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EXHIBIT 10(y)
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EMPLOYEES' STOCK OWNERSHIP AND SAVINGS PLAN OF
RURBAN FINANCIAL CORP.
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EMPLOYEES' STOCK OWNERSHIP AND SAVINGS PLAN OF
RURBAN FINANCIAL CORP.
WHEREAS, the Employer established the "Employees' Stock Ownership Plan
of Rurban Financial Corp." (hereinafter called the "ESOP" or "Plan") which
became effective January 1, 1985;
WHEREAS, the Employer established "The Rurban Financial Corp. Savings
Plan and Trust" (hereinafter called the "Savings Plan") which became effective
July 1, 1988;
WHEREAS, the ESOP is designed to invest primarily in Qualifying
Employer Securities and is intended to meet the applicable requirements of
Sections 401(a), 409 and 4975(e)(7) of the Code;
WHEREAS, it is desired to amend and restate the ESOP in its entirety
effective January 1, 1997 to comply with the provisions of the Small Business
Job Protection Act of 1996 and the Taxpayer Relief Act of 1997 ; and
WHEREAS, it is further desired to merge the Savings Plan into the ESOP,
change the name of the merged plan to the Employees' Stock Ownership and Savings
Plan of Rurban Financial Corp., and to make certain other changes effective
January 1, 2000;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and other valuable considerations, the Plan shall be
amended and restated effective January 1, 1997, except with respect to those
provisions of this Plan that have a specific effective date, as follows:
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ARTICLE I
DEFINITIONS
1.01 ACQUIRED SUBSIDIARY. "Acquired Subsidiary" shall mean any organization,
corporate or otherwise, which is acquired by purchase, merger, consolidation or
any other method, by the holding company.
1.02 ACT. "Act" means Employee Retirement Income Security Act of 1974, as may be
amended from time to time.
1.03 ANNUAL COMPENSATION. "Annual Compensation" means, for each Participant, as
of the date of determination, his compensation as reported for federal
withholding purposes since becoming a Participant.
Annual Compensation includes a Participant's voluntary reduction in
cash consideration made in accordance with an arrangement established by the
Employer under Sections 125 and 401(k) of the Code.
Annual Compensation in excess of $160,000 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 Plan Year beginning with or
within such calendar year. For any short Plan Year the Annual Compensation limit
shall be an amount equal to the Annual Compensation limit for the calendar year
in which the Plan Year begins multiplied by the ratio obtained by dividing the
number of full months in the short Plan Year by twelve (12).
If, in connection with the adoption of this amendment and restatement,
the definition of Annual Compensation has been modified, then, for Plan Years
prior to the Plan Year which includes the adoption date of this amendment and
restatement, Annual Compensation means compensation determined pursuant to the
Plan then in effect.
1.04 BREAK IN SERVICE. "Break in Service" for any Employee occurs in any Plan
Year in which such Employee completes fewer than 501 Hours of Service.
In determining whether a Break in Service has occurred for purposes of
eligibility to participate, benefit eligibility and vesting in a computation
period, an individual who is absent from work for maternity or paternity reasons
shall receive credit for the Hours of Service which would otherwise have been
credited to such individual but for such absence, or in any case in which such
hours cannot be determined, eight (8) Hours of Service per day of absence. For
purposes of this paragraph, an absence from work for maternity or paternity
reasons means an absence:
(1) by reason of the pregnancy of the individual;
(2) by reason of birth of a child of the individual;
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(3) by reason of the placement of a child with the individual in
connection with the adoption of such child by such individual, or
(4) for purposes of caring for such child for a period beginning
immediately following such birth or placement.
If a Participant incurs a Break in Service, but does not terminate
employment, the vested percentage of the value of his ESOP Contributions Account
and Matching Contributions Account prior to such Break in Service shall not
increase as a result of any subsequent service with the Employer until such
Participant completes a Year of Service.
1.05 CODE. "Code" means the Internal Revenue Code of 1986, as amended.
1.06 COMMITTEE. "Committee" shall mean the Administrative Committee as provided
in Article XII.
1.07 COMPANY. "Company" means Rurban Financial Corp. Except as otherwise
specifically provided in the Plan or Trust agreement, the Company may act for
and on behalf of each Employer in any matter pertaining to the Plan or Trust
Agreement, and each such act shall be effective and binding to the same extent
as if the act were that of any Employer. Any action or determination of the
Company under the Plan shall be by its Directors.
1.08 DIRECTORS. "Directors" shall mean the Board of Directors of the Company.
1.09 DISABILITY RETIREMENT DATE. "Disability Retirement Date" shall mean the
last day of any month (prior to his Normal Retirement Date) in which a
Participant terminates employment because of his Permanent and Total Disability.
1.10 DISTRIBUTION DATE. "Distribution Date" means the first day of each month
and such other dates during the Plan Year that are established by the Plan
Administrator.
1.11 EARLY RETIREMENT. "Early Retirement" means termination of employment on or
after age 55 with six (6) Years of Service.
1.12 EARLY RETIREMENT DATE. "Early Retirement Date" means the last day of the
month (prior to Normal Retirement Date) coinciding with or following the date on
which a Participant attains age 55 and has completed at least six (6) Years of
Service.
1.13 EMPLOYEE. "Employee" means any person employed by the Employer. "Employee"
shall not include Leased Employees.
1.14 EMPLOYER OR PARTICIPATING EMPLOYER. "Employer" or "Participating Employer"
means the Company, and any Participating Employer listed in Appendix A, and any
corporation in which the Company owns 50% or more of the outstanding shares of
the stock. Any action or determination of the Employer under the Plan shall be
by its Directors.
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1.15 ENTRY DATE. "Entry Date" means the date the Employee becomes a Participant
hereunder, pursuant to the eligibility requirements of Section 2.01.
1.16 ERISA. "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
1.17 ESOP. "ESOP" means an Employee Stock Ownership Plan as defined in Section
4975(e)(7) of the Code.
1.18 HOUR OF SERVICE. "Hour of Service" means:
(a) Each hour for which an Employee is directly or indirectly paid or
entitled to payment by either the Company or the Employer for the performance of
duties; and
(b) Each hour for which an Employee is directly or indirectly paid, or
entitled to payment, by either the Company or the Employer for reasons (such as
vacation, sickness, disability, or similar leave of absence) other than for the
performance of duties, and for military leaves, Maternity/Paternity Leaves or
leaves for jury duty; and
(c) Each hour for which back pay, irrespective of mitigation of
damages, has been either awarded or agreed to by either the Company or the
Employer provided that the same Hours of Service shall not be credited under
this subsection (c) and subsections (a) or (b) above, as the case may be.
Hours of Service computed hereunder shall be computed in accordance
with Section 2530.200 b-2 (b) and (c) of the Department of Labor Regulations
which is incorporated herein by reference.
In no event shall more than five hundred and one (501) Hours of Service
be credited for any one continuous period of absence during or for which the
Employee receives payment for nonperformance of duties whether or not such
period occurs in a single computation period.
For purposes of this Section 1.18, a Maternity/Paternity Leave means
absence in accordance with the Employer's or Company's preapproved leave policy
which may permit such leaves:
(a) by reason of the pregnancy of an individual,
(b) by reason of the birth of a child of an individual,
(c) by reason of the placement of a child with an individual in
connection with the adoption of such child by such individual, or
(d) for purposes of caring for such child for a period beginning
immediately following such birth or placement.
The Hours of Service credited under this paragraph shall be credited:
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(a) in the computation period in which the absence begins if the
crediting is necessary in order to give the Participant 501 Hours, or
(b) in all other cases, in the following computation period.
If the number of hours which would have been credited cannot be
determined, such person shall receive credit for eight (8) Hours of Service per
day of such absence.
For purposes of this Section 1.18, "computation period" shall mean a
twelve (12) consecutive month period commencing on the date of an Employee's
first Hour of Service with either the Company or the Employer, or any
anniversary thereof.
1.19 LEASED EMPLOYEE. "Leased Employee" shall mean a person who is not a common
law Employee of the Company or a related Company but who provides services to
the Company or related Company and:
(a) such services are provided pursuant to an agreement (written or
oral) between the Company or a related Company, and any other person ("leasing
organization),
(b) such person has performed such services for the Company or a
related Company on a substantially full-time basis for a period of at least one
year, and
(c) such services are performed under primary direction or control by
the recipient Employer.
A person shall not be deemed a Leased Employee if (1) such Employee is
covered by a money purchase pension plan maintained by a leasing organization
providing a nonintegrated employer contribution rate of at least 10% for
immediate participation and full and immediate vesting, and (2) Leased Employees
do not constitute more than 20% of the recipient's non-highly compensated work
force. 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 within the meaning of Section 414(n)(2) of the Code shall not be
eligible to become a Participant in the Plan while a Leased Employee.
1.20 NAMED FIDUCIARY. "Named 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 Plan Administrator.
1.21 NORMAL RETIREMENT AGE. "Normal Retirement Age" means age sixty-five (65) or
the fifth anniversary of joining the Plan, if later. A Participant's Accounts
shall be nonforfeitable upon attaining his Normal Retirement Age.
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1.22 NORMAL RETIREMENT DATE. "Normal Retirement Date" means the first day of the
month coinciding with or next following the date on which a Participant attains
Normal Retirement Age.
1.23 PARTICIPANT. "Participant" means an Employee who has satisfied the
eligibility requirements for participation in the Plan.
1.24 PERMANENT AND TOTAL DISABILITY. "Permanent and Total Disability" means a
physical or mental condition of a Participant resulting from a bodily injury or
disease or mental disorder which renders him incapable of continuing in the
employment of the Employer. The total and permanent disability of any
Participant shall be determined by the Plan Administrator, in accordance with
uniform principles consistently applied, upon the basis of such evidence as the
Plan Administrator deems necessary or advisable.
1.25 PLAN. Prior to January 1, 2000, "Plan" means the Employees' Stock Ownership
Plan of Rurban Financial Corp. Effective January 1, 2000, "Plan" means the
Employees' Stock Ownership and Savings Plan of Rurban Financial Corp.
1.26 PLAN ADMINISTRATOR. "Plan Administrator" means the Company or such
person(s) or entity designated by the Company who is responsible for the
administration of the Plan pursuant to the provisions of Article XII.
1.27 PLAN YEAR. "Plan Year" means the 12-month period beginning on January 1 and
ending on the following December 31 of each year.
1.28 QUALIFIED ELECTION. "Qualified Election" means a waiver of the lump sum
payment to the spouse in the event of death of the Participant. The waiver must
be in writing and must be consented to by the Participant's spouse. The Spouse's
consent to a waiver must be witnessed by a Plan representative or notary public
and must be limited to a benefit for a specific alternate beneficiary (or a
specific form of benefit). Notwithstanding this consent requirement, if the
Participant establishes to the satisfaction of a Plan representative that such
written consent may not be obtained because there is no spouse or the spouse
cannot be located, a waiver will be deemed a Qualified Election. Any consent
necessary under this provision will not be valid with respect to any other
spouse. Additionally, a revocation of a prior waiver may be made by a
Participant without the consent of the spouse at any time before the
commencement of benefits. The number of revocations shall not be limited. Any
new waiver or change of beneficiary will require a new spousal consent. Any
ambiguity in a Participant's death beneficiary designation shall be resolved by
the Administrator. The Administrator may direct a Participant to clarify his
beneficiary designation and, if necessary, execute a new designation containing
such clarification.
1.29 QUALIFYING EMPLOYER SECURITIES. "Qualifying Employer Securities" means any
security issued by the Employer or an affiliate thereof which is:
(a) stock or an equity security, or
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(b) a bond, debenture, note or certificate, or other evidence of
indebtedness which is described in ERISA Section 407(e).
1.30 TRUSTEE. "Trustee" means the original Trustee or any successor Trustee
appointed as provided in the Trust Agreement.
1.31 TRUST AGREEMENT. Prior to January 1, 2000, "Trust Agreement" shall mean the
Trust Agreement (as it may be amended from time to time) to be known as the
"Trust Agreement for Employees' Stock Ownership Plan of Rurban Financial Corp."
Effective January 1, 2000, "Trust Agreement" shall mean the Trust Agreement (as
it may be amended from time to time) to be known as the "Trust Agreement for
Employees' Stock Ownership and Savings Plan of Rurban Financial Corp."
1.32 TRUST FUND. "Trust Fund" means the fund as defined in Section 1 of the
Trust Agreement.
1.33 YEAR OF SERVICE. "Year of Service" means the computation period of twelve
(12) consecutive months during which an Employee is credited with at least 1,000
Hours of Service.
For Plan Years prior to January 1, 2000, 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 one 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 computation period beginning after a one
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 period shall be the Plan Year,
including periods prior to and subsequent to becoming a Participant. A
Participant will be credited with a Year of Service if he or she completes 1,000
Hours of Service during a Plan Year, even though the Participant is not employed
for the full twelve-month period.
Service of an Employee with the Armed Forces of the United States shall
be deemed to be service with the Employer for purposes of Sections 2.01 and
5.03, provided the Employee returns to active employment with the Employer
within the prescribed time limits during which he retains re-employment rights
by law. If such Employee does not return during such period, his employment will
be deemed to have been terminated when he entered the Armed Forces.
An Employee who does not initially meet the eligibility requirements of
Section 2.01 and later becomes a Participant, will have all Years of Service
counted for Plan purposes, both prior to and subsequent to becoming a
Participant.
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In the event a terminated Participant is rehired, all Years of Service
with either the Company or the Employer shall be counted for purposes of
Sections 2.01 and 5.03.
Employees of an Acquired Subsidiary shall be granted Years of Service
credit for purposes of eligibility and vesting, under the conditions and
standards of this Section 1.33 for all service which they had with the Acquired
Subsidiary.
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ARTICLE II
ELIGIBILITY
2.01 ELIGIBILITY
Prior to January 1, 2000, an Employee shall be eligible to participate
in the Plan on the January 1 or July 1 coinciding with or next following the
date the Employee meets all of the following requirements:
(a) Is credited with one (1) Year of Service;
(b) has attained age twenty-one (21); and
(c) is not a Leased Employee
Effective January 1, 2000, an Employee shall be eligible to participate
in the Plan on the January 1, April 1, July 1, or October 1 coinciding with or
next following the date the Employee meets all of the following requirements:
(a) has attained age twenty-one (21); and
(b) is not a Leased Employee
2.02 ELIGIBILITY UPON RE-EMPLOYMENT
(a) A former Participant shall become a Participant immediately upon
his return to the employ of the Employer if such former Participant had a
nonforfeitable right to all or a portion of his Participant's Account at the
time of his termination.
(b) A former Participant who did not have a nonforfeitable right to any
portion of his Participant's Account at the time of his termination shall be
considered a new Employee, for eligibility purposes, if the number of
consecutive one-year Breaks in Service equals or exceeds the greater of five or
the aggregate number of Years of Service before such Break in Service. Unless
such former Participant's Years of Service before his termination may be
disregarded, such Participant shall participate immediately.
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ARTICLE III
CONTRIBUTIONS
3.01 EMPLOYER CONTRIBUTIONS
(a) ESOP CONTRIBUTIONS. For each Plan Year, the Company shall
contribute to the Plan such amount as shall be determined by the Company without
regard to net profits.
ESOP Contributions for any Plan Year shall not exceed the maximum
amount allowable as a deduction to the Employer under the provisions of Code
Section 404. All ESOP Contributions shall be made in cash or in Qualifying
Employer Securities or a combination of cash and Qualifying Employer Securities
valued at the fair market value as of the date of payment.
With respect to ESOP Contributions, this Plan is intended to qualify as
an employee stock ownership plan under Section 4975(e)(7) of the Code and the
regulations thereunder, and is designed to be invested primarily in Qualifying
Employer Securities. At any time up to one hundred percent (100%) of the assets
in the ESOP Contributions Account may be invested in Qualifying Employer
Securities.
(b) COMPENSATION DEFERRAL CONTRIBUTIONS. Each eligible Participant may
elect to defer up to twelve percent (12%) of his Annual Compensation for each
pay period that he remains a Participant in accordance with procedures
established by the Plan Administrator. The Participant's election shall be made
at such time and in such manner as the Plan Administrator shall determine. Said
election shall remain in effect until revoked or superseded by a subsequent
election pursuant to procedures established by the Plan Administrator.
Compensation Deferral Contributions shall not be considered as income
to the Participant for purposes of Section 61 of the Code. Such contributions
shall be deemed as those made by the Employer, subject to the limitations of
Section 7.01.
Except as provided herein, the Employer shall contribute to the Plan on
behalf of the Participant the full amount of the Compensation Deferral
Contribution authorized by said Participant. No Participant shall be permitted
to have Compensation Deferral Contributions made under this Plan, or any other
qualified plan maintained by the Employer, during any taxable year, in excess of
the dollar limitation contained in Section 402(g) of the Code in effect at the
beginning of such taxable year. The Employer shall automatically discontinue
Compensation Deferral Contributions for the remainder of the year on behalf of a
Participant who reaches this limitation. A Participant may request a
distribution of any Excess Deferrals (Compensation Deferral Contributions in
excess of the limitation) in accordance with the provisions of Section 6.07 in
the event that his Compensation Deferral Contributions to the Plan, when
combined with any amounts deferred under any plans or arrangements described in
Sections 401(k), 408(k) or 403(b) of the Code, exceed the limit of Section
402(g) of the Code.
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Contributions to a Participant's Compensation Deferral Contributions
Account must meet the nondiscrimination requirements of Section 401(k) of the
Code pursuant to Section 7.03.
(c) MATCHING CONTRIBUTIONS. The Employer may make Matching
Contributions to the Trust Fund on behalf of Participants who are authorizing
Compensation Deferral Contributions. The amount of the Employer's Matching
Contributions shall be determined each year by the Board of Directors.
Contributions to a Participant's Matching Contributions Account must
meet the nondiscrimination requirements of Section 401(m) of the Code pursuant
to Section 7.04.
3.02 ROLLOVER CONTRIBUTIONS
The Trustee shall accept transfers on behalf of a Participant from:
(a) a qualified pension or profit sharing plan maintained by a former
employer of the Participant;
(b) a terminated but previously qualified pension or profit sharing
plan maintained by the Employer;
(c) a "rollover" Individual Retirement Account as that term is defined
in Section 408(d)(3)(A)(ii) of the Code.
Rollover Contributions made pursuant to this Section 3.02 shall be
credited to the Participant's Rollover Contributions Account and shall be at all
times nonforfeitable.
The Plan will not accept Rollover Contributions from a defined benefit
or defined contribution plan subject to Code Sections 401(a)(11) and 417(a) if
this Plan would be required by Code Section 411(d)(6) to preserve any joint and
survivor or annuity distribution rights.
3.03 TIME FOR PAYMENT OF CONTRIBUTIONS
The Employer shall generally pay to the Trustee its contribution to the
Plan for each Plan Year within the time prescribed by law, including extensions
of time, for filing of the Employer's federal tax return for the Employer's
fiscal year.
However, Compensation Deferral Contributions shall be paid to the
Trustee as of the earliest date on which such contributions are known and can
reasonably be segregated from the Employer's general assets. The provisions of
Department of Labor Regs. 2510.3-102 are incorporated herein by reference.
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ARTICLE IV
ALLOCATIONS
4.01 PARTICIPANT ACCOUNTS
Separate Accounts shall be maintained by the Trustee for each
Participant as follows:
(a) ESOP CONTRIBUTIONS ACCOUNT. The amount of the Employer's
contribution to the Trust Fund pursuant to Section 3.01(a) and allocated
pursuant to Section 4.02, together with such Participant's share of all income,
gains, losses and accumulations, shall be credited or debited to each
Participant's ESOP Contributions Account.
(b) COMPENSATION DEFERRAL CONTRIBUTIONS ACCOUNT. Compensation Deferral
Contributions authorized by each Participant and contributed by the Employer
pursuant to Section 3.01(b) and allocated pursuant to Section 4.02, together
with such Participant's share of all income, gains, losses and accumulations,
shall be credited or debited to each Participant's Compensation Deferral
Contributions Account.
(c) MATCHING CONTRIBUTIONS ACCOUNT. Matching Contributions made by the
Employer pursuant to Section 3.01(c) and allocated pursuant to Section 4.02,
together with such Participant's share of all income, gains, losses and
accumulations, shall be credited or debited to each Participant's Matching
Contributions Account.
(d) ROLLOVER CONTRIBUTIONS ACCOUNT. Any Rollover Contributions made by
a Participant pursuant to Section 3.02 shall be credited to the Participant's
Rollover Contributions Account and shall be credited or debited with its share
of all income, gains, losses and accumulations.
(e) PRIOR PLAN ACCOUNT. Amounts transferred from a previous qualified
plan of the Employer, together with such Participant's share of all income,
gains and accumulations therefrom, shall be credited and losses debited to each
Participant's Prior Plan Account. A Participant's Prior Plan Account shall be
nonforfeitable at all times.
The ESOP Contributions Account, Deferral Contributions Account,
Matching Contributions Account, Rollover Contributions Account, and Prior Plan
Account will sometimes be collectively referred to in this Plan as "Accounts".
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4.02 ANNUAL ALLOCATIONS
(a) EMPLOYER CONTRIBUTIONS
(1) ESOP CONTRIBUTIONS. Effective as of the last day of each
Plan Year, any amount contributed by the Employer pursuant to Section
3.01(a) shall be allocated and credited to the ESOP Contributions
Account of each eligible Participant. An allocation will be made only
if the Participant was employed on the last day of such Plan Year and
was credited with at least one thousand (1,000) Hours of Service during
such Plan Year, subject to the provisions of Section 8.04 hereof,
except that any Participant who becomes Permanently and Totally
Disabled, dies or retires during such Plan Year shall receive an
allocation.
The annual contribution to this ESOP Contributions Account, if
any, and the amount of shares released from a suspense account pursuant
to Section 10.02, less any amount of shares allocated to Participant
ESOP Contributions Accounts pursuant to Section 9.06(b), will be
allocated to each Participant in the same proportion as each
Participant's Annual Compensation bears to the total Annual
Compensation of all Participants.
(2) COMPENSATION DEFERRAL CONTRIBUTIONS. Compensation Deferral
Contributions made by the Employer on behalf of a Participant pursuant
to Section 3.01(b) shall be credited to said Participant's Compensation
Deferral Contributions Account.
(3) MATCHING CONTRIBUTIONS. Matching Contributions made by the
Employer on behalf of a Participant pursuant to Section 3.01(c) shall
be credited to said Participant's Matching Contributions Account.
(b) INVESTMENT GAIN OR LOSS
Any net gain or net loss resulting from the operation of the
investments of the Trust for such year shall be allocated by the
Trustee to the respective Participant's Accounts in proportion to the
value of the respective interests in the investments preceding such
revaluation. The Trustee may use any reasonable method which the
Trustee in his sole discretion determines will fairly allocate
earnings, gains or losses and the net value of the Trust to each
Participant's Account. Any such procedure must be nondiscriminatory and
uniformly applied.
(c) FORFEITURES
Any forfeiture allocable for the current Plan Year, as
provided in Section 5.03 shall be allocated to the ESOP Contributions
Account of Participants who are otherwise entitled to receive an ESOP
Contribution as provided by Plan Section 4.02(a). Such forfeiture shall
be allocated and credited to the ESOP Contributions Account of each
such Participant as an amount determined in the same proportion that
such Participant's Annual Compensation bears to the total Annual
Compensation of all Participants.
Effective January 1, 2000, forfeitures will be used to reduce
Employer contributions for the year in which the forfeiture occurs.
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4.03 DIVIDENDS
Any cash dividends received by the Trustee on Employer stock allocated
to the ESOP Contributions Accounts of Participants (or former Participants or
beneficiaries) may be retained in the Participants' applicable ESOP
Contributions Accounts, applied to the payment of an ESOP loan pursuant to
Section 9.06, or paid to such participants, former Participants or beneficiaries
(in a nondiscriminatory manner) at the sole discretion of the Company; provided
that any current payment in cash must be paid to Participants, former
Participants or beneficiaries within 90 days after the close of the Plan Year in
which the dividend is received by the Trustee. Any such payment of cash
dividends on shares of Employer stock shall be accounted for as if the
Participant or former Participant receiving such dividends was the direct owner
of such shares of Employer stock and such payment shall not be treated as a
distribution under the Plan.
4.04 ANNUAL REPORT TO PARTICIPANTS
The Plan Administrator shall notify each Participant in writing of the
financial status of his Accounts as of the last day of each Plan Year and may
provide Participants at other times with additional statements as the Plan
Administrator may in its sole discretion determine to be appropriate.
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ARTICLE V
BENEFITS TO PARTICIPANTS
5.01 UPON RETIREMENT OR DISABILITY
When a Participant retires (whether it be at Normal Retirement Date or
after Normal Retirement Date) or becomes Permanently and Totally Disabled, the
entire interest in his Accounts, including the amount of any additional credit,
as finally determined, representing his participation and contributions for the
year in which his disability or retirement occurred, shall become nonforfeitable
and his Plan participation shall cease. The Plan Administrator, in accordance
with the provisions of Section 6.01, shall then direct the Trustee to distribute
to such Participant the entire interest in his Accounts, subject to a Qualified
Election.
Late Retirement. A Participant who remains in the employment of the
Employer after his Normal Retirement Date shall continue to participate in this
Plan. No distribution shall be made to the Participant until his actual
retirement, subject to the mandatory commencement of benefit provisions of
Section 6.04.
5.02 UPON DEATH
Upon the death of a Participant, the entire interest in the Accounts of
such Participant, including the amount of any additional credit as finally
determined, representing his participation and contributions for the Plan Year
in which his death occurs, shall become nonforfeitable and the Plan
Administrator, in accordance with the provisions of Section 6.01, shall then
direct the Trustee to distribute the entire interest in his Accounts to such
Participant's designated beneficiary or beneficiaries, or, if none, as provided
in this Section 5.02. The Plan Administrator may require such proper proof of
death and such evidence of the right of any person to receive payment of the
entire interest in the Accounts of such deceased Participant as the Plan
Administrator deems desirable and the Plan Administrator's determination shall
be conclusive. Such distribution shall be made as soon as administratively
feasible following the Participant's death and in accordance with the rules and
procedures established by the Plan Administrator.
Each Participant, by written instrument delivered to the Plan
Administrator, shall have the unqualified right to designate and from time to
time change the beneficiary or beneficiaries to receive in the event of his
death the entire interest in his Accounts.
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5.03 UPON TERMINATION OF EMPLOYMENT
(a) NONFORFEITABLE INTEREST.
Prior to January 1, 2000, upon termination of a Participant's
employment for any reason other than retirement, death, or being
Permanently and Totally Disabled, the Trustee shall, in accordance with
the provisions of Section 6.01 and at the instruction of the Plan
Administrator, distribute to the Participant the entire interest then
constituting his Prior Plan Account which is always nonforfeitable, and
the nonforfeitable interest in the remaining portion of his ESOP
Contributions Account, based on his Years of Service determined in
accordance with the applicable schedule below:
YEARS OF NONFORFEITABLE
SERVICE INTEREST
------- --------
Less than 2 years 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 but less than 6 80%
6 or more 100%
Effective January 1, 2000, upon termination of a Participant's
employment for any reason other than retirement, death, or being
Permanently and Totally Disabled, the Trustee shall, in accordance with
the provisions of Section 6.01 and at the instruction of the Plan
Administrator, distribute to the Participant the entire interest then
constituting his Compensation Deferral Contributions Account, Rollover
Contributions Account, and Prior Plan Account, which are always
nonforfeitable, and the nonforfeitable interest in his ESOP
Contributions Account and Matching Contributions Account, based on his
Years of Service determined in accordance with the applicable schedule
below:
YEARS OF NONFORFEITABLE
SERVICE INTEREST
------- --------
Less than 3 years 0%
3 or more 100%
A Participant shall always be 100% vested at his Normal
Retirement Age, death, or Permanent and Total Disability.
In the event the nonforfeitable interest schedule is hereafter
amended, or the nonforfeitable interest schedule of an existing plan is
amended by the Plan, then any Participant who has completed at least
three (3) Years of Service on the later of the date the amendment is
adopted, or the date the amendment is effective may elect, in writing,
beginning on the date the Plan amendment is adopted and ending on the
latest of:
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(1) his termination of employment,
(2) the date which is 60 days after the day the Plan amendment
is adopted,
(3) the date which is 60 days after the day the Plan amendment
becomes effective, or
(4) the date which is 60 days after the day the Participant is
issued written notice of the Plan amendment by the Plan Administrator,
to have his nonforfeitable interest in his Accounts determined without
regard to such amendment by notifying the Plan Administrator.
(b) FORFEITURE.
(1) If a Participant terminates service, and the value of his
vested Accounts (i) does not exceed $5,000 ($3,500 for Plan Years
beginning prior to August 6, 1997) and (ii) has never exceeded $5,000
($3,500 for Plan Years beginning prior to August 6, 1997) at the time
of any prior distribution, the Participant will receive a distribution
of the value of the entire vested portion of his Accounts and the
nonvested portion will be treated as an immediate forfeiture. For years
after March 21, 1999 and before December 19, 2001, or such other later
date that is established by the IRS or its Commissioner for this rule,
clause (ii) shall not apply.
(2) If a Participant terminates service and elects to receive,
pursuant to Section 6.01, the vested portion of his Accounts, the
nonvested portion will be treated as an immediate forfeiture. If the
Participant receives a distribution of less than the entire vested
portion of his Accounts, the part of the nonvested portion that will be
treated as a forfeiture is the total nonvested portion multiplied by a
fraction, the numerator of which is the amount of the distribution and
the denominator of which is the total value of the vested Accounts.
(3) If a Participant receives a distribution pursuant to
Section 6.01 which is less than the value of the Participant's Account,
and resumes employment within the five consecutive Plan Years following
the Plan Year in which termination of employment occurs, the
Participant's Account will be restored to the amount on the date of
distribution only if the Participant repays to the Plan the full amount
of the distribution within five (5) years of the Participant's
reemployment date.
(4) If a Participant does not receive a distribution pursuant
to Section 6.01, no forfeiture will occur until the expiration of five
consecutive Plan Years following the Plan Year in which termination of
employment occurs during which the Participant is not re-employed.
If a Participant does not have any nonforfeitable interest in
his Accounts, he will be deemed to have received a distribution of the
entire vested portion of his Accounts in accordance with the provisions
of subparagraph (2) above without having submitted any application for
benefits to the Plan Administrator. If such Participant returns to
active service with the Employer prior to the expiration of five
consecutive Plan Years following the Plan Year in which his termination
of employment occurred, said Participant will be deemed to have paid
back the distribution and his Accounts will be restored as provided in
subparagraph (3) above.
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5.04 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 expiration of five (5)
years after it becomes payable, remains unpaid solely by reason of the inability
of the Plan 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 treated as a forfeiture pursuant to Section 5.03(b). In
the event a Participant or Beneficiary is located subsequent to his benefit
being reallocated, such benefit shall be restored.
5.05 CERTIFICATION BY PLAN ADMINISTRATOR
The Plan Administrator shall certify to the Trustee all pertinent facts
and information required to determine its proper action in connection with
retirement, disability, death and termination of employment of Participants, and
the Trustee may rely fully upon information so certified and shall be fully
protected in so doing; but in the absence of appropriate certificates as to any
such facts or pertinent related facts, the Trustee may rely and act upon other
information which it reasonably believes to be true.
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ARTICLE VI
DISTRIBUTIONS
6.01 METHOD AND MEDIUM OF PAYMENT
The distribution of a Participant's nonforfeitable interest in his
Accounts shall be made by the Trustee to such Participant or his beneficiaries
upon his retirement, disability, death or termination of employment. If the
value of the Participant's vested Accounts (i) exceeds $5,000 ($3,500 for Plan
Years beginning prior to August 6, 1997) or (ii) has ever exceeded $5,000
($3,500 for Plan Years beginning prior to August 6, 1997) at the time of any
prior distribution, the Participant or his beneficiaries may elect to receive
the full value of his Accounts, in any form of benefit and medium of payment
provided by this Section. For years after March 21, 1999 and before December 19,
2001, or such other later date that is established by the IRS or its
Commissioner for this rule, clause (ii) shall not apply. Such distribution shall
be made in one or any combination of the following methods as such Participant
or beneficiary may request subject to a Qualified Election and the requirements
of Section 6.02, and the ESOP Contributions Account distribution requirements of
Section 6.03:
(a) In one sum; or
(b) In periodic distributions.
However, if the value of the Participant's vested Accounts (i) does not
exceed $5,000 ($3,500 for Plan Years beginning prior to August 6, 1997) and (ii)
has never exceeded $5,000 ($3,500 for Plan Years beginning prior to August 6,
1997) at the time of any prior distribution, the Plan Administrator shall
require a distribution of the value of the entire vested portion of the
Participant's Accounts. For years after March 21, 1999 and before December 19,
2001, or such other later date that is established by the IRS or its
Commissioner for this rule, clause (ii) shall not apply.
6.02 COMMENCEMENT OF BENEFITS
(a) Except as otherwise provided in this Section 6.02, distribution of
the vested value of a Participant's Accounts by the method or methods selected
in accordance with this Article, shall be made or commenced by the Trustee (in
accordance with the written directions of the Committee) within sixty (60) days
after the Participant's date of termination of employment if the Participant has
accumulated at least 20 Years of Service, Normal Retirement Date, Early
Retirement Date, Late Retirement Date, Permanent and Total Disability or death.
A Participant who meets the service requirement for Early Retirement upon
termination of employment and who is entitled to receive a vested benefit will
commence to receive his vested benefit upon satisfaction of the age requirement.
(b) Each Participant who is entitled to a distribution by reason of
termination of employment prior to retirement by reason of severance, may
receive a lump sum distribution of
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the value of his Accounts following the end of the Plan Year in which such
Participant incurs a one year Break in Service.
(c) In the event that a distribution specified under Section 6.02(a) is
made before the end of the Plan Year, the most recent valuation will be used for
determining the cash out value of shares of Employer stock.
(d) In the event that the valuation of the Plan's assets cannot be
completed within the sixty (60) day period specified in Section 6.02(a), the
distribution of the vested value of a Participant's Account shall be deferred
until such time as a complete valuation will have been made which reflects the
appropriate Plan Year end.
(e) Effective January 1, 2000, distribution will be made as soon as
administratively feasible following the applicable Distribution Date and in
accordance with the rules and procedures of the Plan Administrator.
(f) If any portion of a Participant's Accounts is to be distributed
pursuant to this Section 6.02 over a period of years, such portion shall be
distributed in substantially equal installments over such number of years as
shall not exceed:
(1) A period certain not extending beyond the life expectancy
of the Participant, or
(2) A period certain not extending beyond the joint and last
survivor expectancy of the Participant and a designated beneficiary.
6.03 SPECIAL ESOP DISTRIBUTION REQUIREMENTS
This Section 6.03 shall apply to distributions of the portion of a
Participant's Account that is attributable to Qualified Employer Securities and
shall not act to eliminate any alternative form or time of distribution
otherwise available under the Plan.
(a) TIME OF DISTRIBUTION. Notwithstanding any other provision
of this Plan, other than such provisions as require the consent of the
Participant and the Participant's spouse to a distribution where the
value of his Accounts (i) exceeds $5,000 ($3,500 for Plan Years
beginning prior to August 6, 1997) and (ii) has ever exceeded $5,000
($3,500 for Plan Years beginning prior to August 6, 1997) at the time
of any prior distribution (for years after March 21, 1999 and before
December 19, 2001, or such other later date that is established by the
IRS or its Commissioner for this rule, clause (ii) shall not apply), a
Participant may elect to have the portion of his Account attributable
to Qualifying Employer Securities acquired by the Plan after December
31, 1986 distributed as follows:.
(1) If the Participant separates from service by
reason of the attainment of Normal Retirement Age, death or
Permanent and Total Disability, the distribution of such
portion of the Participant's Account will begin not later than
one year after the close of the Plan Year in which such event
occurs unless the Participant otherwise elects pursuant to
Section 6.01.
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(2) If the Participant separates from service for any
reason other than those enumerated in paragraph (1) above, and
is not re-employed by the Employer at the end of the fifth
Plan Year following the Plan Year of such separation from
service, distribution of such portion of the Participant's
Account will begin not later than one year after the close of
the fifth Plan Year following the Plan Year in which the
Participant separated from service unless the Participant
otherwise elects pursuant to Section 6.01.
(3) If the Participant separates from service for a
reason other than those described in paragraph (1) above, and
is employed by the Employer as of the last day of the fifth
Plan Year following the Plan Year of such separation from
service, distribution to the Participant, prior to any
subsequent separation from service, shall be in accordance
with Plan Section 6.01.
For purposes of determining when a distribution of Qualifying Employer
Securities will occur, the Participant's Account shall be deemed not to include
any Qualifying Employer Securities acquired with the proceeds of a loan
described in Article X until the close of the Plan Year in which such loan is
repaid in full. At that date, those Qualifying Employer Securities that had been
acquired with a loan shall be subject to the distribution rules of this Section.
(b) FORM OF DISTRIBUTION. Distributions may be made either in
whole shares of Employer stock or in cash as the Plan Administrator
shall decide, provided that any distribution in cash shall only be made
after a Participant has been offered the right to receive such
distribution in shares of Employer stock. In the event the distribution
is to be made in Employer stock, any cash balance in a Participant's
ESOP Contributions Account will be applied to acquire for distribution
the maximum number of whole shares of Employer stock at the applicable
value. Any fractional share value unexpended balance will be
distributed in cash. If the Employer stock is not available for
purchase by the Trustee, then the Trustee shall hold such balance until
Employer Stock is acquired and then make such distribution. The Trustee
will make distribution from the Trust Fund only on instructions from
the Plan Administrator.
(c) PERIOD FOR PAYMENT. Unless the Participant otherwise
elects under the provisions of Section 6.01, distributions required
under this Section 6.03 shall be made in substantially equal annual
payments over a period of:
(i) five years, or
(ii) in the case of a Participant with an Account
balance in excess of $500,000, five years plus one additional
year (but not more than five additional years) for each
$100,000 or fraction thereof by which such balance exceeds
$500,000.
The dollar amounts specified in (ii) above shall be subject to
adjustment by the Secretary of the Internal Revenue Service.
In no event shall such distribution period exceed the period
permitted in Section 401(a)(9) of the Code.
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6.04 MANDATORY COMMENCEMENT OF BENEFITS
Unless the Participant elects otherwise, distribution hereunder shall
commence not later than the sixtieth (60th) day after the end of the Plan Year
in which the later of the following events occurs:
(a) The Participant attains age sixty-five (65);
(b) The tenth (10th) anniversary of the year in which the
Participant commences participation in the Plan; or
(c) The Participant terminates his employment with the
Employer.
If the Participant's entire interest is to be distributed in other than
a lump sum, then the amount to be distributed each year must be at least an
amount equal to the quotient obtained by dividing the Participant's entire
interest by the life expectancy of the Participant or joint and last survivor
expectancy of the Participant and designated beneficiary. Life expectancy and
joint and last survivor expectancy are computed by the use of the return
multiples contained in Section 1.72-9 of the Income Tax Regulations. For
purposes of this computation, a Participant's life expectancy may be
recalculated no more frequently than annually, however, the life expectancy of a
non-spouse beneficiary may not be recalculated. If the Participant's spouse is
not the designated beneficiary, the method of distribution selected must assure
that more than 50% of the present value of the amount available for distribution
is paid within the life expectancy of the Participant.
Anything above to the contrary notwithstanding, distributions of a
Participant's benefits must commence by April 1 of the calendar year following
the calendar year in which the Participant attains age 70-1/2 in accordance with
the minimum distribution requirements of Section 401(a)(9) of the Code.
Effective for Plan Years beginning after January 1, 1997, in the case of a
Participant who is not a 5-percent owner, the required beginning date for
minimum distributions is April 1 of the calendar year following the later of the
calendar year in which the Participant attains age 70-1/2 or the calendar year
in which the Participant retires from employment with the Employer.
Additionally, for a Participant (other than a 5-percent owner) who attained age
70-1/2 in 1996, but who had not retired from employment by December 31, 1996,
the required beginning date for minimum distributions is the April 1 of the
calendar year following the calendar year in which the Participant retires from
employment with the Employer.
For purposes of this minimum distribution, the Participant may elect
prior to the date of the first required distribution not to have his life
expectancy and his spouse's life expectancy recalculated annually. Such election
shall be irrevocable once made, and shall apply for all subsequent Plan Years.
The Participant and his spouse shall have the right to separately elect as to
whether each wants his life expectancy recalculated, and the election of one
shall not affect the election of the other. In the event that either the
Participant or his spouse fails to make an election, the life expectancy of each
shall be recalculated annually.
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All distributions must meet the minimum distribution incidental benefit
requirements in Section 1.401(a)(9)-2 of the proposed regulations.
The mandatory commencement of distribution to a Participant or
beneficiary pursuant to this Section, shall not apply provided (i) that prior to
January 1, 1984, or such other date permitted by law, a Participant (including
Key Employees) who had an Account balance under this Plan as of December 31,
1983 made a written designation providing for the commencement of distributions
at a later date, and (ii) further providing for a method of distribution of the
benefit which satisfy the provisions of Code Section 401(a)(9) as in effect
prior to the enactment of the Tax Equity and Fiscal Responsibility Act of 1982
(including rules relating to incidental death benefits). Any written
designation, if made, shall be binding upon the Plan Administrator.
6.05 DISTRIBUTIONS AFTER DEATH OF A PARTICIPANT
If a Participant dies before any of his interest in the Plan has been
distributed, the Participant's interest shall be distributed in one of the
following methods:
(a) The entire interest of the Participant shall be
distributed no later than December 31 of the calendar year which
contains the fifth (5th) anniversary of the date of the Participant's
death, regardless of who is to receive the distribution.
(b) If the distribution is to be made to a designated
beneficiary, the distribution of a Participant's interest shall
commence not later than December 31 of the calendar year immediately
following the calendar year in which the Participant died, and payments
shall occur over a period not extending beyond the life expectancy of
such designated beneficiary. If distribution is to be made to the
Participant's surviving spouse, distributions must commence on or
before the later of: 1) December 31 of the calendar year immediately
following the calendar year in which the Participant died, or 2)
December 31 of the calendar year in which the Participant would have
attained age 70-1/2. Such distributions shall occur over a period not
extending beyond the life expectancy of such designated beneficiary.
A Participant or his spouse or designated beneficiary, may elect the
method of distribution described in subparagraph (b) above. Such election must
be made no later than the earlier of 1) the date which distribution would have
to occur according to the provisions of subparagraph (a) above; or 2) the date
which distribution would have to occur according to the provisions of
subparagraph (b) above. As of such date, the election is irrevocable and shall
apply for all subsequent years and any subsequent beneficiaries. If no such
election is made, distribution shall be made in accordance with subparagraph (a)
above.
If the Participant spouse dies before the distributions to such spouse
begin, the payment of the Participant's interest shall be made as if the
surviving spouse were the Participant. The Plan may not require a surviving
spouse to begin receiving benefits prior to the time the deceased Participant
would have attained Normal Retirement Age, except where the present value of the
nonforfeitable benefit does not exceed $5,000 and has never exceeded $5,000 at
the time of any prior distribution.
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If distribution of the Participant's interest has begun at the time of
such Participant's death, distribution may be made for a term certain at least
as rapidly as under the method of distribution used prior to the death of the
Participant.
6.06 INSTALLMENTS AND DEFERRED DISTRIBUTIONS
(a) Where, in accordance with the provisions of this Article, all or
any part of any distribution is to be made in installments, the Committee may
direct the Trustee to segregate and deposit cash of the Trust Fund to provide
for such installments in one or more savings accounts in banking or savings
institutions (one of which accounts may be in the Trustee's savings department).
(b) Such segregated savings accounts shall be credited with interest at
the savings account interest rates of each depository, and such interest shall
be added to the amount distributable. Such accounts shall be a segregated part
of the Trust Fund and shall be subject to all provisions of the Plan and Trust
Agreement, except that such accounts shall not be included in the valuation of
the Trust nor in the determination of the balances of Participant Accounts for
the purpose of allocation of Trust income or loss.
6.07 DISTRIBUTION OF EXCESS DEFERRALS
Notwithstanding any other provision of this Plan, Excess Deferrals and
income attributable thereto shall be distributed no later than the April 15th
following the calendar year in which the Participant claims Excess Deferrals.
The Participant's claim must be in writing; must be submitted to the Plan
Administrator no later than March 1 of the calendar year following the calendar
year of the Excess Deferrals; must specify the amount of the Participant's
Excess Deferrals for the preceding calendar year; and must be accompanied by a
written statement of the Participant that if such amounts are not distributed,
the Excess Deferrals, when added to amounts deferred under other plans or
arrangements described in Sections 401(k), 408(k) or 403(b) of the Code, exceed
the limit imposed on the Participant by Section 402(g) of the Code for the
calendar year in which the contributions were made. The Plan Administrator shall
have the authority to use such other procedures as it determines necessary or
appropriate to verify the existence and amount of Excess Deferrals, subject to
the limitation that such procedures be nondiscriminatory and consistently
applied.
The Excess Deferrals distributed to a Participant with respect to a
calendar year shall be adjusted for income and, if there is a loss allocable to
the Excess Deferrals, shall in no event be less than the lesser of the
Participant's Compensation Deferral Contributions Account under the Plan or the
Participant's Compensation Deferral Contributions for the calendar year.
For purposes of this Section 6.07, "Excess Deferrals" means the amount
of a Participant's Compensation Deferral Contributions to this Plan which the
Participant claims, pursuant to the procedure outlined above, to be in excess of
the amount allowable under Section 402(g) of the Code.
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6.08 RESTRICTIONS ON DISTRIBUTIONS OF COMPENSATION DEFERRAL CONTRIBUTIONS
Compensation Deferral Contributions may not be distributed from this
Plan prior to the earlier of:
(a) retirement, separation from service, death or disability
of the Participant;
(b) attainment of age 59-1/2 by the Participant;
(c) termination of the Plan without establishment of a
successor plan;
(d) sale of substantially all of the assets of the Employer to
an entity that is not an affiliated employer; or
(e) upon the sale of a subsidiary of the Employer to an entity
that is not an affiliated employer, only Participants who are employed
by such subsidiary may receive a distribution of their Compensation
Deferral Contributions Account.
6.09 RIGHT TO HAVE ACCOUNTS TRANSFERRED
By notice to the Plan Administrator, a Participant entitled to a
distribution shall have the right to have the nonforfeitable portion of his
Accounts transferred to another plan and trust which is qualified under Section
401(a) of the Code and is a tax-exempt trust under the provisions of Section
501(a) of the Code or to an Individual Retirement Account as provided under
Section 408 of the Code.
6.10 DIRECT PLAN TO PLAN TRANSFERS
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 Plan Administrator, to
have any portion of an eligible rollover distribution paid directly to an
eligible retirement plan specified by the distributee in a direct rollover.
(a) Eligible rollover distribution. An eligible rollover distribution
is any distribution of all or any portion of the balance to the credit of the
distributee, except that an eligible rollover distribution does not include: any
distribution that is one of a series of substantially equal periodic payments
(not less frequently than annually) made for the life (or life expectancy) of
the distributee or the joint lives (or joint life expectancies) of the
distributee and the distributee's designated beneficiary, or for a specified
period of ten years or more; any distribution to the extent such distribution is
required under Code Section 401(a)(9); and the portion of any distribution that
is not includible in gross income (determined without regard to the exclusion
for net unrealized appreciation with respect to employer securities).
(b) Eligible retirement plan. 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
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the case of an eligible rollover distribution to the surviving spouse, an
eligible retirement plan is an individual retirement account or individual
retirement annuity.
(c) Distributee. 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.
(d) Direct rollover. A direct rollover is a payment by the plan to the
eligible retirement plan specified by the distributee.
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ARTICLE VII
LIMITATION ON CONTRIBUTIONS AND BENEFITS
7.01 LIMITATION OF BENEFITS
(a) DEFINITIONS:
The following definitions shall apply for purposes of this
Section 7.01:
(1) "Annual Addition." Annual Addition means for each Plan
Year the sum of the following amounts credited to a Participant's
Accounts for the Limitation Year under all Defined Contribution Plans
maintained by the Employer:
(A) Employer contributions;
(B) Voluntary Employee Contributions;
(C) Forfeitures; and
(D) Any amounts allocated to an individual medical
account (as defined in Section 415(l)(2) of the Code) which is
part of any pension or annuity plan maintained by the Employer
are treated as Annual Additions to a Defined Contribution
Plan. 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 Section 419A(d)(3) of the Code) under a welfare
benefit fund (as defined in Section 419(e) of the Code)
maintained by the Employer are treated as Annual Additions to
a Defined Contribution Plan. These amounts are treated as
Annual Additions but are not subject to the 25% of
Compensation limit.
The Annual Addition for any Limitation Year beginning prior to
January 1, 1987 shall not be recomputed to treat all Employee
contributions as an Annual Addition.
Rollover Contributions made by the Participant pursuant to
Section 3.02 shall not be taken into account in computing Annual
Additions.
(2) "Compensation." Compensation means a Participant's earned
income, wages, salaries, fees for professional services and other
amounts received for personal services actually rendered in the course
of employment with the Employer maintaining the Plan (including, but
not limited to, commissions paid salesmen, compensation for services on
the basis of a percentage of profits, commissions on insurance
premiums, tips and bonuses), but excluding the following:
(A) Employer contributions to a plan of deferred
compensation which are not included in the Employee's gross
income for the taxable year in which contributed, Employer
contributions under a simplified employee pension plan to the
extent such
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contributions are deductible by the Employee or any
distributions from a plan of deferred compensation;
(B) Amounts realized from the exercise of a
nonqualified stock option, or when restricted stock (or
property) held by the Employee either becomes freely
transferable or is no longer subject to a substantial risk of
forfeiture;
(C) Amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock option;
and
(D) Other amounts which received special tax benefits
or contributions made by the Employer (whether or not under a
salary reduction agreement and whether or not the amounts are
actually excludable from the gross income of the Employee).
For Limitation Years beginning after December 31, 1997, for
purposes of applying the limitations of this Article, Compensation paid
or made available during such limitation year 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 Employee and which is not includible in the gross income of the
Employee by reason of Section 125 or 457.
(3) "Defined Contribution Plan." Defined Contribution Plan
means a pension plan or profit sharing plan which provides for an
individual account for each Participant and for benefits based solely
upon the amount contributed to the Participant's account and any
income, expenses, gains, losses and any forfeitures of accounts of
other Participants which may be allocated to such Participant's
account.
(4) "Limitation Year." Limitation Year means the Plan Year.
(b) LIMITATION ON ANNUAL ADDITIONS:
Any other provision of this Plan to the contrary
notwithstanding, the maximum Annual Addition allocated to the Accounts
of any Participant under the Plan and any other Defined Contribution
Plan maintained by the Employer or the Company may not exceed the
lesser of:
(1) Thirty Thousand Dollars ($30,000), as adjusted under Code
Section 415(d), or
(2) Twenty-five per cent (25%) of the Participant's
Compensation for the Limitation Year.
If, as a result of a reasonable error in estimating a Participant's
Compensation, the allocation of forfeitures, a reasonable error in determining
the amount of elective deferrals (within the meaning of Code Section 402(g)(3))
that may be made with respect to any individual under the limits of Code Section
415, or under other limited facts and circumstances as may be provided under the
Regulations to Section 415 of the Code, the Annual Addition exceeds the maximum
under this and any other defined contribution plan maintained by the Employer,
the
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Trustee shall make the adjustments by returning to the Participant his
Compensation Deferral Contributions (plus attributable earnings) for such year.
If after such reduction, the maximum Annual Addition limitation is still
exceeded, an amount attributable to the Employer's contribution for the current
Plan Year necessary to reduce the Annual Addition to the maximum Annual Addition
shall be held in a separate account, shall be utilized as a contribution of the
Employer for the next succeeding Plan Year and shall be accounted for
accordingly by the Trustee. Any such sums held in suspense shall not share in
the gains or losses of the Trust Funds.
If no more than one-third of the Employer contributions to the Plan for
a year which are deductible under paragraph (9) of Code Section 404(a) are
allocated to Highly Compensated Employees (within the meaning of Code Section
414(q)), the limitations imposed by this Section shall not apply to --
(a) forfeitures of Qualifying Employer Securities (within the
meaning of Code Section 409) if such securities were acquired with the
proceeds of a loan (as described in Code Section 404(a)(9)(A)), or
(b) Employer contributions to the Plan which are deductible
under Code Section 404(a)(9)(B) and charged against the Participant's
Account.
The amount of any qualified gratuitous transfer (as defined in Code
Section 664(g)(1)) allocated to a Participant for any limitation year shall not
exceed the limitations imposed by this Section, but such amount shall not be
taken into account in determining whether any other amount exceeds the
limitations imposed by this Section.
(c) LIMITATION OF BENEFITS UNDER ALL PLANS:
This Section applies only to Plan Years beginning prior to January 1,
2000.
Where an Employee is a Participant under the Plan and a defined benefit
plan maintained or previously maintained by the Employer, the sum of the defined
contribution fraction and the defined benefit fraction for any Limitation Year
may not exceed 1.0 as computed under the terms and conditions as set forth under
Section 415(e) of the Code.
For purposes of computing the defined contribution fraction for any
Limitation Year, the numerator shall be the sum of the Annual Additions to the
Participant's Accounts during such Limitation Year and for all prior Limitation
Years, and the denominator shall be the lesser of:
(1) the product of 1.25 multiplied by the maximum permissible
dollar amount under Section 415(c)(1)(A) of the Code for such year and
for all prior years, or
(2) the product of 1.4 multiplied by the maximum permissible
percentage of compensation contributed under Section 415(c)(1)(B) of
the Code for such year and for all prior years.
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For purposes of computing the defined benefit plan fraction
for any Limitation Year, the numerator shall be the Participant's
projected annual benefit under the defined benefit plan as of the end
of the Limitation Year and the denominator shall be the lesser of:
(1) the product of 1.25 multiplied by the maximum permissible
dollar amount of benefit in effect under Section 415(b)(1)(A) of the
Code for such year, or;
(2) the product of 1.4 multiplied by the maximum permissible
percentage of compensation limitation of the amount of benefit in
effect under Section 415(b)(1)(B) of the Code for such year.
If the Defined Contribution Plans and the Defined Benefit
Plans in which an Employee is a Participant satisfy the requirements of
Section 415 of the Code in effect for all Limitation Years beginning
prior to January 1, 1987, where necessary, an amount shall be
subtracted from the numerator of the defined contribution fraction (not
to exceed such numerator) as prescribed by the Secretary of the
Treasury so that the sum of the defined benefit plan fraction and the
defined contribution fraction computed under Section 415(e)(1) of the
Code does not exceed 1.0 for such Limitation Year.
7.02 DEFINITIONS
(a) The following definitions shall apply for purposes of Sections
7.03, 7.04, and 7.05:
(1) Actual Contribution Percentage. "Actual Contribution
Percentage" means the average (expressed as a percentage) of the Actual
Contribution Ratios of either the Highly Compensated Employee or
Non-Highly Compensated Employee group.
(2) Actual Contribution Ratio. "Actual Contribution Ratio"
means the ratio (expressed as a percentage) of the Participant's
Employee Contributions and Employer Matching Contributions to the Plan
for the Plan Year (and any other plan which is aggregated with the Plan
for purposes of meeting the nondiscrimination requirements of Section
401(m) of the Code) to the Participant's Compensation for the Plan
Year. The Actual Contribution Ratio of a Participant who is eligible,
but neither makes Employee Contributions nor receives Employer Matching
Contributions is zero.
(3) Actual Deferral Percentage. "Actual Deferral Percentage"
means the average (expressed as a percentage) of the Actual Deferral
Ratios of either the Highly Compensated Employee or Non-Highly
Compensated Employee group.
(4) Actual Deferral Ratio. "Actual Deferral Ratio" means the
ratio (expressed as a percentage) of the Participant's Elective
Deferrals for the Plan Year to the Participant's Compensation for the
Plan Year. At the option of the Plan Administrator, Qualified Matching
Contributions and/or Qualified Nonelective Contributions may be
included for purposes of determining each Participant's Actual Deferral
Ratio. The Actual Deferral Ratio of a Participant who is eligible, but
has no Elective Deferrals, Qualified Employer Matching Contributions or
Qualified Nonelective Contributions is zero.
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(5) Compensation. "Compensation" means Annual Compensation as
defined in Plan Section 1.03.
(6) Elective Deferrals. "Elective Deferrals" means any
Employer contributions made to the Plan at the election of the
Participant, in lieu of cash compensation, and shall include
contributions made pursuant to a salary reduction agreement or other
deferral mechanism. With respect to any taxable year, a Participant's
Elective Deferrals is the sum of all Employer contributions made on
behalf of such Participant pursuant to an election to defer under any
qualified cash or deferred arrangement as described in Code Section
401(k), any salary reduction simplified employee pension as described
in Code Section 408(k)(6), any eligible deferred compensation plan
under Code Section 457, any plan as described under Code Section
501(c)(18), and any Employer contributions made on the behalf of a
Participant for the purchase of an annuity contract under Code Section
403(b) pursuant to a salary reduction arrangement. Elective Deferrals
shall not include any deferrals properly distributed as excess annual
additions.
(7) Employee Contributions. "Employee Contributions" means any
contributions to the Plan (and any other plan which is aggregated with
the Plan for purposes of meeting the nondiscrimination requirements of
Section 401(m) of the Code) that are designated or treated as after-tax
Employee contributions and are allocated to a separate account to which
attributable earnings and losses are allocated.
(8) Excess Contributions. "Excess Contributions" means, with
respect to any Plan Year, the excess of (i) the aggregate amount of
Employer contributions actually taken into account in computing the
Actual Deferral Percentage of Highly Compensated Employees for such
Plan Year, over (ii) the maximum amount of such contributions permitted
under the limits determined in accordance with Section 7.03.
(9) Excess Aggregate Contributions. "Excess Aggregate
Contributions" means the excess of: 1) the Employee Contributions and
Matching Contributions and Elective Deferrals and Qualified Nonelective
Contributions treated as Matching Contributions actually made by or on
behalf of a Highly Compensated Employee or Family Group for such Plan
Year, over; 2) the maximum amount of such contributions permitted under
the limits determined in accordance with Section 7.04.
(10) Highly Compensated Employee. "Highly Compensated
Employee" means an Employee who: (1) was a 5-percent owner at any time
during the year or the preceding year, or (2) for the preceding year
had Compensation from the Employer in excess of $80,000. The $80,000
amount is adjusted at the same time and in the same manner as under
Section 415(d), except that the base period is the calendar quarter
ending September 30, 1996.
For this purpose the applicable year of the Plan for
which a determination is being made is called a determination
year.
A Highly Compensated Former Employee is based on the
rules applicable to determining highly compensated employee
status as in effect for that determination year, in
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accordance with Section 1.414(q)-1T, A-4 of the temporary
Income Tax Regulations and Notice 97-75.
In determining whether an Employee is a Highly
Compensated Employee for years beginning in 1997, the
amendments to Section 414(q) stated above are treated as
having been in effect for years beginning in 1996.
In determining who is a Highly Compensated Employee
(other than as a 5-percent owner) the Employer makes a
calendar data election. The effect of this election is that
the look-back year is the calendar year beginning with or
within the look-back year.
(11) Matching Contributions. "Matching Contributions" means an
Employer contribution made to this or any other defined contribution
plan on behalf of a Participant on account of an Employee Contribution
made by such Participant, or on account of a Participant's Elective
Deferral, under a plan maintained by the Employer. A contribution made
by the Employer in order to meet the Top Heavy minimum contribution
requirements of Article VIII may not be treated as a Matching
Contribution.
(12) Non-Highly Compensated Employee. "Non-Highly Compensated
Employee" means any Employee who is not a Highly Compensated Employee.
(13) Qualified Matching Contributions. "Qualified Matching
Contributions" means Matching Contributions that are fully vested at
the time of contribution and are subject to the withdrawal restrictions
of Code Section 401(k)(2)(B).
(14) Qualified Nonelective Contributions. "Qualified
Nonelective Contributions" means Employer contributions, other than
Elective Deferrals, Qualified Matching Contributions, and Matching
Contributions, that are fully vested at the time of contribution and
are subject to the withdrawal restrictions of Code Section
401(k)(2)(B).
7.03 NONDISCRIMINATION REQUIREMENTS FOR COMPENSATION DEFERRAL CONTRIBUTIONS
(a) ACTUAL DEFERRAL PERCENTAGE TEST. In no event shall the Actual
Deferral Percentage of Participants who are Highly Compensated Employees exceed
the Actual Deferral Percentage of the Participants who are Non-Highly
Compensated Employees by more than the greater of:
(1) 125% of the Actual Deferral Percentage for Participants
who are Non-Highly Compensated Employees, or
(2) The lesser of 200% of the Actual Deferral Percentage for
Participants who are Non-Highly Compensated Employees or 2 percentage
points higher than the Actual Deferral Percentage for Participants who
are Non-Highly Compensated Employees.
For purposes of this Section, the Actual Deferral Percentage
for both the Highly Compensated Employee group and Non-Highly
Compensated Employee group shall be based on prior year data. Any
change from the prior year testing method to the current year testing
method
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34
shall be made pursuant to Internal Revenue Service Notice 98-1, Section VII (or
superseding guidance), the provisions of which are incorporated herein by
reference.
(b) EXCESS CONTRIBUTIONS. Notwithstanding any other provision of the
Plan, Excess Contributions, plus any income and minus any loss allocable
thereto, shall be distributed no later than the last day of each Plan Year to
Participants to whose Accounts such Excess Contributions were allocated for the
preceding Plan Year. Excess Contributions are allocated to the Highly
Compensated Employees with the largest amounts of Employer contributions taken
into account in calculating the Actual Deferral Percentage for the year in which
the excess arose, beginning with the Highly Compensated Employee(s) with the
largest amount of such Employer contributions and continuing in descending order
until all the Excess Contributions have been allocated. For purposes of the
preceding sentence, the "largest amount" is determined after distribution of any
Excess Contributions. If such excess amounts are distributed more than 2-1/2
months after the last day of the Plan Year in which such excess amount arose, a
ten percent (10%) excise tax will be imposed on the Employer maintaining the
Plan with respect to such amounts.
Income or loss attributable to Excess Contributions allocated
to each Participant shall be determined in the same proportion that the
amount of the Participant's Elective Deferrals distributed bears to the
balance of his appropriate Account.
The distribution of Excess Contributions and income may be
made without the consent of the Participant or his spouse, and shall be
considered as income to the Participant for purposes of Section 61 of
the Code.
(c) SPECIAL RULES.
(1) In the event that the Plan satisfies the requirements of
Sections 401(k), 401(a)(4) and 410(b) of the Code only if aggregated
with one or more other plans, or if one or more other plans satisfy the
requirements of such Sections of the Code only if aggregated with the
Plan, then this Section 7.03 shall be applied by determining the Actual
Deferral Ratios of all eligible Participants as if all such plans were
a single plan. Plans may be aggregated under this paragraph (c)(1) only
if they have the same Plan Year. Notwithstanding the above, for Plan
Years beginning on and after January 1, 1997, if two or more plans
which include cash or deferred arrangements are permissively aggregated
under Regulation 1.410(b)-7(d), all plans permissively aggregated must
use either the prior year testing method or the current year testing
method for the testing year.
(2) For purposes of this Section 7.03, the Actual Deferral
Ratio for any Participant who is a Highly Compensated Employee for the
Plan Year and who is eligible for Elective Deferrals under two or more
plans described in Section 401(a) of the Code or arrangements described
in Section 401(k) of the Code that are maintained by the Company or the
Employer shall be determined as if all such contributions were made
under a single plan. If a Highly Compensated Employee participates in
two or more cash or deferred arrangements that have different Plan
Years, all cash or deferred arrangements ending with or within the same
calendar year shall be treated as a single arrangement. Notwithstanding
the foregoing, certain
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35
plans shall be treated as separate if mandatorily disaggregated under
regulations under Section 401(k) of the Code.
7.04 NONDISCRIMINATION REQUIREMENTS FOR MATCHING CONTRIBUTIONS
(a) ACTUAL CONTRIBUTION PERCENTAGE TEST. In no event shall the Actual
Contribution Percentage of Participants who are Highly Compensated Employees
exceed the Actual Contribution Percentage of the Participants who are Non-Highly
Compensated Employees by more than the greater of:
(1) 125% of the Actual Contribution Percentage for
Participants who are Non-Highly Compensated Employees, or
(2) The lesser of 200% of the Actual Contribution Percentage
for Participants who are Non-Highly Compensated Employees or 2
percentage points higher than the Actual Contribution Percentage for
Participants who are Non-Highly Compensated Employees.
For purposes of this Section, the Actual Contribution Percentage for
both the Highly Compensated Employee group and the Non-Highly Compensated
Employee group shall be based on prior year data. Any change from the prior year
testing method to the current year testing method shall be made pursuant to
Internal Revenue Service Notice 98-1, Section VII (or superseding guidance), the
provisions of which are incorporated herein by reference.
(b) EXCESS AGGREGATE CONTRIBUTIONS. Notwithstanding any other provision
of the Plan, Excess Contributions, plus any income and minus any loss allocable
thereto, shall be distributed no later than the last day of each Plan Year to
Participants to whose Accounts such Excess Aggregate Contributions were
allocated for the preceding Plan Year. Excess Contributions are allocated to the
Highly Compensated Employees with the largest amounts of Employer contributions
taken into account in calculating the Actual Contribution Percentage for the
year in which the excess arose, beginning with the Highly Compensated
Employee(s) with the largest amount of such Employer contributions and
continuing in descending order until all the Excess Aggregate Contributions have
been allocated. For purposes of the preceding sentence, the "largest amount" is
determined after distribution of any Excess Aggregate Contributions. If such
excess amounts are distributed more than 2-1/2 months after the last day of the
Plan Year in which such excess amount arose, a ten percent (10%) excise tax will
be imposed on the Employer maintaining the Plan with respect to such amounts.
Income or loss attributable to Excess Aggregate Contributions allocated
to each Participant shall be determined in the same proportion that the amount
of the Participant's Employee Contributions or Matching Contributions
distributed bears to the balance of his appropriate Account.
The distribution of Excess Aggregate Contributions and income may be
made without the consent of the Participant or his spouse, and shall be
considered as income to the Participant, except to the extent of Employee
Contributions distributed, for purposes of Section 61 of the Code.
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(c) SPECIAL RULES.
(1) In the event that the Plan satisfies the requirements of
Sections 401(m), 401(a)(4) and 410(b) of the Code only if aggregated
with one or more other plans, or if one or more other plans satisfy the
requirements of such Sections of the Code only if aggregated with the
Plan, then this Section 7.04 shall be applied by determining the Actual
Contribution Ratios of all eligible Participants as if all such plans
were a single plan. Plans may be aggregated under this paragraph (c)(1)
only if they have the same Plan Year. Notwithstanding the above, for
Plan Years beginning on and after January 1, 1997, if two or more plans
which include cash or deferred arrangements are permissively aggregated
under Regulation 1.410(b)-7(d), all plans permissively aggregated must
use either the prior year testing method or the current year testing
method for the testing year.
(2) For purposes of this Section 7.03, the Actual Contribution
Ratio for any Participant who is a Highly Compensated Employee for the
Plan Year and who is eligible for Elective Deferrals under two or more
plans described in Section 401(a) of the Code or arrangements described
in Section 401(k) of the Code that are maintained by the Company or the
Employer shall be determined as if all such contributions were made
under a single plan. If a Highly Compensated Employee participates in
two or more cash or deferred arrangements that have different Plan
Years, all cash or deferred arrangements ending with or within the same
calendar year shall be treated as a single arrangement. Notwithstanding
the foregoing, certain plans shall be treated as separate if
mandatorily disaggregated under regulations under Section 401(k) of the
Code.
7.05 MULTIPLE USE OF THE ALTERNATIVE TEST
(a) DEFINITIONS
(1) Multiple use of the Alternative Test means that the
conditions described in Plan Section 7.05(b) exist.
(2) The Alternative Test means the nondiscrimination
limitations of Code Sections 401(k)(3)(A)(ii)(II) and 401(m)(2)(A)(ii)
as provided in Plan Sections 7.03(a)(2) and 7.04(a)(2).
(b) MULTIPLE USE OF THE ALTERNATIVE TEST
(1) Multiple use of the Alternative Test exists if all of the
conditions of this paragraph are satisfied:
(a) One or more Highly Compensated Employees of the
Employer are eligible employees in both a cash or deferred
arrangement subject to Section 401(k) and a plan maintained by
the Employer subject to Section 401(m).
(b) The sum of the Actual Deferral Percentage of the
entire group of eligible Highly Compensated Employees under
the arrangement subject to Section 401(k) and the
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37
Actual Contribution Percentage of the entire group of eligible
Highly Compensated Employees under the Plan subject to Section
401(m) exceeds the aggregate limit of paragraph 7.05(b)(2).
(c) The Actual Deferral Percentage of the entire
group of eligible Highly Compensated Employees under the
arrangement subject to Section 401(k) of the Code exceeds the
amount described in Section 401(k)(3)(A)(ii)(I) of the Code.
(d) The Actual Contribution Percentage of the entire
group of eligible Highly Compensated Employees under the
arrangement subject to Section 401(m) of the Code exceeds the
amount described in Section 401(m)(2)(A)(i) of the Code.
(2) For purposes of this Section, the aggregate limit is the
greater of:
(a) The sum of:
(i) 1.25 times the greater of the relevant
Actual Deferral Percentage or the relevant Actual
Contribution Percentage, and
(ii) Two percentage points plus the lesser
of the relevant Actual Deferral Percentage or the
relevant Actual Contribution Percentage. In no event,
however, may this amount exceed twice the lesser of
the relevant Actual Deferral Percentage or the
relevant Actual Contribution Percentage; or
(b) The sum of:
(i) 1.25 times the lesser of the relevant
Actual Deferral Percentage or the relevant Actual
Contribution Percentage, and
(ii) Two percentage points plus the greater
of the relevant Actual Deferral Percentage or the
relevant Actual Contribution Percentage. In no event,
however, may this amount exceed twice the greater of
the relevant Actual Deferral Percentage or the
relevant Actual Contribution Percentage.
(c) CORRECTION OF MULTIPLE USE
(1) If multiple use of the alternative limitation occurs with
respect to two or more plans or arrangements maintained by an Employer,
it must be corrected by reducing the Actual Deferral Percentage or
Actual Contribution Percentage of Highly Compensated Employees in the
manner described in Plan Section 7.05(c)(2). Alternatively, at the
Employer's option, the Employer may eliminate the multiple use of the
alternative limitation by making Qualified Nonelective Contributions.
The Actual Deferral Percentages and Actual Contribution Percentages of
the Highly Compensated Employees are determined after any corrections
required to meet the Actual Deferral Percentage Test and Actual
Contribution Percentage Test and are deemed to be the maximum permitted
under such tests for the Plan Year.
(2) The Employer may elect to reduce either the Actual
Deferral Ratios or the Actual Contribution Ratios of the Highly
Compensated Employees affected.
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(3) The amount of the reduction of the Actual Deferral
Percentage of the entire group of Highly Compensated Employees eligible
in the arrangement subject to Code Section 401(k) is calculated in the
manner described in Plan Section 7.03(b) or the amount of the reduction
of the Actual Contribution Percentage of the entire group of Highly
Compensated Employees eligible in the plan subject to Code Section
401(m) is calculated in the manner described in Plan Section 7.04(b),
so that there is no multiple use of the alternative limitation. The
Employer may elect to reduce the Actual Deferral Ratios or the Actual
Contribution Ratios, as designated in the plan, either for all Highly
Compensated Employees under the plan or arrangements subject to
reduction or for only those Highly Compensated Employees who are
eligible in both the plan subject to Code Section 401(k) and the plan
subject to Code Section 401(m).
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ARTICLE VIII
TOP HEAVY PROVISIONS
8.01 DEFINITIONS
The following definitions shall apply for purposes of this Article
VIII:
(a) "Aggregation Group." Aggregation Group means a group of
Plans including:
(1) Each plan of the Employer in which a Key Employee
is a Participant; and
(2) Each other Plan of the Employer which enables the
Plan described in (a) above to meet the nondiscrimination
requirements of Code Section 401(a)(4) or the minimum
participation requirements of Code Section 410; and
(3) At the option of the Employer, any other Plan
maintained by the Employer as long as the expanded Aggregation
Group including such plan or plans continues to satisfy the
coverage rules of Section 410 and the anti-discrimination
rules of Section 401(a)(4) of the Code.
(b) "Determination Date." Determination Date shall mean the
last day of the Plan Year preceding the Plan Year which is being tested
for Top Heavy status. In the first Plan Year, the Determination Date
shall mean the last day of the Plan Year which is being tested for Top
Heavy status.
(c) "Key Employee." Key Employee means any Employee, former
Employee, or beneficiary of such Employees, who at any time during the
Plan Year or the four (4) preceding Plan Years is:
(1) An officer of the Employer having Annual
Compensation from the Employer greater than 50% of the Section
415(b)(1)(A) dollar limit,
(2) One of 10 employees having Annual Compensation
from the Employer of more than the limitation in effect under
Section 415(c)(1)(A) of the Code, and owning (or considered as
owning within the meaning of Section 318 of the Code) the
largest interests in the Employer. However if two Employees
have the same ownership interest in the Employer, the Employee
having the greater Annual Compensation shall be treated as
having the larger interest,
(3) A 5% owner of the Employer, or
(4) A 1% owner of the Employer having an Annual
Compensation from the Employer of more than $150,000.
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40
For purposes of determining the top 10 owners, 5% owners, or
1% owners, ownership is determined without regard to the aggregation
rules of Sections 414(b), (c), and (m) of the Code.
For purposes of determining Key Employees, no more than 50
Employees (or, if lesser, the greater of 3 or 10 percent of the
Employees) shall be treated as officers and for purposes of determining
the number of officers taken into account, Employees described in
Section 414(q)(8) shall be excluded.
(d) "Non-Key Employee." Non-Key Employee means any Employee
who is not a Key Employee. Non-Key Employees include Employees who are
former Key Employees.
(e) "Valuation Date." Valuation Date means
(1) the last day of the Plan Year.
8.02 DETERMINATION OF TOP HEAVY STATUS
The plan will be considered Top Heavy if, as of the Determination Date,
the present value of cumulative accrued benefits under the Plan for Key
Employees exceeds 60% of the present value of the cumulative accrued benefits
under the Plan for all Employees. In determining the ratio of accrued benefits
for Key Employees to all other Employees, the Plan Administrator shall use the
procedure as outlined in Section 416(g) of the Code which is incorporated herein
by reference. For this purpose, all Employer contributions, and forfeitures
shall be taken into account in determining the contribution percentage made on
behalf of any Key Employee. In determining whether the Plan is considered Top
Heavy, all plans within the Aggregation Group will be utilized for the
calculation.
Solely for the purpose of determining if the Plan, or any other plan
included in the Aggregation Group, is Top Heavy the accrued benefit of an
Employee other than a Key Employee shall be determined under:
(a) The method, if any, that uniformly applies for accrual
purposes under all plans maintained by the Employer or the Company, or
(b) If there is no such method, as if such benefit accrued not
more rapidly than the slowest accrual rate permitted under the
fractional accrual rate of Section 411(b)(1)(C) of the Code.
The present value of cumulative accrued benefits of a Participant who
has not been credited with an Hour of Service for the Employer maintaining the
Plan during the five (5) year period ending on the Determination Date will be
disregarded for purposes of this Article VIII.
8.03 COMBINATION OF DEFINED BENEFIT AND DEFINED CONTRIBUTION PLAN
In the event the Plan is deemed to be Top Heavy, the defined benefit
and defined contribution fraction set forth in Section 7.01(c) will be
calculated by substituting 1.0 for 1.25. If
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41
a non-Key Employee participates in this Plan and a defined benefit plan which
are both Top Heavy, the minimum contribution requirement for this Plan and the
minimum benefit requirement for the defined benefit plan, pursuant to Section
416 of the Code, will be satisfied if such Participant is provided with a
contribution to the Plan equal to 5% of Annual Compensation.
8.04 MINIMUM CONTRIBUTION
In the event that the Plan in aggregation with any other Defined
Contribution Plans of the Employer is determined to be Top Heavy, the
Participants who are non-Key Employees will be eligible for a minimum
contribution for such Plan Year. This minimum contribution, which shall be
allocated to the Accounts of Participants who are non-Key Employees, will be
contributed to this Plan in an amount equal to 3% of Annual Compensation or if
less, the largest contribution percentage of Annual Compensation provided on
behalf of any Key Employee. The minimum contribution required by this Section
8.04 shall be made on behalf of such Participants who are employed as of the
last day of the Plan Year regardless of the number of Hours of Service credited
to each Participant for such Plan Year and regardless of such Participant's
level of Annual Compensation. In the event the highest rate allocated to a Key
Employee for a year in which the Plan is Top Heavy is less than 3%, amounts
contributed as a result of a salary reduction agreement shall be included in
determining contributions made on behalf of Key Employees. If this minimum
contribution is provided by another Defined Contribution Plan of the Employer,
then this Section 8.04 will not apply to this Plan. If part of this minimum
contribution is provided by another Defined Contribution Plan of the Employer,
then the balance of the minimum contribution shall be provided by this Plan. For
purposes of this Section 8.04, "Annual Compensation" means compensation as
defined in Section 7.01(a)(2).
8.05 MINIMUM VESTING
Prior to January 1, 2000, in the event the Plan is determined to be Top
Heavy, each Participant shall have a nonforfeitable interest in his Accounts at
least equal to the following schedule:
YEARS OF NONFORFEITABLE
SERVICE INTEREST
------- --------
Less than 2 years 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 but less than 6 80%
6 or more 100%
Normal Retirement Age 100%
On and after January 1, 2000, in the event the Plan is determined to be Top
Heavy, each Participant shall have a nonforfeitable interest in his Accounts at
least equal to the following schedule:
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YEARS OF NONFORFEITABLE
SERVICE INTEREST
------- --------
Less than 3 years 0%
3 or more 100%
Normal Retirement Age 100%
Irrespective of this provision, the above schedule shall not apply where the
nonforfeitable interest in the Participant's Accounts under Section 5.03 would
be greater.
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ARTICLE IX
SPECIAL ESOP REQUIREMENTS
9.01 VOTING EMPLOYER STOCK
All Employer stock in the ESOP Contributions Account of each
Participant shall be voted by the Trustee in accordance with instructions
received from the Plan Administrator. The Trustee shall not exercise its power
to vote any Employer stock for which it has not received instructions.
Each Participant shall be entitled to direct the Plan as to the manner
in which voting rights of Employer securities which are allocated to the ESOP
Contributions Accounts of such Participant are to be exercised with respect to a
corporate matter which (by law or charter) involves the voting of such stock
with respect to the approval or disapproval of any corporate merger or
consolidation, recapitalization, reclassification, liquidation, dissolution,
sale of substantially all assets of a trade or business, or any similar
transaction prescribed in regulations.
9.02 APPRAISAL OF EMPLOYER STOCK
If the Employer stock is not readily tradable on an established
securities exchange, annually, as of the last day of the Plan Year, the Employer
shall have made an appraisal of the Employer stock by a person who customarily
makes such appraisals and who is independent of the Plan or the Employer.
The Employer, in its sole discretion or if necessary to comply with
legal requirements, may have other interim valuations performed. For all
purposes, except with regard to a transaction between the Plan and a
party-in-interest or if otherwise required by law, the most recent valuation
shall be used.
For all transactions between the Plan and a party-in-interest as that
term is defined in section 3(14) of ERISA, the value of the Employer stock must
be determined as of the date of the transaction. In the event of such
transaction, an independent appraisal of the Employer stock as of the date of
the transaction shall be made by a person who customarily makes such appraisals
and who is independent of the Plan or the Employer.
Any appraisals made shall be performed in a manner which will meet all
ERISA and Code requirements.
9.03 DIVERSIFICATION OF INVESTMENTS
(a) DEFINITIONS.
(1) "Qualified Participant" means a Participant who has
attained age fifty-five (55) and who has completed at least ten (10)
years of participation in the Plan.
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(2) "Qualified Election Period" means the six (6) Plan Year
period beginning with the later of: a) the Plan Year in which the
Participant first becomes a Qualified Participant, or b) the first Plan
Year beginning after December 31, 1986.
(b) ELECTION BY QUALIFIED PARTICIPANTS. Each Qualified Participant may
elect as provided at Section 9.03(d) with respect to twenty-five percent (25%)
of the value of the Participant's Account attributable to Employer Stock which
was acquired by the Plan after December 31, 1986, within 90 days after the last
day of each Plan Year during the Participant's Qualified Election Period. Within
90 days after the close of the last Plan Year in the Participant's Qualified
Election Period, a Qualified Participant may direct the Plan as to the
investment of fifty percent (50%) of the value of his Account.
(c) METHOD OF DIRECTING INVESTMENT. The Participant's direction shall
be provided to the Plan Administrator in writing; shall be effective no later
than 90 days after the close of the Plan Year to which the direction applies;
and shall specify which, if any, of the options set forth in subsection (d)
below the Participant selects.
(d) INVESTMENT OPTIONS.
(1) At the election of the Qualified Participant, the Plan
shall distribute (notwithstanding Section 409(d) of the Code) the
portion of the Participant's ESOP Contributions Account that is covered
by the election within 90 days after the last day of the period during
which the election can be made. Such distribution shall be subject to
such requirements of the Plan concerning put options as would otherwise
apply to a distribution of Qualifying Employer Securities from the
Plan. This Section 9.03(d)(1) shall apply notwithstanding any other
provision of the Plan other than such provisions as require the consent
of the Participant to a distribution where the value of his Account (i)
exceeds $5,000 ($3,500 for Plan Years beginning prior to August 6,
1997) or (ii) has ever exceeded $5,000 ($3,500 for Plan Years beginning
prior to August 6, 1997) at the time any prior distribution. For Years
after March 21, 1999 and before December 19, 2001, or such other date
that is established by the IRS or its Commissioner for this rule,
clause (ii) shall not apply. If the Participant does not consent, such
amount shall be retained in this Plan.
(2) In lieu of distribution under Section 9.03(d)(1), the
Qualified Participant who has the right to receive a cash distribution
under Section 9.03(d)(1) may direct the Plan to invest the portion of
the Participant's ESOP Contributions Account that is covered by the
election in any of the investment options offered by this Plan for
investment of Deferral Contributions, provided that such investments do
not include Qualifying Employer Securities to a substantial degree.
Such transfer shall be made no later than ninety (90) days after the
last day of the period during which the election can be made.
9.04 RIGHT OF FIRST REFUSAL
For any period during which Employer stock is not publicly traded,
distribution of any portion of a Participant's ESOP Contributions Account in the
form of Employer stock may, as determined by the Company, be subject to a "right
of first refusal", until such time as such shares
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are publicly traded. Such a "right" shall provided that prior to any subsequent
transfer, the shares must first be offered by written offer to the Company, and
then, if refused by the Company, to the Trust. The selling price and other terms
under the right must be no less favorable to the seller than the greater of the
fair market value of the shares of Employer stock or the price and other terms
offered by a prospective bona fide purchaser making a good faith offer in
writing. The Company may exercise the right of first refusal at any time during
a period not exceeding fourteen (14) days after receipt of the written offer. In
the event the Company does not accept such offer, the Trustee, at the direction
of the Plan Administrator, may accept such offer at any time during said
fourteen (14) days period. As used in this Section, unless otherwise required by
the Code or applicable law, the term "transfer" shall include all transfers
whether by sale, by gift, as a result of death or otherwise.
9.05 REDEMPTION OF EMPLOYER STOCK - PUT OPTION
For any period during which Employer stock is not publicly traded, with
regard to any Employer stock distributed to a Participant from his ESOP
Contributions Account, the Participant or his beneficiary, donee or heir shall
have the option to require the Employer to redeem the stock within fifteen (15)
months of the date of distribution. The shares of stock shall be redeemed at the
value established as of the last day of the Plan Year prior to the exercise of
the option. Payment by the Employer may be in a lump sum or in installments.
The Employer, or the Plan if the Plan so elects, shall repurchase the
Qualifying Employer Securities as follows:
(a) If the distribution constitutes a Total Distribution,
payment of the fair market value of a Participant's ESOP Contributions
Account shall be made in five substantially equal annual payments. The
first installment shall be paid not later than 30 days after the
Participant exercises the put option. The Plan will pay a reasonable
rate of interest and provide adequate security on amounts not paid
within 30 days.
(b) If the distribution does not constitute a Total
Distribution, the Participant shall be paid an amount equal to the fair
market value of the Qualifying Employer Securities repurchased no later
than 30 days after the Participant exercises the put option.
For purposes of this Section 9.05, "Total Distribution" means a
distribution to a Participant or a Participant's beneficiary of the entire ESOP
Contributions Account within one tax year of the recipient.
The Plan shall not be obligated to, but may elect to assume the rights
and obligations of the Employer with regard to the exercise of the option. The
Employer shall notify the Plan within five days of its receipt of notice of the
exercise of an option under this Section 9.05. The Plan then shall have a
reasonable time, not to exceed fifteen (15) days, of its intention to assume the
rights and obligations of the Employer with regard to the option.
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The option provided for in this Section 9.05 shall not be restricted by
any loan to the Plan or to the Employer or by any other arrangement, including
the terms of the Employer's Articles of Incorporation, unless required by
applicable state law.
9.06 DIVIDENDS
(a) The Company may direct that dividends paid with respect to
Qualifying Employer Securities acquired with an ESOP loan described in Code
Section 404(a)(9) be used to make payments on the loan used to acquire the
Employer securities.
(b) If the Company elects to deduct pursuant to Code Section 404(k) the
dividends used as described in Plan Section 9.06(a), Employer securities with a
fair market value of not less than the amount of such dividend shall be
allocated to such Participant for the year in which such dividend would have
been allocated to such Participant's Account. Such Employer securities used to
replace dividend value shall be taken from those securities released from the
suspense account pursuant to Plan Section 10.02(d).
9.07 NONTERMINABLE RIGHTS
The provisions of this Section IX shall continue to be applicable to
shares of Employer stock even if the Plan ceases to be an ESOP within the
meaning of Section 4975(e)(7) of the Code.
9.08 VALUATION OF THE FUND
The assets of the Fund shall be valued at fair market value as of the
end of each Plan Year and at such other time as the Plan Administrator may
direct. The Accounts of each Participant shall then be adjusted by apportioning
the Fund, including income, as thus revalued, among Participants' Accounts in
proportion to the value of their respective interests in the Fund immediately
preceding such revaluation. In making such valuation of the Fund, the Trustee
may rely upon the annual appraisal of the Employer stock prepared pursuant to
Section 9.02.
9.09 ADDITIONAL REQUIREMENTS
(a) The Plan shall not be obligated to acquire Employer stock from a
particular security holder at any indefinite time determined upon the happening
of an event such as the death of the holder.
(b) An exempt loan shall not be used to purchase key man life
insurance.
(c) If Company stock acquired with the proceeds of an exempt loan
available for distribution consists of more than one class, a distributee must
receive substantially the same proportion of each such class.
(d) Assets attributable to Qualifying Employer Securities acquired by
the Plan in a sale to which section 1042 applies (section 1042 securities)
cannot accrue for the benefit of the
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persons specified in section 409(n). Also, the section 1042 securities acquired
by the Plan cannot be allocated directly or indirectly under any qualified plan
of the Employer.
Allocations of section 1042 securities cannot be made during the
nonallocation period to any taxpayer who makes a section 1042 election, or to
anyone who is related to the taxpayer within the meaning of section 267(b),
unless the lineal descendant exception applies. This exception provides that an
allocation of section 1042 shares to a relative of the taxpayer who made the
section 1042 election is not prohibited if he or she is a lineal descendant of
the taxpayer, and the amount allocated to all such lineal descendants during the
nonallocation period does not exceed five percent of the Qualifying Employer
Securities held by the Plan attributable to a sale under section 1042 by a
person related to such descendants (within the meaning of section 267(c)(4)).
The nonallocation period is the period beginning when the securities
are sold to the Plan pursuant to section 1042, and ends on the later of 1) 10
years after the date of sale, or 2) if the Plan borrowed money to purchase the
section 1042 securities, the date this indebtedness is repaid.
Allocations of section 1042 securities also cannot be made, at any
time, to a person who owns, after the application of section 318(a), more than
25 percent of 1) any class of outstanding stock of the corporation which issued
the Qualifying Employer Securities or of any corporation which is a member of
the same controlled group, or 2) the total value of any class of outstanding
stock of such a corporation. Section 318(a) is applied to the "25 percent
ownership of any class of stock" test without regard to the employee trust
exception in 318(a)(2)(B)(i).
A person is not treated as a 25 percent shareholder if he or she fails
the limitation at any time in the one-year period ending on the date of the sale
to the Plan, or the date the securities are allocated to participants in the
Plan.
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ARTICLE X
EXEMPT LOAN
10.01 DEFINITION OF EXEMPT LOAN
An Exempt Loan is a direct loan of cash, a purchase money transaction,
an assumption of the obligation of the Plan, or a guarantee of the obligation of
the Plan assumed in conjunction with one of the above between the Plan and a
disqualifying person as defined in Code Section 4975(e)(2).
10.02 REQUIREMENTS FOR AN EXEMPT LOAN
Any Exempt Loan entered into by the Plan shall meet the following
requirements:
(a) The loan shall primarily be for the benefit of
Participants. The rate of interest shall be reasonable and the net
effect of the rate of interest and the price of the securities to be
acquired with the loan shall be such that Plan assets would not be
depleted. The loan shall be made only upon such terms as would result
from arm's length negotiations between the Plan and independent third
parties.
(b) The proceeds received shall be used only to acquire
Qualifying Employer Securities, to repay the loan or to repay a prior
exempt loan.
(c) The loan shall be made without recourse against the
general assets of the Plan. The collateral shall consist only of
securities acquired with the proceeds of the loan, or securities
acquired with proceeds of a prior exempt loan if the prior exempt loan
is being paid with proceeds of the current exempt loan. There shall be
no right of any lender to the Plan against assets of the Plan other
than collateral given for the loan, contributions made to the Plan to
meet the obligations of the loan, and earnings attributable to
collateral and investment of the contributions made to meet the
obligations of the loan. In the event of default, the amount of
Employer stock transferred to the lender in satisfaction of a default
cannot exceed the amount of such default. In the case of a default in
favor of a Party-in-interest, the default shall only be to the extent
of current payments due.
(d) Payments made by the Plan to repay an exempt loan shall
not exceed an amount equal to contributions and earnings received
during or prior to the year minus such payments in prior years. The
Employer stock purchased with the proceeds of the loan shall be held in
a suspense account until the stock is released from the suspense
account and allocated to the Participants' ESOP Contributions Accounts.
Stock released from the suspense account must be equal to an amount
calculated by multiplying the amount of encumbered stock by the
fraction of the principal and interest paid for the Plan Year divided
by the sum of the principal and interest paid for the Plan Year plus
principal and interest for all future years. Any encumbered stock
released from the suspense account must be allocated to Participant's
Accounts in shares of stock or other non-monetary units rather than by
dollar amounts.
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(e) The Employer stock acquired with the proceeds of an exempt
loan shall not be subject to any option other than the option provided
for in Plan Section 9.05 or a buy-sell or similar arrangement or a
right of first refusal as described in Plan Section 9.04 when the stock
is held by or distributed from the Plan whether or not the Plan ceases
to be an ESOP or the exempt loan is fully repaid.
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ARTICLE XI
AMENDMENT OR TERMINATION
11.01 AMENDMENT
The Employer reserves the right, at any time and from time to time, to
amend in whole or in part either retroactively or prospectively any or all of
the provisions of the Plan without the consent of any Participant or his
beneficiaries hereunder. Such amendment shall be stated either in an instrument
executed by the Employer in the same manner and form as the Plan or in a
Directors resolution and upon the execution thereof, the Plan shall be deemed to
have been amended in the manner therein set forth and the Employer and all
Participants and their beneficiaries shall be bound thereby; provided, however,
that no amendment:
(a) Shall authorize, cause or permit any part of the Trust
Fund (other than such part as is required to pay taxes and
administrative expenses) to be used or diverted to purposes other than
the exclusive benefit of the Participants, former Participants or their
beneficiaries or estates.
(b) Shall have the effect of vesting in the Employer any
interest in or control over any policies of insurance purchased
hereunder or over any part of the Trust Fund subject to the terms of
the Plan.
(c) Shall affect the rights, duties or responsibilities of the
Trustee without its consent.
(d) Shall have any retroactive effect so as to deprive any
Participant of his nonforfeitable interest already accrued, or
eliminate an optional form of benefit, except only that any amendment
may be made retroactive which is necessary to conform the Plan to
mandatory provisions of Federal or State law, regulations or rulings.
The Employer may unilaterally amend the Plan without Trustee consent.
Such amendments, however, must be provided to the Trustee by the Employer.
11.02 PLAN TERMINATION OR DISCONTINUANCE OF CONTRIBUTIONS
The Employer shall have the right, at any time, to terminate the Plan.
Upon such termination, or any partial termination, the entire interest of each
Participant's Accounts shall become nonforfeitable. Upon the discontinuance of
the Employer's contributions or suspension thereof on other than a temporary
basis, the entire interest of each Participant's Accounts shall become
nonforfeitable. Any unallocated funds existing at the time of such termination
or discontinuance shall be allocated to the then Participants in the same manner
as Employer contributions under Section 4.02(a)(2).
In the event the Employer terminates the Plan but does not terminate
the Trust Fund, the Trustee, in its sole discretion, may either continue to
maintain and administer the Trust Fund or
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terminate the same. No termination of the Plan shall have the effect of vesting
in the Employer any interest in or control over any part of the Trust Fund.
Distributions upon Plan termination shall be made in accordance with
the provisions of Article VI.
11.03 MERGER, CONSOLIDATION OR TRANSFER OF ASSETS
The Plan may be merged, consolidated or its assets or liabilities
transferred to any other plan provided each Participant would receive a benefit
immediately after such merger, consolidation or transfer, if the successor plan
then terminated, which is equal to or greater than the benefit he would have
received immediately prior to such merger, consolidation or transfer if the Plan
were to have terminated on such date.
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ARTICLE XII
ADMINISTRATIVE COMMITTEE
12.01 APPOINTMENT, RESIGNATION, REMOVAL
The Directors shall appoint an Administrative Committee to manage and
administer the Plan. The Committee shall be the Plan Administrator and named
fiduciary of the Plan. The Committee shall consist of not fewer than three
members who may, but need not, be Participants, directors, officers,
stockholders or Employees of the Employer. The members of the Committee may be
removed by the Directors at any time, with or without cause or notice. Upon the
death, resignation, removal or inability to serve of any member of the
Committee, as now or hereafter constituted (and of such inability the Directors
shall be sole judge), the Directors shall name the successor of such member.
12.02 NOTICE TO TRUSTEE
The Employer shall give written notice to the Trustee of the names of
the members of the Committee promptly after appointment of the Committee and
immediately after each change in membership of the Committee. The Trustee shall
not be deemed to be on notice of any change in membership of the Committee
unless so notified.
12.03 PROCEDURE
The Committee shall act by agreement of a majority of its members
either by vote at a meeting or in writing without a meeting. By such action it
may authorize one or more of its members to execute documents on its behalf and
direct the Trustee in the performance of its duties. The Trustee, upon written
notification of such authorization, shall accept and rely upon such documents
and directions until notified in writing that the authorization has been revoked
or changed by the Committee. Subject to the provisions of this Article, a member
of the Committee who is also a Participant shall not vote or act upon any matter
directly affecting any of his benefits under the Plan. In the event of a
deadlock or other situation which prevents agreement of a majority of the
Committee members, the matter shall be decided by the Directors.
12.04 POWERS AND DUTIES
The Committee shall have the power and duty to do all things necessary
or convenient to effect the intent and purposes of this Plan and not
inconsistent with any of the provisions hereof, whether or not such powers and
duties are specifically set forth herein. Not in limitation, but in
amplification of the foregoing, the Committee shall have power to:
(1) Provide rules and regulations for the administration of
the Plan, and, from time to time, to amend or supplement such rules and
regulations.
(2) Construe the Plan and Trust Agreement, which construction
shall be final and binding.
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(3) Correct any defect, supply any omission, or reconcile any
inconsistency in the Plan in such manner and to such extent as it shall
deem expedient to carry the Plan into effect.
(4) Determine all questions that may arise under the Plan
including directions to and questions submitted by the Trustee on all
matters necessary for it to properly discharge its powers and duties.
(5) Delegate to such other parities as are appropriate
pursuant to ERISA all or any part of the responsibilities specifically
required of the Committee under the terms of the Plan or Trust
Agreement.
12.05 FINALITY OF ACTION
Except as provided in Section 12.06, the acts and determinations of the
Committee within the powers conferred by the Plan shall be final and conclusive
for all purposes of the Plan and Trust Agreement. The Employer, Employees,
Participants, Beneficiaries, Trustee and all others having any interest under
the Plan shall be bound thereby.
12.06 CLAIMS PROCEDURES
Each Participant (or Beneficiary) may make applications to receive a
benefit under the Plan by filing such form as the Committee prescribes. Within
60 days of the date that the application is received, the Committee will inform
the Participant (or Beneficiary), in writing, of the amount of benefit due, if
any, or of the denial of the claim for benefit.
Any denial of a claim for benefit will include a statement of the
reasons for the denial, specific references to Plan provisions on which the
denial is based, a description of any additional information the Committee needs
to make a decision under the Plan, an explanation of why such information ins
necessary and an explanation of the Plan's claims procedure.
Within 90 days of the expiration of such 60 day period, the Participant
(or Beneficiary) because of denial, inaction or otherwise, may request, in
writing, that his application for a benefit be reviewed.
Within 30 days of receipt of a request for review, the Committee will
schedule a date to review the application and will notify the Participant (or
Beneficiary), in writing, of such date at least seven days before the date of
the review. The Participant (or Beneficiary) may, prior to the date of the
review, inspect all documents and records pertaining to his claim for benefit
and may submit issues and comments, in writing, to the Committee.
Within 60 days after receiving the request for a review, and after the
date of the review, the Committee will submit to the Participant (or
Beneficiary), in writing, a statement of their decision and their reasons for
arriving at such decision. After such statement has been given, the action of
the Committee shall be final and conclusive and shall not be subject to further
appeal or review.
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The Committee may extend, in writing, for a period not to exceed 60
days, for reasonable cause, the time which the Participant (or Beneficiary) has
to comply with any of the provisions of this Section.
Where a Participant (or Beneficiary) does not comply with the
provisions of this Section within the time prescribed (including extensions),
the action of the Committee shall then be final and conclusive and shall not be
subject to further appeal or review.
Any action to be taken by a Participant (or Beneficiary) pursuant to
this Section may be taken by a representative designated by such Participant (or
Beneficiary) to act for him or to assist him.
12.07 CHAIRMAN, SECRETARY AND OTHERS
The Committee shall appoint a chairman who shall be a member of the
Committee, a secretary who may, but need not, be a member of the Committee, and
such advisors, agents and representatives as it shall deem advisable.
12.08 LIABILITY
No fiduciary shall be directly or indirectly responsible or under any
liability so long as:
(1) he shall act with the care, skill, prudence, and diligence
under the circumstances then prevailing that a prudent man acting in a
like capacity and familiar with such matters would use the conduct of
an enterprise of a like character and with like aims; and
(2) he did not knowingly conceal a breach of duty of any other
fiduciary.
The Employer shall indemnify each member or former member of the
Committee against any and all expenses and liabilities arising out of his own
membership on the Committee, except expenses and liabilities arising out of his
own fraud, willful misconduct or breach of his responsibilities under this
Section.
The fact that any member of the Committee is a director, officer,
employee, or a Participant shall not disqualify him from doing any act or thing
which the Plan authorizes or requires him to do as a member of such Committee
(except as otherwise provided in Section 12.03 with respect to a member who is a
Participant or a former Participant) or render him accountable for any
allowance, distribution or other profit or advantage received by him.
12.09 COMPENSATION AND EXPENSES
The members of the Committee shall be entitled to receive their
reasonable expenses incurred in administering the Plan. Any such compensation
and expenses and actuarial fees and other expenses with respect to the Plan
shall be paid by the Employer (in addition to its contributions under the Plan).
However, the Employer may, in its discretion, determine that all or part thereof
shall be payable out of the Trust Fund, in which case the Employer shall so
direct the Committee and the Committee, in turn, shall so direct the Trustee.
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12.10 INFORMATION FURNISHED TO COMMITTEE
The Employer shall furnish to the Committee, in writing, such
information as the Committee may request in the exercise of its powers and
duties in the administration of the Plan. Such information may include, but not
necessarily be limited to: names of Employees, their compensation, dates of
birth, employment, termination of employment, retirement or death.
12.11 EXAMINATION BY PARTICIPANTS
The Committee shall make available to each Participant for examination
a copy of the Plan and such of its records or copies thereof as may pertain to
any benefits of such Participant under the Plan.
12.12 NONDISCRIMINATORY ACTION
In the exercise of any power or discretion under the Plan or Trust
Agreement, the Committee shall not take any action or direct the Trustee to take
any action with respect to any of the rights, benefits or obligations of
Employees under the Plan which would be discriminatory in favor of Employees who
are officers, shareholders, or highly compensated as between such Employees and
other Employees in substantially similar situations or under substantially
similar sets of facts.
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ARTICLE XIII
MISCELLANEOUS
13.01 PARTICIPANT'S RIGHTS
Neither the establishment of the Plan, nor any modification thereof,
nor the creation of any fund or account, nor any distributions hereunder, shall
be construed as giving to any Participant or other person any legal or equitable
right against the Employer or an Adopting Employer, or any officer or Employee
thereof, or the Trustee, or the Plan Administrator except as herein provided.
Under no circumstances shall the terms of employment of any Participant be
modified or in any way affected thereby.
13.02 ASSIGNMENT OR ALIENATION OF BENEFITS
No benefit or interest available hereunder will be subject to
assignment or alienation, either voluntarily or involuntarily. The preceding
sentence shall also apply to the creation, assignment, or recognition of a right
to any benefit payable with respect to a participant pursuant to a domestic
relations order, unless such order is determined to be a Qualified Domestic
Relations Order or any domestic relations order entered before January 1, 1985.
For purposes of this Section 13.02, "Qualified Domestic Relations Order" means
any domestic relations order which creates or recognizes the existence of an
alternate payee's right to, or assigns to an alternate payee the right to,
receive all or a portion of the benefits payable with respect to a Participant,
and which otherwise meets the requirements of Section 414(p) of the Code.
As soon as practical after receipt of a domestic relations order, the
Plan Administrator shall determine whether it is a Qualified Domestic Relations
Order. If the domestic relations order is determined to be a Qualified Domestic
Relations Order, the Plan Administrator shall be permitted, in accordance with
rules and regulations promulgated by the Internal Revenue Service and the rules
and regulations established by the Plan Administrator, to direct the Trustee to
make an immediate distribution to the alternate payee (i) if the amount is less
than $5,000, (ii) as provided in any such Order, or (iii) as elected by the
alternate payee. Such distribution shall be permitted regardless of the age or
employment of the Participant and regardless of whether the Participant is
otherwise entitled to a distribution.
13.03 REVERSION OF FUNDS TO EMPLOYER
All Employer Contributions are conditioned upon their deductibility
pursuant to Section 404 of the Code. The Employer or an Adopting Employer shall
not directly or indirectly receive any refund on contributions made to the Trust
Fund except in the following circumstances:
(a) The contribution was made by reason of a mistake of fact,
(b) The deduction for such contribution is disallowed, or
(c) The initial qualification of the Plan is denied under the
Code.
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Earnings attributable to any contribution subject to refund shall not
be refunded. The amount subject to refund shall be reduced by any loss
attributable thereto, and by any amount which would cause the individual account
of any Participant to be reduced to less than the balance which would have been
in the account had the contribution subject to refund not been made. The return
of the contribution shall be made within one year of the mistaken payment, the
disallowance of deduction (to the extent disallowed) or the denial of
qualification, as the case may be.
Except as provided above, under no circumstances shall any amount of
the principal or income of the Trust Fund be used for or diverted to the
Employer or be used for or diverted to purposes other than the exclusive benefit
of Participants, former Participants, and their beneficiaries.
13.04 UNIFORMED SERVICES EMPLOYMENT AND REEMPLOYMENT RIGHTS ACT OF 1994
Notwithstanding any provision of this Plan to the contrary,
contributions, benefits and service credit with respect to qualified military
service will be provided in accordance with Code Section 414(u).
13.05 THIRD PARTY IMMUNITY
No third party, including but not limited to life insurance companies
and regulated investment companies, shall be deemed to be a party to the Plan
for any purpose or to be responsible for the validity of the Plan; nor shall
such third party be required to take cognizance of the Trustee or of the Plan
Administrator hereunder, nor shall such third party be responsible to see that
any action of the Trustee or the Plan Administrator is authorized by the terms
of the Plan. Any such third party shall be fully discharged from any and all
liability for any amount paid to the Trustee or paid in accordance with the
direction of the Trustee or the Plan Administrator, as the case may be, or for
any change made or action taken by such third party upon such direction; and no
such third party shall be obligated to see to the distribution or further
application of any monies so paid by such third party.
13.06 RIGHTS OF THE EMPLOYER AND DELEGATION OF AUTHORITY 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 any officer, except the decision to terminate or discontinue
contributions to the Plan, which is specifically reserved to the Directors.
Further, the Directors may take action with respect to the Plan which shall
supersede and be paramount to any right to act delegated to an officer. Any
action taken by an officer with respect to this Plan shall be by amendment to
this Plan written and executed in a style and format similar to that of this
Plan, or may under appropriate circumstances be by correspondence directed to
the Trustee, or employee or agent which or who is acting in an administrative
capacity.
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Any action reserved to the Directors or any specific action taken by
the Directors with respect to this Plan shall be by resolution in accordance
with its Articles of Incorporation and related rules, bylaws and procedures.
13.07 ALLOCATION OF RESPONSIBILITIES
None of the allocated responsibilities or any other responsibilities
shall be shared by any two or more Named Fiduciaries unless such sharing is
provided by a specific provision of the Plan. Whenever one Named Fiduciary is
required to follow the directions of another Named Fiduciary, the responsibility
shall be that of the Named Fiduciary giving the directions.
13.08 CONSTRUCTION OF PLAN
To the extent not in conflict with the provisions of ERISA, all
questions of interpretation of the Plan shall be governed by the laws of the
state of Ohio.
13.09 GENDER AND NUMBER
Wherever any words are used herein in the masculine gender, they shall
be construed as though they were also used in the feminine gender in all cases
where they would so apply, and wherever any words are used herein in the
singular form, they shall be construed as though they were also used in the
plural form in all cases where they would so apply.
13.10 HEADINGS
Headings of sections are for general information only, and the Plan is
not to be construed by reference thereto.
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Executed at Defiance, Ohio this ______ day of _________, 19____.
RURBAN FINANCIAL CORP.
Witness By:
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INDEX
PAGE
NUMBER
ARTICLE I DEFINITIONS 2
1.01 Acquired Subsidiary 2
1.02 Act 2
1.03 Annual Compensation 2
1.04 Break in Service 2
1.05 Code 3
1.06 Committee 3
1.07 Company 3
1.08 Directors 3
1.09 Disability Retirement Date 3
1.10 Distribution Date 3
1.11 Early Retirement 3
1.12 Early Retirement Date 3
1.13 Employee 3
1.14 Employer or Participating Employer 3
1.15 Entry Date 4
1.16 ERISA 4
1.17 ESOP 4
1.18 Hour of Service 4
1.19 Leased Employee 5
1.20 Named Fiduciary 5
1.21 Normal Retirement Age 6
1.22 Normal Retirement Date 6
1.23 Participant 6
1.24 Permanent and Total Disability 6
1.25 Plan 6
1.26 Plan Administrator 6
1.27 Plan Year 6
1.28 Qualified Election 6
1.29 Qualifying Employer Securities 7
1.30 Trustee 7
1.31 Trust Agreement 7
1.32 Trust Fund 7
1.33 Year of Service 7
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PAGE
NUMBER
ARTICLE II ELIGIBILITY 9
2.01 Eligibility 9
2.02 Eligibility Upon Re-Employment 9
ARTICLE III CONTRIBUTIONS 10
3.01 Employer Contributions 10
3.02 Rollover Contributions 11
3.03 Time for Payment of Contributions 11
ARTICLE IV ALLOCATIONS 12
4.01 Participant Accounts 12
4.02 Annual Allocations 13
4.03 Dividends 14
4.04 Annual Report to Participants 14
ARTICLE V BENEFITS TO PARTICIPANTS 15
5.01 Upon Retirement or Disability 15
5.02 Upon Death 15
5.03 Upon Termination of Employment 16
5.04 Location of Participant or Beneficiary Unknown 18
5.05 Certification by Plan Administrator 18
ARTICLE VI DISTRIBUTIONS 19
6.01 Method and Medium of Payment 19
6.02 Commencement of Benefits 19
6.03 Special ESOP Distribution Requirements 20
6.04 Mandatory Commencement of Benefits 22
6.05 Distributions After Death of a Participant 23
6.06 Installments and Deferred Distributions 24
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PAGE
NUMBER
6.07 Distributions of Excess Deferrals 24
6.08 Restrictions on Distributions of Compensation
Deferral Contributions 25
6.09 Right to Have Accounts Transferred 25
6.10 Direct Plan to Plan Transfers 25
ARTICLE VII LIMITATIONS ON CONTRIBUTIONS AND BENEFITS 27
7.01 Limitation of Benefits 27
7.02 Definitions 30
7.03 Nondiscrimination Requirements for Compensation
Deferral Contributions 32
7.04 Nondiscrimination Requirements for Matching
Contributions 34
7.05 Multiple Use of Alternative Test 35
ARTICLE VIII TOP HEAVY PROVISIONS 38
8.01 Definitions 38
8.02 Determination of Top Heavy Status 39
8.03 Combination of Defined Benefit & Defined
Contribution Plan 40
8.04 Minimum Contribution 40
8.05 Minimum Vesting 40
ARTICLE IX SPECIAL ESOP REQUIREMENTS 42
9.01 Voting Employer Stock 42
9.02 Appraisal of Employer Stock 42
9.03 Diversification of Investments 42
9.04 Right of First Refusal 43
9.05 Redemption of Employer Stock - Put Option 44
9.06 Dividends 45
9.07 Nonterminable Rights 45
9.08 Valuation of the Fund 45
9.09 Additional Requirements 45
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PAGE
NUMBER
ARTICLE X EXEMPT LOAN 47
10.01 Definition of Exempt Loan 47
10.02 Requirements for an Exempt Loan 47
ARTICLE XI AMENDMENT OR TERMINATION 49
11.01 Amendment 49
11.02 Plan Termination or Discontinuance of
Contributions 49
11.03 Merger, Consolidation or Transfer of Assets 50
ARTICLE XII ADMINISTRATIVE COMMITTEE 51
12.01 Appointment, Resignation, Removal 51
12.02 Notice to Trustee 51
12.03 Procedure 51
12.04 Powers and Duties 51
12.05 Finality of Action 52
12.06 Claims Procedures 52
12.07 Chairman, Secretary and Others 53
12.08 Liability 53
12.09 Compensation and Expenses 53
12.10 Information Furnished to Committee 54
12.11 Examination by Participants 54
12.12 Nondiscriminatory Action 54
ARTICLE XIII MISCELLANEOUS 55
13.01 Participant's Rights 55
13.02 Assignment or Alienation of Benefits 55
13.03 Reversion of Funds to Employer 55
13.04 Uniformed Services Employment and Reemployment
Rights Act of 1994 56
13.05 Third Party Immunity 56
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PAGE
NUMBER
13.06 Rights of the Employer and Delegation of
Authority by the Employer 56
13.07 Allocation of Responsibilities 57
13.08 Construction of Plan 57
13.09 Gender and Number 57
13.10 Headings 57
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APPENDIX A
PARTICIPATING EMPLOYERS
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The State Bank and Trust Company
The Peoples Banking Company
Rurbanc Data Services, Inc.
The Citizens Savings Bank Company
The First National Bank of Ottawa
Rurban Mortgage Company
Rurban Financial Corp.
Reliance Financial Services, N.A.
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