EXHIBIT 10.7
STANDARD INSURANCE COMPANY
HOME OFFICE EMPLOYEES'
DEFERRED COMPENSATION PLAN
RESTATEMENT
(1994)
By: /s/ Ivy E. Lenz
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(Signature)
By: Ivy E. Lenz
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(Name Printed or Typed
Title: Corporate Secretary
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Date Adopted: Feb 28, 1994
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OUTLINE OF KEY PLAN PROVISIONS
1 . Definition of Compensation (See Plan Section 2.7):
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Generally, "Compensation" means wages that are reportable as income on IRS
Form W-2 and that were earned while the Employee was an "Eligible
Employee". However, Compensation does not include amounts attributable to
Company-wide profit sharing bonuses, officers' hiring, relocation, or other
individualized bonuses, long term incentive compensation plans,
reimbursement for unused vacation at the time of termination, severance
pay, taxable fringe benefits, tax reimbursements, awards and prizes, club
dues, noncash compensation, or contributions to and benefits from any other
employee benefit plan maintained by Standard, except as provided below.
In addition, Compensation means elective deferrals (including, for example,
Elective Contributions under this Plan) and any amounts deferred under a
"cafeteria plan".
2. Definition of Eligible Employee (See Plan Section 2.13):
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"Eligible Employee" means, at any time, an Employee who is not a union
member except to the extent the collective bargaining agreement expressly
permits or requires participation in this Plan, who is not a Leased
Employee or an Agent, and whose Service is based at the Home Office or an
Agency office.
Eligible Employees are those Employees who are potentially eligible to
participate in this Plan.
3. Minimum Participation Standards (See Plan Section 3.2):
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An Employee may participate in the Plan as of any Entry Date when he or
she:
a. is an Eligible Employee,
b. with respect to Elective Contributions, has been an Employee for 28
consecutive days, and
c. with respect to Matching Contributions, has been an Employee for at
least one year.
4. Basic Contributions (See Plan Sections 4.1.1 - 4.1.4):
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a. Amount: Matching Contributions may be made equal to 100% of the
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Participant's Elective Contributions during the period in which he was
a Participant with respect to Matching Contributions.
b. Allocation: Matching Contributions shall be allocated to those
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Participants who make Elective Contributions according to the Matching
Contributions formula described above, EXCEPT that a Participant's
Elective Contributions in excess of 3% of the Participant's Eligible
Compensation shall not be taken into account.
c. Vestinq: Basic Contributions are 100% vested at all times.
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5. Elective Contributions (See Plan Sections 4.2.1 - 4.2.5):
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Elective deferrals may be contributed to the Plan by Participants in
amounts equal to not less than 3% nor more than the maximum percentage
legally premissible of their Elective Compensation.
Elective Contributions are 100% vested at all times.
FIFTH AMENDMENT
Outline of Key Plan Provisions
Effective 7/1/98
6. Expenses (See Plan Section 6.4):
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The Expenses of maintaining this Plan which are not paid by the Employer
shall be satisfied directly out of the Plan's assets, except for certain
transactional charges which shall be paid by the particular Participants
involved.
7. Investments (See Plan Section 6.1.2):
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Effective April 1, 1994, Participants are permitted to direct the
investment of amounts held by the Plan on their behalf.
8. Loans (See Plan Section 7.6):
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Participant loans are permitted under this Plan.
PLEASE NOTE
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THE FOREGOING STATEMENTS ARE MERELY SUMMARIES OF SPECIFIC PLAN PROVISIONS,
PROVIDED FOR QUICK REFERENCE. THE PLAN TEXT ITSELF CONTROLS AND MUST BE REFERRED
TO FOR THE ACTUAL AND COMPLETE PLAN PROVISIONS.
TABLE OF CONTENTS
ARTICLE I STATEMENT OF PURPOSE AND INTENTIONS
1.1 Purpose............................................................ Page 1
1.2 Intent to Qualify.................................................. 1
1.3 Effect of Amendment and Restatement................................ 1
ARTICLE II DEFINITIONS
2.1 Anniversary Date................................................... 2
2.2 Annuity Starting Date.............................................. 2
2.3 Beneficiary........................................................ 2
2.4 Break in Service Year.............................................. 2
2.5 Code............................................................... 2
2.6 Company............................................................ 2
2.7 Compensation....................................................... 2
2.8 Date of Employment................................................. 3
2.9 Date of Re-employment.............................................. 4
2.10 Effective Date..................................................... 4
2.11 Elective Compensation.............................................. 4
2.12 Eligible Compensation.............................................. 4
2.13 Employee........................................................... 4
2.14 Employer........................................................... 7
2.15 Hour of Service.................................................... 8
2.16 Individual Accounts................................................ 9
2.17 Insurance Company.................................................. 9
2.18 Limitation Year.................................................... 9
2.19 Normal Retirement Age and Normal Retirement Date................... 9
2.20 Participant........................................................ 9
2.21 Plan............................................................... 10
2.22 Plan Administrator................................................. 10
2.23 Plan Year.......................................................... 10
2.24 Preliminary Service................................................ 10
2.25 Qualified Matching Contributions ("QMAC").......................... 10
Qualified Nonelective Contributions ("QNC")........................ 10
2.26 Required Beginning Date............................................ 10
2.27 Retirement and Retirement Date..................................... 11
2.28 Service............................................................ 11
2.29 Total and Permanent Disability..................................... 11
2.30 Trustees........................................................... 11
2.31 Vested Benefit..................................................... 11
2.32 Years of Service................................................... 11
ARTICLE III PARTICIPATION
3.1 Commencement of Participant........................................ 13
3.2 Minimum Participation Standards.................................... 13
3.3 Preliminary Service................................................ 13
3.4 Active Participation; Inactive Participation....................... 14
3.5 Cessation of Participation......................................... 14
3.6 Participation on Resumption of Employment.......................... 14
ARTICLE IV CONTRIBUTIONS
4.1.1 Basic Contributions: Amount .......................................... 15
4.1.2 Basic Contribution Account............................................ 15
4.1.3 Basic Contributions: Allocations ..................................... 16
4.1.4 Basic Contributions: Vesting ......................................... 16
4.2.1 Elective Contributions: Amount ....................................... 17
4.2.2 Elective Contribution Account ........................................ 19
4.2.3 Elective Contributions: Allocations .................................. 19
4.2.4 Elective Contributions: Vesting ...................................... 19
4.2.5 Elective Contributions: Withdrawals .................................. 20
4.3.1 Supplemental Contributions: Amount ................................... 22
4.3.2 Supplemental Contribution Accounts ................................... 22
4.3.3 Supplemental Contributions: Allocations .............................. 22
4.3.4 Supplemental Contributions: Vesting .................................. 22
4.4.1 Rollover Contributions: Amount ....................................... 23
4.4.2 Rollover Contribution Account ........................................ 23
4.4.3 Rollover Contributions: Allocation ................................... 23
4.4.4 Rollover Contributions: Vesting ...................................... 23
4.5.1 Prior Plan Contributions Account ..................................... 23
4.5.2 Prior Plan Contributions: Vesting .................................... 24
4.5.3 Prior Plan Contributions: Withdrawals ................................ 24
ARTICLE V REQUIRED NON-DISCRIMINATION TESTING
5.1.1 Limitation on Additions .............................................. 25
5.1.2 Suspense Account ..................................................... 30
5.2.1 Top-Heavy Provisions: Application .................................... 30
5.2.2 Top-Heavy Determination .............................................. 30
5.2.3 Special Rules for Top-Heavy Plans .................................... 33
5.3 Actual Deferral Percentage Test ...................................... 34
5.4 Average Contribution Percentage Test ................................. 38
5.5 Multiple Use of Alternative Limitation ............................... 42
ARTICLE VI ADMINISTRATION OF PLAN ASSETS
6.1.1 The Investment Fund ................................................. 44
6.1.2 Employee Directed Investments........................................ 44
6.2 Net Adjustments...................................................... 45
6.3 Distribution Adjustments............................................. 45
6.4 Expenses ............................................................ 45
ARTICLE VII DISTRIBUTIONS
7.1 Termination of Employment (Including Disability)
Before Retirement.................................................. 47
7.2 Death Benefits....................................................... 47
7.3 Retirement .......................................................... 51
7.4 Form of Retirement Benefit .......................................... 51
7.5 Retirement Benefits: Election of Forms and Commencement
of Payments........................................................ 53
7.6 Loans to Participants................................................ 57
ARTICLE VIII GENERAL PROVISIONS
8.1.1 Plan Modification: Authority........................................ 62
8.1.2 Plan Modification: Merger........................................... 62
8.1.3 Plan Modification: Termination...................................... 62
8.2.1 Duties: Plan Administrator.......................................... 62
8.2.2 Duties: Employer.................................................... 63
8.3 Benefit Claims Procedure............................................ 63
8.4 Review Procedure.................................................... 63
8.5 Qualification of the Plan and Conditions of Contributions........... 64
8.6 Beneficiaries....................................................... 64
8.7 Spendthrift Clause.................................................. 65
8.8 Annuities........................................................... 65
8.9 Limitations of the Employer's Liability............................. 65
8.10 Non-Guarantee of Employment......................................... 66
8.11 Applicable Law...................................................... 66
8.12 USERRA Requirements................................................. 66
ARTICLE IX DIRECT ROLLOVERS
9.1 General Rule........................................................ 67
9.2 Definitions......................................................... 67
ARTICLE I
STATEMENT OF PURPOSE AND
INTENTIONS
1.1 Purpose
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The Employer adopts this Plan as a defined contribution retirement plan
of the profit sharing type with a cash or deferred arrangement to provide
retirement benefits and incidental benefits to certain Employees who
qualify for such benefits as more particularly provided herein.
1.2 Intent to Qualify
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It is the Employer's intent that this Plan be a qualified plan in the
meaning of sec. 401 of the Internal Revenue Code of 1986, as amended, that
any trust that may become part hereof be exempt from tax under sec. 501(a)
of the Code, and that contributions made by the Employer be deductible
under sec. 404 of the Code. This Plan shall be interpreted, applied and
administered in a manner consistent with this intent to qualify. All
amounts contributed to, accumulated and/or held pursuant to this Plan
shall not be diverted to or used for other than the exclusive benefit of
the Participants or their beneficiaries until after such amounts have been
distributed from this Plan. In the event that the portion of this Plan
comprising the qualified cash or deferred arrangement fails to qualify
under the provisions of sec. 401(k) of the Code, the Plan as a whole
shall nonetheless be interpreted so as to qualify under sec. 401(a) of
the Code.
1.3 Effect of Amendment and Restatement
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This Plan is an amendment and restatement of the Standard Insurance
Company Employees and Agents Deferred Compensation Plan. As such, it is
effective only with respect to Home Office Employees and to Employees who
terminate employment with the Employer on or after the date the restated
Plan was adopted, so that the rights to benefits from the Plan, if any,
of former Employees who terminated employment before that date shall be
determined according to the Plan as it was on the date they terminated
employment, except to the extent that it may cause this Plan's document
to more accurately reflect both the intent of the Employer and the ongoing
administration of the Plan, and except as may be otherwise specifically
provided in this Plan, and except to the extent required by law.
1
ARTICLE II
DEFINITIONS
For the purposes of this Plan, when the following terms appear in this Plan in
boldface type, they shall have the meanings indicated in this Article unless a
different meaning is clearly required by the context.
Whenever required by the context, masculine pronouns shall include the feminine,
and singular the plural.
2.1 Anniversary Date means each January 1.
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2.2 Annuity Starting Date means the first day of the first period for which an
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amount is payable as an annuity or any other form.
2.3 Beneficiary is defined in Section 8.6, except as specifically provided to
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the contrary elsewhere in this Plan.
2.4 Break in Service Year means a twelve-consecutive-month period commencing on
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an Anniversary Date (or, for the purposes of determining an Employee's
Preliminary Service, each Preliminary Computation Period, as described in
Article III) and during which an Employee (or former Employee) is not
credited with any Hours of Service.
2.5 Code means the Internal Revenue Code of 1986, as amended, and all
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regulations promulgated thereunder.
2.6 Company means Standard Insurance Company, an Oregon mutual insurance
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company.
2.7 Compensation means wages, salary, and/or other remuneration that is
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receivable by an individual during a Plan Year in exchange for Service
while an Eligible Employee and that is required to be reported as income
on the individual's Form W-2 for federal income tax purposes, EXCEPT that
Compensation shall not include amounts attributable to Company-wide profit
sharing bonuses, officers' hiring or relocation bonuses, other
individualized bonuses paid to officers, long-term incentive compensation
plans, reimbursement for unused vacation at the time of termination of
Service, severance pay, taxable fringe benefits, tax reimbursements,
awards and prizes, club dues, noncash compensation, or contributions to
and benefits from any other employee benefit plan maintained by the
Company except as provided below.
In addition, Compensation shall include the following amounts:
(a) all elective deferrals (as defined by Code sec. 402(g)(3)) made by
the Participant during the Plan Year pursuant to a cash or deferred
arrangement sponsored by the Employer, including those described by
Section 4.2.1 of this Plan; and
2
(b) all Compensation accrued by the Participant during the Plan Year but
which is not then included as taxable income of the Participant
pursuant to a "cafeteria" or other such plan maintained by the
Employer according to Code sec. 125.
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for Plan
Years beginning on or after January 1, 1994, the annual Compensation of
each Employee taken into account under the Plan shall not exceed the OBRA
`93 annual compensation limit. The OBRA `93 annual compensation limit is
$150,000, as adjusted by the Commissioner for increases in the cost of
living in accordance with section 401 (a)(17)(B) of the Internal Revenue
Code. The cost-of-living adjustment in effect or a calendar year applies
to any period, not exceeding 12 months, over which Compensation is
determined (determination period) beginning in such calendar year. If a
determination period consists of fewer than 12 months, the OBRA `93 annual
compensation limit will be multiplied by a fraction, the numerator of
which is the number of months in the determination period, and the
denominator of which is 12.
For Plan Years beginning on or after January 1, 1994, any reference in
this Plan to the limitation under section 401 (a)(17) of the Code shall
mean the OBRA `93 annual compensation limit set forth in this provision.
If Compensation for any prior determination period is taken into account
in determining an Employee's benefits accruing in the current Plan Year,
the Compensation for the prior determination period is subject to the OBRA
`93 annual compensation limit in effect for that prior determination
period. For this purpose, for determination periods beginning before the
first day of the first Plan Year beginning on or after January 1, 1994,
the OBRA `93 annual compensation limit is $150,000.
Any provision of this Section to the contrary notwithstanding, the amount
of Compensation for each Participant taken into account under this Plan
in any Plan Year beginning after 1988 and before 1994 may not exceed
$200,000, or such greater amount as the Secretary of the Treasury or his
delegate may have authorized pursuant to Code sec. 401 (a)(17).
In applying this limit, the family aggregation rules of Code sec.
414(q)(6) shall apply, except that in applying such rules, the term
"family" shall include only the spouse of the Employee and any lineal
descendants of the Employee who have not attained age 19 before the close
of the Plan Year. In addition, if this limit applies to a family unit,
then for the purposes of this Plan, each affected family member shall be
credited with an amount of Compensation on a pro rata basis, so that such
credited amount, when compared to the adjusted compensation limit, shall
have the same direct proportion that exists in comparing that person's
actual Compensation to the sum of all that family's affected members'
Compensation.
3
2.8 Date of Employment means the date on which an Employee has his first Hour
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of Service.
2.9 Date of Re-employment means the first date as of which an Employee has an
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Hour of Service after his most recent termination of Service, EXCEPT that
for the purposes of determining Preliminary Service, Date of Re-employment
means the first date as of which an Employee is credited with an Hour of
Service after he most recently has accrued a Break in Service Year which
permits his prior Preliminary Service to be disregarded.
2.10 Effective Date means January 1, 1980. The effective date of this
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amendment and restatement is January 1, 1994, except as may be otherwise
required by law for particular Plan provisions.
2.11 Elective Compensation means that portion of a Participant's Compensation
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that is attributable to Service performed while the Participant had in
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effect an election to have Elective Contributions made on his behalf,
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pursuant to Article IV.
2.12 Eligible Compensation means that portion of a Participant's
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Compensation that is attributable to Service performed while he was a
Participant with respect to Basic Matching Contributions (i.e. he had
satisfied the one year Preliminary Service requirement and commenced
participation on the next Entry Date).
2.13 Employee means a natural person who performs Service for the Employer in
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exchange for Compensation, including any Leased Employee (as described
below) but excluding any independent contractor who is not a Leased,
Employee. For the purposes of this Plan, Employee shall be further
described as follows.
(a) Eligible Employee means (1) an Employee who is not a Leased Employee,
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(2) an Employee who is not included in a unit of employees covered by
a collective bargaining agreement with the Employer pursuant to which
retirement benefits were the subject of good faith bargaining, except
to the extent that such agreement expressly permits or requires
participation in this Plan and (3) an Employee whose Service is
based at the Company's Home Office in Portland, Oregon, or at any
Agency Office of the Company. However, Eligible Employee does not
mean any person who is an Agent. An Agent means an agency manager,
district manager, associate manager, agency supervisor, career agent
or senior agent engaged as such pursuant to a contract with the
Company.
(b) Highly Compensated Employee ("HCE") means:
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(1) The group of HCEs includes any Employee who during the Plan Year
performs services for the Employer and who (i) in a 5-percent
owner, (ii) receives compensation for the Plan Year in excess of
the sec. 414(q)(1)(B) amount for the Plan Year, (iii) receives
compensation for the Plan Year in excess of the
sec. 414(q)(1)(C) amount for
FIFTH AMENDMENT
Section 2.12
Effective 7/1/98
4
the Plan Year and is a member of the top paid group of Employees
within the meaning of sec. 414(q)(4), or (iv) is an officer and
receives compensation during the Plan Year that is greater than
50 percent of the dollar limitation in effect under sec.
415(b)(1)(A). If no officer satisfies the compensation
requirement during the Plan Year, the highest paid officer for
such year shall be treated as an HCE.
For purposes of determining who is an HCE, compensation means
compensation within the meaning of sec. 415(c)(3) as set forth in
the Plan for purposes of determining the sec. 415 limits, except
that amounts excluded pursuant to sections 125, 402(e)(3),
402(h)(1)(B) and 403(b) are included. If compensation used for
purposes of determining the sec. 415 limits under the Plan is not
defined as total compensation as provided under sec. 415(c)(3)
and the regulations thereunder, then for purposes of determining
who is an HCE, compensation means compensation within the meaning
of sec. 1.415-2(d)(11)(i) of the Income Tax Regulations, except
that amounts excluded pursuant to sections 125, 402(e)(3),
402(h)(1)(B) and 403(b) are included.
(2) If an Employee is a family member of either a 5-percent owner
(whether active or former) or an HCE who is one of the 10 most
highly compensated Employees ranked on the basis of compensation
paid by the Employer during such year, then the family member and
the 5-percent owner or top-ten HCE shall be aggregated. In such
case, the family member and 5-percent owner or top-ten HCE shall
be treated as a single Employee receiving compensation and plan
contributions or benefits equal to the sum of the compensation
and benefits of the family member and 5-percent owner or top-ten
HCE. For purposes of this Section, family member includes the
spouse, lineal ascendants and descendants of the Employee or
former Employee, and the spouses of such lineal ascendants and
descendants.
(3) The determination of who is an HCE, including the determination
of the number and identity of Employees in the top paid group,
the number of Employees treated as officers and the compensation
that is taken into account, shall be made in accordance with the
sec. 414(q) and sec. 1.414(q)-1T of the temporary Income Tax
Regulations to the extent they are not inconsistent with the
method established above.
THIRD AMENDMENT
Section 2.13
Effective 1/1/95
5
(c) Key Employee means (solely for the purposes of Section 5.2) an
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Employee who, at any time during the Plan Year or 4 preceding Plan
Years, was:
(1) an officer of the Employer having an annual Compensation greater
than 50% of the amount in effect under Code sec. 415(b)(1)(A) for
any such Plan Year; or
(2) one of the ten Employees having annual Compensation greater than
the limitation in effect under Code sec. 415(c)(1)(A) and owning
(or considered as owning within the meaning of Code sec. 318) the
largest interests of the Employer; or
THIRD AMENDMENT
Section 2.13
Effective 1/1/95
6
(3) a 5 percent owner of the Employer; or
(4) a 1 percent owner of the Employer having an annual Compensation
of more than $150,000.
For the purposes of this Plan, Key Employee shall be described more
particularly by (and in any event, interpreted consistent with) Code
sec. 416(i)(1) and regulations promulgated thereunder.
(d) Leased Employee means a person who is employed (either as a common
---------------
law employee or an independent contractor) by a leasing organization
(but not by the Employer) and who performs services for the
Employer on a substantially full-time basis for a period of at
least one year, where such services are of a type historically
performed by Employees within the business field of the Employer, and
where such services are provided pursuant to a contract between the
leasing organization and the Employer, EXCEPT that if such person is
covered under a money purchase pension plan maintained by the leasing
organization and which provides (1) a nonintegrated employer
contribution rate of at least 7 1/2% of compensation for services
performed prior to January 1, 1987, and at least 10% of compensation
for services performed after December 31, 1986, with compensation
being determined according to Code sec. 415(c)(3), but including
amounts contributed by the Employer pursuant to a salary reduction
agreement which are excludable from the Employee's gross income
under Code sec. 125, 402(e)(3), 402(h), or 403(b); (2) immediate
participation; and (3) full and immediate vesting, AND if the sum of
all such persons is not more than 20% of the Employer's "nonhighly
compensated workforce" (as defined in 26 CFR 1.414(n)-2(f)(3)(ii)),
then for the purposes of this Plan such person is not a Leased
Employee, and is at that time ineligible for a benefit or any vested
interest in this Plan.
Any provisions of this Section and this Plan to the contrary
notwithstanding, the term "Leased Employee" shall be more
specifically defined by, and Leased Employees shall be treated under
this Plan consistent with, Code sec. 414(n) and 26 CFR 1.414(n)-2.
2.14 Employer means Standard Insurance Company, and any other person or
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business organization which has adopted and maintains this Plan on behalf
of its employees with the consent of Standard Insurance Company.
In addition, to the extent required for this Plan's qualification for
special tax treatment under the Code, and to the extent otherwise required
by applicable law, including for example the determination of a
Participant's Preliminary Service and Years of Service, Employer also
means any predecessor organization which previously maintained this Plan
on behalf of its employees (but only with regard to that period of time
during which the Plan was maintained by such organization(s)), and any
employer which, together with the Employer (as otherwise defined in this
Section), is a member of a controlled group of corporations in the meaning
of Code sec. 414(b), or is a member of a group of trades or business
(whether or not incorporated) under common control in the meaning of Code
sec. 414(c), or is a member of an affiliated service group in the meaning
of Code sec. 414(m), or is otherwise required to be aggregated by Code
sec. 414(o).
7
2.15 Hour of Service means:
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(a) each hour for which an Employee is paid, or entitled to payment, by
the Employer for the performance of duties;
(b) each hour for which an Employee is directly or indirectly paid, or
entitled to payment, by the Employer on account of a period of time
during which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation, holiday,
il1ness, incapacity (including disability), layoff, jury duty,
military duty or leave of absence except with respect to payments
made or due under a plan maintained solely for the purpose of
complying with applicable workers' compensation or unemployment
compensation or disability insurance laws or which are solely in
reimbursement to the Employee for medical or medically-related
expenses incurred by the Employee; however, no more than 501 Hours of
Service shall be credited pursuant to this paragraph to an Employee
on account of any single continuous period during which the Employee
performs no duties (whether or not such period occurs in a single
Plan Year); and
(c) each hour for which back pay, irrespective of mitigation of damages,
is either awarded or agreed to by the Employer; however, an Hour of
Service shall not be credited under both this paragraph and
paragraph (a) or (b), above.
Hours of Service credited under paragraphs (b) and (c), above, shall be
credited in accordance with Department of Labor Regulations found at 29CFR
sec. 2530.200b-2(b). Hours of Service shall be credited to the appropriate
Plan Year in accordance with 29CFR sec. 2530.200b-2(c).
Hours of Service included pursuant to paragraph (a) shall be determined
according to records of employment maintained by the Employer. If such
records do not provide an adequate basis for determining the actual number
of Hours of Service accrued by a particular Employee (e.g. a salaried
Employee), then Hours of Service under paragraph (a) shall be credited to
the Employee on a weekly basis and the Employee shall be credited with 45
Hours of Service for every week in which he has accrued at least one Hour
of Service as otherwise described in paragraph (a).
Special Rule for Maternity or Paternity Absences
------------------------------------------------
If an Employee is absent from work after December 31, 1984, due to
(1) the pregnancy of the Employee,
(2) the birth of a child to the Employee,
(3) the placement of a child with the Employee pursuant to the Employee's
adoption of the child, or
(4) the care of such child described in (2) or (3) above immediately
following its birth or placement,
Art. II
8
the Employee shall nonetheless be credited with the number of Hours of
Service which normally would have been credited to the Employee but for
said absence (or, if the Plan Administrator is unable to determine said
number, with eight (8) Hours of Service for each regularly scheduled
workday the Employee is absent), to a maximum of 501 Hours of Service,
PROVIDED that this special crediting of Hours of Service occurs during
only one Plan Year, and
PROVIDED that the Plan Year in which such Hours of Service are credited is
the Plan Year in which the absence begins, unless such crediting would
not be necessary to avoid a Break in Service Year in said Plan Year, in
which case such Hours of Service shall be credited as they accrue in the
Plan Year immediately following the Plan Year in which the absence begins,
and
PROVIDED that the crediting of such Hours of Service shall be solely for
the purpose of avoiding a Break in Service Year, and shall not operate to
increase any Employee's or former Employee's vested percentage or
retirement benefit, nor shall the crediting have any other operative
effect regarding this Plan, and
PROVIDED that, under rules established by the Plan Administrator, the
Employee may be required to provide to the Plan Administrator written
certification from the Employee's attending doctor or other professional
attendant at birth or representative of the relevant adoption agency to
establish that the absence from work is for the reasons referred to above.
2.16 Individual Accounts means, for any Participant, those accounts which are
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both listed below and maintained pursuant to this Plan on his behalf.
(a) Basic Contribution Account
(b) Elective Contribution Account
(c) Rollover Contribution Account
(d) Prior Plan Contribution Account
(e) Supplemental Contribution Account
2.17 Insurance Company means a legal reserve life insurance company, licensed
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to do business in the state of Oregon, with which the Trustees have
entered into a contract to provide benefits under the Plan.
2.18 Limitation Year, for purposes of determining the limitation on certain
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additions to the Plan for the benefit of an Employee as described in
Section 5.1.1, means a twelve-consecutive-month period beginning on an
Anniversary Date.
2.19 Normal Retirement Age and Normal Retirement Date are defined in Article
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VII under "Retirement".
2.20 Participant means an Employee or former Employee who has become a
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Participant or resumed participation pursuant to Section 3.1 or 3.6 and
who has not subsequently ceased to participate as provided in Section 3.5.
A Participant may be Active or Inactive as provided in Section 3.4.
9
2.21 Plan means this Standard Insurance Company Home Office Employees' Deferred
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Compensation Plan.
2.22 Plan Administrator means one or more persons appointed by the Trustees to
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control and manage the operation and administration of the Plan. The
person or persons so appointed shall constitute a named fiduciary or
fiduciaries for purposes of the Employee Retirement Income Security Act
of 1974. If no Plan Administrator is appointed, then the Employer (or the
Trustee(s) if the Plan is trusteed) shall be the Plan Administrator.
2.23 Plan Year means a period of time commencing on an Anniversary Date and
- ---- ---------
ending with the day immediately preceding the next Anniversary Date.
2.24 Preliminary Service is defined in Article III.
- ---- -------------------
2.25 Qualified Matching Contributions ("QMAC") means employer contributions
- ---- ----------------------------------------
(other than Elective Contributions) made to a plan for a Participant on
account of any employee contributions or Elective Contributions made to a
plan by or on behalf of the Participant, PROVIDED that the amounts of the
employer contributions are subject to the nonforfeitability and
distribution limitations of Income Tax Reg. 26 CFR 1.401(k)-1(c) & (d) the
same as elective contributions.
Qualified Nonelective Contributions ("QNC") means employer contributions
------------------------------------------
made to a plan which are not matching contributions (i.e. not made on
account of any employee or elective contribution) or Elective
Contributions, but which are subject to the nonforfeitability and
distribution limitations of Income Tax Reg. 26 CFR 1.401(k)-1(c) & (d) the
same as elective contributions.
2.26 Required Beginning Date means the later of:
- ---- -----------------------
(a) General Rule. Required Beginning Date means, for any Participant,
------------
April 1 of the calendar year following the calendar year in which the
Participant attains age 70 1/2.
(b) Transition Rules: The Required Beginning Date of any Participant who
----------------
attained age 70 1/2 before January 1, 1988, shall be determined
according to (1) or (2) below:
(1) The Required Beginning Date of a Participant who is not a 5%
---
owner is April 1 of the calendar year following the later of:
(A) the calendar year in which the Participant attained age
70 1/2, or
(B) the calendar year in which the Participant retires.
(2) The Required Beginning Date of any Participant who is a 5%
owner during any year beginning after December 31, 1979, is
April 1 of the calendar year following the later of:
10
(A) the calendar year in which the Participant attained age
70 1/2, or
(B) the earlier of
(i) the calendar year with or within which ends the Plan
Year in which the Participant becomes a 5% owner, or
(ii) the calendar year in which the Participant retires.
(c) The Required Beginning Date of any Participant who is not a 5% owner,
who attained age 70 1/2 during 1988, and who did not retire as of
January 1, 1989, is April 1, 1990.
(d) 5% owner, for purposes of this Section, means a Participant who is a
5% owner within the meaning of Code sec. 416(i) (except without
regard to whether the Plan is actually top-heavy) at any time during
the Plan Year ending with or within the calendar year in which the
Participant attains age 66 1/2, or any subsequent Plan Year.
2.27 Retirement and Retirement Date are defined in Article VII under
- ---- ---------- ---------------
"Retirement".
2.28 Service means employment of the Employee by the Employer for the
- ---- -------
performance of labor or duties by the Employee on behalf of the Employer
and for which the Employee is to be compensated by the Employer.
2.29 Total and Permanent Disability means a physical or mental condition that
- ---- ------------------------------
in the opinion of the Plan Administrator precludes a person from
employment for which he is qualified because of his experience, training,
and education, and that is expected to continue for not less than 12
months. The Plan Administrator's opinion regarding the degree and
permanence of the disability shall be supported by medical evidence.
2.30 Trustees means those persons or the organization with which the Employer
- ---- --------
has entered into a trust agreement to provide benefits under the Plan.
However, at any time that the Plan is not trusteed, "Trustees" shall mean
the Company.
2.31 Vested Benefit means, at any time, the sum of the Participant's vested
- ---- --------------
Individual Account balances.
2.32 Years of Service
- ---- ----------------
(a) General Rule
------------
Subject to the exclusions set forth in (b) below, a Participant's
period of employment taken into account to determine his Years of
Service for the purposes of this Plan shall be measured as follows.
A Participant shall be credited with one Year of Service for each
twelve-consecutive-month period which commenced on an Anniversary
Date on or after the Effective Date and during which the Participant
accrued at least 1,000 Hours of Service.
11
In addition, if the Participant was an Employee on the Effective Date,
he shall also be credited with one Year of Service for each twelve-
consecutive-month period which commenced on an Anniversary Date prior to
the Effective Date and during which the Participant accrued at least
1,000 Hours of Service.
(b) Exclusions
----------
If a Participant or former Participant accrues a Break in Service Year,
all Years of Service attributable to his employment prior to that Break
in Service Year shall thereafter be disregarded unless either
(1) his Vested Percentage is greater than zero at the time the Break in
Service Year has accrued, or
(2) the number of his consecutive Break in Service Years is less than
(A) or (B), whichever is greater, where
(A) equals 5, and
(B) equals the aggregate number of his Years of Service before the
Break in Service Years, not taking into account Years of
Service previously disregarded because of prior Break in
Service Years.
In addition, if a Participant or former Participant has at least five
consecutive Break in Service Years, all Years of Service attributable to
his employment subsequent to said five consecutive Break in Service
Years shall thereafter be disregarded for purposes of determining his
vested interest in the amount which had been allocated to his Basic
Contribution Account (pursuant to Section 4.1.3) prior to the period of
such five consecutive Break in Service Years.
12
ARTICLE III
PARTICIPATION
3.1 Commencement of Participation
- --- -----------------------------
The date of commencement of participation of Employees who were
Participants before the date as of which this restatement of the Plan
became effective (i.e. January 1, 1994) shall be determined by the terms
of this Plan as it was in effect before this restatement.
An Employee who did not participate before this restatement became
effective shall commence participation on this restatement's effective
date if he meets the Plan's Minimum Participation Standards. If not, he
shall commence participation on the first Entry Date thereafter on which
he meets the Plan's Minimum Participation Standards.
The Entry Dates shall be the first day of each month.
3.2 Minimum Participation Standards
- --- -------------------------------
An Employee meets the Plan's Minimum Participation Standards at any time
when he satisfies the following conditions:
(a) He is an Eligible Employee.
(b) With respect to Elective Contributions, he has been an Employee for
at least 28 consecutive days.
(c) With respect to Basic Matching Contributions, he is credited with at
least one year of Preliminary Service.
3.3 Preliminary Service
- --- -------------------
An Employee shall be credited with a year of Preliminary Service for each
complete Preliminary Computation Period in which he has not less than
1,000 Hours of Service, whether or not he was continuously employed during
the Preliminary Computation Period.
Preliminary Computation Periods shall have a duration of twelve
consecutive months. Each Employee's initial Preliminary Computation Period
shall commence as of his Date of Employment (or, after a Break in Service
Year that permits his prior Preliminary Service to be disregarded, his
Date of Re-employment). Thereafter, the Preliminary Computation Periods
shall commence as of each Anniversary Date, beginning with the first
Anniversary Date following the Employee's Date of Employment (or Date of
Re-employment, if applicable).
If an Employee accrues a Break in Service Year, then his Preliminary
Service attributable to his employment prior to that Break in Service Year
shall thereafter be disregarded unless either
(1) his Vested Percentage is greater than zero at the time the Break in
Service Year accrues, or
FIFTH AMENDMENT
Section 3.2
Effective 7/1/98 13
(2) the number of his consecutive Break in Service Years is less than
(A) or (B), whichever is greater, where
(A) equals 5, and
(B) equals the aggregate number of his Years of Preliminary
Service before the Break in Service Years, not taking into
account Years of Preliminary Service previously disregarded
because of prior Break in Service Years.
3.4 Active Participation; Inactive Participation
- --- --------------------------------------------
Once an Employee has commenced participation (or if he subsequently
ceased to participate, once he has resumed participation), he shall be an
Active Participant with respect to each Hour of Service accrued while he
is an Eligible Employee. At any time thereafter at which he is not an
Eligible Employee, but before his participation has ceased, he shall be
an Inactive Participant.
3.5 Cessation of Participation
- --- --------------------------
A Participant shall cease to participate in this Plan (without regard to
his status as an Employee) as of the first date on which he has most
recently terminated his employment as an Employee and also has no rights
(present or contingent) to any benefit under this Plan.
3.6 Participation on Resumption of Employment
- --- -----------------------------------------
A former Employee who participated during the period of his prior
employment and who does not have Break in Service Years which permit his
Preliminary Service earned during his prior employment to be disregarded
shall resume participation as of his first Hour of Service upon
resumption of employment as an Eligible Employee.
Any other former Employee shall commence participation as of the first
Entry Date which occurs on or after the date of his resumption of
employment as an Eligible Employee and as of which he has satisfied the
Minimum Participation Standards described in Section 3.2.
Art. III 14
ARTICLE IV
CONTRIBUTIONS
4.1.1 Basic Contributions: Amount
---------------------------
For each Plan Year, the Employer may contribute amounts to the Plan.
These amounts shall be called Basic Contributions, and shall be
determined according to the following provisions.
(a) Basic Matching Contribution
---------------------------
The Employer may contribute amounts as a match of Elective
Contributions for the Plan Year. The amount of each matching
contribution will equal one hundred percent (100%) of each
Participant's Elective Contribution (if any) for the period in the
Plan Year during which he was a Participant with respect to Basic
Matching Contributions (i.e., he had satisfied the one year
Preliminary Service requirement and commenced participation on the
next Entry Date). However, in determining the amount of a matching
contribution, no matching contribution shall be made on behalf of
any Participant for the Plan Year in excess of three percent (3%)
of the Participants Eligible Compensation for the Plan Year.
For the purposes of this subsection (a), the amount of Elective
Contributions to be matched shall be determined without regard to
any withdrawals of Elective Contributions that were made during
that Plan Year (see Section 4.2.5).
(b) Basic Top-Heavy Contribution
---------------------------
If a Participant is to be credited with some additional amount
pursuant to the "top-heavy provisions of Section 5.2 of this Plan,
such additional amount shall be contributed and credited as an
additional portion of the Basic Contribution for that Plan Year.
Any of the provisions of this Section to the contrary notwithstanding,
no amounts may be contributed to the Plan as Basic Contributions in
excess of the maximum amount that the Employer may deduct from its net
income subject to federal income taxation for the Employer's taxable
year on account of which such contributions have been made plus any
amount which may be currently contributed and "carried over" for
succeeding taxable years pursuant to Code sec. 404(a)(3)(A)(ii)
(assuming that the Employer is subject to federal income taxation), nor
shall such amounts exceed the maximum amount which may be allocated
consistently with the limitations stated in Section 5.1.1.
Basic Contributions shall be allocated among the Plan's Participants
pursuant to Section 4.1.3 in a uniform and nondiscriminatory manner.
4.1.2 Basic Contribution Account
--------------------------
Each Participant shall have maintained on his behalf a Basic
Contribution Account, which shall be adjusted as provided in Article VI
and which shall be closed when the Participant is entitled to no
further benefits under the terms of the Plan.
4.1.3 Basic Contributions: Allocations
- ----- --------------------------------
(a) As of the last day of each Plan Year (but before the allocation of
the Net Adjustment described in Section 6.2 below), a portion of the
Basic Contribution for the Plan Year, if any, shall be allocated to
the Basic Contribution Account of each Participant who is allocated
an Elective Contribution for that Plan Year.
Each such Participant shall be allocated a portion of that Basic
Contribution according to the Basic Contribution match described in
Section 4.1.1(a).
(b) Also, as of the last day of each Plan Year (but before the allocation
of the Net Adjustment described below in Article VI), each
Participant who is entitled to be credited with an additional amount
of Basic Contribution pursuant to Section 5.2 of this Plan shall have
such amount credited to his Basic Contribution Account.
4.1.4 Basic Contributions: Vesting
- ----- ----------------------------
(a) At any time, each Participant's interest in his Basic Contribution
Account balance (EXCEPT in Basic Matching Contributions that are
forfeited because they relate to excess deferrals, excess
contributions, or excess aggregate contributions) shall be fully
vested in the Participant and not subject to forfeiture prior to the
withdrawal or distribution of such balance pursuant to this Plan.
(b) Under no circumstances shall any amendment of this Plan reduce any
Participant's Vested Percentage regarding any benefits accrued under
this Plan as of the adoption date (or effective date, if later) of
such amendment. With regard to the effect of such an amendment on
subsequently accrued benefits, for each Participant whose Vested
Percentage under the Plan as amended would at any future time be less
than it would be if determined without regard to such amendment, then
provided that the Participant had completed at least three Years of
Service as of the adoption date (or effective date, if later) of the
amendment, such Participant may irrevocably elect in a writing
delivered to the Plan Administrator during the election period
described below to have his Vested Percentage in his subsequently
accrued benefits under this Plan determined without regard to such
amendment.
For the purpose of this Section, the election period within which
such election may be delivered to the Plan Administrator shall begin
as of the adoption date of the amendment, and shall end on the
sixtieth day after the latest of:
(1) the adoption date of the amendment;
(2) the effective date of the amendment; or
(3) the date on which the Participant received written notice of the
amendment from the Employer or Plan Administrator.
Art. IV 16
4.2.1 Elective Contributions: Amount
- ----- ------------------------------
(a) Elective Deferral
-----------------
Each Participant may elect to defer his receipt of Compensation that
has not yet become available to him. For each Plan Year, the total
amount of Compensation that may be deferred may equal not less than
three percent (3%) and not more than the maximum amount of his
Elective Compensation for the Plan Year permissible consistent with
Section 5.1.1 and all other limiting provisions of this Plan, the
Code, and all other applicable legal limits.
(For the purposes of this Section, the Participant's "Elective
Compensation for the Plan Year" shall include Elective Compensation
attributable to Service performed by the Participant during the Plan
Year and which, but for the Participant's elective deferral, would
have been received by the Participant within two and one-half months
after the close of the Plan Year.)
For each Plan Year, on behalf of each Participant who has made such
an elective deferral, the Employer shall contribute an amount to the
Plan equal to the amount of the Participant's elective deferral of
Compensation for the Plan Year. This contribution shall be called an
Elective Contribution.
Each Elective Contribution shall be paid to the Plan by the Employer
as soon as reasonably practicable (in no event later than 90 days)
after it is withheld by or otherwise paid to the Employer. In
addition, each Elective Contribution shall be paid to the Plan by
the Employer no later than the last day of the twelve-month period
immediately following the Plan Year with respect to which the
contribution is made.
(b) Election
--------
A Participant may elect to change the amount of his elective
deferrals, and therefore the amount of the Elective Contributions
made on his behalf, within the limits prescribed in subsection (a)
above. A Participant may also elect to cease his elective deferrals
and Elective Contributions altogether, or, having done so, may elect
to recommence them.
A Participant's election to commence or recommence elective deferrals
may become effective only as of the first day of any prospective
month.
A Participant's election to change the amount of his e1ective
deferrals may become effective only as of the first day of any
prospective calendar quarter, however, a Participant may elect only
one change each quarter.
A Participant's election to cease his elective deferrals altogether
may become effective only as of the first day of any prospective
payroll period.
However, any of the provisions of this subparagraph (b) to the
contrary notwithstanding, any election described by this subparagraph
(b) regarding elective deferrals may become effective only after
written notice delivered to the Plan Administrator within a
reasonable time prior to the effective date of the election.
Art. IV 17
(c) Limit on Amount
---------------
The total sum of any Participant's elective deferrals for any taxable year
of the Participant may not exceed the limit prescribed by IRC Reg.
l.402(g)-1(c). (Generally, for taxable years beginning in 1994, that limit
equals $9,240, except for adjustments made to take into account elective
deferrals made to annuity contracts under Code sec. 403(b)).
For the purposes of this subsection (c), "elective deferrals" has the
meaning defined in IRC Reg. 1.402(g)-1(b), including (but not limited to)
Elective Contributions received by this Plan on the Participant's behalf.
For any Participant, if this limit on elective deferrals is exceeded, then
the following corrective measures are permitted.
(1) The Participant may notify the Plan Administrator of the excess
deferral, and may request that the Plan Administrator distribute to
the Participant an amount not exceeding the lesser of:
(A) the amount of the excess deferral, plus all income allocable
to the excess deferral;
(B) the sum of all amounts deferred by the Participant and
contributed to the Plan as Elective Contributions on behalf of
the Participant with regard to the affected taxable year, net of
any allocable earnings, gains or losses attributable to such
amounts; or
(C) the balance of the Participant's Elective Contribution Account
as of the date of distribution, minus any amounts of withholding
that are legally required.
In addition, the amount that may be included in a corrective
distribution shall be reduced by any excess contributions previously
distributed to the Participant for the Plan Year that began with or
within the affected taxable year of the Participant.
To be effective for the purposes of this Plan, the Participant's
notice and request must be in writing and delivered to the Plan
Administrator prior to the first April 15 following the close of the
affected taxable year of the Participant.
To the extent that the Participant has excess deferrals for the
taxable year calculated by taking into account only elective deferrals
under this Plan and other plans of the Employer, and absent actual
notification by the Participant, the Participant shall be deemed to
have provided the notice described above in this subsection.
(2) A corrective distribution of excess deferrals and allocable income may
be made during the affected taxable year of the Participant only if
all of the following conditions are satisfied.
Art. IV 18
(A) The Participant has designated the amount of the
distribution as being attributable to an excess
deferral. (Because subsection (1) above limits the
amount of the corrective distribution to not more than
the amount of excess deferrals calculated by taking
into account only elective deferrals under this Plan
and other plans of the Employer, and absent an actual
designation by the Participant, the Participant shall
be deemed to have provided the designation described
above in this subsection.)
(B) The corrective distribution is made after the date on
which the Plan received the excess deferral.
(C) The Plan has designated the amount of the distribution
as being attributable to an excess deferral.
(3) Not later than the first April 15 following the close of the
affected taxable year of the Participant, and after receipt
of the Participant's written notice and request, the Plan
Administrator may make the appropriate corrective
distribution, consistent with the provisions of this
subparagraph (c).
The Plan Administrator may require that before the
corrective distribution is made, the Participant must
provide to the Plan Administrator additional documentation
evidencing the Participant's representations regarding the
excess deferrals.
The income allocable to excess deferrals for the affected taxable
year of the Participant shall be determined according to IRC Reg.
1.402(g)-(1)(d)(5).
In the event of a corrective distribution of excess deferrals and
allocable income, the balance of the Participant's Elective
Contribution Account shall be reduced accordingly.
4.2.2 Elective Contribution Account
- ----- -----------------------------
On behalf of each Participant who has elected to defer some portion of
his Compensation pursuant to this Article IV, there shall be
maintained an Elective Contribution Account, which shall be adjusted
as provided in Article VI and which shall be closed when the
Participant is entitled to no further benefits under the terms of this
Plan.
4.2.3 Elective Contributions: Allocations
- ----- -----------------------------------
Any Elective Contribution received by the Plan on behalf of a
Participant shall be credited to the Elective Contribution Account of
that Participant as of the date on which the contribution was received
by the Plan, but in any event not later than the last day of the Plan
Year with respect to which the Participant deferred Compensation so as
to receive the Elective Contribution.
4.2.4 Elective Contributions: Vesting
- ----- -------------------------------
The Elective Contributions received by the Plan on behalf of any
Participant shall be fully vested in such Participant and not subject
to forfeiture prior to the time they are withdrawn or distributed
pursuant to this Plan.
Art. IV 19
4.2.5 Elective Contributions: Withdrawals
- ----- -----------------------------------
(a) At any time before his Retirement Date, a Participant may apply to
withdraw an amount from his Elective Contribution Account. The
application must be in writing and received by the Plan
Administrator. If the Participant has attained age 59 1/2 or is not
an Employee as of the date of distribution, the Participant may
withdraw up to the entire balance of his Elective Contribution
Account, including interest or other earnings. Subject to the
additional restrictions of this section, any other Participant may
withdraw an amount that does not exceed the balance of the account
attributable to Elective Contributions made on his behalf, excluding
any interest or other earnings that have been allocated after the
last day of the Plan Year ending before July 1, 1989.
A Participant's application may be approved by the Plan
Administrator only if spousal consent requirements of the type
described in Section 7.5(d) have been met within 90 days before the
proposed date of distribution, provided that the Participant's
Vested Benefit exceeds $3,500.00 or has exceeded $3,500.00 as of
any prior distribution from this Plan on behalf of the Participant;
otherwise, such consent need not be obtained.
(b) If the Participant is an Employee on the date as of which the
withdrawal is to be distributed, and if the Participant has not yet
attained age 59 1/2 as of the date of distribution, the Plan
Administrator may permit the distribution only if the distribution
is both made on account of an immediate and heavy financial need of
the Participant and necessary to satisfy that financial need.
(1) Any of the following facts and circumstances shall constitute
an immediate and heavy financial need of the Participant:
(A) expenses for medical care (as defined in Code sec. 213(d))
that were either previously incurred by the Participant,
the Participant's spouse, or any dependents of the
Participant (with "dependents" being as defined by Code
sec. 152) or that are necessary for these persons to
obtain such medical care;
(B) costs directly related to the purchase of a principal
residence for the Participant (excluding mortgage
payments);
(C) payment of tuition and related educational fees for the
next 12 months of post-secondary education for the
Participant, or the Participant's spouse, children, or
dependents (as defined in Code sec. 152);
(D) payments necessary to prevent the eviction of the
Participant from the Participant's principal residence,
or foreclosure on the mortgage on that residence; or
(E) expenses of repair or replacement of the Participant's
principal residence and its contents for damages caused by
natural disasters;
(F) funeral expenses for members of the Participant's family,
or
First Amendment
Art. IV, Section 4.2.5
Effective 7/1/94 20
(G) any other facts and circumstances that the Commissioner of
the Internal Revenue Service has included through the
publication of revenue rulings, notices, or other
documents of general applicability.
A financial need shall not fail to qualify as immediate and
heavy merely because such need was reasonably foreseeable or
voluntarily incurred by the Participant.
(2) In requesting a withdrawal due to financial need, the
Participant shall specifically identify the facts and
circumstances which have caused the financial need and shall
state the amount needed to satisfy the need, which may include
amounts necessary to pay any income taxes or penalties
reasonably anticipated to result from the distribution. The
Participant shall further state that, to the extent of the
amount requested, the financial need cannot otherwise be
satisfied by:
(A) reimbursement or compensation by insurance or otherwise;
(B) reasonable liquidation of the Participant's assets, but
only to the extent that such liquidation would not in
itself cause an immediate and heavy financial need;
(C) cessation of elective deferrals or any Participant
contributions permitted by the Plan;
(D) other distributions or nontaxable (at the time of the
loan) loans from this Plan or any other plan maintained by
the Employer or any other employer; and/or
(E) borrowing from commercial sources on reasonable commercial
terms.
For the purposes of this subsection, the Participant's
resources shall be deemed to include those assets of the
Participant's spouse and minor children to the extent that such
assets are reasonably available to the Participant.
(3) Before the withdrawal may be permitted, the Plan Administrator
shall receive from the Participant any documentation that the
Plan Administrator requires in the performance of his fiduciary
duty to substantiate that the withdrawal is necessary to
satisfy the financial need identified by the Participant. Under
no circumstances shall the Plan Administrator distribute more
than the Plan Administrator reasonably believes is necessary to
satisfy the financial need identified by the Participant.
(c) The Plan Administrator shall approve or deny the Participant's
application for such a withdrawal within a reasonable amount of time
after receipt of such application. If approved, payment shall be
made by the Plan Administrator as soon as administratively
practicable, but in any event within ninety (90) days after the Plan
Administrator's receipt of the Participant's application.
First Amendment
Art. IV, Section 4.2.5
Effective 7/1/94 21
The Plan Administrator shall also issue any denial of such an
application as soon as administratively practicable. Such a denial
shall be delivered in writing and shall state specifically the
reasons for such denial.
(d) The Plan Administrator may limit the frequency of withdrawals. Such
limit shall apply uniformly to all Participants.
(e) The amount of any withdrawal from an Elective Contribution Account
pursuant to this Section shall be charged against that Account as of
the date that the withdrawal is distributed from the Plan.
A withdrawal shall be taken pro rata from the Participant's balances
in the Plan's investment options (described in Section 6.1.2) as of
the date of withdrawal.
4.3.1 Supplemental Contributions: Amount
- ----- ----------------------------------
For any Plan Year in which the Plan Administrator determines that the
average of the actual deferral ratios and/or the actual contribution
ratios of Participants who are HCE's exceeds the limit determined
pursuant to Section 5.3(b) or 5.4(b), as applicable, the Employer may
make Supplemental Contributions that meet the requirements for Qualified
Nonelective Contributions or Qualified Matching Contributions described
in Article II. Supplemental Contributions shall be made solely for the
purpose of complying with the limitations of the applicable Section,
and shall not exceed the amount necessary to satisfy the test described
therein, subject to the limits of Section 5.1.
4.3.2 Supplemental Contribution Accounts
- ----- ----------------------------------
A Supplemental Contribution Account shall be maintained on behalf of
each Participant who will be allocated a portion of the Supplemental
Contribution. The account shall be adjusted as provided in Article VI and
shall be closed when the Participant is entitled to no further benefits
under the terms of the Plan.
4.3.3 Supplemental Contributions: Allocations
- ----- ---------------------------------------
As of the last day of the Plan Year, a portion of the Supplemental
Contribution for the Plan Year, if any, shall be allocated to the
Supplemental Contribution Account of each Participant who is not an HCE
and who is allocated an Elective Contribution for that Plan Year.
Each such Participant shall be allocated a portion of that Supplemental
Contribution so that such portion, when compared with the entire amount
of Supplemental Contribution that is allocated to all such Participants
for the Plan Year, shall bear the same direct proportion that the
Participant's Basic Matching Contribution for that Plan Year bears to the
sum of all such Participants' Basic Matching Contributions for the Plan
Year.
4.3.4 Supplemental Contributions: Vesting
- ----- -----------------------------------
At any time, a Participant's interest in his Supplemental Contribution
Account shall be fully vested and not subject to forfeiture prior to the
withdrawal or distribution of such balance pursuant to this Plan.
Art. IV 22
4.4.1 Rollover Contribution: Amount
- ----- -----------------------------
The Plan Administrator may accept Rollover Contributions from or on
behalf of a Participant, and also from or on behalf of any Eligible
Employee who is not a Participant solely because he has not yet accrued
the required amount of Preliminary Service (pursuant to Sections 3.2 and
3.3). An Employee who makes such an early Rollover Contribution shall be
treated as a Participant for all purposes, except that he shall not
receive an allocation or share of any Employer contribution, including
Elective Contributions, until he satisfies the requirements of Article
III.
As used herein, Rollover Contribution means all or a portion of an
"eligible rollover distribution" described in Code sec. 402(c), or an
amount paid or distributed out of an individual retirement account or
individual retirement annuity described in Code sec. 408(d)(3)(A)(ii).
The Plan Administrator may require such assurance and proofs of fact from
the Participant as may be necessary to determine whether an amount the
Participant desires to contribute is a Rollover Contribution as defined
herein. He may further require the Participant to agree to indemnify the
Plan for any adverse consequences which may follow if a contribution
proves not to have been a Rollover Contribution. An Employee on whose
behalf a transfer described in this Section is made shall agree to
cooperate fully with the Plan Administrator in effecting any and all
corrective measures which may be required by an agency of the federal
government to prevent the Plan's disqualification as a result of the
transfer.
4.4.2 Rollover Contribution Account
- ----- -----------------------------
For the benefit of any Participant on whose behalf the Plan has accepted
any Rollover Contribution, there shall be maintained a Rollover Account.
Rollover Accounts shall be adjusted as provided in Article VI, and shall
be closed when the balances of such accounts, including allocable
earnings, gains and losses, have been distributed pursuant to this Plan.
4.4.3 Rollover Contributions: Allocation
- ----- ----------------------------------
Any Rollover Contribution received by the Plan pursuant to this Article
IV shall be credited as it is received to the Rollover Account(s) of the
Participant on whose behalf it was received.
4.4.4 Rollover Contributions: Vesting
- ----- -------------------------------
The Rollover Contributions received by the Plan on behalf of any
Participant shall be fully vested in such Participant and not subject to
forfeiture prior to the time they are distributed pursuant to this Plan.
4.5.1 Prior Plan Contributions Account
- ----- --------------------------------
On behalf of any Participant for whom amounts are held under this Plan
which are attributable to Employer Match, Basic, Supplementary or Special
Contributions made to and defined under this Plan as it existed prior to
the effective date of the 1984 restatement, there shall be maintained a
Prior Plan Contribution Account, into which all such amounts shall be
credited. Within this account, all amounts
Art. IV 23
attributable to pre-tax contributions and all earnings on both pre-tax and
after-tax contributions shall be held and accounted separate from any
after-tax contributions that are held.
Prior Plan Contribution Accounts shall be adjusted as provided in
Article VI, and shall be closed when the balances of such accounts,
including allocable earnings, gains and losses, have been distributed
pursuant to this Plan.
4.5.2 Prior Plan Contributions: Vesting
- ----- ---------------------------------
At any time, the balance of any Participant's Prior Plan Contribution
Account shall be fully vested in such Participant and not subject to
forfeiture prior to the time they are distributed pursuant to this Plan.
4.5.3 Prior Plan Contributions: Withdrawals
- ----- -------------------------------------
(a) Subject to the provisions of this Section, a Participant may withdraw
some or all of the amounts credited to his Prior Plan Contribution
Account. A Participant may elect to withdraw such amounts only (1)
while still employed as an Employee, (2) upon termination of his
employment, or (3) after attaining Retirement Age, by filing a
written election to do so with the Plan Administrator in the time,
form and manner which the Plan Administrator will have prescribed.
(b) Withdrawals pursuant to this Section shall be subject to the
following restrictions:
(1) a Participant may make no more than one withdrawal per Plan
Year; and
(2) a withdrawal must equal at least $100, but may not exceed the
amount credited to the Prior Plan Contribution Account.
(c) In no event shall a Participant satisfy the requisite demonstration
of "financial need," defined in Section 4.2.5(b) required for in-
service withdrawals of Elective Contributions, prior to withdrawing
all amounts attributable to the Participant's Prior Plan Contribution
Account.
Art. IV 24
ARTICLE V
REQUIRED NON-DISCRIMINATION TESTING
5.1.1 Limitation on Additions
- ----- -----------------------
(a) The Annual Additions to this Plan for the benefit of a Participant in
a Limitation Year are the sum of:
(1) Allocations to his Elective Contribution Account for the
Limitation Year, directly or indirectly, of the Elective
Contributions to the Plan; and
(2) Allocations to his Basic Contribution Account for the
Limitation Year, directly or indirectly, of the Basic
Contributions to the Plan; and
(3) Allocations to his Supplemental Contribution Account for the
Limitation Year, directly or indirectly, of any Supplemental
Contributions to the Plan; and
(4) Allocations to any individual medical account maintained on
behalf of the Participant by the Employer pursuant to a pension
or annuity plan, as described in Sections 415(l)(1) and
419A(d)(2) of the Code.
Contributions shall not fail to be Annual Additions to this Plan
merely because such contributions are excess contributions or excess
aggregate contributions, or merely because such excess contributions
or excess aggregate contributions are distributed. Excess deferrals
are Annual Additions only if they are not distributed as provided in
Article IV.
(b) A Participant's Maximum Annual Addition for a Limitation Year is
the lesser of:
(1) 25% of the Participant's compensation for the Limitation Year;
or
(2) the greater of:
(A) $30,000; or
(B) 25% of the defined benefit dollar limitation set forth in
Section 4l5(b)(1)(A) of the Code as in effect for the
Limitation Year or such other amount as the Secretary of
the Treasury or his delegate may from time to time
authorize pursuant to Section 415(d) of the Code.
(c) Any provisions of this Plan to the contrary notwithstanding, the
Annual Additions to this Plan for the benefit of a Participant in a
Limitation Year shall in no event exceed the Participant's Maximum
Annual Addition for that Limitation Year.
Art. V 25
If allocations pursuant to Article IV would otherwise result in the
limitation in the preceding sentence being exceeded for a Participant
in a Limitation Year because of the allocation of Forfeitures, if any,
or because of a reasonable error in estimating a Participant's annual
compensation, or because of a reasonable error in determining the amount
of elective deferrals (within the meaning of Code sec. 402(g)(3), or
because of any other facts and circumstances which the Internal Revenue
Service finds to be appropriate consistent with sec. 415 of the Code and
regulations promulgated thereunder, the Plan Administrator shall reduce
that Participant's Annual Additions, but only to the extent that the sum
of such Additions no longer exceeds his Maximum Annual Additions.
This reduction of the Participant's Annual Additions shall be
accomplished by reducing the allocation (if any) to the Participant's
Individual Accounts of each of the allocated amounts described below
according to the order in which they are listed. Each such amount shall
be completely exhausted before the next listed allocation is reduced.
The allocations to be reduced (and the order in which they shall be
reduced) shall be as follows:
(1) Elective Contributions and related Basic Matching Contributions
(2) Supplemental Contributions
The amount by which an Elective Contribution is reduced shall be
distributed to the Participant on whose behalf it was received as soon
as administratively practicable, and shall include any earnings and
gains that have been allocated and which are attributable to that
returned amount.
The remaining surplus amounts created by the reductions described above
shall be reallocated to a Suspense Account established and administered
pursuant to Section 5.1.2.
(d) For purposes of this Section, "compensation" means a Participant's
wages, salaries, fees for professional service and other amounts
received for personal services actually rendered in the course of
employment with the Employer, but does not include:
(1) contributions made by the Employer on behalf of the Participant:
(A) for medical benefits within the meaning of Code
section 419A(f)(2) after the Participant's most recent
termination of employment as an Employee or for medica1
benefits as described by Code section 416(1)(1), where such
contributions are treated as Annual Additions;
(B) to a plan of deferred compensation to the extent that, before
the application of Code section 415 to that plan, the
contributions are not includible in the gross income of the
Participant for the taxable year in which contributed; or
Art. V 26
(C) to a simplified employee pension (according to Code
section 408(k)) to the extent that such contributions are
deductible by the Participant pursuant to Code section
219(b)(7);
(2) distributions from a plan of deferred compensation except for
amounts received by the Participant pursuant to an unfunded
non-qualified plan of deferred compensation in the year such
amounts are includible in the Participant's gross income;
(3) amounts realized from the exercise of a non-qualified stock
option, or when restricted stock (or property) held by the
Participant either becomes freely transferable or is no longer
subject to a substantial risk of forfeiture for purposes of
sec. 83 of the Code and regulations thereunder;
(4) amounts realized from the sale, exchange or other disposition of
stock acquired under a qualified stock option; or
(5) other amounts which receive special tax benefits, such as
premiums for group term life insurance (but only to the extent
that the premiums are not includible in the gross income of the
Participant), or contributions made by an employer (whether or
not under a salary reduction agreement) towards the purchase of
an annuity contract described in sec. 403(b) of the Code (whether
or not the contributions are excludible from the gross income of
the Participant); or
(6) elective deferrals (as defined by Code sec. 402(g)(3)) made by
the Participant and amounts accrued by the Participant but which
are not then included as taxable income of the Participant
pursuant to a "cafeteria" or other such plan maintained by the
Employer according to Code sec. 125.
For the purposes of this Section, the total amount of compensation
that is actually paid or made available to a Participant within a
Limitation Year shall be the amount of that Participant's compensation
taken into account regarding that Limitation Year.
(e) Additional Limitation in the Case of Defined Benefit Plan and Defined
---------------------------------------------------------------------
Contribution Plan for Same Employee
-----------------------------------
(1) When used in this Section, the term "current accrued benefit"
means a Participant's accrued benefit as of December 31, 1982,
when expressed as an annual benefit (as defined in sec.
4l5(b)(2) of the Code and regulations thereunder). For purposes
of determining the amount of a Participant's current accrued
benefit, the following shall not be taken into account:
(A) any change in the terms and conditions of the Plan after
July 1, 1982;
Art. V 27
(B) any cost of living adjustment occurring after July 1,
1982.
Effective for Plan Years beginning after December 31, 1982,
in any case where a Participant has at any time participated
in a defined benefit plan maintained by the Employer, the
limitation imposed by this Section (without regard to this
Additional Limitation) shall be reduced to the extent
necessary to prevent the Participant's Combination Ratio
from exceeding 1.0 in any Limitation Year. A Participant's
Combination Ratio is the sum of his Defined Benefit Fraction
and his Defined Contribution Fraction.
(2) A Participant's Defined Benefit Fraction for a Limitation
Year is a fraction-
(A) the numerator of which is his projected annual benefit
(as defined in sec. 415(e) of the Code and regulations
thereunder) to which the Participant would be entitled
under the defined benefit plan as of the close of the
Limitation Year; and
(B) the denominator of which is the lesser of:
(i) the product of 1.25 (or, if the Plan is top-heavy
as determined under the provisions of Section
5.2, 1.0) multiplied by the greater of (I) and
(II) where
(I) is the dollar limitation in effect under sec.
415(b)(1)(A) of the Code for such Limitation
Year, and
(II) is, in the case of a Participant who was a
Participant prior to January 1, 1983, such
Participant's current accrued benefit as of
December 31, 1982; or
(ii) the product of 1.4 multiplied by the amount which
may be taken into account under sec. 415(b)(1)(B)
of the Code with respect to such Participant for
such Limitation Year.
(3) A Participant's Defined Contribution Fraction for a Limitation
Year is a fraction -
(A) the numerator of which is the sum of the Annual Additions
(as defined in this Section) to the Participant's account
for the Participant's benefit as of the close of the
Limitation Year and for all prior Limitation Years; and
(B) the denominator of which is the sum of the lesser of the
following amounts determined for such Limitation Year and
for each prior Limitation Year of service with the
Employer:
(i) the product of 1.25 (or, if the Plan is top-heavy
as determined under the provisions of Section 5.2,
1.0) multiplied by the dollar limitation in effect
under sec. 415(c)(1)(A) of the Code for such
Limitation Year (determined without regard to sec.
415(c)(6) of the Code), or
Art. V 28
(ii) the product of 1.4 multiplied by the amount which
may be taken into account under sec. 415(c)(1)(B)
of the Code (or subsection (c)(7) or (8), if
applicable) with respect to such Participant for
such Limitation Year.
Provided that the Plan satisfied the applicable requirements
of Code sec. 415 as then in effect for the Limitation Year
(if any) which began in 1986, an amount shall be subtracted
from the numerator of the Defined Contribution Fraction (not
exceeding such numerator) so that the sum of the Defined
Benefit Fraction and the Defined Contribution Fraction for
such Limitation Year, determined according to Code sec. 415
as amended effective in 1987, does not exceed 1.0.
(C) The Plan Administrator may elect that the maximum
annual additions in the denominator of the Defined
Contribution Fraction for all Limitation Years ending
before January 1, 1983, shall be an amount equal to the
product of:
(i) the amount determined under sec. 415(e)(3)(B) of
the Code for the Limitation Year ending in 1982,
and
(ii) the transition fraction, the numerator of which
is the lesser of
(I) $51,875 or
(II) 1.4 multiplied by 25 percent of such
Participant's compensation for the Plan
Year ending in 1981
and the denominator of which is the lesser of
(III) $41,500 or
(IV) 25 percent of such Participant's
compensation for the Plan Year ending in
1981.
(4) For purposes of this Additional Limitation, Employee
contributions to any defined benefit plan maintained by the
Employer, whether mandatory or voluntary, shall be treated
as a separate defined contribution plan maintained by the
Employer.
(5) If an additional limitation is applicable, it shall be
imposed in the defined benefit plan before any reduction in
the annual additions under this Plan.
(f) Aggregation of Plans
--------------------
For purposes of this Section, all qualified defined
contribution plans (without regard to whether a plan has
been terminated) ever maintained by the Employer will be
treated as part of this Plan, and all qualified defined
benefit plans (without regard to whether a plan has been
terminated) ever maintained by the Employer will be treated
as one defined benefit plan.
29
Employee contributions (whether mandatory or voluntary) to a qualified
defined benefit plan maintained by the Employer shall be treated as a
defined contribution plan maintained by the Employer.
Any qualified defined benefit or defined contribution plan maintained
by any member of a controlled group of corporations or group of trades
or businesses (whether or not incorporated) under common control
(within the meaning of sec. 414(b) and (c) of the Code as modified by
sec. 415(h)) of which the Employer is a member shall be treated as a
plan maintained by the Employer.
5.1.2 Suspense Account
- ----- ----------------
For any Plan Year, after application of Section 5.1.1, if there remain
amounts which have been contributed to the Plan but which cannot
otherwise be permissibly reallocated according to the terms of this Plan,
then such excess amounts shall be held unallocated in a Suspense
Account.
Any provisions of this Plan to the contrary notwithstanding, any amounts
held in a Suspense Account shall be applied toward Employer contributions
and Plan expenses as such obligations accrue, with the Employer making no
further contributions to the Plan until such time as the Suspense Account
balance has been exhausted.
Any Suspense Account balance which is maintained at any time shall not
share in any portion of the Net Adjustment described in Section 6.2 which
is attributable to earnings, gains, or losses. No amounts held in a
Suspense Account may be distributed to any Participant at any time prior
to termination of the Plan. If there are amounts held in a Suspense
Account at a time when the Plan is terminated, such amounts may revert to
the Employer according to Section 8.1.3.
5.2.1 Top-Heavy Provisions: Application
- ----- ---------------------------------
The provisions of this Article shall become effective only if, as of the
first day of the applicable Plan Year, the Plan is top-heavy pursuant to
the Test described in Section 5.2.2.
5.2.2 Top-Heavy Determination
- ----- -----------------------
(a) Definitions
(1) Aggregation Group.
-----------------
(A) Required Aggregation Group means
--------------------------
(i) each and every plan of the Employer in which a Key
Employee is a Participant during the Plan Year
containing the Determination Date or any of the four
preceding Plan Years, including any plan that has
subsequently terminated, and
30
(ii) each other plan of the Employer which enables any plan
described in subsection (i) above to meet the
participation and nondiscrimination requirements of the
Code, including (but not limited to) the requirements of
Code sections 401(a)(4) and 410.
(B) Permissive Aggregation Group means a Required Aggregation
----------------------------
Group or a plan described in subsection (A)(i) above
together with any other plan of the Employer which is not
required to be included in an Aggregation Group under
subsection (A)(ii) above but which may be so included if such
group would continue to meet the participation and
nondiscrimination requirements of the Internal Revenue Code.
(C) Top-Heavy Group means any Required Aggregation Group found
---------------
to be top-heavy pursuant to subsection (b) of this Section
5.2.2.
(2) Determination Date means the last day of the preceding Plan Year.
------------------
(3) Key Employee and non-Key Employee are defined in Section 416(i)
---------------------------------
of the Code. For the purposes of determining who is a Key
Employee, "Compensation" shall be determined according to Code
sec. 415(c)(3), but including amounts contributed by the Employer
pursuant to a salary reduction agreement and which are excludable
from the Employee's gross income under Code sec. 125, 402(e)(3),
402(h), or 403(b). Key Employee is also described in Article II,
under the definition of "Employee".
(4) Present Value of Accrued Benefits means, for this Plan, the sum of
---------------------------------
(A) the account balances attributable to Basic and Elective
Contributions and Supplemental Contributions as of the most
recent Valuation Date occurring within a twelve-month period
ending on the Determination Date, and
(B) an adjustment for contributions due as of the Determination
Date.
If this Plan is a member of an Aggregation Group, Present Value of
Accrued Benefits shall mean the sum of the account balances of all
Employer and non-deductible Employee Contribution Accounts
maintained for the Participant pursuant to all defined
contribution plans that belong to the group and of which he is a
member and also the sum of the present values of the vested
accrued benefits due the Participant pursuant to all defined
benefit plans that belong to the group and of which the
Participant is a member.
(5) Valuation Date means the last date in each Plan Year on which
--------------
interest is allocated and account balances are determined.
31
(b) Top-Heavy Test
The Plan (or Aggregation Group) shall be top-heavy for each Plan Year
beginning after 1983 if, as of the Determination Date, the Plan's (or
Aggregation Group's) top-heavy ratio for the Plan Year exceeds sixty
percent (60%). The top-heavy ratio is the Present Value of Accrued
Benefits of all Key Employees over the Present Value of Accrued
Benefits of all Employees, excluding former Key Employees. Calculation
of the top-heavy ratio shall be made in accordance with sec. 416 of the
Code (with specific reference to Code sec. 416(g)(3)) and the
regulations promulgated thereunder and shall take into account the
following amounts:
(i) Present Value of Accrued Benefits as described in subsection
(a)(4) above; and
(ii) The amount of all distributions to Participants or their
Beneficiaries during the Plan Year that includes the Determination
Date and also during the four preceding Plan Years pursuant to
this Plan or pursuant to a terminated plan which if it had not
been terminated would have been required to be included in an
Aggregation Group, EXCEPT
(A) any rollover to this Plan initiated by the Employee; and
(B) any transfer to this Plan from a qualified plan maintained by
an unrelated employer; and
(C) any distribution which occurred after the Valuation Date but
prior to the Determination Date to the extent that such a
distribution has been included in the calculation of the
Present Value of Accrued Benefits.
However, calculation of the top-heavy ratio for any Plan Year shall not
take into account the Present Value of Accrued Benefits or the amount of
all distributions made to any individual who has not performed services
for the Employer at any time during the 5-year period ending on such
Plan Year's Determination Date.
For an Aggregation Group, each plan shall initially be tested
separately, and then the plans shall be aggregated by adding together
the results for each plan as of the Determination Dates that fall within
the same calendar year. If the Aggregation Group includes two or more
defined benefit plans, the same actuarial assumptions will be specified
within and used by such plans for the purposes of this Section 5.2.
Also, in such defined benefit plans proportional subsidies shall be
ignored and non-proportional subsidies considered for the purposes of
this Section 5.2.2(b).
For a Required Aggregation Group, each Plan shall be tested by
determining the Present Value of Accrued Benefits for non-Key Employees
(1) pursuant to the method, if any, that uniformly applies for accrual
purposes under all plans maintained by the affiliated Employers; or (2)
if there is no such method, as if such Accrued Benefits accrued not more
rapidly than the slowest accrual rate permitted under the fractional
accrual rates of Section 411(b)(1)(C) of the Code.
32
5.2.3 Special Rules for Top-Heavy Plans
- ----- ---------------------------------
(a) Application of Special Rules
(1) If, after application of the top-heavy test described in
Section 5.2.2(b), this Plan is found not to be top-heavy,
then the special rules set forth below shall not apply to
this Plan. In that event, the other applicable provisions in
this Plan will govern.
(2) If, after application of the top-heavy test in Section
5.2.2(b), this Plan is found to be top-heavy, then the
following special rules shall govern.
(b) Minimum Contribution
(1) For each Plan Year in which the Plan is top-heavy, each non-
Key Employee who is a Participant and who has not separated
from Service at the end of the Plan Year, including any
Participant who failed to complete 1,000 Hours of Service,
and any who did not make an Elective Contribute pursuant to
Section 4.2.1, shall accrue not less than the minimum
contribution described below.
(2) The sum of the Employer's contributions and any forfeitures
allocated to the Individual Accounts of each such
Participant for each Plan Year in which the Plan is top-
heavy must equal not less than
(A) at least three percent (3%) of each such Participant's
Compensation for that Plan Year; or
(B) if the highest percentage of Compensation provided on
behalf of Key Employees who are Participants for that
Plan Year is less than three percent (3%), then not
less than the same percent of such Compensation for
that Plan Year for each non-Key Employee Participant as
the largest percentage of such Compensation provided on
behalf of Key Employee Participants for that Plan Year.
(3) Any provisions of subsection (2) above to the contrary
notwithstanding, for each Plan Year in which the Employer
maintains both a defined plan and a defined contribution
plan and both plans are top-heavy, each non-Key Employee who
is a Participant in both such Plans shall be credited with
not less than a portion of the sum of the Employer's
contributions and forfeitures made under the terms of this
Plan for that Plan Year equal to five percent (5%) of his
Compensation.
In determining the minimum contribution or benefit that is
required for non-Key Employees by this Section, Election
Contributions and matching contributions, if any, that are
allocated to Key Employees shall be taken into account. However,
to the extent that matching contributions made on behalf of non-
Key Employees are taken into account in meeting the Actual
Deferral Percentage Test and/or the Actual Contribution
Percentage Test
33
described in Article V, such contributions may not additionally be
credited as part of any minimum contribution or benefit required by
this Section. For Plan Years beginning after 1988, Elective
Contributions made on behalf of non-Key Employees may not be credited
as part of any minimum contribution or benefit required by this
Section.
If the Employer is required to contribute an additional amount to the
Plan on behalf of a Participant as a result of the operation of this
Article, that amount shall be credited to a Basic Contribution Account
established and maintained on his behalf.
5.3 Actual Deferral Percentage Test
- --- -------------------------------
(a) For each Plan Year, the Plan Administrator shall perform (or have
performed) an Actual Deferral Percentage Test in order to ensure that
the Plan's cash or deferred arrangement satisfies the requirements of
Code sec. 401(k)(3) and does not impermissibly discriminate in favor
of Participants who are Highly Compensated Employees ("HCE's").
The Actual Deferral Percentage ("ADP") Test shall cormpare the ADP of
those Participants who are HCE's with the ADP of those Participants
who are not HCE's.
For any group of Participants, the group's ADP equals the average
(expressed as a percentage) of the actual deferral ratios of that
group's Participants, with each Participant's actual deferral ratio
calculated separately.
For any Plan Year, a Participant's actual deferral ratio consists of
the amount of the Participant's Elective Contribution for the Plan
Year (subject to the limitations of the following paragraph) plus, at
the discretion of the Plan Administrator, the amount of any Qualified
Matching Contributions ("QMAC's") and Qualified Nonelective
Contributions ("QNC's") that are treated as Elective Contributions and
included in the ADP testing by the Plan Administrator, with such sum
expressed as a percentage of his Compensation. For this purpose, in
any Plan Year, the Plan Administrator may elect to limit the
Compensation taken into account for every Participant to Compensation
received while participating in the Plan.
However, the Plan Administrator's discretion in choosing to include
any QMAC's or QNC's is limited to the extent that such inclusion
satisfies the conditions and requirements set forth in 26 CFR 1.40
1(k)-1(b)(5).
In determining a Participant's actual deferral ratio, the
Participant's Elective Contributions may be taken into account only to
the extent that they satisfy the following conditions.
(1) The Elective Contribution must be allocated to an account
maintained on behalf of the Participant as of a day within the
plan year being considered. For the purpose of this provision, an
Elective Contribution shall be considered allocated as of a date
within a plan year only if both:
34
(A) the allocation is not contingent upon the Participant's
participation in a plan or performance of service on any
date subsequent to the date of allocation; and
(B) the amount of the Elective Contribution is actually paid to
the plan pursuant to which the Elective Contribution is
made no later than the end of the twelve-consecutive-month
period immediately following the plan year to which the
contribution relates.
(2) The Elective Contribution relates to Compensation that either:
(A) would have been received by the Participant in the plan year
but for the Participant's election to defer that
Compensation, or
(B) is attributable to service performed by the Participant in
the plan year and, but for the Participant's election to
defer, would have been received by the Participant within
two and one-half months after the close of the plan year.
In addition, if with reference to a Plan Year the Participant was an
HCE and also participated in more than one cash or deferred
arrangement sponsored by the Employer, then all such cash or deferred
arrangements shall be aggregated and treated as one arrangement for
the purposes of determining the Participant's actual deferral ratio
for that Plan Year. If these arrangements have different plan years,
then for the Plan Years beginning after December 31, 1988, these
arrangements' plan years that end with or within the same calendar
year shall be aggregated and treated for ADP purposes as a single
arrangement and single plan year. However, the preceding provisions to
the contrary notwithstanding, contributions and allocations under
plans described by Code sec. 4975(e)(7) (i.e. "ESOP's") shall not be
aggregated.
(b) For each Plan Year beginning after 1986, the ADP for the group of
Eligible Participants who are HCE's for that Plan Year shall not
exceed the greater of (1) or (2), where
(1) equals 125% of the ADP for the group of Eligible Participants who
are non-HCE's for that Plan Year; and
(2) equals the lesser of (A) and (B), where
(A) equals 200% of the ADP for the group of Eligible
Participants who are non-HCE's for that Plan Year; and
(B) equals the ADP for the group of Eligible Participants who
are non-HCE's for that Plan Year, plus 2 percentage points
(or such other amount as may be prescribed by the Secretary
of the Treasury).
35
For the purposes of this subsection, "Eligible Participants" means
those Participants who during the Plan Year were eligible to have
elected to defer some portion of their Compensation for that Plan Year
so as to receive an Elective Contribution, regardless of whether such
an election was actually made.
(c) If for a Plan Year the ADP limits of subsection (b) above are
exceeded, the amount of excess contributions to be attributed to each
HCE shall be determined by the following leveling method.
The Plan Administrator shall reduce the amount of Elective
Contributions that are allocated pursuant to the Plan for that Plan
Year on behalf of the HCE with the highest actual deferral ratio. This
reduction shall be made only to the extent required to (1) enable the
Plan to meet the ADP limits, or (2) cause the HCE's actual deferral
ratio to equal the actual deferral ratio of the HCE with the next
highest actual deferral ratio, whichever occurs first.
This process shall be repeated by the Plan Administrator until the ADP
test limits of subsection (b) above have been met.
For each Plan Year, the amount of excess contributions, if any, for
each HCE shall equal the sum of the HCE's Elective Contributions, plus
any Qualified Nonelective Contributions and Qualified Matching
Contributions that are treated as Elective Contributions (determined
prior to the application of this subsection) in determining the HCE's
actual deferral ratio, minus the product of the HCE's actual deferral
ratio (determined after application of this subsection) multiplied by
the HCE's Compensation.
(d) After the close of the Plan Year to which the excess contributions
are attributable, but within twelve months after such Plan Year's
close, the Plan Administrator shall designate as such and distribute
to each HCE the amount (if any) of excess contributions (plus any
allocable income attributable to such contributions) that were made on
that HCE's behalf, minus the sum of any excess deferrals previously
distributed to the HCE for the HCE's taxable year ending with or
within that Plan Year.
The income allocable to a Participant's excess contributions (the
"excess income") for the Plan Year shall be determined separately
from the excess income for the period between the end of the Plan Year
and the date as of which the corrective distribution is made (the "gap
period").
The excess income for the Plan Year shall be determined by multiplying
the income for the Plan Year allocable to the Participant's Elective
Contributions (and amounts treated as Elective Contributions) by a
fraction. The numerator of the fraction is the amount of excess
contributions made on behalf of the Participant for the Plan Year. The
denominator is the Participant's Individual Account balance
attributable to Elective Contributions (and amounts treated as
Elective Contributions) as of the end of the Plan Year, with such
balance reduced by the gain allocable to such total balance for the
Plan Year and increased by the loss allocable to such total balance
for the Plan Year.
36
The excess income for the gap period may be calculated by utilizing
either a fractional method or a safe-harbor method, with the choice of
method being made by the Plan Administrator in his or her sole
discretion.
Under the fractional method, the income for the gap period that is
allocable to the Participant's Elective Contributions is multiplied by
the same fraction that is used to determine the excess income for the
Plan Year.
Under the safe-harbor method, the excess income for the gap period
shall equal the product of:
(1) 10% of the Participant's excess income for the Plan Year,
multiplied by
(2) the number of the calendar months that have elapsed since the end
of the Plan Year. (In determining the number of months that have
elapsed, a distribution that occurs on or before the fifteenth
day of the month shall be deemed to have been made as of the last
day of the preceding month, and a distribution occurring after
such fifteenth day shall be deemed to have occurred as of the
first day of the next subsequent month.)
(e) Any of the provisions of this Section to the contrary notwithstanding,
in determining the actual deferral ratio of a Participant who is an
HCE, the family aggregation rules described in paragraph (4) of the
definition in Article II of Highly Compensated Employee shall apply,
and the actual deferral ratio of any such family aggregate shall equal
the actual deferral ratio determined by combining the contributions
received by the Plan on behalf of and Compensation paid to all
eligible family members.
After the actual deferral ratio of such a family aggregate has been
determined, the amount of excess contributions (if any) that were
allocated on behalf of the family aggregate shall be determined and
corrected according to the "leveling" method described in subsection
(c) above. The resulting excess contributions shall be reallocated
among those family members whose contributions were combined to
determine the actual deferral ratio of the family aggregate, with each
such member being allocated an amount of excess contribution in
proportion to the contributions of each such member that have been
combined.
(f) For the purposes of satisfying the limits specified in this Section
and in Code sections 401(a)(4), 410(b), and 401(k), two or more cash
or deferred arrangements may be aggregated, provided that such
aggregation is consistent with the provisions of IRC Regs. 1.401(k)-
1(b)(3) and 1.401(k)-1(g)(1)(ii); for example, for Plan Years
beginning after 1989, cash or deferred arrangements may be aggregated
pursuant to this subsection only if the respective plans of which they
are part have the same plan years. All elective contributions that are
made under any plan that are aggregated with this Plan for the
purposes of Code sec. 401(a)(4) or sec. 410(b) (other than sec.
410(b)(2)(A)(ii) are to be treated as if they were made under a single
plan. In addition, if any plans are permissively aggregated with this
Plan for the purposes of Code sec. 401(k), the aggregated plans must
also satisfy Code secs. 401(a)(4) and 410(b) as though they were a
single plan.
37
5.4 Average Contribution Percentage Test
- --- ------------------------------------
(a) For each Plan Year, the Plan Administrator shall perform (or have
performed) an Average Contribution Percentage Test in order to ensure
that the Plan's receipt and allocation of matching contributions
and/or employee contributions, if any, satisfy the requirements of
Code sec. 401(m) and do not impermissibly discriminate in favor of
Participants who are Highly Compensated Employees ("HCE's").
The Average Contribution Percentage ("ACP") Test shall compare the ACP
of those Participants who are HCE's with the ACP of those Participants
who are not HCE's.
For any group of Participants, the group's ACP equals the average
(expressed as a percentage) of the actual contribution ratios of that
group's Participants, with each Participant's actual contribution
ratio calculated separately.
For any Plan Year, a Participant's actual contribution ratio consists
of the sum of the following contributions (if any) which have been
received by the Plan on the Participant's behalf for that Plan Year:
(1) "matching" employer contributions (within the meaning of Code
sec. 401(m)(4)(A));
(2) employee contributions; and
(3) Any Elective Contributions and Qualified Nonelective
Contributions ("QNC's") that the Plan Administrator, in the
exercise of his sole discretion, chooses to take into account for
the purposes of ACP testing (except that the Plan Administrator's
discretion in choosing to include any Elective Contributions and
QNC's is limited to the extent that such inclusion satisfies the
conditions and requirements set forth in 26 CFR 1.401(m)-
1(b)(5));
with such sum expressed as a percentage of the Participant's
Compensation. For this purpose, in any Plan Year, the Plan
Administrator may elect to limit the Compensation taken into account
for every Participant to Compensation received while participating in
the Plan.
In determining a Participant's actual contribution ratio, matching
contributions made on behalf of the Participant may be taken into
account only to the extent that they satisfy the following conditions.
(1) The matching contribution must be allocated to an account
maintained on behalf of the Participant as of a day within the
plan year being considered.
(2) The amount of the matching contribution is actually paid to the
plan pursuant to which the matching contribution is made no later
than the end of the twelve-consecutive-month period immediately
following the plan year to which the contribution relates.
38
(3) The matching contribution is made on behalf of the Participant on
account of the Participant's elective contributions or employee
contributions (if any) for the plan year to which the matching
contribution relates. Matching contributions that are forfeited
because they relate to excess deferrals, excess contributions or
excess aggregate contributions shall not be taken into account.
(b) For each Plan Year beginning after 1986, the ACP for the group of Eligible
Participants who are HCE's for that Plan Year shall not exceed the greater
of (1) or (2), where
(1) equals 125% of the ACP for the group of Eligible Participants who are
non-HCE's for that Plan Year; and
(2) equals the lesser of (A) and (B), where
(A) equals 200% of the ACP for the group of Eligible Participants who
are non-HCE's for that Plan Year; and
(B) equals the ACP for the group of Eligible Participants who are
non-HCE's for that Plan Year, plus 2 percentage points (or such
other amount as may be prescribed by the Secretary of the
Treasury).
For the purposes of this subsection, "Eligible Particpants" means those
Participants who are directly or indirectly eligible to make an employee
contribution or to receive an allocation of matching contributions
(including matching contributions derived from Forfeitures, if any) under
the terms of this Plan for the Plan Year being reviewed.
If a Participant has "excess deferrals" according to Section 4.2.1(c) or
"excess contributions" for the Plan Year according to Section 5.3, then
such excess deferrals and/or excess contributions shall be calculated and
distributed prior to determining the Participant's excess aggregate
contributions for the Plan Year.
(c) If for a Plan Year the ACP limits of subsection (b) above are exceeded, the
amount of excess aggregate contributions to be attributed to each HCE
shall be determined by the following leveling method.
The Plan Administrator shall reduce the employee contributions and, if
necessary, the matching contributions that had been allocated pursuant to
the Plan Year for that Plan Year on behalf of the HCE with the highest
actual contribution ratio. This reduction shall be made only to the extent
required to (1) enable the Plan to meet the ACP limits, or (2) cause the
HCE's actual contribution ratio to equal the next highest actual
contribution ratio, whichever occurs first.
This process shall be repeated by the Plan Administrator until the ACP
test limits of subsection (b) above have been met.
39
For each Plan Year, the amount of excess aggregate contributions, if any,
for each HCE shall equal the sum of the HCE's employee contributions and
matching contributions, if any, plus any Qualified Nonelective
Contributions and Elective Contributions that are treated as matching
contributions (determined prior to the application of this subsection) in
determining the HCE's actual contribution ratio, minus the product of the
HCE's actual contribution ratio (determined after application of this
subsection) multiplied by the HCE's Compensation.
For the Plan Years beginning after 1988, determinations of actual
contribution ratios shall be rounded to the nearest one-hundredth of one
percent of the Participant's Compensation.
(d) After the close of the Plan Year to which the excess aggregate
contributions are attributable, but within twelve months after such Plan
Year's close, the Plan Administrator shall designate the amount (if any) of
the excess aggregate contributions (plus any allocable income attributable
to such contributions) that are attributable to amounts received and
accumulated under the Plan on each HCE's behalf.
Such excess aggregate contributions shall be forfeited, if forfeitable. As
of the last day of the Plan Year, these forfeited amounts shall be
reallocated only to Participants who are NHCE's for the Plan Year. This
allocation shall be made on a pro rata basis, with each such Participant
being allocated a portion of the total forfeited amounts so that such
portion, when compared to the total of the forfeited amounts, shall bear
the same direct proportion that the amount of Basic Matching Contribution
being allocated to the Participant pursuant to Section 4.1.1, subsection
(a), bears to the entire amount of Basic Matching Contribution that is
allocated to all such NHCE Participants pursuant to Section 4.1.1(a).
If not forfeitable, the amount of the excess aggregate contribution shall
be distributed to the HCE on whose behalf the excess aggregate contribution
was received. If such excess aggregate contributions are distributed more
than 2 1/2 months after the last day of the Plan Year in which such excess
amounts arose, a 10% excise tax will be imposed on the Employer with
respect to these amounts.
The income allocable to a Participant's excess aggregate contributions (the
"excess income") for the Plan Year shall be determined separately from the
excess income for the period between the end of the Plan Year and the date
as of which the corrective distribution is made (the "gap period").
The excess income for the Plan Year shall be determined by multiplying the
income for the Plan Year allocable to the Participant's employee and
matching contributions (and amounts treated as matching contributions), if
any, by a fraction. The numerator of the fraction is the amount of excess
contributions made on behalf of the Participant for the Plan Year. The
denominator is the sum of the Participant's Individual Accounts' balances
attributable to employee and matching contributions (plus balances
attributable to amounts treated as matching contributions), if any, as of
the end of the Plan Year, with such sum reduced by the gain and increased
by the loss allocable to the total sum of such balances for the Plan Year.
40
A Participant's excess income for the gap period may be calculated by
utilizing either a fractional method or safe-harbor method, with the
choice of method being made by the Plan Administrator in his or her sole
discretion.
Under the fractional method, the income for the gap period that is
allocable to the Participant's employee and matching contributions (and
amounts treated as matching contributions), if any, is multiplied by the
same fraction that is used to determine the excess income for the Plan
Year.
Under the safe-harbor method, the excess income for the gap period shall
equal the product of:
(1) 10% of the Participant's excess income for the Plan Year,
multiplied by
(2) the number of calendar months that have elapsed since the end of
the Plan Year. (In determining the number of months that have
elapsed, a distribution that occurs on or before the fifteenth day
of the month shall be deemed to have been made as of the last day
of the preceding month, and a distribution occurring after such
fifteenth day shall be deemed to have occurred as of the first
day of the next subsequent month.)
(e) Any of the provisions of this Section to the contrary notwithstanding,
in determining the actual contribution ratio of a Participant who is an
HCE, the family aggregation rules described in paragraph (4) of the
definition in Article II of Highly Compensated Employee shall apply, and
the actual contribution ratio of any such family aggregate shall equal
the actual contribution ratio determined by combining the contributions
received by the Plan on behalf of and Compensation paid to all eligible
family members.
After the actual contribution ratio of such a family aggregate has been
determined, the amount of excess aggregate contributions (if any) that
were allocated on behalf of the family aggregate shall be determined and
corrected according to the "leveling" method described in subsection (c)
above. The resulting excess aggregate contributions shall be
reallocated among those family members whose contributions were combined
to determine the actual contribution ratio of the family aggregate, with
each such member being allocated an amount of excess aggregate
contribution in proportion to the contributions of each such member that
have been combined.
(f) Any provisions of this Section to the contrary notwithstanding, for the
purposes of determining whether this Plan satisfies the ACP test, all
employee and matching contributions that are made under any plans that
are aggregated with this Plan for the purposes of Code sec. 401(a)(4)
and/or 410(b) (other than Code sec. 4l0(b)(2)(A)(ii)) shall be
aggregated and treated as if made under a single plan. In addition, if
any plans are permissively aggregated with this Plan for the purposes
of ACP testing, then the aggregated plans must also satisfy Code secs.
401(a)(4) and 410(b) as though they were a single plan.
Art. V 41
Also, if a Participant who is a Highly Compensated Employee also
participates in other retirement plans sponsored by the Employer to
which employer matching contributions (as defined in Code section
401(m)(4)(A)) or employee contributions are made, then all such
contributions made on the Participant's behalf shall be aggregated for
the purposes of this Section.
However, for Plan Years beginning after 1989, plans may be aggregated
pursuant to this subsection (f) only if they have the same plan year.
5.5 Multiple Use of Alternative Limitation
- --- --------------------------------------
(a) Any provisions of this Plan to the contrary notwithstanding, if for
any Plan Year a multiple use of the alternative limitation occurs with
respect to two or more cash or deferred arrangements ("CODA's") and/or
plans maintained by the Employer, such multiple use shall be corrected
by reducing the actual deferral percentage ("ADP") or actual
contribution percentage ("ACP") of HCE's who are eligible to
participate in such CODA's and/or plans.
(b) Multiple use of the alternative limitation occurs if the following
conditions are met:
(1) one or more HCE's are eligible to defer compensation pursuant to
a CODA subject to Code sec. 401(k) and sponsored by the
Employer, and also are allocated contributions pursuant to a
plan subject to Code sec. 401(m) and sponsored by the Employer;
and
(2) the ADP for the group of HCE's eligible to defer compensation
pursuant to the CODA exceeds 125% of the ADP for the group of
non-HCE's and the ACP for the group of HCE's allocated
contributions pursuant to the Plan subject to Code sec. 401(m)
exceeds 125% of the ACP for the group of non-HCE's; and
(3) the sum of the ADP for the group of HCE's eligible to defer
compensation pursuant to the CODA and the ACP for the group of
HCE's allocated contributions pursuant to the Plan subject to
Code sec. 401(m) exceeds the "Aggregate Limit".
The "Aggregate Limit" is the greater of (A) and (B), where:
(A) equals the sum of:
(I) 125% of the greater of the ADP or the ACP for the
group of non-HCE's, and
(II) 2 plus the lesser of the ADP or the ACP for the group
of non-HCE's, but not more than 200% of the lesser of
the ADP or the ACP for the group of non-HCE's; and
(B) equals the sum of:
(I) 125% of the lesser of the ADP or the ACP for the
group of non-HCE's, and
Art. V 42
(II) 2 plus the greater of the ADP or the ACP for the group of
non-HCE's, but no more than 200% of the greater of the ADP
or the ACP for the group of non-HCE's.
(c) So that there is no multiple use of the alternative limitation, all HCE's
who were eligible to have deferred compensation under the CODA and who were
also allocated contributions under an Employer-sponsored plan subject to
Code sec. 401(m) testing shall have their ADP reduced in the manner
described in 26 CFR 1.401(k)-1(f)(2).
43
ARTICLE VI
ADMINISTRATION OF PLAN ASSETS
6.1.1 The Investment Fund
- ----- -------------------
All funds received by the Plan pursuant to Article IV, including amounts
deposited with the Insurance Company under an annuity or insurance
contract, shall be credited to an Investment Fund. The Investment Fund
shall be of a suitable nature to hold the funds and to provide the
benefits payable under this Plan.
The Plan Administrator shall create and maintain adequate records to
disclose the interest in the Investment Fund of each Participant or,
where appropriate, his Beneficiary. Such records shall be in the form of
Individual Accounts, and credits and charges shall be made to such
accounts in the manner herein described. These amounts shall be
maintained for accounting purposes only and shall not represent any
segregated or identifiable portion of the Investment Fund.
All deposits to the Investment Fund shall be applied for the exclusive
benefit of Participants and their Beneficiaries, except for such
reasonable expenses as may be incurred in the establishment or operation
of the Plan and which are not otherwise paid. Except as provided in
Sections 8.1.3 and 8.5, no amounts in the Investment Fund, nor any
earnings attributable thereto, may ever revert to the Employer prior to
full satisfaction of all liabilities under the Plan.
6.1.2 Employee Directed Investments
- ----- -----------------------------
Beginning April 1, 1994, each Participant may direct the allocation of
amounts held in the Investment Fund on his behalf, including amounts in
the Prior Plan Account, among a variety of investment options made
available and selected by the Trustees pursuant to the contract with the
Insurance Company.
To the extent that the Participant does not direct the investment of such
amounts received on his behalf, the remainder will automatically be
allocated to and invested in one of the funds or accounts available under
the Insurance Company contract and pursuant to the Trustees' direction.
Each Participant may elect to redirect the investment of amounts held in
the Investment Fund on his behalf, provided that in any calendar quarter
a Participant may transfer out of the Portfolio Fund no more than
$5,000.00 or 5% of his balance in such account, whichever is greater.
This limitation is waived for any directive effective April 1, 1994. The
limitation on a transfer out of the Portfolio Fund on April 1, 1994,
shall be $5,000 or 50% of his balance in such account, whichever is
greater. Furthermore, an exception will be made for any Participant who
elects to transfer his entire balance out of such an account. In that
event, the transfer can be made over a five-year period in quarterly
increments. The amount of each quarterly increment shall be determined by
multiplying the Participant's then-current account balance by a fraction,
the numerator of which is one, and the denominator of which is the number
of quarterly incremental payments remaining to be made within the five-
year period.
First Amendment
Art. IV, Section 6.1.2
Effective 4/1/94 44
Any of the above-specified directives to allocate, re-allocate, transfer
or remove funds from or among the various investment options shall be
effective for the purposes of this Plan only prospectively as of the first
day of the calendar quarter (i.e. January 1, April 1, July 1, or October
1) on which the Employee is a Participant and which is the first calendar
quarter beginning not sooner than 15 days following the receipt by the
Insurance Company of such directive in writing.
6.2 Net Adjustments
- --- ---------------
The Net Adjustment of amounts directed by Participants under Section 6.1.2
shall be determined and applied separately to the Participant-directed
amounts in each investment fund or account. Amounts that are not directed
by Participants shall share in the Net Adjustment attributable to the
investment of all such amounts.
Earnings, gains and losses, and any expenses accrued to the Investment
Fund shall be allocated to the Individual Accounts in the following
manner:
(1) The Plan Administrator shall periodically determine the Net
Adjustment for each calendar quarter. The Net Adjustment shall be the
sum of any earnings and gains experienced by the Investment Fund
during the calendar quarter, less any losses experienced by the
Investment Fund during that quarter, and less expenses for that
quarter (if any) to be allocated pursuant to Section 6.4. The fair
market value of the Plan's assets as of the last day of the calendar
quarter shall be used in determining such earnings, gains and losses.
(2) The Plan Administrator shall allocate the Net Adjustment for each
calendar quarter as of the last day of that quarter, but only to
those Individual Accounts remaining at the end of that quarter.
Individual Accounts that are closed on a date other than the last day
of a calendar quarter shall not be allocated a portion of the Net
Adjustment for that calendar quarter.
(3) The Net Adjustment shall be allocated according to each Individual
Account's balance at the beginning of the calendar quarter, adjusted
in a uniform and consistent manner for any contributions and
distributions made during that quarter.
(4) An Individual Account's allocation of the Plan's Net Adjustment shall
be made in the same proportion that such Individual Account's balance
bears to the sum of such balances of all Individual Accounts.
6.3 Distribution Adjustments
- --- ------------------------
The amount of any distribution from an account maintained on behalf of a
Participant pursuant to the terms of this Plan shall be debited from that
account as of the date such distribution is made.
6.4 Expenses
- --- --------
For any Plan Year, the Employer may pay the expenses of operating and
maintaining the Plan. Such payment shall be in addition to and independent
of any contributions to the Plan or assets held by the Plan.
Art. VI 45
Absent prompt and timely payment by the Employer, the expenses of operating
and maintaining the Plan for the Plan Year shall first be paid by application
(and commensurate reduction) of the balance of any Suspense Account that may
be maintained under the terms of this Plan, and then shall become part of the
Net Adjustment allocated pursuant to Section 6.2 EXCEPT that any expenses
attributable to a Participant's re-allocating, transferring, or removing
amounts to, from, or among the Employee Directed Investment options described
in and pursuant to Section 6.1.2 shall be accounted as a loss to be allocated
solely as part of the next subsequent Net Adjustment of that Participant's
Individual Accounts. However, with respect to expenses attributable to
directives effective on April 1, 1994, no such expenses will be charged to
the Participant's Individual Accounts.
Art. VI 46
ARTICLE VII
DISTRIBUTIONS
7.1 Termination of Employment (Including Disability) Before Retirement
- --- ------------------------------------------------------------------
(a) If a Participant's employment as an Employee is terminated due to his
Total and Permanent Disability, or due to any other reason except his
death or Retirement, he may elect to receive his entire Vested
Benefit. To be effective for the purposes of this Plan, such an
election must be delivered in writing to the Plan Administrator not
more than 90 days before the Annuity Starting Date that he has
selected. In the election the Participant shall specify a form in
which the Vested Benefit is to be distributed from among the forms
described in Section 7.4, and also an Annuity Starting Date (see
Section 2.2), provided that no distribution under this Section shall
be made or commence before the Participant's date of termination as
an Employee, nor later than the date which would be the
Participant's Normal Retirement Date had he not terminated such
employment until then.
If the Participant is married at the time of his election, his
election shall have no effect for the purposes of this Plan unless
the requirements of Section 7.5(d) regarding waiver of the Qualified
Joint and Survivor Annuity are met within 90 days before the Annuity
Starting Date.
(b) In any event, the Plan Administrator (or Trustee, as applicable)
shall distribute to the Participant his entire Vested Benefit in a
lump sum as soon as administratively practicable after the time of
his termination, provided that as of the Annuity Starting Date the
Participant's Vested Benefit has not ever exceeded $3,500 as of the
date of any prior distribution to the Participant. If the
Participant's entire Vested Benefit equals zero as of the date his
Service terminates, then the Participant shall be deemed to have
received a distribution of his entire Vested Benefit as of that date
of termination.
(c) Any distribution that is made to a Participant pursuant to this
Section shall be in lieu of any and all other benefits, present or
contingent, to which the Participant may be entitled under the terms
of this Plan.
7.2 Death Benefits
- --- --------------
(a) If a Participant who is credited with a Vested Benefit dies prior to
the Annuity Starting Date of his Vested Benefit, then the Plan shall
distribute a death benefit on his behalf.
The amount of the death benefit shall be the actuarial equivalent of
his Vested Benefit (after having taken into account any security
interest in his Vested Benefit that the Plan has as a result of any
currently outstanding loan to the Participant).
(b) Unless the Participant elects otherwise as provided in subsection (e)
below, if the Participant has a "surviving spouse" (as such term is
defined in this Section below) as of his date of death, the death
benefit shall be payable to such surviving spouse. If the
Participant has no surviving spouse, the death benefit will be paid
to the Participant's designated Beneficiary.
Art. VII 47
If the Participant's Vested Benefit has always had a lump sum value of
$3,500 or less as of the death benefit's Annuity Starting Date, then
that benefit shall be distributed in the form of a lump sum, and the
Annuity Starting Date of that benefit shall be as soon as
administratively practicable (in any event, within one year) following
the Participant's date of death.
If the Participant's death benefit has ever had a lump sum value in
excess of $3,500 as of that benefit's Annuity Starting Date, and if the
Participant has a surviving spouse as of his date of death, unless the
Participant elects otherwise as provided in subsection (e) below, the
form in which that benefit will be automatically distributable to the
surviving spouse (or to a non-spouse Beneficiary elected pursuant to
subsection (e)) shall be a "qualified preretirement survivor annuity",
providing equal monthly payments to the surviving spouse (or non-spouse
Beneficiary, as applicable) for the duration of his or her life, with no
payments after his or her death.
(c) The Annuity Starting Date of the qualified preretirement survivor
annuity shall be within a reasonable time (not exceeding 90 days)
following the Plan Administrator's receipt from the surviving spouse (or
non-spouse Beneficiary, as applicable) of a writing requesting the
commencement of that annuity. Absent such a request, the Annuity
Starting Date shall be not earlier than the date on which the
Participant would have attained Normal Retirement Age (or age 62, if
later).
(d) "Surviving spouse" means a spouse to whom the Participant was married
throughout the one-year period ending on the earlier of:
(1) the date the Participant's death benefit payments commence under
the terms of this Plan PROVIDED that if the Participant was
married within one year of the date his benefit payments began and
he and his spouse from such marriage were married for at least a
one-year period ending on the date of the Participant's death,
such Participant and such spouse shall be treated as having been
married throughout the one-year period ending on the date the
Participant's benefit payments began, or
(2) the date of the Participant's death.
(e) (1) Subject to paragraph (2) below, at any time during the "election
period" a Participant may elect to waive the qualified
preretirement survivor annuity benefit form so that the benefit
will be payable, if at all, in an alternate form permissible under
this Plan, and may also elect a specifically designated non-spouse
Beneficiary to replace his surviving spouse as the contingent
annuitant. He may also at any time revoke such election and make
another election. Any such election or revocation shall be in
writing and shall be effective upon receipt by the Plan
Administrator.
(2) An election by a Participant pursuant to paragraph (1) shall not
take effect unless:
Art. VII 48
(A) the Participant's spouse, in a writing received by the Plan
Administrator and witnessed by the Plan Administrator or a
notary public, acknowledges the effect of and consents to the
Participant's election; or
(B) it is established to the Plan Administrator's satisfaction
that the spousal consent described in (A) above cannot be
obtained because there is no spouse, because the spouse
cannot be located, or because of other circumstances which
render obtaining such spousal consent impossible.
(3) For purposes of this subsection, the "election period' shall be:
(A) for a Participant who has not separated from Service, the
period commencing on his Date of Employment or Re-employment
and ending on the last day of the Plan Year preceding the
Plan Year in which he attains age 35. Thereafter, a
Participant must make a new election within the period
beginning on the later of the first day of the Plan Year in
which he attains age 35 or his Date of Employment or Re-
employment and ending on the day of his death; or
(B) for a Participant who is separated from Service with the
Employer, the period beginning on the date such Participant
separates from service with the Employer and ending on the
date of his death. In the case of such Participant, such
election shall pertain only to his account balances earned
prior to the date of such separation.
(4) A written explanation with respect to the qualified preretirement
survivor annuity shall be provided to each Participant within a
reasonable period following his commencement of participation
and, if later, once within the period commencing with the first
day of the Plan Year in which he attains age 32 and ending with
the last day of the Plan Year preceding the Plan Year in which he
attains age 35, unless he terminates his employment as an
Employee prior to his attainment of age 35, in which case
such written explanation shall be provided at the time of his
termination or within a reasonable period thereafter. The written
explanation shall be provided in such terms and in such manner as
would be comparable to the explanation provided for meeting the
requirements of Section 7.5 regarding the Qualified Joint and
Survivor Annuity.
For the purposes of applying the preceding paragraph, a
reasonable period ending after the enumerated events is the end of
the two-year period beginning one year prior to the date the
applicable event occurs, and ending one year after that date.
In the case of a Participant who separates from Service before
the Plan Year in which he attains age 35, notice shall be provided
within the two-year period beginning one year prior to separation
and ending one year after separation. If such a Participant
thereafter returns to employment with the Employer, the applicable
period for such Participant shall be redetermined.
49
Art. VII
(f) Except as provided above regarding the qualified preretirement survivor
annuity, the Participant's death benefit shall be distributed to the
surviving spouse or other designated Beneficiary in the form of a lump
sum, and the Annuity Starting Date of that benefit shall be as soon as
administratively practicable (in any event, within one year) following
the Participant's date of death. However, the person to whom that
benefit is to be distributed, whether surviving spouse or other
designated Beneficiary, may elect to have the death benefit distributed
in any other form of benefit described in Section 7.4 and not precluded
thereby. To be effective for the purposes of this Plan, such an election
must be in writing, and must be received by the Plan Administrator
prior to the death benefit's Annuity Starting Date. Given such an
election, the Annuity Starting Date for the death benefit would then
occur within 90 days after receipt of that election.
In any event, any death benefit payable pursuant to this Section shall
commence or be distributed not later than the time period described in
(1) or (2) below, as appropriate:
(1) if payable to a surviving spouse (or child of the Participant, as
provided below), not later than December 31 of the calendar year
in which the Participant would have attained 70 1/2; or
(2) if payable to any other Beneficiary, not later than the first
anniversary of the Participant's death;
PROVIDED that, if said spouse or Beneficiary cannot be located within
the applicable time period specified above, the Plan Administrator may
delay commencement or distribution of payments for a period ending not
later than the first day of the first month beginning after the sixtieth
day following the date on which such spouse or Beneficiary has been
identified and located by the Plan Administrator and the Plan
Administrator has received any necessary documentation of death.
A death benefit payable to any surviving child of the Participant shall
be treated as if payable to the surviving spouse for purposes of (1)
above in this subsection PROVIDED that such benefit will become
payable to the surviving spouse as of the date such child reaches age 21
or as of such other time as prescribed by the Secretary of the Treasury
under regulations.
If a surviving spouse is eligible to receive death benefits under this
Plan, and if that surviving spouse dies prior to the Annuity Starting
Date of those death benefits, then the death benefits to which the
deceased spouse had been entitled shall be payable on his or her behalf
within such a time-frame as would be appropriate if the deceased spouse
had been the Participant, with the date of death of the surviving spouse
being substituted for the Participant's. However, the exceptions
provided in Code sec. 401(a)(9)(B)(iv) shall not be available regarding
any surviving spouse of the Participant's surviving spouse.
Art. VII 50
(g) If a Participant dies after his Vested Benefit has been distributed
in the form of a lump sum, there shall be no benefit payable from the
Plan as a result of his death. If his Vested Benefit has been
distributed in the form of an annuity, any benefit payable as a
result of his death shall be determined solely under the terms of the
annuity that was distributed, provided that the remaining portion of
such benefit, if any, shall be distributed to the beneficiary at
least as rapidly as provided in the terms of said annuity but in any
event consistent with Code sec. 401(a)(9)(B).
If a Participant dies while receiving the Payments from Account
described in Section 7.4 before his entire Vested Benefit has been
distributed, his surviving spouse, if any, may elect in writing to
the Plan Administrator to receive the previously undistributed
portion of such Vested Benefit in the form of a lump sum; in any
event, the remaining portion of such benefit, if any, shall be
distributed at least as rapidly as under the terms of said Payments
from Account in effect for the Participant at death.
7.3 Retirement
----------
A Participant, regardless of his status as an Employee, shall have attained
Retirement Age when he:
(a) has attained at least age 60, which shall be his Early Retirement
Age; or
(b) has attained age 65, which shall be his Normal Retirement Age.
A Participant who has attained Retirement Age may retire by designating in
writing to the Plan Administrator a Retirement Date, which shall be his
Retirement benefit's Annuity Starting Date, and which may be the first
day of any month after he has attained Normal Retirement Age or the first
day of any month after he has both attained Early Retirement Age and
terminated Service, but not later than the latest date permitted by the
provisions of Section 7.5 regarding Commencement of Payments. This latter
date shall be the Retirement Date of any Participant who has not, prior
thereto, designated a Retirement Date.
If the date on which the Participant attains Normal Retirement Age is the
first day of a month, that date shall be his Normal Retirement Date.
Otherwise, the Participant's Normal Retirement Date shall be the first day
of the first month following his attainment of Normal Retirement Age.
Upon Retirement, a Participant shall commence to receive his Vested
Benefit as provided in Section 7.5.
7.4 Form of Retirement Benefit
--------------------------
(a) Unless an optional form of benefit has been selected pursuant to
subsection (b) below, the Retirement benefit payable to a Participant
at the time of his Retirement shall be the actuarial value of his
Vested Benefit distributed in the form of a Qualified Joint and
Survivor Annuity.
(1) For a Participant who has no spouse as of his Retirement, his
Qualified Joint and Survivor Annuity is an annuity providing
monthly income payable for his life only, with no payments after
his death.
Art. VII 51
(2) For a Participant who has a spouse as of his Retirement, his
Qualified Joint and Survivor Annuity is an annuity which provides
monthly income payable for his life, and thereafter for the life
of his spouse, with payments to the spouse equal to one-half of
the payments to the Participant.
(b) Subject to the provisions of Section 7.5, a Participant may elect to
waive receipt of the actuarial value of his Vested Benefit in the form
of a Qualified Joint and Survivor Annuity, and instead to receive such
value in one of the following forms.
(1) Joint and Contingent Survivor Annuity - monthly income payable for
the life of the Participant, and thereafter for the life of his
spouse, if the Participant is married on the Annuity Starting Date
designated in the election, otherwise for the life of his
Beneficiary. Payments to the spouse or beneficiary may be the same
amount as or two-thirds of the payment paid to the Participant,
as specified in the election.
(2) Straight Life Annuity - monthly income payable for the life of
the Participant only, with no payments after his death.
(3) Certain and Life Annuity - monthly income payable for the life of
the Participant with the provision that if the Participant dies
after his Retirement Date, or if a Beneficiary dies after
commencement of payments, but before the end of a certain period
of 60, 120 or 180 months, as elected, payments will commence or be
continued for the remainder of the certain period to the
Participant's Beneficiary (or, if the annuity is distributed
pursuant to Section 7.2, to a beneficiary designated by the
Participant's Beneficiary) PROVIDED, however, that the certain
period elected shall not extend beyond (1) the life expectancy of
the Participant, (2) the life expectancies of the Participant and
his designated Beneficiary, (3) if payable pursuant to Section
7.2, the life expectancy of the designated Beneficiary or (4) 60
months, if by operation of Section 8.6 the Participant's
Beneficiary is his estate.
(4) Annuity for a Period Certain - monthly income payable for a
certain period elected by the Participant of not more than 240
months, with the provision that if the Participant dies after his
Retirement Date, or if a Beneficiary dies after commencement of
payments, but before the end of the certain period, payments will
commence or be continued for the remainder of the certain period
to the Participant's Beneficiary (or, if the annuity is
distributed pursuant to Section 7.2, to a beneficiary designated
by the Participant's Beneficiary) PROVIDED, however, that the
certain period elected shall not extend beyond (1) the life
expectancy of the Participant, (2) the life expectancies of the
Participant and his designated Beneficiary, (3) if payable
pursuant to Section 7.2, the life expectancy of the designated
Beneficiary, or (4) 60 months, if by operation of Section 8.6 the
Participant's Beneficiary is his estate.
(5) Lump Sum - a single payment in an amount equal to the
Participant's Vested Benefit.
Art. VII 52
(6) Partial Distributions - payments in an amount specified by the
Participant. The Participant may request a partial distribution at
any time following his attainment of Retirement Age. However, no
more than four (4) distributions shall be made to the Participant
during any Plan Year, and the amount of each distribution may not
be less than five hundred dollars ($500.00).
However, no optional form may be elected under which the amount of
monthly benefit payable to the Participant would not exceed 50% of
the amount he would receive in the form of a Straight Life Annuity
unless such optional form is a Lump Sum or a Joint and Survivor
Annuity with the Participant's spouse as contingent annuitant.
(c) Subject to the provisions of Section 7.5, and solely for the
purposes of distributing to a Participant his Vested Benefit where
such distribution has not occurred prior to his Required Beginning
Date (see Section 7.5(e)(2) below), the Participant may elect to
receive the distribution to commence as of his Required Beginning
Date in the form of Payments from Account, rather than in one of the
forms of retirement benefit payment already provided by this Article
VII.
Payments from Account shall mean periodic payments in an amount
specified by the Participant or his Beneficiary continuing until such
time as the Participant's Vested Benefit (adjusted for subsequent Net
Adjustments) is exhausted, PROVIDED however that the period over
which said payments are to be made shall not extend beyond (1) the
life expectancy of the Participant, (2) the life expectancies of the
Participant and his designated Beneficiary, (3) if payable pursuant
to Section 7.2, the life expectancy of the designated Beneficiary,
or (4) 60 months, if by operation of Section 8.6 the Participant's
Beneficiary is his estate.
7.5 Retirement Benefits: Election of Forms and Commencement of Payments
-------------------------------------------------------------------
(a) Applicability of this Section
-----------------------------
In the case of a Participant who will receive a distribution pursuant
to Section 7.1 due to his termination of employment before his
attainment of Retirement Age, the form of the distribution and the
time of commencement of payments will be as provided in that section.
The form and time of commencement of death benefits payable to
Beneficiaries shall be governed according to Section 7.2. The form
and time of commencement of any other benefits payable pursuant to
this Plan will be determined according to this section and Section
7.4.
In any event, all distributions required under this Section shall be
determined and made in accordance with the Income Tax Regulations
under Code sec. 401(a)(9), including the minimum distribution
incidental benefit requirement of sec. 1.401(a)(9)-2 of the
regulations.
Art. VII 53
(b) Explanation
-----------
No less than 30 days and no more than 90 days before a Participant's
Annuity Starting Date, the Plan Administrator shall provide the
Participant with a written explanation of (i) the terms and conditions
of the Qualified Joint and Survivor Annuity; (ii) the Participant's
right to make and the effect of an election to waive the Qualified
Joint and Survivor Annuity; (iii) the rights of the Participant's
spouse (if any) regarding the Qualified Joint and Survivor Annuity;
and (iv) the right to make, and the effect of, a revocation of a
previous election to waive the Qualified Joint and Survivor Annuity.
(c) Election
--------
A Participant may elect to waive his right to receive his Retirement
benefit in the form of a Qualified Joint and Survivor Annuity so as to
receive his Retirement benefit in one of the alternative forms
described in Section 7.4, and may also elect to name a person as
contingent annuitant or to replace the person currently designated by
him or this Plan to be his contingent annuitant. Such an election may
be revoked and replaced with another such election. However, to be
effective for the purposes of this Plan, any such an election or
revocation must be made in writing and received by the Plan
Administrator within ninety (90) days before the Participant's Annuity
Starting Date, and must satisfy the spousal consent requirements
described in subsection (d) below, and must specifically designate the
form in which the benefits shall be paid. In addition, if the election
is to replace the person currently designated by the Participant
pursuant to this Plan (or if there is no such designation by the
Participant, then the person (if any) designated by this Plan) to be
his contingent annuitant, then the election must specifically
designate the person who is to become the contingent annuitant.
(d) Spousal Consent
---------------
An election by a Participant to receive his Retirement benefit in one
of the alternative benefits forms or to change his contingent
annuitant shall not have any effect for the purposes of this Plan
unless:
(1) the Participant's spouse, in a writing received by the Plan
Administrator, acknowledges the effect of and consents to the
Participant's election within 90 days before the Annuity Starting
Date, and the writing is witnessed by the Plan Administrator or a
notary public; or
(2) it can be established to the Plan Administrator's satisfaction
that spousal consent cannot be obtained because there is no
spouse, or because the spouse cannot be located, or because of
other circumstances which render obtaining such spousal consent
impossible.
Any consent by a spouse (or establishment that the consent of the
spouse cannot be obtained) pursuant to this subsection shall be
effective only with respect to such spouse.
54
Art. VII
(e) Commencement of Payments
------------------------
(1) Unless a Participant otherwise elects in a writing received by
the Plan Administrator prior to the Participant's Annuity
Starting Date, payment of the Participant's Vested Benefit
shall begin not later than the 60th day after the close of the
Plan Year in which occurs the latest of:
(A) the Participant's attainment of Normal Retirement Age;
(B) the 10th anniversary of the date on which the Participant
commenced participation in this Plan; or
(C) the Participant's termination of employment as an Employee,
provided that if the Participant has failed to provide the Plan
Administrator with sufficient information as to age and marital
status or any other relevant information, so that the amounts
of payment may not be determined, or if the Participant cannot
be located, then the Plan Administrator may delay commencement
of payments for not more than 60 days after the earliest date on
which the amount and form of payment may be determined under the
terms of this Plan, or the Participant is located. The amount
of payment in the event of such a delay shall be retroactive to
the Participant's Retirement Date.
Notwithstanding any provisions of this paragraph (1) to the
contrary, the failure of a Participant and the Participant's
spouse to consent to the distribution of a benefit while that
benefit is immediately distributable pursuant to this Section
shall be deemed to be an election to defer commencement of
payment of that benefit.
(2) Any provisions of this Plan to the contrary notwithstanding, the
entire vested interest of the Participant in benefits under this
Plan:
(A) will be distributed to the Participant not later than the
Participant's Required Beginning Date, or
(B) will be distributed, beginning not later than the
Participant's Required Beginning Date, over the life of
tile Participant or over the lives of the Participant and a
designated beneficiary (or over a period not extending
beyond the life expectancy of the Participant or the life
expectancy of the Participant and a designated
beneficiary).
For the purpose of determining the amount to be distributed as
of the Participant's Required Beginning Date, his Vested Benefit
shall be valued as of December 31 of the calendar year
immediately preceding his Required Beginning Date.
The Participant may elect for these required distributions to be
paid in any of the forms if benefit described in Section 7.4,
subject to any spousal consent requirements that may apply
pursuant to this Plan. Absent such an election, these
distributions automatically shall be payable in the form
described in Section 7.4(a).
Art. VII 55
(3) If a Participant's interest is to be distributed in a form other
than a Lump Sum, the following minimum distribution rules shall
apply on or after the Participant's Required Beginning Date.
(A) If the Participant's benefit is to be distributed over (1) a
period not extending beyond the life expectancy of the
Participant or the joint life and last survivor expectancy of
the Participant and the Participant's Beneficiary, or (2) a
period not extending beyond the life expectancy of the
Beneficiary, then the amount required to be distributed for
each calendar year, beginning with distribution for the
first distribution calendar year, must at least equal the
quotient obtained by dividing the Participant's benefit by
the applicable life expectancy.
(B) For calendar years beginning before January 1, 1989, if the
Participant's spouse (if any) is not the Beneficiary, the
method of distribution selected must assure that at least
50% of the present value of the amount available for
distribution is paid within the life expectancy of the
Participant.
(C) For calendar years beginning after December 31, 1988, the
amount to be distributed each year, beginning with
distributions for the first distribution calendar year, shall
not be less than the quotient obtained by dividing the
Participant's benefit by the lesser of (1) the applicable
life expectancy, or (2) if the Participant's spouse (if any)
is not the Beneficiary, the applicable divisor determined
from the table set forth in Q&A-4 of section 1.401(a)(9)-2 of
the Income Tax Regulations. Distributions after the death of
the Participant shall be distributed using the applicable
life expectancy referenced in subsection (3)(A) above as the
relevant divisor without regard to Regulations sec.
1.401(a)(9)-2.
(D) The minimum distribution required for the Participant's first
distribution calendar year must be made on or before the
Participant's Required Beginning Date. The minimum
distribution for other calendar years, including the minimum
distribution for the distribution calendar year in which the
Participant's Required Beginning Date occurs, must be made on
or before December 31 of that distribution calendar year.
If the Participant's benefit is distributed in the form of an
annuity purchased from an Insurance Company, any such
distribution shall be made in accordance with the requirements of
Code sec. 401(a)(9) and the regulations promulgated thereunder.
(4) Any additional amounts of Vested Benefit accrued by the
Participant after his Required Beginning Date shall be distributed
annually in the form of a lump sum consistent with the
requirements of Code sec. 401(a)(9) and applicable regulations.
Art. VII 56
(5) Once distributions have begun to a 5% owner under this
subsection, they must continue to be distributed even if the
Participant ceases to be a 5% owner in a subsequent year.
(6) For the purposes of this subsection, "applicable life
expectancy" means the life expectancy (or joint and last
survivor expectancy) calculated using the attained age of the
Participant (or designated beneficiary) as of the
Participant's (or designated beneficiary's) birthday in the
applicable calendar year reduced by one for each calendar
year which has elapsed since the date the life expectancy was
first calculated.
If the life expectancy is being recalculated, the applicable
life expectancy shall be the life expectancy as so
recalculated.
The applicable calendar year shall be the first distribution
calendar year, and if the life expectancy is being
recalculated, each such succeeding calendar year.
If annuity payments commence before the Required Beginning
Date, the applicable calendar year is the year such payments
commence. If the distribution is in the form of an immediate
annuity purchased after the Participant's death with the
Participant's remaining Vested Benefit, the applicable
calendar year is the year of purchase.
(7) Unless otherwise elected by the Participant (or spouse, as
applicable) by the time distributions are required to begin,
life expectancies shall be recalculated annually. If such an
election has been made by the Participant (or spouse, as
applicable), it shall be irrevocable as to the Participant
(or spouse) and shall apply to all subsequent years.
The life expectancy of a nonspouse beneficiary may not be
recalculated.
7.6 Loans to Participants
---------------------
Each Active Participant may apply to obtain loans from the Plan according
to the procedures and limits described below.
(a) Any application for a loan may only be made in writing, and will
become effective only upon receipt by the Plan Administrator. The
principal amount of the loan requested may not be less than five
hundred dollars ($500.00).
A loan shall be available only for the applicant's "immediate and
heavy financial need" as described in Section 4.2.5(b)(1) or for
payment of any of the following expenses:
(1) educational expenses not described in Section 4.2.5(b)(1) of the
applicant or an immediate family member;
(2) Taxes owed by the applicant;
(3) Living and home repair expenses and costs of necessary
appliances, e.g. furnace, plumbing, new roof, incurred or to be
incurred by the applicant;
(4) Business or employment expenses, e.g. transportation, of the
applicant;
(5) Payments to prevent mortgage foreclosure on the residence of an
immediate family member;
(6) Debt of the applicant on which collection action by the creditor
has begun;
(7) Legal fees and costs, settlements of claims and lawsuits, and
fines owing by the applicant or an immediate family member;
(8) Uninsured damages caused by natural disasters to any real or
personal property of the applicant.
The written loan application must document the reason for the loan.
Subject to the additional limitations of Section 7.6(f), the
principal amount of the loan may not exceed the amount of that
"immediate and heavy financial need" or expense from the list above.
(b) The Plan Administrator may choose to grant or deny the request in a
reasonably equivalent and nondiscriminatory manner, consistent with
the requirements of section 401 (and all other relevant provisions)
of the Internal Revenue Code, as amended. However, under no
circumstances shall a loan be made by this Plan to any person who is
or is deemed to be (or has as a member of his immediate family) an
"owner-employee" (as defined in Code 4975(d)) or a "shareholder-
employee" (as defined in Code secs. 401(j) and 1379(d)).
(c) If the request is granted and an amount is loaned to the Participant
(hereinafter "the Borrower"), the resulting liability of the Borrower
for repayment of the loan to the Plan shall be accounted through the
establishment of a Segregated Investment Fund into which the
principal amount of the loan shall be entered as of the date on
which the amount of the loan is provided to the Borrower.
FOURTH AMENDMENT
Art. VII, Section 7.6
Effective 1/1/97 58
The loan amount shall be taken pro rata from the Participant's
balances in the Plan's investment options (described in Section
6.1.2) as of the date the loan is made.
Any such loan shall be treated as a directed investment by the
Borrower of Plan assets separate and apart from the Investment Fund
of the Insurance Company or any other assets of the Plan. As such,
any earnings, gains or losses attributable to the loan shall be
credited only to the Segregated Investment Fund representing that
loan, and shall in turn be allocated solely to the Borrower's
Individual Accounts.
(d) Each loan shall bear interest at a reasonable fixed rate established
by the Plan Administrator with reference to the economic conditions
and interest rates being charged by local financial institutions for
similar loans with similar collateral as of the time when the loan
request is being processed. In addition, the Plan Administrator may
require the Borrower to pay any administrative fees that are deemed
to be necessary to establish or maintain the Segregated Investment
Fund, provided that all such fees or fee schedules shall be disclosed
to the Borrower at the time the loan is made and again prior to any
modification of such fees or schedules by the Plan Administrator
(which may be enacted by the Plan Administrator at any time that the
Plan Administrator determines that such modification is appropriate,
in the exercise of his or her fiduciary duty), and further provided
that the ability to obtain loans from the Plan shall remain available
to all Borrowers on a reasonably equivalent basis.
Loans shall not be made available to HCE's in an amount greater than
the amount made available to non-HCE's; however, maximum loan
amounts may vary directly according to the size of each Participant's
vested accrued benefit under this Plan.
Each amount received in repayment of the loan shall be credited to
the Borrower's Segregated Investment Fund as of the day on which it
was received by the Plan Administrator, after its having first been
reduced by any administrative fees charged by the Plan Administrator
pursuant to the preceding paragraph.
(e) Each loan shall be evidenced by a negotiable promissory note signed
by the Borrower and his spouse (if any, as of the time of the making
of the note) within 90 days before the loan is made, and secured by a
portion of the Borrower's vested interest in amounts held under the
Plan on the Borrower's behalf, with such portion equal to the amount
that is loaned to the Borrower at the time of the loan's origination.
FOURTH AMENDMENT
Art. VII, Section 7.6
Effective 1/1/97 59
The note shall contain the consent of the Borrower's spouse to the
loan and an acknowledgment that any default on the loan may under
certain circumstances reduce benefits under the Plan to which such
spouse may become entitled, unless it is established to the Plan
Administrator's satisfaction that spousal consent cannot be obtained
because there is no spouse, or because the spouse cannot be located,
or because of other circumstances which render obtaining such spousal
consent impossible. The note must be witnessed by a notary public or
the Plan Administrator. The note also must state that in the event of
the Borrower's default on the loan, the Borrower (and the Borrower's
spouse, if any, as of the time of the processing of the loan) agree
to be bound by the provisions of this Plan, and particularly of this
Section.
The Plan Administrator, in the exercise of his sole discretion, may
require that additional security or documentation be provided by the
Borrower.
(f) Immediately after the origination of any Plan loan to the Borrower,
the total amount of the outstanding balances of all loans made to the
Borrower from this Plan may not exceed the lesser of:
(1) 50% of the present value of the Borrower's vested interest in
amounts held under the Plan on the Borrower's behalf (determined
immediately after the loan's origination); or
(2) $50,000, except that with regard to loans made, renewed,
negotiated, modified or extended on or after January 1, 1987,
such $50,000 limit shall be reduced by the excess (if any) of:
(A) the highest outstanding balance of all loans to the
Borrower, under all qualified retirement plans maintained
by the Employer, during the one-year period ending on the
day before the date as of which the most recent loan was
made, over
(B) the outstanding balance of all loans to the Borrower, under
all qualified retirement plans maintained by the Employer,
on the date as of which the most recent loan was made.
For the purposes of this subsection (f), "Employer" shall be as
defined in Article II, and in addition shall mean any other employers
which when taken together with the Employer(s) sponsoring this Plan
are treated as a single employer under section 414(b), (c) or (m) of
the Internal Revenue Code, as amended.
FOURTH AMENDMENT
Art. VII, Section 7.6
Effective 1/1/97 60
For the purposes of this subsection (f), simplified employee pension
plans shall not be regarded as qualified retirement plans.
(g) Each loan made, renewed, negotiated, modified or extended on or
after January 1, 1987, shall be subject to substantially level
amortization.
(h) Each loan shall be distributed (if at all) as soon as reasonably
practicable, but in any event not later than 90 days after the date
on which the Plan Administrator receives the prescribed loan request.
(i) Whenever possible, loans shall be repaid to the Plan through periodic
payroll deductions from the Borrower's Compensation (if any).
(j) With the consent of the Plan Administrator, the Borrower may at any
time prepay an amount against the outstanding balance of the loan;
however, unless the entire outstanding balance is prepaid, repayment
installments must continue to be made periodically according to the
pre-arranged repayment schedule.
Notwithstanding any provision of this Section to the contrary, loan
repayments will be suspended as permitted under Code sec. 414(u)(4).
Provided the Plan Administrator consents, a Borrower may refinance
any loan that he has outstanding from the Plan. The procedures and
limits applying to refinancing a loan shall be substantially the same
as those prescribed herein for obtaining a loan.
(k) At any time before it has been completely repaid (including principal
and interest), a loan under this Plan shall be in default as of the
earlier of:
(1) the end of a reasonable period of time (not exceeding 30 days)
specified by the Plan Administrator and immediately following
the date on which any periodic installment payment required
under the Promissory Note is not received by the holder of the
Note when due;
(2) the date as of which any amount becomes distributable to a
Borrower from the Plan, including for example the Borrower's
date of Retirement, but only to the extent that such
distribution would result in the loan balance equaling more
than the Borrower's vested interest in the Plan's assets after
such distribution; or
FOURTH AMENDMENT
Art. VII, Section 7.6
Effective 1/1/97 61
(3) the fifth anniversary of the date on which the amount of the
loan was paid from the Plan to the Borrower, or in the case of a
loan for the purchase of the Borrower's principal residence, the
tenth anniversary of the date on which the amount of the loan
was paid to the Borrower.
(l) If the Plan Administrator as holder of the Promissory Note determines
that a loan under this Plan is in default, then at the option of the
Plan Administrator, the Borrower may be given a reasonable amount of
time (in any event not exceeding 30 days) to cure the default by
repaying all amounts that have become due as of that date.
If the default results from a distribution of excess elective
deferrals (pursuant to Code sec. 402(g)(2)), excess contributions
(pursuant to Code sec. 401(k)(8)), or excess aggregate contributions
(pursuant to Code sec. 401 (m)(6)), if any, then the Borrower may
cure the default by repaying to the Plan an amount sufficient to
reduce the outstanding balance of the loan to an amount equal to not
more than the Borrower's vested interest in Plan Assets remaining
after such distribution.
(m) In addition, as of the date of such default, the Plan shall
immediately stop accepting elective deferrals (if any) on that
Borrower's behalf until such time as the loan is no longer in
default.
(n) If there is security for the loan available in addition to or
instead of the Borrower's vested interest in Plan assets, then upon
default, the holder of the Promissory Note may (but is not required
to) look to that other security for liquidation and repayment of the
loan.
(o) To the extent that a default of a loan is not cured or is not repaid
through security other than the Borrower's vested interest in the
Plan's assets, then the Plan Administrator shall reduce the
Borrower's vested interest in the Plan's assets. The amount of such
reduction shall equal the outstanding balance of the loan, including
any interest that has accrued as of that date of determination,
except that if the default has resulted from a distribution of Plan
assets that has been made to bring the Plan into compliance with any
of the nondiscrimination limits and tests of the Code (as specified,
e.g. in Code secs. 401(k), 401(m), or 415), then the amount of the
reduction shall equal only that amount which is necessary to cure the
default by reducing the outstanding balance of the loan to an amount
equal to the Borrower's vested interest in the Plan's assets as of
that date of determination and after the distribution has been made.
FOURTH AMENDMENT
Art. VII, Section 7.6
Effective 1/1/97 61a
Any reduction in a Borrower's vested interest in Plan assets
accomplished pursuant to this paragraph shall immediately result in a
corresponding reduction and offset of the outstanding balance of the
loan as of that date of determination.
However, under any circumstances, a Borrower's vested interest in the
Plan's assets that are attributable to Elective Contributions, if any
(or to amounts that are treated as Elective Contributions pursuant to
Article V) may not be reduced pursuant to this subsection (o) sooner
or to a greater extent than such amounts become distributable
consistent with the provisions of Code sec. 401(k), all other
relevant Code sections, and regulations promulgated thereunder.
(p) In the event that a loan from this Plan to a Borrower is treated as a
distribution under Code sec. 72, and/or under applicable Department
of Labor regulations, the Borrower's obligation to repay the loan
shall remain unchanged by such distribution treatment.
(q) When the Borrower is no longer indebted under the Promissory Note
(e.g. due to the complete repayment of the loan, or due to recovery
of the loan's security upon default), the Borrower's Segregated
Investment Fund shall then be closed.
FOURTH AMENDMENT
Art. VII, Section 7.6
Effective 1/1/97 61b
ARTICLE VIII
GENERAL PROVISIONS
8.1.1 Plan Modification: Authority
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The Trustees reserve the right to amend, modify, or terminate the Plan at
any time, provided that no amendment or modification shall act to reduce
the balances of the Individual Accounts of any Participant accrued to the
time of such amendment or modification.
8.1.2 Plan Modification: Merger
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No merger, consolidation, or transfer of the assets or 1iabilities of
this Plan with or to any other qualified plan shall be undertaken unless,
after such merger, consolidation, or transfer, each Participant would,
if the Plan then terminated, receive a benefit not less than the benefit
he would have received had the Plan terminated immediately prior to such
merger, consolidation, or transfer.
8.1.3 Plan Modification: Termination
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Upon termination or partial termination of this Plan, or the complete
discontinuance of contributions by the Employer (as defined in Code
secs. 1.401-6(c) and 1.411(d)-2(d)), the rights of each affected
Participant to benefits accrued to the date of termination or partial
termination, or the complete cessation of contributions by the Employer,
shall be fully vested to the extent funded.
If, after the allocation of the Plan's assets pursuant to the Plan's
termination, all liabilities of the Plan have been satisfied in full and
there remain surplus Plan assets not necessary to satisfy the liabilities
of the Plan, such surplus shall revert to the Employer, consistent with
the provisions of the termination amendment of this Plan, and provided
that no successor plan is established (with "successor plan" having the
same meaning as that described in IRC Reg. 1.401(k)-1(d)(3)).
8.2.1 Duties: Plan Administrator
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The Plan Administrator has the discretionary authority to control and
manage the operation and administration of the Plan, including the
specific duties outlined below. The Plan Administrator in his sole
discretion shall make such rules, regulations, interpretations, and
computations and shall take such other actions to administer the Plan
as he may deem appropriate. Such rules, regulations, computations, and
other actions shall be conclusive and binding upon all persons.
Duties of the Plan Administrator include, but are not limited to,
determination of benefits and eligibility to participate, payment of
funds to the Insurance Company or Trustee, authorization of benefit
payments and payment of any expenses incurred in the administration of
the Plan. The Plan Administrator may employ such consultants and advisors
as he deems necessary or desirable for carrying out his duties under the
Plan.
Art. VIII 62
8.2.2 Duties: Employer
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Duties of the Employer include, but are not limited to, payment of funds
to the Insurance Company or Trustee, in addition to payment of any
expenses incurred in the administration of the Plan. The Employer shall
indemnify and hold harmless any fiduciary who is an employee of the
Employer from any and all claims, loss, damages, expense (including
counsel fees), and liability (including amounts paid in settlement with
the Employer's written consent) arising from any act or omission of the
fiduciary, except when the same is judicially determined to be done due
to the gross negligence or willful misconduct of the fiduciary.
8.3 Benefit Claims Procedure
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Any Participant in this Plan, or his Beneficiary, may make a claim for
benefits due to him under this Plan by delivering a written application
to the Plan Administrator. If a claim is wholly or partially denied,
notice of the decision shall be furnished to the claimant by the Plan
Administrator within 90 days after receipt of the claim by the Plan
Administrator unless special circumstances require an extension of time
for processing the claim. If an extension of time is required the Plan
Administrator shall furnish the claimant with written notice of that
fact, including the reason why an extension is required and an estimated
date upon which a final decision is expected, which shall be not later
than 180 days after the claim was made. In that event, if the claim is
denied in whole or part, written notice of denial shall be given as soon
as practicable, but not later than 180 days after the claim was made.
A notice of denial of a claim shall state:
(1) the specific reason or reasons for the denial;
(2) reference to the specific Plan provisions upon which the denial was
based; and
(3) a description of any additional material or information necessary
for the claimant to perfect the claim and an explanation of why such
additional material or information is required.
If this notice is not furnished within the time provided in this Section,
the claim shall be deemed wholly denied.
8.4 Review Procedure
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In the event that a claim is denied under this Plan, the claimant or his
authorized representative may apply in writing to the Plan Administrator
within 60 days of receiving notice of the denial or, if no written notice
of denial is received within the 180-day period prescribed in Section
8.3, within 60 days after the expiration of said 180 day period, asking
that the denial be reviewed. This time limit may be extended by the Plan
Administrator if an extension appears to be reasonable in view of the
nature of the claim and the pertinent circumstances. Upon receipt of such
application, the Plan Administrator shall afford the claimant an
opportunity to review pertinent documents and to submit issues and
comments in writing. A decision on review shall be rendered by the Plan
Administrator not later than 60 days after the claimant's application
for review unless an extension of time for processing is required, in
which case a decision will be made as soon as possible,
Art. VIII 63
but not later than 120 days after the request for review was made. If an
extension of time is required, the Plan Administrator shall give the
claimant written notice of that fact before the extension period begins. A
decision on review shall be in writing and shall include specific reasons
for the decision and specific references to the Plan provisions on which
the decision is based.
If the claimant has not received written decision on review within 60 days
after the request for review was received, or within 120 days if an
extension of time was required, the claim will be considered wholly denied
on review.
8.5 Qualification of the Plan and Conditions of Contributions
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This Plan, together with any insurance or annuity contracts or trust
agreement used in conjunction with it, is intended to meet the requirements
of the Internal Revenue Service for approval as a tax-exempt plan or trust
under Section 401 of the Code. Any amendments which may be necessary to
meet these requirements shall be made retroactive to the date upon which
the Plan failed to meet these requirements.
Contributions to this Plan are made with the intent and on the condition
that such contributions are deductible under Section 404 of the Code. If
any contribution by the Employer is disallowed as a deduction by the
Internal Revenue Service then, to the extent the deduction is disallowed,
the contribution shall be refunded to the Employer within one year after
the disallowance of the deduction. If any contribution by the Employer is
made by a mistake of fact, such contribution shall be refunded to the
Employer within one year after the payment of the contribution.
If a refund occurs pursuant to this Section, the amount which shall be
returned to the Employer shall be the excess of the amount which was
contributed over the amount (1) which was deductible, or (2) which would
have been contributed absent the mistake of fact (as the case may be),
without any earnings but net of any losses attributable to such excess.
Further, no amount shall be refunded to the Employer if such a refund would
result in a reduction of any Participant's Prior Plan Account to an amount
less than the amount the Account would have been had there never been a
refund pursuant to this Section.
8.6 Beneficiaries
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Any payments due under the Plan to a Participant's Beneficiary shall be
paid according to the Beneficiary designation last filed in writing with
the Plan Administrator by the Participant. If no such designation is made,
payments shall be made in the following order of priority:
(a) to the surviving spouse of the Participant;
(b) if no spouse survives the Participant, then to the children of the
Participant in equal shares, with a share by right of representation
to the then surviving children of any deceased child; or
(c) if neither a spouse, children nor grandchildren survive the
Participant, then to the Participant's estate.
Art. VIII 64
8.7 Spendthrift Clause
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(a) General Rule
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Subject to the exception specified in subsection (b) below,
benefits payable under this Plan shall not be subject in any
manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, charge, garnishment, execution, or levy of
any kind, either voluntary or involuntary, including any such
liability which is for alimony or other payments for the support
of a spouse or former spouse, or for any other relative of the
Employee, prior to actually being received by the person entitled
to the benefit under the terms of the Plan except as provided!
below, and any attempt to anticipate, alienate, sell, transfer,
assign, pledge, encumber, charge or otherwise dispose of any
right to benefits payable hereunder shall be void; also, the Plan
shall not in any manner be liable for, nor subject to, the debts,
contracts, liabilities, engagements or torts of any person
entitled to benefits hereunder.
(b) Exception
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The provisions of subsection (a) above to the contrary shall not
withstand a right to a benefit payable under this Plan that has
been created, assigned or recognized pursuant to a "qualified
domestic relations order", as defined in Code sec. 414(p).
Administration of the Plan with respect to qualified domestic
relations orders shall at all times be consistent with Code sec.
414, regulations promulgated thereunder, and any other provisions
of state and federal law that may be applicable. Payment of a
benefit to an alternate payee pursuant to a qualified domestic
relations order may be made prior to the time such payment could
be made to the Participant, provided that such payment is
consistent with the provisions of this Plan in all respects
except for the time of payment.
8.8 Annuities
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Any provisions of this Plan to the contrary notwithstanding:
(a) any annuity contract distributed from this Plan shall contain
express provisions sufficient to make such contract
nontransferable; and
(b) the terms of any annuity contract purchased and distributed by
the Plan to a Participant or Participant's spouse shall comply
and be consistent with the requirements of this Plan.
8.9 Limitations of the Employer's Liability
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To the extent permitted by law, the liability of the Employer with
respect to any and all obligations arising from or in any way
connected with this Plan shall be limited to amounts already
contributed.
Art. VIII 65
8.10 Non-Guarantee of Employment
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This Plan shall not be considered to constitute a contract of employment
and nothing contained in the Plan shall give any Employee the right to be
retained in employment, nor shall anything contained in the Plan interfere
with the Employer's right to discharge or retire any Employee at any time.
Participation in the Plan shall not give any Employee any right or claim
in any benefits except as specifically provided in this Plan.
8.11 Applicable Law
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The provisions of this Plan shall be governed, construed, and administered
in accordance with federal law, and to the extent that state law is not
preempted by federal law, the law of the state of Oregon.
8.12 USERRA Requirements
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Notwithstanding any provisions of this Plan to the contrary, contributions
and Service with respect to qualified military service will be provided in
accordance with Code sec. 414(u).
ARTICLE IX
DIRECT ROLLOVERS
9.1 General Rule
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This Article applies to distributions made on or after January 1, 1993.
Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a distributee's election under this Article, a distributee
may elect, at the time and in the manner prescribed by the Plan
Administrator, to have any portion of an eligible rollover distribution
paid directly to an eligible retirement plan specified by the distributee
in a direct rollover.
9.2 Definitions
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(a) Eligible rollover distribution: An eligible rollover distribution is
any distribution of all or any portion of the balance to the credit
of the distributee, except that an eligible rollover distribution
does not include: any distribution that is one of a series of
substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the distributee
or the joint lives (or joint life expectancies) of the distributee
and the distributee's designated beneficiary, or for a specified
period of ten years or more; any distribution to the extent such
distribution is required under section 401(a)(9) of the Code; and the
portion of any distribution that is not includible in gross income
(determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
(b) Eligible retirement plan: An eligible retirement plan is an
individual retirement account described in Section 408(a) of the
Code, an individual retirement annuity described in Section 408(b) of
the Code, an annuity plan described in Section 403(a) of the Code, or
a qualified trust described in Section 401(a) of the Code, that
accepts the distributee's eligible rollover distribution. However, in
the case of an eligible rollover distribution to the surviving
spouse, an eligible retirement plan is an individual retirement
account or individual retirement annuity.
(c) Distributee: A distributee includes an Employee or former Employee.
In addition, the Employee's or former Employee's surviving spouse and
the Employee's or former Employee's spouse or former spouse who is
the alternate payee under a qualified domestic relations order, as
defined in Section 414(p) of the Code, are distributees with regard
to the interest of the spouse or former spouse.
(d) Direct rollover: A direct rollover is a payment by the Plan to the
eligible retirement plan specified by the distributee.
Art. IX 67