Exhibit 10.1
NBT BANCORP INC. 401(K) and Employee Stock Ownership Plan
made as of January 1, 2001
NBT BANCORP, INC. 401(K) AND EMPLOYEE STOCK OWNERSHIP PLAN
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
ARTICLE II
ADMINISTRATION
2.1 POWERS AND RESPONSIBILITIES OF THE EMPLOYER............................................ 25
2.2 DESIGNATION OF ADMINISTRATIVE AUTHORITY................................................ 26
2.3 ALLOCATION AND DELEGATION OF RESPONSIBILITIES.......................................... 26
2.4 POWERS AND DUTIES OF THE ADMINISTRATOR................................................. 26
2.5 RECORDS AND REPORTS.................................................................... 27
2.6 APPOINTMENT OF ADVISERS................................................................ 28
2.7 PAYMENT OF EXPENSES.................................................................... 28
2.8 CLAIMS PROCEDURE....................................................................... 28
ARTICLE III
ELIGIBILITY
3.1 INITIAL ELIGIBILITY TO BECOME PARTICIPANT............................................. 30
3.2 DETERMINATION OF ELIGIBILITY........................................................... 30
3.3 TERMINATION OF ELIGIBILITY............................................................. 30
3.4 ERRONEOUS OMISSION OF ELIGIBLE EMPLOYEE................................................ 31
3.5 ERRONEOUS INCLUSION OF INELIGBLE EMPLOYEE.............................................. 31
3.6 ELECTION NOT TO PARTICIPATE............................................................ 31
3.7 COMPLIANCE WITH USERRA................................................................. 31
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ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER CONTRIBUTION.......................................... 32
4.2 PARTICIPANT'S SALARY REDUCTION ELECTION................................................ 33
4.3 TIME OF PAYMENT OF EMPLOYER CONTRIBUTION............................................... 36
4.4 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS................................... 36
4.5 ACTUAL DEFERRAL PERCENTAGE TESTS....................................................... 40
4.6 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS......................................... 41
4.7 ACTUAL CONTRIBUTION PERCENTAGE TESTS................................................... 42
4.8 ADJUSTMENT TO ACTUAL CONTRIBUTION PERCENTAGE TESTS..................................... 44
4.9 MAXIMUM ANNUAL ADDITIONS............................................................... 46
4.10 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS.............................................. 49
4.11 TRANSFERS FROM QUALIFIED PLANS......................................................... 51
4.12 DIRECTED INVESTMENT ACCOUNT............................................................ 52
ARTICLE V
FUNDING AND INVESTMENT POLICY
5.1 INVESTMENT POLICY...................................................................... 54
5.2 TRANSACTIONS INVOLVING COMPANY STOCK................................................... 54
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ARTICLE VI
VALUATIONS
6.1 VALUATION OF THE TRUST FUND............................................................ 56
6.2 METHOD OF VALUATION.................................................................... 56
ARTICLE VII
DETERMINATION AND DISTRIBUTION OF BENEFITS
7.1 DETERMINATION OF BENEFITS UPON RETIREMENT.............................................. 57
7.2 DETERMINATION OF BENEFITS UPON DEATH................................................... 57
7.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY....................................... 58
7.4 DETERMINATION OF BENEFITS UPON TERMINATION............................................. 58
ARTICLE VIII
PAYMENT OR DISTRIBUTION OF BENEFIT
8.1 TIME FOR DISTRIBUTION OF BENEFITS...................................................... 63
8.2 MANNER OF DISTRIBUTION................................................................. 63
8.3 DEFERRED DISTRIBUTION; ALTERNATIVE METHODS OF DISTRIBUTION............................ 65
8.4 DISTRIBUTIONS TO MARRIED PARTICIPANTS.................................................. 67
8.5 TRANSITIONAL RULE...................................................................... 68
8.6 NOTICE OF DEATH RETIREMENTS OF TERMINATION OF SERVICES................................. 68
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8.7 PAYMENT OF LUMP SUM ................................................................... 68
8.8 PAYMENT OF INSTALLMENTS................................................................ 68
8.9 DISTRIBUTION OF ANNUITY CONTRACTS...................................................... 68
8.10 DISTRIBUTION TO QUALIFIED RETIRMENT PLAN............................................... 69
8.11 CESSATION OF INTEREST.................................................................. 69
8.12 MISSING PERSONS........................................................................ 69
8.13 MAILING OF BENEFITS.....................................................................69
8.14 MINORS OF INCOPETENTS...................................................................69
8.15 HOW PLAN BENEFIT WILL BE DISTRIBUTED....................................................70
8.16 RIGHT OF FIRST REFUSALS.................................................................71
8.17 STOCK CERTIFICATE LEGEND................................................................71
8.18 PUT OPINION.............................................................................72
8.19 QUALIFIED DOMESTIC RELATIONS ORDER DISTRIBUTION.........................................73
ARTICLE IX
WITHDRAWALS AND TRANSFERS FROM ACCOUNTS
9.1 ADVANCE DISTRIBUTION FOR HARDSHIP...................................................... 74
9.2 WITHDRAWALS FROM ROLLOVER CONTRIBUTION ACCOUNT......................................... 75
9.3 WITHDRAWALS FROM EMPLOYER CONTRIBUTION ACCOUNTS AFTER AGE FIFTY-NINE AND ONE-HALF...... 75
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ARTICLE X
TRUSTEE
10.1 BASIC RESPONSIBILITES OF THE TRUSTEE................................................... 77
10.2 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE.............................................78
10.3 OTHER POWERS OF THE TRUSTEE.............................................................79
10.4 LOAN TO PARTICIPANTS....................................................................81
10.5 VOTING COMPANY STOCK....................................................................83
10.6 DUTIES OF THE TRUSTEE REGARDING PAYMENTS................................................84
10.7 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES...........................................84
10.8 ANNUAL REPORT OF THE TRUSTEE............................................................85
10.9 AUDIT...................................................................................85
10.10 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE..........................................86
10.11 TRANSFER OF INTEREST....................................................................87
10.12 DIRECT ROLLOVER.........................................................................87
ARTICLE XI
AMENDMENT, TERMINATION & MERGERS
11.1 AMENDMENT.............................................................................. 89
11.2 TERMINATION............................................................................ 89
11.3 MERGER OF CONSOLIDATION................................................................ 90
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ARTICLE XII
TOP HEAVY
12.1 TOP HEAVY PLAN EQUIRMENTS.................................................................91
12.2 DETERMINATION OF TOP HEAVY STATUS.........................................................91
ARTICLE XIII
MISCELLANEOUS
13.1 PARTICIPANT RIGHTS.......................................................................95
13.2 ALIENATION...............................................................................95
13.3 CONSTRICTION OF PLAN.....................................................................96
13.4 GENDER & NUMBER..........................................................................96
13.5 LEGAL ACTION.............................................................................96
13.6 PROHIBITION AGAINST DIVERSION OF FUND....................................................96
13.7 BONDING..................................................................................97
13.8 EMPLOYEE'S & TRUSTEE'S PROTECTIVE CLAUSE.................................................97
13.9 INSURER'S PROTECTIVE CLAUSE..............................................................97
13.10 RECEIPT & RELEASE FOR PAYMENTS...........................................................97
13.11 ACTION BY THE EMPLOYER...................................................................98
13.12 NAMED FIDUCIARIES & ALLOCATION OF RESPONSIBILITY.........................................98
13.13 HEADINGS.................................................................................98
13.14 APPROVAL BY INTERNAL REVENUE SERVICE.....................................................99
13.15 UNIFORMITY...............................................................................99
13.16 SECURITIES & EXCHANGE COMMISSION APPROVAL................................................99
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13.17 SPECIAL DISTRIBUTION FORMS...............................................................99
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NBT BANCORP, INC. 401(K) AND EMPLOYEE STOCK OWNERSHIP PLAN
THIS AGREEMENT, hereby made and entered into as of the 1st day of
January, 2001, by and between NBT Bancorp, Inc. (herein referred to as the
"Employer") and NBT Bank, N.A. (herein referred to as the "Trustee").
W I T N E S E T H:
WHEREAS, the Employer heretofore established an Employee Stock
Ownership Plan and Trust effective January 1, 1979 (hereinafter called the
"Effective Date"), known as the NBT Bancorp, Inc. Employee Stock Ownership Plan
and, effective April 1, 1994, established a tax deferred savings plan, known as
the NBT Bancorp 401(k) Retirement Plan. Effective January 1, 1997, the NBT
Bancorp 401(k) Retirement Plan was merged into the NBT Bancorp, Inc. Employee
Stock Ownership Plan in conjunction with this merger in order to comply with the
Uniformed Services Employment and Reemployment Rights Act of 1994 ("USERRA"),
the Uruguay Round Agreements Act ("GATT"), the Small Business Job Protection Act
of 1996 ("SBJPA"), the Taxpayer Relief Act of 1997 ("TRA `97"), and the IRS
Restructuring and Reform Act of 1998 ("IRRA") the plan was amend and restated to
incorporate all necessary language and changes. That plan was thereinafter known
as the NBT Bancorp, Inc. 401(k) and Employee Stock Ownership Plan (the "Plan").
This Plan is now being amended to incorporate the merger of the BSB Bank & Trust
Company 401(k) Savings Plan, LA Bank, N.A. Profit Sharing/401(k) Plan, Pioneer
American Bank N.A. 401(k) Plan and the M. Griffith, Inc. Employee Savings Plan.
Further, in order to comply with legislative and regulatory requirements imposed
subsequent to LA Bank, N.A. Profit Sharing/401(k) Plan's, Pioneer American Bank
N.A. 401(k) Plan's and the M. Griffith, Inc. Employee Savings Plan's last
restatement the effective date with regard to such merged plans shall be January
1, 1997. The Plan contains trust provisions which were formerly contained in a
separate trust document. This Plan was established by the Employer in
recognition of the contribution made to its successful operation by its
employees and for the exclusive benefit of its eligible employees; and
WHEREAS, contributions to the Plan will be made by the Employer and
such contributions made to the trust will be invested primarily in the capital
stock of the Employer, and in other investments, where applicable, as directed
by the Employee.
NOW, THEREFORE, effective January 1, 2001, except as otherwise
provided, the Employer and the Trustee in accordance with the provisions of the
Plan pertaining to amendments thereof, hereby amend the Plan in its entirety and
restate the Plan to provide as follows:
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ARTICLE I
DEFINITIONS
1.1 "Account" means the account maintained on the books of the Plan for each
Participant and includes the Participating Elective Contribution Account,
Participating Employer Non-Elective Contribution Account, and if applicable,
Rollover Account
1.2 "Act" means the Employee Retirement Income Security Act of 1974, as it
may be amended from time to time.
1.3 "Administrator" means the Employer unless another person or entity has been
designated by the Employer pursuant to Section 2.2 to administer the Plan on
behalf of the Employer.
1.4 "Affiliated Employer" means any corporation which is a member of a
controlled group of corporations (as defined in Code Section 414(b)) which
includes the Employer; any trade or business (whether or not incorporated) which
is under common control (as defined in Code Section 414(c)) with the Employer;
any organization (whether or not incorporated) which is a member of an
affiliated service group (as defined in Code Section 414(m)) which includes the
Employer; and any other entity required to be aggregated with the Employer
pursuant to Regulations under Code Section 414(o).
1.5 "Aggregate Account" means, with respect to each Participant, the value of
all accounts maintained on behalf of a Participant, whether attributable to
Participating Employer or Employee contributions, subject to the provisions of
Section 12.2.
1.6 "Annuity Starting Date" means the first day of the first period for
which an amount is received as an annuity.
1.7 "Anniversary Date" means December 31.
1.8 "Beneficiary" means the person to whom the share of a deceased Participant's
total account is payable, subject to the restrictions of Sections 7.2 and
Article 8.
1.9 "Board of Directors" means the Board of Directors of the Employer, as from
time to time constituted, or any committee thereof which is authorized to act on
behalf of the Board of Directors.
1.10 "Claimant" has the meaning set forth in Section 2.8.
1.11 "Code" means the Internal Revenue Code of 1986, as amended or replaced
from time to time.
1.12 "Company Stock" means common stock issued by the Employer (or by a
corporation which is a member of the controlled group of corporations of which
the Employer is a member) which is readily tradeable on an established
securities market. If there is no common stock which meets the foregoing
requirement, the term "Company Stock" means common stock issued by the Employer
(or by a corporation which is a member of the same controlled group) having a
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combination of voting power and dividend rights equal to or in excess of: (A)
that class of common stock of the Employer (or of any other such corporation)
having the greatest voting power, and (B) that class of common stock of the
Employer (or of any other such corporation) having the greatest dividend rights.
Noncallable preferred stock shall be deemed to be "Company Stock" if such stock
is convertible at any time into stock which constitutes "Company Stock"
hereunder and if such conversion is at a conversion price which (as of the date
of the acquisition by the Trust) is reasonable. For purposes of the preceding
sentence, pursuant to Regulations, preferred stock shall be treated as
noncallable if after the call there will be a reasonable opportunity for a
conversion which meets the requirements of the preceding sentence.
1.13 "Company Stock Account" means the account of a Participant which is
credited with the shares of Company Stock purchased and paid for by the Trust
Fund or contributed to the Trust Fund.
A separate accounting shall be maintained with respect to that portion of the
Company Stock Account attributable to Elective Contributions and Non-Elective
Contributions.
1.14 "Compensation" with respect to any Participant means remuneration paid by
the Participating Employer to a Participant in the form of base salary or wages,
commissions, overtime, and cash bonuses, excluding distributions from
non-qualified plans, income from the exercise of stock options, and severance
payments. Compensation must be determined without regard to any rules under Code
Section 3401(a) that limit the remuneration included in wages based on the
nature or location of the employment or the services performed (such as the
exception for agricultural labor in Code Section 3401(a)(2)).
For purposes of this Section, the determination of Compensation shall be made
by:
(a) including amounts which are contributed by the Employer
pursuant to a salary reduction agreement and which are not
includible in the gross income of the Participant under Code
Sections 125, 123(f), 402(e)(3), 402(h)(1)(B), 403(b) or
457(b), and Employee contributions described in Code Section
414(h)(2) that are treated as Employer contributions.
For a Participant's initial year of participation, Compensation shall be
recognized as of such Employee's effective date of participation pursuant to
Section 3.2.
Compensation in excess of $170,000 shall be disregarded. Such amount shall be
adjusted for increases in the cost of living in accordance with Code Section
401(a)(17), except that the dollar increase in effect on January 1 of any
calendar year shall be effective for the Plan Year beginning with or within such
calendar year. For any short Plan Year the Compensation limit shall be an amount
equal to the Compensation limit for the calendar year in which the Plan Year
begins multiplied by the ratio obtained by dividing the number of full months in
the short Plan Year by twelve (12).
If, in connection with the adoption of this amendment and restatement, the
definition of Compensation has been modified, then, for Plan Years prior to the
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Plan Year which includes the adoption date of this amendment and restatement,
Compensation means compensation determined pursuant to the Plan then in effect.
1.15 "Deferred Compensation" with respect to any Participant means the amount of
the Participant's total Compensation which has been contributed to the Plan in
accordance with the Participant's deferral election pursuant to Section 4.2
excluding any such amounts distributed as excess "annual additions" pursuant to
Section 4.10(a).
1.16 "Early Retirement Date" means the first day of the month (prior to the
Normal Retirement Date) coinciding with or following the date on which a
Participant or Former Participant attains age 55, and has completed at least 5
Years of Service with the Participating Employer (Early Retirement Age). A
Participant shall become fully Vested upon satisfying this requirement if still
employed at his Early Retirement Age.
For Participants in the L.A. Bank, N.A., 401(k) Profit Sharing Plan on December
31, 2000, "Early Retirement Date" means the first day of the month coinciding
with or following the date on which a Participant or Former Participant attains
age 60.
A Former Participant who terminates employment after satisfying the service
requirement for Early Retirement and who thereafter reaches the age requirement
contained herein shall be entitled to receive his benefits under this Plan.
1.17 "Elective Contribution" means the Participating Employer contributions to
the Plan of Deferred Compensation excluding any such amounts distributed as
excess "annual additions" pursuant to Section 4.10(a). In addition, any Employer
Qualified Non-Elective Contribution made pursuant to Section 4.6(b) which is
used to satisfy the "Actual Deferral Percentage" tests shall be considered an
Elective Contribution for purposes of the Plan. Any contributions deemed to be
Elective Contributions (whether or not used to satisfy the "Actual Deferral
Percentage" tests) shall be subject to the requirements of Sections 4.2(b) and
4.2(c) and shall further be required to satisfy the nondiscrimination
requirements of Regulation 1.401(k)-1(b)(5), the provisions of which are
specifically incorporated herein by reference.
1.18 "Eligible Distribution" has the meaning set forth in Section 8.12.
1.19 "Eligible Employee" means any Employee except as provided below.
Employees who are Leased Employees within the meaning of Code Sections 414(n)(2)
and 414(o)(2) shall not be eligible to participate in this Plan.
Employees whose employment is governed by the terms of a collective bargaining
agreement between Employee representatives (within the meaning of Code Section
7701(a)(46)) and the Participating Employer under which retirement benefits were
the subject of good faith bargaining between the parties will not be eligible to
participate in this Plan unless such agreement expressly provides for coverage
in this Plan.
Employees who are nonresident aliens (within the meaning of Code Section
7701(b)(1)(B)) and who receive no earned income (within the meaning of Code
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Section 911(d)(2)) from the Participating Employer which constitutes income from
sources within the United States (within the meaning of Code Section 861(a)(3))
shall not be eligible to participate in this Plan.
Employees of Affiliated Employers shall not be eligible to participate in this
Plan unless such Affiliated Employers have specifically adopted this Plan in
accordance with Article XIV and are Participating Employers and then only to the
extent provided in the Adoption Agreement applicable to such Affiliated
Employer.
1.20 "Eligible Plan" has the meaning set forth in Section 10.12.
1.21 "Eligible Recipient" has the meaning set forth in Section 10.12.
1.22 "Employee" means any person who is employed by a Participating Employer or
other Affiliated Employer, but excludes any person who is an independent
contractor. Employee shall include Leased Employees within the meaning of Code
Sections 414(n)(2) and 414(o)(2) unless such Leased Employees are covered by a
plan described in Code Section 414(n)(5) and such Leased Employees do not
constitute more than 20% of the recipient's non-highly compensated work force.
1.23 "Employer" means NBT Bancorp, Inc. and any successor which shall maintain
this Plan. The Employer is a corporation with principal offices in the state of
New York. For purposes of applying Code Sections 401, 410, 411, 415 and 416, all
employees of the Participating Employers and all Affiliated Employers whether or
not they have adopted the Plan, shall be treated as employed by a single
employer
1.24 "Excess Aggregate Contributions" means, with respect to any Plan Year, the
excess of the aggregate amount of the Participating Employer matching
contributions made pursuant to Section 4.1(b) and any qualified non-elective
contributions or elective deferrals taken into account pursuant to Section
4.7(c) on behalf of Highly Compensated Participants for such Plan Year, over the
maximum amount of such contributions permitted under the limitations of Section
4.7(a).
1.25 "Excess Contributions" means, with respect to a Plan Year, the excess of
Elective Contributions used to satisfy the "Actual Deferral Percentage" tests
made on behalf of Highly Compensated Participants for the Plan Year over the
maximum amount of such contributions permitted under Section 4.5(a). Excess
Contributions shall be treated as an "annual addition" pursuant to Section
4.9(b).
1.26 "Excess Deferred Compensation" means, with respect to any taxable year of a
Participant, the excess of the aggregate amount of such Participant's Deferred
Compensation and the elective deferrals pursuant to Section 4.2(f) actually made
on behalf of such Participant for such taxable year, over the dollar limitation
provided for in Code Section 402(g), which is incorporated herein by reference.
Excess Deferred Compensation shall be treated as an "annual addition" pursuant
to Section 4.9(b) when contributed to the Plan unless distributed to the
affected Participant not later than the first April 15th following the close of
the Participant's taxable year. Additionally, for purposes of Sections 12.2 and
4.4(h), Excess Deferred Compensation shall continue to be treated as
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Participating Employer contributions even if distributed pursuant to Section
4.2(f). However, Excess Deferred Compensation of Non-Highly Compensated
Participants is not taken into account for purposes of Section 4.5(a) to the
extent such Excess Deferred Compensation occurs pursuant to Section 4.2(d).
1.27 "ESOP" means an employee stock ownership plan that meets the requirements
of Code Section 4975(e)(7) and Regulation 54.4975-11.
1.28 "Fiduciary" means any person who (a) exercises any discretionary authority
or discretionary control respecting management of the Plan or exercises any
authority or control respecting management or disposition of its assets, (b)
renders investment advice for a fee or other compensation, direct or indirect,
with respect to any monies or other property of the Plan or has any authority or
responsibility to do so, or (c) has any discretionary authority or discretionary
responsibility in the administration of the Plan, including, but not limited to,
the Trustee, the Participating Employer and its representative body, and the
Administrator.
1.29 "Fiscal Year" means the Participating Employer's accounting year of 12
months commencing on January 1st of each year and ending the following December
31st.
1.30 "Forfeiture" means that portion of a Participant's Account that is not
Vested, and occurs on the earlier of:
(a) the distribution of the entire Vested portion of a Terminated
Participant's Account, or
(b) the last day of the Plan Year in which the Participant incurs
five (5) consecutive 1-Year Breaks in Service.
Furthermore, for purposes of paragraph (a) above, in the case of a Terminated
Participant whose Vested benefit is zero, such Terminated Participant shall be
deemed to have received a distribution of his Vested benefit upon his
termination of employment. Restoration of such amounts shall occur pursuant to
Section 7.4(f)(2). In addition, the term Forfeiture shall also include amounts
deemed to be Forfeitures pursuant to any other provision of this Plan.
1.31 "Former Participant" means a person who has been a Participant, but who
has ceased to be a Participant for any reason.
1.32 "415 Compensation" with respect to any Participant means such Participant's
wages as defined in Code Section 3401(a) and all other payments of compensation
by the Participating Employer (in the course of the Participating Employer's
trade or business) for a Plan Year for which the Participating Employer is
required to furnish the Participant a written statement under Code Sections
6041(d), 6051(a)(3) and 6052. "415 Compensation" must be determined without
regard to any rules under Code Section 3401(a) that limit the remuneration
included in wages based on the nature or location of the employment or the
services performed (such as the exception for agricultural labor in Code Section
3401(a)(2)).
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If, in connection with the adoption of this amendment and restatement, the
definition of "415 Compensation" has been modified, then, for Plan Years prior
to the Plan Year which includes the adoption date of this amendment and
restatement, "415 Compensation" means compensation determined pursuant to the
Plan then in effect.
Effective January 1, 1998, the determination of "415 Compensation" shall be made
by including amounts which are contributed by the Participating Employer
pursuant to a salary reduction agreement and which are not includible in the
gross income of the Participant under Code Sections 125, 402(e)(3),
402(h)(1)(B), 403(b) or 457(b), and Employee contributions described in Code
Section 414(h)(2) that are treated as Participating Employer contributions.
1.33 "414(s) Compensation" with respect to any Participant means such
Participant's "415 Compensation" paid during a Plan Year. The amount of "414(s)
Compensation" with respect to any Participant shall include "414(s)
Compensation" for the entire twelve (12) month period ending on the last day of
such Plan Year, except that "414(s) Compensation" shall only be recognized for
that portion of the Plan Year during which an Employee was a Participant in the
Plan.
For purposes of this Section, the determination of "414(s) Compensation" shall
be made by including amounts which are contributed by the Participating Employer
pursuant to a salary reduction agreement and which are not includible in the
gross income of the Participant under Code Sections 125, 402(e)(3),
402(h)(1)(B), 403(b) or 457(b), and Employee contributions described in Code
Section 414(h)(2) that are treated as Participating Employer contributions.
"414(s) Compensation" in excess of $150,000 shall be disregarded. Such amount
shall be adjusted for increases in the cost of living in accordance with Code
Section 401(a)(17), except that the dollar increase in effect on January 1 of
any calendar year shall be effective for the Plan Year beginning with or within
such calendar year. For any short Plan Year the "414(s) Compensation" limit
shall be an amount equal to the "414(s) Compensation" limit for the calendar
year in which the Plan Year begins multiplied by the ratio obtained by dividing
the number of full months in the short Plan Year by twelve (12).
If, in connection with the adoption of this amendment and restatement, the
definition of "414(s) Compensation" has been modified, then, for Plan Years
prior to the Plan Year which includes the adoption date of this amendment and
restatement, "414(s) Compensation" means compensation determined pursuant to the
Plan then in effect.
1.34 "Highly Compensated Employee" means an Employee described in Code Section
414(q) and the Regulations thereunder, and generally means an Employee who
performed services for the Participating Employer during the "determination
year" and is in one or more of the following groups:
(a) Employees who at any time during the "determination year" or
"look-back year" were "five percent owners" of the Participating Employer.
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(b) Employees who received "415 Compensation" during the "look-back
year" from the Participating Employer in excess of $80,000.
The "determination year" shall be the Plan Year for which testing
is being performed, and the "look-back year" shall be the immediately preceding
twelve-month period.
For purposes of this Section, the determination of "415
Compensation" shall be made by including amounts which are contributed by the
Participating Employer pursuant to a salary reduction agreement and which are
not includible in the gross income of the Participant under Code Sections 125,
402(e)(3), 402(h)(1)(B), 403(b) or 457(b), and Employee contributions described
in Code Section 414(h)(2) that are treated as Participating Employer
contributions. Additionally, the dollar threshold amount specified in (b) above
shall be adjusted at such time and in the same manner as under Code Section
415(d), except that the base period shall be the calendar quarter ending
September 30, 1996.
In determining who is a Highly Compensated Employee, all Affiliated
Employers shall be taken into account as a single employer and Leased Employees
within the meaning of Code Sections 414(n)(2) and 414(o)(2) shall be considered
Employees unless such Leased Employees are covered by a plan described in Code
Section 414(n)(5) and are not covered in any qualified plan maintained by the
Employer. The exclusion of Leased Employees for this purpose shall be applied on
a uniform and consistent basis for all of the Employer's retirement plans.
Highly Compensated Former Employees shall be treated as Highly Compensated
Employees without regard to whether they performed services during the
"determination year."
1.35 "Highly Compensated Former Employee" means a former Employee who had a
separation year prior to the "determination year" and was a Highly Compensated
Employee in the year of separation from service or in any "determination year"
after attaining age 55. Notwithstanding the foregoing, an Employee who separated
from service prior to 1987 will be treated as a Highly Compensated Former
Employee only if during the separation year (or year preceding the separation
year) or any year after the Employee attains age 55 (or the last year ending
before the Employee's 55th birthday), the Employee either received "415
Compensation" in excess of $50,000 or was a "five percent owner." For purposes
of this Section, "determination year," "415 Compensation" and "five percent
owner" shall be determined in accordance with Section 1.30. Highly Compensated
Former Employees shall be treated as Highly Compensated Employees. The method
set forth in this Section for determining who is a "Highly Compensated Former
Employee" shall be applied on a uniform and consistent basis for all purposes
for which the Code Section 414(q) definition is applicable.
1.36 "Highly Compensated Participant" means any Highly Compensated Employee
who is eligible to participate in the Plan.
1.37 "Hour of Service" means (1) each hour for which an Employee is directly or
indirectly compensated or entitled to compensation by the Participating Employer
for the performance of duties (these hours will be credited to the Employee for
the computation period in which the duties are performed); (2) each hour for
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which an Employee is directly or indirectly compensated or entitled to
compensation by the Participating Employer (irrespective of whether the
employment relationship has terminated) for reasons other than performance of
duties (such as vacation, holidays, sickness, jury duty, disability, lay-off,
military duty or leave of absence) during the applicable computation period
(these hours will be calculated and credited pursuant to Department of Labor
regulation 2530.200b-2 which is incorporated herein by reference); (3) each hour
for which back pay is awarded or agreed to by the Participating Employer without
regard to mitigation of damages (these hours will be credited to the Employee
for the computation period or periods to which the award or agreement pertains
rather than the computation period in which the award, agreement or payment is
made). The same Hours of Service shall not be credited both under (1) or (2), as
the case may be, and under (3).
Notwithstanding the above, (i) no more than 501 Hours of Service are required to
be credited to an Employee on account of any single continuous period during
which the Employee performs no duties (whether or not such period occurs in a
single computation period); (ii) an hour for which an Employee is directly or
indirectly paid, or entitled to payment, on account of a period during which no
duties are performed is not required to be credited to the Employee if such
payment is made or due under a plan maintained solely for the purpose of
complying with applicable worker's compensation, or unemployment compensation or
disability insurance laws; and (iii) Hours of Service are not required to be
credited for a payment which solely reimburses an Employee for medical or
medically related expenses incurred by the Employee.
For purposes of this Section, a payment shall be deemed to be made by or due
from the Participating Employer regardless of whether such payment is made by or
due from the Participating Employer directly, or indirectly through, among
others, a trust fund, or insurer, to which the Participating Employer
contributes or pays premiums and regardless of whether contributions made or due
to the trust fund, insurer, or other entity are for the benefit of particular
Employees or are on behalf of a group of Employees in the aggregate.
For purposes of this Section, Hours of Service will be credited for employment
with other Affiliated Employers. The provisions of Department of Labor
regulations 2530.200b-2(b) and (c) are incorporated herein by reference.
1.38 "Income" means the income or losses allocable to Excess Deferred
Compensation, Excess Contributions or Excess Aggregate Contributions which
amount shall be allocated in the same manner as income or losses are allocated
pursuant to Section 4.4(d).
1.39 "Investment Manager" means an entity that (a) has the power to manage,
acquire, or dispose of Plan assets and (b) acknowledges fiduciary responsibility
to the Plan in writing. Such entity must be a person, firm, or corporation
registered as an investment adviser under the Investment Advisers Act of 1940, a
bank, or an insurance company.
17
1.40 "Key Employee" means an Employee as defined in Code Section 416(i) and the
Regulations thereunder. Generally, any Employee or former Employee (as well as
each of his Beneficiaries) is considered a Key Employee if he, at any time
during the Plan Year that contains the "Determination Date" or any of the
preceding four (4) Plan Years, has been included in one of the following
categories:
(a) an officer of the Participating Employer (as that term is
defined within the meaning of the Regulations under Code
Section 416) having annual "415 Compensation" greater than 50
percent of the amount in effect under Code Section
415(b)(1)(A) for any such Plan Year.
(b) one of the ten employees having annual "415 Compensation" from
the Participating Employer for a Plan Year greater than the
dollar limitation in effect under Code Section 415(c)(1)(A)
for the calendar year in which such Plan Year ends and owning
(or considered as owning within the meaning of Code Section
318) both more than one-half percent interest and the largest
interests in the Participating Employer.
(c) a "five percent owner" of the Participating Employer. "Five
percent owner" means any person who owns (or is considered as
owning within the meaning of Code Section 318) more than five
percent (5%) of the outstanding stock of the Participating
Employer or stock possessing more than five percent (5%) of
the total combined voting power of all stock of the
Participating Employer or, in the case of an unincorporated
business, any person who owns more than five percent (5%) of
the capital or profits interest in the Participating Employer.
In determining percentage ownership hereunder, employers that
would otherwise be aggregated under Code Sections 414(b), (c),
(m) and (o) shall be treated as separate employers.
(d) a "one percent owner" of the Participating Employer having an
annual "415 Compensation" from the Participating Employer of
more than $150,000. "One percent owner" means any person who
owns (or is considered as owning within the meaning of Code
Section 318) more than one percent (1%) of the outstanding
stock of the Participating Employer or stock possessing more
than one percent (1%) of the total combined voting power of
all stock of the Participating Employer or, in the case of an
unincorporated business, any person who owns more than one
percent (1%) of the capital or profits interest in the
Participating Employer. In determining percentage ownership
hereunder, employers that would otherwise be aggregated under
Code Sections 414(b), (c), (m) and (o) shall be treated as
separate employers. However, in determining whether an
individual has "415 Compensation" of more than $150,000, "415
Compensation" from each employer required to be aggregated
under Code Sections 414(b), (c), (m) and (o) shall be taken
into account.
For purposes of this Section, the determination of "415 Compensation" shall be
made by including amounts which are contributed by the Participating Employer
pursuant to a salary reduction agreement and which are not includible in the
gross income of the Participant under Code Sections 125, 402(e)(3),
18
402(h)(1)(B), 403(b) or 457(b), and Employee contributions described in Code
Section 414(h)(2) that are treated as Participating Employer contributions.
1.41 "Late Retirement Date" means the first day of the month coinciding with or
next following a Participant's actual Retirement Date after having reached his
Normal Retirement Date.
1.42 "Leased Employee" means any person (other than an Employee of the
recipient) who pursuant to an agreement between the recipient and any other
person ("leasing organization") has performed services for the recipient (or for
the recipient 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 year,
and such services are of a type historically performed by employees in the
business field of the recipient employer. 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. A Leased Employee shall not be considered an Employee of the
recipient:
(a) if such employee is covered by a money purchase pension plan
providing:
(1) a non-integrated employer contribution rate of at
least 10% of compensation, as defined in Code Section
415(c)(3), but including amounts which are
contributed by the Participating Employer pursuant to
a salary reduction agreement and which are not
includible in the gross income of the Participant
under Code Sections 125, 402(e)(3), 402(h)(1)(B),
403(b) or 457(b), and Employee contributions
described in Code Section 414(h)(2) that are treated
as Participating Employer contributions.
(2) immediate participation; and
(3) full and immediate vesting; and
(b) if Leased Employees do not constitute more than 20% of the
recipient's non-highly compensated work force.
1.43 "Non-Elective Contribution" means the Participating Employer contributions
to the Plan excluding, however, contributions made pursuant to the Participant's
deferral election provided for in Section 4.2 and any Qualified Non-Elective
Contribution used in the "Actual Deferral Percentage" tests.
1.44 "Non-Highly Compensated Participant" means any Participant who is not a
Highly Compensated Employee.
1.45 "Non-Key Employee" means any Employee or former Employee (and his
Beneficiaries) who is not a Key Employee.
19
1.46 "Normal Retirement Age" means the Participant's 65th birthday. A
Participant shall become fully Vested in his Participant's Account upon
attaining his Normal Retirement Age.
1.47 "Normal Retirement Date" means the first day of the month coinciding with
or next following the Participant's Normal Retirement Age.
1.48 "1-Year Break in Service" means the applicable computation period during
which an Employee has not completed more than 500 Hours of Service with the
Participating Employer. Further, solely for the purpose of determining whether a
Participant has incurred a 1-Year Break in Service, Hours of Service shall be
recognized for "authorized leaves of absence" and "maternity and paternity
leaves of absence." Years of Service and 1-Year Breaks in Service shall be
measured on the same computation period.
"Authorized leave of absence" means an unpaid, temporary cessation from active
employment with the Participating Employer pursuant to an established
nondiscriminatory policy, whether occasioned by illness, military service, or
any other reason.
A "maternity or paternity leave of absence" means, for Plan Years beginning
after December 31, 1984, an absence from work for any period by reason of the
Employee's pregnancy, birth of the Employee's child, placement of a child with
the Employee in connection with the adoption of such child, or any absence for
the purpose of caring for such child for a period immediately following such
birth or placement. For this purpose, Hours of Service shall be credited for the
computation period in which the absence from work begins, only if credit
therefore is necessary to prevent the Employee from incurring a 1-Year Break in
Service, or, in any other case, in the immediately following computation period.
The Hours of Service credited for a "maternity or paternity leave of absence"
shall be those which would normally have been credited but for such absence, or,
in any case in which the Administrator is unable to determine such hours
normally credited, eight (8) Hours of Service per day. The total Hours of
Service required to be credited for a "maternity or paternity leave of absence"
shall not exceed 501.
1.49 "Other Investments Account" means the account of a Participant which is
credited with his share of the net gain (or loss) of the Plan, Forfeitures and
Participating Employer contributions in other than Company Stock and which is
debited with payments made to pay for Company Stock.
A separate accounting shall be maintained with respect to that portion of the
Other Investments Account attributable to Elective Contributions and
Non-Elective Contributions.
1.50 "Participant" means any Eligible Employee who participates in the Plan and
has not for any reason become ineligible to participate further in the Plan.
1.51 "Participant Direction Procedures" means such instructions, guidelines or
policies, the terms of which are incorporated herein, as shall be established
20
pursuant to Section 4.12 and observed by the Administrator and applied to
Participants who have Participant Directed Accounts.
1.52 "Participant's Account" means the account established and maintained by the
Administrator for each Participant with respect to his total interest in the
Plan and Trust resulting from the Participating Employer Non-Elective
Contributions.
A separate accounting shall be maintained with respect to that portion of the
Participant's Account attributable to Participating Employer matching
contributions made pursuant to Section 4.1(b), Participating Employer
discretionary contributions made pursuant to Section 4.1(c) and any
Participating Employer Qualified Non-Elective Contributions.
1.53 "Participant's Combined Account" means the total aggregate amount of each
Participant's Elective Account and Participant's Account.
1.54 "Participant's Directed Account" means that portion of a Participant's
interest in the Plan with respect to which the Participant has directed the
investment in accordance with the Participant Direction Procedure.
1.55 "Participant's Elective Account" means the account established and
maintained by the Administrator for each Participant with respect to his total
interest in the Plan and Trust resulting from the Participating Employer
Elective Contributions used to satisfy the "Actual Deferral Percentage" tests. A
separate accounting shall be maintained with respect to that portion of the
Participant's Elective Account attributable to such Elective Contributions
pursuant to Section 4.2 and any Participating Employer Qualified Non-Elective
Contributions.
1.56 Participating Employer" means NBT Bancorp Inc., NBT Bank, N.A. and any
Affiliated Employer that adopts the Plan and Inst in accordance with the
provisions of Article XIV.
1.57 "Plan" means this instrument, including any and all supplements and
amendments hereto which may be in effect.
1.58 "Plan Year" means the Plan's accounting year of twelve (12) months
commencing on January 1st of each year and ending the following December 31st.
1.59 "Qualified Military Service" means service entitling an individual to
reemployment rights under the Uniformed Services Employment and Reemployment
Rights Act of 1994, as amended from time to time, provided the individual is
reemployed within the period prescribed by the act.
1.60 "Qualified Non-Elective Contribution" means any Participating Employer
contributions made pursuant to Section 4.6(b) and Section 4.8(h). Such
contributions shall be considered an Elective Contribution for the purposes of
the Plan and used to satisfy the "Actual Deferral Percentage" tests or the
"Actual Contribution Percentage" tests.
21
1.61 "Regulation" means the Income Tax Regulations as promulgated by the
Secretary of the Treasury or his delegate, and as amended from time to time.
1.62 "Retired Participant" means a person who has been a Participant, but who
has become entitled to retirement benefits under the Plan.
1.63 "Retirement Date" means the date as of which a Participant retires for
reasons other than Total and Permanent Disability, whether such retirement
occurs on a Participant's Normal Retirement Date, Early or Late Retirement Date.
1.64 "Super Top Heavy Plan" means a plan described in Section 12.2(b).
1.65 "Terminated Participant" means a person who has been a Participant, but
whose employment has been terminated other than by death, Total and Permanent
Disability or retirement.
1.66 "Top Heavy Plan" means a plan described in Section 12.2(a).
1.67 "Top Heavy Plan Year" means a Plan Year during which the Plan is a Top
Heavy Plan.
1.68 "Top Paid Group" means the top 20 percent of Employees who performed
services for the Participating Employer during the applicable year, ranked
according to the amount of "415 Compensation" (determined for this purpose in
accordance with Section 1.30) received from the Participating Employer during
such year. All Affiliated Employers shall be taken into account as a single
employer, and Leased Employees within the meaning of Code Sections 414(n)(2) and
414(o)(2) shall be considered Employees unless such Leased Employees are covered
by a plan described in Code Section 414(n)(5) and are not covered in any
qualified plan maintained by the Participating Employer. Employees who are
non-resident aliens and who received no earned income (within the meaning of
Code Section 911(d)(2)) from the Participating Employer constituting United
States source income within the meaning of Code Section 861(a)(3) shall not be
treated as Employees. Additionally, for the purpose of determining the number of
active Employees in any year, the following additional Employees shall also be
excluded; however, such Employees shall still be considered for the purpose of
identifying the particular Employees in the Top Paid Group:
(a) Employees with less than six (6) months of service;
(b) Employees who normally work less than 17 1/2 hours per week;
(c) Employees who normally work less than six (6) months during a
year; and
(d) Employees who have not yet attained age 21.
In addition, if 90 percent or more of the Employees of the Participating
Employer are covered under agreements the Secretary of Labor finds to be
collective bargaining agreements between Employee representatives and the
Participating Employer, and the Plan covers only Employees who are not covered
22
under such agreements, then Employees covered by such agreements shall be
excluded from both the total number of active Employees as well as from the
identification of particular Employees in the Top Paid Group.
The foregoing exclusions set forth in this Section shall be applied on a uniform
and consistent basis for all purposes for which the Code Section 414(q)
definition is applicable.
1.69 "Total and Permanent Disability" means a physical or mental condition of a
Participant resulting from bodily injury, disease, or mental disorder which
renders him incapable of continuing his usual and customary employment with the
Participating Employer. The disability of a Participant shall be determined a)
by a licensed physician chosen by the Administrator or, b) by a Participant
becoming entitled to receive long term disability benefits under a long term
disability program sponsored by the Participating Employer. The determination
shall be applied uniformly to all Participants.
1.70 "Trustee" means the person or entity named as trustee herein or in any
separate trust forming a part of this Plan, and any successors.
1.71 "Trust Fund" means the assets of the Plan and Trust as the same shall
exist from time to time.
1.72 "Valuation Date" means the last day of March, June, September, and December
in each year, and such other date or dates deemed necessary by the
Administrator. The Valuation Date may include any day during the Plan Year that
the Trustee, any transfer agent appointed by the Trustee or the Participating
Employer and any stock exchange used by such agent are open for business.
1.73 "Vested" means the nonforfeitable portion of any account maintained on
behalf of a Participant.
1.74 "Year of Service" means the computation period of twelve (12) consecutive
months, herein set forth, during which an Employee has at least 1000 Hours of
Service.
For purposes of eligibility for participation, the initial computation period
shall begin with the date on which the Employee first performs an Hour of
Service. The participation computation period beginning after a 1-Year Break in
Service shall be measured from the date on which an Employee again performs an
Hour of Service. The participation computation period shall shift to the Plan
Year which includes the anniversary of the date on which the Employee first
performed an Hour of Service. An Employee who is credited with the required
Hours of Service in both the initial computation period (or the computation
period beginning after a 1-Year Break in Service) and the Plan Year which
includes the anniversary of the date on which the Employee first performed an
Hour of Service, shall be credited with two (2) Years of Service for purposes of
eligibility to participate.
23
For vesting purposes, the computation periods shall be the Plan Year, including
periods prior to the Effective Date of the Plan.
The computation period shall be the Plan Year if not otherwise set forth herein.
Notwithstanding the foregoing, for any short Plan Year, the determination of
whether an Employee has completed a Year of Service shall be made in accordance
with Department of Labor regulation 2530.203-2(c). However, in determining
whether an Employee has completed a Year of Service for benefit accrual purposes
in the short Plan Year, the 1000 hours requirement shall be prorated based on
the number of full months in the short Plan Year.
Years of Service with any employer who was acquired by the Participating
Employer shall be recognized for purposes of determining eligibility and
vesting.
Years of Service with any Affiliated Employer shall be recognized.
24
ARTICLE II
ADMINISTRATION
2.1 POWERS AND RESPONSIBILITIES OF THE EMPLOYER
(a) In addition to the general powers and responsibilities
otherwise provided for in this Plan, the Employer shall be
empowered to appoint and remove the Trustee and the
Administrator from time to time as it deems necessary for the
proper administration of the Plan to ensure that the Plan is
being operated for the exclusive benefit of the Participants
and their Beneficiaries in accordance with the terms of the
Plan, the Code, and the Act. The Employer may appoint counsel,
specialists, advisers, agents (including any nonfiduciary
agent) and other persons as the Employer deems necessary or
desirable in connection with the exercise of its fiduciary
duties under this Plan. The Employer may compensate such
agents or advisers from the assets of the Plan as fiduciary
expenses (but not including any business (settlor) expenses of
the Employer), to the extent not paid by the Employer.
(b) The Employer may, by written agreement or designation, appoint
at its option an Investment Manager (qualified under the
Investment Company Act of 1940 as amended), investment
adviser, or other agent to provide direction to the Trustee
with respect to any or all of the Plan assets. Such
appointment shall be given by the Employer in writing in a
form acceptable to the Trustee and shall specifically identify
the Plan assets with respect to which the Investment Manager
or other agent shall have authority to direct the investment.
(c) The Employer shall establish a "funding policy and method,"
i.e., it shall determine whether the Plan has a short run need
for liquidity (e.g., to pay benefits) or whether liquidity is
a long run goal and investment growth (and stability of same)
is a more current need, or shall appoint a qualified person to
do so. The Employer or its delegate shall communicate such
needs and goals to the Trustee, who shall coordinate such Plan
needs with its investment policy. The communication of such a
"funding policy and method" shall not, however, constitute a
directive to the Trustee as to investment of the Trust Funds.
Such "funding policy and method" shall be consistent with the
objectives of this Plan and with the requirements of Title I
of the Act.
(d) The Employer shall periodically review the performance of any
Fiduciary or other person to whom duties have been delegated
or allocated by it under the provisions of this Plan or
pursuant to procedures established hereunder. This requirement
may be satisfied by formal periodic review by the Employer or
by a qualified person specifically designated by the Employer,
through day-to-day conduct and evaluation, or through other
appropriate ways.
25
(e) The Employer will furnish Plan Fiduciaries and Participants
with notices and information statements when voting rights
must be exercised pursuant to Section 8.5.
2.2 DESIGNATION OF ADMINISTRATIVE AUTHORITY
The Employer shall be the Administrator. The Employer may appoint any person,
including, but not limited to, the Employees of the Employer, to perform the
duties of the Administrator. Any person so appointed shall signify his
acceptance by filing written acceptance with the Employer. Upon the resignation
or removal of any individual performing the duties of the Administrator, the
Employer may designate a successor.
2.3 ALLOCATION AND DELEGATION OF RESPONSIBILITIES
If more than one person is appointed as Administrator, the responsibilities of
each Administrator may be specified by the Employer and accepted in writing by
each Administrator. In the event that no such delegation is made by the
Employer, the Administrators may allocate the responsibilities among themselves,
in which event the Administrators shall notify the Employer and the Trustee in
writing of such action and specify the responsibilities of each Administrator.
The Trustee thereafter shall accept and rely upon any documents executed by the
appropriate Administrator until such time as the Employer or the Administrators
file with the Trustee a written revocation of such designation.
2.4 POWERS AND DUTIES OF THE ADMINISTRATOR
The primary responsibility of the Administrator is to administer the Plan for
the exclusive benefit of the Participants and their Beneficiaries, subject to
the specific terms of the Plan. The Administrator shall administer the Plan in
accordance with its terms and shall have the power and discretion to construe
the terms of the Plan and to determine all questions arising in connection with
the administration, interpretation, and application of the Plan. Any such
determination by the Administrator shall be conclusive and binding upon all
persons. The Administrator may establish procedures, correct any defect, supply
any information, or reconcile any inconsistency in such manner and to such
extent as shall be deemed necessary or advisable to carry out the purpose of the
Plan; provided, however, that any procedure, discretionary act, interpretation
or construction shall be done in a nondiscriminatory manner based upon uniform
principles consistently applied and shall be consistent with the intent that the
Plan shall continue to be deemed a qualified plan under the terms of Code
Section 401(a), and shall comply with the terms of the Act and all regulations
issued pursuant thereto. The Administrator shall have all powers necessary or
appropriate to accomplish his duties under this Plan.
The Administrator shall be charged with the duties of the general administration
of the Plan, including, but not limited to, the following:
26
(a) the discretion to determine all questions relating to the
eligibility of Employees to participate or remain a
Participant hereunder and to receive benefits under the Plan;
(b) to compute, certify, and direct the Trustee with respect to
the amount and the kind of benefits to which any Participant
shall be entitled hereunder;
(c) to authorize and direct the Trustee with respect to all
nondiscretionary or otherwise directed disbursements from
the Trust;
(d) to maintain all necessary records for the administration of
the Plan;
(e) to interpret the provisions of the Plan and to make and
publish such rules for regulation of the Plan as are
consistent with the terms hereof;
(f) to compute and certify to the Employer and to the Trustee from
time to time the sums of money necessary or desirable
to be contributed to the Plan;
(g) to consult with the Employer and the Trustee regarding the
short and long-term liquidity needs of the Plan in order that
the Trustee can exercise any investment discretion in a manner
designed to accomplish specific objectives;
(h) to prepare and implement a procedure to notify Eligible
Employees that they may elect to have a portion of their
Compensation deferred or paid to them in cash;
(i) to establish and communicate to Participants a procedure,
which includes at least three (3) investment options pursuant
to Regulations, for allowing each Participant to direct the
Trustee as to the investment of his Company Stock Account
pursuant to Section 4.12;
(j) to establish and communicate to Participants a procedure and
method to insure that each Participant will vote Company Stock
allocated to such Participant's Company Stock Account pursuant
to Section 8.5;
(k) to assist any Participant regarding his rights, benefits, or
elections available under the Plan.
2.5 RECORDS AND REPORTS
The Administrator shall keep a record of all actions taken and shall keep all
other books of account, records, policies, and other data that may be necessary
for proper administration of the Plan and shall be responsible for supplying all
information and reports to the Internal Revenue Service, Department of Labor,
Participants, Beneficiaries and others as required by law.
27
2.6 APPOINTMENT OF ADVISERS
The Administrator, or the Trustee with the consent of the Administrator, may
appoint counsel, specialists, advisers, agents (including nonfiduciary agents)
and other persons as the Administrator or the Trustee deems necessary or
desirable in connection with the administration of this Plan, including but not
limited to agents and advisers to assist with the administration and management
of the Plan, and thereby to provide, among such other duties as the
Administrator may appoint, assistance with maintaining Plan records and the
providing of investment information to the Plan's investment fiduciaries and to
Plan Participants.
2.7 PAYMENT OF EXPENSES
All expenses of administration may be paid out of the Trust Fund unless paid by
the Participating Employer. Such expenses shall include any expenses incident to
the functioning of the Administrator, or any person or persons retained or
appointed by any Named Fiduciary incident to the exercise of their duties under
the Plan, including, but not limited to, fees of accountants, counsel,
Investment Managers, agents (including nonfiduciary agents) appointed for the
purpose of assisting the Administrator or the Trustee in carrying out the
instructions of Participants as to the directed investment of their accounts and
other specialists and their agents, and other costs of administering the Plan.
Until paid, the expenses shall constitute a liability of the Trust Fund.
2.8 CLAIMS PROCEDURE
(a) If a Participant, Former Participant or Beneficiary (a "Claimant")
asserts a right to any benefit under the Plan which he has not received, he must
file a written claim for such benefit with the Administrator. If the
Administrator wholly or partially denies such claim, it shall provide within
ninety days of the receipt of the claim written notice of the denial to the
Claimant setting forth:
(1) Specific reasons for the denial of the claim;
(2) Specific reference to pertinent provisions of the
Plan on which the denial is based;
(3) A description of any additional material or
information necessary to perfect the claim and an
explanation of why such material or information is
necessary; and
(4) An explanation of the Plan's claims review procedure.
(b) A Claimant whose application for benefits is denied or who has
received neither an affirmative reply nor a notice of denial within
ninety days after filing his claim may request a full and fair review
of the decision denying the claim. The request must be made in writing
to the Administrator within sixty days after receipt of the notice of
28
the denial (or, if no notice of denial is issued, within sixty days
after the expiration of ninety days from the filing of the claim). In
connection with the review, the Claimant may:
(1) Request a hearing by the Administrator upon written
application to the Administrator;
(2) Review pertinent documents in the possession of the
Administrator; or
(3) Submit issues and comments in writing to the
Administrator for review.
(c) A decision on review by the Administrator shall be made promptly
and not later than sixty days after the receipt by the Administrator of
a request for review, unless special circumstances (such as the need to
hold a hearing) require an extension of time for processing, in which
case the Claimant will be so notified of the extension, and a decision
shall be rendered as soon as possible, and not later than 120 days
after the receipt of the request for review. The decision shall be in
writing and shall include specific reasons for the decision written in
a manner calculated to be understood by the Claimant, and specific
reference to the pertinent provisions of the Plan on which the decision
is based. The Administrator shall have discretionary authority to
interpret and apply the provisions with respect to, and make any
factual determination in connection with, any benefit claim, and the
decision of the Administrator shall be final and binding upon all
parties.
29
ARTICLE III
ELIGIBILITY
3.1 INITIAL ELIGIBILITY TO BECOME A PARTICIPANT
(a) Each person who was a Participant in the Plan on December 31, 2000,
shall continue to be eligible to participate in the Plan as of January
1, 2001.
Each other Eligible Employee shall become a Participant in the Plan on the first
day of the month coinciding with or next following his attainment of age 21 and
completion of one Year of Service.
However, an Eligible Employee who is scheduled to work 1,000 or more hours in a
computation period shall be eligible to make Elective Contributions pursuant to
Section 4.2 on the first day of the month coincident with or next following his
date of hire.
In addition, an Eligible Employee who is scheduled to work 1,000 or more hours
in a computation period shall be eligible to make Rollover Contributions
pursuant to Section 4.11 on the first day of the month coincident with or next
following his date of hire.
(b) Notwithstanding any provision of this Plan to the contrary an
ineligible employee or Leased Employee who subsequently becomes an
Eligible Employee, shall become eligible to participate in the Plan as
of the later of the date he becomes as Eligible Employee or the date he
fulfills the age and service requirements set forth in this Section
3.1.
3.2 DETERMINATION OF ELIGIBILITY
The Administrator shall determine the eligibility of each Employee for
participation in the Plan based upon information furnished by the Participating
Employer. Such determination shall be conclusive and binding upon all persons,
as long as the same is made pursuant to the Plan and the Act. The Administrator
shall have full discretionary authority to interpret and apply the eligibility
provisions of the Plan and to make any factual determination necessary in
connection therewith. Such determination shall be subject to review per Section
2.8.
3.3 TERMINATION OF ELIGIBILITY
(a) In the event a Participant shall go from a classification of an
Eligible Employee to an ineligible Employee, such Former Participant
shall continue to vest in his interest in the Plan for each Year of
Service completed while a noneligible Employee, until such time as his
Participant's Account shall be forfeited or distributed pursuant to the
terms of the Plan. Additionally, his interest in the Plan shall
continue to share in the earnings of the Trust Fund.
30
(b) In the event a Participant is no longer a member of an eligible
class of Employees and becomes ineligible to participate but has not
incurred a 1-Year Break in Service, such Employee will participate
immediately upon returning to an eligible class of Employees. If such
Participant incurs a 1-Year Break in Service, eligibility will be
determined under the break in service rules of the Plan.
3.4 ERROEOUS OMISSION OF ELIGIBLE EMPLOYEE
If, in any Plan Year, any Employee who should be included as a Participant in
the Plan is erroneously omitted and discovery of such omission is not made until
after a contribution by his Participating Employer for the year has been made,
the Participating Employer shall make a subsequent contribution with respect to
the omitted Employee in the amount which the said Participating Employer would
have contributed with respect to him had he not been omitted. Such contribution
shall be made regardless of whether or not it is deductible in whole or in part
in any taxable year under applicable provisions of the Code.
3.5 ERRONEOUS INCLUSION OF INELIGIBLE EMPLOYEE
If, in any Plan Year, any person who should not have been included as a
Participant in the Plan is erroneously included and discovery of such incorrect
inclusion is not made until after a contribution for the year has been made, the
Participating Employer shall not be entitled to recover the contribution made
with respect to the ineligible person regardless of whether or not a deduction
is allowable with respect to such contribution. In such event, the amount
contributed with respect to the ineligible person shall constitute a Forfeiture
(except for Deferred Compensation which shall be distributed to the ineligible
person) for the Plan Year in which the discovery is made.
3.6 ELECTION NOT TO PARTICIPATE
An Employee may, subject to the approval of the Participating Employer, elect
voluntarily not to participate in the Plan. The election not to participate must
be communicated to the Participating Employer, in writing, at least thirty (30)
days before the beginning of a Plan Year.
3.7 COMPLIANCE WITH USERRA
Notwithstanding any provision of this Plan to the contrary, contributions,
benefits, and service credit with respect to qualified military service will be
provided in accordance with Section 414(u) of the Code. This provision shall be
effective as of the effective date of the Uniformed Services Employment and
Reemployment Rights Act of 1994, as amended from time to time, with respect to
the Plan.
31
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER CONTRIBUTION
For each Plan Year, the Participating Employer shall contribute to the Plan:
(a) The amount of the total salary reduction elections of all
Participants made pursuant to Section 4.2(a), which amount shall be
deemed a Participating Employer Elective Contribution.
(b) On behalf of each Participant who is eligible to share in matching
contributions for the Plan Year, a matching contribution equal to 100
percent of each such Participant's Deferred Compensation, which amount
shall be deemed an Participating Employer Non-Elective Contribution.
Matching contributions shall be made in Company Stock or, if made in
cash, shall be converted to Company Stock, and shall be subject to the
diversification requirements of Section 4.12.
Except, however, in applying the matching percentage specified above,
only salary reductions up to 3 percent of eligible Compensation shall
be considered. For an Employee's initial year of participation,
Compensation shall be counted from his date of participation in the
Plan.
Not withstanding paragraph one above, the Participating Employer may
make an additional Non-Elective matching contribution which amount, if
any shall be deemed an Participating Employer Non-Elective
Contribution on behalf of Participants who are employed on the last
day of the Plan Year and who completed a Year of Service during the
Plan Year.
(c) A discretionary amount, which amount, if any, shall be deemed a
Participating Employer Non-Elective Contribution. Only participants who
have completed a Year of Service during the Plan Year and are actively
employed on the last day of the Plan Year shall be eligible to share in
this discretionary contribution.
(d) Additionally, to the extent necessary, the Participating Employer
shall contribute to the Plan the amount necessary to provide the top
heavy minimum contribution. All contributions by the Participating
Employer shall be made in cash or in such property as is acceptable to
the Trustee.
32
4.2 PARTICIPANT'S SALARY REDUCTION ELECTION
(a) Each Participant may elect to defer from one percent to twenty
percent of his Compensation which would have been received in the Plan
Year, but for the deferral election. A deferral election (or
modification of an earlier election) may not be made with respect to
Compensation which is currently available on or before the date the
Participant executed such election. For purposes of this Section,
Compensation shall be determined prior to any reductions made pursuant
to Code Sections 125, 402(e)(3), 402(h)(1)(B), 403(b) or 457(b), and
Employee contributions described in Code Section 414(h)(2) that are
treated as Participating Employer contributions.
The amount by which Compensation is reduced shall be that Participant's
Deferred Compensation and be treated as an Participating Employer
Elective Contribution and allocated to that Participant's Elective
Account.
(b) The balance in each Participant's Elective Account shall be fully
Vested at all times and shall not be subject to Forfeiture for any
reason.
(c) Notwithstanding anything in the Plan to the contrary, amounts held
in the Participant's Elective Account may not be distributable
(including any offset of loans) earlier than:
(1) A Participant's separation from service, Total and
Permanent Disability, or death;
(2) A Participant's attainment of age 59 1/2;
(3) The termination of the Plan without the establishment or
existence of a "successor plan," as that term is described in
Regulation 1.401(k)-1(d)(3);
(4) The date of disposition by the Participating Employer to
an entity that is not an Affiliated Employer of substantially
all of the assets (within the meaning of Code Section
409(d)(2)) used in a trade or business of such corporation if
such corporation continues to maintain this Plan after the
disposition with respect to a Participant who continues
employment with the corporation acquiring such assets;
(5) The date of disposition by the Participating Employer or
an Affiliated Employer who maintains the Plan of its interest
in a subsidiary (within the meaning of Code Section 409(d)(3))
to an entity which is not an Affiliated Employer but only with
respect to a Participant who continues employment with such
subsidiary; or
(6) The proven financial hardship of a Participant, subject to
the limitations of Section 9.1.
33
(d) For each Plan Year, a Participant's Deferred Compensation made
under this Plan and all other plans, contracts or arrangements of the
Participating Employer maintaining this Plan shall not exceed, during
any taxable year of the Participant, the limitation imposed by Code
Section 402(g), as in effect at the beginning of such taxable year.
If such dollar limitation is exceeded, a Participant will be deemed
to have notified the Administrator of such excess amount which shall
be distributed in a manner consistent with Section 4.2(f). The dollar
limitation shall be adjusted annually pursuant to the method provided
in Code Section 415(d) in accordance with Regulations.
(e) In the event a Participant has received a hardship distribution
from his Participant's Elective Account pursuant to Section 9.1(b) or
pursuant to Regulation 1.401(k)-1(d)(2)(iv)(B) from any other plan
maintained by the Participating Employer, then such Participant shall
not be permitted to elect to have Deferred Compensation contributed
to the Plan on his behalf for a period of twelve months following the
receipt of the distribution. Furthermore, the dollar limitation under
Code Section 402(g) shall be reduced, with respect to the
Participant's taxable year following the taxable year in which the
hardship distribution was made, by the amount of such Participant's
Deferred Compensation, if any, pursuant to this Plan (and any other
plan maintained by the Participating Employer) for the taxable year
of the hardship distribution.
(f) If a Participant's Deferred Compensation under this Plan together
with any elective deferrals (as defined in Regulation 1.402(g)-1(b))
under another qualified cash or deferred arrangement (as defined in
Code Section 401(k)), a simplified employee pension (as defined in
Code Section 408(k)), a salary reduction arrangement (within the
meaning of Code Section 3121(a)(5)(D)), a deferred compensation plan
under Code Section 457(b), or a trust described in Code Section
501(c)(18) cumulatively exceed the limitation imposed by Code Section
402(g) (as adjusted annually in accordance with the method provided
in Code Section 415(d) pursuant to Regulations) for such
Participant's taxable year, the Participant may, not later than March
1 following the close of the Participant's taxable year, notify the
Administrator in writing of such excess and request that his Deferred
Compensation under this Plan be reduced by an amount specified by the
Participant. In such event, the Administrator may direct the Trustee
to distribute such excess amount (and any Income allocable to such
excess amount) to the Participant not later than the first April 15th
following the close of the Participant's taxable year. Any
distribution of less than the entire amount of Excess Deferred
Compensation and Income shall be treated as a pro rata distribution
of Excess Deferred Compensation and Income. The amount distributed
shall not exceed the Participant's Deferred Compensation under the
Plan for the taxable year (and any Income allocable to such excess
amount). Any distribution on or before the last day of the
Participant's taxable year must satisfy each of the following
conditions:
(1) The distribution must be made after the date on which the
Plan received the Excess Deferred Compensation;
34
(2) The Participant shall designate the distribution as
Excess Deferred Compensation; and
(3) The Plan must designate the distribution as a distribution
of Excess Deferred Compensation.
Any distribution made pursuant to this Section 4.2(f) shall be
made first from unmatched Deferred Compensation and,
thereafter, from Deferred Compensation which is matched.
Matching contributions which relate to such Deferred
Compensation shall be forfeited.
(g) Notwithstanding Section 4.2(f) above, a Participant's Excess
Deferred Compensation shall be reduced, but not below zero, by any
distribution of Excess Contributions pursuant to Section 4.6(a) for
the Plan Year beginning with or within the taxable year of the
Participant.
(h) Participating Employer Elective Contributions made pursuant to
this Section may be segregated into a separate account for each
Participant in a federally insured savings account, certificate of
deposit in a bank or savings and loan association, money market
certificate, or other short-term debt security acceptable to the
Trustee until such time as the allocations pursuant to Section 4.4
have been made.
(i) The Participating Employer and the Administrator shall implement
the salary reduction elections provided for herein in accordance with
the following:
(1) A Participant must make his initial salary deferral
election within a reasonable time, not to exceed thirty days,
after entering the Plan pursuant to Section 3.2. If the
Participant fails to make an initial salary deferral election
within such time, then such Participant may thereafter make an
election in accordance with the rules governing modifications.
The Participant shall make such an election by entering into a
written salary reduction agreement with the Participating
Employer and filing such agreement with the Administrator.
Such election shall initially be effective beginning with the
pay period following the acceptance of the salary reduction
agreement by the Administrator, shall not have retroactive
effect and shall remain in force until revoked.
(2) A Participant may modify a prior election during the Plan
Year and concurrently make a new election by filing a written
notice with the Administrator within a reasonable time before
the first day of the month for which such modification is to
be effective. Any modification shall not have retroactive
effect and shall remain in force until revoked.
(3) A Participant may elect to prospectively revoke his salary
reduction agreement in its entirety at any time during the
Plan Year by providing the Administrator with thirty days
written notice of such revocation (or upon such shorter notice
period as may be acceptable to the Administrator). Such
35
revocation shall become effective as of the beginning of the
first pay period coincident with or next following the
expiration of the notice period. Furthermore, the termination
of the Participant's employment, or the cessation of
participation for any reason, shall be deemed to revoke any
salary reduction agreement then in effect, effective
immediately following the close of the pay period within which
such termination or cessation occurs.
4.3 TIME OF PAYMENT OF PARTICIPATING EMPLOYER CONTRIBUTION
Participating Employer contributions will be paid in cash, Company Stock or
other property as the Participating Employer may from time to time determine.
Company Stock and other property will be valued at their then fair market value.
The Participating Employer shall generally pay to the Trustee its contribution
to the Plan for each Plan Year, within the time prescribed by law, including
extensions of time, for the filing of the Participating Employer federal income
tax return for the Fiscal Year.
However, Participating Employer Elective Contributions accumulated through
payroll deductions shall be paid to the Trustee as of the earliest date on which
such contributions can reasonably be segregated from the Participating Employer
general assets, but in any event no later than the fifteenth business day of the
month following the month during which such amounts would otherwise have been
payable to the Participant in cash. The provisions of Department of Labor
regulations 2510.3-102 are incorporated herein by reference. Furthermore, any
additional Participating Employer contributions which are allocable to the
Participant's Elective Account for a Plan Year shall be paid to the Plan no
later than the twelve-month period immediately following the close of such Plan
Year.
4.4 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS
(a) The Administrator shall establish and maintain an account in the
name of each Participant to which the Administrator shall credit no
later than as of each Anniversary Date all amounts allocated to each
such Participant as set forth herein.
(b) The Participating Employer shall provide the Administrator with
all information required by the Administrator to make a proper
allocation of the Participating Employer contributions for each Plan
Year. Within a reasonable period of time after the date of receipt by
the Administrator of such information, the Administrator shall
allocate such contribution as follows:
(1) With respect to the Participating Employer Elective
Contribution made pursuant to Section 4.1(a), to each
Participant's Elective Account in an amount equal to each such
Participant's Deferred Compensation for the year.
36
(2) With respect to the Participating Employer Non-Elective
Contribution made pursuant to Section 4.1(b), to each
Participant's Account in accordance with Section 4.1(b).
(3) With respect to the Participating Employer Non-Elective
Contribution made pursuant to Section 4.1(c), to each
Participant's Account in the same proportion that each such
Participant's Compensation for the year bears to the total
Compensation of all Participants for such year.
(c) The Company Stock Account of each Participant shall be credited
as of each Anniversary Date with Forfeitures of Company Stock and his
allocable share of Company Stock (including fractional shares)
purchased and paid for by the Plan or contributed in kind by the
Participating Employer. Stock dividends on Company Stock held in his
Company Stock Account shall be credited to his Company Stock Account
when paid. Cash dividends on Company Stock held in his Company Stock
Account shall be credited to his Other Investments Account when paid.
(d) As of each Valuation Date, any earnings or losses (net
appreciation or net depreciation) of the Trust Fund shall be
allocated in the same proportion that each Participant's and Former
Participant's time weighted average (based on beginning year base)
nonsegregated accounts (other than each Participant's Company Stock
Account) bear to the total of all Participants' and Former
Participants' time weighted average (based on beginning year base)
nonsegregated accounts (other than Participants' Company Stock
Accounts) as of such date. Earnings or losses with respect to a
Participant's Directed Account shall be allocated in accordance with
Section 4.12.
Participants' transfers from other qualified plans deposited in the
general Trust Fund shall share in any earnings and losses (net
appreciation or net depreciation) of the Trust Fund in the same
manner provided above. Each segregated account maintained on behalf
of a Participant shall be credited or charged with its separate
earnings and losses.
(e) As of each Anniversary Date any amounts which became Forfeitures
since the last Anniversary Date shall first be made available to
reinstate previously forfeited account balances of Former
Participants, if any, in accordance with Section 7.4(f)(2). The
remaining Forfeitures, if any, shall be allocated to Participants'
Accounts and used to reduce the contribution of the Participating
Employer hereunder for the Plan Year in which such Forfeitures occur
in the following manner:
(1) Forfeitures attributable to Participating Employer
matching contributions made pursuant to Section 4.1(b) shall
be used to reduce the Participating Employer contribution for
the Plan Year in which such Forfeitures occur.
37
(2) Forfeitures attributable to Participating Employer
discretionary contributions made pursuant to Section 4.1(c)
shall be added to any Participating Employer discretionary
contribution for the Plan Year in which such Forfeitures occur
and allocated among the Participants' Accounts in the same
manner as any Participating Employer discretionary
contribution.
Provided, however, that in the event the allocation of
Forfeitures provided herein shall cause the "annual addition"
(as defined in Section 4.9) to any Participant's Account to
exceed the amount allowable by the Code, the excess shall be
reallocated in accordance with Section 4.10.
(f) For any Top Heavy Plan Year, Employees not otherwise eligible to
share in the allocation of contributions and Forfeitures as provided
above, shall receive the minimum allocation provided for in Section
4.4(h) if eligible pursuant to the provisions of Section 4.4(j).
(g) Notwithstanding the foregoing, Participants who are not actively
employed on the last day of the Plan Year due to Retirement (Early,
Normal or Late), Total and Permanent Disability or death shall share
in the allocation of contributions and Forfeitures for that Plan
Year.
(h) Minimum Allocations Required for Top Heavy Plan Years:
Notwithstanding the foregoing, for any Top Heavy Plan Year, the sum
of the Participating Employer contributions and Forfeitures allocated
to the Participant's Combined Account of each Employee shall be equal
to at least three percent of such Employee's "415 Compensation"
(reduced by contributions and forfeitures, if any, allocated to each
Employee in any defined contribution plan included with this plan in
a Required Aggregation Group). However, if (1) the sum of the
Participating Employer contributions and Forfeitures allocated to the
Participant's Combined Account of each Key Employee for such Top
Heavy Plan Year is less than three percent of each Key Employee's
"415 Compensation" and (2) this Plan is not required to be included
in an Aggregation Group to enable a defined benefit plan to meet the
requirements of Code Section 401(a)(4) or 410, the sum of the
Participating Employer contributions and Forfeitures allocated to the
Participant's Combined Account of each Employee shall be equal to the
largest percentage allocated to the Participant's Combined Account of
any Key Employee. However, in determining whether a Non-Key Employee
has received the required minimum allocation, such Non-Key Employee's
Deferred Compensation and matching contributions needed to satisfy
the "Actual Contribution Percentage" tests pursuant to Section 4.7(a)
shall not be taken into account.
However, no such minimum allocation shall be required in this Plan
for any Employee who participates in another defined contribution
plan subject to Code Section 412 included with this Plan in a
Required Aggregation Group.
38
(i) For purposes of the minimum allocations set forth above, the
percentage allocated to the Participant's Combined Account of any Key
Employee shall be equal to the ratio of the sum of the Participating
Employer contributions and Forfeitures allocated on behalf of such
Key Employee divided by the "415 Compensation" for such Key Employee.
(j) For any Top Heavy Plan Year, the minimum allocations set forth
above shall be allocated to the Participant's Combined Account of all
Employees who are Participants and who are employed by the
Participating Employer on the last day of the Plan Year, including
Employees who have (1) failed to complete a Year of Service; and (2)
declined to make mandatory contributions (if required) or, in the
case of a cash or deferred arrangement, elective contributions to the
Plan.
(k) In lieu of the above, in any Plan Year in which an Employee is a
Participant in both this Plan and a defined benefit pension plan
included in a Required Aggregation Group which is top heavy, the
Participating Employer shall not be required to provide such Employee
with both the full separate defined benefit plan minimum benefit and
the full separate defined contribution plan minimum allocation.
Therefore, for any Plan Year when the Plan is a Top Heavy Plan, an
Employee who is participating in this Plan and a defined benefit plan
maintained by the Participating Employer shall receive a minimum
monthly accrued benefit in the defined benefit plan equal to the
product of (1) one-twelfth of "415 Compensation" averaged over the
five consecutive "limitation years" (or actual "limitation years," if
less) which produce the highest average and (2) the lesser of (i) two
percent multiplied by years of service when the plan is top heavy or
(ii) twenty percent.
(l) For the purposes of this Section, "415 Compensation" shall be
limited to $150,000. Such amount shall be adjusted for increases in
the cost of living in accordance with Code Section 401(a)(17), except
that the dollar increase in effect on January 1 of any calendar year
shall be effective for the Plan Year beginning with or within such
calendar year. For any short Plan Year the "415 Compensation" limit
shall be an amount equal to the "415 Compensation" limit for the
calendar year in which the Plan Year begins multiplied by the ratio
obtained by dividing the number of full months in the short Plan Year
by twelve (12).
(m) Notwithstanding anything herein to the contrary, Participants who
terminated employment for any reason during the Plan Year shall share
in the salary reduction contributions made by the Participating
Employer for the year of termination without regard to the Hours of
Service credited.
(n) If a Former Participant is reemployed after five consecutive
1-Year Breaks in Service, then separate accounts shall be maintained
as follows:
39
(1) One account for nonforfeitable benefits attributable to
pre-break service; and
(2) One account representing his status in the Plan
attributable to post-break service.
4.5 ACTUAL DEFERRAL PERCENTAGE TESTS
(a) Maximum Annual Allocation: For each Plan Year, the annual
allocation derived from Participating Employer Elective Contributions
to a Participant's Elective Account shall satisfy one of the
following tests:
(1) The "Actual Deferral Percentage" for the Highly
Compensated Participant group shall not be more than the
"Actual Deferral Percentage" of the NonHighly Compensated
Participant group multiplied by 1.25, or
(2) The excess of the "Actual Deferral Percentage" for the
Highly Compensated Participant group over the "Actual Deferral
Percentage" for the NonHighly Compensated Participant group
shall not be more than two percentage points. Additionally,
the "Actual Deferral Percentage" for the Highly Compensated
Participant group shall not exceed the "Actual Deferral
Percentage" for the NonHighly Compensated Participant group
multiplied by 2. The provisions of Code Section 401(k)(3) and
Regulation 1.401(k)-1(b) are incorporated herein by reference.
However, in order to prevent the multiple use of the
alternative method described in (2) above and in Code Section
401(m)(9)(A), any Highly Compensated Participant eligible to
make elective deferrals pursuant to Section 4.2 and to make
Employee contributions or to receive matching contributions
under this Plan or under any other plan maintained by the
Participating Employer or an Affiliated Employer shall have a
combination of his actual deferral ratio and his actual
contribution ratio reduced pursuant to Regulation 1.401(m)-2,
the provisions of which are incorporated herein by reference.
(b) For the purposes of this Section "Actual Deferral Percentage"
means, with respect to the Highly Compensated Participant group and
NonHighly Compensated Participant group for a Plan Year, the average
of the ratios, calculated separately for each Participant in such
group, of the amount of Participating Employer Elective Contributions
allocated to each Highly Compensated Participant's Elective Account
for such Plan Year and to each such NonHighly Compensated
Participant's Elective Account for the preceding Plan Year, to such
Participant's "414(s) Compensation" for the applicable Plan Year. The
actual deferral ratio for each Participant and the "Actual Deferral
Percentage" for each group shall be calculated to the nearest
one-hundredth of one percent. Participating Employer Elective
Contributions allocated to each NonHighly Compensated Participant's
40
Elective Account for the preceding Plan Year shall be reduced by
Excess Deferred Compensation for the preceding Plan Year to the
extent such excess amounts are made under this Plan or any other plan
maintained by the Participating Employer.
(c) For the purposes of Sections 4.5(a) and 4.6, a Highly Compensated
Participant and a NonHighly Compensated Participant shall include any
Employee eligible to make a deferral election pursuant to Section
4.2, whether or not such deferral election was made or suspended
pursuant to Section 4.2.
(d) For purposes of this Section and Code Sections 401(a)(4), 410(b)
and 401(k), this Plan may not be combined with any other plan.
4.6 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS
In the event that the initial allocations of the Participating Employer Elective
Contributions made pursuant to Section 4.4 do not satisfy one of the tests set
forth in Section 4.5(a), the Administrator shall adjust Excess Contributions
pursuant to the options set forth below:
(a) On or before the fifteenth day of the third month following the
end of each Plan Year, the Highly Compensated Participant having the
greatest actual deferral ratio shall have his actual deferral ratio
reduced until one of the tests set forth in Section 4.5(a) is
satisfied, or until his actual deferral ratio equals the actual
deferral ratio of the Highly Compensated Participant having the
second largest actual deferral ratio. This process shall continue
until one of the tests set forth in Section 4.5(a) is satisfied. Once
one of the tests set forth in Section 4.5(a) is satisfied, the total
dollar amount of Elective Contributions represented by such reduction
or reductions in actual deferral ratio or ratios shall be identified
as the total amount of Excess Contributions to be distributed. These
Excess Contributions will be attributed to and distributed from the
accounts of Highly Compensated Employees as follows. The Elective
Contribution for the Highly Compensated Employee with the largest
Elective Contribution shall be reduced until either a) the total
amount of Excess Contributions is distributed, or (b) the Elective
Contribution for the Highly Compensated Employee with the greatest
Elective Contribution is reduced to the level of the Elective
Contribution for the Highly Compensated Employee with the next
greatest Elective Contribution. This process shall continue until the
total amount of Excess Contributions is distributed.
(1) With respect to the distribution of Excess Contributions
pursuant to
(a) above, such distribution:
(i) may be postponed but not later than the
close of the Plan Year following the Plan
Year to which they are allocable;
(ii) shall be adjusted for Income; and
41
(iii) shall be designated by the Participating
Employer as a distribution of Excess
Contributions (and Income).
(2) Any distribution of less than the entire amount of Excess
Contributions and Income shall be treated as a pro rata
distribution of Excess Contributions and Income.
(3) Matching contributions which relate to Excess
Contributions shall be forfeited unless the related matching
contribution is distributed as an Excess Aggregate
Contribution pursuant to Section 4.8.
(b) Within twelve (12) months after the end of the Plan Year, the
Participating Employer may make a special Qualified Non-Elective
Contribution on behalf of NonHighly Compensated Participants electing
salary reductions pursuant to Section 4.2 in an amount sufficient to
satisfy one of the tests set forth in Section 4.5(a). Such
contribution shall be allocated to the Participant's Elective Account
of each Non-Highly Compensated Participant electing salary reductions
pursuant to Section 4.2 in the same proportion that each such
NonHighly Compensated Participant's Deferred Compensation for the
year bears to the total Deferred Compensation of all such NonHighly
Compensated Participants.
(c) If during a Plan Year the projected aggregate amount of Elective
Contributions to be allocated to all Highly Compensated Participants
under this Plan would, by virtue of the tests set forth in Section
4.5(a), cause the Plan to fail such tests, then the Administrator may
automatically reduce proportionately or in the order provided in
Section 4.6(a) each affected Highly Compensated Participant's
deferral election made pursuant to Section 4.2 by an amount necessary
to satisfy one of the tests set forth in Section 4.5(a).
4.7 ACTUAL CONTRIBUTION PERCENTAGE TESTS
(a) The "Actual Contribution Percentage" for the Highly Compensated
Participant group shall not exceed the greater of:
(1) 125 percent of such percentage for the NonHighly
Compensated Participant group; or
(2) The lesser of 200 percent of such percentage for the
NonHighly Compensated Participant group, or such percentage
for the NonHighly Compensated Participant group plus 2
percentage points. However, to prevent the multiple use of the
alternative method described in this paragraph and Code
Section 401(m)(9)(A), any Highly Compensated Participant
eligible to make elective deferrals pursuant to Section 4.2 or
any other cash or deferred arrangement maintained by the
Participating Employer or an Affiliated Employer and to make
Employee contributions or to receive matching contributions
under this Plan or under any other plan maintained by the
Participating Employer or an Affiliated Employer shall have a
combination of his actual deferral ratio and his actual
42
contribution ratio reduced pursuant to Regulation 1.401(m)-2.
The provisions of Code Section 401(m) and Regulations
1.401(m)-1(b) and 1.401(m)-2 are incorporated herein by
reference.
(b) For the purposes of this Section and Section 4.8, "Actual
Contribution Percentage" for a Plan Year means, with respect to the
Highly Compensated Participant group and Non-Highly Compensated
Participant group, the average of the ratios (calculated separately
for each Participant in each group) of:
(1) The sum of Participating Employer matching contributions
made pursuant to Section 4.1(b) on behalf of each such Highly
Compensated participant for such Plan Year and each Non-Highly
Compensated Participant for the preceding Plan Year; to
(2) The Participant's "414(s) Compensation" for the
applicable Plan Year.
(c) For purposes of determining the "Actual Contribution Percentage"
and the amount of Excess Aggregate Contributions pursuant to Section
4.8(d), only Participating Employer matching contributions
contributed to the Plan prior to the end of the succeeding Plan Year
shall be considered. In addition, the Administrator may elect to take
into account, with respect to Employees eligible to have
Participating Employer matching contributions pursuant to Section
4.1(b) allocated to their accounts, elective deferrals (as defined in
Regulation 1.402(g)-1(b)) and qualified non-elective contributions
(as defined in Code Section 401(m)(4)(C)) contributed to any plan
maintained by the Participating Employer. Such elective deferrals and
qualified non-elective contributions shall be treated as
Participating Employer matching contributions subject to Regulation
1.401(m)-1(b)(5) which is incorporated herein by reference. However,
the Plan Year must be the same as the plan year of the plan to which
the elective deferrals and the qualified non-elective contributions
are made.
(d) For purposes of this Section and Code Sections 401(a)(4), 410(b)
and 401(m), this Plan may not be combined with any other plan.
(e) For purposes of Sections 4.7(a) and 4.8, a Highly Compensated
Participant and Non-Highly Compensated Participant shall include any
Employee eligible to have Participating Employer matching
contributions pursuant to Section 4.1(b) (whether or not a deferral
election was made or suspended pursuant to Section 4.2(e)) allocated
to his account for the Plan Year.
43
4.8 ADJUSTMENT TO ACTUAL CONTRIBUTION PERCENTAGE TESTS
(a) In the event that the "Actual Contribution Percentage" for the
Highly Compensated Participant group exceeds the "Actual Contribution
Percentage" for the Non-Highly Compensated Participant group pursuant
to Section 4.7(a), the Highly Compensated Participant having the
greatest actual contribution ratio shall have his actual contribution
ratio reduced until one of the tests set forth in Section 4.7(a) is
satisfied, or until his actual contribution ratio equals the actual
contribution ratio of the Highly Compensated Participant having the
second largest actual contribution ratio. This process shall continue
until one of the tests set forth in Section 4.7(a) is satisfied. Once
one of the tests set forth in Section 4.7(a) is satisfied, the total
dollar amount of aggregate contributions represented by such
reduction or reductions in actual contribution ratio or ratios shall
be identified as the total amount of Excess Aggregate Contributions
to be distributed and/or forfeited. These Excess Aggregate
Contributions will be attributed to and distributed (with income), if
vested, or forfeited (with income), if not vested from the accounts
of Highly Compensated Employees as follows. The matching contribution
for the Highly Compensated Employee with the largest matching
contribution shall be reduced until either a) the total amount of
Excess Aggregate Contributions is distributed, or b) the matching
contributions for the Highly Compensated Employee with the greatest
matching contributions is reduced to the level of the matching
contributions for the Highly Compensated Employee with the next
greatest matching contributions. This process shall continue until
all Excess Aggregate Contributions are eliminated. Excess Aggregate
Contributions shall be distributed to or forfeited by Highly
Compensated Participants on or before the fifteenth day of the third
month following the end of the Plan Year, but in no event later than
the close of the following Plan Year.
To the extent necessary to affect correction, distributions and
forfeitures shall occur proportionately from the vested portion of a
Highly Compensated Employee's aggregate contributions (and Income
allocable to such contributions) and, if forfeitable, from the
non-Vested Excess Aggregate Contributions attributable to
Participating Employer matching contributions (and Income allocable
to such forfeitures).
If the correction of Excess Aggregate Contributions attributable to
Participating Employer matching contributions is not in proportion to
the Vested and non-Vested portion of such contributions, then the
Vested portion of the Participant's Account attributable to
Participating Employer matching contributions after the correction
shall be subject to Section 7.5(h).
(b) Any distribution and/or Forfeiture of less than the entire amount
of Excess Aggregate Contributions (and Income) shall be treated as a
pro rata distribution and/or Forfeiture of Excess Aggregate
Contributions and Income. Distribution of Excess Aggregate
Contributions shall be designated by the Participating Employer as a
distribution of Excess Aggregate Contributions (and Income).
44
Forfeitures of Excess Aggregate Contributions shall be treated in
accordance with Section 4.4.
(c) Excess Aggregate Contributions, including forfeited matching
contributions, shall be treated as Participating Employer
contributions for purposes of Code Sections 404 and 415 even if
distributed from the Plan.
Forfeited matching contributions that are reallocated to
Participants' Accounts for the Plan Year in which the forfeiture
occurs shall be treated as an "annual addition" pursuant to Section
4.9(b) for the Participants to whose Accounts they are reallocated
and for the Participants from whose Accounts they are forfeited.
(d) For each Highly Compensated Participant, the amount of Excess
Aggregate Contributions is equal to the Participating Employer
matching contributions made pursuant to Section 4.1(b), and any
qualified non-elective contributions or elective deferrals taken into
account pursuant to Section 4.7(c) on behalf of the Highly
Compensated Participant (determined prior to the application of this
paragraph) minus the amount determined by multiplying the Highly
Compensated Participant's actual contribution ratio (determined after
application of this paragraph) by his "414(s) Compensation." The
actual contribution ratio must be rounded to the nearest
one-hundredth of one percent. In no case shall the amount of Excess
Aggregate Contribution with respect to any Highly Compensated
Participant exceed the amount of Participating Employer matching
contributions made pursuant to Section 4.1(b), and any qualified
non-elective contributions or elective deferrals taken into account
pursuant to Section 4.7(c) on behalf of such Highly Compensated
Participant for such Plan Year.
(e) The determination of the amount of Excess Aggregate Contributions
with respect to any Plan Year shall be made after first determining
the Excess Contributions, if any, to be treated as voluntary Employee
contributions due to recharacterization for the plan year of any
other qualified cash or deferred arrangement (as defined in Code
Section 401(k)) maintained by the Participating Employer that ends
with or within the Plan Year.
(f) If during a Plan Year the projected aggregate amount of
Participating Employer matching contributions to be allocated to all
Highly Compensated Participants under this Plan would, by virtue of
the tests set forth in Section 4.7(a), cause the Plan to fail such
tests, then the Administrator may automatically reduce
proportionately or in the order provided in Section 4.8(a) each
affected Highly Compensated Participant's projected share of such
contributions by an amount necessary to satisfy one of the tests set
forth in Section 4.7(a).
(g) Notwithstanding the above, within twelve months after the end of
the Plan Year, the Participating Employer may make a special
Qualified Non-Elective Contribution on behalf of Non-Highly
Compensated Participants in an amount sufficient to satisfy one of
the tests set forth in Section 4.7(a). Such contribution shall be
45
allocated to the Participant's Account of each Non-Highly Compensated
Participant in the same proportion that each Non-Highly Compensated
Participant's Compensation for the year bears to the total
Compensation of all Non-Highly Compensated Participants. A separate
accounting of any special Qualified Non-Elective Contribution shall
be maintained in the Participant's Account.
4.9 MAXIMUM ANNUAL ADDITIONS
(a) Notwithstanding the foregoing, the maximum "annual additions"
credited to a Participant's accounts for any "limitation year" shall
equal the lesser of: (1) $30,000 (or such lerger amount as shall be
in effect as a result of adjustments pursuant to Section 415(d) of
the Code), or (2) twenty-five percent of the Participant's "415
Compensation" for such "limitation year." For any short "limitation
year," the dollar limitation in (1) above shall be reduced by a
fraction, the numerator of which is the number of full months in the
short "limitation year" and the denominator of which is twelve.
(b) For purposes of applying the limitations of Code Section 415,
"annual additions" means the sum credited to a Participant's accounts
for any "limitation year" of (1) Participating Employer
contributions, (2) Employee contributions, (3) forfeitures, (4)
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 Participating Employer and
(5) 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)) under a welfare benefit plan (as defined in Code Section
419(e)) maintained by the Participating Employer. Except, however,
the "415 Compensation" percentage limitation referred to in paragraph
(a)(2) above shall not apply to: (1) any contribution for medical
benefits (within the meaning of Code Section 419A(f)(2)) after
separation from service which is otherwise treated as an "annual
addition," or (2) any amount otherwise treated as an "annual
addition" under Code Section 415(l)(1).
(c) For purposes of applying the limitations of Code Section 415, the
transfer of funds from one qualified plan to another is not an
"annual addition." In addition, the following are not Employee
contributions for the purposes of Section 4.9(b)(2): (1) rollover
contributions (as defined in Code Sections 402(e)(6), 403(a)(4),
403(b)(8) and 408(d)(3)); (2) repayments of loans made to a
Participant from the Plan; (3) repayments of distributions received
by an Employee pursuant to Code Section 411(a)(7)(B) (cash-outs); (4)
repayments of distributions received by an Employee pursuant to Code
Section 411(a)(3)(D) (mandatory contributions); and (5) Employee
contributions to a simplified employee pension excludable from gross
income under Code Section 408(k)(6).
46
(d) For purposes of applying the limitations of Code Section 415, the
"limitation year" shall be the Plan Year.
(e) For the purpose of this Section, all qualified defined benefit
plans (whether terminated or not) ever maintained by the
Participating Employer shall be treated as one defined benefit plan,
and all qualified defined contribution plans (whether terminated or
not) ever maintained by the Participating Employer shall be treated
as one defined contribution plan.
(f) For the purpose of this Section, if the Participating Employer is
a member of a controlled group of corporations, trades or businesses
under common control (as defined by Code Section 1563(a) or Code
Section 414(b) and (c) as modified by Code Section 415(h)), is a
member of an affiliated service group (as defined by Code Section
414(m)), or is a member of a group of entities required to be
aggregated pursuant to Regulations under Code Section 414(o), all
Employees of such Participating Employers shall be considered to be
employed by a single Participating Employer.
(g) For the purpose of this Section, if this Plan is a Code Section
413(c) plan, each Participating Employer who maintains this Plan will
be considered to be a separate Participating Employer.
(h)(1) If a Participant participates in more than one defined
contribution plan maintained by the Participating Employer
which have different Anniversary Dates, the maximum "annual
additions" under this Plan shall equal the maximum "annual
additions" for the "limitation year" minus any "annual
additions" previously credited to such Participant's accounts
during the "limitation year."
(2) If a Participant participates in both a defined contribution
plan subject to Code Section 412 and a defined contribution
plan not subject to Code Section 412 maintained by the
Participating Employer which have the same Anniversary Date,
"annual additions" will be credited to the Participant's
accounts under the defined contribution plan subject to Code
Section 412 prior to crediting "annual additions" to the
Participant's accounts under the defined contribution plan not
subject to Code Section 412.
(3) If a Participant participates in more than one defined
contribution plan not subject to Code Section 412 maintained
by the Participating Employer which have the same Anniversary
Date, the maximum "annual additions" under this Plan shall
equal the product of (A) the maximum "annual additions" for
the "limitation year" minus any "annual additions" previously
credited under subparagraphs (1) or (2) above, multiplied by
(B) a fraction (i) the numerator of which is the "annual
additions" which would be credited to such Participant's
accounts under this Plan without regard to the limitations of
Code Section 415 and (ii) the denominator of which is such
"annual additions" for all plans described in this
subparagraph.
47
(i) For Plan Years beginning before January 1, 2000, if an
Employee is (or has been) a Participant in one or more defined
benefit plans and one or more defined contribution plans
maintained by the Participating Employer, the sum of the
defined benefit plan fraction and the defined contribution
plan fraction for any "limitation year" may not exceed 1.0.
(j) The defined benefit plan fraction for any "limitation year"
prior to January 1, 2000 is 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
terminated) maintained by the Participating Employer, and the
denominator of which is the lesser of 125 percent of the
dollar limitation determined for the "limitation year" under
Code Sections 415(b) and (d) or 140 percent of the highest
average compensation, including any adjustments under Code
Section 415(b).
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 Participating Employer which
were in existence on May 6, 1986, the denominator of this
fraction will not be less than 125 percent 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 the 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.
(k) For Plan Years beginning prior to January 1, 2000, the defined
contribution plan fraction for any "limitation year"
is 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 Participating 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 Participating
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(l)
(2), maintained by the Participating 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 Participating Employer (regardless
of whether a defined contribution plan was maintained
by the Participating Employer). The maximum aggregate amount
in any "limitation year" is the lesser of 125 percent
of the dollar limitation determined under Code Sections 415(b)
and (d) in effect under Code Section 415(c)(1)(A) or
35 percent of the Participant's Compensation for such year.
48
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 Participating 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 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 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. The
annual addition for any "limitation year" beginning before
January 1, 1987 shall not be recomputed to treat all Employee
contributions as annual additions.
(l) Notwithstanding the foregoing, for any "limitation year" in
which the Plan is a Top Heavy Plan prior to January 1, 2000,
100 percent shall be substituted for 125 percent in Sections
4.9(j) and 4.9(k).
(m) For Plan Years prior to January 1, 2000, if the sum of the
defined benefit plan fraction and the defined contribution
plan fraction shall exceed 1.0 in any "limitation year" for
any Participant in this Plan, the Administrator shall adjust
the numerator of the defined benefit plan fraction so that the
sum of both fractions shall not exceed 1.0 in any "limitation
year" for such Participant.
(n) Notwithstanding anything contained in this Section to the
contrary, the limitations, adjustments and other requirements
prescribed in this Section shall at all times comply with the
provisions of Code Section 415 and the Regulations thereunder,
the terms of which are specifically incorporated herein by
reference.
49
4.10 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS
(a) If, as a result of the allocation of Forfeitures, a reasonable
error in estimating a Participant's Compensation, a
reasonable error in determining the amount of elective
deferrals (within the meaning of Code Section 402(g)(3)) that
may be made with respect to any Participant under the limits
of Section 4.9 or other facts and circumstances to
which Regulation 1.415-6(b)(6) shall be applicable, the
"annual additions" under this Plan would cause the maximum
"annual additions" to be exceeded for any Participant, the
Administrator shall (1) distribute any elective deferrals
(within the meaning of Code Section 402(g)(3)) or return any
Employee contributions (whether voluntary or mandatory), and
for the distribution of gains attributable to those elective
deferrals and Employee contributions, to the extent that the
distribution or return would reduce the "excess amount" in the
Participant's accounts (2) hold any "excess amount" remaining
after the return of any elective deferrals or voluntary
Employee contributions in a "Section 415 suspense account" (3)
use the "Section 415 suspense account" in the next "limitation
year" (and succeeding "limitation years" if necessary) to
reduce Participating Employer contributions for that
Participant if that Participant is covered by the Plan as of
the end of the "limitation year," or if the Participant
is not so covered, allocate and reallocate the "Section 415
suspense account" in the next "limitation year" (and
succeeding "limitation years" if necessary) to all
Participants in the Plan before any Participating Employer or
Employee contributions which would constitute
"annual additions" are made to the Plan for such "limitation
year" (4) reduce Participating Employer contributions to the
Plan for such "limitation year" by the amount of the "Section
415 suspense account" allocated and reallocated during such
"limitation year."
(b) For purposes of this Article, "excess amount" for any
Participant for a "limitation year" shall mean the excess, if
any, of (1) the "annual additions" which would be credited to
his account under the terms of the Plan without regard to the
limitations of Code Section 415 over (2) the maximum "annual
additions" determined pursuant to Section 4.9.
(c) For purposes of this Section, "Section 415 suspense account"
shall mean an unallocated account equal to the sum of "excess
amounts" for all Participants in the Plan during the
"limitation year." The "Section 415 suspense account" shall
not share in any earnings or losses of the Trust Fund.
50
4.11 TRANSFERS FROM QUALIFIED PLANS
(a) With the consent of the Administrator, amounts may be
transferred from other qualified plans by Eligible Employees,
provided that the trust from which such funds are transferred
permits the transfer to be made and the transfer will not
jeopardize the tax exempt status of the Plan or Trust or
create adverse tax consequences for the Participating
Employer. The amounts transferred shall be set up in a
separate account herein referred to as a "Participant's
Rollover Account." Such account shall be fully Vested at all
times and shall not be subject to Forfeiture for any reason.
(b) Amounts in a Participant's Rollover Account shall be held by
the Trustee pursuant to the provisions of this Plan and may
not be withdrawn by, or distributed to the Participant, in
whole or in part, except as provided in paragraphs (c) and (d)
of this Section.
(c) Except as permitted by Regulations (including Regulation
1.411(d)-4), amounts attributable to elective contributions
(as defined in Regulation 1.401(k)-1(g)(3)), including amounts
treated as elective contributions, which are transferred from
another qualified plan in a plan-to-plan transfer shall be
subject to the distribution limitations provided for in
Regulation 1.401(k)-1(d).
(d) The Administrator may direct that employee transfers made
after a valuation date be segregated into a separate account
for each Participant in a federally insured savings account,
certificate of deposit in a bank or savings and loan
association, money market certificate, or other short term
debt security acceptable to the Trustee until such time as the
allocations pursuant to this Plan have been made, at which
time they may remain segregated or be invested as part of the
general Trust Fund, to be determined by the Administrator.
(e) For purposes of this Section, the term "qualified plan" shall
mean any tax qualified plan under Code Section 401(a).
The term "amounts transferred from other qualified plans"
shall mean: (i) amounts transferred to this Plan directly
from another qualified plan; (ii) distributions from another
qualified plan which are eligible rollover
distributions and which are either transferred by the Employee
to this Plan within sixty days following his receipt
thereof or are transferred pursuant to a direct rollover;
(iii) amounts transferred to this Plan from a conduit
individual retirement account provided that the conduit
individual retirement account has no assets other than
assets which (A) were previously distributed to the Employee
by another qualified plan as a lump-sum distribution
(B) were eligible for tax-free rollover to a qualified plan
and (C) were deposited in such conduit individual
retirement account within sixty days of receipt thereof and
other than earnings on said assets; and (iv) amounts
distributed to the Employee from a conduit individual
retirement account meeting the requirements of clause
(iii) above, and transferred by the Employee to this Plan
within sixty days of his receipt thereof from such conduit
individual retirement account.
51
(g) Prior to accepting any transfers to which this Section
applies, the Administrator may require the Employee to
establish that the amounts to be transferred to this Plan meet
the requirements of this Section and may also require the
Employee to provide an opinion of counsel satisfactory to the
Participating Employer that the amounts to be transferred meet
the requirements of this Section.
(h) This Plan shall not accept any direct or indirect transfers
(as that term is defined and interpreted under Code Section
401(a)(11) and the Regulations thereunder) from a defined
benefit plan, money purchase plan (including a target benefit
plan), stock bonus or profit sharing plan which would
otherwise have provided for a life annuity form of payment to
the Participant.
(i) Notwithstanding anything herein to the contrary, a transfer
directly to this Plan from another qualified plan (or a
transaction having the effect of such a transfer) shall only
be permitted if it will not result in the elimination or
reduction of any "Section 411(d)(6) protected benefit" as
described in Section 9.1.
4.12 DIRECTED INVESTMENT ACCOUNT
(a) Participants may, subject to Section 4.12(c) and a procedure
established by the Administrator (the Participant Direction
Procedures) and applied in a uniform nondiscriminatory manner,
direct the Trustee to invest all or a portion of their
Participant's Elective Account (and such other account
balances as specified in the Procedures) in specific assets,
specific funds or other investments permitted under the Plan
and the Participant Direction Procedures. That portion of the
interest of any Participant so directing will thereupon be
considered a Participant's Directed Account.
(b) As of each Valuation Date, all Participant Directed Accounts
shall be charged or credited with the net earnings, gains,
losses and expenses as well as any appreciation or
depreciation in the market value using publicly listed fair
market values when available or appropriate.
(1) To the extent that the assets in a Participant's
Directed Account are accounted for as pooled assets
or investments, the allocation of earnings, gains
and losses of each Participant's Directed Account
shall be based upon the total amount of funds so
invested, in a manner proportionate to the
Participant's share of such pooled investment.
52
(2) To the extent that the assets in the Participant's
Directed Account are accounted for as segregated
assets, the allocation of earnings, gains and
losses from such assets shall be made on a separate
and distinct basis.
(c) Each "Qualified Participant" may elect within ninety days
after the close of each Plan Year during the "Qualified
Election Period" to direct the Trustee in writing as to the
investment of 25 percent of the total number of shares
of Company Stock acquired by or contributed to the Plan that
have ever been allocated to such "Qualified
Participant's" Company Stock Account (reduced by the number
of shares of Company Stock previously invested pursuant
to a prior election). In the case of the election year in
which the Participant can make his last election, the
preceding sentence shall be applied by substituting "50
percent" for "25 percent." If the "Qualified Participant"
elects to direct the Trustee as to the investment of his
Company Stock Account, such direction shall be effective no
later than 180 days after the close of the Plan Year to which
such direction applies. In lieu of directing the
Trustee as to the investment of his Company Stock Account, the
"Qualified Participant" may elect a distribution in
cash or Company Stock of the portion of his Company Stock
Account covered by the election within ninety days after
the last day of the period during which the election can be
made. Any such distribution of Company Stock shall be
subject to Section 8.18. Furthermore, the Participant must
be given a choice of at least three distinct investment
options.
Notwithstanding the above, if the fair market value
(determined pursuant to Section 6.1 at the Plan Valuation Date
immediately preceding the first day on which a "Qualified
Participant" is eligible to make an election) of Company Stock
acquired by or contributed to the Plan and allocated to a
"Qualified Participant's" Company Stock Account is $500 or
less, then such Company Stock shall not be subject to this
paragraph. For purposes of determining whether the fair market
value exceeds $500, Company Stock held in accounts of all
employee stock ownership plans (as defined in Code Section
4975(e)(7)) and tax credit employee stock ownership plans (as
defined in Code Section 409(a)) maintained by the
Participating Employer or any Affiliated Employer shall be
considered as held by the Plan.
(d) For the purposes of this Section the following definitions
shall apply:
(1) "Qualified Participant" means any Participant or
Former Participant who has completed ten years as a
Participant and has attained age fifty-five.
(2) "Qualified Election Period" means the six (6) Plan
Year period beginning with the later of (i) the
first Plan Year in which the Participant first
became a "Qualified Participant," or (ii) the first
Plan Year beginning after December 31, 1986.
53
ARTICLE V
FUNDING AND INVESTMENT POLICY
5.1 INVESTMENT POLICY
(a) The Plan is designed to invest primarily in Company Stock.
(b) With due regard to subparagraph (a) above, the Administrator
may also direct the Trustee to invest funds under the Plan in
other property described in the Trust, or the Trustee may hold
such funds in cash or cash equivalents.
(c) The Plan may not obligate itself to acquire Company Stock from
a particular holder thereof at an indefinite time determined
upon the happening of an event such as the death of the
holder.
(d) The Plan may not obligate itself to acquire Company Stock
under a put option binding upon the Plan. However, at the time
a put option is exercised, the Plan may be given an option to
assume the rights and obligations of the Participating
Employer under a put option binding upon the Participating
Employer.
(e) All purchases of Company Stock shall be made at a price which,
in the judgment of the Administrator, does not exceed the fair
market value thereof. All sales of Company Stock shall be made
at a price which, in the judgment of the Administrator, is not
less than the fair market value thereof. The valuation rules
set forth in Article VI shall be applicable.
5.2 TRANSACTIONS INVOLVING COMPANY STOCK
(a) No portion of the Trust Fund attributable to (or allocable in
lieu of) Company Stock acquired by the Plan in a sale to which
Code Section 1042 applies may accrue or be allocated directly
or indirectly under any plan maintained by the Participating
Employer meeting the requirements of Code Section 401(a):
(1) During the "Nonallocation Period," for the benefit of
(i) any taxpayer who makes an election under
Code Section 1042(a) with respect to
Company Stock,
(ii) any individual who is related to the
taxpayer (within the meaning of Code
Section 267(b)), or
(2) For the benefit of any other person who owns (after
application of Code Section 318(a) applied without
regard to the employee trust exception in Code Section
318(a)(2)(B)(i)) more than 25 percent of
54
(i) any class of outstanding stock of the
Participating Employer or Affiliated
Employer which issued
such Company Stock, or
(ii) the total value of any class of outstanding
stock of the Participating Employer or
Affiliated Employer.
(b) Except, however, subparagraph (a)(1)(ii) above shall not apply
to lineal descendants of the taxpayer, provided that the
aggregate amount allocated to the benefit of all such lineal
descendants during the "Nonallocation Period" does not exceed
more than five (5) percent of the Company Stock (or amounts
allocated in lieu thereof) held by the Plan which are
attributable to a sale to the Plan by any person related to
such descendants (within the meaning of Code Section
267(c)(4)) in a transaction to which Code Section 1042 is
applied.
(c) A person shall be treated as failing to meet the stock
ownership limitation under paragraph (a)(2) above if such
person fails such limitation:
(1) at any time during the one (1) year period ending
on the date of sale of Company Stock to the Plan,
or
(2) on the date as of which Company Stock is allocated
to Participants in the Plan.
(d) For purposes of this Section, "Nonallocation Period" means the
period beginning on the date of the sale of the Company Stock
and ending on the date which is ten (10) years after the date
of sale.
55
ARTICLE IV
VALUATIONS
6.1 VALUATION OF THE TRUST FUND
The Administrator shall direct the Trustee, as of each Valuation Date, to
determine the net worth of the assets comprising the Trust Fund as it exists on
the Valuation Date. In determining such net worth, the Trustee shall value the
assets comprising the Trust Fund at their fair market value as of the Valuation
Date and shall deduct all expenses for which the Trustee has not yet obtained
reimbursement from the Employer or the Trust Fund. The Trustee may update the
value of any shares held in the Participant Directed Account by reference to the
number of shares held by that Participant, priced at the market value as of the
Valuation Date.
6.2 METHOD OF VALUATION
Valuations must be made in good faith and based on all relevant factors for
determining the fair market value of securities. In the case of a transaction
between a Plan and a disqualified person, value must be determined as of the
date of the transaction. For Plan distribution purposes, value will be
determined as of the date of the transaction. For all other Plan purposes, value
will be determined as of the most recent valuation date under the Plan. An
independent appraisal will not in itself be a good faith determination of value
in the case of a transaction between the Plan and a disqualified person.
However, in other cases, a determination of fair market value based on at least
an annual appraisal independently arrived at by a person who customarily makes
such appraisals and who is independent of any party to the transaction will be
deemed to be a good faith determination of value. Company Stock not readily
tradeable on an established securities market shall be valued by an independent
appraiser meeting requirements similar to the requirements of the Regulations
prescribed under Code Section 170(a)(1).
56
ARTICLE VII
DETERMINATION AND DISTRIBUTION OF BENEFITS
7.1 DETERMINATION OF BENEFITS UPON RETIREMENT
Every Participant may terminate his employment with the Participating Employer
and retire for the purposes hereof on his Normal Retirement Date or Early
Retirement Date. However, a Participant may postpone the termination of his
employment with the Participating Employer to a later date, in which event the
participation of such Participant in the Plan, including the right to receive
allocations pursuant to Section 4.4, shall continue until his Late Retirement
Date. Upon a Participant's Retirement Date, or as soon thereafter as is
practicable, the Trustee shall, at the election of the Participant, distribute
all amounts credited to such Participant's Combined Account in accordance with
Article 8.
7.2 DETERMINATION OF BENEFITS UPON DEATH
(a) Upon the death of a Participant before his Retirement Date or
other termination of his employment, all amounts credited to
such Participant's Combined Account shall become fully Vested.
If elected, distribution of the Participant's Combined Account
shall commence not later than one (1) year after the close of
the Plan Year in which such Participant's death occurs. The
Administrator shall direct the Trustee, in accordance with the
provisions of Article 8, to distribute the value of the
deceased Participant's accounts to the Participant's
Beneficiary.
(b) Upon the death of a Former Participant, the Administrator
shall direct the Trustee, in accordance with the provisions of
Article 8, to distribute any remaining Vested amounts credited
to the accounts of a deceased Former Participant to such
Former Participant's Beneficiary.
(c) Any security interest held by the Plan by reason of an
outstanding loan to the Participant or Former Participant
shall be taken into account in determining the amount of the
death benefit.
(d) The Administrator may require such proper proof of death and
such evidence of the right of any person to receive payment of
the value of the account of a deceased Participant or Former
Participant as the Administrator may deem desirable. The
Administrator's determination of death and of the right of any
person to receive payment shall be conclusive.
(e) The Beneficiary of the death benefit payable pursuant to this
Section shall be the Participant's spouse. Except, however,
the Participant may designate a Beneficiary other than his
spouse if:
57
(1) the spouse has waived the right to be the
Participant's Beneficiary, or
(2) the Participant is legally separated or has been
abandoned (within the meaning of local law) and the
Participant has a court order to such effect (and
there is no "qualified domestic relations order" as
defined in Code Section 414(p) which provides
otherwise), or
(3) the Participant has no spouse, or
(4) the spouse cannot be located.
In such event, the designation of a Beneficiary shall be made on a
form satisfactory to the Administrator. A Participant may at any time
revoke his designation of a Beneficiary or change his Beneficiary by
filing written notice of such revocation or change with the
Administrator. However, the Participant's spouse must again consent
in writing to any change in Beneficiary unless the original consent
acknowledged that the spouse had the right to limit consent only to a
specific Beneficiary and that the spouse voluntarily elected to
relinquish such right. In the event no valid designation of
Beneficiary exists at the time of the Participant's death, the death
benefit shall be payable to his estate.
(f) Any consent by the Participant's spouse to waive any rights to
the death benefit must be in writing, must acknowledge the
effect of such waiver, and be witnessed by a Plan
representative or a notary public. Further, the spouse's
consent must be irrevocable and must acknowledge the specific
nonspouse Beneficiary.
7.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY
In the event of a Participant's Total and Permanent Disability prior to his
Retirement Date or other termination of his employment, all amounts credited to
such Participant's Combined Account shall become fully Vested. In the event of a
Participant's Total and Permanent Disability, the Trustee, in accordance with
the provisions of Article 8, shall distribute to such Participant all amounts
credited to such Participant's Combined Account as though he had retired. If
such Participant elects, distribution shall commence not later than one (1) year
after the close of the Plan Year in which Total and Permanent Disability occurs.
7.4 DETERMINATION OF BENEFITS UPON TERMINATION
(a) If a Participant's employment with the Participating Employer
is terminated for any reason other than death, Total and
Permanent Disability or retirement, such Participant shall be
entitled to such benefits as are provided hereinafter pursuant
to this Section 7.4.
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If a portion of a Participant's Account is forfeited, Company
Stock allocated to the Participant's Company Stock Account
must be forfeited only after the Participant's Other
Investments Account has been depleted. If interest in more
than one class of Company Stock has been allocated to a
Participant's Account, the Participant must be treated as
forfeiting the same proportion of each such class.
Distribution of the funds due to a Terminated Participant
shall be made on the occurrence of an event which would result
in the distribution had the Terminated Participant remained in
the employ of the Participating Employer (upon the
Participant's death, Total and Permanent Disability, Early or
Normal Retirement). However, at the election of the
Participant, the Administrator shall direct the Trustee to
cause the entire Vested portion of the Terminated
Participant's Combined Account to be payable to such
Terminated Participant as soon as administratively feasible
following termination of employment. Any distribution under
this paragraph shall be made in a manner which is consistent
with and satisfies the provisions of Article 8, including, but
not limited to, all notice and consent requirements of Code
Section 411(a)(11) and the Regulations thereunder.
If the value of a Terminated Participant's Vested benefit
derived from Participating Employer and Employee contributions
does not exceed $5,000 for distributions occurring after
December 31,1997, the Administrator shall direct the Trustee
to cause the entire Vested benefit to be paid to such
Participant in a single lump sum.
(b) The Vested portion of any Participant's Account shall be a
percentage of the total amount credited to his Participant's
Account determined on the basis of the Participant's number of
Years of Service according to the following schedule:
Vesting Schedule
Years of Service Percentage
less than 1 0 %
1 20 %
2 40 %
3 60 %
4 80 %
5 or more 100 %
For Participants in the Pioneer American Bank, N.A., 401(k) Plan on
December 31, 2000, the Vested portion of their account for subsequent Plan Years
shall be determined according to the following schedule:
Less than 1 0%
1 20%
2 40%
3 100%
59
For Participants in the M. Griffith, Inc. Employee Savings Plan on December 31,
2000, the Vested portion of their account for subsequent Plan Years shall be
determined according to the following schedule:
Less than 1 0%
1 0%
2 100%
(c) Notwithstanding the vesting schedule above, the Vested
percentage of a Participant's Account shall not be less than
the Vested percentage attained as of the later of the
effective date or adoption date of this amendment and
restatement.
(d) The computation of a Participant's nonforfeitable percentage
of his interest in the Plan shall not be reduced as the
result of any direct or indirect amendment to this Plan.
For this purpose, the Plan shall be treated as having been
amended if the Plan provides for an automatic change in
vesting due to a change in top heavy status. In the event
that the Plan is amended to change or modify any vesting
schedule, a Participant with at least three Years of
Service as of the expiration date of the election period may
elect to have his nonforfeitable percentage computed
under the Plan without regard to such amendment. If a
Participant fails to make such election, then such Participant
shall be subject to the new vesting schedule. The
Participant's election period shall commence on the adoption
date of the amendment and shall end sixty days after the
latest of:
(1) the adoption date of the amendment,
(2) the effective date of the amendment, or
(3) the date the Participant receives written notice of
the amendment from the Participating Employer or
Administrator.
(e)(1) If any Former Participant shall be reemployed by the
Participating Employer before a 1-Year Break in Service
occurs, he shall continue to participate in the Plan in the
same manner as if such termination had not occurred.
(2) If any Former Participant shall be reemployed by the
Participating Employer before five consecutive 1-Year Breaks
in Service, and such Former Participant had received a
distribution of his entire Vested interest prior to his
reemployment, his forfeited account shall be reinstated only
if he repays the full amount distributed to him before the
earlier of five years after the first date on which the
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Participant is subsequently reemployed by the Participating
Employer or the close of the first period of five (5)
consecutive 1-Year Breaks in Service commencing after the
distribution. In the event the Former Participant does repay
the full amount distributed to him, the undistributed portion
of the Participant's Account must be restored in full,
unadjusted by any gains or losses occurring subsequent to the
Valuation Date coinciding with or preceding his termination.
The source for such reinstatement shall first be any
Forfeitures occurring during the year. If such source is
insufficient, then the Participating Employer shall contribute
an amount which is sufficient to restore any such forfeited
Accounts provided, however, that if a discretionary
contribution is made for such year pursuant to Section 4.1(c),
such contribution shall first be applied to restore any such
Accounts and the remainder shall be allocated in accordance
with Section 4.4.
(3)If any Former Participant is reemployed after a 1-Year Break
in Service has occurred, Years of Service shall include Years
of Service prior to his 1-Year Break in Service subject to
the following rules:
(i) If a Former Participant has a 1-Year Break
in Service, his pre-break and post-break
service shall be used for computing Years
of Service for eligibility and for vesting
purposes only after he has been employed
for one Year of Service following the date
of his reemployment with the Participating
Employer;
(ii) Any Former Participant who under the Plan
does not have a nonforfeitable right to any
interest in the Plan resulting from
Participating Employer contributions shall
lose credits otherwise allowable under (i)
above if his consecutive 1-Year Breaks in
Service equal or exceed the greater of (A)
five or (B) the aggregate number of his
pre-break Years of Service;
(iii) After five consecutive 1-Year Breaks in
Service, a Former Participant's Vested
Account balance attributable to pre-break
service shall not be increased as a result
of post-break service;
(iv) If a Former Participant who has not had his
Years of Service before a 1-Year Break in
Service disregarded pursuant to (ii) above
completes a Year of Service for eligibility
purposes following his reemployment with
the Participating Employer, he shall
participate in the Plan retroactively from
his date of reemployment;
(v) If a Former Participant who has not had his
Years of Service before a 1-Year Break in
Service disregarded pursuant to (ii) above
completes a Year of Service (a 1-Year Break
61
in Service previously occurred, but
employment had not terminated), he shall
participate in the Plan retroactively from
the first day on which he is credited with
an Hour of Service after the first
eligibility computation period in which he
incurs a 1-Year Break in Service.
62
ARTICLE VIII
PAYMENT OR DISTRIBUTION OF BENEFIT
8.1 TIME FOR DISTRIBUTION OF BENEFITS
Distribution of benefits under the Plan shall be made or commence not later than
the sixtieth day following the close of the Plan Year in which a Participant's
Retirement occurs, subject, however, to Sections 8.3, 9.1, 9.2 and 9.3.
Subject to Sections 8.3 and 8.4, distribution of severance benefits under the
Plan shall be made as promptly as practicable upon the request of a Former
Participant who has terminated employment with a Participating Employer (or of
the Beneficiary of a deceased Former Participant). If the value of a Former
Participant's Combined Account does not exceed $5,000 for distributions
occurring after December 31, 1997, the combined Account shall be distributed to
him as promptly as practicable following the close of the Plan Year in which he
first incurs a One-Year Break in Service. If the value of a Participant's or
Former Participant's Combined Account exceeds $5,000 for distributions occurring
after December 31, 1997, distribution of the combined Account shall not be made
or commence without the consent of the Participant or Former Participant (and
his spouse, if he is married) before the earlier of (a) the Participant's or
Former Participant's sixty-fifth birthday or (b) the Participant's or Former
Participant's death. Subject to 8.3 distribution of a Participant's or Former
Participant's combined Account shall commence no later than the sixtieth day
following the close of the Plan Year described in the preceding sentence.
A distribution to which Sections 401(a)(11) and 417 of the Code do not apply may
commence less than thirty days after the notice required under Income Tax
Regulations Section 1.411(a)-11(c) is given, provided that the Administrator
informs the distributee that he has a right to a period of at least thirty days
after receiving the notice to consider whether or not to elect a distribution
and if so, what form of distribution, and the Participant, Former Participant or
Beneficiary thereafter affirmatively elects a distribution.
8.2 MANNER OF DISTRIBUTION
Effective May 1, 2001 distributions to a Participant, Former Participant or
Beneficiary shall be distributed in one lump sum payment, subject to the
provisions of Section 13.17.
Effective for distributions occurring prior to May 1, 2001 and subject to
Section 8.3, Section 8.4, Section 9.1, Section 9.2 and Section 9.3, retirement
and severance benefits determined under Article 7 shall be distributed in cash
or kind, in one or any combination of the following manners selected by the
Participant (which term shall, for purposes of this Section 8.2, include a
Former Participant):
(a) In a lump sum distribution or in one or more partial
distributions in such amount as the Participant may from time
to time elect;
63
(b) In substantially equal installments over a period certain not
to exceed the life expectancy of the Participant or the joint
life and last survivor expectancy of the Participant and his
Designated Beneficiary;
(c) By purchase from an insurance company and distribution to the
Participant of a nontransferable fixed or variable annuity
contract, other than a life annuity contract, providing for
payments over a period certain not to exceed the life
expectancy of the Participant or the joint life and last
survivor expectancy of the Participant and his Designated
Beneficiary; or
(d) By purchase from an insurance company and distribution to the
Participant of a nontransferable life annuity contract
providing for payments over a period not to exceed the life of
the Participant (with or without a joint and survivor 50, 75
or 100 percent or period certain or guaranteed refund
feature).
If distribution is made under Paragraph (b), (c) or (d) above, unless
distribution is made in the form of a Qualified Joint and Survivor Annuity, the
distribution must be made in a manner that satisfies the requirements of Section
8.3
Subject to Section 8.4, in the event of the death of a Participant who
had begun to receive a distribution of benefits in installments or as an annuity
under the foregoing provisions of this Section 8.2, distribution of installments
shall continue after his death to his Beneficiary, over a period no longer than
that contemplated at the commencement of distribution to the deceased
Participant. In the event of the death of a Participant who had not received any
distribution of benefits, distribution to his Beneficiary of benefits determined
under Article 7 shall be made or commence promptly after his death, and in no
event later than the sixtieth day following the close of the Plan Year in which
his death occurred; provided, however, that the Beneficiary may elect to
postpone the commencement of benefit distributions until any date which meets
the requirements stated in the following paragraphs:
(e) If the spouse of the deceased Participant is his Designated
Beneficiary for any portion of his Account, payment of such
portion must commence no later than the later of (i) December
31 of the calendar year immediately following the calendar
year in which the Participant died, and (ii) December 31 of
the calendar year in which the deceased Participant would have
attained age seventy and one-half.
(f) If any portion of the deceased Participant's Account is
payable to a Designated Beneficiary other than his spouse,
payment of such portion must commence on or before December 31
of the calendar year immediately following the calendar year
in which he died.
(g) Prior to May 1, 2001, Distributions under Paragraphs (e) and
(f) may be made (i) in a lump sum, (ii) in a series of
substantially equal annual (or more frequent) installments
over a period not exceeding the Designated Beneficiary's life
64
expectancy; or (iii) an annuity. Distribution occurring on or
after May 1, 2001 will be made in a lump sum.
(h) In any case other than those described in Paragraphs (e) and
(f), the entire Account of the deceased Participant must be
distributed by December 31 of the calendar year including the
fifth anniversary of the Participant's date of death, in a
lump sum or in such installments as the Beneficiary elects.
(i) If the Designated Beneficiary of a deceased Participant who
had not received any distribution of benefits from the Plan at
the time of his death is his surviving spouse, and his
surviving spouse dies before payment of benefits from the Plan
commences, then the rule stated in Paragraph (h) shall apply
as though the surviving spouse were the Participant.
Life expectancy and joint and last survivor expectancy shall be
computed by use of the expected return multiples in Tables V and VI of Income
Tax Regulations Section 1.72-9. The life expectancy or expectancies of a
Participant and his spouse shall be redetermined every year, unless the
Participant has elected in writing on or before his required beginning date
specified in Section 11.3 that one or both of such expectancies not be
recalculated. The life expectancy of a Designated Beneficiary who is not the
Participant's spouse shall not be recalculated.
For purposes of this Section 8.2, distribution of a Participant's
benefit is considered to begin on the Participant's required beginning date (or,
if applicable, the date distribution is required to begin to the surviving
spouse pursuant to Paragraph (e)). Any amount paid to a child of the Participant
will be treated as if it had been paid to the surviving spouse if the amount
becomes payable to the surviving spouse when the child reaches the age of
majority.
8.3 DEFERRED DISTRIBUTION; ALTERNATIVE METHODS OF DISTRIBUTION
Notwithstanding Section 8.1, a Participant (which term shall, for purposes of
this Section 8.3, include a Former Participant) may elect to postpone the
commencement of benefit distributions until any date which meets the
requirements stated in this Section 8.3. (The failure of a Participant to make a
written request for distribution of his benefit (with the written consent of his
spouse, if he is married) shall be deemed to be an election to postpone benefit
distributions under this Section 8.3). Distributions must in all events satisfy
the minimum distribution requirements in Section 401(a)(9) of the Code and any
proposed, temporary or final regulation promulgated thereunder.
The entire interest of a Participant or Former Participant, must be
distributed, or begin to be distributed, no later than the Participant's
required beginning date, determined as follows:
(a) GENERAL RULE. The required beginning date of a Participant is
the first day of April of the calendar year following the
65
later of the calendar year in which the Participant attains
age seventy and one-half or the calendar year in which the
Participant's Retirement occurs.
(b) FORMER PARTICIPANTS AND FIVE PERCENT OWNERS. The required
beginning date of a Former Participant, or a Participant who
is a five percent owner (all such categories of persons being
referred to in this Section 8.3(b) as "Participants") is the
first day of April following the calendar year in which the
Participant attains age seventy and one-half.
(c) RULES FOR FIVE PERCENT OWNERS. A Participant is treated as a
five percent owner for purposes of this Section 8.3 if he is a
"5-percent owner" as defined in Section 416(i) of the Code at
any time during the Plan Year ending with or within the
calendar year in which he attains age sixty-six and one-half,
or any subsequent Plan Year. Once distributions have begun to
a five percent owner under this Section 8.3, they must
continue, even if the Participant thereafter ceases to be a
five percent owner.
Commencing with the calendar year immediately preceding a Participant's
or Former Participant's required beginning date, the minimum amount required to
be distributed with respect to each calendar year is the Participant's or Former
Participant's applicable Account balance divided by the life expectancy or joint
life and last survivor expectancy that measures the period certain of the
distribution. The applicable Account balance is the credit balance of the
Participant's or Former Participant's Account as of the last day of the calendar
year immediately preceding the calendar year for which the minimum distribution
amount is determined; provided, however, that any distribution made on or before
the Participant's or Former Participant's required beginning date, with respect
to the first calendar year in which minimum distributions are required, shall be
treated for this purpose as if it had been made in the calendar year immediately
preceding the Participant's or Former Participant's required beginning date. A
Participant's or Former Participant's first minimum required distribution must
be made on or before the Participant's or Former Participant's required
beginning date. The minimum required distribution for each subsequent calendar
year, including the minimum distribution for the calendar year in which the
Participant's or Former Participant's required beginning date occurs, must be
made on or before December 31 of the calendar year with respect to which it is
made. Notwithstanding the foregoing provisions of this paragraph, if the
Participant's or Former Participant's interest is to be paid in the form of an
annuity, payments under the annuity shall satisfy the requirements of Section
401(a)(9) of the Code and Income Tax Regulations Sections 1.401(a)(9)-1 and
1.401(a)(9)-2 and any additional benefits accruing to the Participant after his
required beginning date shall be distributed as a separate and identifiable
component of the annuity, beginning with the first payment interval ending in
the calendar year immediately following the calendar year in which the
additional benefits accrue.
For purposes of this Section 8.3, life expectancy and joint and last
survivor expectancy shall be computed by use of the expected return multiples in
Tables V and VI of Income Tax Regulations Section 1.72-9. The life expectancy or
expectancies of a Participant or Former Participant and his spouse shall be
66
redetermined every year, unless the Participant or Former Participant explicitly
elects otherwise in writing not later than his required beginning date.
Distributions made to satisfy the requirements of this Section 8.3
shall be made from all Accounts on a pro-rata basis.
8.4 DISTRIBUTIONS TO MARRIED PARTICIPANTS
Notwithstanding the foregoing provisions of this Article 8, unless a
married Participant elects otherwise in accordance with this Section 8.4,
distribution of his Account commencing during his lifetime shall be made in the
form of a fifty percent Qualified Joint and Survivor Annuity for him and his
spouse, and distribution of his Account commencing after his death shall be made
in the form of a Survivor Annuity for his spouse.
A married Participant may elect, within the periods hereinafter
described, not to have distribution of his Account made as described in the
preceding paragraph. The election period with respect to the Qualified Joint and
Survivor Annuity shall be the ninety days ending on the Annuity Starting Date,
and the election period with respect to the Survivor Annuity shall be the period
commencing on the first day of his participation in the Plan and ending at his
death; provided, however, that when a Participant's employment with the
Affiliated Companies terminates, the election period for the Qualified Joint and
Survivor Annuity shall commence on the date of such termination. The election
shall be made in writing in a form acceptable to the Administrator and shall not
take effect unless either (a) the Participant's spouse consents in writing to
the election, and the spouse's consent acknowledges the effect of the election
and is witnessed by a notary public or a representative of the Plan, or (b) it
is established to the satisfaction of the Administrator that the Participant has
no spouse, or that the spouse's consent cannot be obtained because the spouse
cannot be located, or because of such other circumstances as may be prescribed
in regulations pursuant to Section 417 of the Code. An election shall not be
effective unless it designates (i) a specific Beneficiary, including any class
of beneficiaries or any contingent beneficiaries, which may not be changed
without spousal consent (unless the spouse's consent expressly permits
designations by the Participant without any further spousal consent), and (ii) a
form of benefit payment which may not be changed without spousal consent (unless
the spouse's consent expressly permits designations by the Participant without
any further spousal consent). Any election may be revoked at any time during the
period in which such an election may be made; such revocation shall be made in
writing by the Participant or Former Participant in a form acceptable to the
Administrator. No election or revocation shall be effective until its delivery
to the Administrator.
The Administrator shall furnish to each Participant or Former
Participant, within a reasonable time before the commencement of the applicable
election periods described in the preceding paragraph (or, if later, the date on
which this Section 8.4 becomes applicable to him), a written explanation of: the
terms and conditions of the Qualified Joint and Survivor Annuity and the
Survivor Annuity; the Participant's right to make, and the effect of, an
election to waive either or both of the Qualified Joint and Survivor Annuity and
the Survivor Annuity, and to revoke such an election; and the right of the
67
Participant's spouse to prevent such an election by withholding the necessary
consent.
Notwithstanding the foregoing, in the case of a married Participant
whose Account balance at the time of distribution is not more than $5,000 for
distributions occurring after December 31, 1997, or any case in which the
Participant (if living) and his spouse, if any, consent thereto in writing,
distribution shall be made in a lump sum in accordance with Section 8.2.
8.5 TRANSITIONAL RULE
Notwithstanding the other requirements of this Article 8, if a written
designation of a method of distribution of his benefits, whether relating to
benefits under Article 8 or Article 9, was executed by a Participant or Former
Participant prior to January 1, 1984 and such designated method of distribution
was permissible under the provisions of the Code in effect prior to January 1,
1984, such Participant's benefits shall be distributed in the manner and to the
person or persons so specified, provided that the Participant may cause any
payment or payments under such method to be accelerated and distributed.
8.6 NOTICE OF DEATH, RETIREMENT OR TERMIATION OF SERVICES
As soon as possible after the death, Retirement or other termination of service
of a Participant or Former Participant, the Administrator shall deliver to the
Trustee a notice specifying the name and address of the Participant or Former
Participant (including, if applicable, any designated or contingent Beneficiary)
who is entitled to receive benefits under the Plan, the manner in which such
benefits are to be received and the medium of payment.
8.7 PAYMENT IN A LUMP SUM
If a Participant, Former Participant or Beneficiary elects to receive benefits
in the form of a lump sum distribution, the Administrator shall notify the
Trustee to make such distribution in accordance with the Administrator's notice.
8.8 PAYMENT IN INSTALLMENTS
If a part or all of the benefits of a Participant, Former Participant or
Beneficiary are to be deferred and distributed in installments over a period
certain, the Administrator shall direct the Trustee to make annual (or more
frequent) distributions in accordance with the Administrator's notice.
8.9 DISTRIBUTION OF ANNUITY CONTRACTS
If a part or all of the benefits of a Participant, Former Participant or
Beneficiary are to be distributed in the form of an annuity contract, the
Administrator shall notify the Trustee to purchase from an insurance company and
distribute an annuity contract containing such terms and conditions as the
Administrator shall specify in its notice.
68
8.10 DISTRIBUTION TO QUALIFIED RETIREMENT PLAN
Any other provision hereof to the contrary notwithstanding, the Administrator
may, but shall not be required to, direct that any portion or all of the Account
otherwise distributable to such Participant be transferred directly to the
trustee or other fiduciary of a Tax-Qualified Retirement Plan of a successor
employer of the Participant. If a distribution shall be made in accordance with
this Section 8.10, the Administrator shall notify the Trustee to make such
distribution in accordance with the Administrator's notice.
8.11 CESSATION OF INTEREST
Upon the delivery to a Participant, Former Participant or Beneficiary of a lump
sum distribution or an annuity contract or the sum of all installments or the
transfer of his entire Account to the trustee or other fiduciary of a
Tax-Qualified Retirement Plan, as directed by the Administrator in its notice,
the interest of such Participant, Former Participant or Beneficiary in the Plan
and Trust shall thereupon cease.
8.12 MISSING PERSONS
If a person entitled to benefits under the Plan cannot be located after diligent
search by the Administrator or the Trustee and the whereabouts of such person
continues to be unknown for a period of three years, the Administrator or
Trustee may determine that such person has died whereupon such benefits shall be
distributed to the Beneficiary or Beneficiaries determined in accordance with
Article 7 or if no such Beneficiary or Beneficiaries can be determined or
located after reasonable efforts, the Administrator may determine that such
benefits are forfeited and the amount thereof shall be allocated as provided in
Section 4.1; provided, however, that such benefits shall be restored to the
Former Participant or Beneficiary upon the filing of a claim within the time
prescribed by applicable law or regulations.
8.13 MAILING OF BENEFITS
Whenever the Trustee is directed to make payment or delivery of benefits in
accordance with a notice of the Administrator, mailing a check in the required
amount to the person or persons entitled thereto at the address designated in
such notice shall be adequate delivery by the Trustee for all purposes.
8.14 MINORS AND INCOMPETENTS
In the event that any benefit hereunder becomes payable to a minor or to a
person under legal disability or to a person not judicially declared incompetent
but who, by reason of illness or mental or physical disability, is, in the
opinion of the Administrator, unable properly to administer such benefit, then
the same shall be paid out in such of the following ways as the Administrator
deems best, and the Trustee, the Administrator and the Firm shall not incur any
liability therefore: (a) directly to such person; (b) to the legally appointed
guardian or conservator of such person; or (c) to some relative or friend for
the care and support of such person.
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8.15 HOW PLAN BENEFIT WILL BE DISTRIBUTED
(a) Distribution of a Participant's benefit may be made in cash or
Company Stock or both, provided, however, that if a
Participant or Beneficiary so demands, such benefit (other
than Company Stock reinvested pursuant to Section 4.12(c))
shall be distributed only in the form of Company Stock. Prior
to making a distribution of benefits, the Administrator shall
advise the Participant or his Beneficiary, in writing, of the
right to demand that benefits be distributed solely in Company
Stock.
(b) If a Participant or Beneficiary demands that benefits be
distributed solely in Company Stock, distribution of a
Participant's benefit will be made entirely in whole shares or
other units of Company Stock. Any balance in a Participant's
Other Investments Account will be applied to acquire for
distribution the maximum number of whole shares or other units
of Company Stock at the then fair market value. Any fractional
unit value unexpended will be distributed in cash. If Company
Stock is not available for purchase by the Trustee, then the
Trustee shall hold such balance until Company Stock is
acquired and then make such distribution, subject to Sections
8.1 and 8.3.
(c) The Trustee will make distribution from the Trust only on
instructions from the Administrator.
(d) Notwithstanding anything contained herein to the contrary, if
the Employer charter or by-laws restrict ownership of
substantially all shares of Company Stock to Employees and the
Trust Fund, as described in Code Section 409(h)(2), the
Administrator shall distribute a Participant's Combined
Account entirely in cash without granting the Participant the
right to demand distribution in shares of Company Stock.
(e) Except as otherwise provided herein, Company Stock distributed
by the Trustee may be restricted as to sale or transfer by the
by-laws or articles of incorporation of the Employer, provided
restrictions are applicable to all Company Stock of the same
class. If a Participant is required to offer the sale of his
Company Stock to the Employer before offering to sell his
Company Stock to a third party, in no event may the Employer
pay a price less than that offered to the distributee by
another potential buyer making a bona fide offer and in no
event shall the Trustee pay a price less than the fair market
value of the Company Stock.
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8.16 RIGHT OF FIRST REFUSALS
(a) If any Participant, his Beneficiary or any other person to
whom shares of Company Stock are distributed from the
Plan (the "Selling Participant") shall, at any time, desire to
sell some or all of such shares (the "Offered
Shares") to a third party (the "Third Party"), the Selling
Participant shall give written notice of such desire to
the Employer and the Administrator, which notice shall contain
the number of shares offered for sale, the proposed
terms of the sale and the names and addresses of both the
Selling Participant and Third Party. Both the Trust Fund
and the Employer shall each have the right of first refusal
for a period of fourteen days from the date the Selling
Participant gives such written notice to the Employer and the
Administrator (such fourteen day period to run
concurrently against the Trust Fund and the Employer) to
acquire the Offered Shares. As between the Trust Fund and
the Employer, the Trust Fund shall have priority to acquire
the shares pursuant to the right of first refusal. The
selling price and terms shall be the same as offered by the
Third Party.
(b) If the Trust Fund and the Employer do not exercise their right
of first refusal within the required fourteen day period
provided above, the Selling Participant shall have the right,
at any time following the expiration of such fourteen day
period, to dispose of the Offered Shares to the Third Party;
provided, however, that (i) no disposition shall be made to
the Third Party on terms more favorable to the Third Party
than those set forth in the written notice delivered by the
Selling Participant above, and (ii) if such disposition shall
not be made to a third party on the terms offered to the
Employer and the Trust Fund, the offered Shares shall again be
subject to the right of first refusal set forth above.
(c) The closing pursuant to the exercise of the right of first
refusal under Section 8.16(a) above shall take place at such
place agreed upon between the Administrator and the Selling
Participant, but not later than ten days after the Employer or
the Trust Fund shall have notified the Selling Participant of
the exercise of the right of first refusal. At such closing,
the Selling Participant shall deliver certificates
representing the Offered Shares duly endorsed in blank for
transfer, or with stock powers attached duly executed in blank
with all required transfer tax stamps attached or provided
for, and the Employer or the Trust Fund shall deliver the
purchase price, or an appropriate portion thereof, to the
Selling Participant.
8.17 STOCK CERTIFICATE LEGEND
Certificates for shares distributed pursuant to the Plan shall contain the
following legend:
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"The shares represented by this certificate are transferable only upon
compliance with the terms of NBT Bancorp, Inc. 401(k) and Employee Stock
Ownership Plan effective as of January 1, 2001, which grants to NBT Bancorp,
Inc. and the trust for the Plan a right of first refusal, a copy of said Plan
being on file in the office of NBT Bancorp, Inc."
8.18 PUT OPTION
(a) If Company Stock is distributed to a Participant and such
Company Stock is not readily tradeable on an established
securities market, a Participant has a right to require the
Employer to repurchase the Company Stock distributed to such
Participant under a fair valuation formula. Such Stock shall
be subject to the provisions of Section 8.18(b).
(b) The put option must be exercisable only by a Participant, by
the Participant's donees, or by a person (including an
estate or its distributee) to whom the Company Stock passes by
reason of a Participant's death. (Under this
paragraph Participant or Former Participant means a
Participant or Former Participant and the beneficiaries of the
Participant or Former Participant under the Plan.) The put
option must permit a Participant to put the Company Stock
to the Employer. Under no circumstances may the put option
bind the Plan. However, it shall grant the Plan an option
to assume the rights and obligations of the Employer at the
time that the put option is exercised. If it is known at
the time a loan is made that Federal or State law will be
violated by the Employer honoring such put option, the put
option must permit the Company Stock to be put, in a manner
consistent with such law, to a third party (e.g., an
affiliate of the Employer or a shareholder other than the
Plan) that has substantial net worth at the time the loan
is made and whose net worth is reasonably expected to remain
substantial.
The put option shall commence as of the day following the date
the Company Stock is distributed to the Former Participant and
end 60 days thereafter and if not exercised within such 60-day
period, an additional 60-day option shall commence on the
first day of the fifth month of the Plan Year next following
the date the stock was distributed to the Former Participant
(or such other 60-day period as provided in Regulations).
However, in the case of Company Stock that is publicly traded
without restrictions when distributed but ceases to be so
traded within either of the 60-day periods described herein
after distribution, the Employer must notify each holder of
such Company Stock in writing on or before the tenth day after
the date the Company Stock ceases to be so traded that for the
remainder of the applicable 60-day period the Company Stock is
subject to the put option. The number of days between the
tenth day and the date on which notice is actually given, if
later than the tenth day, must be added to the duration of the
put option. The notice must inform distributes of the term of
the put options that they are to hold. The terms must satisfy
the requirements of this paragraph.
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The put option is exercised by the holder notifying the
Employer in writing that the put option is being exercised;
the notice shall state the name and address of the holder and
the number of shares to be sold. The period during which a put
option is exercisable does not include any time when a
distributee is unable to exercise it because the party bound
by the put option is prohibited from honoring it by applicable
Federal or State law. The price at which a put option must be
exercisable is the value of the Company Stock determined in
accordance with Section 6.2. Payment under the put option
involving a "Total Distribution" shall be paid in
substantially equal monthly, quarterly, semiannual or annual
installments over a period certain beginning not later than
thirty days after the exercise of the put option and not
extending beyond years. The deferral of payment is reasonable
if adequate security and a reasonable interest rate on the
unpaid amounts are provided. The amount to be paid under the
put option involving installment distributions must be paid
not later than thirty days after the exercise of the put
option. Payment under a put option must not be restricted by
the provisions of a loan or any other arrangement, including
the terms of the Employer articles of incorporation, unless so
required by applicable state law.
For purposes of this Section, "Total Distribution" means a
distribution to a Participant or his Beneficiary within one
taxable year of the entire Vested Participant's Combined
Account.
(a) An arrangement involving the Plan that creates a put option
must not provide for the issuance of put options other than as
provided under this Section. The Plan (and the Trust Fund)
must not otherwise obligate itself to acquire Company Stock
from a particular holder thereof at an indefinite time
determined upon the happening of an event such as the death of
the holder.
8.19 QUALIFIED DOMESTIC RELATIONS ORDER DISTRIBUTION
All rights and benefits, including elections, provided to a Participant in this
Plan shall be subject to the rights afforded to any alternate payee under a
"Qualified Domestic Relations Order." Furthermore, a distribution to an
alternate payee shall be permitted if such distribution is authorized by a QDRO,
notwithstanding that the QDRO provides for payments to an alternate payee before
the Participant reaches the "earliest retirement age" within the meaning of
Section 414(p)(4)(B) of the Code, and before any distribution other than a
hardship distribution may be made to the Participant pursuant to the Plan.
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ARTICLE 9
WITHDRAWALS AND TRANSFERS FROM ACCOUNTS
9.1 ADVANCE DISTRIBUTION FOR HARDSHIP
(a) The Administrator, at the election of the Participant, shall
direct the Trustee to distribute to any Participant from the
Participant's Account in an amount not in excess of the amount
required to meet the immediate financial need created by the
hardship. The Participant's Account shall be reduced by the
amount of such hardship distribution accordingly. A
distribution will be considered to be made on account of an
immediate and heavy financial need for purposes of this
Section 9.1 if it is made on account of:
(1) Expenses for medical care described in Code Section
213(d) previously incurred by the Participant, his
spouse, or any of his dependents (as defined in
Code Section 152) or necessary for these persons to
obtain medical care;
(2) The costs directly related to the purchase of a
dwelling unit to be used as a principal residence
for the Participant (excluding mortgage payments);
(3) Payment of tuition, related educational fees, and
room and board expenses for the next twelve months
of post-secondary education for the Participant,
his spouse, children, or dependents; or
(4) Payments necessary to prevent the eviction of the
Participant from his principal residence or
foreclosure on the mortgage of the Participant's
principal residence.
(b) No distribution shall be made pursuant to this Section unless
the Administrator, based upon the Participant's representation
and such other facts as are known to the Administrator,
determines that all of the following conditions are satisfied:
(1) The distribution is not in excess of the amount of
the immediate and heavy financial need of the
Participant. The amount of the immediate and heavy
financial need may include any amounts necessary to
pay any federal, state, or local income taxes or
penalties reasonably anticipated to result from the
distribution;
(2) The Plan, and all other plans maintained by the
Participating Employer, provide that the
Participant's elective deferrals and voluntary
Employee contributions will be suspended for at
least twelve months after receipt of the hardship
distribution or, the Participant, pursuant to a
legally enforceable agreement, will suspend his
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elective deferrals and voluntary Employee
contributions to the Plan and all other plans
maintained by the Participating Employer for at
least twelve months after receipt of the hardship
distribution; and
(3) The Plan, and all other plans maintained by the
Participating Employer, provide that the
Participant may not make elective deferrals for the
Participant's taxable year immediately following
the taxable year of the hardship distribution in
excess of the applicable limit under Code Section
402(g) for such next taxable year less the amount
of such Participant's elective deferrals for the
taxable year of the hardship distribution.
(c) Notwithstanding the above, distributions from the
Participant's Elective Account pursuant to this Section shall
be limited, as of the date of distribution, to the
Participant's Elective Account as of the end of the last Plan
Year ending before July 1, 1989, plus the total Participant's
Deferred Compensation after such date, reduced by the amount
of any previous distributions pursuant to this Section.
(d) Any distribution made pursuant to this Section shall be made
in a manner which is consistent with and satisfies the
provisions of Article 8, including, but not limited to, all
notice and consent requirements of Code Section 411(a)(11) and
the Regulations thereunder.
9.2 WITHDRAWALS FROM ROLLOVER CONTRIBUTION ACCOUNT
The Administrator, at the election of the Participant, shall direct the Trustee
to distribute all or a portion of the amount credited to the Participant's
Rollover Account. Any distributions of amounts held in a Participant's Rollover
Account shall be made in a manner which is consistent with and satisfies the
provisions of Article 8, including, but not limited to, all notice and consent
requirements of Code Section 411(a)(11) and the Regulations thereunder.
Furthermore, such amounts shall be considered as part of a Participant's benefit
in determining whether an involuntary cash-out of benefits without Participant
consent may be made.
9.3 WITHDRAWALS FROM EMPLOYER CONTRIBUTION ACCOUNTS AFTER AGE FIFTY-NINE
AND ONE-HALF
Notwithstanding Section 8.1, but subject to reasonable and nondiscriminatory
rules as the Administrator may establish from time to time to facilitate
administration of the Plan, a Participant or Former Participant who has attained
age fifty-nine and one-half may, by giving notice to the Administrator of his
intention to withdraw, at any time and from time to time, withdraw from his
Elective Contribution Account and Non-Elective Contribution Account an amount
not in excess of the Vested balance of such accounts as of the Valuation Date
preceding such withdrawal (adjusted as necessary to reflect contributions
allocated and distributions made since the Valuation Date). The Administrator
shall direct the Trustee to make the distribution requested by the Participant
or Former Participant as promptly as practicable.
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ARTICLE X
TRUSTEE
10.1 BASIC RESPONSIBILITIES OF THE TRUSTEE
(a) The Trustee shall have the following categories of
responsibilities:
(1) Consistent with the "funding policy and method"
determined by the Participating Employer, to
invest, manage, and control the Plan assets
subject, however, to the direction of a Participant
with respect to his Participant Directed Accounts,
the Participating Employer or an Investment Manager
appointed by the Participating Employer or any
agent of the Participating Employer;
(2) At the direction of the Administrator, to pay
benefits required under the Plan to be paid to
Participants, or, in the event of their death, to
their Beneficiaries; and
(3) To maintain records of receipts and disbursements
and furnish to the Participating Employer and/or
Administrator for each Plan Year a written annual
report per Section 8.8.
(b) In the event that the Trustee shall be directed by a
Participant (pursuant to the Participant Direction
Procedures), or the Participating Employer, or an Investment
Manager or other agent appointed by the Participating Employer
with respect to the investment of any or all Plan assets, the
Trustee shall have no liability with respect to the investment
of such assets, but shall be responsible only to execute such
investment instructions as so directed.
(1) The Trustee shall be entitled to rely fully on the
written instructions of a Participant (pursuant to
the Participant Direction Procedures), or the
Participating Employer, or any Fiduciary or
nonfiduciary agent of the Participating Employer,
in the discharge of such duties, and shall not be
liable for any loss or other liability, resulting
from such direction (or lack of direction) of the
investment of any part of the Plan assets.
(2) The Trustee may delegate the duty to execute such
instructions to any nonfiduciary agent, which may
be an affiliate of the Trustee or any Plan
representative.
(3) The Trustee may refuse to comply with any direction
from the Participant in the event the Trustee, in
its sole and absolute discretion, deems such
directions improper by virtue of applicable law.
The Trustee shall not be responsible or liable for
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any loss or expense which may result from the
Trustee's refusal or failure to comply with any
directions from the Participant.
(4) Any costs and expenses related to compliance with
the Participant's directions shall be borne by the
Participant's Directed Account, unless paid by the
Participating Employer.
(c) If there shall be more than one Trustee, they shall act by a
majority of their number, but may authorize one or more of
them to sign papers on their behalf.
10.2 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE
(a) The Trustee shall invest and reinvest the Trust Fund to keep
the Trust Fund invested without distinction between
principal and income and in such securities or property, real
or personal, wherever situated, as the Trustee shall
deem advisable, including, but not limited to, stocks, common
or preferred, bonds and other evidences of
indebtedness or ownership, and real estate or any interest
therein. The Trustee shall at all times in making
investments of the Trust Fund consider, among other factors,
the short and long-term financial needs of the Plan on
the basis of information furnished by the Employer. In making
such investments, the Trustee shall not be restricted
to securities or other property of the character expressly
authorized by the applicable law for trust investments;
however, the Trustee shall give due regard to any limitations
imposed by the Code or the Act so that at all times
the Plan may qualify as an Employee Stock Ownership Plan and
Trust.
(b) The Trustee may employ a bank or trust company pursuant to the
terms of its usual and customary bank agency agreement, under
which the duties of such bank or trust company shall be of a
custodial, clerical and record-keeping nature.
(c) The Trustee may from time to time transfer to a common,
collective, pooled trust fund or money market fund maintained
by any corporate Trustee or affiliate thereof hereunder, all
or such part of the Trust Fund as the Trustee may deem
advisable, and such part or all of the Trust Fund so
transferred shall be subject to all the terms and provisions
of the common, collective, pooled trust fund or money market
fund which contemplate the commingling for investment purposes
of such trust assets with trust assets of other trusts. The
Trustee may, from time to time, withdraw from such common,
collective, pooled trust fund or money market fund all or such
part of the Trust Fund as the Trustee may deem advisable.
(d) In the event the Trustee invests any part of the Trust Fund,
pursuant to the directions of the Administrator, in any shares
of stock issued by the Employer, and the Administrator
thereafter directs the Trustee to dispose of such investment,
78
or any part thereof, under circumstances which, in the opinion
of counsel for the Trustee, require registration of the
securities under the Securities Act of 1933 and/or
qualification of the securities under the Blue Sky laws of any
state or states, then the Employer at its own expense, will
take or cause to be taken any and all such action as may be
necessary or appropriate to effect such registration and/or
qualification.
10.3 OTHER POWERS OF THE TRUSTEE
The Trustee, in addition to all powers and authorities under common law,
statutory authority, including the Act, and other provisions of the Plan, shall
have the following powers and authorities, to be exercised in the Trustee's sole
discretion:
(a) To purchase, or subscribe for, any securities or other
property and to retain the same. In conjunction with the
purchase of securities, margin accounts may be opened and
maintained;
(b) To sell, exchange, convey, transfer, grant options to
purchase, or otherwise dispose of any securities or other
property held by the Trustee, by private contract or at public
auction. No person dealing with the Trustee shall be bound to
see to the application of the purchase money or to inquire
into the validity, expediency, or propriety of any such sale
or other disposition, with or without advertisement;
(c) To vote upon any stocks, bonds, or other securities; to give
general or special proxies or powers of attorney with
or without power of substitution; to exercise any conversion
privileges, subscription rights or other options, and
to make any payments incidental thereto; to oppose, or to
consent to, or otherwise participate in, corporate
reorganizations or other changes affecting corporate
securities, and to delegate discretionary powers, and to pay
any assessments or charges in connection therewith; and
generally to exercise any of the powers of an owner with
respect to stocks, bonds, securities, or other property.
However, the Trustee shall not vote proxies relating to
securities for which it has not been assigned full investment
management responsibilities. In those cases where
another party has such investment authority or discretion, the
Trustee will deliver all proxies to said party who
will then have full responsibility for voting those proxies;
(d) To cause any securities or other property to be registered in
the Trustee's own name or in the name of one or more of the
Trustee's nominees, and to hold any investments in bearer
form, but the books and records of the Trustee shall at all
times show that all such investments are part of the Trust
Fund;
(e) To borrow or raise money for the purposes of the Plan in such
amount, and upon such terms and conditions, as the Trustee
shall deem advisable; and for any sum so borrowed, to issue a
promissory note as Trustee, and to secure the repayment
79
thereof by pledging all, or any part, of the Trust Fund; and
no person lending money to the Trustee shall be bound to see
to the application of the money lent or to inquire into the
validity, expediency, or propriety of any borrowing;
(f) To keep such portion of the Trust Fund in cash or cash
balances as the Trustee may, from time to time, deem to be in
the best interests of the Plan, without liability for interest
thereon;
(g) To accept and retain for such time as the Trustee may deem
advisable any securities or other property received or
acquired as Trustee hereunder, whether or not such securities
or other property would normally be purchased as investments
hereunder;
(h) To make, execute, acknowledge, and deliver any and all
documents of transfer and conveyance and any and all other
instruments that may be necessary or appropriate to carry out
the powers herein granted;
(i) To settle, compromise, or submit to arbitration any claims,
debts, or damages due or owing to or from the Plan, to
commence or defend suits or legal or administrative
proceedings, and to represent the Plan in all suits and legal
and administrative proceedings;
(j) To employ suitable agents and counsel and to pay their
reasonable expenses and compensation, and such agent or
counsel may or may not be agent or counsel for the
Participating Employer;
(k) To invest funds of the Trust in time deposits or savings
accounts bearing a reasonable rate of interest;
(l) To invest in Treasury Bills and other forms of United States
government obligations;
(m) To invest in shares of investment companies registered under
the Investment Company Act of 1940;
(n) To deposit monies in federally insured savings accounts or
certificates of deposit in banks or savings and loan
associations;
(o) To vote Company Stock as provided in Section 8.5;
(p) To consent to or otherwise participate in reorganizations,
recapitalizations, consolidations, mergers and similar
transactions with respect to Company Stock or any other
securities and to pay any assessments or charges in connection
therewith;
(q) To deposit such Company Stock (but only if such deposit does
not violate the provisions of Section 8.5 hereof) or other
securities in any voting trust, or with any protective or like
committee, or with a trustee or with depositories designated
thereby;
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(r) To sell or exercise any options, subscription rights and
conversion privileges and to make any payments incidental
thereto;
(s) To exercise any of the powers of an owner, with respect to
such Company Stock and other securities or other property
comprising the Trust Fund. The Administrator, with the
Trustee's approval, may authorize the Trustee to act on any
administrative matter or class of matters with respect to
which direction or instruction to the Trustee by the
Administrator is called for hereunder without specific
direction or other instruction from the Administrator;
(t) To sell, purchase and acquire put or call options if the
options are traded on and purchased through a national
securities exchange registered under the Securities Exchange
Act of 1934, as amended, or, if the options are not traded on
a national securities exchange, are guaranteed by a member
firm of the New York Stock Exchange;
(u) To appoint a nonfiduciary agent or agents to assist the
Trustee in carrying out any investment instructions of
Participants and of any Investment Manager or Fiduciary, and
to compensate such agent(s) from the assets of the Plan, to
the extent not paid by the Participating Employer;
(v) To do all such acts and exercise all such rights and
privileges, although not specifically mentioned herein, as the
Trustee may deem necessary to carry out the purposes of the
Plan.
10.4 LOANS TO PARTICIPANTS
(a) The Trustee may, in the Trustee's discretion, make loans to
Participants and Beneficiaries under the following
circumstances: (1) loans shall be made available to all
Participants and Beneficiaries on a reasonably equivalent
basis; (2) loans shall not be made available to Highly
Compensated Employees in an amount greater than the amount
made available to other Participants and Beneficiaries; (3)
loans shall bear a reasonable rate of interest; (4) loans
shall be adequately secured; and (5) loans shall provide for
repayment over a reasonable period of time.
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(b) Loans made pursuant to this Section (when added to the
outstanding balance of all other loans made by the Plan to the
Participant) shall be limited to the lesser of:
(1) $50,000 reduced by the excess (if any) of the
highest outstanding balance of loans from the Plan
to the Participant during the one year period
ending on the day before the date on which such
loan is made, over the outstanding balance of loans
from the Plan to the Participant on the date on
which such loan was made, or
(2) one-half (1/2) of the present value of the
non-forfeitable accrued benefit of the Participant
under the Plan (excluding the Participant's Company
Stock Account).
For purposes of this limit, all plans of the Employer shall be
considered one plan.
(c) Loans shall provide for level amortization with payments to be
made not less frequently than quarterly over a period not to
exceed five years. However, loans used to acquire any dwelling
unit which, within a reasonable time, is to be used
(determined at the time the loan is made) as a principal
residence of the Participant shall provide for periodic
repayment over a reasonable period of time that may exceed
five years. For this purpose, a principal residence has the
same meaning as a principal residence under Code Section 1034.
(d) Any loans granted or renewed on or after the last day of the
first Plan Year beginning after December 31, 1988 shall be
made pursuant to a Participant loan program. Such loan program
shall be established in writing and must include, but need not
be limited to, the following:
(1) the identity of the person or positions authorized
to administer the Participant loan program;
(2) a procedure for applying for loans;
(3) the basis on which loans will be approved or
denied;
(4) limitations, if any, on the types and amounts of
loans offered;
(5) the procedure under the program for determining a
reasonable rate of interest;
(6) the types of collateral which may secure a
Participant loan; and
(7) the events constituting default and the steps that
will be taken to preserve Plan assets.
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Such Participant loan program shall be contained in a separate
written document which, when properly executed, is hereby
incorporated by reference and made a part of the Plan.
Furthermore, such Participant loan program may be modified or
amended in writing from time to time without the necessity of
amending this Section.
10.5 VOTING COMPANY STOCK
The Trustee, as directed by the Administrator, shall vote all Company Stock held
by it as part of the Plan assets. Provided, however, that if any agreement
entered into by the Trust provides for voting of any shares of Company Stock
pledged as security for any obligation of the Plan, then such shares of Company
Stock shall be voted in accordance with such agreement. If the Trustee does not
timely receive voting directions from a Participant or Beneficiary with respect
to any Company Stock allocated to that Participant's or Beneficiary's Company
Stock Account, the Trustee shall vote such Company Stock, as directed by the
Administrator.
Notwithstanding the foregoing, if the Employer has a registration-type class of
securities, each Participant or Beneficiary shall be entitled to direct the
Trustee as to the manner in which the Company Stock which is entitled to vote
and which is allocated to the Company Stock Account of such Participant or
Beneficiary is to be voted. If the Employer does not have a registration-type
class of securities, each Participant or Beneficiary in the Plan shall be
entitled to direct the Trustee as to the manner in which voting rights on shares
of Company Stock which are allocated to the Company Stock Account of such
Participant or Beneficiary are to be exercised with respect to any corporate
matter which involves the voting of such shares with respect to the approval or
disapproval of any corporate merger or consolidation, recapitalization,
reclassification, liquidation, dissolution, sale of substantially all assets of
a trade or business, or such similar transaction as prescribed in Regulations.
For purposes of this Section the term "registration-type class of securities"
means: (A) a class of securities required to be registered under Section 12 of
the Securities Exchange Act of 1934; and (B) a class of securities which would
be required to be so registered except for the exemption from registration
provided in subsection (g)(2)(H) of such Section 12.
If the Employer does not have a registration-type class of securities and the
by-laws of the Employer require the Plan to vote an issue in a manner that
reflects a one-man, one-vote philosophy, each Participant or Beneficiary shall
be entitled to cast one vote on an issue and the Trustee shall vote the shares
held by the Plan in proportion to the results of the votes cast on the issue by
the Participants and Beneficiaries.
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10.6 DUTIES OF THE TRUSTEE REGARDING PAYMENTS
(a) The Trustee shall make distributions from the Trust Fund at
such times and in such numbers of shares or other units
of Company Stock and amounts of cash to or for the benefit of
the person entitled thereto under the Plan as the
Administrator directs in writing. Any undistributed part of a
Participant's interest in his accounts shall be
retained in the Trust Fund until the Administrator directs its
distribution. Where distribution is directed in
Company Stock, the Trustee shall cause an appropriate
certificate to be issued to the person entitled thereto and
mailed to the address furnished it by the Administrator. Any
portion of a Participant's Combined Account to be
distributed in cash shall be paid by the Trustee mailing its
check to the same person at the same address. If a
dispute arises as to who is entitled to or should receive any
benefit or payment, the Trustee may withhold or cause
to be withheld such payment until the dispute has been
resolved.
(b) As directed by the Administrator, the Trustee shall make
payments out of the Trust Fund. Such directions or
instructions need not specify the purpose of the payments so
directed and the Trustee shall not be responsible in any way
respecting the purpose or propriety of such payments except as
mandated by the Act.
(c) In the event that any distribution or payment directed by the
Administrator shall be mailed by the Trustee to the
person specified in such direction at the latest address of
such person filed with the Administrator, and shall be
returned to the Trustee because such person cannot be located
at such address, the Trustee shall promptly notify the
Administrator of such return. Upon the expiration of sixty
days after such notification, such direction shall become
void and unless and until a further direction by the
Administrator is received by the Trustee with respect to such
distribution or payment, the Trustee shall thereafter continue
to administer the Trust as if such direction had not
been made by the Administrator. The Trustee shall not be
obligated to search for or ascertain the whereabouts of any
such person.
10.7 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES
The Trustee shall be paid such reasonable compensation as shall from time to
time be agreed upon in writing by the Participating Employer and the Trustee. An
individual serving as Trustee who already receives full-time pay from the
Participating Employer shall not receive compensation from the Plan. In
addition, the Trustee shall be reimbursed for any reasonable expenses, including
reasonable counsel fees incurred by it as Trustee. Such compensation and
expenses shall be paid from the Trust Fund unless paid or advanced by the
Participating Employer. All taxes of any kind and all kinds whatsoever that may
be levied or assessed under existing or future laws upon, or in respect of, the
Trust Fund or the income thereof, shall be paid from the Trust Fund.
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10.8 ANNUAL REPORT OF THE TRUSTEE
Within a reasonable period of time after the later of the Anniversary Date or
receipt of the Participating Employer contribution for each Plan Year, the
Trustee shall furnish to the Participating Employer and Administrator a written
statement of account with respect to the Plan Year for which such contribution
was made setting forth:
(a) the net income, or loss, of the Trust Fund;
(b) the gains, or losses, realized by the Trust Fund upon sales or
other disposition of the assets;
(c) the increase, or decrease, in the value of the Trust Fund;
(d) all payments and distributions made from the Trust Fund; and
(e) such further information as the Trustee and/or Administrator
deems appropriate. The Employer, forthwith upon its
receipt of each such statement of account, shall acknowledge
receipt thereof in writing and advise the Trustee
and/or Administrator of its approval or disapproval thereof.
Failure by the Employer to disapprove any such
statement of account within thirty (30) days after its receipt
thereof shall be deemed an approval thereof. The
approval by the Employer of any statement of account shall be
binding as to all matters embraced therein as between
the Employer and the Trustee to the same extent as if the
account of the Trustee had been settled by judgment or
decree in an action for a judicial settlement of its account
in a court of competent jurisdiction in which the
Trustee, the Employer and all persons having or claiming an
interest in the Plan were parties; provided, however,
that nothing herein contained shall deprive the Trustee of its
right to have its accounts judicially settled if the
Trustee so desires.
10.9 AUDIT
(a) If an audit of the Plan's records shall be required by the Act
and the regulations thereunder for any Plan Year, the
Administrator shall direct the Trustee to engage on behalf of
all Participants an independent qualified public
accountant for that purpose. Such accountant shall, after an
audit of the books and records of the Plan in
accordance with generally accepted auditing standards, within
a reasonable period after the close of the Plan Year,
furnish to the Administrator and the Trustee a report of his
audit setting forth his opinion as to whether any
statements, schedules or lists that are required by Act
Section 103 or the Secretary of Labor to be filed with the
Plan's annual report, are presented fairly in conformity with
generally accepted accounting principles applied
consistently. All auditing and accounting fees shall be an
expense of and may, at the election of the Administrator,
be paid from the Trust Fund.
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(b) If some or all of the information necessary to enable the
Administrator to comply with Act Section 103 is maintained by
a bank, insurance company, or similar institution, regulated
and supervised and subject to periodic examination by a state
or federal agency, it shall transmit and certify the accuracy
of that information to the Administrator as provided in Act
Section 103(b) within one hundred twenty days after the end of
the Plan Year or by such other date as may be prescribed under
regulations of the Secretary of Labor.
10.10 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE
(a) The Trustee may resign at any time by delivering to the
Employer, at least thirty days before its effective date, a
written notice of his resignation.
(b) The Employer may remove the Trustee by mailing by registered
or certified mail, addressed to such Trustee at his last known
address, at least thirty days before its effective date, a
written notice of his removal.
(c) Upon the death, resignation, incapacity, or removal of any
Trustee, a successor may be appointed by the Employer; and
such successor, upon accepting such appointment in writing and
delivering same to the Employer, shall, without further act,
become vested with all the estate, rights, powers,
discretions, and duties of his predecessor with like respect
as if he were originally named as a Trustee herein. Until such
a successor is appointed, the remaining Trustee or Trustees
shall have full authority to act under the terms of the Plan.
(d) The Employer may designate one or more successors prior to the
death, resignation, incapacity, or removal of a Trustee. In
the event a successor is so designated by the Employer and
accepts such designation, the successor shall, without further
act, become vested with all the estate, rights, powers,
discretions, and duties of his predecessor with the like
effect as if he were originally named as Trustee herein
immediately upon the death, resignation, incapacity, or
removal of his predecessor.
(e) Whenever any Trustee hereunder ceases to serve as such, he
shall furnish to the Employer and Administrator a written
statement of account with respect to the portion of the Plan
Year during which he served as Trustee. This statement
shall be either (i) included as part of the annual statement
of account for the Plan Year required under Section
10.8 or (ii) set forth in a special statement. Any such
special statement of account should be rendered to the
Employer no later than the due date of the annual statement
of account for the Plan Year. The procedures set forth
in Section 10.8 for the approval by the Employer of annual
statements of account shall apply to any special
statement of account rendered hereunder and approval by the
Employer of any such special statement in the manner
provided in Section 10.8 shall have the same effect upon the
statement as the Employer's approval of an annual
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statement of account. No successor to the Trustee shall have
any duty or responsibility to investigate the acts or
transactions of any predecessor who has rendered all
statements of account required by Section 10.8 and this
subparagraph.
10.11 TRANSFER OF INTEREST
Notwithstanding any other provision contained in this Plan, the Trustee at the
direction of the Administrator shall transfer the Vested interest, if any, of
such Participant in his account to another trust forming part of a pension,
profit sharing or stock bonus plan maintained by such Participant's new employer
and represented by said employer in writing as meeting the requirements of Code
Section 401(a), provided that the trust to which such transfers are made permits
the transfer to be made.
10.12 DIRECT ROLLOVER
(a) Notwithstanding any provision of the Plan to the contrary that
would otherwise limit an Eligible Recipient's election under
this Section, an Eligible Recipient may elect, at the time and
in the manner prescribed by the Administrator, to have any
portion of an Eligible Distribution that is equal to at least
$500 paid to an Eligible Plan specified by the Eligible
Recipient.
(b) For purposes of this Section the following definitions shall
apply:
(1) "Eligible Distribution" means any distribution from
the Plan to an Eligible Recipient, to the extent
that it is includible in the Eligible Recipient's
gross income (or would be includible but for the
exclusion of net unrealized appreciation in
employer securities) and is not required under
Section 401(a)(9) of the Code, unless the
distribution is one of a series of substantially
equal periodic payments made no less frequently
than annually over a specified period of ten or
more years, or the life or life expectancy of an
Eligible Recipient or the joint lives or joint life
expectancies of the Eligible Recipient and a
designated beneficiary or, effective January 1,
2000, the distribution consists of Participating
Employer Elective Contributions and is made
pursuant to Section 9.1 of the Plan.
(2) "Eligible Plan" means any of the following that
agrees to accept an Eligible Recipient's Eligible
Distribution an individual retirement account
described in Section 408(a) of the Code; an
individual retirement annuity described in Section
408(b) of the Code; and for any Eligible recipient
other than a Participant's surviving spouse, a
qualified plan described in Section 401(a) of the
Code or a qualified annuity described in Section
403(a) of the Code.
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(3) "Eligible Recipient" means a Participant; Former
Participant or an alternate payee under a Qualified
Domestic Relations Order who is either the spouse
or former spouse of a Participant or Former
Participant.
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ARTICLE XI
AMENDMENT, TERMINATION AND MERGERS
11.1 AMENDMENT
(a) The Employer shall have the right at any time to amend the Plan,
subject to the limitations of this Section.
(b) No amendment to the Plan shall be effective if it authorizes
or permits any part of the Trust Fund (other than such part as
is required to pay taxes and administration expenses) to be
used for or diverted to any purpose other than for the
exclusive benefit of the Participants or their Beneficiaries
or estates; or causes any reduction in the amount credited to
the account of any Participant; or causes or permits any
portion of the Trust Fund to revert to or become property of
the Participating Employer.
(c) Except as permitted by Regulations, no Plan amendment or
transaction having the effect of a Plan amendment (such as a
merger, plan transfer or similar transaction) shall be
effective to the extent it eliminates or reduces any "Section
411(d)(6) protected benefit" or adds or modifies conditions
relating to "Section 411(d)(6) protected benefits" the result
of which is a further restriction on such benefit unless such
protected benefits are preserved with respect to benefits
accrued as of the later of the adoption date or effective date
of the amendment. "Section 411(d)(6) protected benefits" are
benefits described in Code Section 411(d)(6)(A), early
retirement benefits and retirement-type subsidies, and
optional forms of benefit.
11.2 TERMINATION
(a) The Employer shall have the right at any time to terminate the
Plan. Upon any full or partial termination, all amounts
credited to the affected Participants' Combined Accounts shall
become 100% Vested as provided in Section 7.4 and shall not
thereafter be subject to forfeiture, and all unallocated
amounts shall be allocated to the accounts of all Participants
in accordance with the provisions hereof.
(b) Upon the full termination of the Plan, the Employer shall
direct the distribution of the assets of the Trust Fund to
Participants in a manner which is consistent with and
satisfies the provisions of Article 8. Except as permitted by
Regulations, the termination of the Plan shall not result in
the reduction of "Section 411(d)(6) protected benefits" in
accordance with Section 11.1(c).
(c) The Company shall notify the Trustee in writing if it shall
permanently discontinue contributions hereunder.
Notwithstanding any other provisions of the Plan, if the Plan
is terminated or if the Company shall permanently discontinue
89
contributions hereunder (irrespective of whether the Trust
shall be terminated), the interests of all Participants in the
Plan and Trust shall become fully vested and nonforfeitable as
of the date of such termination or such discontinuance. Upon
the partial termination of the Plan with respect to a group of
Participants, Former Participants or Beneficiaries, the
interests of all such Participants, Former Participants or
Beneficiaries in the Plan and Trust shall become fully vested
and nonforfeitable as of the date of such partial termination.
11.3 MERGER OR CONSOLIDATION
This Plan and Trust may be merged or consolidated with, or its assets and/or
liabilities may be transferred to any other plan and trust only if the benefits
which would be received by a Participant of this Plan, in the event of a
termination of the plan immediately after such transfer, merger or
consolidation, are at least equal to the benefits the Participant would have
received if the Plan had terminated immediately before the transfer, merger or
consolidation, and such transfer, merger or consolidation does not otherwise
result in the elimination or reduction of any "Section 411(d)(6) protected
benefits" in accordance with Section 11.1(c).
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ARTICLE XII
TOP HEAVY
12.1 TOP HEAVY PLAN REQUIREMENTS
For any Top Heavy Plan Year, the Plan shall provide the special vesting
requirements of Code Section 416(b) pursuant to Section 7.4 of the Plan and the
special minimum allocation requirements of Code Section 416(c) pursuant to
Section 4.4 of the Plan.
12.2 DETERMINATION OF TOP HEAVY STATUS
(a) This Plan shall be a Top Heavy Plan for any Plan Year in
which, as of the Determination Date, (1) the Present Value of
Accrued Benefits of Key Employees and (2) the sum of the
Aggregate Accounts of Key Employees under this Plan and all
plans of an Aggregation Group, exceeds sixty percent of the
Present Value of Accrued Benefits and the Aggregate Accounts
of all Key and Non-Key Employees under this Plan and all plans
of an Aggregation Group.
If any Participant is a Non-Key Employee for any Plan Year,
but such Participant was a Key Employee for any prior Plan
Year, such Participant's Present Value of Accrued Benefit
and/or Aggregate Account balance shall not be taken into
account for purposes of determining whether this Plan is a Top
Heavy or Super Top Heavy Plan (or whether any Aggregation
Group which includes this Plan is a Top Heavy Group). In
addition, if a Participant or Former Participant has not
performed any services for any Participating Employer
maintaining the Plan at any time during the five year period
ending on the Determination Date, any accrued benefit for such
Participant or Former Participant shall not be taken into
account for the purposes of determining whether this Plan is a
Top Heavy or Super Top Heavy Plan.
(b) This Plan shall be a Super Top Heavy Plan for any Plan Year in
which, as of the Determination Date, (1) the Present Value of
Accrued Benefits of Key Employees and (2) the sum of the
Aggregate Accounts of Key Employees under this Plan and all
plans of an Aggregation Group, exceeds ninety percent of the
Present Value of Accrued Benefits and the Aggregate Accounts
of all Key and Non-Key Employees under this Plan and all plans
of an Aggregation Group.
(c) Aggregate Account: A Participant's Aggregate Account as of the
Determination Date is the sum of:
(1) his Participant's Combined Account balance as of
the most recent valuation occurring within a twelve
month period ending on the Determination Date;
91
(2) an adjustment for any contributions due as of the
Determination Date. Such adjustment shall be the
amount of any contributions actually made after the
Valuation Date but due on or before the
Determination Date, except for the first Plan Year
when such adjustment shall also reflect the amount
of any contributions made after the Determination
Date that are allocated as of a date in that first
Plan Year.
(3) any Plan distributions made within the Plan Year
that includes the Determination Date or within the
four preceding Plan Years. However, in the case of
distributions made after the Valuation Date and
prior to the Determination Date, such distributions
are not included as distributions for top heavy
purposes to the extent that such distributions are
already included in the Participant's Aggregate
Account balance as of the Valuation Date.
Notwithstanding anything herein to the contrary,
all distributions, including distributions made
prior to January 1, 1984, and distributions under a
terminated plan which if it had not been terminated
would have been required to be included in an
Aggregation Group, will be counted. Further,
distributions from the Plan (including the cash
value of life insurance policies) of a
Participant's account balance because of death
shall be treated as a distribution for the purposes
of this paragraph.
(4) any Employee contributions, whether voluntary or
mandatory. However, amounts attributable to tax
deductible qualified voluntary employee
contributions shall not be considered to be a part
of the Participant's Aggregate Account balance.
(5) with respect to unrelated rollovers and
plan-to-plan transfers (ones which are both
initiated by the Employee and made from a plan
maintained by one employer to a plan maintained by
another employer), if this Plan provides the
rollovers or plan-to-plan transfers, it shall
always consider such rollovers or plan-to-plan
transfers as a distribution for the purposes of
this Section. If this Plan is the plan accepting
such rollovers or plan-to-plan transfers, it shall
not consider such rollovers or plan-to-plan
transfers as part of the Participant's Aggregate
Account balance. However, rollovers or plan-to-plan
transfers accepted prior to January 1, 1984 shall
be considered as part of the Participant's
Aggregate Account balance.
(6) with respect to related rollovers and plan-to-plan
transfers (ones either not initiated by the
Employee or made to a plan maintained by the same
employer), if this Plan provides the rollover or
plan-to-plan transfer, it shall not be counted as a
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distribution for purposes of this Section. If this
Plan is the plan accepting such rollover or
plan-to-plan transfer, it shall consider such
rollover or plan-to-plan transfer as part of the
Participant's Aggregate Account balance,
irrespective of the date on which such rollover or
plan-to-plan transfer is accepted.
(7) For the purposes of determining whether two
employers are to be treated as the same employer in
(5) and (6) above, all employers aggregated under
Code Section 414(b), (c), (m) and (o) are treated
as the same employer.
(d) "Aggregation Group" means either a Required Aggregation Group
or a Permissive Aggregation Group as hereinafter determined.
(1) Required Aggregation Group: In determining a
Required Aggregation Group hereunder, each plan of
the Participating Employer in which a Key Employee
is a participant in the Plan Year containing the
Determination Date or any of the four preceding
Plan Years, and each other plan of the
Participating Employer which enables any plan in
which a Key Employee participates to meet the
requirements of Code Sections 401(a)(4) or 410,
will be required to be aggregated. Such group shall
be known as a Required Aggregation Group.
In the case of a Required Aggregation Group, each
plan in the group will be considered a Top Heavy
Plan if the Required Aggregation Group is a Top
Heavy Group. No plan in the Required Aggregation
Group will be considered a Top Heavy Plan if the
Required Aggregation Group is not a Top Heavy
Group.
(2) Permissive Aggregation Group: The Participating
Employer may also include any other plan not
required to be included in the Required Aggregation
Group, provided the resulting group, taken as a
whole, would continue to satisfy the provisions of
Code Sections 401(a)(4) and 410. Such group shall
be known as a Permissive Aggregation Group.
In the case of a Permissive Aggregation Group, only
a plan that is part of the Required Aggregation
Group will be considered a Top Heavy Plan if the
Permissive Aggregation Group is a Top Heavy Group.
No plan in the Permissive Aggregation Group will be
considered a Top Heavy Plan if the Permissive
Aggregation Group is not a Top Heavy Group.
(3) Only those plans of the Participating Employer in
which the Determination Dates fall within the same
calendar year shall be aggregated in order to
determine whether such plans are Top Heavy Plans.
93
(4) An Aggregation Group shall include any terminated
plan of the Participating Employer if it was
maintained within the last five years ending on the
Determination Date.
(e) "Determination Date" means (a) the last day of the preceding
Plan Year, or (b) in the case of the first Plan Year, the last
day of such Plan Year.
(f) Present Value of Accrued Benefit: In the case of a defined
benefit plan, the Present Value of Accrued Benefit for a
Participant other than a Key Employee, shall be as determined
using the single accrual method used for all plans of
the Participating Employer and Affiliated Employers, or if no
such single method exists, using a method which
results in benefits accruing not more rapidly than the slowest
accrual rate permitted under Code Section
411(b)(1)(C). The determination of the Present Value of
Accrued Benefit shall be determined as of the most recent
Valuation Date that falls within or ends with the 12-month
period ending on the Determination Date except as
provided in Code Section 416 and the Regulations thereunder
for the first and second plan years of a defined benefit
plan.
(g) "Top Heavy Group" means an Aggregation Group in which, as of
the Determination Date, the sum of:
(1) the Present Value of Accrued Benefits of
Key Employees under all defined benefit
plans included in the group, and
(2) the Aggregate Accounts of Key Employees
under all defined contribution plans
included in the group,
exceeds sixty percent of a similar sum determined for all Participants.
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ARTICLE XIII
MISCELLANEOUS
13.1 PARTICIPANT'S RIGHTS
This Plan shall not be deemed to constitute a contract between the Participating
Employer and any Participant or to be a consideration or an inducement for the
employment of any Participant or Employee. Nothing contained in this Plan shall
be deemed to give any Participant or Employee the right to be retained in the
service of the Participating Employer or to interfere with the right of the
Participating Employer to discharge any Participant or Employee at any time
regardless of the effect which such discharge shall have upon him as a
Participant of this Plan.
13.2 ALIENATION
Subject to the exceptions provided below, no benefit which shall be payable out
of the Trust Fund to any person (including a Participant, Former Participant or
his Beneficiary) shall be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance, or charge, and any attempt to
anticipate, alienate, sell, transfer, assign, pledge, encumber, or charge the
same shall be void; and no such benefit shall in any manner be liable for, or
subject to, the debts, contracts, liabilities, engagements, or torts of any such
person, nor shall it be subject to attachment or legal process for or against
such person, and the same shall not be recognized by the Trustee; provided
however, that the rule just stated shall not apply in the case of any Qualified
Domestic Relations Order, nor to any loan pursuant to Section 10.4 nor,
effective for judgments, orders and decrees issued and settlement agreements
entered into on or after August 5, 1997, to any offset of a Participant's,
Former Participant's or Beneficiary's benefits provided under the Plan against
an amount that such person is ordered or required to pay to the Plan if:
(a) The order or requirement to pay arises:
(i) under a judgment of conviction for a crime involving the Plan;
(ii) under a civil judgment (including a consent order or
decree) entered by a court in an action brought in
connection with a violation (or alleged violation) of
Part 4 of Subtitle B of Title I of ERISA; or
(iii) pursuant to a settlement agreement between the
Secretary of Labor and such person in connection with
a violation (or alleged violation) of a Part 4 of
Subtitle B of Title I of ERISA by a fiduciary or any
other person; and
(b) The judgment, order, decree or settlement agreement expressly
provides for the offset of all or part of the amount ordered or
required to be paid to the Plan against the Participant's, Former
Participant's or Beneficiary's benefits provided under the Plan.
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13.3 CONSTRUCTION OF PLAN
This Plan and Trust shall be construed and enforced according to the Act and the
laws of the State of New York to the extent not preempted by the Act.
13.4 GENDER AND NUMBER
Wherever any words are used herein in the masculine, feminine or neuter gender,
they shall be construed as though they were also used in another gender in all
cases where they would so apply, and whenever any words are used herein in the
singular or plural form, they shall be construed as though they were also used
in the other form in all cases where they would so apply.
13.5 LEGAL ACTION
In the event any claim, suit, or proceeding is brought regarding the Trust
and/or Plan established hereunder to which the Trustee, the Participating
Employer or the Administrator may be a party, and such claim, suit, or
proceeding is resolved in favor of the Trustee, the Participating Employer or
the Administrator, they shall be entitled to be reimbursed from the Trust Fund
for any and all costs, attorney's fees, and other expenses pertaining thereto
incurred by them for which they shall have become liable.
13.6 PROHIBITION AGAINST DIVERSION OF FUNDS
(a) Except as provided below and otherwise specifically permitted
by law, it shall be impossible by operation of the Plan or of
the Trust, by termination of either, by power of revocation or
amendment, by the happening of any contingency, by collateral
arrangement or by any other means, for any part of the corpus
or income of any trust fund maintained pursuant to the Plan or
any funds contributed thereto to be used for, or diverted to,
purposes other than the exclusive benefit of Participants,
Retired Participants, or their Beneficiaries.
(b) In the event the Participating Employer shall make an
excessive contribution under a mistake of fact pursuant to Act
Section 403(c)(2)(A), the Participating Employer may demand
repayment of such excessive contribution at any time within
one (1) year following the time of payment and the Trustees
shall return such amount to the Participating Employer within
the one year period. Earnings of the Plan attributable to the
excess contributions may not be returned to the Participating
Employer but any losses attributable thereto must reduce the
amount so returned.
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13.7 BONDING
Every Fiduciary, except a bank or an insurance company, unless exempted by the
Act and regulations thereunder, shall be bonded in an amount not less than 10
percent of the amount of the funds such Fiduciary handles; provided, however,
that the minimum bond shall be $1,000 and the maximum bond, $500,000. The amount
of funds handled shall be determined at the beginning of each Plan Year by the
amount of funds handled by such person, group, or class to be covered and their
predecessors, if any, during the preceding Plan Year, or if there is no
preceding Plan Year, then by the amount of the funds to be handled during the
then current year. The bond shall provide protection to the Plan against any
loss by reason of acts of fraud or dishonesty by the Fiduciary alone or in
connivance with others. The surety shall be a corporate surety company (as such
term is used in Act Section 412(a)(2)), and the bond shall be in a form approved
by the Secretary of Labor. Notwithstanding anything in the Plan to the contrary,
the cost of such bonds shall be an expense of and may, at the election of the
Administrator, be paid from the Trust Fund or by the Participating Employer.
13.8 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE
Neither the Participating Employer, the Administrator, nor the Trustee, nor
their successors shall be responsible for the validity of any Contract issued
hereunder or for the failure on the part of the insurer to make payments
provided by any such Contract, or for the action of any person which may delay
payment or render a Contract null and void or unenforceable in whole or in part.
13.9 INSURER'S PROTECTIVE CLAUSE
Any insurer who shall issue Contracts hereunder shall not have any
responsibility for the validity of this Plan or for the tax or legal aspects of
this Plan. The insurer shall be protected and held harmless in acting in
accordance with any written direction of the Trustee, and shall have no duty to
see to the application of any funds paid to the Trustee, nor be required to
question any actions directed by the Trustee. Regardless of any provision of
this Plan, the insurer shall not be required to take or permit any action or
allow any benefit or privilege contrary to the terms of any Contract which it
issues hereunder, or the rules of the insurer.
13.10 RECEIPT AND RELEASE FOR PAYMENTS
Any payment to any Participant, his legal representative, Beneficiary, or to any
guardian or committee appointed for such Participant or Beneficiary in
accordance with the provisions of the Plan, shall, to the extent thereof, be in
full satisfaction of all claims hereunder against the Trustee and the
Participating Employer, either of whom may require such Participant, legal
representative, Beneficiary, guardian or committee, as a condition precedent to
such payment, to execute a receipt and release thereof in such form as shall be
determined by the Trustee or Participating Employer.
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13.11 ACTION BY THE EMPLOYER
Whenever the Participating Employer under the terms of the Plan is permitted or
required to do or perform any act or matter or thing, it shall be done and
performed by a person duly authorized by its legally constituted authority.
13.12 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY
The "named Fiduciaries" of this Plan are (1) the Employer, (2) the Administrator
and (3) the Trustee. The named Fiduciaries shall have only those specific
powers, duties, responsibilities, and obligations as are specifically given them
under the Plan or as accepted by or assigned to them pursuant to any procedure
provided under the Plan, including but not limited to any agreement allocating
or delegating their responsibilities, the terms of which are incorporated herein
by reference. In general, unless otherwise indicated herein or pursuant to such
agreements, the Employer shall have the duties specified in Article II hereof,
as the same may be allocated or delegated thereunder, including but not limited
to the responsibility for making the contributions provided for under Section
4.1; and shall have the authority to appoint and remove the Trustee and the
Administrator; to formulate the Plan's "funding policy and method"; and to amend
or terminate, in whole or in part, the Plan. The Administrator shall have the
responsibility for the administration of the Plan, including but not limited to
the items specified at Article II of the Plan, as the same may be allocated or
delegated thereunder. The Trustee shall have the responsibility of management
and control of the assets held under the Trust, except to the extent directed
pursuant to Article II or with respect to those assets, the management of which
has been assigned to an Investment Manager, who shall be solely responsible for
the management of the assets assigned to it, all as specifically provided in the
Plan and any agreement with the Trustee. Each named Fiduciary warrants that any
directions given, information furnished, or action taken by it shall be in
accordance with the provisions of the Plan, authorizing or providing for such
direction, information or action. Furthermore, each named Fiduciary may rely
upon any such direction, information or action of another named Fiduciary as
being proper under the Plan, and is not required under the Plan to inquire into
the propriety of any such direction, information or action. It is intended under
the Plan that each named Fiduciary shall be responsible for the proper exercise
of its own powers, duties, responsibilities and obligations under the Plan as
specified or allocated herein. No named Fiduciary shall guarantee the Trust Fund
in any manner against investment loss or depreciation in asset value. Any person
or group may serve in more than one Fiduciary capacity. In the furtherance of
their responsibilities hereunder, the "named Fiduciaries" shall be empowered to
interpret and apply the Plan and Trust, including the power to resolve questions
of law and/or fact and to resolve ambiguities, inconsistencies and omissions,
which findings shall be binding, final and conclusive.
13.13 HEADINGS
The headings and subheadings of this Plan have been inserted for convenience of
reference and are to be ignored in any construction of the provisions hereof.
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13.14 APPROVAL BY INTERNAL REVENUE SERVICE
(a) Notwithstanding anything herein to the contrary, contributions
to this Plan are conditioned upon the qualification of the
Plan under Code Section 401. If the Plan receives an adverse
determination with respect to its qualification, then the Plan
may return such contributions to the Participating Employer
within one year after such determination, provided the
application for the determination is made by the time
prescribed by law for filing the Participating Employer's
return for the taxable year in which the Plan was adopted, or
such later date as the Secretary of the Treasury may
prescribe.
(b) Notwithstanding any provisions to the contrary, except
Sections 3.5, 3.6, and 4.1(d), any contribution by the
Participating Employer to the Trust Fund is conditioned upon
the deductibility of the contribution by the Participating
Employer under the Code and, to the extent any such deduction
is disallowed, the Participating Employer may, within one (1)
year following the disallowance of the deduction, demand
repayment of such disallowed contribution and the Trustee
shall return such contribution within one (1) year following
the disallowance. Earnings of the Plan attributable to the
excess contribution may not be returned to the Participating
Employer, but any losses attributable thereto must reduce the
amount so returned.
13.15 UNIFORMITY
All provisions of this Plan shall be interpreted and applied in a uniform,
nondiscriminatory manner. In the event of any conflict between the terms of this
Plan and any Contract purchased hereunder, the Plan provisions shall control.
13.16 SECURITIES AND EXCHANGE COMMISSION APPROVAL
The Employer may request an interpretative letter from the Securities and
Exchange Commission stating that the transfers of Company Stock contemplated
hereunder do not involve transactions requiring a registration of such Company
Stock under the Securities Act of 1933. In the event that a favorable
interpretative letter is not obtained, the Employer reserves the right to amend
the Plan and Trust retroactively to their Effective Dates in order to obtain a
favorable interpretative letter or to terminate the Plan.
13.17 SPECIAL DISTRIBUTION FORMS
Notwithstanding any language contained in the Plan to the contrary, with respect
to Participating Employer contributions made to the Plan on and before December
31, 1994, the following provisions shall apply:
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(a) Upon the death of a Participant before his Retirement Date or
other termination of his employment, all amounts credited to
such Participant's Company Stock Account shall become fully
Vested.
(b) Upon the death of a Former Participant, the Administrator
shall direct the Trustee, to distribute any remaining Vested
amounts credited to the accounts of a deceased Former
Participant to such Former Participant's Beneficiary.
(c) Any security interest held by the Plan by reason of an
outstanding loan to the Participant or Former Participant
shall be taken into account in determining the amount of the
Pre-Retirement Survivor Annuity.
(d) The Administrator may require such proper proof of death and
such evidence of the right of any person to receive payment of
the Company Stock Account attributable to Participating
Employer contributions made on or before December 31, 1994 on
behalf of a deceased Participant or Former Participant as the
Administrator may deem desirable. The Administrator's
determination of death and of the right of any person to
receive payment shall be conclusive.
(e) Unless otherwise elected, the Beneficiary of the death benefit
shall be the Participant's spouse, who shall receive such
benefit in the form of a Pre-Retirement Survivor Annuity,
which is an immediate annuity form of payment for the life of
the surviving spouse of a Participant who dies prior to his
annuity starting date, which is the first day of the first
period for which an amount is paid as an annuity, or in the
case of a benefit not payable in the form of an annuity, the
first day on which all events have occurred which entitle the
Participant to such benefit. Except, however, the Participant
may designate a Beneficiary other than his spouse if:
(1) the Participant and his spouse have validly waived the
Pre-Retirement Survivor Annuity, and the spouse has waived his
or her right to be the Participant's Beneficiary, or
(2) the Participant is legally separated or has been abandoned
(within the meaning of local law) and the Participant has a
court order to such effect (and there is no "qualified
domestic relations order" as defined in Code Section 414(p)
which provides otherwise), or
(3) the Participant has no spouse, or
(4) the spouse cannot be located.
In such event, the designation of a Beneficiary shall be made
on a form satisfactory to the Administrator. A Participant may
at any time revoke his designation of a Beneficiary or change
his Beneficiary by filing written notice of such revocation or
change with the Administrator. However, the Participant's
spouse must again consent in writing to any change in
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Beneficiary unless the original consent acknowledged that the
spouse had the right to limit consent only to a specific
Beneficiary and that the spouse voluntarily elected to
relinquish such right. In the event no valid designation of
Beneficiary exists at the time of the Participant's death, the
death benefit shall be payable to his estate.
(f)(1) Unless otherwise elected as provided below, a Participant
who is married on the Annuity Starting Date and who does not
die before the Annuity Starting Date shall receive the value
of his Company Stock Account derived from Participating
Employer contributions made or before December 31, 1994 in the
form of a joint and survivor annuity. The joint and survivor
annuity is an annuity that commences immediately and shall be
equal in value to a single life annuity. Such joint and
survivor benefits following the Participant's death shall
continue to the spouse during the spouse's lifetime at a rate
equal to 50 percent of the rate at which such benefits were
payable to the Participant. This joint and 50 percent survivor
annuity shall be considered the designated qualified joint and
survivor annuity and automatic form of payment of
Participating Employer contributions made to a Participant's
Company Stock Account on or before December 31, 1994. An
unmarried Participant shall receive the value of his Company
Stock Account derived from Participating Employer
contributions made on or before December 31, 1994 in the form
of a life annuity. Such unmarried Participant, however, may
elect in writing to waive the life annuity. The election must
comply with the provisions of this Section as if it were an
election to waive the joint and survivor annuity by a married
Participant, but without the spousal consent requirement. The
Participant may elect to have any annuity provided for in this
Section distributed upon the attainment of the "earliest
retirement age" under the Plan. The "earliest retirement age"
is the earliest date on which, under the Plan, the Participant
could elect to receive retirement benefits.
(2) Any election to waive the joint and survivor
annuity must be made by the Participant in writing
during the election period and be consented to by
the Participant's spouse. If the spouse is legally
incompetent to give consent, the spouse's legal
guardian, even if such guardian is the Participant,
may give consent. Such election shall designate a
Beneficiary (or a form of benefits) that may not be
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changed without spousal consent (unless the consent
of the spouse expressly permits designations by the
Participant without the requirement of further
consent by the spouse). Such spouse's consent shall
be irrevocable and must acknowledge the effect of
such election and be witnessed by a Plan
representative or a notary public. Such consent
shall not be required if it is established to the
satisfaction of the Administrator that the required
consent cannot be obtained because there is no
spouse, the spouse cannot be located, or other
circumstances that may be prescribed by
Regulations. The election made by the Participant
and consented to by his spouse may be revoked by
the Participant in writing without the consent of
the spouse at any time during the election period.
The number of revocations shall not be limited. Any
new election must comply with the requirements of
this paragraph. A former spouse's waiver shall not
be binding on a new spouse.
(3) The election period to waive the joint and survivor
annuity shall be the ninety day period ending on the
Annuity Starting Date.
(4) With regard to the election, the Administrator
shall provide to the Participant no less than
thirty days and no more than ninety days before the
Annuity Starting Date a written explanation of:
(i) the terms and conditions of the joint and
survivor annuity,
(ii) the Participant's right to make, and the
effect of, an election to waive the joint
and survivor annuity,
(iii) the right of the Participant's spouse to
consent to any election to waive the joint
and survivor annuity, and
(iv) the right of the Participant to revoke such
election, and the effect of such revocation.
(5) Any distribution provided for in this Section may
commence less than thirty days after the notice
required by Code Section 417(a)(3) is given,
provided that:
(i) the Administrator clearly informs the
Participant that the Participant has a
right to a period of 30 days after
receiving the notice to consider whether to
waive the joint and survivor annuity and
consent to a form of distribution other
than a joint and survivor annuity,
(ii) the Participant is permitted to revoke an
affirmative distribution election at least
until the Annuity Starting Date, or, if
later, at any time prior to the expiration
of the 7-day period that begins the day
after the explanation of the joint and
survivor annuity is provided to the
Participant,
(iii) the Annuity Starting Date is after the date
that the explanation of the joint and
survivor annuity is provided to the
Participant. However, the Annuity Starting
Date may be before the date that any
affirmative distribution election is made
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by the Participant and before the date that
the distribution is permitted to commence
under (iv) below, and
(iv) distribution in accordance with the
affirmative election does not commence
before the expiration of the 7-day period
that begins the day after the explanation
of the joint and survivor annuity is
provided to the Participant.
(g) In the event a married Participant duly elects not to receive
his benefit in the form of a joint and survivor annuity, or if
such Participant is not married, in the form of a life
annuity, the Administrator, pursuant to the election of the
Participant, shall direct the Trustee to distribute to a
Participant or his Beneficiary any amount to which he is
entitled under the Plan in one or more of the following
methods:
(1) One lump-sum payment in cash.
(2) Payments over a period certain in monthly,
quarterly, semi-annual, or annual cash installments.
(h) The present value of a Participant's joint and survivor
annuity derived from Participating Employer and Employee
contributions may not be paid without his written consent if
the value exceeds, or has ever exceeded, $3,500 ($5,000 for
distributions occurring after December 31, 1997) at the time
of any prior distribution. Further, the spouse of a
Participant must consent in writing to any immediate
distribution. Any written consent must be obtained not more
than ninety days before commencement of the distribution.
If the value of the Participant's benefit derived from
Participating Employer and Employee contributions does not
exceed $3,500 ($5,000 for distributions occurring after
December 31, 1997), the Administrator may immediately
distribute such benefit without such Participant's consent. No
distribution may be made under the preceding sentence after
the Annuity Starting Date unless the Participant and his
spouse consent in writing to such distribution.
(i) Any distribution to a Participant who has a benefit which
exceeds, or has ever exceeded, $3,500 ($5,000 for
distributions occurring after December 31, 1997) at the time
of any prior distribution shall require such Participant's
consent if such distribution commences prior to the later of
his Normal Retirement Age or age 62. With regard to this
required consent:
(1) No consent shall be valid unless the Participant
has received a general description of the material
features and an explanation of the relative values
of the optional forms of benefit available under
the Plan that would satisfy the notice requirements
of Code Section 417.
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(2) The Participant must be informed of his right to
defer receipt of the distribution. If a Participant
fails to consent, it shall be deemed an election to
defer the commencement of payment of any benefit.
(3) Notice of the rights specified under this paragraph
shall be provided no less than thirty days and no
more than ninety days before the Annuity Starting
Date.
(4) Written consent of the Participant to the
distribution must not be made before the
Participant receives the notice and must not be
made more than 90 days before the Annuity Starting
Date.
(5) No consent shall be valid if a significant
detriment is imposed under the Plan on any
Participant who does not consent to the
distribution.
Any such distribution may commence less than thirty days after
the notice required under Regulation 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 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.
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ARTICLE XIV
AFFILIATED EMPLOYERS
14.1 Adoption of Plan and Trust. The following rules shall apply
with respect to the adoption of this Plan and Trust:
(a) Adoption by Affiliated Employers. The terms of this Plan
and Trust may be adopted by any Affiliated Employer with respect to the
Affiliated Employer as a whole or with respect to any one or more of
its divisions, facilities or operations, provided:
(1) The Board of Directors consents to such
adoption by an appropriate written resolution;
(2) The board of directors of the Affiliated Employer
adopts this Plan and Trust by an appropriate written
resolution which identifies the Eligible Employees to be so
covered; and
(3) The Affiliated Employer executes a Plan and Trust
Adoption Agreement, in substantially the form attached hereto
as Plan Exhibit A, applicable to the Eligible Employees of
such Affiliated Employer. The Affiliated Employer may elect in
such Adoption Agreement to have special provisions apply with
respect to the Eligible Employees of the Affiliated Employer
which differ from the provisions of the Plan and Trust
applicable to other Eligible Employees; and
(4) The Affiliated Employer executes such other
documents as may be required to make such
Affiliated Employer a party to the
Plan and Trust as a Participating Employer.
(b) Effect of Adoption. An Affiliated Employer that
adopts the Plan and Trust is thereafter a Participating
Employer with respect to its Eligible Employees.
14.2 Withdrawal from Plan and Trust.
(a) A Participating Employer may at any time withdraw from the
Plan and Trust upon giving the Board of Directors and the Trustee at
least 30 days prior written notice of its intention to withdraw. Upon
the withdrawal of a Participating Employer pursuant to this Section
12.2, the Trustee shall segregate a portion of the assets in the Trust
Fund, the value of which shall equal the total amount credited to the
Aggregate Accounts of Participants then employed or formerly employed
by the withdrawing Participating Employer. The determination of which
assets are to be so segregated shall be made by the Trustee in its sole
discretion.
(b) Exclusive Purpose of Fund. Neither the segregation and
transfer of the Trust Fund upon the withdrawal of a Participating
Employer nor the execution of a new plan and trust by such withdrawing
Participating Employer shall operate to permit any part of the Trust
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Fund to be used for, or diverted to, purposes other than for the
exclusive benefit of the Participants and their Beneficiaries.
(c) Application of Withdrawal Provisions. The withdrawal
provisions contained in this Section 12.2 shall be applicable only if
the withdrawing Participating Employer continues to cover its
Participants and Eligible Employees in another profit-sharing plan and
trust qualified under Sections 401(a) and 501(a) of the Code. Under any
other circumstances, the termination provisions of the Plan and Trust
shall apply.
14.3 Single Plan. Notwithstanding any other provision set forth
herein, the Plan, as adopted by the Employer and each Participating Employer,
shall constitute a single plan, as such term is defined in Treas.
Reg.ss.1.414(1)-1(b)(1).
14.4 Employer Appointed Agent of Participating Employers. As a
condition precedent to the adoption of the Plan and Trust, each Participating
Employer appoints the Employer as its agent to exercise on its behalf all of the
power and authority conferred upon the Employer by the Plan, including, without
limitation, the power to amend or to terminate the Plan. The authority of the
Employer to act as agent of any Participating Employer shall terminate only when
the portion of the Plan's assets held for the benefit of the Eligible Employees
of such Participating Employer shall be segregated in a trust as provided in
Section 12.2 hereof.
14.5 Disposition of Affiliated Employers. In the event of the sale of
substantially all of the assets used by an Affiliated Employer in a trade or
business conducted by the Affiliated Employer or the sale of at least 50% of the
outstanding voting stock of an Affiliated Employer by the Employer or another
Affiliated Employer, the Administrator (in its discretion) may:
(a) Direct that the interest of each Participant, who ceases
to be employed by an Affiliated Employer upon the consummation and by
reason of the sale (an "Affected Participant"), in his or her Aggregate
Account shall be 100% vested;
(b) Authorize distribution of the Affected Participants'
Aggregate Accounts subject to the restrictions imposed
by Section 401(k)(2)(B) of the Code;
(C) Authorize the direct trust-to-trust transfer of Affected Participants'
Aggregate Account balances to a defined contribution plan maintained
for the benefit of employees of the purchaser or its affiliates,
provided that such transferee plan contains provisions pursuant to
which any Deferred Compensation transferred would remain subject to the
distribution restrictions and vesting standard set forth in Section
401(k)(2) of the Code; or
(d) Provide for the administration and subsequent distribution
of Aggregate Accounts not so transferred pending the Affected
Participants' separation from service with the purchaser and its
affiliates.
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The Administrator shall have all powers necessary or appropriate to the
orderly administration of the foregoing provisions of this Section 14.5.
14.6 Acquisition of Affiliated Employers. In the event of the
acquisition by the Employer or an Affiliated Employer of substantially all of
the assets used by an employer in a trade or business conducted by such employer
or the acquisition by the Employer or an Affiliated Employer of more than 50% of
the outstanding voting stock of an employer or its affiliate, the Administrator
(in its discretion) may:
(a) Authorize the acceptance, from a defined contribution plan
maintained for the benefit of employees of the seller or its affiliates
(the "Seller's Plan"), of direct trust-to-trust transfers of the
account balances of individuals who become Employees upon the
consummation and by reason of the acquisition (the "Acquired
Employees"), subject to the provisions of Section 4.11 hereof;
(b) Authorize the acceptance of rollover contributions by the
Acquired Employees of distributions they receive from the Seller's
Plan, subject to the limitations imposed by Section 402(a)(5) and
related provisions of the Code; or
(c) Provide for the administration and subsequent distribution
of amounts transferred or contributed pursuant to Subsection (a) and/or
(b), above, pending the occurrence of a distribution in accordance with
Article VII with respect to each Acquired Employee.
The Administrator shall have all powers necessary or appropriate to
the orderly administration of this Section 14.6, including the power to direct
the sale of any assets transferred or contributed to the Plan in kind.
14.7 Disposition of Less Than 85 Percent of Assets of Trade or
Business. In the event the Employer or Participating Employer transfers
less than 85 percent of the assets of a trade or business to a new
employer, the Plan may distribute to a Participant who was a former
employee such Participant's Aggregate Account provided such Participant
goes to work for the new employer that purchased the assets in accordance with
the provisions of Rev. Rul. 2000-27, 2000 I.R.B. 1.
IN WITNESS WHEREOF, this Plan has been executed the 18th day
of December, 2000, effective January 1, 2001 forward.
NBT Bancorp, Inc. NBT Bank, N.A
By: /s/ Daryl R. Forsythe By: /s/ Martin Dietrich
Title: Pres & CEO Title: Pres & COO
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