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EXHIBIT 4(b)
MPB
EMPLOYEES' SAVINGS PLAN
PLAN AND TRUST AGREEMENT
SECOND COMPLETE
AMENDMENT AND RESTATEMENT OCTOBER 24, 1994
GENERALLY EFFECTIVE APRIL 1, 1990
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MPB Employees' Savings Plan and Trust
Second Complete Amendment and Restatement October 24, 1994
Generally Effective April 1, 1990
MPB Corporation previously established the MPB Employees' Savings Plan for the
benefit of eligible employees of the Company and its participating affiliates.
The Plan is intended to constitute a qualified profit sharing plan, as described
in Code section 401(a), which includes a qualified cash or deferred arrangement,
as described in Code section 401(k).
The provisions of this Plan and Trust relating to the Trustee constitute the
trust agreement which is entered into by and between MPB Corporation and Xxxxx
Fargo Bank, National Association. The Trust is intended to be tax exempt as
described under Code section 501(a).
The Plan constitutes an amendment and restatement of the MPB Employees' Savings
Plan which was originally established effective as of October 1, 1978, and its
related trust agreement.
The MPB Employees' Savings Plan and Trust, as set forth in this document, is
hereby amended and restated generally effective as of April 1, 1990. This
constitutes a second complete amendment and restatement generally effective
April 1, 1990.
Date: November 14, 1994 MPB Corporation
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By: /s/ X.X. Xxxxxxx
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Title: Treasurer/Secretary
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The trust agreement set forth in those provisions of this Plan and Trust which
relate to the Trustee is hereby executed.
Date: November 21, 1994 Xxxxx Fargo Bank, National Association
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By: /s/ X. Xxxx
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Title: Vice President
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Date: November 21, 1994 Xxxxx Fargo Bank, National Association
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By: /s/ X.X. Xxxxxxx
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Title: Assistant Vice President
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TABLE OF CONTENTS
1 DEFINITIONS............................................................... 1
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2 ELIGIBILITY............................................................... 9
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2.1 Eligibility..................................................... 9
2.2 Ineligible Employees............................................ 9
2.3 Ineligible or Former Participants............................... 9
3 PARTICIPANT CONTRIBUTIONS................................................. 10
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3.1 Pre-Tax Contribution Election................................... 10
3.2 After-Tax Contribution Election................................. 10
3.3 Changing a Contribution Election................................ 10
3.4 Revoking and Resuming a Contribution Election................... 10
3.5 Contribution Percentage Limits.................................. 11
3.6 Refunds When Contribution Dollar Limit Exceeded................. 11
3.7 Timing, Posting and Tax Considerations.......................... 12
4 ROLLOVERS & TRUST-TO-TRUST TRANSFERS...................................... 13
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4.1 Rollovers....................................................... 13
4.2 Transfers From Other Qualified Plans............................ 13
5 EMPLOYER CONTRIBUTIONS.................................................... 14
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5.1 Company Match Contributions..................................... 14
5.2 Stock Matching Contributions.................................... 14
5.3 Employer Supplemental Contributions............................. 15
6 ACCOUNTING................................................................ 16
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6.1 Individual Participant Accounting............................... 16
6.2 Sweep Account is Transaction Account............................ 16
6.3 Trade Date Accounting and Investment Cycle...................... 16
6.4 Accounting for Investment Funds................................. 16
6.5 Payment of Fees and Expenses.................................... 16
6.6 Accounting for Participant Loans................................ 17
6.7 Error Correction................................................ 17
6.8 Participant Statements.......................................... 18
6.9 Special Accounting During Conversion Period..................... 18
6.10 Accounts for QDRO Beneficiaries................................. 18
7 INVESTMENT FUNDS AND ELECTIONS............................................ 19
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7.1 Investment Funds................................................ 19
7.2 Investment Fund Elections....................................... 19
7.3 Responsibility for Investment Choice............................ 19
7.4 Default if No Election.......................................... 20
7.5 Timing.......................................................... 20
7.6 Investment Fund Election Change Fees............................ 20
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8 VESTING ............................................................... 21
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8.1 Fully Vested Contribution Accounts .............................. 21
9 PARTICIPANT LOANS ..................................................... 22
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9.1 Participant Loans Permitted ..................................... 22
9.2 Loan Application, Note and Security ............................. 22
9.3 Spousal Consent ................................................. 22
9.4 Loan Approval ................................................... 22
9.5 Loan Funding Limits ............................................. 22
9.6 Maximum Number of Loans ......................................... 23
9.7 Source and Timing of Loan Funding ............................... 23
9.8 Interest Rate ................................................... 23
9.9 Repayment ....................................................... 23
9.10 Repayment Hierarchy ............................................. 24
9.11 Repayment Suspension ............................................ 24
9.12 Loan Default .................................................... 24
9.13 Call Feature .................................................... 24
10 IN-SERVICE WITHDRAWALS ................................................ 25
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10.1 In-Service Withdrawals Permitted ................................ 25
10.2 In-Service Withdrawal Application and Notice .................... 25
10.3 Spousal Consent ................................................. 25
10.4 In-Service Withdrawal Approval .................................. 25
10.5 Minimum Amount, Payment Form and Medium ......................... 25
10.6 Source and Timing of In-Service Withdrawal Funding .............. 26
10.7 IRS Approved Hardship Withdrawals ............................... 26
10.8 Company Approved Hardship Withdrawals ........................... 28
10.9 After-Tax Account Withdrawals ................................... 30
10.10 Rollover Account Withdrawals .................................... 30
10.11 Over Age 59 1/2Withdrawals ...................................... 31
11 DISTRIBUTIONS ONCE EMPLOYMENT ENDS OR AS REQUIRED BY LAW .............. 32
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11.1 Benefit Information, Notices and Election ....................... 32
11.2 Spousal Consent ................................................. 32
11.3 Payment Form and Medium ......................................... 32
11.4 Distribution of Small Amounts ................................... 33
11.5 Source and Timing of Distribution Funding ....................... 33
11.6 Latest Commencement Permitted ................................... 33
11.7 Payment Within Life Expectancy .................................. 34
11.8 Incidental Benefit Rule ......................................... 34
11.9 Payment to Beneficiary .......................................... 34
11.10 Beneficiary Designation ......................................... 35
12 ADP AND ACP TESTS ..................................................... 36
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12.1 Contribution Limitation Definitions ............................. 36
12.2 ADP and ACP Tests ............................................... 39
12.3 Correction of ADP and ACP Tests ................................. 39
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12.4 Multiple Use Test................................................ 40
12.5 Correction of Multiple Use Test.................................. 40
12.6 Adjustment for Investment Gain or Loss........................... 40
12.7 Testing Responsibilities and Required Records.................... 41
12.8 Separate Testing................................................. 41
13 MAXIMUM CONTRIBUTION AND BENEFIT LIMITATIONS.......................... 42
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13.1 "Annual Addition" Defined........................................ 42
13.2 Maximum Annual Addition.......................................... 42
13.3 Avoiding an Excess Annual Addition............................... 42
13.4 Correcting an Excess Annual Addition............................. 42
13.5 Correcting a Multiple Plan Excess................................ 43
13.6 "Defined Benefit Fraction" Defined............................... 43
13.7 "Defined Contribution Fraction" Defined.......................... 43
13.8 Combined Plan Limits and Correction.............................. 43
14 TOP HEAVY RULES........................................................ 44
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14.1 Top Heavy Definitions............................................ 44
14.2 Special Contributions............................................ 45
14.3 Adjustment to Combined Limits for Different Plans................ 46
15 PLAN ADMINISTRATION.................................................... 47
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15.1 Plan Delineates Authority and Responsibility..................... 47
15.2 Fiduciary Standards.............................................. 47
15.3 Company is ERISA Plan Administrator.............................. 47
15.4 Administrator Duties............................................. 48
15.5 Advisors May be Retained......................................... 48
15.6 Delegation of Administrator Duties............................... 49
15.7 Committee Operating Rules........................................ 49
16 MANAGEMENT OF INVESTMENTS.............................................. 50
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16.1 Trust Agreement.................................................. 50
16.2 Investment Funds................................................. 50
16.3 Authority to Hold Cash........................................... 51
16.4 Trustee to Act Upon Instructions................................. 51
16.5 Administrator Has Right to
Vote Registered Investment Company Shares........................ 51
16.6 Custom Fund Investment Management ............................... 51
16.7 Authority to Segregate Assets.................................... 52
16.8 Maximum Permitted Investment in Company Stock.................... 52
16.9 Voting Company Stock............................................. 53
16.10 Tender Offers for Company Stock.................................. 53
16.11 Registration and Disclosure for Company Stock.................... 54
17 TRUST ADMINISTRATION................................................... 55
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17.1 Trustee to Construe Trust........................................ 55
17.2 Trustee To Act As Owner of Trust Assets.......................... 55
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17.3 United States Indicia of Ownership............................... 55
17.4 Tax Withholding and Payment...................................... 56
17.5 Trustee Duties and Limitations................................... 56
17.6 Trust Accounting................................................. 56
17.7 Valuation of Certain Assets...................................... 57
17.8 Legal Counsel.................................................... 57
17.9 Fees and Expenses................................................ 57
18 RIGHTS, PROTECTION, CONSTRUCTION AND JURISDICTION...................... 58
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18.1 Plan Does Not Affect Employment Rights........................... 58
18.2 Limited Return of Contributions.................................. 58
18.3 Assignment and Alienation........................................ 58
18.4 Facility of Payment.............................................. 59
18.5 Reallocation of Lost Participant's Accounts...................... 59
18.6 Claims Procedure................................................. 59
18.7 Construction..................................................... 60
18.8 Jurisdiction and Severability.................................... 60
18.9 Indemnification by Employer...................................... 60
19 AMENDMENT, MERGER AND TERMINATION...................................... 61
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19.1 Amendment........................................................ 61
19.2 Merger........................................................... 61
19.3 Plan Termination................................................. 61
19.4 Amendment and Termination Procedures............................. 62
19.5 Termination of Employer's Participation.......................... 62
19.6 Replacement of the Trustee....................................... 63
19.7 Final Settlement and Accounting of Trustee....................... 63
APPENDIX A - INVESTMENT FUNDS............................................. 00
XXXXXXXX X - PAYMENT OF PLAN FEES AND EXPENSES............................ 65
APPENDIX C - LOAN INTEREST RATE........................................... 66
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1 DEFINITIONS
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When capitalized, the words and phrases below have the following meanings
unless different meanings are clearly required by the context:
1.1 "Account". The records maintained for purposes of
accounting for a Participant's interest in the Plan.
"Account" may refer to one or all of the following
accounts which have been created on behalf of a
Participant to hold specific types of Contributions
under the Plan:
(a) "Pre-Tax Account". An account created to hold Pre-Tax
Contributions.
(b) "After-Tax Account". An account created to hold After-Tax
Contributions.
(c) "Rollover Account". An account created to hold Rollover
Contributions.
(d) "Company Match Account". An account created to hold Company
Match Contributions.
(e) "Stock Matching Account". An account created to hold Stock
Matching Contributions.
(f) "Employer Supplemental Account". An account created to hold
Employer Supplemental Contributions.
1.2 "ACP" or "Average Contribution Percentage". The percentage
calculated in accordance with Section 12.1.
1.3 "Administrator". The Company, which may delegate all or a portion
of the duties of the Administrator under the Plan to a Committee
in accordance with Section 15.6.
1.4 "ADP" or "Average Deferral Percentage". The percentage calculated
in accordance with Section 12.1.
1.5 "Beneficiary". The person or persons who is to receive
benefits after the death of the Participant pursuant to the
"Beneficiary Designation" paragraph in Section 11, or as a
result of a QDRO.
1.6 "Code". The Internal Revenue Code of 1986, as amended.
Reference to any specific Code section shall include such
section, any valid regulation promulgated thereunder, and any
comparable provision of any future legislation amending,
supplementing or superseding such section.
1.7 "Committee". If applicable, the committee which has been
appointed by the Company to administer the Plan in accordance
with Section 15.6.
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1.8 "Company". MPB Corporation, a fully owned subsidiary of The
Timken Company, or any successor by merger, purchase or
otherwise.
1.9 "Company Stock". Shares of common stock of The Timken Company.
1.10 "Compensation". The sum of a Participant's Taxable Income and
salary reductions, if any, pursuant to Code sections 125,
402(e)(3), 402(h), 403(b), 414(h)(2) or 457.
For purposes of determining benefits under this Plan,
Compensation is limited to $200,000 (as indexed for the cost of
living pursuant to Code sections 401(a)(17) and 415(d)) per Plan
Year. For purposes of determining benefits under this Plan for
Plan Years beginning after December 31, 1993, Compensation is
limited to $150,000 (as adjusted for the cost of living pursuant
to Code sections 401(a)(17) and 415(d)) per Plan Year.
For purposes of the preceding paragraph, in the case of an HCE
who is a 5% Owner or one of the 10 most highly compensated
Employees, (i) such HCE and such HCE's family group (as defined
below) shall be treated as a single employee and the Compensation
of each family group member shall be aggregated with the
Compensation of such HCE, and (ii) the limitation on Compensation
shall be allocated among such HCE and his or her family group
members in proportion to each individual's Compensation before
the application of this sentence. For purposes of this Section,
the term "family group" shall mean an Employee's spouse and
lineal descendants who have not attained age 19 before the close
of the year in question.
For the purpose of determining HCEs and key employees,
Compensation for the entire Plan Year shall be used. For the
purpose of determining ADP and ACP, Compensation shall be limited
to amounts paid to an Eligible Employee while a Participant.
1.11 "Contribution". An amount contributed to the Plan by the Employer
or an Eligible Employee, and allocated by contribution type to
Participants' Accounts, as described in Section 1.1. Specific
types of contribution include:
(a) "Pre-Tax Contribution". An amount contributed by the Employer
on an eligible Participant's behalf in conjunction with a
Participant's Code section 401(k) salary deferral election.
(b) "After-Tax Contribution". An amount contributed by an
eligible Participant on an after-tax basis.
(c) "Rollover Contribution". An amount contributed by an Eligible
Employee which originated from another employer's qualified
plan.
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(d) "Company Match Contribution". An amount contributed by the
Employer on an eligible Participant's behalf based upon the
amount contributed by the eligible Participant.
(e) "Stock Matching Contribution". An amount contributed by the
Employer on an eligible Participant's behalf based upon the
amount contributed by the eligible Participant.
(f) "Employer Supplemental Contribution". An amount contributed
by the Employer on an eligible Participant's behalf based
upon the amount contributed by the eligible Participant.
1.12 "Contribution Dollar Limit". The annual limit placed on each
Participant's Pre- Tax Contributions, which shall be $7,000 per
calendar year (as indexed for the cost of living pursuant to Code
sections 402(g)(5) and 415(d)). For purposes of this Section, a
Participant's Pre-Tax Contributions shall include (i) any
employer contribution made under any qualified cash or deferred
arrangement as defined in Code section 401(k) to the extent not
includible in gross income for the taxable year under Code
section 402(e)(3) or 402(h)(1)(B) (determined without regard to
Code section 402(g)), and (ii) any employer contribution to
purchase an annuity contract under Code section 403(b) under a
salary reduction agreement (within the meaning of Code section
3121(a)(5)(D)).
1.13 "Conversion Period". The period of converting the prior
accounting system of the Plan and Trust, if such Plan and Trust
were in existence prior to the Effective Date, or the prior
accounting system of any plan and trust which is merged into this
Plan and Trust subsequent to the Effective Date, to the
accounting system described in Section 6.
1.14 "Direct Rollover". A payment from the Plan to an Eligible
Retirement Plan specified by a Distributee.
1.15 "Disability". A Participant's total and permanent, mental or
physical disability resulting in termination of employment as
evidenced by presentation of medical evidence satisfactory to the
Administrator.
1.16 "Distributee". An Employee or former Employee, the surviving
spouse of an Employee or former Employee and a spouse or former
spouse of an Employee or former Employee determined to be an
alternate payee under a QDRO.
1.17 "Effective Date". April 1, 1990, unless stated otherwise and
except that the provisions related to Company Stock and related
Investment Fund, Stock Matching Contributions and related
Accounts are effective January 1, 1993. The date upon which the
provisions of this document become effective. In general, the
provisions of this document only apply to Participants who are
Employees on or after the Effective Date. However, investment and
distribution provisions apply to all Participants with Account
balances to be invested or distributed after the Effective Date.
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1.18 "Eligible Employee". An Employee of an Employer who is employed
on a regular basis, as such term is defined in the Employer's
personnel policy and procedures manual, except any Employee:
(a) whose compensation and conditions of employment are covered
by a collective bargaining agreement to which an Employer is
a party unless the agreement calls for the Employee's
participation in the Plan; or
(b) who is treated as an Employee because he or she is a Leased
Employee.
1.19 "Eligible Retirement Plan". An individual retirement account
described in Code section 408(a), an individual retirement
annuity described in Code section 408(b), an annuity plan
described in Code section 403(a), or a qualified trust described
in Code section 401(a), that accepts a Distributee's Eligible
Rollover Distribution, except that with regard to an Eligible
Rollover Distribution to a surviving spouse, an Eligible
Retirement Plan is an individual retirement account or individual
retirement annuity.
1.20 "Eligible Rollover Distribution". A distribution of all or any
portion of the balance to the credit of a Distributee, excluding
a distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for
the life (or life expectancy) of a Distributee or the joint lives
(or joint life expectancies) of a Distributee and the
Distributee's designated Beneficiary, or for a specified period
of ten years or more; a distribution to the extent such
distribution is required under Code section 401(a)(9); and the
portion of a distribution that is not includible in gross income
(determined without regard to the exclusion for net unrealized
appreciation with respect to Employer securities).
1.21 "Employee". An individual who is:
(a) directly employed by any Related Company and for whom any
income for such employment is subject to withholding of
income or social security taxes, or
(b) a Leased Employee.
1.22 "Employer". The Company and any Subsidiary or other Related
Company of either the Company or a Subsidiary which adopts this
Plan with the approval of the Company.
1.23 "ERISA". The Employee Retirement Income Security Act of 1974, as
amended. Reference to any specific section shall include such
section, any valid regulation promulgated thereunder, and any
comparable provision of any future legislation amending,
supplementing or superseding such section.
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1.24 "HCE" or "Highly Compensated Employee". An Employee described as
a Highly Compensated Employee in Section 12.
1.25 "Hour of Service". Each hour for which an Employee is entitled
to:
(a) payment for the performance of duties for any Related
Company;
(b) payment from any Related Company for any period during which
no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation,
holiday, sickness, incapacity (including disability), layoff,
leave of absence, jury duty or military service;
(c) back pay, irrespective of mitigation of damages, by award or
agreement with any Related Company (and these hours shall be
credited to the period to which the agreement pertains); or
(d) no payment, but is on a Leave of Absence (and these hours
shall be based upon his or her normally scheduled hours per
week or a 40 hour week if there is no regular schedule).
The crediting of hours for which no duties are performed shall
be in accordance with Department of Labor regulation sections
2530.200b-2(b) and (c). Actual hours shall be used whenever an
accurate record of hours are maintained for an Employee.
Otherwise, an equivalent number of hours shall be credited for
each payroll period in which the Employee would be credited
with at least 1 hour. The payroll period equivalencies are 45
hours weekly, 90 hours biweekly, 95 hours semimonthly and 190
hours monthly.
An Employee's service with a predecessor or acquired company
shall only be counted in the determination of his or her Hours
of Service for eligibility and/or vesting purposes if (1) the
Company directs that credit for such service be granted, or (2)
a qualified plan of the predecessor or acquired company is
subsequently maintained by any Employer or Related Company.
1.26 "Ineligible". The Plan status of an individual during the period
in which he or she is (1) an Employee of a Related Company which
is not then an Employer, (2) an Employee, but not an Eligible
Employee, or (3) not an Employee.
1.27 "Investment Fund" or "Fund". An investment fund as described in
Section 16.2. The Investment Funds authorized by the
Administrator to be offered as of the Execution Date to
Participants and Beneficiaries are as set forth in Appendix A.
1.28 "Leased Employee". An individual who is deemed to be an employee
of any Related Company as provided in Code section 414(n) or (o).
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1.29 "Leave of Absence". A period during which an individual is deemed
to be an Employee, but is absent from active employment, provided
that the absence:
(a) was authorized by a Related Company; or
(b) was due to military service in the United States armed forces
and the individual returns to active employment within the
period during which he or she retains employment rights under
federal law.
1.30 "NHCE" or "Non-Highly Compensated Employee". An Employee
described as a Non-Highly Compensated Employee in Section 12.
1.31 "Normal Retirement Date". The date of a Participant's 65th
birthday.
1.32 "Owner". A person with an ownership interest in the capital,
profits, outstanding stock or voting power of a Related Company
within the meaning of Code section 318 or 416 (which exclude
indirect ownership through a qualified plan).
1.33 "Participant". An Eligible Employee who begins to participate in
the Plan after completing the eligibility requirements as
described in Section 2.1. An Eligible Employee who makes a
Rollover Contribution prior to completing the eligibility
requirements as described in Section 2.1 shall also be considered
a Participant except for purposes of provisions related to
Contributions (other than a Rollover Contribution). A
Participant's participation continues until his or her employment
with all Related Companies ends and his or her Account is
distributed or forfeited.
1.34 "Pay". The base pay and overtime, including shift differential
paid to an Eligible Employee by an Employer while a Participant
during the current period.
Pay is neither increased nor decreased by any salary credit
or reduction pursuant to Code sections 125 or 402(e)(3). Pay
is limited to $200,000 (as indexed for the cost of living
pursuant to Code sections 401(a)(17) and 415(d)) per Plan
Year. Pay is limited to $150,000 (as adjusted for the cost of
living pursuant to Code sections 401(a)(17) and 415(d)) per
Plan Year effective for Plan Years beginning after December
31, 1993.
1.35 "Plan". The MPB Employees' Savings Plan set forth in this
document, as from time to time amended.
1.36 "Plan Year". The annual accounting period of the Plan and Trust
which ends on each December 31.
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1.37 "QDRO". A domestic relations order which the Administrator has
determined to be a qualified domestic relations order within the
meaning of Code section 414(p).
1.38 "Related Company". With respect to any Employer, that Employer
and any corporation, trade or business which is, together with
that Employer, a member of the same controlled group of
corporations, a trade or business under common control, or an
affiliated service group within the meaning of Code section
414(b), (c), (m) or (o).
1.39 "Settlement Date". The date on which the transactions from the
most recent Trade Date are settled.Effective June 1, 1992 for
each Trade Date, the Trustee's next business day.
1.40 "Spousal Consent". The written consent given by a spouse to a
Participant's election or waiver of a specified form of benefit,
including a loan or in-service withdrawal, or Beneficiary
designation. The spouse's consent must acknowledge the effect on
the spouse of the Participant's election, waiver or designation
and be duly witnessed by a Plan representative or notary public.
Spousal Consent shall be valid only with respect to the spouse
who signs the Spousal Consent and only for the particular choice
made by the Participant which requires Spousal Consent. A
Participant may revoke (without Spousal Consent) a prior
election, waiver or designation that required Spousal Consent at
any time before payments begin. Spousal Consent also means a
determination by the Administrator that there is no spouse, the
spouse cannot be located, or such other circumstances as may be
established by applicable law.
1.41 "Subsidiary". A company which is 50% or more owned, directly or
indirectly, by the Company.
1.42 "Sweep Account". The subsidiary Account for each Participant
through which all transactions are processed, which is invested
in interest bearing deposits of the Trustee.
1.43 "Sweep Date". The cut off date and time for receiving
instructions for transactions to be processed on the next Trade
Date.
1.44 "Taxable Income". Compensation in the amount reported by the
Employer as "Wages, tips, other compensation" on Form W-2, or any
successor method of reporting under Code section 6041(d).
1.45 "Trade Date". Each day the Investment Funds are valued, which is
the last business day of the month. Effective June 1, 1992 each
day the Investment Funds are valued, which is normally every day
the assets of such Funds are traded.
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1.46 "Trust". The legal entity created by those provisions of this
document which relate to the Trustee. The Trust is part of the
Plan and holds the Plan assets which are comprised of the
aggregate of Participants' Accounts and any unallocated funds
invested in deposit or money market type assets pending
allocation to Participants' Accounts or disbursement to pay Plan
fees and expenses.
1.47 "Trustee". Xxxxx Fargo Bank, National Association.
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2 ELIGIBILITY
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2.1 Eligibility
All Participants as of April 1, 1990 shall continue their
eligibility to participate. Each other Eligible Employee
shall become a Participant on the first day of the next month
after the date he or she completes a six month eligibility
period in which he or she is credited with at least 500 Hours
of Service. The initial eligibility period begins on the date
an Employee first performs an Hour of Service. Subsequent
eligibility periods begin with the start of each half of the
Plan Year beginning after the first Hour of Service is
performed.
2.2 Ineligible Employees
If an Employee completes the above eligibility requirements, but
is Ineligible at the time participation would otherwise begin (if
he or she were not Ineligible), he or she shall become a
Participant on the first subsequent date on which he or she is an
Eligible Employee.
2.3 Ineligible or Former Participants
A Participant may not make or share in Plan Contributions, nor
generally be eligible for a new Plan loan, during the period he
or she is Ineligible, but he or she shall continue to participate
for all other purposes. An Ineligible Participant or former
Participant shall automatically become an active Participant on
the date he or she again becomes an Eligible Employee.
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3 PARTICIPANT CONTRIBUTIONS
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3.1 Pre-Tax Contribution Election
Upon becoming a Participant, an Eligible Employee may elect to
reduce his or her Pay by an amount which does not exceed the
Contribution Dollar Limit, within the limits described in the
Contribution Percentage Limits paragraph of this Section 3, and
have such amount contributed to the Plan by the Employer as a
Pre-Tax Contribution. The election shall be made as a whole
percentage of Pay in such manner and with such advance notice as
prescribed by the Administrator. In no event shall an Employee's
Pre-Tax Contributions under the Plan and comparable contributions
to all other plans, contracts or arrangements of all Related
Companies exceed the Contribution Dollar Limit for the Employee's
taxable year beginning in the Plan Year.
3.2 After-Tax Contribution Election
Upon becoming a Participant, an Eligible Employee may elect to
make After- Tax Contributions to the Plan in an amount which does
not exceed the limits described in the Contribution Percentage
Limits paragraph of this Section 3. The election shall be made as
a whole percentage of Pay in such manner and with such advance
notice as prescribed by the Administrator.
3.3 Changing a Contribution Election
A Participant who is an Eligible Employee may change his or her
Pre-Tax and/or After-Tax Contribution election at any time in
such manner and with such advance notice as prescribed by the
Administrator, and such election shall be effective with the
first payroll of the month paid after such date. Participants'
Contribution election percentages shall automatically apply to
Pay increases or decreases.
3.4 Revoking and Resuming a Contribution Election
A Participant may revoke his or her Contribution election at the
same time in which a Participant may change his or her election
in such manner and with such advance notice as prescribed by the
Administrator, and such election shall be effective with the
first payroll paid after such date.
A Participant may resume Contributions by making a new
Contribution election at the same time in which a Participant may
change his or her election in such manner and with such advance
notice as prescribed by the Administrator, and such election
shall be effective with the first payroll of the month paid after
such date.
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3.5 Contribution Percentage Limits
The Administrator may establish and change from time to time, in
writing, without the necessity of amending this Plan and Trust
document, the separate minimum, if applicable, and maximum
Pre-Tax and After-Tax Contribution percentages, and/or a maximum
combined Pre-Tax and After-Tax Contribution percentage,
prospectively or retrospectively (for the current Plan Year), for
all Participants. In addition, the Administrator may establish
any lower percentage limits for Highly Compensated Employees as
it deems necessary. As of the Effective Date, the maximum
Contribution percentages are:
HIGHLY
CONTRIBUTION COMPENSATED ALL OTHER
TYPE EMPLOYEES PARTICIPANTS
------------ ----------- ------------
Pre-Tax 4% 16%
After-Tax 2% 16%
Sum of Both 6% 16%
Irrespective of the limits that may be established by the
Administrator in accordance with this paragraph, in no event
shall the contributions made by or on behalf of a Participant for
a Plan Year exceed the maximum allowable under Code section 415.
3.6 Refunds When Contribution Dollar Limit Exceeded
A Participant who makes Pre-Tax Contributions for a calendar year
to this Plan and comparable contributions to any other qualified
defined contribution plan in excess of the Contribution Dollar
Limit may notify the Administrator in writing by the following
March 1 (or as late as April 14 if allowed by the Administrator)
that an excess has occurred. In this event, the amount of the
excess specified by the Participant, adjusted for investment gain
or loss, shall be refunded to him or her by April 15 and shall
not be included as an Annual Addition under Code section 415 for
the year contributed. Excess amounts shall first be taken from
unmatched Pre-Tax Contributions and then from matched Pre-Tax
Contributions. Refunds shall not include investment gain or loss
for the period between the end of the applicable Plan Year and
the date of distribution. However, for Plan Years ending before
December 31, 1993, refunds shall include investment gain or loss
for the period between the end of the applicable Plan Year and
the date of distribution. Any Company Match, Stock Matching and
Employer Supplemental Contributions attributable to refunded
excess Pre-Tax Contributions as described in this Section shall
be deemed a Contribution made by reason of a mistake of fact and
removed from the Participant's Account.
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3.7 Timing, Posting and Tax Considerations
Participants' Contributions, other than Rollover Contributions,
may only be made through payroll deduction. Such amounts shall be
paid to the Trustee in cash and posted to each Participant's
Account(s) as soon as such amounts can reasonably be separated
from the Employer's general assets and balanced against the
specific amount made on behalf of each Participant. In no event,
however, shall such amounts be paid to the Trustee more than 90
days after the date amounts are deducted from a Participant's
Pay. Pre-Tax Contributions shall be treated as Employer
Contributions in determining tax deductions under Code section
404(a).
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4 ROLLOVERS & TRUST-TO-TRUST TRANSFERS
------------------------------------
4.1 Rollovers
The Administrator may authorize the Trustee to accept a rollover
contribution in cash, within the meaning of Code section 402(c)
or 408(d)(3)(A)(ii), directly from an Eligible Employee or
effective January 1, 1993, as a Direct Rollover from another
qualified plan on behalf of the Eligible Employee, even if he or
she is not yet a Participant. The Employee shall be responsible
for furnishing satisfactory evidence, in such manner as
prescribed by the Administrator, that the amount is eligible for
rollover treatment. A rollover contribution received directly
from an Eligible Employee must be paid to the Trustee in cash
within 60 days after the date received by the Eligible Employee
from a qualified plan or conduit individual retirement account.
Contributions described in this paragraph shall be posted to the
applicable Employee's Rollover Account as of the date received by
the Trustee.
If it is later determined that an amount contributed pursuant to
the above paragraph did not in fact qualify as a rollover
contribution under Code section 402(c) or 408(d)(3)(A)(ii), the
balance credited to the Employee's Rollover Account shall
immediately be (1) segregated from all other Plan assets, (2)
treated as a nonqualified trust established by and for the
benefit of the Employee, and (3) distributed to the Employee. Any
such nonqualifying rollover shall be deemed never to have been a
part of the Plan.
4.2 Transfers From Other Qualified Plans
The Administrator may instruct the Trustee to receive assets in
cash or in kind directly from another qualified plan; provided
that a transfer should not be directed if:
(a) any amounts are not exempted by Code section 401(a)(11)(B)
from the annuity requirements of Code section 417; or
(b) any amounts include benefits protected by Code section
411(d)(6) which would not be preserved under applicable Plan
provisions.
The Trustee may refuse the receipt of any transfer if:
(a) the Trustee finds the in-kind assets unacceptable; or
(b) instructions for posting amounts to Participants' Accounts
are incomplete.
Such amounts shall be posted to the appropriate Accounts of
Participants as of the date received by the Trustee.
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5 EMPLOYER CONTRIBUTIONS
----------------------
5.1 Company Match Contributions
(a) Frequency and Eligibility. For each period for which
Participants' Contributions are made, the Employer shall make
Company Match Contributions, as described in the following
Allocation Method paragraph, on behalf of each Participant
who contributed during the period and who is not otherwise
suspended from receiving such Company Match Contributions in
accordance with Section 10.
(b) Allocation Method. The Company Match Contributions for each
period shall total 25% of the sum of each eligible
Participant's Pre-Tax and After-Tax Contributions for the
period, provided that no Company Match Contributions shall be
made based upon a Participant's Contributions in excess of 6%
of his or her Pay.
(c) Timing, Medium and Posting. The Employer shall make each
period's Company Match Contribution in cash as soon as is
feasible, and not later than the Employer's federal tax
filing date, including extensions, for deducting such
Contribution. The Trustee shall post such amount to each
Participant's Company Match Account once the total
Contribution received has been balanced against the specific
amount to be credited to each Participant's Company Match
Account.
5.2 Stock Matching Contributions
(a) Frequency and Eligibility. For each period for which
Participants' Contributions are made, the Employer shall make
Stock Matching Contributions, as described in the following
Allocation Method paragraph, on behalf of each Participant
who contributed during the period and who is not otherwise
suspended from receiving such Stock Matching Contributions in
accordance with Section 10.
(b) Allocation Method. The Stock Matching Contributions for each
period shall total 15% of the sum of each eligible
Participant's Pre-Tax and After-Tax Contributions for the
period, provided that no Stock Matching Contributions shall
be made based upon a Participant's Contributions in excess of
6% of his or her Pay.
(c) Timing, Medium and Posting. The Employer shall make each
period's Stock Matching Contribution in cash as soon as is
feasible, and not later than the Employer's federal tax
filing date, including extensions, for deducting such
Contribution. The Trustee shall post such amount to each
Participant's Stock Matching Account once the total
Contribution received has been balanced against the specific
amount to be credited to each Participant's Stock Matching
Account.
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5.3 Employer Supplemental Contributions
(a) Frequency and Eligibility. For each half of the Plan Year,
the Employer may make Employer Supplemental Contributions, as
described in the following Allocation Method paragraph, on
behalf of each Participant who contributed during the period
and was an Eligible Employee on the last day of the period.
(b) Allocation Method. The Employer Supplemental Contributions
for each period shall be in an amount determined by the
Employer and allocated in proportion to the sum of each
eligible Participant's Pre-Tax and After-Tax Contributions
for the period, to the total of all such Contributions for
all such eligible Participants.
(c) Timing, Medium and Posting. The Employer shall make each
period's Employer Supplemental Contribution in cash as soon
as is feasible, and not later than the Employer's federal tax
filing date, including extensions, for deducting such
Contribution. The Trustee shall post such amount to each
Participant's Employer Supplemental Account once the total
Contribution received has been balanced against the specific
amount to be credited to each Participant's Employer
Supplemental Account.
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6 ACCOUNTING
----------
6.1 Individual Participant Accounting
The Administrator shall maintain an individual set of Accounts
for each Participant in order to reflect transactions both by
type of Contribution and investment medium. Financial
transactions shall be accounted for at the individual Account
level by posting each transaction to the appropriate Account of
each affected Participant. Participant Account values shall be
maintained in shares for the Investment Funds and in dollars for
their Sweep and Participant loan Accounts. At any point in time,
the Account value shall be determined using the most recent Trade
Date values provided by the Trustee.
6.2 Sweep Account is Transaction Account
All transactions related to amounts being contributed to or
distributed from the Trust shall be posted to each affected
Participant's Sweep Account. Any amount held in the Sweep Account
will be credited with interest up until the date on which it is
removed from the Sweep Account.
6.3 Trade Date Accounting and Investment Cycle
Participant Account values shall be determined as of each Trade
Date. For any transaction to be processed as of a Trade Date, the
Trustee must receive instructions for the transaction by the
Sweep Date. Such instructions shall apply to amounts held in the
Account on that Sweep Date. Financial transactions of the
Investment Funds shall be posted to Participants' Accounts as of
the Trade Date, based upon the Trade Date values provided by the
Trustee, and settled on the Settlement Date.
6.4 Accounting for Investment Funds
Investments in each Investment Fund shall be maintained in
shares. The Trustee is responsible for determining the share
values of each Investment Fund as of each Trade Date. To the
extent an Investment Fund is comprised of collective investment
funds of the Trustee, or any other fiduciary to the Plan, the
share values shall be determined in accordance with the rules
governing such collective investment funds, which are
incorporated herein by reference. All other share values shall be
determined by the Trustee. The share value of each Investment
Fund shall be based on the fair market value of its underlying
assets.
6.5 Payment of Fees and Expenses
Except to the extent Plan fees and expenses related to Account
maintenance, transaction and Investment Fund management and
maintenance, as set forth
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below, are paid by the Employer directly, or indirectly, such
fees and expenses shall be paid as set forth below. The Employer
may pay a lower portion of the fees and expenses allocable to the
Accounts of Participants who are no longer Employees or who are
not Beneficiaries, unless doing so would result in
discrimination.
(a) Account Maintenance: Account maintenance fees and expenses,
may include but are not limited to, administrative, Trustee,
government annual report preparation, audit, legal,
nondiscrimination testing, and fees for any other special
services. Account maintenance fees shall be charged to
Participants on a per Participant basis provided that no fee
shall reduce a Participant's Account balance below zero.
(b) Transaction: Transaction fees and expenses, may include but
are not limited to, recurring payment, Investment Fund
election change and loan fees. Transaction fees shall be
charged to the Participant's Account involved in the
transaction provided that no fee shall reduce a Participant's
Account balance below zero.
(c) Investment Fund Management and Maintenance: Management and
maintenance fees and expenses related to the Investment Funds
shall be charged at the Investment Fund level and reflected
in the net gain or loss of each Fund.
As of the Effective Date, a breakdown of which Plan fees and
expenses shall generally be borne by the Trust (and charged to
individual Participants' Accounts) and those that shall be paid
by the Employer, directly or indirectly, is set forth in
Appendix B and may be changed by the Administrator from time to
time, in writing, without the necessity of amending this Plan
and Trust document.
The Trustee shall have the authority to pay any such fees and
expenses, which remain unpaid by the Employer for 60 days, from
the Trust.
6.6 Accounting for Participant Loans
Participant loans shall be held in a separate Account of the
Participant and accounted for in dollars as an earmarked asset of
the borrowing Participant's Account.
6.7 Error Correction
The Administrator may correct any errors or omissions in the
administration of the Plan by restoring any Participant's Account
balance with the amount that would be credited to the Account had
no error or omission been made. Funds necessary for any such
restoration shall be provided through payment made by the
Employer, or by the Trustee to the extent the error or omission
is
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attributable to actions or inactions of the Trustee.
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6.8 Participant Statements
The Administrator shall provide Participants with statements of
their Accounts as soon after the end of each quarter of the Plan
Year as is administratively feasible.
6.9 Special Accounting During Conversion Period
The Administrator and Trustee may use any reasonable accounting
methods in performing their respective duties during any
Conversion Period. This includes, but is not limited to, the
method for allocating net investment gains or losses and the
extent, if any, to which contributions received by and
distributions paid from the Trust during this period share in
such allocation.
6.10 Accounts for QDRO Beneficiaries
A separate Account shall be established for an alternate payee
entitled to any portion of a Participant's Account under a QDRO
as of the date and in accordance with the directions specified in
the QDRO. In addition, a separate Account may be established
during the period of time the Administrator, a court of competent
jurisdiction or other appropriate person is determining whether a
domestic relations order qualifies as a QDRO. Such a separate
Account shall be valued and accounted for in the same manner as
any other Account.
(a) Distributions Pursuant to QDROs. If a QDRO so provides, the
portion of a Participant's Account payable to an alternate
payee may be distributed, in a form as permissible under the
Distributions Once Employment Ends Section, to the alternate
payee at the time specified in the QDRO, regardless of
whether the Participant is entitled to a distribution from
the Plan at such time.
(b) Participant Loans. Except to the extent required by law, an
alternate payee, on whose behalf a separate Account has been
established, shall not be entitled to borrow from such
Account. If a QDRO specifies that the alternate payee is
entitled to any portion of the Account of a Participant who
has an outstanding loan balance, all outstanding loans shall
generally continue to be held in the Participant's Account
and shall not be divided between the Participant's and
alternate payee's Accounts.
(c) Investment Direction. Where a separate Account has been
established on behalf of an alternate payee and has not yet
been distributed, the alternate payee may direct the
investment of such Account in the same manner as if he or she
were a Participant.
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7 INVESTMENT FUNDS AND ELECTIONS
------------------------------
7.1 Investment Funds
Except for Participants' Sweep and loan Accounts, the Trust shall
be maintained in various Investment Funds. The Administrator
shall select the Investment Funds offered to Participants and may
change the number or composition of the Investment Funds, subject
to the terms and conditions agreed to with the Trustee. A list of
the Investment Funds offered to Participants is set forth in
Appendix A, and may be changed by the Administrator from time to
time, in writing, without the necessity of amending this Plan and
Trust document.
7.2 Investment Fund Elections
Each Participant shall direct the investment of all of his or her
Contribution Accounts except for these Accounts:
Stock Matching Account
which shall be entirely invested in the Investment Fund specified
by the Administrator, which Investment Fund as of January 1,
1993, is set forth in Appendix A. However, a Participant who has
attained age 55 may direct the investment of the balance in his
or her Stock Matching Account. Future amounts allocated to his or
her Stock Matching Account will continue to be entirely invested
in the Investment Fund specified by the Administrator, until
otherwise directed by the Participant.
A Participant shall make his or her investment election in any
combination of one or any number of the Investment Funds offered
in accordance with the procedures established by the
Administrator and Trustee. However, during any Conversion Period,
Trust assets may be held in any investment vehicle permitted by
the Plan, as directed by the Administrator, irrespective of
Participant investment elections.
The Administrator may set a maximum percentage of the total
election that a Participant may direct into any specific
Investment Fund, which maximum, if any, as of January 1, 1993, is
set forth in Appendix A, and may be changed by the Administrator
from time to time, in writing, without the necessity of amending
this Plan and Trust document.
7.3 Responsibility for Investment Choice
Each Participant shall be solely responsible for the selection of
his or her Investment Fund choices. No fiduciary with respect to
the Plan is empowered to advise a Participant as to the manner in
which his or her Accounts are to be invested, and the fact that
an Investment Fund is offered shall not be construed to be a
recommendation for investment.
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7.4 Default if No Election
The Administrator shall specify an Investment Fund for the
investment of that portion of a Participant's Account which is
not yet held in an Investment Fund and for which no valid
investment election is on file. The Investment Fund specified is
set forth in Appendix A, and may be changed by the Administrator
from time to time, in writing, without the necessity of amending
this Plan and Trust document.
7.5 Timing
A Participant shall make his or her initial investment election
upon becoming a Participant and may change his or her election at
any time in accordance with the procedures established by the
Administrator and Trustee. Investment elections received by the
Trustee by the Sweep Date will be effective on the following
Trade Date.
7.6 Investment Fund Election Change Fees
A reasonable processing fee may be charged directly to a
Participant's Account for Investment Fund election changes in
excess of a specified number per year as determined by the
Administrator.
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8 VESTING
-------
8.1 Fully Vested Contribution Accounts
A Participant shall be fully vested in all Accounts at all times.
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9 PARTICIPANT LOANS
-----------------
9.1 Participant Loans Permitted
Loans to Participants are permitted pursuant to the terms and
conditions set forth in this Section.
9.2 Loan Application, Note and Security
A Participant shall apply for any loan in such manner and with
such advance notice as prescribed by the Administrator. All loans
shall be evidenced by a promissory note, secured only by the
portion of the Participant's Account from which the loan is made,
and the Plan shall have a lien on this portion of his or her
Account.
9.3 Spousal Consent
A Participant is not required to obtain Spousal Consent in order
to take out a loan under the Plan.
9.4 Loan Approval
The Administrator, or the Trustee if otherwise authorized by the
Administrator and agreed to by the Trustee, is responsible for
determining that a loan request conforms to the requirements
described in this Section and granting such request.
9.5 Loan Funding Limits
The loan amount must meet all of the following limits as
determined as of the Sweep Date the loan is processed:
(a) Plan Minimum Limit. The minimum amount for any loan is
$1,000.
(b) Plan Maximum Limit. Subject to the legal limit described in
(c) below, the maximum a Participant may borrow, including
the outstanding balance of existing Plan loans, is 100% of
the following Accounts which are fully vested:
Pre-Tax Account
Stock Matching Account
Company Match Account
Employer Supplemental Account
Rollover Account
After-Tax Account
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(c) Legal Maximum Limit. The maximum a Participant may borrow,
including the outstanding balance of existing Plan loans, is
50% of his or her vested Account balance, not to exceed
$50,000. However, the $50,000 maximum is reduced by the
Participant's highest outstanding loan balance during the 12
month period ending on the day before the Sweep Date as of
which the loan is made. For purposes of this paragraph, the
qualified plans of all Related Companies shall be treated as
though they are part of this Plan to the extent it would
decrease the maximum loan amount.
9.6 Maximum Number of Loans
A Participant may have only one loan outstanding at any given
time.
9.7 Source and Timing of Loan Funding
A loan to a Participant shall be made solely from the assets of
his or her own Accounts. The available assets shall be determined
first by Account type and then by investment type within each
type of Account. The hierarchy for loan funding by type of
Account shall be the order listed in the preceding Plan Maximum
Limit paragraph. Within each Account used for funding a loan,
amounts shall first be taken from the Sweep Account and then
taken by type of investment in direct proportion to the market
value of the Participant's interest in each Investment Fund as of
the Trade Date on which the loan is processed.
Loans will be funded on the Settlement Date following the Trade
Date as of which the loan is processed. The Trustee shall make
payment to the Participant as soon thereafter as administratively
feasible.
9.8 Interest Rate
The interest rate charged on Participant loans shall be a fixed
reasonable rate of interest, determined from time to time by the
Administrator, which provides the Plan with a return commensurate
with the prevailing interest rate charged by persons in the
business of lending money for loans which would be made under
similar circumstances. As of the Effective Date, the interest
rate is determined as set forth in Appendix C, and may be changed
by the Administrator from time to time, in writing, without the
necessity of amending this Plan and Trust document.
9.9 Repayment
Substantially level amortization shall be required of each loan
with payments made at least monthly, generally through payroll
deduction. Loans may be prepaid in full or in part at any time.
The Participant may choose the loan repayment period, not to
exceed 5 years.
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9.10 Repayment Hierarchy
Loan principal repayments shall be credited to the Participant's
Accounts in the inverse of the order used to fund the loan. Loan
interest shall be credited to the Participant's Accounts in
direct proportion to the principal payment. Loan payments
credited to Contribution Accounts for which the Participant
directs investment are credited by investment type based upon the
Participant's current investment election for new Contributions.
Loan payments credited to Contribution Accounts for which the
Participant does not direct investment as described in Section
7.2 are credited to the Investment Funds specified by the
Administrator for such Contribution Accounts.
9.11 Repayment Suspension
The Administrator may agree to a suspension of loan payments for
up to 12 months for a Participant who is on a Leave of Absence
without pay. During the suspension period interest shall continue
to accrue on the outstanding loan balance. At the expiration of
the suspension period all outstanding loan payments and accrued
interest thereon shall be due unless otherwise agreed upon by the
Administrator.
9.12 Loan Default
A loan is treated as a default if scheduled loan payments are
more than 90 days late. A Participant shall then have 30 days
from the time he or she receives written notice of the default
and a demand for past due amounts to cure the default before it
becomes final.
In the event of default, the Administrator may direct the Trustee
to report the default as a taxable event. As soon as a Plan
withdrawal or distribution to such Participant would otherwise be
permitted, the Administrator may instruct the Trustee to execute
upon its security interest in the Participant's Account by
distributing the note to the Participant.
9.13 Call Feature
The Administrator shall have the right to call any Participant
loan once a Participant's employment with all Related Companies
has terminated or if the Plan is terminated.
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10 IN-SERVICE WITHDRAWALS
----------------------
10.1 In-Service Withdrawals Permitted
In-service withdrawals to a Participant who is an Employee are
permitted pursuant to the terms and conditions set forth in this
Section and as required by law as set forth in Section 11.
10.2 In-Service Withdrawal Application and Notice
A Participant shall apply for any in-service withdrawal in such
manner and with such advance notice as prescribed by the
Administrator. Effective for in-service withdrawals applied for
after December 31, 1992, the Participant shall be provided the
notice prescribed by Code section 402(f).
If an in-service withdrawal is one to which Code sections
401(a)(11) and 417 do not apply, such in-service withdrawal may
commence less than 30 days after the aforementioned notice is
provided, if:
(a) the Participant is clearly informed that he or she has the
right to a period of at least 30 days after receipt of such
notice to consider his or her option to elect or not elect a
Direct Rollover for all or a portion, if any, of his or her
in-service withdrawal which will constitute an Eligible
Rollover Distribution; and
(b) the Participant after receiving such notice, affirmatively
elects a Direct Rollover for all or a portion, if any, of his
or her in-service withdrawal which will constitute an
Eligible Rollover Distribution or alternatively elects to
have all or a portion made payable directly to him or her,
thereby not electing a Direct Rollover for all or a portion
thereof.
10.3 Spousal Consent
A Participant is not required to obtain Spousal Consent in order
to make an in-service withdrawal under the Plan.
10.4 In-Service Withdrawal Approval
The Administrator, or the Trustee if otherwise authorized by the
Administrator and agreed to by the Trustee, is responsible for
determining that an in-service withdrawal request conforms to
the requirements described in this Section and granting such
request.
10.5 Minimum Amount, Payment Form and Medium
The minimum amount for any type of withdrawal is $500.
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33
For withdrawals made after December 31, 1992, with regard to
the portion of a withdrawal representing an Eligible Rollover
Distribution, a Participant may elect a Direct Rollover for
all or a portion of such amount. The form of payment for an
in-service withdrawal shall be a single lump sum and payment
shall be made in cash.
10.6 Source and Timing of In-Service Withdrawal Funding
An in-service withdrawal to a Participant shall be made
solely from the assets of his or her own Accounts and will be
based on the Account values as of the Trade Date the
in-service withdrawal is processed. The available assets
shall be determined first by Account type and then by
investment type within each type of Account. Within each
Account used for funding an in-service withdrawal, amounts
shall first be taken from the Sweep Account and then taken by
type of investment in direct proportion to the market value
of the Participant's interest in each Investment Fund (which
excludes Participant loans) as of the Trade Date on which the
in-service withdrawal is processed.
In-Service withdrawals will be funded on the Settlement Date
following the Trade Date as of which the in-service
withdrawal is processed. The Trustee shall make payment as
soon thereafter as administratively feasible.
10.7 IRS Approved Hardship Withdrawals
(a) Requirements. A Participant who is an Employee may request
the withdrawal of up to the amount necessary to satisfy a
financial need including amounts necessary to pay any
federal, state or local income taxes or penalties reasonably
anticipated to result from the withdrawal. Only requests for
withdrawals (1) on account of a Participant's "Deemed
Financial Need", and (2) which are "Deemed Necessary" or
"Demonstrated as Necessary" to satisfy the financial need
will be approved.
(b) "Deemed Financial Need". Financial commitments relating to:
(1) the payment of unreimbursable medical expenses described
under Code section 213(d) incurred (or to be incurred) by
the Employee, his or her spouse or dependents;
(2) the purchase (excluding mortgage payments) of the
Employee's principal residence;
(3) the payment of unreimbursable tuition and related
educational fees for up to the next 12 months of
post-secondary education for the Employee, his or her
spouse or dependents;
(4) the payment of funeral expenses of an Employee's family
member;
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(5) the payment of amounts necessary for the Employee to
prevent losing his or her principal residence through
eviction or foreclosure on the mortgage; or
(6) any other circumstance specifically permitted under Code
section 401(k)(2)(B)(i)(IV).
(c) "Deemed Necessary". A withdrawal is "deemed necessary" to
satisfy the financial need only if the withdrawal amount does
not exceed the financial need including any federal, state or
local income taxes or penalties reasonably anticipated to
result from the withdrawal, and all of these conditions are
met:
(1) the Employee has obtained all other possible withdrawals
and nontaxable loans available from all plans maintained
by Related Companies;
(2) the Employee shall be suspended from making any
contributions to all qualified and nonqualified plans of
deferred compensation and all stock option or stock
purchase plans maintained by Related Companies for 12
months from the date the withdrawal payment is made; and
(3) the Administrator shall reduce the Contribution Dollar
Limit for the Employee for the calendar year next
following the calendar year of the withdrawal by the
amount of the Employee's Pre-Tax Contributions for the
calendar year of the withdrawal.
(d) "Demonstrated as Necessary". A withdrawal is "demonstrated as
necessary" to satisfy the financial need only if the
withdrawal amount does not exceed the financial need
including any federal, state or local income taxes or
penalties reasonably anticipated to result from the
withdrawal, the Employee represents that he or she is unable
to relieve the financial need (without causing further
hardship) by doing any or all of the following and the
Administrator does not have actual knowledge to the contrary:
(1) receiving any reimbursement or compensation from
insurance or otherwise;
(2) reasonably liquidating his or her assets and the assets
of his or her spouse or minor children that are
reasonably available to the Employee;
(3) ceasing all of his or her contributions to all qualified
and nonqualified plans of deferred compensation and all
stock option or stock purchase plans maintained by
Related Companies;
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(4) obtaining all other possible withdrawals and nontaxable
loans available from all plans maintained by Related
Companies; and
(5) obtaining all possible loans from commercial sources on
reasonable commercial terms.
(e) Account Sources for Withdrawal. All available amounts must
first be withdrawn from a Participant's After-Tax Account.
The remaining withdrawal amount shall come only from the
following of the Participant's fully vested Accounts, in the
priority order as follows:
Rollover Account
Company Match Account
Employer Supplemental Account
Pre-Tax Account
The amount that may be withdrawn from a Participant's Pre-Tax
Account shall not include any earnings credited to his or her
Pre-Tax Account after the start of the first Plan Year
beginning after December 31, 1988.
(f) Permitted Frequency. The maximum number of IRS Approved
Hardship withdrawals permitted to a Participant in any
12-month period is one.
(g) Suspension from Further Contributions. Upon making an IRS
Approved Hardship Withdrawal, a Participant may not make
additional Pre-Tax or After-Tax Contributions for a period of
12 months from the date the withdrawal payment is made.
10.8 Company Approved Hardship Withdrawals
(a) Requirements. A Participant who is an Employee may request
the withdrawal of up to the amount necessary to satisfy a
financial need including amounts necessary to pay any
federal, state or local income taxes or penalties reasonably
anticipated to result from the withdrawal. Only requests for
withdrawals (1) on account of a Participant's "Deemed
Financial Need" or "Demonstrated Financial Need", and (2)
which are "Demonstrated as Necessary" to satisfy the
financial need will be approved.
(b) "Deemed Financial Need". Financial commitments relating to:
(1) the payment of unreimbursable medical expenses described
under Code section 213(d) incurred (or to be incurred) by
the Employee, his or her spouse or dependents;
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(2) the purchase (excluding mortgage payments) of the
Employee's principal residence;
(3) the payment of unreimbursable tuition and related
educational fees for up to the next 12 months of
post-secondary education for the Employee, his or her
spouse or dependents;
(4) the payment of funeral expenses of an Employee's family
member;
(5) the payment of amounts necessary for the Employee to
prevent losing his or her principal residence through
eviction or foreclosure on the mortgage; or
(6) any other circumstance specifically permitted under Code
section 401(k)(2)(B)(i)(IV).
(c) "Demonstrated Financial Need". A determination by the
Administrator that the Participant has an immediate and heavy
financial need based on all relevant facts and circumstances
and has resulted from:
(1) a sudden and unexpected illness or accident to the
Employee or his or her spouse or dependents;
(2) the loss, due to casualty, of the Employee's property
other than nonessential property (such as a boat or a
television); or
(3) some other similar extraordinary (but not necessarily
reasonably foreseeable) circumstances arising as a result
of events beyond the control of the Employee.
(d) "Demonstrated as Necessary". A withdrawal is "demonstrated as
necessary" to satisfy the financial need only if the
withdrawal amount does not exceed the financial need
including any federal, state or local income taxes or
penalties reasonably anticipated to result from the
withdrawal, the Employee represents that he or she is unable
to relieve the financial need (without causing further
hardship) by doing any or all of the following and the
Administrator does not have actual knowledge to the contrary:
(1) receiving any reimbursement or compensation from
insurance or otherwise;
(2) reasonably liquidating his or her assets and the assets
of his or her spouse or minor children that are
reasonably available to the Employee;
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(3) ceasing all of his or her contributions to this Plan;
(4) obtaining all other possible withdrawals and nontaxable
loans available from all plans maintained by Related
Companies; and
(5) obtaining all possible loans from commercial sources on
reasonable commercial terms.
(e) Account Sources for Withdrawal. All available amounts must
first be withdrawn from a Participant's After-Tax Account.
The remaining withdrawal amount shall come only from the
following of the Participant's fully vested Accounts, in the
priority order as follows:
Rollover Account
Company Match Account
Employer Supplemental Account
(f) Permitted Frequency. The maximum number of Company Approved
Hardship withdrawals permitted to a Participant in any
12-month period is one. Effective January 1, 1993, the
maximum number of Company Approved Hardship withdrawals
permitted to a Participant in any Plan Year is one.
(g) Suspension from Further Contributions. Upon making a Company
Approved Hardship Withdrawal, a Participant shall not be
eligible to receive Company Match and Stock Matching
Contributions for a period of three months from the date the
withdrawal payment is made.
10.9 After-Tax Account Withdrawals
(a) Requirements. A Participant who is an Employee may withdraw
up to the entire balance from his or her After-Tax Account.
(b) Permitted Frequency. The maximum number of After-Tax Account
withdrawals permitted to a Participant in any 12-month period
is one. Effective January 1, 1993, the maximum number of
After-Tax Account withdrawals permitted to a Participant in
any Plan Year is one.
(c) Suspension from Further Contributions. Upon making an
After-Tax Account withdrawal, a Participant shall not be
eligible to receive Company Match and Stock Matching
Contributions for a period of three months from the date the
withdrawal payment is made.
10.10 Rollover Account Withdrawals
No in-service withdrawals are permitted from a Participant's
Rollover Account except as provided elsewhere in this
Section.
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10.11 Over Age 59 1/2 Withdrawals
(a) Requirements. A Participant who is an Employee and over age
59 1/2 may withdraw from the Accounts listed in paragraph (b)
below.
(b) Account Sources for Withdrawal. The withdrawal amount shall
come only from the following of the Participant's fully
vested Accounts, in the priority order as follows with the
exception that the Participant may instead choose to have
amounts taken from his or her After-Tax Account first and
except that prior to January 1, 1993, such Accounts only
included a Participant's After-Tax and Pre-Tax Accounts:
Rollover Account
Pre-Tax Account
Stock Matching Account
Company Match Account
Employer Supplemental Account
After-Tax Account
(c) Permitted Frequency. The maximum number of Over Age 59 1/2
withdrawals permitted to a Participant in any 12-month period
is one. Effective January 1, 1993, the maximum number of Over
Age 59 1/2 withdrawals permitted to a Participant in any Plan
Year is one.
(d) Suspension from Further Contributions. An Over Age 59 1/2
withdrawal shall not affect a Participant's ability to make
or be eligible to receive further Contributions.
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11 DISTRIBUTIONS ONCE EMPLOYMENT ENDS OR AS REQUIRED BY LAW
--------------------------------------------------------
11.1 Benefit Information, Notices and Election
A Participant, or his or her Beneficiary in the case of his or
her death, shall be provided with information regarding all
optional times and forms of distribution available, to include
the notices prescribed by Code section 402(f), effective January
1, 1993, and Code section 411(a)(11). Subject to the other
requirements of this Section, a Participant, or his or her
Beneficiary in the case of his or her death, may elect, in such
manner and with such advance notice as prescribed by the
Administrator, to have his or her vested Account balance paid to
him or her beginning upon any Settlement Date following the
Participant's termination of employment with all Related
Companies or, if earlier, at the time required by law as set
forth in Section 11.6.
If a distribution is one to which Code sections 401(a)(11) and
417 do not apply, such distribution may commence less than 30
days after the aforementioned notices are provided, if:
(a) the Participant is clearly informed that he or she has the
right to a period of at least 30 days after receipt of such
notices to consider the decision as to whether to elect a
distribution and if so to elect a particular form of
distribution and to elect or not elect a Direct Rollover for
all or a portion, if any, of his or her distribution which
will constitute an Eligible Rollover Distribution; and
(b) the Participant after receiving such notices, affirmatively
elects a distribution and a Direct Rollover for all or a
portion, if any, of his or her distribution which will
constitute an Eligible Rollover Distribution or alternatively
elects to have all or a portion made payable directly to him
or her, thereby not electing a Direct Rollover for all or a
portion thereof.
11.2 Spousal Consent
A Participant is not required to obtain Spousal Consent in
order to receive a distribution under the Plan.
11.3 Payment Form and Medium
A Participant may elect to be paid in any of these forms:
(a) a single lump sum, or
(b) effective January 1, 1993, a portion paid in a lump sum, and
the remainder paid later, or
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(c) periodic installments over a period not to exceed the life
expectancy of the Participant and his or her Beneficiary.
Distributions shall be made in cash, except to the extent a
distribution consists of a distribution of an offset amount as
described in Section 9.13. For distributions made after December
31, 1992, with regard to the portion of a distribution
representing an Eligible Rollover Distribution, a Distributee may
elect a Direct Rollover for all or a portion of such amount.
11.4 Distribution of Small Amounts
If, at the time a Participant's employment with all Related
Companies ends, the Participant's vested Account balance is
$3,500 or less, the Participant's benefit may be paid as a single
lump sum, without his or her consent, after his or her employment
with all Related Companies ends in accordance with procedures
prescribed by the Administrator.
11.5 Source and Timing of Distribution Funding
A distribution to a Participant shall be made solely from the
assets of his or her own Accounts and will be based on the
Account values as of the Trade Date the distribution is
processed. The available assets shall be determined first by
Account type and then by investment type within each type of
Account. Within each Account used for funding a distribution,
amounts shall first be taken from the Sweep Account and then
taken by type of investment in direct proportion to the market
value of the Participant's interest in each Investment Fund as of
the Trade Date on which the distribution is processed.
Distributions will be funded on the Settlement Date following the
Trade Date as of which the distribution is processed. The Trustee
shall make payment as soon thereafter as administratively
feasible.
11.6 Latest Commencement Permitted
In addition to any other Plan requirements and unless a
Participant elects otherwise, his or her benefit payments will
begin not later than 60 days after the end of the Plan Year in
which he or she attains his or her Normal Retirement Date or
retires, whichever is later. However, if the amount of the
payment or the location of the Participant (after a reasonable
search) cannot be ascertained by that deadline, payment shall be
made no later than 60 days after the earliest date on which such
amount or location is ascertained but in no event later than as
described below. A Participant's failure to elect in such manner
as prescribed by the Administrator to have his or her vested
Account balance paid to him or her, shall be deemed an election
by the Participant to defer his or her distribution.
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Benefit payments shall begin by the April 1 immediately following
the end of the calendar year in which the Participant attains age
70 1/2 (whether or not he or she is an Employee).
11.7 Payment Within Life Expectancy
The Participant's payment election must be consistent with the
requirement of Code section 401(a)(9) that all payments are to be
completed within a period not to exceed the lives or the joint
and last survivor life expectancy of the Participant and his or
her Beneficiary. The life expectancies of a Participant and his
or her Beneficiary, if such Beneficiary is his or her spouse, may
be recomputed annually.
11.8 Incidental Benefit Rule
The Participant's payment election must be consistent with the
requirement that, if the Participant's spouse is not his or her
sole primary Beneficiary, the minimum annual distribution for
each calendar year, beginning with the year in which he or she
attains age 70 1/2, shall not be less than the quotient obtained
by dividing (a) the Participant's vested Account balance as of
the last Trade Date of the preceding year by (b) the applicable
divisor as determined under the incidental benefit requirements
of Code section 401(a)(9).
11.9 Payment to Beneficiary
Payment to a Beneficiary must either: (1) be completed by the end
of the calendar year that contains the fifth anniversary of the
Participant's death or (2) begin by the end of the calendar year
that contains the first anniversary of the Participant's death
and be completed within the period of the Beneficiary's life or
life expectancy, except that:
(a) If the Participant dies after the April 1 immediately
following the end of the calendar year in which he or she
attains age 70 1/2, payment to his or her Beneficiary must be
made at least as rapidly as provided in the Participant's
distribution election;
(b) If the surviving spouse is the Beneficiary, payments need not
begin until the end of the calendar year in which the
Participant would have attained age 70 1/2 and must be
completed within the spouse's life or life expectancy; and
(c) If the Participant and the surviving spouse who is the
Beneficiary die (1) before the April 1 immediately following
the end of the calendar year in which the Participant would
have attained age 70 1/2 and (2) before payments have begun
to the spouse, the spouse will be treated as the Participant
in applying these rules.
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11.10 Beneficiary Designation
Each Participant may complete a beneficiary designation form
indicating the Beneficiary who is to receive the Participant's
remaining Plan interest at the time of his or her death. The
designation may be changed at any time. However, a Participant's
spouse shall be the sole primary Beneficiary unless the
designation includes Spousal Consent for another Beneficiary. If
no proper designation is in effect at the time of a Participant's
death or if the Beneficiary does not survive the Participant, the
Beneficiary shall be, in the order listed, the:
(a) Participant's surviving spouse,
(b) Participant's children, in equal shares, PER STIRPES (by
right of representation), or
(c) Participant's estate.
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12 ADP AND ACP TESTS
-----------------
12.1 Contribution Limitation Definitions
The following definitions are applicable to this Section 12
(where a definition is contained in both Sections 1 and 12, for
purposes of Section 12 the Section 12 definition shall be
controlling):
(a) "ACP" or "Average Contribution Percentage". The Average
Percentage calculated using Contributions allocated to
Participants as of a date within the Plan Year.
(b) "ACP Test". The determination of whether the ACP is in
compliance with the Basic or Alternative Limitation for a
Plan Year (as defined in Section 12.2).
(c) "ADP" or "Average Deferral Percentage". The Average
Percentage calculated using Deferrals allocated to
Participants as of a date within the Plan Year.
(d) "ADP Test". The determination of whether the ADP is in
compliance with the Basic or Alternative Limitation for a
Plan Year (as defined in Section 12.2).
(e) "Average Percentage". The average of the calculated
percentages for Participants within the specified group. The
calculated percentage refers to either the "Deferrals" or
"Contributions" (as defined in this Section) made on each
Participant's behalf for the Plan Year, divided by his or her
Compensation for the portion of the Plan Year in which he or
she was an Eligible Employee while a Participant. (Pre-Tax
Contributions to this Plan or comparable contributions to
plans of Related Companies which will be refunded solely
because they exceed the Contribution Dollar Limit are
included in the percentage for the HCE Group but not for the
NHCE Group.)
(f) "Contributions" shall include Company Match, Stock Matching,
Employer Supplemental and After-Tax Contributions. In
addition, Contributions may include Pre-Tax Contributions,
but only to the extent that (1) the Employer elects to use
them, (2) they are not used or counted in the ADP Test, and
(3) they are necessary to meet the ACP Test Alternative
Limitation (defined in Section 12.2 (b)) or the Multiple Use
Test.
(g) "Deferrals" shall include Pre-Tax Contributions. In addition,
Deferrals may include Stock Matching Contributions, but only
to the extent that (1) the Employer elects to use them, (2)
they are not used or counted in the ACP Test, and (3) such
Contributions are fully vested when made and not withdrawable
by an Employee before he or she attains age 59 1/2.
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44
(h) "Family Member". An Employee who is, at any time during the
Plan Year or Lookback Year, a spouse, lineal ascendant or
descendant, or spouse of a lineal ascendant or descendant of
(1) an active or former Employee who at any time during Plan
Year or Lookback Year is a more than 5% Owner (within the
meaning of Code section 414(q)(3)), or (2) an HCE who is
among the 10 Employees with the highest Compensation for such
Year.
(i) "HCE" or "Highly Compensated Employee". With respect to each
Employer and its Related Companies, an Employee during the
Plan Year or Lookback Year who (in accordance with Code
section 414(q)):
(1) Was a more than 5% Owner at any time during the Lookback
Year or Plan Year;
(2) Received Compensation during the Lookback Year (or in the
Plan Year if among the 100 Employees with the highest
Compensation for such Year) in excess of (i) $75,000 (as
adjusted for such Year pursuant to Code sections
414(q)(1) and 415(d)), or (ii) $50,000 (as adjusted for
such Year pursuant to Code sections 414(q)(1) and 415(d))
in the case of a member of the "top-paid group" (within
the meaning of Code section 414(q)(4)) for such Year),
provided, however, that if the conditions of Code section
414(q)(12)(B)(ii) are met, the Company may elect for any
Plan Year to apply clause (i) by substituting $50,000 for
$75,000 and not to apply clause (ii);
(3) Was an officer of a Related Company and received
Compensation during the Lookback Year (or in the Plan
Year if among the 100 Employees with the highest
Compensation for such Year) that is greater than 50% of
the dollar limitation in effect under Code section
415(b)(1)(A) and (d) for such Year (or if no officer has
Compensation in excess of the threshold, the officer with
the highest Compensation), provided that the number of
officers shall be limited to 50 Employees (or, if less,
the greater of three Employees or 10% of the Employees);
or
(4) Was a Family Member at any time during the Lookback Year
or Plan Year, in which case the Contributions and
Compensation of the HCE and his or her Family Members
shall be aggregated and they shall be treated as a single
HCE.
A former Employee shall be treated as an HCE if (1) such
former Employee was an HCE when he separated from service, or
(2) such former Employee was an HCE in service at any time
after attaining age 55.
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The determination of who is an HCE, including the
determinations of the number and identity of Employees in the
top-paid group, the top 100 Employees and the number of
Employees treated as officers shall be made in accordance
with Code section 414(q).
(j) "HCE Group" and "NHCE Group". With respect to each Employer
and its Related Companies, the respective group of HCEs and
NHCEs who are eligible to have amounts contributed on their
behalf for the Plan Year, including Employees who would be
eligible but for their election not to participate or to
contribute, or because their Pay is greater than zero but
does not exceed a stated minimum.
(1) If the Related Companies maintain two or more plans which
are subject to the ADP or ACP Test and are considered as
one plan for purposes of Code sections 401(a)(4) or
410(b), all such plans shall be aggregated and treated as
one plan for purposes of meeting the ADP and ACP Tests,
provided that, for Plan Years beginning after December
31, 1989, plans may only be aggregated if they have the
same Plan Year.
(2) If an HCE, who is one of the top 10 paid Employees or a
more than 5% Owner, has any Family Members, the
Deferrals, Contributions and Compensation of such HCE and
his or her Family Members shall be combined and treated
as a single HCE. Such amounts for all other Family
Members shall be removed from the NHCE Group percentage
calculation and be combined with the HCE's.
(3) If an HCE is covered by more than one cash or deferred
arrangement maintained by the Related Companies, all such
plans shall be aggregated and treated as one plan for
purposes of calculating the separate percentage for the
HCE which is used in the determination of the Average
Percentage.
(k) "Lookback Year". Pursuant to Code section 414(q), the Company
elects as the Lookback Year the 12 months ending immediately
prior to the start of the Plan Year.
(l) "Multiple Use Test". The test described in Section 12.4 which
a Plan must meet where the Alternative Limitation (described
in Section 12.2(b)) is used to meet both the ADP and ACP
Tests.
(m) "NHCE" or "Non-Highly Compensated Employee". An Employee who
is not an HCE.
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12.2 ADP and ACP Tests
For each Plan Year, the ADP and ACP for the HCE Group must meet
either the Basic or Alternative Limitation when compared to the
respective ADP and ACP for the NHCE Group, defined as follows:
(a) Basic Limitation. The HCE Group Average Percentage may not
exceed 1.25 times the NHCE Group Average Percentage.
(b) Alternative Limitation. The HCE Group Average Percentage is
limited by reference to the NHCE Group Average Percentage as
follows:
IF THE NHCE GROUP THEN THE MAXIMUM HCE
AVERAGE PERCENTAGE IS: GROUP AVERAGE PERCENTAGE IS:
--------------------- -----------------------------
Less than 2% 2 times NHCE Group Average %
2% to 8% NHCE Group Average % plus 2%
More than 8% NA - Basic Limitation applies
12.3 Correction of ADP and ACP Tests
If the ADP or ACP Tests are not met, the Administrator shall
determine, no later than the end of the next Plan Year, a maximum
percentage to be used in place of the calculated percentage for
all HCEs that would reduce the ADP and/or ACP for the HCE group
by a sufficient amount to meet the ADP and ACP Tests.
(a) ADP Correction. Pre-Tax Contributions shall, by the end of
the next Plan Year, be refunded (including amounts previously
refunded because they exceeded the Contribution Dollar Limit)
to the Participant in an amount equal to the actual Deferrals
minus the product of the maximum percentage and the HCE's
Compensation. Excess amounts shall first be taken from
unmatched Pre-Tax Contributions and then from matched Pre-Tax
Contributions. Any Company Match, Stock Matching and Employer
Supplemental Contributions attributable to refunded excess
Pre-Tax Contributions as described in this Section shall be
deemed a Contribution made by reason of a mistake of fact and
removed from the Participant's Account.
(b) ACP Correction. Contributions shall, by the end of the next
Plan Year, be refunded to the Participant in an amount equal
to the actual Contributions minus the product of the maximum
percentage and the HCE's Compensation. The excess amounts
shall first be taken from unmatched After-Tax Contributions
and then as a proportional combination of matched After-Tax
and Company Match, Stock Matching and Employer Supplemental
Contributions.
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(c) Investment Fund Sources. Once the amount of excess Deferrals
and/or Contributions is determined and with regard to excess
Contributions, allocated by type of Contribution, amounts
shall then be taken by type of investment in direct
proportion to the market value of the Participant's interest
in each Investment Fund (which excludes Participant loans) at
the time the correction is made.
(d) Family Member Correction. To the extent any reduction is
necessary with respect to an HCE and his or her Family
Members that have been combined and treated for testing
purposes as a single Employee, the excess Deferrals and
Contributions from the ADP and/or ACP Test shall be prorated
among each such Participant in direct proportion to his or
her Deferrals or Contributions included in each Test.
12.4 Multiple Use Test
If the Alternative Limitation (defined in Section 12.2) is used
to meet both the ADP and ACP Tests, the ADP and ACP for the HCE
Group must also comply with the requirements of Code section
401(m)(9). Such Code section requires that the sum of the ADP and
ACP for the HCE Group (as determined after any corrections needed
to meet the ADP and ACP Tests have been made) not exceed the sum
(which produces the most favorable result) of:
(a) the Basic Limitation (defined in Section 12.2) applied to
either the ADP or ACP for the NHCE Group, and
(b) the Alternative Limitation applied to the other NHCE Group
percentage.
12.5 Correction of Multiple Use Test
If the multiple use limit is exceeded, the Administrator shall
determine a maximum percentage to be used in place of the
calculated percentage for all HCEs that would reduce either or
both the ADP or ACP for the HCE Group by a sufficient amount to
meet the multiple use limit. Any excess shall be handled in the
same manner that the distribution of excess Deferrals or
Contributions are handled.
12.6 Adjustment for Investment Gain or Loss
Any excess Deferrals or Contributions to be refunded to a
Participant in accordance with Section 12.3 or 12.5 shall be
adjusted for investment gain or loss. Refunds shall not include
investment gain or loss for the period between the end of the
applicable Plan Year and the date of distribution. However, for
Plan Years ending before December 31, 1992, refunds shall include
investment gain or loss for the period between the end of the
applicable Plan Year and the date of distribution.
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12.7 Testing Responsibilities and Required Records
The Administrator shall be responsible for ensuring that the Plan
meets the ADP Test, the ACP Test and the Multiple Use Test, and
that the Contribution Dollar Limit is not exceeded. In carrying
out its responsibilities, the Administrator shall have sole
discretion to limit or reduce Deferrals or Contributions at any
time. The Administrator shall maintain records which are
sufficient to demonstrate that the ADP Test, the ACP Test and the
Multiple Use Test, have been met for each Plan Year for at least
as long as the Employer's corresponding tax year is open to
audit.
12.8 Separate Testing
(a) Multiple Employers: The determination of HCEs, NHCEs, and the
performance of the testing and any corrective action
resulting therefrom shall be made separately with regard to
the Employees of each Employer (and its Related Companies)
that is not a Related Company with the other Employer(s).
(b) Collective Bargaining Units: For Plan Years beginning after
December 31, 1992, the performance of the ADP Test, and if
applicable, the ACP Test and Multiple Use Test, and any
corrective action resulting therefrom shall be applied
separately to Employees who are eligible to participate in
the Plan as a result of a collective bargaining agreement.
In addition, separate testing may be applied, at the discretion
of the Administrator and to the extent permitted under Treasury
regulations, to any group of Employees for whom separate testing
is permissible.
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13 MAXIMUM CONTRIBUTION AND BENEFIT LIMITATIONS
--------------------------------------------
13.1 "Annual Addition" Defined
The sum of all amounts allocated to the Participant's Account for
a Plan Year. Amounts include contributions (except for rollovers
or transfers from another qualified plan), forfeitures and, if
the Participant is a Key Employee (pursuant to Section 14) for
the applicable or any prior Plan Year, medical benefits provided
pursuant to Code section 419A(d)(1). For purposes of this Section
13.1, "Account" also includes a Participant's account in all
other defined contribution plans currently or previously
maintained by any Related Company. The Plan Year refers to the
year to which the allocation pertains, regardless of when it was
allocated. The Plan Year shall be the Code section 415 limitation
year.
13.2 Maximum Annual Addition
The Annual Addition to a Participant's accounts under this Plan
and any other defined contribution plan maintained by any Related
Company for any Plan Year shall not exceed the lesser of (1) 25%
of his or her Taxable Income or (2) the greater of $30,000 or
one-quarter of the dollar limitation in effect under Code section
415(b)(1)(A).
13.3 Avoiding an Excess Annual Addition
If, at any time during a Plan Year, the allocation of any
additional Contributions would produce an excess Annual Addition
for such year, Contributions to be made for the remainder of the
Plan Year shall be limited to the amount needed for each affected
Participant to receive the maximum Annual Addition.
13.4 Correcting an Excess Annual Addition
Upon the discovery of an excess Annual Addition to a
Participant's Account (resulting from forfeitures, allocations,
reasonable error in determining Participant compensation or the
amount of elective contributions, or other facts and
circumstances acceptable to the Internal Revenue Service) the
excess amount (adjusted to reflect investment gains) shall first
be returned to the Participant to the extent of his or her
After-Tax Contributions, and then to the extent of his or her
Pre-Tax Contributions (however to the extent After-Tax and/or
Pre-Tax Contributions were matched, the applicable Company Match,
Stock Matching and Employer Supplemental Contributions shall be
forfeited in proportion to the returned matched After-Tax and/or
Pre-Tax Contributions) and the remaining excess, if any, shall be
forfeited by the Participant and together with forfeited Company
Match, Stock Matching and Employer Supplemental Contributions
used to reduce subsequent Contributions as soon as is
administratively feasible.
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13.5 Correcting a Multiple Plan Excess
If a Participant, whose Account is credited with an excess Annual
Addition, received allocations to more than one defined
contribution plan, the excess shall be corrected by reducing the
Annual Addition to this Plan only after all possible reductions
have been made to the other defined contribution plans.
13.6 "Defined Benefit Fraction" Defined
The fraction, for any Plan Year, where the numerator is the
"projected annual benefit" and the denominator is the greater of
125% of the "protected current accrued benefit" or the normal
limit which is the lesser of (1) 125% of the maximum dollar
limitation provided under Code section 415(b)(1)(A) for the Plan
Year or (2) 140% of the amount which may be taken into account
under Code section 415(b)(1)(B) for the Plan Year, where a
Participant's:
(a) "projected annual benefit" is the annual benefit provided by
the Plan determined pursuant to Code section 415(e)(2)(A),
and
(b) "protected current accrued benefit" in a defined benefit plan
in existence (1) on July 1, 1982, shall be the accrued annual
benefit provided for under Public Law 97-248, section
235(g)(4), as amended, or (2) on May 6, 1986, shall be the
accrued annual benefit provided for under Public Law 99-514,
section 1106(i)(3).
13.7 "Defined Contribution Fraction" Defined
The fraction where the numerator is the sum of the Participant's
Annual Addition for each Plan Year to date and the denominator is
the sum of the "annual amounts" for each year in which the
Participant has performed service with a Related Company. The
"annual amount" for any Plan Year is the lesser of (1) 125% of
the Code section 415(c)(1)(A) dollar limitation (determined
without regard to subsection (c)(6)) in effect for the Plan Year
and (2) 140% of the Code section 415(c)(1)(B) amount in effect
for the Plan Year, where:
(a) each Annual Addition is determined pursuant to the Code
section 415(c) rules in effect for such Plan Year, and
(b) the numerator is adjusted pursuant to Public Law 97-248,
section 235(g)(3), as amended, or Public Law 99-514, section
1106(i)(4).
13.8 Combined Plan Limits and Correction
If a Participant has also participated in a defined benefit plan
maintained by a Related Company, the sum of the Defined Benefit
Fraction and the Defined Contribution Fraction for any Plan Year
may not exceed 1.0. If the combined fraction exceeds 1.0 for any
Plan Year, the Participant's benefit under any defined benefit
plan (to the extent it has not been distributed or used to
purchase an annuity contract) shall be limited so that the
combined fraction does not exceed 1.0 before any defined
contribution limits will be enforced.
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14 TOP HEAVY RULES
---------------
14.1 Top Heavy Definitions
When capitalized, the following words and phrases have the
following meanings when used in this Section:
(a) "Aggregation Group". The group consisting of each qualified
plan of an Employer (and its Related Companies) (1) in which
a Key Employee is a participant or was a participant during
the determination period (regardless of whether such plan has
terminated), or (2) which enables another plan in the group
to meet the requirements of Code sections 401(a)(4) or
410(b). The Employer may also treat any other qualified plan
as part of the group if the group would continue to meet the
requirements of Code sections 401(a)(4) and 410(b) with such
plan being taken into account.
(b) "Determination Date". The last Trade Date of the preceding
Plan Year or, in the case of the Plan's first year, the last
Trade Date of the first Plan Year.
(c) "Key Employee". A current or former Employee (or his or her
Beneficiary) who at any time during the five year period
ending on the Determination Date was:
(1) an officer of a Related Company whose Compensation (i)
exceeds 50% of the amount in effect under Code section
415(b)(1)(A) and (ii) places him within the following
highest paid group of officers:
NUMBER OF EMPLOYEES NUMBER OF
NOT EXCLUDED UNDER CODE HIGHEST PAID
SECTION 414(Q)(8) OFFICERS INCLUDED
--------------- ---------------------
Less than 30 3
30 to 500 10% of the number of
Employees not excluded
under Code section
414(q)(8)
More than 500 50
(2) a more than 5% Owner,
(3) a more than 1% Owner whose Compensation exceeds $150,000,
or
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(4) a more than 0.5% Owner who is among the 10 Employees
owning the largest interest in a Related Company and
whose Compensation exceeds the amount in effect under
Code section 415(c)(1)(A).
(d) "Plan Benefit". The sum as of the Determination Date of (1)
an Employee's Account, (2) the present value of his or her
other accrued benefits provided by all qualified plans within
the Aggregation Group, and (3) the aggregate distributions
made within the five year period ending on such date. Plan
Benefits shall exclude rollover contributions and plan to
plan transfers made after December 31, 1983 which are both
employee initiated and from a plan maintained by a
non-related employer.
(e) "Top Heavy". The Plan's status when the Plan Benefits of Key
Employees account for more than 60% of the Plan Benefits of
all Employees who have performed services at any time during
the five year period ending on the Determination Date. The
Plan Benefits of Employees who were, but are no longer, Key
Employees (because they have not been an officer or Owner
during the five year period), are excluded in the
determination.
14.2 Special Contributions
(a) Minimum Contribution Requirement. For each Plan Year in which
the Plan is Top Heavy, the Employer shall not allow any
contributions (other than a Rollover Contribution) to be made
by or on behalf of any Key Employee unless the Employer makes
a contribution (other than Pre-Tax, Company Match, Stock
Matching and Employer Supplemental Contributions) on behalf
of all Participants who were Eligible Employees as of the
last day of the Plan Year in an amount equal to at least 3%
of each such Participant's Taxable Income. The Administrator
shall remove any such contributions (including applicable
investment gain or loss) credited to a Key Employee's Account
in violation of the foregoing rule and return them to the
Employer or Employee to the extent permitted by the Limited
Return of Contributions paragraph of Section 18.
(b) Overriding Minimum Benefit. Notwithstanding, contributions
shall be permitted on behalf of Key Employees if the Employer
also maintains a defined benefit plan which automatically
provides a benefit which satisfies the Code section 416(c)(1)
minimum benefit requirements, including the adjustment
provided in Code section 416(h)(2)(A), if applicable. If this
Plan is part of an aggregation group in which a Key Employee
is receiving a benefit and no minimum is provided in any
other plan, a minimum contribution of at least 3% of Taxable
Income shall be provided to the Participants specified in the
preceding paragraph. In addition, the Employer may offset a
defined benefit minimum by contributions (other than Pre-Tax,
Company Match, Stock Matching and Employer Supplemental
Contributions) made to this Plan.
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14.3 Adjustment to Combined Limits for Different Plans
For each Plan Year in which the Plan is Top Heavy, 100% shall
be substituted for 125% in determining the Defined Benefit
Fraction and the Defined Contribution Fraction.
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15 PLAN ADMINISTRATION
-------------------
15.1 Plan Delineates Authority and Responsibility
Plan fiduciaries include the Company, the Administrator and/or
the Committee and Trustee, as applicable, whose specific duties
are delineated in this Plan and Trust. In addition, Plan
fiduciaries also include any other person to whom fiduciary
duties or responsibility is delegated with respect to the Plan.
Any person or group may serve in more than one fiduciary capacity
with respect to the Plan. To the extent permitted under ERISA
section 405, no fiduciary shall be liable for a breach by another
fiduciary.
15.2 Fiduciary Standards
Each fiduciary shall:
(a) discharge his or her duties in accordance with this Plan and
Trust to the extent they are consistent with ERISA;
(b) use that degree of care, skill, prudence and diligence that a
prudent person acting in a like capacity and familiar with
such matters would use in the conduct of an enterprise of a
like character and with like aims;
(c) act with the exclusive purpose of providing benefits to
Participants and their Beneficiaries, and defraying
reasonable expenses of administering the Plan;
(d) diversify Plan investments, to the extent such fiduciary is
responsible for directing the investment of Plan assets, so
as to minimize the risk of large losses, unless under the
circumstances it is clearly prudent not to do so; and
(e) treat similarly situated Participants and Beneficiaries in a
uniform and nondiscriminatory manner.
15.3 Company is ERISA Plan Administrator
The Company is the plan administrator, within the meaning of
ERISA section 3(16), which is responsible for compliance with all
reporting and disclosure requirements, except those that are
explicitly the responsibility of the Trustee under applicable
law. The Administrator and/or Committee shall have any necessary
authority to carry out such functions through the actions of the
Administrator, duly appointed officers of the Company, and/or the
Committee.
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15.4 Administrator Duties
The Administrator shall have the discretionary authority to
construe this Plan and Trust, other than the provisions which
relate to the Trustee, and to do all things necessary or
convenient to effect the intent and purposes thereof, whether or
not such powers are specifically set forth in this Plan and
Trust. Actions taken in good faith by the Administrator shall be
conclusive and binding on all interested parties, and shall be
given the maximum possible deference allowed by law. In addition
to the duties listed elsewhere in this Plan and Trust, the
Administrator's authority shall include, but not be limited to,
the discretionary authority to:
(a) determine who is eligible to participate, if a contribution
qualifies as a rollover contribution, the allocation of
Contributions, and the eligibility for loans, withdrawals and
distributions;
(b) provide each Participant with a summary plan description no
later than 90 days after he or she has become a Participant
(or such other period permitted under ERISA section
104(b)(1)), as well as informing each Participant of any
material modification to the Plan in a timely manner;
(c) make a copy of the following documents available to
Participants during normal work hours: this Plan and Trust
(including subsequent amendments), all annual and interim
reports of the Trustee related to the entire Plan, the latest
annual report and the summary plan description;
(d) determine the fact of a Participant's death and of any
Beneficiary's right to receive the deceased Participant's
interest based upon such proof and evidence as it deems
necessary;
(e) establish and review at least annually a funding policy
bearing in mind both the short-run and long-run needs and
goals of the Plan. To the extent Participants may direct
their own investments, the funding policy shall focus on
which Investment Funds are available for Participants to use;
and
(f) adjudicate claims pursuant to the claims procedure described
in Section 18.
15.5 Advisors May be Retained
The Administrator may retain such agents and advisors (including
attorneys, accountants, actuaries, consultants, record keepers,
investment counsel and administrative assistants) as it considers
necessary to assist it in the performance of its duties. The
Administrator shall also comply with the bonding requirements of
ERISA section 412.
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15.6 Delegation of Administrator Duties
The Company, as Administrator of the Plan, has appointed a
Committee to administer the Plan on its behalf. The Company shall
provide the Trustee with the names and specimen signatures of any
persons authorized to serve as Committee members and act as or on
its behalf. Any Committee member appointed by the Company shall
serve at the pleasure of the Company, but may resign by written
notice to the Company. Committee members shall serve without
compensation from the Plan for such services. Except to the
extent that the Company otherwise provides, any delegation of
duties to a Committee shall carry with it the full discretionary
authority of the Administrator to complete such duties.
15.7 Committee Operating Rules
(a) Actions of Majority. Any act delegated by the Company to the
Committee may be done by a majority of its members. The
majority may be expressed by a vote at a meeting or in
writing without a meeting, and a majority action shall be
equivalent to an action of all Committee members.
(b) Meetings. The Committee shall hold meetings upon such notice,
place and times as it determines necessary to conduct its
functions properly.
(c) Reliance by Trustee. The Committee may authorize one or more
of its members to execute documents on its behalf and may
authorize one or more of its members or other individuals who
are not members to give written direction to the Trustee in
the performance of its duties. The Committee shall provide
such authorization in writing to the Trustee with the name
and specimen signatures of any person authorized to act on
its behalf. The Trustee shall accept such direction and rely
upon it until notified in writing that the Committee has
revoked the authorization to give such direction. The Trustee
shall not be deemed to be on notice of any change in the
membership of the Committee, parties authorized to direct the
Trustee in the performance of its duties, or the duties
delegated to and by the Committee until notified in writing.
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16 MANAGEMENT OF INVESTMENTS
-------------------------
16.1 Trust Agreement
All Plan assets shall be held by the Trustee in trust, in
accordance with those provisions of this Plan and Trust which
relate to the Trustee, for use in providing Plan benefits and
paying Plan expenses not paid directly by the Employer. Plan
benefits will be drawn solely from the Trust and paid by the
Trustee as directed by the Administrator. Notwithstanding, the
Administrator may appoint, with the approval of the Trustee,
another trustee to hold and administer Plan assets which do not
meet the requirements of Section 16.2.
16.2 Investment Funds
The Administrator is hereby granted authority to direct the
Trustee to invest Trust assets in one or more Investment Funds.
The number and composition of Investment Funds may be changed by
the Administrator from time to time, in writing, without the
necessity of amending this Plan and Trust document. The Trustee
may establish reasonable limits on the number of Investment Funds
as well as the acceptable assets for any such Investment Fund.
Each of the Investment Funds may be comprised of any of the
following:
(a) shares of a registered investment company, whether or not the
Trustee or any of its affiliates is an advisor to, or other
service provider to, such company;
(b) collective investment funds maintained by the Trustee, or any
other fiduciary to the Plan, which are available for
investment by trusts which are qualified under Code sections
401(a) and 501(a);
(c) individual equity and fixed income securities which are
readily tradeable on the open market;
(d) guaranteed investment contracts issued by a bank or insurance
company;
(e) interest bearing deposits of the Trustee; and
(f) Company Stock.
Any Investment Fund assets invested in a collective investment
fund, shall be subject to all the provisions of the instruments
establishing and governing such fund. These instruments,
including any subsequent amendments, are incorporated herein by
reference.
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16.3 Authority to Hold Cash
The Trustee shall have the authority to cause the investment
manager of each Investment Fund to maintain sufficient deposit or
money market type assets in each Investment Fund to handle the
Fund's liquidity and disbursement needs. Each Participant's and
Beneficiary's Sweep Account, which is used to hold assets pending
investment or disbursement, shall consist of interest bearing
deposits of the Trustee.
16.4 Trustee to Act Upon Instructions
The Trustee shall carry out instructions to invest assets in the
Investment Funds as soon as practicable after such instructions
are received from the Administrator, Participants, or
Beneficiaries. Such instructions shall remain in effect until
changed by the Administrator, Participants or Beneficiaries.
16.5 Administrator Has Right to Vote Registered Investment Company
Shares
The Administrator shall be entitled to vote proxies or exercise
any shareholder rights relating to shares held on behalf of the
Plan in a registered investment company. Notwithstanding, the
authority to vote proxies and exercise shareholder rights related
to such shares held in a Custom Fund is vested as provided
otherwise in Section 16.
16.6 Custom Fund Investment Management
The Administrator may designate, with the consent of the Trustee,
an investment manager for any Investment Fund established by the
Trustee solely for Participants of this Plan (a "Custom Fund").
The investment manager may be the Administrator, Trustee or an
investment manager pursuant to ERISA section 3(38). The
Administrator shall advise the Trustee in writing of the
appointment of an investment manager and shall cause the
investment manager to acknowledge to the Trustee in writing that
the investment manager is a fiduciary to the Plan.
A Custom Fund shall be subject to the following:
(a) Guidelines. Written guidelines, acceptable to the Trustee,
shall be established for a Custom Fund. If a Custom Fund
consists solely of collective investment funds or shares of a
registered investment company (and sufficient deposit or
money market type assets to handle the Fund's liquidity and
disbursement needs), its underlying instruments shall
constitute the guidelines.
(b) Authority of Investment Manager. The investment manager of a
Custom Fund shall have the authority to vote or execute
proxies, exercise shareholder rights, manage, acquire, and
dispose of Trust
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assets. Notwithstanding, the authority to vote proxies and
exercise shareholder rights related to shares of Company
Stock held in a Custom Fund is vested as provided otherwise
in Section 16.
(c) Custody and Trade Settlement. Unless otherwise agreed to by
the Trustee, the Trustee shall maintain custody of all Custom
Fund assets and be responsible for the settlement of all
Custom Fund trades. For purposes of this section, shares of a
collective investment fund, shares of a registered investment
company and guaranteed investment contracts issued by a bank
or insurance company, shall be regarded as the Custom Fund
assets instead of the underlying assets of such instruments.
(d) Limited Liability of Co-Fiduciaries. Neither the
Administrator nor the Trustee shall be obligated to invest or
otherwise manage any Custom Fund assets for which the Trustee
or Administrator is not the investment manager nor shall the
Administrator or Trustee be liable for acts or omissions with
regard to the investment of such assets except to the extent
required by ERISA.
16.7 Authority to Segregate Assets
The Company may direct the Trustee to split an Investment Fund
into two or more funds in the event any assets in the Fund are
illiquid or the value is not readily determinable. In the event
of such segregation, the Company shall give instructions to the
Trustee on what value to use for the split-off assets, and the
Trustee shall not be responsible for confirming such value.
16.8 Maximum Permitted Investment in Company Stock
If the Company provides for a Company Stock Fund the Fund shall
be comprised of Company Stock and sufficient deposit or money
market type assets to handle the Fund's liquidity and
disbursement needs. The Fund may be as large as necessary to
comply with Participants' and Beneficiaries' investment elections
as well the total investment of Participants' and Beneficiaries'
Stock Matching Accounts.
The Trustee shall purchase or sell Company Stock on the open
market or purchase Company Stock from or sell Company Stock to
The Timken Company at such place and on such date as instructed
by The Timken Company. If the Company Stock is purchased or sold
on the open market, it shall be at the then current price. If the
Company Stock is purchased from or sold to The Timken Company, it
shall be purchased or sold on the last business day of the month
and the price shall be the average of the high and low selling
prices for the Company Stock, as reported by the New York Stock
Exchange, on the first five of the last six business days of such
month on which Company Stock has actually been traded.
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16.9 Voting Company Stock
Each Participant and Beneficiary shall have the authority to
direct the exercise of voting rights as to whole shares of
Company Stock held for the benefit of the Participant or
Beneficiary as of the record date for The Timken Company's Annual
Shareholder Meeting. Prior to such voting, each Participant and
Beneficiary shall be furnished with The Timken Company's Annual
Report, Notice of Annual Meeting, Proxy Statement, other relevant
shareholder information and a Proxy Card to complete to
confidentially instruct the Trustee to vote such shares in the
manner indicated by the Participant or Beneficiary. Upon receipt
of such instructions, the Trustee shall act with respect to such
shares as instructed. The Committee shall instruct the Trustee
with respect to how to vote any shares for which instructions are
not received from Participants or Beneficiaries.
16.10 Tender Offers for Company Stock
In the event a tender offer (as determined by the board of
directors of The Timken Company) for shares of The Timken Company
Stock is commenced, then, notwithstanding any other provision of
the Plan and the Trust, each Participant and Beneficiary shall,
in accordance with the following provisions of this section, have
the right to decide if Company Stock credited to his or her
Account shall be tendered.
(a) Tendering Shares. In the event of a tender offer described in
this section, the Trustee, the Company or The Timken Company
shall cause to be sent to each Participant and Beneficiary
who at any time during the effective period of the tender
offer has any Company Stock credited to his or her Account
("affected Participants and Beneficiaries") all information
pertinent to such tender offer, including all the terms and
conditions thereof, together with written material pursuant
to which the affected Participant and Beneficiary may direct
the Trustee to tender or sell pursuant to the tender offer
all or part of the Company Stock credited to his or her
account. Affected Participants and Beneficiaries also shall
have the right, to the extent the terms of the tender offer
so permit, to direct the withdrawal of such shares from the
tender. If valid and timely directions to tender or sell are
not received, the Participant's or Beneficiary's lack of
valid or timely direction shall be taken as a direction not
to tender or sell such shares. If, in the course of a tender
offer described in this section, an issue shall arise on
which affected Participants and Beneficiaries are required to
have an opportunity to alter their circumstances, the
Trustee, the Company or The Timken Company shall solicit the
directions of such affected Participants and Beneficiaries
with respect to each such issue and act in response to such
direction. The Trustee shall adopt a deadline, after which
directions to tender (or to withdraw from tender) Company
Stock will not be accepted, sufficiently in advance of any
applicable deadline under the terms of the tender offer to
allow the Trustee to implement directions received from
Participants and Beneficiaries.
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(b) Proceeds from a Tender Offer. To the extent that a tender
offer described in this section is for cash, proceeds from
the sale of any shares of Company Stock pursuant to such
offer shall be held by the Trustee in an interest bearing
account or in short-term government bonds acquired by the
Trustee upon the receipt of any such cash proceeds. To the
extent that a tender offer described in this section is for
property other than cash, property received by the Trustee
from the sale of any shares of Company Stock pursuant to such
offer shall be held by the Trustee in a general investment
fund established by the Trustee upon the receipt of any such
property.
(c) ERISA 404(c) Control. Any decision by an affected Participant
or Beneficiary to tender (or not tender) or to sell (or not
sell), and any other direction by an affected Participant or
Beneficiary, pursuant to this section shall constitute an
exercise of control by such Participant or Beneficiary over
the assets allocated to his or her Account within the meaning
of ERISA section 404(c).
16.11 Registration and Disclosure for Company Stock
The Timken Company shall be responsible for determining the
applicability (and, if applicable, complying with) the
requirements of the Securities Act of 1933, as amended, the
California Corporate Securities Law of 1968, as amended, and any
other applicable blue sky law. The Timken Company shall also
specify what restrictive legend or transfer restriction, if any,
is required to be set forth on the certificates for the
securities and the procedure to be followed by the Trustee to
effectuate a resale of such securities.
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17 TRUST ADMINISTRATION
---------------------
17.1 Trustee to Construe Trust
The Trustee shall have the discretionary authority to construe
those provisions of this Plan and Trust which relate to the
Trustee and to do all things necessary or convenient to the
administration of the Trust, whether or not such powers are
specifically set forth in this Plan and Trust. Actions taken in
good faith by the Trustee shall be conclusive and binding on all
interested parties, and shall be given the maximum possible
deference allowed by law.
17.2 Trustee To Act As Owner of Trust Assets
Subject to the specific conditions and limitations set forth in
this Plan and Trust, the Trustee shall have all the power,
authority, rights and privileges of an absolute owner of the
Trust assets and, not in limitation but in amplification of the
foregoing, may:
(a) receive, hold, manage, invest and reinvest, sell, tender,
exchange, dispose of, encumber, hypothecate, pledge,
mortgage, lease, grant options respecting, repair, alter,
insure, or distribute any and all property in the Trust;
(b) borrow money, participate in reorganizations, pay calls and
assessments, vote or execute proxies, exercise subscription
or conversion privileges, exercise options and register any
securities in the Trust in the name of the nominee, in
federal book entry form or in any other form as will permit
title thereto to pass by delivery;
(c) renew, extend the due date, compromise, arbitrate, adjust,
settle, enforce or foreclose, by judicial proceedings or
otherwise, or defend against the same, any obligations or
claims in favor of or against the Trust; and
(d) lend, through a collective investment fund, any securities
held in such collective investment fund to brokers, dealers
or other borrowers and to permit such securities to be
transferred into the name and custody and be voted by the
borrower or others.
17.3 United States Indicia of Ownership
The Trustee shall not maintain the indicia of ownership of any
Trust assets outside the jurisdiction of the United States,
except as authorized by ERISA section 404(b).
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17.4 Tax Withholding and Payment
(a) Withholding. Effective for taxable distributions made on or
before December 31, 1992, the Trustee shall calculate and
withhold federal (and, if applicable, state) income taxes in
accordance with the Participant's withholding election or as
required by law if no election is made. Effective for taxable
distributions made after December 31, 1992, the Trustee shall
calculate and withhold federal (and, if applicable, state)
income taxes with regard to any Eligible Rollover
Distribution that is not paid as a Direct Rollover in
accordance with the Participant's withholding election or as
required by law if no election is made or the election is
less than the amount required by law. With regard to any
taxable distribution that is not an Eligible Rollover
Distribution, the Trustee shall calculate and withhold
federal (and, if applicable, state) income taxes in
accordance with the Participant's withholding election or as
required by law if no election is made.
(b) Taxes Due From Investment Funds. The Trustee shall pay from
the Investment Fund any taxes or assessments imposed by any
taxing or governmental authority on such Fund or its income,
including related interest and penalties.
17.5 Trustee Duties and Limitations
Unless otherwise agreed to by the Trustee, the Trustee's duties
shall be confined to construing the terms of the Plan and Trust
as they relate to the Trustee, receiving funds on behalf of and
making payments from the Trust, safeguarding and valuing Trust
assets, and investing and reinvesting Trust assets in the
Investment Funds as directed by the Administrator or
Participants. The Trustee shall have no duty or authority to
ascertain whether Contributions are in compliance with the Plan,
to enforce collection or to compute or verify the accuracy or
adequacy of any amount to be paid to it by the Employer. The
Trustee shall not be liable for the proper application of any
part of the Trust with respect to any disbursement made at the
direction of the Administrator.
17.6 Trust Accounting
(a) Annual Report. Within 60 days (or other reasonable period)
following the close of the Plan Year, the Trustee shall
provide the Administrator with an annual accounting of Trust
assets and information to assist the Administrator in meeting
ERISA's annual reporting and audit requirements.
(b) Periodic Reports. The Trustee shall maintain records and
provide sufficient reporting to allow the Administrator to
properly monitor the Trust's assets and activity.
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(c) Administrator Approval. Approval of any Trustee accounting
will automatically occur 90 days after such accounting has
been received by the Administrator, unless the Administrator
files a written objection with the Trustee within such time
period. Such approval shall be final as to all matters and
transactions stated or shown therein and binding upon the
Administrator.
17.7 Valuation of Certain Assets
If the Trustee determines the Trust holds any asset which is not
readily tradable and listed on a national securities exchange
registered under the Securities Exchange Act of 1934, as amended,
the Trustee may engage a qualified independent appraiser to
determine the fair market value of such property, and the
appraisal fees shall be paid from the Investment Fund containing
the asset.
17.8 Legal Counsel
The Trustee may consult with legal counsel of its choice,
including counsel for the Employer or counsel of the Trustee,
upon any question or matter arising under this Plan and Trust.
When relied upon by the Trustee, the opinion of such counsel
shall be evidence that the Trustee has acted in good faith.
17.9 Fees and Expenses
The Trustee's fees for its services as Trustee shall be such as
may be mutually agreed upon by the Company and the Trustee.
Trustee fees and all reasonable expenses of counsel and advisors
retained by the Trustee shall be paid in accordance with Section
6.
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18 RIGHTS, PROTECTION, CONSTRUCTION AND JURISDICTION
--------------------------------------------------
18.1 Plan Does Not Affect Employment Rights
The Plan does not provide any employment rights to any Employee.
The Employer expressly reserves the right to discharge an
Employee at any time, with or without cause, without regard to
the effect such discharge would have upon the Employee's interest
in the Plan.
18.2 Limited Return of Contributions
Except as provided in this paragraph, (1) Plan assets shall not
revert to the Employer nor be diverted for any purpose other than
the exclusive benefit of Participants or their Beneficiaries; and
(2) a Participant's vested interest shall not be subject to
divestment. As provided in ERISA section 403(c)(2), the actual
amount of a Contribution made by the Employer (or the current
value of the Contribution if a net loss has occurred) may revert
to the Employer if:
(a) such Contribution is made by reason of a mistake of fact;
(b) initial qualification of the Plan under Code section 401(a)
is not received and a request for such qualification is made
within the time prescribed under Code section 401(b) (the
existence of and Contributions under the Plan are hereby
conditioned upon such qualification); or
(c) such Contribution is not deductible under Code section 404
(such Contributions are hereby conditioned upon such
deductibility) in the taxable year of the Employer for which
the Contribution is made.
The reversion to the Employer must be made (if at all) within
one year of the mistaken payment of the Contribution, the date
of denial of qualification, or the date of disallowance of
deduction, as the case may be. A Participant shall have no
rights under the Plan with respect to any such reversion.
18.3 Assignment and Alienation
As provided by Code section 401(a)(13) and to the extent not
otherwise required by law, no benefit provided by the Plan may be
anticipated, assigned or alienated, except:
(a) to create, assign or recognize a right to any benefit with
respect to a Participant pursuant to a QDRO, or
(b) to use a Participant's vested Account balance as security for
a loan from the Plan which is permitted pursuant to Code
section 4975.
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18.4 Facility of Payment
If a Plan benefit is due to be paid to a minor or if the
Administrator reasonably believes that any payee is legally
incapable of giving a valid receipt and discharge for any payment
due him or her, the Administrator shall have the payment of the
benefit, or any part thereof, made to the person (or persons or
institution) whom it reasonably believes is caring for or
supporting the payee, unless it has received due notice of claim
therefor from a duly appointed guardian or conservator of the
payee. Any payment shall to the extent thereof, be a complete
discharge of any liability under the Plan to the payee.
18.5 Reallocation of Lost Participant's Accounts
If the Administrator cannot locate a person entitled to payment
of a Plan benefit after a reasonable search, the Administrator
may at any time thereafter treat such person's Account as
forfeited and use such amount to reduce subsequent Contributions
as soon as administratively feasible. If such person subsequently
presents the Administrator with a valid claim for the benefit,
such person shall be paid the amount treated as forfeited, plus
the interest that would have been earned in the Sweep Account to
the date of determination. The Administrator shall pay the amount
through an additional Employer Contribution.
18.6 Claims Procedure
(a) Right to Make Claim. An interested party who disagrees with
the Administrator's determination of his or her right to Plan
benefits must submit a written claim and exhaust this claim
procedure before legal recourse of any type is sought. The
claim must include the important issues the interested party
believes support the claim. The Administrator, pursuant to
the authority provided in this Plan, shall either approve or
deny the claim.
(b) Process for Denying a Claim. The Administrator's partial or
complete denial of an initial claim must include an
understandable, written response covering (1) the specific
reasons why the claim is being denied (with reference to the
pertinent Plan provisions) and (2) the steps necessary to
perfect the claim and obtain a final review.
(c) Appeal of Denial and Final Review. The interested party may
make a written appeal of the Administrator's initial
decision, and the Administrator shall respond in the same
manner and form as prescribed for denying a claim initially.
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(d) Time Frame. The initial claim, its review, appeal and final
review shall be made in a timely fashion, subject to the
following time table:
Days to Respond
Action From Last Action
------- ----------------
Administrator determines benefit NA
Interested party files initial request 60 days
Administrator's initial decision 90 days
Interested party requests final review 60 days
Administrator's final decision 60 days
However, the Administrator may take up to twice the
maximum response time for its initial and final
review if it provides an explanation within the
normal period of why an extension is needed and when
its decision will be forthcoming.
18.7 Construction
Headings are included for reading convenience. The text shall
control if any ambiguity or inconsistency exists between the
headings and the text. The singular and plural shall be
interchanged wherever appropriate. References to Participant
shall include Beneficiary when appropriate and even if not
otherwise already expressly stated.
18.8 Jurisdiction and Severability
The Plan and Trust shall be construed, regulated and administered
under ERISA and other applicable federal laws and, where not
otherwise preempted, by the laws of the State of California. If
any provision of this Plan and Trust shall become invalid or
unenforceable, that fact shall not affect the validity or
enforceability of any other provision of this Plan and Trust. All
provisions of this Plan and Trust shall be so construed as to
render them valid and enforceable in accordance with their
intent.
18.9 Indemnification by Employer
The Employers hereby agree to indemnify all Plan fiduciaries
against any and all liabilities resulting from any action or
inaction, (including a Plan termination in which the Company
fails to apply for a favorable determination from the Internal
Revenue Service with respect to the qualification of the Plan
upon its termination), in relation to the Plan or Trust (1)
including (without limitation) expenses reasonably incurred in
the defense of any claim relating to the Plan or its assets, and
amounts paid in any settlement relating to the Plan or its
assets, but (2) excluding liability resulting from actions or
inactions made in bad faith, or resulting from the negligence or
willful misconduct of the Trustee. The Company shall have the
right, but not the obligation, to conduct the defense of any
action to which this Section applies. The Plan fiduciaries are
not entitled to indemnity from the Plan assets relating to any
such action.
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19 AMENDMENT, MERGER AND TERMINATION
---------------------------------
19.1 Amendment
The Company reserves the right to amend this Plan and Trust at
any time, to any extent and in any manner it may deem necessary
or appropriate. The Company (and not the Trustee) shall be
responsible for adopting any amendments necessary to maintain the
qualified status of this Plan and Trust under Code sections
401(a) and 501(a). If the Committee is acting as the
Administrator in accordance with Section 15.6, it shall have the
authority to adopt Plan and Trust amendments which have no
substantial adverse financial impact upon any Employer or the
Plan. All interested parties shall be bound by any amendment,
provided that no amendment shall:
(a) become effective unless it has been adopted in accordance
with the procedures set forth in Section 19.4;
(b) except to the extent permissible under ERISA and the Code,
make it possible for any portion of the Trust assets to
revert to an Employer or to be used for, or diverted to, any
purpose other than for the exclusive benefit of Participants
and Beneficiaries entitled to Plan benefits and to defray
reasonable expenses of administering the Plan;
(c) decrease the rights of any Employee to benefits accrued
(including the elimination of optional forms of benefits) to
the date on which the amendment is adopted, or if later, the
date upon which the amendment becomes effective, except to
the extent permitted under ERISA and the Code; nor
(d) permit an Employee to be paid the balance of his or her
Pre-Tax Account unless the payment would otherwise be
permitted under Code section 401(k).
19.2 Merger
This Plan and Trust may not be merged or consolidated with, nor
may its assets or liabilities be transferred to, another plan
unless each Participant and Beneficiary would, if the resulting
plan were then terminated, receive a benefit just after the
merger, consolidation or transfer which is at least equal to the
benefit which would be received if either plan had terminated
just before such event.
19.3 Plan Termination
The Company may, at any time and for any reason, terminate the
Plan in accordance with the procedures set forth in Section 19.4,
or completely discontinue contributions. Upon either of these
events, or in the event of a
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partial termination of the Plan within the meaning of Code
section 411(d)(3), the Accounts of each affected Employee shall
be fully vested. Complete distributions or withdrawals will be
made in accordance with the terms of the Plan as in effect at the
time of the Plan's termination or as thereafter amended provided
that a post-termination amendment will not be effective to the
extent that it violates Section 19.1 unless it is required in
order to maintain the qualified status of the Plan upon its
termination. The Trustee's and Employer's authority shall
continue beyond the Plan's termination date until all Trust
assets have been liquidated and distributed.
19.4 Amendment and Termination Procedures
The following procedural requirements shall govern the adoption
of any amendment or termination (a "Change") of this Plan and
Trust:
(a) The Company may adopt any Change by action of its board of
directors in accordance with its normal procedures.
(b) The Committee, if acting as Administrator in accordance with
Section 15.6, may adopt any amendment within the scope of its
authority provided under Section 19.1 and in the manner
specified in Section 15.7(a).
(c) Any Change must be (1) set forth in writing, and (2) signed
and dated by an officer of the Company or, in the case of an
amendment adopted by the Committee, at least one of its
members.
(d) If the effective date of any Change is not specified in the
document setting forth the Change, it shall be effective as
of the date it is signed by the last person whose signature
is required under clause (2) above, except to the extent that
another effective date is necessary to maintain the qualified
status of this Plan and Trust under Code sections 401(a) and
501(a).
(e) No Change shall become effective until it is accepted and
signed by the Trustee (which acceptance shall not
unreasonably be withheld).
19.5 Termination of Employer's Participation
Any Employer may, at any time and for any reason, terminate its
Plan participation by action of its board of directors in
accordance with its normal procedures. Written notice of such
action shall be signed and dated by an officer of the Employer
and delivered to the Company. If the effective date of such
action is not specified, it shall be effective on, or as soon as
reasonably practicable, after the date of delivery. Upon the
Employer's request, the Company may instruct the Trustee and
Administrator to spin off all affected Accounts and underlying
assets into a separate qualified plan under which the
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Employer shall assume the powers and duties of the Company.
Alternatively, the Company may, as a result of regulatory
requirements, treat the event as a partial termination described
above or continue to maintain the Accounts under the Plan.
19.6 Replacement of the Trustee
The Trustee may resign as Trustee under this Plan and Trust or
may be removed by the Company at any time upon at least 90 days
written notice (or less if agreed to by both parties). In such
event, the Company shall appoint a successor trustee by the end
of the notice period. The successor trustee shall then succeed to
all the powers and duties of the Trustee under this Plan and
Trust. If no successor trustee has been named by the end of the
notice period, the Company's chief executive officer shall become
the trustee, or if he or she declines, the Trustee may petition
the court for the appointment of a successor trustee.
19.7 Final Settlement and Accounting of Trustee
(a) Final Settlement. As soon as is administratively feasible
after its resignation or removal as Trustee, the Trustee
shall transfer to the successor trustee all property
currently held by the Trust. However, the Trustee is
authorized to reserve such sum of money as it may deem
advisable for payment of its accounts and expenses in
connection with the settlement of its accounts or other fees
or expenses payable by the Trust. Any balance remaining after
payment of such fees and expenses shall be paid to the
successor trustee.
(b) Final Accounting. The Trustee shall provide a final
accounting to the Administrator within 90 days of the date
Trust assets are transferred to the successor trustee.
(c) Administrator Approval. Approval of the final accounting will
automatically occur 90 days after such accounting has been
received by the Administrator, unless the Administrator files
a written objection with the Trustee within such time period.
Such approval shall be final as to all matters and
transactions stated or shown therein and binding upon the
Administrator.
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APPENDIX A - INVESTMENT FUNDS
I. Investment Funds Available
The Investment Funds offered to Participants and Beneficiaries as of
June 1, 1992 include this set of daily valued funds, except that the
Company Stock Fund is offered to Participants and Beneficiaries
effective January 1, 1993:
CATEGORY FUNDS
-------- -----
INCOME Income Accumulation
------
BALANCED Asset Allocation
--------
EQUITY Company Stock
------ International Equity
Tilts & Timing
II. Default Investment Fund
The default Investment Fund as of June 1, 1992 is the Income
Accumulation Fund.
III. Contribution Accounts For Which Investment is Restricted
A Participant or Beneficiary may direct the investment of his or her
entire Account except for the following Contribution Accounts, and
except as otherwise provided in Section 7, which shall be invested as
of January 1, 1993 as follows:
Stock Matching Account Company Stock Fund
IV. Maximum Percentage Restrictions Applicable to Certain Investment Funds
As of January 1, 1993, a Participant or Beneficiary may not elect to
invest more than the following percentages in these Investment Funds:
Company Stock Fund 50%
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APPENDIX B - PAYMENT OF PLAN FEES AND EXPENSES
As of the Effective Date, payment of Plan fees and expenses shall be as follows:
1) Investment Management Fees: These are paid by Participants in that
management fees reduce the investment return reported and credited to
Participants, except that the Employer shall pay the fees related to
the Company Stock Fund, which Fund is effective January 1, 1993. These
are paid by the Employer on a quarterly basis.
2) Recordkeeping Fees: These are paid by the Employer on a quarterly basis.
3) Loan Fees: A $3.50 per month fee is assessed and billed/collected
quarterly from the Account of each Participant who has an outstanding loan
balance.
4) Investment Fund Election Changes: For each Investment Fund election change
by a Participant, in excess of 4 changes per year, a $10 fee will be
assessed and billed/collected quarterly from the Participant's Account.
5) Recurring Payment Fees: A $3.00 per check fee will be assessed and billed/
collected quarterly from the Participant's Account.
6) Additional Fees Paid by Employer: All other Plan related fees and
expenses shall be paid by the Employer. To the extent that the
Administrator later elects that any such fees shall be borne by
Participants, estimates of the fees shall be determined and reconciled,
at least annually, and the fees will be assessed monthly and
billed/collected from Accounts quarterly.
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APPENDIX C - LOAN INTEREST RATE
As of the Effective Date, the interest rate charged on Participant loans shall
be equal to the U.S. Treasury rate for a note of the same maturity, plus 2%.
The rate may be determined once for all loans made in a month, and the maturity
may be determined to the nearest year.
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