EXHIBIT 10.4
Proposed Form of Employee Stock Ownership Plan
EMPIRE FEDERAL SAVINGS BANK
EMPLOYEE STOCK OWNERSHIP PLAN
(Effective January 1, 1996)
Table of Contents
I. Purpose of the Plan................................................................................... 1
II. Definitions
2.1 "Adjusted Balance".............................................................................2
2.2 "Annual Additions".............................................................................2
2.3 "Beneficiary"..................................................................................2
2.4 "Board"........................................................................................2
2.5 "Break in Service".............................................................................2
2.6 "Code".........................................................................................3
2.7 "Committee"....................................................................................3
2.8 "Company"......................................................................................3
2.9 "Company Contribution Account".................................................................4
2.10 "Company Stock"................................................................................4
2.11 "Company Stock Account"........................................................................4
2.12 "Compensation".................................................................................4
2.13 "Debt".........................................................................................5
2.14 "Early Retirement Date"........................................................................5
2.15 "Employee".....................................................................................5
2.16 "Employment Year"..............................................................................5
2.17 "ERISA"........................................................................................5
2.18 "Highly Compensated Participant"...............................................................5
2.19 "Hour of Service"..............................................................................6
2.20 "Limitation Year"..............................................................................7
2.21 "Loan".........................................................................................7
2.22 "Maximum Permissible Amount"...................................................................7
2.23 "Normal Retirement Date".......................................................................7
2.24 "Other Investments Account"....................................................................7
2.25 "Participant"..................................................................................7
2.26 "Plan".........................................................................................7
2.27 "Plan Year"....................................................................................8
2.28 "Qualified Election Period"....................................................................8
2.29 "Qualified Participant"........................................................................8
2.30 "Related Employer".............................................................................8
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2.31 "Related Plan".................................................................................8
2.32 "Service"......................................................................................8
2.33 "Spouse".......................................................................................8
2.34 "Suspense Account".............................................................................8
2.35 "Trust" or "Trust Fund"........................................................................9
2.36 "Trust Agreement"..............................................................................9
2.37 "Trustee"......................................................................................9
2.38 "Valuation Date"...............................................................................9
III. Participation
3.1 Eligibility Requirement.......................................................................10
3.2 Reemployment of Participant...................................................................10
IV. Contributions
4.1 Company Contributions.........................................................................11
4.2 Exclusive Benefit of Employees................................................................12
V. Investment of Trust Assets
5.1 Investments...................................................................................13
5.2 Valuation of Company Stock....................................................................13
5.3 Suspense Account..............................................................................13
5.4 Sales and Resales of Company Stock............................................................13
VI. Exempt Loans
6.1 Loans.........................................................................................14
6.2 Loan Payments.................................................................................15
6.3 Right of First Refusal........................................................................17
6.4 Put Option....................................................................................17
6.5 Continuation of Rights or Put Option..........................................................18
VII. Allocations to Participants' Accounts
7.1 Separate Accounts.............................................................................19
7.2 Company Stock.................................................................................19
7.3 Other Investments.............................................................................19
7.4 Allocations of Company Contributions and Forfeitures..........................................19
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7.5 Maximum Allocation............................................................................20
7.6 Vesting.......................................................................................22
7.7 Net Income (or Loss) of the Trust.............................................................23
7.8 Accounting for Allocations....................................................................23
7.9 Special Allocation Provisions.................................................................24
7.10 Special Limitations on Allocations............................................................24
VIII. Retirement Payments, Disability Payments and Other Benefits
8.1 Payments on Retirement........................................................................25
8.2 Payments on Death.............................................................................25
8.3 Payments on Disability........................................................................26
8.4 Payments on Termination for Other Reasons.....................................................26
8.5 Property Distributed..........................................................................28
8.6 Methods of Payment............................................................................28
8.7 Administrative Powers Relating to Payments....................................................34
8.8 Dividends.....................................................................................34
8.9 Diversification of Investments................................................................34
IX. Voting of Company Stock
9.1 Company Common Stock - Voting and Consent.....................................................37
X. Plan Administration
10.1 Company Responsibility........................................................................38
10.2 Powers and Duties of Committee................................................................38
10.3 Organization and Operation of Committee.......................................................38
10.4 Records and Reports of Committee..............................................................39
10.5 Claims Procedure..............................................................................39
10.6 Compensation and Expenses of Committee........................................................40
10.7 Indemnity of Committee Members................................................................40
XI. Trust and Trustee
11.1 Trust Agreement...............................................................................41
11.2 Exclusive Benefit of Employees................................................................41
11.3 Trustee.......................................................................................41
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XII. Amendment and Termination
12.1 Amendment of Plan.............................................................................42
12.2 Voluntary Termination of or Permanent Discontinuance of Contributions
to the Plan................................................................................42
12.3 Limitation on Amendment or Termination........................................................42
12.4 Involuntary Termination of Plan...............................................................42
12.5 Payments on Termination of or Permanent Discontinuance of Contributions
to the Plan................................................................................43
XIII. Miscellaneous
13.1 Duty To Furnish Information and Documents.....................................................44
13.2 Committee's Annual Statements and Available Information.......................................44
13.3 No Enlargement of Employment Rights...........................................................44
13.4 Applicable Law................................................................................44
13.5 No Guarantee..................................................................................44
13.6 Unclaimed Funds...............................................................................45
13.7 Merger or Consolidation of Plan...............................................................45
13.8 Interest Nontransferable......................................................................45
13.9 Prudent Man Rule..............................................................................46
13.10 Limitations on Liability......................................................................46
13.11 Federal and State Security Law Compliance.....................................................46
13.12 Headings......................................................................................46
13.13 Gender and Number.............................................................................46
13.14 ERISA and Approval Under Internal Revenue Code................................................46
13.15 Extension of Plan to Related Employers........................................................47
13.16 Administrative Changes Without Amendment......................................................47
XIV. Top-Heavy Provisions
14.1 Top-Heavy Status..............................................................................48
14.2 Definitions...................................................................................48
14.3 Determination of Top-Heavy Status.............................................................48
14.4 Vesting.......................................................................................49
14.5 Minimum Contribution..........................................................................50
14.6 Compensation..................................................................................50
14.7 Collective Bargaining Agreements..............................................................50
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ARTICLE I
PURPOSE OF THE PLAN
The purpose of this Plan is to enable participating Employees of Empire
Federal Savings Bank to share in the growth and prosperity of the Company, to
provide Employees with an opportunity to accumulate capital for their future
economic security, to furnish additional security to Employees who become
permanently disabled, and to enable Employees to acquire stock ownership
interests in the Company. Consequently, Company contributions to the Plan will
be invested primarily in Company Stock. The Plan, effective as of January 1,
1996, shall constitute an employee stock ownership plan under Section 4975(e)(7)
of the Code and Section 407(d)(6) of ERISA and a stock bonus plan under Section
401(a) of the Code.
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ARTICLE II
DEFINITIONS
Whenever used herein the following words and phrases shall have the
meanings stated below unless a different meaning is plainly required by the
context:
2.1 "Adjusted Balance" means the balance in a Participant's account or
accounts, as adjusted in accordance with Sections 7.8 and 7.9 of the Plan as of
the applicable Valuation Date.
2.2 "Annual Additions" means the total of: (a) Company contributions
allocated to a Participant's Accounts under this Plan and any Related Plan
during any Limitation Year; (b) the amount of employee contributions made by the
Participant under any Related Plan; and (c) forfeitures allocated to a
Participant's Accounts under the Plan and any Related Plan.
2.3 "Beneficiary" means the person, persons, or entity designated or
determined pursuant to the provisions of Section 8.2 of the Plan.
2.4 "Board" means the Board of Directors of the Company.
2.5 "Break in Service" means the termination of employment of an
Employee followed by the expiration of an Employment Year in which the Employee
accumulated fewer than 501 Hours of Service. For purposes of this Section:
(a) A Break in Service shall not be deemed to have occurred if
(i) the employment of a terminated Employee is resumed prior to the expiration
of an Employment Year in which he accumulates fewer than 501 Hours of Service;
(ii) the Employee is absent with the prior consent of the Company for a period
not exceeding 12 months (which consent shall be granted under uniform rules
applied to all Employees on a nondiscriminatory basis) and he returns to active
employment with the Company upon the expiration of the period of authorized
absence; or (iii) he leaves the Company to serve in the armed forces of the
United States for a period during which his reemployment rights are guaranteed
by law and he returns or offers to return to work for the Company prior to the
expiration of his reemployment rights.
(b) An Employee who is absent from work with the Company
because of (i) the Employee's pregnancy, (ii) the birth of the Employee's child,
(iii) the placement of a child with the Employee in connection with the
Employee's adoption of the child, or (iv) caring for such child immediately
following such birth or placement
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shall receive credit, solely for purposes of determining whether a Break in
Service has occurred under this Section, for the Hours of Service described in
subsection (c) of this Section; provided that the total number of hours credited
as Hours of Service under this subsection shall not exceed 501 Hours of Service.
(c) In the event of an Employee's absence from work for any of
the reasons set forth in subsection (b) of this Section, the Hours of Service
that the Employee will be credited with under subsection (b) are (i) the Hours
of Service that otherwise would normally have been credited to the Employee but
for such absence, or (ii) eight Hours of Service per day of such absence if the
Committee is unable to determine the Hours of Service described in clause (i).
(d) An Employee who is absent from work for any of the reasons
set forth in subsection (b) of this Section shall be credited with Hours of
Service under subsection (b), (i) only in the Employment Year in which the
absence begins, if the Employee would be prevented from incurring a Break in
Service in that Year solely because the period of absence is treated as credited
Hours of Service, as provided in subsections (b) and (c), or (ii) in any other
case, in the immediately following Employment Year.
(e) No credit for Hours of Service will be given pursuant to
subsections (b), (c) and (d) of this Section unless the Employee furnished to
the Committee such timely information that the Committee may reasonably require
to establish (i) that the absence from work is for one of the reasons specified
in subsection (b) and (ii) the number of days for which there was such an
absence. No credit for Hours of Service will be given pursuant to subsections
(b), (c), and (d) for any purpose of the Plan other than the determination of
whether an Employee has incurred a Break in Service pursuant to this Section.
2.6 "Code" means the Internal Revenue Code of 1986 as amended.
Reference to a section of the Code shall include that section and any comparable
section or sections of any future legislation that amends, supplements or
supersedes said sections.
2.7 "Committee" means the Plan Administrative Committee described in
Section 10.1 of the Plan.
2.8 "Company" means Empire Federal Savings Bank, a federally-chartered
savings bank and any successor corporation resulting from a merger or
consolidation with the Company or transfer of substantially all of the assets of
the Company, if such successor or transferee shall adopt and continue the Plan
by appropriate corporate action, pursuant to Section 12.4 of the Plan.
2.9 "Company Contribution Account" means the Company Stock and other
assets held by the Trustee for the Plan derived from Company contributions to
the Trust.
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2.10 "Company Stock" means any qualifying employer security within the
meaning of Section 4975(e)(8) of the Code and 407(d)(1) of ERISA and Regulations
thereunder.
2.11 "Company Stock Account" means an account of a Participant which is
credited with his allocable share of Company Stock purchased and paid for by the
Trust or contributed to the Trust.
2.12 "Compensation" means a Participant's total earning from the
Company paid during a Plan Year for services rendered, including bonuses,
overtime and commissions, but excluding any contributions or benefits under this
Plan or any other pension, profit sharing, insurance, hospitalization or other
plan or policy maintained by the Company for the benefit of such Participant,
and all other extraordinary and unusual payments. For purposes of Sections 2.18
and 2.22, Compensation means wages, salaries, fees for professional services,
and other amounts received for personal services actually rendered in the course
of employment with the Company (including, but not limited to, commissions paid
salesmen, compensation for services on the basis of percentage of profits, tips,
and bonuses); shall include all compensation actually paid or made available to
a Participant for an entire Limitation Year; and shall not include any other
items or amounts paid to or for the benefit of a Participant. The limit of
Compensation for any participant for a Plan Year or Limitation Year shall be the
dollar limitation in effect under Section 401(a)(17) of the Code and the
Regulations thereunder for such Year. In addition to other applicable
limitations set forth in the Plan, and notwithstanding any other provision of
the plan to the contrary, for plan years beginning on or after January 1, 1994,
the annual compensation of each employee taken into account under the plan shall
not exceed the OBRA '93 annual compensation limit. The OBRA '93 annual
compensation limit is $150,000, as adjusted by the Commissioner for increased in
the cost of living in accordance with Section 401(a)(17)(B) of the Code. The
cost-of-living adjustment in effect for a calendar year applies to any period,
not exceeding 12 months, over which compensation is determined (determination
period) beginning in such calendar year. If a determination period consists of
fewer than 12 months, the OBRA '93 annual compensation limit will be multiplied
by a fraction, the numerator of which is the number of months in the
determination period, and the denominator of which is the number of months in
the determination period, and the denominator of which is 12. For plan years
beginning on or after January 1, 1994, any reference in this Plan to the
limitation under section 401(a)(17) of the Code shall mean the OBRA '93 annual
compensation limit set forth in this provision. If Compensation for any prior
determination period is taken into account in determining an employee's benefits
accruing in the current plan year, the Compensation for that prior determination
period is subject to the OBRA '93 annual compensation limit in effect for that
prior determination period. For this purpose, for determination periods
beginning before the first date of the first plan year beginning on or after
January 1, 1994, the OBRA '93 annual compensation limit is $150,000.
2.13 "Debt" means any borrowing obligation incurred by the Trustee that
is not a Loan.
2.14 "Early Retirement Date" means the date a Participant attains age
55.
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2.15 "Employee" means an individual employed by the Company; provided,
however, that "Employee" does not include an hourly employee or any individual
covered by a collective bargaining agreement between employee representatives
and the Company if retirement benefits were the subject of good faith bargaining
between such employee representatives and the Company. A person who is not
employed by the Company but who performs services for the Company pursuant to an
agreement between the Company and a leasing organization shall be considered a
"leased employee" after such person performs such services for a 12-month period
and the services are of a type historically performed by employees. A person who
is considered a leased employee of the Company shall not be considered an
Employee for purposes of the Plan. If a leased employee subsequently becomes an
Employee, and thereafter participates in the Plan, he shall be given credit for
Hours of Service and Years of Service for his period of employment as a leased
employee, except to the extent that Section 414(n)(5) of the Code was satisfied
with respect to such Employee while he was a leased employee.
2.16 "Employment Year" means a 12 consecutive month period commencing
with an Employee's initial date of hire (or last date of rehire if he has
incurred a Break in Service) or with any anniversary thereof. For purposes
hereof, an Employee's date of hire shall be the first day on which he completes
an Hour of Service and his date of rehire shall be the first day on which he
completes an Hour of Service following a Break in Service.
2.17 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
2.18 "Highly Compensated Participant" means a Participant who, during
the current Plan Year or the preceding Plan Year, (a) was at any time a five
percent (5%) owner of the Company, (b) received Compensation from the Company in
excess of $75,000 (or such greater amount provided by the Secretary of the
Treasury pursuant to Section 414(q) of the Code), (c) received Compensation from
the Company in excess of $50,000 (or such greater amount provided by the
Secretary of the Treasury pursuant to Section 414(q) of the Code) and was in the
top-paid group of Employees for such Year, or (d) was at any time an officer of
the Company and received Compensation from the Company greater than 150% of the
amount in effect under Section 415(c)(1)(A) of the Code for such Plan Year. The
provisions of Section 414(q) of the Code shall apply in determining whether a
Participant is a Highly Compensated Participant. The Company for any Plan Year
may elect to identify Highly Compensated Participants based upon only the
current Plan Year to the extent permitted by Section 414(q) of the Code and
Regulations issued thereunder.
2.19 "Hour of Service" means (i) each hour for which an Employee is
paid or entitled to payment for the performance of duties for the Company or a
Related Employer; and (ii) each hour for which an Employee is directly or
indirectly paid by the Company or a Related Employer during which no duties are
performed by reason of vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military duty or leave of absence (but
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not in excess of 501 hours in any continuous period during which no duties are
performed). Each Hour of Service for which back pay, irrespective of mitigation
of damages, is either awarded or agreed to by the Company or a Related Employer
shall be included under either (i) or (ii) as may be appropriate. Hours of
Service shall be credited:
(a) in the case of Hours referred to in clause (i) of the
first sentence of this section, for the computation period in which the duties
are performed;
(b) in the case of Hours referred to in clause (ii) of the
first sentence of this section, for the computation period or periods in which
the period during which no duties are performed occurs; and
(c) in the case of Hours for which back pay is awarded or
agreed to by the Company or a Related Employer, for the computation period or
periods to which the award or agreement pertains rather than the computation
period in which the award, agreement or payment is made.
In determining Hours of Service an Employee who is employed by the
Company or a Related Employer on other than an hourly rated basis shall be
credited with ten Hours of Service per day for each day the Employee would, if
hourly rated, be credited with service pursuant to clause (i) of the first
sentence of this Section 2.19. If an Employee is paid for reasons other than the
performance of duties pursuant to clause (ii) of the first sentence of this
Section 2.19: (i) in the case of a payment made or due which is calculated on
the basis of units of time, an Employee shall be credited with the number of
regularly scheduled working hours included in the units of time on the basis of
which the payment is calculated; and (ii) an Employee without a regular work
schedule shall be credited with eight Hours of Service per day (to a maximum of
40 Hours of Service per week) for each day that the Employee is so paid. Hours
of Service shall be calculated in accordance with Department of Labor
Regulations Section 2530.200b-2 or any future legislation or Regulation that
amends, supplements or supersedes said section.
Solely for purposes of determining an Employee's
(i) eligibility to participate in the Plan under Section 3.1, and
(ii) vesting under Section 7.6,
Hours of Service shall include Hours during an approved leave
of absence granted by an Employer to an Employee on or after
August 5, 1993 pursuant to the Family and Medical Leave Act,
if the Employee returns to work for an Employer at the end of
such leave of absence. Such Hours of Service shall be
calculated pursuant to the second sentence of this paragraph.
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2.20 "Limitation Year" means the Plan Year.
2.21 "Loan" means any loan as described in Section 4975(d)(1) of the
Code to the Trustee made or guaranteed by a disqualified person (within the
meaning of 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 a
disqualified person (within the meaning of Section 4975(e)(2) of the Code) as
collateral for a loan.
2.22 "Maximum Permissible Amount" means the lesser of: (a) $30,000 (or,
if greater, one-quarter of the dollar limitation in effect pursuant to Section
415(b)(1)(A) of the Code); or (b) 25% of a Participant's Compensation.
2.23 "Normal Retirement Date" means the date a Participant attains age
65.
2.24 "Other Investments Account" means an account of a Participant
which is credited with his share of the net income (or loss) or the Trust and
Company contributions and forfeitures in other than Company Stock, and which is
debited with payments made to pay for Company Stock
2.25 "Participant" means an Employee who becomes a Participant under
the provisions of Section 3.1 of the Plan.
2.26 "Plan" means this Empire Federal Savings Bank Employee Stock
Ownership Plan. It is hereby intended that this Plan shall constitute a stock
bonus plan.
2.27 "Plan Year" means the period beginning January 1 and ending
December 31 of each year.
2.28 "Qualified Election Period" means the six Plan Year period
beginning with the first Plan Year in which a Participant first becomes a
Qualified Participant.
2.29 "Qualified Participant" means any Participant who has attained age
55 and has been a Participant in the Plan for at least ten years.
2.30 "Related Employer" means (i) any corporation that is a member of a
controlled group of corporations (as defined in Section 414(b) of the Code) that
includes the Company; (ii) any trade or business (whether incorporated or
unincorporated) that is under common control (as defined in Section 414(c) of
the Code) with the Company; and (iii) any member of an affiliated service group
(as defined in Section 414(m) of the Code)
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that includes the Company. For purposes of Section 7.5, paragraphs (i) and (ii)
shall be as amended by Section 415(h) of the Code.
2.31 "Related Plan" means any other defined contribution plan (as
defined in Section 415 of the Code) maintained by the Company or by any Related
Employer.
2.32 "Service" means a period of time, measured in whole Employment
Years, commencing with the Employment Year in which an Employee is initially
employed and ending with the Employment Year in which a Break in Service occurs;
provided, however, that Service shall not include any Employment Year in which
the Employee accrues less than 1,000 Hours of Service. Service shall include an
approved leave of absence granted to an Employee on or after August 3, 1993
pursuant to the Family and Medical Leave Act, if the Employee returns to work
for an Employer at the end of such leave of absence. Without regard to the
preceding provisions of this Section 2.28, a Participant's years of Service
after a period of five consecutive one-year Breaks in Service shall be
disregarded for purposes of determining his nonforfeitable interest in his
Accounts as of the Valuation Date coincident with or next preceding the date he
incurs such five consecutive one-year Breaks in Service.
2.33 "Spouse" means the person who is legally married to a Participant
immediately prior to the Participant's death.
2.34 "Suspense Account" means an account to which securities purchased
with any Loans are allocated pending their release and allocation to other
accounts as the Loan is repaid.
2.35 "Trust" or "Trust Fund" means all money, securities and other
property held under the Trust Agreement for the purposes of the Plan.
2.36 "Trust Agreement" means the agreement between the Company and the
Trustee (or any successor Trustee) governing the administration of the Trust, as
it may be amended.
2.37 "Trustee" means the corporation or individuals appointed by the
Board of Directors of the Company to administer the Trust and which executes the
Trust Agreement.
2.38 "Valuation Date" means the last day of each Plan Year and such
other date, if any, as shall be selected by the Company.
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ARTICLE III
PARTICIPATION
3.1 Eligibility Requirement. Any Employee who was in the employ of the
Company on the effective date shall participate in the Plan as of the effective
date if he has completed an Employment Year as of such date and has attained the
age of 21. Each other Employee shall be eligible to participate upon: (i) the
completion of one Employment Year during which the Employee has completed 1,000
Hours of Service and (ii) attainment of the age of 21. An Employee who is
eligible to participate shall commence participation in the Plan on the January
1 or July 1 next following the date on which the Employee is first eligible to
participate in the Plan.
3.2 Reemployment of Participant. For purposes of Section 3.1 of the
Plan pertaining to eligibility and Section 7.7 of the Plan pertaining to
vesting, if a Participant shall incur a Break in Service and shall thereafter be
reemployed by the Company: (i) Years of Service completed before such Break
shall not be required to be taken into account until the Participant has
completed a Year of Service after his return to employment with the Company at
which time such Years of Service shall be restored and the Participant shall
participate in the Plan retroactively from the date of his return to employment
with the Company; and (ii) if no part of the Participant's Company stock and
Other Investments Accounts was nonforfeitable when he incurred such Break, Years
of Service with the Company completed prior to such Break shall not be required
to be taken into account in any event if the number of consecutive one-year
Breaks in Service equals or exceeds the greater of (a) five or (b) the aggregate
number of years of Service prior to such Break.
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ARTICLE IV
CONTRIBUTIONS
4.1 Company Contributions.
(a) For each Plan Year, Company contributions under the Plan
may be paid to the Trust in such amounts (or under such formula) and at such
times as may be determined by the Company's Board of Directors. Company
contributions under the Plan for a Plan Year may be paid during the Plan Year
and shall in any event be paid not later than the due date for filing the
Company's federal income tax return for that year, including any extensions of
such due date. Company contributions for any Plan Year shall not be paid to the
Trust in amounts that would exceed the limitations of Section 404 of the Code.
In no event shall Company contributions in any Limitation year exceed an amount
which would cause: (a) Annual Additions to the accounts of any Participant to
exceed the Maximum Permissible Amount for that Limitation Year (except as
provided in Section 7.5); or (b) the sum of the defined benefit plan fraction
(as defined in Section 7.5) and the defined contribution plan fraction (as
defined in Section 7.5) to exceed one for that Limitation Year.
(b) Company contributions may be paid to the Trust in cash or
in shares of Company Stock, as determined by the Company's Board of Directors;
provided that Company contributions shall be paid in cash in such amounts, and
at such times (subject to the limitations described in Section 7.5) as needed to
provide the Trust with funds sufficient to pay in full when due any principal
and interest payments required by a Loan incurred by the Trustee pursuant to
Article VI to finance the acquisition of Company Stock.
(c) All Company contributions for a Plan Year shall be
allocated to the Company Contribution Account when paid. The Company
Contribution Account shall be subdivided into a Company Stock Contribution
Account and a Company Other Investments Contribution Account. As of the last day
of each Plan Year amounts in the Company Contribution Account, including amounts
contributed after such last day under paragraph (a) above shall be allocated to
Participants' accounts as provided in Article VIII.
(d) No participants shall be required or permitted to make
contributions to the Plan or Trust.
(e) All Company contribution made under the Plan are
conditioned upon the qualification of the Plan under Section 401(a) of the Code
and upon the deductibility of the contribution under Section 404 of the Code.
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4.2 Exclusive Benefit of Employees. All contributions made pursuant to
the Plan shall be held by the Trustee in accordance with the terms of the Trust
Agreement for the exclusive benefit of those Employees who are Participants
under the Plan, including former Employees, and their Beneficiaries, and shall
be applied to provide benefits under the Plan and to pay expenses of
administration of the Plan and the Trust, to the extent that such expenses are
not otherwise paid. At no time prior to the satisfaction of all liabilities with
respect to such Employees and their Beneficiaries shall any part of the Trust
Fund (other than such part as may be required to pay administration expenses and
taxes) be used for, or diverted to, purposes other than for the exclusive
benefit of such Employees and their Beneficiaries. However, without regard to
the provisions of this Section 4.2:
(a) If a contribution under the Plan is conditioned on initial
qualification of the Plan under Section 401(a) of the Code, and the Plan
receives an adverse determination with respect to its initial qualification, the
Trustee shall, upon written request of the Company, return to the Company the
amount of such contribution (increased by earnings attributable thereto and
reduced by losses attributable thereto) within one calendar year after the date
that qualification of the Plan is denied, provided that the application for the
determination is made by the time prescribed by law for filing the Company's
return for the taxable year in which the Plan is adopted, or such later date as
the Secretary of the Treasury may prescribe;
(b) If a contribution is conditioned upon the deductibility of
the contribution under Section 404 if the Code, then, to the extent the
deduction is disallowed, the Trustee shall upon written request of the Company
return the contribution (to the extent disallowed) to the Company within one
year after the date the deduction is disallowed;
(c) If a contribution or any portion thereof is made by the
Company by a mistake of fact, the Trustee shall, upon written request of the
Company, return the contribution or such portion to the Company within one year
after the date of payment of the Trustee; and
(d) Earnings attributable to amount to be returned to the
Company pursuant to subsection (b) or (c) above shall not be returned, and
losses attributable to amounts to be returned pursuant to subsection (b) or (c)
shall reduce the amount to be so returned.
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ARTICLE V
INVESTMENT OF TRUST ASSETS
5.1 Investments. The Trust Fund will be invested primarily in Company
Stock. The Committee may direct the Trustee to incur Debt from time to time to
finance the acquisition of Company Stock by the Trust or otherwise. The Trust
Fund may be used to acquire shales of Company Stock from Company shareholders
(including former Participants) or from the Company. The Trustee may also invest
the Trust Fund in savings accounts, certificates of deposit, high-grade
short-term securities, equity stock, bonds, or other investments desirable for
the Trust, or the Trust Fund may be held in cash. All investments will be made
by the Trustee only upon the direction of the Committee. The Committee may
direct that the entire Trust Fund assets be invested and held in Company Stock.
5.2 Valuation of Company Stock. All purchases of Company Stock will be
made at a price, or at prices, that do not exceed the fair market value of such
Company Stock. If Company Stock is traded on a national securities exchange,
fair market value shall be the average of the closing prices thereof on such
exchange for the ten trading days immediately preceding the purchase. If Company
Stock is not traded on such an exchange but is publicly traded, fair market
value shall be the average of the bid and asked price thereof for such ten
trading days. If Company Stock is not publicly traded, the determination of the
fair market value of Company Stock for all purposes of the Plan shall in all
cases be made by an independent appraiser appointed pursuant to this section
shall meet requirements similar to the requirements of Regulations promulgated
under Section 170(a)(1) of the Code.
5.3 Suspense Account. Company Stock purchased with the proceeds of a
Loan shall be held in the Suspense Account pending release and reallocation to
other Accounts as the Loan is paid. Company Stock purchased with amounts
allocated to Participants' Other Investment Accounts or Company Other
Investments Accounts shall immediately upon purchase be credited pro rata to the
corresponding Participants' Company Stock or Company Stock Contribution Accounts
as the case may be. Company Stock contributed to the Plan pursuant to Article IV
shall be allocated to the Company Stock Accounts of Participants pursuant to
Section 7.4.
5.4 Sales and Resales of Company Stock. The Committee may direct the
Trustee to sell or resell shares of Company Stock to any person, including the
Company, provided that any such sales to any disqualified person, including the
Company, will be made at no less than the fair market value as determined under
Section 5.2 and no commission is charged. Any such sale shall be made in
conformance with Section 408(e) of ERISA. All sales of Company Stock (except
Company Stock held in a Suspense Account or Company Stock Contribution Account)
by the Trustee will be charged pro rata to the Company Stock Accounts of the
Participants.
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ARTICLE VI
EXEMPT LOANS
6.1 Loans.
(a) The Committee may direct the Trustee to obtain Loans. Any
such Loan will meet all requirements necessary to constitute an "exempt loan"
within the meaning of Section 4975(d)(3) of the Code and Regulations
ss.54.4975-7(b)(1)(iii) and shall be used primarily for the benefit of the
Participants and Beneficiaries. The proceeds of any such Loan shall be used,
within a reasonable time after the Loan is obtained, only to purchase Company
Stock, repay the Loan, or repay any prior Loan. Any such Loan shall provide for
no more than a reasonable rate of interest (as determined under Regulations
ss.54.4975-7(b)(7)) and must be without recourse against the Plan. The number of
years to maturity under the Loan must be definitely ascertainable at all times.
The only assets of the Plan that may be given as collateral on a Loan are shares
of Company Stock acquired with the proceeds of the Loan and shares of Company
Stock that were used as collateral on a prior Loan repaid with the proceeds of
the current Loan. Such Company Stock so pledged shall be placed in a Suspense
Account. No person entitled to payment under a Loan shall have recourse against
Trust Assets other than such collateral, contributions (other than contributions
of Company Stock) that are available under the Plan to meet obligations under
the Loan and earnings attributable to such collateral and the investment of such
contributions. All Company contributions paid during the Plan Year in which a
Loan is made (whether before or after the date the proceeds of the Loan are
received), all Company contributions paid thereafter until the Loan has been
repaid in full, and all earnings from investment of such Company contributions,
without regard to whether any such Company contributions and earnings have been
allocated to Participants' Other Investment Accounts, shall be available to meet
obligations under the Loans as such obligations accrue, or prior to the time
such obligations accrue, unless otherwise provided by the Company at the time
any such contribution is made.
(b) Any pledge of Company Stock must provide for the release
of shares so pledged upon the payment of any portion of the Loan. The number of
shares to be released will be determined, at the discretion of the Committee,
under clause (1) or (2) of this section 6.1(b).
(1) If the Loan provides annual payments of
principal and interest at a cumulative rate
that is not less rapid at any time than
level annual payments of principal and
interest over ten years, then for each Plan
Year during the duration of the Loan, the
number of shares of Company Stock released
from such pledge shall equal the number of
encumbered securities held immediately
before release for the current Plan Year
multiplied by a fraction. The numerator of
the fraction is the
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principal paid in such Plan Year. The
denominator of the fraction is the sum of
the numerator plus the principal to be paid
for all future years. Such years will be
determined without taking into account any
possible extension or renewal periods. To
the extent that the net proceeds received by
the Plan in respect of any Loan exceed the
stated principal amount of the Loan, that
portion of any interest payment that would
be deemed to be a repayment of principal
under standard loan amortization tables
shall be treated as principal paid or
principal to be paid, as the case may be,
for purposes of the above calculation.
(2) If the Loan does not satisfy the conditions
stated in subparagraph (1), then for each
Plan Year during the duration of the Loan,
the number of shares of Company Stock
released from such pledge shall equal the
number of encumbered securities held
immediately before release for the current
Plan year multiplied by a fraction. The
numerator of the fraction is the sum of the
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 of
renewal periods.
(c) If the collateral includes more than one class of Company
Stock, the number of shares of each class to be released for a Plan Year must be
determined by applying the same fraction to each class. If interest on any Loan
is variable, the interest to be paid in future years under the Loan shall be
computed by using the interest rate application as of the end of the Plan Year.
Should a Loan initially satisfying the conditions stated in subparagraph (b)(1)
at some subsequent date cease to satisfy the conditions of such subparagraph, by
reason of a renewal, extension, or refinancing of the Loan, then subparagraph
(b)(2) shall be applied in determining the shares released upon payment of any
principal or interest after such date.
6.2 Loan Payments.
(a) Payments of principal and interest on any Loan during a
Plan Year shall be made by the Trustee (as directed by the Committee) only from
(1) Company Contributions to the Trust made to meet the Plan's obligation under
a Loan (other than contributions of Company Stock) and from any earnings
attributable to Company Stock and investments of such contributions (both
received during or prior to the Plan Year); (2) the proceeds of a subsequent
Loan made to repay a prior Loan; and (3) the proceeds of the sale of any Company
Stock held as
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collateral for a Loan. Such contribution and earnings must be accounted for
separately by the Plan until the Loan is repaid.
(b) Company Stock released by reason of the payment of
principal or interest on a Loan from amounts allocated to Participants' Other
Investments Accounts or Company Other Investments Accounts shall immediately
upon payment be allocated as set forth in Sections 7.2 and 7.4 to the
corresponding Company Stock or Company Stock Contribution Accounts.
(c) The Company shall contribute to the Trust sufficient
amounts to enable the Trust to pay principal and interest on any such Loan as
they are due, provided however that no such contributions shall exceed the
limitations in Section 7.5. In the event that such contributions by reason of
the limitations in Section 7.5 are insufficient to enable the Trust to pay
principal and interest on such Loan as it is due, then upon the Trustee's
request the Company shall:
(1) Make a loan to the Trust as described in
Regulations ss.54.4975(b)(4)(iii), in sufficient amounts to meet such principal
and interest payment. Such new Loan shall also meet all requirements of an
"exempt loan" within the meaning of Regulations ss.54.4975-7(b)(1)(iii) and
shall be subordinated to the prior Loan. Company Stock released from the pledge
of the prior Loan shall be pledged as collateral to secure the new Loan. Such
Company Stock will be released from this new pledge and allocated to the
accounts of the Participants in accordance with applicable provisions of the
Plan;
(2) Purchase any Company Stock 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.
(d) The Company 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.
(e) Except as provided in sections 6.3 and 6.4 below, 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 a loan, no shares of Company
Stock acquired with
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the proceeds of a Loan obtained by the Trust to purchase Company Stock may be
subject to a put, call or other option, or buy-sell or similar arrangement while
such shares are held by and when distributed from the Plan.
6.3 Right of First Refusal. Shares of Company Stock purchased with the
proceeds of a Loan and distributed by the Trustee may be subject to a "right of
first refusal." Such a "right" shall provide that prior to any subsequent
transfer, the shares must first be offered in writing to the Company at a price
equal to the greater of (1) the then fair market value of such shares of Company
Stock as determined in accordance with Section 5.2, or (2) the purchase price
offered by a buyer, other than the Company or Trustee, making a good faith (as
determined by the Committee) offer to purchase such shares of Company Stock. The
Trust or the Company, as the case may be, may accept the offer as to part or all
of the Company Stock at any time during a period not exceeding 14 days after
receipt of such offer by the Trust, on terms and conditions no less favorable to
the shareholder than those offered by the independent third party buyer. Any
installment purchase shall be made pursuant to a note secured by the shares
purchased and shall bear a reasonable rate of interest as determined by the
Committee. If the offer is not accepted by the Trust, or the Company, or both,
then the proposed transfer may be completed within a reasonable prior following
the end of the 14 day period, but only upon terms and conditions of the third
party buyer's prior offer. Shares of Company Stock which are publicly traded
within the meaning of Code Section 409(h)(1)(B) at the time such right may
otherwise be exercised shall not be subject to this "right of first refusal."
6.4 Put Option.
(a) Shares of Company Stock acquired by the Trust shall be
subject to a "put" option at the time of distribution, provided that at such
time the shares are not readily tradable on an established market within the
meaning of Section 409(h)(1)(B) of the Code. The "put" option shall be
exercisable by the Participant or his Beneficiary, by the donees of either, or
by a person (including an estate or its distributee) to whom the Company Stock
passes by reason of the Participant's or Beneficiary's death. The "put" option
shall provide that for a period of at least 60 days following the date of
distribution of the Company Stock, the holder of the option shall have the right
to cause the Company, by notifying the Committee in writing, to purchase such
shares at their fair market value (as determined pursuant to Section 5.2). If
the "put" option is not exercised within such 60-day period, the option shall be
exercisable for an additional period of 60 days in the following Plan Year. The
Committee may give the Trustee the option to assume the rights and obligations
of the Company at the time the "put" option is exercised, insofar as the
repurchase of Company Stock is concerned.
(b) If the entire Adjusted Balance of a Participant's Accounts
is distributed to the Participant within one taxable year, payment of the price
of the Company Stock purchased pursuant to an exercised "put" option shall be
made in five substantially equal annual payments and the first installment shall
be paid not later than 30 days
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after the Participant exercises the "put" option. The Plan will provide adequate
security and pay a reasonable rate of interest on amounts not paid after 30
days. If the entire Adjusted Balance of a Participant's Accounts is not
distributed to him within one taxable year, payment of the price of the Company
Stock purchased pursuant to an exercised "put" option shall be made in a single
lump sum not later than 30 days after the Participant exercises the "put"
option.
6.5 Continuation of Rights or Put Option. The rights set forth in
Section 6.2(d) and the "put" option provided for by Section 6.4 are
nonterminable and shall continue to apply to shares of Company Stock purchased
by the Trustee with the proceeds of a Loan as described herein or to shares of
Company Stock distribute hereunder notwithstanding the repayment of the Loan or
any amendment to, or termination of, this Plan which causes the Plan to cease to
be an employee stock ownership plan within the meaning of Section 4975(e)(7) of
the Code.
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ARTICLE VII
ALLOCATIONS TO PARTICIPANTS' ACCOUNTS
7.1 Separate Accounts. Separate Company Stock Accounts and Other
Investments Accounts will be established to reflect Participants' interests
under the Plan. Records shall be kept by the Committee from which can be
determined the portion of each Other Investments Account which at any time is
available to meet obligations under a Loan in accordance with Section 6.1 and
the portion which is not so available.
7.2 Company Stock. The Company Stock Account maintained for each
Participant will be credited with his allocable share determined under Section
7.4 of Company Stock (including fractional shares) purchased and paid for by the
Trust or contributed in kind to the Trust, with the forfeitures of Company
Stock, and with any stock dividends on Company Stock allocated to his Company
Stock Account to the extent such dividends are not distributed pursuant to
Section 8.8. Company Stock acquired by the Trust with the proceeds of a Loan
obtained pursuant to Article VI shall be allocated to the Company Stock Accounts
of Participants according to the method set forth in Section 7.4, as the Company
Stock is released from Suspense Accounts as provided for in Section 6.1.
7.3 Other Investments. The Other Investments Account maintained for
each Participant will be credited (or debited) with its allocable shares as
determined under Section 7.8 of the net income (or loss) of the Trust, with any
cash dividends on Company Stock allocated to his Company Stock Accounts to the
extent such dividends are not distributed to the Participant or applied to the
repayment of principal or interest of a Loan pursuant to Section 8.8, with
Company Contributions which have not been used to make principal and interest
payments on a Loan or other Debt or to purchase Company Stock and with
forfeitures in other than Company Stock. Each Other Investments Account will be
debited for its share of any payments for the acquisition of Company Stock for
the benefit of the Participants' Company Stock Accounts and for any repayment of
principal or interest on any Loan or other Debt chargeable to Participants'
Company Stock Accounts; provided that only the portion of each Other Investments
Account which is available to meet obligations under Loans shall be used to pay
principal or interest on a Loan.
7.4 Allocations of Company Contributions and Forfeitures. The Company
Stock and other investments held in the Company Contribution Accounts under the
Plan, and forfeitures incurred under the Plan for each Plan Year, shall be
allocated as of the last day of such Plan Year (even though receipt of the
Company Contributions by the Trustee may take place after the close of such
Year) among the Company Stock and Other Investments Accounts of all Participants
who, during the course of such Plan Year; (i) completed at least 1,000 Hours of
Service and were employed by the Company on the last day of such Plan Year; (ii)
retired on or after their Normal Retirement Dates; (iii) died; or (iv) became
disabled as defined in Section 8.3. Such allocation shall be in the ratio that
each
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Participant's Compensation (as defined in Section 2.12 of the Plan) during the
Plan Year bears to the total Compensation during such Plan Year of all
Participants entitled to share in such allocation. Notwithstanding the preceding
provisions of this Section, in no event shall an allocation be made to the
Account of any Participant, for any Limitation Year, which would cause: (a)
Annual Additions to the accounts of such Participant to exceed the Maximum
Permissible Amount for that Year (except as permitted in Section 7.5); or (b)
the sum of the defined benefit plan fraction (as defined in Section 7.5) and the
defined contribution plan fraction (as defined in Section 7.5) to exceed one for
such Participant for that Year.
7.5 Maximum Allocation.
(a) Except as provided in paragraphs (b) and (c) below, the
allocations to the accounts of any Participant in any Limitation Year shall be
limited so that the Participant's Annual Additions for such Year do not exceed
the Maximum Permissible Amount.
(b) If no more than one-third of the Company Contribution for
a Limitation Year that are deductible as principal or interest payments on a
Loan, pursuant to the provisions of Section 404(a)(9) of the Code, are allocated
to Highly Compensated Participants, then the limitations imposed by subsection
(a) or (b), whichever is applicable, shall not apply to:
(i) Forfeitures of Company Stock if the Company
Stock was acquired with the proceeds of a
Loan, or
(ii) Company Contributions that are deductible as
interest payments on a Loan under Section
404(a)(9)(B) of the Code and charged against
a Participant's Account.
(c) If the foregoing limitation on allocations would be
exceeded in any Limitation Year for any Participant as a result of the
allocation of forfeitures under the Plan, reasonable error in estimating a
Participant's Compensation, or under such other limited facts and circumstances
that the Commissioner of the Internal Revenue Service, pursuant to Regulations
ss.1.415-6(b)(6), finds justify the availability of this Section 7.5, the amount
in excess of the limits of this Section 7.5 shall be placed, unallocated to any
Participant, in a Limitation Account. If a Limitation Account is in existence at
any time during a particular Limitation Year, other than the Limitation Year
described in the preceding sentence, all amounts in the Limitation Account must
be allocated to Participants' Accounts (subject to the limits of this Section
7.5) before any Company Contributions which would constitute Annual Additions
may be made to the Plan for that Limitation Year. The excess amount allocated
pursuant to this Section 7.5(d) shall be used to reduce Company Contributions
for the next Limitation Year (and succeeding Limitation Years,
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as necessary) for all of the Participants in the Plan. The Limitation Account
will not share in the valuation of Participants' Accounts and the allocation of
earnings set forth in Section 7.8 of the Plan, and the change in fair market
value and allocation of earnings attributable to the Limitation Account shall be
allocated to the remaining accounts hereunder as set forth in Section 7.5.
(d) Upon termination of the Plan, any amounts in a Limitation
Account at the time of such termination shall revert to the Company.
(e) In the event that any Participant under this Plan is also
a Participant in a defined benefit plan (as defined in Section 415(k) of the
Code) maintained by the Company or a Related Employer, the sum of the defined
benefit plan fraction and the defined contribution plan fraction for any
Limitation Year with respect to such Participant shall not exceed one. The
"defined benefit plan fraction" for any Limitation Year for a Participant means
a fraction, the numerator of which is the projected annual benefit of the
Participant under all defined benefit plans maintained by the Company or a
Related Employer determined as of the close of the Limitation Year and the
denominator of which is the lesser of (a) the product of 1.25 and the dollar
limitation in effect under Section 415(b)(1)(A) of the Code for such Year, or
(b) the product of 1.4 and the amount taken into account under Section
415(b)(1)(B) of the Code for the Participant for such Year. The "defined
contribution plan fraction" for any Limitation Year for any Participant is a
fraction, the numerator of which is the sum of the annual additions to the
Participant's accounts under the Plan and to the accounts under all Related
Plans as of the close of the Year, and the denominator of which is the sum of
the lesser of the following amounts determined for such Year and for each prior
Year of Service with the Company or an Affiliate: (A) the product of 1.25 of the
dollar limitation in effect under Section 415(c)(1)(A) of the Code for such Year
(determined without regard to Section 415(c)(6) of the Code), and (B) the
product of 1.4 and the amount which may be taken into account under Section
415(c)(1)(B) of the Code with respect to such Participant for such Year.
(f) If a Participant shall be entitled to receive an
allocation under this Plan and any Related Plan and, in the absence of the
limitations contained in this and Section 7.6, the Company would have
contributed or allocated to the Account of any Participant an amount for a
Limitation Year that would have caused the Annual Additions to the Account of a
Participant to exceed the Maximum Permissible Amount for such Year, then the
contributions or allocations under such Related Plan shall be reduced prior to
any reduction in contributions or allocations made with respect to the
Participant under this Plan to the extent necessary so that the allocations of
such Annual Additions does not exceed the Maximum Permissible Amount.
(g) Any reduction in the contributions and allocations under
this Plan made with respect to a Participant's Accounts required pursuant to
this Section 7.5 and Section 415 of the Code shall be effected, to the
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minimum extent necessary, by reducing the Company Contributions that would have
been made by the Company for the applicable Plan Year with respect to such
Participant.
(h) The provisions of this Section shall be interpreted by the
Committee, in the administration of the Plan, to reduce contributions and
allocations (as required by this Section) only to the minimum extent necessary
to reflect the requirements of Section 415 of the Code, as amended and in force
from time to time, and Regulations promulgated pursuant to that Section, which
are incorporated by reference herein.
7.6 Vesting.
(a) Each Participant shall have a vested interest in the
Adjusted Balance of his Company Stock and Other Investments Accounts in
accordance with the following formula:
Years of Vested Forfeitable
Service Percentage Percentage
Less than 5 0% 100%
5 or more 100% 0%
(b) On reaching his Normal Retirement Date, a Participant
shall be one hundred percent (100%) vested in the Adjusted Balance of his
Company Stock and Other Investments Accounts.
(c) In the event a Participant dies or becomes disabled within
the meaning of Section 8.3 while an Employee, he shall be one hundred percent
(100%) vested in the Adjusted Balance of his Company Stock and Other Investments
Accounts as of the date of his death or disability.
(d) In the event the Plan is terminated or upon the complete
discontinuance of Company Contributions to the Plan, each Participant shall
become one hundred percent (100%) vested in the Adjusted Balance of his Company
Stock and Other Investments Accounts if such event occurs (1) in the case of a
Participant who does not have a vested interest in his Accounts, while the
Participant is an Employee, and (2) in the case of a Participant who has a
vested interest in his Accounts, prior to the time the Participant incurs a
one-year Break in Service.
7.7 Net Income (or Loss) of the Trust. Any dividends received in
respect of Company Stock allocated to Company Stock Accounts of Participants or
Company Stock Contribution Account shall be credited upon receipt (to the extent
not distributed or applied to the repayment of principal or interest on a Loan
pursuant to Section 8.8) to the applicable Company Stock Account or Company
Stock Contribution Account in the case of stock dividends,
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or to the corresponding Other Investments or Company Other Investments
Contributions Account in the case of cash dividends. The net income (or loss) of
the Trust for each Plan Year will be determined as of each Valuation Date. Each
Participant's share of the net income (or loss) will be allocated to his Other
Investments Account in the ratio which the balance of such Account on the
preceding Anniversary Date (reduced by the amount of any distribution from such
Account) bears to the sum of such balances for all Participants as of that date.
The net income (or loss) of the Trust includes the increase (or decrease) in the
fair market value of the Trust Fund (other than Company Stock, except as
provided below), interest income, dividends and other income (or loss)
attributable to the Trust Fund (other than allocated Company Stock) since the
preceding Valuation Date but net income (or loss) shall not include Company
contributions or forfeitures. Any dividends on unallocated Company Stock and any
proceeds of sales of unallocated Company Stock, to the extent such proceeds are
not used to pay principal or interest on a Loan, shall be considered net income
for the Trust for the Plan Year and allocated to the Company Other Investments
Contribution Account. Net income (or loss) attributable to any Limitation
Account established under Section 7.4 shall be allocated to the Other
Investments Accounts of Participants in the manner set forth in the third
sentence of this Section, and the Limitation Account shall not share in the
allocation of Net Income (or loss) of the Trust under this Section.
7.8 Accounting for Allocations. The Committee shall adopt accounting
procedures for the purposes of making the allocations, valuations and
adjustments to Participants' Accounts provided for in this Article. Except as
provided in Regulations ss. 54.4975-11(d), Company Stock acquired by the Plan
shall be accounted for as provided under Regulations ss. 1.402(a)-1(b)(2)(ii),
allocations of Company Stock shall be made separately for each class of stock,
and the Committee shall maintain adequate records of the cost basis of all
shares of Company Stock allocated to each Participant's Company Stock Account.
From time to time, the Committee may modify the accounting procedures for the
purpose of achieving equitable and nondiscriminatory allocations among the
Accounts of Participants in accordance with the general concepts of the Plan and
the provisions of this Section. Annual valuations of Trust Assets shall be made
at fair market value, as described in Section 5.2 above.
7.9 Special Allocation Provisions. Whenever an account balance is
distributable in installments, the undistributed balance of such account shall
participate in the valuation provided in Section 7.7 until fully distributed. In
lieu of such participation, however, upon the written request of the former
Participant or Beneficiary entitled to receive such installments, received by
the Committee prior to the payment of the first installment, the Adjusted
Balances of his accounts shall be deposited in the name of the Trustee in a
savings account or certificate of deposit in a national or state bank or in a
federal savings and loan association and earn and be credited with such earnings
(at not less than the current rate of earnings paid thereon by the depository).
Any amounts deposited pursuant to this Section 7.9 and any earnings thereon
shall be disregarded in computing the fair market value of trust assets to be
allocated under Section 7.7 of the Plan and the earnings shall be payable to
such former Participant or Beneficiary
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with payment of the aforementioned installments. Any expenses incurred by the
Trustee and the Committee as the result of any deposit made pursuant to this
Section shall be payable from the accounts of the former Participant or
Beneficiary from whom such deposit was made.
7.10 Special Limitations on Allocations.
(a) Notwithstanding the foregoing provisions of this Article,
if more than one-third of Company Contributions for a Plan Year which
are deductible under Section 404(a)(9) of the Code would be allocated,
in the aggregate, to the Accounts of Highly Compensated Participants
then such allocations to the Accounts Highly Compensated Participants
shall be reduced, pro rata, in an amount sufficient to reduce the
amounts allocated to the Accounts of such Participants to an amount
not in excess of one-third of such deductible contributions with
respect to such Plan Year. Any contributions which are prevented from
being allocated due to the restriction contained in this Section 7.10
shall be allocated pursuant to Section 7.4 as though those Highly
Compensated Participants did not participate in the Plan.
(b) Notwithstanding the foregoing provisions of this Article,
in the event that the Trustee acquires shares of Company Stock
transaction to which Section 1042 of the Code applies, then, in
accordance with the Regulations, such Shares shall not be allocated,
directly or indirectly, to any Participant described in Section
409(n)(1) of the Code for the duration of the "nonallocation period"
(as defined in section 409(n)(3)(C) of the Code). Where any shares of
Company Stock are prevented from being allocated due to the
prohibition contained in the allocation of contributions otherwise
provided under Section 7.4 shall be adjusted to reflect such result.
ARTICLE VIII
RETIREMENT PAYMENTS, DISABILITY PAYMENTS AND OTHER BENEFITS
8.1 Payments on Retirement. A Participant who attains his Normal
Retirement Date and continues to be an Employee shall continue to share in the
allocation of Company Contributions and of forfeitures under the Plan. Upon the
retirement of a Participant at or after his Normal Retirement Date the Committee
shall notify the Trustee in writing of the Participant's retirement and shall
direct the Trustee to make payment of the Adjusted Balance of the Participant's
Accounts as of the Valuation Date coinciding with or immediately preceding the
distribution commencement date pursuant to Section 8.6, in a method provided in
the Plan.
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8.2 Payments on Death.
(a) Upon the death of a Participant, the Committee shall
promptly notify the Trustee in writing of the Participant's death and the name
of his Beneficiary and shall direct the Trustee to make payments of the Adjusted
Balance of the Participant's accounts as of the Valuation Date coinciding with
or immediately preceding the date of distribution to his Beneficiary pursuant to
Section 8.6, in a method provided in the Plan.
(b) Each unmarried Participant or each married Participant
whose surviving Spouse has consented to any alternate Beneficiary or an
alternate method of payment as provided in subsection (c), shall have the right
to designate, by giving a written designation to the Committee, (i) a person or
entity as Beneficiary to receive the death benefit provided under this Section
8.2 and (ii) the method of payment of such death benefit to his Beneficiary
pursuant to Section 8.6. Successive designations may be made, and the last
designation received by the Committee prior to the death of the Participant
shall be effective and shall revoke all prior designations. If a designated
Beneficiary shall die before the Participant, his interest shall terminate, and,
unless otherwise provided in the Participant's designation, if the designation
included more than one Beneficiary, such interest shall be paid in equal shares
to those Beneficiaries, if any, who survive the Participant. A Participant to
whom this subsection applies shall have the right to designate different
Beneficiaries to receive the Adjusted Balance in the Participant's various
accounts under the Plan.
(c) The Beneficiary of each Participant who is married shall
be the surviving Spouse of such Participant and the death benefits of any
Participant who is married shall be paid in full to his surviving Spouse in a
single lump sum. Notwithstanding the preceding sentence, the death benefits
provided pursuant to subsection (a) shall be distributed to any other
Beneficiary designated by a married Participant as provided in subsection (b),
if the Participant's surviving Spouse consented to such designation, prior to
the date of the Participant's death, in writing. Such a consent must acknowledge
the effect of the election and designation and the identity of any nonsurviving
Spouse Beneficiary, including any class of Beneficiaries or contingent
Beneficiaries, and must be witnessed by a representative of the Plan or a notary
public. Consent of a Participant's surviving Spouse shall not be required if the
Participant established to the satisfaction of the Committee that consent may
not be obtained because there is no surviving Spouse or the surviving Spouse
cannot be located, or because of such other circumstances as the Secretary of
the Treasury may prescribe by Regulations. The Participant may not subsequently
change the method of distribution elected by the Participant or the designation
of his Beneficiary unless his surviving Spouse consents to the new elections or
designation in accordance with the requirements set forth in the preceding
sentence, or unless the surviving Spouse's consent permits the Participant to
change the election of method of payment or the designation of his Beneficiary
without the Spouse's further consent. A surviving Spouse's consent shall be
irrevocable. Any
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consent by a surviving Spouse, or establishment that the consent of the
surviving Spouse may not be obtained, shall be effective only with respect to
that surviving Spouse.
(d) The Committee may determine the identity of the
distributees and in so doing may act and rely upon any information it may deem
reliable upon reasonable inquiry, and upon any affidavit, certificate, or other
paper believed by it to be genuine, and upon any affidavit, certificate, or
other paper believed by it to be genuine, and upon any evidence believed by it
sufficient.
8.3 Payments on Disability. Upon the termination of a Participant's
employment with the Company by reason of a disability, the Committee shall
notify the Trustee in writing of said disability termination, and shall direct
the Trustee to make payment of the Adjusted Balance of the Participant's
accounts as of the Valuation Date coinciding with or immediately preceding the
distribution commencement date under Section 8.6 in a method provided in the
Plan. For purposes of this section "disability" means a physical or mental
condition which is expected to render the Participant permanently unable to
perform his usual duties or any comparable duties for the Company. The
determination of the existence of such disability shall be made by the Committee
and shall be final and binding upon the Participant and all other parties. The
Committee may require the submission of such medical evidence as it may deem
necessary in order to arrive at its determination. The Committee's determination
of the existence of a disability will be made with reference to the nature of
the injury without regard to the period the Participant is absent from work.
8.4 Payments on Termination for Other Reasons. Upon the termination of
a Participant's employment with the Company for any reason (whether before, on,
or after his Early Retirement Date) other than retirement on or after his Normal
Retirement Date, or permanent disability, the Committee shall notify the Trustee
to make payment of the vested portion of the Adjusted Balance of his Accounts,
if any, as of the Valuation Date coinciding with or next preceding the
distribution commencement date determined under Section 8.6, in a method
provided in the Plan. The vested portion of a Participant's Accounts shall be
determined in accordance with Section 7.7 of the Plan. The nonvested portion of
the Adjusted Balance of his Accounts shall be retained in his Accounts until a
period has elapsed sufficient to determine whether he will be reemployed or will
incur five consecutive one-year Breaks in Service. If he is reemployed before he
incurs five consecutive one-year Breaks in Service, his Accounts will continue
to vest; if he incurs five consecutive one-year Breaks in Service, the amount in
such Accounts shall be deemed a forfeiture as of the last day of the Plan Year
in which the Participant incurs the last of the five consecutive one-year Breaks
in Service. The amount of any such forfeiture shall be first deducted from the
Participant's Other Investments Account. If forfeitures of the Participants'
Other Investments Account are not sufficient to reduce the fair market value of
the vested portion of the Adjusted Balances of his Accounts to the percentage of
the total value of his Accounts determined under this Section, the remainder of
the forfeitures shall be deducted from the
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Participant's Company Stock Account. If a Participant's Company Stock Account
includes more than one class of Company Stock, the forfeiture will consist of
the same proportion of each class of stock. All forfeitures will be applied in
the same manner described in Section 7.4 as of the end of the Plan Year in which
the last of five consecutive one-year Breaks in Service resulting in forfeiture
occurs. If a Participant incurs a Break in Service, is rehired before incurring
five consecutive one-year Breaks in Service and subsequently incurs another
Break in Service under circumstances in which he is not fully vested in his
Accounts, the portion of his Accounts distributable upon the date of his later
one-year Break in Service shall be calculated as follows:
(i) the amount distributed to the Participant from his
Accounts upon his earlier Break in Service shall be
added to the Adjusted Balance of his Accounts;
(ii) the amount determined under paragraph (i) shall be
multiplied by the vested percentage as of the date of
his later termination of employment determined under
Section 7.7; and
(iii) the amount distributed to the Participant upon his
earlier Break in Service shall be deducted from the
product calculated under paragraph (ii) to determine
the amount distributable upon his later Break in
Service.
8.5 Property Distributed. Distribution of the vested portion of the
Adjusted Balance of a Participant's Accounts under the Plan will be made in
whole shares of Company Stock. To the extent a distribution is to be made in
Company Stock, any cash or other property in the Participant's Other Investments
Accounts will be used to acquire Company Stock for distribution. The right of a
Participant to receive a distribution in whole shares of Company Stock pursuant
to this Section 8.5 shall not apply to the extent the Participant is a Qualified
Participant who makes a valid and timely election for a distribution pursuant to
Section 8.9 below. Notwithstanding the foregoing, if applicable corporate
charter or bylaw provisions restrict ownership of substantially all outstanding
shares of Company Stock to Employees or to a plan or trust descried in Section
401(a) of the Code, then any distribution shall be in cash. Notwithstanding
anything herein to the contrary, if any shares of Company Stock in a
Participant's Accounts are issued by a bank described in Section 409(h)(3) of
the Code, distribution shall be made, at the Participant's election, in cash or
Shares.
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8.6 Methods of Payments.
(a) Whenever the Committee shall direct the Trustee to make
payment to a Participant or his Beneficiary upon termination of the
Participant's employment (whether by reason of retirement, death, disability or
for other reasons), the Committee shall direct the Trustee to pay the vested
portion of the Adjusted Balance of his Accounts, if any, to or for the benefit
of the Participant or his Beneficiary, in either of the following ways as the
Participant (or, if a deceased former Participant shall have failed to select a
method of payment, as his Benefit) shall determine;
(i) In a lump sum; provided that distribution of
Company Stock shall be valued at its fair
market value on the date of such
distribution as determined pursuant to
section 5.2; or
(ii) Subject to Section 8.2, in installments
payable in substantially equal amounts,
continuing over a period that complies with
subsection (d) below, but in no event over a
period exceeding ten years in the case of a
Participant whose termination occurs prior
to age 65.
If the selection of a method of payment is not made within 90 days
prior to the distribution date determined under subsection (b), payment shall be
made in a lump sum.
(b) Payment under this Section shall be made or commence as follows:
(i) In the case of a Participant whose
employment terminated due to death,
disability, retirement or termination of
employment, not more than 60 days after the
end of the Plan Year in which the employment
of the Participant terminates, unless the
Participant, or his Beneficiary in the event
of his death, agrees to a later date.
Notwithstanding the preceding sentence,
however, if the Participant's Account
balances at the time for any distribution
exceed $3,500, then neither such
distribution nor any subsequent distribution
shall be made to the Participant at any time
before his 65th birthday without his written
consent.
(ii) If a Participant terminates service and the
value of his Account balances does not
exceed (or at the time of any prior
distribution has not exceeded) $3,500, the
Participant shall receive a distribution of
the entire value of his Account balances
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as soon as administratively feasible. For
purposes of this Section 8.6(b)(ii), if the
value of the Participant's Account balances
is zero, the Participant shall be deemed to
have received a distribution of such Account
balances.
(c) Notwithstanding the provisions of paragraph (b) of this
Section, unless a Participant, or his Beneficiary in the event of his death,
otherwise elects, the payment of benefits under the Plan will begin not later
than 60 days after the last day of the Plan Year in which last of the following
events occur:
(i) the date on which the Participant
attains the age of 65;
(ii) the tenth anniversary of the date
on which the Participant commenced
participation in the Plan; or
(iii) the date on which the
Participant's employment with the
Company terminates.
(d) Notwithstanding the provisions of subsection (b) and (c)
other than those that require the consent of a Participant to a distribution of
the Adjusted Balance of his Accounts in excess of $3,500:
(i) A Participant may always elect to
have the payment of benefits begin
not later than one year after the
close of the Plan Year (x) in which
the Participant separates from
service by reason of the attainment
of his Normal Retirement Date,
disability, or death or (y) which
is the fifth Plan Year following
the Plan Year in which the
Participant otherwise separates
from service.
(ii) Unless the Participant otherwise
elects, the distribution of the
Adjusted Balance of his Accounts
will be in substantially equal
annual or more frequent payments
over a period not longer than the
greater of (1) five years, or (2)
in the case of a Participant the
Adjusted Balance of whose Accounts
exceeds $642,450, five years plus
one additional year (but not more
than five additional years) for
each $128,490 or fraction thereof
by which such Adjusted Balance
exceeds $623,450. The dollar
amounts contained in this
paragraph (ii) shall be adjusted
by the Secretary of the Treasury
pursuant to Section 409(o)(2) of
the Code.
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(e) Notwithstanding anything to the contrary contained
elsewhere in the Plan:
(i) A Participant's benefits under the
Plan will:
(1) be distributed to him not
later than the Required
Distribution Date (as defined in
subsection (iii)), or
(2) be distributed commencing not
later than the Required
Distribution Date in accordance
with regulations prescribed by the
Secretary of the Treasury over a
period not extending beyond the
life expectancy of the Participant
or the life expectancy of the
Participant and his Beneficiary.
(ii) (1) If the Participant dies after
distribution has commenced pursuant
to subsection (i)(2) but before his
entire interest in the Plan has
been distributed to him, then the
remaining portion of that interest
will be distributed at least as
rapidly as under the method of
distribution being used under
subsection (i)(2) at the date of
his death.
(2) If the Participant dies before
distribution has commenced pursuant
to subsection (i)(2), then, except
as provided in subsections (ii)(3)
and (ii)(4), his entire interest in
the Plan will be distributed within
five years after his death.
(3) Notwithstanding the provisions
of subsection (ii)(2), if the
Participant dies before
distribution has commenced pursuant
to subsection (i)(2) and if any
portion of his interest in the Plan
is payable (A) to or for the
benefit of a Beneficiary, (B) in
accordance with Regulations
prescribed by the Secretary of the
Treasury over a period not
extending beyond the life
expectancy of the Beneficiary, and
(C) beginning not later than one
year after the date as the
Secretary of the Treasury may
prescribe by Regulations, then the
portion referred to in this
subsection (ii)(3) shall be treated
as distributed on the date on which
such distribution begins.
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(4) Notwithstanding the provisions
of subsections (ii)(2) and
(ii)(3), if the Beneficiary
referred to in subsection (ii)(3)
is the spouse of the Participant,
then
(A) the date on which
the distributions
are required to
begin under
subsection
(ii)(3)(C) of
this Section
shall not be
earlier than the
date on which the
Participant would
have attained age
70 1/2, and
(B) if the spouse
dies before the
distributions to
that spouse
begin, then this
subsection
(ii)(4) shall be
applied as if the
surviving spouse
were the
Participant.
(iii) For purposes of paragraph
(h), the Required Distribution Date
means October 1 of the calendar
year following the calendar year in
which the Participant attains age
70 1/2.
(iv) For purposes of subsection
(e), the life expectancy of a
Participant and his spouse may be
redetermined, but not more
frequently than annually.
(v) A Participant may not elect a
form of distribution pursuant to
subsection (i) providing payments
to a Beneficiary who is other than
his spouse unless the actuarial
value of the payments expected to
be paid to the Participant is more
than 50% of the actuarial value of
the total payments expected to be
paid under such form of
distribution.
(vi) No Participant shall receive a
distribution under circumstances
that would impose an additional tax
on such distribution pursuant to
Section 72(t) of the Code unless
and until that individual is
notified in writing by the
Committee of the tax and the
individual, by writing delivered to
the Committee, acknowledges receipt
of the notification and requests
the distribution.
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(f) (i) This subsection 8.6(f) applies
to distributions made on or after
January 1, 1993. Notwithstanding
any provision of the Plan to the
contrary that would otherwise limit
a Distributee's election under this
subsection, 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.
(ii) Definitions.
(A) "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).
(B) "Eligible Retirement Plan" is an
individual retirement account
described in Section 408(b) of the
Code, an individual retirement
annuity 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 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.
(C) "Distributee" includes an Employee
or former Employee. In addition,
the Employee's or former
Employee's Surviving Spouse and
the Employee's or former
Employee's spouse or former spouse
who is the
-31-
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.
(D) "Direct Rollover" is a payment by
the Plan to the Eligible Retirement
Plan specified by the Distributee.
8.7 Administrative Powers Relating to Payments. If a Participant or
Beneficiary is under a legal disability or, by reason of illness or mental or
physical disability, is in the opinion of the Committee unable properly to
attend to his personal financial matters, the Trustee may make such payments in
such of the following ways as the Committee shall direct:
(i) directly to such Participant or Beneficiary;
(ii) to the legal representative of such Participant or
Beneficiary; or
(iii) to some relative by blood or marriage, or friend, for
the benefit of such Participant or Beneficiary.
Any payment made pursuant to this section shall be in complete
discharge of the obligation therefor under the Plan.
8.8 Dividends. Any cash dividends received by the Trustee on Company
Stock allocated to the Accounts of Participants (or former Participants or
Beneficiaries) may be applied to the repayment of principal or interest on a
Loan, retained in the Participants' applicable accounts or paid to such
Participants, former Participants or Beneficiaries (in a nondiscriminatory
manner) at the sole discretion of the Committee; provided that any current
payment in cash must be paid to Participants, Former Participant or
Beneficiaries within 90 days after the close of the Plan Year in which the
dividend is received by the Trustee. Any such payment of cash dividends on
shares of Company Stock shall be accounted for as if the Participant or former
Participant receiving such dividends was the direct owner of such shares of
Company Stock and such payment shall not be treated as a distribution under the
Plan. In the event that cash dividends paid with respect to shares allocated to
the Accounts of a Participant are applied to the repayment of principal or
interest on a Loan, shares of Company Stock released thereby from the Suspense
Account shall be allocated to the Accounts of each Participant in proportion to
the value of the dividends otherwise allocable to such Participant's Accounts.
Any cash dividends paid with respect to unallocated Company Stock shall be
applied to the repayment of principal or interest on a Loan.
-32-
8.9 Diversification of Investments.
(a) Notwithstanding any other provisions of the Plan or the
Trust, each Qualified Participant in the Plan may elect within 90 days after the
close of each Plan Year in the Qualified Election Period, by written instrument
delivered to the Committee, to direct the investment of not more than 25% (in
whole multiples of 1%) of the Participant's Adjusted Balance of his Accounts in
the Plan (to the extent that such portion exceeds the amount to which a prior
election under this Section applies). In the case of an election year in which
the Participant can make his last election, the preceding sentence shall be
applied by substituting "50%" for "25%." The Committee shall direct the Trustee
to invest the Accounts of Qualified Participants pursuant to their valid and
timely elections within 90 days after the last day of the period during which
the election can be made. Notwithstanding the foregoing, a Qualified Participant
shall not be entitled to make the election hereunder for a Plan Year within the
Qualified Election Period if the fair market value of his Accounts as of the
last day of such Plan Year is less than $500.
(b) A Qualified Participant's election pursuant to this
Section 8.9 shall direct the investment of the amount subject to the election
among one or more of the three investment options provided by the Trustee from
time to time. The Trustee will provide a written description of each such
investment option to the Qualified Participant within a reasonable time prior to
the Qualified Election Period. Such an investment election shall comply with
such rules and regulations as the Committee may prescribe.
(c) Distributions.
(1) At the election of a Qualified Participant,
the Plan shall distribute the portion of the
Participant's Accounts that is covered by
the election described in this Section 8.9
within 90 days after the last day of the
period during which the election can be
made. Such a distribution shall be subject
to right of first refusal and "put" option
provisions of Sections 6.3 and 6.4 of the
Plan. The provisions of this paragraph (1)
shall apply notwithstanding any other
provisions of the Plan other than those that
require the consent of the Participant to a
distribution of the Adjusted Balance of his
Accounts in excess of $3,500.
(2) In lieu of a distribution pursuant to
paragraph (1), a Qualified Participant who
has the right to receive a cash distribution
pursuant to paragraph (1) may direct the
Plan to transfer the portion of the Adjusted
Balance of his Accounts that is covered by
the election to another qualified plan of
the Company that accepts
-33-
such transfers, provided that the transferee
plan permits participant-directed
investments and does not invest in Company
Stock to a substantial degree. Such a
transfer shall be made no later than 90 days
after the last day of the period during
which the election can be made.
(d) The portion of the Adjusted Balance of a Participant's
Accounts attributable to Company Stock acquired by the Plan after December 31,
1986, shall be determined by multiplying the number of shares of Stock held in
the Accounts by a fraction, the numerator of which is the number of shares
acquired by the Plan after December 31, 1986 and allocated to Participant's
Accounts (not to exceed the number of shares held by the Plan on the date the
Participant becomes a Qualified Participant) and the denominator of which is the
total number of shares held by the Plan at the date the Participant becomes a
Qualified Participant.
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ARTICLE IX
VOTING OF COMPANY STOCK
9.1 Company Common Stock - Voting and Consents.
(a) Each Participant is entitled to direct the Trustee as to
the manner in which any Company Common Stock allocated to his Company
Contribution Account is to be voted. The Company shall furnish the Trustee with
notices and information statements when voting rights are to be exercised. The
Trustee will notify Participants of each occasion for the exercise of voting
rights and will forward copies of any proxy material within a reasonable time
after it is secured from the Company. A Participant shall elect to exercise such
right by filing written voting instructions with the Trustee at such time and in
such form as the Trustee may reasonably specify. Instructions received from
Participants by the Trustee shall be held in the strictest confidence and shall
not be divulged or released to any person including officers, director or
employees of the Company. To the extent not inconsistent with its fiduciary
obligations under ERISA, the Trustee shall vote shares of Company Stock for
which it does not receive timely instructions from Participants, or that have
not been allocated to Participants' Accounts, pro rata in accordance with the
timely instructions it has received from Participants.
(b) Participants will be allowed to direct the voting of
fractional shares or fractional rights to shares. This requirement will be
satisfied if the Trustee, or such other person or persons as the Trustee may
designate, votes the combined fractional shares or rights to shares to the
extent possible to reflect the instructions of the Participants holding
fractional shares or rights to shares.
-35-
ARTICLE X
PLAN ADMINISTRATION
10.1 Company Responsibility. The Company shall be responsible for and
shall control and manage the operation and administration of the Plan. It shall
be the "Plan Administrator" and "Named Fiduciary" for purposes of ERISA and
shall be subject to service of process on behalf of the Plan. The Board may, in
its discretion, appoint a Committee of one or more persons, to be known as the
"Plan Administrative Committee" to act as the agent of the Company in performing
these duties. In the event that the Board chooses not to appoint such a
Committee, all references in the Plan to the "Committee" (except for such
references in this Section 10.1) shall mean the Board. The members of the
Committee shall serve at the pleasure of the Board; they may be officers,
directors, or Employees of the Company or any other individuals. Any member may
resign by delivering his written resignation to the Board and to the Committee.
Vacancies in the Committee arising by resignation, death, removal or otherwise,
shall be filled by the Board. The Company shall advise the Trustee in writing of
the names of the member of the Committee and of changes in membership from time
to time.
10.2 Powers and Duties of Committee. The Committee shall administer
the Plan in accordance with its terms and shall have all powers necessary to
carry out the provisions of the Plan. The Committee shall direct the Trustee
concerning all payments which shall be made out of the Trust pursuant to the
Plan. The Committee shall interpret the Plan and shall determine all questions
arising in the administration, interpretation, and application of the Plan,
including but not limited to questions of eligibility and the status and rights
of Participants, Beneficiaries and other persons. Any such determination by the
Committee shall presumptively be conclusive and binding on all persons. The
regularly kept records of the Company shall be conclusive and binding upon all
persons with respect to an Employee's Hours of Service, date and length of
employment, time and amount of Compensation and the manner of payment thereof,
type and length of any absence from work and all other matters contained therein
relating to Employees. All rules and determinations of the Committee shall be
uniformly and consistently applied to all persons in similar circumstances.
10.3 Organization and Operations of Committee.
(a) The Committee shall act by a majority vote of its members
at the time in office, and such action may be taken either by a vote at a
meeting or in writing without a meeting. The signatures of a majority of the
members will be sufficient to authorize Committee action. A Committee member
shall not participant in discussions of or vote upon matters pertaining to his
own participation in the Plan.
(b) The Committee may authorize any of its members or any
other person to execute any document or documents on behalf of the Committee, in
which event the Committee shall notify the Trustee in writing
-36-
of such action and the name or names of such member or person. The Trustee
thereafter shall accept and rely upon any document executed by such members or
persons as representing action by the Committee, until the Committee shall file
with the Trustee a written revocation of such designation.
(c) The Committee may adopt such bylaws and regulations as it
deems desirable for the conduct of its affairs and with the consent of the
President of the Company, may appoint such accountants, counsel, specialists,
and other persons as it deems necessary or desirable in connection with the
administration of this Plan. The Committee shall be entitled to rely
conclusively upon, and shall be fully protected in any action taken by it in
good faith in relying upon, any opinions or reports which shall be furnished to
it by any such accountant, counsel, specialist or other person.
10.4 Records and Reports of Committee. The Committee shall keep a
record of all its proceedings and acts and shall keep all such books of account,
records, and other data as may be necessary for proper administration of the
Plan. The Committee shall notify the Trustee and the Company of any action taken
by the Committee and, when required, shall notify any other interested person or
persons.
10.5 Claims Procedure. Claims for benefits under the Plan shall be
made in writing to the Committee. In the event a claim for benefits is wholly or
partially denied by the Committee, the Committee shall, within a reasonable
period of time, but no later than 90 days after the receipt of the claim, notify
the claimant in writing of the denial of the claim. If the claimant shall not be
notified in writing of the denial of the claim within 90 days after it is
received by the Committee, the claim shall be deemed denied. A notice of denial
shall be written in a manner calculated to be understood by the claimant, and
shall contain (i) the specific reason or reasons for denial of the claim, (ii) a
specific reference to the pertinent Plan provisions upon which the denial is
based, (iii) a description of any additional material or information necessary
for the claimant to perfect the claim, together with an explanation of why such
material or information is necessary, and (iv) an explanation of the Plan's
review procedure. Within 60 days of the receipt by the claimant of the written
notice of denial of the claim, or within 60 days after the claim is deemed
denied as set forth above, if applicable, the claimant may file a written
request with the Committee that it conduct a full and fair review of the denial
of the claimant's claim for benefits, including the conducting of a hearing, if
deemed necessary by the Committee. In connection with the claimant's appeal of
the denial of his benefit, the claimant may review pertinent documents and may
submit issues and comments in writing. The Committee shall render a decision on
the claim appeal promptly, but not later than 60 days after the receipt of the
claimant's request for review, unless special circumstances (such as the need to
hold a hearing, if necessary) require an extension of time for processing, in
which case the 60 day period may be extended to 120 days. The Committee shall
notify the claimant in writing of any such extension. The decision upon review
shall (i) include specific reasons for the
-37-
decision, (ii) be written in a manner calculated to be understood by the
claimant and (iii) contain specific references to the pertinent Plan provisions
upon which the decision is based.
10.6 Compensation and Expenses of Committee. The members of the
Committee shall serve without compensation for services as such, but all
reasonable expenses incurred by the Committee incident to the administration of
the Plan (including reasonable expenses of litigation involving the Plan and
reasonable fees and expenses of its attorneys and agents) shall be borne by, and
paid out of the plan assets, except to the extent the Board elects to have such
expenses paid directly by the Company.
10.7 Indemnity of Committee Members. The Company shall indemnify and
defend each member of the Committee and each of its other employees against any
and all claims, loss, damages, expenses (including reasonable attorneys fees),
and liability arising in connection with the administration of the Plan, except
when the same is judicially determined to be due to the gross negligence or
willful misconduct of such member or other employee.
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ARTICLE XI
TRUST AND TRUSTEE
11.1 Trust Agreement. A Trust has been created and will be maintained
for the purposes of the Plan. All contributions under the Plan will be paid into
the Trust. The Trust Fund will be held, invested and disposed of by the Trustee
from time to time acting in accordance with the Trust Agreement. All benefits
payable under the Plan will be paid from the Trust Fund.
11.2 Exclusive Benefit of Employees. All contributions made pursuant
to the Plan shall be held by the Trustee in accordance with the terms of the
Trust Agreement and Section 4.2 of the Plan for the exclusive benefit of those
Employees who are Participants under the Plan, including former Employees and
their Beneficiaries, and shall be applied to provide benefits under the Plan and
to pay expenses of administration of the Plan and the Trust, to the extent that
such expenses are not otherwise paid by the Company.
11.3 Trustee. The Company shall appoint a bank or trust company or an
individual or individuals to act as Trustee or Trustees under the Trust
Agreement. The Trustee shall serve at the pleasure of the Company and its powers
and responsibilities shall be set forth in a Trust Agreement entered into
between the Company and the Trustee. No person who receives full-time pay from
the Company shall receive compensation paid by the Trust Fund except for
reimbursement of expenses properly incurred.
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ARTICLE XII
AMENDMENT AND TERMINATION
12.1 Amendment of Plan. The Company shall have the right to amend the
Plan at any time and from time to time by resolution of its Board of Directors,
and all Employees and persons claiming any interest hereunder shall be bound
thereby; provided, however, that no amendment shall have the effect of: (i)
directly or indirectly divesting the interest of any Participant in any amount
that he would have received had he terminated his employment with the Company
immediately prior to the effective date of such amendment, of the interest of
any Beneficiary as such interest existed immediately prior to the effective date
of such amendment; (ii) directly or indirectly affective the vesting schedule
set forth in Section 7.7 used to determine the vested interest of a Participant
on the effective date of the amendment unless the conditions of Section 203(c)
of ERISA are satisfied; (iii) vesting in the Company any right, title or
interest in or to any Plan assets, (iv) causing or effecting discrimination in
favor of officers, shareholders, or highly compensated Employees; or (v) causing
any part of the Plan assets to be used for any purpose other than for the
exclusive benefit of the Participants and their Beneficiaries.
12.2 Voluntary Termination of or Permanent Discontinuance of
Contributions to the Plan. The Company expects the Plan to be permanent, but
since future conditions affecting the Company cannot be anticipated, the Company
shall have the right to terminate the Plan in whole or in part, or to
permanently discontinue contributions to the Plan, at any time by resolution of
its Board and by giving written notice of such termination or permanent
discontinuance, which shall not be earlier than the first day of the Plan Year
which includes the date of the resolution.
12.3 Limitation on Amendment or Termination. Notwithstanding the
provisions of Sections 12.1 and 12.2, the Company shall not terminate the Plan
or discontinue contributions thereto while any Debt or Loan shall remain
outstanding and unpaid in whole or in part, without the prior written consent to
any such termination or amendment by all holders and guarantors, if any, of the
Plan's obligations under such Debt or Loan.
12.4 Involuntary Termination of Plan. The Plan shall automatically
terminate if the Company is legally adjudicated a bankrupt, makes a general
assignment for the benefit of creditors, or is dissolved. In the event of the
merger or consolidation of the Company with or into any other corporation, or in
the event substantially all of the assets of the Company shall be transferred to
another corporation, the successor corporation resulting from the consolidation
or merger, or transfer of such assets, as the case may be, shall have the right
to adopt and continue the Plan and succeed to the position of the Company
hereunder. If, however, the Plan is not so adopted within 90 days after the
effective date of such consolidation, merger or sale, the Plan shall
automatically be deemed terminated
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as of the effective date of such transaction. Nothing in this Plan shall prevent
the dissolution, liquidation, consolidation or merger of the Company, or the
sale or transfer of all or substantially all of its assets.
12.5 Payments on Termination of or Permanent Discontinuance of
Contribution to the Plan. If the Plan is terminated as herein provided, or if it
should be partially terminated, or upon the complete discontinuance of Company
contributions to the Plan, the following procedure shall be followed, except
that in the event of a partial termination, it shall be followed only in cases
of those Participants and Beneficiaries directly affected:
(i) The Committee may continue to function, but if it fails to
do so, its records, books of account and other necessary data shall be turned
over to the Trustee and the Trustee shall act on its own motion as hereinafter
provided.
(ii) Notwithstanding any other provisions of the Plan, all
interests of Participants shall become fully vested and nonforfeitable, provided
that, the Accounts of a former Participant who terminated employment prior to
the date of Plan termination, who had no vested interest at the date of his
termination of employment, and who has incurred a Break in Service of more than
one year but less than five years at the date of Plan termination, shall not be
vested.
(iii) The value of the Trust and the shares of all
Participants and Beneficiaries shall be determined as of the date of termination
or discontinuance.
(iv) Distribution to Participants and Beneficiaries shall be
made at such time after termination of or discontinuance of contributions to the
Plan and by such of the methods provided in Sections 8.5 and 8.6, as the
Committee (or the Trustee if no Committee is then acting) in its discretion
shall determine (except that distribution shall be made not later than the time
specified in Section 8.6(c)).
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ARTICLE XIII
MISCELLANEOUS
13.1 Duty To Furnish Information and Documents. Participants and their
Beneficiaries must furnish to the Committee and the Trustee such evidence, data
or information as the Committee considers necessary or desirable for the purpose
of administering the Plan, and the provisions of the Plan for each person are
upon the condition that he will furnish promptly full, true, and complete
evidence, data, and information requested by the Committee. All parties to, or
claiming any interest under, the Plan hereby agrees to perform any and all acts,
and to execute any and all document and papers, necessary or desirable for
carrying out the Plan and the Trust.
13.2 Committee's Annual Statements and Available Information. The
Company shall advise Employees of the eligibility requirements and benefits
under the Plan. As soon as practicable after making the annual valuations and
allocations provided for in the Plan, and at such other times as the Committee
may determine, the Committee shall provide each Participant, and each former
Participant and Beneficiary with respect to whom an account is maintained, with
a statement reflecting the current status of his accounts, including the
Adjusted Balance thereof. No Participant, except a member of the Committee,
shall have the right to inspect the records reflecting the account of any other
Participant. The Committee shall make available for inspection at reasonable
times by Participants and Beneficiaries copies of the Plan, any amendments
thereto, Plan summary, and all reports of Plan and Trust operations required by
law.
13.3 No Enlargement of Employment Rights. Nothing contained in the
Plan shall be construed as a contract of employment between the Company and any
person, nor shall the Plan be deemed to give any person the right to be retained
in the employ of the Company or limit the right of the Company to employ or
discharge any person with or without cause, or to discipline any Employee.
13.4 Applicable Law. All questions pertaining to the validity,
construction and administration of the Plan shall be determined in conformity
with the laws of Montana to the extent that such laws are not preempted by ERISA
and valid regulations published thereunder.
13.5 No Guarantee. Neither the Trustee, the Committee, nor the Company
in any way guarantees the Trust Fund from loss or depreciation nor the payment
of any money or other assets which may be or become due to any person from the
Trust Fund. No Participant or other person shall have any recourse against the
Trustee, the Company or the Committee if the Trust Fund is insufficient to
provide Plan benefits in full. Nothing herein contained shall be deemed to give
any Participant, former Participant, or Beneficiary an interest in any specific
part
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of the Trust Fund or any other interest except the right to receive benefits out
of the Trust Fund in accordance with the provisions of the Plan and Trust.
13.6 Unclaimed Funds. Each Participant shall keep the Committee
informed of his current address and the current address of his Beneficiary or
Beneficiaries. Neither the Company, the Committee nor the Trustee shall be
obligated to search for the whereabouts of any person. If the location of a
Participant is not made known to the Committee within three years after the date
on which distribution of the Participant's Accounts may first be made,
distribution may be made as though the Participant had died at the end of the
three-year period. If, within one additional year after such three-year period
has elapsed, or, within three years after the actual death of a Participant, the
Committee is unable to locate any individual who would receive a distribution
under the Plan upon the death of the Participant pursuant to Section 8.2 of the
Plan, the Adjusted Balance in the Participant's Accounts shall be deemed a
forfeiture and shall be used to reduce Company contributions to the Plan for the
Plan Year next following the year in which the forfeiture occurs; provided,
however, that in the event that the Participant or a Beneficiary makes a claim
for any amount which has been so forfeited, the benefits which have been
forfeited shall be reinstated.
13.7 Merger or Consolidation of Plan. Any merger or consolidation of
the Plan with another plan, or transfer of Plan assets or liabilities to any
other plan, shall be effected in accordance with such regulation, if any, as may
be issued pursuant to Section 208 of ERISA, in such a manner that each
Participant in the Plan would receive, if the merged, consolidated or transferee
plan were terminated immediately following such event, a benefit which is equal
to or greater than the benefit he would have been entitled to receive if the
Plan had terminated immediately before such event.
13.8 Interest Nontransferable. Except as provided in this Section, no
interest of any person or entity in, or right to receive distributions from, the
Trust Fund shall be subject in any manner to sale, transfer, assignment, pledge,
attachment, garnishment, or other alienation or encumbrance of any kind; nor may
such interest or right to receive distributions be taken, either voluntarily or
involuntarily, for the satisfaction of the debts of, or other obligations or
claims against, such person or entity, including claims in bankruptcy
proceedings. The Account of any Participant, however, shall be subject to and
payable in accordance with the applicable requirements of any qualified domestic
relations order, as that term is defined in Section 414(p) of the Code, and the
Committee shall direct the Trustees to provide for payment from a Participant's
Accounts in accordance with such order and with the provisions of Section 414(p)
of the Code and any regulations promulgated thereunder.
13.9 Prudent Man Rule. Notwithstanding any other provisions of this
Plan, and the Trust Agreement, the Trustee, the Committee and the Company shall
exercise their powers and discharge their duties under this Plan and the Trust
Agreement for the exclusive purpose of providing benefits to Employees and their
Beneficiaries, and
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shall act with the care, skill, prudence and diligence under the circumstances
that a prudent man acting in a like capacity and familiar with such matters
would use in the conduct of an enterprise of a like character and with like
aims.
13.10 Limitations on Liability. Notwithstanding any of the preceding
provisions of the Plan, none of the Trustee, the Company, the Committee and each
individual acting as an employee or agent of any of them shall be liable to any
Participant, former Participant or Beneficiary for any claim, loss, liability or
expense incurred in connection with the Plan, except when the same shall have
been judicially determined to be due to the gross negligence or willful
misconduct of such person.
13.11 Federal and State Security Law Compliance.
(a) Each Participant or Beneficiary shall, prior to the
transfer of Company Stock to such Participant and Beneficiary, execute and
deliver an agreement, in form and substance acceptable to the Committee,
certifying such person's intent to hold such Stock and containing such other
representations and agreements relating to the Stock as the Committee may
reasonably request.
(b) The Committee will take all necessary steps to comply with
any applicable registration or other requirements of federal or state securities
laws from which no exemption is available.
(c) Stock certificates distributed to Participants may bear
such legends concerning restrictions imposed by federal or state securities law,
and concerning other restrictions and rights under the Plan, as the Committee in
its discretion may determine.
13.12 Headings. The headings in this Plan are inserted for convenience
of reference only and are not to be considered in construction of the provisions
hereof.
13.13 Gender and Number. Except when otherwise required by the
context, any masculine terminology in this document shall include the feminine,
and any singular terminology shall include the plural.
13.14 ERISA and Approval Under Internal Revenue Code. This Plan is
intended to constitute an employee stock ownership plan and meet the
requirements of Sections 401(a), 409, 501(a) and 4975(d)(3) and (e)(7) of the
Code, and Sections 407(d)(6) and 408(b)(3) of ERISA, to the extent applicable,
as now in effect or hereafter amended. Any modification or amendment of the Plan
may be made retroactively, as necessary or appropriate, to establish and
maintain such qualification and to meet any requirements of the Code or ERISA.
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13.15 Extension of Plan to Related Employers.
(a) With the approval of the Company, any Related Employer may
adopt the Plan and qualify its Employees to become Participants thereunder by
taking proper corporate action to adopt the Plan and making such contributions
to the Trust Fund as the board of directors of the Related Employer may require.
(b) The Plan will terminate with respect to any Related
Employer that has adopted the Plan pursuant to this Section if the Related
Employer ceases to be a Related Employer, revokes its adoption of the Plan by
appropriate corporate action, permanently discontinues its contributions for its
Employees, is judicially declared bankrupt, makes a general assignment for the
benefit of creditors, or is dissolved. If the Plan is terminated or
contributions are discontinued with respect to any Related Employer, the
provisions of Section 12.5 shall apply to the interest in the Plan of the
Employees of such Related Employer, and their Beneficiaries.
(c) The terms "Company" and "Employee" in the Plan shall
include any Related Employer that has adopted the Plan pursuant to this Section
13.15 and such Related Employer's Employees; provided, however, that the term
"Company" shall not include any such Related Employer where used in Articles X
or XI of the Plan. The Company shall act as the agent for each Related Employer
that adopts the Plan for all purposes of administration thereof.
13.16 Administrative Changes Without Plan Amendment.
The Committee reserves authority to make administrative changes to
this Plan document that do not alter the minimum qualification requirements
without formal amendment to the Plan. The Committee will effect such changes by
substituting pages in the Plan document with corrected pages. Administrative
changes include, but are not limited to, corrections of typographical errors and
similar errors, conforming provisions for administrative procedures to actual
practice and changes in practice, and deleting or correcting language that fails
to accurately reflect the intended provision of the Plan.
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ARTICLE XIV
TOP-HEAVY PROVISIONS
14.1 Top-Heavy Status. Except as provided in Sections 14.4(b) and (c),
the provisions of this Article shall not apply to the Plan with respect to any
Plan Year for which the Plan is not Top-Heavy. If the Plan is or becomes
Top-Heavy in any Plan Year, the provisions of this Article XIV will supersede
any conflicting provisions elsewhere in the Plan.
14.2 Definitions. For purposes of this Article XIV, the following
words and phrases shall have the meanings states below unless a different
meaning is plainly required by the context:
(a) "Determination Date" means, with respect to any Plan Year:
(i) the last day of the preceding Plan Year, or (ii) in the case of the first
Plan Year of the Plan, the last day of such Plan Year.
(b) "Key Employee" means in Employee meeting the definition of
"key employee" contained in Section 416(i)(1) of the Code and the Regulations
interpreting that section. For purposes of determining whether an Employee is a
Key Employee, the definition of Compensation set forth in Section 14.6 shall
apply.
(c) "Non-Key Employee" means any Employee who is not a Key
Employee.
(d) "Valuation Date" means with respect to a particular
Determination Date, the most recent Valuation Date (as defined in Section 2.34
occurring within a 12-month period ending on the applicable Determination Date.
14.3 Determination of Top-Heavy Status.
(a) The Plan will be "Top-Heavy" with respect to any Plan Year
if, as of the Determination Date applicable to such Year, the ratio of the
Adjusted Balances in the accounts of Key Employees (determined as of the
Valuation Date applicable to such Determination Date) to the Adjusted Balances
in the accounts of all Employees (determined as of such Valuation Date) exceeds
60%. For purposes of computing such ratio and for all other purposes of applying
and interpreting this paragraph (a): (i) the amount of the accounts of any
Employee shall be increased by the aggregate distributions made with respect to
such Employee under the Plan during the five-year period ending on any
Determination Date; (ii) benefits provided under all plans which are aggregated
pursuant to (b) of this Section must be considered; and (iii) the provisions of
Section 416 of the Code and all Regulations interpreting that section shall be
applied. If any Employee has not performed services for the company or any
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Related Employer at any time during the five-year period ending on any
Determination Date, the balances of the accounts of such Employee shall not be
taken into consideration for purposes of determining whether the Plan is
Top-Heavy with respect to the Plan Year to which such Determination Date
applies.
(b) For purposes of determining whether the Plan is Top-Heavy,
all qualified retirement plans maintained by the Company and each Related
Employer shall be aggregated to the extent that such aggregation is required
under the applicable provisions of Section 416 of the Code and the Regulations
interpreting that Section. All other qualified Related employer shall be
aggregated only to the extent permitted by Section 416 of the Code and such
Regulations and elected by the Company.
(c) For purposes of determining whether the Plan is Top-Heavy,
the Adjusted Balance of a Participant's accounts shall not include (i) the
amount of a rollover contribution (or similar transfer) accepted after December
31, 1983, initiated by the Participant and derived from a plan not maintained by
the Company or any Related Employer, or (ii) a distribution made with respect to
any Employee which is a tax-free rollover contribution (or similar transfer)
that is either not initiated by the Employee or that is made to a plan
maintained by the Company or any Related Employer.
(d) Solely for purposes of determining whether the Plan is
Top-Heavy, the accrued benefit of any Non-key Employee shall be determined (i)
under the method, if any, that uniformly applies for accrual purposes under all
plans of the Company or any Related Employer, or (ii) if there is no such
method, as if such benefit accrued not more rapidly than the slowest accrual
rate permitted under the fractional accrual rule of Section 411(b)(1)(C) of the
Code.
14.4 Vesting.
(a) If the Plan becomes Top-Heavy, the vested interest of a
Participant in the portion of his Company Stock and Other Investments Accounts
referred to in subsection (b) shall be determined in accordance with the
following formula in lieu of the formula set forth in Section 7.6:
Vested Forfeitable
Years of Service Percentage Percentage
Less than 3 0% 100%
3 or more 100% 0%
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For purposes of the above schedule, years of Service shall include all
years of Service required to be counted under Section 411(a) of the
Code, disregarding all years of Service permitted to be disregarded
under Section 411(a)(4) of the Code.
(b) The vesting schedule set forth in subsection (a) shall apply to all
amounts allocated to a Participant's Company Stock and Other Investments
Accounts while the Plan is Top-Heavy and during the period of time before the
Plan becomes Top Heavy. This vesting schedule shall not apply to the Company
Stock and Other Investments Accounts of any Employee who does not have an Hour
of Service after the Plan becomes Top-Heavy.
(c) If the Plan becomes Top-Heavy and subsequently ceases to be
Top-Heavy, the vesting schedule set forth in subsection (a) shall automatically
cease to apply, and the vesting schedule set forth in Section 7.6 above shall
automatically apply, with respect to all amounts allocated to a Participant's
Company Stock and Other Investments Accounts for all Plan Years after the Plan
Year with respect to which the Plan was las Top-Heavy. For purposes of this
subsection (c), this change in vesting schedules shall only be valid to the
extent that the conditions of Section 12.1 of the Plan and Section 411(a)(10) of
the Code are satisfied.
14.5 Minimum Contribution. For each Plan Year that the Plan is
Top-Heavy, the Company will contribute and allocate to the Company Stock and
Other Investments Accounts of each Participant who is a Non-key Employee and is
employed by the Company on the last day of such Plan Year an amount consisting
of contributions and forfeitures equal to the lesser of (i) 3% of such
Participant's Compensation (as defined in Section 14.6) for such Plan Year and
(ii) the largest percentage of Company contributions and forfeitures, as a
percentage of the Key Employee's compensation (as described in Section 14.6),
allocated to the Company Stock and Other Investments Accounts of any Key
Employee for such Year. The minimum contribution allocable pursuant to this
Section 14.5 will be determined without regard to any contributions by the
Company for any Employee under the Federal Social Security Act. A Non-key
Employee will not be excluded from an allocation pursuant to this Section merely
because his compensation is less than a stated amount. A Non-Key Employee who
has become a Participant but who fails to complete at least 1,000 Hours of
Service in a Plan Year in which the Plan is top Heavy shall not be excluded from
an allocation pursuant to this Section.
14.6 Compensation. For any Plan Year in which the Plan is Top-Heavy,
annual Compensation for the purposes of this Article shall have the meaning set
forth in Section 414(q)(7) of the Code.
14.7 Collective Bargaining Agreements. The requirements of Sections
14.4 and 14.5 shall not apply with respect to any employees included in a unit
of employees covered by a collective bargaining agreement between
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employer representatives and the Company or a Related Employer if retirements
benefits were the subject of good faith bargaining between such employer
representatives and the Company or Related Employer.
IN WITNESS WHEREOF, Empire Federal Savings Bank has caused this Plan to
be executed by its duly authorized officer this _______ day of ____________,
1996.
Attest: EMPIRE FEDERAL SAVINGS BANK
By:
Secretary President
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