Exhibit 10.3
Employee Stock Ownership Plan
PSB HOLDING COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
Effective as of January 1, 1996
PSB HOLDING COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
TABLE OF CONTENTS
Page
PREAMBLE 1
ARTICLE I DEFINITION OF TERMS AND CONSTRUCTION
1.1 Definitions
(a) "Act" 2
(b) "Administrator" 2
(c) "Annual Additions" 2
(d) "Authorized Leave of Absence" 2
(e) "Beneficiary" 2
(f) "Board of Directors" 3
(g) "Break" 3
(h) "Code" 3
(i) "Compensation" 3
(j) "Date of Hire" 3
(k) "Disability" 4
(l) "Disability Retirement Date" 4
(m) "Early Retirement Date" 4
(n) "Effective Date" 4
(o) "Eligibility Period" 4
(p) "Employee" 4
(q) "Employer" 4
(r) "Employer Securities" 4
(s) "Entry Date" 5
(t) "Exempt Loan" 5
(u) "Former Participant" 5
(v) "Fund" 5
(w) "Hour of Service" 5
(x) "Investment Adjustments" 6
(y) "Limitation Year" 6
(z) "Normal Retirement Date" 6
(aa) "Participant" 6
(bb) "Plan" 6
(cc) "Plan Year" 6
(dd) "Qualified Domestic Relations Order" 6
(ee) "Retirement" 7
(ff) "Service" 7
(gg) "Sponsor" 7
(hh) "Trust Agreement" 7
(ii) "Trustee" 7
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Page
(jj) "Valuation Date" 7
(kk) "Year of Service" 7
1.2 Plurals and Gender 8
1.3 Incorporation of Trust Agreement 8
1.4 Headings 8
1.5 Severability 8
1.6 References to Governmental Regulations 8
ARTICLE II PARTICIPATION
2.1 Commencement of Participation 9
2.2 Termination of Participation 9
2.3 Resumption of Participation 9
2.4 Determination of Eligibility 10
ARTICLE III CREDITED SERVICE
3.1 Service Counted for Eligibility Purposes 11
3.2 Service Counted for Vesting Purposes 11
3.3 Credit for Pre-Break Service 11
3.4 Service Credit During Authorized Leaves 11
3.5 Service Credit During Maternity or
Paternity Leave 12
3.6 Ineligible Employees 12
ARTICLE IV CONTRIBUTIONS
4.1 Employee Stock Ownership Contributions 13
4.2 Time and Manner of Employee Stock Ownership
Contributions 13
4.3 Records of Contributions 14
4.4 Erroneous Contributions 14
ARTICLE V ACCOUNTS, ALLOCATIONS AND INVESTMENTS
5.1 Establishment of Separate Participant
Accounts 16
5.2 Establishment of Suspense Account 16
5.3 Allocation of Earnings, Losses and Expenses 17
5.4 Allocation of Forfeitures 17
5.5 Allocation of Annual Employee Stock
Ownership Contributions 17
5.6 Limitation on Annual Additions 18
5.7 Erroneous Allocations 21
5.8 Value of Participant's Interest in Fund 22
5.9 Investment of Account Balances 22
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Page
ARTICLE VI RETIREMENT, DEATH AND DESIGNATION
OF BENEFICIARY
6.1 Normal Retirement 23
6.2 Early Retirement 23
6.3 Disability Retirement 23
6.4 Death Benefits 23
6.5 Designation of Death Beneficiary and
Manner of Payment 24
ARTICLE VII VESTING AND FORFEITURES
7.1 Vesting on Death, Disability, Normal Retirement 25
7.2 Vesting on Termination of Participation 25
7.3 Disposition of Forfeitures 25
ARTICLE VIII EMPLOYEE STOCK OWNERSHIP RULES
8.1 Right to Demand Employer Securities 27
8.2 Voting Rights 27
8.3 Nondiscrimination in Employee Stock Owner-
ship Contributions 27
8.4 Dividends 28
8.5 Exempt Loans 28
8.6 Exempt Loan Payments 30
8.7 Put Option 31
8.8 Diversification Requirements 32
8.9 Independent Appraiser 32
ARTICLE IX PAYMENTS AND DISTRIBUTIONS
9.1 Payments on Termination of Service
- In General 33
9.2 Commencement of Payments 33
9.3 Mandatory Commencement of Benefits 34
9.4 Required Beginning Dates 36
9.5 Form of Payment 37
9.6 Payments Upon Termination of Plan 37
9.7 Distribution Pursuant to Qualified
Domestic Relations Orders 38
9.8 Cash-Out Distributions 38
9.9 ESOP Distribution Rules 39
9.10 Withholding 39
9.11 Waiver of 30-day Notice 40
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Page
ARTICLE X PROVISIONS RELATING TO TOP-HEAVY PLANS
10.1 Top-Heavy Rules to Control 41
10.2 Top-Heavy Plan Definitions 41
10.3 Calculation of Accrued Benefits 43
10.4 Determination of Top-Heavy Status 44
10.5 Determination of Super Top-Heavy Status 45
10.6 Minimum Contribution 45
10.7 Vesting 46
10.8 Maximum Benefit Limitation 47
ARTICLE XI ADMINISTRATION
11.1 Appointment of Administrator 48
11.2 Resignation or Removal of Administrator 48
11.3 Appointment of Successors: Terms of
Office, Etc. 48
11.4 Powers and Duties of Administrator 48
11.5 Action by Administrator 50
11.6 Participation by Administrators 50
11.7 Agents 50
11.8 Allocation of Duties 50
11.9 Delegation of Duties 50
11.10 Administrator's Action Conclusive 51
11.11 Compensation and Expenses of
Administrator 51
11.12 Records and Reports 51
11.13 Reports of Fund Open to Participants 51
11.14 Named Fiduciary 51
11.15 Information from Employer 52
11.16 Reservation of Rights by Employer 52
11.17 Liability and Indemnification 52
11.18 Service as Trustee and Administrator 53
ARTICLE XII CLAIMS PROCEDURE
12.1 Notice of Denial 54
12.2 Right to Reconsideration 54
12.3 Review of Documents 54
12.4 Decision by Administrator 54
12.5 Notice by Administrator 54
ARTICLE XIII AMENDMENTS, TERMINATION AND MERGER
13.1 Amendments 55
13.2 Consolidation, Merger or Other
Transactions of Employer 56
13.3 Consolidation or Merger of Trust 56
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Page
13.4 Bankruptcy or Insolvency of Employer 56
13.5 Voluntary Termination 57
13.6 Partial Termination of Plan or Permanent
Discontinuance of Contributions 57
ARTICLE XIV MISCELLANEOUS
14.1 No Diversion of Funds 58
14.2 Liability Limited 58
14.3 Incapacity 58
14.4 Spendthrift Clause 58
14.5 Benefits Limited to Fund 59
14.6 Cooperation of Parties 59
14.7 Payments Due Missing Persons 59
14.8 Governing Law 60
14.9 Nonguarantee of Employment 60
14.10 Counsel 60
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PSB HOLDING COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
PREAMBLE
Effective as of January 1, 1996, PSB Holding Company, a Delaware
corporation, (the "Sponsor"), has adopted the PSB Holding Company Employee Stock
Ownership Plan in order to enable Participants to share in the growth and
prosperity of the Sponsor and its wholly owned subsidiary, Preferred Savings
Bank, and to provide Participants with an opportunity to accumulate capital for
their future economic security by accumulating funds to provide retirement,
death and disability benefits. The Plan is a stock bonus plan designed to meet
the requirements of an employee stock ownership plan as described at Section
4975(e)(7) of the Code and Section 407(d)(6) of ERISA. The primary purpose of
the employee stock ownership plan is to invest in employer securities. The
Sponsor intends that the Plan will qualify under Sections 401(a) and 501(a) of
the Code and will comply with the provisions of ERISA. The Plan has been drafted
to comply with the Tax Reform Act of 1986, the Omnibus Budget Reconciliation Act
of 1986, the Omnibus Budget Reconciliation Act of 1987, the Technical and
Miscellaneous Revenue Act of 1988, the Revenue Reconciliation Act of 1989, and
the Omnibus Budget Reconciliation Act of 1993.
The terms of this Plan shall apply only with respect to Employees of
the Employer on and after January 1, 1996.
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ARTICLE I
DEFINITION OF TERMS AND CONSTRUCTION
1.1 Definitions.
Unless a different meaning is plainly implied by the context, the
following terms as used in this Plan shall have the following meanings:
(a) "Act" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, or any successor statute.
(b) "Administrator" shall mean the administrative committee
provided for in Article XI.
(c) "Annual Additions" shall mean, with respect to each Participant,
the sum of those amounts allocated to the Participant's accounts under this Plan
and under any other qualified defined contribution plan to which the Employer
contributes for any Limitation Year, consisting of the following:
(1) Employer contributions;
(2) Forfeitures; and
(3) Voluntary contributions (if any).
(d) "Authorized Leave of Absence" shall mean an absence from Service
with respect to which the Employee may or may not be entitled to Compensation
and which meets any one of the following requirements:
(1) Service in any of the armed forces of the United States
for up to 36 months, provided that the Employee resumes Service within 90 days
after discharge, or such longer period of time during which such Employee's
employment rights are protected by law; or
(2) Any other absence or leave expressly approved and granted
by the Employer which does not exceed 24 months, provided that the Employee
resumes Service at or before the end of such approved leave period. In approving
such leaves of absence, the Employer shall treat all Employees on a uniform and
nondiscriminatory basis.
(e) "Beneficiary" shall mean such persons as may be designated by the
Participant to receive benefits after the death of the Participant, or such
persons designated by the Administrator to receive benefits after the death of
the Participant, all as provided in Section 6.5.
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(f) "Board of Directors" shall mean the Board of Directors of
the Sponsor.
(g) "Break" shall mean a Plan Year during which an Employee fails to
complete more than 500 Hours of Service.
(h) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, or any successor statute.
(i) "Compensation" shall mean the amount of remuneration paid to an
Employee by the Employer, after the date on which the Employee becomes a
Participant, for services rendered to the Employer during a Plan Year, including
base salary, bonuses, overtime and commissions, and any amount of compensation
contributed pursuant to a salary reduction election under Code Section 401(k)
and any amount of compensation contributed to a cafeteria plan described at
Section 125 of the Code, but excluding amounts paid by the Employer or accrued
with respect to this Plan or any other qualified or non-qualified unfunded plan
of deferred compensation or other employee welfare plan to which the Employer
contributes, payments for group insurance, medical benefits, reimbursement for
expenses, and other forms of extraordinary pay, and excluding amounts accrued
for a prior year.
Notwithstanding the foregoing, for purposes of complying with Code Section 415,
a Participant's contributions to the 401(k) Plan and cafeteria plan shall not be
included in the Participant's compensation. Notwithstanding anything herein to
the contrary, the annual Compensation of each Participant taken into account
under the Plan for any Plan Year shall not exceed $150,000, as adjusted from
time to time in accordance with Section 415(d) of the Code. In determining the
compensation of a Participant for purposes of this limitation, the rules of
section 414(q)(6) of the Code shall apply, except in applying such rules, the
term "family" shall include only the spouse of the Participant and any lineal
descendants of the Participant who have not attained age 19 before the close of
the year. If, as a result of such rules, the adjusted $150,000 limitation is
exceeded, then (except for purposes of determining the portion of compensation
up to the integration level), the limitation shall be prorated among the
affected individuals in proportion to each such individual's compensation as
determined under this section prior to the application of this limitation.
(j) "Date of Hire" shall mean the date on which a person shall perform
his first Hour of Service. Notwithstanding the foregoing, in the event a person
incurs one or more consecutive Breaks after his initial Date of Hire which
results in the forfeiture of his preBreak Service pursuant to Section 3.3, his
"Date of Hire" shall thereafter be the date on which he completes his first Hour
of Service after such Break or Breaks.
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(k) "Disability" shall mean a physical or mental impairment which
prohibits a Participant from engaging in any occupation for wages or profit and
which has caused the Social Security Administration to classify the individual
as "disabled" for purposes of Social Security.
(l) "Disability Retirement Date" shall mean the first day of
the month after which a Participant incurs a Disability.
(m) "Early Retirement Date" shall mean the first day of the month
coincident with or next following the date on which a Participant attains age 55
and completes 5 Years of Service.
(n) "Effective Date" shall mean January 1, 1996.
(o) "Eligibility Period" shall mean the period of 12 consecutive months
commencing on an Employee's Date of Hire. Succeeding eligibility computation
periods after the initial eligibility computation period shall be based on Plan
Years which include the first anniversary of an Employee's Date of Hire.
(p) "Employee" shall mean any person employed by the Employer,
including officers but excluding directors in their capacity as such; provided,
however, that the term "Employee" shall not include leased employees, employees
regularly employed outside the employer's own offices in connection with the
operation and maintenance of buildings or other properties acquired through
foreclosure or deed, and any employee included in a unit of employees covered by
a collective-bargaining agreement with the Employer that does not expressly
provide for participation of such employees in this Plan, where there has been
good-faith bargaining between the Employer and employees' representatives on the
subject of retirement benefits.
(q) "Employer" shall mean PSB Holding Company, a Delaware corporation,
and its wholly owned subsidiary, Preferred Savings Bank, or any successors to
the aforesaid corporations by merger, consolidation or otherwise, which may
agree to continue this Plan, or any affiliated or subsidiary corporation or
business organization of any Employer which, with the consent of the Sponsor,
shall agree to become a party to this Plan.
(r) "Employer Securities" shall mean the common stock issued
by PSB Holding Company, a Delaware corporation.
(s) "Entry Date" shall mean each January 1 and July 1, so long as this
Plan shall remain in effect.
(t) "Exempt Loan" shall mean a loan described at Section 4975(d)(1) of
the Code to the Trustee to purchase Employer Securities for the Plan, made or
guaranteed by a disqualified person, as
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defined at Section 4975(e)(2) of the Code, including, but not limited to, a
direct loan of cash, a purchase money transaction, an assumption of an
obligation of the Trustee, an unsecured guarantee or the use of assets of such
disqualified person as collateral for such a loan.
(u) "Former Participant" shall mean any previous Participant
whose participation has terminated but who has a vested interest in
the Plan which has not been distributed in full.
(v) "Fund" shall mean the Fund maintained by the Trustee pursuant to
the Trust Agreement in order to provide for the payment of the benefits
specified in the Plan.
(w) "Hour of Service" shall mean each hour for which an Employee is
directly or indirectly paid or entitled to payment by an Employer for the
performance of duties or for reasons other than the performance of duties (such
as vacation time, holidays, sickness, disability, paid lay-offs, jury duty and
similar periods of paid nonworking time). To the extent not otherwise included,
Hours of Service shall also include each hour for which back pay, irrespective
of mitigation of damages, is either awarded or agreed to by the Employer. Hours
of working time shall be credited on the basis of actual hours worked, even
though compensated at a premium rate for overtime or other reasons. In computing
and crediting Hours of Service for an Employee under this Plan, the rules set
forth in Sections 2530.200b-2(b) and (c) of the Department of Labor Regulations
shall apply, said Sections being herein incorporated by reference. Hours of
Service shall be credited to the Plan Year or other relevant period during which
the services were performed or the nonworking time occurred, regardless of the
time when Compensation therefor may be paid. Any Employee for whom no hourly
employment records are kept by the Employer shall be credited with 45 Hours of
Service for each calendar week in which he would have been credited with a least
one Hour or Service under the foregoing provisions, if hourly records were
available. Effective January 1, 1985, for absences commencing on or after that
date, solely for purposes of determining whether a Break for participation and
vesting purposes has occurred in an Eligibility Period or Plan Year, an
individual who is absent from work for maternity or paternity reasons shall
receive credit for the Hours of Service which would otherwise have been credited
to such individual but for such absence, or in any case in which such hours
cannot be determined, 8 Hours of Service per day of such absence. For purposes
of this Section 1.1(w), an absence from work for maternity or paternity reasons
means an absence (1) by reason of the pregnancy of the individual, (2) by reason
of a birth of a child of the individual, (3) by reason of the placement of a
child with the individual in connection with the adoption of such child by such
individual, or (4) for purposes of caring for such child for a period beginning
immediately following such birth or placement. The Hours of Service credited
under
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this provision shall be credited (1) in the computation period in which the
absence begins if the crediting is necessary to prevent a Break in that period,
or (2) in all other cases, in the following computation period.
(x) "Investment Adjustments" shall mean the increases and/or decreases
in the value of a Participant's accounts attributable to earnings, gains, losses
and expenses of the Fund, as set forth in Section 5.3.
(y) "Limitation Year" shall mean the Plan Year.
(z) "Normal Retirement Date" shall mean the first day of the month
coincident with or during which a Participant attains age 65 and completes the
fifth anniversary of his participation in the Plan.
(aa) "Participant" shall mean an Employee who has met all of the
eligibility requirements of the Plan and who is currently included in the Plan
as provided in Article II hereof.
(bb) "Plan" shall mean the PSB Holding Company Employee Stock Ownership
Plan, as described herein or as hereafter amended from time to time.
(cc) "Plan Year" shall mean any 12 consecutive month period commencing
on January 1 and ending on December 31.
(dd) "Qualified Domestic Relations Order" shall mean any judgment,
decree or order (including approval of a property settlement agreement) that
relates to the provision of child support, alimony, marital property rights to a
spouse, former spouse, child or other dependent of the Participant (all such
persons hereinafter termed "alternate payee") and is made pursuant to a State
domestic relations law (including community property law) and, further, that
creates or recognizes the existence of an alternate payee's right to, or assigns
to an alternate payee the right to receive all or a portion of the benefits
payable with respect to a Participant and that clearly specifies the following:
(1) the name and last known mailing address (if available) of
the Participant and the name and mailing address of each alternate
payee to which the order relates;
(2) the amount or percentage of the Participant's benefits
to be paid to an alternate payee or the manner in which the
amount is to be determined; and
(3) the number of payments or period for which payments
are required.
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A domestic relations order is not a Qualified Domestic Relations Order
if it:
(1) requires the Plan to provide any type or form of
benefit or any option not otherwise provided under the Plan;
or,
(2) requires the Plan to provide increased benefits, or
(3) requires payment of benefits to an alternate payee that is
required to be paid to another alternate payee under a previously
existing Qualified Domestic Relations Order.
(ee) "Retirement" shall mean termination of employment which qualifies
as early, normal or Disability retirement as described in Article VI.
(ff) "Service" shall mean employment with the Employer.
(gg) "Sponsor" shall mean PSB Holding Company, a Delaware
corporation.
(hh) "Trust Agreement" shall mean the agreement, dated August
__, 1996 by and between PSB Holding Company, a Delaware corporation,
and First Bankers Trust Co., N.A. of Quincy, Illinois.
(ii) "Trustee" shall mean the Trustee or Trustees by whom the assets of
the Plan are held, as provided in the Trust Agreement, or his or their
successors.
(jj) "Valuation Date" shall mean the last day of each Plan Year. The
Trustee may make additional valuations, at the instruction of the Administrator,
but in no event may the Administrator request additional valuations by the
Trustee more frequently than quarterly. Whenever such date falls on a Saturday,
Sunday or holiday, the preceding business day shall be the Valuation Date.
(kk) "Year of Service" shall mean any Plan Year during which an
Employee has completed at least 1,000 Hours of Service, except as otherwise
specified in Article III, in the determination of Years of Service for
eligibility and vesting purposes under this Plan, the term "Year of Service"
shall also mean any Plan Year during which an Employee has completed at least
1,000 Hours of Service with an entity that is:
(1) a member of a controlled group including the Employer,
while it is a member of such controlled group (within the meaning of
Section 414(b) of the Code);
(2) in a group of trades or businesses under common control
with the Employer, while it is under common control (within the meaning
of Section 414(c) of the Code);
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(3) a member of an affiliated service group including the
Employer, while it is a member of such affiliated service group (within
the meaning of Section 414(m) of the Code); or
(4) a leasing organization, under the circumstances
described in Section 414(n) of the Code.
1.2 Plurals and Gender.
Where appearing in the Plan and the Trust Agreement, the masculine
gender shall include the feminine and neuter genders, and the singular shall
include the plural, and vice versa, unless the context clearly indicates a
different meaning.
1.3 Incorporation of Trust Agreement.
The Trust Agreement, as the same may be amended from time to time, is
intended to be and hereby is incorporated by reference into this Plan and for
all purposes shall be deemed a part of the Plan.
1.4 Headings.
The headings and sub-headings in this Plan are inserted for the
convenience of reference only and are to be ignored in any construction of the
provisions hereof.
1.5 Severability.
In case any provision of this Plan shall be held illegal or void, such
illegality or invalidity shall not affect the remaining provisions of this Plan,
but shall be fully severable, and the Plan shall be construed and enforced as if
said illegal or invalid provisions had never been inserted herein.
1.6 References to Governmental Regulations.
References in this Plan to regulations issued by the Internal Revenue
Service, the Department of Labor, or other governmental agencies shall include
all regulations, rulings, procedures, releases and other position statements
issued by any such agency.
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ARTICLE II
PARTICIPATION
2.1 Commencement of Participation.
(a) Any Employee who completes at least 1,000 Hours of Service during
his Eligibility Period or during any Plan Year beginning after his Date of Hire
shall initially become a Participant on the Entry Date coincident with or next
following the later of the following dates, provided he is employed by the
Employer on that Entry Date:
(1) The date which is 12 months after his Date of Hire;
and
(2) The date on which he attains age 21.
(b) Any Employee who had satisfied the requirements set forth in
Section 2.1(a) during the 12-month period prior to the Effective Date shall
become a Participant on the Effective Date, provided he is still employed by the
Employer on the Effective Date.
2.2 Termination of Participation.
After commencement or resumption of his participation, an Employee
shall remain a Participant during each consecutive Plan Year thereafter until
the earliest of the following dates:
(a) His actual Retirement date;
(b) His date of death; or
(c) The last day of a Plan Year during which he incurs a Break.
2.3 Resumption of Participation.
(a) Any Participant whose employment terminates and who resumes Service
before he incurs a Break shall resume participation immediately on the date he
is reemployed.
(b) Except as otherwise provided in Section 2.3(c), any Participant who
incurs one or more Breaks and resumes Service shall resume participation
retroactively as of the first day of the first Plan Year in which he completes a
Year of Service after such Break(s).
(c) Any Participant who incurs one or more Breaks and resumes Service,
but whose pre-Break Service is not reinstated to his credit pursuant to Section
3.3, shall be treated as a new Employee and
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shall again be required to satisfy the eligibility requirements contained in
Section 2.1 before resuming participation on the appropriate Entry Date, as
specified in Section 2.1.
2.4 Determination of Eligibility.
The Administrator shall determine the eligibility of Employees in
accordance with the provisions of this Article. For each Plan Year, the Employer
shall furnish the Administrator a list of all Employees, indicating the original
date of their reemployment with the Employer and any Breaks they may have
incurred.
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ARTICLE III
CREDITED SERVICE
3.1 Service Counted for Eligibility Purposes.
Except as provided in Section 3.3, all Years of Service completed by an
Employee shall be counted in determining his eligibility to become a Participant
on and after the Effective Date, whether such Service was completed before or
after the Effective Date.
3.2 Service Counted for Vesting Purposes.
All Years of Service completed by an Employee (including Years of
Service completed prior to the Effective Date) shall be counted in determining
his vested interest in this Plan, except the following:
(a) Service which is disregarded under the provisions of
Section 3.3;
(b) Service prior to the Effective Date of this Plan if such Service
would have been disregarded under the "break in service" rules (within the
meaning of Section 1.411(a)-5(b)(6) of the Treasury Regulations).
3.3 Credit for Pre-Break Service.
Upon his resumption of participation following one or a series of
consecutive Breaks, an Employee's pre-Break Service shall be reinstated to his
credit for all purposes of this Plan only if either:
(a) He was vested in any portion of his accrued benefit at the
time the Break(s) began; or
(b) The number of his consecutive Breaks does not equal or exceed the
greater of 5 or the number of his Years of Service credited to him before the
Breaks began.
Except as provided in the foregoing, none of an Employee's Service
prior to one or a series of consecutive Breaks shall be counted for any purpose
in connection with his participation in this Plan thereafter.
3.4 Service Credit During Authorized Leaves.
An Employee shall receive no Service credit under Section 3.1 or 3.2
during any Authorized Leave of Absence. However, solely for the purpose of
determining whether he has incurred a Break during
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any Plan Year in which he is absent from Service for one or more Authorized
Leaves of Absence, he shall be credited with 45 Hours of Service for each week
during any such leave period. Notwithstanding the foregoing, if an Employee
fails to return to Service on or before the end of a leave period, he shall be
deemed to have terminated Service as of the first day of such leave period and
his credit for Hours of Service, determined under this Section 3.4, shall be
revoked. Notwithstanding anything contained herein to the contrary, an Employee
who is absent by reason of military service as set forth in Section 1.1(d)(1)
shall be given Service credit under this Plan for such military leave period to
the extent, and for all purposes, required by law.
3.5 Service Credit During Maternity or Paternity Leave.
Effective for absences beginning on or after January 1, 1985, for
purposes of determining whether a Break has occurred for participation and
vesting purposes, an individual who is on maternity or paternity leave as
described in Section 1.1(w), shall be deemed to have completed Hours of Service
during such period of absence, all in accordance with Section 1.1(w).
Notwithstanding the foregoing, no credit shall be given for such Hours of
Service unless the individual furnishes to the Administrator such timely
information as the Administrator may reasonably require to determine:
(a) that the absence from Service was attributable to one of
the maternity or paternity reasons enumerated in Section 1.1(w); and
(b) the number of days for which such absence lasted.
In no event, however, shall any credit be given for such leave other than for
determining whether a Break has occurred.
3.6 Ineligible Employees.
Notwithstanding any provisions of this Plan to the contrary, any person
who is employed by the Employer, but who is ineligible to participate in this
Plan, either because of his failure
(a) To meet the eligibility requirements contained in Article II; or
(b) To be an Employee, as defined in Section 1.1(p), shall,
nevertheless, earn Years of Service for eligibility and vesting purposes
pursuant to the rules contained in this Article III. However, such a person
shall not be entitled to receive any contributions hereunder unless and until he
becomes a Participant in this Plan, and then, only during his period of
participation.
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ARTICLE IV
CONTRIBUTIONS
4.1 Employee Stock Ownership Contributions.
(a) Subject to all of the provisions of this Article IV, for each Plan
Year commencing on or after the Effective Date, the Employer shall make an
Employee Stock Ownership contribution to the Fund, in such amount as may be
determined by the Board of Directors in its discretion. Such contribution shall
be in the form of cash or Employer Securities. In determining the value of
Employer Securities transferred to the Fund as an Employee Stock Ownership
contribution, the Administrator may determine the average of closing prices of
such securities for a period of up to 90 consecutive days immediately preceding
the date on which the securities are contributed to the Fund. In the event that
the Employer Securities are not readily tradable on an established securities
market, the value of the Employer Securities transferred to the Fund shall be
determined by an independent appraiser in accordance with Section 8.9.
(b) In no event shall such contribution by the Employer exceed for any
Plan Year the maximum amount that may be deducted by the Employer under Section
404 of the Code, nor shall such contribution cause the Employer to violate its
regulatory capital requirements. Each Employee Stock Ownership contribution by
the Employer shall be deemed to be made on the express condition that the Plan,
as then in effect, shall be qualified under Sections 401 and 501 of the Code and
that the amount of such contribution shall be deductible from the Employer's
income under Section 404 of the Code.
4.2 Time and Manner of Employee Stock Ownership Contributions.
(a) The Employee Stock Ownership contribution (if any) for each Plan
Year shall be paid to the Trustee in one lump sum or installments at any time on
or before the expiration of the time prescribed by law (including any
extensions) for filing of the Employer's federal income tax return for its
fiscal year ending concurrent with or during such Plan Year. Any portion of the
Employee Stock Ownership contribution for each Plan Year that may be made prior
to the last day of the Plan Year shall be maintained by the Trustee in the
Employee Stock Ownership suspense account described in Section 5.2 until the
last day of such Plan Year.
(b) If an Employee Stock Ownership contribution for a Plan Year is paid
after the close of the Employer's fiscal year which ends concurrent with or
during such Plan Year but on or prior to the due date (including any extensions)
for filing of the Employer's federal income tax return for such fiscal year, it
shall be
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considered, for allocation purposes, as an Employee Stock Ownership contribution
to the Fund for the Plan Year for which it was computed and accrued, unless such
contribution is accompanied by a statement to the Trustee, signed by a
representative of the Employer, which specifies that the Employee Stock
Ownership contribution is made with respect to the Plan Year in which it is
received by the Trustee. Any Employee Stock Ownership contribution paid by the
Employer during any Plan Year but after the due date (including any extensions)
for filing of its federal income tax return for the fiscal year of the Employer
ending on or before the last day of the preceding Plan Year shall be treated,
for allocation purposes, as an Employee Stock Ownership contribution to the Fund
for the Plan Year in which the contribution is paid to the Trustee.
(c) Notwithstanding anything contained herein to the contrary, no
Employee Stock Ownership contribution shall be made for any year during which a
"limitations account" created pursuant to Section 5.6(c)(2) is in existence
until the balance of such limitations account has been reallocated in accordance
with Section 5.6(c)(2).
4.3 Records of Contributions.
The Employer shall deliver at least annually to the Trustee, with
respect to the contributions contemplated in Section 4.1, a certificate of the
Administrator, in such form as the Trustee shall approve, setting forth:
(a) The aggregate amount of contributions, if any, to the Fund
for such Plan Year;
(b) The names, Internal Revenue Service identifying
numbers and current residential addresses of all Participants in the
Plan;
(c) The amount and category of contributions to be allocated
to each such Participant; and
(d) Any other information reasonably required for the proper
operation of the Plan.
4.4 Erroneous Contributions.
(a) Notwithstanding anything herein to the contrary, upon the
Employer's request, a contribution which was made by a mistake of fact, or
conditioned upon the initial qualification of the Plan, under Code Section 401,
or upon the deductibility of the contribution under Section 404 of the Code,
shall be returned to the Employer by the Trustee within one year after the
payment of the contribution, the denial of the qualification or the disallowance
of the deduction (to the extent disallowed), whichever is applicable; provided,
however, that in the case of denial of the initial
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qualification of the Plan, a contribution shall not be returned unless an
Application for Determination has been timely filed with the Internal Revenue
Service. Any portion of a contribution returned pursuant to this Section 4.4
shall be adjusted to reflect its proportionate share of the losses of the fund,
but shall not be adjusted to reflect any earnings or gains. Notwithstanding any
provisions of this Plan to the contrary, the right or claim of any Participant
or Beneficiary to any asset of the Fund or any benefit under this Plan shall be
subject to and limited by this Section 4.4.
(b) In no event shall voluntary Employee contributions be accepted. Any
such voluntary Employee contributions (and any earnings attributable thereto)
mistakenly received by the Trustee shall promptly be returned to the
Participant.
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ARTICLE V
ACCOUNTS, ALLOCATIONS AND INVESTMENTS
5.1 Establishment of Separate Participant Accounts.
The Administrator shall establish and maintain separate individual
accounts for Participants in the Plan and for each Former Participant in
accordance with the provisions of this Article V. Such separate accounts shall
be for accounting purposes only and shall not require a segregation of the Fund,
and no Participant, Former Participant or Beneficiary shall acquire any right to
or interest in any specific assets of the Fund as a result of the allocations
provided for under this Plan, except where segregation is expressly provided for
in this Plan.
(a) Employee Stock Ownership Accounts.
The Administrator shall establish a separate Employee Stock
Ownership Account in the Fund for each Participant. The account shall be
credited as of the last day of each Plan Year with the amounts allocated to the
Participant under Sections 5.4 and 5.5. The Administrator may establish
subaccounts hereunder, an Employer Stock Account reflecting a Participant's
interest in Employer Securities held by the Trust and an Other Investments
Account reflecting the Participant's interest in his Employee Stock Ownership
Account other than Employer Securities.
(b) Distribution Accounts.
In any case where distribution of a terminated Participant's
vested interest in the Plan is to be deferred, the Administrator shall establish
a separate, nonforfeitable account in the Fund to which the balance in his
Employee Stock Ownership Account in the Plan shall be transferred after such
Participant incurs a Break. Unless the Former Participant's distribution
accounts are segregated for investment purposes pursuant to section 9.4, they
shall share in Investment Adjustments.
(c) Other Accounts.
The Administrator shall establish such other separate accounts
for each Participant as may be necessary or desirable for the convenient
administration of the Fund.
5.2 Establishment of Suspense Accounts.
The Administrator shall establish separate accounts to be known as
"suspense accounts." There shall be credited to such appropriate suspense
accounts any Employee Stock Ownership contributions that may be made prior to
the last day of the Plan Year, as provided in
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Section 4.2. The suspense accounts shall share proportionately as to time and
amount in any Investment Adjustments. As of the last day of each Plan Year, the
balance of the Employee Stock Ownership suspense account shall be added to the
Employee Stock Ownership contribution and allocated to the Employee Stock
Ownership Accounts of Participants as provided in Section 5.5, except as
provided herein. In the event that the Plan takes an Exempt Loan, the Employer
Securities purchased thereby shall be allocated to a separate Exempt Loan
Suspense Account, from which allocations shall be made in accordance with
Section 8.5.
5.3 Allocation of Earnings, Losses and Expenses.
As of each Valuation Date, any increase or decrease in the net worth of
the aggregate Employee Stock Ownership Accounts held in the Fund attributable to
earnings, losses, expenses and unrealized appreciation or depreciation in each
such aggregate Account, as determined by the Trustee pursuant to the Trust
Agreement, shall be credited to or deducted from the appropriate suspense
accounts and all Participants' Employee Stock Ownership Accounts (except
segregated distribution accounts described in Section 5.1(b) and the
"limitations account" described in Section 5.6(c)(4)) in the proportion that the
value of each such Account (determined immediately prior to such allocation and
before crediting any Employee Stock Ownership contributions and forfeitures for
the current Plan Year but after adjustment for any transfer to or from such
Accounts and for the time such funds were in such Accounts) bears to the value
of all Employee Stock Ownership Accounts.
5.4 Allocation of Forfeitures.
As of the last day of each Plan Year, all forfeitures attributable to
the Employee Stock Ownership Accounts which are then available for reallocation
shall be, as appropriate, added to the Employee Stock Ownership contribution (if
any) for such year and allocated among the Participants' Employee Stock
Ownership Accounts, as appropriate, in the manner provided in Sections 5.5 and
5.6.
5.5 Allocation of Annual Employee Stock Ownership Contributions.
As of the last day of each Plan Year for which the Employer shall make
an Employee Stock Ownership contribution, the Administrator shall allocate the
Employee Stock Ownership contribution (including reallocable forfeitures) for
such Plan Year to the Employee Stock Ownership account of each Participant who
completed at least 1,000 Hours of Service during that Plan Year, provided that
he is still employed by the Employer on the last day of the Plan Year. Such
allocation shall be made in the same proportion that each such Participant's
Compensation for such Plan Year bears to the total Compensation of all such
Participants for such Plan Year, subject to Section 5.6. Notwithstanding the
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foregoing, if a Participant attains his Normal Retirement Date and terminates
Service prior to the last day of the Plan Year but after completing 1,000 Hours
of Service, he shall be entitled to an allocation based on his Compensation
earned prior to his termination and during the Plan Year. Furthermore, if a
Participant completes 1,000 Hours of Service and is on a Leave of Absence on the
last day of the Plan Year because of pregnancy or other medical reason, such a
Participant shall be entitled to an allocation based on his Compensation earned
during such Plan Year.
5.6 Limitation on Annual Additions.
(a) Notwithstanding any provisions of this Plan to the contrary, the
total Annual Additions credited to a Participant's accounts under this Plan (and
under any other defined contribution plan to which the Employer contributes) for
any Limitation Year shall not exceed the lesser of:
(1) 25% of the Participant's compensation for such
Limitation Year; or
(2) $30,000 (or, if greater, one-fourth of the defined benefit
dollar limitation set forth in Section 415(b)(1)(A) of the Code).
Whenever otherwise allowed by law, the maximum amount of $30,000 shall
be automatically adjusted annually for cost-of-living increases in
accordance with Section 415(d) of the Code and the highest such
increase effective at any time during the Limitation Year shall be
effective for the entire Limitation Year, without any amendment to this
Plan.
(b) Solely for the purpose of this Section 5.6, the term "compensation"
is defined as wages, salaries, and fees for professional services and other
amounts received (without regard to whether or not an amount is paid in cash)
for personal services actually rendered in the course of employment with the
Employer maintaining the Plan to the extent that the amounts are includable in
gross income (including, but not limited to, commissions paid to salesmen,
compensation for services on the basis of a percentage of profits, commissions
on insurance premiums, tips, bonuses, fringe benefits, and reimbursements or
other expense allowances under a nonaccountable plan (as described in Treas.
Regs. ss. 1.62-2(c)), and excluding the following:
(1) Employer contributions to a plan of deferred compensation
which are not includible in the Employee's gross income for the taxable year in
which contributed, or Employer contributions under a simplified employee pension
plan to the extent such contributions are deductible by the Employee, or any
distributions from a plan of deferred compensation;
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(2) Amounts realized from the exercise of a non-qualified
stock option, or when restricted stock (or property) held by the employee either
becomes freely transferable or is no longer subject to a substantial risk of
forfeiture;
(3) Amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock option; and
(4) Other amounts which received special tax benefits, or
contributions made by the employer (whether or not under a salary reduction
agreement) towards the purchase of an annuity contract described in section
403(b) of the Code (whether or not the contributions are actually excludable
from the gross income of the Employee).
(c) In the event that the limitations on Annual Additions described in
this Section 5.6(a) above are exceeded with respect to any Participant in any
Limitation Year, then the contributions allocable to the Participant for such
year shall be reduced to the minimum extent required by such limitations in the
following order of priority:
(1) If any further reductions in Annual Additions are
necessary, then the Employee Stock Ownership contributions and
forfeitures allocated during such Limitation Year to the Participant's
Employee Stock Ownership Account shall be reduced. The amount of any
such reductions in the Employee Stock Ownership contributions and
forfeitures shall be reallocated to all other Participants in the same
manner as set forth under Sections 5.4 and 5.5.
(2) Any amounts which cannot be reallocated to other
Participants in a current Limitation Year in accordance with Section
5.6(c)(1) above because of the limitations contained in Sections 5.6(a)
and (d) shall be credited to an account designated as the "limitations
account" and carried forward to the next and subsequent Limitation
Years until it can be reallocated to all Participants as set forth in
Sections 5.4, and 5.5, as appropriate. No Investment Adjustments shall
be allocated to this limitations account. In the next and subsequent
Limitation Years, all amounts in the limitations account must be
allocated in the manner described in Sections 5.4 and 5.5, as
appropriate, before any Employee Stock Ownership contributions may be
made to this Plan for that Limitation Year.
(3) The Administrator shall determine to what extent the
Annual Additions to any Participant's Employee Stock Ownership Account
must be reduced in each Limitation Year. The Administrator shall reduce
the Annual Additions to all other
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qualified, tax-exempt retirement plans maintained by the Employer in
accordance with the terms contained therein for required reductions or
reallocations mandated by Section 415 of the Code before reducing any
Annual Additions in this Plan.
(4) In the event this Plan is voluntarily terminated by the
Employer under Section 13.5, any amounts credited to the limitations
account described in Section 5.6(c)(2) above which have not be
reallocated as set forth herein shall be distributed to the
Participants who are still employed by the Employer on the date of
termination, in the proportion that each Participant's Compensation
bears to the Compensation of all Participants.
(d) The Annual Additions credited to a Participant's accounts for each
Limitation Year are further limited so that in the case of an Employee who is a
Participant in both this Plan and any qualified defined benefit plan
(hereinafter referred to as a "pension plan") of the Employer, the sum of (1)
and (2) below will not exceed 1.0:
(1) (A) The projected annual normal retirement benefit
of a Participant under the pension plan, divided by
(B) The lesser of:
(i) The product of 1.25 multiplied by the dollar
limitation in effect under Section 415(b)(1)(A) of the Code
for such Limitation Year, or
(ii) The product of 1.4 multiplied by the amount of
compensation which may be taken into account under Section
415(b)(1)(B) of the Code for the Participant for such
Limitation Year; plus
(2) (A) The sum of Annual Additions credited to the
Participant under this Plan for all Limitation Years, divided by:
(B) The sum of the lesser of the following amounts
determined for such Limitation Year and for each prior year of service
with the Employer:
(i) The product of 1.25 multiplied by the dollar
limitation in effect under Section 415(b)(1)(A) of the Code
for such Limitation Year, or
(ii) The product of 1.4 multiplied by the amount of
compensation which may be taken into account under Section
415(b)(1)(B) of the Code for the Participant for such
Limitation Year.
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The Administrator may, in calculating the defined contribution plan
fraction described in Section 5.6(d)(2), elect to use the transitional rule
pursuant to Section 415(e)(6) of the Code, if applicable. If the sum of the
fractions produced above will exceed 1.0, even after the use of the "fresh
start" rule contained in Section 235 of the Tax Equity and Fiscal Responsibility
Act of 1982 ("TEFRA"), if applicable, then the same provisions as stated in
Section 5.6(c) above shall apply. If, even after the reductions provided for in
Section 5.6(c), the sum of the fractions still exceed 1.0, then the benefits of
the Participant provided under the pension plan shall be reduced to the extent
necessary, in accordance with Treasury Regulations issued under the Code. Solely
for the purposes of this Section 5.6(d), the term "years of service" shall mean
all years of service defined by Treasury Regulations issued under Section 415 of
the Code.
(e) In the event that the Employer is a member of (1) a controlled
group of corporations or a group of trades or businesses under common control
(as described in Section 414(b) or (c) of the Code, as modified by Section
415(h) thereof), or (2) an affiliated service group (as described in Section
414(m) of the Code), the Annual Additions credited to any Participant's accounts
in any such Limitation Year shall be further limited by reason of the existence
of all other qualified retirement plans maintained by such affiliated
corporations, other entities under common control or other members of the
affiliated service group, to the extent such reduction is required by Section
415 of the Code and the regulations promulgated thereunder. The Administrator
shall determine if any such reduction in the Annual Additions to a Participant's
accounts is required for this reason, and if so, the same provisions as stated
in 5.6(c) and (d) above shall apply.
(f) Annual Additions shall not include any Employer contributions which
are used by the Trust to pay interest on an Exempt Loan nor any forfeitures of
Employer Securities purchased with the proceeds of an Exempt Loan, provided that
not more than one-third of the Employer contributions are allocated to
Participants who are among the group of employees deemed "highly compensated
employees" within the meaning of Code Section 414(q).
5.7 Erroneous Allocations.
No Participant shall be entitled to any Annual Additions or other
allocations to his accounts in excess of those permitted under Sections 5.3,
5.4, 5.5, and 5.6. If it is determined at anytime that the Administrator and/or
Trustees 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
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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.
5.8 Value of Participant's Interest in Fund.
At any time, the value of a Participant's interest in the Fund shall
consist of the aggregate value of his Employee Stock Ownership Account and his
distribution account, if any, determined as of the next-preceding Valuation
Date. The Administrator shall maintain adequate records of the cost basis of
Employer Securities allocated to each Participant's Employer Stock Ownership
Account.
5.9 Investment of Account Balances.
The Employee Stock Ownership Accounts shall be invested primarily in
Employer Securities. Employer Securities shall constitute at least 51% of the
assets of all Employee Stock Ownership Accounts. All sales of Employer
Securities by the Trustee attributable to the Employee Stock Ownership Accounts
of all Participants shall be charged pro rata to the Employee Stock Ownership
Accounts of all Participants.
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ARTICLE VI
RETIREMENT, DEATH AND DESIGNATION OF BENEFICIARY
6.1 Normal Retirement.
A Participant who reaches his Normal Retirement Date and who shall
retire at that time shall thereupon be entitled to retirement benefits based on
the value of his interest in the Fund, payable pursuant to the provisions of
Section 9.1. A Participant who remains in Service after his Normal Retirement
Date shall not be entitled to any retirement benefits until his actual
termination of Service thereafter (except as provided in Section 9.3(g)) and he
shall meanwhile continue to participate in this Plan.
6.2 Early Retirement.
A Participant who reaches his Early Retirement Date may retire at such
time (or, at his election, as of the first day of any month thereafter prior to
his Normal Retirement Date) and shall thereupon be entitled to retirement
benefits based on the value of his interest in the Fund, payable pursuant to the
provisions of Section 9.1.
6.3 Disability Retirement.
In the event a Participant incurs a Disability, he may retire on his
Disability Retirement Date and shall thereupon be entitled to retirement
benefits based on the value of his interest in the Fund, payable pursuant to the
provisions of Section 9.1.
6.4 Death Benefits.
(a) Upon the death of a Participant before his Retirement or other
termination of Service, the value of his interest in the Fund shall be payable
pursuant to the provisions of Section 9.1. The Administrator shall direct the
Trustee to distribute his interest in the Fund to any surviving Beneficiary
designated by the Participant or, if none, to such persons designated by the
Administrator pursuant to Section 6.5.
(b) Upon the death of a Former Participant, the Administrator shall
direct the Trustee to distribute any undistributed balance of his interest in
the Fund to any surviving Beneficiary designated by him or, if none, to such
persons designated by the Administrator pursuant to Section 6.5.
(c) The Administrator may require such proper proof of death
and such evidence of the right of any person to receive the
interest in the Fund of a deceased Participant or Former Partici-
pant as the Administrator may deem desirable. The Administrator's
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determination of death and of the right of any person to receive
payment shall be conclusive.
6.5 Designation of Death Beneficiary and Manner of Payment.
(a) Each Participant shall have the right to designate a Beneficiary or
Beneficiaries to receive the sum or sums to which he may be entitled upon his
death. The Participant may also designate the manner in which any death benefits
under this Plan shall be payable to his Beneficiary, provided that such
designation is in accordance with Section 9.4. Such designation of Beneficiary
and manner of payment shall be in writing and delivered to the Administrator,
and shall be effective when received by the Administrator. The Participant shall
have the right to change such designation by notice in writing to the
Administrator. Such change of Beneficiary or the manner of payment shall become
effective upon its receipt by the Administrator. Any such change shall be deemed
to revoke all prior designations.
(b) If a Participant shall fail to designate validly a Beneficiary or
if no designated Beneficiary survives the Participant, his interest in the Fund
shall be paid to the person or persons in the first of the following classes of
successive preference Beneficiaries surviving at the death of the Participant:
the Participant's (1) widow or widower, (2) children, (3) parents, and (4)
estate. The Administrator shall decide what Beneficiaries, if any, shall have
been validly designated, and its decision shall be binding and conclusive on all
persons.
(c) Notwithstanding the foregoing, if a Participant has been married
throughout the 12 month period preceding the date of his death, the sum or sums
to which he may be entitled under this Plan upon his death shall be paid to his
spouse, unless the Participant's spouse shall have consented to the election of
another Beneficiary. Such a spousal consent shall be in writing and shall be
witnessed either by a representative of the Plan or a notary public. If it is
established to the satisfaction of the Administrator that such spousal consent
cannot be obtained because there is no spouse, because the spouse cannot be
located, or other reasons prescribed by governmental regulations, the consent of
the spouse may be waived, and the Participant may designate a Beneficiary or
Beneficiaries other than his spouse.
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ARTICLE VII
VESTING AND FORFEITURES
7.1 Vesting on Death, Disability and Normal Retirement.
Unless his participation in this Plan shall have terminated prior
thereto, upon a Participant's death, Disability or upon his attainment of Normal
Retirement Date (whether or not he actually retires at that time) while he is
still employed by the Employer, the Participant's entire interest in the Fund
shall be fully vested and nonforfeitable.
7.2 Vesting on Termination of Participation.
Upon termination of his participation in this Plan for any reason other
than death, Disability, or Normal Retirement, a Participant shall be vested in a
percentage of his Employee Stock Ownership Account, such vested percentages to
be determined under the following table, based on the Years of Service
(including Years of Service prior to the Effective Date) credited to him for
vesting purposes at the time of his termination of participation:
Years of Service Completed Percentage Vested
-------------------------- -----------------
Less than 5 0%
5 or more 100%
Any portion of the Participant's Employee Stock Ownership Account which
is not vested at the time he incurs a Break shall thereupon be forfeited and
disposed of pursuant to Section 7.3. Distribution of the vested portion of a
terminated Participant's interest in the Plan may be authorized by the
Administrator in any manner permitted under Section 9.1.
7.3 Disposition of Forfeitures.
(a) In the event a Participant incurs a Break and subsequently resumes
both his Service and his participation in the Plan prior to incurring at least 5
Breaks, the forfeitable portion of his Employee Stock Ownership Account shall be
reinstated to the credit of the Participant as of the date he resumes
participation.
(b) In the event a Participant terminates Service and subsequently
incurs a Break and receives a distribution, or in the event a Participant does
not terminate Service, but incurs at least 5 Breaks, or in the event that a
Participant terminates Service and incurs at least 5 Breaks but has not received
a distribution, then the forfeitable portion of his Employer Account, including
Investment Adjustments, shall be reallocated to
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other Participants, pursuant to Section 5.4 as of the date the Participant
incurs such Break or Breaks, as the case may be.
(c) In the event a former Participant who had received a distribution
from the Plan is rehired, he shall repay the amount of his distribution before
the earlier of 5 years after the date of his rehire by the Employer, or the
close of the first period of 5 consecutive Breaks commencing after the
withdrawal in order for any forfeited amounts to be restored to him.
-26-
ARTICLE VIII
EMPLOYEE STOCK OWNERSHIP PROVISIONS
8.1 Right to Demand Employer Securities.
A Participant entitled to a distribution from his Employee Stock
Ownership Account shall be entitled to demand that his interest in the Account
be distributed to him in the form of Employer Securities, all subject to Section
9.9. In the event that the Employer Securities are not readily tradable on an
established market, the Participant shall be entitled to require that the
Employer repurchase the Employer Securities under a fair valuation formula, as
provided by governmental regulations. The Participant or Beneficiary shall be
entitled to exercise the put option described in the preceding sentence for a
period of not more than 60 days following the date of distribution of Employer
Securities to him. If the put option is not exercised within such 60-day period,
the Participant or Beneficiary may exercise the put option during an additional
period of not more than 60 days after the beginning of the first day of the
first Plan Year following the Plan Year in which the first put option period
occurred, all as provided in regulations promulgated by the Secretary of the
Treasury.
8.2 Voting Rights.
Each Participant with an Employee Stock Ownership Account shall be
entitled to direct the Trustee as to the manner in which the Employer Securities
in such Account are to be voted. Employer Securities held in the Employee Stock
Ownership Suspense Account or the Exempt Loan Suspense Account shall be voted by
the Trustee on each issue with respect to which shareholders are entitled to
vote in the manner directed by the majority of the Participants who directed the
Trustee as to the manner of voting their shares in the Employee Stock Ownership
Accounts with respect to such issue. Prior to the initial allocation of shares,
the Trustee shall be entitled to vote the shares in the Suspense Account without
prior direction from the Participants or the Administrator. In the event that a
Participant fails to give timely voting instructions to the Trustee with respect
to the voting of his allocated Employer Securities, the Trustee shall be
entitled to vote such shares in its discretion.
-27-
8.3 Nondiscrimination in Employee Stock Ownership Contributions.
In the event that the amount of the Employee Stock Ownership
contributions that would be required in any Plan Year to make the scheduled
payments on an Exempt Loan would exceed the amount that would otherwise be
deductible by the Employer for such Plan Year under Code Section 404, then no
more than one-third of the Employee Stock Ownership contributions for the Plan
Year, which is also the Employer's taxable year, shall be allocated to the group
of Employees who, during the Plan Year or the preceding Plan Year:
(a) Was at any time a 5 percent owner of the Employer;
(b) Received compensation from the Employer in excess of
$75,000, as adjusted under Code Section 414(q);
(c) Received compensation from the Employer in excess of $50,000, as
adjusted under Code Section 414(q), and was in the "top-paid group" of employees
(as defined below) for such year; or
(d) Was at any time an officer and received compensation greater than
50 percent of the amount in effect under Code Section 415(b)(1)(A), as adjusted
for cost-of-living increases permitted under Code Section 415(d)(1), but without
regard to any adjustment under Code Section 415(c)(6)(A).
An Employee shall be deemed a member of the "top-paid group" of employees for a
given Plan Year if such Employee is in the group of the top 20% of the employees
of the Employer when ranked on the basis of compensation.
8.4 Dividends.
Dividends paid with respect to Employer Securities credited to a
Participant's Employee Stock Ownership account as of the record date for the
dividend payment may be paid in cash to the Participants, pursuant to the
directions of the Board of Directors of the Sponsor. If the Board of Directors
shall direct that the aforesaid dividends shall be paid directly to
Participants, the quarterly dividends paid with respect to such Employer
Securities shall be paid to the Plan, from which dividend distributions in cash
shall be made to the Participants with respect to the Employer Securities in
their Employee Stock Ownership Accounts within 90 days of the close of the Plan
Year in which the dividends were paid. Dividends on Employer Securities obtained
pursuant to an Exempt Loan and still held in the Suspense Account may be used to
make payments on an Exempt Loan, as described in Section 8.5.
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8.5 Exempt Loans.
(a) The Sponsor may direct the Trustee to obtain Exempt Loans. The
Exempt Loan may take the form of (i) a loan from a bank or other commercial
lender to purchase Employer Securities (ii) a loan from the Employer to the
Plan; or (iii) an installment sale of Employer Securities to the Plan. The
proceeds of any such Exempt Loan shall be used, within a reasonable time after
the Exempt Loan is obtained, only to purchase Employer Securities, repay the
Exempt Loan, or repay any prior Exempt Loan. Any such Exempt Loan shall provide
for no more than a reasonable rate of interest and shall be without recourse
against the Plan. The number of years to maturity under the Exempt Loan must be
definitely ascertainable at all times. The only assets of the Plan that may be
given as collateral for an Exempt Loan are Employer Securities acquired with the
proceeds of the Exempt Loan and Employer Securities that were used as collateral
for a prior Exempt Loan repaid with the proceeds of the current Exempt Loan.
Such Employer Securities so pledged shall be placed in an Exempt Loan Suspense
Account. No person or institution entitled to payment under an Exempt Loan shall
have recourse against Trust assets other than the aforesaid collateral, Employer
Stock Ownership contributions (other than contributions of Employer Securities)
that are available under the Plan to meet obligations under the Exempt Loan and
earnings attributable to such collateral and the investment of such
contributions. All Employee Stock Ownership contributions paid during the Plan
Year in which an Exempt Loan is made (whether before or after the date the
proceeds of the Exempt Loan are received), all Employee Stock Ownership
contributions paid thereafter until the Exempt Loan has been repaid in full, and
all earnings from investment of such Employee Stock Ownership contributions,
without regard to whether any such Employee Stock Ownership contributions and
earnings have been allocated to Participants' Employee Stock Ownership Accounts,
shall be available to meet obligations under the Exempt Loan as such obligations
accrue, or prior to the time such obligations accrue, unless otherwise provided
by the Employer at the time any such contribution is made. Any pledge of
Employer Securities shall provide for the release of shares so pledged upon the
payment of any portion of the Exempt Loan.
(b) For each Plan Year during the duration of the Exempt Loan, the
number of shares of Employer Securities released from such pledge shall equal
the number of encumbered shares held immediately before release for the current
Plan Year multiplied by a fraction. The numerator of the fraction is the sum of
principal and interest paid in such Plan Year. The denominator of the fraction
is the sum of the numerator plus the principal and interest to be paid for all
future years. Such years will be determined without taking into account any
possible extension or renewal periods. If interest on any Exempt Loan is
variable, the
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interest to be paid in future years under the Exempt Loan shall be computed by
using the interest rate applicable as of the end of the Plan Year.
(c) Notwithstanding the foregoing, the Trustee may obtain an Exempt
Loan pursuant to the terms of which the number of Employer Securities to be
released from encumbrance shall be determined solely with reference to principal
payments. In the event that such an Exempt Loan is obtained, annual payments of
principal and interest shall be at a cumulative rate that is not less rapid at
any time than level payments of such amounts for not more than 10 years. The
amount of interest in any such annual loan repayment shall be disregarded only
to the extent that it would be determined to be interest under standard loan
amortization tables. The requirement set forth in the preceding sentence shall
not be applicable from the time that, by reason of a renewal, extension, or
refinancing, the sum of the expired duration of the Exempt Loan, the renewal
period, the extension period, and the duration of a new Exempt Loan exceeds 10
years.
8.6 Exempt Loan Payments.
(a) Payments of principal and interest on any Exempt Loan
during a Plan Year shall be made by the Trustee (as directed by the
Administrator) only from (1) Employee Stock Ownership contributions to the Trust
made to meet the Plan's obligation under an Exempt Loan (other than
contributions of Employer Securities) and from any earnings attributable to
Employer Securities held as collateral for an Exempt Loan and investments of
such contributions (both received during or prior to the Plan Year); (2) the
proceeds of a subsequent Exempt Loan made to repay a prior Exempt Loan; and (3)
the proceeds of the sale of any Employer Securities held as collateral for an
Exempt Loan. Such contribution and earnings shall be accounted for separately by
the Plan until the Exempt Loan is repaid.
(b) Employer Securities released by reason of the payment of
principal or interest on an Exempt Loan from amounts allocated to Participants'
Employee Stock Ownership Accounts shall immediately upon payment be allocated as
set forth in Section 5.5.
(c) The Employer shall contribute to the Trust sufficient
amounts to enable the Trust to pay principal and interest on any such Exempt
Loans as they are due, provided however that no such contribution shall exceed
the limitations in Section 5.6. In the event that such contributions by reason
of the limitations in Section 5.6 are insufficient to enable the Trust to pay
principal and interest on such Exempt Loan as it is due, then upon the Trustee's
request the Employer shall:
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(1) Make an Exempt Loan to the Trust in sufficient amounts to
meet such principal and interest payments. Such new Exempt Loan shall
be subordinated to the prior Exempt Loan. Securities released from the
pledge of the prior Exempt Loan shall be pledged as collateral to
secure the new Exempt Loan. Such Employer Securities will be released
from this new pledge and allocated to the Employee Stock Ownership
Accounts of the Participants in accordance with applicable provisions
of the Plan;
(2) Purchase any Employer Securities pledged as collateral in
an amount necessary to provide the Trustee with sufficient funds to
meet the principal and interest repayments. Any such sale by the Plan
shall meet the requirements of Section 408(e) of ERISA; or
(3) Any combination of the foregoing. However, the Employer
shall not, pursuant to the provisions of this subsection, do, fail to
do or cause to be done any act or thing which would result in a
disqualification of the Plan as an Employee Stock Ownership Plan under
the Code.
(d) Except as provided in Section 8.1 above and notwithstanding any
amendment to or termination of the Plan which causes it to cease to qualify as
an Employee Stock Ownership plan within the meaning of Section 4975(e)(7) of the
Code, or any repayment of an Exempt Loan, no shares of Employer Securities
acquired with the proceeds of an Exempt Loan obtained by the Trust to purchase
Employer Securities may be subject to a put, call or other option, or buy-sell
or similar arrangement while such shares are held by the Plan or when such
Shares are distributed from the Plan.
8.7 Put Option.
If a Participant exercises a put option (as set forth in Section 8.1)
with respect to Employer Securities that were distributed as part of a total
distribution pursuant to which a Participant's Employee Stock Ownership Account
is distributed to him in a single taxable year, the Employer or the Plan may
elect to pay the purchase price of the Employer Securities over a period not to
exceed 5 years. Such payments shall be made in substantially equal installments
not less frequently than annually over a period beginning not later than 30 days
after the exercise of the put option. Reasonable interest shall be paid to the
Participant with respect to the unpaid balance of the purchase price and
adequate security shall be provided with respect thereto. In the event that a
Participant exercises a put option with respect to Employer Securities that are
distributed as part of an installment distribution, the amount to be paid for
such securities shall be paid not later than 30 days after the exercise of the
put option.
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8.8 Diversification Requirements
Each Participant who has completed at least 10 years of participation
in the Plan and has attained age 55 may elect within 90 days after the close of
each Plan Year during his "qualified election period" to direct the Plan as to
the investment of at least 25 percent of his Employee Stock Ownership Account
(to the extent such percentage exceeds the amount to which a prior election
under this Section 8.8 had been made). For purposes of this Section 8.8, the
term "qualified election period" shall mean the 5-Plan-Year period beginning
with the Plan Year after the Plan Year in which the Participant attains age 55
(or, if later, beginning with the Plan Year after the first Plan Year in which
the Employee first completes at least 10 years of participation in the Plan). In
the case of the Employee who has attained age 60 and completed 10 years of
participation in the prior Plan Year and in the case of the election year in
which any other Participant who has met the minimum age and service requirements
for diversification can make his last election hereunder, he shall be entitled
to direct the Plan as to the investment of at least 50 percent of his Employee
Stock Ownership Account (to the extent such percentage exceeds the amount to
which a prior election under this Section 8.8 had been made). The Plan shall
make available at least 3 investment options (not inconsistent with regulations
prescribed by the Department of Treasury) to each Participant making an election
hereunder. The Plan shall be deemed to have met the requirements of this Section
if the portion of the Participant's Employee Stock Ownership Account covered by
the election hereunder is distributed to the Participant or his designated
Beneficiary within 90 days after the period during which the election may be
made. In the absence of such a distribution, the Trustee shall implement the
Participant's election within 90 days following the expiration of the qualified
election period.
8.9 Independent Appraiser.
An independent appraiser meeting the requirements of Code 170(a)(1)
shall value the Employer Securities in those Plan Years when such securities are
not readily tradable on an established securities market.
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ARTICLE IX
PAYMENTS AND DISTRIBUTIONS
9.1 Payments on Termination of Service - In General.
All benefits provided under this Plan shall be funded by the value of a
Participant's vested interest in the Fund. As soon as practicable after a
Participant's Retirement, death or termination of Service, the Administrator
shall ascertain the value of his vested interest in the Fund, as provided in
Article V, and the Administrator shall hold or dispose of the same in accordance
with the following provisions of this Article IX.
9.2 Commencement of Payments.
(a) Distributions upon Retirement or Death. Upon a Participant's
Retirement or Death, payment of benefits under this Plan shall, unless the
Participant otherwise elects (in accordance with Section 9.3), commence no later
than 6 months after the close of the Plan Year in which occurs the date of the
Participant's Retirement or death.
(b) Distribution following Termination of Service. Unless a Participant
elects otherwise, if a Participant terminates Service prior to Retirement or
death, he shall be accorded an opportunity to commence receipt of distributions
from his Accounts within six (6) months after the Valuation Date next following
the date of his termination of service. A Participant who terminates Service
with a deferred vested benefit shall be entitled to receive from the
Administrator a statement of his benefits. In the event that a Participant
elects not to commence receipt of distributions from his Accounts in accordance
with this Section 9.2(b), after the Participant incurs a Break, the
Administrator shall transfer his deferred vested interest to a distribution
account. If a Participant's vested Employer Account does not exceed (or at the
time of any prior distribution did not exceed) $3,500, the Plan Administrator
may distribute the vested portion of his Employer Account as soon as
administratively feasible without the consent of the Participant or his spouse.
(c) Distribution of Accounts Greater Than $3,500. If the value of a
Participant's vested Account balance exceeds (or at the time of any prior
distribution exceeded) $3,500, and the Account balance is immediately
distributable, the Participant must consent to any distribution of such Account
balance. The Plan Administrator shall notify the Participant of the right to
defer any distribution until the Participant's Account balance is no longer
immediately distributable. The consent of the Participant shall not be required
to the extent that a distribution is required to satisfy Code ss.401(a)(9) or
Code ss.415.
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9.3 Mandatory Commencement of Benefits.
(a) Unless a Participant elects otherwise, in writing, distribution of
benefits will begin no later than the 60th day after the latest of the close of
the Plan Year in which (i) the Participant attains age 65, (ii) occurs the tenth
anniversary of the year in which the Participant commenced participation in the
Plan Year, or (iii) the Participant terminates Service with the Employer.
(b) In the event that the Plan shall be subsequently amended to provide
for a form of distribution other than a lump sum, as of the first distribution
calendar year, distributions, if not made in a lump sum, may be made only over
one of the following periods (or a combination thereof):
(i) the life of the Participant,
(ii) the life of the Participant and the designated
beneficiary,
(iii) a period certain not extending beyond the life
expectancy of the Participant, or
(iv) a period certain not extending beyond the joint and
last survivor expectancy of the Participant and a
designated beneficiary.
(c) In the event that the Plan shall be subsequently amended to provide
for a form of distribution other than a lump sum, if the participant's interest
is to be distributed in other than a lump sum, the following minimum
distribution rules shall apply on or after the required beginning date:
(i) If a Participant's benefit is to be distributed over (1) a
period not extending beyond the life expectancy of the Participant or the joint
life and last survivor expectancy of the Participant and the Participant's
designated beneficiary or (2) a period not extending beyond the life expectancy
of the designated beneficiary, the amount required to be distributed for each
calendar year, beginning with distributions for the first distribution calendar
year, must at least equal the quotient obtained by dividing the Participant's
benefit by the applicable life expectancy.
(ii) For calendar years beginning after December 31, 1988, the
amount to be distributed each year, beginning with distributions for the first
distribution calendar year shall not be less than the quotient obtained by
dividing the Participant's benefit by the lesser of (1) the applicable life
expectancy or (2) if the Participant's spouse is not the designated beneficiary,
the
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applicable divisor determined from the table set forth in Q&A-4 of section
1.401(a)(9)-2 of the Proposed Regulations. Distributions after the death of the
participant shall be distributed using the applicable life expectancy in
sub-section (iii) above as the relevant divisor without regard to Proposed
Regulations
1.401(a)(9)-2.
(iii) The minimum distribution required for the Participant's
first distribution calendar year must be made on or before the Participant's
required beginning date. The minimum distribution for other calendar years,
including the minimum distribution for the distribution calendar year in which
the employee's required beginning date occurs, must be made on or before
December 31 of the distribution calendar year.
(d) If a Participant dies after a distribution has commenced in
accordance with Section 8.3(b) but before his entire interest has been
distributed to him, the remaining portion of such interest shall be distributed
to his Beneficiary at least as rapidly as under the method of distribution in
effect as of the date of his death.
(e) If a Participant shall die before the distribution of his interest
in the Plan has begun, the entire interest of the Participant shall be
distributed by December 31 of the calendar year containing the fifth anniversary
of the death of the Participant, except in the following events:
(i) If any portion of the Participant's interest is payable to
(or for the benefit of) a designated beneficiary over a period not extending
beyond the life expectancy of such beneficiary and such distributions begin not
later than December 31 of the calendar year immediately following the calendar
year in which the Participant died.
(ii) If any portion of the Participant's interest is payable
to (or for the benefit of) the Participant's spouse over a period not extending
beyond the life expectancy of such spouse and such distributions begin no later
than December 31 of the calendar year in which the Participant would have
attained age 70-1/2.
If the Participant has not made a distribution election by the time of
his death, the Participant's designated beneficiary shall elect the method of
distribution no later than the earlier of (1) December 31 of the calendar year
in which distributions would be required to begin under this Article or (2)
December 31 of the calendar year which contains the fifth anniversary of the
date of death of the Participant. If the Participant has no designated
beneficiary, or if the designated beneficiary does not elect a method of
distribution, distribution of the Participant's
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entire interest shall be completed by December 31 of the calendar year
containing the fifth anniversary of the Participant's death.
(f) For purposes of this Article, the life expectancy of a Participant
and his spouse may be redetermined but not more frequently than annually. The
life expectancy (or joint and last survivor expectancy) shall be calculated
using the attained age of the Participant (or designated beneficiary) as of the
Participant's (or designated beneficiary's) birthday in the applicable calendar
year reduced by one for each calendar year which has elapsed since the date life
expectancy was first calculated. If life expectancy is being recalculated, the
applicable life expectancy shall be the life expectancy as so recalculated. The
applicable calendar year shall be the first distribution calendar year, and if
life expectancy is being recalculated, such succeeding calendar year. Unless
otherwise elected by the Participant (or his spouse, if applicable) by the time
distributions are required to begin, life expectancies shall be recalculated
annually. Any such election not to recalculate shall be irrevocable and shall
apply to all subsequent years. The life expectancy of a nonspouse beneficiary
may not be recalculated.
(g) For purposes of Section 9.3(b) and 9.3(e), any amount paid to a
child shall be treated as if it had been paid to a surviving spouse if such
amount will become payable to the surviving spouse upon such child reaching
majority (or other designated event permitted under regulations).
(h) For distributions beginning before the Participant's death, the
first distribution calendar year is the calendar year immediately preceding the
calendar year which contains the Participant's required beginning date. For
distributions beginning after the Participant's death, the first distribution
calendar year is the calendar year in which distributions are required to begin
pursuant to this Article.
9.4 Required Beginning Dates.
(a) General Rule. The required beginning date of a
Participant is the first day of April of the calendar year
following the calendar year in which the participant attains age
70-1/2.
(b) Transitional rules. The required beginning date of a Participant
who attains age 70-1/2 before January 1, 1988, shall be determined in accordance
with (1) or (2) below:
(1) Non-5-percent owners. The required beginning date
of a Participant who is not a 5-percent owner is the first day of
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April of the calendar year following the calendar year in which the later of
retirement or attainment or age 70-1/2 occurs.
(2) 5-percent owners. The required beginning date of a
Participant who is a 5-percent owner during any year beginning after December
31, 1989, is the first day of April following the later of:
(i) the calendar year in which the Participant attains
age 70-1/2, or
(ii) the earlier of the calendar year with or within which
ends the Plan Year in which the Participant becomes a 5-percent owner, or the
calendar year in which the Participant retires.
The required beginning date of a Participant who is not a 5-percent
owner who attains age 70-1/2 during 1988 and who has not retired as of January
1, 1989, is April 1, 1990.
(c) 5-percent owner. A Participant is treated as a 5-percent owner for
purposes of this section if such Participant is a 5-percent owner as defined in
section 416(i) of the Code (determined in accordance with section 416 but
without regard to whether the plan is top-heavy) at any time during the Plan
Year ending with or within the calendar year in which such owner attains age
66-1/2 or any subsequent Plan Year. Once distributions have begun to a 5-percent
owner under this section, they must continue to be distributed, even if the
Participant ceases to be a 5-percent owner in a subsequent year.
9.5 Form of Payment.
Each Participant's vested interest shall be distributed in a lump sum
payment. Notwithstanding the preceding sentence, but subject to Section 9.3, the
Administrator may not distribute a lump sum when the present value of a
Participant's total Account balances is in excess of $3,500 without the
Participant's consent. This form of payment shall be the normal form of
distribution. Furthermore, however, in the event that the Administrator must
commence distributions with respect to an Employee who has attained age 70-1/2
and is still employed by the Employer, if the Employee does not elect a lump sum
distribution, payments shall be made in installments in such amounts as shall
satisfy the minimum distribution rules of Section 9.3.
9.6 Payments Upon Termination of Plan.
Upon termination of this Plan pursuant to Sections 13.2, 13.4, 13.5 or
13.6, the Administrator shall continue to perform its duties and the Trustee
shall make all payments upon the fol-
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lowing terms, conditions and provisions: All interests of Participants shall
immediately become fully vested; the value of the interests of all Participants
shall be determined within 60 days after such termination, and the Administrator
shall have the same powers to direct the Trustee in making payments as contained
in Sections 9.1 and 13.5.
9.7 Distributions Pursuant to Qualified Domestic Relations Orders.
Upon receipt of a domestic relations order, the Administrator shall
notify promptly the Participant and any alternate payee of receipt of the order
and the Plan's procedure for determining whether the order is a Qualified
Domestic Relations Order. While the issue of whether a domestic relations order
is a Qualified Domestic Relations Order is being determined, if the benefits
would otherwise be paid, the Administrator shall segregate in a separate account
in the Plan the amounts that would be payable to the alternate payee during such
period if the order were a Qualified Domestic Relations Order. If within 18
months the order is determined to be a Qualified Domestic Relations Order, the
amounts so segregated, along with the interest or investment earnings
attributable thereto shall be paid to the alternate payee. Alternatively, if
within 18 months, it is determined that the order is not a Qualified Domestic
Relations Order or if the issue is still unresolved, the amounts segregated
under this Section 9.6, with the earnings attributable thereto, shall be paid to
the Participant or Beneficiary who would have been entitled to such amounts if
there had been no order. The determination as to whether the order is qualified
shall be applied prospectively. Thus, if the Administrator determines that the
order is a Qualified Domestic Relations Order after the 18-month period, the
Plan shall not be liable for payments to the alternative payee for the period
before the order is determined to be a Qualified Domestic Relations Order.
9.8 Cash-Out Distributions
If a Participant receives a distribution of the entire present value of
his vested Account balances under this Plan because of the termination of his
participation in the Plan, the Plan shall disregard a Participant's Service with
respect to which such cash-out distribution shall have been made, in computing
his accrued benefit under the Plan in the event that a Former Participant shall
again become an Employee and become eligible to participate in the Plan. Such a
distribution shall be deemed to be made on termination of participation in the
Plan if it is made not later than the close of the second Plan Year following
the Plan Year in which such termination occurs. The forfeitable portion of a
Participant's accrued benefit shall be restored upon repayment to the Plan by
such former Participant of the full amount of the
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cash-out distribution, provided that the former Participant again becomes an
Employee. Such repayment must be made by the Employee not later than the end of
the 5-year period beginning with the date of the distribution. Forfeitures
required to be restored by virtue of such repayment shall be restored from the
following sources in the following order of preference: (i) current forfeitures;
(ii) additional employee stock ownership contributions, as appropriate and as
subject to Section 5.6; and (iii) investment earnings of the Fund. In the event
that a Participant's interest in the Plan is totally forfeitable, a Participant
shall be deemed to have received a distribution of zero upon his termination of
Service. In the event of a return to Service within 5 years of the date of his
deemed distribution, the Participant shall be deemed to have repaid his
distribution in accordance with the rules of this Section 9.8.
9.9 ESOP Distribution Rules.
Notwithstanding any provision of this Article IX to the contrary, the
distribution of a Participant's Employee Stock Ownership Account (unless the
Participant elects otherwise in writing), shall commence as soon as
administratively feasible as of the first Valuation Date coincident with or next
following his death, disability or termination of Service, but not later than 1
year after the close of the Plan Year in which the Participant separates from
Service by reason of the attainment of his Normal Retirement Date, disability,
death or separation from Service. In addition, all distributions hereunder
shall, to the extent that the Participant's Account is invested in Employer
Securities, be made in the form of Employer Securities. Fractional shares,
however, may be distributed in the form of cash.
9.10 Withholding.
(a) Notwithstanding any provision of the Plan to the contrary that
would otherwise limit a distributee's election under this Article IX, a
distributee may elect, at the time and in the manner prescribed by the Plan
Administrator, to have any portion of an "eligible rollover distribution" paid
directly to an "eligible retirement plan" specified by the distributee in a
"direct rollover."
(b) For purposes of this Section 9.10, an "eligible rollover
distribution" is any distribution of all or any portion of the balance to the
credit of the distributee, except that an "eligible rollover distribution" does
not include: any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for the life (or life
expectancy) of the distributee or the joint lives (or joint life expectancies)
of the distributee and the distributee's designated beneficiary, or for a
specified period of ten years or more; any distribution
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to the extent such distribution is required under section 401(a)(9) of the Code;
and the portion of any distribution that is not includible in gross income
(determined without regard to the exclusion for net unrealized appreciation with
respect to Employer Securities).
(c) For purposes of this Section 9.10, an "eligible retirement plan" is
an individual retirement account described in section 408(a) of the Code, an
individual retirement annuity described in section 408(b) of the Code, an
annuity plan described in section 403(a) of the Code, or a qualified trust
described in section 401(a) of the Code, that accepts the distributee's eligible
rollover distribution. However, in the case of an "eligible rollover
distribution" to the surviving spouse, an "eligible retirement plan" is an
individual retirement account or individual retirement annuity.
(d) For purposes of this Section 9.10, a distributee includes a
Participant or former Participant. In addition, the Participant's or former
Participant's surviving spouse and the Participant's or former Participant's
spouse or former spouse who is the alternate payee under a qualified domestic
relations order, as defined in section 414(p) of the Code, are "distributees"
with regard to the interest of the spouse or former spouse.
(e) For purposes of this Section 9.10, a "direct rollover" is a payment
by the Plan to the "eligible retirement plan" specified by the distributee.
9.11 Waiver of 30-day Notice.
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: (1) the Plan Administrator clearly informs the Participant
that the Participant has a right to a period of at least 30 days after receiving
the notice to consider the decision of whether or not to elect a distribution
(and, if applicable, a particular distribution option), and (2) the Participant,
after receiving the notice, affirmatively elects a distribution.
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ARTICLE X
PROVISIONS RELATING TO TOP-HEAVY PLANS
10.1 Top-Heavy Rules to Control.
Anything contained in this Plan to the contrary notwithstanding, if for
any Plan Year the Plan is a top-heavy plan, as determined pursuant to Section
416 of the Code, then the Plan must meet the requirements of this Article X for
such Plan Year.
10.2 Top-Heavy Plan Definitions.
Unless a different meaning is plainly implied by the context, the
following terms as used in this Article X shall have the following meanings:
(a) "Accrued Benefit" shall mean the account balances or accrued
benefits of an Employee, calculated pursuant to Section 10.3.
(b) "Determination Date" shall mean, with respect to any particular
Plan Year of this Plan, the last day of the preceding Plan Year (or, in the case
of the first Plan Year of the Plan, the last day of the first Plan Year). In
addition, the term "Determination Date" shall mean, with respect to any
particular plan year of any plan (other than this Plan) in a Required
Aggregation Group or a Permissive Aggregation Group, the last day of the plan
year of such plan which falls within the same calendar year as the Determination
Date for this Plan.
(c) "Employer" shall mean the Employer (as defined in Section 1.1(q))
and any entity which is (1) a member of a controlled group including such
Employer, while it is a member of such controlled group (within the meaning of
Section 414(b) of the Code), (2) in a group of trades or businesses under common
control with such Employer, while it is under common control (within the meaning
of Section 414(c) of the Code), and (3) a member of an affiliated service group
including such Employer, while it is a member of such affiliated service group
(within the meaning of Section 414(m) of the Code).
(d) "Key Employee" shall mean any Employee or former Employee (or any
Beneficiary of such Employee or former Employee, as the case may be) who, at any
time during the Plan Year or during the 4 immediately preceding Plan Years is
one of the following:
(1) An officer of the Employer who has compensation greater
than 50% of the amount in effect under Code 415(b)(1)(A) for the Plan
Year; provided, however, that no
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more than 50 Employees (or, if lesser, the greater of 3 or
10% of the Employees) shall be deemed officers;
(2) One of the 10 Employees having annual compensation (as
defined in Section 415 of the Code) in excess of the limitation in
effect under Section 415(c)(1)(A) of the Code, and owning (or
considered as owning, within the meaning of Section 318 of the Code)
the largest interests in the Employer;
(3) Any Employee owning (or considered as owning, within the
meaning of Section 318 of the Code) more than 5% of the outstanding
stock of the Employer or stock possessing more than 5% of the total
combined voting power of all stock of the Employer; or
(4) Any Employee having annual compensation (as defined in
Section 415 of the Code) of more than $150,000 and who would be
described in Section 10.2(d)(3) if "1%" were substituted for "5%"
wherever the latter percentage appears.
For purposes of applying Section 318 of the Code to the provisions of
this Section 10.2(d), Section 318(a)(2)(C) of the Code shall be applied by
substituting "5%" for "50%" wherever the latter percentage appears. In addition,
for purposes of this Section 10.2(d), the provisions of Section 414(b), (c) and
(m) shall not apply in determining ownership interests in the Employer. However,
for purposes of determining whether an individual has compensation in excess of
$150,000, or whether an individual is a Key Employee under Section 10.2(d)(1)
and (2), compensation from each entity required to be aggregated under Sections
414(b), (c) and (m) of the Code shall be taken into account. Notwithstanding
anything contained herein to the contrary, all determinations as to whether a
person is or is not a Key Employee shall be resolved by reference to Section 416
of the Code and any rules and regulations promulgated thereunder.
(e) "Non-Key Employee" shall mean any Employee or former Employee (or
any Beneficiary of such Employee or former Employee, as the case may be) who is
not considered to be a Key Employee with respect to this Plan.
(f) "Permissive Aggregation Group" shall mean all plans in the Required
Aggregation Group and any other plans maintained by the Employer which satisfy
Sections 401(a)(4) and 410 of the Code when considered together with the
Required Aggregation Group.
(g) "Required Aggregation Group" shall mean each plan (including any
terminated plan) of the Employer in which a Key Employee is (or in the case of a
terminated plan, had been) a Participant in the Plan Year containing the
Determination Date or
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any of the 4 preceding Plan Years, and each other plan of the Employer which
enables any plan of the Employer in which a Key Employee is a Participant to
meet the requirement of Sections 401(a)(4) and 410 of the Code.
10.3 Calculation of Accrued Benefits.
(a) An Employee's Accrued Benefit shall be equal to:
(1) With respect to this Plan or any other defined
contribution plan (other than a defined contribution pension plan) in a
Required Aggregation Group or a Permissive Aggregation Group, the
Employee's account balances under the respective plan, determined as of
the most recent plan valuation date within a 12-month period ending on
the Determination Date, including contributions actually made after the
valuation date but before the Determination Date (and, in the first
plan year of a plan, also including any contributions made after the
Determination Date which are allocated as of a date in the first plan
year).
(2) With respect to any defined contribution pension plan in a
Required Aggregation Group or a Permissive Aggregation Group, the
Employee's account balances under the plan, determined as of the most
recent plan valuation date within a 12-month period ending on the
Determination Date, including contributions which have not actually
been made, but which are due to be made as of the Determination Date.
(3) With respect to any defined benefit plan in a Required
Aggregation Group or a Permissive Aggregation Group, the present value
of the Employee's accrued benefits under the plan, determined as of the
most recent plan valuation date within a 12-month period ending on the
Determination Date, pursuant to the actuarial assumptions used by such
plan, and calculated as if the Employee terminated Service under such
plan as of the valuation date (except that, in the first plan year of a
plan, a current Participant's estimated Accrued Benefit Plan as of the
Determination Date shall be taken into account).
(4) If any individual has not performed services for the
Employer maintaining the Plan at any time during the 5-year period
ending on the Determination Date, any Accrued Benefit for such
individual shall not be taken into account.
(b) The Accrued Benefit of any Employee shall be further
adjusted as follows:
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(1) The Accrued Benefit shall be calculated to include all
amounts attributable to both Employer and Employee contributions, but
shall exclude amounts attributable to voluntary deductible Employee
contributions, if any.
(2) The Accrued Benefit shall be increased by the aggregate
distributions made with respect to an Employee under the plan or plans,
as the case may be, during the 5-year period ending on the
Determination Date.
(3) Rollover and direct plan-to-plan transfers shall be taken
into account as follows:
(A) If the transfer is initiated by the Employee and made
from a plan maintained by one employer to a plan maintained by
another unrelated employer, the transferring plan shall
continue to count the amount transferred; the receiving plan
shall not count the amount transferred.
(B) If the transfer is not initiated by the Employee or
is made between plans maintained by related employers, the
transferring plan shall no longer count the amount
transferred; the receiving plan shall count the amount
transferred.
(c) If any individual has not performed services for the Employer at
any time during the 5-year period ending on the Determination Date, any accrued
benefit for such individual (and the account of such individual) shall not be
taken into account.
10.4 Determination of Top-Heavy Status.
This Plan shall be considered to be a top-heavy plan for any Plan Year
if, as of the Determination Date, the value of the Accrued Benefits of Key
Employees exceeds 60% of the value of the Accrued Benefits of all eligible
Employees under the Plan. Notwithstanding the foregoing, if the Employer
maintains any other qualified plan, the determination of whether this Plan is
top-heavy shall be made after aggregating all other plans of the Employer in the
Required Aggregation Group and, if desired by the Employer as a means of
avoiding top-heavy status, after aggregating any other plan of the Employer in
the Permissive Aggregation Group. If the required Aggregation Group is
top-heavy, then each plan contained in such group shall be deemed to be
top-heavy, notwithstanding that any particular plan in such group would not
otherwise be deemed to be top-heavy. Conversely, if the Permissive Aggregation
Group is not top-heavy, then no plan contained in such group shall be deemed to
be top-heavy, notwithstanding that any particular plan in such group would
otherwise be deemed to be top-heavy. In no event shall a plan included in a
top-heavy
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Permissive Aggregation Group be deemed a top-heavy plan unless such plan is also
included in a top-heavy Required Aggregation Group.
10.5 Determination of Super Top-Heavy Status.
The Plan shall be considered to be a super top-heavy plan if, as of the
Determination Date, the Plan would meet the test specified in Section 10.4 above
for classification as a top-heavy plan, except that "90%" shall be substituted
for "60%" whenever the latter percentage appears.
10.6 Minimum Contribution.
(a) For any year in which the Plan is top-heavy, each Non- Key Employee
who has met the age and service requirements, if any, contained in the Plan,
shall be entitled to a minimum contribution (which may include forfeitures
otherwise allocable) equal to a percentage of such Non-Key Employee's
compensation (as defined in Section 415 of the Code) as follows:
(1) If the Non-Key Employee is not covered by a defined
benefit plan maintained by the Employer, then the minimum contribution
under this Plan shall be 3% of such Non-Key Employee's compensation.
(2) If the Non-Key Employee is covered by a defined benefit
plan maintained by the Employer, then the minimum contribution under
this Plan shall be 5% of such Non-Key Employee's compensation.
(b) Notwithstanding the foregoing, the minimum contribution otherwise
allocable to a Non-Key Employee under this Plan shall be reduced in the
following circumstances:
(1) The percentage minimum contribution required under this
Plan shall in no event exceed the percentage contribution made for the
Key Employee for whom such percentage is the highest for the Plan Year
after taking into account contributions under other defined
contribution plans in this Plan's Required Aggregation Group; provided,
however, that this Section 10.7(b)(1) shall not apply if this Plan is
included in a Required Aggregation Group and this Plan enables a
defined benefit plan in such Required Aggregation Group to meet the
requirements of Section 401(a)(4) or 410 of the Code.
(2) No minimum contribution shall be required (or the minimum
contribution shall be reduced, as the case may be) for a Non-Key
Employee under this Plan for any Plan Year if the Employer maintains
another qualified plan under which a
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minimum benefit or contribution is being accrued or made on account of
such Plan Year, in whole or in part, on behalf of the Non-Key Employee,
in accordance with Section 416(c) of the Code.
(c) For purposes of this Section 10.6, there shall be disregarded (1)
any Employer contributions attributable to a salary reduction or similar
arrangement, or (2) any Employer contributions to or any benefits under Chapter
21 of the Code (relating to the Federal Insurance Contributions Act), Title II
of the Social Security Act, or any other federal or state law.
(d) For purposes of this Section 10.6, minimum contributions shall be
required to be made on behalf of only those Non-Key Employees, as described in
Section 10.7(a), who have not terminated Service as of the last day of the Plan
Year. If a Non-Key Employee is otherwise entitled to receive a minimum
contribution pursuant to this Section 10.6(d), the fact that such Non-Key
Employee failed to complete 1,000 Hours of Service or failed to make any
mandatory or elective contributions under this Plan, if any are so required,
shall not preclude him from receiving such minimum contribution.
10.7 Vesting.
(a) For any Plan Year in which the Plan is a top-heavy plan, a
Participant's Employer account shall continue to vest according to the following
schedule:
Years of Service Completed Percentage Vested
-------------------------- -----------------
Less than 1 0%
1 but less than 2 20%
2 but less than 3 40%
3 but less than 4 60%
4 but less than 5 80%
5 or more 100%
(b) For purposes of Section 10.7(a), the term "year of service" shall
have the same meaning as set forth in Section 1.1(kk), as modified by Section
3.2
(c) If for any Plan Year the Plan becomes top-heavy and the vesting
schedule set forth in Section 10.7(a) becomes effective, then, even if the Plan
ceases to be top-heavy in any subsequent Plan Year, the vesting schedule set
forth in Section 10.7(a) shall remain applicable with respect to any Participant
who has completed 3 Years of Service.
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10.8 Maximum Benefit Limitation.
For any Plan Year in which the Plan is a top-heavy plan, Section
5.6(d)(1)(B)(i) and Section 5.6(d)(2)(B)(i)shall be read by substituting "1.0"
for "1.25" wherever the latter figure appears; provided, however, that such
substitution shall not have the effect of reducing any benefit accrued under a
defined benefit plan prior to the first day of the plan year in which this
Section 10.8 becomes applicable.
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ARTICLE XI
ADMINISTRATION
11.1 Appointment of Administrator.
This Plan shall be administered by a committee consisting of up to 5
persons, whether or not Employees or Participants, who shall be appointed from
time to time by the Board of Directors to serve at its pleasure. The Sponsor may
require that each person appointed as an Administrator shall signify his
acceptance by filing an acceptance with the Sponsor. The term "Administrator" as
used in this Plan shall refer to the members of the committee, either
individually or collectively, as appropriate. In the event that the Sponsor
shall elect not to appoint any individuals to constitute a committee to
administer the Plan, the Sponsor shall serve as the Administrator hereunder.
11.2 Resignation or Removal of Administrator.
An Administrator shall have the right to resign at any time by giving
notice in writing, mailed or delivered to the Employer and to the Trustee. Any
Administrator who was an employee of the Employer at the time of his appointment
shall be deemed to have resigned as an Administrator upon his termination of
Service. The Board of Directors may, in its discretion, remove any Administrator
with or without cause, by giving notice in writing, mailed or delivered to the
Administrator and to the Trustee.
11.3 Appointment of Successors: Terms of Office, Etc.
Upon the death, resignation or removal of an Administrator, the
Employer may appoint, by Board of Directors' resolution, a successor or
successors. Notice of termination of an Administrator and notice of appointment
of a successor shall be made by the Employer in writing, with copies mailed or
delivered to the Trustee, and the successor shall have all the rights and
privileges and all of the duties and obligations of the predecessor.
11.4 Powers and Duties of Administrator.
The Administrator shall have the following duties and responsibilities
in connection with the administration of this Plan:
(a) To promulgate and enforce such rules, regulations and procedures as
shall be proper for the efficient administration of the Plan, such rules,
regulations and procedures to apply uniformly to all Employees, Participants and
Beneficiaries;
(b) To determine all questions arising in the administra-
tion, interpretation and application of the Plan, including ques-
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tions of eligibility and of the status and rights of Participants,
Beneficiaries and any other persons hereunder;
(c) To decide any dispute arising hereunder strictly in accordance with
the terms of the Plan; provided, however, that no Administrator shall
participate in any matter involving any questions relating solely to his own
participation or benefits under this Plan;
(d) To advise the Employer and the Trustee regarding the known future
needs for funds to be available for distribution in order that the Trustee may
establish investments accordingly;
(e) To correct defects, supply omissions and reconcile
inconsistencies to the extent necessary to effectuate the Plan;
(f) To advise the Employer of the maximum deductible con-
tribution to the Plan for each fiscal year;
(g) To direct the Trustee concerning all payments which
shall be made out of the Fund pursuant to the provisions of this
Plan;
(h) To advise the Trustee on all terminations of Service by
Participants, unless the Employer has so notified the Trustee;
(i) To confer with the Trustee on the settling of any claims
against the Fund;
(j) To make recommendations to the Board of Directors with
respect to proposed amendments to the Plan and the Trust
Agreement;
(k) To file all reports with government agencies, Employees and other
parties as may be required by law, whether such reports are initially the
obligation of the Employer, the Plan or the Trustee; and
(l) To have all such other powers as may be necessary to
discharge its duties hereunder.
Reasonable discretion is granted to the Administrator to affect the
benefits, rights and privileges of Participants, Beneficiaries or other persons
affected by this Plan. The Administrator shall exercise reasonable discretion
under the terms of this Plan and shall administer the Plan strictly in
accordance with its terms, such administration to be exercised uniformly so that
all persons similarly situated shall be similarly treated.
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11.5 Action by Administrator.
The Administrator may elect a Chairman and Secretary from among its
members and may adopt rules for the conduct of its business. A majority of the
members then serving shall constitute a quorum for the transaction of business.
All resolutions or other action taken by the Administrator shall be by vote of a
majority of those present at such meeting and entitled to vote. Resolutions may
be adopted or other action taken without a meeting upon written consent signed
by at least a majority of the members. All documents, instruments, orders,
requests, directions, instructions and other papers shall be executed on behalf
of the Administrator by either the Chairman or the Secretary of the
Administrator, if any, or by any member or agent of the Administrator duly
authorized to act on the Administrator's behalf.
11.6 Participation by Administrators.
No Administrator shall be precluded from becoming a Participant in the
Plan if he would be otherwise eligible, but he shall not be entitled to vote or
act upon matters or to sign any documents relating specifically to his own
participation under the Plan, except when such matters or documents relate to
benefits generally. If this disqualification results in the lack of a quorum,
then the Board of Directors shall appoint a sufficient number of temporary
Administrators who shall serve for the sole purpose of determining such a
question.
11.7 Agents.
The Administrator may employ agents and provide for such clerical,
legal, actuarial, accounting, medical, advisory or other services as it deems
necessary to perform its duties under this Plan. The cost of such services and
all other expenses incurred by the Administrator in connection with the
administration of the Plan shall be paid from the Fund, unless paid by the
Employer.
11.8 Allocation of Duties.
The duties, powers and responsibilities reserved to the Administrator
may be allocated among its members so long as such allocation is pursuant to
written procedures adopted by the Administrator, in which case, except as may be
required by the Act, no Administrator shall have any liability, with respect to
any duties, powers or responsibilities not allocated to him, for the acts of
omissions of any other Administrator.
11.9 Delegation of Duties.
The Administrator may delegate any of its duties to other
employees of the Employer, to the Trustee with its consent, or to
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any other person or firm, provided that the Administrator shall prudently choose
such agents and rely in good faith on their actions.
11.10 Administrator's Action Conclusive.
Any action on matters within the authority of the Administrator shall
be final and conclusive except as provided in Article XII.
11.11 Compensation and Expenses of Administrator.
No Administrator who is receiving compensation from the Employer as a
full-time employee, as a director or agent, shall be entitled to receive any
compensation or fee for his services hereunder. Any other Administrator shall be
entitled to receive such reasonable compensation for his services as an
Administrator hereunder as may be mutually agreed upon between the Employer and
such Administrator. Any such compensation shall be paid from the Fund, unless
paid by the Employer. Each Administrator shall be entitled to reimbursement by
the Employer for any reasonable and necessary expenditures incurred in the
discharge of his duties.
11.12 Records and Reports.
The Administrator shall maintain adequate records of its actions and
proceedings in administering this Plan and shall file all reports and take all
other actions as it deems appropriate in order to comply with the Act, the Code
and governmental regulations issued thereunder.
11.13 Reports of Fund Open to Participants.
The Administrator shall keep on file, in such form as it shall deem
convenient and proper, all annual reports of the Fund received by the
Administrator from the Trustee, and a statement of each Participant's interest
in the Fund as from time to time determined. The annual reports of the Fund and
the statement of his own interest in the Fund, as well as a complete copy of the
Plan and the Trust Agreement and copies of annual reports to the Internal
Revenue Service, shall be made available by the Administrator to the Employer
for examination by each Participant during reasonable hours at the office of the
Employer, provided, however, that the statement of a Participant's interest
shall not be made available for examination by any other Participant.
11.14 Named Fiduciary.
The Administrator is the named fiduciary for purposes of the Act and
shall be the designated agent for receipt of service of process on behalf of the
Plan. It shall use ordinary care and
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diligence in the performance of its duties under this Plan. Nothing in this Plan
shall preclude the Employer from indemnifying the Administrator for all actions
under this Plan, or from purchasing liability insurance to protect it with
respect to its duties under this Plan.
11.15 Information from Employer.
The Employer shall promptly furnish all necessary information to the
Administrator to permit it to perform its duties under this Plan. The
Administrator shall be entitled to rely upon the accuracy and completeness of
all information furnished to it by the Employer, unless it knows or should have
known that such information is erroneous.
11.16 Reservation of Rights by Employer.
Where rights are reserved in this Plan to the Employer, such rights
shall be exercised only by action of the Board of Directors, except where the
Board of Directors, by written resolution, delegates any such rights to one or
more officers of the Employer or to the Administrator. Subject to the rights
reserved to the Board of Directors acting on behalf of the Employer as set forth
in this Plan, no member of the Board of Directors shall have any duties or
responsibilities under this Plan, except to the extent he shall be acting in the
capacity of an Administrator or Trustee.
11.17 Liability and Indemnification.
(a) The Administrator shall perform all duties required of it under
this Plan in a prudent manner. To the extent not prohibited by the Act, the
Administrator shall not be responsible in any way for any action or omission of
the Employer, the Trustee or any other fiduciaries in the performance of their
duties and obligations set forth in this Plan and in the Trust Agreement. To the
extent not prohibited by the Act, the Administrator shall also not be
responsible for any act or omission of any of its agents, or with respect to
reliance upon advice of its counsel (whether or not such counsel is also counsel
to the Employer or the Trustee), provided that such agents or counsel were
prudently chosen by the Administrator and that the Administrator relied in good
faith upon the action of such agent or the advice of such counsel.
(b) The Administrator shall not be relieved from responsibility or
liability for any responsibility, obligation or duty imposed upon it under this
Plan or under the Act. Except for its own gross negligence, willful misconduct
or willful breach of the terms of this Plan, the Administrator shall be
indemnified and held harmless by the Employer against liability or losses
occurring by reason of any act or omission of the Administrator to the
-52-
extent that such indemnification does not violate the Act or any other federal
or state laws.
11.18 Service as Trustee and Administrator.
Nothing in this Plan shall prevent one or more Trustees from serving as
Administrator under this Plan.
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ARTICLE XII
CLAIMS PROCEDURE
12.1 Notice of Denial.
If a Participant or his Beneficiary is denied any benefits under this
Plan, either in whole or in part, the Administrator shall advise the claimant in
writing of the amount of his benefit, if any, and the specific reasons for the
denial. The Administrator shall also furnish the claimant at that time with a
written notice containing:
(a) A specific reference to pertinent Plan provisions;
(b) A description of any additional material or information
necessary for the claimant to perfect his claim, if possible, and
an explanation of why such material or information is needed; and
(c) An explanation of the Plan's claim review procedure.
12.2 Right to Reconsideration.
Within 60 days of receipt of the information described in 12.1 above,
the claimant shall, if he desires further review, file a written request for
reconsideration with the Administrator.
12.3 Review of Documents.
So long as the claimant's request for review is pending (including the
60-day period described in Section 12.2 above), the claimant or his duly
authorized representative may review pertinent Plan documents and the Trust
Agreement (and any pertinent related documents) and may submit issues and
comments in writing to the Administrator.
12.4 Decision by Administrator.
A final and binding decision shall be made by the Administrator within
60 days of the filing by the claimant of his request for reconsideration;
provided, however, that if the Administrator feels that a hearing with the
claimant or his representative present is necessary or desirable, this period
shall be extended an additional 60 days.
12.5 Notice by Administrator.
The Administrator's decision shall be conveyed to the claimant in
writing and shall include specific reasons for the decision, written in a manner
calculated to be understood by the claimant, with specific references to the
pertinent Plan provisions on which the decision is based.
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ARTICLE XIII
AMENDMENTS, TERMINATION AND MERGER
13.1 Amendments.
The Employer reserves the right at any time and from time to time, and
retroactively if deemed necessary or appropriate by it, to the extent
permissible under law, to conform with governmental regulations or other
policies, to amend in whole or in part any or all of the provisions of this
Plan, provided that:
(a) No amendment shall make it possible for any part of the Fund to be
used for, or diverted to, purposes other than for the exclusive benefit of
Participants or their Beneficiaries under the Trust Agreement, except to the
extent provided in Section 4.4;
(b) No amendment may, directly or indirectly, reduce the vested portion
of any Participant's interest as of the effective date of the amendment or
change the vesting schedule with respect to the future accrual of Employer
contributions for any Participants unless each Participant with 3 or more Years
of Service with the Employer is permitted to elect to have the vesting schedule
in effect before the amendment used to determine his vested benefit; and
(c) No amendment may eliminate an optional form of benefit.
(d) No amendment may increase the duties of the Trustee
without its consent.
(e) No amendment that shall change any of the following types of
provisions shall be made more than once every 6 months, other than to comport
with changes in the Code, the Act or the regulations thereunder: (i) any
provision stating the amount and price of Employer Securities to be awarded to
designated officers and directors or categories of officers and directors; (ii)
any provisions specifying the timing of awards or allocations to officers and
directors; (iii) any provision setting forth a formula that determines the
amount, price and timing of allocations or awards, using objective criteria such
as earnings of the issuer, value of the Employer Securities, Years of Service,
job classification and Compensation levels.
Amendments may be made in the form of Board of Directors' resolutions
or separate written document. Copies of all amendments shall be delivered to the
Trustee.
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13.2 Consolidation, Merger or Other Transactions of Employer.
Nothing in this Plan shall prevent the consolidation, merger,
reorganization or liquidation of the Employer, or prevent the sale by Employer
of any or all of its property. Any successor corporation or other entity formed
and resulting from any such transaction shall have the right to become a party
to this Plan by adopting the same by resolution and by appointing a new Trustee
as though the Trustee had resigned in accordance with the Trust Agreement, and
by executing a proper supplemental agreement with the Trustee. If, within 180
days from the effective date of such transaction, such new entity does not
become a party to this Plan as above provided, this Plan shall automatically be
terminated and the Trustee shall make payments to the persons entitled thereto
in accordance with Section 9.5.
13.3 Consolidation or Merger of Trust.
In the event of any merger or consolidation of the Fund with, or
transfer in whole or in part of the assets and liabilities of the Fund to,
another trust fund held under any other plan of deferred compensation maintained
or to be established for the benefit of all or some of the Participants of this
Plan, the assets of the Fund applicable to such Participants shall be
transferred to the other trust fund only if:
(a) Each Participant would receive a benefit under such successor trust
fund immediately after the merger, consolidation or transfer which is equal to
or greater than the benefit he would have been entitled to receive immediately
before the merger, consolidation or transfer (determined as if this Plan and
such transferee trust fund had then terminated);
(b) Resolutions of the Board of Directors under this Plan, or of any
new or successor employer of the affected Participants, shall authorize such
transfer of assets, and, in the case of the new or successor employer of the
affected Participants, its resolutions shall include an assumption of
liabilities with respect to such Participants' inclusion in the new employer's
plan; and
(c) Such other plan and trust are qualified under Sections
401(a) and 501(a) of the Code.
13.4 Bankruptcy or Insolvency of Employer.
In the event of (a) the Employer's legal dissolution or liquidation by
any procedure other than a consolidation or merger, (b) the Employer's
receivership, insolvency, or cessation of its business as a going concern, or
(c) the commencement of any proceeding by or against the Employer under the
federal bankruptcy
-56-
laws, and similar federal or state statute, or any federal or state statute or
rule providing for the relief of debtors, compensation of creditors,
arrangement, receivership, liquidation or any similar event which is not
dismissed within 30 days, this Plan shall terminate automatically on such date
(provided, however, that if a proceeding is brought against the Employer for
reorganization under Chapter 11 of the United States Bankruptcy Code or any
similar federal or state statute, then this Plan shall terminate automatically
if and when said proceeding results in a liquidation of the Employer, or the
approval of any Plan providing therefor, or the proceeding is converted to a
case under Chapter 7 of the Bankruptcy Code or any similar conversion to a
liquidation proceeding under federal or state law including, but not limited to,
a receivership proceeding). In the event of any such termination as provided in
the foregoing sentence, the Trustee shall make payments to the persons entitled
thereto in accordance with Section 9.5 hereof.
13.5 Voluntary Termination.
The Board of Directors reserves the right to terminate this Plan at any
time by giving to the Trustee and the Administrator notice in writing of such
desire to terminate. The Plan shall terminate upon the date of receipt of such
notice, the interests of all Participants shall become fully vested, and the
Trustee shall make payments to each Participant or Beneficiary in accordance
with Section 9.5. Alternatively, the Employer, in its discretion, may determine
to continue the Trust Agreement and to continue the maintenance of the Fund, in
which event distributions shall be made upon the contingencies and in all the
circumstances which would have been entitled such distributions on a fully
vested basis, had there been no termination of the Plan.
13.6 Partial Termination of Plan or Permanent Discontinuance of
Contributions.
In the event that a partial termination of the Plan shall be deemed to
have occurred, or if the Employer shall discontinue completely its contributions
hereunder, the right of each affected Participant to his interest in the Fund
shall be fully vested. The Employer, in its discretion, shall decide whether to
direct the Trustee to make immediate distribution of such portion of the Fund
assets to the persons entitled thereto or to make distribution in the
circumstances and contingencies which would have controlled such distributions
if there had been no partial termination or discontinuance of contributions.
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ARTICLE XIV
MISCELLANEOUS
14.1 No Diversion of Funds.
It is the intention of the Employer that it shall be impossible for any
part of the corpus or income of the Fund to be used for, or diverted to,
purposes other than for the exclusive benefit of the Participants or their
Beneficiaries, except to extent that a return of the Employer's contribution is
permitted under Section 4.4.
14.2 Liability Limited.
Neither the Employer nor the Administrator, nor any agents, employees,
officers, directors or shareholders of any of them, nor the Trustee, nor any
other person shall have any liability or responsibility with respect to this
Plan, except as expressly provided herein.
14.3 Incapacity.
If the Administrator shall receive evidence satisfactory to it that a
Participant or Beneficiary entitled to receive any benefit under the Plan is, at
the time when such benefit becomes payable, a minor, or is physically or
mentally incompetent to receive such benefit and to give a valid release
therefor, and that another person or an institution is then maintaining or has
custody of such Participant or Beneficiary, and that no guardian, committee or
other representative of the estate of such Participant or Beneficiary shall have
been duly appointed, the Administrator may direct the Trustee to make payment of
such benefit otherwise payable to such Participant or Beneficiary, to such other
person or institution, including a custodian under a Uniform Gifts to Minor Act,
or corresponding legislation (who shall be an adult, a guardian of the minor or
a trust company), and the release of such other person or institution shall be a
valid and complete discharge for the payment of such benefit.
14.4 Spendthrift Clause.
Except as permitted by the Act or the Code, no benefits or other
amounts payable under the Plan shall be subject in any manner to anticipation,
sale, transfer, assignment, pledge, encumbrance, charge or alienation. If the
Administrator determines that any person entitled to any payments under the Plan
has become insolvent or bankrupt or has attempted to anticipate, sell, transfer,
assign, pledge, encumber, charge or otherwise in any manner alienate any benefit
or other amount payable to him under the Plan or that there is any danger of any
levy or attachment or
-58-
other court process or encumbrance on the part of any creditor of such person
entitled to payments under the Plan against any benefit or other accounts
payable to such person, the Administrator may, at any time, in its discretion,
direct the Trustee to withhold any or all payments to such person under the Plan
and apply the same for the benefit of such person, in such manner and in such
proportion as the Administrator may deem proper.
14.5 Benefits Limited to Fund.
All contributions by the Employer to the Fund shall be voluntary, and
the Employer shall be under no legal liability to make any such contributions.
The benefits of this Plan shall be only as can be provided by the assets of the
Fund, and no liability for the payment of benefits under the Plan or for any
loss of assets due to any action or inaction of the Trustee shall be imposed
upon the Employer.
14.6 Cooperation of Parties.
All parties to this Plan and any party claiming interest hereunder
agree to perform any and all acts and execute any and all documents and papers
which are necessary and desirable for carrying out this Plan or any of its
provisions.
14.7 Payments Due Missing Persons.
The Administrator shall direct the Trustee to make a reasonable effort
to locate all persons entitled to benefits under the Plan; however,
notwithstanding any provision in the Plan to the contrary, if, after a period of
5 years from the date such benefit shall be due, any such persons entitled to
benefits have not been located, their rights under the Plan shall stand
suspended. Before this provision becomes operative, the Trustee shall send a
certified letter to all such persons at their last known address advising them
that their interest in benefits under the Plan shall be suspended. Any such
suspended amounts shall be held by the Trustee for a period of 3 additional
years (or a total of 8 years from the time the benefits first became payable),
and thereafter such amounts shall be reallocated among current Participants in
the same manner that a current contribution would be allocated. However, if a
person subsequently makes a valid claim with respect to such reallocated amounts
and any earnings thereon, the Plan earnings or the Employer's contribution to be
allocated for the year in which the claim shall be paid shall be reduced by the
amount of such payment. Any such suspended amounts shall be handled in a manner
not inconsistent with regulations issued by the Internal Revenue Service and
Department of Labor.
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14.8 Governing Law.
This Plan has been executed in the State of Illinois and all questions
pertaining to its validity, construction and administration shall be determined
in accordance with the laws of that State, except to the extent superseded by
the Act.
14.9 Nonguarantee of Employment.
Nothing contained in this Plan shall be construed as a contract of
employment between the Employer and any Employee, or as a right of any Employee
to be continued in the employment of the Employer, or as a limitation of the
right of the Employer to discharge any of its Employees, with or without cause.
14.10 Counsel.
The Trustee and the Administrator may consult with legal counsel, who
may be counsel for the Employer and for the Administrator or the Trustee (as the
case may be), with respect to the meaning or construction of this Plan and the
Trust Agreement, their respective obligations or duties hereunder or with
respect to any action or proceeding or any question of law, and they shall be
fully protected with respect to any action taken or omitted by them in good
faith pursuant to the advice of legal counsel.
IN WITNESS WHEREOF, the Sponsor has caused these presents to be
executed by its duly authorized officers and its corporate seal to be affixed on
this _____ day of August, 1996.
PSB HOLDING COMPANY
ATTEST:
____________________________ By_____________________________
Lorraine G. Ptak, Kimberly P. Rooney,
Secretary President
[Corporate Seal]
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TRUST AGREEMENT
FOR THE
PSB HOLDING COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
Effective as of January 1, 1996
TRUST AGREEMENT
FOR THE
PSB HOLDING COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND CONSTRUCTION 2
1.1 Definitions 2
1.2 Plurals and Gender 2
1.3 Headings and Subheadings 2
ARTICLE II CONTRIBUTIONS 3
2.1 Contributions by Employer 3
2.2 Discontinuance of Contributions 3
ARTICLE III DUTIES OF THE EMPLOYER AND THE 4
ADMINISTRATOR
3.1 Information and Data to be 4
Furnished the Trustee
3.2 Limitation of Duties 4
3.3 Limitation of Liability 4
ARTICLE IV ESTABLISHMENT OF TRUST FUND AND 5
ACCOUNTS
4.1 Establishment of Trust Fund 5
4.2 Establishment of Accounts 5
4.3 Receipt of Contributions 5
4.4 Disbursements from Trust Fund 5
4.5 Charges Against Accounts 6
4.6 Disputes as to Payments 6
4.7 Valuation of Trust Fund 6
ARTICLE V DUTIES AND POWERS OF THE TRUSTEE 8
5.1 Accounting, Records and Certificates 8
5.2 Agents 9
5.3 Sponsor's Power to Appoint 9
Investment Manager
5.4 General Powers of the Trustee 9
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Page
5.5 Investment of Account Assets 10
5.6 Additional Powers of the Trustee 10
5.7 Power to Invest in Employer
Securities and Real Property 12
5.8 Liability of the Trustee 12
5.9 Fees and Expenses 13
5.10 Freedom From Liability as to
Validity of Agreement 13
ARTICLE VI RESIGNATION OR REMOVAL OF TRUSTEE 14
6.1 Resignation or Removal of Trustee 14
ARTICLE VII CONTINUANCE AND TERMINATION OF 16
THIS AGREEMENT
7.1 Term of this Agreement 16
7.2 Effect of Termination 16
7.3 Irrevocability of Contributions 16
ARTICLE VII AMENDMENTS 17
8.1 Amendments Suggested by the
Treasury Department 17
8.2 Other Amendments 17
ARTICLE IX MISCELLANEOUS 18
9.1 Reliance 18
9.2 Persons Dealing with the Trustee 18
9.3 Advice of Administrator, Counsel,
Etc. 18
9.4 Notices 19
9.5 Judicial Accounting 19
9.6 No Bond or Security Required 20
9.7 Governing Law 20
9.8 Invalidity 20
9.9 Copies 20
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TRUST AGREEMENT
FOR THE
PSB HOLDING COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
THIS AGREEMENT, made this ___ day of August, 1996, by and between PSB
HOLDING COMPANY, a Delaware corporation, (hereinafter referred to as the
"Sponsor"), and FIRST BANKERS TRUST CO., N.A. of Quincy, Illinois (hereinafter
referred to as the "Trustee"):
W I T N E S S E T H:
WHEREAS, the Sponsor has adopted the PSB HOLDING COMPANY EMPLOYEE STOCK
OWNERSHIP PLAN (the "Plan"), effective as of January 1, 1996, in order to
provide a retirement fund with employee stock ownership features for the
employees of the Sponsor and its wholly owned subsidiary, Preferred Savings
Bank, to be known after the conversion from mutual to stock form (hereinafter
sometimes collectively and individually, as the case may be, referred to as the
"Employer"), which fund will help in the future security of their employees who
are eligible to participate in the Plan; and
WHEREAS, the Sponsor and the Trustee desire to adopt this Trust
Agreement for the Plan and to provide for the accumulation of assets under the
Plan; and
WHEREAS, the Sponsor intends that the Plan and this Trust shall qualify
under Section 401(a) and 501(a) of the Internal Revenue Code of 1986, as well as
the provisions of the Employee Retirement Income Security Act of 1974, as
amended (the "Act");
NOW, THEREFORE, in consideration of the mutual promises, the mutual
covenants and agreements herein contained, and other good and valuable
consideration, the receipt of which is hereby acknowledged, the Sponsor and the
Trustee agree, effective as of the date of execution of this Trust Agreement, as
follows:
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ARTICLE I
DEFINITIONS AND CONSTRUCTION
1.1 Definitions.
Unless the context of this Agreement clearly indicates otherwise, the
terms defined in Article I of the Plan shall, when used herein, have the same
meaning as in said Plan.
1.2 Plurals and Gender.
Where appearing in this Agreement, the masculine gender shall include
the feminine and neuter genders, and the singular shall include the plural, and
vice versa, unless the context clearly indicates a different meaning.
1.3 Headings and Subheadings.
The headings and subheadings in this Agreement are inserted for the
convenience of reference only and are to be ignored in any construction of the
provisions thereof.
-2-
ARTICLE II
CONTRIBUTIONS
2.1 Contributions by Employer.
The Employer shall contribute and pay over to the Trustee, annually or
more often, as the Employer shall decide, such amounts as shall be determined
under the Plan. Contributions may be made by the Employer to the Trustee in the
form of cash, securities or any other property permissible under the Code and
acceptable to the Trustee.
2.2 Discontinuance of Contributions.
As set forth in the Plan, the Employer assumes no contractual
obligation to continue contributions to the Plan but has specifically reserved
therein the right at any time and for any reason to discontinue the Plan and the
contributions provided to be made thereunder. Failure by the Employer to
continue the Plan or make contributions provided to be made thereunder shall not
give rise to any liability on its part whatsoever other than for contributions
provided to be made prior to the effective date of the termination.
-3-
ARTICLE III
DUTIES OF THE EMPLOYER AND THE ADMINISTRATOR
3.1 Information and Data to be Furnished the Trustee.
In addition to making the contributions called for in Article II
hereof, the Employer agrees to furnish the Trustee, through the Administrator,
with such information and data relative to the Plan as is necessary for the
proper administration of the Fund established hereunder. The Employer shall
promptly notify the Trustee in the event that the Internal Revenue Service
proposes to disallow the qualified status of the Plan or Trust.
3.2 Limitation of Duties.
Neither the Employer nor any of its shareholders or directors, nor the
Administrator shall have any duties or obligations with respect to this
Agreement, except those expressly set forth in Articles II and III hereof and in
the Plan.
3.3 Limitation of Liability.
Except as otherwise provided by law, neither the Employer, nor any of
its officers, directors, employees, or partners (as the case may be) nor the
Administrator shall in any way be liable or responsible to any participant,
beneficiary, Trustee or any other person, firm or corporation whatsoever for any
acts of omission or commission in connection with his or its duties, as
specified in Articles II and III hereof, unless such act of omission or
commission is due to his or its own individual, willful and intentional
nonfeasance, malfeasance or misfeasance.
-4-
ARTICLE IV
ESTABLISHMENT OF TRUST FUND AND ACCOUNTS
4.1 Establishment of Trust Fund.
The Trustee shall establish and maintain a trust fund into which shall
be paid the contributions made by the Employer under the terms of the Plan,
which contributions, together with any income, gains or profits, less
distributions, expenses and losses, shall comprise the Fund held by the Trustee.
The Trustee shall hold, invest, reinvest, manage, administer and distribute the
assets of the Fund, as hereinafter set forth, for the exclusive benefit of the
employees participating in the Plan and their beneficiaries.
4.2 Establishment of Accounts.
As a part of the Fund, the Administrator shall establish and maintain
any individual participant's accounts required under the provisions of the Plan
for such individuals who become participants from time to time, including any
separate accounts as may be provided for in the Plan and as directed by the
Sponsor or the Administrator from time to time to aid in the administration of
the Plan. In addition, the Trustee shall also establish and maintain suspense
accounts as a part of the Fund for the purposes specified in the Plan. The
establishment of separate accounts hereunder shall not require a segregation of
any part of the assets of the Fund, and no participant shall acquire any right
to or interest in any specific asset of the fund as a result of the allocations
to such accounts provided for under the Plan, except where segregation is
specifically provided.
4.3 Receipt of Contributions.
The Trustee shall accept and hold in the Fund contributions made by the
Employer under the Plan. If the amount of the contribution is less than any
minimum established for any investment medium, then the contribution may be held
by the Trustee in cash, without interest, until such time as the required amount
has been contributed so that an investment may be properly made. The Trustee
shall not be responsible in any way for the administration of the Plan and shall
be under no duty to determine whether the amount of any contributions is in
accordance with the Plan or to collect or enforce payment of any contribution.
4.4 Disbursements from Trust Fund.
The Trustee shall make payment from the Fund to such persons (who may
include the Administrator) in such manner, at such times, and in such amounts as
the Administrator may from time to time
-5-
direct. Each such direction shall be in the form of a certificate setting forth
the names and addresses of, and the amount payable to, the persons named therein
and verifying that such persons are entitled to receive benefits under the Plan
in the amounts and at the times stated in such certificate. All such payments
shall be made by the Trustee in kind or, if in cash, by checks mailed postage
prepaid to the persons or companies named in such certificate at their addresses
therein set forth.
4.5 Charges Against Accounts.
Upon receipt of written instructions from the Sponsor or the
Administrator, the Administrator shall charge the appropriate account of the
participant for any withdrawals or distributions made under the Plan.
4.6 Disputes as to Payments.
In the event that any dispute shall arise as to the persons to whom
payments and the delivery of any fund or property shall be made by the Trustee,
or the amounts thereof, the Trustee may retain such payments and/or postpone
such delivery until actual adjudication of such dispute shall have been made in
a court of competent jurisdiction as provided herein, or it shall be indemnified
against loss to its satisfaction.
4.7 Valuation of the Trust Fund.
(a) As of each Valuation Date, the Trustee shall determine the net
worth of the assets of the fund and report such value to the Employer and the
Administrator in writing. In determining such net worth, the Trustee shall
evaluate the assets of the Fund at their fair market value as of such valuation
date and shall deduct all expenses chargeable to the Fund. Any increase or
decrease in the net worth of the assets of the Fund shall be allocated as of
each valuation date among the accounts established as a part of the fund in the
manner specified in the Plan.
(b) In determining and valuing the assets and liabilities of the Fund
for any purpose, securities held in the Fund shall be valued at their last
published sale price on the valuation date, or if the valuation date is not a
business day, then on the business day immediately prior thereto upon the New
York Stock Exchange or upon any other recognized exchange or exchanges, or if no
sale shall have been reported, and in the case of over-the-counter quotations,
the last bid price at the close of business on said business day, all as
reported by any report in common use or authorized as official by the New York
Stock Exchange or any such other exchange as the case may be. Where any security
is listed on two or more exchanges, the Trustee shall determine from time to
time the
-6-
particular exchange which shall be used for the purpose of this
Section.
(c) However, with respect to securities, in the event the Trustee
considers the method hereinbefore in this Section provided to be impracticable
because of the fact that any of the securities included in the Fund are not
quoted or listed, or for any other reason, then the Trustee may employ, at the
expense of the Fund, an independent appraiser to appraise such securities for
the purpose of obtaining the value of the Fund and for any other purpose in the
administration of the Trust. It is recognized and agreed that, in connection
with the conversion of Preferred Savings Bank to stock form, an independent
appraisal has been performed by Keller & Company, Inc. in the course of such
conversion and that the Trustee had relied thereon for the initial purchase of
Employer Securities.
-7-
ARTICLE V
DUTIES AND POWERS OF THE TRUSTEE
5.1 Accounting, Records and Certificates.
(a) The Trustee shall keep accurate and detailed accounts of all
investments, receipts and disbursements and other transactions hereunder, which
shall show the complete record of the operation of the Fund, and all such
accounts and the books and records relating thereto shall be open to inspection
at all reasonable times by any person designated in writing by the
Administrator.
(b) The Trustee shall also furnish to the Employer and the
Administrator, upon request, balance sheets and statements of receipts and
disbursements during the continuance of this Agreement as of any date requested,
but the Trustee shall not be required to furnish such statements more than once
in any three-month period.
(c) Within sixty (60) days following the close of each plan year, and
within sixty (60) days following the resignation or removal of the Trustee as
provided for in Section 6.1 hereof, and within sixty (60) days following the
completion of the application or distribution of the Fund upon termination of
the Plan as provided for in Article VII hereof, the Trustee shall file with the
Employer and with the Administrator a written account setting forth all
investments, receipts, disbursements and other transactions effected by it
during such year or during the period from the closing date of the last
preceding written account to the date of such resignation or removal or to the
date of such completion of application or distribution of funds. Each such
account shall set forth in summary form the receipts and disbursements of the
Trustee for the period accounted for and shall include a description of all
securities and other assets purchased and sold during the period accounted for,
and the cost or proceeds of sale thereof, and shall show all cash, securities
and other property held at the end of such period, and the cost and the market
value of each item thereof. Except as otherwise prescribed by the Act, the
Trustee shall be forever released and discharged from any liability or
accountability to anyone about the propriety of its acts or transactions shown
in such account, except with respect to any such acts or transactions as to
which the Employer or Administrator shall, within the one year period after such
account shall have been filed with the Employer and with the Administrator, file
with the Trustee a written statement setting forth its or their exceptions or
objections. If such statement is filed with the Trustee and the matters thereby
brought into controversy cannot be adjusted by agreement between the Employer
and/or Administrator and the Trustee, then the Trustee shall file such account
in any court of competent jurisdiction for audit and adjudication, as provided
in Section 9.5 hereof. The
-8-
written approval by the Employer and by the Administrator of any account filed
by the Trustee with the Employer and the Administrator shall forever release and
discharge the Trustee from any liability or accountability to anyone about the
propriety of their acts or transactions shown in such account.
5.2 Agents.
(a) The Trustee may employ such counsel, accountants, brokers,
actuaries and other agents and provide for such clerical, accounting, actuarial
and other services as the Trustee may deem advisable to perform their duties
under this Trust Agreement, or as may be directed by the Administrator.
(b) The Trustee may enter into contracts in such form as they shall
determine with one or more persons, firms, corporations or associations to
provide administrative services in handling investments, including custodial
arrangements with qualified parties.
5.3 Sponsor's Power to Appoint Investment Manager.
The Sponsor reserves the right to retain the services of one or more
persons or firms for the management of (including the power to acquire and
dispose of) all or any part of the Fund, or to direct the Trustee on investments
for all or any part of the Fund, provided that each such persons or firms is
registered as an investment advisor under the Investment Advisers Act of 1940,
is a bank (as defined in that Act), or is an insurance company qualified to
manage, acquire or dispose of trust assets under the laws of more than one
state, and provided that each of such persons or firms has acknowledged in
writing that he or it is a fiduciary with respect to the Plan; in such event,
the investment manager or managers shall have the same investment powers and
duties as the Trustee, to the extent that such advisors are so retained, and the
Trustee shall not be liable for the acts or omissions of such investment manager
or managers, or for any transaction entered into upon the instructions of such
investment manager or managers, nor shall it be under any obligation to invest
or otherwise manage any Fund assets which are subject to the management of such
investment manager or managers.
5.4 General Powers of the Trustee.
The Trustee shall have all of the powers necessary or desirable to
perform properly the duties herein set forth.
-9-
5.5 Investment of Account Assets.
The Trustee shall invest and reinvest contributions. Contributions
shall be invested primarily in Employer Securities. Monies, at any time forming
a part of the Fund, shall be limited to investment in overnight Fed Funds, or
deposits with well-capitalized financial institutions, or investments in United
States government obligations. If any distribution of an investment may be
received at the election of the shareholder in additional shares or in cash, the
Trustee may elect to receive it in additional shares. The Trustee is also
authorized to sell or redeem shares as required to implement the instructions of
the Administrator or to pay the Trustee's fees and expenses.
5.6 Additional Powers of the Trustee.
In extension and not in limitation of the powers given them by law or
by other provisions of this Agreement, and subject to the provisions of Section
5.3 and 5.5 hereof, the Trustee shall have the following powers with respect to
the Funds, to be exercised in its discretion or pursuant to direction given by
the Investment Manager, if applicable.
(a) To invest and reinvest any monies at any time forming a part of the
Fund in any capital or common stock (whether voting or non-voting and whether or
not currently paying a dividend), preferred or preference stock (whether voting
or non-voting and whether or not currently paying a dividend), convertible
securities, corporate and governmental obligations, notes and other evidences of
indebtedness or ownership (secured or unsecured), contracts, partnership or
joint venture interests, choses in actions, and warrants and other instruments
entitling the owner thereof to subscribe to or purchase any of the aforesaid.
Substitute Trustee need not request approval from any governmental agency as to
the propriety of any investment in the Fund at the time they assume their
duties.
(b) To borrow or raise money for the purposes of the Fund to the extent
that the Trustees shall deem desirable, including the borrowing of money for the
purpose of acquiring Employer Securities to the extent permitted by the Act, the
Code and the applicable regulations, upon such terms and conditions as the
Trustee in its absolute discretion may deem desirable and proper. For any sum so
borrowed, the Trustee may issue a promissory note as Trustee, and secure the
repayment thereof by pledging, mortgaging or otherwise assigning all or any part
of the Fund.
(c) Subject to Section 5.5 hereof, to vote in person or by proxy any
stocks, bonds or other securities held by the Trustee; to exercise any options
appurtenant to any stock, bonds or other securities, or to exercise any right to
subscribe for additional
-10-
stocks, bonds, or other securities and to make any and all necessary payments
therefor; to join in, or to dissent from and to oppose the reorganization,
recapitalization, consolidation, liquidation, sale or merger of corporations or
properties in which it may be interested as Trustee, upon such terms and
conditions as they may deem wise. Notwithstanding the foregoing, each
Participant with an Employee Stock Ownership Account shall be entitled to direct
the Trustee as to the manner in which the Employer Securities in such Account
are to be voted. Employer Securities held in the Employee Stock Ownership
Suspense Account or the Exempt Loan Suspense Account shall be voted by the
Trustee on each issue with respect to which shareholders are entitled to vote in
the manner directed by the majority of the Participants who directed the Trustee
as to the manner of voting their shares in the Employee Stock Ownership Accounts
with respect to such issue.
(d) To cause any investments from time to time held by it to be
registered in, or transferred into, its name as Trustee, or the name of a
nominee, or to retain them unregistered or in form permitting transferability by
delivery, but the books and records of the Trustee shall at all times show that
all such investments are part of the Fund. The Trustee is authorized to utilize
the services of a securities clearing corporation such as The Depository Trust
Co. .0
to the extent permitted by applicable law.
(e) To employ and enter into agreements with such counsel, accountants,
brokers, investment advisors, and other agents as the Trustee shall deem
advisable, or as may be directed by the Administrator, and to pay their
reasonable expenses and compensation.
(f) To retain any cash and keep unproductive of income any portion of
the Fund as the Trustee, in its absolute discretion, may deem advisable, without
liability to pay interest on such cash balance or on cash in its hands pending
investment or distribution.
(g) To hold and administer the Fund without distinction between
principal and income, and as a single trust fund without physical separation of
any separate funds or accounts provided for in the Plan, except where the Plan
clearly requires the segregation of Fund assets.
Each and all of the foregoing powers may be exercised without court
order or other legal formality. No one dealing with the Trustee need inquire
concerning the validity or propriety of anything that is done or need see to the
application of any money paid or property transferred to or upon the order of
the Trustee.
-11-
5.7 Power to Invest in Employer Securities and Real Property.
(a) The Trustee may acquire or hold, at its own discretion, or at the
direction of the Investment Manager, any security issued by the Employer or an
affiliate of the Employer which is a "qualifying employer security" or any real
property (and related personal property) which is leased to the Employer or an
affiliate of the Employer which is a "qualifying employer real property," as
such terms are defined in the Act and Code, provided that the Trustees may not
acquire any additional qualifying employer real property if immediately after
such acquisition the aggregate fair market value of employer securities and
employer real property held in the Fund exceeds the amount permitted under the
Department of Labor regulations, as amended from time to time.
(b) The Trustee may sell qualifying employer securities and qualifying
employer real property to any party (subject to any restrictions applicable to
such employer securities) including the Employer, provided that:
(i) such sale is for adequate consideration; and
(ii) no commission is charged with respect thereto, if such stock
is purchased or sold to, from, or through a party in interest, as defined in the
Act.
(c) Any qualifying employer securities held in the Fund shall be valued
at fair market value for all purposes of the Plan. The determination of fair
market value shall be made in good faith by the Trustee in accordance with
Section 4.7 hereof.
(d) Bearing in mind that this Trust is the trust for an employee stock
ownership plan, the Trustee shall predominantly invest the assets of the Trust
in Employer Securities.
5.8 Liability of the Trustee
(a) The Trustee shall discharge its duties with the care, skill,
prudence and diligence under the circumstances then prevailing that a prudent
man acting in a like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like aims. Except in the
case where the Plan Administrator, or an Investment Manager, may direct the
Trustee as to investments hereunder (in which case the Trustee shall have no
liability as a result of following such direction) the Trustee shall diversify
the investments of the Fund so as to minimize the risk of large losses, unless
under the circumstances it is clearly prudent not to do so or unless the
investment is in Employer Securities, as it is contemplated that the Trust shall
invest primarily in Employer Securities. The Trustee shall perform its duties in
accordance with
-12-
the Plan insofar as such Plan is consistent with the provisions of the Act. The
Trustee shall be under no duty to defend or engage in any suit with respect to
the Fund unless the Trustee shall have been fully indemnified to its
satisfaction. To the extent not prohibited by the Act, the Trustee shall not be
responsible in any way for any action or omission of the Employer or the
Administrator with respect to its duties and obligations as set forth in the
Plan and this Agreement. To the extent not prohibited by the Act, the Trustee
shall also not be responsible for any action or omission of any of its agents or
with respect to reliance upon the advice of its counsel (whether or not such
counsel is also counsel to the Employer or the Administrator), provided that
such agents or counsel were prudently chosen by the Trustee and that the Trustee
relied in good faith upon the action of such agent or the advice of such
counsel. The Trustee shall not be relieved from responsibility or liability for
any responsibility, obligation or duty imposed upon it under the Plan or under
the Act. Nothing herein shall preclude the indemnification of the Trustee by the
Employer nor prevent the Employer or the Trustee from purchasing liability
insurance to protect the Trustee against liability or losses occurring by reason
of any act of omission of the Trustee, to the extent that such insurance is
permissible under the Act.
(b) The Trustee is a party to this Agreement solely for the purposes
set forth in this Agreement and the Plan and to perform the acts set forth
herein, and no obligation or duty shall be expected or required of them except
as expressly stated in the Plan or this Agreement.
5.9 Fees and Expenses.
The Trustee may receive such reasonable fee for his or its services as
shall be agreed upon, prior to the rendering of such services, between the
Sponsor and the Trustee. Any expenses incurred by the Trustee in the
administration of the Trust shall be paid from the Trust unless paid by the
Employer directly. If paid by the Trust, such expenses (including the fees of a
corporate trustee) shall be charged proportionately (or in such other reasonable
manner as the Trustee shall determine) to the accounts of participants, unless
such expenses are allocable to specific interests of participants.
5.10 Freedom from Liability as to Validity of Agreement.
Anything herein contained to the contrary notwithstanding, the Trustee
shall not have any responsibility for the validity of the Plan or this Trust
Agreement.
-13-
ARTICLE VI
RESIGNATION OR REMOVAL OF TRUSTEE
6.1 Resignation or Removal of Trustee.
The Trustee may resign from this Agreement at any time by giving the
Sponsor and the Administrator written notice of resignation. The Trustee may be
removed by the Sponsor by written notice of removal either mailed or delivered
by hand to the Trustee. Such resignation or removal shall take effect on the
date specified in the notice of resignation or removal, but the date thus
specified shall not be less than thirty (30) days nor more than ninety (90) days
following the date of mailing or delivery of such notice. In the event that the
Trustee is unable or unwilling to comply with instructions from the Sponsor, the
Investment Manager (if any), or the Administrator, or the voting determination
made pursuant to Section 8.2 of the Plan, the Trustee shall be entitled to
resign immediately upon delivery of written notice to the Sponsor.
Notwithstanding the preceding sentence, the Trustee shall not be entitled to
resign immediately in the event of a dispute between the Trustee and the Sponsor
or Administrator about the prudence of continuing to make payments under a
previously negotiated Exempt Loan to purchase Employer Securities. In the event
of such a dispute, the Trustee may resign, but such resignation shall not take
effect less than thirty (30) days from the date of the mailing of such written
resignation. In no event shall the resignation or removal of the Trustee
terminate this Agreement, but upon such resignation or removal of the Trustee,
the Sponsor shall have the duty forthwith of appointing a successor trustee to
carry out the terms of this Agreement. Notice in writing of such appointment of
a successor trustee shall be given to the Trustee resigning or being removed by
the Sponsor. In the event of such resignation or removal of such Trustee and
upon the appointment of a successor trustee and acceptance of such trustee, the
Trustee shall turn over to his successor trustee the Fund and all records or
books of account pertaining to this Agreement in his possession, provided that
the Trustee shall be given a reasonable time, not to exceed sixty (60) days, to
complete his accounting before making such turnover. Upon such resignation or
removal of a corporate Trustee, it shall be entitled to be paid its fee, if any,
earned to the date of such resignation or removal. A successor trustee shall
have the same powers and duties as those herein conferred upon the Trustee. A
successor trustee may be removed or may resign in the same manner, and, in the
event of such removal or resignation of a successor trustee, the same steps
shall follow as on removal of the Trustee. When the Fund assets shall have been
transferred and delivered to the successor trustee and the accounts of the
Trustee shall have been settled in accordance with Section 5.1(c) hereof, the
Trustee shall be forever released and discharged from all further
-14-
accountability, responsibility and liability to anyone for the Fund assets and
shall not be responsible in any way for the further disposition of the Fund.
-15-
ARTICLE VII
CONTINUANCE AND TERMINATION OF THIS AGREEMENT
7.1 Term of this Agreement.
This Agreement shall continue as long as the Plan is in full force and
effect. If the Plan ceases to be in full force and effect, this Agreement shall
thereupon terminate unless expressly extended by the Sponsor.
7.2 Effect of Termination.
Upon the termination of the Plan, the Fund shall be allocated and
distributed or held by the Trustee as provided in Article XII of the Plan.
7.3 Irrevocability of Contributions.
Except as otherwise expressly provided in the Plan, neither the
termination of this Agreement nor any other action or non-action shall cause the
Employer to have any right whatsoever with respect to any contribution, any
asset of the fund, or any other matter or thing whatsoever in connection with
the Fund, it being expressly agreed and understood that all contributions made
are irrevocable and that none of said contributions may, under any circumstances
whatsoever (except as specifically set forth in the Plan), be returned or used
for the benefit of the Employer.
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ARTICLE VIII
AMENDMENTS
8.1 Amendments Suggested by the Treasury Department.
Any and all amendments to this Agreement which may be required or
suggested by any employee or agent of the Internal Revenue Service for the
purpose of the approval of the Plan and Trust under Sections 401 and 501 of the
Code, or any other governmental agency, may be made retroactively to the extent
permitted by law and shall be accomplished by the Employer and effected by
written notice to the Trustee.
8.2 Other Amendments.
This Agreement may otherwise be amended by the Sponsor, in which event
written notice of amendment shall be given by the Sponsor to the Trustee, but no
amendment to this Agreement may be made which is prohibited under the Plan or
which increases the duties or liabilities of the Trustee without its consent.
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ARTICLE IX
MISCELLANEOUS
9.1 Reliance.
The parties hereto shall be protected in acting upon any notice,
resolution, request, consent, order, certificate, report, opinion, statement or
other document which they reasonably believed to be genuine and to have been
signed by the proper party or parties or by a person or persons authorized to
act on its behalf.
9.2 Persons Dealing with the Trustee.
No person dealing with the Trustee shall be under any obligation to
inquire into the validity, expediency or propriety of any action by the Trustee
or of any exercise by him or it of any of the powers conferred upon him or it by
this Agreement. The execution by the Trustee of any instrument, document or
paper in connection with the exercise of any of the powers enumerated herein
shall, of itself, be conclusive evidence to all persons of the authority of the
Trustee to execute the same and to exercise the powers incident thereto.
9.3 Advice of Administrator, Counsel, Etc.
(a) If at any time or times the Trustee is in doubt as to the course
which it should follow in any matter relating to the administration of this
Agreement, it may request the Administrator to advise it with respect thereto,
and it shall be protected in relying upon the advice or direction which may be
given it by the Administrator, in writing, in response to such request.
(b) In the event the Trustee shall have any reasonable doubt at any
time as to its rights or obligations hereunder, or in the event of any dispute
arising under the terms of this Agreement or the Plan, in which dispute the
Sponsor, the Administrator, any participant, any beneficiary or any person
claiming an interest in the Fund is involved, the Trustee shall have the right
to consult with legal counsel (including counsel for the Employer or the
Administrator) and to obtain other professional assistance such as, for example,
accountants or actuaries, to assist it in resolving such doubts, or to advise it
with respect to the meaning or construction of this Agreement, or its
obligations, powers or duties hereunder, or to advise it or represent it with
respect to any action or proceeding or any question, and it shall be fully
protected with respect to any action taken by it or omitted by them in good
faith pursuant to the advice of such counsel or other such professional
advisors. The fees and expenses of such counsel or
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such professional advisors shall be paid from the Fund, unless paid by the
Employer.
9.4 Notices.
(a) Any action by the Employer pursuant to any of the provisions of the
Plan or this Agreement shall be evidenced by a resolution of its Board of
Directors certified to the Trustee over the signature of the Employer's
authorized officer, and the Trustee shall be fully protected in acting in
accordance with such resolution so certified to it. All orders, requests,
directions and instructions of the Administrator to the Trustee shall be in
writing, signed by the Administrator or by any agent of the Administrator duly
authorized to act on its behalf. Unless it knows that the direction constitutes
a breach of the Administrator's duties or responsibilities under the Plan, the
Trustee shall act and shall be fully protected in acting in accordance with such
order, requests, directions and instructions. In the absence of knowledge that
the direction constitutes such a breach, the Trustee shall be entitled to rely
conclusively on such direction, and shall have no further duty to make any
investigation or inquiry before acting upon any such direction of the
Administrator. The Trustee shall not be liable to anyone for the inaction,
action, mistaken action or other errors of the Administrator in directing or
failing to direct the Trustee to make any payments to any participant or
beneficiary.
(b) Promptly after the execution of this Agreement, the Sponsor shall
furnish the Trustee with a list of the names of the Administrators, and
thereafter it shall, upon the removal of any Administrator or upon the
resignation of any Administrator, notify the Trustee of the name of the
Administrator so removed or so resigning, and at such time or times a successor
Administrator is appointed it shall notify the Trustee of the name of said
successor. The Trustee may assume at all times that the Administrators are the
same persons named in said list, unless it has received written notice from the
Sponsor to the contrary.
9.5 Judicial Accounting.
Nothing contained in this Agreement or in the Plan shall be construed
as depriving the Trustee of the right to have a judicial settlement of its
accounts. Upon any proceeding by the Trustee for a judicial settlement of its
accounts or for instructions, the only necessary party thereto in addition to
the Trustee shall be the Employer. If the Trustee's statement or account proves
accurate, the costs of such proceedings, including any reasonable counsel fee
incurred by the Trustee, shall be paid from the Fund.
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9.6 No Bond or Security Required.
The Trustee shall not be required to give any bond or other security
for the faithful performance of its duties hereunder, unless otherwise required
by law.
9.7 Governing Law.
This Agreement shall be construed in accordance with the laws of the
State of Illinois, except to the extent superseded by the Act.
9.8 Invalidity.
In the event any provision of this Agreement shall be held illegal or
invalid for any reason, said illegality or invalidity shall not affect the
remaining provisions hereof, and this Agreement shall thereafter be construed
and enforced as if said illegal or invalid provisions had never been included
herein.
9.9 Copies.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized and their
corporate seals to be hereunto affixed and attested as of the day and year first
above written.
"Sponsor"
ATTEST: PSB HOLDING COMPANY,
A Delaware Corporation
___________________________ By:_________________________
Lorraine G. Ptak, Kimberly P. Rooney,
Secretary President
[Corporate Seal]
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STATE OF ILLINOIS )
) to wit:
COUNTY OF COOK )
I HEREBY CERTIFY that on this ____ day of Ausgust, 1996, before me, the
subscriber, a Notary Public of the State of Illinois, in and for Cook County,
aforesaid, personally appeared Kimberly P. Rooney, President of PSB Holding
Company, a Delaware corporation, and duly acknowledged the foregoing Trust
Agreement to be the act and deed of said corporation.
-------------------
Notary Public
My Commission Expires:
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"Trustee"
FIRST BANKERS TRUST CO., N.A.
ATTEST:
__________________________ By:________________________
Carmen Walch,
Trust Officer
STATE OF ILLINOIS )
) to wit:
COUNTY OF ADAMS )
I HEREBY CERTIFY that on this ____ day of August, 1996, before me, the
subscriber, a Notary Public of the State of Illinois, in and for Adams County,
aforesaid, personally appeared Carmen Walch, Trust Officer of First Bankers
Trust Co., N.A. of Quincy, Illinois, and duly acknowledged the foregoing Trust
Agreement to be the act and deed of said banking institution.
----------------
Notary Public
My Commission Expires:
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