EXHIBIT 10.4
BANK OF CABOT RETIREMENT PLAN
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
ARTICLE II
ADMINISTRATION
2.1 POWERS AND RESPONSIBILITIES OF THE EMPLOYER.......................... 20
2.2 DESIGNATION OF ADMINISTRATIVE AUTHORITY.............................. 21
2.3 POWERS AND DUTIES OF THE ADMINISTRATOR............................... 21
2.4 RECORDS AND REPORTS.................................................. 23
2.5 APPOINTMENT OF ADVISERS.............................................. 23
2.6 PAYMENT OF EXPENSES.................................................. 23
2.7 CLAIMS PROCEDURE..................................................... 24
2.8 CLAIMS REVIEW PROCEDURE.............................................. 24
ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY............................................ 25
3.2 EFFECTIVE DATE OF PARTICIPATION...................................... 25
3.3 DETERMINATION OF ELIGIBILITY......................................... 25
3.4 TERMINATION OF ELIGIBILITY........................................... 25
3.5 ELECTION NOT TO PARTICIPATE.......................................... 26
ARTICLE IV
CONTRIBUTION AND VALUATION
4.1 PAYMENT OF CONTRIBUTIONS............................................. 26
4.2 ACTUARIAL METHODS.................................................... 26
4.3 TRANSFERS FROM QUALIFIED PLANS....................................... 26
ARTICLE V
BENEFITS
5.1 RETIREMENT BENEFITS.................................................. 29
5.2 MINIMUM BENEFIT REQUIREMENT FOR TOP HEAVY PLAN....................... 31
5.3 PAYMENT OF RETIREMENT BENEFITS....................................... 33
5.4 DISABILITY RETIREMENT BENEFITS....................................... 34
5.5 DEATH BENEFITS....................................................... 34
5.6 TERMINATION OF EMPLOYMENT BEFORE RETIREMENT.......................... 35
5.7 DISTRIBUTION OF BENEFITS............................................. 39
5.8 DISTRIBUTION OF BENEFITS UPON DEATH.................................. 45
5.9 TIME OF SEGREGATION OR DISTRIBUTION.................................. 49
5.10 DISTRIBUTION FOR MINOR BENEFICIARY................................... 50
5.11 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN....................... 50
5.12 EFFECT OF SOCIAL SECURITY ACT........................................ 51
5.13 LIMITATIONS ON DISTRIBUTIONS......................................... 51
5.14 QUALIFIED DOMESTIC RELATIONS ORDER DISTRIBUTION...................... 51
5.15 LIMITATION OF BENEFITS ON TERMINATION................................ 52
5.16 ELIMINATION OF LOOKBACK RULE......................................... 53
ARTICLE VI
CODE SECTION 415 LIMITATIONS
6.1 ANNUAL BENEFIT....................................................... 54
6.2 MAXIMUM ANNUAL BENEFIT............................................... 54
6.3 ADJUSTMENTS TO ANNUAL BENEFIT AND LIMITATIONS........................ 56
6.4 ANNUAL BENEFIT NOT IN EXCESS OF $10,000.............................. 57
6.5 PARTICIPATION OR SERVICE REDUCTIONS.................................. 58
6.6 MULTIPLE PLAN REDUCTION.............................................. 58
6.7 INCORPORATION BY REFERENCE........................................... 61
ARTICLE VII
TRUSTEE
7.1 BASIC RESPONSIBILITIES OF THE TRUSTEE................................ 62
7.2 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE.......................... 63
7.3 OTHER POWERS OF THE TRUSTEE.......................................... 64
7.4 DUTIES OF THE TRUSTEE REGARDING PAYMENTS............................. 67
7.5 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES........................ 67
7.6 ANNUAL REPORT OF THE TRUSTEE......................................... 67
7.7 AUDIT................................................................ 68
7.8 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE....................... 69
7.9 TRANSFER OF INTEREST................................................. 70
7.10 DIRECT ROLLOVER...................................................... 70
ARTICLE VIII
PLAN AMENDMENT
8.1 AMENDMENT............................................................ 71
ARTICLE IX
PLAN TERMINATION
9.1 TERMINATION.......................................................... 73
9.2 LIMITATION OF BENEFITS ON PLAN TERMINATION........................... 76
ARTICLE X
MERGER, CONSOLIDATION OR TRANSFER OF ASSETS
10.1 REQUIREMENTS......................................................... 77
ARTICLE XI
TOP HEAVY
11.1 TOP HEAVY PLAN REQUIREMENTS.......................................... 77
11.2 DETERMINATION OF TOP HEAVY STATUS.................................... 77
ARTICLE XII
MISCELLANEOUS
12.1 PARTICIPANT'S RIGHTS................................................. 82
12.2 ALIENATION........................................................... 82
12.3 CONSTRUCTION OF PLAN................................................. 83
12.4 GENDER AND NUMBER.................................................... 83
12.5 LEGAL ACTION......................................................... 83
12.6 PROHIBITION AGAINST DIVERSION OF FUNDS............................... 84
12.7 BONDING.............................................................. 84
12.8 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE........................... 85
12.9 INSURER'S PROTECTIVE CLAUSE.......................................... 85
12.10 RECEIPT AND RELEASE FOR PAYMENTS..................................... 85
12.11 ACTION BY THE EMPLOYER............................................... 85
12.12 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY................... 86
12.13 HEADINGS............................................................. 87
12.14 APPROVAL BY INTERNAL REVENUE SERVICE................................. 87
12.15 UNIFORMITY........................................................... 87
BANK OF CABOT RETIREMENT PLAN
THIS AGREEMENT, hereby made and entered into this _____28th day of
February 2002, by and between Community Bank (herein referred to as the
"Employer") and Community Bank (herein referred to as the "Trustee").
WITNESSETH:
WHEREAS, the Employer heretofore established a Pension Plan and Trust
effective December 1, 1955, (hereinafter called the "Effective Date") known as
Bank Of Cabot Retirement Plan (herein referred to as the "Plan") in recognition
of the contribution made to its successful operation by its employees and for
the exclusive benefit of its eligible employees; and
WHEREAS, under the terms of the Plan, the Employer has the ability to
amend the Plan, provided the Trustee joins in such amendment if the provisions
of the Plan affecting the Trustee are amended;
NOW, THEREFORE, effective January 1, 2001, except as otherwise
provided, the Employer and the Trustee in accordance with the provisions of the
Plan pertaining to amendments thereof, hereby amend the Plan in its entirety and
restate the Plan to provide as follows:
ARTICLE I
DEFINITIONS
1.1 "Accrued Benefit" means the retirement benefit a Participant would
receive at his Normal Retirement Date based on the retirement benefit formula
set forth in Section 5.1 of the Plan, multiplied by a fraction, not greater than
one (1), the numerator of which is the Participant's total number of Years of
Service and the denominator of which is the aggregate number of Years of Service
the Participant would have accumulated if he continued his employment until his
Normal Retirement Age.
When determining a Participant's Accrued Benefit, the retirement
benefit projected to be provided pursuant to the retirement benefit formula in
Section 5.1 is the monthly benefit to which the Participant would be entitled if
he continued to earn until Normal Retirement Age the same rate of Average
Monthly Compensation upon which his retirement benefit formula is based. This
rate of Average Monthly Compensation is computed on the basis of Average Monthly
Compensation taken into account under the Plan (but not to exceed the ten years
of service immediately preceding the determination).
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The Accrued Benefit of each Participant in the Fresh-Start Group,
shall be equal to the greater of (a) the Participant's Frozen Accrued Benefit,
if any, and (b) the Participant's Accrued Benefit determined with respect to the
Normal Retirement Benefit formula provided in Section 5.1(a).
For Plan Years beginning before Code Section 411 is applicable hereto,
a Participant's Accrued Benefit shall be the greater of that provided by the
Plan, or 1/2 of the benefit which would have accrued had the provisions of this
Section been in effect. In the event the Accrued Benefit as of the effective
date of Code Section 411 is less than that provided by this Section, such
difference shall be accrued pursuant to this Section.
Notwithstanding anything herein to the contrary, a Participant's
Accrued Benefit attributable to his retirement benefit formula at the close of
any Plan Year coinciding with or next following his attainment of Normal
Retirement Age shall be equal to the monthly retirement benefit formula
determined pursuant to Section 5.1(d) based upon service and Average Monthly
Compensation determined at the close of any such Plan Year.
Notwithstanding the above, the Vested portion of a Participant's
Accrued Benefit shall be reduced by the Actuarial Equivalent of the Vested
portion of the Participant's account balance attributable to Employer
contributions in the Community Bank ESOP Plan as of the date such Accrued
Benefit is calculated (plus the Actuarial Equivalent, without regard to
mortality, of any prior distributions from that portion of the account balance).
Notwithstanding the above, a Participant's Accrued Benefit derived
from Employer contributions shall not be less than the minimum Accrued Benefit,
if any, provided pursuant to Section 5.2.
However, no benefits shall be accrued under this Plan after December
31, 2000. Service and Compensation after December 31, 2000 shall not be included
in the determination of Accrued Benefit. The Accrued Benefit on and after
December 31, 2000 will equal the Accrued Benefit at December 31, 2000. The
Accrued Benefit cannot be less than the Accrued Benefit on December 31, 1996.
1.2 "Act" means the Employee Retirement Income Security Act of 1974, as it
may be amended from time to time.
1.3 "Actuarial Equivalent" means, effective January 1, 2000, a form of
benefit differing in time, period, or manner of payment
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from a specific benefit provided under the Plan but having the same value when
computed using Pre-Retirement Table: 1984 Unisex Pension Table; Post-Retirement
Table: 1984 Unisex Pension Table and Pre-Retirement Interest: 7.00;
Post-Retirement Interest: 7.00.
Notwithstanding the foregoing, effective with the later of the
adoption date or the first day of the Plan Year beginning after December 31,
1999, the mortality table and the interest rate for the purposes of determining
an Actuarial Equivalent amount (other than nondecreasing life annuities payable
for a period not less than the life of a Participant or, in the case of a
Pre-Retirement Survivor Annuity, the life of the surviving spouse) shall be the
"Applicable Mortality Table" and the "Applicable Interest Rate" described below.
However, if prior to the later of the adoption date or the first day of the Plan
Year beginning after December 31, 1999, the Plan used an interest rate other
than the Pension Benefit Guaranty Corporation interest rate (or an interest rate
or rates based on the Pension Benefit Guaranty Corporation interest rate) in
determining the present value of a Participant's Accrued Benefit, the mortality
table and the interest rate for the purposes of determining an Actuarial
Equivalent amount (other than nondecreasing life annuities payable for a period
not less than the life of a Participant or, in the case of a Pre-Retirement
Survivor Annuity, the life of the surviving spouse) shall be the mortality table
and the interest rate specified above or the "Applicable Mortality Table" and
the "Applicable Interest Rate" described below, whichever produces the greater
benefit:
(a) The "Applicable Mortality Table" means the table prescribed
by the Secretary of the Treasury. Such table shall be based on the
prevailing commissioner's standard table (described in Code Section
807(d)(5)(A)) used to determine reserves for group annuity contracts
issued on the date as of which present value is being determined
(without regard to any other subparagraph of Code Section 807(d)(5)).
(b) The "Applicable Interest Rate" means the annual rate of
interest on 30-year Treasury securities determined as of the second
calendar month preceding the first day of the Plan Year during which
the Annuity Starting Date occurs. However, except as provided in
Regulations, if a Plan amendment (including this amendment and
restatement) changes the time for determining the "Applicable Interest
Rate" (including an indirect change as a result of a change in the
Plan Year), any distribution for which the Annuity Starting Date
occurs in the one-year period commencing at the
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time the Plan amendment is effective (if the amendment is effective on
or after the adoption date) must use the interest rate as provided
under the terms of the Plan after the effective date of the amendment,
determined at either the date for determining the interest rate before
the amendment or the date for determining the interest rate after the
amendment, whichever results in the larger distribution. If the Plan
amendment is adopted retroactively (that is, the amendment is
effective prior to the adoption date), the Plan must use the interest
rate determination date resulting in the larger distribution for the
period beginning with the effective date and ending one year after the
adoption date.
Notwithstanding the above, if a benefit is distributed in a
form other than a nondecreasing annuity payable for a period not less
than the life of a Participant or, in the case of a Pre-Retirement
Survivor Annuity, the life of the surviving spouse, the interest rate
used in determining the Actuarial Equivalent of the portion of the
excess/offset portion of the monthly retirement benefit pursuant to
Section 5.1(a) shall not be less than the lesser of 7.5% or the
"Applicable Interest Rate."
In the case of a distribution (other than nondecreasing life annuities
payable for a period not less than the life of a Participant or, in the case of
a Pre-Retirement Survivor Annuity, the life of the surviving spouse) that was
made in a Plan Year beginning after December 31, 1994, and before the later of
the adoption date or the first day of the Plan Year beginning after December 31,
1999, the calculation shall be made by using the interest rate determined under
the regulations of the Pension Benefit Guaranty Corporation for determining the
present value of a lump sum distribution on plan termination that were in effect
on September 1, 1993, and using the provisions of the Plan as in effect on the
day before December 8, 1994; but only if such provisions of the Plan met the
requirements of Code Section 417 (e) (3) and Regulation 1.417(e)-1(d) as in
effect on the day before December 8, 1994.
In the event this Section is amended, the Actuarial Equivalent of a
Participant's Accrued Benefit on or after the date of change shall be determined
(unless otherwise permitted by law or Regulation) as the greater of (1) the
Actuarial Equivalent of the Accrued Benefit as of the date of change computed on
the old basis, or (2) the Actuarial Equivalent of the total Accrued Benefit
computed on the new basis.
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1.4 "Administrator" means the Employer unless another ' person or entity
has been designated by the Employer pursuant to Section 2.2 to administer the
Plan on behalf of the Employer.
1.5 "Affiliated Employer" means any corporation which is a member of a
controlled group of corporations (as defined in Code Section 414(b)) which
includes the Employer; any trade or business (whether or not incorporated) which
is under common control (as defined in Code Section 414 (c)) with the Employer;
any organization (whether or not incorporated) which is a member of an
affiliated service group (as defined in Code Section 414(m)) which includes the
Employer; and any other entity required to be aggregated with the Employer
pursuant to Regulations under Code Section 414(o).
1.6 "Age" means age at last birthday. '
1.7 "Aggregate Account" means, with respect to each Participant, the value
of all accounts maintained on behalf of a Participant, whether attributable to
Employer or Employee contributions, used to determine Top Heavy Plan status
under the provisions of a defined contribution plan included in any Aggregation
Group (as defined in Section 11.2).
1.8 "Anniversary Date" means January 1.
1.9 "Annuity Starting Date" means, with respect to any Participant, the
first day of the first period for which an amount is paid as an annuity or any
other form.
1.10 Highest 5 consecutive Years of Service excluding Compensation after
December 31, 2000
For purposes of this Section, if the determination of Average Monthly
Compensation is based on Compensation prior to the first day of the Plan Year
beginning after December 31, 1993, Compensation in excess of $150,000 shall be
disregarded for purposes of calculating Average Monthly Compensation.
Notwithstanding the foregoing, with respect to Plan Years beginning prior to the
first day of the Plan Year beginning after December 31, 1994, compliance with
Code Section 401(a)(17) then in effect shall be deemed to be compliance with
this paragraph.
1.11 "Beneficiary" means the person designated as provided in Section 5.5
to receive the benefits which are payable under the Plan upon or after the death
of a Participant.
1.12 "Code" means the Internal Revenue Code of 1986, as amended or replaced
from time to time.
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1.13 "Compensation" with respect to any Participant means such
Participant's wages, salaries, fees for professional services and other amounts
received (without regard to whether or not an amount is paid in cash) for
personal services actually rendered in the course of employment with the
Employer maintaining the Plan to the extent that the amounts are includible in
gross income (including, but not limited to, commissions paid salesmen,
compensation for services on the basis of a percentage of profits, commissions
on insurance premiums, tips, bonuses, fringe benefits, and reimbursements or
other expense allowances under a nonaccountable plan (as described in Regulation
1.62-2(c)) for a Calendar Year ending with or within the Plan Year.
Compensation shall exclude (a)(1) contributions made by the Employer
to a plan of deferred compensation to the extent that, the contributions are not
includible in the gross income of the Participant for the taxable year in which
contributed, (2) Employer contributions made on behalf of an Employee to a
simplified employee pension plan described in Code Section 408(k) to the extent
such contributions are excludable from the Employee's gross income, (3) any
distributions from a plan of deferred compensation; (b) 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; (c) amounts realized from the sale,
exchange or other disposition of stock acquired under a qualified stock option;
and (d) other amounts which receive special tax benefits, or contributions made
by the Employer (whether or not under a salary reduction agreement) towards the
purchase of any annuity contract described in Code Section 403(b) (whether or
not the contributions are actually excludable from the gross income of the
Employee).
For purposes of this Section, the determination of Compensation shall
be made by:
(a) including amounts which are contributed by the Employer
pursuant to a salary reduction agreement and which are not includible
in the gross income of the Participant under Code Sections 125, 132(f)
(4) for Calendar Years beginning after December 31, 2000, 402(e)(3),
402(h)(1)(B), 403(b) or 457(b), and Employee contributions described
in Code Section 414(h)(2) that are treated as Employer contributions.
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Compensation in excess of $150,000 shall be disregarded. Such amount
shall be adjusted for increases in the cost of living in accordance with Code
Section 401(a)(17), except that the dollar increase in effect on January 1 of
any calendar year shall be effective for the Calendar Years beginning with such
calendar year. If Compensation for any prior determination period is taken into
account in determining an Employee's benefits accruing in a Plan Year beginning
after December 31, 1993, the Compensation for that prior determination period is
subject to the adjusted compensation limit in effect for that prior
determination period. For this purpose, for determination periods beginning
before the first day of the first Plan Year beginning on or after January 1,
1994, the annual compensation limit is $150,000. For any short Calendar Year the
Compensation limit shall be an amount equal to the Compensation limit for the
calendar year in which the 'Calendar Year begins multiplied by the ratio
obtained by dividing the number of full months in the short Calendar Year by
twelve (12).
Effective with Plan Years beginning after December 31, 1996, the
aggregation rules of Code Section 414(q) as in effect prior to the Small
Business Job Protection Act of 1996 and Code Section 401(a)(17) are eliminated.
In determining Average Monthly Compensation, the elimination of these rules are
treated as not having been in effect for earlier years.
1.14 "Contract" or "Policy" means any life insurance policy, retirement
income or annuity policy or annuity contract (group or individual) issued
pursuant to the terms of the Plan.
1.15 "Earliest Retirement Age" means the earliest date on which, under the
Plan, the Participant could elect to receive retirement benefits.
1.16 "Early Retirement Date" means the first day of the month (prior to the
Normal Retirement Date) coinciding with or following the date on which a
Participant or Former Participant attains age 55, and has completed at least 10
Years of Service with the Employer (Early Retirement Age). A Participant shall
become fully Vested upon satisfying this requirement if still employed at his
Early Retirement Age.
A Former Participant who terminates employment after satisfying the
service requirement for Early Retirement and who thereafter reaches the age
requirement contained herein shall be entitled to receive his benefits under
this Plan.
1.17 "Eligible Employee" means any Employee hired before January 1, 2001.
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Employees of Affiliated Employers shall not be eligible to participate
in this Plan unless such Affiliated Employers have specifically adopted this
Plan in writing.
1.18 "Employee" means any person who is employed by the Employer or
Affiliated Employer. Employee shall include Leased Employees within the meaning
of Code Sections 414(n)(2) and 414(o) (2) unless such Leased Employees are
covered by a plan described in Code Section 414(n)(5) and such Leased Employees
do not constitute more than 20% of the recipient's non-highly compensated work
force.
1.19 "Employer" means Community Bank and any successor which shall maintain
this Plan; and any predecessor which has maintained this Plan. The Employer is a
corporation, with principal offices in the State of Arkansas.
1.20 "Fiduciary" means any person who (a) exercises any discretionary
authority or discretionary control respecting management of the Plan or
exercises any authority or control respecting management or disposition of its
assets, (b) renders investment advice for a fee or other compensation, direct or
indirect, with respect to any monies or other property of the Plan or has any
authority or responsibility to do so, or (c) has any discretionary authority or
discretionary responsibility in the administration of the Plan, including, but
not limited to, the Trustee, the Employer and its representative body, and the
Administrator.
1.21 "Fiscal Year" means the Employer's accounting year of 12 months
commencing on January 1 of each year and ending the following December 31.
1.22 "Former Participant" means a person who has been a Participant, but
who has ceased to be a Participant for any reason.
1.23 "415 Compensation" with respect to any Participant means such
Participant's wages, salaries, fees for professional services and other amounts
received (without regard to whether or not an amount is paid in cash) for
personal services actually rendered in the course of employment with the
Employer maintaining the Plan to the extent that the amounts are includible in
gross income (including, but not limited to, commissions paid salesmen,
compensation for services on the basis of a percentage of profits, commissions
on insurance premiums, tips, bonuses, fringe benefits, and reimbursements or
other expense allowances under a nonaccountable plan (as
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described in Regulation 1.62-2(c)) for a Calendar Year ending' with or within
the Plan Year.
"415 Compensation" shall exclude (a)(1) contributions made by the
Employer to a plan of deferred compensation to the extent that, the
contributions are not includible in the gross income of the Participant for the
taxable year in which contributed, (2) Employer contributions made on behalf of
an Employee to a simplified employee pension plan described in Code Section
408(k) to the extent such contributions are excludable from the Employee's gross
income, (3) any distributions from a plan of deferred compensation; (b) 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; (c) amounts realized from
the sale, exchange or other disposition of stock acquired under a qualified
stock option; and (d) other amounts which receive special tax benefits, or
contributions made by the Employer (whether or not under a salary reduction
agreement) towards the purchase of any annuity contract described in Code
Section 403(b) (whether or not the contributions are actually excludable from
the gross income of the Employee).
For Plan Years beginning after December 31, 1997, for purposes of this
Section, the determination of "415 Compensation" shall include any elective
deferral (as defined in Code Section 402(g)(3)), and any amount which is
contributed or deferred by the Employer at the election of the Participant and
which is not includible in the gross income of the Participant by reason of Code
Sections 125, 132(f) (4) for Calendar Years beginning after December 31, 2000 or
457.
1.24 "Freeze Date" means the last day of the "limitation year" beginning
prior to the first day of the "limitation year" beginning after December 31,
1994.
1.25 "Fresh-Start Date" generally means the last day of the Plan Year
preceding a Plan Year for which any amendment of the Plan that directly or
indirectly affects the amount of a Participant's benefit determined under the
current benefit formula, is made effective. If this Plan has had a fresh-start
for all Participants, and in a subsequent Plan Year is aggregated for purposes
of Code Section 401(a)(4) with another plan that did not make the same
fresh-start, the Plan will have a fresh-start on the last day of the Plan Year
preceding the Plan Year during which the plans are first aggregated.
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1.26 "Fresh-Start Group" means all Participants who have Accrued Benefits
as of the Fresh-Start Date and have at least one Hour of Service with the
Employer after that date.
1.27 "Frozen Accrued Benefit" means a Participant's Accrued Benefit under
the Plan determined as of the latest Fresh-Start Date as if the Participant
terminated employment with the Employer as of the latest Fresh-Start Date, or
the date the Participant actually terminated employment with the Employer, if
earlier, without regard to any amendment made to the Plan after that date other
than amendments recognized as effective as of or before the date under Code
Section 401(b) or Regulation 1.401(a)(4)-11(g). If the Participant has not had a
Fresh-Start Date, the Participant's Frozen Accrued Benefit will be zero.
If, as of the Participant's latest Fresh-Start date, the amount of a
Participant's Frozen Accrued Benefit was limited by the application of Code
Section 415, the Participant's Frozen Accrued Benefit will be increased for
years after the latest Fresh-Start Date to the extent permitted under Code
Section 415(d)(1). In addition, the Frozen Accrued Benefit of a Participant
whose Frozen Accrued Benefit includes the top-heavy minimum benefits provided in
Section 5.2, will be increased to the extent necessary to comply with the
average compensation requirement of Code Section 416(c) (1) (D) (i).
If: (a) the Plan's normal form of benefit in effect on the
Participant's latest Fresh-Start Date is not the same as the normal form under
the Plan after such Fresh-Start Date and/or (b) the Normal Retirement Age for
any Participant on that date was greater than the Normal Retirement Age for that
Participant under the Plan after such Fresh-Start Date, the Frozen Accrued
Benefit will be expressed as an actuarially equivalent benefit in the normal
form under the Plan after such Fresh-Start Date, commencing at the Participant's
Normal Retirement Age under the Plan in effect after the latest Fresh-Start
Date.
1.28 "Highly Compensated Employee" means, for Plan Years beginning after
December 31, 1996, an Employee described in Code Section 414(q) and the
Regulations thereunder, and generally means an Employee who performed services
for the Employer during the "determination year" and is in one or more of the
following groups:
(a) Employees who at any time during the "determination year" or
"look-back year" were "five percent owners" as defined in Section
1.33(c).
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(b) Employees who received "415 Compensation"' during the
"look-back year" from the Employer in excess of $80,000.
Notwithstanding the above, for the first Plan Year beginning after
December 31, 1996, the "look-back year" shall be the calendar year ending with
or within the Plan Year for which testing is being performed, and the
"determination year" (if applicable) shall be the period of time, if any, which
extends beyond the "look-back year" and ends on the last day of the Plan Year
for which testing is being performed (the "lag period").
The "look-back year" shall be the calendar year ending with or within
the Plan Year for which testing is being performed, and the "determination year"
(if applicable) shall be the period of time, if any, which extends beyond the
"look-back year" and ends on the last day of the Plan Year for which testing is
being performed (the "lag period"). If the "lag period" is less than twelve
months long, the dollar threshold amounts specified in (b), (c) and (d) above
shall be prorated based upon the number of months in the "lag period."
For purposes of this Section, the determination of "415 Compensation"
shall be based only on "415 Compensation" which is actually paid and shall be
made by including amounts which are contributed by the Employer pursuant to a
salary reduction agreement and which are not includible in the gross income of
the Participant under Code Sections 125, 402(e)(3), 402(h)(1)(B), 403(b) or
457(b), and Employee contributions described in Code Section 414(h)(2) that are
treated as Employer contributions. Additionally, the dollar threshold amount
specified in (b) above shall be adjusted at such time and in the same manner as
under Code Section 415(d), except that the base period shall be the calendar
quarter ending September 30, 1996. In the case of such an adjustment, the dollar
limit which shall be applied is the limit for the calendar year in which the
"look-back year" begins.
In determining who is a Highly Compensated Employee, Employees who are
non-resident aliens and who received no earned income (within the meaning of
Code Section 911(d)(2)) from the Employer constituting United States source
income within the meaning of Code Section 861(a)(3) shall not be treated as
Employees. Additionally, all Affiliated Employers shall be taken into account as
a single employer and Leased Employees within the meaning of Code Sections
414(n)(2) and 414(o)(2) shall be considered Employees unless such Leased
Employees are covered by a plan described in Code Section 414(n)(5) and are not
covered in any qualified plan maintained by the Employer. The exclusion
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of Leased Employees for this purpose shall be applied on a uniform and
consistent basis for all of the Employer's retirement plans. Highly Compensated
Former Employees shall be treated as Highly Compensated Employees without regard
to whether they performed services during the "determination year."
1.29 "Highly Compensated Former Employee" means a former Employee who had a
separation year prior to the "determination year" and was a Highly Compensated
Employee in the year of separation from service or in any "determination year"
after attaining age 55. Notwithstanding the foregoing, an Employee who separated
from service prior to 1987 will be treated as a Highly Compensated Former
Employee only if during the separation year (or year preceding the separation
year) or any year after the Employee attains age 55 (or the last year ending
before the Employee's 55th birthday), the Employee either received "415
Compensation" in excess of $50,000 or was a "five percent owner." For purposes
of this Section, "determination year," "415 Compensation" and "five percent
owner" shall be determined in accordance with Section 1.28. Highly Compensated
Former Employees shall be treated as Highly Compensated Employees. The method
set forth in this Section for determining who is a "Highly Compensated Former
Employee" shall be applied on a uniform and consistent basis for all purposes
for which the Code Section 414(q) definition is applicable.
1.30 "Highly Compensated Participant" means any Highly Compensated Employee
who is eligible to participate in the Plan.
1.31 "Hour of Service" means (1) each hour for which an Employee is
directly or indirectly compensated or entitled to compensation by the Employer
for the performance of duties (these hours will be credited to the Employee for
the computation period in which the duties are performed); (2) each hour for
which an Employee is directly or indirectly compensated or entitled to
compensation by the Employer (irrespective of whether the employment
relationship has terminated) for reasons other than performance of duties (such
as vacation, holidays, sickness, jury duty, disability, lay-off, military duty
or leave of absence) during the applicable computation period (these hours will
be calculated and credited pursuant to Department of Labor regulation
2530.200b-2 which is incorporated herein by reference); (3) each hour for which
back pay is awarded or agreed to by the Employer without regard to mitigation of
damages (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). The same Hours of
Service shall
12
not be credited both under (1) or (2), as the case may be, and under (3).
Notwithstanding the above, (i) no more than 501 Hours of Service are
required to be credited to an Employee on account of any single continuous
period during which the Employee performs no duties (whether or not such period
occurs in a single computation period); (ii) an hour for which an Employee is
directly or indirectly paid, or entitled to payment, on account of a period
during which no duties are performed is not required to be credited to the
Employee if such payment is made or due under a plan maintained solely for the
purpose of complying with applicable worker's compensation, or unemployment
compensation or disability insurance laws; and (iii) Hours of Service are not
required to be credited for a payment which solely reimburses an Employee for
medical or medically related expenses incurred by the Employee.
For purposes of this Section, a payment shall be deemed to be made by
or due from the Employer regardless of whether such payment is made by or due
from the Employer directly, or indirectly through, among others, a trust fund,
or insurer, to which the Employer contributes or pays premiums and regardless of
whether contributions made or due to the trust fund, insurer, or other entity
are for the benefit of particular Employees or are on behalf of a group of
Employees in the aggregate.
For purposes of this Section, Hours of Service will be credited for
employment with other Affiliated Employers. The provisions of Department of
Labor regulations 2530.200b-2(b) and (c) are incorporated herein by reference.
1.32 "Investment Manager" means an entity that (a) has the power to manage,
acquire, or dispose of Plan assets and (b) acknowledges fiduciary responsibility
to the Plan in writing. Such entity must be a person, firm, or corporation
registered as an investment adviser under the Investment Advisers Act of 1940, a
bank, or an insurance company.
1.33 "Key Employee" means an Employee as defined in Code Section 416(i) and
the Regulations thereunder. Generally, any Employee or former Employee (as well
as each of his Beneficiaries) is considered a Key Employee if he, at any time
during the Plan Year that contains the "Determination Date" or any of the
preceding four (4) Plan Years, has been included in one of the following
categories:
13
(a) an officer of the Employer (as that term is defined within
the meaning of the Regulations under Code Section 416) having annual
"415 Compensation" greater than 50 percent of the amount in effect
under Code Section 415(b)(1)(A) for any such Plan Year.
(b) one of the ten employees having annual "415 Compensation"
from the Employer for a Plan Year greater than the dollar limitation
in effect under Code Section 415(c)(1) (A) for the calendar year in
which such Plan Year ends and owning (or considered as owning within
the meaning of Code Section 318) both more than one-half percent
interest and the largest interests in the Employer.
(c) a "five percent owner" of the Employer. "Five percent owner"
means any person who owns (or is considered as owning within the
meaning of Code Section 318) more than five percent (5%) of the
outstanding stock of the Employer or stock possessing more than five
percent (5%) of the total combined voting power of all stock of the
Employer or, in the case of an unincorporated business, any person who
owns more than five percent (5%) of the capital or profits interest in
the Employer. In determining percentage ownership hereunder, employers
that would otherwise be aggregated under Code Sections 414(b), (c),
(m) and (o) shall be treated as separate employers.
(d) a "one percent owner" of the Employer having an annual "415
Compensation" from the Employer of more than $150,000. "One percent
owner" means any person who owns (or is considered as owning within
the meaning of Code Section 318) more than one percent (1%) of the
outstanding stock of the Employer or stock possessing more than one
percent (1%) of the total combined voting power of all stock of the
Employer or, in the case of an unincorporated business, any person who
owns more than one percent (1%) of the capital or profits interest in
the Employer. In determining percentage ownership hereunder, employers
that would otherwise be aggregated under Code Sections 414(b), (c),
(m) and (o) shall be treated as separate employers. However, in
determining whether an individual has "415 Compensation" of more than
$150,000, "415 Compensation" from each employer required to be
aggregated under Code Sections 414(b), (c), (m) and (o) shall be taken
into account.
14
For purposes of this Section, the determination of "415 Compensation"
shall be based only on "415 Compensation" which is actually paid and shall be
made by including amounts which are contributed by the Employer pursuant to a
salary reduction agreement and which are not includible in the gross income of
the Participant under Code Sections 125, 132(f)(4) for Calendar Years beginning
after December 31, 2000, 402(e)(3), 402(h)(1)(B), 403(b) or 457(b), and Employee
contributions described in Code Section 414(h)(2) that are treated as Employer
contributions.
1.34 "Late Retirement Date" means the first day of the month coinciding
with or next following a Participant's actual Retirement Date after having
reached his Normal Retirement Date.
1.35 "Leased Employee" means, for Plan Years beginning after December 31,
1996, any person (other than an Employee of the recipient) who pursuant to an
agreement between the recipient and any other person ("leasing organization")
has performed services for the recipient (or for the recipient and related
persons determined in accordance with Code Section 414(n)(6)) on a substantially
full time basis for a period of at least one year, and such services are
performed under primary direction or control by the recipient employer.
Contributions or benefits provided a Leased Employee by the leasing organization
which are attributable to services performed for the recipient employer shall be
treated as provided by the recipient employer. A Leased Employee shall not be
considered an Employee of the recipient:
(a) if such employee is covered by a money purchase pension plan
providing:
(1) a non-integrated employer contribution rate of at least 10%
of compensation, as defined in Code Section 415(c)(3), but
including amounts which are contributed by the Employer pursuant
to a salary reduction agreement and which are not includible in
the gross income of the Participant under Code Sections 125,
402(e)(3), 402(h)(1)(B), 403(b) or 457(b), and Employee
contributions described in Code Section 414(h)(2) that are
treated as Employer contributions.
(2) immediate participation; and
(3) full and immediate vesting; and
15
(b) if Leased Employees do not constitute more than 20% of the
recipient's non-highly compensated work force.
1.36 "Non-Highly Compensated Participant" means any Participant who is not
a Highly Compensated Employee.
1.37 "Non-Key Employee" means any Employee or former Employee (and his
Beneficiaries) who is not a Key Employee.
1.38 "Normal Retirement Age" means the Participant's 65 birthday. A
Participant shall become fully Vested in his Normal Retirement Benefit upon
attaining his Normal Retirement Age.
1.39 "Normal Retirement Date" means first day of the month coinciding with
or next following the Participant's Normal Retirement Age.
1.40 "Old Law Benefit" means the Participant's Accrued Benefit under the
terms of the Plan as of the Freeze Date, for the Annuity Starting Date and
optional form and taking into account the limitations of Code Section 415, as in
effect on December 7, 1994, including the participation requirements under Code
Section 415(b)(5). In determining the amount of a Participant's Old Law Benefit,
the following shall be disregarded:
(a) any Plan amendment increasing benefits adopted after the
Freeze Date; and
(b) any cost of living adjustments that become effective after
such date.
A Participant's Old Law Benefit is not increased after the Freeze
Date, but if the limitations of Code Section 415, as in effect on December 7,
1994, are less than the limitations that were applied to determine the
Participant's Old Law Benefit on the Freeze Date, then the Participant's Old Law
Benefit shall be reduced in accordance with such reduced limitation. If, at any
date after the Freeze Date, the Participant's total Plan benefit, before the
application of Code Section 415, is less than the Participant's Old Law Benefit,
the Old Law Benefit shall be reduced to the Participant's total Plan Benefit.
1.41 "1-Year Break in Service" means the applicable computation period
during which an Employee has not completed more than 500 Hours of Service with
the Employer. Further, solely for the purpose of determining whether a
Participant has incurred a 1-Year Break in Service, Hours of Service shall be
16
recognized for "authorized leaves of absence" and "maternity and paternity
leaves of absence." Years of Service and 1-Year Breaks in Service shall be
measured on the same computation period.
"Authorized leave of absence" means an unpaid, temporary cessation
from active employment with the Employer pursuant to an established
nondiscriminatory policy, whether occasioned by illness, military service, or
any other reason.
A "maternity or paternity leave of absence" means, for Plan Years
beginning after December 31, 1984, an absence from work for any period by reason
of the Employee's pregnancy, birth of the Employee's child, placement of a child
with the Employee in connection with the adoption of such child, or any absence
for the purpose of caring for such child for a period immediately following such
birth or placement. For this purpose, Hours of Service shall be credited for the
computation period in which the absence from work begins, only if credit
therefore is necessary to prevent the Employee from incurring a 1-Year Break in
Service, or, in any other case, in the immediately following computation period.
The Hours of Service credited for a "maternity or paternity leave of absence"
shall be those which would normally have been credited but for such absence, or,
in any case in which the Administrator is unable to determine such hours
normally credited, eight (8) Hours of Service per day. The total Hours of
Service required to be credited for a "maternity or paternity leave of absence"
shall not exceed 501.
1.42 "Participant" means any Eligible Employee who participates in the Plan
and has not for any reason become ineligible to participate further in the Plan.
1.43 "Participant's Cumulative Permitted Disparity Limit" is equal to 35
minus the number of years credited to the Participant for purposes of the
benefit formula or the accrual method under the plan under one or more qualified
plans or simplified employee pensions (whether or not terminated) ever
maintained by the Employer, other than years for which a Participant earned a
year of credited service under this Plan. For purposes of determining the
Participant's Cumulative Permitted Disparity Limit, all years ending in the same
calendar year are treated as the same year. If the Participant's Cumulative
Permitted Disparity Limit is less than the period of years specified in Section
5.1(a), then for years after the Participant reaches his Cumulative Permitted
Disparity Limit and through the end of the period specified in Section 5.1(a),
the Participant's benefit will be equal to the excess/gross benefit percentage,
or, if the Participant's benefit after the latest Fresh-Start Date is not
accrued under the fractional accrual
17
rule and the plan does not satisfy Code Section 411(b)(1)(f), 133 1/3 percent
of the base benefit percentage, if lesser, times Average Monthly Compensation.
1.44 "Plan" means this instrument, including all amendments thereto.
1.45 "Plan Year" means the Plan's accounting year of twelve (12) months
commencing on January 1 of each year and ending the following December 31.
1.46 "Pre-Retirement Survivor Annuity" is an immediate annuity form of
payment for the life of the surviving spouse of a Participant who dies prior to
his Annuity Starting Date, the payment under which must be equal to the "minimum
spouse's death benefit" provided in Section 5.5(b).
1.47 "Present Value of Accrued Benefit" means the Actuarial Equivalent
lump-sum amount of a Participant's Accrued Benefit at date of valuation.
Notwithstanding the foregoing, the Present Value of Accrued Benefit for the
determination of Top Heavy Plan status shall be made exclusively pursuant to the
provisions of Section 11.2.
1.48 "Regulation" means the Income Tax Regulations as promulgated by the
Secretary of the Treasury or his delegate, and as amended from time to time.
1.49 "Retired Participant" means a person who has been a Participant, but
who has become entitled to retirement benefits under the Plan.
1.50 "Retirement Date" means the date as of which a Participant retires for
reasons other than Total and Permanent Disability, whether such retirement
occurs on a Participant's Normal Retirement Date, Early or Late Retirement Date
(see Section 5.1).
1.51 "Social Security Retirement Age" means the age used as the retirement
age under Section 216(1) of the Social Security Act, except that such section
shall be applied without regard to the age increase factor and as if the early
retirement age under Section 216(1)(2) of such Act were 62.
1.52 "Super Top Heavy Plan" means a plan described in Section 11.2(b).
18
1.53 "Terminated Participant" means a person who has been a Participant,
but whose employment has been terminated other than by death, Total and
Permanent Disability or retirement.
1.54 "Top Heavy Plan" means a plan described in Section 11.2(a).
1.55 "Top Heavy Plan Year" means a Plan Year during which the Plan is a Top
Heavy Plan.
1.56 "Total and Permanent Disability" means a physical or mental condition
of a Participant resulting from bodily injury, disease, or mental disorder which
renders him incapable of continuing his usual and customary employment with the
Employer. The disability of a Participant shall be determined by a licensed
physician chosen by the Administrator. The determination shall be applied
uniformly to all Participants.
1.57 "Trustee" means the person or entity named as trustee herein or in any
separate trust forming a part of this Plan, and any successors.
1.58 "Trust Fund" means the assets of the Plan and Trust as the same shall
exist from time to time.
1.59 "USERRA" means the Uniformed Services Employment and Reemployment
Rights Act of 1994. Notwithstanding any provision of this Plan to the contrary,
effective December 12, 1994, contributions, benefits and service credit with
respect to qualified military service will be provided in accordance with Code
Section 414(u).
1.60 "Vested" means the portion of a Participant's benefits under the Plan
that are nonforfeitable.
1.61 "Year of Service" means the computation period of twelve (12)
consecutive months, herein set forth, during which an Employee has at least 1000
Hours of Service.
For purposes of eligibility for participation, the initial computation
period shall, begin with the date on which the Employee first performs an Hour
of Service. The participation computation period beginning after a 1-Year Break
in Service shall be measured from the date on which an Employee again performs
an Hour of Service. The participation computation period shall shift to the Plan
Year which includes the anniversary of the date on which the Employee first
performed an Hour of Service. An Employee who is credited with the required
Hours of Service in both the initial computation period (or the
19
computation period beginning after a 1-Year Break in Service) and the Plan
Year which includes the anniversary of the date on which the Employee first
performed an Hour of Service, shall be credited with two (2) Years of Service
for purposes of eligibility to participate.
For vesting purposes, the computation periods shall be the Plan Year,
including periods prior to the Effective Date of the Plan.
The computation period shall be the Plan Year if not otherwise set
forth herein.
Notwithstanding the foregoing, for any short Plan Year, the
determination of whether an Employee has completed a Year of Service shall be
made in accordance with Department of Labor regulation 2530.203-2(c). However,
in determining whether an Employee has completed a Year of Service for benefit
accrual purposes or for purposes of Section 5.1(a) in the short Plan Year, the
number of the Hours of Service required shall be proportionately reduced based
on the number of full months in the short Plan Year.
Years of Service with any Affiliated Employer shall be recognized.
ARTICLE II
ADMINISTRATION
2.1 POWERS AND RESPONSIBILITIES OF THE EMPLOYER
(a) In addition to the general powers and responsibilities
otherwise provided for in this Plan, the Employer shall be empowered
to appoint and remove the Trustee and the Administrator from time to
time as it deems necessary for the proper administration of the Plan
to ensure that the Plan is being operated for the exclusive benefit of
the Participants and their Beneficiaries in accordance with the terms
of the Plan, the Code, and the Act. The Employer may appoint counsel,
specialists, advisers, agents (including any nonfiduciary agent) and
other persons as the Employer deems necessary or desirable in
connection with the exercise of its fiduciary duties under this Plan.
The Employer may compensate such agents or advisers from the assets of
the Plan as fiduciary expenses (but not including any business
(settlor) expenses of the Employer), to the extent not paid by the
Employer.
20
(b) The Employer shall establish a "funding policy and method,"
i.e., it shall determine whether the Plan has a short run need for
liquidity (e.g., to pay benefits) or whether liquidity is a long run
goal and investment growth (and stability of same) is a more current
need, or shall appoint a qualified person to do so. The Employer or
its delegate shall communicate such needs and goals to the Trustee,
who shall coordinate such Plan needs with its investment policy. The
communication of such a "funding policy and method" shall not,
however, constitute a directive to the Trustee as to investment of the
Trust Funds. Such "funding policy and method" shall be consistent with
the objectives of this Plan and with the requirements of Title I of
the Act.
(c) The Employer shall periodically review the performance of any
Fiduciary or other person to whom duties have been delegated or
allocated by it under the provisions of this Plan or pursuant to
procedures established hereunder. This requirement may be satisfied by
formal periodic review by the Employer or by a qualified person
specifically designated by the Employer, through day-to-day conduct
and evaluation, or through other appropriate ways.
2.2 DESIGNATION OF ADMINISTRATIVE AUTHORITY
The Employer shall be the Administrator. The Employer may appoint any
person, including, but not limited to, the Employees of the Employer, to perform
the duties of the Administrator. Any person so appointed shall signify his
acceptance by filing written acceptance with the Employer. Upon the resignation
or removal of any individual performing the duties of the Administrator, the
Employer may designate a successor.
2.3 POWERS AND DUTIES OF THE ADMINISTRATOR
The primary responsibility of the Administrator is to administer the
Plan for the exclusive benefit of the Participants and their Beneficiaries,
subject to the specific terms of the Plan. The Administrator shall administer
the Plan in accordance with its terms and shall have the power and discretion to
construe the terms of the Plan and to determine all questions arising in
connection with the administration, interpretation, and application of the Plan.
Any such determination by the Administrator shall be conclusive and binding upon
all persons. The Administrator may establish
21
procedures, correct any defect, supply any information, or reconcile any
inconsistency in such manner and to such extent as shall be deemed necessary or
advisable to carry out the purpose of the Plan; provided, however, that any
procedure, discretionary act, interpretation or construction shall be done in a
nondiscriminatory manner based upon uniform principles consistently applied and
shall be consistent with the intent that the Plan shall continue to be deemed a
qualified plan under the terms of Code Section 401(a), and shall comply with the
terms of the Act and all regulations issued pursuant thereto. The Administrator
shall have all powers necessary or appropriate to accomplish his duties under
this Plan.
The Administrator shall be charged with the duties of the general
administration of the Plan, including, but not limited to, the following:
(a) the discretion to determine all questions relating to the
eligibility of Employees to participate or remain a Participant
hereunder and to receive benefits under the Plan;
(b) to compute, certify, and direct the Trustee with respect to
the amount and the kind of benefits to which any Participant shall be
entitled hereunder;
(c) to authorize and direct the Trustee with respect to all
nondiscretionary or otherwise directed disbursements from the Trust;
(d) to maintain all necessary records for the administration of
the Plan;
(e) to interpret the provisions of the Plan and to make and
publish such rules for regulation of the Plan as are consistent with
the terms hereof;
(f) to determine the size and type of any Contract to be
purchased from any insurer and to designate the insurer from which
such Contract shall be purchased. All Policies shall be issued on a
uniform basis as of each Anniversary Date with respect to all
Participants under similar circumstances;
(g) to compute and certify to the Employer and to the Trustee
from time to time the sums of money necessary or desirable to be
contributed to the Plan;
22
(h) to consult with the Employer and the Trustee regarding the
short and long-term liquidity needs of the Plan in order that the
Trustee can exercise any investment discretion in a manner designed to
accomplish specific objectives;
(i) to prepare and distribute to Employees a procedure for
notifying Participants and Beneficiaries of their rights to elect
joint and survivor annuities and Pre-Retirement Survivor Annuities as
required by the Act and regulations thereunder;
(j) to assist any Participant regarding his rights, benefits, or
elections available under the Plan.
2.4 RECORDS AND REPORTS
The Administrator shall keep a record of all actions taken and shall
keep all other books of account, records, policies, and other data that may be
necessary for proper administration of the Plan and shall be responsible for
supplying all information and reports to the Internal Revenue Service,
Department of Labor, Participants, Beneficiaries and others as required by law.
2.5 APPOINTMENT OF ADVISERS
The Administrator, or the Trustee with the consent of the
Administrator, may appoint counsel, specialists, advisers, agents (including
nonfiduciary agents) and other persons as the Administrator or the Trustee deems
necessary or desirable in connection with the administration of this Plan,
including but not limited to agents and advisers to assist with the
administration and management of the Plan, and thereby to provide, among such
other duties as the Administrator may appoint, assistance with maintaining Plan
records and the providing of investment information to the Plan's investment
fiduciaries.
2.6 PAYMENT OF EXPENSES
All expenses of administration may be paid out of the Trust Fund
unless paid by the Employer. Such expenses shall include any expenses incident
to the functioning of the Administrator, or any person or persons retained or
appointed by any Named Fiduciary incident to the exercise of their duties under
the Plan, including, but not limited to, fees of accountants, counsel,
Investment Managers, and other specialists
23
and their agents, and other costs of administering the Plan. Until paid, the
expenses shall constitute a liability of the Trust Fund.
2.7 CLAIMS PROCEDURE
Claims for benefits under the Plan may be filed in writing with the
Administrator. Written notice of the disposition of a claim shall be furnished
to the claimant within 90 days after the application is filed. In the event the
claim is denied, the reasons for the denial shall be specifically set forth in
the notice in language calculated to be understood by the claimant, pertinent
provisions of the Plan shall be cited, and, where appropriate, an explanation as
to how the claimant can perfect the claim will be provided. In addition, the
claimant shall be furnished with an explanation of the Plan's claims review
procedure.
2.8 CLAIMS REVIEW PROCEDURE
Any Employee, former Employee, or Beneficiary of either, who has been
denied a benefit by a decision of the Administrator pursuant to Section 2.7
shall be entitled to request the Administrator to give further consideration to
his claim by filing with the Administrator (on a form which may be obtained from
the Administrator) a request for a hearing. Such request, together with a
written statement of the reasons why the claimant believes his claim should be
allowed, shall be filed with the Administrator no later than 60 days after
receipt of the written notification provided for in Section 2.7. The
Administrator shall then conduct a hearing within the next 60 days, at which the
claimant may be represented by an attorney or any other representative of his
choosing and at which the claimant shall have an opportunity to submit written
and oral evidence and arguments in support of his claim. At the hearing (or
prior thereto upon 5 business days written notice to the Administrator) the
claimant or his representative shall have an opportunity to review all documents
in the possession of the Administrator which are pertinent to the claim at issue
and its disallowance. Either the claimant or the Administrator may cause a court
reporter to attend the hearing and record the proceedings. In such event, a
complete written transcript of the proceedings shall be furnished to both
parties by the court reporter. The full expense of any such court reporter and
such transcripts shall be borne by the party causing the court reporter to
attend the hearing. A final decision as to the allowance of the claim shall be
made by the Administrator within 60 days of receipt of the appeal (unless there
has been an extension of 60 days due to special circumstances, provided the
24
delay and the special circumstances occasioning it are communicated to the
claimant within the 60 day period). Such communication shall be written in a
manner calculated to be understood by the claimant and shall include specific
reasons for the decision and specific references to the pertinent Plan
provisions on which the decision is based.
ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY
Any Eligible Employee who has completed one (1) Year of Service and
has attained age 21 shall be eligible to participate hereunder as of the date he
has satisfied such requirements. However, any Employee who was a Participant in
the Plan prior to the effective date of this amendment and restatement shall
continue to participate in the Plan.
3.2 EFFECTIVE DATE OF PARTICIPATION
An Eligible Employee shall become a Participant effective as of the
first day of the month coinciding with or next following the date on which such
Employee met the eligibility requirements of Section 3.1, provided said Employee
was still employed as of such date (or if not employed on such date, as of the
date of rehire if a 1-Year Break in Service has not occurred).
3.3 DETERMINATION OF ELIGIBILITY
The Administrator shall determine the eligibility of each Employee for
participation in the Plan based upon information furnished by the Employer. Such
determination shall be conclusive and binding upon all persons, as long as the
same is made pursuant to the Plan and the Act. Such determination shall be
subject to review per Section 2.8.
3.4 TERMINATION OF ELIGIBILITY
(a) In the event a Participant shall go from a classification of
an Eligible Employee to an ineligible Employee, such Former
Participant shall continue to vest in his Accrued Benefit under the
Plan for each Year of Service completed while a noneligible employee,
until such time as his Accrued Benefit shall be forfeited or
distributed pursuant to the terms of the Plan.
25
(b) In the event a Participant is no longer a member of an
eligible class of Employees and becomes ineligible to participate,
such Employee will participate immediately upon returning to an
eligible class of Employees.
3.5 ELECTION NOT TO PARTICIPATE
An Employee may, subject to the approval of the Employer, elect
voluntarily not to participate in the Plan. The election not to participate must
be communicated to the Employer, in writing, at least thirty (30) days before
the beginning of a Plan Year.
ARTICLE IV
CONTRIBUTION AND VALUATION
4.1 PAYMENT OF CONTRIBUTIONS
No contribution shall be required under the Plan from any Participant.
The Employer shall pay to the Trustee from time to time such amounts in cash as
the Administrator and Employer shall determine to be necessary to provide the
benefits under the Plan determined by the application of accepted actuarial
methods and assumptions. The method of funding shall be consistent with Plan
objectives.
4.2 ACTUARIAL METHODS
In establishing the liabilities under the Plan and contributions
thereto, the enrolled actuary will use such methods and assumptions as will
reasonably reflect the cost of the benefits. The Plan assets are to be valued on
the last day of the Plan Year (or on any other date determined by the
Administrator) using any reasonable method of valuation that takes into account
fair market value pursuant to Regulations. There must be an actuarial valuation
of the Plan at least once every year.
4.3 TRANSFERS FROM QUALIFIED PLANS
(a) With the consent of the Administrator, amounts may be
transferred to this Plan from other qualified plans by Participants,
provided that the trust from which such funds are transferred permits
the transfer to be made and the transfer will not jeopardize the tax
exempt status of the Plan or Trust or create adverse tax consequences
for the Employer. The amounts transferred shall be considered an
additional Accrued Benefit and set up in a separate
26
account herein referred to as a "Participant's Rollover Account." Such
account shall be fully Vested at all times and shall not be subject to
Forfeiture for any reason.
(b) Amounts in a Participant's Rollover Account shall be held by
the Trustee pursuant to the provisions of this Plan and may not be
withdrawn by, or distributed to the Participant, in whole or in part,
except as provided in paragraphs (c) and (d) of this Section.
(c) Except as permitted by Regulations (including Regulation
1.411(d)-4), amounts attributable to elective contributions (as
defined in Regulation 1.401(k)-1(g) (3)), including amounts treated
as elective contributions, which are transferred from another
qualified plan in a plan-to-plan transfer shall be subject to the
distribution limitations provided for in Regulation 1.40l(k)-l(d).
(d) At Normal Retirement Date, or such other date when the
Participant or his Beneficiary shall be entitled to receive benefits,
the fair market value of the Participant's Rollover Account shall be
used to provide additional benefits to the Participant or his
Beneficiary. Additionally, the Administrator, at the election of the
Participant, shall direct the Trustee to distribute all or a portion
of the amount credited to the Participant's Rollover Account (other
than any direct or indirect transfers as that term is defined and
interpreted under Code Section 401(a)(11) and the Regulations
thereunder) from a defined benefit plan, money purchase plan
(including a target benefit plan), stock bonus or profit sharing plan.
Any distributions of amounts held in a Participant's Rollover Account
shall be made in a manner which is consistent with and satisfies the
provisions of Section 5.7, including, but not limited to, all notice
and consent requirements of Code Sections 417 and 411(a)(11) and the
Regulations thereunder. Furthermore, such amounts shall be considered
as part of a Participant's benefit in determining whether an
involuntary cash-out of benefits without Participant consent may be
made.
(e) The Administrator may direct that employee transfers made
after a Valuation Date be segregated into a separate account for each
Participant in a
27
federally insured savings account, certificate of deposit in a bank or
savings and loan association, money market certificate, or other short
term debt security acceptable to the Trustee until such time as the
allocations pursuant to this Plan have been made, at which time they
may remain segregated or be invested as part of the general Trust
Fund, to be determined by the Administrator.
(f) For purposes of this Section, the term "qualified plan" shall
mean any tax qualified plan under Code Section 401(a). The term
"amounts transferred from other qualified plans" shall mean: (i)
amounts transferred to this Plan directly from another qualified plan;
(ii) distributions from another qualified plan which are eligible
rollover distributions and which are either transferred by the
Employee to this Plan within sixty (60) days following his receipt
thereof or are transferred pursuant to a direct rollover; (iii)
amounts transferred to this Plan from a conduit individual retirement
account provided that the conduit individual retirement account has no
assets other than assets which (A) were previously distributed to the
Employee by another qualified plan as a lump-sum distribution (B) were
eligible for tax-free rollover to a qualified plan and (C) were
deposited in such conduit individual retirement account within sixty
(60) days of receipt thereof and other than earnings on said assets;
and (iv) amounts distributed to the Employee from a conduit individual
retirement account meeting the requirements of clause (iii) above, and
transferred by the Employee to this Plan within sixty (60) days of his
receipt thereof from such conduit individual retirement account.
(g) Prior to accepting any transfers to which this Section
applies, the Administrator may require the Employee to establish that
the amounts to be transferred to this Plan meet the requirements of
this Section and may also require the Employee to provide an opinion
of counsel satisfactory to the Employer that the amounts to be
transferred meet the requirements of this Section.
(h) Notwithstanding anything herein to the contrary, a transfer
directly to this Plan from another qualified plan (or a transaction
having the effect of such a transfer) shall only be permitted if
28
it will not result in the elimination or reduction of any "Section
411(d)(6) protected benefit" as described in Section 8.1.
ARTICLE V
BENEFITS
5.1 RETIREMENT BENEFITS
(a) The amount of monthly retirement benefit to be provided for
each Participant who retires on his Normal Retirement Date shall be
equal to his Accrued Benefit (herein called his Normal Retirement
Benefit). A Participant's Accrued Benefit is based on the greater of
his Frozen Accrued Benefit and a retirement benefit formula equal to
the sum of (1) and (2) reduced by (3) where: (1).9% of such
Participant's Average Monthly Compensation multiplied by the
Participant's total number of Years of Service, plus (2).5% of such
Average Monthly Compensation in excess of one-twelfth of $10,000
multiplied by the Participant's total number of Years of Service (up
to a maximum of 40 years), minus (3) the Actuarial Equivalent benefit
that can be provided by the Participant's Vested Account Balance
attributable to Employer Contributions in the Community Bank ESOP Plan
as of such Participant's Normal Retirement Date under this Plan,
computed to the nearest cent.
No other qualified plan or simplified employee pension, as
defined in Code Section 408(k), maintained by the Employer shall (1)
impute disparity pursuant to Regulation 1.401(a)(4)-7 for any
Participant and (2) provide for permitted disparity pursuant to Code
Section 401(1). Additionally, the number of Years of Service taken
into account for any Participant will not exceed the Participant's
Cumulative Permitted Disparity Limit as defined in Section 1.43.
The "Normal Retirement Benefit" of each Participant shall
not be less than the largest periodic benefit that would have been
payable to the Participant upon separation from service at or prior to
Normal Retirement Age under the Plan exclusive of social security
supplements, premiums on disability or term insurance, and the value
of disability benefits not in excess of the "Normal Retirement
Benefit." For purposes of comparing periodic benefits in the same
form, commencing prior to and at Normal Retirement Age, the greater
benefit is determined by converting the benefit
29
payable prior to Normal Retirement Age into the same form of annuity
benefit payable at Normal Retirement Age and comparing the amount of
such annuity payments. In the case of a Top Heavy Plan, the "Normal
Retirement Benefit" shall not be smaller than the minimum benefit to
which the Employee is entitled under Section 5.2.
(b) A Participant may elect to retire on an Early Retirement
Date. In the event that a Participant makes such an election, he shall
be entitled to receive an Early Retirement Benefit equal to his
Accrued Benefit payable at his Normal Retirement Date. However, if a
Participant so elects, he may receive payment of an Early Retirement
Benefit commencing on the first day of the month coinciding with or
next following his Early Retirement Date, which Early Retirement
Benefit shall equal the greater of (1) his Accrued Benefit reduced by
l/15th for each of the first five (5) years and l/30th for each of the
next five (5) years and reduced actuarially for each additional year
thereafter that the first day of the month on which his Early
Retirement Benefit commences precedes his Normal Retirement Date, or
(2) the Actuarial Equivalent of his Accrued Benefit if such benefit is
distributed in a form other than a nondecreasing life annuity payable
for a period not less than the life of such Participant.
(c) The Normal Retirement Benefit payable to a Participant
pursuant to this Section 5.1 shall be a monthly pension commencing on
his Retirement Date and continuing for life. However, the form of
distribution of such benefit shall be determined pursuant to the
provisions of Section 5.7.
(d) At the request of a Participant he may be continued in
employment beyond his Normal Retirement Date. In such event, no
retirement benefit will be paid to the Participant until he actually
retires, subject, however to any required minimum distributions
pursuant to Section 5.7(e). At the close of each Plan Year (which
begins after December 31, 1987) prior to his actual Retirement Date, a
Participant shall be entitled to a retirement benefit equal to the
greater of (1) the Actuarial Equivalent of the monthly retirement
benefit such Participant was entitled to at the close of the prior
Plan Year, or (2) his Accrued Benefit determined at the close of the
Plan Year. The monthly retirement benefit calculated pursuant to this
Section 5.1(d) shall be offset by the actuarial value (determined
pursuant to
30
Section 1.3) of the total benefit distributions (pursuant to Section
5.7(e)) made by the close of the Plan Year.
(e) If a Former Participant again becomes a Participant, such
renewed participation shall not result in duplication of benefits.
Accordingly, if he has received a distribution of a Vested Accrued
Benefit under the Plan by reason of prior participation (and such
distribution has not been repaid to the Plan with interest within a
period of the earlier of 5 years after the first date on which the
Participant is subsequently reemployed by the Employer or the close of
the first period of 5 consecutive 1-Year Breaks in Service commencing
after the distribution), his Accrued Benefit shall be reduced by the
Actuarial Equivalent (at the date of distribution) of the Present
Value of the Accrued Benefit as of the date of distribution. Any
repayment by a Participant shall be equal to the total of:
(1) the amount of the distribution,
(2) interest on such distribution compounded annually at the rate
of 5 percent per annum from the date of distribution to the date
of repayment or to the last day of the first Plan Year ending on
or after December 31, 1987, if earlier, and
(3) interest on the sum of (1) and (2) above compounded annually
at the rate of 120 percent of the federal mid-term rate (as in
effect under Code Section 1274 for the first month of a Plan
Year) from the beginning of the first Plan Year beginning after
December 31, 1987 or the date of distribution, whichever is
later, to the date of repayment.
5.2 MINIMUM BENEFIT REQUIREMENT FOR TOP HEAVY PLAN
(a) The minimum Accrued Benefit derived from Employer
contributions to be provided under this Section for each Non-Key
Employee who is a Participant during a Top Heavy Plan Year shall equal
the product of (1) one-twelfth (l/12th) of "415 Compensation" averaged
over the five (5) consecutive "limitation years" (or actual number of
"limitation years," if less) which produce the highest average, and
(2) the lesser of (i) two percent (2%) multiplied by Plan Years of
31
Service, or (ii) twenty percent (20%), expressed as a single life
annuity.
(b) For purposes of providing the minimum benefit under Code
Section 416, a Non-Key Employee who is not a Participant solely
because (1) his Compensation is below a stated amount or (2) he
declined to make mandatory contributions (if required) to the Plan
will be considered to be a Participant. Furthermore, such minimum
benefit shall be provided regardless of whether such Non-Key Employee
is employed on a specified date.
(c) For purposes of this Section, Plan Years of Service for any
Plan Year beginning before January 1, 1984, or for any Plan Year
during which the Plan was not a Top Heavy Plan shall be disregarded.
(d) For purposes of this Section, "415 Compensation" for any
"limitation year" ending in a Plan Year which began prior to January
1, 1984, subsequent to the last "limitation year" during which the
Plan is a Top Heavy Plan, or in which the Participant failed to
complete a Plan Year of Service, shall be disregarded.
(e) For the purposes of this Section, "415 Compensation" shall be
limited to $150,000. Such amount shall be adjusted for increases in
the cost of living in accordance with Code Section 401(a)(17), except
that the dollar increase in effect on January 1 of any calendar year
shall be effective for the Calendar Year beginning with such calendar
year. For any short Calendar Year the "415 Compensation" limit shall
be an amount equal to the "415 Compensation" limit for the calendar
year in which the Calendar Year begins multiplied by the ratio
obtained by dividing the number of full months in the short Calendar
Year by twelve (12).
For purposes of this Section, if the determination of "415
Compensation" is based on "415 Compensation" prior to the first day of
the "limitation year" beginning after December 31, 1993, "415
Compensation" in excess of $150,000 shall be disregarded.
(f) If Section 5.1 (c) provides for the Normal Retirement Benefit
to be paid in a form other than a single life annuity, the Accrued
Benefit under this Section shall be the Actuarial Equivalent of the
minimum Accrued Benefit under (a) above pursuant to Section 1.3.
32
(g) If payment of the minimum Accrued Benefit commences at a date
other than Normal Retirement Date, the minimum Accrued Benefit shall
be the Actuarial Equivalent of the minimum Accrued Benefit commencing
at Normal Retirement Date pursuant to Section 1.3.
(h) For any Plan Year when (1) the Plan is a Top Heavy Plan but
not a Super Top Heavy Plan and (2) a Key Employee is a Participant in
both this Plan and a defined contribution plan included in a Required
Aggregation Group which is top heavy, each Non-Key Employee who is a
Participant shall receive a minimum Accrued Benefit by substituting
three percent (3%) for two percent (2%) and thirty percent (30%) for
twenty percent (20%) in (a) above.
(i) If a Non-Key Employee participates in this Plan and a defined
contribution plan included in a Required Aggregation Group which is
top heavy, the minimum benefits shall be provided under this Plan.
(j) To the extent required to be nonforfeitable under Section
5.6, the minimum Accrued Benefit under this Section may not be
forfeited under Code Section 411(a)(3)(B) or Code Section
411(a)(3)(D).
5.3 PAYMENT OF RETIREMENT BENEFITS
When a Participant retires, the Administrator shall immediately take
all necessary steps and execute all required documents to cause the payment to
him of his Accrued Benefit.
33
5.4 DISABILITY RETIREMENT BENEFITS
(a) If a Participant becomes Totally and Permanently Disabled
pursuant to Section 1.56 prior to retirement or separation from
service, and such condition continues for a period of six (6)
consecutive months and by reason thereof such Participant's status as
an Employee ceases, then said disabled Participant shall be entitled
to receive the Actuarial Equivalent of his Accrued Benefit (calculated
without regard to Section 5.13). In the event of a Participant's Total
and Permanent Disability, the Administrator shall direct the Trustee
to commence payment of the benefits payable hereunder pursuant to the
provisions of Sections 5.7 and 5.9 as though he had retired.
(b) The benefit payable pursuant to (a) above shall be computed
as of the Anniversary Date subsequent to termination of employment.
(c) In the event of the Terminated Participant's Total and
Permanent Disability subsequent to his termination of employment, the
Terminated Participant (or his Beneficiary) shall receive the
Actuarial Equivalent of such Terminated Participant's Vested Accrued
Benefit pursuant to the provisions of Sections 5.7 and 5.9 as though
he had retired.
5.5 DEATH BENEFITS
(a) The death benefit provided under this Plan shall be the
"minimum spouse's death benefit." In the case of an unmarried
Participant or unmarried Former Participant who dies prior to his
Retirement Date, no death benefits shall be payable under this Plan.
(b) For the purposes of this Section, the "minimum spouse's death
benefit" means a death benefit for a Vested married Participant
payable in the form of a Pre-Retirement Survivor Annuity. Such annuity
payments shall be equal to the amount which would be payable as a
survivor annuity under the joint and survivor annuity provisions of
the Plan if:
(1) in the case of a Participant who dies after the Earliest
Retirement Age, such Participant had retired with an immediate
joint and survivor annuity on the day before the Participant's
date of death, or
34
(2) in the case of a Participant who dies on or before the
Earliest Retirement Age, such Participant had:
(i) separated from service on the earlier of the actual time
of separation or the date of his death,
(ii) survived to the Earliest Retirement Age,
(iii)retired with an immediate joint and survivor annuity at
the Earliest Retirement Age based on his Vested Accrued
Benefit on his date of death, and
(iv) died on the day after the day on which said Participant
would have attained the Earliest Retirement Age.
(c) Unless otherwise elected in the manner prescribed in Section
5.8, the Beneficiary of the death benefit shall be the Participant's
spouse, who shall receive such benefit in the form of a Pre-Retirement
Survivor Annuity pursuant to Section 5.8. Except, however, the married
Participant may designate a Beneficiary of his own choosing if the
Participant and his spouse have validly waived the Pre-Retirement
Survivor Annuity in the manner prescribed in Section 5.8 and the
spouse has waived all rights to be the Participant's Beneficiary. No
designation of any Beneficiary hereunder shall be recognized for a
Participant who is not married at the time of his death.
5.6 TERMINATION OF EMPLOYMENT BEFORE RETIREMENT
(a) Payment to a Former Participant of the Vested portion of his
Accrued Benefit, unless he otherwise elects, shall begin not later
than the 60th day after the close of the Plan Year in which the latest
of the following events occurs: (1) the date on which the Participant
attains the earlier of age 65 or the Normal Retirement Age specified
herein; (2) the 10th anniversary of the year in which the Participant
commenced participation in the Plan; or (3) the date the Participant
terminates his service with the Employer.
However, the Administrator shall, at the election of the
Participant, direct earlier payment of
35
the Vested portion of the Participant's Accrued Benefit. Any
distribution under this paragraph shall be made in a manner which is
consistent with and satisfies the provisions of Section 5.7,
including, but not limited to, notice and consent requirements of Code
Sections 417 and 411(a)(11) and the Regulations thereunder.
However, the Administrator shall direct the earlier payment
of the entire Vested portion of the Present Value of Accrued Benefit,
but only if it does not exceed $5,000 ($3,500 for Plan Years beginning
prior to August 6, 1997) and has never exceeded $5,000 ($3,500 for
Plan Years beginning prior to August 6, 1997) at the time of any prior
distribution.
That portion of a Terminated Participant's Accrued Benefit
that is forfeited shall be used only to reduce future costs of the
Plan at such time as it becomes a forfeiture.
That portion of a Terminated Participant's Accrued Benefit
that is not Vested shall become a forfeiture on the last day of the
Plan Year in which the Participant incurs five (5) consecutive 1-Year
Breaks in Service.
(b) The Vested portion of any Participant's Accrued Benefit shall
be a percentage of such Participant's Accrued Benefit determined on
the basis of the Participant's number of Years of Service according to
the following schedule:
Vesting Schedule
- -----------------------------
Years of Service Percentage
- ---------------- ----------
Less than 5 0%
5 100%
(c) Notwithstanding the vesting provided for in paragraph (b)
above, for any Top Heavy Plan Year, the Vested portion of the Accrued
Benefit of any Participant who has an Hour of Service after the Plan
becomes top heavy shall be a percentage of the Participant's Accrued
Benefit determined on the basis of the Participant's number of Years
of Service according to the following schedule:
36
Vesting Schedule
- -----------------------------
Years of Service Percentage
- ---------------- ----------
Less than 3 0%
3 100%
If in any subsequent Plan Year, the Plan ceases to be a Top
Heavy Plan, the Administrator shall revert to the vesting schedule in
effect before this Plan became a Top Heavy Plan. Any such reversion
shall be treated as a Plan amendment pursuant to the terms of the
Plan.
(d) Notwithstanding the vesting schedule above, the Vested
percentage of a Participant's Accrued Benefit shall not be less than
the Vested percentage attained as of the later of the effective date
or adoption date of this amendment and restatement.
(e) Notwithstanding the vesting schedule above, upon any full or
partial termination of the Plan, an affected Participant shall become
fully Vested in his Accrued Benefit (to the extent funded as of such
date of termination) which shall not thereafter be subject to
forfeiture.
(f) The computation of a Participant's nonforfeitable percentage
of his interest in the Plan shall not be reduced as the result of any
direct or indirect amendment to this Plan. For this purpose, the Plan
shall be treated as having been amended if the Plan provides for an
automatic change in vesting due to a change in top heavy status. In
the event that the Plan is amended to change or modify any vesting
schedule, a Participant with at least three (3) Years of Service as of
the expiration date of the election period may elect to have his
nonforfeitable percentage computed under the Plan without regard to
such amendment. If a Participant fails to make such election, then
such Participant shall be subject to the new vesting schedule. The
Participant's election period shall commence on the adoption date of
the amendment and shall end 60 days after the latest of:
(1) the adoption date of the amendment,
(2) the effective date of the amendment, or.
37
(3) the date the Participant receives written notice of the
amendment from the Employer or Administrator.
(g)(1) If any Terminated Participant shall be reemployed by the
Employer before a 1-Year Break in Service occurs, he shall continue to
participate in the Plan in the same manner as if such termination had
not occurred.
(2) If any Former Participant is reemployed after a 1-Year Break
in Service has occurred, Years of Service shall include Years of
Service prior to his 1-Year Break in Service subject to the
following rules:
(i) If a Former Participant has a 1-Year Break in Service,
his pre-break and post-break service shall be used for
computing Years of Service for eligibility and for vesting
purposes only after he has been employed for one (1) Year of
Service following the date of his reemployment with the
Employer;
(ii) Any Former Participant who under the Plan does not have
a nonforfeitable right to any interest in the Plan resulting
from Employer contributions shall lose credits otherwise
allowable under (i) above if his consecutive 1-Year Breaks
in Service equal or exceed the greater of (A) five (5) or
(B) the aggregate number of his pre-break Years of Service;
(iii) If a Former Participant is reemployed by the Employer,
he shall participate in the Plan immediately on his date of
reemployment;
(iv) If a Former Participant (a 1-Year Break in Service
previously occurred, but employment had not terminated) is
credited with an Hour of Service after the first eligibility
computation period in which he incurs a 1-Year Break in
Service, he shall participate in the Plan immediately.
38
5.7 DISTRIBUTION OF BENEFITS
(a) (1) Unless otherwise elected as provided below, a Participant
who is married on the Annuity Starting Date and who does not die
before the Annuity Starting Date shall receive the value of all of his
benefits in the form of a joint and survivor annuity. The joint and
survivor annuity is an annuity that commences immediately and shall be
the Actuarial Equivalent of a single life annuity. Such joint and
survivor benefits following the Participant's death shall continue to
the spouse during the spouse's lifetime at a rate equal to 50% of the
rate at which such benefits were payable to the Participant. This
joint and 50% survivor annuity shall be considered the designated
qualified joint and survivor annuity and automatic form of payment for
the purposes of this Plan. An unmarried Participant shall receive the
value of his benefit in the form of a life annuity. Such unmarried
Participant, however, may elect in writing to waive the life annuity.
The election must comply with the provisions of this Section as if it
were an election to waive the joint and survivor annuity by a married
Participant, but without the spousal consent requirement. The joint
and survivor annuity and the life annuity form of distribution shall
be the Actuarial Equivalent of the benefits due the Participant.
(2) Any election to waive the joint and survivor annuity must be
made by the Participant in writing during the election period and
be consented to by the Participant's spouse. If the spouse is
legally incompetent to give consent, the spouse's legal guardian,
even if such guardian is the Participant, may give consent. Such
election shall designate a Beneficiary (or a form of benefits)
that may not be changed without spousal consent (unless the
consent of the spouse expressly permits designations by the
Participant without the requirement of further consent by the
spouse). Such spouse's consent shall be irrevocable and must
acknowledge the effect of such election and be witnessed by a
Plan representative or a notary public. Such consent shall not be
required if it is established to the satisfaction of the
Administrator that the required consent cannot be obtained
because there is no spouse, the spouse cannot be located, or
other circumstances that may be prescribed by Regulations. The
election made by the Participant and consented to by his spouse
may be revoked by
39
the Participant in writing without the consent of the spouse at
any time during the election period. The number of revocations
shall not be limited. Any-new election must comply with the
requirements of this paragraph. A former spouse's waiver shall
not be binding on a new spouse.
(3) The election period to waive the joint and survivor annuity
shall be the 90 day period ending on the Annuity Starting Date.
(4) With regard to the election, the Administrator shall provide
to the Participant no less than 30 days and no more than 90 days
before the Annuity Starting Date a written explanation of:
(i) the terms and conditions of the joint and survivor
annuity,
(ii) the Participant's right to make, and the effect of, an
election to waive the joint and survivor annuity,
(iii)the right of the Participant's spouse to consent to any
election to waive the joint and survivor annuity, and
(iv) the right of the Participant to revoke such election,
and the effect of such revocation.
(5) The Annuity Starting Date for a distribution in a form other
than a qualified joint and survivor annuity may be less than 30
days after receipt of the written explanation described above,
provided that:
(i) the Administrator clearly informs the Participant that
the Participant has a right to a period of 30 days after
receiving the notice to consider whether to waive the joint
and survivor annuity and elect (with spousal consent) to a
form of distribution other than a joint and survivor
annuity,
(ii) the Participant is permitted to revoke an affirmative
distribution election at least until the Annuity Starting
Date, or, if later, at any time prior to the expiration of
40
the 7-day period that begins the day after the explanation
of the joint and survivor annuity is provided to the
Participant, and
(iii) the Annuity Starting Date is a date after the date
that the written explanation was provided to the
Participant.
Notwithstanding the above, the Annuity Starting Date may be
a date prior to the date the written explanation is provided
to the Participant if the distribution does not commence
until at least 30 days after such written explanation is
provided, subject to the waiver of the 30-day period as
provided for above.
(b) In the event a married Participant duly elects pursuant to
paragraph (a)(2) above not to receive his benefit in the form of a
joint and survivor annuity, or if such Participant is not married, in
the form of a life annuity, the Administrator, pursuant to the
election of the Participant, shall direct the Trustee to distribute to
a Participant or his Beneficiary an amount which is the Actuarial
Equivalent of the monthly retirement benefit provided in Section
5.1(c) in one or more of the following methods:
(1) One lump-sum payment in cash.
(2) Payments over a period certain in monthly, quarterly,
semiannual, or annual cash installments. The period over which
such payment is to be made shall not extend beyond the
Participant's life expectancy (or the life expectancy of the
Participant and his designated Beneficiary).
(3) Monthly pension payable over the life of the Participant.
(4) Reduced monthly pension payable over the life of the
Participant, with the provision that, if a Retired Participant
dies prior to the completion of 120 monthly payments, such
monthly payments shall be continued to the Retired Participant's
designated Beneficiary until the monthly payments made to the
Retired Participant and to the Beneficiary shall total 120.
41
(5) Reduced monthly pension payable over the life of the
Participant and the life of his designated Beneficiary (50% joint
and survivor annuity).
However, any such annuity may not be in any form that will
provide for payments over a period extending beyond either the
life of the Participant (or the lives of the Participant and his
designated Beneficiary) or the life expectancy of the Participant
(or the life expectancy of the Participant and his designated
Beneficiary).
(c) The present value of a Participant's joint and survivor
annuity derived from Employer and Employee contributions may not be
paid without his written consent if the value exceeds, or has ever
exceeded, $5,000 ($3,500 for Plan Years beginning prior to August 6,
1997) at the time of any prior distribution. Further, the spouse of a
Participant must consent in writing to any immediate distribution. Any
written consent required by this Section 5.7(c) must be obtained not
more than 90 days before commencement of the distribution and shall
be made in a manner consistent with Section 5.7(a)(2). The present
value in this regard shall be determined as provided in Section 1.47.
If the value of the Participant's benefit derived from Employer
and Employee contributions does not exceed $5,000 ($3,500 for Plan
Years beginning prior to August 6, 1997) and has never exceeded $5,000
($3,500 for Plan Years beginning prior to August 6, 1997) at the time
of any prior distribution, the Administrator may immediately
distribute such benefit without such Participant's consent. No
distribution may be made under the preceding sentence after the
Annuity Starting Date unless the Participant and his spouse consent in
writing to such distribution.
(d) Any distribution to a Participant who has a benefit which
exceeds, or has ever exceeded, $5,000 ($3,500 for Plan Years beginning
prior to August 6, 1997) at the time of any prior distribution shall
require such Participant's consent if such distribution commences
prior to the later of his Normal Retirement Age or age 62. With regard
to this required consent:
(1) No consent shall be valid unless the Participant has
received a general description of material features and an
explanation of the
42
relative values of the optional forms of benefit available under
the Plan that would satisfy the notice requirements of Code
Section 417.
(2) The Participant must be informed of his right to defer
receipt of the distribution. If a Participant fails to consent,
it shall be deemed an election to defer the commencement of
payment of any benefit. However, any election to defer the
receipt of benefits shall not apply with respect to distributions
which are required under Section 5.7(e).
(3) Notice of the rights specified under this paragraph shall be
provided no less than 30 days and no more than 90 days before the
Annuity Starting Date.
Notwithstanding the above, the Annuity Starting Date may be a
date prior to the date the explanation is provided to the
Participant if the distribution does not commence until at least
30 days after such explanation is provided, subject to the waiver
of the 30-day period as provided for in Section 5.7(a)(5).
(4) Consent of the Participant to the distribution must not be
made before the Participant receives the notice and must not be
made more than 90 days before the Annuity Starting Date.
(5) No consent shall be valid if a significant detriment is
imposed under the Plan on any Participant who does not consent to
the distribution.
Any such distribution may commence less than 30 days, subject to
Section 5.7(a)(5), after the notice required under Regulation
1.411(a)-11(c) is given, provided that: (1) the Administrator clearly
informs the Participant that the Participant has a right to a period
of at least 30 days after receiving the notice to consider the
decision of whether or not to elect a distribution (and, if
applicable, a particular distribution option), and (2) the
Participant, after receiving the notice, affirmatively elects a
distribution.
43
(e) Notwithstanding any provision in the Plan to the contrary,
the distribution of a Participant's benefits, whether under the Plan
or through the purchase of an annuity contract, shall be made in
accordance with the following requirements and shall otherwise comply
with Code Section 401(a)(9) and the Regulations thereunder (including
Regulation 1.401(a) (9)-2), the provisions of which are incorporated
herein by reference:
(1) A Participant's benefits shall be distributed or must begin
to be distributed to him not later than the April 1st of the
calendar year following the calendar year in which the
Participant attains age 70 1/2. Such distribution shall be equal
to or greater than any required distribution.
Alternatively, distributions to a Participant must begin no later
than the applicable April 1st as determined under the preceding
paragraph and must be made over the life of the Participant (or
the lives of the Participant and the Participant's designated
Beneficiary) or the life expectancy of the Participant (or the
life expectancies of the Participant and his designated
Beneficiary) in accordance with Regulations.
(2) Distributions to a Participant and his Beneficiaries shall
only be made in accordance with the incidental death benefit
requirements of Code Section 401(a)(9)(G) and the Regulations
thereunder.
(f) For purposes of this Section, the life expectancy of a
Participant and a Participant's spouse (other than in the case of a
life annuity) may, at the election of the Participant or the
Participant's spouse, be redetermined in accordance with Regulations.
The election, once made, shall be irrevocable. If no election is made
by the time distributions must commence, then the life expectancy of
the Participant and the Participant's spouse shall not be subject to
recalculation. Life expectancy and joint and last survivor expectancy
shall be computed using the return multiples in Tables V and VI of
Regulation 1.72-9.
(g) Subject to the spouse's right of consent afforded under the
Plan, the restrictions imposed by this Section shall not apply if a
Participant has, prior
44
to January 1, 1984, made a written designation to have his retirement
benefit paid in an alternative method acceptable under Code Section
401(a) as in effect prior to the enactment of the Tax Equity and
Fiscal Responsibility Act of 1982.
(h) With respect to distributions under the Plan made for
calendar years beginning on or after the later of the Effective Date
of this Plan or January 1, 2001, the Plan will apply the minimum
distribution requirements of Section 401(a)(9) of the Internal Revenue
Code in accordance with the regulations under Section 401(a)(9) that
were proposed on January 17, 2001, notwithstanding any provision of
the Plan to the contrary. This amendment shall continue in effect
until the end of the last calendar year beginning before the effective
date of final regulations under Section 401(a)(9) or such other date
as may be specified in guidance published by the Internal Revenue
Service.
(i) All annuity Contracts under this Plan shall be
non-transferable when distributed. Furthermore, the terms of any
annuity Contract purchased and distributed to a Participant or spouse
shall comply with all of the requirements of the Plan.
5.8 DISTRIBUTION OF BENEFITS UPON DEATH
(a) Unless otherwise elected as provided below, a Vested
Participant who dies before the Annuity Starting Date and who has a
surviving spouse shall have his death benefit paid to his surviving
spouse in the form of a Pre-Retirement Survivor Annuity. The
Participant's spouse may direct that payment of the Pre-Retirement
Survivor Annuity commence within a reasonable period after the
Participants death (but not later than the month in which the
Participant would have attained the Earliest Retirement Age under the
Plan if the Participant dies on or before the Earliest Retirement
Age). If the spouse does not so direct, payment of such benefit will
commence at the time the Participant would have attained the later of
his Normal Retirement Age or age 62. However, the spouse may elect a
later commencement date, subject to the rules specified in Section
5.8(g).
(b) Any election to waive the Pre-Retirement Survivor Annuity
before the Participant's death must be made by the Participant in
writing during the election
45
period and shall require the spouse's irrevocable consent in the same
manner provided for in Section 5.7(a)(2). Further, the spouse's
consent must acknowledge the specific nonspouse Beneficiary.
Notwithstanding the foregoing, the nonspouse Beneficiary need not be
acknowledged, provided the consent of the spouse acknowledges that the
spouse has the right to limit consent only to a specific Beneficiary
and that the spouse voluntarily elects to relinquish such right.
(c) The election period to waive the Pre-Retirement Survivor
Annuity shall begin on the first day of the Plan Year in which the
Participant attains age 35 and end on the date of the Participant's
death. An earlier waiver (with spousal consent) may be made provided a
written explanation of the Pre-Retirement Survivor Annuity is given to
the Participant and such waiver becomes invalid at the beginning of
the Plan Year in which the Participant turns age 35. In the event a
Vested Participant separates from service prior to the beginning of
the election period, the election period shall begin on the date of
such separation from service.
(d) With regard to the election, the Administrator shall provide
each Participant within the applicable period, with respect to such
Participant (and consistent with Regulations), a written explanation
of the Pre-Retirement Survivor Annuity containing comparable
information to that required pursuant to Section 5.7(a)(4). For the
purposes of this paragraph, the term "applicable period" means, with
respect to a Participant, whichever of the following periods ends
last:
(1) The period beginning with the first day of the Plan Year in
which the Participant attains age 32 and ending with the close of
the Plan Year preceding the Plan Year in which the Participant
attains age 35;
(2) A reasonable period after the individual becomes a
Participant;
(3) A reasonable period ending after the Plan no longer fully
subsidizes the cost of the Pre-Retirement Survivor Annuity with
respect to the Participant;
46
(4) A reasonable period ending after Code Section 401(a)(11)
applies to the Participant; or
(5) A reasonable period after separation from service in the case
of a Participant who separates before attaining age 35. For this
purpose, the Administrator must provide the explanation beginning
one year before the separation from service and ending one year
after such separation. If such a Participant thereafter returns
to employment with the Employer, the applicable period for such
Participant shall be redetermined.
For purposes of applying this Section 5.8(d), a reasonable
period ending after the enumerated events described in paragraphs (2),
(3) and (4) is the end of the two year period beginning one year
prior to the date the applicable event occurs, and ending one year
after that date.
(e) If the present value of the Participant's death benefit
derived from Employer and Employee contributions does not exceed
$5,000 ($3,500 for Plan Years beginning prior to August 6, 1997) and
has never exceeded $5,000 ($3,500 for Plan Years beginning prior to
August 6, 1997) at the time of any prior distribution, the
Administrator shall direct the immediate distribution of such amount
to the Participant's Beneficiary. No distribution of the
Pre-Retirement Survivor Annuity may be made under the preceding
sentence after the annuity starting date unless the spouse consents in
writing. The present value in this regard shall be determined as
provided in Section 1.47.
If the value exceeds, or has ever exceeded, $5,000 ($3,500
for Plan Years beginning prior to August 6, 1997) at the time of any
prior distribution, an immediate distribution of the entire amount may
be made to the Beneficiary, provided such Beneficiary consents in
writing to such distribution. Any written consent required under this
paragraph must be obtained not more than 90 days before commencement
of the distribution and shall be made in a manner consistent with
Section 5.7(a)(2).
(f)(1) To the extent the death benefit is not paid in the form of
a Pre-Retirement Survivor Annuity, it shall be paid to the
Participant's Beneficiary by either
47
of the following methods, as elected by the Participant (or if no
election has been made prior to the Participant's death, by his
Beneficiary), subject to the rules specified in Section 5.8(g):
(i) One lump-sum payment in cash.
(ii) Payment in monthly, quarterly, semi-annual, or annual
cash installments over a period to be determined by the
Participant or his Beneficiary. After periodic installments
commence, the Beneficiary shall have the right to direct the
Trustee to reduce the period over which such periodic
installments shall be made, and the Trustee shall adjust the
cash amount of such periodic installments accordingly.
(iii) Monthly pension payable over the life of the
Participant's Beneficiary.
(2) In the event the death benefit payable pursuant to Section
5.5 is payable in installments, then, upon the death of the
Participant, the Administrator may direct the Trustee to
segregate the death benefit into a separate account, and the
Trustee shall invest such segregated account separately, and the
funds accumulated in such account shall be used for the payment
of the installments.
(3) Notwithstanding the above, if the death benefit payable
pursuant to Section 5.5 is payable in an annuity, payments shall
be subject to the rules specified in Section 5.8 (g).
(g) Notwithstanding any provision in the Plan to the contrary,
distributions upon the death of a Participant shall be made in
accordance with the following requirements and shall otherwise comply
with Code Section 401(a)(9) and the Regulations thereunder. If it is
determined pursuant to Regulations that the distribution of a
Participant's interest has begun and the Participant dies before his
entire interest has been distributed to him, the remaining portion of
such interest shall be distributed at least as rapidly as under the
method of distribution selected pursuant to Section 5.7 as of his date
of death. If a Participant dies before he has begun to receive any
distributions
48
of his interest under the Plan or before distributions are deemed to
have begun pursuant to Regulations, then his death benefit shall be
distributed to his Beneficiaries by December 31st of the calendar year
in which the fifth anniversary of his date of death occurs.
However, in the event that the Participant's spouse
(determined as of the date of the Participant's death) is his
Beneficiary, then in lieu of the preceding rules, distributions must
be made over the life of the spouse (or over a period not extending
beyond the life expectancy of the spouse) and must commence on or
before the later of: (1) December 31st of the calendar year
immediately following the calendar year in which the Participant died;
or (2) December 31st of the calendar year in which the Participant
would have attained age 70 1/2. If the surviving spouse dies before
distributions to such spouse begin, then the 5-year distribution
requirement of this Section shall apply as if the spouse was the
Participant.
(h) For purposes of this Section, the life expectancy of a
Participant and a Participant's spouse (other than in the case of a
life annuity) may, at the election of the Participant or the
Participant's spouse, be redetermined in accordance with Regulations.
The election, once made, shall be irrevocable. If no election is made
by the time distributions must commence, then the life expectancy of
the Participant and the Participant's spouse shall not be subject to
recalculation. Life expectancy and joint and last survivor expectancy
shall be computed using the return multiples in Tables V and VI of
Regulation 1.72-9.
(i) Subject to the spouse's right of consent afforded under the
Plan, the restrictions imposed by this Section shall not apply if a
Participant has, prior to January 1, 1984, made a written designation
to have his death benefits paid in an alternative method acceptable
under Code Section 401(a) as in effect prior to the enactment of the
Tax Equity and Fiscal Responsibility Act of 1982.
5.9 TIME OF SEGREGATION OR DISTRIBUTION
Except as limited by Sections 5.7 and 5.8, whenever the Trustee is to
make a distribution or to commence a series of payments the distribution or
series of payments may be made or
49
begun as soon as is practicable. However, unless a Former Participant elects in
writing to defer the receipt of benefits (such election may not result in a
death benefit that is more than incidental), the payment of benefits shall begin
not later than the 60th day after the close of the Plan Year in which the latest
of the following events occurs: (a) the date on which the Participant attains
the earlier of age 65 or the Normal Retirement Age specified herein; (b) the
10th anniversary of the year in which the Participant commenced participation in
the Plan; or (c) the date the Participant terminates his service with the
Employer.
Notwithstanding the foregoing, the failure of a Participant and spouse
to consent to a distribution while any part of the Accrued Benefit could be
distributed before the Participant attains (or would have attained if not
deceased) the later of Normal Retirement Age or 62, shall be deemed to be an
election to defer commencement of payment of any benefit sufficient to satisfy
this Section.
5.10 DISTRIBUTION FOR MINOR BENEFICIARY
In the event a distribution is to be made to a minor, then the
Administrator may direct that such distribution be paid to the legal guardian,
or if none, to a parent of such Beneficiary or a responsible adult with whom the
Beneficiary maintains his residence, or to the custodian for such Beneficiary
under the Uniform Gift to Minors Act or Gift to Minors Act, if such is permitted
by the laws of the state in which said Beneficiary resides. Such a payment to
the legal guardian, custodian or parent of a minor Beneficiary shall fully
discharge the Trustee, Employer, and Plan from further liability on account
thereof.
5.11 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN
In the event that all, or any portion, of the distribution payable to
a Participant or his Beneficiary hereunder shall, at the later of the
Participant's attainment of age 62 or his Normal Retirement Age, remain unpaid
solely by reason of the inability of the Administrator, after sending a
registered letter, return receipt requested, to the last known address, and
after further diligent effort, to ascertain the whereabouts of such Participant
or his Beneficiary, the amount so distributable shall be forfeited and shall be
used to reduce the cost of the Plan. In the event a Participant or Beneficiary
is located subsequent to his benefit being forfeited, such benefit shall be
restored unadjusted for earnings or losses.
50
5.12 EFFECT OF SOCIAL SECURITY ACT
Benefits being paid to a Participant or Beneficiary under the terms of
the Plan may not be decreased by reason of any post-separation Social Security
benefit increases or by the increase of the Social Security wage base under
Title II of the Social Security Act. Benefits to which a Former Participant has
a Vested interest may not be decreased by reason of an increase in a benefit
level or wage base under Title II of the Social Security Act.
5.13 LIMITATIONS ON DISTRIBUTIONS
In the event a Participant receives a distribution of his Vested
Accrued Benefit prior to his Normal Retirement Age (determined without regard to
any years of participation), the excess/offset percentage, whichever is
applicable in Section 5.1(a), shall be limited to .75/26.25%, whichever is
applicable, reduced l/15th for each of the first five (5) years and l/30th for
each of the next five (5) years and reduced actuarially for each additional year
thereafter that the date on which his benefit commences precedes his Social
Security Retirement Age. With respect to benefits commencing prior to the
Participant attaining age 55, the .75/26.25% shall be further reduced (on a
monthly basis to reflect the month in which benefits commence) to a percentage
that is the Actuarial Equivalent of the .75/26.25% (as reduced in accordance
with the preceding sentence) applicable to a benefit commencing in the month in
which the Participant attains age 55. For purposes of this paragraph, a benefit
commences on the first day of the period for which the benefit is paid.
Notwithstanding the above, if such benefit is distributed in a form other than a
nondecreasing life annuity payable for a period not less than the life of such
Participant and the Actuarial Equivalent of the Vested Accrued Benefit of such
Participant attributable to .75/26.25% is greater than the benefit calculated
above, such amount shall be the benefit limitation.
5.14 QUALIFIED DOMESTIC RELATIONS ORDER DISTRIBUTION
All rights and benefits, including elections, provided to a
Participant in this Plan shall be subject to the rights afforded to any
"alternate payee" under a "qualified domestic relations order." Furthermore, a
distribution to an "alternate payee" shall be permitted if such distribution is
authorized by a "qualified domestic relations order," even if the affected
Participant has not separated from service and has not reached the Earliest
Retirement Age. For the purposes of this Section, "alternate payee" and
"qualified domestic relations order" shall have the meaning set forth under Code
Section 414(p).
51
5.15 LIMITATION OF BENEFITS ON TERMINATION
(a) Benefits distributed to any of the twenty-five (25) most
highly compensated active and Highly Compensated Former Employees with
the greatest compensation in the current or prior year are restricted
such that the monthly payments are no greater than an amount equal to
the monthly payment that would be made on behalf of such individual
under a straight life annuity that is the Actuarial Equivalent of the
sum of the individual's Accrued Benefit, the individual's other
benefits under the Plan (other than a social security supplement
within the meaning of Regulation 1.411(a)-7(c)(4)(ii)), and the amount
the individual is entitled to receive under a social security
supplement. However, the limitation of this Section 5.15 shall not
apply if:
(1) after payment of the benefit to an individual described
above, the value of Plan assets equals or exceeds 110 percent of
the value of current liabilities, as defined in Code Section
412(1)(7);
(2) the value of the benefits for an individual described above
is less than 1 percent of the value of current liabilities before
distribution; or
(3) the value of the benefits payable under the Plan to an
individual described above does not exceed $5,000 ($3,500 for
Plan Years beginning prior to August 6, 1997).
(b) For purposes of this Section, benefit includes any periodic
income, any withdrawal values payable to a living Participant, and any
death benefits not provided for by insurance on the individual's life.
(c) An individual's otherwise restricted benefit may be
distributed in full to the affected individual if, prior to receipt of
the restricted amount, the individual enters into a written agreement
with the Administrator to secure repayment to the Plan of the
restricted amount. The restricted amount is the excess of the amounts
distributed to the individual (accumulated with reasonable interest)
over the amounts that could have been distributed to the individual
under the straight life annuity described above (accumulated
52
with reasonable interest). The individual may secure repayment of the
restricted amount upon distribution by:
(1) entering into an agreement for promptly depositing in escrow
with an acceptable depositary, property having a fair market
value equal to at least 125 percent of the restricted amount;
(2) providing a bank letter of credit in an amount equal to at
least 100 percent of the restricted amount; or
(3) posting a bond equal to at least 100 percent of the
restricted amount. The bond must be furnished by an insurance
company, bonding company or other surety for federal bonds.
(d) The escrow arrangement may permit an individual to withdraw
from escrow amounts in excess of 125 percent of the restricted amount.
If the market value of the property in an escrow account falls below
110 percent of the remaining restricted amount, the individual must
deposit additional property to bring the value of the property held by
the depositary up to 125 percent of the restricted amount. The escrow
arrangement may provide that the individual has the right to receive
any income from the property placed in escrow, subject to the
individual's obligation to deposit additional property, as set forth
in the preceding sentence.
(e) A surety or bank may release any liability on a bond or
letter of credit in excess of 100 percent of the restricted amount.
(f) If the Administrator certifies to the depositary, surety or
bank that the individual (or the individual's estate) is no longer
obligated to repay any restricted amount, a depositary may deliver to
the individual any property held under an escrow arrangement, and a
surety or bank may release any liability on an individual's bond or
letter of credit.
5.16 ELIMINATION OF LOOKBACK RULE
Notwithstanding anything in this Article to the contrary, the
"lookback rule" (the "lookback rule" provides that for purposes of determining
whether a distribution may be made without consent, if the value at the time of
a prior distribution exceeded the applicable dollar threshold (e.g.,
53
$5,000) then the value at any subsequent time is deemed to exceed the threshold)
will not apply to any distributions made on or after October 17, 2000.
ARTICLE VI
CODE SECTION 415 LIMITATIONS
6.1 ANNUAL BENEFIT
For purposes of this Article, effective with the first day of the
first "limitation year" beginning after December 31, 1994, "annual benefit"
means the benefit payable annually under the terms of the Plan (exclusive of any
benefit not required to be considered for purposes of applying the limitations
of Code Section 415 to the Plan) payable in the form of a straight life annuity
with no ancillary benefits. If the benefit under the Plan is payable in any
other form, the "annual benefit" shall be adjusted to the equivalent of a
straight life annuity pursuant to Section 6.3(c). Notwithstanding the foregoing,
with respect to the Code Section 415 limitations prior to the effective date of
this Article VI, the Old Law Benefit shall be determined on the basis of Code
Section 415(b)(2)(E) as in effect on December 7, 1994.
6.2 MAXIMUM ANNUAL BENEFIT
(a) Notwithstanding the foregoing and subject to the exceptions
below, the maximum "annual benefit" payable to a Participant under
this Plan in any "limitation year" shall equal the lesser of: (1)
$90,000, or (2) one hundred percent (100%) of the Participant's "415
Compensation" averaged over the three consecutive "limitation years"
(or actual number of "limitation years" for Employees who have been
employed for less than three consecutive "limitation years") during
which the Employee had the greatest aggregate "415 Compensation" from
the Employer.
(b) For purposes of applying the limitations of Code Section 415,
the "limitation year" shall be the Calendar Year.
(c) Notwithstanding anything in this Article to the contrary, if
the Plan was in existence on May 6, 1986, and had complied at all
times with the requirements of Code Section 415, the maximum "annual
benefit" for any individual who is a Participant as of the first day
of the "limitation year" beginning after December 31, 1986, shall not
be less than the "current
54
accrued benefit." "Current accrued benefit" shall mean a
Participant's Accrued Benefit under the Plan, determined as if the
Participant had separated from service as of the close of the last
"limitation year" beginning before January 1, 1987, when expressed as
an annual benefit within the meaning of Code Section 415(b)(2). In
determining the amount of a Participant's "current accrued benefit,"
the following shall be disregarded: (1) any change in the terms and
conditions of the Plan after May 5, 1986; and (2) any cost of living
adjustment occurring after May 5, 1986.
(d) The dollar limitation under Code Section 415(b)(1)(A) stated
in paragraph (a)(1) above shall be adjusted annually as provided in
Code Section 415(d) pursuant to the Regulations. The adjusted
limitation is effective as of January 1st of each calendar year and is
applicable to "limitation years" ending with or within that calendar
year.
(e) The limitation stated in paragraph (a)(2) above for
Participants who have separated from service with a non-forfeitable
right to an Accrued Benefit shall be adjusted annually as provided in
Code Section 415(d) pursuant to the Regulations.
(f) For the purpose of this Article, all qualified defined
benefit plans (whether terminated or not) ever maintained by the
Employer shall be treated as one defined benefit plan, and all
qualified defined contribution plans (whether terminated or not) ever
maintained by the Employer shall be treated as one defined
contribution plan.
(g) For the purpose of this Article, if the Employer is a member
of a controlled group of corporations, trades or businesses under
common control (as defined by Code Section 1563(a) or Code Section
414(b) and (c) as modified by Code Section 415(h)) or is a member of
an affiliated service group (as defined by Code Section 414(m)), all
Employees of such Employers shall be considered to be employed by a
single Employer.
(h) For the purpose of this Article, if this Plan is a Code
Section 413(c) plan, each Employer who maintains this Plan will be
considered to be a single Employer.
55
6.3 ADJUSTMENTS TO ANNUAL BENEFIT AND LIMITATIONS
(a) If the "annual benefit" begins before the Participant's
Social Security Retirement Age, but on or after age 62, the $90,000
limitation shall be reduced by: (1) in the case of a Participant whose
Social Security Retirement Age is 65, 5/9 of 1% for each month by
which benefits commence before the month in which the Participant
attains age 65, or (2) in the case of a Participant whose Social
Security Retirement Age is greater than 65, 5/9 of 1% for each of the
first 36 months and 5/12 of 1% for each additional month (up to 24) by
which benefits commence before the month in which the Participant
attains his Social Security Retirement Age. If the "annual benefit"
begins before age 62, the $90,000 limitation shall be the actuarial
equivalent of the Participant's limitation for benefits commencing at
age 62, reduced for each month by which benefits commence before the
month in which the Participant attains age 62.
In order to determine actuarial equivalence for this purpose, the
lesser of the equivalent amount computed using the Plan interest rate
and Plan mortality table (or other tabular factor) and the amount
computed using five percent (5%) interest and the "Applicable
Mortality Table" shall be used. The mortality decrement shall be
ignored to the extent that a forfeiture does not occur at death.
(b) If the "annual benefit" begins after the Participant's Social
Security Retirement Age (or for Plan Years beginning prior to January
1, 1987, age 65) the $90,000 limitation shall be increased so that it
is the actuarial equivalent of the $90,000 limitation at the
Participant's Social Security Retirement Age (or for Plan Years
beginning prior to January 1, 1987, age 65). In order to determine
actuarial equivalence for this purpose, the lesser of the equivalent
amount computed using the Plan interest rate and Plan mortality table
(or other tabular factor) used for actuarial equivalence for late
retirement benefits under the Plan and the equivalent annual amount
computed using five percent (5%) and the "Applicable Mortality Table"
shall be used. The mortality decrement shall be ignored to the extent
that a forfeiture does not occur at death.
56
(c) For purposes of adjusting the "annual benefit" to a straight
life annuity, the equivalent "annual benefit" shall be the greater of
the equivalent "annual benefit" computed using the Plan interest rate
and Plan mortality table (or other tabular factor) and the equivalent
"annual benefit" computed using five percent (5%) interest rate
assumption and the "Applicable Mortality Table." If the "annual
benefit" is paid in a form other than a nondecreasing life annuity
payable for a period not less than the life of a Participant or, in
the case of a Pre-Retirement Survivor Annuity, the life of the
surviving spouse, the "Applicable Interest Rate" shall be substituted
for five percent (5%) in the preceding sentence.
(d) For purposes of Sections 6.1, 6.3(a) and 6.3(b), no
adjustments under Code Section 415(d) shall be taken into account
before the "limitation year" for which such adjustment first takes
effect.
(e) For purposes of Section 6.1, no adjustment is required for
qualified joint and survivor annuity benefits, pre-retirement death
benefits and post-retirement medical benefits.
(f) Notwithstanding the foregoing, if the benefit is not payable
in the form of an annual benefit within the meaning of Code Section
415(b)(2)(A), the equivalent annual benefit determined in Section
6.3(c) is computed separately with respect to the Old Law Benefit (not
to exceed the total Plan benefit) and the portion of the total Plan
benefit that exceeds the Old Law Benefit. The determination of the
annual benefit that is equivalent to the portion of the Plan benefit
that is in excess of the Old Law Benefit must reflect the changes made
by section 1449(b) of the Small Business Job Protection Act of 1996 to
Code Section 415(b)(2)(E) as provided in Section 6.3(c). The results
of these two separate computations are added together to determine the
equivalent annual benefit.
6.4 ANNUAL BENEFIT NOT IN EXCESS OF $10,000
This Plan may pay an "annual benefit" to any Participant in excess of
his maximum "annual benefit" if the "annual benefit" derived from Employer
contributions under this Plan and all other defined benefit plans maintained by
the
57
Employer does not in the aggregate exceed $10,000 for the "limitation year" or
for any prior "limitation year" and the Employer has not at any time maintained
a defined contribution plan in which the Participant participated. For purposes
of this paragraph, if this Plan provides for voluntary or mandatory Employee
contributions, such contributions will not be considered a separate defined
contribution plan maintained by the Employer.
6.5 PARTICIPATION OR SERVICE REDUCTIONS
If a Participant has less than ten (10) years of participation in the
Plan at the time he begins to receive benefits under the Plan, the limitations
in Sections 6.2(a)(1) and 6.3 shall be reduced by multiplying such limitations
by a fraction (a) the numerator of which is the number of years of participation
(or part thereof) in the Plan and (b) the denominator of which is ten (10),
provided, however, that said fraction shall in no event be less than 1/1Oth. The
limitations of Sections 6.2(a)(2) and 6.4 shall be reduced in the same manner
except the preceding sentence shall be applied with respect to years of service
with the Employer rather than years of participation in the Plan.
6.6 MULTIPLE PLAN REDUCTION
(a) If an Employee is (or has been) a Participant in one or more
defined benefit plans and one or more defined contribution plans
maintained by the Employer, the sum of the defined benefit plan
fraction and the defined contribution plan fraction for any
"limitation year" may not exceed 1.0.
(b) The defined benefit plan fraction for any "limitation year"
is a fraction, the numerator of which is the sum of the Participant's
projected annual benefits under all the defined benefit plans (whether
or not terminated) maintained by the Employer, and the denominator of
which is the lesser of 125 percent of the dollar limitation determined
for the "limitation year" under Code Sections 415(b) and (d) or 140
percent of the highest average compensation, including any adjustments
under Code Section 415(b).
Notwithstanding the above, if the Participant was a
Participant as of the first day of the first "limitation year"
beginning after December 31, 1986, in one or more defined benefit
plans maintained by the Employer which were in
58
existence on May 6, 1986, the denominator of this fraction will not be
less than 125 percent of the sum of the annual benefits under such
plans which the Participant had accrued as of the close of the last
"limitation year" beginning before January 1, 1987, disregarding any
changes in the terms and conditions of the plan after May 5, 1986. The
preceding sentence applies only if the defined benefit plans
individually and in the aggregate satisfied the requirements of Code
Section 415 for all "limitation years" beginning before January 1,
1987.
(c)(1) The defined contribution plan fraction for any "limitation
year" is a fraction, the numerator of which is the sum of the annual
additions to the Participant's Account under all the defined
contribution plans (whether or not terminated) maintained by the
Employer for the current and all prior "limitation years" (including
the annual additions attributable to the Participant's nondeductible
Employee contributions to all defined benefit plans, whether or not
terminated, maintained by the Employer, and the annual additions
attributable to all welfare benefit funds, as defined in Code Section
419(e), and individual medical accounts, as defined in Code Section
415(1)(2), maintained by the Employer), and the denominator of which
is the sum of the maximum aggregate amounts for the current and all
prior "limitation years" of service with the Employer (regardless of
whether a defined contribution plan was maintained by the Employer).
The maximum aggregate amount in any "limitation year" is the lesser of
125 percent of the dollar limitation determined under Code Sections
415(b) and (d) in effect under Code Section 415 (c)(1)(A) or 35
percent of the Participant's Compensation for such year.
If the Employee was a Participant as of the end of the first
day of the first "limitation year" beginning after December 31, 1986,
in one or more defined contribution plans maintained by the Employer
which were in existence on May 6, 1986, the numerator of this fraction
will be adjusted if the sum of this fraction and the defined benefit
fraction would otherwise exceed 1.0 under the terms of this Plan.
Under the adjustment, an amount equal to the product of (1) the excess
of the sum of the fractions over 1.0 times (2) the denominator of this
fraction, will be permanently subtracted from the numerator of this
59
fraction. The adjustment is calculated using the fractions as they
would be computed as of the end of the last "limitation year"
beginning before January 1, 1987, and disregarding any changes in the
terms and conditions of the Plan made after May 5, 1986, but using the
Code Section 415 limitation applicable to the first "limitation year"
beginning on or after January 1, 1987. The annual addition for any
"limitation year" beginning before January 1, 1987 shall not be
recomputed to treat all Employee contributions as annual additions.
(2) For purposes of this Article, the term "participant's
account" shall mean the account established and maintained by the
Administrator for each Participant with respect to his total
interest in the defined contribution plan maintained by the
Employer resulting from "annual additions."
(3) For purposes of this Article, the term "annual additions"
shall mean the sum credited to a "participant's account" for any
"limitation year" of (A) Employer contributions, (B) Employee
contributions, (C) forfeitures, (D) amounts allocated after March
31, 1984, to an individual medical account, as defined in Code
Section 415(1)(2) which is part of a pension or annuity plan
maintained by the Employer, and (E) 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 (as defined in Code Section 419A(d)(3))
under a welfare benefit plan (as defined in Code Section 419 (e))
maintained by the Employer. Except, however, the percentage
limitation referred to in (4)(B) below shall not apply to: (1)
any contribution for medical benefits (within the meaning of Code
Section 419A(f)(2)) after separation from service which is
otherwise treated as an "annual addition," or (2) any amount
otherwise treated as an "annual addition" under Code Section
415(1)(1). Notwithstanding the foregoing, for "limitation years"
beginning prior to January 1, 1987, only that portion of Employee
contributions equal to the lesser of Employee contributions in
excess of six percent (6%) of
60
"415 Compensation" or one-half of Employee contributions shall be
considered an "annual addition."
(4) If, as a result of a reasonable error in estimating a
Participant's compensation or other facts and circumstances to
which Regulation 1.415-6(b)(6) shall be applicable, voluntary
employee contributions for the "limitation year" would cause the
"annual additions" credited to a "participant's account" to
exceed the lesser of (A) $30,000 adjusted annually as provided in
Code Section 415(d) pursuant to the Regulations, or (B)
twenty-five percent (25%) of the Participant's "415 Compensation"
for such limitation year, the Administrator shall', pursuant to
Regulation 1.415-6(b)(6)(iv), return such voluntary employee
contributions and distribute any gains attributable to such
voluntary employee contributions to the Participant to the extent
necessary so that "annual additions" for the "limitation year" do
not exceed the lesser of (A) or (B).
(d) Notwithstanding the foregoing, for any "limitation year" in
which the Plan is a Super Top Heavy Plan, 100 percent shall be
substituted for 125 percent in Sections 6.6(b) and 6.6(c)(l).
(e) If the sum of the defined benefit plan fraction and the
defined contribution plan fraction shall exceed 1.0 in any "limitation
year" for any Participant in this Plan, the Administrator shall adjust
the numerator of the defined benefit plan fraction so that the sum of
both fractions shall not exceed 1.0 in any "limitation year" for such
Participant.
(f) The provisions of this Section 6.6 shall apply to "limitation
years" beginning prior to the first day of the first "limitation year"
beginning after December 31, 1999.
6.7 INCORPORATION BY REFERENCE
Notwithstanding anything contained in this Article to the contrary,
the limitations, adjustments and other requirements prescribed in this Article
shall at all times comply with the provisions of Code Section 415 and the
61
Regulations thereunder, the terms of which are specifically incorporated herein
by reference.
ARTICLE VII
TRUSTEE
7.1 BASIC RESPONSIBILITIES OF THE TRUSTEE
(a) The Trustee shall have the following categories of
responsibilities:
(1) Consistent with the "funding policy and method" determined by
the Employer, to invest, manage, and control the Plan assets
subject, however, to the direction of the Employer or an
Investment Manager if the Trustee should' appoint such manager as
to all or a portion of the assets of the Plan;
(2) At the direction of the Administrator, to pay benefits
required under the Plan to be paid to Participants, or, in the
event of their death, to their Beneficiaries; and
(3) To maintain records of receipts and disbursements and furnish
to the Employer and/or Administrator for each Plan Year a written
annual report per Section 7.6.
(b) In the event that the Trustee shall be directed by the
Employer, or an Investment Manager with respect to the investment of
any or all Plan assets, the Trustee shall have no liability with
respect to the investment of such assets, but shall be responsible
only to execute such investment instructions as so directed.
(1) The Trustee shall be entitled to rely fully on the written
instructions of the Employer, or any Fiduciary or nonfiduciary
agent of the Employer, in the discharge of such duties, and shall
not be liable for any loss or other liability, resulting from
such direction (or lack of direction) of the investment of any
part of the Plan assets.
(2) The Trustee may delegate the duty to execute such
instructions to any nonfiduciary agent,
62
which may be an affiliate of the Trustee or any Plan
representative.
(c) If there shall be more than one Trustee, they shall act by a
majority of their number, but may authorize one or more of them to
sign papers on their behalf.
7.2 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE
(a) The Trustee shall invest and reinvest the Trust Fund to keep
the Trust Fund invested without distinction between principal and
income and in such securities or property, real or personal, wherever
situated, as the Trustee shall deem advisable, including, but not
limited to, stocks, common or preferred, bonds and other evidences of
indebtedness or ownership, and real estate or any interest therein.
The Trustee shall at all times in making investments of the Trust Fund
consider, among other factors, the short and long-term financial needs
of the Plan on the basis of information furnished by the Employer. In
making such investments, the Trustee shall not be restricted to
securities or other property of the character expressly authorized by
the applicable law for trust investments; however, the Trustee shall
give due regard to any limitations imposed by the Code or the Act so
that at all times the Plan may qualify as a qualified Pension Plan and
Trust.
(b) The Trustee may employ a bank or trust company pursuant to
the terms of its usual and customary bank agency agreement, under
which the duties of such bank or trust company shall be of a
custodial, clerical and record-keeping nature.
(c) The Trustee may from time to time transfer to a common,
collective, pooled trust fund or money market fund maintained by any
corporate Trustee or affiliate thereof hereunder, all or such part of
the Trust Fund as the Trustee may deem advisable, and such part or all
of the Trust Fund so transferred shall be subject to all the terms and
provisions of the common, collective, pooled trust fund or money
market fund which contemplate the commingling for investment purposes
of such trust assets with trust assets of other trusts. The Trustee
may transfer, any part of the Trust Fund intended for temporary
investment of cash balances to a money market fund maintained by
63
Community Bank or its affiliates. The Trustee may, from time to time,
withdraw from such common, collective, pooled trust fund or money
market fund all or such part of the Trust Fund as the Trustee may deem
advisable.
7.3 OTHER POWERS OF THE TRUSTEE
The Trustee, in addition to all powers and authorities under common
law, statutory authority, including the Act, and other provisions of the Plan,
shall have the following powers and authorities, to be exercised in the
Trustee's sole discretion:
(a) To purchase, or subscribe for, any securities or other
property and to retain the same. In conjunction with the purchase of
securities, margin accounts may be opened and maintained;
(b) To sell, exchange, convey, transfer, grant options to
purchase, or otherwise dispose of any securities or other property
held by the Trustee, by private contract or at public auction. No
person dealing with the Trustee shall be bound to see to the
application of the purchase money or to inquire into the validity,
expediency, or propriety of any such sale or other disposition, with
or without advertisement;
(c) To vote upon any stocks, bonds, or other securities; to give
general or special proxies or powers of attorney with or without power
of substitution; to exercise any conversion privileges, subscription
rights or other options, and to make any payments incidental thereto;
to oppose, or to consent to, or otherwise participate in, corporate
reorganizations or other changes affecting corporate securities, and
to delegate discretionary powers, and to pay any assessments or
charges in connection therewith; and generally to exercise any of the
powers of an owner with respect to stocks, bonds, securities, or other
property. However, the Trustee shall not vote proxies relating to
securities for which it has not been assigned full investment
management responsibilities. In those cases where another party has
such investment authority or discretion, the Trustee will deliver all
proxies to said party who will then have full responsibility for
voting those proxies;
64
(d) To cause any securities or other property to be registered in
the Trustee's own name or in the name of one or more of the Trustee's
nominees, and to hold any investments in bearer form, but the books
and records of the Trustee shall at all times show that all such
investments are part of the Trust Fund;
(e) To borrow or raise money for the purposes of the Plan in such
amount, and upon such terms and conditions, as the Trustee shall deem
advisable; and for any sum so borrowed, to issue a promissory note as
Trustee, and to secure the repayment thereof by pledging all, or any
part, of the Trust Fund; and no person lending money to the Trustee
shall be bound to see to the application of the money lent or to
inquire into the validity, expediency, or propriety of any borrowing;
(f) To keep such portion of the Trust Fund in cash or cash
balances as the Trustee may, from time to time, deem to be in the best
interests of the Plan, without liability for interest thereon;
(g) To accept and retain for such time as the Trustee may deem
advisable any securities or other property received or acquired as
Trustee hereunder, whether or not such securities or other property
would normally be purchased as investments hereunder;
(h) To make, execute, acknowledge, and deliver any and all
documents of transfer and conveyance and any and all other instruments
that may be necessary or appropriate to carry out the powers herein
granted;
(i) To settle, compromise, or submit to arbitration any claims,
debts, or damages due or owing to or from the Plan, to commence or
defend suits or legal or administrative proceedings, and to represent
the Plan in all suits and legal and administrative proceedings;
(j) To employ suitable agents and counsel and to pay their
reasonable expenses and compensation, and such agent or counsel may or
may not be agent or counsel for the Employer;
(k) To apply for and procure from responsible insurance
companies, to be selected by the
65
Administrator, as an investment of the Trust Fund such annuity, or
other Contracts (on the life of any Participant) as the Administrator
shall deem proper; to exercise, at any time or from time to time,
whatever rights and privileges may be granted under such annuity, or
other Contracts; to collect, receive, and settle for the proceeds of
all such annuity or other Contracts as and when entitled to do so
under the provisions thereof;
(l) To invest funds of the Trust in time deposits or savings
accounts bearing a reasonable rate of interest in the Trustee's bank;
(m) To invest in Treasury Bills and other forms of United States
government obligations;
(n) To invest in shares of investment companies registered under
the Investment Company Act of 1940, including any money market fund
advised by or offered through Community Bank;
(o) To sell, purchase and acquire put or call options if the
options are traded on and purchased through a national securities
exchange registered under the Securities Exchange Act of 1934, as
amended, or, if the options are not traded on a national securities
exchange, are guaranteed by a member firm of the New York Stock
Exchange;
(p) To deposit monies in federally insured savings accounts or
certificates of deposit in banks or savings and loan associations;
(q) To pool all or any of the Trust Fund, from time to time, with
assets belonging to any other qualified employee pension benefit trust
created by the Employer or an affiliated company of the Employer, and
to commingle such assets and make joint or common investments and
carry joint accounts on behalf of this Plan and such other trust or
trusts, allocating undivided shares or interests in such investments
or accounts or any pooled assets of the two or more trusts in
accordance with their respective interests;
(r) To do all such acts and exercise all such rights and
privileges, although not specifically mentioned herein, as the Trustee
may deem necessary to carry out the purposes of the Plan.
66
7.4 DUTIES OF THE TRUSTEE REGARDING PAYMENTS
At the direction of the Administrator, the Trustee shall, from time to
time, in accordance with the terms of the Plan, make payments out of the Trust
Fund. The Trustee shall not be responsible in any way for the application of
such payments.
7.5 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES
The Trustee shall be paid such reasonable compensation as shall from
time to time be agreed upon in writing by the Employer and the Trustee. An
individual serving as Trustee who already receives full-time pay from the
Employer shall not receive compensation from the Plan. In addition, the Trustee
shall be reimbursed for any reasonable expenses, including reasonable counsel
fees incurred by it as Trustee. Such compensation and expenses shall be paid
from the Trust Fund unless paid or advanced by the Employer. All taxes of any
kind and all kinds whatsoever that may be levied or assessed under existing or
future laws upon, or in respect of, the Trust Fund or the income thereof, shall
be paid from the Trust Fund.
7.6 ANNUAL REPORT OF THE TRUSTEE
Within a reasonable period of time after the later of the Anniversary
Date or receipt of the Employer contribution for each Plan Year, the Trustee
shall furnish to the Employer and Administrator a written statement of account
with respect to the Plan Year for which such contribution was made setting
forth:
(a) the net income, or loss, of the Trust Fund;
(b) the gains, or losses, realized by the Trust Fund upon sales
or other disposition of the assets;
(c) the increase, or decrease, in the value of the Trust Fund;
(d) all payments and distributions made from the Trust Fund; and
(e) such further information as the Trustee and/or Administrator
deems appropriate. The Employer, forthwith upon its receipt of each
such statement of account, shall acknowledge receipt thereof in
writing and advise the Trustee and/or Administrator of its approval or
disapproval thereof. Failure by the Employer to disapprove any such
statement of account
67
within thirty (30) days after its receipt thereof shall be deemed an
approval thereof. The approval by the Employer of any statement of
account shall be binding as to all matters embraced therein as between
the Employer and the Trustee to the same extent as if the account of
the Trustee had been settled by judgment or decree in an action for a
judicial settlement of its account in a court of competent
jurisdiction in which the Trustee, the Employer and all persons having
or claiming an interest in the Plan were parties; provided, however,
that nothing herein contained shall deprive the Trustee of its right
to have its accounts judicially settled if the Trustee so desires.
7.7 AUDIT
(a) If an audit of the Plan's records shall be required by the
Act and the regulations thereunder for any Plan Year, the
Administrator shall direct the Trustee to engage on behalf of all
Participants an independent qualified public accountant for that
purpose. Such accountant shall, after an audit of the books and
records of the Plan in accordance with generally accepted auditing
standards, within a reasonable period after the close of the Plan
Year, furnish to the Administrator and the Trustee a report of his
audit setting forth his opinion as to whether any statements,
schedules or lists that are required by Act Section 103 or the
Secretary of Labor to be filed with the Plan's annual report, are
presented fairly in conformity with generally accepted accounting
principles applied consistently. All auditing and accounting fees
shall be an expense of and may, at the election of the Administrator,
be paid from the Trust Fund.
(b) If some or all of the information necessary to enable the
Administrator to comply with Act Section 103 is maintained by a bank,
insurance company, or similar institution, regulated and supervised
and subject to periodic examination by a state or federal agency, it
shall transmit and certify the accuracy of that information to the
Administrator as provided in Act Section 103(b) within one hundred
twenty (120) days after the end of the Plan Year or by such other date
as may be prescribed under regulations of the Secretary of Labor.
68
7.8 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE
(a) The Trustee may resign at any time by delivering to the
Employer, at least thirty (30) days before its effective date, a
written notice of his resignation.
(b) The Employer may remove the Trustee by mailing by registered
or certified mail, addressed to such Trustee at his last known
address, at least thirty (30) days before its effective date, a
written notice of his removal.
(c) Upon the death, resignation, incapacity, or removal of any
Trustee, a successor may be appointed by the Employer; and such
successor, upon accepting such appointment in writing and delivering
same to the Employer, shall, without further act, become vested with
all the estate, rights, powers, discretions, and duties of his
predecessor with like respect as if he were originally named as a
Trustee herein. Until such a successor is appointed, the remaining
Trustee or Trustees shall have full authority to act under the terms
of the Plan.
(d) The Employer may designate one or more successors prior to
the death, resignation, incapacity, or removal of a Trustee. In the
event a successor is so designated by the Employer and accepts such
designation, the successor shall, without further act, become vested
with all the estate, rights, powers, discretions, and duties of his
predecessor with the like effect as if he were originally named as
Trustee herein immediately upon the death, resignation, incapacity, or
removal of his predecessor.
(e) Whenever any Trustee hereunder ceases to serve as such, he
shall furnish to the Employer and Administrator a written statement of
account with respect to the portion of the Plan Year during which he
served as Trustee. This statement shall be either (i) included as part
of the annual statement of account for the Plan Year required under
Section 7.6 or (ii) set forth in a special statement. Any such special
statement of account should be rendered to the Employer no later than
the due date of the annual statement of account for the Plan Year. The
procedures set forth in Section 7.6 for the approval by the
69
Employer of annual statements of account shall apply to any special
statement of account rendered hereunder and approval by the Employer
of any such special statement in the manner provided in Section 7.6
shall have the same effect upon the statement as the Employer's
approval of an annual statement of account. No successor to the
Trustee shall have any duty or responsibility to investigate the acts
or transactions of any predecessor who has rendered all statements of
account required by Section 7.6 and this subparagraph.
7.9 TRANSFER OF INTEREST
Notwithstanding any other provision contained in this Plan, the
Trustee at the direction of the Administrator shall transfer the Vested
interest, if any, of such Participant in his account to another trust forming
part of a pension, profit sharing or stock bonus plan maintained by such
Participant's new employer and represented by said employer in writing as
meeting the requirements of Code Section 401(a), provided that the trust to
which such transfers are made permits the transfer to be made.
7.10 DIRECT ROLLOVER
(a) Notwithstanding any provision of the Plan to the contrary
that would otherwise limit a distributee's election under this
Section, a distributee may elect, at the time and in the manner
prescribed by the Administrator, to have any portion of an eligible
rollover distribution that is equal to at least $500 paid directly to
an eligible retirement plan specified by the distributee in a direct
rollover.
(b) For purposes of this Section the following definitions shall
apply:
(1) An eligible rollover distribution is any distribution of all
or any portion of the balance to the credit of the distributee,
except that an eligible rollover distribution does not include:
any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for
the life (or life expectancy) of the distributee or the joint
lives (or joint life expectancies) of the distributee and the
distributee's designated beneficiary, or for a specified period
of ten
70
years or more; any distribution to the extent such distribution
is required under Code Section 401(a)(9); the portion of any
other distribution that is not includible in gross income
(determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities); and any other
distribution that is reasonably expected to total less than $200
during a year.
(2) An eligible retirement plan is an individual retirement
account described in Code Section 408(a), an individual
retirement annuity described in Code Section 408(b), an annuity
plan described in Code Section 403(a), or a qualified trust
described in Code Section 401(a), that accepts the distributee's
eligible rollover distribution. 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.
(3) A distributee includes an Employee or former Employee. In
addition, the Employee's or former Employee's surviving spouse
and the Employee's or former Employee's spouse or former spouse
who is the alternate payee under a qualified domestic relations
order, as defined in Code Section 414(p), are distributees with
regard to the interest of the spouse or former spouse.
(4) A direct rollover is a payment by the Plan to the eligible
retirement plan specified by the distributee.
ARTICLE VIII
PLAN AMENDMENT
8.1 AMENDMENT
(a) The Employer shall have the right at any time to amend the
Plan, subject to the limitations of this Section. However, any
amendment which affects the rights, duties or responsibilities of the
Trustee and Administrator, other than an amendment to remove the
Trustee or Administrator, may only be made with the Trustee's and
Administrator's written consent. Any such amendment shall become
effective as provided
71
therein upon its execution. The Trustee shall not be required to
execute any such amendment unless the Trust provisions contained
herein are a part of the Plan and the amendment affects the duties of
the Trustee hereunder.
(b) No amendment to the Plan shall be effective if it authorizes
or permits any part of the Trust Fund (other than such part as is
required to pay taxes and administration expenses) to be used for or
diverted to any purpose other than for the exclusive benefit of the
Participants or their Beneficiaries or estates; or causes any
reduction in the Accrued Benefit of any Participant (except to the
extent permitted under Code Section 412(c)(8)); or causes or permits
any portion of the Trust Fund to revert to or become property of the
Employer.
(c) Except as permitted by Regulations, no Plan amendment or
transaction having the effect of a Plan amendment (such as a merger,
plan transfer or similar transaction) shall be effective to the extent
it eliminates or reduces any "Section 411(d)(6) protected benefit" or
adds or modifies conditions relating to "Section 411(d)(6) protected
benefits" the result of which is a further restriction on such benefit
unless such protected benefits are preserved with respect to benefits
accrued as of the later of the adoption date or effective date of the
amendment. "Section 411(d)(6) protected benefits" are benefits
described in Code Section 411(d)(6)(A), early retirement benefits and
retirement-type subsidies, and optional forms of benefit.
(d) If this Plan is amended and an effect of such amendment is to
increase current liability (as defined in Code Section 401(a)(29)(E))
under the Plan for a Plan Year, and the funded current liability
percentage of the Plan for the Plan Year in which the amendment takes
effect is less than sixty percent (60%), including the amount of the
unfunded current liability under the Plan attributable to the
amendment, the amendment shall not take effect until the Employer (or
any member of a controlled group which includes the Employer) provides
security to the Plan. The form and amount of such security shall
satisfy the requirements of Code Section 401(a)(29)(B) and (C). Such
security may be released provided the
72
requirements of Code Section 401(a)(29)(D) are satisfied.
ARTICLE IX
PLAN TERMINATION
9.1 TERMINATION
(a) The Employer shall have the right to terminate the Plan by
delivering to the Trustee and Administrator written notice of such
termination. However, any termination (other than a partial
termination or an involuntary termination pursuant to Act Section
4042) must satisfy the requirements and follow the procedures outlined
herein and in Act Section 4041 for a Standard Termination or a
Distress Termination. Upon any termination (full or partial), all
amounts shall be allocated in accordance with the provisions hereof
and the Accrued Benefit, to the extent funded as of such date, of each
affected Participant shall become fully Vested and shall not
thereafter be subject to forfeiture.
(b) Standard Termination Procedure --
(1) The Administrator shall first notify all "affected parties"
(as defined in Act Section 4001(a)(21)) of the Employer's
intention to terminate the Plan and the proposed date of
termination. Such termination notice must be provided at least
sixty (60) days prior to the proposed termination date. However,
in the case of a standard termination, it shall not be necessary
to provide such notice to the Pension Benefit Guaranty
Corporation (PBGC). As soon as practicable after the termination
notice is given, the Administrator shall provide a follow-up
notice to the PBGC setting forth the following:
(i) a certification of an enrolled actuary of the projected
amount of the assets of the Plan as of the proposed date of
final distribution of assets, the actuarial present value of
the "benefit liabilities" (as defined in Act Section
4001(a)(16)) under the Plan as of the proposed termination
date, and confirmation that the Plan is projected to be
sufficient for such
73
"benefit liabilities" as of the proposed date of final
distribution;
(ii) a certification by the Administrator that the
information provided to the PBGC and upon which the enrolled
actuary based his certification is accurate and complete;
and
(iii) such other information as the PBGC may prescribe by
regulation.
The certification of the enrolled actuary and of the
Administrator shall not be applicable in the case of a plan
funded exclusively by individual insurance contracts.
(2) No later than the date on which the follow-up notice is sent
to the PBGC, the Administrator shall provide all Participants and
Beneficiaries under the Plan with an explanatory statement
specifying each such person's "benefit liabilities," the benefit
form on the basis of which such amount is determined, and any
additional information used in determining "benefit liabilities"
that may be required pursuant to regulations promulgated by the
PBGC.
(3) A standard termination may only take place if at the time the
final distribution of assets occurs, the Plan is sufficient to
meet all "benefit liabilities" determined as of the termination
date.
(c) Distress Termination Procedure --
(1) The Administrator shall first notify all "affected parties"
of the Employer's intention to terminate the Plan and the
proposed date of termination. Such termination notice must be
provided at least 60 days prior to the proposed termination date.
As soon as practicable after the termination notice is given, the
Administrator shall also provide a follow-up notice to the PBGC
setting forth the following:
(i) a certification of an enrolled actuary of the amount, as
of the proposed termination date, of the current value of
74
the assets of the Plan, the actuarial present value (as of
such date) of the "benefit liabilities" under the Plan,
whether the Plan is sufficient for "benefit liabilities" as
of such date, the actuarial present value (as of such date)
of benefits under the Plan guaranteed under Act Section
4022, and whether the Plan is sufficient for guaranteed
benefits as of such date;
(ii) in any case in which the Plan is not sufficient for
"benefit liabilities" as of such date, the name and address
of each Participant and Beneficiary under the Plan as of
such date;
(iii) a certification by the Administrator that the
information provided to the PBGC and upon which the enrolled
actuary based his certification is accurate and complete;
and
(iv) such other information as the PBGC may prescribe by
regulation.
The certification of the enrolled actuary and of the
Administrator shall not be applicable in the case of a plan
funded exclusively by individual insurance contracts.
(2) A distress termination may only take place if:
(i) the Employer demonstrates to the PBGC that such
termination is necessary to enable the Employer to pay its
debts while staying in business, or to avoid unreasonably
burdensome pension costs caused by a decline in the
Employer's work force;
(ii) the Employer is the subject of a petition seeking
liquidation in a bankruptcy or insolvency proceeding which
has not been dismissed as of the proposed termination date;
or
(iii) the Employer is the subject of a petition seeking
reorganization in a bankruptcy or insolvency proceeding
which
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has not been dismissed as of the proposed ' termination
date, and the bankruptcy court (or such other appropriate
court) approves the termination and determines that the
Employer will be unable to continue in business outside a
Chapter 11 reorganization process and that such termination
is necessary to enable the Employer to pay its debts
pursuant to a plan of reorganization.
(d) Priority and Payment of Benefits: In the case of a distress
termination, upon approval by the PBGC that the Plan is sufficient for
"benefit liabilities" or for "guaranteed benefits," or in the case of
a standard termination, a letter of non-compliance has not been issued
within the sixty (60) day period (as extended) following the receipt
by the PBGC of the follow-up notice, the Administrator shall allocate
the assets of the Plan among Participants and Beneficiaries pursuant
to Act Section 4044(a). As soon as practicable thereafter, the assets
of the Trust shall be distributed to the Participants and
Beneficiaries, in cash or through the purchase of irrevocable
commitments from an insurer, in a manner consistent with Section 5.7.
However, if all liabilities with respect to Participants and
Beneficiaries under the Plan have been satisfied and there remains a
balance in the Trust due to erroneous actuarial computation, such
balance, if any, shall be returned to the Employer. In the case of a
distress termination in which the PBGC is unable to determine that the
Plan is sufficient for guaranteed benefits, the assets of the Plan
shall only be distributed in accordance with proceedings instituted by
the PBGC.
(e) The termination of the Plan shall comply with such other
requirements and rules as may be promulgated by the PBGC under
authority of Title IV of the Act, including any rules relating to time
periods or deadlines for providing notice or for making a necessary
filing.
9.2 LIMITATION OF BENEFITS ON PLAN TERMINATION
In the event of Plan termination, the benefit of any Highly
Compensated Participant or any Highly Compensated Former Employee shall be
limited to a benefit that is nondiscriminatory under Code Section 401(a)(4).
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ARTICLE X
MERGER, CONSOLIDATION OR TRANSFER OF ASSETS
10.1 REQUIREMENTS
Before this Plan can be merged or consolidated with any other
qualified plan or its assets or liabilities transferred to any other qualified
plan, the Administrator must secure (and file with the Secretary of Treasury at
least 30 days beforehand) a certification from a government-enrolled actuary
that the benefits which would be received by a Participant of this Plan, in the
event of a termination of the Plan immediately after such transfer, merger or
consolidation, are at least equal to the benefits the Participant would have
received if the Plan had terminated immediately before the transfer, merger or
consolidation, and such transfer, merger or consolidation does not otherwise
result in the elimination or reduction of any "Section 411(d)(6) protected
benefits" as described in Section 8.1.
ARTICLE XI
TOP HEAVY
11.1 TOP HEAVY PLAN REQUIREMENTS
For any Top Heavy Plan Year, the Plan shall provide the special
vesting requirements of Code Section 416(b) pursuant to Section 5.6 of the Plan
and the special minimum benefit requirements of Code Section 416(c) pursuant to
Section 5.2 of the Plan.
11.2 DETERMINATION OF TOP HEAVY STATUS
(a) This Plan shall be a Top Heavy Plan for any Plan Year in
which, as of the Determination Date, (1) the Present Value of Accrued
Benefits of Key Employees and (2) the sum of the Aggregate Accounts of
Key Employees under this Plan and all plans of an Aggregation Group,
exceeds sixty percent (60%) of the Present Value of Accrued Benefits
and the Aggregate Accounts of all Key and Non-Key Employees under this
Plan and all plans of an Aggregation Group.
If any Participant is a Non-Key Employee for any Plan Year,
but such Participant was a Key Employee for any prior Plan Year, such
Participant's Present Value of Accrued Benefit and/or Aggregate
Account balance shall not be taken into account for purposes of
determining whether this Plan is a Top Heavy or
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Super Top Heavy Plan (or whether any Aggregation Group which includes
this Plan is a Top Heavy Group). In addition, if a Participant or
Former Participant has not performed any services for any Employer
maintaining the Plan at any time during the five year period ending on
the Determination Date, any accrued benefit for such Participant or
Former Participant shall not be taken into account for the purposes of
determining whether this Plan is a Top Heavy or Super Top Heavy Plan.
(b) This Plan shall be a Super Top Heavy Plan for any Plan Year
in which, as of the Determination Date, (1) the Present Value of
Accrued Benefits of Key Employees and (2) the sum of the Aggregate
Accounts of Key Employees under this Plan and all plans of an
Aggregation Group, exceeds ninety percent (90%) of the Present Value
of Accrued Benefits and the Aggregate Accounts of all Key and Non-Key
Employees under this Plan and all plans of an Aggregation Group.
(c) Aggregate Account: A Participant's Aggregate Account as of
the Determination Date shall be determined under applicable provisions
of the defined contribution plan used in determining Top Heavy Plan
status.
(d) "Aggregation Group" means either a Required Aggregation Group
or a Permissive Aggregation Group as hereinafter determined.
(1) Required Aggregation Group: In determining a Required
Aggregation Group hereunder, each plan of the Employer in which a
Key Employee is a participant in the Plan Year containing the
Determination Date or any of the four preceding Plan Years, and
each other plan of the Employer which enables any plan in which a
Key Employee participates to meet the requirements of Code
Sections 401(a)(4) or 410, will be required to be aggregated.
Such group shall be known as a Required Aggregation Group.
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
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Required Aggregation Group is not a Top Heavy ' Group.
(2) Permissive Aggregation Group: The Employer may also include
any other plan not required to be included in the Required
Aggregation Group, provided the resulting group, taken as a
whole, would continue to satisfy the provisions of Code Sections
401(a)(4) and 410. Such group shall be known as a Permissive
Aggregation Group.
In the case of a Permissive Aggregation 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 a Top Heavy
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.
(3) Only those plans of the Employer in which the Determination
Dates fall within the same calendar year shall be aggregated in
order to determine whether such plans are Top Heavy Plans.
(4) An Aggregation Group shall include any terminated plan of the
Employer if it was maintained within the last five (5) years
ending on the Determination Date.
(e) "Determination Date" means (a) the last day of the preceding
Plan Year, or (b) in the case of the first Plan Year, the last day of
such Plan Year. (f) Present Value of Accrued Benefit: In the case of a
defined benefit plan, a Participant's Present Value of Accrued Benefit
shall be determined:
(1) in the case of a Participant other than a Key Employee, using
the single accrual method used for all plans of the Employer and
Affiliated Employers, or if no such single method exists, using a
method which results in benefits accruing not more rapidly than
the slowest accrual rate permitted under Code Section
411(b)(1)(C).
(2) as of the most recent "actuarial valuation date," which is
the most recent valuation date
79
within a twelve (12) month period ending on the Determination
Date.
(3) for the first Plan Year, as if (a) the Participant terminated
service as of the Determination Date; or (b) the Participant
terminated service as of the actuarial valuation date, but taking
into account the estimated Accrued Benefits as of the
Determination Date.
(4) for the second Plan Year, the Accrued Benefit taken into
account for a current Participant must not be less than the
Accrued Benefit taken into account for the first Plan Year unless
the difference is attributable to using an estimate of the
Accrued Benefit as of the Determination Date for the first Plan
Year and using the actual Accrued Benefit for the second Plan
Year.
(5) for any other Plan Year, as if the Participant terminated
service as of the actuarial valuation date.
(6) the actuarial valuation date must be the same date used for
computing the defined benefit plan minimum funding costs,
regardless of whether a valuation is performed that Plan Year.
(7) by not taking into account proportional subsidies.
(8) by taking into account nonproportional subsidies.
(g) The calculation of a Participant's Present Value of Accrued
Benefit as of a Determination Date shall be the sum of:
(1) the Present Value of Accrued Benefit using the actuarial
assumptions of Section 1.3, which assumptions shall be identical
for all defined benefit plans being tested for Top Heavy Plan
status.
(2) any Plan distributions made within the Plan Year that
includes the Determination Date or within the four (4) preceding
Plan Years. However, in the case of distributions made after
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the valuation date and prior to the Determination Date, such
distributions are not included as distributions for top heavy
purposes to the extent that such distributions are already
included in the Participant's Present Value of Accrued Benefit as
of the valuation date. Notwithstanding anything herein to the
contrary, all distributions, including distributions made prior
to January 1, 1984, and distributions under a terminated plan
which if it had not been terminated would have been required to
be included in an Aggregation Group, will be counted. Further,
benefits paid on account of death, to the extent such benefits do
not exceed the Present Value of Accrued Benefits existing
immediately prior to death, shall be treated as distributions for
the purposes of this paragraph.
(3) any Employee contributions, whether voluntary or mandatory.
However, amounts attributable to tax deductible Qualified
Voluntary Employee Contributions shall not be considered to be a
part of the Participant's Present Value of Accrued Benefit.
(4) with respect to unrelated rollovers and plan-to-plan
transfers (ones which are both initiated by the Employee and made
from a plan maintained by one employer to a plan maintained by
another employer), if this Plan provides the rollovers or
plan-to-plan transfers, it shall always consider such rollovers
or plan-to-plan transfers as a distribution for the purposes of
this Section. If this Plan is the plan accepting such rollovers
or plan-to-plan transfers, it shall not consider such rollovers
or plan-to-plan transfers accepted after December 31, 1983, as
part of the Participant's Present Value of Accrued Benefit.
(5) with respect to related rollovers and plan-to-plan transfers
(ones either not initiated by the Employee or made to a plan
maintained by the same employer), if this Plan provides the
rollovers or plan-to-plan transfers, it shall not be counted as a
distribution for purposes of this Section. If this Plan is the
plan accepting such rollovers or plan-to-plan transfers, it shall
consider such rollovers or plan-to-plan transfers
81
as part of the Participant's Present Value of Accrued Benefit,
irrespective of the date on which such rollovers or plan-to-plan
transfers are accepted.
(6) for the purposes of determining whether two employers are to
be treated as the same employer in (4) and (5) above, all
employers aggregated under Code Section 414 (b), (c), (m) or (o)
are treated as the same employer.
(h) "Top Heavy Group" means an Aggregation Group in which, as of
the Determination Date, the sum of:
(1) the Present Value of Accrued Benefits of Key Employees under
all defined benefit plans included in the group, and
(2) the Aggregate Accounts of Key Employees under all defined
contribution plans included in the group,
exceeds sixty percent (60%) of a similar sum determined for
all Participants.
ARTICLE XII
MISCELLANEOUS
12.1 PARTICIPANT'S RIGHTS
This Plan shall not be deemed to constitute a contract between the
Employer and any Participant or to be a consideration or an inducement for the
employment of any Participant or Employee. Nothing contained in this Plan shall
be deemed to give any Participant or Employee the right to be retained in the
service of the Employer or to interfere with the right of the Employer to
discharge any Participant or Employee at any time regardless of the effect which
such discharge shall have upon him as a Participant of this Plan.
12.2 ALIENATION
(a) Subject to the exceptions provided below, no benefit which
shall be payable out of the Trust Fund to any person (including a
Participant or his Beneficiary) shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, or charge, and any attempt to anticipate, alienate, sell,
transfer, assign, pledge,
82
encumber, or charge the same shall be void; and no such benefit shall
in any manner be liable for, or subject to, the debts, contracts,
liabilities, engagements, or torts of any such person, nor shall it be
subject to attachment or legal process for or against such person, and
the same shall not be recognized by the Trustee, except to such extent
as may be required by law.
(b) This provision shall not apply to a "qualified domestic
relations order" defined in Code Section 414(p), and those other
domestic relations orders permitted to be so treated by the
Administrator under the provisions of the Retirement Equity Act of
1984. The Administrator shall establish a written procedure to
determine the qualified status of domestic relations orders and to
administer distributions under such qualified orders. 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.
12.3 CONSTRUCTION OF PLAN
This Plan and Trust shall be construed and enforced according to the
Act and the laws of the State of Arkansas, other than its laws respecting choice
of law, to the extent not preempted by the Act.
12.4 GENDER AND NUMBER
Wherever any words are used herein in the masculine, feminine or
neuter gender, they shall be construed as though they were also used in another
gender in all cases where they would so apply, and whenever any words are used
herein in the singular or plural form, they shall be construed as though they
were also used in the other form in all cases where they would so apply.
12.5 LEGAL ACTION
In the event any claim, suit, or proceeding is brought regarding the
Trust and/or Plan established hereunder to which the Trustee, the Employer or
the Administrator may be a party, and such claim, suit, or proceeding is
resolved in favor of the Trustee, the Employer or the Administrator, they shall
be entitled to be reimbursed from the Trust Fund for any and all
83
costs, attorney's fees, and other expenses pertaining thereto incurred by them
for which they shall have become liable.
12.6 PROHIBITION AGAINST DIVERSION OF FUNDS
(a) Except as provided below and otherwise specifically permitted
by law, it shall be impossible by operation of the Plan or of the
Trust, by termination of either, by power of revocation or amendment,
by the happening of any contingency, by collateral arrangement or by
any other means, for any part of the corpus or income of any trust
fund maintained pursuant to the Plan or any funds contributed thereto
to be used for, or diverted to, purposes other than the exclusive
benefit of Participants, Retired Participants, or their Beneficiaries.
(b) In the event the Employer shall make an excessive
contribution under a mistake of fact pursuant to Act Section
403(c)(2)(A), the Employer may demand repayment of such excessive
contribution at any time within one (1) year following the time of
payment and the Trustees shall return such amount to the Employer
within the one (1) year period. Earnings of the Plan attributable to
the excess contributions may not be returned to the Employer but any
losses attributable thereto must reduce the amount so returned.
12.7 BONDING
Every Fiduciary, except a bank or an insurance company, unless
exempted by the Act and regulations thereunder, shall be bonded in an amount not
less than 10% of the amount of the funds such Fiduciary handles; provided,
however, that the minimum bond shall be $1,000 and the maximum bond, $500,000.
The amount of funds handled shall be determined at the beginning of each Plan
Year by the amount of funds handled by such person, group, or class to be
covered and their predecessors, if any, during the preceding Plan Year, or if
there is no preceding Plan Year, then by the amount of the funds to be handled
during the then current year. The bond shall provide protection to the Plan
against any loss by reason of acts of fraud or dishonesty by the Fiduciary alone
or in connivance with others. The surety shall be a corporate surety company (as
such term is used in Act Section 412(a)(2)), and the bond shall be in a form
approved by the Secretary of Labor. Notwithstanding anything in the Plan to the
contrary, the cost of such bonds shall be an expense of and
84
may, at the election of the Administrator, be paid from the Trust Fund or by the
Employer.
12.8 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE
Neither the Employer, the Administrator, nor the Trustee, nor their
successors shall be responsible for the validity of any Contract issued
hereunder or for the failure on the part of the insurer to make payments
provided by any such Contract, or for the action of any person which may delay
payment or render a Contract null and void or unenforceable in whole or in part.
12.9 INSURER'S PROTECTIVE CLAUSE
Any insurer who shall issue Contracts hereunder shall not have any
responsibility for the validity of this Plan or for the tax or legal aspects of
this Plan. The insurer shall be protected and held harmless in acting in
accordance with any written direction of the Trustee, and shall have no duty to
see to the application of any funds paid to the Trustee, nor be required to
question any actions directed by the Trustee. Regardless of any provision of
this Plan, the insurer shall not be required to take or permit any action or
allow any benefit or privilege contrary to the terms of any Contract which it
issues hereunder, or the rules of the insurer.
12.10 RECEIPT AND RELEASE FOR PAYMENTS
Any payment to any Participant, his legal representative, Beneficiary,
or to any guardian or committee appointed for such Participant or Beneficiary in
accordance with the provisions of the Plan, shall, to the extent thereof, be in
full satisfaction of all claims hereunder against the Trustee and the Employer,
either of whom may require such Participant, legal representative, Beneficiary,
guardian or committee, as a condition precedent to such payment, to execute a
receipt and release thereof in such form as shall be determined by the Trustee
or Employer.
12.11 ACTION BY THE EMPLOYER
Whenever the Employer under the terms of the Plan is permitted or
required to do or perform any act or matter or thing, it shall be done and
performed by a person duly authorized by its legally constituted authority.
85
12.12 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY
The "named Fiduciaries" of this Plan are (1) the Employer, (2) the
Administrator and (3) the Trustee. The named Fiduciaries shall have only those
specific powers, duties, responsibilities, and obligations as are specifically
given them under the Plan or as accepted by or assigned to them pursuant to any
procedure provided under the Plan, including but not limited to any agreement
allocating or delegating their responsibilities, the terms of which are
incorporated herein by reference. In general, unless otherwise indicated herein
or pursuant to such agreements, the Employer shall have the duties specified in
Article II hereof, as the same may be allocated or delegated thereunder,
including but not limited to the responsibility for making the contributions
provided for under Section 4.1; and shall have the authority to appoint and
remove the Trustee and the Administrator; to formulate the Plan's "funding
policy and method"; and to amend or terminate, in whole or in part, the Plan.
The Administrator shall have the responsibility for the administration of the
Plan, including but not limited to the items specified at Article II of the
Plan, as the same may be allocated or delegated thereunder. The Trustee shall
have the responsibility of management and control of the assets held under the
Trust, except to the extent directed pursuant to Article II or with respect to
those assets, the management of which has been assigned to an Investment
Manager, who shall be solely responsible for the management of the assets
assigned to it, all as specifically provided in the Plan and any agreement with
the Trustee. Each named Fiduciary warrants that any directions given,
information furnished, or action taken by it shall be in accordance with the
provisions of the Plan, authorizing or providing for such direction, information
or action. Furthermore, each named Fiduciary may rely upon any such direction,
information or action of another named Fiduciary as being proper under the Plan,
and is not required under the Plan to inquire into the propriety of any such
direction, information or action. It is intended under the Plan that each named
Fiduciary shall be responsible for the proper exercise of its own powers,
duties, responsibilities and obligations under the Plan as specified or
allocated herein. No named Fiduciary shall guarantee the Trust Fund in any
manner against investment loss or depreciation in asset value. Any person or
group may serve in more than one Fiduciary capacity. In the furtherance of their
responsibilities hereunder, the "named Fiduciaries" shall be empowered to
interpret the Plan and Trust and to resolve ambiguities, inconsistencies and
omissions, which findings shall be binding, final and conclusive.
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12.13 HEADINGS
The headings and subheadings of this Plan have been inserted for
convenience of reference and are to be ignored in any construction of the
provisions hereof.
12.14 APPROVAL BY INTERNAL REVENUE SERVICE
(a) Notwithstanding anything herein to the contrary,
contributions to this Plan are conditioned upon the initial
qualification of the Plan under Code Section 401. If the Plan receives
an adverse determination with respect to its initial qualification,
then the Plan may return such contributions to the Employer within one
year after such determination, provided the application for the
determination is made by the time prescribed by law for filing the
Employer's return for the taxable year in which the Plan was adopted,
or such later date as the Secretary of the Treasury may prescribe.
(b) Notwithstanding any provisions to the contrary, any
contribution by the Employer to the Trust Fund is conditioned upon the
deductibility of the contribution by the Employer under the Code and,
to the extent any such deduction is disallowed, the Employer shall,
within one (1) year following the disallowance of the deduction,
demand repayment of such disallowed contribution and the Trustee shall
return such contribution within one (1) year following the
disallowance. Earnings of the Plan attributable to the excess
contribution may not be returned to the Employer, but any losses
attributable thereto must reduce the amount so returned.
12.15 UNIFORMITY
All provisions of this Plan shall be interpreted and applied in a
uniform, nondiscriminatory manner. In the event of any conflict between the
terms of this Plan and any Contract purchased hereunder, the Plan provisions
shall control.
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IN WITNESS WHEREOF, this Plan has been executed the day and year
first above written.
Signed, sealed, and delivered in the
presence of:
Community Bank
Nancy Henson By /s/ Illegible
-------------------------------------
EMPLOYER
/s/ Nancy Henson
- -------------------------------------
WITNESSES AS TO EMPLOYER
Community Bank
Nancy Henson By /s/ Illegible
-------------------------------------
TRUSTEE
/s/ Nancy Henson
- -------------------------------------
WITNESSES AS TO TRUSTEE
ATTEST /s/ illegible
---------------------------------
88