EXHIBIT 10.7
MONTGOMERY FINANCIAL CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
Effective as of July 1, 1996
MONTGOMERY FINANCIAL CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
TABLE OF CONTENTS
PREAMBLE 1
ARTICLE I DEFINITION OF TERMS AND CONSTRUCTION
1.1 Definitions
(a) "Act" 2
(b) "Administrator" 2
(c) "Annual Additions" 2
(d) "Authorized Leave of Absence" 2
(e) "Beneficiary" 2
(f) "Board of Directors" 2
(g) "Break" 3
(h) "Code" 3
(i) "Compensation" 3
(j) "Date of Hire" 3
(k) "Disability" 3
(l) "Disability Retirement Date" 3
(m) "Early Retirement Date" 4
(n) "Effective Date" 4
(o) "Eligibility Period" 4
(p) "Employee" 4
(q) "Employer" 4
(r) "Employer Securities" 4
(s) "Entry Date" 4
(t) "Exempt Loan" 4
(u) "Former Participant" 4
(v) "Fund" 4
(w) "Hour of Service" 5
(x) "Investment Adjustments" 5
(y) "Limitation Year" 5
(z) "Normal Retirement Date" 5
(aa) "Participant" 5
(bb) "Plan" 6
(cc) "Plan Year" 6
(dd) "Qualified Domestic Relations Order" 6
(ee) "Retirement" 6
(ff) "Service" 6
(gg) "Sponsor" 6
(hh) "Trust Agreement" 6
(ii) "Trustee" 7
(jj) "Valuation Date" 7
(kk) "Year of Service" 7
1.2 Plurals and Gender 7
1.3 Incorporation of Trust Agreement 7
1.4 Headings 8
1.5 Severability 8
1.6 References to Governmental Regulations 8
ARTICLE II PARTICIPATION
2.1 Commencement of Participation 9
2.2 Termination of Participation 9
2.3 Resumption of Participation 9
2.4 Determination of Eligibility 10
ARTICLE III CREDITED SERVICE
3.1 Service Counted for Eligibility Purposes 11
3.2 Service Counted for Vesting Purposes 11
3.3 Credit for Pre-Break Service 11
3.4 Service Credit During Authorized Leaves 11
3.5 Service Credit During Maternity or
Paternity Leave 12
3.6 Ineligible Employees 12
ARTICLE IV CONTRIBUTIONS
4.1 Employee Stock Ownership Contributions 13
4.2 Time and Manner of Employee Stock Ownership
Contributions 13
4.3 Records of Contributions 14
4.4 Erroneous Contributions 14
ARTICLE V ACCOUNTS, ALLOCATIONS AND INVESTMENTS
5.1 Establishment of Separate Participant
Accounts 16
5.2 Establishment of Suspense Account 16
5.3 Allocation of Earnings, Losses and Expenses 17
5.4 Allocation of Forfeitures 17
5.5 Allocation of Annual Employee Stock
Ownership Contributions 17
5.6 Limitation on Annual Additions 18
5.7 Erroneous Allocations 21
5.8 Value of Participant's Interest in Fund 21
5.9 Investment of Account Balances 21
ARTICLE VI RETIREMENT, DEATH AND DESIGNATION OF BENEFICIARY
6.1 Normal Retirement 22
6.2 Early Retirement 22
6.3 Disability Retirement 22
6.4 Death Benefits 22
6.5 Designation of Death Beneficiary and
Manner of Payment 23
ARTICLE VII VESTING AND FORFEITURES
7.1 Vesting on Death, Disability, Normal Retirement 24
7.2 Vesting on Termination of Participation 24
7.3 Disposition of Forfeitures 24
ARTICLE VIII EMPLOYEE STOCK OWNERSHIP RULES
8.1 Right to Demand Employer Securities 26
8.2 Voting Rights 26
8.3 Nondiscrimination in Employee Stock
Ownership Contributions 26
8.4 Dividends 27
8.5 Exempt Loans 27
8.6 Exempt Loan Payments 29
8.7 Put Option 30
8.8 Diversification Requirements 30
8.9 Independent Appraiser 31
ARTICLE IX PAYMENTS AND DISTRIBUTIONS
9.1 Payments on Termination of Service
- In General 32
9.2 Commencement of Payments 32
9.3 Mandatory Commencement of Benefits 33
9.4 Required Beginning Dates 35
9.5 Form of Payment 35
9.6 Payments Upon Termination of Plan 36
9.7 Distribution Pursuant to Qualified
Domestic Relations Orders 36
9.8 Cash-Out Distributions 36
9.9 ESOP Distribution Rules 37
9.10 Withholding 37
9.11 Waiver of 30-day Notice 38
ARTICLE X PROVISIONS RELATING TO TOP-HEAVY PLANS
10.1 Top-Heavy Rules to Control 39
10.2 Top-Heavy Plan Definitions 39
10.3 Calculation of Accrued Benefits 41
10.4 Determination of Top-Heavy Status 42
10.5 Determination of Super Top-Heavy Status 42
10.6 Minimum Contribution 43
10.7 Vesting 44
10.8 Maximum Benefit Limitation 44
ARTICLE XI ADMINISTRATION
11.1 Appointment of Administrator 45
11.2 Resignation or Removal of Administrator 45
11.3 Appointment of Successors: Terms of
Office, Etc. 45
11.4 Powers and Duties of Administrator 45
11.5 Action by Administrator 47
11.6 Participation by Administrators 47
11.7 Agents 47
11.8 Allocation of Duties 47
11.9 Delegation of Duties 47
11.10 Administrator's Action Conclusive 48
11.11 Compensation and Expenses of
Administrator 48
11.12 Records and Reports 48
11.13 Reports of Fund Open to Participants 48
11.14 Named Fiduciary 48
11.15 Information from Employer 49
11.16 Reservation of Rights by Employer 49
11.17 Liability and Indemnification 49
11.18 Service as Trustee and Administrator 49
ARTICLE XII CLAIMS PROCEDURE
12.1 Notice of Denial 50
12.2 Right to Reconsideration 50
12.3 Review of Documents 50
12.4 Decision by Administrator 50
12.5 Notice by Administrator 50
ARTICLE XIII AMENDMENTS, TERMINATION AND MERGER
13.1 Amendments 51
13.2 Consolidation, Merger or Other
Transactions of Employer 51
13.3 Consolidation or Merger of Trust 52
13.4 Bankruptcy or Insolvency of Employer 52
13.5 Voluntary Termination 53
13.6 Partial Termination of Plan or Permanent
Discontinuance of Contributions 53
ARTICLE XIV MISCELLANEOUS
14.1 No Diversion of Funds 54
14.2 Liability Limited 54
14.3 Incapacity 54
14.4 Spendthrift Clause 54
14.5 Benefits Limited to Fund 55
14.6 Cooperation of Parties 55
14.7 Payments Due Missing Persons 55
14.8 Governing Law 55
14.9 Nonguarantee of Employment 56
14.10 Counsel 56
MONTGOMERY FINANCIAL CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
PREAMBLE
Effective as of July 1, 1996, Montgomery Financial Corporation, a
Delaware corporation, (the "Sponsor"), has adopted the Montgomery Financial
Corporation Employee Stock Ownership Plan in order to enable Participants to
share in the growth and prosperity of the Sponsor and its wholly owned
subsidiary, Montgomery Savings, A Federal Association, and to provide
Participants with an opportunity to accumulate capital for their future economic
security by accumulating funds to provide retirement, death and disability
benefits. The Plan is a stock bonus plan designed to meet the re quirements of
an employee stock ownership plan as described at Section 4975(e)(7) of the Code
and Section 407(d)(6) of ERISA. The primary purpose of the employee stock
ownership plan is to invest in employer securities. The Sponsor intends that the
Plan will qualify under Sections 401(a) and 501(a) of the Code and will comply
with the provisions of ERISA. The Plan has been drafted to comply with the Tax
Reform Act of 1986, the Omnibus Budget Reconciliation Act of 1986, the Omnibus
Budget Reconciliation Act of 1987, the Technical and Miscellaneous Revenue Act
of 1988, the Revenue Reconciliation Act of 1989, the Omnibus Budget
Reconciliation Act of 1993, and the Small Business Job Protection Act of 1986.
The terms of this Plan shall apply only with respect to Employees of
the Employer on and after July 1, 1996.
ARTICLE I
DEFINITION OF TERMS AND CONSTRUCTION
1.1 Definitions.
Unless a different meaning is plainly implied by the context, the
following terms as used in this Plan shall have the following meanings:
(a) "Act" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, or any successor statute.
(b) "Administrator" shall mean the administrative committee provided
for in Article XI.
(c) "Annual Additions" shall mean, with respect to each Participant,
the sum of those amounts allocated to the Participant's accounts under this
Plan and under any other qualified defined contribution plan to which the
Employer contributes for any Limitation Year, consisting of the follow ing:
(1) Employer contributions;
(2) Forfeitures; and
(3) Voluntary contributions (if any).
(d) "Authorized Leave of Absence" shall mean an absence from Service
with respect to which the Employee may or may not be entitled to
Compensation and which meets any one of the following requirements:
(1) Service in any of the armed forces of the United States
for up to 36 months, provided that the Employee resumes Service within 90
days after discharge, or such longer period of time during which such
Employee's employment rights are protected by law; or
(2) Any other absence or leave expressly approved and granted
by the Employer which does not exceed 24 months, provided that the Employee
resumes Service at or before the end of such approved leave period. In
approving such leaves of absence, the Employer shall treat all Employees on
a uniform and nondiscriminatory basis.
(e) "Beneficiary" shall mean such persons as may be designated by the
Participant to receive benefits after the death of the Participant, or such
persons designated by the Administrator to receive benefits after the death
of the Participant, all as provided in Section 6.5.
(f) "Board of Directors" shall mean the Board of Directors of the
Sponsor.
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(g) "Break" shall mean a Plan Year during which an Employee fails to
complete more than 500 Hours of Service.
(h) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, or any successor statute.
(i) "Compensation" shall mean the amount of remuneration paid to an
Employee by the Employer, after the date on which the Employee becomes a
Participant, for services rendered to the Employer during a Plan Year,
including base salary, bonuses, overtime and commissions, and any amount of
compensation contributed pursuant to a salary reduction election under Code
Section 401(k) and any amount of compensation contributed to a cafeteria
plan described at Section 125 of the Code, but excluding amounts paid by
the Employer or accrued with respect to this Plan or any other qualified or
non-qualified unfunded plan of deferred compensation or other employee
welfare plan to which the Employer contributes, payments for group
insurance, medical benefits, reimburse ment for expenses, and other forms
of extraordinary pay, and excluding amounts accrued for a prior year.
Notwithstanding anything herein to the contrary, the annual Compensation of
each Participant taken into account under the Plan for any Plan Year shall
not exceed $150,000, as adjusted from time to time in accordance with
Section 415(d) of the Code. In determining the compensation of a Participant
for purposes of this limitation, the rules of section 414(q)(6) of the Code
shall apply, except in applying such rules, the term "family" shall include
only the spouse of the Participant and any lineal descendants of the
Participant who have not attained age 19 before the close of the year. If,
as a result of such rules, the adjusted $150,000 limitation is exceeded,
then (except for purposes of determining the portion of compensation up to
the integration level), the limitation shall be prorated among the affected
individuals in proportion to each such individual's compensation as
determined under this section prior to the application of this limitation.
(j) "Date of Hire" shall mean the date on which a person shall perform
his first Hour of Service. Notwithstanding the foregoing, in the event a
person incurs one or more consecutive Breaks after his initial Date of Hire
which results in the forfeiture of his pre-Break Service pursuant to
Section 3.3, his "Date of Hire" shall thereafter be the date on which he
completes his first Hour of Service after such Break or Breaks.
(k) "Disability" shall mean a physical or mental impairment which
prohibits a Participant from engaging in any occupation for wages or profit
and which has caused the Social Security Administration to classify the
individual as "disabled" for purposes of Social Security.
(l) "Disability Retirement Date" shall mean the first day of the month
after which a Participant incurs a Disability.
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(m) "Early Retirement Date" shall mean the first day of the month
coincident with or next following the date on which a Participant attains
age 55 and completes 5 Years of Service.
(n) "Effective Date" shall mean July 1, 1996.
(o) "Eligibility Period" shall mean the period of 12 consecutive
months commencing on an Employee's Date of Hire. Succeeding eligibility
computation periods after the initial eligibility computation period shall
be based on Plan Years which include the first anniversary of an Employee's
Date of Hire.
(p) "Employee" shall mean any person employed by the Employer,
including officers but excluding directors in their capacity as such;
provided, however, that the term "Employee" shall not include leased
employees, employees regularly employed outside the employer's own offices
in connection with the operation and maintenance of buildings or other
properties acquired through foreclosure or deed, and any employee included
in a unit of employees covered by a collective- bargaining agreement with
the Employer that does not expressly provide for participation of such
employees in this Plan, where there has been good-faith bargaining between
the Employer and employees' representatives on the subject of retirement
benefits.
(q) "Employer" shall mean Montgomery Financial Corporation, a Delaware
corporation, and its wholly owned subsidiary, Montgomery Savings, A Federal
Association, or any successors to the aforesaid corporations by merger,
consolidation or otherwise, which may agree to continue this Plan, or any
affiliated or subsidiary corporation or business organization of any
Employer which, with the consent of the Sponsor, shall agree to become a
party to this Plan.
(r) "Employer Securities" shall mean the common stock issued by
Montgomery Financial Corporation, a Delaware corporation.
(s) "Entry Date" shall mean each January 1 and July 1, so long as this
Plan shall remain in effect.
(t) "Exempt Loan" shall mean a loan described at Section 4975(d)(1) of
the Code to the Trustee to purchase Employer Securities for the Plan, made
or guaranteed by a disqualified person, as defined at Section 4975(e)(2) of
the Code, including, but not limited to, a direct loan of cash, a purchase
money transaction, an assumption of an obligation of the Trustee, an
unsecured guarantee or the use of assets of such disqualified person as
collateral for such a loan.
(u) "Former Participant" shall mean any previous Participant whose
participation has terminated but who has a vested interest in the Plan
which has not been distributed in full.
(v) "Fund" shall mean the Fund maintained by the Trustee pursuant to
the Trust Agreement in order to provide for the payment of the benefits
specified in the Plan.
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(w) "Hour of Service" shall mean each hour for which an Employee is
directly or indirectly paid or entitled to payment by an Employer for the
performance of duties or for reasons other than the performance of duties
(such as vacation time, holidays, sickness, disability, paid lay-offs, jury
duty and similar periods of paid nonworking time). To the extent not
otherwise included, Hours of Service shall also include each hour for which
back pay, irrespective of mitigation of damages, is either award ed or
agreed to by the Employer. Hours of working time shall be credited on the
basis of actual hours worked, even though compensated at a premium rate for
overtime or other reasons. In computing and crediting Hours of Service for
an Employee under this Plan, the rules set forth in Sections 2530.200b-
2(b) and (c) of the Department of Labor Regulations shall apply, said
Sections being herein incor porated by reference. Hours of Service shall be
credited to the Plan Year or other relevant period during which the
services were performed or the nonworking time occurred, regardless of the
time when Compensation therefor may be paid. Any Employee for whom no
hourly employment records are kept by the Employer shall be credited with
45 Hours of Service for each calendar week in which he would have been
credited with a least one Hour or Service under the foregoing provisions,
if hourly records were available. Effective January 1, 1985, for absences
commencing on or after that date, solely for purposes of determining
whether a Break for participation and vesting purposes has occurred in an
Eligibility Period or Plan Year, an individual who is absent from work for
maternity or paternity reasons shall receive credit for the Hours of
Service which would otherwise have been credited to such individual but for
such absence, or in any case in which such hours cannot be determined, 8
Hours of Service per day of such absence. For purposes of this Section
1.1(w), an absence from work for maternity or paternity reasons means an
absence (1) by reason of the pregnancy of the individual, (2) by reason of
a birth of a child of the individual, (3) by reason of the placement of a
child with the individual in connection with the adoption of such child by
such individual, or (4) for purposes of caring for such child for a period
beginning immediately following such birth or placement. The Hours of
Service credited under this provision shall be credited (1) in the
computation period in which the absence begins if the crediting is
necessary to prevent a Break in that period, or (2) in all other cases, in
the following computation period.
(x) "Investment Adjustments" shall mean the increases and/or decreases
in the value of a Participant's accounts attributable to earnings, gains,
losses and expenses of the Fund, as set forth in Section 5.3.
(y) "Limitation Year" shall mean the Plan Year.
(z) "Normal Retirement Date" shall mean the first day of the month
coincident with or during which a Participant attains age 65 and completes
the fifth anniversary of his participation in the Plan.
(aa) "Participant" shall mean an Employee who has met all of the
eligibility requirements of the Plan and who is currently included in the
Plan as provided in Article II hereof.
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(bb) "Plan" shall mean the Montgomery Financial Corporation Employee
Stock Ownership Plan, as described herein or as hereafter amended from time
to time.
(cc) "Plan Year" shall mean any 12 consecutive month period commencing
on July 1 and ending on June 30.
(dd) "Qualified Domestic Relations Order" shall mean any judgment,
decree or order (including approval of a property settlement agreement)
that relates to the provision of child support, alimony, marital property
rights to a spouse, former spouse, child or other dependent of the
Participant (all such persons hereinafter termed "alternate payee") and is
made pursuant to a State domestic relations law (including community
property law) and, further, that creates or recognizes the existence of an
alternate payee's right to, or assigns to an alternate payee the right to
receive all or a portion of the benefits payable with respect to a
Participant and that clearly specifies the following:
(1) the name and last known mailing address (if available) of
the Participant and the name and mailing address of each alternate
payee to which the order relates;
(2) the amount or percentage of the Participant's benefits to
be paid to an alternate payee or the manner in which the amount is to
be determined; and
(3) the number of payments or period for which payments are
required.
A domestic relations order is not a Qualified Domestic Relations Order
if it:
(1) requires the Plan to provide any type or form of benefit
or any option not otherwise provided under the Plan; or,
(2) requires the Plan to provide increased benefits, or
(3) requires payment of benefits to an alternate payee that is
required to be paid to another alternate payee under a previously
existing Qualified Domestic Relations Order.
(ee) "Retirement" shall mean termination of employment which
qualifies as early, normal or Disability retirement as described in
Article VI.
(ff) "Service" shall mean employment with the Employer.
(gg) "Sponsor" shall mean Montgomery Financial Corporation, a
Delaware corporation.
(hh) "Trust Agreement" shall mean the agreement, dated April ___,
1997 by and between Montgomery Financial Corporation, a Delaware
corporation, and _________________, of _________, ___________.
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(ii) "Trustee" shall mean the Trustee or Trustees by whom the assets of
the Plan are held, as provided in the Trust Agreement, or his or their
successors.
(jj) "Valuation Date" shall mean the last day of each Plan Year. The
Trustee may make additional valuations, at the instruction of the
Administrator, but in no event may the Administrator request additional
valuations by the Trustee more frequently than quarterly. Whenever such date
falls on a Saturday, Sunday or holiday, the preceding business day shall be
the Valuation Date.
(kk) "Year of Service" shall mean any Plan Year during which an
Employee has completed at least 1,000 Hours of Service, except as otherwise
specified in Article III, in the determination of Years of Service for
eligibility and vesting purposes under this Plan, the term "Year of Service"
shall also mean any Plan Year during which an Employee has completed at
least 1,000 Hours of Service with an entity that is:
(1) a member of a controlled group including the Employer,
while it is a member of such controlled group (within the meaning of
Section 414(b) of the Code);
(2) in a group of trades or businesses under common control
with the Employer, while it is under common control (within the meaning
of Section 414(c) of the Code);
(3) a member of an affiliated service group including the
Employer, while it is a member of such affiliated service group (within
the meaning of Section 414(m) of the Code); or
(4) a leasing organization, under the circumstances described
in Section 414(n) of the Code.
1.2 Plurals and Gender.
Where appearing in the Plan and the Trust Agreement, the masculine
gender shall include the feminine and neuter genders, and the singular shall
include the plural, and vice versa, unless the context clearly indicates a
different meaning.
1.3 Incorporation of Trust Agreement.
The Trust Agreement, as the same may be amended from time to time, is
intended to be and hereby is incorporated by reference into this Plan and
for all purposes shall be deemed a part of the Plan.
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1.4 Headings.
The headings and sub-headings in this Plan are inserted for the
convenience of reference only and are to be ignored in any construction of
the provisions hereof.
1.5 Severability.
In case any provision of this Plan shall be held illegal or void, such
illegality or invalidity shall not affect the remaining provisions of this
Plan, but shall be fully severable, and the Plan shall be construed and
enforced as if said illegal or invalid provisions had never been inserted
herein.
1.6 References to Governmental Regulations.
References in this Plan to regulations issued by the Internal Revenue
Service, the Department of Labor, or other governmental agencies shall
include all regulations, rulings, procedures, releases and other position
statements issued by any such agency.
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ARTICLE II
PARTICIPATION
2.1 Commencement of Participation.
(a) Any Employee who completes at least 1,000 Hours of Service during
his Eligibility Period or during any Plan Year beginning after his Date of
Hire shall initially become a Participant on the Entry Date coincident with
or next following the later of the following dates, provided he is employed
by the Employer on that Entry Date:
(1) The date which is 12 months after his Date of Hire; and
(2) The date on which he attains age 21.
(b) Any Employee who had satisfied the requirements set forth in
Section 2.1(a) during the 12-month period prior to the Effective Date shall
become a Participant on the Effective Date, provided he is still employed by
the Employer on the Effective Date.
2.2 Termination of Participation.
After commencement or resumption of his participation, an Employee
shall remain a Participant during each consecutive Plan Year thereafter
until the earliest of the following dates:
(a) His actual Retirement date;
(b) His date of death; or
(c) The last day of a Plan Year during which he incurs a Break.
2.3 Resumption of Participation.
(a) Any Participant whose employment terminates and who resumes Service
before he incurs a Break shall resume participation immediately on the date
he is reemployed.
(b) Except as otherwise provided in Section 2.3(c), any Participant who
incurs one or more Breaks and resumes Service shall resume participation
retroactively as of the first day of the first Plan Year in which he
completes a Year of Service after such Break(s).
(c) Any Participant who incurs one or more Breaks and resumes Service,
but whose pre- Break Service is not reinstated to his credit pursuant to
Section 3.3, shall be treated as a new
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Employee and shall again be required to satisfy the eligibility requirements
contained in Section 2.1 before resuming participation on the appropriate
Entry Date, as specified in Section 2.1.
2.4 Determination of Eligibility.
The Administrator shall determine the eligibility of Employees in
accordance with the provisions of this Article. For each Plan Year, the
Employer shall furnish the Administrator a list of all Employees, indicating
the original date of their reemployment with the Employer and any Breaks
they may have incurred.
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ARTICLE III
CREDITED SERVICE
3.1 Service Counted for Eligibility Purposes.
Except as provided in Section 3.3, all Years of Service completed by an
Employee shall be counted in determining his eligibility to become a
Participant on and after the Effective Date, whether such Service was
completed before or after the Effective Date.
3.2 Service Counted for Vesting Purposes.
All Years of Service completed by an Employee (including Years of
Service completed prior to the Effective Date) shall be counted in
determining his vested interest in this Plan, except the following:
(a) Service which is disregarded under the provisions of Section 3.3;
(b) Service prior to the Effective Date of this Plan if such Service
would have been disregarded under the "break in service" rules (within the
meaning of Section 1.411(a)-5(b)(6) of the Treasury Regulations).
3.3 Credit for Pre-Break Service.
Upon his resumption of participation following one or a series of
consecutive Breaks, an Employee's pre-Break Service shall be reinstated to
his credit for all purposes of this Plan only if either:
(a) He was vested in any portion of his accrued benefit at the time the
Break(s) began; or
(b) The number of his consecutive Breaks does not equal or exceed the
greater of 5 or the number of his Years of Service credited to him before
the Breaks began.
Except as provided in the foregoing, none of an Employee's Service
prior to one or a series of consecutive Breaks shall be counted for any
purpose in connection with his participation in this Plan thereafter.
3.4 Service Credit During Authorized Leaves.
An Employee shall receive no Service credit under Section 3.1 or 3.2
during any Authorized Leave of Absence. However, solely for the purpose of
determining whether he has incurred a Break during any Plan Year in which he
is absent from Service for one or more Authorized Leaves of
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Absence, he shall be credited with 45 Hours of Service for each week during
any such leave period. Notwithstanding the foregoing, if an Employee fails
to return to Service on or before the end of a leave period, he shall be
deemed to have terminated Service as of the first day of such leave period
and his credit for Hours of Service, determined under this Section 3.4,
shall be revoked. Notwithstanding anything contained herein to the contrary,
an Employee who is absent by reason of military service as set forth in
Section 1.1(d)(1) shall be given Service credit under this Plan for such
military leave period to the extent, and for all purposes, required by law.
3.5 Service Credit During Maternity or Paternity Leave.
Effective for absences beginning on or after January 1, 1985, for
purposes of determining whether a Break has occurred for participation and
vesting purposes, an individual who is on maternity or paternity leave as
described in Section 1.1(w), shall be deemed to have completed Hours of
Service during such period of absence, all in accordance with Section
1.1(w). Notwithstanding the foregoing, no credit shall be given for such
Hours of Service unless the individual furnishes to the Administrator such
timely information as the Administrator may reasonably require to determine:
(a) that the absence from Service was attributable to one of the
maternity or paternity reasons enumerated in Section 1.1(w); and
(b) the number of days for which such absence lasted.
In no event, however, shall any credit be given for such leave other than
for determining whether a Break has occurred.
3.6 Ineligible Employees.
Notwithstanding any provisions of this Plan to the contrary, any person
who is employed by the Employer, but who is ineligible to participate in
this Plan, either because of his failure
(a) To meet the eligibility requirements contained in Article II; or
(b) To be an Employee, as defined in Section 1.1(p), shall,
nevertheless, earn Years of Service for eligibility and vesting purposes
pursuant to the rules contained in this Article III. However, such a person
shall not be entitled to receive any contributions hereunder unless and
until he becomes a Participant in this Plan, and then, only during his
period of participation.
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ARTICLE IV
CONTRIBUTIONS
4.1 Employee Stock Ownership Contributions.
(a) Subject to all of the provisions of this Article IV, for each Plan
Year commencing on or after the Effective Date, the Employer shall make an
Employee Stock Ownership contribution to the Fund, in such amount as may be
determined by the Board of Directors in its discretion. Such contribution
shall be in the form of cash or Employer Securities. In determining the
value of Employer Securities transferred to the Fund as an Employee Stock
Ownership contribution, the Administrator may determine the average of
closing prices of such securities for a period of up to 90 consecutive days
immediately preceding the date on which the securities are contributed to
the Fund. In the event that the Employer Securities are not readily tradable
on an established securities market, the value of the Employer Securities
transferred to the Fund shall be determined by an independent appraiser in
accordance with Section 8.9.
(b) In no event shall such contribution by the Employer exceed for any
Plan Year the maximum amount that may be deducted by the Employer under
Section 404 of the Code, nor shall such contribution cause the Employer to
violate its regulatory capital requirements. Each Employee Stock Ownership
contribution by the Employer shall be deemed to be made on the express
condition that the Plan, as then in effect, shall be qualified under
Sections 401 and 501 of the Code and that the amount of such contribution
shall be deductible from the Employer's income under Section 404 of the
Code.
4.2 Time and Manner of Employee Stock Ownership Contributions.
(a) The Employee Stock Ownership contribution (if any) for each Plan
Year shall be paid to the Trustee in one lump sum or installments at any
time on or before the expiration of the time prescribed by law (including
any extensions) for filing of the Employer's federal income tax return for
its fiscal year ending concurrent with or during such Plan Year. Any portion
of the Employee Stock Ownership contribution for each Plan Year that may be
made prior to the last day of the Plan Year shall be maintained by the
Trustee in the Employee Stock Ownership suspense account described in
Section 5.2 until the last day of such Plan Year.
(b) If an Employee Stock Ownership contribution for a Plan Year is paid
after the close of the Employer's fiscal year which ends concurrent with or
during such Plan Year but on or prior to the due date (including any
extensions) for filing of the Employer's federal income tax return for such
fiscal year, it shall be considered, for allocation purposes, as an Employee
Stock Ownership contribution to the Fund for the Plan Year for which it was
computed and accrued, unless such
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contribution is accompanied by a statement to the Trustee, signed by a
representative of the Employer, which specifies that the Employee Stock
Ownership contribution is made with respect to the Plan Year in which it is
received by the Trustee. Any Employee Stock Ownership contribution paid by
the Employer during any Plan Year but after the due date (including any
extensions) for filing of its federal income tax return for the fiscal year
of the Employer ending on or before the last day of the preceding Plan Year
shall be treated, for allocation purposes, as an Employee Stock Ownership
contribution to the Fund for the Plan Year in which the contribution is paid
to the Trustee.
(c) Notwithstanding anything contained herein to the contrary, no
Employee Stock Ownership contribution shall be made for any year during
which a "limitations account" created pursuant to Section 5.6(c)(2) is in
existence until the balance of such limitations account has been reallocated
in accordance with Section 5.6(c)(2).
4.3 Records of Contributions.
The Employer shall deliver at least annually to the Trustee, with
respect to the contributions contemplated in Section 4.1, a certificate of
the Administrator, in such form as the Trustee shall approve, setting forth:
(a) The aggregate amount of contributions, if any, to the Fund for such
Plan Year;
(b) The names, Internal Revenue Service identifying numbers and current
residential addresses of all Participants in the Plan;
(c) The amount and category of contributions to be allocated to each
such Participant; and
(d) Any other information reasonably required for the proper operation
of the Plan.
4.4 Erroneous Contributions.
(a) Notwithstanding anything herein to the contrary, upon the
Employer's request, a contribution which was made by a mistake of fact, or
conditioned upon the initial qualification of the Plan, under Code Section
401, or upon the deductibility of the contribution under Section 404 of the
Code, shall be returned to the Employer by the Trustee within one year after
the payment of the contribution, the denial of the qualification or the
disallowance of the deduction (to the extent disallowed), whichever is
applicable; provided, however, that in the case of denial of the initial
qualification of the Plan, a contribution shall not be returned unless an
Application for Determination has been timely filed with the Internal
Revenue Service. Any portion of a contribution returned pursuant to this
Section 4.4 shall be adjusted to reflect its proportionate share of the
losses of the fund, but shall not be adjusted to reflect any earnings or
gains. Notwithstanding any provisions of this Plan to the contrary, the
right or claim of any Participant or Beneficiary to any asset of the Fund or
any benefit under this Plan shall be subject to and limited by this Section
4.4.
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(b) In no event shall voluntary Employee contributions be accepted. Any
such voluntary Employee contributions (and any earnings attributable
thereto) mistakenly received by the Trustee shall promptly be returned to
the Participant.
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ARTICLE V
ACCOUNTS, ALLOCATIONS AND INVESTMENTS
5.1 Establishment of Separate Participant Accounts.
The Administrator shall establish and maintain separate individual
accounts for Participants in the Plan and for each Former Participant in
accordance with the provisions of this Article V. Such separate accounts
shall be for accounting purposes only and shall not require a segregation of
the Fund, and no Participant, Former Participant or Beneficiary shall
acquire any right to or interest in any specific assets of the Fund as a
result of the allocations provided for under this Plan, except where
segregation is expressly provided for in this Plan.
(a) Employee Stock Ownership Accounts.
The Administrator shall establish a separate Employee Stock
Ownership Account in the Fund for each Participant. The account shall be
credited as of the last day of each Plan Year with the amounts allocated to
the Participant under Sections 5.4 and 5.5. The Administrator may establish
subaccounts hereunder, an Employer Stock Account reflecting a Participant's
interest in Employer Securities held by the Trust and an Other Investments
Account reflecting the Participant's interest in his Employee Stock
Ownership Account other than Employer Securities.
(b) Distribution Accounts.
In any case where distribution of a terminated Participant's
vested interest in the Plan is to be deferred, the Administrator shall
establish a separate, nonforfeitable account in the Fund to which the
balance in his Employee Stock Ownership Account in the Plan shall be
transferred after such Participant incurs a Break. Unless the Former
Participant's distribution accounts are segregated for investment purposes
pursuant to section 9.4, they shall share in Investment Adjustments.
(c) Other Accounts.
The Administrator shall establish such other separate accounts
for each Participant as may be necessary or desirable for the convenient
administration of the Fund.
5.2 Establishment of Suspense Accounts.
The Administrator shall establish separate accounts to be known as
"suspense accounts." There shall be credited to such appropriate suspense
accounts any Employee Stock Ownership contributions that may be made prior
to the last day of the Plan Year, as provided in Section 4.2. The suspense
accounts shall share proportionately as to time and amount in any Investment
Adjustments. As of the last day of each Plan Year, the balance of the
Employee Stock Ownership suspense account
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shall be added to the Employee Stock Ownership contribution and allocated to
the Employee Stock Ownership Accounts of Participants as provided in Section
5.5, except as provided herein. In the event that the Plan takes an Exempt
Loan, the Employer Securities purchased thereby shall be allocat ed to a
separate Exempt Loan Suspense Account, from which allocations shall be made
in accordance with Section 8.5.
5.3 Allocation of Earnings, Losses and Expenses.
As of each Valuation Date, any increase or decrease in the net worth of
the aggregate Employee Stock Ownership Accounts held in the Fund
attributable to earnings, losses, expenses and unrealized appreciation or
depreciation in each such aggregate Account, as determined by the Trustee
pursuant to the Trust Agreement, shall be credited to or deducted from the
appropriate suspense accounts and all Participants' Employee Stock Ownership
Accounts (except segregated distribution accounts described in Section
5.1(b) and the "limitations account" described in Section 5.6(c)(4)) in the
proportion that the value of each such Account (determined immediately prior
to such allocation and before crediting any Employee Stock Ownership
contributions and forfeitures for the current Plan Year but after adjustment
for any transfer to or from such Accounts and for the time such funds were
in such Accounts) bears to the value of all Employee Stock Ownership
Accounts.
5.4 Allocation of Forfeitures.
As of the last day of each Plan Year, all forfeitures attributable to
the Employee Stock Ownership Accounts which are then available for
reallocation shall be, as appropriate, added to the Employee Stock Ownership
contribution (if any) for such year and allocated among the Participants'
Employee Stock Ownership Accounts, as appropriate, in the manner provided in
Sections 5.5 and 5.6.
5.5 Allocation of Annual Employee Stock Ownership Contributions.
As of the last day of each Plan Year for which the Employer shall make
an Employee Stock Ownership contribution, the Administrator shall allocate
the Employee Stock Ownership contribution (including reallocable
forfeitures) for such Plan Year to the Employee Stock Ownership account of
each Participant who completed at least 1,000 Hours of Service during that
Plan Year, provided that he is still employed by the Employer on the last
day of the Plan Year. Such allocation shall be made in the same proportion
that each such Participant's Compensation for such Plan Year bears to the
total Compensation of all such Participants for such Plan Year, subject to
Section 5.6. Notwithstanding the foregoing, if a Participant attains his
Normal Retirement Date and terminates Service prior to the last day of the
Plan Year but after completing 1,000 Hours of Service, he shall be entitled
to an allocation based on his Compensation earned prior to his termination
and during the Plan Year. Furthermore, if a Participant completes 1,000
Hours of Service and is on a Leave of Absence on the last day of the Plan
Year because of pregnancy or other medical reason, such a Participant shall
be entitled to an allocation based on his Compensation earned during such
Plan Year.
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5.6 Limitation on Annual Additions.
(a) Notwithstanding any provisions of this Plan to the contrary, the
total Annual Additions credited to a Participant's accounts under this Plan
(and under any other defined contribution plan to which the Employer
contributes) for any Limitation Year shall not exceed the lesser of:
(1) 25% of the Participant's compensation for such Limitation
Year; or
(2) $30,000 (or, if greater, one-fourth of the defined benefit
dollar limitation set forth in Section 415(b)(1)(A) of the Code).
Whenever otherwise allowed by law, the maximum amount of $30,000 shall
be automatically adjusted annually for cost-of-living increases in
accordance with Section 415(d) of the Code and the highest such
increase effective at any time during the Limitation Year shall be
effective for the entire Limitation Year, without any amendment to this
Plan.
(b) Solely for the purpose of this Section 5.6, the term "compensation"
is defined as wages, salaries, and fees for professional services and other
amounts received (without regard to whether or not an amount is paid in
cash) for personal services actually rendered in the course of employment
with the Employer maintaining the Plan to the extent that the amounts are
includable in gross income (including, but not limited to, commissions paid
to salesmen, compensation for services on the basis of a percentage of
profits, commissions on insurance premiums, tips, bonuses, fringe benefits,
and reimbursements or other expense allowances under a nonaccountable plan
(as described in Treas.
Regs. Section 1.62-2(c)), and excluding the following:
(1) Employer contributions to a plan of deferred compensation
which are not includible in the Employee's gross income for the taxable year
in which contributed, or Employer contributions under a simplified employee
pension plan to the extent such contributions are deductible by the
Employee, or any distributions from a plan of deferred compensation;
(2) Amounts realized from the exercise of a non-qualified
stock option, or when restricted stock (or property) held by the employee
either becomes freely transferable or is no longer subject to a substantial
risk of forfeiture;
(3) Amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock option; and
(4) Other amounts which received special tax benefits, or
contributions made by the employer (whether or not under a salary reduction
agreement) towards the purchase of an annuity contract described in section
403(b) of the Code (whether or not the contributions are actually excludable
from the gross income of the Employee).
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(c) In the event that the limitations on Annual Additions described in
this Section 5.6(a) above are exceeded with respect to any Participant in
any Limitation Year, then the contributions allocable to the Participant for
such year shall be reduced to the minimum extent required by such
limitations in the following order of priority:
(1) If any further reductions in Annual Additions are
necessary, then the Employee Stock Ownership contributions and
forfeitures allocated during such Limitation Year to the Participant's
Employee Stock Ownership Account shall be reduced. The amount of any
such reductions in the Employee Stock Ownership contributions and
forfeitures shall be reallocated to all other Participants in the same
manner as set forth under Sections 5.4 and 5.5.
(2) Any amounts which cannot be reallocated to other
Participants in a current Limitation Year in accordance with Section
5.6(c)(1) above because of the limitations contained in Sections 5.6(a)
and (d) shall be credited to an account designated as the "limitations
account" and carried forward to the next and subsequent Limitation
Years until it can be reallocated to all Participants as set forth in
Sections 5.4, and 5.5, as appropriate. No Investment Adjustments shall
be allocated to this limitations account. In the next and subsequent
Limitation Years, all amounts in the limitations account must be
allocated in the manner described in Sections 5.4 and 5.5, as
appropriate, before any Employee Stock Ownership contributions may be
made to this Plan for that Limitation Year.
(3) The Administrator shall determine to what extent the
Annual Additions to any Participant's Employee Stock Ownership Account
must be reduced in each Limitation Year. The Administrator shall reduce
the Annual Additions to all other qualified, tax-exempt retirement
plans maintained by the Employer in accordance with the terms contained
therein for required reductions or reallocations mandated by Section
415 of the Code before reducing any Annual Additions in this Plan.
(4) In the event this Plan is voluntarily terminated by the
Employer under Section 13.5, any amounts credited to the limitations
account described in Section 5.6(c)(2) above which have not be
reallocated as set forth herein shall be distributed to the
Participants who are still employed by the Employer on the date of
termination, in the proportion that each Participant's Compensation
bears to the Compensation of all Participants.
(d) The Annual Additions credited to a Participant's accounts for each
Limitation Year are further limited so that in the case of an Employee who
is a Participant in both this Plan and any qualified defined benefit plan
(hereinafter referred to as a "pension plan") of the Employer, the sum of
(1) and (2) below will not exceed 1.0:
(1) (A) The projected annual normal retirement benefit of a
Participant under the pension plan, divided by
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(B) The lesser of:
(i) The product of 1.25 multiplied by the dollar
limitation in effect under Section 415(b)(1)(A) of the Code
for such Limitation Year, or
(ii) The product of 1.4 multiplied by the amount of
compensation which may be taken into account under Section
415(b)(1)(B) of the Code for the Participant for such
Limitation Year; plus
(2) (A) The sum of Annual Additions credited to the
Participant under this Plan for all Limitation Years, divided by:
(B) The sum of the lesser of the following amounts
determined for such Limitation Year and for each prior year of service
with the Employer:
(i) The product of 1.25 multiplied by the dollar
limitation in effect under Section 415(b)(1)(A) of the Code
for such Limitation Year, or
(ii) The product of 1.4 multiplied by the amount of
compensation which may be taken into account under Section
415(b)(1)(B) of the Code for the Participant for such
Limitation Year.
The Administrator may, in calculating the defined contribution plan
fraction described in Section 5.6(d)(2), elect to use the transitional rule
pursuant to Section 415(e)(6) of the Code, if applicable. If the sum of the
fractions produced above will exceed 1.0, even after the use of the "fresh
start" rule contained in Section 235 of the Tax Equity and Fiscal
Responsibility Act of 1982 ("TEFRA"), if applicable, then the same
provisions as stated in Section 5.6(c) above shall apply. If, even after the
reductions provided for in Section 5.6(c), the sum of the fractions still
exceed 1.0, then the benefits of the Participant provided under the pension
plan shall be reduced to the extent neces sary, in accordance with Treasury
Regulations issued under the Code. Solely for the purposes of this Section
5.6(d), the term "years of service" shall mean all years of service defined
by Treasury Regulations issued under Section 415 of the Code.
(e) In the event that the Employer is a member of (1) a controlled
group of corporations or a group of trades or businesses under common
control (as described in Section 414(b) or (c) of the Code, as modified by
Section 415(h) thereof), or (2) an affiliated service group (as described in
Section 414(m) of the Code), the Annual Additions credited to any
Participant's accounts in any such Limitation Year shall be further limited
by reason of the existence of all other qualified retirement plans
maintained by such affiliated corporations, other entities under common
control or other members of the affiliated service group, to the extent such
reduction is required by Section 415 of the Code and the regulations
promulgated thereunder. The Administrator shall determine if any such
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reduction in the Annual Additions to a Participant's accounts is required
for this reason, and if so, the same provisions as stated in 5.6(c) and (d)
above shall apply.
(f) Annual Additions shall not include any Employer contributions which
are used by the Trust to pay interest on an Exempt Loan nor any forfeitures
of Employer Securities purchased with the proceeds of an Exempt Loan,
provided that not more than one-third of the Employer contributions are
allocated to Participants who are among the group of employees deemed
"highly compensated employees" within the meaning of Code Section 414(q).
5.7 Erroneous Allocations.
No Participant shall be entitled to any Annual Additions or other
allocations to his accounts in excess of those permitted under Sections 5.3,
5.4, 5.5, and 5.6. If it is determined at anytime that the Administrator
and/or Trustees have erred in accepting and allocating any contributions or
forfeitures under this Plan, or in allocating Investment Adjustments, or in
excluding or including any person as a Participant, then the Administrator,
in a uniform and nondiscriminatory manner, shall determine the manner in
which such error shall be corrected and shall promptly advise the Trustee in
writing of such error and of the method for correcting such error. The
accounts of any or all Participants may be revised, if necessary, in order
to correct such error.
5.8 Value of Participant's Interest in Fund.
At any time, the value of a Participant's interest in the Fund shall
consist of the aggregate value of his Employee Stock Ownership Account and
his distribution account, if any, determined as of the next-preceding
Valuation Date. The Administrator shall maintain adequate records of the
cost basis of Employer Securities allocated to each Participant's Employer
Stock Ownership Account.
5.9 Investment of Account Balances.
The Employee Stock Ownership Accounts shall be invested primarily in
Employer Securities. Employer Securities shall constitute at least 51% of
the assets of all Employee Stock Ownership Accounts. All sales of Employer
Securities by the Trustee attributable to the Employee Stock Ownership
Accounts of all Participants shall be charged pro rata to the Employee Stock
Ownership Accounts of all Participants.
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ARTICLE VI
RETIREMENT, DEATH AND DESIGNATION OF BENEFICIARY
6.1 Normal Retirement.
A Participant who reaches his Normal Retirement Date and who shall
retire at that time shall thereupon be entitled to retirement benefits based
on the value of his interest in the Fund, payable pursuant to the provisions
of Section 9.1. A Participant who remains in Service after his Normal
Retirement Date shall not be entitled to any retirement benefits until his
actual termination of Service thereafter (except as provided in Section
9.3(g)) and he shall meanwhile continue to participate in this Plan.
6.2 Early Retirement.
A Participant who reaches his Early Retirement Date may retire at such
time (or, at his election, as of the first day of any month thereafter prior
to his Normal Retirement Date) and shall thereupon be entitled to retirement
benefits based on the value of his interest in the Fund, payable pursuant to
the provisions of Section 9.1.
6.3 Disability Retirement.
In the event a Participant incurs a Disability, he may retire on his
Disability Retirement Date and shall thereupon be entitled to retirement
benefits based on the value of his interest in the Fund, payable pursuant to
the provisions of Section 9.1.
6.4 Death Benefits.
(a) Upon the death of a Participant before his Retirement or other
termination of Service, the value of his interest in the Fund shall be
payable pursuant to the provisions of Section 9.1. The Administrator shall
direct the Trustee to distribute his interest in the Fund to any surviving
Beneficiary designated by the Participant or, if none, to such persons
designated by the Administrator pursuant to Section 6.5.
(b) Upon the death of a Former Participant, the Administrator shall
direct the Trustee to distribute any undistributed balance of his interest
in the Fund to any surviving Beneficiary designated by him or, if none, to
such persons designated by the Administrator pursuant to Section 6.5.
(c) The Administrator may require such proper proof of death and such
evidence of the right of any person to receive the interest in the Fund of a
deceased Participant or Former Partici pant as the Administrator may deem
desirable. The Administrator's determination of death and of
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the right of any person to receive payment shall be conclusive.
6.5 Designation of Death Beneficiary and Manner of Payment.
(a) Each Participant shall have the right to designate a Beneficiary or
Beneficiaries to receive the sum or sums to which he may be entitled upon
his death. The Participant may also designate the manner in which any death
benefits under this Plan shall be payable to his Beneficiary, provided that
such designation is in accordance with Section 9.4. Such designation of
Beneficiary and manner of payment shall be in writing and delivered to the
Administrator, and shall be effective when received by the Administrator.
The Participant shall have the right to change such designation by notice in
writing to the Administrator. Such change of Beneficiary or the manner of
payment shall become effective upon its receipt by the Administrator. Any
such change shall be deemed to revoke all prior designations.
(b) If a Participant shall fail to designate validly a Beneficiary or
if no designated Beneficiary survives the Participant, his interest in the
Fund shall be paid to the person or persons in the first of the following
classes of successive preference Beneficiaries surviving at the death of the
Participant: the Participant's (1) widow or widower, (2) children, (3)
parents, and (4) estate. The Administrator shall decide what Beneficiaries,
if any, shall have been validly designated, and its decision shall be
binding and conclusive on all persons.
(c) Notwithstanding the foregoing, if a Participant has been married
throughout the 12 month period preceding the date of his death, the sum or
sums to which he may be entitled under this Plan upon his death shall be
paid to his spouse, unless the Participant's spouse shall have consented to
the election of another Beneficiary. Such a spousal consent shall be in
writing and shall be witnessed either by a representative of the Plan or a
notary public. If it is established to the satisfaction of the Administrator
that such spousal consent cannot be obtained because there is no spouse,
because the spouse cannot be located, or other reasons prescribed by
governmental regulations, the consent of the spouse may be waived, and the
Participant may designate a Beneficiary or Beneficiaries other than his
spouse.
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ARTICLE VII
VESTING AND FORFEITURES
7.1 Vesting on Death, Disability and Normal Retirement.
Unless his participation in this Plan shall have terminated prior
thereto, upon a Participant's death, Disability or upon his attainment of
Normal Retirement Date (whether or not he actually retires at that time)
while he is still employed by the Employer, the Participant's entire
interest in the Fund shall be fully vested and nonforfeitable.
7.2 Vesting on Termination of Participation.
Upon termination of his participation in this Plan for any reason other
than death, Disability, or Normal Retirement, a Participant shall be vested
in a percentage of his Employee Stock Ownership Account, such vested
percentages to be determined under the following table, based on the Years
of Service (including Years of Service prior to the Effective Date) credited
to him for vesting purposes at the time of his termination of participation:
Years of Service Completed Percentage Vested
-------------------------- -----------------
Less than 5 0%
5 or more 100%
Any portion of the Participant's Employee Stock Ownership Account which
is not vested at the time he incurs a Break shall thereupon be forfeited and
disposed of pursuant to Section 7.3. Distribution of the vested portion of a
terminated Participant's interest in the Plan may be authorized by the
Administrator in any manner permitted under Section 9.1.
7.3 Disposition of Forfeitures.
(a) In the event a Participant incurs a Break and subsequently resumes
both his Service and his participation in the Plan prior to incurring at
least 5 Breaks, the forfeitable portion of his Employee Stock Ownership
Account shall be reinstated to the credit of the Participant as of the date
he resumes participation.
(b) In the event a Participant terminates Service and subsequently
incurs a Break and receives a distribution, or in the event a Participant
does not terminate Service, but incurs at least 5 Breaks, or in the event
that a Participant terminates Service and incurs at least 5 Breaks but has
not received a distribution, then the forfeitable portion of his Employer
Account, including Investment
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Adjustments, shall be reallocated to other Participants, pursuant to Section
5.4 as of the date the Participant incurs such Break or Breaks, as the case
may be.
(c) In the event a former Participant who had received a distribution
from the Plan is rehired, he shall repay the amount of his distribution
before the earlier of 5 years after the date of his rehire by the Employer,
or the close of the first period of 5 consecutive Breaks commencing after
the withdrawal in order for any forfeited amounts to be restored to him.
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ARTICLE VIII
EMPLOYEE STOCK OWNERSHIP PROVISIONS
8.1 Right to Demand Employer Securities.
A Participant entitled to a distribution from his Employee Stock
Ownership Account shall be entitled to demand that his interest in the
Account be distributed to him in the form of Em ployer Securities, all
subject to Section 9.9. In the event that the Employer Securities are not
readily tradable on an established market, the Participant shall be entitled
to require that the Employer repurchase the Employer Securities under a fair
valuation formula, as provided by governmental regulations. The Participant
or Beneficiary shall be entitled to exercise the put option described in the
preceding sentence for a period of not more than 60 days following the date
of distribution of Employer Securities to him. If the put option is not
exercised within such 60-day period, the Participant or Beneficiary may
exercise the put option during an additional period of not more than 60 days
after the beginning of the first day of the first Plan Year following the
Plan Year in which the first put option period occurred, all as provided in
regulations promulgated by the Secretary of the Treasury.
8.2 Voting Rights.
Each Participant with an Employee Stock Ownership Account shall be
entitled to direct the Trustee as to the manner in which the Employer
Securities in such Account are to be voted. Employer Securities held in the
Employee Stock Ownership Suspense Account or the Exempt Loan Suspense
Account shall be voted by the Trustee on each issue with respect to which
shareholders are entitled to vote in the manner directed by the majority of
the Participants who directed the Trustee as to the manner of voting their
shares in the Employee Stock Ownership Accounts with respect to such issue.
Prior to the initial allocation of shares, the Trustee shall be entitled to
vote the shares in the Suspense Account without prior direction from the
Participants or the Administrator. In the event that a Participant fails to
give timely voting instructions to the Trustee with respect to the voting of
his allocated Employer Securities, the Trustee shall be entitled to vote
such shares in its discretion.
8.3 Nondiscrimination in Employee Stock Ownership Contributions.
In the event that the amount of the Employee Stock Ownership
contributions that would be required in any Plan Year to make the scheduled
payments on an Exempt Loan would exceed the amount that would otherwise be
deductible by the Employer for such Plan Year under Code Section 404, then
no more than one-third of the Employee Stock Ownership contributions for the
Plan Year, which is also the Employer's taxable year, shall be allocated to
the group of Employees who, during the Plan Year or the preceding Plan Year:
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(a) Was at any time a 5 percent owner of the Employer;
(b) Received compensation from the Employer in excess of $75,000, as
adjusted under Code Section 414(q);
(c) Received compensation from the Employer in excess of $50,000, as
adjusted under Code Section 414(q), and was in the "top-paid group" of
employees (as defined below) for such year; or
(d) Was at any time an officer and received compensation greater than
50 percent of the amount in effect under Code Section 415(b)(1)(A), as
adjusted for cost-of-living increases permitted under Code Section
415(d)(1), but without regard to any adjustment under Code Section
415(c)(6)(A).
An Employee shall be deemed a member of the "top-paid group" of employees
for a given Plan Year if such Employee is in the group of the top 20% of the
employees of the Employer when ranked on the basis of compensation.
8.4 Dividends.
Dividends paid with respect to Employer Securities credited to a
Participant's Employee Stock Ownership account as of the record date for the
dividend payment may be paid in cash to the Participants, pursuant to the
directions of the Board of Directors of the Sponsor. If the Board of
Directors shall direct that the aforesaid dividends shall be paid directly
to Participants, the quarterly dividends paid with respect to such Employer
Securities shall be paid to the Plan, from which dividend distributions in
cash shall be made to the Participants with respect to the Employer
Securities in their Employee Stock Ownership Accounts within 90 days of the
close of the Plan Year in which the dividends were paid. Dividends on
Employer Securities obtained pursuant to an Exempt Loan and still held in
the Suspense Account may be used to make payments on an Exempt Loan, as
described in Section 8.5.
8.5 Exempt Loans.
(a) The Sponsor may direct the Trustee to obtain Exempt Loans. The
Exempt Loan may take the form of (i) a loan from a bank or other commercial
lender to purchase Employer Securities (ii) a loan from the Employer to the
Plan; or (iii) an installment sale of Employer Securities to the Plan. The
proceeds of any such Exempt Loan shall be used, within a reasonable time
after the Ex empt Loan is obtained, only to purchase Employer Securities,
repay the Exempt Loan, or repay any prior Exempt Loan. Any such Exempt Loan
shall provide for no more than a reasonable rate of interest and shall be
without recourse against the Plan. The number of years to maturity under the
Exempt Loan must be definitely ascertainable at all times. The only assets
of the Plan that may be given as collateral for an Exempt Loan are Employer
Securities acquired with the proceeds
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of the Exempt Loan and Employer Securities that were used as collateral for
a prior Exempt Loan repaid with the proceeds of the current Exempt Loan.
Such Employer Securities so pledged shall be placed in an Exempt Loan
Suspense Account. No person or institution entitled to payment under an
Exempt Loan shall have recourse against Trust assets other than the
aforesaid collateral, Employer Stock Ownership contributions (other than
contributions of Employer Securities) that are available under the Plan to
meet obligations under the Exempt Loan and earnings attributable to such
collateral and the investment of such contributions. All Employee Stock
Ownership contributions paid during the Plan Year in which an Exempt Loan is
made (whether before or after the date the proceeds of the Exempt Loan are
received), all Employee Stock Ownership contribu tions paid thereafter until
the Exempt Loan has been repaid in full, and all earnings from investment of
such Employee Stock Ownership contributions, without regard to whether any
such Employee Stock Ownership contributions and earnings have been allocated
to Participants' Employee Stock Ownership Accounts, shall be available to
meet obligations under the Exempt Loan as such obligations accrue, or prior
to the time such obligations accrue, unless otherwise provided by the
Employer at the time any such contribution is made. Any pledge of Employer
Securities shall provide for the release of shares so pledged upon the
payment of any portion of the Exempt Loan.
(b) For each Plan Year during the duration of the Exempt Loan, the
number of shares of Employer Securities released from such pledge shall
equal the number of encumbered shares held immediately before release for
the current Plan Year multiplied by a fraction. The numerator of the
fraction is the sum of principal and interest paid in such Plan Year. The
denominator of the fraction is the sum of the numerator plus the principal
and interest to be paid for all future years. Such years will be determined
without taking into account any possible extension or renewal periods. If
interest on any Exempt Loan is variable, the interest to be paid in future
years under the Exempt Loan shall be computed by using the interest rate
applicable as of the end of the Plan Year.
(c) Notwithstanding the foregoing, the Trustee may obtain an Exempt
Loan pursuant to the terms of which the number of Employer Securities to be
released from encumbrance shall be determined solely with reference to
principal payments. In the event that such an Exempt Loan is obtained,
annual payments of principal and interest shall be at a cumulative rate that
is not less rapid at any time than level payments of such amounts for not
more than 10 years. The amount of interest in any such annual loan repayment
shall be disregarded only to the extent that it would be determined to be
interest under standard loan amortization tables. The requirement set forth
in the preceding sentence shall not be applicable from the time that, by
reason of a renewal, extension, or refinancing, the sum of the expired
duration of the Exempt Loan, the renewal period, the extension period, and
the duration of a new Exempt Loan exceeds 10 years.
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8.6 Exempt Loan Payments.
(a) Payments of principal and interest on any Exempt Loan during a Plan
Year shall be made by the Trustee (as directed by the Administrator) only
from (1) Employee Stock Ownership contributions to the Trust made to meet
the Plan's obligation under an Exempt Loan (other than contributions of
Employer Securities) and from any earnings attributable to Employer
Securities held as collateral for an Exempt Loan and investments of such
contributions (both received during or prior to the Plan Year); (2) the
proceeds of a subsequent Exempt Loan made to repay a prior Exempt Loan; and
(3) the proceeds of the sale of any Employer Securities held as collateral
for an Exempt Loan. Such contribution and earnings shall be accounted for
separately by the Plan until the Exempt Loan is repaid.
(b) Employer Securities released by reason of the payment of principal
or interest on an Exempt Loan from amounts allocated to Participants'
Employee Stock Ownership Accounts shall immediately upon payment be
allocated as set forth in Section 5.5.
(c) The Employer shall contribute to the Trust sufficient amounts to
enable the Trust to pay principal and interest on any such Exempt Loans as
they are due, provided however that no such contribution shall exceed the
limitations in Section 5.6. In the event that such contributions by reason
of the limitations in Section 5.6 are insufficient to enable the Trust to
pay principal and interest on such Exempt Loan as it is due, then upon the
Trustee's request the Employer shall:
(1) Make an Exempt Loan to the Trust in sufficient amounts to
meet such principal and interest payments. Such new Exempt Loan shall
be subordinated to the prior Exempt Loan. Securities released from the
pledge of the prior Exempt Loan shall be pledged as collateral to
secure the new Exempt Loan. Such Employer Securities will be released
from this new pledge and allocated to the Employee Stock Ownership
Accounts of the Partici pants in accordance with applicable provisions
of the Plan;
(2) Purchase any Employer Securities pledged as collateral in
an amount necessary to provide the Trustee with sufficient funds to
meet the principal and interest repayments. Any such sale by the Plan
shall meet the requirements of Section 408(e) of ERISA; or
(3) Any combination of the foregoing. However, the Employer
shall not, pursuant to the provisions of this subsection, do, fail to
do or cause to be done any act or thing which would result in a
disqualification of the Plan as an Employee Stock Ownership Plan under
the Code.
(d) Except as provided in Section 8.1 above and notwithstanding any
amendment to or termination of the Plan which causes it to cease to qualify
as an Employee Stock Ownership plan within the meaning of Section 4975(e)(7)
of the Code, or any repayment of an Exempt Loan, no
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shares of Employer Securities acquired with the proceeds of an Exempt Loan
obtained by the Trust to purchase Employer Securities may be subject to a
put, call or other option, or buy-sell or similar arrangement while such
shares are held by the Plan or when such Shares are distributed from the
Plan.
8.7 Put Option.
If a Participant exercises a put option (as set forth in Section 8.1)
with respect to Employer Securities that were distributed as part of a total
distribution pursuant to which a Participant's Employee Stock Ownership
Account is distributed to him in a single taxable year, the Employer or the
Plan may elect to pay the purchase price of the Employer Securities over a
period not to exceed 5 years. Such payments shall be made in substantially
equal installments not less frequently than annually over a period beginning
not later than 30 days after the exercise of the put option. Reasonable
interest shall be paid to the Participant with respect to the unpaid balance
of the purchase price and adequate security shall be provided with respect
thereto. In the event that a Participant exercises a put option with respect
to Employer Securities that are distributed as part of an installment
distribution, the amount to be paid for such securities shall be paid not
later than 30 days after the exercise of the put option.
8.8 Diversification Requirements
Each Participant who has completed at least 10 years of participation
in the Plan and has attained age 55 may elect within 90 days after the close
of each Plan Year during his "qualified election period" to direct the Plan
as to the investment of at least 25 percent of his Employee Stock Ownership
Account (to the extent such percentage exceeds the amount to which a prior
election under this Section 8.8 had been made). For purposes of this Section
8.8, the term "qualified election period" shall mean the 5-Plan-Year period
beginning with the Plan Year after the Plan Year in which the Participant
attains age 55 (or, if later, beginning with the Plan Year after the first
Plan Year in which the Employee first completes at least 10 years of
participation in the Plan). In the case of the Employee who has attained age
60 and completed 10 years of participation in the prior Plan Year and in the
case of the election year in which any other Participant who has met the
minimum age and service requirements for diversification can make his last
election hereunder, he shall be entitled to direct the Plan as to the
investment of at least 50 percent of his Employee Stock Ownership Account
(to the extent such percentage exceeds the amount to which a prior election
under this Section 8.8 had been made). The Plan shall make available at
least 3 investment options (not inconsistent with regulations prescribed by
the Department of Treasury) to each Participant making an election
hereunder. The Plan shall be deemed to have met the requirements of this
Section if the portion of the Participant's Employee Stock Ownership Account
covered by the election hereunder is distributed to the Participant or his
designated Beneficiary within 90 days after the period during which the
election may be made. In the absence of such a distribution, the Trustee
shall implement the Participant's election within 90 days following the
expiration of the qualified election period.
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8.9 Independent Appraiser.
An independent appraiser meeting the requirements of Code Section
170(a)(1) shall value the Employer Securities in those Plan Years when such
securities are not readily tradable on an established securities market.
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ARTICLE IX
PAYMENTS AND DISTRIBUTIONS
9.1 Payments on Termination of Service - In General.
All benefits provided under this Plan shall be funded by the value of a
Participant's vested interest in the Fund. As soon as practicable after a
Participant's Retirement, death or termination of Service, the Administrator
shall ascertain the value of his vested interest in the Fund, as provided in
Article V, and the Administrator shall hold or dispose of the same in
accordance with the following provisions of this Article IX.
9.2 Commencement of Payments.
(a) Distributions upon Retirement or Death. Upon a Participant's
Retirement or Death, payment of benefits under this Plan shall, unless the
Participant otherwise elects (in accordance with Section 9.3), commence no
later than 6 months after the close of the Plan Year in which occurs the
date of the Participant's Retirement or death.
(b) Distribution following Termination of Service. Unless a Participant
elects otherwise, if a Participant terminates Service prior to Retirement or
death, he shall be accorded an opportunity to commence receipt of
distributions from his Accounts within six (6) months after the Valuation
Date next following the date of his termination of service. A Participant
who terminates Service with a deferred vested benefit shall be entitled to
receive from the Administrator a statement of his benefits. In the event
that a Participant elects not to commence receipt of distributions from his
Accounts in accordance with this Section 9.2(b), after the Participant
incurs a Break, the Administrator shall transfer his deferred vested
interest to a distribution account. If a Participant's vested Employer
Account does not exceed (or at the time of any prior distribution did not
exceed) $3,500, the Plan Administrator may distribute the vested portion of
his Employer Account as soon as administratively feasible without the
consent of the Participant or his spouse.
(c) Distribution of Accounts Greater Than $3,500. If the value of a
Participant's vested Account balance exceeds (or at the time of any prior
distribution exceeded) $3,500, and the Account balance is immediately
distributable, the Participant must consent to any distribution of such
Account balance. The Plan Administrator shall notify the Participant of the
right to defer any distribution until the Participant's Account balance is
no longer immediately distributable. The consent of the Participant shall
not be required to the extent that a distribution is required to satisfy
Code ss.401(a)(9) or Code ss.415.
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9.3 Mandatory Commencement of Benefits.
(a) Unless a Participant elects otherwise, in writing, distribution of
benefits will begin no later than the 60th day after the latest of the close
of the Plan Year in which (i) the Participant attains age 65, (ii) occurs
the tenth anniversary of the year in which the Participant commenced
participation in the Plan Year, or (iii) the Participant terminates Service
with the Employer.
(b) In the event that the Plan shall be subsequently amended to provide
for a form of distribution other than a lump sum, as of the first
distribution calendar year, distributions, if not made in a lump sum, may be
made only over one of the following periods (or a combination thereof):
(i) the life of the Participant,
(ii) the life of the Participant and the designated beneficiary,
(iii) a period certain not extending beyond the life expectancy
of the Participant, or
(iv) a period certain not extending beyond the joint and last
survivor expectancy of the Participant and a designated
beneficiary.
(c) In the event that the Plan shall be subsequently amended to provide
for a form of distribution other than a lump sum, if the participant's
interest is to be distributed in other than a lump sum, the following
minimum distribution rules shall apply on or after the required beginning
date:
(i) If a Participant's benefit is to be distributed over (1) a
period not extending beyond the life expectancy of the
Participant or the joint life and last survivor expectancy
of the Participant and the Participant's designated
beneficiary or (2) a period not extending beyond the life
expectancy of the designated beneficiary, the amount
required to be distributed for each calendar year, beginning
with distributions for the first distribution calendar year,
must at least equal the quotient obtained by dividing the
Participant's benefit by the applicable life expectancy.
(ii) For calendar years beginning after December 31, 1988, the
amount to be distributed each year, beginning with
distributions for the first distribution calendar year shall
not be less than the quotient obtained by dividing the
Participant's benefit by the lesser of (1) the applicable
life expectancy or (2) if the Participant's spouse is not
the designated beneficiary, the applicable divisor
determined from the table set forth in Q&A-4 of section
1.401(a)(9)-2 of the Proposed Regulations. Distributions
after the death of the participant shall be distributed
using the applicable life expectancy in sub-section (iii)
above as the relevant divisor without regard to Proposed
Regulations 1.401(a)(9)-2.
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(iii) The minimum distribution required for the Participant's
first distribution calendar year must be made on or before
the Participant's required beginning date. The minimum
distribution for other calendar years, including the minimum
distribution for the distribution calendar year in which the
employee's required beginning date occurs, must be made on
or before December 31 of the distribution calendar year.
(d) If a Participant dies after a distribution has commenced in
accordance with Section 8.3(b) but before his entire interest has been
distributed to him, the remaining portion of such interest shall be
distributed to his Beneficiary at least as rapidly as under the method of
distribution in effect as of the date of his death.
(e) If a Participant shall die before the distribution of his interest
in the Plan has begun, the entire interest of the Participant shall be
distributed by December 31 of the calendar year containing the fifth
anniversary of the death of the Participant, except in the following events:
(i) If any portion of the Participant's interest is payable to
(or for the benefit of) a designated beneficiary over a
period not extending beyond the life expectancy of such
beneficiary and such distributions begin not later than
December 31 of the calendar year immediately following the
calendar year in which the Participant died.
(ii) If any portion of the Participant's interest is payable to
(or for the benefit of) the Participant's spouse over a
period not extending beyond the life expectancy of such
spouse and such distributions begin no later than December
31 of the calendar year in which the Participant would have
attained age 70-1/2.
If the Participant has not made a distribution election by the time of
his death, the Participant's designated beneficiary shall elect the method
of distribution no later than the earlier of (1) December 31 of the calendar
year in which distributions would be required to begin under this Article or
(2) December 31 of the calendar year which contains the fifth anniversary of
the date of death of the Participant. If the Participant has no designated
beneficiary, or if the designated beneficiary does not elect a method of
distribution, distribution of the Participant's entire interest shall be
completed by December 31 of the calendar year containing the fifth
anniversary of the Participant's death.
(f) For purposes of this Article, the life expectancy of a Participant
and his spouse may be redetermined but not more frequently than annually.
The life expectancy (or joint and last survivor expectancy) shall be
calculated using the attained age of the Participant (or designated
beneficiary) as of the Participant's (or designated beneficiary's) birthday
in the applicable calendar year reduced by one for each calendar year which
has elapsed since the date life expectancy was first calculated. If life
expectancy is being recalculated, the applicable life expectancy shall be
the life expectancy as so recalculated. The applicable calendar year shall
be the first distribution calendar year, and if life expectancy is being
recalculated, such succeeding calendar year. Unless
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otherwise elected by the Participant (or his spouse, if applicable) by the
time distributions are required to begin, life expectancies shall be
recalculated annually. Any such election not to recalculate shall be
irrevocable and shall apply to all subsequent years. The life expectancy of
a nonspouse beneficiary may not be recalculated.
(g) For purposes of Section 9.3(b) and 9.3(e), any amount paid to a
child shall be treated as if it had been paid to a surviving spouse if such
amount will become payable to the surviving spouse upon such child reaching
majority (or other designated event permitted under regulations).
(h) For distributions beginning before the Participant's death, the
first distribution calendar year is the calendar year immediately preceding
the calendar year which contains the Participant's required beginning date.
For distributions beginning after the Participant's death, the first
distribution calendar year is the calendar year in which distributions are
required to begin pursuant to this Article.
9.4 Required Beginning Dates.
(a) General Rule. The required beginning date of a Participant is the
first day of April of the calendar year following the calendar year in which
the participant attains age 70-1/2, provided that such Participant is a
5-percent owner.
(b) 5-percent owner. A Participant is treated as a 5-percent owner for
purposes of this section if such Participant is a 5-percent owner as defined
in section 416(i) of the Code (determined in accordance with section 416 but
without regard to whether the plan is top-heavy) at any time during the Plan
Year ending with or within the calendar year in which such owner attains age
66-1/2 or any subsequent Plan Year. Once distributions have begun to a
5-percent owner under this section, they must continue to be distributed,
even if the Participant ceases to be a 5- percent owner in a subsequent
year.
9.5 Form of Payment.
Each Participant's vested interest shall be distributed in a lump sum
payment. Notwithstanding the preceding sentence, but subject to Section 9.3,
the Administrator may not distribute a lump sum when the present value of a
Participant's total Account balances is in excess of $3,500 without the
Participant's consent. This form of payment shall be the normal form of
distribution. Furthermore, however, in the event that the Administrator must
commence distributions, pursuant to Section 9.4, with respect to an Employee
who has attained age 70-1/2 and is still employed by the Employer, if the
Employee does not elect a lump sum distribution, payments shall be made in
installments in such amounts as shall satisfy the minimum distribution rules
of Section 9.3.
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9.6 Payments Upon Termination of Plan.
Upon termination of this Plan pursuant to Sections 13.2, 13.4, 13.5 or
13.6, the Administrator shall continue to perform its duties and the Trustee
shall make all payments upon the following terms, conditions and provisions:
All interests of Participants shall immediately become fully vested; the
value of the interests of all Participants shall be determined within 60
days after such termination, and the Administrator shall have the same
powers to direct the Trustee in making payments as contained in Sections 9.1
and 13.5.
9.7 Distributions Pursuant to Qualified Domestic Relations Orders.
Upon receipt of a domestic relations order, the Administrator shall
notify promptly the Participant and any alternate payee of receipt of the
order and the Plan's procedure for determining whether the order is a
Qualified Domestic Relations Order. While the issue of whether a domestic
relations order is a Qualified Domestic Relations Order is being determined,
if the benefits would otherwise be paid, the Administrator shall segregate
in a separate account in the Plan the amounts that would be payable to the
alternate payee during such period if the order were a Qualified Do mestic
Relations Order. If within 18 months the order is determined to be a
Qualified Domestic Relations Order, the amounts so segregated, along with
the interest or investment earnings attributable thereto shall be paid to
the alternate payee. Alternatively, if within 18 months, it is determined
that the order is not a Qualified Domestic Relations Order or if the issue
is still unresolved, the amounts segregated under this Section 9.6, with the
earnings attributable thereto, shall be paid to the Participant or
Beneficiary who would have been entitled to such amounts if there had been
no order. The determination as to whether the order is qualified shall be
applied prospectively. Thus, if the Administrator determines that the order
is a Qualified Domestic Relations Order after the 18-month period, the Plan
shall not be liable for payments to the alternative payee for the period
before the order is determined to be a Qualified Domestic Relations Order.
9.8 Cash-Out Distributions
If a Participant receives a distribution of the entire present value of
his vested Account balances under this Plan because of the termination of
his participation in the Plan, the Plan shall disregard a Participant's
Service with respect to which such cash-out distribution shall have been
made, in computing his accrued benefit under the Plan in the event that a
Former Participant shall again become an Employee and become eligible to
participate in the Plan. Such a distribution shall be deemed to be made on
termination of participation in the Plan if it is made not later than the
close of the second Plan Year following the Plan Year in which such
termination occurs. The forfeitable portion of a Participant's accrued
benefit shall be restored upon repayment to the Plan by such former
Participant of the full amount of the cash-out distribution, provided that
the former Participant again becomes an Employee. Such repayment must be
made by the Employee not later than the end of the 5-year period beginning
with the date of the distribution. Forfeitures required
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to be restored by virtue of such repayment shall be restored from the
following sources in the following order of preference: (i) current
forfeitures; (ii) additional employee stock ownership contributions, as
appropriate and as subject to Section 5.6; and (iii) investment earnings of
the Fund. In the event that a Participant's interest in the Plan is totally
forfeitable, a Participant shall be deemed to have received a distribution
of zero upon his termination of Service. In the event of a return to Service
within 5 years of the date of his deemed distribution, the Participant shall
be deemed to have repaid his distribution in accordance with the rules of
this Section 9.8.
9.9 ESOP Distribution Rules.
Notwithstanding any provision of this Article IX to the contrary, the
distribution of a Participant's Employee Stock Ownership Account (unless the
Participant elects otherwise in writing), shall commence as soon as
administratively feasible as of the first Valuation Date coincident with or
next following his death, disability or termination of Service, but not
later than 1 year after the close of the Plan Year in which the Participant
separates from Service by reason of the attainment of his Normal Retirement
Date, disability, death or separation from Service. In addition, all
distributions hereunder shall, to the extent that the Participant's Account
is invested in Employer Securities, be made in the form of Employer
Securities. Fractional shares, however, may be distributed in the form of
cash.
9.10 Withholding.
(a) Notwithstanding any provision of the Plan to the contrary that
would otherwise limit a distributee's election under this Article IX, a
distributee may elect, at the time and in the manner prescribed by the Plan
Administrator, to have any portion of an "eligible rollover distribution"
paid directly to an "eligible retirement plan" specified by the distributee
in a "direct rollover."
(b) For purposes of this Section 9.10, an "eligible rollover
distribution" is any distribution of all or any portion of the balance to
the credit of the distributee, except that an "eligible rollover
distribution" does not include: any distribution that is one of a series of
substantially equal periodic payments (not less frequently than annually)
made for the life (or life expectancy) of the distributee or the joint lives
(or joint life expectancies) of the distributee and the distributee's
designated beneficiary, or for a specified period of ten years or more; any
distribution to the extent such distribution is required under section
401(a)(9) of the Code; and the portion of any distribution that is not
includible in gross income (determined without regard to the exclusion for
net unrealized appreciation with respect to Employer Securities).
(c) For purposes of this Section 9.10, an "eligible retirement plan" is
an individual retirement account described in section 408(a) of the Code, an
individual retirement annuity described in section 408(b) of the Code, an
annuity plan described in section 403(a) of the Code, or a qualified trust
described in section 401(a) of the Code, that accepts the distributee's
eligible
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rollover distribution. However, in the case of an "eligible rollover
distribution" to the surviving spouse, an "eligible retirement plan" is an
individual retirement account or individual retirement annuity.
(d) For purposes of this Section 9.10, a distributee includes a
Participant or former Participant. In addition, the Participant's or former
Participant's surviving spouse and the Participant's or former Participant's
spouse or former spouse who is the alternate payee under a qualified
domestic relations order, as defined in section 414(p) of the Code, are
"distributees" with regard to the interest of the spouse or former spouse.
(e) For purposes of this Section 9.10, a "direct rollover" is a payment
by the Plan to the "eligible retirement plan" specified by the distributee.
9.11 Waiver of 30-day Notice.
If a distribution is one to which sections 401(a)(11) and 417 of the
Code do not apply, such distribution may commence less than 30 days after
the notice required under section 1.411(a)- 11(c) of the Income Tax
Regulations is given, provided that: (1) the Plan Administrator clearly
informs the Participant that the Participant has a right to a period of at
least 30 days after receiving the notice to consider the decision of whether
or not to elect a distribution (and, if applicable, a particular
distribution option), and (2) the Participant, after receiving the notice,
affirmatively elects a distribution.
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ARTICLE X
PROVISIONS RELATING TO TOP-HEAVY PLANS
10.1 Top-Heavy Rules to Control.
Anything contained in this Plan to the contrary notwithstanding, if for
any Plan Year the Plan is a top-heavy plan, as determined pursuant to
Section 416 of the Code, then the Plan must meet the requirements of this
Article X for such Plan Year.
10.2 Top-Heavy Plan Definitions.
Unless a different meaning is plainly implied by the context, the
following terms as used in this Article X shall have the following meanings:
(a) "Accrued Benefit" shall mean the account balances or accrued
benefits of an Employee, calculated pursuant to Section 10.3.
(b) "Determination Date" shall mean, with respect to any particular
Plan Year of this Plan, the last day of the preceding Plan Year (or, in the
case of the first Plan Year of the Plan, the last day of the first Plan
Year). In addition, the term "Determination Date" shall mean, with respect
to any particular plan year of any plan (other than this Plan) in a Required
Aggregation Group or a Permissive Aggregation Group, the last day of the
plan year of such plan which falls within the same calendar year as the
Determination Date for this Plan.
(c) "Employer" shall mean the Employer (as defined in Section 1.1(q))
and any entity which is (1) a member of a controlled group including such
Employer, while it is a member of such controlled group (within the meaning
of Section 414(b) of the Code), (2) in a group of trades or businesses under
common control with such Employer, while it is under common control (within
the meaning of Section 414(c) of the Code), and (3) a member of an
affiliated service group including such Employer, while it is a member of
such affiliated service group (within the meaning of Section 414(m) of the
Code).
(d) "Key Employee" shall mean any Employee or former Employee (or any
Beneficiary of such Employee or former Employee, as the case may be) who, at
any time during the Plan Year or during the 4 immediately preceding Plan
Years is one of the following:
(1) An officer of the Employer who has compensation greater
than 50% of the amount in effect under Code 415(b)(1)(A) for the Plan
Year; provided, however, that no more than 50 Employees (or, if lesser,
the greater of 3 or 10% of the Employees) shall be deemed officers;
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(2) One of the 10 Employees having annual compensation (as
defined in Section 415 of the Code) in excess of the limitation in
effect under Section 415(c)(1)(A) of the Code, and owning (or
considered as owning, within the meaning of Section 318 of the Code)
the largest interests in the Employer;
(3) Any Employee owning (or considered as owning, within the
meaning of Section 318 of the Code) more than 5% of the outstanding
stock of the Employer or stock possessing more than 5% of the total
combined voting power of all stock of the Employer; or
(4) Any Employee having annual compensation (as defined in
Section 415 of the Code) of more than $150,000 and who would be
described in Section 10.2(d)(3) if "1%" were substituted for "5%"
wherever the latter percentage appears.
For purposes of applying Section 318 of the Code to the provisions of
this Section 10.2(d), Section 318(a)(2)(C) of the Code shall be applied by
substituting "5%" for "50%" wherever the latter percentage appears. In
addition, for purposes of this Section 10.2(d), the provisions of Section
414(b), (c) and (m) shall not apply in determining ownership interests in
the Employer. However, for purposes of determining whether an individual has
compensation in excess of $150,000, or whether an individual is a Key
Employee under Section 10.2(d)(1) and (2), compensation from each entity
required to be aggregated under Sections 414(b), (c) and (m) of the Code
shall be taken into account. Notwithstanding anything contained herein to
the contrary, all determinations as to whether a person is or is not a Key
Employee shall be resolved by reference to Section 416 of the Code and any
rules and regulations promulgated thereunder.
(e) "Non-Key Employee" shall mean any Employee or former Employee (or
any Beneficiary of such Employee or former Employee, as the case may be) who
is not considered to be a Key Employee with respect to this Plan.
(f) "Permissive Aggregation Group" shall mean all plans in the Required
Aggregation Group and any other plans maintained by the Employer which
satisfy Sections 401(a)(4) and 410 of the Code when considered together with
the Required Aggregation Group.
(g) "Required Aggregation Group" shall mean each plan (including any
terminated plan) of the Employer in which a Key Employee is (or in the case
of a terminated plan, had been) a Participant in the Plan Year containing
the Determination Date or any of the 4 preceding Plan Years, and each other
plan of the Employer which enables any plan of the Employer in which a Key
Employee is a Participant to meet the requirement of Sections 401(a)(4) and
410 of the Code.
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10.3 Calculation of Accrued Benefits.
(a) An Employee's Accrued Benefit shall be equal to:
(1) With respect to this Plan or any other defined
contribution plan (other than a defined contribution pension plan) in a
Required Aggregation Group or a Permissive Aggregation Group, the
Employee's account balances under the respective plan, determined as of
the most recent plan valuation date within a 12-month period ending on
the Determination Date, including contributions actually made after the
valuation date but before the Determination Date (and, in the first
plan year of a plan, also including any contributions made after the
Determination Date which are allocated as of a date in the first plan
year).
(2) With respect to any defined contribution pension plan in a
Required Aggregation Group or a Permissive Aggregation Group, the
Employee's account balances under the plan, determined as of the most
recent plan valuation date within a 12-month period ending on the
Determination Date, including contributions which have not actually
been made, but which are due to be made as of the Determination Date.
(3) With respect to any defined benefit plan in a Required
Aggregation Group or a Permissive Aggregation Group, the present value
of the Employee's accrued benefits under the plan, determined as of the
most recent plan valuation date within a 12-month period ending on the
Determination Date, pursuant to the actuarial assumptions used by such
plan, and calculated as if the Employee terminated Service under such
plan as of the valuation date (except that, in the first plan year of a
plan, a current Participant's estimated Accrued Benefit Plan as of the
Determination Date shall be taken into account).
(4) If any individual has not performed services for the
Employer maintaining the Plan at any time during the 5-year period
ending on the Determination Date, any Accrued Benefit for such
individual shall not be taken into account.
(b) The Accrued Benefit of any Employee shall be further adjusted as
follows:
(1) The Accrued Benefit shall be calculated to include all
amounts attributable to both Employer and Employee contributions, but
shall exclude amounts attributable to voluntary deductible Employee
contributions, if any.
(2) The Accrued Benefit shall be increased by the aggregate
distributions made with respect to an Employee under the plan or plans,
as the case may be, during the 5-year period ending on the
Determination Date.
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(3) Rollover and direct plan-to-plan transfers shall be taken
into account as follows:
(A) If the transfer is initiated by the Employee and made
from a plan maintained by one employer to a plan maintained by
another unrelated employer, the transferring plan shall
continue to count the amount transferred; the receiving plan
shall not count the amount transferred.
(B) If the transfer is not initiated by the Employee or
is made between plans maintained by related employers, the
transferring plan shall no longer count the amount
transferred; the receiving plan shall count the amount
transferred.
(c) If any individual has not performed services for the Employer at
any time during the 5- year period ending on the Determination Date, any
accrued benefit for such individual (and the account of such individual)
shall not be taken into account.
10.4 Determination of Top-Heavy Status.
This Plan shall be considered to be a top-heavy plan for any Plan Year
if, as of the Determination Date, the value of the Accrued Benefits of Key
Employees exceeds 60% of the value of the Accrued Benefits of all eligible
Employees under the Plan. Notwithstanding the foregoing, if the Employer
maintains any other qualified plan, the determination of whether this Plan
is top-heavy shall be made after aggregating all other plans of the Employer
in the Required Aggregation Group and, if desired by the Employer as a means
of avoiding top-heavy status, after aggregating any other plan of the
Employer in the Permissive Aggregation Group. If the required Aggregation
Group is top-heavy, then each plan contained in such group shall be deemed
to be top-heavy, notwithstanding that any particular plan in such group
would not otherwise be deemed to be top-heavy. Conversely, if the Permissive
Aggregation Group is not top-heavy, then no plan contained in such group
shall be deemed to be top-heavy, notwithstanding that any particular plan in
such group would otherwise be deemed to be top-heavy. In no event shall a
plan included in a top-heavy Permissive Aggregation Group be deemed a
top-heavy plan unless such plan is also included in a top-heavy Required
Aggregation Group.
10.5 Determination of Super Top-Heavy Status.
The Plan shall be considered to be a super top-heavy plan if, as of the
Determination Date, the Plan would meet the test specified in Section 10.4
above for classification as a top-heavy plan, except that "90%" shall be
substituted for "60%" whenever the latter percentage appears.
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10.6 Minimum Contribution.
(a) For any year in which the Plan is top-heavy, each Non-Key Employee
who has met the age and service requirements, if any, contained in the Plan,
shall be entitled to a minimum con tribution (which may include forfeitures
otherwise allocable) equal to a percentage of such Non- Key Employee's
compensation (as defined in Section 415 of the Code) as follows:
(1) If the Non-Key Employee is not covered by a defined
benefit plan maintained by the Employer, then the minimum contribution
under this Plan shall be 3% of such Non- Key Employee's compensation.
(2) If the Non-Key Employee is covered by a defined benefit
plan maintained by the Employer, then the minimum contribution under
this Plan shall be 5% of such Non- Key Employee's compensation.
(b) Notwithstanding the foregoing, the minimum contribution otherwise
allocable to a Non-Key Employee under this Plan shall be reduced in the
following circumstances:
(1) The percentage minimum contribution required under this
Plan shall in no event exceed the percentage contribution made for the
Key Employee for whom such percentage is the highest for the Plan Year
after taking into account contributions under other defined
contribution plans in this Plan's Required Aggregation Group; provided,
however, that this Section 10.7(b)(1) shall not apply if this Plan is
included in a Required Aggregation Group and this Plan enables a
defined benefit plan in such Required Ag gregation Group to meet the
requirements of Section 401(a)(4) or 410 of the Code.
(2) No minimum contribution shall be required (or the minimum
contribution shall be reduced, as the case may be) for a Non-Key
Employee under this Plan for any Plan Year if the Employer maintains
another qualified plan under which a minimum benefit or contribution is
being accrued or made on account of such Plan Year, in whole or in
part, on behalf of the Non-Key Employee, in accordance with Section
416(c) of the Code.
(c) For purposes of this Section 10.6, there shall be disregarded (1)
any Employer contributions attributable to a salary reduction or similar
arrangement, or (2) any Employer contri butions to or any benefits under
Chapter 21 of the Code (relating to the Federal Insurance Contributions
Act), Title II of the Social Security Act, or any other federal or state
law.
(d) For purposes of this Section 10.6, minimum contributions shall be
required to be made on behalf of only those Non-Key Employees, as described
in Section 10.7(a), who have not terminated Service as of the last day of
the Plan Year. If a Non-Key Employee is otherwise entitled to receive a
minimum contribution pursuant to this Section 10.6(d), the fact that such
Non- Key Employee failed to complete 1,000 Hours of Service or failed to
make any mandatory or
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elective contributions under this Plan, if any are so required, shall not
preclude him from receiving such minimum contribution.
10.7 Vesting.
(a) For any Plan Year in which the Plan is a top-heavy plan, a
Participant's Employer account shall continue to vest according to the
following schedule:
Years of Service Completed Percentage Vested
-------------------------- -----------------
Less than 1 0%
1 but less than 2 20%
2 but less than 3 40%
3 but less than 4 60%
4 but less than 5 80%
5 or more 100%
(b) For purposes of Section 10.7(a), the term "year of service" shall
have the same meaning as set forth in Section 1.1(kk), as modified by
Section 3.2
(c) If for any Plan Year the Plan becomes top-heavy and the vesting
schedule set forth in Section 10.7(a) becomes effective, then, even if the
Plan ceases to be top-heavy in any subse quent Plan Year, the vesting
schedule set forth in Section 10.7(a) shall remain applicable with respect
to any Participant who has completed 3 Years of Service.
10.8 Maximum Benefit Limitation.
For any Plan Year in which the Plan is a top-heavy plan, Section
5.6(d)(1)(B)(i) and Section 5.6(d)(2)(B)(i)shall be read by substituting
"1.0" for "1.25" wherever the latter figure appears; provided, however, that
such substitution shall not have the effect of reducing any benefit accrued
under a defined benefit plan prior to the first day of the plan year in
which this Section 10.8 becomes applicable.
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ARTICLE XI
ADMINISTRATION
11.1 Appointment of Administrator.
This Plan shall be administered by a committee consisting of up to 5
persons, whether or not Employees or Participants, who shall be appointed
from time to time by the Board of Directors to serve at its pleasure. The
Sponsor may require that each person appointed as an Administrator shall
signify his acceptance by filing an acceptance with the Sponsor. The term
"Administrator" as used in this Plan shall refer to the members of the
committee, either individually or collectively, as appropriate. In the event
that the Sponsor shall elect not to appoint any individuals to constitute a
committee to administer the Plan, the Sponsor shall serve as the
Administrator hereunder.
11.2 Resignation or Removal of Administrator.
An Administrator shall have the right to resign at any time by giving
notice in writing, mailed or delivered to the Employer and to the Trustee.
Any Administrator who was an employee of the Employer at the time of his
appointment shall be deemed to have resigned as an Administrator upon his
termination of Service. The Board of Directors may, in its discretion,
remove any Administrator with or without cause, by giving notice in writing,
mailed or delivered to the Administrator and to the Trustee.
11.3 Appointment of Successors: Terms of Office, Etc.
Upon the death, resignation or removal of an Administrator, the
Employer may appoint, by Board of Directors' resolution, a successor or
successors. Notice of termination of an Adminis trator and notice of
appointment of a successor shall be made by the Employer in writing, with
copies mailed or delivered to the Trustee, and the successor shall have all
the rights and privileges and all of the duties and obligations of the
predecessor.
11.4 Powers and Duties of Administrator.
The Administrator shall have the following duties and responsibilities
in connection with the administration of this Plan:
(a) To promulgate and enforce such rules, regulations and procedures as
shall be proper for the efficient administration of the Plan, such rules,
regulations and procedures to apply uniformly to all Employees, Participants
and Beneficiaries;
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(b) To determine all questions arising in the administration,
interpretation and application of the Plan, including questions of
eligibility and of the status and rights of Partici pants, Beneficiaries and
any other persons hereunder;
(c) To decide any dispute arising hereunder strictly in accordance with
the terms of the Plan; provided, however, that no Administrator shall
participate in any matter involving any questions relating solely to his own
participation or benefits under this Plan;
(d) To advise the Employer and the Trustee regarding the known future
needs for funds to be available for distribution in order that the Trustee
may establish investments accordingly;
(e) To correct defects, supply omissions and reconcile inconsistencies
to the extent necessary to effectuate the Plan;
(f) To advise the Employer of the maximum deductible contribution to
the Plan for each fiscal year;
(g) To direct the Trustee concerning all payments which shall be made
out of the Fund pursuant to the provisions of this Plan;
(h) To advise the Trustee on all terminations of Service by
Participants, unless the Employer has so notified the Trustee;
(i) To confer with the Trustee on the settling of any claims against
the Fund;
(j) To make recommendations to the Board of Directors with respect to
proposed amendments to the Plan and the Trust Agreement;
(k) To file all reports with government agencies, Employees and other
parties as may be required by law, whether such reports are initially the
obligation of the Employer, the Plan or the Trustee; and
(l) To have all such other powers as may be necessary to discharge its
duties hereunder.
Reasonable discretion is granted to the Administrator to affect the
benefits, rights and privileges of Participants, Beneficiaries or other
persons affected by this Plan. The Administrator shall exercise reasonable
discretion under the terms of this Plan and shall administer the Plan
strictly in accordance with its terms, such administration to be exercised
uniformly so that all persons similarly situated shall be similarly treated.
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11.5 Action by Administrator.
The Administrator may elect a Chairman and Secretary from among its
members and may adopt rules for the conduct of its business. A majority of
the members then serving shall consti tute a quorum for the transaction of
business. All resolutions or other action taken by the Administrator shall
be by vote of a majority of those present at such meeting and entitled to
vote. Resolutions may be adopted or other action taken without a meeting
upon written consent signed by at least a majority of the members. All
documents, instruments, orders, requests, directions, instructions and other
papers shall be executed on behalf of the Administrator by either the
Chairman or the Secretary of the Administrator, if any, or by any member or
agent of the Ad ministrator duly authorized to act on the Administrator's
behalf.
11.6 Participation by Administrators.
No Administrator shall be precluded from becoming a Participant in the
Plan if he would be otherwise eligible, but he shall not be entitled to vote
or act upon matters or to sign any documents relating specifically to his
own participation under the Plan, except when such matters or documents
relate to benefits generally. If this disqualification results in the lack
of a quorum, then the Board of Directors shall appoint a sufficient number
of temporary Administrators who shall serve for the sole purpose of
determining such a question.
11.7 Agents.
The Administrator may employ agents and provide for such clerical,
legal, actuarial, accounting, medical, advisory or other services as it
deems necessary to perform its duties under this Plan. The cost of such
services and all other expenses incurred by the Administrator in connection
with the administration of the Plan shall be paid from the Fund, unless paid
by the Em ployer.
11.8 Allocation of Duties.
The duties, powers and responsibilities reserved to the Administrator
may be allocated among its members so long as such allocation is pursuant to
written procedures adopted by the Administrator, in which case, except as
may be required by the Act, no Administrator shall have any liability, with
respect to any duties, powers or responsibilities not allocated to him, for
the acts of omissions of any other Administrator.
11.9 Delegation of Duties.
The Administrator may delegate any of its duties to other employees of
the Employer, to the Trustee with its consent, or to any other person or
firm, provided that the Administrator shall prudently choose such agents and
rely in good faith on their actions.
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11.10 Administrator's Action Conclusive.
Any action on matters within the authority of the Administrator shall
be final and conclusive except as provided in Article XII.
11.11 Compensation and Expenses of Administrator.
No Administrator who is receiving compensation from the Employer as a
full-time employee, as a director or agent, shall be entitled to receive any
compensation or fee for his services hereunder. Any other Administrator
shall be entitled to receive such reasonable compensation for his services
as an Administrator hereunder as may be mutually agreed upon between the
Employer and such Administrator. Any such compensation shall be paid from
the Fund, unless paid by the Employer. Each Administrator shall be entitled
to reimbursement by the Employer for any reasonable and necessary
expenditures incurred in the discharge of his duties.
11.12 Records and Reports.
The Administrator shall maintain adequate records of its actions and
proceedings in administering this Plan and shall file all reports and take
all other actions as it deems appropriate in order to comply with the Act,
the Code and governmental regulations issued thereunder.
11.13 Reports of Fund Open to Participants.
The Administrator shall keep on file, in such form as it shall deem
convenient and proper, all annual reports of the Fund received by the
Administrator from the Trustee, and a statement of each Participant's
interest in the Fund as from time to time determined. The annual reports of
the Fund and the statement of his own interest in the Fund, as well as a
complete copy of the Plan and the Trust Agreement and copies of annual
reports to the Internal Revenue Service, shall be made available by the
Administrator to the Employer for examination by each Participant during
reasonable hours at the office of the Employer, provided, however, that the
statement of a Participant's interest shall not be made available for
examination by any other Participant.
11.14 Named Fiduciary.
The Administrator is the named fiduciary for purposes of the Act and
shall be the designated agent for receipt of service of process on behalf of
the Plan. It shall use ordinary care and diligence in the performance of its
duties under this Plan. Nothing in this Plan shall preclude the Employer
from indemnifying the Administrator for all actions under this Plan, or from
purchasing liability insurance to protect it with respect to its duties
under this Plan.
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11.15 Information from Employer.
The Employer shall promptly furnish all necessary information to the
Administrator to permit it to perform its duties under this Plan. The
Administrator shall be entitled to rely upon the accuracy and completeness
of all information furnished to it by the Employer, unless it knows or
should have known that such information is erroneous.
11.16 Reservation of Rights by Employer.
Where rights are reserved in this Plan to the Employer, such rights
shall be exercised only by action of the Board of Directors, except where
the Board of Directors, by written resolution, delegates any such rights to
one or more officers of the Employer or to the Administrator. Subject to the
rights reserved to the Board of Directors acting on behalf of the Employer
as set forth in this Plan, no member of the Board of Directors shall have
any duties or responsibilities under this Plan, except to the extent he
shall be acting in the capacity of an Administrator or Trustee.
11.17 Liability and Indemnification.
(a) The Administrator shall perform all duties required of it under
this Plan in a prudent manner. To the extent not prohibited by the Act, the
Administrator shall not be respon sible in any way for any action or
omission of the Employer, the Trustee or any other fiduciaries in the
performance of their duties and obligations set forth in this Plan and in
the Trust Agreement. To the extent not prohibited by the Act, the
Administrator shall also not be responsible for any act or omission of any
of its agents, or with respect to reliance upon advice of its counsel
(whether or not such counsel is also counsel to the Employer or the
Trustee), provided that such agents or counsel were prudently chosen by the
Administrator and that the Administrator relied in good faith upon the
action of such agent or the advice of such counsel.
(b) The Administrator shall not be relieved from responsibility or
liability for any responsibility, obligation or duty imposed upon it under
this Plan or under the Act. Except for its own gross negligence, willful
misconduct or willful breach of the terms of this Plan, the Administrator
shall be indemnified and held harmless by the Employer against liability or
losses occurring by reason of any act or omission of the Administrator to
the extent that such indemnification does not violate the Act or any other
federal or state laws.
11.18 Service as Trustee and Administrator.
Nothing in this Plan shall prevent one or more Trustees from serving as
Administrator under this Plan.
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ARTICLE XII
CLAIMS PROCEDURE
12.1 Notice of Denial.
If a Participant or his Beneficiary is denied any benefits under this
Plan, either in whole or in part, the Administrator shall advise the
claimant in writing of the amount of his benefit, if any, and the specific
reasons for the denial. The Administrator shall also furnish the claimant at
that time with a written notice containing:
(a) A specific reference to pertinent Plan provisions;
(b) A description of any additional material or information necessary
for the claimant to perfect his claim, if possible, and an explanation of
why such material or information is needed; and
(c) An explanation of the Plan's claim review procedure.
12.2 Right to Reconsideration.
Within 60 days of receipt of the information described in 12.1 above,
the claimant shall, if he desires further review, file a written request for
reconsideration with the Administrator.
12.3 Review of Documents.
So long as the claimant's request for review is pending (including the
60-day period described in Section 12.2 above), the claimant or his duly
authorized representative may review pertinent Plan documents and the Trust
Agreement (and any pertinent related documents) and may submit issues and
comments in writing to the Administrator.
12.4 Decision by Administrator.
A final and binding decision shall be made by the Administrator within
60 days of the filing by the claimant of his request for reconsideration;
provided, however, that if the Admin istrator feels that a hearing with the
claimant or his representative present is necessary or desirable, this
period shall be extended an additional 60 days.
12.5 Notice by Administrator.
The Administrator's decision shall be conveyed to the claimant in
writing and shall include specific reasons for the decision, written in a
manner calculated to be understood by the claimant, with specific references
to the pertinent Plan provisions on which the decision is based.
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ARTICLE XIII
AMENDMENTS, TERMINATION AND MERGER
13.1 Amendments.
The Employer reserves the right at any time and from time to time, and
retroactively if deemed necessary or appropriate by it, to the extent
permissible under law, to conform with governmental regulations or other
policies, to amend in whole or in part any or all of the provisions of this
Plan, provided that:
(a) No amendment shall make it possible for any part of the Fund to be
used for, or diverted to, purposes other than for the exclusive benefit of
Participants or their Beneficiaries un der the Trust Agreement, except to
the extent provided in Section 4.4;
(b) No amendment may, directly or indirectly, reduce the vested portion
of any Participant's interest as of the effective date of the amendment or
change the vesting schedule with respect to the future accrual of Employer
contributions for any Participants unless each Participant with 3 or more
Years of Service with the Employer is permitted to elect to have the vesting
schedule in effect before the amendment used to determine his vested
benefit; and
(c) No amendment may eliminate an optional form of benefit.
(d) No amendment may increase the duties of the Trustee without its
consent.
Amendments may be made in the form of Board of Directors' resolutions
or separate written document. Copies of all amendments shall be delivered to
the Trustee.
13.2 Consolidation, Merger or Other Transactions of Employer.
Nothing in this Plan shall prevent the consolidation, merger,
reorganization or liquidation of the Employer, or prevent the sale by
Employer of any or all of its property. Any successor corporation or other
entity formed and resulting from any such transaction shall have the right
to become a party to this Plan by adopting the same by resolution and by
appointing a new Trustee as though the Trustee had resigned in accordance
with the Trust Agreement, and by executing a proper supplemental agreement
with the Trustee. If, within 180 days from the effective date of such
transaction, such new entity does not become a party to this Plan as above
provided, this Plan shall automatically be terminated and the Trustee shall
make payments to the persons entitled thereto in accordance with Section
9.5.
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13.3 Consolidation or Merger of Trust.
In the event of any merger or consolidation of the Fund with, or
transfer in whole or in part of the assets and liabilities of the Fund to,
another trust fund held under any other plan of deferred compensation
maintained or to be established for the benefit of all or some of the
Participants of this Plan, the assets of the Fund applicable to such
Participants shall be transferred to the other trust fund only if:
(a) Each Participant would receive a benefit under such successor trust
fund immediately after the merger, consolidation or transfer which is equal
to or greater than the benefit he would have been entitled to receive
immediately before the merger, consolidation or transfer (determined as if
this Plan and such transferee trust fund had then terminated);
(b) Resolutions of the Board of Directors under this Plan, or of any
new or successor employer of the affected Participants, shall authorize such
transfer of assets, and, in the case of the new or successor employer of the
affected Participants, its resolutions shall include an assumption of
liabilities with respect to such Participants' inclusion in the new
employer's plan; and
(c) Such other plan and trust are qualified under Sections 401(a) and
501(a) of the Code.
13.4 Bankruptcy or Insolvency of Employer.
In the event of (a) the Employer's legal dissolution or liquidation by
any procedure other than a consolidation or merger, (b) the Employer's
receivership, insolvency, or cessation of its business as a going concern,
or (c) the commencement of any proceeding by or against the Employer under
the federal bankruptcy laws, and similar federal or state statute, or any
federal or state statute or rule providing for the relief of debtors,
compensation of creditors, arrangement, receivership, liquidation or any
similar event which is not dismissed within 30 days, this Plan shall
terminate automatically on such date (provided, however, that if a
proceeding is brought against the Employer for reorganization under Chapter
11 of the United States Bankruptcy Code or any similar federal or state
statute, then this Plan shall terminate automatically if and when said
proceeding results in a liquidation of the Employer, or the approval of any
Plan providing therefor, or the proceeding is converted to a case under
Chapter 7 of the Bankruptcy Code or any similar conversion to a liquidation
proceeding under federal or state law including, but not limited to, a
receivership proceeding). In the event of any such termination as provided
in the foregoing sentence, the Trustee shall make payments to the persons
entitled thereto in accordance with Section 9.5 hereof.
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13.5 Voluntary Termination.
The Board of Directors reserves the right to terminate this Plan at any
time by giving to the Trustee and the Administrator notice in writing of
such desire to terminate. The Plan shall terminate upon the date of receipt
of such notice, the interests of all Participants shall become fully vested,
and the Trustee shall make payments to each Participant or Beneficiary in
accordance with Section 9.5. Alternatively, the Employer, in its discretion,
may determine to continue the Trust Agreement and to continue the
maintenance of the Fund, in which event distributions shall be made upon the
contingencies and in all the circumstances which would have been entitled
such distributions on a fully vested basis, had there been no termination of
the Plan.
13.6 Partial Termination of Plan or Permanent
Discontinuance of Contributions.
In the event that a partial termination of the Plan shall be deemed to
have occurred, or if the Employer shall discontinue completely its
contributions hereunder, the right of each affected Participant to his
interest in the Fund shall be fully vested. The Employer, in its discretion,
shall decide whether to direct the Trustee to make immediate distribution of
such portion of the Fund assets to the persons entitled thereto or to make
distribution in the circumstances and contingencies which would have
controlled such distributions if there had been no partial termina tion or
discontinuance of contributions.
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ARTICLE XIV
MISCELLANEOUS
14.1 No Diversion of Funds.
It is the intention of the Employer that it shall be impossible for any
part of the corpus or income of the Fund to be used for, or diverted to,
purposes other than for the exclusive benefit of the Participants or their
Beneficiaries, except to extent that a return of the Employer's contribution
is permitted under Section 4.4.
14.2 Liability Limited.
Neither the Employer nor the Administrator, nor any agents, employees,
officers, directors or shareholders of any of them, nor the Trustee, nor any
other person shall have any liability or responsibility with respect to this
Plan, except as expressly provided herein.
14.3 Incapacity.
If the Administrator shall receive evidence satisfactory to it that a
Participant or Beneficiary entitled to receive any benefit under the Plan
is, at the time when such benefit becomes payable, a minor, or is physically
or mentally incompetent to receive such benefit and to give a valid release
therefor, and that another person or an institution is then maintaining or
has custody of such Participant or Beneficiary, and that no guardian,
committee or other representative of the estate of such Participant or
Beneficiary shall have been duly appointed, the Administrator may direct the
Trustee to make payment of such benefit otherwise payable to such
Participant or Beneficiary, to such other person or institution, including a
custodian under a Uniform Gifts to Minor Act, or corresponding legislation
(who shall be an adult, a guardian of the minor or a trust company), and the
release of such other person or institution shall be a valid and complete
discharge for the payment of such benefit.
14.4 Spendthrift Clause.
Except as permitted by the Act or the Code, no benefits or other
amounts payable under the Plan shall be subject in any manner to
anticipation, sale, transfer, assignment, pledge, encum brance, charge or
alienation. If the Administrator determines that any person entitled to any
payments under the Plan has become insolvent or bankrupt or has attempted to
anticipate, sell, transfer, assign, pledge, encumber, charge or otherwise in
any manner alienate any benefit or other amount payable to him under the
Plan or that there is any danger of any levy or attachment or other court
process or encumbrance on the part of any creditor of such person entitled
to payments under the Plan against any benefit or other accounts payable to
such person, the Administrator may, at any time, in its discretion, direct
the Trustee to withhold any or all payments to such
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person under the Plan and apply the same for the benefit of such person, in
such manner and in such proportion as the Administrator may deem proper.
14.5 Benefits Limited to Fund.
All contributions by the Employer to the Fund shall be voluntary, and
the Employer shall be under no legal liability to make any such
contributions. The benefits of this Plan shall be only as can be provided by
the assets of the Fund, and no liability for the payment of benefits under
the Plan or for any loss of assets due to any action or inaction of the
Trustee shall be imposed upon the Employer.
14.6 Cooperation of Parties.
All parties to this Plan and any party claiming interest hereunder
agree to perform any and all acts and execute any and all documents and
papers which are necessary and desirable for carrying out this Plan or any
of its provisions.
14.7 Payments Due Missing Persons.
The Administrator shall direct the Trustee to make a reasonable effort
to locate all persons entitled to benefits under the Plan; however,
notwithstanding any provision in the Plan to the contrary, if, after a
period of 5 years from the date such benefit shall be due, any such persons
entitled to benefits have not been located, their rights under the Plan
shall stand suspended. Before this provision becomes operative, the Trustee
shall send a certified letter to all such persons at their last known
address advising them that their interest in benefits under the Plan shall
be suspended. Any such suspended amounts shall be held by the Trustee for a
period of 3 additional years (or a total of 8 years from the time the
benefits first became payable), and thereafter such amounts shall be
reallocated among current Participants in the same manner that a current
contribution would be allocated. However, if a person subsequently makes a
valid claim with respect to such reallocated amounts and any earnings
thereon, the Plan earnings or the Employer's contribution to be allocated
for the year in which the claim shall be paid shall be reduced by the amount
of such payment. Any such suspended amounts shall be handled in a manner not
inconsistent with regulations issued by the Internal Revenue Service and
Department of Labor.
14.8 Governing Law.
This Plan has been executed in the State of Indiana and all questions
pertaining to its validity, construction and administration shall be
determined in accordance with the laws of that State, except to the extent
superseded by the Act.
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14.9 Nonguarantee of Employment.
Nothing contained in this Plan shall be construed as a contract of
employment between the Employer and any Employee, or as a right of any
Employee to be continued in the employment of the Employer, or as a
limitation of the right of the Employer to discharge any of its Employees,
with or without cause.
14.10 Counsel.
The Trustee and the Administrator may consult with legal counsel, who
may be counsel for the Employer and for the Administrator or the Trustee (as
the case may be), with respect to the meaning or construction of this Plan
and the Trust Agreement, their respective obligations or duties hereunder or
with respect to any action or proceeding or any question of law, and they
shall be fully protected with respect to any action taken or omitted by them
in good faith pursuant to the advice of legal counsel.
IN WITNESS WHEREOF, the Sponsor has caused these presents to be
executed by its duly authorized officers and its corporate seal to be
affixed on this ____ day of April, 1997.
MONTGOMERY FINANCIAL
CORPORATION
ATTEST:
____________________________ By_____________________________
Nancy L. McCormick, J. Lee Walden,
Secretary President
[Corporate Seal]
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