1
EXHIBIT 10.2
FORM OF
ATLANTIC LIBERTY SAVINGS F.A.
EMPLOYEE STOCK OWNERSHIP PLAN
(adopted effective January 1, 1998)
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ATLANTIC LIBERTY SAVINGS F.A.
EMPLOYEE STOCK OWNERSHIP PLAN
This Employee Stock Ownership Plan, executed on the ____ day of
_____________, 1998, by Atlantic Liberty Savings F.A., a federal stock savings
bank (the "Bank"),
W I T N E S S E T H T H A T
WHEREAS, the board of directors of the Bank has resolved to adopt an
employee stock ownership plan for eligible employees in accordance with the
terms and conditions presented to the directors;
NOW, THEREFORE, the Bank hereby adopts the following Plan setting
forth the terms and conditions pertaining to contributions by the Employer and
the payment of benefits to Participants and Beneficiaries.
IN WITNESS WHEREOF, the Bank has adopted this Plan and caused this
instrument to be executed by its duly authorized officers as of the above date.
ATTEST:
By:
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Secretary President
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C 0 N T E N T S
PAGE NO.
Section 1. Plan Identity..................................................................-1-
1.1 Name........................................................................-1-
1.2 Purpose.....................................................................-1-
1.3 Effective Date..............................................................-1-
1.4 Fiscal Period...............................................................-1-
1.5 Single Plan for All Employers...............................................-1-
1.6 Interpretation of Provisions................................................-1-
Section 2. Definitions....................................................................-1-
Section 3. Eligibility for Participation...............................................-8-
3.1 Initial Eligibility.........................................................-8-
3.2 Definition of Eligibility Year..............................................-8-
3.3 Terminated Employees........................................................-8-
3.4 Certain Employees Ineligible................................................-8-
3.5 Participation and Reparticipation...........................................-8-
3.6 Omission of Eligible Employee...............................................-8-
3.7 Inclusion of Ineligible Employee............................................-9-
Section 4. Contributions and Credits...................................................-9-
4.1 Discretionary Contributions.................................................-9-
4.2 Contributions for Stock Obligations.........................................-9-
4.3 Definitions Related to Contributions........................................-9-
4.4 Conditions as to Contributions.............................................-10-
4.5 Transfers..................................................................-10-
Section 5. Limitations on Contributions and Allocations...............................-10-
5.1 Limitation on Annual Additions.............................................-10-
5.2 Coordinated Limitation With Other Plans....................................-12-
5.3 Effect of Limitations......................................................-12-
5.4 Limitations as to Certain Participants.....................................-13-
Section 6. Trust Fund and Its Investment..............................................-13-
6.1 Creation of Trust Fund.....................................................-13-
6.2 Stock Fund and Investment Fund.............................................-13-
6.3 Acquisition of Stock.......................................................-14-
6.4 Participants' Option to Diversify..........................................-14-
Section 7. Voting Rights and Dividends on Stock.......................................-15-
7.1 Voting and Tendering of Stock..............................................-15-
7.2 Dividends on Stock.........................................................-16-
(i)
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Page No.
Section 8. Adjustments to Accounts....................................................-16-
8.1 Adjustments for Transactions...............................................-16-
8.2 Valuation of Investment Fund...............................................-16-
8.3 Adjustments for Investment Experience......................................-17-
Section 9. Vesting of Participants' Interests.........................................-17-
9.3 Full Vesting Upon Certain Events...........................................-18-
9.4 Full Vesting Upon Plan Termination.........................................-19-
9.5 Forfeiture, Repayment, and Restoral........................................-19-
9.6 Accounting for Forfeitures.................................................-19-
9.7 Vesting and Nonforfeitability..............................................-19-
Section 10. Payment of Benefits........................................................-19-
10.1 Benefits for Participants..................................................-19-
10.2 Time for Distribution......................................................-20-
10.3 Marital Status.............................................................-21-
10.4 Delay in Benefit Determination.............................................-21-
10.5 Accounting for Benefit Payments............................................-21-
10.6 Options to Receive and Sell Stock..........................................-21-
10.7 Restrictions on Disposition of Stock.......................................-22-
10.8 Continuing Loan Provisions; Creations of Protections and Rights............-23-
10.9 Direct Rollover of Eligible Distribution...................................-23-
10.10 In Service Distribution of Roll-over Account...............................-23-
10.11 Waiver of 30 Day Period After Notice of Distribution.......................-24-
Section 11. Rules Governing Benefit Claims and Review of Appeals.......................-24-
11.1 Claim for Benefits.........................................................-24-
11.2 Notification by Committee..................................................-24-
11.3 Claims Review Procedure....................................................-24-
Section 12. The Committee and Its Functions............................................-25-
12.1 Authority of Committee.....................................................-25-
12.2 Identity of Committee......................................................-25-
12.3 Duties of Committee........................................................-25-
12.4 Valuation of Stock.........................................................-25-
12.5 Compliance with ERISA......................................................-26-
12.6 Action by Committee........................................................-26-
12.7 Execution of Documents.....................................................-26-
12.8 Adoption of Rules..........................................................-26-
12.9 Responsibilities to Participants...........................................-26-
12.10 Alternative Payees in Event of Incapacity..................................-26-
12.11 Indemnification by Employers...............................................-26-
12.12 Nonparticipation by Interested Member......................................-27-
(ii)
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Page No.
Section 13. Adoption, Amendment, or Termination of the Plan............................-27-
13.1 Adoption of Plan by Other Employers........................................-27-
13.2 Adoption of Plan by Successor..............................................-27-
13.3 Plan Adoption Subject to Qualification.....................................-27-
13.4 Right to Amend or Terminate................................................-27-
Section 14. Miscellaneous Provisions...................................................-28-
14.1 Plan Creates No Employment Rights..........................................-28-
14.2 Nonassignability of Benefits...............................................-28-
14.3 Limit of Employer Liability................................................-28-
14.4 Treatment of Expenses......................................................-28-
14.5 Number and Gender..........................................................-28-
14.6 Nondiversion of Assets.....................................................-28-
14.7 Separability of Provisions.................................................-28-
14.8 Service of Process.........................................................-29-
14.9 Governing State Law........................................................-29-
14.10 Employer Contributions Conditioned on Deductibility........................-29-
14.11 Unclaimed Accounts.........................................................-29-
14.12 Qualified Domestic Relations Order.........................................-29-
Section 15. Top-Heavy Provisions.......................................................-30-
15.1 Top-Heavy Plan.............................................................-30-
15.2 Super Top-Heavy Plan.......................................................-30-
15.3 Definitions................................................................-31-
15.4 Top-Heavy Rules of Application.............................................-32-
15.5 Top-Heavy Ratio............................................................-33-
15.6 Minimum Contributions......................................................-33-
15.7 Minimum Vesting............................................................-34-
15.8 Top-Heavy Provisions Control in Top-Heavy Plan.............................-34-
(iii)
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ATLANTIC LIBERTY SAVINGS F.A.
EMPLOYEE STOCK OWNERSHIP PLAN
SECTION 1. PLAN IDENTITY.
1.1 NAME. The name of this Plan is "Atlantic Liberty Savings F.A.
Employee Stock Ownership Plan."
1.2 PURPOSE. The purpose of this Plan is to describe the terms
and conditions under which contributions made pursuant to the Plan will be
credited and paid to the Participants and their Beneficiaries.
1.3 EFFECTIVE DATE. The Effective Date of this Plan is
___________________, 1998.
1.4 FISCAL PERIOD. This Plan shall be operated on the basis of a
January 1 to December 31 fiscal year for the purpose of keeping the Plan's
books and records and distributing or filing any reports or returns required by
law.
1.5 SINGLE PLAN FOR ALL EMPLOYERS. This Plan shall be treated as
a single plan with respect to all participating Employers for the purpose of
crediting contributions and forfeitures and distributing benefits, determining
whether there has been any termination of Service, and applying the limitations
set forth in Section 5.
1.6 INTERPRETATION OF PROVISIONS. The Employers intend this Plan
and the Trust to be a qualified stock bonus plan under Section 401(a) of the
Code and an employee stock ownership plan within the meaning of Section
407(d)(6) of ERISA and Section 4975(e)(7) of the Code. The Plan is intended to
have its assets invested primarily in qualifying employer securities of one or
more Employers within the meaning of Section 407(d)(3) of ERISA, and to satisfy
any requirement under ERISA or the Code applicable to such a plan.
Accordingly, the Plan and Trust Agreement shall be interpreted and
applied in a manner consistent with this intent and shall be administered at
all times and in all respects in a nondiscriminatory manner.
SECTION 2. DEFINITIONS.
The following capitalized words and phrases shall have the meanings
specified when used in this Plan and in the Trust Agreement, unless the context
clearly indicates otherwise:
"ACCOUNT" means a Participant's interest in the assets accumulated
under this Plan as expressed in terms of a separate account balance which is
periodically adjusted to reflect his Employer's contributions, the Plan's
investment experience, and distributions and forfeitures.
"ACTIVE PARTICIPANT" means any Employee who has satisfied the
eligibility requirements of Section 3 and who qualifies as an Active
Participant for a particular Plan Year under Section 4.3.
"BANK" means Atlantic Liberty Savings F.A. and any entity which
succeeds to the business of Atlantic Liberty Savings F.A. and adopts this Plan
as its own pursuant to Section 14.2.
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"BENEFICIARY" means the person or persons who are designated by a
Participant to receive benefits payable under the Plan on the Participant's
death. In the absence of any designation or if all the designated
Beneficiaries shall die before the Participant dies or shall die before all
benefits have been paid, the Participant's Beneficiary shall be his surviving
spouse, if any, or his estate if he is not survived by a spouse. The Committee
may rely upon the advice of the Participant's executor or administrator as to
the identity of the Participant's spouse.
"BREAK IN SERVICE" means any Plan Year in which an Employee has 500 or
fewer Hours of Service. Solely for this purpose, an Employee shall be
considered employed for his normal hours of paid employment during a Recognized
Absence (said employee shall not be credited with more than 501 Hours of
Service to avoid a Break in Service), unless he does not resume his Service at
the end of the Recognized Absence. Further, if an Employee is absent for any
period beginning on or after January 1, 1985, (i) by reason of the Employee's
pregnancy, (ii) by reason of the birth of the Employee's child, (iii) by reason
of the placement of a child with the Employee in connection with the Employee's
adoption of the child, or (iv) for purposes of caring for such child for a
period beginning immediately after such birth or placement, the Employee shall
be credited with the Hours of Service which would normally have been credited
but for such absence, up to a maximum of 501 Hours of Service.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTEE" means the committee responsible for the administration of
this Plan in accordance with Section 12.
"COMPANY" means __________________., the stock holding company of
Bank.
"DISABILITY" means only a disability which renders the Participant
totally unable, as a result of bodily or mental disease or injury, to perform
any duties for an Employer for which he is reasonably fitted, which disability
is expected to be permanent or of long and indefinite duration. However, this
term shall not include any disability directly or indirectly resulting from or
related to habitual drunkenness or addiction to narcotics, a criminal act or
attempt, service in the armed forces of any country, an act of war, declared or
undeclared, any injury or disease occurring while compensation to the
Participant is suspended, or any injury which is intentionally self-inflicted.
Further, this term shall apply only if (i) the Participant is sufficiently
disabled to qualify for the payment of disability benefits under the federal
Social Security Act or Veterans Disability Act, or (ii) the Participant's
disability is certified by a physician selected by the Committee. Unless the
Participant is sufficiently disabled to qualify for disability benefits under
the federal Social Security Act or Veterans Disability Act, the Committee may
require the Participant to be appropriately examined from time to time by one
or more physicians chosen by the Committee, and no Participant who refuses to
be examined shall be treated as having a Disability. In any event, the
Committee's good faith decision as to whether a Participant's Service has been
terminated by Disability shall be final and conclusive.
"EARLY RETIREMENT" means retirement on or after a Participant's
attainment of age 55 and the completion of twenty years of Service for an
Employer. If the participant separates from Service before satisfying the age
requirement, but has satisfied the Service requirement, the Participant will be
entitled to elect early retirement upon satisfaction of the age requirement.
"EFFECTIVE DATE" means January 1, 1998.
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"EMPLOYEE" means any individual who is or has been employed or
self-employed by an Employer. "Employee" also means an individual employed by a
leasing organization who, pursuant to an agreement between an Employer and the
leasing organization, has performed services for the Employer and any related
persons (within the meaning of Section 414(n)(6) of the Code) on a substantially
full-time basis for more than one year, if such services are performed under the
primary direction or control of the Employer. However, such a "leased employee"
shall not be considered an Employee if (i) he participates in a money purchase
pension plan sponsored by the leasing organization which provides for immediate
participation, immediate full vesting, and an annual contribution of at least 10
percent of the Employee's Total Compensation, and (ii) leased employees do not
constitute more than 20 percent of the Employer's total work force (including
leased employees, but excluding Highly Paid Employees and any other employees
who have not performed services for the Employer on a substantially full-time
basis for at least one year).
"EMPLOYER" means the Bank or any affiliate within the purview of
section 414(b), (c) or (m) and 415(h) of the Code, any other corporation,
partnership, or proprietorship which adopts this Plan with the Bank's consent
pursuant to Section 13.1, and any entity which succeeds to the business of any
Employer and adopts the Plan pursuant to Section 13.2.
"ENTRY DATE" means the Effective Date of the Plan and each January 1
and July 1 of each Plan Year after the Effective Date.
"ERISA" means the Employee Retirement Income Security Act of 1974 (P.L.
93-406, as amended).
"HIGHLY PAID EMPLOYEE" for any Plan Year means an Employee who, during
either of that or the immediately preceding Plan Year was at any time a five
percent owner of the Employer (as defined in Code Section 416(i)(1)) or had
Total Compensation exceeding $80,000 and was among the most highly compensated
one-fifth of all Employees. For this purpose:
(a) "Total Compensation" shall include any amount which is
excludable from the Employee's gross income for tax purposes pursuant
to Sections 125, 402(a)(8), 402(h)(1)(B), or 403(b) of the Code.
(b) The number of Employees in "the most highly
compensated one-fifth of all Employees" shall be determined by taking
into account all individuals working for all related Employer entities
described in the definition of "Service", but excluding any individual
who has not completed six months of Service, who normally works fewer
than 17-1/2 hours per week or in fewer than six months per year, who
has not reached age 21, whose employment is covered by a collective
bargaining agreement, or who is a nonresident alien who receives no
earned income from United States sources.
"HOURS OF SERVICE" means hours to be credited to an Employee under the
following rules:
(a) Each hour for which an Employee is paid or is entitled
to be paid for services to an Employer is an Hour of Service.
(b) Each hour for which an Employee is directly or
indirectly paid or is entitled to be paid for a period of vacation,
holidays, illness, disability, lay-off, jury duty, temporary military
duty, or leave of absence is an Hour of Service. However, except as
otherwise specifically provided, no more than 501 Hours of Service
shall be credited for any single continuous period
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which an Employee performs no duties. No more than 501 hours of service
will be credited under this paragraph for any single continuous period
(whether or not such period occurs in a single computation period).
Further, no Hours of Service shall be credited on account of payments
made solely under a plan maintained to comply with worker's
compensation, unemployment compensation, or disability insurance laws,
or to reimburse an Employee for medical expenses.
(c) Each hour for which back pay (ignoring any mitigation
of damages) is either awarded or agreed to by an Employer is an Hour
of Service. However, no more than 501 Hours of Service shall be
credited for any single continuous period during which an Employee
would not have performed any duties. The same hours of service will
not be credited both under paragraph (a) or (b) as the case may be,
and under this paragraph (c). These hours will be credited to the
employee for the computation period or periods to which the award or
agreement pertains rather than the computation period in which the
award agreement or payment is made.
(d) Hours of Service shall be credited in any one period
only under one of the foregoing paragraphs (a), (b) and (c); an
Employee may not get double credit for the same period.
(e) If an Employer finds it impractical to count the
actual Hours of Service for any class or group of non-hourly
Employees, each Employee in that class or group shall be credited
with 45 Hours of Service for each weekly pay period in which he has at
least one Hour of Service. However, an Employee shall be credited only
for his normal working hours during a paid absence.
(f) Hours of Service to be credited on account of a
payment to an Employee (including back pay) shall be recorded in the
period of Service for which the payment was made. If the period
overlaps two or more Plan Years, the Hours of Service credit shall be
allocated in proportion to the respective portions of the period
included in the several Plan Years. However, in the case of periods
of 31 days or less, the Administrator may apply a uniform policy of
crediting the Hours of Service to either the first Plan Year or the
second.
(g) In all respects an Employee's Hours of Service shall
be counted as required by Section 2530.200b-2(b) and (c) of the
Department of Labor's regulations under Title I of ERISA.
"INVESTMENT FUND" means that portion of the Trust Fund consisting of
assets other than Stock. Notwithstanding the above, assets from the Investment
Fund may be used to purchase Stock in the open market or otherwise, or used to
pay on the Stock Obligation, and shares so purchased will be allocated to a
Participant's Stock Fund.
"NORMAL RETIREMENT" means retirement on or after a Participant's 65th
birthday.
"NORMAL RETIREMENT DATE" means the date on which a Participant attains
age 65.
"PARTICIPANT" means any Employee who is participating in the Plan, or
who has previously participated in the Plan and still has a balance credited to
his Account.
"PLAN YEAR" means the twelve month period commencing January 1 and
ending December 31, 1998 and each period of 12 consecutive months beginning on
January 1 of each succeeding year.
"RECOGNIZED ABSENCE" means a period for which --
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(a) an Employer grants an Employee a leave of absence for
a limited period, but only if an Employer grants such leave on a
nondiscriminatory basis; or
(b) an Employee is temporarily laid off by an Employer
because of a change in business conditions; or
(c) an Employee is on active military duty, but only to
the extent that his employment rights are protected by the Military
Selective Service Act of 1967 (38 U.S.C. Sec. 2021).
"ROLL OVER ACCOUNT" means the separate account established to hold a
Participant's roll-over contributions and direct transfers.
"SERVICE" means an Employee's period(s) of employment or
self-employment with an Employer, excluding for initial eligibility purposes
any period in which the individual was a nonresident alien and did not receive
from an Employer any earned income which constituted income from sources within
the United States. An Employee's Service shall include any service which
constitutes service with a predecessor employer within the meaning of Section
414(a) of the Code. An Employee's Service shall also include any service with
an entity which is not an Employer, but only either (i) for a period after 1975
in which the other entity is a member of a controlled group of corporations or
is under common control with other trades and businesses within the meaning of
Section 414(b) or 414(c) of the Code, and a member of the controlled group or
one of the trades and businesses is an Employer, (ii) for a period after 1979
in which the other entity is a member of an affiliated service group within the
meaning of Section 414(m) of the Code, and a member of the affiliated service
group is an Employer, or (iii) all employers aggregated with the Employer under
Section 414(o) of the Code (but not until the Proposed Regulations under
Section 414(o) become effective).
"SPOUSE" means the individual, if any, to whom a Participant is
lawfully married on the date benefit payments to the Participant are to begin,
or on the date of the Participant's death, if earlier. A former spouse shall
be treated as the Spouse or surviving spouse to the extent provided under a
qualified domestic relations order as described in section 414(p) of the Code.
"STOCK" means shares of the Company's voting common stock or
preferred stock meeting the requirements of Section 409(e)(3) of the Code
issued by an Employer which is a member of the same controlled group of
corporations within the meaning of Code Section 414(b).
"STOCK FUND" means that portion of the Trust Fund consisting of Stock.
"STOCK OBLIGATION" means an indebtedness arising from any extension of
credit to the Plan or the Trust which satisfies the requirements set forth in
Section 6.3 and which was obtained for any or all of the following purposes:
(i) to acquire qualifying employer securities as defined
in Treasury Regulations Section 54,4975012l
(ii) to repay such Stock Obligation; or
(iii) to repay a prior exempt loan.
"TOTAL COMPENSATION" (a) shall mean:
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(i) A Participant's wages, salaries, fees for professional
services and other amounts received (without regard to whether an
amount is paid in cash) for personal services actually rendered in the
course of employment with the Employer while a Participant in the
Plan, (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, severance payments
and amounts paid as a result of termination, and any deferred
compensation contributions made to this or any other Section 401(k)
Plan on behalf of the Participants), taxable fringe benefits,
reimbursements and expense allowances under a nonaccountable plan (as
described in Section 1.62-2(c) of the Treasury Regulations).
(ii) Amounts described in sections 104(a)(3), 105(a), and
105(h), but only to the extent that these amounts are includable in
the gross income of the employee.
(iii) Amounts paid or reimbursed by the employer for moving
expenses incurred by an employee, but only to the extent that at the
time of payment it is reasonable to believe that these amounts are not
deductible by the employee under section 217.
(iv) The value of a non-qualified stock option granted to
an employee by the employer, but only to the extent that the value of
the option is includable in the gross income of the employee for the
taxable year in which granted.
(v) The amount includable in the gross income of an
employee upon making the election described in section 83(b).
(b) The term "Total Compensation" does not include items
such as:
(i) Contributions made by the Employer to a Plan of
deferred compensation to the extent that before the application of
Section 415 limitations to the Plan, the contributions are not
includable in the gross income of the Employee for the taxable year in
which contributed, except for deferred compensation contributions made
by the Employer to a Section 401(k) Plan on behalf of the Participant.
However, for purposes of computing Code Section 415 annual additions,
deferred compensation contributions made by the Employer to a Section
401(k) Plan on behalf of a Participant shall be deducted from Total
Compensation. In addition, Employer contributions made on behalf of
an Employee to a simplified employee pension plan described in Code
Section 408(k) are not considered as compensation for the taxable year
in which contributed to the extent such contributions are deductible
by the Employee under Code Section 219(b)(7). Additionally, any
distributions from a Plan of deferred compensation are not considered
as compensation for Code Section 415 purposes, regardless of whether
such amounts are includable in the gross income of the Employee when
distributed. However, any amounts received by an Employee pursuant to
an unfunded non-qualified Plan may be considered as compensation for
Code Section 415 purposes in the year such amounts are includable in
the gross income of the Employee.
(ii) Amounts realized from the exercise of a non-qualified
stock option, or when restricted stock (or property) held by an
Employee either becomes freely transferable or is no longer subject to
a substantial risk of forfeiture.
(iii) Amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock option.
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(iv) Other amounts which receive special tax benefits, such
as premiums for group term life insurance (but only to the extent that
the premiums are not includable in the gross income of the Employee),
or contributions made by the Employer (whether or not under a salary
reduction agreement) towards the purchase of an annuity contract
described in Code Section 403(b) (whether or not the contributions are
excludable from the gross income of the Employee).
(c) For Plan Years beginning after December 31, 1993,
Total Compensation in excess of $150,000 (as indexed) shall be
disregarded for all Participants. For purposes of this sub-section,
the $150,000 limit shall be referred to as the "applicable limit" for
the Plan Year in question. Such amount shall be adjusted in such
manner as permitted under Code Section 401(a)(17)(B), effective for
the Plan Year which begins within the applicable calendar year. For
purposes of the applicable limit, Total Compensation shall be prorated
over short plan years.
"TRUST" OR "TRUST FUND" means the trust fund created under this Plan.
"TRUST AGREEMENT" means the agreement between the Bank and the Trustee
concerning the Trust Fund. If any assets of the Trust Fund are held in a
co-mingled trust fund with assets of other qualified retirement plans, "Trust
Agreement" shall be deemed to include the trust agreement governing that
co-mingled trust fund. With respect to the allocation of investment
responsibility for the assets of the Trust Fund, the provisions of Article II
of the Trust Agreement are incorporated herein by reference.
"TRUSTEE" means one or more corporate persons or individuals selected
from time to time by the Bank to serve as trustee or co-trustees of the Trust
Fund.
"UNALLOCATED STOCK FUND" means that portion of the Stock Fund
consisting of the Plan's holding of stock which have been acquired in exchange
for one or more Stock obligations and which have not yet been allocated to the
Participant's Accounts in accordance with Section 4.2
"VALUATION DATE" means the last day of the Plan Year and each other
date as of which the committee shall determine the investment experience of the
Investment Fund and adjust the Participants' accounts accordingly.
"VALUATION PERIOD" means the period following a Valuation Date and
ending with the next Valuation Date.
"VESTING YEAR" means a unit of Service credited to a Participant
pursuant to Section 9.2 for purposes of determining his vested interest in his
Account.
SECTION 3. ELIGIBILITY FOR PARTICIPATION.
3.1 INITIAL ELIGIBILITY. An Employee shall enter the Plan as of
the Entry Date coincident with or next following the later of the following
dates:
(a) the last day of the Employee's first Eligibility Year,
and
(b) the Employee's 21st birthday. However, if an Employee
is not in active Service with an Employer on the date he would
otherwise first enter the Plan, his entry shall be deferred until the
next day he is in Service.
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3.2 DEFINITION OF ELIGIBILITY YEAR. An "Eligibility Year" means
an applicable eligibility period (as defined below) in which the Employee has
completed 1,000 Hours of Service for the Employer. For this purpose:
(a) an Employee's first "eligibility period" is the
12-consecutive month period beginning on the first day on which he has
an Hour of Service, and
(b) his subsequent eligibility periods will be
12-consecutive month periods beginning on each January 1 after that
first day of Service.
3.3 TERMINATED EMPLOYEES. No Employee shall have any
interest or rights under this Plan if he is never in active Service with an
Employer on or after the Effective Date.
3.4 CERTAIN EMPLOYEES INELIGIBLE. No Employee shall participate
in the Plan while his Service is covered by a collective bargaining agreement
between an Employer and the Employee's collective bargaining representative if
(i) retirement benefits have been the subject of good faith bargaining between
the Employer and the representative and (ii) the collective bargaining
agreement does not provide for the Employee's participation in the Plan. No
Employee shall participate in the Plan while he is actually employed by a
leasing organization rather than an Employer.
3.5 PARTICIPATION AND REPARTICIPATION. Subject to the
satisfaction of the foregoing requirements, an Employee shall participate in
the Plan during each period of his Service from the date on which he first
becomes eligible until his termination. For this purpose, an Employee who
returns before five (5) consecutive Breaks in Service who previously satisfied
the initial eligibility requirements or who returns after 5 consecutive one
year Breaks in Service with a vested account balance in the Plan shall re-enter
the Plan as of the date of his return to Service with an Employer.
3.6 OMISSION OF ELIGIBLE EMPLOYEE. If, in any Plan Year, any
Employee who should be included as a Participant in the Plan is erroneously
omitted and discovery of such omission is not made until after a contribution
by his Employer for the year has been made, the Employer shall make a
subsequent contribution with respect to the omitted Employee in the amount
which the said Employer would have contributed shall be made regardless of
whether or not it is deductible in whole or in part in any taxable year under
applicable provisions of the Code.
3.7 INCLUSION OF INELIGIBLE EMPLOYEE. If, in any Plan Year, any
person who should not have been included as a Participant in the Plan is
erroneously included and discovery of such incorrect inclusion is not made
until after a contribution for the year has been made, the Employer shall not
be entitled to recover the contribution made with respect to the ineligible
person regardless of whether or not a deduction is allowable with respect to
the ineligible person shall constitute a Forfeiture for the Plan Year in which
the discovery is made.
SECTION 4. CONTRIBUTIONS AND CREDITS.
4.1 DISCRETIONARY CONTRIBUTIONS. The Employer shall from time to
time contribute, with respect to a Plan Year, such amounts as it may determine
from time to time. The Employer shall have no obligation to contribute any
amount under this Plan except as so determined in its sole discretion. The
Employer's contributions and available forfeitures for a Plan Year shall be
credited as of the last day of the year to the Accounts of the Active
Participants in proportion to their amounts of Cash Compensation.
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14
4.2 CONTRIBUTIONS FOR STOCK OBLIGATIONS. If the Trustee, upon
instructions from the Committee, incurs any Stock Obligation upon the purchase
of Stock, the Employer may contribute for each Plan Year an amount sufficient
to cover all payments of principal and interest as they come due under the
terms of the Stock Obligation. If there is more than one Stock Obligation, the
Employer shall designate the one to which any contribution is to be applied.
Investment earnings realized on Employer contributions and any dividends paid
by the Employer on Stock held in the Unallocated Stock Account, shall be
applied to the Stock Obligation related to that Stock, subject to Section 7.2.
In each Plan Year in which Employer contributions, earnings on
contributions, or dividends on unallocated Stock are used as payments under a
Stock Obligation, a certain number of shares of the Stock acquired with that
Stock Obligation which is then held in the Unallocated Stock Fund shall be
released for allocation among the Participants. The number of shares released
shall bear the same ratio to the total number of those shares then held in the
Unallocated Stock Fund (prior to the release) as (i) the principal and interest
payments made on the Stock Obligation in the current Plan Year bears to (ii)
the sum of (i) above, and the remaining principal and interest payments
required (or projected to be required on the basis of the interest rate in
effect at the end of the Plan Year) to satisfy the Stock Obligation.
At the direction of the Committee, the current and projected payments
of interest under a Stock Obligation may be ignored in calculating the number
of shares to be released in each year if (i) the Stock Obligation provides for
annual payments of principal and interest at a cumulative rate that is not less
rapid at any time than level annual payments of such amounts for 10 years, (ii)
the interest included in any payment is ignored only to the extent that it would
be determined to be interest under standard loan amortization tables, and (iii)
the term of the Stock Obligation, by reason of renewal, extension, or
refinancing, has not exceeded 10 years from the original acquisition of the
Stock.
For these purposes, each Stock Obligation, the Stock purchased with
it, and any dividends on such Stock, shall be considered separately. The Stock
released from the Unallocated Stock Fund in any Plan Year shall be credited as
of the last day of the year to the Accounts of the Active Participants in
proportion to their amounts of Cash Compensation.
4.3 DEFINITIONS RELATED TO CONTRIBUTIONS. For the purposes of this
Plan, the following terms have the meanings specified:
"ACTIVE PARTICIPANT" means a Participant who has satisfied the
eligibility requirements under Section 3 and who has at least 1000 Hours of
Service during the current Plan Year. However, a Participant shall not qualify
as an Active Participant unless (i) he is in active Service with an Employer as
of the last day of the Plan Year, or (ii) he is on a Recognized Absence as of
that date, or (iii) his Service terminated during the Plan Year by reason of
Disability, death, Early or Normal Retirement.
"CASH COMPENSATION" A Participant's Cash Compensation shall include
base salary, bonuses and overtime received by the Participant during the Plan
Year while a Participant in the Plan, and shall also include amounts
contributed under a salary reduction agreement pursuant to Section 401(k) or
Section 125 of the Code.
In the event a Plan Year is a period of less than 12 months for any
reason, then Cash Compensation for the short period shall not exceed the pro
rata portion of this limit created by multiplying a fraction which is the
number of months in the short period divided by twelve times the annual
compensation limit.
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15
4.4 CONDITIONS AS TO CONTRIBUTIONS. Employers' contributions
shall in all events be subject to the limitations set forth in Section 5.
Contributions may be made in the form of cash, or securities and other property
to the extent permissible under ERISA, including Stock, and shall be held by
the Trustee in accordance with the Trust Agreement. In addition to the
provisions of Section 13.3 for the return of an Employer's contributions in
connection with a failure of the Plan to qualify initially under the Code, any
amount contributed by an Employer due to a good faith mistake of fact, or based
upon a good faith but erroneous determination of its deductibility under Section
404 of the Code, shall be returned to the Employer within one year after the
date on which the contribution was originally made, or within one year after its
nondeductibility has been finally determined. However, the amount to be returned
shall be reduced to take account of any adverse investment experience within the
Trust Fund in order that the balance credited to each Participant's Account is
not less that it would have been if the contribution had never been made.
4.5 TRANSFERS. This plan shall accept direct and indirect
transfers, including roll-over contributions from other tax-qualified plans,
provided, however, that this Plan shall not accept any direct or indirect
transfers from any other retirement plan that is tax-qualified under Section
401(a) of the Code and which is subject to the survivor annuity requirements of
section 401(a)(11) and section 417 of the Code.
SECTION 5. LIMITATIONS ON CONTRIBUTIONS AND ALLOCATIONS.
5.1 LIMITATION ON ANNUAL ADDITIONS. Notwithstanding anything
herein to the contrary, allocation of Employer contributions for any Plan Year
shall be subject to the following:
5.1-1 If allocation of Employer contributions in accordance
with Section 4.1 will result in an allocation of more than one-third
the total contributions for a Plan Year to the accounts of Highly Paid
Employees, then allocation of such amount shall be adjusted so that
such excess will not occur.
5.1-2 After adjustment, if any, required by the preceding
paragraph, the annual additions during any Plan Year to any
Participant's Account under this and any other defined contribution
plans maintained by the Employer or an affiliate (within the purview
of Section 414(b), (c) and (m) and Section 415(h) of the Code, which
affiliate shall be deemed the Employer for this purpose) shall not
exceed the lesser of $30,000 (or such other dollar amount which
results from cost-of- living adjustments under Section 415(d) of the
Code) or "25 percent of the Participant's Total Compensation for such
limitation year." In the event that annual additions exceed the
aforesaid limitations, they shall be reduced in the following
priority:
(i) If the Participant is covered by the Plan at the end
of the Plan Year, any excess amount at the end of the Plan Year that
cannot be allocated to the Participant's account shall be used to
reduce the employer contribution for such Participant in the next
limitation year and any succeeding limitation years if necessary.
(ii) If the Participant is not covered by the Plan at the
end of the Plan Year, the excess amount will be held unallocated in a
suspense account. The suspense account will be applied to reduce
future employer contributions for all remaining Participants in the
next limitation year and each succeeding limitation year if necessary.
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(iii) If a suspense account is in existence at any time
during a limitation year, it will not participate in any allocation of
investment gains and losses. All amounts held in suspense accounts
must be allocated to Participant's accounts before any contributions
may be made to the Plan for the limitation year.
(iv) If a suspense account exists at the time of plan
termination, amounts held in the suspense account that cannot be
allocated shall revert to the Employer.
5.1-3 For purposes of this Section 5.1 and the following
Section 5.2, the "annual addition" to a Participant's accounts means
the sum of (I) employer contributions, (ii) employee contributions, if
any, and (iii) forfeitures. Annual additions to a defined
contribution plan also include amounts allocated, after March 31,
1984, to an individual medical account, as defined in Section
415(l)(2) of the Internal Revenue Code, which is part of a pension or
annuity plan maintained by the Employer, amounts derived from
contributions paid or accrued after December 31, 1985, in taxable
years ending after such date, which are attributable to post-
retirement medical benefits allocated to the separate account of a Key
Employee under a welfare benefit fund, as defined in Section 419A(d)
of the Internal Revenue Code, maintained by the Employer. For these
purposes, annual additions to a defined contribution plan shall not
include the allocation of the excess amounts remaining in the
Unallocated Stock Fund subsequent to a sale of stock from such fund in
accordance with a transaction described in Section 8.1 of the Plan.
The $30,000 limitations referred to shall, for each limitation year
ending after 1988, be automatically adjusted to the new dollar
limitations determined by the Commissioner of Internal Revenue for the
calendar year beginning in that limitation year.
5.1-4 Notwithstanding the foregoing, if no more than
one-third of the Employer Contributions to the Plan for a year which
are deductible under Section 404(a)(9) of the Code are allocated to
Highly Paid Employees (within the meaning of Section 414(q) of the
Internal Revenue Code), the limitations imposed herein shall not apply
to:
(i) forfeitures of employer securities (within the meaning
of Section 409 of the Code) under the Plan if such securities were
acquired with the proceeds of a loan described in Section 404(a)(9)(A)
of the Code), or
(ii) Employer Contributions to the Plan which are
deductible under Section 404(a)(9)(B) and charged against a
Participant's account.
5.1-5 If the Employer contributes amounts, on behalf of
Employees covered by this Plan, to other "defined contribution plans"
as defined in Section 3(34) of ERISA, the limitation on annual
additions provided in this Section shall be applied to annual
additions in the aggregate to this Plan and to such other plans.
Reduction of annual additions, where required, shall be accomplished
first by reductions under such other plan pursuant to the directions
of the named Fiduciary for administration of such other plans or under
priorities, if any, established under the terms of such other plans
and then by allocating any remaining excess for this Plan in the
manner and priority set out above with respect to this Plan."
5.1-6 A limitation year shall mean each 12 consecutive month
period beginning each January 1.
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5.2 COORDINATED LIMITATION WITH OTHER PLANS. Aside from the
limitation prescribed by Section 5.1 with respect to the annual addition to a
Participant's accounts for any single limitation year, if a Participant has
ever participated in one or more defined benefit plans maintained by an
Employer or an affiliate, then the accrued benefit shall be limited so that the
sum of his defined plan fraction and his defined contribution plan fraction
does not exceed one. For this purpose:
5.2-1 A Participant's defined contribution plan fraction with
respect to a Plan Year shall be a fraction, (i) the numerator of which
is the sum of the annual additions to his accounts through the current
year, and (ii) the denominator of which is the sum of the lesser of the
following amounts -A- and -B- determined for the current limitation
year and each prior limitation year of Service with an Employer: -A- is
1.25 times the dollar limit in effect for the year under Section
415(c)(1)(A) of the Code, or 1.0 times such dollar limitation if the
Plan is top-heavy, and -B- is 35 percent of the Participant's Total
Compensation for such year. Further, if the Participant participated in
any related defined contribution plan in any years beginning before
1976, any-excess of the sum of the actual annual additions to the
Participant's accounts for those years over the maximum annual
additions which could have been made in accordance with Section 5.1
shall be ignored, and voluntary contributions by the Participant during
those years shall be taken into account as to each such year only to
the extent that his average annual voluntary contribution in those
years exceeded 10 percent of his average annual Total Compensation in
those years.
5.2-2 A Participant's defined benefit plan fraction with
respect to a limitation year shall be a fraction, (i) the numerator of
which is his projected annual benefit payable at normal retirement
under the Employers' defined benefit plans, and (ii) the denominator
of which is the lesser of (a) 1.25 times $90,000, or 1.0 times such
dollar limitation if the Plan is top-heavy, and (b) 1.4 times the
Participant's average Total Compensation during his highest-paid three
consecutive limitation years.
5.3 EFFECT OF LIMITATIONS. The Committee shall take whatever
action may be necessary from time to time to assure compliance with the
limitations set forth in Section 5.1 and 5.2. Specifically, the Committee shall
see that each Employer restrict its contributions for any Plan Year to an
amount which, taking into account the amount of available forfeitures, may be
completely allocated to the Participants consistent with those limitations.
Where the limitations would otherwise be exceeded by any Participant, further
allocations to the Participant shall be curtailed to the extent necessary to
satisfy the limitations. Where an excessive amount is contributed on account of
a mistake as to one or more Participants' compensation, or there is an amount
of forfeitures which may not be credited in the Plan Year in which it becomes
available, the amount shall be corrected in accordance with Section 5.1-2 of
the Plan.
5.4 LIMITATIONS AS TO CERTAIN PARTICIPANTS. Aside from the
limitations set forth in Section 5.1 and 5.2, if the Plan acquires any Stock in
a transaction as to which a selling shareholder or the estate of a deceased
shareholder is claiming the benefit of Section 1042 of the Code, the Committee
shall see that none of such Stock, and no other assets in lieu of such Stock,
are allocated to the Accounts of certain Participants in order to comply with
Section 409(n) of the Code.
This restriction shall apply at all times to a Participant who owns
(taking into account the attribution rules under Section 318(a) of the Code,
without regard to the exception for employee plan trusts in Section
318(a)(2)(B)(i) more than 25 percent of any class of stock of a corporation
which issued the Stock acquired by the Plan, or another corporation within the
same controlled group, as defined in Section 409(l)(4) of the Code (any such
class of stock hereafter called a "Related Class"). For this purpose, a
Participant who owns more than 25 percent of any Related Class at any time
within the one year preceding the Plan's
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purchase of the Stock shall be subject to the restriction as to all allocations
of the Stock, but any other Participant shall be subject to the restriction only
as to allocations which occur at a time when he owns more than 25 percent of any
Related Class.
Further, this restriction shall apply to the selling shareholder
claiming the benefit of Section 1042 and any other Participant who is related
to such a shareholder within the meaning of Section 267(b) of the Code, during
the period beginning on the date of sale and ending on the later of (1) the
date that is ten years after the date of sale, or (2) the date of the plan
allocation attributable to the final payment of acquisition indebtedness
incurred in connection with the sale.
This restriction shall not apply to any Participant who is a lineal
descendant of a selling shareholder if the aggregate amounts allocated under
the Plan for the benefit of all such descendants do not exceed five percent of
the Stock acquired from the shareholder.
SECTION 6. TRUST FUND AND ITS INVESTMENT.
6.1 CREATION OF TRUST FUND. All amounts received under the Plan
from Employers and investments shall be held as the Trust Fund pursuant to the
terms of this Plan and of the Trust Agreement between the Bank and the Trustee.
The benefits described in this Plan shall be payable only from the assets of
the Trust Fund, and none of the Bank, any other Employer, its board of
directors or trustees, its stockholders, its officers, its employees, the
Committee, and the Trustee shall be liable for payment of any benefit under
this Plan except from the Trust Fund.
6.2 STOCK FUND AND INVESTMENT FUND. The Trust Fund held by the
Trustee shall be divided into the Stock Fund, consisting entirely of Stock, and
the Investment Fund, consisting of all assets of the Trust other than Stock.
The Trustee shall have no investment responsibility for the Stock Fund, but
shall accept any Employer contributions made in the form of Stock, and shall
acquire, sell, exchange, distribute, and otherwise deal with and dispose of
Stock in accordance with the instructions of the Committee. The Trustee shall
have full responsibility for the investment of the Investment Fund, except to
the extent such responsibility may be delegated from time to time to one or
more investment managers pursuant to Section 2.2 of the Trust Agreement, or to
the extent the Committee directs the Trustee to purchase Stock with the assets
in the Investment Fund.
6.3 ACQUISITION OF STOCK. From time to time the Committee may, in
its sole discretion, direct the Trustee to acquire Stock from the issuing
Employer or from shareholders, including shareholders who are or have been
Employees, Participants, or fiduciaries with respect to the Plan. The Trustee
shall pay for such Stock no more than its fair market value, which shall be
determined conclusively by the Committee pursuant to Section 12.4. The
Committee may direct the Trustee to finance the acquisition of Stock by
incurring or assuming indebtedness to the seller or another party which
indebtedness shall be called a "Stock Obligation". The term "Stock Obligation"
shall refer to a loan made to the Plan by a disqualified person within the
meaning of Section 4975(e)(2) of the Code, or a loan to the Plan which is
guaranteed by a disqualified person. A Stock Obligation includes a direct loan
of cash, a purchase-money transaction, and an assumption of an obligation of a
tax-qualified employee stock ownership plan under Section 4975(e)(7) of the
Code ("ESOP"). For these purposes, the term "guarantee" shall include an
unsecured guarantee and the use of assets of a disqualified person as
collateral for a loan, even though the use of assets may not be a guarantee
under applicable state law. An amendment of a Stock Obligation in order to
qualify as an "exempt loan" is not a refinancing of the Stock Obligation or the
making of another Stock Obligation. The term "exempt loan" refers to a loan
that satisfies the provisions of this paragraph.
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A "non-exempt loan" fails to satisfy this paragraph. Any Stock Obligation shall
be subject to the following conditions and limitations:
6.3-1 A Stock Obligation shall be for a specific term, shall
not be payable on demand except in the event of default, and shall
bear a reasonable rate of interest.
6.3-2 A Stock Obligation may, but need not, be secured by a
collateral pledge of either the Stock acquired in exchange for the
Stock Obligation, or the Stock previously pledged in connection with a
prior Stock Obligation which is being repaid with the proceeds of the
current Stock Obligation. No other assets of the Plan and Trust may
be used as collateral for a Stock Obligation, and no creditor under a
Stock Obligation shall have any right or recourse to any Plan and
Trust assets other than Stock remaining subject to a collateral
pledge.
6.3-3 Any pledge of Stock to secure a Stock Obligation must
provide for the release of pledged Stock in connection with payments
on the Stock obligations in the ratio prescribed in Section 4.2.
6.3-4 Repayments of principal and interest on any Stock
Obligation shall be made by the Trustee only from Employer cash
contributions designated for such payments, from earnings on such
contributions, and from cash dividends received on Stock, in the last
case, however, subject to the further requirements of Section 7.2.
6.3-5 In the event of default of a Stock Obligation, the
value of plan assets transferred in satisfaction of the Stock
Obligation must not exceed the amount of the default. If the lender
is a disqualified person within the meaning of Section 4975 of the
Code, a Stock Obligation must provide for a transfer of plan assets
upon default only upon and to the extent of the failure of the plan to
meet the payment schedule of said Stock Obligation. For purposes of
this paragraph, the making of a guarantee does not make a person a
lender."
6.4 PARTICIPANTS' OPTION TO DIVERSIFY. The Committee shall
provide for a procedure under which each Participant may, during the qualified
election period, elect to "diversify" a portion of the Employer Stock allocated
to his Account, as provided in Section 401(a)(28)(B) of the Code. An election
to diversity must be made on the prescribed form and filed with the Committee
within the period specified herein. For each of the first five (5) Plan years in
the qualified election period, the Participant may elect to diversify an amount
which does not exceed 25% of the number of shares allocated to his Account since
the inception of the Plan, less all shares with respect to which an election
under this Section has already been made. For the last year of the qualified
election period, the Participant may elect to have up to 50 percent of the value
of his Account committed to other investments, less all shares with respect to
which an election under this Section has already been made. The term "qualified
election period" shall mean the six (6) Plan Year period beginning with the
first Plan Year in which a Participant has both attained age 55 and completed 10
years of participation in the Plan. A Participant's election to diversify his
Account may be made within each year of the qualified election period and shall
continue for the 90-day period immediately following the last day of each year
in the qualified election period. Once a Participant makes such election, the
Plan must complete diversification in accordance with such election within 90
days after the end of the period during which the election could be made for the
Plan Year. In the discretion of the Committee, the Plan may satisfy the
diversification requirement by any of the following methods:
6.4-1 The Plan may distribute all or part of the amount
subject to the diversification election.
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6.4-2 The Plan may offer the Participant at least three
other distinct investment options, if available under the Plan. The
other investment options shall satisfy the requirements of Regulations
under Section 404(c) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA").
6.4-3 The Plan may transfer the portion of the
Participant's Account subject to the diversification election to
another qualified defined contribution plan of the Employer that
offers at least three investment options satisfying the requirements
of the Regulations under Section 404(c) of ERISA.
SECTION 7. VOTING RIGHTS AND DIVIDENDS ON STOCK.
7.1 VOTING AND TENDERING OF STOCK. The Trustee generally shall
vote all shares of Stock held under the Plan in accordance with the written
instructions of the Committee. However, if any Employer has registration-type
class of securities within the meaning of Section 409(e)(4) of the Code, or if a
matter submitted to the holders of the Stock involves a merger, consolidation,
recapitalization, reclassification, liquidation, dissolution, or sale of
substantially all assets of an entity, then (i) the shares of Stock which have
been allocated to Participants' Accounts shall be voted by the Trustee in
accordance with the Participants' written instructions, and (ii) the Trustee
shall vote any unallocated Stock and allocated Stock for which it has received
no voting instructions in the same proportions as it votes the allocated Stock
for which it has received instructions from Participants; provided, however,
that if an exempt loan, as defined in Section 4975(d) of the Code, is
outstanding and the Plan is in default on such exempt loan, as default is
defined in the loan documents, then to the extent that such loan documents
require the lender to exercise voting rights with respect to the unallocated
shares, the loan documents will prevail. In the event no shares of Stock have
been allocated to Participants' Accounts at the time Stock is to be voted and
any exempt loan which may be outstanding is not in default, each Participant
shall be deemed to have one share of Stock allocated to his or her account for
the sole purpose of providing the Trustee with voting instructions.
Notwithstanding any provision hereunder to the contrary, all
unallocated shares of Stock must be voted by the Trustee in a manner determined
by the Trustee to be for the exclusive benefit of the Participants and
Beneficiaries. Whenever such voting rights are to be exercised, the Employers
shall provide the Trustee, in a timely manner, with the same notices and other
materials as are provided to other holders of the Stock, which the Trustee
shall distribute to the Participants. The Participants shall be provided with
adequate opportunity to deliver their instructions to the Trustee regarding the
voting of Stock allocated to their Accounts. The instructions of the
Participants' with respect to the voting of allocated shares hereunder shall be
confidential.
7.1-1 In the event of a tender offer, Stock shall be tendered
by the Trustee in the same manner as set forth above with respect to
the voting of Stock. Notwithstanding any provision hereunder to the
contrary, Stock must be tendered by the Trustee in a manner determined
by the Trustee to be for the exclusive benefit of the Participants and
Beneficiaries.
7.2 DIVIDENDS ON STOCK. Dividends on Stock which are received by
the Trustee in the form of additional Stock shall be retained in the Stock
Fund, and shall be allocated among the Participant's Accounts and the
Unallocated Stock Fund in accordance with their holdings of the Stock on which
the dividends have been paid. Dividends on Stock credited to Participants'
Accounts which are received by the Trustee in the form of cash shall, at the
direction of the Employer paying the dividends, either (i) be credited to the
Accounts in accordance with Section 8.3 and invested as part of the Investment
Fund, (ii) be distributed immediately to the Participants in proportion with the
Participants' Stock Fund Account
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balance (iii) be distributed to the Participants within 90 days of the close of
the Plan Year in which paid in proportion with the Participants' Stock Fund
Account balance or (iv) be used to make payments on the Stock Obligation. If
dividends on Stock allocated to a Participant's Account are used to repay the
Stock Obligation, Stock with a fair market value equal to the dividends so used
must be allocated to such Participant's Account in lieu of the dividends.
Dividends on Stock held in the Unallocated Stock Fund which are received by the
Trustee in the form of cash shall be allocated to Participants' Investment Fund
Accounts (pro rata based on the Participant's Account balance in relation to all
Participants' Account balances) and shall be applied as soon as practicable to
payments of principal and interest under the Stock Obligation incurred with the
purchase of the Stock.
SECTION 8. ADJUSTMENTS TO ACCOUNTS.
8.1 ADJUSTMENTS FOR TRANSACTIONS. An Employer contribution
pursuant to Section 4.1 shall be credited to the Participants' Accounts as of
the last day of the Plan Year for which it is contributed, in accordance with
Section 4.1. Stock released from the Unallocated Stock Fund upon the Trust's
repayment of a Stock Obligation pursuant to Section 4.2 shall be credited to
the Participants' Accounts as of the last day of the Plan Year in which the
repayment occurred, pro rata based on the cash applied from such Participant's
Account relative to the cash applied from all Participants' Accounts. Any
excess amounts remaining from the use of proceeds of a sale of Stock from the
Unallocated Stock Fund to repay a Stock Obligation shall be allocated as
earnings of the Plan as of the last day of the Plan Year in which the repayment
occurred among the Participants' Accounts in proportion to the opening balance
in each Account. Any benefit which is paid to a Participant or Beneficiary
pursuant to Section 10 shall be charged to the Participant's Account as of the
first day of the Valuation Period in which it is paid. Any forfeiture or
restoral shall be charged or credited to the Participant's Account as of the
first day of the Valuation Period in which the forfeiture or restoral occurs
pursuant to Section 9.6.
8.2 VALUATION OF INVESTMENT FUND. As of each Valuation Date, the
Trustee shall prepare a balance sheet of the Investment Fund, recording each
asset (including any contribution receivable from an Employer) and liability at
its fair market value. Any liability with respect to short positions or
options and any item of accrued income or expense and unrealized appreciation
or depreciation shall be included; provided, however, that such an item may be
estimated or excluded if it is not readily ascertainable unless estimating or
excluding it would result in a material distortion. The Committee shall then
determine the net gain or loss of the Investment Fund since the preceding
Valuation Date, which shall mean the entire income of the Investment Fund,
including realized and unrealized capital gains and losses, net of any expenses
to be charged to the general Investment Fund and excluding any contributions by
the Employer. The determination of gain or loss shall be consistent with the
balance sheets of the Investment Fund for the current and preceding Valuation
Dates.
8.3 ADJUSTMENTS FOR INVESTMENT EXPERIENCE. Any net gain or loss
of the Investment Fund during a Valuation Period, as determined pursuant to
Section 8.2, shall be allocated as of the last day of the Valuation Period
among the Participants' Accounts in proportion to the opening balance in each
Account, as adjusted for benefit payments and forfeitures during the Valuation
Period, without regard to whatever Stock may be credited to an Account. Any
cash dividends received on Stock credited to Participant's Accounts shall be
allocated as of the last day of the Valuation Period among the Participants'
Accounts based on the opening balance in each Participant's Stock Fund Account.
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SECTION 9. VESTING OF PARTICIPANTS' INTERESTS.
9.1 DEFERRED VESTING IN ACCOUNTS. A Participant's vested interest
in his Account shall be based on his Vesting Years in accordance with the
following Table, subject to the balance of this Section 9:
Vesting Percentage of
Years Interest Vested
----- ---------------
Fewer than 5 0%
5 or more 100%
9.2 COMPUTATION OF VESTING YEARS. For purposes of this Plan, a
"Vesting Year" means generally a calendar year in which an Employee has at
least 1,000 Hours of Service, beginning with the first Plan Year in which the
Employee has completed an Hour of Service with the Employer, and including
Service with other employers as provided in the definition of "Service".
Notwithstanding the above, an Employee who was employed with Atlantic Liberty
Savings F.A., a federal mutual savings association (the "Mutual Association")
which is the predecessor to the Bank, shall receive credit for vesting purposes
for each calendar year of employment with the Mutual Association in which such
Employee completed 1,000 Hours of Service, not to exceed 5 years of credit for
vesting purpose (such years shall also be referred to as "Vesting Years").
However, a Participant's Vesting Years shall be computed subject to the
following conditions and qualifications:
9.2-1 A Participant's Vesting Years shall not include any
Service prior to the date on which an Employee attains age 18.
9.2-2 A Participant's vested interest in his Account
accumulated before five (5) consecutive Breaks in Service shall be
determined without regard to any Service after such five consecutive
Breaks in Service. Further, if a Participant has five (5) consecutive
Breaks in Service before his interest in his Account has become vested
to some extent, pre-Break years of Service shall not be required to be
taken into account for purposes of determining his post-Break vested
percentage.
9.2-3 In the case of a participant who has 5 or more
consecutive 1-year Breaks in Service, the participant's pre-break
service will count in vesting of the employer-derived post- break
accrued benefit only if either:
(i) such Participant has any nonforfeitable interest in
the accrued benefit attributable to employer
contributions at the time of separation from service,
or
(ii) upon returning to service the number of consecutive
1-year Breaks in Service is less than the number of
years of service.
9.2-4 Unless otherwise specifically excluded, a
Participant's Vesting Years shall include any period of active
military duty to the extent required by the Military Selective Service
Act of 1967 (38 U.S.C. Section 2021).
9.2-5 If any amendment changes the vesting schedule,
including an automatic change to or from a top-heavy vesting schedule,
any Participant with three (3) or more Vesting Years may, by filing a
written request with the Employer, elect to have his vested percentage
computed under the vesting schedule in effect prior to the amendment.
The election period must begin not later
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than the later of sixty (60) days after the amendment is adopted, the
amendment becomes effective, or the Participant is issued written
notice of the amendment by the Employer or the Committee.
9.3 FULL VESTING UPON CERTAIN EVENTS.
9.3-1 Notwithstanding Section 9.1, a Participant's interest in his
Account shall fully vest on the Participant's Normal Retirement Date. The
Participant's interest shall also fully vest in the event that his Service is
terminated by Early Retirement, Disability or by death.
9.3-2 The Participant's interest in his Account shall also fully
vest in the event of a "Change in Control" of the Bank, or the Company. For
these purposes, "Change in Control" shall mean an event of a nature that; (i)
would be required to be reported in response to Item 1a of the current report
on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 (the "Exchange Act'); or (ii) results in
a Change in Control of the Bank or the Company within the meaning of the Bank
Holding Company Act of 1956, as amended, and applicable rules and regulations
promulgated thereunder as in effect at the time of the Change in Control
(collectively, the BHCA"); or (iii) without limitation such a Change in Control
shall be deemed to have occurred at such time as (a) any "Person' (as the term
is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Bank or the Company representing 25% or more
of the Bank's or the Company's outstanding securities except for any securities
of the Bank purchased by the Company in connection with the conversion of the
Bank to the stock form and any securities purchased by the Bank's employee stock
ownership plan and trust; or (b) individuals who constitute the Board on the
date hereof (the "Incumbent Board") cease for any reason to constitute at least
a majority thereof, provided, however, that this sub-section (b) shall not apply
if the Incumbent Board is replaced by the appointment by a Federal banking
agency of a conservator or receiver for the Bank and, provided further that any
person becoming a director subsequent to the date hereof whose election was
approved by a vote of at least two-thirds of the directors comprising the
Incumbent Board or whose nomination for election by the Company's stockholders
was approved by the same Nominating Committee serving under an Incumbent Board,
shall be, for purposes of this clause (b), considered as though he were a member
of the Incumbent Board; or (c) a plan of reorganization, merger, consolidation,
sale of all or substantially all the assets of the Bank or the Company; or (d) a
proxy statement soliciting proxies from stockholders of the Company, by someone
other than the current management of the Company, seeking stockholder approval
of a plan of reorganization, merger or consolidation of the Company or Bank or
similar transaction with one or more corporations as a result of which the
outstanding shares of the class of securities then subject to such plan or
transaction are exchanged for or converted into cash or property or securities
not issued by the Bank or the Company shall be distributed and the requisite
number of proxies approving such plan of reorganization, merger or consolidation
of the Company or Bank are received and voted in favor of such transactions; or
(e) a tender offer is made for 25% or more of the outstanding securities of the
Bank or Company and shareholders owning beneficially or of record 25% or more of
the outstanding securities of the Bank or Company have tendered or offered to
sell their shares pursuant to such tender offer and such tendered shares have
been accepted by the tender offeror.
9.4 FULL VESTING UPON PLAN TERMINATION. Notwithstanding Section
9.1, a Participant's interest in his Account shall fully vest if he is in
active Service upon termination of this Plan or upon the permanent and complete
discontinuance of contributions by his Employer. In the event of a partial
termination, the interest of each affected Participant who is in Service shall
fully vest with respect to that part of the Plan which is terminated.
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9.5 FORFEITURE, REPAYMENT, AND RESTORAL. If a Participant's
Service terminates before his interest in his Account is fully vested, that
portion which has not vested shall be forfeited if he either (i) receives a
distribution of his entire vested interest pursuant to Section 10.1, or (ii)
incurs five (5) consecutive one year Breaks In Service. If a Participant's
Service terminates prior to having any portion of his Account become vested,
such Participant shall be deemed to have a received a distribution of his
vested interest as of the Valuation Date next following his termination of
Service.
If a Participant who has received his entire vested interest returns
to Service before he has five (5) consecutive Breaks in Service, he may repay
to the Trustee an amount equal to the distribution. The Participant may repay
such amount at any time within five years after he has returned to Service.
The amount shall be credited to his account at the time it is repaid; an
additional amount equal to that portion of his Account which was previously
forfeited shall be restored to his Account at the same time from other
Employees' forfeitures and, if such forfeitures are insufficient, from a
special contribution by his Employer for that year. A Participant who was
deemed to have received a distribution of his vested interest in the Plan shall
have his account restored as of the first day on which he performs an Hour of
Service after his return.
9.6 ACCOUNTING FOR FORFEITURES. If a portion of a Participant's
account is forfeited, Stock allocated to said Participant's account shall be
forfeited only after other assets are forfeited. If interests in more than one
class of Stock have been allocated to a Participant's account, the Participant
must be treated as forfeiting the same proportion of each class of Stock. A
forfeiture shall be charged to the Participant's Account as of the first day of
the first Valuation Period in which the forfeiture becomes certain pursuant to
Section 9.5. Except as otherwise provided in that Section, a forfeiture shall
be added to the contributions of the terminated Participant's Employer which
are to be credited to other Participants pursuant to Section 4.1 as of the
last day of the Plan Year in which the forfeiture becomes certain.
9.7 VESTING AND NONFORFEITABILITY. A Participant's interest in
his Account which has become vested shall be nonforfeitable for any reason.
SECTION 10. PAYMENT OF BENEFITS.
10.1 BENEFITS FOR PARTICIPANTS. For a Participant whose Service
ends for any reason, distribution will be made to or for the benefit of the
Participant or, in the case of the Participant's death, his Beneficiary, by
either, or a combination of the following methods:
10.1.1 By payment in a lump sum, in accordance with Section
10.2; or
10.1.2 By payment in a series of substantially equal annual
installments over a period not to exceed five (5) years, provided the
maximum period over which the distribution of a Participant's Account
may be made shall be extended by 1 year, up to five (5) additional
years, for each $100,000 (or fraction thereof) by which such
Participant's Account balance exceeds $500,000 (the aforementioned
figures are subject to cost-of-living adjustments prescribed by the
Secretary of the Treasury pursuant to Section 409(o)(2) of the Code).
The Participant shall elect the manner in which his vested Account
balance will be distributed to him. If a Participant so desires, he may direct
how his benefits are to be paid to his Beneficiary. If a deceased Participant
did not file a direction with the Committee, the Participant's benefits shall
be distributed to his Beneficiary in a lump sum. Notwithstanding the
foregoing, if the balance credited to his Account exceeds $3,500, his benefits
shall not be paid before the latest of his 65th birthday or the tenth
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anniversary of the year in which he commenced participation in the Plan unless
he elects an early payment date in a written election filed with the Committee.
A Participant may modify such an election at any time, provided any new benefit
payment date is at least 30 days after a modified election is delivered to the
Committee, subject to the provisions of Section 10.11 hereof.
10.2 TIME FOR DISTRIBUTION.
10.2.1 Distribution of the balance of a Participant's
Account generally shall commence as soon as practicable after the last
day of the Plan Year next following his termination of Service for any
reason, but no later than one year after the close of the Plan Year:
(i) in which the Participant separates from
service by reason of Normal Retirement, Disability, or death;
or
(ii) which is the fifth Plan Year following the
year in which the Participant resigns or is dismissed, unless
he is reemployed before such date.
10.2.2 Unless the Participant elects otherwise, the
distribution of the balance of a Participant's Account shall commence not later
than the 60th day after the latest of the close of the plan year in which -
(i) the Participant attains the age of 65;
(ii) occurs the tenth anniversary of the year in
which the Participant commenced participation in the Plan; or
(iii) the participant terminates his service with
the Employer.
10.2.3 Notwithstanding anything to the contrary, (1) with
respect to a 5-percent owner (as defined in Code Section 416),
distribution of a Participant's Account shall commence (whether or not
he remains in the employ of the Employer) not later than the April 1
of the calendar year next following the calendar year in which the
Participant attains age 70- 1/2, and (2) with respect to all other
Participants, payment of a Participant's benefit will commence not
later than April 1 of the calendar year following the calendar year in
which the Participant attains age 70-1/2, or, if later, the year in
which the Participant retires. A Participant's benefit from that
portion of his Account committed to the Investment Fund shall be
calculated on the basis of the most recent Valuation Date before the
date of payment.
10.2.4 Distribution of a Participant's Account balance after
his death shall comply with the following requirements:
(i) If a Participant dies before his
distributions have commenced, distribution of his Account to
his Beneficiary shall commence not later than one year after
the end of the Plan Year in which the Participant died,
however, if the Participant's Beneficiary is his surviving
spouse, distributions may commence on the date on which the
Participant would have attained age 70-1/2. In either case,
distributions shall be completed within five years after the
they commence.
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(ii) If the Participant dies after distribution
has commenced pursuant to Section 10.1.2 but before his entire
interest in the Plan has been distributed to him, then the
remaining portion of that interest shall, in accordance with
Section 401(a)(9) of the Code, be distributed at least as
rapidly as under the method of distribution being used under
Section 10.1.2 at the date of his death.
(iii) If a married Participant dies before his
benefit payments begin, then unless he has specifically
elected otherwise the Committee shall cause the balance in his
Account to be paid to his Spouse. No election by a married
Participant of a different Beneficiary shall be valid unless
the election is accompanied by the Spouse's written consent,
which (i) must acknowledge the effect of the election, (ii)
must explicitly provide either that the designated Beneficiary
may not subsequently be changed by the Participant without the
Spouse's further consent, or that it may be changed without
such consent, and (iii) must be witnessed by the Committee,
its representative, or a notary public. (This requirement
shall not apply if the Participant establishes to the
Committee's satisfaction that the Spouse may not be located.)
10.3 MARITAL STATUS. The Committee shall from time to time take
whatever steps it deems appropriate to keep informed of each Participant's
marital status. Each Employer shall provide the Committee with the most
reliable information in the Employer's possession regarding its Participants'
marital status, and the Committee may, in its discretion, require a notarized
affidavit from any Participant as to his marital status. The Committee, the
Plan, the Trustee, and the Employers shall be fully protected and discharged
from any liability to the extent of any benefit payments made as a result of
the Committee's good faith and reasonable reliance upon information obtained
from a Participant and his Employer as to his marital status.
10.4 DELAY IN BENEFIT DETERMINATION. If the Committee
is unable to determine the benefits payable to a Participant or Beneficiary on
or before the latest date prescribed for payment pursuant to Section 10.1 or
10.2, the benefits shall in any event be paid within 60 days after they can
first be determined, with whatever makeup payments may be appropriate in view
of the delay.
10.5 ACCOUNTING FOR BENEFIT PAYMENTS. Any benefit payment shall be
charged to the Participant's Account as of the first day of the Valuation
Period in which the payment is made.
10.6 OPTIONS TO RECEIVE AND SELL STOCK. Unless ownership of
virtually all Stock is restricted to active Employees and qualified retirement
plans for the benefit of Employees pursuant to the certificates of
incorporation or by-laws of the Employers issuing Stock, a terminated
Participant or the Beneficiary of a deceased Participant may instruct the
Committee to distribute the Participant's entire vested interest in his Account
in the form of Stock. In that event, the Committee shall apply the
Participant's vested interest in the Investment Fund to purchase sufficient
Stock from the Stock Fund or from any owner of stock to make the required
distribution. In all other cases, the Participant's vested interest in the
Stock Fund shall be distributed in shares of Stock, and his vested interest in
the Investment Fund shall be distributed in cash.
Any Participant who receives Stock pursuant to Section 10.1, and any
person who has received Stock from the Plan or from such a Participant by
reason of the Participant's death or incompetency, by reason of divorce or
separation from the Participant, or by reason of a rollover contribution
described in Section 402(a)(5) of the Code, shall have the right to require the
Employer which issued the Stock to purchase the Stock for its current fair
market value (hereinafter referred to as the "put right"). The put right shall
be exercisable by written notice to the Committee during the first 60 days
after the Stock is
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distributed by the Plan, and, if not exercised in that period, during the first
60 days in the following Plan Year after the Committee has communicated to the
Participant its determination as to the Stock's current fair market value.
However, the put right shall not apply to the extent that the Stock, at the time
the put right would otherwise be exercisable, may be sold on an established
market in accordance with federal and state securities laws and regulations.
Similarly, the put option shall not apply with respect to the portion of a
Participant's account which the employee elected to have reinvested under Code
Section 401(a)(28)(B). If the put right is exercised, the Trustee may, if so
directed by the Committee in its sole discretion, assume the Employer's rights
and obligations with respect to purchasing the Stock. Notwithstanding anything
herein to the contrary, in the case of a plan established by a Bank (as defined
in Code Section 581), the put option shall not apply if prohibited by a federal
or state law and Participants are entitled to elect their benefits be
distributed in cash.
If a Participant elects to receive his distribution in the form of a
lump sum pursuant to Section 10.1.1 of the Plan, the Employer or the Trustee,
as the case may be, may elect to pay for the Stock in equal periodic
installments, not less frequently than annually, over a period not longer than
five years from the day after the put right is exercised, with adequate
security and interest at a reasonable rate on the unpaid balance, all such
terms to be set forth in a promissory note delivered to the seller with normal
terms as to acceleration upon any uncured default.
If a Participant elects to receive his distribution in the form of an
installment payment pursuant to Section 10.1.2 of the Plan, the Employer or the
Trustee, as the case may be, shall pay for the Stock distributed in the
installment distribution over a period which shall not exceed 30 days after the
exercise of the put right.
Nothing contained herein shall be deemed to obligate any Employer to
register any Stock under any federal or state securities law or to create or
maintain a public market to facilitate the transfer or disposition of any
Stock. The put right described herein may only be exercised by a person
described in the second preceding paragraph, and may not be transferred with
any Stock to any other person. As to all Stock purchased by the Plan in
exchange for any Stock Obligation, the put right shall be nonterminable. The
put right for Stock acquired through a Stock Obligation shall continue with
respect to such Stock after the Stock Obligation is repaid or the Plan ceases
to be an employee stock ownership plan.
10.7 RESTRICTIONS ON DISPOSITION OF STOCK. Except in the case of
Stock which is traded on an established market, a Participant who receives
Stock pursuant to Section 10.1, and any person who has received Stock from the
Plan or from such a Participant by reason of the Participant's death or
incompetency, by reason of divorce or separation from the Participant, or by
reason of a rollover contribution described in Section 402(a)(5) of the Code,
shall, prior to any sale or other transfer of the Stock to any other person,
first offer the Stock to the issuing Employer and to the Plan at the greater of
(i) its current fair market value, or (ii) the purchase price offered in good
faith by an independent third party purchaser. This restriction shall apply to
any transfer, whether voluntary, involuntary, or by operation of law, and
whether for consideration or gratuitous. Either the Employer or the Trustee may
accept the offer within 14 days after it is delivered. Any Stock distributed by
the Plan shall bear a conspicuous legend describing the right of first refusal
under this Section 10.7, as well as any other restrictions upon the transfer of
the Stock imposed by federal and state securities laws and regulations.
10.8 CONTINUING LOAN PROVISIONS; CREATIONS OF PROTECTIONS AND
RIGHTS. Except as otherwise provided in Sections 10.6 and 10.7 and this
Section, no shares of Employer Stock held or distributed by the Trustee may be
subject to a put, call or other option, or buy-sell arrangement. The
provisions of this
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Section shall continue to by applicable to such Stock even if the Plan ceases to
be an employee stock ownership plan under Section 4975(e)(7) of the Code.
10.9 DIRECT ROLLOVER OF ELIGIBLE DISTRIBUTION. A Participant or
distributee may elect, at the time and in the manner prescribed by the Trustee
or the Committee, to have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the Participant or
distributee in a direct rollover.
10.9-1 An "eligible rollover" is any distribution that does
not include: any distribution that is one of a series of substantially
equal periodic payments (not less frequently than annually) made for
the life (or life expectancy) of the distributee or the joint lives
(or joint life expectancies) of the Participant and the Participant's
Beneficiary, or for a specified period of ten years or more; any
distribution to the extent such distribution is required under Code
Section 401(a)(9); and the portion of any distribution that is not
included in gross income (determined without regard to the exclusion
for net unrealized appreciation with respect to employer securities).
10.9-2 An "eligible retirement plan" is an individual
retirement account described in Code Section 401(a), an individual
retirement annuity described in Code Section 408(b), an annuity plan
described in Code Section 403(a), or a qualified trust described in
Code Section 401(a), that accepts the distributee's eligible rollover
distribution. However, in the case of an eligible rollover distribution
to the surviving spouse, an eligible retirement plan is an individual
retirement account or individual retirement annuity.
10.9-3 A "direct rollover" is a payment by the Plan to the
eligible retirement plan specified by the distributee.
10.9-4 The term "distributee" shall refer to a deceased
Participant's spouse or a Participant's former spouse who is the
alternate payee under a qualified domestic relations order, as defined
in Code Section 414(p).
10.10 IN SERVICE DISTRIBUTION OF ROLL-OVER ACCOUNT. Upon the
written election of a Participant delivered to the Committee, all or any
portion of the amounts held in the Participant's Roll-over Account, shall be
distributed to the Participant at any time within 30 days or as soon thereafter
as is reasonably practicable.
10.11 WAIVER OF 30 DAY PERIOD AFTER NOTICE OF DISTRIBUTION. If a
distribution is one to which Sections 401(a)(11) and 417 of the Code do not
apply, such distribution may commence less than 30 days after the notice
required under Section 4.11(a)-11(c) of the Income Tax Regulations is given,
provided that:
(i) the Trustee or Administrative Committee, as
applicable, clearly informs the Participant
that the Participant has a right to a period
of at least 30 days after receiving the
notice to consider the decision of whether or
not to elect a distribution (and, if
applicable, a particular option), and
(ii) the Participant, after receiving the notice,
affirmatively elects a distribution.
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SECTION 11. RULES GOVERNING BENEFIT CLAIMS AND REVIEW OF APPEALS.
11.1 CLAIM FOR BENEFITS. Any Participant or Beneficiary who
qualifies for the payment of benefits shall file a claim for his benefits with
the Committee on a form provided by the Committee. The claim, including any
election of an alternative benefit form, shall be filed at least 30 days before
the date on which the benefits are to begin. If a Participant or Beneficiary
fails to file a claim by the day before the date on which benefits become
payable, he shall be presumed to have filed a claim for payment for the
Participant's benefits in the standard form prescribed by Sections 10.1 or 10.2
11.2 NOTIFICATION BY COMMITTEE. Within 90 days after receiving a
claim for benefits (or within 180 days, if special circumstances require an
extension of time and written notice of the extension is given to the
Participant or Beneficiary within 90 days after receiving the claim for
benefits), the Committee shall notify the Participant or Beneficiary whether
the claim has been approved or denied. If the Committee denies a claim in any
respect, the Committee shall set forth in a written notice to the Participant
or Beneficiary:
(i) each specific reason for the denial;
(ii) specific references to the pertinent Plan provisions
on which the denial is based;
(iii) a description of any additional material or
information which could be submitted by the Participant or Beneficiary
to support his claim, with an explanation of the relevance of such
information; and
(iv) an explanation of the claims review procedures set
forth in Section 11.3.
11.3 CLAIMS REVIEW PROCEDURE. Within 60 days after a Participant
or Beneficiary receives notice from the Committee that his claim for benefits
has been denied in any respect, he may file with the Committee a written notice
of appeal setting forth his reasons for disputing the Committee's
determination. In connection with his appeal the Participant or Beneficiary or
his representative may inspect or purchase copies of pertinent documents and
records to the extent not inconsistent with other Participants' and
Beneficiaries' rights of privacy. Within 60 days after receiving a notice of
appeal from a prior determination (or within 120 days, if special circumstances
require an extension of time and written notice of the extension is given to the
Participant or Beneficiary and his representative within 60 days after receiving
the notice of appeal), the Committee shall furnish to the Participant or
Beneficiary and his representative, if any, a written statement of the
Committee's final decision with respect to his claim, including the reasons for
such decision and the particular Plan provisions upon which it is based.
SECTION 12. THE COMMITTEE AND ITS FUNCTIONS.
12.1 AUTHORITY OF COMMITTEE. The Committee shall be the "plan
administrator" within the meaning of ERISA and shall have exclusive
responsibility and authority to control and manage the operation and
administration of the Plan, including the interpretation and application of its
provisions, except to the extent such responsibility and authority are
otherwise specifically (i) allocated to the Bank, the Employers, or the Trustee
under the Plan and Trust Agreement, (ii) delegated in writing to other persons
by the Bank, the Employers, the Committee, or the Trustee, or (iii) allocated
to other parties by operation of law. The Committee shall have exclusive
responsibility regarding decisions concerning the payment of benefits under the
Plan. The Committee shall have no investment responsibility with respect to
the Investment Fund except to the extent, if any, specifically provided in the
Trust Agreement. In the
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discharge of its duties, the Committee may employ accountants, actuaries, legal
counsel, and other agents (who also may be employed by an Employer or the
Trustee in the same or some other capacity) and may pay their reasonable
expenses and compensation.
12.2 IDENTITY OF COMMITTEE. The Committee shall consists of three
or more individuals selected by the Bank. Any individual, including a
director, trustee, shareholder, officer, or employee of an Employer, shall be
eligible to serve as a member of the Committee. The Bank shall have the power
to remove any individual serving on the Committee at any time without cause
upon 10 days written notice, and any individual may resign from the Committee
at any time upon 10 days written notice to the Bank. The Bank shall notify the
Trustee of any change in membership of the Committee.
12.3 DUTIES OF COMMITTEE. The Committee shall keep whatever
records may be necessary to implement the Plan and shall furnish whatever
reports may be required from time to time by the Bank. The Committee shall
furnish to the Trustee whatever information may be necessary to properly
administer the Trust. The Committee shall see to the filing with the appropriate
government agencies of all reports and returns required of the plan Committee
under ERISA and other laws.
Further, the Committee shall have exclusive responsibility and
authority with respect to the Plan's holdings of Stock and shall direct the
Trustee in all respects regarding the purchase, retention, sale, exchange, and
pledge of Stock and the creation and satisfaction of Stock Obligations. The
Committee shall at all times act consistently with the Bank's long-term
intention that the Plan, as an employee stock ownership plan, be invested
primarily in Stock. Subject to the direction of the Board as to the
application of Employer contributions to Stock Obligations, and subject to the
provisions of Sections 6.4 and 10.6 as to Participants' rights under certain
circumstances to have their Accounts invested in Stock or in assets other than
Stock, the Committee shall determine in its sole discretion the extent to which
assets of the Trust shall be used to repay Stock Obligations, to purchase
Stock, or to invest in other assets to be selected by the Trustee or an
investment manager. No provision of the Plan relating to the allocation or
vesting of any interests in the Stock Fund or the Investment Fund shall
restrict the Committee from changing any holdings of the Trust, whether the
changes involve an increase or a decrease in the Stock or other assets
credited to Participants' Accounts. In determining the proper extent of the
Trust's investment in Stock, the Committee shall be authorized to employ
investment counsel, legal counsel, appraisers, and other agents to pay their
reasonable expenses and compensation.
12.4 VALUATION OF STOCK. If the valuation of any Stock is not
established by reported trading on a generally recognized public market, the
Committee shall have the exclusive authority and responsibility to determine
its value for all purposes under the Plan. Such value shall be determined as
of each Valuation Date, and on any other date as of which the Plan purchases or
sells such Stock. The Committee shall use generally accepted methods of
valuing stock of similar corporations for purposes of arm's length business and
investment transactions, and in this connection the Committee shall obtain, and
shall be protected in relying upon, the valuation of such Stock as determined
by an independent appraiser experienced in preparing valuations of similar
businesses.
12.5 COMPLIANCE WITH ERISA. The Committee shall perform all acts
necessary to comply with ERISA. Each individual member or employee of the
Committee shall discharge his duties in good faith and in accordance with the
applicable requirements of ERISA.
12.6 ACTION BY COMMITTEE. All actions of the Committee shall be
governed by the affirmative vote of a number of members which is a majority of
the total number of members currently appointed,
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including vacancies. The members of the Committee may meet informally and may
take any action without meeting as a group.
12.7 EXECUTION OF DOCUMENTS. Any instrument executed by the
Committee shall be signed by any member or employee of the Committee.
12.8 ADOPTION OF RULES. The Committee shall adopt such rules and
regulations of uniform applicability as it deems necessary or appropriate for
the proper administration and interpretation of the Plan.
12.9 RESPONSIBILITIES TO PARTICIPANTS. The Committee shall
determine which Employees qualify to enter the Plan. The Committee shall
furnish to each eligible Employee whatever summary plan descriptions, summary
annual reports, and other notices and information may be required under ERISA.
The Committee also shall determine when a Participant or his Beneficiary
qualifies for the payment of benefits under the Plan. The Committee shall
furnish to each such Participant or Beneficiary whatever information is
required under ERISA (or is otherwise appropriate) to enable the Participant or
Beneficiary to make whatever elections may be available pursuant to Sections 6
and 10, and the Committee shall provide for the payment of benefits in the
proper form and amount from the assets of the Trust Fund. The Committee may
decide in its sole discretion to permit modifications of elections and to defer
or accelerate benefits to the extent consistent with applicable law and the
best interests of the individuals concerned.
12.10 ALTERNATIVE PAYEES IN EVENT OF INCAPACITY. If the Committee
finds at any time that an individual qualifying for benefits under this Plan is
a minor or is incompetent, the Committee may direct the benefits to be paid, in
the case of a minor, to his parents, his legal guardian, or a custodian for him
under the Uniform Gifts to Minors Act, or, in the case of an incompetent, to
his spouse, or his legal guardian, the payments to be used for the individual's
benefit. The Committee and the Trustee shall not be obligated to inquire as to
the actual use of the funds by the person receiving them under this Section
12.10, and any such payment shall completely discharge the obligations of the
Plan, the Trustee, the Committee, and the Employers to the extent of the
payment.
12.11 INDEMNIFICATION BY EMPLOYERS. Except as separately agreed in
writing, the Committee, and any member or employee of the Committee, shall be
indemnified and held harmless by the Employer, jointly and severally, to the
fullest extent permitted by law against any and all costs, damages, expenses,
and liabilities reasonably incurred by or imposed upon it or him in connection
with any claim made against it or him or in which it or he may be involved by
reason of its or his being, or having been, the Committee, or a member or
employee of the Committee, to the extent such amounts are not paid by
insurance.
12.12 NONPARTICIPATION BY INTERESTED MEMBER. Any member of the
Committee who also is a Participant in the Plan shall take no part in any
determination specifically relating to his own participation or benefits,
unless his abstention would leave the Committee incapable of acting on the
matter.
SECTION 13. ADOPTION, AMENDMENT, OR TERMINATION OF THE PLAN.
13.1 ADOPTION OF PLAN BY OTHER EMPLOYERS. With the consent of the
Bank, any entity may become a participating Employer under the Plan by (i)
taking such action as shall be necessary to adopt the Plan, (ii) becoming a
party to the Trust Agreement establishing the Trust Fund, and (iii) executing
and delivering such instruments and taking such other action as may be
necessary or desirable to put the Plan into effect with respect to the entity's
Employees.
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13.2 ADOPTION OF PLAN BY SUCCESSOR. In the event that any Employer
shall be reorganized by way of merger, consolidation, transfer of assets or
otherwise, so that an entity other than an Employer shall succeed to all or
substantially all of the Employer's business, the successor entity may be
substituted for the Employer under the Plan by adopting the Plan and becoming a
party to the Trust Agreement. Contributions by the Employer shall be
automatically suspended from the effective date of any such reorganization
until the date upon which the substitution of the successor entity for the
Employer under the Plan becomes effective. If, within 90 days following the
effective date of any such reorganization, the successor entity shall not have
elected to become a party to the Plan, or if the Employer shall adopt a plan of
complete liquidation other than in connection with a reorganization, the Plan
shall be automatically terminated with respect to Employees of the Employer as
of the close of business on the 90th day following the effective date of the
reorganization, or as of the close of business on the date of adoption of a plan
of complete liquidation, as the case may be.
13.3 PLAN ADOPTION SUBJECT TO QUALIFICATION. Notwithstanding any
other provision of the Plan, the adoption of the Plan and the execution of the
Trust Agreement are conditioned upon their being determined initially by the
Internal Revenue Service to meet the qualification requirements of Section
401(a) of the Code, so that the Employers may deduct currently for federal
income tax purposes their contributions to the Trust and so that the
Participants may exclude the contributions from their gross income and
recognize income only when they receive benefits. In the event that this Plan
is held by the Internal Revenue Service not to qualify initially under Section
401(a), the Plan may be amended retroactively to the earliest date permitted by
U.S. Treasury Regulations in order to secure qualification under Section
401(a). If this Plan is held by the Internal Revenue Service not to qualify
initially under Section 401(a) either as originally adopted or as amended, each
Employer's contributions to the Trust under this Plan (including any earnings
thereon) shall be returned to it and this Plan shall be terminated. In the
event that this Plan is amended after its initial qualification and the Plan as
amended is held by the Internal Revenue Service not to qualify under Section
401(a), the amendment may be modified retroactively to the earliest date
permitted by U.S. Treasury Regulations in order to secure approval of the
amendment under Section 401(a).
13.4 RIGHT TO AMEND OR TERMINATE. The Bank intends to continue
this Plan as a permanent program. However, each participating Employer
separately reserves the right to suspend, supersede, or terminate the Plan at
any time and for any reason, as it applies to that Employer's Employees, and
the Bank reserves the right to amend, suspend, supersede, merge, consolidate,
or terminate the Plan at any time and for any reason, as it applies to the
Employees of each Employer. No amendment, suspension, supersession, merger,
consolidation, or termination of the Plan shall (i) reduce any Participant's or
Beneficiary's proportionate interest in the Trust Fund, (ii) reduce or
restrict, either directly or indirectly, the benefit provided any Participant
prior to the amendment, or (iii) divert any portion of the Trust Fund to
purposes other than the exclusive benefit of the Participants and their
Beneficiaries prior to the satisfaction of all liabilities under the Plan.
Moreover, there shall not be any transfer of assets to a successor plan or
merger or consolidation with another plan unless, in the event of the
termination of the successor plan or the surviving plan immediately following
such transfer, merger, or consolidation, each participant or beneficiary would
be entitled to a benefit equal to or greater than the benefit he would have been
entitled to if the plan in which he was previously a participant or beneficiary
had terminated immediately prior to such transfer, merger, or consolidation.
Following a termination of this Plan by the Bank, the Trustee shall continue to
administer the Trust and pay benefits in accordance with the Plan as amended
from time to time and the Committee's instructions.
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SECTION 14. MISCELLANEOUS PROVISIONS.
14.1 PLAN CREATES NO EMPLOYMENT RIGHTS. Nothing in this Plan shall
be interpreted as giving any Employee the right to be retained as an Employee
by an Employer, or as limiting or affecting the rights of an Employer to
control its Employees or to terminate the Service of any Employee at any time
and for any reason, subject to any applicable employment or collective
bargaining agreements.
14.2 NONASSIGNABILITY OF BENEFITS. No assignment, pledge, or other
anticipation of benefits from the Plan will be permitted or recognized by the
Employer, the Committee, or the Trustee. Moreover, benefits from the Plan
shall not be subject to attachment, garnishment, or other legal process for
debts or liabilities of any Participant or Beneficiary, to the extent permitted
by law. This prohibition on assignment or alienation shall apply to any
judgment, decree, or order (including approval of a property settlement
agreement) which relates to the provision of child support, alimony, or
property rights to a present or former spouse, child or other dependent of a
Participant pursuant to a State domestic relations or community property law,
unless the judgment, decree, or order is determined by the Committee to be a
qualified domestic relations order within the meaning of Section 414(p) of the
Code, as more fully set forth in Section 14.2 hereof.
14.3 LIMIT OF EMPLOYER LIABILITY. The liability of the Employer
with respect to Participants under this Plan shall be limited to making
contributions to the Trust from time to time, in accordance with Section 4.
14.4 TREATMENT OF EXPENSES. All expenses incurred by the Committee
and the Trustee in connection with administering this Plan and Trust Fund shall
be paid by the Trustee from the Trust Fund to the extent the expenses have not
been paid or assumed by the Employer or by the Trustee.
14.5 NUMBER AND GENDER. Any use of the singular shall be
interpreted to include the plural, and the plural the singular. Any use of the
masculine, feminine, or neuter shall be interpreted to include the masculine,
feminine, or neuter, as the context shall require.
14.6 NONDIVERSION OF ASSETS. Except as provided in Sections 5.3
and 13.3, under no circumstances shall any portion of the Trust Fund be diverted
to or used for any purpose other than the exclusive benefit of the Participants
and their Beneficiaries prior to the satisfaction of all liabilities under the
Plan.
14.7 SEPARABILITY OF PROVISIONS. If any provision of this Plan is
held to be invalid or unenforceable, the other provisions of the Plan shall not
be affected but shall be applied as if the invalid or unenforceable provision
had not been included in the Plan.
14.8 SERVICE OF PROCESS. The agent for the service of process upon
the Plan shall be the president of the Bank, or such other person as may be
designated from time to time by the Bank.
14.9 GOVERNING STATE LAW. This Plan shall be interpreted in
accordance with the laws of the State of New York to the extent those laws are
applicable under the provisions of ERISA.
14.10 EMPLOYER CONTRIBUTIONS CONDITIONED ON DEDUCTIBILITY. Employer
Contributions to the Plan are conditioned on deductibility under Code Section
404. In the event that the Internal Revenue Service shall determine that all
or any portion of an Employer Contribution is not deductible under that
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Section, the nondeductible portion shall be returned to the Employer within one
year of the disallowance of the deduction.
14.11 UNCLAIMED ACCOUNTS. Neither the Employer nor the Trustees
shall be under any obligation to search for, or ascertain the whereabouts of,
any Participant or beneficiary. The Employer or the Trustees, by certified or
registered mail addressed to his last known address of record with the
Employer, shall notify any Participant or beneficiary that he is entitled to a
distribution under this Plan, and the notice shall quote the provisions of this
Section. If the Participant or beneficiary fails to claim his benefits or make
his whereabouts known in writing to the Employer or the Trustees within seven
(7) calendar years after the date of notification, the benefits of the
Participant or beneficiary under the Plan will be disposed of as follows:
(a) If the whereabouts of the Participant is unknown but
the whereabouts of the Participant's beneficiary is known to the
Trustees, distribution will be made to the beneficiary.
(b) If the whereabouts of the Participant and his
beneficiary are unknown to the Trustees, the plan will forfeit the
benefit, provided that the benefit is subject to a claim for
reinstatement if the Participant or Beneficiary make a claim for the
forfeited benefit.
Any payment made pursuant to the power herein conferred upon the
Trustees shall operate as a complete discharge of all obligations of the
Trustees, to the extent of the distributions so made.
14.12 QUALIFIED DOMESTIC RELATIONS ORDER. Section 14.2 shall not
apply to a "qualified domestic relations order" defined in Code Section 414(p),
and such other domestic relations orders permitted to be so treated by
Administrator under the provisions of the Retirement Equity Act of 1984.
Further, to the extent provided under a "qualified domestic relations order", a
former spouse of a Participant shall be treated as the spouse or surviving
spouse for all purposes under the Plan.
In the case of any domestic relations order received by the Plan:
(a) The Employer or the Plan Committee shall promptly
notify the Participant and any other alternate payee of the receipt of
such order and the Plan's procedures for determining the qualified
status of domestic relations orders, and
(b) Within a reasonable period after receipt of such
order, the Employer or the Plan Committee shall determine whether such
order is a qualified domestic relations order and notify the
Participant and each alternate payee of such determination. The
Employer or the Plan Committee shall establish reasonable procedures
to determine the qualified status of domestic relations orders and to
administer distributions under such qualified orders.
During any period in which the issue of whether a domestic relations
order is a qualified domestic relations order is being determined (by the
Employer or Plan Committee, by a court of competent jurisdiction, or otherwise),
the Employer or the Plan Committee shall segregate in a separate account in the
Plan or in an escrow account the amounts which would have been payable to the
alternate payee during such period if the order had been determined to be a
qualified domestic relations order. If within eighteen (18) months the order
(or modification thereof) is determined to be a qualified domestic relations
order, the Employer or the Plan Committee shall pay the segregated amounts (plus
any interest thereon) to the person or persons entitled thereto. If within
eighteen (18) months it is determined that the order is not a qualified domestic
relations order, or the issue as to whether such order is a qualified domestic
relations
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order is not resolved, then the Employer or the Plan Committee shall pay the
segregated amounts (plus any interest thereon) to the person or persons who
would have been entitled to such amounts if there had been no order. Any
determination that an order is a qualified domestic relations order which is
made after the close of the eighteen (18) month period shall be applied
prospectively only. The term "alternate payee" means any spouse, former spouse,
child or other dependent of a Participant who is recognized by a domestic
relations order as having a right to receive all, or a portion of, the benefit
payable under a Plan with respect to such Participant.
SECTION 15. TOP-HEAVY PROVISIONS.
15.1 TOP-HEAVY PLAN. For any Plan Year beginning after December
31, 1983, this Plan is top-heavy if any of the following conditions exist:
(a) If the top-heavy ratio for this Plan exceeds sixty
percent (60%) and this Plan is not part of any required aggregation group or
permissive aggregation group;
(b) If this Plan is a part of a required aggregation group
(but is not part of a permissive aggregation group) and the aggregate top-heavy
ratio for the group of Plans exceeds sixty percent (60%); or
(c) If this Plan is a part of a required aggregation group
and part of a permissive aggregation group and the aggregate top-heavy ratio
for the permissive aggregation group exceeds sixty percent (60%).
15.2 SUPER TOP-HEAVY PLAN For any Plan Year beginning after
December 31, 1983, this Plan will be a super top-heavy Plan if any of the
following conditions exist:
(a) If the top-heavy ratio for this Plan exceeds ninety
percent (90%) and this Plan is not part of any required aggregation group or
permissive aggregation group.
(b) If this Plan is a part of a required aggregation group
(but is not part of a permissive aggregation group) and the aggregate top-heavy
ratio for the group of Plans exceeds ninety percent (90%), or
(c) If this Plan is a part of a required aggregation group
and part of a permissive aggregation group and the aggregate top-heavy ratio
for the permissive aggregation group exceeds ninety percent (90%).
15.3 DEFINITIONS.
In making this determination, the Committee shall use the following definitions
and principles:
15.3-1 The "Determination Date', with respect to the first
Plan Year of any plan, means the last day of that Plan Year, and with
respect to each subsequent Plan Year, means the last day of the
preceding Plan Year. If any other plan has a Determination Date which
differs from this Plan's Determination Date, the top-heaviness of this
Plan shall be determined on the basis of the other plan's
Determination Date falling within the same calendar years as this
Plan's Determination Date.
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15.3-2 A "Key Employee", with respect to a Plan Year, means
an Employee who at any time during the five years ending on the
top-heavy Determination Date for the Plan Year has received
compensation from an Employer and has been (i) an officer of the
Employer having Total Compensation greater than 50 percent of the
limit then in effect under Section 415(b)(1)(A) of the Code, (ii) one
of the 10 Employees owning the largest interests in the Employer
having Total Compensation greater than the limit then in effect under
Section 415(c)(1)(A), (iii) an owner of more than five percent of the
outstanding equity interest or the outstanding voting interest in any
Employer, or (iv) an owner of more than one percent of the outstanding
equity interest or the outstanding voting interest in an Employer
whose annual compensation exceeds $150,000. For purposes of
determining whether an Employee is a Key Employee, annual compensation
means compensation as defined in Section 415(c)(3) of the Code, but
including amounts contributed by the Employee pursuant to a salary
reduction agreement which are excludable from the Employee's gross
income under Section 125, Section 402(e)(3), Section 402(H)(1)(B) or
Section 403(b) of the Code. The Beneficiary of a Key Employee shall
also be considered a Key Employee.
15.3-3 A "Non-key Employee" means an Employee who at any time
during the five years ending on the top-heavy Determination Date for
the Plan Year has received compensation from an Employer and who has
never been a Key Employee, and the Beneficiary of any such Employee.
15.3-4 A "required aggregation group" includes (a) each
qualified Plan of the Employer in which at least one Key Employee
participates in the Plan Year containing the Determination Date and
any of the four (4) preceding Plan Years, and (b) any other qualified
Plan of the Employer which enables a Plan described in (a) to meet the
requirements of Code Sections 401(a)(4) and 410. For purposes of the
preceding sentence, a qualified Plan of the Employer includes a
terminated Plan maintained by the Employer within the five (5) year
period ending on the Determination Date. In the case of a required
aggregation group, each Plan in the group will be considered a
top-heavy Plan if the required aggregation group is a top-heavy group.
No Plan in the required aggregation group will be considered a
top-heavy Plan if the required aggregation group is not a top-heavy
group. All Employers aggregated under Code Sections 414(b), (c) or
(m) or (o) (but only after the Code Section 414(o) regulations become
effective) are considered a single Employer.
15.3-5 A "permissive aggregation group" includes the required
aggregation group of Plans plus any other qualified Plan(s) of the
Employer that are not required to be aggregated but which, when
considered as a group with the required aggregation group, satisfy the
requirements of Code Sections 401(a)(4) and 410 and are comparable to
the Plans in the required aggregation group. No Plan in the
permissive aggregation group will be considered a top-heavy Plan if
the permissive aggregation group is not a top-heavy group. Only a
Plan that is part of the required aggregation group will be considered
a top-heavy Plan if the permissive aggregation group is top-heavy.
15.4 TOP-HEAVY RULES OF APPLICATION.
For purposes of determining the value of account balances and
the present value of accrued benefits the following provisions shall apply:
15.4-1 The value of account balances and the present value of
accrued benefits will be determined as of the most recent valuation
date that falls within or ends with the twelve (12) month period ending
on the Determination Date.
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15.4-2 For purposes of testing whether this Plan is
top-heavy, the present value of an individual's accrued benefits and
an individual's account balances is counted only once each year.
15.4-3 The account balances and accrued benefits of a
Participant who is not presently a Key Employee but who was a Key
Employee in a Plan Year beginning on or after January 1, 1984 will be
disregarded.
15.4-4 For years beginning after December 31, 1984,
non-deductible Voluntary Employee Contributions will be taken into
account for purposes of computing the top-heavy ratio. Employer
contributions attributable to a salary reduction or similar
arrangement will be taken into account.
15.4-5 When aggregating Plans, the value of account balances
and accrued benefits will be calculated with reference to the
Determination Dates that fall within the same calendar year.
15.4-6 The present value of the accrued benefits or the
amount of the account balances of an Employee shall be increased by
the aggregate distributions made to such Employee from a Plan of the
Employer. No distribution, however, made from the Plan to an
individual (other than the beneficiary of a deceased Employee who was
an Employee within the five (5) year period ending on the
Determination Date) who has not been an Employee at any time during
the five (5) year period ending on the Determination Date shall be
taken into account in determining whether the Plan is top-heavy.
Also, any amounts recontributed by an Employee upon becoming a
Participant in the Plan shall no longer be counted as a distribution
under this paragraph.
15.4-7 The present value of the accrued benefits or the
amount of the account balances of an Employee shall be increased by
the aggregate distributions made to such Employee from a terminated
Plan of the Employer, provided that such Plan (if not terminated)
would have been required to be included in the aggregation group.
15.4-8 Accrued benefits and account balances of an
individual shall not be taken into account for purposes of determining
the top-heavy ratios if the individual has performed no services for
the Employer during the five (5) year period ending on the applicable
Determination Date. Compensation for purposes of this subparagraph
shall not include any payments made to an individual by the Employer
pursuant to a qualified or non-qualified deferred compensation plan.
15.4-9 The present value of the accrued benefits or the
amount of the account balances of any Employee participating in this
Plan shall not include any rollover contributions or other transfers
voluntarily initiated by the Employee except as described below. If a
rollover was received by this Plan after December 31, 1983, the
rollover or transfer voluntarily initiated by the Employee was
received prior to January 1, 1984, then the rollover or transfer shall
be considered as part of the accrued benefit by the Plan receiving
such rollover or transfer. If this Plan transfers or rolls over funds
to another Plan in a transaction voluntarily initiated by the Employee
after December 31, 1983, then this Plan shall count the distribution
for purposes of determining account balances or the present value of
accrued benefits. A transfer incident to a merger or consolidation of
two or more Plans of the Employer (including Plans of related
Employers treated as a single Employer under Code Section 414), or a
transfer or rollover between Plans of the Employer, shall not be
considered as voluntarily initiated by the Employee.
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15.5 TOP-HEAVY RATIO.
If the Employer maintains one (1) or more defined contribution plans
(including any simplified Employee pension plan) and the Employer has never
maintained any defined benefit plans which have covered or could cover a
Participant in this Plan, the top-heavy ratio is a fraction, the numerator of
which is the sum of the account balances of all Key Employees as of the
Determination Date, and the denominator of which is the sum of the account
balances of all Employees as of the Determination Date. Both the numerator and
denominator of the top-heavy ratio shall be increased to reflect any
contribution which is due but unpaid as of the Determination Date.
If the Employer maintains one (1) or more defined contribution plans
(including any simplified Employee pension plan) and the Employer maintains or
has maintained one (1) or more defined benefit plans which have covered or could
cover a Participant in this Plan, the top-heavy ratio is a fraction, the
numerator of which is the sum of account balances under the defined contribution
plans for all Key Employees and the present value of accrued benefits under the
defined benefit plans for all Key Employees, and the denominator of which is the
sum of the account balances under the defined contribution plans for all
Employees and the present value of accrued benefits under the defined benefit
plans for all Employees.
15.6 MINIMUM CONTRIBUTIONS. For any Top-Heavy Year, each Employer
shall make a special contribution on behalf of each Participant to the extent
that the total allocations to his Account pursuant to Section 4 is less than
the lesser of:
(i) three percent of his Total Compensation for that
year, or
(ii) the highest ratio of such allocation to Total
Compensation received by any Key Employee for that year. For purposes
of the special contribution of this Section 15.2, a Key Employee's
Total Compensation shall include amounts the Key Employee elected to
defer under a qualified 401(k) arrangement. Such a special
contribution shall be made on behalf of each Participant who is
employed by an Employer on the last day of the Plan Year, regardless
of the number of his Hours of Service, and shall be allocated to his
Account.
For any Plan Year when (1) the Plan is top-heavy and (2) a Non-key
Employee is a Participant in both this Plan and a defined benefit plan included
in the plan aggregation group which is top heavy, the sum of the Employer
contributions and forfeitures allocated to the Account of each such Non-key
Employee shall be equal to at least five percent (5%) of such Non-key
Employee's Total Compensation for that year.
15.7 MINIMUM VESTING. If a Participant's vested interest in his
Account is to be determined in a Top-Heavy Year, it shall be based on the
following "top-heavy table":
Vesting Percentage of
Years Interest Vested
----- ---------------
Fewer than 3 years 0%
3 or more 100%
15.8 TOP-HEAVY PROVISIONS CONTROL IN TOP-HEAVY PLAN. In the event
this Plan becomes top-heavy and a conflict arises between the top-heavy
provisions herein set forth and the remaining provisions set forth in this Plan,
the top-heavy provisions shall control.
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