401(k) Plan - Plantronics Inc.
PLANTRONICS, INC.
401(k) PLAN
ORIGINAL EFFECTIVE DATE: JUNE 1, 1968
RESTATEMENT EFFECTIVE DATE: APRIL 2, 2000
WILSON SONSINI GOODRICH & ROSATI
650 PAGE MILL ROAD
PALO ALTO, CA 94304-1050
(650) 493-9300
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TABLE OF CONTENTS
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ARTICLE I INTRODUCTION......................................................... 1
ARTICLE II DEFINITIONS......................................................... 2
2.1 Account......................................................... 2
2.2 Adjustment Factor............................................... 2
2.3 Administrator................................................... 2
2.4 Base Compensation............................................... 2
2.5 Beneficiary..................................................... 3
2.6 Board........................................................... 3
2.7 Break in Service................................................ 3
2.8 Code............................................................ 3
2.9 Committee....................................................... 3
2.10 Company......................................................... 3
2.11 Company Stock................................................... 3
2.12 Compensation.................................................... 3
2.13 Contributions................................................... 4
2.14 Days of Service................................................. 4
2.15 Department of Labor Regulations................................. 4
2.16 Disability...................................................... 5
2.17 Early Retirement................................................ 5
2.18 Earnings........................................................ 5
2.19 Effective Date.................................................. 5
2.20 Eligible Employees.............................................. 5
2.21 Eligible Participant............................................ 6
2.22 Employee........................................................ 6
2.23 Employer........................................................ 7
2.24 Employer Discretionary Contributions............................ 7
2.25 Employer Matching Contributions................................. 7
2.26 Employment Commencement Date.................................... 7
2.27 Entry Dates..................................................... 7
2.28 ERISA........................................................... 7
2.29 Highly Compensated Employee..................................... 7
2.30 Hour of Service................................................. 8
2.31 Income Tax Regulations.......................................... 9
2.32 Leased Employee................................................. 9
2.33 Non-Highly Compensated Employee................................. 9
2.34 Normal Retirement or Normal Retirement Date..................... 9
2.35 Participant..................................................... 9
2.36 Participating Employer.......................................... 9
2.37 Period of Service............................................... 9
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2.38 Plan............................................................ 10
2.39 Plan Year....................................................... 10
2.40 Qualified Matching Contributions................................ 10
2.41 Qualified Nonelective Contributions............................. 10
2.42 Reemployment Commencement Date.................................. 10
2.43 Rollover Contributions.......................................... 10
2.44 Safe Harbor Contributions....................................... 10
2.45 Safe Harbor Matching Contributions.............................. 10
2.46 Safe Harbor Nonelective Contributions........................... 10
2.47 Salary Deferral Contributions................................... 10
2.48 Section 415 Compensation........................................ 11
2.49 Severance Date.................................................. 11
2.50 Spouse or Surviving Spouse...................................... 12
2.51 Trust........................................................... 12
2.52 Trust Agreement................................................. 12
2.53 Trustee......................................................... 12
2.54 Valuation Date.................................................. 12
2.55 Year of Service................................................. 12
2.56 Other Definitions............................................... 12
ARTICLE III ELIGIBILITY........................................................ 14
3.1 Participation................................................... 14
3.2 Reemployment.................................................... 14
3.3 Change in Employment Status..................................... 14
3.4 Enrollment of Participants...................................... 14
3.5 Erroneous Participation......................................... 14
ARTICLE IV CONTRIBUTIONS....................................................... 16
4.1 Salary Deferral Contributions................................... 16
4.2 Safe Harbor Nonelective Contributions........................... 16
4.3 Safe Harbor Matching Contributions.............................. 17
4.4 Safe Harbor Contributions Requirements.......................... 18
4.5 Employer Matching Contributions and Qualified Matching
Contributions................................................... 19
4.6 Employer Discretionary and Qualified Nonelective Contributions.. 19
4.7 Limitations on Contributions.................................... 20
4.8 Time and Manner of Payment of Contributions..................... 20
4.9 Receipt of Assets from Another Plan............................. 20
ARTICLE V ACCOUNTS............................................................. 21
5.1 Participant's Accounts.......................................... 21
5.2 Allocation of Contributions..................................... 22
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5.3 Allocation of Earnings.......................................... 22
5.4 Section 415 Limitations......................................... 22
5.5 Discrimination Testing of Salary Deferral Contributions......... 26
5.6 Distribution of Excess Elective Deferrals....................... 31
5.7 Discrimination Testing of Employer Matching Contributions....... 32
5.8 Corrective Procedure for Discriminatory Matching Contributions.. 34
ARTICLE VI VESTING AND DISTRIBUTION OF ACCOUNTS................................ 37
6.1 Vested Interest................................................. 37
6.2 Forfeitures..................................................... 38
6.3 Early Retirement................................................ 39
6.4 Normal Retirement Date.......................................... 39
6.5 Death Benefits.................................................. 39
6.6 Termination of Employment....................................... 39
6.7 Commencement of Distribution.................................... 39
6.8 Special Rule for Salary Deferral Contributions, Safe Harbor
Nonelective Contributions, Safe Harbor Matching Contributions
and Qualified Nonelective Contributions......................... 41
6.9 Direct Rollovers and Withholding................................ 42
6.10 Form of Distribution............................................ 42
6.11 Form of Benefit................................................. 43
6.12 Minimum Distribution Requirements............................... 43
6.13 Distribution to Minor or Incompetent............................ 47
6.14 Beneficiary Designation......................................... 47
6.15 Location of Participant or Beneficiary Unknown.................. 47
6.16 Hardship Distributions.......................................... 48
6.17 Loans........................................................... 49
6.18 In-Service Withdrawals at Age Fifty-Nine and One-Half (59 1/2).. 50
ARTICLE VII ADMINISTRATION..................................................... 51
7.1 Powers of the Administrator..................................... 51
7.2 Absolute Discretion of the Administrator........................ 51
7.3 Committee....................................................... 52
7.4 Domestic Relations Orders....................................... 53
ARTICLE VIII LEAVES OF ABSENCE AND TRANSFERS................................... 56
8.1 Military Leave of Absence....................................... 56
8.2 Other Leaves of Absence......................................... 56
8.3 Transfers....................................................... 56
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ARTICLE IX TRUST PROVISIONS.................................................... 58
9.1 Trust Agreement................................................. 58
9.2 Voting.......................................................... 58
ARTICLE X FEES AND EXPENSES.................................................... 59
ARTICLE XI AMENDMENT, TERMINATION OR MERGER.................................... 60
11.1 Amendment....................................................... 60
11.2 Termination of Plan............................................. 60
11.3 Merger.......................................................... 61
ARTICLE XII ADOPTION OF PLAN BY RELATED ENTITIES............................... 62
12.1 Adoption of the Plan............................................ 62
12.2 Withdrawal...................................................... 62
ARTICLE XIII CLAIMS PROCEDURE.................................................. 63
13.1 Right to File Claim............................................. 63
13.2 Denial of Claim................................................. 63
13.3 Claim Review Procedure.......................................... 63
ARTICLE XIV TOP-HEAVY PROVISIONS............................................... 65
14.1 Purpose......................................................... 65
14.2 Definitions..................................................... 65
14.3 Minimum Allocation.............................................. 67
ARTICLE XV MISCELLANEOUS....................................................... 68
15.1 Legal or Equitable Action....................................... 68
15.2 Indemnification................................................. 68
15.3 No Enlargement of Plan Rights................................... 68
15.4 No Enlargement of Employment Rights............................. 68
15.5 Interpretation.................................................. 68
15.6 Governing Law................................................... 68
15.7 Non-Alienation of Benefits...................................... 69
15.8 No Reversion.................................................... 69
15.9 Conflict........................................................ 69
15.10 Severability.................................................... 70
15.11 Conditional Restatement......................................... 70
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ARTICLE I
INTRODUCTION
Plantronics, Inc. maintains the Plantronics, Inc. 401(k) Plan, (the
"Plan") consisting of the following provisions, for the exclusive benefit of
Participants and their Beneficiaries (and for defraying reasonable
administrative expenses of the Plan). The Plan was originally established
effective as of June 1, 1968, and was subsequently restated on three (3)
occasions. The Company further amends and restates this Plan in its entirety,
including changing the name of the Plan from the Plantronics, Inc. Annual Profit
Sharing/Individual Savings Plan to the Plantronics, Inc. 401(k) Plan, effective
as of April 2, 2000 (except as otherwise stated herein).
The Plan is intended to be a tax-qualified profit sharing plan and
related tax-exempt trust under Code Sections 401(a) and 501(a), which includes a
cash or deferred arrangement under Code Section 401(k) and provides for a
matching contribution arrangement under Code Section 401(m). The Plan is also
intended to provide participant-directed investment accounts in compliance with
ERISA Section 404(c), and to allow for investment in Company Stock. Finally, the
Plan is intended to meet certain safe harbor requirements such that it is
automatically deemed to pass certain nondiscrimination testing requirements.
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ARTICLE II
DEFINITIONS
Wherever used in this Plan, the following terms shall have the meanings
indicated below, unless a different meaning is plainly required by the context.
The singular shall include the plural, unless the context indicates otherwise.
Headings of sections are used for convenience of reference only, and in case of
conflict, the text of the Plan, rather than such headings, shall control:
2.1 ACCOUNT. "Account" means a Participant's interest in the Trust which
may consist of any or all of the following: Salary Deferral Contributions
Account, Employer Matching Contributions Account, Qualified Matching
Contributions Account, Employer Discretionary Contributions Account, Qualified
Nonelective Contributions Account, Rollover Contributions Account, Safe Harbor
Matching Contributions Account, Safe Harbor Nonelective Contributions Account,
Quarterly Plan Account, Pre-97 Employee 401(k) Contributions Account, Pre-97
Employer 401(k) Matching Contributions Account, and such other Account(s) as the
Administrator shall determine. Any reference to Account in the Plan shall
include reference to any or all of the above-mentioned accounts, as applicable.
2.2 ADJUSTMENT FACTOR. "Adjustment Factor" means the cost-of-living
adjustment factor prescribed by the Secretary of the Treasury under Code Section
415(d), as applied to such items and in such manner as the Secretary of the
Treasury shall provide from time to time.
2.3 ADMINISTRATOR. "Administrator" (as defined in ERISA Section
3(16)(A)), means the Company, which also shall be a named fiduciary, within the
meaning of ERISA Section 402(a)(2).
2.4 BASE COMPENSATION
(a) "Base Compensation" means all of an Employee's base wages as
reportable on IRS Form W-2 and shall not include an Employee's profit sharing,
overtime, bonuses, sales commissions, and other cash incentive payments that are
subject to Federal Income tax withholdings. Base Compensation shall include only
those amounts which are actually paid or made available to the Employee during
the portion of the Plan Year during which the Employee was an Eligible
Participant. Base Compensation shall include any amount which is contributed by
the Employer pursuant to a salary deferral agreement, and which is not
includable in the gross income of the Employee under Code Section 125,
402(e)(3), 402(h), or 403(b).
(b) The annual Base Compensation of each Employee that is taken into
account under the Plan shall not exceed the limit prescribed under Code Section
401(a)(17), as adjusted by
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the Adjustment Factor for a twelve (12)-month Plan Year (One Hundred Seventy
Thousand Dollars ($170,000) for the Plan Year beginning on April 2, 2000). The
Adjustment Factor in effect for a calendar year applies to the Plan Year that
begins in such calendar year. If a Plan Year consists of less than twelve (12)
months, then the annual Base Compensation limit shall be adjusted to an amount
equal to the otherwise applicable limit for such Plan Year multiplied by a
fraction, the numerator of which is the number of months in the short Plan Year
and the denominator of which is twelve (12).
(c) The determination of the amount of Base Compensation shall be
made by the Participating Employer (or its designee) who employs the Employee,
in accordance with the records of the Participating Employer, and shall be
conclusive.
2.5 BENEFICIARY. "Beneficiary" means the individual person or entity who
is entitled to receive benefits payable from the Plan on account of a
Participant's death.
2.6 BOARD. "Board" means the Board of Directors of the Company.
2.7 BREAK IN SERVICE. "Break in Service" means:
(a) A period of time commencing with an Employee's Severance Date of
at least twelve (12)-consecutive months during which the Employee is not
credited with any Period of Service under Section 2.37. If an Employee is absent
on account of maternity or paternity leave, as described in subsection (b)
below, or on account of an authorized leave of absence as described in Section
8.1 or 8.2, then the Employee will not be considered to have incurred a one
(1)-year Break in Service for the first twelve (12)-consecutive month period in
which he or she would otherwise have had a one (1)-year Break in Service.
(b) For purposes of paragraph (a) above, "maternity or paternity
leave" means a period during which an Employee is absent because of (i) the
pregnancy of the Employee, (ii) the birth of a child of the Employee, (iii) the
placement of a child with the Employee in connection with the Employee's
adoption of the child, or (iv) the caring for a child by the Employee
immediately after the birth or placement of the child.
2.8 CODE. "Code" means the Internal Revenue Code of 1986, as amended
from time to time, and applicable valid Income Tax Regulations issued
thereunder.
2.9 COMMITTEE
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"Committee" means the Plantronics, Inc. 401(k) Plan Committee that shall assist
in the day-to-day oversight and administration of the Plan pursuant to Section
7.3.
2.10 COMPANY. "Company" means Plantronics, Inc., and any successor by
merger, consolidation or otherwise.
2.11 COMPANY STOCK. "Company Stock" means common and/or preferred stock,
as applicable, of the Company, or any successor by merger, consolidation or
otherwise, that meets the requirements of "qualifying employer security" under
ERISA Section 407(d)(5) and "employer securities" under Code Section 409(1).
2.12 COMPENSATION.
(a) "Compensation," subject to paragraphs (b) and (c) below, means
all of an Employee's "wages" within the meaning of Code Section 3401(a) in
connection with income tax withholding as reportable on IRS Form W-2, and all
other compensation paid to the Employee by the Employer in the course of its
trade or business, for which the Employer is required to furnish the Employee
with a written statement under Code Sections 6041(d), 6051(a)(3) and 6052,
determined without regard to exclusions based on the nature or location of the
employment or the services performed (such as the exception for agricultural
labor in Code Section 3401(a)(2)) Compensation shall include only those amounts
which are actually paid or made available to the Employee during the portion of
the Plan Year during which the Employee was a Participant. Compensation shall
include any amount which is contributed by the Employer pursuant to a salary
deferral agreement and which is not includable in the gross income of the
Employee under Code Section 125, 402(e)(3), 402(h) or 403(b).
(b) The annual Compensation of each Employee that is taken into
account under the Plan shall not exceed the limit prescribed under Code Section
401(a)(17), as adjusted by the Adjustment Factor for a twelve (12) month Plan
Year (One Hundred Seventy Thousand Dollars ($170,000) for the Plan Year
beginning on April 2, 2000). The Adjustment Factor in effect for a calendar year
applies to the Plan Year that begins in such calendar year. If a Plan Year
consists of less than twelve (12) months, then the annual Compensation limit
shall be adjusted to an amount equal to the otherwise applicable limit for such
Plan Year multiplied by a fraction, the numerator of which is the number of
months in the short Plan Year and the denominator of which is twelve (12).
(c) The determination of the amount of Compensation shall be made by
the Participating Employer (or its designee) who employs the Employee, in
accordance with the records of the Participating Employer, and shall be
conclusive.
2.13 CONTRIBUTIONS
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"Contributions" means Salary Deferral Contributions, Safe Harbor Nonelective
Contributions, Safe Harbor Matching Contributions, Employer Matching
Contributions, Qualified Matching Contributions, Employer Discretionary
Contributions, and Qualified Nonelective Contributions.
2.14 DAYS OF SERVICE. "Days of Service" means the total number of days
in an Employee's service periods, whether or not such periods were completed
consecutively. Days of Service shall also include the number of days in all
severance periods, if any, in which:
(a) the Employee severs from service by reason of quit, discharge or
retirement, if the Employee performs an Hour of Service within twelve (12)
months of the date of such severance; provided that immediately prior to such
quit, discharge or retirement, the Employee was not absent from service; or
(b) notwithstanding paragraph (a) above, the Employee severs from
service by reason of quit, discharge or retirement during an absence from
service of twelve (12) months or less for any reason other than a quit,
discharge, retirement or death and the Employee then performs an Hour of Service
within twelve (12) months of the date on which the Employee was first absent
from service.
2.15 DEPARTMENT OF LABOR REGULATIONS. "Department of Labor Regulations"
means the regulations prescribed by the Secretary of Labor from time to time
under ERISA.
2.16 DISABILITY. "Disability" means the inability of the Participant, as
determined by the Administrator, to perform the customary duties of the
Participant's employment with an Employer for an indefinite, continuous period
of time that the Administrator determines will be of long duration. The
Administrator may require the Participant to submit to an examination by a
licensed physician chosen by the Administrator to determine the degree and
permanence of the disability, which shall be supported by medical evidence.
2.17 EARLY RETIREMENT. "Early Retirement" means the date on which a
Participant terminates employment with an Employer on or after attaining age
fifty-five (55) and completing two (2) Years of Service.
2.18 EARNINGS. "Earnings" means (a) interest, dividends, rents,
royalties, net realized and unrealized gains and losses, and other income, less
(b) fees, commissions, insurance premiums and other expenses.
2.19 EFFECTIVE DATE
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"Effective Date" means April 2, 2000, except as otherwise provided herein;
provided, however, that any provision of the Plan required as a result of the
Small Business Job Protection Act of 1996, the Taxpayer Relief Act of 1997, the
Uruguay Round Agreements Act of 1994, the Uniformed Services Employment and
Reemployment Rights Act of 1994, the Restructuring and Reform Act of 1998, or
any other applicable legislation, shall be effective as of the date specified in
such legislation.
2.20 ELIGIBLE EMPLOYEES. "Eligible Employees" means all Employees of
each Participating Employer, except:
(a) Employees who are covered by a collective bargaining agreement
between a union and the Employer or any employers' association under which
retirement benefits were the subject of good faith bargaining, unless the
agreement specifically provides for coverage of such Employees under the Plan;
(b) Employees who are non-resident aliens (within the meaning of
Code Section 7701(b)(1)(B)) and who receive no earned income (within the meaning
of Code Section 911(d)(2)) from the Employer which constitutes income from
sources within the United States (within the meaning of Code Section 861(a)(3));
(c) individuals employed by a corporation or other business entity
which is not a Participating Employer, but which is merged or liquidated into,
or whose assets are acquired by, a Participating Employer, unless the board of
directors of the Participating Employer designates the Employees of such
corporation or other business entity, as the case may be, as Eligible Employees
under the Plan pursuant to written resolutions adopted by such board of
directors at any time prior to or after such liquidation, merger or asset
acquisition;
(d) individuals who are classified as Part-Time Employees by the
Employer. "Part-Time Employees" means individuals who are regularly-scheduled to
work less than twenty (20) hours per week, other than those Employees who are
credited with one thousand (1,000) Hours of Service in the twelve
(12)-consecutive month period measured from the date the Employee completes his
or her first Hour of Service or any Plan Year which begins after the date the
Employee completes his or her first Hour of Service;
(e) individuals who are classified as Temporary Employees by the
Employer. "Temporary Employees" means individuals who are employed for
short-term assignments, generally three (3) months or less), other than
Employees who are credited with one thousand (1,000) Hours of Service in the
twelve (12)-consecutive month period measured from the date the Employee
completes his or her first Hour of Service or any Plan Year which begins after
the date the Employee completes his or her first Hour of Service;
(f) Leased Employees;
(g) individuals who are classified as Consultants by the Employer,
whether or not such classification is upheld upon governmental or judicial
review. "Consultants" means individuals (who may also be referred to as
independent contractors) who have specialized knowledge or special
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skills and are retained to provide advice or assistance to the Employer and who
are not Employees of the Employer;
(h) individuals who are classified as Agency Workers by the
Employer, whether or not such classification is upheld upon governmental or
judicial review. "Agency Workers" means individuals who are employed pursuant to
a written agreement with an agency or other third party for a specific job
assignment or project;
(i) individuals who are classified as Interns by the Employer.
"Interns" means individuals enrolled in a college and/or university employed by
the Employer and designated as Interns by the Employer. An Employee who meets
the foregoing criteria shall be classified as an Intern even if he or she does
not receive academic course credit from his or her college or university based
upon the Intern's term of employment;
(j) individuals who are Reclassified Employees. "Reclassified
Employees" means Employees who were not initially classified by the Employer as
Employees, but who were subsequently reclassified as Employees by a federal,
state or local group, organization or agency, or a court;
(k) individuals who are parties to an agreement that provides that
they shall not be eligible to participate in the Plan, whether or not such
agreement is upheld upon governmental or judicial review; or
(l) individuals who are not on the United States payroll of the
Employer.
2.21 ELIGIBLE PARTICIPANT. "Eligible Participant" means an Eligible
Employee who meets the requirements for eligibility set forth in Sections 3.1
through 3.3 regardless of whether or not he or she has an Account under the Plan
established on his or her behalf.
2.22 EMPLOYEE. "Employee" means any person who is employed by, and
designated as an employee, by the Employer, or who is a Leased Employee. If,
however, Leased Employees constitute less than twenty percent (20%) of the
non-highly compensated workforce (within the meaning of Code Section
414(n)(5)(C)(ii)), then the term "Employee" shall not include those Leased
Employees who are covered by a money purchase pension plan providing:
(a) a non-integrated employer contribution rate of at least ten
percent (10%) of compensation, as defined in Code Section 415(c)(3), but
including amounts contributed pursuant to a salary reduction agreement which are
excludable from the individual's gross income under Code Section 125, 402(e)(3),
402(h), 403(b), or 408(p);
(b) immediate participation; and
(c) full and immediate vesting.
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2.23 EMPLOYER. "Employer" means: (a) the Company; (b) any other
corporation which is a member of a controlled group of corporations (as defined
under Code Section 414(b)) which includes the Company; (c) any trade or business
(whether or not incorporated) which is under common control (as defined under
Code Section 414(c)) with the Company; (d) any organization (whether or not
incorporated) which is a member of an affiliated service group (as defined under
Code Section 414(m)) which includes the Company; and (e) any other organization
or entity which is required to be aggregated with the Company pursuant to Code
Section 414(o). For purposes of the calculation of Annual Additions as set forth
in Section 5.4, the determination of whether any entity is an Employer shall be
made in accordance with Code Section 415(h).
2.24 EMPLOYER DISCRETIONARY CONTRIBUTIONS. "Employer Discretionary
Contributions" means Employer Contributions made by a Participating Employer
under this Plan in accordance with Section 4.6.
2.25 EMPLOYER MATCHING CONTRIBUTIONS. "Employer Matching Contributions"
means Employer Contribution made under this Plan in accordance with Section 4.5.
2.26 EMPLOYMENT COMMENCEMENT DATE. "Employment Commencement Date" means
the date on which an Employee first performs an Hour of Service for the
Employer, within the meaning of Department of Labor Regulation Section
2530.200b-2(a).
2.27 ENTRY DATES. "Entry Dates" means the first day of each fiscal
quarter of the Company during the Plan Year.
2.28 ERISA. "ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and applicable valid Department of Labor
Regulations issued thereunder.
2.29 HIGHLY COMPENSATED EMPLOYEE.
(a) "Highly Compensated Employee" means, for any Plan Year, an
Employee in active service who meets any of the following criteria:
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(i) is, at any time during the current Plan Year or the
immediately preceding Plan Year, a five percent (5%) owner (as determined under
Code Section 416(i)(1)) of an Employer; or
(ii) received aggregate Section 415 Compensation for the
immediately preceding Plan Year in excess of the limit prescribed under Code
Section 414(q), as adjusted by the Adjustment Factor (Eighty-Five Thousand
Dollars ($85,000) for the Plan Year beginning on April 2, 2000).
(b) A former Employee shall be treated as a Highly Compensated
Employee if:
(i)such Employee was a Highly Compensated Employee when such
Employee separated from service; or
(ii) such Employee was a Highly Compensated Employee at any time
after attaining age fifty-five (55).
(c) For purposes of this Section, the Section 415 Compensation of
each Employee shall be determined on an aggregate basis as if all Employers were
a single employer entity paying such Section 415 Compensation. All other
determinations under this Section shall be made in accordance with Code Section
414(q).
2.30 HOUR OF SERVICE. "Hour of Service" means:
(a) Each hour for which an Employee is directly or indirectly paid
or entitled to payment by an Employer for the performance of duties and for
reasons other than the performance of duties; provided, however, that:
(i)no more than five hundred and one (501) Hours of Service
shall be credited on account of any single continuous period during which no
duties are performed; and
(ii) no Hours of Service shall be credited if payment was made
or due:
(A) under a plan maintained solely for the purpose of
complying with applicable workers' compensation, unemployment compensation or
disability insurance laws; or
(B) solely as reimbursement for medical or medically-related
expenses incurred by the Employee.
(b) An Employee on a leave of absence (pursuant to Section 8.1 or
8.2) shall be credited with Hours of Service equal to the number of
regularly-scheduled working hours included in the period of such leave (subject
to paragraph (a)(i) above).
(c) "Hours of Service" shall, for an Employee, include each hour for
which back pay, irrespective of mitigation of damages, has been either awarded
or agreed to by the Employer
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(such Hours of Service shall be credited for the periods to which the award or
agreement pertains rather than the periods in which the award, agreement, or
payment is made); provided, however, Hours of Service shall not be credited
under this paragraph to the extent such credit would duplicate any hours
credited above.
(d) Hours of Service shall be credited for employment with any
Employer, and shall be calculated in accordance with Department of Labor
Regulation Sections 2530.200b-2(b) and (c).
2.31 INCOME TAX REGULATIONS. "Income Tax Regulations" means the
regulations prescribed by the Secretary of Treasury from time to time under the
Code.
2.32 LEASED EMPLOYEE. "Leased Employee" means any individual who,
pursuant to an agreement between the Employer and any other individual, has
performed services for the Employer (or for the Employer and related individuals
determined in accordance with Code Section 414(n)(6)) ("Recipient Employer") on
a substantially full-time basis for a period of at least one (1) year, and such
services are performed under the primary direction of or control by the
Recipient Employer.
2.33 NON-HIGHLY COMPENSATED EMPLOYEE. "Non-Highly Compensated Employee"
means an Employee who is not a Highly Compensated Employee.
2.34 NORMAL RETIREMENT OR NORMAL RETIREMENT DATE. "Normal Retirement" or
"Normal Retirement Date" means the date on which a Participant attains age
sixty-five (65).
2.35 PARTICIPANT. "Participant" means a current or former Eligible
Employee or other individual for whom an Account is maintained under the Plan.
2.36 PARTICIPATING EMPLOYER. "Participating Employer" means the Company
and any other Employer that adopts the Plan for the benefit of its Eligible
Employees pursuant to Section 12.1.
2.37 PERIOD OF SERVICE. "Period of Service" means an Employee's period
of employment with the Employer, beginning with the Employee's Employment
Commencement Date or Reemployment Commencement Date, whichever is applicable,
and ending with his or her Severance Date. An
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Employee's Period of Service shall be determined without regard to whether he or
she is a Participant or an Eligible Employee during his or her Period of Service
with the Employer and shall also include those periods which do not exceed
twelve (12) months during which the Employee is on a leave of absence, disabled,
laid off, on sick leave, on vacation or on holiday. In addition, if an Employee
ceases to be an Employee and then resumes Employee status within twelve (12)
consecutive months immediately following the date of such cessation, then his or
her Period of Service shall also include each day during the period following
the time he or she ceases to be an Employee and ending with the day he or she
again becomes an Employee. If an Employee is absent from service for any reason
other than quit, discharge, retirement, or death, and during the absence ceases
to be an Employee, his or her Period of Service shall also include the period
between the Employee's Severance Date and the first anniversary of the date on
which the Employee was first absent, if he or she again becomes an Employee
before such first anniversary date. An Employee's Period of Service shall be
expressed in years and portions of years and shall be measured in cumulative
daily increments (including holidays, weekends, and other non-working days) with
three hundred sixty-five (365) Days of Service equaling a Year of Service
irrespective of whether such Year of Service was completed within a twelve (12)
consecutive month period. Service shall be credited for any period of service
with any Employer regardless of whether such employer was an Employer at the
time the service occurred. Service shall also be credited for any individual
required under Code Section 414(n) or 414(o) to be considered an employee of any
employer aggregated under Code Section 414(b), (c) or (m).
2.38 PLAN. "Plan" means the Plantronics, Inc. 401(k) Plan as set forth
herein and in amendments from time to time made hereto.
2.39 PLAN YEAR. "Plan Year" means the fifty-two/fifty-three (52/53) week
period ending on the Saturday closest to (or falling on) each March 31st, which
is currently the Company's fiscal year.
2.40 QUALIFIED MATCHING CONTRIBUTIONS. "Qualified Matching
Contributions" means discretionary Participating Employer Contributions under
this Plan or any other tax-qualified plan of the Employer made in accordance
with Section 4.5, which may be treated as Salary Deferral Contributions for
purposes of the ADP test.
2.41 QUALIFIED NONELECTIVE CONTRIBUTIONS. "Qualified Nonelective
Contributions" means discretionary Participating Employer Contributions under
this Plan or any other tax-qualified plan of the Employer made in accordance
with Section 4.6, which may be treated as Salary Deferral Contributions for
purposes of the ADP test or as Employer Matching Contributions for purposes of
the ACP test.
2.42 REEMPLOYMENT COMMENCEMENT DATE
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"Reemployment Commencement Date" means the first date, following a Severance
Date, on which an Employee again performs one (1) Hour of Service for the
Employer.
2.43 ROLLOVER CONTRIBUTIONS. "Rollover Contributions" means
contributions under this Plan in accordance with Section 4.9.
2.44 SAFE HARBOR CONTRIBUTIONS. "Safe Harbor Contributions" means Safe
Harbor Nonelective Contributions and Safe Harbor Matching Contributions.
2.45 SAFE HARBOR MATCHING CONTRIBUTIONS. "Safe Harbor Matching
Contributions" means Participating Employer Contributions under this Plan, made
in accordance with Section 4.3.
2.46 SAFE HARBOR NONELECTIVE CONTRIBUTIONS. "Safe Harbor Nonelective
Contributions" means Participating Employer Contributions under this Plan, made
in accordance with Section 4.2.
2.47 SALARY DEFERRAL CONTRIBUTIONS. "Salary Deferral Contributions"
means Participating Employer Contributions under this Plan, made in accordance
with Section 4.1.
2.48 SECTION 415 COMPENSATION.
(a) "Section 415 Compensation" means, except as set forth below,
wages, salaries, and fees for professional services and other amounts received
(without regard to whether or not an amount is paid in cash) for personal
services actually rendered in the course of employment with the Employer
maintaining the Plan to the extent that the amounts are includable in gross
income (including, but not limited to, commissions paid to salespersons,
compensation for services on the basis of a percentage of profits, commissions
on insurance premiums, tips, reimbursements, bonuses, fringe benefits, and
reimbursements or other expense allowances under a nonaccountable plan (as
described in Income Tax Regulation Section 1.62-2(c)). Section 415 Compensation
includes any elective deferrals (as defined in Code Section 402(g)(3)), and any
amount contributed or deferred by the Employer at the election of the Employee
and not includable in the gross income of the Employee by reason of Code Section
125 or 457.
(b) The annual Section 415 Compensation of each Employee that is
taken into account under the Plan shall not exceed the limit prescribed under
Code Section 401(a)(17), as adjusted by the Adjustment Factor for a twelve (12)
month Plan Year (One Hundred Seventy
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Thousand Dollars ($170,000) for the Plan Year beginning April 2, 2000). The
Adjustment Factor in effect for a calendar year applies to the Plan Year that
begins in such calendar year. If a Plan Year consists of less than twelve (12)
months, then the annual Section 415 Compensation limit shall be adjusted to an
amount equal to the otherwise applicable limit for such Plan Year multiplied by
a fraction, the numerator of which is the number of months in the short Plan
Year and the denominator of which is twelve (12).
(c) Section 415 Compensation shall not include the following:
(i)Employer contributions to a plan of deferred compensation
that are not includable in the Employee's gross income for the taxable year in
which contributed, or Employer contributions under a simplified employee pension
plan to the extent such contributions are deductible by the Employee, or any
distributions from a plan of deferred compensation;
(ii) amounts realized from the exercise of a non-qualified stock
option, or when restricted stock (or property) held by the Employee either
becomes freely transferable or is no longer subject to a substantial risk of
forfeiture;
(iii) amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock option; or
(iv) other amounts which received special tax benefits, or
contributions made by the Employer (whether or not under a salary reduction
agreement) towards the purchase of an annuity contract described in Code Section
403(b) (whether or not the contributions are actually excludable from the gross
income of the Employee).
2.49 SEVERANCE DATE. "Severance Date" means the first to occur of (a)
the date on which an Employee terminates employment with a Participating
Employer because he or she quits, is discharged, dies or retires; or (b) the
first anniversary of the date on which the Employee is absent (with or without
pay) from employment for any other reason (such as vacation, holiday, sickness,
maternity or paternity leave, or layoff).
2.50 SPOUSE OR SURVIVING SPOUSE. "Spouse" or "Surviving Spouse" means,
except as may be specified in one or more of the Appendices, the spouse or
surviving spouse of a Participant; provided, however, that a former spouse shall
be treated as the spouse or surviving spouse to the extent provided under a
Qualified Domestic Relations Order as described in Section 7.4.
2.51 TRUST. "Trust" means the assets held in the trust maintained under
Article IX.
2.52 TRUST AGREEMENT
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"Trust Agreement" means the separate agreement entered into by and between the
Company and the Trustee pursuant to which the Trust is held, administered and
distributed.
2.53 TRUSTEE. "Trustee" means the person(s) or entity named in the Trust
Agreement or any successor or successors thereto, and designated by the Company
to act as trustee of the Trust, in accordance with Article IX.
2.54 VALUATION DATE. "Valuation Date" means the last day of each Plan
Year and such other date(s) as the Administrator may designate from time to
time.
2.55 YEAR OF SERVICE. "Year of Service" means a Period of Service equal
to three hundred sixty-five (365) Days of Service, whether or not consecutive.
2.56 OTHER DEFINITIONS. In addition to the definitions contained in this
Section, the following terms are defined in the specified Section below:
SECTION TERM
------- ----
5.8(c)(i) ACP Allocations
5.5(a)(i) Actual Deferral Percentage ("ADP")
5.7(a)(i) Actual Contribution Percentage ("ACP")
5.7(a)(ii) Aggregate Limit
7.4(a)(i) Alternate Payee
5.4(a)(i) Annual Additions
6.12(a)(i) Applicable Life Expectancy
5.7(a)(iii) Average ACP
5.5(a)(ii) Average ADP
5.7(a)(iv) Contribution Percentage Amount
5.4(a)(ii) Defined Contribution Dollar Limitation
6.12(a)(ii) Designated Beneficiary
14.2(a) Determination Date
14.2(b) Determination Period
6.9(a)(i) Direct Rollover
6.9(a)(ii) Distributee
6.12(a)(iii) Distribution Calendar Year
7.4(a)(ii) Domestic Relations Order or Order
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SECTION TERM
------- ----
5.6(a)(i) Elective Deferrals
6.9(a)(iii) Eligible Retirement Plan
6.9(a)(iv) Eligible Rollover Distribution
5.5(a)(iii) Excess 401(k) Contributions
5.4(a)(iii) Excess Amount
5.6(a)(ii) Excess Elective Deferrals
5.7(a)(v) Excess Matching Contributions
6.12(a)(iv) Five Percent Owner
5.5(c)(vii),5.6(d), Gap Period
5.8(f)
7.1(j) Investment Managers
14.2(c) Key Employee
6.12(a)(v) Life Expectancy
5.4(a)(iv) Limitation Year
2.7(b) Maternity or Paternity Leave
5.4(a)(v) Maximum Permissible Amount
14.2(d) Non-Key Employee
4.4(a) Notice Requirements
5.4(a)(vi) Other Plan
6.12(a)(vi) Participant's Benefit
14.2(e) Permissive Aggregation Group
11.3 Protected Benefits
7.4(a)(iii) Qualified Domestic Relations Order
2.32 Recipient Employer
14.2(f) Required Aggregation Group
6.12(a)(vii) Required Beginning Date
7.4(d)(i)) Segregated Amounts
6.14 Spousal Consent
14.2(g) Top-Heavy Plan
14.2(h) Top-Heavy Ratio
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ARTICLE III
ELIGIBILITY
3.1 PARTICIPATION. Each Participant in the Plan on the day before the
Effective Date who is an Eligible Employee on the Effective Date, shall
automatically continue as an Eligible Participant on the Effective Date. Each
other Eligible Employee shall become an Eligible Participant in the Plan for
purposes of sharing in the allocation of Safe Harbor Nonelective Contributions
and/or Employer Nonelective Contributions on the first day of the payroll period
coinciding with or next following his or her Employment Commencement Date and,
for purposes of all other Contributions, on the Entry Date coinciding with or
next following his or her Employment Commencement Date.
3.2 REEMPLOYMENT. If (a) a Participant, or (b) an Eligible Employee who
has satisfied the requirements of Section 3.1, terminates employment with a
Participating Employer and is thereafter reemployed by the Employer as an
Eligible Employee, then such Eligible Employee shall become an Eligible
Participant in the Plan as of the later of his or her Reemployment Commencement
Date or the Entry Date on which he or she could have first become an Eligible
Participant in the Plan.
3.3 CHANGE IN EMPLOYMENT STATUS. If a Participant ceases to be an
Eligible Employee, then such Employee shall be reinstated as an Eligible
Participant upon again becoming an Eligible Employee. If, however, an Employee
who is not, and has never been, an Eligible Employee becomes an Eligible
Employee, then such Employee shall become an Eligible Participant in the Plan
for purposes of sharing in the allocation of Safe Harbor Nonelective
Contributions and/or Employer Nonelective Contributions on the first day of the
payroll period coinciding with or next following the date he or she becomes an
Eligible Employee, and for purposes of all other Contributions, on the Entry
Date coinciding with or next following the date on which he or she becomes an
Eligible Employee.
3.4 ENROLLMENT OF PARTICIPANTS. Each Eligible Participant shall comply
with such enrollment procedures as the Administrator may prescribe from time to
time and shall make available to the Administrator and the Trustee any
information they may reasonably require for such purpose. By virtue of his or
her participation in the Plan, an Eligible Employee agrees, on his or her behalf
and on behalf of all individuals who may make any claim arising out of, relating
to, or resulting from that Eligible Employee's participation in the Plan, to be
bound by all provisions of the Plan, the Trust Agreement and other related
agreements.
3.5 ERRONEOUS PARTICIPATION
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(a) Erroneous Salary Deferral Contributions. If Salary Deferral
Contributions are erroneously made on behalf of an individual who is not
eligible to participate in the Plan, then such Salary Deferral Contributions
plus Earnings thereon shall be distributed to that individual as soon as
administratively feasible after discovery of such error.
(b) Erroneous Rollover Contributions. If a Rollover Contribution is
erroneously made to the Plan by an individual who is not eligible to make a
Rollover Contribution, then such Rollover Contribution plus Earnings thereon
shall be distributed to that individual as soon as administratively feasible
after discovery of such error.
(c) Other Erroneous Contributions. If any Contributions (other than
Salary Deferral Contributions, as set forth in paragraph (a)) are erroneously
made on behalf of an individual who is not entitled to such Contributions, then
such erroneously made Contributions shall be forfeited and: first, used to
offset the Participating Employer's obligation to make Safe Harbor Nonelective
Contributions and Safe Harbor Matching Contributions, if applicable, for the
Plan Year in which the error is discovered; second, returned to the
Participating Employer in accordance with Section 15.8, to the extent such
Contribution is made as a result of a mistake of fact; third, used to pay
administrative expenses of the Plan for the Plan Year in which the error is
discovered; and fourth, used to allocate as Employer Discretionary Contributions
for the Plan Year in which the error is discovered.
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ARTICLE IV
CONTRIBUTIONS
4.1 SALARY DEFERRAL CONTRIBUTIONS.
(a) Subject to the limitations of Sections 5.4 and 5.5, if
applicable, an Eligible Participant may elect, in accordance with the procedures
established from time to time by the Administrator, to have a portion of his or
her Compensation contributed to his or her Salary Deferral Contributions
Account. The Participant's election shall specify the amount of his or her
Compensation to be contributed, which amount shall not be less than two percent
(2%) for the Plan Year beginning on April 2, 2000, and one percent (1%) for Plan
Years beginning on and after April 1, 2001, and not more than fifteen percent
(15%), of the Participant's Compensation for the payroll period; provided,
however, in no event shall the dollar amount contributed on behalf of such
Participant for any calendar year exceed the limit prescribed under Code Section
402(g)(5) (Ten Thousand Five Hundred Dollars ($10,500) in 2000). A Participant
may elect to increase, decrease or discontinue Salary Deferral Contributions in
such manner and at such time as the Administrator shall specify from time to
time.
(b) For purposes of the Plan, and with respect to Salary Deferral
Contributions made on behalf of any Participant, such Salary Deferral
Contributions shall be allocated to the Participant's Salary Deferral
Contributions Account as of a given date within the Plan Year and shall relate
to Compensation that would have been received by the Participant in the Plan
Year but for the Participant's election to defer such Compensation.
(c) Salary Deferral Contributions shall be at all times one hundred
percent (100%) vested.
4.2 SAFE HARBOR NONELECTIVE CONTRIBUTIONS.
(a) For Plan Years beginning on and after the Effective Date, the
Company has elected that Participating Employers shall make Safe Harbor
Nonelective Contributions on behalf of each Eligible Participant for each Plan
Year in an amount equal to three percent (3%) of that Eligible Participant's
Base Compensation for each payroll period.
(b) The Company may further elect that Participating Employers shall
make additional Safe Harbor Nonelective Contributions pursuant to this Section
for a Plan Year; provided, however, that such additional Contributions shall be
allocated to the Safe Harbor Nonelective Contributions Account of each Eligible
Participant in proportion to his or her Base Compensation as it relates to the
aggregate Base Compensation of all Eligible Participants for such Plan Year.
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(c) Safe Harbor Nonelective Contributions shall be at all times one
hundred percent (100%) vested.
(d) If the provisions of Section 4.4 are met for a Plan Year, the
Plan will be deemed to satisfy the ADP test in Section 5.5 for the Plan Year.
Notwithstanding the foregoing, this Plan will not be deemed to satisfy the ADP
test in Section 5.5 for any Plan Year in which an Eligible Participant is
covered under another defined contribution plan maintained by the Employer that
uses the provisions of this Section to comply with the ADP test.
4.3 SAFE HARBOR MATCHING CONTRIBUTIONS.
(a) For Plan Years beginning on and after the Effective Date, the
Company has elected that Participating Employers shall make Safe Harbor Matching
Contributions on behalf of each Eligible Participant for each payroll period in
an amount equal to fifty percent (50%) of that Eligible Participant's Salary
Deferral Contributions that do not exceed six percent (6%) of the Participant's
Compensation for such payroll period.
(b) Safe Harbor Matching Contributions shall be at all times one
hundred percent (100%) vested.
(c) If the Plan satisfies the conditions under Sections 4.2 and 4.4
for a Plan Year, then the Plan will be deemed to satisfy the ACP test for that
Plan Year (including, with respect to Employer Matching Contributions);
provided, however, that the following conditions are satisfied:
(i)Safe Harbor Matching Contributions and Employer Matching
Contributions, in the aggregate, must not be made on more than six percent (6%)
of an Eligible Participant's Compensation;
(ii) Safe Harbor Matching Contributions and Employer Matching
Contributions, in the aggregate, may not exceed four percent (4%) of an Eligible
Participant's Compensation;
(iii) the Employer Matching Contribution formula may not provide
a higher rate of match at higher levels of Salary Deferral Contributions; and
(iv) Employer Matching Contributions and Safe Harbor Matching
Contributions made for any Highly Compensated Employee at any rate of Salary
Deferral Contributions cannot be greater than Employer Matching Contributions
and Safe Harbor Matching Contributions provided for any Nonhighly Compensated
Employee at the same rate of Salary Deferral Contributions.
(d) If the ACP test must be performed because the Employer Matching
Contributions and Safe Harbor Matching Contributions do not satisfy the
conditions described in paragraph (c), the ACP test in Section 5.7 must be
performed using current year data for the ACP of Nonhighly Compensated
Employees, even if Section 5.7 specifies that prior year data is to be used.
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<PAGE> 25
In addition, the testing rules provided in Internal Revenue Service Notice 98-52
and any subsequent binding guidance or legislation are applicable for the ACP
test in Section 5.7.
4.4 SAFE HARBOR CONTRIBUTIONS REQUIREMENTS.
(a) Notice Requirements. The requirements as to content and timing
of the notice to be given to Eligible Participants with respect to Safe Harbor
Nonelective Contributions and Safe Harbor Matching Contributions (the "Notice
Requirements") are as follows:
(i)the notice shall be sufficiently accurate and comprehensive
to inform the Eligible Participant of his or her rights and obligations under
the Plan and be written in a manner calculated to be understood by the average
Eligible Employee;
(ii) the notice shall describe (A) the Safe Harbor Nonelective
Contributions contribution formula and/or the Safe Harbor Matching Contributions
contribution formula used under the Plan (including a description of the levels
of Safe Harbor Matching Contributions, if any, available under the Plan); (B)
any other Contributions under the Plan (including the potential for Employer
Matching Contributions) and the conditions under which such Contributions are
made; (C) the plan to which Safe Harbor Nonelective Contributions will be made
if not this Plan; (D) the type and amount of Compensation that may be deferred
under the Plan; (E) how to make Salary Deferral Contributions, including any
administrative requirements that apply to such elections; (F) the periods
available under the Plan for making Salary Deferral Contribution elections; and
(G) withdrawal and vesting provisions applicable to Contributions under the
Plan.
(iii) The timing of the notice shall meet the following
requirements:
(A) The notice must be provided within a reasonable period
before the beginning of the Plan Year. If an Employee becomes eligible to
participate during the Plan Year, the notice must be provided within a
reasonable time before he or she becomes eligible.
(B) The timing of the notice will automatically be deemed to
be reasonable (1) if it is given to Eligible Participants at least thirty (30)
days and no more than ninety (90) days before the beginning of the Plan Year, or
(2) if a Participant who becomes eligible after the notice in (1) receives a
copy of the notice no more than ninety (90) days before he or she is eligible to
participate in the Plan.
(b) Time Period for Contributions. Safe Harbor Nonelective
Contributions and Safe Harbor Matching Contributions for a Plan Year shall be
made no later than twelve (12) months after the last day of the Plan Year, and
shall be made in accordance with the allocation and timing rules of Income Tax
Regulations Sections 1.401(k)-1(b)(4) and 1.401(m)-1(b)(4)(ii)(A), respectively.
(c) Distribution and Withdrawal Restrictions. For all purposes under
the Plan, Safe Harbor Nonelective Contributions and Safe Harbor Matching
Contributions shall be subject to the distribution limitations of Article VI.
Amounts allocated to a Participant's Safe Harbor
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Nonelective Contributions Account and Safe Harbor Matching Contributions Account
shall not be eligible for hardship distribution under Section 6.16.
4.5 EMPLOYER MATCHING CONTRIBUTIONS AND QUALIFIED MATCHING
CONTRIBUTIONS.
(a) The Company may elect, subject to the provisions of paragraph
(b) below, that Participating Employers shall make Employer Matching
Contributions to the Trust. Employer Matching Contributions shall be made in
such amount as prescribed by the Company from time to time.
(b) Employer Matching Contributions which would otherwise be made on
behalf of a Participant may be reduced to the extent necessary to comply with
the limitations of Sections 5.4, 5.7 and 5.8, and the Employer shall have no
obligation to contribute such amounts to the Trust.
(c) The Administrator may elect to treat all or a portion of
Employer Matching Contributions for a Plan Year as Qualified Matching
Contributions for purposes of the ADP test.
(d) For all purposes under the Plan, Employer Matching Contributions
or Qualified Matching Contributions shall be subject to the distribution
limitations of Article VI. Amounts allocated to a Participant's Qualified
Matching Contributions Account shall not be eligible for hardship distribution
under Section 6.16.
4.6 EMPLOYER DISCRETIONARY AND QUALIFIED NONELECTIVE CONTRIBUTIONS.
(a) The Company may require Participating Employers to make Employer
Discretionary Contributions, if any, in such amount as it shall determine in its
sole and absolute discretion.
(b) The Employer Discretionary Contributions and forfeitures, if
applicable, for each Plan Year, if any, shall be allocated to the Employer
Discretionary Contributions Accounts of all Participants who were employed by a
Participating Employer on the last day of the Plan Year and who were credited
with one (1) Year of Service during that Plan Year. Notwithstanding the
foregoing, an Eligible Employee who incurs a Disability during the Plan Year or
whose employment with the Employer terminates as a result of death or Normal
Retirement or Early Retirement shall, for purposes of this Section, be deemed to
have been employed by the Employer on the last day of the Plan Year. Employer
Discretionary Contributions and forfeitures, if applicable, shall be allocated
to each Participant entitled to share in the allocation of Employer
Discretionary Contributions for a Plan Year in proportion to his or her
Compensation as it relates to the aggregate Compensation of all such
Participants for such Plan Year, subject to the limitations of Section 5.4.
(c) The Company may elect to treat all or a portion of Employer
Discretionary Contributions for a Plan Year as Qualified Nonelective
Contributions for purposes of the ADP test and/or the ACP test.
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(d) The Company may, with respect to a Plan Year, allocate Qualified
Nonelective Contributions to such Participants and in such a manner as it deems
necessary or appropriate to satisfy the requirements of the Plan.
(e) For all purposes of the Plan, Employer Discretionary
Contributions and Qualified Nonelective Contributions shall be subject to the
distribution limitations of Article VI. Amounts allocated to a Participant's
Qualified Nonelective Contributions Account shall not be eligible for hardship
distribution under Section 6.16.
4.7 LIMITATIONS ON CONTRIBUTIONS. Contributions for any Plan Year shall
not exceed the maximum amount allowable as a deduction to the Employer under the
provisions of Code Section 404. Notwithstanding the preceding sentence, to the
extent necessary to provide Top Heavy minimum allocations, the Employer shall
make Contributions, even if such Contributions exceed the amount deductible to
the Employer under the provisions of Code Section 404.
4.8 TIME AND MANNER OF PAYMENT OF CONTRIBUTIONS. Except as otherwise
expressly provided in this Plan, Contributions shall be paid to the Trustee in
such form (i.e., cash or Company Stock, or any combination thereof) and at such
time as determined by the Administrator, subject to the timing requirements of
applicable law.
4.9 RECEIPT OF ASSETS FROM ANOTHER PLAN.
(a) If directed by the Administrator, the Trustee shall accept a
transfer of assets for the benefit of an Eligible Employee or group of Eligible
Employees. Such assets shall be (i) received directly from the trustee of a
tax-qualified plan under Code Section 401(a) and related tax-exempt trust under
Code Section 501(a); (ii) an Eligible Rollover Distribution received from the
Eligible Employee in accordance with Code Section 402(c); (iii) a distribution
from a conduit individual retirement account received from the Eligible Employee
in accordance with Code Section 402(c); or (iv) transferred in the form of a
Direct Rollover from another tax-qualified plan.
(b) Amounts attributable to elective contributions (as defined in
Income Tax Regulation Section 1.401(k)-1(g)(3)), including amounts treated as
elective contributions which are transferred in a plan-to-plan transfer, shall
be subject to the distribution limitations provided in Income Tax Regulation
Section 1.401(k)-1(d).
(c) Notwithstanding any provision in this Plan to the contrary, any
amounts transferred to this Plan directly from the trustee of another
tax-qualified plan under Code Section 401(a) and related tax-exempt trust under
Code Section 501(a) shall, to the extent the benefits accrued under the
transferor plan are protected benefits under Code Section 411(d)(6), be
preserved under this Plan, and shall not in any way be affected, reduced or
eliminated.
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ARTICLE V
ACCOUNTS
5.1 PARTICIPANT'S ACCOUNTS. The following separate Accounts, if
applicable, shall be maintained for each Participant:
(a) Salary Deferral Contributions Account. A Participant's Salary
Deferral Contributions Account shall be credited with all amounts attributable
to Salary Deferral Contributions pursuant to Section 4.1.
(b) Safe Harbor Nonelective Contributions Account. A Participant's
Safe Harbor Nonelective Contributions Account shall be credited with all amounts
attributable to Safe Harbor Nonelective Contributions pursuant to Section 4.2.
(c) Safe Harbor Matching Contributions. A Participant's Safe Harbor
Matching Contributions Account shall be credited with all amounts attributable
to Safe Harbor Matching Contributions pursuant to Section 4.3.
(d) Employer Matching Contributions Account. A Participant's
Employer Matching Contributions Account shall be credited with all amounts
attributable to Employer Matching Contributions pursuant to Section 4.5.
(e) Qualified Matching Contributions Account. A Participant's
Qualified Matching Contributions Account shall be credited with all amounts
attributable to Qualified Matching Contributions pursuant to Section 4.5.
(f) Employer Discretionary Contributions Account. A Participant's
Employer Discretionary Contributions Account shall be credited with all amounts
attributable to Employer Discretionary Contributions pursuant to Section 4.6.
(g) Qualified Nonelective Contributions Account. A Participant's
Qualified Nonelective Contributions Account shall be credited with all amounts
attributable to Qualified Nonelective Contributions pursuant to Section 4.6.
(h) Rollover Contributions Account. A Participant's Rollover
Contributions Account shall be credited with amounts transferred to the Plan
pursuant to Section 4.9.
(i) Quarterly Plan Account. A Participant's Quarterly Plan Account
is an account maintained pursuant for funds transferred from the former
Plantronics, Inc. Quarterly Profit Sharing Plan.
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(j) Pre-97 Employee 401(k) Contributions Account. A Participant's
Pre-97 Employee 401(k) Contributions Account is an account maintained for Salary
Deferral Contributions made by Participants prior to January 1, 1997.
(k) Pre-97 Employer 401(k) Matching Contributions Account. A
Participant's Pre-97 Employer 401(k) Matching Contributions Account is an
account maintained for Employer Matching Contributions made prior to January 1,
1997.
(l) Other Accounts. Such other Account(s) as the Administrator shall
deem necessary or appropriate.
5.2 ALLOCATION OF CONTRIBUTIONS. As of each Valuation Date, the
Administrator shall allocate to the Accounts of each Participant the
Contributions made on his or her behalf and, if applicable, the Rollover
Contributions, since the preceding Valuation Date.
5.3 ALLOCATION OF EARNINGS.
(a) Participant Accounts shall be valued at their fair market value
at least annually, as of a date and in a manner specified by the Administrator.
The Administrator shall adjust each Account: first, to reflect any allocations
made to, or any distributions or withdrawals made from, such Account since the
immediately preceding Valuation Date, to the extent not previously credited or
charged thereto, and second, to reflect the Earnings allocable to each Account
in accordance with paragraph (b) below.
(b) The Administrator shall maintain a separate record of all
Earnings of the Trust attributable to each Participant's Account.
5.4 SECTION 415 LIMITATIONS.
(a) Definitions.
(i) Annual Additions. "Annual Additions" means, with respect to
each Participant, the sum of the following amounts for the Limitation Year under
this Plan, any Other Plan(s), or as otherwise specified:
(A) Employer Contributions;
(B) Employee contributions;
(C) forfeitures;
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(D) amounts allocated, after March 31, 1984, to the
Participant's individual medical account (as defined in Code Section 415(l)(2)),
which is part of a pension or annuity plan maintained by the Employer;
(E) amounts derived from contributions paid or accrued after
December 31, 1985, in taxable years ending after such date, which are
attributable to post-retirement medical benefits, allocated to the separate
account of a Key Employee (as defined in Code Section 19A(d)(3)) and under a
welfare benefit fund (as defined in Code Section 419(e)) maintained by the
Employer; and
(F) any Excess Amount applied under Paragraph (e) in the
Limitation Year to reduce Employer Contributions.
Contributions do not fail to be Annual Additions merely because they are
Excess Elective Deferrals, Excess 401(k) Contributions, or Excess Matching
Contributions or merely because Excess 401(k) Contributions or Excess Matching
Contributions are corrected through distribution or recharacterization. Excess
Elective Deferrals that are distributed in accordance with paragraph (e) below
are not Annual Additions.
(ii) Defined Contribution Dollar Limitation. "Defined
Contribution Dollar Limitation" means the dollar amount specified in Code
Section 415(c)(1)(A), (Thirty-Five Thousand Dollars ($35,000) for the Plan Year
beginning on April 2, 2000).
(iii) Excess Amount. "Excess Amount" means the amount of Annual
Additions which, if credited to a Participant's Account under this Plan and any
Other Plan(s) for a Limitation Year, would exceed the Maximum Permissible
Amount.
(iv) Limitation Year. "Limitation Year" means the twelve
(12)-consecutive month period ending on the last day of the Plan Year. If the
Limitation Year is amended to a different twelve (12)-consecutive month period,
then the new Limitation Year must begin on a date within the Limitation Year in
which the amendment is made effective.
(v)Maximum Permissible Amount. "Maximum Permissible Amount"
means the maximum Annual Addition contributed or allocated to a Participant's
Account under this Plan and any Other Plan(s) for any Limitation Year which
shall not exceed the lesser of:
(A) the Defined Contribution Dollar Limitation, or
(B) twenty-five percent (25%) of the Participant's Section
415 Compensation for the Limitation Year. The Section 415 Compensation
limitation shall not apply to any contribution for medical benefits (within the
meaning of Code Section 401(h) or 419A(f)(2)) which is otherwise treated as an
Annual Addition under Code Section 415(1)(1) or 419A(d)(2). If a short
Limitation Year is created because of an amendment changing the Limitation Year
to a different twelve (12)-consecutive month period, then the Maximum
Permissible Amount will not exceed the Defined Contribution Dollar Limitation
multiplied by the following fraction:
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Number of months in the short Limitation Year
12
(vi) Other Plan. "Other Plan" means any other defined
contribution plan to which contributions are or have been made on behalf of
Participants in this Plan by one or more members of the controlled group of
corporations (as determined in accordance with the ownership rules of Code
Section 1563, without regard however, to Code Section 1563(a)(4) or
1563(e)(3)(C)) and any other employer entity which constitutes an affiliated
service group or is required to be aggregated with the Employer pursuant to Code
Section 414(c), 414(m) or 414(o).
(b) Maximum Annual Additions. The amount of Annual Additions which
may be credited to the Participant's Account under this Plan and any Other
Plan(s) for any Limitation Year shall not exceed the lesser of the Maximum
Permissible Amount or any other limitation contained in this Plan or any Other
Plan(s). If the Contributions that would otherwise be contributed or allocated
on behalf of the Participant would cause the Annual Additions for the Limitation
Year to exceed the Maximum Permissible Amount, then the amount contributed or
allocated shall be reduced so that the Annual Additions for the Limitation Year
equal the Maximum Permissible Amount.
(c) Timing. Prior to determining the Participant's actual Section
415 Compensation for the Limitation Year, the Employer may determine the Maximum
Permissible Amount for a Participant on the basis of a reasonable estimation of
the Participant's Section 415 Compensation for the Limitation Year.
(d) Actual Section 415 Compensation. As soon as is administratively
feasible after the end of the Limitation Year (or within such other period as
applicable for a Participant who terminates employment and requests a
distribution from the Plan), the Maximum Permissible Amount for the Limitation
Year shall be determined on the basis of the Participant's actual Section 415
Compensation for the Limitation Year.
(e) Disposition of Excess Amount. If an Excess Amount exists for one
or more Participants for a Limitation Year, as a result of (i) a reasonable
error in determining the amount of elective deferrals (within the meaning of
Code Section 402(g)(3)) that may be made with respect to any Participant under
the limits of this Section, (ii) an allocation of forfeitures, (iii) a
reasonable error in estimating a Participant's annual Section 415 Compensation,
or (iv) other facts and circumstances with respect to which the provisions of
Income Tax Regulation Section 1.415-6(b)(6) are available, then, to the extent
necessary, such Excess Amount shall be disposed of in the manner and in the
order specified below. Except to the extent inconsistent with the provisions of
any Other Plan(s): (i) whenever this Plan provides for the disposition of an
Excess Amount, the disposition of an Excess Amount consisting of a particular
type of contribution shall be of that type of contribution in this Plan and any
Other Plan(s), and (ii) to the extent disposition of an Excess Amount is made,
the Administrator shall have discretion as to whether disposition of such Excess
Amount shall be made from this Plan or any Other Plan(s), or partly from each.
(i) First, all or the necessary portion of Salary Deferral
Contributions (including, if applicable, the gains thereon) made on the
Participant's behalf which were not the subject of any Safe Harbor Matching
Contributions or Employer Matching Contributions shall be
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distributed to the Participant as a current cash payment, subject to applicable
Federal and state withholding taxes;
(ii) Then, all or the necessary portion of Salary Deferral
Contributions (including, if applicable, the gains thereon) made on the
Participant's behalf for such Limitation Year which were entitled to Employer
Matching Contributions shall be distributed to the Participant as a current cash
payment, subject to applicable Federal and state withholding taxes, and no
Employer Matching Contributions shall be made with respect to the distributed
Salary Deferral Contributions. Accordingly, the Participant's Employer Matching
Contributions for such Limitation Year are to be reduced as follows:
(A) to the extent the Employer Matching Contributions have
not already been made on the Participant's behalf, the reduction shall be
effected by making an appropriate reduction in the aggregate amount of Employer
Matching Contributions to take into account the distributed Salary Deferral
Contributions no longer eligible for Employer Matching Contributions; or
(B) to the extent the Employer Matching Contributions have
already been allocated to the Participant's Employer Matching Contributions
Account, then such Employer Matching Contributions (to the extent attributable
to the distributed Salary Deferral Contributions) shall, together with the
Earnings thereon (if applicable), be withdrawn from the Participant's Employer
Matching Contributions Account and used for any Employer Matching Contributions
still to be made on behalf of other Participants eligible for Employer Matching
Contributions. Any Employer Matching Contributions withdrawn from the
Participant's Employer Matching Contributions Account and not utilized shall be
held in a suspense account and disposed of pursuant to paragraph (f) below;
(iii) Then, all or the necessary portion of the Participant's
share of Employer Discretionary Contributions for the Limitation Year shall be
reduced, and if such amounts have been allocated to the Participant's Employer
Discretionary Contributions Account, withdrawn from such Account, held in a
suspense account and disposed of pursuant to paragraph (f) below;
(iv) Then, all or the necessary portion of Salary Deferral
Contributions (including, if applicable, the gains thereon) made on the
Participant's behalf for such Limitation Year which were entitled to Safe Harbor
Matching Contributions shall be distributed to the Participant as a current cash
payment, subject to applicable Federal and state withholding taxes, and no Safe
Harbor Matching Contributions shall be made with respect to the distributed
Salary Deferral Contributions. Accordingly, the Participant's Safe Harbor
Matching Contributions for such Limitation Year are to be reduced as follows:
(A) to the extent the Safe Harbor Matching Contributions
have not already been made on the Participant's behalf, the reduction shall be
effected by making an appropriate reduction in the aggregate amount of Safe
Harbor Matching Contributions to take into account the distributed Salary
Deferral Contributions no longer eligible for Safe Harbor Matching
Contributions; or
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<PAGE> 33
(B) to the extent the Safe Harbor Matching Contributions
have already been allocated to the Participant's Safe Harbor Matching
Contributions Account, then such Safe Harbor Matching Contributions (to the
extent attributable to the distributed Salary Deferral Contributions) shall,
together with the Earnings thereon (if applicable), be withdrawn from the
Participant's Safe Harbor Matching Contributions Account and used for any Safe
Harbor Matching Contributions still to be made on behalf of other Participants
eligible for Safe Harbor Matching Contributions. Any Safe Harbor Matching
Contributions withdrawn from the Participant's Safe Harbor Matching
Contributions Account and not utilized shall be held in a suspense account and
disposed of pursuant to paragraph (f) below;
(v) Then, all or the necessary portion of the Participant's
share of Safe Harbor Nonelective Contributions for the Limitation Year shall be
reduced, and if such amounts have been allocated to the Participant's Safe
Harbor Nonelective Contributions Account, withdrawn from such Account, held in a
suspense account and disposed of pursuant to paragraph (f) below; and
(vi) Finally, all or the necessary portion of the Participant's
allocable share of contributions and forfeitures under any Other Plan(s) (other
than as set forth in paragraphs (i) through (v) above) shall be reduced in
accordance with the applicable provisions of such Other Plan(s).
(f) Suspense Account. Amounts held in the suspense account pursuant
to paragraphs (e)(ii) through (e)(v) above shall be held unallocated and shall
be used to reduce future Employer Contributions for each succeeding Plan Year
until the suspense account is reduced to zero (0). Earnings attributable to the
assets of the Trust shall be allocated to the suspense account. No contributions
shall be made to this Plan or, if applicable, Other Plan(s), by the Employer
while there is an outstanding balance in such suspense account. Upon the
termination of the Plan, any outstanding balance in the suspense account shall
revert to the Employer, or if applicable, the Participating Employer who made
such Contributions to the Plan.
5.5 DISCRIMINATION TESTING OF SALARY DEFERRAL CONTRIBUTIONS.
(a) Definitions.
(i) Actual Deferral Percentage ("ADP"). "Actual Deferral
Percentage" or "ADP" means:
(A) with respect to each Eligible Participant, a percentage,
calculated as the sum of the amount of (1) Salary Deferral Contributions, (2)
Qualified Matching Contributions, and (3) Qualified Nonelective Contributions,
made on behalf of such Eligible Participant for the Plan Year (and allocated for
purposes of the ADP test), divided by such Eligible Participant's Section 415
Compensation for that Plan Year. If an Eligible Participant makes no Salary
Deferral Contributions, and no Qualified Matching Contributions or Qualified
Nonelective Contributions are taken into account with respect to the Eligible
Participant, then the ADP of the Eligible Participant shall be zero (0); and
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(B) the ADP for any Eligible Participant who is a Highly
Compensated Employee for the Plan Year and who is eligible to have Salary
Deferral Contributions (and Qualified Nonelective or Qualified Matching
Contributions, or both, if treated as Salary Deferral Contributions for purposes
of the ADP test) allocated to his or her account under two (2) or more
arrangements described in Code Section 401(k) that are maintained by the
Employer, shall be determined as if such Salary Deferral Contributions (and, if
applicable, such Qualified Nonelective Contributions or Qualified Matching
Contributions, or both) were made under a single arrangement. If a Highly
Compensated Employee participates in two (2) or more cash or deferred
arrangements that have different plan years, then all cash or deferred
arrangements ending with or within the same calendar year shall be treated as a
single arrangement. Notwithstanding the foregoing, certain plans shall be
treated as separate if mandatorily disaggregated pursuant to Code Section
401(k).
(ii) Average ADP. "Average ADP" means the average (expressed as
a percentage) of the ADPs for all Eligible Participants in the relevant group.
(iii) Excess 401(k) Contributions. "Excess 401(k) Contributions"
means, with respect to any Plan Year, the excess of (A) the aggregate amount of
Employer Contributions actually taken into account in computing the ADPs of
Highly Compensated Employees for such Plan Year, over (B) the maximum amount of
such Contributions permitted by the ADP test. Excess 401(k) Contributions shall
be treated as Annual Additions under the Plan for the Plan Year that such
Contributions were allocated to the affected Eligible Participant's Account.
(b) ADP. The anti-discrimination requirements of Code Section
401(k)(3) provide that in each Plan Year one of the following ADP tests must be
met:
(i) the Average ADP for Eligible Participants who are Highly
Compensated Employees for the Plan Year shall not exceed the current Plan Year's
Average ADP for Eligible Participants who are Non-Highly Compensated Employees
for the current Plan Year multiplied by one and twenty-five one-hundredths
(1.25); or
(ii) the Average ADP for Eligible Participants who are Highly
Compensated Employees for the Plan Year shall not exceed the current Plan Year's
Average ADP for Eligible Participants who are Non-Highly Compensated Employees
for the prior Plan Year multiplied by two (2), provided that the ADP for
Eligible Participants who are Highly Compensated Employees does not exceed the
Average ADP for Eligible Participants who are Non-Highly Compensated Employees
for the current Plan Year by more than two (2) percentage points or such lesser
amount as the Secretary of the Treasury shall prescribe to prevent the multiple
use of this alternative limitation with respect to any Highly Compensated
Employee.
(c) Corrective Procedure.
(i) Correction of Excess 401(k) Contributions. The Administrator
may take any and all steps it deems necessary or appropriate to ensure
compliance with the limitations of paragraph (b) above. Such steps shall
include, without limitation, one or any combination of the following:
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<PAGE> 35
(A) restrict the amount of Salary Deferral Contributions on
behalf of Highly Compensated Employees;
(B) distribute Excess 401(k) Contributions to the Highly
Compensated Employees who made such Excess 401(k) Contributions, pursuant to
paragraph (c)(v) below; and/or
(C) treat Employer Matching Contributions or Employer
Discretionary Contributions, as applicable, as Qualified Matching Contributions
or Qualified Nonelective Contributions, respectively. The amount of Qualified
Matching Contributions and/or Qualified Nonelective Contributions made under
this Plan and taken into account as Salary Deferral Contributions for purposes
of calculating the ADP test, subject to such other requirements as may be
prescribed by the Secretary of the Treasury, shall be such Qualified Matching
Contributions and/or Qualified Nonelective Contributions as are needed to meet
the ADP test.
(ii) Calculation of Excess 401(k) Contributions. The amount of
Excess 401(k) Contributions for Highly Compensated Employees for a Plan Year
shall be calculated by the following method, under which the ADP of the Highly
Compensated Employee with the highest ADP is reduced to the extent required to
enable the Plan to satisfy the ADP test or to cause such Highly Compensated
Employee's ADP to equal the ADP of the Highly Compensated Employee with the next
highest ADP:
(A) the Salary Deferral Contributions of the Highly
Compensated Employee with the highest ADP shall be reduced; such reduction shall
continue, as necessary, until such Highly Compensated Employee's ADP equals that
(those) of the Highly Compensated Employee(s) with the second highest ADP;
(B) following the application of paragraph (A), if it is
still necessary to reduce Highly Compensated Employees' Salary Deferral
Contributions, then the Contributions of (or allocations on behalf of, if
applicable) Highly Compensated Employees with the highest and second highest
ADPs shall be reduced, as necessary, until such Employees' ADP equals that of
the Highly Compensated Employee(s) with the third highest ADP;
(C) following the application of paragraph (B), if it is
still necessary to reduce Highly Compensated Employees' Salary Deferral
Contributions, then the procedure, the beginning of which is described in
paragraphs (A) and (B) above, shall continue until no further reductions are
necessary; and
(D) amounts determined pursuant to paragraphs (A) through
(C) above shall be combined. The resulting sum shall be the Excess 401(k)
Contributions, and the portion of the total to be allocated to each affected
Highly Compensated Employee shall be determined pursuant to paragraph (iii)
below.
(iii) Allocation of Excess 401(k) Contributions. The amount of
Excess 401(k) Contributions to be allocated to a Highly Compensated Employee for
a Plan Year shall be determined by the following method:
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<PAGE> 36
(A) the Salary Deferral Contributions of the Highly
Compensated Employee(s) with the highest dollar amount of Salary Deferral
Contributions shall be reduced, as necessary, until either such Highly
Compensated Employee's dollar amount of Salary Deferral Contributions equals
that of the Highly Compensated Employee(s) with the next highest dollar amounts
of Salary Deferral Contributions, or until no unallocated Excess 401(k)
Contributions remain;
(B) following the application of the preceding paragraph
(A), if unallocated Excess 401(k) Contributions remain, then Salary Deferral
Contributions of the Highly Compensated Employees with the highest and second
highest dollar amount(s) of Salary Deferral Contributions shall be reduced, as
necessary, until either such Highly Compensated Employees' dollar amount of
Salary Deferral Contributions equal those of the Highly Compensated Employee(s)
with the third highest dollar amount(s) of Salary Deferral Contributions, or
until no unallocated Excess 401(k) Contributions remain;
(C) following the application of the preceding paragraph
(B), if unallocated Excess 401(k) Contributions remain, then the procedure, the
beginning of which is described in paragraphs (A) and (B), shall continue until
no further reductions are necessary; and
(D) Excess 401(k) Contributions in an amount equal to the
reduction of Salary Deferral Contributions determined in paragraphs (A) through
(C) above with respect to a Highly Compensated Employee shall be allocated to
that Highly Compensated Employee and, as determined by the Administrator,
distributed pursuant to paragraph (v) below.
(iv) Character of Excess 401(k) Contributions. The Excess 401(k)
Contributions of a Highly Compensated Employee shall be deemed to consist of
Contributions and allocations as determined according to the following order:
(A) first, the Highly Compensated Employee's Excess 401(k)
Contributions shall be deemed to consist of Salary Deferral Contributions, if
any, which exceed the highest rate or amount at which Salary Deferral
Contributions are matched; provided, however, such Contributions shall be offset
by any Excess Elective Deferrals distributable to the Employee pursuant to
Section 5.6; and
(B) second, the Highly Compensated Employee's Excess 401(k)
Contributions shall be deemed to consist of (1) any Salary Deferral
Contributions and (2) any Employer Matching Contributions and Qualified Matching
Contributions, each in proportion to the Highly Compensated Employee's total
Salary Deferral Contributions, Employer Matching Contributions, and Qualified
Matching Contributions for the Plan Year; provided, however, any Salary Deferral
Contributions characterized as Excess 401(k) Contributions under this paragraph
shall be offset by any Excess Elective Deferrals distributable to the Employee
pursuant to Section 5.6 and not taken into account under paragraph (a)(i) above.
(v) Distribution of Excess 401(k) Contributions. If, pursuant to
paragraph (c)(i)(B) above, the Administrator elects to distribute Excess 401(k)
Contributions, which shall then be treated as Annual Additions (adjusted for
Earnings) to Highly Compensated
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Employees, then the Administrator shall make such distributions in accordance
with the following timing restrictions:
(A) on or before the date which falls two and one-half (2_)
months after the last day of the Plan Year for which such Excess 401(k)
Contributions were made, to avoid liability for the Federal excise tax
(currently, equal to ten percent (10%) of the undistributed Excess 401(k)
Contributions) and state excise tax, if applicable, which will be imposed on
Excess 401(k) Contributions distributed after such date;
(B) in the event of a complete termination of the Plan
during the Plan Year in which there are Excess 401(k) Contributions, such
distributions shall be made and as soon as administratively feasible after the
date of termination of the Plan, but in no event later than the close of the
twelve (12)-month period immediately following such termination; and
(C) in any event, such Excess 401(k) Contributions shall be
distributed before the last day of the Plan Year next following the Plan Year
for which such Excess 401(k) Contributions were made.
(vi) Compliance. Any adjustments to the Non-Highly Compensated
Employee Average ADP for the current Plan Year shall be made in accordance with
Internal Revenue Service Notice 98-1 and any subsequent binding guidance or
legislation.
(vii) Adjustment for Earnings. After the Administrator has
determined the aggregate amount and character of Excess 401(k) Contributions to
be distributed to a given Highly Compensated Employee, then that amount shall be
adjusted for Earnings. Earnings shall be calculated through the end of the Plan
Year, as well as for the Gap Period. For this purpose, the "Gap Period" means
the period beginning on the first day of the subsequent Plan Year and ending on
either the day before the date of distribution or on a date selected in
accordance with the safe harbor method set forth in Income Tax Regulation
Section 1.401(k)-1(f)(4)(ii)(D). The Earnings allocable to Excess 401(k)
Contributions shall be calculated by the Administrator using any reasonable
method for computing the Earnings allocable to Excess 401(k) Contributions;
provided, however, that the method shall not violate Code Section 401(a)(4), and
that the method shall be used consistently for all Eligible Participants, for
all corrective distributions under the Plan for the Plan Year, and for
allocating Earnings to Eligible Participants' Accounts.
(d) Special Rules.
(i) Computation of Section 415 Compensation. For purposes of
this Section, an Eligible Participant's Section 415 Compensation for the entire
Plan Year shall be included, whether or not he or she made Salary Deferral
Contributions for the entire Plan Year.
(ii) Coordination with Distribution of Excess Elective
Deferrals. After calculation of an amount to be distributed to an Eligible
Participant pursuant to the procedures discussed in paragraphs (c)(ii) and (iii)
above, if the Eligible Participant in question has also made Excess Elective
Deferrals during the calendar year ended within or coincident with the Plan
Year,
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the amount actually distributed to that Eligible Participant shall be adjusted
to take into account such Excess Elective Deferrals pursuant to Section 5.6.
(iii) Aggregation of Plans. For purposes of determining whether
a plan satisfies the ADP test in paragraph (a), all elective contributions that
are made under two or more plans that are aggregated for purposes of Code
Section 401(a)(4) or 410(b) (other than Code Section 410(b)(2)(A)(ii)) shall be
treated as made under a single plan. If two (2) or more plans are permissively
aggregated for purposes of Code Section 401(k), then the aggregated plans shall
also satisfy Code Sections 401(a)(4) and 410(b) as though they were a single
plan. For Plan Years beginning after December 31, 1989, two (2) or more plans
may be aggregated in order to satisfy Code Section 401(k) only if they have the
same plan year and use the same ADP testing method. Any adjustments to the ADP
of Non-Highly Compensated Employees for the prior Plan Year shall be made in
accordance with Internal Revenue Service Notice 98-1 and any superseding binding
guidance or legislation.
5.6 DISTRIBUTION OF EXCESS ELECTIVE DEFERRALS.
(a) Definitions.
(i) Elective Deferrals. "Elective Deferrals" means, with respect
to any calendar year, any amount allocated to a Participant's Salary Deferral
Contributions Account pursuant to Section 4.1, and any contributions made on
behalf of such Participant pursuant to an election to defer under any qualified
cash or deferred compensation arrangement described in Code Section 401(k), any
simplified employee pension cash or deferred arrangement as described in Code
Section 402(h)(1)(B), any eligible deferred compensation plan under Code Section
457, any plan as described in Code Section 501(c)(18), and any contributions
made on the behalf of a Participant for the purchase of an annuity contract
under Code Section 403(b) pursuant to a salary reduction agreement. Elective
Deferrals shall not include any deferrals properly distributed as excess Annual
Additions.
(ii) Excess Elective Deferrals. "Excess Elective Deferrals"
means those Elective Deferrals that exceed the dollar limitation under Code
Section 402(g) and any Earnings allocable thereto. Excess Elective Deferrals not
distributed pursuant to Section 5.4 shall be treated as Annual Additions under
the Plan.
(b) Notification by Participant of Excess Elective Deferrals. A
Participant may assign to the Plan any Excess Elective Deferrals made during a
taxable year of the Participant by notifying the Administrator in writing of the
amount of such Excess Elective Deferral to be assigned to the Plan on or before
March 1st of the year following the close of the Participant's taxable year in
which the Excess Elective Deferrals were made. A Participant is automatically
deemed to have notified the Administrator to the extent he or she has Excess
Elective Deferrals arising from Salary Deferral Contributions made to the Plan
and any Other Plan of the Employer.
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(c) Distribution of Excess Elective Deferrals and Forfeiture of
Related Safe Harbor Matching Contributions and/or Employer Matching
Contributions. Excess Elective Deferrals shall be distributed to the Participant
no later than April 15th of the calendar year following the year in which the
Excess Elective Deferrals were made. Safe Harbor Matching Contributions and
Employer Matching Contributions made on account of such Excess Elective
Deferrals shall be forfeited as soon as administratively feasible thereafter and
applied to reduce future Employer Contributions.
(d) Adjustment for Earnings. Excess Elective Deferrals, and Safe
Harbor Matching Contributions and/or Employer Matching Contributions
attributable thereto shall be adjusted for any Earnings. Earnings shall be
calculated through the end of the taxable year of the Participant for which the
Excess Elective Deferrals, and Safe Harbor Matching Contributions and/or
Employer Matching Contributions attributable thereto were made. Earnings shall
also be calculated for the Gap Period. For this Purpose, the "Gap Period" means
the period beginning on the first day of the subsequent taxable year of the
Participant and ending on either the day before the date of distribution or on a
date selected in accordance with the safe-harbor method set forth in Income Tax
Regulation Section 1.402(g)-1(e)(5)(iv). The Earnings allocable to such Excess
Elective Deferrals, and Safe Harbor Matching Contributions and/or Employer
Matching Contributions attributable thereto shall be calculated by the
Administrator using any reasonable method for computing the Earnings allocable
to Excess Elective Deferrals, and Safe Harbor Matching Contributions and/or
Employer Matching Contributions attributable thereto; provided, however, that
the method shall not violate Code Section 401(a)(4), and that method shall be
used consistently for all Participants and for all corrective distributions
under the Plan for the Plan Year, and for allocating Earnings to Participants'
Accounts.
5.7 DISCRIMINATION TESTING OF EMPLOYER MATCHING CONTRIBUTIONS.
(a) Definitions.
(i) Actual Contribution Percentage ("ACP"). "Actual Contribution
Percentage" or "ACP" means:
(A) with respect to each Participant, the Participant's
Contribution Percentage Amount, divided by his or her Section 415 Compensation
for that Plan Year.
(B) if, however, (1) a Participant makes no Salary Deferral
Contributions, and as a result, no Employer Matching Contributions are made on
behalf of such Participant for the Plan Year; and (2) no Qualified Nonelective
Contributions are taken into account with respect to the Participant, then the
ACP of the Participant shall be zero (0).
(ii) Aggregate Limit. "Aggregate Limit" means the sum of (A) one
hundred twenty-five percent (125%) of the greater of the Average ADP of the
Non-Highly Compensated Employees for the current Plan Year or the Average ACP of
Non-Highly Compensated Employees under the Plan subject to Code Section 401(m)
for the Plan Year beginning
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with or within the prior Plan Year of the cash or deferred arrangement, and (B)
the lesser of two hundred percent (200%) or two (2) plus the lesser of such
Average ADP or Average ACP. "Lesser" is substituted for "greater" in (A) above,
and "greater" is substituted for "lesser" after "two (2) plus the" in (B) above,
if it would result in a larger Aggregate Limit.
(iii) Average ACP. "Average ACP" means the average of the ACPs
of the Eligible Participants in a group.
(iv) Contribution Percentage Amount. "Contribution Percentage
Amount" means the sum of the Employer Matching Contributions and Qualified
Matching Contributions made under the Plan on behalf of an Eligible Participant
for the Plan Year. In addition, to the extent elected by the Administrator for
purposes of calculating the ACP tests, "Contribution Percentage Amount" may also
include Qualified Nonelective Contributions, Salary Deferral Contributions,
and/or pre-tax and/or qualified nonelective contributions under Other Plans of
the Employer (subject to such requirements as may be prescribed by the Secretary
of the Treasury); provided, however, the amount of Qualified Nonelective
Contributions, Salary Deferral Contributions and/or pre-tax contributions under
Other Plans of the Employer used in calculating the ADP test may not be used in
calculating the ACP test. Such Contribution Percentage Amount shall not include
Employer Matching Contributions that are forfeited either to correct Excess
Matching Contributions or because the Contributions to which they relate are
Excess Elective Deferrals and the Employer Matching Contributions attributable
thereto, or Excess 401(k) Contributions.
(v) Excess Matching Contributions. "Excess Matching
Contributions" means with respect to any Plan Year, the excess of (A) the
aggregate amount of Contributions actually taken into account in computing the
Average ACP of Highly Compensated Employees for such Plan Year, over (B) the
maximum amount of such Contributions permitted by the ACP test.
(b) ACP Test. One of the following tests shall be satisfied for each
Plan Year (except as provided in paragraphs (c) and (d) below):
(i) the Average ACP for Eligible Participants who are Highly
Compensated Employees for such Plan Year shall not exceed the current Plan
Year's Average ACP for Eligible Participants who are Non-Highly Compensated
Employees for the current Plan Year multiplied by one and twenty-five
one-hundredths (1.25); or
(ii) the Average ACP for Eligible Participants who are Highly
Compensated Employees for such Plan Year shall not exceed the current Plan
Year's Average ACP for Eligible Participants who are Non-Highly Compensated
Employees for the current Plan Year multiplied by two (2); provided, however,
that the Average ACP for Eligible Participants who are Highly Compensated
Employees does not exceed the Average ACP for Eligible Participants who are
Non-Highly Compensated Employees for the current Plan Year by more than two (2)
percentage points or such lesser amount as the Secretary of the Treasury shall
prescribe to prevent the multiple use of this alternative limitation with
respect to any Highly Compensated Employee.
(c) Multiple Use. If one or more Highly Compensated Employee(s)
participate(s) in both a cash or deferred arrangement and a plan subject to the
ACP test maintained by the
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Employer and the sum of the Average ADP and Average ACP of such Highly
Compensated Employee(s) subject to either or both tests exceed(s) the Aggregate
Limit, then the Average ACP of such Highly Compensated Employee(s) who also
participate(s) in a cash or deferred arrangement shall be reduced in the manner
described in Section 5.5(c) so that the limit is not exceeded. The amount by
which each Highly Compensated Employee's Contribution Percentage Amount is
reduced shall be treated as an Excess Matching Contribution. The ADP and ACP of
the Highly Compensated Employees are determined after any corrections required
to meet ADP and ACP tests and are deemed to be the maximum permitted under such
tests for the Plan Year. Multiple use does not occur if either the Average ADP
or Average ACP of the Highly Compensated Employees does not exceed one and
twenty-five hundredths (1.25) multiplied by the Average ADP and Average ACP of
the Non-Highly Compensated Employees.
(d) Special Rules.
(i) For purposes of this Section, the ACP for any Eligible
Participant who is eligible to have a Contribution Percentage Amount allocated
to his or her account under two (2) or more plans described in Code Section
401(a), or arrangements described in Code Section 401(k) that are maintained by
the Employer, shall be determined as if the total of such Contribution
Percentage Amount was made under each plan. If a Highly Compensated Employee
participates in two or more cash or deferred arrangements that have different
plan years, all cash or deferred arrangements ending with or within the same
calendar year shall be treated as a single arrangement. Notwithstanding the
foregoing, certain plans shall be treated as separate if mandatorily
disaggregated pursuant to Code Section 401(m).
(ii) In the event that this Plan satisfies the requirements of
Code Section 401(m), 401(a)(4) or 410(b) only if aggregated with one or more
other plans, or if one or more other plans satisfy the requirements of any such
Code Section only if aggregated with this Plan, then this Section shall be
applied by determining the Contribution Percentage of Participants as if all
such plans were a single plan. Any adjustments to the Non-Highly Compensated
Employee Average ACP for the current Plan Year shall be made in accordance with
Internal Revenue Service Notice 98-1 and any subsequent binding guidance or
legislation. Plans may be aggregated in order to satisfy Code Section 401(m)
only if they have the same Plan Year.
(iii) For purposes of determining the ACP test, Employer
Matching Contributions and Qualified Nonelective Contributions are considered
made for a Plan Year if made no later than the end of the twelve (12)-month
period beginning on the day after the close of the Plan Year.
5.8 CORRECTIVE PROCEDURE FOR DISCRIMINATORY MATCHING CONTRIBUTIONS.
(a) The Administrator shall have the power to take any and all steps
it deems necessary or appropriate to ensure compliance with the limitations
described in Section 5.7, including, without limitation, the following:
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(i) to distribute vested Excess Matching Contributions to Highly
Compensated Employees who received such allocations, pursuant to paragraph (e)
below;
(ii) to treat that portion of Excess Matching Contributions
which consist of unvested allocations of Employer Matching Contributions to the
Employer Matching Contributions Accounts of Highly Compensated Employees as
amounts to be reallocated, pursuant to paragraph (d) below; and
(iii) to limit the amount of Employer Matching Contributions
allocated to the Employer Matching Contributions Accounts of Highly Compensated
Employees.
(b) Notwithstanding any contrary provisions in this Plan, if,
pursuant to paragraph (a)(i) or (ii) above, the Administrator elects to
distribute or reallocate Excess Matching Contributions (adjusted for Earnings),
then the Administrator shall take such action on or before the date which falls
two and one-half (2_) months after the last day of the Plan Year for which such
Excess Matching Contributions were made, if the Employer wishes to avoid
liability for the Federal excise tax (currently, equal to ten percent (10%) of
undistributed and unreallocated Excess Matching Contributions) and state excise
tax, if applicable, which will be imposed on Excess Matching Contributions
distributed or reallocated after such date, but in any event, before the last
day of the Plan Year next following the Plan Year for which such Contributions
were made.
(c) Determination of Amount of Excess Matching Contributions. The
amount of Excess Matching Contributions for Highly Compensated Employees for a
Plan Year shall be determined by the following method, to enable the Plan to
satisfy the ACP test:
(i) first, the allocations of Contributions taken into account
in determining the ACP ("ACP Allocations") of the Highly Compensated Employee
with the highest ACP shall be reduced, as necessary, until such Employee's ACP
equals those of the Highly Compensated Employee(s) with the second highest ACP;
(ii) second, following the application of paragraph (i), if it
is still necessary to reduce Highly Compensated Employees' ACP Allocations, then
the Contributions of Highly Compensated Employees with the highest and second
highest ACPs shall be reduced, as necessary, until each affected Employee's ACP
equals that (those) of the Highly Compensated Employee(s) with the third highest
ACP;
(iii) third, following the application of paragraph (ii), if it
is still necessary to reduce Highly Compensated Employees' ACP Allocations, then
the procedure, the beginning of which is described in paragraphs (i) and (ii),
shall continue until no further reductions are necessary; and
(iv) fourth, amounts determined pursuant to paragraphs (i)
through (iii) shall be combined. The resulting sum shall be the Excess Matching
Contributions, and the portion of the total to be allocated to each affected
Highly Compensated Employee shall be determined pursuant to paragraph (d) below.
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(d) Allocation of Excess Matching Contributions. The amount of
Excess Matching Contributions to be allocated to a Highly Compensated Employee
for a Plan Year shall be determined by the following method to enable the Plan
to satisfy the ACP test:
(i) first, the ACP Allocations of the Highly Compensated
Employee(s) with the highest dollar amount of ACP Allocations shall be reduced,
as necessary, until either such Employee's dollar amount of ACP Allocations
equals those of the Highly Compensated Employee(s) with the second highest
dollar amount of ACP Allocations or until no ACP Allocations remain;
(ii) second, following the application of paragraph (i), if
unallocated ACP Allocations remain, then ACP Allocations of Highly Compensated
Employees with the highest and second highest dollar amount of ACP Allocations
shall be reduced, as necessary, until either each affected Employee's dollar
amount of ACP Allocations equals that (those) of the Highly Compensated
Employee(s) with the third highest dollar amount of ACP Allocations, or until no
ACP Allocations remain;
(iii) third, following the application of paragraph (ii), if
unallocated ACP Allocations remain, the procedure, the beginning of which is
outlined in paragraphs (i) and (ii), shall continue until no further reductions
are necessary or until no further unallocated ACP Allocations remain; and
(iv) fourth, Excess Matching Contributions in an amount equal to
the reductions of ACP Allocations determined in paragraphs (i) through (iii)
above with respect to a Highly Compensated Employee shall be allocated to that
Highly Compensated Employee and, as determined by the Administrator, distributed
pursuant to paragraph (e) below.
(e) Distribution of Excess Matching Contributions. After the
procedure outlined in paragraph (d) above is completed, all amounts of Excess
Matching Contributions shall be forfeited (if forfeitable) or distributed (if
distributable) to the respective Highly Compensated Employees to whose Accounts
the Excess Matching Contributions were made. Excess Matching Contributions for
each affected Highly Compensated Employee shall be forfeited (if forfeitable) or
distributed (if distributable) from the following Accounts in the following
order:
(i) the Highly Compensated Employee's Matching Contributions
Account;
(ii) the Highly Compensated Employee's Qualified Nonelective
Contributions Account;
(iii) the Highly Compensated Employee's Qualified Matching
Contributions Account; and
(iv) the Highly Compensated Employee's Salary Deferral
Contributions Account.
(f) Adjustment for Earnings. After the Administrator has determined
the aggregate amount and character, of Excess Matching Contributions to be
forfeited or distributed to a
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given Highly Compensated Employee, then that amount shall be adjusted for
Earnings. Earnings shall be calculated through the end of the Plan Year, as well
as for the Gap Period. For this purpose, the "Gap Period" means the period
beginning on the first day of the subsequent Plan Year and ending on either the
day before the date of distribution or on a date selected in accordance with the
safe harbor method set forth in Income Tax Regulation Section
1.401(m)-1(e)(3)(ii)(D). The Earnings allocable to Excess Matching Contributions
shall be calculated by the Administrator using any reasonable method for
computing the Earnings allocable to Excess Matching Contributions; provided,
however, that the method shall not violate Code Section 401(a)(4), and that the
method shall be used consistently for all Participants and for all corrective
distributions under the Plan for the Plan Year, and for allocating Earnings to
Participants' Accounts.
(g) Special Rule. Any amount distributed to a Highly Compensated
Employee pursuant to this Section shall not be subject to any of the consent
rules for Participants and Spouses contained in Article VI. Similarly, any such
distribution shall not make that Employee liable for the Federal taxes
applicable to early withdrawals under Code Section 72(t) or excess distributions
under Code Section 4981A.
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ARTICLE VI
VESTING AND DISTRIBUTION OF ACCOUNTS
6.1 VESTED INTEREST.
(a) A Participant's interest in his or her Salary Deferral
Contributions Account, Safe Harbor Nonelective Contributions Account, Safe
Harbor Matching Contributions Account, Employer Matching Contributions Account,
Quarterly Plan Account, Qualified Matching Contributions Account, Qualified
Nonelective Contributions Account, Pre-97 Employee 401(k) Contributions Account,
Pre-97 Employer 401(k) Matching Contributions Account and Rollover Contributions
Account under this Plan shall be at all times fully vested and nonforfeitable. A
Participant's interest in his or her Employer Discretionary Contributions
Account shall be fully vested and nonforfeitable at the Participant's Normal
Retirement Date or Early Retirement Date, on the Participant's death or
Disability, provided that the Participant is employed by the Employer at such
time, or upon termination of the Plan. In all other cases, a Participant's
interest in his or her Employer Discretionary Contributions Account shall be
subject to the following vesting schedule:
Years of Service Vested Percentage
---------------- -----------------
Less than 1 year 0%
1 year but less than 2 years 50%
2 years or more 100%
(b) The crediting of service shall be subject to the following
rules:
(i) If a Participant who has voluntarily terminated or has been
discharged returns to employment and is credited with an Hour of Service on or
before incurring a Break in Service, that Participant shall receive credit for
the time elapsed during that absence.
(ii) If a Participant is absent for a reason other than
termination or discharge and then voluntarily terminates or is discharged, the
date on which that Participant must first be credited with an Hour of Service to
receive credit for the time elapsed during that absence is the first anniversary
of the first day of the absence.
(iii) If a Participant has a Break in Service of five (5) years
or more, then service after such Break in Service shall not be taken into
account for purposes of determining the nonforfeitable percentage of the
Participant's Vested Account balance which accrued prior to such Break in
Service.
(iv) If a Participant has less than one (1) Year of Service,
then service prior to a Break in Service shall not be taken into account for
purposes of determining the nonforfeitable
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percentage of the Participant's Vested Account balance if the period of
severance equals or exceeds the Participant's service before such period of
severance.
(c) If the vesting schedule specified in paragraph (a) constitutes
an amendment to the prior vesting schedule or is subsequently amended, then in
the case of an Employee who is a Participant as of the later of the date such
amendment is adopted or the date it becomes effective, the nonforfeitable
percentage (determined as of such date) of such Employee's Employer derived
accrued benefit will not be less than the percentage computed under the Plan
without regard to such amendment. In addition, if the amended vesting schedule
provides less rapid vesting, if the Plan is amended in any way that directly or
indirectly affects the computation of the Participant's nonforfeitable
percentage, or if the Plan is deemed amended by an automatic change to a
Top-Heavy vesting schedule, then each Participant who is credited with three (3)
Years of Service and whose Account would have vested more rapidly prior to the
amendment, may irrevocably elect during the election period to have the
nonforfeitable percentage of his or her Account calculated without regard to
such amendment. For purposes of this Section, the election period shall begin
the date the amendment is adopted, and shall end on the date sixty (60) days
after the latest of (i) the date the amendment is adopted, (ii) the date the
amendment becomes effective, or (iii) the date the Participant is issued written
notice of the amendment by the Participating Employer or the Administrator.
6.2 FORFEITURES.
(a) If a Participant is required to take a distribution pursuant to
Section 6.7 (the "cash-out rule"), then, following the Participant's Severance
Date, the Participant shall receive a distribution of the value of the entire
vested portion of his or her Account balance in accordance with Sections 6.7
through 6.11. The nonvested portion of the Participant's Account balance shall
be treated as a forfeiture as of the earlier of (i) the date on which the
distribution occurs, or (ii) the last day of the Plan Year in which the
Participant incurs five (5) consecutive one (1)-year Breaks in Service. For
purposes of this Section, if the value of a Participant's vested Account balance
is zero (0), then the Participant shall be deemed to have received a
distribution of such vested Account balance.
(b) If a Participant has the option to elect and does elect to
receive the value of his or her vested Account balance following his or her
Severance Date, in accordance with the requirements of Section 6.7, then the
nonvested portion of the Participant's Account balance shall be treated as a
forfeiture as of the earlier of (i) the date on which the distribution occurs,
or (ii) the last day of the Plan Year in which the Participant incurs five (5)
consecutive one (1)-year Breaks in Service.
(c) If a Participant has the option to elect and does not elect to
receive the value of his or her vested Account balance following his or her
Severance Date in accordance with the requirements of Section 6.7, then the
nonvested portion of the Participant's Account balance shall be treated as a
forfeiture as of the last day of the Plan Year in which the Participant incurs
five (5) consecutive one (1)-year Breaks in Service.
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(d) If a Participant is not fully vested in his or her Account, and
that Participant receives a distribution in accordance with the requirements of
Section 6.7 and subsequently resumes employment with a Participating Employer,
then that Participant's Employer Discretionary Contributions Account balance
shall be restored to the amount on the Valuation Date preceding the date of
distribution; provided, however, the Participant repays to the Plan the full
amount of the distribution attributable to Employer Discretionary Contributions
before the earlier of five (5) years after the Participant's Reemployment
Commencement Date, or the date the Participant incurs five (5) consecutive one
(1)-year Breaks in Service following the date of the distribution. If a
Participant is deemed to receive a distribution pursuant to paragraph (a) above,
and the Participant resumes employment covered under the Plan before the date
the Participant incurs five (5) consecutive one (1)-year Breaks in Service,
then, upon the Participant's Reemployment Commencement Date, the Employer
Discretionary Contributions Account balance of the Participant shall be restored
to the amount on the Valuation Date preceding date of such deemed distribution.
The funds for effecting the restoration of the Account shall be drawn first from
forfeitures, and second, from a special Contribution to the Plan made by the
Participating Employer that last employed such Participant. The amount
contributed to the Account for the purpose of effecting such restoration shall
not be considered to be part of the Annual Addition to the Account of such
Participant for the Plan Year of restoration or any subsequent Plan Year.
(e) Any amounts forfeited pursuant to this Section, Section 5.4 or
Section 5.8 shall be applied, first, to restore Accounts pursuant to paragraph
(d) above, second, to reduce the Participating Employers' obligation to make
Safe Harbor Nonelective Contributions, third, to reduce the Participating
Employers' obligation to make Safe Harbor Matching Contributions, fourth, to
reduce the Participating Employers' obligation to make Employer Matching
Contributions, fifth, to reduce the Participating Employers' obligation to make
Employer Discretionary Contributions and sixth, to pay administrative expenses
under the Plan.
6.3 EARLY RETIREMENT. A Participant who terminates employment with the
Employer on or after his or her Early Retirement Date may elect to have his or
her Account distributed in accordance with Sections 6.7 through 6.11.
6.4 NORMAL RETIREMENT DATE. A Participant who terminates employment with
the Employer on or after his or her Normal Retirement Date, may elect to have
his or her Account distributed in accordance with Sections 6.7 through 6.11.
6.5 DEATH BENEFITS. If a Participant or former Participant dies before
the entire vested balance of his or her Account has been distributed, then the
vested balance in his or her Account shall be paid to the Participant's
Beneficiary in accordance with Sections 6.7 through 6.11.
6.6 TERMINATION OF EMPLOYMENT.
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Following a Participant's Severance Date, the Participant's vested
Account balance shall be distributed in accordance with Sections 6.7 through
6.11.
6.7 COMMENCEMENT OF DISTRIBUTION.
(a) Subject to Sections 6.8 through 6.12 below, following a
Participant's Severance Date, the Participant's Account shall be distributed at
a date designated by the Administrator, which designation (except as provided
below) shall be determined in accordance with the Administrator's procedures,
and shall be subject to the following:
(b) Effective for distributions made during the period beginning on
March 29, 1998 and ending on March 22, 1999:
(i) if the Participant's vested Account balance does not exceed
Five Thousand Dollars ($5,000) at the time of distribution (or at the time of
any prior distribution), then the Participant shall receive a lump sum
distribution of the entire vested portion of such Account balance and the
nonvested portion shall be treated as a forfeiture; or
(ii) if the Participant's vested Account balance exceeds Five
Thousand Dollars ($5,000) at the time of distribution (or at the time of any
prior distribution), then the Participant must consent, in writing, prior to the
distribution.
(c) Effective for distributions made on or after March 22, 1999:
(i) if the Participant's vested Account balance does not exceed
Five Thousand Dollars ($5,000) at the time of the distribution, then the
Participant shall receive a lump sum distribution of the entire vested portion
of such Account balance and the nonvested portion shall be treated as a
forfeiture; or
(ii) if the Participant's vested Account balance exceeds Five
Thousand Dollars ($5,000) at the time of distribution, then the Participant must
consent, in writing, prior to the distribution.
(iii) Notwithstanding the foregoing, if a Participant has begun
to receive a distribution pursuant to an optional form of benefit under which at
least one (1) scheduled periodic distribution is still payable, and if the value
of the Participant's vested Account balance exceeded Five Thousand Dollars
($5,000) at the time of the first distribution under that optional form of
benefit, then the remaining value of the Participant's vested Account balance
may not be distributed without the written consent of the Participant.
(d) If consent is required for a distribution, then the Participant
must consent in writing to the distribution before it may be made and within the
ninety (90)-day period ending on the first day on which all of the events have
occurred that entitle the Participant to such benefit (the "Annuity Starting
Date"). If the Participant consents to the distribution, then such distribution
shall include all of the Participant's vested Account balance. If the
Participant does not consent in writing
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to the distribution, then the Participant's vested Account balance shall be held
in the Trust until the maximum period permitted under paragraph (e) below. If
consent to a distribution is required hereunder, then at least thirty (30) days
and not more than ninety (90) days prior to the Annuity Starting Date the
Administrator shall provide the Participant with a notice of the right to elect
immediate distribution or the right to defer distribution until the
Participant's Normal Retirement.
(e) Unless the Participant elects otherwise by providing the
Administrator with an executed written notice specifying the Participant's
benefit under the Plan and the commencement date for distribution of the
Participant's Account, then distribution to a Participant shall commence no
later than sixty (60) days following the close of the Plan Year in which occurs
the latest of:
(i) the date the Participant attains Normal Retirement;
(ii) the tenth (10th) anniversary of the date on which the
Participant first commences participation in the Plan; or
(iii) the Participant's Severance Date.
With the exception of distributions made pursuant to Sections (b)(i) and (c)(i)
above, the failure of a Participant to consent to the distribution of a benefit
that is immediately available under this Section, shall be deemed to be an
election to defer commencement of a payment of any benefit to the latest
possible date pursuant to this paragraph or paragraph (f) below, as applicable.
(f) Neither the consent of the Participant nor the Participant's
Spouse shall be required to the extent that a distribution is required to
satisfy Code Section 401(a)(9) or 415. In addition, upon termination of this
Plan, to the extent the Plan does not offer an annuity option (to be purchased
from a commercial provider) and if the Employer does not maintain another
defined contribution plan (other than an employee stock ownership plan as
defined in Code Section 4975(e)(7)), then the Participant's Account balance
shall, without the Participant's consent, be distributed in a single lump sum to
the Participant. However, if the Employer maintains another defined contribution
plan (other than an employee stock ownership plan as defined in Code Section
4975(e)(7)), then the Participant's Account balance shall be transferred,
without the Participant's consent, to the other plan if the Participant does not
consent to an immediate distribution.
(g) Notwithstanding anything to the contrary in the Plan,
distribution of each Participant's Account shall begin no later than the
Participant's Required Beginning Date, regardless of whether the Participant has
consented to such a distribution.
(h) If a distribution is one for which Code Sections 401(a)(11) and
417 do not apply, then such distribution may commence less than thirty (30) days
after the notice required under Income Tax Regulation Section 1.411(a)-11(c) is
given; provided, however, that: (i) the Administrator informs the Participant
that the Participant has a right to a period of at least thirty (30) days after
receiving the notice to consider the decision of whether or not to elect a
distribution (and, if applicable, a particular distribution option); and (ii)
the Participant, after receiving the notice, affirmatively elects a distribution
and waives the thirty (30)-day period by written notice.
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6.8 SPECIAL RULE FOR SALARY DEFERRAL CONTRIBUTIONS, SAFE HARBOR
NONELECTIVE CONTRIBUTIONS, SAFE HARBOR MATCHING CONTRIBUTIONS AND QUALIFIED
NONELECTIVE CONTRIBUTIONS. Salary Deferral Contributions, Safe Harbor
Nonelective Contributions, Safe Harbor Matching Contributions and Qualified
Nonelective Contributions, including Earnings thereon, shall also, as determined
by the Company, be eligible for distribution upon:
(a) the transfer by the Employer to any other employer of
substantially all of the assets (within the meaning of Code Section 409(d)(2),
as modified by Revenue Ruling 2000-27 and any subsequent binding guidance or
legislation) used by the Employer in a trade or business, but only with respect
to Participants who continue employment with the other employer who acquired
such assets; or
(b) the transfer by the Employer of such Employer's interest in a
subsidiary (within the meaning of Code Section 409(d)(2), as modified by Revenue
Ruling 2000-27 and any subsequent binding guidance or legislation) to any other
employer, but only with respect to Participants who continue employment with
such transferred subsidiary, and so long as the Company maintains this Plan.
6.9 DIRECT ROLLOVERS AND WITHHOLDING.
(a) Definitions.
(i) Direct Rollover. "Direct Rollover" means an Eligible
Rollover Distribution paid directly to an Eligible Retirement Plan for the
benefit of a Distributee.
(ii) Distributee. "Distributee" means a Participant, a Surviving
Spouse of a deceased Participant, or a Spouse entitled to payment under a
Qualified Domestic Relations Order.
(iii) Eligible Retirement Plan. "Eligible Retirement Plan"
means:
(A) with respect to any Distributee, an individual
retirement account described in Code Section 408(a) or an individual retirement
annuity (other than an endowment contract) described in Code Section 408(b); and
(B) in addition to paragraph (A) above and solely with
respect to a Distributee who is a Participant, or a Spouse entitled to payment
under a Qualified Domestic Relations Order, a qualified trust described in Code
Section 401(a), or an annuity plan described in Code Section 403(a).
(iv) Eligible Rollover Distribution. "Eligible Rollover
Distribution" means any distribution of all or any portion of the balance
credited to the Account of a Distributee, except that an Eligible Rollover
Distribution shall not include: (A) any distribution that is one of a series of
substantially equal periodic payments (not less frequently than annually) made
for the life (or life expectancy) of the Distributee or the joint lives (or
joint life expectancies) of the Distributee and the Distributee's designated
Beneficiary, or for a specified period of ten (10) years or more; (B) any
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distribution to the extent such distribution is required under Code Section
401(a)(9); (C) the portion of any distribution that is not includable in gross
income (determined without regard to the exclusion for net unrealized
appreciation with respect to Employer securities); and (D) effective as of
January 1, 2000, any Salary Deferral Contributions distributed as a result of a
hardship distribution in accordance with Section 6.16.
(b) General Rule. If the Distributee of any Eligible Rollover
Distribution from the Plan elects to have all or a specified portion of the
Eligible Rollover Distribution paid directly to an Eligible Retirement Plan, and
specifies the Eligible Retirement Plan to which the Eligible Rollover
Distribution is to be paid, then the Eligible Rollover Distribution shall be
paid to that Eligible Retirement Plan in a Direct Rollover.
6.10 FORM OF DISTRIBUTION. Distributions shall be in the form of cash.
Any Company Stock held in a Participant's Account shall be liquidated and the
cash equivalent distributed.
6.11 FORM OF BENEFIT.
(a) Normal Form of Benefit. Benefits shall be paid to the
Participant or the Participant's Beneficiary in the form of a single lump sum,
unless the Participant (or, if the Participant is deceased, his or her
Beneficiary) elects otherwise.
(b) Optional Forms of Benefit. The Participant may elect
substantially-equal annual installments over a specified period of years which
shall not exceed the Life Expectancy of the Participant or the Joint and Last
Survivor Life Expectancies of the Participant and his or her Beneficiary;
provided, however, that Life Expectancy(ies) shall not be recalculated.
6.12 MINIMUM DISTRIBUTION REQUIREMENTS.
(a) Definitions.
(i) Applicable Life Expectancy. "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 (1) for each calendar year which has elapsed since the date
Life Expectancy was first calculated. If Life Expectancy is being recalculated,
then the Applicable Life Expectancy shall be the Life Expectancy as so
recalculated. The applicable calendar year shall mean the first Distribution
Calendar Year, or if Life Expectancy is being recalculated, the calendar year
for which the distribution amount is being calculated.
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(ii) Designated Beneficiary. "Designated Beneficiary" means the
individual who is designated as the Beneficiary under the Plan in accordance
with Code Section 401(a)(9).
(iii) Distribution Calendar Year. "Distribution Calendar Year"
means a calendar year for which a minimum distribution is required. For
distributions beginning before the Participant's death, the first distribution
calendar year shall mean the calendar year immediately preceding the calendar
year which contains the Participant's Required Beginning Date. For distributions
beginning after the Participant's death, the first distribution calendar year
shall mean the calendar year in which distributions are required to begin
pursuant to Code Section 401(a)(9).
(iv) Five Percent Owner. "Five Percent Owner" means a
Participant who, for purposes of this Section, is a five percent owner as
defined in Code Section 416(i) (determined in accordance with Code Section 416
but without regard to whether the Plan is Top-Heavy) at any time during the Plan
Year ending with or within the calendar year in which such Participant attains
age sixty-six and one-half (66-1/2) or any subsequent Plan Year.
(v) Life Expectancy. "Life Expectancy" means that for purposes
of this Section, life expectancy and joint and last survivor expectancy shall be
computed by use of the expected return multiples in Tables V and VI of Income
Tax Regulation Section 1.72-9. Unless otherwise elected by the Participant (or
the Participant's Spouse in the case of distributions which begin following the
Participant's death and in which the Spouse is named as the designated
Beneficiary) by the time distributions are required to begin, life expectancies
shall be recalculated annually. Such election shall be irrevocable as to the
Participant (or Spouse) and shall apply to all subsequent years. The life
expectancy of a nonspouse Beneficiary shall not be recalculated.
(vi) Participant's Benefit. "Participant's Benefit" means:
(A) the Participant's Account balance as of the last
Valuation Date in the calendar year immediately preceding the distribution
calendar year increased by the amount of any Contributions, Rollover
Contributions or forfeitures allocated to the Participant's Account balance as
of dates in the valuation calendar year after the Valuation Date and decreased
by distributions made in the valuation calendar year after the Valuation Date.
(B) for purposes of paragraph (A) above, if any portion of
the minimum distribution for the first distribution calendar year is made in the
second distribution calendar year on or before the Required Beginning Date, then
the amount of the minimum distribution made in the second distribution calendar
year shall be treated as if it had been made in the immediately preceding
distribution calendar year.
(vii) Required Beginning Date. "Required Beginning Date" means:
(A) for Five Percent Owners, the first day of April
following the later of:
a) the calendar year in which the Participant attains
age seventy and one-half (70-1/2), or
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b) the earlier of the calendar year with or within which
ends the Plan Year in which the Participant becomes a Five Percent Owner, or the
calendar year in which the Participant's Severance Date occurs.
Once begun, distributions to a Five Percent Owner under this Section
must continue to be distributed, even if the Participant ceases to be a Five
Percent Owner in a subsequent year.
(B) for Non-Five Percent Owners, the first day of April of
the calendar year following the calendar year in which the Participant attains
age seventy and one-half (70-1/2).
(b) General Rules.
(i) Subject to Section 6.7, the requirements of this Section
shall apply to any distribution of a Participant's interest and will take
precedence over any inconsistent provision of this Plan.
(ii) All distributions required under this Section shall be
determined and made in accordance with the proposed Income Tax Regulations under
Code Section 401(a)(9), including the minimum distribution incidental benefit
requirement of proposed Income Tax Regulation Section 1.401(a)(9)-2.
(iii) If a Participant dies after payments have begun, then his
or her remaining vested Account balance, if any, must be distributed to his or
her Beneficiary at least as rapidly as under the method of distribution elected
by the Participant.
(iv) If the Participant dies before distribution of his or her
interest begins, distribution of the Participant's entire interest shall be
completed by December 31st of the calendar year containing the fifth (5th)
anniversary of the Participant's death except to the extent that an election is
made to receive distributions in accordance with paragraphs (A) or (B) below:
(A) if any portion of the Participant's interest is payable
to a Beneficiary, then distributions may be made over the life or over a period
certain not greater than the Life Expectancy of the Beneficiary commencing on or
before December 31st of the calendar year immediately following the calendar
year in which the Participant died;
(B) if the Beneficiary is the Participant's Surviving
Spouse, then the date distributions are required to begin in accordance with
paragraph (A) above shall not be earlier than the later of (1) December 31st of
the calendar year immediately following the calendar year in which the
Participant died, or (2) December 31st of the calendar year in which the
Participant would have attained age seventy and one-half (70-1/2).
If the Participant has not made an election pursuant to
paragraph (B) by the time of his or her death, then the Participant's
Beneficiary must elect the method of distribution no later than the earlier of
(1) December 31st of the calendar year in which distributions would be required
to begin under this Section, or (2) December 31st of the calendar year which
contains the fifth (5th) anniversary of the date of death of the Participant. If
the Participant has no
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Beneficiary, or if the Beneficiary does not elect a method of distribution, then
distribution of the Participant's entire interest must be completed by December
31st of the calendar year containing the fifth (5th) anniversary of the
Participant's death.
For purposes of this paragraph (iv), if the Surviving Spouse
dies after the Participant, but before payments to such Surviving Spouse begin,
the provisions of this paragraph (iv), with the exception of paragraph (B)
herein, shall be applied as if the Surviving Spouse were the Participant.
(v) For the purposes of this Section, distribution of a
Participant's interest is considered to begin on the Participant's Required
Beginning Date (or, if paragraph (iv)(B) above is applicable, the date
distribution is required to begin to the Surviving Spouse pursuant to paragraph
(iv)(A) above). If distribution in the form of an annuity (pursuant to an
Appendix attached hereto) irrevocably commences to the Participant before the
Required Beginning Date, the date distribution is considered to begin is the
date distribution actually commences.
(vi) As of any subsequent Valuation Date, the Administrator,
with the consent of the Participant (or, if applicable, his or her Beneficiary),
may cause the Amount then credited to the Account of the Participant to be paid
in a lump sum.
(c) Required Distribution Date. The entire interest of a Participant
shall be distributed or begin to be distributed no later than the Participant's
Required Beginning Date regardless of whether the Participant specified a
contrary commencement date in his or her written election.
(d) Limits on Distribution Periods. As of the first distribution
calendar year, distributions, if not made in a single-sum, shall only be made
over one of the following periods (or a combination thereof):
(i) the life of the Participant;
(ii) the life of the Participant and a Designated Beneficiary;
(iii) a period certain not extending beyond the Life Expectancy
of the Participant; or
(iv) a period certain not extending beyond the joint and last
survivor expectancy of the Participant and a Designated Beneficiary.
(e) Determination of Amount to be Distributed Each Year. If the
Participant's interest is to be distributed in a form other than a single sum,
then the following minimum distribution rules shall apply on or after the
Required Beginning Date:
(i) Individual Account.
(A) If a 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
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expectancy of the Participant and the Participant's Designated Beneficiary, or
(2) a period not extending beyond the Life Expectancy of the Designated
Beneficiary, then the amount required to be distributed for each calendar year,
beginning with distributions for the first Distribution Calendar Year, shall be
at least equal to the quotient obtained by dividing the Participant's Benefit by
the Applicable Life Expectancy.
(B) 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 is not the
Designated Beneficiary, the applicable divisor determined from the table set
forth in Q&A-4 of proposed Income Tax Regulation Section 1.401(a)(9)-2.
Distributions after the death of the Participant shall be distributed using the
Applicable Life Expectancy in paragraph (A) above as the relevant divisor
without regard to proposed Income Tax Regulation Section 1.401(a)(9)-2.
(C) The minimum distribution required for the Participant's
first Distribution Calendar Year shall be made on or before the Participant's
Required Beginning Date. The minimum distribution for other Distribution
Calendar Years, including the minimum distribution for the Distribution Calendar
Year in which the Employee's Required Beginning Date occurs, shall be made on or
before December 31st of that Distribution Calendar Year.
6.13 DISTRIBUTION TO MINOR OR INCOMPETENT. If any individual to whom a
benefit is payable under the Plan is a minor, or if the Administrator determines
that any individual to whom a benefit is payable under the Plan is incompetent
to receive such payment or to give a valid release thereof, then the
Administrator may direct that such distribution be paid to the legal guardian,
or if none, to a parent of such minor or incompetent, or a responsible adult
with whom the minor or incompetent resides, or to a custodian for a minor under
the Uniform Transfers to Minors Act (or other statutes of similar import), if
permitted by the laws of the state in which the minor or incompetent resides.
Payment to the legal guardian, parent or custodian of a minor Beneficiary shall
fully discharge the Trustee, Administrator and Plan from liability on account
thereof.
6.14 BENEFICIARY DESIGNATION. If the Participant is married, then the
Beneficiary shall be the Participant's Surviving Spouse and no written
designation is required. However, a Participant may designate a Beneficiary
other than the Participant's Spouse; provided, however: (a) the Participant's
Spouse consents in writing to such designation and to the form thereof (on a
form acceptable to the Administrator); (b) such Beneficiary designation may not
be changed without the consent of his or her Spouse ("Spousal Consent") (or the
consent of the Spouse expressly permits changes in the beneficiary designation
by the Participant without any requirement of further consent by the Spouse);
and (c) the Spouse's consent acknowledges the effect of such Beneficiary
designation and is witnessed by a Plan representative or a notary public. Such
Spousal Consent shall not be required if it is established to the satisfaction
of the Administrator that the consent required under the preceding sentence
cannot be obtained because there is no Spouse, the Spouse cannot be located, or
such other circumstances as
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the Secretary of the Treasury may by Income Tax Regulations prescribe. If, at
the time of the Participant's death, the Participant has no Surviving Spouse or
designated Beneficiary, then the Beneficiary shall be the individual
representative of the Participant's estate. If a Beneficiary who is entitled to
payment under this Section dies before receiving distribution of the entire
amount to which he or she is entitled, then any amount remaining shall be
payable to the contingent Beneficiary named by the Participant pursuant to the
requirements of this Section. If there is no such contingent Beneficiary, the
remaining portion of the Participant's Account shall be payable to the
beneficiary designated by the Participant's Beneficiary, or if none, to the
individual representative of the Beneficiary's estate. A Participant's
Beneficiary, contingent Beneficiary and any Beneficiary's beneficiary shall be
bound by the terms and conditions of the Plan.
6.15 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN. If a Participant or
Beneficiary who is entitled to a distribution cannot be located and the
Administrator has made reasonable efforts to locate the Participant or
Beneficiary, then the Participant's or Beneficiary's interest shall be forfeited
and used: first, to restore any amounts previously forfeited under this Section;
second, to offset the Employer's obligation to make Safe Harbor Nonelective
Contributions, third, to offset the Employer's obligation to make Safe Harbor
Matching Contributions, fourth, to pay administrative expenses of the Plan for
the Plan Year in which the forfeiture occurs; fifth, to offset the Employer's
obligation to make Employer Matching Contributions for the Plan Year in which
the forfeiture occurs; and sixth, to allocate as Employer Discretionary
Contributions for the Plan Year in which the forfeiture occurs. If the
Participant or Beneficiary makes a written claim for the Account subsequent to
the forfeiture, then the Employer shall cause the Account to be reinstated.
6.16 HARDSHIP DISTRIBUTIONS.
(a) Upon hardship of a Participant, the Trustee shall, upon the
direction of the Administrator, make a distribution from the Participant's
Salary Deferral Contributions Account (not including Earnings) and/or Rollover
Contributions Account, in that order. A Participant shall be entitled to a
hardship distribution only if the distribution is both (i) made on account of an
immediate and heavy financial need of the Participant (as defined in paragraph
(b)), and (ii) necessary to satisfy such financial need (as defined in paragraph
(c)). The Participant shall furnish the Administrator with satisfactory proof
that the hardship distribution meets the requirements of paragraphs (b) and (c).
(b) An immediate and heavy financial need shall be deemed to include
any one or more of the following:
(i) expenses incurred or necessary for medical care (described
in Code Section 213(d)) for the Participant, his or her Spouse, or any
dependents of the Participant (as defined in Code Section 152);
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(ii) costs (excluding mortgage payments) relating to the
purchase of a principal residence for the Participant;
(iii) payment of tuition, related educational fees and room and
board expenses, for up to the next twelve (12) months of post-secondary
education for the Participant, his or her Spouse, children, or dependents (as
defined in Code Section 152); or
(iv) payments necessary to prevent the eviction of the
Participant from his or her principal residence or foreclosure on the mortgage
or deed of trust on that principal residence.
(c) A distribution shall be considered as necessary to satisfy an
immediate and heavy financial need of the Participant only if:
(i) the Participant has obtained all distributions, other than
hardship distributions, and all nontaxable loans under all plans maintained by
the Employer;
(ii) the Participant is prohibited from making Salary Deferral
Contributions to this Plan for twelve (12) months after the receipt of the
hardship distribution. In addition, the Participant must agree to stop making
elective contributions and employee contributions to all other plans of the
Employer (to the extent permissible under the terms of each such plan) for at
least twelve (12) months after receipt of the hardship distribution;
(iii) the distribution is not in excess of the amount of an
immediate and heavy financial need (including amounts necessary to pay any
federal, state or local income taxes or penalties reasonably anticipated to
result from the distribution); and
(iv) all plans maintained by the Employer limit the
Participant's elective contributions for the taxable year immediately following
the taxable year of the hardship distribution to the applicable limit under Code
Section 402(g) for such taxable year, less the amount of such Participant's
elective contributions for the taxable year of the hardship distribution.
6.17 LOANS.
(a) The Administrator may direct the Trustee to make loans to
Participants who are Employees and/or Beneficiaries who are parties in interest
(as defined in ERISA Section 3(14)), provided that:
(i) such loans are available to all such Participants and
Beneficiaries on a reasonably equivalent basis;
(ii) such loans are not made available to Highly Compensated
Employees, officers or shareholders in an amount greater than the amount made
available to other Employees;
(iii) such loans bear a reasonable rate of interest;
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(iv) such loans are adequately secured; and
(v) a Participant's or Beneficiary's aggregate outstanding loans
shall not exceed the lesser of (A) fifty percent (50%) of the present value of
the Participant's or Beneficiary's vested Account, or (B) Fifty Thousand Dollars
($50,000) reduced by the excess, if any, of (1) the highest principal amount of
the Participant's or Beneficiary's aggregate outstanding loans (including
defaulted loans) at any time during the immediately preceding twelve (12)
months, over the aggregate principal amount outstanding under such loans on the
date the new loan is made, plus (2) the amount of unpaid accrued interest on a
defaulted loan.
(b) In the event of default, foreclosure on the note and attachment
of security shall not occur until a distributable event occurs under the Plan.
(c) Notwithstanding any contrary provision of this Plan, the portion
of the Participant's vested Account balance used as a security interest held by
the Plan by reason of a loan outstanding to the Participant shall be taken into
account for purposes of determining the amount of the Account balance payable at
the time of distribution, but only if the reduction is used as repayment of the
loan.
(d) All such loans shall be subject to ERISA, the Code, and such
terms and conditions not inconsistent therewith (and subject to this Section) as
determined by the Administrator.
(e) The Administrator shall adopt written policies and guidelines
which establish and detail the terms of Plan loans hereunder, and which shall be
deemed a part of this Plan. Such policies and guidelines may be amended by the
Administrator from time to time.
6.18 IN-SERVICE WITHDRAWALS AT AGE FIFTY-NINE AND ONE-HALF (59-1/2).
(a) A Participant may withdraw all or a portion of the vested
portion of his or her Accounts at any time subsequent to attainment of age
fifty-nine and one-half (59-1/2). Any such withdrawal shall be in the amount
specified by the Participant up to the value of his or her vested Account
balance.
(b) If a Participant receives a distribution under this Section from
his or her partially vested Employer Discretionary Contributions Account, at any
relevant time following the distribution, the Participant's vested interest in
his or her Employer Discretionary Contributions Account shall be calculated in
accordance with the following formula: X = P (AB + D) - D. For purposes of this
formula, "P" is the Participant's current vesting percentage at the relevant
time, "AB" is the value of the Participant's Employer Discretionary
Contributions Account at the relevant time, and "D" is the amount of the
distribution.
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ARTICLE VII
ADMINISTRATION
7.1 POWERS OF THE ADMINISTRATOR. In addition to the powers of the
Administrator specified elsewhere in the Plan, the Administrator shall be
responsible for the general administration and interpretation of the Plan and
for carrying out its provisions, and shall have such powers as may be necessary
to discharge its duties hereunder, including, without limitation, the following:
(a) to file, or cause to be filed, all reports and distribute to
Participants and Beneficiaries information required under ERISA;
(b) to monitor the Plan's compliance with the limitations of
Sections 5.4, 5.5 and 5.7 (to the extent applicable), and to maintain such
records as it deems necessary to demonstrate compliance with these Sections;
(c) to prescribe such procedures as the Administrator deems
necessary and appropriate to be followed by Participants and Beneficiaries,
including without limitation, designation of beneficiary, loans, hardships,
Qualified Domestic Relations Orders, Rollovers, determinations of eligibility
and investment elections;
(d) to make a determination as to the right of any individual to a
benefit in accordance with Article VI;
(e) to request and receive from Employees such information as
necessary for the proper administration of the Plan, including, without
limitation, such information as the Administrator may reasonably require to
determine each Participant's eligibility to participate in the Plan and the
benefits payable to each Participant or his or her Beneficiary;
(f) to direct the Trustee as to the method in which, and individuals
to whom, Plan assets shall be distributed;
(g) to establish a funding and, if deemed appropriate, an investment
policy;
(h) to select investment funds or vehicles;
(i) to receive and review reports on the financial condition of the
Trust and statements of the receipts and disbursements of the Trust from the
Trustee; and
(j) to appoint or employ one or more "Investment Managers" (as
defined in ERISA Section 3(38), without regard to subparagraph (A)), to render
investment advice with respect to all or any part of the assets of the Plan for
which the Administrator has investment discretion.
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7.2 ABSOLUTE DISCRETION OF THE ADMINISTRATOR. The Administrator (or any
individual acting on its behalf) shall, in its sole and absolute discretion,
construe and interpret the terms and provisions of the Plan, and any issue
arising out of, relating to, or resulting from the administration and operation
of the Plan, which interpretation or construction shall be final and binding on
all parties, including, without limitation, any Participating Employer, Eligible
Participant, Employee, Eligible Employee, Participant, Beneficiary or successors
or assigns. When making a determination or calculation, the Administrator shall,
in its sole and absolute discretion, be entitled to rely upon information
furnished by Participating Employers, third party administrators, Participants,
Beneficiaries, or other individuals acting on their behalf.
7.3 COMMITTEE.
(a) The Administrator has established the Committee to discharge the
duties of the Administrator under the Plan. The members of the Committee shall
be appointed by the Administrator, or its authorized delegate, and shall serve
at the discretion of the Administrator, or its authorized delegate. An
individual may be a member of the Committee regardless of whether such
individual is or may be a Participant in the Plan. The Company, or its
authorized delegate, may change the composition of the Committee (including,
without limitation, the number of members of the Committee) from time to time.
(b) The Committee and each of its members shall be indemnified to
the extent permitted by law, from and against any and all direct and indirect
liabilities, demands, claims, losses, taxes, costs and expenses, including
(without limitation) reasonable attorney's fees, arising out of, relating to, or
resulting from any action, inaction or conduct as a Committee member or in his
or her defense, if the Company fails to provide such defense; provided, however,
that (i) such Committee member shall not be indemnified and held harmless if his
or her actions, inactions or conduct arise out of, relate to, or result from his
or her gross negligence, bad faith, willful misconduct, or other willful
violation of the law, including, without limitation, a breach of fiduciary duty
under ERISA; and (ii) such member shall promptly notify the Company of any
litigation involving the Plan, shall cooperate in the defense of any such
lawsuit, and shall give the Company sole and exclusive authority to act on his
or her behalf in the event of any such litigation or other claim or demand
arising out of, relating to, or resulting from his or her action, inaction or
conduct as a member of the Committee.
(c) No fee or compensation shall be paid to any member of the
Committee who is an Employee for his or her services as a member of the
Committee. Any member of the Committee may be removed by the Administrator at
any time for any reason. In addition, any member of the Committee may resign at
any time for any reason by delivering his or her written notice of resignation
to the Administrator, which shall be effective prospectively (unless otherwise
agreed to by the Administrator) upon the date specified therein. If a member of
the Committee, who is an Employee of the Employer, ceases his or her employment
with the Employer, then he or she shall be deemed to have resigned from the
Committee as of the same date as his or her cessation of employment, unless
otherwise mutually agreed to by the Administrator and that Committee member.
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7.4 DOMESTIC RELATIONS ORDERS.
(a) Definitions.
(i) Alternate Payee. "Alternate Payee" means any Spouse, former
Spouse, child or other dependent (within the meaning of Code Section 152) of a
Participant who is recognized by a Domestic Relations Order as having a right to
receive any immediate or deferred payment of all or a portion of the balance
credited to a Participant's Account under the Plan.
(ii) Domestic Relations Order or Order. "Domestic Relations
Order" or "Order" means any judgment, decree or order (including approval of a
property settlement agreement) which provides or otherwise conveys, pursuant to
applicable state domestic relations laws (including community property laws),
child support, alimony payments or marital property rights to an Alternate
Payee.
(iii) Qualified Domestic Relations Order. "Qualified Domestic
Relations Order" means any Domestic Relations Order that meets the following
requirements:
(A) such Order establishes (or otherwise recognizes the
existence of) the right of an Alternate Payee to receive all or a portion of the
vested balance credited to a Participant's Account under the Plan;
(B) such Order specifies (1) the name and last known mailing
address of the Participant, (2) the name and last known mailing address of each
Alternate Payee covered by such Order, (3) the amount or percentage of the
Participant's vested account balance under the Plan payable to each such
Alternate Payee or the manner in which such amount or percentage is to be
calculated, and (4) any other requirement set forth in ERISA Section 206(d)(3)
or Code Section 414(p); and
(C) such Order does not require the Plan to (1) provide any
type or form of benefit or option not otherwise available to the Participant
under the Plan, (2) provide increased benefits not otherwise payable to the
Participant under the Plan, or (3) pay benefits to an Alternate Payee which are
required to be paid to another Alternate Payee pursuant to any Qualified
Domestic Relations Orders previously issued with respect to the Participant's
Account under the Plan.
(b) Notification. Upon receipt of a Domestic Relations Order, the
Administrator shall promptly notify the affected Participant and each Alternate
Payee of the receipt of such Order and the procedures established by the
Administrator for determining whether such Order satisfies the requirements for
recognition as a Qualified Domestic Relations Order. Such notice shall also
advise such Participant and Alternate Payee of each of their rights to designate
a representative to receive communications from the Administrator concerning the
disposition of the Domestic Relations Order. Within a reasonable time after
providing such notification, the Administrator shall, pursuant to such
procedures, determine whether or not the Order is a Qualified Domestic Relations
Order and shall notify the Participant and each Alternate Payee (or his or her
representative) of such determination.
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(c) Procedures. The Administrator shall establish reasonable
procedures for determining the qualified status of Domestic Relations Orders and
for effecting distributions pursuant to all such Orders which are determined to
be Qualified Domestic Relations Orders.
(d) Payment.
(i) During the period in which the qualified status of a
Domestic Relations Order is pending, the Administrator shall defer the payment
of all Plan benefits affecting the Participant which are in dispute and shall
separately account for all amounts which would otherwise be payable to the
Alternate Payee (the "Segregated Amounts") during such period were the Order
determined to be a Qualified Domestic Relations Order.
(ii) If the Administrator determines, within eighteen (18)
months after the date the first payment to the Alternate Payee would otherwise
be required to be made pursuant to the terms of the Order, that such Order is a
Qualified Domestic Relations Order, then the Administrator shall establish a
separate Account to hold the Segregated Amounts (including any Earnings thereon)
on behalf of such Alternate Payee and such Alternate Payee shall then be treated
as a Participant for purposes of such Account. To the extent such Qualified
Domestic Relations Order provides for the payment of the entire balance of the
Segregated Amounts (including any Earnings thereon) to the Alternate Payee prior
to the Participant's Severance Date, then the Administrator shall make such
payment in accordance with such Order, even though the affected Participant's
Severance Date has not occurred. Such payment shall be made as if the
Participant's Severance Date occurred on the date on which benefits are to enter
pay status under the Order. Notwithstanding the foregoing, payment to the
Alternate Payee shall not be deferred beyond the date distribution to the
Participant or (in the event of death) his or her Beneficiary is made or
commenced.
(iii) If the Administrator determines, within such eighteen (18)
month period under paragraph (ii) above, that such Order is not a Qualified
Domestic Relations Order, or if the qualified status of such Order cannot be
determined prior to the expiration of such eighteen (18) month period, then the
Administrator shall authorize the payment of the Segregated Amounts (including
any Earnings thereon) to the individual or individuals who would have been
entitled to receive such Segregated Amounts under the Plan had the Order not
been issued. If such individual is the Participant, then the previously
Segregated Amounts shall remain part of the Trust and shall not be distributed
until the Participant becomes entitled to benefits under the Plan in accordance
with the provisions of Article VI. Should there be a subsequent determination
that the Order is in fact a Qualified Domestic Relations Order, then such
determination shall be applied on a prospective basis only.
(e) Hold Procedures. Notwithstanding any contrary Plan provision,
prior to the receipt of a Domestic Relations Order, the Administrator may place
a hold (as defined below) upon such portion of a Participant's Account, at such
time and for such reasonable period of time as the Administrator may determine,
if the Administrator receives notice that (1) a Domestic Relations Order is
being sought by the Participant, his or her Spouse, former Spouse, child or
other dependent (within the meaning of Code Section 152), and (2) the
Participant's Account is likely to be a source of payment under such Order. For
purposes of this paragraph, a "hold" means that no withdrawals,
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loans or other distributions may be made with respect to a Participant's
Account. The Administrator shall notify a Participant if a hold is placed upon
his or her Account pursuant to this paragraph.
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ARTICLE VIII
LEAVES OF ABSENCE AND TRANSFERS
8.1 MILITARY LEAVE OF ABSENCE. An Employee who leaves the employment of
the Employer for military service in the Armed Forces of the United States, as
defined in the Uniformed Services Employment and Reemployment Rights Act of 1994
("USERRA"), shall, for all purposes of the Plan, be considered as having been in
the employment of the Employer, with the time of the Participant's service in
the military credited to his or her service under the Plan; provided, however,
that upon such Employee being discharged from the military service of the United
States, the Employee must apply for reemployment with the Employer and take all
other necessary action to be entitled to, and to be otherwise eligible for,
re-employment rights, as provided by USERRA or any similar law from time to time
in force. Notwithstanding any provision of this Plan to the contrary,
contributions, benefits and service credit with respect to qualified military
service shall be provided in accordance with Code Section 414(u).
8.2 OTHER LEAVES OF ABSENCE. For all purposes of this Plan, an Employee
on an Employer-approved leave of absence not described in Section 8.1 shall be
considered as having continued in the employment of the Employer for the period
of such leave, provided that the Employee returns to the active employment of
the Employer before or at the expiration of such leave.
8.3 TRANSFERS.
(a) In the event that:
(i) a Participant is transferred to employment with an Employer
that is not a Participating Employer, or to employment with an Employer in a
status other than as an Eligible Employee;
(ii) an individual is transferred from employment with an
Employer that is not a Participating Employer or from other employment;
(iii) an individual is transferred from service with the
Employer in a status other than as an Eligible Employee to employment with the
Employer as an Eligible Employee; or
(iv) an individual was employed by an Employer that is not a
Participating Employer, terminated his or her employment and was subsequently
employed by the Employer as an Eligible Employee;
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(b) then the following provisions shall apply:
(i) transfer to employment with (A) an Employer that is not a
Participating Employer, or (B) the Employer not as an Eligible Employee, shall
not be considered termination of employment with the Employer, and such
transferred individual shall continue to be entitled to the benefits provided in
the Plan, as modified by this Section;
(ii) any employment with an Employer which is not a
Participating Employer or with the Employer not as an Eligible Employee will be
deemed to be employment by the Employer;
(iii) no amounts earned from an Employer at a time when it is
not a Participating Employer or from the Employer not as an Employee shall
constitute Compensation hereunder;
(iv) no service for an Employer at a time when such individual
was not an Employee shall be counted for purposes of eligibility and vesting
hereunder, unless agreed to by the Company or required pursuant to a closing
agreement entered into by the Employer and the Internal Revenue Service;
(v) termination of employment with an Employer which is not a
Participating Employer by an individual entitled to benefits under this Plan
(other than to transfer to employment with another Employer) shall be considered
as termination of employment with the Employer; and
(vi) all other terms and provisions of this Plan shall fully
apply to such individual and to any benefits to which he or she may be entitled
hereunder.
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ARTICLE IX
TRUST PROVISIONS
9.1 TRUST AGREEMENT. The Administrator may at any time select and
appoint a Trustee to hold all or a portion of the assets of the Trust, and the
Company shall, on its behalf and on behalf of all Participating Employers enter
into a Trust Agreement. The Trust Agreement shall be a part of the Plan.
9.2 VOTING. The Trustee shall deliver to the Administrator, or the
person or persons identified by the Administrator, proxies and powers of
attorney and related informational material, for any shares or other property
held in the Trust. The Administrator shall have responsibility for instructing
the Trustee as to voting such shares and the tendering of such shares, by proxy
or in person, except to the extent such responsibility is delegated to another
person, under the terms of the Plan or Trust Agreement or under an agreement
between the named fiduciary of the Plan and an Investment Manager, in which case
such persons shall have such responsibility. The Trustee may use agreements to
effect such delivery to the Administrator or the person or persons identified by
the Administrator. In no event shall the Trustee be responsible for the voting
or tendering of shares of securities held in the Trust or for ascertaining or
monitoring whether, or how, proxies are voted or whether the proper number of
proxies is received.
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ARTICLE X
FEES AND EXPENSES
All reasonable fees and expenses of the Administrator, the Committee
and/or the Trustee incurred in the performance of their duties hereunder or
under the Trust shall be charged against Participants' Accounts, unless the
Employer elects to pay such fees and expenses.
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ARTICLE XI
AMENDMENT, TERMINATION OR MERGER
11.1 AMENDMENT.
(a) The Company shall have full power and authority to amend the
provisions of the Plan for any reason at any time, either prospectively or
retroactively, to such extent and in such manner as the Company shall deem
advisable, in accordance with its normally established procedures. The Company
may delegate such power, in whole or in part, to one or more committees
(comprised of officers or other managerial personnel of the Employer) to whom
administrative responsibilities may be delegated under the Plan.
(b) The Board delegates to the Committee or any individual or
committee appointed by the Administrator the full power and authority to adopt
and to provide a certificate evidencing the execution of any amendment to the
Plan which satisfies one of the following requirements:
(i) the amendment is designed to clarify any provision of the
Plan;
(ii) the amendment is designed to bring the Plan into compliance
with applicable law;
(iii) the amendment is designed to ensure the continued
tax-qualified status of the Plan; or
(iv) the amendment does not have a significant financial impact
on the Employer.
(c) An amendment shall become effective, in accordance with its
terms as to all Participants and all other persons having or claiming an
interest under the Plan, upon the effective date specified in the instrument
evidencing such amendment. However, no such amendment shall operate to: (i)
cause any part of the Trust to revert to or be recoverable by the Employer or to
be used for, or diverted to, purposes other than the exclusive benefit of
Participants and their Beneficiaries (or for defraying the reasonable
administrative expenses of the Plan); (ii) reduce the then outstanding balances
in the Accounts of Participants; (iii) cause or effect any discrimination in
favor of Highly Compensated Employees; (iv) change the duties, responsibilities
or liabilities of the Trustee hereunder without the written consent of such
Trustee; or (v) affect, reduce or eliminate any benefits which are protected
benefits pursuant to Code Section 411(d)(6).
11.2 TERMINATION OF PLAN
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The Company may terminate this Plan at any time for any reason by resolution
adopted by the Board, but the Trust may not thereby be diverted from the
exclusive benefit of the Participants, their Beneficiaries, survivors or estates
(other than for defraying the reasonable administrative expenses of the Plan),
nor revert to the Employer, nor may any change be made to a previously allocated
contribution. Upon termination or partial termination of the Plan or complete
discontinuance of Employer Contributions under the Plan, the Accounts of each
affected Participant shall be nonforfeitable. The Administrator shall distribute
each Participant's Accounts to the Participant pursuant to Sections 6.7 through
6.11 as soon as administratively feasible after the termination.
11.3 MERGER.
(a) The Administrator shall have the full power and authority to
effect from time to time, upon such terms and conditions deemed appropriate, the
merger of any and all tax-qualified defined contribution plans and related
tax-exempt trusts maintained by entities acquired by the Company into the Plan
and Trust and to take any and all such actions, and prepare, execute, and
deliver all such documents as may be necessary or advisable to effect any and
all such plan and trust mergers.
(b) Nothing contained herein shall prevent the merger or
consolidation of the Plan with, or transfer of assets or liabilities of the Plan
to, another plan meeting the requirements of Code Section 401(a) or the transfer
to the Plan of assets or liabilities of another such plan so qualified under the
Code. Any such merger, consolidation or transfer shall be accompanied by the
transfer of such existing records and information as may be necessary to
properly allocate such assets among Participants, including without limitation
any tax or other information necessary for the Participants or persons
administering the plan which is receiving such assets. The terms of such merger,
consolidation or transfer must be such that (if the Plan had then terminated),
the requirements of this Article would be satisfied and each Participant (or, if
applicable, his or her Beneficiary) would receive a benefit immediately after
the merger, consolidation or transfer equal to or greater than the benefit he or
she would have received if the Plan had terminated immediately before the
merger, consolidation or transfer. Notwithstanding any provision in this Plan to
the contrary, any amounts transferred to the Plan as a result of such merger,
consolidation or transfer shall, to the extent the benefits accrued under the
transferor plan are protected benefits under Code Section 411(d)(6) ("Protected
Benefits"), be preserved under this Plan, and shall not in any way be affected,
reduced or eliminated.
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ARTICLE XII
ADOPTION OF PLAN BY RELATED ENTITIES
12.1 ADOPTION OF THE PLAN. An Employer may become a Participating
Employer with the approval of the Committee.
12.2 WITHDRAWAL. A Participating Employer may withdraw from the Plan at
any time for any reason by giving advance written notice of its intention to
withdraw to the Company and to the Administrator. Upon receipt of such
withdrawal notice, the Trustee shall set aside from the Trust such cash,
securities and other property as it shall deem to be equal in value to the
Participating Employer's equitable share. If the Plan is to be terminated with
respect to the Participating Employer, the amount set aside shall be
administered according to Article X and the Trust Agreement. If the Plan is not
to be terminated with respect to the Participating Employer, then the Trustee
shall turn over the Participating Employer's equitable share to a trustee
designated by the Participating Employer, and the cash, securities and other
property shall thereafter be held and invested as a separate trust of the
Participating Employer and shall be used and applied according to the terms of a
new trust agreement between the Participating Employer and the trustee so
designated. Neither the segregation of the Trust assets upon the withdrawal of a
Participating Employer, nor the execution of a new trust agreement shall operate
to permit any part of the assets of the Trust to be used for or diverted to
purposes other than for the exclusive benefit of Participants, and Beneficiaries
(or for defraying the reasonable administrative expenses of the Plan).
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ARTICLE XIII
CLAIMS PROCEDURE
13.1 RIGHT TO FILE CLAIM. Every Participant or Beneficiary shall be
entitled to file with the Administrator a written claim for benefits under the
Plan.
13.2 DENIAL OF CLAIM.
(a) If the claim is denied by the Administrator, in whole or in
part, the claimant shall be furnished within ninety (90) days after the
Administrator's receipt of the claim (or within one hundred eighty (180) days
after such receipt if special circumstances require an extension of time) a
written notice of denial of such claim containing the following:
(i) specific reason or reasons for denial;
(ii) specific reference to pertinent Plan provisions on which
the denial is based;
(iii) a description of any additional material or information
necessary for the claimant to perfect the claim, and an explanation of why the
material or information is necessary; and
(iv) an explanation of the claims review procedure.
(b) If written notice of the denial of such claim is not furnished
within the time period prescribed under paragraph (a), then the claim shall be
deemed denied.
13.3 CLAIM REVIEW PROCEDURE.
(a) Review may be requested at any time within sixty (60) days
following the date the claimant received written notice of the denial of his or
her claim. For purposes of this Section, any action required or authorized to be
taken by the claimant may be taken by a representative authorized in writing by
the claimant to act on his or her behalf. The Administrator shall afford the
claimant a full and fair review of the decision denying the claim and, if so
requested, shall:
(i) permit the claimant to review any documents that are
pertinent to the claim; and
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(ii) permit the claimant to submit to the Administrator issues
and comments in writing.
(b) The decision on review by the Administrator shall be in writing
and shall be issued within sixty (60) days following receipt of the request for
review. The period for decision may, however, be extended up to one hundred
twenty (120) days after such receipt if the Administrator determines that
special circumstances require extension. The decision on review shall include
specific reasons for the decision and specific references to the pertinent Plan
provisions on which the decision of the Administrator is based.
(c) If the decision on review by the Administrator is not furnished
within the time period prescribed under paragraph (b), then the claim shall be
deemed denied on review.
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ARTICLE XIV
TOP-HEAVY PROVISIONS
14.1 PURPOSE. This Article is intended to insure that the Plan complies
with Code Section 416. If the Plan is or becomes Top-Heavy in any Plan Year, the
provisions of this Section shall supersede any conflicting provision in the
Plan.
14.2 DEFINITIONS.
(a) Determination Date. "Determination Date" means for any Plan
Year, the last day of the preceding Plan Year.
(b) Determination Period. "Determination Period" means the Plan Year
containing the Determination Date and the four (4) preceding Plan Years.
(c) Key Employee. "Key Employee" means any Employee or former
Employee (and the Beneficiaries of such Employee) who at any time during the
determination period was (i) an officer of the Employer if such individual's
annual Section 415 Compensation exceeds fifty percent (50%) of the dollar
limitation in effect under Code Section 415(b)(1)(A); (ii) an owner (or
considered an owner under Code Section 318) of one of the ten (10) largest
interests in the Employer if such individual's Section 415 Compensation exceeds
one hundred percent (100%) of the dollar limitation in effect under Code Section
415(c)(1)(A); (iii) a five percent (5%) owner of the Employer; or (iv) a one
percent (1%) owner of the Employer who has an annual Section 415 Compensation of
more than One Hundred Fifty Thousand Dollars ($150,000). For purposes of this
Section, the determination of Section 415 Compensation shall be based only on
Section 415 Compensation which is actually paid. A determination of who
constitutes a Key Employee shall be made in accordance with Code Section
416(i)(1).
(d) Non-Key Employee. "Non-Key Employee" means any Employee who is
not a Key Employee, including Employees who are former Key Employees.
(e) Permissive Aggregation Group. "Permissive Aggregation Group"
means the Required Aggregation Group of plans plus any other plan or plans of
the Employer which, when considered as a group with the Required Aggregation
Group, would continue to satisfy the requirements of Code Sections 401(a)(4) and
410.
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(f) Required Aggregation Group. "Required Aggregation Group" means:
(i) each tax-qualified plan of the Employer in which at least
one (1) Key Employee participates or participated at any time during the
Determination Period (regardless of whether the plan has terminated); and
(ii) any other tax-qualified plan of the Employer which enables
a plan described in paragraph (i) above to meet the requirements of Code Section
401(a)(4) or 410.
(g) Top-Heavy Plan. "Top-Heavy Plan" means this Plan, if for any
Plan Year any of the following conditions exists:
(i) if the Top-Heavy Ratio for this Plan exceeds sixty percent
(60%) and this Plan is not part of any Required Aggregation Group or Permissive
Aggregation Group of plans;
(ii) if this Plan is a part of a Required Aggregation Group of
plans but not part of a Permissive Aggregation Group and the Top-Heavy Ratio for
the Permissive Aggregation Group exceeds sixty percent (60%); or
(iii) if this Plan is a part of a Required Aggregation Group and
part of a Permissive Aggregation Group of plans and the Top-Heavy Ratio for the
Permissive Aggregation Group exceeds sixty percent (60%).
(h) Top-Heavy Ratio. "Top-Heavy Ratio" means:
(i) if the Employer maintains one or more defined contribution
plans (including any simplified employee pension plan) and the Employer has not
maintained any defined benefit plan which during the five (5) year period ending
on the Determination Date(s) has or has had accrued benefits, the Top-Heavy
Ratio for this Plan alone or for the Required or Permissive Aggregation Group as
appropriate is a fraction, the numerator of which is the sum of the Account
balances of all Key Employees as of the Determination Date(s) (including any
part of any Account balance distributed in the five (5) year period ending on
the Determination Date(s)), and the denominator of which is the sum of Account
balances (including any part of any Account balance distributed in the five (5)
year period ending on the Determination Date(s)), both computed in accordance
with Code Section 416. Both the numerator and denominator of the Top-Heavy Ratio
are increased to reflect any contribution not actually made as of the
Determination Date, but which is required to be taken into account on that date
under Code Section 416.
(ii) if the Employer maintains one or more defined contribution
plans (including any simplified employee pension plan) and the Employer
maintains or has maintained one or more defined benefit plans which during the
five (5) year period ending on the Determination Date(s) has or has had any
accrued benefits, the Top-Heavy Ratio for any Required or Permissive Aggregation
Group as appropriate is a fraction, the numerator of which is the sum of Account
balances under the aggregated defined contribution plan or plans for all Key
Employees, determined in accordance with paragraph (i) above, and the present
value of accrued benefits under the aggregated defined benefit plan or plans for
all Key Employees as of the Determination Date(s), and the denominator of which
is the sum of Account balances under the aggregated defined contribution
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plan or plans for all participants, determined in accordance with paragraph (i)
above, and the present value of accrued benefits under the defined benefit plan
or plans for all participants as of the Determination Date(s), all determined in
accordance with Code Section 416. The accrued benefits under a defined benefit
plan in both the numerator and denominator of the Top-Heavy Ratio are increased
for any distribution of an accrued benefit made in the five (5) year period
ending on the Determination Date.
(iii) for purposes of paragraphs (i) and (ii) above, the value
of Account balances and the present value of accrued benefits shall be
determined as of the last day of the most recent Plan Year that falls within or
ends with the twelve (12) month period ending on the Determination Date, except
as provided in Code Section 416 for the first and second plan years of a defined
benefit plan. The Account balances and accrued benefits of a participant (1) who
is not a Key Employee but who was a Key Employee in a prior year, or (2) who has
not been credited with at least one (1) Hour of Service with any Employer
maintaining the Plan at any time during the five (5) year period ending on the
Determination Date shall be disregarded. The calculation of the Top-Heavy Ratio,
and the extent to which distributions, rollovers, and transfers are taken into
account shall be made in accordance with Code Section 416. When aggregating
plans the value of Account balances and accrued benefits shall be calculated
with reference to the Determination Dates that fall within the same calendar
year.
The accrued benefit of a Participant other than a Key
Employee shall be determined under (1) the method, if any, that uniformly
applies for accrual purposes under all defined benefit plans maintained by the
Employer, or (2) if there is no such method, as if such benefit accrued not more
rapidly than the slowest accrual rate permitted under the fractional rule of
Code Section 411(b)(1)(C).
14.3 MINIMUM ALLOCATION.
(a) Except as otherwise provided in paragraphs (b) and (c) below, in
any Plan Year that the Plan is Top-Heavy, Employer Contributions (other than
Salary Deferral Contributions and Employer Matching Contributions included in
the ADP, ACP and multiple use tests described in Sections 5.5 and 5.7) allocated
to the Accounts of each Participant who is a Non-Key Employee, shall be not less
than the lesser of (i) three percent (3%) of the Non-Key Employee's Section 415
Compensation, or (ii) in the case where the Employer has no defined benefit plan
which designates this Plan to satisfy Code Section 401, the largest percentage
of Contributions and forfeitures (if applicable), as a percentage of the first
One Hundred Sixty Thousand Dollars ($160,000) (as adjusted by the Adjustment
Factor) of Section 415 Compensation, allocated on behalf of any Key Employee for
that Plan Year. The minimum allocation shall be determined without regard to any
Social Security contribution. This minimum allocation shall be made even though,
under other provisions of the Plan, the Participant would not otherwise be
entitled to receive an allocation or would have received a lesser allocation for
the Plan Year because of (i) the Participant's failure to complete one thousand
(1,000) Hours of Service (or any equivalent provided in the Plan) or (ii)
Section 415 Compensation less than a stated amount.
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(b) The provisions in paragraph (a) above shall not apply to any
Participant who was not employed by the Employer on the last day of the Plan
Year.
(c) The provisions in paragraph (a) above shall not apply to any
Participant to the extent the Participant is covered under any other plan or
plans of the Employer.
(d) The minimum allocation required (to the extent required to be
nonforfeitable under Code Section 416(b)) may not be forfeited under Code
Section 411(a)(3)(B) or (D).
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ARTICLE XV
MISCELLANEOUS
15.1 LEGAL OR EQUITABLE ACTION. If any legal or equitable action with
respect to the Plan is brought by or maintained against any individual, and the
results of such action are adverse to that individual, attorney's fees and all
other direct and indirect expenses and costs incurred by the Participating
Employer, the Administrator, the Committee, the Trustee or the Trust of
defending or bringing such action shall be charged against the interest, if any,
of such individual under the Plan.
15.2 INDEMNIFICATION. Each Participating Employer indemnifies and holds
harmless any of its Employees, officers and directors who may be fiduciaries of
the Plan, the Administrator and each member of the Committee, from and against
any and all direct and indirect liabilities, demands, claims, losses, taxes,
costs and expenses, including reasonable attorney's fees, arising out of,
relating to, or resulting from any action, inaction or conduct in their official
capacity in the administration of this Plan or Trust or in their defense, if a
Participating Employer fails to provide such defense; provided, however, that
any such person shall not be indemnified and held harmless if his or her action,
inaction or conduct arises out of, related to, or results from his or her gross
negligence or willful misconduct, or otherwise in willful violation of the law.
The indemnification provisions of this Section shall not relieve any fiduciary
from any liability such individual may have under ERISA for breach of a
fiduciary duty. Each Participating Employer may purchase insurance to satisfy
its obligations under this Section.
15.3 NO ENLARGEMENT OF PLAN RIGHTS. Each individual agrees, as a
condition of participation in this Plan, that he or she shall look solely to the
assets of the Trust for the payment of any benefit under the Plan.
15.4 NO ENLARGEMENT OF EMPLOYMENT RIGHTS. Nothing appearing in or done
pursuant to the Plan shall be construed to give any individual a legal or
equitable right or interest in the assets of the Trust or distribution therefrom
(except as expressly provided in the Plan), nor against any Participating
Employer (except as expressly provided herein), or to create or modify any
contract of employment between a Participating Employer and any Employee or to
obligate a Participating Employer to continue the services of any Employee.
15.5 INTERPRETATION. The headings contained in this Plan and in the
table of contents to the Plan are for reference purposes only, and shall not
affect in any way the meaning or interpretation of the Plan. The
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masculine pronoun shall include the feminine pronoun and the singular the
plural, where the context so indicates.
15.6 GOVERNING LAW. This Plan shall be construed, administered and
governed in all respects in accordance with ERISA, the Code and other pertinent
Federal laws and, to the extent not preempted by ERISA, in accordance with the
laws of the State of California (irrespective of the choice of law principles of
the State of California as to all matters); provided, however, that if any
provision is susceptible to more than one interpretation, such interpretation
shall be given thereto as is consistent with the Plan being a tax-qualified plan
and related tax-exempt trust under Code Sections 401(a) and 501(a),
respectively.
15.7 NON-ALIENATION OF BENEFITS. None of the benefits, payments,
proceeds or claims of any Participant under the Plan shall be subject to any
claim or any creditor of any Participant, and, in particular, the same shall not
be subject to attachment or garnishment or other legal process by any creditor
of any Participant, nor shall any Participant have any right to alienate,
anticipate, commute, pledge, encumber or assign any of the benefits, payments or
proceeds which he or she is or may be entitled to receive from the Plan, other
than:
(a) federal tax levies and executions on federal tax judgments;
(b) payments made from the Accounts of a Participant in satisfaction
of the rights of Alternate Payees pursuant to a Qualified Domestic Relations
Order under Section 7.4;
(c) enforcement of any security interests or offset rights
applicable to the Account of a Participant pursuant to the loan provisions of
Section 6.17; or
(d) any offset of a Participant's Account under the Plan against an
amount the Participant is ordered to pay due to a judgement or settlement
described in Code Section 401(a)(13)(C).
15.8 NO REVERSION. Notwithstanding any contrary provision of the Plan
(except as provided in Section 5.4), no part of the assets in the Trust shall
revert to the Employer, and no part of such assets, other than that amount
required to pay taxes or reasonable administrative expenses of the Plan, shall
be used for any purpose other than the exclusive benefit of Employees or their
Beneficiaries. However, upon the Company's request, the Trustee shall return the
appropriate amount to a Participating Employer under any of the following
circumstances provided, however, any such excess amounts shall be reduced to the
extent there are negative Earnings attributable thereto:
(a) the amount was all or part of an Employer Contribution which was
made as a result of a mistake of fact and the amount contributed is returned to
the Participating Employer within one (1) year after the date of the mistaken
payment; or
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(b) the amount was all or part of an Employer Contribution which was
conditioned on its deductibility under Code Section 404 and this condition is
not satisfied, and the amount is returned to the Participating Employer within
one (1) year after the date on which the deduction was disallowed.
15.9 CONFLICT. In the event of any conflict between the respective
provisions of the Plan and the Trust Agreement relating to the rights,
obligations and duties of the Trustee, the applicable provisions of the Trust
Agreement shall control. In all other cases, in the event of any conflict
between the Plan and the terms of any contract or agreement issued hereunder or
with respect hereto, the Plan shall control.
15.10 SEVERABILITY. If any provision of the Plan, or the application
thereof to any individual or circumstance, is deemed invalid or unenforceable by
a court of competent jurisdiction, then the remainder of the Plan, or the
application of such term or provision to individuals or circumstances other than
those as to whom it is held invalid or unenforceable, shall not be affected
thereby, and each provision of the Plan shall be valid and enforceable to the
fullest extent permitted by law.
15.11 CONDITIONAL RESTATEMENT. This Plan is restated on the express
condition that it shall be considered by the Internal Revenue Service as
continuing to qualify under Code Sections 401(a), 401(k), 401(m) and 501(a). In
the event that the Internal Revenue Service determines that the Plan does not
continue to qualify under the Code, then the restatement of the Plan shall be of
no force or effect.
* * * * * * * * * * * * * * *
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