EXHIBIT 10.31
SILICON VALLEY BANK
401(K) AND EMPLOYEE STOCK
OWNERSHIP PLAN
PLAN AND TRUST AGREEMENT
AS AMENDED AND RESTATED
EFFECTIVE MARCH 1, 1995
Silicon Valley Bank 401(k) and
Employee Stock Ownership Plan and Trust
As Amended and Restated Effective March 1, 1995
Silicon Valley Bank previously established the Silicon Valley Bancshares
Employee Stock Ownership Plan, intended to constitute a qualified stock bonus
plan, as described in Code section 401(a), and the Silicon Valley Bank 401(k)
Plan, intended to constitute a qualified profit sharing plan as described in
Code section 401(a), including a qualified cash or deferred arrangement, as
described in Code section 401(k), effective January 1, 1989 and January 1,
1985, respectively. Each plan together with its related trust was established
for the benefit of eligible employees of the Company and its participating
affiliates.
Effective March 1, 1995, the Silicon Valley Bancshares Employee Stock Ownership
Plan was merged into the Silicon Valley Bank 401(k) Plan and the merged plan
was restated and renamed the Silicon Valley Bank 401(k) and Employee Stock
Ownership Plan. The Plan is intended to constitute a qualified profit sharing
plan, as described in Code section 401(a), which includes a qualified cash or
deferred arrangement, as described in Code section 401(k).
The provisions of this Plan and Trust relating to the Trustee constitute the
trust agreement which is entered into by and between Silicon Valley Bank and
Wells Fargo Bank, National Association. The Trust is intended to be tax exempt
as described under Code section 501(a).
Date: October 11, 1995 Silicon Valley Bank
By: /s/ Glen G. Simmons
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Title: Executive Vice President -
Human Resources
The trust agreement set forth in those provisions of this Plan and Trust which
relate to the Trustee is hereby executed.
Date: November 10, 1995 Wells Fargo Bank, National Association
By: /s/ Lisa M. Maloney
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Title: Vice President
Date: November 10, 1995 Wells Fargo Bank, National Association
By: /s/ Gwyn E. Slack
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Title: Vice President
TABLE OF CONTENTS
1 DEFINITIONS.......................................................... 1
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2 ELIGIBILITY.......................................................... 9
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2.1 Eligibility.................................................. 9
2.2 Ineligible Employees......................................... 9
2.3 Ineligible or Former Participants............................ 9
3 PARTICIPANT CONTRIBUTIONS............................................ 10
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3.1 Employee Contribution Election............................... 10
3.2 Changing a Contribution Election............................. 10
3.3 Revoking and Resuming a Contribution Election................ 10
3.4 Contribution Percentage Limits............................... 10
3.5 Refunds When Contribution Dollar Limit Exceeded.............. 11
3.6 Timing, Posting and Tax Considerations....................... 11
4 ROLLOVERS AND TRANSFERS FROM OTHER QUALIFIED PLANS................... 12
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4.1 Rollovers.................................................... 12
4.2 Transfers From Other Qualified Plans......................... 12
5 EMPLOYER CONTRIBUTIONS AND FORFEITURE ACCOUNT ALLOCATIONS............ 13
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5.1 Company Match Contributions and
Company Match Forfeiture Account Allocations................. 13
5.2 ESOP Contributions and ESOP Forfeiture Account Allocations... 14
6 ACCOUNTING........................................................... 16
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6.1 Individual Participant Accounting............................ 16
6.2 Sweep Account is Transaction Account......................... 16
6.3 Trade Date Accounting and Investment Cycle................... 16
6.4 Accounting for Investment Funds.............................. 16
6.5 Payment of Fees and Expenses................................. 16
6.6 Accounting for Participant Loans............................. 17
6.7 Error Correction............................................. 17
6.8 Participant Statements....................................... 18
6.9 Special Accounting During Conversion Period.................. 18
6.10 Accounts for QDRO Beneficiaries.............................. 18
7 INVESTMENT FUNDS AND ELECTIONS....................................... 19
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7.1 Investment Funds............................................. 19
7.2 Investment Fund Elections.................................... 19
7.3 Responsibility for Investment Choice......................... 20
7.4 Default if No Election....................................... 20
7.5 Timing....................................................... 20
7.6 Investment Fund Election Change Fees......................... 20
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8 VESTING & FORFEITURES................................................ 21
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8.1 Fully Vested Contribution Accounts........................... 21
8.2 Full Vesting upon Certain Events............................. 21
8.3 Vesting Schedule............................................. 21
8.4 Forfeitures.................................................. 21
8.5 Rehired Employees............................................ 22
9 PARTICIPANT LOANS.................................................... 23
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9.1 Participant Loans Permitted.................................. 23
9.2 Loan Application, Note and Security.......................... 23
9.3 Spousal Consent.............................................. 23
9.4 Loan Approval................................................ 23
9.5 Loan Funding Limits, Account Sources and Funding Order....... 23
9.6 Maximum Number of Loans...................................... 24
9.7 Source and Timing of Loan Funding............................ 24
9.8 Interest Rate................................................ 24
9.9 Loan Payment................................................. 24
9.10 Loan Payment Hierarchy....................................... 25
9.11 Repayment Suspension......................................... 25
9.12 Loan Default................................................. 25
9.13 Call Feature................................................. 25
10 IN-SERVICE WITHDRAWALS............................................... 26
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10.1 In-Service Withdrawals Permitted............................. 26
10.2 In-Service Withdrawal Application and Notice................. 26
10.3 Spousal Consent.............................................. 26
10.4 In-Service Withdrawal Approval............................... 26
10.5 Minimum Amount, Payment Form and Medium...................... 26
10.6 Source and Timing of In-Service Withdrawal Funding........... 27
10.7 Hardship Withdrawals......................................... 27
10.8 Over Age 59 1/2 Withdrawals.................................. 29
11 DISTRIBUTIONS ONCE EMPLOYMENT ENDS OR AS REQUIRED BY LAW............. 30
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11.1 Benefit Information, Notices and Election.................... 30
11.2 Spousal Consent.............................................. 30
11.3 Payment Form and Medium...................................... 30
11.4 Distribution of Small Amounts................................ 31
11.5 Source and Timing of Distribution Funding.................... 31
11.6 Deemed Distribution.......................................... 31
11.7 Latest Commencement Permitted................................ 32
11.8 Payment Within Life Expectancy............................... 32
11.9 Incidental Benefit Rule...................................... 32
11.10 Payment to Beneficiary....................................... 33
11.11 Beneficiary Designation...................................... 33
11.12 QJSA and QPSA Annuity Information and Elections.............. 33
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12 ADP AND ACP TESTS.................................................... 36
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12.1 Contribution Limitation Definitions.......................... 36
12.2 ADP and ACP Tests............................................ 38
12.3 Correction of ADP and ACP Tests.............................. 39
12.4 Multiple Use Test............................................ 40
12.5 Correction of Multiple Use Test.............................. 40
12.6 Adjustment for Investment Gain or Loss....................... 41
12.7 Testing Responsibilities and Required Records................ 41
12.8 Separate Testing............................................. 41
13 MAXIMUM CONTRIBUTION AND BENEFIT LIMITATIONS......................... 42
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13.1 "Annual Addition" Defined.................................... 42
13.2 Maximum Annual Addition...................................... 42
13.3 Avoiding an Excess Annual Addition........................... 42
13.4 Correcting an Excess Annual Addition......................... 42
13.5 Correcting a Multiple Plan Excess............................ 43
13.6 "Defined Benefit Fraction" Defined........................... 43
13.7 "Defined Contribution Fraction" Defined...................... 43
13.8 Combined Plan Limits and Correction.......................... 43
14 TOP HEAVY RULES...................................................... 44
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14.1 Top Heavy Definitions........................................ 44
14.2 Special Contributions........................................ 45
14.3 Adjustment to Combined Limits for Different Plans............ 46
15 PLAN ADMINISTRATION.................................................. 47
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15.1 Plan Delineates Authority and Responsibility................. 47
15.2 Fiduciary Standards.......................................... 47
15.3 Company is ERISA Plan Administrator.......................... 47
15.4 Administrator Duties......................................... 48
15.5 Advisors May be Retained..................................... 48
15.6 Delegation of Administrator Duties........................... 49
15.7 Committee Operating Rules.................................... 49
16 MANAGEMENT OF INVESTMENTS............................................ 50
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16.1 Trust Agreement.............................................. 50
16.2 Investment Funds............................................. 50
16.3 Authority to Hold Cash....................................... 51
16.4 Trustee to Act Upon Instructions............................. 51
16.5 Administrator Has Right to
Vote Registered Investment Company Shares................... 51
16.6 Custom Fund Investment Management............................ 51
16.7 Authority to Segregate Assets................................ 52
16.8 Maximum Permitted Investment in Company Stock................ 52
16.9 Participants Have Right to Vote and Tender Company Stock..... 52
16.10 Registration and Disclosure for Company Stock................ 53
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17 TRUST ADMINISTRATION................................................. 54
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17.1 Trustee to Construe Trust.................................... 54
17.2 Trustee To Act As Owner of Trust Assets...................... 54
17.3 United States Indicia of Ownership........................... 54
17.4 Tax Withholding and Payment.................................. 55
17.5 Trust Accounting............................................. 55
17.6 Valuation of Certain Assets.................................. 55
17.7 Legal Counsel................................................ 56
17.8 Fees and Expenses............................................ 56
17.9 Trustee Duties and Limitations............................... 56
18 RIGHTS, PROTECTION, CONSTRUCTION AND JURISDICTION.................... 57
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18.1 Plan Does Not Affect Employment Rights....................... 57
18.2 Limited Return of Contributions.............................. 57
18.3 Assignment and Alienation.................................... 57
18.4 Facility of Payment.......................................... 58
18.5 Reallocation of Lost Participant's Accounts.................. 58
18.6 Claims Procedure............................................. 58
18.7 Construction................................................. 59
18.8 Jurisdiction and Severability................................ 59
18.9 Indemnification by Employer.................................. 59
19 AMENDMENT, MERGER, DIVESTITURES AND TERMINATION
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19.1 Amendment.................................................... 60
19.2 Merger....................................................... 60
19.3 Divestitures................................................. 60
19.4 Plan Termination............................................. 61
19.5 Amendment and Termination Procedures......................... 61
19.6 Termination of Employer's Participation...................... 62
19.7 Replacement of the Trustee................................... 62
19.8 Final Settlement and Accounting of Trustee................... 62
APPENDIX A - INVESTMENT FUNDS............................................. 64
APPENDIX B - PAYMENT OF PLAN FEES AND EXPENSES............................ 65
APPENDIX C - LOAN INTEREST RATE........................................... 66
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1 DEFINITIONS
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When capitalized, the words and phrases below have the following meanings
unless different meanings are clearly required by the context:
1.1 "Account". The records maintained for purposes of accounting for a
Participant's interest in the Plan. "Account" may refer to one or
all of the following accounts which have been created on behalf of a
Participant to hold specific types of Contributions under the Plan
or predecessor plans as merged herein as of the Effective Date:
(a) "Employee Account". An account created to hold Employee
Contributions.
(b) "Rollover Account". An account created to hold Rollover
Contributions.
(c) "Prior ESOP Rollover Account". An account created to hold
amounts representing Rollover Contributions contributed to the
Silicon Valley Bancshares Employee Stock Ownership Plan.
(d) "Company Match Account". An account created to hold Company
Match Contributions for periods commencing on or after March 1,
1995.
(e) "Prior Match Account" An account created to hold Company Match
Contributions for periods commencing prior to March 1, 1995.
(f) "ESOP Account". An account created to hold ESOP Contributions.
1.2 "ACP" or "Average Contribution Percentage". The percentage
calculated in accordance with Section 12.1.
1.3 "Administrator". The Company, which may delegate all or a portion of
the duties of the Administrator under the Plan to a Committee in
accordance with Section 15.6.
1.4 "ADP" or "Average Deferral Percentage". The percentage calculated in
accordance with Section 12.1.
1.5 "Beneficiary". The person or persons who is to receive benefits
after the death of the Participant pursuant to the "Beneficiary
Designation" paragraph in Section 11, or as a result of a QDRO.
1.6 "Break in Service". The fifth anniversary (or sixth anniversary if
absence from employment was due to a Parental Leave) of the date on
which a Participant's employment ends.
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1.7 "Code". The Internal Revenue Code of 1986, as amended. Reference to
any specific Code section shall include such section, any valid
regulation promulgated thereunder, and any comparable provision of
any future legislation amending, supplementing or superseding such
section.
1.8 "Committee". If applicable, the committee which has been appointed
by the Company to administer the Plan in accordance with Section
15.6.
1.9 "Company". Silicon Valley Bank or any successor by merger, purchase
or otherwise.
1.10 "Company Stock". Shares of common stock of Silicon Valley
Bancshares, the parent company of the Company, its predecessor(s),
or its successors or assigns, or any corporation with or into which
said corporation may be merged, consolidated or reorganized, or to
which a majority of its assets may be sold.
1.11 "Compensation". The sum of a Participant's Taxable Income and salary
reductions, if any, pursuant to Code sections 125, 402(e)(3),
402(h), 403(b), 414(h)(2) or 457.
For purposes of determining benefits under this Plan, Compensation
is limited to $150,000, (as adjusted for the cost of living pursuant
to Code sections 401(a)(17) and 415(d)) per Plan Year. For purposes
of the preceding sentence, in the case of an HCE who is a 5% Owner
or one of the 10 most highly compensated Employees, (i) such HCE and
such HCE's family group (as defined below) shall be treated as a
single employee and the Compensation of each family group member
shall be aggregated with the Compensation of such HCE, and (ii) the
limitation on Compensation shall be allocated among such HCE and his
or her family group members in proportion to each individual's
Compensation before the application of this sentence. For purposes
of this Section, the term "family group" shall mean an Employee's
spouse and lineal descendants who have not attained age 19 before
the close of the year in question.
For purposes of determining HCEs and key employees, Compensation for
the entire Plan Year shall be used. For purposes of determining ADP
and ACP, Compensation shall be limited to amounts paid to an
Eligible Employee while a Participant.
1.12 "Contribution". An amount contributed to the Plan by the Employer or
an Eligible Employee, and allocated by contribution type to
Participants' Accounts, as described in Section 1.1. Specific types
of contribution include:
(a) "Employee Contribution". An amount contributed by an eligible
Participant in conjunction with his or her Code section 401(k)
salary deferral election which shall be treated as made by the
Employer on an eligible Participant's behalf.
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(b) "Rollover Contribution". An amount contributed by an Eligible
Employee which originated from another employer's or an
Employer's qualified plan.
(c) "Company Match Contribution". An amount contributed by the
Employer on an eligible Participant's behalf based upon the
amount contributed by the eligible Participant.
(d) "ESOP Contribution". An amount contributed by the Employer on
an eligible Participant's behalf and allocated on a pay based
formula.
1.13 "Contribution Dollar Limit". The annual limit placed on each
Participant's Employee Contributions, which shall be $7,000 per
calendar year (as adjusted for the cost of living pursuant to Code
sections 402(g)(5) and 415(d)). For purposes of this Section, a
Participant's Employee Contributions shall include (i) any employer
contribution made under any qualified cash or deferred arrangement
as defined in Code section 401(k) to the extent not includible in
gross income for the taxable year under Code section 402(e)(3) or
402(h)(1)(B) (determined without regard to Code section 402(g)), and
(ii) any employer contribution to purchase an annuity contract under
Code section 403(b) under a salary reduction agreement (within the
meaning of Code section 3121(a)(5)(D)).
1.14 "Conversion Period". The period of converting the prior accounting
system of the Plan and Trust, if such Plan and Trust were in
existence prior to the Effective Date, or the prior accounting
system of any plan and trust which is merged into this Plan and
Trust subsequent to the Effective Date, to the accounting system
described in Section 6.
1.15 "Direct Rollover". An Eligible Rollover Distribution that is paid
directly to an Eligible Retirement Plan for the benefit of a
Distributee.
1.16 "Disability". A Participant's mental or physical disability
resulting in termination of employment as evidenced by presentation
of medical evidence satisfactory to the Administrator.
1.17 "Distributee". An Employee or former Employee, the surviving spouse
of an Employee or former Employee and a spouse or former spouse of
an Employee or former Employee determined to be an alternate payee
under a QDRO.
1.18 "Early Retirement Date". The date of a Participant's 55th birthday
and completion of 10 Years of Vesting Service.
1.19 "Effective Date". The date upon which the provisions of this
document become effective. This date is March 1, 1995, unless stated
otherwise. In general, the provisions of this document only apply to
Participants who are Employees on or after the Effective Date.
However, investment and distribution provisions apply to all
Participants with Account balances to be invested or distributed
after the Effective Date.
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1.20 "Eligible Employee". An Employee of an Employer, except any
Employee:
(a) whose compensation and conditions of employment are covered by
a collective bargaining agreement to which an Employer is a
party unless the agreement calls for the Employee's
participation in the Plan;
(b) who is treated as an Employee because he or she is a Leased
Employee; or
(c) who is a nonresident alien who (i) either receives no earned
income (within the meaning of Code section 911(d)(2)), from
sources within the United States under Code section 861(a)(3);
or (ii) receives such earned income from such sources within
the United States but such income is exempt from United States
income tax under an applicable income tax convention.
1.21 "Eligible Retirement Plan". An individual retirement account
described in Code section 408(a), an individual retirement annuity
described in Code section 408(b), an annuity plan described in Code
section 403(a), or a qualified trust described in Code section
401(a), that accepts a Distributee's Eligible Rollover Distribution,
except that with regard to an Eligible Rollover Distribution to a
surviving spouse, an Eligible Retirement Plan is an individual
retirement account or individual retirement annuity.
1.22 "Eligible Rollover Distribution". A distribution of all or any
portion of the balance to the credit of a Distributee, excluding a
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 a Distributee or the joint lives (or joint life
expectancies) of a Distributee and the Distributee's designated
Beneficiary, or for a specified period of ten years or more; a
distribution to the extent such distribution is required under Code
section 401(a)(9); and the portion of a distribution that is not
includible in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to Employer
securities).
1.23 "Employee". An individual who is:
(a) directly employed by any Related Company and for whom any
income for such employment is subject to withholding of income
or social security taxes, or
(b) a Leased Employee.
1.24 "Employer". The Company and any Related Company which adopts this
Plan with the approval of the Company.
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1.25 "ERISA". The Employee Retirement Income Security Act of 1974, as
amended. Reference to any specific section shall include such
section, any valid regulation promulgated thereunder, and any
comparable provision of any future legislation amending,
supplementing or superseding such section.
1.26 "Forfeiture Account". An account holding amounts forfeited by
Participants who have left the Employer, invested in interest
bearing deposits of the Trustee, pending disposition as provided in
this Plan and Trust and as directed by the Administrator.
1.27 "HCE" or "Highly Compensated Employee". An Employee described as a
Highly Compensated Employee in Section 12.
1.28 "Ineligible". The Plan status of an individual during the period in
which he or she is (1) an Employee of a Related Company which is not
then an Employer, (2) an Employee, but not an Eligible Employee, or
(3) not an Employee.
1.29 "Investment Fund" or "Fund". An investment fund as described in
Section 16.2. The Investment Funds authorized by the Administrator
to be offered under the Plan as of the Effective Date are set forth
in Appendix A.
1.30 "Leased Employee". An individual who is deemed to be an employee of
any Related Company as provided in Code section 414(n) or (o).
1.31 "Leave of Absence". A period during which an individual is deemed to
be an Employee, but is absent from active employment, provided that
the absence:
(a) was authorized by a Related Company; or
(b) was due to military service in the United States armed forces
and the individual returns to active employment within the
period during which he or she retains employment rights under
federal law.
1.32 "Loan Account". The record maintained for purposes of accounting for
a Participant's loan and payments of principal and interest thereon.
1.33 "NHCE" or "Non-Highly Compensated Employee". An Employee described
as a Non-Highly Compensated Employee in Section 12.
1.34 "Normal Retirement Date". The date of a Participant's 62nd birthday.
1.35 "Owner". A person with an ownership interest in the capital,
profits, outstanding stock or voting power of a Related Company
within the meaning of Code section 318 or 416 (which exclude
indirect ownership through a qualified plan).
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1.36 "Parental Leave". The period of absence from work by reason of
pregnancy, the birth of an Employee's child, the placement of a
child with the Employee in connection with the child's adoption, or
caring for such child immediately after birth or placement as
described in Code section 410(a)(5)(E).
1.37 "Participant". An Eligible Employee who begins to participate in the
Plan after completing the eligibility requirements as described in
Section 2.1 or such eligibility requirements as were in effect prior
to the Effective Date under this Plan or predecessor plans as merged
herein as of the Effective Date. An Eligible Employee who makes a
Rollover Contribution prior to completing the eligibility
requirements as described in Section 2.1 shall also be considered a
Participant, except that he or she shall not be considered a
Participant for purposes of provisions related to Contributions,
other than a Rollover Contribution, until he or she completes the
eligibility requirements as described in Section 2.1. A
Participant's participation continues until his or her employment
with all Related Companies ends and his or her Account is
distributed or forfeited.
1.38 "Pay". All cash compensation paid to an Eligible Employee by an
Employer while a Participant during the current period, except that
for purposes of ESOP Contributions, "All cash compensation,
excluding incentive pay (annual incentive awards, referral fees and
other recognition/achievement awards)" shall be substituted for the
preceding reference to "All cash compensation". Pay excludes
reimbursements or other expense allowances, cash and non-cash fringe
benefits, moving expenses, deferred compensation and welfare
benefits.
Pay is neither increased by any salary credit or decreased by any
salary reduction pursuant to Code sections 125 or 402(e)(3). Pay is
limited to $150,000 (as adjusted for the cost of living pursuant to
Code sections 401(a)(17) and 415(d)) per Plan Year.
For purposes of the Contributions described in Section 5.2, the
limitations as described in the second paragraph of Section 1.11
shall also apply.
1.39 "Period of Employment". The period beginning on the date an Employee
first performs an hour of service and ending on the date his or her
employment ends. Employment ends on the date the Employee quits,
retires, is discharged, dies or (if earlier) the first anniversary
of his or her absence for any other reason. The period of absence
starting with the date an Employee's employment temporarily ends and
ending on the date he or she is subsequently reemployed is (1)
included in his or her Period of Employment if the period of absence
does not exceed one year, and (2) excluded if such period exceeds
one year.
Period of Employment includes the period prior to a Break in
Service.
An Employee's service with a predecessor or acquired company shall
only be counted in the determination of his or her Period of
Employment for eligibility
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and/or vesting purposes if (1) the Company directs that credit for
such service be granted, or (2) a qualified plan of the predecessor
or acquired company is subsequently maintained by any Employer or
Related Company.
1.40 "Plan". The Silicon Valley Bank 401(k) and Employee Stock Ownership
Plan set forth in this document, as from time to time amended.
1.41 "Plan Year". The annual accounting period of the Plan and Trust
which ends on each December 31.
1.42 "QDRO". A domestic relations order which the Administrator has
determined to be a qualified domestic relations order within the
meaning of Code section 414(p).
1.43 "Reduction in Force". An Employer sponsored program developed to
reduce force on a permanent basis.
1.44 "Related Company". With respect to any Employer, that Employer and
any corporation, trade or business which is, together with that
Employer, a member of the same controlled group of corporations, a
trade or business under common control, or an affiliated service
group within the meaning of Code sections 414(b), (c), (m) or (o)
and except that for purposes of Section 13 "within the meaning of
Code sections 414(b), (c), (m) or (o), as modified by Code section
415(h)" shall be substituted for the preceding reference to "within
the meaning of Code section 414(b), (c), (m) or (o)".
1.45 "Settlement Date". For each Trade Date, the Trustee's next business
day.
1.46 "Spousal Consent". The written consent given by a spouse to a
Participant's election or waiver of a specified form of benefit or
Beneficiary designation. The spouse's consent must acknowledge the
effect on the spouse of the Participant's election, waiver or
designation, and be duly witnessed by a Plan representative or
notary public. Spousal Consent shall be valid only with respect to
the spouse who signs the Spousal Consent and only for the particular
choice made by the Participant which requires Spousal Consent. A
Participant may revoke (without Spousal Consent) a prior election,
waiver or designation that required Spousal Consent at any time
before payments begin. Spousal Consent also means a determination
by the Administrator that there is no spouse, the spouse cannot be
located, or such other circumstances as may be established by
applicable law.
1.47 "Sweep Account". The subsidiary Account for each Participant through
which all transactions are processed, which is invested in interest
bearing deposits of the Trustee.
1.48 "Sweep Date". The cut off date and time for receiving instructions
for transactions to be processed on the next Trade Date.
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1.49 "Taxable Income". Compensation in the amount reported by the
Employer or a Related Company as "Wages, tips, other compensation"
on Form W-2, or any successor method of reporting under Code section
6041(d).
1.50 "Trade Date". Each day the Investment Funds are valued, which is
normally every day the assets of such Funds are traded.
1.51 "Trust". The legal entity created by those provisions of this
document which relate to the Trustee. The Trust is part of the Plan
and holds the Plan assets which are comprised of the aggregate of
Participants' Accounts, any unallocated funds invested in deposit or
money market type assets pending allocation to Participants'
Accounts or disbursement to pay Plan fees and expenses and the
Forfeiture Account.
1.52 "Trustee". Wells Fargo Bank, National Association.
1.53 "Year of Vesting Service". A 12 month Period of Employment.
Notwithstanding, Years of Vesting Service shall be calculated as
follows if (and only if) it would be of benefit to the Employee:
(a) For service from January 1, 1995, each 12 month Period of
Employment;
(b) For the period before January 1, 1995, a 12 consecutive month
period ending on the anniversary of the date an individual
became an Employee, or as that date may be adjusted as a result
of his or her termination of employment with all related
Companies and subsequent rehire as an Employee, in which an
Employee is credited with at least 1,000 hours of service, as
such term was defined for this purpose prior to January 1,
1995.
Years of Vesting Service shall include service credited prior to
January 1, 1985.
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2 ELIGIBILITY
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2.1 Eligibility
All Participants as of March 1, 1995 shall continue their
eligibility to participate. Each other Eligible Employee shall
become a Participant on March 1, 1995 or thereafter, on the first
January 1, April 1, July 1 or October 1 after the date he or she
attains age 18, and completes one hour of service.
2.2 Ineligible Employees
If an Employee completes the above eligibility requirements, but is
Ineligible at the time participation would otherwise begin (if he or
she were not Ineligible), he or she shall become a Participant on
the first subsequent date on which he or she is an Eligible
Employee.
2.3 Ineligible or Former Participants
A Participant may not make or share in Plan Contributions, nor
generally be eligible for a new Plan loan, during the period he or
she is Ineligible, but he or she shall continue to participate for
all other purposes. An Ineligible Participant or former Participant
shall automatically become an active Participant on the date he or
she again becomes an Eligible Employee.
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3 PARTICIPANT CONTRIBUTIONS
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3.1 Employee Contribution Election
Upon becoming a Participant, an Eligible Employee may elect to
reduce his or her Pay by an amount which does not exceed the
Contribution Dollar Limit, within the limits described in the
Contribution Percentage Limits paragraph of this Section 3, and have
such amount contributed to the Plan by the Employer as a Employee
Contribution. The election shall be made as a whole percentage of
Pay or a fixed dollar amount of Pay in such manner and with such
advance notice as prescribed by the Administrator. A Participant
who makes a fixed dollar amount of Pay election shall do so with
full knowledge that such election shall not apply to any portion of
his or her Pay attributable to incentive pay (annual incentive
awards, referral fees and other recognition/achievement awards). In
no event shall an Employee's Employee Contributions under the Plan
and comparable contributions to all other plans, contracts or
arrangements of all Related Companies exceed the Contribution Dollar
Limit for the Employee's taxable year beginning in the Plan Year.
3.2 Changing a Contribution Election
A Participant who is an Eligible Employee may change his or her
Employee Contribution election as of any January 1, April 1, July 1
or October 1 in such manner and with such advance notice as
prescribed by the Administrator, and such election shall be
effective with the first payroll paid after such date.
Participants' Contribution election percentages shall automatically
apply to Pay increases or decreases.
3.3 Revoking and Resuming a Contribution Election
A Participant may revoke his or her Contribution election at any
time in such manner and with such advance notice as prescribed by
the Administrator, and such revocation shall be effective with the
first payroll paid after such date.
A Participant who is an Eligible Employee may resume Contributions
by making a new Contribution election at the same time in which a
Participant may change his or her election in such manner and with
such advance notice as prescribed by the Administrator, and such
election shall be effective with the first payroll paid after such
date.
3.4 Contribution Percentage Limits
The Administrator may establish and change from time to time, in
writing, without the necessity of amending this Plan and Trust, the
minimum, if applicable, and maximum Employee Contribution
percentages, prospectively or retrospectively (for the current Plan
Year), for all Participants. In addition, the Administrator may
establish any lower percentage limits for Highly
10
Compensated Employees as it deems necessary to satisfy the tests
described in Section 12. As of the Effective Date, the Employee
Contribution maximum percentage is 15%.
Irrespective of the limits that may be established by the
Administrator in accordance with this paragraph, in no event shall
the contributions made by or on behalf of a Participant for a Plan
Year exceed the maximum allowable under Code section 415.
3.5 Refunds When Contribution Dollar Limit Exceeded
A Participant who makes Employee Contributions for a calendar year
to this Plan and comparable contributions to any other qualified
defined contribution plan in excess of the Contribution Dollar Limit
may notify the Administrator in writing by the following March 1 (or
as late as April 14 if allowed by the Administrator) that an excess
has occurred. In this event, the amount of the excess specified by
the Participant, adjusted for investment gain or loss, shall be
refunded to him or her by April 15 and shall not be included as an
Annual Addition under Code section 415 for the year contributed.
Refunds shall not include investment gain or loss for the period
between the end of the applicable Plan Year and the date of
distribution. Excess amounts shall first be taken from unmatched
Employee Contributions and then from matched Employee Contributions.
Any Company Match Contributions attributable to refunded excess
Employee Contributions as described in this Section shall be
forfeited and used as described in Section 8.4.
3.6 Timing, Posting and Tax Considerations
Participants' Contributions, other than Rollover Contributions, may
only be made through payroll deduction. Such amounts shall be paid
to the Trustee in cash and posted to each Participant's Account(s)
as soon as such amounts can reasonably be separated from the
Employer's general assets and balanced against the specific amount
made on behalf of each Participant. In no event, however, shall
such amounts be paid to the Trustee more than 90 days after the date
amounts are deducted from a Participant's Pay. Employee
Contributions shall be treated as Contributions made by an Employer
in determining tax deductions under Code section 404(a).
11
4 ROLLOVERS AND TRANSFERS FROM OTHER QUALIFIED PLANS
--------------------------------------------------
4.1 Rollovers
The Administrator may authorize the Trustee to accept a rollover
contribution, within the meaning of Code section 402(c) or
408(d)(3)(A)(ii), in cash, directly from an Eligible Employee or as
a Direct Rollover from another qualified plan on behalf of the
Eligible Employee, even if he or she is not yet a Participant. The
Employee shall be responsible for furnishing satisfactory evidence,
in such manner as prescribed by the Administrator, that the amount
is eligible for rollover treatment. A rollover contribution
received directly from an Eligible Employee must be paid to the
Trustee in cash within 60 days after the date received by the
Eligible Employee from a qualified plan or conduit individual
retirement account. Contributions described in this paragraph shall
be posted to the applicable Employee's Rollover Account as of the
date received by the Trustee.
If it is later determined that an amount contributed pursuant to the
above paragraph did not in fact qualify as a rollover contribution
under Code section 402(c) or 408(d)(3)(A)(ii), the balance credited
to the Employee's Rollover Account shall immediately be (1)
segregated from all other Plan assets, (2) treated as a nonqualified
trust established by and for the benefit of the Employee, and (3)
distributed to the Employee. Any such nonqualifying rollover shall
be deemed never to have been a part of the Plan.
4.2 Transfers From Other Qualified Plans
The Administrator may instruct the Trustee to receive assets in cash
or in kind directly from another qualified plan; provided that a
transfer should not be directed if:
(a) any amounts are not exempted by Code section 401(a)(11)(B) from
the annuity requirements of Code section 417 unless the Plan
complies with such requirements; or
(b) any amounts include benefits protected by Code section
411(d)(6) which would not be preserved under applicable Plan
provisions.
The Trustee may refuse the receipt of any transfer if:
(a) the Trustee finds the in-kind assets unacceptable; or
(b) instructions for posting amounts to Participants' Accounts are
incomplete.
Such amounts shall be posted to the appropriate Accounts of
Participants as of the date received by the Trustee.
12
5 EMPLOYER CONTRIBUTIONS AND FORFEITURE ACCOUNT ALLOCATIONS
---------------------------------------------------------
5.1 Company Match Contributions and Company Match Forfeiture Account
Allocations
(a) Frequency and Eligibility. For each period for which
Participants' Contributions are made, the Employer shall make
Company Match Contributions, as described in the following
Allocation Method paragraph, on behalf of each Participant who
contributed during the period.
Effective January 1, 1995, for each Plan Year, the Employer
shall allocate any Forfeiture Account balance remaining as of
the end of the Plan Year attributable to forfeited Company
Match Account amounts and earnings thereon, as Company Match
Contributions on behalf of each Participant who contributed
during the period and therefore received an allocation of
Company Match Contributions and who was an Eligible Employee on
the last day of the period. Such an allocation shall also be
made on behalf of each Participant who contributed during the
period but who ceased being an Employee during the period after
having attained his or her Early Retirement Date, Normal
Retirement Date, or by reason of his or her Disability or
death.
(b) Allocation Method. The Company Match Contributions for each
period shall total 100% of each eligible Participant's Employee
Contributions for the period. Notwithstanding, the maximum
dollar match (not including Forfeiture Account amounts
allocated as Company Match Contributions) shall not exceed
$1,000 for the Plan Year. The Employer may change the 100%
matching rate to any other percentage, including 0%,or the
maximum dollar match, generally by notifying eligible
Participants in sufficient time to adjust their Contribution
elections prior to the start of the period for which the new
percentage or amount apply.
Forfeiture Account amounts to be allocated as Company Match
Contributions shall be allocated among eligible Participants in
direct proportion to each eligible Participant's Employee
Contributions for the Plan Year to the total Employee
Contributions for the Plan Year for all such eligible
Participants.
(c) Timing, Medium and Posting. The Employer shall make each
period's Company Match Contribution in cash and allocate
Forfeiture Account amounts as soon as administratively
feasible, and for purposes of deducting such Company Match
Contribution, not later than the Employer's federal tax filing
date, including extensions. The Trustee shall post such amounts
to each Participant's Company Match Account
13
once the total Contribution received or Forfeiture Account
amount to be allocated has been balanced against the specific
amount to be credited to each Participant's Company Match
Account.
5.2 ESOP Contributions and ESOP Forfeiture Account Allocations
(a) Frequency and Eligibility. Subject to determination made by the
Employer's board of directors, or duly authorized committee
appointed by the Employer's board of directors, for each
quarter of the Plan Year, the Employer shall make ESOP
Contributions on behalf of each Participant who was an Eligible
Employee on the last day of the quarter and for each Plan Year
the Employer may make additional ESOP Contributions on behalf
of each Participant who was an Eligible Employee on the last
day of the Plan Year. If such Contributions are made, such
Contributions shall also be made on behalf of each Participant
who was an Eligible Employee at any time during the applicable
period (quarter or Plan Year) but who ceased being an Employee
during the applicable period (quarter or Plan Year) after
having attained his or her Early Retirement Date, Normal
Retirement Date, or by reason of his or her Disability or
death.
Notwithstanding, the Employer reserves the right to suspend
quarterly ESOP Contributions which were otherwise authorized by
the Employer's board of directors, or duly authorized committee
appointed by the Employer's board of directors, in the event of
adverse business conditions incurred subsequent to the
authorization of such quarterly ESOP Contributions or other
good cause.
For each Plan Year, the Employer shall allocate any Forfeiture
Account balance remaining as of the end of the Plan Year
attributable to forfeited ESOP Account amounts and earnings
thereon, as ESOP Contributions on behalf of each Participant
who was an Eligible Employee on the last day of the period.
Such an allocation shall also be made on behalf of each
Participant who ceased being an Employee during the period
after having attained his or her Early Retirement Date, Normal
Retirement Date, or by reason of his or her Disability or
death.
(b) Allocation Method. The ESOP Contributions for each quarter,
shall be equal to a specified percentage, including 0% and up
to 5%, of each eligible Participant's Pay. As of the Effective
Date, the specified percentage is 5%. The ESOP Contributions
for each Plan Year, shall be equal to a specified percentage,
including 0% and up to 10%, of each eligible Participant's Pay.
Together, the quarterly and annual ESOP Contribution (not
including Forfeiture Account amounts allocated as ESOP
Contributions), shall not exceed 15% of each eligible
Participant's Pay.
Forfeiture Account amounts to be allocated as ESOP
Contributions shall be allocated among eligible Participants in
direct proportion to their Pay.
14
(c) Timing, Medium and Posting. The Employer shall make each
period's ESOP Contribution in cash and allocate Forfeiture
Account amounts as soon as administratively feasible, and for
purposes of deducting such ESOP Contribution, not later than
the Employer's federal tax filing date, including extensions.
The Trustee shall post such amount to each Participant's ESOP
Account once the total Contribution received or Forfeiture
Account amount to be allocated has been balanced against the
specific amount to be credited to each Participant's ESOP
Account.
15
6 ACCOUNTING
----------
6.1 Individual Participant Accounting
The Administrator shall maintain an individual set of Accounts for
each Participant in order to reflect transactions both by type of
Contribution and investment medium. Financial transactions shall be
accounted for at the individual Account level by posting each
transaction to the appropriate Account of each affected Participant.
Participant Account values shall be maintained in shares for the
Investment Funds and in dollars for the Sweep and Loan Accounts. At
any point in time, the Account value shall be determined using the
most recent Trade Date values provided by the Trustee.
6.2 Sweep Account is Transaction Account
All transactions related to amounts being contributed to or
distributed from the Trust shall be posted to each affected
Participant's Sweep Account. Any amount held in the Sweep Account
shall be credited with interest up until the date on which it is
removed from the Sweep Account.
6.3 Trade Date Accounting and Investment Cycle
Participant Account values shall be determined as of each Trade
Date. For any transaction to be processed as of a Trade Date, the
Trustee must receive instructions for the transaction by the Sweep
Date. Such instructions shall apply to amounts held in the Account
on that Sweep Date. Financial transactions of the Investment Funds
shall be posted to Participants' Accounts as of the Trade Date,
based upon the Trade Date values provided by the Trustee, and
settled on the Settlement Date.
6.4 Accounting for Investment Funds
Investments in each Investment Fund shall be maintained in shares.
The Trustee is responsible for determining the share values of each
Investment Fund as of each Trade Date. To the extent an Investment
Fund is comprised of collective investment funds of the Trustee, or
any other fiduciary to the Plan, the share values shall be
determined in accordance with the rules governing such collective
investment funds, which are incorporated herein by reference. All
other share values shall be determined by the Trustee. The share
value of each Investment Fund shall be based on the fair market
value of its underlying assets.
6.5 Payment of Fees and Expenses
Except to the extent Plan fees and expenses related to Account
maintenance, transaction and Investment Fund management and
maintenance, as set forth below, are paid by the Employer directly,
or indirectly, through the Forfeiture
16
Account as directed by the Administrator, such fees and expenses
shall be paid as set forth below. The Employer may pay a lower
portion of the fees and expenses allocable to the Accounts of
Participants who are no longer Employees or who are not
Beneficiaries, unless doing so would result in discrimination.
(a) Account Maintenance: Account maintenance fees and expenses, may
include but are not limited to, administrative, Trustee,
government annual report preparation, audit, legal,
nondiscrimination testing and fees for any other special
services. Account maintenance fees shall be charged to
Participants on a per Participant basis provided that no fee
shall reduce a Participant's Account balance below zero.
(b) Transaction: Transaction fees and expenses, may include but are
not limited to, periodic installment payment, Investment Fund
election change and loan fees. Transaction fees shall be
charged to the Participant's Account involved in the
transaction provided that no fee shall reduce a Participant's
Account balance below zero.
(c) Investment Fund Management and Maintenance: Management and
maintenance fees and expenses related to the Investment Funds
shall be charged at the Investment Fund level and reflected in
the net gain or loss of each Fund.
As of the Effective Date, a breakdown of which Plan fees and
expenses shall generally be borne by the Trust (and charged to
individual Participants' Accounts or charged at the Investment Fund
level and reflected in the net gain or loss of each Fund) and those
that shall be paid by the Employer is set forth in Appendix B and
may be changed from time to time by the Administrator, in writing,
without the necessity of amending this Plan and Trust.
The Trustee shall have the authority to pay any such fees and
expenses, which remain unpaid by the Employer for 60 days, from the
Trust.
6.6 Accounting for Participant Loans
Participant loans shall be held in a separate Loan Account of the
Participant and accounted for in dollars as an earmarked asset of
the borrowing Participant's Account.
6.7 Error Correction
The Administrator may correct any errors or omissions in the
administration of the Plan by restoring any Participant's Account
balance with the amount that would be credited to the Account had no
error or omission been made. Funds necessary for any such
restoration shall be provided through payment made by the Employer,
or by the Trustee to the extent the error or omission is
17
attributable to actions or inactions of the Trustee, or if the
restoration involves an Account holding amounts contributed by an
Employer, the Administrator may direct the Trustee to use amounts
from the Forfeiture Account.
6.8 Participant Statements
The Administrator shall provide Participants with statements of
their Accounts as soon after the end of each quarter of the Plan
Year as administratively feasible.
6.9 Special Accounting During Conversion Period
The Administrator and Trustee may use any reasonable accounting
methods in performing their respective duties during any Conversion
Period. This includes, but is not limited to, the method for
allocating net investment gains or losses and the extent, if any, to
which contributions received by and distributions paid from the
Trust during this period share in such allocation.
6.10 Accounts for QDRO Beneficiaries
A separate Account shall be established for an alternate payee
entitled to any portion of a Participant's Account under a QDRO as
of the date and in accordance with the directions specified in the
QDRO. In addition, a separate Account may be established during the
period of time the Administrator, a court of competent jurisdiction
or other appropriate person is determining whether a domestic
relations order qualifies as a QDRO. Such a separate Account shall
be valued and accounted for in the same manner as any other Account.
(a) Distributions Pursuant to QDROs. If a QDRO so provides, the
portion of a Participant's Account payable to an alternate
payee may be distributed, in a form as permissible under
Section 11 and Code section 414(p), to the alternate payee at
the time specified in the QDRO, regardless of whether the
Participant is entitled to a distribution from the Plan at such
time.
(b) Participant Loans. Except to the extent required by law, an
alternate payee, on whose behalf a separate Account has been
established, shall not be entitled to borrow from such Account.
If a QDRO specifies that the alternate payee is entitled to any
portion of the Account of a Participant who has an outstanding
loan balance, all outstanding loans shall generally continue to
be held in the Participant's Account and shall not be divided
between the Participant's and alternate payee's Accounts.
(c) Investment Direction. Where a separate Account has been
established on behalf of an alternate payee and has not yet
been distributed, the alternate payee may direct the investment
of such Account in the same manner as if he or she were a
Participant.
18
7 INVESTMENT FUNDS AND ELECTIONS
------------------------------
7.1 Investment Funds
Except for Participants' Sweep and Loan Accounts, the Trust shall be
maintained in various Investment Funds. The Administrator shall
select the Investment Funds offered to Participants and may change
the number or composition of the Investment Funds, subject to the
terms and conditions agreed to with the Trustee. As of the
Effective Date, a list of the Investment Funds offered under the
Plan is set forth in Appendix A, and may be changed from time to
time by the Administrator, in writing, and as agreed to by the
Trustee, without the necessity of amending this Plan and Trust. If
the Company provides for a Company Stock Fund, the Administrator has
the discretion to deny or restrict the availability of the Company
Stock Fund to certain Participants in accordance with procedures
prescribed by the Administrator to the extent such denial or
restriction does not violate Code section 401(a).
7.2 Investment Fund Elections
Each Participant shall direct the investment of all of his or her
Contribution Accounts except for these Accounts:
Prior ESOP Rollover Account
ESOP Account
which shall be entirely invested in the Investment Fund specified by
the Administrator, which Investment Fund as of the Effective Date is
set forth in Appendix A. However, a Participant who has attained age
55 may direct the investment of the balance in his or her Prior ESOP
Rollover Account and ESOP Account. Future amounts allocated to his
or her Prior ESOP Rollover Account and ESOP Account shall continue
to be entirely invested in the Investment Fund specified by the
Administrator, until otherwise directed by the Participant.
A Participant shall make his or her investment election in any
combination of one or any number of the Investment Funds offered in
accordance with the procedures established by the Administrator and
Trustee. However, during any Conversion Period, Trust assets may be
held in any investment vehicle permitted by the Plan, as directed by
the Administrator, irrespective of Participant investment elections.
The Administrator may set a maximum percentage of the total election
that a Participant may direct into any specific Investment Fund,
which maximum, if any, as of the Effective Date, is set forth in
Appendix A, and may be changed from time to time by the
Administrator, in writing, without the necessity of amending this
Plan and Trust.
19
7.3 Responsibility for Investment Choice
Each Participant shall be solely responsible for the selection of
his or her Investment Fund choices. No fiduciary with respect to
the Plan is empowered to advise a Participant as to the manner in
which his or her Accounts are to be invested, and the fact that an
Investment Fund is offered shall not be construed to be a
recommendation for investment.
7.4 Default if No Election
The Administrator shall specify an Investment Fund for the
investment of that portion of a Participant's Account which is not
yet held in an Investment Fund and for which no valid investment
election is on file. The Investment Fund specified as of the
Effective Date is set forth in Appendix A, and may be changed from
time to time by the Administrator, in writing, without the necessity
of amending this Plan and Trust.
7.5 Timing
A Participant shall make his or her initial investment election upon
becoming a Participant and may change his or her investment election
at any time in accordance with the procedures established by the
Administrator and Trustee. Investment elections received by the
Trustee by the Sweep Date shall be effective on the following Trade
Date.
7.6 Investment Fund Election Change Fees
A reasonable processing fee may be charged directly to a
Participant's Account for Investment Fund election changes in excess
of a specified number per year as determined by the Administrator.
20
8 VESTING & FORFEITURES
---------------------
8.1 Fully Vested Contribution Accounts
A Participant shall be fully vested in these Accounts at all times:
Employee Account
Rollover Account
Prior ESOP Rollover Account
Prior Match Account
Notwithstanding, prior to the Effective Date a Participant's Prior
Match Account became vested in accordance with a vesting schedule
then in effect.
8.2 Full Vesting upon Certain Events
A Participant's entire Account shall become fully vested once he or
she has attained his or her Normal Retirement Date as an Employee or
upon his or her terminating employment with all Related Companies
due to a Reduction in Force or his or her Disability or death.
8.3 Vesting Schedule
In addition to the vesting provided above, a Participant's Company
Match and ESOP Accounts shall become vested in accordance with the
following schedule:
YEARS OF VESTING VESTED
SERVICE PERCENTAGE
---------------- ----------
Less than 1 0%
1 but less than 2 20%
2 but less than 3 40%
3 but less than 4 60%
4 but less than 5 80%
5 or more 100%
If this vesting schedule is changed, the vested percentage for each
Participant shall not be less than his or her vested percentage
determined as of the last day prior to this change, and for any
Participant with at least three Years of Vesting Service when the
schedule is changed, vesting shall be determined using the more
favorable vesting schedule.
8.4 Forfeitures
A Participant's non-vested Account balance shall be forfeited as of
the Settlement Date following the Sweep Date on which the
Administrator has reported to the Trustee that the Participant's
employment has terminated with
21
all Related Companies. Forfeitures from all Employer Contribution
Accounts shall be transferred to and maintained in a single
Forfeiture Account, which shall be invested in interest bearing
deposits of the Trustee. Forfeiture Account amounts shall be
utilized to restore Accounts, to pay Plan fees and expenses at the
discretion of the Administrator and in accordance with Section 5 to
increase the amount allocated as Company Match Contributions and
ESOP Contributions as directed by the Administrator.
8.5 Rehired Employees
(a) Service. If a former Employee is rehired, all Periods of
Employment credited when his or her employment last terminated
shall be counted in determining his or her vested interest.
(b) Account Restoration. If a former Employee is rehired before he
or she has a Break in Service, the amount forfeited when his or
her employment last terminated shall be restored to his or her
Account. The restoration shall include the interest which would
have been credited had such forfeiture been invested in the
Sweep Account from the date forfeited until the date the
restoration amount is restored. The amount shall come from the
Forfeiture Account to the extent possible, and any additional
amount needed shall be contributed by the Employer. The vested
interest in his or her restored Account shall then be equal to:
V% times (AB plus D) minus D
where:
V% = current vested percentage
AB = current account balance
D = amount previously distributed
22
9 PARTICIPANT LOANS
-----------------
9.1 Participant Loans Permitted
Loans to Participants are permitted pursuant to the terms and
conditions set forth in this Section.
9.2 Loan Application, Note and Security
A Participant shall apply for any loan in such manner and with such
advance notice as prescribed by the Administrator. All loans shall
be evidenced by a promissory note, secured only by the portion of
the Participant's Account from which the loan is made, and the Plan
shall have a lien on this portion of his or her Account.
9.3 Spousal Consent
A Participant is not required to obtain Spousal Consent in order to
take out a loan under the Plan.
9.4 Loan Approval
The Administrator, or the Trustee, if otherwise authorized by the
Administrator and agreed to by the Trustee, is responsible for
determining that a loan request conforms to the requirements
described in this Section and granting such request.
9.5 Loan Funding Limits, Account Sources and Funding Order
The loan amount must meet all of the following limits as determined
as of the Sweep Date the loan is processed and shall be funded from
the Participant's Accounts as follows:
(a) Plan Minimum Limit. The minimum amount for any loan is $1,000.
(b) Plan Maximum Limit, Account Sources and Funding Order. Subject
to the legal limit described in (c) below, the maximum a
Participant may borrow, including the outstanding balance of
existing Plan loans, is 100% of the following of the
Participant's Accounts which are fully vested in the priority
order as follows:
Employee Account
Rollover Account
(c) Legal Maximum Limit. The maximum a Participant may borrow,
including the outstanding balance of existing Plan loans, is
50% of his or her vested Account balance, not to exceed
$50,000. However, the
23
$50,000 maximum is reduced by the Participant's highest
outstanding loan balance during the 12 month period ending on
the day before the Sweep Date as of which the loan is made. For
purposes of this paragraph, the qualified plans of all Related
Companies shall be treated as though they are part of this Plan
to the extent it would decrease the maximum loan amount.
9.6 Maximum Number of Loans
A Participant may have a maximum of two loans outstanding at any
given time.
9.7 Source and Timing of Loan Funding
A loan to a Participant shall be made solely from the assets of his
or her own Account. The available assets shall be determined first
by Account type and then within each Account used for funding a
loan, amounts shall first be taken from the Sweep Account and then
taken by Investment Fund in direct proportion to the market value of
the Participant's interest in each Investment Fund as of the Trade
Date on which the loan is processed.
The loan shall be funded on the Settlement Date following the Trade
Date as of which the loan is processed. The Trustee shall make
payment to the Participant as soon thereafter as administratively
feasible.
9.8 Interest Rate
The interest rate charged on Participant loans shall be a fixed
reasonable rate of interest, determined from time to time by the
Administrator, which provides the Plan with a return commensurate
with the prevailing interest rate charged by persons in the business
of lending money for loans which would be made under similar
circumstances. As of the Effective Date, the interest rate is
determined as set forth in Appendix C, and may be changed from time
to time by the Administrator, in writing, without the necessity of
amending this Plan and Trust.
9.9 Loan Payment
Substantially level amortization shall be required of each loan with
payments made at least monthly, generally through payroll deduction.
Loans may be prepaid in full or in part at any time. The
Participant may choose the loan repayment period, not to exceed 5
years, except that the repayment period may be for any period not to
exceed 10 years if the purpose of the loan is to acquire the
Participant's principal residence.
24
9.10 Loan Payment Hierarchy
Loan principal payments shall be credited to the Participant's
Accounts in the inverse of the order used to fund the loan. Loan
interest shall be credited to the Participant's Accounts in direct
proportion to the principal payment. Loan payments are credited to
the Investment Funds based upon the Participant's current investment
election for new Contributions.
9.11 Repayment Suspension
The Administrator may agree to a suspension of loan payments for up
to four months for a Participant who is on a Leave of Absence
without pay. During the suspension period interest shall continue
to accrue on the outstanding loan balance. At the expiration of the
suspension period all outstanding loan payments and accrued interest
thereon shall be due unless otherwise agreed upon by the
Administrator.
9.12 Loan Default
A loan is treated as a default if scheduled loan payments are more
than 90 days late. A Participant shall then have 30 days from the
time he or she receives written notice of the default and a demand
for past due amounts to cure the default before it becomes final.
In the event of default, the Administrator may direct the Trustee to
report the outstanding principal balance of the loan and accrued
interest thereon as a taxable distribution. As soon as a Plan
withdrawal or distribution to such Participant would otherwise be
permitted, the Administrator may instruct the Trustee to execute
upon its security interest in the Participant's Account by
distributing the note to the Participant.
9.13 Call Feature
The Administrator shall have the right to call any Participant loan
once a Participant's employment with all Related Companies has
terminated or if the Plan is terminated.
25
10 IN-SERVICE WITHDRAWALS
----------------------
10.1 In-Service Withdrawals Permitted
In-service withdrawals to a Participant who is an Employee are
permitted pursuant to the terms and conditions set forth in this
Section and as required by law as set forth in Section 11.
10.2 In-Service Withdrawal Application and Notice
A Participant shall apply for any in-service withdrawal in such
manner and with such advance notice as prescribed by the
Administrator. The Participant shall be provided the notice
prescribed by Code section 402(f).
If an in-service withdrawal is one to which Code sections 401(a)(11)
and 417 do not apply, such in-service withdrawal may commence less
than 30 days after the aforementioned notice is provided, if:
(a) the Participant is clearly informed that he or she has the
right to a period of at least 30 days after receipt of such
notice to consider his or her option to elect or not elect a
Direct Rollover for all or a portion, if any, of his or her in-
service withdrawal which shall constitute an Eligible Rollover
Distribution; and
(b) the Participant after receiving such notice, affirmatively
elects a Direct Rollover for all or a portion, if any, of his
or her in-service withdrawal which shall constitute an Eligible
Rollover Distribution or alternatively elects to have all or a
portion made payable directly to him or her, thereby not
electing a Direct Rollover for all or a portion thereof.
10.3 Spousal Consent
A Participant is not required to obtain Spousal Consent in order to
make an in-service withdrawal under the Plan.
10.4 In-Service Withdrawal Approval
The Administrator, or the Trustee, if otherwise authorized by the
Administrator and agreed to by the Trustee, is responsible for
determining that an in-service withdrawal request conforms to the
requirements described in this Section and granting such request.
10.5 Minimum Amount, Payment Form and Medium
The minimum amount for any type of withdrawal is $1,000.
26
With regard to the portion of a withdrawal representing an Eligible
Rollover Distribution, a Participant may elect a Direct Rollover for
all or a portion of such amount. The form of payment for an in-
service withdrawal shall be a single lump sum and payment shall be
made in cash, except that regard to an Over Age 59 1/2 Withdrawal, a
Participant may elect to have the portion of his or her Over Age 59
1/2 Withdrawal attributable to amounts invested in the Company Stock
Fund be made in the form of whole shares of Company Stock and cash
in lieu of fractional shares.
10.6 Source and Timing of In-Service Withdrawal Funding
An in-service withdrawal to a Participant shall be made solely from
the assets of his or her own Account and shall be based on the
Account values as of the Trade Date the in-service withdrawal is
processed. The available assets shall be determined first by
Account type and then within each Account used for funding an in-
service withdrawal, amounts shall first be taken from the Sweep
Account and then taken by Investment Fund in direct proportion to
the market value of the Participant's interest in each Investment
Fund (which excludes his or her Loan Account balance) as of the
Trade Date on which the in-service withdrawal is processed.
The in-service withdrawal shall be funded on the Settlement Date
following the Trade Date as of which the in-service withdrawal is
processed. The Trustee shall make payment as soon thereafter as
administratively feasible.
10.7 Hardship Withdrawals
(a) Requirements. A Participant who is an Employee may request the
withdrawal of up to the amount necessary to satisfy a financial
need including amounts necessary to pay any federal, state or
local income taxes or penalties reasonably anticipated to
result from the withdrawal. Only requests for withdrawals (1)
on account of a Participant's "Deemed Financial Need", and (2)
which are "Deemed Necessary" to satisfy the financial need
shall be approved.
(b) "Deemed Financial Need". An immediate and heavy financial need
relating to:
(1) the payment of unreimbursable medical expenses described
under Code section 213(d) incurred (or to be incurred) by
the Employee, his or her spouse or dependents;
(2) the purchase (excluding mortgage payments) of the
Employee's principal residence;
27
(3) the payment of unreimbursable tuition, related educational
fees and room and board for up to the next 12 months of
post-secondary education for the Employee, his or her
spouse or dependents;
(4) the payment of amounts necessary for the Employee to
prevent losing his or her principal residence through
eviction or foreclosure on the mortgage; or
(5) any other circumstance specifically permitted under Code
section 401(k)(2)(B)(i)(IV).
(c) "Deemed Necessary". A withdrawal is "deemed necessary" to
satisfy the financial need only if the withdrawal amount does
not exceed the financial need and all of these conditions are
met:
(1) the Employee has obtained all possible withdrawals (other
than hardship withdrawals) and nontaxable loans available
from this Plan and all other plans maintained by Related
Companies;
(2) the Administrator shall suspend the Employee from making
any contributions to this Plan and all other qualified and
nonqualified plans of deferred compensation and all stock
option or stock purchase plans maintained by Related
Companies for 12 months from the date the withdrawal
payment is made; and
(3) the Administrator shall reduce the Contribution Dollar
Limit for the Employee with regard to this Plan and all
other plans maintained by Related Companies, for the
calendar year next following the calendar year of the
withdrawal by the amount of the Employee's Employee
Contributions for the calendar year of the withdrawal.
(d) Account Sources and Funding Order. The withdrawal amount shall
come from the following of the Participant's fully vested
Accounts, in the priority order as follows:
Rollover Account
Employee Account
The amount that may be withdrawn from a Participant's Employee
Account shall not include any earnings credited to his or her
Employee Account after the start of the first Plan Year
beginning after December 31, 1988.
(e) Suspension from Further Contributions. Upon making a Hardship
withdrawal, a Participant may not make additional Employee
28
Contributions (or additional contributions to all other
qualified and nonqualified plans of deferred compensation and
all stock option or stock purchase plans maintained by Related
Companies) for a period of 12 months from the date the
withdrawal payment is made.
(f) Permitted Frequency. There is no restriction on the number of
Hardship withdrawals permitted to a Participant.
10.8 Over Age 59 1/2 Withdrawals
(a) Requirements. A Participant who is an Employee and over age
59 1/2 may withdraw from the Accounts listed in paragraph (b)
below.
(b) Account Sources and Funding Order. The withdrawal amount shall
come from the following of the Participant's fully vested
Accounts, in the priority order as follows:
Rollover Account
Employee Account
Prior ESOP Rollover Account
ESOP Account
(c) Permitted Frequency. The maximum number of Over Age 59 1/2
withdrawals permitted to a Participant in any 12-month period
is one.
(d) Suspension from Further Contributions. An Over Age 59 1/2
withdrawal shall not affect a Participant's ability to make or
be eligible to receive further Contributions.
29
11 DISTRIBUTIONS ONCE EMPLOYMENT ENDS OR AS REQUIRED BY LAW
---------------------------------------------------------
11.1 Benefit Information, Notices and Election
A Participant, or his or her Beneficiary in the case of his or her
death, shall be provided with information regarding all optional
times and forms of distribution available, to include the notices
prescribed by Code section 402(f) and Code section 411(a)(11).
Subject to the other requirements of this Section, a Participant, or
his or her Beneficiary in the case of his or her death, may elect,
in such manner and with such advance notice as prescribed by the
Administrator, to have his or her vested Account balance paid to him
or her beginning upon any Settlement Date following the
Participant's termination of employment with all Related Companies
or, if earlier, at the time required by law as set forth in Section
11.7.
If a distribution is one to which Code sections 401(a)(11) and 417
do not apply, such distribution may commence less than 30 days after
the aforementioned notices are provided, if:
(a) the Participant is clearly informed that he or she has the
right to a period of at least 30 days after receipt of such
notices to consider the decision as to whether to elect a
distribution and if so to elect a particular form of
distribution and to elect or not elect a Direct Rollover for
all or a portion, if any, of his or her distribution which
shall constitute an Eligible Rollover Distribution; and
(b) the Participant after receiving such notices, affirmatively
elects a distribution and a Direct Rollover for all or a
portion, if any, of his or her distribution which shall
constitute an Eligible Rollover Distribution or alternatively
elects to have all or a portion made payable directly to him or
her, thereby not electing a Direct Rollover for all or a
portion thereof.
11.2 Spousal Consent
A Participant is not required to obtain Spousal Consent in order to
receive a distribution under the Plan, except for a Participant who
is eligible for an annuity form of payment as described in Section
11.3 and who elects an annuity form of payment.
11.3 Payment Form and Medium
Except to the extent otherwise provided by Section 11.4, a
Participant may elect to be paid in any of these forms:
(a) a single lump sum, or
(b) a portion paid in a lump sum, and the remainder paid later, or
30
(c) periodic installments over a period not to exceed the life
expectancy of the Participant and his or her Beneficiary, or
(d) a single life annuity or a joint and 50%or 100% survivor
annuity.
Any annuity option permitted shall be provided through the purchase
of a non-transferable single premium contract from an insurance
company which must conform to the terms of the Plan and which shall
be distributed to the Participant or Beneficiary in complete
satisfaction of the benefit due.
Except to the extent a distribution consists of a loan call as
described in Section 9, distributions (other than annuity contracts)
shall be made in cash, or if a Participant so elects, in the form of
whole shares of Company Stock and cash in lieu of fractional shares
to the extent invested in the Company Stock Fund. With regard to
the portion of a distribution representing an Eligible Rollover
Distribution, a Distributee may elect a Direct Rollover for all or a
portion of such amount.
11.4 Distribution of Small Amounts
If, after a Participant's employment with all Related Companies
ends, the Participant's vested Account balance is $3,500 or less,
and if at the time of any prior withdrawal or distribution the
Participant's vested Account balance did not exceed $3,500, the
Participant's benefit shall be paid as a single lump sum as soon as
administratively feasible in accordance with procedures prescribed
by the Administrator.
11.5 Source and Timing of Distribution Funding
A distribution to a Participant shall be made solely from the assets
of his or her own Accounts and shall be based on the Account values
as of the Trade Date the distribution is processed. The available
assets shall be determined first by Account type and then within
each Account used for funding a distribution, amounts shall first be
taken from the Sweep Account and then taken by Investment Fund in
direct proportion to the market value of the Participant's interest
in each Investment Fund as of the Trade Date on which the
distribution is processed.
The distribution shall be funded on the Settlement Date following
the Trade Date as of which the distribution is processed. The
Trustee shall make payment as soon thereafter as administratively
feasible.
11.6 Deemed Distribution
For purposes of Section 8.4, if at the time a Participant's
employment with all Related Companies has terminated, the
Participant's vested Account balance attributable to Accounts
subject to vesting as described in Section 8, is zero,
31
his or her vested Account balance shall be deemed distributed as of
the Settlement Date following the Sweep Date on which the
Administrator has reported to the Trustee that the Participant's
employment with all Related Companies has terminated.
11.7 Latest Commencement Permitted
In addition to any other Plan requirements and unless a Participant
elects otherwise, his or her benefit payments shall begin not later
than 60 days after the end of the Plan Year in which he or she
attains his or her Normal Retirement Date or retires, whichever is
later. However, if the amount of the payment or the location of the
Participant (after a reasonable search) cannot be ascertained by
that deadline, payment shall be made no later than 60 days after the
earliest date on which such amount or location is ascertained but in
no event later than as described below. A Participant's failure to
elect in such manner as prescribed by the Administrator to have his
or her vested Account balance paid to him or her, shall be deemed an
election by the Participant to defer his or her distribution.
Benefit payments shall begin by the April 1 immediately following
the end of the calendar year in which the Participant attains age 70
1/2, whether or not he or she is an Employee.
If benefit payments cannot begin at the time required because the
location of the Participant cannot be ascertained (after a
reasonable search), the Administrator may, at any time thereafter,
treat such person's Account as forfeited subject to the provisions
of Section 18.5.
11.8 Payment Within Life Expectancy
The Participant's payment election must be consistent with the
requirement of Code section 401(a)(9) that all payments are to be
completed within a period not to exceed the lives or the joint and
last survivor life expectancy of the Participant and his or her
Beneficiary. The life expectancies of a Participant and his or her
Beneficiary, if such Beneficiary is his or her spouse, may be
recomputed annually.
11.9 Incidental Benefit Rule
The Participant's payment election must be consistent with the
requirement that, if the Participant's spouse is not his or her sole
primary Beneficiary, the minimum annual distribution for each
calendar year, beginning with the year in which he or she attains
age 70 1/2, shall not be less than the quotient obtained by dividing
(a) the Participant's vested Account balance as of the last Trade
Date of the preceding year by (b) the applicable divisor as
determined under the incidental benefit requirements of Code section
401(a)(9).
32
11.10 Payment to Beneficiary
Payment to a Beneficiary must either: (1) be completed by the end of
the calendar year that contains the fifth anniversary of the
Participant's death or (2) begin by the end of the calendar year
that contains the first anniversary of the Participant's death and
be completed within the period of the Beneficiary's life or life
expectancy, except that:
(a) If the Participant dies after the April 1 immediately following
the end of the calendar year in which he or she attains age 70
1/2, payment to his or her Beneficiary must be made at least as
rapidly as provided in the Participant's distribution election;
(b) If the surviving spouse is the Beneficiary, payments need not
begin until the end of the calendar year in which the
Participant would have attained age 70 1/2 and must be
completed within the spouse's life or life expectancy; and
(c) If the Participant and the surviving spouse who is the
Beneficiary die (1) before the April 1 immediately following
the end of the calendar year in which the Participant would
have attained age 70 1/2 and (2) before payments have begun to
the spouse, the spouse shall be treated as the Participant in
applying these rules.
11.11 Beneficiary Designation
Each Participant may complete a beneficiary designation form
indicating the Beneficiary who is to receive the Participant's
remaining Plan interest at the time of his or her death. The
designation may be changed at any time. However, a Participant's
spouse shall be the sole primary Beneficiary unless the designation
includes Spousal Consent for another Beneficiary. If no proper
designation is in effect at the time of a Participant's death or if
the Beneficiary does not survive the Participant, the Beneficiary
shall be, in the order listed, the:
(a) Participant's surviving spouse,
(b) Participant's children, in equal shares, (or if a child does
not survive the Participant, and that child leaves issue, the
issue shall be entitled to that child's share, by right of
representation) or
(c) Participant's estate.
11.12 QJSA and QPSA Annuity Information and Elections
The following definitions, information and election rules shall
apply to any Participant who is eligible for an annuity form of
payment and who elects an annuity form of payment:
33
(a) Annuity Starting Date. The first day of the first period for
which an amount is payable as an annuity, or, in the case of a
benefit not payable in the form of an annuity, the first day on
which all events have occurred which entitle the Participant to
such benefit.
(b) "QJSA". A qualified joint and survivor annuity, meaning for a
married Participant, a form of benefit payment which is the
actuarial equivalent of the Participant's vested Account
balance at the Annuity Starting Date, payable to the
Participant in monthly payments for life and providing that, if
the Participant's spouse survives him or her, monthly payments
equal to 50% of the amount payable to the Participant during
his or her lifetime shall be paid to the spouse for the
remainder of such person's lifetime and for a single
Participant, a form of benefit payment which is the actuarial
equivalent of the Participant's vested Account balance at the
Annuity Starting Date, payable to the Participant in monthly
payments for life.
(c) "QPSA". A qualified pre-retirement survivor annuity, meaning
that upon the death of a Participant before the Annuity
Starting Date, the vested portion of the Participant's Account
becomes payable to the surviving spouse as a life annuity,
except to the extent of any Loan Account balance, unless
Spousal Consent has been given to a different Beneficiary or
the surviving spouse chooses a different form of payment.
(d) QJSA Information to a Participant. No less than 30 and no more
than 90 days before the Annuity Starting Date, each Participant
shall be given a written explanation of (1) the terms and
conditions of the QJSA, (2) the right to make an election to
waive this form of payment and choose an optional form of
payment and the effect of this election, (3) the right to
revoke this election and the effect of this revocation, and (4)
the need for Spousal Consent.
(e) QJSA Election. A Participant may elect, and such election shall
include Spousal Consent if married, at any time within the 90
day period ending on the Annuity Starting Date, to (1) waive
the right to receive the QJSA and elect an optional form of
payment, or (2) revoke or change any such election.
(f) QPSA Beneficiary Information to Participant. Upon becoming a
Participant, and with updates as needed to insure such
information is accurate and readily available to each
Participant who is between the ages of 32 and 35, each married
Participant shall be given written information stating that (1)
his or her death benefit is payable to his or her surviving
spouse, (2) he or she may choose that the benefit be paid to a
different Beneficiary, (3) he or she has the right to revoke or
change a prior designation and the effects of such revocation
or change, and (4) the need for Spousal Consent.
34
(g) QPSA Beneficiary Designation by Participant. A married
Participant may designate, with Spousal Consent, a non-spouse
Beneficiary at any time after the Participant has been given
the information in the QPSA Beneficiary Information to
Participant paragraph above and upon the earlier of (1) the
date the Participant has terminated employment, or (2) the
beginning of the Plan Year in which the Participant attains age
35.
(h) QPSA Information to a Surviving Spouse. Each surviving spouse
shall be given a written explanation of (1) the terms and
conditions of being paid his or her Account balance in the form
of a single life annuity, (2) the right to make an election to
waive this form of payment and choose an optional form of
payment and the effect of this election, and (3) the right to
revoke this election and the effect of this revocation.
(i) QPSA Election by Surviving Spouse. A surviving spouse may
elect, at any time up to the Annuity Starting Date, to (1)
waive the right to receive a single life annuity and elect an
optional form of payment, or (2) revoke or change any such
election.
35
12 ADP AND ACP TESTS
-----------------
12.1 Contribution Limitation Definitions
The following definitions are applicable to this Section 12 (where a
definition is contained in both Sections 1 and 12, for purposes of
Section 12 the Section 12 definition shall be controlling):
(a) "ACP" or "Average Contribution Percentage". The Average
Percentage calculated using Contributions allocated to
Participants as of a date within the Plan Year.
(b) "ACP Test". The determination of whether the ACP is in
compliance with the Basic or Alternative Limitation for a Plan
Year (as defined in Section 12.2).
(c) "ADP" or "Average Deferral Percentage". The Average Percentage
calculated using Deferrals allocated to Participants as of a
date within the Plan Year.
(d) "ADP Test". The determination of whether the ADP is in
compliance with the Basic or Alternative Limitation for a Plan
Year (as defined in Section 12.2).
(e) "Average Percentage". The average of the calculated percentages
for Participants within the specified group. The calculated
percentage refers to either the "Deferrals" or "Contributions"
(as defined in this Section) made on each Participant's behalf
for the Plan Year, divided by his or her Compensation for the
portion of the Plan Year in which he or she was an Eligible
Employee while a Participant. (Employee Contributions to this
Plan or comparable contributions to plans of Related Companies
which shall be refunded solely because they exceed the
Contribution Dollar Limit are included in the percentage for
the HCE Group but not for the NHCE Group.)
(f) "Contributions" shall include Company Match Contributions. In
addition, Contributions may include Employee Contributions, but
only to the extent that (1) the Employer elects to use them,
(2) they are not used or counted in the ADP Test and (3) they
otherwise satisfy the requirements as prescribed under Code
section 401(m) permitting treatment as Contributions for
purposes of the ACP Test.
(g) "Deferrals" shall include Employee Contributions.
(h) "Family Member". An Employee who is, at any time during the
Plan Year or Lookback Year, a spouse, lineal ascendant or
descendant, or spouse of a lineal ascendant or descendant of
(1) an active or former
36
Employee who at any time during the Plan Year or Lookback Year
is a more than 5% Owner (within the meaning of Code section
414(q)(3)), or (2) an HCE who is among the 10 Employees with
the highest Compensation for such Year.
(i) "HCE" or "Highly Compensated Employee". With respect to each
Employer and its Related Companies, an Employee during the Plan
Year or Lookback Year who (in accordance with Code section
414(q)):
(1) Was a more than 5% Owner at any time during the Lookback
Year or Plan Year;
(2) Received Compensation during the Lookback Year (or in the
Plan Year if among the 100 Employees with the highest
Compensation for such Year) in excess of (i) $75,000 (as
adjusted for such Year pursuant to Code sections 414(q)(1)
and 415(d)), or (ii) $50,000 (as adjusted for such Year
pursuant to Code sections 414(q)(1) and 415(d)) in the
case of a member of the "top-paid group" (within the
meaning of Code section 414(q)(4)) for such Year),
provided, however, that if the conditions of Code section
414(q)(12)(B)(ii) are met, the Company may elect for any
Plan Year to apply clause (i) by substituting $50,000 for
$75,000 and not to apply clause (ii);
(3) Was an officer of a Related Company and received
Compensation during the Lookback Year (or in the Plan Year
if among the 100 Employees with the highest Compensation
for such Year) that is greater than 50% of the dollar
limitation in effect under Code section 415(b)(1)(A) and
(d) for such Year (or if no officer has Compensation in
excess of the threshold, the officer with the highest
Compensation), provided that the number of officers shall
be limited to 50 Employees (or, if less, the greater of
three Employees or 10% of the Employees); or
(4) Was a Family Member at any time during the Lookback Year
or Plan Year, in which case the Contributions and
Compensation of the HCE and his or her Family Members
shall be aggregated and they shall be treated as a single
HCE.
A former Employee shall be treated as an HCE if (1) such former
Employee was an HCE when he separated from service, or (2) such
former Employee was an HCE in service at any time after
attaining age 55.
The determination of who is an HCE, including the
determinations of the number and identity of Employees in the
top-paid group, the top 100 Employees and the number of
Employees treated as officers shall be made in accordance with
Code section 414(q).
37
(j) "HCE Group" and "NHCE Group". With respect to each Employer and
its Related Companies, the respective group of HCEs and NHCEs
who are eligible to have amounts contributed on their behalf
for the Plan Year, including Employees who would be eligible
but for their election not to participate or to contribute, or
because their Pay is greater than zero but does not exceed a
stated minimum.
(1) If the Related Companies maintain two or more plans which
are subject to the ADP or ACP Test and are considered as
one plan for purposes of Code sections 401(a)(4) or
410(b), all such plans shall be aggregated and treated as
one plan for purposes of meeting the ADP and ACP Tests,
provided that the plans may only be aggregated if they
have the same Plan Year.
(2) If an HCE, who is one of the top 10 paid Employees or a
more than 5% Owner, has any Family Members, the Deferrals,
Contributions and Compensation of such HCE and his or her
Family Members shall be combined and treated as a single
HCE. Such amounts for all other Family Members shall be
removed from the NHCE Group percentage calculation and be
combined with the HCE's.
(3) If an HCE is covered by more than one cash or deferred
arrangement, or more than one arrangement permitting
employee and matching contributions, maintained by the
Related Companies, all such plans shall be aggregated and
treated as one plan for purposes of calculating the
separate percentage for the HCE which is used in the
determination of the Average Percentage.
(k) "Lookback Year". Pursuant to Code section 414(q), the Company
elects as the Lookback Year the 12 months ending immediately
prior to the start of the Plan Year.
(l) "Multiple Use Test". The test described in Section 12.4 which a
Plan must meet where the Alternative Limitation (described in
Section 12.2(b)) is used to meet both the ADP and ACP Tests.
(m) "NHCE" or "Non-Highly Compensated Employee". An Employee who is
not an HCE.
12.2 ADP and ACP Tests
For each Plan Year, the ADP and ACP for the HCE Group must meet
either the Basic or Alternative Limitation when compared to the
respective ADP and ACP for the NHCE Group, defined as follows:
38
(a) Basic Limitation. The HCE Group Average Percentage may not
exceed 1.25 times the NHCE Group Average Percentage.
(b) Alternative Limitation. The HCE Group Average Percentage is
limited by reference to the NHCE Group Average Percentage as
follows:
IF THE NHCE GROUP THEN THE MAXIMUM HCE
AVERAGE PERCENTAGE IS: GROUP AVERAGE PERCENTAGE IS:
---------------------- -----------------------------
Less than 2% 2 times NHCE Group Average %
2% to 8% NHCE Group Average % plus 2%
More than 8% NA - Basic Limitation applies
12.3 Correction of ADP and ACP Tests
If the ADP or ACP Tests are not met, the Administrator shall
determine, no later than the end of the next Plan Year, a maximum
percentage to be used in place of the calculated percentage for all
HCEs that would reduce the ADP and/or ACP for the HCE group by a
sufficient amount to meet the ADP and ACP Tests. ADP and/or ACP
corrections shall be made in accordance with the leveling method as
described below.
(a) ADP Correction. The HCE with the highest Deferral percentage
shall have his or her Deferral percentage reduced to the lesser
of the extent required to meet the ADP Test or to cause his or
her Deferral percentage to equal that of the HCE with the next
highest Deferral percentage. The process shall be repeated
until the ADP Test is met.
To the extent an HCE's Deferrals were determined to be reduced
as described in the paragraph above, Employee Contributions
shall, by the end of the next Plan Year, be refunded to the HCE
in an amount equal to the actual Deferrals minus the product of
the maximum percentage and the HCE's Compensation, except that
such amount to be refunded shall be reduced by Employee
Contributions previously refunded because they exceeded the
Contribution Dollar Limit. Excess amounts shall first be taken
from unmatched Employee Contributions and then from matched
Employee Contributions. Any Company Match Contributions
attributable to refunded excess Employee Contributions as
described in this Section shall be forfeited and used as
described in Section 8.4.
(b) ACP Correction. The HCE with the highest Contribution
percentage shall have his or her Contribution percentage
reduced to the lesser of the extent required to meet the ACP
Test or to cause his or her Contribution percentage to equal
that of the HCE with the next highest Contribution percentage.
The process shall be repeated until the ACP Test is met.
39
To the extent an HCE's Contributions were determined to be
reduced as described in the paragraph above, Company Match
Contributions shall, by the end of the next Plan Year, be
refunded to the HCE to the extent vested, and forfeited to the
extent such amounts were not vested, as of the end of the Plan
Year being tested, in an amount equal to the actual
Contributions minus the product of the maximum percentage and
the HCE's Compensation.
(c) Investment Fund Sources. Once the amount of excess Deferrals
and/or Contributions is determined amounts shall first be taken
from the Sweep Account and then taken by Investment Fund in
direct proportion to the market value of the Participant's
interest in each Investment Fund (which excludes his or her
Loan Account balance) as of the Trade Date on which the
correction is processed.
(d) Family Member Correction. To the extent any reduction is
necessary with respect to an HCE and his or her Family Members
that have been combined and treated for testing purposes as a
single Employee, the excess Deferrals and Contributions from
the ADP and/or ACP Test shall be prorated among each such
Participant in direct proportion to his or her Deferrals or
Contributions included in each Test.
12.4 Multiple Use Test
If the Alternative Limitation (defined in Section 12.2) is used to
meet both the ADP and ACP Tests, the ADP and ACP for the HCE Group
must also comply with the requirements of Code section 401(m)(9).
Such Code section requires that the sum of the ADP and ACP for the
HCE Group (as determined after any corrections needed to meet the
ADP and ACP Tests have been made) not exceed the sum (which produces
the most favorable result) of:
(a) the Basic Limitation (defined in Section 12.2) applied to
either the ADP or ACP for the NHCE Group, and
(b) the Alternative Limitation applied to the other NHCE Group
percentage.
12.5 Correction of Multiple Use Test
If the multiple use limit is exceeded, the Administrator shall
determine a maximum percentage to be used in place of the calculated
percentage for all HCEs that would reduce either or both the ADP or
ACP for the HCE Group by a sufficient amount to meet the multiple
use limit. Any excess shall be handled in the same manner that the
distribution of excess Deferrals or Contributions are handled.
40
12.6 Adjustment for Investment Gain or Loss
Any excess Deferrals or Contributions to be refunded to a
Participant or forfeited in accordance with Section 12.3 or 12.5
shall be adjusted for investment gain or loss. Refunds or
forfeitures shall not include investment gain or loss for the period
between the end of the applicable Plan Year and the date of
distribution.
12.7 Testing Responsibilities and Required Records
The Administrator shall be responsible for ensuring that the Plan
meets the ADP Test, the ACP Test and the Multiple Use Test, and that
the Contribution Dollar Limit is not exceeded. In carrying out its
responsibilities, the Administrator shall have sole discretion to
limit or reduce Deferrals or Contributions at any time. The
Administrator shall maintain records which are sufficient to
demonstrate that the ADP Test, the ACP Test and the Multiple Use
Test, have been met for each Plan Year for at least as long as the
Employer's corresponding tax year is open to audit.
12.8 Separate Testing
(a) Multiple Employers: The determination of HCEs, NHCEs, and the
performance of the ADP Test, the ACP Test and Multiple Use
Test, and any corrective action resulting therefrom, shall be
made separately with regard to the Employees of each Employer
(and its Related Companies) that is not a Related Company with
the other Employer(s).
(b) Collective Bargaining Units: The performance of the ADP Test,
and if applicable, the ACP Test and Multiple Use Test, and any
corrective action resulting therefrom, shall be applied
separately to Employees who are eligible to participate in the
Plan as a result of a collective bargaining agreement.
In addition, separate testing may be applied, at the discretion of
the Administrator and to the extent permitted under Treasury
regulations, to any group of Employees for whom separate testing is
permissible.
41
13 MAXIMUM CONTRIBUTION AND BENEFIT LIMITATIONS
--------------------------------------------
13.1 "Annual Addition" Defined
The sum of all amounts allocated to the Participant's Account for a
Plan Year. Amounts include contributions (except for rollovers or
transfers from another qualified plan), forfeitures and, if the
Participant is a Key Employee (pursuant to Section 14) for the
applicable or any prior Plan Year, medical benefits provided
pursuant to Code section 419A(d)(1). For purposes of this Section
13.1, "Account" also includes a Participant's account in all other
defined contribution plans currently or previously maintained by any
Related Company. The Plan Year refers to the year to which the
allocation pertains, regardless of when it was allocated. The Plan
Year shall be the Code section 415 limitation year.
13.2 Maximum Annual Addition
The Annual Addition to a Participant's accounts under this Plan and
any other defined contribution plan maintained by any Related
Company for any Plan Year shall not exceed the lesser of (1) 25% of
his or her Taxable Income or (2) $30,000 (as adjusted for the cost
of living pursuant to Code section 415(d)).
13.3 Avoiding an Excess Annual Addition
If, at any time during a Plan Year, the allocation of any additional
Contributions would produce an excess Annual Addition for such year,
Contributions to be made for the remainder of the Plan Year shall be
limited to the amount needed for each affected Participant to
receive the maximum Annual Addition.
13.4 Correcting an Excess Annual Addition
Upon the discovery of an excess Annual Addition to a Participant's
Account (resulting from forfeitures, allocations, reasonable error
in determining Participant compensation or the amount of elective
contributions, or other facts and circumstances acceptable to the
Internal Revenue Service) the excess amount (adjusted to reflect
investment gains) shall first be returned to the Participant to the
extent of his or her Employee Contributions (however to the extent
Employee Contributions were matched, the applicable Company Match
Contributions shall be forfeited in proportion to the returned
matched Employee Contributions) and the remaining excess, if any,
shall be forfeited by the Participant first from Company Match
Contributions and then from ESOP Contributions and together with
forfeited Company Match Contributions attributable to returned
Employee Contributions used as described in Section 8.4.
42
13.5 Correcting a Multiple Plan Excess
If a Participant, whose Account is credited with an excess Annual
Addition, received allocations to more than one defined contribution
plan, the excess shall be corrected by reducing the Annual Addition
to this Plan only after all possible reductions have been made to
the other defined contribution plans.
13.6 "Defined Benefit Fraction" Defined
The fraction, for any Plan Year, where the numerator is the
"projected annual benefit" and the denominator is the greater of
125% of the "protected current accrued benefit" or the normal limit
which is the lesser of (1) 125% of the maximum dollar limitation
provided under Code section 415(b)(1)(A) for the Plan Year or (2)
140% of the amount which may be taken into account under Code
section 415(b)(1)(B) for the Plan Year, where a Participant's:
(a) "projected annual benefit" is the annual benefit provided by
the Plan determined pursuant to Code section 415(e)(2)(A), and
(b) "protected current accrued benefit" in a defined benefit plan
in existence (1) on July 1, 1982, shall be the accrued annual
benefit provided for under Public Law 97-248, section
235(g)(4), as amended, or (2) on May 6, 1986, shall be the
accrued annual benefit provided for under Public Law 99-514,
section 1106(i)(3).
13.7 "Defined Contribution Fraction" Defined
The fraction where the numerator is the sum of the Participant's
Annual Addition for each Plan Year to date and the denominator is
the sum of the "annual amounts" for each year in which the
Participant has performed service with a Related Company. The
"annual amount" for any Plan Year is the lesser of (1) 125% of the
Code section 415(c)(1)(A) dollar limitation (determined without
regard to subsection (c)(6)) in effect for the Plan Year and (2)
140% of the Code section 415(c)(1)(B) amount in effect for the Plan
Year, where:
(a) each Annual Addition is determined pursuant to the Code section
415(c) rules in effect for such Plan Year, and
(b) the numerator is adjusted pursuant to Public Law 97-248,
section 235(g)(3), as amended, or Public Law 99-514, section
1106(i)(4).
13.8 Combined Plan Limits and Correction
If a Participant has also participated in a defined benefit plan
maintained by a Related Company, the sum of the Defined Benefit
Fraction and the Defined Contribution Fraction for any Plan Year may
not exceed 1.0. If the combined fraction exceeds 1.0 for any Plan
Year, the Participant's benefit under any defined benefit plan (to
the extent it has not been distributed or used to purchase an
annuity contract) shall be limited so that the combined fraction
does not exceed 1.0 before any defined contribution limits shall be
enforced.
43
14 TOP HEAVY RULES
---------------
14.1 Top Heavy Definitions
When capitalized, the following words and phrases have the following
meanings when used in this Section:
(a) "Aggregation Group". The group consisting of each qualified
plan of an Employer (and its Related Companies) (1) in which a
Key Employee is a participant or was a participant during the
determination period (regardless of whether such plan has
terminated), or (2) which enables another plan in the group to
meet the requirements of Code sections 401(a)(4) or 410(b). The
Employer may also treat any other qualified plan as part of the
group if the group would continue to meet the requirements of
Code sections 401(a)(4) and 410(b) with such plan being taken
into account.
(b) "Determination Date". The last Trade Date of the preceding Plan
Year or, in the case of the Plan's first year, the last Trade
Date of the first Plan Year.
(c) "Key Employee". A current or former Employee (or his or her
Beneficiary) who at any time during the five year period ending
on the Determination Date was:
(1) an officer of a Related Company whose Compensation (i)
exceeds 50% of the amount in effect under Code section
415(b)(1)(A) and (ii) places him within the following
highest paid group of officers:
NUMBER OF EMPLOYEES NUMBER OF
NOT EXCLUDED UNDER CODE HIGHEST PAID
SECTION 414(Q)(8) OFFICERS INCLUDED
----------------------- -----------------
Less than 30 3
30 to 500 10% of the number of
Employees not excluded
under Code section
414(q)(8)
More than 500 50
(2) a more than 5% Owner,
(3) a more than 1% Owner whose Compensation exceeds $150,000,
or
44
(4) a more than 0.5% Owner who is among the 10 Employees
owning the largest interest in a Related Company and whose
Compensation exceeds the amount in effect under Code
section 415(c)(1)(A).
(d) "Plan Benefit". The sum as of the Determination Date of (1) an
Employee's Account, (2) the present value of his or her other
accrued benefits provided by all qualified plans within the
Aggregation Group, and (3) the aggregate distributions made
within the five year period ending on such date. Plan Benefits
shall exclude rollover contributions and plan to plan transfers
made after December 31, 1983 which are both employee initiated
and from a plan maintained by a non-related employer.
(e) "Top Heavy". The Plan's status when the Plan Benefits of Key
Employees account for more than 60% of the Plan Benefits of all
Employees who have performed services at any time during the
five year period ending on the Determination Date. The Plan
Benefits of Employees who were, but are no longer, Key
Employees (because they have not been an officer or Owner
during the five year period), are excluded in the
determination.
14.2 Special Contributions
(a) Minimum Contribution Requirement. For each Plan Year in which
the Plan is Top Heavy, the Employer shall not allow any
contributions (other than a Rollover Contribution) to be made
by or on behalf of any Key Employee unless the Employer makes a
contribution (other than contributions made by an Employer in
accordance with a Participant's salary deferral election or
contributions made by an Employer based upon the amount
contributed by a Participant) on behalf of all Participants who
were Eligible Employees as of the last day of the Plan Year in
an amount equal to at least 3% of each such Participant's
Taxable Income. The Administrator shall remove any such
contributions (including applicable investment gain or loss)
credited to a Key Employee's Account in violation of the
foregoing rule and return them to the Employer or Employee to
the extent permitted by the Limited Return of Contributions
paragraph of Section 18.
(b) Overriding Minimum Benefit. Notwithstanding, contributions
shall be permitted on behalf of Key Employees if the Employer
also maintains a defined benefit plan which automatically
provides a benefit which satisfies the Code section 416(c)(1)
minimum benefit requirements, including the adjustment provided
in Code section 416(h)(2)(A), if applicable. If this Plan is
part of an aggregation group in which a Key Employee is
receiving a benefit and no minimum is provided in any other
plan, a minimum contribution of at least 3% of Taxable Income
45
shall be provided to the Participants specified in the
preceding paragraph. In addition, the Employer may offset a
defined benefit minimum by contributions (other than
contributions made by an Employer in accordance with a
Participant's salary deferral election or contributions made by
an Employer based upon the amount contributed by a Participant)
made to this Plan.
14.3 Adjustment to Combined Limits for Different Plans
For each Plan Year in which the Plan is Top Heavy, 100% shall be
substituted for 125% in determining the Defined Benefit Fraction and
the Defined Contribution Fraction.
46
15 PLAN ADMINISTRATION
-------------------
15.1 Plan Delineates Authority and Responsibility
Plan fiduciaries include the Company, the Administrator, the
Committee and/or the Trustee, as applicable, whose specific duties
are delineated in this Plan and Trust. In addition, Plan
fiduciaries also include any other person to whom fiduciary duties
or responsibility is delegated with respect to the Plan. Any person
or group may serve in more than one fiduciary capacity with respect
to the Plan. To the extent permitted under ERISA section 405, no
fiduciary shall be liable for a breach by another fiduciary.
15.2 Fiduciary Standards
Each fiduciary shall:
(a) discharge his or her duties in accordance with this Plan and
Trust to the extent they are consistent with ERISA;
(b) use that degree of care, skill, prudence and diligence that a
prudent person acting in a like capacity and familiar with such
matters would use in the conduct of an enterprise of a like
character and with like aims;
(c) act with the exclusive purpose of providing benefits to
Participants and their Beneficiaries, and defraying reasonable
expenses of administering the Plan;
(d) diversify Plan investments, to the extent such fiduciary is
responsible for directing the investment of Plan assets, so as
to minimize the risk of large losses, unless under the
circumstances it is clearly prudent not to do so; and
(e) treat similarly situated Participants and Beneficiaries in a
uniform and nondiscriminatory manner.
15.3 Company is ERISA Plan Administrator
The Company is the plan administrator, within the meaning of ERISA
section 3(16), which is responsible for compliance with all
reporting and disclosure requirements, except those that are
explicitly the responsibility of the Trustee under applicable law.
The Administrator and/or Committee shall have any necessary
authority to carry out such functions through the actions of the
Administrator, duly appointed officers of the Company, and/or the
Committee.
47
15.4 Administrator Duties
The Administrator shall have the discretionary authority to construe
this Plan and Trust, other than the provisions which relate to the
Trustee, and to do all things necessary or convenient to effect the
intent and purposes thereof, whether or not such powers are
specifically set forth in this Plan and Trust. Actions taken in
good faith by the Administrator shall be conclusive and binding on
all interested parties, and shall be given the maximum possible
deference allowed by law. In addition to the duties listed
elsewhere in this Plan and Trust, the Administrator's authority
shall include, but not be limited to, the discretionary authority
to:
(a) determine who is eligible to participate, if a contribution
qualifies as a rollover contribution, the allocation of
Contributions, and the eligibility for loans, withdrawals and
distributions;
(b) provide each Participant with a summary plan description no
later than 90 days after he or she has become a Participant (or
such other period permitted under ERISA section 104(b)(1)), as
well as informing each Participant of any material modification
to the Plan in a timely manner;
(c) make a copy of the following documents available to
Participants during normal work hours: this Plan and Trust
(including subsequent amendments), all annual and interim
reports of the Trustee related to the entire Plan, the latest
annual report and the summary plan description;
(d) determine the fact of a Participant's death and of any
Beneficiary's right to receive the deceased Participant's
interest based upon such proof and evidence as it deems
necessary;
(e) establish and review at least annually a funding policy bearing
in mind both the short-run and long-run needs and goals of the
Plan. To the extent Participants may direct their own
investments, the funding policy shall focus on which Investment
Funds are available for Participants to use; and
(f) adjudicate claims pursuant to the claims procedure described in
Section 18.
15.5 Advisors May be Retained
The Administrator may retain such agents and advisors (including
attorneys, accountants, actuaries, consultants, record keepers,
investment counsel and administrative assistants) as it considers
necessary to assist it in the performance of its duties. The
Administrator shall also comply with the bonding requirements of
ERISA section 412.
48
15.6 Delegation of Administrator Duties
The Company, as Administrator of the Plan, has appointed a Committee
to administer the Plan on its behalf. The Company shall provide the
Trustee with the names and specimen signatures of any persons
authorized to serve as Committee members and act as or on its
behalf. Any Committee member appointed by the Company shall serve
at the pleasure of the Company, but may resign by written notice to
the Company. Committee members shall serve without compensation
from the Plan for such services. Except to the extent that the
Company otherwise provides, any delegation of duties to a Committee
shall carry with it the full discretionary authority of the
Administrator to complete such duties.
15.7 Committee Operating Rules
(a) Actions of Majority. Any act delegated by the Company to the
Committee may be done by a majority of its members. The
majority may be expressed by a vote at a meeting or in writing
without a meeting, and a majority action shall be equivalent to
an action of all Committee members.
(b) Meetings. The Committee shall hold meetings upon such notice,
place and times as it determines necessary to conduct its
functions properly.
(c) Reliance by Trustee. The Committee may authorize one or more of
its members to execute documents on its behalf and may
authorize one or more of its members or other individuals who
are not members to give written direction to the Trustee in the
performance of its duties. The Committee shall provide such
authorization in writing to the Trustee with the name and
specimen signatures of any person authorized to act on its
behalf. The Trustee shall accept such direction and rely upon
it until notified in writing that the Committee has revoked the
authorization to give such direction. The Trustee shall not be
deemed to be on notice of any change in the membership of the
Committee, parties authorized to direct the Trustee in the
performance of its duties, or the duties delegated to and by
the Committee until notified in writing.
49
16 MANAGEMENT OF INVESTMENTS
-------------------------
16.1 Trust Agreement
All Plan assets shall be held by the Trustee in trust, in accordance
with those provisions of this Plan and Trust which relate to the
Trustee, for use in providing Plan benefits and paying Plan fees and
expenses not paid directly by the Employer. Plan benefits shall be
drawn solely from the Trust and paid by the Trustee as directed by
the Administrator. Notwithstanding, the Administrator may appoint,
with the approval of the Trustee, another trustee to hold and
administer Plan assets which do not meet the requirements of Section
16.2.
16.2 Investment Funds
The Administrator is hereby granted authority to direct the Trustee
to invest Trust assets in one or more Investment Funds. The number
and composition of Investment Funds may be changed from time to
time, without the necessity of amending this Plan and Trust. The
Trustee may establish reasonable limits on the number of Investment
Funds as well as the acceptable assets for any such Investment Fund.
Each of the Investment Funds may be comprised of any of the
following:
(a) shares of a registered investment company, whether or not the
Trustee or any of its affiliates is an advisor to, or other
service provider to, such company;
(b) collective investment funds maintained by the Trustee, or any
other fiduciary to the Plan, which are available for investment
by trusts which are qualified under Code sections 401(a) and
501(a);
(c) individual equity and fixed income securities which are readily
tradeable on the open market;
(d) guaranteed investment contracts issued by a bank or insurance
company;
(e) interest bearing deposits of the Trustee; and
(f) Company Stock.
Any Investment Fund assets invested in a collective investment fund,
shall be subject to all the provisions of the instruments
establishing and governing such fund. These instruments, including
any subsequent amendments, are incorporated herein by reference.
50
16.3 Authority to Hold Cash
The Trustee shall have the authority to cause the investment manager
of each Investment Fund to maintain sufficient deposit or money
market type assets in each Investment Fund to handle the Fund's
liquidity and disbursement needs. Each Participant's and
Beneficiary's Sweep Account, which is used to hold assets pending
investment or disbursement, shall consist of interest bearing
deposits of the Trustee.
16.4 Trustee to Act Upon Instructions
The Trustee shall carry out instructions to invest assets in the
Investment Funds as soon as practicable after such instructions are
received from the Administrator, Participants, or Beneficiaries.
Such instructions shall remain in effect until changed by the
Administrator, Participants or Beneficiaries.
16.5 Administrator Has Right to Vote Registered Investment Company Shares
The Administrator shall be entitled to vote proxies or exercise any
shareholder rights relating to shares held on behalf of the Plan in
a registered investment company. Notwithstanding, the authority to
vote proxies and exercise shareholder rights related to such shares
held in a Custom Fund is vested as provided otherwise in Section 16.
16.6 Custom Fund Investment Management
The Administrator may designate, with the consent of the Trustee, an
investment manager for any Investment Fund established by the
Trustee solely for Participants of this Plan (a "Custom Fund"). The
investment manager may be the Administrator, Trustee or an
investment manager pursuant to ERISA section 3(38). The
Administrator shall advise the Trustee in writing of the appointment
of an investment manager and shall cause the investment manager to
acknowledge to the Trustee in writing that the investment manager is
a fiduciary to the Plan.
A Custom Fund shall be subject to the following:
(a) Guidelines. Written guidelines, acceptable to the Trustee,
shall be established for a Custom Fund. If a Custom Fund
consists solely of collective investment funds or shares of a
registered investment company (and sufficient deposit or money
market type assets to handle the Fund's liquidity and
disbursement needs), its underlying instruments shall
constitute the guidelines.
(b) Authority of Investment Manager. The investment manager of a
Custom Fund shall have the authority to vote or execute
proxies, exercise shareholder rights, manage, acquire, and
dispose of Trust
51
assets. Notwithstanding, the authority to vote proxies and
exercise shareholder rights related to shares of Company Stock
held in a Custom Fund is vested as provided otherwise in
Section 16.
(c) Custody and Trade Settlement. Unless otherwise agreed to by the
Trustee, the Trustee shall maintain custody of all Custom Fund
assets and be responsible for the settlement of all Custom Fund
trades. For purposes of this section, shares of a collective
investment fund, shares of a registered investment company and
guaranteed investment contracts issued by a bank or insurance
company, shall be regarded as the Custom Fund assets instead of
the underlying assets of such instruments.
(d) Limited Liability of Co-Fiduciaries. Neither the Administrator
nor the Trustee shall be obligated to invest or otherwise
manage any Custom Fund assets for which the Trustee or
Administrator is not the investment manager nor shall the
Administrator or Trustee be liable for acts or omissions with
regard to the investment of such assets except to the extent
required by ERISA.
16.7 Authority to Segregate Assets
The Company may direct the Trustee to split an Investment Fund into
two or more funds in the event any assets in the Fund are illiquid
or the value is not readily determinable. In the event of such
segregation, the Company shall give instructions to the Trustee on
what value to use for the split-off assets, and the Trustee shall
not be responsible for confirming such value.
16.8 Maximum Permitted Investment in Company Stock
If the Company provides for a Company Stock Fund the Fund shall be
comprised of Company Stock and sufficient deposit or money market
type assets to handle the Fund's liquidity and disbursement needs.
The Fund may be as large as necessary to comply with Participants'
and Beneficiaries' investment elections as well the total investment
of Participants' and Beneficiaries' ESOP Accounts.
16.9 Participants Have Right to Vote and Tender Company Stock
Each Participant or Beneficiary shall be entitled to instruct the
Trustee as to the voting or tendering of any full or partial shares
of Company Stock held on his or her behalf in the Company Stock
Fund. Prior to such voting or tendering of Company Stock, each
Participant or Beneficiary shall receive a copy of the proxy
solicitation or other material relating to such vote or tender
decision and a form for the Participant or Beneficiary to complete
which confidentially instructs the Trustee to vote or tender such
shares in the manner indicated by the Participant or Beneficiary.
Upon receipt of such instructions, the Trustee
52
shall act with respect to such shares as instructed. The
Administrator shall instruct the Trustee with respect to how to vote
or tender any shares for which instructions are not received from
Participants or Beneficiaries.
16.10 Registration and Disclosure for Company Stock
The Administrator shall be responsible for determining the
applicability (and, if applicable, complying with) the requirements
of the Securities Act of 1933, as amended, the California Corporate
Securities Law of 1968, as amended, and any other applicable blue
sky law. The Administrator shall also specify what restrictive
legend or transfer restriction, if any, is required to be set forth
on the certificates for the securities and the procedure to be
followed by the Trustee to effectuate a resale of such securities.
53
17 TRUST ADMINISTRATION
--------------------
17.1 Trustee to Construe Trust
The Trustee shall have the discretionary authority to construe those
provisions of this Plan and Trust which relate to the Trustee and to
do all things necessary or convenient to the administration of the
Trust, whether or not such powers are specifically set forth in this
Plan and Trust. Actions taken in good faith by the Trustee shall be
conclusive and binding on all interested parties, and shall be given
the maximum possible deference allowed by law.
17.2 Trustee To Act As Owner of Trust Assets
Subject to the specific conditions and limitations set forth in this
Plan and Trust, the Trustee shall have all the power, authority,
rights and privileges of an absolute owner of the Trust assets and,
not in limitation but in amplification of the foregoing, may:
(a) receive, hold, manage, invest and reinvest, sell, tender,
exchange, dispose of, encumber, hypothecate, pledge, mortgage,
lease, grant options respecting, repair, alter, insure, or
distribute any and all property in the Trust;
(b) borrow money, participate in reorganizations, pay calls and
assessments, vote or execute proxies, exercise subscription or
conversion privileges, exercise options and register any
securities in the Trust in the name of the nominee, in federal
book entry form or in any other form as shall permit title
thereto to pass by delivery;
(c) renew, extend the due date, compromise, arbitrate, adjust,
settle, enforce or foreclose, by judicial proceedings or
otherwise, or defend against the same, any obligations or
claims in favor of or against the Trust; and
(d) lend, through a collective investment fund, any securities held
in such collective investment fund to brokers, dealers or other
borrowers and to permit such securities to be transferred into
the name and custody and be voted by the borrower or others.
17.3 United States Indicia of Ownership
The Trustee shall not maintain the indicia of ownership of any Trust
assets outside the jurisdiction of the United States, except as
authorized by ERISA section 404(b).
54
17.4 Tax Withholding and Payment
(a) Withholding. The Trustee shall calculate and withhold federal
(and, if applicable, state) income taxes with regard to any
Eligible Rollover Distribution that is not paid as a Direct
Rollover in accordance with the Participant's withholding
election or as required by law if no election is made or the
election is less than the amount required by law. With regard
to any taxable distribution that is not an Eligible Rollover
Distribution, the Trustee shall calculate and withhold federal
(and, if applicable, state) income taxes in accordance with the
Participant's withholding election or as required by law if no
election is made.
(b) Taxes Due From Investment Funds. The Trustee shall pay from the
Investment Fund any taxes or assessments imposed by any taxing
or governmental authority on such Fund or its income, including
related interest and penalties.
17.5 Trust Accounting
(a) Annual Report. Within 60 days (or other reasonable period)
following the close of the Plan Year, the Trustee shall provide
the Administrator with an annual accounting of Trust assets and
information to assist the Administrator in meeting ERISA's
annual reporting and audit requirements.
(b) Periodic Reports. The Trustee shall maintain records and
provide sufficient reporting to allow the Administrator to
properly monitor the Trust's assets and activity.
(c) Administrator Approval. Approval of any Trustee accounting
shall automatically occur 90 days after such accounting has
been received by the Administrator, unless the Administrator
files a written objection with the Trustee within such time
period. Such approval shall be final as to all matters and
transactions stated or shown therein and binding upon the
Administrator.
17.6 Valuation of Certain Assets
If the Trustee determines the Trust holds any asset which is not
readily tradeable and listed on a national securities exchange
registered under the Securities Exchange Act of 1934, as amended,
the Trustee may engage a qualified independent appraiser to
determine the fair market value of such property, and the appraisal
fees shall be paid from the Investment Fund containing the asset.
55
17.7 Legal Counsel
The Trustee may consult with legal counsel of its choice, including
counsel for the Employer or counsel of the Trustee, upon any
question or matter arising under this Plan and Trust. When relied
upon by the Trustee, the opinion of such counsel shall be evidence
that the Trustee has acted in good faith.
17.8 Fees and Expenses
The Trustee's fees for its services as Trustee shall be such as may
be mutually agreed upon by the Company and the Trustee. Trustee
fees and all reasonable expenses of counsel and advisors retained by
the Trustee shall be paid in accordance with Section 6.
17.9 Trustee Duties and Limitations
The Trustee's duties, unless otherwise agreed to by the Trustee,
shall be confined to construing the terms of the Plan and Trust as
they relate to the Trustee, receiving funds on behalf of and making
payments from the Trust, safeguarding and valuing Trust assets,
investing and reinvesting Trust assets in the Investment Funds as
directed by the Administrator, Participants or Beneficiaries and
those duties as described in this Section 17.
The Trustee shall have no duty or authority to ascertain whether
Contributions are in compliance with the Plan, to enforce collection
or to compute or verify the accuracy or adequacy of any amount to be
paid to it by the Employer. The Trustee shall not be liable for the
proper application of any part of the Trust with respect to any
disbursement made at the direction of the Administrator.
56
18 RIGHTS, PROTECTION, CONSTRUCTION AND JURISDICTION
-------------------------------------------------
18.1 Plan Does Not Affect Employment Rights
The Plan does not provide any employment rights to any Employee.
The Employer expressly reserves the right to discharge an Employee
at any time, with or without cause, without regard to the effect
such discharge would have upon the Employee's interest in the Plan.
18.2 Limited Return of Contributions
Except as provided in this paragraph, (1) Plan assets shall not
revert to the Employer nor be diverted for any purpose other than
the exclusive benefit of Participants or their Beneficiaries; and
(2) a Participant's vested interest shall not be subject to
divestment. As provided in ERISA section 403(c)(2), the actual
amount of a Contribution made by the Employer (or the current value
of the Contribution if a net loss has occurred) may revert to the
Employer if:
(a) such Contribution is made by reason of a mistake of fact;
(b) initial qualification of the Plan under Code section 401(a) is
not received and a request for such qualification is made
within the time prescribed under Code section 401(b) (the
existence of and Contributions under the Plan are hereby
conditioned upon such qualification); or
(c) such Contribution is not deductible under Code section 404
(such Contributions are hereby conditioned upon such
deductibility) in the taxable year of the Employer for which
the Contribution is made.
The reversion to the Employer must be made (if at all) within one
year of the mistaken payment of the Contribution, the date of denial
of qualification, or the date of disallowance of deduction, as the
case may be. A Participant shall have no rights under the Plan with
respect to any such reversion.
18.3 Assignment and Alienation
As provided by Code section 401(a)(13) and to the extent not
otherwise required by law, no benefit provided by the Plan may be
anticipated, assigned or alienated, except:
(a) to create, assign or recognize a right to any benefit with
respect to a Participant pursuant to a QDRO, or
(b) to use a Participant's vested Account balance as security for a
loan from the Plan which is permitted pursuant to Code section
4975.
57
18.4 Facility of Payment
If a Plan benefit is due to be paid to a minor or if the
Administrator reasonably believes that any payee is legally
incapable of giving a valid receipt and discharge for any payment
due him or her, the Administrator shall have the payment of the
benefit, or any part thereof, made to the person (or persons or
institution) whom it reasonably believes is caring for or supporting
the payee, unless it has received due notice of claim therefor from
a duly appointed guardian or conservator of the payee. Any payment
shall to the extent thereof, be a complete discharge of any
liability under the Plan to the payee.
18.5 Reallocation of Lost Participant's Accounts
If the Administrator cannot locate a person entitled to payment of a
Plan benefit after a reasonable search, the Administrator may at any
time thereafter treat such person's Account as forfeited and use
such amount as described in Section 8.4. If such person
subsequently presents the Administrator with a valid claim for the
benefit, such person shall be paid the amount treated as forfeited,
plus the interest that would have been earned in the Sweep Account
to the date of determination. The Administrator shall pay the
amount through an additional amount contributed by the Employer or
direct the Trustee to pay the amount from the Forfeiture Account.
18.6 Claims Procedure
(a) Right to Make Claim. An interested party who disagrees with the
Administrator's determination of his or her right to Plan
benefits must submit a written claim and exhaust this claim
procedure before legal recourse of any type is sought. The
claim must include the important issues the interested party
believes support the claim. The Administrator, pursuant to the
authority provided in this Plan, shall either approve or deny
the claim.
(b) Process for Denying a Claim. The Administrator's partial or
complete denial of an initial claim must include an
understandable, written response covering (1) the specific
reasons why the claim is being denied (with reference to the
pertinent Plan provisions) and (2) the steps necessary to
perfect the claim and obtain a final review.
(c) Appeal of Denial and Final Review. The interested party may
make a written appeal of the Administrator's initial decision,
and the Administrator shall respond in the same manner and form
as prescribed for denying a claim initially.
58
(d) Time Frame. The initial claim, its review, appeal and final
review shall be made in a timely fashion, subject to the
following time table:
Days to Respond
Action From Last Action
------ ----------------
Administrator determines benefit NA
Interested party files initial request 60 days
Administrator's initial decision 90 days
Interested party requests final review 60 days
Administrator's final decision 60 days
However, the Administrator may take up to twice the maximum
response time for its initial and final review if it provides
an explanation within the normal period of why an extension is
needed and when its decision shall be forthcoming.
18.7 Construction
Headings are included for reading convenience. The text shall
control if any ambiguity or inconsistency exists between the
headings and the text. The singular and plural shall be
interchanged wherever appropriate. References to Participant shall
include Beneficiary when appropriate and even if not otherwise
already expressly stated.
18.8 Jurisdiction and Severability
The Plan and Trust shall be construed, regulated and administered
under ERISA and other applicable federal laws and, where not
otherwise preempted, by the laws of the State of California. If any
provision of this Plan and Trust shall become invalid or
unenforceable, that fact shall not affect the validity or
enforceability of any other provision of this Plan and Trust. All
provisions of this Plan and Trust shall be so construed as to render
them valid and enforceable in accordance with their intent.
18.9 Indemnification by Employer
The Employers hereby agree to indemnify all Plan fiduciaries against
any and all liabilities resulting from any action or inaction,
(including a Plan termination in which the Company fails to apply
for a favorable determination from the Internal Revenue Service with
respect to the qualification of the Plan upon its termination), in
relation to the Plan or Trust (1) including (without limitation)
expenses reasonably incurred in the defense of any claim relating to
the Plan or its assets, and amounts paid in any settlement approved
by the Company relating to the Plan or its assets, but (2) excluding
liability resulting from actions or inactions made in bad faith, or
resulting from the negligence or willful misconduct of the Trustee.
The Company shall have the right, but not the obligation, to conduct
the defense of any action to which this Section applies. The Plan
fiduciaries are not entitled to indemnity from the Plan assets
relating to any such action.
59
19 AMENDMENT, MERGER, DIVESTITURES AND TERMINATION
-----------------------------------------------
19.1 Amendment
The Company reserves the right to amend this Plan and Trust at any
time, to any extent and in any manner it may deem necessary or
appropriate. The Company (and not the Trustee) shall be responsible
for adopting any amendments necessary to maintain the qualified
status of this Plan and Trust under Code sections 401(a) and 501(a).
If the Committee is acting as the Administrator in accordance with
Section 15.6, it shall have the authority to adopt Plan and Trust
amendments which have no substantial adverse financial impact upon
any Employer or the Plan. All interested parties shall be bound by
any amendment, provided that no amendment shall:
(a) become effective unless it has been adopted in accordance with
the procedures set forth in Section 19.5;
(b) except to the extent permissible under ERISA and the Code, make
it possible for any portion of the Trust assets to revert to an
Employer or to be used for, or diverted to, any purpose other
than for the exclusive benefit of Participants and
Beneficiaries entitled to Plan benefits and to defray
reasonable expenses of administering the Plan;
(c) decrease the rights of any Employee to benefits accrued
(including the elimination of optional forms of benefits) to
the date on which the amendment is adopted, or if later, the
date upon which the amendment becomes effective, except to the
extent permitted under ERISA and the Code; nor
(d) permit an Employee to be paid the balance of his or her
Employee Account unless the payment would otherwise be
permitted under Code section 401(k).
19.2 Merger
This Plan and Trust may not be merged or consolidated with, nor may
its assets or liabilities be transferred to, another plan unless
each Participant and Beneficiary would, if the resulting plan were
then terminated, receive a benefit just after the merger,
consolidation or transfer which is at least equal to the benefit
which would be received if either plan had terminated just before
such event.
19.3 Divestitures
In the event of a sale by an Employer which is a corporation of: (1)
substantially all of the Employer's assets used in a trade or
business to an unrelated corporation, or (2) a sale of such
Employer's interest in a subsidiary
60
to an unrelated entity or individual, lump sum distributions shall
be permitted from the Plan, except as provided below, to
Participants with respect to Employees who continue employment with
the corporation acquiring such assets or who continue employment
with such subsidiary, as applicable.
Notwithstanding, distributions shall not be permitted if the
purchaser agrees, in connection with the sale, to be substituted as
the Company as the sponsor of the Plan or to accept a transfer of
the assets and liabilities representing the Participants' benefits
into a plan of the purchaser or a plan to be established by the
purchaser.
19.4 Plan Termination
The Company may, at any time and for any reason, terminate the Plan
in accordance with the procedures set forth in Section 19.5, or
completely discontinue contributions. Upon either of these events,
or in the event of a partial termination of the Plan within the
meaning of Code section 411(d)(3), the Accounts of each affected
Employee who has not yet incurred a Break in Service shall be fully
vested. If no successor plan is established or maintained, lump sum
distributions shall be made in accordance with the terms of the Plan
as in effect at the time of the Plan's termination or as thereafter
amended provided that a post-termination amendment shall not be
effective to the extent that it violates Section 19.1 unless it is
required in order to maintain the qualified status of the Plan upon
its termination. The Trustee's and Employer's authority shall
continue beyond the Plan's termination date until all Trust assets
have been liquidated and distributed.
19.5 Amendment and Termination Procedures
The following procedural requirements shall govern the adoption of
any amendment or termination (a "Change") of this Plan and Trust:
(a) The Company may adopt any Change by action of its board of
directors in accordance with its normal procedures.
(b) The Committee, if acting as Administrator in accordance with
Section 15.6, may adopt any amendment within the scope of its
authority provided under Section 19.1 and in the manner
specified in Section 15.7(a).
(c) Any Change must be (1) set forth in writing, and (2) signed and
dated by an authorized officer of the Company or, in the case
of an amendment adopted by the Committee, at least one of its
members.
(d) If the effective date of any Change is not specified in the
document setting forth the Change, it shall be effective as of
the date it is signed by the last person whose signature is
required under clause (2) above,
61
except to the extent that another effective date is necessary
to maintain the qualified status of this Plan and Trust under
Code sections 401(a) and 501(a).
(e) No Change affecting the Trustee in its capacity as Trustee or
in any other capacity shall become effective until it is
accepted and signed by the Trustee (which acceptance shall not
unreasonably be withheld).
19.6 Termination of Employer's Participation
Any Employer may, at any time and for any reason, terminate its Plan
participation by action of its board of directors in accordance with
its normal procedures. Written notice of such action shall be
signed and dated by an authorized officer of the Employer and
delivered to the Company. If the effective date of such action is
not specified, it shall be effective on, or as soon as reasonably
practicable, after the date of delivery. Upon the Employer's
request, the Company may instruct the Trustee and Administrator to
spin off all affected Accounts and underlying assets into a separate
qualified plan under which the Employer shall assume the powers and
duties of the Company. Alternatively, the Company may treat the
event as a partial termination described above or continue to
maintain the Accounts under the Plan.
19.7 Replacement of the Trustee
The Trustee may resign as Trustee under this Plan and Trust or may
be removed by the Company at any time upon at least 90 days written
notice (or less if agreed to by both parties). In such event, the
Company shall appoint a successor trustee by the end of the notice
period. The successor trustee shall then succeed to all the powers
and duties of the Trustee under this Plan and Trust. If no
successor trustee has been named by the end of the notice period,
the Company's chief executive officer shall become the trustee, or
if he or she declines, the Trustee may petition the court for the
appointment of a successor trustee.
19.8 Final Settlement and Accounting of Trustee
(a) Final Settlement. As soon as administratively feasible after
its resignation or removal as Trustee, the Trustee shall
transfer to the successor trustee all property currently held
by the Trust. However, the Trustee is authorized to reserve
such sum of money as it may deem advisable for payment of its
accounts and expenses in connection with the settlement of its
accounts or other fees or expenses payable by the Trust. Any
balance remaining after payment of such fees and expenses shall
be paid to the successor trustee.
62
(b) Final Accounting. The Trustee shall provide a final accounting
to the Administrator within 90 days of the date Trust assets
are transferred to the successor trustee.
(c) Administrator Approval. Approval of the final accounting shall
automatically occur 90 days after such accounting has been
received by the Administrator, unless the Administrator files a
written objection with the Trustee within such time period.
Such approval shall be final as to all matters and transactions
stated or shown therein and binding upon the Administrator.
63
APPENDIX A - INVESTMENT FUNDS
I. Investment Funds Available
The Investment Funds offered under the Plan as of the Effective Date
include this set of daily valued funds, except that the Company Stock Fund
shall be offered under the Plan at such later date as determined by the
Administrator:
CATEGORY FUNDS
-------- -----
INCOME U.S. Treasury Allocation
------
EQUITY Company Stock
------ S&P 500 Stock
Aim Constellation
COMBINATION LifePath
-----------
II. Default Investment Fund
The default Investment Fund as of the Effective Date is the U.S. Treasury
Allocation Fund.
III. Contribution Accounts For Which Investment is Restricted
A Participant or Beneficiary may direct the investment of his or her
entire Account except for the following Contribution Accounts, and except
as otherwise provided in Section 7, which shall be invested as of the
Effective Date as follows:
Prior ESOP Rollover Account Company Stock Fund
ESOP Account Company Stock Fund
IV. Maximum Percentage Restrictions Applicable to Certain Investment Funds
With regard to those Accounts for which a Participant or Beneficiary may
direct investment, at such time as the Company Stock Fund is offered under
the Plan, a Participant or Beneficiary may not elect to invest more than
the following percentages in these Investment Funds:
Company Stock Fund 25%
64
APPENDIX B - PAYMENT OF PLAN FEES AND EXPENSES
As of the Effective Date, payment of Plan fees and expenses shall be as
follows:
1) Investment Management Fees: These are paid by Participants in that
management fees reduce the investment return reported and credited to
Participants, except that the Employer shall pay the fees related to the
Company Stock Fund. These are paid by the Employer on a quarterly basis.
2) Recordkeeping Fees: These are paid by the Employer on a quarterly basis,
except that with regard to a Participant who is no longer an Employee or a
Beneficiary, these are paid by the Participant and are assessed monthly
and billed/collected from Accounts quarterly.
3) Loan Fees: A $3.50 per month fee is assessed and billed/collected
quarterly from the Account of each Participant who has an outstanding loan
balance.
4) Investment Fund Election Changes: For each Investment Fund election
change by a Participant, in excess of 4 changes per year, a $10 fee shall
be assessed and billed/collected quarterly from the Participant's Account.
5) Periodic Installment Payment Fees: A $3.00 per check fee shall be assessed
and billed/collected quarterly from the Participant's Account.
6) Additional Fees Paid by Employer: All other Plan related fees and
expenses shall be paid by the Employer. To the extent that the
Administrator later elects that any such fees shall be borne by
Participants, estimates of the fees shall be determined and reconciled, at
least annually, and the fees shall be assessed monthly and
billed/collected from Accounts quarterly.
65
APPENDIX C - LOAN INTEREST RATE
As of the Effective Date, the interest rate charged on Participant loans shall
be equal to the Trustee's prime rate, plus 1%.
66
AMENDMENT NO. 1
TO THE
SILICON VALLEY BANK
401(k) AND EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST
WHEREAS, Silicon Valley Bank (the "Company"), approved and adopted the
Silicon Valley Bancshares Employee Stock Ownership Plan, intended to
constitute a qualified stock bonus plan, as described in Code section 401(a),
and the Silicon Valley Bank 401(k) Plan, intended to constitute a qualified
profit sharing plan, as described in Code section 401(a), including a cash or
deferred arrangement, as described in Code section 401(k), which were
originally effective January 1, 1989 and January 1, 1985, respectively;
WHEREAS, effective March 1, 1995, the Silicon Valley Bancshares Employee
Stock Ownership Plan was merged into the Silicon Valley Bank 401(k) Plan and
the merged plan was restated and renamed the Silicon Valley Bank 401(k) and
Employee Stock Ownership Plan (the "Plan") and Trust Agreement (the "Trust"),
then intended to constitute a qualified profit sharing plan, as described in
Code section 401(a), which includes a qualified cash or deferred arrangement,
as described in Code section 401(k);
WHEREAS, Section 19.1 of the Plan and Trust provides that the Company
reserves the right to amend the Plan and Trust;
NOW THEREFORE RESOLVED, that Sections 5, 9, 13 and 16 are amended
effective January 1, 1995, Sections 1, 3, 5, 8, 10 and 11 are amended
effective January 1, 1996 and Section 10 is amended effective May 1, 1996 as
follows:
Effective January 1, 1995:
-------------------------
1. Section 5 is amended to restate (a) and (b) of Subsection 5.2 each in its
entirety as follows:
5.2 ESOP Contributions and ESOP Forfeiture Account Allocations
(a) Frequency and Eligibility. Subject to determination made by
the Employer's board of directors, or duly authorized
committee appointed by the Employer's board of directors, for
each Plan Year, the Employer may make an ESOP Contribution on
behalf of each Participant who was an Eligible Employee on the
last day of the period. If such Contributions are made, such
Contributions shall also be made on behalf of each Participant
who was an Eligible Employee at any time during the period but
who ceased being an Employee during the period after having
attained his or her Early Retirement Date, Normal Retirement
Date or by reason of his or her Disability or death.
For each Plan Year, the Employer shall allocate any Forfeiture
Account balance remaining as of the end of the Plan Year
attributable to forfeited ESOP Account amounts and earnings
thereon, as ESOP Contributions on behalf of each Participant
who was an Eligible Employee on the last day of the period.
Such an allocation shall also be made on behalf of each
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Silicon Valley Bank Amendment No. 1
401(k) and Employee Stock Ownership Plan and Trust
Participant who ceased being an Employee during the period
after having attained his or her Early Retirement Date, Normal
Retirement Date or by reason of his or her Disability or
death.
(b) Allocation Method. The ESOP Contribution for each period,
shall be equal to a specified percentage, including 0% and up
to 10%, of each eligible Participant's Pay (not including
Forfeiture Account amounts allocated as ESOP Contributions).
Forfeiture Account amounts to be allocated as ESOP
Contributions shall be allocated among eligible Participants
in direct proportion to their Pay.
2. Section 9 is amended to restate (c) of Subsection 9.5 in its entirety as
follows:
9.5 Loan Funding Limits, Account Sources and Funding Order
(c) Legal Maximum Limit. The maximum a Participant may borrow,
including the outstanding balance of existing Plan loans, is
50% of his or her combined vested balance in this Plan and the
Silicon Valley Bank Money Purchase Pension Plan, not to exceed
$50,000. However, the $50,000 maximum is reduced by the
Participant's highest outstanding loan balance during the 12
month period ending on the day before the Sweep Date as of
which the loan is made. For purposes of this paragraph and
except as otherwise stated for purposes of determining a
Participant's vested balance, the qualified plans of all
Related Companies shall be treated as though they are part of
this Plan to the extent it would decrease the maximum loan
amount.
3. Section 13 is amended to hereby delete Subsection 13.3, to redesignate
each subsequent Subsection and to restate Subsection 13.5 in its entirety
as follows:
13.5 Correcting a Multiple Plan Excess
If a Participant, whose Account is credited with an excess Annual
Addition, received allocations to more than one defined contribution
plan, the excess shall be corrected by first reducing the Annual
Addition to this Plan before any reductions are made to the other
defined contribution plans.
4. Section 16 is amended to restate the first paragraph of Subsection 16.6,
to add a new Subsection 16.7 and to redesignate each existing subsection
as follows:
16.6 Custom Fund Investment Management
The Administrator may designate, with the consent of the Trustee, an
investment manager for any Investment Fund established by the
Trustee solely
2
Silicon Valley Bank Amendment No. 1
401(k) and Employee Stock Ownership Plan and Trust
for Participants of this Plan and, subject to Section 16.7, any
other qualified plan of the Company or a Related Company (a "Custom
Fund"). The investment manager may be the Administrator, Trustee or
an investment manager pursuant to ERISA section 3(38). The
Administrator shall advise the Trustee in writing of the appointment
of an investment manager and shall cause the investment manager to
acknowledge to the Trustee in writing that the investment manager is
a fiduciary to the Plan.
16.7 Master Custom Fund
The Trustee may establish, at the direction of the Company, a single
Custom Fund (a "Master Custom Fund"), for the benefit of this Plan
and any other qualified plan of the Company or a Related Company for
which the Trustee acts as trustee pursuant to a plan and trust
document that contains a provision substantially identical to this
provision. The assets of this Plan, to the extent invested in the
Master Custom Fund, shall consist only of that percentage of the
assets of the Master Custom Fund represented by the shares held by
this Plan.
Effective January 1, 1996:
-------------------------
1. Section 1 is amended to restate Subsections 1.38 and 1.52 each in its
entirety as follows:
1.38 "Pay". All cash compensation paid to an Eligible Employee by an
Employer while a Participant during the current period, except that
for purposes of ESOP Contributions, "All cash compensation,
excluding incentive pay (annual incentive awards, referral fees and
other recognition/achievement awards)" shall be substituted for the
preceding reference to "All cash compensation". Pay excludes
reimbursements or other expense allowances, cash and non-cash fringe
benefits, moving expenses, deferred compensation and welfare
benefits.
Pay shall be determined further by including amounts contributed by
an Employer pursuant to Code sections 125 and 402(e)(3), except that
for purposes of ESOP Contributions, "excluding amounts" shall be
substituted for the preceding reference to "including amounts". Pay
is limited to $150,000 (as adjusted for the cost of living pursuant
to Code sections 401(a)(17) and 415(d)) per Plan Year.
For purposes of the Contributions described in Section 5.2, the
limitations as described in the second paragraph of Section 1.11
shall also apply.
1.52 "Trustee". BZW Barclays Global Investors, National Association.
3
Silicon Valley Bank Amendment No. 1
401(k) and Employee Stock Ownership Plan and Trust
2. Section 3 is amended to restate Subsection 3.4 in its entirety as
follows:
3.4 Contribution Percentage Limits
The Administrator may establish and change from time to time, in
writing, without the necessity of amending this Plan and Trust, the
minimum, if applicable, and maximum Employee Contribution
percentages, prospectively or retrospectively (for the current Plan
Year), for all Participants. In addition, the Administrator may
establish any lower percentage limits for Highly Compensated
Employees as it deems necessary to satisfy the tests described in
Section 12. The Employee Contribution maximum percentage is 5%.
Irrespective of the limits that may be established by the
Administrator in accordance with this paragraph, in no event shall
the contributions made by or on behalf of a Participant for a Plan
Year exceed the maximum allowable under Code section 415.
3. Section 5 is amended to restate the Heading thereof and Subsections 5.1
and 5.2 each in its entirety including the Titles thereof as follows:
5 EMPLOYER CONTRIBUTIONS
----------------------
5.1 Company Match Contributions
(a) Frequency and Eligibility. For each period for which
Participants' Contributions are made, the Employer shall
make Company Match Contributions, as described in the
following Allocation Method paragraph, on behalf of each
Participant who contributed during the period.
(b) Allocation Method. The Company Match Contributions for
each period shall total 100% of each eligible
Participant's Employee Contributions for the period.
Notwithstanding, the maximum dollar match (including
Forfeiture Account amounts applied as Company Match
Contributions in accordance with Section 8.4) shall not
exceed $1,000 for the Plan Year. The Employer may change
the 100% matching rate to any other percentage, including
0%, or the maximum dollar match, generally by notifying
eligible Participants in sufficient time to adjust their
Contribution elections prior to the start of the period
for which the new percentage or amount apply.
(c) Timing, Medium and Posting. The Employer shall make each
period's Company Match Contribution in cash as soon as
administratively feasible, and for purposes of deducting
such
4
Silicon Valley Bank Amendment No. 1
401(k) and Employee Stock Ownership Plan and Trust
Company Match Contribution, not later than the Employer's
federal tax filing date, including extensions. The
Trustee shall post such amount to each Participant's
Company Match Account once the total Contribution
received has been balanced against the specific amount to
be credited to each Participant's Company Match Account.
5.2 ESOP Contributions
(a) Frequency and Eligibility. Subject to determination made
by the Employer's board of directors, or duly authorized
committee appointed by the Employer's board of directors,
for each Plan Year, the Employer may make an ESOP
Contribution on behalf of each Participant who was an
Eligible Employee on the last day of the period. If such
Contributions are made, such Contributions shall also be
made on behalf of each Participant who was an Eligible
Employee at any time during the period but who ceased
being an Employee during the period after having attained
his or her Early Retirement Date, Normal Retirement Date
or by reason of his or her Disability or death.
(b) Allocation Method. The ESOP Contribution for each
period, shall be equal to a specified percentage,
including 0% and up to 10%, of each eligible
Participant's Pay (including Forfeiture Account amounts
applied as ESOP Contributions in accordance with Section
8.4).
(c) Timing, Medium and Posting. The Employer shall make each
period's ESOP Contribution in cash as soon as
administratively feasible, and for purposes of deducting
such ESOP Contribution, not later than the Employer's
federal tax filing date, including extensions. The
Trustee shall post such amount to each Participant's ESOP
Account once the total Contribution received has been
balanced against the specific amount to be credited to
each Participant's ESOP Account.
4. Section 8 is amended to restate Subsection 8.4 in its entirety as
follows:
8.4 Forfeitures
A Participant's non-vested Account balance shall be forfeited as of
the Settlement Date following the Sweep Date on which the
Administrator has reported to the Trustee that the Participant's
employment has terminated with all Related Companies. Forfeitures
from all Employer Contribution Accounts shall be transferred to and
maintained in a single Forfeiture Account, which shall
5
Silicon Valley Bank Amendment No. 1
401(k) and Employee Stock Ownership Plan and Trust
be invested in interest bearing deposits of the Trustee. Forfeiture
Account amounts shall be utilized to restore Accounts, to pay Plan
fees and expenses at the discretion of the Administrator and to
reduce Company Match Contributions and ESOP Contributions as
directed by the Administrator.
5. Section 10 is amended to restate Subsections 10.1 and 10.2 each in its
entirety as follows:
10.1 In-Service Withdrawals Permitted
In-service withdrawals to a Participant who is an Employee are
permitted pursuant to the terms and conditions as set forth in this
Section and as required by law pursuant to the terms and conditions
as set forth in Section 11.
10.2 In-Service Withdrawal Application and Notice
A Participant shall apply for any in-service withdrawal in such
manner and with such advance notice as prescribed by the
Administrator. The Participant shall be provided the notice
prescribed by Code section 402(f).
Code sections 401(a)(11) and 417 do not apply to in-service
withdrawals under the Plan as described in this Section. An in-
service withdrawal may therefore commence less than 30 days after
the aforementioned notice is provided, if:
(a) the Participant is clearly informed that he or she has the
right to a period of at least 30 days after receipt of such
notice to consider his or her option to elect or not elect a
Direct Rollover for all or a portion, if any, of his or her
in-service withdrawal which shall constitute an Eligible
Rollover Distribution; and
(b) the Participant after receiving such notice, affirmatively
elects a Direct Rollover for all or a portion, if any, of his
or her in-service withdrawal which shall constitute an
Eligible Rollover Distribution or alternatively elects to have
all or a portion made payable directly to him or her, thereby
not electing a Direct Rollover for all or a portion thereof.
6. Section 11 is amended to restate Subsection 11.1 and the Title of
Subsection 11.12 and (a) and (d) thereof each its entirety as follows:
11.1 Benefit Information, Notices and Election
A Participant, or his or her Beneficiary in the case of his or her
death, shall be provided with information regarding all optional
times and forms of distribution available, to include the notices
prescribed by Code section 402(f) and Code section 411(a)(11).
Subject to the other requirements of this Section, a
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Silicon Valley Bank Amendment No. 1
401(k) and Employee Stock Ownership Plan and Trust
Participant, or his or her Beneficiary in the case of his or her
death, may elect, in such manner and with such advance notice as
prescribed by the Administrator, to have his or her vested Account
balance paid to him or her beginning upon any Settlement Date
following the Participant's termination of employment with all
Related Companies or, if earlier, at the time required by law as set
forth in Section 11.7.
A distribution may commence less than 30 days, but more than seven
days if such distribution is one to which Code sections 401(a)(11)
and 417 apply, after the aforementioned notices are provided, if:
(a) the Participant is clearly informed that he or she has the
right to a period of at least 30 days after receipt of such
notices to consider the decision as to whether to elect a
distribution and if so to elect a particular form of
distribution and to elect or not elect a Direct Rollover for
all or a portion, if any, of his or her distribution which
shall constitute an Eligible Rollover Distribution; and
(b) the Participant after receiving such notices, affirmatively
elects a distribution and a Direct Rollover for all or a
portion, if any, of his or her distribution which shall
constitute an Eligible Rollover Distribution or alternatively
elects to have all or a portion made payable directly to him
or her, thereby not electing a Direct Rollover for all or a
portion thereof; and
(c) if such distribution is one to which Code sections 401(a)(11)
and 417 apply, the Participant's election includes Spousal
Consent.
11.12 QJSA and QPSA Information and Elections
(a) Annuity Starting Date. The first day of the first period for
which an amount is payable as an annuity, or, in the case of a
benefit not payable in the form of an annuity, the first day
on which all events have occurred which entitle the
Participant to such benefit. Such date shall be a date no
earlier than the expiration of the seven-day period that
commences the day after the information described in the QJSA
Information to a Participant paragraph below is provided to
the Participant.
(d) QJSA Information to a Participant. No more than 90 days
before the Annuity Starting Date, each Participant shall be
given a written explanation of (1) the terms and conditions of
the QJSA, (2) the right to a period of at least 30 days after
receipt of the written explanation to make an election to
waive this form of payment and choose an optional form of
payment and the effect of this election, (3) the right to
revoke this election and the effect of this revocation, and
(4) the need for Spousal Consent.
7
Silicon Valley Bank Amendment No. 1
401(k) and Employee Stock Ownership Plan and Trust
Effective May 1, 1996:
---------------------
1. Section 10 is amended to restate (b) of Subsection 10.8 in its entirety
as follows:
10.8 Over Age 59 1/2 Withdrawals
(b) Account Sources and Funding Order. The withdrawal amount
shall come from the following of the Participant's fully
vested Accounts, in the priority order as follows:
Rollover Account
Employee Account
Prior ESOP Rollover Account
Company Match Account
ESOP Account
Prior Match Account
Date: May 28, 1996 SILICON VALLEY BANK
By: /s/ Glen G. Simmons
--------------------------------------
Title: Executive V.P. Human Resources/
Administration
The provisions of the above amendment which relate to the Trustee are hereby
approved and executed.
Date: May 30, 1996 BZW BARCLAYS GLOBAL INVESTORS, NATIONAL
ASSOCIATION
By: /s/ Gwyn E. Slack
--------------------------------------
Title: Principal
Date: May 30, 1996 BZW BARCLAYS GLOBAL INVESTORS, NATIONAL
ASSOCIATION
By: /s/ Lisa M. Maloney
--------------------------------------
Title: Principal
8