EXHIBIT 10.4
CLAY COUNTY SAVINGS BANK
EMPLOYEE STOCK OWNERSHIP PLAN
(adopted effective January 1, 2002)
CLAY COUNTY SAVINGS BANK
EMPLOYEE STOCK OWNERSHIP PLAN
This Employee Stock Ownership Plan, executed on the ________ day of
______________, 2002, by Clay County Savings Bank, a federally chartered stock
savings Bank (the "Bank"),
W I T N E S S E T H T H A T
WHEREAS, the board of directors of the Bank has resolved to adopt an
employee stock ownership plan for eligible employees of the Bank and
subsidiaries of the Bank, if any, in accordance with the terms and conditions
presented set forth herein;
NOW, THEREFORE, the Bank hereby adopts the following Plan setting forth
the terms and conditions pertaining to contributions by the Employer and the
payment of benefits to Participants and Beneficiaries.
IN WITNESS WHEREOF, the Bank has adopted this Plan and caused this
instrument to be executed by its duly authorized officers as of the above date.
ATTEST:
By: ____________
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Secretary President
C O N T E N T S
Page No.
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Section 1. Plan Identity ....................................................................... 1
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1.1 Name ................................................................................ 1
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1.2 Purpose ............................................................................. 1
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1.3 Effective Date ...................................................................... 1
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1.4 Fiscal Period ....................................................................... 1
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1.5 Single Plan for All Employers ....................................................... 1
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1.6 Interpretation of Provisions ........................................................ 1
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Section 2. Definitions ......................................................................... 1
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Section 3. Eligibility for Participation ....................................................... 6
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3.1 Initial Eligibility ................................................................. 6
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3.2 Definition of Eligibility Year ...................................................... 7
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3.3 Terminated Employees ................................................................ 7
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3.4 Certain Employees Ineligible ........................................................ 7
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3.5 Participation and Reparticipation ................................................... 7
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3.6 Omission of Eligible Employee ....................................................... 7
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Section 4. Contributions and Credits ........................................................... 8
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4.1 Discretionary Contributions ......................................................... 8
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4.2 Contributions for Stock Obligations ................................................. 8
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4.3 Conditions as to Contributions ...................................................... 8
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4.4 Rollover Contributions .............................................................. 9
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Section 5. Limitations on Contributions and Allocations ........................................ 9
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5.1 Limitation on Annual Additions ...................................................... 9
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5.2 Effect of Limitations ............................................................... 10
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5.3 Limitations as to Certain Participants .............................................. 11
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Section 6. Trust Fund and Its Investment ....................................................... 11
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6.1 Creation of Trust Fund .............................................................. 11
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6.2 Stock Fund and Investment Fund ...................................................... 12
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6.3 Acquisition of Stock ................................................................ 12
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6.4 Participants' Option to Diversify ................................................... 13
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Section 7. Voting Rights and Dividends on Stock ................................................ 13
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7.1 Voting and Tendering of Stock ....................................................... 13
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7.2 Dividends on Stock .................................................................. 14
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Section 8. Adjustments to Accounts ............................................................. 15
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8.1 Adjustments for Transactions ........................................................ 15
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8.2 Valuation of Investment Fund ........................................................ 15
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8.3 Adjustments for Investment Experience ............................................... 15
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Section 9. Vesting of Participants' Interests .................................................. 15
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9.1 Deferred Vesting in Accounts ........................................................ 15
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9.2 Computation of Vesting Years ........................................................ 16
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9.3 Full Vesting Upon Certain Events .................................................... 16
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9.4 Full Vesting Upon Plan Termination .................................................. 17
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9.5 Forfeiture, Repayment, and Restoral ................................................. 17
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9.6 Accounting for Forfeitures .......................................................... 18
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(i)
9.7 Vesting and Nonforfeitability ....................................................... 18
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Section 10. Payment of Benefits ................................................................. 18
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10.1 Benefits for Participants ........................................................... 18
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10.2 Time for Distribution ............................................................... 18
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10.3 Marital Status ...................................................................... 20
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10.4 Delay in Benefit Determination ...................................................... 20
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10.5 Accounting for Benefit Payments ..................................................... 20
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10.6 Options to Receive and Sell Stock ................................................... 20
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10.7 Restrictions on Disposition of Stock ................................................ 21
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10.8 Continuing Loan Provisions; Creations of Protections and Rights ..................... 21
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10.9 Direct Rollover of Eligible Distribution ............................................ 21
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10.10 Waiver of 30-Day Period After Notice of Distribution ................................ 22
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Section 11. Rules Governing Benefit Claims and Review of Appeals ................................ 22
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11.1 Claim for Benefits .................................................................. 22
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11.2 Notification by Committee ........................................................... 23
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11.3 Claims Review Procedure ............................................................. 23
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Section 12. The Committee and its Functions ..................................................... 23
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12.1 Authority of Committee .............................................................. 23
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12.2 Identity of Committee ............................................................... 24
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12.3 Duties of Committee ................................................................. 24
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12.4 Valuation of Stock. ................................................................. 24
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12.5 Compliance with ERISA ............................................................... 24
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12.6 Action by Committee ................................................................. 24
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12.7 Execution of Documents .............................................................. 25
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12.8 Adoption of Rules ................................................................... 25
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12.9 Responsibilities to Participants .................................................... 25
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12.10 Alternative Payees in Event of Incapacity ........................................... 25
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12.11 Indemnification by Employers ........................................................ 25
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12.12 Nonparticipation by Interested Member ............................................... 25
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Section 13. Adoption, Amendment, or Termination of the Plan ..................................... 25
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13.1 Adoption of Plan by Other Employers ................................................. 25
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13.2 Plan Adoption Subject to Qualification .............................................. 26
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13.3 Right to Amend or Terminate ......................................................... 26
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Section 14. Miscellaneous Provisions ............................................................ 26
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14.1 Plan Creates No Employment Rights ................................................... 26
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14.2 Nonassignability of Benefits ........................................................ 26
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14.3 Limit of Employer Liability ......................................................... 27
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14.4 Treatment of Expenses ............................................................... 27
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14.5 Number and Gender ................................................................... 27
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14.6 Nondiversion of Assets .............................................................. 27
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14.7 Separability of Provisions .......................................................... 27
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14.8 Service of Process .................................................................. 27
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14.9 Governing State Law ................................................................. 27
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14.10 Employer Contributions Conditioned on Deductibility ................................. 27
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14.11 Unclaimed Accounts .................................................................. 27
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14.12 Qualified Domestic Relations Order .................................................. 28
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Section 15. Top-Heavy Provisions ................................................................ 28
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(ii)
15.1 Top-Heavy Plan .............................................................................. 28
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15.2 Super Top-Heavy Plan ........................................................................ 29
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15.3 Definitions ................................................................................. 29
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15.4 Top-Heavy Rules of Application .............................................................. 30
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15.5 Minimum Contributions ....................................................................... 31
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15.6 Minimum Vesting ............................................................................. 34
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15.7 Top-Heavy Provisions Control in Top-Heavy Plan .............................................. 32
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(iii)
CLAY COUNTY SAVINGS BANK
EMPLOYEE STOCK OWNERSHIP PLAN
Section 1. Plan Identity.
1.1 Name. The name of this Plan is "Clay County Savings Bank
Employee Stock Ownership Plan."
1.2 Purpose. The purpose of this Plan is to describe the terms and
conditions under which contributions made pursuant to the Plan will be credited
and paid to the Participants and their Beneficiaries.
1.3 Effective Date. The Effective Date of this Plan is January 1,
2002.
1.4 Fiscal Period. This Plan shall be operated on the basis of a
January 1 to December 31 fiscal year for the purpose of keeping the Plan's books
and records and distributing or filing any reports or returns required by law.
1.5 Single Plan for All Employers. This Plan shall be treated as a
single plan with respect to all participating Employers for the purpose of
crediting contributions and forfeitures and distributing benefits, determining
whether there has been any termination of Service, and applying the limitations
set forth in Section 5.
1.6 Interpretation of Provisions. The Employers intend this Plan
and the Trust to be a qualified stock bonus plan under Section 401(a) of the
Code and an employee stock ownership plan within the meaning of Section
407(d)(6) of ERISA and Section 4975(e)(7) of the Code. The Plan is intended to
have its assets invested primarily in qualifying employer securities of one or
more Employers within the meaning of Section 407(d)(3) of ERISA, and to satisfy
any requirement under ERISA or the Code applicable to such a plan.
Accordingly, the Plan and Trust Agreement shall be interpreted and
applied in a manner consistent with this intent and shall be administered at all
times and in all respects in a nondiscriminatory manner.
Section 2. Definitions.
The following capitalized words and phrases shall have the meanings
specified when used in this Plan and in the Trust Agreement, unless the context
clearly indicates otherwise:
"Account" means a Participant's interest in the assets accumulated
under this Plan as expressed in terms of a separate account balance which is
periodically adjusted to reflect his Employer's contributions, the Plan's
investment experience, and distributions and forfeitures.
"Active Participant" means a Participant who has satisfied the
eligibility requirements under Section 3 and who has at least 1,000 Hours of
Service during the current Plan Year. However, a Participant shall not qualify
as an Active Participant unless (i) he is in active Service with an Employer as
of the last day of the Plan Year, or (ii) he is on a Recognized Absence as of
that date, or (iii) his Service terminated during the Plan Year by reason of
Disability, death, Early or Normal Retirement.
"Bank" means Clay County Savings Bank and any entity which succeeds to
the business of Clay County Savings Bank and adopts this Plan as its own
pursuant to Section 13.1 of the Plan.
"Beneficiary" means the person or persons who are designated by a
Participant to receive benefits payable under the Plan on the Participant's
death. In the absence of any designation or if all the designated Beneficiaries
shall die before the Participant dies or shall die before all benefits have been
paid, the Participant's Beneficiary shall be his surviving Spouse, if any, or
his estate if he is not survived by a Spouse. The Committee may rely upon the
advice of the Participant's executor or administrator as to the identity of the
Participant's Spouse.
"Break in Service" means the inability to do any substantial amount of
work of any sort because of a physical or mental condition which can be
medically determined and which can be expected to last more than a year. The
Committee may require a medical examination by a physician chosen by the
Committee. However, if the disabled individual is eligible for Social Security
disability benefits, he will automatically satisfy the requirements for
Disability under the Plan.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the committee responsible for the administration of
this Plan in accordance with Section 12.
"Company" means CCSB Financial Corp., the holding company of the Bank,
and any successor entity which succeeds to the business of the Company.
"Disability" means the inability to do any substantial amount of work
of any sort because of a physical or mental condition which can be medically
determined and which can be expected to last more than a year. The Committee may
require a medical examination by a physician chosen by the Committee. However,
if the disabled individual is eligible for Social Security disability benefits,
he will automatically satisfy the requirements for Disability under the Plan.
"Early Retirement" means retirement on or after a Participant's
attainment of age 55 and the completion of ten (10) years of employment with an
Employer.
"Effective Date" means January 1, 2002.
"Eligible Employee" means an Employee who is employed by the Employer
on a full-time basis or works at least 35 hours per week.
"Employee" means any individual who is or has been employed or
self-employed by an Employer. "Employee" also means an individual employed by a
leasing organization who, pursuant to an agreement between an Employer and the
leasing organization, has performed services for the Employer and any related
persons (within the meaning of Section 414(n)(6) of the Code) on a substantially
full-time basis for more than one year, if such services are performed under the
primary direction or control of the Employer. However, such a "leased employee"
shall not be considered an Employee if (i) he participates in a money purchase
pension plan sponsored by the leasing organization which provides for immediate
participation, immediate full vesting, and an annual contribution of at least 10
percent of the Employee's 415 Compensation, and (ii) leased employees do not
constitute more than 20 percent of the Employer's total work force (including
leased employees, but excluding Highly Paid Employees and any other Employees
who have not performed services for the Employer on a substantially full-time
basis for at least one year).
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"Employer" means the Bank or any affiliate within the purview of
section 414(b), (c) or (m) and 415(h) of the Code, any other corporation,
partnership, or proprietorship which adopts this Plan with the Bank's consent
pursuant to Section 13.1, and any entity which succeeds to the business of any
Employer and adopts the Plan pursuant to Section 13.2.
"Entry Date" means the Effective Date of the Plan and each January 1
and July 1 of each Plan Year after the Effective Date.
"ERISA" means the Employee Retirement Income Security Act of 1974 (P.L.
93-406, as amended).
"415 Compensation"
(a) shall mean wages, as defined in Code Section 3401(a) for
purposes of income tax withholding at the source.
(b) Any elective deferral as defined in Code Section 402(g)(3)
(any Employer contributions made on behalf of a Participant to the
extent not includible in gross income and any Employer contributions to
purchase an annuity contract under Code Section 403(b) under a salary
reduction agreement) and any amount which is contributed or deferred by
the Employer at the election of the Participant and which is not
includible in gross income of the Participant by reason of Code Section
125 (Cafeteria Plan), Code Section 457 or 132(f)(4) shall also be
included in the definition of 415 Compensation.
(c) 415 Compensation in excess of $200,000 (as indexed) shall
be disregarded for all Participants. For purposes of this sub-section,
the $200,000 limit shall be referred to as the "applicable limit" for
the Plan Year in question. The $200,000 limit shall be adjusted for
increases in the cost of living in accordance with Section
401(a)(17)(B) of the Code, effective for the Plan Year which begins
within the applicable calendar year. For purposes of the applicable
limit, 415 Compensation shall be prorated over short Plan Years.
"Highly Paid Employee" for any Plan Year means an Employee who, during
either that or the immediately preceding Plan Year was at any time a five
percent owner of the Employer (as defined in Code Section 416(i)(1)) or, during
the immediately preceding Plan Year, had 415 Compensation exceeding $85,000 and
was among the most highly compensated one-fifth of all Employees (the $85,000
amount is adjusted at the same time and in the same manner as under Code Section
415(d), provided, however, the base period is the calendar quarter ending
September 30, 1996). For these purposes, "the most highly compensated one-fifth
of all Employees" shall be determined by taking into account all individuals
working for all related Employer entities described in the definition of
"Service", but excluding any individual who has not completed six months of
Service, who normally works fewer than 17-1/2 hours per week or in fewer than
six months per year, who has not reached age 21, whose employment is covered by
a collective bargaining agreement, or who is a nonresident alien who receives no
earned income from United States sources. The applicable year for which a
determination is being made is called a "determination year" and the preceding
12-month period is called a look-back year.
"Hours of Service" means hours to be credited to an Employee under the
following rules:
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(a) Each hour for which an Employee is paid or is entitled to
be paid for services to an Employer is an Hour of Service.
(b) Each hour for which an Employee is directly or indirectly
paid or is entitled to be paid for a period of vacation, holidays,
illness, disability, lay-off, jury duty, temporary military duty, or
leave of absence is an Hour of Service. However, except as otherwise
specifically provided, no more than 501 Hours of Service shall be
credited for any single continuous period which an Employee performs no
duties. No more than 501 Hours of Service will be credited under this
paragraph for any single continuous period (whether or not such period
occurs in a single computation period). Further, no Hours of Service
shall be credited on account of payments made solely under a plan
maintained to comply with worker's compensation, unemployment
compensation, or disability insurance laws, or to reimburse an Employee
for medical expenses.
(c) Each hour for which back pay (ignoring any mitigation of
damages) is either awarded or agreed to by an Employer is an Hour of
Service. However, no more than 501 Hours of Service shall be credited
for any single continuous period during which an Employee would not
have performed any duties. The same Hours of Service will not be
credited both under paragraph (a) or (b) as the case may be, and under
this paragraph (c). These hours will be credited to the employee for
the computation period or periods to which the award or agreement
pertains rather than the computation period in which the award
agreement or payment is made.
(d) Hours of Service shall be credited in any one period only
under one of the foregoing paragraphs (a), (b) and (c); an Employee may
not get double credit for the same period.
(e) If an Employer finds it impractical to count the actual
Hours of Service for any class or group of non-hourly Employees, each
Employee in that class or group shall be credited with 45 Hours of
Service for each weekly pay period in which he has at least one Hour of
Service. However, an Employee shall be credited only for his normal
working hours during a paid absence.
(f) Hours of Service to be credited on account of a payment to
an Employee (including back pay) shall be recorded in the period of
Service for which the payment was made. If the period overlaps two or
more Plan Years, the Hours of Service credit shall be allocated in
proportion to the respective portions of the period included in the
several Plan Years. However, in the case of periods of 31 days or less,
the Administrator may apply a uniform policy of crediting the Hours of
Service to either the first Plan Year or the second.
(g) In all respects an Employee's Hours of Service shall be
counted as required by Section 2530.200b-2(b) and (c) of the Department
of Labor's regulations under Title I of ERISA.
"Investment Fund" means that portion of the Trust Fund consisting of
assets other than Stock. Notwithstanding the above, assets from the Investment
Fund may be used to purchase Stock in the open market or otherwise, or used to
pay on the Stock Obligation, and shares so purchased will be allocated to a
Participant's Stock Fund.
"Normal Retirement" means retirement on or after the Participant's
Normal Retirement Date.
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"Normal Retirement Date" means the date on which a Participant attains
age 65 and has completed five years of Service.
"Participant" means any Eligible Employee who is an Active Participant
participating in the Plan, or Eligible Employee or former Employee who was
previously an Active Participant and still has a balance credited to his
Account.
"Plan Year" means the twelve-month period commencing January 1 and
ending December 31, 2002 and each period of 12 consecutive months beginning on
January 1 of each succeeding year.
"Recognized Absence" means a period for which --
(a) an Employer grants an Employee a leave of absence for a
limited period, but only if an Employer grants such leave on a
nondiscriminatory basis; or
(b) an Employee is temporarily laid off by an Employer because
of a change in business conditions; or
(c) an Employee is on active military duty, but only to the
extent that his employment rights are protected by the Military
Selective Service Act of 1967 (38 U.S.C. Sec. 2021).
"Service" means an Employee's period(s) of employment or
self-employment with an Employer, excluding for initial eligibility purposes any
period in which the individual was a nonresident alien and did not receive from
an Employer any earned income which constituted income from sources within the
United States. An Employee's Service shall include any Service which constitutes
Service with a predecessor Employer within the meaning of Section 414(a) of the
Code, provided, however, that Service with an acquired entity shall not be
considered Service under the Plan unless required by applicable law or agreed to
by the parties to such transaction. An Employee's Service shall also include any
Service with an entity which is not an Employer, but only either (i) for a
period after 1975 in which the other entity is a member of a controlled group of
corporations or is under common control with other trades and businesses within
the meaning of Section 414(b) or 414(c) of the Code, and a member of the
controlled group or one of the trades and businesses is an Employer, (ii) for a
period after 1979 in which the other entity is a member of an affiliated service
group within the meaning of Section 414(m) of the Code, and a member of the
affiliated service group is an Employer, or (iii) all Employers aggregated with
the Employer under Section 414(o) of the Code (but not until the Proposed
Regulations under Section 414(o) become effective). Notwithstanding any
provision of this Plan to the contrary, contributions, benefits and service
credit with respect to qualified military service will be provided in accordance
with Section 414(u) of the Code.
"Spouse" means the individual, if any, to whom a Participant is
lawfully married on the date benefit payments to the Participant are to begin,
or on the date of the Participant's death, if earlier. A former Spouse shall be
treated as the Spouse or surviving Spouse to the extent provided under a
qualified domestic relations order as described in section 414(p) of the Code.
"Stock" means shares of the Company's voting common stock or preferred
stock meeting the requirements of Section 409(e)(3) of the Code issued by an
Employer which is a member of the same controlled group of corporations within
the meaning of Code Section 414(b).
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"Stock Fund" means that portion of the Trust Fund consisting of Stock.
"Stock Obligation" means an indebtedness arising from any extension of
credit to the Plan or the Trust which satisfies the requirements set forth in
Section 6.3 and which was obtained for any or all of the following purposes:
(i) to acquire qualifying Employer securities as defined in
Treasury Regulations (S)54.4975-12;
(ii) to repay such Stock Obligation; or
(iii) to repay a prior exempt loan.
"Trust" or "Trust Fund" means the trust fund created under this Plan.
"Trust Agreement" means the agreement between the Bank and the Trustee
concerning the Trust Fund. If any assets of the Trust Fund are held in a
co-mingled trust fund with assets of other qualified retirement plans, "Trust
Agreement" shall be deemed to include the trust agreement governing that
co-mingled trust fund. With respect to the allocation of investment
responsibility for the assets of the Trust Fund, the provisions of Article II of
the Trust Agreement are incorporated herein by reference.
"Trustee" means one or more corporate persons or individuals selected
from time to time by the Bank to serve as trustee or co-trustees of the Trust
Fund.
"Unallocated Stock Fund" means that portion of the Stock Fund
consisting of the Plan's holding of Stock which have been acquired in exchange
for one or more Stock obligations and which have not yet been allocated to the
Participant's Accounts in accordance with Section 4.2.
"Valuation Date" means the last day of the Plan Year and each other
date as of which the Committee shall determine the investment experience of the
Investment Fund and adjust the Participants' Accounts accordingly.
"Valuation Period" means the period following a Valuation Date and
ending with the next Valuation Date.
"Vesting Year" means a unit of Service credited to a Participant
pursuant to Section 9.2 for purposes of determining his vested interest in his
Account.
Section 3. Eligibility for Participation.
3.1 Initial Eligibility. An Eligible Employee shall enter the Plan
as of the Entry Date coincident with or next following the later of the
following dates:
(a) the last day of the Eligible Employee's first Eligibility
Year, and
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(b) the Eligible Employee's 18th birthday. However, if an
Eligible Employee is not in active Service with an Employer on the date
he would otherwise first enter the Plan, his entry shall be deferred
until the next day he is in Service.
3.2 Definition of Eligibility Year. An "Eligibility Year" means
an applicable eligibility period (as defined below) in which the Eligible
Employee has completed 1,000 Hours of Service for the Employer. For this
purpose:
(a) an Eligible Employee's first "eligibility period" is the
12-consecutive month period beginning on the first day on which he has
an Hour of Service, and
(b) his subsequent eligibility periods will be 12-consecutive
month periods beginning on each January 1 after that first day of
Service.
3.3 Terminated Employees. No Employee shall have any interest or
rights under this Plan if he is never in active Service with an Employer on or
after the Effective Date.
3.4 Certain Employees Ineligible.
(a) No Employee shall participate in the Plan while his
Service is covered by a collective bargaining agreement between an
Employer and the Employee's collective bargaining representative if (i)
retirement benefits have been the subject of good faith bargaining
between the Employer and the representative and (ii) the collective
bargaining agreement does not provide for the Employee's participation
in the Plan.
(b) Leased Employees are not eligible to participate in the
Plan.
(c) An Eligible Employee may elect not to participate in the
Plan, provided, however, such election is made solely to meet the
requirements of Code Section 409(n). For an election to be effective
for a particular Plan Year, the Eligible Employee or Participant must
file the election in writing with the Plan Administrator no later than
the last day of the Plan Year for which the election is to be
effective. The Employer may not make a contribution under the Plan for
the Eligible Employee or for the Participant for the Plan Year for
which the election is effective, nor for any succeeding Plan Year,
unless the Eligible Employee or Participant re-elects to participate in
the Plan. The Eligible Employee or Participant may elect again not to
participate, but not earlier than the first Plan Year following the
Plan Year in which the re-election was first effective.
3.5 Participation and Reparticipation. Subject to the satisfaction
of the foregoing requirements, an Eligible Employee shall participate in the
Plan during each period of his Service from the date on which he first becomes
eligible until his termination. For this purpose, an Eligible Employee who
returns before five (5) consecutive Breaks in Service who previously satisfied
the initial eligibility requirements or who returns after five (5) consecutive
one year Breaks in Service with a vested Account balance in the Plan shall
re-enter the Plan as of the date of his return to Service with an Employer.
3.6 Omission of Eligible Employee. If, in any Plan Year, any
Eligible Employee who should be included as a Participant in the Plan is
erroneously omitted and discovery of such omission is not made until after a
contribution by his Employer for the year has been made, the Employer shall make
a subsequent
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contribution with respect to the omitted Eligible Employee in the amount which
the said Employer would have contributed regardless of whether or not it is
deductible in whole or in part in any taxable year under applicable provisions
of the Code.
Section 4. Contributions and Credits.
4.1 Discretionary Contributions. The Employer shall from time to
time contribute, with respect to a Plan Year, such amounts as it may determine
from time to time. The Employer shall have no obligation to contribute any
amount under this Plan except as so determined in its sole discretion. The
Employer's contributions and available forfeitures for a Plan Year shall be
credited as of the last day of the year to the Accounts of the Active
Participants in proportion to their amounts of 415 Compensation earned during
that portion of the Plan Year that such persons are Participants in the Plan.
4.2 Contributions for Stock Obligations. If the Trustee, upon
instructions from the Committee, incurs any Stock Obligation upon the purchase
of Stock, the Employer may contribute for each Plan Year an amount sufficient to
cover all payments of principal and interest as they come due under the terms of
the Stock Obligation. If there is more than one Stock Obligation, the Employer
shall designate the one to which any contribution is to be applied. Investment
earnings realized on Employer contributions and any dividends paid by the
Employer on Stock held in the Unallocated Stock Account, shall be applied to the
Stock Obligation related to that Stock, subject to Section 7.2.
In each Plan Year in which Employer contributions, earnings on
contributions, or dividends on unallocated Stock are used as payments under a
Stock Obligation, a certain number of shares of the Stock acquired with that
Stock Obligation which is then held in the Unallocated Stock Fund shall be
released for allocation among the Participants. The number of shares released
shall bear the same ratio to the total number of those shares then held in the
Unallocated Stock Fund (prior to the release) as (i) the principal and interest
payments made on the Stock Obligation in the current Plan Year bears to (ii) the
sum of (i) above, and the remaining principal and interest payments required (or
projected to be required on the basis of the interest rate in effect at the end
of the Plan Year) to satisfy the Stock Obligation.
At the direction of the Committee, the current and projected payments
of interest under a Stock Obligation may be ignored in calculating the number of
shares to be released in each year if (i) the Stock Obligation 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 10 years, (ii)
the interest included in any payment is ignored only to the extent that it would
be determined to be interest under standard loan amortization tables, and (iii)
the term of the Stock Obligation, by reason of renewal, extension, or
refinancing, has not exceeded 10 years from the original acquisition of the
Stock.
4.3 Conditions as to Contributions. Employers' contributions shall
in all events be subject to the limitations set forth in Section 5.
Contributions may be made in the form of cash, or securities and other property
to the extent permissible under ERISA, including Stock, and shall be held by the
Trustee in accordance with the Trust Agreement. In addition to the provisions of
Section 13.3 for the return of an Employer's contributions in connection with a
failure of the Plan to qualify initially under the Code, any amount contributed
by an Employer due to a good faith mistake of fact, or based upon a good faith
but erroneous determination of its deductibility under Section 404 of the Code,
shall be returned to the Employer within one year after the date on which the
contribution was originally made, or within one year after its nondeductibility
has been finally determined. However, the amount to be returned shall be reduced
to take
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of any adverse investment experience within the Trust Fund in order that the
balance credited to each Participant's Account is not less that it would have
been if the contribution had never been made.
4.4 Rollover Contributions. This Plan shall not accept a direct
rollover or rollover contribution of an "eligible rollover distribution" as such
term is defined in Section 10.9-1 of the Plan.
Section 5. Limitations on Contributions and Allocations.
5.1 Limitation on Annual Additions. Notwithstanding anything herein to
the contrary, allocation of Employer contributions for any Plan Year shall be
subject to the following:
5.1-1 If allocation of Employer contributions in accordance with
Section 4.1 will result in an allocation of more than one-third the
total contributions for a Plan Year to the Accounts of Highly Paid
Employees, then allocation of such amount shall be adjusted so that
such excess will not occur.
5.1-2 After adjustment, if any, required by the preceding
paragraph, the annual additions during any Plan Year to any
Participant's Account under this and any other defined contribution
plans maintained by the Employer or an affiliate (within the purview of
Section 414(b), (c) and (m) and Section 415(h) of the Code, which
affiliate shall be deemed the Employer for this purpose) shall not
exceed the lesser of $40,000 (or such other dollar amount which results
from cost-of-living adjustments under Section 415(d) of the Code) (the
"dollar limitation") or 100 percent of the Participant's 415
Compensation for such limitation year (the "percentage limitation").
The percentage limitation shall not apply to any contribution for
medical benefits after separation from service (within the meaning of
Section 401(h) or Section 419A(f)(2) of the Code) which is otherwise
treated as an annual addition. In the event that annual additions
exceed the aforesaid limitations, they shall be reduced in the
following priority:
(i) Any excess amount at the end of the Plan Year that cannot be
allocated to the Participant's Account shall be reallocated to the
remaining Participants who are eligible for an allocation of Employer
contributions for the Plan Year. The reallocation shall be made in
accordance with Section 4.1 of the Plan as if the Participant whose
Account otherwise would receive the excess amount is not eligible for
an allocation of Employer contributions.
(ii) If the allocation or reallocation of the excess amounts
causes the limitations of Code section 415 to be exceeded with respect
to each Participant for the limitation year, then the excess amount
will be held unallocated in a suspense account. The suspense account
will be applied to reduce future Employer contributions for all
remaining Participants in the next limitation year and each succeeding
limitation year if necessary.
(iii) If a suspense account is in existence at any time during a
limitation year, it will not participate in any allocation of
investment gains and losses. All amounts held in suspense accounts must
be allocated to Participants' Accounts before any contributions may be
made to the Plan for the limitation year.
(iv) If a suspense account exists at the time of Plan termination,
amounts held in the suspense account that cannot be allocated shall
revert to the Employer.
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5.1-3 For purposes of this Section 5.1, the "annual addition" to a
Participant's Accounts means the sum of (i) Employer contributions,
(ii) Employee contributions, if any, and (iii) forfeitures. Annual
additions to a defined contribution plan also include amounts
allocated, after March 31, 1984, to an individual medical account, as
defined in Section 415(l)(2) of the Internal Revenue Code, which is
part of a pension or annuity plan maintained by the Employer, amounts
derived from contributions paid or accrued after December 31, 1985, in
taxable years ending after such date, which are attributable to
post-retirement medical benefits allocated to the separate account of a
Key Employee under a welfare benefit fund, as defined in Section
419A(d) of the Internal Revenue Code, maintained by the Employer. For
these purposes, annual additions to a defined contribution plan shall
not include the allocation of the excess amounts remaining in the
Unallocated Stock Fund subsequent to a sale of stock from such fund in
accordance with a transaction described in Section 8.1 of the Plan.
5.1-4 Notwithstanding the foregoing, if no more than one-third of
the Employer contributions to the Plan for a year which are deductible
under Section 404(a)(9) of the Code are allocated to Highly Paid
Employees (within the meaning of Section 414(q) of the Internal Revenue
Code), the limitations imposed herein shall not apply to:
(i) forfeitures of Employer securities (within the meaning of
Section 409 of the Code) under the Plan if such securities were
acquired with the proceeds of a loan described in Section 404(a)(9)(A)
of the Code), or
(ii) Employer contributions to the Plan which are deductible
under Section 404(a)(9)(B) and charged against a Participant's Account.
5.1-5 If the Employer contributes amounts, on behalf of Eligible
Employees covered by this Plan, to other "defined contribution plans"
as defined in Section 3(34) of ERISA, the limitation on annual
additions provided in this Section shall be applied to annual additions
in the aggregate to this Plan and to such other plans. Reduction of
annual additions, where required, shall be accomplished first by
reductions under such other plan pursuant to the directions of the
named fiduciary for administration of such other plans or under
priorities, if any, established under the terms of such other plans and
then by allocating any remaining excess for this Plan in the manner and
priority set out above with respect to this Plan.
5.1-6 A limitation year shall mean each 12 consecutive month
period beginning each January 1.
5.2 Effect of Limitations. The Committee shall take whatever action
may be necessary from time to time to assure compliance with the limitations set
forth in Section 5.1. Specifically, the Committee shall see that each Employer
restrict its contributions for any Plan Year to an amount which, taking into
account the amount of available forfeitures, may be completely allocated to the
Participants consistent with those limitations. Where the limitations would
otherwise be exceeded by any Participant, further allocations to the Participant
shall be curtailed to the extent necessary to satisfy the limitations. Where an
excessive amount is contributed on account of a mistake as to one or more
Participants' compensation, or there is an amount of forfeitures which may not
be credited in the Plan Year in which it becomes available, the amount shall be
corrected in accordance with Section 5.1-2 of the Plan. If it is determined at
any time that the Committee and/or Trustee has erred in accepting and allocating
any contributions or forfeitures under this Plan, or in allocating net gain or
loss pursuant to Sections 8.2 and 8.3, then the Committee, in a uniform and
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nondiscriminatory manner, shall determine the manner in which such error shall
be corrected and shall promptly advise the Trustee in writing of such error and
of the method for correcting such error. The Accounts of any or all Participants
may be revised, if necessary, in order to correct such error.
5.3 Limitations as to Certain Participants. Aside from the limitations
set forth in Section 5.1, if the Plan acquires any Stock in a transaction as to
which a selling shareholder or the estate of a deceased shareholder is claiming
the benefit of Section 1042 of the Code, the Committee shall see that none of
such Stock, and no other assets in lieu of such Stock, are allocated to the
Accounts of certain Participants in order to comply with Section 409(n) of the
Code.
This restriction shall apply at all times to a Participant who owns
(taking into account the attribution rules under Section 318(a) of the Code,
without regard to the exception for employee plan trusts in Section
318(a)(2)(B)(i) more than 25 percent of any class of stock of a corporation
which issued the Stock acquired by the Plan, or another corporation within the
same controlled group, as defined in Section 409(l)(4) of the Code (any such
class of stock hereafter called a "Related Class"). For this purpose, a
Participant who owns more than 25 percent of any Related Class at any time
within the one year preceding the Plan's purchase of the Stock shall be subject
to the restriction as to all allocations of the Stock, but any other Participant
shall be subject to the restriction only as to allocations which occur at a time
when he owns more than 25 percent of any Related Class.
Further, this restriction shall apply to the selling shareholder
claiming the benefit of Section 1042 and any other Participant who is related to
such a shareholder within the meaning of Section 267(b) of the Code, during the
period beginning on the date of sale and ending on the later of (1) the date
that is ten years after the date of sale, or (2) the date of the Plan allocation
attributable to the final payment of acquisition indebtedness incurred in
connection with the sale.
This restriction shall not apply to any Participant who is a lineal
descendant of a selling shareholder if the aggregate amounts allocated under the
Plan for the benefit of all such descendants do not exceed five percent of the
Stock acquired from the shareholder.
5.4 Erroneous Allocations. No Participant shall be entitled to any
annual additions or other allocations to his Account in excess of those
permitted under Section 5. If it is determined at any time that the
administrator and/or Trustee have erred in accepting and allocating any
contributions or forfeitures under this Plan, or in allocating investment
adjustments, or in excluding or including any person as a Participant, then the
administrator, in a uniform and nondiscriminatory manner, shall determine the
manner in which such error shall be corrected and shall promptly advise the
Trustee in writing of such error and of the method for correcting such error.
The Accounts of any or all Participants may be revised, if necessary, in order
to correct such error.
Section 6. Trust Fund and Its Investment.
6.1 Creation of Trust Fund. All amounts received under the Plan from
Employers and investments shall be held as the Trust Fund pursuant to the terms
of this Plan and of the Trust Agreement between the Bank and the Trustee. The
benefits described in this Plan shall be payable only from the assets of the
Trust Fund, and none of the Bank, any other Employer, its board of directors or
trustees, its stockholders, its officers, its employees, the Committee, and the
Trustee shall be liable for payment of any benefit under this Plan except from
the Trust Fund.
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6.2 Stock Fund and Investment Fund. The Trust Fund held by the Trustee
shall be divided into the Stock Fund, consisting entirely of Stock, and the
Investment Fund, consisting of all assets of the Trust other than Stock. The
Trustee shall have no investment responsibility for the Stock Fund, but shall
accept any Employer contributions made in the form of Stock, and shall acquire,
sell, exchange, distribute, and otherwise deal with and dispose of Stock in
accordance with the instructions of the Committee. The Trustee shall have full
responsibility for the investment of the Investment Fund, except to the extent
such responsibility may be delegated from time to time to one or more investment
managers pursuant to Section 2.3 of the Trust Agreement, or to the extent the
Committee directs the Trustee to purchase Stock with the assets in the
Investment Fund.
6.3 Acquisition of Stock. From time to time the Committee may, in its
sole discretion, direct the Trustee to acquire Stock from the issuing Employer
or from shareholders, including shareholders who are or have been Employees,
Participants, or fiduciaries with respect to the Plan. The Trustee shall pay for
such Stock no more than its fair market value, which shall be determined
conclusively by the Committee pursuant to Section 12.4. The Committee may direct
the Trustee to finance the acquisition of Stock by incurring or assuming
indebtedness to the seller or another party which indebtedness shall be called a
"Stock Obligation." The term "Stock Obligation" shall refer to a loan made to
the Plan by a disqualified person within the meaning of Section 4975(e)(2) of
the Code, or a loan to the Plan which is guaranteed by a disqualified person. A
Stock Obligation includes a direct loan of cash, a purchase-money transaction,
and an assumption of an obligation of a tax-qualified employee stock ownership
plan under Section 4975(e)(7) of the Code ("ESOP"). For these purposes, the term
"guarantee" shall include an unsecured guarantee and the use of assets of a
disqualified person as collateral for a loan, even though the use of assets may
not be a guarantee under applicable state law. An amendment of a Stock
Obligation in order to qualify as an "exempt loan" is not a refinancing of the
Stock Obligation or the making of another Stock Obligation. The term "exempt
loan" refers to a loan that satisfies the provisions of this paragraph. A
"non-exempt loan" fails to satisfy this paragraph. Any Stock Obligation shall be
subject to the following conditions and limitations:
6.3-1 A Stock Obligation shall be for a specific term, shall
not be payable on demand except in the event of default, and shall bear
a reasonable rate of interest.
6.3-2 A Stock Obligation may, but need not, be secured by a
collateral pledge of either the Stock acquired in exchange for the
Stock Obligation, or the Stock previously pledged in connection with a
prior Stock Obligation which is being repaid with the proceeds of the
current Stock Obligation. No other assets of the Plan and Trust may be
used as collateral for a Stock Obligation, and no creditor under a
Stock Obligation shall have any right or recourse to any Plan and Trust
assets other than Stock remaining subject to a collateral pledge.
6.3-3 Any pledge of Stock to secure a Stock Obligation must
provide for the release of pledged Stock in connection with payments on
the Stock obligations in the ratio prescribed in Section 4.2.
6.3-4 Repayments of principal and interest on any Stock
Obligation shall be made by the Trustee only from Employer cash
contributions designated for such payments, from earnings on such
contributions, and from cash dividends received on Stock, in the last
case, however, subject to the further requirements of Section 7.2.
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6.3-5 In the event of default of a Stock Obligation, the value
of Plan assets transferred in satisfaction of the Stock Obligation must
not exceed the amount of the default. If the lender is a disqualified
person within the meaning of Section 4975 of the Code, a Stock
Obligation must provide for a transfer of Plan assets upon default only
upon and to the extent of the failure of the Plan to meet the payment
schedule of said Stock Obligation. For purposes of this paragraph, the
making of a guarantee does not make a person a lender.
6.4 Participants' Option to Diversify. The Committee shall provide for
a procedure under which each Participant may, during the qualified election
period, elect to "diversify" a portion of the Employer Stock allocated to his
Account, as provided in Section 401(a)(28)(B) of the Code. An election to
diversify must be made on the prescribed form and filed with the Committee
within the period specified herein. For each of the first five (5) Plan years in
the qualified election period, the Participant may elect to diversify an amount
which does not exceed 25% of the number of shares allocated to his Account since
the inception of the Plan, less all shares with respect to which an election
under this Section has already been made. For the last year of the qualified
election period, the Participant may elect to have up to 50 percent of the value
of his Account committed to other investments, less all shares with respect to
which an election under this Section has already been made. The term "qualified
election period" shall mean the six (6) Plan Year period beginning with the
first Plan Year in which a Participant has both attained age 55 and completed 10
years of participation in the Plan. A Participant's election to diversify his
Account may be made within each year of the qualified election period and shall
continue for the 90-day period immediately following the last day of each year
in the qualified election period. Once a Participant makes such election, the
Plan must complete diversification in accordance with such election within 90
days after the end of the period during which the election could be made for the
Plan Year. In the discretion of the Committee, the Plan may satisfy the
diversification requirement by any of the following methods:
6.4-1 The Plan may distribute all or part of the amount subject to
the diversification election.
6.4-2 The Plan may offer the Participant at least three other
distinct investment options, if available under the Plan. The other
investment options shall satisfy the requirements of Regulations under
Section 404(c) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA").
6.4-3 The Plan may transfer the portion of the Participant's
Account subject to the diversification election to another qualified
defined contribution plan of the Employer that offers at least three
investment options satisfying the requirements of the Regulations under
Section 404(c) of ERISA.
Section 7. Voting Rights and Dividends on Stock.
7.1 Voting and Tendering of Stock. The Trustee generally shall vote all
shares of Stock held under the Plan in accordance with the written instructions
of the Committee. However, if any Employer has registration-type class of
securities within the meaning of Section 409(e)(4) of the Code, or if a matter
submitted to the holders of the Stock involves a merger, consolidation,
recapitalization, reclassification, liquidation, dissolution, or sale of
substantially all assets of an entity, then (i) the shares of Stock which have
been allocated to Participants' Accounts shall be voted by the Trustee in
accordance with the Participants' written instructions, and (ii) the Trustee
shall vote any unallocated Stock and allocated Stock for which it has received
no voting instructions in the same proportions as it votes the allocated Stock
for which it has received
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instructions from Participants; provided, however, that if an exempt loan, as
defined in Section 4975(d) of the Code, is outstanding and the Plan is in
default on such exempt loan, as default is defined in the loan documents, then
to the extent that such loan documents require the lender to exercise voting
rights with respect to the unallocated shares, the loan documents will prevail.
In the event no shares of Stock have been allocated to Participants' Accounts at
the time Stock is to be voted and any exempt loan which may be outstanding is
not in default, each Participant shall be deemed to have one share of Stock
allocated to his or her Account for the sole purpose of providing the Trustee
with voting instructions.
Notwithstanding any provision hereunder to the contrary, all
unallocated shares of Stock must be voted by the Trustee in a manner determined
by the Trustee to be for the exclusive benefit of the Participants and
Beneficiaries. Whenever such voting rights are to be exercised, the Employers
shall provide the Trustee, in a timely manner, with the same notices and other
materials as are provided to other holders of the Stock, which the Trustee shall
distribute to the Participants. The Participants shall be provided with adequate
opportunity to deliver their instructions to the Trustee regarding the voting of
Stock allocated to their Accounts. The instructions of the Participants' with
respect to the voting of allocated shares hereunder shall be confidential.
7.1-1 In the event of a tender offer, Stock shall be tendered by
the Trustee in the same manner as set forth above with respect to the
voting of Stock. Notwithstanding any provision hereunder to the
contrary, Stock must be tendered by the Trustee in a manner determined
by the Trustee to be for the exclusive benefit of the Participants and
Beneficiaries.
7.2 Dividends on Stock. Dividends on Stock which are received by the
Trustee in the form of additional Stock shall be retained in the Stock Fund, and
shall be allocated among the Participant's Accounts and the Unallocated Stock
Fund in accordance with their holdings of the Stock on which the dividends have
been paid. Dividends on Stock credited to Participants' Accounts which are
received by the Trustee in the form of cash shall, at the direction of the
Employer paying the dividends, either (i) be credited to the Accounts in
accordance with Section 8.3 and invested as part of the Investment Fund, (ii) be
distributed immediately to the Participants in proportion with the Participants'
Stock Fund Account balance (iii) be distributed to the Participants within 90
days of the close of the Plan Year in which paid in proportion with the
Participants' Stock Fund Account balance or (iv) be used to make payments on the
Stock Obligation. If dividends on Stock allocated to a Participant's Account are
used to repay the Stock Obligation, Stock with a fair market value equal to the
dividends so used must be allocated to such Participant's Account in lieu of the
dividends. Dividends on Stock held in the Unallocated Stock Fund which are
received by the Trustee in the form of cash shall be allocated to Participants'
Investment Fund Accounts (pro rata based on the Participant's Account balance in
relation to all Participants' Account balances) and shall be applied as soon as
practicable to payments of principal and interest under the Stock Obligation
incurred with the purchase of the Stock.
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Section 8. Adjustments to Accounts.
8.1 Adjustments for Transactions. An Employer contribution pursuant to
Section 4.1 shall be credited to the Participants' Accounts as of the last day
of the Plan Year for which it is contributed, in accordance with Section 4.1.
Stock released from the Unallocated Stock Fund upon the Trust's repayment of a
Stock Obligation pursuant to Section 4.2 shall be credited to the Participants'
Accounts as of the last day of the Plan Year in which the repayment occurred,
pro rata based on the cash applied from such Participant's Account relative to
the cash applied from all Participants' Accounts. Any excess amounts remaining
in the suspense account following a sale of Stock from the Unallocated Stock
Fund to repay a Stock Obligation shall be allocated as of the last day of the
Plan Year in which the repayment occurred among the Participants' Accounts in
proportion to 415 Compensation. Any benefit which is paid to a Participant or
Beneficiary pursuant to Section 10 shall be charged to the Participant's Account
as of the first day of the Valuation Period in which it is paid. Any forfeiture
or restoral shall be charged or credited to the Participant's Account as of the
first day of the Valuation Period in which the forfeiture or restoral occurs
pursuant to Section 9.6.
8.2 Valuation of Investment Fund. As of each Valuation Date, the
Trustee shall prepare a balance sheet of the Investment Fund, recording each
asset (including any contribution receivable from an Employer) and liability at
its fair market value. Any liability with respect to short positions or options
and any item of accrued income or expense and unrealized appreciation or
depreciation shall be included; provided, however, that such an item may be
estimated or excluded if it is not readily ascertainable unless estimating or
excluding it would result in a material distortion. The Committee shall then
determine the net gain or loss of the Investment Fund since the preceding
Valuation Date, which shall mean the entire income of the Investment Fund,
including realized and unrealized capital gains and losses, net of any expenses
to be charged to the general Investment Fund and excluding any contributions by
the Employer. The determination of gain or loss shall be consistent with the
balance sheets of the Investment Fund for the current and preceding Valuation
Dates.
8.3 Adjustments for Investment Experience. Any net gain or loss of the
Investment Fund during a Valuation Period, as determined pursuant to Section
8.2, shall be allocated as of the last day of the Valuation Period among the
Participants' Accounts in proportion to the opening balance in each Account, as
adjusted for benefit payments and forfeitures during the Valuation Period,
without regard to whatever Stock may be credited to an Account. Any cash
dividends received on Stock credited to Participant's Accounts shall be
allocated as of the last day of the Valuation Period among the Participants'
Accounts based on the opening balance in each Participant's Stock Fund Account.
Section 9. Vesting of Participants' Interests.
9.1 Deferred Vesting in Accounts. A Participant's vested interest in
his Account shall be based on his Vesting Years in accordance with the following
table, subject to the balance of this Section 9:
Vesting Percentage of
Years ........ Interest Vested
----- ---------------
Fewer than 5 0%
5 or more 100%
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9.2 Computation of Vesting Years. For purposes of this Plan, a "Vesting
Year" means generally a Plan Year in which an Eligible Employee has at least
1,000 Hours of Service, beginning with the first Plan Year in which the Eligible
Employee has completed an Hour of Service with the Employer, and including
Service with other Employers as provided in the definition of "Service."
Notwithstanding the above, an Eligible Employee who was employed with the Bank
in its pre-conversion mutual form (the "Mutual Bank") shall receive credit for
vesting purposes for each calendar year of continuous employment with the Mutual
Bank in which such Eligible Employee completed 1,000 Hours of Service (such
years shall also be referred to as "Vesting Years"). However, a Participant's
Vesting Years shall be computed subject to the following conditions and
qualifications:
9.2-1 A Participant's Vesting Years shall not include any Service
prior to the date on which an Eligible Employee attains age 18.
9.2-2 A Participant's vested interest in his Account accumulated
before five (5) consecutive Breaks in Service shall be determined
without regard to any Service after such five consecutive Breaks in
Service. Further, if a Participant has five (5) consecutive Breaks in
Service before his interest in his Account has become vested to some
extent, pre-Break years of Service shall not be required to be taken
into account for purposes of determining his post-Break vested
percentage.
9.2-3 In the case of a Participant who has 5 or more consecutive
1-year Breaks in Service, the Participant's pre-Break Service will count
in vesting of the Employer-derived post-break accrued benefit only if
either:
(i) such Participant has any nonforfeitable interest in the
accrued benefit attributable to Employer contributions at the time of
separation from Service, or
(ii) upon returning to Service the number of consecutive 1-year
Breaks in Service is less than the number of years of Service.
9.2-4 Notwithstanding any provision of the Plan to the contrary,
effective January 1, 1998, calculation of service for determining
Vesting Years with respect to qualified military service will be
provided in accordance with Section 414(u) of the Code.
9.2-5 If any amendment changes the vesting schedule, including an
automatic change to or from a top-heavy vesting schedule, any
Participant with three (3) or more Vesting Years may, by filing a
written request with the Employer, elect to have his vested percentage
computed under the vesting schedule in effect prior to the amendment.
The election period must begin not later than the later of sixty (60)
days after the amendment is adopted, the amendment becomes effective, or
the Participant is issued written notice of the amendment by the
Employer or the Committee.
9.3 Full Vesting Upon Certain Events.
9.3-1 Notwithstanding Section 9.1, a Participant's interest in his
Account shall fully vest on the Participant's Normal Retirement Date.
The Participant's interest shall also fully vest in the event that his
Service is terminated by Early Retirement, Disability or by death.
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9.3-2 The Participant's interest in his Account shall also fully
vest in the event of a "Change in Control" of the Bank, or the Company.
For these purposes, "Change in Control" shall mean a change in control
of a nature that: (i) would be required to be reported in response to
Item 1(a) of the current report on Form 8-K, as in effect on the date
hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 (the "Exchange Act"); or (ii) results in a Change in Control of
the Bank or the Company within the meaning of the Home Owners Loan Act,
as amended ("HOLA"), and applicable rules and regulations promulgated
thereunder, as in effect at the time of the Change in Control; or (iii)
without limitation such a Change in Control shall be deemed to have
occurred at such time as (a) any "person" (as the term is used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the
"beneficial owner"(as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 25% or
more of the combined voting power of Company's outstanding securities
except for any securities purchased by the Bank's employee stock
ownership plan or trust; or (b) individuals who constitute the Board on
the date hereof (the "Incumbent Board") cease for any reason to
constitute at least a majority thereof, provided that any person
becoming a director subsequent to the date hereof whose election was
approved by a vote of at least three-quarters of the directors
comprising the Incumbent Board, or whose nomination for election by the
Company's stockholders was approved by the same Nominating Committee
serving under an Incumbent Board, shall be, for purposes of this clause
(b), considered as though he were a member of the Incumbent Board; or
(c) a plan of reorganization, merger, consolidation, sale of all or
substantially all the assets of the Bank or the Company or similar
transaction in which the Bank or Company is not the surviving
institution occurs; or (d) a proxy statement soliciting proxies from
stockholders of the Company, by someone other than the current
management of the Company, seeking stockholder approval of a plan of
reorganization, merger or consolidation of the Company or similar
transaction with one or more corporations as a result of which the
outstanding shares of the class of securities then subject to the Plan
are to be exchanged for or converted into cash or property or securities
not issued by the Company; or (e) a tender offer is made for 25% or more
of the voting securities of the Company and the shareholders owning
beneficially or of record 25% or more of the outstanding securities of
the Company have tendered or offered to sell their shares pursuant to
such tender offer and such tendered shares have been accepted by the
tender offeror.
9.3-3 Upon a Change in Control described in 9.3-2, the Plan shall
be terminated and the Plan Administrator shall direct the Trustee to
sell a sufficient amount of Stock from the Unallocated Stock Fund to
repay any outstanding Stock Obligation in full. The proceeds of such
sale shall be used to repay such Stock Obligation. After repayment of
the Stock Obligation, all remaining shares in the Unallocated Stock Fund
(or the proceeds thereof, if applicable) shall be deemed to be earnings
and shall be allocated in accordance with the requirements of Section
8.1.
9.4 Full Vesting Upon Plan Termination. Notwithstanding Section 9.1, a
Participant's interest in his Account shall fully vest upon termination of this
Plan or upon the permanent and complete discontinuance of contributions by his
Employer. In the event of a partial termination, the interest of each affected
Participant shall fully vest with respect to that part of the Plan which is
terminated.
9.5 Forfeiture, Repayment, and Restoral. If a Participant's Service
terminates before his interest in his Account is fully vested, that portion
which has not vested shall be forfeited if he either (i) receives a distribution
of his entire vested interest pursuant to Section 10.1, or (ii) incurs a
one-year Break in Service. If a Participant's Service terminates prior to having
any portion of his Account become vested, such
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Participant shall be deemed to have received a distribution of his vested
interest immediately upon his termination of Service.
If a Participant who has suffered a forfeiture of the nonvested portion
of his Account returns to Service before he has five (5) consecutive Breaks in
Service, the nonvested portion shall be restored, provided that, if the
Participant had received a distribution of his vested Account balance, the
amount distributed shall be repaid prior to such restoral. The Participant may
repay such amount at any time within five years after he has returned to
Service. The amount repaid shall be credited to his Account at the time it is
repaid; an additional amount equal to that portion of his Account which was
previously forfeited shall be restored to his Account at the same time from
other Employees' forfeitures and, if such forfeitures are insufficient, from a
special contribution by his Employer for that year. If the Participant did not
receive a distribution of his vested Account balance, any forfeiture restored
shall include earnings that would have been credited to the Account but for the
forfeiture. A Participant who was deemed to have received a distribution of his
vested interest in the Plan shall have his Account restored as of the first day
on which he performs an Hour of Service after his return.
9.6 Accounting for Forfeitures. If a portion of a Participant's
Account is forfeited, Stock allocated to said Participant's Account shall be
forfeited only after other assets are forfeited. If interests in more than one
class of Stock have been allocated to a Participant's Account, the Participant
must be treated as forfeiting the same proportion of each class of Stock. A
forfeiture shall be charged to the Participant's Account as of the first day of
the first Valuation Period in which the forfeiture becomes certain pursuant to
Section 9.5. Except as otherwise provided in that Section, a forfeiture shall be
added to the contributions of the terminated Participant's Employer which are to
be credited to other Participants pursuant to Section 4.1 as of the last day of
the Plan Year in which the forfeiture becomes certain.
9.7 Vesting and Nonforfeitability. A Participant's interest in his
Account which has become vested shall be nonforfeitable for any reason.
Section 10. Payment of Benefits.
10.1 Benefits for Participants. For a Participant whose Service ends
for any reason, distribution will be made to or for the benefit of the
Participant or, in the case of the Participant's death, his Beneficiary, by
payment in a lump sum, in accordance with Section 10.2.
A deceased Participant's benefits shall be distributed to his Beneficiary in a
lump sum. Notwithstanding any provision to the contrary, if the value of a
Participant's vested Account balance at the time of any distribution, does not
equal or exceed $5,000, then such Participant's vested Account shall be
distributed in a lump sum within 60 days after the end of the Plan Year in which
employment terminates. If the value of a Participant's vested Account balance
is, or has ever been, in excess of $5,000, then his benefits shall not be paid
prior to the later of the time he has attained Normal Retirement or age 62
unless he elects an early payment date in a written election filed with the
Committee. A Participant may modify such an election at any time, provided any
new benefit payment date is at least 30 days after a modified election is
delivered to the Committee. Failure of a Participant to consent to a
distribution prior to the later of Normal Retirement or age 62 shall be deemed
to be an election to defer commencement of payment of any benefit under this
section.
10.2 Time for Distribution.
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10.2.1 If the Participant and, if applicable, with the consent
of the Participant's spouse, elects the distribution of the
Participant's Account balance in the Plan, distribution shall commence
as soon as practicable following his termination of Service, but no
later than one year after the close of the Plan Year:
(i) in which the Participant separates from service by
reason of attainment of Normal Retirement Age under the Plan,
Disability, or death; or
(ii) which is the fifth Plan Year following the year in
which the Participant resigns or is dismissed, unless he is reemployed
before such date.
10.2.2 Unless the Participant elects otherwise, the
distribution of the balance of a Participant's Account shall commence
not later than the 60th day after the latest of the close of the Plan
Year in which -
(i) the Participant attains the age of 65;
(ii) occurs the tenth anniversary of the year in which the
Participant commenced participation in the Plan; or
(iii) the Participant terminates his Service with the
Employer.
10.2.3 Notwithstanding anything to the contrary, (1) with
respect to a 5-percent owner (as defined in Code Section 416),
distribution of a Participant's Account shall commence (whether or not
he remains in the employ of the Employer) not later than the April 1 of
the calendar year next following the calendar year in which the
Participant attains age 70 1/2, and (2) with respect to all other
Participants, payment of a Participant's benefit will commence not
later than April 1 of the calendar year following the calendar year in
which the Participant attains age 70 1/2, or, if later, the year in
which the Participant retires. A Participant's benefit from that
portion of his Account committed to the Investment Fund shall be
calculated on the basis of the most recent Valuation Date before the
date of payment.
10.2.4 Distribution of a Participant's Account balance after
his death shall comply with the following requirements:
(i) If a Participant dies before his distributions have
commenced, distribution of his Account to his Beneficiary shall
commence not later than one year after the end of the Plan Year in
which the Participant died; however, if the Participant's Beneficiary
is his surviving Spouse, distributions may commence on the date on
which the Participant would have attained age 70 1/2. In either case,
distributions shall be completed within five years after they commence.
(ii) If the Participant dies after distribution has
commenced pursuant to Section 10.1.2 but before his entire interest in
the Plan has been distributed to him, then the remaining portion of
that interest shall, in accordance with Section 401(a)(9) of the Code,
be distributed at least as rapidly as under the method of distribution
being used under Section 10.1.2 at the date of his death.
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(iii) If a married Participant dies before his benefit
payments begin, then unless he has specifically elected otherwise the
Committee shall cause the balance in his Account to be paid to his
Spouse. No election by a married Participant of a different Beneficiary
shall be valid unless the election is accompanied by the Spouse's
written consent, which (i) must acknowledge the effect of the election,
(ii) must explicitly provide either that the designated Beneficiary may
not subsequently be changed by the Participant without the Spouse's
further consent, or that it may be changed without such consent, and
(iii) must be witnessed by the Committee, its representative, or a
notary public. (This requirement shall not apply if the Participant
establishes to the Committee's satisfaction that the Spouse may not be
located.)
10.3 Marital Status. The Committee, the Plan, the Trustee, and the
Employers shall be fully protected and discharged from any liability to the
extent of any benefit payments made as a result of the Committee's good faith
and reasonable reliance upon information obtained from a Participant and his
Employer as to his marital status.
10.4 Delay in Benefit Determination. If the Committee is unable to
determine the benefits payable to a Participant or Beneficiary on or before the
latest date prescribed for payment pursuant to Section 10.1 or 10.2, the
benefits shall in any event be paid within 60 days after they can first be
determined, with whatever makeup payments may be appropriate in view of the
delay.
10.5 Accounting for Benefit Payments. Any benefit payment shall be
charged to the Participant's Account as of the first day of the Valuation Period
in which the payment is made.
10.6 Options to Receive and Sell Stock. Unless ownership of
virtually all Stock is restricted to active Employees and qualified retirement
plans for the benefit of Employees pursuant to the certificates of incorporation
or by-laws of the Employers issuing Stock, a terminated Participant or the
Beneficiary of a deceased Participant may instruct the Committee to distribute
the Participant's entire vested interest in his Account in the form of Stock. In
that event, the Committee shall apply the Participant's vested interest in the
Investment Fund to purchase sufficient Stock from the Stock Fund or from any
owner of Stock to make the required distribution. In all other cases, the
Participant's vested interest in the Stock Fund shall be distributed in shares
of Stock, and his vested interest in the Investment Fund shall be distributed in
cash.
Any Participant who receives Stock pursuant to Section 10.1, and any
person who has received Stock from the Plan or from such a Participant by reason
of the Participant's death or incompetency, by reason of divorce or separation
from the Participant, or by reason of a rollover contribution described in
Section 402(a)(5) of the Code, shall have the right to require the Employer
which issued the Stock to purchase the Stock for its current fair market value
(hereinafter referred to as the "put right"). The put right shall be exercisable
by written notice to the Committee during the first 60 days after the Stock is
distributed by the Plan, and, if not exercised in that period, during the first
60 days in the following Plan Year after the Committee has communicated to the
Participant its determination as to the Stock's current fair market value.
However, the put right shall not apply to the extent that the Stock, at the time
the put right would otherwise be exercisable, may be sold on an established
market in accordance with federal and state securities laws and regulations.
Similarly, the put option shall not apply with respect to the portion of a
Participant's Account which the Employee elected to have reinvested under Code
Section 401(a)(28)(B). If the put right is exercised, the Trustee may, if so
directed by the Committee in its sole discretion, assume the Employer's rights
and obligations with respect to purchasing the Stock. Notwithstanding anything
herein to the contrary, in the case
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of a plan established by a bank (as defined in Code Section 581), the put option
shall not apply if prohibited by a federal or state law and Participants are
entitled to elect their benefits be distributed in cash.
If a Participant elects to receive his distribution in the form of a
lump sum pursuant to Section 10.1.1 of the Plan, the Employer or the Trustee, as
the case may be, may elect to pay for the Stock in equal periodic installments,
not less frequently than annually, over a period not longer than five years from
the day after the put right is exercised, with adequate security and interest at
a reasonable rate on the unpaid balance, all such terms to be set forth in a
promissory note delivered to the seller with normal terms as to acceleration
upon any uncured default.
If a Participant elects to receive his distribution in the form of an
installment payment pursuant to Section 10.1.2 of the Plan, the Employer or the
Trustee, as the case may be, shall pay for the Stock distributed in the
installment distribution over a period which shall not exceed 30 days after the
exercise of the put right.
Nothing contained herein shall be deemed to obligate any Employer to
register any Stock under any federal or state securities law or to create or
maintain a public market to facilitate the transfer or disposition of any Stock.
The put right described herein may only be exercised by a person described in
the second preceding paragraph, and may not be transferred with any Stock to any
other person. As to all Stock purchased by the Plan in exchange for any Stock
Obligation, the put right shall be nonterminable. The put right for Stock
acquired through a Stock Obligation shall continue with respect to such Stock
after the Stock Obligation is repaid or the Plan ceases to be an employee stock
ownership plan.
10.7 Restrictions on Disposition of Stock. Except in the case of
Stock which is traded on an established market, a Participant who receives Stock
pursuant to Section 10.1, and any person who has received Stock from the Plan or
from such a Participant by reason of the Participant's death or incompetency, by
reason of divorce or separation from the Participant, or by reason of a rollover
contribution described in Section 402(a)(5) of the Code, shall, prior to any
sale or other transfer of the Stock to any other person, first offer the Stock
to the issuing Employer and to the Plan at the greater of (i) its current fair
market value, or (ii) the purchase price offered in good faith by an independent
third party purchaser. This restriction shall apply to any transfer, whether
voluntary, involuntary, or by operation of law, and whether for consideration or
gratuitous. Either the Employer or the Trustee may accept the offer within 14
days after it is delivered. Any Stock distributed by the Plan shall bear a
conspicuous legend describing the right of first refusal under this Section
10.7, as well as any other restrictions upon the transfer of the Stock imposed
by federal and state securities laws and regulations.
10.8 Continuing Loan Provisions; Creations of Protections and
Rights. Except as otherwise provided in Sections 10.6 and 10.7 and this Section,
no shares of Employer Stock held or distributed by the Trustee may be subject to
a put, call or other option, or buy-sell arrangement. The provisions of this
Section shall continue to be applicable to such Stock even if the Plan ceases to
be an employee stock ownership plan under Section 4975(e)(7) of the Code.
10.9 Direct Rollover of Eligible Distribution. A Participant or
distributee may elect, at the time and in the manner prescribed by the Trustee
or the Committee, to have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the Participant or
distributee in a direct rollover.
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10.9-1 An "eligible rollover" is any distribution that 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 Participant and the Participant's
Beneficiary, or for a specified period of ten years or more; any
distribution to the extent such distribution is required under Code
Section 401(a)(9); any hardship distribution described in Section
401(k)(2)(B)(i)(IV) of the Code; and the portion of any distribution
that is not included in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to employer
securities). A portion of a distribution shall not fail to be an
eligible rollover distribution merely because the portion consists of
after-tax employee contributions which are not includible in gross
income. However, such portion may be transferred only to an individual
retirement account or annuity described in section 408(a) or (b) of the
Code, or to a qualified defined contribution plan described in section
401(a) or 403(a) of the Code that agrees to separately accounting for
the portion of such distribution which is includible in gross income
and the portion of such distribution which is not so includible.
10.9-2 An "eligible retirement plan" is an individual
retirement account described in Code Section 408(a), an individual
retirement annuity described in Code Section 408(b), an annuity plan
described in Code Section 403(a), or a qualified trust described in
Code Section 401(a), that accepts the distributee's eligible rollover
distribution. In the case of distributions after December 31, 2001, an
eligible retirement plan shall also include an annuity contract
described in Section 403(b) of the Code and an eligible plan under
Section 457(b) of the Code which is maintained by a state, or any
agency or instrumentality of a state or political subdivision of a
state and which agrees to separately account for amounts transferred
into such plan from this Plan. In the case of an eligible rollover
distribution to a surviving Spouse, an eligible retirement plan is an
individual retirement account or individual retirement annuity.
10.9-3 A "direct rollover" is a payment by the Plan to the
eligible retirement plan specified by the distributee.
10.9-4 The term "distributee" shall refer to a deceased
Participant's Spouse or a Participant's former Spouse who is the
alternate payee under a qualified domestic relations order, as defined
in Code Section 414(p).
10.10 Waiver of 30-Day Period After Notice of Distribution. If a
distribution is one to which Sections 401(a)(11) and 417 of the Code do not
apply, such distribution may commence less than 30 days after the notice
required under Section 1.411(a)-11(c) of the Income Tax Regulations is given,
provided that:
(i) the Trustee or Committee, as applicable, clearly
informs the Participant that the Participant has a right to a period of
at least 30 days after receiving the notice to consider the decision of
whether or not to elect a distribution (and, if applicable, a
particular option), and
(ii) the Participant, after receiving the notice,
affirmatively elects a distribution.
Section 11. Rules Governing Benefit Claims and Review of Appeals.
11.1 Claim for Benefits. Any Participant or Beneficiary who
qualifies for the payment of benefits shall file a claim for his benefits with
the Committee on a form provided by the Committee. The claim,
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including any election of an alternative benefit form, shall be filed at least
30 days before the date on which the benefits are to begin. If a Participant or
Beneficiary fails to file a claim by the day before the date on which benefits
become payable, he shall be presumed to have filed a claim for payment for the
Participant's benefits in the standard form prescribed by Sections 10.1 or 10.2.
11.2 Notification by Committee. Within 90 days after receiving a claim
for benefits (or within 180 days, if special circumstances require an extension
of time and written notice of the extension is given to the Participant or
Beneficiary within 90 days after receiving the claim for benefits), the
Committee shall notify the Participant or Beneficiary whether the claim has been
approved or denied. If the Committee denies a claim in any respect, the
Committee shall set forth in a written notice to the Participant or Beneficiary:
(i) each specific reason for the denial;
(ii) specific references to the pertinent Plan provisions on
which the denial is based;
(iii) a description of any additional material or information
which could be submitted by the Participant or Beneficiary to support
his claim, with an explanation of the relevance of such information;
and
(iv) an explanation of the claims review procedures set forth in
Section 11.3.
11.3 Claims Review Procedure. Within 60 days after a Participant or
Beneficiary receives notice from the Committee that his claim for benefits has
been denied in any respect, he may file with the Committee a written notice of
appeal setting forth his reasons for disputing the Committee's determination. In
connection with his appeal the Participant or Beneficiary or his representative
may inspect or purchase copies of pertinent documents and records to the extent
not inconsistent with other Participants' and Beneficiaries' rights of privacy.
Within 60 days after receiving a notice of appeal from a prior determination (or
within 120 days, if special circumstances require an extension of time and
written notice of the extension is given to the Participant or Beneficiary and
his representative within 60 days after receiving the notice of appeal), the
Committee shall furnish to the Participant or Beneficiary and his
representative, if any, a written statement of the Committee's final decision
with respect to his claim, including the reasons for such decision and the
particular Plan provisions upon which it is based.
Section 12. The Committee and its Functions.
12.1 Authority of Committee. The Committee shall be the "plan
administrator" within the meaning of ERISA and shall have exclusive
responsibility and authority to control and manage the operation and
administration of the Plan, including the interpretation and application of its
provisions, except to the extent such responsibility and authority are otherwise
specifically (i) allocated to the Bank, the Employers, or the Trustee under the
Plan and Trust Agreement, (ii) delegated in writing to other persons by the
Bank, the Employers, the Committee, or the Trustee, or (iii) allocated to other
parties by operation of law. The Committee shall have exclusive responsibility
regarding decisions concerning the payment of benefits under the Plan. The
Committee shall have no investment responsibility with respect to the Investment
Fund except to the extent, if any, specifically provided in the Trust Agreement.
In the discharge of its duties, the Committee may employ accountants, actuaries,
legal counsel, and other agents (who also may be employed by an Employer or the
Trustee in the same or some other capacity) and may pay their reasonable
expenses and compensation.
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12.2 Identity of Committee. The Committee shall consist of three or
more individuals selected by the Bank. Any individual, including a director,
trustee, shareholder, officer, or Employee of an Employer, shall be eligible to
serve as a member of the Committee. The Bank shall have the power to remove any
individual serving on the Committee at any time without cause upon 10 days
written notice, and any individual may resign from the Committee at any time
upon 10 days written notice to the Bank. The Bank shall notify the Trustee of
any change in membership of the Committee.
12.3 Duties of Committee. The Committee shall keep whatever records may
be necessary to implement the Plan and shall furnish whatever reports may be
required from time to time by the Bank. The Committee shall furnish to the
Trustee whatever information may be necessary to properly administer the Trust.
The Committee shall see to the filing with the appropriate government agencies
of all reports and returns required of the Plan under ERISA and other laws.
Further, the Committee shall have exclusive responsibility and
authority with respect to the Plan's holdings of Stock and shall direct the
Trustee in all respects regarding the purchase, retention, sale, exchange, and
pledge of Stock and the creation and satisfaction of Stock Obligations. The
Committee shall at all times act consistently with the Bank's long-term
intention that the Plan, as an employee stock ownership plan, be invested
primarily in Stock. Subject to the direction of the board as to the application
of Employer contributions to Stock Obligations, and subject to the provisions of
Sections 6.4 and 10.6 as to Participants' rights under certain circumstances to
have their Accounts invested in Stock or in assets other than Stock, the
Committee shall determine in its sole discretion the extent to which assets of
the Trust shall be used to repay Stock Obligations, to purchase Stock, or to
invest in other assets to be selected by the Trustee or an investment manager.
No provision of the Plan relating to the allocation or vesting of any interests
in the Stock Fund or the Investment Fund shall restrict the Committee from
changing any holdings of the Trust, whether the changes involve an increase or a
decrease in the Stock or other assets credited to Participants' Accounts. In
determining the proper extent of the Trust's investment in Stock, the Committee
shall be authorized to employ investment counsel, legal counsel, appraisers, and
other agents and to pay their reasonable expenses and compensation.
12.4 Valuation of Stock. If the valuation of any Stock is not
established by reported trading on a generally recognized public market, the
Committee shall have the exclusive authority and responsibility to determine its
value for all purposes under the Plan, subject to the requirements of Code
Section 401(a)(28)(c). Such value shall be determined as of each Valuation Date,
and on any other date as of which the Plan purchases or sells such Stock. The
Committee shall use generally accepted methods of valuing stock of similar
corporations for purposes of arm's length business and investment transactions,
and in this connection the Committee shall obtain, and shall be protected in
relying upon, the valuation of such Stock as determined by an independent
appraiser experienced in preparing valuations of similar businesses.
12.5 Compliance with ERISA. The Committee shall perform all acts
necessary to comply with ERISA. Each individual member or employee of the
Committee shall discharge his duties in good faith and in accordance with the
applicable requirements of ERISA.
12.6 Action by Committee. All actions of the Committee shall be
governed by the affirmative vote of a number of members which is a majority of
the total number of members currently appointed, including vacancies.
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12.7 Execution of Documents. Any instrument executed by the Committee
shall be signed by any member or employee of the Committee.
12.8 Adoption of Rules. The Committee shall adopt such rules and
regulations of uniform applicability as it deems necessary or appropriate for
the proper administration and interpretation of the Plan.
12.9 Responsibilities to Participants. The Committee shall determine
which Employees qualify to enter the Plan. The Committee shall furnish to each
eligible Employee whatever summary plan descriptions, summary annual reports,
and other notices and information may be required under ERISA. The Committee
also shall determine when a Participant or his Beneficiary qualifies for the
payment of benefits under the Plan. The Committee shall furnish to each such
Participant or Beneficiary whatever information is required under ERISA (or is
otherwise appropriate) to enable the Participant or Beneficiary to make whatever
elections may be available pursuant to Sections 6 and 10, and the Committee
shall provide for the payment of benefits in the proper form and amount from the
assets of the Trust Fund. The Committee may decide in its sole discretion to
permit modifications of elections and to defer or accelerate benefits to the
extent consistent with applicable law and the best interests of the individuals
concerned.
12.10 Alternative Payees in Event of Incapacity. If the Committee finds
at any time that an individual qualifying for benefits under this Plan is a
minor or is incompetent, the Committee may direct the benefits to be paid, in
the case of a minor, to his parents, his legal guardian, or a custodian for him
under the Uniform Gifts to Minors Act, or, in the case of an incompetent, to his
spouse, or his legal guardian, the payments to be used for the individual's
benefit. The Committee and the Trustee shall not be obligated to inquire as to
the actual use of the funds by the person receiving them under this Section
12.10, and any such payment shall completely discharge the obligations of the
Plan, the Trustee, the Committee, and the Employers to the extent of the
payment.
12.11 Indemnification by Employers. Except as separately agreed in
writing, the Committee, and any member or employee of the Committee, shall be
indemnified and held harmless by the Employer, jointly and severally, to the
fullest extent permitted by ERISA, and subject to and conditioned upon
compliance with 12 C.F.R. Section 545.121, to the extent applicable, against any
and all costs, damages, expenses, and liabilities reasonably incurred by or
imposed upon it or him in connection with any claim made against it or him or in
which it or he may be involved by reason of its or his being, or having been,
the Committee, or a member or employee of the Committee, to the extent such
amounts are not paid by insurance.
12.12 Nonparticipation by Interested Member. Any member of the
Committee who also is a Participant in the Plan shall take no part in any
determination specifically relating to his own participation or benefits, unless
his abstention would leave the Committee incapable of acting on the matter.
Section 13. Adoption, Amendment, or Termination of the Plan.
13.1 Adoption of Plan by Other Employers. With the consent of the
Bank, any entity may become a participating Employer under the Plan by (i)
taking such action as shall be necessary to adopt the Plan, (ii) becoming a
party to the Trust Agreement establishing the Trust Fund, and (iii) executing
and delivering such instruments and taking such other action as may be necessary
or desirable to put the Plan into effect with respect to the entity's Employees.
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13.2 Plan Adoption Subject to Qualification. Notwithstanding any other
provision of the Plan, the adoption of the Plan and the execution of the Trust
Agreement are conditioned upon their being determined initially by the Internal
Revenue Service to meet the qualification requirements of Section 401(a) of the
Code, so that the Employers may deduct currently for federal income tax purposes
their contributions to the Trust and so that the Participants may exclude the
contributions from their gross income and recognize income only when they
receive benefits. In the event that this Plan is held by the Internal Revenue
Service not to qualify initially under Section 401(a), the Plan may be amended
retroactively to the earliest date permitted by U.S. Treasury Regulations in
order to secure qualification under Section 401(a). If this Plan is held by the
Internal Revenue Service not to qualify initially under Section 401(a) either as
originally adopted or as amended, each Employer's contributions to the Trust
under this Plan (including any earnings thereon) shall be returned to it and
this Plan shall be terminated. In the event that this Plan is amended after its
initial qualification and the Plan as amended is held by the Internal Revenue
Service not to qualify under Section 401(a), the amendment may be modified
retroactively to the earliest date permitted by U.S. Treasury Regulations in
order to secure approval of the amendment under Section 401(a).
13.3 Right to Amend or Terminate. The Bank intends to continue this
Plan as a permanent program. However, each participating Employer separately
reserves the right to suspend, supersede, or terminate the Plan at any time and
for any reason, as it applies to that Employer's Employees, and the Bank
reserves the right to amend, suspend, supersede, merge, consolidate, or
terminate the Plan at any time and for any reason, as it applies to the
Employees of each Employer. No amendment, suspension, supersession, merger,
consolidation, or termination of the Plan shall (i) reduce any Participant's or
Beneficiary's proportionate interest in the Trust Fund, (ii) reduce or restrict,
either directly or indirectly, the benefit provided any Participant prior to the
amendment, or (iii) divert any portion of the Trust Fund to purposes other than
the exclusive benefit of the Participants and their Beneficiaries prior to the
satisfaction of all liabilities under the Plan. Moreover, there shall not be any
transfer of assets to a successor plan or merger or consolidation with another
plan unless, in the event of the termination of the successor plan or the
surviving plan immediately following such transfer, merger, or consolidation,
each participant or beneficiary would be entitled to a benefit equal to or
greater than the benefit he would have been entitled to if the plan in which he
was previously a participant or beneficiary had terminated immediately prior to
such transfer, merger, or consolidation. Following a termination of this Plan by
the Bank, the Trustee shall continue to administer the Trust and pay benefits in
accordance with the Plan as amended from time to time and the Committee's
instructions.
Section 14. Miscellaneous Provisions.
14.1 Plan Creates No Employment Rights. Nothing in this Plan shall be
interpreted as giving any Employee the right to be retained as an Employee by an
Employer, or as limiting or affecting the rights of an Employer to control its
Employees or to terminate the Service of any Employee at any time and for any
reason, subject to any applicable employment or collective bargaining
agreements.
14.2 Nonassignability of Benefits. No assignment, pledge, or other
anticipation of benefits from the Plan will be permitted or recognized by the
Employer, the Committee, or the Trustee. Moreover, benefits from the Plan shall
not be subject to attachment, garnishment, or other legal process for debts or
liabilities of any Participant or Beneficiary, to the extent permitted by law.
This prohibition on assignment or alienation shall apply to any judgment,
decree, or order (including approval of a property settlement agreement) which
relates to the provision of child support, alimony, or property rights to a
present or former spouse, child or other dependent of a Participant pursuant to
a state domestic relations or community property law, unless the
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judgment, decree, or order is determined by the Committee to be a qualified
domestic relations order within the meaning of Section 414(p) of the Code, as
more fully set forth in Section 14.12 hereof.
14.3 Limit of Employer Liability. The liability of the Employer with
respect to Participants under this Plan shall be limited to making contributions
to the Trust from time to time, in accordance with Section 4.
14.4 Treatment of Expenses. All expenses incurred by the Committee and
the Trustee in connection with administering this Plan and Trust Fund shall be
paid by the Trustee from the Trust Fund to the extent the expenses have not been
paid or assumed by the Employer or by the Trustee.
14.5 Number and Gender. Any use of the singular shall be interpreted
to include the plural, and the plural the singular. Any use of the masculine,
feminine, or neuter shall be interpreted to include the masculine, feminine, or
neuter, as the context shall require.
14.6 Nondiversion of Assets. Except as provided in Sections 5.2 and
14.12, under no circumstances shall any portion of the Trust Fund be diverted to
or used for any purpose other than the exclusive benefit of the Participants and
their Beneficiaries prior to the satisfaction of all liabilities under the Plan.
14.7 Separability of Provisions. If any provision of this Plan is held
to be invalid or unenforceable, the other provisions of the Plan shall not be
affected but shall be applied as if the invalid or unenforceable provision had
not been included in the Plan.
14.8 Service of Process. The agent for the service of process upon the
Plan shall be the president of the Bank, or such other person as may be
designated from time to time by the Bank.
14.9 Governing State Law. This Plan shall be interpreted in accordance
with the laws of the State of Missouri to the extent those laws are applicable
under the provisions of ERISA.
14.10 Employer Contributions Conditioned on Deductibility. Employer
Contributions to the Plan are conditioned on deductibility under Code Section
404. In the event that the Internal Revenue Service shall determine that all or
any portion of an Employer Contribution is not deductible under that Section,
the nondeductible portion shall be returned to the Employer within one year of
the disallowance of the deduction.
14.11 Unclaimed Accounts. Neither the Employer nor the Trustees shall
be under any obligation to search for, or ascertain the whereabouts of, any
Participant or Beneficiary. The Employer or the Trustees, by certified or
registered mail addressed to his last known address of record with the Employer,
shall notify any Participant or Beneficiary that he is entitled to a
distribution under this Plan, and the notice shall quote the provisions of this
Section. If the Participant or Beneficiary fails to claim his benefits or make
his whereabouts known in writing to the Employer or the Trustees within seven
(7) calendar years after the date of notification, the benefits of the
Participant or Beneficiary under the Plan will be disposed of as follows:
(a) If the whereabouts of the Participant is unknown but the
whereabouts of the Participant's Beneficiary is known to the Trustees,
distribution will be made to the Beneficiary.
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(b) If the whereabouts of the Participant and his Beneficiary are
unknown to the Trustees, the Plan will forfeit the benefit, provided
that the benefit is subject to a claim for reinstatement if the
Participant or Beneficiary make a claim for the forfeited benefit.
Any payment made pursuant to the power herein conferred upon the
Trustees shall operate as a complete discharge of all obligations of the
Trustees, to the extent of the distributions so made.
14.12 Qualified Domestic Relations Order. Section 14.2 shall not apply
to a "qualified domestic relations order" defined in Code Section 414(p), and
such other domestic relations orders permitted to be so treated under the
provisions of the Retirement Equity Act of 1984. Further, to the extent provided
under a "qualified domestic relations order," a former Spouse of a Participant
shall be treated as the Spouse or surviving Spouse for all purposes under the
Plan.
In the case of any domestic relations order received by the Plan:
(a) The Employer or the Committee shall promptly notify the
Participant and any other alternate payee of the receipt of such order
and the Plan's procedures for determining the qualified status of
domestic relations orders, and
(b) Within a reasonable period after receipt of such order, the
Employer or the Committee shall determine whether such order is a
qualified domestic relations order and notify the Participant and each
alternate payee of such determination. The Employer or the Committee
shall establish reasonable procedures to determine the qualified status
of domestic relations orders and to administer distributions under such
qualified orders.
During any period in which the issue of whether a domestic relations
order is a qualified domestic relations order is being determined (by the
Employer or Committee, by a court of competent jurisdiction, or otherwise), the
Employer or the Committee shall segregate in a separate account in the Plan or
in an escrow account the amounts which would have been payable to the alternate
payee during such period if the order had been determined to be a qualified
domestic relations order. If within eighteen (18) months the order (or
modification thereof) is determined to be a qualified domestic relations order,
the Employer or the Committee shall pay the segregated amounts (plus any
interest thereon) to the person or persons entitled thereto. If within eighteen
(18) months it is determined that the order is not a qualified domestic
relations order, or the issue as to whether such order is a qualified domestic
relations order is not resolved, then the Employer or the Committee shall pay
the segregated amounts (plus any interest thereon) to the person or persons who
would have been entitled to such amounts if there had been no order. Any
determination that an order is a qualified domestic relations order which is
made after the close of the eighteen (18) month period shall be applied
prospectively only. The term "alternate payee" means any Spouse, former Spouse,
child or other dependent of a Participant who is recognized by a domestic
relations order as having a right to receive all, or a portion of, the benefit
payable under a Plan with respect to such Participant.
Section 15. Top-Heavy Provisions.
15.1 Top-Heavy Plan. This Plan is top-heavy if any of the following
conditions exist:
(a) If the top-heavy ratio for this Plan exceeds sixty percent
(60%) and this Plan is not part of any required aggregation group or
permissive aggregation group;
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(b) If this Plan is a part of a required aggregation group
(but is not part of a permissive aggregation group) and the aggregate
top-heavy ratio for the group of Plans exceeds sixty percent (60%); or
(c) If this Plan is a part of a required aggregation group
and part of a permissive aggregation group and the aggregate top-heavy
ratio for the permissive aggregation group exceeds sixty percent (60%).
15.2 Super Top-Heavy Plan This Plan will be a super top-heavy Plan
if any of the following conditions exist:
(a) If the top-heavy ratio for this Plan exceeds ninety
percent (90%) and this Plan is not part of any required aggregation
group or permissive aggregation group.
(b) If this Plan is a part of a required aggregation group
(but is not part of a permissive aggregation group) and the aggregate
top-heavy ratio for the group of Plans exceeds ninety percent (90%), or
(c) If this Plan is a part of a required aggregation group
and part of a permissive aggregation group and the aggregate top-heavy
ratio for the permissive aggregation group exceeds ninety percent
(90%).
15.3 Definitions.
In making this determination, the Committee shall use the following definitions
and principles:
15.3-1 The "Determination Date", with respect to the first
Plan Year of any plan, means the last day of that Plan Year, and with
respect to each subsequent Plan Year, means the last day of the
preceding Plan Year. If any other plan has a Determination Date which
differs from this Plan's Determination Date, the top-heaviness of this
Plan shall be determined on the basis of the other plan's Determination
Date falling within the same calendar years as this Plan's
Determination Date.
15.3-2 A "Key Employee" means any employee or former employee
(including any deceased employee) who at any time during the plan year
that includes the determination date was an officer of the employer
having annual compensation greater than $130,000 (as adjusted under
section 416(i)(1) of the Code for plan years beginning after December
31, 2002, a 5-percent owner of the employer, or a 1-percent owner of
the employer having annual compensation of more than $150,000. For this
purpose, annual compensation means compensation within the meaning of
section 415(c)(3) of the Code. The determination of who is a key
employee will be made in accordance with section 416(i)(1) of the Code
and the applicable regulations and other guidance of general
applicability issued thereunder.
15.3-3 A "Non-key Employee" means an Employee who at any time
during the five years ending on the top-heavy Determination Date for
the Plan Year has received compensation from an Employer and who has
never been a Key Employee, and the Beneficiary of any such Employee.
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15.3-4 A "required aggregation group" includes (a) each
qualified Plan of the Employer in which at least one Key Employee
participates in the Plan Year containing the Determination Date and (b)
any other qualified Plan of the Employer which enables a Plan described
in (a) to meet the requirements of Code Sections 401(a)(4) and 410. For
purposes of the preceding sentence, a qualified Plan of the Employer
includes a terminated Plan maintained by the Employer within the period
ending on the Determination Date. In the case of a required aggregation
group, each Plan in the group will be considered a top-heavy Plan if
the required aggregation group is a top-heavy group. No Plan in the
required aggregation group will be considered a top-heavy Plan if the
required aggregation group is not a top-heavy group. All Employers
aggregated under Code Sections 414(b), (c) or (m) or (o) (but only
after the Code Section 414(o) regulations become effective) are
considered a single Employer.
15.3-5 A "permissive aggregation group" includes the required
aggregation group of Plans plus any other qualified Plan(s) of the
Employer that are not required to be aggregated but which, when
considered as a group with the required aggregation group, satisfy the
requirements of Code Sections 401(a)(4) and 410 and are comparable to
the Plans in the required aggregation group. No Plan in the permissive
aggregation group will be considered a top-heavy Plan if the permissive
aggregation group is not a top-heavy group. Only a Plan that is part of
the required aggregation group will be considered a top-heavy Plan if
the permissive aggregation group is top-heavy.
15.4 Top-Heavy Rules of Application.
For purposes of determining the value of Account balances and
the present value of accrued benefits the following provisions shall apply:
15.4-1 The value of Account balances and the present value of
accrued benefits will be determined as of the most recent Valuation
Date that falls within or ends with the twelve (12) month period ending
on the Determination Date.
15.4-2 For purposes of testing whether this Plan is top-heavy,
the present value of an individual's accrued benefits and an
individual's Account balances is counted only once each year.
15.4-3 The Account balances and accrued benefits of a
Participant who is not presently a Key Employee but who was a Key
Employee in a Plan Year beginning on or after January 1, 1984 will be
disregarded.
15.4-4 Employer contributions attributable to a salary
reduction or similar arrangement will be taken into account. Employer
matching contributions also shall be taken into account for purposes of
satisfying the minimum contribution requirements of Section 416(c)(2)
of the Code and the Plan.
15.4-5 When aggregating Plans, the value of Account balances
and accrued benefits will be calculated with reference to the
Determination Dates that fall within the same calendar year.
15.4-6 The present values of accrued benefits and the amounts
of account balances of an employee as of the determination date shall
be increased by the distributions made with respect to the employee
under the plan and any plan aggregated with the plan under Section
416(g)(2) of the Code during the 1-year period ending on the
determination date. The preceding sentence shall also apply to
distributions under a terminated plan which, had it not been
terminated, would have been aggregated
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with the plan under Section 416(g)(2)(A)(i) of the Code. In the case of
a distribution made for a reason other than separation from service,
death, or disability, this provision shall be applied by substituting
"five (5) year period" for "one (1) year period."
15.4-7 Accrued benefits and Account balances of an individual
shall not be taken into account for purposes of determining the
top-heavy ratios if the individual has performed no services for the
Employer during the one (1) year period ending on the applicable
Determination Date. Compensation for purposes of this subparagraph
shall not include any payments made to an individual by the Employer
pursuant to a qualified or non-qualified deferred compensation plan.
15.4-8 The present value of the accrued benefits or the amount
of the Account balances of any Employee participating in this Plan
shall not include any rollover contributions or other transfers
voluntarily initiated by the Employee except as described below. If
this Plan transfers or rolls over funds to another Plan in a
transaction voluntarily initiated by the Employee, then this Plan shall
count the distribution for purposes of determining Account balances or
the present value of accrued benefits. A transfer incident to a merger
or consolidation of two or more Plans of the Employer (including Plans
of related Employers treated as a single Employer under Code Section
414), or a transfer or rollover between Plans of the Employer, shall
not be considered as voluntarily initiated by the Employee.
15.5 Minimum Contributions. For any Top-Heavy Year, each Employer
shall make a special contribution on behalf of each Participant to the extent
that the total allocations to his Account pursuant to Section 4 is less than the
lesser of:
(i) three percent of his 415 Compensation for that year, or
(ii) the highest ratio of such allocation to 415
Compensation received by any Key Employee for that year. For purposes
of the special contribution of this Section 15.2, a Key Employee's 415
Compensation shall include amounts the Key Employee elected to defer
under a qualified 401(k) arrangement. Such a special contribution shall
be made on behalf of each Participant who is employed by an Employer on
the last day of the Plan Year, regardless of the number of his Hours of
Service, and shall be allocated to his Account.
If the Employer maintains a qualified plan in addition to this Plan and
more than one such plan is determined to be Top-Heavy, a minimum contribution or
a minimum benefit shall be provided in one of such other plans, including a plan
that consists solely of a cash or deferred arrangement which meets the
requirements of Section 401(k)(12) of the Code and matching contributions with
respect to which the requirements of Section 401(m)(11) of the Code are met. If
the Employer has both a Top-Heavy defined benefit plan and a Top-Heavy defined
contribution plan and a minimum contribution is to be provided only in the
defined contribution plan, then the sum of the Employer contributions and
forfeitures allocated to the Account of each Non-key Employee shall be equal to
at least five percent (5%) of such Non-key Employee's 415 Compensation for that
year.
15.6 Minimum Vesting. For any Plan Year in which this Plan is
Top-Heavy, a Participant's vested interest in his Account shall be based on the
following "top-heavy table":
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Vesting Years Percentage of Interest Vested
------------- -----------------------------
Fewer than 3 years 0%
3 or more 100%
15.7 Top-Heavy Provisions Control in Top-Heavy Plan. In the event this
Plan becomes top-heavy and a conflict arises between the top-heavy provisions
herein set forth and the remaining provisions set forth in this Plan, the
top-heavy provisions shall control.
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