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EXHIBIT 99.4
BANKCO POPULAR DE PUERTO RICO
MASTER DEFINED CONTRIBUTION RETIREMENT PLAN
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BANCO POPULAR DE PUERTO RICO
MASTER DEFINED CONTRIBUTION RETIREMENT PLAN DOCUMENT
The Banco Popular de Puerto Rico Master Defined Contribution Retirement
Plan may be adopted through an adoption agreement as either a money purchase
pension plan or a profit-sharing plan, which may, or may not, contain a cash or
deferred arrangement. The Plan is intended to qualify under sections 165(a), (e)
and (g) of the Puerto Rico Income Tax Act of 1954 and to comply with all
applicable requirements of both Title I of the Employee Retirement Income
Security Act of 1974 and the Puerto Rico Income Tax Act.
By executing the Adoption Agreement, the Employer has established a
retirement plan governed by the provisions of the Adoption Agreement and this
Plan document, if an Employer is interested in establishing more than one type
of plan, a separate Adoption Agreement must be executed for each plan. The
purpose of the Plan is to create a retirement fund intended to help provide for
the future security of the Participants and their Beneficiaries. In no event
shall any portion of the principal or income of the Master Trust, established by
the Banco Popular de Puerto Rico and forming part of this Plan, be used for, or
diverted to, any purpose other than the exclusive benefit of the Participants
and their Beneficiaries, except as and to the limited extent otherwise
specifically permitted under the Employee Retirement Income Security Act and the
Puerto Rico Income Tax Act.
The Plan consists of this Master Defined Contribution Retirement Plan
Document, the Adoption Agreement executed by the Employer, and the Master Trust
established by Banco Popular de Puerto Rico, as each may be amended from lime to
time. The Plan Sponsor is Banco Popular de Puerto Rico, 209 Ponce de Leon
Avenue, Hato Rey, Puerto Rico 00917.
ARTICLE 1
CONSTRUCTION, INTENT AND APPLICABLE LAW
1.1 CONSTRUCTION. Whenever used in the Plan, unless the context clearly
indicates otherwise, the masculine pronoun shall include the feminine, the
singular shall include the plural and the plural the singular. The conjunction
"or" shall include both the conjunctive and disjunctive, and the adjective "any"
shall mean one or more or all. Unless the context indicates otherwise, the words
"herein," "hereof', "hereunder" and words of similar import refer to the Plan as
a whole and not only to the section in which they appear. Article, section and
paragraph headings have been inserted for convenience of reference only and are
to be ignored in any construction of the provisions hereof. If any provision of
the Plan shall for any reason be invalid or unenforceable, the remaining
provisions shall nevertheless be valid, enforceable and fully effective.
1.2 INTENT. It is the intent that the Plan shall at all times be a
qualified plan under section 165(a) and (g) of the ITA and the Trust shall at
all times be exempt from taxation under section 165(a) of the ITA and section
501(a) of the Code (as provided in section 1022(i)(1) of
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ERISA). It is also intended that the cash or deferred arrangement contained in
the Plan meet the requirements of section 165(e) of the ITA.
1.3 GOVERNING LAW. The Plan and all rights hereunder shall be governed
by and construed in accordance with the laws of the Commonwealth of Puerto Rico
to the extent such laws have not been preempted by applicable federal law.
ARTICLE 2
DEFINITIONS
Whenever used in the Plan, unless the context clearly indicates
otherwise, the following terms shall have the following meanings:
2.1 "ACTUAL DEFERRAL PERCENTAGE" shall mean, the ratio (expressed as a
percentage to the nearest one-hundredth of one percent) of (1) the sum of
Pre-Tax Contributions and Qualified Employer Deferral Contributions actually
paid over to the Trust on behalf of each Participant for the Plan Year to (2)
the Participant's Compensation for such Plan Year (whether or not the Employee
was a Participant for the entire Plan Year). For purposes of computing actual
deferral percentages, an Employee who would be a Participant but for the failure
to make Pre-Tax Contributions shall be treated as a Participant on whose behalf
zero (0) Pre-Tax Contributions are made.
2.2 "ADOPTION AGREEMENT" shall mean the Banco Popular de Puerto Rico
Master Defined Contribution Retirement Plan Adoption Agreement executed by the
Employer to establish of amend the Employer's Plan and to specify optional
provisions as part of the Employer's Plan.
2.3 "AFTER-TAX CONTRIBUTIONS" shall mean voluntary contributions made by
a Participant-to the Plan during the Plan Year as described in Article 5.
2.4 "AFTER-TAX CONTRIBUTIONS ACCOUNT," with respect to a Participant,
shall mean the account established under the Plan for such Participant
representing the After-Tax Contributions plus any gains or losses allocated to
such account in accordance with the provisions of the Plan, as adjusted to
reflect distributions therefrom. Such account will be fully vested and
nonforfeitable at all times.
2.5 "ANNUITY STARTING DATE" shall mean the first day of the first period
for which an amount is payable as an annuity or, in the case of a benefit not
payable in the form of an annuity, the first day in which all events have
occurred which entitle the Participant to such benefit
2.6 "AVERAGE ACTUAL DEFERRAL PERCENTAGE" shall mean the average
(expressed as a percentage to the nearest one-hundredth of one percent) of the
Actual Deferral Percentages of Participants in a group.
2.7 "BENEFICIARY" shall mean the person or persons (natural or
otherwise) designated by a Participant or Beneficiary, or by the Plan, to
receive any benefit payable upon the death of the Participant or Beneficiary.
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2.8 "COMPENSATION" unless elected otherwise in the Adoption Agreement,
shall mean with respect to any Participant, total compensation paid by the
Employer during the Plan Year that is currently includible in income for income
tax purposes. Amounts contributed by the Employer under the Plan, except for
Pre-Tax Contributions, and any nontaxable fringe benefits shall not be
considered as Compensation.
2.9 "DISABILITY" shall mean a physical or mental condition which in the
judgment of the Plan Administrator, based upon medical reports and other
evidence satisfactory to the Plan Administrator, presumably permanently prevents
an Employee from satisfactorily performing usual duties for the Employer or the
duties of such other position or job which the Employer makes available and for
which such Employee is qualified by reason of training, education, or
experience. Qualification by an Employee for permanent Disability benefits under
the social security system shall be deemed adequate evidence of Disability for
purposes of this Plan.
2.10 "EARLY RETIREMENT AGE" shall mean the early retirement date
selected by the Employer in the Adoption Agreement
2.11 "EARLY RETIREMENT DATE" shall mean the first day of any month
coinciding with or following a Participant's attainment of Early Retirement Age.
2.12 "EARNED INCOME" shall mean, with respect to a Self-Employed
Individual, the net earnings from self employment in the trade or business with
respect to which the Plan is established, for which the personal services of the
individual are a material income producing factor. Net earnings will be
determined without regard to items excluded from gross income and the deductions
allocable to such items. Net earnings are reduced by contributions by the
Employer to a qualified plan to the extent deductible under ITA section 23(p).
2.13 "EFFECTIVE DATE" shall mean the date elected in the Adoption
Agreement.
2.14 "ELIGIBLE SPOUSE" shall mean that spouse to whom a Participant is
married on either the Annuity Starting Date or the date of his death, whichever
occurs earlier.
2.15 "EMPLOYEE" shall mean any person employed by the Employer, but
excludes any person who is employed as an independent contractor. Employee
includes a Self-Employed Individual and an Owner-Employee.
2.16 "EMPLOYER" shall mean the Employer or Employers named in the
Adoption Agreement.
2.17 "EMPLOYER CONTRIBUTIONS" shall mean Profit-Sharing Contributions or
Money Purchase Contributions made by the Employer to the Plan pursuant to the
provisions of Article 6.
2.18 "EMPLOYER CONTRIBUTIONS ACCOUNTS," with respect to a Participant,
shall mean the account established under the Plan for such Participant
representing the Employer Contributions (and any forfeitures) plus any gains or
losses allocated to such account in accordance with the provisions of the Plan,
as adjusted to reflect distributions therefrom.
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2.19 "ENTRY DATE" shall mean the date(s) elected in the Adoption
Agreement on which Participants may commence participation in the Plan.
2.20 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
2.21 "EXCESS CONTRIBUTIONS" shall mean, with respect to any Plan Year,
the excess of:
a. The aggregate amount of Pre-Tax Contributions and Qualified
Employer Deferral Contributions actually taken into account in computing the
Actual Deferral Percentage of Highly Compensated Employees for such Plan Year,
over
b. The maximum amount of such contributions permitted by the
actual deferral percentage test.
2.22 "EXCESS DEFERRALS" shall mean those Pre-Tax Contributions that are
includible in a Participant's gross income under ITA section 165(e)(7) to the
extent such Participant's Pre-Tax Contributions for a taxable year exceed the
lesser of 10% of the Participant's Compensation or $7,000.
2.23 "HIGHLY COMPENSATED EMPLOYEE" shall mean, with respect to a Plan
Year, any Employee who, determined on the basis of Compensation for such Plan
Year, has Compensation greater than two-thirds (2/3) of all other Participants.
2.24 "ITA" shall mean the Puerto Rico Income Tax Act of 1954, as
amended.
2.25 "MATCHING CONTRIBUTIONS" shall mean contributions made by the
Employer to the Plan on behalf of a Participant on account of a Participant's
After-Tax or Pre-Tax Contributions.
2.26 "MATCHING CONTRIBUTIONS ACCOUNT," with respect to a Participant,
shall mean the account established under the Plan for such Participant
representing the Matching Contributions plus any gains or losses allocated to
such account in accordance with the provisions of the Plan, as adjusted to
reflect distributions therefrom.
2.27 "MONEY PURCHASE CONTRIBUTIONS" shall mean contributions made by the
Employer pursuant to a Money Purchase Pension Plan using the formula established
by the Employer in the Adoption Agreement.
2.28 "NON-HIGHLY COMPENSATED EMPLOYEE" shall mean those Participants
that are not Highly Compensated Employees.
2.29 "NORMAL RETIREMENT AGE" shall mean the latter of:
a. Age sixty-five (65); or
b. The Participant's age on the fifth anniversary of the first
day of the Plan Year in which he/she commenced participation in the Plan.
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2.30 "NORMAL RETIREMENT DATE" shall mean the first day of the month
following the end of the Plan Year in which a Participant has attained Normal
Retirement Age.
2.31 "OWNER-EMPLOYEE" shall mean an individual who is a sole proprietor,
or who is a partner owning more than 10 percent of either the capital or profits
interest of a special partnership.
2.32 "PARTICIPANT" shall mean any Employee who has become eligible to
participate in the Plan and has not for any reason become ineligible to
participate in the Plan.
2.33 "PLAN" shall mean the Employer's Plan set forth in this Banco
Popular de Puerto Rico Defined Contribution Retirement Plan Document and the
Adoption Agreement executed by the Employer, including all amendments to either
document.
2.34 "PLAN ADMINISTRATOR" shall mean the person or persons designated in
the Adoption Agreement to control and manage the operation and administration of
the Employer's Plan as provided in Article 14.
2.35 "PLAN SPONSOR" shall mean Banco Popular de Puerto Rico.
2.36 "PLAN YEAR" shall mean the calendar year unless another Plan Year
is specified in the Adoption Agreement.
2.37 "PRE-TAX CONTRIBUTIONS" shall mean any Employer contributions made
to the Plan at the election of the Participant, in lieu of cash compensation,
pursuant to a salary reduction agreement or other deferral mechanism.
2.38 "PRE-TAX CONTRIBUTIONS ACCOUNT," with respect to a Participant,
shall mean the account established under the Plan for such Participant
representing the Pre-Tax Contributions plus any gains or losses allocated to
such account in accordance with the provisions of the Plan, as adjusted to
reflect distributions therefrom. Such account will be fully vested and
nonforfeitable at all times.
2.39 "PROFIT-SHARING CONTRIBUTIONS" shall mean contributions made by the
Employer pursuant to a Profit-Sharing Plan.
2.40 "QUALIFIED EMPLOYER DEFERRAL CONTRIBUTIONS" shall mean Qualified
Non-Elective Contributions and Qualified Matching Contributions which are taken
into account under this Plan, and any other qualified plans that are maintained
by the Employer which are aggregated with this Plan under section 4.5(b) and
(c), in determining a Participant's Actual Deferral Percentage.
2.41 "QUALIFIED MATCHING CONTRIBUTIONS" shall mean Matching
Contributions which are taken into account under the Plan in determining a
Participant's Actual Deferral Percentage. In order for Matching Contributions to
be considered as Qualified Matching Contributions, the Matching Contributions
must be one hundred percent (100%) vested and nonforfeitable when made and must
not be distributable under the Plan to Participants or their Beneficiaries
earlier than provided in section 4.4c.
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2.42 "QUALIFIED MATCHING CONTRIBUTIONS ACCOUNT," with respect to a
Participant, shall mean the account established under the Plan for such
Participant representing the Qualified Matching Contributions plus any gains or
losses allocated to such account in accordance with the provisions of the Plan,
as adjusted to reflect distributions therefrom. Such account will be fully
vested and nonforfeitable at all times.
2.43 "QUALIFIED NON-ELECTIVE CONTRIBUTIONS" shall mean contributions
made by the Employer to this Plan (other than Pre-Tax Contributions and Matching
Contributions) which are taken into account in determining a Participant's
Actual Deferral Percentage and which the Participant may not elect to receive in
cash until distributed from the Plan. In order for such contributions to be
considered as Qualified Non-Elective Contributions, they must be one hundred
percent (100%) vested and nonforfeitable when made and must not be distributable
under the terms of the Plan to Participants or their Beneficiaries earlier than
provided in section 4.4c.
2.44 "QUALIFIED NON-ELECTIVE CONTRIBUTIONS ACCOUNT," with respect to a
Participant, shall mean the account established under the Plan for such
Participant representing the Qualified Non-Elective Contributions plus any gains
or losses allocated to such account in accordance with the provisions of the
Plan, as adjusted to reflect distributions therefrom. Such account will be fully
vested and nonforfeitable at all times.
2.45 "ROLLOVER CONTRIBUTIONS" shall mean contributions to the Plan as
described in Article 7.
2.46 "ROLLOVER CONTRIBUTIONS ACCOUNT," with respect to a Participant,
shall mean the account established under the Plan for such Participant
representing the Rollover Contributions plus any gains or losses allocated
thereto, in accordance with the provisions of the Plan, as adjusted to reflect
distributions therefrom. Such account will be fully vested and nonforfeitable at
all times.
2.47 "SELF-EMPLOYED INDIVIDUAL" shall mean an individual who has Earned
Income for the taxable year from the trade or business for which the Plan is
established, or an individual who would have had Earned Income but for the fact
that the trade or business had no net profits for the taxable year.
2.48 "SPOUSAL CONSENT" shall mean an Eligible Spouse's written consent
which acknowledges the effect of the Participant's election and is witnessed by
the Plan Administrator (or any Plan representative appointed by the Plan
Administrator for such purposes) or a notary public. The written consent shall
specify the nonspouse Beneficiary, if any (and, in the case of a Participant's
election to waive a qualified joint and survivor annuity, the alternate form of
distribution elected). A Spousal Consent shall be irrevocable unless the
Participant changes his Beneficiary designation or revokes his election to waive
the qualified joint and survivor annuity or the qualified pre-retirement
survivor annuity, as applicable; upon such event, a consent shall be deemed to
be revoked. Notwithstanding the foregoing, Spousal Consent is not required if
the Participant establishes to the satisfaction of a Plan Administrator that
such written consent may not be obtained because there is no Eligible Spouse or
that the Eligible Spouse cannot be located. In addition, no Spousal Consent is
necessary if the Participant has been legally separated or
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abandoned within the meaning of local law and the Participant provides the Plan
Administrator with a court order to that effect, so long as such court order
does not conflict with a qualified domestic relations order as defined in
Article 17. If the Eligible Spouse is legally incompetent to consent, the
Eligible Spouse's legal guardian may consent on his/her behalf, even if the
legal guardian is the Participant.
2.49 "TRUST" shall mean the Master Trust established under the Plan by
Banco Popular de Puerto Rico, and adopted by the Employer through the Adoption
Agreement, for the payment of the benefits provided by the Plan.
2.50 "TRUSTEE" shall mean Banco Popular de Puerto Rico.
2.51 "VALUATION DATE" shall mean the last business day of the Plan Year.
The Plan Sponsor or Employer may designate other valuation dates.
2.52 "165(e) PLAN" shall mean a profit sharing plan containing a cash or
deferred arrangement qualified under Section 165(e) of the ITA.
ARTICLE 3
PARTICIPATION
3.1 INITIAL PARTICIPATION. An Employee shall become a Participant in the
Plan in accordance with the following requirements:
a. Each Employee who, on the Effective Date of the Plan, has
complied with the minimum age and service requirements specified by the Employer
in the Adoption Agreement will become a Participant as of such date.
b. Each Employee (other than one who is a Participant under
subsection above) will become a Participant on the Entry Date immediately
following the date in which he complies with the minimum age and service
requirements specified by the Employer in the Adoption Agreement.
c. Employees who are included in a unit of Employees covered by a
collective bargaining agreement between the Employer and Employee
representatives, where retirement benefits were the subject of good faith
bargaining with the Employer and the agreement does not call for his inclusion
in the Plan or Employees who are nonresidents of Puerto Rico are not allowed to
participate in the Plan.
d. Unless specified otherwise in the Adoption Agreement, the
Entry Dates will be the first day of the first and seventh months of the Plan
Year (January I and July 1 for calendar year Plans). If the Adoption Agreement
provides for additional or other Entry Dates, the Entry Dates will be as so
specified; provided that the first day of the Plan Year will always be an Entry
Date.
e. If the Employer's Plan permits Pre-Tax Contributions or
After-Tax Contributions, each Employee who has become a Participant under the
preceding subsections of
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this section may make Pre-Tax Contributions and/or After-Tax Contributions
subject to the applicable provisions of the Plan and the Adoption Agreement, and
such an Employee will be considered a Participant even if he elects not to make
Pre-Tax Contributions or After-Tax Contributions. However, an Employee may not
make Pre-Tax Contributions and/or After-Tax Contributions before the date the
Employer signs the Adoption Agreement.
3.2 TERMINATION OF PARTICIPATION. An Employee will cease to be a
Participant when he is no longer eligible to participate in the Plan due either
to a change in his employment status or to the termination of his service as an
Employee because of Disability, death, retirement or any other reason.
3.3 RESUMED PARTICIPATION. If a former Participant returns to service
with the Employer, he will resume participation in the Plan immediately upon his
return.
3.4 RULES RELATING TO SERVICE. The rules and definitions regarding the
computation of years of service for purposes of determining eligibility to
participate in the Plan and vesting will be as follows:
a. HOURS OF SERVICE METHOD. The definitions and rules in this
subsection will apply to Employers who in the Adoption Agreement elected to have
Employees' service determined under the hours of service method.
(1) Employment Commencement Date means the date on which
an Employee first performs an hour of service; or, in the case of an Employee
who has incurred in one or more breaks in service, as defined below, such
Employee's employment commencement date shall mean the date on which such
Employee first performs an hour of service following such breach in service.
(2) Eligibility Computation Period, with respect to an
Employee, means the period of twelve (12) consecutive months commencing on an
Employee's most recent employment commencement date, or any anniversary thereof,
in which he is credited with at least 1,000 hours of service.
(3) Year of Service, with respect to an Employee, means an
eligibility computation period during which an Employee completes at least 1,000
hours of service regardless of whether such Employee is in service continuously
during all of such eligibility computation period. An Employee who completes one
thousand (1,000) hours of service during an eligibility computation period shall
not be deemed to have completed a year of service until the last day of such
eligibility computation period regardless of when such Employee completes such
one thousand (1,000) hours of service.
(4) HOURS OF SERVICE. Hours of service shall mean:
(a) each hour for which an Employee is paid, or
entitled to payment, by the Employer for the performance of duties for
the Employer during any eligibility computation period. These hours will
be credited to the Employee for the eligibility computation period in
which the duties are performed;
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(b) each hour for which an Employee is paid, or
entitled to payment, by the Employer on account of a period of time
during which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation, holiday,
illness, incapacity (including Disability), layoff, jury duty, military
duty or leave of absence. Notwithstanding the preceding sentence, no
more than 501 hours of service shall be credited under this subsection
(b) to au Employee on account of any single continuous period during
which the Employee performs no duties (whether or not such period occurs
within a single eligibility computation period). Hours under this
subsection (b) will be calculated and credited under Department of Labor
Regulations, 29 C.F.R. Section 2530.200b-2(b) and (c), which are
incorporated herein by this reference;
(c) each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to by the Employer.
The same hours of service shall not be credited both under subsection
(a) or subsection (b), as the case may be, and under this subsection
(c); and no more than 501 hours of service shall be credited under this
subsection (c) with respect to payments of back pay, to the extent that
such pay is agreed to or awarded for a period of time described in
subsection (b) during which the Employee did not perform or would not
have performed any duties. These hours will be credited to the Employee
for the eligibility computation period(s) to which the award or
agreement pertains rather than the computation period in which the
award, agreement or payment is made;
(d) In addition to hours credited to an Employee
under subsections (a) through (c) above, an Employee will be credited
with the number of hours (not exceeding 40 for a full week or a pro rata
portion of 40 for a partial week) he normally would have worked except
for the fact that he was absent on one of the following types of unpaid
absence: (i) leave of absence for a period authorized by the Employer
under a leave policy applied uniformly to all Employees, provided he
returns to service with the Employer at or before the expiration of such
period; or (ii) leave of absence for service in the armed forces of the
United States, provided he returns to service with the Employer within
the period during which his reemployment rights are protected by law,
and
(e) Solely for purposes of determining whether a
break in service, as defined in subsection (5), has occurred in an
eligibility computation period, an Employee who is absent from work for
maternity or paternity reasons will receive credit for the hours of
service which would otherwise have been credited to such Employee but
for such absence, (or in any case in which such hours cannot be
determined, eight hours of service per day of such absence). For
purposes of this subsection (e), an absence from work for maternity or
paternity reasons means an absence (i) by reason of the pregnancy of the
Employee, (ii) by reason of a birth of a child of the Employee, (iii) by
reason of the placement of a child with the Employee in connection with
the Employee's adoption of such child, or (iv) for purposes of caring
for such child for a period beginning immediately following such birth
or placement. No more than 501 hours of service shall be credited under
this subsection (e). The hours of service credited under this subsection
(e) will be credited (i) in the eligibility computation period in which
the absence begins if the crediting is necessary to prevent a break in
service in that period, or (ii) in all other
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cases, in the following eligibility computation period if necessary to
prevent a break in service in that eligibility computation period.
(5) BREAK IN SERVICE, with respect to an Employee, means
an eligibility computation period during which such Employee does not complete
more than five hundred (500) hours of service.
(6) VESTING COMPUTATION PERIOD. For purposes of computing
an Employee's nonforfeitable right to his Employer Contributions Account and/or
Matching Contributions Account, an Employee's vesting computation period(s) will
be the period of twelve (12) consecutive months commencing on an Employee's most
recent employment commencement date, or any anniversary thereof, in which he is
credited with at least 1000 hours of service.
(7) COUNTING YEARS OF SERVICE FOR PARTICIPATION. All of an
Employee's years of service with the Employer are counted toward meeting the
Plan's anticipation eligibility requirement (if any), except that, if the Plan
provides for 100% vesting after two years or less of service, service before a
break in service which occurs before the Employee satisfies the Plan's
requirement for eligibility will be disregarded. However, the preceding sentence
will not apply if the Employer's Plan is a 165(e) Plan.
If the service requirement to become a Participant
as specified in the Adoption Agreement includes a fractional year, an Employee
will not be required to complete any minimum number of hours of service to
receive credit for such fractional year.
(8) COUNTING YEARS OF SERVICE FOR VESTING. For purposes of
determining a Participant's vested percentage, all of his years of service will
be counted, except that, if the Plan Administrator specifically so provides, the
following years of service will not be counted:
(a) years of service completed before age 18;
(b) years of service before the Employer maintained
this Plan or a predecessor plan.
A plan is a predecessor plan if it was terminated
on or after the date it was required to comply with ERISA and within five years
before or after the Effective Date of this Plan. A plan is not treated as a
predecessor plan with respect to an Employee unless he was a participant in such
plan.
(9) SERVICE WITH OTHER ORGANIZATIONS.
(a) To determine whether an Employee is a
Participant and to determine his vested percentage, if the Employer
maintains a plan of a predecessor employer, service with the predecessor
employer will be treated as service with the Employer.
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(b) If not treated as service with the Employer
under subsection (a) above, service with any entity specifically so
designated in the Adoption Agreement will be treated as service with the
Employer.
b. ELAPSED TIME METHOD. The definitions and rules in this
subsection will apply to Employers who in the Adoption Agreement elected to have
Employees' service determined under the elapsed time method.
(1) SERVICE.
(a) IN GENERAL. Service of an Employee includes all
of the following:
(i) any period of service, as defined below,
whether or not continuous; and
(ii) for a reemployed Employee, any period
of severance provided that his reemployment commencement
date occurs within one year after his severance date.
(b) YEAR OF SERVICE. To determine an Employee's
years of service, all of his service will be aggregated and each
365 days of such aggregated service will constitute a year of
service. If any provision of the Plan calls for completion of a
fractional year of service, such fraction of 365 days of the
Employee's aggregated service will satisfy the provision; for
example, if one-half year of service is required, then such
requirement will be met when the Employee's aggregated service
equals 183 days.
(2) DEFINITIONS RELATING TO SERVICE.
(a) PERIOD OF SERVICE shall mean an Employee's
service, beginning on his employment commencement date or
reemployment commencement date and ending on his severance date.
(b) EMPLOYMENT COMMENCEMENT DATE. An Employee's
employment commencement date is the date on which he first
completes an hour of service, as defined below.
(c) REEMPLOYMENT COMMENCEMENT DATE. In the case of
an Employee who has a period of severance which is not taken into
account under subsection (1)(a)(ii), the reemployment date is the
date on which he first completes an hour of service after such
period of severance.
(d) PERIOD OF SEVERANCE. A period of severance of
an Employee means a period beginning on his severance date and,
if applicable, ending on his reemployment commencement date.
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In the case of an Employee who is absent
from work for maternity or paternity reasons, the 12-consecutive month period
beginning on the date of such absence will constitute a year of service; the
first anniversary of the first date of such absence will be treated as neither a
period of service nor a period of severance; any period after the 24-consecutive
month beginning on the date of such absence will constitute a period of
severance. For purposes of this section, an absence, from work for maternity or
paternity reasons means an absence (1) by reason of the pregnancy of the
Employee, (2) by reason of the birth of a child of the Employee, (3) by reason
of the placement of a child with the Employee in connection with the Employee's
adoption of such child, or (4) for purposes of caring for such child for a
period beginning immediately following such birth or placement.
Each Employee will share in Employer
Contributions and Matching Contributions for the period beginning on the date
the Employee commences participation under the Plan and ending on the date on
which such Employee severs employment with the Employer or is no longer a
Participant.
(e) SEVERANCE FROM SERVICE DATE. An Employee's
severance from service date is the earlier of:
(i) the date on which he quits, retires, is
discharged or dies, or
(ii) the first anniversary of the first day
of a period during which he is absent (with or without
compensation) from performing duties for the Employer for
any reason other than quit, retirement, discharge or
death, such as vacation, holiday, sickness, leave of
absence or layoff.
(f) HOUR OF SERVICE. Hour of service is an hour for
which the Employee is paid or entitled to payment for the
performance of duties for the Employer.
(3) COUNTING YEARS OF SERVICE FOR PARTICIPATION. All of an
Employee's years of service with the Employer are counted toward meeting the
Plan's participation requirement (if any), except that, if the Plan provides for
100% vesting after two years or less of service, service will be disregarded if
it was completed before a period of severance of one year or more which occurs
before the Employee satisfied the Plan's service requirement for eligibility.
However, the preceding sentence apply if the Employer's Plan is a 165(e) Plan.
(4) COUNTING YEARS OF SERVICE FOR VESTING. For purposes of
determining a Participant's vested percentage, all of his years of service will
be counted except that, if the Plan Administrator so provides, the following
years of service will not be counted:
(a) service completed before age 18;
(b) service before the Employer maintained this
Plan or a predecessor Plan.
12.
<PAGE> 14
A plan is a predecessor plan if it was terminated
on or after the date it was required to comply with ERISA and within five years
before or after the Effective Date of this Plan. A plan is not treated as a
predecessor plan with respect to an Employee unless he was a participant in such
plan.
(5) SERVICE WITH OTHER ORGANIZATIONS.
(a) To determine whether an Employee is a
Participant and to determine his vested percentage, if the Employer
maintains a plan of a predecessor employer, service with a predecessor
employer will count as service with the Employer.
(b) If not treated as service with the Employer
under subsection (a) above, service with any entity specifically so
designated in the Adoption Agreement will be treated as service with the
Employer.
3.5 BENEFITS FOR OWNER-EMPLOYEES. If the Plan provides contributions or
benefits for one or more Owner-Employees who together control the trade or
business with respect to which the Plan is established, and who also control as
Owner-Employees, one or more other trades or businesses, the Plan and plans
established with respect to such other trades or businesses must, when looked at
as a single plan, satisfy Sections 165(a), and (g) of the ITA with respect to
the Employees of this and all such other trades or businesses. If the Plan
provides contributions or benefits for one or more Owner-Employees who control
one or more other trades or businesses, the Employees of each such other trade
or business must be included in a plan which satisfies Sections 165(a) and (g)
of the IRA and which provides contributions and benefits not less favorable than
those provided for such Owner-Employee under the plans of two or more trades or
businesses which he does not control and such individual controls a trade or
business, then the contributions or benefits of the Employees under the plan of
the trade or business which he does control must be as favorable as those
provided for him under the most favorable plan of the trade or business which he
does not control. For purposes of this subsection, an Owner-Employee, or two or
more Owner-Employees, shall be considered to control a trade or business if such
Owner-Employee, or such two or more Owner-Employees together.
a. own the entire interest in an unincorporated trade or
business, or
b. in the case of a special partnership, own more than 50 percent
of either the capital interest or the profits interest in such partnership.
For purposes of the preceding sentence, an Owner-Employee or two
or more Owner-Employees shall be treated as owning any interest in a special
partnership which is owned, directly or indirectly, by a special partnership
which such Owner-Employee or such two or more Owner-Employees are considered to
control within the meaning of the preceding sentence.
ARTICLE 4
PRE-TAX CONTRIBUTIONS
13.
<PAGE> 15
4.1 ELIGIBILITY. If the Employer's Plan is a profit-sharing plan and the
Adoption Agreement so provides, an Employee who meets the participation
requirements of section 3.1 may elect to make Pre-Tax Contributions under ITA
section 165(e). Pre-Tax Contributions are voluntary and no Employee is required
to make such contributions. Pre-Tax Contributions Accounts are fully vested and
nonforfeitable at all times.
4.2 PRE-TAX CONTRIBUTION ELECTION. The Participant must file a written
election form with the Plan Administrator indicating the amount of Pre-Tax
Contributions he wishes to make and agreeing to reduce his Compensation by such
amount. Subject to any rules specified in the Adoption Agreement or established
by the Plan Administrator, a Participant may increase, decrease, discontinue or
resume his Pre-Tax Contributions during a Plan Year by filing an appropriate
form with the Plan Administrator. A discontinuance of Pre-Tax Contributions will
be effective as soon as reasonably practicable after the Plan Administrator's
receipt of the Participant's election form. An increase or decrease of Pre-Tax
Contributions, or a resumption after a discontinuance, will be effective as of
the Entry Date next following the Participant's timely election.
No change under the preceding paragraph may cause a Participant's
Pre-Tax Contributions to exceed the maximum provided for under section 4.4.
The Plan Administrator, with the approval of the Plan Sponsor, may
establish reasonable rules of uniform application governing Participants'
elections and changes. Such rules include the number and of elections Plan Year,
may frequency or changes during any effective dates for elections or changes
(for example, the first day of the payroll period coinciding with or next
following the applicable election or change date), cutoff dates for timely
filing of elections or changes, and other rules to facilitate operation of this
article.
Notwithstanding the preceding, a Participant will be permitted to change
his election at least once each year.
4.3 COLLECTION OF PRE-TAX CONTRIBUTIONS. The Employer will collect
Participants' Pre-Tax Contributions using payroll procedures. The Employer will
transfer the amounts collected to the Trustee as of the earliest date when such
contributions can reasonably be segregated from the Employer's general assets,
but not later than 90 days from the date on which such amounts would otherwise
have been payable to the Participant in cash.
4.4 LIMITATIONS ON PRE-TAX CONTRIBUTIONS.
a. LIMITS ON PRE-TAX CONTRIBUTIONS. The minimum amount of Pre-Tax
Contributions the Participant may elect is 1 percent of his Compensation.
Pre-Tax Contributions may not exceed the lesser of: (1) 10% of the Participant's
Compensation up to a maximum of $7,000 in any calendar year; (2) the maximum
amount permitted under section 4.5 for Highly Compensated Employees for any Plan
Year, or (3) any maximum or other limitation imposed by the Plan Administrator.
If a Participant makes Pre-Tax Contributions in a calendar year equal to
the lesser of 10% of his compensation or $7,000, his Pre-Tax Contributions will
immediately cease.
14.
<PAGE> 16
b. LIMITS ON WITHDRAWALS. Notwithstanding section 4.1 and section
4.4.a. above, a Participant who makes a withdrawal on account of a financial
hardship under section 9.1 may not make Pre-Tax Contributions or After-Tax
Contributions hereunder (or under any other Plan maintained by the Employer) for
a period of 12 months following the date of the in-service withdrawal. Also, in
the taxable year following the date of the withdrawal, such a Participant may
not make Pre-Tax Contributions which, when added to his Pre-Tax Contributions
during the taxable year of the withdrawal, exceed the amount specified in
subsection a. above.
c. LIMITS ON DISTRIBUTIONS. Pre-Tax Contributions may not be
distributed to Participants or their Beneficiaries earlier than:
(1) separation from service, death or Disability,
(2) termination of the Plan without the establishment of a
successor plan,
(3) the date of the sale or other disposition to an
unrelated entity of substantially all of the assets used by the Employer in a
trade or business, provided the Employee continues in employment with the
purchaser of the assets,
(4) the date of sale or other disposition to an unrelated
entity of a subsidiary of the Employer, provided the Employee continues in
employment with the subsidiary,
(5) reaching the age of fifty-nine and a half (591/2)
years, or
(6) a case of financial hardship, as defined in Section
9.1.
4.5 ACTUAL DEFERRAL PERCENTAGE TEST.
a. As of the last day of each Plan Year, the Average Actual
Deferral Percentages of Highly Compensated Employees (such average is called the
HCE-ADP in this section) may not exceed the Average Actual Deferral Percentages
of Non-Highly Compensated Employees (such average is called the NHCE-ADP in this
section) by more than the amount specified in the following table:
If NHCE-ADP is: NCE-ADP may not exceed:
less than 2% two times NHCE-ADP
2% but less than 8% two percentage points more
than NHCE-ADP
8% or higher 1.25 times NHCE-ADP
15.
<PAGE> 17
The determination and treatment of Participants' Actual
Deferral Percentages will be subject to the requirements of any applicable
regulations under ERISA or the ITA.
b. The Actual Deferral Percentage for any Participant who is a
Highly Compensated Employee for the Plan Year and who is eligible to make
Pre-Tax Contributions (and, if applicable, to receive Qualified Employer
Deferral Contributions) allocated to his accounts under two or more arrangements
described in ITA section 165(e), that are maintained by the Employer, shall be
determined as if such Pre-Tax Contributions (and, if applicable, such Qualified
Employer Deferral Contributions) were made under a single arrangement. If a
Highly Compensated Employee participates in two or more cash or deferred
arrangements that have different Plan Years, all cash or deferred arrangements
ending with or within the same calendar year shall be treated as a single
arrangement.
c. In the event that this Plan satisfies the requirements of ITA
sections 165(e), 165(a)(3) or 165(a)(4) only if aggregated with one or more
other Plans, or if one or more other Plans satisfy the requirements of such
sections of the ITA only if aggregated with this Plan, then this section shall
be applied by determining the Actual Deferral Percentage of Employees as if all
such Plans were a single Plan.
d. For purposes of determining the Actual Deferral Percentage
test, Pre-Tax Contributions and Qualified Employer Deferral Contributions must
be made before the 4.4 last day of the twelve-month period immediately following
the Plan Year to which contributions relate.
e. The Employer shall maintain records sufficient to demonstrate
satisfaction of the Actual Deferral Percentage test and the amount of Qualified
Employer Deferral Contributions used in such test.
4.6 QUALIFIED NON-ELECTIVE CONTRIBUTIONS. If the Employer's Plan
provides for Profit-Sharing Contributions and such contributions meet the
requirements of this section, then, subject to the requirements of applicable
regulations, the Plan Administrator may elect to treat all or part of such
contributions as Qualified Non-Elective Contributions which will be considered
Qualified Employer Deferral Contributions for purposes of the Actual Deferral
Percentage test of section 4.5, above.
Profit-Sharing Contributions meet the requirements of this section if
they are always fully vested when made, and they are subject to the limitations
on distribution of section 4.4c. Also, any Profit-Sharing Contributions not
treated as Qualified Employer Deferral Contributions under the preceding
paragraph must be nondiscriminatory under ITA section 165(a)(4).
In lieu of distributing Excess Contributions as provided in section
4.8a. of the Plan, the Employer may make Qualified Non-Elective Contributions
under the Plan on behalf of Non-Highly Compensated Employees in an amount as is
needed to meet the Actual Deferral Percentage test in such case, the allocation
of Qualified Non-Elective Contributions shall be made only to the accounts of
Participants who are Non-Highly Compensated Employees in the
16.
<PAGE> 18
ratio that each Participant's Compensation for the Plan Year bears to the
Compensation of all such Participants for such Plan Year.
4.7 QUALIFIED MATCHING CONTRIBUTIONS. Generally, Matching Contributions
will not be included in determining a Participant's Deferral Percentage.
However, if the Plan provides for Matching Contributions and such contributions
meet the requirements of this section, the Plan Administrator may elect to treat
all or part of such contributions as Qualified Matching Contributions which will
be considered Qualified Employer Deferral Contributions for purposes of the
Actual Deferral Percentage tests of section 4.5 above.
Matching Contributions meet the requirements of this section if they are
fully vested when made, and they are subject to the limitations on distribution
of section 4.4c.
Qualified Matching Contributions will be taken into account as Qualified
Employer Deferral Contributions for purposes of calculating the Actual Deferral
Percentages, subject to such other requirements as may be prescribed by the
Puerto Rico Secretary of the Treasury and shall be made as are needed to meet
the Actual Deferral Percentage test. The Employer will make Qualified Matching
Contributions to the Plan on behalf of Participants who are Non-Highly
Compensated Employees who make either Pre-Tax Contributions and/or After-Tax
Contributions to the Plan.
4.8 MONITORING PARTICIPANTS' ACTUAL DEFERRAL PERCENTAGES. The Plan
Administrator (or an administrative services provider - which may be the Trustee
or the Plan Sponsor - retained by the Plan Administrator to perform
recordkeeping and other administrative duties) will monitor Participants' Actual
Deferral Percentages to insure compliance with the requirements of section 4.5
above. Any adjustments in Participants' elections or Actual Pre-Tax
Contributions necessary to meet the requirements of section 4.5 win be made as
follows: The Plan Administrator will reduce the Actual Deferral Percentage of
the participating Highly Compensated Employee who has the highest Actual
Deferral Percentage until it reaches the Actual Deferral Percentage of the next
participating Highly Compensated Employee(s) with the next highest Actual
Deferral Percentage; then the Plan Administrator will reduce the Actual Deferral
Percentages of both or all such participating Highly Compensated Employees until
they reach that of the Highly Compensated Employee(s) with the then next highest
Actual Deferral Percentage; and so on. The foregoing reductions will be made
only to the extent necessary to meet the requirements of section 4.5.
a. EXCESS CONTRIBUTIONS. The Plan Administrator will adjust
Pre-Tax Contributions elections by Highly Compensated Employees in accordance
with the preceding paragraph at such time or times before or during a Plan Year
as the Plan Administrator deems advisable to insure that the requirements of
section 4.5 are met as of the last day of the Plan Year.
If, notwithstanding the preceding sentence, the requirements of section
4.5 are not met as of the last day of a Plan Year, such adjustments may be made
after the end of a Plan Year in one or a combination of the following ways: (i)
paying to a Participant the amount of his Excess Contributions plus earnings (or
losses) on such excess, (ii) recharacterizing the Excess Contributions of such a
Participant as After-Tax Contributions during such year, or (iii) in the
17.
<PAGE> 19
Employer's discretion, by making Qualified Non-Elective Contributions or
Qualified Matching Contributions that meet the requirements of section 4.6 or
4.7, respectively, on behalf of Non-Highly Compensated Employees in the amount
needed so that the requirements of section 4.5 are met. For purposes of the
preceding sentence, any such payment or recharacterization of Excess
Contributions will be designated as such by the Employer, and will be made by
the end of the succeeding Plan Year. However, the amount to be paid or
recharacterized will be reduced by any amounts relating to such Plan Year
previously withdrawn by the Participant. For purposes of clause (ii) of this
paragraph, recharacterizing will be available only if the Adoption Agreement
permits After-Tax Contributions.
Recharacterized amounts will remain nonforfeitable and subject to the
same distribution requirements as Pre-Tax Contributions. Amounts may not be
recharacterized by a Highly Compensated Employee to the extent that such amount
in combination with other After-Tax Contributions made by that Employee would
exceed any stated limit provided in the Adoption Agreement, or by the Puerto
Rico Secretary of the Treasury, on After-Tax Contributions. Recharacterized
amounts will be taxable to the Participant in the tax year in which the
Participant would have received them in cash.
Recharacterization must occur no later than two and one-half months
after the last day of the Plan Year in which such Excess Contributions arose and
is deemed to occur no earlier than the date the last Highly Compensated Employee
is informed in writing of the amount recharacterized and the consequences
thereof.
Excess Contributions shall be distributed from the Participant's Pre-Tax
Contributions Account and Qualified Matching Contributions Account (if
applicable) in proportion to the Participant's Pre-Tax Contributions and
Qualified Matching Contributions (to the extent used in the Actual Deferral
Percentage test) for the Plan Year. Excess Contributions shall be distributed
from the Participant's Qualified Non-Elective Contributions Account only to the
extent that such Excess Contributions exceed the balance in the Participant's
Pre-Tax Contributions Account and Qualified Matching Contributions Account.
A distribution of Excess Contributions under this section may be made
notwithstanding any otherwise applicable restrictions or spousal consent
requirements on in-service withdrawals or distributions.
4.9 EXCESS DEFERRALS. Notwithstanding any other provision of the Plan,
Excess Deferrals, plus any income and minus any loss allocable thereto, shall be
distributed no later than April 15 to any Participant to whose account Excess
Deferrals were assigned for the preceding year and who claims Excess Deferrals
for such taxable year. A withdrawal of an Excess Deferral under this section may
be made notwithstanding any otherwise applicable restrictions or spousal consent
requirement on in-service withdrawals. The amount of any Excess Deferrals to be
withdrawn under this section will be reduced by any amounts previously
distributed or recharacterized under section 4.8.
ARTICLE 5
AFTER-TAX CONTRIBUTIONS
18.
<PAGE> 20
5.1 ELIGIBILITY. If the Adoption Agreement so provides, an Employee may
elect to make After-Tax Contributions. After-Tax Contributions are voluntary and
no Employee will be required to make such contributions. After-Tax Contributions
Accounts are fully vested and nonforfeitable at all times.
5.2 LIMITS ON AMOUNT. The minimum amount of After-Tax Contributions a
Participant may elect is 1 percent of his Compensation. His After-Tax
Contributions for any Plan Year may not exceed any maximum limitation imposed by
the Plan Administrator, within any limits prescribed by the ITA and Regulations
thereunder. Additional restrictions on After-Tax Contributions may apply in
certain cases to Participants who make a in-service withdrawal on account of a
financial hardship under Section 9.1. (See the first sentence of section 4.4b.)
5.3 AFTER-TAX CONTRIBUTION ELECTION. The procedures for electing and
changing After-Tax Contributions will be similar to those described in section
4.2.
5.4 COLLECTION OF AFTER-TAX CONTRIBUTIONS. The Employer will collect
Participants' After-Tax Contributions using payroll or other procedures. The
Employer will transfer the amounts collected to the Trustee as of the earliest
date on which such contributions can reasonably be segregated from the
Employer's general assets, but not later than 90 days from the date on which
such amounts are received by the Employer or the date on which such amounts
would otherwise have been payable to the Participant in cash.
ARTICLE 6
EMPLOYER AND MATCHING CONTRIBUTIONS
6.1 ELIGIBILITY. If the Adoption Agreement so provides, the Employer
will make Employer Contributions (Money Purchase Contributions or Profit-Sharing
Contributions) and/or Matching Contributions to all Participants pursuant to the
provisions of this Article 6. Participants will have a vested and nonforfeitable
interest in their Employer Contributions Account and Matching Contributions
Account in accordance with the vesting schedule specified by the Employer in the
Adoption Agreement.
6.2 EMPLOYER CONTRIBUTIONS.
a. IN GENERAL. For each Plan Year that the Plan is in effect, the
Employer will make Employer Contributions (Money Purchase Contributions or
Profit-Sharing Contributions) in cash, the amount (if any) determined according
to the provisions of this Article. If, due to miscalculation or error, the
Employer Contributions exceed the amount prescribed or determined by the
Employer, such excess may, at the election of the Employer, bi treated as a
contribution for the succeeding Plan Year or years.
The Employer Contribution may be paid in a single sum or installments,
but the total amount will be paid to the Trustee not later than the earlier of
the time (including extensions thereof) prescribed by law for filing the
Employer's Puerto Rico income tax return for its taxable year ending with or
within the Plan Year.
19.
<PAGE> 21
b. MONEY PURCHASE PENSION PLANS. If pursuant to the Adoption
Agreement the Plan is a money purchase pension plan, the following provisions
will apply:
(1) MONEY PURCHASE CONTRIBUTION. For each Plan Year the
Employer will contribute an amount which will equal the contribution required
for all Participants entitled to receive an allocation for such year under the
contribution formula elected by the Employer in the Adoption Agreement.
(2) MAXIMUM CONTRIBUTION. Employer Contributions to the
Plan shall not exceed the maximum amount which the Employer may deduct under ITA
section 23(I2), or any successor provision or similar statutory provisions
hereafter enacted.
(3) FORFEITURES. Forfeitures will be allocated to the
accounts of Participants during such Plan Year in the proportion that each such
Participant's Compensation during such Plan Year bears to the total Compensation
during such Plan Year of all such Participants. No forfeitures will occur solely
as a result of an Employee's withdrawal of Employee contributions.
c. PROFIT-SHARING PLANS. If pursuant to the Adoption Agreement
the Plan is a profit-sharing plan, the following provisions will apply:
(1) PROFIT-SHARING CONTRIBUTION. If specified in the
Adoption Agreement, for each Plan Year in which the Plan is in effect, the
Employer shall make contributions to the Trust in such amounts as it may
determine; the Employer will not be obligated to contribute any particular
amount in a Plan Year or to make any contribution at all in any particular Plan
Year.
(2) MAXIMUM CONTRIBUTION. All Employer Contributions to
the Plan shall be made out of Net Profits and shall not exceed the lesser of:
(a) The Employer's Net Profits; or (b) The maximum amount permitted to be
deducted by the Employer under IFA section 23(p), or any successor or similar
statutory provisions hereafter enacted.
(3) NET PROFITS DEFINED. "Net Profits" for purposes of
this formula shall mean the taxable income of the Employer as determinable for
Puerto Rico income tax purposes, such taxable income to be exclusive of capital
gains and capital losses and without any deduction for taxes based upon income
or for contributions made by the Employer under this Plan or to any other
qualified plans maintained by the Employer. Net Profits shall also include any
undistributed Net Profits from prior years, after deduction of taxes based upon
income and contributions made by the Employer under this Plan or any other
qualified plans maintained by the Employer.
(4) FORFEITURES. Forfeitures will be allocated to the
accounts of Participants during such Plan Year in the proportion that each such
Participant's Compensation during such Plan Year bears to the total Compensation
during such Plan Year of all such Participants. No forfeitures will occur solely
as a result of an Employee's withdrawal of Employee contributions.
20.
<PAGE> 22
6.3 ALLOCATION OF EMPLOYER CONTRIBUTIONS. Employer Contributions for
each Plan Year shall be allocated as of the last day of such Plan Year (even
though receipt of the Employer Contributions by the Trustee may take place after
the close of such Plan Year) among the Employer Contributions Accounts of those
Participants who either completed more than 500 hours of service or were
actively employed by the Employer at the end of such Plan Year.
Notwithstanding the above, a Participant whose employment with the
Employer terminates because of his retirement, Disability or death during the
Plan Year is not required to fulfill the foregoing employment requirement to
share in the allocation of Employer Contributions for such Plan Year.
Employer Contributions will be allocated so that each Participant
receives a proportionate amount of the total Employer Contribution equal to the
ratio of his Compensation over the Compensation of all Participants for the Plan
Year (Employer Contributions to a profit-sharing plan), or so that each
Participant receives the percentage of his Compensation for the Plan Year
specified in the Adoption Agreement (money purchase pension plan).
6.4 MATCHING CONTRIBUTIONS.
a. AMOUNT OF CONTRIBUTION. If the Employer so chooses in the
Adoption Agreement, for each matching period, as defined below, the Employer
will make a Matching Contribution in cash on behalf of each Participant who
makes Pre-Tax Contributions under t Article 4 and/or After-Tax Contributions
under Article 5 during such period. A Participant will be required to be an
Employee on the last day of a matching period (or to have left employment during
such period because of retirement, death or Disability) in order to receive a
Matching Contribution for such period.
The amount of such Matching Contribution will be as specified in the
Adoption Agreement. The Employer will not make a Matching Contribution with
respect to any Excess Contributions under section 4.8.
The Plan Administrator will select the matching period, which may be the
Plan Year or a period shorter than the Plan Year such as each month, three
months (quarterly), four months (tri-annual) or six months (semi-annual).
Matching contributions for a matching period will be transferred to the Trustee
within a reasonable time after the end of such period. However, the total amount
of the Employer's matching contributions for a Plan Year will be paid to the
Trustee by the time specified in section 6.2.
Matching Contributions shall be vested in accordance with the vesting
schedule selected in the Adoption Agreement. In any event, Matching
Contributions shall be fully vested at Normal Retirement Age, upon the complete
or partial termination of the Plan, or upon the complete discontinuance of
contributions by the Employer.
b. SOURCE OF CONTRIBUTIONS. In a profit-sharing or 165(e) plan,
the Matching Contributions required under this section will be limited to the
Employer's net profits, as defined in section 6.2.c.(3).
21.
<PAGE> 23
c. USE OF FORFEITURES. Any forfeitures occurring during a
matching period will be allocated to the accounts of Participants during such
Plan Year in the proportion that each such Participant's Compensation during
such Plan Year bears to the total Compensation during such Plan Year of all such
Participants.
ARTICLE 7
ROLLOVERS
7.1 ROLLOVER CONTRIBUTIONS.
a. With the approval of the Plan Administrator, an Employee may:
(1) make a rollover transfer to the Plan of cash in an
amount which constitutes all of a qualifying rollover distribution, as defined
in IFA section 165(b)(2); or
(2) cause any amount which could be rolled over to the
Plan under subsection (1) to be transferred directly to the Trustee of the Plan
from the Trustee or custodian of a Puerto Rico qualified plan or annuity. In the
case of such transfers directly from another Puerto Rico qualified plan funded
through a trust or annuity contract, amounts consisting of the following will be
accounted for separately: employer contributions to a money purchase plan,
employer contributions to a profit-sharing or 165(e) plan, pre-tax contributions
and after-tax contributions. The Employee will be responsible for providing the
Plan Administrator with records that will reflect such amounts separately.
b. The Employer, the Plan Administrator and the Trustee have no
responsibility for determining the propriety of, proper amount or time of, or
status as a tax free transaction of any transfer under subsection a. above.
c. If an Employee who is not yet a Participant makes a transfer
under subsection a. above, he will be considered to be a Participant with
respect to administering such transferred amount only. He will not be a
Participant for any other purpose of the Plan until he completes the
participation requirements under Article 3.
d. The Employer, Plan Administrator or Trustee in its discretion
may direct the return to the Employee (or the retransfer to another Trustee or
custodian designated by the Employee) of any transfer to the extent that such
return is deemed necessary to insure the continued qualification of this Plan
under ITA section 165(a) or that holding such contribution hereunder would be
administratively burdensome.
e. The Plan Administrator will credit any Rollover Contribution
to the Participant's Rollover Contributions Account as soon as practicable after
receipt thereof by the Trustee. Any amounts separately accounted for under
subsection a.(2) above will be separately accounted for hereunder as subaccounts
within the Employee's Rollover Contributions Account.
ARTICLE 8
VESTING
22.
<PAGE> 24
8.1 VESTING. A Participant will have a vested and nonforfeitable
interest in that percentage of his Employer Contributions Account and/or
Matching Contributions Account determined under the vesting schedule specified
by the Employer in the Adoption Agreement.
8.2 FULL VESTING. Notwithstanding section 8.1, Participants will become
fully vested in their Employer Contributions Account and/or Matching
Contributions Account upon the earlier of (i) reaching Normal Retirement Age
while still employed by the Employer; (ii) upon retirement at their Normal
Retirement Date or at an Early Retirement Date as specified in the Adoption
Agreement; (iii) upon Disability as defined in section 2.9; or (iv) upon death
while still an Employee.
8.3 PAYMENT OF VESTED INTEREST. A Participant's vested interest in his
accrued benefit will be paid to him, or payments will begin, on a date elected
by the Participant and will be paid to him in one or more of the methods
described in section 10.1 as elected by the Participant. The Participant's
election as to either time or form of payment will be subject to the rules of
Article 10.
8.4 FORFEITURE OF NON-VESTED INTEREST. A Participant will forfeit the
non-vested portion of his accrued benefit on the day after he incurs a period of
five consecutive breaks in service (as explained in section 3.4a. if the
Employer's Plan counts service for vesting purposes using the hours of service
method, or as explained in section 3.4b. if the Employer's Plan counts service
for vesting purposes using the elapsed time method).
8.5 RESUMPTION OF EMPLOYMENT. A former Participant who returns to
employment with the Employer after a period of less than five consecutive breaks
in service will receive credit for all his prior years of service for vesting
purposes.
8.6 CALCULATING VESTED INTEREST AFTER WITHDRAWAL OR DISTRIBUTION. This
section applies only in cases in which the Employer chooses in the Adoption
Agreement the graded vesting schedule. Where a Participant's Employer
Contributions Account and/or Matching Contributions Account is charged with a
withdrawal or distribution at a time when he is not fully vested in such
account, the remaining balance of the Participant in such account will be
credited to a separate suspense account within the Participant's Employer
Contributions Account and/or Matching Contributions Account, or accounting
records will be maintained in a manner which has the same effect as establishing
a separate suspense account. The Participant's vested interest in such separate
suspense account will be determined in accordance with the following formula:
X = P(AB + W/D)- W/D
For purposes of the formula:
a. "X" is the Participant's vested interest in the separate
suspense account at the time the formula is applied;
b. "P" is the Participant's vested percentage in his/her Employer
Contributions Account and/or Matching Contributions
Account at the time the formula is applied;
23.
<PAGE> 25
c. "AB" is the balance in the separate suspense account at the
time the formula is applied; and
d. "W/D" is the amount withdrawn by, or distributed to, the
Participant at the time the formula is applied.
The term remaining balance as used in this section means a Participant's
interest in his Employer Contributions Account and/or Matching Contributions
Account remaining after a withdrawal or distribution of a portion or all of his
vested interest therein.
ARTICLE 9
IN-SERVICE WITHDRAWALS
9.1 WITHDRAWAL OF PRE-TAX CONTRIBUTIONS.
a. AMOUNT. A Participant may make in-service withdrawals from his
Pre-Tax Contributions Account in the event of financial hardship only. The
maximum withdrawal from the Participant's Pre-Tax Contributions Account is the
smaller of the amount of his Pre-Tax Contributions, without earnings or
investment gains, or the amount needed to alleviate his financial hardship.
b. FINANCIAL HARDSHIP.
(1) An in-service withdrawal will be on account of
financial hardship only if the Participant has an immediate and heavy financial
need and the withdrawal is necessary to meet such need.
(2) A withdrawal will be deemed to be on account of an
immediate and heavy-financial need if it is occasioned by:
(a) a deductible medical expense incurred by the
Participant or his spouse, children or dependent;
(b) purchase of the Participant's principal
residence (not including mortgage payments);
(c) tuition payments for the next semester or
quarter of post-secondary education for the Participant or
his spouse, child or dependent;
(d) rent or mortgage payments to prevent the
Participant's eviction from or the foreclosure of the
mortgage on his principal residence; or
(e) such other event or circumstance as the Puerto
Rico Secretary of the Treasury through regulations may
permit.
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(3) A withdrawal will be deemed necessary to satisfy the
Participant's financial needs if either:
(a) the Participant has made all non-financial
hardship withdrawals and obtained all nontaxable loans
available under all of the Employer's qualified retirement
Plans; and each such other Plan which provides for Pre-Tax
Contributions contains restrictions similar to those in
section 4.4b.; or
(b) the Participant satisfies such other
requirements as may be prescribed by the Puerto Rico
Secretary of the Treasury.
(4) A Participant must establish to the Plan
Administrator's satisfaction both that the Participant has an immediate and
heavy financial need and that the withdrawal is necessary to meet the need, as
provided in subsections (2) and (3) above.
A Participant's application for a financial hardship withdrawal will be
in writing on such form and containing such information (or other evidence or
materials establishing the Participant's financial hardship) as the Plan
Administrator may require. The Plan Administrator's determination of the
existence of and the amount needed to meet a financial hardship will be binding
on the Participant.
c. WITHDRAWALS AFTER AGE 59 1/2. Notwithstanding subsection b.
above,
(1) to the extent provided in the Adoption Agreement, a
Participant may make in-service withdrawals from his Pre-Tax Contributions
Account after he has reached age 59 1/2; and
(2) a Participant may make in-service withdrawals from his
Pre-Tax Contributions Account under the following circumstances: (i) termination
of the Plan without the establishment of a successor Plan; (ii) the sale or
other disposition to an unrelated entity of substantially all of the assets used
by the Employer in a trade or business, provided the Employee continues in
employment with the purchaser of the assets; (iii) the sale or other disposition
to an unrelated entity of a subsidiary of the Employer, provided the Employee
continues in employment with the subsidiary.
d. SPOUSAL CONSENT TO IN-SERVICE WITHDRAWALS. Married
Participant's spouse must consent to an in-service withdrawal under this
section. Such consent must be in writing and witnessed by a notary public or the
Plan Administrator (or any Plan representative appointed by the Plan
Administrator for such purposes).
e. PAYMENT. Any withdrawal under this section will be paid to the
Participant as soon as practicable after the valuation date next following the
Plan Administrator's receipt of the Participant's withdrawal form; however the
Plan Administrator may approve an earlier payment of some or all of the amount
to be withdrawn if such earlier payment would not be detrimental to the
interests of the other Participants.
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f. LIMITATION ON FUTURE CONTRIBUTIONS. A Participant who makes an
in-service withdrawal under this section may not make a Pre-Tax Contribution or
After-Tax Contribution for a period of up to 12 months following such in-service
withdrawal.
9.2 WITHDRAWAL OF AFTER-TAX CONTRIBUTIONS.
a. AMOUNT. A Participant whose employment has not terminated may
upon reasonable advance written notice to the Plan Administrator withdraw all or
any portion of his After-Tax Contributions Account to the extent not previously
withdrawn.
b. PAYMENT. Any withdrawal under this section will be paid to the
Participant as soon as practicable after the valuation date next following the
Plan Administrator's receipt of the Participant's withdrawal form; however the
Plan Administrator may approve an earlier payment of some or all of the amount
to be withdrawn if such earlier payment would not be detrimental to the
interests of the other Participants.
c. LIMITATION ON FUTURE WITHDRAWALS. If so provided by the Plan
Administrator, a Participant who makes an in-service withdrawal under this
section may not make a Pre-Tax Contribution or After-Tax Contribution for a
period of up to 12 months following the date of such in-service withdrawal.
The Plan Sponsor and the Plan Administrator may establish reasonable
minimum withdrawal amounts and reasonable limitations on the frequency or number
of withdrawals during a Plan Year. No forfeitures will occur solely as a result
of an Employee's making an in-service withdrawal.
9.3 WITHDRAWAL OF MATCHING CONTRIBUTIONS.
a. AMOUNT. A Participant may make in-service withdrawals from his
vested portion of his Matching Contributions Account, to the extent provided in
the Adoption Agreement. The Adoption Agreement may limit such in-service
withdrawals to financial hardship situations, or may permit in-service
withdrawals for reasons other than financial hardship.
9.4 WITHDRAWALS OF PROFIT-SHARING CONTRIBUTIONS. In-service withdrawals
of Profit-Sharing Contributions are not permitted.
9.5 WITHDRAWALS OF MONEY PURCHASE CONTRIBUTIONS. In-service withdrawals
of Money Purchase Contributions are not permitted.
9.6 WITHDRAWALS OF ROLLOVER CONTRIBUTIONS.
a. AMOUNTS. A Participant may upon reasonable advance written
notice to the Plan Administrator withdraw all or any portion of his Rollover
Contributions Account. The Plan Administrator may establish reasonable minimum
withdrawal amounts.
Notwithstanding the preceding paragraph, amounts separately accounted
for under section 7.1a.(2) will be subject to restrictions on withdrawal as
follows: employer contributions
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to a money purchase plan or profit-sharing plan are not available for in-service
withdrawal; pre-tax contributions are available for in-service withdrawal only
under section 9.1; Qualified Employer Deferral Contributions are not available
for in-service withdrawal; matching and after-tax contributions are available
for in-service withdrawal, as provided in the Adoption Agreement.
b. PAYMENT. Any withdrawal under this section will be paid to the
Participant as soon as practicable after the valuation date next following the
Plan Administrator's receipt of the Participant's withdrawal form; however, the
Plan Administrator may approve an earlier payment of all or some of the amount
to be withdrawn if such earlier payment would not be detrimental to the
interests of the other Participants.
ARTICLE 10
DISTRIBUTION OF BENEFITS
10.1 METHODS OF DISTRIBUTION.
a. The distribution of benefits to which a Participant may become
entitled shall be made in accordance with this Article 10.
(1) The benefits provided by the Plan shall be distributed
under whichever of the following methods the Participant shall elect:
(a) The purchase of a nontransferable,
conventional fixed or variable annuity contract, providing
payments at least annually, of such type and from such insurance
company approved by the Plan Administrator;
(b) A single distribution of the entire
vested balance then standing in the Participant's accounts; or
(c) Payments in monthly, quarterly,
semiannual or annual installments of substantially equal
designated amounts over a period of years certain.
Except in the case of a Participant in a profit sharing or 165(e) version of
this Master Plan, retirement benefits to a married Participant will be paid in
the form of a qualified joint and survivor annuity unless the Participant elects
otherwise as provided in subsection a.(2)(b), below. Under a profit sharing or
165(e) version of this Master Plan, the Participant will receive his benefits in
the form of a lump sum payment.
An election to receive a Plan distribution under any method set forth in this
subsection a.(1) for an Annuity Starting Date which occurs on or after the
Participant's Normal Retirement Age, Early Retirement Age or Disability shall
apply to all subsequent distributions made from the Participant's accounts.
Except with respect to the payment of a qualified joint and survivor annuity
pursuant to subsection a.(2) below, the Participant shall in all cases elect a
distribution method which requires that the present value of the payments to be
made to the Participant
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exceed fifty percent (50%) of the present value of the total payments to be made
to the Participant and his Beneficiary, determined as of the date such payments
commence.
(2) If at any time the Participant elects or has
elected that his benefits be paid through the purchase of an annuity,
the Plan Administrator shall direct the Trustee to purchase an annuity
contract in the form of a qualified joint and survivor annuity for all
distributions to the Participant.
(a) The term `qualified joint and survivor
annuity means an annuity that commences immediately for the life
of the Participant if he does not have an Eligible Spouse or, if
he has an Eligible Spouse, an annuity that commences immediately,
which is at least as valuable as any other alternate form of
benefit payable under the Plan, for the life of the Participant
with a survivor annuity for the life of his Eligible Spouse. Upon
the election of the Participant, which may be made at any time
and any number of times, the survivor annuity shall be fifty
percent (50%) or one hundred percent (100%) of the amount of the
annuity payable during the joint lives of the Participant and his
Eligible Spouse, both of which shall be actuarially equivalent;
provided that in the event no election is made, the survivor
annuity shall be fifty percent (50%) of the amount payable during
the Participant's and his Eligible Spouse's joint lives. In
determining the Participant's interest subject to the qualified
joint and survivor annuity requirement, any security interest
held by the Plan by reason of a loan outstanding to the
Participant shall reduce the Participant's interest if the
security interest is treated as payment in satisfaction of the
Plan loan to the Participant.
(b) Notwithstanding the foregoing, a
Participant may elect to waive the qualified joint and survivor
annuity and thereby receive an alternate form of distribution.
Such waiver must be made within the ninety (90) day period ending
on the Participant's Annuity Starting Date with respect to such
benefit. A Participant may subsequently revoke an election to
waive a qualified joint and survivor annuity and elect again to
waive the qualified joint and survivor annuity at any time and
any number of times prior to such Annuity Starting Date. All such
elections and revocations shall be in writing. Any election to
waive a qualified joint and survivor annuity (1) must specify the
alternate form of distribution elected, (2) must be accompanied
by the designation of a specific beneficiary (including any class
of beneficiaries or any contingent beneficiaries) who will
receive the benefit upon the Participant's death, if applicable,
and (3) must be accompanied by a Spousal Consent, to the extent
required under section 2.48.
b. If a Participant dies before the Annuity Starting Date with
respect to such benefits, the portion of his vested accounts balances which are
not currently being distributed in the form of a qualified joint and survivor
annuity shall be distributed as provided in this subsection b.
(1) If the Participant is unmarried on the date of his
death, his entire interest (reduced by any security interest held by the
Plan by reason of a loan outstanding
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to the Participant) shall be distributed to his Beneficiary in a single
distribution or in installments at the time set forth in section 10.3.
(2) Except as provided in subsection (3) below, if the
Participant is married on the date of his death, his entire interest
(reduced by any security interest held by the Plan by reason of a loan
outstanding to the Participant) shall be distributed to his Beneficiary
in a single distribution or in installments at the time set forth in
section 10.3.
(3) If the Participant is married on the date of his death
and the Plan is, with respect to the Participant, an offset plan or a
direct or indirect transferee (in a transfer after December 31, 1984) of
a defined benefit plan, a money purchase pension plan (including a
target benefit plan), or a stock bonus or profit-sharing plan which
otherwise would be required to provide for a life annuity form of
payment to the Participant, then fifty percent (50%) of the
Participant's vested interest as of the date of his death (or fifty
percent (50%) of the amount of the Participant's accounts attributable
to the transferred amount, if such transferred amount is separately
accounted for and gains, losses, withdrawals, contributions,
forfeitures, and other credits or charges are allocated on a reasonable
basis between the transferred amount and other assets in the
Participant's accounts) shall be applied toward the purchase of an
annuity for the life of his Eligible Spouse (a "qualified pre-retirement
survivor annuity") unless otherwise elected as provided below. This Plan
shall be considered to be an offset plan if it is used to offset
benefits in a plan which is subject to the survivor annuity requirements
with respect to the Participant whose benefits are offset. In
determining the Participant's interest, any security interest held by
the Plan by reason of a loan outstanding to the Participant shall reduce
the Participant's interest if the security interest is treated as
payment in satisfaction of the Plan loan to the Participant. The portion
of the Participant's vested interest not applied to the purchase of the
qualified pre-retirement survivor annuity shall be distributed to the
Participant's Beneficiary as provided in subsection b:
(a) Within the applicable notice period,
each Participant shall be furnished with a written "notice of the
qualified pre-retirement survivor annuity" in such terms and in
such manner as would be comparable to the "general notice of
distribution" provided pursuant to section 10.2a. This notice
must be accompanied by a general description of the eligibility
conditions, relative values, and other material features of each
method of distribution - under section 10.1a.(1). The "applicable
notice period" means, with respect to each Participant, whichever
of the following periods ends last: (1) the period beginning with
the first day of the Plan Year in which the Participant attains
age 32 and ending with the close of the Plan Year preceding the
Plan Year in which the Participant attains age 35; (2) the period
commencing one year before an ending one year after the
individual becomes a Participant; or (3) the period commencing
one year before and ending one year after the annuity requirement
of section 10.1a.(1)(a) first applies to such Participant. In
addition, the applicable notice period for a Participant who
separates from service before attaining age 35 shall be the
period beginning one year before and ending one year after the
Participant's separation from service. Such notice shall be given
to the Participant in person, by mailing, by posting, or by
placing it in an Employer publication
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which is distributed in such a manner as to be reasonably
available to such Participant. If the explanation is to be
posted, it shall be posted at the location within the
Participant's principal place of employment which is customarily
used for employer notices to employees with regard to
labor-management relations matters.
(b) A Participant may elect to waive a
qualified pre-retirement survivor annuity, revoke such election,
and elect again to waive the qualified pre-retirement survivor
annuity at any time and any number of times during the applicable
election period. All such elections and revocations shall be in
writing. Any election to waive a qualified pre-retirement
survivor annuity must be accompanied by (1) the designation of a
specific nonspouse beneficiary (including any class of
beneficiaries or any contingent beneficiaries) who will receive
the benefit upon the Participant's death, if applicable, and (2)
a Spousal Consent to the extent required under section 2.48. The
"applicable election period" for the waiver of the qualified
pre-retirement survivor annuity shall commence once the
Participant receives a written explanation of such annuity as set
forth in section 10.1b,(3)(a) above or on the first day of the
Plan Year in which the Participant attains age 35, whichever
occurs earlier. Any waiver of the qualified pre-retirement
survivor annuity made prior to the first day of the Plan Year in
which the Participant attained age 35 shall become invalid as of
such date and a new waiver must be issued in order for a waiver
of a qualified pre-retirement survivor annuity to be effective.
(c) Except as provided in subsection (d)
below, the qualified pre-retirement survivor annuity benefit
shall only apply to a Participant if he is credited with at least
one Hour of Service with the Employer on or after August 23,
1984.
(d) If a Participant dies with an effective
waiver of the qualified pre-retirement survivor annuity in force
or the Eligible Spouse so elects after the Participant's death,
his account shall be distributed in the manner specified for
unmarried Participants in section 10.1b.(1) above.
10.2 TIME OF DISTRIBUTION TO PARTICIPANT.
a. The Plan Administrator must provide the Participant with
"general notice of distribution" no less than thirty (30) and no more than
ninety (90) days before the Participant's Annuity Starting Date. Such notice
must be in writing and must set forth the following information: (i) an
explanation of the eligibility requirements for, the material features of, and
the relative values of the alternate forms of benefits available under section
10.la., and (ii) the Participant's right to defer receipt of a Plan distribution
under sections 10.2c. and d. If the Plan is a transferee or offset plan with
respect to the Participant as set forth in section l0.la.()(a), the general
notice also shall include (a) the terms and conditions of a qualified joint and
survivor annuity; (b) the Participant's right to make, and the effect of, an
election to waive the qualified joint and survivor annuity; (c) the rights of
the Participant's Eligible Spouse; and (d) the right to make, and the effect of,
a revocation of an election to waive a qualified joint and survivor
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annuity. Such notice shall be given to the Participant in person, by mailing, by
posting, or by placing it in an Employer publication which is distributed in
such a manner as to be reasonably available to such Participant. If the notice
is to be posted, it shall be posted at the location within the Participant's
principal place of employment which is customarily used for Employer notices to
employees with regard to labor-management relation matters.
b. Upon receipt of the general notice of distribution, a
Participant may consent to receive a distribution of his vested accounts as soon
as practicable after his termination of service. A Participant's vested accounts
shall be distributed in the manner set forth in section 10.la. If at any time
the Participant elects or has elected that his benefits be paid through the
purchase of an annuity, the Participant's consent to receive such distribution
prior to his Normal Retirement Age must be accompanied by the written consent of
the Participant's Eligible Spouse, if married, which is comparable to the
Spousal Consent requirements in section 2.48, unless the distribution is to be
made in the form of a qualified joint and survivor annuity.
c. Subject to the maximum deferral requirements of sections
10.2e. and f., a Participant may elect to defer receipt of a Plan distribution,
provided that such election is in writing, describes the form of benefit
payment, indicates the date the distribution is to commence, and is signed by
the Participant. To the extent not inconsistent with section 10.2d. below, in
the event that the Participant does not elect to defer receipt of his
distribution, payment of the vested balance in the Participant's accounts shall
begin no later than the 60th day after the latest of the close of the Plan Year
in which:
(1) The Participant attains the earlier of age sixty-five
(65) or Normal Retirement Age;
(2) Occurs the tenth (10th) anniversary of the year in
which the Participant entered the Plan; or
(3) The Participant terminates service with the Employer.
d. In the event that the Participant has terminated service and
the Participant (and the Eligible Spouse, if applicable) neither consents to
receive a Plan distribution nor elects to defer receipt of a Plan distribution,
the Participant's accounts shall be distributed in the normal benefit form as
soon as practicable thereafter, but in no event before the date the Participant
attains Normal Retirement Age, if such vested accounts exceed $3,500 (or, if the
Participant's vested accounts balances exceeded $3,500 prior to such
distribution, is less than or equal to $3,500 for distributions made after the
initial distribution date). For purposes of this section, "normal benefit form"
shall mean a single distribution or, if the Plan is a transferee or offset plan
with respect to the Participant as set forth in section 10.1a.(1)(a), a
qualified joint and survivor annuity as set forth in section 10.1a.(1)(b) and
10.1a.(2), respectively.
e. If the form of distribution is other than a single
distribution, then the Participant's entire interest shall be paid over a period
not extending beyond the life (or the life expectancy) of the Participant and
his Beneficiary. For purposes of this subsection, a Participant may elect (other
than in the case of a life annuity) to have the life expectancy of either he or
his spouse, or both, redetermined; provided, however, that if a timely election
is not made, such
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redetermination shall not be made. A Participant's election to redetermine life
expectancy shall be made no later than the time distributions are required to
commence under subsection f. below, shall be irrevocable, shall specify the
frequency with which redeterminations are to be made (not more frequently than
annually), and shall require that such redeterminations be made from that date
forward.
f. Notwithstanding anything to the contrary contained in this
Plan, distribution of the vested balance in the Participant's accounts, or the
first installment of such distribution, shall be made no later than April 1 of
the calendar year following the calendar year in which the Participant attains
age 70 1/2 If the amount of the required payment cannot be ascertained by the
date payment is to commence, or if it is not possible to make such payment
because of the Plan Administrator's inability to locate the Participant after
making reasonable efforts to do so, a payment retroactive to the required
commencement date shall be made no later than sixty (60) days after the date the
amount of such payment can be ascertained or the Participant is located.
10.3 TIME OF DISTRIBUTION TO BENEFICIARY.
a. A Participant's Beneficiary may consent to receive a
distribution of the Participant's vested accounts balances which shall commence
within ninety (90) days (or within such longer period as is reasonable based on
the particular facts and circumstances) after the Participant's death, to be
distributed in the manner set forth in section 10.lb. If the Beneficiary is the
Participant's Eligible Spouse, such consent must be comparable to the Spousal
Consent requirements in section 2.48.
b. A Beneficiary may elect to defer such distribution beyond the
time specified in subsection a. above, provided that such election is in
writing, describes the form of benefit payment to be received, indicates the
date distributions are to commence, is signed by the Beneficiary, and satisfies
the requirements of subsection d. below.
c. In the event that the Beneficiary neither consents to receive
a Plan distribution nor elects to defer receipt of a Plan distribution, the
Beneficiary shall receive a Plan distribution in the normal benefit form within
ninety (90) days (or within such longer period as is reasonable based on the
particular facts and circumstances) after the Participant's death. For purposes
of this subparagraph, "normal benefit form" shall mean a single distribution
and, to the extent required by section 10.lb.(3), a qualified pre-retirement
survivor annuity. Notwithstanding the foregoing but subject to subsection d.
below, if the Beneficiary is the Participant's Eligible Spouse and the Plan is a
transferee or offset plan with respect to the Participant as set forth in
section 10.1a.(1)(a), the Beneficiary shall not receive a Plan distribution
before the date the Participant attained or would have attained Normal
Retirement Age if the Participant's vested accounts balances exceed $3,500 at
the time of distribution (or, if the Participant's vested accounts balances
exceeded $3,500 prior to such distribution, is less than or equal to $3,500 for
distributions made after the initial distribution date).
d. Notwithstanding any provision of this Article to the contrary,
any distribution to a Participant's Beneficiary must comply with the following
requirements:
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(1) If distributions to a Participant have begun
and the Participant dies before his entire interest has been distributed
to him, the remaining portion shall be distributed at least as rapidly
as under the distribution method being utilized on the date of his
death.
(2) Except as provided in subsection d.(3) below,
in no event shall distributions be made later than December 31 of the
calendar year which contains the fifth anniversary of the Participant's
death unless the Participant's designated Beneficiary elects to receive
payments in substantially equal installments at least annually for a
period not exceeding the Beneficiary's life expectancy, in which case
the first installment must be made by December 31 of the calendar year
immediately following the calendar year of the Participant's death. Any
such election shall be made prior to the date the distribution is
scheduled to commence.
(3) An Eligible Spouse who elects to receive
installment payments as set forth in subsection d.2. above, over such
Eligible Spouse's life expectancy (which may be redetermined no more
frequently than annually) may defer commencement of payments until
December 31 of the calendar year the deceased Participant would have
attained age 70 1/2. Such an election shall be made by the earlier of
(a) the date the distribution is required to commence under the
preceding sentence, or (b) December 31 of the calendar year which
contains the fifth anniversary of the Participant's death. An Eligible
Spouse who elects to have her life expectancy redetermined must do so no
later than the time distributions are required to commence under this
subsection, at which time the election will be irrevocable and shall
apply to all subsequent years; provided, however, that if no election is
made by the time distribution is required to commence, life expectancy
may not be redetermined. If the Eligible Spouse elects to defer such
distribution in accordance with this subsection and the Eligible Spouse
dies leaving an unpaid balance, the balance shall be distributed no
later than December 31 of the calendar year which contains the fifth
anniversary of the Eligible Spouse's death to the Beneficiary designated
by the Participant or, in the absence of such designation, to the estate
of the Eligible Spouse.
10.4 SMALL ACCOUNT BALANCES. Notwithstanding anything to the contrary in
sections 10.1, 10.2 and 10.3, if the Participant has terminated service or has
died with vested accounts balances of $3,500 or less on the date distributions
commence, the entire vested accounts balances shall be distributed in a single
sum distribution as soon as practicable to the Participant, or, in the event of
his death, to his Beneficiary. No distribution may be made under the preceding
sentence after the Participant's Annuity Starting Date unless the Participant
and his Eligible Spouse consent thereto in a manner which is comparable to the
Spousal Consent requirements in section 2.48.
10.5 NONLIABILITY. Any payment to any Participant, or to his legal
representative or Beneficiary, in accordance with the provisions of the Plan,
shall to the extent thereof be in full satisfaction of all claims hereunder
against the Trustee, the Plan Administrator and the Employer, any of whom may
require such Participant, legal representative or Beneficiary, as a condition
precedent to such payment, to execute a receipt therefor in such form as shall
be determined by the Trustee, the Plan Administrator, or the Employer, as the
case may be. The
33.
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Employer does not guarantee the Trust, the Participants, former Participants or
their Beneficiaries against loss of or depreciation in value of any right or
benefit that any of them may acquire under the terms of this Plan. All benefits
payable hereunder shall be paid or provided for solely from the Trust, and the
Employer does not assume any liability or responsibility therefor.
10.6 MISSING PERSONS. In the case of any benefit payable to a person
under this Plan, if the Plan Administrator is unable to locate the person within
six (6) months from the date a certified letter was mailed to such person
notifying him of the benefit, the Plan Administrator shall direct the Trustee to
establish a segregated account. This account shall share in the allocations of
Trust income or loss on a segregated basis. The Trustee shall continue to
maintain this segregated account until: (a) the person entitled to the benefit
makes application therefor; or (2) the benefit reverts by escheat to the state,
whichever occurs first.
10.7 BENEFICIARIES.
a. DESIGNATION OF BENEFICIARY.
Subject to the qualified pre-retirement survivor annuity and qualified
joint and survivor annuity requirements set forth in this Article 10, a
Participant shall have the right to designate, on forms provided by the
Employer, a Beneficiary or Beneficiaries to receive the benefits herein provided
in the event of his death (reduced by any security interest held by the Plan by
reason of a loan outstanding to the Participant) and to revoke such designation
or to substitute another Beneficiary or Beneficiaries at any time.
Notwithstanding the preceding sentence, if this Plan is not a transferee or
offset plan with respect to the Participant, a married Participant's initial
designation of a Beneficiary or change in Beneficiary designation to someone
other than or in addition to his Eligible Spouse shall not be effective unless
Spousal Consent is obtained.
b. ABSENCE OF VALID DESIGNATION OF BENEFICIARIES.
If, upon the death of a Participant, former participant or Beneficiary,
there is no valid designation of Beneficiary on file with the Employer, the
following shall be designated by the Plan Administrator as the Beneficiary or
Beneficiaries, in order of priority:
(1) The surviving spouse;
(2) Surviving children, including adopted
children, in equal shares;
(3) Surviving parents, in equal shares;
(4) The Participant's estate;
(5) The Beneficiaries estate.
The determination of the Plan Administrator as to which persons, if any,
qualify within the categories listed above shall be final and conclusive upon
all persons.
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ARTICLE 11
LOANS
11.1 IN GENERAL. If the Adoption Agreement so provides, loans will be
available from the Plan. If loans are available, the Plan Administrator will
establish guidelines and procedures for loans from the Plan to Participants in
specific instances, which guidelines may include limitations on the number of
loans that may be outstanding to a Participant at any time or on the frequency
of loans. Each loan must be approved by the Plan Administrator and must conform
to the loan guidelines and procedures. The guidelines and procedures must be
formulated and administered so that they conform with ERISA section 408(b)(1)
and ERISA Reg. Section 2550.408-1(d). In addition, the following requirements of
this section must be satisfied.
a. Loans are available to all Participants and any other person
required by the United States Department of Labor on a reasonably equivalent
basis. However, no loan will be made to a Participant who is an Owner-Employee
or a shareholder-employee unless such person has at his expense obtained an
administrative exemption from ERISA's prohibited transaction rules from the
United States Department of Labor with respect to such loan, unless the United
States Department of Labor has issued a prohibited transaction class exemption
Covering such loans. Any loan will be evidence by a promissory note signed by
the Participant.
b. Loans shall not be made available to Highly Compensated
Employees in an amount greater than the amount made available to Non-Highly
Compensated Employees.
c. Loans are adequately secured and bear a reasonable rate of
interest. However, no more than 50% of a Participant's nonforfeitable accrued
benefit may be pledged as collateral.
Each loan hereunder will be a Participant-directed investment for the
benefit of the Participant requesting such loan; accordingly, any default in the
repayment of principal or interest of any loan hereunder will reduce the amount
available for distribution to such Participant (or his Beneficiary). Thus, any
loan hereunder will be effectively and adequately secured by the Participant's
accounts.
d. A loan to a Participant (when added to the outstanding balance
of all other loans from this Plan and any other qualified plan maintained by the
Employer) shall not be in an amount that exceeds the lesser of:
(1) $50,000 reduced by the excess, if any, of:
(i) the highest outstanding balance of loans
from the plan during the one-year period ending on the day before
such loan is made, over
(ii) the outstanding balance of loans from
the Plan on the date such loan is made; or
(2) 50% of the vested Participant's account
balances.
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e. Except as provided in the next sentence, the maximum term of a
loan will be five years. If a Participant requests a loan for the acquisition of
the principal residence of the Participant, the maximum repayment period will be
determined by reference to bank loans for the same purpose.
f. A Participant must obtain the consent of his or her spouse, if
any, within the 90 day period before the time the account balance is used as
security for the loan. A new consent is required if the account balance is used
as security for any increase in the loan balance, for renegotiation, extension,
renewal, or other revision of the loan. However, spousal consent is not
necessary if the total amount of loans outstanding hereunder does not exceed
$3,500. The consent of any subsequent spouse will not be necessary in order to
foreclose the Plan's security interest in the Participant's account balance if
the Participant's then spouse validly consented to the original use of the
account balance as security (or if the Participant was unmarried at such time).
If a valid spousal consent has been obtained in accordance with this
section, then, notwithstanding any other provision of this Plan, the portion of
the Participant's vested account balance used as a security interest held by the
Plan by reason of a loan outstanding to the Participant shall be taken into
account for purposes of determining the amount of the account balance payable at
the time of death or distribution, but only if the reduction is used as
repayment of the loan. If less than 100% of the Participant's vested account
balance (determined without regard to the preceding sentence) is payable to the
surviving spouse, then the account balance shall be adjusted by first reducing
the vested account balance by the amount of the security used as repayment of
the loan, and then determining the benefit payable to the surviving spouse.
g. The Plan Administrator may require a Participant to agree to
repay the principal and interest of a loan through regular payroll deduction
payments. The Plan Administrator may establish back-up-repayment procedures for
Participants who do not make payroll deduction repayment; except as may
otherwise be permitted under ERISA or the ITA, any such back-up procedures will
provide for substantially level amortization payments made quarterly or more
frequently. Any loan hereunder may be prepaid, in whole or in part, at any time
without penalty. If a Participant's service as an Employee is terminated for any
reason, the entire unpaid principal and interest of any loan then outstanding to
such Participant will become immediately due and payable.
If a Participant defaults on any payment of interest or principal of a
loan hereunder or defaults upon any other obligation relating to such loan, the
Plan Administrator may take (or direct the Trustee to take) such action or
actions as it determines to be necessary to protect the interest of the Plan.
Such actions may include commencing legal proceedings against the Participant,
or foreclosing on any security interest in the Participant's account or other
security given in connection with a loan hereunder. In the event of a default,
foreclosure on the Participant's note and attachment of one or more of the
Participant's accounts given as security will not occur until a distributable
event occurs in the Plan.
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An assignment or pledge of any portion of the Participant's interest in
the Plan and a loan, pledge, or assignment with respect to any insurance
contract purchased under the Plan, will be treated as a loan under this section.
h. In the case of any Participant with one or more loans
outstanding hereunder, the amount available for distribution to such Participant
(or his Beneficiary) will consist of the Participant's vested account balance(s)
(not including the outstanding principal and accrued but unpaid interest on such
loans), plus the notes representing such loans.
ARTICLE 12
INVESTMENTS
12.1 IN GENERAL.
a. INVESTMENT FUNDS shall mean any investment fund chosen by the
Employer in the Adoption Agreement as an investment media for the Trust. The
Plan Sponsor and Plan Administrator shall have the discretion to make available
and terminate such funds as they shall deem appropriate.
b. The Plan Sponsor may impose requirements concerning the
investment funds in which contributions to the Plan must be invested, and the
Employer agrees to observe such requirements as a condition of participating in
this Master Plan. Subject to such requirements, the Employer may permit each
Participant to direct the investment of some or all of the contributions to his
accounts. To the extent that Participants do direct the investment of their
accounts, ERISA section 404(c) will apply to the Employer's Plan, and neither
the Employer, the Plan Administrator, the Trustee, the Plan Sponsor nor any
other fiduciary will have any responsibility or liability for the Participant's
exercise of such investment control or for any loss of diminution in value
occasioned thereby.
12.2 PARTICIPANT INVESTMENT DIRECTIONS.
a. If the Employer allows, amounts credited to a Participant's
accounts will be invested in the investment funds selected by the Employer in
the Adoption Agreement for the Plan in accordance with the Participant's
directions. Such Participant investment control may be permitted with respect to
certain types of contributions but no others. Where allowed, a Participant's
investment directions will govern the investment of contributions to his
accounts and the transfer of amounts in one investment fund to another.
Participants' exercise of investment control over their accounts will be subject
to any rules of the Plan Administrator under section 12.3.
b. Subject to the Plan Sponsor's requirements under section
12.lb. above, the Employer will determine the investment of any account over
which the Participant does not exercise investment control under subsection a.
above. In making such investment determinations, the Employer will establish
investment policies or rules of general application which do not discriminate
among Participants.
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12.3 RULES FOR EXERCISE OF INVESTMENT OPTIONS. Any designation of
investments by Participants will be subject to nondiscriminatory general rules
established by the Plan Administrator and the Trustee; such rules may include:
(a) restrictions on the minimum amount or percentage of any contribution which
may be placed in any particular investment fund; (b) restrictions on the use of
different amounts or percentages for different types of contributions; (c)
minimums or maximums (or both) on the amount which may be invested or
transferred to or from any particular investment fund; and (d) restrictions on
the time and frequency of designations, changes in designations and transfers
from one investment fund to another including the required advance notice.
These rules may differ for different types of contributions. The
effective date of any change in a Participant's election respecting allocation
of contributions among investment funds or any transfer from one fund to another
must coincide with a valuation date for each fund, unless the Plan
Administrator, Plan Sponsor and Trustee provide otherwise.
ARTICLE 13
ACCOUNTS
13.1 SEPARATE ACCOUNTS.
a. The Plan Administrator and the Trustee shall establish and
maintain, where appropriate, separate accounts for each Participant, including
Pre-Tax Contributions Account, After-Tax Contributions Account, Employer
Contributions Account, Matching Contributions Account, and Rollover
Contributions Account; a Participant's Rollover Contributions Account may
contain subaccounts as provided in section 7.1 earnings will be credited to such
accounts (and subaccounts) in accordance with the provisions of this Article.
Since these individual accounts are maintained only for accounting purposes, a
segregation of the Trust assets within each account is not required.
b. The Plan Administrator may itself maintain records of
Participants' accounts or may arrange for such records to be maintained by an
outside service provider (which may be the Plan Sponsor or Trustee or a person
contracted by the Plan Sponsor or Trustee). If the Plan Administrator arranges
with a service provider to maintain records of Participants' accounts, the Plan
Administrator will provide such information as is necessary for the service
provider to maintain such accounts as required herein.
13.2 VALUATION AND ALLOCATION OF EARNINGS AND LOSSES TO PARTICIPANTS
ACCOUNTS. As of each Valuation Date, the assets of the Trust will be valued at
their fair market value. The Plan Administrator, with the assistance of the
Trustee, shall allocate the net earnings and gains or losses of each investment
fund of the Trust since the preceding Valuation Date to each account in the same
proportion that the market value of the Participant's account in such investment
fund bears to the total market value of all Participant's accounts in such
investment fund; and, for this purpose, the Plan Administrator shall adopt
uniform rules which conform to applicable law and generally accepted accounting
practices.
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13.3 ALLOCATION OF EXPENSES. Any fees and expenses will be paid by the
Employer unless it elects not to pay any or all such fees and expenses; in such
event, any fee or expense not paid by the Employer will be paid from the Trust
and will be allocated to the accounts of Participants or to collective
investment funds in which accounts are invested in a manner which reasonably
reflects the accounts and investment funds that generated such fees and
expenses. Approximations may be used whenever its is not feasible to allocate
such expenses on an exact basis.
ARTICLE 14
PLAN ADMINISTRATION
14.1 PLAN ADMINISTRATOR. The Employer will be the Plan Administrator for
purposes of section 3(16) of ERISA, and any reference in this document or the
Adoption Agreement to the Plan Administrator means the Employer. The Employer
may in the Adoption Agreement designate an individual or a group of individuals
acting as a committee to act of the Employer's behalf in carrying out its duties
as Plan Administrator. Such persons may, but need not, be Participants or
Employees, partners, or officers of the Employer. The Employer will notify the
Trustee of any such appointment The Employer may remove any such individual or
committee member at any time with or without cause, by filing written notice of
his removal with the Trustee. Any such individual or committee member may resign
at any time by filing his written resignation with the Employer and the Trustee.
A vacancy however arising, will be filled by the Employer.
If the Employer does not appoint an individual or committee to act for
the Employer, the Employer will carry out the responsibilities of the Plan
Administrator. If the Employer is a sole proprietorship, in the event of the
sole proprietor's death, his executor or administrator will be the Plan
Administrator. If the Employer is a partnership, in the event of the death of
all the partners, the executor or administrator of the last to die will be the
Plan Administrator.
14.2 PLAN ADMINISTRATION. The Plan Administrator is a named fiduciary of
the Plan. In addition, the Plan Administrator shall have the power and the duty
to perform the following administrative functions according to the policies,
interpretations, rules, practices and procedures established by the Employer in
accordance with the respective areas of named fiduciary responsibilities:
a. Apply Plan rules determining eligibility for participation or
benefits;
b. Calculate service and compensation credits for benefits;
c. Prepare employee communications material;
d. Maintain Participants' service and employment records;
e. Prepare reports required by government agencies, which shall
include maintaining records to demonstrate compliance with the Actual Deferral
Percentage test of Article 4 of the Plan that indicate the extent that Qualified
Non-Elective Contributions and Qualified Matching Contributions were taken into
account to satisfy such requirements;
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f. Calculate benefits;
g. Orient new Participants and advise Participants regarding
their rights and options under the Plan;
h. Collect contributions and apply contributions as provided in
the Plan;
i. Prepare reports concerning Participants' benefits; and
j. Process claims.
The Plan Administrator (and those to whom it has delegated its
authority) shall have vested in it under the terms of this Plan full
discretionary and final authority when exercising its duties hereunder.
14.3 COMPENSATION AND EXPENSES. The Plan Administrator will serve
without compensation unless otherwise determined by the Employer, but no
Employee of the Employer will be compensated for his service as Plan
Administrator. All reasonable expenses of operating and administering the Plan
will be paid by the Employer or from the assets of the Trust, as provided in
section 13.4. Such expenses include the compensation of all persons employed or
retained by the Plan Administrator (such as attorneys, accountants, actuaries,
trustee or other consultants or specialists), premiums for insurance or bonds
protecting the Plan and required by law or deemed advisable by the Plan
Administrator, and all other fees, expenses or costs of Plan administration.
14.4 CLAIMS PROCEDURES.
a. FILING OF CLAIM. A Participant or Beneficiary who believes has
entitled to a benefit which he has net received may file a claim in writing with
the Plan Administrator. The Plan Administrator may require a claimant to submit
additional information, if necessary to process the claim. The Plan
Administrator shall review the claim and render its decision within ninety (90)
days from the date the claim is filed (or the requested additional information
is submitted, if later), unless special circumstances require an extension of
time for processing the claim. If such an extension is required, written notice
of the extension shall be furnished the claimant within the initial ninety (90)
day period. The notice shall indicate the special circumstances requiring the
extension and the date by which the Plan Administrator expects to reach a
decision on the claim. In no event shall the extension exceed a period of ninety
(90) days from the end of the initial period.
b. NOTICE OF CLAIM DENIED. If the Plan Administrator denies a
claim, in whole or in part, it shall provide the claimant with written notice of
the denial within the period specified in subparagraph a. The notice shall be
written in language calculated to be understood by the claimant, and shall
include the following information:
(1) The specific reason for such denial;
(2) Specific reference to pertinent Plan provisions
upon which the denial is based;
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(3) A description of any additional material or
information which may be needed to clarify or perfect the request, and
an explanation of why such information is required; and
(4) An explanation of the Plan's review procedure
with respect to the denial of benefits.
c. REVIEW PROCEDURE. Any claimant whose claim has been denied, in
whole or in part, shall follow those review procedures as set forth herein.
(1) A claimant whose claim has been denied, in
whole or in part, may request a full and fair review of the claim by
the Plan Administrator by making written request therefor within sixty
(60) days of receipt of the notification of denial. The Plan
Administrator, for good cause shown, may extend the period during which
the request may be filed. The claimant shall be permitted to examine
all documents pertinent to the claim and shall be permitted to submit
issues and comments regarding the claim to the Plan Administrator in
writing.
(2) The Plan Administrator shall render its
decision within sixty (60) days after receipt of the application for
review, unless special circumstances (such as the need to hold a
hearing) require an extension of time for processing, in which case the
decision shall be rendered as soon as possible but not later than one
hundred and twenty (120) days after receipt of a request for review, if
an extension of time is necessary, written notice shall be furnished the
claimant before the extension period commences.
(3) The Plan Administrator shall decide whether a
hearing shall be held on the claim. If so, it shall notify the claimant
in writing of the time and place for the hearing. Unless the claimant
agrees to a shorter period, the hearing shall be scheduled at least
fourteen (14) days after the date of the notice of hearing. The claimant
and/or his authorized representative may appear at any such hearing.
(4) The Plan Administrator shall send its decision
on review to the claimant in writing within the time specified in this
section. If the claim is denied, in whole or in part, the decision shall
specify the reasons for the denial in a manner calculated to be
understood by the claimant, referring to the specific Plan provisions on
which the decision is based. The Plan Administrator shall not be
restricted in its review to those provisions of the Plan cited in the
original denial of the claim.
(5) If the Plan Administrator does not furnish its
decision on review within the time specified in this subsection c., the
claim shall be deemed denied on review.
14.5 AGENT FOR LEGAL PROCESS. The Employer shall be the agent for
service of legal process.
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ARTICLE 15
AMENDMENT, TERMINATION OR MERGER OF PLAN
15.1 AMENDMENT BY PLAN SPONSOR. The Plan Sponsor may amend any or all
provisions of this Plan at any time without obtaining the consent of the
Employer, and the Employer hereby expressly delegates authority to amend this
Plan to the Plan Sponsor.
15.2 AMENDMENT BY EMPLOYER. Except for (a) changes of design options
selected in the Adoption Agreement, and (b) adding certain amendments to ERISA
or the ITA that will not cause the Plan to be treated as an individually
designed plan, if the Employer amends the Plan or non-elective portions of the
Adoption Agreement, for any other reason, it will no longer participate in this
Plan and will be considered to have an individually designed Plan.
15.3 RESTRICTIONS ON AMENDMENTS. No amendment under section 15.1 or 15.2
will:
a. cause or permit any part of the assets of the Trust to be
diverted to purposes other than the exclusive benefit of Participants and their
Beneficiaries, or cause or permit any portion of such assets to revert to or
become the property of-the Employer;
b. retroactively deprive any Participant of any benefit to which
he was entitled hereunder by reason of contributions made by the Employer or the
Participant before the amendment, unless such amendment is necessary to conform
the Trust or Plan to, or satisfy the conditions of any law, governmental
regulation or ruling or to permit the Plan and Trust to meet the requirements of
ERISA and the ITA;
c. decrease a Participant's account balance. For purposes of this
paragraph, a Plan amendment which has the effect of decreasing a Participant's
account balance or eliminating an optional form of benefit, with respect to
benefits attributable to service before the amendment shall be treated as
reducing an accrued benefit;
d. if the vesting schedule of a Plan is amended, for an Employee
who is a Participant as of the later of the date such amendment is adopted or
the date it becomes effective, cause the nonforfeitable percentage (determined
as of such date) of such Employee's right to his Employer-derived accrued
benefit to be less than his percentage computed under the Plan without regard to
such amendment;
e. eliminate an optional form of distribution; or
f. increase or otherwise affect the duties, liabilities or rights
of the Trustee unless the Trustee consents thereto in writing.
15.4 NONREVERSION. Except as provided in this section, the assets of the
Plan shall never inure to the benefit of an Employer; such assets shall be held
for the exclusive purpose of providing benefits to Participants and their
Beneficiaries and for defraying the reasonable administrative expenses of the
Plan.
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a. If an Employer Contribution is made by virtue of a mistake of
fact, this section shall not prohibit the return of such contribution to the
Employer within one (1) year after the payment of the contribution.
b. If a deduction for an Employer Contribution is disallowed
under ITA section 23(p), or any successor provision thereto, the contribution
shall be returned to the Employer (to the extent disallowed) within one (1) year
after such disallowance.
15.5 TERMINATION OF PLAN. Although the Employer has established the Plan
with the bona fide intention and expectation that it will be able to make
contributions indefinitely, nevertheless the Employer is not and shall not be
under any obligation or liability whatsoever to continue its contributions or to
maintain the Plan for any given length of time. An Employer may, in its sole and
absolute discretion, discontinue such contributions or terminate the Plan with
respect to its Employees, in accordance with the provisions of me Plan, at any
time with no liability whatsoever for such discontinuance or termination. If the
Plan is terminated or partially terminated, or if contributions of an Employer
are completely discontinued, the rights of all affected Participants in their
accounts shall thereupon become nonforfeitable, notwithstanding any other
provisions of the Plan. However, the Trust shall continue until all
Participants' accounts have been completely distributed to or for the benefit of
the Participants, in accordance with the Plan.
15.6 DISPOSITION AND TERMINATION OF THE PLAN.
a. Upon complete or partial termination of the Plan, the Plan
Administrator will determine, subject to the joint and survivor rules of this
Plan, whether to direct the Trustee to continue to hold the accounts of
Participants affected by the termination or partial termination, to disburse
them as immediate benefit payments, to purchase immediate or deferred annuity
contracts, or to follow any other procedure he deems advisable. The Trustee will
follow the directions of the Plan Administrator.
b. For purposes of each Employer adopting the Plan, the Trust
created hereunder will terminate when all the assets in the Trust related to
such Employer have been distributed.
15.7 MERGER OF PLANS.
a. If the Employer merges or consolidates with or into a
corporation, or if substantially all of the assets of the Employer are
transferred to another business, the Plan hereby created shall terminate on the
effective date of such merger, consolidation or transfer. However, if the
surviving corporation resulting from such merger or consolidation, or the
business to which the Employer's assets have been transferred, adopts this Plan,
it shall continue and such corporation or business shall succeed to all rights,
powers and duties of the Employer hereunder. The employment of any Employee who
continues in the employ of such successor corporation or business shall not be
deemed to have been terminated for any purpose hereunder.
b. In no event shall this Plan be merged or consolidated with any
other plan, nor shall there be any transfer of assets or liabilities from this
Plan to any other plan, unless immediately after such merger, consolidation or
transfer, each Participant's benefits, if such other plan were then to
terminate, are at least equal to or greater than the benefits to which the
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Participant would have been entitled, had this Plan been terminated immediately
before such merger, consolidation, or transfer.
ARTICLE 16
TRANSFERS FROM OR TO OTHER QUALIFIED PLANS
16.1 TRANSFERS FROM ANOTHER PLAN OF THE EMPLOYER.
a. Notwithstanding any other provision hereof, the Employer, with
the approval of the Plan Sponsor, may cause to be transferred to the Trustee all
or any of the assets held (whether by a Trustee, custodian, or otherwise) under
any other defined contribution Plan which satisfies the requirements of ITA
section 165(a) and which is maintained by the Employer for the benefit of any of
the Participants hereunder. If the Trustee is keeping separate accounts for each
Participant, any such assets so transferred will be accompanied by written
instructions from the Employer or Plan Administrator naming the Participants for
whose benefit such assets have been transferred and showing separately the
respective contributions by the Employer and by the Participants and the current
value of the assets attributable thereto.
b. Upon receipt of any assets transferred to it under subsection
(a), the Trustee may sell any non-cash assets and invest the proceeds and any
cash transferred to it. The Trustee will make appropriate credits to the proper
accounts in accordance with the Employer's or Plan Administrator's instructions.
16.2 TRANSFERS TO OTHER PLANS.
Upon the written request of the Employer, the Trustee will transfer an
amount designated by the Employer to the Trustee or custodian of any other
qualified Plan under which Plan Participants are covered.
ARTICLE 17
QUALIFIED DOMESTIC RELATIONS ORDER
17.1 GENERAL. The provisions of section 18.1 shall not be applicable to
a Qualified Domestic Relations Order (as defined in section 17.2), and payment
of benefits under the Plan shall be made in accordance with the terms of such
order, provided that such order:
a. creates or recognizes the existence of an alternate payee's
(as defined in section 17.2) right to, or assigns to an alternate payee the
right to, receive all or a portion of the benefits payable to a Participant
under the Plan;
b. clearly specifies:
(1) the name and the last known mailing address (if
any) of the Participant and the name and mailing address of each
alternate payee covered by the order;
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(2) the amount or percentage of the Participant's
benefits to be paid by the Plan to each such alternate payee or the
manner in which such amount or percentage is to be determined;
(3) the number of payments or the period to which
the order applies; and
(4) the name of each plan to which such order
applies;
c. does not require the Plan to provide any type or form of
benefit, or any option, not otherwise provided under the Plan;
d. does not require the Plan to provide increased benefits
(determined on the basis of actuarial value); and
e. does not require the payment of benefits to an alternate payee
which are required to be paid to another alternate payee under another order
previously determined to be a Qualified Domestic Relations Order.
17.2 DEFINITIONS. The following terms shall have the following meanings
for purposes of this Article:
a. "ALTERNATE PAYEE" means any spouse, former spouse, child or
other dependent of a Participant who is recognized by a domestic relations order
as having a right to receive all, or a portion of, the benefits payable under
the Plan with respect to such Participant
b. "QUALIFIED DOMESTIC RELATIONS ORDER" means any judgment,
decree or order (including approval of a property settlement agreement) which:
(1) relates to the provision of child support,
alimony payments, or marital property rights to a spouse, former spouse,
child, or other dependent of a Participant;
(2) is made pursuant to a state domestic relations
law (including a community property law); and
(3) which meets the requirements of the foregoing
section 17.1.
17.3 PAYMENTS AFTER THE EARLIEST RETIREMENT AGE. In the case of any
payment made before a Participant has separated from service, a Qualified
Domestic Relations Order shall not be considered as failing to meet the
requirements of section 17.1c. solely because such order requires that payment
of benefits be made to an alternate payee:
a. on or after the date on which the Participant first attains
(or would have attained) the earliest retirement age;
b. as if the Participant had retired on the date on which such
payment is to begin under such order (but taking into account only the present
value of benefits accrued); and
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c. in any form in which such benefits may be paid under the Plan
to the Participant.
17.4 TREATMENT OF FORMER SPOUSE AS SURVIVING SPOUSE. To the extent
provided in any Qualified Domestic Relations Order:
a. the former spouse of a Participant shall be treated as a
"surviving spouse" of such Participant for purposes of section 205 of ERISA; and
b. if married for at least one (1) year to the Participant, such
former spouse shall be treated as meeting the requirements of section 205(f) of
ERISA.
17.5 PROCEDURES. The Plan Administrator shall promptly notify a
Participant and any other alternate payee of the receipt of a domestic relations
order and of the Plan's procedure for determining whether the order meets the
requirements of a Qualified Domestic Relations Order under this Article. Within
a reasonable period of time after the receipt of such order, the Plan
Administrator, in accordance with such procedures as it shall from time to time
establish, shall determine whether such order meets the requirements of a
Qualified Domestic Relations Order under this Article and shall notify the
Participant and each alternate payee of such determination.
17.6 PROCEDURES DURING PERIOD OF DETERMINATION. During any period of
time in which the issue of whether a domestic relations order meets the
requirements of a Qualified Domestic Relations Order under this Article is being
determined by a court of competent jurisdiction, the Plan Administrator shall
segregate in a separate account in the Plan or in an escrow account the amounts
which would have been payable to the alternate payee during such period if the
order had been determined to be a Qualified Domestic Relations Order under this
Article. If within eighteen (18) months such order is determined to be a
Qualified Domestic Relations Order under this Article, the Plan Administrator
shall instruct the Trustee to pay the segregated amounts (plus any interest
thereon) to the person or persons entitled thereto. If within eighteen (18)
months it is determined that such order is not a Qualified Domestic Relations
Order under this Article, or the issue as to whether such order so qualifies is
not resolved, then the Plan Administrator shall instruct the Trustee to pay the
segregated amounts (plus any interest thereon) to the person or persons who
would have been entitled to such amounts if there had been no order. Any
determination that an order is a Qualified Domestic Relations Order under this
Article which is made after the end of the eighteen (18) month period, shall be
applied prospectively only.
ARTICLE 18
MISCELLANEOUS
18.1 NON-ALIENATION AND NON-ASSIGNMENT OF BENEFITS. Except as provided
in Article 17, no benefit under this Plan shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or
charge, and any attempt so to do shall be void, nor shall any benefit be in any
manner liable for or subject to garnishment, attachment, execution or levy, or
liable for or subject to the debts, contracts, liabilities, engagements or torts
of the person entitled to such benefit; and in the event that the Plan
Administrator shall find that any
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Participant or other person entitled to a benefit under this Plan has become
bankrupt or that any attempt has been made to anticipate, alienate, sell,
transfer, assign, pledge, encumber or charge any of his benefits under this
Plan, then such benefit shall cease and terminate and in that event the Plan
Administrator shall hold or apply the same to or for the benefit of such
Participant or such other person, his spouse, children, parents or other blood
relatives, or any of them.
18.2 LIMITATION ON RIGHTS CREATED BY PLAN.
a. The adoption and maintenance of the Plan and Trust will not be
construed to give a Participant the right to continue in the employ of the
Employer or to interfere with the right of the Employer to discharge, lay off or
discipline a Participant at any time, or give the Employer the right to require
any Participant to remain in its employ or to interfere with the Participant's
right to terminate his employment.
b. The adoption and maintenance of the Plan and Trust, the
creation of any account or the payment of any benefit will not be construed as
creating any legal or equitable right against the Employer or the Trust except
as this Plan specifically provides.
c. The Employer, the Trustee, the Plan Administrator and the
Rollover Contributions Account do not guaranty the payment of benefits hereunder
and benefits will be paid only to the extent of the assets of the Trust. It is a
condition of participation in the Plan that each participant (and his
Beneficiary or anyone else claiming through him) will look only to the assets of
the Trust for the payment of any benefit to which he or his Beneficiary or other
person is entitled.
18.3 ALLOCATION OF RESPONSIBILITIES. The Employer, the Trustee and the
Plan Administrator will each have only those duties and responsibilities
specifically allocated to each of them under the Plan. There will be no joint
fiduciary responsibility between or among fiduciaries unless specifically stated
otherwise. Any person may serve in more than one fiduciary capacity.
18.4 CURRENT ADDRESS OF PAYEE. The Plan Administrator, the Trustee and
the Employer have no obligation to locate any person entitled to payments
hereunder and will be fully protected if all payments, notices and other papers
are mailed to the last address of which such person has notified the Plan
Administrator in writing, or are withheld pending receipt of proof of his
current address and proof that he is alive.
18.5 APPLICATION OF PLAN'S TERMS.
a. If an Employee retired, died or otherwise terminated his
service before the Effective Date of the Employer's Plan, the Employee and his
beneficiaries will receive no benefits and will have no rights under the Plan.
b. If an Employee retires, dies or otherwise terminates his
service on or after the Effective Date of the Employer's Plan, the benefits and
rights of the Employee and his beneficiaries will be determined in accordance
with the terms of the Plan that are in effect on the date of such termination of
service.
47.
<PAGE> 49
c. The allocations to a Participant's account for any year of
reference will be determined in accordance with the terms of the Plan that are
in effect for such year.
January 28, 1993
48.
<PAGE> 50
BANCO POPULAR DE PUERTO RICO
MASTER DEFINED CONTRIBUTION RETIREMENT PLAN
165 (e) PROFIT SHARING PLAN ADOPTION AGREEMENT
<PAGE> 51
BANCO POPULAR DE PUERTO RICO
MASTER DEFINED CONTRIBUTION RETIREMENT PLAN
PROFIT SHARING PLAN ADOPTION AGREEMENT
By executing this Adoption Agreement the Employer is adopting a profit sharing
plan with a cash or deferred arrangement under Section 165(e) of the Puerto Rico
Income Tax Act of 1954, as amended, (hereinafter "Pre-Tax Contribution's") plan
for the benefit of its Employees. The Employer's Plan is comprised of the Banco
Popular de Puerto Rico Master Defined Contribution Retirement Plan Document, the
Banco Popular de Puerto Rico Master Defined Contribution Retirement Plan Master
Trust and this Adoption Agreement. The terms used in this Adoption Agreement, as
well as the rules to be complied with in connection with the Plan, are fully
explained in the Master Plan Document. When signing this Adoption Agreement, the
Employer has received copy of the Banco Popular de Puerto Rico Master Defined
Contribution Retirement Plan and the Master Plan's Summary Plan Description. The
Banco Popular de Puerto Rico Master Defined Contribution Retirement Plan Master
Trust is available upon request at Banco Popular's main offices in Hato Rey,
Puerto Rico.
I. EMPLOYER INFORMATION
Name of Employer DANBURY PHARMACAL PUERTO RICO, INC.
Address: ROUTE 3 KM. 76.9
BOX 886
HUMACAO, PUERTO RICO 00792
Person for Banco Popular de Puerto Rico to Contact: MR. MIGUEL CANDELARIO
Employer tax identification number: 52-1760757
Type of business: CORPORATION
Employer's taxable year: CALENDAR YEAR (52-53 WEEK)
II. GENERAL PLAN INFORMATION
Plan Name: DANBURY PHARMACAL PUERTO RICO, INC.
Adoption or Amendment of Plan
1.
<PAGE> 52
By signing this Adoption Agreement the Employer:
ADOPTS THE BANCO POPULAR DE PUERTO RICO MASTER DEFINED
CONTRIBUTION RETIREMENT PLAN.
Effective Date
The effective date of this Plan or amendment is: JANUARY 1, 1994
(cannot be earlier than the first day of the Plan Year in which the
Employer signs this Adoption Agreement).
Plan Year
The Plan Year shall begin on January 1 and end on December 31.
III. ELIGIBILITY FOR PLAN PARTICIPATION
Age Requirement: An employee must fulfill the following age requirement to
become a Participant:
No minimum age required
Service Requirements. An employee must fulfill the following service
requirement to become a Participant:
Six consecutive calendar months.
Method for calculating year of service:
Hours of Service Method. An employee's service will be determined
by using the Hours of Service method as described in Article 3 of
the Master Plan Document.
IV. ENTRY DATES
Indicate the Plan's entry dates:
Monthly Entry Dates. The first day of each month is an entry
date.
2.
<PAGE> 53
V. COMPENSATION
Compensation
A Participant's Compensation shall mean the total compensation that is currently
includible in income for income tax purposes paid to him by the Employer during
a Plan Year. However, Compensation will exclude the following items (Note: the
exclusions of any of the following items will not be permitted if such
exclusions would result in using a higher percentage of total Compensation for
Highly Compensated Employees than for Non-Highly Compensated Employees):
[X] AWARDS AND OTHER EMPLOYEE BENEFITS
VI. CONTRIBUTIONS
Profit Sharing Contributions: For each Plan Year in which this
Plan is in effect the Employer may
make contributions to the Trust in
one or more installments out of its
Net Profits (as defined in section
6.2c.(3) of the Plan) for the Plan
Year, in such amounts as the
Employer may determine (if any). The
Plan Year for which each
contribution is made shall be
designated at the time of the
contribution. Profit-Sharing
Contributions may not exceed the
lesser of Employer's Net Profits or
15% of a Participant's Compensation
in any Plan Year.
Employee Contributions: Pre-Tax Contributions and/or
After-Tax Contributions, at the
election of the Participant.
Pre-Tax Contribution in a Plan Year may not exceed 10% of Compensation
or $7,000, whichever is less.
Pre-Tax Contributions and/or After-Tax Contributions may not commence
prior to the date the Plan is adopted.
Matching Contributions: The Employer will make a Matching
Contribution equal to 25 cents for
each dollar of a Participant's
Pre-Tax Contributions.
3.
<PAGE> 54
However, the Employer will not make
Matching Contributions above 3% of
the Participant's Compensation.
VII. VESTING
Pre-Tax, After-Tax and/or Matching Contributions.
Pre-Tax, After-Tax and or Matching Contributions Account are always 100%
vested.
Profit Sharing Contributions
Profit Sharing Contributions will vest in accordance with the following
vesting schedule:
Grading Vesting. Participants are vested in accordance with the
following vesting schedule. (A participant's vested percentage is
the percentage in column (2) or the percentage in column (3),
whichever is greater.
<TABLE>
<CAPTION>
(1) (2) (3)
Years
Required Vested Minimum
of Service Percentage Percentage
----------------- -------------- --------------
<S> <C> <C>
Less than 1 0 0
At least 1 10 0
At least 2 20 0
At least 3 30 20
At least 4 40 40
At least 5 60 60
At least 6 80 80
At least 7 100 100
</TABLE>
VIII. LOANS
Loans to Participants from the Plan are not permitted.
4.
<PAGE> 55
IX. IN-SERVICE WITHDRAWALS
The following provisions will govern the availability of in-service withdrawals
from a Participant's accounts. See Article 9 of the Plan document for additional
details, including definitions and limitations.
Profit Sharing Contributions. In-service withdrawals from Profit Sharing
Contributions will not be allowed.
Pre-Tax Contributions. In-service withdrawals from Pre-Tax Contributions will
only be allowed in case of a financial hardships.
After-Tax Contributions. In-service withdrawals from After-Tax Contributions
will be allowed for any reason.
Matching Contributions. In-service withdrawals from Matching Contributions will
only be allowed in case of a financial hardship.
Rollover Contributions. Refer to Article 9 of the Master Plan document.
Withdrawals after Age 59 1/2
After age 59 1/2, a Participant may make in-service withdrawals from his
Pre-Tax Contributions and, if applicable, Matching Contributions
Accounts without financial hardship (up to the vested percentage of each
such accounts).
X. RETIREMENT AGE
Normal Retirement Age. A Participant will be fully vested and may retire after
the latter of: reaching age 65 or the fifth anniversary of the first day of the
Plan Year in which he/she commenced participation in the Plan.
Disability Retirement. A Participant will be fully vested and may retire before
normal retirement age upon becoming disabled.
Early Retirement Age
A Participant will be fully vested and may retire prior to Normal
Retirement Age upon reaching age 55 and completing 7 years of
service.
5.
<PAGE> 56
XI. INVESTMENT FUNDS
The Employer selects the following funding vehicles for the Employer's
Plan(s):
1. LaSalle National Trust
2. Columbia Fixed Income
3. Vanguard Quantitative Fund
4. PBHG Growth Fund
5. T. Rowe Price International Stock Fund
All investment instructions as to each Participant's accounts will be directed
by the Participant.
XII. PLAN ADMINISTRATION
Plan Administrator. The Employer is the legal plan administrator under ERISA.
Specify one or more officers, partners, Employees or other persons to perform
the functions of the Plan Administrator.
[X] MIGUEL CANDELARIO
[X] OLIVER ESMAN
[X] MICHELLE OSTERWISE
Each person selected should submit a specimen signature. Any such appointment
may be changed by written notice.
XIII. MASTER TRUST
By executing this Adoption Agreement, the Employer adopts the Master Trust
established by the Banco Popular de Puerto Rico to carry out the purposes of the
Plan and thus retains Banco Popular as Trustee. The terms of the Trust and
corresponding fees are contained in the Banco Popular de Puerto Rico Master
Defined Contribution Retirement Plan and Fee Schedule, respectively, which are
incorporated by reference into this Adoption Agreement.
6.
<PAGE> 57
XIV. RECORDKEEPER
By executing this Adoption Agreement, the Employer retains Banco Popular de
Puerto Rico as Recordkeeper of the Plan pursuant to the Recordkeeping Agreement
and Fee Schedule incorporated by reference into this Adoption Agreement.
Recordkeeping and Trustee's Fees and Conditions:
The Employer agrees to retain Banco Popular de Puerto Rico as Trustee and
Recordkeeper for an initial minimum period of three (3) years. The Adoption
Agreement shall renew automatically for an indefinite period of time. The
Employer may terminate this Adoption Agreement at any time subject to a written
termination notice received by Banco Popular at least thirty (30) days prior to
the effective date of termination. If termination occurs during the initial
three (3) year period, the Employer agrees to compensate Banco Popular with a
termination fee equal to three times the total annual fees minus any amount
already satisfied in connection with the services rendered since the effective
date of this Adoption Agreement. Banco Popular may change the Fee Schedule from
time to time subject to the approval of the Employer, upon receipt of written
notification to the Employer.
The identifying number for the Banco Popular de Puerto Rico Master Defined
Contribution Retirement Plan document is 01 and for this Adoption Agreement is
100. The Plan Sponsor is Banco Popular de Puerto Rico, 209 Ponce de Leon Avenue,
Hato Rey, Puerto Rico 00917. The Plan Sponsor will notify you if it amends or
discontinues this Master Plan.
The Employer should insure that this Adoption Agreement has been filled out
completely and properly. Failure to do so may result in Plan disqualification.
XV. EXECUTION OF ADOPTION AGREEMENT
Responsibilities of Employer
The Employer understands that, by establishing this Plan, it will have
certain legal responsibilities for which neither the Trustee nor the
Plan Sponsor will be responsible. The Employer also understands that it
will be solely responsible for any taxes, costs or expenses arising from
the disqualification of the Employer's Plan. The Employer warrants that
it has obtained legal and tax advice to the extent the Employer deems
necessary before signing this Adoption Agreement.
Employer
7.
<PAGE> 58
Name of Employer DANBURY PHARMACAL PUERTO RICO, INC.
Signed
------------------------------------------------------------------
Print name and title
----------------------------------------------------
Date
--------------------------------------------------------------------
Trustee
Name of Trustee BANCO POPULAR DE PUERTO RICO
Address 209 Ponce de Leon Avenue
Hato Rey, Puerto Rico 00917
Signed
------------------------------------------------------------------
Print name and title Luis R. Cintron
Senior Vice President & Trust Officer
Date 06-28-94
8.
