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EXHIBIT 10.18
CENTRAL COAST BANCORP
EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST
AND ALL SUPPORTING FORMS HAVE BEEN PRODUCED FOR
SHEARN & ASSOCIATES, INC.
Copyright 1995 Corbel
All Rights Reserved
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CENTRAL COAST BANCORP
EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
ARTICLE II
TOP HEAVY AND ADMINISTRATION
2.1 TOP HEAVY PLAN REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.2 DETERMINATION OF TOP HEAVY STATUS . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.3 POWERS AND RESPONSIBILITIES OF THE EMPLOYER . . . . . . . . . . . . . . . . . . . . . 18
2.4 DESIGNATION OF ADMINISTRATIVE AUTHORITY . . . . . . . . . . . . . . . . . . . . . . . 19
2.5 ALLOCATION AND DELEGATION OF RESPONSIBILITIES . . . . . . . . . . . . . . . . . . . . 19
2.6 POWERS AND DUTIES OF THE ADMINISTRATOR . . . . . . . . . . . . . . . . . . . . . . . . 19
2.7 RECORDS AND REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.8 APPOINTMENT OF ADVISERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.9 INFORMATION FROM EMPLOYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.10 PAYMENT OF EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.11 MAJORITY ACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.12 CLAIMS PROCEDURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.13 CLAIMS REVIEW PROCEDURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE III
ELIGIBILITY
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3.1 CONDITIONS OF ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.2 APPLICATION FOR PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.3 EFFECTIVE DATE OF PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.4 DETERMINATION OF ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.5 TERMINATION OF ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.6 OMISSION OF ELIGIBLE EMPLOYEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.7 INCLUSION OF INELIGIBLE EMPLOYEE . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.8 ELECTION NOT TO PARTICIPATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION . . . . . . . . . . . . . . . . . . . 24
4.2 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION . . . . . . . . . . . . . . . . . . . . . . 25
4.3 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS . . . . . . . . . . . . . . . . . 25
4.4 MAXIMUM ANNUAL ADDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.5 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS . . . . . . . . . . . . . . . . . . . . . . 33
4.6 TRANSFERS FROM QUALIFIED PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.7 DIRECTED INVESTMENT ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE V
FUNDING AND INVESTMENT POLICY
5.1 INVESTMENT POLICY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.2 APPLICATION OF CASH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
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5.3 TRANSACTIONS INVOLVING COMPANY STOCK . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.4 LOANS TO THE TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE VI
VALUATIONS
6.1 VALUATION OF THE TRUST FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.2 METHOD OF VALUATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE VII
DETERMINATION AND DISTRIBUTION OF BENEFITS
7.1 DETERMINATION OF BENEFITS UPON RETIREMENT . . . . . . . . . . . . . . . . . . . . . . 40
7.2 DETERMINATION OF BENEFITS UPON DEATH . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY . . . . . . . . . . . . . . . . . . . 41
7.4 DETERMINATION OF BENEFITS UPON TERMINATION . . . . . . . . . . . . . . . . . . . . . . 42
7.5 DISTRIBUTION OF BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.6 HOW PLAN BENEFIT WILL BE DISTRIBUTED . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.7 DISTRIBUTION FOR MINOR BENEFICIARY . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.8 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN . . . . . . . . . . . . . . . . . . . . 51
7.9 RIGHT OF FIRST REFUSALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.10 STOCK CERTIFICATE LEGEND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.11 NONTERMINABLE PROTECTIONS AND RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.12 PRE-RETIREMENT DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.13 QUALIFIED DOMESTIC RELATIONS ORDER DISTRIBUTION . . . . . . . . . . . . . . . . . . . 53
ARTICLE VIII
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TRUSTEE
8.1 BASIC RESPONSIBILITIES OF THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . 53
8.2 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . 54
8.3 OTHER POWERS OF THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.4 VOTING COMPANY STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.5 DUTIES OF THE TRUSTEE REGARDING PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . 58
8.6 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES . . . . . . . . . . . . . . . . . . . . 59
8.7 ANNUAL REPORT OF THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
8.8 AUDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.9 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE . . . . . . . . . . . . . . . . . . . . 60
8.10 TRANSFER OF INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.11 DIRECT ROLLOVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE IX
AMENDMENT, TERMINATION AND MERGERS
9.1 AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
9.2 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
9.3 MERGER OR CONSOLIDATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
ARTICLE X
MISCELLANEOUS
10.1 PARTICIPANT'S RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
10.2 ALIENATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
10.3 CONSTRUCTION OF PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
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10.4 GENDER AND NUMBER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
10.5 LEGAL ACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
10.6 PROHIBITION AGAINST DIVERSION OF FUNDS . . . . . . . . . . . . . . . . . . . . . . . . 65
10.7 BONDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
10.8 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE . . . . . . . . . . . . . . . . . . . . . . 66
10.9 INSURER'S PROTECTIVE CLAUSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
10.10 RECEIPT AND RELEASE FOR PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
10.11 ACTION BY THE EMPLOYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
10.12 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY . . . . . . . . . . . . . . . . . . 67
10.13 HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
10.14 APPROVAL BY INTERNAL REVENUE SERVICE . . . . . . . . . . . . . . . . . . . . . . . . . 67
10.15 UNIFORMITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
10.16 SECURITIES AND EXCHANGE COMMISSION APPROVAL . . . . . . . . . . . . . . . . . . . . . 68
ARTICLE XI
PARTICIPATING EMPLOYERS
11.1 ADOPTION BY OTHER EMPLOYERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
11.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS . . . . . . . . . . . . . . . . . . . . . . . 68
11.3 DESIGNATION OF AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
11.4 EMPLOYEE TRANSFERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
11.5 PARTICIPATING EMPLOYER'S CONTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . 70
11.6 AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
11.7 DISCONTINUANCE OF PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
11.8 ADMINISTRATOR'S AUTHORITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
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CENTRAL COAST BANCORP EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST
THIS AGREEMENT, hereby made and entered into this __________
day of _________________________, 19____, by and between Central Coast Bancorp
(herein referred to as the "Employer") and Central Coast Bancorp Board of
Directors (herein referred to as the "Trustee").
W I T N E S S E T H:
WHEREAS, the Employer desires an Employee Stock Ownership
Plan so as to enable its eligible employees to acquire a proprietary interest
in capital stock of the Employer; and
WHEREAS, the Employer desires to recognize the contribution
made to its successful operation by its employees and to reward such
contribution by means of an Employee Stock Ownership Plan for those employees
who shall qualify as Participants hereunder; 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;
NOW, THEREFORE, effective January 1, 1996 (hereinafter
called the "Effective Date"), the Employer hereby establishes an Employee Stock
Ownership Plan (ESOP) and creates this trust (which plan and trust are
hereinafter called the "Plan") for the exclusive benefit of the Participants
and their Beneficiaries, which is intended to qualify as an "ESOP", and the
Trustee hereby accepts the Plan on the following terms:
ARTICLE I
DEFINITIONS
I.1 "Act" means the Employee Retirement Income Security Act of 1974, as it
may be amended from time to time.
I.2 "Administrator" means the person or entity designated by the Employer
pursuant to Section 2.4 to administer the Plan on behalf of the Employer.
I.3 "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).
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I.4 "Aggregate Account" means, with respect to each Participant, the value
of all accounts maintained on behalf of a Participant, whether attributable to
Employer or Employee contributions, subject to the provisions of Section 2.2.
I.5 "Anniversary Date" means December 31st.
I.6 "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 7.5.
I.7 "Code" means the Internal Revenue Code of 1986, as amended or replaced
from time to time.
I.8 "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
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.
I.9 "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.
I.10 "Compensation" with respect to any Participant means such
Participant's wages, salaries, fees for professional services and other amounts
received (without regard to whether or not an amount is paid in cash) for
personal services actually rendered in the course of employment with the
Employer maintaining the Plan to the extent that the amounts are includible in
gross income (including, but not limited to, commissions paid salesmen,
compensation for services on the basis of a percentage of profits, commissions
on insurance premiums, tips, bonuses, fringe benefits, and reimbursements or
other expense allowances under a nonaccountable plan (as described in
Regulation 1.62-2(c)) for a Plan Year.
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Compensation shall exclude (a)(1) contributions made by the
Employer to a plan of deferred compensation to the extent that, the
contributions are not includible in the gross income of the Participant for the
taxable year in which contributed, (2) Employer contributions made on behalf of
an Employee to a simplified employee pension plan described in Code Section
408(k) to the extent such contributions are excludable from the Employee's
gross income, (3) any distributions from a plan of deferred compensation; (b)
amounts realized from the exercise of a non-qualified stock option, or when
restricted stock (or property) held by an Employee either becomes freely
transferable or is no longer subject to a substantial risk of forfeiture; (c)
amounts realized from the sale, exchange or other disposition of stock acquired
under a qualified stock option; and (d) other amounts which receive special tax
benefits, or contributions made by the Employer (whether or not under a salary
reduction agreement) towards the purchase of any annuity contract described in
Code Section 403(b) (whether or not the contributions are actually excludable
from the gross income of the Employee).
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, 402(e)(3), 402(h)(1)(B), 403(b) or
457, 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 for the entire Plan Year.
Compensation in excess of $200,000 shall be disregarded. Such
amount shall be adjusted at the same time and in such manner as permitted under
Code Section 415(d), 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 and the first adjustment to the $200,000 limitation shall be
effective on January 1, 1990. 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). In applying this
limitation, the family group of a Highly Compensated Participant who is subject
to the Family Member aggregation rules of Code Section 414(q)(6) because such
Participant is either a "five percent owner" of the Employer or one of the ten
(10) Highly Compensated Employees paid the greatest "415 Compensation" during
the year, shall be treated as a single Participant, except that for this
purpose Family Members shall include only the affected Participant's spouse and
any lineal descendants who have not attained age nineteen (19) before the close
of the year. If, as a result of the application of such rules the adjusted
$200,000 limitation is exceeded, then the limitation shall be prorated among
the affected Family Members in proportion to each such Family Member's
Compensation prior to the application of this limitation, or the limitation
shall be adjusted in accordance with any other method permitted by Regulation.
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In addition to other applicable limitations set forth in the
Plan, and notwithstanding any other provision of the Plan to the contrary, for
Plan Years beginning on or after January 1, 1994, the annual Compensation of
each Employee taken into account under the Plan shall not exceed the OBRA '93
annual compensation limit. The OBRA '93 annual compensation limit is $150,000,
as adjusted by the Commissioner for increases in the cost of living in
accordance with Code Section 401(a)(17)(B). The cost of living adjustment in
effect for a calendar year applies to any period, not exceeding 12 months, over
which Compensation is determined (determination period) beginning in such
calendar year. If a determination period consists of fewer than 12 months, the
OBRA '93 annual compensation limit will be multiplied by a fraction, the
numerator of which is the number of months in the determination period, and the
denominator of which is 12.
For Plan Years beginning on or after January 1, 1994, any
reference in this Plan to the limitation under Code Section 401(a)(17) shall
mean the OBRA '93 annual compensation limit set forth in this provision.
If Compensation for any prior determination period is taken
into account in determining an Employee's benefits accruing in the current Plan
Year, the Compensation for that prior determination period is subject to the
OBRA '93 annual compensation limit in effect for that prior determination
period. For this purpose, for determination periods beginning before the first
day of the first Plan Year beginning on or after January 1, 1994, the OBRA '93
annual compensation limit is $150,000.
If, as a result of such rules, the maximum "annual addition"
limit of Section 4.4(a) would be exceeded for one or more of the affected
Family Members, the prorated Compensation of all affected Family Members shall
be adjusted to avoid or reduce any excess. The prorated Compensation of any
affected Family Member whose allocation would exceed the limit shall be
adjusted downward to the level needed to provide an allocation equal to such
limit. The prorated Compensation of affected Family Members not affected by
such limit shall then be adjusted upward on a pro rata basis not to exceed each
such affected Family Member's Compensation as determined prior to application
of the Family Member rule. The resulting allocation shall not exceed such
individual's maximum "annual addition" limit. If, after these adjustments, an
"excess amount" still results, such "excess amount" shall be disposed of in the
manner described in Section 4.5(a) pro rata among all affected Family Members.
For purposes of this Section, if the Plan is a plan described
in Code Section 413(c) or 414(f) (a plan maintained by more than one Employer),
the $200,000 limitation applies separately with respect to the Compensation of
any Participant from each Employer maintaining the Plan.
I.11 "Contract" or "Policy" means any life insurance policy, retirement
income or annuity policy, or annuity contract (group or individual) issued
pursuant to the terms of the Plan.
I.12 "Current Obligations" means Trust obligations arising from extension
of credit to the Trust and payable in cash within (1) year from the date an
Employer contribution is due.
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I.13 "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 7
Years of Service with the Employer (Early Retirement Age). A Participant shall
become fully Vested upon satisfying this requirement if still employed at his
Early Retirement Age.
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.
I.14 "Eligible Employee" means any Employee.
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 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 or two percent or more of the Employees of
the Employer who are covered pursuant to that agreement are professionals as
defined in Regulation 1.410(b)-9.
Part-time "on call" Employees shall not be eligible to
participate in this Plan.
Temporary Employees 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 writing.
I.15 "Employee" means any person who is employed by the Employer or
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.
I.16 "Employer" means Central Coast Bancorp and any Participating Employer
(as defined in Section 11.1) which shall adopt this Plan; any successor which
shall maintain this Plan; and any predecessor which has maintained this Plan.
The Employer is a corporation with principal offices in the State of
California.
I.17 "ESOP" means an employee stock ownership plan that meets the
requirements of Code Section 4975(e)(7) and Regulation 54.4975-11.
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I.18 "Exempt Loan" means a loan made to the Plan by a disqualified person
or a loan to the Plan which is guaranteed by a disqualified person and which
satisfies the requirements of Section 2550.408b-3 of the Department of Labor
Regulations, Section 54.4975-7(b) of the Treasury Regulations and Section 5.4
hereof.
I.19 "Family Member" means, with respect to an affected Participant, such
Participant's spouse and such Participant's lineal descendants and ascendants
and their spouses, all as described in Code Section 414(q)(6)(B).
I.20 "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 Employer and its representative
body, and the Administrator.
I.21 "Fiscal Year" means the Employer's accounting year of 12 months
commencing on January 1st of each year and ending the following December 31st.
I.22 "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.
I.23 "Former Participant" means a person who has been a Participant, but
who has ceased to be a Participant for any reason.
I.24 "415 Compensation" with respect to any Participant means such
Participant's wages, salaries, fees for professional services and other amounts
received (without regard to whether or not an amount is paid in cash) for
personal services actually rendered in the course
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of employment with the Employer maintaining the Plan to the extent that the
amounts are includible in gross income (including, but not limited to,
commissions paid salesmen, compensation for services on the basis of a
percentage of profits, commissions on insurance premiums, tips, bonuses, fringe
benefits, and reimbursements or other expense allowances under a nonaccountable
plan (as described in Regulation 1.62-2(c)) for a Plan Year.
"415 Compensation" shall exclude (a)(1) contributions made by
the Employer to a plan of deferred compensation to the extent that, the
contributions are not includible in the gross income of the Participant for the
taxable year in which contributed, (2) Employer contributions made on behalf of
an Employee to a simplified employee pension plan described in Code Section
408(k) to the extent such contributions are excludable from the Employee's
gross income, (3) any distributions from a plan of deferred compensation; (b)
amounts realized from the exercise of a non-qualified stock option, or when
restricted stock (or property) held by an Employee either becomes freely
transferable or is no longer subject to a substantial risk of forfeiture; (c)
amounts realized from the sale, exchange or other disposition of stock acquired
under a qualified stock option; and (d) other amounts which receive special tax
benefits, or contributions made by the Employer (whether or not under a salary
reduction agreement) towards the purchase of any annuity contract described in
Code Section 403(b) (whether or not the contributions are actually excludable
from the gross income of the Employee).
I.25 "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 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" as defined
in Section 1.30(c).
(b) Employees who received "415 Compensation"
during the "look-back year" from the Employer in excess of $75,000.
(c) Employees who received "415 Compensation"
during the "look-back year" from the Employer in excess of $50,000 and were in
the Top Paid Group of Employees for the Plan Year.
(d) Employees who during the "look-back year"
were officers of the Employer (as that term is defined within the meaning of
the Regulations under Code Section 416) and received "415 Compensation" during
the "look-back year" from the Employer greater than 50 percent of the limit in
effect under Code Section 415(b)(1)(A) for any such Plan Year. The number of
officers shall be limited to the lesser of (i) 50 employees; or (ii) the
greater of 3 employees or 10 percent of all employees. For the purpose of
determining the number of officers, Employees described in Section 1.50(a),
(b), (c) and (d) shall be excluded, but such Employees shall still be
considered for the purpose of identifying the particular Employees who are
officers. If the Employer does not have at least one officer whose annual "415
Compensation" is in excess of 50 percent of the Code Section 415(b)(1)(A)
limit, then the highest paid officer of the Employer will be treated as a
Highly Compensated Employee.
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(e) Employees who are in the group consisting of
the 100 Employees paid the greatest "415 Compensation" during the
"determination year" and are also described in (b), (c) or (d) above when these
paragraphs are modified to substitute "determination year" for "look-back
year."
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
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, and Employee contributions described in Code
Section 414(h)(2) that are treated as Employer contributions. Additionally, the
dollar threshold amounts specified in (b) and (c) above shall be adjusted at
such time and in such manner as is provided in Regulations. In the case of such
an adjustment, the dollar limits which shall be applied are those for the
calendar year in which the "determination year" or "look-back year" begins.
In determining who is a Highly Compensated Employee, Employees
who are non-resident aliens and who received no earned income (within the
meaning of Code Section 911(d)(2)) from the Employer constituting United States
source income within the meaning of Code Section 861(a)(3) shall not be treated
as Employees. Additionally, 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."
I.26 "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 1.25. 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.
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I.27 "Highly Compensated Participant" means any Highly Compensated Employee
who is eligible to participate in the Plan.
I.28 "Hour of Service" means (1) each hour for which an Employee is
directly or indirectly compensated or entitled to compensation by the Employer
for the performance of duties during the applicable computation period; (2)
each hour for which an Employee is directly or indirectly compensated or
entitled to compensation by the 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;
(3) each hour for which back pay is awarded or agreed to by the 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 Employer regardless of whether such payment is made by
or due from the Employer directly, or indirectly through, among others, a trust
fund, or insurer, to which the 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.
An Hour of Service must be counted for the purpose of
determining a Year of Service, a year of participation for purposes of accrued
benefits, a 1-Year Break in Service, and employment commencement date (or
reemployment commencement date). In addition, 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.
I.29 "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.
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I.30 "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 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
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
Employer.
(c) a "five percent owner" of the 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 Employer or
stock possessing more than five percent (5%) of the total combined voting power
of all stock of the 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 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 Employer having
an annual "415 Compensation" from the 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 Employer or stock possessing more than one percent (1%) of the
total combined voting power of all stock of the 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 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
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, and Employee contributions described in Code
Section 414(h)(2) that are treated as Employer contributions.
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I.31 "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.
I.32 "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 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,
and Employee contributions described in Code Section 414(h)(2) that are treated
as 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.
I.33 "Non-Highly Compensated Participant" means any Participant who is
neither a Highly Compensated Employee nor a Family Member.
I.34 "Non-Key Employee" means any Employee or former Employee (and his
Beneficiaries) who is not a Key Employee.
I.35 "Normal Retirement Age" means the Participant's 65th birthday, or his
5th anniversary of joining the Plan, if later. A Participant shall become fully
Vested in his Participant's Account upon attaining his Normal Retirement Age.
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I.36 "Normal Retirement Date" means the first day of the month coinciding
with or next following the Participant's Normal Retirement Age.
I.37 "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 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 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.
I.38 "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 Employer contributions in other than Company Stock and which is debited
with payments made to pay for Company Stock.
I.39 "Participant" means any Eligible Employee who participates in the Plan
as provided in Sections 3.2 and 3.3, and has not for any reason become
ineligible to participate further in the Plan.
I.40 "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 Employer's contributions.
I.41 "Plan" means this instrument, including all amendments thereto.
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I.42 "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.
I.43 "Regulation" means the Income Tax Regulations as promulgated by the
Secretary of the Treasury or his delegate, and as amended from time to time.
I.44 "Retired Participant" means a person who has been a Participant, but
who has become entitled to retirement benefits under the Plan.
I.45 "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
(see Section 7.1).
I.46 "Super Top Heavy Plan" means a plan described in Section 2.2(b).
I.47 "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.
I.48 "Top Heavy Plan" means a plan described in Section 2.2(a).
I.49 "Top Heavy Plan Year" means a Plan Year during which the Plan is a Top
Heavy Plan.
I.50 "Top Paid Group" means the top 20 percent of Employees who performed
services for the Employer during the applicable year, ranked according to the
amount of "415 Compensation" (determined for this purpose in accordance with
Section 1.25) received from the 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 Employer. Employees who are non-resident aliens and who
received no earned income (within the meaning of Code Section 911(d)(2)) from
the 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;
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(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
Employer are covered under agreements the Secretary of Labor finds to be
collective bargaining agreements between Employee representatives and the
Employer, and the Plan covers only Employees who are not covered 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.
I.51 "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 Employer. The disability of a Participant shall be determined by a
licensed physician chosen by the Administrator. The determination shall be
applied uniformly to all Participants.
I.52 "Trustee" means the person or entity named as trustee herein or in any
separate trust forming a part of this Plan, and any successors.
I.53 "Trust Fund" means the assets of the Plan and Trust as the same shall
exist from time to time.
I.54 "Unallocated Company Stock Suspense Account" means an account
containing Company Stock acquired with the proceeds of an Exempt Loan and which
has not been released from such account and allocated to the Participants'
Company Stock Accounts.
I.55 "Vested" means the nonforfeitable portion of any account maintained on
behalf of a Participant.
I.56 "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
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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.
For vesting purposes, the computation period shall be the Plan
Year.
For all other purposes, the computation period shall be the
Plan Year.
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 number of the Hours of Service
required shall be proportionately reduced based on the number of full months in
the short Plan Year.
Years of Service with Cypress Coast Bank and Bank of Salinas shall be
recognized.
Years of Service with any Affiliated Employer shall be
recognized.
ARTICLE II
TOP HEAVY AND ADMINISTRATION
II.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 4.3 of the Plan.
II.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 (60%) 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
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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 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 (90%) 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 Account balance as of the
most recent valuation occurring within a twelve (12) month period ending on the
Determination Date;
(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 (4) 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
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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.
(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 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 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 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 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 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.
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(4) An Aggregation Group shall include any
terminated plan of the Employer if it was maintained within the last five (5)
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 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 (60%) of a similar sum determined for all Participants.
II.3 POWERS AND RESPONSIBILITIES OF THE EMPLOYER
(a) 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 assure 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.
(b) 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.
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(c) 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.
(d) The Employer will furnish Plan Fiduciaries and Participants with
notices and information statements when voting rights must be exercised
pursuant to Section 8.4.
II.4 DESIGNATION OF ADMINISTRATIVE AUTHORITY
The Employer shall appoint one or more Administrators. Any
person, including, but not limited to, the Employees of the Employer, shall be
eligible to serve as an Administrator. Any person so appointed shall signify
his acceptance by filing written acceptance with the Employer. An Administrator
may resign by delivering his written resignation to the Employer or be removed
by the Employer by delivery of written notice of removal, to take effect at a
date specified therein, or upon delivery to the Administrator if no date is
specified.
The Employer, upon the resignation or removal of an
Administrator, shall promptly designate in writing a successor to this
position. If the Employer does not appoint an Administrator, the Employer will
function as the Administrator.
II.5 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.
II.6 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
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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:
(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 determine the size and type of any Contract to be purchased from
any insurer, and to designate the insurer from which such Contract shall be
purchased;
(g) 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;
(h) 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;
(i) to establish and communicate to Participants a procedure for allowing
each Participant to direct the Trustee as to the distribution of his Company
Stock Account pursuant to Section 4.7;
(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 8.4;
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(k) to assist any Participant regarding his rights, benefits, or elections
available under the Plan.
II.7 RECORDS AND REPORTS
The Administrator shall keep a record of all actions taken
and shall keep all other books of account, records, 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.
II.8 APPOINTMENT OF ADVISERS
The Administrator, or the Trustee with the consent of the
Administrator, may appoint counsel, specialists, advisers, and other persons as
the Administrator or the Trustee deems necessary or desirable in connection
with the administration of this Plan.
II.9 INFORMATION FROM EMPLOYER
To enable the Administrator to perform his functions, the
Employer shall supply full and timely information to the Administrator on all
matters relating to the Compensation of all Participants, their Hours of
Service, their Years of Service, their retirement, death, disability, or
termination of employment, and such other pertinent facts as the Administrator
may require; and the Administrator shall advise the Trustee of such of the
foregoing facts as may be pertinent to the Trustee's duties under the Plan. The
Administrator may rely upon such information as is supplied by the Employer and
shall have no duty or responsibility to verify such information.
II.10 PAYMENT OF EXPENSES
All expenses of administration may be paid out of the Trust
Fund unless paid by the Employer. Such expenses shall include any expenses
incident to the functioning of the Administrator, including, but not limited
to, fees of accountants, counsel, 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.
II.11 MAJORITY ACTIONS
Except where there has been an allocation and delegation of
administrative authority pursuant to Section 2.5, if there shall be more than
one Administrator, they shall act by a majority of their number, but may
authorize one or more of them to sign all papers on their behalf.
II.12 CLAIMS PROCEDURE
Claims for benefits under the Plan may be filed in writing
with the Administrator. Written notice of the disposition of a claim shall be
furnished to the claimant within 90 days after the application is filed. In the
event the claim is denied, the reasons for the
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denial shall be specifically set forth in the notice in language calculated to
be understood by the claimant, pertinent provisions of the Plan shall be cited,
and, where appropriate, an explanation as to how the claimant can perfect the
claim will be provided. In addition, the claimant shall be furnished with an
explanation of the Plan's claims review procedure.
II.13 CLAIMS REVIEW PROCEDURE
Any Employee, former Employee, or Beneficiary of either, who
has been denied a benefit by a decision of the Administrator pursuant to
Section 2.12 shall be entitled to request the Administrator to give further
consideration to his claim by filing with the Administrator (on a form which
may be obtained from the Administrator) a request for a hearing. Such request,
together with a written statement of the reasons why the claimant believes his
claim should be allowed, shall be filed with the Administrator no later than 60
days after receipt of the written notification provided for in Section 2.12.
The Administrator shall then conduct a hearing within the next 60 days, at
which the claimant may be represented by an attorney or any other
representative of his choosing and at which the claimant shall have an
opportunity to submit written and oral evidence and arguments in support of his
claim. At the hearing (or prior thereto upon 5 business days written notice to
the Administrator) the claimant or his representative shall have an opportunity
to review all documents in the possession of the Administrator which are
pertinent to the claim at issue and its disallowance. Either the claimant or
the Administrator may cause a court reporter to attend the hearing and record
the proceedings. In such event, a complete written transcript of the
proceedings shall be furnished to both parties by the court reporter. The full
expense of any such court reporter and such transcripts shall be borne by the
party causing the court reporter to attend the hearing. A final decision as to
the allowance of the claim shall be made by the Administrator within 60 days of
receipt of the appeal (unless there has been an extension of 60 days due to
special circumstances, provided the delay and the special circumstances
occasioning it are communicated to the claimant within the 60 day period). Such
communication shall be written in a manner calculated to be understood by the
claimant and shall include specific reasons for the decision and specific
references to the pertinent Plan provisions on which the decision is based.
ARTICLE III
ELIGIBILITY
III.1 CONDITIONS OF ELIGIBILITY
Any Eligible Employee who has completed six (6) Months of
Service and has attained age 21 shall be eligible to participate hereunder as
of the date he has satisfied such requirements. The Employer shall give each
prospective Eligible Employee written notice of his eligibility to participate
in the Plan prior to the close of the Plan Year in which he first becomes an
Eligible Employee.
For purposes of this Section, an Eligible Employee will be
deemed to have completed six (6) Months of Service if he is in the employ of
the Employer at any time six (6) months after his employment commencement date.
Employment commencement date shall be the first day that he is entitled to be
credited with an Hour of Service for the performance of duty.
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III.2 APPLICATION FOR PARTICIPATION
In order to become a Participant hereunder, each Eligible
Employee shall make application to the Employer for participation in the Plan
and agree to the terms hereof. Upon the acceptance of any benefits under this
Plan, such Employee shall automatically be deemed to have made application and
shall be bound by the terms and conditions of the Plan and all amendments
hereto.
III.3 EFFECTIVE DATE OF PARTICIPATION
An Eligible Employee shall become a Participant effective as
of the earlier of the first day of the Plan Year or the first day of the
seventh month of such Plan Year coinciding with or next following the date such
Employee met the eligibility requirements of Section 3.1, provided said
Employee was still employed as of such date (or if not employed on such date,
as of the date of rehire if a 1-Year Break in Service has not occurred).
In the event an Employee who is not a member of an eligible
class of Employees becomes a member of an eligible class, such Employee will
participate immediately if such Employee has satisfied the minimum age and
service requirements and would have otherwise previously become a Participant.
III.4 DETERMINATION OF ELIGIBILITY
The Administrator shall determine the eligibility of each
Employee for participation in the Plan based upon information furnished by the
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. Such
determination shall be subject to review per Section 2.13.
III.5 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.
(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.
III.6 OMISSION OF ELIGIBLE EMPLOYEE
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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 Employer for the year has been
made, the Employer shall make a subsequent contribution with respect to the
omitted Employee in the amount which the said 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.
III.7 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 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 for the Plan Year in which the discovery is made.
III.8 ELECTION NOT TO PARTICIPATE
An Employee may, subject to the approval of the Employer,
elect voluntarily not to participate in the Plan. The election not to
participate must be communicated to the Employer, in writing, at least thirty
(30) days before the beginning of a Plan Year.
ARTICLE IV
CONTRIBUTION AND ALLOCATION
IV.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION
(a) For each Plan Year, the Employer shall
contribute to the Plan such amount as shall be determined by the Employer.
(b) Notwithstanding the foregoing, however, the
Employer's contributions for any Plan Year shall not exceed the maximum amount
allowable as a deduction to the Employer under the provisions of Code Section
404. All contributions by the Employer shall be made in cash, Company Stock or
in such property as is acceptable to the Trustee.
(c) Except, however, to the extent necessary to
provide the top heavy minimum allocations, the Employer shall make a
contribution even if it exceeds the amount which is deductible under Code
Section 404.
IV.2 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION
Employer contributions will be paid in cash, Company Stock
or other property as the Employer may from time to time determine. Company
Stock and other property will be valued at their then fair market value. The
Employer shall pay to the Trustee its contribution to
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the Plan for each Plan Year within the time prescribed by law, including
extensions of time, for the filing of the Employer's federal income tax return
for the Fiscal Year.
IV.3 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 as of each Anniversary Date all amounts allocated to each such
Participant as set forth herein.
(b) The Employer shall provide the
Administrator with all information required by the Administrator to make a
proper allocation of the Employer's 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 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.
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
the discretionary contribution for the 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
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, in the sole discretion
of the Administrator, either be credited to his Other Investments Account when
paid or be used to repay an Exempt Loan; provided, however, that when cash
dividends are used to repay an Exempt Loan, Company Stock shall be released
from the Unallocated Company Stock Suspense Account and allocated to the
Participant's Company Stock Account pursuant to Section 4.3(e) and, provided
further, that Company Stock allocated to the Participant's Company Stock
Account shall have a fair market value not less than the amount of cash
dividends which would have been allocated to such Participant's Other
Investments Account for the year.
Company Stock acquired by the Plan with the proceeds
of an Exempt Loan shall only be allocated to each
Participant's Company Stock Account upon release from the
Unallocated Company Stock Suspense Account as provided in
Section 4.3(e) herein. Company Stock acquired with the
proceeds of an Exempt Loan shall be an asset of the Trust
Fund and maintained in the Unallocated Company Stock Suspense
Account.
(d) As of each Anniversary Date or other
valuation date, before allocation of one-half of the Employer contributions for
the entire Plan Year and after allocation of Forfeitures, 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 nonsegregated accounts (other than each Participant's Company
Stock Account) bear to the total
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of all Participants' and Former Participants' nonsegregated accounts (other
than Participants' Company Stock Accounts) as of such date.
Earnings or losses do not include the
interest paid under any installment contract for the
purchase of Company Stock by the Trust Fund or on any loan
used by the Trust Fund to purchase Company Stock, nor does
it include income received by the Trust Fund with respect to
Company Stock acquired with the proceeds of an Exempt Loan;
all income received by the Trust Fund from Company Stock
acquired with the proceeds of an Exempt Loan may, at the
discretion of the Administrator, be used to repay such loan.
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) All Company Stock acquired by the Plan with
the proceeds of an Exempt Loan must be added to and maintained in the
Unallocated Company Stock Suspense Account. Such Company Stock shall be
released and withdrawn from that account as if all Company Stock in that
account were encumbered. For each Plan Year during the duration of the loan,
the number of shares of Company Stock released shall equal the number of
encumbered shares held immediately before release for the current Plan Year
multiplied by a fraction, the numerator of which is the amount of principal and
interest paid for the Plan Year and the denominator of which is the sum of the
numerator plus the principal and interest to be paid for all future Plan Years.
As of each Anniversary Date, the Plan must consistently allocate to each
Participant's Account, in the same manner as Employer discretionary
contributions pursuant to Section 4.1(a) are allocated, non-monetary units
(shares and fractional shares of Company Stock) representing each Participant's
interest in Company Stock withdrawn from the Unallocated Company Stock Suspense
Account. However, Company Stock released from the Unallocated Company Stock
Suspense Account with cash dividends pursuant to Section 4.3(c) shall be
allocated to each Participant's Company Stock Account in the same proportion
that each such Participant's number of shares of Company Stock sharing in such
cash dividends bears to the total number of shares of all Participants' Company
Stock sharing in such cash dividends. Income earned with respect to Company
Stock in the Unallocated Company Stock Suspense Account shall be used, at the
discretion of the Administrator, to repay the Exempt Loan used to purchase such
Company Stock. Company Stock released from the Unallocated Company Stock
Suspense Account with such income, and any income which is not so used, shall
be allocated as of each Anniversary Date or other valuation date in the same
proportion that each Participant's and Former Participant's nonsegregated
accounts after the allocation of any earnings or losses pursuant to Section
4.3(d) bear to the total of all Participants' and Former Participants'
nonsegregated accounts after the allocation of any earnings or losses pursuant
to Section 4.3(d).
(f) 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 added to the Employer's discretionary
contribution
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pursuant to Section 4.1(a) and for the Plan Year in which such Forfeitures
occur allocated among the Participants' Accounts in the same manner as the
Employer's discretionary contribution for the current year.
Provided, however, that in the event
the allocation of Forfeitures provided herein shall cause
the "annual addition" (as defined in Section 4.4) to any
Participant's Account to exceed the amount allowable by the
Code, the excess shall be reallocated in accordance with
Section 4.5.
(g) 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
4.3(i) if eligible pursuant to the provisions of Section 4.3(k).
(h) 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 only if otherwise eligible in
accordance with this Section.
(i) Minimum Allocations Required for Top Heavy
Plan Years: Notwithstanding the foregoing, for any Top Heavy Plan Year, the sum
of the Employer's contributions and Forfeitures allocated to the Participant's
Account of each Employee shall be equal to at least three percent (3%) 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
Employer's contributions and Forfeitures allocated to the Participant's Account
of each Key Employee for such Top Heavy Plan Year is less than three percent
(3%) 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
Employer's contributions and Forfeitures allocated to the Participant's Account
of each Employee shall be equal to the largest percentage allocated to the
Participant's Account of any Key Employee.
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 providing such benefits included with this
Plan in a Required Aggregation Group.
(j) For purposes of the minimum allocations set
forth above, the percentage allocated to the Participant's Account of any Key
Employee shall be equal to the ratio of the sum of the Employer's contributions
and Forfeitures allocated on behalf of such Key Employee divided by the "415
Compensation" for such Key Employee.
(k) For any Top Heavy Plan Year, the minimum
allocations set forth above shall be allocated to the Participant's Account of
all Employees who are Participants and who are employed by the Employer on the
last day of the Plan Year, including Employees who
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have (1) failed to complete a Year of Service; and (2) declined to make
mandatory contributions (if required) to the Plan.
(l) For the purposes of this Section, "415
Compensation" shall be limited to $200,000. Such amount shall be adjusted at
the same time and in the same manner as permitted under Code Section 415(d),
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 and the first adjustment to the $200,000 limitation shall be effective on
January 1, 1990. 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).
In addition to other applicable
limitations set forth in the Plan, and notwithstanding any
other provision of the Plan to the contrary, for Plan Years
beginning on or after January 1, 1994, the annual
Compensation of each Employee taken into account under the
Plan shall not exceed the OBRA '93 annual compensation
limit. The OBRA '93 annual compensation limit is $150,000,
as adjusted by the Commissioner for increases in the cost of
living in accordance with Code Section 401(a)(17)(B). The
cost of living adjustment in effect for a calendar year
applies to any period, not exceeding 12 months, over which
Compensation is determined (determination period) beginning
in such calendar year. If a determination period consists of
fewer than 12 months, the OBRA '93 annual compensation limit
will be multiplied by a fraction, the numerator of which is
the number of months in the determination period, and the
denominator of which is 12.
For Plan Years beginning on or after
January 1, 1994, any reference in this Plan to the
limitation under Code Section 401(a)(17) shall mean the OBRA
'93 annual compensation limit set forth in this provision.
If Compensation for any prior
determination period is taken into account in determining an
Employee's benefits accruing in the current Plan Year, the
Compensation for that prior determination period is subject
to the OBRA '93 annual compensation limit in effect for that
prior determination period. For this purpose, for
determination periods beginning before the first day of the
first Plan Year beginning on or after January 1, 1994, the
OBRA '93 annual compensation limit is $150,000.
(m) If a Former Participant is reemployed after
five (5) consecutive 1-Year Breaks in Service, then separate accounts shall be
maintained as follows:
(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.
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IV.4 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 adjusted annually as provided in
Code Section 415(d) pursuant to the Regulations, or (2) twenty-five percent
(25%) 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 (12).
(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) 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 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 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 following are not "annual additions": (1) the transfer of
funds from one qualified plan to another and (2) provided no more than
one-third of the Employer contributions for the year are allocated to Highly
Compensated Participants, Forfeitures of Company Stock purchased with the
proceeds of an Exempt Loan and Employer contributions applied to the payment of
interest on an Exempt Loan. In addition, the following are not Employee
contributions for the purposes of Section 4.4(b)(2): (1) rollover contributions
(as defined in Code Sections 402(a)(5), 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).
(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 Employer shall be treated as one defined benefit plan, and all qualified
defined contribution plans (whether terminated or not) ever maintained by the
Employer shall be treated as one defined contribution plan.
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(f) For the purpose of this Section, if the
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 Employers shall be considered to be
employed by a single Employer.
(g) For the purpose of this Section, if this
Plan is a Code Section 413(c) plan, all Employers of a Participant who maintain
this Plan will be considered to be a single Employer.
(h)(1) If a Participant participates in more than one defined contribution
plan maintained by the 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 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
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.
(i) 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 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" 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 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
Employer which were
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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) 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 Employer for
the current and all prior "limitation years" (including the annual additions
attributable to the Participant's nondeductible Employee contributions to all
defined benefit plans, whether or not terminated, maintained by the Employer,
and the annual additions attributable to all welfare benefit funds, as defined
in Code Section 419(e), and individual medical accounts, as defined in Code
Section 415(l)(2), maintained by the Employer), and the denominator of which is
the sum of the maximum aggregate amounts for the current and all prior
"limitation years" of service with the Employer (regardless of whether a
defined contribution plan was maintained by the Employer). The maximum
aggregate amount in any "limitation year" is the lesser of 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.
If the Employee was a Participant as of
the end of the first day of the first "limitation year"
beginning after December 31, 1986, in one or more defined
contribution plans maintained by the Employer which were in
existence on May 6, 1986, the numerator of this fraction
will be adjusted if the sum of this fraction and the defined
benefit fraction would otherwise exceed 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, 100 percent shall be
substituted for 125 percent in Sections 4.4(k) and 4.4(l) unless the extra
minimum allocation is being provided pursuant to Section 4.3. However, for any
"limitation year" in which the Plan is a Super Top Heavy Plan, 100 percent
shall be substituted for 125 percent in any event.
(m) Notwithstanding anything contained in this
Section to the contrary, the limitations, adjustments and other requirements
prescribed in this Section shall at
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all times comply with the provisions of Code Section 415 and the Regulations
thereunder, the terms of which are specifically incorporated herein by
reference.
IV.5 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 4.4 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 voluntary Employee
contributions credited for the "limitation year" to the extent that the 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)
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 Employer or Employee contributions which
would constitute "annual additions" are made to the Plan for such "limitation
year" (4) reduce 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 4.4.
(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.
(d) The Plan may not distribute "excess amounts," other than voluntary
Employee contributions, to Participants or Former Participants.
IV.6 TRANSFERS FROM QUALIFIED PLANS
(a) With the consent of the Administrator, amounts may be transferred from
other qualified plans by Participants, 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 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.
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(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) At Normal Retirement Date, or such other date when the Participant or
his Beneficiary shall be entitled to receive benefits, the fair market value of
the Participant's Rollover Account shall be used to provide additional benefits
to the Participant or his Beneficiary. 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 Section 7.5, 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.
(e) 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.
(f) 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 (60) 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 (60) 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 (60) days of his
receipt thereof from such conduit individual retirement account.
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(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
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.
IV.7 DIRECTED INVESTMENT ACCOUNT
(a) Each "Qualified Participant" may elect within ninety (90) days after
the close of each Plan Year during the "Qualified Election Period" to direct
the Trustee in writing as to the distribution in cash 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
distributed in cash 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 distribution 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.
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 Employer or any Affiliated Employer shall
be considered as held by the Plan.
(b) For the purposes of this Section the following definitions shall
apply:
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(1) "Qualified Participant" means any Participant or Former Participant
who has completed ten (10) Plan Years of Service as a Participant and has
attained age 55.
(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.
ARTICLE V
FUNDING AND INVESTMENT POLICY
V.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 in life insurance policies to the extent permitted by
subparagraph (c) below, or the Trustee may hold such funds in cash or cash
equivalents.
(c) With due regard to subparagraph (a) above, the Administrator may also
direct the Trustee to invest funds under the Plan in insurance policies on the
life of any "keyman" Employee. The proceeds of a "keyman" insurance policy may
not be used for the repayment of any indebtedness owed by the Plan which is
secured by Company Stock. In the event any "keyman" insurance is purchased by
the Trustee, the premiums paid thereon during any Plan Year, net of any policy
dividends and increases in cash surrender values, shall be treated as the cost
of Plan investment and any death benefit or cash surrender value received shall
be treated as proceeds from an investment of the Plan.
(d) 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.
(e) 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
Employer under a put option binding upon the Employer.
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(f) 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.
V.2 APPLICATION OF CASH
Employer contributions in cash and other cash received by
the Trust Fund shall first be applied to pay any Current Obligations of the
Trust Fund.
V.3 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 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
(i) any class of outstanding stock of the Employer or Affiliated Employer
which issued such Company Stock, or
(ii) the total value of any class of outstanding stock of the 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.
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(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 later
of:
(1) the date which is ten (10) years after the date of sale, or
(2) the date of the Plan allocation attributable to the final payment of
the Exempt Loan incurred in connection with such sale.
V.4 LOANS TO THE TRUST
(a) The Plan may borrow money for any lawful purpose, provided the
proceeds of an Exempt Loan are used within a reasonable time after receipt only
for any or all of the following purposes:
(1) To acquire Company Stock.
(2) To repay such loan.
(3) To repay a prior Exempt Loan.
(b) All loans to the Trust which are made or guaranteed by a disqualified
person must satisfy all requirements applicable to Exempt Loans including but
not limited to the following:
(1) The loan must be at a reasonable rate of interest;
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(2) Any collateral pledged to the creditor by the Plan shall consist only
of the Company Stock purchased with the borrowed funds;
(3) Under the terms of the loan, any pledge of Company Stock shall provide
for the release of shares so pledged on a pro-rata basis pursuant to Section
4.3(e);
(4) Under the terms of the loan, the creditor shall have no recourse
against the Plan except with respect to such collateral, earnings attributable
to such collateral, Employer contributions (other than contributions of Company
Stock) that are made to meet Current Obligations and earnings attributable to
such contributions;
(5) The loan must be for a specific term and may not be payable at the
demand of any person, except in the case of default;
(6) In the event of default upon an Exempt Loan, the value of the Trust
Fund transferred in satisfaction of the Exempt Loan shall not exceed the amount
of default. If the lender is a disqualified person, an Exempt Loan shall
provide for a transfer of Trust Funds upon default only upon and to the extent
of the failure of the Plan to meet the payment schedule of the Exempt Loan;
(7) Exempt Loan payments during a Plan Year must not exceed an amount
equal to: (A) the sum, over all Plan Years, of all contributions and cash
dividends paid by the Employer to the Plan with respect to such Exempt Loan and
earnings on such Employer contributions and cash dividends, less (B) the sum of
the Exempt Loan payments in all preceding Plan Years. A separate accounting
shall be maintained for such Employer contributions, cash dividends and
earnings until the Exempt Loan is repaid.
(c) For purposes of this Section, the term "disqualified person" means a
person who is a Fiduciary, a person providing services to the Plan, an Employer
any of whose Employees are covered by the Plan, an employee organization any of
whose members are covered by the Plan, an owner, direct or indirect, of 50% or
more of the total combined voting power of all classes of voting stock or of
the total value of all classes of the stock, or an officer, director, 10% or
more shareholder, or a highly compensated Employee.
ARTICLE VI
VALUATIONS
VI.1 VALUATION OF THE TRUST FUND
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The Administrator shall direct the Trustee, as of each
Anniversary Date, and at such other date or dates deemed necessary by the
Administrator, herein called "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.
VI.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 all other Plan purposes,
value must 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).
ARTICLE VII
DETERMINATION AND DISTRIBUTION OF BENEFITS
VII.1 DETERMINATION OF BENEFITS UPON RETIREMENT
Every Participant may terminate his employment with the
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 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 4.3, shall continue until his Late Retirement
Date. Upon a Participant's Retirement Date or attainment of his Normal
Retirement Date without termination of employment with the Employer, or as soon
thereafter as is practicable, the Trustee shall distribute all amounts credited
to such Participant's Account in accordance with Sections 7.5 and 7.6.
VII.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
Account shall become fully Vested. If elected, distribution of the
Participant's 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
Sections 7.5 and 7.6, to distribute the value of the deceased Participant's
accounts to the Participant's Beneficiary.
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(b) Upon the death of a Former Participant, the Administrator shall direct
the Trustee, in accordance with the provisions of Sections 7.5 and 7.6, to
distribute any remaining Vested amounts credited to the accounts of a deceased
Former Participant to such Former Participant's Beneficiary.
(c) 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.
(d) 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:
(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.
(e) 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
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representative or a notary public. Further, the spouse's consent must be
irrevocable and must acknowledge the specific nonspouse Beneficiary.
VII.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 Account shall become fully Vested.
In the event of a Participant's Total and Permanent Disability, the Trustee, in
accordance with the provisions of Sections 7.5 and 7.6, shall distribute to
such Participant all amounts credited to such Participant's 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.
VII.4 DETERMINATION OF BENEFITS UPON TERMINATION
(a) On or before the Anniversary Date coinciding with or subsequent to the
termination of a Participant's employment for any reason other than death,
Total and Permanent Disability or retirement, the Administrator may direct the
Trustee to segregate the amount of the Vested portion of such Terminated
Participant's Account and invest the aggregate amount thereof in a separate,
federally insured savings account, certificate of deposit, common or collective
trust fund of a bank or a deferred annuity. In the event the Vested portion of
a Participant's Account is not segregated, the amount shall remain in a
separate account for the Terminated Participant and share in allocations
pursuant to Section 4.3 until such time as a distribution is made to the
Terminated Participant.
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
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 Account to be payable to such
Terminated Participant after a 1-Year Break in Service.
Distribution to a Participant shall not include any Company
Stock acquired with the proceeds of an Exempt Loan until the
close of the Plan Year in which such loan is repaid in full.
Any distribution under this paragraph shall be made in a
manner which is consistent with and satisfies the provisions
of Sections 7.5 and 7.6, including, but not limited to, all
notice and consent requirements of Code Section 411(a)(11)
and the Regulations thereunder.
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If the value of a Terminated
Participant's Vested benefit derived from Employer and
Employee contributions does not exceed $3,500 and has never
exceeded $3,500 at the time of any prior distribution, the
Administrator shall direct the Trustee to cause the entire
Vested benefit to be paid to such Participant in a single
lump sum.
For purposes of this Section 7.4, if
the value of a Terminated Participant's Vested benefit is
zero, the Terminated Participant shall be deemed to have
received a distribution of such Vested benefit.
(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 3 0 %
3 20 %
4 40 %
5 60 %
6 80 %
7 100 %
(c) Notwithstanding the vesting schedule provided for in paragraph (b)
above, for any Top Heavy Plan Year, the Vested portion of the Participant's
Account of any Participant who has an Hour of Service after the Plan becomes
top heavy 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 2 0 %
2 20 %
3 40 %
4 60 %
5 80 %
6 100 %
If in any subsequent Plan Year, the Plan ceases to
be a Top Heavy Plan, the Administrator shall revert to the vesting schedule in
effect before this Plan became a Top Heavy Plan. Any such reversion shall be
treated as a Plan amendment pursuant to the terms of the Plan.
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(d) Notwithstanding the vesting schedule above, upon the complete
discontinuance of the Employer's contributions to the Plan or upon any full or
partial termination of the Plan, all amounts credited to the account of any
affected Participant shall become 100% Vested and shall not thereafter be
subject to Forfeiture.
(e) 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 (3)
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 60 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 Employer or Administrator.
(f)(1) If any Former Participant shall be reemployed by the 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 Employer before
five (5) consecutive 1-Year Breaks in Service, and such Former Participant had
received, or was deemed to have 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
(5) years after the first date on which the Participant is subsequently
reemployed by the Employer or the close of the first period of five (5)
consecutive 1-Year Breaks in Service commencing after the distribution, or in
the event of a deemed distribution, upon the reemployment of such Former
Participant. In the event the Former Participant does repay the full amount
distributed to him, or in the event of a deemed distribution, the undistributed
portion of the Participant's Account must be restored in full, unadjusted by
any gains or losses occurring subsequent to the Anniversary Date or other
valuation date coinciding with or preceding his
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termination. The source for such reinstatement shall first be any Forfeitures
occurring during the year. If such source is insufficient, then the 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, such contribution shall first be applied to restore any such
Accounts and the remainder shall be allocated in accordance with Section 4.3.
(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
(1) Year of Service following the date of his reemployment with the Employer;
(ii) Any Former Participant who under the Plan does not have a
nonforfeitable right to any interest in the Plan resulting from 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
(5) or (B) the aggregate number of his pre-break Years of Service;
(iii) After five (5) 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 one (1)
Year of Service for eligibility purposes following his reemployment with the
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 in Service previously occurred, but employment had not
terminated), he shall participate in the Plan retroactively from the first day
of the Plan Year during which he completes one (1) Year of Service.
(g) In determining Years of Service for purposes of vesting under the
Plan, Years of Service prior to the Effective Date of the Plan shall be
excluded.
VII.5 DISTRIBUTION OF BENEFITS
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(a) The Administrator, pursuant to the election of the Participant (or if
no election has been made prior to the Participant's death, by his
Beneficiary), 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;
(2) Payments over a period certain in monthly, quarterly, semiannual, or
annual installments. The period over which such payment is to be made shall not
extend beyond the earlier of the Participant's life expectancy (or the life
expectancy of the Participant and his designated Beneficiary) or the limited
distribution period provided for in Section 7.5(b).
(b) Unless the Participant elects in writing a longer distribution period,
distributions to a Participant or his Beneficiary attributable to Company Stock
shall be in substantially equal monthly, quarterly, semiannual, or annual
installments over a period not longer than five (5) years. In the case of a
Participant with an account balance attributable to Company Stock in excess of
$500,000, the five (5) year period shall be extended one (1) additional year
(but not more than five (5) additional years) for each $100,000 or fraction
thereof by which such balance exceeds $500,000. The dollar limits shall be
adjusted at the same time and in the same manner as provided in Code Section
415(d).
(c) Any distribution to a Participant who has a benefit which exceeds, or
has ever exceeded, $3,500 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) 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. However, any election to
defer the receipt of benefits shall not apply with respect to distributions
which are required under Section 7.5(f).
(2) Notice of the rights specified under this paragraph shall be provided
no less than 30 days and no more than 90 days before the first day on which all
events have occurred which entitle the Participant to such benefit.
(3) 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 first day on which all events have occurred which entitle
the Participant to such benefit.
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(4) No consent shall be valid if a significant detriment is imposed under
the Plan on any Participant who does not consent to the distribution.
If a distribution is one to which Code Sections
401(a)(11) and 417 do not apply, such distribution
may commence less than 30 days after the 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.
(d) Notwithstanding anything herein to the contrary, the Administrator, in
his sole discretion, may direct that cash dividends on shares of Company Stock
allocable to Participants' or Former Participants' Company Stock Accounts be
distributed to such Participants or Former Participants within 90 days after
the close of the Plan Year in which the dividends are paid.
(e) Any part of a Participant's benefit which is retained in the Plan
after the Anniversary Date on which his participation ends will continue to be
treated as a Company Stock Account or as an Other Investments Account (subject
to Section 7.4(a)) as provided in Article IV. However, neither account will be
credited with any further Employer contributions or Forfeitures.
(f) Notwithstanding any provision in the Plan to the contrary, the
distribution of a Participant's benefits shall be made in accordance with the
following requirements and shall otherwise comply with Code Section 401(a)(9)
and the Regulations thereunder (including Regulation 1.401(a)(9)-2), the
provisions of which are incorporated herein by reference:
(1) A Participant's benefits shall be distributed to him not later than
April 1st of the calendar year following the later of (i) the calendar year in
which the Participant attains age 70 1/2 or (ii) the calendar year in which the
Participant retires, provided, however, that this clause (ii) shall not apply
in the case of a Participant who is a "five (5) percent owner" at any time
during the five (5) Plan Year period ending in the calendar year in which he
attains age 70 1/2 or, in the case of a Participant who becomes a "five (5)
percent owner" during any subsequent Plan Year, clause (ii) shall no longer
apply and the required beginning date shall be the April 1st of the calendar
year following the calendar year in which such subsequent Plan Year ends.
Alternatively, distributions to a Participant must begin no later than the
applicable April 1st as determined under the preceding sentence and must be
made over a period certain measured by the life expectancy of the Participant
(or the life expectancies of the Participant and his designated Beneficiary) in
accordance with Regulations. Notwithstanding the foregoing, clause (ii) above
shall not apply to any Participant unless the Participant had attained age 70
1/2 before January 1, 1988 and was not a "five (5) percent owner" at any time
during the Plan Year ending with or within the calendar year in which the
Participant attained age 66 1/2 or any subsequent Plan Year.
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(2) Distributions to a Participant and his Beneficiaries shall only be
made in accordance with the incidental death benefit requirements of Code
Section 401(a)(9)(G) and the Regulations thereunder.
(g) Notwithstanding any provision in the Plan to the contrary,
distributions upon the death of a Participant shall be made in accordance with
the following requirements and shall otherwise comply with Code Section
401(a)(9) and the Regulations thereunder. If it is determined pursuant to
Regulations that the distribution of a Participant's interest has begun and the
Participant dies before his entire interest has been distributed to him, the
remaining portion of such interest shall be distributed at least as rapidly as
under the method of distribution selected pursuant to Section 7.5 as of his
date of death. If a Participant dies before he has begun to receive any
distributions of his interest under the Plan or before distributions are deemed
to have begun pursuant to Regulations, then his death benefit shall be
distributed to his Beneficiaries by December 31st of the calendar year in which
the fifth anniversary of his date of death occurs.
However, the 5-year distribution
requirement of the preceding paragraph shall not apply to
any portion of the deceased Participant's interest which is
payable to or for the benefit of a designated Beneficiary.
In such event, such portion may, at the election of the
Participant (or the Participant's designated Beneficiary),
be distributed over a period not extending beyond the life
expectancy of such designated Beneficiary provided such
distribution begins not later than December 31st of the
calendar year immediately following the calendar year in
which the Participant died. However, in the event the
Participant's spouse (determined as of the date of the
Participant's death) is his Beneficiary, the requirement
that distributions commence within one year of a
Participant's death shall not apply. In lieu thereof,
distributions must commence on or before the later of: (1)
December 31st of the calendar year immediately following the
calendar year in which the Participant died; or (2) December
31st of the calendar year in which the Participant would
have attained age 70 1/2. If the surviving spouse dies
before distributions to such spouse begin, then the 5-year
distribution requirement of this Section shall apply as if
the spouse was the Participant.
(h) For purposes of Section 7.5(g), the election by a designated
Beneficiary to be excepted from the 5-year distribution requirement must be
made no later than December 31st of the calendar year following the calendar
year of the Participant's death. Except, however, with respect to a designated
Beneficiary who is the Participant's surviving spouse, the election must be
made by the earlier of: (1) December 31st of the calendar year immediately
following the calendar year in which the Participant died or, if later, the
calendar year in which the Participant would have attained age 70 1/2; or (2)
December 31st of the calendar year which contains the fifth anniversary of the
date of the Participant's death. An election by a designated Beneficiary must
be in writing and shall be irrevocable as of the last day of the election
period stated herein.
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In the absence of an election by the Participant or a designated Beneficiary,
the 5-year distribution requirement shall apply.
(i) For purposes of this Section, the life expectancy of a Participant and
a Participant's spouse shall not be redetermined in accordance with Code
Section 401(a)(9)(D). Life expectancy and joint and last survivor expectancy
shall be computed using the return multiples in Tables V and VI of Regulation
1.72-9.
(j) Except as limited by Sections 7.5 and 7.6, whenever the Trustee is to
make a distribution or to commence a series of payments on or as of an
Anniversary Date, the distribution or series of payments may be made or begun
on such date or as soon thereafter as is practicable. However, unless a Former
Participant elects in writing to defer the receipt of benefits (such election
may not result in a death benefit that is more than incidental), the payment of
benefits shall begin not later than the 60th day after the close of the Plan
Year in which the latest of the following events occurs:
(1) the date on which the Participant attains the earlier of age 65 or the
Normal Retirement Age specified herein;
(2) the 10th anniversary of the year in which the Participant commenced
participation in the Plan; or
(3) the date the Participant terminates his service with the Employer.
(k) If a distribution is made at a time when a Participant is not fully
Vested in his Participant's Account (employment has not terminated) and the
Participant may increase the Vested percentage in such account:
(1) a separate account shall be established for the Participant's interest
in the Plan as of the time of the distribution; and
(2) at any relevant time, the Participant's Vested portion of the separate
account shall be equal to an amount ("X") determined by the formula:
X equals P(AB plus (R x D)) - (R x D)
For purposes of applying the formula: P is the
Vested percentage at the relevant time, AB is the
account balance at the relevant time, D is the
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amount of distribution, and R is the ratio of the
account balance at the relevant time to the account
balance after distribution.
VII.6 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 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 7.5(j) and
7.5(f).
(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's 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 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.
(f) If Company Stock acquired with the proceeds of an Exempt Loan
(described in Section 5.4 hereof) is available for distribution and consists of
more than one class, a Participant or his Beneficiary must receive
substantially the same proportion of each such class.
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VII.7 DISTRIBUTION FOR MINOR BENEFICIARY
In the event a distribution is to be made to a minor, then
the Administrator may direct that such distribution be paid to the legal
guardian, or if none, to a parent of such Beneficiary or a responsible adult
with whom the Beneficiary maintains his residence, or to the custodian for such
Beneficiary under the Uniform Gift to Minors Act or Gift to Minors Act, if such
is permitted by the laws of the state in which said Beneficiary resides. Such a
payment to the legal guardian, custodian or parent of a minor Beneficiary shall
fully discharge the Trustee, Employer, and Plan from further liability on
account thereof.
VII.8 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN
In the event that all, or any portion, of the distribution
payable to a Participant or his Beneficiary hereunder shall, at the later of
the Participant's attainment of age 62 or his Normal Retirement Age, remain
unpaid solely by reason of the inability of the Administrator, after sending a
registered letter, return receipt requested, to the last known address, and
after further diligent effort, to ascertain the whereabouts of such Participant
or his Beneficiary, the amount so distributable shall be treated as a
Forfeiture pursuant to the Plan. In the event a Participant or Beneficiary is
located subsequent to his benefit being reallocated, such benefit shall be
restored.
VII.9 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 (14) days from the date the Selling
Participant gives such written notice to the Employer and the Administrator
(such fourteen (14) 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 (14) day period provided above, the
Selling Participant shall have the right, at any time following the expiration
of such fourteen (14) 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.
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(c) The closing pursuant to the exercise of the right of first refusal
under Section 7.9(a) above shall take place at such place agreed upon between
the Administrator and the Selling Participant, but not later than ten (10) 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.
(d) Except as provided in this paragraph (d), no Company Stock acquired
with the proceeds of an Exempt Loan complying with the requirements of Section
5.4 hereof shall be subject to a right of first refusal. Company Stock acquired
with the proceeds of an Exempt Loan, which is distributed to a Participant or
Beneficiary, shall be subject to the right of first refusal provided for in
paragraph (a) of this Section only so long as the Company Stock is not publicly
traded. The term "publicly traded" refers to a securities exchange registered
under Section 6 of the Securities Exchange Act of 1934 (15 U.S.C. 78f) or that
is quoted on a system sponsored by a national securities association registered
under Section 15A(b) of the Securities Exchange Act (15 U.S.C. 780). In
addition, in the case of Company Stock which was acquired with the proceeds of
a loan described in Section 5.4, the selling price and other terms under the
right must not be less favorable to the seller than the greater of the value of
the security determined under Section 6.2, or the purchase price and other
terms offered by a buyer (other than the Employer or the Trust Fund), making a
good faith offer to purchase the security. The right of first refusal must
lapse no later than fourteen (14) days after the security holder gives notice
to the holder of the right that an offer by a third party to purchase the
security has been made. The right of first refusal shall comply with the
provisions of paragraphs (a), (b) and (c) of this Section, except to the extent
those provisions may conflict with the provisions of this paragraph.
VII.10 STOCK CERTIFICATE LEGEND
Certificates for shares distributed pursuant to the Plan
shall contain the following legend:
"The shares represented by this certificate are transferable
only upon compliance with the terms of CENTRAL COAST BANCORP EMPLOYEE STOCK
OWNERSHIP PLAN AND TRUST effective as of January 1, 1996, which grants to
Central Coast Bancorp a right of first refusal, a copy of said Plan being on
file in the office of the Company."
VII.11 NONTERMINABLE PROTECTIONS AND RIGHTS
No Company Stock, except as provided in Section 4.3(n),
acquired with the proceeds of a loan described in Section 5.4 hereof may be
subject to a put, call, or other option, or buy-sell or similar arrangement
when held by and when distributed from the Trust Fund, whether or not the Plan
is then an ESOP. The protections and rights granted in this Section are
nonterminable, and such protections and rights shall continue to exist under
the terms of this Plan so long as any Company Stock acquired with the proceeds
of a loan described in Section 5.4
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hereof is held by the Trust Fund or by any Participant or other person for
whose benefit such protections and rights have been created, and neither the
repayment of such loan nor the failure of the Plan to be an ESOP, nor an
amendment of the Plan shall cause a termination of said protections and rights.
VII.12 PRE-RETIREMENT DISTRIBUTION
At such time as a Participant shall have attained the age of
59 1/2 years, the Administrator, at the election of the Participant, shall
direct the Trustee to distribute all or a portion of the amount then credited
to the accounts maintained on behalf of the Participant. However, no
distribution from the Participant's Account shall occur prior to 100% vesting.
In the event that the Administrator makes such a distribution, the Participant
shall continue to be eligible to participate in the Plan on the same basis as
any other Employee. Any distribution made pursuant to this Section shall be
made in a manner consistent with Sections 7.5 and 7.6, including, but not
limited to, all notice and consent requirements of Code Section 411(a)(11) and
the Regulations thereunder.
VII.13 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 "qualified domestic relations order," even if the affected
Participant has not separated from service and has not reached the "earliest
retirement age" under the Plan. For the purposes of this Section, "alternate
payee," "qualified domestic relations order" and "earliest retirement age"
shall have the meaning set forth under Code Section 414(p).
ARTICLE VIII
TRUSTEE
VIII.1 BASIC RESPONSIBILITIES OF THE TRUSTEE
The Trustee shall have the following categories of
responsibilities:
(a) Consistent with the "funding policy and method" determined by the
Employer, to invest, manage, and control the Plan assets subject, however, to
the direction of an Investment Manager if the Trustee should appoint such
manager as to all or a portion of the assets of the Plan;
(b) 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;
(c) To maintain records of receipts and disbursements and furnish to the
Employer and/or Administrator for each Plan Year a written annual report per
Section 8.7; and
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(d) 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.
VIII.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) 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, 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.
VIII.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;
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(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;
(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 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;
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(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 Employer;
(k) To apply for and procure from responsible insurance companies, to be
selected by the Administrator, as an investment of the Trust Fund such annuity,
or other Contracts (on the life of any Participant) as the Administrator shall
deem proper; to exercise, at any time or from time to time, whatever rights and
privileges may be granted under such annuity, or other Contracts; to collect,
receive, and settle for the proceeds of all such annuity or other Contracts as
and when entitled to do so under the provisions thereof;
(l) To invest funds of the Trust in time deposits or savings accounts
bearing a reasonable rate of interest in the Trustee's bank;
(m) To invest in Treasury Bills and other forms of United States
government obligations;
(n) To invest in shares of investment companies registered under the
Investment Company Act of 1940;
(o) To deposit monies in federally insured savings accounts or
certificates of deposit in banks or savings and loan associations;
(p) To vote Company Stock as provided in Section 8.4;
(q) 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;
(r) To deposit such Company Stock (but only if such deposit does not
violate the provisions of Section 8.4 hereof) or other securities in any voting
trust, or with any protective or like committee, or with a trustee or with
depositories designated thereby;
(s) To sell or exercise any options, subscription rights and conversion
privileges and to make any payments incidental thereto;
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(t) 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;
(u) 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;
(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.
VIII.4 VOTING COMPANY STOCK
The Trustee shall vote all Company Stock held by it as part
of the Plan assets at such time and in such manner as the Administrator shall
direct. 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 Administrator fails or refuses to give
the Trustee timely instructions as to how to vote any Company Stock as to which
the Trustee otherwise has the right to vote, the Trustee shall not exercise its
power to vote such Company Stock and shall consider the Administrator's failure
or refusal to give timely instructions as an exercise of the Administrator's
rights and a directive to the Trustee not to vote said Company Stock. 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 on such Company
Stock.
Notwithstanding the foregoing, if the Employer has a
registration-type class of securities or, with respect to Company Stock
acquired by, or transferred to, the Plan in connection with a securities
acquisition loan (as defined in Code Section 133(b)) after July 10, 1989, 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, with respect to Company Stock other than Company Stock acquired by,
or transferred to, the Plan in connection with a securities acquisition loan
(as defined in Code Section 133(b)) after July 10, 1989, 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
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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.
VIII.5 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 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 (60) 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.
VIII.6 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 Employer and the
Trustee. An individual serving as Trustee who already receives full-time pay
from the Employer shall not receive compensation
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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 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.
VIII.7 ANNUAL REPORT OF THE TRUSTEE
Within a reasonable period of time after the later of the
Anniversary Date or receipt of the Employer's contribution for each Plan Year,
the Trustee shall furnish to the 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.
VIII.8 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
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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.
(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 (120) days after the end of the
Plan Year or by such other date as may be prescribed under regulations of the
Secretary of Labor.
VIII.9 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE
(a) The Trustee may resign at any time by delivering to the Employer, at
least thirty (30) 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 (30) 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 8.7 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
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forth in Section 8.7 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 8.7 shall have the same effect upon the statement as the Employer's
approval of an annual 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 8.7
and this subparagraph.
VIII.10 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.
VIII.11 DIRECT ROLLOVER
(a) Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a distributee's election under this Section, a distributee may
elect, at the time and in the manner prescribed by the Plan Administrator, to
have any portion of an eligible rollover distribution paid directly to an
eligible retirement plan specified by the distributee in a direct rollover.
(b) For purposes of this Section the following definitions shall apply:
(1) An eligible rollover distribution is any distribution of all or any
portion of the balance to the credit of the distributee, except that an
eligible rollover distribution does not include: any distribution that is one
of a series of substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the distributee or the
joint lives (or joint life expectancies) of the distributee and the
distributee's designated beneficiary, or for a specified period of ten years or
more; any distribution to the extent such distribution is required under Code
Section 401(a)(9); and the portion of any distribution that is not includible
in gross income (determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
(2) An eligible retirement plan is an individual retirement account
described in Code Section 408(a), an individual retirement annuity described in
Code Section 408(b), an annuity plan described in Code Section 403(a), or a
qualified trust described in Code Section 401(a), that accepts the
distributee's eligible rollover distribution. However, in the case of an
eligible rollover distribution to the surviving spouse, an eligible retirement
plan is an individual retirement account or individual retirement annuity.
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(3) A distributee includes an Employee or former Employee. In addition,
the Employee's or former Employee's surviving spouse and the Employee's or
former Employee's spouse or former spouse who is the alternate payee under a
qualified domestic relations order, as defined in Code Section 414(p), are
distributees with regard to the interest of the spouse or former spouse.
(4) A direct rollover is a payment by the plan to the eligible retirement
plan specified by the distributee.
ARTICLE IX
AMENDMENT, TERMINATION AND MERGERS
IX.1 AMENDMENT
(a) The Employer shall have the right at any time to amend the Plan,
subject to the limitations of this Section. Any such amendment shall be adopted
by formal action of the Employer's board of directors and executed by an
officer authorized to act on behalf of the Employer. However, any amendment
which affects the rights, duties or responsibilities of the Trustee and
Administrator may only be made with the Trustee's and Administrator's written
consent. Any such amendment shall become effective as provided therein upon its
execution. The Trustee shall not be required to execute any such amendment
unless the Trust provisions contained herein are a part of the Plan and the
amendment affects the duties of the Trustee hereunder.
(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 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.
In addition, no such amendment shall
have the effect of terminating the protections and rights
set forth in Section 7.11, unless such
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termination shall then be permitted under the applicable
provisions of the Code and Regulations; such a termination
is currently expressly prohibited by Regulation
54.4975-11(a)(3)(ii).
IX.2 TERMINATION
(a) The Employer shall have the right at any time to terminate the Plan by
delivering to the Trustee and Administrator written notice of such termination.
Upon any full or partial termination, all amounts credited to the affected
Participants' 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 Sections 7.5 and 7.6. 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 9.1(c).
IX.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 9.1(c).
ARTICLE X
MISCELLANEOUS
X.1 PARTICIPANT'S RIGHTS
This Plan shall not be deemed to constitute a contract
between the 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 Employer or to interfere with the right of
the 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.
X.2 ALIENATION
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(a) Subject to the exceptions provided below, no benefit which shall be
payable out of the Trust Fund to any person (including a 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,
except to such extent as may be required by law.
(b) This provision shall not apply to a "qualified domestic relations
order" defined in Code Section 414(p), and those other domestic relations
orders permitted to be so treated by the Administrator under the provisions of
the Retirement Equity Act of 1984. The Administrator shall establish a written
procedure to determine the qualified status of domestic relations orders and to
administer distributions under such qualified orders. Further, to the extent
provided under a "qualified domestic relations order," a former spouse of a
Participant shall be treated as the spouse or surviving spouse for all purposes
under the Plan.
X.3 CONSTRUCTION OF PLAN
This Plan and Trust shall be construed and enforced
according to the Act and the laws of the State of California, other than its
laws respecting choice of law, to the extent not preempted by the Act.
X.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.
X.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 or
the Administrator may be a party, and such claim, suit, or proceeding is
resolved in favor of the Trustee or 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.
X.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
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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 Employer shall make an excessive contribution under a
mistake of fact pursuant to Act Section 403(c)(2)(A), the 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
Employer within the one (1) year period. Earnings of the Plan attributable to
the excess contributions may not be returned to the Employer but any losses
attributable thereto must reduce the amount so returned.
X.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% 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
Employer.
X.8 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE
Neither the Employer 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.
X.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.
X.10 RECEIPT AND RELEASE FOR PAYMENTS
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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 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 Employer.
X.11 ACTION BY THE EMPLOYER
Whenever the 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.
X.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. In general, the Employer shall have the
sole responsibility for making the contributions provided for under Section
4.1; and shall have the sole 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 sole responsibility for the administration of the Plan, which
responsibility is specifically described in the Plan. The Trustee shall have
the sole responsibility of management of the assets held under the Trust,
except 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. 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. 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 the Plan and Trust and to resolve ambiguities,
inconsistencies and omissions, which findings shall be binding, final and
conclusive.
X.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.
X.14 APPROVAL BY INTERNAL REVENUE SERVICE
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(a) Notwithstanding anything herein to the contrary, contributions to this
Plan are conditioned upon the initial qualification of the Plan under Code
Section 401. If the Plan receives an adverse determination with respect to its
initial qualification, then the Plan may return such contributions to the
Employer within one year after such determination, provided the application for
the determination is made by the time prescribed by law for filing the
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 3.6,
3.7, and 4.1(c), any contribution by the Employer to the Trust Fund is
conditioned upon the deductibility of the contribution by the Employer under
the Code and, to the extent any such deduction is disallowed, the 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
Employer, but any losses attributable thereto must reduce the amount so
returned.
X.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.
X.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.
ARTICLE XI
PARTICIPATING EMPLOYERS
XI.1 ADOPTION BY OTHER EMPLOYERS
Notwithstanding anything herein to the contrary, with the
consent of the Employer and Trustee, any other corporation or entity, whether
an affiliate or subsidiary or not, may adopt this Plan and all of the
provisions hereof, and participate herein and be known as a Participating
Employer, by a properly executed document evidencing said intent and will of
such Participating Employer.
XI.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS
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(a) Each such Participating Employer shall be required to use the same
Trustee as provided in this Plan.
(b) The Trustee may, but shall not be required to, commingle, hold and
invest as one Trust Fund all contributions made by Participating Employers, as
well as all increments thereof. However, the assets of the Plan shall, on an
ongoing basis, be available to pay benefits to all Participants and
Beneficiaries under the Plan without regard to the Employer or Participating
Employer who contributed such assets.
(c) The transfer of any Participant from or to an Employer participating
in this Plan, whether he be an Employee of the Employer or a Participating
Employer, shall not affect such Participant's rights under the Plan, and all
amounts credited to such Participant's Account as well as his accumulated
service time with the transferor or predecessor, and his length of
participation in the Plan, shall continue to his credit.
(d) All rights and values forfeited by termination of employment shall
inure only to the benefit of the Participants of the Employer or Participating
Employer by which the forfeiting Participant was employed, except if the
Forfeiture is for an Employee whose Employer is an Affiliated Employer, then
said Forfeiture shall be allocated to the Participants employed by the Employer
or Participating Employers who are Affiliated Employers. Should an Employee of
one ("First") Employer be transferred to an associated ("Second") Employer
which is an Affiliated Employer, such transfer shall not cause his account
balance (generated while an Employee of "First" Employer) in any manner, or by
any amount to be forfeited. Such Employee's Participant Account balance for all
purposes of the Plan, including length of service, shall be considered as
though he had always been employed by the "Second" Employer and as such had
received contributions, forfeitures, earnings or losses, and appreciation or
depreciation in value of assets totaling the amount so transferred.
(e) Any expenses of the Trust which are to be paid by the Employer or
borne by the Trust Fund shall be paid by each Participating Employer in the
same proportion that the total amount standing to the credit of all
Participants employed by such Employer bears to the total standing to the
credit of all Participants.
XI.3 DESIGNATION OF AGENT
Each Participating Employer shall be deemed to be a party to
this Plan; provided, however, that with respect to all of its relations with
the Trustee and Administrator for the purpose of this Plan, each Participating
Employer shall be deemed to have designated irrevocably the Employer as its
agent. Unless the context of the Plan clearly indicates the contrary, the word
"Employer" shall be deemed to include each Participating Employer as related to
its adoption of the Plan.
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XI.4 EMPLOYEE TRANSFERS
It is anticipated that an Employee may be transferred
between Participating Employers, and in the event of any such transfer, the
Employee involved shall carry with him his accumulated service and eligibility.
No such transfer shall effect a termination of employment hereunder, and the
Participating Employer to which the Employee is transferred shall thereupon
become obligated hereunder with respect to such Employee in the same manner as
was the Participating Employer from whom the Employee was transferred.
XI.5 PARTICIPATING EMPLOYER'S CONTRIBUTION
Any contribution subject to allocation during each Plan Year
shall be allocated only among those Participants of the Employer or
Participating Employer making the contribution, except if the contribution is
made by an Affiliated Employer, in which event such contribution shall be
allocated among all Participants of all Participating Employers who are
Affiliated Employers in accordance with the provisions of this Plan. On the
basis of the information furnished by the Administrator, the Trustee shall keep
separate books and records concerning the affairs of each Participating
Employer hereunder and as to the accounts and credits of the Employees of each
Participating Employer. The Trustee may, but need not, register Contracts so as
to evidence that a particular Participating Employer is the interested Employer
hereunder, but in the event of an Employee transfer from one Participating
Employer to another, the employing Employer shall immediately notify the
Trustee thereof.
XI.6 AMENDMENT
Amendment of this Plan by the Employer at any time when
there shall be a Participating Employer hereunder shall only be by the written
action of each and every Participating Employer and with the consent of the
Trustee where such consent is necessary in accordance with the terms of this
Plan.
XI.7 DISCONTINUANCE OF PARTICIPATION
Any Participating Employer shall be permitted to discontinue
or revoke its participation in the Plan. At the time of any such discontinuance
or revocation, satisfactory evidence thereof and of any applicable conditions
imposed shall be delivered to the Trustee. The Trustee shall thereafter
transfer, deliver and assign Contracts and other Trust Fund assets allocable to
the Participants of such Participating Employer to such new Trustee as shall
have been designated by such Participating Employer, in the event that it has
established a separate pension plan for its Employees, provided however, that
no such transfer shall be made if the result is the elimination or reduction of
any "Section 411(d)(6) protected benefits" in accordance with Section 9.1(c).
If no successor is designated, the Trustee shall retain such assets for the
Employees of said Participating Employer pursuant to the provisions of Article
VII hereof. In no such event shall any part of the corpus or income of the
Trust as it relates to such Participating Employer be used for or diverted to
purposes other than for the exclusive benefit of the Employees of such
Participating Employer.
XI.8 ADMINISTRATOR'S AUTHORITY
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The Administrator shall have authority to make any and all
necessary rules or regulations, binding upon all Participating Employers and
all Participants, to effectuate the purpose of this Article.
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IN WITNESS WHEREOF, this Plan has been executed the day and
year first above written.
Signed, sealed, and delivered
in the presence of:
Central Coast Bancorp
______________________________ By______________________________
EMPLOYER
______________________________
WITNESSES AS TO EMPLOYER
______________________________ _______________________ (SEAL)
TRUSTEE
______________________________
WITNESSES AS TO TRUSTEE
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