FORM OF
EMPLOYEE STOCK OWNERSHIP PLAN
OF RFS BANCORP, INC.
AND AFFILIATES
ADOPTED ON ____________, 1998
EFFECTIVE AS OF ___________, 1998
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.1 Account.........................................................1
Section 1.2 Affiliated Employer.............................................1
Section 1.3 Allocation Compensation.........................................1
Section 1.4 Bank............................................................2
Section 1.5 Board...........................................................2
Section 1.6 Beneficiary.....................................................2
Section 1.7 Change in Control...............................................2
Section 1.8 Code............................................................2
Section 1.9 Committee.......................................................2
Section 1.10 Computation Period..............................................2
Section 1.11 Disability......................................................2
Section 1.12 Domestic Relations Order........................................2
Section 1.13 Effective Date..................................................3
Section 1.14 Eligibility Computation Period..................................3
Section 1.15 Eligible Employee...............................................3
Section 1.16 Eligible Participant............................................3
Section 1.17 Employee........................................................3
Section 1.18 Employer........................................................3
Section 1.19 Employment Commencement Date....................................3
Section 1.20 ERISA...........................................................3
Section 1.21 ESOP Contribution...............................................3
Section 1.22 Fair Market Value...............................................3
Section 1.23 Financed Share..................................................4
Section 1.24 Five Percent Owner..............................................4
Section 1.25 Forfeitures.....................................................4
Section 1.26 Former Participant..............................................4
Section 1.27 General Investment Account......................................4
Section 1.28 Highly Compensated Employee.....................................4
Section 1.29 Hour of Service.................................................5
Section 1.30 Investment Account..............................................5
Section 1.31 Investment Fund.................................................5
Section 1.32 Loan Repayment Account..........................................6
Section 1.33 Loan Repayment Contribution.....................................6
Section 1.34 Maternity or Paternity Leave....................................6
Section 1.35 Military Service................................................6
Section 1.36 Named Fiduciary.................................................6
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Section 1.37 Officer.........................................................6
Section 1.38 One-Year Break in Service.......................................6
Section 1.39 Participant.....................................................6
Section 1.40 Plan............................................................6
Section 1.41 Plan Administrator..............................................7
Section 1.42 Plan Year.......................................................7
Section 1.43 Qualified Domestic Relations Order..............................7
Section 1.44 Qualified Participant...........................................7
Section 1.45 Retirement......................................................7
Section 1.46 Share...........................................................7
Section 1.47 Share Acquisition Loan..........................................7
Section 1.48 Share Investment Account........................................7
Section 1.49 Tender Offer....................................................7
Section 1.50 Total Compensation..............................................7
Section 1.51 Trust...........................................................8
Section 1.52 Trust Agreement.................................................8
Section 1.53 Trust Fund......................................................8
Section 1.54 Trustee.........................................................8
Section 1.55 Valuation Date..................................................8
Section 1.56 Vesting Computation Period......................................8
Section 1.57 Year of Eligibility Service.....................................8
Section 1.58 Year of Vesting Service.........................................8
ARTICLE II
PARTICIPATION
Section 2.1 Eligibility for Participation...................................9
Section 2.2 Commencement of Participation...................................9
Section 2.3 Termination of Participation....................................9
ARTICLE III
SPECIAL PROVISIONS
Section 3.1 Military Service...............................................10
Section 3.2 Maternity or Paternity Leave...................................10
Section 3.3 Adjustments to Years of Eligibility Service....................11
Section 3.4 Leave of Absence...............................................11
Section 3.5 Family and Medical Leave.......................................12
Section 3.6 Service with Uniformed Forces..................................12
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ARTICLE IV
CONTRIBUTIONS BY PARTICIPANTS NOT PERMITTED
Section 4.1 Contributions by Participants Not Permitted....................12
ARTICLE V
CONTRIBUTIONS BY THE EMPLOYER
Section 5.1 In General.....................................................12
Section 5.2 Loan Repayment Contributions...................................12
Section 5.3 ESOP Contributions.............................................13
Section 5.4 Time and Manner of Payment.....................................13
ARTICLE VI
SHARE ACQUISITION LOANS
Section 6.1 In General.....................................................14
Section 6.2 Collateral; Liability for Repayment............................14
Section 6.3 Loan Repayment Account.........................................15
Section 6.4 Release of Financed Shares.....................................15
Section 6.5 Restrictions on Financed Shares................................16
ARTICLE VII
ALLOCATION OF CONTRIBUTIONS
Section 7.1 Allocation Among Eligible Participants.........................17
Section 7.2 Allocation of Released Shares or Other Property................17
Section 7.3 Allocation of ESOP Contributions...............................17
Section 7.4 Retroactive Contributions for Returning Veterans...............17
ARTICLE VIII
LIMITATIONS ON ALLOCATIONS
Section 8.1 Optional Limitations on Allocations of Contributions...........18
Section 8.2 General Limitations on Contributions...........................18
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Page
ARTICLE IX
VESTING
Section 9.1 Vesting........................................................22
Section 9.2 Vesting on Death, Disability, Retirement or Change in Control..22
Section 9.3 Forfeitures on Termination of Employment.......................22
Section 9.4 Amounts Credited Upon Re-Employment............................22
Section 9.5 Allocation of Forfeitures......................................23
ARTICLE X
THE TRUST FUND
Section 10.1 The Trust Fund.................................................23
Section 10.2 Investments....................................................23
Section 10.3 Diversification of Investments.................................24
Section 10.4 Use of Commingled Trust Funds..................................25
Section 10.5 Management and Control of Assets...............................25
ARTICLE XI
VALUATION OF INTERESTS IN THE TRUST FUND
Section 11.1 Establishment of Investment Accounts...........................26
Section 11.2 Share Investment Accounts......................................26
Section 11.3 General Investment Accounts....................................26
Section 11.4 Valuation of Investment Accounts...............................26
Section 11.5 Annual Statements..............................................27
ARTICLE XII
SHARES
Section 12.1 Specific Allocation of Shares..................................27
Section 12.2 Dividends......................................................27
Section 12.3 Voting Rights..................................................28
Section 12.4 Tender Offers..................................................30
Section 12.5 Dissent and Appraisal Rights...................................32
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Page
ARTICLE XIII
PAYMENT OF BENEFITS
Section 13.1 In General.....................................................33
Section 13.2 Designation of Beneficiaries...................................33
Section 13.3 Distributions to Participants and Former Participants..........34
Section 13.4 Manner of Payment..............................................37
Section 13.5 Put Options....................................................37
Section 13.6 Right of First Refusal.........................................38
Section 13.7 Minimum Required Distributions.................................39
Section 13.8 Direct Rollover of Eligible Rollover Distributions.............40
Section 13.9 Valuation of Shares Upon Settlement to a Participant...........41
ARTICLE XIV
CHANGE IN CONTROL
Section 14.1 Definition of Change in Control................................42
Section 14.2 Vesting on Change of Control...................................43
Section 14.3 Repayment of Loan..............................................43
Section 14.4 Plan Termination After Change in Control.......................44
Section 14.5 Amendment of Article XIV.......................................44
ARTICLE XV
ADMINISTRATION
Section 15.1 Named Fiduciaries..............................................45
Section 15.2 Plan Administrator.............................................45
Section 15.3 Committee Responsibilities.....................................46
Section 15.4 Claims Procedure...............................................47
Section 15.5 Claims Review Procedure........................................48
Section 15.6 Allocation of Fiduciary Responsibilities
and Employment of Advisors.....................................48
Section 15.7 Other Administrative Provisions................................49
ARTICLE XVI
AMENDMENT, TERMINATION AND TAX QUALIFICATION
Section 16.1 Amendment and Termination by RFS Bancorp, Inc..................50
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Section 16.2 Amendment or Termination Other Than by RFS Bancorp, Inc........50
Section 16.3 Conformity to Internal Revenue Code............................50
Section 16.4 Contingent Nature of Contributions.............................51
ARTICLE XVII
SPECIAL RULES FOR TOP HEAVY PLAN YEARS
Section 17.1 In General.....................................................51
Section 17.2 Definition of Top Heavy Plan...................................52
Section 17.3 Determination Date.............................................52
Section 17.4 Cumulative Accrued Benefits....................................53
Section 17.5 Key Employees..................................................53
Section 17.6 Required Aggregation Group.....................................54
Section 17.7 Permissible Aggregation Group..................................54
Section 17.8 Special Requirements During Top Heavy Plan Years...............55
ARTICLE XVIII
MISCELLANEOUS PROVISIONS
Section 18.1 Governing Law..................................................56
Section 18.2 No Right to Continued Employment...............................56
Section 18.3 Construction of Language.......................................56
Section 18.4 Headings.......................................................56
Section 18.5 Merger with Other Plans........................................56
Section 18.6 Non-alienation of Benefits.....................................57
Section 18.7 Procedures Involving Domestic Relations Orders.................57
Section 18.8 Leased Employees...............................................58
Section 18.9 Status as an Employee Stock Ownership Plan.....................59
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EMPLOYEE STOCK OWNERSHIP PLAN
OF RFS BANCORP, INC.
AND AFFILIATES
ARTICLE I
DEFINITIONS
The following definitions shall apply for the purposes of the Plan, unless
a different meaning is clearly indicated by the context:
SECTION 1.1 ACCOUNT means an account established for each Participant to
which is allocated such Participant's share, if any, of all Financed Shares and
other property that are re leased from the Loan Repayment Account in accordance
with section 6.4, together with his share, if any, of any ESOP Contributions
that may be made by the Employer.
SECTION 1.2 AFFILIATED EMPLOYER means any corporation which is a member of
a controlled group of corporations (as defined in section 414(b) of the Code)
that includes the Employer; any trade or business (whether or not incorporated)
that is under common control (as defined in section 414(c) of the Code) with the
Employer; any organization (whether or not incorporated) that is a member of an
affiliated service group (as defined in section 414(m) of the Code) that
includes the Employer; any leasing organization (as defined in section 414(n) of
the Code) to the extent that any of its employees are required pursuant to
section 414(n) of the Code to be treated as employees of the Employer; and any
other entity that is required to be aggregated with the Employer pursuant to
regulations under section 414(o) of the Code.
SECTION 1.3 ALLOCATION COMPENSATION during any period means the
compensation taken into account in determining the allocation of benefits and
contributions among Participants and consists of the aggregate compensation
received by an Employee from the Employer or any Affiliated Employer with
respect to such period as reported to the Internal Revenue Service as wages for
such period pursuant to section 6041(a) of the Code, plus the amount by which
such Employee's compensation with respect to such period has been reduced
pursuant to a compen sation reduction agreement under the terms of any of the
following plans which may be maintained by the Employer:
(a) a qualified cash or deferred arrangement described in section
401(k) of the Code;
(b) a salary reduction simplified employee pension plan described in
section 408(k) of the Code;
(c) a tax deferred annuity plan described in section 403(b) of the
Code; or
1
(d) a cafeteria plan described in section 125 of the Code.
In no event, however, shall an Employee's Allocation Compensation for any
calendar year include any compensation in excess of $150,000, or any such other
amount as may be prescribed in accordance with regulations prescribed under
section 401(a)(17) of the Code. If there are less than twelve (12) months in the
Plan Year, the $150,000 limitation (as adjusted) shall be prorated by
multiplying such limitation by a fraction, the numerator of which is the number
of months in the Plan Year and the denominator of which is twelve (12).
SECTION 1.4 BANK means Revere Federal Savings and any successor thereto.
SECTION 1.5 BOARD means the Board of Directors of RFS Bancorp, Inc.
SECTION 1.6 BENEFICIARY means the person or persons designated by a
Participant or Former Participant or other person entitled to a benefit under
the Plan, or otherwise determined to be entitled to a benefit under the Plan. If
more than one person is designated, each shall have an equal share unless the
person making the designation directed otherwise. The word "person" includes an
individual, a trust, an estate or any other person that is permitted to be named
as a Beneficiary.
SECTION 1.7 CHANGE IN CONTROL means an event described in section 14.1.
SECTION 1.8 CODE means the Internal Revenue Code of 1986, as amended
(including the corresponding provisions of any succeeding law).
SECTION 1.9 COMMITTEE means the Committee described in section 15.3.
SECTION 1.10 COMPUTATION PERIOD means an Eligibility Computation Period or
a Vesting Computation Period.
SECTION 1.11 DISABILITY means a condition of total incapacity, mental or
physical, for further performance of duty with the Employer or any Affiliated
Employer, which the Plan Administrator shall have determined, on the basis of
competent medical evidence, is likely to be permanent.
SECTION 1.12 DOMESTIC RELATIONS ORDER means a judgment, decree or order
(including the approval of a property settlement) that is made pursuant to a
state domestic relations or community property law and relates to the provision
of child support, alimony payments, or marital property rights to a spouse,
child or other dependent of a Participant or Former Participant.
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SECTION 1.13 EFFECTIVE DATE means the first day of the calendar year in
which Revere Federal Savings converts from a mutual savings bank to a stock
savings bank.
SECTION 1.14 ELIGIBILITY COMPUTATION PERIOD means, with respect to any
person, (a) the 12-consecutive month period beginning on such person's
Employment Commencement Date and (b) each 12-consecutive month period that
begins on an anniversary of such person's Employment Commencement Date.
SECTION 1.15 ELIGIBLE EMPLOYEE means an Employee who is eligible for
participation in the Plan in accordance with Article II.
SECTION 1.16 ELIGIBLE PARTICIPANT means, for any Plan Year, an Employee who
is a Participant on the last day of such Plan Year and an Employee who was a
Participant during part of such Plan Year and whose participation ceased prior
to the last day of such Plan Year on account of his Retirement, Disability or
death.
SECTION 1.17 EMPLOYEE means any person, including an officer, who is
employed by the Employer or an Affiliated Employer.
SECTION 1.18 EMPLOYER means RFS Bancorp, Inc. and any successor thereto and
any Affiliated Employer which, with the prior written approval of the Board of
Directors of RFS Bancorp, Inc. and subject to such terms and conditions as may
be imposed by the Board of Directors of RFS Bancorp, Inc., shall adopt this
Plan.
SECTION 1.19 EMPLOYMENT COMMENCEMENT DATE means the date on which a person
first performs an Hour of Service, except that if an Employee separates from
service with the Employer, incurs a One-Year Break in Service and subsequently
returns to service with the Employer, his Employment Commencement Date shall be
the date on which he first performs an Hour of Service following the One-Year
Break in Service.
SECTION 1.20 ERISA means the Employee Retirement Income Security Act of
1974, as amended from time to time (including the corresponding provisions of
any succeeding law).
SECTION 1.21 ESOP CONTRIBUTION means Shares or amounts of money contributed
to the Plan by the Employer in accordance with section 5.3.
SECTION 1.22 FAIR MARKET VALUE on any date means:
(a) with respect to a Share:
(i) the final quoted sale price on the date in question (or, if there
is no reported sale on such date, on the last preceding date on which any
reported sale occurred) as
3
reported in the principal consolidated reporting system with respect to
securities listed or admitted to trading on the principal United States
securities exchange on which like Shares are listed or admitted to trading;
or
(ii) if Shares are not listed or admitted to trading on any such
exchange, the closing bid quotation with respect to a Share on such date on
the Nasdaq Stock Market, or, if no such quotation is provided, on another
similar system, selected by the Plan Administrator, then in use; or
(iii) if sections 1.22(a)(i) and (ii) are not applicable, the fair
market value of a Share as determined by an appraiser independent of the
Employer and experienced and expert in the field of corporate appraisal.
(b) with respect to property other than Shares, the fair market value
determined in the manner determined by the Trustee.
SECTION 1.23 FINANCED SHARE means: (a) a Share that has been purchased with
the proceeds of a Share Acquisition Loan, that has been allocated to the Loan
Repayment Account in accordance with section 6.3 and that has not been released
in accordance with section 6.4; or (b) a Share that constitutes a dividend paid
with respect to a Share described in section 1.46, that has been allocated to
the Loan Repayment Account in accordance with section 6.3 and that has not been
released in accordance with section 6.4.
SECTION 1.24 FIVE PERCENT OWNER means, for any Plan Year, a person who,
during such Plan Year, owned (or was considered as owning for purposes of
section 318 of the Code): (a) more than 5% of the value of all classes of
outstanding stock of the Employer; or (b) stock possessing more than 5% of the
combined voting power of all classes of outstanding stock of the Employer.
SECTION 1.25 FORFEITURES means the amounts forfeited by Participants and
Former Participants on termination of employment prior to full vesting, pursuant
to section 9.3, less amounts credited because of re-employment, pursuant to
section 9.4.
SECTION 1.26 FORMER PARTICIPANT means a Participant whose participation in
the Plan has terminated pursuant to section 2.3.
SECTION 1.27 GENERAL INVESTMENT ACCOUNT means an Investment Account
established and maintained in accordance with Article XI.
SECTION 1.28 HIGHLY COMPENSATED EMPLOYEE means, for any Plan Year, an
Employee who:
4
(a) at any time during such Plan Year or the immediately preceding
Plan Year was a Five Percent Owner; or
(b) during the immediately preceding Plan Year received Total
Compensation for such Plan Year in excess of $80,000 (or such higher amount
as may be permitted under section 414(q) of the Code) and, if the Employer
so elects, is a member of the group consisting of the top 20% of Employees
when ranked on the basis of Total Compensation paid to Employees during
such Plan Year.
The determination of who is a Highly Compensated Employee will be made in
accordance with section 414(q) of the Code and the regulations thereunder.
SECTION 1.29 HOUR OF SERVICE means:
(a) Each hour for which a person is paid, or entitled to payment, for
the performance of duties for the Bank or any Affiliated Employer. These
hours shall be credited to the person for the Computation Period or
Computation Periods in which the duties are performed; and
(b) Each hour for which a person is paid, or entitled to payment, by
the Bank or any Affiliated Employer on account of a period of time during
which no duties are per formed (irrespective of whether the employment
relationship has terminated) due to vaca tion, holiday, illness, incapacity
(including disability), layoff, jury duty, military duty, or leave of
absence. No more than 501 Hours of Service shall be credited under this
section 1.29(b) for any single continuous period (whether or not such
period occurs in a single Computation Period). Hours under this section
1.29(b) shall be calculated and credited pursuant to section 2530.200b-2 of
the Department of Labor's regulations (or any successor regulation), which
are incorporated herein by reference; and
(c) Each hour for which back pay, irrespective of any mitigation of
damages, is either awarded or agreed to by the Bank or any Affiliated
Employer. The same Hours of Service shall not be credited both under
section 1.29(a) or (b), as the case may be, and under this section 1.29(c).
Hours under this section 1.29(c) shall be credited to the person for the
Computation Period or Computation Periods to which the award or agreement
pertains, rather than the Computation Period in which the award, agreement
or payment is made.
SECTION 1.30 INVESTMENT ACCOUNT means either a General Investment Account
or a Share Investment Account.
SECTION 1.31 INVESTMENT FUND means any one of the three or more funds as
may be established from time to time by the Plan Administrator which, together
with any and all Shares and other investments held under the Plan, constitute
the Trust Fund.
5
SECTION 1.32 LOAN REPAYMENT ACCOUNT means an account established and
maintained in accordance with section 6.3.
SECTION 1.33 LOAN REPAYMENT CONTRIBUTION means amounts of money contributed
to the Plan by the Employer in accordance with section 5.2.
SECTION 1.34 MATERNITY OR PATERNITY LEAVE means a person's absence from
work for the Employer and all Affiliated Employers: (a) by reason of the
pregnancy of such person; (b) by reason of the birth of a child of such person;
(c) by reason of the placement of a child with the person in connection with the
adoption of such child by such person; or (d) for purposes of caring for a child
of such person immediately following the birth of the child or the placement of
the child with such person.
SECTION 1.35 MILITARY SERVICE means service in the armed forces of the
United States. It may also include, if and to the extent that the Board so
provides and if all Participants and Former Participants in like circumstances
are similarly treated, special service for the government of the United States
and other public service.
SECTION 1.36 NAMED FIDUCIARY means any person, committee, corporation or
organization as described in section 15.1.
SECTION 1.37 OFFICER means an Employee who is an administrative executive
in regular and continued service with the Employer or any Affiliated Employer;
provided, however, that at no time shall more than the lesser of (a) 50
Employees or (b) the greater of: (i) 3 Employees or (ii) 10% of all employees be
treated as Officers. The determination of whether an employee is to be
considered an Officer shall be made in accordance with section 416(i) of the
Code.
SECTION 1.38 ONE-YEAR BREAK IN SERVICE means, with respect to any person:
(a) for purposes of eligibility to participate, an Eligibility Computation
Period during which such person is credited with fewer than 501 Hours of Service
and (b) for purposes of vesting, a Vesting Computation Period during which such
person is credited with fewer than 501 Hours of Service.
SECTION 1.39 PARTICIPANT means any person who has satisfied the eligibility
requirements set forth in section 2.1, who has become a Participant in
accordance with section 2.2, and whose participation has not terminated under
section 2.3.
SECTION 1.40 PLAN means the Employee Stock Ownership Plan of RFS Bancorp,
Inc. and Affiliates, as amended from time to time. The Plan may be referred to
as the "Employee Stock Ownership Plan of RFS Bancorp, Inc. and Affiliates."
6
SECTION 1.41 PLAN ADMINISTRATOR means any person, committee, corporation or
organization designated in section 15.2, or appointed pursuant to section 15.2,
to perform the responsibilities of that office.
SECTION 1.42 PLAN YEAR means the calendar year in which the Effective Date
occurs, and each calendar year thereafter.
SECTION 1.43 QUALIFIED DOMESTIC RELATIONS ORDER means a Domestic Relations
Order that: (a) clearly specifies (i) the name and last known mailing address of
the Participant or Former Participant and of each person given rights under such
Domestic Relations Order, (ii) the amount or percentages of the Participant's or
Former Participant's benefits under this Plan to be paid to each person covered
by such Domestic Relations Order, (iii) the number of payments or the period to
which such Domestic Relations Order applies, and (iv) the name of this Plan; and
(b) does not require the payment of a benefit in a form or amount that is (i)
not otherwise provided for under the Plan, or (ii) inconsistent with a previous
Qualified Domestic Relations Order.
SECTION 1.44 QUALIFIED PARTICIPANT means a Participant who has attained age
55 and who has been a Participant in the Plan for at least 10 years.
SECTION 1.45 RETIREMENT means: (a) any termination of participation in the
Plan at or after attainment of age 65; and (b) any retirement under an
applicable qualified defined benefit plan of the Employer as in effect from time
to time with entitlement to a normal or early retirement allowance.
SECTION 1.46 SHARE means a share of any class of stock issued by the
Employer or any Affiliated Employer; provided, however, that such share is a
"qualifying employer security" within the meaning section 409(l) of the Code and
section 407(d)(5) of ERISA.
SECTION 1.47 SHARE ACQUISITION LOAN means a loan obtained by the Trustee in
accordance with Article VI.
SECTION 1.48 SHARE INVESTMENT ACCOUNT means an Investment Account
established and maintained in accordance with Article XI.
SECTION 1.49 TENDER OFFER means a tender offer made to holders of any one
or more classes of Shares generally, or any other offer, made to holders of any
one or more classes of Shares generally, to purchase, exchange, redeem or
otherwise transfer Shares, whether for cash or other consideration.
SECTION 1.50 TOTAL COMPENSATION during any period means an Employee's
aggregate total compensation paid by the Employer and any Affiliated Employer
with respect to such period and reportable for federal income tax purposes
pursuant to section 6041(a) of the Code. In addition, solely for purposes of
identifying those Employees who are Highly
7
Compensated Employees, each Employee's Total Compensation shall include any
amounts by which the Employee's compensation paid by the Employer or any
Affiliated Employer has been reduced pursuant to a compensation reduction
agreement under the terms of any qualified cash or deferred arrangement
described in section 401(k) of the Code, any salary reduction simplified
employee pension plan described in section 408(k) of the Code, any tax deferred
annuity plan des cribed in section 403(b) of the Code, or any cafeteria plan
described in section 125 of the Code. In no event, however, shall an Employee's
Total Compensation for any calendar year include any compensation in excess of
$150,000 (or such other amount as may be permitted under section 401(a)(17) of
the Code).
SECTION 1.51 TRUST means the legal relationship created by the Trust
Agreement pursuant to which the Trustee holds the Trust Fund in trust. The Trust
may be referred to as the "Employee Stock Ownership Plan Trust of RFS Bancorp,
Inc. and Affiliates."
SECTION 1.52 TRUST AGREEMENT means the agreement between RFS Bancorp, Inc.
and the Trustee therein named or its successors pursuant to which the Trust Fund
shall be held in trust.
SECTION 1.53 TRUST FUND means the corpus (consisting of contributions paid
over to the Trustee, and investments thereof), and all earnings, appreciations
or additions thereof and thereto, held by the Trustee under the Trust Agreement
in accordance with the Plan, less any depreciation thereof and any payments made
therefrom pursuant to the Plan.
SECTION 1.54 TRUSTEE means the Trustee of the Trust Fund from time to time
in office. The Trustee shall serve as Trustee until it is removed or resigns
from office and is re placed by a successor Trustee appointed in accordance with
the terms of the Trust Agreement.
SECTION 1.55 VALUATION DATE means the last business day of March, June,
September and December.
SECTION 1.56 VESTING COMPUTATION PERIOD means, with respect to any person,
the 12-month period beginning on such person's Employment Commencement Date and
each Plan Year beginning after such Employment Commencement Date.
SECTION 1.57 YEAR OF ELIGIBILITY SERVICE means, with respect to any person,
an Eligibility Computation Period during which such person receives credit for
at least 1,000 Hours of Service.
SECTION 1.58 YEAR OF VESTING SERVICE means, with respect to any person, a
Vesting Computation Period during which such person receives credit for at least
1,000 Hours of Service. If an Employee has credit for 1,000 Hours of Service in
the Vesting Computation Period that includes his Employment Commencement Date
and 1,000 Hours of Service in the first Vesting
8
Computation Period that begins after his Employment Commencement Date, he shall
receive credit for two Years of Vesting Service even if such periods overlap.
ARTICLE II
PARTICIPATION
SECTION 2.1 ELIGIBILITY FOR PARTICIPATION.
(a) Only Eligible Employees may be or become Participants in the Plan.
An Employee shall be an Eligible Employee if he is a common law employee of
an Employer, has completed at least one Year of Eligibility Service and is
not excluded under section 2.1(b).
(b) An Employee is not an Eligible Employee if he:
(i) is an Employee who has waived any claim to participation in the
Plan; or
(ii) is an Employee or in a unit of Employees covered by a collective
bargaining agreement with the Employer where retirement benefits were the
subject of good faith bargaining, unless such agreement expressly provides
that Employees such as he be covered under the Plan; or
(iii) is a "leased employee" as defined in section 18.8(a).
SECTION 2.2 COMMENCEMENT OF PARTICIPATION.
Every Employee who is an Eligible Employee on the Effective Date shall
automatically become a Participant on the Effective Date. An Employee who
becomes an Eligible Employee after the Effective Date shall automatically become
a Participant on the first day of the month following the month in which he
becomes an Eligible Employee.
SECTION 2.3 TERMINATION OF PARTICIPATION.
Participation in the Plan shall cease, and a Participant shall become a
Former Participant, upon termination of employment with the Employer, death,
Disability or Retirement, failure to return to work upon the expiration of a
leave of absence granted by the Employer pursuant to section 3.4 or becoming an
Employee who is excluded under section 2.1(b) or distribution of the entire
vested interest in his Account.
9
ARTICLE III
SPECIAL PROVISIONS
SECTION 3.1 MILITARY SERVICE.
In the case of a termination of employment of any Employee to enter
directly into Military Service, the entire period of his absence shall be
treated, for purposes of vesting and eligibility for participation (but not,
except as required by law, for purposes of eligibility to share in allocations
of contributions in accordance with Article VII), as if he had worked for the
Employer during the period of his absence. In the event of the re-employment of
such person by the Employer within a period of not more than six months:
(a) after he becomes entitled to release or discharge, if he has
entered into the armed forces; or
(b) after such service terminates, if he has entered into other
service defined as Military Service;
such period, also, shall be deemed to be Military Service.
SECTION 3.2 MATERNITY OR PATERNITY LEAVE.
(a) Subject to section 3.2(c), in the event of an Employee's absence
from work in the service of the Employer and all Affiliated Employers for a
period:
(i) that commences on or after October 1, 1985;
(ii) for which the person is not paid or entitled to payment by the
Employer or any Affiliated Employer; and
(iii) that constitutes Maternity or Paternity Leave;
then the rules of section 3.2(b) shall apply.
(b) In cases of absence described in section 3.2(a), solely for
purposes of determining whether a One-Year Break in Service has occurred,
the person shall be credited for the period of an absence described in
section 3.2(a) with the number of Hours of Service equal to the lesser of:
(i) (A) the number of Hours of Service that would have been credited
to the person if he had continued working for the Bank or an Affiliated
Employer during the period of such absence, or (B) if the number of Hours
of Service prescribed under section
10
3.2(b)(i)(A) cannot be determined, 8 Hours of Service for each working day
during the period of absence; or
(ii) 501 Hours of Service.
Such credit shall be given during the Computation Period during which such
absence began, if necessary to prevent a One-Year Break in Service from
occurring during such Computation Period, and in all other cases, such
credit shall be given during the immediately following Computation Period.
(c) Notwithstanding anything in the Plan to the contrary, this section
3.2 shall not apply unless the person furnishes to the Plan Administrator
such information as the Plan Administrator may reasonably require in order
to establish (i) that the person's absence is one described in section
3.2(a), and (ii) the number of working days during such absence.
SECTION 3.3 ADJUSTMENTS TO YEARS OF ELIGIBILITY SERVICE.
The Years of Eligibility Service of an Employee who returns to the
employment of the Employer or any Affiliated Employer following a separation
from service shall include his Years of Eligibility Service prior to such
separation from service, and such an Employee shall be readmitted to
participation immediately upon his return to service if he is then an Eligible
Employee; provided, however, that if such separation from service includes a
One-Year Break in Service, such prior Years of Eligibility Service shall not be
included until he has completed one Year of Eligibility Service following his
return to service, and upon completion of such one Year of Eligibility Service,
he shall be readmitted to participation in the Plan with retroactive effect to
the date of his return to employment, if he is then an Eligible Employee, but he
shall not participate in any ESOP Contributions or Loan Repayment Contributions
allocated during the interim period.
SECTION 3.4 LEAVE OF ABSENCE.
In the event of temporary absence from work in the service of the Employer
and all Affiliated Employers for any period for which a Participant shall have
been granted a leave of absence by the Employer, the entire period of his
absence shall be treated for purposes of vesting and eligibility for
participation (but not for purposes of eligibility to share in the allocation of
con tributions in accordance with Article VII), as if he had worked for the
Employer during the period of his absence. Absence from work for a period
greater than, or failure to return to work upon the expiration of, the period of
leave of absence granted by the Employer shall terminate participation in the
Plan as of the date on which such period ended. In granting leaves of absence
for purposes of the Plan, all Employees in like circumstances shall be similarly
treated.
11
SECTION 3.5 FAMILY AND MEDICAL LEAVE.
In the event of absence for a period recognized a family and medical leave
under the federal Family and Medical Leave Act of 1992, the period of such
absence shall be recognized for purposes of vesting and eligibility to
participate to the full extent required by law.
SECTION 3.6 SERVICE WITH UNIFORMED FORCES.
Periods of service with the uniformed forces of the United States shall be
treated in the manner required pursuant to section 414(u) of the Code.
ARTICLE IV
CONTRIBUTIONS BY PARTICIPANTS NOT PERMITTED
SECTION 4.1 CONTRIBUTIONS BY PARTICIPANTS NOT PERMITTED.
Participants shall not be required, nor shall they be permitted, to make
contributions to the Plan.
ARTICLE V
CONTRIBUTIONS BY THE EMPLOYER
SECTION 5.1 IN GENERAL.
Subject to the limitations of Article VIII, for each Plan Year, the
Employer shall contribute to the Plan the amount, if any, determined by the
Board, but in no event less than the amount described in section 5.2(a). The
amount contributed for any Plan Year shall be treated as a Loan Repayment
Contribution, an ESOP Contribution, or a combination thereof, in accordance with
the provisions of this Article V.
SECTION 5.2 LOAN REPAYMENT CONTRIBUTIONS.
For each Plan Year, a portion of the Employer's contributions, if any, to
the Plan for such Plan Year equal to the sum of:
(a) the minimum amount required to be added to the Loan Repayment
Account in order to provide adequate funds for the payment of the principal
and interest then required to be repaid under the terms of any outstanding
Share Acquisition Loan obtained by the Trustee; plus
12
(b) the additional amount, if any, designated by the Committee to be
applied to the prepayment of principal or interest under the terms of any
outstanding Share Acquisition Loan obtained by the Trustee;
shall be treated as a Loan Repayment Contribution for such Plan Year. A Loan
Repayment Contribution for a Plan Year shall be allocated to the Loan Repayment
Account and shall be applied by the Trustee, in the manner directed by the
Committee, to the payment of accrued interest and to the reduction of the
principal balance of any Share Acquisition Loan obtained by the Trustee that is
outstanding on the date on which the Loan Repayment Contribution is made. To the
extent that a Loan Repayment Contribution for a Plan Year results in a release
of Financed Shares in accordance with section 6.4, such Shares shall be
allocated among the Accounts of Eligible Participants for such Plan Year in
accordance with section 7.2.
SECTION 5.3 ESOP CONTRIBUTIONS.
In the event that the amount of the Employer's contributions to the Plan
for a Plan Year exceeds the amount of the Loan Repayment Contributions for such
Plan Year, such excess shall be treated as an ESOP Contribution and shall be
allocated among the Accounts of the Eligible Participants for such Plan Year in
accordance with section 7.3.
SECTION 5.4 TIME AND MANNER OF PAYMENT.
(a) Payment of contributions made pursuant to this Article V shall be
made:
(i) in cash, in the case of a Loan Repayment Contribution; and
(ii) in cash, in Shares or in a combination of cash and Shares, in the
case of an ESOP Contribution.
(b) Contributions made pursuant to this Article V for a Plan Year
shall be paid to the Trust Fund on or before the due date (including any
extensions thereof) of the Employer's federal income tax return for its
taxable year during which such Plan Year ends. All such contributions shall
be allocated to the Accounts of the Eligible Participants, in the case of
an ESOP Contribution, or to the Loan Repayment Account, in the case of a
Loan Repayment Contribution, as soon as is practicable following the
payment thereof to the Trust Fund.
13
ARTICLE VI
SHARE ACQUISITION LOANS
SECTION 6.1 IN GENERAL.
The Committee may, with the prior approval of the Board, direct the Trustee
to obtain a Share Acquisition Loan on behalf of the Plan, the proceeds of which
shall be applied on the earliest practicable date:
(a) to purchase Shares; or
(b) to make payments of principal or interest, or a combination of
principal and interest, with respect to such Share Acquisition Loan; or
(c) to make payments of principal and interest, or a combination of
principal and interest, with respect to a previously obtained Share
Acquisition Loan that is then outstanding.
Any such Share Acquisition Loan shall be obtained on such terms and conditions
as the Plan Administrator may approve; provided, however, that such terms and
conditions shall provide for the payment of interest at no more than a
reasonable rate and shall permit such Share Acquisition Loan to satisfy the
requirements of section 4975(d)(3) of the Code and section 408(b)(3) of ERISA.
SECTION 6.2 COLLATERAL; LIABILITY FOR REPAYMENT.
(a) The Committee may direct the Trustee to pledge, at the time a
Share Acquisition Loan is obtained, the following assets of the Plan as
collateral for such Share Acquisition Loan:
(i) any Shares purchased with the proceeds of such Share Acquisition
Loan and any earnings attributable thereto;
(ii) any Financed Shares then pledged as collateral for a prior Share
Acquisition Loan which is repaid with the proceeds of such Share
Acquisition Loan and any earnings attributable thereto; and
(iii) pending the application thereof to purchase Shares or repay a
prior Share Acquisition Loan, the proceeds of such Share Acquisition Loan
and any earnings attributable thereto.
14
Except as specifically provided in this section 6.2(a), no assets of the Plan
shall be pledged as collateral for the repayment of any Share Acquisition Loan.
(b) No person entitled to payment under a Share Acquisition Loan shall
have any right to the assets of the Plan except for:
(i) Financed Shares that have been pledged as collateral for such
Share Acquisition Loan pursuant to section 6.2(a);
(ii) Loan Repayment Contributions made pursuant to section 5.2; and
(iii) earnings attributable to Financed Shares described in section
6.2(b)(i) and to Loan Repayment Contributions described in section
6.2(b)(ii).
Except in the event of a default or a refinancing pursuant to which an existing
Share Acquisition Loan is repaid, the aggregate amount of all payments of
principal and interest made by the Trustee with respect to all Share Acquisition
Loans obtained on behalf of the Plan shall at no time exceed the aggregate
amount of all Loan Repayment Contributions theretofore made plus the aggregate
amount of all earnings (other than dividends paid in the form of Shares)
attributable to Financed Shares and to such Loan Repayment Contributions.
(c) Any Share Acquisition Loan shall be without recourse against the
Plan and Trust.
SECTION 6.3 LOAN REPAYMENT ACCOUNT.
In the event that one or more Share Acquisition Loans shall be obtained, a
Loan Repayment Account shall be established under the Plan. The Loan Repayment
Account shall be credited with all Shares acquired with the proceeds of a Share
Acquisition Loan, all Loan Repayment Contributions and all earnings (including
dividends paid in the form of Shares) or appreciation attributable to such
Shares and Loan Repayment Contributions. The Loan Repayment Account shall be
charged with all payments of principal and interest made by the Trustee with
respect to any Share Acquisition Loan, all Shares released in accordance with
section 6.4 and all losses, depreciation or expenses attributable to Shares or
to other property credited thereto. The Financed Shares, as well as any earnings
thereon, shall be allocated to such Loan Repayment Account and shall be
accounted for separately from all other amounts contributed under the Plan.
SECTION 6.4 RELEASE OF FINANCED SHARES.
As of the last day of each Plan Year during which a Share Acquisition Loan
is outstanding, a portion of the Financed Shares purchased with the proceeds of
such Share Acquisition Loan and allocated to the Loan Repayment Account shall be
released. The number
15
of Financed Shares released in any such Plan Year shall be equal to the amount
determined according to one of the following methods:
(a) by computing the product of: (i) the number of Financed Shares
purchased with the proceeds of such Share Acquisition Loan and allocated to
the Loan Repayment Account immediately before the release is effected;
multiplied by (ii) a fraction, the numerator of which is the aggregate
amount of the principal and interest payments (other than payments made
upon the refinancing of a Share Acquisition Loan as contemplated by section
6.1(c)) made with respect to such Share Acquisition Loan during such Plan
Year, and the denominator of which is the aggregate amount of all principal
and interest remaining to be paid with respect to such Share Acquisition
Loan as of the first day of such Plan Year; or
(b) by computing the product of: (i) the number of Financed Shares
purchased with the proceeds of such Share Acquisition Loan and allocated to
the Loan Repayment Account immediately before the release is effected;
multiplied by (ii) a fraction, the numerator of which is the aggregate
amount of the principal payments (other than payments made upon the
refinancing of a Share Acquisition Loan as contemplated by section 6.1(c))
made with respect to such Share Acquisition Loan during such Plan Year, and
the denominator of which is the aggregate amount of all of principal
remaining to be paid with respect to such Share Acquisition Loan as of the
first day of such Plan Year; provided, however, that the method described
in this section 6.4(b) may be used only if the Share Acquisition Loan does
not extend for a period in excess of 10 years after the date of origination
and only to the extent that principal payments on such Share Acquisition
Loan are made at least as rapidly as under a loan of like principal amount
with a like interest rate and term requiring level amortization of
principal and interest.
The method to be used shall be specified in the documents governing the Share
Acquisition Loan or, if not specified therein, prescribed by the Committee, in
its discretion. In the event that property other than, or in addition to,
Financed Shares shall be held in the Loan Repayment Account and pledged as
collateral for a Share Acquisition Loan, then the property to be released
pursuant to this section 6.4 shall be property having a Fair Market Value
determined by applying the method to be used to the Fair Market Value of all
property pledged as collateral for such Share Acquisition Loan; provided,
however, that no property other than Financed Shares shall be released pursuant
to this section 6.4 unless all Financed Shares have previously been released.
SECTION 6.5 RESTRICTIONS ON FINANCED SHARES.
Except to the extent required under any applicable law, rule or regulation,
no Shares purchased with the proceeds of a Share Acquisition Loan shall be
subject to a put, call or other option, or to any buy-sell or similar
arrangement, while held by the Trustee or when distri buted from the Plan. The
provisions of this section 6.5 shall continue to apply in the event that
16
this Plan shall cease to be an employee stock ownership plan, within the meaning
of section 4975(e)(7) of the Code.
ARTICLE VII
ALLOCATION OF CONTRIBUTIONS
SECTION 7.1 ALLOCATION AMONG ELIGIBLE PARTICIPANTS.
Subject to the limitations of Article VIII, ESOP Contributions for a Plan
Year made in accordance with section 5.3 and Financed Shares and other property
that are released from the Loan Repayment Account for a Plan Year in accordance
with section 6.4 shall be allocated among the Eligible Participants for such
Plan Year, in the manner provided in this Article VII.
SECTION 7.2 ALLOCATION OF RELEASED SHARES OR OTHER PROPERTY.
Subject to the limitations of Article VIII, in the event that Financed
Shares or other property are released from the Loan Repayment Account for a Plan
Year in accordance with section 6.4, such released Shares or other property
shall be allocated among the Accounts of the Eligible Participants for the Plan
Year in the proportion that each such Eligible Participant's Allocation
Compensation for the portion of the Plan Year during which he was a Participant
bears to the aggregate Allocation Compensation of all Eligible Participants for
the portion of such Plan Year during which they were Eligible Participants.
SECTION 7.3 ALLOCATION OF ESOP CONTRIBUTIONS.
Subject to the limitations of Article VIII, in the event that the Employer
makes an ESOP Contribution for a Plan Year, such ESOP Contribution shall be
allocated among the Accounts of the Eligible Participants for such Plan Year in
the proportion that each such Eligible Participant's Allocation Compensation for
the portion of the Plan Year during which he was a Participant bears to the
aggregate Allocation Compensation of all Eligible Participants for the portion
of such Plan Year during which they were Eligible Participants.
SECTION 7.4 RETROACTIVE CONTRIBUTIONS FOR RETURNING VETERANS.
Notwithstanding anything in the Plan to the contrary, to the extent
required by section 414(u) of the Code, in the event of the reemployment, on or
after December 12, 1994, by the Employer of a Participant with statutory
reemployment rights following a period of service in the uniformed services of
the United States, such person shall be eligible for retroactive benefit
contributions or allocations under the Plan computed as though he or she had
continued working for an Employer during the period of uniformed service.
17
ARTICLE VIII
LIMITATIONS ON ALLOCATIONS
SECTION 8.1 OPTIONAL LIMITATIONS ON ALLOCATIONS OF CONTRIBUTIONS.
If, for any Plan Year, the application of sections 7.2 and 7.3 would result
in more than one-third of the number of Shares or of the amount of money or
property to be allocated thereunder being allocated to the Accounts of Eligible
Participants for such Plan Year who are also Highly Compensated Employees for
such Plan Year, then the Committee may, but shall not be required to, direct
that this section 8.1 shall apply in lieu of sections 7.2 and 7.3. If the
Committee gives such a direction, then the Committee shall impose a maximum
dollar limitation on the amount of Allocation Compensation that may be taken
into account for each Eligible Participant. The dollar limitation which shall be
imposed shall be the limitation which produces the result that the aggregate
Allocation Compensation taken into account for Eligible Participants who are
Highly Compensated Employees, constitutes exactly one-third of the aggregate
Allocation Compensation taken into account for all Eligible Participants.
SECTION 8.2 GENERAL LIMITATIONS ON CONTRIBUTIONS.
(a) No amount shall be allocated to a Participant's Account under this
Plan for any Limitation Year, to the extent that such an allocation would
result in an Annual Addition of an amount greater than the lesser of (i)
$30,000 (or such other amount as is permissible under section 415(c)(1)(A)
of the Code, or (ii) 25% of the Participant's Total Compensation for such
Limitation Year.
(b) In the case of a Participant who may be entitled to benefits under
any qualified defined benefit plan (whether or not terminated) now in
effect or ever maintained by the Employer, such Participant's Annual
Additions under this Plan shall, in addition to the limitations provided
under section 8.2(a), be further limited so that for any Limitation Year
beginning prior to December 31, 1999, the sum of the Participant's Defined
Contribution Plan Fraction plus his Defined Benefit Plan Fraction does not
exceed 1.0 for any Limitation Year; provided, that this limitation shall
only apply if and to the extent that the benefits under the Employer's
Retirement Plan or any other defined contribution plan are not limited so
that such sum is not exceeded. In the case of a Participant who is entitled
to contributions under any other qualified defined contribution plan
maintained by the Employer, such Participant's Annual Additions under such
other plan or plans shall be limited to the extent necessary so that total
Annual Additions under all such plans and this Plan do not exceed the
limitations under this Article VIII before any limitation is applied under
this Plan. In the event that this Section 8.2 conflicts with such other
qualified defined benefit or qualified defined contribution plan or plans,
the Plan Administrator shall determine under which plan the Annual
Additions or benefits shall be limited.
18
(c) For purposes of this section 8.2, the following special
definitions shall apply:
(i) Annual Addition means the sum of the following amounts allocated
on behalf of a Participant for a Limitation Year:
(A) all contributions by the Employer (including contributions
made under a salary reduction agreement pursuant to sections 401(k),
408(k) or 403(b) of the Code) under any qualified defined contribution
plan (other than this Plan) maintained by the Employer, as well as the
Participant's allocable share, if any, of any forfeitures under such
plans; plus
(B) (I) for Limitation Years that began prior to January 1, 1987,
the lesser of (1) 50% of the Participant's voluntary nondeductible
contributions to all qualified defined contribution plans maintained
by the Employer, or (2) the amount by which the Participant's
nondeductible voluntary contributions to such plans exceeds 6% of his
Total Compensation; and (II) for Limitation Years that begin after
December 31, 1986, all of the Participant's voluntary nondeductible
contributions to such plans; plus
(C) all ESOP Contributions under this Plan; plus
(D) except as hereinafter provided in this section 8.2(c)(i), a
portion of the Employer's Loan Repayment Contributions to the Plan for
such Limitation Year which bears the same proportion to the total
amount of the Employer's Loan Repayment Contributions for the
Limitation Year that the number of Shares (or the Fair Market Value of
property other than Shares) allocated to the Participant's Account
pursuant to section 7.2 or 8.1, whichever is applicable, bears to the
ag gregate number of Shares (or Fair Market Value of property other
than Shares) so allocated to all Participants for such Limitation
Year.
Notwithstanding section 8.2(c)(i)(D), if, for any Limitation Year, the
aggregate amount of ESOP Contributions allocated to the Accounts of the
individuals who are Highly Compensated Employees for such Limitation Year,
when added to such Highly Compensated Employees' allocable share of any
Loan Repayment Contributions for such Limitation Year, does not exceed
one-third of the total of all ESOP Contributions and Loan Repayment
Contributions for such Limitation Year, then that portion, if any, of the
Loan Repayment Contributions for such Limitation Year that is applied to
the payment of interest on a Share Acquisition Loan shall not be included
as an Annual Addition. In no event shall any Financed Shares, any dividends
or other earnings thereon, any proceeds of the sale thereof or any portion
of the value of the foregoing be included as an Annual Addition.
19
(ii) Employer means RFS Bancorp, Inc. and all members of a controlled
group of corporations, as defined in section 414(b) of the Code, as
modified by section 415(h) of the Code, all commonly controlled trades or
businesses, as defined in section 414(c) of the Code, as modified by
section 415(h) of the Code, all affiliated service groups, as defined in
section 414(m) of the Code, of which RFS Bancorp, Inc. is a member, as well
as any leasing organization, as defined in section 18.8, that employs any
person who is considered an employee under section 18.8 and any other
entity that is required to be aggregated with the Employer pursuant to
regulations under section 414(o) of the Code.
(iii) Defined Benefit Plan Fraction means, for any Participant for any
Limitation Year, a fraction, the numerator of which is the Projected Annual
Benefit (determined as of the end of such Limitation Year) of the
Participant under any qualified defined benefit plans (whether or not
terminated) maintained by the Employer for the current and all prior
Limitation Years, and the denominator of which is as follows: (A) for
Limitation Years ending prior to January 1, 1983, the lesser of (I) the
dollar limitation in effect under section 415(b)(1) (A) of the Code for
such Limitation Year, or (II) the amount which may be taken into account
under section 415(b)(1)(B) of the Code with respect to such Par ticipant
for such Limitation Year; and (B) in all other cases, the lesser of (I)
(except as provided in section 17.8(b) for a Top Heavy Plan Year) the
product of 1.25 multiplied by the dollar limitation in effect under section
415(b)(1)(A) of the Code for such Limitation Year, or (II) the product of
1.4 multiplied by the amount which may be taken into account under section
415(b)(1)(B) of the Code with respect to such Participant for such
Limitation Year.
(iv) Defined Contribution Plan Fraction means, for any Participant for
any Limitation Year, a fraction (A) the numerator of which is the sum of
such Participant's Annual Additions (determined as of the end of such
Limitation Year) under this Plan and any other qualified defined
contribution plans (whether or not terminated) maintained by the Employer
for the current and all prior Limitation Years, and (B) the denominator of
which is as follows: (I) for Limitation Years ending prior to January 1,
1983, the sum of the lesser of the following amounts for such Limitation
Year and for each prior Limitation Year during which such Participant was
employed by the Employer: (1) the Maximum Permissible Amount for such
Limitation Year (without regard to section 415(c)(6) of the Code), or (2)
the amount which may be taken into account under section 415(c)(1)(B) of
the Code with respect to such Participant for such Limitation Year; and
(II) in all other cases, the sum of the lesser of the following amounts for
such Limitation Year and for each prior Limitation during which such
Participant was employed by the Employer: (1) (except as provided in
section 17.8(b) for a Top Heavy Plan Year) the product of 1.25 multiplied
by the Maximum Permissible Amount for such Limitation Year (determined
without regard to section 415(c)(6) of the Code), or (2) the product of 1.4
multiplied by the amount which may be taken into account under section
415(c)(1)(B) of the Code (or section 415(c)(7) of the Code, if applicable)
with respect to such Participant for such Limitation Year; provided,
however, that the Plan Administrator may, at his election, adopt the
transition
20
rule set forth in section 415(e)(6) of the Code in making the computation
set forth in this section 8.2(c)(iv). If the sum of a Participant's Defined
Benefit Plan Fraction and Defined Contribution Plan Fraction exceeded 1.0
as of September 30, 1983, then such Participant's Defined Contribution Plan
Fraction shall be determined under regulations to be prescribed by the
Secretary of the Treasury so that the sum of the fractions does not exceed
1.0.
(v) Limitation Year means the Plan Year; provided, however, that if
the Employer changes the Limitation Year, the new Limitation Year shall
begin on a date within the Limitation Year in which the amendment is made.
(vi) Maximum Permissible Amount means (A) $25,000 (or such higher
amount as may be permitted under section 415(d) of the Code because of cost
of living increases) for Limitation Years beginning prior to January 1,
1983, and (B) the greater of (I) $30,000, or (II) 25% of the dollar
limitation in effect under section 415(b)(1)(A) of the Code for Limitation
Years beginning on or after January 1, 1983.
(vii) Projected Annual Benefit means a Participant's annual retirement
benefit (adjusted to the actuarial equivalent of a straight life annuity if
expressed in a form other than a straight life or qualified joint and
survivor annuity) under any qualified defined benefit plan maintained by
the Employer, whether or not terminated, assuming that the Participant will
continue employment until the later of current age or normal retirement age
under such plan, and that the Participant's Total Compensation for the
Limitation Year and all other relevant factors used to determine benefits
under such plan will remain con stant for all future Limitation Years.
(d) When a Participant's Annual Addition to this Plan must be reduced
to satisfy the limitations of section 8.2(a) or (b), such reduction shall
be applied first to ESOP Contributions; and second, if necessary, to Shares
allocated as a result of a Loan Repayment Contribution which are included
as an Annual Addition in such order as shall result in the smallest
reduction in the number of Shares allocable to the Participant's Account.
The amount by which any Participant's Annual Addition to this Plan is
reduced shall be allocated in accordance with Articles V and VII as a
contribution by the Employer in the next succeeding Limitation Year.
(e) Prior to determining a Participant's actual Total Compensation for
a Limitation Year, the Employer may determine the limitations under this
section 8.2 for a Participant on the basis of a reasonable estimation of
the Participant's Total Compensation for the Limitation Year that is
uniformly determined for all Participants who are similarly situated. As
soon as it is administratively feasible after the end of the Limitation
Year, the limitations of this section 8.2 shall be determined on the basis
of the Participant's actual Total Compensation for the Limitation Year.
21
ARTICLE IX
VESTING
SECTION 9.1 VESTING.
Subject to the provisions of section 9.2, the balance credited
to each Employee's Account shall become vested in accordance with the following
schedule:
Years of Vested
Vesting Service Percentage
--------------- ----------
less than 3 0%
3 but less than 4 20%
4 but less than 5 40%
5 but less than 6 60%
6 but less than 7 80%
7 or more 100%
SECTION 9.2 VESTING ON DEATH, DISABILITY, RETIREMENT OR CHANGE IN CONTROL.
Any previously unvested portion of the remainder of the balance credited to
the Account of a Participant or of a person who is a Former Participant solely
because he is excluded from participation under section 2.1(b) shall become
fully vested in him immediately upon attainment of age 65, or, if earlier, upon
the termination of his participation by reason of death, Disability, Retirement
or upon the occurrence of a Change in Control of the Employer.
SECTION 9.3 FORFEITURES ON TERMINATION OF EMPLOYMENT.
Upon the termination of employment of a Participant or Former Participant
for any reason other than death, Disability or Retirement, that portion of the
balance credited to his Account which is not vested at the date of such
termination shall be forfeited as of the last Valuation Date for the Plan Year
in which such termination of employment occurs. The proceeds of such
forfeitures, less amounts, if any, required to be credited because of
re-employment pursuant to section 9.4, shall be treated as Forfeitures and shall
be disposed of as provided in section 9.5.
SECTION 9.4 AMOUNTS CREDITED UPON RE-EMPLOYMENT.
If an Employee forfeited any amount of the balance credited to his Account
upon his termination of employment with the Employer, and is re-employed prior
to the occurrence of five consecutive One-Year Breaks in Service, then:
22
(a) an amount equal to the Fair Market Value of the Shares forfeited,
determined as of the date of forfeiture; and
(b) the amount credited to his General Investment Account that was
forfeited, determined as of the date of forfeiture;
shall be credited back to his Account from the proceeds of forfeitures which are
redeemed pursuant to section 9.3 during the Plan Year in which he is
re-employed, unless such proceeds are insufficient, in which case the Employer
shall make an additional contribution in the amount of such deficiency.
SECTION 9.5 ALLOCATION OF FORFEITURES.
Any Forfeitures that occur during a Plan Year shall be used to reduce the
contributions required of the Employer under the Plan and shall be treated as
Loan Repayment Contributions and ESOP Contributions in the proportions
designated by the Committee in accordance with Article V.
ARTICLE X
THE TRUST FUND
SECTION 10.1 THE TRUST FUND.
The Trust Fund shall be held and invested under the Trust Agreement with
the Trustee. The provisions of the Trust Agreement shall vest such powers in the
Trustee as to invest ment, control and disbursement of the Trust Fund, and such
other provisions not inconsistent with the Plan, including provision for the
appointment of one or more "investment managers" within the meaning of section
3(38) of ERISA to manage and control (including acquiring and disposing of) all
or any of the assets of the Trust Fund, as the Board may from time to time
authorize. Except as required by ERISA, no bond or other security shall be
required of any Trustee at any time in office.
SECTION 10.2 INVESTMENTS.
Except to the extent provided to the contrary in section 10.3, the Trust
Fund shall be invested in:
(a) Shares;
(b) such Investment Funds as may be established from time to time by
the Committee; and
23
(c) such other investments as may be permitted under the Trust
Agreement;
in such proportions as shall be determined by the Committee or, if so provided
under the Trust Agreement, as directed by one or more investment managers or by
the Trustee, in its discretion; provided, however, that the investments of the
Trust Fund shall consist primarily of Shares. Notwithstanding the immediately
preceding sentence, the Trustee may temporarily invest the Trust Fund in
short-term obligations of, or guaranteed by, the United States Government or an
agency thereof, or may retain uninvested, or sell investments to provide,
amounts of cash required for purposes of the Plan.
SECTION 10.3 DIVERSIFICATION OF INVESTMENTS.
(a) Notwithstanding section 10.2, each Qualified Participant may:
(i) during the first 90 days of each of the first four Plan Years to
begin after the Plan Year in which he first becomes a Qualified
Participant, elect that such percentage of the balance credited to his
Account as he may specify, but in no event more than 25% of the balance
credited to his Account, be invested in one or more of the Investment
Funds; and
(ii) during the first 90 days of the fifth Plan Year to begin after
the Plan Year in which he first becomes a Qualified Participant or of any
Plan Year thereafter, elect that such percentage of the balance credited to
his Account as he may specify, but in no event more than 50% of the balance
credited to his Account, be invested in one or more of the Investment
Funds.
For purposes of an election under this section 10.3, the balance credited to a
Participant's Account shall be the balance credited to his Account determined as
of the last Valuation Date to occur in the Plan Year immediately preceding the
Plan Year in which such election is made.
(b) An election made under section 10.3(a) shall be made in writing,
in the form and manner prescribed by the Plan Administrator, and shall be
filed with the Plan Administrator during the election period specified in
section 10.3(a). As soon as is practicable following the end of the
election period during which such election is made, the Plan Administrator
shall take such actions as are necessary to cause the specified percentage
of the balance credited to the Account of the Qualified Participant making
the election to be invested in the specified Investment Funds. Any
investments made pursuant to this section 10.3 shall be specifically
allocated to the General Investment Account of the Qualified Participant
for whom they are made.
(c) An election made under section 10.3(a) may be changed or revoked
at any time during the election period described in section 10.3(a) during
which it is initially
24
made, during any subsequent election period described in section 10.3(a)
or, upon at least 15 days' advance written notice given in the form and
manner prescribed by the Plan Administrator, as of the first day of any
calendar quarter of any Plan Year that begins after the Participant first
becomes a Qualified Participant. In no event, however, shall any election
under this section 10.3 result in more than 25% of the balance credited to
the Par ticipant's Account being invested at the direction of the
Participant, if such election is made during a Plan Year to which section
10.3(a)(i) applies, or result in more than 50% of the balance credited to
the Participant's Account being invested at the direction of the
Participant, if such election is made during the Plan Year to which section
10.3(a)(ii) applies or thereafter.
SECTION 10.4 USE OF COMMINGLED TRUST FUNDS.
Subject to the provisions of the Trust Agreement, amounts held in the Trust
Fund may be invested in:
(a) any commingled or group trust fund described in section 401(a) of
the Code and exempt under section 501(a) of the Code; or
(b) any common trust fund exempt under section 584 of the Code
maintained exclusively for the collective investment of the assets of
trusts that are exempt under section 501(a) of the Code;
provided that the trustee of such commingled, group or common trust fund is a
bank or trust company.
SECTION 10.5 MANAGEMENT AND CONTROL OF ASSETS.
All assets of the Plan shall be held by the Trustee in trust for the
exclusive benefit of Participants, Former Participants and their Beneficiaries.
No part of the corpus or income of the Trust Fund shall be used for, or diverted
to, purposes other than for the exclusive benefit of Participants, Former
Participants and their Beneficiaries, and for defraying reasonable
administrative expenses of the Plan and Trust Fund. No person shall have any
interest in or right to any part of the earnings of the Trust Fund, or any
rights in, to or under the Trust Fund or any part of its assets, except to the
extent expressly provided in the Plan.
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ARTICLE XI
VALUATION OF INTERESTS IN THE TRUST FUND
SECTION 11.1 ESTABLISHMENT OF INVESTMENT ACCOUNTS.
The Plan Administrator shall establish, or cause to be established, for
each person for whom an Account is maintained a Share Investment Account and a
General Investment Account. Such Share Investment Accounts and General
Investment Accounts shall be maintained in accordance with this Article XI.
SECTION 11.2 SHARE INVESTMENT ACCOUNTS.
The Share Investment Account established for a person in accordance with
section 11.1 shall be credited with: (a) all Shares allocated to such person's
Account; (b) all Shares pur chased with amounts of money or property allocated
to such person's Account; (c) all dividends paid in the form of Shares with
respect to Shares credited to his Account; and (d) all Shares purchased with
amounts credited to such person's General Investment Account. Such Share
Investment Account shall be charged with all Shares that are sold or exchanged
to acquire other investments or to provide cash and with all Shares that are
distributed in kind.
SECTION 11.3 GENERAL INVESTMENT ACCOUNTS.
The General Investment Account that is established for a person in
accordance with section 11.1 shall be credited with: (a) all amounts, other than
Shares, allocated to such person's Account; (b) all dividends paid in a form
other than Shares with respect to Shares credited to such person's Share
Investment Account; (c) the proceeds of any sale of Shares credited to such
person's Share Investment Account; and (d) any earnings attributable to amounts
credited to such person's General Investment Account. Such General Investment
Account shall be charged with all amounts credited thereto that are applied to
the purchase of Shares, any losses or depreciation attributable to amounts
credited thereto, any expenses allocable thereto and any distributions of
amounts credited thereto.
SECTION 11.4 VALUATION OF INVESTMENT ACCOUNTS.
(a) The Plan Administrator shall determine, or cause to be determined,
the aggregate value of each person's Share Investment Account as of each
Valuation Date by multiplying the number of Shares credited to such Share
Investment Account on such Valuation Date by the Fair Market Value of a
Share on such Valuation Date.
(b) As of each Valuation Date, the Accounts of each Participant shall
be separately adjusted to reflect their proportionate share of any
appreciation or depreciation in the fair market value of the Investment
Funds, any income earned by the Investment
26
Funds and any expenses incurred by the Investment Funds, as well as any
contributions, withdrawals or distributions and investment transfers not
posted as of the last Valuation Date.
SECTION 11.5 ANNUAL STATEMENTS.
There shall be furnished, by mail or otherwise, at least once in each Plan
Year to each person who would then be entitled to receive all or part of the
balance credited to any Account if the Plan were then terminated, a statement of
his interest in the Plan as of such date as shall be selected by the Plan
Administrator, which statement shall be deemed to have been accepted as correct
and be binding on such person unless the Plan Administrator receives written
notice to the contrary within 30 days after the statement is mailed or furnished
to such person.
ARTICLE XII
SHARES
SECTION 12.1 SPECIFIC ALLOCATION OF SHARES.
All Shares purchased under the Plan shall be specifically allocated to the
Share Investment Accounts of Participants, Former Participants and their
Beneficiaries in accordance with section 11.2, with the exception of Financed
Shares, which shall be allocated to the Loan Repayment Account.
SECTION 12.2 DIVIDENDS.
(a) Dividends paid with respect to Shares held under the Plan shall be
credited to the Loan Repayment Account, if paid with respect to Financed
Shares. Such dividends shall be: (i) applied to the payment of principal
and accrued interest with respect to any Share Acquisition Loan, if paid in
cash; or (ii) held in the Loan Repayment Account as Financed Shares for
release in accordance with section 6.4, if paid in the form of Shares.
(b) Dividends paid with respect to Shares allocated to a person's
Share Investment Account shall be credited to such person's Share
Investment Account. Cash dividends credited to a person's General
Investment Account shall be, at the direction of the Board, either: (i)
held in such General Investment Account and invested in accordance with
sections 11.2 and 11.3; (ii) distributed immediately to such person; (iii)
distributed to such person within 90 days of the close of the Plan Year in
which such dividends were paid; or (iv) used to make payments of principal
or interest on a Share Acquisition Loan; provided, however, that the Fair
Market Value of Financed Shares released from the Loan Repayment Account
equals or exceeds the amount of the dividend.
27
SECTION 12.3 VOTING RIGHTS.
(a) Each person shall direct the manner in which all voting rights
appurtenant to Shares allocated to his Share Investment Account will be
exercised, provided that such Shares were allocated to his Share Investment
Account as of the applicable record date. Such person shall, for such
purpose, be deemed a "named fiduciary" within the meaning of section
402(a)(2) of ERISA. Such a direction shall be given by completing and
filing with the inspector of elections, the Trustee or such other person
who shall be independent of the Employer as the Committee shall designate,
at least 10 days prior to the date of the meeting of holders of Shares at
which such voting rights will be exercised, a written direction in the form
and manner prescribed by the Committee. The inspector of elections, the
Trustee or such other person designated by the Committee shall tabulate the
directions given on a strictly confidential basis, and shall provide the
Committee with only the final results of the tabulation. The final results
of the tabulation shall be followed by the Committee in directing the
Trustee as to the manner in which such voting rights shall be exercised.
The Committee shall make a reasonable effort to furnish, or cause to be
furnished, to each person for whom a Share Investment Account is maintained
all annual reports, proxy materials and other information known by the
Committee to have been furnished by the issuer of the Shares, or by any
solicitor of proxies, to the holders of Shares.
(b) To the extent that any person shall fail to give instructions with
respect to the exercise of voting rights appurtenant to Shares allocated to
his Share Investment Account:
(i) the Trustee shall, with respect to each matter to be voted upon:
(A) cast a number of affirmative votes equal to the product of (I) the
number of allocated Shares for which no written instructions have been
given, multiplied by (II) a fraction, the numerator of which is the number
of allocated Shares for which affirmative votes will be cast in accordance
with written instructions given as provided in section 12.3(a) and the
denominator of which is the aggregate number of affirmative and negative
votes which will be cast in accordance with written instructions given as
aforesaid, and (B) cast a number of negative votes equal to the excess (if
any) of (I) the number of allocated Shares for which no written
instructions have been given over (II) the number of affirmative votes
being cast with respect to such allocated Shares pursuant to section
12.3(b)(i)(A); or
(ii) if the Trustee shall determine that it may not, consistent with
its fiduciary duties, vote the allocated Shares for which no written
instructions have been given in the manner described in section 12.3(b)(i),
it shall vote such Shares in such manner as it, in its discretion, may
determine to be in the best interests of the persons to whose Share
Investment Accounts such Shares have been allocated.
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(c) (i) The voting rights appurtenant to Financed Shares shall be
exercised as follows with respect to each matter as to which holders of
Shares may vote:
(A) a number of votes equal to the product of (I) the total
number of votes appurtenant to Financed Shares allocated to the Loan
Repayment Account on the applicable record date; multiplied by (II) a
fraction, the numerator of which is the total number of affirmative
votes cast by Participants, Former Participants and the Beneficiaries
of deceased Former Participants with respect to such matter pursuant
to section 12.3(a) and the denominator of which is the total number of
affirmative and negative votes cast by Participants, Former
Participants and the Beneficiaries of deceased Former Participants,
shall be cast in the affirmative; and
(B) a number of votes equal to the excess of (I) the total number
of votes appurtenant to Financed Shares allocated to the Loan
Repayment Account on the applicable record date, over (II) the number
of affirmative votes cast pursuant to section 12.3(c)(i)(A) shall be
cast in the negative.
To the extent that the Financed Shares consist of more than one class of Shares,
this section 12.3(c)(i) shall be applied separately with respect to each class
of Shares.
(ii) If voting rights are to be exercised with respect to Financed
Shares as provided in section 12.3(c)(i)(A) and (B) at a time when there
are no Shares allocated to the Share Investment Accounts of Participants,
Former Participants and the Beneficiaries of deceased Former Participants,
then the voting rights appurtenant to Financed Shares shall be exercised as
follows with respect to each matter as to which holders of Shares may vote:
(A) Each person who is a Participant on the applicable record
date and who was a Participant on the last day of the Plan Year ending
on or immediately prior to such record date will be granted a number
of votes equal to the quotient, rounded to the nearest integral
number, of (I) such Participant's Allocation Com pensation for the
Plan Year ending on or immediately prior to such record date (or for
the portion of such Plan Year during which he was a Participant);
divided by (II) $1,000.00; and
(B) a number of votes equal to the product of (I) the total
number of Financed Shares allocated to the Loan Repayment Account on
the applicable record date; multiplied by (II) a fraction, the
numerator of which is the total number of votes that are cast in the
affirmative with respect to such matter pursuant to section
12.3(c)(ii)(A) and the denominator of which is the total number of
votes that are cast either in the affirmative or in the negative with
respect to such matter pursuant to section 12.3(c)(ii)(A), shall be
cast in the affirmative; and
29
(C) a number of votes equal to the excess of (I) the total number
of Financed Shares allocated to the Loan Repayment Account on the
applicable record date, over (II) the number of affirmative votes cast
with respect to such matter pursuant to section 12.3(c)(ii)(B), shall
be cast in the negative.
To the extent that the Financed Shares consist of more than one class of Shares,
this section 12.3(c)(ii) shall be applied separately with respect to each class
of Shares.
SECTION 12.4 TENDER OFFERS.
(a) Each person shall direct whether Shares allocated to his Share
Investment Account will be delivered in response to any Tender Offer. Such
person shall, for such purpose, be deemed a "named fiduciary" within the
meaning of section 402(a)(2) of ERISA. Such a direction shall be given by
completing and filing with the Trustee or such other person who shall be
independent of the Employer as the Committee shall designate, at least 10
days prior to the latest date for exercising a right to deliver Shares
pursuant to such Tender Offer, a written direction in the form and manner
prescribed by the Committee. The Trustee or other person designated by the
Committee shall tabulate the directions given on a strictly confidential
basis, and shall provide the Plan Administrator with only the final results
of the tabulation. The final results of the tabulation shall be followed by
the Committee in directing the number of Shares to be delivered. The
Committee shall make a reasonable effort to furnish, or cause to be
furnished, to each person for whom a Share Investment Account is
maintained, all information known by the Committee to have been furnished
by the issuer or by or on behalf of any person making such Tender Offer, to
the holders of Shares in connection with such Tender Offer.
(b) To the extent that any person shall fail to give instructions with
respect to Shares allocated to his Share Investment Account:
(i) the Trustee shall (A) tender or otherwise offer for purchase,
exchange or redemption a number of such Shares equal to the product of (I)
the number of allocated Shares for which no written instructions have been
given, multiplied by (II) a fraction, the numerator of which is the number
of allocated Shares tendered or otherwise offered for purchase, exchange or
redemption in accordance with written instructions given as provided in
section 12.4(a) and the denominator of which is the aggregate number of
allocated Shares for which written instructions have been given as
aforesaid, and (B) withhold a number of Shares equal to the excess (if any)
of (I) the number of allocated Shares for which no written instructions
have been given over (II) the number of Shares being tendered or otherwise
offered pursuant to section 12.4(b)(i)(A); or
(ii) if the Trustee shall determine that it may not, consistent with
its fiduciary duties, exercise the tender or other rights appurtenant to
allocated Shares for which no written instructions have been given in the
manner described in section 12.4(b)(i), it shall
30
tender, or otherwise offer, or withhold such Shares in such manner as it,
in its discretion, may determine to be in the best interests of the persons
to whose Share Investment Accounts such Shares have been allocated.
(c) In the case of any Tender Offer, any Financed Shares held in the
Loan Repayment Account shall be dealt with as follows:
(i) If such Tender Offer occurs at a time when there are no Shares
allocated to the Share Investment Accounts of Participants, Former
Participants and the Beneficiaries of deceased Former Participants, then
the disposition of the Financed Shares shall be deter mined as follows:
(A) each person who is a Participant on the applicable record
date and who was a Participant on the last day of the Plan Year ending
on or immediately prior to such record date will be granted a number
of tender rights equal to the quotient, rounded to the nearest
integral number, of (I) such Participant's Allocation Compensation for
the Plan Year ending on or immediately prior to such record date (or
for the portion of such Plan Year during which he was a Participant),
divided by (II) $1,000.00; and
(B) on the last day for delivering Shares or otherwise responding
to such Tender Offer, a number of Shares equal to the product of (I)
the total number of Financed Shares allocated to the Loan Repayment
Account on the last day of the effective period of such Tender Offer;
multiplied by (II) a fraction, the numerator of which is the total
number of tender rights exercised in favor of the delivery of Shares
in response to the Tender Offer pursuant to section 12.4(c)(i)(A) and
the denominator of which is the total number of tender rights that are
exercisable in response to the Tender Offer pursuant to section
12.4(c)(i)(A), shall be delivered in response to the Tender Offer; and
(C) a number of Shares equal to the excess of (I) the total
number of Financed Shares allocated to the Loan Repayment Account on
the last day of the effective period of such Tender Offer; over (II)
the number of Shares to be delivered in response to the Tender Offer
pursuant to section 12.4(c)(i)(B), shall be withheld from delivery.
(ii) If such Tender Offer occurs at a time when the voting rights
appurtenant to such Financed Shares are to be exercised in accordance with
section 12.3(c)(i), then:
(A) on the last day for delivering Shares or otherwise responding
to such Tender Offer, a number of Financed Shares equal to the product
of (I) the total number of Financed Shares allocated to the Loan
Repayment Account on the last day of the effective period of such
Tender Offer; multiplied by (II) a fraction, the
31
numerator of which is the total number of Shares delivered from the
Share Invest ment Accounts of Participants, Former Participants and
the Beneficiaries of deceased Former Participants in response to such
Tender Offer pursuant to section 12.4(a), and the denominator of which
is the total number of Shares allocated to the Share Investment
Accounts of Participants, Former Participants and Beneficiaries of
deceased Former Participants immediately prior to the last day for
delivering Shares or otherwise responding to such Tender Offer, shall
be delivered; and
(B) a number of Financed Shares equal to the excess of (I) the
total number of Financed Shares allocated to the Loan Repayment
Account on the last day for delivering Shares or otherwise responding
to such Tender Offer; over (II) the number of Financed Shares to be
delivered pursuant to section 12.4(c)(ii)(A), shall be withheld from
delivery.
To the extent that the Financed Shares consist of more than one class of Shares,
this section 12.4(c) shall be applied separately with respect to each class of
Shares.
SECTION 12.5 DISSENT AND APPRAISAL RIGHTS.
(a) Each person shall have the right to direct the manner in which all
dissent and appraisal rights appurtenant to Shares allocated to his Share
Investment Account will be exercised. Such person shall, for such purpose,
be deemed a "named fiduciary" within the meaning of section 402(a)(2) of
ERISA. Such a direction shall be given by completing and filing with the
Trustee or such other person who shall be independent of the Employer as
the Committee shall designate, at least 10 days prior to the latest date
for exercising such dissent and appraisal rights, a written direction in
the form and manner prescribed by the Committee. The Trustee or other
person designated by the Committee shall tabulate the directions given on a
strictly confidential basis, and shall provide the Committee with only the
final results of the tabulation. The final results of the tabulation shall
be followed by the Committee in directing the Trustee as to the manner in
which such dissent and appraisal rights shall be exercised. The Committee
shall make a reasonable effort to furnish, or cause to be furnished, to
each person for whom a Share Investment Account is maintained, all
information known by the Committee to have been furnished by the issuer or
by or on behalf of any person to the holders of Shares in connection with
such dissent and appraisal rights.
(b) To the extent that any person for whom a Share Investment Account
is maintained shall fail to give instructions with respect to dissent and
appraisal rights appurtenant to Shares attributable to his interest, the
Committee shall direct the Trustee to exercise dissent and appraisal rights
as to those Shares in such manner as the Committee shall determine to be in
the best interest of the person to whom such Shares are attributable.
32
ARTICLE XIII
PAYMENT OF BENEFITS
SECTION 13.1 IN GENERAL.
The balance credited to a Participant's or Former Participant's Account
under the Plan shall be paid only at the times, to the extent, in the manner and
to the persons provided in this Article XIII.
SECTION 13.2 DESIGNATION OF BENEFICIARIES.
(a) Subject to section 13.2(b), any person entitled to a benefit under
the Plan may designate a Beneficiary to receive any amount to which he is
entitled that remains undistributed on the date of his death. Such person
shall designate his Beneficiary (and may change or revoke any such
designation) in writing in the form and manner prescribed by the Plan
Administrator. Such designation, and any change or revocation thereof,
shall be effective only if received by the Plan Administrator prior to such
person's death and shall become irrevocable upon such person's death.
(b) A Participant or Former Participant who is married shall
automatically be deemed to have designated his spouse as his Beneficiary,
unless, prior to the time such designation would, under section 13.2(a),
become irrevocable:
(i) the Participant or Former Participant designates an additional or
a different Beneficiary in accordance with this section 13.2; and
(ii) (A) the spouse of such Participant or Former Participant consents
to such designation in a writing that acknowledges the effect of such
consent and is witnessed by a Plan representative or a notary public; or
(B) the spouse of such Participant or Former Participant has previously
consented to such designation by signing a written waiver of any right to
consent to any designation made by the Participant or Former Participant,
and such waiver acknowledged the effect of the waiver and was witnessed by
a Plan representative or a notary public; or (C) it is established to the
satisfaction of a Plan representative that the consent required under
section 13.2(b)(ii)(A) may not be obtained because such spouse cannot be
located or because of other circumstances permitted under regulations
issued by the Secretary of the Treasury.
(c) In the event that a Beneficiary entitled to payments hereunder
shall die after the death of the person who designated him but prior to
receiving payment of his entire interest in the Account of the person who
designated him, then such Beneficiary's interest in the Account of such
person, or any unpaid balance thereof, shall be paid as provided in section
13.3 to the Beneficiary who has been designated by the deceased
Beneficiary, or
33
if there is none, to the executor or administrator of the estate of such
deceased Beneficiary, or if no such executor or administrator is appointed
within such time as the Plan Ad ministrator, in his sole discretion, shall
deem reasonable, to such one or more of the spouse and descendants and
blood relatives of such deceased Beneficiary as the Plan Administrator may
select. If a person entitled to a benefit under the Plan and any of the
Beneficiaries designated by him shall die in such circumstances that there
shall be substan tial doubt as to which of them shall have been the first
to die, for all purposes of the Plan, the person who made the Beneficiary
designation shall be deemed to have survived such Beneficiary.
(d) If no Beneficiary survives the person entitled to the benefit
under the Plan or if no Beneficiary has been designated by such person,
such benefit shall be paid to the executor or administrator of the estate
of such person, or if no such executor or administrator is appointed within
such time as the Plan Administrator, in his sole discretion, shall deem
reasonable, to such one or more of the spouse and descendants and blood
relatives of such deceased person as the Plan Administrator may select.
SECTION 13.3 DISTRIBUTIONS TO PARTICIPANTS AND FORMER PARTICIPANTS.
(a) (i) Subject to the provisions of section 13.7 with respect to
required minimum distributions, the vested portion of the balance credited
to a Participant's or a Former Participant's Account shall be distributed
to him commencing as of the last Valuation Date to occur in the Plan Year
in which the Participant or Former Participant terminates employment with
the Employer or attains age 65, whichever is later; unless the Participant
or Former Participant elects otherwise pursuant to section 13.3(a)(ii), and
the payment, or first in a series of payments, is actually made within
three months following such Valuation Date.
(ii) A Participant or Former Participant may, upon request on a form
provided by the Plan Administrator and filed with the Plan Administrator not
later than 15 days prior to the date on which his employment with the Employer
terminates, elect that his vested interest in his Account be paid commencing as
of any earlier or later Valuation Date after his termination of employment, but
in no event later than the last Valuation Date to occur in the calendar year in
which the Participant or Former Participant attains age 70 1/2, in which case
the payment, or first in a series of payments, shall be made within three months
following such Valuation Date.
(b) (i) Subject to section 13.3(b)(ii), the vested portion of the
balance credited to the Account of a Participant or Former Participant will
be paid to him, commencing as of the Valuation Date determined under
section 13.3(a), in substantially equal annual installments over a fixed
period equal to the greater of:
(A) five years; or
34
(B) if the vested portion of the balance credited to the Account
of the Participant or Former Participant, determined as of the
Valuation Date determined under section 13.3(a), is greater than
$500,000 (or such larger amount as may be prescribed by the Secretary
of the Treasury pursuant to section 409(o) of the Code), the sum of
five years plus the lesser of (I) five additional years, or (II) one
additional year for each $100,000 (or fraction thereof) by which the
vested portion of the balance credited to the Participant's or Former
Participant's Account exceeds $500,000 (or such larger amount as may
be prescribed by the Secretary of the Treasury pursuant to section
409(o) of the Code).
(ii) A Participant or Former Participant may, upon request on a form
provided by the Plan Administrator and filed with the Plan Administrator
not later than 15 days prior to the date on which his employment
terminates, elect that the vested portion of the balance credited to his
Account be paid, commencing as of the Valuation Date determined under
section 13.3(a):
(A) in substantially equal annual installments over a fixed
period not to exceed the lesser of (I) 10 years, or (II) the life
expectancy of the Participant or Former Participant, or, if his
Beneficiary is a natural person, the joint life and last survivor
expectancy of the Participant or Former Participant and his
Beneficiary; or
(B) subject to section 13.4, in a lump sum payment.
(c) If any person entitled to a benefit under the Plan dies before his
entire benefit has been distributed to him, then the remainder of such
benefit shall be paid to the Beneficiary designated by him under section
13.2 either:
(i) in a lump sum distribution as of the Valuation Date next following
the date of his death, and the amount thereof shall be based upon the
vested portion of the balance credited to his Account as of such Valuation
Date; or
(ii) if, prior to the death of the Participant or Former Participant
whose vested Account is being distributed, an election pursuant to section
13.3(b)(ii)(B) is in effect for him, in a lump sum distribution as of the
Valuation Date specified in such election, or, if earlier, as of the latest
Valuation Date that would permit payment to be made within five years after
the Participant's or Former Participant's death, and the amount thereof
shall be based upon the vested portion of the balance credited to his
Account as of such Valuation Date; or
(iii) if, prior to the death of the Participant or Former Participant
whose vested Account is being distributed, an election pursuant to section
13.3(b)(ii)(A) is in effect for him:
35
(A) over the period and at the times set forth in such election,
if distribution has begun prior to the Participant's or Former
Participant's death; or
(B) commencing at the time set forth in such election and over
the period set forth in such election (or, if less, over a period
equal to the life expectancy of the Beneficiary of the deceased
Participant or Former Participant), if the deceased Participant's or
Former Participant's spouse is his Beneficiary and distribution has
not begun prior to the deceased Participant's or Former Participant's
death; or
(C) commencing on the date specified in such election (or, if
earlier, the last Valuation Date that will permit payment to begin
within one year after the deceased Participant's or Former
Participant's death) and over the period set forth in such election
(or, if less, over a period equal to the life expectancy of the
Beneficiary of the deceased Participant or Former Participant), if the
deceased Participant's or Former Participant's Beneficiary is a
natural person other than his spouse and distribution has not begun
prior to the deceased Participant's or Former Participant's death;
and the amount thereof shall be based upon the vested portion of the
balance credited to his Account as of the Valuation Dates as of which
payments are determined; or
(iv) upon written application of the Beneficiary made in such form and
manner as the Plan Administrator may prescribe, at another time or in
another manner permitted under section 13.3(a) or (b), subject to the
following limitations:
(A) (I) If such Beneficiary is a natural person other than the
spouse of the deceased Participant or Former Participant whose vested
Account is being distributed, a distribution that commences within one
year after such deceased Participant's or Former Participant's death
shall be made over a fixed period that does not exceed the life
expectancy of such Beneficiary when distribution commences.
(II) If such Beneficiary is the spouse of the deceased
Participant or Former Participant whose vested Account is being
distributed, a distribution that commences no later than the later of:
(1) the date on which the deceased Participant or Former Participant
would have attained age 70 1/2 had he lived; or (2) the first
anniversary of the death of such deceased Participant or Former
Participant; shall be made over a fixed period that does not exceed
the life expectancy of such Beneficiary when distribution commences.
36
(III) In all other cases where the spouse of the deceased Partici
pant or Former Participant whose vested Account is being distributed
is not the Beneficiary, payment must be completed within five years
after the death of such deceased Participant or Former Participant.
(B) In cases where distribution has commenced prior to the death
of the deceased Participant or Former Participant whose vested Account
is being distributed, distribution must be completed as least as
rapidly as under the method in effect prior to such deceased
Participant's or Former Participant's death.
SECTION 13.4 MANNER OF PAYMENT.
(a) Subject to section 13.4(b), payments of distributions made
pursuant to section 13.3 or section 13.7 shall be paid, in accordance with
the written direction of the person requesting the payment, in whole
Shares, in cash, or in a combination of cash and whole Shares. Such written
direction shall be given in such form and manner as the Plan Administrator
may prescribe. If no such direction is given, then payment shall be made in
the maximum number of whole Shares that may be acquired with the amount of
the payment, plus, if necessary, an amount of money equal to any remaining
amount of the payment that is less than the Fair Market Value of a whole
Share.
(b) No distribution of a lump sum payment shall be made in cash to the
extent that the making of such distribution, when combined with all other
distributions to be made in cash as of the same Valuation Date, would
require the sale of Shares constituting 1% or more of all outstanding
Shares; provided, however, that this section 13.4(b) shall not apply to or
in respect of a Participant or Former Participant:
(i) following such Participant's or Former Participant's termination
of employment with the Employer on account of his Retirement or Disability;
or
(ii) following such Participant's or Former Participant's 65th
birthday; or
(iii) following the death of such Participant or Former Participant.
SECTION 13.5 PUT OPTIONS.
(a) Except as provided otherwise in section 13.5(b), each Participant
or Former Participant to whom Shares are distributed under the Plan, each
Beneficiary of a deceased Participant or Former Participant, including the
estate of a deceased Participant or Former Participant, to whom Shares are
distributed under the Plan, and each person to whom such a Participant,
Former Participant or Beneficiary gives Shares that have been distributed
under the Plan shall have the right to require the Employer to purchase
from him all or any portion of such Shares. A person shall exercise such
right by delivering to the Employer
37
a written notice, in such form and manner as the Employer may by written
notice to such person prescribe, setting forth the number of Shares to be
purchased by the Employer, the number of the stock certificate evidencing
such person's ownership of such Shares, and the effective date of purchase.
Such notice shall be given, and the effective date of the purchase
specified therein shall be, no later than the last day of the fifteenth
calendar month to begin after the date on which the Shares to be purchased
by the Employer were distributed from the Plan. As soon as practicable
following its receipt of such notice, the Employer shall take such actions
as are necessary to purchase the Shares specified in such notice at a price
per Share equal to the Fair Market Value of a Share determined as of the
effective date of the purchase.
(b) The Employer shall have no obligation to purchase any Share (i)
pursuant to a notice given, or on an effective date of purchase, after the
last day of the fifteenth calendar month to begin after the date on which
such Share was distributed from the Plan; (ii) following the earliest date
on which Shares are publicly traded on an established market; or (iii) if
the Employer is a "bank" within the meaning of section 581 of the Code and
is prohibited by law from redeeming or purchasing its own securities.
SECTION 13.6 RIGHT OF FIRST REFUSAL.
(a) For any period during which Shares are not publicly traded on any
established market, no person who owns Shares that were distributed from
the Plan, other than a person to whom such Shares were sold in compliance
with this section 13.6, shall sell such Shares to any person other than the
Employer without first offering to sell such Shares to the Employer (or
person designated by the Employer) in accordance with this section 13.6.
(b) In the event that a person to whom this section 13.6 applies shall
receive and desire to accept from a person other than the Employer a bona
fide offer to purchase Shares to which this section 13.6 applies, he shall
furnish to the Employer a written notice which shall:
(i) include a copy of such offer to purchase;
(ii) offer to sell to the Employer the Shares subject to such offer to
purchase at a price per Share that is equal to the greater of:
(A) the price per Share specified in such offer to purchase; or
(B) the Fair Market Value of a Share as of the date of purchase;
and otherwise upon the same terms and conditions as those specified in such
offer to purchase; and
38
(iii) include an indication of his intention to accept such offer to
purchase if the Employer does not accept his offer to sell.
(c) The Employer shall have the right to purchase the Shares covered
by the offer to sell contained in a notice given pursuant to section
13.6(b), on the terms and conditions specified in such notice, by written
notice given to the party making the offer to sell not later than the
fourteenth day after the notice described in section 13.6(b) is given. If
the Employer does not give such a notice during the prescribed fourteen day
period, then the person owning such Shares may accept the offer to purchase
described in the notice.
SECTION 13.7 MINIMUM REQUIRED DISTRIBUTIONS.
(a) Required minimum distributions of a Participant's or Former
Participant's Account shall commence no later than:
(i) if the Participant or Former Participant is not a Five Percent
Owner at any time during the Plan Year ending in the calendar year in which
he attains age 70 1/2, the later of (A) the calendar year in which he
attains or attained age 70 1/2 or (B) the calendar year in which he
terminates employment with the Employer; or
(ii) if the Participant or Former Participant is or was a Five Percent
Owner at any time during the Plan Year ending in the calendar year in which
he attains age 70 1/2, the later of (A) the calendar year in which he
attains age 70 1/2 or (B) the calendar year in which he first becomes a
Five Percent Owner.
(b) The required minimum distributions contemplated by section 13.7(a)
shall be made as follows:
(i) The minimum required distribution to be made for the calendar year
for which the first minimum distribution is required shall be no later than
April 1st of the immediately following calendar year and shall be equal to
the quotient obtained by dividing (A) the vested balance credited to the
Participant's or Former Participant's Account as of the last Valuation Date
to occur in the calendar year immediately preceding the calendar year in
which the first minimum distribution is required (adjusted to account for
any additions thereto or subtractions therefrom after such Valuation Date
but on or before December 31st of such calendar year); by (B) the
Participant's or Former Participant's life expectancy (or, if his
Beneficiary is a natural person, the joint life and last survivor
expectancy of him and his Beneficiary); and
(ii) the minimum required distribution to be made for each calendar
year following the calendar year for which the first minimum distribution
is required shall be made no later than December 31st of the calendar year
for which the distribution is
39
required and shall be equal to the quotient obtained by dividing (A) the
vested balance credited to the Participant's or Former Participant's
Account as of the last Valuation Date to occur in the calendar year prior
to the calendar year for which the distribution is required (adjusted to
account for any additions thereto or subtractions therefrom after such
Valuation Date but on or before December 31st of such calendar year and, in
the case of the distribution for the calendar year immediately following
the calendar year for which the first minimum distribution is required,
reduced by any distribution for the prior calendar year that is made in the
current calendar year); by (B) the Participant's or Former Participant's
life expectancy (or, if his Beneficiary is a natural person, the joint life
and last survivor expectancy of him and his Beneficiary).
For purposes of this section 13.7, the life expectancy of a Participant or
Former Participant (or the joint life and last survivor expectancy of a
Participant or Former Participant and his designated Beneficiary) for the
calendar year in which the Participant or Former Participant attains age 70 1/2
shall be determined on the basis of Tables V and VI, as applicable, of section
1.72-9 of the Income Tax Regulations as of the Participant's or Former
Participant's and Beneficiary's birthday in such year. Such life expectancy or
joint life and last survivor expectancy for any subsequent year shall be equal
to the excess of (1) the life expectancy or joint life and last survivor
expectancy for the year in which the Participant or Former Participant attains
age 70 1/2, over (2) the number of whole years that have elapsed since the
Participant or Former Participant attained age 70 1/2.
(c) Payment of the distributions required to be made to a Participant
or Former Participant under this section 13.7 shall be made in accordance
with section 13.4.
SECTION 13.8 DIRECT ROLLOVER OF ELIGIBLE ROLLOVER DISTRIBUTIONS.
(a) A Distributee may elect, at the time and in the manner prescribed
by the Plan Administer, to have any portion of an Eligible Rollover
Distribution paid directly to an Eligible Retirement Plan specified by the
Distributee in a Direct Rollover.
(b) The following rules shall apply with respect to Direct Rollovers
made pursuant to this section 13.8:
(i) A Participant may only elect to make a Direct Rollover of an
Eligible Rollover Distribution if such Eligible Rollover Distribution (when
combined with other Eligible Rollover Distributions made or to be made in
the same calendar year) is reasonably expected to be at least $200;
(ii) If a Participant elects a Direct Rollover of a portion of an
Eligible Rollover Distribution, that portion must be equal to at least
$500; and
(iii) A Participant may not divide his or her Eligible Rollover
Distribution into separate distributions to be transferred to two or more
Eligible Retirement Plans.
40
(c) For purposes of this section 13.8 and any other applicable section
of the Plan, the following definitions shall have the following meanings:
(i) "Direct Rollover" means a payment by the Plan to the Eligible
Retirement Plan specified by the Distributee.
(ii) "Distributee" means an Employee or former Employee. In addition,
the Employee's or former Employee's surviving spouse and the Employee's
spouse or former spouse who is the alternate payee under a Qualified
Domestic Relations Order are considered Distributees with regard to the
interest of the spouse or former spouse.
(iii) "Eligible Retirement Plan" means an individual retirement
account described in section 408(a) of the Code, an individual retirement
annuity described in section 408(b) or the Code, an annuity plan described
in section 403(a) of the Code, or a qualified trust described in section
401(a) of the Code that accepts the Distributee's Eligible Rollover
Distribution. However, in the case of an Eligible Rollover Distribution to
the current or former spouse who is the alternative payee under a Qualified
Domestic Relations Order or to a surviving spouse, an Eligible Retirement
Plan is an individual retirement account or individual retirement annuity.
(iv) "Eligible Rollover Distribution" means 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'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).
SECTION 13.9 VALUATION OF SHARES UPON SETTLEMENT TO A PARTICIPANT.
Notwithstanding any contrary provision in this Article XIII, in the event
that all or a portion of a payment of a distribution to a Participant is to be
made in cash, such Participant shall only be entitled to receive the proceeds of
the Shares allocated to his Account that are sold in connection with such
distribution and which are valued as of the date of such sale.
41
ARTICLE XIV
CHANGE IN CONTROL
SECTION 14.1 DEFINITION OF CHANGE IN CONTROL.
A Change in Control of the Employer shall be deemed to have occurred upon
the happening of any of the following events:
(a) the occurrence of any event upon which any "person" (as such term
is used in sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended ("Exchange Act")), other than (A) a trustee or other fiduciary
holding securities under an employee benefit plan maintained for the
benefit of employees of RFS Bancorp, Inc.; (B) a corporation owned,
directly or indirectly, by the shareholders of RFS Bancorp, Inc. in
substantially the same proportions as their ownership of stock of RFS
Bancorp, Inc.; or (C) any group constituting a person in which employees of
RFS Bancorp, Inc. are substantial members, becomes the "beneficial owner"
(as defined in Rule 13d-3 promulgated under the Exchange Act), directly or
indirectly, of securities issued by RFS Bancorp, Inc. representing 25% or
more of the combined voting power of all of RFS Bancorp, Inc.'s then
outstanding securities; or
(b) the occurrence of any event upon which the individuals who on the
date the Plan is adopted are members of the Board, together with
individuals whose election by the Board or nomination for election by RFS
Bancorp, Inc.'s shareholders was approved by the affirmative vote of at
least two-thirds of the members of the Board then in office who were either
members of the Board on the date this Plan is adopted or whose nomination
or election was previously so approved, cease for any reason to constitute
a majority of the members of the Board, but excluding, for this purpose,
any such individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the election of
directors of RFS Bancorp, Inc. (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act); or
(c) the shareholders of RFS Bancorp, Inc. approve either:
(i) a merger or consolidation of RFS Bancorp, Inc. with any other
corporation, other than a merger or consolidation following which both of
the following conditions are satisfied:
(A) either (1) the members of the Board of RFS Bancorp, Inc.
immediately prior to such merger or consolidation constitute at least
a majority of the members of the governing body of the institution
resulting from such merger or consolidation; or (2) the shareholders
of RFS Bancorp, Inc. own securities of the institution resulting from
such merger or consolidation representing 80% or
42
more of the combined voting power of all such securities then
outstanding in substantially the same proportions as their ownership
of voting securities of RFS Bancorp, Inc. before such merger or
consolidation; and
(B) the entity which results from such merger or consolidation
expressly agrees in writing to assume and perform RFS Bancorp, Inc.'s
obligations under the Plan; or
(ii) a plan of complete liquidation of RFS Bancorp, Inc. or an
agreement for the sale or disposition by RFS Bancorp, Inc. of all or
substantially all of its assets; and
(d) any event that would be described in section 14.1(c)(i), or (ii)
if "Revere Federal Savings" were substituted for "RFS Bancorp, Inc."
therein, and "Board of Directors of Revere Federal Savings" were
substituted for "Board" therein; and
In no event, however, shall the transaction by which Revere Federal Savings
converts from a mutual savings bank to a stock savings bank, or any transaction
by which a company wholly owned by Revere Federal Savings becomes the parent
company of Revere Federal Savings be deemed a Change in Control. In addition, in
no event shall the second step reorganization of RFS Bancorp, Inc. in connection
with the Bank's conversion to stock ownership form be deemed a "Change in
Control."
SECTION 14.2 VESTING ON CHANGE OF CONTROL.
Upon the effective date of a Change in Control, the Account of each person
who would then, upon termination of the Plan, be entitled to a benefit, shall be
fully vested and nonforfeitable.
SECTION 14.3 REPAYMENT OF LOAN.
(a) Upon a Change in Control described in section 14.1(c) (or which
would be described in section 14.1(c) if "Revere Federal Savings" were
substituted for "RFS Bancorp, Inc." thereunder), the Committee shall direct
the Trustee to sell a sufficient number of Shares to repay any outstanding
Share Acquisition Loan in full. The proceeds of such sale shall be used to
repay such Share Acquisition Loan. After repayment of the Share Acquisition
Loan, all remaining Shares which had been unallocated (or the proceeds
thereof, if applicable) shall be allocated among the accounts of all
Participants who were employed by an Employer on the effective date of such
Change in Control. Such allocation of Shares or proceeds shall be credited
as of the date on which the Change in Control occurs to the Accounts of
each Participant who has not had a termination of participation under
section 2.3 as of such date (each, an "Affected Participant"), in
proportion to their Allocation Compensation, for the period, beginning on
the January 1 immediately preceding the date on which the Change in Control
occurs and ending on the date on which
43
the Change in Control occurs. If any amount cannot be allocated to an
Affected Participant in the year of such Change in Control as a result of
the limitations of section 415 of the Code, the amounts will be allocated
in subsequent years to those persons who were Affected Participants and who
continue to be Participants in the Plan until finally distributed to
Affected Participants.
(b) In the event that the application of section 415 of the Code
prevents the allocation of all of the Shares or other assets released from
the Loan Repayment Account as provided in section 14.3(a) as of the
effective date of the Change in Control, each Affected Participant shall be
entitled to receive a supplemental benefit payment directly from the
Employer. The supplemental benefit payment to each Affected Participant
shall be an amount equal to the excess of:
(i) the total amount of Shares or other property that would be
allocated to such Affected Participant's Account under section 14.3(a) if
section 415 of the Code did not apply; over
(ii) the total of Shares or other property actually allocated to such
Affected Participant's Account under section 14.3(a).
Such payment (without offset for any allocations which may occur under this Plan
subsequent to the Change in Control) shall be made as soon as practicable, but
in any event within ten business days, after the effective date of the Change in
Control. This section 14.3(b) shall be treated as a separate, non-qualified
"excess benefit plan" within the meaning of section 3(34) of ERISA and shall be
interpreted, administered and enforced in a manner consistent with this
intention. To the extent that any Affected Participant is entitled to the same
or a similar payment under any other non-qualified plan, program or arrangement
of the Employer, any payment under this section 14.3(b) shall be coordinated
with the payments under such other non-qualified programs, plan or arrangements
in such manner as shall be determined by the Plan Administrator to be necessary
to prevent the duplication of benefits.
SECTION 14.4 PLAN TERMINATION AFTER CHANGE IN CONTROL.
After repayment of the loan and allocation of shares or proceeds as
provided in section 14.3, the Plan shall be terminated and all amounts shall be
distributed as soon as practicable.
SECTION 14.5 AMENDMENT OF ARTICLE XIV.
Article XIV of the Plan may not be amended after a Change in Control of the
Employer unless required by the Internal Revenue Service as a condition to the
continued treatment of the Plan as a tax-qualified plan under section 401(a) of
the Code.
44
ARTICLE XV
ADMINISTRATION
SECTION 15.1 NAMED FIDUCIARIES.
The term "Named Fiduciary" shall mean (but only to the extent of the
responsi bilities of each of them) the Plan Administrator, the Committee, the
Board and the Trustee. This Article XV is intended to allocate to each Named
Fiduciary the responsibility for the prudent execution of the functions assigned
to him or it, and none of such responsibilities or any other responsibility
shall be shared by two or more of such Named Fiduciaries. Whenever one Named
Fiduciary is required by the Plan or Trust Agreement to follow the directions of
another Named Fiduciary, the two Named Fiduciaries shall not be deemed to have
been assigned a shared responsibility, but the responsibility of the Named
Fiduciary giving the directions shall be deemed his sole responsibility, and the
responsibility of the Named Fiduciary receiving those directions shall be to
follow them insofar as such instructions are on their face proper under
applicable law.
SECTION 15.2 PLAN ADMINISTRATOR.
There shall be a Plan Administrator, who shall be Revere Federal Savings,
or such Employee or officer as may be designated by the Board, as hereinafter
provided, and who shall, subject to the responsibilities of the Committee and
the Board, have the responsibility for the day-to-day control, management,
operation and administration of the Plan (except trust duties). The Plan
Administrator shall have the following responsibilities:
(a) To maintain records necessary or appropriate for the
administration of the Plan;
(b) To give and receive such instructions, notices, information,
materials, reports and certifications to the Trustee as may be necessary or
appropriate in the administration of the Plan;
(c) To prescribe forms and make rules and regulations consistent with
the terms of the Plan and with with the interpretations and other actions
of the Committee;
(d) To require such proof of age or evidence of good health of an
Employee, Participant or Former Participant or the spouse of either, or of
a Beneficiary as may be necessary or appropriate in the administration of
the Plan;
(e) To prepare and file, distribute or furnish all reports, plan
descriptions, and other information concerning the Plan, including, without
limitation, filings with the Secretary of Labor and communications with
Participants, Former Participants and other persons, as shall be required
of the Plan Administrator under ERISA;
45
(f) To determine any question arising in connection with the Plan, and
the Plan Administrator's decision or action in respect thereof shall be
final and conclusive and binding upon the Employer, the Trustee,
Participants, Former Participants, Beneficiaries and any other person
having an interest under the Plan; provided, however, that any question
relating to an inconsistency or an omission in the Plan, or an
interpretation of the provisions of the Plan, shall be referred to the
Committee by the Plan Administrator and the decision of the Committee in
respect thereof shall be final;
(g) Subject to the provisions of section 15.5, to review and dispose
of claims under the Plan filed pursuant to section 15.4 and appeals filed
pursuant to section 15.5;
(h) If the Plan Administrator shall determine that by reason of
illness, senility, insanity, or for any other reason, it is undesirable to
make any payment to a Participant, Former Participant, Beneficiary or any
other person entitled thereto, to direct the application of any amount so
payable to the use or benefit of such person in any manner that he may deem
advisable or to direct in his discretion the withholding of any payment
under the Plan due to any person under legal disability until a
representative competent to receive such payment in his behalf shall be
appointed pursuant to law;
(i) To discharge such other responsibilities or follow such directions
as may be assigned or given by the Committee or the Board; and
(j) To perform any duty or take any action which is allocated to the
Plan Administrator under the Plan.
SECTION 15.3 COMMITTEE RESPONSIBILITIES.
There shall be a Committee consisting of not less than three persons, who
may, but need not be officers of the Bank and who shall be appointed by the
Board and serve at the pleasure of the Board. The Committee shall, subject to
the responsibilities of the Board, have the following responsibilities:
(a) To review the performance of the Plan Administrator;
(b) To hear and decide appeals, pursuant to the claims procedure
contained in section 15.5 of the Plan, taken from the decisions of the Plan
Administrator;
(c) To hear and decide questions, including the interpretation of the
Plan, as may be referred to the Committee by the Plan Administrator;
46
(d) To review the performance of the Trustee and such investment
managers as may be appointed in or pursuant to the Trust Agreement in
investing, managing and controlling the assets of the Plan;
(e) To the extent required by ERISA, to establish a funding policy and
method consistent with the objectives of the Plan and the requirements of
ERISA, and to review such policy and method at least annually;
(f) To report and make recommendations to the Board regarding changes
in the Plan, including changes in the operation and management of the Plan
and removal and replacement of the Trustee and such investment managers as
may be appointed in or pursuant to the Trust Agreement;
(g) To designate an Alternate Plan Administrator to serve in the event
that the Plan Administrator is absent or otherwise unable to discharge his
responsibilities;
(h) To remove and replace the Plan Administrator or Alternate, or both
of them, and to fill a vacancy in either office;
(i) To the extent provided under and subject to the provisions of the
Trust Agreement, to appoint "investment managers" as defined in section
3(38) of ERISA to manage and control (including acquiring and disposing of)
all or any of the assets of the Plan;
(j) With the prior approval of the Board, to direct the Trustee to
obtain one or more Share Acquisition Loans;
(k) To develop and provide procedures and forms necessary to enable
Participants to give voting and tendering directions on a confidential
basis;
(l) To discharge such other responsibilities or follow such directions
as may be assigned or given by the Board; and
(m) To perform any duty or take any action which is allocated to the
Committee under the Plan.
The Committee shall have the power and authority necessary or appropriate to
carry out its responsibilities.
SECTION 15.4 CLAIMS PROCEDURE.
Any claim relating to benefits under the Plan shall be filed with the Plan
Administrator on a form prescribed by him. If a claim is denied in whole or in
part, the Plan
47
Administrator shall give the claimant written notice of such denial, which
notice shall specifically set forth:
(a) The reasons for the denial;
(b) The pertinent Plan provisions on which the denial was based;
(c) Any additional material or information necessary for the claimant
to perfect his claim and an explanation of why such material or information
is needed; and
(d) An explanation of the Plan's procedure for review of the denial of
the claim.
In the event that the claim is not granted and notice of denial of a claim is
not furnished by the 30th day after such claim was filed, the claim shall be
deemed to have been denied on that day for the purpose of permitting the
claimant to request review of the claim.
SECTION 15.5 CLAIMS REVIEW PROCEDURE.
Any person whose claim filed pursuant to section 15.4 has been denied in
whole or in part by the Plan Administrator may request review of the claim by
the Committee, upon a form prescribed by the Plan Administrator. The claimant
shall file such form (including a statement of his position) with the Committee
no later than 60 days after the mailing or delivery of the written notice of
denial provided for in section 15.4, or, if such notice is not provided, within
60 days after such claim is deemed denied pursuant to section 15.4. The claimant
shall be permitted to review pertinent documents. A decision shall be rendered
by the Committee and communicated to the claimant not later than 30 days after
receipt of the claimant's written request for review. However, if the Committee
finds it necessary, due to special circumstances (for example, the need to hold
a hearing), to extend this period and so notifies the claimant in writing, the
decision shall be rendered as soon as practicable, but in no event later than
120 days after the claimant's request for review. The Committee's decision shall
be in writing and shall specifically set forth:
(a) The reasons for the decision; and
(b) The pertinent Plan provisions on which the decision is based.
Any such decision of the Committee shall be binding upon the claimant and the
Employer, and the Plan Administrator shall take appropriate action to carry out
such decision.
SECTION 15.6 ALLOCATION OF FIDUCIARY RESPONSIBILITIES
AND EMPLOYMENT OF ADVISORS.
Any Named Fiduciary may:
48
(a) Allocate any of his or its responsibilities (other than trustee
responsibilities) under the Plan to such other person or persons as he or
it may designate, provided that such allocation and designation shall be in
writing and filed with the Plan Administrator;
(b) Employ one or more persons to render advice to him or it with
regard to any of his or its responsibilities under the Plan; and
(c) Consult with counsel, who may be counsel to the Employer.
SECTION 15.7 OTHER ADMINISTRATIVE PROVISIONS.
(a) Any person whose claim has been denied in whole or in part must
exhaust the administrative review procedures provided in section 15.5 prior
to initiating any claim for judicial review.
(b) No bond or other security shall be required of the Plan
Administrator, a member of the Committee or any officer or Employee of the
Employer to whom fiduciary responsibilities are allocated by a Named
Fiduciary, except as may be required by ERISA.
(c) Subject to any limitation on the application of this section
15.7(c) pursuant to ERISA, neither the Plan Administrator, nor any member
of the Committee, nor any officer or Employee of the Employer to whom
fiduciary responsibilities are allocated by a Named Fiduciary, shall be
liable for any act of omission or commission by himself or by another
person, except for his own individual willful and intentional malfeasance.
(d) The Plan Administrator or the Committee may, except with respect
to actions under section 15.5, shorten, extend or waive the time (but not
beyond 60 days) required by the Plan for filing any notice or other form
with the Plan Administrator or the Committee, or taking any other action
under the Plan.
(e) The Plan Administrator or the Committee may direct that the costs
of services provided pursuant to section 15.6, and such other reasonable
expenses as may be incurred in the administration of the Plan, shall be
paid out of the funds of the Plan unless the Employer shall pay them.
(f) Any person, group of persons, committee, corporation or
organization may serve in more than one fiduciary capacity with respect to
the Plan.
(g) Any action taken or omitted by any fiduciary with respect to the
Plan, including any decision, interpretation, claim denial or review on
appeal, shall be conclusive and binding on all interested parties and shall
be subject to judicial modification or reversal only to the extent it is
determined by a court of competent jurisdiction that such action or
omission was arbitrary and capricious and contrary to the terms of the
Plan.
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ARTICLE XVI
AMENDMENT, TERMINATION AND TAX QUALIFICATION
SECTION 16.1 AMENDMENT AND TERMINATION BY RFS BANCORP, INC.
The Employer expects to continue the Plan indefinitely, but specifically
reserves the right, in its sole discretion, at any time, by appropriate action
of the Board, to amend, in whole or in part, any or all of the provisions of the
Plan and to terminate the Plan at any time. Subject to the provisions of section
16.2, no such amendment or termination shall permit any part of the Trust Fund
to be used for or diverted to purposes other than for the exclusive benefit of
Participants, Former Participants, Beneficiaries or other persons entitled to
benefits, and no such amendment or termination shall reduce the accrued benefit
of any Participant, Former Participant, Beneficiary or other person who may be
entitled to benefits, without his consent. In the event of a termination or
partial termination of the Plan, or in the event of a complete discontinuance of
the Employer's contributions to the Plan, the Accounts of each affected person
shall forthwith become nonforfeitable and shall be payable in accordance with
the provisions of Article XIII.
SECTION 16.2 AMENDMENT OR TERMINATION OTHER THAN BY RFS BANCORP, INC.
In the event that a corporation or trade or business other than RFS
Bancorp, Inc. shall adopt this Plan, such corporation or trade or business
shall, by adopting the Plan, empower RFS Bancorp, Inc. to amend or terminate the
Plan, insofar as it shall cover employees of such corporation or trade or
business, upon the terms and conditions set forth in section 16.1; provided,
however, that any such corporation or trade or business may, by action of its
board of directors or other governing body, amend or terminate the Plan, insofar
as it shall cover employees of such corporation or trade or business, at
different times and in a different manner. In the event of any such amendment or
termination by action of the board of directors or other governing body of such
a corporation or trade or business, a separate plan shall be deemed to have been
established for the employees of such corporation or trade or business, and the
assets of such plan shall be segregated from the assets of this Plan at the
earliest practicable date and shall be dealt with in accordance with the
documents governing such separate plan.
SECTION 16.3 CONFORMITY TO INTERNAL REVENUE CODE.
The Employer has established the Plan with the intent that the Plan and
Trust will at all times be qualified under section 401(a) and exempt under
section 501(a) of the Code and with the intent that contributions under the Plan
will be allowed as deductions in computing the net income of the Employer for
federal income tax purposes, and the provisions of the Plan and Trust Agreement
shall be construed to effectuate such intentions. Accordingly, notwithstanding
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anything to the contrary hereinbefore provided, the Plan and the Trust Agreement
may be amended at any time without prior notice to Participants, Former
Participants, Beneficiaries or any other persons entitled to benefits, if such
amendment is deemed by the Board to be necessary or appropriate to effectuate
such intent.
SECTION 16.4 CONTINGENT NATURE OF CONTRIBUTIONS.
(a) All ESOP Contributions to the Plan are conditioned upon the
issuance by the Internal Revenue Service of a determination that the Plan
and Trust are qualified under section 401(a) of the Code and exempt under
section 501(a) of the Code. If the Employer applies to the Internal Revenue
Service for such a determination within 90 days after the date on which it
files its federal income tax return for its taxable year that includes the
last day of the Plan Year in which the Plan is adopted, and if the Internal
Revenue Service issues a determination that the Plan and Trust are not so
qualified or exempt, all ESOP Contributions made by the Employer prior to
the date of receipt of such a determination may, at the election of the
Employer, be returned to the Employer within one year after the date of
such determination.
(b) All ESOP Contributions and Loan Repayment Contributions to the
Plan are made upon the condition that such ESOP Contributions and Loan
Repayment Contributions will be allowed as a deduction in computing the net
income of the Employer for federal income tax purposes. To the extent that
any such deduction is disallowed, the amount disallowed may, at the
election of the Employer, be returned to the Employer within one year after
the deduction is disallowed.
(c) Any contribution to the Plan made by the Employer as a result of a
mistake of fact may, at the election of the Employer, be returned to the
Employer within one year after such contribution is made.
ARTICLE XVII
SPECIAL RULES FOR TOP HEAVY PLAN YEARS
SECTION 17.1 IN GENERAL.
As of the Determination Date for each Plan Year, the Plan Administrator
shall determine whether the Plan is a Top Heavy Plan in accordance with the
provisions of this Article XVII. If, as of such Determination Date, the Plan is
a Top Heavy Plan, then the Plan Year immediately following such Determination
Date shall be a Top Heavy Plan Year and the special provisions of this Article
XVII shall be in effect; provided, however, that if, as of the Determination
Date for the Plan Year in which the Effective Date occurs, the Plan is a Top
Heavy
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Plan, such Plan Year shall be a Top Heavy Plan Year, and the provisions of this
Article XVII shall be given retroactive effect for such Plan Year.
SECTION 17.2 DEFINITION OF TOP HEAVY PLAN.
(a) Subject to section 17.2(c), the Plan is a Top Heavy Plan if, as of
a Deter mination Date: (i) it is not a member of a Required Aggregation
Group, and (ii)(A) the sum of the Cumulative Accrued Benefits of all Key
Employees exceeds 60% of (B) the sum of the Cumulative Accrued Benefits of
all Employees (excluding former Key Employees), former Employees (excluding
former Key Employees and other former Employees who have not performed any
services for the Employer or any Affiliated Employer during the immediately
preceding five Plan Years), and their Beneficiaries.
(b) Subject to section 17.2(c), the Plan is a Top Heavy Plan if, as of
a Deter mination Date: (i) the Plan is a member of a Required Aggregation
Group, and (ii)(A) the sum of the Cumulative Accrued Benefits of all Key
Employees under all plans that are members of the Required Aggregation
Group exceeds 60% of (B) the sum of the Cumulative Accrued Benefits of all
Employees (excluding former Key Employees), former Employees (excluding
former Key Employees and other former Employees who have not performed any
services for the Employer or any Affiliated Employer during the im
mediately preceding five Plan Years), and their Beneficiaries under all
plans that are members of the Required Aggregation Group.
(c) Notwithstanding sections 17.2(a) and 17.2(b), the Plan is not a
Top Heavy Plan if, as of a Determination Date: (i) the Plan is a member of
a Permissible Aggregation Group, and (ii)(A) the sum of the Cumulative
Accrued Benefits of all Key Employees under all plans that are members of
the Permissible Aggregation Group does not exceed 60% of (B) the sum of the
Cumulative Accrued Benefits of all Employees (excluding former Key
Employees), former Employees (excluding former Key Employees and other
former Employees who have not performed any services for the Employer or
any Affiliated Employer during the immediately preceding five Plan Years),
and their Beneficiaries under all plans that are members of the Permissible
Aggregation Group.
SECTION 17.3 DETERMINATION DATE.
The Determination Date for the Plan Year in which the Effective Date occurs
shall be the last day of such Plan Year, and the Determination Date for each
Plan Year beginning after the Plan Year in which the Effective Date occurs shall
be the last day of the preceding Plan Year. The Determination Date for any other
qualified plan maintained by the Employer for a plan year shall be the last day
of the preceding plan year of each such plan, except that in the case of the
first plan year of such plan, it shall be the last day of such first plan year.
52
SECTION 17.4 CUMULATIVE ACCRUED BENEFITS.
(a) An individual's Cumulative Accrued Benefits under this Plan as of
a Determination Date are equal to the sum of:
(i) the balance credited to such individual's Account under this Plan
as of the most recent Valuation Date preceding the Determination Date;
(ii) the amount of any ESOP Contributions or Loan Repayment
Contributions made after such Valuation Date but on or before the
Determination Date; and
(iii) the amount of any distributions of such individual's Cumulative
Accrued Benefits under the Plan during the five year period ending on the
Determination Date.
For purposes of this section 17.4(a), the computation of an individual's
Cumulative Accrued Benefits, and the extent to which distributions, rollovers
and transfers are taken into account, will be made in accordance with section
416 of the Code and the regulations thereunder.
(b) For purposes of this Plan, the term "Cumulative Accrued Benefits"
with respect to any other qualified plan, shall mean the cumulative accrued
benefits determined for purposes of section 416 of the Code under the
provisions of such plans.
(c) For purposes of determining the top heavy status of a Required
Aggregation Group or a Permissible Aggregation Group, the Cumulative
Accrued Benefits under this Plan and the Cumulative Accrued Benefits under
any other plan shall be determined as of the Determination Date that falls
within the same calendar year as the Determination Dates for all other
members of such Required Aggregation Group or Permissible Aggregation
Group.
SECTION 17.5 KEY EMPLOYEES.
(a) For purposes of the Plan, the term Key Employee means any employee
or former employee of the Employer or any Affiliated Employer who is at any
time during the current Plan Year or was at any time during the immediately
preceding four Plan Years:
(i) a Five Percent Owner;
(ii) a person who would be described in section 1.24 if the number
"1%" were substituted for the number "5%" in section 1.24 and who has an
annual Total Compen sation from the Employer and any Affiliated Employer of
more than $150,000;
53
(iii) an Officer of the Employer or any Affiliated Employer who has an
annual Total Compensation greater than 50% of the amount in effect under
section 415(b)(1)(A) of the Code for any such Plan Year; or
(iv) one of the ten persons owning the largest interests in the
Employer and having an annual Total Compensation from the Employer or any
Affiliated Employer in excess of the dollar limitation in effect under
section 415(c)(1)(A) of the Code for such Plan Year.
(b) For purposes of section 17.5(a):
(i) for purposes of section 17.5(a)(iii), in the event the Employer or
any Affiliated Employer has more officers than are considered Officers, the
term Key Emplo yee shall mean those officers, up to the maximum number,
with the highest annual compensation in any one of the five consecutive
Plan Years ending on the Determination Date; and
(ii) for purposes of section 17.5(a)(iv), if two or more persons have
equal ownership interests in the Employer, each such person shall be
considered as having a larger ownership interest than any such person with
a lower annual compensation from the Employer or any Affiliated Employer.
(c) For purposes of section 17.5(a): (i) a person's compensation from
Affiliated Employers shall be aggregated, but his ownership interests in
Affiliated Employers shall not be aggregated; (ii) an employee shall only
be deemed to be an officer if he has the power and responsibility of a
person who is an officer within the meaning of section 416 of the Code; and
(iii) the term Key Employee shall also include the Beneficiary of a
deceased Key Employee.
SECTION 17.6 REQUIRED AGGREGATION GROUP.
For purposes of this Article XVII, a Required Aggregation Group shall
consist of (a) this Plan; (b) any other qualified plans maintained by the
Employer and any Affiliated Employers that cover Key Employees; and (c) any
other qualified plans that are required to be aggregated for purposes of
satisfying the requirements of sections 401(a)(4) or 410(b) of the Code.
SECTION 17.7 PERMISSIBLE AGGREGATION GROUP.
For purposes of this Article XVII, a Permissible Aggregation Group shall
consist of (a) the Required Aggregation Group and (b) any other qualified plans
maintained by the Employer and any Affiliated Employers; provided, however, that
the Permissible Aggregation Group must satisfy the requirements of sections
401(a)(4) and 410(b) of the Code.
54
SECTION 17.8 SPECIAL REQUIREMENTS DURING TOP HEAVY PLAN YEARS.
(a) Notwithstanding any other provision of the Plan to the contrary,
for each Top Heavy Plan Year, in the case of a Participant (other than a
Key Employee) on the last day of such Top Heavy Plan Year who is not also a
participant in another qualified plan which satisfies the minimum
contribution and benefit requirements of section 416 of the Code with
respect to such Participant, the sum of the ESOP Contributions and Loan
Repayment Contributions made with respect to such Participant, when
expressed as a percentage of his Total Compensation for such Top Heavy Plan
Year, shall not be less than 3% of such Participant's Total Compensation
for such Top Heavy Plan Year or, if less, the highest combined rate,
expressed as a percentage of Total Compensation at which ESOP Contributions
and Loan Repayment Contributions were made on behalf of a Key Employee for
such Top Heavy Plan Year. The Employer shall make an additional
contribution to the Account of each Participant to the extent necessary to
satisfy the foregoing requirement.
(b) For any Top Heavy Plan Year, the number "1.0" shall be substituted
for the number "1.25" in sections 8.2(c)(iii) and 8.2(c)(iv), except that:
(i) this section 17.8(b) shall not apply to any individual for a Top
Heavy Plan Year that is not a Super Top Heavy Plan Year if the requirements
of section 17.8(a) would be satisfied for such Super Top Heavy Plan Year if
the number "4%" were substituted for the number 3% in section 17.8(a); and
(ii) this section 17.8(b) shall not apply to an individual for a Top
Heavy Plan Year if, during such Top Heavy Plan Year, there are no ESOP
Contributions or Loan Repayment Contributions allocated to such individual
under this Plan, there are no contributions under any other qualified
defined contribution plan maintained by the Employer, and there are no
accruals for such individual under any qualified defined benefit plan
maintained by the Employer.
For purposes of this section 17.8(b), the term Super Top Heavy Plan Year means a
Top Heavy Plan Year in which the Plan would meet the definitional requirements
of sections 17.2(a) or 17.2(b) if the term "90%" were substituted for the term
"60%" in sections 17.2(a), 17.2(b) and 17.2(c).
55
ARTICLE XVIII
MISCELLANEOUS PROVISIONS
SECTION 18.1 GOVERNING LAW.
The Plan shall be construed, administered and enforced according to the
laws of the State of New York without giving effect to the conflict of laws
principles thereof, except to the extent that such laws are preempted by federal
law.
SECTION 18.2 NO RIGHT TO CONTINUED EMPLOYMENT.
Neither the establishment of the Plan, nor any provisions of the Plan or of
the Trust Agreement establishing the Trust Fund nor any action of the Committee,
the Plan Administrator or the Trustee, shall be held or construed to confer upon
any Employee any right to a continuation of employment by the Employer. The
Employer reserves the right to dismiss any Employee or otherwise deal with any
Employee to the same extent as though the Plan had not been adopted.
SECTION 18.3 CONSTRUCTION OF LANGUAGE.
Wherever appropriate in the Plan, words used in the singular may be read in
the plural, words used in the plural may be read in the singular, and words
importing the masculine gender may be read as referring equally to the feminine
and the neuter. Any reference to an Article or section number shall refer to an
Article or section of the Plan, unless otherwise indicated.
SECTION 18.4 HEADINGS.
The headings of Articles and sections are included solely for convenience
of reference. If there is any conflict between such headings and the text of the
Plan, the text shall control.
SECTION 18.5 MERGER WITH OTHER PLANS.
The Plan shall not be merged or consolidated with, nor transfer its assets
or liabilities to, any other plan unless each Participant, Former Participant,
Beneficiary and other person entitled to benefits, would (if that plan then
terminated) receive a benefit immediately after the merger, consolidation or
transfer which is equal to or greater than the benefit he would have been
entitled to receive if the Plan had terminated immediately before the merger,
consolidation or transfer.
56
SECTION 18.6 NON-ALIENATION OF BENEFITS.
(a) Except as provided in section 18.6(b), the right to receive a
benefit under the Plan shall not be subject in any manner to anticipation,
alienation or assignment, nor shall such right be liable for or subject to
debts, contracts, liabilities or torts. Should any Participant, Former
Participant or other person attempt to anticipate, alienate or assign his
interest in or right to a benefit, or should any person claiming against
him seek to subject such interest or right to legal or equitable process,
all the interest or right of such Participant or Former Participant or
other person entitled to benefits in the Plan shall cease, and in that
event such interest or right shall be held or applied, at the direction of
the Plan Administrator, for or to the benefit of such Participant or Former
Participant, or other person or his spouse, children or other dependents in
such manner and in such proportions as the Plan Administrator may deem
proper. This prohibition on assignment shall also not apply to prevent a
benefit offset by any amount such Participant, Former Participant or
Beneficiary is required or ordered to pay to the Plan if:
(i) the order or requirement to pay arises: (A) under a judgment
issued on or after August 5, 1997 of conviction for a crime involving the
Plan; (B) under a civil judgment (including a consent order or decree)
entered by a court on or after August 5, 1997 in an action brought in
connection with a violation (or alleged violation) of part 4 of subtitle B
of title I of ERISA; or (C) pursuant to a settlement agreement entered into
on or after August 5, 1997 between the Participant, Former Participant or
Beneficiary and one or both of the United States Department of Labor and
the Pension Benefit Guaranty Corporation in connection with a violation (or
alleged violation) of part 4 of subtitle B of title I of ERISA by a
fiduciary or any other person; and
(ii) the judgment, order, decree or settlement agreement expressly
provides for the offset of all or part of the amount ordered or required to
be paid to the Plan against the Participant's, Former Participant's or
Beneficiary's benefits under the Plan.
(b) This section 18.6 shall not prohibit the Plan Administrator from
recognizing a Domestic Relations Order that is determined to be a Qualified
Domestic Relations Order in accordance with section 18.7.
SECTION 18.7 PROCEDURES INVOLVING DOMESTIC RELATIONS ORDERS.
Upon receiving a Domestic Relations Order, the Plan Administrator shall
segregate in a separate account or in an escrow account or separately account
for the amounts payable to any person pursuant to such Domestic Relations Order,
pending a determination whether such Domestic Relations Order constitutes a
Qualified Domestic Relations Order, and shall give notice of the receipt of the
Domestic Relations Order to the Participant or Former Participant and each other
person affected thereby. If, within 18 months after receipt of such Domestic
Relations Order, the Plan Administrator, a court of competent jurisdiction or
another appropriate authority
57
determines that such Domestic Relations Order constitutes a Qualified Domestic
Relations Order, the Plan Administrator shall direct the Trustee to pay the
segregated amounts (plus any interest thereon) to the person or persons entitled
thereto under the Qualified Domestic Relations Order. If it is determined that
the Domestic Relations Order is not a Qualified Domestic Relations Order or if
no determination is made within the prescribed 18-month period, the segregated
amounts shall be distributed as though the Domestic Relations Order had not been
received, and any later determination that such Domestic Relations Order
constitutes a Qualified Domestic Relations Order shall be applied only with
respect to benefits that remain undistributed on the date of such determination.
The Plan Administrator shall be authorized to establish such reasonable
administrative procedures as he deems necessary or appropriate to administer
this section 18.7. This section 18.7 shall be construed and administered so as
to comply with the requirements of section 401(a)(13) of the Code.
SECTION 18.8 LEASED EMPLOYEES.
(a) Subject to section 18.8(b), a leased employee shall be treated as
an Employee for purposes of the Plan. For purposes of this section 18.8,
the term "leased employee" means any person (i) who would not, but for the
application of this section 18.8, be an Employee and (ii) who pursuant to
an agreement between the Employer and any other person ("leasing
organization") has performed for the Employer (or for the Employer and
related persons determined in accordance with section 414(n)(6) of the
Code), on a substantially full-time basis for a period of at least one
year, services performed under the primary direction or control of the
Employer.
(b) For purposes of the Plan:
(i) contributions or benefits provided to the leased employee by the
leasing organization which are attributable to services performed for the
Employer shall be treated as provided by the Employer; and
(ii) section 18.8(a) shall not apply to a leased employee if:
(A) the number of leased employees performing services for the
Employer does not exceed 20% of the number of the Employer's Employees
who are not Highly Compensated Employees; and
(B) such leased employee is covered by a money purchase pension
plan providing (I) a nonintegrated contribution rate of at least 10%
of the leased employ ee's compensation; (II) immediate participation;
(III) full and immediate vesting; and (IV) coverage for all of the
employees of the leasing organization (other than employees who
perform substantially all of their services for the leasing
organization).
58
SECTION 18.9 STATUS AS AN EMPLOYEE STOCK OWNERSHIP PLAN.
It is intended that the Plan constitute an "employee stock ownership plan,"
as defined in section 4975(e)(7) of the Code and section 407(d)(6) of ERISA. The
Plan shall be construed and administered to give effect to such intent.
59