EXHIBIT 10.3
UPS
SAVINGS PLAN
AMENDMENT AND RESTATEMENT
EFFECTIVE AS OF
JANUARY 1, 1998
TABLE OF CONTENTS
PAGE
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Article I. DEFINITIONS.....................................................................................1
Section 1.1 Account................................................................................1
Section 1.2 Accounting Period......................................................................1
Section 1.3 Actual Contribution Percentage ("ACP").................................................1
Section 1.4 ACP Test...............................................................................1
Section 1.5 Actual Deferral Percentage.............................................................1
Section 1.6 ADP Test...............................................................................2
Section 1.7 Affiliate..............................................................................2
Section 1.8 After-Tax Contribution.................................................................2
Section 1.9 After-Tax Contribution Account.........................................................2
Section 1.10 Beneficiary............................................................................2
Section 1.11 Board..................................................................................2
Section 1.12 Break in Service.......................................................................2
Section 1.13 Code...................................................................................2
Section 1.14 Collectively Bargained Plan............................................................2
Section 1.15 Committee..............................................................................3
Section 1.16 Compensation...........................................................................3
Section 1.17 Eligible Compensation..................................................................3
Section 1.18 Eligible Employee......................................................................4
Section 1.19 Employee...............................................................................5
Section 1.20 Employer...............................................................................5
Section 1.21 Employer Company.......................................................................5
Section 1.22 Eligibility Computation Period.........................................................5
Section 1.23 Employment Commencement Date...........................................................5
Section 1.24 Entry Date.............................................................................6
Section 1.25 ERISA..................................................................................6
Section 1.26 ESOP...................................................................................6
Section 1.27 Excess Aggregate Contributions.........................................................6
Section 1.29 Highly Compensated Employee............................................................6
Section 1.30 Hour of Service........................................................................7
Section 1.31 Investment Options.....................................................................8
Section 1.32 Investment Manager.....................................................................8
Section 1.33 Merged Account.........................................................................8
Section 1.34 Nonhighly Compensated Employee.........................................................8
Section 1.35 Participant............................................................................8
Section 1.36 Participation Requirement..............................................................8
Section 1.37 Period of Separation...................................................................9
Section 1.38 Period of Service......................................................................9
Section 1.39 Plan...................................................................................9
Section 1.40 Plan Year..............................................................................9
Section 1.41 Pre-Tax Contribution...................................................................9
Section 1.42 Pre-Tax Contribution Account...........................................................9
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Section 1.43 QSOP..................................................................................10
Section 1.44 Reemployment Commencement Date........................................................10
Section 1.45 Rollover Contribution.................................................................10
Section 1.46 Rollover Contribution Account.........................................................10
Section 1.47 SavingsPLUS Contribution..............................................................10
Section 1.48 SavingsPLUS Transfer Account..........................................................10
Section 1.49 Separation from Service...............................................................10
Section 1.50 Trust Fund............................................................................11
Section 1.51 Trustee...............................................................................11
Section 1.52 VRU...................................................................................11
Section 1.53 Valuation Date........................................................................11
Article II. PARTICIPATION..................................................................................11
Section 2.1 General...............................................................................11
Section 2.2 Application to Participate............................................................11
Section 2.3 Transfers.............................................................................11
Section 2.4 Correction............................................................................12
Section 2.5 Reemployment..........................................................................12
Section 2.6 Not a Contract of Employment..........................................................12
Article III. EMPLOYEE CONTRIBUTIONS, ROLLOVER CONTRIBUTIONS AND TRANSFERS..................................12
Section 3.1 Pre-Tax Contributions.................................................................12
Section 3.2 After-Tax Contributions...............................................................14
Section 3.3 Changes...............................................................................14
Section 3.4 Suspension of Contributions...........................................................14
Section 3.5 Payment of Contributions to Trustee...................................................15
Section 3.6 Rollovers from Qualified Plans or Conduit IRAs........................................15
Article IV. TRANSFERS FROM AND TO THE QSOP.................................................................16
Section 4.1 Amounts Transferred from the QSOP.....................................................16
Section 4.2 Transfers to the QSOP.................................................................16
Article V. LIMITATIONS ON CONTRIBUTIONS AND ALLOCATIONS...................................................17
Section 5.1 Order.................................................................................17
Section 5.2 Codess. 415 Limitations................................................................17
Section 5.3 Codess.402(g) Limitations.............................................................19
Section 5.4 Codess.401(k) Limitations for Highly Compensated Employees............................20
Section 5.5 ACP Test Limitation For Highly Compensated Employees..................................21
Article VI. VALUATION AND ACCOUNT DEBITS AND CREDITS.......................................................23
Section 6.1 Accounts..............................................................................23
Section 6.2 Allocation Procedure..................................................................23
Section 6.3 Allocation Corrections................................................................24
Article VII. INVESTMENTS....................................................................................24
Section 7.1 Investment of Trust Fund..............................................................24
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Section 7.2 Investment of Accounts................................................................26
Section 7.3 Investment Allocation of Future Contributions.........................................27
Section 7.4 Transfer of Account Balances Between Investment Options...............................27
Section 7.5 Ownership Status of Funds.............................................................28
Section 7.6 Statements............................................................................28
Section 7.7 Transition Period to Implement Plan Changes...........................................28
Section 7.8 Alternate Payees and Beneficiaries....................................................29
Article VIII. VESTING........................................................................................29
Article IX. DISTRIBUTIONS, WITHDRAWALS AND TRANSFERS.......................................................29
Section 9.1 General...............................................................................29
Section 9.2 Separation From Service...............................................................29
Section 9.3 Deferral of Payment until 70 1/2......................................................29
Section 9.4 Required Beginning Date...............................................................30
Section 9.5 Distribution Form.....................................................................30
Section 9.6 Death.................................................................................31
Section 9.7 Distribution Pursuant to a Qualified Domestic Relations Order.........................32
Section 9.8 In-Service Withdrawals from Savings Plan Accounts.....................................32
Section 9.9 Other In-Service Withdrawals..........................................................35
Section 9.10 Redeposits Prohibited.................................................................35
Section 9.11 Distributions in Cash.................................................................35
Section 9.12 Eligible Rollover Distribution........................................................35
Section 9.13 30-Day Waiver.........................................................................36
Section 9.14 Withholding Obligations...............................................................36
Section 9.15 Account Balance.......................................................................36
Section 9.16 Reemployment..........................................................................36
Section 9.17 Claims Procedure......................................................................36
Section 9.18 Forfeiture in Case of Unlocatable Participant.........................................37
Section 9.19 Distribution/Transfer Processing Rules................................................39
Article X. LOANS..........................................................................................39
Section 10.1 Hardship Loans........................................................................39
Section 10.2 Rollover of Loan Balances.............................................................43
Section 10.3 Loans from Merged Plans...............................................................44
Article XI. TRUST FUND.....................................................................................44
Article XII. EXPENSES.......................................................................................44
Article XIII. ADMINISTRATIVE COMMITTEE.......................................................................44
Section 13.1 Committee.............................................................................44
Section 13.2 Vacancies on Committee................................................................44
Section 13.3 Authority of Committee................................................................44
Section 13.4 Action by Committee...................................................................45
Section 13.5 Liability of the Committee............................................................45
Section 13.6 Authority to Appoint Officers and Advisors............................................45
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Section 13.7 Committee Meeting.....................................................................45
Section 13.8 Compensation and Expenses of Committee................................................45
Section 13.9 Records...............................................................................46
Section 13.10 Fiduciary Responsibility Insurance, Bonding...........................................46
Section 13.11 Delegation of Specific Responsibilities...............................................46
Section 13.12 Allocation of Responsibility Among Fiduciaries for Plan and Trust Administration......46
Section 13.13 Indemnification.......................................................................46
Article XIV. AMENDMENT, TERMINATION AND MERGER..............................................................47
Section 14.1 Amendment.............................................................................47
Section 14.2 Termination...........................................................................47
Section 14.3 Merger, Consolidation or Transfer of Plan Assets......................................47
Article XV. MISCELLANEOUS..................................................................................48
Section 15.1 Headings..............................................................................48
Section 15.2 Construction..........................................................................48
Section 15.3 Counterparts..........................................................................48
Section 15.4 Necessity of Initial Qualification....................................................48
Section 15.5 Prohibition Against Attachment........................................................48
Section 15.6 Benefits Supported Only by Trust Fund.................................................49
Section 15.7 Satisfaction of Claims................................................................50
Section 15.8 Nonreversion..........................................................................50
Section 15.9 Top-Heavy Plan........................................................................50
Section 15.10 USERRA................................................................................52
Section 15.11 Family and Medical Leave Act..........................................................52
Section 15.12 No Estoppel of Plan...................................................................52
Appendix 1.21 ..............................................................................................A-1
Appendix 1.36 ..............................................................................................A-2
Appendix 2.3 ..............................................................................................A-3
Appendix VII ..............................................................................................A-4
Appendix 10.1(c)(9).............................................................................................A-6
Appendix 14.3 ..............................................................................................A-7
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UPS SAVINGS PLAN
EFFECTIVE AS OF JANUARY 1, 1998
PURPOSE
This UPS Savings Plan ("Plan") was originally established effective as
of July 1, 1988 to permit individuals not covered by a collective bargaining
agreement who are employed by United Parcel Service of America, Inc. or another
Employer Company to put money aside for retirement, on a pre-tax or after-tax
basis, to supplement that which they will receive from Social Security and other
pension or retirement plans in which they participate.
This amendment and restatement of the Plan ("Amendment and
Restatement") is generally effective as of January 1, 1998 except where
otherwise provided. This Amendment and Restatement has been undertaken to bring
this Plan into compliance with the General Agreement on Tariffs and Trade, the
Uniformed Services Employment and Reemployment Rights Act of 1994, the Small
Business Job Protection Act of 1996, the Taxpayer Relief Act of 1997, the
Internal Revenue Service Restructuring and Reform Act of 1998, and the Community
Renewal Tax Relief Act of 2000 (collectively, "GUST"); to add provisions to
reflect the interaction between this Plan and the UPS Qualified Stock Ownership
Plan; to add certain Employer Companies and to add provisions to reflect the
merger of other plans into this Plan.
Article I. DEFINITIONS
The following words and phrases have the following meanings:
Section 1.1 Account - means the aggregate of a Participant's Pre-Tax
Contribution Account; After-Tax Contribution Account; Rollover Contribution
Account; SavingsPLUS Transfer Account (first effective November 23, 1998); and,
Merged Account (first effective July 1, 2001); established, respectively, under
Articles III, IV and Appendix 14.3.
Section 1.2 Accounting Period - means the period beginning on the first
day of each calendar quarter and ending on the last day of such quarter.
Section 1.3 Actual Contribution Percentage ("ACP") - means, for Plan
Years beginning on or after January 1, 1997 for each Participant who is eligible
to make Pre-Tax Contributions at any time during the Plan Year, the ratio
(expressed as a percentage) of (a) the sum of the After-Tax Contributions within
the meaning of Section 5.5(b), if any, credited to his or her Account for such
Plan Year to (b) his or her Compensation for the Plan Year.
Section 1.4 ACP Test - means the Code ss. 401(m) nondiscrimination test
as described in Section 5.5.
Section 1.5 Actual Deferral Percentage ("ADP") - means, for Plan Years
beginning on or after January 1, 1997 for each Participant who is eligible to
make Pre-Tax Contributions at any time during the Plan Year, the ratio of
(expressed as a percentage) of (a) the Pre-Tax
Contributions with the meaning of Section 5.4(b) credited to a Participant's
Account for such Plan Year to (b) his or her Compensation for the Plan Year.
Section 1.6 ADP Test - means the Code ss. 401(k) nondiscrimination test
described in Section 5.4.
Section 1.7 Affiliate - means the Employer and any trade or business,
whether or not incorporated, that is considered to be a single employer with the
Employer under Code ss. 414(b), (c), (m) or (o). However, in applying Code ss.
414 solely for purposes of Section 5.1, the phrase "more than 50%" is
substituted for the phrase "at least 80%" each place it appears in Code ss.
1563(a)(1).
Section 1.8 After-Tax Contribution - means a contribution to the Plan
at the election of a Participant in accordance with Section 3.2 through payroll
deduction that is includible in his or her gross income for federal income tax
purposes.
Section 1.9 After-Tax Contribution Account - means the subaccount
maintained as a part of a Participant's Account to show his or her interest
attributable to the Participant's After-Tax Contributions, amounts transferred
by the Participant from his or her after-tax contribution account under the
QSOP, and amounts attributable to after-tax contributions under another
qualified plan transferred pursuant to a merger or other event described in
Section 14.3 to the extent described in Appendix 14.3.
Section 1.10 Beneficiary - means the person or persons so designated in
accordance with Section 9.6 by a Participant or by operation of this Plan to
receive any Plan benefits payable on account of the death of such Participant.
Section 1.11 Board - means the Board of Directors and/or the Executive
Committee of United Parcel Service of America, Inc.
Section 1.12 Break in Service - means
(a) Effective as of May 1, 2000, an Eligibility Computation Period
during which an individual does not complete more than 500 Hours of Service.
(b) Effective before May 1, 2000, a Period of Separation of at least 12
consecutive months; provided, for each individual whose Employment Commencement
Date or Reemployment Commencement Date is on or after May 1, 2000 and before
July 1, 2001, Break in Service means the period of time described in this
Section 1.12(a) or (b), whichever is most favorable to the individual.
Section 1.13 Code - means the Internal Revenue Code of 1986, as
amended, or any successor statute.
Section 1.14 Collectively Bargained Plan - means any plan (other than a
multiemployer plan) that incorporates a cash or deferred arrangement as
described in Code ss. 401(k) and is sponsored by the Employer pursuant to a
collective bargaining agreement in effect between the Employer and any union,
local or lodge of any union or any bargaining agent for any union
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which such union, local, lodge or bargaining agent and the Employer have
provided that some or all of the employees in the bargaining unit shall be
covered by such plan.
Section 1.15 Committee - means the administrative committee described
in ARTICLE XIII.
Section 1.16 Compensation - means for each Participant
(a) For all purposes other than as described in Section 1.16(b), the
sum of
(1) his or her wages within the meaning of Code ss. 3401(a) and all
other compensation paid by the Affiliates to, or on behalf of, such Participant
for the Plan Year that is reportable as "wages, tips and other compensation" on
Form W-2 or such other form as the Affiliates are required to provide the
Participant under Code ss.ss. 3401(a), 6041(d), 6051(a)(3) and 6052; and
(2) his or her Pre-Tax Contributions, any elective deferrals under any
other Code ss. 401(k) plan maintained by an Affiliate that are excludible from
income under Code ss. 402(e)(3), any contributions made to a cafeteria plan of
an Affiliate that are excludible under Code ss. 125 and any other contributions
or deferrals excludible under Code ss.ss. 132(f)(4) (for Plan Years beginning on
or after January 1, 2001), 402(h), 403(b), 414(h)(2) or 457(b).
(b) For Plan Years beginning before January 1, 1998 for purposes of
calculating the Actual Deferral Percentage or Actual Contribution Percentage,
such other nondiscriminatory definition of compensation as satisfies the
requirements of Code ss. 414(s) and the regulations thereunder.
(c) The annual Compensation of each Participant taken into account
under the Plan shall not exceed $150,000 as adjusted for cost-of-living
increases in accordance with Code ss. 401(a)(17). The cost-of-living adjustment
in effect for a calendar year applies to any Plan Year beginning in such
calendar year. If a Plan Year consists of fewer than 12 months, the annual
compensation limit will be multiplied by a fraction, the numerator of which is
the number of months in the short Plan Year, and the denominator of which is 12.
The annual compensation limit does not apply for purposes of Section 5.2.
(d) For the Plan Years beginning January 1, 1997, any reference to the
family aggregation rules of former Code ss. 414(q)(6) in the Plan as in effect
before January 1, 1998 is deleted.
Section 1.17 Eligible Compensation - means for each Participant who is
an Eligible Employee all compensation or wages payable to him or her for the
Plan Year by reason of his or her employment by an Employer Company before any
payroll deductions, but excluding
(a) bonuses (other than any half-month bonus and, as of July 1, 2001,
quarterly bonuses);
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(b) amounts allocated or benefits paid under any employee benefit plan
or program, whether or not the plan or program is subject to ERISA or the
benefit paid thereunder is taxable (other than paid time off or discretionary
days, Pre-Tax Contributions and salary reduction contributions made on behalf of
an Employee to the UPS Flexible Benefits Plan or other plan described in Code
ss. 125 and, for periods on or after April 1, 1999, amounts allocated under the
UPS Deferred Compensation Plan, as amended from time to time, and/or the UPS
Deferred Compensation Plan 2000);
(c) amounts payable under any incentive compensation plan or program
(other than commissions and, as of July 1, 2001, sales incentives);
(d) MIP awards;
(e) stock options;
(f) foreign service differentials;
(g) severance pay;
(h) expense reimbursements;
(i) grievance awards (other than back pay);
(j) fringe benefits; and
(k) all compensation classified as "miscellaneous."
The annual Eligible Compensation of each Participant taken into account
under the Plan shall not exceed $150,000 as adjusted for cost-of-living
increases in accordance with Code ss. 401(a)(17) (the "annual compensation
limit"). The cost-of-living adjustment in effect for a calendar year applies to
any Plan Year beginning in such calendar year. If a Plan Year consists of fewer
than 12 months, the annual compensation limit will be multiplied by a fraction,
the numerator of which is the number of months in the short Plan Year, and the
denominator of which is 12. The annual compensation limit does not apply for
purposes of Section 5.2.
For any Plan Year beginning on or after January 1, 1997, in determining the
Compensation of an Eligible Employee, the family aggregation rules of former
Code ss. 414(q)(6) shall not apply.
Section 1.18 Eligible Employee - means any Employee other than an
Employee
(a) whose terms and conditions of employment are governed by a
collective bargaining agreement to which the Employer Company is a party, unless
the collective bargaining agreement expressly provides for coverage under this
Plan;
(b) who is a nonresident alien receiving no earned income from an
Employer Company from sources within the United States (as described more fully
in Code ss. 410(b)(3)(C)); or
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(c) who is eligible to participate in a Collectively Bargained Plan or
any other Code ss. 401(k) cash or deferred arrangement maintained by an Employer
Company (other than the Plan).
Members of the Board as such shall not be considered as Eligible Employees
unless they also qualify as such pursuant to the preceding sentence. Under no
circumstances will an individual who performs services for a Employer Company,
but who is not classified on the payroll as an employee of the Employer Company,
for example, an individual performing services for a Employer Company under a
leasing arrangement, be treated as an Eligible Employee even if such individual
is treated as an "employee" of a Employer Company as a result of common law
principals or the leased employee rules under Code ss. 414(n). Further, if an
individual performing services for a Employer Company is retroactively
reclassified as an employee of a Employer Company for any reason, such
reclassified individual shall not be treated as an Eligible Employee for any
period prior to the actual date (and not the effective date) of such
reclassification unless the Employer Company determines that retroactive
reclassification is necessary to correct a payroll classification error.
Section 1.19 Employee - means a person who is classified on the payroll
of an Employer Company as an employee of that Employer Company.
Section 1.20 Employer - means United Parcel Service of America, Inc.
Section 1.21 Employer Company - means the Employer, each corporation
listed in Appendix 1.21 and any of the following corporations that adopts the
Plan and the accompanying Trust Agreement with the approval of the Board of
Directors:
(a) any domestic corporation at least 90% of whose voting stock is
owned by UPS; and
(b) any domestic corporation at least 90% of whose voting stock is
owned by any corporation described in (a) above.
Section 1.22 Eligibility Computation Period - means the 12 consecutive
month period beginning on an individual's Employment Commencement Date or
Reemployment Commencement Date (or any anniversary of either such date) and
ending on the date immediately preceding the anniversary of such date (or next
succeeding anniversary of such date).
Section 1.23 Employment Commencement Date - means
(a) Effective as of May 1, 2000, the date on which an individual first
performs an Hour of Service.
(b) Effective prior to May 1, 2000, the date on which an individual
first performs an hour of service, within the meaning of Labor Regulation
Section 2530.200b-2, with an Employer Company.
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Section 1.24 Entry Date - means, effective on or after July 7, 2001,
the first Saturday of each calendar month and, before July 7, 2001, the first
day of each calendar month.
Section 1.25 ERISA - means the Employee Retirement Income Security Act
of 1974, as amended, or any successor statute. Section 1.26 ESOP - means an
employee stock ownership plan within the meaning of Code ss. 4975(e).
Section 1.27 Excess Aggregate Contributions - means for any Plan Year
the excess of
(a) the After-Tax Contributions within the meaning of Section 5.5(b)
actually made by or on behalf of Highly Compensated Employees for a Plan Year
and
(b) the maximum permissible amount of such contributions for such Plan
Year under Codess. 401(m) as described in Section 5.5(a).
The total dollar amount of Excess Aggregate Contributions is determined by
reducing contributions on behalf of Highly Compensated Employees in order of
their contribution percentages, beginning with the highest of such percentages
and continuing until the ACP test is satisfied.
Section 1.28 Excess Contributions - means for any Plan Year the excess
of
(a) the Pre-Tax Contributions actually were made by or on behalf of
Highly Compensated Employees for a Plan Year and which were taken into account
in computing his or her Actual Deferral Percentage for such Plan Year over
(b) the maximum permissible amount of such contributions permitted for
such Plan Year under Codess. 401(k) as described in Section 5.4(a).
The total dollar amount of Excess Contributions is determined by reducing
contributions on behalf of Highly Compensated Employees in order of their
contribution percentages, beginning with the highest of such percentages and
continuing until the ADP test is satisfied.
Section 1.29 Highly Compensated Employee -
(a) General. The term "Highly Compensated Employee" means for each Plan
Year beginning on or after January 1, 1997 each Participant who is an Eligible
Employee performing services for an Affiliate during the Plan Year and
(1) who at any time during the Plan Year or the preceding Plan Year was
a 5% owner of an Affiliate (as defined in Code ss. 416(i)(1)(B)(I)), or
(2) who for the preceding Plan Year received Compensation in excess of
$80,000 (indexed in accordance with Codess. 415(d)).
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(b) Additional Rules.
(1) The determination of which Eligible Employees are Highly
Compensated Employees is subject to Codess. 414(q) and any regulations, rulings,
notices or procedures under that section.
(2) Employers aggregated under Codess. 414(b), (c), (m) or (o) will be
treated as a single employer for purposes of this Section 1.29.
Notwithstanding the foregoing, only for the purposes of Puerto Rican
law and solely to comply therewith, a "Highly Compensated Employee" shall mean
any Participant who is an Eligible Employee employed in Puerto Rico who is among
the top one-third (1/3) of all Eligible Employees receiving the highest
aggregate compensation from an Employer Company.
Effective for Plan Years beginning on or after January 1, 1997, the
family aggregation rules of former Code ss. 414(q)(6) shall not apply in
determining who is a Highly Compensated Employee.
Section 1.30 Hour of Service -
(a) General. The term "Hour of Service" means each hour for which an
individual:
(1) is paid, or entitled to payment, for the performance of duties for
an Affiliate;
(2) is paid, or entitled to payment (directly or indirectly) for
periods during which no duties are performed due to vacation, holiday, illness,
short-term disability or incapacity pursuant to which payments are received in
the form of salary continuation or from a short-term disability plan or worker's
compensation plan sponsored by an Affiliate or to which an Affiliate
contributes, layoff, jury duty, military duty which gives rise to reemployment
rights under Federal law, or paid leave of absence (including a period where an
employee remains on salary continuation during a period of illness or
incapacity);
(3) is paid by an Affiliate for any reason an amount as "back pay,"
irrespective of mitigation of damages; or
(4) is on an unpaid leave of absence, including (i) by reason of the
pregnancy of the individual, (ii) by reason of the birth of a child of the
individual, (iii) by reason of the placement of a child with the individual in
connection with the adoption of such child by the individual or (iv) for
purposes of caring for such child for a period beginning immediately following
such birth or placement.
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(b) Additional Rules. Notwithstanding the foregoing,
(1) An individual will earn Hours of Service credit without regard to
whether such individual is treated as an "employee" of an Affiliate as a result
of the application of common law principles or by operation of Code ss. 414(n).
(2) An individual will be credited with 190 Hours of Service for the
performance of duties with respect to each regularly-scheduled calendar work
month in which such individual would, under the rules described herein, have
earned at least one Hour of Service and if an individual has a Period of
Separation of less than 12 months, he or she will be credited with 190 Hours of
Service for each calendar month during that Period of Separation.
Section 1.31 Investment Options - means the investment alternatives
selected by the Committee pursuant to Section 7.1.
Section 1.32 Investment Manager - means a person (a) who is registered
as an investment advisor under the Investment Advisers Act of 1940 (the "Act"),
a bank, as defined in the Act, or an insurance company that, within the meaning
of ERISA ss. 3(38), is qualified to manage, acquire and dispose of the assets of
an employee benefit plan under the laws of more than one state, and (b) who is
appointed as an investment manager.
Section 1.33 Merged Account - means the subaccount maintained as a part
of a Participant's Account to show his or her interest attributable to amounts
that have been transferred from another qualified plan pursuant to a merger or
other transaction described in Section 14.3 and which are not allocated to his
or her Pre-Tax Contribution Account, After-Tax Contribution Account or Rollover
Contribution Account.
Section 1.34 Nonhighly Compensated Employee - means for each Plan Year
each Participant who is an Eligible Employee performing services for an
Affiliate during the Plan Year and who is not a Highly Compensated Employee.
Section 1.35 Participant - means (a) each Eligible Employee who
satisfied the requirements for participation set forth in Section 2.1 and (b)
each other person (other than an alternate payee as defined in Code ss.
414(p)(8) or a Beneficiary) for whom an Account is maintained as a result of
contributions made under this Plan or amounts transferred to this Plan.
Section 1.36 Participation Requirement - means on or after May 1, 2000,
a 6-month Period of Service and, before May 1, 2000, a 1-year Period of Service.
(a) A "6-month Period of Service" means,
(1) effective as of May 1, 2000, an Eligibility Computation Period
during which an individual completes at least 1000 Hours of Service and an
individual will be deemed to have completed a 6-month Period of Service as of
the last day of the calendar month in which he or she completes at least 1000
Hours of Service; or
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(2) effective before May 1, 2000, a Period of Service of at least 6
months; provided, for each individual whose Employment Commencement Date or
Reemployment Commencement Date is on or after May 1, 2000 and before July 1,
2001, a "6-month Period of Service" means the period described in Section
1.36(a)(1) or the period described in this Section 1.35(a)(2), whichever is
completed first.
(b) A "1-year Period of Service" means a Period of Service of at least
12 months.
(c) For purposes of satisfying the Participation Requirement under
Section 1.36(a) or (b) (as well as the service requirement of Section 9.5(b)),
(1) an individual who first performed services for an Affiliate
following a transaction identified in Appendix 1.35 will be given credit for
employment with the employer identified in Appendix 1.36 (but not before any
date as may be specified in Appendix 1.35) as if such employment had been with
an Affiliate; and
(2) an individual who was a participant in a merged plan (described in
Appendix 1.36) will be given credit for employment with an employer maintaining
the merged plan as if such employment had been with an Affiliate.
Section 1.37 Period of Separation - means for those Employees who first
become Participants before July 1, 2001, a continuous period of time during
which an individual does not perform an Hour of Service. Such a Period of
Separation begins on the date the individual has a Separation from Service.
Section 1.38 Period of Service - means the period of time beginning on
an individual's Employment Commencement Date or Reemployment Commencement Date,
whichever is applicable, and ending on the date a Break in Service begins. A
Period of Service of 12 months is equal to one full year of service.
Section 1.39 Plan - means this UPS Savings Plan and Trust Agreement as
set forth in this document and all subsequent amendments to this document.
Section 1.40 Plan Year - means the calendar year.
Section 1.41 Pre-Tax Contribution - means a contribution to the Plan at
the election of a Participant pursuant to a salary reduction agreement in
accordance with Section 3.1 that is not includible in gross income for federal
income tax purposes solely by reason of the application of Code ss. 401(k).
Section 1.42 Pre-Tax Contribution Account - means the subaccount
maintained as part of a Participant's Account to show his or her interest
attributable to Pre-Tax Contributions, amounts transferred from his or her
pre-tax contribution accounts under the QSOP and amounts attributable to pre-tax
contributions under another qualified plan transferred pursuant to a merger of
other transaction described in Section 14.3 to the extent provided in Appendix
14.3.
9
Section 1.43 QSOP - means the UPS Qualified Stock Ownership Plan, as
amended from time to time.
Section 1.44 Reemployment Commencement Date - means for an individual
who has a Break in Service, an adjusted employment commencement date, which is
the first date on which that individual performs an Hour of Service following
the Break in Service.
Section 1.45 Rollover Contribution - means a contribution described in
Section 3.6.
Section 1.46 Rollover Contribution Account - means the subaccount
maintained as part of a person's Account to show his or her interest
attributable to Rollover Contributions, amounts transferred from his or her
rollover account under the QSOP and amounts attributable to rollover
contributions under another qualified plan transferred pursuant to a merger or
other transaction described in Section 14.3 to the extent provided in Appendix
14.3.
Section 1.47 SavingsPLUS Contribution - means the SavingsPLUS
Contribution made under the QSOP in respect of a Participant's Pre-Tax
Contributions.
Section 1.48 SavingsPLUS Transfer Account - means the subaccount
maintained as a part of a person's Account to show his or her interest
attributable to SavingsPLUS Contributions transferred by the Participant from
his or her SavingsPLUS contribution account under the QSOP in accordance with
Section 4.1.
Section 1.49 Separation from Service - means:
(a)
(1) Effective as of May 1, 2000, the date on which an individual
terminates employment with all Affiliates by reason of a voluntarily quit,
retirement, death, the end of a period of disability of more than 52 weeks at
which time a physician certifies that the individual is currently disabled and
unable to return to work for an Affiliate, discharge, failure to return from
layoff or authorized leave of absence, or for any other reason (unless a
grievance is pending) provided for periods before January 1, 2002, such
separation constitutes a "separation from service" within the meaning of Code
ss. 401(k) and for periods on or after January 1, 2002, such separation
constitutes a "severance from employment" within the meaning of Code ss. 401(k);
provided, however, that a "separation from employment" shall not occur with
respect to any Participant as a result of a transaction if his or her new
employer following the transaction agrees to assume this Plan or agrees to
assume assets and liabilities of this Plan attributable to such Participant. A
discharge will not be treated as a Separation from Service while a grievance is
pending but, if the discharge is upheld, will be treated as a Separation from
Service as of the date of the discharge.
(2) Effective before May 1, 2000, the earlier of the date under Section
1.49(a)(1) or the date on which a 12-consecutive month period ends during which
the individual did not perform an Hour of Service.
10
(b) A transfer from one Affiliate to another will not result in a
Separation from Service.
(c) A discharge will not result in a Separation from Service for any
purpose while a grievance is pending but, if the discharge is upheld, the
Separation from Service will be the date of the discharge.
Notwithstanding the foregoing, and solely for the purpose of
determining the length of a Period of Service before May 1, 2000, in the case of
an Employee who ceases active employment (i) by reason of the pregnancy of the
Employee, (ii) by reason of the birth of a child of the Employee, (iii) by
reason of the placement of a child with the Employee in connection with the
adoption of such child by the Employee or (iv) for purposes of caring for such
child for a period beginning immediately following such birth or placement,
"Separation from Service" shall mean the second anniversary of said cessation of
active employment.
Section 1.50 Trust Fund - means the assets held by the Trustee under
this Plan.
Section 1.51 Trustee - means a bank, trust company or other financial
institution with trust powers acting from time to time as trustee for the Trust
Fund pursuant to ARTICLE XI.
Section 1.52 VRU - means the automated voice response unit or any other
voice or electronic medium maintained for the purpose of effecting participant
communications under the Plan.
Section 1.53 Valuation Date - means December 31 of each year and any
other date chosen by the Committee and acceptable to the Trustee.
Article II. PARTICIPATION
Section 2.1 General. Each Eligible Employee will become a Participant
on the Entry Date coinciding with or immediately following the date he or she
has completed the Participation Requirements.
Section 2.2 Application to Participate. Each Participant who is an
Eligible Employee may enroll in the Plan by electing to make a Pre-Tax
Contribution, After-Tax Contribution or a Rollover Contribution via VRU or in
accordance with such other procedures prescribed by the Committee or its
designee. The Committee or its designee shall promptly process the Participant's
enrollment and confirm the enrollment of such Participant and his or her
elections to make contributions.
Section 2.3 Transfers.
(a) Transfer to Position Not Covered by Plan. If a Participant loses
his or her status as an Eligible Employee because he or she is transferred to an
Affiliate that is not an Employer Company or because he or she is transferred to
a position with an Employer Company that is not an Eligible Employee position,
he or she shall cease to be eligible to make Pre-Tax Contributions, After-Tax
contributions or Rollover Contributions under
11
this Plan, but his or her Account shall continue to be maintained under this
Plan until he or she has a distribution even or such Account is transferred to
another qualified plan maintained by an Employer Company or Affiliate.
(b) Transfer of Account from Another Employer Company Plan. This
Section 2.3(b) will be effective on and after the date it is activated by the
Committee. To the extent provided in Appendix 2.3 (which will be written and
amended by or at the direction of the Committee), the Committee may permit the
contribution of funds to a Participant's Account which represent the transfer of
his or her account from any other ss. 401(k) cash or deferred arrangement
maintained by an Employer Company. Such funds shall be transferred in accordance
with procedures established by the Committee and shall be held in the
appropriate subaccount.
Section 2.4 Correction. If the Committee discovers that an individual
it determined to be a Participant is in fact not a Participant, the Committee
will as soon as practicable after such discovery make such corrections or
refunds. If the Committee discovers that a Participant was not treated as
covered under the Plan, the Committee as soon as practicable will take such
action as it deems appropriate and proper under the circumstances.
Section 2.5 Reemployment. If an Eligible Employee has a Separation from
Service before he or she completes the Participation Requirement and his or her
Period of Separation is less than 12 consecutive months, the Eligible Employee's
Period of Service will be aggregated with the Period of Separation and the
Period of Service completed after the Period of Separation. If the individual
had a Break in Service, then his or her prior Period of Service will be
disregarded and he or she will not become a Participant until he or she
completes the Participation Requirement following his or her Reemployment
Commencement Date.
If a Participant has a Separation from Service after completing the
Participation Requirement, then he or she will again become eligible to make
Pre-Tax Contributions, After-Tax Contributions, and Rollover Contributions to
the extent otherwise permitted under the Plan as soon as practicable after the
date he or she next performs an Hour of Service as an Eligible Employee.
Section 2.6 Not a Contract of Employment. This Plan is intended only to
encourage Eligible Employees of the Employer Companies to save for their
retirement. This Plan is not a contract of employment. Thus, participation in
this Plan will not give any person either the right to be retained as an
employee of an Employer Company or, upon such person's termination of
employment, the right to any interest in the Trust Fund other than his or her
interest as expressly set forth in this Plan.
Article III. EMPLOYEE CONTRIBUTIONS, ROLLOVER CONTRIBUTIONS
AND TRANSFERS
Section 3.1 Pre-Tax Contributions.
(a) General. Subject to the rules and limitations in this Section 3 and
in Section 5, each Participant who is an Eligible Employee (other than an
Eligible Employee
12
employed in Puerto Rico) may make Pre-Tax Contributions through authorizing the
pre-tax payroll deduction of
(1) from 1% to 17% (in 1% increments) of his or her Eligible
Compensation (excluding those items set forth in Section 3.1(a)(2),(3) and (4)
below) for each pay period;
(2) all or a part of his or her half month bonus;
(3) effective as of July 1, 2001, quarterly bonuses; and
(4) all or a part of his or her discretionary days pay off.
(b) Puerto Rico. Subject to the rules and limitations in this Section 3
and in Section 5, each Participant who is an Eligible Employee employed in
Puerto Rico may make Pre-Tax Contributions through authorizing the pre-tax
payroll deduction of
(1) from 1% to 10% (in 1% increments) of his or her Eligible
Compensation (including those items set forth in Section 3.1(b)(2),(3) and (4)
below) for each pay period;
(2) all or a part of his or her half month bonus;
(3) effective as of July 1, 2001, quarterly bonuses; and
(4) all or a part of his or her discretionary days pay off.
Notwithstanding the foregoing, a Participant who is an Eligible Employee
employed in Puerto Rico may not contribute total Pre-Tax Contributions under
this Section 3.1(b) in excess of 10% of his or her Eligible Compensation.
An election under this Section 3.1(a) or (b) must be made via VRU or in
accordance with such other procedures prescribed by the Committee or its
designee. A Participant may make an election to begin making Pre-Tax
Contributions on any business day that coincides with or follows the date he or
she becomes a Participant. A Participant's initial payroll deduction
contribution election will be effective for the first pay period beginning after
his or her election is processed and will continue while the Participant is an
Eligible Employee until the Participant changes his or her election in
accordance with Section 3.3 or suspends his or her contributions in accordance
with Section 3.4.
The Committee has the right at any time unilaterally to reduce prospectively the
amount or percentage of Pre-Tax Contributions elected by any Participant who is
a Highly Compensated Employee or by all Highly Compensated Employees as a group
if it determines that reduction is appropriate in light of the limitations under
Section 5.4.
(c) Accounts. The Pre-Tax Contributions elected by a Participant under
Sections 3.1(a) and (b) will be credited to such Participant's Pre-Tax
Contribution Account.
13
Section 3.2 After-Tax Contributions.
(a) General. Subject to the rules and limitations in this Section 3 and
in Section 5, each Participant who is an Eligible Employee may make After -Tax
Contributions through authorizing the after-tax payroll deduction of from 1% to
5% (in 1% increments) of his or her Eligible Compensation for each pay period.
Such election must be made via VRU or in accordance with such other procedures
prescribed by the Committee or its designee. A Participant may make an election
to begin making After-Tax Contributions on any business day that coincides with
or follows the date he or she becomes a Participant. A Participant's initial
contribution election will be effective for the first pay period beginning after
his or her election is processed and will continue while the Participant is an
Eligible Employee until the Participant changes his or her election in
accordance with Section 3.3 or suspends his or her contributions in accordance
with Section 3.4.
The Committee has the right at any time unilaterally to reduce prospectively the
amount or percentage of After-Tax Contributions elected by any Participant who
is a Highly Compensated Employee or by all Highly Compensated Employees as a
group if it determines that reduction is appropriate in light of the limitations
under Section 5.5.
(b) Accounts. The After-Tax Contributions elected by a Participant
under Section 3.2(a) will be credited to such Participant's After-Tax
Contribution Account.
Section 3.3 Changes. A Participant who is an Eligible Employee may make
an election to change the rate of his or her Pre-Tax or After-Tax Contributions
or the type of Contributions on any business day via VRU or in accordance with
such other procedures prescribed by the Committee or its designee. Such change
in the rate or type of Contributions will be effective for the first pay period
beginning after his or her election is processed.
Section 3.4 Suspension of Contributions.
(a) Voluntary Suspension. A Participant may suspend his or her Pre-Tax
Contribution or After-Tax Contribution at any time via VRU or in accordance with
such other procedures prescribed for such purpose by the Committee or its
designee. A Participant's suspension will be effective for the first pay period
beginning after his or her election is processed. Thereafter, the Participant
who is an Eligible Employee may make an election to resume Pre-Tax Contributions
and/or After-Tax Contributions in accordance with Section 3.1 or Section 3.2,
respectively.
(b) Change in Eligibility Status. A Participant's Pre-Tax Contributions
and/or After-Tax Contributions shall automatically stop when he or she ceases to
be an Eligible Employee. If a Participant's status thereafter changes to an
Eligible Employee (whether by reemployment or otherwise), he or she may make a
new election to make Pre-Tax Contributions and/or After-Tax Contributions in
accordance with Section 3.1 or Section 3.2, respectively.
14
(c) Hardship Withdrawal. A Participant will be treated as if he or she
had elected to completely suspend Pre-Tax and After-Tax Contributions for the
12-month period following a hardship withdrawal in accordance with Section
9.8(c), and a Participant who was not making Pre-Tax or After-Tax Contributions
at the time of the withdrawal will not be allowed to resume making Pre-Tax or
After-Tax contributions for the 12-month period following a hardship withdrawal.
Following the suspension, Participant may elect to resume making Pre-Tax
Contributions and/or After-Tax Contributions in accordance with Section 3.1 or
Section 3.2, respectively.
(d) Leave of Absence. A Participant's Pre-Tax and After-Tax
Contributions will continue to be deducted during any period of paid leave of
absence, provided he or she continues to be classified as an Eligible Employee
during the leave. However, a Participant's Pre-Tax and After-Tax Contributions
will be suspended during any period of unpaid leave of absence. Payroll
deductions automatically will resume as soon as administratively practicable
after the Participant's resumption of active employment as an Eligible Employee
in accordance with the Participant's Election in effect immediately prior to his
or her unpaid leave unless the Participant files an Election (1) to suspend
contributions in accordance with Section 3.4(a), or (2) to change his or her
rate of contributions in accordance with Section 3.3.
Section 3.5 Payment of Contributions to Trustee. All Pre-Tax and
After-Tax Contributions will be paid to the Trustee as soon as practicable after
the related payroll deductions are made and, in any event, by the deadlines, if
any, established for making those payments under ERISA or the Code.
Section 3.6 Rollovers from Qualified Plans or Conduit IRAs
(a) An Eligible Employee may contribute to the Trust an amount
consisting of an "eligible rollover distribution" (as defined below) from
another qualified retirement plan, or "a transfer from a conduit IRA," (as
defined below) provided that the contribution shall not jeopardize the
qualification of the Plan or the tax-exempt status of the Trust or create
adverse tax consequences for the Employer. A Participant who has incurred a
Separation from Service may contribute to the Trust in accordance with this
Section 3.6(a), provided that the Participant has not otherwise received a
distribution of his or her Account pursuant to Section 9.2 and, provided
further, that (i) before July 1, 2001, such contribution is made within ninety
(90) days of the date he or she has a Separation from Service and (ii) on or
after July 1, 2001, only if the Participant's aggregate balance in the Savings
Plan and the QSOP exceeds thirty-five hundred dollars ($3,500.00) and the ninety
(90) day rule described in (i) shall not apply.
(b) Any such contribution shall at all times be fully vested and
nonforfeitable. Such contribution shall be held in a subaccount under the
Participant's Account (the "Rollover Contribution Account").
(c) For purposes of this Section 3.6, an "eligible rollover
distribution" means:
15
(1) an eligible rollover distribution, within the meaning of Code ss.
402, which is transferred to this Plan by the participant no later than sixty
(60) days following the date on which the Participant received the distribution
from another qualified retirement plan or
(2) an eligible rollover distribution, within the meaning of Code ss.
402, which is transferred to this Plan directly by another qualified retirement
plan at the Participant's direction pursuant to Code ss. 401(a)(31).
In the case of an eligible rollover distribution described in ss. 3.6(c)(1)
above, the Participant may contribute an amount equal to the gross amount of the
distribution, notwithstanding that a portion of the distribution may have been
subject to mandatory income tax withholding.
(d) For purposes of this Section 3.6, "a transfer from a conduit IRA"
means: an amount transferred to this Plan within sixty (60) days of the
Participant's receipt of distribution thereof, from an individual retirement
account or annuity ("IRA") to which no contributions have been made from any
source other than amounts which were previously distributed to the Participant
as an eligible rollover distribution from another qualified retirement plan
subject to Code ss. 401(a), and which were deposited in such IRA within sixty
(60) days of such prior distribution.
(e) After-tax employee contributions distributed from a qualified
retirement plan or annuity contract or from an IRA may not be contributed to the
Plan under this Section 3.6.
Article IV. TRANSFERS FROM AND TO THE QSOP
Section 4.1 Amounts Transferred from the QSOP. Effective as of November
23, 1998, a Participant may transfer amounts from his or her account under the
QSOP to this Plan, subject to any provisions in the QSOP which would govern such
a transfer, via the VRU or in accordance with such other procedures as are
established from time to time by the administrative committee of the QSOP and
accepted by the Committee, and such a request for transfer shall be processed as
soon as practicable after the request is made. Any amounts transferred from the
QSOP to this Plan which are attributable, in whole or in part, to a
Participant's Pre-Tax Contribution Account, After-Tax Contribution Account,
Rollover Contribution Account or Merged Account shall be credited respectively
to the Participant's Pre-Tax Contributions Account, After-Tax Contribution
Account and Rollover Contribution Account or Merged Account. Any amounts
transferred from the QSOP to this Plan which are attributable to a Participant's
"SavingsPLUS Contributions" as defined in the QSOP shall be credited to the
Participant's SavingsPLUS Transfer Account. All amounts transferred from the
QSOP to this Plan shall be invested as provided in Section 7.2.
Section 4.2 Transfers to the QSOP. Effective as of November 23, 1998, a
Participant may transfer amounts from his or her Account under the Plan to the
QSOP, subject to any provisions in the QSOP which would govern such a transfer,
via the VRU or in accordance with such other procedures as are established from
time to time by the administrative committee of
16
the QSOP and accepted by the Committee, and such a request for transfer shall be
processed as soon as practicable after the request is made. Notwithstanding the
foregoing, any amounts attributable to assets of a Merged Plan shall not be
eligible for transfer to the QSOP until the assets of such Merged Plan are
consolidated for investment purposes with the amounts contributed under this
Plan.
Article V. LIMITATIONS ON CONTRIBUTIONS AND ALLOCATIONS
Section 5.1 Order. The allocation of contributions made under this Plan
(other than Rollover Contributions) will be subject to the limitations of this
Section 5.1, as applied, in the following order:
(a) the Codess.415 limitations under Section 5.2,
(b) the Codess.402(g) limitation under Section 5.3,
(c) the ADP Test limitation for Highly Compensated Employees under
Section 5.4,
(d) the ACP Test limitation for Highly Compensated Employees under
Section 5.5.
Section 5.2 Codess. 415 Limitations.
(a) General Rule. The term "limitation year" as defined in Code ss. 415
and the corresponding regulations means the calendar year. The total annual
additions (as described in Section 5.2(b)) allocated to a Participant's Account
for any limitation year when added to the contributions that are treated as made
on behalf of such Participant for such limitation year under the coordination
rules in Section 5.2(c) will not exceed the lesser of:
(1) 25% of the Participant's Compensation for the limitation year,
(2) for limitation years beginning after December 31, 1994, $30,000 (as
adjusted under Codess. 415(d)), or
(3) such lesser amount as the Committee deems necessary or appropriate
to satisfy the requirements of Code ss. 415 in light of Section 5.2(c) and the
benefits, if any, accrued and the contributions, if any, made for such
Participant under any other employee benefit plan maintained by an Affiliate.
If a short limitation year (less than 12 months) is created because of an
amendment, the limitation described in (2) above will be prorated.
(b) Annual Additions. The term "annual additions" means, for each Plan
Year, the total contributions allocated to a Participant's Account for that Plan
Year as Pre-Tax Contributions or After-Tax Contributions. Any corrective
allocations made
17
under this Plan will be treated as annual additions in the limitation year to
which such allocations relate.
For the purpose of this Section 5.2, contributions allocated to an "individual
medical benefit account" described in Code ss. 415(l) and contributions credited
under a welfare benefit fund maintained by an Affiliate for any year to a
reserve for post-retirement medical benefits for a Participant who is a "key
employee" within the meaning of Code ss. 416(i) will be treated as a
contribution made on his or her behalf under this Plan when, and to the extent,
required under Code ss. 415 or ss. 419A(d).
(c) Corrections in this Plan. If as the result of the allocation of
forfeitures, the failure to estimate a Participant's compensation, the failure
to estimate a Participant's Pre-Tax Contributions or pre-tax contributions under
other plans of an Affiliate or under such other facts and circumstances which
the Commissioner of the Internal Revenue finds so justify, the limitations
imposed by Code ss. 415(c) are exceeded for any Participant in a Limitation
Year, the Participant's Account shall be reduced to the extent required to
comply with such limitations. Such reductions shall be made in the following
order:
(1) by refunding After-Tax Contributions for such limitation year (and
any investment gain attributable to those refunded contributions);
(2) by refunding unmatched Pre-Tax Contributions for such limitation
year (and any investment gain attributable to those refunded contributions); and
(3) by refunding matched Pre-Tax Contributions for such limitation year
(and any investment gain attributable to those attributable to those refunded
contributions) and transferring the related SavingsPLUS Contributions under the
QSOP to a Code ss. 415 suspense account.
(d) Coordination Rules.
(1) For limitation years beginning on or after January 1, 2000. If any
adjustment is required under Codess. 415 as a result of a Participant's
participation in any other defined contribution plans, the adjustment will be
made in the following steps: (1) from unmatched employee contributions in this
Plan or any other defined contribution plan with a cash or deferred arrangement
intended to satisfy Codess. 401(k); (2) from unmatched elective deferrals in
this Plan or any other defined contribution plan with a cash or deferred
arrangement intended to satisfy Code ss. 401(k); (3) from matched employee
contributions in this Plan or any other defined contribution plan with a cash or
deferred arrangement intended to satisfy Codess. 401(k) and the related
SavingsPLUS Contributions under the QSOP or matching contribution under any
other defined contribution plan in which the individual is a participant (4)
from matched elective deferrals in this Plan or any other defined contribution
plan with a cash or deferred arrangement intended to satisfy Codess. 401(k) and
the related SavingsPLUS Contributions under the QSOP or matching contribution
under any other defined contribution
18
plan in which the individual is a participant; (5) from other contributions made
to the QSOP and (5) from other contributions to any other defined contribution
plans in which the individual is a participant.
(2) For limitation years beginning prior to January 1, 2000. If any
adjustment is required under Codess. 415 as a result of a Participant's
participation in any other defined contribution plans or defined benefit plans
established or maintained by an Affiliate, the adjustment will be made in the
following steps: (1) in the defined benefit plans; (2) from unmatched Pre-Tax
Contributions, After-Tax Contributions, elective deferrals or employee
contributions in this Plan, a Collectively Bargained Plan and any other defined
contribution plans with a cash or deferred arrangement intended to satisfy
Codess. 401(k); (3) from matched Pre-Tax Contributions, elective deferrals or
employee contributions in this Plan, a Collectively Bargained Plan or any other
defined contribution plan with a cash or deferred arrangement intended to
satisfy Codess. 401(k) and the related SavingsPLUS Contributions under the QSOP
or matching contribution under any other defined contribution plan in which the
individual is a participant; (4) from other contributions made to the QSOP and
(5) from other contributions made under any other defined contribution plans in
which the individual is a participant.
(e) Coordination with Code ss. 401(k) and Code ss. 402(g). Any Pre-Tax
Contributions refunded under this Section 5.2 will be disregarded for the
purposes of Code ss. 402(g) limitations under Section 5.3 and the Code ss.
401(k) limitations under Section 5.4.
Section 5.3 Codess.402(g) Limitations.
(a) A Participant's total Pre-Tax Contributions under this Plan and
"elective deferrals" within the meaning of Code ss. 402(g) under all other
qualified plans, contracts and arrangements maintained by an Affiliate during
any calendar year (other than amounts refunded to reduce a Code ss. 415 excess
under Section 5.2 or other plans) will not exceed the annual dollar limit under
Code ss. 402(g) (or, with respect to Participants in Puerto Rico, such lower
limit as may be prescribed under Puerto Rican law). A Participant whose Pre-Tax
Contributions together with other elective deferrals under a plan of an
Affiliate exceed the applicable limitation, shall be deemed to have made a
request for a refund under Section 5.3(b) and the excess will be refunded in
accordance with Section 5.3(c).
(b) If a Participant's Pre-Tax Contributions for a calendar year, when
added to the "elective deferrals" within the meaning of Codess. 402(g) made for
a calendar year on behalf of such Participant under plans, contracts or
arrangements of an employer that is not an Affiliate (for example, another
unrelated employer's Codess.401(k) plan or tax sheltered annuity) for that
calendar year, exceed the Codess.402(g) dollar limit, he or she may request a
refund of that excess (or, if less, the Participant's Pre-Tax Contributions
deducted during such calendar year under this Plan) by filing an Election no
later than March 1 of the following calendar year. A Participant's Election
under this Section 5.3(b) will specify the dollar amount of the excess and
include a written statement that
19
absent the refund, the Pre-Tax Contributions made under this Plan plus the other
contributions described in Section 5.3(a) will exceed the Codess.402(g) limit
for that calendar year.
(1) Any refund timely requested or deemed requested under Section
5.3(b) (adjusted for investment gain or loss) will be made no later than the
April 15 that immediately follows the date the refund is requested or deemed
requested.
(2) Any Pre-Tax Contributions (other than Pre-Tax Contributions
described in the second sentence of this Section 5.3(b)(2)) that exceed the
limit set forth in Codess. 402(g) will be taken into account for purposes of the
ADP Test under Section 5.4 regardless of whether the Pre-Tax Contributions are
refunded to a Participant in accordance with this Section 5.3(b).
Notwithstanding the foregoing, excess Pre-Tax Contributions of a Nonhighly
Compensated Employee will not be taken into account for purposes of the ADP Test
to the extent the excess arises solely from Pre-Tax Contributions under this
Plan and pre-tax contributions under all other qualified plans, contracts and
arrangements maintained by the Affiliates to the extent prohibited under Codess.
401(a)(30). Excess Pre-Tax Contributions that are refunded under this Section
5.3(c) will not be taken into account for purposes of the Code ss. 415
limitations under Section 5.2.
(3) Refunds of excess Pre-Tax Contributions will be adjusted for
investment gain or loss for the Plan Year for which the deferrals were made in
accordance with the regulations under Code ss. 402(g) but will not be adjusted
for investment gain or loss for the period between the end of the Plan Year and
the date the deferrals are distributed.
Section 5.4 Codess.401(k) Limitations for Highly Compensated Employees.
(a) ADP Test. For each Plan Year beginning on or after January 1, 1997,
the average of the Highly Compensated Employees' ADPs for that Plan Year, when
compared to the average of the Nonhighly Compensated Employees' ADPs for the
preceding Plan Year will satisfy either of the following tests:
(1) the average of the ADPs for all Highly Compensated Employees is not
more than 125% of the average of the ADPs for all Nonhighly Compensated
Employees, or
(2) the average of the ADPs for all Highly Compensated Employees is not
more than two times the average of the ADPs for all Nonhighly Compensated
Employees, and the excess of the average of the ADPs for all Highly Compensated
Employees over the average of the ADPs for all Nonhighly Compensated Employees
is not more than two percentage points.
In performing the ADP Test for a Plan Year, the applicable averages
will be calculated taking into account each Participant who was eligible to make
Pre-Tax Contributions at any time during that Plan Year.
20
(b) Aggregation with Other Plans or Arrangements. The ADP for any
Highly Compensated Employee will be determined as if all contributions made
behalf of such Highly Compensated Employee during the same Plan Year under one,
or more than one, other plan described in Code ss. 401(k) maintained by an
Affiliate had been made under this Plan or, at the option of the Committee, the
Plan may be permissively aggregated with such other plans. If this Plan
satisfies the coverage requirements of Code ss. 410(b) only if aggregated with
one or more other plans, or if one or more other plans satisfy the coverage
requirements of Code ss. 410(b) only if aggregated with this Plan, this Section
5.4 will be applied by determining the ADPs of all Participants as if all those
plans were a single plan.
(c) Other Requirements and Elections. The determination and treatment
of the Pre-Tax Contributions and ADP of any Participant will satisfy any other
requirements prescribed by the Secretary of the Treasury including any
subsequent Internal Revenue Service guidance issued under Code ss. 401(k), and,
in performing the ADP Test, the Committee may use any alternatives and elections
authorized under the applicable regulations, rulings or revenue procedures.
(d) Action to Satisfy ADP Test.
(1) Refund of Excess Contributions. Excess Contributions for a Plan
Year beginning on or after January 1, 1997 (adjusted for investment gain or
loss) will be refunded no later than the last day of the immediately following
Plan Year to Highly Compensated Employees on whose behalf the Excess
Contributions were made. Refunds will be made on the basis of the amount of
Pre-Tax Contributions for such Plan Year starting with the Highly Compensated
Employee with the greatest dollar amount of Pre-Tax Contributions, first from
his or her unmatched Pre-Tax Contributions thereafter from his or her Pre-Tax
Contributions that are matched under the QSOP. The Excess Contributions that
would otherwise be refunded will be reduced (in accordance with the
Codess.401(k) regulations) by any refund made to the Highly Compensated Employee
under Section 5.3.
(2) Determination of Investment Gain or Loss. Excess Contributions will
be adjusted for investment gain or loss for the Plan Year for which the
contributions were made in accordance with the regulations under Code ss. 401(k)
but will not be adjusted for investment gain or loss for the period between the
end of the Plan Year and the date the Excess Contributions are distributed.
Section 5.5 ACP Test Limitation For Highly Compensated Employees.
(a) ACP Test. For each Plan Year beginning on or after January 1, 1997,
the average of the Highly Compensated Employees' ACPs for that Plan Year, when
compared to the average of the Nonhighly Compensated Employees' ACPs for the
preceding Plan Year will satisfy either of the following tests:
21
(1) the average of the ACPs for all Highly Compensated Employees does
not exceed 125% of the average of the ACPs for all Nonhighly Compensated
Employees, or
(2) the average of the ACPs for all Highly Compensated Employees is not
more than two times the average of the ACPs for all Nonhighly Compensated
Employees, and the excess of the average of the ACPs for all Highly Compensated
Employees over the average of the ACPs for all Nonhighly Compensated Employees
is not more than two percentage points.
In performing the ACP Test for a Plan Year, the applicable averages
will be calculated taking into account each Participant who was eligible to make
Pre-Tax Contributions at any time during that Plan Year.
(b) Aggregation with Other Plans or Arrangements.
(1) For any Plan Year before the Board activates the ESOP feature on
the QSOP, the ACP for each Participant who is an Eligible Employee will be
determined by aggregating this Plan with the QSOP. SavingsPLUS Contributions
made under the QSOP will be treated as After-Tax Contributions under this Plan.
Further, the ACP for any Highly Compensated Employee will be determined as if
any "employee contributions" (within the meaning of Codess. 401(m)) and any
"matching contributions" (within the meaning of Codess. 401(m)(4)) allocated to
his or her account during the same Plan Year under one, or more than one, other
plan described in Codess. 401(a) orss.401(k) maintained by an Affiliate had been
made under this Plan or, at the option of the Committee, the Plan may be
permissively aggregated with such other plans. If this Plan satisfies the
coverage requirements of Codess. 410(b) only if aggregated with one or more
other plans, or if one or more other plans satisfy the coverage requirements of
Code ss. 410(b) only if aggregated with this Plan, then this Section 5.5 will be
applied by determining the ACPs of all Participants as if all the plans were a
single plan.
(2) For any Plan Year in which the ESOP feature is activated,
SavingsPLUS Contributions under the QSOP may not be aggregated with employee
contributions or matching contributions under any other plan, including this
Plan, to the extent prohibited by the regulations under Code ss. 410(b), as
modified by the regulations under Code ss. 401(k).
(c) Multiple Use Limitation. The ACPs of all Highly Compensated
Employees will be reduced (beginning with the highest of such percentages) to
the extent required under Code ss. 401(m) and the regulations issued under that
section to prevent multiple use of the alternative test described in Code ss.
401(k)(3)(A)(ii)(II) and in Code ss. 401(m)(2)(A)(ii) in the same Plan Year. The
reduction will be treated as an Excess Aggregate Contribution.
(d) Action to Satisfy ACP Test.
(1) Distribution or Forfeiture of Excess Aggregate Contributions.
22
Notwithstanding any other provision of this Plan, Excess Aggregate
Contributions made for any Plan Year adjusted for investment gains and losses
will be distributed from the Accounts of Highly Compensated Employees no later
than the last day of the immediately following Plan Year.
For any Plan Year before the Board activates the ESOP feature of the
QSOP, the Excess Aggregate Contributions will be distributed on behalf of each
Highly Compensated Employee, starting with the Highly Compensated Employee who
has the largest sum of those contributions and ending when the Excess Aggregate
Contributions are distributed. The Excess Aggregate Contributions will first be
reduced by distributing After-Tax Contributions from this Plan, and then by
distributing SavingsPLUS Contributions from the QSOP. If a distribution cannot
be made from this Plan because After-Tax Contributions have been transferred to
the QSOP (without having been transferred back to this Plan), then the
distribution will be made from the Highly Compensated Employee's savings plan
after-tax contribution account in the QSOP.
For any Plan Year in which the ESOP feature is activated, the
distribution of Excess Aggregate Contributions will be made on the basis of the
amount of After-Tax Contributions made on behalf of a Highly Compensated
Employee, starting with the Highly Compensated Employee with the most After-Tax
Contributions and ending when the Excess Aggregate Contributions are
distributed.
(2) Determination of Investment Gain or Loss. Excess Aggregate
Contributions will be adjusted for investment gain or loss for the Plan Year for
which such contributions were made in accordance with the regulations under Code
ss. 401(m) but will not be adjusted for investment gain or loss for the period
between the end of the Plan Year and the date the Excess Aggregate Contributions
are distributed.
Article VI. VALUATION AND ACCOUNT DEBITS AND CREDITS
Section 6.1 Accounts. The Committee will establish and maintain an
Account (composed of such subaccounts as the Committee deems appropriate) in the
name of each Participant to which will be credited such sums of cash or other
property from time to time contributed or transferred to this Plan together with
the earnings, profits and appreciation on those assets and to which will be
charged the losses and depreciation on those assets and the Participant's share
of the expenses of this Plan and the Trust Fund unless the Employer Companies
pay for such expenses.
Section 6.2 Allocation Procedure. As of the last day of each Accounting
Period each Account balance will be adjusted to reflect the following credits or
debits as soon as practicable after the Committee receives the Employer
Companies' payroll data and other relevant records:
(a) His or her Pre-Tax Contributions, After-Tax Contributions and
Rollover Contributions (in accordance with ARTICLE III);
23
(b) Effective as of November 23, 1998, his or her transfers of amounts
of, or amounts attributable to, Pre-Tax Contributions, After-Tax Contributions
and Rollover Contributions (together with any earnings thereon) to and from the
QSOP in accordance with Sections 4.1 and 4.2;
(c) His or her amounts transferred pursuant to a merger or other event
described in Section 14.3 and in accordance with provisions set forth in
Appendix 14.3;
(d) Effective as of November 23, 1998, his or her transfers of
SavingsPLUS Contributions from the QSOP (together with any earnings thereon) in
accordance with Section 4.1;
(e) His or her pro rata share of investment earnings, profits, and
investment losses;
(f) His or her pro rata share of appreciation and depreciation;
(g) His or her per capita share of the administrative expenses of the
Plan and Trust Fund and his or her pro rata share of all other expenses of the
Plan and Trust Fund except to the extent that the Employer Companies pay for
those administrative or other expenses; and
(h) Distributions, withdrawals or transfers from his or her Account.
The Committee will make these and any additional credits or debits as
the Committee deems necessary or appropriate under the circumstances in whatever
sequence the Committee deems appropriate under the circumstances.
Section 6.3 Allocation Corrections. If an error or omission is
discovered in any Account, an appropriate adjustment will be made to such
Account and to such other Accounts as deemed appropriate and proper under the
circumstances by or at the direction of the Committee in order to remedy such
error or omission.
Article VII. INVESTMENTS
Section 7.1 Investment of Trust Fund.
(a) It is intended that the Plan satisfy the conditions for the
participant-directed investment of Plan accounts contained in ERISAss.404(c) and
the regulations thereunder (Labor Regulation Section 2550.404c-1), so as to
afford to each Participant the opportunity to exercise control over the assets
in his or her Account and to choose, from a broad range of investment
alternatives, the manner in which said assets are invested. In accordance with
Sections 7.2 through 7.4, each Participant shall have the opportunity to choose,
in accordance with such procedures as the Committee or its designee may
prescribe, among the Investment Options selected by the Committee and
communicated to the Participants. Specific provisions which applied to these
Investment Options prior to November 23, 1998, are set forth in Appendix 7.1.
The initial allocation
24
of the Participant's Account among Investment Options must be made in ten
percent (10%) increments before July 1, 2000, and effective July 1, 2000, one
percent (1%) increments.
(b) In order to provide Participants the opportunity to obtain
sufficient information to make informed decisions with regard to Investment
Options:
(1) The Committee or its designee shall provide each Participant, by
means of the summary plan description or by separate written communication, with
the following information:
(i) An explanation that the Plan is intended to constitute a plan
described in ERISA ss. 404(c) and the regulations thereunder, and that the
fiduciaries of the Plan may be relieved of liability for any losses which are
the direct and necessary result of investment instructions by the Participant.
(ii) With respect to each Investment Option, a general description of
the investment objectives and risk and return characteristics of such Investment
Option, including information relating to the type and diversification of assets
comprising the portfolio of the Investment Option.
(iii) Identification of the investment manager, if any, with respect to
each Investment Option.
(iv) An explanation of the circumstances under which Participants may
give investment instructions and any limitations or restrictions on such
instructions, including any restrictions with respect to transfers to or between
Investment Options, and, if voting, tender or similar rights with respect to
investments held in an Investment Option are passed through to Participants, any
restrictions on such rights.
(v) A description of any transaction fees and expenses that affect the
Participant's Account balance in connection with the purchase or sale of
interests in the several Investment Options (e.g., commissions, sales loads,
deferred sales charges, redemption or exchange fees).
(vi) The name, address and telephone number of the Plan fiduciary (or
its designee) that is responsible for the provision of information upon request
as described in paragraph (2) below.
(vii) Such other information as may be required to be disclosed to
Participants, with respect to an Investment Option, in accordance with Labor
Regulation Section 2550.404c-1(b)(2)(B)(1).
(2) The Committee or its designee shall provide each Participant with
the following information upon request, based on the latest information
available to the Plan:
25
(i) A description of the annual operating expenses of each Investment
Option (e.g., investment management or administrative fees, transaction costs)
that reduce the Option's rate of return to Participants and beneficiaries, and
the aggregate amount of such expenses expressed as a percentage of the average
net assets of the Investment Option.
(ii) Copies of prospectuses, financial statements and reports relating
to the Investment Options, to the extent such information is provided to the
Plan.
(iii) A list of the assets comprising the portfolio of each Investment
Option that constitutes plan assets within the meaning of Labor Regulation
Section 2510.3-101, the value of each such asset (or the proportion of the
Investment Option of the investment which it comprises), and, with respect to
each such asset that is a fixed rate investment contract issued by a bank,
savings and loan association or insurance company, the name of the issuer of the
contract, the term of the contract and the rate of return on the contract.
(iv) Information concerning the value of shares or units in each
Investment Option available to Participants and Beneficiaries under the Plan, as
well as the past and current investment performance of such Investment Option,
determined, net of expenses, on a reasonable and consistent basis.
(v) Such other information as may be required to be disclosed upon
request to Participants, with respect to an Investment Option, in accordance
with Labor Regulation Section 2550.404c-1(b)(2)(B)(2).
(3) The Committee or its designee shall provide each Participant with
confirmation statements, as applicable, to report (i) his or her enrollment;
(ii) the Elective Deferral percentage selected by the Participant; (iii) the
Voluntary Contribution percentage selected by the Participant; (iv) loans, if
any, made to the Participant from the Plan; (v) Rollover Contributions made by
the Participant; (vi) withdrawals and distributions from the Participant's
Account; and (vii) on or after November 23, 1998, all transfers to and from the
QSOP. The Committee or its designee shall provide each Participant with the
opportunity to obtain written confirmation of the Participant's investment
instructions.
Section 7.2 Investment of Accounts. The Trustee shall invest and
reinvest each Participant's Account among the Investment Options in accordance
with the instructions provided by such Participant, which shall remain in force
until altered in accordance with Sections 7.3 and 7.4. The same Investment
Options designated by the Participant and the same percentage allocations with
respect to each Investment Option selected shall apply to all of the
Participant's subaccounts. Notwithstanding the foregoing, (a) a Participant
shall direct the investment of any sums transferred from the QSOP to this Plan
at the time of such transfer via the VRU or in accordance with such other
procedures as are prescribed from time to time by the
26
Committee or its designee, and such investment directions shall be effective as
soon as practicable following the receipt thereof; and (b) a Participant may, on
a form provided by the Trustee, make a separate written election with respect to
the Participant's Rollover Contribution to have his or her Rollover Contribution
invested in a manner independent of his or her other subaccounts, so long as
such written election is transmitted to the Trustee at the same time as the
Rollover Contribution is made to the Plan. Such investment directions must be in
increments of ten percent (10%) before July 1, 2000, and effective July 1, 2000,
in increments of one percent (1%). Such investment directions must result in the
investment of one hundred percent (100%) of the directed amount. Except as set
forth in Schedule 7.2 with respect to periods prior to November 23, 1998,
authorizations that do not result in an allocation of one hundred percent (100%)
or are incorrect in any other respect will not be processed and the prior
investment allocation shall continue in effect. Notwithstanding the foregoing,
the Trustee may refuse to follow any investment instructions that the Trustee or
the Committee reasonably believes could result in a transaction prohibited under
ERISA ss. 406 or Code ss. 4975 and for which there is no exemption, could
generate income that would be taxable to the Plan, would not be in accordance
with the Plan or with ERISA, could cause the Trustee to maintain indicia of
ownership of Plan assets outside of the United States, could jeopardize the
Plan's tax exempt status or could result in a loss to the Plan in excess of the
Participant's Account.
Section 7.3 Investment Allocation of Future Contributions. Each
Participant may elect to change the investment allocation of future Pre-Tax
Contributions or, if none, his or her future After-Tax Contributions at any
time. Each election to change a Participant's investment allocation among
Investment Options shall be made via the VRU or in accordance with such other
procedures as are prescribed by the Committee or its designee from time to time,
and shall be effective as soon as practicable following the receipt thereof.
Such election shall apply uniformly to all future Pre-Tax Contributions and
After-Tax Contributions made by or on behalf of the Participant. Changes must be
in increments of ten percent (10%) before July 1, 2000, and effective July 1,
2000, in increments of one percent (1%). Changes must result in a total
investment of one hundred percent (100%) of the Participant's contributions
under the Plan. Except as set forth in Schedule 7.2 with respect to periods
prior to November 23, 1998, authorizations that do not result in an allocation
of one hundred percent (100%) of the Participant's future contributions or are
incorrect in any other respect will not be processed and the prior investment
allocation shall continue in effect.
Section 7.4 Transfer of Account Balances Between Investment Options.
Each Participant may elect to transfer the balances in his or her Account among
the Investment Options at any time. Transfers pursuant to this Section 7.4 shall
apply uniformly to all amounts allocated to each subaccount within the
Participant's Account at the time of such election. Such election shall be made
via the VRU, or in accordance with such other procedures as shall be prescribed
by the Committee or its designee from time to time, and shall be effective as
soon as practicable following receipt thereof, subject to limitations, if any,
of the investment vehicles selected. Such transfers must be in increments of ten
percent (10%) before July 1, 2000, and effective July 1, 2000, in increments of
one percent (1%). Such transfers must result in the investment of one hundred
percent (100%) of the Participant's Account. If a transfer authorization does
not result in the allocation of one hundred percent (100%) of the Participant's
Account or if it is incorrect in any other respect, the transfer authorization
will not be processed by the Committee or its designee and the prior investment
allocation will continue in effect.
27
Section 7.5 Ownership Status of Funds. The Trustee shall be the owner
of record of the assets invested under the Investment Options. The Trustee or a
recordkeeper designated by the Committee shall maintain or have maintained
records for each Investment Option allocating a portion of the investment
representing such Investment Option to each Participant who has elected that his
or her Account be invested in such Investment Option. The records shall reflect
the U.S. dollar value of each Participant's portion of each Investment Option.
Section 7.6 Statements. The Committee or its designee shall furnish to
each Participant, at least annually, a statement of his or her Account, and a
Summary Annual Report. At a minimum, while not requiring specific line items,
each statement of a Participants' Individual Account shall reflect the
following:
(a) The balance in the Participant's Account as of the preceding
Valuation Date, broken down among the Investment Options;
(b) The amount of contributions allocated to the Account, broken down
among the Investment Options;
(c) The increase or decrease in value of the Account, broken down among
the Investment Options as a result of investment performance and
appreciation/depreciation since the previous Valuation Date, including the
expenses of administering the Fund since the previous Valuation Date;
(d) Participant withdrawals or loans since the previous Valuation Date,
broken down among the Investment Options; and
(e) The new balance in the Account as of the current Valuation Date,
broken down among the Investment Options
Section 7.7 Transition Period to Implement Plan Changes. In connection
with a change in record keepers, trustees, or other service providers for the
Plan, a change in the methodology for valuing accounts, a change in investment
options, a plan merger or other circumstances, a temporary interruption in the
normal operations of the Plan may be required in order to properly implement
such change or merger or take action in light of such circumstances. In such
event or under such circumstances, the Committee, may take such action as it
deems appropriate under the circumstances to implement such change or merger or
in light of such circumstances, including authorizing a temporary interruption
in a Participant's ability to obtain information about his or her Account, to
take distributions from such Account and to make changes in the investment of
that Account, provided the Committee will take appropriate action as to give
Participants as much advance notice of the interruption as possible and to
minimize the scope and length of the interruption in normal Plan operations. In
addition, when changing investment options, the Committee will take such action
as it deems appropriate under the circumstances to direct the investment of the
funds pending completion by the Trustee of the administrative processes
necessary to transfer investment authority to the Participants, including, but
not limited to, mapping monies from old funds to new funds.
28
Section 7.8 Alternate Payees and Beneficiaries. Solely for purposes of
this Article VII, an Alternate Payee or a Beneficiary who was the spouse of a
Participant and who elects the installment distribution form in accordance with
Section 9.5(b) will be treated as a Participant.
Article VIII. VESTING
Each Participant shall at all times have a fully vested nonforfeitable
interest in the value of his or her Account.
Article IX. DISTRIBUTIONS, WITHDRAWALS AND TRANSFERS
Section 9.1 General. A Participant may request distribution of his or
her Account when he or she has a Separation from Service and a Participant may
request a withdrawal from his or her Account before a Separation from Service to
the extent provided in Section 9.8.
Section 9.2 Separation From Service. As a general rule, if a
Participant has a Separation from Service he or she may request a distribution
of his or her Account and the Account will be paid to him or her as soon as
practicable (but, generally, no earlier than thirty (30) days) after the
Separation from Service. However, no payment will be made without the
Participant's consent before age seventy and one-half (70 1/2) if (a) the value
of the vested portion of his or her Account exceeds thirty-five hundred dollars
($3,500) at the time of the distribution or for distributions made before
October 17, 2000, exceeded thirty-five hundred dollars ($3,500) at the time of
any prior distribution under this Plan (including any in-service withdrawals
made under Section 9.7), or (b) effective as of November 23, 1998, the sum of
the value of his or her Account and the value of his or her account under the
QSOP exceeds thirty-five hundred dollars ($3,500) at the time of the
distribution or for distributions made before October 17, 2000, exceeded
thirty-five hundred dollars ($3,500) at the time of any prior distribution under
this Plan (including any in-service withdrawals made under Section 9.7).
Section 9.3 Deferral of Payment until 70 1/2 . Unless a Participant
consents to an earlier distribution or consent is not required under Section
9.2, the Participant will be deemed to have elected to defer payment of his or
her Account (which deemed election will be in lieu of a written election that
conforms to the requirements of Code ss. 401(a)(14) and regulations promulgated
thereunder) until the earlier of the date of such Participant's death or the
date such Participant attains age seventy and one-half (70 1/2) or has a
Separation from Service, whichever is later, or for a Participant who is a five
percent (5%) owner (as defined in Code ss. 416), the date that such Participant
has a Separation from Service.
If a Participant consents to payment or the Participant's consent is not
required under Section 9.2, payment of a Participant's Account be made no later
than the sixtieth (60th) day after the close of the Plan Year in which the
latest of the following events occurs:
(a) the date on which the Participant attains age sixty-two (62), which
is the normal retirement age under the Plan; or
29
(b) the Participant has a Separation from Service.
Section 9.4 Required Beginning Date. Notwithstanding the foregoing, for
Plan Years beginning on or after January 1, 1997 a Participant's Account will be
paid to him or her no later than April 1 of the calendar year following (a) the
calendar year in which he or she reaches age seventy and one-half (70 1/2) or
(b) if later, for a Participant who is not a five percent (5%) owner (as defined
in Code ss. 416), the calendar year in which he or she has a Separation from
Service.
Section 9.5 Distribution Form.
(a) General. Distribution of each Participant's Account shall be,
except as provided under this Section 9.5(b) or Appendix 14.3, in a lump sum
distribution of Participant's entire Account.
(b) Special Installment Option. Effective as of July 1, 2000, a
Participant shall be eligible to receive all or a portion of his or her Account
in the form of a monthly installment distribution only if (1) he or she
Separates from Service on or after attaining age fifty-five (55) and completing
a Period of Service of at least ten (10) years determined from the Employment
Commencement Date or Reemployment Commencement Date that most closely preceded
his or her satisfaction of the Participation Requirement, (2) he or she has at
the time monthly installment payments commence at least twenty-thousand dollars
($20,000) credited to his or her Account excluding any amounts which are
invested in a "self-managed account," and (3) has an account established at a
financial institution that can accept wire transfer monthly installment
payments. A Participant shall select in accordance with procedures prescribed by
the Committee or its designee the number of monthly installment payments that he
or she wants to receive; provided, however, a Participant must select a minimum
of twelve (12) monthly installment payments and each monthly installment payment
must be at least fifty dollars ($50). Each monthly installment payment shall be
equal to the balance credited to the Participant's Account (excluding any
amounts which are invested in a "self-managed account") as of the last business
day of the month prior to the date of payment divided by the number then
remaining installment payments. Only the spouse of a Participant may, as
Beneficiary, elect to continue to receive monthly installment payments; any
other Beneficiary shall receive the balance of the Participant's Account in a
lump sum payment in accordance with Section 9.6(d). Notwithstanding any other
provision, (i) if the amount of a monthly installment becomes less than fifty
dollars ($50), installment payments will cease immediately and no further
payments will be made from the Account until the Participant (or a deceased
Participant's spouse) requests a lump sum distribution and (ii) any balance
remaining to be paid in installments at a Participant's seventieth (70th)
birthday shall be paid out in a lump sum as soon as practicable thereafter.
A "self-managed account" shall mean an Investment Option that allows a
Participant to invest directly in stocks, bonds or mutual funds of his or her
choice subject to such rules as are established from time to time by the
Committee.
30
A Participant (or spouse of a deceased Participant) who begins
receiving installment payments may elect to terminate such installments at any
time, and make a new election of monthly installments at any time, provided the
requirements of this Section 9.5(b) are independently satisfied with respect to
each such new election.
Section 9.6 Death.
(a) General. Subject to the provisions set forth in Appendix 14.3, if a
Participant dies before his or her Account is paid to him or her in full, the
remaining portion of the Account will be paid to his or her Beneficiary
determined in accordance with (b) below.
(b) Determination of Beneficiary. A Participant's Beneficiary(ies) will
be determined as follows:
(1) Except as otherwise provided below, a Participant's sole primary
Beneficiary will be his or her surviving spouse, if the Participant is lawfully
married on the date of his or her death.
(2) If the Participant was not lawfully married at death, if the
Participant's surviving spouse consented in writing before a notary public to
the designation of some other person or persons as the Participant's Beneficiary
or if the Committee determines that spousal consent is not required under the
Code or ERISA, then the Participant's Beneficiary will be the person or persons
so designated in writing by the Participant on a form satisfactory to the
Committee in accordance with (c) below.
(3) The Participant's Beneficiaries will be the surviving children of
the Participant, in equal shares, if any of the following apply:
(i) The Participant did not have a spouse and failed to properly
designate another Beneficiary;
(ii) Neither the Participant's spouse, if any, nor any other
Beneficiaries survive the Participant; or
(iii) The whereabouts of each person designated as a Beneficiary is
unknown and no death benefit claim is submitted to the Committee prior to
December 31 of the calendar year following the calendar year in which the
Participant died.
(4) If a Beneficiary is not identified and located pursuant to Section
9.6 (b)(1), (2) or (3), the Participant's Account will be paid to the
Participant's estate.
(c) Designation of Beneficiaries. A Participant may designate one or
more Beneficiaries on a form satisfactory to the Committee. A Participant may
designate both
31
primary Beneficiaries and contingent Beneficiaries. Unless clearly indicated
otherwise by the Participant on the Beneficiary designation form: (1) if the
Participant designates multiple primary Beneficiaries or multiple contingent
Beneficiaries, each will share equally in the Account and (2) persons designated
as contingent Beneficiaries will be treated as the Participant's Beneficiaries
only if each of the Participant's primary Beneficiaries fail to survive the
Participant or cannot be located at the time of the distribution of the
Participant's Account. A Participant may change his or her designation of
Beneficiary from time to time, provided, however, that if the Participant's
spouse, if any, is not the sole primary Beneficiary of the Account, such spouse,
if any, must consent to the designation of other Beneficiaries in writing before
a notary public. No such designation or change will be effective unless and
until it is received by the Committee prior to the Participant's death.
(d) Payment to Beneficiary. Subject to 9.5(b), a Beneficiary's interest
in the Account of a deceased Participant will be paid to him or her in a single
sum as soon as practicable after the Committee determines that the person has an
interest in the Account. Distribution will be completed by December 31 of the
calendar year containing the fifth anniversary of the date of the Participant's
death.
(e) Information to the Committee. In its discretion, the Committee may
require a copy of the Participant's death certificate and such other information
as the Committee deems relevant to be submitted by the Beneficiary when making a
request for death benefits under the Plan.
Section 9.7 Distribution Pursuant to a Qualified Domestic Relations
Order. Any portion of a Participant's Account that is awarded to an alternate
payee by reason of a qualified domestic relations order in accordance with
Section 15.5(c) will, to the extent provided in such order, become available for
distribution as soon as practicable following the determination by the Committee
that the order meets the requirements of Code ss. 414(p).
Section 9.8 In-Service Withdrawals from Savings Plan Accounts. A
Participant may make a withdrawal from his or her Account before his or her
Separation from Service in accordance with the rules of this Section 9.8 or, in
the case of a Merged Account, in accordance with the rules of Section 9.9.
(a) After-Tax Contribution Account, and Rollover Contribution Account.
A Participant may withdraw all or a portion of his or her After-Tax Contribution
Account or his or her Rollover Contribution Account at any time by making a
request for withdrawal via VRU or in accordance with such other procedures
prescribed by the Committee or its designee from time to time.
The Participant's After-Tax Contribution Account or Rollover
Contribution Account shall both be considered a separate "contract" for purposes
of Code ss. 72(d) and a withdrawal from those subaccounts will be allocated on a
pro rata basis with respect to the pre-and post-tax monies held in such
subaccount.
32
A Participant's subaccount for after-tax contributions under a Merged
Account shall be treated as part of his or her After-Tax Contribution Account
and a Participant's subaccount for rollover contributions under a Merged Account
shall be treated as a part of his or her Rollover Contribution Account for
purposes of this Section 9.8.
(b) Withdrawals After Age Fifty-Nine and One-Half (59 1/2). A
Participant who is employed by an Affiliate may withdraw all or a portion of his
or her Pre-Tax Contribution Account or, if applicable, any subaccount for
pre-tax contributions under a Merged Account after age fifty-nine and one-half
(59 1/2), by submitting a request for withdrawal via VRU or in accordance with
such other procedures prescribed by the Committee or its designee for this
purpose.
(c) Hardship Withdrawals. Prior to age fifty-nine and one-half (59
1/2), a Participant may withdraw any portion of his or her Pre-Tax Contribution
Account or, if applicable, any subaccount for pre-tax contributions under a
Merged Account (other than earnings on the Pre-Tax Contributions or pre-tax
contributions under a Merged Plan held in the respective subaccount) in the
event of financial hardship and a hardship withdrawal will be granted if, and to
the extent that, the Committee determines that the withdrawal is "necessary" to
satisfy an "immediate and heavy financial need" as determined in accordance with
this Section 9.8(c)(1).
(1) Financial Need. An "immediate and heavy financial need" means one
or more of the following:
(i) expenses for unreimbursed medical care described in Code ss. 213(d)
incurred by the Participant, the Participant's spouse or dependents (as defined
in Code ss. 152) and amounts necessary for those individuals to obtain the
medical care,
(ii) the purchase of a principal residence for the Participant
(excluding mortgage payments),
(iii) the payment of tuition and related educational fees, including
room and board, for the next twelve (12) months of post-secondary education for
the Participant or the Participant's spouse, children or dependents (as defined
in Code ss. 152), or
(iv) the prevention of the eviction of the Participant from his or her
principal residence or the foreclosure on the mortgage of the Participant's
principal residence.
(2) Withdrawal Necessary to Satisfy Need. A hardship withdrawal will be
deemed to be "necessary" to satisfy a financial need only if both of the
following conditions are satisfied:
33
(i) The withdrawal will not exceed the amount of the need and any
amounts necessary to pay any federal, state or local income taxes or penalties
reasonably anticipated to result from the withdrawal.
(ii) The Participant has obtained all distributions and withdrawals
(other than hardship withdrawals) and all nontaxable loans currently available
from all plans maintained by the Affiliates. However, a Participant will not be
required to obtain a loan if the effect of the loan would be to increase the
amount of the need.
(3) Suspension of Contributions and Adjusted Limits. If any portion of
the hardship withdrawal comes from the Participant's Pre-Tax Account, the
following restrictions apply:
(i) For the twelve (12) month period following the date of the
withdrawal, the Participant cannot make any Pre-Tax Contributions or After-Tax
Contributions under this Plan or elective deferrals or employee contributions
under any other plans maintained by the Employer and any of its Affiliates. For
this purpose, "other plans" means all qualified and nonqualified plans of
deferred compensation, including a stock option, stock purchase or other similar
plan, but excluding a health or welfare benefit plan (even if it is part of a
cafeteria plan described in Code ss. 125).
(ii) For the calendar year immediately following the calendar year in
which the withdrawal occurs, the Participant's Pre-Tax Contributions under this
Plan and elective deferrals under all other plans maintained by the Affiliates
cannot exceed the dollar limitation under Code ss. 402(g) for that calendar year
(as described in Section 5.3) reduced by the amount of the Participant's Pre-Tax
Contributions and elective deferrals under those other plans for the calendar
year in which the withdrawal occurs.
(4) Procedures. Any hardship withdrawal election must describe in
detail the nature of the hardship and the amount needed as a result of the
hardship and must include any additional information that the Committee requests
consistent with this Section 9.8, including but not limited to, personal
financial records.
Finally, the hardship withdrawal rules in this Section 9.8 are intended to
satisfy the safe harbor requirements in the Code ss. 401(k) regulations, and the
Committee has the power to implement written procedures to modify these rules
and to adopt additional rules to the extent permissible under those regulations.
(d) Payment of Withdrawal. Payment of the amount requested under
Section 9.8 if permitted will be made to the Participant in a single lump sum as
soon as practicable after his or her election is processed.
34
Section 9.9 Other In-Service Withdrawals. A Participant who was a
participant in a Merged Plan may make an in-service withdrawal from his or her
Merged Account as described in Appendix 14.3.
Section 9.10 Redeposits Prohibited. No amount withdrawn pursuant to
Section 9.8 or 9.9 may be redeposited in the Plan.
Section 9.11 Distributions in Cash. The distribution of an Account will
be made entirely in cash.
Section 9.12 Eligible Rollover Distribution.
(a) General. Notwithstanding any provision of this Plan to the contrary
that would otherwise limit a Distributee's election under this Section 9.12, a
Distributee may elect, at the time and in the manner prescribed by the
Committee, to have any portion of an Eligible Rollover Distribution of two
hundred dollars ($200) or more transferred to an Eligible Retirement Plan
specified by the Distributee in a Direct Rollover.
(b) Definitions.
(1) Eligible Rollover Distribution. An Eligible Rollover Distribution
is any distribution of all or any portion of the balance to the credit of the
Distributee, except that an Eligible Rollover Distribution does not include:
(i) any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for the life (or life
expectancy) of the Distributee or the joint lives (or joint life expectancies)
of the Distributee and the Distributee's designated beneficiary, or for a
specified period of ten (10) years or more;
(ii) any distribution to the extent that distribution is required under
Codess. 401(a)(9);
(iii) any distribution of Pre-Tax Contributions or pre-tax
contributions under a Merged Plan on account of hardship on or after January 1,
1999;
(iv) and the portion of any distribution that is not includible in
gross income.
(2) Eligible Retirement Plan. An Eligible Retirement Plan is an
individual retirement account described in Code ss. 408(a), an individual
retirement annuity described in Code ss. 408(b), an annuity plan described in
Code ss. 403(a), or a qualified trust described in Code ss. 401(a), that accepts
the Distributee's Eligible Rollover Distribution. However, in the case of an
Eligible Rollover Distribution
35
to the surviving spouse, an Eligible Retirement Plan is an individual retirement
account or individual retirement annuity.
(3) Distributee. A Distributee includes an employee or former employee.
In addition, the employee's or former employee's surviving spouse and the
employee's or former employee's spouse or former spouse who is the alternate
payee under a qualified domestic relations order, as defined in Code ss. 414(p),
are Distributees with regard to the interest of the spouse or former spouse.
(4) Direct Rollover. A Direct Rollover is a payment by this Plan to the
Eligible Retirement Plan specified by the Distributee.
(5) Additional Limitations. Notwithstanding the foregoing,
(i) if the Distributee elects to have his or her Eligible Rollover
Distribution paid in part to him or her and paid in part as a Direct Rollover,
the Direct Rollover must be in an amount of two hundred dollars ($200) or more;
and
(ii) a Direct Rollover to more than one Eligible Retirement Plan will
not be permitted.
Section 9.13 30-Day Waiver. A distribution may commence less than
thirty (30) days after the notice required with respect to such distributions
under Code ss. 411(a)(11) ("Notice") is given, provided that:
(a) the Notice informs the Participant that he or she has the right to
a period of at least thirty (30) days after receiving the Notice to consider the
decision of whether or not to elect a distribution (and, if applicable, a
particular distribution option), and
(b) the Participant, after receiving the Notice, affirmatively elects a
distribution within the thirty (30)-day period.
Section 9.14 Withholding Obligations. The amount of any payment from an
Account will be reduced as necessary to satisfy any applicable tax withholding
requirements with respect to such payment.
Section 9.15 Account Balance. A payment from an Account may be delayed
pending the completion of allocations to the Account if necessary to avoid
underpayment or overpayment.
Section 9.16 Reemployment. Except as provided in Section 9.4 or in
connection with an in-service withdrawal, no payment will be made from an
Account if a Participant is reemployed as an Employee before payment is made.
Section 9.17 Claims Procedure. All claims for benefits hereunder will
be directed to the Committee or to a member of the Committee designated for that
purpose. Within ninety (90)
36
days following receipt of a claim for benefits, the Committee will determine
whether the claimant is entitled to benefits under the Plan, unless additional
time is required for processing the claim. In this event, the Committee will,
within the initial ninety (90)-day period, notify the claimant that additional
time is needed, explain the reason for the extension, and indicate when a
decision on the claim will be made, and such decision will be made within one
hundred eighty (180) days of the date the claim is filed.
A denial by the Committee of a claim for benefits will be stated in
writing and delivered or mailed to the claimant. The notice will set forth the
specific reasons for the denial, written in a manner calculated to be understood
by the claimant. The notice will include specific reference to the Plan
provisions on which the denial is based and a description of any additional
material or information necessary to perfect the claim, an explanation of why
this material or information is necessary, the steps to be taken if the claimant
wishes to submit his or her claim for review and, effective January 1, 2002, a
description of the Plan's review procedures, and the time limits applicable to
such procedures, and a statement of the claimant's right to bring a civil action
under ERISA ss. 502(a).
The Committee will afford a reasonable opportunity to any claimant
whose request for benefits has been denied for a review of the decision denying
the claim. The review must be requested by written application to the Committee
within sixty (60) days following receipt by the claimant of written notification
of denial of his or her claim. Pursuant to this review, the claimant or his or
her duly authorized representative may review any documents, records and other
information which are pertinent to the denied claim and may submit issues and
comments in writing. Effective January 1, 2002, a claimant may also submit
documents, records and other information relating to his or her claim, without
regard to whether such information was submitted in connection with his or her
original benefit claim.
A decision on the claimant's appeal of the denial of benefits will
ordinarily be made by the Committee within sixty (60) days of the receipt of the
request for review, unless additional time is required for a decision on review,
in which event the decision will be reviewed not later than one hundred twenty
(120) days after receipt of request for ruling. Written notice of the need for
an extension will be given to the claimant within sixty (60) days of his or her
request for review.
The decision on review will be in writing and will include specific
reasons for the decision, written in a manner calculated to be understood by the
claimant, specific reference to the Plan provisions on which the decision is
based and, effective January 1, 2002, a statement that the claimant or his or
her authorized personal representative may review any documents and records
relevant to the claim determination, a statement describing any further
voluntary appeals procedure, if any, and a statement of the claimant's right to
bring a civil action under ERISA ss. 502(a).
Section 9.18 Forfeiture in Case of Unlocatable Participant. If the
Committee is unable to pay any benefits under the Plan to any Participant or to
a Beneficiary of any Participant who is entitled to benefits under this Plan
because the location of such person cannot be ascertained, the Committee will
proceed as follows
37
(a) Within 90 days of the date any benefits are payable under this
Plan, the Committee will send an appropriate notice to such individual, to the
last address for such individual listed in the Committee's records.
(b) If this notice is returned as unclaimed or the individual cannot be
located
(1) effective as of July 1, 2001, at the end of the ninety (90)-day
period which follows the ninety (90)-day period referred to in Section 9.18(a),
or
(2) prior to July 1, 2001, during each of the next three plan years,
the Committee will send a notice to the last address listed in its records for
the individual and, effective as of July 1, 2001, will attempt to locate such
individual through a commercial locator service. (c) If such individual has not
been located by
(1) effective as of July 1, 2001, the December 31 of the calendar year
following the calendar year in which benefits become payable, or
(2) prior to July 1, 2001, the last day of the third Plan Year referred
to in Section 9.18(b)(2),
and in the case of a Beneficiary, there is no alternate Beneficiary identified
under the procedures of Section 9.6, all amounts held for his or her benefit
will be forfeited and all liability for payment of that benefit will terminate,
unless some other procedure is permitted or required by law. In any such case,
the funds released as a result of such forfeiture each Plan Year will be applied
as provided in Section 9.18(d). However, if an individual subsequently makes
what the Committee determines to be a valid and proper claim to the Committee
for his or her benefit that was forfeited, the forfeited amount will be restored
without interest and will be distributed in accordance with the terms of this
Plan
(d)
(1) The forfeitures which occur prior to January 1, 2002 in any Plan
Year under Section 9.18(c) shall be applied as additional investment income.
(2) The forfeitures which occur on or after January 1, 2002 in any Plan
Year under Section 9.19(c) shall be applied in the next following Plan Year and
in subsequent Plan Years to the following items in the order set forth below
until all the forfeitures have been so applied:
(i) to restore each previously forfeited benefit upon a valid and
proper claim as described in Section 9.18(c), and
38
(ii) to pay the reasonable and proper expenses of the Plan and Trust
Fund as provided under Article XII.
To the extent forfeitures for any Plan Year exceed amounts described in (1) and
(2), such excess forfeitures shall be allocated to each Participant who is an
Eligible Employee for such Plan Year on a per capita basis.
Section 9.19 Distribution/Transfer Processing Rules. All distributions,
transfers and other transactions will be processed via VRU or in accordance with
such other procedures as may be prescribed from time to time by the Committee or
its designee, or the Trustee, including procedures regarding the use of
reasonable blackout periods during which no transactions are processed.
Article X. LOANS
Section 10.1 Hardship Loans.
(a) Hardship Loans. Hardship loans from a person's Account under this
Plan are available in accordance with this Section 10.1. A Participant may apply
for a second loan while a first loan is outstanding, provided that repayment on
the first loan is being made in a timely manner. Subject to Section 10.2 and
Section 10.3, no more than two loans may be outstanding at any one time, and any
loan balance which is "rolled over" into a Participant's Account or a loan from
a Merged Plan shall be counted for the purpose of this limitation. Any loan
application must satisfy spousal consent rules, if applicable. Application for a
loan may be made only for the following purposes:
(1) the purchase of a principal residence.
(2) the payment of tuition and related educational fees, including room
and board expenses, for the next twelve (12) months of post- secondary education
for a Participant, his or her spouse or dependents (as defined in Code ss. 152).
(3) the payment of expenses for medical care (as described in Code ss.
213(d)) previously incurred by the Participant, his or her spouse or any
dependents (as defined in Code ss. 152), or necessary for those persons to
obtain medical care.
(4) the payment to prevent eviction from or foreclosure on a
Participant's principal residence.
(5) the payment of expenses in connection with the adoption of a child.
(6) the payment of unreimbursed funeral expenses for the family member
of a Participant. For this purpose "family member" shall mean the spouse of a
Participant, the child of a Participant or the Participant's spouse, the parent
or step-parent of a Participant or the Participant's spouse, the brother or
sister of a
39
Participant or the Participant's spouse, the grandparent of a Participant or the
Participant's spouse, or the grandchild of a Participant or the Participant's
spouse.
(b) Administration. The Committee will be the named fiduciary
responsible for the administration of the loan program under this Plan. The
Committee will establish objective nondiscriminatory written procedures for that
loan program in compliance with Labor Regulation Section 2550.408b-1. Those
procedures and any amendments to those procedures, to the extent not
inconsistent with the terms of this Plan, are incorporated by this reference as
part of this Plan.
(c) Statutory Requirements.
(1) General. All loans made under this Plan will comply with the
following requirements under ERISAss. 408(b)(1):
(i) Each Participant or Beneficiary of a deceased Participant who is an
"party-in-interest" (as defined in ERISA ss. 3(14) ) may request a loan from the
Plan.
(ii) Loans will be made available to Participants and Beneficiaries who
are eligible for a loan on a reasonably equivalent basis.
(iii) Loans will not be made available to Highly Compensated Employees
in an amount greater than the amount made available to other Employees.
(iv) Loans will be made in accordance with specific provisions
regarding loans set forth in this Plan and the written loan procedures
established by the Committee.
(v) Loans will bear a reasonable rate of interest as set by the
Committee.
(vi) Loans will be adequately secured.
(2) Repayment Period.
(i) Principal and interest on the loan must be repaid in substantially
level installments with payments not less frequently than quarterly over a
period of five (5) years or less, or up to fifteen (15) years in the case of a
residential loan.
(ii) The Committee may establish such rules as it deems necessary or
appropriate for the repayment of loans, including a cure period for repayments.
Effective as of July 31, 2000, the Committee may permit a Participant who is on
a bona fide leave of absence either without
40
pay or with pay that is at a rate that is less than the amount of the
installment payments required under the terms of the loan to suspend repayment
of the absence (but not to exceed a year, except in the case of a Participant
who is performing qualified military service within the meaning of
Codess.414(u)(5)). If payments are suspended, the loan will be reamortized on
the date that such Participant is no longer entitled to a suspension at the then
outstanding principal and interest (including interest accrued during the
absence) in substantially equal installments over the remaining loan term. The
loan term for a Participant engaged in qualified military service within the
meaning of Codess. 414(u)(5) shall be extended by the period of such service.
Except in the case of a Participant engaged in qualified military service within
the meaning of Codess.414(u)(5), in no event shall any loan become due and
payable later than the applicable period described in Section 10.1(c)(2)(i). In
the case of a suspension of loan payments during a period of qualified military
service within the meaning of Codess. 414(u)(5), the loan must be paid in full
(including interest that accrues during such period) by the end of the original
term extended by the period of military service.
(iii) A loan made under this Section 10.1 shall become due and payable
in full
(A) if a Participant's employment as an Employee terminates for any
reason whatsoever unless such Participant remains a "party-in-interest" with
respect to this Plan following his termination of employment,
(B) if the Committee or the Trustee conclude that the Participant or
Beneficiary no longer is a good credit risk, or
(C) to the extent permissible under federal law, if a Participant's or
Beneficiary's obligation to repay the loan has been discharged through a
bankruptcy or any other legal process or action which did not actually result in
payment in full.
(3) Limitations on Amounts. No loan will be available to a Participant
or a Beneficiary under this Section 10.1 if the Committee determines he or she
would be unable to repay such loan in a timely fashion. The principal amount of
a loan made under this Plan to a Participant or Beneficiary, together with the
outstanding principal amount of any loan made under any plan maintained by an
Affiliate that satisfies the requirements of Code ss.ss. 401 or 403, may not
exceed the lesser of
(i) Fifty percent (50%) of that person's vested portion of his or her
Account (excluding any amounts in such person's SavingsPLUS Transfer Account and
subject to any special consent requirements under Appendix 14.3.) at the time
the loan is made, or
41
(ii) Fifty Thousand Dollars ($50,000), reduced by the excess (if any)
of
(A) the highest outstanding balance of any previous loans from this
Plan and any other plan maintained by an Affiliate during the one-year period
ending immediately before the date on which the current loan is made over
(B) the outstanding balance of the previous loans on the date on which
the current loan is made.
(iii) Minimum Loan Amount. The minimum loan amount is one thousand
dollars ($1,000).
(4) Interest Rate. The interest rate for a loan made under this Section
10.1 shall be one percent above the prime rate as published in the Wall Street
Journal as of the last business day of the month preceding the month in which
the loan application is made. The interest rate will remain fixed for the
duration of the loan.
(5) Method of Repayment. Repayment of a loan made under this Section
10.1 shall be made through payroll withholding except that payment by check will
be permitted under any circumstances where the Committee determines that payroll
deduction would be impracticable or prohibitive. Further, a loan may be repaid
in full at any time prior to the expiration of the installment period of such
loan by a single sum payment to the Trustee of the outstanding principal balance
then due plus any accrued but unpaid interest. All repayments made to an
Affiliate shall be transferred to the Trustee as soon as practicable after such
Affiliate deducts them or receives them.
(6) Security and Default.
(i) Any loan made to a Participant or Beneficiary under this Section
10.1 shall be secured by the lesser of the outstanding principal and interest
due under such loan or fifty percent (50%) of his or her total vested interest
in his or her Account (excluding any amounts in such person's SavingsPLUS
Transfer Account).
(ii) The events of default shall be set forth in the promissory note
and security agreement which evidences the loan, and such events may include the
following:
(A) failure to repay the loan before the end of the five (5) year
maximum period or fifteen (15) year period in the case of a residential loan set
forth in Section 10.1(c)(2).
42
(B) failure to repay the amount due and payable on the loan upon the
occurrence of an event described in Section 10.1(c)(2)(iii).
(iii) Upon default of a loan the Trustee shall upon direction by the
Committee foreclose on such loan and exercise the Plan's security interest in
the Participant's or Beneficiary's Account by reducing the amount otherwise
distributable to him or her under this Plan by the principal amount of the loan
plus any accrued but unpaid interest then due at the time of default as
determined without regard to whether the loan had been discharged through a
bankruptcy or any other legal process or action which did not actually result in
payment in full.
(iv) The Committee shall have the power to direct the Trustee to take
such action as the Committee deems necessary or appropriate to stop the payment
of an Account to or on behalf of a Participant or Beneficiary who fails to repay
a loan (without regard to whether his or her obligation to repay such loan had
been discharged through a bankruptcy or any other legal process or action) until
his or her Account has been reduced by the principal plus accrued but unpaid
interest due (without regard to such discharge) on such loan or to distribute
the note which evidences such loan in full satisfaction of any interest in such
Account which is attributable to the value of such note.
(7) Distribution and Default. The vested portion of an Account actually
payable to an individual who has an outstanding loan will be determined by
reducing the vested portion of an Account by the amount of the security interest
in the Account. Notwithstanding anything to the contrary in this Plan or in the
written loan procedures, in the event of default, foreclosure on the note and
execution of the security interest in an Account will not occur until a
distributable event occurs under this Plan.
(8) Other Conditions. Any loan made under this Plan shall be subject to
such other terms, limitations and conditions as the Committee from time to time
shall deem necessary or appropriate
(9) Accounting. A loan to a Participant shall be considered a separate
investment of the Account of the Participant. Except as set forth in Schedule
10.1(c)(9) with respect to periods prior to November 23, 1998, the proceeds of
the loan shall be withdrawn pro rata from each Investment Option in which the
Participant's Account is invested at the time of the loan and repayments of
principal and interest on the loan shall be invested in the Investment Options
in effect at the time of repayment pursuant to the Participant's investment
election under Article VII.
Section 10.2 Rollover of Loan Balances. Effective October 1, 2001, an
Eligible Employee who becomes an Eligible Employee as a result of an acquisition
by UPS or an
43
Affiliate may elect to rollover one or more loans from another qualified
retirement plan in connection with the rollover of the Participant's entire
balance under such plan. Notwithstanding the foregoing, if a Participant rolls
over more than two loans under this Section 10.2 such Participant may not apply
for or take a new loan under Section 10.1(a) until he or she has repaid in full
all but one loan, and after such repayment such Participant shall be subject to
the limitation set forth in Section 10.1(a).
Section 10.3 Loans from Merged Plans. Any outstanding loan under a
Merged Plan shall continue to be repaid under this Plan following the merger in
accordance with Appendix 14.3. Notwithstanding the foregoing, if a Participant
had more than two loans under a Merged Plan such Participant may not apply for
or take a new loan under Section 10.1(a) until her or she has repaid in full all
but one loan, and after such repayment such Participant shall be subject to the
limitation set forth in Section 10.1(a).
ARTICLE XI. TRUST FUND
The Trustee will hold in trust all assets of the Trust Fund and will
manage, invest and administer the Trust Fund in accordance with the terms of the
trust agreement between UPS and the Trustee, as amended from time to time, and
incorporated herein by reference.
ARTICLE XII. EXPENSES
All reasonable and proper expenses of the Plan and the Trust Fund
(within the meaning of ERISA ss. 403(c)(1) and ss. 404(a)(1)(A)), including the
compensation of each Investment Manager and the Trustee, the expenses related to
the Plan's administration and any taxes that may be levied or assessed against
the Trustee on account of the Trust Fund, will be paid from the Trust Fund,
unless the payment of the expense would constitute a "prohibited transaction"
within the meaning of ERISA ss. 406 or Code ss. 4975. The Employer Companies,
however, will have the right to pay all or any part of any expenses and to be
reimbursed from the Trust Fund for any expenses paid by them that are properly
payable from the Trust Fund. Any expenses that cannot be paid from the Trust
Fund will be paid by the Employer Companies.
Article XIII. ADMINISTRATIVE COMMITTEE
Section 13.1 Committee. The Plan will be administered by a Committee
consisting of not less than three members appointed by the Board, each of whom
is and shall be a "named fiduciary" with respect to the Plan. The Committee will
be the "plan administrator" of the Plan as that term is used in ERISA and the
agent for service of process on or with respect to the Plan.
Section 13.2 Vacancies on Committee. Committee members will serve at
the pleasure of the Board, and all vacancies will be filled by the Board.
Committee members may resign at any time, such resignation to be effective when
accepted by the Board.
Section 13.3 Authority of Committee. The Committee will establish rules
for the administration of the Plan, and will decide all questions arising in the
administration of the Plan not specifically delegated or reserved to the Board,
the Employer, the Individual Trustees or the
44
Trustee. Except as otherwise expressly provided in this Plan, the Committee will
have the exclusive right and complete discretion and authority to control the
operation, management and administration of this Plan, with all powers necessary
to enable the Committee to properly carry out such responsibilities, including
but not limited to, the power to interpret the Plan, to construe the Plan's
terms, and to decide any matters arising in and with respect to the
administration and operation of the Plan, and, subject to the claims procedure
described in Section 9.17, any interpretations or decisions so made will be
final and binding on all persons; provided, however that all such
interpretations and decisions will be applied in a uniform manner to all
similarly situated persons.
Section 13.4 Action by Committee. The Committee will act by a majority
of the Committee members at that time in office. Such action may be taken either
by a vote at a meeting or in writing without a meeting. The Committee may
appoint subcommittees and also may authorize any one or more of the Committee
members or any agent to execute any document or documents or to take any other
action on behalf of the Committee, except that no member of the Committee will
have the right to take any such action on any matter relating solely to himself
or herself or to any of his or her rights or benefits under the Plan.
Section 13.5 Liability of the Committee. The Committee and its members,
to the extent of the exercise of their authority, will discharge their duties
with respect to the Plan in accordance with ERISA. No member will be responsible
for the actions or omissions of another member or of any other party that is a
fiduciary with respect to this Plan, other than himself or herself, which are
not in conformity with the Plan or ERISA, unless (a) the member knowingly
participates in or knowingly conceals such conduct which he or she knows to be
in breach of this standard, (b) his or her own conduct has enabled the other
member or other fiduciary to be in breach of this standard, or (c) he or she has
knowledge of such breach by another member or other fiduciary and fails to make
reasonable efforts under the circumstances to remedy such breach.
Section 13.6 Authority to Appoint Officers and Advisors. The Committee
may appoint such officers as it may deem advisable and may adopt by-laws
covering the transaction of its business. The Committee may appoint and employ
an Investment Manager or Managers, counsel, agents and such other service
providers, including clerical, accounting and advisory service providers, as it
may require in carrying out the provisions of the Plan, and will be fully
protected in relying upon any action taken in reliance upon advice given by such
persons.
Section 13.7 Committee Meeting. The Committee will hold meetings at
such place or places, and at such time or times as it may determine from time to
time, but not less frequently than once each calendar quarter.
Section 13.8 Compensation and Expenses of Committee. The members of the
Committee may receive reasonable compensation for their services as the Board
from time to time may determine. Such compensation and all other expenses of the
Committee, including the compensation of officers, actuaries or counsel, agents
or others that the Committee may employ, will constitute expenses of the Trust
Fund unless paid by the Employer Companies. Notwithstanding the foregoing, any
Committee member who is employed on a full-time basis by
45
an Employer Company will receive no compensation, but may be reimbursed for
expenses incurred.
Section 13.9 Records. The Committee will keep or cause to be kept
accurate and complete books and records.
Section 13.10 Fiduciary Responsibility Insurance, Bonding. If the
Employer has not done so, the Committee may purchase appropriate insurance on
behalf of the Plan and the Plan's fiduciaries, including the members of the
Committee, to cover liability or losses occurring by reason of the acts or
omissions of a fiduciary; provided, however, that such insurance, to the extent
purchased by the Plan, must permit recourse by the insurer against the fiduciary
in the case of a breach of a fiduciary duty or obligation by such fiduciary. The
cost of such insurance will be borne by the Trust Fund, unless the insurance is
paid for by the Employer. The Committee will also obtain a bond covering all of
the Plan's fiduciaries, to be paid from the assets of the Trust Fund.
Section 13.11 Delegation of Specific Responsibilities. The members of
the Committee may agree in writing signed by each member to allocate to any one
of their number or to other persons (including corporations or other entities)
any of the responsibilities with which they are charged pursuant hereto,
including the appointment of a record keeper and one or more Investment
Managers, provided any agreement allocating such duties will be in writing and
kept with the records of the Plan and, in the case of the appointment of an
Investment Manager, the person is a named fiduciary. If such delegation is made
to a person who is not a member of the Committee, that person or, in the case of
a corporation or other entity, its responsible officer, will acknowledge the
acceptance and understanding of such duties and responsibilities.
Section 13.12 Allocation of Responsibility Among Fiduciaries for Plan
and Trust Administration. The fiduciaries of this Plan, including the Trustee,
the Employer, the Board and the Committee, will have only those specific powers,
duties, responsibilities and obligations as are specifically given them under
this Plan. Each fiduciary warrants that any directions given, information
furnished, or action taken will be in accordance with the provisions of the Plan
authorizing or providing for such direction, information or action. Furthermore,
each fiduciary may rely upon any such direction, information or action of
another fiduciary as being proper under this Plan, and is not required under
this Plan to inquire into the propriety of any such direction, information or
action. It is intended that each fiduciary will be responsible for the proper
exercise of its own powers, duties, responsibilities and obligations under this
Plan and will not be responsible for any act or failure to act of another
fiduciary. No fiduciary guarantees the Trust Fund in any manner against
investment loss or depreciation in asset value.
Section 13.13 Indemnification. The Employer (to the extent permissible
under the Employer's charter and by-laws and applicable law) will indemnify the
officers and employees of the Employer and each Employer Company and the members
of the Committee, and their heirs, successors and assigns from and against any
liability, assessment, loss, expense or other cost of any kind or description
whatsoever, including legal fees and expenses, actually incurred by him or her
on account of any action or proceeding, actual or threatened, that arises as a
result of his or her acting within the scope of his or her authority under this
Plan, provided (a) such action or proceeding does not arise as a result of his
or her own gross negligence, willful
46
misconduct or lack of good faith and (b) such protection is not otherwise
provided through insurance.
ARTICLE XIV. AMENDMENT, TERMINATION AND MERGER
Section 14.1 Amendment. The Board reserves the right at any time and
from time to time to amend this Plan in any respect in writing, and the
amendment will be binding upon a Trustee and all Employer Companies without
further action; provided, that no amendment will be made that (unless otherwise
permissible under applicable law) would (a) divert any of the assets of the
Trust Fund to any purpose other than the exclusive benefit of Participants and
Beneficiaries, (b) eliminate or reduce an optional form of benefit except to the
extent permissible under Code ss. 411(d)(6) or (c) change the rights and duties
of the Trustee without its consent. Notwithstanding the foregoing, this Plan may
be amended retroactively to affect the Account maintained for any person if
necessary to cause this Plan and the Trust Fund to be exempt from income taxes
under the Code.
Section 14.2 Termination. The Employer expects this Plan to be
continued indefinitely but, of necessity, reserves the right to terminate or to
partially terminate this Plan or to discontinue its contributions at any time by
action of the Board. The Employer also reserves the right to terminate or to
partially terminate the participation in this Plan by an Employer Company by
action of the Board. An Employer Company's participation in this Plan
automatically will terminate if, and at such time as, it ceases to satisfy the
requirements to be an Employer Company for any reason whatsoever (other than
through a merger or consolidation into another Employer Company), but
termination of participation by an Employer Company will not be deemed to be a
termination or partial termination of the Plan except to the extent required
under the Code.
If there is a termination or partial termination of this Plan or a
declaration of a discontinuance of contributions to this Plan, the Accounts of
all affected Participants who are employees as of the effective date of the
termination, partial termination or declaration will become fully vested. The
Committee will cause all unallocated amounts to be allocated to the appropriate
Accounts of the affected Participants and Beneficiaries. Upon direction of the
Committee, the Trustee will distribute Accounts to Participants and
Beneficiaries in accordance with uniform rules established by the Committee
consistent with Code ss. 401(a).
Section 14.3 Merger, Consolidation or Transfer of Plan Assets. No
merger or consolidation of this Plan with, or transfer of assets or liabilities
of this Plan to, any other plan will occur unless each Participant in the Plan
would (if the Plan then terminated) receive a benefit immediately after the
merger, consolidation, or transfer that is equal to or greater than the benefit
he or she would have been entitled to receive immediately before the merger,
consolidation or transfer (if the Plan had then terminated).
The Committee may authorize the Trustee to accept a transfer of assets
from or to transfer Trust Fund assets to the trustee, custodian or insurance
company holding assets of any other plan that satisfies the requirements of Code
ss. 401(a) in connection with a merger or
47
consolidation with or other transfer of assets and liabilities to or from any
such plan, provided that the transfer will not affect the qualification of this
Plan under Code ss. 401(a).
Any special provisions that apply to amounts transferred under this
Section 14.3 shall be set forth in Appendix 14.3.
ARTICLE XV. MISCELLANEOUS
Section 15.1 Headings. The headings and subheadings in this Plan have
been inserted for convenience of reference only and are to be ignored in the
construction of the provisions of this Plan. All references to Articles,
Sections and to paragraphs will be to sections and to subsections of this Plan
unless otherwise indicated.
Section 15.2 Construction. In the construction of this Plan, the
singular will include the plural in all cases where that meaning would be
appropriate. This Plan will be construed in accordance with the laws of the
State of Georgia, to the extent that those laws are not preempted by federal
law. This Plan will not be construed to grant, nor will grant, any rights or
interests to Participants or Beneficiaries in addition to those minimum rights
and interests required under ERISA. Further, the Trust Fund is intended to be
tax exempt under the Code.
Any reference to a statute will also include a reference to any
successor statute and if any amendment renumbers a section of a statute
referenced in this Plan, any such reference to such section automatically will
become a reference to that section as renumbered.
Section 15.3 Counterparts. This Plan may be executed by the Employer
and the Trustee in two or more counterparts, each of which shall be deemed to be
an original but all of which taken together shall be deemed to be one document.
Section 15.4 Necessity of Initial Qualification. This Plan is
established with the intent that it shall qualify under Code ss. 401(a) and
shall be effective only if so qualified by the Internal Revenue Service. If the
Internal Revenue Service determines that the Plan initially fails to meet those
requirements, and it is not or cannot be amended to meet said requirements, then
within 120 days after the date of such determination all of the assets of the
Trust Fund held for the benefit of Participants and their Beneficiaries will be
distributed to them and the Plan will be considered to be rescinded and of no
force or effect.
Section 15.5 Prohibition Against Attachment.
(a) None of the benefits payable hereunder will be subject to the
claims of any creditor of any Participant or Beneficiary other than this Plan
nor will those benefits be subject to attachment, garnishment or other legal or
equitable process by any creditor of a Participant or Beneficiary other than
this Plan, nor will any Participant or Beneficiary have any right to alienate,
anticipate, commute, pledge, encumber, or assign any of such benefits.
(b) If any Participant or Beneficiary under the Plan becomes bankrupt
or attempts to anticipate, alienate, sell, transfer, assign, pledge, encumber or
charge any
48
benefit under the Plan, the interest of such person in such benefit shall, in
the discretion of the Committee, cease and terminate, and in that event the
Committee may direct the Trustee to hold or apply the same or any part thereof
to or for the benefit of such Participant or Beneficiary, his or her spouse,
children, or other dependants, or any of them, in such manner and in such
proportion as the Committee may deem proper.
(c) The restrictions of subsections (a) and (b) of this Section will
not be violated by either (1) the creation of a right to payments from this Plan
by reason of a qualified domestic relations order (as defined in Code ss.
414(p)) or (2) the making of such payments. In accordance with uniform and
nondiscriminatory procedures established by the Committee from time to time, the
Committee upon the receipt of a domestic relations order that seeks to require
the distribution of a Participant's Account in whole or in part to an alternate
payee (as the term is defined in Code ss. 414(p)(8)) will
(1) promptly notify the Participant and such alternate payee of the
receipt of such order and of the procedure that the Committee will follow to
determine whether such order constitutes a qualified domestic relations order
within the meaning of Code ss. 414(p),
(2) determine whether such order constitutes a qualified domestic
relations order, notify the Participant and the alternate payee of the results
of such determination and, if the Committee determines that such order does
constitute a qualified domestic relations order,
(3) transfer such amounts, if any, from the Participant's Account to a
separate bookkeeping account for such alternate payee as the Committee
determines necessary to satisfy the requirements of the order and Code ss.
414(p); and
(4) make such distribution to such alternate payee as the Committee
deems called for under the terms of such order in accordance with Code ss.
414(p) without regard to whether a distribution would be permissible at such
time to the Participant under the terms of this Plan.
An alternate payee will be treated the same as a Beneficiary of a
deceased Participant pending the distribution of such alternate payee's entire
interest under this Plan. Further, an alternate payee who is the spouse or
former spouse of the Participant may elect that any distribution that qualifies
as an eligible rollover distribution (within the meaning of Code ss. 401(a)(31))
be transferred directly to an eligible retirement plan in accordance with
Section 9.12.
Section 15.6 Benefits Supported Only by Trust Fund. Any person having
any claim for any benefit under this Plan must look solely to the assets of the
Trust Fund for satisfaction. In no event will the Trustee, the Employer, an
Employer Company, the Committee or any of their officers, directors or agents be
liable in their individual capacities to any person whomsoever for the payment
of benefits under the provisions of this Plan.
49
Section 15.7 Satisfaction of Claims. Any payment to a Participant or
Beneficiary, or to the legal representative or heirs-at-law of either, made in
accordance with the provisions of this Plan will to the extent of such payment
be in full satisfaction of all claims under this Plan against the Trustee, the
Employer, any Employer Company and the Committee, any of whom may require that
person, his or her legal representative or heirs-at-law, as a condition
precedent to such payment, to execute a receipt and release in a form acceptable
to the Committee.
Section 15.8 Nonreversion. No part of the Trust Fund will ever be used
for or be diverted to purposes other than for the exclusive benefit of
Participants and Beneficiaries except that, upon direction of the Committee, the
Trustee will return contributions to the Employer Companies in the following
circumstances, to the extent permitted by the Code and ERISA:
(a) a contribution that is made by a mistake of fact will be returned,
provided the return is made within one year after the payment of such
contribution; and
(b) a contribution may be returned to the extent that the Internal
Revenue Service denies an income tax deduction of such contribution, provided
such return is made within one year after such denial, all such contributions
being made expressly on the condition that such contributions are deductible in
full for federal income tax purposes.
Section 15.9 Top-Heavy Plan.
(a) Determination. The Committee as of the last day of each Plan Year
(the "determination date") will determine the sum of the present value of the
accrued benefits of "key employees" (as defined in Codess. 416(i)(1)) and the
sum of the present value of the accrued benefits of all other Employees in
accordance with the rules set forth in Codess. 416(g), or will take such other
action as the Committee deems appropriate to conclude that no such determination
is necessary under the circumstances. If the sum of the present value of the
accrued benefits of such key employees exceeds sixty percent (60%) of the sum of
the present value of the accrued benefits of all employees as of the
determination date, this Plan will be "top-heavy" for the immediately following
Plan Year. For purposes of this Section, the present value of the accrued
benefit of each employee will be equal to the sum of
(1) the balance of the employee's Account under this Plan (determined
for this purpose as of the last day of each Plan Year, which is the "valuation
date" for this Plan);
(2) the present value of the employee's accrued benefit, if any,
(determined as of the most recent valuation date occurring within a twelve
(12)-month period ending on the determination date) under
(i) each qualified plan (as described in Code ss. 401(a)) maintained by
an Affiliate (A) in which a key employee is a participant or (B) that enables
any plan described in subclause (i) to meet the requirements of Code ss.
401(a)(4) or ss. 410 (the "required aggregation group"), and
50
(ii) each other qualified plan maintained by an Affiliate (other than a
plan described in clause (a) that may be aggregated with this Plan and the plans
described in clause (a), provided such aggregation group (including a plan
described in this clause (b) continues to meet the requirements of Code ss.
401(a)(4) and ss. 410 (the "permissive aggregation group"); and
(3) the value of any withdrawals and distributions made from this Plan
and the plans described in (2) above during the 5 year period ending on such
determination date and the value of any contributions due under this Plan and
the defined contribution plans described in (2) above but as yet unpaid as of
such determination date;
provided, however, the accrued benefit of any employee will be disregarded if
such employee has not performed any services for any Affiliate at any time
during the five (5) year period ending on the date as of which such
determination is made.
(b) Special Top-Heavy Contribution. If the Committee determines that
this Plan is "top-heavy" for any Plan Year, the following special rules will
apply notwithstanding any other rules to the contrary set forth elsewhere in
this Plan.
(1) A contribution will be made to the QSOP for each Participant who is
an Eligible Employee on the last day of such Plan Year that, when added to the
employer contribution and forfeitures otherwise allocated on behalf of such
individual for such Plan Year under this Plan and any other defined contribution
plan maintained by an Affiliate, is equal to:
(i) for each such Eligible Employee who is not a participant in a
top-heavy defined benefit plan maintained by the Employer or an Affiliate, the
lesser of (a) three percent (3%) of such Eligible Employee's Compensation for
such year or (b) the percentage at which contributions are made (or are required
to be made) for such year to the key employee for whom such percentage is the
highest; or
(ii) for each such Eligible Employee who also participates in a
top-heavy defined benefit plan maintained by the Employer or an Affiliate, five
percent (5%) of such Eligible Employee's Compensation for such year;
provided, however, that no such contribution will be made under this Section for
any Eligible Employee to the extent such Eligible Employee receives the
top-heavy minimum contributions (as described in Code ss. 416(c)) under another
defined contribution plan maintained by the Employer or an Affiliate for such
Plan Year.
(2) For Plan Years beginning before January 1, 2000, if the sum of the
present value of the accrued benefits of key employees (computed as described in
Section 16.9(a)) exceeds ninety percent (90%) of the sum of the present value of
the accrued benefits of all employees (computed as described in Section 16.9(a))
51
as of the determination date this Plan will be "super top-heavy" for the
immediately following Plan Year. With respect to "limitation years" (within the
meaning of Section 5.2) which begin prior to January 1, 2000, in computing the
denominators of the defined benefit and defined contribution fractions described
in Codess. 415(e), (i) a factor of 1.0 will be used instead of 1.25 while the
Plan is super top-heavy and (ii) if the Plan is top-heavy, but not super
top-heavy and the Plan uses a factor of 1.25, the minimum contribution described
in Section 16.9(b)(1)(ii) is increased to 7 1/2% of Compensation. The Committee
will take such other action as necessary to satisfy the requirements of Code ss.
415(e) andss.416(h) if the Committee determines that this Plan fails to meet the
requirements set forth in Code ss. 416(h)(2)(B).
Section 15.10 USERRA. Effective as of December 12, 1994,
notwithstanding anything in this Plan to the contrary, contributions, benefits
and service credit with respect to qualified military service shall be provided
in accordance with Code ss. 414(u).
Section 15.11 Family and Medical Leave Act. Notwithstanding any other
provision, this Plan shall be interpreted and administered in all respects so
that it complies with the Family and Medical Leave Act of 1993, as may be
amended from time to time.
Section 15.12 No Estoppel of Plan. No person is entitled to any benefit
under this Plan except and to the extent expressly provided under this Plan. The
fact that payments have been made from this Plan in connection with any claim
for benefits under this Plan does not (a) establish the validity of the claim,
(b) provide any right to have such benefits continue for any period of time, or
(c) prevent this Plan from recovering the benefits paid to the extent that the
Committee determines that there was no right to payment of the benefits under
this Plan. Thus, if a benefit is paid to a person under this Plan and it is
thereafter determined by the Committee that such benefit should not have been
paid (whether or not attributable to an error by such person, the Committee or
any other person), then the Committee may take such action as the Committee
deems necessary or appropriate to remedy such situation, including without
limitation by (1) deducting the amount of any overpayment theretofore made to or
on behalf of such person from any succeeding payments to or on behalf of such
person under this Plan or from any amounts due or owing to such person by the
Employer or any Affiliate or under any other plan, program or arrangement
benefiting the employees or former employees of the Employer or any Affiliate,
or (2) otherwise recovering such overpayment from whoever has benefited from it.
If the Committee determines that an underpayment of benefits has been
made, the Committee will take such action as it deems necessary or appropriate
to remedy such situation. However, in no event will interest be paid on the
amount of any underpayment other than the investment gains (or losses) credited
to the Participant's Account pending payment.
52
IN WITNESS WHEREOF, the undersigned certify that United Parcel Service
of America, Inc., based upon action by its Board of Directors on
___________________, 2002, has caused this Restatement to be adopted.
ATTEST: UNITED PARCEL SERVICE OF AMERICA, INC.
- --------------------------------- --------------------------------
Joseph R. Moderow Michael L. Eskew
Secretary Chairman
53
IN WITNESS WHEREOF, the Trustee acknowledges receipt of the Plan as
amended and restated effective as of January 1, 1998.
STATE STREET BANK
AND TRUST COMPANY
------------------------------
By:
---------------------------
Title:
------------------------
Date:
-------------------------
UPS SAVINGS PLAN
APPENDIX 1.21
BUSINESS UNIT/GROUP SAVINGS PLAN ADOPTION DATE
UPS
United Parcel Service of America, Inc. July 1, 1988
United Parcel Service Co. July 1, 1988
UPS General Services Co. July 1, 1988
UPS Aviation Services, Inc. February 7. 1989
UPS International General Services Co. August 12, 1988
UPS Procurement Services Corporation September 9, 1997
UPS Worldwide Forwarding, Inc. August 12, 1988
United Parcel Service, Inc. (New York) July 1, 1988
United Parcel Service, Inc. (Ohio) July 1, 1988
Trailer Conditioners, Inc. July 1, 1988
UPS Latin America, Inc. November 12, 1993
BT Realty Holdings, Inc. May 18, 1999
BT Realty Holdings II, Inc. May 18, 1999
UPS CAPITAL CORPORATION
UPS Capital Corporation, Inc. May 28, 1998
Glenlake Insurance Agency, Inc. July 29, 1998
Glenlake Insurance Agency, Inc. of California August 10, 1999
First International Bank September 1, 2000
First International Capital Corporation of New Jersey September 1, 2001
UPS LOGISTICS GROUP
UPS Logistics Group, Inc. May 24, 1996
Diversified Trimodal, Inc. (Martrac) July 1, 1988
UPS Logistics Technologies, Inc. July 1, 1988
UPS Supply Chain Management, Inc. December 18, 1992
Worldwide Dedicated Services, Inc. June 9, 1995
UPS Supply Chain Management Nevada, Inc. July 1, 2001
UPS Supply Chain Management Tristate, Inc. July 1, 2001
Livingston Healthcare Services, Inc. July 1, 2001
UPS Logistics Group Americas, Inc. July 1, 2001
UPS Service Parts Logistics, Inc. July 1, 2001
UPSLG Puerto Rico, Inc. July 1, 2001
UPS AVIATION TECHNOLOGIES, INC. July 1, 1988
UPS CUSTOMHOUSE BROKERAGE, INC. July 1, 1988
UPS FULL SERVICE BROKERAGE, INC. June 6, 2000
UPS TELECOMMUNICATIONS, INC. (UPS TELESERVICES) July 1, 2001
UPS MESSAGING.
Mail2000, Inc. February 1, 2001
UPS MAIL BOXES ETC., INC. April 30, 2001
UPS CONSULTING, INC. February 8, 2001
FRITZ COMPANIES
Fritz Companies, Inc. July 1, 2001
NEW NEON COMPANY, INC. November 1, 2001
ISHIP, INC. December 1, 2001
UPS SUPPLY CHAIN SOLUTIONS, INC. January 1, 2002
A-1
UPS SAVINGS PLAN
APPENDIX 1.36
Prior Service Credit
An individual who began performing services for an Employer Company as a result
of the acquisition of a company listed below will receive credit for his or her
service for such company as if such service were employment with an Affiliate.
Border Brokerage Company, Inc
Burnham Service Corporation, et. al.
Challenge Air Cargo, Inc.
Fritz Companies, Inc.
Fulfillment Systems International, Inc
Livingston Healthcare Services, Inc.
Mail Boxes, Etc.
Mail2000. Inc.
Miles Group, Inc.
William F. Joffroy, Inc.
W.Y. Moberly, Inc.
Rollins Logistics, Inc. et. al.
Transborder Customs Services, Inc.
TSCI Holdings, Inc. (Comlasa)
H.A. & J.L. Wood, Inc.
First International Bank
First International Capital Corporation of New Jersey
Merged Plans
NAME OF MERGED PLAN EFFECTIVE DATE OF MERGER
UPS Logistics Group Retirement Savings Plan July 1, 2001
SonicAir, Inc. 401(k) Plan July 1, 2001
Trans-Border Customs Services, Inc.
401(k) and Profit Sharing Plan July 1, 2001
UPS Global Forwarding Services, Inc.
Retirement/Savings Plan July 1, 2001
A-2
UPS SAVINGS PLAN
APPENDIX 2.3
[THIS APPENDIX IS INTENTIONALLY BLANK.]
A-3
UPS SAVINGS PLAN
APPENDIX VII
Section 7.1 Investment of Trust Fund. Prior to November 23, 1998, the
Investment Options under the Plan included the following investment vehicles:
- - Option A - A fixed rate investment fund, as designated by the
Committee or its delegate, consisting of fixed interest rate
obligations issued by one or more domestic insurance companies or
domestic banks each of which satisfies the asset and creditworthiness
requirements described below, and collective short-term investment
funds which satisfy the credit-worthiness requirements described
below. The fixed interest rate obligations shall, in accordance with
guidelines established by the Committee, consist of either or both of
the following:
- fixed interest rate contracts under which the payment of
interest and principal is backed by the general assets and
surplus of the insurance company or bank.
- fixed interest rate contracts under which the payment of
interest and principal is backed by a separate account or
trust portfolio of short-term debt securities which are (i)
direct obligations of the United States, (ii) obligations of
an agency or instrumentality of the United States, or (iii)
securities or receipts evidencing ownership interests in
obligations or specified portions (such as principal or
interest) of obligations described in (i) or (ii).
- - Each such insurance company or bank issuing a fixed rate obligation
described above shall have at least five billion dollars in assets,
and shall maintain a minimum Standard & Poor's rating of AA- or a
minimum Moody's rating of Aa3.
- - Pending investment in fixed rate obligations described above or for
the purpose of providing a source of liquid funds for anticipated
transfers, moneys invested in Option A may be invested in one or more
collective short-term investment funds, the investments under which
shall consist of short-term obligations or deposits, with an average
maturity of not more than 120 days and a maximum maturity of not more
than 30 months, which are rated at least A1 by Standard & Poor's and
P1 by Moody's (or rated at least AA in the case of obligations with a
maturity of 12 months or more) at the time of acquisition.
- - Option B - A Standard & Poor's 500 equity index fund or funds with the
principal goal of providing returns comparable to the Standard &
Poor's 500 index, an acknowledged broad-based benchmark index, as
designated by the Committee.
- - Option C - A balanced investment fund as designated by the Committee
or its delegate, the investments under which consist of a mix of
equity and fixed income investments, with the objective of producing a
combination of risk and reward which falls between that of Options A
and B above.
A-4
- - Option D - An investment fund, as designated by the Committee or its
delegate, consisting of short term debt securities which represent (i)
direct obligations of the United States for which its full faith and
credit are pledged, (ii) obligations of an agency or instrumentality
of the United States, the payment of which is unconditionally
guaranteed as a full faith and credit obligation of the United States,
or (iii) securities or receipts evidencing ownership interests in
obligations or specified portions (such as principal or interest) of
obligations described in (i) or (ii), with the primary objective of
securing principal against risk of loss.
- - Option E - the Fidelity Magellan Fund, managed by Fidelity Management
& Research Company, consisting primarily of common stocks and
securities convertible into common stocks, with the primary objective
of capital appreciation.
- - Option F - The following four Bright Horizon Funds managed by State
Street Bank and Trust Company: the Bright Horizon 2005 Fund; the
Bright Horizon 2015 Fund; the Bright Horizon 2025 Fund; and the Bright
Horizon 2035 Fund, each consisting of equity, fixed income and, at
times, cash investments, with the primary objective of providing an
appropriate asset mix coupled with appropriate levels of risk and
return given a Participant's approximate retirement date.
Section 7.2 Investment of Accounts. For periods prior to November 23,
1998, in the event that a Participant fails to designate any Investment Option,
fails to designate Investment Options for 100% of the Participant's Account, or
fails to designate a new Investment Option for amounts held in a Bright Horizon
Fund under Option F on December 31 of the year in which such fund reaches its
Maturity Date, or erroneously designates the investment of more than 100% of the
Participant's Account, the Participant's Account will be invested as though
Option D were selected until a corrected investment designation which meets the
foregoing requirements is filed by the Participant. For purposes of the previous
sentence, the term "Maturity Date" shall mean July 31 of the year designated by
the name of the Bright Horizon Fund (e.g. the Maturity Date of the Bright
Horizon 2005 Fund shall be July 31, 2005).
Section 7.3 Investment Allocation of Future Contributions. For periods
prior to November 23, 1998, in the event that a Participant fails to designate a
new Investment Option for amounts held in a Bright Horizon Fund under Option F
on December 31 of the year in which such fund reaches its Maturity Date the
Participant's Account will be invested as though Option D were selected until a
corrected investment designation which meets the foregoing requirements is filed
by the Participant. For purposes of the previous sentence, the term "Maturity
Date" shall mean July 31 of the year designated by the name of the Bright
Horizon Fund (e.g. the Maturity Date of the Bright Horizon 2005 Fund shall be
July 31, 2005).
A-5
UPS SAVINGS PLAN
APPENDIX 10.1(C)(9)
Accounting.
For periods prior to November 23, 1998, the proceeds shall be
withdrawn from the Participant's subaccount in the following order: first, from
the Participant's Pre-Tax Contribution Account, second, from his or her
Rollover Contribution Account and, third, from his or her After-Tax
Contribution Account, and prorata from each Investment Option in which such
subaccount is invested at the time of the loan. Repayment of principle and
interest on the loan shall be credited to the Participant's subaccount in the
reverse order from which the loan proceeds were withdrawn and shall be invested
in the Investment Options in effect at the time of repayment pursuant to the
Participant's investment election under Article VII.
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UPS SAVINGS PLAN
APPENDIX 14.3
SPECIAL PROVISIONS RELATING TO MERGERS, ACQUISITIONS
AND OTHER TRANSFERS
Section 14.3.1 General. This Section describes special rules applicable
to individuals who were employed by an employer acquired by an Employer Company
or who otherwise became Employees of an Employer Company as a result of a
corporate transaction, or who participated in a qualified plan that was merged
into the Plan or the assets of which were transferred to this Plan pursuant to
Section 14.3.
Any assets transferred to this Plan shall be invested as directed by
the Committee pending completion of any allocations or other steps necessary or
advisable to properly transfer investment authority of Merged Plan assets to the
Participants in accordance with Article 7 of the Plan. Any loans outstanding
under a Merged Plan will become loans under this Plan and, if the Participant is
an Employee, will be repaid by payroll deduction following the merger or
transfer.
Section 14.3.2 UPS Global Forwarding Services, Inc.
(a) GFS Plan. For purposes of this Section 14.3.2, GFS Plan
means the UPS Global Forwarding Services Company, Inc. Retirement/
Savings Plan, as in effect on June 30, 2001.
(b) Merger. The assets and liabilities of the GFS Plan as of
the close of business on June 30, 2001 will be merged into this Plan
and will be assets and liabilities of this Plan as of July 1, 2001.
(c) Accounts. An Account will be established under this Plan
to reflect the interest of each former participant in the GFS Plan to
the extent he or she does not already have an Account under this Plan.
The portion of a Participant's account under the GFS Plan attributable
to his or her "after-tax contributions", if any, will become a part of
his or her After-Tax Contribution Account; the portion attributable to
his or her "pre -tax contributions", if any, will become part of his
or her Pre-Tax Contribution Account under this Plan; the portion
attributable to his or her "rollover contributions", if any, will
become part of his or her Rollover Contribution Account under this
Plan; and the remaining portion of a Participant's account under the
GFS Plan will become a part of his or her Merged Account.
Section 14.3.3 UPS Logistics Group.
(a) LG Plan. For purposes of this Section 14.3.3, LG Plan
means the UPS Logistics Group Retirement Savings Plan, as in effect on
June 30, 2001.
(b) Merger. The assets and liabilities of the LG Plan as of
the close of business on June 30, 2001 will be merged into this Plan
and will be assets and liabilities of this Plan as of July 1, 2001.
(c) Accounts. An Account will be established under this Plan
to reflect the interest of each former participant in the LG Plan to
the extent he or she does not already have an Account under this Plan.
The portion of a Participant's account under the LG Plan attributable
to his or her "after-tax contributions", if any, will become a part of
his or her After-Tax Contribution Account; the portion attributable to
his or her "pre -tax contributions", if any, will become part of his
or her Pre-Tax Contribution Account under this Plan; the portion
attributable to his or her "rollover contributions", if any, will
become part of his or her Rollover Contribution Account under this
Plan; and the remaining portion of a Participant's account under the
LG Plan will become a part of his or her Merged Account.
Section 14.3.4 Sonic Air, Inc.
(a) SA Plan. For purposes of this Section 14.3.4, SA Plan
means the Sonic Air, Inc. 401(k) Plan, as in effect on June 30, 2001.
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(b) Merger. The assets and liabilities of the SA Plan as of
the close of business on June 30, 2001 will be merged into this Plan
and will be the assets and liabilities of this Plan as of July 1,
2001.
(c) Accounts. An Account will be established under this Plan
to reflect the interest of each former participant in the SA Plan to
the extent he or she does not already have an Account under this Plan.
A Participant's interest in his or her Account attributable to his or
her interest under the SA Plan will be separately accounted for in his
or her Merged Account and separate subaccounts of his or her Merged
Account shall be maintained for his or her interest under the SA Plan
attributable to after-tax contributions, pre-tax contributions,
rollover contributions, matching contributions and discretionary
profit sharing contributions, if applicable, until the Amendment
Effective Date described in Section 14.3.6. After the Amendment
Effective Date, the portion of a Participant's Merged Account
attributable to his or her "after-tax contributions", if any, will
become a part of his or her After-Tax Contribution Account; the
portion attributable to his or her "pre -tax contributions", if any,
will become part of his or her Pre-Tax Contribution Account under this
Plan; and the portion attributable to his or her "rollover
contributions", if any, will become part of his or her Rollover
Contribution Account under this Plan.
(d) Distribution Forms. Subject to Section 14.3.6 and to the
automatic cashout rules of Section 9.2, any distribution (including a
hardship withdrawal) made from a Participant's Merged Account shall be
distributed in the Normal Form unless the Participant elects in
accordance with Section 14.3.4(d)(4) to receive payment in an optional
form as described in Section 14.3.4(d)(2).
(1) Normal Form. Normal Form means
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(i) a Single Life Annuity Option if the
Participant does not have a spouse on his or her
Annuity Starting Date, or
(ii) a Joint and Survivor Annuity Option
with his or her spouse as beneficiary if the
Participant has a spouse on his or her Annuity
Starting Date.
(2) Optional Forms. Subject to Section 14.3.4(d)(4),
a Participant may elect one of the following optional forms
in lieu of the Normal Form:
(i) A lump sum payment in cash;
(ii) Purchase of an annuity contract that
does not provide for payments beyond the life of the
Participant (or the lives of the Participant and his
or her Beneficiary) or the life expectancy of the
Participant (or the life expectancy of the
Participant and his or her Beneficiary.
(3) Election Procedures. The Committee will
(consistent with the regulations under Code ss. 417) furnish
each Participant entitled to the Normal Form with a written
explanation of the normal annuity form, the optional payment
forms and his or her rights under Code ss. 401(a)(11), ss.
411(a)(11), and ss. 417.
A Participant may waive the Normal Form and select an optional
payment form on a properly completed Election before his or
her Annuity Starting Date. The last properly completed
Election before the Participant's Annuity Starting Date will
control the payment of benefits under this Plan.
A Participant's Election to waive the Normal Form generally
will not be effective unless (A) the Election designates the
form of payment, (B) his or her spouse consents in writing to
the waiver, (C) the spouse's consent acknowledges the effect
of the waiver, and (D) the spouse's consent is witnessed by a
notary public.
However, if the Participant establishes to the satisfaction of
the Committee and in accordance with Code ss. 417 that written
consent of his or her spouse may not be obtained because there
is no spouse or the spouse cannot be located or because of
such other circumstances as may be described in the
regulations under Code ss. 417, the Participant's Election
will be deemed to be a valid waiver.
A spouse's written consent will be irrevocable as to that
spouse and will be binding only as against that spouse.
A Participant may revoke (without the consent of his or her
spouse) an election to waive the Normal Form by completing
another Election at any time prior to his or her Annuity
Starting Date.
(4) Death Benefits. If a Participant dies before his
or her Annuity Starting Date, a Preretirement Survivor
Annuity will be purchased for his or her surviving
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spouse if the Participant did not waive the Preretirement
Survivor Annuity in accordance with the waiver procedures set
forth in Section 14.3.4(d)(4). In lieu of the Preretirement
Survivor Annuity, the surviving spouse may elect that
distribution of the Participant's Merged Account balance be
made in a lump sum in cash. The balance of the Participant's
Merged Account shall be paid to his or her Beneficiary in a
lump sum in cash.
(5) Definitions. For purposes of this Section
14.3.4(d), the following terms will have the meanings set
forth below:
(i) Annuity Starting Date - means for each
Participant or spouse the first day of the first
period for which an amount is paid as an annuity
under this Plan.
(ii) Joint and Survivor Annuity Option -
means an annuity for the life of the Participant
with a survivor annuity for the life of the
Participant's spouse or the Participant's
beneficiary that provides for monthly payments equal
to 50%, 75% or 100% (as elected by the Participant)
of the monthly payments payable to the Participant
during his or her lifetime and that is equal to the
maximum amount of annuity benefit that can be
purchased (in that form) with the Participant's
Merged Account and this benefit form shall be the
qualified joint and survivor annuity for the
purposes of Code ss. 401(a)(11) and 417.
(iii) Preretirement Survivor Annuity -
means an annuity for the life of a Participant's
surviving spouse, that is equal to the maximum
amount of annuity benefit that can be purchased with
fifty percent (50%) the Participant's SA Plan Merged
Account as of the Annuity Starting Date.
(iv) Single Life Annuity Option - means an
annuity payable only during the lifetime of the
Participant that is equal to the maximum amount of
the annuity benefit that can be purchased with the
Participant's SA Plan Merged Account.
Section 14.3.5 Trans-Border Customs Services, Inc.
(a) TBCS. For purposes of this Section 14.3.5, TBCS Plan
means the Trans-Border Customs Services Profit Sharing Plan, as in
effect on June 30, 2001
(b) Merger. The assets and liabilities of the TCBS Plan as of
the close of business on June 30, 2001 will be merged into this Plan
and will be assets and liabilities of this Plan as of July 1, 2001.
(c) Accounts. An Account will be established under this Plan
to reflect the interest of each former participant in the TCBS Plan to
the extent he or she does not already have an Account under this Plan.
A Participant's interest in his or her Account
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attributable to his or her interest under the TCBS Plan will be
separately accounted for in his or her Merged Account and separate
subaccounts of his or her Merged Account shall be maintained for his
or her interest under the TCBS Plan attributable to after-tax
contributions, pre-tax contributions, rollover contributions, matching
contributions and discretionary profit sharing contributions, if
applicable, until the Amendment Effective Date described in Section
14.3.6. After the Amendment Effective Date, the portion of a
Participant's Merged Account attributable to his or her "after-tax
contributions", if any, will become a part of his or her After-Tax
Contribution Account; the portion attributable to his or her "pre -tax
contributions", if any, will become part of his or her Pre-Tax
Contribution Account under this Plan; and the portion attributable to
his or her "rollover contributions", if any, will become part of his
or her Rollover Contribution Account under this Plan.
(d) Distribution Forms. Subject to Section 14.3.6,
distribution of a Participant's Account the portion of his or her
Account attributable to his or her account under the TCBS Plan may be
made in any of the following optional forms:
(1) A lump sum payment.
(2) A series of installments over a period certain
not extending beyond the life expectancy of the Participant
or the joint and last survivor expectancy of the Participant
and his Beneficiary determined by use of the expected return
multiples under the regulations under Treas. Reg.ss. 1.72-9;
or
(3) A nontransferable annuity contract (other than
an annuity for the life of the Participant), providing for
payments over a period certain not extending beyond the life
expectancy of the Participant or the joint and last survivor
expectancy of the Participant and his Beneficiary determined
by use of the expected return multiples under the regulations
under Treas. Reg.ss. 1.72-9.
Section 14.3.6 Limitation on Distribution Forms. Notwithstanding any
provision of this Appendix 14.3 to the contrary, no form of payment other than
as described in Section 9.5 shall be available for any such distribution
commencing on or after the Amendment Effective Date and Section 14.3.4(d) and
Section 14.3.5(d) shall be of no further effect on or after the Amendment
Effective Date. To the extent a distribution described in this Appendix 14.3
required spousal consent to the timing or form of a distribution, such spousal
consent shall no longer be required effective for distributions commencing on or
after the Amendment Effective Date. The Amendment Effective Date shall mean the
earlier of (a) the ninetieth day following the date a Participant has been
furnished a summary that reflects the provisions of this Plan and which
satisfies the requirements of Labor Regulation Section 2520.104b-3 for pension
plans or (b) January 1, 2003.
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APPENDIX 14.3 A
GUST/RRA 98
I. RETROACTIVE AMENDMENT OF PREDECESSOR PLANS.
This Appendix 14.3 A is intended to amend each Predecessor Plan (as
defined below) for the applicable provisions of the Uruguay Agreements
Act, Pub. L. 103-464, the Uniformed Services Employment and
Reemployment Rights Act of 1994, Pub. L. 103-353, the Small Business
Job Protection Act of 1996, Pub. L. 104-188, the Taxpayer Relief Act of
1997, Pub. L. 105-34, and the Internal Revenue Restructuring and Reform
Act of 1998, Pub. L. 105-206 (collectively referred to as "GUST/RRA
98") that applied to each Predecessor Plan before its merger into the
Plan effective as of July 1, 2001. This amendment shall be effective as
to each Predecessor Plan as of the dates indicated in this Appendix and
shall constitute a part of each Predecessor Plan as in effect prior to
July 1, 2001.
II. PREDECESSOR PLANS. "PREDECESSOR PLAN" MEANS EACH OF THE FOLLOWING
MERGED PLANS:
(A) UPS Global Forwarding Services Company, Inc. Retirement
Savings Plan ("GFS Plan")
(B) UPS Logistics Group Retirement Plan ("LG Plan")
(C) Sonic Air, Inc. 401(k) Plan ("SA Plan")
(D) Trans-Border Customs Services Profit Sharing Plan ("TBCS
Plan")
III. AMENDMENTS APPLICABLE TO ALL PREDECESSOR PLANS. THE FOLLOWING
AMENDMENTS APPLY TO ALL PREDECESSOR PLANS:
(A) CODE SS. 401(A)(17) - FAMILY AGGREGATION RULES
Effective for plan years beginning after December 31, 1996, any
provision regarding the compensation limit of Code ss. 401(a)(17) is
hereby amended to delete the requirement that certain family members
(i.e., the spouse and lineal descendants who have not attained age 19
before the close of the year) be aggregated with certain "highly
compensated employees" within the meaning of Code ss. 414(q) and be
treated as a single participant for purposes of applying the
compensation limit for a plan year. The spouse of such participants and
any lineal descendants (including those descendants who have not
attained age 19 before the close of the plan year) shall be treated as
a separate participant for purposes of applying the limitation on
compensation for a plan year.
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Further, any references to the family aggregation rules previously
required by Code ss. 414(q)(6) are hereby deleted.
(B) CODE SS. 414(N)(2) - TREATMENT OF LEASED EMPLOYEES
Effective for plan years beginning after December 31, 1996, the term
"leased employee" shall mean any person (other than an employee of the
recipient) who pursuant to an agreement between the recipient and any
other person has performed services for the recipient (or for the
recipient and related persons determined in accordance with Code ss.
414(n)(6)) on a substantially full-time basis for a period of at least
one year, and such services are performed under the recipient's primary
direction or control. No leased employees shall be eligible to
participate in a Predecessor Plan.
(C) CODE SS. 414(Q) - HIGHLY COMPENSATED EMPLOYEES
Effective for plan years beginning after December 31, 1996, the term
"highly compensated employee" means an employee who performed services
for the employer and any other entity that is considered to be a single
employer under Code ss.ss. 414(b), (c), (m) and (o) (collectively the
"Controlled Group Employer") during the "determination year" and is in
one or more of the following groups:
was a five (5) percent owner (as defined in Code ss. 416(i)(1)) of the
Controlled Group Employer at any time during the plan year or the
look-back year (the preceding twelve (12) month period), or
(b) for the look-back year-had compensation from the
Controlled Group Employer in excess of eighty thousand dollars
($80,000) (as adjusted by the Secretary pursuant to Code ss. 415(d)).
The "look-back year" shall be the calendar year ending with or within
the plan year for which testing is being performed, and the
"determination year" shall be the plan year. In determining whether an
employee is a "highly compensated employee" in 1997, this amendment to
the definition of "highly compensated employee" is treated as having
been in effect in 1996.
For purposes of determining a "highly compensated employee", the term
"compensation" means "415 compensation."
The determination of a "Highly Compensated Employees" shall be made in
accordance with Code ss. 414(q) and the regulations thereunder.
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(D) CODE SS. 415(C)(3) - COMPENSATION
For limitation years beginning on and after January 1, 1998, for
purposes of applying the limitations of Code ss. 415 or determining
"415 compensation," compensation paid or made available during such
limitation year shall include any elective deferral (as defined in Code
ss. 402(g)(3)), and any amount which is contributed or deferred by the
employer at the election of the employee and which is not includible in
the gross income of the employee by reason of Code ss.ss. 125, 457 or,
effective as of January 1, 2001, under Code ss. 132(f)(4).
(E) Codess. 415(e) - Repeal of Combined Limitation on Defined
Contribution and Defined Benefit Plans
Effective for limitation years beginning after December 31, 1999, all
references to Code ss. 415(e) shall be deleted and any contribution
allocation limitations imposed by such Code ss. 415(e) shall cease to
apply.
(F) CODESS.415(C)(1) - LIMITATION FOR DEFINED CONTRIBUTION PLAN
Effective for limitation years beginning after December 31, 1994, the
limitation of Code ss. 415(c)(1) is amended to change the Code ss.
415(c)(1)(A) language to read as follows:
30,000 (as adjusted under Codess.415(d)).
(G) CODE SS. 414(U) - USERRA
Effective December 12, 1994, contributions, benefits and service credit
with respect to qualified military service shall be provided in
accordance with Code ss. 414(u).
(H) CODESS.SS. 401(A)(31) AND 402(C)(4) - DEFINITION OF ELIGIBLE
ROLLOVER DISTRIBUTION
Effective for calendar years beginning on or after January 1, 2000, an
eligible rollover distribution described in Code ss. 402(c)(4) shall
exclude hardship withdrawals as defined in Code ss.
401(k)(2)(B)(i)(IV), which are attributable to the participant's
elective contributions under Treasury Reg. ss. 1.401(k)-1(d)(2)(ii).
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(I) CODESS. 401(K)(3) - APPLICATION OF PARTICIPATION AND
DISCRIMINATION STANDARDS
Effective for plan years beginning on and after January 1, 1997, the
actual deferral percentage ("ADP") for "non-highly compensated
employees" (those employees who are not "highly compensated employees"
as described in Code ss. 414(q) and the regulations thereunder) for the
current plan year will be used in performing the nondiscrimination
testing required under Code ss. 401(k)(3) for a plan year.
(J) CODE SS. 401(K)(8)(C) - DISTRIBUTION OF EXCESS CONTRIBUTIONS
Effective for plan years beginning after December 31, 1996, any
distribution of the excess contributions made to satisfy the ADP test
for any plan year shall be made to "highly compensated employees" as
described in Code ss. 414(q) and the regulations thereunder on the
basis of the amount of contributions by, or on behalf of, such
employees.
Excess contributions will be calculated and distributed according to
the following procedures:
Step l) First, the total dollar amount of excess contributions is
determined by reducing contributions on behalf of "highly
compensated employees" in the order of their deferral
percentages, beginning with the highest of such percentages
and continuing until the ADP test is satisfied.
Step 2) Second, the amount determined in Step 1 above is reduced
beginning with the "highly compensated employee" with the
highest dollar amount of contributions to equal the dollar
amount of the "highly compensated employee" with the next
highest dollar amount of contributions and continuing in
succeeding order of the "highly compensated employees" until
all excess contributions are accounted for as determined in
Step 1.
Step 3) Third, each "highly compensated employee" will receive a
distribution of their portion of excess contributions
determined in Step 2.
(K) CODESS. 401(M) - NONDISCRIMINATION TEST FOR MATCHING
CONTRIBUTIONS AND EMPLOYEE CONTRIBUTIONS
Effective for plan years beginning on and after January 1, 1997, the
actual contribution percentage (ACP) for "non-highly compensated
employees" for the current plan year will be used in performing the
nondiscrimination testing required under Code ss. 401(m)(2) for a plan
year.
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(L) CODESS. 401(M)(6)(C) - METHOD OF DISTRIBUTING EXCESS
AGGREGATE CONTRIBUTIONS
Effective for plan years beginning after December 31, 1996, any
distribution of the excess aggregate contributions made to satisfy the
actual contribution percentage ("ACP") test for any plan year shall be
made to "highly compensated employees" on the basis of the amount of
contributions by, or on behalf of, each such employee.
Excess aggregate contributions will be calculated and distributed
according to the following procedures:
Step 1) First, the total dollar amount of excess aggregate
contributions is determined by reducing contributions on
behalf of "highly compensated employees" in the order of
their contribution percentages, beginning with the highest
of such percentages and continuing until the ACP test is
satisfied.
Step 2) Second, the amount determined in Step 1 above is reduced
beginning with the "highly compensated employee" with the
highest dollar amount of contributions to equal the dollar
amount of the "highly compensated employee" with the next
highest dollar amount of contributions and continuing in
succeeding order of the "highly compensated employees" until
all excess aggregate contributions are accounted for as
determined in Step 1.
Step 3) Third, each "highly compensated employee" will receive a
distribution of their portion of excess aggregate
contributions determined in Step 2.
(M) CODE SS. 417(E)(1) - RESTRICTIONS ON CASHOUTS
Effective for plan years beginning after December 31, 1996, the Plan,
which provides contributions or benefits for employees some or all of
whom are owner-employees (as defined under Code ss. 401(c)), is amended
as follows:
a) Contributions on behalf of any owner-employee will be
made only with respect to the earned income of such
owner-employee that is derived from the trade or
business with respect to which the Plan is
established.
b) The provisions of the Plans, if any, regarding the
special aggregation rules as they existed under Code
ss. 401(d) prior to its amendments by SBJPA are
deleted.
(N) CODESS.402(G)(9) - LIMITATION ON EXCLUSION FOR ELECTIVE
DEFERRALS FOR SELF-EMPLOYED INDIVIDUAL
Effective for years beginning after December 31, 1997, except as
provided under Code ss. 401(c)(3)(D)(ii), any matching contribution
described in Code ss. 401(m)(4)(A) which is made on behalf of a
self-employed individual (as defined in Code ss. 401(c)), shall not be
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treated as an elective employer contribution under a qualified cash or
deferred arrangement (as defined in Code ss. 401(k)).
(O) CODE SS. 417(E)(1) - RESTRICTIONS ON CASHOUTS
Effective for plan years beginning on or after January 1, 1998 for the
GFS and LG Plans only, if a participant's nonforfeitable account
balance, taking into consideration benefits derived from both employer
and employee contributions, does not exceed five thousand dollars
($5,000), such account balance shall be distributed as soon as
administratively possible without the consent of the participant, and,
if applicable, the participant's spouse.
(P) CODE SS. 401(A)(9) - REQUIRED DISTRIBUTIONS
Effective for calendar years beginning on and after January 1, 1997 for
the LG Plan only, distribution of a participant's account shall be
made, or shall commence, to him or her no later than April 1 of the
calendar year which follows () the calendar year in which he or she
reaches age seventy and one-half (70 1/2) or (2) if later, for a
participant who is not a five (5) percent owner (as defined in Code ss.
416) the calendar year in which he or she terminates employment.
(Q) CODESS.417 - WAIVER OF PLAN DISTRIBUTION WAITING PERIOD.
Effective for distributions in plan years beginning on or after January
1, 1997 for the SA and TBCS Plans only, the annuity starting date for
any annuity which is not a qualified joint and survivor annuity may be
less than thirty (30) days after the receipt of the written explanation
described in Code ss. 417(a)(3) provided that:
a) the participant has been provided with information that
clearly indicates that the Participant has at least thirty
(30) days to consider whether to waive the qualified joint and
survivor annuity and to elect with spousal consent an optional
method of payment;
b) the Participant is permitted to revoke any affirmative
optional form of payment at least until the annuity starting
date or, if later, at any time prior to the expiration of the
seven (7) day period that begins the day after the required
written explanation described in Code ss. 417(a)(3) is
provided to the Participant; and
c) the annuity starting date is a date after the date that the
written explanation described in Code ss. 417(a)(3) was
provided to the Participant.
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(R) DIFFERENT PROVISIONS IN RECORDS OF EACH PREDECESSOR PLANS.
Notwithstanding the foregoing, to the extent the records of a
Predecessor Plan indicate that the sponsor of such plan implemented a
permissible GUST/RRA 98 provision for such Predecessor Plan that is
different than the provisions of this Appendix 14.3 A (including a
different effective date), such Predecessor Plan is hereby amended to
such records are incorporated by reference and control in the event of
a conflict with the other provisions of this Appendix 14.3 A
incorporate such different provision.
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