SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------------
FORM S-8
REGISTRATION STATEMENT
under
The Securities Act of 1933
--------------------------------
C-COR ELECTRONICS, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 24-0811591
(State or other jurisdic- (I.R.S. Employer
tion of incorporation or Identification No.)
organization)
60 Decibel Road
State College, Pennsylvania 16801
(Address of Principal Executive Offices) (Zip Code)
C-COR Electronics, Inc.
Retirement Savings and Profit Sharing Plan
(Full title of the plan)
Chris A. Miller
Vice President-Finance, Secretary
and Treasurer
C-COR Electronics, Inc.
60 Decibel Road
State College, Pennsylvania 16801
(Name and address of agent for service)
(814) 238-2461
(Telephone number, including area code, of agent for service)
<PAGE>
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Per Offering Registra-
Registered Registered Share Price tion Fee
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
par value $.10 50,000
per share(1) shares $15.00(2) $750,000(2) $259
- -----------------------------------------------------------------------------
<FN>
(1) In addition, pursuant to Rule 416(c) under the Securities Act of 1933,
this Registration Statement also covers an indeterminate amount of
interests to be offered or sold pursuant to the employee benefit plan
described herein.
(2) Estimated solely for the purpose of calculating the registration fee.
In accordance with Rule 457(c), the price shown is based upon the
average of the high and low price of C-COR Electronics, Inc. Common
Stock on April 9, 1996, as reported on the NASDAQ National Market
System.
</FN>
</TABLE>
<PAGE>
PART I - INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The documents containing the information specified in Part I
of this Registration Statement will be given or sent to all persons who
participate in the C-COR Electronics, Inc. Retirement Savings and Profit Sharing
Plan (the "Plan").
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
Item 3. Incorporation of Certain Documents by Reference.
The following documents filed with the Commission pursuant to
the Securities Exchange Act of 1934 (the "Exchange Act") by C-COR Electronics,
Inc. (the "Company") (File No. 0-10726) are incorporated herein by reference:
(1) the Company's Annual Report on Form 10-K for the year ended June 30, 1995;
(2) the Company's Quarterly Reports on Form 10-Q for the quarters ended
September 29, 1995 and December 29, 1995; and (3) the description of the
Company's Common Stock contained in the Company's Registration Statement on Form
8-A filed with the Commission on October 27, 1982 (as amended by Form 8 filed
with the Commission on July 3, 1990).
Each document filed by the Company or by the Plan after the
date hereof pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
prior to the filing of a post-effective amendment which indicates that all
securities offered hereby have been sold or which deregisters all securities
remaining unsold, shall be deemed to be incorporated by reference in this
Registration Statement and shall be part hereof from the date of filing of such
document.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
Sections 1741 through 1750 of the Pennsylvania Business
Corporation Law of 1988 permits, and in some cases requires, the indemnification
of officers, directors and employees of the Company. Article VII Section 7-1 of
the Company's bylaws provides that the Company shall indemnify any director or
officer of the Company against expenses (including legal fees), judgments, fines
and amounts paid in settlement, actually and reasonably incurred by him, to the
fullest extent now or hereafter permitted by law in connection with any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, brought or threatened to be brought
against him, including actions or suits by or in the right of the Company, by
reason of the fact that he is or was a director or officer of the Company, its
parent or any of its subsidiaries, or acted as a director or officer or in any
other capacity on behalf of the Company, its parent or any of its subsidiaries
or is or was serving at the request of the Company as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise.
The Board of Directors by resolution may similarly indemnify
any person other than a director or officer of the Company to the fullest extent
now or hereafter permitted by law for liabilities incurred by him in connection
with services rendered by him for or at the request of the Company, its parent
or any of its subsidiaries.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
4 Specimen copy of Common Stock certificate (incorporated by
reference to Exhibit 4 to the Registrant's Registration
Statement on Form S-8, File No. 2-95959)
5 Opinion of Ballard Spahr Andrews & Ingersoll
23.1 Consent of KPMG Peat Marwick, LLP
23.2 Consent of Ballard Spahr Andrews & Ingersoll (included in
Exhibit 5)
24 Power of Attorney (included on signature page)
99 C-COR Electronics, Inc. Retirement Savings and Profit Sharing
Plan
Item 9. Undertakings.
A. The Company hereby undertakes:
(1) to file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement: (i) to
include any prospectus required by Section 10(a)(3) of the Securities Act of
1933; (ii) to reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement; and (iii) to include any material
information with respect to the plan of distribution not previously disclosed in
the registration statement or any material change to such information in the
registration statement; provided, however, that clauses (i) and (ii) above do
not apply if the registration statement is on Form S-3 or Form S-8, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Company pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
B. The Company hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the Company's
annual report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act, and will be governed by the final adjudication
of such issue.
<PAGE>
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities
Act of 1933, the registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-8 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of State College, Commonwealth of
Pennsylvania, on January 23, 1996.
C-COR ELECTRONICS, INC.
By: /s/ Richard E. Perry
Richard E. Perry
Chairman and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints, RICHARD E. PERRY and CHRIS A.
MILLER and each of them, as true and lawful attorneys-in-fact and agents with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any or all amendments (including
post-effective amendments) to this Registration Statement, and to file the same
with all exhibits thereto, and other documents in connection therewith, granting
unto said attorneys-in-fact and agents full power and authority to do and be
done in connection with the above premises, as fully to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/ Richard E. Perry Chairman and Chief January 23, 1996
Richard E. Perry Executive Officer
(Principal Executive
Officer)
<PAGE>
Signature Title Date
/s/ Donald M. Cook, Jr. Director January 23, 1996
- -------------------------
Donald M. Cook, Jr.
/s/ I.N. Rendall Harper, Jr. Director January 23, 1996
- ----------------------------
I.N. Rendall Harper, Jr.
/s/ Anne P. Jones Director January 23, 1996
- -------------------------
Anne P. Jones
/s/ John J. Omlor Director January 23, 1996
- -------------------------
John J. Omlor
/s/ Frank Rusinko, Jr. Director January 23, 1996
- -------------------------
Frank Rusinko, Jr.
/s/ James J. Tietjen Director January 23, 1996
- -------------------------
James J. Tietjen
/s/ Philip L. Walker, Jr. Director January 23, 1996
- -------------------------
Philip L. Walker, Jr.
/s/ Chris A. Miller Vice President-Finance, January 23, 1996
Chris A. Miller Treasurer and
Secretary (Principal
Financial Officer)
/s/ Joseph E. Zavacky Controller and January 23, 1996
Joseph E. Zavacky Assistant Secretary
(Principal Accounting Officer)
<PAGE>
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Act
of 1933, C-COR Electronics, Inc., as Plan Administrator for the C-COR
Electronics, Inc. Retirement Savings and Profit Sharing Plan, has caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of State College, Commonwealth of Pennsylvania, on
January 23, 1996.
C-COR ELECTRONICS, INC.
By:/s/ Richard E. Perry
Richard E. Perry
<PAGE>
EXHIBIT INDEX
Number Exhibit
4 Specimen copy of Common Stock certificate
(incorporated by reference to Exhibit 4 to the
Registrant's Registration Statement on Form S-8,
File No. 2-95959)
5 Opinion of Ballard Spahr Andrews & Ingersoll
23.1 Consent of KPMG Peat Marwick, LLP
23.2 Consent of Ballard Spahr Andrews & Ingersoll
(included in Exhibit 5)
24 Power of Attorney (included on signature page)
99 C-COR Electronics, Inc. Retirement Savings and
Profit Sharing Plan
<PAGE>
[LETTERHEAD OF BALLARD SPAHR ANDREWS & INGERSOLL]
April 12, 1996
C-COR Electronics, Inc.
60 Decibel Road
State College, PA 16801
Re: Registration Statement on Form S-8
Gentlemen:
We have acted as special counsel to C-COR Electronics, Inc.
(the "Company") in connection with the registration under the Securities Act of
1933, as amended, of interests in the C-COR Electronics, Inc. Retirement Savings
and Profit Sharing Plan (the "Plan") and 50,000 shares of common stock of the
Company, par value $.10 per share (the "Shares"), issuable thereunder.
In rendering our opinion, we have reviewed the Plan and such
certificates, documents, corporate records and other instruments as in our
judgment are necessary or appropriate to enable us to render the opinion
expressed below. In giving this opinion, we are assuming the authenticity of all
instruments presented to us as originals, the conformity with the originals of
all instruments presented to us as copies and the genuineness of all signatures.
Based on the foregoing, we are of the opinion that the Shares,
when issued in accordance with the terms of the Plan, will be legally issued,
fully paid and nonassessable.
We consent to the filing of this opinion as Exhibit 5 to the
Registration Statement on Form S-8 being filed with respect to the offering of
the Shares.
Very truly yours,
/s/ Ballard Spahr Andrews & Ingersoll
<PAGE>
TO THE BOARD OF DIRECTORS
C-COR ELECTRONICS, INC. AND SUBSIDIARIES:
ACCOUNTANTS' CONSENT
We consent to incorporation by reference in this registration statement on
Form S-8 of C-COR Electronics, Inc. and Subsidiaries of our report dated
August 4, 1995, relating to the consolidated balance sheets of C-COR
Electronics, Inc. and Subsidiaries as of June 30, 1995 and June 24, 1994,
and the related consolidated statements of income, shareholders' equity and cash
flows for each of the years in the three-year period ended June 30, 1995, and
all related schedules, which reports are included in or incorporated by
reference in the June 30, 1995 annual report on Form 10-K of C-COR Electronics,
Inc. and Subsidiaries.
/s/ KPMG Peat Marwick, LLP
State College, Pennsylvania
April 12, 1996
<PAGE>
CONSENT OF COUNSEL
The consent of Ballard Spahr Andrews & Ingersoll is contained
in its opinion filed as Exhibit 5 to the Registration Statement.
<PAGE>
C-COR ELECTRONICS, INC.
RETIREMENT SAVINGS AND PROFIT SHARING PLAN
As Amended and Restated July 1, 1989
Including amendments through April 19, 1994
TABLE OF CONTENTS
PURPOSE 1
ARTICLE I DEFINITIONS 2
1.01 "Account" 2
1.02 "Administrator" 2
1.03 "Affiliated Company" 2
1.04 "Beneficiary" 2
1.05 "Board of Directors" 2
1.06 "Code" 2
1.07 "Company" 2
1.08 "Company Stock" 2
1.09 "Compensation" 3
1.10 "Designated Fiduciary" 3
1.11 "Disability" 3
1.12 "Eligible Employee" 3
1.13 "Employee" 3
1.14 "Employee-Directed Contributions" 4
1.15 "Employer Discretionary Contributions" 4
1.16 "Employer Matching Contributions" 4
1.17 "Entry Date" 4
1.18 "ERISA" 4
1.19 "Investment Fund" 4
1.20 "Member" 4
1.21 "Normal Retirement Age" 4
1.22 "Participating Employer" 4
1.23 "Plan" 4
1.24 "Plan Year" 4
1.25 "Rollover Contribution" 4
1.26 "Trust Agreement" 4
1.27 "Trust Fund" 4
1.28 "Trustee" 5
1.29 "Valuation Date" 5
ARTICLE 2 DEFINITIONS AND RULES FOR
DETERMINING SERVICE 6
2.01 "Approved Absence" 6
2.02 "Break in Service" 6
2.03 "Eligibility Computation Period" 6
2.04 "Employment Commencement Date" 6
2.05 "Employment Recommencement Date" 6
2.06 "Hours of Service" 6
2.07 "Maternity or Paternity Leave of Absence" 7
2.08 "Vesting Computation Period" 7
2.09 "Year of Service" 7
2.10 Rules for Crediting Service After
a Break in Service 8
ARTICLE 3 PARTICIPATION 9
3.01 Eligibility to Participate 9
3.02 Commencement of Participation 9
3.03 Break in Service Before Participation 9
3.04 Break in Service After Participation 9
3.05 Cessation of Participation 9
ARTICLE 4 MEMBER CONTRIBUTIONS 10
4.01 Employee-Directed Contributions 10
4.02 Rollover Contributions 10
ARTICLE 5 EMPLOYER CONTRIBUTIONS 11
5.01 Employer Matching Contributions 11
5.02 Employer Discretionary Contributions 11
5.03 Transfer of Funds 11
ARTICLE 6 LIMITATIONS ON CONTRIBUTIONS 12
6.01 Definitions 12
6.02 Maximum Annual Limitation on
Employee-Directed Contributions 13
6.03 Limitations on Employee-Directed Contributions
Applicable to Highly Compensated Employees 14
6.04 Limitations on Employer Matching Contributions
Applicable to Highly Compensated Employees 14
6.05 Combined Limitations on Employee-Directed Contributions
and Employer Matching Contributions 15
6.06 Correction of Excess Employee-Directed Contributions
and Excess Employer Matching Contributions 15
6.07 Forfeiture of Employer Matching Contributions 16
6.08 Limitations on Contributions Applicable to All
Participants 16
6.09 Reduction of Excess Annual Additions 16
6.10 Deduction Limitation Applicable to Employer
Contributions 17
ARTICLE 7 MEMBERS' ACCOUNTS 18
7.01 Separate Accounts 18
7.02 Contributions to Account 18
7.03 Valuation of Accounts 18
ARTICLE 8 TRUST FUND AND INVESTMENT OF ACCOUNTS 19
8.01 Trust Fund and Trustees 19
8.02 Investment Funds 19
8.03 Investment Direction 19
8.04 Limitations on Investment in Company
Stock Prior to April 1, 1994 20
8.05 Insider Trading Restrictions 20
8.06 Member's Rights With Respect to
Company Stock 20
ARTICLE 9 VESTING AND FORFEITURE 22
9.01 Employee-Directed Contributions Account and Rollover
Contributions Account 22
9.02 Employer Matching Contributions Account and Employer
Discretionary Contributions Account 22
9.03 Forfeiture 22
9.04 Restoration of Forfeitures 23
9.05 Application of Forfeitures 23
9.06 Change in Vesting Schedule 23
ARTICLE 10 WITHDRAWALS PRIOR TO
TERMINATION OF EMPLOYMENT 24
10.01 Withdrawals Permitted At Any Time 24
10.02 Financial Hardship 24
10.03 Withdrawals After Vesting 25
10.04 General Rules Applying to Withdrawals 25
ARTICLE 11 DISTRIBUTION AFTER TERMINATION
OF EMPLOYMENT 27
11.01 Termination of Employment 27
11.02 Termination of Employment At or After
Normal Retirement Age 27
11.03 Death 28
11.04 Form of Payment 28
11.05 Form of Payment of Death Benefits 28
11.06 Beneficiary Designation 29
11.07 Direct Transfer of Eligible Rollover Distribution 29
11.08 Rules Applying to Installment Distributions 29
11.09 Mandatory Distribution 30
ARTICLE 12 ADMINISTRATION 31
12.01 Plan Administrator 31
12.02 Administrator's Authority and Powers 31
12.03 Delegation of Duties 31
12.04 Fiduciary Responsibilities With Respect
to Company Stock 31
12.05 Compensation 32
12.06 Exercise of Discretion 32
12.07 Fiduciary Liability 32
12.08 Indemnification by Employer 32
12.09 Plan Participation by Fiduciaries 32
12.10 Missing Persons 33
12.11 Claims Procedure 33
ARTICLE 13 AMENDMENT AND TERMINATION OF PLAN 34
13.01 Amendment 34
13.02 Right to Terminate Plan 34
13.03 Consequences of Termination 34
ARTICLE 14 PARTICIPATION BY AFFILIATED COMPANIES 35
14.01 Participation 35
14.02 Delegation of Powers and Authority 35
14.03 Termination of Participation 35
ARTICLE 15 TOP-HEAVY PLAN PROVISIONS 37
15.01 Applicability 37
15.02 Definitions 37
15.03 Vesting Requirement and Schedule 39
15.04 Minimum Contribution 39
15.05 Compensation Limitation 40
15.06 Aggregate Limit on Contributions and Benefits
for Key Employees 40
ARTICLE 16 GENERAL PROVISIONS 41
16.01 Trust Fund Sole Source of Payments for Plan 41
16.02 Exclusive Benefit 41
16.03 Non-Alienation 41
16.04 Employment Rights 41
16.05 Return of Contributions 41
16.06 Distribution of Employee-Directed Contributions in
Event of Merger or Sale 42
16.07 Merger, Consolidation or Transfer 42
16.08 Applicable Law 42
16.09 Rules of Construction 43
ARTICLE 17 LOANS TO MEMBERS 44
17.01 General 44
17.02 Maximum Loan Amount 44
17.03 Loan Terms 44
17.04 Collateral 45
17.05 Treatment of Loan Payments 45
17.06 Default 45
C-COR ELECTRONICS, INC.
RETIREMENT SAVINGS AND PROFIT SHARING PLAN
As Amended and Restated Effective July 1, 1989
PURPOSE
The purpose of the C-COR Electronics, Inc. Retirement Savings and Profit
Sharing Plan (the "Plan") is to provide eligible employees of C-COR
Electronics, Inc. (the "Company') and any Affiliated Company which adopts the
Plan on behalf of its employees with an opportunity to increase their savings
on a tax-favored basis, to enable them to share in the profitability of C-COR
Electronics, Inc. and to accumulate capital for their future economic
security.
The Plan is intended to (1) qualify as a profit-sharing plan for purposes of
Sections 401(a), 402, 412, and 417 of the Internal Revenue Code of 1986, as
amended (the "Code"), (2) qualify as a cash or deferred arrangement under
Section 401(k) of the Code, and (3) comply with the requirements of the
Employee Retirement Income Security Act of 1974, as amended.
The Plan was originally adopted by the Company effective January 1, 1987. The
Plan has been amended and restated effective July 1, 1989.
This plan document sets forth the provisions of the Plan as amended and
restated effective July 1, 1989 and also includes all amendments to the Plan
through April 19, 1994. All issues arising with respect to participation in
the Plan prior to July 1, 1989 shall be determined by the terms and provisions
of the Plan as in effect prior to July 1, 1989.
ARTICLE I
DEFINITIONS
Wherever used herein, the following terms shall have the following meanings:
1.01 "Account" means the entire interest of a Member in the Trust Fund and
shall include the following subaccounts:
(a) "Employee-Directed Contributions Account" means that portion of the
Member's Account attributable to the Employee-Directed Contributions
made on the Member's behalf by a Participating Employer and the earnings
thereon.
(b) "Employer Discretionary Contributions Account" means that portion of the
Member's Account attributable to the Employer Discretionary
Contributions made on the Member's behalf by a Participating Employer
and the earnings thereon.
(c) "Employer Matching Contributions Account" means that portion of the
Member's Account attributable to the Employer Matching Contributions
made on the Member's behalf by a Participating Employer and the earnings
thereon.
(d) "Rollover Contributions Account" means that portion of the Member's
Account attributable to the Member's Rollover Contributions, if any, and
the earnings thereon.
1.02 "Administrator" means the Company or such other person or committee as may
be appointed from time to time by the Board of Directors to administer the Plan
in accordance with Article 13.
1.03 "Affiliated Company" means any corporation which is a member of a
controlled group of corporations (as defined in Section 414(b) of the Code)
which includes the Company; any trade or business (whether or not incorporated)
which is under common control (as defined in Section 414(c) of the Code) with
the Company; any organization (whether or not incorporated) which is a member of
an affiliated service group (as defined in Section 414(m) of the Code) which
includes the Company; and any other entity required to be aggregated with the
Company pursuant to regulations under Section 414(o) of the Code.
1.04 "Beneficiary" means any person entitled to receive payment of a Member's
Account as a result of the death of the Member pursuant to Section 11.06.
1.05 "Board of Directors" means the Board of Directors of C-COR Electronics,
Inc.
1.06 "Code" means the Internal Revenue Code of 1986, as amended.
1.07 "Company" means C-COR Electronics, Inc. or any successor by merger,
consolidation or sale of assets.
1.08 "Company Stock" means any stock of the Company which is a
"qualifying employer security" within the meaning of Section 407(d)(5)
of ERISA.
2
1.09 "Compensation" means for any Plan Year, except as otherwise provided in the
Plan, a Member's wages as defined in Section 3401(a) of the Code (for purposes
of income tax withholding) determined without regard to any rules that limit
remuneration included in wages based on the nature or location of the employment
or the services performed, subject to the following inclusions and exclusions:
(a) including employer contributions made pursuant to a compensation
reduction agreement which are not includible in the gross income of an
Eligible Employee under Sections 125, 402(a)(8), 402(h) or 403(b) of the
Code;
(b) solely for purposes of determining Employee-Directed Contributions and
Employer Matching Contributions, excluding (even if includible in gross
income) reimbursements or other expense allowances, fringe benefits
(cash or noncash), moving expenses, deferred compensation, and welfare
benefits; and
(c) excluding any wages attributable to periods prior to the effective date
of Member's participation in the Plan.
The maximum amount of Compensation that may be taken into account in any Plan
Year shall not exceed the dollar limitation contained in Section 401(a)(17) of
the Code in effect for the beginning of the Plan Year. In determining the
compensation of a Member for purposes of this limitation, the rules of Section
414(q)(6) of the Code shall apply, except in applying such rules, the term
"family" shall include only the spouse of the Member and any lineal ascendants
and descendants of the Member who have not attained age 19 before the close of
the year. If, as a result of the application of such rules the adjusted annual
compensation limitation is exceeded, then the limitation shall be prorated among
the affected individuals in proportion to each such individual's compensation as
determined under this section prior to the application of this limitation.
1.10 "Designated Fiduciary" means the Trustee or any other person who is
designated by the Administrator as a "named fiduciary" (within the meaning of
Section 403(a)(1) of ERISA) for purposes of the exercise of voting, tender, and
other stockholder rights with respect to Company Stock in accordance with
Section 8.06.
1.11 "Disability" means a Member's total and permanent disability as determined
for purposes of the Company's Long Term Disability Plan.
1.12 "Eligible Employee" means any Employee employed by a Participating
Employer, but excluding
15
(a) any Employee who is covered by a collective bargaining agreement to
which a Participating Employer is a party, and which agreement does not
provide for participation in the Plan; and
(b) any individual who is a "leased employee" within the meaning of
Section 414(n)(2) of the Code.
1.13 "Employee" means any individual who is a common law employee of the Company
or an Affiliated Company, and any individual who is a "leased employee" within
the meaning of Section 414(n)(2) of the Code of the Company or an Affiliated
Company
3
1.14 "Employee-Directed Contributions" means the contributions made by a
Participating Employer on behalf of a Member pursuant to the Member's
election to defer Compensation under Section 4.01.
1.15 "Employer Discretionary Contributions" means the contributions made by
a Participating Employer on behalf of Members as described in Section 5.02.
1.16 "Employer Matching Contributions" means the contributions made by a
Participating Employer on behalf of Members as described in Section 5.01.
1.17 "Entry Date" means January 1, April 1, July I and October 1.
1.18 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
1.19 "Investment Fund" means one or more of the investment vehicles made
available to Participants for investment of their Accounts pursuant to
Article 8.
1.20 "Member" means any Eligible Employee or former Eligible Employee who
has met the participation requirements set forth in Article 3.
1.21 "Normal Retirement Age" means
(a) with respect to Employees hired prior to April 19, 1994, age 65;
and
(b) with respect to any other Employees, the later of (i) age 65 or
(ii) the completion of 5 Years of Service.
1.22 "Participating Employer" means (a) the Company and (b) any Affiliated
Company which is designated as a Participating Employer by the Board of
Directors and which has adopted the Plan by proper corporate action.
1.23 "Plan" means the C-COR Electronics, Inc. Retirement Savings and Profit
Sharing Plan, as amended and restated effective July 1, 1989.
1.24 "Plan Year" means (a) with respect to the Plan Year beginning July 1,
1989, the period beginning July 1, 1989 and ending March 31, 1990, (b) with
respect to Plan Years beginning after March 31, 1990, the twelve (12) month
period commencing April I and ending March 31; (c) with respect to the Plan
Year beginning April 1, 1992, the period beginning April 1, 1992 and ending
December 31, 1992; and (d) with respect to Plan Years beginning after
December 31, 1992, the calendar year.
1.25 "Rollover Contribution" means the contribution made to the Plan by an
Eligible Employee pursuant to Section 4.02 of all or part of the amount
distributed to the Eligible Employee from another qualified plan.
1.26 "Trust Agreement" means the agreement between the Employer and the
Trustee under which the assets are held, administered and managed.
1.27 "Trust Fund" means all assets under the Plan held by the Trustee.
4
1.28 "Trustee" means any person, bank, or such other trustee or trustees under
the Trust Agreement as may be appointed by the Board of Directors to hold,
invest and disburse the funds of the Plan.
1.29 "Valuation Date" means the last day of each calendar quarter and such other
dates as may be determined by the Administrator for valuing the Trust Fund.
5
ARTICLE 2
DEFINITIONS AND RULES FOR DETERMINING SERVICE
2.01 "Approved Absence" means an Employee's approved leave of absence from
employment with the Company or an Affiliated Company because of military
service, illness, disability, pregnancy, educational pursuits, service as a
juror, or temporary employment with a government agency, or other leave of
absence (including a lay-off) approved by the Company or Affiliated Company.
An Approved Absence also includes any leave of absence in accordance with the
requirements of the Family and Medical Leave Act of 1993. The Company or
Affiliated Company shall determine the first and last days of any Approved
Absence.
2.02 "Break in Service" means an Eligibility Computation Period or a Vesting
Computation Period in which an Employee fails to complete more than five
hundred (500) Hours of Service with the Company or any Affiliated Company.
Solely for purposes of determining whether an Employee has a Break in Service
(a) Hours of Service shall be recognized during an Approved Absence or a
Maternity or Paternity Leave of Absence. During such absence, the
Employee shall be credited with the Hours of Service which would have
been credited but for the absence, or, if such hours cannot be
determined, with eight hours per day.
(b) Hours of Service shall be recognized during an Approved Absence not in
excess of two (2) years, or military leave while the Employee's
reemployment rights are protected by law or such additional or other
periods as granted by the Company or any Affiliated Company as military
leave, provided the Employee returns to employment at the end of his
leave of absence or within ninety (90) days of the end of his military
leave, whichever is applicable.
2.03 "Eligibility Computation Period" means the twelve (12) consecutive month
period beginning on an Employee's Employment Commencement Date or Employment
Recommencement Date and any anniversary thereof.
2.04 "Employment Commencement Date" means the first day on which an Employee
first performs an Hour of Service for the Company or an Affiliated Company.
2.05 "Employment Recommencement Date" means the first day on which an Employee
performs an Hour of Service for the Company or an Affiliated Company following
a Break in Service.
2.06 "Hours of Service" means the following:
(a) Each hour for which an Employee is directly or indirectly paid, or
entitled to payment, for the performance of duties for the Company or
any Affiliated Company. Each such hour shall be credited to the
Employee for the computation period or periods in which the duties are
performed.
6
(b) Each hour for which an Employee is directly or indirectly paid, or
entitled to payment, by the Company or any Affiliated Company on
account of a period of time during which no duties are performed
(irrespective of whether the employment relationship has terminated)
due to vacation, holiday, illness, incapacity (including disability),
layoff, jury duty, military duty, or leave of absence. Each such hour
shall be credited to the Employee for the computation period or
periods in which such period occurs, subject to the following rules:
(i) No more than 501 Hours of Service shall be credited under this
paragraph (b) to an Employee on account of any single
continuous period during which the Employee performs no duties
(whether or not such period occurs in a single computation
period), and
(ii) Hours of Service will not be credited under this paragraph (b)
for which payment by the Company or an Affiliated Company is
made or due under a plan maintained solely for the purpose of
complying with applicable workers' compensation, unemployment
compensation, or disability insurance laws or where payment
solely reimburses the Employee for medical or medically related
expenses incurred by the Employee.
(c) Each hour for which back pay, irrespective of mitigation of damages, is
either awarded or agreed to by the Company or any Affiliated Company.
The same Hours of Service shall not be credited both under paragraph
(a) or paragraph (b), as the case may be, and under this paragraph (c).
These hours shall 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.
(d) Hours of Service also shall include a leave of absence in accordance
with the requirements of the Family and Medical Leave Act of 1993.
During this absence, the Employee shall be credited with the Hours of
Service which have been credited but for such absence, or, if such
hours cannot be determined, with eight hours per day.
Hours of Service credited to an individual under this Section 2.06 will be
calculated and credited pursuant to Section 2530.200b-2 of the DOL Regulations
which is incorporated herein by reference.
2.07 "Maternity or Paternity Leave of Absence" means an absence from work by
reason of the Employee's pregnancy, birth of a child of the Employee,
placement of a child with the Employee in connection with adoption, or any
absence for purposes of caring for such a child for a period immediately
following such birth or placement.
2.08 "Vesting Computation Period" means the twelve (12) consecutive month
period beginning on an Employee's Employment Commencement Date or
Employment Recommencement Date and any anniversary thereof.
2.09 "Year of Service" means a Vesting Computation Period during which an
Employee has completed at least one thousand (1,000) Hours of Service with
the Company or an Affiliated Company.
7
2.10 Rules for Crediting Service After a Break in Service.
If a Member is reemployed by the Company or an Affiliated Company after a
Break in Service, the following special rules shall apply in determining his
Years of Service:
(a) In the case of a Member who is reemployed before the occurrence of 5
consecutive Breaks in Service
(i) Years of Service completed prior to such break will not be
taken into account until the Member has completed a Year of
Service following his reemployment; and
(ii) both pre-break and post-break Years of Service will count in
vesting his pre-break and post-break account balances.
(b) In the case of Member who is reemployed after the occurrence of 5 or
more consecutive Breaks in Service (or he is reemployed prior to such
occurrence but does not make the repayment provided for in Section 9.04.
(i) separate Matching Contribution Accounts and Profit Sharing
Accounts will be maintained to reflect the Participant's
pre-break and post-break account balances; and
(ii) all Years of Service after such Breaks in Service will be
disregarded for the purposes of vesting the pre-break account
balance, but both pre-break and post-break Years of Service will
count for purposes of vesting the account balance that accrues
after such break.
8
ARTICLE 3
PARTICIPATION
3.01 Eligibility to Participate.
Each Eligible Employee who is employed by a Participating Employer shall be
eligible to participate in the Plan if he
(a) has completed at least 1,000 Hours of Service during either (i) an
Eligibility Computation Period or (ii) the six (6) consecutive month
period beginning on his Employment Commencement Date or Employment
Recommencement Date; and
(b) has attained age 21; provided, however, that the age requirement set
forth in this paragraph (b) shall not apply to any Employee on or after
October 20, 1992.
3.02 Commencement of Participation.
Each Eligible Employee who meets the requirement of Section 3.01 may become a
Member in the Plan commencing as of the first Entry Date coinciding with or
next following his completion of such requirements.
3.03 Break in Service Before Participation.
If an Eligible Employee incurs a Break in Service before he becomes eligible
to participate in the Plan and he later is reemployed, he shall be treated as
a new Eligible Employee at the time of his reemployment for purposes of the
participation requirements.
3.04 Break in Service After Participation.
If an Eligible Employee incurs a Break in Service after he becomes a Member
and he later is reemployed, he shall again become a Member in the Plan
commencing on his Employment Recommencement Date.
3.05 Cessation of Participation.
An individual will cease to be eligible to participate in the Plan as of the
date of his (a) transfer to a nonparticipating Affiliated Company, (b)
inclusion in an ineligible job classification, or (c) termination of
employment. After such date, he shall continue to be a Member only with
respect to the allocation of earnings, losses and expenses made in accordance
with Article 7 until the balance credited to his Account is distributed.
9
ARTICLE 4
MEMBER CONTRIBUTIONS
4.01 Employee-Directed Contributions.
(a) A Member may elect for any Plan Year to have Employee-Directed
Contributions made on his behalf in an amount equal to a full
percentage of his Compensation from 1 percent (1%) to 10 percent
(10%) or such other percentage as may be established by the Board of
Directors. Such contributions shall be made by the Member's employer
as a reduction in the Compensation that would otherwise be payable
to the Member.
(b) A Member's election to have Employee-Directed Contributions made on
his behalf shall be made in the form and manner prescribed by the
Administrator.
(c) A Member may change or revoke his election with respect to
Employee-Directed Contributions effective upon the first day of any
calendar month by delivering to the Administrator, at least 15 days
prior thereto, written notice in such form and manner as prescribed
by the Administrator. Notwithstanding the foregoing, the
Administrator in its sole discretion may, at any time and with or
without notice, permit a Member to change or revoke his election if
it determines that such change or revocation is justified by
individual circumstances.
(d) Employee-Directed Contributions shall be transferred by
Participating Employers to the Trust Fund as soon as practicable,
but in no event later than ninety (90) days after the day on which
a Member's Compensation has been reduced with respect to such
contribution.
(e) Employee-Directed Contributions shall be subject to the limitations
set forth in Article 6. The Administrator may reject, amend or revoke
the election of any Member at any time if the Administrator
determines that such change or revocation is necessary to ensure that
the limitations of Article 6 are not exceeded.
4.02 Rollover Contributions.
(a) An Eligible Employee, subject to approval of the Administrator, may
at any time contribute to the Trust Fund all or a portion of the cash
he has received from (i) another qualified plan under circumstances
meeting the requirements of Section 402(c) of the Code, or (ii) a
conduit individual retirement account under circumstances meeting the
requirements of Section 408(d)(3)(A)(ii) of the Code. Such Rollover
Contribution must be made no later than sixty (60) days following the
date on which the Eligible Employee receives distribution from such
other plan or conduit individual retirement account.
(b) The Administrator may require such assurances and certifications as it
may deem necessary to determine whether the amounts to be rolled over
in fact meet the rollover treatment requirements of the Code and will
not affect the qualification of the Plan under Section 401(a) of the
Code.
10
ARTICLE 5
EMPLOYER CONTRIBUTIONS
5.01 Employer Matching Contributions.
(a) Except as otherwise provided herein, for each Plan Year, each
Participating Employer shall make a Employer Matching Contribution
from its Profits for each Member employed by such Participating
Employer who makes an Employee-Directed Contribution for such Plan
Year. Such Employer Matching Contribution shall be equal to such
percentage of a Member's Employee-Directed Contributions as may be
determined by the Board of Directors in its sole discretion at the
beginning of the Plan Year.
(b) Notwithstanding anything herein to the contrary, the Board of
Directors may, in its sole discretion, change the percentage of
Employer Matching Contributions (including reducing it to zero),
provided that each Member affected by any such change shall, in the
form and manner provided by the Administrator, be given advance
notice thereof and shall be permitted to change or revoke his
election to make Employee-Directed Contributions.
(c) Employer Matching Contributions made on behalf of any Participant
shall be subject to the limitations set forth in Article 6.
5.02 Employer Discretionary Contributions.
(a) For each Plan Year, a Participating Employer may make a contribution
to the Trust Fund in such amount as may be determined from time to
time by the Board of Directors in its sole discretion.
(b) Employer Discretionary Contributions for any Plan Year shall be
allocated to the Employer Discretionary Contributions Account of each
Member who (i) completes at least 1,000 Hours of Service during the
Plan Year and is employed by a Participating Employer on the last day
of such Plan Year or (ii) dies or suffers a Disability during such
Plan Year. The amount of the Employer Discretionary Contribution to
be allocated to each eligible Member's Account for a Plan Year shall
be equal to the ratio that such Member's Compensation for the Plan
Year bears to the Compensation for all eligible Members for the Plan
Year.
(c) Employer Discretionary Contributions made on behalf of any Member
shall be subject to the limitations set forth in Article 6.
5.03 Transfer of Funds.
Employer Matching Contributions and Employer Discretionary Contributions
shall be paid by a Participating Employer in cash to the Trust Fund not
later than the due date (including extensions) prescribed by law for filing
the federal income tax return for the Participating Employer's taxable year
for which the Employer Matching Contribution and Employer Discretionary
Contribution is claimed as an income tax deduction.
ARTICLE 6
LIMITATIONS ON CONTRIBUTIONS
6.01 Definitions.
The following definitions shall apply for purposes of this Article 6:
(a) "Annual Addition" means, effective for Plan Years beginning after
December 31, 1986, the sum of the following amounts allocated to a
Participant's Account during the Limitation Year:
(i) employer contributions,
(ii) employee contributions,
(iii) forfeitures, and
(iv) amounts described in Sections 415(l)(1) and 419(A)(d)(2) of
the Code.
The amount of a Participant's Annual Additions shall be determined
without regard to the limitations set forth in Sections 6.02, 6.03,
6.04 and 6.05.
(b) "415 Compensation" means wages as defined in Section 3401(a) of the
Code and all other payments of compensation to an employee by his
employer (in the course of the employer's trade or business) for
which the employer is required to furnish the employee a written
statement under Sections 6041(d), 6051(a)(3), and 6052 of the Code.
The maximum amount of 415 Compensation that may be taken into account in any
Plan Year shall not exceed the dollar limitation contained in Section
401(a)(17) of the Code in effect as of the beginning of the Plan Year.
(c) "Highly Compensated Employee" means, with respect to any Plan Year
beginning after December 31, 1986,
(i) any Employee who at any time during the Look-back Year:
(A) received 415 Compensation in excess of the dollar
limitation contained in Section 414(q)(1)(B) of the Code
in effect at the beginning of such year;
(B) received 415 Compensation in excess of the dollar
limitation contained in Section 414(q)(1)(C) of the Code
in effect at the beginning of such year and was a member
of the top-paid 20 percent (20%) of Employees during such
year;
(C) was an officer of the Company or any Affiliated Company
and received 415 Compensation during such year greater
than 50 percent (50%) of the dollar
12
limitation in effect under Section 415(b)(1)(A) of the
Code at the beginning of such year; or
(D) was a 5-percent owner.
(ii) The term Highly Compensated Employee also means, with
respect to any Plan Year, any Employee who, at any time
during such Plan Year, (A) is one of the 100 employees who
received the most compensation from the Company or any
Affiliated Company during the Plan Year, or (B) is a
5-percent owner.
(iii) If an employee is, during a determination year or a Look-back
Year, a family member of either a 5-percent owner who is an
active or former employee or a Highly Compensated Employee who
is one of the 10 most highly compensated employees ranked on the
basis of 415 Compensation paid by the Company or any Affiliated
Company during such year, then the family member and the
5-percent owner or top 10 highly compensated employee shall be
aggregated. In such case, the family member and 5-percent owner
or top-10 highly compensated employee shall be treated as a
single employee receiving compensation and contributions or
benefits of the family member and 5-percent owner or top-10
highly compensated employee. For purposes of this clause,
family member includes the spouse, lineal ascendants and
descendants of the employee or former employee and the spouses
of such lineal ascendants and descendants.
(iv) The Look-back Year shall be the 12-consecutive month period
immediately preceding the Plan Year; provided, however,
that the Administrator may elect for any Plan Year to make
the Look-back Year calculation on the basis of the
calendar year ending with or within such Plan Year in
accordance with Section 1.414(q)-1T Q&A-14 of the Income
Tax Regulations.
(v) The determination of who is a Highly Compensated Employee,
including the determinations of the number and identity of
employees in the top-paid group, the top 100 employees, the
number of employees treated as officers and the compensation
that is considered, will be made in accordance with Section
414(q) of the Code and the regulations thereunder.
(d) "Limitation Year" means the Plan Year.
(e) "Non-Highly Compensated Employee" means an Employee who is neither a
Highly Compensated Employee nor a "Family Participant' (within the
meaning of Section 414(q)(6)(B) of the Code).
6.02 Maximum Annual Limitation on Employee-Directed Contributions.
(a) Effective for Plan Years beginning after December 31, 1986, in no
event shall a Participant's Employee-Directed Contributions made
under the Plan, or any other qualified plan maintained by the Company
or any Affiliated Company, during any calendar year exceed the dollar
limitation contained in Section 402(g) of the Code in effect at the
beginning of such year.
13
(b) Notwithstanding any other provision of the Plan, Employee-Directed
Contributions which exceed the dollar limitation determined under
paragraph (a) for a calendar year, plus any income or minus any loss
allocable thereto, shall be distributed to affected Participants no
later than April 15 of the following calendar year.
6.03 Limitations on Employee-Directed Contributions Applicable to Highly
Compensated Employees.
(a) Effective for Plan Years beginning after December 31, 1986, the
Actual Deferral Percentage for Participants who are Highly
Compensated Employees for the Plan Year shall not exceed the greater
of:
(i) the Actual Deferral Percentage for Participants who are Non-
highly Compensated Employees for the Plan Year multiplied
by 1.25; or
(ii) the Actual Deferral Percentage for Participants who are
Non-highly Compensated Employees for the Plan Year
multiplied by 2.0. provided that the Actual Deferral
Percentage for Participants who are Highly Compensated
Employees does not exceed the Actual Deferral Percentage for
Participants who are Non-highly Compensated Employees by
more than 2 percentage points.
(b) "Actual Deferral Percentage" means, for a specified group of
Participants for a Plan Year, the average of the ratios (calculated
separately for each participant in such group) of (i) the amount of
Employee-Directed Contributions actually paid over to the trust on
behalf of such Participant for the Plan Year to (ii) the
Participant's 415 Compensation for such Plan Year (whether or not the
Employee was a Participant for the entire Plan Year).
(c) The limitations set forth in this Section 6.03 shall be determined
after application of the annual dollar limitations set forth in Section
6.02.
6.04 Limitations on Employer Matching Contributions Applicable to Highly
Compensated Employees.
(a) Effective for Plan Years beginning after December 31, 1986, the Actual
Contribution Percentage for Participants who are Highly Compensated
Employees for the Plan Year shall not exceed the greater of-.
(i) the Actual Contribution Percentage of the Participants who are
Non-highly Compensated Employees for the Plan Year multiplied
by 1.25; or
(ii) the Actual Contribution Percentage for Participants who are
Non-highly Compensated Employees for the Plan Year multiplied
by 2.0, provided that the Actual Contribution Percentage for
Participants who are Highly Compensated Employees does not
exceed the Actual Contribution Percentage for Participants who
are Non-highly Compensated Employees by more than 2 percentage
points.
(b) "Actual Contribution Percentage" means, for a specified group of
Participants for a Plan Year, the average of the ratios (calculated
separately for each participant in such group) of (i)
14
the amount of Employer Matching Contributions actually paid over to
the trust on behalf of such Participant for the Plan Year to (ii)
the Participant's 415 Compensation for such Plan Year (whether or
not the Employee was a Participant for the entire Plan Year).
6.05 Combined Limitations on Employee-Directed Contributions and Employer
Matching Contributions.
Effective for Plan Years beginning after December 31, 1986, in no event shall
the Actual Deferral Percentage or the Actual Contribution Percentage for
Participants who are Highly Compensated Employees for the Plan Year exceed the
multiple use limitation set forth in Section 1.401(m)-2 of the Income Tax
Regulations. The limitations set forth in this Section 6.05 shall be
determined after application of the limitations set forth in Sections 6.03 and
6.04.
6.06 Correction of Excess Employee-Directed Contributions and Excess
Employer Matching Contributions.
In the event that any of the limitations set forth in Sections 6.03, 6.04, and
6.05 are exceeded for an Plan Year, the Administrator shall take one or more
(either alone or in combination) of the following corrective actions no later
than the last day of the following Plan Year:
(a) Notwithstanding any other provision of this Plan, excess
Employee-Directed Contributions with respect to a Plan Year, plus any
income or minus any loss allocable thereto, shall be distributed to
Participants on whose behalf such excess contributions were made. The
amount of a Participant's excess Employee-Directed Contributions
shall be determined in accordance with Section 401(k)(8)(b) of the
Code and the regulations thereunder.
(b) Notwithstanding any other provision of this Plan, excess Employer
Matching Contributions with respect to a Plan Year, plus any income
or minus any loss allocable thereto, shall be treated as follows:
(i) To the extent not yet vested, such excess contributions shall
be treated as forfeitures with respect to Participants on
whose behalf such excess contributions were made. Amounts
forfeited pursuant to this Section 6.06(b) shall be applied to
reduce employer contributions in accordance with Section 9.04.
(ii) If not forfeitable, such excess contributions shall be
distributed to Participants on whose behalf such excess
contributions were made.
The amount of a Participant's excess Employer Matching Contributions
shall be determined in accordance with Section 401(m)(6)(B) of the Code
and the regulations thereunder.
(c) The Employer may make "Qualified Nonelective Contributions" (within the
meaning of Section 1.401(k)-I(g)(7) of the Income Tax Regulations) to
the Plan on behalf of Participants who are Non-highly Compensated
Employees for such Plan Year. The amount of the Qualified Nonelective
Contributions to be allocated to each such Participant's Account shall
be equal to the ratio that such Participant's Compensation for the Plan
Year bears to the Compensation for all such Participants who are
Non-highly Compensated Employees.
15
6.07 Forfeiture of Employer Matching Contributions.
Notwithstanding anything in this Plan to the contrary, Employer Matching
Contributions shall be forfeited to the extent that such contributions
relate to excess Employee-Directed Contributions made on behalf of a
Participant.
6.08 Limitations on Contributions Applicable to All Participants.
(a) In no event shall the Annual Addition to a Participant's Account
for any Limitation Year exceed the
lesser of.
(i) $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 Limitation Year), or
(ii) 25 % of the Participant's 415 Compensation for the
Limitation Year.
(b) If a Participant also is covered under another defined contribution
plan, a welfare benefit fund (as defined in Section 419(e) of the
Code), or an individual medical account (as defined in Section
415(l)(2) of the Code), maintained by an Employer, then the Annual
Addition which may be credited to a Participant's Account under
paragraph (a) above for any Limitation Year shall be reduced by the
Annual Additions credited to the Participant's account under such
other plans and welfare benefit funds for the same limitation year.
(c) If a Participant also participates, or has previously participated, in
one or more defined benefit plans (as defined in Section 414(j) of the
Code) maintained by an Employer, then in no event shall the sum of
the Participant's Defined Contribution Fraction (as defined in
Section 415(e)(3) of the Code) and the Participant's Defined Benefit
Fraction (as defined in Section 415(e)(2) of the Code) for such
Participant exceed 1.0 in any Limitation Year. If such limitation is
exceeded, then Participant's Annual Addition to this Plan shall be
reduced to the extent necessary so that such fraction does not exceed
1.0, but only if the defined benefit plan in which the Participant is
participating does not permit a reduction of the Participant's benefit
thereunder that would reduce such fraction to 1.0.
(d) Solely for purposes of this Section 6.08, the term "Employer" means any
corporation which is a member of a controlled group of corporations (as
defined in Section 414(b) of the Code as modified by Section 415(h))
which includes the Company; any trade or business (whether or not
incorporated) which is under common control (as defined in Section
414(c) of the Code as modified by Section 414(h)) with the Company; any
organization (whether or not incorporated) which is a member of an
affiliated service group (as defined in Section 414(m) of the Code)
which includes the Company; and any other entity required to be
aggregated with the Company pursuant to regulations under
Section 414(o) of the Code.
6.09 Reduction of Excess Annual Additions.
In the event that the Annual Addition credited to a Participant's Account
exceeds the limitations contained in Section 6.08 of the Plan in any
Limitation Year, then such excess Annual Addition shall be reduced as follows:
16
(a) First, the amount of his Employer Discretionary Contributions shall be
reduced to the extent that such reduction results in a reduction of the
amount by which a Participant's Annual Addition exceeds such
limitations.
(b) Second, the amount of his Profit-Sharing Contributions shall be reduced
to the extent that such reduction results in a reduction of the amount
by which a Participant's Annual Addition exceeds such limitations.
(c) Third, the amount of his Employer Matching Contributions shall be
reduced to the extent that such reduction results in a reduction of the
amount by which a Participant's Annual Addition exceeds such
limitations.
(d) Fourth, the amount of his Employee-Directed Contributions shall be
reduced. Any reduction of Employee-Directed Contributions shall be
paid to the Participant as soon as administratively feasible.
Any reduction of Employer Discretionary Contributions, Profit-Sharing
Contributions, or Employer Matching Contributions shall be held unallocated in
a suspense account and applied to reduce employer contributions in succeeding
Plan Years in accordance with Section 9.05.
Notwithstanding anything contained herein or in the Trust Agreement to the
contrary, if the Plan is terminated while there remains a balance in any
suspense account, such amounts shall be paid to the Participating Employer
which contributed said amounts.
6.10 Deduction Limitation Applicable to Employer Contributions.
In no event shall the amount of Employer contributions for any Plan Year
exceed the amount deductible with respect to such Plan Year under Section 404
of the Code.
17
ARTICLE 7
MEMBERS' ACCOUNTS
7.01 Separate Accounts.
An Account in the Trust Fund shall be established and maintained for each
Member. The records of each such Account shall reflect the manner in which
each Account is invested and the value of such investments, any withdrawals by
or distributions to the Member or other persons, any charges or credits made
to such Account, and such other information as the Administrator or the
Trustee may deem appropriate.
7.02 Contributions to Accounts.
All contributions made by a Participating Employer on behalf of a Member or
made by a Member on his own behalf, shall be paid to the Trustee and shall be
allocated to the Member's Account in accordance with the provisions of this
Plan.
7.03 Valuation of Accounts.
The value of each Member's Account shall be determined as of each Valuation
Date, at which time the Administrator shall adjust the balance of each
Member's Account to reflect any of the following which have occurred since the
last Valuation Date:
(a) contributions, withdrawals, distributions and other charges or
credits attributable to the Member's Account; and
(b) the net increase or decrease, as the case may be, in the value of the
Trust Fund due to investment earnings, gains or losses and any expenses
of the Trust Fund, which adjustment shall be made in the same
proportion that the balance in the Member's Account as of the last
Valuation Date (reduced by any withdrawals, distributions or transfers
from such Account since the last Valuation Date and by the principal
amount of all outstanding loans to such Member) bore to the total
balance of all Members' Accounts (as so reduced) as of such last
Valuation Date; provided, however, that if separate investment funds
are maintained pursuant to Article 8, such adjustment shall be made for
each such fund in the same proportion that the balance of the Member's
Account invested in such fund bears to the total balance in all
Members' Accounts invested in such fund.
18
ARTICLE 8
TRUST FUND AND INVESTMENT OF ACCOUNTS
8.01 Trust Fund and Trustees.
The Administrator may execute a Trust or Trusts with a Trustee or Trustees to
establish a Trust Fund under the Plan. Any Trust Agreement is designated as,
and shall constitute, a part of this Plan and all rights which may accrue to
any person under the Plan shall be subject to the terms and conditions of such
Trust Agreement. The Administrator may modify the Trust Agreement from time to
time to accomplish the purposes of the Plan.
8.02 Investment Funds.
The Administrator shall select such investment vehicles as it determines
appropriate to meet the requirements of Section 404(c) of ERISA and the
regulations thereunder relating to the investment of Members' Accounts at the
direction of the Members. The Administrator may select such additional
investment vehicles as it determines appropriate for the investment of
Members' Accounts. The Administrator may prescribe such rules and restrictions
on the investment of Members' Accounts in any such investment vehicle as it
deems appropriate.
8.03 Investment Direction.
(a) The Administrator, or its designees, shall provide Members with such
information and materials with respect to the Investment Funds as may
be required by Section 404(c) of ERISA.
(b) A Member shall have the right to direct the Administrator to invest his
Account in any of the Investment Funds. A Member's investment direction
(or any change in his investment direction) shall be made in the manner
and in such form as the Administrator shall direct.
(c) A Member's investment election (or any change in his investment
election) shall be made in increments of 10 percent.
(d) A Member's investment election shall remain in effect until the
Member properly files a change of election with the Administrator. In
the event that any Member shall not have directed the investment of
all or a portion of the balance in his account at any time, the
Member shall be deemed to have directed that such balance be invested
in a balanced portfolio fund and such assets shall remain in such
Investment Fund until such time as the Member directs otherwise.
(e) A Member may change his investment election with respect to existing
investments, new contributions, or both, effective as of the first
day of any calendar month. Such change must be made in writing or in
accordance with such other methods as may be established by the
Administrator in accordance with the requirements of Section 404(c)
of ERISA.
19
8.04 Limitations on Investment in Company Stock Prior to April 1, 1994.
(a) Employer Matching Contributions and Employer Discretionary
Contributions shall be invested in Company Stock unless a Member
directs the Trustee to invest such contributions in another
Investment Fund in accordance with Section 8.03. If a Member elects
to instruct the Trustee to invest all or a portion of the Employer
Matching Contributions or Employer Discretionary Contributions made
on his behalf in an Investment Fund other than Company Stock, such
amounts shall not thereafter be eligible to be invested in Company
Stock.
(b) The investment limitations set forth in this Section 8.04
(i) shall not apply to new contributions made on or after April 1,
1994, and
(ii) shall not apply on or after July 1 1994 (or as soon as
administratively practicable thereafter) with respect to
amounts invested in Company Stock prior to April 1, 1994.
8.05 Insider Trading Restrictions.
Effective September 1, 1993, the following rules shall apply to any Member
who is subject to the insider trading restrictions of Section 16(b) of the
Securities Exchange Act of 1934:
(a) Notwithstanding Sections 8.03 and 8.04, a Member described in this
Section 8.07 may make an election to transfer funds from
investments in Company Stock only once in any 6-month period and
such election may be made only during the 10-day period beginning
on the third business day following the date of release by the
Company of the quarterly financial data specified in Section
16b-3(e)(1)(ii) of the SEC Regulations.
(b) In the event that a Member described in this Section 8.07 makes a
withdrawal pursuant to Article 10, all or a portion of which is
attributable to Company Stock, then such Participant shall be
subject to the investment election and transfer restrictions set
forth in Section 16b3(d) of the SEC Regulations.
8.06 Member's Rights With Respect to Company Stock.
(a) Each Member or Beneficiary who has shares of Company Stock allocated
to his Account, whether or not vested, shall have the right to direct
the Designated Fiduciary as to the exercise of voting, tender, and
other stockholder rights with respect to such Company Stock.
(b) The Designated Fiduciary shall exercise voting, tender, and other
stockholder rights in accordance with the instructions received from
Members with respect to Company Stock. For this purpose, the
Designated Fiduciary shall combine fractional shares and exercise
rights with respect to such shares to the extent possible to reflect
the instructions of the Members.
(c) In the event that a Member fails to provide timely or valid
instructions as to how rights with respect to his Company Stock
shall be exercised, or in the case of Company Stock held by the
Trust which are not allocated to Members' Accounts, the Designated
Fiduciary shall exercise rights with respect to such Company Stock,
as it, in its sole discretion, determines appropriate and in
accordance with its fiduciary obligations under ERISA.
20
(d) All information and instructions received from Members or Beneficiaries
with respect to the exercise of voting, tender, and other stockholder
rights shall be held in the strictest confidence by the Administrator
and the Designated Fiduciary, except to the extent necessary to comply
with federal laws or state laws not preempted by ERISA.
21
ARTICLE 9
VESTING AND FORFEITURE
9.01 Employee-Directed Contributions Account and Rollover Contributions
Account.
A Member's interest in his Employee-Directed Contribution Account and
Rollover Contributions Account, if any, shall be fully vested and
nonforfeitable at all times.
9.02 Employer Matching Contributions Account and Employer Discretionary
Contributions Account.
(a) Upon a Member's Disability, death or attainment of Normal
Retirement Age while an Employee, his interest in his Employer
Matching Contributions Account and Employer Discretionary
Contributions Account, shall be fully vested and nonforfeitable.
(b) If a Member terminates employment before Normal Retirement Age for
any reason other than Disability or death, his vested interest in
his Employer Matching Contributions Account and Employer
Discretionary Contributions Account shall be determined in
accordance with the following schedule:
Completed Years of Service Vested Interest
Less than 1 year 0%
1 Year but less than 2 20%
2 Year but less than 3 40%
3 Year but less than 4 60%
4 Year but less than 5 80%
5 Years or more 100%
9.03 Forfeiture.
(a) If a Member terminates employment and elects to receive or is deemed to
receive his entire vested interest in his Employer Matching
Contributions Account and his Employer Discretionary Contributions
Account, the nonvested portion of such accounts shall be treated as a
forfeiture. For purposes of this Section 9.03, if the value of a
Member's vested account balance is zero, then such Member shall be
deemed to have received a distribution of his entire vested account
balance as of the date of his termination of employment.
(b) If a Member terminates employment and elects to receive distribution
of his vested interest in his Account in installments, then the part
of the nonvested portion of his Account which will be treated as a
forfeiture is the total nonvested portion multiplied by a fraction,
the numerator, which is the amount of the distribution attributable
to employer contributions, and the denominator, which is the total
value of the vested employer derived account balance.
22
9.04 Restoration of Forfeitures.
(a) In the case of a Member who received a distribution of his entire
vested account balance under the Plan and who again becomes an
Employee, then the amount forfeited pursuant to Section 9.03 shall be
restored if he repays the full amount of the distribution before the
earlier of:
(i) 5 years after the first date on which the Member is
subsequently reemployed; or
(ii) the date the Member incurs 5 consecutive Breaks in Service
following the date of the distribution.
(b) In the case of a Member who is deemed to have received a distribution
of his entire vested account balance and who again becomes an
Employee, then the amount forfeited pursuant to Section 9.03 shall be
restored if the Member again becomes an Employee before the date on
which he incurs 5 consecutive Breaks in Service.
(c) A Member who is reemployed after the occurrence of 5 consecutive
Breaks in Service shall not have any restoration rights with respect
to the previously forfeited balance in his Employer Matching
Contributions Account and Employer Discretionary Contributions
Account.
9.05 Application of Forfeitures.
Except as provided in Section 9.04, forfeitures shall be used to reduce the
amount of Employer Matching Contributions and Employer Discretionary
Contributions which are to be made by the Participating Employer for the Plan
Year in which such forfeitures occur.
9.06 Change in Vesting Schedule.
If the Plan's vesting schedule is amended, or the Plan is amended in any way
that directly or indirectly affects the calculation of a Member's vested
interest in his Employer Matching Contributions Account and Employer
Discretionary Contributions Account, or if the Plan is deemed amended by an
automatic change to or from the top-heavy vesting schedule, each Member with at
least three (3) Years of Service may elect to have his vested interest
calculated under the Plan without regard to such amendment or change. A Member's
election under this section must be made during the period beginning with the
date the amendment is adopted or deemed to be made and ending on the latest of.
(a) sixty (60) days after the amendment is adopted;
(b) sixty (60) days after the amendment becomes effective; or
(c) sixty (60) days after the Member is issued written notice of the
amendment by the Participating Employer.
23
ARTICLE 10
WITHDRAWALS PRIOR TO TERMINATION OF EMPLOYMENT
10.01 Withdrawals Permitted At Any Time.
A Member may, in the form and manner and at such times as may be prescribed
by the Administrator, direct payment to himself of part or all of the
balance of his Rollover Contributions Account.
10.02 Financial Hardship.
Upon evidence of "hardship" satisfactory to the Administrator, a Member may,
in the form and manner prescribed by the Administrator, withdraw in cash
that part of the Employee-Directed Contributions allocated to his
Employee-Directed Contributions Account which the Administrator determines
is needed by the Member on account of such hardship. For this purpose,
"hardship" shall mean immediate and heavy financial need of the Member that
cannot be met by other reasonably available financial resources of the
Member.
The Administrator's determination as to whether a hardship exists and the
amount necessary to be distributed on of such hardship shall be made in
accordance with the following rules:
(a) A hardship exists if the Administrator determines that the
distribution is necessary to pay any of the following expenses:
(i) medical expenses (described in Section 213(d) of the Code)
incurred by the Member, his spouse, or any of his dependents
(as defined in Section 152 of the Code);
(ii) purchase (excluding mortgage payments) of a principal
residence for the Member;
(iii) funeral expenses for a member of the Member's family;
(iv) payment of tuition and related educational fees for the next
12 months of postsecondary education for the Member, his
spouse, children, or dependents; or
(v) payment to prevent the eviction of the Member from his
principal residence or foreclosure on the mortgage of the
Member's principal residence.
(b) The Administrator shall not permit a hardship withdrawal to be made
unless it determines, based upon all relevant facts and circumstances,
that the amount to be distributed is not in excess of the amount
required to relieve the financial need and that such need cannot be
satisfied from other resources reasonably available to the Member. For
this purpose, the Member's resources shall be deemed to include those
assets of his spouse and minor children that are reasonably available
to the Member. A distribution may be treated as necessary to satisfy a
financial need if the Administrator relies upon the Member's written
representations, unless the Administrator has actual knowledge to the
contrary, that the need cannot be relieved:
24
(i) through reimbursement or compensation by insurance or
otherwise;
(ii) by reasonable liquidation of the Member's assets, to the
extent such liquidation would not itself cause an immediate
and heavy financial need;
(iii) by cessation of elective deferrals and voluntary
contributions under the Plan; or
(iv) by other distribution or loans from the Plan or any other
qualified retirement plan, or by borrowing from commercial
sources on reasonable commercial terms.
(c) Notwithstanding subsection (b), the Administrator may permit a
hardship withdrawal to be made if it determines that all of the
following conditions are satisfied:
(i) the distribution is not in excess of the amount to the
immediate and heavy financial need of the Member (including
any amounts necessary to pay any federal, state or local
income taxes or penalties which may result from the
distribution);
(ii) the Member has obtained all distributions, other than
hardship distributions, and all nontaxable loans currently
available under all plans maintained by the Company or any
Affiliated Company;
(iii) the Plan, and all other plans maintained by the Company or any
Affiliated Company, provide that the Member's elective
deferrals and voluntary employee contributions will be
suspended for at least twelve (12) months after receipt of the
hardship distribution; and
(iv) the Plan, and all other plans maintained by the Company and any
Affiliated Company, provide that the Member may not make
elective deferrals for the Member's taxable year immediately
following the taxable year of the hardship distribution in
excess of the applicable limit under Code Section 402(g) for
such next taxable year less the amount of such Member's elective
deferrals for the taxable year of the hardship distribution.
(e) Hardship withdrawals from a Member's 401(k) Account shall not include
any income allocable to the Member's Employee-Directed Contributions.
10.03 Withdrawals After Vesting.
A Member who is 100% vested in his Employer Matching Contributions Account and
Employer Discretionary Contributions Account may, in the form and manner
prescribed by the Administrator, withdraw in cash that part of such Accounts
which the Administrator determines is needed by the Member on account of a
hardship described in Section 10.02.
10-04 General Rules Applying to Withdrawals.
The following rules shall apply to withdrawals made under this Article 10:
25
(a) Distribution of any withdrawal under this Article shall be made as soon
as practicable following the Valuation Date selected by the
Administrator for effecting such payment, unless the Administrator, in
its sole discretion, elects to make payment earlier.
(b) A Member may not make a withdrawal from his Account more often than
once in any Plan Year or at such other times as may be permitted
pursuant to uniform rules prescribed by the Administrator.
(c) Any withdrawal made under this Article 10 shall be at least in the
amount of One Thousand Dollars ($1,000).
(d) Effective for withdrawals made after December 31, 1992, a Member or a
designated Beneficiary who is the Member's spouse may elect to have all
or any portion of the amount withdrawn pursuant to this Article 10 (but
in no event less than $500) which is eligible for rollover distribution
under Section 402(c) of the Code transferred directly to an eligible
retirement plan (as defined in Section 401(a)(31) of the Code).
26
ARTICLE 11
DISTRIBUTION AFTER TERMINATION OF EMPLOYMENT
11.01 Termination of Employment Prior to Normal Retirement Age.
In the event a Member terminates employment with the Company or an Affiliated
Company prior to attaining Normal Retirement Age for any reason other than
death, he shall be entitled to receive a distribution of the vested balance in
his Account as of the Valuation Date coincident with or next following his
termination of employment.
(a) If the vested balance of the Member's Account does not exceed $3,500,
distribution shall be made as soon as practicable following the earlier
of:
(i) the date on which the Administrator receives a properly
completed distribution election form; or
(ii) the expiration of the 90-day period beginning on the date on
which the Administrator provides the notice required by
Section 402(f) of the Code to the Member.
(b) If the vested balance of a Member's Account exceeds S3,500, no
distribution will be made without the Member's prior written consent.
If such consent is not given, distribution shall be made as soon as
practicable following the earlier of:
(i) the date on which the Administrator receives a properly
completed distribution election form; or
(ii) the later of the Member's attainment of Normal Retirement
Age or the expiration of the 90-day period beginning on
the date on which the Administrator provides the notices
required by Section 402(f) of the Code and Treasury
Regulation Section 1.411(a)-11(c) to the Member.
11.02 Termination of Employment At or After Normal Retirement Age.
In the event a Member terminates employment with the Company or an Affiliated
Company at or after attaining Normal Retirement Age, he shall be entitled to
receive a distribution of the balance in his Account as of the Valuation Date
coincident with or next following his termination of employment. Distribution
shall be made as soon as practicable following the earlier of.
(i) the date on which the Administrator receives a properly
completed distribution election form; or
(ii) the expiration of the 90-day period beginning on the date on
which the Administrator provides the notices required by Section
402(f) of the Code and IRS Regulation
subsection 1.41 1 (a)- II (c) to the Member.
27
11.03 Death.
(a) In the event a Member dies before payment of his Account begins,
his designated Beneficiary or his estate shall be entitled to
receive distribution of the Account as of the Valuation Date
coincident with or next following his death. Distribution shall
be made as soon as practicable following the earlier of.
(i) the date on which the Administrator receives a properly
completed distribution election form; or
(ii) the expiration of the 90-day period beginning on the date on
which the Administrator provides the notices required by
Section 402(f) of the Code and IRS Regulation
Section 1.411(a)-11(c) to the designated Beneficiary.
(b) Notwithstanding paragraph (a), in no event shall distribution of the
Account begin later than:
(i) if (A) the designated Beneficiary is the Member's Spouse and
(B) the balance of the Member's Account exceeds $3,500, the
date on which the Member would have attained age 70-1/2; or
(ii) in any other case, one year after the Member's death.
11.04 Form of Payment Following Termination of Employment.
(a) If the Member's vested balance in his Account as of the Valuation
Date coinciding with or next following the date of the Member's
termination of employment is $3,500 or less, the Account shall be
distributed in a single lump sum cash payment.
(b) If the Member's vested balance in his Account exceeds $3,500, the
Member may elect to have his Account distributed by either of the
following methods:
(i) In a single lump sum cash payment; or
(ii) In substantially equal annual cash installments over a period
specified by the Member not extending beyond the shorter of
(i) 10 years or (ii) the life expectancy of the Member or the
joint and last survivor expectancy of the Member and his
Beneficiary.
11.05 Form of Payment of Death Benefits.
(a) If the Member's vested balance in his Account as of the Valuation Date
coinciding with or next following the date of the Member's termination
of employment is $3,500 or less, the Account shall be distributed in a
single lump sum cash payment.
(b) If the balance in the Member's Account exceeds $3,500, the Account
shall be distributed in the form elected by the Member in accordance
with Section 11.06(c). If a Member does not have an election in
effect at the time of his death, or if no Beneficiary is designated
or survives the Member, the Member's Account shall be distributed in
a single lump sum cash payment.
28
(c) In the event a Member dies after the commencement of installment
payments under the Plan, the remaining portion of such benefits will
continue to be distributed at least as rapidly as under the method of
distribution being used prior to the Member's death.
(d) The Administrator may establish rules permitting a Beneficiary who is
receiving payment of benefits in installments to elect to have the
balance of the benefits distributed in a single lump sum payment.
11.06 Beneficiary Designation; Election of Form of Death Benefit.
(a) Each Member may designate, in the form and manner prescribed by the
Administrator, one or more persons as the Beneficiary of his Account;
provided, however, that if the Member is survived by a spouse, such
spouse shall be the Member's sole Beneficiary unless the spouse
consents, in writing, to the Member's designation of one or more other
persons to be the Beneficiary of all or a portion of the Member's
Account. Any Beneficiary designation made by a Member may be changed
or revoked by the Member at any time or from time to time during his
lifetime; provided, however, that any such change or revocation shall
not reduce the portion of the Account payable to his spouse without the
written consent of the spouse. Any written consent required of a
Member's spouse shall acknowledge the effect of the consent and shall
be witnessed by a representative of the Plan or a notary public. The
consent of a spouse shall not be required if the Administrator
determines that the spouse cannot be located or that the Code and ERISA
otherwise do not require such consent.
(b) If no Beneficiary is designated or survives the Member, the
Member's Account shall be paid to his estate.
(c) A Member may elect, in the form and manner prescribed by the
Administrator, to have his Account distributed in the event of his
death by either of the following methods:
(i) In a single lump sum cash payment; or
(ii) In substantially equal annual cash installments over a period
specified by the Member not extending beyond the shorter of (i)
10 years or (ii) the life expectancy of the Member's designated
Beneficiary.
11.07 Direct Transfer of Eligible Rollover Distribution.
Effective for distributions made after December 31, 1992, a Member or a
designated Beneficiary who is the Member's spouse may elect to have all or any
portion of his Account which is eligible for rollover distribution under Section
402(c) of the Code transferred directly to an eligible retirement plan (as
defined in Section 401(a)(31) of the Code).
11.08 Rules Applying to Installment Distributions.
If a Member elects to have his Account distributed in installments, the amount
to be so distributed each year must be at least equal to the quotient obtained
by dividing the Member's benefit by the life expectancy of the Member and his
designated Beneficiary. Life expectancy and joint and last survivor expectancy
shall be computed by the use of the return multiples contained in Section 1.72-9
29
of the Income Tax Regulations. For purposes of this computation, a Member's life
expectancy may be recalculated no more frequently than annually; however, the
life expectancy of a designated Beneficiary, other than the Member's spouse, may
not be recalculated. If the Member's spouse is not the designated Beneficiary,
the method of distribution selected must assure that at least 50% of the present
value of the amount available for distribution is paid within the life
expectancy of the Member.
11.09 Mandatory Distribution.
Notwithstanding any other Plan provision, benefit payments to a Member shall
commence no later than April I of the calendar year following the calendar year
in which the Member attains age 70-1/2.
30
ARTICLE 12
ADMINISTRATION
12-01 Plan Administrator.
The Company shall be the "Administrator" of the Plan within the meaning of
Section 3(16)(A) of ERISA and the "Named Fiduciary' for purposes of Section
402(a)(2) of ERISA. Such duties shall be performed on behalf of the Company
by such person or committee as may be appointed by the Board of Directors.
12.02 Administrator's Authority and Powers.
(a) The Administrator shall have full authority and power to administer
and construe the Plan, subject to applicable requirements of law.
Without limiting the generality of the foregoing, the Administrator
shall have the following powers and duties:
(i) To make and enforce such rules and regulations as it deems
necessary or proper for the efficient administration of the
Plan;
(ii) To interpret the Plan, its interpretation thereof to be
final and conclusive on all persons claiming benefits under
the Plan;
(iii) To decide all questions concerning the Plan, including the
eligibility of any person to participate in the Plan and the
status and rights of any Member or Beneficiary under the
Plan; and
(iv) To exercise all other powers specified in the Plan.
(b) The Administrator may adopt such rules for the conduct of its affairs
as it deems appropriate.
12.03 Delegation of Duties.
The Administrator may delegate such of its duties and may engage such experts
and other persons as it deems appropriate in connection with administering the
Plan. The Administrator shall be entitled to rely conclusively upon, and shall
be fully protected in any action taken by them in good faith in reliance upon
any opinions or reports furnished them by any such experts or other persons.
12-04 Fiduciary Responsibilities With Respect to Company Stock.
The Administrator shall appoint a person who is not affiliated with the
Company or an Affiliated Company to act as the Designated Fiduciary with
respect to all matters affecting Members' rights with respect to Company Stock
as described in Section 8.06. Such fiduciary shall have full authority and
power to take any such actions as it deems necessary or appropriate to ensure
that such rights are enforced.
31
12.05 Compensation of Administrator.
No person or member of a committee serving as the Administrator who is a
full time employee of a Participating Employer shall receive any
compensation for his services as Administrator. Any expenses of the
Administrator shall be paid from the Trust Fund, unless paid by the
Participating Employers.
12.06 Exercise of Discretion.
Any person with any discretionary power in the administration of the Plan
shall exercise such discretion in a nondiscriminatory manner and shall
discharge his duties with respect to the Plan in a manner consistent with
the provisions of the Plan and with the standards of fiduciary conduct
contained in Title 1, Part 4, of ERISA.
12.07 Fiduciary Liability.
In administering the Plan, neither the Administrator nor any person or
member of a committee serving as the Administrator nor any person to whom
the Administrator delegates any duty or power in connection with
administering the Plan shall be liable, except in the case of his own
willful misconduct, for:
(a) any action or failure to act,
(b) the payment of any amount under the Plan,
(c) any mistake of judgment made by him or on his behalf, or
(d) any omission or wrongdoing of any other member of the
Administrator. No person or member of a committee serving as the
Administrator shall be personally liable under any contract,
agreement, bond, or other instrument made or executed by him or on
his behalf as a member of a counting serving as the Administrator.
12.08 Indemnification by Employer.
To the extent not compensated by insurance or otherwise, the Participating
Employers shall indemnify and hold harmless each person and each member of a
committee serving as the Administrator, and each employee of a Participating
Employer designated by the Administrator to carry out fiduciary
responsibility with respect to the Plan from any and all claims, losses,
damages, expenses (including counsel fees approved by the Company) and
liabilities (including any amount paid in settlement with the approval of
the Company), arising from any act or omission of such member or employee,
except where the same is judicially determined to be due to willful
misconduct of such member or employee. Anything herein to the contrary
notwithstanding, no assets of the Plan may be used for any such
indemnification.
12.09 Plan Participation by Fiduciaries.
No person who is a fiduciary with respect to the Plan shall be precluded
from being a Member therein upon satisfying the requirements for
eligibility.
32
12.10 Missing Persons.
If the Administrator is unable to locate a Member or Beneficiary within five
(5) years after an Account becomes payable, the Administrator shall mail
notice by registered mail to the last known address of such person outlining
the following action to be taken unless such person makes written reply to
the Administrator within sixty (60) days from the mailing of such notice:
the Administrator shall direct that the amount of such Account shall be
treated as a forfeiture for the current Plan Year; provided, however, that
in the event of the subsequent reappearance of such Member or Beneficiary
prior to the termination of the Plan, such forfeiture shall be restored to
such Account.
12.11 Claims Procedure.
All claims for benefits under the Plan by a Member or his Beneficiary with
respect to benefits not received by such person shall be made in writing to
the Administrator, which shall review such claims. If the Administrator
believes that a claim should be denied, it shall notify the claimant in
writing of the denial within ninety (90) days after its receipt of the
claim. Such notice shall:
(a) set forth the specific reasons for the denial, making reference to
the pertinent provisions of the Plan or the Plan documents on which
the denial is based;
(b) describe any additional material or information that should be
received before the claim may be acted upon favorably, and explain
why such material or information, if any, is needed; and
(c) inform the person making the claim of his right pursuant to this
Section to request review of the decision by the Administrator.
Any such person who believes that he has submitted all available and relevant
information may appeal the denial of a claim to the Administrator by submitting
a written request for review to the Administrator within sixty (60) days after
the date on which such denial is received. Such period may be extended by the
Administrator for good cause. The person making the request for review may
examine pertinent Plan documents. The request for review may discuss any issues
relevant to the claim. The Administrator shall decide whether or not to grant
the claim within sixty (60) days after receipt of the request for review, but
this period may be extended by the Administrator for up to an additional sixty
(60) days in special circumstances. If such an extension of time for review is
required because of special circumstances, written notice of the extension shall
be furnished to the claimant prior to the commencement of the extension. The
Administrator's decision shall be in writing, shall include specific reasons for
the decision and shall refer to pertinent provisions of the Plan or of the Plan
documents on which the decision is based.
33
ARTICLE 13
AMENDMENT AND TERMINATION OF PLAN
13.01 Amendment.
The Company may at any time and from time to time amend the Plan by action of
the Board of Directors, without the consent of any Trustee, any other
Participating Employer, or any Member or Beneficiary, provided that:
(a) no amendment that materially affects the Trustee's duties shall be
effective without the written consent of the Trustee;
(b) no amendment shall cause the Trust Fund to be used other than for the
exclusive benefit of Members and their Beneficiaries; and
(c) no amendment shall eliminate or reduce a "Section 41 l(d)(6) Protected
Benefit" within the meaning of Section 1. 41 1 (d)-4 of the Income Tax
Regulations except to the extent permitted under Section 41 1 (d)(6)
and the regulations thereunder.
13.02 Right to Terminate Plan.
The Company intends to maintain the Plan as a permanent tax-qualified
retirement plan.
Nevertheless, the Company reserves the right to terminate the Plan (in whole
or in part) at any time and from time to time, by action of the Board of
Directors, without the consent of any Trustee, any other Participating
Employer, or any Member or Beneficiary.
13.03 Consequences of Termination.
(a) If the Plan is terminated in whole or in part, the interest of each
Member affected by the termination in his Account will become fully
vested and nonforfeitable as of the date of the termination.
(b) If the Plan is terminated in whole or in part, the Administrator
shall determine the date and manner of distribution of all Members'
Accounts.
(c) The Administrator shall give prompt notice to each Member (or, if
deceased, his Beneficiary) affected by the Plan's complete or partial
termination.
34
ARTICLE 14
PARTICIPATION BY AFFILIATED COMPANIES
14.01 Participation.
Any Affiliated Company which adopts the Plan with the consent of the Board of
Directors, may at any time join in the Trust Fund created hereunder (a
"Participating Affiliated Company"). Such Participating Affiliated Company
shall file with the Company a duly executed instrument approved by the
Administrator. Any such action shall become effective upon the delivery to the
Trustees of such instrument duly executed by the Participating Affiliated
Company and the Administrator, and upon receipt of such instrument the
Trustees shall be deemed to accept such Participating Affiliated Company as a
party to the Trust Fund without further action by the Trustees. Each such
Participating Affiliated Company may then contribute under the Plan to the
Trust Fund. The contributions which may be made by the Company or any other
Participating Affiliated Company, and the income therefrom, shall be held by
the Trustees as a part of a single Trust Fund without allocation to the
Company or any other Participating Affiliated Company until the Administrator
shall notify the Trustees of the termination of the plan as to any
Participating Affiliated Company pursuant to Section 14.03(c).
14.02 Delegation of Powers and Authority.
Any Participating Affiliated Company shall be deemed to thereby appoint the
Board of Directors or the Administrator as its exclusive agent to exercise on
its behalf all of the powers and authority conferred upon the Board of
Directors or the Administrator by the terms of the Plan including, but not by
way of limitation, the power to amend and terminate the Plan and the Trust
Fund created hereunder. The authority of the Board of Directors or the
Administrator to act as such agent shall continue with respect to all funds
contributed by each Participating Affiliated Company and the income therefrom
until and unless the amount of such funds and income has been distributed by
the Trustees as provided in Section 14.03.
14.03 Termination of Participation.
(a) The Administrator shall notify the Trustees in writing of the
termination of the Plan as to any Participating Affiliated Company, and
the Trustees shall not accept any further contributions under the Plan
from such Participating Affiliated Company and shall set aside in a
separate account such part of the Trust Fund as the Administrator
shall, pursuant to paragraph (b), determine to be held for the benefit
of eligible employees of the Participating Affiliated Company (and
their beneficiaries), as of the last day of the Plan Year which is such
Participating Affiliated Company's termination date under the Plan.
(b) The Administrator shall give written directions to the Trustees with
respect to the part of the assets of the Trust Fund segregated in a
separate account pursuant to paragraph (a). Such directions shall
specify the amount to be segregated and shall be in accordance with
generally accepted accounting principles, and, to the maximum extent
consistent with ERISA, the determination of the fair market value of
the assets of the Trust Fund in the manner provided for in the Plan
shall be conclusive for the purpose of such segregation. The Trustees
shall
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follow such directions of the Administrator which shall constitute a
conclusive determination of the amount which should be segregated for
the benefit of the eligible employees of such Participating Affiliated
Company (and their beneficiaries).
(c) The Trust shall continue as to any Participating Affiliated Company,
despite receipt by the Trustees of notice of termination of the Plan as
to such Participating Affiliated Company, for such time as may be
necessary to effect such termination. Upon receipt by the Trustees
from the Administrator of notice to terminate the Trust as to such
Participating Affiliated Company, the Trustees shall, with reasonable
promptness after receipt of such notice, arrange for the orderly
distribution, in accordance with written instructions of the
Administrator which shall be given in conformity with the provisions of
the Plan and ERISA, of the assets segregated with respect to such
Participating Affiliated Company pursuant to this Article 14.
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ARTICLE 15
TOP-HEAVY PLAN PROVISIONS
15.01 Applicability.
If the Plan is or becomes Top-Heavy in any Plan Year, the provisions of this
Article 15 shall supersede any conflicting provisions of the Plan.
15.02 Definitions.
The following definitions shall apply for purposes of this Article 15:
(a) "Determination Date" means (i) the last day of the preceding Plan Year,
or (ii) in the case of the first Plan Year, the last day of such Plan
Year.
(b) "Employer" means the Company and all Affiliated Companies.
(C) "Key Employee" means any Employee, or former Employee who is a Key
Employee within the meaning of Section 416(i)(1) of the Code and the
regulations thereunder.
(d) "Permissive Aggregation Group" means the Required Aggregation Group
of plans plus any other plan or plans of the Employer which, when
considered as a group with the Required Aggregation Group, would
continue to satisfy the requirements of Sections 401(a)(4) and 410 of
the Code.
(e) "Required Aggregation Group" means (i) each qualified plan of the
Employer in which at least one Key Employee participates or
participated at any time during the determination period (regardless
of whether the plan has terminated), and (ii) any other qualified
plan of the Employer which enables a plan described in clause (i) to
meet the requirements of Section 40 1 (a)(4) or 4 1 0 of the Code.
(f) "Super Top-Heavy Plan" means a Top-Heavy Plan with respect to
which the Top-Heavy Ratio exceeds 90 percent (90%).
(g) "Top-Heavy Plan" means with respect to any Plan Year, this plan
if any of the following conditions exist:
(i) If the Top-Heavy Ratio for this Plan exceeds 60 percent (60%)
and this Plan is not part of any Required Aggregation Group or
Permissive Aggregation Group of plans;
(ii) If this Plan is a part of a Required Aggregation Group of
plans but not part of a Permissive Aggregation Group and the
Top-Heavy Ratio for the group of plans exceeds 60 percent
(60%); or
37
(iii) If this Plan is a part of a Required Aggregation Group and
part of a Permissive Aggregation Group of plans and the
Top-Heavy Ratio for the Permissive Aggregation Group
exceeds 60 percent (60%).
(h) "Top-Heavy Ratio" means as follows:
(i) If the Employer maintains one or more defined contribution plans
(including any Simplified Employee Pension Plan) and the Employer has
not maintained any defined benefit plan which during the 5-year
period ending on the Determination Date(s) has or has had accrued
benefits, the Top-Heavy Ratio for this Plan alone or for the Required
or Permissive Aggregation Group as appropriate is a fraction, the
numerator of which is the sum of the account balances of all Key
Employees as of the Determination Date(s) (including any part of any
account balance distributed in the 5 year period ending on the
Determination Date(s), and the denominator of which is the sum of all
account balances (including any part of any account balance
distributed in the 5-year period ending on the Determination Date(s),
both computed in accordance with Section 416 of the Code and the
regulations thereunder. Both the numerator and denominator of the
Top-Heavy Ratio are increased to reflect any contribution not
actually made as of the determination date, but which is required to
be taken into account on that date under Section 416 of the Code and
the regulations thereunder.
(ii) If the Employee maintains one or more defined contribution plans
(including any Simplified Employee Pension Plan) and the Employer
maintains or has maintained one or more defined benefit plans which
during the 5-year period ending on the Determination Date(s) has or
has had any accrued benefits, the Top-Heavy Ratio for any Required or
Permissive Aggregation Group as appropriate is a fraction, the
numerator of which is the sum of account balances under the
aggregated defined contribution plan or plans for all Key Employees,
determined in accordance with clause (i) above, and the present value
of accrued benefit under the aggregated defined benefit plan or plans
for all Key Employees as of the Determination Date(s), and the
denominator of which is the sum of the account balances under the
aggregated defined contribution plan or plans for all participants,
determined in accordance with clause (i) above, and the present value
of accrued benefits under the defined benefit plan or plans for
all participants as of the Determination Date(s), all determined in
accordance with Section 416 of the Code and the regulations
thereunder. The accrued benefits under a defined benefit plan in
both the numerator and denominator of the Top-Heavy Ratio are
increased for any distribution of any accrued benefit made in the
five-year period ending on the Determination Date.
(iii) For purposes of clauses (i) and (ii) above, the value of account
balances and the present value of accrued benefits will be
determined as of the most recent Valuation Date that falls within
or ends with the 12-month period ending on the Determination Date,
except as provided in Section 416 of the Code and the regulations
thereunder for the first and second plan years of a defined benefit
plan. The account balances and accrued benefits of a participant
(A) who is not a Key Employee but who was a Key Employee in a
prior year, or (B) who has not been credited with at least one
Hour of Service with any Employer maintaining the plan at any time
during the 5-year period ending on the Determination Date will
be disregarded. The calculation of the Top-Heavy ratio, and the
"tent to which distributions, rollovers, and transfers are
taken into account will be made in accordance with Section 416
of the Code and the regulations thereunder. Deductible
employee contributions will not be taken into account for
purposes of computing the top-heavy ratio. When aggregating
plans the value of account balances and accrued benefits will
be calculated with reference to the Determination Dates that
fall within the same calendar year.
The accrued benefits of a participant other than a Key Employee shall
be determined under (A) the method, if any, that uniformly applies
for accrual purposes under all defined benefit plans maintained by
the Employer, or (b) if there is no such method, as if such benefits
accrued not more rapidly than the slowest accrual rate permitted
under the fractional rule of Section 41 I (b)(1)(C) of the Code.
15.03 Vesting Requirement and Schedule.
(a) For any Plan Year during which the Plan is a Top-Heavy Plan, the
following Vesting Schedule shall apply to any Member who has been
credited with an Hour of Service after the Plan initially became a
Top-Heavy Plan:
Years of Credited Service Vested Interest
2 years but less than 3 years 20%
3 years but less than 4 years 40%
4 years but less than 5 years 60%
5 or more years 100%
(b) If the Plan ceases to be a Top-Heavy Plan, such change shall be
considered to be an amendment of the vesting schedule which is subject
to the election requirements in Section 9.06. In no event may a
Member's vested interest be decreased as a result of a change in the
Plan's status.
15.04 Minimum Contribution.
(a) If a Member is a non-Key Employee on the last day of a Top-Heavy Plan
Year, and is not a participant in any other plan maintained by a
Participating Employer that provides him with such a minimum
contribution or with a comparable minimum accrual, the total of the
Employer contribution allocated to such Member's Account for such
Top-Heavy Plan Year shall not be less than three percent (3 %) of his
Compensation for the Top-Heavy Plan Year, the Employer has no defined
benefit plan which designates the Plan to satisfy Section 401(a)(4) or
Section 410 of the Code and the highest percentage obtained by dividing
the sum of the Employer contribution made for the benefit of each Key
Employee by the Key Employee's Compensation for such Year is less than
three percent (3 %), such highest percentage shall be substituted
therefor in the preceding clause.
(b) In the event a Member who is a non-Key Employee is covered under
both a defined contribution plan and a defined benefit plan
maintained by a Participating Employer, notwithstanding anything
herein to the contrary, the minimum contribution or benefit required
by this Section 15-04 and by Section 416 of the Code shall be deemed
satisfied if any one of the following rules are satisfied:
(i) each such Member receives the defined benefit minimum as
specified in Section 416(c)(1) of the Code;
(ii) the defined benefit minimum (as defined in clause (i),
above) is provided each such Member by the defined benefit
plan and is offset by the benefits provided under the
defined contribution plan;
(iii) defined contribution plan provides aggregate benefits at least
comparable to those provided by the defined benefit plan; or
(iv) contributions and forfeitures under the defined contribution
plan equal five percent (5%) of the Compensation for each
Top-Heavy Plan.
15.05 Compensation Limitation.
For any Plan Year in which the Plan is a Top-Heavy Plan, the compensation
limitation described in Section 416(d) of the Code shall apply.
15.06 Aggregate Limit on Contributions and Benefits for Key Employees.
If any one of the following occurs, then 1.0 shall be substituted for 1.25 in
the denominators of the Defined Benefit Plan and Defined Contribution Plan
Fractions used in computing the aggregate limitations set forth in Section 415
of the Code:
(a) A Key Employee participates in both a defined benefit plan and a
defined contribution plan of a Participating Employer and the plans are
Super Top-Heavy Plans.
(b) A Key Employee participates in both a defined benefit plan and a
defined contribution plan of a Participating Employer and the plans are
Top-Heavy Plans and an Extra Minimum Benefit or Extra Minimum
Contribution is not provided for non-Key Employees.
For purposes of this section, Extra Minimum Benefit or Contribution shall mean
one (I %) percent more than the standard minimum benefit or contribution
required for non-Key Employees under Top-Heavy Plans as prescribed by Section
416(c) of the Code.
40
ARTICLE 16
GENERAL PROVISIONS
16-01 Trust Fund Sole Source of Payments for Plan.
The Trust Fund shall be the sole source for the payment of all Members'
Accounts, and the Plan's liability to make payment to any Member or his
Beneficiary shall be limited to the extent that the balance in such Member's
Account is sufficient to make such payment. In no event shall assets of the
Employer be applied for the payment of Plan benefits.
16.02 Exclusive Benefit.
The Plan is established for the exclusive benefit of the Members and their
Beneficiaries, and the Plan shall be administered in a manner consistent
with the provisions of Section 401(a) of the Code and ERISA.
16.03 Non-Alienation.
Except as is permitted under Section 401(a)(13) of the Code in the case of a
qualified domestic relations order (as defined in Section 414(p) of the Code)
and in accordance with Section 11.02, no Member or Beneficiary shall have the
right to alienate or assign his benefits under the Plan, and no Plan benefits
shall be subject to attachment, execution, garnishment, or other legal or
equitable process. If a Member or his Beneficiary attempts to alienate or
assign his benefits under the Plan, or if his property or estate should be
subject to attachment, execution, garnishment or other legal or equitable
process, the Administrator may direct the Trustee to distribute the Member's
(or Beneficiary's) benefits under the Plan to members of his family, or may
use or hold such benefits for his benefit or for the benefit of members of his
family as the Administrator deems appropriate under the circumstances.
16.04 Employment Rights.
The Company's and any Affiliated Company's right to discipline or discharge
its Employees shall not be affected by reason of any of the provisions of the
Plan.
16.05 Return of Contributions.
(a) Except as specifically provided in the Plan, under no circumstances
shall any funds contributed to the Trust Fund or any assets of the
Trust Fund ever revert to, or be used by, the Company or any Affiliated
Company.
(b) Any contributions made by a Participating Employer may be returned to
the Participating Employer if:
(i) the contribution is made by reason of a mistake of fact; or
41
(ii) the contribution is conditioned on its deductibility for
federal income tax purposes (each contribution shall be
deemed to be so conditioned unless otherwise stated in
writing by the Participating Employer) and such deduction is
disallowed; or
provided such contribution is returned within one year of the
discovery of the mistake of fact, the disallowance of the deduction
for federal income tax purposes or the receipt of written notice from
the Internal Revenue Service (in response to the request for its
favorable determination) that the Plan fails to qualify under Section
401(a) of the Code, as the case may be. The amount of contribution
that may be returned shall be reduced to reflect its proportionate
share of any net investment loss in the Trust Fund. In the event
clause (iii) applies, the returned contribution may include any net
investment earnings or gain in the Trust Fund.
16.06 Distribution of Employee-Directed Contributions in Event of Merger or
Sale.
Notwithstanding anything in the Plan to the contrary, Employee-Directed
Contributions and income attributable thereto, may be distributed to Members or
their beneficiaries as soon as administratively practicable after any of the
following events:
(a) The termination of the Plan, provided that neither the Company nor any
Affiliated Company maintains another defined contribution plan (other
than an employee stock ownership plan within the meaning of Section
4975(e)(7) of the Code) at such time or establishes a successor defined
contribution plan (other than an employee stock ownership plan within
the meaning of Section 4975(e)(7) of the Code) during the period ending
12 months after the distribution of all assets of the Plan;
(b) The sale or other disposition, to an entity that is not an Affiliated
Company, of substantially all of the assets used by the Participating
Employer in the trade or business in which the Member is employed, but
only with respect to Members who continue employment with acquiring
entity; or
(c) The sale or other disposition, to an entity that is not an Affiliated
Company, of the Company's or an incorporated Affiliated Company's
interest in a subsidiary, but only with respect to Members who continue
employment with such subsidiary.
16.07 Merger, Consolidation or Transfer.
The Plan shall not be merged or consolidated with, nor shall any Plan assets or
liabilities be transferred to, any other qualified plan, unless each Member (if
the other plan then terminated) would receive a benefit that is equal to or
greater than the benefit he would have been entitled to receive immediately
before the merger, consolidation or transfer of the Plan had then terminated).
16.08 Applicable Law.
Except as otherwise expressly required by ERISA, this Agreement shall be
construed and governed in accordance with the laws of the Commonwealth of
Pennsylvania.
42
16-09 Rules of Construction.
Whenever the context so admits, the use of the masculine gender shall be deemed
to include the feminine and vice versa, either gender shall be deemed to include
the neuter and vice versa; and the use of the singular shall be deemed to
include the plural and vice versa.
43
ARTICLE 17
LOANS To MEMBERS
17.01 General.
All Members who are eligible to make contributions to the Plan shall be
eligible to receive loans from the Plan. The Administrator shall prescribe
the terms and conditions for making loans to Members from their Accounts
consistent with the provisions of this Article and the prohibited
transaction exemption requirements of the Code and ERISA and other
applicable law.
17.02 Maximum Loan Amount.
In no event shall any loan made pursuant to this Article 17 be in an amount
which would cause the outstanding aggregate balance of all loans made to the
Member under this Plan and all other qualified plans maintained by the
Company or any Affiliated Company to exceed the lesser of (a) or (b):
(a) $50,000 reduced by the excess (if any) of
(i) the highest outstanding balance of loans from the Plan to the
Member during the one year period ending on the day before the
date the loan is made, over
(ii) the outstanding balance of loans from the Plan to the Member
on the date the loan is made; or
(b) 50% of the current balance of the vested portion of the Member's
Account, determined as of the most recent Valuation Date occurring
prior to the date on which the loan is made.
17.03 Loan Terms.
Loans shall be made to Members in accordance with the following terms:
(a) A loan to a Member shall be evidenced by the Member's recourse
promissory note in the form prescribed by the Administrator.
(b) The period for repayment of a loan shall not exceed 5 years; provided,
however, that a loan used to acquire a dwelling unit which within a
reasonable time is to be used (determined at the time the loan is made)
as the Member's principal residence may be repaid over a period of up
to 30 years.
(c) Interest shall be charged on the loan at a reasonable rate to be
determined by the Administrator at the time the loan is made.
(d) Loan repayments on principal and interest shall be amortized in level
payments over payment periods to be determined by the Administrator
in its discretion, but not less than quarterly, over the term of the
loan.
44
17-04 Collateral.
Notwithstanding anything to the contrary in Section 16.03, a Member who
accepts a Plan loan shall be deemed to have assigned to the Trustee, as
security for the loan, all of his right, title and interest in the Plan. The
Administrator may require such additional security for the loan as it deems
necessary or prudent.
17.05 Treatment of Loan Payments.
A loan shall be considered to be an investment of the Trust Fund. Any
payment to the Plan of interest on a loan to a Member, as well as repayments
of loan principal, shall be credited to the Member's Account and shall be
accounted for as investment earnings or return of principal, as the case may
be, on that Account.
17.06 Default.
If not paid as and when due, in addition to any other remedies permitted by
law, any outstanding Plan loan (including, interest accrued and unpaid
thereon) to a Member may be charged against the Member's Account. If and to
the extent the outstanding loan balance is charged against the Member's
Account, the amount of such charge shall be deemed a distribution to him of
his Account in the following order of priority:
(a) First, the balance of his Rollover Contributions Account until
exhausted,
(b) Second, his Employer Discretionary Contributions Account until
exhausted,
(c) Third, his Employer Matching Contributions Account until exhausted,
and
(d) Fourth, if the Member has attained age 59-1/2, his Employee-Directed
Contributions Account until exhausted.
The outstanding loan balance shall be treated as repaid to the extent of
such charge. The Administrator may elect to charge the unpaid loan balance
against the Member's Account, as described above, whether or not the Member
has attained age 59-1/2 or terminated employment, and whether or not such
charge is on account of any financial hardship of the Member.
45
