EXHIBIT (d)(1)(ii)(C)
2002 AMENDMENT TO
LENAWEE BANCORP, INC.
EMPLOYEE STOCK OWNERSHIP AND 401(K) PLAN
PAVILION BANCORP, INC. (formerly known as Lenawee Bancorp, Inc.), a
Michigan corporation ("Company") adopts this amendment to its Employee Stock
Ownership and 401(k) Savings Plan ("Plan"). This amendment takes effect as
stated below.
WHEREAS, the Company believes it advisable and in the best interests of
Participants and Beneficiaries to make certain changes to the Plan;
WHEREAS, pursuant to Art. X(D) of the Plan, the Company reserved the right
to amend the Plan subject to the conditions provided therein.
NOW, THEREFORE, the Plan is amended as provided below:
1. EFFECTIVE APRIL 18, 2002, THE NAME OF THE PLAN IS CHANGED TO PAVILION
BANCORP, INC. EMPLOYEE STOCK OWNERSHIP AND 401(k) SAVINGS PLAN AND THE NAME OF
ITS ASSOCIATED TRUST IS CHANGED TO PAVILION BANCORP, INC. EMPLOYEE STOCK
OWNERSHIP AND 401(k) SAVINGS TRUST.
2. EFFECTIVE JANUARY 1, 2002, THE LAST THREE PARAGRAPHS OF ART. I(A)(16) ARE
AMENDED TO READ:
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, the
Compensation and Creditable Compensation of each Employee taken into account
under the Plan for any Plan Year beginning after 2001 shall not exceed $200,000,
as adjusted for cost-of-living increases in accordance with Section 401
(a)(17)(B) of the Code. To the extent permitted by applicable law, for purposes
of testing for nondiscrimination under Code Sections 401(k) and (m), the
Compensation taken into account shall be limited to the Compensation received by
the Employee only during the period while the Employee is a Participant. The
cost-of-living adjustment in effect for a calendar year applies to any period,
not exceeding 12 months, over which Compensation and Creditable Compensation are
determined ("determination period") beginning in such calendar year. If a
determination period consists of fewer than 12 months, the adjusted annual
compensation limit will be multiplied by a fraction, the numerator of which is
the number of months in the determination period, and the denominator of which
is 12.
Any reference in this Plan to the limitation under Section 401(a)(17) of
the Code shall mean the adjusted annual compensation limit set forth in the
preceding paragraph.
If Compensation or Creditable Compensation for any prior determination
period is taken into account in determining an Employee's benefits accruing in
the current Plan Year, the Compensation or Creditable Compensation for that
prior determination period is subject to the adjusted annual compensation limit
in effect for that prior determination period.
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3. EFFECTIVE JANUARY 1, 2002, THE FIRST PARAGRAPH OF ART. III(B) IS AMENDED
AND REPLACED BY TWO NEW PARAGRAPHS, READING AS FOLLOWS:
B. Elective Contributions: Adjusted Elective Contribution Limitation:
Catch-Up Contributions: Corrective Distributions. Subject to the limitations of
Article III(D) and (E) and Article IV(E), each Participant may elect within a
reasonable time (to be specified by the Committee) before any Entry Date, and
before any additional regular periodic dates which the Committee may designate
and communicate to Participants, on a form to be furnished to him by the
Committee to reduce the Creditable Compensation which otherwise would be paid to
him after such Entry Date (or other designated date) and to have the Company
make contributions ("Elective Contributions") to the Trust in the amounts of
such reductions on his behalf; provided, however, that no Participant may elect
to have Elective Contributions made to the Trust on his behalf of less than 1%
or more than 20% (in whole percentages) of such Creditable Compensation. Such an
election, and any election to change the same made pursuant to this Agreement,
may be made only with respect to Creditable Compensation which is not currently
available to the electing Participant on the Entry Date (or other designated
date) as of which the election is made. Further, no Participant may elect to
have Elective Contributions made to the Trust and/or to any other tax qualified
plan of the Company on his behalf of more than the Adjusted Equivalent of the
lesser of the dollar limit or the percentage limit described in (1) or (2),
below:
(1) The dollar limit for a calendar year shall be:
$11,000 for 2002
$12,000 for 2003
$13,000 for 2004
$14,000 for 2005
$15,000 for 2006 and thereafter.
(2) The percentage limit shall be 100 percent of the Participant's
Earnings.
A Participant who has attained (or will attain) the age of 50 before the
close of the Plan Year, and with respect to whom no other Elective Contributions
may be made to the Plan for the Plan Year by reason of the above limitations,
may elect to defer an additional "catch-up" amount not to exceed the lesser
of --
(i) the applicable dollar amount as defined in Section
414(v)(2)(B) of the Code, namely:
$1,000 for 2002
$2,000 for 2003
$3,000 for 2004
$4,000 for 2005
$5,000 for 2006 and thereafter
as adjusted for the cost-of-living in accordance with Section 414(v)(2)(C)
of the Code, or
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(ii) the excess (if any) of (x) the Participant's compensation (as
defined in Section 415(c)(3) of the Code) for the year, over (y) any other
Elective Contributions of the Participant for such year which are made
without regard to this "catch-up" provision. An additional contribution
made pursuant to this provision shall not, with respect to the year in
which the contribution is made, be subject to any otherwise applicable
limitation, contained in subsections (1) or (2), or otherwise, or be taken
into account in applying such limitation to other contributions or
benefits under the Plan or any other plan. However, no Matching Company
Contributions shall be made with respect to any additional contributions
by Participants pursuant to this "catch-up" provision.
4. EFFECTIVE JANUARY 1, 2002, ART III(D) IS AMENDED TO READ:
D. Limitations on Company Contributions. The Company Contributions to the
Trust for any taxable year of the Company shall not exceed the least of:
(1) The aggregate Company Contributions permitted by Article IV(D)
(specifying maximum Annual Additions) as applied to all Participants;
(2) An amount equal to 25% of the aggregate Compensation paid during
such taxable year to Employees who are Participants as of the Anniversary Date
falling within such taxable year, plus the amount of any unused pre-87
limitation carry forwards available under Section 404(a)(3)(A)(v) of the Code in
respect of such taxable year; or
(3) The Company contributions permitted by Article III(E) (pertaining to
two or more plans).
5. EFFECTIVE JANUARY 1, 2002, THE OPENING PARAGRAPH OF ART. IV(D), BEFORE THE
"PROVISO," IS AMENDED TO READ:
D. Limitations on Annual Additions to Accounts. Notwithstanding the foregoing
provisions of Paragraphs (A-2), (B) and (C) of this Article IV or of Article
III, the contributions and other additions with respect to any one Participant
for any such taxable year under all Defined Contribution Plans of the Company,
expressed as an Annual Addition to such Participant's Accounts under this Plan
and as annual additions (defined similarly to Article I(A)(7)) allocated to such
Participant's accounts under all other Defined Contribution Plans of the
Company, for Limitation Years beginning after 2001, shall not exceed the lesser
of:
(1) the Adjusted Equivalent of $40,000.00 (provided that, if a short
Limitation Year is created for any reason, the dollar amount shall be prorated
by multiplying it by a fraction, the numerator of which is the number of months
in the short Limitation Year and the denominator of which is twelve)
or
(2) 100% of the Compensation paid to such Participant by the Company in
such taxable year;
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6. EFFECTIVE JANUARY 1, 2003, ART. V(M) IS AMENDED TO ELIMINATE DISTRIBUTION
AS A PERMITTED METHOD OF DIVERSIFICATION. FOLLOWING SUCH EFFECTIVE DATE, ART.
V(M) SHALL READ:
A Participant's Post 1986 Company Stock Account shall generally be
invested primarily in Company Stock, subject to the following:
(1) As used in this subsection (M), the following terms shall have the
following meaning:
(a) Qualified Participant. The term "Qualified Participant" shall
mean a Participant who has attained age fifty-five (55) and who has
completed ten (10) years of participation under the Plan.
(b) Qualified Election Period. The term "Qualified Election
Period" shall mean the period beginning with the Plan Year following the
Plan Year in which the Participant first becomes a Qualified Participant.
The Qualified Election Period ends with the fifth Plan Year within the
Qualified Election Period.
(c) Election Period. The term "Election Period" shall mean the
ninety (90) day period commencing on the first day of each Plan Year in
the Participant's Qualified Election Period.
(d) Additional Diversification Election Period. The term
"Additional Diversification Election Period" shall mean the ninety (90)
day period commencing on the first day of the Plan Year following the last
Plan Year in the Participant's Qualified Election Period.
(e) "Post 1986 Company Stock Account" means shares of Company
Stock in the Qualified Participant's Company Stock Account acquired by or
contributed to the Trust after December 31, 1986. However, in the
discretion of the Committee "Company Stock Account" may be substituted in
place of the term "Post 1986 Company Stock Account".
(2) During each Election Period, a Qualified Participant will be given
an election to diversify up to twenty-five percent (25%) of the value of his
Post 1986 Company Stock Account. During the Additional Diversification Election
Period, the amount eligible for diversification is fifty percent (50%) of the
value of the Participant's Post 1986 Company Stock Account. The twenty-five (25)
or fifty (50) percent limit, as applicable, is reduced by amounts diversified in
previous Election Periods in determining the amount eligible for
diversification.
(3) The Qualified Participant's direction shall be provided to the
Committee in writing and shall be effected no later than ninety (90) days after
the close of the applicable Election Period to which the direction applies.
(4) At the election of the Qualified Participant, the Trustee shall
transfer the amount for which the Participant has elected diversification to the
401(k) portion of the Plan or to any other 401(k) plan maintained by the Company
or a Related Company for which the Qualified Participant is an eligible
employee, shall distribute such amount to the Participant, or shall transfer
such amount to an individual retirement account established by the Participant.
The
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Committee will provide Qualified Participants with information concerning the
Diversification Option prior to the commencement of the Election Period and
during each Plan Year in the Participant's Qualified Election Period.
(5) A Qualified Participant may modify, revoke or amend an election
under this paragraph at any time during the ninety (90) day Election Period in
which the election is made.
(6) If the fair market value of Company Stock allocated to the Stock
Account of a Qualified Participant is $500 or less on the Anniversary Date
immediately preceeding the first day of any Election Period, no election shall
be required under this Art. V(M).
7. THE FOLLOWING ADDITIONAL PROVISIONS ARE ADOPTED AS GOOD FAITH COMPLIANCE
WITH THE REQUIREMENTS OF THE ECONOMIC GROWTH AND TAX RELIEF RECONCILIATION ACT
OF 2001 ("EGTRRA") AND ARE TO BE CONSTRUED IN ACCORDANCE WITH EGTRRA AND
GUIDANCE ISSUED THEREUNDER. EXCEPT AS OTHERWISE PROVIDED, THESE PROVISIONS ARE
EFFECTIVE JANUARY 1, 2002 AND SHALL SUPERSEDE THE PROVISIONS OF THE PLAN TO THE
EXTENT THOSE PROVISIONS ARE INCONSISTENT WITH THE PROVISIONS OF THIS AMENDMENT:
A. DIRECT ROLLOVERS OF PLAN DISTRIBUTIONS.
a. Effective Date. This Section shall apply to distributions made after
December 31, 2001.
b. Modification of Definition of Eligible Retirement Plan. For purposes of
the direct rollover provisions in Art. XI(F) of the Plan, an eligible
retirement plan shall also mean an annuity contract described in Section
403(b) of the Code and an eligible plan under Section 457(b) of the Code
which is maintained by a state, political subdivision of a state, or any
agency or instrumentality of a state or political subdivision of a state
and which agrees to separately account for amounts transferred into such
plan from this Plan. The definition of eligible retirement plan shall also
apply in the case of a distribution to a surviving spouse, or to a spouse
or former spouse who is the alternate payee under a qualified domestic
relation order, as defined in Section 414(p) of the Code.
c. Modification of Definition of Eligible Rollover Distribution to Exclude
Hardship Distributions. For purposes of the direct rollover provisions in
Art. XI(F) of the Plan, any amount that is distributed on account of
hardship shall not be an eligible rollover distribution and the
distributee may not elect to have any portion of such a distribution paid
directly to an eligible retirement plan.
B. ROLLOVERS DISREGARDED IN INVOLUNTARY CASH-OUTS.
For purposes of Section 8.1(c) of the Plan, the value of a Participant's
nonforfeitable account balance shall be determined without regard to that
portion of the account balance that is attributable to rollover
contributions (and earnings allocable thereto) within the meaning of
Sections 402(c), 403(a)(4), 403(b)(8), 408(d)(3)(A)(ii), and 457(e)(16) of
the Code. If the value of the participant's nonforfeitable account balance
as so determined is $5,000 or less, the Plan shall immediately distribute
the Participant's entire nonforfeitable account balance. This Section
shall be effective with respect to distributions made after
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December 31, 2001 with respect to Participants who separated from service
on or prior to December 31, 2001.
C. REPEAL OF MULTIPLE USE TEST.
The multiple use test described in Treasury Regulation Section 1.401(m)-2
and Article IV(I) of the Plan shall not apply for Plan Years beginning
after December 31, 2001.
D. ELECTIVE CONTRIBUTIONS - CONTRIBUTION LIMITATION.
No Participant shall be permitted to have Elective Contributions made
under this Plan, or any other qualified plan maintained by the Company
during any taxable year, in excess of the dollar limitation contained in
Section 402(g) of the Code in effect for such taxable year, except to the
extent permitted under Art.III(B) of the Plan as amended in Section 3 of
this amendment, and under Section 414(v) of the Code, if applicable.
E. SUSPENSION PERIOD FOLLOWING HARDSHIP DISTRIBUTION.
A Participant who receives a distribution of Elective Contributions after
December 31, 2001, on account of hardship, shall be prohibited from making
Elective Contributions and employee contributions under this and all other
plans of the Company for 6-months after receipt of the distribution. A
Participant who received a distribution of Elective Contributions in
calendar year 2001 on account of hardship shall be prohibited from making
Elective Contributions and employee contributions under this and all other
plans of the Company for 6 months after receipt of the distribution or
until January 1, 2002, if later.
F. ROLLOVERS FROM OTHER PLANS.
a. The Plan will accept Participant rollover contributions and/or direct
rollovers of eligible rollover distributions from the following types of
plans:
i. a qualified plan, other than a pension plan, described in Section
401(a) or 403(a) of the Code, excluding after-tax employee contributions;
ii. an annuity contract described in Section 403(b) of the Code, excluding
after-tax employee contributions; and
iii.an eligible plan under Section 457(b) of the Code which is maintained
by a state, political subdivision of a state, or any agency or
instrumentality of a state or political subdivision of a state.
b. Participant Rollover Contributions from IRAs. The Plan will accept a
participant rollover contribution of the portion of a distribution from an
individual retirement account or annuity described in Section 408(a) or
408(b) of the Code that is eligible to be rolled over and would otherwise
be includible in gross income.
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c. Effective Date of Direct Rollover and Participant Rollover Contribution
Provisions. Section G, Rollovers From Other Plans, shall be effective
January 1, 2002.
G. MODIFICATION OF TOP-HEAVY RULES.
a. Effective Date. This Section shall apply for purposes of determining
whether the Plan is a top-heavy plan under Section 416(g) of the Code for
Plan Years beginning after December 31, 2001, and whether the Plan
satisfies the minimum benefits requirements of Section 416(c) of the Code
for such years. This Section amends Article XIII of the Plan.
b. Determination of Top-Heavy Status.
(1) Key Employee. Key Employee means any Employee or former Employee
(including any deceased Employee) who at any time during the Plan Year
that includes the Determination Date was an officer of the Company having
annual compensation greater than $130,000 (as adjusted under Section
416(i)(1) of the Code for Plan Years beginning after December 31, 2002), a
5-percent owner of the Company, or a 1-percent owner of the Company having
annual compensation of more than $150,000. For this purpose, annual
compensation means compensation within the meaning of Section 415(c)(3) of
the Code. The determination of who is a Key Employee will be made in
accordance with Section 416(i)(1) of the Code and the applicable
Regulations and other guidance of general applicability issued thereunder.
(2) Determination of Present Values and Amounts. This paragraph (2) shall
apply for purposes of determining the present values of accrued benefits
and the amounts of account balances of Employees as of the Determination
Date.
(A) Distributions During Year Ending on the Determination Date. The
present values of accrued benefits and the amounts of account balances of
an Employee as of the Determination Date shall be increased by the
distributions made with respect to the Employee under the Plan and any
plan aggregated with the Plan under Section 416(g)(2) of the Code during
the 1-year period ending on the Determination Date. The preceding sentence
shall also apply to distributions under a terminated plan which, had it
not been terminated, would have been aggregated with the Plan under
Section 416(g)(2)(A)(i) of the Code. In the case of a distribution made
for a reason other than separation from service, death, or disability,
this provision shall be applied by substituting 5-year period for 1-year
period.
(B) Employees Not Performing Services During Year Ending on the
Determination Date. The accrued benefits and accounts of any individual
who has not performed services for the Company during the 1-year period
ending on the Determination Date shall not be taken into account.
c. Minimum Benefits. Matching Company Contributions shall be taken into
account for purposes of satisfying the minimum contribution requirements
of Section 416(c)(2) of the Code and the Plan. The preceding sentence
shall apply with respect to Matching Contributions under the Plan or any
other tax qualified Defined Contribution Plan(s) maintained by the Company
or a Related Company taken into account under Article
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XIII(B)(1) of the Plan for purposes of satisfying such minimum
contribution requirements. Matching Company Contributions that are used to
satisfy the minimum contribution requirements shall be treated as Matching
Contributions for purposes of the actual contribution percentage test and
other requirements of Section 401(m) of the Code.
12. THE TERMS AND PROVISIONS OF THE PLAN SHALL IN ALL OTHER REGARDS REMAIN IN
FULL FORCE AND EFFECT.
WITNESS WHEREOF, the Company has caused this document to be executed by
its duly authorized officer.
PAVILION BANCORP, INC.
By /s/ Famela S. Fisher
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