Exhibit 4.3
TAX-FAVORED SAVINGS PROGRAM
TAX-FAVORED SAVINGS PROGRAM
TABLE OF CONTENTS
Page
ARTICLE I
EFFECTIVE DATE OF PROVISIONS; DEFINITIONS 1
Section 1.1 - Account 1
Section 1.2 - Actual Deferral Percentage 1
Section 1.3 - Adoption Agreement 2
Section 1.4 - Annual Addition 2
Section 1.5 - Association 3
Section 1.5A - Average Contribution Percentage 3
Section 1.6 - Basic Contribution 4
Section 1.7 - Basic Contribution Subaccount 4
Section 1.8 - Beneficiary 4
Section 1.9 - Break In Service 5
Section 1.10 - Code 5
Section 1.11 - Committee 5
Section 1.12 - Compensation, Section 415,
Compensation, and Test Compensation 5
Section 1.13 - Deferred Retirement Date 7
Section 1.14 - Defined Benefit Fraction 7
Section 1.15 - Defined Contribution Fraction 8
Section 1.16 - Disabled 9
Section 1.17 - Discretionary Contribution 9
Section 1.18 - Discretionary Contribution Subaccount 9
Section 1.19 - Effective Date 9
Section 1.20 - Employee 9
Section 1.21 - Employer 9
Section 1.22 - Employer Contributions 10
Section 1.23 - Employment 10
Section 1.24 - Entry Date 10
Section 1.25 - ERISA 10
Section 1.26 - Excess Amount, Excess
Contribution, Excess Deferral, and
Excess Matching Contribution 10
Section 1.27 - Fund or Investment Fund 11
Section 1.28 - Hour of Service 11
Section 1.29 - Highly Compensated Employee 11
Section 1.30 - Initial Computation Period and
Subsequent Computation Period 11
Section 1.31 - Loan Supervisor 12
Section 1.32 - Master Trust Agreement 12
Section 1.33 - Matching Contribution 12
Section 1.34 - Matching Contribution Subaccount 12
Section 1.35 - Reserved 13
Section 1.36 - Normal Retirement Age 13
Section 1.37 - Participant 13
Section 1.38 - Participating Plan 13
Section 1.39 - Part-time Service Year 13
Section 1.40 - Period of Severance 13
Section 1.41 - Plan 13
Section 1.42 - Plan Service Year and Plan
Service Month 13
Section 1.43 - Program 14
Section 1.44 - Program Administrator 14
Section 1.45 - Program Year 14
Section 1.46 - Projected Annual Benefit 14
Section 1.47 - Recordkeeper 14
Section 1.48 - Related Plan 14
Section 1.49 - Rollover Contribution 14
Section 1.50 - Rollover Contribution Subaccount 14
Section 1.51 - Severance from Service Date 14
Section 1.52 - Trust Fund or Trust 15
Section 1.53 - Trustee 15
Section 1.54 - Valuation Date 15
Section 1.55 - Withdrawal Supervisor 15
ARTICLE II
ELIGIBILITY REQUIREMENTS FOR EMPLOYEES 16
Section 2.1 - Eligible on Effective Date 16
Section 2.2 - Eligible After Effective Date 16
Section 2.3 - Change in Status 16
Section 2.4 - Limited Eligibility for Rollover
Contributions 17
ARTICLE III
CONTRIBUTIONS 18
Section 3.1 - Basic Contributions 18
Section 3.2 - Matching Contributions 19
Section 3.3 - Discretionary Contributions 19
Section 3.4 - Rollover Contributions 19
Section 3.5 - Voluntary Contributions 20
Section 3.6 - Timing of Contributions 20
Section 3.7 - Annual Valuation Dates 21
ARTICLE IV
LIMITATIONS ON CONTRIBUTIONS 22
Section 4.1 - Limitations on Basic
and Matching Contributions 22
Section 4.2 - Deduction Limitation 23
Section 4.3 - Limitation Applicable to
All Participants' Accounts 23
Section 4.4 - Additional Limitation Applicable
to Participants' Accounts When
the Employer Maintains Other
Qualified Defined Contribution
Programs 24
Section 4.5 - Additional Limitation Applicable
to Participants' Accounts When
the Employer Maintains a
Defined Benefit Program 25
ARTICLE V
INVESTMENT OF CONTRIBUTIONS 26
Section 5.1 - Investment Options 26
Section 5.2 - Income and Expenses of a Fund 27
Section 5.3 - Separate Accounting 27
Section 5.4 - Valuation of Accounts 27
Section 5.5 - Effect of Participant Loans 28
ARTICLE VI
VESTING 29
Section 6.1 - Vesting Schedule 29
Section 6.2 - Forfeitures 29
ARTICLE VII
RETIREMENT 31
Section 7.1 - Normal Retirement 31
Section 7.2 - Deferred Retirement 31
Section 7.3 - Disability Retirement 31
ARTICLE VIII
DISTRIBUTIONS 32
Section 8.1 - In-Service Withdrawals
of Employer Contributions 32
Section 8.2 - Payment on Death, Retirement
or Separation from Service 35
Section 8.3 - Time of Payment 36
Section 8.4 - Address of Record 39
Section 8.5 - Distribution of Excess Deferrals,
Excess Contributions, and Excess
Matching Contributions 39
Section 8.6 - Rollover Distributions 41
Section 8.7 - In-Service Withdrawals in Case of
Permanent Disability 43
ARTICLE IX
LOANS 44
Section 9.1 - Loans to Participants 44
ARTICLE X
PARTICIPATION BY RELATED PLANS 47
Section 10.1 - Terms and Conditions of
Participation by Related Plan 47
ARTICLE XI
ADMINISTRATION OF PROGRAM 48
Section 11.1 - National Employee Benefits Committee 48
Section 11.2 - Administration 48
Section 11.3 - Records 49
Section 11.4 - Liability of the Committee 49
Section 11.5 - Legal Incompetence 50
Section 11.6 - Correction of Errors 50
ARTICLE XII
AMENDMENT AND TERMINATION OF PROGRAM 51
Section 12.1 - Amendment of Program 51
Section 12.2 - Termination of Program 52
Section 12.3 - Termination of Participation
in this Program 52
Section 12.4 - Termination of the Association's
Sponsorship of this Program 52
ARTICLE XIII
TOP-HEAVY PROVISIONS 54
Section 13.1 - Application of this Article 54
Section 13.2 - Definitions 54
Section 13.3 - Vesting 55
Section 13.4 - Minimum Contributions or Benefits 56
Section 13.5 - Limitation on Compensation 57
Section 13.6 - Limits on Benefits and Contributions 57
ARTICLE XIV
MISCELLANEOUS 59
Section 14.1 - Action by Employer 59
Section 14.2 - Liability of Employer 59
Section 14.3 - Successor to Business of Employer 59
Section 14.4 - Dissolution of the Employer 59
Section 14.5 - Interest in the Fund 59
Section 14.6 - Claims 60
Section 14.7 - Mergers, Consolidations and
Transfers of Assets 60
Section 14.8 - Non-assignment of Accounts 60
Section 14.9 - No Guarantee 61
Section 14.10 - Definition of Words 61
Section 14.11 - Titles 61
Section 14.12 - Construction 61
Section 14.13 - Employment Contract 62
Section 14.14 - Failure to Qualify 62
Section 14.15 - Prior Programs 62
Attachment A to Tax-Favored Savings Program 63
ARTICLE I
EFFECTIVE DATE OF PROVISIONS; DEFINITIONS
The Program is amended and restated as follows, effective as
of January 1, 1994 except as specifically provided below and in
the Adoption Agreement.
The following words and phrases as used herein shall have
the meanings indicated, unless a different meaning is required by
the context.
Section 1.1 - "Account" shall mean the sum of a
Participant's Basic Contribution Subaccount, Matching
Contribution Subaccount, Discretionary Contribution Subaccount,
and Rollover Contribution Subaccount.
Section 1.2 - "Actual Deferral Percentage" shall mean
(effective January 1, 1987), for a specified group of
Participants for a Program Year, the average of the ratios
(calculated separately) for each Participant in such group of:
(a) The amount of Basic Contributions actually paid to
the Program on behalf of such Participant for such Program Year,
to
(b) The Participant's Test Compensation for such
Program Year.
The individual ratios and the Actual Deferral Percentage shall be
calculated to the nearest one-hundredth of one percent.
For purposes of determining the Actual Deferral Percentage,
if the Employer maintains two or more programs that are treated
as a single program for purposes of Code Sections 401(a)(4) or
410(b) (other than Code Section 410(b)(2)(A)(ii) as in effect for
program years beginning after December 31, 1988), all cash or
deferred arrangements that are included in such programs shall be
treated as a single arrangement. Effective January 1, 1990, all
such programs must have the same program year in order to be
treated as a single program.
The ratio under this Section for a Participant who is a
Highly Compensated Employee for the Program Year and who is
eligible to have Basic Contributions made to his account under
two or more programs or arrangements described in Code Section
401(k) that are maintained by the Employer shall be determined as
if all such Basic Contributions were made under a single
arrangement. Where the programs under which such Participant is
eligible to have Basic Contributions made on his behalf have
different Program Years, Basic Contributions with respect to
program years ending with or within the same calendar year shall
be treated as having been made under a single arrangement. In no
event, however, shall contributions and allocations for such
Participant under a program, or portion of a program, described
in Code Section 4975(e)(7) be included as having been made under
the single arrangement.
For purposes of determining the ratio of a Participant who
is a 5-percent owner, as defined in Code Section 414(q)(3), or
who is in the group consisting of the 10 Highly Compensated
Employees paid the greatest compensation, as defined in Code
Section 414(q)(7), during the year, the Basic Contributions and
any Matching Contributions or Discretionary Contributions used
for the purposes of this Section, and Test Compensation of such
Participant shall include, in accordance with such rules or
regulations as may be prescribed by the Secretary of the
Treasury, the Basic Contributions, such applicable Matching
Contributions and Discretionary Contributions and Test
Compensation of family members described in Code Section
414(q)(6)(B). Such family members shall otherwise be disregarded
in determining the Actual Deferral Percentage. The deferral
ratio of such a Participant shall be calculated in accordance
with such rules and regulations as the Secretary of the Treasury
may provide.
Subject to such rules as the Secretary of the Treasury shall
provide, for purposes of determining the Actual Deferral
Percentage, the amount of a Participant's Basic Contribution in
Subsection (a) may include, at the Employer's discretion, the
amount of Matching Contributions or Discretionary Contributions
actually paid to the Program on behalf of such Participant for
such Program Year, if such Matching Contributions or
Discretionary Contributions are fully vested at all times and are
subject to the withdrawal restrictions applicable to earnings on
Basic Contributions in Section 8.1 of the Program. For purposes
of calculating the Actual Deferral Percentage, the amount of
Basic Contributions shall include any amount determined
subsequently to be an Excess Deferral, except that Excess
Deferral amounts of Participants who are not Highly Compensated
Employees made with respect to programs of the Employer shall not
be included. The amount of Basic Contributions shall also
include the amount of any Basic Contributions used for the
purposes of Section 1.5A.
The determination and treatment of the Basic Contributions,
Matching Contributions, and Discretionary Contributions in
determining the Actual Deferral Percentage shall satisfy such
other requirements as may be prescribed by the Secretary of the
Treasury.
Section 1.3 - "Adoption Agreement" shall mean the agreement
executed by the Employer upon the adoption of the Program and
shall, in conjunction with the terms of the Program, govern the
operation of the Program.
Section 1.4 - "Annual Addition" shall mean the sum of the
following amounts credited to a Participant's Account for the
Program Year:
(1) Employer Contributions;
(2) nondeductible Employee contributions
(effective January 1, 1987);
(3) forfeitures; and
(4) allocations under a simplified employee pension.
For this purpose, any Excess Amount applied under Section 4.3 or
4.4 in the Program Year to reduce Employer contributions will be
considered Annual Additions for such Program Year. In addition,
amounts distributed as Excess Deferrals, Excess Contributions and
Excess Matching Contributions shall be considered Annual
Additions with respect to the Program Year to which they relate.
Amounts allocated after December 31, 1985 to a key employee's
post-retirement medical account, as described in Code Section
419A(d), and amounts allocated in Program Years beginning after
March 31, 1984 to any individual medical account, as described in
Code Section 415(1), under a defined benefit program also shall
be treated as Annual Additions to a defined contribution program.
Amounts which are repaid or restored to the Account of a
reemployed Participant pursuant to Section 6.2 shall not be
treated as Annual Additions hereunder.
Section 1.5 - "Association" shall mean the Blue Cross and
Blue Shield Association.
Section 1.5A - "Average Contribution Percentage" shall mean
(effective January 1, 1987), for a specified group of
Participants for a Program Year, the average of the ratios
(calculated separately), for each Participant in such group of:
(a) The amount of Matching Contributions actually paid
to the Program on behalf of such Participant for such Program
Year, to
(b) The Participant's Test Compensation for such
Program Year.
The individual ratios and the Average Contribution Percentage
shall be calculated to the nearest one-hundredth of one-percent.
For purposes of determining the Average Contribution
Percentage, if the Employer maintains two programs that are
treated as a single program for purposes of Code Sections
401(a)(4) or 410(b) (other than Code Section 410(b)(2)(A)(ii) for
program years beginning after December 31, 1988), all Matching
Contributions shall be treated as having been made under the same
program for purposes of Code Sections 401(a)(4), 410(b) and
401(m), provided, however, that effective January 1, 1990, all
such programs must have the same program year in order to be
treated as a single program.
The contribution percentage for any Participant who is a
Highly Compensated Employee for the Program Year and who is
eligible to have Basic Contributions made on his behalf, to
receive Matching Contributions, or to make voluntary
contributions, under two or more programs 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
all such contributions were made under a single program. In no
event, however, shall contributions or allocations for such
Participant under a program, or a portion of a program, described
in Code Section 4975(e)(7) be included as having been made under
the same program.
For purposes of determining the contribution percentage of a
Participant who is a 5-percent owner, as defined in Code Section
414(q)(3), or is in the group consisting of the 10 Highly
Compensated Employees paid the greatest compensation, as defined
in Code Section 414(q)(7), during the year, the Matching
Contributions and any Basic Contributions or Discretionary
Contributions treated as Matching Contributions and Test
Compensation of such Participant shall include, in accordance
with such rules or regulations as may be prescribed by the
Secretary of the Treasury, the Matching Contributions, such
applicable Basic Contributions and Discretionary Contributions
and Test Compensation of family members described in Code Section
414(q)(6)(B). Such family members shall otherwise be disregarded
in determining the Average Contribution Percentage. The
contribution percentage of such Participant shall be calculated
in accordance with such rules and regulations as the Secretary of
the Treasury may provide.
Subject to such rules as the Secretary of the Treasury shall
provide, for purposes of determining the Average Contribution
Percentage, the amount of the Participant's Matching
Contributions in Subsection (a) may include, at the Employer's
discretion, the amount of Basic Contributions or Discretionary
Contributions actually paid to the Program on behalf of such
Participant for such Program Year; provided, however, that in the
case of Discretionary Contributions, such contributions may be
included only if they are fully vested at all times and subject
to the withdrawal restrictions applicable to earnings on Basic
Contributions in Section 8.1 of the Program.
For purposes of calculating the Average Contribution
Percentage, any forfeitures, as defined in Section 6.2 and
Section 8.5(e), that are used to reduce Matching Contributions
shall be counted as Matching Contributions.
The determination and treatment of the Basic Contributions,
Matching Contributions, and Discretionary Contributions in
determining the Average Contribution Percentage shall satisfy
such other requirements as may be prescribed by the Secretary of
the Treasury.
Section 1.6 - "Basic Contribution" shall mean the amount
contributed by the Employer on behalf of the Participant in
accordance with Section 3.1.
Section 1.7 - "Basic Contribution Subaccount" shall mean the
account of a Participant established and maintained in accordance
with Section 3.1.
Section 1.8 - "Beneficiary" shall mean the person, persons,
or trust last designated by the Participant, in writing on forms
of the Committee provided by the Employer, who shall receive any
benefits payable under the Program upon the death of the
Participant, subject to the provisions of Section 8.2. The
Participant may from time to time change his designation by
filing a new written designation with the Employer. Such
designation or change in designation becomes effective only on
receipt by the Employer.
Section 1.9 - "Break In Service" shall mean a Period of
Severance of at least 12 consecutive months. A "one-year Break
in Service" shall mean a 12 consecutive month Period of
Severance. Notwithstanding the foregoing, in determining whether
an Employee who is absent from work for maternity or paternity
reasons has incurred a Break in Service for purposes of Article
VI, a "Break in Service" occurs on the last day of a twelve
consecutive month period (beginning immediately after the first
anniversary of his last day of Employment by a Plan) during which
the Employee is not in the Employment of a Plan. For this
purpose, an absence for maternity or paternity reasons means an
absence (i) by reason of the pregnancy of the Employee, (ii) by
reason of the birth of a child of the Employee, (iii) by reason
of the placement of a child with the Employee in connection with
the adoption of such child by the Employee, or (iv) for purposes
of caring for such child for a period immediately following such
birth or placement. An Employee shall not be deemed to be absent
from work for maternity or paternity reasons unless the Employee
furnishes the Committee such timely information as the Committee
may reasonably require to establish that the absence is for
maternity or paternity reasons and the number of days for which
there was such an absence.
Section 1.10 - "Code" shall mean the Internal Revenue Code
of 1986, as amended from time to time.
Section 1.11 - "Committee" shall mean the National Employee
Benefits Committee appointed by the Board of Directors of the
Blue Cross and Blue Shield Association, and any successor
committee appointed by the Board of Directors of the Blue Cross
and Blue Shield Association pursuant to this Program.
Section 1.12 - "Compensation," "Section 415 Compensation,"
and "Test Compensation" shall have the meanings set out below,
effective January 1, 1987. For Program Years beginning on or
after January 1, 1989, and before January 1, 1994, in no event
shall the annual amount of Compensation, Section 415
Compensation, or Test Compensation of each Participant taken into
account for any Program Year exceed $200,000 as adjusted by the
Secretary of the Treasury to reflect cost of living increases.
For Program Years beginning on or after January 1, 1994, the
annual amount of Compensation, Section 415 Compensation, or Test
Compensation of each Participant taken into account for any
Program Year shall not exceed $150,000, as adjusted for increases
in the cost-of-living in accordance with Code Section 401(a)(17).
If the Program Year consists of fewer than 12 months, the annual
compensation limit is an amount equal to the otherwise applicable
annual compensation limit multiplied by a fraction, the numerator
of which is the number of months in the short Program Year, and
the denominator of which is 12.
In determining the compensation, for purposes of the above
limitation, of a Participant who is a 5-percent owner, as defined
in Code Section 414(q)(3), or is in the group consisting of the
10 Highly Compensated Employees paid the greatest compensation,
as defined in Code Section 414(q)(7), during the year, the
compensation of such Participant shall include, in accordance
with such rules or regulations as may be prescribed by the
Secretary of the Treasury, the compensation of family members, as
defined in Code Section 414(q)(6), except that for this purpose
the term "family" shall include only the Participant's spouse,
and lineal descendants who have not attained the age of 19 by the
close of the Program Year. If the annual compensation limit is
exceeded as a result of taking into account the compensation of
such family members of a Participant, then the limitation shall
be prorated among the affected individuals in proportion to each
such individual's compensation as determined under this Section
1.12 prior to the application of this limitation.
If compensation for any prior Program Year is taken into
account in determining a Participant's allocations for the
current Program Year, the compensation for such prior Program
Year is subject to the applicable annual compensation limit in
effect for that prior Program Year. For this purpose, in
determining allocations in Program Years beginning on or after
January 1, 1989, the annual compensation limit in effect for
Program Years beginning before that date is $200,000. In
addition, in determining allocations in Program Years beginning
on or after January 1, 1994, the annual compensation limit in
effect for Program Years beginning before that date is $150,000.
(a) Compensation shall be the compensation actually
paid to the Employee by the Employer within a relevant period
which is subject to federal income tax withholding at the source
(within the meaning of Code Section 3401(a)), but determined
without regard to any rules that limit the remuneration included
in wages based on the nature or location of the employment or the
services performed, plus elective contributions that are made by
the Employer on behalf of its Employees that are not includible
in gross income under Code Sections 125, 402(e)(3), 402(h) and
403(b), compensation deferred under an eligible deferred
compensation plan within the meaning of Code Section 457(b) and
employee contributions described in Code Section 414(h)(2) that
are picked up by the employing unit and thus are treated as
employer contributions; provided, however, that any compensation
paid to the Employee prior to the date on which he becomes a
Participant shall be disregarded. Any Basic Contribution made in
excess of statutory limits and recharacterized shall not be
counted again in Compensation.
(b) Section 415 Compensation shall be a Participant's
earned income, wages, salaries, 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
Program to the extent that the amounts are includible in gross
income (including, but not limited to, commissions paid to
salesmen, compensation for services on the basis of a percentage
of profits, commissions on insurance premiums, tips, and bonuses,
fringe benefits, and reimbursements or other expense allowances
under a nonaccountable plan as described in Treas. Reg. 1.62-
2(c)) and excluding the following:
(1) Employer contributions to a program of
deferred compensation to the extent contributions are not
included in gross income of the Employee for the taxable year in
which contributed, or on behalf of an Employee to a simplified
employee pension program described in Code Section 408(k), and
any distributions from a program of deferred compensation whether
or not includible in the gross income of the Employee when
distributed, except that any amounts received by an Employee
pursuant to an unfunded non-qualified program shall be included
in the year such amounts are includible in the gross income of
the Employee.
(2) amounts realized from the exercise of a non-
qualified stock option, or when restricted stock (or property)
held by an Employee becomes freely transferable or is no longer
subject to a substantial risk of forfeiture;
(3) amounts realized from the sale, exchange or
other disposition of stock acquired under a qualified stock
option; and
(4) other amounts which receive special tax
benefits, such as premiums for group term life insurance (but
only to the extent that the premiums are not includible in the
gross income of the Employee) or contributions made by an
Employer (whether or not under a salary reduction agreement)
towards the purchase of a Code Section 403(b) annuity contract
(whether or not the contributions are excludable from the gross
income of the Employee).
For purposes of applying the limitations in Sections 4.3,
4.4 and 4.5, amounts included as Section 415 Compensation are
those actually paid or made available to a Participant within the
Program Year.
(c) Test Compensation shall be the Participant's
compensation, as such term is defined in Code Section 414(s),
plus elective contributions that are made by the Employer on
behalf of its Employees that are not includible in gross income
under Code Sections 125, 402(e)(3), 402(h) and 403(b),
compensation deferred under an eligible deferred compensation
plan within the meaning of Code Section 457(b) and employee
contributions described in Code Section 414(h)(2) that are picked
up by the employing unit and thus are treated as employer
contributions; provided, however, that any compensation paid to
the Employee prior to the date on which he becomes a Participant
shall be disregarded.
Section 1.13 - "Deferred Retirement Date" shall mean in the
case of a Participant who continues his Employment after his
Normal Retirement Age, the day he actually terminates Employment.
Section 1.14 - "Defined Benefit Fraction" shall mean a
fraction, the numerator of which is the sum of a Participant's
Projected Annual Benefit under all the qualified defined benefit
programs determined at the end of the Program Year, and the
denominator of which is the lesser of (1) the product of 1.25,
multiplied by Defined Benefit Dollar Limit; or (2) the product of
1.4, multiplied by 100 percent of the Participant's average
Section 415 Compensation for the 3 highest consecutive calendar
years of service during which the Participant was active in the
Program.
For purposes of this Section, the term "Defined Benefit
Dollar Limit" shall mean the dollar limit specified in Code
Section 415(b)(1)(A). Such dollar limit shall be adjusted to the
extent required where the Participant's Normal Retirement Age
under the Program precedes the applicable Social Security
retirement age, and shall also be adjusted to reflect such higher
amount determined by the Secretary of the Treasury or his
delegate under Code Section 415(d).
Section 1.15 - "Defined Contribution Fraction" shall mean a
fraction, the numerator of which is the sum of the Annual
Additions credited to the Participant's accounts under this and
all other qualified defined contribution programs of the Employer
for the current and all prior Program Years plus the sum of the
Annual Additions attributable to the Participant's Employee
contributions to any qualified defined benefit programs of the
Employer for the current and all prior Program Years, and the
denominator of which is the sum of the lesser of the following
amounts determined for the current and each prior Program Year:
(1) 1.25, multiplied by the dollar limitation in effect under
Code Section 415(c)(1)(A) for such Program Year; or (2) 1.4,
multiplied by 25 percent of the Participant's Section 415
Compensation for such Program Year.
The Annual Addition for any Program Year beginning before
January 1, 1987 shall not be recomputed to treat all
nondeductible Employee contributions as Annual Additions.
If the applicable requirements of Section 415 of the Code as
in effect for all Program Years beginning before January 1, 1987
were satisfied, an amount shall be subtracted from the numerator
of the Defined Contribution Fraction (not exceeding such
numerator) as prescribed by the Secretary of the Treasury so that
the sum of the Defined Benefit Fraction and the Defined
Contribution Fraction as computed under this Section does not
exceed 1.0 for such Program Year.
Effective as of January 1, 1983, if the Employer maintained
a defined contribution program on or before July 1, 1982, the
following provisions shall also apply with respect to such
program for purposes of this definition: With respect to program
years beginning prior to January 1, 1976, the aggregate amount
taken into account in the numerator of the fraction shall not
exceed the aggregate amount taken into account in the
denominator. The denominator of the Defined Contribution
Fraction with respect to each Participant for all years ending
before January 1, 1983, shall be an amount equal to the aggregate
of the maximum Annual Additions which could have been made on the
Participant's behalf for each Program Year ending before January
1, 1983, multiplied by the transition fraction. For purposes of
the preceding sentence, the term "transition fraction" means a
fraction,
(1) The numerator of which is the lesser of --
(i) $51,875, or
(ii) 1.4 multiplied by 25 percent of the
Participant's Section 415 Compensation for
the Program Year
ending in 1981; and
(2) the denominator of which is the lesser of --
(i) $41,500, or
(ii) 25 percent of the Participant's Section 415
Compensation for the Program Year ending in 1981.
Section 1.16 - "Disabled" shall mean that a Participant is,
in the judgment of the Committee, wholly prevented, by reason of
mental or physical disability, from engaging in any occupation
comparable to that in which he was engaged for the Employer at
the time his disability occurred.
Section 1.17 - "Discretionary Contribution" shall mean the
amount contributed by the Employer in accordance with Section
3.3.
Section 1.18 - "Discretionary Contribution Subaccount" shall
mean the account of a Participant established and maintained in
accordance with Section 3.3.
Section 1.19 - "Effective Date" shall mean the date as of
which the Employer has adopted the Program, as specified on the
second page of the Adoption Agreement. If more than one Plan is
included in the term "Employer," such term shall mean the date as
of which such Plan adopted the Program for its Employees.
Section 1.20 - "Employee" shall mean any person who is
employed by the Employer except a person who is a leased employee
(within the meaning of Code Section 414(n)) of the Employer.
Section 1.21 - "Employer" shall mean the Plan which has
adopted the Program by executing the Adoption Agreement and any
Related Plan which adopts such Plan's version of the Program
pursuant to Article X.
(a) With respect to the determination of Part-time
Service Years, Plan Service Years or Months, or Severance from
Service Date, the term "Employer" shall also include (1) all
corporations which are members of a controlled group of
corporations (as defined in Code Section 414(b)) which includes
the Employer; (2) all trades or businesses (whether or not
incorporated) which are under common control (as defined in Code
Section 414(c)) and which include the Employer; (3) all members
of an affiliated service group (as defined in Code Section
414(m)) which includes the Employer; and (4) except to the extent
otherwise provided in regulations prescribed by the Secretary of
the Treasury under Code Section 414(n), with respect to periods
of service required to be credited under Code Section 414(n)(4)
with respect to a leased employee, as defined in Code Section
414(n), or a common-law employee, the leasing organization.
(b) For purposes of determining the limitations in
Sections 4.3, 4.4, and 4.5, the term "Employer" shall also
include: (1) all members of a controlled group of corporations
(as defined in Code Section 414(b) as modified by Code Section
415(h)), (2) all trades or businesses under common control (as
defined in Code Section 414(c) as modified by Code Section
415(h)), (3) all members of an affiliated service group (as
defined in Code Section 414(m)); and (4) except to the extent
otherwise provided in regulations prescribed by the Secretary of
the Treasury, with respect to periods of service performed by a
leased employee (as defined in Code Section 414(n)) for the
Employer or a related person (as defined in Code Section
103(b)(6)(C)), the leasing organization.
Section 1.22 - "Employer Contributions" shall mean the sum
of the Basic Contributions, the Matching Contributions, and the
Discretionary Contributions contributed to the Trust Fund.
Section 1.23 - "Employment" shall mean service as an
Employee, within the meaning of the Federal Insurance
Contribution Act, of the Employer, beginning when the Employee
first works an Hour of Service for the Employer, and ending on
the Severance from Service Date, provided, however, that if the
severance from service resulted from the Employee's resignation,
retirement, or discharge, and the Employee returns to the service
of the Employer within 12 months of the separation from service,
or if the Employee separated from service as a result of his
resignation, retirement, or discharge during an absence for any
other reason and the Employee returns to the service of the
Employer within 12 months of the date he was first absent, the
period of absence will be included in the period of Employment.
Section 1.24 - "Entry Date" shall mean the Effective Date
and each January 1 or July 1 thereafter.
Section 1.25 - "ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended from time to time.
Section 1.26 - "Excess Amount," "Excess Contribution,"
"Excess Deferral," and "Excess Matching Contribution" shall have
the following meanings (effective January 1, 1987):
(a) Excess Amount shall be the excess of the Annual
Additions credited to the Participant's account for the Program
Year over the maximum permissible amount under Section 4.3 or
4.4.
(b) Excess Contribution shall be the amount of Basic
Contribution (and, to the extent included under Section 1.2,
Matching Contribution or Discretionary Contribution) which, in
accordance with Code Section 401(k)(8)(B), is determined to be in
excess of the limit on the Actual Deferral Percentage specified
in Section 4.1(b) or (d).
(c) Excess Deferral shall be the amount of Basic
Contribution for a calendar year that the Participant allocates
to the Program in accordance with the procedure described in
Section 8.5(a).
(d) Excess Matching Contribution shall be the amount
of Matching Contribution (and to the extent included under
Section 1.5A, Basic Contribution or Discretionary Contribution),
which, in accordance with Code Section 401(m)(6)(B), is
determined to be in excess of the limit on the Average
Contribution Percentage specified in Section 4.1(c) or (d).
Section 1.27 - "Fund" or "Investment Fund" shall mean an
investment fund or designated mutual fund established under the
Master Trust Agreement, and elected by the Employer under Section
5B of the Adoption Agreement. The investment experience of such
Funds shall be accounted for separately by the Trustee.
Section 1.28 - "Hour of Service" shall mean:
(a) each hour for which an Employee is paid, or
entitled to payment, by the Employer for the performance of
duties for the Employer. These hours will be credited to the
Employee for the Computation Period in which the duties are
performed; and
(b) each hour for which an Employee is paid, or
entitled to payment, by the Employer on account of a period of
time during which no duties are performed (irrespective of
whether the employment relationship is terminated) due to
vacation, holiday, illness, incapacity (including disability),
layoff, jury duty or military duty or leave of absence. No more
than 501 Hours of Service shall be credited to an Employee under
this Subsection for any single continuous period (whether or not
such period occurs in a single Computation Period). Hours under
this Subsection will be calculated and credited pursuant to
Section 2530.200b-2 of the Department of Labor Regulations which
are incorporated herein by reference; and
(c) each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to by the
Employer. The same hours of service will not be credited both
under Subsection (a) or Subsection (b), as the case may be, and
under this Subsection (c). These hours will be credited to the
Employee for the Computation Period or Periods to which the award
or agreement pertains rather than the Computation Period in which
the award, agreement or payment is made.
Section 1.29 - "Highly Compensated Employee" shall mean,
with respect to a Program Year, any Employee of the Employer who
is described in Code Section 414(q), effective January 1, 1987.
Section 1.30 - "Initial Computation Period" and "Subsequent
Computation Period" shall have the following meanings.
(a) the Initial Computation Period shall be the period
beginning on the date the Employee first works an Hour of Service
as an Employee of the Employer and ending on the date preceding
the first anniversary of such date;
(b) the Subsequent Computation Period or Periods shall
be Program Years beginning with the Program Year which includes
the first anniversary of the date the Employee first works an
Hour of Service for the Employer.
In the case of an Employee whose Employment terminates and
who completes no more than 500 Hours of Service during the
Initial or Subsequent Computation Periods prior to becoming a
Participant in the Program, such Employee shall be treated as a
new Employee with a new Initial Computation Period on the date
the Employee first commences service as an Employee of the
Employer after such Initial or Subsequent Computation Period.
Solely for purposes of the preceding sentence, in determining
whether an Employee has completed 500 Hours of Service, an
Employee who is absent from work for maternity or paternity
reasons (as defined in Section 1.9) shall be credited with the
number of Hours of Service which otherwise would normally have
been credited to such individual but for such absence (or, if
such number is indeterminable, 8 Hours of Service per day of such
absence), except that the total number of Hours of Service
credited to an Employee under this special rule shall not exceed
501 Hours of Service. The hours described in the preceding
sentence shall be treated as Hours of Service only in the
Computation Period in which the absence from work begins, if the
Employee would be credited with more than 500 Hours of Service
solely because such hours are treated as Hours of Service, or, in
any other case, in the immediately following Computation Period;
provided, however, that no credit shall be given for such hours
unless the Employee furnishes the Committee with the information
described in Section 1.9.
"Computation Period" shall mean the Initial Computation
Period or the Subsequent Computation Period, as the case may be.
Section 1.31 - "Loan Supervisor" shall mean the entity (the
Employer or the Committee) designated under the Adoption
Agreement to approve loans under the Program.
Section 1.32 - "Master Trust Agreement" shall mean the
master trust agreement by and between the Blue Cross and Blue
Shield Association and the Trustee which has executed the
Employer's Adoption Agreement.
Section 1.33 - "Matching Contribution" shall mean the amount
contributed by the Employer on account of, or allocated with
respect to, Basic Contributions in accordance with Section 3.2.
Section 1.34 - "Matching Contribution Subaccount" shall mean
the account of a Participant established and maintained in
accordance with Section 3.2.
Section 1.35 - Reserved
Section 1.36 - "Normal Retirement Age" shall mean (i)
effective after January 1, 1988 but before January 1, 1995, the
later of (a) age 65, or (b) the fifth anniversary of the
Employee's participation commencement date, and (ii) effective
after December 31, 1994, age 65. For purposes of (i), the
participation commencement date is the first day of the first
Program Year in which the employee became a Participant in the
Program.
Section 1.37 - "Participant" shall mean any individual who
has become a Participant pursuant to the provisions of Article
II.
Section 1.38 - "Participating Plan" shall mean the Employer
and any other Plan which adopts and maintains the Tax-Favored
Savings Program under its own Adoption Agreement.
Section 1.39 - "Part-time Service Year" shall mean in the
case of an Employee who is not regularly employed on a full-time
basis, a Computation Period during which an Employee completes
1,000 Hours of Service for the Employer or, with respect to prior
Employment with another Plan, for such Plan. An Employee who is
credited with 1,000 Hours of Service in both the Initial
Computation Period and the first Subsequent Computation Period
which commences prior to the first anniversary of the Employee's
Initial Computation Period will be credited with two Part-time
Service Years hereunder.
Section 1.40 - "Period of Severance" shall mean a continuous
period of time beginning on the Severance from Service Date
during which the Employee is not in the Employment of the
Employer.
Section 1.41 - "Plan" shall mean a corporation which is
approved or licensed as a Blue Cross Plan; a corporation which is
approved or licensed as a Blue Shield Plan; the Blue Cross and
Blue Shield Association; each corporation which is wholly owned
or controlled by a Blue Cross Plan, a Blue Shield Plan, or the
Blue Cross and Blue Shield Association or is jointly owned or
controlled by the Blue Cross and Blue Shield Association and/or
other Plans; or any other organization which the Committee
approves for participation in the Program.
Section 1.42 - "Plan Service Year" and "Plan Service Month"
shall have the following meanings:
(a) a Plan Service Year shall mean the aggregate of all
periods of the Employee's Employment with the Employer and prior
Employment with any Plan, expressed in years and days. For
purposes of aggregating nonconsecutive periods of Employment, 365
days shall be treated as one year.
(b) a Plan Service Month shall mean the aggregate of
all periods of the Employee's Employment with the Employer and
prior Employment with any Plan, expressed in months and days.
For purposes of aggregating nonconsecutive periods of Employment,
30 days shall be treated as one month.
Section 1.43 - "Program" shall mean the Tax-Favored Savings
Program, as amended from time to time. The Program is intended
to be at all times a profit-sharing program with a cash or
deferred arrangement. With respect to an Employer, the term
"Program" shall mean the version of the Program adopted by the
Employer for its Employees and shall constitute a separate
qualified deferred compensation program for such Employer.
Section 1.44 - "Program Administrator" shall mean the
National Employee Benefits Committee appointed by the Board of
Directors of the Blue Cross and Blue Shield Association.
Section 1.45 - "Program Year" shall mean the 12-month period
ending December 31.
Section 1.46 - "Projected Annual Benefit" shall mean a
Participant's annual benefit (adjusted to be the actuarial
equivalent of a straight life annuity if expressed in a form
other than a straight life or qualified joint and survivor
annuity) under a defined benefit program of the Employer,
assuming that the Participant will continue employment until the
later of his current age or normal retirement age under the
program, and that the Participant's Section 415 Compensation for
the Program Year and all other relevant factors used to determine
benefits under the program will remain constant for all future
Program Years.
Section 1.47 - "Recordkeeper" shall mean the entity, if any,
appointed by the Committee to maintain and preserve the records
for each Participant relating to his participation in an
Employer's Program. If a Recordkeeper is not appointed with
respect to an Employer's Program, then the Committee shall carry
out the function of the Recordkeeper for such Program.
Section 1.48 - "Related Plan" shall mean a Plan which adopts
the Employer's version of the Program pursuant to Article X.
Section 1.49 - "Rollover Contribution" shall mean the amount
contributed by an Employee in accordance with Section 3.4.
Section 1.50 - "Rollover Contribution Subaccount" shall mean
the account of an Employee established and maintained in
accordance with Section 3.4.
Section 1.51 - "Severance from Service Date" shall mean the
date upon which an Employee terminates his Employment with his
Employer, which date shall be the earliest of the Employee's
resignation, discharge, retirement, or death, or the first
anniversary of the date he is absent from service for any other
reason.
Section 1.52 - "Trust Fund" or "Trust" shall mean the assets
consisting of cash or such other property as shall be paid or
delivered to the Trustee under the Master Trust Agreement on
behalf of a Participant, including earnings thereon, while held
by the Trustee.
Section 1.53 - "Trustee" shall mean, with respect to an
Employer's Program, the entity which has executed the Employer's
Adoption Agreement as trustee.
Section 1.54 - "Valuation Date" shall mean the date as of
which the Trustee shall determine the value of the Trust Fund,
which shall be:
(a) when the Employer elects daily administration under
Section 5A of the Adoption Agreement, any business day on which
both the Trustee and the New York Stock Exchange are open; or
(b) when the Employer elects periodic administration
under Section 5A of the Adoption Agreement, the end of each
calendar month and such other dates as the Trustee may deem
appropriate or the Committee may direct.
The Account value of a Participant's Account shall be
determined for each allocation, distribution, or withdrawal, at
each Valuation Date, or at any other time as may be deemed
necessary by the Committee. The assets of the Trust Fund shall
be valued at their fair market value.
Section 1.55 - "Withdrawal Supervisor" shall mean the entity
(the Employer or the Committee) designated under the Adoption
Agreement to approve withdrawals under the Program.
ARTICLE II
ELIGIBILITY REQUIREMENTS FOR EMPLOYEES
Section 2.1 - Eligible on Effective Date. Each Employee on
the Effective Date who has satisfied the eligibility requirements
specified in the Adoption Agreement shall become a Participant on
the Effective Date.
Section 2.2 - Eligible After Effective Date. Any other
present, future, or reemployed Employee shall become a
Participant on the first Entry Date on or after the date he
satisfies the eligibility requirements specified in the Adoption
Agreement, provided he is in the Employment of the Employer on
such Entry Date. Notwithstanding the foregoing, a reemployed
Employee shall become a Participant on the date he returns to
service if he was a Participant (without regard to Section 2.4)
during his prior period of Employment or if, as of the date he
returns to service, he has satisfied the eligibility requirements
specified in the Adoption Agreement and would have become a
Participant on a prior Entry Date, but for his period of absence.
Section 2.3 - Change in Status.
(a) In the event an Employee who is not a member of the
eligible class of Employees becomes a member of the eligible
class, such Employee shall participate immediately upon such
change in status if such Employee has satisfied the Minimum Age
and Minimum Service requirements specified in the Adoption
Agreement and would have become a Participant on a prior Entry
Date, but for his being a member of an ineligible class of
Employees. In the event a Participant becomes a member of a
class of Employees ineligible to participate, he shall thereupon
cease participation in the Program but shall not as a result
thereof be deemed to have terminated Employment.
(b) If an Employee who is not regularly employed on a
full-time basis becomes employed on a full-time basis, the
Employee shall, for purposes only of this Article II, be credited
with Plan Service Years equal to the sum of --
(1) the Part-time Service Years credited to the
Employee before the Computation Period during which the change
occurs; and
(2) the greater of (I) the period of Plan Service
Years that would be credited to the Employee for his Employment
in the entire Computation Period in which the change occurs or
(II) the service credit, if any, which the Employee would have
for such Computation Period as of the date of change under the
Part-time Service method of crediting service.
The Employee shall receive credit for subsequent service as Plan
Service Years commencing on the day after the last day of the
Computation Period in which such change occurs.
(c) If the status of an Employee who is regularly
employed on a full-time basis changes so that he is not employed
on a full-time basis, the Employee shall be credited with service
for purposes of this Article II as follows:
(1) the Employee shall be credited with the number
of Part-time Service Years equal to the number of full Plan
Service Years credited to the Employee on the date of such
change; and
(2) the Employee shall be credited with Hours of
Service with respect to the fractional part of the Computation
Period before such change on the basis of an equivalency of 10
Hours of Service for each day the Employee would be credited with
at least one Hour of Service during such period.
The Employee shall receive credit for subsequent service after
the date of change under the Part-time Service method.
Section 2.4 - Limited Eligibility for Rollover
Contributions. An Employee who is a member of an eligible class
of Employees, regardless of whether he has satisfied the Minimum
Age and Minimum Service requirements specified in the Adoption
Agreement, shall be eligible to make a Rollover Contribution as
described in Section 3.4. In the event such an Employee makes a
Rollover Contribution prior to satisfying the eligibility
requirements of this Article, he shall be regarded as a
Participant, but only with respect to his interest in his
Rollover Contribution Account. He shall not be regarded as a
Participant for purposes of receiving Employer Contributions
until such time as he satisfies the Minimum Age and Minimum
Service requirements specified in the Adoption Agreement.
ARTICLE III
CONTRIBUTIONS
Section 3.1 - Basic Contributions. Each Participant may
elect to have the Employer reduce his cash Compensation by an
amount (at least the minimum amount specified in the Adoption
Agreement, and thereafter in 1 percent increments) and, in lieu
of payment of such portion to him, to have such amount
contributed as a Basic Contribution under the Program.
Notwithstanding the foregoing, effective July 1, 1987, a
Participant electing to have the maximum dollar amount of Basic
Contribution (described below) made on his behalf may elect to
reduce his Compensation by a dollar amount per pay period and to
have such amount contributed as a Basic Contribution under the
Program, as long as the Employer has elected such a provision in
the Adoption Agreement. Basic Contributions shall be withheld
from the Participant's Compensation, transmitted to the Trustee
and allocated to the Participant's Basic Contribution Subaccount.
At a Participant's initial enrollment, or in the case of an
Employee who becomes a Participant under Article II on the date
of reemployment or the date of status change, such election shall
be made by providing written notice to the Employer in the form
and manner prescribed by the Committee. A Participant may change
the amount of Basic Contributions to be made on his behalf,
upward or downward, elect to have such Basic Contributions cease,
or elect to recommence Basic Contributions following suspension
of Basic Contributions, as of the next Entry Date. Such change
may be made by providing written notice to the Employer or by
telephone instructions to the Recordkeeper (so long as the
Employer has elected such method in the Adoption Agreement) in
the form and manner prescribed by the Committee. Any such
election or change, whether by written notice or by telephone
instructions, shall be effective as of the next Entry Date,
provided such notice is given to the Employer, or such telephone
instructions are given to the Recordkeeper, by such time as is
specified by the Employer based on uniform nondiscriminatory
standards consistently applied. In no event may such an election
or change be made with respect to Compensation which has already
been made available to the Employee.
The amount of Basic Contributions made on behalf of any
Participant shall be subject to the limitations in the Adoption
Agreement and in Article IV of this Program, and such
contributions may be restricted, reduced, or to the extent
already made to the Trust, refunded in accordance with the
provisions of the Program, in order to ensure that such
limitations are satisfied. In no event shall the amount of Basic
Contribution made on behalf of any Participant exceed $7,000 (as
adjusted by the Secretary of the Treasury for increases in the
cost of living) in any taxable year of the Participant, effective
January 1, 1987. The foregoing limit shall not apply to amounts
of Basic Contribution attributable to service performed in 1986
and described in Section 1105(c)(5) of the Tax Reform Act of
1986.
Section 3.2 - Matching Contributions. Concurrently with the
payment to the Trustee of any Basic Contribution on behalf of any
Participant, the Employer shall contribute such Matching
Contribution, if any, as is specified in the Adoption Agreement.
Further, if provided in the Adoption Agreement, an Employer may
elect for any Program Year to contribute an additional amount.
Such additional amount shall be allocated as an additional
Matching Contribution to Participants who were actively employed
on the last day of the Program Year in the manner specified in
the Adoption Agreement, and shall be transferred to the Trustee
no later than 60 days after the close of the Program Year to
which it relates. In no event, however, shall the amount of the
Matching Contribution exceed the applicable limitations in
Article IV or the Adoption Agreement, and such contributions may
be restricted, reduced, or, to the extent already made to the
Trust, disposed of in accordance with the provisions of this
Program, in order to ensure that such limitations are satisfied.
Matching Contributions shall be transmitted to the Trustee and
allocated to the Participant's Matching Contribution Subaccount.
Section 3.3 - Discretionary Contributions. Except as
otherwise provided in the Adoption Agreement, an Employer may
elect, for any Program Year, to make a Discretionary
Contribution, in addition to the Basic Contribution and the
Matching Contribution, if any, for that Program Year. The
Employer, in its sole discretion, shall determine the amount of
such Discretionary Contribution, subject to the limitations in
Article IV. A Discretionary Contribution shall be transferred by
the Employer to the Trustee no later than 60 days after the close
of the Program Year to which it relates and shall be allocated in
accordance with the method provided in the Adoption Agreement.
Such contributions may be restricted, reduced, or, to the extent
already made to the Trust, disposed of in accordance with the
provisions of this Program, in order to ensure that such
limitations are satisfied.
Section 3.4 - Rollover Contributions. This Section 3.4
applies to distributions made on or after January 1, 1993. An
Employee who is a member of an eligible class of Employees, as
described in Section 2.4, may contribute a Rollover Contribution
in accordance with such rules and procedures as the Committee may
prescribe.
(a) A Rollover Contribution shall be an amount which --
(1) qualifies as (I) an eligible rollover
distribution as defined in Section 8.6(b)(1) except that such
distribution must be paid from an employees' trust described in
Code Section 401(a) which is exempt from tax under Code Section
501(a) or from an annuity plan described in Code Section 403(a);
or (II) a distribution from an individual retirement account or
individual retirement annuity, as defined in Code Section 408,
where no amount in the account or no part of the value in the
annuity has any source other than a rollover contribution (as
defined in Code Section 402) from an employees' trust described
in Code Section 401(a) which is exempt from tax under Code
Section 501(a) or from an annuity plan described in Code Section
403(a) (and any earnings on such contribution), and
(2) will not adversely affect the continued tax
qualification of the Program under Code Sections 401(a) and
501(a).
(b) For purposes of this Section 3.4, the rules and
procedures which the Committee shall provide under this Section
with respect to accepting Rollover Contributions shall include
the following requirements:
(1) a Rollover Contribution attributable to a
rollover distribution from an employees' trust described in Code
Section 401(a) which is exempt from tax under Code Section 501(a)
or from an annuity plan described in Code Section 403(a) may only
be made if the contribution occurs on or before the 60th day
following the day on which the rollover distribution was received
(unless the distribution is a direct rollover, as defined below)
and if the contribution is equal to the portion of the eligible
rollover distribution which would be includible in gross income
if it were not rolled over in accordance with this Section.
(2) A Rollover Contribution attributable to a
rollover contribution from an individual retirement account or
annuity, as provided above, may only be made if the contribution
of the entire amount of such rollover contribution occurs on or
before the 60th day following the date such amount was received
(unless the distribution is a direct rollover, as defined below,
from such account or annuity).
(3) A Rollover Contribution may only be made in
cash. A distribution of amounts attributable to accumulated
deductible employee contributions may not be transferred to the
Program as a Rollover Contribution.
(4) For purposes of this Section, "direct
rollover" shall mean a payment of an amount which constitutes an
eligible rollover distribution (as defined in Section 8.6(b)(1))
from an employees' trust described in Code Section 401(a) which
is exempt from tax under Code Section 501(a), from an annuity
plan described in Code Section 403(a), or from an individual
retirement account or individual retirement annuity (subject to
the conditions set forth in Subsection (a)) directly to the
Program.
(c) Rollover Contributions may be contributed without
regard to the limitations in Article IV and shall be transmitted
to the Trustee and allocated to the Participant's Rollover
Contribution Subaccount.
Section 3.5 - Voluntary Contributions. Except to the extent
provided in Section 6.2 (with respect to certain payments by
reemployed Participants), after-tax voluntary contributions are
neither required nor permitted under the Program, effective
January 1, 1987.
Section 3.6 - Timing of Contributions. When daily
administration has been selected under Section 5A of the Adoption
Agreement, the Employer shall pay its contribution to the Trust
Fund on a periodic basis as determined by the Employer in a
uniform and nondiscriminatory manner, but not less frequently
than monthly. When periodic administration has been elected
under Section 5A of the Adoption Agreement, the Employer shall
pay its contribution to the Trust Fund under the terms hereof
within a reasonable time following the close of the calendar
month to which it relates, but no later than 30 days after the
end of such month.
In the case of an additional Matching Contribution or a
Discretionary Contribution, however, the Employer shall pay such
Contribution to the Trust Fund no later than 60 days after the
close of the Program Year to which it relates.
Section 3.7 - Annual Valuation Duties. The Committee shall
establish a funding policy and method consistent with the
objectives of the Program and the requirements of Title I of
ERISA. The Committee shall meet at least annually to review such
funding policy and method. All actions of the Committee, and the
reasons therefore, taken pursuant to this Section 3.7 shall be
recorded in the minutes of such meeting.
ARTICLE IV
LIMITATIONS ON CONTRIBUTIONS
Section 4.1 - Limitations on Basic and Matching
Contributions.
(a) Dollar Limit on Basic Contributions. The total
amount of Basic Contribution made on behalf of any Participant
for a Program Year under this Program shall be limited in
accordance with Section 3.1.
(b) Limit on Actual Deferral Percentage. The Actual
Deferral Percentage for Participants who are Highly Compensated
Employees shall not exceed the greater of:
(1) The Actual Deferral Percentage for all other
Participants multiplied by 1.25; or
(2) The lesser of (i) the Actual Deferral
Percentage for all other Participants multiplied by 2, or (ii)
the Actual Deferral Percentage for all other Participants plus 2
percentage points or such lesser amount as may be prescribed by
the Secretary of the Treasury in regulations, as described in
Subsection (d) below, to prevent the multiple use of this
alternative limitation with respect to any Highly Compensated
Employee.
Rules shall be prescribed, which shall be applied by the
Employer in limiting the Basic Contributions which may be made on
behalf of Participants who are Highly Compensated Employees so
that this percentage limitation is satisfied.
(c) Limit on Average Contribution Percentage. The
Average Contribution Percentage for Participants who are Highly
Compensated Employees shall not exceed the greater of:
(1) The Average Contribution Percentage for all
other Participants multiplied by 1.25; or
(2) The lesser of (i) the Average Contribution
Percentage for all other Participants multiplied by 2, or (ii)
the Average Contribution Percentage for all other Participants
plus 2 percentage points or such lesser amount as may be
prescribed by the Secretary of the Treasury in regulations, as
described in Subsection (d) below, to prevent the multiple use of
this alternative limitation with respect to any Highly
Compensated Employee.
Rules shall be prescribed, which shall be applied by the
Employer in limiting the Matching Contributions which may be made
on behalf of Participants who are Highly Compensated Employees so
that this percentage limitation is satisfied. To the extent
permitted under applicable law or regulations, if Matching
Contributions are taken into account for purposes of calculating
the Actual Deferral Percentage under Section 1.2 of this Program,
such Matching Contributions shall not be subject to Section
4.1(c).
(d) Limit on Multiple Use of Alternative Limitation.
This Subsection shall be applicable with respect to those Program
Years in which both the Actual Deferral Percentage and the
Average Contribution Percentage of Participants who are Highly
Compensated Employees exceed the respective percentages of all
other Participants by more than 125%. In no event shall the sum
of the Actual Deferral Percentage and the Average Contribution
Percentage of the entire group of eligible Highly Compensated
Employees, determined pursuant to Sections 1.2 and 1.5A, be
greater than the aggregate limit. For purposes of this
Subsection, the term "aggregate limit" shall mean the aggregate
limit as determined in accordance with rules and regulations
prescribed by the Secretary of the Treasury. Amounts in excess
of the aggregate limit shall be corrected by reducing the Average
Contribution Percentage of Highly Compensated Employees pursuant
to Section 8.5.
(e) Collectively Bargained Employees. If any Employees
of the Employer are included in a unit of Employees covered by a
collective bargaining agreement, the Employees of the Employer
shall be divided into two groups, one group which shall include
those Employees who are so covered and the other group which
shall include all those other Employees who are not so covered.
The Actual Deferral Percentage, the Average Contribution
Percentage and the Multiple Use tests specified above shall be
performed separately for each group.
(f) Effective Date of Limitations on Basic and Matching
Contributions. The provisions of this Section 4.1 shall be
effective as of January 1, 1987.
Section 4.2 - Deduction Limitation. In no event shall the
total amount contributed by the Employer, including the amount of
any Excess Deferrals, Excess Contributions, and Excess Matching
Contributions, exceed the amount deductible under Code Section
404, or if the Employer is exempt from Federal income tax, the
amount which would have been deductible if it were not exempt.
In the event Employer Contributions would otherwise exceed the
above deduction limitation, such Employer Contributions shall be
reduced or restricted, in accordance with such rules as the
Committee may prescribe.
Section 4.3 - Limitation Applicable to All Participants'
Accounts.
(a) If the Employer does not maintain any other
qualified program, the amount of Annual Additions which may be
credited to a Participant's Account for any Program Year shall
not exceed the lesser of (1) $30,000 (or if greater, one-fourth
of the defined benefit dollar limitation set forth in Section
415(b)(1) of the Code, as in effect for the Program Year), or (2)
25 percent of the Participant's Section 415 Compensation for such
Program Year, effective January 1, 1987. The limit in (2) above
shall not apply to any contribution for medical benefits (within
the meaning of Section 419A(f)(2) of the Code) after a
Participant's Severance from Service Date, or to any amount
otherwise treated as an Annual Addition under Section 415(1)(1)
of the Code.
(b) If, as a result of the allocation of forfeitures, a
reasonable error in estimating a Participant's Section 415
Compensation, or a reasonable error in determining the amount of
Basic Contributions that may be made with respect to any
individual under the limits of Code Section 415 or under such
limited facts and circumstances which the Commissioner of
Internal Revenue finds justify the availability of the following
rules, there is an Excess Amount with respect to a Participant
for the Program Year, such Excess Amount will be disposed of as
follows:
(1) If the Participant is covered by the Program
at the end of the Program Year, the Excess Amount in the
Participant's Account may be used to reduce Employer
Contributions for such Participant in the next Program Year, and
each succeeding Program Year if necessary.
(2) If any Participant is not covered by the
Program at the end of the Program Year, the Excess Amount may be
held unallocated in a suspense account. The suspense account
shall be applied to reduce future Employer Contributions for all
remaining Participants in the next Program Year, and each
succeeding Program Year if necessary.
(3) If a suspense account is in existence at any
time during the Program Year pursuant to this Section, it will
not participate in the allocation of the Trust's investment gains
and losses.
(4) Notwithstanding paragraphs (1), (2) and (3) of
Section 4.3(b), Basic Contributions with respect to a Participant
may be distributed to such Participant to the extent that the
distribution would reduce any Excess Amount in the Participant's
Account. The amounts so distributed shall be disregarded for
purposes of the dollar limit set forth in Section 4.1(a) and the
tests set forth in Sections 4.1(b) and 4.1(c).
Section 4.4 - Additional Limitation Applicable to
Participants' Accounts When the Employer Maintains Other
Qualified Defined Contribution Programs.
(a) If, in addition to this Program, the Employer
maintains any other qualified defined contribution program, the
amount of Annual Additions which may be credited to a
Participant's Account under this Program for any Program Year
shall not exceed the maximum permissible amount determined under
Section 4.3, reduced by the Annual Additions previously credited
to a Participant's account under such other programs for the same
Program Year.
(b) If a Participant's Annual Additions under this
Program and such other programs result in an Excess Amount, the
Excess Amount will be deemed to consist of the Annual Additions
last allocated.
(c) If an Excess Amount was allocated to a Participant
on an allocation date of this Program which coincides with an
allocation date of another program, the Excess Amount attributed
to this Program will be the product of,
(1) the total Excess Amount allocated as of such
date, times
(2) the ratio of (i) the Annual Additions
allocated to the Participant for the Program Year as of such date
under this Program to (ii) the total Annual Additions allocated
to the Participant for the Program Year as of such date under
this and all the other qualified defined contribution programs.
(d) Any Excess Amount attributed to this Program will
be disposed in the manner described in Section 4.3.
Section 4.5 - Additional Limitation Applicable to
Participants' Accounts When the Employer Maintains a Defined
Benefit Program. If the Employer maintains, or at any time
maintained, a qualified defined benefit program which covered any
Participant in this Program, the sum of the Defined Contribution
Fraction and the Defined Benefit Fraction with respect to any
Participant for a Program Year shall not exceed 1.0, and the
Annual Additions credited to any such Participant's Account under
this Program in any Program Year shall be limited as provided in
Section 4 of the Adoption Agreement.
ARTICLE V
INVESTMENT OF CONTRIBUTIONS
Section 5.1 - Investment Options. Contributions shall be
invested in the following manner:
(a) Each contribution, including Basic Contribution,
Matching Contribution, Discretionary Contribution, and Rollover
Contribution, made by or on behalf of a Participant shall be
invested by the Trustee in one or more of the Investment Funds
designated in Section 5B of the Adoption Agreement. Such
contributions shall be made in such proportions as the
Participant shall direct in the percentage increments specified
in Section 5B of the Adoption Agreement.
(b) A Participant shall direct the investment of all
contributions on his behalf, as follows, subject to the
provisions of Subsection (d):
(1) When the Employer has elected daily
administration under Section 5A of the Adoption Agreement,
initial enrollments and changes and reallocations shall be by
written notice to the Employer in the manner and form prescribed
by the Committee or by telephone instructions to the Trustee; or
(2) When the Employer has elected periodic
administration under Section 5A of the Adoption Agreement,
initial enrollments and changes and reallocations shall be by
written notice to the Employer in the manner and form prescribed
by the Committee or by telephone instructions to the Trustee.
(3) If the Participant fails to specify the
investment of any contribution, the contribution will be
allocated entirely to the money market fund, if any, which has
been elected as an investment fund by the Employer in Section 5B
of the Adoption Agreement. If no money market fund has been
elected as an investment fund by the Employer in Section 5B of
the Adoption Agreement, such contribution will be allocated
entirely to the income fund which has been elected as an
investment fund by the Employer in Section 5B of the Adoption
Agreement.
(c) A Participant may prospectively change his
investment direction for contributions made after the next
investment change date (as defined in Section 5D of the Adoption
Agreement), subject to the provisions of Subsection (d). A
Participant shall also have the right to reallocate his existing
Account to one or more Funds as of the next investment change
date (as defined in Section 5D of the Adoption Agreement),
subject to the provisions of Subsection (d); provided, however,
that if his Account is not reallocated to one Fund, it shall be
allocated among the other Funds in the percentage (or dollar
amount, but only prior to January 1, 1995) specified in Section
5B of the Adoption Agreement.
Such change or reallocation shall be made as follows:
(1) When the Employer elects daily administration
under Section 5A of the Adoption Agreement, by telephone
instructions to the Trustee in the manner prescribed by the
Committee. Such change or reallocation shall be effective as
soon as practicable.
(2) When the Employer elects periodic
administration under Section 5A of the Adoption Agreement, by
telephone instructions to the Trustee in the manner prescribed by
the Committee. Such change or reallocation shall be effective as
of the first business day of the next month following such
telephone instructions.
(3) A loan made to the Participant pursuant to
Article IX shall not be regarded as a change in investments for
purposes of this provision.
(d) The Program shall be administered as a program
described in Section 404(c) of ERISA and Dept. of Labor Reg.
2550.404c-1 so as to relieve the fiduciaries of the Program from
liability for any losses which are the direct and necessary
result of investment instructions given by Participants and
Beneficiaries. Accordingly, the Program shall, in accordance
with the provisions of such regulations:
(1) provide an opportunity for each Participant or
Beneficiary to exercise control over assets in his individual
Account, and
(2) provide each Participant or Beneficiary an
opportunity to choose, from a broad range of investment
alternatives, the manner in which some or all of the assets in
his Account are invested.
Section 5.2 - Income and Expenses of a Fund. All earnings
on the investments in a Fund, together with all proceeds from the
sale of assets in such Fund, shall be reinvested by the Trustee
in the same Fund. Brokerage commissions, transfer or other
taxes, and other charges and expenses which are incurred in
connection with the investments of a Fund shall be charged to
such Fund. Fees, commissions, and other charges and expenses
which are attributable to the Trust Fund as a whole shall be
allocated among the Funds in accordance with a uniform policy
established by the Trustee.
Section 5.3 - Separate Accounting. The Recordkeeper shall
maintain the necessary subaccounts so that the Basic
Contributions, Matching Contributions, Discretionary
Contributions and Rollover Contributions made by or on behalf of
a Participant may be separately accounted for.
Section 5.4 - Valuation of Accounts. As of each Valuation
Date, the Committee will:
(a) First, adjust the balances in the accounts of all
Participants upward or downward to reflect investment gains and
losses (adjusted by any expenses charged to the Plan) since the
last Valuation Date. The gain or loss of each separate
Investment Fund will be allocated to each subaccount in the same
proportion that the value of such subaccount as of the last
Valuation Date bears to the value of all subaccounts invested in
that Fund as of the same date.
(b) Next, credit to the proper subaccount of each
Participant the Employer Contributions, Rollover Contributions
and loan payments which were attributed to the processing cycle
since the last Valuation Date.
(c) Next, credit and charge the proper subaccounts of
each Participant to reflect transfers among the separate
Investment Funds.
(d) Finally, charge to the proper subaccount of each
Participant all payments or distributions made to or on behalf of
the Participant since the last preceding Valuation Date.
Section 5.5 - Effect of Participant Loans. Pursuant to
Article IX, a Participant may borrow from his Account, and in
such event the loan shall be deemed to be a separate earmarked
investment held for the Participant. As provided in Article IX,
any amount borrowed by a Participant shall reduce the
Participant's interest in the Investment Funds in which his
Account is invested. Payments made by the Participant with
respect to a loan (principal and interest) will be invested in
accordance with the Participant's existing investment direction
for Employer Contributions.
ARTICLE VI
VESTING
Section 6.1 - Vesting Schedule. A Participant shall have a
fully vested interest in his Basic Contribution Subaccount and
his Rollover Contribution Subaccount at all times. A
Participant's interest in his Matching Contribution Subaccount
and his Discretionary Contribution Subaccount shall vest at the
rate or rates specified in the Adoption Agreement.
Section 6.2 - Forfeitures. A Participant's vested interest
in his subaccounts shall be determined as soon as practicable
following the Participant's Severance from Service Date, and
pending forfeitures will be invested in the money market fund, if
any, which has been elected as an investment fund by the Employer
in Section 5B of the Adoption Agreement. If no money market fund
has been elected as an investment fund by the Employer in Section
5B of the Adoption Agreement, pending forfeitures will be
invested in the income fund which has been elected as an
investment fund by the Employer in Section 5B of the Adoption
Agreement.
In the event that a Participant's Account under the Program
is not fully vested on his Severance from Service Date, the
vested portion of the Account shall be distributed to him in
accordance with Article VIII, and the nonvested portion of the
Account shall be forfeited and used to reduce subsequent Matching
or Discretionary Contributions, as the case may be. If a
partially vested terminated Participant does not immediately
consent to a distribution, the nonvested portion of his Account
is not forfeited until distribution or, if earlier, a 5-year
Break In Service.
If a Participant who has forfeited a portion of his Account
is subsequently reemployed by the Employer, he may elect to repay
to the Trustee the full amount of the distribution he previously
received (unadjusted by any subsequent gains or losses and
disregarding amounts received from the Rollover Contribution
Subaccount). Such right of repayment shall be deemed waived
unless repayment is made before (a) the Participant has five
consecutive one-year Breaks In Service, or (b) the fifth
anniversary of the date on which the Participant resumes
Employment, whichever is the earlier to occur.
When periodic administration has been elected under Section
5A of the Adoption Agreement, on the Valuation Date next
following the date on which repayment is made, the previously
forfeited amount (unadjusted by any subsequent gains or losses)
shall be restored by the Employer as an additional contribution.
When daily administration has been elected under Section 5A of
the Adoption Agreement, as soon as practical after repayment, the
previously forfeited amount (unadjusted by any gains or losses)
shall be restored by the Employer as an additional contribution.
Both the restored amount and the repaid amount shall be credited
to the Participant's Account and allocated to the Basic
Contribution Subaccount, Matching Contribution Subaccount, or
Discretionary Contribution Subaccount in which such amounts were
held before the distribution was made. The repaid amount and the
restored amounts in the Basic Contribution Subaccount, the
Matching Contribution Subaccount and the Discretionary
Contribution Subaccount shall be accounted for separately and
shall retain any form or timing of payment option available under
the Program at the time of the initial distribution.
The repaid amount shall be treated, together with earnings
thereon, as fully vested at all times and shall not be counted as
an Annual Addition, or as a Basic, Matching, or Discretionary
Contribution for purposes of the limitations of Section 4.1 in
the year in which repayment occurs. The Participant's vested
interest in the restored amount at any relevant time after the
restoration shall be determined in accordance with the procedure
set forth in Section 8.1 for determining a Participant's vested
interest in the separate subaccount described therein. The
Recordkeeper shall not be required to establish separate
subaccounts for the repaid and restored amounts if the account
balances in the Participant's Account are maintained under a
method that has the same effect.
A reemployed Participant's Account shall be invested in
accordance with the directions of the Participant, which shall be
made by written notice to the Employer in the manner and form
prescribed by the Committee or by telephone instructions to the
Trustee. If such amount is not allocated to a single Fund, it
shall be allocated to two or more Funds in the percentage
increments specified in Section 5B of the Adoption Agreement. If
the Participant fails to specify the investment of the Account,
the Account shall be invested solely in the money market fund, if
any, which has been elected as an investment fund by the Employer
in Section 5B of the Adoption Agreement. If no money market fund
has been elected as an investment fund by the Employer in Section
5B of the Adoption Agreement, the Participant's Accounts shall be
invested solely in the income fund which has been elected as an
investment fund by the Employer in Section 5B of the Adoption
Agreement. Following restoration of the Participant's Account, a
Participant shall be permitted to reallocate his existing Account
to one or more Funds only as provided in Section 5.1(c).
ARTICLE VII
RETIREMENT
Section 7.1 - Normal Retirement. A Participant who attains
his Normal Retirement Age shall have a nonforfeitable right to
his Account under the Program and may thereafter receive a
distribution under Article VIII upon his termination of
Employment.
Section 7.2 - Deferred Retirement. A Participant who
continues in the service of his Employer after attaining his
Normal Retirement Age may continue to participate in the Program
until his Deferred Retirement Date.
Section 7.3 - Disability Retirement. If a Participant
terminates Employment after becoming Disabled, his interest in
his Account under the Program shall be fully vested on his
Severance from Service Date.
ARTICLE VIII
DISTRIBUTIONS
Section 8.1 - In-Service Withdrawals of Employer
Contributions. A Participant may withdraw amounts from his Basic
Contribution Subaccount and his Rollover Contribution Subaccount
and from the vested portion of his Matching Contribution
Subaccount and Discretionary Contribution Subaccount, by
submitting his written request to the Withdrawal Supervisor at
such time and in such manner as shall be prescribed by the
Committee. Such written request shall serve as the Participant's
consent to the distribution. A Participant's request for a
withdrawal shall be subject to the following provisions:
(a) The withdrawal request must be for a purpose which
is determined by the Withdrawal Supervisor to qualify as a
hardship within the meaning of the rules and regulations
promulgated by the Internal Revenue Service under Code Section
401(k).
(1) A hardship withdrawal is a withdrawal made on
account of a Participant's immediate and heavy financial need.
The following events or expenses shall be considered immediate
and heavy financial needs under the Program:
(i) Medical expenses described in Code
Section 213(d) previously incurred by the Participant or the
Participant's spouse or dependents (as described in Code Section
152) or necessary for such persons to obtain medical care
described in Code Section 213(d);
(ii) Tuition payments and related educational
fees for the next twelve months of post-secondary education for
the Participant or the Participant's spouse, children or
dependents (as defined in Code Section 152);
(iii) The purchase (excluding mortgage
payments) of a principal residence for the Participant;
(iv) The need to prevent the eviction of the
Participant from, or the foreclosure on the mortgage of, the
Participant's principal residence;
(v) Other needs and expenses specified in the
future by the Commissioner of the Internal Revenue Service as
being immediate and heavy financial needs.
To the extent warranted by all the relevant facts
and circumstances, the following events and expenses will also be
considered immediate and heavy financial needs under the Program:
(i) Funeral expenses and all unreimbursed
medical expenses relating to the last illness of a family member
of the Participant;
(ii) The partial or total loss of income of
the Participant's spouse;
(iii) Amounts necessary to pay an outstanding
court ordered judgment.
(2) A hardship withdrawal may be for no more than
the amount necessary to relieve the financial need (including the
amount necessary to pay tax on the withdrawal amount), and the
Participant must not be able to satisfy the need from other
resources that are reasonably available. The Withdrawal
Supervisor shall determine whether these criteria are met on the
basis of all the relevant facts and circumstances, and, to the
extent that the Withdrawal Supervisor may reasonably rely on a
Participant's representations, the Withdrawal Supervisor may
consider a withdrawal necessary to satisfy the Participant's
financial need if the Participant represents that the need cannot
be satisfied:
(i) Through reimbursement or compensation by
insurance or otherwise;
(ii) By reasonable liquidation of the
Participant's assets, to the extent that such liquidation would
not itself cause an immediate and heavy financial need;
(iii) By cessation of Basic Contributions;
(iv) By other distributions or nontaxable (at
the time of the loan) loans from programs, including this
Program, maintained by the Employer or any other employer;
(v) By borrowing from commercial sources on
reasonable commercial terms in an amount sufficient to satisfy
the need.
(b) The amount withdrawn may not exceed the actual
expense incurred or to be incurred by the Participant on account
of such hardship. A Participant who desires a hardship
withdrawal and who is eligible to obtain a loan from the Program
must first request such a loan for the maximum amount under the
Program in order to meet the financial need causing the hardship.
Then, if the total amount of the financial need causing the
hardship exceeds the amount available for a loan, the Participant
may apply for a hardship withdrawal to cover the remaining amount
of the financial need. A withdrawal request must be for at least
$1,000, except that, in the case of a withdrawal for purposes of
tuition expenses, a request must be for at least $500.
Notwithstanding the foregoing, in the case of a Participant who
obtains a loan from the Program in the maximum amount for which
he is eligible in order to satisfy his financial need, if the
original total amount of the Participant's financial need (before
obtaining the loan) is at least $1,000 (or $500 in case of
tuition expenses), the remaining amount of his financial need
(after obtaining the loan) may be taken as a hardship withdrawal
even though it is less than such minimum.
(c) Only one such withdrawal shall be permitted during
a twelve month period, except that in the case of a withdrawal
for purposes of tuition expenses, up to three withdrawals shall
be permitted in a twelve month period.
(d) The amount withdrawn shall reduce proportionately
the Participant's interest in the Investment Funds in which his
Account is invested, except that, prior to January 1, 1995, the
Participant may designate the Investment Fund from which such
withdrawal is to be made. Withdrawals shall be taken first from
the Participant's Rollover Contribution Subaccount and then from
his Basic Contribution Subaccount, the vested portion of his
Matching Contribution Subaccount, and the vested portion of his
Discretionary Contribution Subaccount, in that order. The amount
which may be withdrawn from a Participant's Basic Contribution
Subaccount is limited to the amount in such Subaccount as of
December 31, 1988, if any, plus the amount of Basic Contributions
only on or after January 1, 1989 (excluding earnings after such
date). In the event Section 3(b)(iii) of the Employer's Adoption
Agreement provides that Matching Contributions are used in
computing the Actual Deferral Percentage in Section 1.2, then no
amounts may be withdrawn from the Participant's Matching
Contribution Subaccount, and in the event Section 3(c) of the
Employer's Adoption Agreement provides that Discretionary
Contributions are used in computing the Actual Deferral
Percentage in Section 1.2 or the Average Contribution Percentage
in Section 1.5A, then no amounts may be withdrawn from the
Participant's Discretionary Contribution Subaccount, effective
January 1, 1989.
(e) If a Participant has a loan from the Program, his
outstanding loan balance shall not be subject to withdrawal
hereunder.
(f) The withdrawal shall be paid to the Employee:
(1) when daily administration has been elected
under Section 5A of the Adoption Agreement, as soon as
practicable following the approval of the Employee's request by
the Withdrawal Supervisor; or
(2) when periodic administration has been elected
under Section 5A of the Adoption Agreement, within the 30 day
period after the next Valuation Date which follows by more than 3
days the approval of the Employee's written request by the
Withdrawal Supervisor and subsequent receipt thereof by the
Recordkeeper.
If a payment is made hereunder from the vested portion
of a Participant's Matching Contribution Subaccount or
Discretionary Contribution Subaccount at a time when the
Participant has a nonforfeitable right to less than 100 percent
of such Subaccounts and the Participant may increase his
nonforfeitable percentage in such Subaccount:
(1) A separate subaccount will be established for
the Participant's interest in such Matching Contribution
Subaccount or Discretionary Contribution Subaccount as of the
time of distribution, and
(2) At any relevant time after the distribution,
the Participant's vested interest in the separate subaccount will
be equal to a dollar amount ("X") determined by the formula:
X = P(AB + D) - D
For purposes of applying the formula: P is the vested percentage
at the relevant time; AB is the value of the account balance at
the relevant time; and D is the amount of the distribution. The
Recordkeeper shall not be required to establish a separate
subaccount hereunder if the account balances in the Participant's
Account are maintained under a method that has the same effect.
Section 8.2 - Payment on Death, Retirement or Separation
from Service. Upon the Participant's Severance from Service
Date, the Participant (or his Beneficiary, if applicable) shall
be entitled to receive an amount in full settlement of his vested
interest in his Account under the Program. Notwithstanding the
foregoing, if a married Participant's termination of Employment
is on account of death, the Participant's vested interest in his
Account under the Program shall be payable in full to the
Participant's surviving spouse (if any), unless such spouse
consents in writing to the payment of such interest to a non-
spouse Beneficiary designated by the Participant pursuant to
Section 1.8. The spouse's consent shall not be effective unless
it acknowledges the specific non-spouse beneficiary, the effect
of payment to a Beneficiary other than the spouse and is
witnessed by a notary public or an Employer representative of the
Program. Payment shall be made to a non-spouse Beneficiary
without the consent of the Participant's spouse only if it is
established to the satisfaction of the Program representative
that such consent cannot be obtained because there is no spouse,
because the spouse cannot be located, or because of any
circumstances described in regulations under Code Section 417.
Any consent by a spouse (or any establishment that such consent
cannot be obtained) shall be effective only with respect to such
spouse.
If, at the time of a Participant's death, there is no
surviving spouse and no properly designated surviving
Beneficiary, any amount which is payable under this Program as a
result of the Participant's death shall be payable in a lump sum
to the Participant's estate.
The amount payable to the Participant, his Beneficiary, his
surviving spouse, or his estate, as the case may be, shall be
equal to the value of the Participant's Basic Contribution
Subaccount and Rollover Contribution Subaccount and the value of
the vested portion of his Matching Contribution Subaccount and
his Discretionary Contribution Subaccount, as determined in
accordance with Article V as follows:
(a) When periodic administration has been elected under
Section 5A of the Adoption Agreement, on the later of the next
Valuation Date which follows by more than 3 days the
Participant's Severance from Service Date, or the Valuation Date
for the month in which the last contribution made on behalf of
the Participant is made by the Employer, unless the necessary
consent described in Section 8.3(a) has not been obtained prior
to such Valuation Date, in which case the amount shall be
determined in accordance with Article V on the earlier of the
next Valuation Date which follows by more than 3 days the date on
which consent is obtained, or the last Valuation Date which
precedes by 30 days the required commencement date described in
Section 8.3(b). Such amount shall be paid in cash in a lump sum.
(b) When daily administration has been elected under
Section 5A of the Adoption Agreement, as soon as practicable
following the later of the Participant's Severance from Service
Date or the date on which the last contribution made on behalf of
the Participant is made by the employer, unless the necessary
consent described in Section 8.3(a) has not been obtained in
which case the amount shall be determined in accordance with
Article V as soon as practicable following the date on which the
consent is obtained, or , if earlier, the last Valuation Date
which precedes by more than 30 days the required commencement
date described in Section 8.3(b). Such amount shall be paid in
cash in a lump sum.
Section 8.3 - Time of Payment.
(a) Generally, any payment provided for under Section
8.2 (upon the Participant's Severance from Service Date) or under
Section 8.1 or 8.7 shall be made:
(i) when periodic administration has been elected
under Section 5A of the Adoption Agreement, as soon as
practicable following the Valuation Date as of which such payment
is determined, but in no event later than 30 days following such
date; or
(ii) when daily administration has been elected
under Section 5A of the Adoption Agreement, as soon as
practicable.
If the vested accrued benefit amount exceeds $3,500, no payment
shall be made to a Participant (who has not attained Normal
Retirement Age) before a date that is 30 days after (or after a
date which is 90 days after) the Participant has received a
notice containing the required information concerning the payment
and consented to such payment. The required information shall
include a statement that the Participant may defer payment until
Normal Retirement Age, a statement regarding the Participant's
right to a direct rollover under Section 8.6 and such other
information as may be prescribed by the Secretary of the Treasury
in rules or regulations. Notwithstanding the foregoing, if a
distribution is one to which Code Sections 401(a)(11) and 417 do
not apply, such distribution may commence less than 30 days after
the notice required under Treas. Reg. 1.411(a)-11(c) is given,
provided that:
(1) the Participant is clearly informed that he
has a right to a period of at least 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
(2) the Participant, after receiving the notice,
affirmatively elects a distribution.
A Participant who terminates Employment, but who does not
consent to a distribution of his Account before attaining Normal
Retirement Age, shall be paid the entire amount of his vested
interest in his Account upon attaining such age. No payment
under Section 8.2 shall be made later than the date on which the
Participant attains the later of his Normal Retirement Age or
Deferred Retirement Date.
For purposes of the payment rules in Section 8.2 and 8.3,
the following events shall be treated as a Severance from Service
Date, effective January 1, 1985, thereby permitting distribution:
(1) the Program is terminated and no Successor
Program (as defined below) is established or maintained;
(2) a disposition by the Employer to an unrelated
corporation of substantially all the assets used by the Employer
in a trade or business (with respect to a Participant who
continues to work for the acquiring corporation), provided that
the Employer continues to maintain the Program after the
disposition; or
(3) the disposition by the Employer to an
unrelated corporation of its interest in a subsidiary (with
respect to a Participant who continues to work for the
subsidiary), provided that the Employer continues to maintain the
Program after the disposition.
Distributions authorized pursuant to the preceding sentence
shall be made only in the form of a lump sum as defined in Code
Section 402(d)(4) (effective January 1, 1993), without regard to
clauses (i), (ii), (iii), and (iv) of subparagraph (A),
subparagraph (B), or subparagraph (F) thereof, and shall be
subject to the consent requirements prescribed in the first
sentence of this Section 8.3(a); provided, however, that a
distribution permitted on Program termination may be made to the
Participant without his consent to the extent provided in
Treasury Regulations.
For purposes of the situation in (1), above, a "Successor
Program" is any other defined contribution plan maintained by the
same Employer, except that if fewer than two percent of the
Employees who are eligible under the Program at the time of its
termination are or were eligible under the other defined
contribution plan at any time during the 24-month period
beginning 12 months before the time of the termination, the other
defined contribution plan is not a Successor Program. For
purposes of the foregoing, a defined contribution plan is one
defined in Code Section 414(i), other than an employee stock
ownership plan or a simplified employee pension. A defined
contribution plan is a Successor Program only if it exists at the
time the Program is terminated or within the period ending 12
months after distribution of all assets from the Program.
(b) Effective January 1, 1989, notwithstanding any
provision of the Program that is or may be interpreted to the
contrary, distributions under this Program will be made in
accordance with the regulations under Code Section 401(a)(9),
including Treas. Reg. 1.401(a)(9)-2. Under no circumstances
shall payment hereunder commence later than April 1 of the
calendar year following the calendar year in which the
Participant attains the age of 70-1/2, unless the Participant
attained age 70-1/2 before January 1, 1988 (and was not a 5-
percent owner during any Program Year since the Participant
attained the age of 66-1/2), in which case the rule in Subsection
(b) as in effect on December 31, 1988 will continue to apply. In
the case of a Participant who attained the age of 70-1/2 in 1988
who was not a 5-percent owner and who had not separated from
service prior to January 1, 1989, payment hereunder must commence
no later than April 1, 1990. In order to ensure that payment is
made no later than April 1, the amount payable to the Participant
shall be determined no later than the last Valuation Date which
precedes by 30 days the April 1 commencement date specified in
this Section. In no event shall the amount paid to the
Participant be less than the minimum amount required by
regulations under Code Section 401(a)(9).
If a Participant is in the Employment of the
Employer at or after the time he attains age 70-1/2, the
following rules shall apply:
(1) The amount required to be paid to a
Participant who has attained the age of 70-1/2 (the "required
amount") is his entire vested interest in his Account under the
Program as of the last Valuation Date preceding the payment date
specified herein. The year in which a Participant attains the
age of 70-1/2 shall, for purposes of this Subsection, be the "70-
1/2 year". Payment of the required amount shall be made as soon
as practicable following December 31 of the 70-1/2 year, but in
no event later than April 1 of the calendar year following the 70-
1/2 year.
(2) For each Program Year subsequent to the 70-
1/2 year during which the Participant remains in the Employment
of the Employer, payment shall be made to the Participant as soon
as practicable after the close of such Program Year (but in no
event later than January 31) of his vested interest in his
Account (as of December 31 of the year preceding payment). This
provision is intended to be construed in a manner that is
consistent with rules promulgated under Code Section 401(a)(9).
(3) Notwithstanding the foregoing, upon the
Participant's Severance from Service Date, payment shall be made
in accordance with Section 8.2 and 8.3(a).
Section 8.4 - Address of Record. Each Participant on whose
behalf contributions are made under the Program shall file and
maintain a current record of address with the Employer, and shall
notify the Employer of any change of address. The Committee, the
Recordkeeper, Trustee and the Employer are entitled to rely on
the Participant's address as shown on the records of the Employer
for purposes of communications and distributions under the
Program.
Section 8.5 - Distribution of Excess Deferrals, Excess
Contributions, and Excess Matching Contributions. The following
procedures shall apply in the disposition of Excess Deferrals,
Excess Contributions, and Excess Matching Contributions,
effective January 1, 1987. A distribution to a Participant of
Excess Contributions or Excess Matching Contributions shall not
require the consent of the Participant.
(a) Excess Deferrals. Notwithstanding any other
provision in the Program, Excess Deferrals with respect to a
Participant, and the income allocable thereto, shall be
distributed to the Participant who claims such Excess Deferral
for the present or preceding Program Year in accordance with Code
Section 402(g), this Subsection, and the rules prescribed for
such purpose. Such distribution shall be made no later than
April 15 of the Program Year following the Program Year to which
the Excess Deferral relates.
(1) The Participant's claim shall be in writing;
shall be submitted to the Withdrawal Supervisor no later than
March 1 of the Program Year following the Program Year to which
the Excess Deferral relates; shall specify the amount of the
Participant's Excess Contribution for the present or preceding
Program Year; and shall be accompanied by the Participant's
written statement that, if such amount is not distributed, such
amount when added to amounts deferred under this Program and
other plans or arrangements described in Code Sections 401(k),
408(k) or 403(b) exceed the limit imposed on the Participant by
Code Section 402(g) for the year in which the deferral occurred.
A Participant is deemed to have notified the Program of Excess
Deferrals and claimed such amounts to the extent the Participant
has Excess Deferrals for the taxable year calculated by taking
into account only Basic Contributions under the Program and
elective deferrals under other programs of the Employer.
(2) The Withdrawal Supervisor shall notify the
Recordkeeper of such Excess Deferral and direct the Trustee to
refund to the Participant such amount, together with any
allocable earnings or reduced by allocable losses, as determined
by the Recordkeeper in accordance with Subsection (f) of this
Section 8.5. The amount of Excess Deferrals to be refunded to a
Participant with respect to a taxable year shall be reduced by
any Excess Contributions previously distributed to the
Participant with respect to the Program Year in that taxable
year. Matching Contributions that have been made with respect to
Excess Deferrals shall be forfeited to the extent required by
rules or regulations prescribed by the Secretary of the Treasury.
Any distribution of Excess Deferral amounts shall be designated
as such in accordance with such rules and regulations as the
Secretary of the Treasury may prescribe.
(b) Excess Contributions. In the event that at the
end of the Program Year the Actual Deferral Percentage for Highly
Compensated Employees exceeds the limitation in Section 4.1(b) or
(d), the Employer shall determine the maximum deferral percentage
which a Highly Compensated Employee may have in order for the
Actual Deferral Percentage for all Highly Compensated Employees
to satisfy the limitation. Such determination shall be made by
reducing contributions made on behalf of Highly Compensated
Employees in order of their deferral percentages under Section
1.2, beginning with the highest deferral percentage. The
reduction for a Highly Compensated Employee whose deferral
percentage is determined under the family aggregation rules in
Section 1.2 shall be determined according to such rules and
regulations as the Secretary of the Treasury may provide. The
Excess Contributions made on behalf of those Highly Compensated
Employees with deferral percentages in excess of such maximum
will be refunded as provided in this Subsection so that such
Highly Compensated Employees' deferral percentages do not exceed
the maximum.
(1) The Employer shall notify the Recordkeeper of
such adjustments and direct the Trustee to refund such amount,
together with any allocable earnings or losses, to affected
Participants.
(2) Notwithstanding any other provision of the
Program, the Excess Contribution, and any earnings or losses
allocable thereto, shall be distributed within the first 2-1/2
months of the Program Year following the year to which such
Excess Contributions relate. The amount of Excess Contributions
to be distributed with respect to a Participant for a Program
Year shall be reduced by any Excess Deferrals previously
distributed to such Participant for the Participant's taxable
year ending with the Program Year. Matching Contributions that
have been made with respect to Excess Contributions shall be
forfeited to the extent required by rules or regulations
prescribed by the Secretary of the Treasury.
(3) The earnings or losses allocable to Excess
Contributions shall be determined in accordance with Subsection
(f) of this Section 8.5.
(4) Amounts distributed under this Subsection
shall first be treated as distributions from the Participant's
Basic Contribution Subaccount and shall be treated as distributed
from the Participant's Matching or Discretionary Contribution
Subaccounts only to the extent the amount to be distributed
exceeds the balance in the Participant's Basic Contribution
Subaccount.
(c) Excess Matching Contributions. In the event that
at the end of the Program Year the Average Contribution
Percentage for Highly Compensated Employees exceeds the
limitation in Section 4.1(c) or (d), the Employer shall determine
the maximum contribution percentage which a Highly Compensated
Employee may have in order for the Average Contribution
Percentage for all Highly Compensated Employees to satisfy the
limitation. Such determination shall be made by reducing
contributions made on behalf of Highly Compensated Employees in
order of their contribution percentages, beginning with the
highest of such percentages. The reduction for a Highly
Compensated Employee whose contribution percentage is determined
under the family aggregation rules of Section 1.5A shall be
determined in accordance with such rules and regulations as the
Secretary of the Treasury may prescribe. The Excess Matching
Contributions made on behalf of those Highly Compensated
Employees with contribution percentages in excess of such maximum
will be forfeited or distributed as provided in this Subsection,
depending on whether or not the affected Highly Compensated
Employees are vested in such contributions, so that such Highly
Compensated Employees' contribution percentages do not exceed the
maximum.
(1) The Employer shall notify the Recordkeeper of
such adjustments and direct the Trustee to dispose of such Excess
Matching Contributions, together with any allocable earnings or
losses, by distributing Excess Matching Contributions and
allocable earnings or losses to those affected Highly Compensated
Participants who are vested in such amounts, and by treating the
remaining Excess Matching Contributions and allocable earnings or
losses as a forfeiture under the Program.
(2) Notwithstanding any other provision of the
Program, the Excess Matching Contribution, and earnings or losses
allocable thereto, shall be disposed of within the first 2-1/2
months of the Program Year following the year to which such
Excess Matching Contributions relate.
(3) The earnings or losses allocable to Excess
Matching Contributions shall be determined in accordance with
Subsection (f) of this Section 8.5.
(d) Ordering. The calculation and disposition of the
excess amounts in this Section shall be made in accordance with
rules prescribed by the Secretary of the Treasury for
coordinating such items.
(e) Forfeitures. Any amount required to be forfeited
under this Section shall be used to reduce subsequent Matching or
Discretionary Contributions.
(f) Income Allocable to Corrective Distributions. The
income allocable to Excess Deferrals, Excess Contributions and
Excess Matching Contributions, respectively, shall be equal to
the sum of the allocable gain or loss for the Program Year and
the allocable gain or loss for the period between the end of the
Program Year and the date of distribution. Any reasonable method
for computing the income allocable to such excess amounts may be
used, provided that the method does not violate Code Section
401(a)(4), is used consistently for all Participants in the
Program for all corrective distributions under the Program for
the Program Year, and is used by the Program for allocating
income to Participants' Accounts.
Section 8.6 - Rollover Distributions. The following
provisions apply to distributions made on or after January 1,
1993.
(a) Direct Rollovers. Notwithstanding any provision
of the Program to the contrary that would otherwise limit a
distributee's election under this Section 8.6, a distributee may
elect, at the time, in the manner, and subject to the
restrictions all as prescribed by the Committee, to have any
portion of an eligible rollover distribution (that is equal to at
least $500) paid directly to an eligible retirement plan
specified by the distributee in a direct rollover. Payment to an
eligible retirement plan shall be made in accordance with the
rules prescribed by the Committee.
(b) Definitions. For purposes of this Section 8.6,
the following definitions apply:
(1) An "eligible rollover distribution" is any
distribution of all or any portion of the balance to the credit
of the distributee, except that an eligible rollover distribution
does not include: any distribution that is one of a series of
substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the
distributee or the joint lives (or joint life expectancies) of
the distributee and the distributee's designated beneficiary, or
for a specified period of ten years or more; any distribution to
the extent such distribution is required under Code Section
401(a)(9); and the portion of any distribution that is not
includible in gross income determined without regard to the
exclusion for net unrealized appreciation with respect to
employer securities).
(2) An "eligible retirement plan" is an
individual retirement account described in Code Section 408(a),
an individual retirement annuity described in Code Section
408(b), an annuity plan described in Code Section 403(a), or a
qualified trust described in Code Section 401(a), that accepts
the distributee's eligible rollover distribution. However, in
the case of an eligible rollover distribution to the surviving
spouse, an eligible retirement plan is an individual retirement
account or individual retirement annuity.
(3) A "distributee" includes an Employee or
former Employee. In addition, the Employee's or former
Employee's surviving spouse and the Employee's or former
Employee's spouse or former spouse who is the alternate payee
under a qualified domestic relations order, as defined in Code
Section 414(p), are distributees with regard to the interest of
the spouse or former spouse.
(4) A "direct rollover" is a payment by the
Program to the eligible retirement plan specified by the
distributee.
Section 8.7 - In-Service Withdrawals in Case of Permanent
Disability. In the event that a Participant becomes disabled
within the meaning of Code Section 72(m)(7), the Participant may
withdraw the entire balance of his Basic Contribution Subaccount
and of his Rollover Contribution Subaccount and the vested
portion of his Matching Contribution Subaccount and Discretionary
Contribution Subaccount, by submitting his written request to the
Committee at such time and in such manner as shall be prescribed
by the Committee. Such written request shall serve as the
Participant's consent to the distribution.
ARTICLE IX
LOANS
Section 9.1 - Loans to Eligible Participants. The Loan
Supervisor is the party responsible for administering loans under
the Program. The Loan Supervisor may authorize the Trustee to
loan an eligible Participant, in accordance with the following
procedures, an amount or amounts which, when added to the
outstanding balance of all other loans to the Participant under
this Program and all related programs, does not exceed whichever
of the following amounts is lesser: (1) $50,000, reduced by the
excess, if any, of the highest outstanding balance of loans from
the Program and related Programs during the one-year period
ending the day before the date on which such loan is made, over
the outstanding balance of loans from the Program and related
programs on the date which such loan is made; or (2) 50 percent
of the vested portion of the Participant's Account (determined as
of the most recent Valuation Date).
Each Participant who is a "party in interest," as defined in
Section 3(14) of ERISA, is eligible to borrow from the vested
portion of his Program Account. Loans shall be made available to
all such Participants on a reasonably equivalent basis and shall
not be made available to Participants who are officers or highly
paid Employees in percentage amounts greater than the percentage
amounts available to other Participants. Notwithstanding the
foregoing, however, no loan shall be made to an eligible
Participant whose Employment has terminated, but who is a Highly
Compensated Employee, until the Employer has received a favorable
determination letter from the Internal Revenue Service indicating
that such a loan will not jeopardize the tax status of the
Program.
All loans shall comply with the following conditions and
with such rules interpreting these conditions as may be
prescribed by the Committee:
(a) Loans shall be made at a lending rate determined
from time to time by the Committee based on the prime lending
rate as published in the Wall Street Journal, plus 1 percent (the
"Loan Interest Rate"). The Loan Interest Rate shall be updated
monthly. The Loan Interest Rate, as determined at the time the
loan is made, shall apply during the term of the loan.
Notwithstanding the foregoing, if the Loan Supervisor is the
Employer in accordance with Section 7 of the Adoption Agreement,
loans shall be made at a reasonable interest rate as determined
by the Employer, based on such indices or guidelines specified in
additional documents forming part of the Program.
(b) Loans shall extend for a stated period as requested
by the Participant and shall in any event be repayable by their
terms within 4 years and 9 months, provided, however, that if the
loan is used to acquire any dwelling unit which is to be used
within a reasonable time after the loan is made as the principal
residence of the Participant, the loan shall be repayable within
a reasonable time, up to 30 years, as requested by the
Participant. A loan may be paid in full at any time thereafter
with no penalty for prepayment.
(c) Loans shall be generally repaid by payroll
deduction. Loan payments shall begin no later than the first
payroll period in the second month after the employee receives
the loan proceeds. When an employee is on leave of absence for
12 months or less, payments will be suspended until return from
the leave. Upon return, the repayment schedule shall be
adjusted to provide for repayment of the missed payments and
accumulated interest charges for the suspension period.
Participants whose Employment with the Employer has terminated,
but who remain parties in interest, and who have outstanding
loans will be required to forward their loan payment checks to
the Employer for the term of the loan.
(d) The obligation of the borrowing Participant shall
be evidenced by a note which shall contain the terms of repayment
and provisions covering default. The terms of repayment shall be
in accordance with the provisions of this Article IX and in
accordance with such rules as the Secretary of the Treasury may
prescribe. Loans shall be repaid in substantially level payments
of principal and interest not less frequently than monthly. If a
loan to a Participant is outstanding on the date the Participant
becomes entitled to a distribution under Section 8.2 of the Plan,
the balance of the loan, or a portion thereof equal to the amount
to be distributed, if less, shall on such date become due and
payable, unless the Participant demonstrates to the Employer that
the Participant will remain a party in interest following
termination of Employment, in which case loan repayment shall
continue for the term of the loan in accordance with (c) above.
The portion of the loan due and payable shall be satisfied by
offsetting such amount against the amount to be distributed to
the Participant following the period set forth in (e) below, or,
if earlier, when the remaining amounts in the Participant's
Account are distributed to him.
(e) A loan shall be considered in default if payments
are not made for a period of 90 days or more after (1) loan
proceeds were received or (2) repayments stop prior to the full
repayment of the loan, except that the loan of a Participant who
is on a leave of absence that does not exceed 12 months shall not
be considered in default under this provision. In the event that
the loan of a Participant is considered to be in default under
this provision, such loan shall be deemed renegotiated. Loan
repayment amounts shall be redetermined using the interest rate
at the time of the renegotiation, a revised loan amount to cover
the unpaid principal and lost interest, and another loan
recordkeeping fee as set forth in Subsection (g). In addition, a
Participant who defaults on a loan will be precluded from
obtaining any further loans for a period of three years. If loan
repayments either do not commence on time or stop prior to full
repayment of a loan, but a period of less than 90 days passes
before payments begin or resume, the loan shall not be considered
in default. Instead, an additional amount, calculated to make up
the missed payments within a reasonable period of time, will be
determined by the Employer and automatically deducted from the
Participant's paycheck. In the case of default on a loan by a
Participant at or subsequent to termination of Employment, the
remaining loan balance, plus interest, shall be deducted from the
Participant's Account.
(f) Each loan shall be adequately secured, and for
these purposes, the Participant shall pledge up to 50% of the
vested portion of his Account as security for repayment of the
loan. To the extent possible, a loan shall be deemed secured by
the vested portions of a Participant's Discretionary Contribution
Subaccount, Matching Contribution Subaccount and Rollover
Subaccount, before his Basic Contribution Subaccount is used for
such purposes.
(g) Loan applications are submitted to the Employer or
the Recordkeeper and are subject to the approval of the Loan
Supervisor. Any cost or expense incurred in connection with the
loan shall be deducted from the total proceeds of the loan or
deducted from the Participant's Account, whichever method is
utilized by the Recordkeeper.
(h) Loans may be for any purpose. Loans must be for
amounts that are multiples of $100 and the minimum loan amount is
$1,000. Only one new loan may be made to a Participant in a
twelve-month period, and a Participant may have no more than
three loans outstanding.
(i) Any amount loaned to the Participant shall reduce
proportionately the Participant's interest in the Investment
Funds in which his Account is invested, except that, prior to
January 1, 1995, a Participant may designate the Investment Fund
from which such loan is to be made.. Loans shall be deemed to be
taken first from the Participant's Rollover Contribution
Subaccount, and then from the vested portion of his Matching
Contribution Subaccount, the vested portion of his Discretionary
Contribution Subaccount, and his Basic Contribution Subaccount,
in that order.
(j) The Loan Supervisor shall direct the Trustee with
respect to the making of loans to Participants, and the Employer
shall be responsible for the collection thereof. The Trustee
shall follow directions of the Loan Supervisor to the extent
possible and shall not take any independent action with respect
to such loans. The Trustee shall have no responsibility
whatsoever with respect to loans to Participants except to follow
the directions of the Loan Supervisor to the extent possible.
(k) The Loan Supervisor shall cause to be furnished to
any Participant receiving a loan any information required to be
furnished pursuant to the Federal Truth In Lending Act, if
applicable, or pursuant to any other applicable law.
ARTICLE X
PARTICIPATION BY RELATED PLANS
Section 10.1 - Terms and Conditions of Participation by
Related Plan. A Related Plan may adopt an Employer's version of
the Program with the consent of the Employer. In such event, the
Related Plan shall be treated as the "Employer" under the Program
with respect to its Employees. Participation in the Program by
the Related Plan shall be subject to the following terms and
conditions:
(a) The Related Plan will pay the amount of
contributions and all other expenses and payments arising under
the Program and the Adoption Agreement which are properly
allocable to it as a participating employer, as determined by the
Employer based on information supplied by the Committee and/or
the Recordkeeper.
(b) The Related Plan shall be deemed to appoint the
Employer as its agent to act for it and all elections which are
granted to the "Employer" or to a "Participating Plan" under the
Program and the Adoption Agreement shall be made by the Employer
alone.
(c) In the event of the Related Plan's withdrawal from
the Program, the Related Plan (or the Employer) shall notify the
Committee of the Related Plan's withdrawal. The Related Plan's
termination of participation in the Program shall take effect as
of the end of the last day of the calendar year in which such
notice is received by the Committee; provided, however, that if
such notice is received after September 30 of a calendar year,
the effective date of withdrawal shall be the end of the last day
of the next calendar year, unless otherwise agreed to by the
Committee. As of the effective date of withdrawal, coverage of
the Related Plan's Employees shall cease, and, except as
otherwise provided by law, the obligation of the Related Plan to
pay expenses attributable to a participating employer shall
cease; provided, however, the Related Plan shall remain obligated
for its respective share of contributions and expenses prior to
its date of withdrawal. The Accounts of Participants affected by
the withdrawal shall be treated and disposed of in accordance
with the Program, except to the extent the Related Plan has such
Accounts transferred to a successor trustee of a new program
qualified under Code Section 401(a).
ARTICLE XI
ADMINISTRATION OF PROGRAM
Section 11.1 - National Employee Benefits Committee. The
administration of the Program shall be in the charge of the
National Employee Benefits Committee, established by the Board of
Directors of the Blue Cross and Blue Shield Association. The
Board of Directors of the Association shall appoint a committee
of persons who are employees or board members of Plans, which
shall be known as the National Employee Benefits Committee. The
Board of Directors of the Association has the right to remove any
member of the Committee, and in the event of the removal, death
or resignation of a member, to appoint a successor. The
Committee shall appoint a chairman and vice-chairman from among
its members, and a secretary and assistant secretary and such
other agents, who need not be members of the Committee, as it may
deem necessary for the effective exercise of its duties. The
Committee may delegate to such agents any powers and duties, both
ministerial and discretionary, as the Committee may deem
expedient or appropriate. Action of the Committee shall be by
majority vote. The Committee need not meet for the purpose of
taking action, but an instrument or concurrent instruments in
writing approved by a majority of its members shall be deemed the
action of the Committee. The members of the Committee shall
serve without compensation. A member of the Committee may not
vote on any matter relating solely to himself or a Participating
Plan with which he is associated as an employee or board member.
Section 11.2 - Administration. The Committee is the named
fiduciary and the administrator of the Program and shall have the
sole power, duty and responsibility of directing the
administration of the Program, except to the extent that (1) such
power, duty and responsibility is delegated to the Recordkeeper
or the Employer, or (2) the Employer is designated as the Loan
Supervisor or Withdrawal Supervisor under the Adoption Agreement,
in which case the Employer shall be the named fiduciary under the
Program with regard to the administration of the loan and/or
withdrawal provisions of the Program. The Committee shall have
the sole and absolute right and power to construe and interpret
the provisions of the Program and administer it for the best
interest of the Participants and Beneficiaries, including, but
not limited to, the following powers and duties:
(a) to construe any ambiguity and interpret any
provision of the Program or supply any omission or reconcile any
inconsistencies in such manner as it deems proper, in its sole
discretion;
(b) to decide all questions arising in connection with
the Program, including all questions relating to eligibility and
to the amount, manner, and time of any payments hereunder, to
determine the right of any person to a payment, and to prescribe
a procedure for claims review;
(c) to establish uniform rules and procedures to be
followed by Participants in electing to make contributions or
have contributions made on their behalf, electing investment
options, requesting withdrawals, and in any other matters
required to administer the Program;
(d) to receive and review reports from the Trustee of
the financial condition and of the receipts and disbursements of
the Trust;
(e) to establish written procedures (consistent with
the regulations prescribed under Code Sections 401(a)(13) and
414(p) and ERISA Section 206(d)) to determine the qualified
status of domestic relations orders and to administer
distributions under qualified domestic relations orders;
(f) to adopt such rules as it deems necessary or
desirable; and
(g) to delegate some or all of its duties,
responsibilities, and authorities to one or more specified
parties, including the Employer and the Recordkeeper.
All directions by the Committee shall be final, binding and
conclusive on all parties concerned, including the Trustee, and
all decisions of the Committee as to the facts of any case and
the meaning, intent, or proper construction of any provision of
the Program, or as to any rule or regulation in its application
to any case shall be final, binding and conclusive, except as
otherwise provided by law. All decisions of the Committee shall
be uniformly and consistently applied to all Participants and
Beneficiaries in similar circumstances.
The Recordkeeper shall maintain and preserve a record for
each Participant which shows all items of information required
for the administration of the Program. All disbursements by the
Trustee shall be made upon, and in accordance with, the written
direction of the Committee (or to the extent such disbursement
authority has been allocated or delegated to it, the Employer).
Any order, direction or advice required under the terms of the
Master Trust Agreement shall be given by the Committee (or the
Employer) in the manner therein set forth.
Section 11.3 - Records. All acts and determinations of the
Committee shall be duly recorded; and all such records, together
with such other documents as may be necessary for the
administration of the Program, shall be preserved in the custody
of the Committee or the Recordkeeper. Copies of the Program and
of any relevant forms and procedures shall be made available at
all reasonable times for examination by the Participants.
Section 11.4 - Liability of the Committee. When making a
determination, the Committee shall be entitled to rely
conclusively upon, and shall be fully protected by the Employer
in any action it may take or suffer in reliance upon, information
furnished by the Employer.
The Employer and the Committee shall be entitled to rely
upon the financial reports and certificates and reports furnished
by consultants and upon all opinions given by legal counsel
selected by the Employer or the Committee.
Section 11.5 - Legal Incompetence. If any Participant or
Beneficiary is a minor, or is in the judgment of the Committee
otherwise legally incapable of personally receiving and giving a
valid receipt for any payment due him hereunder, the Committee
may, unless and until a claim shall have been made by a guardian
or conservator of such person duly appointed by a court of
competent jurisdiction, direct the Trustee that payment be made
to such person's spouse, child, parent, brother or sister, or
other person deemed by the Committee to be a proper person to
receive such payment. Any payment so made shall be a complete
discharge of any liability under the Program for such payment.
Section 11.6 - Correction of Errors. If any change in
records or error results in any Participant or Beneficiary
receiving from the Program an amount other than what he would
have been entitled to receive had the records been correct or had
the error not been made, the Committee, upon discovery of such
error, shall correct the error by adjusting, as far as
practicable, the payments in such manner that the amount to which
such person was correctly entitled shall be paid.
ARTICLE XII
AMENDMENT AND TERMINATION OF PROGRAM
Section 12.1 - Amendment of Program. Amendments to the
Program and the Adoption Agreement may be made on (a) the
approval of the Committee; and (b) the affirmative vote of three-
fourths of Participating Plans. Notwithstanding the above,
amendments to the Program and the Adoption Agreement may be made
on approval by the Committee where in its opinion such amendments
constitute nonsubstantive amendments which will facilitate
administration of the Program or such amendments are necessary to
assure continued tax qualification of the Program under Code
Sections 401(a) and (k) and 501(a), as amended, or compliance
with ERISA. If a Participating Plan declines to abide by an
amendment approved as provided in this Section, such action shall
constitute a termination of the Plan's participation in the
Program as of the effective date of the amendment; except that if
the terms of the Plan's Program which differ from the amended
Program are (1) applicable only to Employees of the Plan, (2) do
not, in the judgment of the Secretary of the Committee, affect
adversely the operation of the Program with respect to other
Participating Plans, and (3) are deemed by the Secretary of the
Committee to be necessary or advisable to effectuate the
continued participation in the Plan in the Program, the Plan may
continue to participate in the Program with such provisions being
treated as transition provisions under Section 6 of the Adoption
Agreement.
A Participating Plan may choose an available
option offered under the Adoption Agreement (other than that
presently elected by it in the Agreement) on prior written notice
to the Committee. If a Participating Plan shall amend any part
of the Program or Adoption Agreement other than electing a
permitted option, such action shall constitute a termination of
its participation in the Program as of the effective date of the
amendment; provided, however, that any amendment to the Program
and Adoption Agreement which is adopted by a Plan which (1) is
applicable only to Employees of the Plan, (2) does not, in the
judgment of the Secretary of the Committee, affect adversely the
operation of the Program with respect to other Participating
Plans, and (3) is deemed by the Secretary of the Committee to be
necessary or advisable to effectuate a transition from another
qualified deferred compensation program to this Program, or to
effectuate the participation of the Plan in this Program, shall
not constitute an "amendment" under the terms of this Section.
No amendment shall cause or permit any part of the Trust
Fund to be used for, or diverted to, purposes other than for the
exclusive benefit of the Participants, or their Beneficiaries or
estates, and no amendment shall have the effect of diverting to
the Employer any portion of such assets. Furthermore, no
amendment, unless it is necessary to meet the requirements of any
present, new or modified state or federal law or regulation,
shall operate to deprive any Participant or Beneficiary of any
benefits which have vested in him prior to such amendment. No
amendment shall increase the duties, obligations, or
responsibilities or change the compensation of the Trustee
without its consent.
Section 12.2 - Termination of Program. The Employer expects
the Program to be continued indefinitely, but the Employer
reserves the right to terminate the Program as to its Employees
as of the end of a Program Year after not less than 90 days'
prior notice to the Committee. Upon a partial or complete
termination of the Program pursuant to this Section, or upon a
complete discontinuance of contributions to the Program, the
Accounts of the Participants affected thereby shall be
nonforfeitable and shall be determined as of the Valuation Date
at the end of the Program Year which the Employer designates as
the date of termination, or the end of the Program Year following
the last taxable year of the Employer for which a substantial
contribution to the Program was made, as the case may be. There
shall be no distribution to Participants of their Accounts except
as provided in, and in accordance with, Sections 8.2, 8.3 and
8.6. If the Employer and the Committee agree, the Committee may
direct the Trustee to transfer the Accounts of the Participants
affected by such partial or complete termination, or by such
complete discontinuance of contributions, to another program
which is qualified under Code Section 401(a) and which provides
for the receipt of such Accounts.
Section 12.3 - Termination of Participation in this Program.
Each Employer fully reserves the right to terminate its
participation in the Program at the end of a Program Year, by
giving at least 90 days' prior notice to the Committee of its
intent to transfer the Accounts of its Employees to the trustee
of a new program qualified under Code Section 401(a). In the
event that the Employer terminates its participation in the
Program in accordance with this Section, all obligations of the
Employer, the Association, the Committee, and the Trustee
accruing hereunder shall cease, except as otherwise provided by
law and the terms of this Program and the Trust Agreement.
On the date that the Employer's participation in the Program
terminates, or as soon thereafter as practicable, the Trustee
shall transfer to the successor trustee the Accounts of every
Employee of the Employer who is then a Participant, accompanied
by a schedule setting forth the value of each Employee's Account
and Subaccounts as of the Valuation Date coinciding with the date
of termination. Upon such transfer, the Trustee shall be
entitled to have its accounts settled as provided in the Trust
Agreement. In addition, the Trustee shall be released and
discharged from all further accountability or liability
respecting such assets and shall not be responsible in any way
for the further disposition of such assets or any part thereof.
The Trustee is authorized, however, to reserve such reasonable
sums of money as it may deem advisable to provide for any charges
against the Trust Fund for which it may be liable, or for its
fees and expenses in connection with the settlement of its
accounts or otherwise.
Section 12.4 - Termination of the Association's Sponsorship
of this Program. The Association fully reserves the right to
terminate its sponsorship of the Program at the end of the
Program Year, by giving at least 90 days' prior notice to the
Trustee and Participating Plans. In the event that the
Association terminates its sponsorship of the Program in
accordance with this Section, all obligations of the Employer,
the Association, the Committee, and the Trustee accruing
hereunder shall cease, except as otherwise provided by law and
the terms of this Program and Trust Agreement. On the date that
the Association's sponsorship of the Program terminates, or as
soon thereafter as practicable, the Trustee shall transfer to the
successor trustee the Accounts of every Employee of the Employer
who is then a Participant, in the manner set forth in Section
12.3 and, except to the extent it is the successor trustee, shall
have the right to have its accounts settled and shall be released
from all further accounting or liability with respect to such
assets, as provided in Section 12.3.
ARTICLE XIII
TOP-HEAVY PROVISIONS
Section 13.1 - Application of this Article. Notwithstanding
any provision of the Program to the contrary, the provisions of
this Article shall apply with respect to any Program Year
beginning on or after January 1, 1984, if, and only if, the
Program is deemed to be a "top-heavy plan" with respect to such
Year within the meaning of Code Section 416. The Program shall
constitute a "top-heavy plan" if --
(a) The Program is not part of an aggregation group
and, as of the determination date, the aggregate value of the
Accounts of key employees under the Program exceeds 60 percent of
the aggregate value of the Accounts of all employees under the
Program, where such ratio is computed in accordance with the
provisions of Code Section 416(g) and any regulations prescribed
thereunder; or
(b) The Program must be included in an aggregation
group and such group is a top-heavy group.
The Employer shall be responsible for determining whether this
Program constitutes a "top-heavy plan." If the Employer
determines that the Program does constitute a "top-heavy plan,"
it shall notify the Committee and the Recordkeeper of its
determination hereunder, so that the Program can be administered
in accordance with this Article. Solely for the purpose of
determining if the Program and any other program included in a
required aggregation group of which this Program is a part is top-
heavy (within the meaning of Section 416(g) of the Code), the
accrued benefit of an Employee other than a key employee (within
the meaning of Section 416(i)(1) of the Code) shall be determined
under (i) the method, if any, that uniformly applies for accrual
purposes under all programs maintained by the Employer or (ii) if
there is no such method, as if such benefit accrued not more
rapidly than the slowest accrual rate permitted under the
fractional accrual rate of Section 411(b)(1)(C) of the Code,
effective January 1, 1987.
Section 13.2 - Definitions. For purposes of this Article,
the following terms shall have the meaning indicated:
(a) Aggregation Group. The term "aggregation group"
means --
(1) each deferred compensation program maintained
by the Employer which qualifies under Code Section 401(a) and in
which a key employee is a participant;
(2) each other program maintained by the Employer
which enables a program described in the preceding clause to meet
the non-discrimination requirements of Code Section 401(a)(4) or
the participation requirements of Code Section 410; and
(3) if the Employer so elects, any other qualified
deferred compensation program of the Employer, if, after the
inclusion of such program in the aggregation group, such group
would continue to meet the non-discrimination requirements of
Code Section 401(a)(4) and the participation requirements of Code
Section 410.
(b) Top-Heavy Group. The term "top-heavy group" means
any aggregation group if, as of the determination date, the sum
of the present value of the cumulative accrued benefits for key
employees under all defined benefit programs included in such
group, and the aggregate value of the accounts of key employees
under all defined contribution programs included in such group,
exceeds 60 percent of the analogous sum determined for all
employees. The present value of the cumulative accrued benefits
for any employee and the value of the account of any employee
shall be computed in accordance with the provisions of Code
Section 416(g) and any regulations prescribed thereunder.
(c) Key Employee. The term "key employee" means any
individual who is a key employee within the meaning of Code
Section 416(i)(1), and such regulations as the Secretary of the
Treasury may prescribe thereunder.
(d) Non-Key Employee. The term "non-key employee"
means any Employee who is not a key employee.
(e) Determination Date. The term "determination date"
means, with respect to any Program Year, the last day of the
preceding Program Year; in the case of the initial Program Year,
however, the determination date is the last day of such year.
(f) Valuation Date. The term "Valuation Date" means,
for purposes of this Article XIII, the last day of the Program
Year containing the determination date.
(g) Value of Account. The "value of the account" of a
Participant in this Program means --
(1) in the case of the initial Program Year, the
Participant's Account as of the Valuation Date for that Program
Year, and
(2) in the case of any other Program Year, the
Participant's Account on the Valuation Date without regard to any
contributions made after the Valuation Date which are allocated
as of such Valuation Date.
Section 13.3 - Vesting.
(a) Top-Heavy Vesting Schedule. If, with respect to
any Program Year, the Program is deemed to be a top-heavy plan,
then each Participant who has completed three or more Plan
Service Years, including at least one Hour of Service after the
Program becomes a top-heavy plan, shall be fully vested in the
portion of his Account attributable to Matching Contributions and
Discretionary Contributions. In no event shall the rule stated
in the preceding sentence be applied to reduce the vested benefit
of a Participant as determined under the vesting schedule
selected by the Employer in Section 5 of the Adoption Agreement.
For purposes of this Section, the term "Plan Service Years" shall
not include periods of Employment with Plans other than the
Employer.
(b) Change in Vesting Schedule. In the event that the
Program ceases to be a top-heavy plan, then each Participant's
interest in the portion of his Account attributable to Matching
Contributions and Discretionary Contributions shall vest in
accordance with the following rules:
(1) Except as provided in paragraphs (2) and (3)
below, the Participant's vested benefit shall be determined under
the terms of the Program and the Adoption Agreement without
regard to the provisions of Section 13.3(a) of the Program.
(2) If a Participant has completed 3 or more Plan
Service Years, his vested benefit shall be determined in
accordance with the provisions of Section 13.3(a) of the Program
or Section 5 of the Adoption Agreement, whichever produces the
greater vested benefit; provided, however, that such a
Participant's vested benefit shall not be greater than that which
is determined under the Program without regard to the provisions
of Section 13.3(a) unless under regulations or rulings
interpreting Code Sections 411 and 416, such a Participant would
otherwise have the right to an election described in Code Section
411(a)(10)(B).
(3) In no event shall a change in the vesting
schedule resulting from a change in the Program's top-heavy
status reduce any Participant's vested interest in the portion of
his Account attributable to Matching Contributions and
Discretionary Contributions (determined as of the date the change
in the vesting schedule occurs).
Section 13.4 - Minimum Contributions or Benefits.
(a) General Rule. If, with respect to any Program
Year, the Program is deemed to be a top-heavy plan, then the
Employer shall make a minimum contribution on behalf of each
Participant who is a non-key employee and who has not separated
from service prior to the end of the Program Year equal to 3
percent of Section 415 Compensation for that Program Year;
provided, however, that if 3 percent exceeds the percentage at
which contributions under the Program are made for the key
employee whose percentage is the highest (determined by dividing
all contributions made on his behalf by so much of his Section
415 Compensation as does not exceed the applicable limitation as
set forth in Section 1.12), such percentage figure shall be
substituted in lieu of "3 percent" in the preceding clause.
Amounts which are otherwise allocated to Participants under the
Program shall be taken into account in determining whether this
minimum contribution requirement is satisfied as follows:
(1) Basic Contributions made on behalf of key
employees may be included in the determination of the highest
percentage contribution, but Basic Contributions made on behalf
of non-key employees shall not be taken into account in
determining whether the minimum contribution is satisfied.
(2) Matching Contributions shall not be taken into
account in determining whether the minimum contribution is
satisfied.
(3) Discretionary Contributions, including those
Discretionary Contributions used for purposes of Section 1.2 and
1.5A, shall be taken into account in determining whether this
minimum contribution is satisfied.
(b) Nonduplication of Contributions. If the Employer
maintains another deferred compensation program, the Employer
shall provide non-key employees who participate in both programs
with a minimum contribution under this Program.
(c) Limitation on Minimum Contribution. This Section
sets forth the requirements imposed by Code Section 416(c) and
the regulations prescribed thereunder and shall not be
interpreted to impose any requirements other than, or provide any
contributions greater than, those mandated by such provisions of
law.
Section 13.5 - Limitation on Compensation. The limitation
on compensation in Section 1.12 shall be applied in determining
Compensation under the Program, effective January 1, 1989.
Section 13.6 - Limits on Benefits and Contributions.
(a) Basic Limitation. If, with respect to any Program
Year, the Program is deemed to be a top-heavy plan, then the
Defined Benefit Fraction and the Defined Contribution Fraction,
as defined in Sections 1.14 and 1.15, shall be computed by
substituting "1.0" for "1.25" wherever the latter appears in
those Sections.
(b) Exception. Subsection (a) shall not apply,
however, if the Program is not a "super top-heavy plan" (as
defined in Subsection (c)) and the Program provides each non-key
employee with the additional minimum benefit or contribution
described in Subsection (d).
(c) Super Top-Heavy Plan. The Program shall constitute
a "super top-heavy plan" unless the Program would not be a top-
heavy plan if "90 percent" were substituted for "60 percent"
wherever the latter appears in Sections 13.1(a) and 13.2(b).
(d) Additional Minimum Contribution. The requirements
of this Subsection shall be satisfied if the Program would
satisfy the minimum contribution provisions of Section 13.4 if
such additional contributions or benefits are provided under this
Program or another deferred compensation program as shall be
required under regulations prescribed under Code Section 416(f)
and (h)(2)(A).
(e) Coordination With Section 1.15. If the basic
limitation described in Subsection (a) of this Section applies to
the Program with respect to any Program Year, and the election is
made to compute the denominator of the Defined Contribution
Fraction in accordance with the transition rule described in the
definition of "Defined Contribution Fraction" in Section 1.15,
then the transition rule in such Section shall be applied by
substituting "$41,500" for "$51,875".
ARTICLE XIV
MISCELLANEOUS
Section 14.1 - Action by Employer. Whenever under the terms
of this Program the Employer is permitted or required to perform
any act, it shall be done and performed by an officer of the
Employer duly authorized by its board of directors unless the
authority to perform the act has been otherwise delegated
pursuant to this Program.
Section 14.2 - Liability of Employer. The Employer shall
have no liability for payments under the Program or for the
investment experience of the Trust Fund except as otherwise
provided by law. Persons entitled to payments hereunder shall
look solely to the Trust Fund under the Program.
Section 14.3 - Successor to Business of Employer. Unless
the Program is sooner terminated, a successor to the business of
the Employer shall continue the Program and such successor shall
thereupon succeed to all the rights, powers and duties of the
Employer hereunder. The Employment of any Employee who has
continued in the employ of such successor shall not be deemed to
have terminated or severed for any purpose hereunder.
Section 14.4 - Dissolution of the Employer. In the event
that the Employer is dissolved by reason of bankruptcy or
insolvency, there being no successor to the business of the
Employer, the Program hereunder shall terminate as to that
Employer's Employees and the Trustee shall proceed in the same
manner as though the Program were being terminated as provided in
Article XII.
Section 14.5 - Interest in the Fund. Except to the extent
provided herein, or otherwise required by law, no Participant,
Beneficiary, nor any dependent of a Participant, nor any person
claiming by or through such Participant, nor any other person,
partnership, firm or corporation shall have any right, title or
interest in or to the Trust Fund or any part thereof. Except as
otherwise required by law, the Trust Fund shall not be liable for
or subject to the debts, contracts, or liabilities of any such
person, partnerships, firms or corporations, and no such person,
partnership, firm or corporation shall have any right to any
portion of the Fund.
The Employer shall have no beneficial interest in the Trust
Fund, and no part of the Trust Fund or the income therefrom shall
revert or be repaid to the Employer; provided, however, that (1)
forfeitures arising under the Program shall be used to reduce
subsequent Matching or Discretionary Contributions in accordance
with Section 6.2; (2) if the Internal Revenue Service makes a
final determination that the Program does not initially meet the
requirements of Code Sections 401(a) and (k), any assets
attributable to Employer contributions shall be returned to the
Employer within one calendar year of the date of such
determination; and (3) if a contribution is made by the Employer
by a mistake of fact, such contribution shall be returned to the
Employer within one year of the mistaken payment, in which event
the amount that may be returned shall not be more than the excess
of the amount actually contributed over the amount which would
have been contributed without the mistake, as adjusted by the
amount of any losses (but not gains) attributable to such excess
contribution.
Section 14.6 - Claims. Any payment to a Participant or
Beneficiary, or to their legal representatives, in accordance
with the provisions of the Program, shall, to the extent of the
amount thereof, constitute full satisfaction of all claims
hereunder against the Trustee, the Association, the Committee,
and the Employer. Such Participant or Beneficiary or legal
representative, as a condition precedent to such payment, may be
required to execute a receipt therefor in such forms as shall be
determined by the Trustee, the Association, the Committee, or the
Employer, as the case may be.
Section 14.7 - Mergers, Consolidations and Transfers of
Assets. In the event that this Program merges or consolidates
with, or transfers any of its assets or liabilities to, any other
program of deferred compensation qualified under Code Section
401(a), no Participant hereunder shall, solely on account of such
merger, consolidation, or transfer, be entitled to a benefit
immediately following such event which is less than the benefit
to which he was entitled immediately preceding such event.
Section 14.8 - Non-assignment of Accounts. A Participant's
interest under this Program shall be payable only in the manner
provided in the Program and shall not be transferred, assigned,
or alienated, except as provided in Article IX (relating to
loans) or as required by the terms of a "qualified domestic
relations order" (as defined in Code Section 414(p)) entered on
or after January 1, 1985. The Committee shall treat a domestic
relations order entered before January 1, 1985 as a qualified
domestic relations order if distribution of a Participant's
interest pursuant to such order has commenced as of such date.
The Committee may, in its sole discretion, treat any other
domestic relations order entered before January 1, 1985 as a
qualified domestic relations order.
In the case of any domestic relations order received by the
Committee on or after January 1, 1985, the Committee shall
promptly notify the Participant and each alternate payee (as
defined in Code Section 414(p)(8)) of the receipt of such order
and the procedures for determining the qualified status of
domestic relations orders. Within a reasonable period after
receipt of such order, the Committee shall determine whether such
order is qualified and shall notify the Participant and each
alternate payee of such determination.
Except as provided in the following sentence, the amounts to
which an alternate payee would have a right if an order is
determined to be a qualified domestic relations order shall not
be segregated in a separate account during the period in which
the qualified status of the order is being determined (by the
Committee, a court, or otherwise), but the Participant's Account
shall not be available for loans or withdrawals during such
period. If, however, the Participant would otherwise be entitled
to an immediate distribution of his Account during any period in
which the qualified status of a domestic relations order is being
determined, the Committee shall direct the Trustee to segregate
in a separate account the amounts that would be payable to each
alternate payee if the order is determined to be a qualified
domestic relations order. If a separate account is established
pursuant to the preceding sentence, the amounts held therein
shall be invested in the money market fund, if any, which has
been elected as an investment fund in Section 5B of the Adoption
Agreement, or, if no money market fund has been elected as an
investment fund by the Employer in Section 5B of the Adoption
Agreement, such amounts shall be invested in the income fund
which has been elected as an investment fund by the Employer in
Section 5B of the Adoption Agreement, pending a final
determination as to the order's qualified status.
If it is determined that the order is not qualified, then
the Committee shall direct the Trustee (i) to pay the segregated
amounts (plus any earnings thereon) to the person or persons who
would have been entitled to such amounts if there had been no
order, or (ii) if no amounts were segregated in separate
accounts, to disregard the order in determining the portion of
the Participant's Account that is available for loans,
withdrawals, and distributions.
If the order (or modification thereof) is determined to be a
qualified domestic relations order, the Committee shall direct
the Trustee to pay each alternate payee the amounts to which he
is entitled. Such payment shall be made as soon as practicable,
to the extent consistent with the terms of the order, even if the
Participant remains in the Employment of the Employer and has not
attained age 55. If a qualified domestic relations order
requires payment to an alternate payee to be deferred, the
Committee shall direct the Trustee to hold the amount payable to
the alternate payee in a separate account for the benefit of such
payee, and the alternate payee shall have the right to direct
investments with respect to such separate account.
Section 14.9 - No Guarantee. Neither the Employer, the
Association, the Committee, nor the Trustee guarantees the Trust
Fund in any manner against loss or depreciation.
Section 14.10 - Definition of Words. Feminine or neuter
pronouns shall be substituted for those of the masculine form,
and the plural shall be substituted for the singular, in any
place or places herein where the context may require such
substitution or substitutions.
Section 14.11 - Titles. The titles of Articles and Sections
are included only for convenience and shall not be construed as
part of the Program or in any respect to affect or modify its
provisions.
Section 14.12 - Construction. In any question of
interpretation or other matter of doubt, the Trustee, the
Committee, the Recordkeeper, and the Employer may rely upon the
opinion of legal counsel. The provisions of the Program shall be
construed, administered, and enforced according to laws of the
State of Illinois to the extent that the application of state law
to the Program has not been preempted by Section 514 of ERISA.
Section 14.13 - Employment Contract. Nothing contained in
this Program or the Trust Agreement shall be held or construed to
create any liability upon the Employer to retain any Employee in
its employ or to modify the Employer's employment policies.
Section 14.14 - Failure to Qualify. If the Employer's
Program fails to attain qualification, the funds of the
Employer's Program will be removed from the Trust under the
Master Trust Agreement as soon as administratively convenient and
held as part of a separate trust under Section 8 of the Adoption
Agreement.
Section 14.15 - Prior Programs. If the assets of any
program that is a profit-sharing program with a cash or deferred
arrangement become subject to the provisions of this Program
prior to January 1, 1995, such program shall be designated as a
"Prior Program" under this Section 14.15. Each Prior Program is
hereby amended to comply with the provisions set forth in
Attachment A, effective as of the later of (i) the respective
dates set forth in such attachment with regard to each such
provision or (ii) the date of the establishment of such Prior
Program, until such assets are no longer subject to the
provisions of the Prior Program. Notwithstanding the foregoing,
if the Prior Program contains a provision that is substantially
similar to a provision in Attachment A, the provision already set
forth in the Prior Program shall apply rather than the provision
in Attachment A.
(As amended through 6/22/94)
H:\j10bwadl\anna\document\000198.doc
Attachment A
to
Tax-Favored Savings Program
Each Prior Program (as defined in Program Section 14.15) is
amended under such Program Section to comply with the following
provisions, effective as of the later of (i) the respective dates
set forth below or (ii) the date of the establishment of such
Prior Program, until the assets of the Prior Program are no
longer subject to the provisions of the Prior Program.
Attachment Section 1 - Elective Deferrals. The amount of
elective deferrals made on behalf of any participant shall be
subject to the limitations set forth in the Prior Program, and
such contributions may be restricted, reduced, or to the extent
already made to the Trust, refunded in accordance with the
provisions of the Prior Program, in order to ensure that such
limitations are satisfied. In no event shall the amount of
elective deferrals made on behalf of any participant exceed
$7,000 (as adjusted by the Secretary of the Treasury for
increases in the cost of living) in any taxable year of the
participant, effective January 1, 1987. The foregoing limit
shall not apply to amounts of elective deferrals attributable to
service performed in 1986 and described in Section 1105(c)(5) of
the Tax Reform Act of 1986.
Attachment Section 2 - Limitations on Basic and Matching
Contributions.
(a) Dollar Limit on Elective Deferrals. The total
amount of elective deferrals made on behalf of any participant
for a program year under the Prior Program shall be limited in
accordance with Attachment Section 1.
(b) Limit on Actual Deferral Percentage. The Actual
Deferral Percentage (as defined in Program Section 1.2) for
participants who are Highly Compensated Employees (as defined in
Internal Revenue Code Section 414(q)) shall not exceed the
greater of:
(1) The Actual Deferral Percentage for all other
participants multiplied by 1.25; or
(2) The lesser of (i) the Actual Deferral
Percentage for all other participants multiplied by 2, or (ii)
the Actual Deferral Percentage for all other participants plus 2
percentage points or such lesser amount as may be prescribed by
the Secretary of the Treasury in regulations, as described in
Subsection (d) below, to prevent the multiple use of this
alternative limitation with respect to any Highly Compensated
Employee.
Rules shall be prescribed, which shall be applied by the
employer in limiting the elective deferrals which may be made on
behalf of participants who are Highly Compensated Employees so
that this percentage limitation is satisfied.
(c) Limit on Average Contribution Percentage. If
matching contributions are made under the Prior Program, the
Average Contribution Percentage (as defined in Program Section
1.5A) for participants who are Highly Compensated Employees (as
defined in Internal Revenue Code Section 414(q)) shall not exceed
the greater of:
(1) The Average Contribution Percentage for all
other participants multiplied by 1.25; or
(2) The lesser of (i) the Average Contribution
Percentage for all other participants multiplied by 2, or (ii)
the Average Contribution Percentage for all other participants
plus 2 percentage points or such lesser amount as may be
prescribed by the Secretary of the Treasury in regulations, as
described in Subsection (d) below, to prevent the multiple use of
this alternative limitation with respect to any Highly
Compensated Employee.
Rules shall be prescribed, which shall be applied by the
employer in limiting the matching contributions which may be made
on behalf of Participants who are Highly Compensated Employees so
that this percentage limitation is satisfied. To the extent
permitted under applicable law or regulations, if matching
contributions are taken into account for purposes of calculating
the Actual Deferral Percentage, such matching contributions shall
not be subject to this Section.
(d) Limit on Multiple Use of Alternative Limitation.
This Subsection shall be applicable with respect to those program
years in which both the Actual Deferral Percentage and the
Average Contribution Percentage of participants who are Highly
Compensated Employees exceed the respective percentages of all
other participants by more than 125%. In no event shall the sum
of the Actual Deferral Percentage and the Average Contribution
Percentage of the entire group of eligible Highly Compensated
Employees be greater than the aggregate limit. For purposes of
this Subsection, the term "aggregate limit" shall mean the
aggregate limit as determined in accordance with rules and
regulations prescribed by the Secretary of the Treasury. Amounts
in excess of the aggregate limit shall be corrected by reducing
the Average Contribution Percentage of Highly Compensated
Employees pursuant to Attachment Section 6.
(e) Collectively Bargained Employees. If any employees
of the employer are included in a unit of employees covered by a
collective bargaining agreement, the employees of the employer
shall be divided into two groups, one group which shall include
those employees who are so covered and the other group which
shall include all those other employees who are not so covered.
The Actual Deferral Percentage, the Average Contribution
Percentage and the Multiple Use tests specified above shall be
performed separately for each group.
(f) Effective Date of Limitations on Basic and Matching
Contributions. The provisions of this Section shall be effective
as of January 1, 1987.
Attachment Section 3 - Limitation Applicable to All Participants'
Accounts.
(a) If the employer does not maintain any other
qualified program, the amount of annual additions which may be
credited to a participant's account for any program year shall
not exceed the lesser of (1) $30,000 (or if greater, one-fourth
of the defined benefit dollar limitation set forth in Section
415(b)(1) of the Internal Revenue Code, as in effect for the
program year), or (2) 25 percent of the participant's 415
Compensation (as defined in Program Section 1.12) for such
program year, effective January 1, 1987. The limit in (2) above
shall not apply to any contribution for medical benefits (within
the meaning of Section 419A(f)(2) of the Code) after a
participant's severance from service, or to any amount otherwise
treated as an annual addition under Section 415(1)(1) of the
Code.
(b) If, as a result of the allocation of forfeitures, a
reasonable error in estimating a participant's Section 415
Compensation, or a reasonable error in determining the amount of
elective deferrals that may be made with respect to any
individual under the limits of Code Section 415 or under such
limited facts and circumstances as are specified by the
Commissioner of Internal Revenue, there is an excess amount with
respect to a participant for the program year, such excess amount
will be disposed of in accordance with the provisions of the
Prior Program.
Attachment Section 4 - Vesting Schedule. A participant shall
have a fully vested interest in his elective deferrals subaccount
and his rollover contribution subaccount, if any, at all times.
A participant's interest in his matching contribution subaccount,
if any, and his discretionary contribution subaccount, if any,
shall vest, effective January 1, 1989, at the rate or rates
specified in the Prior Program, or the rates set forth in
Internal Revenue Code Section 411(a), whichever rates are more
favorable to the participants.
Attachment Section 5 - Required Distributions. Effective January
1, 1989, notwithstanding any provision of the Prior Program that
is or may be interpreted to the contrary, distributions under the
Prior Program shall be made in accordance with the regulations
under Internal Revenue Code Section 401(a)(9), including Treas.
Reg. 1.401(a)(9)-2. Under no circumstances shall payment
hereunder commence later than April 1 of the calendar year
following the calendar year in which the participant attains the
age of 70-1/2, unless the participant attained age 70-1/2 before
January 1, 1988 (and was not a 5-percent owner during any program
year since the participant attained the age of 66-1/2), in which
case the applicable rule in the Prior Program as in effect on
December 31, 1988 will continue to apply. In the case of a
participant who attained the age of 70-1/2 in 1988 who was not a
5-percent owner and who had not separated from service prior to
January 1, 1989, payment hereunder must commence no later than
April 1, 1990. In no event shall the amount paid to the
participant be less than the minimum amount (nor shall the time
of making any payment be later than the latest date) required by
regulations under Code Section 401(a)(9).
Attachment Section 6 - Distribution of Excess Deferrals, Excess
Contributions, and Excess Matching Contributions. The following
procedures shall apply in the disposition of Excess Deferrals,
Excess Contributions, and Excess Matching Contributions (as such
terms are defined in the Program, effective January 1, 1987. A
distribution to a participant of Excess Contributions or Excess
Matching Contributions shall not require the consent of the
participant.
(a) Excess Deferrals. Notwithstanding any other
provision in the Prior Program, Excess Deferrals with respect to
a participant, and the income allocable thereto, shall be
distributed to the participant who claims such Excess Deferral
for the present or preceding program year in accordance with
Internal Revenue Code Section 402(g), this Subsection, and the
rules prescribed for such purpose. Such distribution shall be
made no later than April 15 of the program year following the
program year to which the Excess Deferral relates.
(1) The participant's claim shall be in writing;
shall be submitted to the program administrator no later than
March 1 of the program year following the program year to which
the Excess Deferral relates; shall specify the amount of the
participant's Excess Contribution for the present or preceding
program year; and shall be accompanied by the participant's
written statement that, if such amount is not distributed, such
amount when added to amounts deferred under the Prior Program and
other plans or arrangements described in Code Sections 401(k),
408(k) or 403(b) exceed the limit imposed on the participant by
Code Section 402(g) for the year in which the deferral occurred.
A participant is deemed to have notified the Prior Program of
Excess Deferrals and claimed such amounts to the extent the
participant has Excess Deferrals for the taxable year calculated
by taking into account only elective deferrals under the Prior
Program and elective deferrals under other programs of the
employer.
(2) The program administrator shall notify the
recordkeeper of such Excess Deferral and direct the Trustee to
refund to the participant such amount, together with any
allocable earnings or reduced by allocable losses, as determined
by the recordkeeper in accordance with Subsection (f) of this
Section. The amount of Excess Deferrals to be refunded to a
participant with respect to a taxable year shall be reduced by
any Excess Contributions previously distributed to the
participant with respect to the program year in that taxable
year. Matching contributions that have been made with respect to
Excess Deferrals shall be forfeited to the extent required by
rules or regulations prescribed by the Secretary of the Treasury.
Any distribution of Excess Deferral amounts shall be designated
as such in accordance with such rules and regulations as the
Secretary of the Treasury may prescribe.
(b) Excess Contributions. In the event that at the
end of the program year the Actual Deferral Percentage for Highly
Compensated Employees exceeds the limitation set forth above, the
employer shall determine the maximum deferral percentage which a
Highly Compensated Employee may have in order for the Actual
Deferral Percentage for all Highly Compensated Employees to
satisfy the limitation. Such determination shall be made by
reducing contributions made on behalf of Highly Compensated
Employees in order of their deferral percentages, beginning with
the highest deferral percentage. The reduction for a Highly
Compensated Employee whose deferral percentage is determined
under the family aggregation rules shall be determined according
to such rules and regulations as the Secretary of the Treasury
may provide. The Excess Contributions made on behalf of those
Highly Compensated Employees with deferral percentages in excess
of such maximum will be refunded as provided in this Subsection
so that such Highly Compensated Employees' deferral percentages
do not exceed the maximum.
(1) The employer shall notify the recordkeeper of
such adjustments and direct the Trustee to refund such amount,
together with any allocable earnings or losses, to affected
participants.
(2) Notwithstanding any other provision of the
Prior Program, the Excess Contribution, and any earnings or
losses allocable thereto, shall be distributed within the first 2-
1/2 months of the program year following the year to which such
Excess Contributions relate. The amount of Excess Contributions
to be distributed with respect to a participant for a program
year shall be reduced by any Excess Deferrals previously
distributed to such participant for the participant's taxable
year ending with the program year. Matching contributions that
have been made with respect to Excess Contributions shall be
forfeited to the extent required by rules or regulations
prescribed by the Secretary of the Treasury.
(3) The earnings or losses allocable to Excess
Contributions shall be determined in accordance with Subsection
(f) of this Section.
(4) Amounts distributed under this Subsection
shall first be treated as distributions from the participant's
elective deferrals subaccount and shall be treated as distributed
from the participant's matching or discretionary contribution
subaccounts, if any, only to the extent the amount to be
distributed exceeds the balance in the participant's elective
deferrals subaccount.
(c) Excess Matching Contributions. In the event that
at the end of the program year the Average Contribution
Percentage for Highly Compensated Employees exceeds the
limitation set forth above, the employer shall determine the
maximum contribution percentage which a Highly Compensated
Employee may have in order for the Average Contribution
Percentage for all Highly Compensated Employees to satisfy the
limitation. Such determination shall be made by reducing
contributions made on behalf of Highly Compensated Employees in
order of their contribution percentages, beginning with the
highest of such percentages. The reduction for a Highly
Compensated Employee whose contribution percentage is determined
under the family aggregation rules shall be determined in
accordance with such rules and regulations as the Secretary of
the Treasury may prescribe. The Excess Matching Contributions
made on behalf of those Highly Compensated Employees with
contribution percentages in excess of such maximum will be
forfeited or distributed as provided in this Subsection,
depending on whether or not the affected Highly Compensated
Employees are vested in such contributions, so that such Highly
Compensated Employees' contribution percentages do not exceed the
maximum.
(1) The employer shall notify the recordkeeper of
such adjustments and direct the Trustee to dispose of such Excess
Matching Contributions, together with any allocable earnings or
losses, by distributing Excess Matching Contributions and
allocable earnings or losses to those affected Highly Compensated
participants who are vested in such amounts, and by treating the
remaining Excess Matching Contributions and allocable earnings or
losses as a forfeiture under the Prior Program.
(2) Notwithstanding any other provision of the
Program, the Excess Matching Contribution, and earnings or losses
allocable thereto, shall be disposed of within the first 2-1/2
months of the program year following the year to which such
Excess Matching Contributions relate.
(3) The earnings or losses allocable to Excess
Matching Contributions shall be determined in accordance with
Subsection (f) of this Section.
(d) Ordering. The calculation and disposition of the
excess amounts in this Section shall be made in accordance with
rules prescribed by the Secretary of the Treasury for
coordinating such items.
(e) Forfeitures. Any amount required to be forfeited
under this Section shall be used to reduce subsequent employer
contributions.
(f) Income Allocable to Corrective Distributions. The
income allocable to Excess Deferrals, Excess Contributions and
Excess Matching Contributions, respectively, shall be equal to
the sum of the allocable gain or loss for the program year and
the allocable gain or loss for the period between the end of the
program year and the date of distribution. Any reasonable method
for computing the income allocable to such excess amounts may be
used, provided that the method does not violate Code Section
401(a)(4), is used consistently for all participants in the Prior
Program for all corrective distributions under the Prior Program
for the program year, and is used by the Prior Program for
allocating income to participants' accounts.
Attachment Section 7 - Rollover Distributions. The following
provisions apply to distributions made on or after January 1,
1993.
(a) Direct Rollovers. Notwithstanding any provision
of the Prior Program to the contrary that would otherwise limit a
distributee's election under this Section, a distributee may
elect, at the time, in the manner, and subject to the
restrictions all as prescribed by the program administrator, to
have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the
distributee in a direct rollover. Payment to an eligible
retirement plan shall be made in accordance with the rules
prescribed by the program administrator.
(b) Definitions. For purposes of this Section, the
following definitions apply:
(1) An "eligible rollover distribution" is any
distribution of all or any portion of the balance to the credit
of the distributee, except that an eligible rollover distribution
does not include: any distribution that is one of a series of
substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the
distributee or the joint lives (or joint life expectancies) of
the distributee and the distributee's designated beneficiary, or
for a specified period of ten years or more; any distribution to
the extent such distribution is required under Internal Revenue
Code Section 401(a)(9); and the portion of any distribution that
is not includible in gross income determined without regard to
the exclusion for net unrealized appreciation with respect to
employer securities).
(2) An "eligible retirement plan" is an
individual retirement account described in Code Section 408(a),
an individual retirement annuity described in Code Section
408(b), an annuity plan described in Code Section 403(a), or a
qualified trust described in Code Section 401(a), that accepts
the distributee's eligible rollover distribution. However, in
the case of an eligible rollover distribution to the surviving
spouse, an eligible retirement plan is an individual retirement
account or individual retirement annuity.
(3) A "distributee" includes an employee or
former employee. In addition, the employee's or former
employee's surviving spouse and the employee's or former
employee's spouse or former spouse who is the alternate payee
under a qualified domestic relations order, as defined in Code
Section 414(p), are distributees with regard to the interest of
the spouse or former spouse.
(4) A "direct rollover" is a payment by the Prior
Program to the eligible retirement plan specified by the
distributee.
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