COAST COMMERCIAL BANK
EMPLOYEE STOCK OWNERSHIP PLAN
(WITH 401(k) PROVISIONS)
EFFECTIVE AS OF JANUARY 1, 1991
SECTION PAGE
1. Nature of Plan. . . . . . . . . . . . . . . . . . 1.1
2. Definitions . . . . . . . . . . . . . . . . . . . 2.1
3. Eligibility and Participation . . . . . . . . . . 3.1
4. Employer and Employee Contributions . . . . . . . 4.1
5. Investment of Trust Assets . . . . . . . . . . . 5.1
6. Allocations to Participants' Accounts . . . . . . 6.1
7. Expenses of the Plan and Trust . . . . . . . . . 7.1
8. Voting Bank Stock . . . . . . . . . . . . . . . . 8.1
9. Disclosure to Participants . . . . . . . . . . . 9.1
10. Capital Accumulation . . . . . . . . . . . . . . 10.1
11. Retirement, Disability or Death . . . . . . . . . 11.1
12. Termination of Service, Break in Service,
Vesting and Forfeitures . . . . . . . . . . . . . 12.1
13. Credited Service . . . . . . . . . . . . . . . . . 13.1
14. When Capital Accumulation Will Be Distributed . . 14.1
15. How Capital Accumulation Will Be Distributed . . . 15.1
16. Rights, Options and Restrictions on
Bank Stock . . . . . . . . . . . . . . . . . . . 16.1
17. No Assignments of Benefits, Dividends, Hardship,
Optional Distributions and Loans . . . . . . . . 17.1
18. Administration . . . . . . . . . . . . . . . . . . 18.1
19. Claims Procedure . . . . . . . . . . . . . . . . . 19.1
20. Guaranties . . . . . . . . . . . . . . . . . . . . 20.1
21. Future of the Plan . . . . . . . . . . . . . . . . 21.1
22. "Top-Heavy" Contingency Provisions . . . . . . . . 22.1
23. Diversification . . . . . . . . . . . . . . . . . 23.1
24. Governing Law. . . . . . . . . . . . . . . . . . . 24.1
25. Execution. . . . . . . . . . . . . . . . . . . . . 25.1
COAST COMMERCIAL BANK
EMPLOYEE STOCK OWNERSHIP PLAN
(WITH 401(k) PROVISIONS)
SECTION 1. NATURE OF PLAN.
The purpose of this Plan is to enable participating Employees to share in
the growth and prosperity of the Bank through Employer contributions to the Plan
and to provide Participants with an opportunity to accumulate capital for their
future economic security. The Plan is designed to permit both Employer and
Employee contributions to the Plan. The primary purpose of the Plan is to
enable Participants to acquire stock ownership interests in the Bank.
Therefore, the Trust Assets held under the Plan will be invested primarily in
Bank Stock.
The Plan is also designed to be available as a technique of corporate
finance to the Bank. Accordingly, it may be used to accomplish the following
objectives:
(a) To meet general financing requirements of the Bank, including capital
growth and transfers in the ownership of Bank Stock;
(b) To provide Participants with beneficial ownership of Bank Stock and
other assets through Employer and Employee contributions to the Plan;
and
(c) To receive loans (or other extensions of credit) to finance the
acquisition of Bank Stock ("Acquisition Loans"), with such loans to be
repaid by Employer Contributions to the Trust and dividends received
on such Bank Stock.
The Plan, hereby effective as of January 1, 1991, is a stock bonus plan
containing Section 401(k) features that is intended to qualify under Section
401(a) of the Internal Revenue Code. The Plan is a complete amendment and
restatement of the Coast Commercial Bank Employee Savings Plan originally
effective January 1, 1985, and as amended from time to time thereafter. The
Plan is also designed to be an employee stock ownership plan under Section
4975(e)(7) of the Code.
1.1
All Trust Assets under the Plan will be administered, distributed,
forfeited and otherwise governed by the provisions of this Plan and the related
Trust Agreement. The Plan is administered by a Board of Trustees and an
Administrative Committee for the exclusive benefit of Participants (and their
Beneficiaries).
1.2
SECTION 2. DEFINITIONS
In this Plan, whenever the context so indicates, the singular or plural
number and the masculine, feminine or neuter gender shall be deemed to include
the other, the terms "he," "his," and "him" shall refer to a Participant, and
the capitalized terms shall have the following meanings:
ACCOUNT
One of the several accounts maintained to record the interest of a
Participant under the Plan. See Section 6.
ACQUISITION LOAN
A loan (or other extension of credit) used by the Trust to finance the
Acquisition of Bank Stock, which loan may constitute an extension of credit
to the Trust from a party in interest (as defined by ERISA). See Section
5(b).
ADJUSTED COMPENSATION
The total remuneration paid to an Employee as an Employee in each Plan
Year, as reported on IRS Form W-2, plus the amount (if any) of his Salary
Reduction Contributions for the Plan Year. For any Plan Year, however,
Adjusted Compensation exceeding $200,000 for any Employee (adjusted in
accordance with the Section 415(d) of the Code for cost of living
increases) shall not be taken into account.
AFFILIATED COMPANY
Any corporation or business which is a member of a controlled group of
corporations or businesses with the Bank pursuant to Section 414(b), (c),
or (m) of the Code.
ANNIVERSARY DATE
The 31st day of December of each year (the last day of each Plan Year).
ANNUITY STARTING DATE
The first day of the first period for which an amount is payable as an
annuity; or in the case of a benefit not payable in the form of an annuity,
the first day on which all events have occurred which entitle the
participant to such benefit.
APPROVED ABSENCE
A leave of absence (without pay) granted to an Employee by an Employer
under its established leave policy.
BANK
Coast Commercial Bank, a state Bank organized under the laws of California.
2.1
BANK STOCK
Shares of capital stock issued by the Bank, which are either voting common
stock or preferred stock (convertible into voting common stock) and which
shares constitute "employer securities" under Section 409(1) of the Code.
BANK STOCK ACCOUNT
The Account of a Participant which reflects his interest in Bank Stock held
under the Plan. See Section 6(e).
BENEFICIARY
The person (or persons) entitled to receive any benefit under the Plan in
the event of a Participant's death. See Section 15(b).
BOARD OF DIRECTORS
The Board of Directors of the Bank.
BREAK IN SERVICE
A Plan Year in which a Participant is not credited with more than 500 Hours
of Service by reason of his termination of Service. See Section 12(b).
BUYOUT
A transaction or series of related transactions by which the Bank is sold,
either through the sale of a Controlling Interest in the Bank's voting
stock or through the sale of substantially all of the Bank's assets, to a
party not having a Controlling Interest in the Bank's voting stock on the
date of execution of this Agreement.
2.2
CAPITAL ACCUMULATION
A Participant's vested, nonforfeitable interest in his Accounts under the
Plan. See Section 10.
CHANGE IN CONTROL
A Buyout, Merger or Substantial Change in Ownership.
CODE
The Internal Revenue Code of 1986.
COMMITTEE
The Administrative Committee appointed by the Board of Directors to
administer the Plan. See Section 18.
COMPENSATION
The total remuneration paid to an Employee by the Employer in each Plan
Year for personal services, excluding (a) contributions to a plan of
deferred compensation (to the extent contributions are not included in
gross income of the employee for the taxable year contributed) and
distributions from such a deferred compensation plan (whether or not
includable in gross income), (b) amounts realized in connection with the
exercise of non-qualified stock options (or the sale exchange or other
disposition of qualified stock options) and amounts which receive special
tax benefits.
CONTROLLING INTEREST
Controlling Interest shall mean ownership, either directly or indirectly,
of more than twenty percent (20%) of the Bank's voting stock.
CREDITED SERVICE
The number of calendar years during which an Employee is credited with at
least 1000 Hours of Service. See Section 13.
DEFINED CONTRIBUTION DOLLAR LIMITATION
The dollar amount of $30,000, or, if greater, one-fourth of the defined
benefit dollar limitation set forth in Section 415(b)(1) of the Code as in
effect for the Plan Year.
EMPLOYEE
Any common-law employee of an Employer.
EMPLOYER
2.3
The Bank and any other Affiliated Company which is designated by the Board
of Directors as an Employer and which adopts the Plan for the benefit of
its Employees.
EMPLOYER CONTRIBUTIONS
Payments made to the Trust by an Employer which include Basic
Contributions, Matching Contributions and Optional Contributions. See
Section 4.
EMPLOYER DISCRETIONARY BASIC CONTRIBUTIONS
Plan contributions made pursuant to Plan Section 4(1)(a)(3).
EMPLOYER DISCRETIONARY MATCHING CONTRIBUTIONS
Plan contributions made pursuant to Plan Section 4(1)(a)(2).
EMPLOYER DISCRETIONARY OPTIONAL CONTRIBUTIONS
Plan contributions made pursuant to Plan Section 4(1)(a)(4).
ENTRY DATE
January 1 or July 1 of each Plan Year. See Section 3(a).
ERISA
The Employee Retirement Income Security Act of 1974, as amended.
FINANCED SHARES
Shares of Bank Stock acquired by the Trust with the proceeds of an
Acquisition Loan.
FORFEITURE
Any portion of a Participant's Accounts which does not become a part of his
Capital Accumulation upon the occurrence of a Break in Service. See
Sections 12(b) and (c).
HIGHLY COMPENSATED PARTICIPANT
An Employee who, in accordance with Code Section 414(q), during the year or
the preceding year: (A) was at any time a five percent (5%) owner of the
Employer, (B) received compensation from the Employer in excess of $75,000,
(C) received compensation from the Employer in excess of $50,000 and was in
the top-paid group of Employees for such year (defined as the top twenty
percent (20%) of Employees when ranked on the basis of compensation paid
during such year), or (D) was at any time an officer and received
compensation greater than one hundred fifty percent (150%) of the amount in
effect under Section 415(c)(1)(A) for such year. See Section 4(2)(c).
HOUR OF SERVICE
2.4
Each hour of Service for which an Employee is credited under the Plan, as
described in Section 3(d).
KEY EMPLOYEE
Any Employee or former Employee (and the beneficiaries of such Employee)
who at any time during the Plan Year (or any of the four preceding Plan
Years) was an officer of the Employer if such individual's annual
Compensation exceeds one hundred fifty percent (150%) of the dollar
limitation under Section 415(c)(1)(A) of the Code, an owner (or considered
an owner under Section 318 of the Code) of both more than .5% interest, as
well as one of the ten (10) largest interests in the Employer if such
individual's Compensation exceeds one hundred percent (100%) of such dollar
limitation, a five percent (5%) owner of the Employer, or a one percent
(1%) owner of the Employer who has an annual Compensation of more than
$150,000.
LOAN SUSPENSE ACCOUNT
The account to which Financed Shares are credited and maintained while an
Acquisition Loan is outstanding. See Sections 5(b) and 6(e).
MERGER
A transaction or series of transactions wherein the Bank is combined with
another business entity, and after which the persons or entities who had
owned, either directly or indirectly, a Controlling Interest in the Bank's
voting stock on the date of execution of this Agreement own less than a
Controlling Interest in the voting stock of the combined entity.
NON-KEY EMPLOYEE
Any Employee or former Employee not defined as a Key Employee.
OTHER INVESTMENTS ACCOUNT
The portion of the Optional Contribution Account of a Participant which
reflects his interest under the Plan attributable to Trust Assets other
than Bank Stock. See Section 6(e).
PARTICIPANT
Any Employee who is participating in this Plan. See Section 3.
PLAN
Coast Commercial Bank Employee Stock Ownership Plan (with Section 401(k)
provisions), which includes the Trust Agreement.
PLAN YEAR
The twelve-month period ending on each Anniversary Date.
2.5
PRIOR PLAN ACCOUNT
The Account of a Participant attributable to contributions prior to the
date of the restatement of the Plan.
SALARY REDUCTION CONTRIBUTIONS
Plan contributions made as a result of the salary reduction elections of
Participants pursuant to Plan Section 4(2).
SERVICE
Employment with the Bank (or an Affiliated Company).
SUBSTANTIAL CHANGE IN OWNERSHIP
A transaction or series of transactions in which a Controlling Interest in
the Bank is acquired by or for a person or business entity, either of which
did not own, either directly or indirectly, a Controlling Interest in the
Bank on the date that this Agreement was executed. The above shall not
apply to stock purchased by the Coast Commercial Bank Employee Stock
Ownership Plan (ESOP).
TRUST
Coast Commercial Bank Employee Stock Ownership Trust, created by the Trust
Agreement entered into between the Bank and the Trustee.
TRUST AGREEMENT
The agreement between the Bank and the Trustee establishing the Trust and
specifying the duties of the Trustee.
TRUST ASSETS
The Bank Stock and other assets held in the Trust for the benefit of
Participants. See Section 5.
TRUSTEE
The Board of Trustees (and any successor Trustee) appointed by the Board of
Directors to hold and invest the Trust Assets. See Section 18.
VESTED ACCOUNT
The fair market value of a Participant's nonforfeitable benefit under the
Plan.
2.6
SECTION 3. ELIGIBILITY AND PARTICIPATION.
(a) All Employees currently participating in the Plan will remain as
Participants in the restated Plan. Thereafter, each Employee will become a
Participant on the Entry Date following his initial date of Service (the date he
is first credited with an Hour of Service), provided that he has attained age
twenty-one (21) and is credited with at least 1000 Hours of Service during an
eligibility computation period. For this purpose, an eligibility computation
period shall first be the period of twelve (12) consecutive months beginning on
the Employee's initial date of Service and thereafter shall be the Plan Year.
(b) A Participant is generally entitled to share in the allocations of
Employer Contributions and Forfeitures only for a Plan Year in which he is
credited with at least 1000 Hours of Service and in which he was an Employee (or
on Approved Absence) on the Anniversary Date. A Participant shall also share in
the allocations of Employer Contributions for the Plan Year of his retirement,
disability or death (as provided in Section 12).
(c) A former Employee who is reemployed by an Employer and has previously
satisfied the eligibility requirements of Section 3(a) shall become a
Participant as of his date of reemployment. An Employee who is on an Approved
Absence shall not become a Participant until the end of his Approved Absence but
a Participant who is on an Approved Absence shall continue as a Participant
during the period of his Approved Absence. Failure to return to work by the end
of the Approved Absence will terminate Service as of the beginning of the
Approved Absence.
(d) HOURS OF SERVICE. For purposes of determining the Hours of Service to
be credited to an Employee under the Plan, the following rules shall be applied:
(1) Hours of Service shall include:
(a) each hour of Service for which an Employee is paid, or
entitled to payment, for the performance of duties, with
such hours of Service being credited in the Plan Year in
which the duties are performed; and
(b) each hour of Service for which an Employee is paid, or
entitled to payment, for a period during which no duties are
performed (irrespective of whether the employment
relationship has terminated) due to vacation, holiday,
illness, incapacity (including disability), layoff, jury
duty, military
3.1
duty or leave of absence; provided that no more than 501
Hours of Service need be credited for one continuous period
during which an Employee does not perform duties; and
(c) each hour of Service for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to;
provided, however, that Hours of Service credited under
either subparagraph (a) or (b) above shall not be credited
under this subparagraph (c). These Hours of Service will be
credited to Employee for the Plan Year to which the award or
agreement pertains rather than the Plan Year in which the
award, agreement or payment is made.
(2) The crediting of Hours of Service shall be determined by the Committee
in accordance with the rules set forth in Section 2530.200b-2(b) and (c) of
the regulations prescribed by the Department of Labor, which rules shall be
consistently applied with respect to all Employees within the same job
classification.
(3) Hours of Service shall not be credited to an Employee for a period
during which no duties are performed if payment is made or due under a plan
maintained solely for the purpose of complying with applicable worker's
compensation, unemployment compensation or disability insurance laws, and
Hours of Service shall not be credited on account of any payment made or
due an Employee solely in reimbursement of medical or medically-related
expenses.
(4) An Employee compensated on an hourly basis shall be credited for each
Hour of Service as described above. Unless an Employer maintains records
of actual Hours of Service, a salaried Employee who completes at least one
Hour of Service during a monthly period shall be credited with 190 Hours
for each such period of Service.
(5) Hours of Service will be credited for employment with other members of
an affiliated service group (under Section 414(m) of the Code), a
controlled group of corporations (under Section 414 (b) of the Code), a
group of trades or businesses under common control (under Section 414 (c)
of the Code), of which an Employer is, or may become, a member.
(6) For purposes of determining whether an Employee has incurred a
Break in Service and for vesting and participation purposes, if an Employee
begins a maternity/paternity leave of absence described in Section
411(a)(6)(E)(i) of the Code, his Hours of Service shall include the Hours
of Service that would have been credited to him if he had not been so
absent (or eight (8) Hours of Service for each day of such absence if the
actual Hours of Service cannot be determined). An Employee shall be
credited for such Hours of Service (up to a maximum of 501 Hours of
Service) in the Plan Year in which his absence begins (if such crediting
will prevent him from incurring a Break in Service in such Plan Year) or,
in all other cases, in the following Plan Year. For purposes of this
provision, a maternity/paternity leave of absence described in Section
411(a)(6)(E)(i) of the Code pertains to a Participant who is absent from
work for any period by reason of the pregnancy of the Participant, by
reason of the birth of a child of the Participant, by reason of the
placement of a child with the Participant in connection with the adoption
of such child by such Participant, or for purposes of caring for such child
for a period beginning immediately following such birth or placement.
3.2
SECTION 4. EMPLOYER AND EMPLOYEE CONTRIBUTIONS.
1. EMPLOYER CONTRIBUTIONS
(a) The Employer shall contribute the following amounts to the Plan each
Plan Year:
1. The amount of each Participant's Salary Reduction Contribution
made pursuant to Section 4(2). As provided in Section 12(a), the
interests of a Participant in the Salary Reduction Contributions
allocated to his account will always be 100% vested.
2. An Employer Discretionary Matching Contribution on behalf of each
Participant up to a maximum of one hundred percent (100%) of the
Participant's Salary Reduction Contributions, provided, however,
that the maximum Employer Matching Contribution shall be based on
a Participant's Salary Reduction Contribution of up to six
percent (6%) of such Participant's Compensation. As provided in
Section 12(a), the interests of a Participant in the Employer
Matching Contributions allocated to his account will be 100%
vested at all times.
3. An Employer Discretionary Basic Contribution, which shall be
determined at the sole discretion of the Board of Directors. As
provided in Section 12(a), the interests of a Participant in the
Employer Basic Contributions allocated to his account will always
be 100% vested.
4. An Employer Discretionary Optional Contribution, which shall be
determined in the sole discretion of the Board of Directors. The
interests of a Participant in the Employer Discretionary Optional
Contributions allocated to his account will become nonforfeitable
pursuant to the vesting schedule contained in Section 12(a).
(b) Salary Reduction Contributions shall be paid to the Trustee promptly
(and in no event later than 30 days after the end of the Plan Year) following
each pay period.
(c) Employer Discretionary Matching, Basic, and Optional Contributions for
each Plan Year shall be paid to the Trustee not later than the due date
(including extensions) for filing the Employer's Federal income tax return for
that Plan Year.
(d) In the event Employer Contributions are paid to the Trust by reason of
a mistake of fact, such Employer Contributions may be returned to the Employer
(upon the request of the Employer) by the Trustee within one (1) year after the
payment to the Trust.
2. EMPLOYEE SALARY REDUCTION CONTRIBUTIONS
(a) A Participant may authorize his Employer to contribute to the Trust on
his behalf Salary Reduction Contributions. Such Salary Reduction Contributions
shall be stated as a whole percentage, and shall not be less than 1%, or more
than 15%, of the Participant's Compensation. The total amount of Salary
Reduction Contributions by a Participant for any
4.1
Plan Year shall not exceed $7,000, multiplied by any cost of living adjustment
factor prescribed by the Secretary of the Treasury under Section 415(d) of the
Code.
(b) Each Participant electing to have his Employer contribute Salary
Reduction Contributions on his behalf during the Plan Year shall file a written
notice with the Plan Administrator at least thirty (30) days prior to the Entry
Date that he intends such election to take effect. This requirement shall be
waived on adoption of the Plan and each Participant shall be given a reasonable
time to elect Salary Reduction Contributions. Such written notice shall contain
an election of the percentage of his Compensation to be contributed and
authorization for his Employer to reduce his Compensation by such amount.
Salary Reduction Contributions may be suspended at any time by giving prior
written notice. After suspension, the Participant shall not be eligible for
further Salary Reduction Contributions until the beginning of the next Plan
Year. A Participant may change the percentage of his Salary Reduction
Contributions only as of a quarterly Entry Date, but upon not less than thirty
(30) days prior written notice. A Participant shall be fully vested at all
times in the portion of his Account from Salary Reduction Contributions.
(c) For any Plan Year, the Committee shall have the right to limit or
reduce the Salary Reduction Contributions of the Highly Compensated Participants
in order to insure that the Maximum Deferral Percentage Limit under Code Section
401(k) is not exceeded. Furthermore, in accordance with Proposed Regulation
1.401(k)-1(f), the Employer may make additional Basic Contributions, Optional
Contributions and/or Matching Contributions or may distribute or recharacterize
such contributions made during the Plan Year in order to provide that the
Maximum Deferral Percentage Limit under Code Section 401(k) is not exceeded.
The Maximum Deferral Percentage Limit under Code Section 401(k) is equal to the
greater of Limit 1 or Limit 2:
Limit 1. The Actual Deferral Percentage of the Highly Compensated
Participants may not exceed one hundred twenty-five percent
(125%) of the Actual Deferral Percentage of all other
Participants; or
Limit 2. The Actual Deferral Percentage of the Highly Compensated
Participants may not exceed the lesser of:
(a) The Actual Deferral Percentage of all other Participants,
plus two percent (2%) or
4.2
(b) The Actual Deferral Percentage of all other Participants,
multiplied by two hundred percent (200%).
Actual Deferral Percentage with respect to any specific group of
Participants for a Plan Year shall mean the average of the ratios (calculated
separately for each Participant in such group) of (A) the amount of Salary
Reduction Contributions paid into the Trust Fund on behalf of each Participant
for such Plan Year to (B) the Participant's Compensation for such Plan Year. In
the case of a Highly Compensated Participant who is eligible to have Salary
Reduction Contributions paid into a trust fund to his account under two or more
plans maintained by the Employer, the Actual Deferral Percentage shall be
determined as if all such Salary Reduction Contributions were made under a
single arrangement. Furthermore, for purposes of determining the Actual
Deferral Percentage of a Highly Compensated Participant, the amount of Salary
Reduction Contributions paid into the Trust Fund on his behalf shall include
Salary Reduction Contributions made on behalf of certain family members
described in Section 414(q)(6).
(d) In the event the Maximum Deferral Percentage Limit under Code Section
401(k) is exceeded, the amount of excess contributions for a Highly Compensated
Participant will be determined in the following manner, pursuant to Regulation
1.401(k)-1(f)(2). First, the Actual Deferral Percentage (ADP) of the Highly
Compensated Participant with the highest ADP will be reduced to the extent
necessary to satisfy the Maximum Deferral Percentage Limit under Code Section
401(k) or to cause such Participant's ADP to equal the ADP of the Highly
Compensated Participant with the next highest ADP. Second, this process is
repeated until the Maximum Deferral Percentage Limit under Code Section 401(k)
is satisfied. For each such Highly Compensated Participant whose ADP is
reduced, the amount of such Participant's excess contributions is equal to the
Participant's total Basic and Salary Reduction Contributions (determined prior
to the application of this paragraph) minus the amount determined by multiplying
the Participant's ADP (determined after application of this paragraph) by such
Participant's Compensation. In the case of a Highly Compensated Participant
whose ADP is determined pursuant to the Code Section 414(q)(6) family
aggregation rules, the determination of the amount of excess assets shall be
made pursuant to Proposed Regulation 1.401(k)-1(f)(5)(iii).
The amount of a Participant's excess contributions distributed or
recharacterized pursuant to Proposed Regulation 1.401(k)-1(f) shall be reduced
by any excess deferrals previously
4.3
distributed or recharacterized during such Plan Year. The distribution or
recharacterization of excess contributions will include any income attributable
thereto (computed pursuant to Proposed Regulation 1.401(k)-1(f)(4)) from the
date such excess contributions were made until such date of recharacterization
or distribution. The distribution or recharacterization of any excess
contribution is to be made prior to the two and one-half month period following
the end of the Plan Year in which such excess contributions were made. Any
recharacterized excess contributions will remain subject to Plan provisions
applicable to Salary Reduction Contributions.
(e) In the event a Participant's Salary Reduction Contribution or Employer
Contribution:
(1) is made under a mistake of fact;
(2) is conditioned upon initial qualification of the Plan under Code
Section 401(a) and the Plan does not so qualify,
the contribution may be returned to the Employer within one (1) year after the
payment of the contribution, the disallowance of the deduction to the extent
disallowed, or the date of denial of the qualification of the Plan, whichever is
applicable. Except as provided under this paragraph, the assets of the Plan
will be used for the exclusive purpose of providing benefits to Participants
under the Plan and their Beneficiaries and for defraying reasonable
administrative expenses of the Plan.
3. EMPLOYEE VOLUNTARY CONTRIBUTIONS
(a) A Participant may (subject to the limitation provision of Section 6)
make Voluntary Participant Contributions. These contributions may be made
during any period in which he is a Participant. Voluntary Participant
Contributions shall be made in accordance with procedures set up by the
Administrative Committee.
A Participant's Voluntary Participant Contributions, including any
voluntary contributions he has made under any other qualified plan of the
Employer may not, in the aggregate, exceed 10% of his aggregate earnings from
the Employer for the period of time that he has actively participated under this
and such other plan or plans.
(b) Before the date he ceases to be an Employee, a Participant may
withdraw any part of his Capital Accumulation resulting from his Voluntary
Participant Contributions in a single sum.
4.4
(c) Voluntary Participant Contributions shall be credited to the
Participant's Account as they are made and shall be forwarded to the Trustee at
least quarterly. Voluntary Participant Contributions are fully vested and
nonforfeitable.
(d) For any Plan Year, the Committee shall have the right to limit or
reduce the Voluntary Contributions or the Matching Contributions attributable
to the Highly Compensated Participants in order to insure that the Maximum
Contribution Percentage Limit under Code Section 401(m) is not exceeded. The
Maximum Contribution Percentage Limit under Code Section 401(m) is equal to the
greater of Limit 1 or Limit 2:
Limit 1. The Actual Contribution Percentage of the Highly Compensated
Participants may not exceed one hundred twenty-five percent
(125%) of the Actual Contribution Percentage of all other
Participants; or
Limit 2. The Actual Contribution Percentage of the Highly Compensated
Participants may not exceed the lesser of:
(a) The Actual Contribution Percentage of all other Participants,
plus two percent (2%) or
(b) The Actual Contribution Percentage of all other Participants,
multiplied by two hundred percent (200%).
Actual Contribution Percentage with respect to any specific group of
Participants for a Plan Year shall mean the average of the ratios (calculated
separately for each Participant in such group) of (A) the amount of Voluntary
and Matching Contributions paid into the Trust Fund on behalf of each
Participant for such Plan Year to (B) the Participant's Compensation for such
Plan Year. A Participant's Voluntary and Matching Contributions are to be taken
into account if they are paid to the Trust during the Plan Year or are paid to
an agent of the Plan and are transmitted to the Trust within a reasonable period
after the end of the Plan Year. In the case of a Participant who has no
Voluntary and Matching Contributions, the Actual Contribution Percentage is
considered to be zero. In the case of a Highly Compensated Participant who is
eligible to have Voluntary and Matching Contributions paid into a trust fund to
his account under two or more plans maintained by the Employer, the Actual
Contribution Percentage shall be determined as if all such Voluntary and
Matching Contributions were made under a single arrangement. Furthermore, for
purposes of determining the Actual Contribution Percentage of a Highly
Compensated Participant, the amount of Voluntary and Matching Contributions paid
4.5
into the Trust Fund on his behalf shall include Voluntary and Matching
Contributions made on behalf of certain family members described in Code Section
414(q)(6) and the Regulations thereunder.
(e) In the event the Maximum Contribution Percentage Limit under Code
Section 401(m) is exceeded, the amount of excess aggregate contributions for a
Highly Compensated Participant will be determined in the following manner,
pursuant to Regulation 1.401(m)-1(e)(2). First, the Actual Contribution
Percentage (ACP) of the Highly Compensated Participant with the highest ACP will
be reduced to the extent necessary to satisfy the Maximum Contribution
Percentage Limit under Code Section 401(m) or to cause such Participant's ACP to
equal the ACP of the Highly Compensated Participant with the next highest ACP.
Second, this process is repeated until the Maximum Contribution Percentage Limit
under Code Section 401(m) is satisfied. For each such Highly Compensated
Participant whose ACP is reduced, the amount of such Participant's excess
aggregate contributions is equal to the Participant's total Voluntary and
Matching Contributions (determined prior to the application of this paragraph)
minus the amount determined by multiplying the Participant's ACP (determined
after application of this paragraph) by such Participant's Compensation. In the
case of a Highly Compensated Participant whose ACP is determined pursuant to the
Code Section 414(q)(6) family aggregation rules, the determination of the amount
of excess assets shall be made pursuant to Proposed Regulation 1.401(m)-
1(e)(4)(iii).
The amount of a Participant's excess contributions distributed pursuant to
Proposed Regulation 1.401(m)-1(e) shall be reduced by any excess contributions
previously distributed during such Plan Year. The distribution of excess
contributions will include any income attributable thereto (computed pursuant to
Proposed Regulation 1.401(m)-1(e)(3)) from the date such excess contributions
were made until such date of recharacterization or distribution. The
distribution of any excess aggregate contribution is to be made prior to the two
and one-half month period following the end of the Plan Year in which such
excess contributions were made. Any recharacterized excess contributions will
remain subject to Plan provisions applicable to Voluntary and Matching
Contributions.
(f) For any Plan Year, the application of the Maximum Deferral Percentage
Limitation and Maximum Contribution Percentage Limitation pursuant to Sections
4(2)(c) and 4(3)(d) of the
4.6
Plan shall be made in accordance with the multiple use limitations under
Regulation 1.401(m)-2.
(g) To the extent Matching Contributions are used, pursuant to Plan
Section 4(2)(c), to compute the Maximum Deferral Percentage Limit under Code
Section 401(k), they will not be used to compute the Maximum Contribution
Percentage Limit under Code Section 401(m). Furthermore, at the election of the
Employer, Optional Contributions and Basic Contributions (to the extent not
utilized to compute the Maximum Deferral Percentage Limit under Code Section
401(k)) may be used in the computation of the Maximum Contribution Percentage
Limit under Code Section 401(m).
4. EMPLOYEE ROLLOVER CONTRIBUTION
4.7
(a) With the Employer's consent, a Rollover Contribution may be made by or
for an Employee if either of the following conditions are met:
(1) The Contribution is a rollover contribution which the Code
permits to be transferred to a plan that meets the requirements
of Section 401(a) of the Code; and
(2) The Contribution is made within 60 days after the Employee
receives or would be entitled to receive the distribution; and
(3) The Employee furnishes evidence satisfactory to the Committee
that proposed transfer is in fact a rollover contribution which
meets conditions (1) and (2) above.
-OR-
(4) The contribution is made pursuant to Plan Section 23
diversification requirements.
The Rollover Contribution may be made by the Employee or may be made with
his consent by the named fiduciary of another plan. The Contribution will be
made according to procedures set up by the Committee.
(b) If the Employee is not a Participant at the time the Rollover
Contribution is made, he will be deemed to be a Participant only for the
purposes of investment and distribution of the Rollover Contribution. No
Employer Contribution will be made for him and he may not make Participant
Contributions, until the time he meets all of the requirements to become a
Participant.
(c) Any Rollover Contribution made by or for an Employee is credited to
his Account when made and is at all times fully vested and nonforfeitable.
4.2
SECTION 5. INVESTMENT OF TRUST ASSETS.
(a) Trust Assets under the Plan will be invested by the Trustee, with the
exception provided in (c), primarily in Bank Stock in accordance with the Trust
Agreement. Employer Contributions (and other Trust Assets) may be used to
acquire shares of Bank Stock from Bank shareholders or from the Bank. The
Trustee may also invest Trust Assets in such other prudent investments as the
Trustee deems to be desirable for the Trust, or Trust Assets may be held
temporarily in cash. All purchases of Bank Stock by the Trustee shall be made
at prices which do not exceed the fair market value of Bank Stock, as determined
in good faith by the Trustee in accordance with the provisions of Section 18.
The Trustee may invest and hold up to one hundred percent (100%) of the Trust
Assets in Bank Stock.
(b) The Trustee may incur Acquisition Loans from time to time to finance
the acquisition of Bank Stock (Financed Shares) for the Plan or to repay a prior
Acquisition Loan. An installment obligation incurred in connection with the
purchase of Bank Stock shall constitute an Acquisition Loan. An Acquisition
Loan shall be for a specific term, shall bear a reasonable rate of interest and
shall not be payable on demand except in the event of default. An Acquisition
Loan may be secured by a pledge of the Financed Shares so acquired (or acquired
with the proceeds of a prior Acquisition Loan which is being refinanced). No
other Trust Assets may be pledged as collateral for an Acquisition Loan, and no
lender shall have recourse against Trust Assets other than any Financed Shares
remaining subject to pledge. If the lender is a party in interest (as defined
in ERISA), Financed Shares may be transferred to the lender only upon and to the
extent of the failure of the Plan to meet the payment schedule of the loan. Any
pledge of Financed Shares must provide for the release of the shares so pledged
as payments on the Acquisition Loan are made by the Trustee and such Financed
Shares are allocated to Participants' Bank Stock Accounts under Section 6(e).
Payments of principal and interest on any Acquisition Loan shall be made by the
Trustee only from Employer Contributions to enable the Trust to repay such
Acquisition Loan, from earnings attributable to such Employer Contributions,
from Salary Reduction Contributions, and from any dividends received by the
Trust on such Financed Shares.
5.1
(c) Salary Reduction Contributions and the Prior Plan Account will not
normally be invested in Bank Stock. However, a Participant may, with the
consent of the Trustee, direct the investment of his Salary Reduction Account
and the Prior Plan Account in one of the following Investment Funds:
(1) The Equity Fund has a principal investment goal of capital
appreciation primarily through investment in Bank Stock.
(2) A Bond Fund has a principal investment goal of the production of
income through ownership and governmental debt instruments.
(3) The Money Market Fund has a principal investment goal of the
preservation of principal and the production of high current
income with liquidity, primarily through government and other
money market fixed income securities.
(4) The Mutual Fund has a principal investment goal of a balanced
mixture of income and capital appreciation through ownership of
interests in regulated investment companies.
Notwithstanding the principal investment goal of each Investment Fund, the
Trustee may make temporary short-term investment of assets in a Money Market
Fund. Investment direction shall normally be made in twenty-five percent (25%)
increments with the exception that any percentage up to one hundred percent
(100%) of such Accounts may be invested in Bank Stock.
(d) As of each Anniversary Date, the Trustee shall determine the fair
market value of each Investment Fund being administered by the Trustee. With
respect to each such Investment Fund, the Trustee shall determine the net gain
or loss resulting from expenses paid, and realized and unrealized gains and
losses. After each Anniversary Date, the net gain or loss of each Investment
Fund shall be allocated by the Trustee to the Accounts of Participants
participating in such Investment Fund.
The reasonable and equitable decision of the Trustee as to the value of
each Investment Fund and of any Account as of each Anniversary Date shall be
conclusive and binding upon all Participants having any interest, direct or
indirect, in the Investment Funds or in any Account.
5.2
SECTION 6. ALLOCATIONS TO PARTICIPANT'S ACCOUNT.
Separate Accounts shall be established to reflect each Participant's
interest under the Plan.
(a) EMPLOYER MATCHING CONTRIBUTION ACCOUNT. The Employer Matching
Contribution Account maintained for each Participant will be credited annually
with the amount of the Employer Matching Contribution allocable to such
Participant, as determined pursuant to Section (4)(1)(a)(2), and with his share
of the net income (or loss) of the Trust.
(b) EMPLOYER BASIC CONTRIBUTION ACCOUNT. The Employer Basic Contribution
Account maintained for each Participant will be credited annually with his
allocable share of Employer Basic Contributions and with his share of the net
income (or loss) of the Trust. Employer Basic Contributions under Section 4
shall be allocated as of the Anniversary Date among the Accounts of Participants
so entitled under Section 3(b) in a manner necessary to satisfy the
nondiscrimination requirements of the Code.
(c) EMPLOYEE SALARY REDUCTION AND VOLUNTARY CONTRIBUTION ACCOUNT. The
Employee Salary Reduction and Voluntary Contribution Accounts maintained for
each Participant will be credited (or debited) annually with his share of the
net income (or loss) of the Trust, his Salary Reduction and Voluntary
Contributions, if any, made during the Plan Year, and with any financed shares
released from the Loan Suspense Account on account of his Salary Reduction
Contributions. This Account shall keep separate the portion attributable to
Salary Reduction Contributions and the portion attributable to Voluntary
Participant Contributions.
(d) EMPLOYEE ROLLOVER CONTRIBUTION ACCOUNT. The Rollover Contribution
Account maintained for each Participant will be credited (or debited) annually
with his share of net income (or loss) of the Trust and with his Rollover
Contributions, if any, made during the Plan Year.
(e) EMPLOYER OPTIONAL CONTRIBUTION ACCOUNT. A separate Bank Stock Account
and Other Investments Account shall be established to reflect each Participant's
interest under the Employer Optional Contribution portion of the Plan. The Bank
Stock Account maintained for each Participant will be credited annually with his
allocable share of Bank Stock (including fractional shares) purchased and paid
for by the Trust or contributed in kind to the Trust, with
6.1
any Forfeitures of Bank Stock and with any stock dividends on Bank Stock
allocated to his Bank Stock Account. Financed Shares shall initially be
credited to a Loan Suspense Account and shall be allocated to the Bank Stock
Accounts of Participants only as payments on the Acquisition Loan are made by
the Trustee. The number of Financed Shares to be released from the Loan
Suspense Account for allocation to Participants' Bank Stock Accounts for each
Plan Year shall be determined by the Committee as described under (e)(1) and
(e)(2) below.
(1) GENERAL RULE. The number of Financed Shares held in the Loan
Suspense Account immediately before the release for the current Plan Year shall
be multiplied by a fraction. The numerator of the fraction shall be the amount
of principal or principal and interest paid on the Acquisition Loan for that
Plan Year. The denominator of the fraction shall be the sum of the numerator
plus the total payments of principal or principal and interest on the
Acquisition Loan projected to be paid for all future Plan Years. For this
purpose, the interest to be paid in future years is to be computed by using the
interest rate in effect as of the Anniversary Date of the Plan Year.
(2) SPECIAL RULE. The Committee may elect (at the time an
Acquisition Loan is incurred) or the provisions of the Acquisition Loan may
provide for the release of shares from the Loan Suspense Account based solely
upon the ratio that the payments of principal for each Plan Year bear to the
total principal amount of the Acquisition Loan. This method may be used only
if: (A) the Acquisition Loan provides for annual payments of principal and
interest at a cumulative rate that is not less rapid at any time than level
annual payments of such amounts for ten (10) years; (B) interest included in any
payment on the Acquisition Loan is disregarded only to the extent that it would
be determined to be interest under standard loan amortization tables; and (C)
the entire duration of the Acquisition Loan repayment period does not exceed ten
(10) years, even in the event of a renewal, extension or refinancing of the
Acquisition Loan.
(3) OTHER INVESTMENTS ACCOUNTS. The Other Investments Account
maintained for each Participant will be credited (or debited) annually with his
share of the net income (or loss) of the Trust, with any cash dividends on Bank
Stock allocated to his Bank Stock Account (other than currently distributed
dividends) and with his allocable share of Employer Contributions in cash and
other Forfeitures from the Other Investments Accounts. Such
6.2
Account will be debited for the Participant's share of any cash payments made
for the acquisition of Bank Stock or for the repayment of any principal and
interest on an Acquisition Loan.
The allocations to Participants' Accounts for each Plan Year will be made
as follows under the remaining subsections of this Section.
(f) EMPLOYER CONTRIBUTIONS AND FORFEITURES. Employer Contributions under
Section 4 and Forfeitures under Section 12(b) and (c) for each Plan Year will be
allocated as of the Anniversary Date among the Accounts of Participants so
entitled under Section 3(b) in the ratio which the Adjusted Compensation of each
such Participant bears to the total Adjusted Compensation of all such
Participants for that Plan Year.
(g) ALLOCATION LIMITATIONS. For each Plan Year, the Annual Additions with
respect to any Participant may not exceed the lesser of:
(1) Twenty-five percent (25%) of his compensation (within the meaning
of Code Section 415(c)(3)); or
(2) The Defined Contribution Dollar Limitation.
For this purpose, "Annual Additions" shall be the total amount of any Employer
Contributions, Salary Reduction Contributions, Voluntary Participant
Contributions and Forfeitures (including any income attributable to Forfeitures
and amounts described in Code Sections 415(L)(1) and 419A(d)(2)) allocated to
the Participant in this Plan and any other Employer defined contribution plan.
For purposes of applying these limitations only, the Plan uses the safe harbor
definition of Compensation pursuant to Section 1.415-2(d)(8) of the regulations,
as defined in Section 2 of the Plan. In computing Annual Additions, Forfeitures
of Bank Stock and Employer Contributions of Bank Stock shall be based on the
fair market value of Bank Stock as of the Anniversary Date.
Prior to the allocation of the Employer Contributions for any Plan Year,
the Committee shall determine whether the amount to be allocated would cause the
limitation described herein to be exceeded as to any Participant. In the event
that the limitation is exceeded for any Participant due to the allocation of a
forfeiture or a reasonable error in the estimation of a
6.3
Participant's Compensation, the following action shall be taken until the
limitation for the Plan Year will not any longer be exceeded:
(i) First, Salary Reduction Contributions allocated in accordance with
Section 6 shall be subtracted from the Participant's Account.
(ii) Next, Employer Matching Contributions allocated in accordance with
Plan Section 6 shall be subtracted from the Participant's Account.
(iii) Next, Employer Basic Contributions allocated in accordance with Plan
Section 6 shall be subtracted from the Participant's Account.
(iv) Next, Employer Optional Contributions allocated in accordance with
Plan Section 6 shall be subtracted from the Participant's Account.
The amount of Salary Reduction Contributions (including any income and gains
thereon) and Employer Contributions (including any income and gains thereon)
subtracted from a Participant's Account in accordance witht the foregoing shall
be maintained in a separate suspense account and shall be allocated in the next
subsequent Plan Year as if such amounts were an additional contribution to the
appropriate Account. No contributions which would be included in the next
limitation year's Annual Addition may be made before the total suspense account
has been reallocated.
In addition, for any Participant who was covered under a defined benefit
plan, Annual Additions may not be allocated to his Accounts (under this Plan) in
amounts which cause the sum of the defined benefit plan fraction and the defined
contribution plan fraction to exceed 1.0 for any Plan Year. For this purpose,
the "defined benefit plan fraction" shall have as its numerator the projected
annual benefit of the Participant under the defined benefit plan as of the
Anniversary Date and shall have as its denominator the lesser of (i) the product
of 1.25 multiplied by the dollar limitation in effect under Section 415(b)(1)(A)
of the Code for such Plan Year; or (ii) the product of 1.4 multiplied by the
amount which may be taken into account under Section 415(b)(1)(B) of the Code
with respect to the Participant for such Plan Year. The "defined contribution
plan fraction" shall have as its numerator the total of the Annual Additions of
the Participant (under this Plan and any other Employer defined contribution
plan) for all Plan Years and shall have as its denominator the sum of the lesser
of the following amounts determined for such Plan Years and for each prior year
of Service with an Employer: (i) the
6.4
product of 1.25 multiplied by the dollar limitation taken into account under
Section 415(c)(1)(A) of the Code for the year; or (ii) the product of 1.4
multiplied by the amount which may be taken into account under Section
415(c)(1)(B) of the Code with respect to such Participant for such year.
Any excess amount shall be reallocated among the Accounts of the other
Participants according to the ratio which the Adjusted Compensation of each such
Participant bears to the total Adjusted Compensation of all such Participants
for that Plan Year, to the extent possible without exceeding the limitations
with respect to any other Participant for that Plan Year.
(h) SPECIAL LIMITATION PROVISION. Any Employer Contributions which are
applied by the Trust (not later than the due date, including extensions, for
filing the Bank's Federal income tax return for that Plan Year) to pay interest
on an Acquisition Loan, and any Financed Shares which are allocated as
Forfeitures, shall not be included as Annual Additions under Section 6(g);
provided, however, that the provisions of this Section 6(h) shall be applicable
only for Plan Years for which not more than one-third (1/3) of the Employer
Contributions applied to pay principal or interest, or both, on an Acquisition
Loan are allocated to Participants who are highly compensated employees within
the meaning of Code Section 414(q).
(i) NET INCOME (OR LOSS) OF THE TRUST. The net income (or loss) of the
Trust for each Plan Year will be determined as of the Anniversary Date. Each
Participant's share of the net income (or loss) will be allocated to his
Accounts in the ratio which the balance of such Accounts on the preceding
Anniversary Date (reduced by the amount of any distribution of Capital
Accumulation from such Account during the Plan Year) bears to the sum of such
Account balances for all Participants as of that date. Net income earned on
each Participant's Salary Reduction Contributions made during the Plan Year
shall be allocated on a method which takes into account the timing of such
Contributions into the Account. The net income (or loss) of the Trust includes
the increase (or decrease) in the fair market value of Trust Assets (other than
Bank Stock), interest income, dividends and other income and gains (or loss)
attributable to Trust Assets (other than any dividends on Bank Stock allocated
to Bank Stock Accounts) since the preceding Anniversary Date, reduced by any
expenses charged to the Trust Assets for that Plan Year. The computation of the
net income (or loss) of the Trust shall not take into account any interest paid
by the Trust under an Acquisition Loan.
6.5
(j) DIVIDENDS ON BANK STOCK. Cash dividends received on shares of Bank
Stock allocated to Participants' Accounts will be allocated to the respective
Other Investments Account portion of the Employer Optional Contribution Accounts
of those Participants. Cash dividends received on unallocated shares of Bank
Stock shall be included in the computation of net income (or loss) of the Trust.
Stock dividends received on Bank Stock shall be credited to the Accounts to
which such Bank Stock was allocated. Any cash dividends which are currently
distributed to Participants, used to repay a loan to the ESOP under Sections
17(b) or (c) shall not be credited to their Other Investments Account portion of
the Employer Optional Contribution Account. Furthermore, any cash dividends
used to pay administrative expenses of the Plan shall not be credited to
Participants' Other Investments Account portion of the Employer Optional
Contribution Account.
(k) ACCOUNTING FOR ALLOCATIONS. The Committee shall establish accounting
procedures for the purpose of making the allocations to Participants' Accounts
provided for in this Section. The Committee shall maintain adequate records of
the aggregate cost basis of Bank Stock allocated to each Participant's Bank
Stock Account. The Committee shall also keep separate records of Financed
Shares and of Employer Contributions (and any earnings thereon) made for the
purpose of enabling the Trust to repay any Acquisition Loans. From time to
time, the Committee may modify the accounting procedures for the purposes of
achieving equitable and nondiscriminatory allocations among the Accounts of
Participants in accordance with the general concepts of the Plan, the provisions
of this Section and the requirements of the Code and ERISA.
(l) LIMITATION ON ALLOCATION TO CERTAIN SHAREHOLDERS. To the extent that
a Bank shareholder sells qualifying Bank securities to the Plan Trust and elects
(with the consent of the Bank) nonrecognition of gain under Section 1042 of the
Code, no portion of the Bank securities purchased in nonrecognition transaction
(or other dividends or other income attributable thereto) may accrue or be
allocated:
(1) during the nonallocation period (the ten year period beginning on
the later of (i) the date of the sale of the qualified Bank
securities, or (ii) the date of the Plan allocation attributable
to the final payment of acquisition indebtedness incurred in
connection with such sale) for the benefit of:
6.6
(A) the selling shareholder;
(B) the spouse, brothers or sisters (whether by the whole or
half blood), ancestors or lineal descendants of the selling
shareholder or decedent referred to above;
OR
(2) for the benefit of any other person who owns after application of
Section 318(a) more than 25% of:
(A) any class of outstanding stock of the Bank or of any
corporation which is a member of the same controlled group
or corporations within the meaning of subsection (1)(4) as
the Bank, or
(B) the total value of any class of outstanding stock of the
Bank or any such corporation described in (2)(A) above.
For the purposes of this subparagraph (1)(2), Code Section 318(a) shall be
applied without regard to the employee trust exception in Section
318(a)(2)(B)(i).
6.7
SECTION 7. EXPENSES OF THE PLAN AND TRUST.
All expenses of administering the Plan and Trust shall be charged to and
paid out of the Trust Assets. The Bank may pay all or any portion of such
expenses, and payment of expenses by the Bank shall not be deemed to be Employer
Contributions.
7.1
SECTION 8. VOTING BANK STOCK.
If the Bank Stock is a registration-type class of securities as described
in Section 409(e)(4) of the Code, each Participant will be entitled to direct
the Trustee as to the exercise of any voting rights attributable to shares of
Bank Stock then allocated to his Bank Stock Account but only to the extent
required by Sections 4975(e)(7) and 409(e)(2) of the Code and the regulations
thereunder. In that event, any allocated Bank Stock with respect to which
voting instructions are not received from Participants shall not be voted, and
all Bank Stock which is not then allocated to Participants' Bank Stock Accounts
shall be voted by the Trustee only in such manner as it shall determine in its
sole discretion.
If the Bank Stock is not a registration-type class of securities as
described in Section 409(e)(4) of the Code, then all Bank Stock in the Trust
shall normally be voted by the Trustee in such manner as it shall determine in
its sole discretion. However, with respect to any corporate matter which
involves the voting of Bank Stock as 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 transactions as may be prescribed in Code regulations,
each Participant will be entitled to direct the Trustee as to the exercise of
any voting rights attributable to shares of Bank Stock then allocated to his
Bank Stock Account but only to the extent required by Sections 401(a)(22) and
409(e)(3) of the Code and the regulations thereunder. In that event, any
allocated Bank Stock with respect to which voting instructions are not received
from Participants shall not be voted, and all Bank Stock which is not then
allocated to Participants' Bank Stock Accounts shall be voted in the manner
determined by the Trustee.
8.1
SECTION 9. DISCLOSURE TO PARTICIPANTS.
(a) SUMMARY PLAN DESCRIPTION. Each Participant shall be furnished with
the summary plan description required by Sections 102(a)(1) and 104(b)(1) of
ERISA. Such summary plan description shall be updated from time to time as
required under ERISA and Department of Labor regulations thereunder.
(b) SUMMARY ANNUAL REPORT. Within nine (9) months after each Anniversary
Date, each Participant shall be furnished with the summary annual report of the
Plan required by Section 104(b)(3) of ERISA, in the form required by regulations
of the Department of Labor.
(c) ANNUAL STATEMENT. Following each Anniversary Date, each Participant
shall be furnished with a statement reflecting the following information:
(1) The balance (if any) in his Accounts as of the beginning of the
Plan Year.
(2) The amounts of Employer Contributions, Salary Reduction
Contributions, and Forfeitures allocated to his Accounts for that
Plan Year.
(3) The adjustments to his Accounts to reflect his share of dividends
(if any) on Bank Stock and the net income (or loss) of the Trust
for that Plan Year.
(4) The new balance in his Accounts, including the number of shares
of Bank Stock allocated to his Bank Stock Account and the fair
market value of Bank Stock as of that Anniversary Date.
(5) His number of years of Credited Service and his vested percentage
in his Account balances (under Sections 12 and 13) as of that
Anniversary Date.
(d) ADDITIONAL DISCLOSURE. The Committee shall make available for
examination by any Participant copies of the Plan, the Trust Agreement and the
latest annual report of the Plan filed (on Form 5500) with the Internal Revenue
Service. Upon written request of any Participant, the Committee shall furnish
copies of such documents and may make a reasonable charge to cover the cost of
furnishing such copies, as provided in regulations of the Department of Labor.
9.1
SECTION 10. CAPITAL ACCUMULATION.
A Participant's vested (nonforfeitable) interest under the Plan is called
his Capital Accumulation. His Capital Accumulation shall be determined in
accordance with the provisions of Sections 11 and 12. Each Participant's
Capital Accumulation will be distributed as provided in Sections 14 and 15.
10.1
SECTION 11. RETIREMENT, DISABILITY, OR DEATH.
Upon a Participant's retirement, disability or death, his Capital
Accumulation will be the total of his Account balances (100% vested). The
Participant will share in the allocation of Employer Contributions and
Forfeitures for the Plan Year in which his retirement, disability, or death
occurs.
A Participant will be treated as having retired under the Plan if his
Service ends by any of the following:
(a) NORMAL RETIREMENT
A Participant's Normal Retirement Age is his sixty-fifth (65th)
birthday. Upon attaining his Normal Retirement Age while employed by
the Company (or an Affiliated Company), a Participant's Account
balances will become nonforfeitable.
(b) EARLY RETIREMENT
A Participant may elect early retirement under the Plan at any time
after he has attained age fifty-five (55) and completed at least
fifteen (15) years of Service.
(c) DEFERRED RETIREMENT
In the event a Participant's Service continues beyond his Normal
Retirement Age, he shall continue to participate in the Plan.
(d) DISABILITY RETIREMENT
If the Committee determines that a Participant has suffered a
disability (while employed by the Bank or an Affiliated Company) of a
type that entitles him to receive total disability benefits under
Social Security, he will be granted disability retirement under the
Plan without regard to his age or period of Service.
11.1
SECTION 12. OTHER TERMINATION OF SERVICE, BREAK IN SERVICE, VESTING AND
FORFEITURES.
(a) If Participant's Service terminates for any reason other than his
retirement, disability or death, his Employer Optional Contribution Account
Capital Accumulation will be determined on the basis of his nonforfeitable
interest, in accordance with the following vesting schedule:
Credited Service Nonforfeitable
Under Section 13 Percentage
---------------- ----------
Less than Three Years 0%
Three Years 20%
Four Years 40%
Five Years 60%
Six Years 80%
Seven Years or More 100%
A Participant is 100% vested at all times in his Account due to Employer Basic
and Matching Contributions, and in Employee Salary Reduction, Voluntary and
Rollover Contributions. A Participant will not share in the allocation of
Employer Contributions and Forfeitures for the Plan year if his Service
terminates prior to the Anniversary Date (except for reasons of retirement,
disability or death).
(b) Any portion of the final balances in a Participant's Accounts which is
not vested (and does not become part of his Capital Accumulation) will become a
Forfeiture upon the occurrence of a Break in Service, provided the Participant
has first received a distribution of his nonforfeitable interest in his Account
balances. If the Participant has not received a distribution of his Account
balances, then the portion of his Account balance which is not vested shall be
forfeited only upon the occurrence of a five-consecutive-year Break in Service.
Forfeitures shall first be charged against a Participant's Other Investments
Account, with any balance charged against his Bank Stock Account at the then
fair market value of Bank Stock. Financed Shares shall be forfeited only after
other shares of Bank Stock have been forfeited. Forfeitures will be reallocated
among the Participants, as provided in Section 6(f), as of the Anniversary Date
of the Plan Year in which a Break in Service occurs. A Break in Service will
12.1
occur only in a Plan Year for which a Participant is not credited with more than
500 hours of Service and is not an Employee on the Anniversary Date by reason of
his termination of Service.
(c) RESTORATION OF FORFEITED ACCOUNTS. If a Participant is reemployed
after a one-year Break in Service but prior to the occurrence of a five-
consecutive-year Break in Service, the portion of his Accounts (attributable to
the prior period of Service) that was forfeited upon the occurrence of a one-
year Break in Service shall be restored as if there had been no Forfeiture,
provided the Participant repays any amounts previously distributed. Such
restoration shall be made out of Forfeitures in the Plan Year of reemployment
(prior to allocations under Section 6(f)). To the extent such Forfeitures are
not sufficient, the Bank shall make a special contribution to the Participant's
restored Accounts. Any amount so restored to a Participant shall not constitute
an Annual Addition under Section 6(g).
(d) SUBSEQUENT VESTING. If the Participant received a distribution of his
Capital Accumulation prior to the occurrence of a five-consecutive-year Break in
Service and he is reemployed prior to the occurrence of such a Break in Service,
the portion of his Account restored under Section 12(c) shall be maintained
separately until he becomes one-hundred percent (100%) vested. His Capital
Accumulation ("X") attributable to such separate Accounts shall be detemined
(prior to one-hundred percent (100%) vesting) at the time his participation in
the Plan subsequently terminates, in accordance with the following formula:
X = P(AB + D) - D
For purposes of applying this formula, P is the vested percentage at the time of
the subsequent termination; AB is the total of such Account balances at that
time; and D is the amount of his Capital Accumulation previously distributed.
(e) Upon a Change in Control, a Participant will be 100% vested in his
Bank Stock Account and Other Investments Account.
12.2
SECTION 13. CREDITED SERVICE.
(a) GENERAL RULE. For purposes of vesting, an Employee's Credited Service
includes the total number of Plan Years in which he is credited with at least
1,000 Hours of Service with the Employer. Credited Service shall include such
Service with the Bank, any other Employer and any Affiliated Company. Service
prior to January 1, 1985 shall not be recognized for purposes of vesting.
(b) REEMPLOYMENT. If a former Participant is reemployed after the
occurrence of a Break in Service, the following special rules shall apply in
determining his Credited Service:
(1) New Accounts will be established to reflect his interest in the
Plan attributable to his Service after the Break in Service.
(2) If he is reemployed after the occurrence of a five-consecutive-
year Break in Service, Credited Service after the Break in
Service will not increase his vested interest in his Accounts
attributable to Service prior to the Break in Service.
(3) After he completes one (1) Plan Year of Credited Service
following his reemployment, his Credited Service with respect to
his new Accounts will include his Credited Service accumulated
prior to the Break in Service.
(4) In the case of a Participant who is reemployed who has not
attained a vested interest under this Plan, Service prior to the
Break in Service shall not be included in determining his
Credited Service provided the number of consecutive one-year
Breaks in Service equals or exceeds the greater of five (5), or
the aggregate number of years of Credited Service before such
consecutive Breaks in Service.
13.1
SECTION 14. WHEN CAPITAL ACCUMULATION WILL BE DISTRIBUTED.
(a) A Participant's Capital Accumulation will be computed following the
termination of his Service. The Committee will, upon implementation of the
Plan, determine whether distribution of a Participant's Capital Accumulation for
any reason other than retirement, disability or death be made: (i) as soon as
reasonably possible after termination of Service, (ii) at some set date or dates
during the Plan Year, or (iii) as soon as reasonably possible after a Break in
Service has occurred. Once such determination has been made by the Committee,
it must be applied equally and in a nondiscriminatory manner to all terminating
Participants. In the event of a Participant's retirement, disability or death,
his Capital Accumulation will be distributed in a single distribution as soon as
reasonably possible after the close of the Plan Year in which the Participant
retires, is disabled or dies. In no event, however, shall distribution in such
case be delayed later than one year after the close of the Plan Year in which
the Participant retires, is disabled or dies. Under certain circumstances
described in Section 14(d), the Committee may delay the timing of a distribution
to the Participant because the Plan lacks sufficient cash liquidity to convert a
Participant's Stock Account to cash.
In no event, however (with the exception of Financed Shares described in
the succeeding sentence), shall distribution be deferred more than one year
after the close of the fifth Plan Year following the Participant's termination
of Service (unless the Participant has been reemployed by the Bank at the end of
the fifth Plan Year following the termination of Service or the Participant has
chosen to delay the distribution of his Capital Accumulation beyond this date).
In the event any portion of the Participant's Account consists of Bank Stock
attributable to a loan made to the Plan (pursuant to Section 5 of the Plan)
which has not been fully repaid, if the Plan lacks sufficient cash liquidity as
described in Section 14(d), the above timing as to distributions may be delayed
until the earlier of the Plan Year in which sufficient cash liquidity is
available or the Plan Year following the year in which the loan is fully repaid.
Once entitled to distribution, the Participant may choose the following
alternative modes of distribution:
14.1
(1) Distribution of a Participant's Capital Accumulation in a single
distribution at some later date; or
(2) Distribution of a Participant's Capital Accumulation in
substantially equal, annual installments over a period not
exceeding five (5) years (provided that such period does not
exceed the life expectancy of the Participant); or
(3) Any combination of the foregoing.
Notwithstanding Section 14(a)(2) above, if the fair market value of a
Participants' Account attributable to Bank Stock is in excess of $500,000 as of
the date distribution is to begin, the five-year maximum distribution period
shall be extended by one additional year (up to an additional five years) for
each $100,000 increment, or fraction of such increment, by which the value of
the Participants' Account exceeds $500,000. The $500,000 and $100,000 dollar
amounts shall be subject to adjustment in accordance with Section 409(o)(2) of
the Code.
(b) Distribution of a Participant's Capital Accumulation shall commence
not later than sixty (60) days after the Anniversary Date coinciding with or
next following his Normal Retirement Age (or his termination of Service, if
later). A Participant who terminates Service prior to attaining age fifty-five
(55) but after completing at least fifteen (15) years of Service shall be
entitled, upon his request, to have the distribution of his Capital Accumulation
commence upon his attaining age fifty-five (55). The distribution of the
Capital Accumulation of any Participant with respect to the Plan Year in which
he attains age 70 1/2 must commence not later than April 1st of the next Plan
Year (even if he has not terminated Service and regardless of any consent
requirements pursuant to Section 15(c) of the Plan). If the amount of a
Participant's Capital Accumulation cannot be ascertained by the Committee by the
date on which a distribution is to commence, or if the Participant cannot be
located, distribution of his Capital Accumulation shall commence within sixty
(60) days after the date on which his Capital Accumulation is able to be
determined or after the date on which the Committee locates the Participant.
(d) If any part of a Participant's Capital Accumulation is retained in the
Trust after his Service or participation ends, his Accounts will continue to be
treated as provided in Section 6.
14.2
However, such Accounts will not be credited with any additional Employer
Contributions or Forfeitures.
(e) In accordance with Section 15 of the Plan, if Company Stock is not
readily tradable on an established market, the Participant must be given the
right to demand distribution of his Capital Accumulation entirely in cash, Bank
Stock or some combination of the two. In such case, the Trustees will strive to
create sufficient cash reserves in the Plan to permit a terminating Participant
to convert the portion of his Capital Accumulation consisting of Bank Stock to
cash. However, should Plan cash reserves not permit conversion of Bank Stock to
cash, the Committee may delay distribution of a Participant's Capital
Accumulation, within the limits described in Section 14(a), until the date such
Plan cash reserves can be reasonably generated through either additional
Employer contributions to the Plan or a restructuring of existing Plan assets.
14.3
SECTION 15. HOW CAPITAL ACCUMULATION WILL BE DISTRIBUTED.
(a) Distribution of a Participant's Capital Accumulation will be made in
whole shares of Bank Stock, cash or a combination of both, as determined by the
Committee; provided, however, that the Committee shall notify the Participant of
his right to demand distribution of his Capital Accumulation entirely in cash or
entirely in whole shares of Bank Stock (with the value of any fractional share
paid in cash). If Bank Stock is readily tradable on an established market, a
Participant need not be given the right to demand distribution in cash. In the
event a distribution is to be made in shares of Bank Stock, any balance in a
Participant's Other Investments Account will be applied to provide whole shares
of Bank Stock for distribution, at the then fair market value. If securities
acquired with the proceeds of an exempt loan are available for distribution and
consist of more than one class of Bank Stock, a Participant must receive
substantially the same proportion of each such class of Bank Stock.
(b) The Trustee will make distributions from the Trust only upon the
direction of the Committee. Distribution will be made to the Participant if
living, and if not, to his Beneficiary. Upon the death of a Participant, the
Participant's Beneficiary shall be his surviving spouse, or if none, his estate.
A Participant (with the consent of his spouse, if any) may designate a different
Beneficiary (and contingent Beneficiaries) and alternate form of distribution of
his Capital Accumulation from time to time (and may change such designation of
Beneficiary or form of distribution at any time) with the consent of his spouse
(unless the original consent permits subsequent choice of Beneficiary or form of
distribution without further spousal consent) by filing a written designation
with the Committee. The consent for a designation of a Beneficiary (or change
in designation of Beneficiary and form of distribution) must be in writing, must
acknowledge the effect of such election, and must be witnessed by a Plan
representative or a notary public. A deceased Participant's entire Capital
Accumulation shall be distributed to his Beneficiary within five (5) years after
his death, except to the extent that distribution has previously commenced in
accordance with Section 14(a).
(c) The Bank shall furnish the recipient of a distribution with the tax
consequences explanation required by Section 402(f) of the Code and shall comply
with the applicable
15.1
withholding requirements of Section 3405 of the Code with respect to
distributions from the Trust (other than any dividend distributions under
Section 17(b)). If a Participant's Accumulation has at any time exceeded
$3,500, no portion of his Capital Accumulation shall be distributed to him in a
lump sum without his consent, or where the Participant has died, the consent of
the surviving Participant's Beneficiary. Regardless of the value of a
Participant's Capital Accumulation, no distribution may be made under the
preceding sentence after the Annuity Starting Date unless the Participant and
the spouse of the Participant (or where the Participant has died, the surviving
spouse) consents in writing to such distribution in accordance with Section 417
of the Code and the Regulations thereunder.
15.2
SECTION 16. RIGHTS, OPTIONS AND RESTRICTIONS ON BANK STOCK.
(a) Shares of Bank Stock distributed by the Trust shall be subject to a
"right of first refusal" if the Bank Stock is not publicly traded at the time
the right may be exercised. The right of first refusal shall not be applicable
if Bank Stock is publicly traded at the time the right may otherwise be
exercised. For this purpose, "publicly traded" refers to shares of Bank Stock
which are listed on a national securities exchange or which are quoted on a
system sponsored by a national securities association. If the Bank Stock is
subject to a right of first refusal, the right shall provide that, prior to any
subsequent transfer of such shares, the shares must first be offered for
purchase in writing to the Bank, and then to the Trust, at their then fair
market value. A bona fide written offer from an independent prospective buyer
shall be deemed to be the fair market value of such Bank Stock for this purpose.
The Bank and the Trustee shall have a total of fourteen (14) days to exercise
the right of first refusal on the same terms offered by a prospective buyer.
The Bank or the Trustee may require that a Participant entitled to a
distribution of Bank Stock execute an appropriate stock transfer agreement
(evidencing the right of first refusal) prior to receiving a distribution of
Bank Stock.
(b) In accordance with Section 409(h) of the Code and the regulations
thereunder, the Bank shall not be required to issue a "put option" to any
Participant who receives a distribution of Bank Stock if the Bank Stock is
readily tradable on any established market or if the Bank is not allowed by law
to purchase its own stock. If the Bank is permitted by law to purchase its own
stock and the Bank's stock is not readily tradable on an established market, the
Bank shall issue a "put option" to any Participant who receives a distribution
of Bank Stock. The put option shall permit the Participant to sell such Bank
Stock to the Bank at any time during two option periods, at the fair market
value of such shares. The first put option period shall be for at least sixty
(60) days beginning on the date of distribution. The second put option period
shall be for at least sixty (60) days beginning after the new determination of
the fair market value of Bank Stock by the Trustee (and notice to the
Participant) in the following Plan Year. The Bank may allow the Trustee to
purchase shares of Bank Stock tendered to the Bank under a put option. In the
event neither the Trustee nor the Bank wishes to purchase such shares, then the
Participant has the right to demand distribution in cash. If the distribution
to
16.1
the Participant constituted a total distribution within the meaning of Code
Section 409(h)(5), payment of the fair market value of a Participants' Account
consisting of Bank Stock may be made in five substantially equal annual
payments. The first installment shall be paid not later than 30 days after the
Participant exercises the put option. The Plan will pay a reasonable rate of
interest (as determined by the Bank or the Trustees) and will provide adequate
security on amounts not paid after 30 days. If the distribution to the
Participant did not constitute a total distribution within the meaning of Code
Section 409(h)(5), the Participant shall be paid an amount equal to the fair
market value of the Bank Stock repurchased no later than 30 days after the
Participant exercises the put option.
(c) The Bank or the Trustee may at any time offer to purchase any shares
of Bank Stock (including, if a put option is issued, those shares not sold under
the put option described in Section 16(b)) which are held by former Participants
(or Beneficiaries), at the then fair market value. The terms of payment for any
such purchase of Bank Stock may be either in a lump sum or in installments over
a period not exceeding ten (10) years, with interest payable at a reasonable
rate on any unpaid installment balance (as determined by the Trustee).
(d) Shares of Bank Stock held or distributed by the Trustee may include
such legend restrictions on transferability as the Bank may reasonably require
in order to assure compliance with applicable federal and state securities and
banking laws. Except as otherwise provided in this Section 16, no shares of
Bank Stock held or distributed by the Trustee may be subject to a put, call or
other option, or buy-sell or similar arrangement. Furthermore, except as
otherwise provided in this Section 16, the Trustee may not obligate the Plan or
Trust to acquire securities from a particular security holder at an indefinite
time determined upon the happening of an event. The provisions of this Section
16 shall continue to be applicable to Bank Stock even if the Plan ceases to be
an employee stock ownership plan under Section 4975(e)(7) of the Code.
16.2
SECTION 17. NO ASSIGNMENT OF BENEFITS, DIVIDENDS, HARDSHIP DISTRIBUTIONS; AND
LOANS
(a) Prior to a Participant receiving distribution of his Capital
Accumulation, such Participant's Capital Accumulation may not be anticipated,
assigned (either at law or in equity), alienated or subject to attachment,
garnishment, levy, execution or other legal or equitable process, except in
accordance with a "qualified domestic relations order" (as defined in Section
414(p) of the Code).
(b) DIVIDENDS ON ALLOCATED STOCK. Any cash dividends on Bank Stock
allocated to the Accounts of Participants may be paid currently (or within
ninety (90) days after the end of the Plan Year in which the dividends are paid
to the Trust) in cash to such Participants on a nondiscriminatory basis, as
determined by the Committee. Such distribution (if any) of cash dividends to
Participants may be limited to dividends on shares of Bank Stock which are then
vested or may be applicable to dividends on all shares allocated to Bank Stock
Accounts.
(c) DIVIDENDS USED TO REPAY LOAN TO PLAN. Any cash dividends on allocated
and unallocated Bank Stock may also be used to repay a loan to the Plan which
meets the requirements of Code Section 4975 and the Regulations thereunder.
(d) TRUSTEE DISCRETION AS TO DIVIDENDS. The decision as to whether cash
dividends on Bank Stock will be distributed to Participants, used to repay a
loan to the ESOP, or held in the Trust shall be made in the sole discretion of
the Committee, and the Committee may request the Bank to pay such dividends
directly to Participants.
(e) HARDSHIP DISTRIBUTIONS. Upon prior written notice effective as of the
first Anniversary Date after receipt of such notice, a Participant who is 100%
vested in his Accounts may be permitted to make a withdrawal in accordance with
the rules listed below. However, a Participant shall cease Salary Deferrals for
a one year period after receipt of a hardship distribution.
(1) An application for approval shall be made in writing on a form
provided for such purposes by the Committee, and
(2) Withdrawals shall be subject to the following conditions:
17.1
(i) Withdrawals shall be approved only on account of an
immediate and heavy financial hardship and shall be approved
only up to the amount that is necessary to satisfy such
financial hardship. The determination of the existence of
an immediate and heavy financial need and of the amount
necessary to meet such need is to be made in a
nondiscriminatory and objective manner on the basis of all
relevant facts and circumstances. The determination of the
Committee as to justification of the withdrawal and the
amount thereof shall be final.
(ii) A distribution will generally be treated as necessary to
satisfy a financial need if the Committee reasonably relies
upon the Participants' representation that the need cannot
be relieved:
(A) through reimbursement or compensation by insurance or
otherwise, or
(B) by reasonable liquidation of the Participants' assets
(or those of his spouse), to the extent such
liquidation would not itself cause an immediate and
heavy financial need, or
(C) by cessation of Salary Reduction or Voluntary
Participant Contributions under the Plan, or
(D) by other distributions or nontaxable (at the time of
the loan) loans from any tax-qualified employee benefit
plans maintained by the Employer or any other employer
of the Participant, or by borrowing from commercial
sources on reasonable commercial terms.
(iii) For the purpose of this Section, the term "financial
hardship" shall mean the financial inability to the
Participant to provide the necessary funds:
(A) to meet the extraordinary medical expenses (described
in Code Section 213(d)) incurred by the Participant,
the Participant's spouse, or any dependents of the
Participant (as defined in Code Section 152), or
(B) to provide payment of tuition for the next semester or
quarter of post-secondary education for the
Participant, his or her spouse, children or dependents,
or
(C) to provide funds for the purchase (excluding mortgage
payments) of a principal residence for the Participant
or to provide funds to prevent the eviction of the
Participant from his principal residence or
foreclosure on the mortgage of the Participant's
principal residence.
(iv) Withdrawals shall not exceed one hundred percent (100%) of
the Participant's Vested Account Balances (excluding
earnings attributable to Salary Reduction Contributions
after December 31, 1988)..
(v) Withdrawals shall be made in cash.
17.2
(f) LOANS TO PARTICIPANTS. The Committee is hereby designated with sole
authority and responsibility to approve or deny loans and, except as provided in
this Section, collect unpaid loans. Loans may be made on any Quarterly Date
upon the written application of a Participant submitted to the Committee during
the period 30 days prior to and ending 15 days before the date the loan is to be
made.
Written application shall be in a form acceptable to the Trustee and shall
set forth the reason the loan is being requested. Loans shall be made available
to all Participants in a uniform and nondiscriminatory manner. All loans will
be adequately secured and will bear a reasonable rate of interest as determined
by the Committee. The term of the loan shall be determined by the Committee,
but shall not exceed the earlier of five (5) years or a Participant's Normal
Retirement Date, except that the Committee, in its discretion, may permit a
repayment period in excess of five years for loans used to acquire, construct,
or substantially rehabilitate any dwelling unit which is to be used as a
principal residence of the Participant.
The Committee shall bear sole responsibility for ensuring compliance with
all applicable federal or state laws and regulations. Each loan shall be secured
by a written assignment of that portion of the Participant's vested Account
which the Committee determines to be necessary to adequately secure repayment of
the loan. However, no portion of the Participant's Capital Accumulation may be
used as security for such loan unless the spouse (if any) consents in writing to
such use during the 90-day period ending on the date on which the loan is
secured. No loan shall be approved by the Committee to any Participant in any
amount which exceeds (1) minus (2) where:
(1) is the lesser of:
(i) $50,000; or
(ii) fifty percent (50%) of the Participant's vested Other Investment
Account.
(2) is the aggregate unpaid amount of all loans made to the Participant
under this or any other qualified plan maintained by the Employer.
Each loan shall be made from the borrowing Participant's Account.
Repayments of the loan and interest shall be credited to his Account. No loan
shall be considered a general
17.3
investment of the Trust Fund. In the event a Participant does not repay the
principal of such loan within the time prescribed by the Committee or interest
thereon at such times as are required by the terms of the loan or if the
Participant ceases to be an Employee while such Participant has a loan which is
outstanding, the Committee may direct the Trustee to take such action as the
Committee may reasonably determine, including:
(1) demand repayment of the loan and institute legal action to enforce
collection, or
(2) demand repayment of the loan and charge the total amount against the
balance credited to the Participant's vested Account which was
assigned as security, and reduce any payment or distribution from the
Trust Fund to which the Participant or his Beneficiary may become
entitled to the extent necessary to discharge the obligation on the
loan.
17.4
SECTION 18. ADMINISTRATION.
The Plan will be administered by a Board of Trustees (the "Trustee") and an
Administrative Committee (the "Committee"), each composed of individuals
appointed by the Board of Directors to serve at its pleasure and without
compensation. The Trustee shall be the named fiduciary with authority and
responsibility for the management and investment of the Trust Assets. The
Committee members shall be the named fiduciaries with authority to control and
manage all other aspects of the administration of the Plan. Any Committee
member may also serve as a Trustee of the Plan, if so designated by the Board
of Directors.
Committee action will be by vote of a majority of the members at a meeting
or in writing without a meeting. Minutes of each meeting of the Committee shall
be kept. The Committee shall make such rules, regulations, computations,
interpretations, and decisions, and shall maintain such records and accounts as
may be necessary to administer the Plan in a nondiscriminatory manner for the
exclusive benefit of the Participants and their Beneficiaries, as required under
the Code and ERISA. The Committee shall establish procedures to determine the
qualified status of domestic relations orders and to administer distributions
under such qualified orders (in accordance with Section 414(p) of the Code).
The Committee will give instructions to the Trustee with respect to matters
which require instructions, as provided in this Plan and the Trust Agreement.
The Committee members may allocate their fiduciary responsibilities among
themselves and may designate other persons (including the Trustee) to carry out
its fiduciary responsibilities under the Plan. In the event that the Committee
specifically designates the Trustee to perform any of the Committee's fiduciary
responsibilities, or if the Trustee is composed of the same individuals as the
Committee, then any specific instructions otherwise required by the Plan or
Trust Agreement from the Committee to the Trustee with respect to such
designated fiduciary responsibilities shall not be required.
The Trustee shall be responsible for investing the Trust Assets under the
Plan. The Trustee shall establish a funding policy and method for acquiring
Bank Stock for the Trust in a manner that is consistent with the objectives of
the Plan and the requirements of ERISA. If Bank Stock is readily tradable on an
established securities market, the fair market value of Bank Stock shall be
based upon the offering price established by current bid and asked prices quoted
by persons independent of the Bank, pursuant to Section 3(18)(A)(ii) of ERISA.
In the
18.1
absence of Bank Stock trading on an established securities market, all
valuations of Bank Stock pursuant to activities carried on by the Plan shall be
made by an independent appraiser meeting requirements similar to those contained
in Treasury Regulations under Section 170(a)(1) of the Code.
The Trustee and the Committee are empowered, on behalf of the Plan, to
employ investment advisers, accountants, legal counsel and other agents to
assist them in the performance of their duties under the Plan. The Bank shall
secure fidelity bonding for the fiduciaries of the Plan, as required by Section
412 of ERISA. All reasonable expenses of the Trustee and the Committee shall be
paid as provided in Section 7. The Bank shall indemnify each member of the
Board of Trustees and the Committee against any personal liability or expense,
except such liability or expense as may result from his own willful misconduct.
The Bank shall be the Plan Administrator under Section 414(g) of the Code
and under Section 3(16)(A) of ERISA. The Committee shall be the designated
agent of the Plan for the service of legal process.
18.2
SECTION 19. CLAIMS PROCEDURE.
Unless otherwise specified in the Plan, distributions of Capital
Accumulations under the Plan will normally be paid without a Participant (or
Beneficiary) having to file a claim for benefits. However, a Participant (or
Beneficiary) who does not receive a distribution to which he believes he is
entitled may present a claim to the Committee for any unpaid benefits. All
questions and claims regarding benefits under the Plan shall be acted upon by
the Committee.
Each Participant (or Beneficiary) who wishes to file a claim for benefits
with the Committee shall do so in writing, addressed to the Committee or to the
Bank. If the claim for benefits is wholly or partially denied, the Committee
shall notify the Participant (or Beneficiary) in writing of such denial of
benefits within ninety (90) days after the Committee initially received the
benefit claim.
Any notice of a denial of benefits shall advise the Participant (or
Beneficiary) of:
(a) the specific reason or reasons for the denial;
(b) the specific provisions of the Plan on which the denial is based;
(c) any additional material or information necessary for the
Participant (or Beneficiary) to perfect his claim and an
explanation of why such material or information is necessary; and
(d) the steps which the Participant (or Beneficiary) must take to
have his claim for benefits reviewed.
Each Participant (or Beneficiary) whose claim for benefits is denied shall
have the opportunity to file a written request for a full and fair review of his
claim by the Committee, to review all documents pertinent to his claim and to
submit a written statement regarding issues relative to his claim. Such written
request for review of his claim must be filed by the Participant (or
Beneficiary) within sixty (60) days after receipt of written notification of the
denial of his claim.
The decision of the Committee will be made within sixty (60) days after
receipt of a request for review and shall be communicated in writing to the
claimant. Such written notice shall set forth the specific reasons and specific
Plan provisions on which the Committee based its
19.1
decision. If there are special circumstances (such as the need to hold a
hearing) which require an extension of time for completing the review, the
Committee's decision shall be rendered not more than one hundred twenty (120)
days after receipt of a request for review.
All notices by the Committee denying a claim for benefits, and all
decisions on request for a review of the denial of a claim for benefits, shall
be written in a manner calculated to be understood by the Participant (or
Beneficiary) filing the claim or requesting the review.
19.2
SECTION 20. GUARANTIES.
All Capital Accumulations will be paid only from the Trust Assets. An
Employer, the Trustee or the Committee shall not have any duty or liability to
furnish the Trust with any funds, securities or other assets, except as
expressly provided in the Plan.
The adoption and maintenance of the Plan shall not be deemed to constitute
a contract of employment or otherwise between an Employer and any Employee, or
to be a consideration for, or an inducement or condition of, any employment.
Nothing contained in this Plan shall be deemed to give an Employee the right to
be retained in the Service of an Employer or to interfere with the right of an
Employer to discharge, with or without cause, any Employee at any time.
20.1
SECTION 21. FUTURE OF THE PLAN.
As future conditions cannot be foreseen, the Bank reserves the right to
amend or terminate the Plan (in whole or in part) and the Trust Agreement at any
time, by action of its Board of Directors. Neither amendment nor termination
shall retroactively reduce the vested rights of Participants or permit any part
of the Trust Assets to be diverted to or used for any purpose other than for the
exclusive benefit of the Participants (and their Beneficiaries).
The Bank specifically reserves the right to amend the Plan and the Trust
Agreement retroactively in order to satisfy any applicable requirements of the
Code and ERISA.
The Bank further reserves the right to terminate the Plan in the event of a
determination by the Internal Revenue Service (after a timely Application for
Determination is filed by the Bank) that the Plan initially fails to satisfy the
requirements of Section 401(a) and 4975(e)(7) of the Code. In that event, all
Trust Assets shall (upon written direction of the Bank) be returned to the Bank,
and the Plan and the Trust shall terminate.
If the Plan is terminated (or partially terminated) by the Bank,
participation of all Participants affected by the termination will end. The
Accounts of all Participants affected by termination or partial termination will
become nonforfeitable as of the date of termination. A complete discontinuance
of Employer Contributions shall be deemed to be a termination of the Plan for
this purpose. The Plan will not be considered "terminated," however, if Employer
Contributions are replaced by contributions to a comparable plan that meets the
requirements of Section 401(a) of the Code. After termination of the Plan,
the Trust will be maintained until the Capital Accumulations of all Participants
have been distributed. Capital Accumulations will be distributed following
termination of the Plan in accordance with Section 14 of the Plan.
In the event of the merger or consolidation of this Plan with another Plan,
or the transfer of Trust Assets (or liabilities) to another Plan, the Account
balances of each Participant immediately after such merger, consolidation or
transfer must be at least as great as immediately before such merger,
consolidation or transfer (as if the Plan had then terminated).
21.1
SECTION 22. "TOP HEAVY" CONTINGENCY PROVISIONS.
(a) The provisions of this Section 22 are included in the Plan pursuant to
Section 401(a)(10)(B)(ii) of the Code and shall become applicable only if the
Plan becomes a "top-heavy plan" under Section 416(g) of the Code for any Plan
Year.
(b) The determination as to whether the Plan becomes "top-heavy" for any
Plan Year shall be made as of the Anniversary Date of the immediately preceding
Plan Year (or as of December 31, 1991, for the Plan Year ending on that date),
by considering the Account balances of Participants in (1) the Plan, (2) any
other plan (such as a defined contribution or defined benefit plan) of the
Employer in which a Key Employee participates (in the Plan Year containing the
determination date or any of the preceding four Plan Years, even if the plan was
terminated), and (3) each other plan which enables any plan in which a Key
Employee participates during the period tested to meet the requirements of Code
Section 401(a)(4) or 410(b). All employers aggregated under Code Section
414(b), (c), or (m) are considered a single employer. The Plan (and any other
defined contribution plan or any defined benefit plan) shall be "top-heavy" only
if the total of the Account balances under the Plan and any other defined
contribution plan and the value of accrued benefits under any defined benefit
plan for Key Employees as of the determination date for that Plan Year exceeds
sixty percent (60%) of the total of the Account balances for all Participants.
For such purpose, Account balances (including Participants' Account balances
under any other defined contribution plan) and accrued benefit values shall be
computed and adjusted pursuant to Section 416(g) of the Code. In determining
Key Employees under this Section 22(b), the term "annual compensation" in
Section 416(i)(1)(A) of the Code shall mean Compensation (as defined in Section
2).
(c) For any Plan Year in which the Plan is "top-heavy," each Participant
who is an Employee on the Anniversary Date and is not a participant in a defined
benefit plan and who is a Non-Key Employee shall receive, regardless of his
Hours of Service for that Plan Year, a minimum allocation of Employer
Contributions and Forfeitures which is equal to the lesser of:
22.1
(1) Three percent (3%) of his Compensation; or
(2) The same percentage of his Compensation as the allocation to the
Key Employee for whom the Percentage is the highest for that Plan
Year. For purposes of this calculation, any salary reduction or
other similar arrangement of a Key Employee shall be included in
determining the percentage allocation to a Key Employee.
If such Employee is also a Participant in any other defined contribution plan,
he shall receive only the minimum allocation in this Plan and shall not receive
the minimum allocation provided in the defined contribution plan.
(d) As of the first day of any Plan Year in which the Plan has become
"top-heavy," the vesting schedule in Section 12(a) shall be amended to read as
follows:
Nonforfeitable
Credited Service Percentage
---------------- ----------
Less Than Two Years 0%
Two Years 20%
Three Years 40%
Four Years 60%
Five Years 80%
Six Years or More 100%
(e) The Capital Accumulation of an Employee who has not performed any
Service for the Employer at any time during the five-year period ending on the
determination date is excluded from the calculation to determine top-heaviness.
22.2
SECTION 23. DIVERSIFICATION.
(a) Within 90 days after the last day of each Plan Year during the
Participants' Qualified Election Period, any Plan Participant who has attained
age fifty-five (55) has completed ten (10) years of Credited Service (i.e., a
"Qualified Participant") shall have the right to make an election to direct the
Plan as to the investment of twenty-five percent (25%) of the value of the
Participants' Account attributable to Bank Stock which was acquired by the Plan.
Within 90 days after the close of the last Plan Year in the Participants'
Qualified Election Period, a Qualified Participant may direct the Plan as to the
investment of fifty percent (50%) of the value of such Account. The term
Qualified Election Period shall mean the six (6) Plan Year period beginning with
the Plan Year in which a Plan Participant first becomes a Qualified Participant.
(b) METHOD OF DIRECTING INVESTMENT. The Participant's election to
diversify his Account shall be provided to the Plan Administrator in writing and
shall be effective no later than 180 days after the close of the Plan Year to
which the election applies.
(c) DISTRIBUTION OF ACCOUNT. Upon a Qualified Participant's election to
direct the investment of a portion of the Participant's Account, the Plan may
distribute the portion of the Account that is covered by the election within 90
days after the last day of the period during which the election can be made.
Such distribution shall be subject to such requirements of the Plan concerning
put options (Section 16) and such provisions under Section 15 as require the
consent of the Participant and the Participant's spouse (if any) to a
distribution with a value in excess of $3,500.
23.1
SECTION 24. GOVERNING LAW.
The provisions of the Plan and the Trust Agreement shall be construed,
administered and enforced in accordance with the laws of the State of
California, to the extent such laws are not superseded by ERISA.
24.1
SECTION 25. EXECUTION.
To record the adoption of this Plan, the Bank has caused this document to
be executed this _18th__ day of __December_, 1991.
COAST COMMERCIAL BANK
By: /s/ Harvey Nickelson
--------------------------------
President
By: /s/ Sara Anderson
--------------------------------
Secretary
25.1
AMENDMENT NUMBER 1 TO THE
COAST COMMERCIAL BANK
EMPLOYEE STOCK OWNERSHIP PLAN (WITH 401(k) PROVISIONS)
Coast Commercial Bank, a banking association organized and operated under
the laws of the state of California, hereby adopts the following amendments to
the Coast Commercial Bank Employee Stock Ownership Plan (with 401(k) Provisions)
("Plan"):
1. Section 2 of the Plan is hereby amended to add the following language
to the definition of "Adjusted Compensation":
"For purposes of applying the $200,000 limit on compensation to the
family unit in accordance with Section 414(q)(6) of the Code, and, except
for the purpose of determining compensation below the Plan's integration
level, if applicable, the $200,000 limit will be allocated among the
members of the family unit in proportion to their respective
contributions."
2. Section 2 of the Plan is hereby amended to add the following
definition of "Direct Rollover":
"A payment by the Plan to the eligible retirement plan specified by the
distributee."
3. Section 2 of the Plan is hereby amended to add the following
definition of "Distributee":
"A Distributee includes an employee or former employee. In addition, the
employees 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 Section 414(p) of the
Code, or Distributees with regard to the interests of the spouse or former
spouse."
1
4. Section 2 of the Plan is hereby amended to add the following
definition of "Eligible Retirement Plan":
"A qualified trust described in Section 401(a) of the Code, 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."
5. Section 2 of the Plan is hereby amended to add the following
definition of "Eligible Rollover Distribution":
"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 Section
401(a)(9) of the Code; and the portion of any distribution that is not
includable in gross income proceeds determined without regard to the
exclusion for net unrealized appreciation with respect to employer
securities."
6. Section 2 of the Plan is hereby amended to add the following definition
of "Family Members":
"With respect to either a five percent owner or one of the ten most highly
compensated employees, the employee's spouse, and the employee's lineal
descendants who have not attained age 19 before the close of the year."
2
7. Section 2 of the Plan is hereby amended to add the following language
to the definition of "Highly Compensated Participant":
"The top-paid group consists of the top 20 percent of employees ranked on
the basis of compensation received during the year. For purposes of
determining the number of employees in the top-paid group, employees
described in Section 414(q)(8) and Q & A 9(b) of Section 1.414(q)-1T of the
regulations are excluded."
"The number of officers is limited to 50 (or, if lesser, the greater of
three employees or 10 percent of employees) excluding those employees who
may be excluded in determining the top-paid group."
"When no officer has compensation in excess of 50 percent of the Section
415(b)(1)(A) limit, the highest paid officer is treated as highly
compensated."
"Compensation is compensation within the meaning of Section 415(c)(3),
including elective or salary reduction contributions to a cafeteria plan,
cash or deferred arrangement or tax-sheltered annuity."
"Employers aggregated under Sections 414(b), (c), (m), or (o) are treated
as a single employer. IRC Section 414(q) and Regs. Section 1.414(q)-1T.
Plan Section 2.3."
"A participant who is both described in parts (B), (c), or (D), in
definition of Highly Compensated Participant, when these paragraphs are
modified to substitute the determination year for the look back year and
one of the 100 employees who receive the most compensation from the
employer during the determination year."
3
"The determination year is the plan year for which the determination of who
is highly compensated is being made."
"The look-back year is the 12 month period immediately preceding the
determination year, or if the employer elects, the calendar year ending
with or within the determination year."
8. Part (D) of the definition of "Highly Compensated Participant" in
Section 2 of the Plan is hereby deleted, and substituted therefor is a new Part
(D) to read as follows:
"Was at any time an officer and received compensation greater then fifty
percent (50%) of the amount in effect under Section 415(b)(1)(a) for such
year."
9. The last sentence of Section 3(a) of the Plan is hereby deleted, and
substituted therefor is a new sentence to read as follows:
"For this purpose, an eligibility computation period shall first be the
period of twelve (12) consecutive months beginning on the Employee's
initial date of service and thereafter shall be the Plan Year which
includes the first anniversary of his initial date of service in which case
an employee will be credited with a year of eligibility service in each
computation period that he completes at least 1,000 hours of service."
10. Section 4.2 (c) of the Plan is hereby amended to include the following
language:
"The Plan will take into account the actual deferral ratios of all eligible
employees for purposes of the actual deferral percentage (ADP) test and
Section 401(k). For this purpose, an eligible employee is an employee who
4
is directly or indirectly eligible to make a cash or deferred election
under the Plan for all or a portion of a Plan Year and includes: an
employee who would be a Plan participant but for the failure to make
required contributions; an employee whose eligibility to make elective
contributions has been suspended because of an election (other than certain
one-time elections) not to participate, the distribution, or alone; and, an
employee who cannot defer because of the Section 415 limits on annual
additions. In the case of an eligible employee who makes no elective
contributions to a deferral ratio that is to be included in determining the
ADP is zero."
"In the case of a highly compensated employee who is either a five percent
owner or one of the ten most highly compensated employees and is subject to
the family aggregation rules as set forth in Section 414(q)(6), the actual
deferral ratio for the family group (which is treated as one highly
compensated employee) is determined by combining the elective
contributions, compensation, and amounts treated as elective contributions
of all eligible family members. Except to the extent taken into account in
the preceding sentence, the elective contributions, compensation, and
amounts treated as elective contributions of all family members are
disregarded in determining their individual actual deferral percentages."
"An elective contribution will be taken into account under the actual
deferral percentage test of Section 401(k)(3)(A) of the Code for a Plan
Year only if it is allocated to an employee as of the date within that Plan
Year. For this purpose, an elective contribution is considered allocated
as of a date within a Plan Year if the allocation is not contingent on
participation or performance of services after such date and the elective
5
contribution is actually paid to the Trust no later than twelve (12) months
after the Plan Year to which the contribution relates. For purposes of
determining whether the Plan satisfies the ADP test of Section 401(k), all
elective contributions that are made under two or more plans that are
aggregated for purposes of Section 401(a)(4) or 410(b) are to be treated as
made under a single plan. If two or more plans are permissibly aggregated
for purposes of Section 401(k), the aggregated plans must also satisfy
Sections 401(a)(4) and 410(b) as though they were a single plan."
11. Section 4.2(d) of the Plan is amended to include the following
language:
"The distribution of excess contributions will include the income allocable
thereto. The income allocable to excess contributions includes income for
the Plan Year for which the excess contributions were made and is to be
calculated in the manner provided by Treas. Reg. Section 1.401(k)-1(f)(4)."
12. The last sentence of paragraph 1 in Section 4.2(d) of the Plan is
hereby deleted and substituted therefor is a new sentence to read as follows:
"In the case of a Highly Compensated Participant whose ADP is determined
pursuant to Code Section 414(q)(6) family aggregation rules, the excess
contributions shall be determined in accordance with the leveling method
described in Treas. Reg. Section 1.401(k)-1(f)(2) and allocated among
family members in proportion to the contributions of each family member
that have been combined."
6
13. Section 4.2(e) of the Plan is hereby deleted and substituted therefor
is a new Section 4.2(e) to read as follows:
"In the event a Participant's Salary Reduction Contribution or Employer
Contribution is made under a mistake of fact, the contribution may be
returned to the Employer within one (1) year after the payment of the
contribution or the disallowance of the deduction to the extent allowed,
whichever is applicable. Except as provided under this paragraph, the
assets of the Plan will be used for the exclusive purpose of providing
benefits to Participants under the Plan and their Beneficiaries and for for
defraying reasonable administrative expenses of the Plan."
14. Section 4.3(a) of the Plan is hereby amended by deleting the word
"earnings" and substituting therefor the word "compensation."
15. Section 4.3(d) of the Plan is amended to include the following
language:
"For purposes of determining whether a plan satisfies the actual
contribution percentage test of Code Section 401(m), all employee and
matching contributions that are made under two or more plans that are
aggregated for purposes of Code Sections 401(a)(4) and 410(b) are to be
treated as made under a single plan; if two or more plans are permissively
aggregated for purposes of Section 401(m), these plans must also satisfy
Sections 401(a)(4) and 410(b) as though they were a single plan."
"In the case of a Highly Compensated Employee who is either a five percent
(5%) owner or one of the ten most
7
Highly Compensated Employees and is thereby subject to the family
aggregation rules of Section 414(q)(6), the actual contribution ratio (ACR)
for the family group (which is treated as one Highly Compensated Employee)
is the ACR determined by combining the contributions and compensation of
all eligible family members. Except to the extent taken into account in
the preceding sentence, the contributions and compensation of all family
members are disregarded in determining the actual contribution percentage
for the groups of Highly Compensated Employees and Nonhighly Compensated
Employees."
"Furthermore, in accordance with Regulation 1.401(k)-1(f), the Employer may
allow additional Voluntary Contributions and/or Matching Contributions or
may distribute or recharacterize such contributions made during the Plan
Year in order to provide that the maximum Contribution Percentage Limit
under Code Section 401(m) is not exceeded."
16. The last paragraph of Section 4.3(e) of the Plan is hereby deleted,
and substituted therefor is a new paragraph to read as follows:
"In the case of a highly compensated employee who is either a five percent
owner or one of the ten most highly compensated employees and is subject to
the family aggregation rules as set forth in Section 414(q)(6), the actual
contribution ratio for the family group is determined by combining the
contributions and compensation of all eligible family members. When a
highly compensated employee's actual contribution ratio is determined under
the family aggregation rules, the determination of the amount of excess
aggregate contributions shall be made as follows: (a) the ACR is reduced
in accordance with the "leveling" method described in Prop. Reg. Section
8
1.401(m)-1(e)(2), and (b) the excess aggregate contributions are allocated
among the family members in proportion to the contributions of each family
member that have been combined. The distribution of excess aggregate
contributions will include the income allocable thereto, determined
pursuant to the safe harbor method of allocating gap period income pursuant
to Prop. Rep. Section 1.401(m)-1(e)(3)(ii)(D). The income allocable to
the excess aggregate contributions includes income for the plan year for
which the excess aggregate contributions were made."
17. Section 4.3(e) of the Plan is amended to include the following
language:
"The distribution (or forfeiture, if applicable) of excess aggregate
contributions shall be made on the basis of the respective portions of such
amounts attributable to each Highly Compensated Employee."
"The amount of excess aggregate contributions for a Plan Year shall be
determined only after first determining the excess contributions that are
treated as employee contributions due to recharacterization."
18. Section 4.3(f) of the Plan is amended to include the following
language:
"If multiple use of the alternative limitation occurs, it must be corrected
by reducing the actual deferral percentage of all highly compensated
employees, regardless of whether they are eligible under both the
arrangement subject to Section 401(k) and the plan subject to Section
401(m).
9
19. Section 4.4(a) of the Plan is hereby amended to add the following
language:
"All distributions made on or after January 1, 1993, not withstanding any
provision of the Plan to the contrary that would otherwise limit a
Distributee's election under Code Section 401(a)(31), 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."
20. Section 5(a) of the Plan is hereby amended to include the following
language:
"Valuations of employer securities which are not readily tradable on an
established market are made by an independent appraiser, who meets the
requirements similar to the requirements of the regulations prescribed
under Code Section 170(a)(1)."
21. Section 11(a) of the Plan is hereby deleted and substituted therefore
is a new Section 11(a) to read as follows:
"A Participant's Normal Retirement Age is his sixty-fifth (65th) birthday
or the fifth anniversary of the time the Participant commenced
participation in the Plan. Upon attaining his Normal Retirement Age, a
Participant's Account balances will become nonforfeitable."
10
22. Subsection 17(e)(2)(iii)(B) is hereby deleted, and substituted
therefor is a new subpart to read as follows:
"To provide payment of tuition and related educational fees for the next
twelve (12) months of post-secondary education for the employee, or the
employee's spouse, children, or dependents (as defined in Section 152).
IN WITNESS WHEREOF, the undersigned, a duly authorized officer of Coast
Commercial Bank, hereby adopts this Amended Number 1 to the Coast Commercial
Bank Employee Stock Ownership Plan (with 401(k) provisions) on this 15th day of
April , 1993.
COAST COMMERCIAL BANK
By: /s/
------------------------------
As Its:
-----------------------
11
COAST COMMERCIAL BANK
RESOLUTIONS RELATING TO AMENDMENT OF
EMPLOYEE STOCK OWNERSHIP PLAN
WITH 401(K) PROVISIONS
AMENDMENT NO. 2
August 18, 1993
-------------------------------------------------------------------------------
WHEREAS, Coast Commercial Bank (the "Bank") desires to amend the Coast
Commercial Bank Employee Stock Ownership Plan with 401(k) Provisions (the
"Plan") in order to provide that an employee may participate in the Plan
provided that he has attained age eighteen (18) and is credited with at least
1,000 Hours of Service during an eligibility computation period; and
WHEREAS, the Bank desires to amend the Plan in order to provide that
interest on any acquisition loan shall first be paid from the Optional
Contribution Account to the extent available before such interest is paid from
other accounts of the Plan; and
WHEREAS, the Bank desires to amend the Plan in order to provide that a
Participant may direct that up to fifty percent (50%) of his salary deferrals
may be invested in Bank Stock; and
WHEREAS, the Bank recognizes that such Amendments will serve the interests
of the Bank and its shareholders by increasing the opportunity for Bank
personnel to share in the profitability of the Bank as a result of their efforts
and receive greater value from investments of their own contributions.
W I T N E S S E T H:
RESOLVED, pursuant to Section 21 of the Plan, Section 3(a) of the Plan is
deleted in its entirety and is replaced with the following, effective for the
Plan Year beginning January 1, 1993:
(a) All employees currently participating in the Plan will remain as
Participants in the restated Plan. Thereafter, each Employee will
become a Participant on the Entry Date following his initial date of
Service (the date he is first credited with an Hour of Service),
provided that he has attained age eighteen (18) and is credited with
at least 1,000 Hours of Service during an eligibility computation
period. For this purpose, an eligibility computation period shall
first be the period of twelve (12) consecutive months beginning on the
Employee's initial date of service and thereafter shall be the Plan
Year which includes the first anniversary of his initial date of
service in
which case an Employee be credited with a year of eligibility service
and each computation period that he completes 1,000 Hours of Service.
RESOLVED, pursuant to Section 21 of the Plan, Section 5(b) of the Plan is
hereby amended to add the following language, effective for the Plan Year
beginning January 1, 1991:
Payments of interest on any Acquisition Loan shall be made from a
Participant's Optional Contribution Account to the extent that such account
is sufficient to meet the obligation. Otherwise, to the extent the
Optional Contribution Account is deficient to meet such obligation,
payments of interest shall be made from the Participant's other Employee
Contribution Accounts. Salary Reduction Contributions shall only be
applied to the payment of principal on Acquisition Loans.
RESOLVED, pursuant to Section 21 of the Plan, Section 5(c) of the Plan is
deleted in its entirety and is replaced with the following, effective for the
Plan Year beginning on January 1, 1991:
(c) Salary Reduction Contributions in the Prior Plan Account will not
normally be invested in Bank Stock. However, a Participant may, with
the consent of the Trustee, direct the investment of his Salary
Reduction Account in the Prior Plan Account in one of the following
Investment Funds:
(1) The Equity Fund has a principal investment goal of capital
appreciation primarily through investment in Bank Stock.
(2) A Bond Fund has a principal investment goal of the production of
income through ownership of corporate and governmental debt
instruments.
(3) The Money Market Fund has a principal investment goal of the
preservation of principal and the production of high current
income with liquidity, primarily through government and other
money market fixed income securities.
(4) The Mutual Fund has a principal investment goal of a balanced
mixture of income and capital appreciation through ownership of
interest and regulated investment companies.
Notwithstanding the principal investment goal of each Investment Fund,
the Trustee may make temporary short-term investment of assets in a
Money Market Fund. Investment direction shall normally be made in
twenty-five percent (25%) increments with the exception that any
percentage up to fifty percent (50%) of such Accounts may be invested
in Bank Stock.
Separate Accounts shall be established to reflect each Participant's
interest under the Plan.
RESOLVED, that the Officers of Coast Commercial Bank are hereby authorized
and directed to do any and all things necessary and appropriate to the Plan and
to carry out the intent of the foregoing resolution.
- - --------------------------------------------------------------------------------
SECRETARY'S ACKNOWLEDGMENT
I, Sandra Anderson, hereby certify that I am the duly appointed and acting
secretary of Coast Commercial Bank and that the above resolutions are a true and
correct copy of resolutions adopted at a meeting of the Board of Directors of
said Bank on August 18, 1993, at which meeting a quorum was at all times present
and acting, and that said resolutions are still in full force and effect.
Dated: August, 1993 /s/Sandra Anderson
-------------- ------------------
Secretary
COAST COMMERCIAL BANK
RESOLUTIONS RELATING TO AMENDMENT OF
EMPLOYEE STOCK OWNERSHIP PLAN
WITH 401(k) PROVISIONS
AMENDMENT NO. 3
_____________, 1994
- - --------------------------------------------------------------------------------
WHEREAS, Coast Commercial Bank (the "Bank") desires to amend the Coast
Commercial Bank Employee Stock Ownership Plan with 401(k) Provisions (the
"Plan") in order to provide that employment as of the anniversary date (December
31) is required in order to receive any Employer Contributions; and
WHEREAS, the Bank recognizes that such Amendment will serve the interests
of the Bank and its shareholders by increasing the opportunity for Bank
personnel to share in the profitability of the Bank as a result of their efforts
and receive greater value from investments of their own contributions.
W I T N E S S E T H:
RESOLVED, pursuant to Section 21 of the Plan, Section 3(b) of the Plan is
deleted in its entirety and is replaced with the following, effective for the
Plan Year beginning January 1, 1995:
(b) A Participant is generally entitled to share in the allocations of
Employer Contributions and Forfeitures only for a Plan Year in which he is
employed (or on Approved Absence) on the Anniversary Date (December 31). A
Participant shall also share in the allocations of Employer Contributions for
the Plan Year of his retirement, disability or death (as provided in Section
12).
RESOLVED, that the Officers of Coast Commercial Bank are hereby authorized
and directed to do any and all things necessary and appropriate to the Plan and
to carry out the intent of the foregoing resolution.
- - --------------------------------------------------------------------------------
SECRETARY'S ACKNOWLEDGMENT
I, Sandra Anderson, hereby certify that I am the duly appointed and acting
Secretary of Coast Commercial Bank and that the above resolution is a true and
correct copy of the resolution adopted at a meeting of the Board of Directors of
said Bank on August 17, 1994, at which meeting a quorum was at all times present
and acting, and that said resolution is still in full force and effect.
Dated: Sept 19, 1994 /s/ Sandra Anderson
------------- -------------------
Secretary
AMENDMENT NUMBER 4
TO THE
COAST COMMERCIAL BANK
EMPLOYEE STOCK OWNERSHIP PLAN (WITH 401(K) PROVISIONS)
Coast Commercial Bank, a banking association organized and operated under
the laws of the state of California and a banking association hereby adopts the
following amendment to the Coast Commercial Bank Employee Stock Ownership Plan
(with 401(k) Provisions) ("Plan"):
1. Section 2 of the Plan is hereby amended to add the following
definition:
" 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 AND
ANNUAL ADJUSTED 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 SECTION 401(A)(17)(B) OF
THE INTERNAL REVENUE CODE. THE COST-OF-LIVING ADJUSTMENT IN EFFECT FOR A
CALENDAR YEAR APPLIES TO ANY PERIOD, NOT EXCEEDING 12 MONTHS, OVER WHICH
COMPENSATION AND ADJUSTED COMPENSATION ARE 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 SECTION 401(A)(17) OF THE CODE SHALL MEAN
THE OBRA 93 ANNUAL COMPENSATION LIMIT SET FORTH IN THIS PROVISION.
IF COMPENSATION OR ADJUSTED COMPENSATION FOR ANY PRIOR DETERMINATION
PERIOD IS TAKEN INTO ACCOUNT IN DETERMINING AN EMPLOYEE'S BENEFITS ACCRUING
IN THE CURRENT PLAN YEAR, THE COMPENSATION OR ADJUSTED 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.."
1
IN WITNESS WHEREOF, the undersigned, a duly authorized officer Coast
Commercial Bank, hereby adopts this Amendment Number 4 to the Coast Commercial
Bank Employee Stock Ownership Plan (with 401(k) Provisions) on this 21st day of
December, 1994.
COAST COMMERCIAL BANK
By: /s/ Sandra Anderson
-------------------
As Its: Secretary
----------------
2
COAST COMMERCIAL BANK
RESOLUTIONS RELATING TO AMENDMENT OF
EMPLOYEE STOCK OWNERSHIP PLAN
WITH 401(k) PROVISIONS
AMENDMENT NO. 5
______________, 1995
- - --------------------------------------------------------------------------------
WHEREAS, Coast Commercial Bank (the "Bank") desires to amend the
Coast Commercial Bank Employee Stock Ownership Plan and Trust Agreement
(the "Plan") to reflect the current Trustees and Committee of the Plan.
W I T N E S S E T H:
RESOLVED, that the Plan is amended to reflect the current
Trustees of the Plan to be as follows:
Harvey J. Nickelson
David V. Heald
RESOLVED, that the Plan is amended to reflect the current
Committee members of the Plan to be as follows:
Brenda Pannell
Maria Ruiz-Gonzalez
RESOLVED, that the Officers of the Bank are hereby authorized and
directed to do any and all things necessary and appropriate to carry
out the intent of the foregoing resolution.
- - --------------------------------------------------------------------------------
SECRETARY'S ACKNOWLEDGMENT
I, Sandra Anderson, hereby certify that I am the duly appointed
and acting secretary of Coast Commercial Bank and that the above
resolutions are a true and correct copy of resolutions adopted at a
meeting of the Board of Directors of said Bank on Feb 15, 1995, at
which meeting a quorum was at all times present and acting, and that
said resolutions are still in full force and effect.
2-15-95 /s/ Sandra Anderson
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Date Secretary
COAST COMMERCIAL BANK
RESOLUTIONS RELATING TO AMENDMENT OF
EMPLOYEE STOCK OWNERSHIP PLAN
WITH 401(k) PROVISIONS
AMENDMENT NO. 6
______________, 1995
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WHEREAS, Coast Commercial Bank (the "Bank") desires to amend the
Coast Commercial Bank Employee Stock Ownership Plan and Trust Agreement
(the "Plan") to reflect the current Trustees of the Plan.
W I T N E S S E T H:
RESOLVED, that the Plan is amended to reflect the current
Trustees ofthe Plan to be as follows:
Harvey J. Nickelson
David V. Heald
Bruce H. Kendall
RESOLVED, that the Officers of the Bank are hereby authorized and
directed to do any and all things necessary and appropriate to carry
out the intent of the foregoing resolution.
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SECRETARY'S ACKNOWLEDGMENT
I, Sandra Anderson, hereby certify that I am the duly appointed
and acting secretary of Coast Commercial Bank and that the above
resolutions are a true and correct copy of resolutions adopted at a
meeting of the Board of Directors of said Bank on March 22, 1995, at
which meeting a quorum was at all times present and acting, and that
said resolutions are still in full force and effect.
March 22, 1995 /s/ Sandra Anderson
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Date Secretary