EXHIBIT 4.1
KLA-TENCOR 401(k) PLAN
Original Effective Date January 1, 1982
Restatement Effective Date July 1, 1997
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304-1050
(650) 493-9300
TABLE OF CONTENTS
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ARTICLE I INTRODUCTION ................................................. 1
ARTICLE II PLAN SPECIFICATIONS ......................................... 2
2.1 Company Information ..................................... 2
2.2 Eligibility ............................................. 2
2.3 Credit for Service ...................................... 3
2.4 Compensation ............................................ 4
2.5 Highly Compensated Employees ............................ 4
2.6 Contributions ........................................... 4
2.7 Vesting ................................................. 5
2.8 Top Heavy Minimum Allocation ............................ 5
2.9 Distributions ........................................... 5
2.10 Investment .............................................. 5
2.11 Retirement Date ......................................... 5
2.12 Loans ................................................... 5
2.13 In-Service Withdrawals .................................. 6
ARTICLE III DEFINITIONS ................................................ 7
3.1 Account or Accounts ..................................... 7
3.2 Adjustment Factor ....................................... 7
3.3 Administrator or Plan Administrator ..................... 7
3.4 Beneficiary ............................................. 7
3.5 Code .................................................... 7
3.6 Company ................................................. 8
3.7 Compensation ............................................ 8
3.8 Contribution Percentage Amounts ......................... 8
3.9 Contributions ........................................... 8
3.10 Effective Date .......................................... 9
3.11 Employee ................................................ 9
3.12 Employer ................................................ 9
3.13 Employer Profit Sharing Contributions ................... 10
3.14 Employer Matching Contributions ......................... 10
3.15 Employment Commencement Date ............................ 10
3.16 ERISA ................................................... 10
3.17 Highly Compensated Employee ............................. 10
3.18 Hour of Service ......................................... 11
3.19 Non-Highly Compensated Employee ......................... 12
3.20 Normal Retirement Date .................................. 12
3.21 Participant ............................................. 12
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TABLE OF CONTENTS
(CONTINUED)
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3.22 Participating Employer .................................. 12
3.23 Plan .................................................... 12
3.24 Plan Year ............................................... 12
3.25 Prometrix Plan .......................................... 12
3.26 Prometrix Plan Account(s) ............................... 12
3.27 Qualified Matching Contributions ........................ 12
3.28 Qualified Nonelective Contributions ..................... 13
3.29 Reemployment Commencement Date .......................... 13
3.30 Regulations ............................................. 13
3.31 Rollover Contribution ................................... 13
3.32 Salary Deferral Contributions ........................... 13
3.33 Section 415 Compensation ................................ 13
3.34 Severance Date .......................................... 14
3.35 Spouse or Surviving Spouse .............................. 14
3.36 Trust ................................................... 14
3.37 Trustee ................................................. 14
3.38 Trust Fund .............................................. 14
3.39 Valuation Date .......................................... 15
3.40 Voluntary Contributions Account ......................... 15
3.41 Year of Service ......................................... 15
3.42 Other Definitions ....................................... 15
ARTICLE IV ELIGIBILITY ................................................. 18
4.1 Participation ........................................... 18
4.2 Reemployment ............................................ 18
4.3 Change in Employment Status ............................. 18
4.4 Election Not to Participate ............................. 18
ARTICLE V CONTRIBUTIONS ................................................ 19
5.1 Salary Deferral Contributions ........................... 19
5.2 Employer Matching and Qualified Matching Contributions .. 19
5.3 Employer Profit Sharing and Qualified Nonelective
Contributions ........................................... 20
5.4 Limitations on Contributions ............................ 20
5.5 Time and Manner of Payment of Contributions ............. 20
5.6 Receipt of Assets from Plan of Former Employer .......... 21
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TABLE OF CONTENTS
(CONTINUED)
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ARTICLE VI ACCOUNTS .................................................... 22
6.1 Participants' Accounts .................................. 22
6.2 Allocation of Contributions ............................. 22
6.3 Allocation of Earnings or Losses ........................ 23
6.4 Section 415 Limitations ................................. 23
6.5 Discrimination Testing of Salary Deferral
Contributions ........................................... 29
6.6 Distribution of Excess Deferral Contributions ........... 34
6.7 Discrimination Testing of Employer Matching
Contributions ........................................... 35
6.8 Corrective Procedure for Discriminatory Matching
Contributions ........................................... 38
ARTICLE VII VESTING AND DISTRIBUTION OF ACCOUNTS ....................... 42
7.1 Vested Interest ......................................... 42
7.2 Normal Retirement ....................................... 42
7.3 Death Benefits .......................................... 42
7.4 Termination of Employment ............................... 42
7.5 Commencement of Distribution ............................ 42
7.6 Direct Rollovers and Withholding ........................ 44
7.7 Form of Benefit ......................................... 45
7.8 Minimum Distribution Requirements ....................... 47
7.9 Distribution to Minor or Incompetent .................... 50
7.10 Location of Participant or Beneficiary Unknown .......... 51
7.11 Hardship Distribution ................................... 51
7.12 Loans ................................................... 52
7.13 Withdrawals at Age Fifty-Nine and One-Half (59 1/2) ..... 53
7.14 Withdrawals from Voluntary Contributions Account ........ 53
ARTICLE VIII ADMINISTRATION ............................................ 54
8.1 Powers of the Administrator ............................. 54
8.2 Domestic Relations Orders ............................... 55
ARTICLE IX LEAVES OF ABSENCE AND TRANSFERS ............................. 58
9.1 Military Leave of Absence ............................... 58
9.2 Other Leaves of Absence ................................. 58
9.3 Transfers ............................................... 58
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TABLE OF CONTENTS
(CONTINUED)
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ARTICLE X TRUST PROVISIONS; INVESTMENT OF CONTRIBUTIONS;
VALUATION OF ACCOUNTS ............................................. 60
10.1 Trust Agreement ......................................... 60
10.2 Inconsistent Provisions ................................. 60
10.3 Investment Decision ..................................... 60
10.4 Directed Investments .................................... 60
10.5 Accounts Not Directed ................................... 60
10.6 Valuation ............................................... 60
ARTICLE XI FEES AND EXPENSES ........................................... 61
ARTICLE XII NECESSITY OF QUALIFICATION ................................. 62
ARTICLE XIII AMENDMENT, TERMINATION OR MERGER .......................... 63
13.1 Amendment ............................................... 63
13.2 Termination of Plan ..................................... 63
13.3 Merger .................................................. 64
ARTICLE XIV ADOPTION OF PLAN BY PARTICIPATING EMPLOYERS ................ 65
14.1 Adoption of the Plan .................................... 65
14.2 Withdrawal .............................................. 65
ARTICLE XV CLAIMS PROCEDURE ............................................ 66
15.1 Right to File Claim ..................................... 66
15.2 Denial of Claim ......................................... 66
15.3 Claims Review Procedure ................................. 66
ARTICLE XVI TOP-HEAVY PROVISIONS ....................................... 68
16.1 Purpose ................................................. 68
16.2 Definitions ............................................. 68
16.3 Minimum Allocation ...................................... 70
ARTICLE XVII MISCELLANEOUS ............................................. 72
17.1 Legal or Equitable Action ............................... 72
17.2 Indemnification ......................................... 72
17.3 No Enlargement of Plan Rights ........................... 72
17.4 No Enlargement of Employment Rights ..................... 72
17.5 No Release from Liability ............................... 72
17.6 Headings ................................................ 72
17.7 Applicable Law .......................................... 72
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TABLE OF CONTENTS
(CONTINUED)
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17.8 Non-Alienation of Benefits ............................. 73
17.9 No Reversion ........................................... 73
17.10 Conflict ............................................... 73
APPENDIX A - MERGER OF TENCOR INSTRUMENTS 401(k) RETIREMENT PLAN ....... 1
A.1 Transfer of Account Balances ........................... 1
A.2 Amount of Account Balance .............................. 1
A.3 Investment of Account Balance .......................... 1
A.4 Service Credit ......................................... 1
A.5 Protected Benefits ..................................... 1
A.6 Prometrix Protected Benefits ........................... 2
A.7 Spousal Consent ........................................ 5
APPENDIX B - MERGER OF AMRAY/LICO, INC. EMPLOYEE SAVINGS PLAN .......... 1
B.1 Transfer of Account Balances ........................... 1
B.2 Amount of Account Balance .............................. 1
B.3 Investment of Account Balance .......................... 1
B.4 Service Credit ......................................... 1
B.5 Protected Benefits ..................................... 1
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ARTICLE I
INTRODUCTION
KLA-Tencor Corporation maintains the KLA-Tencor 401(k) Plan (the
"Plan"), consisting of the following provisions, for the exclusive benefit of
Participants and their Beneficiaries. The Plan was formerly named the KLA
Retirement Plan. The Plan was originally established effective as of January 1,
1982, and has been amended and restated several times. Effective as of July 1,
1997, except as otherwise stated herein, the Company wishes to further amend and
restate this Plan.
Effective July 1, 1997, the Tencor Instruments 401(k) Retirement Plan
was merged with and into the KLA Retirement Plan, and the resulting merged plan
was then renamed the KLA-Tencor 401(k) Plan. Effective on or about July 1, 1998,
the Amray\Lico, Inc. Employee Savings Plan will be merged with and into the
Plan.
The Plan is intended to be a profit sharing plan qualified under
Sections 401(a) and 501(a) of the Internal Revenue Code of 1986, as amended (the
"Code") and is intended to include a qualified cash or deferred arrangement
under Code Section 401(k).
ARTICLE II
PLAN SPECIFICATIONS
2.1 COMPANY INFORMATION.
(a) NAME OF COMPANY: KLA-Tencor Corporation
(b) ADDRESS OF COMPANY: 160 Rio Robles
San Jose, CA 95134-1809
(c) TELEPHONE NUMBER:(408) 875-3000
(d) THE COMPANY IS: a corporation
(e) COMPANY'S FISCAL YEAR-END:June 30
(f) PLAN YEAR-END: June 30 of each year
(g) PLAN LIMITATION YEAR END: June 30 of each year
(h) COMPANY'S TAX IDENTIFICATION NUMBER: 04-2564110
(i) EFFECTIVE DATE OF THIS RESTATEMENT: July 1, 1997
(j) ORIGINAL PLAN EFFECTIVE DATE: January 1, 1982
(k) PLAN NAME: KLA-Tencor 401(k) Plan
(l) PLAN NUMBER: 001
2.2 ELIGIBILITY.
(a) An Employee is required to complete one (1) Hour of
Service to become a Participant.
(b) An Employee is required to attain age eighteen (18) to
become a Participant.
(c) All Employees may participate in the Plan except:
(i) Participants in the KLA-Tencor Corporation
Management Retention Plan or the KLA-Tencor Corporation Corporate Officers
Retention Plan who are in pay status;
(ii) Leased Employees, as defined in Section 3.11;
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(iii) Employees who are non-resident aliens (within
the meaning of Section 7701(b)(1)(B) of the Code) and who receive no earned
income (within the meaning of Section 911(d)(2) of the Code) from the Employer
which constitutes income from sources within the United States (within the
meaning of Section 861(a)(3) of the Code);
(iv) Employees who are covered by a collective
bargaining agreement between a union and the Employer or any employers'
association under which retirement benefits were the subject of good faith
bargaining;
(v) individuals who are classified as consultants
(who may also be referred to as independent contractors) (whether or not such
classification is upheld upon governmental or judicial review). A consultant is
an individual with specialized knowledge or special skills who is retained to
provide advice or assistance to the Employer. A consultant is not an Employee of
the Employer;
(vi) individuals who are classified as agency workers
(whether or not such classification is upheld upon governmental or judicial
review). An agency worker is an individual who is employed pursuant to a written
agreement with an approved agency or other third party for a specific job
assignment or project;
(vii) individuals who are reclassified Employees. A
reclassified Employee is an Employee who was formerly not classified by the
Company as an Employee, but who was reclassified as an Employee by a federal,
state or local group, organization or agency, or a court;
(viii) an individual who is a party to an agreement
that provides that he or she shall not be eligible to participate in the Plan
(whether or not such agreement is upheld upon governmental or judicial review);
or
(ix) Employees of an Employer that is not a
Participating Employer.
(d) Each Employee who has satisfied the eligibility
requirements in this Section shall be eligible to participate in the Plan on the
later of the Employee's Employment Commencement Date or his or her attainment of
age eighteen (18). An Employee who does not satisfy the eligibility requirements
of paragraph (c) above as of his or her Employment Commencement Date, but who
later satisfies the eligibility requirements of paragraph (c) above shall be
eligible to participate in the Plan on the later of the date on which the
Employee satisfies the requirements of paragraph (c) above or his or her
attainment of age eighteen (18).
2.3 CREDIT FOR SERVICE.
(a) For purposes of determining eligibility and vesting,
credit will be given for service with the following predecessor employers: KLA
Instruments Corporation; Tencor Instruments; Prometrix Corporation; Amray, Inc.;
Groff Associates, Inc. (dba Dentech Sales and Service, Inc.); and any other
Employer which is a Participating Employer.
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(b) Service shall be calculated using the Hours of Service
Method. Employees who complete at least 1,000 Hours of Service during a Plan
Year will be credited with a Year of Service.
2.4 COMPENSATION.
(a) SALARY DEFERRAL CONTRIBUTIONS. Base salary or regular time
hourly wages, overtime, bonus, commissions, shift differential, payments for
paid time off and paid time off cashouts, payments in lieu of notice and
termination pay. Compensation for purposes of Salary Deferral Contributions
shall not include contributions to any nonqualified deferred compensation plan
sponsored by the Employer.
(b) PROFIT SHARING CONTRIBUTIONS. Base salary or regular time
hourly wages.
(c) ALL OTHER PURPOSES. Section 415 Compensation, as defined
in Section 3.33.
2.5 HIGHLY COMPENSATED EMPLOYEES.
(a) The Company elects that to be a Highly Compensated
Employee for the current Plan Year, in addition to having Compensation in excess
of Eighty Thousand Dollars ($80,000), as adjusted by the Adjustment Factor, for
the prior Plan Year, an Employee must be in the Top-Paid Group (as defined in
Section 3.17(b)(iii)).
(b) The Company elects to perform the nondiscrimination tests
under Sections 6.5 and 6.7 based on the Average Deferral Percentages and Actual
Contribution Percentages of Non-Highly Compensated Employees for the prior Plan
Year.
2.6 CONTRIBUTIONS. For each Plan Year, the Employer will make
contributions to the Trust on behalf of eligible Participants as follows:
(a) SALARY DEFERRAL CONTRIBUTIONS. Equal to the portion of the
Compensation otherwise payable to the Participant that the Participant has
elected to contribute to the Trust. The Participant's election shall specify the
amount of his or her Compensation to be contributed (expressed as a whole
percentage), which amount shall not be less than one percent (1%) and not more
than fifteen percent (15%) of the Participant's Compensation for the Plan Year.
(b) MATCHING CONTRIBUTIONS. In a discretionary amount to be
determined by the Board of Directors of the Company. If, during the Plan Year, a
Participant's Salary Deferral Contribution rate changes to an amount above or
below any threshold at which such contributions are matched, Employer Matching
Contributions will change prospectively with the change in a Participant's
Salary Deferral Contributions.
(c) PROFIT SHARING CONTRIBUTIONS. In a discretionary amount,
to be determined by the Board of Directors of the Company as of the end of each
calendar quarter.
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(d) VOLUNTARY CONTRIBUTIONS. Not permitted; however, Voluntary
Contribution Accounts shall continue to be maintained for Participants credited
with such amounts (i) under the Prometrix Plan which were transferred to the
Tencor Instruments 401(k) Retirement Plan, and (ii) under the KLA Retirement
Plan.
(e) ROLLOVER CONTRIBUTIONS. As specified in Section 5.6.
2.7 VESTING.
All Accounts shall be at all times one hundred percent (100%) vested.
2.8 TOP HEAVY MINIMUM ALLOCATION. Any minimum Top Heavy allocations
will be made from this Plan.
2.9 DISTRIBUTIONS.
(a) If at the date of distribution, the Participant's Accounts
do not exceed (and at the time of any prior distribution did not exceed) Three
Thousand Five Hundred Dollars ($3,500) (or, effective as of January 1, 1998,
Five Thousand Dollars ($5,000)), the Participant's Accounts shall be distributed
to the Participant in a lump sum.
(b) If, at the date of distribution, the Participant's
Accounts exceed (or at the time of any prior distribution exceeded) Three
Thousand Five Hundred Dollars ($3,500) (or, effective as of January 1, 1998,
Five Thousand Dollars ($5,000)), and unless otherwise specified in an Appendix
to the Plan, the Participant's Accounts shall be distributed to the Participant
in the form of a lump sum. However, the Participant shall be provided with the
opportunity to elect equal, or nearly equal, annual installments over a term
certain extending not beyond the normal life expectancies of the Participant and
his or her Beneficiary.
(c) If, at the date of distribution, the Participant's
Accounts exceed (or at the time of any prior distribution) exceeded Three
Thousand Five Hundred Dollars ($3,500) (or, effective as of January 1, 1998,
Five Thousand Dollars ($5,000)), and if the Participant or, where applicable,
the Participant's Spouse does not consent in writing to a distribution, the
Participant's Accounts will be held in the Trust Fund until the earlier of (i)
the Participant's death, (ii) the Participant's Normal Retirement Date, or (iii)
the date on which the Participant (or, where applicable, the Participant's
Spouse) consents in writing to a distribution.
2.10 INVESTMENT. All contributions under this Plan and any earnings
thereon shall be invested as elected by the Participant.
2.11 RETIREMENT DATE. A Participant's Normal Retirement Date shall be
the date on which the Participant attains age sixty-five (65).
2.12 LOANS. Loans to Participants are permitted.
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2.13 IN-SERVICE WITHDRAWALS.
(a) Hardship distributions are permitted from a Participant's
Salary Deferral Account, provided however, that no more than one (1) such
withdrawal shall be permitted per Plan Year.
(b) Distributions to a Participant who has attained age
fifty-nine and one-half (59 1/2) are permitted.
(c) Distributions from a Participant's Voluntary Contributions
Account accrued under the KLA Retirement Plan are permitted. Distributions from
a Participant's Voluntary Contributions Account accrued under the Prometrix Plan
which were transferred to the Tencor Instruments 401(k) Retirement Plan are
permitted, but no more frequently than twice in any twelve (12) consecutive
month period.
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ARTICLE III
DEFINITIONS
Wherever used in this Plan, the following terms shall have the meanings
indicated below, unless a different meaning is plainly required by the context.
The singular shall include the plural, unless the context indicates otherwise.
Headings of sections are used for convenience of reference, and in case of
conflict, the text of the Plan, rather than such headings, shall control:
3.1 ACCOUNT OR ACCOUNTS. A Participant's interest in the Trust Fund,
consisting of the Participant's Salary Deferral Contributions Account, Employer
Matching Contributions Account, Qualified Matching Contributions Account,
Rollover Contributions Account, Employer Profit Sharing Contributions Account,
Qualified Nonelective Contributions Account, Voluntary Contributions Account,
Prometrix Plan Account, and such other Account(s) as the Administrator shall
determine.
3.2 ADJUSTMENT FACTOR. The cost-of-living adjustment factor prescribed
by the Secretary of the Treasury under Section 415(d) of the Code as applied to
such items and in such manner as the Secretary shall provide.
3.3 ADMINISTRATOR OR PLAN ADMINISTRATOR. The Company.
3.4 BENEFICIARY. The person or entity who is to receive any benefits
payable from the Plan on account of a Participant's death. If the Participant is
married, the Beneficiary is the Participant's Surviving Spouse and no written
designation is required. A Participant may designate a Beneficiary other than
the Participant's Spouse; provided, however: (i) the Participant's Spouse
consents in writing (on a form acceptable to the Administrator) to such
designation and to the form thereof; (ii) such Beneficiary designation may not
be changed without spousal consent (or the consent of the Spouse expressly
permits designations by the Participant without any requirement of further
consent by the Spouse); and (iii) the Spouse's consent acknowledges the effect
of such Beneficiary designation and is witnessed by a Plan representative or a
notary public. Such spousal consent shall not be required if it is established
to the satisfaction of the Administrator that the consent required under the
preceding sentence cannot be obtained because there is no Spouse, because the
Spouse cannot be located, or because of such other circumstances as the
Secretary of the Treasury may by Regulations prescribe. If, at the time of the
Participant's death, the Participant has no Surviving Spouse or designated
Beneficiary, then the Beneficiary shall be the personal representative of the
Participant's estate. A Participant's Beneficiary shall be bound by the terms of
the Plan.
3.5 CODE. The Internal Revenue Code of 1986, as amended. Reference to a
section of the Code includes such section and any comparable section or sections
of any future legislation that amends, supplements or supersedes such section.
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3.6 COMPANY. KLA-Tencor Corporation.
3.7 COMPENSATION.
(a) Compensation, as defined in Section 2.4.
(b) Compensation shall include only that compensation which is
actually paid to the Employee during the Plan Year. Notwithstanding the
foregoing, Compensation shall include any amount which is contributed by the
Employer pursuant to a salary reduction agreement and which is not includable in
the gross income of the Employee under Code Section 125, 402(e)(3), 402(h) or
403(b).
(c) For Plan Years beginning on or after January 1, 1994, the
annual Compensation of each Employee taken into account under the Plan shall not
exceed One Hundred Fifty Thousand Dollars ($150,000), as adjusted by the
Adjustment Factor. The cost-of-living adjustment in effect for a calendar year
applies to any period, not exceeding twelve (12) months, over which compensation
is determined (the "Determination Period") beginning in such calendar year. If a
Determination Period consists of fewer than twelve (12) months, the One Hundred
Fifty Thousand Dollars ($150,000) annual compensation limit shall be multiplied
by a fraction, the numerator of which is in the number of months in the
Determination Period, and the denominator of which is twelve (12). For Plan
Years beginning on or after January 1, 1994, any reference in this Plan to the
limitation under Code Section 401(a)(17) shall mean the One Hundred Fifty
Thousand Dollars ($150,000) annual compensation limit set forth in this
provision. If Compensation for any prior determination period is taken into
account in determining an Employee's benefits accruing in the current Plan Year,
the Compensation for that prior determination period is subject to the annual
compensation limit in effect for that prior Determination Period.
(d) For purposes of applying the limitations of this Section,
Compensation for a limitation year is the Compensation actually paid or made
available during such limitation year.
3.8 CONTRIBUTION PERCENTAGE AMOUNTS. The sum of Employer Matching
Contributions and Qualified Matching Contributions (to the extent not taken into
account for purposes of the test in Section 6.5(a)) made under the Plan on
behalf of the Participant for the Plan Year. Such Contribution Percentage
Amounts shall not include Employer Matching Contributions that are forfeited
either to correct Excess Matching Contributions or because the Contributions to
which they relate are Excess Salary Deferral Contributions, Excess 401(k)
Contributions or Excess Matching Contributions. The Employer may include
Qualified Nonelective Contributions in the Contribution Percentage Amounts. The
Employer may also elect to use Salary Deferral Contributions in the Contribution
Percentage Amounts so long as the test in Section 6.5(a) is met before the
Salary Deferral Contributions are used in the test in Section 6.7(a) and
continues to be met following the exclusion of those Salary Deferral
Contributions that are used to meet the test in Section 6.7(a).
3.9 CONTRIBUTIONS. Salary Deferral Contributions, Employer Matching
Contributions, Qualified Matching Contributions, Employer Profit Sharing
Contributions and Qualified Nonelective Contributions.
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3.10 EFFECTIVE DATE. The Effective Date of the Plan was January 1,
1982. The Effective Date of this Restatement shall be July 1, 1997, except as
otherwise provided herein; provided, however, that any provision of this Plan
required as a result of the Small Business Job Protection Act of 1996, the
Taxpayer Relief Act of 1997, the Uruguay Round Agreements Act, the Uniformed
Services Employment and Reemployment Rights Act of 1994 or any similar
legislation, shall be effective as of the date required by such legislation.
3.11 EMPLOYEE. Any person employed by the Employer other than as an
independent contractor. The term Employee shall include any person (other than
an Employee of the Employer) who, pursuant to an agreement between the Employer
and any other person ("Leasing Organization"), has performed services for the
Employer (or for the Employer and related persons determined in accordance with
Code Section 414(n)(6)) on a substantially full-time basis for a period of at
least one (1) year, and such services are performed under the primary direction
or control by the recipient ("Leased Employee"). A Leased Employee shall not be
considered an Employee of the Employer if both of the following conditions are
met:
(a) such employee is covered by a money purchase pension plan
providing:
(i) a non-integrated employer contribution rate of at
least ten percent (10%) of compensation, as defined in Code Section 415(c)(3),
but including amounts contributed pursuant to a salary reduction agreement which
are excludable from the employee's gross income under Code Section 125,
402(e)(3), 402(h), 403(b) or 408(p);
(ii) immediate participation; and
(iii) full and immediate vesting.
(b) Leased Employees do not constitute more than twenty
percent (20%) of the Employer's non-highly-compensated work force.
Contributions or benefits provided a Leased Employee by the Leasing Organization
which are attributable to services performed for the recipient employer shall be
treated as provided by the recipient employer.
3.12 EMPLOYER. An Employer is the Company and any corporation which is
a member of a controlled group of corporations (as defined under Code Section
414(b) as modified by Code Section 415(h)) which includes the Company; any trade
or business (whether or not incorporated) which is under common control (as
defined under Code Section 414(c) as modified by Code Section 415(h)) with the
Company; any organization (whether or not incorporated) which is a member of an
affiliated service group (as defined under Code Section 414(m)) which includes
the Company; and any other organization or entity which is required to be
aggregated with the Company, pursuant to Code Section 414(o).
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3.13 EMPLOYER PROFIT SHARING CONTRIBUTIONS. Employer contributions to
the Trust other than Employer Matching Contributions and other than Employer
contributions made pursuant to Participants' salary deferral elections.
3.14 EMPLOYER MATCHING CONTRIBUTIONS. Employer contributions to the
Trust made on account of Salary Deferral Contributions, but not including any
contribution and/or allocation made to satisfy the minimum allocation
requirements of Section 16.3.
3.15 EMPLOYMENT COMMENCEMENT DATE. The date on which an Employee first
performs an Hour of Service for the Employer, within the meaning of Department
of Labor Regulation Section 2530.200b-2(a).
3.16 ERISA. The Employee Retirement Income Security Act of 1974, as
amended. Reference to a section of ERISA includes such section and any
comparable section or sections of any future legislation that amends,
supplements or supersedes such section.
3.17 HIGHLY COMPENSATED EMPLOYEE.
(a) A Highly Compensated Employee shall, for each Plan Year,
mean an Employee in active service who meets any of the following criteria:
(i) is, at any time during the current Plan Year or
the immediately preceding Plan Year, a five percent (5%) owner (as determined
under Code Section 416(i)(1)) of any Employer; or
(ii) received aggregate Compensation (as adjusted
below) for the immediately preceding Plan Year in excess of Eighty Thousand
Dollars ($80,000.00), and is a member of the Top-Paid Group for that immediately
preceding Plan Year.
(b) For purposes of the foregoing definition of "Highly
Compensated Employee" the following provisions shall apply:
(i) The dollar amounts of aggregate Compensation
specified above shall be automatically adjusted each Plan Year by the Adjustment
Factor.
(ii) A former Employee shall be treated as a Highly
Compensated Employee if:
(A) such Employee was a Highly Compensated
Employee when such Employee separated from service; and
(B) such Employee was a Highly Compensated
Employee at any time after attaining age fifty-five (55).
(iii) The term "Top-Paid Group" shall mean the top
twenty percent (20%) of all Employees (including any Leased Employees treated as
Employees pursuant to Section 3.11)
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when ranked on the basis of the Compensation paid to such Employees for the Plan
Year under consideration. However, for purposes of calculating the number of
Employees in the Top-Paid Group, the following Employees shall be excluded:
(A) Employees who have completed less than
six (6) months of service;
(B) Employees who normally work less than
seventeen and one-half (17-1/2) hours per week;
(C) Employees who normally work six (6)
months or less during the Plan Year under consideration;
(D) Employees who have incurred a Severance
Date prior to the start of the Plan Year under consideration; and
(E) Employees who are not eligible to
participate in the Plan under Section 2.2.
(iv) For purposes of this Section, the Compensation
of each Employee shall be determined on an aggregate basis as if all the
Employers were a single employer entity paying such Compensation. All other
determinations under this Section shall be made in accordance with Code Section
414(q) and the Regulations thereunder.
3.18 HOUR OF SERVICE.
(a) Each hour for which an Employee is directly or indirectly
paid, or entitled to payment, by the Employer for the performance of duties and
for reasons other than the performance of duties; provided that:
(i) no more than 501 Hours of Service shall be
credited on account of a single continuous period during which no duties are
performed, and
(ii) no Hours of Service shall be credited if payment
was made or due:
(A) under a plan maintained solely for the
purpose of complying with applicable worker's compensation, unemployment
compensation or disability insurance laws; or
(B) solely as reimbursement for medical or
medically related expenses incurred by the Employee. Hours of Service shall be
calculated in accordance with Department of Labor Regulation Sections
2530.200b-2(b) and (c);
(b) For an Employee on a leave of absence pursuant to Section
9.1 or 9.2, credit for such leave shall be given for the number of
regularly-scheduled working hours included in the period of such leave;
-11-
(c) An Employee's Hours of Service include each hour for which
back pay, irrespective of mitigation of damages, has been either awarded or
agreed to by the Employer. Such Hours of Service shall be credited for the
periods to which the award or agreement pertains rather than the periods in
which the award, agreement, or payment is made, and no Hours of Service shall be
credited under this paragraph which would duplicate any hours credited above.
(d) Hours of Service will be credited for employment with
other members of an affiliated service group (under Code Section 414(m)), a
controlled group of corporations (under Code Section 414(b)), or a group of
trades or business under common control (under Code Section 414(c)) of which the
Employer is a member, and any other entity required to be aggregated with the
Employer pursuant to Code Section 414(o). Hours of Service will also be credited
for any individual considered an Employee for purposes of this Plan under Code
Section 414(n) or (o).
3.19 NON-HIGHLY COMPENSATED EMPLOYEE. An Employee who is not a Highly
Compensated Employee.
3.20 NORMAL RETIREMENT DATE. The date on which a Participant attains
age sixty-five (65).
3.21 PARTICIPANT. An Employee or former Employee for whom an Account is
maintained under the Plan.
3.22 PARTICIPATING EMPLOYER. An Employer which has adopted the Plan for
the benefit of its Employees pursuant to Section 14.1.
3.23 PLAN. The KLA-Tencor 401(k) Plan.
3.24 PLAN YEAR. The twelve (12) consecutive month period beginning each
July 1st and ending each June 30th.
3.25 PROMETRIX PLAN. The Prometrix Corporation Profit Sharing and
401(k) Plan, merged into the Tencor Instruments 401(k) Retirement Plan prior to
its merger into the KLA Retirement Plan.
3.26 PROMETRIX PLAN ACCOUNT(S). Account(s) accrued under the Prometrix
Plan.
3.27 QUALIFIED MATCHING CONTRIBUTIONS. Employer Matching Contributions
under this Plan or any other plan of the Employer, as provided by the
Regulations, treated as Salary Deferral Contributions for purposes of the tests
of Section 6.5(a). The amount of Qualified Matching Contributions made under
this Plan and taken into account as Salary Deferral Contributions for purposes
of calculating the tests of Section 6.5(a), subject to such other requirements
as may be prescribed by the Secretary of the Treasury, shall be such Qualified
Matching Contributions as are needed to meet the Actual Deferral Percentage test
of Section 6.5(a).
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3.28 QUALIFIED NONELECTIVE CONTRIBUTIONS. Employer Profit Sharing
Contributions under this Plan or any other plan of the Employer, as provided by
the Regulations, treated as Salary Deferral Contributions for purposes of the
test of Section 6.5(a), or as Matching Contributions for purposes of the test of
Section 6.7(a).
(a) The amount of Qualified Nonelective Contributions made
under this Plan and taken into account as Salary Deferral Contributions for
purposes of calculating the tests of Section 6.5(a), subject to such other
requirements as may be prescribed by the Secretary of the Treasury, shall be
such Qualified Nonelective Contributions as are needed to meet the Actual
Deferral Percentage test of Section 6.5(a).
(b) The amount of Qualified Nonelective Contributions made
under this Plan and taken into account as Contribution Percentage Amounts for
purposes of calculating the tests of Section 6.7(a), subject to such other
requirements as may be prescribed by the Secretary of the Treasury, shall be
such Qualified Nonelective Contributions as are needed to meet the Average
Actual Contribution Percentage test of Section 6.7(a). Notwithstanding the
foregoing, Qualified Nonelective Contributions used in calculating the Actual
Deferral Percentage test of Section 6.5(a) may not be used in calculating the
Average Actual Contribution Percentage test of Section 6.7(a).
3.29 REEMPLOYMENT COMMENCEMENT DATE. The first date, following a
Severance Date, on which an Employee again performs one (1) Hour of Service for
the Employer.
3.30 REGULATIONS. The Income Tax Regulations as prescribed by the
Secretary of the Treasury from time to time under the Code.
3.31 ROLLOVER CONTRIBUTION. A qualified Rollover Contribution as
described in Section 5.6.
3.32 SALARY DEFERRAL CONTRIBUTIONS. Employer contributions to the Trust
on behalf of Participants who have elected to make such contributions as
described in Section 5.1. For purposes of the test under Section 6.7(a), the
Employer may take into account and include as Contribution Percentage Amounts,
Salary Deferral Contributions under this Plan or any other plan of the Employer,
as provided by Regulations. The amount of Salary Deferral Contributions made
under the Plan and taken into account as Contribution Percentage Amounts for
purposes of calculating the Average Actual Contribution Percentage, subject to
such other requirements as may be prescribed by the Secretary of the Treasury,
shall be such Salary Deferral Contributions as are needed to meet the Average
Actual Contribution Percentage test of Section 6.7(a); provided, however, that
Salary Deferral Contributions used in calculating the Actual Deferral Percentage
test of Section 6.5(a) may not be used in calculating the Average Actual
Contribution Percentage test of Section 6.7(a).
3.33 SECTION 415 COMPENSATION.
(a) For Plan Years beginning before January 1, 1998, "Section
415 Compensation" shall mean wages, salaries, and fees for professional services
and other amounts received (without regard to whether or not an amount is paid
in cash) for personal services actually
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rendered in the course of employment with the Employer maintaining the Plan to
the extent that the amounts are includable in gross income (including, but not
limited to, commissions paid salespersons, compensation for services on the
basis of a percentage of profits, commissions on insurance premiums, tips,
bonuses, fringe benefits, reimbursements, and reimbursements or other expense
allowances under a nonaccountable plan (as described in Section 1.62-2(c) of the
Regulations), and excluding the following:
(i) Employer contributions to a plan of deferred
compensation which are not includable in the Employee's gross income for the
taxable year in which contributed, or Employer contributions under a simplified
employee pension plan to the extent such contributions are deductible by the
Employee, or any distributions from a plan of deferred compensation;
(ii) Amounts realized from the exercise of a
non-qualified stock option, or when restricted stock (or property) held by the
Employee either becomes freely transferable or is no longer subject to a
substantial risk of forfeiture;
(iii) Amounts realized from the sale, exchange or
other disposition of stock acquired under a qualified stock option; and
(iv) Other amounts which received special tax
benefits, or contributions made by the Employer (whether or not under a salary
reduction agreement) towards the purchase of an annuity contract described in
Section 403(b) of the Code (whether or not the contributions are actually
excludable from the gross income of the Employee).
(b) For Plan Years beginning on or after January 1, 1998,
"Section 415 Compensation" shall include any elective deferrals (as defined in
Code Section 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 Section 125 or 457.
3.34 SEVERANCE DATE. The first to occur of the date on which an
Employee terminates employment with the Employer because he or she quits, is
discharged, dies or retires; and, for purposes of distributions made under any
of the Appendices, the date on which an Employee is determined to have a
Disability.
3.35 SPOUSE OR SURVIVING SPOUSE. The Spouse or Surviving Spouse of a
Participant; provided, however, that a former Spouse will be treated as the
Spouse or Surviving Spouse to the extent provided under a Qualified Domestic
Relations Order as described in Code Section 414(p).
3.36 TRUST. The Trust established under Article X.
3.37 TRUSTEE. The person(s) or entity named in the Trust Agreement, or
any successor or successors thereto, and designated by the Company to act as
Trustee of the Trust and to hold the Trust assets in accordance with Article X.
3.38 TRUST FUND. The assets held by the Trustee under the Trust.
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3.39 VALUATION DATE. The last day of each Plan Year and such other
date(s) as the Administrator may designate.
3.40 VOLUNTARY CONTRIBUTIONS ACCOUNT. Participant after-tax
contributions accrued under the KLA Retirement Plan or the Prometrix Plan.
3.41 YEAR OF SERVICE. A Plan Year during which an Employee completes
1,000 Hours of Service.
3.42 OTHER DEFINITIONS. In addition to the definitions contained in
this Section, the following terms are defined in the Section listed:
TERM SECTION
---- -------
Actual Deferral Percentage 6.5(3)(i)
Agency workers 2.2(c)(vi)
Aggregate Limit 6.7(c)(i)
Alternate Payee 8.2(d)(i)
Amray Merger Date B
Amray Participants B.5
Amray Plan B
Annual Additions 6.4(g)(i)
Annuity Starting Date A.6(e)(i)
Applicable Life Expectancy 7.8(e)(i)
Average Actual Contribution Percentage 6.7(c)(ii)
Average Actual Deferral Percentage 6.5(e)(ii)
Board 13.1(a)
Consultants 2.2(c)(v)
Contribution Percentage 6.7(c)(iii)
Contribution Percentage Amounts 6.7(c)(iv)
Defined Benefit Fraction 6.4(g)(ii)
Defined Contribution Dollar Limitation 6.4(g)(iii)
Defined Contribution Fraction 6.4(g)(iv)
Designated Beneficiary 7.8(e)(ii)
Determination Date 16.2(a)
Direct Rollover 7.6(b)(i)
Disability A.6-3,B.5-2
Distributee 7.6(b)(ii)
Distribution Calendar Year 7.8(e)(iii)
Domestic Relations Order or Order 8.2(d)(ii)
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TERM SECTION
---- -------
Earliest Retirement Age 8.2(d)(iii)
Election Period A.6(e)(ii)
Eligible Employee 6.5(e)(iii)
Eligible Participant 6.7(c)(v)
Eligible Retirement Plan 7.6(b)(iii)
Eligible Rollover Distribution 7.6(b)(iv)
Employee Contribution 6.7(e)(vi)
Excess 401(k) Contributions 6.5(e)(iv)
Excess Amount 6.4(g)(v)
Excess Matching Contributions 6.7(c)(vii)
Excess Salary Deferrals 6.6(a)
Five Percent Owner 7.8(e)(iv)
Hardship 7.12
Highest Average Compensation 6.4(g)(vi)
Key Employee 16.2(b)
KLA Plan A
Leased Employees 3.15
Life Expectancy 7.8(e)(v)
Limitation Year 6.4(g)(vii)
Maternity and Paternity Leave 3.5(b)
Maximum Permissible Amount 6.4(g)(viii)
Non-Key Employee 16.2(c)
Non-resident aliens 2.2(c)(iii)
Other Plan 6.4(g)(ix)
Participant's Benefit 7.8(e)(vi)
Permissive Aggregation Group 16.2(d)
Plan Committee 8.1(e)
Pre-age thirty-five (35) Waiver A.6(e)(iii)
Projected Annual Benefit 6.4(g)(x)
Prometrix Merger Date A
Prometrix Participants A.6
Prometrix Plan A.5
Protected Benefits B.5
Qualified Domestic Relations Order 8.2(d)(iv)
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TERM SECTION
---- -------
Qualified Election A.6(e)(iv)
Qualified Joint and Survivor Annuity A.6(e)(v)
Qualified Preretirement Survivor Annuity A.6(e)(vi)
Reclassified Employees 2.2(c)(vii)
Required Aggregation Group 16.2(e)
Required Beginning Date 7.8(e)(vii)
Salary Deferrals 6.6(a)
Segregated Amounts 8.2(c)(i)
Straight Life Annuity A.6(e)(vii)
Tencor Merger Date A
Tencor Participants A.5
Tencor Plan A
Top-Heavy Plan 16.2(f)
Top-Heavy Ratio 16.2(g)
Valuation Date 16.2(h)
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ARTICLE IV
ELIGIBILITY
4.1 PARTICIPATION. Each Employee who satisfies the conditions for
eligibility specified in Section 2.2 may commence participation in the Plan as
soon as administratively feasible thereafter.
4.2 REEMPLOYMENT. If an Employee who has satisfied the eligibility
requirements specified in Section 2.2 terminates employment with the Employer
and is thereafter reemployed by the Employer, then the Employee will be eligible
to participate in the Plan as of his or her Reemployment Commencement Date. An
Employee who terminates employment prior to satisfying the eligibility
requirements specified in Section 2.2 will become eligible to participate in the
Plan in accordance with the provisions of Section 4.1.
4.3 CHANGE IN EMPLOYMENT STATUS. If a Participant subsequently becomes
an Employee ineligible to participate in the Plan pursuant to Section 2.2, then
such Employee shall become a Participant immediately upon returning to an
eligible class of Employees. If an Employee who is not a member of an eligible
class of Employees becomes a member of an eligible class, then such Employee
shall become a Participant in the Plan as soon as administratively feasible
thereafter, provided that such Employee satisfies the requirements of Section
2.2.
4.4 ELECTION NOT TO PARTICIPATE. Employees who would otherwise be
eligible to participate in the Plan may elect not to participate in any
contributions made pursuant to Section 5.3 for any Plan Year by making such
election in writing in such manner and at such times as the Administrator shall
specify.
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ARTICLE V
CONTRIBUTIONS
5.1 SALARY DEFERRAL CONTRIBUTIONS.
(a) As provided in Section 2.6, an eligible Employee may
elect, in accordance with the procedures established from time to time by the
Administrator, to have a portion of Compensation from each payroll period
contributed to his or her Salary Deferral Contributions Account; provided,
however, in no event shall the dollar amount made on behalf of each such
Participant for any calendar year exceed the limit prescribed under Code Section
402(g) as adjusted automatically each calendar year to the extent permitted
under Code Section 402(g)(5) and the Regulations thereunder (Nine Thousand Five
Hundred Dollars ($9,500) in 1997; Ten Thousand Dollars ($10,000) in 1998). A
Participant may elect to increase, discontinue or decrease Salary Deferral
Contributions by filing a new election with the Administrator in such a manner
as the Administrator shall specify, but in no event less frequently than once
each calendar year.
(b) For purposes of the Plan, and with respect to Salary
Deferral Contributions on behalf of any Participant, such Salary Deferral
Contributions must be allocated to the Participant's Salary Deferral
Contributions Account as of a date within the Plan Year and must relate to
Compensation that would have been received by the Participant in the Plan Year
but for the Participant's election to defer such Compensation.
5.2 EMPLOYER MATCHING AND QUALIFIED MATCHING CONTRIBUTIONS.
(a) The Employer may, in its discretion and as specified in
Section 2.6, make Employer Matching Contributions. Employer Matching
Contributions which would otherwise be made on behalf of a Participant may be
reduced to the extent necessary to comply with the limitations of Sections 5.4,
6.4, 6.5 and 6.7. Any amount that cannot be contributed to the Trust because of
these limitations shall be retained by the Employer, and the Employer shall have
no obligation to contribute such amount to the Trust.
(b) The Administrator may, in its discretion, elect to treat
all or a portion of Employer Matching Contributions for a Plan Year as Qualified
Matching Contributions for purposes of the tests of Section 6.5(a).
(c) For all purposes of the Plan, Employer Matching or
Qualified Matching Contributions shall be subject to the distribution
limitations of Article VII. Amounts allocated to a Participant's Qualified
Matching Contributions Account shall not be eligible for hardship distribution
under Section 7.11.
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5.3 EMPLOYER PROFIT SHARING AND QUALIFIED NONELECTIVE CONTRIBUTIONS.
(a) The Employer may, in its discretion and as specified in
Section 2.6, make Employer Profit Sharing Contributions in such amount and at
such times as it shall determine.
(b) Employer Profit Sharing Contributions for each calendar
quarter shall be allocated among the Employer Profit Sharing Contributions
Accounts of all Participants and former Participants who were employed by the
Employer on the first and last days of the calendar quarter for which an
Employer Profit Sharing Contribution is made to the Plan. Employer Profit
Sharing Contributions shall be allocated to each Participant entitled to share
in the allocation of Employer Profit Sharing Contributions for a calendar
quarter in proportion to his or her Compensation as it relates to the aggregate
Compensation of all such Participants for such calendar quarter, subject to the
limitations of Section 6.4.
(c) The Administrator may, in its discretion, elect to treat
all or a portion of Employer Profit Sharing Contributions for a Plan Year as
Qualified Nonelective Contributions for purposes of the tests of Sections 5.7(a)
and 6.5(a).
(d) The Employer may, with respect to a Plan Year, allocate
Qualified Nonelective Contributions to such Participants and in such a manner as
it deems necessary or appropriate to satisfy the tests of Sections 6.5(a) and
6.7(a).
(e) No Participant shall have any right to inquire into the
amount of the Employer's Profit Sharing or Qualified Nonelective Contributions
or the method used in determining the amount of the Employer's Profit Sharing or
Qualified Nonelective Contributions. The Trustee shall be accountable only for
funds actually received by the Trustee.
(f) For all purposes of the Plan, Employer Profit Sharing or
Qualified Nonelective Contributions shall be subject to the distribution
limitations of Article VII. Amounts allocated to a Participant's Qualified
Nonelective Contributions Account shall not be eligible for hardship
distribution under Section 7.11.
5.4 LIMITATIONS ON CONTRIBUTIONS. The Employer Contributions for any
Plan Year shall not exceed the maximum amount allowable as a deduction to the
Employer under the provisions of Code Section 404. Notwithstanding the preceding
sentence, to the extent necessary to provide Top Heavy minimum allocations, the
Employer shall make Contributions, even if such Contributions exceed the amount
deductible to the Employer under the provisions of Code Section 404.
5.5 TIME AND MANNER OF PAYMENT OF CONTRIBUTIONS. Contributions shall be
paid to the Trustee on a regular basis determined by the Administrator; provided
that:
(a) Unless the Regulations otherwise permit, all Qualified
Nonelective Contributions and Qualified Matching Contributions for a Plan Year
must be paid to the Trustee within the time limits prescribed under applicable
Federal and state law for the current deductibility thereof; and
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(b) All Salary Deferral Contributions must be paid to the
Trustee as soon as administratively feasible, but in no event later than the
time prescribed by the Regulations promulgated by the Secretary of the
Department of Labor.
5.6 RECEIPT OF ASSETS FROM PLAN OF FORMER EMPLOYER.
(a) The Trustee may receive, with the consent of the
Administrator, a transfer of assets previously held under a tax-qualified plan
for the benefit of an Employee. The assets may be (i) received directly from the
trustee of a plan qualified under Code Section 401(a), (ii) received from the
Employee in accordance with Code Section 402(c) or 408(d)(3), or (iii) with the
consent of the Administrator, transferred in the form of a Direct Rollover (as
defined in Section 7.6).
(b) The Administrator shall be fully protected in relying on
data, representations, or other information provided by the Employee or by the
trustee or custodian of a qualified plan or individual retirement account that
transfers assets to it for the purpose of determining that the requirements of
subsection (a) above have been satisfied.
(c) Amounts attributable to elective contributions (as defined
in Regulation Section 1.401(k)-1(g)(3)), including amounts treated as elective
contributions which are transferred from another tax-qualified plan in a
plan-to-plan transfer, shall be subject to the distribution limitations provided
for in Regulation Section 1.401(k)-1(d).
-21-
ARTICLE VI
ACCOUNTS
6.1 PARTICIPANTS' ACCOUNTS. For each Participant, a separate Account
shall be maintained for each of the following, and for the income, expenses,
gains and losses attributable thereto:
(a) Salary Deferral Contributions. A Participant's Salary
Deferral Contributions Account shall be credited with all amounts attributable
to Salary Deferral Contributions pursuant to Section 5.1.
(b) Employer Matching Contributions. A Participant's Employer
Matching Contributions Account shall be credited with all amounts, if any,
attributable to Employer Matching Contributions pursuant to Section 5.2.
(c) Qualified Matching Contributions. A Participant's
Qualified Matching Contributions Account shall be credited with all amounts, if
any, attributable to Qualified Matching Contributions pursuant to Section 5.2.
(d) Employer Profit Sharing Contributions. A Participant's
Employer Profit Sharing Contributions Account shall be credited with all
amounts, if any, attributable to Employer Profit Sharing Contributions pursuant
to Section 5.3.
(e) Qualified Nonelective Contributions. A Participant's
Qualified Nonelective Contributions Account shall be credited with all amounts,
if any, attributable to Qualified Nonelective Contributions pursuant to Section
5.3.
(f) Rollover Contributions. A Participant's Rollover
Contributions Account shall be credited with all amounts transferred to the Plan
pursuant to Section 5.6.
(g) Voluntary Contributions. A Participant's Voluntary
Contributions Account shall be maintained for Participants credited with such
amounts under the Prometrix Plan which were transferred to the Tencor
Instruments 401(k) Retirement Plan, and for Participants credited with such
accounts under the KLA Retirement Plan.
(h) Other Accounts. Such other Account or Accounts as the
Administrator shall deem necessary or appropriate.
6.2 ALLOCATION OF CONTRIBUTIONS. As of each Valuation Date, the
Administrator shall allocate to the Accounts of each Participant the
Contributions made on his or her behalf since the preceding Valuation Date.
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6.3 ALLOCATION OF EARNINGS OR LOSSES.
(a) As of each Valuation Date, the Trustee shall determine the
net fair market value of all assets of the Trust Fund (other than (i) any
Contributions made as of such Valuation Date, and (ii) and payments of principal
or interest made on outstanding loans to Participants pursuant to Section 7.12
since the preceding Valuation Date), and the Trustee shall then report such
value to the Administrator. The Administrator shall adjust each Account: first,
to reflect any allocations made to, or any distributions or withdrawals made
from, such Account since the immediately preceding Valuation Date, to the extent
not previously credited or charged thereto, and second, to reflect the earnings
or losses allocable to each Account in accordance with Section 6.3(b). If an
allocation of Contributions is to be made to the Accounts as of the same
Valuation Date, then the adjustments required under this Section shall be made
prior to such allocation.
(b) The Administrator shall maintain a separate record of all
gains and losses of the Trust Fund attributable to each Participant's Account.
For purposes of this Section, the gains or losses of the Trust Fund shall
include any unrealized increase or decrease in the fair market value of the
assets of the Trust Fund as determined by the Trustee under the terms of the
Trust. Each Participant's Account shall be credited with the gains or losses
attributable to the investments made in such Account over the relevant period as
of each Valuation Date.
6.4 SECTION 415 LIMITATIONS.
(a) If the Participant does not participate in, and has never
participated in, another qualified plan maintained by the Employer, or a welfare
benefit fund (as defined in Code Section 419(e)) maintained by the Employer, or
an individual medical account (as defined in Code Section 415(l)(2)) maintained
by the Employer, which provides an Annual Addition (as defined below) the amount
of Annual Additions which may be credited to the Participant's Account for any
Limitation Year shall not exceed the lesser of the Maximum Permissible Amount
(as defined below) or any other limitation contained in this Plan. If the
Contributions that would otherwise be contributed or allocated to the
Participant's Account would cause the Annual Additions for the Limitation Year
to exceed the Maximum Permissible Amount, then the amount contributed or
allocated shall be reduced so that the Annual Additions for the Limitation Year
equal the Maximum Permissible Amount.
(b) Prior to determining the Participant's actual Section 415
Compensation for the Limitation Year, the Employer may determine the Maximum
Permissible Amount for a Participant on the basis of a reasonable estimation of
the Participant's Section 415 Compensation for the Limitation Year.
(c) As soon as is administratively feasible after the end of
the Limitation Year, the Maximum Permissible Amount for the Limitation Year
shall be determined on the basis of the Participant's actual Section 415
Compensation for the Limitation Year.
(d) If an Excess Amount exists for one or more Participants
under this Plan and any Other Plan for a Limitation Year, as a result of (1) a
reasonable error in determining the amount
-23-
of Salary Deferral Contributions that may be made with respect to any
Participant under the limits of this Section, (2) an allocation of forfeitures,
(3) a reasonable error in estimating a Participant's annual Section 415
Compensation, or (4) other facts and circumstances with respect to which the
rules of Regulation Section 1.415-6(b)(6) are available, then the Excess Amount
will be disposed of in the following manner in accordance with the order
indicated and to the extent necessary to eliminate such excess:
(i) First, the Participant's after-tax employee
contributions (including, if applicable, earnings thereon) under any Other Plan
shall be refunded;
(ii) Then, any Salary Deferral Contributions
(including, if applicable, the earnings thereon) made on the Participant's
behalf which were not the subject of any Employer Matching Contributions shall
be distributed to the Participant as a current cash payment, subject to
applicable Federal and state withholding taxes;
(iii) Then, any Salary Deferral Contributions
(including, if applicable, the earnings thereon) made on the Participant's
behalf which were entitled to Employer Matching Contributions shall be
distributed to the Participant as a current cash payment, subject to applicable
Federal and state withholding taxes, and no Employer Matching Contributions
shall be made with respect to the distributed Salary Deferral Contributions.
Accordingly, the Participant's Employer Matching Contributions for such Plan
Year are to be reduced as follows:
(A) To the extent the Employer Matching
Contributions have not already been made to the Plan on the Participant's
behalf, the reduction shall be effected by making an appropriate reduction in
the aggregate amount of Employer Matching Contributions required for such Plan
Year to take into account the distributed Salary Deferral Contributions no
longer eligible for an Employer Matching Contribution.
(B) To the extent the Employer Matching
Contributions have already been allocated to the Participant's Employer Matching
Contributions Account for the Plan Year coincident with such Limitation Year,
such Employer Matching Contributions (to the extent attributable to the
distributed Salary Deferral Contributions) shall, together with the earnings
thereon (if applicable), be withdrawn from the Participant's Employer Matching
Contributions Account and reapplied to the satisfaction of any Employer Matching
Contributions still to be made on behalf of other Participants eligible for an
Employer Matching Contribution for such Plan Year. Any Employer Matching
Contributions withdrawn from the Participant's Employer Matching Contribution
Account and not so reapplied shall be held unallocated in a suspense account and
shall be used to reduce future Employer Matching Contributions required to be
made for each succeeding Plan Year until the suspense account is reduced to zero
(0). No profits or losses attributable to the assets of the Trust shall be
allocated to the suspense account, nor shall any Contributions to the Plan
(other than Salary Deferral Contributions) be made by the Employer while there
is an outstanding balance in such suspense account. Upon the termination of the
Plan, any outstanding balance in the suspense account shall revert to the
Employer or, if applicable, the Participating Employer who made that Employer
Matching Contribution to the Trust.
-24-
(iv) Then, the Participant's share of the Employer
Profit Sharing Contributions (if any) for the Plan Year coincident with the
Limitation Year shall be reduced. Accordingly, the Employer shall make an
appropriate reduction in the Employer Profit Sharing Contribution for the
calendar quarter for which such Employer Profit Sharing Contribution is reduced
from the Participant's Employer Profit Sharing Contribution Account.
(v) Finally, the Participant's allocable share of
contributions and forfeitures under any Other Plan shall be reduced in
accordance with the applicable provisions of such Other Plan.
(e) This Section applies if, in addition to this Plan, the
Participant is covered under another defined contribution plan maintained by the
Employer, a welfare benefit fund (as defined in Code Section 419(e)) maintained
by the Employer, or an individual medical account (as defined in Code Section
415(l)(2)) maintained by the Employer, which provides an Annual Addition, during
any Limitation Year. The Annual Additions which may be credited to a
Participant's Account under this Plan for any such Limitation Year will not
exceed the Maximum Permissible Amount reduced by the Annual Additions credited
to a participant's account under the other plans and welfare benefit funds for
the same Limitation Year. If the Annual Additions with respect to the
participant under other defined contribution plans and welfare benefit funds
maintained by the Employer are less than the Maximum Permissible Amount and the
Employer contribution that would otherwise be contributed or allocated to the
Participant's Account under this Plan would cause the Annual Additions for the
Limitation Year to exceed this limitation, the amount contributed or allocated
will be reduced so that the Annual Additions under all such plans and funds for
the Limitation Year will equal the Maximum Permissible Amount. If the Annual
Additions with respect to the Participant under such other defined contribution
plans and welfare benefit funds in the aggregate are equal to or greater than
the Maximum Permissible Amount, no amount will be contributed or allocated to
the Participant's Account under this Plan for the Limitation Year.
(i) Prior to determining the Participant's actual
Section 415 Compensation for the Limitation Year, the Employer may determine the
Maximum Permissible Amount for a Participant in the manner described in
paragraph (a) of this Section.
(ii) As soon as is administratively feasible after
the end of the Limitation Year, the Maximum Permissible Amount for the
Limitation Year will be determined on the basis of the Participant's actual
Section 415 Compensation for the Limitation Year.
(iii) If, as a result of (1) a reasonable error in
determining the amount of Salary Deferral Contributions that may be made with
respect to any Participant under the limits of this Section, (2) an allocation
of forfeitures, (3) a reasonable error in estimating a Participant's annual
Section 415 Compensation, or (4) other facts and circumstances with respect to
which the rules of Regulation Section 1.415-6(b)(6) are available, a
Participant's Annual Additions under this Plan and such other plans would result
in an Excess Amount for a Limitation Year, the Excess Amount will be deemed to
consist of the Annual Additions last allocated, except that Annual Additions
attributable to a welfare benefit fund or individual medical account will be
deemed to have been allocated first regardless of the actual allocation date.
-25-
(iv) If an Excess Amount was allocated to a
Participant on an allocation date of this Plan which coincides with an
allocation date of another plan, the Excess Amount attributed to this Plan will
be the product of,
(A) the total Excess Amount allocated as of
such date, times
(B) the ratio of (i) the Annual Additions
allocated to the Participant for the Limitation Year as of such date under this
Plan to (ii) the total Annual Additions allocated to the Participant for the
Limitation Year as of such date under this and all other defined contribution
plans.
(v) Any Excess Amount attributed to this Plan will be
disposed in the manner described in paragraph (a) (iv) above.
(f) If the Employer maintains, or at any time maintained, a
qualified defined benefit plan covering any Participant in this Plan, the sum of
the Participant's defined benefit plan fraction and defined contribution plan
fraction will not exceed one (1.0) in any Limitation Year. The Annual Additions
which may be credited to the Participant's Account under this Plan for any
Limitation Year will be limited in accordance with the provisions of Section
6.4(b).
(g) Definitions.
(i) Annual Additions. The sum of the following
amounts credited to a Participant's Account for the Limitation Year are treated
as Annual Additions:
(A) Employer contributions;
(B) Employee contributions;
(C) forfeitures;
(D) amounts allocated, after March 31, 1984,
to an individual medical account, as defined in Code Section 415(l)(2), which is
part of a pension or annuity plan maintained by the Employer;
(E) amounts derived from contributions paid
or accrued after December 31, 1985, in taxable years ending after such date,
which are attributable to post-retirement medical benefits, allocated to the
separate account of a Key Employee (as defined in Code Section 419A(d)(3)) and
under a welfare benefit fund (as defined in Code Section 419(e)) maintained by
the Employer;
(F) any Excess Amount applied under
paragraph (a)(iv) or (b)(vi) in the Limitation Year to reduce Employer
contributions.
(ii) Defined Benefit Fraction. A fraction, the
numerator of which is the sum of the Participant's Projected Annual Benefits
under all the defined benefit plans (whether or not
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terminated) maintained by the Employer, and the denominator of which is the
lesser of one hundred twenty-five percent (125%) of the dollar limitation
determined for the Limitation Year under Code Sections 415(b) and (d) or one
hundred forty percent (140%) of the Highest Average Compensation, as adjusted by
the Adjustment Factor. Notwithstanding the above, if the Participant was a
participant as of the first day of the first Limitation Year beginning after
December 31, 1986, in one or more defined benefit plans maintained by the
Employer which were in existence on May 6, 1986, the denominator of this
fraction will not be less than one hundred twenty-five percent (125%) of the sum
of the annual benefits under such plans which the Participant had accrued as of
the close of the last Limitation Year beginning before January 1, 1987,
disregarding any changes in the terms and conditions of that plan after May 5,
1986. The preceding sentence applies only if the defined benefit plans
individually and in the aggregate satisfied the requirements of Code Section 415
for all Limitation Years beginning before January 1, 1987.
(iii) Defined Contribution Dollar Limitation. Thirty
Thousand Dollars ($30,000), as adjusted by the Adjustment Factor.
(iv) Defined Contribution Fraction. A fraction, the
numerator of which is the sum of the Annual Additions to the Participant's
account under all the defined contribution plans (whether or not terminated)
maintained by the Employer for the current and all prior Limitation Years
(including the Annual Additions attributable to the Participant's nondeductible
Employee contributions to all defined benefit plans, whether or not terminated,
maintained by the Employer, and the Annual Additions attributable to all welfare
benefit funds (as defined in Code Section 419(e)) and individual medical
accounts (as defined in Code Section 415(1)(2)) maintained by the Employer), and
the denominator of which is the sum of the maximum aggregate amounts for the
current and all prior Limitation Years of Service with the Employer (regardless
of whether a defined contribution plan was maintained by the Employer). The
maximum aggregate amount in any Limitation Year is the lesser of one hundred
twenty-five percent (125%) of the dollar limitation determined under Code
Sections 415(b) and (d) in effect under Code Section 415(c)(1)(A) or thirty-five
percent (35%) of the Participant's Section 415 Compensation for such year. If
the Employee was a Participant as of the end of the first day of the first
Limitation Year beginning after December 31, 1986, in one or more defined
contribution plans maintained by the Employer which were in existence on May 6,
1986, the numerator of this fraction will be adjusted if the sum of this
fraction and the Defined Benefit Fraction would otherwise exceed one (1.0) under
the terms of this Plan. Under the adjustment, an amount equal to the product of
(1) the excess of the sum of the fractions over one (1.0), times (2) the
denominator of this fraction, will be permanently subtracted from the numerator
of this fraction. The adjustment is calculated using the fractions as they would
be computed as of the end of the last Limitation Year beginning before January
1, 1987, and disregarding any changes in the terms and conditions of the plan
made after May 5, 1986, but using the Code Section 415 limitation applicable to
the first Limitation Year beginning on or after January 1, 1987.
(v) Excess Amount. The amount of Annual Additions
which, if credited to a Participant's Account for a Limitation Year, would
exceed the Maximum Permissible Amount.
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(vi) Highest Average Compensation. The average
Section 415 Compensation for the three (3) consecutive Years of Service with the
Employer that produces the highest average.
(vii) Limitation Year. The twelve (12) consecutive
month period ending on the date specified in Section 2.1(g). All qualified plans
maintained by the Employer must use the same Limitation Year. If the Limitation
Year is amended to a different twelve (12)-consecutive month period, the new
Limitation Year must begin on a date within the Limitation Year in which the
amendment is made.
(viii) Maximum Permissible Amount. The maximum Annual
Addition that may be contributed or allocated to a Participant's Account under
the Plan for any Limitation Year shall not exceed the lesser of:
(A) the Defined Contribution Dollar
Limitation, or
(B) Twenty-five percent (25%) of the
Participant's Section 415 Compensation for the Limitation Year. The Section 415
Compensation limitation shall not apply to any contribution for medical benefits
(within the meaning of Code Section 401(h) or 419A(f)(2)) which is otherwise
treated as an Annual Addition under Code Section 415(1)(1) or 419A(d)(2). If a
short Limitation Year is created because of an amendment changing the Limitation
Year to a different twelve (12)-consecutive month period, the Maximum
Permissible Amount will not exceed the Defined Contribution Dollar Limitation
multiplied by the following fraction:
Number of months in the short Limitation Year
---------------------------------------------
12
(ix) Other Plan. Any other defined contribution plan
to which one or more members of the controlled group of corporations (as
determined in accordance with the ownership rules of Code Section 1563, without
regard however, to Code Section 1563(a)(4) or 1563(e)(3)(C)) and any other
employer entity which constitutes an affiliated service group or is required to
be aggregated with the Employer pursuant to Code Section 414(c), 414(m) or
414(o) and the Regulations thereunder.
(x) Projected Annual Benefit. The annual retirement
benefit (adjusted to an actuarially equivalent straight life annuity if such
benefit is expressed in a form other than a straight life annuity or qualified
joint and survivor annuity) to which the Participant would be entitled under the
terms of a plan assuming:
(A) the Participant will continue employment
until normal retirement age under the plan (or current age, if later), and
(B) the Participant's Section 415
Compensation for the current Limitation Year and all other relevant factors used
to determine benefits under the plan will remain constant for all future
Limitation Years.
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(h) If the Participant does not participate in, and has never
participated in another qualified plan maintained by the Employer, or a welfare
benefit fund (as defined in Code Section 419(e)) maintained by the Employer, or
an individual medical account (as defined in Code Section 415(l)(2)) maintained
by the Employer, which provides an Annual Addition (as defined below) the amount
of Annual Additions which may be credited to the Participant's Account for any
Limitation Year shall not exceed the lesser of the Maximum Permissible Amount
(as defined below) or any other limitation contained in this Plan. If the
Contributions that would otherwise be contributed or allocated to the
Participant's Account would cause the Annual Additions for the Limitation Year
to exceed the Maximum Permissible Amount, then the amount contributed or
allocated shall be reduced so that the Annual Additions for the Limitation Year
equal the Maximum Permissible Amount.
(i) Prior to determining the Participant's actual Section 415
Compensation for the Limitation Year, the Employer may determine the Maximum
Permissible Amount for a Participant on the basis of a reasonable estimation of
the Participant's Section 415 Compensation for the Limitation Year.
(j) As soon as is administratively feasible after the end of
the Limitation Year, the Maximum Permissible Amount for the Limitation Year
shall be determined on the basis of the Participant's actual Section 415
Compensation for the Limitation Year.
6.5 DISCRIMINATION TESTING OF SALARY DEFERRAL CONTRIBUTIONS.
(a) Actual Deferral Percentage. The anti-discrimination
requirements of Code Section 401(k)(3) provide that in each Plan Year one of the
following tests must be met:
(i) The Average Actual Deferral Percentage for
Eligible Employees who are Highly Compensated Employees for the Plan Year shall
not exceed the prior Plan Year's Average Actual Deferral Percentage for Eligible
Employees who were Non-Highly Compensated Employees for the prior Plan Year
multiplied by one and twenty-five one-hundredths (1.25); or
(ii) The Average Actual Deferral Percentage for
Eligible Employees who are Highly Compensated Employees for the Plan Year shall
not exceed the prior Plan Year's Average Actual Deferral Percentage for Eligible
Employees who were Non-Highly Compensated Employees for the prior Plan Year
multiplied by two (2), provided that the Average Actual Deferral Percentage for
Eligible Employees who are Highly Compensated Employees does not exceed the
Average Actual Deferral Percentage for Eligible Employees who were Non-Highly
Compensated Employees for the prior Plan Year by more than two (2) percentage
points or such lesser amount as the Secretary of the Treasury shall prescribe to
prevent the multiple use of this alternative limitation with respect to any
Highly Compensated Employee.
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(b) Corrective Procedure.
(i) Correction of Excess 401(k) Contributions. The
Administrator shall have the discretion to take any and all steps it deems
necessary or appropriate to ensure compliance with the limitations of paragraph
(a) above, including, without limitation:
(A) Restricting the amount of Salary
Deferral Contributions by Highly Compensated Employees;
(B) Pursuant to subsection (v) below,
distributing Excess 401(k) Contributions to the Highly Compensated Employees who
made such contributions; and
(C) Treating Employer Matching or Profit
Sharing Contributions, as the case may be, as Qualified Matching or Qualified
Nonelective Contributions, respectively.
(ii) Calculation of Amount of Excess 401(k)
Contributions. The amount of Excess 401(k) Contributions for Highly Compensated
Employees for a Plan Year is to be calculated by the following method, under
which the Actual Deferral Percentage of the Highly Compensated Employee with the
highest Actual Deferral Percentage is reduced to the extent required to enable
the Plan to satisfy the anti-discrimination test of Section 6.5(a) or to cause
such Highly Compensated Employee's Actual Deferral Percentage to equal the
Actual Deferral Percentage of the Highly Compensated Employee with the next
highest Actual Deferral Percentage.
(A) The Salary Deferral Contributions of the
Highly Compensated Employee with the highest Actual Deferral Percentage shall be
reduced; such reduction shall continue, as necessary, until such Employee's
Actual Deferral Percentage equals those of the Highly Compensated Employee(s)
with the second highest Actual Deferral Percentage(s).
(B) Following the application of the
preceding paragraph (A), if it is still necessary to reduce Highly Compensated
Employees' Salary Deferral Contributions, the contributions of (or allocations
on behalf of, if applicable) Highly Compensated Employees with the highest and
second highest Actual Deferral Percentages shall be reduced, as necessary, until
such Employees' Actual Deferral Percentage equal those of the Highly Compensated
Employee(s) with the third highest Actual Deferral Percentage.
(C) Following the application of paragraph
(B), if it is still necessary to reduce Highly Compensated Employees' Salary
Deferral Contributions, the procedure, the beginning of which is described in
paragraphs (A) and (B), shall continue until no further reductions are
necessary.
(D) Amounts determined pursuant to
paragraphs (A) through (C) above shall be combined. The resulting sum shall be
the Excess 401(k) Contributions, and the portion of the total to be allocated to
each affected Highly Compensated Employee shall be determined pursuant to
paragraph (iii) below.
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(iii) Allocation of Excess 401(k) Contributions. The
amount of Excess 401(k) Contributions to be allocated to a Highly Compensated
Employee for a Plan Year is to be determined by the following method, under
which the dollar amount of Salary Deferral Contributions of the Highly
Compensated Employee with the highest dollar amount of Salary Deferral
Contributions is reduced to the extent required to enable the Plan to satisfy
the anti-discrimination test of Section 6.5(a) or to cause such Highly
Compensated Employee's dollar amount of Salary Deferral Contributions to equal
the dollar amount of Salary Deferral Contributions of the Highly Compensated
Employee with the next highest dollar amount of Salary Deferral Contributions.
(A) The Salary Deferral Contributions of the
Highly Compensated Employee(s) with the highest dollar amount of such Salary
Deferral Contributions shall be reduced; such reduction shall continue, as
necessary, until either such Employee's (Employees') dollar amount of Salary
Deferral Contributions equal(s) those of the Highly Compensated Employee(s) with
the second highest dollar amount of Salary Deferral Contributions, or the
anti-discrimination test of Section 6.5(a) is met.
(B) Following the application of the
preceding paragraph (A), if unallocated Excess 401(k) Contributions remain,
Salary Deferral Contributions of the Highly Compensated Employees with the
highest and second highest dollar amount of Salary Deferral Contributions shall
be reduced as necessary, until either such Employees' dollar amount of Salary
Deferral Contributions equal those of the Highly Compensated Employee(s) with
the third highest dollar amount of Salary Deferral Contributions, or the
anti-discrimination test of Section 6.5(a) is met.
(C) Following the application of the
preceding paragraph (B), if unallocated Excess 401(k) Contributions remain, the
procedure, the beginning of which is described in paragraphs (A) and (B), shall
continue until no further reductions are necessary.
(D) Excess 401(k) Contributions in an amount
equal to the reduction of Salary Deferral Contributions determined in paragraphs
(A) through (C) above with respect to a Highly Compensated Employee shall be
allocated to that Highly Compensated Employee and, as determined by the
Administrator, distributed pursuant to paragraph (v) below.
(iv) Character of Excess 401(k) Contributions. The
Excess 401(k) Contributions of a Highly Compensated Employee shall be deemed to
consist of contributions and allocations as determined according to the
following order of primacy:
(A) First, the Employee's Excess 401(k)
Contributions shall be deemed to consist of any Salary Deferral Contributions
which exceed the highest rate or amount at which Salary Deferral Contributions
are matched; provided, such contributions shall be offset by any Excess Salary
Deferrals distributable to the Employee pursuant to Section 6.6.
(B) Second, the Employee's Excess 401(k)
Contributions shall be deemed to consist of (1) any Salary Deferral
Contributions and (2) any Employer Matching and
-31-
Qualified Matching Contributions, each in proportion to the Employee's total
Salary Deferral Contributions and total Employer Matching and Qualified Matching
Contributions for the Plan Year; provided, any Salary Deferral Contributions
characterized as Excess 401(k) Contributions by this paragraph (B) shall be
offset by any Excess Salary Deferrals distributable to the Employee pursuant to
Section 6.6 and not taken into account under paragraph (b)(iii)(A) above.
(C) Third, the Employee's Excess 401(k)
Contributions shall be deemed to consist of any allocations of Employer Profit
Sharing and Qualified Nonelective Contributions.
(v) Distribution of Excess 401(k) Contributions. If,
pursuant to paragraph (b)(i)(B) above, the Administrator elects to distribute
Excess 401(k) Contributions (increased by attributable income and decreased by
attributable losses) to Highly Compensated Employees, the Administrator shall
make such distributions:
(A) On or before the date which falls 2-1/2
months after the last day of the Plan Year for which such Excess 401(k)
Contributions were made, to avoid liability for the federal excise tax (equal to
10% of the undistributed Excess 401(k) Contributions), which will be imposed on
Excess 401(k) Contributions distributed after such date;
(B) In the event of a complete termination
of the Plan during the Plan Year in which there are Excess 401(k) Contributions,
such distributions shall be made after the date of termination of the Plan and
as soon as administratively feasible, but in no event later than the close of
the twelve-month period immediately following such termination; and
(C) In any case, before the last day of the
Plan Year next following the Plan Year for which such Excess 401(k)
Contributions were made.
(D) Excess 401(k) Contributions (including
amounts recharacterized) shall be treated as Annual Additions under the Plan.
(vi) Adjustment for Income/Loss. After the
Administrator has determined the aggregate amount and character of Excess 401(k)
Contributions to be distributed to a given Highly Compensated Employee, the
amount to be distributed shall be increased to reflect any attributable income,
or decreased to reflect any attributable losses. Excess 401(k) Contributions
shall be adjusted for any income or loss up to the date of distribution. The
income or loss allocable to Excess 401(k) Contributions shall be calculated by
the Plan Administrator using any reasonable method for computing the income or
loss allocable to Excess 401(k) Contributions, provided that the method does not
violate Section 401(a)(4) of the Code, is used consistently for all Participants
and for all corrective distributions under the plan for the Plan Year, and is
used by the Plan Administrator for allocating income to Participants' Accounts.
-32-
(c) Special Rules.
(i) Computation of Section 415 Compensation. For
purposes of this Section, a Participant's Section 415 Compensation for the
entire Plan Year shall be included, whether or not he or she made Salary
Deferral Contributions for the entire Plan Year.
(ii) Coordination with Distribution of Excess Salary
Deferrals. After calculation of an amount to be distributed to a Participant
pursuant to the procedures discussed in subsection (b)(iii) and (iv), if the
Participant in question has also made Excess Salary Deferrals during the
calendar year ended within or coincident with the Plan Year, the amount actually
distributed to the Participant shall be adjusted to take into account such
Excess Salary Deferrals pursuant to Section 6.6 and any relevant Regulations.
(iii) Aggregation of Plans. For purposes of
determining whether a plan satisfies the Actual Deferral Percentage test in
paragraph (a) of this Section, all elective contributions that are made under
two or more plans that are aggregated for purposes of Code Sections 401(a)(4) or
410(b) (other than Code Section 410(b)(2)(A)(ii)) are to be treated as made
under a single plan. If two or more plans are permissively aggregated for
purposes of Code Section 401(k), the aggregate plans must also satisfy Code
Sections 401(a)(4) and 410(b) as though they were a single plan. For Plan Years
beginning after December 31, 1989 two or more plans may be aggregated in order
to satisfy Code Section 401(k) only if they have the same Plan Year.
(d) The Employer shall maintain records sufficient to
demonstrate satisfaction of the test in Section 6.5(a) and the amount, if any,
of Qualified Nonelective Contributions or Qualified Matching Contributions, or
both, used in such test.
(e) Definitions. For purposes of this Article, the following
definitions shall apply:
(i) Actual Deferral Percentage.
(A) With respect to each Eligible Employee,
a percentage, calculated as the sum of the amount of (A) Salary Deferral
Contributions, (B) Qualified Matching Contributions, and (C) Qualified
Nonelective Contributions, made on behalf of such Eligible Employee for the Plan
Year, divided by such Employee's Section 415 Compensation for the Plan Year.
(B) The Actual Deferral Percentage for any
Participant who is a Highly Compensated Employee for the Plan Year and who is
eligible to have Salary Deferral Contributions (and Qualified Nonelective or
Qualified Matching Contributions, or both, if treated as Salary Deferral
Contributions for purposes of the test under this Section, allocated to his or
her Accounts under two or more arrangements described in Code Section 401(k),
that are maintained by the Employer, shall be determined as if such Salary
Deferral Contributions (and, if applicable, such Qualified Nonelective
Contributions or Qualified Matching Contributions, or both) were made under a
single arrangement. If a Highly Compensated Employee participates in two or more
cash or
-33-
deferred arrangements that have different Plan Years, all cash or deferred
arrangements ending with or within the same calendar year shall be treated as a
single arrangement. Notwithstanding the foregoing, certain plans shall be
treated as separate if mandatorily disaggregated pursuant to Regulations under
Code Section 401(k).
(C) For purposes of computing Actual
Deferral Percentages, an Employee who would be a Participant but for the failure
to make Salary Deferral Contributions shall be treated as a Participant on whose
behalf no Salary Deferral Contributions are made.
(ii) Average Actual Deferral Percentage. The average
(expressed as a percentage) of the Actual Deferral Percentages for all Eligible
Employees in the relevant group.
(iii) Eligible Employee. Any Employee of the Employer
who is otherwise authorized under the terms of the Plan to have Contributions
allocated to the Employee's Account for the Plan Year.
(A) Excess 401(k) Contributions. With
respect to any Plan Year, the excess of the aggregate amount of Employer
Contributions actually taken into account in computing the Actual Deferral
Percentage of Highly Compensated Employees for such Plan Year, over the maximum
amount of such Contributions permitted by the test in Section 6.5(a).
6.6 DISTRIBUTION OF EXCESS DEFERRAL CONTRIBUTIONS.
(a) A Participant may assign to this Plan any Excess Salary
Deferrals made during a taxable year of the Participant by notifying the Plan
Administrator in writing of the amount of the Excess Salary Deferrals to be
assigned to the Plan on or before March 15 of the year following the
Participant's taxable year in which the Excess Salary Deferrals were made.
"Salary Deferrals" shall, for purposes of this Section, mean
any Employer contributions made to the Plan at the election of the Participant,
in lieu of cash compensation, and shall include contributions made pursuant to a
salary reduction agreement or other deferral mechanism. With respect to any
taxable year, a Participant's Salary Deferral is the sum of all Employer
contributions made on behalf of such Participant pursuant to an election to
defer under any qualified cash or deferred arrangement as described in Code
Section 401(k), any simplified employee pension cash or deferred arrangement as
described in Code Section 402(h)(1)(B), any eligible deferred compensation plan
under Code Section 457, any plan as described under Code Section 501(c)(18), and
any Employer contributions made on the behalf of a Participant for the purchase
of an annuity contract under Code Section 403(b) pursuant to a salary reduction
agreement. Salary Deferrals shall not include any deferrals properly distributed
as excess annual additions.
"Excess Salary Deferrals" shall, for purposes of this Section,
mean those Salary Deferrals that are includable in a Participant's gross income
under Code Section 402(g) to the extent such Participant's Salary Deferrals for
a taxable year exceed the dollar limitation under such Code Section. For
purposes of Section 6.4, Excess Salary Deferrals shall be treated as Annual
Additions under the Plan. A Participant is deemed to notify the Plan
Administrator of any Excess
-34-
Salary Deferral Contributions that arise by taking into account only those
Salary Deferral Contributions made to this Plan and any other plans of the
Employer.
Notwithstanding any other provision of the Plan, Excess Salary
Deferrals, plus any income and minus any loss allocable thereto, shall be
distributed no later than April 15 to any Participant to whose account Excess
Salary Deferrals were assigned for the preceding taxable year and who claims
Excess Salary Deferrals for such taxable year.
(b) Determination of Income or Loss. Excess Salary Deferrals
shall be adjusted for any income or loss up to the end of the Plan Year for
which such Excess Salary Deferrals were made. The income or loss allocable to
Excess Salary Deferrals shall be calculated by the Plan Administrator using any
reasonable method for computing the income or loss allocable to Excess Salary
Deferrals, provided that the method does not violate Code Section 401(a)(4), is
used consistently for all Participants and for all corrective distributions
under the Plan for the Plan Year, and is used by the Plan Administrator for
allocating income to Participants' Accounts.
6.7 DISCRIMINATION TESTING OF EMPLOYER MATCHING CONTRIBUTIONS.
(a) Except as provided in subsection (b) below, for each Plan
Year, Participant's allocations of Employer Matching Contributions for each Plan
Year must satisfy one of the following tests:
(i) The Average Actual Contribution Percentage for
Eligible Employees who are Highly Compensated Employees shall not exceed the
prior Plan Year's Average Actual Contribution Percentage for Eligible Employees
who were Non-Highly Compensated Employees for the prior Plan Year multiplied by
one and twenty-five one-hundredths (1.25); or
(ii) The Average Actual Contribution Percentage for
Eligible Employees who are Highly Compensated Employees shall not exceed the
prior Plan Year's Average Actual Contribution Percentage for Eligible Employees
who were Non-Highly Compensated Employees for the prior Plan Year multiplied by
two (2), provided that the Average Actual Contribution Percentage for Eligible
Employees who are Highly Compensated Employees does not exceed the Average
Actual Contribution Percentage for Eligible Employees who were Non-Highly
Compensated Employees for the prior Plan Year by more than two (2) percentage
points or such lesser amount as the Secretary of the Treasury shall prescribe to
prevent the multiple use of this alternative limitation with respect to any
Highly Compensated Employee.
(b) Special Rules.
(i) Multiple Use. If one or more Highly Compensated
Employees participate in both a cash or deferred arrangement and a plan subject
to the Actual Contribution Percentage test maintained by the Employer and the
sum of the Actual Deferral Percentage and Actual Contribution Percentage of
those Highly Compensated Employees subject to either or both tests exceeds the
Aggregate Limit, then the Actual Contribution Percentage of those Highly
Compensated Employees who also participate in a cash or deferred arrangement
will be reduced in
-35-
the manner described in Section 6.5(b) so that the limit is not exceeded. The
amount by which each Highly Compensated Employee's Contribution Percentage
Amount is reduced shall be treated as an Excess Matching Contribution. The
Actual Deferral Percentage and Actual Contribution Percentage of the Highly
Compensated Employees are determined after any corrections required to meet the
Actual Deferral Percentage and Actual Contribution Percentage tests and are
deemed to be the maximum permitted under such tests for the Plan Year. Multiple
use does not occur if either the Actual Deferral Percentage or Actual
Contribution Percentage of the Highly Compensated Employees does not exceed 1.25
multiplied by the Actual Deferral Percentage and Actual Contribution Percentage
of the Non-Highly Compensated Employees.
(ii) For purposes of this Section, the Contribution
Percentage for any Participant who is eligible to have Contribution Percentage
Amounts allocated to his or her account under two or more plans described in
Code Section 401(a), or arrangements described in Code Section 401(k) that are
maintained by the Employer, shall be determined as if the total of such
Contribution Percentage Amounts was made under each plan. If a Highly
Compensated Employee participates in two or more cash or deferred arrangements
that have different plan years, all cash or deferred arrangements ending with or
within the same calendar year shall be treated as a single arrangement.
Notwithstanding the foregoing, certain plans shall be treated as separate if
mandatorily disaggregated pursuant to Regulations under Code Section 401(m).
(iii) In the event that this Plan satisfies the
requirements of Code Sections 401(m), 401(a)(4) or 410(b) only if aggregated
with one or more other plans, or if one or more other plans satisfy the
requirements of such Code Sections only if aggregated with this Plan, then this
Section shall be applied by determining the Contribution Percentage of Employees
as if all such plans were a single plan. Any adjustments to the Non-Highly
Compensated Employee Average Actual Contribution Percentage for the prior Plan
Year shall be made in accordance with Internal Revenue Service Notice 98-1 and
any superseding guidance. Plans may be aggregated in order to satisfy Code
Section 401(m) only if they have the same Plan Year.
(iv) For purposes of determining the Contribution
Percentage test, Employee Contributions are considered to have been made in the
Plan Year in which contributed to the trust. Employer Matching Contributions and
Qualified Nonelective Contributions will be considered made for a Plan Year if
made no later than the end of the twelve-month period beginning on the day after
the close of the Plan Year.
(v) The Employer shall maintain records sufficient to
demonstrate satisfaction of the Actual Contribution Percentage test and the
amount of Qualified Nonelective Contributions or Qualified Matching
Contributions, or both, used in such test.
(vi) The determination and treatment of the
Contribution Percentage of any Participant shall satisfy such other requirements
as may be prescribed by the Secretary of the Treasury.
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(c) Definitions. For purposes of this Article, the following
definitions shall apply:
(i) Aggregate Limit. The sum of (A) one hundred
twenty-five percent (125%) of the greater of the Actual Deferral Percentage of
the Non-Highly Compensated Employees for the prior Plan Year or the Actual
Contribution Percentage of Non-Highly Compensated Employees under the Plan
subject to Code Section 401(m) for the Plan Year beginning with or within the
prior Plan Year of the cash or deferred arrangement, and (B) the lesser of two
hundred percent (200%) or two plus the lesser of such Actual Deferral Percentage
or Actual Contribution Percentage. "Lesser" is substituted for "greater" in
"(A)", above, and "greater" is substituted for "lesser" after "two plus the" in
"(B)" if it would result in a larger Aggregate Limit.
(ii) Average Actual Contribution Percentage. The
average of the Contribution Percentages of the Eligible Participants in a group.
(iii) Contribution Percentage. The ratio (expressed
as a percentage) of the Participant's Contribution Percentage Amounts to the
Participant's Section 415 Compensation for the Plan Year.
(iv) Contribution Percentage Amounts. The sum of the
Employee Contributions, Employer Matching Contributions, and Qualified Matching
Contributions (to the extent not taken into account for purposes of the Actual
Deferral Percentage test) made under the Plan on behalf of the Participant for
the Plan Year. Such Contribution Percentage Amounts shall not include Employer
Matching Contributions that are forfeited either to correct Excess Matching
Contributions or because the contributions to which they relate are Excess
Salary Deferral Contributions, Excess 401(k) Contributions, or Excess Matching
Contributions. The Employer may include Qualified Non-elective Contributions in
the Contribution Percentage amounts. The Employer also may elect to use Salary
Deferral Contributions in the Contribution Percentage Amounts so long as the
Actual Deferral Percentage test is met before the Salary Deferral Contributions
are used in the Actual Contribution Percentage test and continues to be met
following the exclusion of those Salary Deferral Contributions that are used to
meet the Actual Contribution Percentage test.
(v) Eligible Participant. Any Employee who is
eligible to make an Employee Contribution, or any Elective Deferral (if the
Employer takes such contributions into account in the calculation of the
Contribution Percentage), or to receive Employer Matching Contributions
(including forfeitures) or Qualified Matching Contributions. If an Employee
Contribution is required as a condition of participation in the Plan, any
Employee who would be a Participant in the Plan if such Employee made such a
contribution shall be treated as an eligible Participant on behalf of whom no
Employee Contributions are made.
(vi) Employee Contribution. Any contribution made to
the Plan by or on behalf of a Participant that is included in the Participant's
gross income in the year in which made and that is maintained under a separate
account to which earnings and losses are allocated.
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(vii) Excess Matching Contributions. With respect to
any Plan Year, the excess of (A) the aggregate amount of Employer Contributions
actually taken into account in computing the Average Actual Contribution
Percentage of Highly Compensated Employees for such Plan Year, over (B) the
maximum amount of such Contributions permitted by the test in Section 6.7(a).
6.8 CORRECTIVE PROCEDURE FOR DISCRIMINATORY MATCHING CONTRIBUTIONS
(a) The Administrator shall have responsibility of monitoring
the Plan's compliance with the limitations of the preceding Section. The
Administrator shall have the discretionary power to take any and all steps it
deems necessary or appropriate to ensure compliance with those limitations,
including, without limitation:
(i) pursuant to subsection (c) below, distributing
vested Excess Matching Contributions to the Eligible Employees who are Highly
Compensated Employees who received such allocations;
(ii) treating as amounts to be reallocated pursuant
to subsection (d) below, the portion of Excess Matching Contributions which
consists of unvested allocations of Employer Matching Contributions to the
Employer Matching Contribution Accounts of Eligible Employees who are Highly
Compensated Employees; and
(iii) limiting the amount of Employer Matching
Contributions allocated to the Employer Matching Contribution Accounts of
Eligible Employees who are Highly Compensated Employees.
(b) Notwithstanding any other provisions in this Plan, if,
pursuant to subsection (a)(i) or (ii) above, the Administrator elects to
distribute or reallocate Excess Matching Contributions (increased by
attributable income and decreased by attributable losses), the Administrator
shall take such action(s) (i) on or before the date which falls two and one-half
(2-1/2) months after the last day of the Plan Year for which such Excess
Matching Contributions were made, if the Employer wishes to avoid liability for
the federal excise tax (equal to ten percent (10%) of undistributed and
unreallocated Excess Matching Contributions), which will be imposed on Excess
Matching Contributions distributed or reallocated after such date, and (ii) in
any case, before the last day of the Plan Year next following the Plan Year for
which such contributions were made.
(c) Determination of Amount of Excess Matching Contributions.
The amount of Excess Matching Contributions for Highly Compensated Employees for
a Plan Year is to be determined by the following method, under which the
Contribution Percentage of the Highly Compensated Employee with the highest
Contribution Percentage is reduced to the extent required to enable the Plan to
satisfy the anti-discrimination test of Section 6.7(a) or to cause such Highly
Compensated Employee's Contribution Percentage to equal the Contribution
Percentage of the Highly Compensated Employee with the next highest Contribution
Percentage.
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(i) The allocations of Employer Matching
Contributions of the Highly Compensated Employee with the highest Contribution
Percentage shall be reduced; such reduction shall continue, as necessary, until
such Employee's Contribution Percentage equals those of the Highly Compensated
Employee(s) with the second highest Contribution Percentage(s).
(ii) Following the application of paragraph (i), if
it is still necessary to reduce Highly Compensated Employees' allocations of
Employer Matching Contributions, the contributions of Highly Compensated
Employees with the highest and second highest Contribution Percentages shall be
reduced, as necessary, until such Employee's Contribution Percentages equal
those of the Highly Compensated Employee(s) with the third highest Contribution
Percentage(s).
(iii) Following the application of paragraph (ii), if
it is still necessary to reduce Highly Compensated Employees' allocations of
Employer Matching Contributions, the procedure, the beginning of which is
described in paragraphs (i) and (ii), shall continue until no further reductions
are necessary.
(iv) Amounts determined pursuant to paragraphs (i)
through (iii) shall be combined. The resulting sum shall be the Excess Matching
Contributions, and the portion of the total to be allocated to each affected
Highly Compensated Employee shall be determined pursuant to paragraph (f).
(d) Allocation of Excess Matching Contributions. The amount of
Excess Matching Contributions to be allocated to a Highly Compensated Employee
for a Plan Year is to be determined by the following method, under which the
dollar amount of Employer Matching Contributions of the Highly Compensated
Employee with the highest dollar amount of Employer Matching Contributions is
reduced to the extent required to enable the Plan to satisfy the
anti-discrimination test of Section 6.7(a) or to cause such Highly Compensated
Employee's dollar amount of Employer Matching Contributions to equal the dollar
amount of Employer Matching Contributions of the Highly Compensated Employee
with the next highest dollar amount of Employer Matching Contributions.
(i) The allocations of Employer Matching
Contributions of the Highly Compensated Employee(s) with the highest dollar
amount of Employer Matching Contributions shall be reduced; such reduction shall
continue, as necessary, until either such Employee's dollar amount of Employer
Matching Contributions equals those of the Highly Compensated Employee(s) with
the second highest dollar amount of Employer Matching Contributions or the
anti-discrimination test of Section 6.7(a) is met.
(ii) Following the application of paragraph (i), if
unallocated Excess Matching Contributions remain, Employer Matching
Contributions of Highly Compensated Employees with the highest and second
highest dollar amount of Employer Matching Contributions shall be reduced, as
necessary, until either such Employees' dollar amount of Employer Matching
Contributions equal those of the Highly Compensated Employee(s) with the third
highest dollar amount of Employer Matching Contributions, or the
anti-discrimination test of Section 6.7(a) is met.
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(iii) Following the application of paragraph (ii), if
unallocated Excess Matching Contributions remain, the procedure, the beginning
of which is outlined in paragraphs (i) and (ii), shall continue until no further
reductions are necessary.
(iv) Excess Matching Contributions in an amount equal
to the reductions of Employer Matching Contributions determined in paragraphs
(i) through (iii) above with respect to a Highly Compensated Employee shall be
allocated to that Highly Compensated Employee and, as determined by the
Administrator, distributed pursuant to paragraph (7) below.
(e) Character of Excess Matching Contributions. The Excess
Matching Contributions of a Highly Compensated Employee shall be deemed to
consist of allocations and contributions as determined according to the
following order:
(A) First, the Employee's Excess Matching
Contributions shall be deemed to consist of any Excess Salary Deferrals which
both are distributable to the Employee pursuant to Section 6.6 and were used to
satisfy the Section 6.7(a) nondiscrimination tests pursuant to Section 6.7(b).
(B) Second, the Employee's Excess Matching
Contributions shall be deemed to consist of any Employer Matching Contributions
used to satisfy the Section 6.7(a) tests in proportion to the Employee's
Employer Matching Contributions used to satisfy the Section 6.7(a) test for the
Plan Year.
(C) Third, the Employee's Excess Matching
Contributions shall be deemed to consist of any allocations of Employer Profit
Sharing Contributions which were characterized as Qualified Nonelective
Contributions and used to satisfy the Section 6.7(a) nondiscrimination tests
pursuant to Section 6.7(b).
(f) Distribution of Excess Matching Contributions. After the
procedure outlined in subsection (d) is completed, all amounts of Excess
Matching Contributions shall be distributed to the respective Highly Compensated
Employees to whose Accounts the Excess Matching Contributions were made.
(g) Adjustment for Income/Loss. After the Administrator has
determined the aggregate amount, and character, of Excess Matching Contributions
to be distributed to a given Highly Compensated Employee, the amount to be
distributed shall be increased to reflect any attributable income, or decreased
to reflect any attributable losses. The attributable income or loss to be
distributed shall be calculated by the Plan Administrator using any reasonable
method for computing the income or loss allocable to Excess Matching
Contributions, provided that the method does not violate Section 401(a)(4) of
the Code, is used consistently for all Participants and for all corrective
distributions under the plan for the Plan Year, and is used by the Plan
Administrator for allocating income to Participants' Accounts.
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(h) Special Rules.
(i) Any amount distributed to a Highly Compensated
Employee pursuant to this Section shall not be subject to any of the consent
rules for Participants and Spouses contained in Article VII. Similarly, any such
distribution will not make the Employee liable for the federal taxes applicable
to early withdrawals (Section 72(t) of the Code) and excess distributions
(Section 4981A of the Code).
(ii) After calculation of an amount to be distributed
to an Employee pursuant to the procedure discussed in paragraph (d) above, if
the Employee in question has also made Excess Salary Deferrals during the
calendar year ended within or coincident with the Plan Year, any Salary Deferral
Contributions scheduled to be distributed to the Employee shall be adjusted to
take into account any Excess Salary Deferrals deemed to be Excess Matching
Contributions pursuant to paragraph (d) above and any relevant Regulations.
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ARTICLE VII
VESTING AND DISTRIBUTION OF ACCOUNTS
7.1 VESTED INTEREST.
(a) A Participant's interest in his or her Accounts shall be
vested in accordance with Section 2.7.
(b) If the vesting schedule specified in Section 2.7 is later
amended to provide less rapid vesting, or if the Plan is amended in any way that
directly or indirectly affects the computation of the Participant's
nonforfeitable percentage, then each Participant (i) who has completed three (3)
Years of Service with the Employer and (ii) whose Account(s) would have vested
more rapidly prior to the amendment, may irrevocably elect during the election
period to have the nonforfeitable percentage of his or her Accounts calculated
without regard to such amendment. For purposes of this Section, the election
period shall begin the date the amendment is adopted, and shall end on the date
sixty (60) days after the later of (i) the date the amendment is adopted, (ii)
the date the amendment becomes effective, or (iii) the date the Participant is
issued written notice of the amendment by the Employer or the Administrator.
7.2 NORMAL RETIREMENT. A Participant may retire as of the first day of
any month coinciding with or immediately following his or her Normal Retirement
Date as specified in Section 2.11. In such event, the Participant's Accounts
shall be distributed in accordance with Sections 7.5, 7.6 and 7.7.
7.3 DEATH BENEFITS. If a Participant or former Participant dies before
the entire vested balance of his or her Accounts has been distributed, then the
vested balance in his or her Accounts shall be paid to the Participant's
Beneficiary in accordance with Sections 7.5, 7.6 and 7.7.
7.4 TERMINATION OF EMPLOYMENT. Following a Participant's Severance
Date, the Participant's Accounts shall be valued as soon as administratively
practicable in accordance with the Administrator's customary procedures, and
distributed in accordance with Sections 7.5, 7.6 and 7.7.
7.5 COMMENCEMENT OF DISTRIBUTION.
(a) Subject to Sections 7.5 through 7.9 and the Appendices,
following a Participant's Severance Date, the Participant's Accounts shall be
distributed at a date designated by the Administrator, which designation (except
as provided below) shall be as soon as administratively practicable following
the next Valuation Date after the Participant's Severance Date. If, at the date
of distribution, the Participant's Accounts do not exceed (or at the time of any
prior distribution did not exceed) Three Thousand Five Hundred Dollars ($3,500),
(or, effective as of January 1, 1998, Five Thousand Dollars ($5,000)), the
Participant's Accounts will be distributed to the Participant (or, where the
Participant is deceased, the Participant's Beneficiary) in a lump sum. If, at
the date of
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distribution, the Participant's Accounts exceed (or at the time of any prior
distribution exceeded) Three Thousand Five Hundred Dollars ($3,500) (or,
effective as of January 1, 1998, Five Thousand Dollars ($5,000)), the
Participant (or, where the Participant is deceased, the Participant's
Beneficiary) must consent in writing within the ninety (90) day period ending on
the Annuity Starting Date to the distribution before it may be made. If the
Participant, or, where applicable, his or her Spouse, consents to the
distribution, such distribution shall include all of the Participant's vested
Account balances. If the Participant or, where applicable, the Participant's
Spouse, does not consent in writing to the distribution, the Participant's
Accounts will be held in the Trust Fund until the earlier of (i) the
Participant's death, (ii) the Participant's Normal Retirement Date, or (iii) the
date on which the Participant (or, where applicable, the Participant's Spouse)
consents in writing to a distribution pursuant to this Section. If a
Participant's consent to a distribution is required hereunder, then at least
thirty (30) days and not more than ninety (90) days prior to the Annuity
Starting Date the Administrator shall provide the Participant (or, if
applicable, the Participant's Spouse) with a notice of the right to elect
immediate distribution or the right to defer distribution until the
Participant's Normal Retirement Date. A retired, disabled, deceased or
terminated Participant's Accounts shall be increased by any Contributions that
are allocated to the Participant's Accounts after the Valuation Date.
(b) Unless the Participant elects otherwise, distributions to
a Participant must commence no later than sixty (60) days following the close of
the Plan Year in which occurs the latest of:
(i) The date the Participant attains age sixty-five
(65);
(ii) The tenth (10th) anniversary of the date on
which the Participant first commences participation in the Plan; or
(iii) The Participant's Severance Date.
Notwithstanding the foregoing, the failure of a Participant (and, where
applicable, the Participant's Spouse) to consent to a distribution while a
benefit is immediately distributable within the meaning of this Section, shall
be deemed to be an election to defer commencement of payment of any benefit
sufficient to satisfy this Section.
(c) Notwithstanding the foregoing, and if the normal form of
distribution specified in the Appendices is a Qualified Joint and Survivor
Annuity, only the affected Participant (and not his or her Spouse) need consent
to the commencement of a distribution in the form of a Qualified Joint and
Survivor Annuity. Neither the consent of the Participant nor the Participant's
Spouse shall be required to the extent that a distribution is required to
satisfy Code Section 401(a)(9) or 415. In addition, upon termination of this
Plan, to the extent the Plan does not offer an annuity option (purchased from a
commercial provider) and if the Employer or any entity within the same
controlled group as the Employer does not maintain another defined contribution
plan (other than an employee stock ownership plan as defined in Code Section
4975(e)(7)), then the Participant's Account balance will, without the
Participant's consent, be distributed to the Participant. However, if any entity
within the same controlled group as the Employer maintains another defined
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contribution plan (other than an employee stock ownership plan as defined in
Code Section 4975(e)(7)) then the Participant's Account balance will be
transferred, without the Participant's consent, to the other plan if the
Participant does not consent to an immediate distribution.
(d) Notwithstanding anything to the contrary herein, the
balance in each Participant's Account must begin to be distributed not later
than the Participant's Required Beginning Date regardless of whether the
Participant has consented to such a distribution.
(e) If a distribution is one for which Code Sections
401(a)(11) and 417 do not apply, such distribution may commence less than thirty
(30) days after the notice required under Regulations Section 1.411(a)-11(c) is
given, provided that: (1) the Administrator clearly informs the Participant that
the Participant has a 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 (2) the
Participant, after receiving the notice, affirmatively elects a distribution and
waives the thirty (30) day period by written notice.
7.6 DIRECT ROLLOVERS AND WITHHOLDING.
(a) General Rule. If the Distributee of any Eligible Rollover
Distribution elects to have the Eligible Rollover Distribution paid directly to
an Eligible Retirement Plan, and specifies the Eligible Retirement Plan to which
the Eligible Rollover Distribution is to be paid, then the Eligible Rollover
Distribution will be paid to that Eligible Retirement Plan in a Direct Rollover.
(b) Definitions. For purposes of this Section, the following
definitions shall apply:
(i) Direct Rollover. An Eligible Rollover
Distribution paid directly to an Eligible Retirement Plan for the benefit of a
Distributee.
(ii) Distributee. An Employee, Surviving Spouse of a
deceased Employee, or a Spouse entitled to payment under a Qualified Domestic
Relations Order.
(iii) Eligible Retirement Plan.
(A) With respect to any Distributee, an
individual retirement account described in Code Section 408(a) or an individual
retirement annuity (other than an endowment contract) described in Code Section
408(b); or
(B) With respect to a Distributee who is an
Employee or a Spouse or former Spouse of an Employee who is an Alternate Payee
under a Qualified Domestic Relations Order as defined in Section 8.2, an
Eligible Retirement Plan shall also mean a qualified trust described in Code
Section 401(a) or an annuity plan described in Code Section 403(a).
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(iv) 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: any distribution that is one of a series of substantially
equal periodic payments (not less frequently than annually) made for the life
(or life expectancy) of the Distributee or the joint lives (or joint life
expectancies) of the Distributee and the Distributee's designated Beneficiary,
or for a specified period of ten years or more; any distribution to the extent
such distribution is required under Code Section 401(a)(9); and the portion of
any distribution that is not includible in gross income (determined without
regard to the exclusion for net unrealized appreciation with respect to Employer
securities).
(c) If a Participant does not elect to have an Eligible
Rollover Distribution transferred directly to an Eligible Retirement Plan, or in
the case of any distribution which is not an Eligible Rollover Distribution, the
Administrator shall direct the Trustee as to any required withholding.
7.7 FORM OF BENEFIT. Unless otherwise specified in one or more of the
Appendices, benefits shall be paid to the Participant or the Participant's
Beneficiary in the manner specified in Section 2.9.
(a) If it is a permissible form of distribution, and if the
Participant or his or her Beneficiary chooses the installment method of
distribution, the following shall apply:
(i) If the Participant dies before the completion of
installment payments, any balance in the Participant's Account shall be paid to
his or her Beneficiary as provided in Section 7.3. If a Beneficiary who is
receiving payments dies, any remaining balance of the Account shall be paid to
the personal representative of the Beneficiary's estate. When establishing the
terms of installment payments, at the time payments begin, the present value of
the payments projected to be paid to the Participant, based on his or her life
expectancy, must be more than fifty percent (50%) of the present value of the
payments projected to be paid to the Participant and his or her Beneficiary,
based on their life expectancies.
(ii) As of any subsequent Valuation Date, the
Administrator, with the consent of the Participant, may cause the amount then
credited to the Accounts of the Participant to be paid in a lump sum.
(iii) The following rules apply to payments after a
Participant's death:
(A) Distribution Beginning Before Death. If
a Participant dies after payments have begun, then his or her remaining vested
Account balances, if any, must be distributed to his or her Beneficiary at least
as rapidly as under the method of distribution elected by the Participant;
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(B) Distribution Beginning After Death.
(1) If the Participant dies before
distribution of his or her interest begins, distribution of the Participant's
entire interest shall be completed by December 31 of the calendar year
containing the fifth (5th) anniversary of the Participant's death except to the
extent that an election is made to receive distributions in accordance with (I)
or (II) below:
(I) if any portion of
the Participant's interest is payable to a designated Beneficiary, distributions
may be made over the life or over a period certain not greater than the life
expectancy of the designated Beneficiary commencing on or before December 31 of
the calendar year immediately following the calendar year in which the
Participant died;
(II)if the designated
Beneficiary is the Participant's Surviving Spouse, the date distributions are
required to begin in accordance with (I) above shall not be earlier than the
later of (a) December 31 of the calendar year immediately following the calendar
year in which the Participant died and (b) December 31 of the calendar year in
which the Participant would have attained age seventy and one-half (70-1/2).
If the Participant has
not made an election pursuant to this paragraph (I) by the time of his or her
death, the Participant's designated Beneficiary must elect the method of
distribution no later than the earlier of (a) December 31 of the calendar year
in which distributions would be required to begin under this Section, or (b)
December 31 of the calendar year which contains the fifth anniversary of the
date of death of the Participant. If the Participant has no designated
Beneficiary, or if the designated Beneficiary does not elect a method of
distribution, distribution of the Participant's entire interest must be
completed by December 31 of the calendar year containing the fifth anniversary
of the Participant's death.
(2) For purposes of paragraph (1)
above, if the Surviving Spouse dies after the Participant, but before payments
to such Spouse begin, the provisions of paragraph (1), with the exception of
paragraph (II) therein, shall be applied as if the Surviving Spouse were the
Participant.
(3) For the purposes of this
Section, distribution of a Participant's interest is considered to begin on the
Participant's required beginning date (or, if paragraph (2) above is applicable,
the date distribution is required to begin to the Surviving Spouse pursuant to
paragraph (1) above). If distribution in the form of an annuity irrevocably
commences to the Participant before the required beginning date, the date
distribution is considered to begin is the date distribution actually commences.
(b) Notwithstanding anything herein to the contrary, if the
Participant (or, if applicable, the Beneficiary) signed a written distribution
prior to January 1, 1984, the Committee must distribute the Participant's vested
Accounts in accordance with that designation. This paragraph does not apply to a
pre-1984 distribution designation, and the Committee will not comply with that
designation, if any of the following applies: (i) the method of distribution
would have
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disqualified the Plan under Code Section 401(a)(9) as in effect on December 31,
1983; (ii) the Participant did not have a vested Account as of December 31,
1983; (iii) the distribution designation does not specify the timing and form of
the distribution and the Beneficiaries (in order of priority); (iv) the
substitution of a Beneficiary modifies the payment period of the distribution;
or (v) the Participant (or Beneficiary) modifies or revokes the distribution
designation. In the event of a revocation, the Plan must distribute, no later
than December 31 of the calendar year following the year of revocation, the
amount which the Participant would have received pursuant to Section 7.8 if the
distribution designation had not been in effect or, if the Beneficiary revokes
the distribution designation, the amount which the Beneficiary would have
received under Section 7.8 designation had not been in effect. The Committee
will apply this paragraph to rollovers and transfers in accordance with Part J
of the Regulations relating to Code Section 401(a)(9).
7.8 MINIMUM DISTRIBUTION REQUIREMENTS.
(a) General Rules.
(i) Subject to Section 7.7 and any applicable
Appendices to the Plan, the requirements of this Section shall apply to any
distribution of a Participant's interest and will take precedence over any
inconsistent provisions of this Plan.
(ii) All distributions required under this Section
shall be determined and made in accordance with the proposed Regulations under
Code Section 401(a)(9), including the minimum distribution incidental benefit
requirement of proposed Regulations Section 1.401(a)(9)-2.
(b) Required Beginning Date. The entire interest of a
Participant must be distributed or begin to be distributed no later than the
Participant's Required Beginning Date.
(c) Limits on Distribution Periods. As of the first
distribution calendar year, distributions, if not made in a single-sum, may only
be made over one of the following periods (or a combination thereof):
(i) the life of the Participant,
(ii) the life of the Participant and a designated
Beneficiary,
(iii) a period certain not extending beyond the life
expectancy of the Participant, or
(iv) a period certain not extending beyond the joint
and last survivor expectancy of the Participant and a designated Beneficiary.
(d) Determination of Amount to be Distributed Each Year. If
the Participant's interest is to be distributed in other than a single sum, the
following minimum distribution rules shall apply on or after the Required
Beginning Date:
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(i) Individual Account.
(A) If a Participant's benefit is to be
distributed over (1) a period not extending beyond the life expectancy of the
Participant or the joint life and last survivor expectancy of the Participant
and the Participant's designated Beneficiary or (2) a period not extending
beyond the life expectancy of the designated Beneficiary, the amount required to
be distributed for each calendar year, beginning with distributions for the
first distribution calendar year, must at least equal the quotient obtained by
dividing the Participant's benefit by the applicable life expectancy.
(B) For calendar years beginning before
January 1, 1989, if the Participant's Spouse is not the designated Beneficiary,
the method of distribution selected must assure that at least fifty percent
(50%) of the present value of the amount available for distribution is paid
within the life expectancy of the Participant.
(C) For calendar years beginning after
December 31, 1988, the amount to be distributed each year, beginning with
distributions for the first distribution calendar year shall not be less than
the quotient obtained by dividing the Participant's benefit by the lesser of (1)
the applicable life expectancy or (2) if the Participant's Spouse is not the
designated Beneficiary, the applicable divisor determined from the table set
forth in Q&A-4 of proposed Regulations Section 1.401(a)(9)-2. Distributions
after the death of the Participant shall be distributed using the applicable
life expectancy in paragraph (A) above as the relevant divisor without regard to
proposed Regulations Section 1.401(a)(9)-2.
(D) The minimum distribution required for
the Participant's first distribution calendar year must be made on or before the
Participant's required beginning date. The minimum distribution for other
calendar years, including the minimum distribution for the distribution calendar
year in which the Employee's required beginning date occurs, must be made on or
before December 31 of that distribution calendar year.
(ii) Other Forms. If the Participant's benefit is
distributed in the form of an annuity purchased from an insurance company,
distributions thereunder shall be made in accordance with the requirements of
Code Section 401(a)(9) and the proposed Regulations thereunder. Any annuity
contract distributed from this Plan must be nontransferable.
(e) Definitions. For purposes of this Section, the
following definitions shall apply:
(i) Applicable Life Expectancy. The life expectancy
(or joint and last survivor expectancy) calculated using the attained age of the
Participant (or designated Beneficiary) as of the Participant's (or designated
Beneficiary's) birthday in the applicable calendar year reduced by one for each
calendar year which has elapsed since the date life expectancy was first
calculated. If life expectancy is being recalculated, the applicable life
expectancy shall be the life expectancy as so recalculated. The applicable
calendar year shall be the first distribution calendar year, and if life
expectancy is being recalculated such succeeding calendar year.
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(ii) Designated Beneficiary. The individual who is
designated as the Beneficiary under the Plan in accordance with Code Section
401(a)(9) and the proposed Regulations thereunder.
(iii) Distribution Calendar Year. A calendar year for
which a minimum distribution is required. For distributions beginning before the
Participant's death, the first distribution calendar year is the calendar year
immediately preceding the calendar year which contains the Participant's
required beginning date. For distributions beginning after the Participant's
death, the first distribution calendar year is the calendar year in which
distributions are required to begin pursuant to Code Section 401(a)(9).
(iv) Five Percent Owner. A Participant is treated as
a Five Percent Owner for purposes of this Section if such Participant is a Five
Percent Owner as defined in Code Section 416(i) (determined in accordance with
Code Section 416 but without regard to whether the Plan is Top-Heavy) at any
time during the Plan Year ending with or within the calendar year in which such
owner attains age sixty-six and one-half (66-1/2) or any subsequent Plan Year.
(v) Life Expectancy. Life expectancy and joint and
last survivor expectancy are computed by use of the expected return multiples in
Tables V and VI of Regulations Section 1.72-9. Unless otherwise elected by the
Participant (or Spouse in the case of distributions which begin following the
Participant's death and in which the Spouse is named as the designated
Beneficiary) by the time distributions are required to begin, life expectancies
shall be recalculated annually. Such election shall be irrevocable as to the
Participant (or Spouse) and shall apply to all subsequent years. The life
expectancy of a nonspouse Beneficiary may not be recalculated.
(vi) Participant's Benefit.
(A) The Account balance as of the last
Valuation Date in the calendar year immediately preceding the distribution
calendar year (valuation calendar year) increased by the amount of any
contributions or forfeitures allocated to the Account balance as of dates in the
valuation calendar year after the Valuation Date and decreased by distributions
made in the valuation calendar year after the Valuation Date.
(B) Exception for second distribution
calendar year. For purposes of paragraph (A) above, if any portion of the
minimum distribution for the first distribution calendar year is made in the
second distribution calendar year on or before the required beginning date, the
amount of the minimum distribution made in the second distribution calendar year
shall be treated as if it had been made in the immediately preceding
distribution calendar year.
(vii) Required Beginning Date.
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(A) Five Percent Owners. The first day of
April following the later of:
(1) the calendar year in which the
Participant attains age seventy and one-half (70-1/2), or
(2) the earlier of the calendar year
with or within which ends the Plan Year in which the Participant becomes a Five
Percent Owner, or the calendar year in which the Participant's Severance Date
occurs.
Once begun, distributions to a Five Percent Owner under this Section
must continue to be distributed, even if the Participant ceases to be a Five
Percent Owner in a subsequent year.
(B) Non-Five Percent Owners.
(1) Participants who are not Five
Percent Owners, but who attain age seventy and one-half (70-1/2) prior to
January 1, 1996. The first day of April of the calendar year following the
calendar year in which the Participant attains age seventy and one-half
(70-1/2).
(2) Participants who are not Five
Percent Owners and who attain age seventy and one-half (70-1/2) between January
1, 1996 and December 31, 1998. The first day of April of the calendar year
following the calendar year in which the later of attainment of age seventy and
one-half (70-1/2) or the Participant's Severance Date occurs; provided, however,
that an Employee whose Severance Date has not occurred may irrevocably elect, in
writing, to defer distribution until that Employee's Severance Date.
(3) Participants who are not Five
Percent Owners and who attain age seventy and one-half (70-1/2) after December
31, 1998. The date on which occurs the Participant's Severance Date.
7.9 DISTRIBUTION TO MINOR OR INCOMPETENT
(a) In the event a distribution is to be made to a minor, the
Administrator may direct that such distribution be paid to the legal guardian,
or if none, to a parent of such Beneficiary or a responsible adult with whom the
Beneficiary resides, or to a custodian for such Beneficiary under the Uniform
Transfer to Minors Act, if permitted by the laws of the state in which the
Beneficiary resides. Payment to the legal guardian, parent or custodian of a
minor Beneficiary shall fully discharge the Trustee, Administrator and Plan from
further liability on account thereof.
(b) If a person who is entitled to receive payment under the
Plan is physically or mentally incapable of personally receiving and giving a
valid receipt for any payment due (unless a previous claim has been made by a
duly qualified conservator or other legal representative), the payment may be
made to the person's spouse, son, daughter, parent, brother, sister or other
person determined by the Administrator to have incurred expense for the person
otherwise entitled to
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payment. Distribution under this Section shall be in the discretion of the
Administrator, and the Administrator shall not be compelled to make any
distribution under this Section.
7.10 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN. If a Participant
who is entitled to a distribution cannot be located and the Administrator has
made reasonable efforts to locate the Participant, the Participant's interest
shall be forfeited and used: first, to restore any amounts previously forfeited
under this Section; second, to pay administrative expenses of the Plan for the
Plan Year in which the forfeiture occurs; third, to offset the Employer's
obligation to make Employer Matching Contributions for the Plan Year in which
the forfeiture occurs; and fourth, to allocate as Employer Profit Sharing
Contributions for the Plan Year in which the forfeiture occurs. If the
Participant or Beneficiary makes a written claim for the Account(s) subsequent
to the forfeiture, the Employer shall cause the Account(s) to be reinstated.
7.11 HARDSHIP DISTRIBUTION.
(a) The Trustee shall, upon the direction of the
Administrator, make a distribution from a Participant's Salary Deferral
Contributions Account (not including earnings) upon hardship of the Participant.
A Participant shall be entitled to a hardship distribution only if the
distribution is both (i) made on account of an immediate and heavy financial
need of the Participant (as defined in paragraph (b)), and (ii) is necessary to
satisfy such financial need (as defined in paragraph (c)).
(b) An immediate and heavy financial need shall be deemed any
one of the following:
(i) Expenses incurred or necessary for medical care
described in Code Section 213(d) for the Participant, his or her Spouse, or any
dependents of the Participant (as defined in Code Section 152);
(ii) Cost (excluding mortgage payments) relating to
the purchase of a principal residence for the Participant;
(iii) Payment of tuition and related educational fees
for the next twelve (12) months of post-secondary education for the Participant,
his or her Spouse, children, or dependents; or
(iv) The need to prevent the eviction of the
Participant from his or her principal residence or foreclosure on the mortgage
of the Participant's principal residence.
(c) A distribution will be considered as necessary to satisfy
an immediate and heavy financial need of the Participant only if:
(i) The Participant has obtained all distributions,
other than hardship distributions, and all nontaxable loans under all plans
maintained by the Employer;
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(ii) The Participant is prohibited from making Salary
Deferral Contributions to this Plan for twelve (12) months after the receipt of
the hardship distribution. In addition, the Participant must be prohibited,
under the terms of the plan, or by an otherwise legally enforceable agreement,
from making elective contributions and employee contributions to all other plans
of the Employer for at least twelve (12) months after receipt of the hardship
distribution;
(iii) The distribution is not in excess of the amount
of an immediate and heavy financial need (including amounts necessary to pay any
Federal, state or local income taxes or penalties reasonably anticipated to
result from the distribution); and
(iv) All plans maintained by the Employer limit the
Participant's Salary Deferral Contributions for the taxable year immediately
following the taxable year of the hardship distribution to the applicable limit
under Code Section 402(g) for such taxable year, less the amount of such
Participant's Salary Deferral Contributions for the taxable year of the hardship
distribution.
(d) No more than one (1) hardship withdrawal shall be
permitted per Participant per Plan Year.
(e) If required in accordance with one or more of the
Appendices, a Participant must obtain the consent of his or her Spouse, if any
to receive a hardship distribution. Spousal consent shall be obtained no earlier
than the beginning of the ninety (90)-day period that ends on the date on which
the hardship withdrawal is to be made. The consent must be in writing, must
acknowledge the effect of the withdrawal, and must be witnessed by a Plan
representative or notary public.
7.12 LOANS.
(a) The Administrator may authorize a loan or loans to
currently employed Participants, or parties in interest (as defined in ERISA
Section 3(14)) who are Participants or Beneficiaries, provided that:
(i) such loans are available to all such Participants
and Beneficiaries on a reasonably equivalent basis;
(ii) such loans are not made available to Highly
Compensated Employees, officers or shareholders in an amount greater than the
amount made available to other Employees;
(iii) such loans bear a reasonable rate of interest;
(iv) such loans are adequately secured; and
(v) a Participant's or Beneficiary's aggregate
outstanding loans shall not exceed fifty percent (50%) of the present value of
the Participant's or Beneficiary's vested accrued benefit.
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(b) If required in accordance with one or more of the
Appendices to the Plan, a Participant must obtain the consent of his or her
Spouse, if any, to use of the Account balance as security for the loan. Spousal
consent shall be obtained no earlier than the beginning of the ninety (90) day
period that ends on the date on which the loan is to be so secured. The consent
must be in writing, must acknowledge the effect of the loan, and must be
witnessed by a Plan representative or notary public. Such consent shall
thereafter be binding with respect to the consenting Spouse or any subsequent
Spouse with respect to that loan. A new consent shall be required if the Account
balance is used for renegotiation, extension, renewal, or other revision of the
loan.
(c) In the event of default, foreclosure on the note and
attachment of security will not occur until a distributable event occurs in the
Plan.
(d) Notwithstanding any other provision of this Plan, the
portion of the Participant's vested Account balance used as a security interest
held by the Plan by reason of a loan outstanding to the Participant shall be
taken into account for purposes of determining the amount of the Account balance
payable at the time of death or distribution, but only if the reduction is used
as repayment of the loan. If less than one hundred percent (100%) of the
Participant's vested Account balance (determined without regard to the preceding
sentence) is payable to the Surviving Spouse, then the Account balance shall be
adjusted by first reducing the vested Account balance by the amount of the
security used as repayment of the loan, and then determining the benefit payable
to the Surviving Spouse.
(e) All such loans shall be available to Participants and
Beneficiaries without regard to any individual's race, color, religion, sex, age
or national origin. All such loans shall further be subject to ERISA, the Code,
the Regulations and rulings thereunder, and to such terms and conditions not
inconsistent therewith (and subject to this Section) as determined by the
Administrator. Such policies and guidelines shall be in writing and (i) may be
amended by the Administrator from time to time (ii) shall be communicated to all
affected Participants and Beneficiaries, and (iii) shall be deemed a part of
this Plan.
7.13 WITHDRAWALS AT AGE FIFTY-NINE AND ONE-HALF (59-1/2). A Participant
may withdraw all or a part of his or her Accounts at any time subsequent to
attainment of age fifty-nine and one-half (59-1/2); provided, however, that if
required in accordance with one or more of the Appendices, the Participant must
obtain the consent of his or her Spouse, if any for amounts withdrawn from the
Participant's Account. If required, Spousal consent shall be obtained no earlier
than the beginning of the ninety (90) day period that ends on the date on which
the withdrawal is to be made. The consent must be in writing, must acknowledge
the effect of the withdrawal, and must be witnessed by a Plan representative or
notary public.
7.14 WITHDRAWALS FROM VOLUNTARY CONTRIBUTIONS ACCOUNT. A Participant
may withdraw all or a part of his or her Voluntary Contributions Account accrued
under the KLA Retirement Plan at any time. A Participant may withdraw all or
part of his or her Voluntary Contributions Account accrued under the Prometrix
Plan in accordance with the provisions of Section 2.13 and A.6-2.
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ARTICLE VIII
ADMINISTRATION
8.1 POWERS OF THE ADMINISTRATOR.
(a) The Administrator shall file all reports and distribute to
Participants and Beneficiaries reports and other information required under
ERISA.
(b) The Administrator shall be responsible for the general
administration and interpretation of the Plan and for carrying out its
provisions and shall have such powers as may be necessary to discharge its
duties hereunder, including, but not by way of limitation, the following powers
and duties:
(i) Discretionary authority to construe and interpret the
terms of the Plan, and to determine eligibility and the amount, manner and time
of payment of any benefits hereunder;
(ii) To monitor the Plan's compliance with the limitations
of Sections 6.4, 6.5 and 6.7 throughout the Plan Year. The Administrator shall
maintain such records as are necessary to demonstrate compliance with these
Sections;
(iii) To prescribe procedures to be followed by Employees in
filing applications for benefits;
(iv) To make a determination as to the right of any person
to a benefit and to afford any person dissatisfied with such determination the
right to a hearing;
(v) To request and receive from Employees such information
as is necessary for the proper administration of the Plan, including but not
limited to, such information as the Administrator may reasonably require to
determine each Participant's eligibility to participate in the Plan and the
benefits payable to each Participant upon his or her death, retirement or
termination of employment;
(vi) To prepare and distribute, in such manner as it
determines to be appropriate, information explaining the Plan; and
(vii) To direct the Trustee as to the method in which, and
persons to whom, Plan assets will be distributed.
(c) The Administrator shall have full discretion to construe and
interpret the terms and provisions of this Plan, which interpretation or
construction shall be final and binding on all parties, including, but not
limited to, the Company and any Participant or Beneficiary, except as otherwise
provided by law. When making a determination or calculation, the Administrator
shall be
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entitled to rely upon information furnished by the Employer or anyone acting on
behalf of the Employer.
(d) The Administrator shall have the power to (i) establish a
funding policy; (ii) select alternative investment funds; (iii) receive and
review reports on the financial condition of the Trust Fund and statements of
the receipts and disbursements of the Trust Fund from the Trustee; and (iv)
appoint or employ one or more Investment Managers (as defined in ERISA Section
3(38)) to manage any part or all of the assets of the Plan for which the
Administrator has investment discretion.
(e) The Administrator may appoint one or more persons to act as a
"Plan Committee" to discharge the duties of the Administrator under the Plan. A
person shall not be ineligible to be a member of the Committee because he or she
is or may be a Participant in the Plan. The Administrator may, from time to
time, increase or decrease the number of members of the Committee. The Committee
and each of its members shall be indemnified by the Employer to the extent set
forth in Section 17.2.
8.2 DOMESTIC RELATIONS ORDERS.
(a) Notification. Upon receipt of a Domestic Relations Order, the
Administrator shall promptly notify the affected Participant and each Alternate
Payee of the receipt of such order and the procedures established by the
Administrator for determining whether such Order satisfies the requirements for
recognition as a Qualified Domestic Relations Order. Such notice shall also
advise each Alternate Payee of his or her right to designate a representative to
receive communications from the Administrator concerning the disposition of the
Domestic Relations Order. Within a reasonable time after providing such
notification, the Administrator shall, pursuant to such procedures, determine
whether or not the Order is a Qualified Domestic Relations Order and shall
notify the Participant and each Alternate Payee (or his or her representative)
of such determination.
(b) Procedures. The Administrator shall establish reasonable
procedures for determining the qualified status of Domestic Relations Orders and
for effecting distributions pursuant to all such Orders which are determined to
be Qualified Domestic Relations Orders.
(c) Payment
(i) During the period in which the qualified status of a
Domestic Relations Order is being determined, the Administrator shall defer the
payment of all Plan benefits affecting the Participant which are in dispute and
shall separately account for all amounts which would otherwise be payable to the
Alternate Payee (the "Segregated Amounts") during such period were the Order
determined to be a Qualified Domestic Relations Order.
(ii) If the Administrator determines, within eighteen (18)
months after the date the first payment to the Alternate Payee would otherwise
be required pursuant to the terms of the Order, that such Order is a Qualified
Domestic Relations Order, then the Administrator shall establish an Account to
hold the Segregated Amounts (including any earnings thereon) on behalf of
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such Alternate Payee and such Alternate Payee shall then be treated as a
Participant for purposes of such Account. To the extent such Qualified Domestic
Relations Order provides for the payment of the entire balance of the Segregated
Amounts (including any earnings thereon) to the Alternate Payee prior to the
Participant's Severance Date, then the Administrator shall make such payment in
accordance with such Order, notwithstanding that the affected Participant's
Severance Date has not occurred, nor has the affected Participant actually
attained his or her Earliest Retirement Age (as defined below) at that time.
Such payment shall be made in any form in which benefits under the Plan may be
distributed to the affected Participant and his or her Beneficiaries.
(iii) If the Administrator determines, within such eighteen
(18) month period under paragraph (ii), that such Order is not a Qualified
Domestic Relations Order, or if the qualified status of such Order cannot be
determined prior to the expiration of such eighteen (18) month period, then the
Administrator shall authorize the payment of the Segregated Amounts (including
any earnings thereon) to the person or person who would have been entitled to
such Segregated Amounts had the Order not been issued. If such person is the
Participant, then the previously Segregated Amounts shall remain part of the
Trust and shall not be distributed until the Participant becomes entitled to
benefits under the Plan in accordance with the provisions of Article VII. Should
there be a subsequent determination that the Order is in fact a Qualified
Domestic Relations Order, then such determination shall be applied on a
prospective basis only.
(d) Definitions. For purposes of this Section, the following
definitions shall apply:
(i) Alternate Payee. Any Spouse, former Spouse, child or
other dependent of a Participant who is recognized by a Domestic Relations Order
as having a right to all or a portion of the benefits payable under the Plan to
the Participant.
(ii) Domestic Relations Order or Order. Any judgment, decree
or order (including approval of a property settlement agreement) which provides
or otherwise conveys, pursuant to applicable state domestic relations laws
(including community property laws), child support, alimony payments or marital
property rights to an Alternate Payee.
(iii) Earliest Retirement Age. With respect to any
Participant, the earlier of (A) the date on which the Participant is entitled to
a distribution from the Plan, or (B) the later of (1) the date the Participant
attains age fifty (50) or (2) the earliest date the Participant would be
entitled to a distribution under the Plan were the Participant's Severance Date
to occur.
(iv) Qualified Domestic Relations Order. Any domestic
relations order or judgment that meets the following requirements:
(A) such Order establishes (or otherwise recognizes the
existence of) the right of an Alternate Payee to receive all or a portion of the
benefits otherwise payable under the Plan to a Participant;
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(B) such Order specifies (1) the name and last known
mailing address of the Participant, (2) the name and last known mailing address
of each Alternate Payee covered by such Order, (3) the amount or percentage of
the Participant's benefits under the Plan payable to each such Alternate Payee
or the manner in which such amount or percentage is to be calculated, and (4)
the number of payments or the duration of the pay-out period to which the Order
applies; and
(C) such Order does not require the Plan to (1) provide
any type or form of benefit or option not otherwise available under the Plan,
(2) provide increased benefits under the Plan, or (3) pay benefits to an
Alternate Payee which are required to be paid to another Alternate Payee
pursuant to any Qualified Domestic Relations Orders previously issued with
respect to the Plan.
A Domestic Relations Order shall not be considered to be in violation of
the requirement of paragraph (C)(1) merely because such Order requires the
payment of benefits to an Alternate Payee before the date of the affected
Participant's actual Severance Date or specifically provides for payment prior
to the date the Participant attains his or her Earliest Retirement Age.
Accordingly, such payments shall be made as of the Participant's Severance Date
occurred on the date on which benefits are to enter pay status under the Order.
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ARTICLE IX
LEAVES OF ABSENCE AND TRANSFERS
9.1 MILITARY LEAVE OF ABSENCE. So long as the Uniformed Services
Employment and Reemployment Rights Act of 1994 or any similar law, shall remain
in force, providing for re-employment rights for all persons in military
service, as therein defined, an Employee who leaves the employment of the
Employer for military service in the Armed Forces of the United States, as
defined in such Act from time to time in force, shall, for all purposes of this
Plan, be considered as having been in the employment of the Employer, with the
time of the Participant's service in the military credited to his or her service
under the Plan; provided, however, that upon such Employee being discharged from
the military service of the United States, the Employee applies for reemployment
with the Employer and takes all other necessary action to be entitled to, and to
be otherwise eligible for, re-employment rights, as provided by the Uniformed
Services Employment and Reemployment Rights Act of 1994 or any similar law from
time to time in force. Notwithstanding any provision of this Plan to the
contrary, contributions, benefits and service credit with respect to qualified
military service shall be provided in accordance with Section 414(u) of the
Code.
9.2 OTHER LEAVES OF ABSENCE. For all purposes of this Plan, an Employee
on an Employer-approved leave of absence not described in Section 9.1 shall be
considered as having continued in the employment of the Employer for the period
of such leave, provided that the Employee returns to the active employment of
the Employer before or at the expiration of such leave.
9.3 TRANSFERS.
(a) In the event that:
(i) a Participant is transferred to employment with an
Employer which is not a Participating Employer or to employment with the
Employer in a status other than as an Employee; or
(ii) a person is transferred from employment with an
Employer which is not a Participating Employer or from other employment with the
Employer in a status other than Employee to employment with the Employer under
circumstances making such person an Employee; or
(iii) a person was employed by an Employer which is not a
Participating Employer, terminated his or her employment and was subsequently
employed by the Employer as an Employee;
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(b) then the following provisions shall apply:
(i) transfer to employment (A) with an Employer which is not
a Participating Employer or (B) with the Employer not as an Employee, shall not
be considered termination of employment with the Employer, and such transferred
person shall continue to be entitled to the benefits provided in the Plan, as
modified by this Section;
(ii) any employment with an Employer which is not a
Participating Employer or with the Employer not as an Employee will be deemed to
be employment by the Employer;
(iii) no amounts earned from an Employer at a time when it
is not a Participating Employer or from the Employer not as an Employee shall
constitute Compensation hereunder;
(iv) termination of employment with an Employer which is not
a Participating Employer by a person entitled to benefits under this Plan (other
than to transfer to employment with another Employer) shall be considered as
termination of employment with the Employer; and
(v) all other terms and provisions of this Plan shall fully
apply to such person and to any benefits to which he or she may be entitled
hereunder.
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ARTICLE X
TRUST PROVISIONS; INVESTMENT OF
CONTRIBUTIONS; VALUATION OF ACCOUNTS
10.1 TRUST AGREEMENT. The Administrator may at any time select and
appoint a Trustee to hold the assets of the Plan, and the Company shall, on
behalf of itself and all other related entities which have adopted the Plan
pursuant to the provisions of Article XIV, enter into a Trust Agreement with the
Trustee to provide for the investment, management and control of the assets of
the Plan. The Trust Agreement shall be a part of the Plan, and the Trust Fund
shall be administered by the Trustee in accordance with the terms and provisions
of the Trust Agreement.
10.2 INCONSISTENT PROVISIONS. To the extent the provisions of the Plan
and any Trust Agreement in effect under the Plan may prove to be inconsistent or
otherwise in conflict with respect to the rights, duties or obligations of the
Trustee, the provisions of the Trust Agreement shall control.
10.3 INVESTMENT DECISION. The decision as to the investment of an
Account shall be made by the Participant, and the Trustee shall have no
responsibility for determining how an Account is to be invested or whether the
investment directions communicated to the Trustee comply with the terms of the
Plan.
10.4 DIRECTED INVESTMENTS. As specified in Section 2.8, each Participant
shall have the right to direct the investment of any or all of his or her
Accounts among such investments as are authorized by the Administrator, as
follows: subject to such procedural guidelines as the Administrator shall from
time to time establish, each Participant may file an investment direction with
the Administrator (in such manner and in such form as prescribed from time to
time by the Administrator) that specifies the manner in which his or her
Accounts are to be invested; provided, however, that no Participant may direct
any assets of his or her Accounts to purchase life insurance. The Administrator
shall prescribe dates as of which investment directions shall be effective and
time periods within which such investment directions must be filed with the
Administrator. An investment direction shall continue to apply until a
subsequent direction is filed with the Administrator. The Administrator shall
forward investment directions to the Trustee (or to such third party as the
Administrator and the Trustee shall designate) in order to implement the
Participant's directions.
10.5 ACCOUNTS NOT DIRECTED. If a Participant fails to designate the
manner in which his or her Accounts are to be invested, the Participant's
Accounts shall be invested in the manner directed by the Administrator.
10.6 VALUATION. On the last day of each Plan Year, or more frequently in
the sole and absolute discretion of the Administrator, the assets of the Trust
shall be valued at fair market value and each Account shall be proportionately
adjusted to reflect income, gains, losses or expenses, if the system of
accounting does not directly accomplish all such adjustments.
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ARTICLE XI
FEES AND EXPENSES
All reasonable fees and expenses of the Administrator or the Trustee
incurred in the performance of their duties hereunder or under the Trust may be
paid by the Employer; provided, however, that to the extent not so paid by the
Employer and to the extent permitted by law, such fees and expenses shall be
deemed to be an expense of the Trust, and, accordingly, the Trustee is
authorized to charge the same to the Accounts of the Participants, and unless
allocable to the Accounts of specific Participants, they shall be charged
against the respective accounts of all or a reasonable group of Participants in
such reasonable manner as the Trustee shall determine.
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ARTICLE XII
NECESSITY OF QUALIFICATION
This Plan is restated on the express condition that it will be
considered by the Internal Revenue Service as continuing to qualify under
Sections 401(a), 401(k) and 401(m) of the Code. In the event that the Internal
Revenue Service determines that the Plan does not continue to qualify under the
Code, the restatement of the Plan shall be of no effect. The Board of Directors
of the Company or an authorized officer of the Company may, however (but shall
not be required to do so), make any retroactive amendments to the Plan, as so
restated, which the Internal Revenue Service may require as a condition for its
determination that the Plan continues to qualify under Sections 401(a), 401(k)
and 401(m) of the Code.
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ARTICLE XIII
AMENDMENT, TERMINATION OR MERGER
13.1 AMENDMENT.
(a) The Administrator, acting through the Board of Directors of
the Company (the "Board"), shall have full power and authority to amend at any
time or times the provisions of the Plan, either prospectively or retroactively,
to such extent and in such manner as the Board shall deem advisable, in
accordance with its normally established procedures. The Board may delegate such
power, in whole or in part, to one or more committees (comprised of officers or
other managerial personnel of the Employer) to whom administrative
responsibilities may be delegated under the Plan. The Plan Committee is
expressly given the authority to adopt and to provide a certificate evidencing
the execution of any amendment to the Plan which satisfies one of the following
requirements:
(i) The amendment is designed to clarify any provision of
the Plan; or
(ii) The amendment is designed to bring the Plan into
compliance with applicable Federal or state law; or
(iii) The amendment does not have a significant financial
impact on the Plan or the Company;
provided, however, that any Plan amendment which would have a substantive effect
on the rights and obligations of any Participating Employer or of any Plan
Participant or Beneficiary shall be approved or ratified by the Board.
(b) An amendment shall become effective, in accordance with its
terms as to all Participants and all other persons having or claiming an
interest under the Plan, upon the effective date specified in the instrument
evidencing such amendment. However, no such amendment shall operate to: (i)
cause any part of the Trust to revert to or be recoverable by the Employer or to
be used for, or diverted to, purposes other than the exclusive benefit of
Participants and their Beneficiaries; (ii) reduce the then outstanding balances
in the Accounts of Participants; (iii) cause or effect any discrimination in
favor of Highly Compensated Employees; (iv) change the duties, responsibilities
or liabilities of the Trustee hereunder without the written consent of such
Trustee; or (v) affect, reduce or eliminate any benefits which are protected
benefits pursuant to Section 411(d)(6) of the Code and the Regulations
thereunder.
13.2 TERMINATION OF PLAN. The Company may terminate this Plan at any
time by resolution adopted by the Board, but the Trust may not thereby be
diverted from the exclusive benefit of the Participants, their Beneficiaries,
survivors or estates, or the administrative expenses of the Plan, nor revert to
the Employer, nor may an allocation or contribution theretofore made be
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changed thereby. Upon termination or partial termination of the Plan or complete
discontinuance of Employer Contributions under it, the Accounts of each affected
Participant shall be nonforfeitable. The Administrator shall distribute each
Participant's Accounts to the Participant pursuant to Sections 7.5, 7.6 and 7.7
as soon as is administratively practicable after the termination.
13.3 MERGER.
(a) The Board delegates to the Plan Committee the full power and
authority to effect from time to time, upon such terms and conditions as the
Plan Committee deems appropriate, the merger of any and all tax-qualified 401(k)
and profit sharing plans and related trusts maintained by entities acquired by
the Company into the Plan and Trust and to take any and all such action, and
prepare, execute, and deliver all such documents as may be necessary or
advisable to effect any and all such plan and trust mergers.
(b) Nothing contained herein shall prevent the merger or
consolidation of the Plan with, or transfer of assets or liabilities of the Plan
to, another plan meeting the requirements of Section 401(a) of the Code or the
transfer to the Plan of assets or liabilities of another such plan so qualified
under the Code. Any such merger, consolidation or transfer shall be accompanied
by the transfer of such existing records and information as may be necessary to
properly allocate such assets among Participants, including any tax or other
information necessary for the Participants or persons administering the plan
which is receiving the assets. The terms of such merger, consolidation or
transfer must be such that (if this Plan had then terminated), the requirements
of this Article would be satisfied and each Participant would receive a benefit
immediately after the merger, consolidation or transfer equal to or greater than
the benefit he or she would have received if the Plan had terminated immediately
before the merger, consolidation or transfer.
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ARTICLE XIV
ADOPTION OF PLAN BY PARTICIPATING EMPLOYERS
14.1 ADOPTION OF THE PLAN. An Employer may become a Participating
Employer with the approval of the Company.
14.2 WITHDRAWAL. A Participating Employer may withdraw from the Plan at
any time by giving advance notice in writing of its intention to withdraw to the
Company and to the Administrator. Upon the receipt of notice of any such
withdrawal, the Trustee shall set aside from the Trust Fund such cash,
securities and other property as it shall deem to be equal in value to the
Participating Employer's equitable share. If the Plan is to be terminated with
respect to the Participating Employer, the amount set aside shall be
administered according to Article X. If the Plan is not to be terminated with
respect to the Participating Employer, the Trustee shall turn over the
Participating Employer's equitable share to a trustee designated by the
Participating Employer, and the cash, securities and other property shall
thereafter be held and invested as a separate trust of the Employer and shall be
used and applied according to the terms of a new trust agreement between the
Employer and the trustee so designated. Neither the segregation of the Trust
Fund assets upon the withdrawal of a Participating Employer nor the execution of
a new trust agreement shall operate to permit any part of the corpus or income
of the Trust Fund to be used for or diverted to purposes other than for the
exclusive benefit of Participants, former Participants and Beneficiaries.
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ARTICLE XV
CLAIMS PROCEDURE
15.1 RIGHT TO FILE CLAIM. Every Participant or Beneficiary of a
Participant shall be entitled to file with the Administrator a claim for
benefits under the Plan. The claim must be in writing.
15.2 DENIAL OF CLAIM. If the claim is denied by the Administrator, in
whole or in part, the claimant shall be furnished within ninety (90) days after
the Administrator's receipt of the claim (or within one hundred eighty (180)
days after such receipt if special circumstances require an extension of time) a
written notice of denial of claim containing the following:
(a) Specific reason or reasons for denial;
(b) Specific reference to pertinent Plan provisions on which the
denial is based;
(c) A description of any additional material or information
necessary for the claimant to perfect the claim, and an explanation of why the
material or information is necessary; and
(d) An explanation of the claims review procedure.
15.3 CLAIMS REVIEW PROCEDURE.
(a) Review may be requested at any time within ninety (90) days
following the date the claimant received written notice of the denial of his or
her claim. For purposes of this Section, any action required or authorized to be
taken by the claimant may be taken by a representative authorized in writing by
the claimant to represent him or her. The Administrator shall afford the
claimant a full and fair review of the decision denying the claim and, if so
requested, shall:
(i) Permit the claimant to review any documents that are
pertinent to the claim;
(ii) Permit the claimant to submit to the Administrator
issues and comments in writing; and
(iii) Afford the claimant an opportunity to meet with a
representative of the Administrator as a part of the review procedure.
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(b) The decision on review by the Administrator shall be
in writing and shall be issued within sixty (60) days following receipt of the
request for review. The period for decision may be extended to a date not later
than one hundred twenty (120) days after such receipt if the Administrator
determines that special circumstances require extension. The decision on review
shall include specific reasons for the decision and specific references to the
pertinent Plan provisions on which the decision of the Administrator is based.
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ARTICLE XVI
TOP-HEAVY PROVISIONS
16.1 PURPOSE. This Article is intended to insure that the Plan complies
with Code Section 416. If the Plan is or becomes Top-Heavy in any Plan Year, the
provisions of this Section will supersede any conflicting provision in the Plan.
16.2 DEFINITIONS. For purposes of this Article, the following
definitions shall apply:
(a) Determination Date. For any Plan year subsequent to the first
Plan Year, the last day of the preceding Plan Year. For the first Plan Year of
the Plan, the last day of that Plan Year.
(b) Key Employee. Any Employee or former Employee (and the
beneficiaries of such Employee) who at any time during the determination period
was (i) an officer of the Employer if such individual's annual Section 415
Compensation exceeds fifty percent (50%) of the dollar limitation in effect
under Code Section 415(b)(1)(A), (ii) an owner (or considered an owner under
Code Section 318) of one of the ten (10) largest interests in the Employer if
such individual's Section 415 Compensation exceeds one hundred percent (100%) of
the dollar limitation in effect under Code Section 415(c)(1)(A), (iii) a five
percent (5%) owner of the Employer, or (iv) a one percent (1%) owner of the
Employer who has an annual Section 415 Compensation of more than One Hundred
Fifty Thousand Dollars ($150,000). For purposes of this Section, the
determination of Section 415 Compensation shall be based only on Section 415
Compensation which is actually paid and shall be made by including amounts
contributed by the Employer pursuant to a salary reduction agreement which are
excludable from the Employee's gross income under Code Section 125, 402(e)(3),
402(h), 403(b) or 408(p). The "Determination Period" for purposes of this
Article is the Plan Year containing the Determination Date and the four (4)
preceding Plan Years. A determination of who constitutes a Key Employee shall be
made in accordance with Code Section 416(i)(1) and the Regulations thereunder.
(c) Non-Key Employee. Any Employee who is not a Key Employee,
including Employees who are former Key Employees.
(d) Permissive Aggregation Group. The Required Aggregation Group
of plans plus any other plan or plans of the Employer which, when considered as
a group with the Required Aggregation Group, would continue to satisfy the
requirements of Code Sections 401(a)(4) and 410.
(e) Required Aggregation Group. Each qualified plan of the
Employer in which at least one (1) Key Employee participates or participated at
any time during the determination period (regardless of whether the plan has
terminated); and any other qualified plan of the Employer which enables a plan
described in paragraph (1) to meet the requirements of Code Section 401(a)(4) or
410.
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(f) Top-Heavy Plan. This Plan is Top-Heavy if for any Plan Year
any of the following conditions exists:
(i) If the Top-Heavy Ratio for this Plan exceeds sixty
percent (60%) and this Plan is not part of any Required Aggregation Group or
Permissive Aggregation Group of plans;
(ii) If this Plan is a part of a Required Aggregation Group
of plans but not part of a Permissive Aggregation Group and the Top-Heavy Ratio
for the Permissive Aggregation Group exceeds sixty percent (60%); or
(iii) If this Plan is a part of a Required Aggregation Group
and part of a Permissive Aggregation Group of plans and the Top-Heavy Ratio for
the Permissive Aggregation Group exceeds sixty percent (60%).
(g) Top-Heavy Ratio.
(i) If the Employer maintains one or more defined
contribution plans (including any simplified employee pension plan) and the
Employer has not maintained any defined benefit plan which during the five (5)
year period ending on the Determination Date(s) has or has had accrued benefits,
the Top-Heavy Ratio for this Plan alone or for the Required or Permissive
Aggregation Group as appropriate is a fraction, the numerator of which is the
sum of the Account balances of all Key Employees as of the Determination Date(s)
(including any part of any Account balance distributed in the five (5) year
period ending on the Determination Date(s)), and the denominator of which is the
sum of Account balances (including any part of any Account balance distributed
in the five (5) year period ending on the Determination Date(s)), both computed
in accordance with Section 416 of the Code and the Regulations thereunder. Both
the numerator and denominator of the Top-Heavy Ratio are increased to reflect
any contribution not actually made as of the Determination Date, but which is
required to be taken into account on that date under Code Section 416 and the
Regulations thereunder.
(ii) If the Employer maintains one or more defined
contribution plans (including any simplified employee pension plan) and the
Employer maintains or has maintained one or more defined benefit plans which
during the five (5) year period ending on the Determination Date(s) has or has
had any accrued benefits, the Top-Heavy Ratio for any Required or Permissive
Aggregation Group as appropriate is a fraction, the numerator of which is the
sum of Account balances under the aggregated defined contribution plan or plans
for all Key Employees, determined in accordance with paragraph (i) above, and
the present value of accrued benefits under the aggregated defined benefit plan
or plans for all Key Employees as of the Determination Date(s), and the
denominator of which is the sum of Account balances under the aggregated defined
contribution plan or plans for all participants, determined in accordance with
paragraph (i) above, and the present value of accrued benefits under the defined
benefit plan or plans for all participants as of the Determination Date(s), all
determined in accordance with Code Section 416 and the Regulations thereunder.
The accrued benefits under a defined benefit plan in both the numerator and
denominator of the Top-Heavy Ratio are increased for any distribution of an
accrued benefit made in the five (5) year period ending on the Determination
Date.
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(iii) For purposes of (i) and (ii) above the value of
Account balances and the present value of accrued benefits will be determined as
of the most recent Valuation Date that falls within or ends with the twelve (12)
month period ending on the Determination Date, except as provided in Code
Section 416 and the Regulations thereunder for the first and second plan years
of a defined benefit plan. The Account balances and accrued benefits of a
participant (1) who is not a Key Employee but who was a Key Employee in a prior
year, or (2) who has not been credited with at least one (1) Hour of Service
with any Employer maintaining the Plan at any time during the five (5) year
period ending on the Determination Date will be disregarded. The calculation of
the Top-Heavy Ratio, and the extent to which distributions, rollovers, and
transfers are taken into account will be made in accordance with Code Section
416 and the Regulations thereunder. Deductible employee contributions will not
be taken into account for purposes of computing the Top-Heavy Ratio. When
aggregating plans the value of Account balances and accrued benefits will be
calculated with reference to the Determination Dates that fall within the same
calendar year.
The accrued benefit of a Participant other than a Key
Employee shall be determined under (1) the method, if any, that uniformly
applies for accrual purposes under all defined benefit plans maintained by the
Employer, or (2) if there is no such method, as if such benefit accrued not more
rapidly than the slowest accrual rate permitted under the fractional rule of
Code Section 411(b)(1)(C).
(h) Valuation Date. The Plan Year-End specified in Section 2.1 as
of which Account balances or accrued benefits are valued for purposes of
calculating the Top-Heavy Ratio.
16.3 MINIMUM ALLOCATION.
(a) Except as otherwise provided in Sections 16.3(b) and (c), in
any Plan Year in which this Plan is Top-Heavy, Employer Contributions (other
than Salary Deferral Contributions and Employer Matching Contributions included
in the tests described in Sections 6.5 and 6.7) allocated to the Accounts of
each Participant who is a Non-Key Employee, shall be not less than the lesser of
(i) three percent (3%) of the Non-Key Employee's Section 415 Compensation, or
(ii) in the case where the Employer has no defined benefit plan which designates
this Plan to satisfy Code Section 401, the largest percentage of Contributions
and forfeitures (if applicable), as a percentage of the first One Hundred Fifty
Thousand Dollars ($150,000) (as adjusted by the Adjustment Factor) of Section
415 Compensation, allocated on behalf of any Key Employee for that Plan Year.
The minimum allocation shall be determined without regard to any Social Security
contribution. This minimum contribution shall be made even though, under other
provisions of this Plan, the Participant would not otherwise be entitled to
receive an allocation or would have received a lesser allocation for the Plan
Year because of (i) the Participant's failure to complete one thousand (1,000)
Hours of Service (or any equivalent provided in the Plan), (ii) the
Participant's failure to make mandatory Employee contributions to the Plan, or
(iii) Section 415 Compensation less than a stated amount.
(b) The provisions in Section 16.3(a) shall not apply to any
Participant who was not employed by the Employer on the last day of the Plan
Year.
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(c) The provisions in Section 16.3(a) shall not apply to any
Participant to the extent the Participant is covered under any other plan or
plans of the Employer.
(d) The minimum allocation required (to the extent required to be
nonforfeitable under Code Section 416(b)) may not be forfeited under Code
Section 411(a)(3)(B) or (D).
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ARTICLE XVII
MISCELLANEOUS
17.1 LEGAL OR EQUITABLE ACTION. If any legal or equitable action with
respect to the Plan is brought by or maintained against any person, and the
results of such action are adverse to that person, attorney's fees and all other
costs incurred by the Employer, the Administrator or the Trust of defending or
bringing such action shall be charged against the interest, if any, of such
person under the Plan.
17.2 INDEMNIFICATION. The Employer indemnifies and holds harmless the
Plan Administrator and all members of the Plan Committee, if any, from and
against any and all liabilities, demands, claims, losses, taxes, expenses,
including reasonable attorney's fees, both direct and indirect, arising by
reason of any act or omission to act (except willful misconduct or negligence)
in their official capacities in the administration of this Plan or Trust or
both, including all expenses reasonably incurred in their defense, if the
Employer fails to provide such defense. The indemnification provisions of this
Section shall not relieve the Plan Administrator, any member of the Plan
Committee from any liability such person may have under the Act for breach of a
fiduciary duty.
17.3 NO ENLARGEMENT OF PLAN RIGHTS. It is a condition of the Plan, and
each Participant by participating herein expressly agrees, that he or she shall
look solely to the assets of the Trust for the payment of any benefit under the
Plan.
17.4 NO ENLARGEMENT OF EMPLOYMENT RIGHTS. Nothing appearing in or done
pursuant to the Plan shall be construed to give any person a legal or equitable
right or interest in the assets of the Trust or distribution therefrom, nor
against the Employer, except as expressly provided herein, or to create or
modify any contract of employment between the Employer and any Employee or to
obligate the Employer to continue the services of any Employee.
17.5 NO RELEASE FROM LIABILITY. Nothing in the Plan shall relieve any
person from liability for any responsibility under Part 4 of Title I of ERISA.
Subject thereto, neither the Administrator nor any other person shall have any
liability under the Plan, except as a result of negligence or willful
misconduct, and in any event the Employer shall fully indemnify and save
harmless all persons from any liability except that resulting from their
negligence or willful misconduct.
17.6 HEADINGS. Headings herein are primarily for convenience of
reference, and if they conflict with the text, the text shall control.
17.7 APPLICABLE LAW. This Plan shall be construed, administered and
governed in all respects in accordance with ERISA and other pertinent Federal
laws and in accordance with the laws of the State of California to the extent
not preempted by ERISA; provided, however, that if any
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provision is susceptible to more than one interpretation, such interpretation
shall be given thereto as is consistent with the Plan being a qualified plan
under Code Section 401(a). If any provision of this Plan shall be held by a
court of competent jurisdiction to be invalid or unenforceable, the remaining
provisions of the Plan shall continue to be fully effective.
17.8 NON-ALIENATION OF BENEFITS. Except as otherwise provided by law, no
person entitled to any benefits under the Plan shall have the right to alienate,
hypothecate or encumber his or her interest in such benefits and such benefits
shall not in any way be subject to the claims of his or her creditors or liable
to attachment, execution or other process of law (other than (a) federal tax
levies and executions on federal tax judgments, (b) payments made from the
Accounts of a Participant in satisfaction of the rights of Alternate Payees
pursuant to a Qualified Domestic Relations Order under Section 8.2, or (c)
enforcement of any security interests or offset rights applicable to the Account
of a Participant pursuant to the loan provisions of Section 7.12).
17.9 NO REVERSION. Notwithstanding any other provision of the Plan, no
part of the assets in the Trust shall revert to the Employer, and no part of
such assets, other than that amount required to pay taxes or administrative
expenses, shall be used for any purpose other than exclusive benefit of
Employees or their Beneficiaries. However, the Employer may request a return,
and this Section shall not prohibit such return, of an amount to the Employer
under any of the following circumstances:
(a) If the amount was all or part of an Employer Contribution
which was made as a result of a mistake of fact and the amount contributed is
returned to the Employer within one (1) year after the date on which the
mistaken payment of the contribution was made; or
(b) If the amount was all or part of an Employer Contribution
which was conditioned on its deductibility under Code Section 404 and this
condition is not satisfied, and the amount is returned to the Employer within
one (1) year after the date on which the deduction is disallowed.
17.10 CONFLICT. In the event of any conflict between the provisions of
this Plan and the terms of any contract or agreement issued thereunder or with
respect thereto, the provisions of the Plan shall control.
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IN WITNESS WHEREOF, the Company has executed this document on this ___
day of June, 1998.
KLA-TENCOR CORPORATION
By:
------------------------------------
Its:
-----------------------------------
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APPENDIX A
MERGER OF TENCOR INSTRUMENTS 401(k) RETIREMENT PLAN
The Tencor Instruments 401(k) Retirement Plan (the "Tencor Plan") was
merged with and into the KLA Retirement Plan (the "KLA Plan"), effective as of
July 1, 1997 (the "Tencor Merger Date"). Previously, the Prometrix Corporation
Profit Sharing and 401(k) Plan (the "Prometrix Plan") was merged with and into
the Tencor Plan, effective as of January 1, 1995 (the "Prometrix Merger Date").
Following the Tencor Merger Date, the name of the KLA Plan was changed to the
KLA-Tencor 401(k) Plan (referred to, for purposes of this Appendix, as the
"KLA-Tencor Plan"). The merger of the Tencor Plan and the KLA Plan was effected
in accordance with the following provisions:
A.1 TRANSFER OF ACCOUNT BALANCES. The outstanding account balances under
the Tencor Plan were transferred to the KLA Plan through a direct transfer from
the trust fund for the Tencor Plan to the Trust Fund for the KLA Plan effected
on the Tencor Merger Date.
A.2 AMOUNT OF ACCOUNT BALANCE. The account balance credited to each
individual under the Tencor Plan immediately prior to the Merger Date was
credited to the account maintained for such individual under the KLA Plan
immediately after the Tencor Merger Date. Accordingly, the account balance
maintained under the KLA Plan for each individual who was a participant in the
Tencor Plan on the Merger Date was, immediately after the Tencor Merger Date,
credited with a dollar amount equal to that individual's account balance under
the Tencor Plan immediately prior to the Tencor Merger Date.
A.3 INVESTMENT OF ACCOUNT BALANCE. The account balances transferred from
the Tencor Plan to the KLA-Tencor Plan shall be invested in accordance with each
Participant's new investment directive. In the absence of such directives, the
transferred account balances shall be invested in such Fund or Funds as the
Administrator deems appropriate.
A.4 SERVICE CREDIT. Each Participant in the KLA-Tencor Plan shall, for
eligibility and vesting purposes under the KLA-Tencor Plan, be credited with all
Service credited to such Participant for eligibility and vesting purposes under
the Tencor Plan immediately prior to the Merger Date.
A.5 PROTECTED BENEFITS. The terms and provisions of the KLA-Tencor Plan
shall govern the rights, benefits and entitlements of all Participants and any
other individuals who have an interest in any outstanding account balance under
the surviving KLA-Tencor Plan. The terms and provisions of the Tencor Plan have,
as of the Tencor Merger Date, been extinguished and cease to have any force or
effect. However, any benefits accrued under the Tencor Plan prior to the Tencor
Merger Date shall, to the extent those benefits are protected benefits under
Code Section 411(d)(6) (the "Protected Benefits"), be preserved under the
KLA-Tencor Plan and shall not in any way be affected, reduced or eliminated as a
result of the merger of the KLA Plan and the Tencor Plan. Except as outlined in
Section A.6, no Protected Benefits exist for Participants who held account
balances in the
Tencor Plan as of the Merger Date ("Tencor Participants") which are not included
in the KLA-Tencor Plan.
A.6 PROMETRIX PROTECTED BENEFITS. The following Protected Benefits exist
for Participants who held account balances in the Prometrix Plan as of the
Prometrix Merger Date (the "Prometrix Participants"):
A.6-1 DISTRIBUTION FORMS.
(a) The normal form of benefit for Prometrix Participants
shall be:
(i) a Straight Life Annuity if the Participant is
unmarried on his or her Severance Date; or
(ii) a Qualified Joint and fifty percent (50%) Survivor
Annuity with installment refund if the Participant is married on his or her
Severance Date.
(b) If, however, the Participant (or his or her Beneficiary)
elects, as outlined in Article VII of the Plan, he or she may instead choose one
of the following alternative forms of distribution:
(i) a lump sum payment;
(ii) equal, or nearly equal, at least annual
installments over a term certain extending not beyond the normal life
expectancies of the Participant and his or her Beneficiary;
(iii) a Straight Life Annuity;
(iv) a Straight Life Annuity with a term certain of
five (5), ten (10) or fifteen (15) years;
(v) a Straight Life Annuity with installment refund;
(vi) a fixed period Annuity for any period of whole
months which is not less than sixty (60) and does not exceed the normal life
expectancies of the Participant and his or her Beneficiary;
(vii) a Qualified Joint and one hundred percent (100%)
Survivor Annuity with installment refund.
(c) However, if the balance credited to the Participant's
Accounts at the time distribution is to commence does not exceed (and at the
time of any prior distribution did not exceed) Three Thousand five Hundred
Dollars ($3,500) (or, effective January 1, 1998, Five Thousand Dollars
($5,000)), then the vested balance of those Accounts shall be paid to the
Participant in one (1) lump-sum payment.
A-2
(d) Unless an optional form of benefit has been selected
within the Election Period pursuant to a Qualified Election, if a married
Prometrix Participant dies before his or her Annuity Starting Date, then the
Prometrix Participant's vested Account balances shall be applied toward the
purchase of a Qualified Preretirement Survivor Annuity for the life of the
Prometrix Participant's Surviving Spouse. A Prometrix Participant shall be
deemed to be a "married" Prometrix Participant if the Prometrix Participant is
married on his or her Severance Date.
(i) In the case of a Qualified Joint and Survivor
Annuity as described in this Appendix, the Administrator shall provide each
Prometrix Participant no less than thirty (30) days and no more than ninety (90)
days prior to the Annuity Starting Date with a written explanation of: (1) the
terms and conditions of a Qualified Joint and Survivor Annuity; (2) the
Prometrix Participant's right to make and the effect of an election to waive the
Qualified Joint and Survivor Annuity form of benefit; (3) the rights of a
Prometrix Participant's Spouse; and (4) the right to make, and the effect of a
revocation of a previous election to waive the Qualified Joint and Survivor
Annuity. Notwithstanding the foregoing, such explanation may be provided after
the Annuity Starting Date, provided that, in such case, the Prometrix
Participant's election period shall not end before the thirtieth (30th) day
after the date on which such explanation is provided, unless such thirty (30)
day period is waived by the Prometrix Participant, with the consent of his or
her Spouse, and provided that the distribution must commence more than seven (7)
days after such explanation is provided.
(ii) In the case of a Qualified Preretirement Survivor
Annuity as described in this Appendix, the Administrator shall provide each
Prometrix Participant within the applicable period, a written explanation of the
Qualified Preretirement Survivor Annuity in such terms and in such manner as
would be comparable to the explanation provided for meeting the requirements of
paragraph (i) applicable to a Qualified Joint and Survivor Annuity.
(A) The applicable period for a Prometrix
Participant is whichever of the following periods ends last: (I) the period
beginning on the first day of the Plan Year in which the Prometrix Participant
attains age thirty-two (32) and ending with the close of the Plan Year in which
the Prometrix Participant attains age thirty-five (35); (II) a reasonable period
ending after the individual becomes a Prometrix Participant; or (III) a
reasonable period ending after this Appendix first applies to the Prometrix
Participant. Notwithstanding the foregoing, notice must be provided within a
reasonable period ending after the Prometrix Participant's Severance Date in the
case of a Prometrix Participant whose Severance Date occurs before the Prometrix
Participant attains age thirty-five (35).
(B) For purposes of applying the preceding
paragraph, a reasonable period ending after the enumerated events described in
(II) and (III) is the end of the two (2) year period beginning one (1) year
prior to the date the applicable event occurs, and ending one (1) year after
that date. In the case of a Prometrix Participant whose Severance Date occurs
prior to the Plan Year in which the Prometrix Participant attains age
thirty-five (35), notice shall be provided within the two (2) year period
beginning one (1) year prior to the Prometrix Participant's Severance Date and
ending one (1) year after the Prometrix Participant's Severance Date. If such
Prometrix
A-3
Participant thereafter returns to employment with the Employer, the applicable
period for such Prometrix Participant shall be redetermined.
(e) For purposes of this Section, the following definitions
shall apply:
(i) Annuity Starting Date. The first day of the first
period for which an amount is paid in an annuity or any other form.
(ii) Election Period. The period that begins on the
first day of the Plan Year in which the Prometrix Participant attains age
thirty-five (35) and ends on the date of the Prometrix Participant's death. If a
Prometrix Participant's Severance Date is prior to the first day of the Plan
Year in which age thirty-five (35) is attained, with respect to the Prometrix
Participant's Account balances as of the Severance Date, the election period
shall begin on the Severance Date.
(iii) Pre-age thirty-five (35) Waiver. A Prometrix
Participant who will not yet attain age thirty-five (35) as of the end of any
current Plan Year may make a special qualified election to waive the Qualified
Preretirement Survivor Annuity for the period beginning on the date of such
Election and ending on the first day of the Plan Year in which the Prometrix
Participant will attain age thirty-five (35). Such Election shall not be valid
unless the Prometrix Participant receives a written explanation of the Qualified
Preretirement Survivor Annuity in such terms as are comparable to the
explanation required under paragraph (b)(i). Qualified Preretirement Survivor
Annuity coverage will be automatically reinstated as of the first day of the
Plan Year in which the Prometrix Participant attains age thirty-five (35). Any
new waiver on or after such date shall be subject to the full requirements of
this Appendix.
(iv) Qualified Election. A waiver of a Qualified Joint
and Survivor Annuity or a Qualified Preretirement Survivor Annuity. The waiver
must be in writing and must be consented to by the Prometrix Participant's
Spouse. The Spouse's consent to a waiver must be witnessed by a Plan
representative or notary public. Notwithstanding this consent requirement, if
the Prometrix Participant establishes to the satisfaction of a Plan
representative that such written consent may not be obtained because there is no
Spouse or the Spouse cannot be located, a waiver will be deemed a Qualified
Election. Any consent necessary under this paragraph will be valid only with
respect to the Spouse who signs the consent, or in the event of a deemed
Qualified Election, the designated Spouse. Additionally, a revocation of a prior
waiver may be made by a Prometrix Participant without the consent of the Spouse
at any time before the commencement of benefits. The number of revocations shall
not be limited.
(v) Qualified Joint and Survivor Annuity. An annuity
for the life of the Prometrix Participant with a survivor annuity for the
remaining life of the Spouse which is fifty percent (50%) or one hundred percent
(100%) of the amount of the annuity payable during the joint lives of the
Prometrix Participant and the Spouse. The annuity shall be the amount of benefit
that can be purchased with the Prometrix Participant's Account balances. The
Prometrix Participant may elect to have such annuity distributed upon attainment
of his or her Normal Retirement Age.
A-4
(vi) Qualified Preretirement Survivor Annuity. An
annuity for the life of the Surviving Spouse of a Prometrix Participant who dies
prior to his or her being entitled to the commencement of benefits and without
selecting an optional form of benefit. This annuity shall be the amount of
benefit which can be purchased with the deceased Prometrix Participant's Account
balance. The Surviving Spouse may elect to have such annuity distributed within
a reasonable period after the Prometrix Participant's death.
(vii) Straight Life Annuity. An annuity payable for the
life of a Prometrix Participant which shall be the amount of benefit that can be
purchased with the Prometrix Participant's Account balance.
A.6-2 WITHDRAWALS FROM PROMETRIX PLAN VOLUNTARY CONTRIBUTIONS
ACCOUNT. A Participant may withdraw all or any portion of his or her Voluntary
Contributions Account accrued under the Prometrix Plan; provided, however, that
no more than two (2) such withdrawals shall be permitted in any twelve (12)
consecutive month period, and provided further, that the Participant must obtain
the consent of his or her Spouse, if any, for amounts withdrawn pursuant to this
Section. Spousal consent shall be obtained no earlier than the beginning of the
ninety (90) day period that ends on the date on which the withdrawal is to be
made. The consent must be in writing, must acknowledge the effect of the
withdrawal, and must be witnessed by a Plan representative or notary public.
A.6-3 DISABILITY. A Prometrix Participant shall be entitled to
receive a distribution from the Plan upon a "Disability." For this purpose,
"Disability" shall mean the inability to engage in any substantial, gainful
activity by reason of any medically determinable physical or mental impairment
that can be expected to result in death or which has lasted or can be expected
to last for a continuous period of not less than twelve (12) months, or such
other standard as expressed in Code Section 22(e)(3) or any successor provision.
The permanence and degree of such impairment shall be supported by medical
evidence.
A.7 SPOUSAL CONSENT. All distributions from Prometrix Plan accounts that
may be made pursuant to one or more of the distributable events in Sections 7.12
through 7.14 of the Plan and this Appendix are subject to the Spousal consent
requirements contained in Code Sections 411(a)(11) and 417 and the Regulations
thereunder.
A-5
APPENDIX B
MERGER OF AMRAY/LICO, INC. EMPLOYEE SAVINGS PLAN
The Amray\Lico, Inc. Employee Savings Plan (the "Amray Plan") will be
merged with and into the KLA-Tencor 401(k) Plan (the "KLA-Tencor Plan")
effective on or about July 1, 1998; (the "Amray Merger Date"). The merger of the
Amray Plan and the KLA-Tencor Plan will be effected in accordance with the
following provisions:
B.1 TRANSFER OF ACCOUNT BALANCES. The outstanding account balances under
the Amray Plan will be transferred to the KLA-Tencor Plan through a direct
transfer from the trust fund for the Amray Plan to the Trust Fund for the
KLA-Tencor Plan effected on the Amray Merger Date.
B.2 AMOUNT OF ACCOUNT BALANCE. The account balance credited to each
individual under the Amray Plan immediately prior to the Amray Merger Date will
be credited to the account maintained for such individual under the KLA-Tencor
Plan immediately after the Amray Merger Date. Accordingly, the account balance
maintained under the KLA-Tencor Plan for each individual who was a participant
in the Amray Plan on the Merger Date was, immediately after the Amray Merger
Date, credited with a dollar amount equal to that individual's account balance
under the Amray Plan immediately prior to the Amray Merger Date.
B.3 INVESTMENT OF ACCOUNT BALANCE. The account balances transferred from
the Amray Plan to the KLA-Tencor Plan shall be invested in accordance with each
Participant's new investment directive. In the absence of such directives, the
transferred account balances shall be invested in such Fund or Funds as the
Administrator deems appropriate.
B.4 SERVICE CREDIT. Each Participant in the KLA-Tencor Plan shall, for
eligibility and vesting purposes under the KLA-Tencor Plan, be credited with all
Service credited to such Participant for eligibility and vesting purposes under
the Amray Plan immediately prior to the Merger Date.
B.5 PROTECTED BENEFITS. The terms and provisions of the KLA-Tencor Plan
shall govern the rights, benefits and entitlements of all Participants and any
other individuals who have an interest in any outstanding account balance under
the surviving KLA-Tencor Plan. The terms and provisions of the Amray Plan shall,
as of the Amray Merger Date, be extinguished and cease to have any force or
effect. However, any benefits accrued under the Amray Plan prior to the Amray
Merger Date shall, to the extent those benefits are protected benefits under
Code Section 411(d)(6) (the "Protected Benefits"), be preserved under the
KLA-Tencor Plan and shall not in any way be affected, reduced or eliminated as a
result of the merger of the KLA-Tencor Plan and the Amray Plan. The following
Protected Benefits exist for Participants who held account balances in the Amray
Plan as of the Amray Merger Date (the "Amray Participants"):
B.5-1 DISTRIBUTION FORMS.
(a) The normal form of benefit for Amray Participants shall
be a single lump sum distribution.
(b) If, however, the Participant (or his or her Beneficiary)
elects, subject to the provisions of Section 7.7(a), he or she may choose
distribution in the form of annual installments over a period of ten (10) years.
(c) However, if the balance credited to the Participant's
Accounts at the time distribution is to commence does not exceed (and at the
time of any prior distribution did not exceed) Three Thousand five Hundred
Dollars ($3,500) (or, effective January 1, 1998, Five Thousand Dollars
($5,000)), then the vested balance of those Accounts shall be paid to the
Participant in one (1) lump sum payment.
B.5-2 DISABILITY. An Amray Participant shall be entitled to
receive a distribution from the Plan upon a "Disability." For this purpose,
"Disability" shall mean the inability to engage in any substantial, gainful
activity by reason of any medically determinable physical or mental impairment
that may be expected to result in death or which has lasted or can be expected
to last for a continuous period of not less than twelve (12) months. The
permanence and degree of such impairment shall be supported by medical evidence.
An Amray Participant will be deemed to have a Disability if he or she is
receiving disability benefits under the Social Security Act or Railroad
Retirement Act.
B-2
KLA-TENCOR 401(k) PLAN
PLAN AMENDMENT NO. 1
The KLA-Tencor 401(k) Plan (the "Plan"), as originally effective as of
January 1, 1982, and as most recently restated in its entirety effective as of
July 1, 1997, is hereby amended, effective as of July 1, 1998 as follows:
1. Subsection 2.4(a) of the Plan is hereby amended in its entirety to
read as follows:
"(a) SALARY DEFERRAL CONTRIBUTIONS. Base salary or regular
time hourly wages, overtime, bonus, commissions, shift
differential, payments for paid time off and paid time
off cashouts, payments in lieu of notice, and
termination pay. Notwithstanding the foregoing,
Compensation for purposes of Salary Deferral
Contributions shall not include contributions to any
nonqualified deferred compensation plan sponsored by the
Employer."
2. Section 6.4(d) of the Plan is hereby amended in its entirety to read
as follows:
"(d) If an Excess Amount exists for one or more Participants
under this Plan and any Other Plan for a Limitation
Year, as a result of (1) a reasonable error in
determining the amount of Salary Deferral Contributions
that may be made with respect to any Participant under
the limits of this Section, (2) an allocation of
forfeitures, (3) a reasonable error in estimating a
Participant's annual Section 415 Compensation, or (4)
other facts and circumstances with respect to which the
rules of Regulation Section 1.415-6(b)(6) are available,
then the Excess Amount will be disposed of in the
following manner in accordance with the order indicated
and to the extent necessary to eliminate such excess:
(i) First, the Participant's after-tax employee
contributions (including, if applicable, gains thereon)
under any Other Plan shall be refunded;
(ii) Then, the Participant's share of the
Employer Profit Sharing Contributions (if any) for the
Plan Year coincident with the Limitation Year
(including, if applicable, gains thereon) shall be
reduced. Accordingly, the Employer shall make an
appropriate reduction in the Employer Profit Sharing
Contributions for the calendar quarter(s) for which the
Participant's Employer Profit Sharing Contribution is
reduced.
(iii) Then, any Salary Deferral Contributions
(including, if applicable, the gains thereon) made on
the Participant's behalf which were not
the subject of any Employer Matching Contributions shall
be distributed to the Participant as a current cash
payment, subject to applicable Federal and state
withholding taxes;
(iv) Then, any Salary Deferral Contributions
(including, if applicable, the gains thereon) made on
the Participant's behalf which were entitled to Employer
Matching Contributions shall be distributed to the
Participant as a current cash payment, subject to
applicable Federal and state withholding taxes, and no
Employer Matching Contributions shall be made with
respect to the distributed Salary Deferral
Contributions. Accordingly, the Participant's Employer
Matching Contributions for such Plan Year are to be
reduced as follows:
(A) To the extent the Employer Matching
Contributions have not already been made to the Plan on
the Participant's behalf, the reduction shall be
effected by making an appropriate reduction in the
aggregate amount of Employer Matching Contributions
required for such Plan Year to take into account the
distributed Salary Deferral Contributions no longer
eligible for an Employer Matching Contribution.
(B) To the extent the Employer Matching
Contributions have already been allocated to the
Participant's Employer Matching Contributions Account
for the Plan Year coincident with such Limitation Year,
such Employer Matching Contributions (to the extent
attributable to the distributed Salary Deferral
Contributions) shall, together with the gains thereon
(if applicable), be withdrawn from the Participant's
Employer Matching Contributions Account and reapplied to
the satisfaction of any Employer Matching Contributions
still to be made on behalf of other Participants
eligible for an Employer Matching Contribution for such
Plan Year. Any Employer Matching Contributions withdrawn
from the Participant's Employer Matching Contribution
Account and not so reapplied shall be held unallocated
in a suspense account and shall be used to reduce future
Employer Matching Contributions required to be made for
each succeeding Plan Year until the suspense account is
reduced to zero (0). No profits or losses attributable
to the assets of the Trust shall be allocated to the
suspense account, nor shall any Contributions to the
Plan (other than Salary Deferral Contributions) be made
by the Employer while there is an outstanding balance in
such suspense account. Upon the termination of the Plan,
any outstanding balance in the suspense account shall
revert to the Employer or, if applicable, the
Participating Employer who made that Employer Matching
Contribution to the Trust.
-2-
(v) Finally, the Participant's allocable share of contributions
and forfeitures under any Other Plan shall be reduced in accordance with
the applicable provisions of such Other Plan."
3. Subsection 7.8(e)(vii)(B)(2) of the Plan is hereby amended in its
entirety to read as follows:
"(2) Participants who are not Five Percent Owners and who
attain age seventy and one-half (70-1/2) between January
1, 1996 and December 31, 1998. The first day of April of
the calendar year following the calendar year in which
the earlier of attainment of age seventy and one-half
(70-1/2) or the Participant's Severance Date occurs;
provided, however, that an Employee whose Severance Date
has not occurred may irrevocably elect, in writing, to
defer distribution until that Employee's Severance
Date."
4. Subsection 7.11(a) of the Plan is hereby amended in its entirety to
read as follows:
"(a) The Trustee shall, upon the direction of the
Administrator, make a distribution from a Participant's
Rollover Contributions Account and, if additional
amounts are needed, from a Participant's Salary Deferral
Contributions Account (not including earnings), in the
event a Participant elects and is entitled to a hardship
distribution. A Participant shall be entitled to a
hardship distribution only if the distribution is both
(i) made on account of an immediate and heavy financial
need of the Participant (as defined in paragraph (b)),
and (ii) is necessary to satisfy such financial need (as
defined in paragraph (c))."
5. Except as modified by this Amendment No. 1, all the terms and
conditions of the Plan shall continue in full force and effect.
-3-
IN WITNESS WHEREOF, KLA-Tencor Corporation has caused this instrument to
be executed on its behalf by its duly authorized officer as of this __________
day of December, 1998.
By:
------------------------------------
Its:
-----------------------------------
-4-
KLA-TENCOR 401(k) PLAN
PLAN AMENDMENT NO. 2
The KLA-Tencor 401(k) Plan (the "Plan"), as originally effective as of
January 1, 1982, and as most recently restated in its entirety effective as of
July 1, 1997, and as subsequently amended on July 1, 1998, is hereby further
amended, effective as of February 1, 1999, as follows:
1. Subsection 2.13(a) of the Plan is hereby amended in its entirety to
read as follows:
"(a) Hardship distributions are permitted pursuant to
Section 7.11, provided however, that no more than one (1) such
withdrawal shall be permitted per Plan Year."
2. Subsection 7.11(a) of the Plan is hereby amended in its entirety to
read as follows:
"(a) The Trustee shall, upon a qualifying hardship of a
Participant (as specified in this Section), and upon the
direction of the Administrator, make a distribution from the
Participant's Salary Deferral Contributions Account (not
including earnings), if any, and if such Account is not
maintained, or if the account balance of such Account is not
sufficient for the distribution, the Trustee shall then make
such distribution from the Participant's Rollover Contributions
Account. A Participant shall be entitled to a hardship
distribution only if the distribution is both (i) made on
account of an immediate and heavy financial need of the
Participant (as defined in paragraph (b)), and (ii) is necessary
to satisfy such financial need (as defined in paragraph (c))."
3. Except as modified by this Amendment No. 2, all the terms and
conditions of the Plan shall continue in full force and effect.
IN WITNESS WHEREOF, KLA-Tencor Corporation has caused this instrument to
be executed on its behalf by its duly authorized officer as of this __________
day of March, 1999.
By:
------------------------------------
Its:
-----------------------------------
KLA-TENCOR 401(k) PLAN
PLAN AMENDMENT NO. 3
The KLA-Tencor 401(k) Plan (the "Plan"), as originally effective as of
January 1, 1982, and as most recently restated in its entirety effective as of
July 1, 1997, and as subsequently amended on two separate occasions, is hereby
further amended, effective as of the dates specified below, as follows:
1. Subsection 2.2(c) of the Plan is hereby amended, effective as of July
1, 1999, by adding the following new paragraph to the end thereof:
"(x) Employees eligible to participate in a pension plan sponsored by
(A) the government of a country other than the United States, or
(B) a private entity approved under the laws of a country other
than the United States."
2. Subsection 2.6(b) of the Plan is hereby amended in its entirety,
effective as of July 6, 1998, to read as follows:
"Matching Contributions. In a discretionary amount to be determined by
the Board of Directors of the Company or, at the election of the Board
of Directors of the Company, the Plan Committee. If, during the Plan
Year, a Participant's Salary Deferral Contribution rate changes to an
amount above or below any threshold at which such contributions are
matched, Employer Matching Contributions will change prospectively with
the change in a Participant's Salary Deferral Contributions."
3. Subsection 13.1(a) of the Plan is hereby amended in its entirety,
effective as of July 6, 1998, to read as follows:
"The Administrator, acting through the Board of Directors of the Company
(the "Board"), shall have full power and authority to amend at any time
or times the provisions of the Plan, either prospectively or
retroactively, to such extent and in such manner as the Board shall deem
advisable, in accordance with its normally established procedures. The
Board may delegate such power, in whole or in part, to one or more
committees (comprised of officers or other managerial personnel of the
Employer) to whom administrative responsibilities may be delegated under
the Plan. The Plan Committee is expressly given the authority to adopt
and to provide a certificate evidencing the execution of any amendment
to the Plan which satisfies one of the following requirements:
(i) The amendment is designed to clarify any provision of
the Plan; or
(ii) The amendment is designed to bring the Plan into
compliance with applicable Federal or state law; or
(iii) The amendment does not have a significant financial
impact on the Plan or the Company;
provided, however, that any Plan amendment which would have a
substantive effect on the rights and obligations of any Participating
Employer or the Plan shall be approved or ratified by the Board."
4. Except as modified by this Amendment No. 3, all the terms and
conditions of the Plan shall continue in full force and effect.
IN WITNESS WHEREOF, KLA-Tencor Corporation has caused this instrument to
be executed on its behalf by its duly authorized officer as of this __________
day of July, 1999.
By:
------------------------------------
Its:
-----------------------------------
-2-
KLA-TENCOR 401(k) PLAN
AMENDMENT NO. 4
The KLA-Tencor 401(k) Plan (the "Plan"), as originally effective as of
January 1, 1982, as most recently restated in its entirety effective as of July
1, 1997, and as subsequently amended on three separate occasions, is hereby
further amended, effective as of January 1, 2000, as follows:
1. The following subparagraph (x) is hereby added to paragraph (c)
of Section 2.2, ELIGIBILITY:
"(x) individuals who are not on the United States payroll of
the Company or of a Participating Employer."
2. Paragraphs (a) and (b) of Section 2.4, COMPENSATION, are amended
in their entirety, to read as follows:
"(a) SALARY DEFERRAL CONTRIBUTIONS. Base salary or regular
time hourly wages, overtime, bonus, commissions, shift
differential, payments for paid time off and paid time
off cashouts, payments in lieu of notice and termination
pay. Compensation for purposes of Salary Deferral
Contributions shall not include contributions to any
nonqualified deferred compensation plan sponsored by the
Employer or any Cost of Living Allowance, as defined in
the policies and procedures of the Company.
(b) PROFIT SHARING CONTRIBUTIONS. Base salary or regular
time hourly wages. Compensation for purposes of Profit
Sharing Contributions shall not include any Cost of
Living Allowance, as defined in the policies and
procedures of the Company."
3. Except as modified by this Amendment No. 4, all the terms and
conditions of the Plan shall continue in full force and effect.
IN WITNESS WHEREOF, KLA-Tencor Corporation has caused this instrument to
be executed on its behalf by its duly authorized officer as of this __________
day of May, 2000.
By:
------------------------------------
Its:
-----------------------------------