Exhibit 10.27
COMMUNITY BANK SYSTEM, INC.
PENSION PLAN
Amended and Restated as of January 1, 2004
Article I
HISTORY AND PURPOSE OF PLAN
1.1 History. Community Bank System, Inc. established the Community Bank
System, Inc. Pension Plan ("Plan"), effective as of July 1, 1976, for the
benefit of covered employees and their beneficiaries. The Plan has been amended
and restated a number of times since 1976, the most recent amendment and
restatement being effective as of January 1, 2001. This document amends and
restates the Plan in its entirety, effective as of January 1, 2004, except to
the extent a different effective date is specified for certain provisions. This
amended and restated Plan document incorporates a "cash balance" design. The
Plan shall at all times be considered a defined benefit pension plan for
purposes of Code ss.ss.401(a), 411, 412 and 417.
1.2 Purpose. The purpose of the Plan is to provide retirement and certain
survivor benefits for the Participants and their Beneficiaries. To provide such
benefits, the Employer shall make contributions to the Plan as provided herein.
1.3 Application of Restated Plan. Unless expressly stated otherwise
herein, the amount of Accrued Benefit and the rate of accrual of benefits for
Participants (or their Beneficiaries) who have terminated employment, or whose
benefits are in pay status, as of the Restatement Effective Date shall be
determined under the terms of the predecessor(s) to this Plan in effect during
his employment or at his termination date and not under the Plan as restated by
this document.
Article II
DEFINITIONS
As used in this Plan, the following terms shall have the following
meanings, unless a different meaning is stated and clearly indicated by the
context:
2.1 "Account" means the account established and maintained for a
Participant who is entitled to benefits pursuant to Paragraph 5.3. The
Administrator may establish one or more sub-Accounts as may be necessary to
administer the Plan. A Participant's Account shall include all such
sub-Accounts.
2.2 "Accrual Computation Period" shall mean a Plan Year.
2.3 "Accrued Benefit" means the amount of retirement benefit earned by a
Participant hereunder, and payable during the life of the Participant, expressed
in the form of an annual benefit commencing at the Participant's Normal
Retirement Date. A Participant's Accrued Benefit under the Traditional Formula
(if applicable) as of any Valuation Date shall be determined in accordance with
Paragraph 5.2, based on his credited Years of Creditable Service and his Average
Annual Compensation, both determined as of such Valuation Date. A Participant's
Accrued Benefit under the Cash Balance Formula (if applicable) as of any
Valuation Date shall be the Actuarial Equivalent of the Participant's Account
balance determined in accordance with Paragraph 5.3; provided that, for
Valuation Dates that occur prior to the Participant's Normal Retirement Date,
such Actuarial Equivalent shall be determined by projecting the value of the
Participant's Account balance to the Participant's Normal Retirement Age, using
the Interest Rate described in subparagraph 2.4(c)(1), and then converting such
projected Account balance to a single life annuity payable to the Participant
commencing at the Participant's Normal Retirement Date; provided further that
such Actuarial Equivalent (when expressed as a single lump sum) shall not be
less than the Participant's Account balance as of the applicable Valuation Date.
2.4 "Actuarial Equivalent".
(a) An Actuarial Equivalent benefit shall mean a form of benefit
differing in time, period or manner of payment from a specific benefit under the
Plan, but having the same present value as such specific benefit.
(b) Except as otherwise provided in subparagraphs (c) and (d) below,
an Actuarial Equivalent benefit shall be determined by using the following
assumptions:
Interest Rate - 6% pre-retirement
6% post-retirement
Mortality - pre-retirement: 1984 Unisex Table
post-retirement: 1984 Unisex Table
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(c) Effective for Plan Years beginning on or after January 1, 1995,
the following assumptions shall be used to compute a lump-sum Actuarial
Equivalent benefit:
(1) Interest Rate - an interest rate that is the annual
interest rate announced by the Commissioner of Internal Revenue on 30-year U.S.
Treasury securities (A) for the first full calendar month immediately preceding
the Plan Year of distribution, with respect to distributions prior to January 1,
2005, and (B) the second full calendar month immediately preceding the Plan Year
of distribution, with respect to distributions after December 31, 2004 (provided
that distributions during 2005 will be based on the interest rate in (A) or (B)
that produces the greatest benefit), which rate shall be constant during that
entire Plan Year; and
(2) Mortality - mortality assumptions under the prevailing
commissioners' standard table as described in Code ss.807(d)(5)(A) used to
determine reserves for group annuity contracts issued on the date as of which
the determination of present value is being made.
Notwithstanding the foregoing provisions of this subparagraph (c), a
Participant's lump sum Actuarial Equivalent benefit shall in no event be less
than the present value of the Participant's Vested Accrued Benefit earned as of
December 31, 1994, computed by taking into account the Participant's age at the
Annuity Starting Date and by using the actuarial assumptions set out in
subparagraph (b) above.
(d) In the event this paragraph is amended so as to affect benefits
protected under Code ss.411(d)(6), the Actuarial Equivalent benefit on or after
the date of change shall be the greater of:
(1) the Actuarial Equivalent benefit as of the date of change
computed under the Plan provisions in effect immediately prior to such change;
or
(2) the Actuarial Equivalent benefit computed under the Plan
provisions in effect immediately after such change.
2.5 "Administrator" or "Plan Administrator" shall mean the person or
entity that administers the Plan, as further described in Article XIII.
2.6 "Affiliated Company" shall mean any corporation which is a member of a
controlled group of corporations (as defined in Code ss. 1563(a), determined
without regard to ss.ss.1563(a)(4) and (e)(3)(C), except that, with respect to
the limitations on Annual Additions in Article VIII, "50%" shall be substituted
for "80%" wherever such percentage appears in Code ss.1563(a)(1)) which includes
the Employer; any trade or business (whether or not incorporated) which is under
common control (as defined in Code ss.414(c)) with the Employer; any affiliated
service group (as defined in Code ss.414(m)) which includes the Employer; and
any other entity required to be aggregated with the Employer pursuant to
regulations under Code ss.414(o).
2.7 "Age" shall mean age as of the nearest birthday.
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2.8 "Anniversary Date" means the first day of the Plan Year.
2.9 "Annuity Starting Date" shall mean (i) the first day of the first
period for which an amount is paid as an annuity (whether by reason of
retirement or disability) or (ii) in the case of a benefit not payable in the
form of an annuity, the first day on which all events have occurred which
entitle the recipient to such benefit.
2.10 "Average Annual Compensation" shall mean the average of a
Participant's annual Compensation for the 5 consecutive Years of Participation
which produce the highest average. If he has less than 5 Years of Participation
as of his termination date, the average shall be determined by averaging the
annual Compensation received during the Participant's entire Service with the
Employer.
2.11 "Beneficiary" shall mean the person(s) or entity(s) designated by a
Participant, or otherwise designated as such under the provisions of this Plan,
to receive benefits hereunder following the Participant's death.
2.12 "Break in Service" shall mean, for purposes of eligibility, the
failure of an Employee to complete more than 500 Hours of Service during any
Eligibility Computation Period, and for purposes of benefit accrual and vesting,
the failure of a Participant to complete more than 500 Hours of Service during
any Plan Year. The term "One-Year Break in Service" shall mean any such Break in
Service. An Employee shall not incur a Break in Service for the Plan Year in
which he becomes a Participant, dies or retires.
2.13 "Cash Balance Formula" means the cash balance formula, including
minimum and supplemental amounts, used to determine a Participant's Accrued
Benefit pursuant to Paragraph 5.3.
2.14 "Code" means the Internal Revenue Code of 1986, as amended from time
to time, any regulations thereunder, and any rulings issued by the Internal
Revenue Service. Reference to any Code Section shall include any successor
provision thereto.
2.15 "Compensation".
(a) "Compensation" shall mean the amount reportable by the Employer
on IRS Form W-2 for wages as defined in Code ss.3401(a) and other amounts
pursuant to Code ss.ss.6041(d) and 6051(a)(3), for the calendar year ending in
the Plan Year. Compensation shall include all of the Participant's elective
deferrals as defined in Code ss.402(g), amounts withheld from the Participant's
pay which are not includable in the Participant's gross income under Code
ss.ss.125, 402(e)(3), 402(h)(1)(B), 403(b), or 132(f)(4), amounts deferred under
a Code ss.457 plan, and amounts treated as employer contributions under Code
ss.414(h)(2). Compensation, however, shall not include income attributable to
the grant or exercise of stock options, the vesting of restricted stock, the
sale of stock, or any other income attributable to the acquisition or
disposition of stock or rights related to stock.
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(b) For purposes of Article VIII, Compensation shall be measured in
relation to the Limitation Year and adjusted in accordance with Treasury Regs.
ss.ss.1.415-2(d)(2) and (3), if required thereunder. In the case of an employee
of two or more Affiliated Companies, his Compensation from all such Affiliated
Companies while so affiliated shall be aggregated.
(c) In addition to other applicable limitations set forth in the
Plan, and notwithstanding any other provision of the Plan to the contrary, the
annual Compensation of each Employee shall not exceed $150,000, as adjusted by
the Commissioner for increases in the cost of living in accordance with Code
ss.401(a)(17)(B). The cost-of-living adjustment in effect for a calendar year
applies to any period not exceeding 12 months over which compensation is
determined ("Determination Period") beginning in such calendar year. If a
Determination Period consists of fewer than 12 months, the compensation limit
will be multiplied by a fraction, the numerator of which is the number of months
in the Determination Period, and the denominator of which is 12.
If Compensation for any prior Determination Period is taken into
account in determining an Employee's benefits accruing in the current Plan Year,
the Compensation for that prior Determination Period is subject to the OBRA `93
Annual Compensation Limit in effect for that prior Determination Period. For
this purpose, for Determination Periods beginning before the first day of the
first Plan Year beginning on or after January 1, 1994, the OBRA `93 Annual
Compensation Limit is $150,000.
Effective for Plan Years beginning after December 31, 1996, and
notwithstanding anything in this Plan to the contrary, an Employee who is a
Family Member of a Highly Compensated Employee shall be considered a separate
Employee and shall not be aggregated with the Highly Compensated Employee for
purposes of determining the Compensation of the Employee or the Compensation of
the Highly Compensated Employee for any purposes under this Plan.
(d) Increase in Compensation Limit. The annual compensation of each
participant taken into account in determining benefit accruals in any Plan Year
beginning after December 31, 2001 shall not exceed $200,000, as adjusted for
cost-of-living increases in accordance with Code ss.401(a)(17)(B). Annual
compensation means compensation during the Plan Year or such other consecutive
12-month period over which compensation is otherwise determined under the Plan
(the Determination Period). For purposes of determining benefit accruals in a
Plan Year beginning after December 31, 2001, compensation for any prior
Determination Period shall not exceed the limit in effect pursuant to Code
ss.401(a)(17) for such prior Determination Period. The cost-of-living adjustment
in effect for a calendar year applies to annual compensation for the
Determination Period that begins with or within such calendar year.
2.16 "Cost of Living Factor" shall mean the cost of living adjustment
prescribed by the Secretary of the Treasury under Code ss.415(d).
2.17 "Defined Benefit Plan" shall mean a Retirement Plan other than a
Defined Contribution Plan.
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2.18 "Defined Benefit Plan Fraction" shall mean a fraction, the numerator
of which is the sum of the Participant's projected annual benefit (calculated in
accordance with Treasury regulations) under all the Defined Benefit Plans
(whether or not terminated) maintained by the Employer, and the denominator of
which is the lesser of (i) 125% of the dollar limitation in effect for the
Limitation Year under Code ss.415(b)(1) and (d) or (ii) 140% of the
Participant's average compensation for the 3 consecutive Years of Service that
produces the highest average, including any adjustments under Code ss.415(b).
Notwithstanding the preceding, if the Participant participated as of
the first day of the first Limitation Year beginning after December 31, 1986, in
one or more Defined Benefit Plans maintained by the Employer which were in
existence on May 6, 1986, the denominator of this fraction will not be less than
125% of the sum of the annual benefits under such plans which the Participant
had accrued as of the close of the Limitation Year beginning before January 1,
1987, disregarding any changes in the terms and conditions of the Plan after May
5, 1986. The preceding sentence applies only if the Defined Benefit Plans
individually and in the aggregate satisfied Code ss.415 limits at the end of the
1986 Limitation Year.
For purposes of the preceding calculation, a Participant's
"projected annual benefit" shall mean the annual retirement benefit (adjusted to
an actuarially equivalent straight life annuity if such benefit is expressed in
a form other than a straight life annuity or qualified joint and survivor
annuity) to which the Participant would be entitled under the terms of the plan
assuming:
(a) the Participant will continue employment until normal retirement
age under the plan (or current age, if later), and
(b) the Participant's compensation for the current Limitation Year
and all other relevant factors used to determine benefits under the Plan will
remain constant for all future Limitation Years.
For limitation years beginning on or after December 31, 1986 the
denominator of the defined benefit fraction shall be determined using the dollar
limitation under Code ss.415 as amended by the Tax Reform Act of 1986, even if
the Plan terminated in a prior limitation year.
2.19 "Defined Contribution Plan" shall mean a Retirement Plan which
provides for an individual account for each participant and for benefits based
solely on the amount contributed to the participant's account, and any income,
expenses, gains and losses, and any forfeitures of accounts of other
participants which may be allocated to such participant's account.
2.20 "Defined Contribution Plan Fraction" shall mean a fraction, the
numerator of which is the Annual Additions to the Participant's Account under
the Employer's Defined Contribution Plans currently or formerly maintained by
the Employer for the current and all prior Limitation Years, including Annual
Additions attributable to the Participant's nondeductible contributions to the
Employer's Defined Benefit Plans and Annual Additions attributable to all
welfare benefit funds (defined in Code ss.419(e)) and individual medical
accounts (defined in Code ss.415(1)(2)), and the denominator of which is the sum
of the lesser of the following
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amounts determined for such year and each prior year of the Participant's
Service with the Employer: (i) 125% times the dollar limitation in effect under
Code ss.415(c)(1)(A) for the pertinent year, or (ii) 140% times the amount that
could be contributed under the percentage limitation of Code ss.415(c)(1)(B) for
the Participant.
If the Employee was a participant in one or more Defined
Contribution Plans maintained by the Employer which were in existence on May 6,
1986, the numerator of this fraction shall be adjusted in accordance with Code
ss.4l5 if the sum of this fraction and the Defined Benefit Plan Fraction would
otherwise exceed 1.0 under the terms of this Plan. Under the adjustment, an
amount equal to the product of (1) the excess of the sum of the fractions over
1.0 times (2) the denominator of this fraction, will be permanently subtracted
from the numerator of this fraction. The adjustment is calculated using the
fractions as they would be computed as of the end of the last Limitation Year
beginning before January 1, 1987, and disregarding any changes in the terms and
conditions of the Plan made after May 5,1986, but using the Code ss.415
limitation applicable to the first Limitation Year beginning on or after January
1, 1987.
2.21 "Determination Date" shall mean with respect to the first Plan Year
of the Plan, the last day of that Plan Year, and with respect to any subsequent
Plan Year, the last day of the preceding Plan Year.
2.22 "Disabled" Participant shall mean one whose physical and/or mental
incapacity, disability or illness qualifies him for benefits under the
Employer's long-term disability insurance program or, in the absence of such
program, which qualifies the Participant for disability benefits under Title II
of the Social Security Act. The Administrator may require a Participant to
submit to a physician examination to make such determination.
2.23 "Early Retirement Age" of a Participant shall mean (i) the date the
Participant attains age 55 and completes 10 Years of Vesting Service, as defined
in Paragraph 7.2 below, or (ii) the date he attains the earliest age when Social
Security benefits may be paid and completes 5 Years of Vesting Service.
2.24 "Early Retirement Date" shall mean the first day of the month
following the date the Participant attains his Early Retirement Age.
2.25 "Effective Date of the Restatement" or "Restatement Effective Date"
shall mean January 1, 2004. The "Effective Date" of the Plan shall mean July 1,
1976.
2.26 "Eligibility Computation Period" for each Employee shall mean a
12-consecutive month period beginning on the date the Employee first performs an
Hour of Service with the Employer and any succeeding Eligibility Computation
Period shall mean a Plan Year beginning with the Plan Year immediately following
the Plan Year within which the Employee first performed an Hour of Service. In
the case of an Employee who has a Break in Service where Service prior to such
Break in Service is disregarded pursuant to Paragraph 3.4, the Eligibility
Computation Period shall be determined pursuant to this paragraph beginning on
the date the Employee first completes an Hour of Service with the Employer
immediately following such Break in Service.
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2.27 "Employee" shall mean any person who is employed by the Employer and
treated by the Employer for payroll and employment tax purposes as a common law
employee. For all purposes under this Plan, no independent contractor or any
other individual treated by the Employer for payroll and employment tax purposes
as a non-employee shall be considered an Employee, even if reclassified by a
court or regulatory agency as an employee of the Employer.
2.28 "Employer" shall mean Community Bank System, Inc. and any
Participating Employer.
2.29 "Entry Date" shall mean January 1, April 1, July 1, and October 1.
2.30 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations thereunder. References
to any ERISA section shall include any successor provision thereto.
2.31 "Fiscal Year" means the 12-month period beginning January 1 and
ending December 31.
2.32 "Forfeiture" shall mean that portion of a Participant's Accrued
Benefit that is not Vested and which is forfeited pursuant to Article VII.
2.33 "Highly Compensated Employee" includes Highly Compensated Active
Employees and Highly Compensated Former Employees.
(a) A Highly Compensated Active Employee means any Employee who (i)
was a 5% owner (as defined in Code ss.416(i)(1)) of the Employer at any time
during the current or the preceding Plan Year, or (ii) for the preceding Plan
Year had compensation from the Employer in excess of $80,000 (as adjusted by the
Secretary pursuant to Code ss.415(d)).
(b) A former Employee shall be treated as a Highly Compensated
Employee if: (i) the Employee was a Highly Compensated Employee when he
separated from Service, or (ii) the Employee was a Highly Compensated Employee
at any time after attaining age 55.
(c) The determination of who is a Highly Compensated Employee will
be made in accordance with Code ss.414(q).
(d) For purposes of this paragraph, the term "compensation" means
compensation within the meaning of Code ss.415(c)(3). For Plan Years beginning
on or after January 1, 2001, amounts excluded from gross income by reason of
Code ss.132(f)(4) shall be added to compensation.
This definition of a Highly Compensated Employee is effective for
Plan Years beginning after December 31, 1996, except that, in determining
whether an Employee is a Highly Compensated Employee in 1997, this definition is
treated as having been in effect in
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1996, and the family aggregation rules under Code ss.414(q)(6) shall be treated
as inapplicable beginning in 1996.
2.34 "Hour of Service" shall mean:
(a) each hour for which an Employee is paid or entitled to payment
for the performance of duties for the Employer;
(b) each hour (up to 501 hours for any single continuous period,
whether or not occurring in a single computation period) for which an Employee
is paid, or entitled to payment, by the Employer during which no duties are
performed (regardless of whether the employment relationship has terminated) due
to vacation, holiday, illness, incapacity (including disability), layoff, jury
or military duty, or leave of absence. Hours under this paragraph shall be
calculated and credited pursuant to 29 C.F.R. 2530.200b-2(b) and (c) which are
incorporated herein by this reference;
(c) for purposes other than benefit accrual, each hour (up to the
number required to avoid a Break in Service) for which an Employee would
otherwise be credited but for an unpaid parental leave beginning after December
31, 1984, or family medical leave in effect on or beginning after February 6,
1995. In any case in which such hours cannot be determined, the Employee shall
be credited with 8 Hours of Service per day of such absence. Parental leave
shall mean an authorized absence by reason of (i) the Employee's pregnancy, (ii)
birth of the Employee's child, (iii) placement of a child with the Employee
through adoption, or (iv) caring for the Employee's child immediately following
its birth or adoption. Family medical leave shall mean leave authorized under
the Family Medical Leave Act of 1993 ("FMLA"). No Hours of Service shall be
credited under this subparagraph (c) unless the Employee furnishes to the
Administrator such timely information as the Administrator shall require to
determine whether an Employee's absence constitutes a parental or family medical
leave, and the length of such absence. Hours of Service shall be credited under
this subparagraph (c) in the computation period in which the absence begins only
if such credited hours would prevent a Break in Service in such period,
otherwise in the next succeeding computation period;
(d) if not credited under the preceding paragraphs, each hour for
which back pay, irrespective of mitigation of damages, is either awarded or
agreed to by the Employer. These hours shall be credited for the computation
period or periods to which the award or agreement pertains rather than the
computation period in which the award, agreement or payment is made;
(e) for purposes other than benefit accrual, each hour (up to 501
hours in any Plan Year) during which an Employee performs no duties for the
Employer while on an unpaid Leave of Absence. Such hours shall be credited to
the Employee only if the additional hours awarded would prevent the Employee
from incurring a One-Year Break in Service. Hours under this subparagraph shall
be credited on the basis of 40 hours per work week or 8 hours per work day.
"Leave of Absence" shall mean any absence authorized by the Employer under the
Employer's standard personnel practices, provided that the Employee retires or
returns within the
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period of authorized absence. The Employer shall treat all Employees under
similar circumstances in a consistent, non-discriminatory manner;
(f) each hour for which a leased employee who is considered an Employee
under this Plan would be credited under the foregoing provisions.
Unless the Employer maintains records of actual Hours of Service, a
salaried Employee who completes at least one Hour of Service during a monthly
period shall be credited with 190 Hours for each such period.
Notwithstanding the foregoing, no credit shall be given for any
period during which no duties are performed but for which an Employee receives
payment or is entitled to payment under a plan maintained solely for the purpose
of complying with applicable worker's compensation, unemployment compensation or
disability insurance laws or where payment solely reimburses an Employee for
medical or medically related expenses incurred by the Employee. Service rendered
at overtime or other premium rates shall be credited at the rate of one Hour of
Service for each hour worked, regardless of the rate of compensation in effect
with respect to such hour.
For purposes of eligibility and vesting, Hours of Service will be
credited to an Employee for employment with any Affiliated Company while that
company was an Affiliated Company with the Employer.
2.35 "Interest Credit" means, with respect to any Plan Year, an addition
to an eligible Participant's Account determined pursuant to subparagraph 5.3(f).
2.36 "Investment Manager" shall mean any person or entity who:
(a) is registered as an investment adviser under the Investment
Advisers Act of 1940, a bank (as defined in the Investment Advisers Act of
1940), or an insurance company qualified to manage, acquire and dispose of Plan
assets under the laws of more than one state;
(b) acknowledges in writing that it is a fiduciary with respect to
the Plan; and
(c) is granted the power to manage, acquire or dispose of any asset
of the Plan pursuant to its provisions.
2.37 "Key Employee" shall mean any Employee or former Employee (or such
Employee's Beneficiary) who at any time during the Plan Year including the
Determination Date or during any of the 4 preceding Plan Years is or was:
(a) an officer of the Employer who has Top Heavy Compensation
greater than 50% of the amount in effect under Code ss.415(b)(1)(A) for the Plan
Year;
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(b) an owner (or one who is considered an owner under the provisions
of Code ss.318) of one of the 10 largest interests in the Employer if such
individual's Top Heavy Compensation exceeds the amount in effect under Code
ss.415(c)(1)(A);
(c) a more than 5% owner of the Employer; or
(d) a 1% owner of the Employer earning more than $150,000 in Top
Heavy Compensation from the Employer.
For purposes of subparagraph (a), not more than 50 (or, if there are less than
500 Employees, not more than the greater of three or 10% of the Employees) shall
be considered a Key Employee by virtue of being an officer. For purposes of
subparagraph (b), if 2 Employees have the same ownership percentage, the
Employee having greater Compensation shall be considered as having a larger
interest.
"Key Employee" shall mean any Employee or former Employee (including any
deceased Employee) who at any time during the Plan Year that includes the
Determination Date was an officer of the Employer having annual compensation
greater than $130,000 (as adjusted under Code ss.416(i)(1) for Plan Years
beginning after December 31, 2002), a 5-percent owner of the Employer, or a
1-percent owner of the Employer having annual compensation of more than
$150,000. For purpose, annual compensation means compensation within the meaning
of Code ss.415(c)(3). The determination of who is a Key Employee will be made in
accordance with Code ss.416(i)(1) and the applicable regulations and other
guidance of general applicability issued thereunder.
2.38 "Late Retirement Date" shall mean the first day of the month
coinciding with or next following a Participant's delayed termination from
Service after having reached his Normal Retirement Age.
2.39 "Non-Highly Compensated Employee" shall mean an Employee or former
Employee who is not a Highly Compensated Employee.
2.40 "Non-Key Employee" shall mean any Employee or former Employee who is
not a Key Employee, and any Beneficiary of a Non-Key Employee.
2.41 "Normal Retirement Age" of a Participant shall mean the later of the
Participant's 65th birthday or the 5th anniversary of the date the Participant
commenced participation in the Plan.
2.42 "Normal Retirement Benefit" shall mean a Participant's benefit earned
for Service up to his Normal Retirement Age, and expressed in the form of an
annual benefit commencing at his Normal Retirement Date.
2.43 "Normal Retirement Date" shall mean the first day of the month
coincident with or next following the date a Participant attains his Normal
Retirement Age, presuming he retires from Service upon attaining Normal
Retirement Age.
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2.44 "Participant" shall mean (i) an Employee who has met the eligibility
requirements for participation in the Plan and who continues to participate
("Active Participant"), and (ii) a former Employee whose Accrued Benefit
hereunder has not yet been fully distributed to him or forfeited under the terms
of the Plan ("Inactive Participant").
2.45 "Participating Employer" shall mean any entity that adopts the Plan
in accordance with the provisions of Article XXI.
2.46 "Permissive Aggregation Group" shall mean the Required Aggregation
Group of plans plus any other planes) of the Employer which, when considered as
a group with the Required Aggregation Group, would continue to satisfy the
requirements of Code ss.ss.401(a)(4) and 410.
2.47 "Plan" shall mean the defined benefit plan and trust as set forth in
this document.
2.48 "Plan Year" shall mean the 12-month period beginning January 1 and
ending December 31.
2.49 "Predecessor Plan" means the Employer's tax-qualified pension plan
which has been restated in its entirety by this document.
2.50 "Pre-Retirement Survivor Annuity" shall mean an annuity payable for
the life of the Participant's Spouse following the Participant's death prior to
the Participant's Annuity Starting Date, in an amount determined as follows:
(a) For a Participant dying after his Earliest Retirement Age (as
defined in Article VI), the Pre-Retirement Survivor Annuity shall equal the
survivor annuity portion of the Qualified Joint and Survivor Annuity payable if
the Participant had begun to receive the Qualified Joint and Survivor Annuity
the day before his death.
(b) For a Participant dying on or before his Earliest Retirement Age
(as defined in Article VI), the Pre-Retirement Survivor Annuity shall equal the
survivor annuity portion of the Qualified Joint and Survivor Annuity payable
under the Plan if the Participant had separated from service on the date of his
death (or date of separation from Service, if earlier), had survived to his
Earliest Retirement Age, had begun to receive the Qualified Joint and Survivor
Annuity at such Earliest Retirement Age, and had died the day after attaining
his Earliest Retirement Age.
2.51 "Qualified Joint and Survivor Annuity" means an annuity for the life
of a Participant with a survivor annuity for the life of his Spouse which is 50%
of the amount of the annuity payable during the joint lives of the Participant
and his Spouse, and which is the Actuarial Equivalent of his Accrued Benefit
payable in the form of a life annuity.
2.52 "Required Aggregation Group" shall mean each qualified plan of the
Employer or any Affiliated Company, whether or not the plan is terminated, in
which at least one Key
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Employee participates (in the Plan Year containing the Determination Date or any
of the four preceding Plan Years) and any other qualified plan of the Employer
which enables any plan in which a Key Employee participates to meet the
requirements of Code ss.ss.401(a)(4) or 410.
2.53 "Retirement Age" shall mean the date the Participant attains his
Early or Normal Retirement Age as defined herein.
2.54 "Retirement Date" shall mean the Participant's effective date of
retirement after attaining his Retirement Age.
2.55 "Retirement Plan" shall mean (i) any profit sharing, pension or stock
bonus plan described in Code ss.ss.401(a) and 501(a), (ii) any annuity plan or
annuity contract described in Code ss.ss.403(a) or 403(b), (iii) any qualified
bond purchase plan described in Code ss.405(a), and (iv) any individual
retirement account, individual retirement annuity or retirement bond described
in Code ss.ss.408(a), 408(b) or 409.
2.56 "Rollover Contribution" shall mean:
(a) an amount distributed to a Participant or directly to this Plan
on his behalf in a distribution that qualifies under Code ss.402(c)(4) as an
eligible rollover distribution; or
(b) an amount which the Participant receives from an individual
retirement account or individual retirement annuity in a distribution described
in Code ss.408(d)(3)(A)(ii).
An amount shall not qualify as a Rollover Contribution if it includes any
after-tax contribution by the Participant or anyone else.
2.57 "Service" means any period of time the Employee is in the employ of
the Employer, including any period the Employee is on a Leave of Absence (as
defined in the Hour of Service definition herein).
2.58 "Service Credit" means an addition to a Participant's Account
determined pursuant to subparagraph 5.3(b) or subparagraph 5.3(c), as
applicable.
2.59 "Social Security Taxable Wage Base" means the contribution and
benefit base in effect under Section 230 of the Social Security Act as of the
first day of each Plan Year for which Service Credits are added to Accounts
pursuant to Paragraph 5.3.
2.60 "Spouse" shall mean the spouse or surviving spouse of the
Participant, except that a former spouse will be treated as the Spouse to the
extent specifically provided under a Qualified Domestic Relations Order as
defined in Paragraph 15.5 or to the extent required by law.
2.61 "Super Top Heavy" shall mean that for any Plan Year, the Plan is
determined to be Top Heavy under any of the circumstances described in the
definition of "Top Heavy" herein, except that the applicable Top Heavy Ratio
exceeds 90%.
13
2.62 "Termination of Employment" shall mean termination of employment with
the Employer other than by reason of a Participant's death, his becoming
Disabled, or retirement after attaining Retirement Age.
2.63 "Top Heavy" shall mean that for any Plan Year:
(a) this Plan is not a part of any Required Aggregation Group or
Permissive Aggregation Group of plans, and the Top Heavy Ratio for this Plan
exceeds 60%;
(b) this Plan is a part of a Required Aggregation Group of plans but
not a part of a Permissive Aggregation Group, and the Top Heavy Ratio for the
Required Aggregation Group exceeds 60%; or
(c) this Plan is a part of a Permissive Aggregation Group of plans
and the Top Heavy Ratio for the Plan exceeds 60% and the Top Heavy Ratio for the
Permissive Aggregation Group exceeds 60%.
2.64 "Top Heavy Compensation" means compensation as defined in Code
ss.415(c)(3), including any amount that is excludable from the Employee's gross
income under ss.ss.125, 402(e)(3), 402(b), 403(b), or, for Plan Years beginning
on or after January 1, 2001, ss.132(f)(4).
2.65 "Top Heavy Ratio" shall mean the ratio determined as follows:
(a) If the Employer maintains one or more defined benefit plans and
the Employer has never maintained any defined contribution plan which has
covered or could cover a Participant in this Plan, the Top Heavy Ratio is a
fraction, the numerator of which is the sum of the present values of the accrued
benefits of all Key Employees under such planes) as of the Determination Date
(including any part of any accrued benefit distributed in the five year period
ending on the Determination Date), and the denominator of which is the sum of
the present values of the accrued benefits (including any part of any accrued
benefit distributed in the five year period ending on the Determination Date) of
all participants in such planes) as of the Determination Date. Both the
numerator and denominator of the Top Heavy Ratio shall be adjusted to reflect
any benefit which is accrued but unpaid as of the Determination Date.
(b) If the Employer maintains one or more defined benefit plans and
maintains or has maintained one or more defined contribution plans (including
any Simplified Employee Pension Plan) which have covered or could cover a
Participant in this Plan, the Top Heavy Ratio is a fraction, the numerator of
which is the sum of the present values of the accrued benefits under the defined
benefit planes) for all Key Employees and the sum of the account balances under
the defined contribution planes) for all Key Employees as of the Determination
Date, and the denominator of which is the sum of the present values of the
accrued benefits under the defined benefit planes) for all Participants and the
sum of the account balances under the defined contribution planes) for all
Participants as of the Determination Date(s). Both the numerator and denominator
of the Top Heavy Ratio are adjusted for any distribution of an
14
account balance or distribution of an accrued benefit made in the five year
period ending on the Determination Date and any contribution due but unpaid as
of the Determination Date.
(c) For purposes of (a) and (b) above, the present value of a
Participant's Accrued Benefit in this Plan and all other defined benefit plans
included in the Required or Permissive Aggregation Group shall be determined (i)
by taking into account all benefits derived from Employer and Employee
contributions other than deductible employee contributions and (ii) by using the
actuarial assumptions set forth in Paragraph 2.3.
(d) For purposes of (a) and (b) above, the value of account balances
and the Present Value of accrued benefits will be determined as of the most
recent Valuation Date that falls within or ends with the twelve month period
ending on the Determination Date. The account balances and accrued benefits of a
Participant who is not a Key Employee but who was a Key Employee in a prior year
will be disregarded. The account balances and accrued benefits of a participant
who has not performed any service for the Employer at any time during the five
year period ending on the Determination Date will be disregarded; however, if
the participant returns to Service, his account balances and accrued benefits
will again be considered. The calculation of the Top Heavy Ratio, and the extent
to which distributions, rollovers, and transfers are taken into account will be
made in accordance with Code ss.416. When aggregating plans the value of account
balances and accrued benefits will be calculated with reference to the
Determination Dates that fall within the same calendar year. Effective January
1, 1987, the accrued benefit of a Non-Key Employee shall be determined under the
method that uniformly applies for accruing benefits under all defined benefit
plans maintained by the Employer or any Affiliated Employer, and if none, as if
such benefit accrued not more rapidly than the slowest accrual rate allowed
under Code ss.411(b)(1)(C).
(e) Determination of present values and amounts. This subparagraph
(e) shall apply for purposes of determining the present values of Accrued
Benefits and the amounts of account balances of employees as of the
Determination Date.
(1) Distributions during year ending on the Determination
Date. The present values of Accrued Benefits and the amounts of account balances
of an Employee as of the Determination Date shall be increased by the
distributions made with respect to the Employee under the Plan and any plan
aggregated with the Plan under Code ss.416(g)(2) during the 1-year period ending
on the Determination Date. The preceding sentence shall also apply to
distributions under a terminated plan which, had it not been terminated, would
have been aggregated with the plan under Code ss.416(g)(2)(A)(i). In the case of
a distribution made for a reason other than separation from Service, death, or
disability, this provision shall be applied by substituting "5-year period" for
1-year period."
(2) Employees not performing services during year ending on
the Determination Date. The Accrued Benefits and accounts of any individual who
has not performed services for the Employer during the 1-year period ending on
the Determination Date shall not be taken into account.
15
2.66 "Top Heavy Year" shall mean a particular Plan Year for which the Plan
has been determined to be Top Heavy and for which the benefit accrual and
vesting requirements described in Code ss.416 and in this Plan must be met.
2.67 "Traditional Formula" means the formula, including minimum and
supplemental amounts, used to determine a Participant's Accrued Benefit pursuant
to Paragraph 5.2.
2.68 "Trust" shall mean the trust created by the Employer by establishing
this Plan and thereby declaring the trust upon which the Trustee will receive,
manage and administer contributions hereunder, which Trust is upon all the terms
and conditions set out in this instrument.
2.69 "Trust Fund" shall mean all property of every kind held or acquired
by the Trustee under the Plan.
2.70 "Trustee" or "Trustees" shall mean the person or persons named to act
as trustees, and each duly appointed additional or successor Trustee or Trustees
acting hereunder.
2.71 "Valuation Date" shall mean the first day of the Plan Year or any
other day agreed upon by the Employer, Plan Administrator and Trustee.
2.72 "Vested" shall mean that portion of a Participant's Accrued Benefit
which is nonforfeitable.
2.73 "Vesting Computation Period" shall mean the Plan Year or, for periods
of Service prior to the Effective Date of the Plan, the same 12-month period as
the Plan Year.
2.74 "Year of Creditable Service" shall mean an Accrual Computation Period
during which the Employee completes 1000 Hours of Service.
2.75 "Year of Participation" shall mean an Accrual Computation Period
commencing on or after the Effective Date of the Plan during which an Employee
is a Participant and completes 1000 Hours of Service.
16
Article III
ELIGIBILITY REQUIREMENTS
3.1 Eligibility Requirements and Participation.
(a) Except as otherwise provided in this paragraph:
(1) any Employee employed on the Restatement Effective Date
who participated in the Predecessor Plan on the day before the Restatement
Effective Date shall continue as a Participant in the Plan;
(2) any other Employee employed on the Restatement Effective
Date who has completed a Year of Service shall become a Participant as of the
Restatement Effective Date, unless participation is specifically waived by the
Employee; and
(3) after the Restatement Effective Date, an Employee shall
become a Participant (unless he specifically waives participation) as of the
Entry Date coincident with or next following the date (prior to January 1, 2005,
the Entry Date closest to the date) on which he satisfies the requirements
described previously in this subparagraph (a), unless he is no longer employed
on such date.
(b) (1) Notwithstanding anything herein to the contrary, leased
employees shall not be eligible to participate in this Plan.
(2) Effective for Plan Years beginning after December 31,
1996, for purposes of this subparagraph (b), the term "leased employee" means
any person (other than an Employee of the Employer) who pursuant to an agreement
between the Employer and any other person ("leasing organization") has performed
services for the Employer (or for the Employer and related persons determined in
accordance with Code ss.414(n)(6)) on a substantially full-time basis for a
period of at least 1 year, and such services are performed under the Employer's
primary direction or control.
(c) Notwithstanding the foregoing, no person who is included in a
unit of employees covered by a collective bargaining agreement (as so determined
by the Secretary of Labor) between employee representatives and the Employer
shall be eligible to participate in the Plan if retirement benefits were the
subject of good faith bargaining unless such collective bargaining agreement
expressly provides for the inclusion of such persons as Participants. Any
Participant who joins such unit as a member shall immediately cease to accrue
benefits hereunder; however, his Service credited thereafter shall be counted
for vesting purposes.
(d) Notwithstanding any other provision of this Plan, individuals
who are not contemporaneously classified as Employees of the Employer for
purposes of the Employer's payroll system (including, without limitation,
individuals employed by temporary help firms, technical help firms, staffing
firms, professional employer organizations or other staffing firms whether or
not deemed to be "common law" employees within the meaning of Code ss.414(n))
are
17
not considered to be eligible Employees of the Employer and shall not be
eligible to participate in the Plan. In the event any such individuals are
reclassified as Employees for any purpose, including, without limitation, common
law or statutory employees, by any action of any third party, including, without
limitation, any government agency, or as a result of any private lawsuit,
action, or administrative proceeding, such individuals shall, notwithstanding
such reclassification, remain ineligible for participation hereunder. In
addition to and not in derogation of the foregoing, the exclusive means for
individuals who are not contemporaneously classified as an Employee of the
Employer on the Employer's payroll system to become eligible to participate in
this Plan is through an amendment to this Plan, duly executed by the Employer,
which specifically renders such individuals eligible for participation
hereunder.
3.2 Year of Service. For purposes of determining an Employee's eligibility
to participate, a "Year of Service" shall mean the Eligibility Computation
Period during which the Employee completes at least 1000 Hours of Service.
Except as may be provided in ensuing paragraphs of this Article, credit shall be
given for Years of Service completed beginning with the first year the Employee
was employed by the Employer.
3.3 Waiver. An Employee may, subject to the approval of the Employer, make
an irrevocable election in writing not to participate in the Plan.
3.4 Participation and Service Upon Reemployment.
(a) A reemployed Employee who previously separated from Service with
a Vested benefit shall be eligible to resume participation effective as of his
reemployment date.
(b) A reemployed Employee who previously separated from Service
prior to satisfying the eligibility requirements for participation shall
commence participation on the Entry Date coinciding with or next following the
date on which he meets such eligibility requirements, provided he is so employed
on such Entry Date. For this subparagraph (b), all Years of Service shall be
taken into account except those disregarded under subparagraph (e).
(c) A reemployed Employee who had completed the eligibility
requirements for participation but who previously separated from Service prior
to becoming a Participant shall commence participation immediately upon his
reemployment, unless his prior Service is disregarded under subparagraph (e).
(d) A reemployed Employee who had participated in the Plan but
separated from Service with no Vested benefit derived from Employer
contributions shall be eligible to resume participation effective as of his
reemployment date, unless his prior Service is disregarded under subparagraph
(e).
(e) For purposes of subparagraphs (b)-(d), an Employee's Years of
Service before a period of at least 5 consecutive Breaks in Service shall be
disregarded if the consecutive Breaks in Service exceed the aggregate number of
the Participant's credited Years of Service before such Break period, and the
Employee shall be considered a new Employee as of his
18
reemployment date. For purposes of this subparagraph (e), Years of Service not
required to be taken into account by reason of any prior Break in Service shall
be disregarded.
3.5 Forms Upon Eligibility. Each Employee who becomes eligible to
participate in the Plan shall be notified of his eligibility and shall be
provided with such information as is required by ERISA within the time
prescribed for providing such information and forms for designating one or more
Beneficiaries to receive benefits following the Employee's death.
3.6 Change in Status.
(a) In the event a person who has been employed in a category of
employment not eligible for participation in this Plan changes to covered
employment, he shall become a Participant immediately upon his change in status,
provided he has completed the eligibility requirements for participation. If he
has not completed the eligibility requirements, he will become a Participant on
the Entry Date coinciding with or next following the date he completes the
eligibility requirements.
(b) In the event a Participant who has been employed in covered
employment changes to a category of employment not eligible for participation in
the Plan, he shall continue to participate in the Plan and shall receive credit
for benefit accrual purposes based upon such Participant's Compensation from the
Employer and Hours of Service from the first day of the Plan Year up to the date
of change from covered employment, provided such Participant completed the
eligibility requirements under Paragraph 3.1, treating service with an
Affiliated Company as Service with the Employer. In any subsequent Plan Year,
such Participant shall not be eligible for further benefit accruals under the
Plan, unless he returns to covered employment with the Employer.
3.7 Improper Omission or Inclusion of Participant.
(a) If, for any Plan Year, an Employee who should be included as a
Participant in the Plan is erroneously omitted and discovery of such error is
not made until a later year, the Employee's status as a Participant shall be
corrected and his Accrued Benefit and Vesting credited to him as if he had not
been omitted.
(b) If an Employee who is ineligible to participate in the Plan is
erroneously included as a Participant, his Accrued Benefit for the period he is
ineligible shall be treated as a Forfeiture in the year the error is discovered.
3.8 Service With Predecessor Employer. If the Employer maintains the plan
of a predecessor employer, whether a corporation, partnership, sole
proprietorship or other business entity, any period of service with such
employer shall be treated as Service with the Employer for eligibility purposes.
If the Plan is not the plan of a predecessor employer, service with such
predecessor employer shall not be considered Service with the Employer, except
to the extent required pursuant to Treasury regulations.
19
3.9 Special Credit for Certain Employees.
(a) With respect to any Employee who was formerly employed on June
13, 1997 by Key Bank, N.A. ("Key") and who on that date became employed by the
Employer, all of the Employee's Service with Key shall be treated as service
with the Employer for purposes of determining his eligibility to participate in
the Plan. Any such Employee who meets the service requirement specified in
Paragraph 3.1 after taking into account such service shall commence
participation on January 1, 1998.
(b) With respect to any Employee who was formerly employed on July
18, 1997 by Fleet Bank ("Fleet") and who on that date became employed by the
Employer, all of the Employee's Service with Fleet shall be treated as service
with the Employer for purposes of determining his eligibility to participate in
the Plan. Any such Employee who meets the service requirement specified in
Paragraph 3.1 after taking into account such service shall commence
participation on January 1, 1998.
(c) With respect to Joseph Butler who was formerly employed on June
20, 1997 by Fleet and who on that date became employed by the Employer, all of
the Employee's Service with Fleet shall be treated as service with the Employer
for purposes of determining his eligibility to participate in the Plan. Provided
that he meets the service requirement specified in Paragraph 3.1 after taking
into account such service Joseph Butler shall commence participation on January
1, 1998.
(d) With respect to Douglas Frank who was formerly employed on
January 27, 1997 by Key and who on that date became employed by the Employer,
all of the Employee's Service with Key shall be treated as service with the
Employer for purposes of determining his eligibility to participate in the Plan.
Provided that he meets the service requirement specified in Paragraph 3.1 after
taking into account such service Douglas Frank shall commence participation on
January 1, 1998.
(e) With respect to Brian Aldrich who was formerly employed on June
26, 1997 by Key and who on that date became employed by the Employer, all of the
Employee's Service with Key shall be treated as service with the Employer for
purposes of determining his eligibility to participate in the Plan. Provided
that he meets the service requirement specified in Paragraph 3.1 after taking
into account such service Brian Aldrich shall commence participation on January
1, 1998.
(f) With respect to any Employee who was formerly employed on July
8, 1996 by Benefit Plans Administrators ("BPA") and who on that date became
employed by the Employer, all of the Employee's services with BPA shall be
treated as Service with the Employer for purposes of determining his eligibility
to participate in the Plan.
(g) With respect to any Employee who was formerly employed on
October 29, 1994 by Chase Bank at the branch located in Cato, New York ("Chase")
and who on that date became employed by the Employer, all of the Employee's
services with Chase shall be
20
treated as Service with the Employer for purposes of determining his eligibility
to participate in the Plan.
(h) With respect to any Employee who was formerly employed on July
15, 1995 by Chase Bank ("Chase") and who on that date became employed by the
Employer, all of the Employee's services with Chase shall be treated as Service
with the Employer for purposes of determining his eligibility to participate in
the Plan.
(i) With respect to any Employee who was formerly employed on
January 26, 2001 by Citizens National Bank of Malone ("Citizens Bank") and who
on that date became employed by the Employer, all of the Employee's services
with Citizens Bank shall be treated as Service with the Employer for purposes of
determining his eligibility to participate in the Plan.
(j) With respect to any Employee who was formerly employed on
November 16, 2001 by FleetBoston Financial Corporation Fleet National Bank
("FleetBoston") and who on that date became employed by the Employer, all of the
Employee's services with FleetBoston shall be treated as Service with the
Employer for purposes of determining his eligibility to participate in the Plan.
(k) With respect to any Employee who was formerly employed on August
1, 2003 by PricewaterhouseCoopers, LLP ("PricewaterhouseCoopers") and who on
that date became employed by the Employer, all of the Employee's service with
PricewaterhouseCoopers shall be treated as service with the Employer for
purposes of determining his eligibility to participate in this Plan. Any such
Employee who meets the service requirement specified in Paragraph 3.1 after
taking into account such service shall commence participation on August 1, 2003.
(l) With respect to any Employee who was formerly employed on
September 5, 2003 by Peoples Bankcorp, Inc. ("Peoples") and who on that date
became employed by the Employer, all of the Employee's service with Peoples
shall be treated as service with the Employer for purposes of determining his
eligibility to participate in this Plan. Any such Employee who meets the service
requirements specified in Paragraph 3.1 after taking into account such service
shall commence participation on September 5, 2003.
(m) With respect to any Employee who was formerly employed on
November 22, 2003 by Grange National Banc Corp. ("Grange") and who on that date
became employed by the Employer, all of the Employee's service with Grange shall
be treated as service with the Employer for purposes of determining his
eligibility to participate in this Plan. Any such Employee who meets the service
requirement specified in Paragraph 3.1 after taking into account such service
shall commence participation on November 22, 2003.
(n) With respect to any Employee who was employed by First Heritage
Bank ("First Heritage") on May 14, 2004, and who on that date became employed by
the Employer, all of the Employee's service with First Heritage shall be treated
as service with the Employer for purposes of determining the Employee's
eligibility to participate in this Plan. An Employee who
21
meets the eligibility requirements specified in Paragraph 3.1 after taking into
account such service shall commence participation in the Plan on May 14, 2004.
(o) With respect to any Employee who was employed by HSBC Bank at
its branch located in Dansville, New York ("HSBC") on December 3, 2004, and who
on that date became employed by the Employer, all of the Employee's service with
HSBC shall be treated as service with the Employer for purposes of determining
the Employee's eligibility to participate in this Plan. An Employee who meets
the eligibility requirements specified in Paragraph 3.1 after taking into
account such service shall commence participation in the Plan on December 3,
2004.
3.10 Special Credit for Elias Employees. With respect to any Employee who
was employed on April 3, 2000 by Elias Asset Management Incorporated ("Elias"),
all of the Employee's Service with Elias shall be treated as service with the
Employer for purposes of determining his eligibility to participate in this
Plan. Any such Employee who meets the service requirement specified in Paragraph
3.1 after taking into account such Service shall commence participation on April
3, 2000.
22
Article IV
CREDITED SERVICE FOR BENEFIT ACCRUAL
4.1 Benefit Accrual.
(a) A Participant shall be credited with Service for benefit accrual
purposes for each Year of Creditable Service he completes.
(b) Except as otherwise specifically provided in the Plan, no
employee of an Affiliated Company shall be credited with Service with the
Employer with respect to any time period prior to the date the Affiliated
Company became so affiliated with the Employer by reason of purchase, merger or
otherwise. Without limiting the generality of the prior sentence, with respect
to any Employee described in Paragraph 3.9, none of the Employee's service with
any company prior to his employment by the Employer shall be taken into account
for purposes of this Article. Notwithstanding the foregoing, for purposes of
calculating a Participant's Years of Creditable Service and Accrued Benefit,
both as of December 31, 1988, a Participant employed or formerly employed by
Nichols Bank shall be credited with Service as if he were employed by the
Employer from his hire date with Nichols Bank.
4.2 Service Limitations.
(a) No more than one Year of Creditable Service shall be credited to
a Participant with respect to any Accrual Computation Period.
(b) No more than 35 Years of Creditable Service shall be credited to
any Participant.
4.3 Loss of Service - Non-Vested Participants. In the case of a
Participant who incurs a period of five or more consecutive One-Year Breaks in
Service who did not have any Vested right to his Accrued Benefit derived from
Employer contributions at his severance date and who subsequently resumes
participation in the Plan, no Years of Creditable Service with the Employer
before the Break in Service shall be taken into account in computing his Accrued
Benefit if the number of consecutive One-Year Breaks in Service equals or
exceeds the aggregate number of Years of Creditable Service before the Break.
4.4 Reinstatement of Creditable Service - Vested Participant. A
Participant who, at the time he incurred one or more consecutive Breaks in
Service, had a Vested right to his Accrued Benefit derived from Employer
contributions, who is reemployed by the Employer and who resumes participation
in the Plan, shall have his pre-Break Years of Creditable Service restored in
determining his Accrued Benefit unless, after his employment termination, the
Participant received a lump-sum distribution of his Vested Accrued Benefit and
upon reemployment, failed to repay the distribution within the time period
allowed and in accordance with Paragraph 7.7.
23
4.5 Retention of Service. The Accrued Benefit of a Participant who
separates from Service after the Effective Date will not be reduced by
termination of employment, absences from employment, or other Breaks in Service,
except as provided under the terms of this Plan.
24
Article V
RETIREMENT BENEFITS
5.1 Choice of Traditional Formula or Cash Balance Formula.
(a) Each Participant who is classified by the Employer as an active
Employee on October 1, 2004, may elect prior to November 1, 2004 either (1) to
have the Participant's total Accrued Benefit determined under the Traditional
Formula described in Paragraph 5.2 below, or (2) to have the Participant's
Accrued Benefit determined under the Cash Balance Formula described in Paragraph
5.3 below. An eligible Participant who fails to make an affirmative election of
either (1) or (2) above shall be deemed to have elected (2) above. An election
or deemed election shall apply to all of the Participant's recognized service
with the Employer, including recognized service rendered after a future break in
service.
(b) A Participant who was not classified by the Employer as an
active Employee on October 1, 2004, but who thereafter returns to active
employment shall have an Accrued Benefit equal to the sum of (1) the
Participant's Accrued Benefit earned prior to October 1, 2004 under the
Traditional Formula, plus (2) the Participant's Accrued Benefit earned after
September 30, 2004 under the Cash Balance Formula.
(c) An Employee who becomes a Participant after October 1, 2004
shall have an Accrued Benefit determined only under the Cash Balance Formula.
(d) Except to the extent provided in subparagraph 5.3(e) (regarding
certain supplemental cash balance benefits), in no event shall a Participant be
entitled to benefits under both the Traditional Formula and the Cash Balance
Formula for the same period of service.
5.2 Traditional Formula.
(a) Normal Retirement Benefit. Subject to the provisions of Article
XIV and the limitations under this Paragraph and Article VIII, a Participant who
retires upon attaining his Normal Retirement Age and whose benefit is determined
in whole or in part under the Traditional Formula (see Paragraph 5.1) shall be
entitled to receive a Normal Retirement Benefit under the Traditional Formula
equal to the greater of the amount described in (1) below or the amount
described in (2) below:
(1) (A) an amount equal to the Participant's Accrued Benefit
earned as of December 31, 1988 under the terms of the Predecessor Plan as
modified by the terms of subparagraph 5.2(b), disregarding all Service after
December 31, 1988, but adjusted for anyone who completed one or more Hours of
Service after December 31, 1988 for changes in Compensation after December 31,
1988 by multiplying such Accrued Benefit by a fraction (not less than 1.0), the
numerator of which is his Average Annual Compensation as of the date the
computation is performed, and the denominator of which is his Average Annual
Compensation as of the Plan Year ending December 31, 1988; however, the Accrued
Benefit, as so adjusted, of any Participant or Former Participant employed by
Exchange National Bank or its predecessor
25
shall be reduced by his unadjusted accrued benefit earned prior to July 1, 1984
under the defined benefit pension plan sponsored by the Bank of New York; plus
(B) an amount equal to .9% of his Average Annual
Compensation, plus .65% of his Average Annual Compensation in excess of his
Covered Compensation, multiplied by the Participant's Years of Creditable
Service earned after December 31, 1988, not to exceed 35 years reduced by his
total Years of Creditable Service earned prior to January 1, 1989.
(2) An amount equal to .9% of his Average Annual Compensation,
plus .65% of his Average Annual Compensation in excess of his Covered
Compensation, multiplied by the Participant's total Years of Creditable Service,
not to exceed 35 years.
(3) Notwithstanding the foregoing, a Participant employed or
formerly employed by Nichols Bank shall receive under the Traditional Formula
the greater of the sum of the benefits under subparagraphs (a)(1) and (a)(2)
above, or the Actuarial Equivalent of the Participant's Accrued Benefit to which
his account balance in the former profit sharing plan sponsored by Nichols Bank
was converted as of January 1, 1988.
(4) Notwithstanding the foregoing, to the extent the Normal
Retirement Benefit of a Participant employed or formerly employed by First
Liberty Bank & Trust is determined under the Traditional Formula (see Paragraph
5.1) such benefit shall equal the sum of (A) the Participant's accrued benefit
determined under the First Liberty Bank & Trust Retirement Plan as of December
31, 2001, plus (B) the benefit earned by the Participant after December 31, 2001
under subparagraph (a)(2) above (taking into account only Compensation and Years
of Creditable Service earned by the Participant after December 31, 2001).
(5) In applying the Traditional Formula, neither the Maximum
Excess Allowance (as hereinafter defined) nor the Overall Permitted Disparity
Limits (as hereinafter defined) may be exceeded in any Plan Year with respect to
any Participant. Accordingly, at such time that a Participant's cumulative
permitted disparity reaches the Participant's applicable limit calculated in
accordance with Treas. Regs. ss.1.401(1)-5, then for each Year of Creditable
Service thereafter, the formula under subparagraph (a)(2) shall be modified such
that the Participant shall accrue a benefit at the rate of the Base Benefit
Percentage times his Average Annual Compensation.
(6) For all purposes under this Plan:
(A) "Base Benefit Percentage" means the rate, expressed
as a percentage, at which Employer-derived benefits are accrued with respect to
that amount of a Participant's Average Annual Compensation that is at or below
the Participant's Covered Compensation for the Plan Year.
(B) "Covered Compensation" for each Participant for a
Plan Year shall be the average of the taxable wage bases in effect under the
Social Security Act for each calendar year during the 35-year period ending with
the calendar year in which the
26
Participant attains or will attain his Social Security retirement age (as
defined in Code ss.415(b)(8)), rounded to the nearest multiple of $600. For this
purpose, the taxable wage base for all years after the year in which the
determination is being made is assumed to be the same as the taxable wage base
in effect for the year of determination. Covered Compensation for a participant
after the 35-year period is the same as his Covered Compensation as of his
Social Security retirement age. A Participant's Covered Compensation shall be
automatically adjusted each Plan Year.
(C) "Excess Benefit Percentage" means the rate,
expressed as a percentage, at which Employer-derived benefits are accrued with
respect to that amount of a Participant's Average Annual Compensation that is
above the Participant's Covered Compensation for the Plan Year, which rate
(except as otherwise provided herein) shall be 0.65%.
(D) "Maximum Excess Allowance" means the maximum
differential allowed under ss.404(1) and the regulations thereunder between the
Base Benefit Percentage and the Excess Benefit Percentage.
(E) "Overall Permitted Disparity Limits" means the
cumulative permitted disparity applicable to a Participant's benefit accrued
hereunder as of any Plan Year, which amount is based on the Participant's total
Years of Creditable Service and calculated in accordance with ss.401(1) and the
regulations thereunder.
(7) Except as provided in subparagraph 5.2(b), the Employer
intends that ss.401(l) and the regulations thereunder shall apply only to
benefits that accrue in Plan Years beginning after December 31, 1988 and not to
benefits that accrued under the Predecessor Plan as of December 31,1988, and the
Plan shall be construed accordingly.
(8) A Participant's Normal Retirement Benefit under the
Traditional Formula shall not be less than his Accrued Benefit earned under that
formula (as applicable) as of the date he attained Early Retirement Age.
(9) For Plan Years that begin on or after January 1, 2004, a
Participant's annual Normal Retirement Benefit under the Traditional Formula
shall equal the greater of the Normal Retirement Benefit determined under
subparagraph 5.2(a) or the following amount:
Participant
(by Employee ID No.) Amount
-------------------- -------
98744 $ 32,232
68051 $109,812
93083 $115,944
Any Active Participant $ 0
described in subparagraphs
3.9(k), (l), (m), (n), or (o)
All other Active Participants $ 660
27
Notwithstanding the dollar amounts set forth above, no Normal Retirement Benefit
shall exceed the limits set forth in Paragraph 8.1.
(10) For Plan Years beginning on or after January 1, 2004, and
subject to the limits set forth in Paragraph 8.1, the following Participants
shall have their annual Normal Retirement Benefit under the Traditional Formula
determined above under this subparagraph 5.2(a) increased by the following
amounts:
Participant
(by Employee ID No.) Amount
-------------------- -------
4091 $ 6,302
3954 $15,045
(11) With respect to any Employee described in Section 3.9(k),
(l), (m), (n) or (o), none of the Employee's service while employed by
PricewaterhouseCoopers, LLP, Peoples Bankcorp, Inc., Grange National Banc Corp.,
First Heritage Bank or HSBC, as the case may be, shall be taken into account for
any purpose of this Article.
(b) For purposes of determining a Participant's Accrued Benefit
earned as of December 31, 1988 ("Pre-1989 Accrued Benefit"), the terms of the
Predecessor Plan shall be followed, except as modified by the following:
(1) The Pre-1989 Accrued Benefit for each Employee or former
employee of Exchange National Bank shall be determined by (A) combining the
benefits earned by the Employee prior to July 1, 1984 under the defined benefit
pension plan sponsored by the Bank of New York, with the benefits accrued by the
Employee under the Predecessor Plan from July 1, 1984 through December 31, 1988,
and (B) adjusting such benefit (if necessary) such that the Base Benefit
Percentage is not less than 50% of the Excess Benefit Percentage under the Prior
Plan.
(2) The Pre-1989 Accrued Benefit for each Employee or former
employee of Nichols Bank shall be determined as if the employee participated in
the Predecessor Plan from his hire date at Nichols Bank.
(c) Nonforfeitability of Normal Retirement Benefits. The Accrued
Benefit of a Participant who while in Service attains his Normal Retirement Age
prior to completing a period of 5 consecutive One-Year Breaks in Service shall
become 100% nonforfeitable.
28
(d) Payment of Benefit. Unless the Participant selects a different
form, the Participant's Normal Retirement Benefit shall be payable in the manner
set forth in Paragraph 9.1. Payment shall commence on the Participant's Normal
Retirement Date or as soon thereafter as administratively feasible.
(e) Re-Employment. If a former Participant who is entitled to
receive a Normal Retirement Benefit shall be reemployed, his Normal Retirement
Benefit payments shall continue.
5.3 Cash Balance Formula.
(a) The Accrued Benefit of a Participant to whom the Cash Balance
Formula applies (see Paragraph 5.1) shall be based upon the Participant's
Account balance, which Account balance shall be determined pursuant to this
Paragraph 5.3.
(b) A Participant who elected (pursuant to Paragraph 5.1) to have
the Cash Balance Formula apply and who had an Accrued Benefit as of December 31,
2003 shall have an opening Account balance as of January 1, 2004 equal to the
present value of the Participant's Accrued Benefit determined as of December 31,
2003 under the Traditional Formula as in effect on January 1, 2004 (determined
without regard to the minimum benefit provisions of subparagraph 5.2(a)(9)),
where present value for this purpose is determined by using an interest rate of
5.5% and the 1994 Group Annuity Reserve table (projected to 2002 and weighted
equally for males and females). The Account of a Participant who elected
(pursuant to Paragraph 5.1) to have the Cash Balance Formula apply and who
completes at least 1000 Hours of Service during each Plan Year after December
31, 2003 shall be credited with a Service Credit as of the end of each
subsequent Plan Year (beginning December 31, 2004) in accordance with the
following table:
----------------------------------------------------------------------
Attained Age
On December 31* Service Credit**
--------------- ----------------
----------------------------------------------------------------------
Under 22 5.00%
----------------------------------------------------------------------
22 and 23 5.05%
----------------------------------------------------------------------
24 and 25 5.10%
----------------------------------------------------------------------
26 and 27 5.15%
----------------------------------------------------------------------
28 and 29 5.20%
----------------------------------------------------------------------
30 and 31 5.25%
----------------------------------------------------------------------
32 and 33 5.30%
----------------------------------------------------------------------
34 and 35 5.35%
----------------------------------------------------------------------
36 and 37 5.40%
----------------------------------------------------------------------
38 and 39 5.45%
----------------------------------------------------------------------
40 and 41 5.50%
----------------------------------------------------------------------
42 and 43 5.55%
----------------------------------------------------------------------
44 and 45 5.60%
----------------------------------------------------------------------
46 and 47 5.65%
----------------------------------------------------------------------
48 and 49 5.70%
----------------------------------------------------------------------
50 and 51 5.75%
----------------------------------------------------------------------
29
----------------------------------------------------------------------
Attained Age
On December 31* Service Credit**
--------------- ----------------
52 and 53 5.80%
----------------------------------------------------------------------
54 and 55 5.85%
----------------------------------------------------------------------
56 and 57 5.90%
----------------------------------------------------------------------
58 and 59 5.95%
----------------------------------------------------------------------
60 and 61 6.00%
----------------------------------------------------------------------
62 and 63 6.05%
----------------------------------------------------------------------
64 and 65 6.10%
----------------------------------------------------------------------
Over 65 6.10%
----------------------------------------------------------------------
*or the last day of the Participant's employment, if the
Participant's termination occurs prior to December 31.
----------------------------------------------------------------------
**Service Credits shall be applied to the sum of the Participant's
total Compensation for the Plan Year, plus the portion of the
Participant's total Compensation for the Plan Year that is in excess
of the Social Security Taxable Wage in effect for the Plan Year.
----------------------------------------------------------------------
(c) The Account of a Participant to whom the Cash Balance Formula
applies (see Paragraph 5.1) but who is not entitled to Service Credits pursuant
to subparagraph (b) above shall be credited with a Service Credit as of the end
of each Plan Year during which the Participant completes at least 1000 Hours of
Service. The Service Credit, which will be added to the Participant's Account as
of December 31 of each applicable Plan Year, shall equal five percent (5%) of
the sum of the Participant's total Compensation for the Plan Year, plus the
portion of the Participant's total Compensation for the Plan Year that is in
excess of the Social Security Taxable Wage Base for the Plan Year.
(d) (1) Notwithstanding the other provisions of this Paragraph 5.3,
for Plan Years beginning on or after January 1, 2004, the annual Normal
Retirement Benefit payable to the following Participants shall not be less than
the following amounts, except as may be limited under Article VIII:
Participant
(by Employee ID No.) Minimum Benefit
-------------------- ---------------
98840 $283,041
3952 $100,000
(2) Notwithstanding the other provisions of this Paragraph
5.3, the opening Account balance on January 1, 2004 for the Plan Participant
with Employee ID No. 1026 shall be $153,548.
(3) Notwithstanding the other provisions of this Paragraph
5.3, the Account balance on December 31, 2004 for the Plan Participant with
Employee ID No. 3398 shall be $37,781.
30
(e) In addition to the Accrued Benefit determined pursuant to
Paragraph 5.2 or the other provisions of Paragraph 5.3, each Participant
identified below shall have a supplemental Account balance, as of October 1,
2004, determined as follows:
Supplemental Account
Participant Balance
(by Employee ID No.) As of October 1, 2004
-------------------- ---------------------
4577 $ 23,943
98890 $ 20,095
98744 $ 22,315
1438 $ 23,613
908 $ 19,988
45999 $ 47,577
49575 $ 14,514
68051 $234,655
2996 $ 16,241
3398 $ 9,636
93083 $212,272
The supplemental Account balance provisions in this subparagraph (e) shall apply
to each listed Participant regardless of the election (or deemed election) made
by the Participant pursuant to Paragraph 5.1. The supplemental Account balance
described in this subparagraph (e) shall not be increased by any Service Credits
described in subparagraphs 5.3(b) or (c) or by the Interest Credit described in
subparagraph 5.3(f).
(f) Beginning December 31, 2004 and continuing on each December 31
thereafter until the Participant's employment ends, the Account of each
Participant to whom the Cash Balance Formula applies shall be credited with an
Interest Credit. The Interest Credit for Plan Years during employment shall
equal six percent (6%) of the total balance credited to the Participant's
Account as of January 1 of the same Plan Year. For the Plan Year during which
the Participant's employment ends, the Interest Credit shall be six percent
(6%), prorated based on months of employment, plus the lesser of six percent
(6%) or the Interest Rate described in subparagraph 2.4(c)(1), prorated based on
months between the date employment ends and December 31 of the Plan Year during
which employment ends. The Interest Credit described in the preceding sentence
shall be added to the Participant's Account as of December 31 of the Plan Year
during which the Participant's employment ends. As of December 31 of each Plan
Year that follows the Plan Year during which the Participant's employment ends,
the Participant's Account will be credited with an Interest Credit equal to the
lesser of six percent (6%) or the Interest Rate described in subparagraph
2.4(c)(1), times the amount credited to the Participant's Account as of January
1 of the same Plan Year. For the Plan Year during which the Participant's
Account balance is withdrawn as a lump sum or converted to annuity payments, the
Interest Credit described in the preceding sentence shall be prorated through
the date of withdrawal or conversion.
31
(g) In no event will a Participant's benefit determined under the
Cash Balance Formula (if applicable) be less than the benefit the Participant
would have accrued under the Traditional Formula as of December 31, 2004.
(h) Notwithstanding the above, the annual rate at which a
Participant accrues future Normal Retirement Benefits under the Cash Balance
Formula shall be limited to the extent necessary to ensure compliance with the
applicable accrual rate rules described in Section 411 of the Code.
5.4 Accrued Benefits Attributable to Prior Mandatory Employee
Contributions.
(a) If under the terms of the Predecessor Plan a Participant made
mandatory employee contributions, such Participant's Accrued Benefit as of any
Valuation Date shall equal the greater of:
(1) his Accrued Benefit; or
(2) the benefit derived from the sum of his mandatory employee
contributions accumulated with interest at the rate of 120% of the federal
mid-term rate in effect in the month preceding payment under Code ss.1274.
Upon distribution of a Participant's mandatory employee contributions plus
interest, the Accrued Benefit of such Participant shall be reduced by that
portion of the Accrued Benefit derived from that distributed amount.
(b) Notwithstanding anything in this Plan to the contrary, a
Participant shall at all times be 100% Vested in that portion of his Accrued
Benefit derived from his or her mandatory employee contributions.
5.5 Early Retirement.
(a) A Participant who retires after attaining his Early Retirement
Age but prior to his Normal Retirement Age shall be entitled to receive an
annual retirement benefit determined as follows:
(1) If payment of such benefit commences at his Normal
Retirement Date, the amount of the benefit shall be the Participant's Accrued
Benefit, determined in accordance with the applicable provisions of Paragraph
5.2 and/or Paragraph 5.3 as of his Early Retirement Date.
(2) If the Participant elects to receive payment of such
benefit prior to his Normal Retirement Date, the amount of the benefit shall be
his Accrued Benefit, reduced by 3.5% for each of the first 3 years by which his
Annuity Starting Date precedes Age 65 and reduced by 5.5% for each of the next 7
years by which his Annuity Starting Date precedes Age 65.
32
(3) If a Participant who has satisfied the service requirement
for Early Retirement under this paragraph separates from Service before
satisfying the age requirement for Early Retirement, the Participant may elect,
upon satisfying such age requirement, to receive an early retirement benefit
equal to his Accrued Benefit in which he was Vested at the time of his
Termination of Employment, subject to the same reduction as provided in
subparagraph (a)(2).
(b) Unless the Participant selects an optional form under Paragraph
9.3, a Participant's early retirement benefit shall be payable in the manner set
forth in Paragraph 9.1(a). Payment shall commence as of the date elected by the
Participant, or as soon thereafter as administratively feasible.
(c) If a Participant who is receiving his early retirement benefit
returns to Service prior to January 1, 2005, his benefit payments shall be
suspended until he terminates Service or attains his Required Beginning Date,
whichever occurs earlier. At such date, and at each subsequent Valuation Date if
the Participant remains in Service after his Required Beginning Date, he shall
be entitled to receive an annual benefit equal to his Accrued Benefit determined
pursuant to the applicable provisions of Paragraph 5.2 and/or Paragraph 5.3 as
of the date for which the calculation is being made, reduced actuarially by the
value of benefit payments already made to the Participant; provided, however
that to the extent the Participant repays the earlier distribution(s) in
accordance with Paragraph Article XXI there shall be no actuarial reduction.
After December 31, 2004, no benefit will be suspended upon reemployment, but any
additional benefits earned during reemployment shall be reduced actuarially by
the value of benefit payments made to the Participant.
(d) Prohibition Against Reduction in Benefit. Notwithstanding any
contrary provision contained in this Plan, no amendment to this Plan shall
reduce or eliminate a Participant's early retirement benefit accrued prior to
such restatement or amendment, determined as the day before its effective date.
5.6 Late Retirement. A Participant who remains in Service with the
Employer after attaining his Normal Retirement Age shall have payment of
benefits suspended until the earlier of his Late Retirement Date or his Required
Beginning Date. At such date and each subsequent Valuation Date, the Participant
shall be entitled to receive an annual benefit equal to the greater of (a) the
Actuarial Equivalent of his Normal Retirement Benefit earned as of the date he
attained his Normal Retirement Age, or (b) his Accrued Benefit earned through
his Late Retirement Date using the applicable formula or formulas set out in
Paragraph 5.2 and/or Paragraph 5.3 and any limitations described therein. The
Participant's benefit determined under the foregoing shall be reduced
actuarially to reflect the value of benefit payments previously made to the
Participant hereunder.
5.7 Disability.
(a) Disability Retirement Benefits. A Participant who terminates
from Service because of his becoming Disabled prior to attaining his Normal
Retirement Age shall be entitled to receive a retirement benefit ("Disability
Retirement Benefit") determined as follows:
33
(1) If payment commences at his Normal Retirement Date, the
amount of the benefit shall be the Participant's Vested Accrued Benefit
determined under the applicable provisions of Paragraph 5.2 and/or Paragraph 5.3
by applying the relevant factors as of his Disability Retirement Date.
(2) If the Participant elects to begin payment prior to his
Normal Retirement Date, the amount of the benefit shall be the Actuarial
Equivalent of the Participant's Vested Accrued Benefit determined under the
applicable provisions of Paragraph 5.2 and/or Paragraph 5.3 based on the
relevant factors as of his Disability Retirement Date.
(b) Unless the Participant elects an optional form under Paragraph
9.3, or defers payment under Paragraph 9.1, his Disability Retirement Benefit
shall be payable in the normal form in accordance with Paragraph 9.1(a). Payment
shall commence on his Retirement Date or (if he so elects) on his Disability
Retirement Date, or as soon thereafter as practicable.
(c) If a Participant who is receiving or has received disability
benefits under this Plan resumes Service, he shall resume participation in this
Plan, and payments of his disability benefits shall cease. In addition, his
Years of Creditable Service and Years of Vesting Service for the period prior to
his becoming Disabled shall be reinstated, and he shall be treated in the same
manner as any other rehired Employee, except that the Participant's Accrued
Benefit shall be reduced actuarially by the value of the Participant's
disability retirement benefits previously paid to him hereunder; provided,
however, that no such reduction shall be applied to the extent the Participant
repays the earlier distribution(s) received in accordance with the provisions of
Paragraph 7.7.
5.8 Relation to Social Security Benefits. Increases in Social Security
benefits or the Social Security Wage Base under Title II of the Social Security
Act subsequent to a Participant's termination of employment or retirement shall
not cause a reduction in benefits under this Plan.
5.9 Supplemental Retirement Benefit. Notwithstanding any other provision
in this Plan, John A. Lanahan shall be entitled to receive a supplemental
retirement benefit equal to $250.00 per month payable as a life annuity
beginning at his Annuity Starting Date. Such benefit shall be in addition to any
other benefits he may be entitled to under the terms of this Plan. Payment of
such benefit shall be made in accordance with the terms of Article IX.
34
Article VI
DEATH BENEFITS
6.1 Benefits Upon Death.
(a) If a Participant (including any Inactive Participant) dies prior
to his Annuity Starting Date at a time when he is not married on the date of his
death, no death benefit shall be payable under this Plan with respect to such
Participant, except to the extent provided in subparagraph (f) below.
(b) If a married Participant (including any married Inactive
Participant) who is Vested in any portion of his Accrued Benefit dies prior to
his Earliest Retirement Age (as defined in subparagraph (c) below), a
Pre-Retirement Survivor Annuity shall be payable to the Participant's Spouse.
The Pre-Retirement Survivor Annuity cannot be waived, and no optional form of
benefit shall be provided in lieu of the Pre-Retirement Survivor Annuity, except
as provided in subparagraphs (e) and (f) below.
(c) For purposes of this Article, "Earliest Retirement Age" means
the earliest date on which the Participant can elect to receive retirement
benefits under the Plan (disregarding disability retirement benefits), and
administered (for purposes of this paragraph) as follows:
(1) If a Participant dies or separates from Service before
completing the service requirement for an Early Retirement Benefit hereunder,
the Earliest Retirement Age is the date the Participant would have attained his
Normal Retirement Age had he survived.
(2) If a Participant dies or separates from Service after
completing the service requirement for an Early Retirement Benefit hereunder,
the Earliest Retirement Age is the earliest date the Participant could have
retired and begun receiving his Early Retirement Benefit.
(d) If retirement benefits have begun to be paid to the Participant
and the Participant dies before his entire interest has been distributed to him,
distribution shall continue to the Participant's Beneficiary in accordance with
the terms of this Plan and the Participant's executed beneficiary designation
(if in effect) and consistent with the method of payment selected by the
Participant. Notwithstanding anything to the contrary in the Plan or any payment
election made by a Participant, if distribution of the Participant's benefit has
begun as of the time of the Participant's death as determined under Code
ss.401(a)(9), the remaining benefit shall be distributed to his Beneficiary at
least as rapidly as under the method of distribution in effect as of the date of
the Participant's death.
(e) Regardless of the normal form of benefit or any optional form
chosen by the Participation or his Beneficiary, the Actuarial Equivalent of the
Pre-Retirement Survivor Annuity shall be paid in a lump sum, without the consent
of the Participant's Spouse, under the following circumstances:
35
(1) for Plan Years beginning before August 6, 1997, the single
sum Actuarial Equivalent of such death benefit does not exceed $3,500 at the
time of distribution;
(2) for Plan Years beginning on or after August 6, 1997, the
single sum Actuarial Equivalent of such death benefit does not exceed $5,000 at
the time of distribution.
Notwithstanding the foregoing, no distribution to the surviving Spouse may be
made after the Annuity Starting Date unless the Spouse consents in writing to
such distribution within the 90-day period preceding the date of distribution.
(f) Notwithstanding the provisions of subparagraphs (a) and (b)
above, to the extent the Cash Balance Formula and/or the provisions of
subparagraph 5.2(a)(9) or (10) apply to a Participant at the time of his death,
the provisions of this subparagraph (f) shall apply.
(1) If a Participant dies prior to the Participant's
Retirement Date, such Participant's Beneficiary shall receive a death benefit
equal to the Actuarial Equivalent of the Accrued Benefit determined as of the
date of death.
(2) Death benefits payable by reason of the death of a
Participant or a Retired Participant shall be paid to such Participant's
Beneficiary in accordance with the following provisions:
(A) Upon the death of a Participant subsequent to the
Participant's Retirement Date, but prior to the Annuity Starting Date, the
Participant's Beneficiary shall be entitled to a death benefit in an amount
equal to the Actuarial Equivalent of the benefit the Participant would have
received at the Participant's Retirement Date.
(B) Upon the death of a Participant subsequent to the
Annuity Starting Date, the Participant's Beneficiary shall be entitled to
whatever death benefit may be available under the settlement arrangements
pursuant to which the Participant's benefit is made payable.
(C) In the event of a Terminated Participant's death
subsequent to the Participant's termination of employment, the Participant's
Beneficiary shall receive the Present Value of such Participant's Vested Accrued
Benefit as of the date of the Participant's death.
(3) The Administrator may require such proper proof of death
and such evidence of the right of any person to receive the death benefit
payable as a result of the death of a Participant as the Administrator may deem
desirable. The Administrator's determination of death and the right of any
person to receive payment shall be conclusive.
(4) Unless otherwise elected in the manner prescribed in
Paragraph 6.4, the Beneficiary of that portion of the death benefit necessary to
fund the "minimum spouse's death benefit" shall be the Participant's surviving
spouse, who shall receive such benefit in the
36
form of a Pre-Retirement Survivor Annuity. Except, however, the Participant may
designate a Beneficiary other than the surviving spouse to receive the Actuarial
Equivalent of the "minimum spouse's death benefit" if:
(A) the Participant and the Participant's spouse have
validly waived the Pre-Retirement Survivor Annuity in the manner prescribed in
Paragraph 6.4, and the spouse has waived the right to be the Participant's
Beneficiary, or
(B) the Participant is legally separated or has been
abandoned (within the meaning of local law) and the Participant has a court
order to such effect (and there is no qualified domestic relations order which
provides otherwise), or
(C) the Participant has no spouse, or
(D) the spouse cannot be located.
In such event, the designation of a Beneficiary shall be made on a
form satisfactory to the Administrator. A Participant may at any time revoke a
designation of a Beneficiary or change a Beneficiary by filing written (or in
such other form as permitted by the Internal Revenue Service) notice of such
revocation or change with the Administrator. However, the Participant's spouse
must again consent in writing (or in such other form as permitted by the
Internal Revenue Service) to any change in Beneficiary of that portion of the
death benefit that would otherwise be paid as a Pre-Retirement Survivor Annuity
unless the original consent acknowledged that the spouse had the right to limit
consent only to a specific Beneficiary and that the spouse voluntarily elected
to relinquish such right. That portion of the death benefit remaining after the
"minimum spouse's death benefit" shall be paid to the Participant's designated
Beneficiary. In the event no valid designation of Beneficiary exists, or if the
Beneficiary is not alive, at the time of the Participant's death, the death
benefit shall be payable in accordance with Paragraph 6.6. Additionally, if the
Beneficiary does not predecease the Participant, but dies prior to the
distribution of the death benefit, the death benefit will be paid to the
Beneficiary's estate.
(5) The benefit payable under this subparagraph (f) shall be
paid pursuant to the provisions of Article IX.
(6) In no event shall the death benefit payable to a surviving
spouse be less than the Actuarial Equivalent of the "minimum spouse's death
benefit."
(7) For the purposes of this Section, the "minimum spouse's
death benefit" means a death benefit for a Vested married Participant payable in
the form of a Pre-Retirement Survivor Annuity. Such annuity payments shall be
equal to the amount which would be payable as a survivor annuity under the joint
and survivor annuity provisions of the Plan if:
(A) in the case of a Participant who dies after the
Earliest Retirement Age, such Participant had retired with an immediate joint
and survivor annuity on the day before the Participant's date of death, or
37
(B) in the case of a Participant who dies on or before
the Earliest Retirement Age, such Participant had:
(i) separated from service on the earlier of the
actual time of separation or the date of death,
(ii) survived to the Earliest Retirement Age,
(iii) retired with an immediate joint and survivor
annuity at the Earliest Retirement Age based on the Participant's Vested
Accrued Benefit on date of death, and
(iv) died on the day after the day on which said
Participant would have attained the Earliest Retirement Age.
(g) Inactive Participants who are not credited with an Hour of
Service after August 22, 1984 shall be provided with rights to a
pre-retirement survivor annuity in accordance with Section 303(e)(2) of
the Retirement Equity Act of 1984 and not under the preceding terms of
this paragraph.
6.2 Commencement of Payment. To the extent the Traditional Formula
applies, unless a later date is elected by the Participant's Spouse, payment to
the Spouse of the Pre-Retirement Survivor Annuity or the Actuarial Equivalent
lump sum shall be made as soon as administratively feasible following the
Participant's Earliest Retirement Age (as defined in Paragraph 6.1). To the
extent the Cash Balance Formula applies, the Actuarial Equivalent of the
Pre-Retirement Survivor Annuity or the balance credited to the Participant's
Account shall be payable as soon as administratively feasible following the
Administrator's receipt of the Spouse's and/or Beneficiary's election(s).
Notwithstanding anything to the contrary herein, distribution of the
Pre-Retirement Survivor Annuity to a surviving Spouse must commence on or before
the later of: (1) December 31st of the calendar year immediately following the
calendar year in which the Participant died; or (2) December 31st of the
calendar year in which the Participant would have attained age 70 1/2 ("Required
Beginning Date"). Distribution to a designated Beneficiary (who is not the
Spouse) must be made by December 31st of the calendar year immediately following
the calendar year during which the Participant died.
6.3 Notice of Right to Waive Pre-Retirement Survivor Annuity. The
Administrator shall provide each Participant with a written explanation of the
terms and conditions of the Pre-Retirement Survivor Annuity in a manner
consistent with Treasury regulations within that of the following periods ending
last:
(a) the period beginning on the first day of the Plan Year in which
the Participant attains age 32 and ending on the last day of the Plan Year in
which the Participant attains age 34;
(b) a reasonable period after he became a Participant;
38
(c) a reasonable period ending after Code ss.401(a)(11) first
applies to the Participant;
(d) a reasonable period after the Participant's termination of
employment if the Participant's termination occurs prior to age 35.
6.4 Effective Waiver of Pre-Retirement Survivor Annuity.
(a) Election Period. A waiver of a Pre-Retirement Survivor Annuity
may be elected only during the period that begins on the first day of the Plan
Year in which the Participant attains age 35 (or, if he separates from Service
with the Employer prior to then, the date of separation) and ends on the date of
his death.
(b) Form of Election. The Participant's election shall be made in
writing on a form prescribed by the Administrator.
(c) Spousal Consent. The Participant's spouse must consent in
writing to a Participant's election under this paragraph. Such consent shall
acknowledge the effect of the election and shall be either notarized or
witnessed by a Plan representative.
(d) Revocation of Election; Subsequent Election(s). A Participant
may revoke his election at any time during the election period and make one (1)
or more subsequent elections at any time during the election period. A Spouse
who consents to a Participant's election may not revoke his or her consent to
the Participant's election. A subsequent election by the Participant resulting
in a change of form of benefit must be consented to by the Spouse at the time
the subsequent election is made.
(e) Valid Election Without Consent. Notwithstanding anything herein
to the contrary, a Participant's election under this paragraph shall be valid
without the Spouse's consent if the Participant establishes to the satisfaction
of the Plan Administrator that
(1) the Participant is not married at the time of the
election;
(2) after all reasonable efforts by the Participant, the
Spouse cannot be located; or
(3) there exists other circumstances not requiring spousal
consent, as provided under Treasury regulations.
6.5 Beneficiary Designation. Except as provided in subparagraph 6.1(f), no
beneficiary other than the Participant's Spouse shall be entitled to receive
death benefits payable by reason of a married Participant's death prior to his
Annuity Starting Date. To the extent the Cash Balance Formula applies to a
Participant who is not married at the time of his death prior to his Annuity
Starting Date, death benefits shall be paid to the Beneficiary designated by the
Participant.
39
6.6 No Beneficiary Designation. If a Participant fails to name a
Beneficiary in accordance with Paragraph 6.5, or if all designated Beneficiaries
predecease him or die before complete distribution of benefits, the Trustees
shall pay the Participant's remaining benefits in one of the methods specified
under Article IX in the following order of priority to:
(a) the surviving Spouse;
(b) surviving children, including adopted children, in equal shares;
or
(c) the legal representatives of the estate of the last to die of
the Participant and his Beneficiary.
40
Article VII
EMPLOYMENT TERMINATION BENEFITS
7.1 Termination of Employment. Any Participant who terminates from Service
prior to attaining Retirement Age shall be entitled to receive the Vested
portion of his Accrued Benefit in accordance with the terms of this Article.
Vesting shall be determined under the following schedule, based on his Years of
Vesting Service as of his termination date:
(a) For those Participants hired on or after January 1, 1989:
Years of Vesting Service Vested Percentage
------------------------ -----------------
Less than 5 0%
5 or more 100%
(b) For those Participants hired before January 1, 1989 credited
with at least 1 Hour of Service on or after January 1, 1989:
Years of Vesting Service Vested Percentage
------------------------ -----------------
Less than 4 0%
4 40%
5 or more 100%
If this Plan becomes Top Heavy, this vesting schedule shall be superceded by the
vesting schedule set forth in Article XIV.
7.2 Vesting Service.
(a) Except as otherwise provided in this paragraph, for purposes of
Paragraph 7.1, a "Year of Vesting Service" shall mean any Vesting Computation
Period during which the Participant completes at least 1000 Hours of Service
with the Employer. Should an Employee's Eligibility Computation Period overlap
two Vesting Computation Periods, and if such Employee completes 1000 Hours of
Service in the Eligibility Computation Period but fails to complete 1000 Hours
of Service in either of the overlapping Vesting Computation Periods, the Year of
Service completed for eligibility purposes shall also be considered a Year of
Vesting Service at the time the Employee becomes a Participant.
(b) With respect to any Employee described in Paragraph 3.9, all of
the Employee's service with Key Bank, N.A., Fleet Bank, Benefit Plans
Administrators, Chase Bank, Citizens Bank, FleetBoston, Pricewaterhouse Coopers,
LLP, Peoples Bankcorp, Inc.,
41
Grange National Banc Corp., First Heritage Bank or HSBC, as the case may be,
prior to such Employee's employment by the Employer shall be treated as Service
with the Employer for purposes of determining his Vested interest in his Accrued
Benefit under this Plan.
(c) With respect to any Employee described in Paragraph 3.10, all of
the Employee's service with Elias prior to April 3, 2000 shall be treated as
Service with the Employer for purposes of determining his Vested interest in his
Accrued Benefit under this Plan.
7.3 Break in Service. For purposes of this Article, a Participant shall
incur a Break in Vesting Service if during any Vesting Computation Period he
does not complete more than 500 Hours of Service with the Employer.
7.4 Determination of Years of Service for Vesting. All of the
Participant's credited Years of Vesting Service with the Employer shall be taken
into account in determining a Participant's Vested interest in the Plan, except
as follows:
(a) In the case of a Participant who has any One-Year Break in
Service, Years of Vesting Service before such Break shall be disregarded until
such Participant completes a Year of Vesting Service after his return to
employment.
(b) In the case of any Participant who incurs 5 or more consecutive
One-Year Breaks in Service and who at the time of his Termination of Employment
did not have a Vested right to any portion of his Accrued Benefit derived from
Employer Contributions, Years of Vesting Service before such break shall be
disregarded for purposes of vesting his Accrued Benefit that is earned after
such break if the number of consecutive One-Year Breaks in Service equals or
exceeds the number of Years of Vesting Service before such break. Such aggregate
number of Years of Vesting Service before such break shall not include any Years
of Vesting Service not required to be taken into account under this paragraph by
reason of any prior Break in Service.
(c) Years of Vesting Service after a period of 5 or more consecutive
One-Year Breaks in Service shall be disregarded for purposes of determining the
Participant's Vested interest in his Accrued Benefit that is earned before such
break.
(d) Notwithstanding (c) above, for the purpose of determining a
reemployed Participant's Vested interest in his Accrued Benefit earned after
such Participant's date of reemployment, if the Participant had a Vested
interest in his then Accrued Benefit when his prior period of employment
terminated, any Years of Vesting Service attributable to his prior period of
employment shall not be disregarded and shall be reinstated as of the date of
such Participant's reparticipation.
7.5 Forfeitures.
(a) Forfeiture of any portion of a Participant's Accrued Benefit
shall occur as of the date the Participant receives a lump sum distribution of
his Vested Accrued Benefit following his Termination of Employment. A
Participant who at his Termination of Employment
42
had no Vested right to his Accrued Benefit will be considered to have received a
lump sum distribution of his entire Vested Accrued Benefit on the last day on
which he performed an Hour of Service.
(b) Forfeitures for any Plan Year shall be applied to reduce the
Employer's contribution to the Trust for such Plan Year and succeeding Plan
Years and shall not revert to the Employer except as otherwise permitted herein.
7.6 Payment of Vested Benefit.
(a) To the extent the Traditional Formula applies, the Vested
Accrued Benefit of a Participant who terminates employment prior to attaining
Retirement Age shall become payable to the Participant, if living, in an
Actuarial Equivalent amount as soon as administratively feasible following the
date the Participant attains Retirement Age. Payment shall be made to the
Participant in the normal form in accordance with Paragraph 9.1 or an optional
form in accordance with Paragraph 9.3.
(b) To the extent the Cash Balance Formula applies, the Vested
Account balance of a Participant who terminates employment shall be payable to
the Participant as soon as administratively feasible following the
Administrator's receipt of appropriate election and consent forms. Payment shall
be made in accordance with Article IX.
(c) Notwithstanding subparagraphs (a) and (b), the single sum
Actuarial Equivalent of the Participant's Vested Accrued Benefit shall be paid
in a single sum as soon as practicable following his Termination of Employment
without his consent or the consent of his Spouse under any of the following
circumstances:
(1) for distribution occurring in Plan Years beginning before
August 6, 1997, the amount of such single sum did not exceed $3,500 at the time
of distribution;
(2) for distributions occurring in Plan Years beginning on or
after August 6, 1997, the amount of such single sum does not exceed $5,000 at
the time of distribution, regardless of the value of the Participant's Vested
Accrued Benefit at the time of any earlier distribution; however, this
subparagraph (2) shall not apply if a Participant has begun to receive
distribution of his Vested Accrued Benefit and there is still payable at least
one scheduled periodic distribution and the single sum present value of his
Vested Accrued Benefit exceeded $5,000 at the time the earlier distribution
began or was made.
7.7 Reemployment of Participant. If a former Participant who received a
distribution returns to Service and repays the entire amount previously
received, plus interest from the date of distribution at 120% of the Federal
mid-term rate (in effect under Code ss.1274 for the first month of the Plan Year
of payment) compounded annually, before the earlier of (i) the fifth anniversary
of the Participant's Reemployment Date or (ii) the close of a period of 5
consecutive One-Year Breaks in Service commencing after distribution, his
Accrued Benefit, Years of Creditable Service and Years of Vesting Service shall
be restored to the levels at the time of his termination of employment. If the
former Participant fails to repay the amount(s) plus
43
interest, his Accrued Benefit, Years of Creditable Service and Years of Vesting
Service attributable to his pre-Break Service shall be fully restored, but his
benefit payable upon his later termination from Service shall be reduced
actuarially by the value of amounts previously paid.
44
Article VIII
LIMITATION OF BENEFITS
8.1 Maximum Permissible Benefit.
(a) Except as otherwise provided in this Article, a Participant's
annual retirement benefit payable hereunder and expressed as a straight life
annuity with no ancillary benefits (hereinafter referred to in this Article as
the "Annual Benefit") shall not exceed the lesser of:
(1) $160,000 ($90,000 for Limitation Years ending before
January 1, 2002) multiplied by the Cost of Living Factor, and further multiplied
by a fraction (not to exceed 1), the numerator of which is the Participant's
Years of Participation, and the denominator of which is 10; or
(2) 100% of the Participant's Compensation for his high three
consecutive Years of Service, multiplied by a fraction (not to exceed 1), the
numerator of which is all of his Years of Service, and the denominator of which
is 10.
For purposes of this paragraph, a Year of Service shall mean any Eligibility
Computation Period, beginning on the Participant's first hire date or
thereafter, during which the Participant completed 1000 Hours of Service. The
limitation described in this subparagraph (a) shall be referred to in this
Article as the Participant's "Maximum Permissible Benefit".
(b) An Accrued Benefit payable in any form other than a straight
life annuity shall be adjusted to an equivalent straight life annuity. For
purposes of adjusting a benefit to an equivalent "annual benefit", the
equivalent "annual benefit" shall be the greater of the Actuarial Equivalent of
such "annual benefit" computed using the Plan interest rate and mortality table
(as determined under Paragraph 2.3) and the equivalent "annual benefit" computed
using 5% interest and the blended 1983 GAM table specified in Revenue Ruling
95-6, or such successor table as may be prescribed by the Secretary of the
Treasury. If the benefit is paid in a form other than a nondecreasing life
annuity payable for a period of not less than the life of the Participant or, in
the case of a Pre-Retirement Survivor Annuity, the life of the surviving spouse,
the annual interest rate on 30-year Treasury securities as published for the
second full calendar month (the "Lookback Month") preceding the first day of the
Plan Year (the "Stability Period") shall be substituted for 5% in the preceding
sentence. As the Effective Date of the Plan is after the first day of the first
Limitation Year beginning in 1995 (the "Retirement Protection Act of 1994
section 415 effective date"), all changes to Code ss.415(b)(2)(E) enacted in the
Retirement Protection Act of 1994 shall apply to all benefit calculations
hereunder.
8.2 Aggregation of Defined Benefit Plans. For purposes of this Article,
all defined benefit plans maintained by the Employer shall be considered as a
single plan.
45
8.3 Adjustments to Benefit Limitations.
(a) Retirement Prior to Social Security Retirement Age. If a
Participant's retirement benefit begins before the Participant's Social Security
Retirement Age under the Social Security Act, the dollar limitation under
Paragraph 8.1(a)(l) shall be reduced as follows:
(1) If payment commences prior to age 62, reduction of the
dollar limit under Paragraph 8.1(a)(1) shall be to the Actuarial Equivalent of
such dollar limit beginning at age 62, reduced for each month by which benefits
commence before the month the Participant attains age 62. The interest rate
assumption used to determine the Actuarial Equivalent shall be the greater of 5%
or the post-retirement interest rate described in Paragraph 2.3(b).
(2) If payment commences on or after age 62 and the
Participant's Social Security Retirement Age is 65, reduction of the dollar
limit under Paragraph 8.1(a)(l) shall be 5/9 of 1 % for each month by which
benefits commence before the month in which the Participant attains age 65.
(3) If payment commences on or after age 62 and the
Participant's Social Security Retirement Age is 66 or older, reduction of the
dollar limit under Paragraph 8.1(a)(l) shall be 5/9 of 1% for each of the first
36 months and 5/12 of 1 % for each additional month (up to 24 months) by which
benefits commence before the month of the Participant's Social Security
Retirement Age.
For Limitation Years ending after December 31, 2001, if a Participant's
retirement benefit begins before the Participant attains age 62, the dollar
limitation under Paragraph 8.1(a)(1) shall be reduced to the Actuarial
Equivalent of such dollar limit beginning at age 62, reduced for each month by
which benefits commence before the month the Participant attains age 62. The
interest rate assumption used to determine the Actuarial Equivalent shall be the
greater of 5% or the post-retirement interest rate described in Paragraph
2.3(b).
(b) Retirement After Social Security Retirement Age. If the
retirement benefit begins after the Participant's Social Security Retirement
Age, the dollar limitation under Paragraph 8.1(a)(l) shall be increased so that
it is the Actuarial Equivalent of the amount in such Paragraph 8.1 (a)(l)
beginning at the Participant's Social Security Retirement Age, multiplied by the
Cost of Living Factor. The interest rate assumption used to determine the
Actuarial Equivalent shall not exceed 5%.
For Limitation Years ending after December 31, 2001, if the retirement
benefit begins on or after the Participant 66th birthday, the dollar limitation
under Paragraph 8.1(a)(1) shall be increased so that it is the Actuarial
Equivalent of the amount in such Paragraph 8.1(a)(1) beginning at age 66,
multiplied by the Cost of Living Factor. The interest rate assumption used to
determine the Actuarial Equivalent shall not exceed 5%.
(c) No Anticipatory Adjustments. For purposes of adjusting the
Annual Benefit under this paragraph, no adjustments shall be taken into account
before the year for which such adjustment first takes effect.
46
8.4 Exception for Minimum Benefit. Notwithstanding the preceding
provisions of this Article, the Participant's retirement benefit shall be deemed
not to exceed the Maximum Permissible Benefit if (a) his Annual Benefit payable
under this Plan and under all other Defined Benefit Plans sponsored by the
Employer does not exceed $10,000, multiplied by a fraction (not to exceed 1) the
numerator of which is all of his Years of Service (as defined in Paragraph
8.1(a)) and the denominator of which is 10; and (b) the Participant never
participated in a Defined Contribution Plan maintained by the Employer.
8.5 Limitations for Defined Contribution Plans. Effective for Plan Years
beginning on or after December 31, 1994, the Annual Additions for any Limitation
Year for a Participant participating only in a Defined Contribution Plan
maintained by the Employer shall not exceed the lesser of: (i) $30,000
multiplied by the applicable Cost of Living Factor, or (ii) 25% of the
Participant's compensation as defined in Code ss.415(c)(3).
8.6 Limitation if Employer Maintains Defined Contribution Plan(s) in
Addition to this Plan. For Plan Years beginning prior to January 1, 2000, if an
Employee is or has ever been a Participant in one or more Defined Benefit Plans
and one or more Defined Contribution Plans maintained by the Employer or any
Affiliated Company, then for any Limitation Year the sum of the Participant's
Defined Benefit Plan Fraction and Defined Contribution Plan Fraction may not
exceed 1.0. If for any Limitation Year such sum would exceed 1.0, to the extent
necessary to avoid such excess (a) the Participant's voluntary contributions
which constitute Annual Additions to the Defined Contribution Plans of the
Employer and any Affiliated Company and Participant voluntary contributions to
this Plan shall be returned to him, and (b) the annual benefit which the
Participant would accrue for such Limitation Year under this Plan shall be
limited such that the sum of both fractions shall not exceed 1.0.
8.7 Definitions. For purposes of this Article, the following terms shall
have the following meanings:
(a) "Annual Additions" with respect to any Participant shall mean
the sum of the following amounts allocated to the Participant's Account in a
Defined Contribution Plan for a Limitation Year:
(1) all Employer contributions;
(2) all Employee contributions (excluding any Rollover
Amount);
(3) all forfeitures; plus
(4) amounts described in Code ss.415(i)(1) and amounts
described in Code ss.419(A)(d)(2), which are paid or accrued to a Key Employee,
but only for determining whether the dollar limit in Paragraph 8.5 is exceeded.
(b) "Limitation Year" shall mean the Employer's fiscal year or any
other 12 consecutive month period the Employer, by written resolution, adopts
for all plans of which it is the Employer.
47
(c) "Accounting Date" shall mean the date with respect to which the
plan administrator allocates all or any portion of Employer contributions,
Employee contributions, and Forfeitures (if any) to the Participants' Accounts.
(d) "Highest average compensation" shall mean the average
Compensation for the 3 consecutive years of service with the Employer that
produces the highest average.
(e) "Participant's Account" shall mean the account established and
maintained for each Participant with respect to his total interest in the
Defined Contribution Plan maintained by the Employer.
(f) (1) "Compensation" for purposes of the limitations contained in
this Article shall be the Participant's Compensation measured in relation to the
Limitation Year, adjusted in accordance with Treas. Regs. ss.1.415-2(d)(2) and
(3).
(2) For Limitation Years beginning on and after January 1,
2001, for purposes of applying the limitations described in Paragraphs 8.1 and
8.5, Compensation paid or made available during such limitation years shall
include elective amounts that are not includible in the gross income of the
Employee by reason of Code ss.132(f)(4).
(g) Social Security Retirement Age means:
(1) age 65 for a Participant attaining age 62 before January
1, 2000;
(2) age 66 for a Participant attaining age 62 after December
31, 1999 and before January 1, 2017;
(3) age 67 for a Participant attaining age 62 after December
31, 2016.
48
Article IX
PAYMENT OF BENEFITS
9.1 Form and Payment of Benefit. The retirement benefit payable to a
Participant hereunder shall be paid in accordance with the following:
(a) The normal form of benefit is, for a non-married Participant, a
life annuity, and for a married Participant, a Qualified Joint and Survivor
Annuity which is the Actuarial Equivalent of his Accrued Benefit payable in the
form of a life annuity. Prior to distribution, the Administrator shall obtain
the consent of the Participant and, if he is married, the Participant's Spouse,
if required pursuant to Paragraph 9.9.
(b) Subject to the terms of Paragraph 9.4, unless the Participant
elects a later beginning date in writing, the Trustee shall commence
distribution of a Participant's benefit not later than 60 days after the close
of the Plan Year in which the latest of the following occurs:
(1) The earlier of the Participant's Normal Retirement Date,
or the date he attains age 65;
(2) The tenth anniversary of the year in which the Participant
commenced participation in the Plan; or
(3) The date on which the Participant terminates Service with
the Employer.
(c) Notwithstanding the terms of subparagraph (a), a Participant may
elect at any time during the 90-day period ending on his Annuity Starting Date
to receive an optional form of benefit under Paragraph 9.3 or to select a
non-Spouse Beneficiary, however, a married Participant must obtain the consent
of his Spouse to either such election unless otherwise provided in this Article.
9.2 Notice of Right to Waive Normal Form and Select Optional Form.
(a) Subject to the provisions of subparagraph (b) below, no less
than 30 days nor more than 90 days before the Participant's Annuity Starting
Date, the Administrator shall provide the Participant a written explanation of
the terms and conditions of the normal form of benefit, including the
Participant's right to make and the effect of an election to waive the normal
form of benefit, the material features and relative values of the available
optional forms of benefit, the rights of the Participant's Spouse regarding the
waiver election, and the Participant's right to make and the effect of a
revocation of a waiver election.
(b) Effective for Plan Years beginning after December 31, 1996, the
Participant may elect to begin receiving his benefits less than 30 days after
the Participant receives the written explanation described in subparagraph (a)
above, provided that:
49
(1) the Administrator clearly informs the Participant of the
Participant's right to a period of at least 30 days after receipt of the
explanation to consider the decision to receive his benefit and to elect an
optional form;
(2) the distribution does not begin before the end of the
7-day period that begins the day after the Participant's receipt of the written
explanation;
(3) the Participant affirmatively elects distribution after
receipt of the notice;
(4) the Participant is notified of his right to revoke his
election prior to the end of the 7-day period described in subparagraph (b)(2)
above and does not revoke his election within that time period; and
(5) in accordance with Paragraph 9.5 his Spouse consents to
the optional form chosen (if any) and to the waiver of the 30-day notice period.
9.3 Optional Forms of Benefit.
(a) Participant's Waiver and Election of Optional Form. A
Participant may elect, under the procedure described in Paragraph 9.5, to waive
his normal form of benefit and select an Actuarial Equivalent form under one of
the following options:
(1) a life annuity, payable no less frequently than annually,
with payments ending on the Participant's death;
(2) a life annuity with 60 monthly payments guaranteed;
(3) a joint life and last survivor annuity, with payments
ending on the death of the survivor of the Participant and the contingent
annuitant (Payments to the contingent annuitant shall be equal to 50%, 75% or
100% of the monthly amount paid to the Participants.);
(4) a joint life and last survivor annuity, payable no less
frequently than annually, with 60 monthly payments guaranteed;
(5) to the extent the Cash Balance Formula applies, or
subparagraph 5.2(a)(9), 5.2(a)(10), 5.3(d) or 5.3(e) applies, a single lump sum
payment; and
(6) with respect to any vested Participant who terminated
employment for any reason after December 31, 2003 and before October 1, 2004, a
single lump sum payment; provided that such a Participant must make the lump sum
election by June 30, 2005. Eligible Participants who make the foregoing election
and who previously commenced receipt of Plan benefits shall be considered to
have a new Annuity Starting Date and shall have the elected lump sum payment
reduced by the value of Plan benefits previously paid.
50
(b) Cash-Out. Notwithstanding the normal form of benefit or any
optional form selected by the Participant, the Actuarial Equivalent of the
Participant's Vested Accrued Benefit shall be paid in a single sum under any of
the following circumstances:
(1) for distribution occurring in Plan Years beginning before
August 6, 1997, the amount of such single sum does not exceed $3,500 at the time
of distribution; or
(2) for distributions occurring in Plan Years beginning on or
after August 6, 1997, the amount of such single sum does not exceed $5,000 at
the time of distribution, regardless of the value of the Participant's Vested
Accrued Benefit at the time of any earlier distribution; however, this
subparagraph shall not apply if a Participant has begun to receive distribution
of his Vested Accrued Benefit and there is still payable at least one scheduled
periodic distribution and the single sum present value of his Vested Accrued
Benefit exceeded $5,000 at the time the earlier distribution began or was made.
Such distributions may be made without the consent of either the Participant or
his Spouse; however, if distribution is to be made after the Annuity Starting
Date, the Participant and his Spouse (or if the Participant has died, the
surviving Spouse) must consent in writing to such distribution in accordance
with Paragraph 9.9.
(c) Selection of Form by Beneficiary. Following a Participant's
death the Beneficiary may elect to receive his or her benefit under any of the
options listed in subparagraph (a), unless the Participant irrevocably elects an
optional form of benefit to be paid to his Beneficiary.
(d) Alternate Form to Comply With Minimum Distribution Rules. No
alternate form of benefit described in subparagraph (a) shall result in an
annual payment to a Participant or his Beneficiary which fails to comply with
the minimum distribution rules under Code ss.401(a)(9), as generally described
in Paragraph 9.4. The Administrator shall, after consultation with the
Participant (or his Beneficiary, as the case may be), modify such non-complying
form to the extent necessary to conform the selected mode of payment to such
rules.
(e) Validity of ss.242(b)(2) Elections. Notwithstanding the
foregoing provisions of this Article, the Administrator shall pay the
Participant's retirement benefit in accordance with his timely written election
which meets the requirements of ss.242(b)(2) of the Tax Equity and Fiscal
Responsibility Act of 1982, provided that a married Participant's Spouse
consents in writing to such election, which consent is either notarized or
witnessed by a Plan representative.
(f) Validity of Waiver. A Participant's waiver of the normal form of
retirement benefit or pre-retirement death benefit and election of an optional
form under this paragraph shall be valid only if executed in accordance with
Paragraph 9.5.
(g) Participant Consent to Early Distributions. No distribution of
an optional form of benefit to the Participant (except a cash-out under
subparagraph (b)) may be made without the Participant's prior consent, if
required under the provisions of Paragraph 9.9.
51
9.4 Minimum Distribution Rules.
(a) Benefits under this Plan shall be paid in a form that, as of the
Required Beginning Date, satisfies the minimum distribution rules and minimum
distribution incidental benefit rules under this paragraph, Code ss.401(a)(9)
and Treas. Reg. ss. 1.401(a)(9)-2. If any provision of this Plan is inconsistent
with Code ss.401(a)(9), the provisions of Code ss.401(a)(9) shall control.
(b) The Administrator shall, after consultation with the Participant
(or his Beneficiary, as the case may be), modify any noncomplying form of
payment to the extent necessary to conform the selected mode of payment to such
rules.
(c) Without limiting the generality of the foregoing provisions of
this paragraph, a Participant's Accrued Benefit payable to the Participant must
be distributed:
(1) in its entirety to the Participant on or before his
Required Beginning Date, or
(2) in two or more payments, beginning on or before his
Required Beginning Date, over a period of time not extending beyond the
Participant's life, the lives of the Participant and his Designated Beneficiary,
the Participant's life expectancy, or the joint life and last survivor
expectancy of the Participant and his Designated Beneficiary.
(d) If the Participant dies prior to the date benefit payments have
begun (determined in accordance with Code ss.401(a)(9)), the following rules
apply:
(1) With respect to benefits payable other than to a
Designated Beneficiary, the benefits shall be distributed in their entirety by
no later than December 31 of the calendar year in which occurs the fifth
anniversary of the Participant's death;
(2) The portion of the Participant's benefit payable to a
Designated Beneficiary shall commence by December 31 of the calendar year
immediately following the calendar year of the Participant's death, and shall be
distributed in minimum amounts in accordance with Code ss.401(a)(9), over the
life of the Designated Beneficiary or over a period not longer than the
Designated Beneficiary's life expectancy as selected by the Designated
Beneficiary. Alternatively, the Designated Beneficiary may irrevocably elect to
receive all benefits by no later than December 31 of the calendar year
containing the fifth anniversary of the Participant's death. Such election must
be made by the earlier of:
(A) December 31 of the calendar year in which
distributions would, absent such election, be required to begin to the
Designated Beneficiary; or
(B) December 31 of the calendar year containing the
fifth anniversary of the Participant's death.
52
Absent such election, payments shall be made over the life expectancy of the
Designated Beneficiary, commencing by December 31 of the calendar year following
the Participant's death. With respect to benefits payable to the surviving
Spouse, payment need not commence until the later of (i) December 31 of the
calendar year immediately following the calendar year of the Participant's
death, or (ii) December 31 of the calendar year in which the Participant would
have attained age 70 1/2.
(e) Death of Participant After Payments Begin. If the Participant
dies after the date benefit payments have begun (determined in accordance with
Code ss.401(a)(9)), the balance of the Participant's benefit shall be
distributed at least as rapidly as under the method of distribution in effect as
of the date of his death.
(f) Definitions. For purposes of this Article:
(1) "Required Beginning Date" shall mean:
(A) for a Participant who is a 5% owner (as determined
under Code ss.401(a)(9)), the April 1 following the calendar year in which he
attains age 70 1/2; and
(B) effective for Plan Years beginning after December
31, 1996, for all other Participants, the April 1 following the later of (i) the
calendar year in which he attains age 70 1/2 or (ii) the calendar year in which
he retires. If the Participant becomes a 5% owner after attaining age 70 1/2,
his Required Beginning Date shall be the April 1 immediately following the
calendar year with or within which ends the Plan Year in which the Participant
became a 5% owner.
(2) "Designated Beneficiary" shall mean such person or entity
named by the Participant or named pursuant to Paragraph 6.6 to receive benefits
following the Participant's death, who (or which) qualifies as a "designated
beneficiary" under Code ss.401(a)(9).
(g) Effect of Disclaimer. Any Designated Beneficiary may disclaim
all or any portion of the benefit to which the Designated Beneficiary is
entitled at any time within 9 months following the Participant's death. Such
disclaimed portion shall then be payable to such alternate Beneficiary
designated by the Participant to receive the disclaimed portion, or in the
absence of such contingent designation, to such individual(s), in the order of
priority, designated in Paragraph 6.6.
9.5 Election Procedure-Qualified Waivers.
(a) Election Period. A married Participant's waiver of a Qualified
Joint and Survivor Annuity or an unmarried Participant's waiver of a straight
life annuity may be elected only during the 90-day period ending on the Annuity
Starting Date.
(b) Form of Election. The Participant's election shall be made in
writing on a form prescribed by the Administrator.
53
(c) Spousal Consent. No election of an optional form of benefit by a
married Participant shall be effective without the written consent of the
Participant's Spouse. Such consent shall acknowledge the effect of the election
and shall be either notarized or witnessed by a Plan representative.
(d) Revocation of Election; Subsequent Election(s). A Participant
may revoke his election at any time during the applicable election period, and
he or she may make one or more subsequent elections at any time during the
applicable election period. A Spouse who consents to a Participant's election
may not revoke his or her consent to that election. A subsequent election by the
Participant resulting in a change of Beneficiary or form of benefit must be
consented to by the Participant's Spouse at the time the subsequent election is
made, unless the Spouse executed a general consent. Such consent must, in
addition, acknowledge the specific non-spouse Beneficiary including any class of
beneficiaries or any contingent Beneficiaries.
(e) Valid Election Without Consent. Notwithstanding anything herein
to the contrary, a Participant's election under this paragraph shall be valid
without the Spouse's consent if the Participant establishes to the satisfaction
of the Administrator that:
(1) the Participant is not married at the time of the
election;
(2) after all reasonable efforts by the Participant, the
Participant's Spouse cannot be located; or
(3) there exists other circumstances not requiring spousal
consent, as provided under Treasury regulations.
9.6 Qualified Domestic Relations Orders. For purposes of this Article and
Article XV, to the extent provided in a Qualified Domestic Relations Order (as
defined in Article XV), a Participant's Spouse or former Spouse who is entitled
to any portion of the Participant's Accrued Benefit shall be treated as the
Participant's Spouse or surviving Spouse, as the case may be, with respect to
the portion of the Accrued Benefit to which he or she may be entitled under such
Qualified Domestic Relations Order. With respect to the remaining portion (if
any) of the Participant's Accrued Benefit, the Participant's former Spouse shall
be treated as not married to the Participant.
9.7 Post-Distribution Credits. If after payment has commenced there shall
be additional benefits accrued by a Participant, the Administrator shall direct
adjustment of the remaining payments so as to include all such credited sums, as
nearly evenly as possible, in the remaining payments.
9.8 Incompetency of Recipient. In the event of the incompetency of a
Participant or Beneficiary at any time while he or she is entitled to receive
benefits under the Plan, the Trustees, in their sole discretion, may pay such
benefits to the legal representative of such incompetent or to such other person
as the Trustees shall deem appropriate.
54
9.9 Required Consents.
(a) (1) If the Participant's Vested Accrued Benefit cannot be
distributed under Paragraphs 7.6(b) or 9.3(b), the Participant and the
Participant's Spouse (or where either the Participant or the Spouse has died,
the survivor) must consent to any distribution of the Vested Accrued Benefit.
Such consent shall be obtained in writing within the 90-day period ending on the
Annuity Starting Date. The Administrator shall notify the Participant and the
Participant's Spouse of the right to defer any distribution until the
Participant's Accrued Benefit is no longer immediately distributable. Such
notification shall describe the material features and explain the relative
values of the optional forms of benefit available under the Plan in a manner
that would satisfy the notice requirements of Paragraph 9.2. The notice shall be
provided no less than 30 days but no more than 90 days prior to the Annuity
Starting Date, except as provided in subparagraph (a)(2) below.
(2) The written explanation described in subparagraph (a)(1)
may be provided after the Annuity Starting Date, in which case the 90-day
election period shall not end before the 30th day after the date on which such
explanation is provided. The Secretary may by regulations limit the period of
time by which the Annuity Starting Date precedes the provision of the written
explanation.
A Participant may elect (with spousal consent if the Participant is
married) to waive any requirement that the written explanation be provided at
least 30 days before the Annuity Starting Date, and may waive the 30-day
requirement under the foregoing provisions of this subparagraph, if the
distribution commences more than 7 days after the explanation is provided.
(b) Notwithstanding the foregoing, only the Participant need consent
to the commencement of a distribution in the form of a Qualified Joint and
Survivor Annuity while the benefit is immediately distributable. Neither the
consent of the Participant or the Participant's Spouse shall be required to the
extent that a distribution is required to satisfy Code ss.ss.401(a)(9) or 415.
(c) A benefit is immediately distributable if any part of the
benefit could be distributed to the Participant (or surviving Spouse) before the
Participant attains (or would have attained had he not died) the later of his
Normal Retirement Age or age 62.
9.10 Annuity Contracts. Any annuity form of distribution may be
distributed to the annuitant in the form of an annuity contract, provided that
such contract is by its terms non-transferable (except for surrender to the
obligor under such contract). The terms of any such contract shall comply with
the requirements of this Plan and, in the event of any conflict, the terms of
this Plan shall control.
9.11 Loans to Participants. Loans to Participants or Beneficiaries shall
not be allowed from this Plan.
55
9.12 Direct Rollover.
(a) Rollover to Eligible Plan. Notwithstanding any contrary
provision in this Plan, a Distributee may elect, at the time and in the manner
prescribed by the Plan Administrator, to have any portion of an Eligible
Rollover Distribution paid directly to an Eligible Retirement Plan specified by
the Distributee in a Direct Rollover.
(b) Definitions. For purposes of this paragraph:
(1) "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 and the Distributee's
designated beneficiary, or for a specified period of 10 years or more; any
distribution to the extent such distribution is required under Code
ss.401(a)(9); nor the portion of any distribution that is not includable in
gross income (determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities). For distributions made after
December 31, 2001, any amount that is distributed on account of hardship shall
not be an eligible rollover distribution and the distribute may not elect to
have any portion of such a distribution paid directly to an eligible retirement
plan.
(2) "Eligible Retirement Plan" means an individual retirement
account described in Code ss.408(a), an individual retirement annuity described
in Code ss.408(b), an annuity plan described in Code ss.403(a), or a qualified
trust described in Code ss.401(a), that accepts the Distributee's Eligible
Rollover Distribution. However, in the case of an Eligible Rollover Distribution
to the surviving Spouse, an Eligible Retirement Plan is limited to an individual
retirement account or individual retirement annuity.
For distributions made after December 31, 2001, an eligible
retirement plan shall also mean an annuity contract described in Code ss.403(b)
and an eligible plan under Code ss.457(b) which is maintained by a state,
political subdivision of a state, or any agency or instrumentality of a state or
political subdivision of a state, and which agrees to separately account for
amounts transferred into such plan from this Plan. The definition of eligible
retirement plan shall also apply in the case of a distribution to a surviving
spouse, or to a spouse or former spouse who is the alternative payee under a
qualified domestic relation order, as defined in Code ss.414(p).
(3) "Distributee" means an Employee or former Employee, his or
her surviving Spouse, or his or her Spouse or former Spouse who is the Alternate
Payee under a Qualified Domestic Relations Order (as defined in Paragraph 15.5)
with regard to the interest of the Spouse or former Spouse.
(4) "Direct Rollover" means a payment by the Plan to the
Eligible Retirement Plan specified by the Distributee.
56
(c) Automatic Rollover. Effective as of March 28, 2005, absent an
affirmative election by the Distributee, an Eligible Rollover Distribution of an
amount in excess of $1,000 but not exceeding $5,000 which is required to be
distributed to the Distributee without the consent of the Distributee (in
accordance with the applicable terms of the Plan) shall be rolled over into an
individual retirement plan, as defined in Code Section 7701(a)(37), established
for the benefit of the Distributee. The establishment of the individual
retirement plan shall comply with the requirements of 29 C.F.R. 2550.404a-2.
Automatic rollovers from the Plan shall be administered in accordance with, and
shall be subject to, the requirements of Code Sections 401(a)(31) and 402.
57
Article X
CONTRIBUTIONS
10.1 Fund. The funding of the Plan and payment of the benefits hereunder
will be provided through, and only through, the medium of a Trust Fund to which
contributions shall be made by the Employer as provided herein, and which shall
be held by the Trustee under the provisions of this Plan and Trust. This Plan
confers no right to any Participant, Beneficiary or any other person claiming
through such Participant or Beneficiary to any asset of the Employer to provide
the benefits provided hereunder.
10.2 Employer Contributions. The Employer intends to make from time to
time such contributions to the Trust Fund as determined necessary or appropriate
by the Plan Administrator to fund the Plan in accordance with the minimum
funding standards of the Code, and to make such contributions in periodic
installments as may be required under ERISA or the Code. Administration expenses
of the Plan, unless paid by the Employer, will be paid out of the assets of the
Trust Fund.
10.3 Employee Contributions. No Participant shall be required or allowed
to make contributions to the Trust.
10.4 Rollover Contribution. Rollover Contributions will not be accepted by
the Plan.
58
Article XI
EMPLOYER ADMINISTRATIVE PROVISIONS
11.1 Information to Administrator. The Employer shall supply current
information to the Administrator as to the name, date of birth, date of
employment, annual compensation, leaves of absences, Service and date of
termination of employment of each Employee who is, or who will be eligible to
become, a Participant under the Plan, together with any other information which
the Administrator considers necessary. The Employer's records as to the current
information the Employer furnishes to the Administrator shall be conclusive as
to all persons.
11.2 No Liability. Except as specifically provided herein, the Employer
assumes no obligation or responsibility to any of its Employees, Participants or
Beneficiaries for any act or failure to act on the part of the Trustees or the
Administrator.
11.3 Indemnity of Administrator. To the maximum extent not prohibited by
law, the Employer shall indemnify and hold harmless the Administrator from and
against any and all loss, liability or expense incurred by the Administrator by
reason of any act or conduct (except that amounting to the Administrator's
willful misconduct or gross negligence) in the administration of the Trust or
Plan or both, including all expenses reasonably incurred in the Administrator's
defense in case the Employer fails to provide such defense.
59
Article XII
PARTICIPANT ADMINISTRATIVE PROVISIONS
12.1 Personal Data to Plan Administrator. Each person entitled to benefits
hereunder must furnish to the Administrator such evidence, data or information
as the Administrator considers necessary or desirable for the purpose of
administering the Plan. The provisions of this Plan are effective for the
benefit of each Participant upon the condition precedent that each Participant
furnish promptly full, true and complete evidence, data and information when
requested by the Administrator.
12.2 Address for Notification. Each Participant and each Beneficiary of a
deceased Participant shall file with the Administrator from time to time, in
writing, his post office address and any change of post office address. Any
communication, statement or notice addressed to a Participant or Beneficiary at
his last post office address filed with the Administrator, or as shown on the
records of the Employer, shall bind the Participant, or Beneficiary, for all
purposes of this Plan.
12.3 Assignment or Alienation. Except as permitted under the Code and/or
ERISA, neither a Participant nor a Beneficiary shall transfer, assign or
alienate any benefit provided under the Plan, nor shall such benefit be subject
to attachment, execution, garnishment or other legal or equitable process, and
the Trustee shall not recognize any such transfer, assignment, alienation,
attachment, execution or legal or equitable process.
12.4 Litigation Against the Trust. If any legal action filed against the
Trustee or the Administrator, or against any individual Administrator, by or on
behalf of any Participant or Beneficiary, results adversely to the Participant
or to the Beneficiary, the Trustee shall reimburse itself or the Administrator
all costs and fees expended by it or him by surcharging, to the extent such
surcharging is not prohibited by ERISA, all costs and fees against the sums
payable under the Plan to the Participant or to the Beneficiary.
12.5 Denial of Claim.
(a) If the Plan Administrator denies a claim in whole or in part, it
shall send the claimant a written notice of the denial.
(b) The Plan Administrator shall send the denial notice within 90
days after the date if receives a claim, unless it needs additional time to make
its decision. In that case, the Plan Administrator may authorize an extension of
up to an additional 90 days, if it notifies the claimant of the extension within
the initial 90-day period. The extension notice shall state the reasons for the
extension and the expected decision date.
(c) The denial notice shall be written in a manner calculated to be
understood by the claimant and shall contain:
(1) The specific reason or reasons for the denial of the
claim;
60
(2) Specific reference to pertinent Plan provisions on which
the denial is based;
(3) A description of any additional material or information
necessary to perfect the claim, with an explanation of why the material or
information is necessary;
(4) An explanation of the review procedures provided by
Section 12.6 and 12.7; and
(5) A statement regarding the claimant's right to commence a
civil action.
12.6 Request for Review of Denial.
(a) Within 60 days after the claimant receives a denial notice, the
claimant may file a request for review with the Plan Administrator. Any such
request must be made in writing.
(b) A claimant who timely requests review shall have the right to
review documents affecting the claim, to submit additional information or
written comments, and to be represented.
12.7 Review Decision.
(a) The Plan Administrator shall send the claimant a written
decision on any request for review that it receives.
(b) The Plan Administrator shall send the review decision within 60
days after the date it receives a request for review, unless an extension of
time is needed, due to special circumstances. In that case, the Plan
Administrator may authorize an extension of up to an additional 60 days,
provided it notifies the claimant of the extension within the initial 60-day
period.
(c) The review decision shall be written in a manner calculated to
be understood by the claimant and shall contain:
(1) The specific reason or reasons for the decision;
(2) Specific reference to the pertinent Plan provisions on
which the decision is based; and
(3) A statement regarding the claimant's right to commence a
civil action.
(d) If the Plan Administrator does not send the claimant a review
decision within the applicable time period, the claim shall be deemed denied on
review.
61
(e) The review decision (including a deemed decision) shall be the
final decision of the Plan.
62
Article XIII
ADMINISTRATION
13.1 Appointment; Compensation.
(a) The Employer shall appoint one or more persons (whether or not
Participants) to act as Administrator. In the absence of such appointment, the
Employer shall act as Administrator.
(b) The Administrator shall serve without compensation, but the
Employer shall pay all expenses of the Administrator including the expense for
any bond required under ERISA.
13.2 Term. The Administrator shall serve until its successor is appointed.
Any Administrator may resign upon 10 days' prior written notice. The Employer
may remove any individual acting as Administrator at any time and, in its
discretion, appoint a successor whenever a vacancy occurs.
13.3 Action During Vacancy. In case of a vacancy in the position of
Administrator, the persons remaining to act as Administrator may exercise any
and all of the powers, authority, duties and discretion conferred upon the
Administrator pending the filling of the vacancy.
13.4 General Powers and Duties. The Administrator shall have the authority
and responsibility to administer the Plan. The Administrator shall have all
powers necessary or appropriate to administer the Plan, including, but not
limited to the following:
(a) to select a secretary, who need not be an individual;
(b) to direct the Trustee as respects the crediting and distribution
of the Trust fund;
(c) to furnish the Employer with information required by the
Employer for tax or other purposes;
(d) to engage the service of actuaries, agents, accountants,
attorneys, physicians or such other personnel, whom it may deem advisable to
assist it with the performance of its duties;
(e) to engage the services of an Investment Manager who shall have
full power and authority to manage, acquire or dispose (or direct the Trustees
with respect to acquisition or disposition) of any Plan asset under its control;
(f) to be the sole and exclusive arbiter of all questions arising
with respect to issues under the Plan as to coverage and eligibility, both as to
participation and as to benefits and the amount thereof, including, without
limitation, the determination of those individuals who are
63
deemed employees of the Employer (or any controlled group member). This Plan is
to be construed to exclude all individuals who are not classified by the
Employer as employees for purposes of the Employer's payroll system, and the
Administrator is authorized to do so, despite the fact that its decision may
result in the loss of the Plan's tax qualification;
(g) to adopt rules of procedure and regulations as the Administrator
deems desirable for the conduct of the administration of the Plan;
(h) to interpret the terms of the Plan and the Administrator's rules
and regulations, and to determine all questions arising in the administration,
interpretation and application of the Plan;
(i) to render and review decisions respecting claims for benefits
and rights under the Plan;
(j) to make factual determinations relating to the value of a
Participant's Accrued Benefit and the right to receive such Accrued Benefit;
(k) to determine whether a domestic relations order constitutes a
Qualified Domestic Relations Order and whether a putative Alternate Payee
otherwise qualifies for benefits hereunder; and
(1) to correct any defect, supply any omission or reconcile any
inconsistency, including but not limited to mathematical or arithmetical errors,
in such manner and to such an extent as it shall deem necessary to carry out the
purposes of this Plan.
Any final decision by the Administrator shall be binding and
conclusive on all parties concerned. The Administrator shall have absolute,
exclusive, total and complete discretion in carrying out the Administrator's
duties and responsibilities, and no decision by the Administrator shall be
modified or overturned upon judicial review unless it was arbitrary and
capricious or made in bad faith.
13.5 Funding Policy. The Administrator shall establish a funding policy
and method consistent with the objectives of the Plan and the requirements of
Title I of ERISA. The Administrator shall review, not less often than annually,
all pertinent Employee information and Plan data in order to review the funding
policy of the Plan and to determine the appropriate methods of carrying out the
Plan's objectives. The Administrator shall communicate annually to the Trustee
and to any Investment Manager the Plan's short-term and long-term financial
needs so that investment policy can be coordinated with Plan financial
requirements.
13.6 Manner of Action. The decision of a majority of persons acting as
Administrator shall control.
13.7 Authorized Representative. The Administrator may authorize anyone of
its members to sign on its behalf any notices, directions, applications,
certificates, consents,
64
approvals, waivers, letters or other documents. The Administrator must evidence
this authority by an instrument signed by all members and filed with the
Trustees.
13.8 Interested Member. No Administrator may decide or determine any
matter concerning the distribution, nature or method of settlement of his own
benefits under the Plan, unless he is acting alone in the capacity of the
Administrator.
13.9 Annual Statement. As soon as practicable after the Valuation Date of
each Plan Year but within the time prescribed by ERISA and the regulations under
the Act, the Plan Administrator shall deliver to each Participant (and to each
Beneficiary) a statement reflecting his Accrued Benefit in the Plan as of such
Valuation Date and such other information the Act required by ERISA to be
furnished to the Participant or Beneficiary.
13.10 Unclaimed Benefit Procedure.
(a) Neither the Trustees nor the Administrator shall be obliged to
search for, or ascertain the whereabouts of, any Participant or Beneficiary. The
Administrator, by certified or registered mail addressed to his last known
address of record with the Administrator or the Employer, shall notify any
Participant, or Beneficiary, that he is entitled to a distribution under this
Plan, and the notice shall quote the provisions of this paragraph.
(b) If the Participant or Beneficiary fails to claim his benefit or
make his whereabouts known in writing to the Administrator within 6 months from
the date of mailing of the notice or before this Plan is terminated or
discontinued, whichever should first occur, the Administrator shall request a
third party of the Administrator's choice to locate such Participant or
Beneficiary. If after a 2-year period commencing from the date the Administrator
notifies the Trustees that a Participant's Accrued Benefit is to be distributed,
a Participant or his Beneficiary fails to claim his benefit, the Administrator
may either treat as a Forfeiture, or permanently segregate such benefit for the
Participant or Beneficiary in any manner acceptable under ERISA.
(c) The forfeiture of a Participant's unclaimed benefit shall be
subject to the right of the Participant (or, following the Participant's death,
the Participant's Beneficiary) at any time to make a claim for such benefit. In
the event a Participant or the Participant's Beneficiary claims such forfeited
amount, the Employer shall contribute such additional amount to the Plan as is
required to make complete distribution to the claimant, but if the Trust is not
in existence, the Employer shall pay such amount directly to the claimant.
65
Article XIV
TOP HEAVY REQUIREMENTS
14.1 General. If this Plan becomes Top Heavy with respect to any Plan
Year, the requirements of this Article must be met, notwithstanding any other
Plan provision to the contrary. The requirements of this Article will not apply,
however, to Participants who have ceased employment with the Employer before the
Plan becomes Top Heavy and who have not returned to employment with the Employer
in a Top Heavy Year.
14.2 Minimum Benefits for Top Heavy Plan.
(a) If the Employer does not maintain any qualified defined
contribution plan, and if this Plan becomes Top Heavy, then a minimum Normal
Retirement Benefit shall accrue for each Non-Key Employee Participant equal to
2% of his "average annual compensation", multiplied by the number of Years of
Participation (not to exceed 10) earned as a Non-Key Employee Participant in Top
Heavy Years ("Top Heavy Minimum Benefit"). For purposes of this Paragraph,
"average annual compensation" shall be the average of the Participant's "415
Compensation" for such five consecutive Top Heavy Years that produce the highest
average. "415 Compensation" shall mean compensation as defined in Treas. Regs.
ss.1.415-2(d). The Plan meets this requirement if the Non-Key Employee's Accrued
Benefit at the end of the Top Heavy Year is at least equal to the Top Heavy
Minimum Benefit.
For purposes of this paragraph, a Non-Key Employee Participant
includes any Employee eligible to participate in the Plan and entitled to
benefit accrual for the Plan Year but who does not participate solely because
his Compensation does not exceed a specified level. For purposes of this
paragraph, the Participant's Accrued Benefit and Top Heavy Minimum Benefit is
expressed as a straight life annuity payable annually beginning at Normal
Retirement Age.
If, at the end of any Top Heavy Year, a Non-Key Employee
Participant's Accrued Benefit is not at least equal to the Top Heavy Minimum
Benefit, the Participant shall earn the additional accrual necessary to increase
his Accrued Benefit to such Top Heavy Minimum Benefit. The Participant's Accrued
Benefit shall never be less than the Top Heavy Minimum Benefit, regardless of
whether the Plan is Top Heavy in Plan Years subsequent to a Top Heavy Year.
The Employer shall not impute Social Security benefits to
determine whether it has satisfied its obligation to provide the Top Heavy
Minimum Benefit, nor shall the Plan offset a Participant's Social Security
Benefit against his Top Heavy Minimum Benefit.
The provisions of this subparagraph (a) shall not apply to any
Participant to the extent the Participant is covered under any other defined
benefit plan of the Employer and the Employer has provided in such other plan
the Top Heavy Minimum Benefit.
66
For Plan Years beginning after December 31, 2001, if this Plan
is frozen, for purposes of satisfying the minimum benefit requirements of Code
ss.416(c)(1) and the Plan, in determining Years of Service with the Employer,
any service with the Employer shall be disregarded to the extent that such
service occurs during a Plan Year when the Plan benefits (within the meaning of
Code ss.410(b)) no Key Employee or former Key Employee.
(b) If the Employer maintains, in addition to this Plan, any
qualified defined contribution plan which is part of a Required or Permissive
Aggregation Group, and a Non-Key Employee participates in both plans, the
Non-Key Employee shall be entitled to the top heavy minimum benefit under this
Plan.
(c) The minimum benefit provided for a Participant under this
paragraph (to the extent such benefit is Vested) shall not be treated as
forfeitable solely because the Plan provides (i) that the payment of benefits is
suspended for such period as the Employee is employed, subsequent to the
commencement of payment of such benefits, or (ii) that, in the case of a
Participant who does not have a Vested right to at least 50% of his Accrued
Benefit derived from Employer contributions, such Accrued Benefit may be
forfeited on account of the withdrawal by the Participant of any amount
attributable to the benefit derived from mandatory contributions made by such
Participant.
14.3 Combined Plan Limits in Top Heavy Years.
(a) If for any Plan Year the Plan is Super Top Heavy, then for
purposes of the limitations on contributions and benefits under Code ss.415 as
described in Article V, the dollar limitations in the denominators of the
Defined Benefit Plan Fraction and the Defined Contribution Plan Fraction shall
be multiplied by 100% rather than 125% (as otherwise stated in the definitions
of such Fractions in Article II). The foregoing shall not apply in Plan Years
beginning after December 31, 1999.
(b) If reduction of the multiplier in the Defined Benefit and
Defined Contribution Plan Fractions from 125% to 100% would cause a Participant
to exceed the combined Code ss.415 limitations on contributions and benefits,
then the application of the provisions of Paragraph 14.2 shall be suspended as
to such Participant until such time as he no longer exceeds the combined Code
ss.415 limits. During the period of such suspension, there shall be no Employer
contributions allocated to such Participant under this Plan. The foregoing shall
not apply in Plan Years beginning after December 31, 1999.
14.4 Top Heavy Vesting. Notwithstanding anything to the contrary in
Article VII, the following vesting schedule shall apply in any Top Heavy Year
for any Participant who is credited with an Hour of Service after the Plan
becomes Top Heavy:
67
Years of
Vesting Service Vested Percentage
--------------- -----------------
Less than 3 0%
3 or more 100%
If following a Top Heavy Year this Plan ceases to be Top Heavy, a Participant's
Vested percentage of his Accrued Benefit shall be determined under the schedule
in Paragraph 7.1, subject to the Participant's right of election under Paragraph
19.3. No change in the Plan's Top Heavy status which alters the Plan's vesting
schedule shall reduce a Participant's Vested percentage of his Accrued Benefit
as determined immediately prior to the effective date of such change.
68
Article XV
QUALIFIED DOMESTIC RELATIONS ORDERS
15.1 Payment of Benefits to Alternate Payee. Notwithstanding the
prohibitions contained in Paragraph 12.3, all or a portion of a Participant's
Accrued Benefit shall be paid to one or more Alternate Payees in accordance with
the terms of a Qualified Domestic Relations Order entered into on or after
January 1, 1985.
15.2 Determination of Qualified Status.
(a) Initial Notice. Within 30 days following receipt of any domestic
relations order, or within such other time period as may be prescribed by
Treasury regulations, the Administrator shall notify the Participant and each
Alternate Payee in writing of its receipt and shall provide a copy of the
Administrator's procedures as outlined below for determining if such order
qualifies as a Qualified Domestic Relations Order.
(b) Notice of Determination. Within 90 days following the
Administrator's initial notice described in subparagraph (a) above, the
Administrator shall notify the Participant and each Alternate Payee in writing
of its determination whether the proposed order is qualified. If the order is
denied qualified status, the Administrator shall list the specific reasons
therefor. Whether or not the order is determined to be qualified, the
Administrator shall notify the Participant and each Alternate Payee of their
right to appeal such determination within 60 days after receipt of the
determination, and that failure to appeal such determination in writing within
the 60-day period will render such determination final, binding and conclusive.
The Administrator's notice shall identify the name of the Administrator and the
address to which appeal is to be forwarded.
(c) Appeal. If a Participant or Alternate Payee should appeal the
Administrator's decision, he may submit in writing all pertinent issues and
comments and may review pertinent Plan documents. The Administrator shall
re-examine all facts related to the appeal and make a final determination as to
whether the initial determination is justified under the circumstances. The
Administrator shall notify the appellant of the Administrator's decision within
such time period as provided in rules adopted by the Administrator.
15.3 Authorized Representative. An Alternate Payee may designate an
authorized representative to receive copies of all notices with respect to the
payment of benefits or claim for such payment under a domestic relations order.
The Alternate Payee shall notify the Administrator of such designation in
writing, which shall be effective upon its receipt by the Administrator.
15.4 Transition Rule. In the case of a domestic relations order entered
into before January 1, 1985, the Administrator shall treat such order as a
Qualified Domestic Relations Order if benefits pursuant to such order are in pay
status on January 1, 1985. In addition, the Administrator, in its sole
discretion, may treat any other order entered into before January 1,
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1985 as a Qualified Domestic Relations Order notwithstanding its failure to meet
all the requirements for qualification under Code ss.4l4(p).
15.5 Definitions.
(a) "Qualified Domestic Relations Order" shall mean a domestic
relations order that meets the requirements of Code ss.4l4(p).
(b) "Domestic relations order" shall mean any judgment, decree or
order, including approval of a property settlement agreement, which relates to
the provision of child support, alimony payments, or marital property rights of
a Spouse, former Spouse, child or other dependent of a Participant, and which is
made pursuant to a state domestic relations law (including community property
law).
(c) "Alternate Payee" shall mean a Spouse, former Spouse, child or
other dependent of a Participant who is recognized by a domestic relations order
as entitled to receive all or a portion of the benefits payable under a
qualified plan with respect to the Participant.
15.6 Method and Timing of Distribution.
(a) Distribution of benefits to an Alternate Payee specified in a
Qualified Domestic Relations Order shall be in any optional form of distribution
allowable under this Plan.
(b) A domestic relations order which requires payment to an
Alternate Payee prior to the Participant's "earliest retirement age" as defined
in Code ss.4l4(p)(4)(B) shall be allowable under this Plan.
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Article XVI
TRUSTEE POWERS AND DUTIES
16.1 Acceptance. The Trustees accept the Trust created under the Plan and
agree to perform the obligations imposed upon them hereunder. The Trustees shall
provide bond for the faithful performance of their duties under the Trust to the
extent required by ERISA.
16.2 Receipt of Contributions. The Trustees shall be accountable to the
Employer for the funds contributed to the Trust by the Employer, but shall have
no duty to see that the contributions received comply with the provisions of the
Plan. The Trustees shall not be obligated to collect any contributions from the
Employer, nor be obligated to see that funds deposited in the Trust are
deposited according to the provisions of the Plan.
16.3 Full Investment Powers. The Trustees shall have full discretion and
authority with regard to the investment of the Trust Fund, except with respect
to a Plan asset under the control or direction of a properly appointed
Investment Manager. The Trustees shall coordinate their investment policy with
the financial needs of the Plan as communicated to the Trustees by the
Administrator. The Trustees are authorized and empowered, but not by way of
limitation, with the following powers, rights and duties with respect to the
Trust Fund:
(a) to invest any or all of the Trust Fund in any common or
preferred stocks, bonds (including United States retirement plan bonds),
insurance contracts, mortgages, notes or other property of any kind, real or
personal, as a prudent man would do under like circumstances with due regard for
the purposes of this Plan;
(b) to retain in cash so much as the Trustees may deem advisable to
satisfy liquidity needs of the Plan and to deposit any cash in a bank account
without liability for the highest rate of interest available;
(c) to manage, sell, contract to sell, grant options to purchase,
convey, exchange, transfer, abandon, improve, repair, insure, lease for any term
even though commencing in the future or extending beyond the term of the Trust,
and otherwise deal with all property, real or personal, in such manner, for such
consideration and on such terms and conditions as the Trustees shall decide;
(d) to credit and distribute the Trust as directed by the
Administrator. The Trustees shall not be obliged to inquire as to whether the
distribution is proper or within the terms of the Plan, or as to the manner of
making any payment or distribution. The Trustees shall be accountable only to
the Administrator for any payment or distribution made by it in good faith on
the order or direction of the Administrator;
(e) to borrow money, to assume indebtedness, extend mortgages and
encumber by mortgage or pledge;
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(f) to compromise, contest, arbitrate or abandon claims and demands,
in their discretion;
(g) to have all of the rights of an individual owner, including the
power to give proxies, to participate in any voting trusts, mergers,
consolidations or liquidations, and to exercise or sell stock subscriptions or
conversion rights;
(h) to hold any securities or other property in the name of the
Trustees or their nominee, or in another form as they may deem best, with or
without disclosing the trust relationship;
(i) to perform any and all other acts in their judgment necessary or
appropriate for the proper and advantageous management, investment and
distribution of the Trust;
(j) to retain any funds or property subject to any dispute without
liability for the payment of interest, and to decline to make payment or
delivery of the funds or property until final adjudication is made by a court of
competent jurisdiction;
(k) to apply for one or more insurance contracts and to pay to the
insurer in accordance with such insurance contract(s) and otherwise to act as
contractholder under such insurance contract(s).
(1) to file all required tax returns; and
(m) to begin, maintain or defend any litigation necessary in
connection with the administration of the Plan.
16.4 Accounting. Upon request by the Administrator within 60 days after
the later of the Anniversary Date or receipt of the Employer's contribution for
the Fiscal Year, the Trustees shall furnish to the Employer and Administrator a
written statement of account with respect to the Fiscal Year for which such
contribution was made, and any prior period for which the Trustees have not
provided an accounting, setting forth:
(a) the net income or loss of the Trust Fund;
(b) the gains or losses realized by the Trust Fund upon sales or
other disposition of the assets;
(c) the increase or decrease in the value of the Trust Fund;
(d) all payments and distributions made from the Trust Fund; and
(e) such further information as the Trustees and/or Administrator
deems appropriate. The Employer, forthwith upon its receipt of each such
statement of account, shall acknowledge receipt thereof in writing and advise
the Trustees and/or Administrator of its
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approval or disapproval thereof. Failure by the Employer to disapprove any such
statement of account within a reasonable period after its receipt thereof shall
be deemed an approval thereof. The approval by the Employer of any statement of
accounting shall be binding as to all matters embraced therein as between the
Employer and the Trustees to the same extent as if the account of the Trustee
has been settled by judgment or decree in an action for a judicial settlement of
its account in a court of competent jurisdiction in which the Trustees, the
Employer and all persons having or claiming an interest in the Plan were
parties; provided, however, that nothing herein contained shall deprive the
Trustees of their right to have the accounts judicially settled if the Trustees
so desire.
16.5 Records and Statements. The Trustees' records shall be open to the
inspection of the Administrator and the Employer at all reasonable times and may
be audited from time to time by any person(s) as the Administrator may specify
in writing. The Trustees shall furnish the Administrator with whatever
information relating to the Trust Fund the Administrator considers necessary.
16.6 Fees and Expenses From Fund. The Trustees shall receive annual
compensation as may be agreed upon from time to time between the Employer and
the Trustees; however, no person who is receiving full pay from the Employer
shall receive compensation for services as Trustee. The Trustees shall pay all
expenses reasonably incurred by them in their administration of the Plan from
the Trust Fund unless the Employer pays the expenses.
16.7 Parties to Litigation. Except as otherwise provided by ERISA, only
the Employer, the Administrator, and the Trustees shall be necessary parties to
any court proceeding involving the Trust or the Trust Fund. No Participant or
Beneficiary shall be entitled to any notice of process unless required by ERISA.
Any final judgment entered in any proceeding shall be conclusive upon the
Employer, the Administrator, the Trustees, Participants and Beneficiaries.
16.8 Professional Agents. The Trustees may employ and reasonably
compensate from the Trust Fund such agents, attorneys, accountants and other
persons to advise the Trustees as in their opinion may be necessary and may act
or refrain from acting on such advice. The Trustees may delegate to any person
any such power or duty vested in them by the Plan to the extent not prohibited
by ERISA.
16.9 Third Party. No person dealing with the Trustees shall be obligated
to see to the proper application of any money paid or property delivered to the
Trustees, or to inquire whether the Trustees have acted pursuant to any of the
terms of the Plan. Each person dealing with the Trustees may act upon any
notice, request or representation in writing by the Trustees, or by the
Trustees' duly authorized agent, and shall not be liable to any person
whomsoever in so doing. The certificate of the Trustees that they are acting in
accordance with the Plan shall be conclusive in favor of any third person
relying on the certificate.
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16.10 Resignation, Removal and Appointment of Trustee.
(a) A Trustee may resign at any time by giving 30 days' written
notice in advance to the Employer and to the Administrator.
(b) The Employer may remove any Trustee upon written notice to such
Trustee.
(c) The Employer may appoint additional or successor Trustees at any
time by giving written notice to such persons. Each additional or successor
Trustee shall succeed to the title to the Trust by accepting in writing his
appointment as Trustee and filing such acceptance with the former Trustee (if
any) and the Administrator.
(d) The Employer may designate one or more successors prior to the
death, resignation, incapacity, or removal of a Trustee. In the event a
successor is so designated by the Employer and accepts such designation, the
successor shall, without further act, become vested with all the estate, rights,
powers, discretions, and duties of his predecessor with the like effect as if he
were originally named as Trustee herein immediately upon the death, resignation,
incapacity, or removal of his predecessor.
(e) A resigning or removed Trustee, upon receipt of acceptance in
writing of the Trust by a successor Trustee, shall execute all documents and do
all acts necessary to vest title of record in any successor Trustee. Each
successor Trustee shall have and enjoy all of the powers, both discretionary and
ministerial, conferred under this Agreement upon his predecessor. No successor
Trustee shall be personally liable for any act or failure to act of any
predecessor Trustee. With the approval of the Employer and the Administrator, a
successor Trustee may accept the account rendered and the property delivered to
it by a predecessor Trustee without incurring any liability or responsibility
for so doing.
16.11 Limitation of Liability Upon Appointment of Investment Manager. The
Trustees shall not be liable for the acts or omissions of any Investment
Manager(s) appointed by the Administrator, nor shall the Trustees be under any
obligation to invest or otherwise manage any asset of the Plan which is subject
to the management of a properly appointed Investment Manager.
16.12 Investment in Pooled Fund. Notwithstanding the provisions of
Paragraph 16.3, the Employer specifically authorizes the Trustees to invest all
or any portion of the assets comprising the Trust Fund in any common trust fund
which at the time of the investment provides for the pooling of the assets of
plans qualified under Code ss.401(a).
16.13 Protection of Trustee. To the maximum extent not prohibited by law,
the Employer shall indemnify and hold harmless the Trustees from any loss,
liability or expense (including reasonable attorneys fees) suffered or incurred
by the Trustees as a result of any act or omission on the Trustees' part in the
performance of their duties hereunder, unless the same results from the
Trustees' gross negligence or willful misconduct.
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16.14 Duties Limited. The duties and responsibilities of the Trustees are
limited to those specifically stated in this instrument and no other or further
duties or responsibilities shall be implied.
16.15 Notices.
(a) All notices to the Trustees hereunder shall be mailed or
delivered to the Trustees at their last known address.
(b) The Trustees shall be fully protected in presenting any notice
hereunder to an Employer or Administrator by mailing such notice to the
Employer, or in care of the Employer, at the last known address provided by such
Employer, and in presenting any notice or distributing any benefit hereunder to
a Participant by mailing it to such Participant at the latest address, if any,
which may have been furnished to the Trustees or by mailing it in care of the
Employer, as above provided.
16.16 Audit. If an audit of the Plan's records shall be required for any
Plan Year, the Administrator shall direct the Trustees to engage an independent
qualified public accountant for that purpose. Such accountant shall, after an
audit of the books and records of the Plan in accordance with generally accepted
auditing standards, within a reasonable period after the close of the Plan Year,
furnish to the Administrator and the Trustees a report of his audit setting
forth his opinion as to whether each of the following statements, schedules or
lists, or any others that are required by ERISA ss.103 or the Secretary of Labor
to be filed with the Plan's annual report, are presented fairly in conformity
with generally accepted accounting principles applied consistently:
(a) statement of the assets and liabilities of the Plan;
(b) statement of changes in net assets available to the Plan;
(c) statement of receipts and disbursements, a schedule of all
assets held for investment purposes, a schedule of all loans or fixed income
obligations in default at the close of the Plan Year;
(d) a list of all leases in default or uncollectible during the Plan
Year;
(e) the most recent annual statement of assets and liabilities of
any bank common or collective trust fund in which Plan assets are invested.
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Article XVII
VALUATION OF TRUST FUND
17.1 Valuation of Trust Fund. Each Plan Year, the Trustees shall value the
Trust Fund at fair market value as of the close of business on each Valuation
Date for the Plan Year. In making such valuation, the Trustees shall deduct all
charges, expenses and other liabilities (if any), contingent or otherwise, then
chargeable against the Trust Fund, in order to give effect to income realized
and expenses paid or incurred, losses sustained and unrealized gains or losses
constituting appreciation or depreciation in the value of Trust investments
since the last previous valuation. As soon as practicable after such valuation,
the Trustees shall deliver in writing to the Administrator and to the Employer a
certified valuation of the Trust Fund together with a statement of the amount of
net income or loss (including appreciation or depreciation in the value of Trust
investments) since the last previous valuation.
17.2 Method of Valuation. In determining the fair market value of
securities held in the Trust Fund which are listed on a registered stock
exchange, the Administrator shall direct the Trustee to value them at the prices
they were last traded on such exchange preceding the close of business on the
Valuation Date. If such securities were not traded on the Valuation Date, or if
the exchange on which they are traded was not open for business on the Valuation
Date, then the securities shall be valued at the prices at which they were last
traded prior to the Valuation Date. Any unlisted security held in the Trust Fund
shall be valued at its bid price next preceding the close of business on the
Valuation Date, which bid price shall be obtained from a registered broker or an
investment banker. In determining the fair market value of assets other than
securities for which trading or bid prices can be obtained, the Trustee may
appraise such assets itself, or in its discretion, employ one or more appraisers
for that purpose and rely on the values established by such appraiser or
appraisers.
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Article XVIII
LIFE INSURANCE CONTRACTS AND COMPANIES
18.1 Purchase of Life Insurance Contracts for the Benefit of Individual
Participants.
(a) If life insurance coverage is made available on a uniform,
non-discriminatory basis to all Participants, then upon written request received
from any Participant, the Trustees shall purchase and pay premiums on one or
more life insurance policies on the life of a Participant, provided that the
face amounts of such Contract(s) covering anyone Participant shall be limited to
the greater of:
(1) 100 times the Participant's anticipated monthly retirement
benefit; or
(2) an amount of Ordinary Life Insurance that may be purchased
by less than 66% of such Participant's Theoretical Contribution (as hereinafter
defined); or
(3) an amount of Universal Life Insurance or other Contract(s)
that may be purchased by less than 33% of such Participant's Theoretical
Contribution; or
(4) an amount of insurance which is a combination of Ordinary
Life, Universal Life or other life insurance Contracts where the sum of one-half
of the Ordinary Life premiums plus all other premiums does not exceed 33% of
such Participant's Theoretical Contribution.
Notwithstanding the above, the Trustee may purchase Contracts as described in
Code ss.412(i) for each Participant in units of $1,000 face amount for each $10
of anticipated monthly retirement benefit to which the Participant is entitled.
(b) The Trustees shall, at or before such Participant's retirement,
either
(1) convert the entire value of such insurance policies into
cash or into an annuity contract, which will provide periodic income so that no
portion of such value may be used to continue life insurance protection beyond
the date of retirement of such Participant, or
(2) distribute such insurance policies to such Participant at
the time such Participant is entitled to receive benefits under the Plan.
(c) If the Trustees deem it prudent to purchase a Participant's
existing insurance policy either from the Participant directly or from another
qualified employee benefit plan, they may do so provided that such purchase be
made in compliance with all relevant state and federal requirements.
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(d) All dividends paid on such policies, if any, shall be used to
reduce the Employer's contribution for the year in which the dividends are paid.
In no event shall any dividends revert to the Employer.
(e) If a Participant or his designated Beneficiary wishes to
purchase an insurance policy from the Trust, the Trustees may transfer such
policy in accordance with all relevant state and federal regulations.
18.2 Purchase of Life Insurance for the Benefit of the Trust. The Trustees
may, in their discretion, purchase and pay premiums on one or more life
insurance policies on the life of a Participant for the benefit of the Trust
rather than the insured Participant, in which event all premiums paid shall be
treated as a general expense of the Trust Fund and all proceeds from such
insurance shall constitute a general asset of the Trust Fund. The Trustees may
purchase a Participant's existing insurance contract subject to compliance with
all relevant state and federal requirements.
18.3 Annuity Purchase Riders. Any insurance policy purchased hereunder may
be subject to the terms of an annuity purchase rider, applied for by the
Trustees and issued as a part of such policy, pursuant to which the proceeds of
such policy may be applied for the purchase of an annuity to provide benefits
under the Plan. The annuity referred to in this paragraph shall be paid
according to the terms of such policy regardless of the survival of the
Participant.
18.4 Designation of Trust as Owner and Beneficiary. Each application for
an insurance policy and the policy itself shall nominate and designate the Trust
or the Trustees as sole owner, with the right reserved to said Trustees to
exercise any right or option contained therein. All such policies shall be held
by the Trustees. The Trust or the Trustees shall be designated in the policies
to receive the proceeds maturing by reason of the death of the Participant;
however the Trustees shall be required to pay over the proceeds of any contract
purchased pursuant to Paragraph 18.1 to the Participant's Beneficiary in
accordance with the distribution provisions of this Plan, and under no
circumstances shall the Trust retain any part of the proceeds of such contract.
18.5 Insurance Company Reliance on Trustee's Signature. For the purpose of
applying to an insurance company and in the exercise of any right or option
contained in any contract, the insurance company may rely upon the signature of
anyone Trustee and shall be held harmless and completely discharged in acting at
the direction and authorization of such Trustees.
18.6 Duties of Insurance Company. Each insurance company shall keep such
records, make such identification of contracts, funds and accounts within funds,
and supply such information as may be necessary for the proper administration of
the Plan under which it is carrying insurance benefits.
18.7 Plan Provisions Control. In the event of any conflict between the
terms of the Plan and the provisions of any insurance policy or annuity contract
purchased hereunder, the terms of the Plan shall control.
78
18.8 Protection of Employer, Plan Administrator and Trustee. Neither the
Employer, Administrator nor the Trustees shall be responsible for the validity
of any insurance policy nor for the failure on the part of an insurance company
to make payments under such insurance policies, nor for the action of any other
person which may render a policy null and void or unenforceable in whole or in
part.
18.9 Definitions. For purposes of this Article:
(a) "Contract" shall mean an ordinary or term life insurance
contract, or annuity contract, issued by an insurer.
(b) "Issuing Company" is any life insurance company which has issued
a policy upon application by the Trustee under the terms of this Plan.
(c) "Ordinary Life Insurance" contracts shall mean contracts with
nondecreasing death benefits and non-increasing premiums.
(d) "Theoretical Contribution" shall mean the contribution that
would be made on behalf of the Participant, using the actuarial assumptions
stated in Paragraph 2.3(b) and the individual level premium funding method from
the age at which participation commenced to Normal Retirement Age, to fund the
Participant's entire retirement benefit without regard to preretirement
ancillary benefits.
(e) "Theoretical Individual Level Premium Reserve" shall mean the
reserve that would be available at time of death if for each year of plan
participation a contribution had been made on behalf of the Participant in an
amount equal to the Theoretical Contribution.
(f) "Universal Life" contracts are contracts where the premium or
death benefit amounts can be adjusted.
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Article XIX
EXCLUSIVE BENEFIT, AMENDMENT, TERMINATION
19.1 Exclusive Benefit.
(a) Except as specifically set forth in this Plan, the Employer
shall have no beneficial interest in any asset of the Trust and no part of any
asset in the Trust shall ever revert to or be repaid to the Employer, either
directly or indirectly; nor shall any part of the corpus or income of the Trust
Fund, or any asset of the Trust, be at any time used for, or diverted to,
purposes other than for the exclusive benefit of the Participants or their
Beneficiaries.
(b) Any contribution made by the Employer because of a mistake of
fact may be returned to the Employer within one year after the contribution was
made.
(c) All Employer contributions are conditioned upon the Plan's
initial qualification under the Code. If the Employer receives a final
determination that the Plan does not initially qualify, the Plan shall terminate
and all Employer contributions shall be returned to the Employer within one year
after the date such initial qualification is denied, but only if the application
for qualification is made by the time prescribed by law for filing the
Employer's tax return for the taxable year in which the Plan is adopted, or such
later date as the Secretary of the Treasury may prescribe.
(d) All Employer contributions are conditioned upon their
deductibility under Code ss.404 for the Employer's fiscal year for which a
deduction is claimed, and to the extent the deduction is disallowed, the
contributions may be returned to the Employer within one year after the
disallowance.
(e) For purposes of this Article, "contribution" has the same
meaning as in ERISA ss.403(c).
19.2 Amendment. The Employer shall have the right at any time to amend the
Plan, subject to the limitations of this paragraph and such prohibitions as may
be provided by law or by other terms of this Plan. Any such amendment shall be
adopted by formal action of the Employer's Board of Directors and executed by an
officer authorized to act on behalf of the Employer, except as otherwise
provided herein. However, any amendment which affects the rights, duties or
responsibilities of the Trustee and Administrator may only be made with the
Trustee's and Administrator's written consent.
In addition, subject to the foregoing limitation with respect to the
rights, duties and responsibilities of the Trustee or the Administrator, the
pension committee of the Employer's Board of Directors shall also have the
authority to amend the Plan pursuant to written Plan amendments.
(a) to comply with changes required by law, or
80
(b) to make any other change to the Plan, including any change
required as a result of a corporate purchase or sale of stock or assets which
involves the transfer of employees and their eligibility, participation or
benefits under the Plan;
provided that any such change does not have or create any material financial
impact on the Employer and does not have any adverse impact on the rights of
Participants. Any such amendment shall become effective as provided therein upon
its execution. The Trustee shall not be required to execute any such amendment
unless the Trust provisions contained herein are part of the Plan and the
amendment affects the duties of the Trustee hereunder.
19.3 Amendment to Vesting Schedule. No amendment shall directly or
indirectly reduce a Participant's Vested interest in his Accrued Benefit to the
date of the amendment, as computed under the terms of the Plan in effect
immediately prior to the date of the amendment. If the vesting schedule of the
Plan is amended, each Participant with at least three Years of Service for
vesting purposes may elect within the time period described below after the
adoption of the amendment to have his Vested percentage computed under the Plan
without regard to such amendment. The period during which the election may be
made shall commence with the date the amendment is adopted and shall end on the
later of:
(a) 60 days after the amendment is adopted;
(b) 60 days after the amendment becomes effective; or
(c) 60 days after the Participant is issued written notice of the
amendment by the Employer or Administrator.
19.4 Termination. The Employer shall have the right at any time to
terminate the Plan by delivering to the Trustees and Administrator written
notice of such termination. Upon full or partial termination of this Plan, the
Accrued Benefit of each affected Participant, to the extent funded as of the
date of such termination, shall become fully Vested. Upon complete termination
of the Plan, the Employer, by written notice to the Trustee, and subject to the
ensuing Paragraphs of this Article, shall distribute the assets in the Trust
Fund in the form of deferred annuities payable at Normal Retirement Date. The
Trustee may also distribute benefits in the form of a lump sum, in cash or in
kind, as soon as practicable following termination.
19.5 Allocation of Assets. Upon complete termination of the Plan, the
Administrator shall allocate the assets of the Plan among Participants and
Beneficiaries in the following order of priority and subject in any event to the
provisions of ERISA:
(a) First, to that portion of each Participant's Accrued Benefit
which is derived from his voluntary contributions.
(b) Equally among individuals in the following two categories:
(1) Benefits to retired Participants and their Beneficiaries
to whom payment commenced at least 3 years prior to the termination date, based
on Plan provisions in
81
effect during the 5-year period ending on such date. The lowest benefit in any
pay status during the most recent 3-year period shall be considered the benefit
in pay status for such period.
(2) Benefits as respects a Participant wherein payment would
have commenced at least 3 years prior to the termination date if the Participant
had actually retired, based on the lowest benefit determined under the Plan
provisions in effect during the 5-year period ending on such date.
(c) All other benefits guaranteed (insured) under ERISA determined
without regard to ss.4022(b)(5) thereof; and additional benefits, if any, under
this subparagraph if ERISA Section 4022(b)(6) did not apply.
(d) All other (uninsured) Vested benefits.
(e) All other benefits under the Plan.
Any funds remaining after satisfaction of the foregoing shall be returned to the
Employer.
19.6 Limitation of Benefits on Early Termination.
(a) Upon termination of this Plan, the benefits under the Plan for
any Highly Compensated Employee (or any Highly Compensated Employee formerly
employed by the Employer) shall be limited to benefits that are
nondiscriminatory under Code ss.401(a)(4).
(b) The following distribution restrictions shall apply only to the
25 highest paid Highly Compensated Employees or formerly employed Highly
Compensated Employees taking into account the Employee's highest Compensation in
any Plan Year ("Restricted Participants").
(1) The payments made to any Restricted Participant from this
Plan shall be restricted to an amount equal to the payments that would be made
under a single life annuity that is the Actuarial Equivalent of the sum of (A)
the Employee's Accrued Benefit and the other benefits he is entitled to under
the Plan (other than a social security supplement), plus (B) the amount of the
payments that he is actually entitled to receive under a social security
supplement (such sum to be hereinafter referred to as the "Restricted Amount").
(2) The restriction set forth in (1) above shall not apply if:
(A) After payment to a Restricted Participant of his
total benefit under the Plan, the value of the remaining Plan's assets is at
least 110% of the value of the Plan's current liabilities (as defined in Code
ss.412(l)(7)); or
(B) The value of all benefits payable to a Restricted
Participant is less than 1% of the value of the Plan's current liabilities (as
defined in Code ss.412(l)(7)) before distribution; or
82
(C) The lump sum Actuarial Equivalent of all benefits
payable to the Restricted Participant is less than $5,000; or
(D) The Participant agrees in writing with the Plan
Administrator to return to the Plan all amounts necessary for the distribution
of assets upon Plan termination to meet the requirements of Code ss.401(a)(4)
and to secure such obligation by agreeing either (A) to promptly deposit in
escrow with an acceptable depository property having a fair market value of at
least 125% of the Restricted Amount, or (B) to post a bond or arrange a bank
letter of credit, in either case acceptable to the Plan Administrator, in an
amount equal to at least 100% of the Restricted Amount. The escrow account shall
at no time have a value less than 125% of the Restricted Amount.
(c) If an escrow is arranged by the Participant, the following shall
apply:
(1) The Participant may withdraw amounts in the escrow account
in excess of 125% of the Restricted Amount at any time;
(2) If the value of the escrow account falls below 110% of the
Restricted Amount, the Participant shall deposit additional property into the
escrow account to increase the value to 125% of the Restricted Amount;
(3) The depository may release all property from the escrow
account only if the Plan Administrator certifies to the depository that the
Participant (or his estate) is no longer obligated to repay the Restricted
Amount, which certification shall be made only if at any time after distribution
the conditions set forth in either subparagraphs (b)(2)(A) or (b)(2)(B) are met.
19.7 Merger or Consolidation. This Plan and Trust may be merged or
consolidated with, or its assets and/or liabilities may be transferred to, any
other plan and trust only if the benefits which would be received by a
Participant of this Plan, in the event of a termination of the plan immediately
after such transfer, merger or consolidation, are at least equal to the benefits
the Participant would have received if this Plan had terminated immediately
before the transfer, merger or consolidation.
19.8 Transfer to Qualified Plan. The Administrator may direct the Trustee
to transfer all or any part of a Participant's Accrued Benefit to the trustee of
any other plan that purportedly meets the qualification requirements of Code
ss.401(a), provided, however, that such transfer would not disqualify this Plan
under Code ss.401(a). The Trustee may require a certification from the trustee
of such other plan as to the qualified status of such plan under Code ss.401(a)
prior to making such transfer.
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Article XX
VETERANS' REEMPLOYMENT RIGHTS
20.1 Veterans' Reemployment Rights. Notwithstanding any other provision of
this Plan and in accordance with the Uniformed Services Employment and
Reemployment Rights Act of 1994 ("USERRA"), this Article shall apply to
Participants reemployed on or after December 12, 1994, after a Qualified Leave.
20.2 Service Credit.
(a) Participant's Qualified Leave shall not be considered as a Break
in Service, but shall be deemed to constitute continuous Service with the
Employer for purposes of determining such Participant's Accrued Benefit under
this Plan and his Vested interest therein.
(b) All rights to additional Service credit under this Article shall
accrue only upon a Participant's timely reemployment in accordance with this
Article; however, a Participant's Vested interest in his Accrued Benefit earned
prior to entering a Uniformed Service shall not be reduced regardless of the
date such Participant actually returns to Service with the Employer.
20.3 Compensation. For purposes of determining the benefits to which a
Participant may be entitled under this Article, a Participant shall be deemed to
have received Compensation from the Employer during his Qualified Leave, of an
amount based on the rate of pay such Participant would have received from the
Employer but for the Qualified Leave. If such Participant's pre-Qualified Leave
Compensation was not based on a fixed rate, the calculation will be based on
such Participant's average rate of pay during the 12-month period immediately
preceding the Qualified Leave or, if shorter, the Participant's period of
employment immediately preceding the Qualified Leave.
20.4 Qualified Leave. A Participant's absence from employment with the
Employer shall be a "Qualified Leave" for the purposes of this Article if all of
the following conditions are met:
(a) Notice. The Participant (or an appropriate officer of the
Uniformed Service in which services are to be performed) gives written or verbal
notice to the Employer of such Participant's service in one of the Uniformed
Services in advance of the Participant's departure for such service.
(b) Cumulative Length of Absence. The cumulative length of the
Participant's absence from employment with the Employer by reason of such
Participant's service in one of the Uniformed Services, when combined with all
previous absences from service with the Employer by reason of service in the
Uniformed Services, does not exceed 5 years.
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(c) Uniformed Service. The Participant's absence from employment with the
Employer is due to the Participant's service in one of the following "Uniformed
Services" of the United States: the Army, Navy, Marine Corps, Air Force, Coast
Guard, Army Reserve, Naval Reserve, Marines Corps Reserve, Air Force Reserve,
Coast Guard Reserve, Army National Guard, Air National Guard, commissioned corps
of the Public Health Service, or any other category designated as a uniformed
service by the President of the United States during a time of war or national
emergency.
(d) Reemployment. The Participant, upon completion of a period of service
in one of the Uniformed Services, notifies the Employer of the Participant's
intention to return to employment with the Employer by reporting to or
submitting an application for reemployment to the Employer within the following
time periods:
(1) if the period of service in the Uniformed Services is less than
31 days, or a period of any length for the purposes of an examination to
determine the Participant's fitness to perform service in the Uniformed
Services, the Participant reports to the Employer not later than the beginning
of the first full regularly scheduled work period in the first full calendar day
following the completion of the period of service and the expiration of 8 hours
after a period allowing for the safe transportation of the Participant from the
place of that service to the Participant's residence; or if reporting within the
period referred to above is impossible or unreasonable through no fault of the
Participant, as soon as possible after the expiration of the 8-hour period
referred to above;
(2) if the period of service in the Uniformed Services is more than
30 days but less than 181 days the Participant submits an application for
reemployment not later than 14 days after the completion of the period of such
service, or if submitting such application within such time period is impossible
or unreasonable through no fault of the Participant, the next first full
calendar day when submission of such application becomes possible;
(3) if the period of service in the Uniformed Services is more than
180 days the Participant submits an application for reemployment not later than
90 days after the completion of the period of such service;
(4) a Participant who is hospitalized for, or convalescing from, an
illness or injury incurred in, or aggravated during, the performance of service
in the Uniformed Services shall, at the end of the period that is necessary for
the person to recover from such illness or injury, report to (in the case of a
Participant described in subparagraph (1) above) or submit an application for
reemployment (in the case of a Participant described in subparagraph (2) or (3)
above) with the Employer. Such period of recovery may not exceed 2 years,
although such period shall be extended by the minimum time required to
accommodate the circumstances beyond such Participant's control which make
reporting within the period specified in subparagraph (1) impossible or
unreasonable.
(e) Less Than Honorable Discharge. Notwithstanding the above, a
Participant shall not be entitled to the benefits of this Article if such
Participant's service in the Uniformed Services terminates upon any of the
following events:
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(1) a separation of the Participant from such Uniformed
Service with a dishonorable or bad conduct discharge;
(2) a separation of such Participant from such Uniformed
Service under other than honorable conditions; or
(3) a dismissal or dropping from the rolls of any Uniformed
Service of such Participant, in accordance with 10 U.S.C. 1161(a) or (b).
86
Article XXI
PARTICIPATING EMPLOYERS
21.1 Adoption by Other Entities. Anything contained herein to the contrary
notwithstanding, with the consent of the Employer, any corporation, partnership
or sole proprietorship, whether an Affiliated Company or not, may adopt this
Plan and all of the provisions hereof, and participate herein and be known as a
Participating Employer, by a properly executed document evidencing said intent
and will of such other entity.
21.2 Requirements of Participating Employers.
(a) Each Participating Employer shall be required to use the same
Trustee as provided in this Plan.
(b) The Trustee shall commingle, hold and invest as one Trust Fund
all contributions made by Participating Employers, as well as all increments
thereof.
(c) The transfer of any Participant from or to a company
participating in this Plan, whether he be an Employee of the Employer or a
Participating Employer, shall not affect such Participant's rights under the
Plan, and the Participant's interest in his Accrued Benefit as well as his
accumulated service time with the transferor or predecessor and his length of
participation in the Plan, shall continue to his credit.
21.3 Designation of Agent. Each Participating Employer shall be deemed to
be a part of this Plan; provided, however, that with respect to all of its
relations with the Trustee and Administrator for the purpose of this Plan, each
Participating Employer shall be deemed to have designated irrevocably the
signatory Employer to this Plan document as its agent. Unless the context of the
Plan clearly indicates the contrary, the word "Employer" shall be deemed to
include each Participating Employer as related to its adoption of the Plan.
21.4 Employee Transfers. It is anticipated that an Employee may be
transferred between Participating Employers, and in the event of any such
transfer, the Employee involved shall carry with him his accumulated service and
eligibility. No such transfer shall effect a termination of employment
hereunder, and the Participating Employer to which the Employee is transferred
shall thereupon become obligated hereunder with respect to such Employee in the
same manner as was the Participating Employer from whom the Employee was
transferred.
21.5 Amendment and Termination. Amendment or termination of this Plan by
the Employer at any time when there shall be a Participating Employer hereunder
shall only be by the written action of each and every Participating Employer and
with the consent of the Trustee where such consent is necessary in accordance
with the terms of this Plan.
21.6 Discontinuance of Participation. Any Participating Employer shall be
permitted to discontinue or revoke its participation in the Plan. At the time of
any such discontinuance or revocation, satisfactory evidence thereof and of any
applicable conditions imposed shall be
87
delivered to the Trustee. The Trustee shall thereafter transfer, deliver and
assign Contracts and other Trust Fund assets allocable to the Participants of
such Participating Employer to such new Trustee as shall have been designated by
such Participating Employer, in the event that it has established a separate
pension plan for its Employees. If no successor is designated, the Trustee shall
retain such assets for the Employees of said Participating Employer. In no such
event shall any part of the corpus or income of the Trust as it relates to such
Participating Employer be used for or diverted for purposes other than for the
exclusive benefit of the Employees of such Participating Employer.
21.7 Administrator's Authority. The Administrator shall have authority to
make any and all necessary rules or regulations, binding upon all Participating
Employers and all Participants, to effectuate the purpose of this Article.
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Article XXII
MISCELLANEOUS
22.1 Evidence. Anyone required to give evidence under the terms of the
Plan may do so by certificate, affidavit, document or other information which
the person to act in reliance thereof may consider pertinent, reliable and
genuine, and to have been signed, made or presented by the proper party or
parties. The Administrator and the Trustees shall be fully protected in acting
and relying upon any evidence described under this paragraph.
22.2 Named Fiduciaries and Allocation of Responsibility. The "named
fiduciaries" of this Plan are the Employer, the Administrator, the Trustees and
any Investment Manager appointed hereunder. The named fiduciaries shall have
only those specific powers, duties, responsibilities, and obligations as are
specifically given them under this Plan. Each named fiduciary warrants that any
directions given, information furnished, or action taken by it shall be in
accordance with the provisions of this Plan, authorizing or providing for such
direction, information or action. Further, each named fiduciary may rely upon
such direction, information or action of another named fiduciary as being proper
under this Plan, and is not required under this Plan to inquire into the
propriety of any such direction, information or action. It is intended that each
named fiduciary shall be responsible only for the proper exercise of its own
powers, duties, responsibilities and obligations under this Plan. Any person or
group may serve in more than one fiduciary capacity.
22.3 Limited Responsibilities. The Trustees and the Administrator shall
not have any obligation nor responsibility with respect to any action required
by the Plan to be taken by the Employer, any Participant or eligible Employee,
nor for the failure of the Employer to act or make any payment or contribution,
or to otherwise provide any benefit contemplated under this Plan, nor shall the
Trustee or the Plan Administrator be required to collect any contribution
required under the Plan, or determine the correctness of the amount of any
Employer contribution. The Trustees and the Administrator shall not have any
obligation to inquire into or be responsible for any action or failure to act on
the part of the others.
22.4 Fiduciaries Not Insurers. The Trustees, the Administrator and the
Employer do not guarantee the Trust Fund from loss or depreciation. The Employer
does not guarantee the payment of any money which may become due to any person
from the Trust Fund. The liability of the Administrator and the Trustees to make
any payment from the Trust Fund at any time and all times is limited to the then
available assets of the Trust.
22.5 Waiver of Notice. Any person entitled to notice under the Plan may
waive the notice.
22.6 Successors. The Plan shall be binding upon all persons entitled to
benefits under the Plan, their respective heirs and legal representatives, upon
the Employer, its successors and assigns, and upon the Trustees, the
Administrator and their successors.
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22.7 Word Usage. Words used in the masculine shall apply to the feminine
where applicable, and wherever the context of the Plan dictates, the plural
shall be read as the singular and the singular as the plural.
22.8 Status of Employment Relations. The adoption and maintenance of the
Plan and Trust shall not be deemed to constitute a contract between the Employer
and its Employees or to be consideration for, or an inducement or condition of,
the employment of any person. Nothing herein contained shall be deemed (a) to
give to any Employee the right to be retained in the employ of the Employer; (b)
to affect the right of the Employer to discipline or discharge any Employee at
any time; (c) to give the Employer the right to require any Employee to remain
in its employ; or (d) to affect any Employee's right to terminate his employment
at any time.
22.9 Interpretation of the Plan and Trust. It is the intention of the
Employer that this Plan and Trust shall comply with the provisions of Code
ss.ss.401 and 501, the requirements of ERISA, and the corresponding provisions
of any subsequent laws. The provisions of this Plan and Trust shall be construed
to effectuate such intention.
22.10 Governing Law. All questions arising with respect to the provisions
of this Agreement shall be determined by application of the laws of the State of
New York, except to the extent superseded by federal law.
IN WITNESS WHEREOF, the Employer and the Trustees named herein have
executed this Plan and Trust Agreement this 30th day of December, 2004.
The Employer:
COMMUNITY BANK SYSTEM, INC.
By: /s/ Sanford A. Belden
----------------------------------
President and CEO
The Trustee:
By: /s/ Mark E. Tryniski
----------------------------------
Executive Vice President and COO
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COMMUNITY BANK SYSTEM, INC.
PENSION PLAN
TABLE OF CONTENTS
Article I HISTORY AND PURPOSE OF PLAN ............................... 1
Article II DEFINITIONS ............................................... 2
Article III ELIGIBILITY REQUIREMENTS .................................. 17
Article IV CREDITED SERVICE FOR BENEFIT ACCRUAL ...................... 23
Article V RETIREMENT BENEFITS ....................................... 25
Article VI DEATH BENEFITS ............................................ 35
Article VII EMPLOYMENT TERMINATION BENEFITS ........................... 41
Article VIII LIMITATION OF BENEFITS .................................... 45
Article IX PAYMENT OF BENEFITS ....................................... 49
Article X CONTRIBUTIONS ............................................. 58
Article XI EMPLOYER ADMINISTRATIVE PROVISIONS ........................ 59
Article XII PARTICIPANT ADMINISTRATIVE PROVISIONS ..................... 60
Article XIII ADMINISTRATION ............................................ 63
Article XIV TOP HEAVY REQUIREMENTS .................................... 66
Article XV QUALIFIED DOMESTIC RELATIONS ORDERS ....................... 69
Article XVI TRUSTEE POWERS AND DUTIES ................................. 71
Article XVII VALUATION OF TRUST FUND ................................... 76
Article XVIII LIFE INSURANCE CONTRACTS AND COMPANIES .................... 77
Article XIX EXCLUSIVE BENEFIT, AMENDMENT, TERMINATION ................. 80
Article XX VETERANS' REEMPLOYMENT RIGHTS ............................. 84
i
Article XXI PARTICIPATING EMPLOYERS ................................... 87
Article XXII MISCELLANEOUS ............................................. 89
ii