EXHIBIT 99.1
COOPERATIVE BANK FOR SAVINGS, INC., SSB
401(k) SUPPLEMENTAL RETIREMENT PLAN
AMENDED AND RESTATED
EFFECTIVE
OCTOBER 1, 1999
(1-5-00)
TABLE OF CONTENTS
Article Page
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I NATURE OF PLAN 1
II DEFINITIONS AND CONSTRUCTION 3
III ELIGIBILITY AND PARTICIPATION 13
IV EMPLOYEE CONTRIBUTIONS 15
V EMPLOYER CONTRIBUTIONS 21
VI ALLOCATIONS 25
VII TERMINATION OF SERVICE-PARTICIPANT VESTING 33
VIII TIME AND METHOD OF PAYMENT OF BENEFITS 37
X RETIREMENT COMMITTEE 46
XI PARTICIPANT ADMINISTRATIVE PROVISIONS 50
XII FIDUCIARIES DUTIES 54
XIII DISCONTINUANCE, AMENDMENT, AND TERMINATION 58
XIV THE TRUST FUND 62
XV PARTICIPATION BY AFFILIATE OF COMPANY AND EMPLOYMENT
WITH A MEMBER OF A CONTROLLED GROUP 63
XVI DIRECTED INVESTMENT OPTIONS 65
XVII TOP-HEAVY RULES 68
XVIII MISCELLANEOUS 73
ARTICLE I
NATURE OF PLAN
The Board of Directors of COOPERATIVE Bank for Savings, Inc. SSB
("Employer") has by appropriate resolution of said Board adopted the amended and
restated Cooperative Bank for Savings, Inc. SSB 401(k) Supplemental Retirement
Plan ("Plan") as hereinafter stated to be effective as of October 1, 1999.
The purpose of this Plan is to provide additional incentive and retirement
security for eligible Employees of the Employer.
WHEREAS, effective April 1, 1992, the Employer adopted the original Plan
known originally as the Cooperative Bank for Savings, Inc. SSB Employee Stock
Ownership/401(k) Plan.
WHEREAS, effective December 31, 1996 the Cooperative Bank for Savings, Inc.
SSB ESOP Plan was merged into this Plan.
WHEREAS, it is the intention of the Employer to continue a 401(k) Plan and
Trust for the sole and exclusive benefit of its eligible Employees who qualify
as Participants hereunder and their beneficiaries, as herein provided, under the
provisions of Section 401 of the Internal Revenue Code, as amended by the
Employee Retirement Income Security Act of 1974, and to make contributions
thereto under the provisions of Section 404 of said Internal Revenue Code, as
amended; and
WHEREAS, the Plan must comply with all qualification and operational
provisions required by the Uruguay Round Agreements ("GATT"), the Uniformed
Services Employment and Reemployment Rights Act of 1994 ("USERRA"), the Small
Business Job Protection Act of 1996 ("SBJPA") and Tax Reform Act of 1997
("TRA'97") (with all such legislation referred to collectively as "GUST") and
any regulations, interpretations, rulings or procedures promulgated in relation
to GUST;
WHEREAS, it is the intention of the Employer and the Trustees to operate
this Plan and Trust in accordance with the provisions of the Internal Revenue
Code as amended by the Employee Retirement Income Security Act of 1974, as
interpreted by regulations prescribed by the Department of the Treasury and the
Secretary of Labor; and
WHEREAS, the benefits provided under the amended Plan will in no event be
less than the benefits accrued and vested by the Participant in the original
Plan; and
WHEREAS, this Plan embodied herein has been duly approved and authorized by
the Board of Directors of said Company;
NOW, THEREFORE, THIS AGREEMENT,
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CREATION AND NAME
This Plan is amended and restated effective October 1, 1999. The name of
the Plan shall be designated as COOPERATIVE BANK FOR SAVINGS, INC. SSB 401(k)
SUPPLEMENTAL RETIREMENT PLAN, hereafter referred to as "Plan" (#002).
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ARTICLE II
DEFINITIONS AND CONSTRUCTION
Definitions. For the purpose of this Plan, the following definitions shall apply
unless the context requires otherwise:
2.01 "Accounts" shall mean the separate accounts maintained to record the
interest of a Participant under the Plan, consisting of the following:
(a) Employee 401(k) Savings Account - shall mean a separate account
maintained for each Participant consisting of all Employee Salary
Deferral Contributions, earnings of the Trust, adjustments for
withdrawals, and realized and unrealized gains and losses
attributable thereto.
(b) Employer Matching Account - shall mean a separate account maintained
for each Participant who makes an Employee Salary Deferral
Contribution and consisting of his allocable share of Employer
Matching and Discretionary Contributions and forfeitures and
earnings of the Trust, and realized and unrealized gains and losses
allocable to such account.
(c) ESOP Account - shall mean a separate account maintained for each
Participant whose ESOP Plan Account was merged into this Plan on
December 31, 1996, and adjusted for gains and losses allocated
thereto.
2.02 "Accrued Benefit" shall mean the amount in all of a Participant's Accounts
as defined in Section 2.01. The benefits provided under the amended Plan
will in no event be less than the benefits accrued and vested by a
Participant in the Plan as of September 30, 1999.
2.03 "Act" or "ERISA" shall mean the "Employee Retirement Income Security Act
of 1974", as amended.
2.04 "Adjustment Factor" shall mean the cost of living adjustment factor
prescribed by the Secretary of the Treasury under Section 415(d) for Plan
Years beginning after December 31, 1987, as applied to such items and in
such manner as the Secretary shall provide.
2.05 "Affiliated Employer" shall mean the Employer and any corporation which is
a member of a controlled group of corporations (as defined in Code Section
414(b)) which includes the Employer; any trade or business (whether or not
incorporated) which is under common control (as defined in Code Section
414(c)) with the Employer; any organization (whether or not incorporated)
which is a member of an affiliated service group (as defined in Code
Section 414(m)) which includes the Employer; and any other entity required
to be aggregated with the Employer pursuant to regulations under Code
Section 414(o).
For purposes of this Section 2.05, the term "controlled group" means any
two or more corporations, trades or businesses under common control of
which the Employer is a
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member, or two or more "affiliated organizations" under Code Section
414(m). The term "two or more corporations, trades or businesses under
common control" will include any group of corporations, trades or
businesses which is either:
(a) a parent-subsidiary group, or
(b) a brother-sister group, or
(c) a combined group
within the meaning under Code Sections 414(b), 414(c), and 414(m) and
their Regulations.
All Employees of a controlled group will be treated as employed by a
single Employer for purposes of applying qualification provisions of this
Plan; including minimum participation standards; minimum vesting
standards, and of limitation of benefits and contributions under this
Plan.
2.06 "Annual Addition" shall mean the sum of the following additions to a
Participant's Account for the Limitation Year:
(a) Employer Contributions,
(b) Forfeitures,
(c) Employee Contributions, and
(d) Amounts allocated, after March 31, 1984, to an individual medical
account, as defined in Code Section 415(l)(2), which is part of a
pension or annuity plan maintained by the Employer and amounts
derived from contributions paid or accrued after December 31, 1985,
in taxable years ending after such date, which are attributable to
post-retirement medical benefits, allocated to the separate account
of a Key Employee, as defined in Code Section 419(A)(d)(3), under a
welfare benefit fund, as defined in Code Section 419(e), maintained
by the Employer.
Provided, however, that the distribution of any excess deferral, made
pursuant to Section 4.05 and in accordance with Code Section 402(g) and
the regulations promulgated thereunder, shall not be included in the
definition of Annual Addition.
2.07 "Beneficiary" shall mean any person or fiduciary designated by a
Participant who is or may become entitled to a benefit under the Plan
following the death of the Participant.
2.08 "Board" shall mean the Board of Directors of the Employer unless otherwise
indicated or the context otherwise requires.
2.09 "Break-in-Service" shall mean a Plan Year in which an Employee is credited
with not more than 500 Hours of Service, as measured by the Vesting
Computation Period.
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2.10 "Code" shall mean the Internal Revenue Code of 1986, as amended.
2.11 "Company" shall mean the Employer as defined in Section 2.17.
2.12 "Compensation" shall mean an Employee's Compensation for any Plan Year
consisting of the total compensation actually paid to the Employee by the
Employer for the Plan Year concerned, including any amount of earnings
deferred under any other qualified Employer sponsored plan under Code
Sections 125, 401(k), 403(b), 408(k), or any other qualified Cash or
Deferred Arrangement, but excluding any reimbursements for the use of an
automobile, any reimbursements due to moving expenses, and the taxable
value of any Employer paid group term life insurance, or other taxable
fringe benefit provided by the Employer. For Plan Years beginning after
December 31, 1988, annual Compensation used shall not exceed $200,000, (or
other amount as approved by the Secretary of the Treasury).
Notwithstanding the foregoing, Compensation shall not include any
contributions made on behalf of an Employee to a nonqualified plan, stock
options or other forms of executive compensation not includible in the
Employer's gross income for the taxable year or other compensation
permitted under Reg. 1.415(d) to be excluded from compensation
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the plan to the contrary, for plan
years beginning on or after January 1, 1994, the annual compensation of
each employee taken into account under the plan shall not exceed the
OBRA'93 annual compensation limit. The OBRA'93 annual compensation limit
is $150,000, as adjusted by the Commissioner for increases in the cost of
living in accordance with Code Section 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 OBRA'93 annual compensation limit
will be multiplied by a fraction, the numerator of which is the number of
months in the determination period, and the denominator of which is 12.
For Plan Years beginning on or after January 1, 1985, Compensation of a
Highly Compensated Employee shall be subject to the family aggregation
rules of Code Section 401(a)(17) and the regulations promulgated
thereunder. For the purposes of this Section 2.12, family members shall
include the Participant's Spouse and such Participant's lineal descendants
who have not attained age 19 as of the end of the Plan Year for which
Compensation is determined.
Notwithstanding the preceding paragraph, effective as of the first day of
the Plan Year beginning after December 31, 1996, the family aggregation
provision as described in Code Section 401(a)(17)(A) which requires a Plan
Participant, the spouse of such Participant and any lineal descendants who
have not attained age 19 before the close of the Plan Year to be treated
as a single Participant for purposes of applying the limitation on
Compensation for a Plan Year shall no longer apply.
For plan years beginning on or after January 1, 1994, any reference in
this plan to the limitation under section 401(a)(17) shall mean the
OBRA'93 annual compensation limit
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set forth in this provision.
If compensation for any prior determination period is taken into account
in determining an employee's benefits accruing in the current plan year,
the compensation for that prior determination period is subject to the
OBRA'93 annual compensation limit in effect for that prior determination
period. For this purpose, for determination periods beginning before the
first day of the first plan year beginning on or after January 1, 1994,
the OBRA'93 annual compensation limit is $150,000.
For purposes of Article 17, and all Top Heavy provisions contained
therein, Compensation shall be defined as an Employer's W-2 earnings for
the calendar year ending with or within the Plan Year. For Plan Years
beginning on or after January 1, 1985, in determining whether or not an
Employee is a Key Employee, Compensation shall include any salary
deferrals made by such Employee.
2.13 "Computation Periods":
(a) Eligibility Computation Period - the 12 consecutive month period in
which the Employee is credited with at least 1,000 Hours of Service.
The initial period begins on the employment or re-employment
commencement date on which an Employee first performs one "Hour of
Service" for the Employer. His subsequent Eligibility Computation
Period shall be measured from succeeding Plan Years, the first of
which begins with the first day of the Plan Year that includes the
first anniversary of such Employee's Employment Commencement Date.
An Employee who is credited with 1,000 Hours of Service in both the
initial Eligibility Computation Period and the first Plan Year which
commences prior to the first anniversary of the Employee's initial
Eligibility Computation Period will be credited with two (2) Years
of Service for purposes of eligibility to Participate.
(b) Vesting Computation Period - the 12 consecutive month period
beginning with the first day of the Plan Year and ending with the
last day of the Plan Year in which an Employee is credited with at
least 1,000 Hours of Service. Thus, if an Employee is not credited
with at least 1,000 Hours of Service during a Plan Year, he is not
given credit for a Year of Service for vesting purposes.
2.14 "Contributions" shall mean contributions to this Plan from one of the
following sources:
(a) Employee Salary Deferral Contribution - shall mean the amount which
the Employee contributes under Section 4.01(a) of the Plan and shall
mean, with respect to any taxable year, the sum of all Employer
contributions made on behalf of such Participant pursuant to an
election to defer under any qualified CODA, as described in Section
401(k), any simplified employee pension cash or deferred
arrangement, as described in Section 402(h)(1)(B), any eligible
deferred compensation plan under Section 457, any plan as described
under Section 501(c)(18), and any employer contributions made on
behalf of a Participant for the purchase of an annuity contract
under Section 403(b) pursuant to a salary reduction agreement.
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(b) Employer Matching Contribution - shall mean the Employer's
Contributions to the Plan under Section 5.01(a) for Participants
making Employee Salary Deferral Contributions.
(c) Employer Discretionary Contribution - shall mean the Employer's
discretionary contribution to the Plan under Section 5.01(b).
2.15 "Dates":
(a) Effective Date - The original effective date of the Plan was April
1, 1992. This restatement is effective October 1, 1999.
(b) Anniversary Date - shall mean December 31.
(c) Plan Entry Dates - shall mean each January 1 and July 1.
(d) Allocation Dates of Assets - each business day. The valuation of all
assets in the Trust shall be conducted at least annually.
2.16 "Employee" shall mean any person on employed by the Employer (including
Leased Employees as defined by Code Section 414(n)(2)), or on approved
Leave of Absence [who is subject to withholding for purposes of Federal
income taxes and for purposes of the Federal Insurance Contributions Act].
However, a leased employee will not be considered an Employee for purposes
of testing required under Code Section 410(b) if the requirements of Code
Section 414(n)(5) are satisfied.
2.17 "Employer" shall mean Cooperative Bank for Savings, Inc., SSB (a
corporation). The term Employer shall also apply to any subsidiary or
Affiliated Employer who adopts the Plan and who, at the time such
reference applies, are included in the list of Affiliated Employers set
forth below. For the purpose of this Plan, Cooperative Bank for Savings,
Inc., SSB shall deal exclusively with the funding agent and shall be
deemed the representative of each Employer, and any action taken by
Cooperative Bank for Savings, Inc., SSB shall be binding on all Employers.
List of Affiliated Employers Date of Plan Adoption
---------------------------- ---------------------
None N/A
An Employer may be removed from the above list as of the date on which it
ceases to be subsidiary to, affiliated with, or allied with Cooperative
Bank for Savings, Inc., SSB, or such Employer loses its status as a legal
entity by means of dissolution, merger, consolidation, bankruptcy, or
otherwise. An Employer shall also be removed from the list of Employers
upon the termination of the Plan for that Employer.
As used in the further provisions of the Plan, the term Employer shall be
deemed to
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apply to each Employer independently. The requirement that Cooperative
Bank for Savings, Inc., SSB deal exclusively with the funding agent is for
administrative convenience only. In no event shall this Plan be
interpreted to be a multiemployer plan as defined in Code Section 413(c).
2.18 "Employment Commencement Date" shall mean the date on which an Employee
first performs an Hour of Service for the Employer.
2.19 "Fiscal Year" shall mean the Employer's taxable year for Federal income
tax purposes.
2.20 "Forfeiture" shall mean the portion of a Participant's Employer-funded
Account which does not become part of the Participant's vested Accrued
Benefit upon the earlier of (a) complete distribution of the Participant's
vested Accrued Benefit or, (b) when the Participant incurs five (5)
consecutive Breaks-in-Service.
2.21 "Hour of Service" shall mean:
(a) Each Hour of Service for which the Employer or Affiliated Employer,
either directly or indirectly, pays an Employee, or for which the
Employee is entitled to payment, for the performance of duties
during the Plan Year. The Retirement Committee shall credit Hours of
Service under this paragraph (a) to the Employee for the Plan Year
in which the Employee performs the duties, irrespective of when
paid.
(b) Each Hour of Service for back pay, (irrespective of mitigation of
damages), to which the Employer or Affiliated Employer has agreed or
for which the Employee has received an award. The Retirement
Committee shall credit Hours of Service under this paragraph (b) to
the Employee for the Plan Year(s) to which the award or the
agreement pertains rather than for the Plan Year in which the award,
agreement or payment is made; and
(c) Each Hour of Service for which the Employer or Affiliated Employer,
either directly or indirectly, pays an Employee, or for which the
Employee is entitled to payment (irrespective of whether the
employment relationship is terminated), for reasons other than for
the performance of duties during a Plan Year, such as Leave of
Absence, vacation, holiday, sick leave, illness, incapacity
(including disability), layoff, jury duty or military duty.
Notwithstanding the preceding provisions of this paragraph (c), the
Retirement Committee shall not credit:
(1) More than five hundred one (501) Hours of Service under this
paragraph (c) to an Employee on account of any single
continuous period during which the Employee does not perform
any duties (whether or not such period occurs during a single
Plan Year);
(2) An Hour of Service to an Employee on account of a period
during which the Employee does not perform any duties if the
payment the Employer makes (or the payment due) is under a
plan maintained solely for the purpose of complying with the
applicable workman's compensation law,
8
unemployment compensation law or disability insurance law; and
(3) An Hour of Service for a payment to an Employee which solely
reimburses the Employee for medical or medically related
expenses incurred by the Employee.
(d) The Retirement Committee shall not credit an Hour of Service under
more than one (1) of the above paragraphs. Furthermore, if the
Retirement Committee is to credit Hours of Service to an Employee
for the twelve (12) month period beginning with the Employee's
Employment Commencement Date, then the twelve (12) month period
shall be substituted for the term "Plan Year" wherever the latter
term appears in this paragraph. The Retirement Committee shall
resolve any ambiguity with respect to the crediting of an Hour of
Service in favor of the Employee. Furthermore, in crediting Hours of
Service under this paragraph, the Retirement Committee shall apply
the rules of paragraphs (b) and (c) of Labor Reg. Section
2530.200b-2, which the Plan, by this reference, specifically
incorporates in full within this paragraph.
(e) An Employee or Participant for whom hourly records are not
maintained shall be credited with either (i) forty-five (45) Hours
of Service per week, if compensated on a weekly basis, (ii)
ninety-five (95) Hours of Service semi-monthly, if compensated
semi-monthly, or (iii) one hundred ninety (190) Hours of Service
monthly, if compensated on a monthly basis, for each period
described above which if the Employee were hourly rated would have
been credited with one Hour of Service under paragraphs (a), (b) or
(c).
(f) Maternity - Solely for purposes of determining whether a Break in
Service (as defined in Section 2.09) for participation and vesting
purposes, has occurred in a Computation Period, an individual who is
absent from work for maternity or paternity reasons shall receive
credit for the Hours of Service which would otherwise have been
credited to such individual but for such absence, or in any case in
which such hours cannot be determined, 8 Hours of Service per day of
such absence subject to a maximum of 501 Hours of Service for such
Plan Year. For purposes of this paragraph, an absence from work for
maternity or paternity reasons means an absence (1) by reason of the
pregnancy of the individual, (2) by reason of a birth of a child of
the individual, (3) by reason of the placement of a child with the
individual in connection with the adoption of such child by such
individual, or (4) for purposes of caring for such child for a
period beginning immediately following such birth or placement. The
Hours of Service credited under this paragraph shall be credited (1)
in the computation period in which the absence begins if the
crediting is necessary to prevent a Break in Service in that period,
or (2) in all other cases, in the following computation period.
2.22 Leased Employee - effective for Plan Years beginning after December 31,
1996, means any person (other than an Employee of the recipient) who
pursuant to an agreement between the recipient and any other person
("leasing organization") has performed services for the recipient (or for
the recipient and related persons determined in accordance with Code
Section 414(n)(6)) on a substantially full time basis for a period of at
least one year, and
9
such services are performed under the primary direction or control of
recipient. Contributions or benefits provided a Leased Employee by the
leasing organization which are attributable to services performed for the
recipient employer shall be treated as provided by the recipient employer.
A Leased Employee shall not be considered an Employee of the recipient:
(a) if such employee is covered by a money purchase pension plan
providing:
(1) a non-integrated contribution rate of at least 10% of
compensation, as defined in Code Section 415(c)(3), but
including amounts which are contributed by the Employer
pursuant to a salary reduction agreement and which are not
includible in the gross income of the Participant under Code
Sections 125, 402(e)(3), 402(h)(1)(B), 403(b) or 457(b), and
Employee contributions described in Code Section 414(h)(2)
that are treated as Employer contributions.
(2) immediate participation; and
(3) full and immediate vesting; and
(b) if Leased Employees do not constitute more than 20% of the
recipient's non-highly compensated work force.
2.23 "Leave of Absence" shall mean any period of absence from the active
employment of the Employer due to jury duty and compulsory service in the
Armed Forces of the United States if the Employee returns to active
Service with the Employer within 90 days after he first becomes eligible
for release from such active duty. A Leave of Absence may be granted by
the Employer for sickness, vacations, disability, or other similar reasons
under rules established by it and uniformly applied by it to all
individuals similarly situated. If the Employee does not return to active
Service with the Employer within ninety (90) days of the termination of
his Leave of Absence, his Service will be deemed to have ceased on the
date his absence first commenced.
2.24 "Limitation Year" shall mean each 12 month period beginning each January 1
and ending the following December 31. Execution of this Plan (or any
amendment to this Plan changing the Limitation Year) constitutes adoption
of a written resolution by the Employer electing a Limitation Year
pursuant to governmental regulations.
2.25 "Net Profits" shall mean the Employer's current or accumulated earnings as
determined in accordance with generally accepted accounting practices.
2.26 "Normal Retirement Date" shall mean the first day of the month coinciding
with or next following the Participant's 65th birthday.
2.27 "Participant" shall mean any Employee who becomes a participant as
provided in Article III and has not for any reason become ineligible to
participate further in the Plan. An "Inactive Participant" shall mean any
Employee or former Employee who has ceased to be a Participant but on
whose behalf an Account is still maintained under the Plan.
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2.28 [Reserved]
2.29 "Plan" shall mean the Cooperative Bank for Savings, Inc., SSB 401(k)
Supplemental Retirement Plan as established herein and amended from time
to time.
2.30 "Plan Administrator" shall mean the Employer or the person or persons who
have been or are in the future named by the Employer to administer the
Plan.
2.31 "Plan Year" shall mean the 12 consecutive-month period beginning each
January 1 and ending 12 months later on December 31.
2.32 "Qualifying Year of Service" shall mean an Eligibility Computation Period
as defined in Section 2.13(a) during which an Employee completes at least
1,000 Hours of Service and shall commence on such Employee's Employment
Commencement Date.
Military Leave. Effective December 12, 1994, credit toward the Qualifying
Year of Service eligibility requirement will be granted for the period
during which an Employee is absent from work by reason of his military
duty with the Uniformed Services of the United States of America; provided
that he retains statutory reemployment rights and resumes Employment
within 90 days after his honorable discharge from active military duty, or
during any other period prescribed by law.
2.33 "Service" shall mean any period of time the Employee is in the employ of
the Employer, including any period the Employee is on Leave of Absence
authorized by the Employer under a uniform non-discriminatory policy
applicable to all Employees. Service with any predecessor Employer that
maintained this Plan shall be recognized for all purposes hereunder.
2.34 "Suspense Account" shall mean an account established pursuant to Section
6.05.
2.35 "Trust" shall mean the trust established to hold, administer, and invest
the contributions made under the Plan.
2.36 "Trust Agreement" shall mean the agreement between the Employer and the
Trustee or any successor Trustee establishing the Trust and specifying the
duties of the Trustee.
2.37 "Trustee" shall mean the person, persons or entity from time to time
appointed a Trustee under the Trust Agreement.
2.38 "Trust Fund" shall mean all property of every kind held or acquired by the
Trustee under the Trust Agreement.
2.39 "Vested Interest" shall mean a nonforfeitable right to all or a portion of
the Accrued Benefit.
2.40 "Year of Service" - The term "Year of Service" means a 12 consecutive
month period during the applicable computation period in which the
Employee has completed at least 1,000 Hours of Service.
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Military Service. Effective December 12, 1994, each Participant will
receive credit for Vesting Service as if his active Employment had
continued during the period of his military service with the Uniformed
Services of the United States of America; provided that he retains
statutory reemployment rights and resumes Employment within 90 days after
his honorable discharge from military duty, or during any other period
prescribed by law.
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.
Construction. It is the intention of the Employer that the Plan be qualified
under the provisions of the Code and the Act and all provisions hereof shall be
construed to that result.
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ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.01 Eligibility.
An Employee, who as of June 30, 1999 was a Participant in the prior Plan,
shall be eligible to continue to participate as of July 1, 1999 in this
amended and restated Plan.
Effective July 1, 1999, all Employees shall be eligible to participate in
this Plan on July 1, 1999, or any subsequent Plan Entry Date (January 1 or
July 1) coincident with or next following the later of the attainment of
age twenty-one (21) or the completion of a Qualifying Year of Service.
Notwithstanding the above, the following classes of Employees shall not be
eligible to participate in the Plan:
(a) leased employees, and
(b) any Employee of the Employer who is included in a unit of employees
covered by an agreement which the Secretary of Labor finds to be a
collective bargaining agreement between employee representatives and
the Employer, if there is evidence that retirement benefits were the
subject of good faith bargaining between such employee
representatives and the Employer, and
(c) contract employees the terms of whose contract does not specifically
provide for inclusion in this Plan.
(d) Hourly paid employees
3.02 Participation Upon Re-Employment. Any former Participant re-employed by
the Employer prior to incurring a Break-in-Service shall continue to
participate in the Plan in the same manner as if such termination had not
occurred. A former Participant whose employment terminates and who is
re-employed after a Break-in-Service shall re-enter the Plan as of his
re-employment commencement date after he performs his first Hour of
Service as a result of his re-employment. Any other Employee whose
employment terminates and who is subsequently re-employed shall commence
participation in accordance with the provisions of Section 3.01.
3.03 Employee Salary Deferral Contribution Application. Participation in the
Employee Salary Deferral Contribution option of the Plan shall not be
compulsory. A Participant as a condition for participation must file an
Employee Salary Deferral Contribution election on a written form provided
by the Retirement Committee on or before the time prescribed by the
Retirement Committee before each Plan Entry Date. A Participant who elects
not to make an Employee Salary Deferral Contribution will not participate
in any Employer Matching Contributions.
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3.04 Transferred Participants:
(a) A Participant who is transferred to any Affiliated Employer which is
not an Employer as defined in Section 2.17 or to a class of
employees not covered by this Plan shall be considered a Transferred
Participant. The Accrued Benefit of such Transferred Participant
shall be determined as of the date of transfer and shall be held
under the Plan until such time as the Transferred Participant
becomes eligible to receive it. If such Transferred Participant is
not fully vested in his Accrued Benefit as of the date of transfer,
such service after the date of transfer shall be used in determining
Vesting Service. In no event, however, shall service with the
Affiliated Employer or in a class of employees not covered by this
Plan be used to accrue further benefits under this Plan.
(b) A Participant who is a member of a class of employees not covered by
this Plan shall be considered a Transferred Participant and shall be
treated as described in Section 3.04(a) above.
(c) An Employee, previously excluded from coverage under the Plan
because he was a member of a class of employees not covered by this
Plan, shall enter (or re-enter, as the case may be) the Plan in the
Plan Year during which he is a member of the class covered by the
Plan. All such Employees shall accrue benefits under this Plan only
with respect to those Years of Service performed by the Employee
while a member of the class covered by this Plan.
Service while the Employee was previously excluded from
Participation will be counted for vesting purposes.
If an Employee transfers from employment not covered under this
Plan, and if such transfer occurs at any time during a Plan Year,
all Hours of Service earned during such Plan Year, regardless of
whether or not they were worked under excluded employment, shall be
considered in determining Service for such year.
14
ARTICLE IV
EMPLOYEE CONTRIBUTIONS
4.01 Employee Contributions shall consist of:
Employee Salary Deferral Contributions. A Participant may elect to defer
receipt of a portion of his Compensation, and have the Employer contribute
such amount to the Plan on his behalf for each Limitation Year, the
Employee Salary Deferral Contribution shall be an amount between one
percent (1%) and fifteen percent (15%) of his Compensation. Employee
Salary Deferral Contributions shall be subject to the provisions of
Section 4.05 and Section 6.09, and any other administrative rules
prescribed by the Retirement Committee.
(1) No Participant shall be permitted to have Employee Salary Deferral
Contributions made under this Plan, or any other qualified plan
maintained by the Employer during any taxable year, in excess of the
dollar limitation contained in Section 402(g) in effect at the
beginning of the taxable year. In the event such limit is exceeded,
the method of correction is found in Section 4.06.
(2) Make-Up Contributions After Military Leave. Effective December 12,
1994, each Participant who resumes active employment after an
absence due to qualified military service (as defined in Code
Section 414(u)) will be permitted to make special Salary Reduction
Contributions in an amount up to the maximum amount he could have
contributed if he had remained in Employment during his period of
qualified military service. Each make-up Contribution will be
subject to the limitations under Code Sections 402(g) and 415 in
effect for the year to which the Contribution relates, but will be
ignored for purposes of the ADP Test. The Committee will permit him
to make his special Contributions during the period beginning on the
date when he resumes Employment and continuing for a period equal to
the lesser of three times the length of his military leave, or five
years. The amount of his special Contributions will be based on the
Compensation he would have received if he had remained in active
employment, at his rate of pay in effect when he began his leave. If
that pay rate cannot be determined with certainty, the Committee
will treat him as having Compensation equal to the amount he
received during the 12-month period preceding his leave, or during
the entire period of his prior employment if shorter than 12 months.
4.02 Method of Payment or Deduction. Employee Salary Deferral Contributions may
be made by regular payroll deductions from the Participant's Compensation,
or in any other manner approved by the Retirement Committee.
4.03 Modification of Employee Contributions. A Participant may modify his
Employee Salary Deferral Contributions at any time on such forms as the
Retirement Committee may prescribe. Such modification shall become
effective upon the first day of the next calendar quarter and will have
prospective effect only for the Employee Salary Deferral Contributions.
15
Such modification shall be in accordance with such rules as the Retirement
Committee may prescribe.
4.04 Termination of Employee Contributions. A Participant may terminate his
Salary Deferral Agreement at any time with respect to Compensation not yet
earned by delivering written notice of termination to the Plan
Administrator. Any Participant who terminates his Salary Deferral
Agreement shall be permitted, in accordance with uniform and
nondiscriminatory rules prescribed by the Plan Administrator, to execute a
new Salary Deferral Agreement and resume having Salary Deferral
Contributions made to the Trust on his behalf on the next following Plan
Entry Date.
4.05 Excess Deferrals. In the event a participant's Employee Salary Deferred
Contributions (hereafter referred to as an "Excess Deferral") exceeds the
Code Section 402(g) limit for his taxable year, the Plan will distribute
to the Participant the amount by which the Excess Deferral exceeds the
Code Section 402(g) limit.
(a) The distribution of the amount calculated above shall be distributed
by the April 15 following the calendar year in which the Excess
Deferral was contributed.
(b) For a Highly Compensated Participant who has an Excess Deferral, the
Excess Deferral will be returned prior to any distribution required
under Section 4.06 to correct the Plan's failure of the ADP test.
Such Excess Deferral amount will be included in the
nondiscrimination testing performed in Section 4.06.
(c) Income allocable to the Excess Deferral shall be calculated in
acordance with Section 4.06.
4.06 Nondiscrimination Testing. For Plan Years beginning before January 1, 1997
the provisions contained in this Section 4.05 shall pertain to data
collected in the current Plan Year for which the nondiscrimination testing
is performed. For Plan Years beginning on or after January 1, 1997 the
Employer may elect to utilize the prior year's data, as it pertains to
Non-Highly Compensated Participants, or current year's data for all
Eligible Participants, in performing the nondiscriminatory testing. The
Employer may elect to use current or prior year's data for Plan years
beginning in 1999; a change in such election shall be made only in
accordance with the guidance issued by the IRS, including Notice 98-1,
Section VII which is incorporated herein by reference.
The Plan shall not discriminate in favor of Highly Compensated
Participants. Nondiscrimination testing of Employee Salary Deferral
Contributions shall occur at least annually. The Average Actual Deferral
Percentage (ADP) for Highly Compensated Participants for each Plan Year
shall not exceed the relationship to the ADP of all Non-Highly Compensated
Participants for the preceding Plan Year of either of the following
specified tests:
(a) Primary Test:
The ADP for Highly Compensated Participants for the Plan Year shall
not exceed the
16
ADP for Non-Highly Compensated Participants for the preceding Plan
Year multiplied by 1.25; or
(b) Alternate Test:
The ADP Highly Compensated Participants for the Plan being tested
Year shall not exceed the ADP Non-Highly Compensated Participants
for the preceding Plan Year multiplied by 2, provided that the ADP
for Highly Compensated Participants does not exceed the ADP
Non-Highly Compensated Participants for the preceding Plan Year by
more than two (2) percentage points or such lesser amount as the
Secretary of the Treasury shall prescribe to prevent the multiple
use of this alternative limitation with respect to any Highly
Compensated Participant.
For the first Plan Year for which this Plan is effective, if the
Employer elects to use prior year's data for testing purposes, the
Employer may elect to use three percent (3%) as the Average Actual
Deferral Percentage of Non-Highly Compensated Participants, or the
current year's actual deferral percentage of Non-Highly Compensated
Participants. Provided, however, that this option is not permitted
for any plan which is a successor plan.
Definitions: For purposes of this Section 4.06, and for purposes of
this Plan, the following definitions shall be used:
(1) "Actual Deferral Percentage" shall mean the ratio (expressed
as a percentage), of Employee Salary Deferral Contributions
and Qualified Nonelective Contributions on behalf of the
Eligible Participant for the Plan Year to the Eligible
Participant's Compensation for the Plan Year, calculated to
the nearest hundredth of a percentage point.
(2) "Average Actual Deferral Percentage" (ADP) shall mean the
average (expressed as a percentage) of the Actual Deferral
Percentage of the Eligible Participants in a group, calculated
to the nearest hundredth of a percentage point.
(3) "Qualified Nonelective Contributions" shall mean contributions
made by the Employer and allocated to Participants' accounts
that the participant may not elect to receive in cash and may
be used to satisfy the nondiscrimination tests in Section
4.05. Such contribution shall be nonforfeitable and subject to
Section 4.08.
(4) "Eligible Participant" shall mean any Employee of the Employer
who is otherwise eligible under the terms of the Plan to have
Employee Salary Deferral Contributions or Qualified Employer
Nonelective Contributions allocated to his account for the
Plan Year.
(5) "Highly Compensated Participant" effective for Plan Years
beginning after December 31, 1996, means any Participant, or
former Participant, who at any time during the determination
year, or look-back year, is a Highly Compensated
17
Employee, as defined in Code Section 414(q), who:
(i) was a 5% owner (as defined under Code Section
416(i)(1)(A)(iii)) during the determination year or look
back year, or
(ii) Earned more than $80,000 (as adjusted by a Cost of
Living Index under Code Section 415(d) as approved by
the Secretary of the Treasury) during the preceding Plan
Year [and was in the top-paid 20% of all Employees based
on compensation.] To determine the number of Employees
in the top-paid group, the Plan may exclude Employees
who either: (a) are under age 21; (b) have fewer than 6
months of employment; (c) normally work fewer than 17
1/2 hours per week; (d) normally work less than 6 months
per Plan Year; (e) are included in a collective
bargaining unit; or (f) are non-resident aliens with no
United States source income.
(iii) The determination of whether a former Employee is a
former Highly Compensated Employee shall be made in
accordance with (i) and (ii) above.
In determining whether an Employee is a Highly Compensated
Participant for Plan Years beginning in 1997, the amendments
of SBJPA to Code Section 414(q) stated above are treated as
having been in effect for Plan Years beginning in 1996.
(6) "Non-Highly Compensated Participant" shall mean an Employee of
the Employer who is not a Highly Compensated Employee. In the
event an Employer utilizes the prior Plan Year's data in
determining the Actual Deferral Percentage of Non-Highly
Compensated Employees for testing purposes, the status of the
employee in the current Plan Year shall be disregarded.
(7) "Compensation," for the purposes of this Section 4.05, shall
mean an Employee's total nondeferred compensation includible
in gross income, including any elective contributions made to
this Plan or an Employer Sponsored Code Section 125 plan.
(c) Special Rules.
(1) For purposes of this Section 4.05, the Actual Deferral
Percentage for any Highly Compensated Participant for the Plan
Year and who is eligible to have Employee Salary Deferral or
Qualified Nonelective Contributions allocated to his Account
under two or more plans or arrangements described in Section
401(k) that are maintained by the Employer or an Affiliated
Employer shall be determined as if all such Employee Salary
Deferral Contributions and Qualified Employer Deferral
Contributions were made under a single arrangement.
(2) In the event that this Plan satisfies the requirements of Code
Section 401(a)(4) or 410(b) only if aggregated with one or
more other plans, or if one or more other plans satisfy the
requirements of Code Section 401(a)(4) or 410(b) only if
aggregated with this Plan, then this Section 4.05 shall be
applied by determining
18
the ADP of Eligible Participants as if all such plans were a
single plan.
(3) The determination and treatment of the Employee Salary
Deferral Contributions, Qualified Nonelective Contributions
and Actual Deferral Percentage of any Participant shall
satisfy such other requirements as may be prescribed by the
Secretary of the Treasury.
(4) The Employer shall maintain records sufficient to demonstrate
satisfaction of the ADP test of this Section 4.05, and the
amount of Qualified Employer Nonelective Contributions used in
such test.
4.07 Correction of Excess Contributions. In the event the Plan fails to pass
the nondiscrimination test pursuant to Section 4.06, the Excess
Contribution will be corrected in accordance with the following rules. The
"Excess Contribution" is the amount of employee Salary Deferral
Contributions made on behalf of the Highly Compensated Participant(s),
which exceed the amount permitted under Section 4.06.
(a) Correction Before Excess Contributions Are Made. In the event the
Retirement Committee determines, before any Excess Contributions
have been made to the Plan, that the Plan will fail the ADP
nondiscrimination testing, it will limit the Employee Salary
Deferral Contributions of the Highly Compensated Participants,
beginning with the Highly Compensated Participant with the highest
deferral percentage.
(b) Correction After Excess Contributions Are Made. In the event the
Retirement Committee determines that the Plan fails the ADP
nondiscrimination testing for the Plan Year and Excess Contributions
have already been made to the Plan, the Plan will refund such Excess
Contributions and earnings as are necessary for the Plan to pass the
ADP nondiscrimination test.
For Plan Years beginning before December 31, 1996 the Excess
Contributions will be refunded to the Highly Compensated Participant
with the highest percentage of deferral. Such participant's
percentage will be reduced to the next Highly Compensated
Participant's percentage. If further correction is necessary, the
Excess Contribution of the Highly Compensated Participant with the
next highest percentage of deferral shall be refunded his Excess
Contribution. Such method of correction will continue until the ADP
nondiscrimination test is satisfied. The Retirement Committee shall
calculate earnings on the refunded Excess Contributions, with such
calculation made in accordance with the method utilized under the
Plan.
For Plan years beginning after December 31, 1996 the Excess
Contributions will be refunded to the Highly Compensated Participant
with the highest dollar amount deferred. Such Participant's dollar
amount will be reduced, if necessary, to the dollar amount of the
next Highly Compensated Participant. If further correction is
necessary, the Highly Compensated Participant with the next highest
dollar amount also be refunded his Excess Contribution. Such method
of correction shall continue as necessary until all Highly
Compensated Participants have the same dollar amount of deferral. If
further reduction is required, the dollar amounts of all Highly
Compensated Participants shall be reduced. The Retirement Committee
shall calculate
19
earnings on the refunded Excess Contributions, with such calculation
made in accordance with the method utilized under the Plan.
Any Highly Compensated Participant's Excess Contributions to be
refunded shall be reduced by the Excess Deferrals, if any,
previously distributed to the Participant for the same Plan Year.
4.08 Employee Salary Deferral Contributions are not distributable to
Participants or their beneficiaries earlier than the earlier of:
(i) separation from service, death, or disability of the Participant;
(ii) attainment of the age 59 1/2 by the Participant;
(iii) termination of the Plan without establishment or maintenance of
another defined contribution plan (other than an ESOP);
(iv) the events specified in those of Section 13.10, 13.11, or 13.12 of
this Plan adopted by the Employer.
4.09 Family Aggregation Rules Removed. Effective as of the first day of the
Plan Year beginning after December 31, 1996, the family aggregation rules
required by Code Section 414(q)(6) have been removed from this Plan.
20
ARTICLE V
EMPLOYER CONTRIBUTIONS
5.01 Employer Contributions:
(a) Employer Matching Contribution. Subject to the limitations of
Sections 5.05 and 6.09, the Employer shall contribute to the Trust a
discretionary matching contribution in an amount as determined
annually by the Board of Directors. Such discretionary match shall
be communicated to the Employees as of the beginning of each Plan
Year. The total amount of such Employer Matching Contributions shall
be increased by any forfeitures arising under Section 7.09.
Make-Up Matching Contributions After Military Leave. Effective
December 12, 1994, each Employer will make special Matching
Contributions for each of its Participants who returns to Employment
from qualified military service and contributes the make-up Salary
Reduction Contributions described in Subsection 4.01(a)(3). Each
Matching Contribution will relate to the year for which the make-up
Salary Reduction Contribution is made and will be subject to the
percentage-of-Compensation limit and Code Section 415 limit in
effect for that year. The Committee will ignore the make-up Matching
Contributions for purposes of the ADP and ACP Tests. The Committee
will not allocate investment earnings to the make-up Contribution
for the period of leave.
(b) Employer Discretionary Contribution. Subject to the limitations of
Section 6.09, for each Plan Year that ends with or within the
Employer's taxable Year, the Employer may contribute to the Trust
from its current or accumulated Net Profits an amount that the Board
may from time to time deem advisable.
Make-Up Discretionary Contributions After Military Leave. Effective
December 12, 1994, each Participant who resumes active employment
after qualified military service will receive credit for any
allocations of Employer Discretionary Contributions (but not
forfeitures or earnings) to which he or she would have been entitled
had there been no interruption in employment. Each make-up
Contribution will be subject to the limitations under Code Section
415 in effect for the year to which the Contribution relates. The
amount of this special Contribution will be based on the
Compensation he would have received if he had remained in active
Employment, at his rate of pay in effect when he began his leave. If
that pay rate cannot be determined with certainty, the Committee
will treat him as having Compensation equal to the amount he
received during the 12-month period preceding his leave, or during
the entire period of his Employment if shorter than 12 months.
5.02 Determination of Contribution. The Employer, from its records, shall
determine the amount of any contributions to be made by it to the Trust
under the terms of the Plan.
5.03 Time and Method of Payment of Contribution. The Employer may pay its
contribution for
21
each Limitation Year in one (1) or more installments. The Employer's
contribution for any Limitation Year shall be due on the last day of its
taxable year coinciding with or within which such Limitation Year ends,
and, unless paid before, shall be payable then or as soon thereafter as
practicable, but not later than the time prescribed by law for filing the
Employer's Federal income tax return (including extensions thereof) for
such taxable year, without interest. If the contribution is on account of
the Employer's preceding taxable year, the contribution shall be
accompanied by the Employer's signed statement to the Trustee that payment
is on account of such taxable year. Contributions may be paid in cash. All
contributions for each Limitation Year shall be deemed to be paid as of
the last day of such Limitation Year if not allocated before the last day
of the Limitation Year.
5.04 Return of Employer Contributions. Employer Contributions hereunder shall
not revert to the Employer. Notwithstanding any provision herein to the
contrary, however, upon the Employer's request, a contribution which was
made upon a good faith mistake of fact, conditioned upon initial
qualification of the Plan for which a determination letter request was
filed timely and the determination was adverse or upon deductibility under
Code Section (404), shall be returned to the Employer within one year
after payment of the contribution, or denial of the qualification, as the
case may be.
5.05 Nondiscrimination Testing. For Plan Years beginning before January 1, 1997
the provisions contained in this Section 5.05 shall pertain to the data
collected in the current Plan Year for which the nondiscriminatory testing
is performed. For Plan Years beginning on or after January 1, 1997 the
Employer may elect to utilize the prior year's data as it pertains to
Non-Highly Compensated Participants, or current year's data for all
eligible Participants, in performing the nondiscrimination testing. The
Plan shall not discriminate in favor of Highly Compensated Participants
(as defined in 4.06). Nondiscrimination testing of Employer Matching
Contributions shall occur at least annually. This test shall pertain to
Employer contributions made under this Article 5. The term "Matching
Contribution" refers to all forms of contribution under Article 5, which
are conditioned upon the making of a Salary Reduction Contribution. The
Average Contribution Percentage (ACP) for Highly Compensated Participants
for the Plan Year shall not exceed the relationship to the ACP of all
Non-Highly Compensated Participants for the preceding Plan Year of either
of the following specified tests:
(a) Primary Test: The ACP for Highly Compensated Participants for the
Plan Year shall not exceed the ACP for Non-Highly Compensated
Participants for the preceding Plan Year multiplied by 1.25, or
(b) Alternative Test: The ACP for Highly Compensated Participants for
the Plan Year shall not exceed the ACP for Non-Highly Compensated
Participants for the preceding Plan Year multiplied by 2, provided
that the ACP for Highly Compensated Participants does not exceed the
ACP for Non-Highly Compensated Participants for the preceding Plan
Year by more than two (2) percentage points or such lesser amount as
the Secretary of the Treasury shall prescribe to prevent the
multiple use of this alternative limitation with respect to any
Highly Compensated Participant.
For the first Plan Year for which this Plan is effective, if the
Employer elects to use prior year's data for testing purposes, the
Employer may elect to use three percent
22
(3%) as the ACP of Non-Highly Compensated Participants, or the
current year's actual contribution percentage of Non-Highly
Compensated Employees. Provided, however, that this option is not
permitted for any plan which is a successor plan.
Definitions: For purposes of this Section 5.05, and for purposes of
this Plan, the following definitions shall be used:
(1) "Average Actual Contribution Percentage (ACP)" shall mean the
average (expressed as a percentage) of the Actual Contribution
Percentages of the Eligible Participants in a group,
calculated to the nearest hundredth percentage.
(2) "Actual Contribution Percentage" shall mean the ratio
(expressed as a percentage), of the sum of the Employee
Non-Deductible Contributions and Employer Matching
Contributions under the Plan on behalf of the Eligible
Participant for the Plan Year to the Eligible Participant's
Compensation for the Plan Year, calculated to the nearest
hundredth percentage.
(3) "Eligible Participant" shall mean any Employee of the Employer
who is otherwise eligible under the terms of the Plan to have
Employee Non-Deductible Contributions or Employer Matching
Contributions allocated to his Account for the Plan Year.
(c) Special Rules.
(1) For purposes of this Section 5.05, the Actual Contribution
Percentage for a Highly Compensated Participant for the Plan
Year and who is eligible to make Non-Deductible Employee
Contributions or to receive Employer Matching Contributions
under two or more plans as described in Section 401(a) or
arrangements described in Section 401(k) that are maintained
by the Employer or an Affiliated Employer shall be determined
as if all such contributions were made under a single Plan.
(2) In the event that this Plan satisfies the requirements of Code
Section 401(a)(4) or 410(b) only if aggregated with one or
more other plans, or if one or more other plans satisfy the
requirements of Code Section 401(a)(4) or 410(b) only if
aggregated with this Plan, then this Section 5.05 shall be
applied by determining the Actual Contribution Percentages of
Eligible Participants as if all such plans were a single plan.
(3) The determination and treatment of the Actual Contribution
Percentage of any Participant shall satisfy such other
requirements as may be prescribed by the Secretary of the
Treasury.
5.06 Correction for Excess Aggregate Contributions. In the event the Plan fails
to pass the nondiscrimination test pursuant to Section 5.05, the Excess
Aggregate Contributions will be corrected in accordance with this Section
5.06. "Excess Aggregate Contributions" are the amounts of Employer
Matching contributions made on behalf of the Highly Compensated
Participants which exceed the amount permitted under the nondiscrimination
testing of
23
Section 5.05.
Effective for Plan Years beginning after December 31, 1996, the Plan
Administrator (on or before the fifteenth day of the third month following
the end of the Plan Year, but in no event later than the close of the
following Plan Year) shall direct the Trustee to distribute to the Highly
Compensated Participant group the amount of Excess Aggregate Contributions
(and any income allocable to such contributions) no later than the end of
the Plan Year next following the Plan Year for which they were made, or,
if forfeitable, forfeit such Excess Aggregate Contributions. Such
distribution or Forfeiture shall be made on behalf of the Highly
Compensated Participant group in order of the dollar amount contributed,
beginning with the Highly Compensated Employee with the highest dollar
amount and continuing the distributions, if necessary, until all Highly
Compensated Participants have the same dollar amount and then reduce those
dollar amounts equally. Forfeitures of Excess Aggregate Contributions
shall be treated in accordance with Section 7.07. However, no such
Forfeiture may be allocated to a Highly Compensation Participant whose
contributions are reduced pursuant to this Section.
Effective for Plan Years beginning before December 31, 1996, the reduction
method referenced above shall substitute "highest percentage" for the
highest dollar amount.
Allocation of Forfeitures under this Section 5.06. Amounts forfeited by
Highly Compensated Employees under this Section shall be applied to reduce
Employer Matching Contributions.
5.07 Multiple Use Test. In order to prevent the multiple use of the alternative
method described in Section4.05(b) and Section5.05(b) and in Code
Section401(m)(9)(A), any Highly Compensated Participant eligible to make
elective deferrals pursuant to Section4.01(a) and to receive matching
contributions under Section5.01(a) or to make Employee Non-Deductible
Contributions pursuant to Section401(b) under this Plan or any other plan
maintained by the Employer or an Affiliated Employer shall have his Actual
Contribution Percentage reduced pursuant to Internal Revenue Code
Regulation Section1.401(m)-2, the provisions of which are incorporated
herein by reference.
The Employer may reduce the actual deferral ratios (or actual contribution
ratios as applicable) for all Highly Compensated Employees covered by the
Plan(s) or only those Highly Compensated Employees eligible for both (or
all such) Plans.
5.08 Family Aggregation Rules Removed. Effective as of the first day of the
Plan Year beginning after December 31, 1996, the family aggregation rules
required by Code Section 414(q)(6) have been deleted in their entirety
from this Plan.
24
ARTICLE VI
ALLOCATIONS
6.01 Participant's Accounts. For each Participant, the Retirement Committee
shall establish an:
(a) Employee 401(k) Savings Account
(b) Employer Matching Account
(c) ESOP Account
which will reflect the Participant's share of contributions and the
income, losses, appreciation, depreciation, and forfeitures, if
applicable, attributable to all such Accounts. The establishment of
separate Accounts shall not require a separation of the Trust assets.
6.02 Valuation of Accounts. As of each Allocation Date, prior to allocating
contributions and forfeitures, if any, for the Plan Year, the Retirement
Committee shall:
(a) First, charge to the proper Accounts all payments or distributions
made from Participants' Accounts since the last preceding Allocation
Date that have not been charged previously, as provided in Section
6.03;
(b) Next, any earnings or losses (net appreciation or net depreciation)
of the Trust Fund shall be allocated in the same proportion that
each Participant's and Former Participant's nonsegregated accounts
bear to the total of all Participants' and Former Participants'
nonsegregated accounts as of such date. If any nonsegregated account
of a Participant has been distributed prior to the Anniversary Date
or other valuation date subsequent to a Participant's termination of
employment, no earnings or losses shall be credited to such account.
(c) Next, any earnings or losses (net appreciation or depreciation) of
the Trust shall be allocated in the same proportion that each
Participant's and Former Participant's time weighted average (based
on the Valuation Date base) nonsegregated accounts bears to the
total of all Participant's and Former Participant's time weighted
average (based on the Valuation Date base) nonsegregated accounts as
of such date.
The Suspense Account, if any, shall not be adjusted to reflect any Trust
earnings or losses.
6.03 Charging of Payments and Distributions. As of each Allocation Date, all
payments and distributions made under the Plan since the last preceding
Allocation Date to or for the benefit of a Participant or his Beneficiary
will be charged to the proper Account of such Participant.
6.04 Method for Allocating and Crediting Employee and Employer Contributions.
25
Subject to the conditions and limitations of this Article VI, as of each
Allocation Date:
(a) Employee Salary Deferral Contributions, shall be credited to each
Employee 401(k) Savings Account.
(b) Employer's Matching Contribution shall be credited to each
Participant's Employer Matching Account in an amount as determined
by the Board in Section 5.01(a). Any Matching Account forfeitures
shall be re-allocated pro-rata as an additional Employer Matching
Contribution to all Participants who are employed by the Employer on
the last day of the Plan Year and who have completed 1,000 or more
Hours of Service.
(c) Employer's Discretionary Contribution plus any Discretionary Account
Forfeitures, shall be allocated among and credited to Employer
Discretionary Accounts of eligible Participants who during the Plan
Year completed at least 1,000 Hours of Service and are in the employ
(includes Employees granted a Leave of Absence) of the Employer on
the last day of the Plan Year. Any Discretionary Contribution shall
be allocated pro-rata to each Participant's Discretionary Account,
based on the ratio of the Participant's Salary Deferral
Contributions to the total Salary Deferral Contributions of all
Participants eligible for a Discretionary Contribution.
Separate Accounts - Breaks in Service. If a Participant re-enters the Plan
subsequent to his having incurred 5 consecutive 1-Year Breaks in Service,
the Retirement Committee shall maintain, or cause to be maintained, a
separate Employer Discretionary Contribution Account and Matching Account
for the Participant's pre-Break in Service Accrued Benefit derived from
Employer Discretionary Contributions and Employer Matching Contributions,
and a separate Employer Discretionary Contribution and Matching
Contribution Accounts for his post-Break in Service Accrued Benefit
derived from Employer Discretionary Contributions and Employer's Matching
Contributions unless the Participant's entire Accrued Benefit under the
Plan is one hundred percent (100%) nonforfeitable.
6.05 Suspense Account. The excess amount allocated to each Participant by
reason of Section 6.09 shall be held in this Account and not distributed
to a Participant but shall be reapplied to reduce further Employer
Matching Contributions or Employer Discretionary Contributions under the
Plan for the next Limitation Year (and for each succeeding Limitation
Year, if necessary) for such Participant, so that in each such year the
sum of actual Employer Matching Contributions or Employer Discretionary
Contributions which would otherwise be allocated to each Participant's
Employer Matching Account or Employer Discretionary Account will be made
from this Suspense Account. In the event the Participant is not employed
by the Employer at the end of any Limitation Year, then the excess amounts
shall not be distributed to the Participant but shall be reapplied to
reduce future such Employer Matching Contributions for all remaining
Participants in the Limitation Year and each succeeding year, if
necessary. This provision shall apply only to excess amounts which arise
due to the allocation of forfeitures, a reasonable error in estimating the
Participant's annual Compensation, a reasonable error in determining the
amount of elective deferrals under Code Section 402(g)(3) or such other
reason accepted by the Commissioner of the IRS.
26
6.06 Employer Contributions Considered Made on Last Day of Plan Year. For
purposes of this Article VI, the Employer's contribution which remains
unallocated on the last day of any Plan Year will be considered to have
been made on the last day of that year, regardless of when paid to the
Trustee.
6.07 Accrual of Benefits. The Retirement Committee shall determine a
Participant's Accrued Benefit on the basis of the Limitation Year. The
Retirement Committee shall only take into account the Compensation earned
during that part of the Limitation Year the Employee is actually a
Participant in the Plan.
6.08 Equitable Allocations. If the Retirement Committee determines in making a
valuation, an allocation, or by adding interest to any Account under the
provisions of the Plan, that the strict application of the provisions of
the Plan will not produce an equitable and nondiscriminatory allocation
among the Accounts of the Participants, it may modify any procedure
specified in the Plan for the purpose of achieving an equitable and
nondiscriminatory allocation in accordance with the general concepts of
the Plan; provided, however, that any such modification shall not reduce
any Participant's Accrued Benefits and shall be consistent with the
provisions of Code Section 401(a)(4), and provided further that such
modification shall be made in the form of a written amendment to the Plan.
Should the Retirement Committee in good faith determine that certain
expenses of administration paid by the Trustee during the Plan Year under
consideration are not general, ordinary, and usual, and should not
equitably be borne by all Participants, but should be borne only by one or
more Participants, for whom or because of whom such specific expenses were
incurred, the net earnings and adjustments in value of the Accounts shall
be increased by the amounts of such expenses, and the Retirement Committee
shall make suitable adjustments by debiting the particular Account or
Accounts of such one or more Participants, Former Participants, or
Beneficiaries; provided, however, that any such adjustment must be
nondiscriminatory and consistent with the provisions of Code Section
401(a).
6.09 Maximum Annual Additions. Notwithstanding any other provision of the Plan,
the Annual Addition to a Participant's Account for any Limitation Year may
not exceed in any Limitation Year an amount equal to the lesser of the:
(a) Defined Contribution Dollar Limitation effective for the first
Limitation Year beginning after December 31, 1994, means $30,000
adjusted annually as provided in Code Section 415(d) pursuant to
Regulations. The adjusted limitation is effective as of January 1st
of each calendar year and is applicable to "limitation years" ending
with or within that calendar year; or
(b) Twenty-five percent (25%) of the Compensation (within the meaning of
Code Section 415(c)(3)). However, the compensation limitation in
this subsection (b) shall not apply to (i) any contributions for
medical benefits (within the meaning of Code Section 419(A)(f)(2))
after separation from service which is otherwise treated as an
Annual Addition, or (ii) any amount otherwise treated as an Annual
Addition under Code Section 415(l)(1).
If the Participant does not participate in, and never has participated in
another Qualified Plan maintained by the Employer, or a welfare benefit
fund, as defined in Code Section
27
419(e) maintained by the Employer, or an individual medical account, as
defined in Code Section 415(l)(2), maintained by the Employer, the amount
of Annual Additions which the Committee may allocate under this Plan on a
Participant's behalf for a Limitation Year shall not exceed the Maximum
Annual Addition. If the amount the Employer otherwise would contribute to
the Participant's Account would cause the Annual Additions for the
Limitation Year to exceed the Maximum Annual Addition, the Employer will
reduce or refund the amount of contribution so the Annual Additions for
the Limitation Year will be equal to the Maximum Annual Addition. In the
event a Participant does participate in, or has participated in another
Qualified Plan (including a defined benefit plan with voluntary employee
contributions) maintained by the Employer, an IRA with Employer allocated
contributions, a Code Section 419(e) welfare plan, all such plans will be
treated as one plan for the purposes of this Section 6.09 and compliance
with Code Section 415(c). In the event the Employer is a controlled group
member, affiliated service group member or member of a commonly controlled
trade or business to which Code Sections 414(b), (c) or (m), and 415(b)
and (h) apply, all employers in the controlled group, affiliated service
group or commonly controlled trade or business shall be treated as a
single employer for the purposes of this Section 6.09.
A Participant's Annual Addition shall be reduced so as to not exceed his
Maximum Annual Addition first through the refund of Employee Salary
Deferral Contribution and then, to the extent necessary, by the reduction
of Employer Matching Contribution. The application of Section 6.05 (the
allocation of excess contributions to a suspense account) shall apply only
when the excess amount contributed by or on behalf of a Participant is due
to reasonable error in estimating the Participant's Annual Compensation,
reasonable error in determining the amount of elective deferrals the
Participant is eligible to make or allocation of forfeitures.
Special Rules for Plans Subject to Overall Limitations Under Code Section
415(e).
The following limitations apply, for Plan Years beginning prior to January
1, 2000, where a Participant in this Plan is also a Participant in one or
more plans, one of which is a Defined Benefit Plan maintained by the
Employer during the Plan Year.
(a) Recomputation Not Required. The Annual Addition for any Limitation
Year beginning prior to January 1, 1987 shall not be recomputed to
treat all Employee Contributions as an Annual Addition.
(b) Adjustment of Defined Contribution Plan Fraction. If the Plan
satisfied the applicable requirements of Code Section 415 as in
effect for all Limitation Years beginning before January 1, 1987, an
amount shall be subtracted from the numerator of the Defined
Contribution Plan Fraction (not exceeding such numerator) as
prescribed by the Secretary of the Treasury so that the sum of the
Defined Benefit Plan Fraction and Defined Contribution Plan Fraction
computed under Code Section 415(e)(1) (as revised by this Section
6.09) does not exceed 1.0 for such Limitation Year.
If the Participant presently participates, or has ever participated
under a Defined Benefit Plan maintained by the Employer, then the
sum of the Defined Benefit Plan Fraction and the Defined
Contribution Plan Fraction for the Participant for that
28
Limitation Year shall not exceed 1.0. If in any Limitation Year the
sum of the Defined Benefit Plan Fraction and the Defined
Contribution Plan Fraction on behalf of a Participant does exceed
1.0, then the Employer shall reduce its contribution on behalf of
such Participant to the Defined Contribution Plan to the extent
necessary to prevent the sum of the Defined Contribution Plan
Fraction and the Defined Benefit Plan fraction from exceeding 1.0.
For purposes of this Section, the following terms shall mean:
(a) "Defined Benefit Plan" A retirement plan which does not
provide for individual accounts for Employer contributions.
The Retirement Committee shall treat all defined benefit plans
(whether or not terminated) maintained by the Employer as a
single plan and the Retirement Committee shall treat all
defined contribution plans (whether or not terminated)
maintained by the Employer as a single plan.
(b) "Defined Benefit Plan Fraction"
projected annual benefit of the Participant
-------------------------------------------
under the defined benefit plan(s) (divided by)
The lesser of (i) 125% of the dollar
limitation in effect under Code Section 415(b)(1)(A)
for the Limitation Year, or (ii) 140% of the
Participant's average Compensation for his
highest paid three (3) consecutive Years of Service
If the Employee was a Participant in one or more defined benefit
plans maintained by the Employer which were in existence on July 1,
1982, the denominator of this fraction will not be less than 125% of
the sum of the annual benefits under such plans which the Employee
had accrued as of the end of the 1982 Limitation Year (the last
Limitation Year beginning before January 1, 1983). The preceding
sentence only applies if the defined benefit plans individually and
in the aggregate satisfied the requirements of Code Section 415 as
in effect at the end of the 1982 Limitation Year.
Notwithstanding the above, if the Participant was a Participant 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 percent of
the sum of the annual benefits under such plans which the
Participant had accrued as of the end of the close of the last
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 the requirements of Code
Section 415 for all Limitation Years beginning before January 1,
1987.
(c) "Defined Contribution Plan Fraction"
the sum of the Annual Additions to the Participant's
Account under the defined contribution plan(s)
29
as of the close of the Limitation Year (divided by)
---------------------------------------------------
the sum of the lesser of the following amounts
determined for the Limitation Year and for each
prior Year of Service with the Employer: (i) 125%
of the dollar limitation in effect under Code
Section 415(c)(1)(A) for the Limitation Year (determined
without regard to the special dollar limitations
for employee stock ownership plans), or (ii) 35%
of the Participant's Compensation for the
Limitation Year
If the Employee was a Participant in one or more defined
contribution plans maintained by the Employer which were in
existence on July 1, 1982, the Retirement Committee will redetermine
the Defined Contribution Plan Fraction and the Defined Benefit Plan
Fraction, as of the end of the 1982 Limitation Year (the last
Limitation Year beginning before January 1, 1983), under this
Section. If the sum of the redetermined fractions exceeds 1.0, the
Retirement Committee will subtract permanently from the numerator of
this fraction 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. The Retirement Committee also may use any transitional
rules (see Section 6.09(d) below) provided by law which are
applicable in computing the Participant's Defined Contribution Plan
Fraction.
The Retirement Committee will make a similar adjustment to the
numerator of this fraction if the sum of the fractions exceeds 1.0,
as of the end of the 1983 Limitation Year (the last Limitation Year
beginning before January 1, 1984), because (a) the Plan is Top-Heavy
in the first Plan Year beginning after December 31, 1983, and the
Retirement Committee must apply Article XVII or (b) the terms of one
or more July 1, 1982, plans required Annual Additions or accruals
during the 1983 Limitation Year in excess of the Code Section 415
limitations as amended by the Tax Equity and Fiscal Responsibility
Act of 1982.
Notwithstanding the above, if the Employee was a Participant as of
the first day of the first Limitation Year beginning after December
31, 1986, in one or more defined contribution plans maintained by
the Employer which were in existence on May 6, 1986, the numerator
of this fraction will be adjusted if the sum of this fraction and
the Defined Benefit 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 Section 415 limitation
applicable to the first Limitation Year beginning on or after
January 1, 1987. The preceding sentence applies only if the defined
benefit plans individually and in the aggregate satisfied the
requirements of Code Section 415 for all Limitation Years beginning
before January 1, 1987.
30
(d) "Projected Annual Benefit". The annual retirement benefit (adjusted
to an actuarially equivalent straight life annuity if the plan
expresses such benefit in a form other than a straight life annuity
or qualified joint and survivor annuity) of the Participant under
the terms of the Defined Benefit Plan on the assumptions he
continues employment until his normal retirement age as stated in
the Defined Benefit Plan, his compensation continues at the same
rate as in effect in the Limitation Year under consideration until
the date of his normal retirement age and all other relevant factors
used to determine benefits under the Defined Benefit Plan remain
constant as of the current Limitation Year for all future Limitation
Years.
(e) "Compensation" - The Participant's earned income, wages, salaries,
fees for professional service and other amounts received for
personal services actually rendered in the course of employment with
the Employer maintaining the Plan (including, but not limited to,
commissions paid salesmen, compensation for services on the basis of
a percentage of profits, commissions on insurance premiums, tips and
bonuses). The term "Compensation" shall not include:
(1) Employer contributions to a plan of deferred compensation to
the extent the contributions are not included in the gross
income of the Employee for the taxable year in which
contributed, on behalf of an Employee to a Simplified Employee
Pension Plan described in Code Section 408(k) to the extent
such contributions are deductible by the Employee under Code
Section 219(b)(7), and any distributions from a plan of
deferred compensation, regardless of whether such amounts are
includible in the gross income of the Employee when
distributed.
(2) Amounts realized from the exercise of a non-qualified stock
option, or when restricted stock (or property) held by an
Employee either becomes freely transferable or is no longer
subject to a substantial risk of forfeiture.
(3) Amounts realized from the sale, exchange or other disposition
of stock acquired under a qualified stock option.
(4) Other amounts which receive special tax benefits, such as
premiums for group term life insurance (but only to the extent
that the premiums are not includible in the gross income of
the Employee), or contributions made by an Employer (whether
or not under a salary reduction agreement) towards the
purchase of an annuity contract described in Code Sec. 403(b)
(whether or not the contributions are excludible from the
gross income of the Employee).
For purposes of applying the limitations of Section 6.04 through
this Section 6.09, amounts included as Compensation are those
amounts actually paid to a Participant or includible in his gross
income within the Limitation Year.
Notwithstanding the above, effective for Limitation Years beginning
after December 31, 1997, the term "Compensation" includes (1) an
Employee's elective deferrals under Code Section 402(g)(3), and (2)
amounts contributed or deferred under Code Section
31
125 or Code Section 457 by the Employer at the Employee's election
that aren't otherwise includible in the Employee's gross income.
(f) "Employer" - The Employer that adopts this Plan. In the case of a
group of employers which constitutes a controlled group of
corporations (as defined in Code Section 414(b) as modified by Code
Section 415(h)), which constitutes trades or businesses (whether or
not incorporated) which are under common control (as defined in Code
Section 414(c) as modified by Code Section 415(h)), which
constitutes an "affiliated service" group within the meaning of Code
Section 414(m), the Committee shall consider all such employers as a
single employer for purposes of applying the limitations of this
Article 6.
(g) "Limitation Year" - For purposes of this Section 6.09, "Limitation
Year" shall mean the limitation year specified in the Plan, or if
none is specified, the Calendar Year.
(h) "Effective Date of Section 6.09 Provisions" - The provisions of this
Section 6.09 shall be effective for Limitation Years beginning after
December 31, 1986.
(i) The preceding Sections of this Article VI are intended to comply
with the provisions of Code Section 415 and the Regulations
thereunder. Code Section 415 and the relevant regulations are hereby
incorporated by reference.
32
ARTICLE VII
TERMINATION OF SERVICE-PARTICIPANT VESTING
7.01 Normal Retirement. A Participant's Normal Retirement Age under the Plan is
age 65. At such time he shall be 100% vested in, and shall have a
nonforfeitable right to his Accrued Benefit. A Participant who remains in
the employ of the Employer after attaining Normal Retirement Age shall
continue to participate in Employer contributions until the date of his
actual retirement. Upon termination of a Participant's employment for any
reason after attaining Normal Retirement Age, the Retirement Committee
shall direct the Trustee to make payment of the full value of the
Participant's Accrued Benefit to him at such times and in such manner as
provided in Article VIII hereof. The value of the Participant's Accrued
Benefit shall be determined as of the Allocation Date that coincides with,
or next follows the date of the Participant's employment termination.
7.02 Early Retirement. A Participant may retire prior to his Normal Retirement
Age upon the completion of 5 or more Years of Vesting Service and the
attainment of age 55. Upon such Early Retirement, the Retirement Committee
shall direct the Trustee to make payment of the non-forfeitable value of
the Participant's vested Accrued Benefit to him at such times and in such
manner as provided in Article VIII hereof. The value of the Participant's
Accrued Benefit shall be determined as of the Allocation Date which
coincides with, or, which next follows the date of the Participant's
employment termination.
7.03 Disability. A Participant who becomes permanently disabled shall be 100%
vested in and shall have a nonforfeitable right to his Accrued Benefit
paid to him at such time and in such manner as provided in Article VIII
hereof. The value of a disabled Participant's Accrued Benefit shall be
determined as of the Allocation Date which coincides with, or which next
follows the date of the Participant's termination of employment due to
disability. A Participant shall be considered "disabled" when the
Retirement Committee determines the Participant is not able to engage in
any gainful activity by reason of any medically determinable physical or
mental impairment, which the Retirement Committee expects to result in
death or which the Retirement Committee expects to last for a continuous
period of not less than twelve (12) months. Furthermore, the disabling
condition must exist for a period of at least six (6) months before the
Retirement Committee makes a determination of disability. The Retirement
Committee shall apply the provisions of this Section 7.03 in a
non-discriminatory, consistent and uniform manner.
7.04 Death. Upon the death of a Participant, his Accrued Benefit shall be 100%
vested, and his Surviving Spouse, if he is married, or in the event there
is no surviving Spouse, or if the Spouse has waived, in writing, the right
to such death benefits, his other named Beneficiary shall be entitled to
receive the full value of the deceased Participant's Accrued Benefit
[(reduced by any security interest held by the Plan by reason of a loan
outstanding to such Participant)] determined as of the Allocation Date
which coincides with, or which next follows the date of such Participant's
death. The death benefit so provided shall be payable at such time and in
such manner as provided in Article VIII hereof. In the event the Spouse
completes a valid waiver, and a beneficiary is named other than the
Spouse, the Spouse
33
must consent to and acknowledge the specific nonspouse beneficiary. The
nonspouse beneficiary so named may not be subsequently changed without the
Spouse's written consent. The number of revocations of prior beneficiary
designations made by the Participant and so consented to by the Spouse
shall not be limited.
7.05 Distribution to Certain Terminated Participants. A Participant who has
satisfied the service requirements for Early Retirement under 7.02(a) but
who separates from service with any nonforfeitable right to an Accrued
Benefit prior to satisfying the age requirement under 7.02(b) for such
Early Retirement, shall be entitled, upon satisfaction of such age
requirement, to receive a distribution of his Accrued Benefit as if he
were retiring under Early Retirement.
7.06 No Distributions Prior to Separation From Service. Except as provided in
Sections 8.01, 13.10, 13.11 and 13.12 a Participant shall receive no
distribution from the Plan or Trust prior to separation from Service.
7.07 Vesting on Termination of Employment - If a Participant shall terminate
employment for reasons other than death, disability or retirement, his
Accounts shall be vested as follows:
(a) The Employee 401(k) Savings Account shall be 100% Vested and
Non-forfeitable at all times:
(b) Employer Matching and ESOP Accounts - the amount of these Accounts
funded by the Employer shall be vested based on the following
schedule:
Years of Vesting Service Vesting Percentage
------------------------ ------------------
Less than 5 Years 0%
5 or more 100%
Provided, however, any Employer Matching Contributions not already 100%
vested, will be 100% vested immediately, if they are taken into account
for purposes of meeting the ADP or ACP test described in Section 4.05 or
5.05 and re-designated as Qualified Nonelective Contributions or Qualified
Matching Contributions.
7.08 Years of Vesting Service - For purposes of determining his vested
percentage an Employee shall be credited with one Year of Vesting Service
as follows:
(a) Years of Vesting Service prior to April 1, 1992, shall mean all full
years of continuous employment.
(b) Years of Vesting Service on or after April 1, 1992, shall mean all
Plan Years during which a Participant completed 1,000 or more Hours
of Service with the Employer or any Affiliated Employer of the
Employer provided that the following special provisions shall apply:
(1) Except as otherwise provided in paragraph (2) immediately
following, if an Employee who has a Break in Service after
April 1, 1992, shall reenter
34
service following such break, Years of Vesting Service of such
Employee prior to such break shall not be taken into account
unless and until he shall have a Year of Service following
such recommencement of service; and
(2) Notwithstanding the provisions of paragraph (1) immediately
preceding, with respect to an Employee who shall have a Break
in Service after April 1, 1992 and before he shall have any
Vested Interest in his Accrued Benefit under the Plan, all
such Years of Vesting Service prior to such break shall be
disregarded if the number of consecutive Plan Years in which
the Break in Service continues, equals or exceeds the greater
of (a) five (5) consecutive one Year Breaks in Service, or (b)
the aggregate number of Years of Vesting Service earned before
the consecutive Breaks in Service. For the purpose of
determining Years of Vesting Service prior to such break,
there shall be excluded any Years of Service previously
disregarded under this paragraph (2).
(3) Provided, however, for the initial short Plan Year from April
1, 1992 through December 31, 1992, for the purposes of
vesting, a Participant shall receive credit for a Year of
Service if he completes 1,000 or more Hours of Service during
calendar year 1992.
(c) Service of any Employee who is a leased Employee to any Employer
aggregated under Code Section 414(b), (c), or (m) of the Internal
Revenue Code must be credited for vesting purposes whether or not
such individual is eligible to participate in the Plan.
(c) If a Participant returns to work before incurring a Break in
Service, he will continue to vest starting at the point in the
vesting schedule where he left employment in both his pre-separation
and post-separation accrued benefit.
(d) If the Participant separates from service and returns to service
after incurring a Break in Service, and completes a Year of Service,
both the pre-Break and post-Break service will count in vesting both
pre-Break and post-Break Account Balances, if such Participant does
not have five (5) consecutive one year Breaks in Service.
(e) Military Service. Effective December 12, 1994, each Participant will
receive credit for Vesting Service as if his active Employment had
continued during the period of his military service with the
Uniformed Services of the United States of America; provided that he
retains statutory reemployment rights and resumes Employment within
90 days after his honorable discharge from military duty, or during
any other period prescribed by law.
7.09 Forfeiture - If a Participant terminates employment, and is not 100%
vested in his Accrued Benefit, his non-vested Accounts shall be held until
the earlier of: (1) the Anniversary Date coincident with or next following
the distribution to the Participant of his entire vested portion of his
Account, or (2) the last day of the Plan Year in which the Participant
incurs five (5) consecutive 1-Year Breaks in Service. At such time, the
35
Forfeiture in the Employer Matching Account will be used to increase the
Employer Matching Contribution. Any non-vested amount in the Employer
Discretionary Account shall become a Forfeiture and shall be reallocated
to remaining eligible Participants' Discretionary Accounts.
If the present value of the Participant's vested Accrued Benefit derived
from Employer and Employee contributions is $5,000 ($3,500 for Plan years
beginning on or before August 6, 1997) or less, a lump sum cash payment
will be made to the Participant, within a reasonable time after the end of
the Plan Year following the Participant's termination of employment.
However, if the present value of the Participant's vested Accrued Benefit
derived from Employer and Employee contributions or has ever been is more
than $5,000 ($3,500 for Plan Years beginning on or before August 6, 1997),
the written consent of the Participant (and, if necessary, the
Participant's Spouse) is necessary before such lump sum cash payment can
be made.
However, if any former Participant shall be re-employed by the Employer
before he has incurred five (5) consecutive 1-Year Breaks-in-Service, and
such former Participant had received a distribution of all or part of his
vested interest prior to his re-employment, his forfeited Account balance
shall be reinstated only if he repays the full amount distributed to him
from his Employer funded Accounts. Provided, however, such repayment shall
not be required before the earlier of a period of (a) five consecutive
1-year Breaks-in-Service or (b) five (5) years after the former
Participant is rehired. In the event the former Participant does repay the
full amount distributed to him, the previously forfeited portion of the
Participant's Account must be restored in full, unadjusted by any gains or
losses occurring subsequent to the Allocation Date preceding his
termination. The amount necessary to restore such previously forfeited
non-vested amounts shall be provided, in order, from the following
sources: (a) other non-vested Accounts currently being forfeited, (b) the
Employer's current contribution and, to the extent necessary, (c) an
additional Employer contribution.
If a distribution is made at a time when a Participant is less than 100%
vested in his Account balances derived from Employer Contributions, a
Separate Account shall be established for the Participant's interest in
the Plan as of the time of distribution and at any relevant time the
Participant's nonforfeitable portion of Employer derived Account shall be
equal to an amount ("X") determined by the formula:
X = P [AB + (R*D)] - (R*D)
For the purposes of applying the formula: P is the nonforfeitable
percentage at the relevant time; AB is the "Account balances" at the
relevant time; D is the amount of the distribution; and R is the ratio of
the "Account balances" at the relevant time to the "Account balances"
after distribution. The preceding two paragraphs only apply to a
distribution which does not cash-out a Participant's Accrued Benefit.
7.10 No Divestment for Cause - Under no circumstances shall a Participant be
divested of any vested benefit for any cause.
36
ARTICLE VIII
TIME AND METHOD OF PAYMENT OF BENEFITS
8.01 Time of Payment. - Subject to the exceptions found in Sections 8.09, no
distribution of a Participant's 401(k) Account (comprised of Employee
Salary Deferral Contributions) shall occur prior to Retirement, Death,
Disability, termination of employment, or the attainment of age 59 1/2 .
(a) Retirement. In the event of Normal or Early Retirement, payment of a
Participant's Accrued Benefit shall commence within a reasonable
time after the Allocation Date the Participant becomes eligible to
receive benefits, unless the Participant otherwise elects.
(b) Death or Disability. In the event of death or permanent disability,
payment of the Participant's Accrued Benefit shall commence within a
reasonable time after the Allocation Date (unless the Participant or
his Beneficiary otherwise elects) following receipt by the
Retirement Committee of proof of death, or after the determination
by the Retirement Committee that permanent disability exists.
If the Participant dies or becomes permanently disabled after
terminating employment, but prior to receiving his Accrued Benefit,
the Retirement Committee, upon confirmation of the death or
disability, shall direct the Trustee to make payment of the Accrued
Benefit to the Participant (or to his Beneficiary if the Participant
is deceased) in accordance with the provisions of Section 8.02
within sixty (60) days after the Allocation Date, following receipt
by the Retirement Committee of proof of death, or after the
determination by the Retirement Committee that permanent disability
exists.
(c) Other Termination of Service. Upon a Participant's termination of
employment for any reason other than retirement, permanent
disability, or death, the Trustee shall continue to hold the
Participant's Accrued Benefit in Trust until the end of the Plan
Year that coincides with, or, immediately follows the date on which
the Participant terminates employment. Payment of his vested Accrued
Benefit may commence within a reasonable time after the end of such
Plan Year, unless the Participant otherwise elects. However, if the
Participant's vested Accrued Benefit is (or ever has been) in excess
of $5,000 ($3,500 for Plan Years beginning on or before August 5,
1997), the Participant must elect in writing to receive his benefit
and his Spouse must also consent in writing to such lump sum
payment. The Spouse's consent must be witnessed by a Notary Public
or Plan representative.
(d) Time of Payment of Benefits - Unless the Participant elects
otherwise, payment of benefits must begin no later than 60 days
after the close of the Plan Year in which the latest of the
following events occur:
37
(1) the Participant attains age 65 or earlier Normal Retirement
Age specified under the Plan,
(2) the termination of the Participant's service with the
Employer,
(3) the 10th anniversary of the year in which the Participant
commenced participation in the Plan (the 5th anniversary of
the year in which the Participant commenced participation in
the Plan, in the case of a Participant who commences
participation in the Plan within 5 years before attaining
Normal Retirement Age under the Plan), or
(4) a later date elected by the Participant.
(e) Distributions: Notwithstanding subsection (d) with regard to the
latest time the payment of a Participant's benefit could commence,
for Plan years beginning before January 1, 1997, distribution to a
Participant must commence no later than the first day of April
following the calendar year in which the Participant attains age 70
1/2, regardless of whether he has retired.
However, effective for Plan Years beginning after December 31, 1996,
a Participant may defer, in writing and by April 1 of the calendar
year following his attainment of age 70 1/2, the receipt of any
benefits under this Plan until the April 1st following the later of
(i) the calendar year in which he attained age 70 1/2 or (ii) the
calendar year in which he actually retired; notwithstanding the
foregoing, any 5% or more shareholder must commence payment of his
benefit no later than the April 1st following the calendar year in
which he attained age 70 1/2, regardless of whether he actually
retired.
Compliance with Code Section 401(a)(9). The intent of this Section
is that the beginning dates and payment periods of benefits payable
to each Participant and beneficiary will be within the limitations
permitted under Code Section 401(a)(9) and the proposed regulations
promulgated thereunder. If there is any discrepancy between this
Section and Code Section 401(a)(9), that Code Section will prevail.
Further, if there is any discrepancy between this Section and any
other provision of the Plan, this Section will prevail. It is the
intent of this Plan to comply with the requirements of the
regulations under Code Section 401(a)(9) including the minimum
distribution incidental benefits rule.
(f) Death Benefit Distribution Provisions: Upon the death of the
Participant, the following distribution provisions shall take
effect:
(1) If the Participant dies after distribution of interest has
commenced, the remaining portion of such interest will
continue to be distributed at least as rapidly as under the
method of distribution being used prior to the Participant's
death.
(2) If the Participant dies before distribution of his interest
commences, the Participant's entire interest will be
distributed no later than five (5) years after
38
the Participant's death except to the extent that an election
is made to receive distributions in accordance with (i) or
(ii) below:
(i) If any portion of the Participant's interest is payable
to a designated Beneficiary, distributions may be made
in substantially equal installments over the life or
life expectancy of the designated Beneficiary commencing
no later than one (1) year after the Participant's
death;
(ii) If the designated Beneficiary is the Participant's
surviving Spouse, the date distributions are required to
begin in accordance with (i) above shall not be earlier
than the date on which the Participant would have
attained age 70 1/2, and, if the Spouse dies before
payments begin, subsequent distributions shall be made
as if the Spouse had been the Participant.
(3) For purposes of Section 8.01(f)(2) above, payments will be
calculated by use of the return multiples specified in section
1.72-9 of the regulations. Life expectancy of a surviving
Spouse may be recalculated annually; however, in the case of
any other designated Beneficiary, such life expectancy will be
calculated at the time payment first commences without further
recalculation.
(4) For purposes of (1), (2) and (3) above, any amount paid to a
child of the Participant will be treated as if it had been
paid to the surviving Spouse if the amount becomes payable to
the surviving Spouse when the child reaches the age of
majority.
(g) Transitional Rule: Notwithstanding the above distribution
requirements of Section 8.01, distribution on behalf of any
Employee, including a Five Percent (5%) Owner, may be made in
accordance with all of the following requirements (regardless of
when such distribution commences):
(1) The distribution by the Plan and Trust is one which would not
have disqualified such Trust under Code Section 401(a)(9) as
in effect prior to amendment by the Deficit Reduction Act of
1984.
(2) The distribution is in accordance with a method of
distribution designated by the Participant whose interest in
the Trust is being distributed or, if the Participant is
deceased, by a Beneficiary of such Participant.
(3) Such designation was in writing, was signed by the Participant
or the Beneficiary and was made before January 1, 1984.
(4) The Participant had accrued a benefit under the plan as of
December 31, 1983.
(5) The method of distribution designated by the Participant or
the Beneficiary
39
specifies the time at which distribution will commence, the
period over which distributions will be made and in the case
of any distribution upon the Participant's death, the
Beneficiaries of the Participant listed in order of priority.
Unless paid to a surviving Spouse under a Qualified Joint and
Survivor Annuity, the method of distribution selected must assure
that more than fifty percent (50%) of the present value of the
amount available for distribution is paid within the life expectancy
of the Participant.
A distribution upon death will not be covered by this Transitional
Rule unless the information in the designation contains the required
information described above, with respect to the distributions to be
made upon the death of the Employee.
For any distribution which commences before January 1, 1984, but
continues after December 31, 1983, the Participant, or the
Beneficiary, to whom such distribution is being made, will be
presumed to have designated the method of distribution under which
the distribution is being made if the method of distribution was
specified in writing and the distribution satisfies the requirements
in subsections (1) and (5) above.
If a designation is revoked, any subsequent distribution must
satisfy the requirements of Code Section 401(a)(9) as amended. Any
changes in the designation will be considered to be a revocation of
the designation. However, the mere substitution or addition of
another beneficiary (one not named in the designation) under the
designation will not be considered to be a revocation of the
designation, so long as such substitution or addition does not alter
the period over which distributions are to be made under the
designation, directly or indirectly (for example, by altering the
relevant measuring life).
8.02 Method of Payment. After all required accounting adjustments, the Trustee,
in accordance with the direction of the Retirement Committee, shall make
payment of the Participant's Accrued Benefit in a lump sum, in annual
installments over a period not to exceed 15 years, or by the purchase of a
Term Certain Annuity, subject to the "ESOP Account - Special Distribution
Rules," below.
All distributions shall be paid in cash unless a Participant elects
otherwise, as follows. A Participant may elect to receive shares of the
Employer's Qualifying Securities from (i) his ESOP Account and (ii) his
Employer Matching Account and Employee 401(k) Savings Account (invested in
the Cooperative Bankshares Fund) provided that the minimum number of
shares under this subsection (ii) must equal at least 100 shares.
ESOP Account - Special Distribution Rules
(a) Unless a Participant elects otherwise, the distribution of the ESOP
Account must commence no later than one year after the close of the
Plan Year (I) in which employment is terminated as a result of the
Participant reaching Normal Retirement Age, disability or death; or
(II) that is the fifth Plan Year following
40
the year in which the Participant otherwise separates from service,
unless the Participant is reemployed by the Employer before the
distribution is required to be made.
(b) Unless the Participant elects otherwise, a distribution required
under this Section shall be paid in substantially equal periodic
payments (not less frequently than annually) over a period not
longer than the greater of five years, or (in the case of a
Participant with an Accrued Benefit, attributed to Employer
Securities acquired after December 31, 1986, in excess of $500,000,
as adjusted by the Secretary of the Treasury) five years plus one
additional year (not to exceed five additional years) for each
$100,000 (as adjusted by the Secretary of the Treasury) or fraction
thereof by which such Accrued Benefit exceeds $500,000 (as adjusted
by the Secretary of the Treasury).
The distribution provisions of this Section are subject to the
consent and form of distribution requirements of the Plan.
(c) A Participant may elect to take distribution of his vested ESOP
Account in Employer Securities valued at fair market value at the
time of distribution. If the Participant elects to take distribution
in Employer Securities, the Trustee will pay in cash any fractional
security share to which a Participant or his Beneficiary is
entitled.
Limitation on Settlement Options: The distributions, if not made in a lump
sum, may only be made over one of the following periods (or a combination
thereof):
(a) a period certain not extending beyond the life expectancy of the
Participant, or
(b) a period certain not extending beyond the joint and last survivor
expectancy of the Participant and a designated beneficiary.
If the Participant's entire interest is to be distributed in other than a
lump sum, then the amount to be distributed each year must be at least an
amount equal to the quotient obtained by dividing the Participant's entire
interest by the life expectancy of the Participant or joint and last
survivor expectancy of the Participant and designated beneficiary. Life
expectancy and joint and last survivor expectancy are computed by the use
of the return multiples contained in Reg. 1.72-9. For purposes of this
computation, a Participant's life expectancy may be recalculated no more
frequently than annually; however, the life expectancy of a non-spouse
beneficiary may not be recalculated. If the Participant's spouse is not
the designated beneficiary, the method of distribution selected must
assure that more than fifty percent (50%) of the present value of the
amount available for distribution is paid within the life expectancy of
the Participant.
A Participant may not elect an optional form of payment providing monthly
benefits to a contingent annuitant who is other than his Spouse, or to a
Beneficiary, unless the actuarial value of the payments expected to be
made to the Participant at the time the payment is to commence is more
than 50% of the actuarial value of the total payments expected to be made
under such optional form. In no event, however, can the amount of each
41
monthly payment to a contingent annuitant or Beneficiary exceed that
payable to the Participant.
8.03 Deferral of Payments. Should a Participant's Accounts be retained in the
Trust after the date on which his participation ends, the Accounts may
continue to be treated as a part of the Trust Fund. The Accounts will be
credited (or debited) with their share of the net income (or loss)
attributable to the investments of such Accounts.
8.04 Limitation on Distributions. Except as otherwise provided in this Article
VIII, a Participant, Former Participant, or Beneficiary is not entitled to
any payment, withdrawal, or distribution under the Plan.
8.05 Payment in the Event of Legal Disability. Payments to any Participant,
Former Participant, or Beneficiary shall be made to the recipient entitled
thereto in person or upon his personal receipt, in form satisfactory to
the Retirement Committee, except when the recipient entitled thereto shall
be under a legal disability, or, in the sole judgment of the Retirement
Committee, shall otherwise be unable to apply such payment in furtherance
of his own interest and advantage. The Retirement Committee may, in such
event, at its sole discretion, direct all or any portion of such payments
to be made in any one or more of the following ways:
(a) To such person directly;
(b) To the guardian of his person or his estate;
(c) To a relative or friend of such person, to be expended for his
benefit; or
(d) To a custodian for such person under any Uniform Gifts to Minors
Act.
The decision of the Retirement Committee, in each case, will be final,
binding, and conclusive upon all persons ever interested hereunder. The
Retirement Committee shall not be obliged to see to the proper application
or expenditure of any payment so made. Any payment made pursuant to the
power herein conferred upon the Retirement Committee shall operate as a
complete discharge of all obligations of the Trustee and the Retirement
Committee, to the extent of the distributions so made.
8.06 Accounts Charged. The Retirement Committee shall charge all distributions
made to a Participant or to his Beneficiary from his Accounts against the
Accounts of the Participant when made.
8.07 Payments Only from Trust Fund. All benefits of the Plan shall be payable
solely from the Trust Fund and neither the Employer, Retirement Committee,
nor Trustee shall have any liability or responsibility therefor excepts
expressly provided herein.
8.08 Participant Benefit Payment Election. The Retirement Committee may permit
a Participant who terminates employment after attaining Normal Retirement
Age to elect any of the forms of payment of retirement benefits prescribed
by Section 8.02. Upon the Participant's request, the Retirement Committee
shall furnish the Participant an
42
appropriate form for the making of the election. The Participant shall
make an election under this Section 8.08 by filing the election form with
the Plan Administrator on or before the last day of the Plan Year
following which the Trustee would otherwise commence to pay a
Participant's vested Accrued Benefit in accordance with the requirements
of Section 8.01. The Participant shall not make any election for an
optional form of retirement benefit under which the present value of the
retirement benefits payable solely to the Participant will not be greater
than fifty percent (50%) of the present value of the total retirement
benefits payable to the Participant and his Beneficiaries. The Retirement
Committee shall determine "present value" as of the date the Trustee is to
commence payment of the retirement benefits to the Participant. The
Retirement Committee shall charge the electing Participant's Account for
any expense incurred in making the "present value" determination. If the
Retirement Committee determines not to permit the Participant's election,
it shall direct the Trustee in writing to make distribution of the
Participant's Vested Accrued Benefit to him in accordance with Section
8.02. The Retirement Committee shall apply the Provisions of this Section
8.08 in a nondiscriminatory and uniform manner. Should the Retirement
Committee reject the Participant's claim in whole or in part the appeal
procedures in Section 11.09 shall apply.
8.09 Portability of Participant Accounts - Notwithstanding any other provision
of the Plan, upon the direction of the Retirement Committee, and upon the
occurrence of an event which would trigger the distribution of a
Participant's Accrued Benefits, the Trustee shall transfer the amount
allocated to the credit of a Participant in the Trust (including also for
this purpose, the amount, if any, in his Employee Rollover Account) to the
Trustee of any tax exempt trust which forms part of a tax-qualified
retirement plan under Section 401 of the Code.
8.10 Direct Rollover. This Section applies to distributions made on or after
January 1, 1993. Notwithstanding any provision of the plan to the contrary
that would otherwise limit a distributee's election under this Section, a
distributee may elect, at the time and in the manner prescribed by the
plan administrator, to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan specified by the
distributee in a direct rollover.
Definitions.
(l) Eligible rollover distribution: An eligible rollover distribution is
any distribution of all or any portion of the balance to the credit
of the distributee, except that an eligible rollover distribution
does not include: any distribution that is one of a series of
substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the distributee
or the joint lives (or joint life expectancies) of the distributee
and the distributee's designated beneficiary, or for a specified
period of ten years or more; any distribution to the extent such
distribution is required under Code Section 401(a)(9); and the
portion of any distribution that is not includible in gross income
(determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
43
(2) Eligible retirement plan: An eligible retirement plan is an
individual retirement account described in Code Section 408(a), an
individual retirement annuity described in Code Section 408(b), an
annuity plan described in Code Section 403(a), or a qualified trust
described in Code Section 401(a), that accepts the rollover
distribution to the surviving spouse, an eligible retirement plan is
an individual retirement account or individual retirement annuity.
(3) Distributee: A distributee includes an Employee or former Employee.
In addition, distributee's eligible rollover distribution. However,
in the case of an eligible the Employee's or former Employee's
surviving spouse and the Employee's or former Employee's spouse or
former spouse who is the alternate payee under a qualified domestic
relations order, as defined in Code Section 414(p), are distributees
with regard to the interest of the spouse or former spouse.
(4) Direct Rollover: A direct rollover is a payment by the Plan to the
eligible retirement plan specified by the distributee.
44
ARTICLE IX
EMPLOYER ADMINISTRATIVE PROVISIONS
9.01 Information. The Employer shall, upon request, or as may be specifically
required hereunder, furnish or cause to be furnished, all of the
information or documentation which is necessary or required by the
Retirement Committee and Trustee to perform their respective duties and
functions under the Plan. The Employer's records as to the current
information the Employer furnishes to the Retirement Committee and Trustee
shall be conclusive to all persons.
9.02 No Liability. Subject to Article XII hereof, the Employer assumes no
obligation or responsibility to any of the Employees, Participants, or
Beneficiaries for any act of, or failure to act, on the part of the
Retirement Committee or the Trustee.
9.03 Employer Action. Any action required of the Employer shall be by
resolution of its Board or by a person authorized to act by Board
resolution.
9.04 Indemnity. The Employer agrees it will indemnify and hold harmless the
Board, individual Trustee(s), and the members of the Retirement Committee,
and each of them, from and against any and all loss resulting from
liability to which the Board, individual Trustee(s), and the Retirement
Committee, or the members of the Board and Retirement Committee, may be
subjected by reason of any act or conduct (except willful or reckless
misconduct) in their official capacities in the administration of this
Plan or Trust or both, including all expenses reasonably incurred in their
defense, in case the Employer fails to provide such defense. The
indemnification provisions of this Section 9.04 shall not relieve the
Board, individual Trustee(s), or any members of the Retirement Committee
from any liability they may have under the Act for breach of a fiduciary
duty.
45
ARTICLE X
RETIREMENT COMMITTEE
10.01 Appointment of Committee. The Employer's Board shall appoint an Retirement
Committee consisting of not less than three (3) members to administer the
Plan, the members of which may also be Participants in the Plan.
10.02 Term. Each member of the Retirement Committee shall serve until his
successor is appointed. Any member of the Retirement Committee may be
removed by the Board, with or without cause. The Board shall have the
power to fill any vacancy which may occur. An Retirement Committee member
may resign upon written notice to the Employer.
10.03 Compensation. The members of the Retirement Committee shall serve without
compensation for services in behalf of the Plan, but the Employer shall
pay all expenses, including the expenses for any bond required under Act
Section 412. To the extent such expenses are not paid by the Employer,
they shall be paid by the Trustee from the Trust Fund.
10.04 Powers of Retirement Committee. Subject to Article XII hereof, the
Retirement Committee shall have the following powers and duties:
(a) To direct the administration of the Plan in accordance with the
provisions herein set forth;
(b) To adopt rules of procedure and regulations necessary for the
administration of the Plan, provided the rules are not inconsistent
with the terms of the Plan;
(c) To determine all questions with regard to rights of Employees,
Participants, and Beneficiaries under the Plan, including but not
limited to rights of eligibility of an Employee to participate in
the Plan and the value of the Accrued Benefit of each Participant;
(d) To enforce the terms of the Plan and the rules and regulations it
adopts;
(e) To direct the Trustee as respects the crediting and distribution of
the Trust and all other matters within its discretion as provided in
the Trust Agreement;
(f) To review and render decisions respecting a claim for (or denial of
a claim for) a benefit under the Plan;
(g) To furnish the Employer with information which the Employer may
require for tax or other purposes;
(h) To engage the service of counsel (who may, if appropriate, be
counsel for the
46
Employer) and agents whom it may deem advisable to assist it with
the performance of its duties;
(i) To prescribe procedures to be followed by distributees in obtaining
benefits;
(j) To receive from the Employer and from Employees such information as
shall be necessary for the proper administration of the Plan;
(k) To receive and review reports of the financial condition and of the
receipts and disbursements of the Trust Fund from the Trustee;
(l) To establish a nondiscriminatory policy which the Trustee shall
observe in making loans, if any, to Participants;
(m) To maintain, or cause to be maintained, separate Accounts in the
name of each Participant to reflect the Participant's Accrued
Benefits under the Plan;
(n) To select a secretary, who need not be a member of the Retirement
Committee;
(o) To interpret and construe the Plan;
(p) To select the issuing company or companies from which Insurance
Contracts shall be purchased as may be provided herein; and to
determine the form, type, and kind of such contract;
(q) To engage the services of an Investment Manager or Managers (as
defined in Act Section 3 (38)) each of whom shall have full power
and authority to manage, acquire or dispose (or direct the Trustee
with respect to acquisition or disposition) of any Plan Asset under
its control; and
(r) To direct the Trustee in the investment, reinvestment, and
disposition of the Trust Fund as provided in the Trust Agreement.
10.05 Manner of Action. The decision of a majority of the members of the
Retirement Committee appointed and qualified shall control. In case of a
vacancy in the membership of the Retirement Committee, the remaining
members of the Retirement Committee may exercise any and all of the
powers, authorities, duties, and discretions conferred upon such
Retirement Committee, pending the filling of the vacancy. The Retirement
Committee may, but need not, call or hold formal meetings. Any decisions
made or action taken pursuant to written approval of a majority of the
then members shall be sufficient. The Retirement Committee shall maintain
adequate records of its decisions.
10.06 Authorized Representative. The Retirement Committee may authorize any one
of its members, or its secretary, to sign on its behalf any notices,
directions, applications, certificates, consents, approvals, waivers,
letters, or other documents. The Retirement Committee must evidence this
authority by an instrument signed by all its respective members and filed
with the Trustee.
47
10.07 Nondiscrimination. The Retirement Committee shall administer the Plan in a
uniform, nondiscriminatory manner for the exclusive benefit of the
Participants and their Beneficiaries.
10.08 Interested Member. No member of the Retirement Committee may decide or
determine any matter concerning the distribution, nature, or method of
settlement of his own benefits under the Plan unless there is only one
person acting alone in the capacity as the Retirement Committee.
10.09 Funding Policy. The Retirement Committee shall review, not less often than
annually, all pertinent Employee information and Plan data in order to
establish the funding policy of the Plan to determine the appropriate
methods of carrying out the Plan's objectives. The Retirement Committee
shall communicate annually to the Trustee or to any Plan Investment
Manager (herein so-called), if any, the Plan's short-term and long-term
financial needs so investment policy can be coordinated with Plan
financial requirements.
10.10 Individual Statement. As soon as practicable after the Allocation Dates of
each Plan Year, but within the time prescribed by the Act and the
regulations under the Act, the Retirement Committee will deliver to each
Participant (and to each Beneficiary) a statement reflecting the condition
of his Accrued Benefit in the Trust as of that date, and such other
information the Act requires be furnished the Participant or Beneficiary.
No Participant, except a member of the Retirement Committee, shall have
the right to inspect the records reflecting the Account of any other
Participant.
10.11 Books and Records. The Retirement Committee shall maintain, or cause to be
maintained, records which will adequately disclose at all times the state
of the Trust Fund and of each separate interest therein. The books, forms,
and methods of accounting shall be the responsibility of the Retirement
Committee.
10.12 Unclaimed Account Procedure. Neither the Trustee nor the Retirement
Committee shall be obliged to search for, or ascertain the whereabouts of,
any Participant or Beneficiary. The Retirement Committee, by certified or
registered mail addressed to his last known address of record with the
Retirement Committee 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 section. If the Participant,
or Beneficiary, fails to claim his distributive share or make his
whereabouts known in writing to the Retirement Committee within six (6)
months from the date of mailing of the notice, or before this Plan is
terminated or discontinued, whichever should first occur, the Retirement
Committee shall direct the Trustee to segregate the Participant's
unclaimed Accrued Benefit in a nontransferable deferred annuity or in a
segregated interest bearing Account in the name of the Participant or
Beneficiary. The Retirement Committee shall then notify the Social
Security Administration of the Participant's (or Beneficiary's) failure to
claim the distribution to which he is entitled. The Retirement Committee
shall request the Social Security Administration to notify the Participant
(or Beneficiary) in accordance with procedures it has established for this
purpose. The segregated Account shall be entitled to all income it earns
and shall bear all expense or loss it incurs.
48
10.13 Valuation. Within a reasonable time after the close of each Plan Year, the
Trustee shall prepare or cause to be prepared a statement of the condition
of the Trust Fund, setting forth all investments, receipts, and
disbursements, and other transactions effected by it during such Plan
Year, and showing all the assets of the Trust Fund and the cost and fair
market value thereof. This statement shall be delivered to the Retirement
Committee. The Retirement Committee shall then cause to be prepared, and
shall deliver to each Participant or Former Participant an annual report
disclosing the status of his Accounts in the Trust. The Trustee's
determination of the fair market value of the assets of the Trust Fund and
the Retirement Committee charges or credits to Accounts shall be final and
conclusive on all persons ever interested hereunder, subject to Section
11.09.
49
ARTICLE XI
PARTICIPANT ADMINISTRATIVE PROVISIONS
11.01 Beneficiary Designation. Each Participant may from time to time designate,
in writing, a Beneficiary and/or a Contingent Beneficiary to whom the
Trustee shall pay his Accrued Benefit in the Trust Fund in the event of
his death. The Retirement Committee shall prescribe the form for the
written designation of Beneficiary and, upon the Participant's filing the
form with the Retirement Committee, it effectively shall revoke all
designations filed prior to that date by the same Participant. As a
condition to any married Participant designating a Beneficiary other than
his spouse, the Retirement Committee shall require the spouse's written
consent. The spouse's signature must be notarized by a notary public or
witnessed by a plan representative. The spouse's consent must acknowledge
the effect of waiving his rights under the Plan and specifically consent
to the election of any alternate beneficiary other than the spouse.
11.02 No Beneficiary Designation. With respect to any death benefit provided
hereunder, the Participant shall file a beneficiary designation with the
Committee and the Participant, during his lifetime, shall have the right,
which may be successively exercised by written instrument filed with and
received by the Committee, to request a change of his designated
beneficiary. In the event the designated beneficiary is not living at the
death of the Participant, or if no beneficiary has been designated, the
death benefit shall be payable to the spouse of the Participant, if
living; otherwise to his children, equally per stirpes; if none, then to
the estate of the Participant.
11.03 Personal Data to Retirement Committee. Each Participant and Beneficiary
must furnish to the Retirement Committee evidence, data, or information as
the Retirement Committee 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 will furnish promptly full, true, and complete evidence, data,
and information when requested by the Retirement Committee, provided the
Retirement Committee shall advise each Participant of the effect of his
failure to comply with its request.
11.04 Address for Notification. Each Participant and each Beneficiary of a
deceased Participant shall file with the Retirement Committee, in writing,
his post office address, and each subsequent change of such post office
address. Any payment or distribution hereunder, and any communication
addressed to a Participant or his Beneficiary, shall be sent to the last
address filed with the Retirement Committee, or if no such address has
been filed, then the last address indicated on the records of the
Employer, shall be deemed to have been delivered to the Participant or his
Beneficiary on the date that such distribution or communication is
deposited in the United States mail, postage prepaid.
11.05 Assignment or Alienation. To the extent required by law, the Participant
may not anticipate, encumber, alienate or assign any of his rights,
claims, or interests in this Plan
50
or any part thereof, or any payments, benefits, or rights arising by
reason of this Plan shall in any way be subject to the Participant's
debts, contracts, or engagements, or to any judicial processes to levy
upon or attach the same for payment thereof.
Notwithstanding the above, in the event of a Qualified Domestic Relations
Order no violation of the non-alienation provisions of ERISA occurs where
a portion of the benefits of a Participant is required to be paid to the
Participant's spouse pursuant to a Qualified Domestic Relations Order. A
"Qualified Domestic Relations Order" is a judgment or decree (including
approval of a property settlement agreement) that relates to the
provisions of child support, alimony payments or marital property, rights
to a spouse, former spouse, child or other dependent of a Participant and
is made pursuant to a state domestic relations law. The Qualified Domestic
Relations Order may not alter the amount, time, or form of payment of plan
benefits. Furthermore, a distribution to an Alternate Payee under a
Qualified Domestic Relations Order shall be permitted if such distribution
is authorized by a Qualified Domestic Relations Order, even if the
affected Participant has not reached the Earliest Retirement Age under the
Plan. For the purposes of this Section, Alternate Payee, Qualified
Domestic Relations Order and Earliest Retirement Age shall have the
meaning set forth under Code Section 414(p).
Offset of a Participant's Accrued Benefit. Pursuant to Code Section
401(a)(13)(C), the offset of a Participant's Accrued Benefit in the Plan
will not violate ERISA's prohibition against assignment or alienation of
benefits if the Participant is ordered or required on or after August 5,
1997 to pay under:
(1) a judgment or conviction for a crime involving the Plan;
(2) a civil judgement (including a consent order or decree) entered by a
court in an action brought in connection with a violation (or
alleged violation) of ERISA's fiduciary responsibility provisions;
or
(3) a settlement agreement between the Department of Labor or the
Pension Benefit Guaranty Corporation and the Participant in
connection with a violation or alleged violation of ERISA's
fiduciary responsibility provisions by a fiduciary or any other
person; provided such judgement, order, decree or settlement
agreement expressly provides for such offset.
To the extent that Code Sections 401(a)(11) and 417 apply to this Plan,
the rights of a Participant's spouse under Code Section 401(a)(13)(C)(iii)
are hereby incorporated by reference.
11.06 Information Available. Any Participant in the Plan or any Beneficiary may
examine copies of the summary plan description, latest annual report, any
bargaining agreement, this Plan, trust, or any other instrument under
which the Plan was established or is operated. The Retirement Committee
will maintain all of the items listed in this Section in its office, or in
such other place or places as it may designate from time to time in order
to comply with the regulations issued under the Act for examination during
reasonable business hours. Upon the written request of a Participant or
Beneficiary, the Retirement Committee shall furnish him with a copy of any
item listed in this Section.
51
The Retirement Committee may make a reasonable charge to the requesting
person for the copy so furnished.
11.07 Beneficiary's Right to Information. A Beneficiary's right to (and the
Retirement Committee's duty to provide to the Beneficiary) information or
data concerning the Plan shall not arise until he first becomes entitled
to receive a benefit under the Plan.
11.08 Appeal Procedure for Denial of Benefits. The Retirement Committee shall
provide adequate notice in writing to any Participant or to any
Beneficiary (claimant) whose claim for benefits under this Plan has been
denied. The Retirement Committee's notice to the claimant shall set forth:
(a) The specific reason for the denial;
(b) Specific reference to pertinent Plan provisions on which the
Retirement Committee based its denial;
(c) A description of any additional material and information needed for
the claimant to perfect his claim and an explanation of why the
material or information is needed;
(d) A statement that the claimant may:
(1) request a review upon written application to the Committee;
(2) review pertinent Plan documents; and
(3) submit issues and comments in writing; and
(e) That any appeal the claimant wishes to make of the adverse
determination must be in writing to the Retirement Committee within
seventy-five (75) days after receipt of the Retirement Committee's
notice of denial of benefits. The Retirement Committee's notice must
further advise the claimant that his failure to appeal the action to
the Retirement Committee in writing within the seventy-five (75) day
period will render the Retirement Committee's determination final,
binding, and conclusive.
If the claimant should appeal to the Retirement Committee, he, or his duly
authorized representative, may submit, in writing, whatever issues and
comments he, or his duly authorized representative, feels are pertinent.
The Retirement Committee shall re-examine all facts related to the appeal
and make a final determination as to whether the denial of benefits is
justified under the circumstances. The Retirement Committee shall advise
the claimant of its decision within sixty (60) days of the claimant's
written request for review, unless special circumstances (such as a
hearing) would make the rendering of a decision within the sixty (60) day
limit infeasible, but in no event shall the Retirement Committee render a
decision respecting a denial for a claim for benefits later than one
hundred twenty (120) days after its receipt of a request for review. A
written statement stating the decision on review, the specific reasons for
the decision, and the
52
specific Plan provisions on which the decision is based shall be mailed or
delivered to the claimant within such sixty (60) (or one hundred twenty
(120)) day period.
The Retirement Committee's notice of denial of benefits shall identify the
name of each member of the Retirement Committee and the name and address
of the Retirement Committee member to whom the claimant may forward his
appeal.
11.09 No Rights Implied. Nothing contained in this Plan, or any modification or
amendment to the Plan, or in the creation of any benefit, or the payment
of any benefit, shall give any Employee, Participant, or any Beneficiary
any right to continue employment, any legal or equitable right against the
Employer or any officer, director, or Employee of the Employer, or its
agents or employees.
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ARTICLE XII
FIDUCIARIES DUTIES
12.01 Named Fiduciary. The "Named Fiduciary" of the Plan shall consist of the
following:
(a) The Employer;
(b) The Retirement Committee;
(c) The Trustee; and
(d) Such other person or persons that are designated to carry out
fiduciary responsibilities under the Plan in accordance with Section
12.03 (c) hereof.
Any person or group of persons may serve in more than one fiduciary
capacity with respect to the Plan. A Named Fiduciary may employ one or
more persons to render advice with regard to any responsibility such Named
Fiduciary has under the Plan.
12.02 Allocation of Responsibilities. The powers and responsibilities of the
Named Fiduciary are hereby allocated as indicated below:
(a) Employer. The Employer shall be responsible for all functions
assigned or reserved to it under the Plan and Trust Agreement. Any
authority assigned or reserved to the Employer under the Plan and
Trust Agreement shall be exercised by resolution of the Employer's
Board of Directors.
(b) Retirement Committee. The Retirement Committee shall have the
responsibility and authority to control the operation and
administration of the Plan in accordance with the terms of the Plan
and Trust Agreement, except with respect to duties and
responsibilities specifically allocated to other fiduciaries. The
Retirement Committee shall have the authority to issue written
directions to the Trustee to the extent provided in the Trust
Agreement. The Trustee shall follow the Retirement Committee's
directions, unless it is clear that the actions to be taken under
those directions would be violations of applicable fiduciary
standards, or would be contrary to the terms of the Plan or Trust
Agreement.
The Retirement Committee shall have the responsibility and authority
to control the investment of the Trust Fund in accordance with the
terms of the Plan and Trust Agreement, except with respect to duties
and responsibilities specifically allocated to other fiduciaries.
The Retirement Committee shall have the authority to issue written
directions to the Trustee to the extent provided in the Trust
Agreement.
The Trustee shall follow the Retirement Committee's directions,
unless it is clear
54
that the actions to be taken under those directions would be
violations of applicable fiduciary standards or would be contrary to
the terms of the Plan or Trust Agreement.
(c) Trustee. The Trustee shall have the duties and responsibilities set
out in the Trust Agreement, subject, however, to direction by the
Committee as set out in the Trust Agreement.
(d) Allocation. Powers and responsibilities may be allocated to other
Fiduciaries in accordance with Section 12.03 hereof, or as otherwise
provided herein or in the Trust Agreement.
This Article is intended to allocate to each Named Fiduciary the
individual responsibility for the prudent execution of the functions
assigned to it, and none of such responsibilities or any other
responsibility shall be shared by two or more of such Named Fiduciaries,
unless such sharing shall be provided by a specified provision of the Plan
or Trust Agreement.
12.03 Procedures for Delegation and Allocation of Responsibilities. Fiduciary
responsibilities may be allocated as follows:
(a) The Retirement Committee may specifically allocate responsibilities
to a specified member or members of the Retirement Committee.
(b) The Retirement Committee may designate a person or persons other
than a Named Fiduciary to carry out fiduciary responsibilities under
the Plan (this authority shall not cause any person or persons
employed to perform ministerial acts and services for the Plan to be
deemed fiduciaries of the Plan).
(c) The Retirement Committee may appoint an Investment Manager or
managers to manage (including the power to acquire and dispose of)
the assets of the Plan (or a portion thereof).
(d) If at any time there be more than one Trustee serving under the
Trust Agreement, such Trustees may allocate specific
responsibilities, obligations, or duties among themselves in such
manner as they shall agree.
Any allocation of responsibilities pursuant to this Section shall be made
by filing a written notice thereof with the Retirement Committee
specifically designating the person or persons to whom such
responsibilities or duties are allocated and specifically setting out the
particular duties and responsibilities with respect to which the
allocation or designation is made.
12.04 General Fiduciary Standards. Subject to Section 12.05 hereof, a Named
Fiduciary shall discharge his duties with respect to the Plan solely in
the interest of the Participants and their Beneficiaries and:
55
(a) For the exclusive purpose of providing benefits to Participants and
their Beneficiaries and paying reasonable expenses of administering
the Plan;
(b) With the care, skill, prudence, and diligence under the
circumstances then prevailing that a prudent man acting in a like
capacity and familiar with such matters would use in the conduct of
an enterprise of a like character and with like aims;
(c) By diversifying the investments of the Plan so as to minimize the
risk of large losses, unless under the circumstances it is deemed
prudent not to do so; and
(d) In accordance with documents and instruments governing the Plan,
insofar as such documents and instruments are consistent with the
provisions of Title I of the Act.
12.05 Liability Among Co-Named Fiduciaries.
(a) General. Except for any liability which he may have under the Act, a
fiduciary shall not be liable for the breach of a fiduciary duty or
responsibility by another fiduciary of the Plan except in the
following circumstances:
(1) He participates knowingly in, or knowingly undertakes to
conceal, an act or omission of such other fiduciary, knowing
such act or omission is a breach;
(2) By his failure to comply with the general fiduciary standards
set out in Section 12.04 hereof in the administration of his
specific responsibilities which give rise to his status as a
fiduciary to commit a breach; or
(3) He has knowledge of a breach by such other fiduciary and he
does not undertake reasonable efforts under the circumstances
to remedy the breach.
(b) Co-Trustees. In the event that there are two or more Trustees
serving under the Trust Agreement each should use reasonable care to
prevent a Co-Trustee from committing a breach of fiduciary
responsibility and they shall jointly manage and control assets of
the Plan, except that in the event of an allocation of
responsibilities, obligations, or duties, a Trustee to whom such
responsibilities, obligations, or duties have not been allocated
shall not be liable to any person by reason of this Section, either
individually or as a Trustee, for any loss resulting to the Plan
arising from the acts or omissions on the part of the Trustee to
whom such responsibilities, obligations, or duties have been
allocated.
(c) Liability Where Allocation is in Effect. To the extent that
fiduciary responsibilities are specifically allocated by a Named
Fiduciary, or pursuant to the express terms hereof, to any person or
persons, then such Named Fiduciary shall not be liable for any act
or omission of such person in carrying out such responsibility,
except to the extent that the Named Fiduciary violated Section 12.04
hereof (i) with respect to such allocation or designation, (ii) with
respect to the establishment or implementation of the procedure for
making such an
56
allocation or designation, (iii) in continuing the allocation or
designation or (iv) the Named Fiduciary would otherwise be liable in
accordance with this Section 12.05.
(d) Liability of Trustee Following Retirement Committee Directions. No
Trustee shall be liable for following instructions of the Retirement
Committee given pursuant to Section 12.02 (b) and (c) hereof.
(e) No Responsibility for Employer Action. Neither the Trustee, nor the
Retirement Committee, shall 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 the failure of
any of the above persons to act or make any payment or contribution,
or to otherwise provide any benefit contemplated under this Plan,
nor shall the Trustee, nor the Retirement Committee be required to
collect any contribution required under the Plan, or determine the
correctness of the amount of any Employer contribution.
(f) No Duty to Inquire. Neither the Trustee nor the Retirement Committee
shall have any obligation to inquire into or be responsible for any
action or failure to act on the part of others.
(g) Liability of Trustee Where Investment Manager Appointed. If an
Investment Manager has been appointed pursuant to Section 12.03 (c)
hereof, then neither the Trustee nor the Retirement Committee shall
be liable for the acts or omissions of such Investment Manager, or
be under any obligation to invest or otherwise manage any assets of
the Plan which are subject to the management of such Investment
Manager.
(h) Successor Fiduciary. No Named Fiduciary shall be liable with respect
to any breach of fiduciary duty if such breach was committed before
he became a Named Fiduciary or after he ceased to be a Named
Fiduciary.
57
ARTICLE XIII
DISCONTINUANCE, AMENDMENT, AND TERMINATION
13.01 Discontinuance. The Employer shall have the right, at any time, to suspend
or discontinue its contributions under the Plan.
13.02 Amendment. The Employer shall have the right at any time to amend the Plan
in any manner it deems necessary or advisable in order to qualify (or
maintain qualification of) the Plan and Trust under the provisions of Code
Section 401(a) and to amend the Plan in any other manner, provided no
amendment shall:
(a) Authorize or permit any of the Trust Fund (other than the part which
is required to pay taxes and administration expenses) to be used for
or diverted to purposes other than for the exclusive benefit of the
Participants or their Beneficiaries;
(b) Cause or permit any portion of the Trust Fund to revert to or become
the property of the Employer;
(c) Increase duties or responsibilities of the Trustee or the Retirement
Committee without the written consent of the affected Trustee or the
affected member of the Retirement Committee.
(d) Revise the vesting schedule under the Plan unless each Participant
having three (3) Years or more of Service is permitted to elect
within a reasonable period after the adoption of such amendment to
have his vested benefit computed under the Plan without regard to
such amendment; a reasonable period for purposes of this Section
shall be a period which begins no later than the date the Plan
amendment is adopted and ends no later than the last to occur of the
following:
(1) sixty (60) days after the date of Plan amendment is adopted;
(2) sixty (60) days after the day on which the Plan amendment
becomes effective; or
(3) sixty (60) days after a Participant is issued written notice
of the Plan amendment.
(e) Revise the vested benefit of a Participant determined as of the
later of the date such amendment is adopted, or the date such
amendment becomes effective, if such revised vested benefit is less
than that computed under the Plan without regard to such amendment.
(f) Procedure
(1) All proposed amendments shall be set forth in a written
instrument, detailing any and all changes to the Plan.
58
(2) All proposed amendments shall be presented to the Board for
its consideration and shall be enacted by a vote of the Board.
(3) All actions taken by the Board shall be set forth in enabling
documentation (e.g., minutes of meetings setting forth
appropriate resolutions adopted therein or appropriate
certification of actions taken by the Board in lieu of a
formal meeting).
(4) The Board shall authorize, in the documentation referred to
under (3), above, an officer or officers of the Employer to
execute said amendment or amendments on behalf of the Employer
and to certify as to the date on which the steps set forth
under (1), (2), and (3) took place (e.g., a Certificate of
Resolution).
The Employer shall make all amendments in writing. Each amendment shall
state the date to which it is either retroactively or prospectively
effective.
13.03 Termination. The Employer shall have the right to terminate the Plan at
any time. The Plan shall terminate upon the first to occur of the
following:
(a) The date terminated by action of the Board;
(b) The date the Employer shall be judicially declared bankrupt or
insolvent; or
(c) The dissolution, merger, consolidation, or reorganization of the
Employer or the sale by the Employer of all or substantially all of
its assets, unless the successor or purchaser makes provisions to
continue the Plan, in which event the successor or purchaser shall
be substituted as the Employer under this Plan.
(d) Termination Procedure
(1) A proposal to terminate the Plan shall be set forth in a
written instrument, detailing said action to the Board.
(2) A proposal to terminate the Plan shall be presented to the
Board for its consideration and shall be enacted by a vote of
the Board.
(3) All actions taken by the Board to terminate the Plan shall be
set forth in enabling documentation (e.g., minutes of meetings
setting forth appropriate resolutions adopted therein or
appropriate certification of actions taken by the Board in
lieu of a formal meeting).
(4) The Board shall authorize, in the documentation referred to
under (3), above, an officer or officers of the Employer to
execute such instruments and take such actions as are
necessary to effectuate the termination of the Plan on behalf
of the Employer and to certify as to the date on which the
steps set forth under (1), (2), and (3) took place (e.g., a
Certificate of Resolution).
59
13.04 Vesting on Termination or Suspension. Notwithstanding any other provision
of the Plan to the contrary, upon the date of full or partial termination
of the Plan, or, upon complete discontinuance of contributions to the
Plan, an affected Participant's right to his Accrued Benefit shall be one
hundred percent (100%) vested and nonforfeitable. The Retirement Committee
shall interpret and administer this Section 13.04 in accordance with the
intent and scope of the Regulations issued under Code Section 411 (d) (3).
13.05 Procedure on Termination. In the event of termination of the Plan or
permanent discontinuance of Employer contributions, the Employer shall, at
its sole discretion, authorize any one of the following procedures:
(a) Continue Trust. To continue the Trust in operation in all respects
until the Trustee has distributed, as soon as administratively
feasible, all benefits under the Plan, except that no further
persons shall become Participants, no further contributions shall be
made, all Accounts shall be fully vested, and no further payments
shall be made, except in distribution of the Trust Fund and payment
of administration expenses; or
(b) Liquidate Plan. To wind up and liquidate the Plan and Trust and
distribute the assets thereof after deduction of all expenses to the
Participants, Former Participants, and Beneficiaries in accordance
with their respective Accounts as then constituted. If the Employer
makes no election before termination, then this subsection (b) will
govern distribution of the Trust Fund.
13.06 Merger. The Trustee shall not consent to, or be a party to, any merger or
consolidation with another plan, unless immediately after the merger,
consolidation, or transfer, the surviving Plan provides each Participant a
benefit equal to or greater than the benefit each Participant would have
received had the Plan terminated immediately before the merger,
consolidation, or transfer.
13.07 Notice of Change in Terms. The Retirement Committee, within the time
prescribed by the Act and applicable regulations, shall furnish all
Participants and Beneficiaries a summary plan description of any material
amendment to the Plan or notice of discontinuance of the Plan and all
other information required by the Act to be furnished without charge.
13.08 Reversion of Suspense Account. Notwithstanding any provisions contained
herein to the contrary, the Employer reserves the right to recover, upon
the termination of the Plan and Trust Fund, any amounts held in a Suspense
Account that cannot be allocated to the accounts of Participants and their
Beneficiaries in the year of termination, because of the limitations
contained in Section 6.09 of the Plan and Section 415 of the Code, after
the satisfaction of all fixed and contingent obligations to Participants
and their Beneficiaries under the Plan.
13.09 Distributions Upon Plan Termination. All Elective Deferrals, Qualified
Employer Deferral Contributions, and income attributable thereto, shall be
distributed to Participants or their Beneficiaries as soon as
administratively feasible after the
60
termination of the Plan, provided that neither the Employer nor an
Affiliated Employer establishes or maintains a successor plan. A successor
plan is any other defined contribution plan (other than an ESOP)
maintained by the Employer, existing at any time during the period
commencing with the date of the Plan termination and ending 12 months
after the distribution of all assets from the terminated Plan.
13.10 Distributions Upon Sale Of Assets. All Elective Deferrals, Qualified
Employer Deferral Contributions, and income attributable thereto, shall be
distributed to Participants as soon as administratively feasible after the
sale, to an entity that is not an Affiliated Employer, of substantially
all of the assets used by the Employer in the trade or business in which
the Participant is employed.
13.11 Distributions Upon Sale Of Subsidiary. All Elective Deferrals, Qualified
Employer Deferral Contributions, and income attributable thereto shall be
distributed to Participants as soon as administratively feasible after the
sale, to an entity that is not an Affiliated Employer, of an incorporated
Affiliated Employer's interest in a subsidiary to Participants employed by
such subsidiary.
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ARTICLE XIV
THE TRUST FUND
14.01 Purpose of the Trust Fund. A Trust Fund has been created and will be
maintained for the purposes of the Plan, and the assets thereof shall be
invested in accordance with the terms of the Trust Agreement. All
contributions will be paid into the Trust Fund, and all benefits under the
Plan will be paid from the Trust Fund.
14.02 Appointment of Trustee. A Trustee shall be appointed by the Board to
administer the Trust Fund. The Trustee's obligations, duties, and
responsibilities shall be governed solely by the terms of the Trust
Agreement.
14.03 Exclusive Benefit of Participants. Subject to Section 5.04 hereof, the
Trust Fund will be used and applied only in accordance with the provisions
of the Plan to provide the benefits thereof, and no part of the corpus or
income of the Trust Fund shall be used for or diverted to purposes other
than for the exclusive benefit of the Participants and their Beneficiaries
or for expenses of administration. Notwithstanding the preceding sentence,
as provided in Section 13.08 hereof, the Employer reserves the right to
recover any amounts held in a Suspense Account at the termination of the
Trust Fund that cannot be allocated to the Accounts of Participants and
their Beneficiaries in the year of termination because of the limitations
contained in Section 6.09 of the Plan and Section 415 of the Code.
14.04 Benefits Supported Only By the Trust Fund. Any person having any claim
under the Plan will look solely to the assets of the Trust Fund for
satisfaction.
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ARTICLE XV
PARTICIPATION BY AFFILIATE OF COMPANY AND
EMPLOYMENT WITH A MEMBER OF A CONTROLLED GROUP
15.01 Employment With a Member of a Controlled Group. Any employment service
completed by an Employee with an Affiliated Employer, shall be credited as
service with the Employer for purposes of determining "participation" and
"vesting" under the Plan. Determination of membership within the
controlled group shall be determined under the provisions of Code Section
1563(a), but without regard to Code Section 1563(a)(4) and (e)(3)(c).
15.02 Adoption by Affiliates. Any corporation or other business entity which is
a member of an affiliated group (as defined in Code Section 1504(a), or
any successor provision), which includes the Employer, may, with the
consent of the Employer, adopt the Plan for its Employees. Such adoption
shall be made by resolution of such corporation's Board and an instrument
executed by its officers pursuant thereto. The provisions of the Plan
shall apply to each Employer, except as provided in the instrument
adopting the Plan and Trust otherwise specifically provided herein.
15.03 Amendment. If the Plan and Trust are amended by the Company, after they
are adopted by such affiliate, unless otherwise expressly provided, they
shall be treated as so amended by such other business entity without the
necessity of any action on its part.
15.04 Withdrawal by Affiliated Employers
(a) Any one or more of the Employers included in the Plan may withdraw
from the Plan at any time by giving six months' advance notice in
writing of the intention to withdraw, (unless a shorter notice shall
be agreed to by the Board).
(b) After an Employer has given notice as provided in subsection (a),
the Plan Administrator shall establish an amount of the Trust Fund
to be allocated to such Employer's portion of the Plan. No
Participant of the Plan, including Participants who are Employees of
the withdrawing Employer, shall receive a benefit immediately after
such withdrawal, determined as if the Plan had terminated at that
time, which is less than the benefit such Participants would have
received immediately prior to such withdrawal had the Plan
terminated at that time.
(c) If the Trust is not to be terminated with respect to the withdrawing
Employer, then as of the date of withdrawal, the Trustee shall
distribute securities, property, or money of the Trust Fund
representing the portion of the Trust Fund allocated to the
withdrawing Employer and such securities, property or money shall
thereafter be held and invested as a separate trust fund pursuant to
the terms of the plan adopted by the withdrawing Employer.
63
(d) If the Plan is to be terminated with respect to the withdrawing
Employer, then the amount set aside pursuant to subsection (b) shall
be dealt with according to the provisions of Article XIII.
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ARTICLE XVI
DIRECTED INVESTMENT OPTIONS
16.01 Authorized Investment Funds. The Retirement Committee will provide for
the investment of Plan assets. Investment funds will be developed by
the Trustee to accommodate this direction. The Retirement Committee may
increase or decrease the number of authorized investment options,
subject to the Trustee's approval, which may include the following:
(1) Stable Asset Fund - This fund is invested primarily in U.S.
government securities and guaranteed investment contracts (GICs)
issued by major life insurance companies and money center banks. It
seeks to earn high current income with preservation of capital.
(2) Intermediate Bond Fund - This fund's objective is to provide
security of principal while generating a high rate of current
income. Investments in this fund consist of Corporate Bonds, U.S.
Government securities and other high quality fixed income
securities.
(3) Balanced Fund - This fund's objective is to seek high total return
through current income and capital appreciation. Investments
generally range from 50% to 70% in common stocks, with the remainder
in investment grade fixed income obligations.
(4) S&P 500 Index Fund - This fund invests in all 500 stocks in the S&P
500 Index in proportions to match the index's composition.
(5) Value Equity Fund - This fund's objective is to seek long-term
capital apprecition. Investments consist of a diversified portfolio
of securities of primarily large cap companies, which are considered
to be undervalued with consistent earnings growth, and are market
leaders in their industry.
(6) Growth Equity Fund - This fund's objective is to seek long-term
capital appreciation. These companies are primarily in rapidly
growing industries such as technology, healthcare and consumer
products and services, with expectation for above average growth.
(7) Cooperative Bankshares Fund - This fund invests primarily in
Cooperative Bankshares common stock purchased in the open market at
current market prices. This fund is designed to achieve a long-term
growth based on the Bank's profitability and performance.
16.02 Participant Direction. Each Participant may direct, on forms provided by
the Retirement Committee, that contributions to his Account be invested in
the various investment funds provided under Section 16.01. A Participant
may redirect the investment of his Accounts as well as future
contributions. The election to direct or redirect the investment of
Accounts will be made during such times as the Retirement Committee shall
determine, after consultation with the Trustee. The Retirement Committee
may impose such limitations on such direction of Account investments as it
deems appropriate, for example, limitations on
65
minimum percentage investments in an investment fund or minimum notice
periods when Accounts may be redirected.
16.03 Participant Non-Direction. If the Participant fails to direct the
investment of his Accounts, if such direction is allowed, his entire
Account will be invested in the investment vehicle selected by the
Trustee, based on prudent fiduciary standards and uniformly applied to
similarly situated Participants.
16.04 Employer Contributions. Any Employer Matching Contributions allocated to
Participants' Employer Matching Accounts and Employer Discretionary
Contributions allocated to the Participant's Discretionary Account shall
be invested in the Cooperative Bankshares Common Stock Fund. This fund
shall be invested in fixed income and Qualifying Employer Securities.
16.05 "Qualifying Employer Security" shall mean an Employer Security of
Cooperative Bankshares that is a stock or a marketable obligation. For
purposes of this section, the term "marketable obligation" means a bond,
debenture, note, certificate, or other evidence of indebtedness
("obligation") if such obligation is acquired:
(a) on the market, either
(1) at the price of the obligation prevailing on a national
securities exchange that is registered with the Securities and
Exchange Commission, or
(2) if the obligation is not traded on such a national securities
exchange, a price not less favorable to the Plan than the
offering price for the obligation established by current bid
and asked prices quoted by persons independent of the issuer;
(b) from an underwriter, at a price
(1) not in excess of the public offering price for the obligation
set forth in a prospectus or offering circular filed with the
Securities and Exchange Commission, and
(2) at which a substantial portion of the same issue is acquired
by persons independent of the issuer, or
(3) directly from the issuer, at a price not less favorable to the
Plan than the price paid currently for a substantial portion
of the same issue by persons independent of the issuer.
(c) directly from the issuer, at a price not less favorable to the Plan
than the price paid currently for a substantial portion of the same
issue by persons independent of the issuer.
16.07 Voting Rights.
(a) ESOP Account. As to any Employer Securities allocated to the
Participant's ESOP
66
Account which are part of a registration-type class of securities, a
Participant has the right to direct the Trustee regarding the voting
of such Employer Securities allocated to his ESOP Account with
respect to any corporate matters requiring a vote of stockholders.
The Trustee does not have the right to vote any Employer Securities
which a Participant (or Beneficiary) fails to vote as authorized by
this Section.
Non-ESOP Accounts. As to any Employer Securities allocated to the
Participant's non-ESOP Accounts which are part of a
registration-type class of securities, the Trustee, as directed by
the Plan Administrator, has the right to direct the voting of such
Employer Securities allocated to his non-ESOP Accounts with respect
to any corporate matters requiring a vote of stockholders.
16.07 Diversification of ESOP Account.
Each Qualified Participant may direct the Trustee in all years in the
Qualified Election Period, other than the final year of such period, as to
the investment of 25% of the total number of shares of Employer Securities
in the ESOP Account acquired by or contributed to the Plan after December
31, 1986, that have ever been allocated to a Qualified Participant's
Account on or before the most recent Plan Accounting Date; less the number
of shares of Employer Securities previously distributed, transferred or
diversified pursuant to a diversification election made after December 31,
1986. A diversification election shall be made within 90 days after the
Accounting Date of each Plan Year (to the extent a direction amount
exceeds the amount to which a prior direction under this Section applies)
during the Participant's Qualified Election Period. For the last Plan Year
in the Participant's Qualified Election Period, the Trustee will
substitute "50%" for "25%" in the immediately preceding sentence. The
Qualified Participant must make his direction to the Trustee in writing,
the direction may be effective no later than 180 days after the close of
the Plan Year to which the direction applies, and the direction must
specify which, if any, of the investment options the Participant selects.
The Retirement Committee has establish investment accounts under this
Article 16, which will permit the Qualified Participant to make an
election to direct the investment of a portion of his Account attributed
to Employer Securities as set forth under the first paragraph of this
Section.
For purposes of this Section 16.07, the following definitions apply:
(i) "Qualified Participant" means a Participant who has attained age 55
and who has completed at least 10 years of participation in the
Plan. A "year of participation" means a Plan Year in which the
Participant was eligible for an allocation of Employer
contributions, irrespective of whether the Employer actually
contributed to the Plan for that Plan Year.
(ii) "Qualified Election Period" means the 6 Plan Year period beginning
with the Plan Year in which the Participant first becomes a
Qualified Participant.
A Participant's right under Section 16.07 to direct the investment of his
ESOP Account applies solely to Employer Securities acquired by the Plan
after December 31, 1986.
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ARTICLE XVII
TOP-HEAVY RULES
17.01 Top-Heavy Status. If the Plan is or becomes Top-Heavy in any Plan Year
beginning after December 31, 1983, the provisions of this Article will
supersede any conflicting provision in the Plan. The following definitions
apply in making this determination:
(a) Key Employee: Any Employee or former Employee (and the Beneficiaries
of such Employee) who at any time during the determination period
was (i) an officer of the Employer, (if such officer's Compensation
exceeds 50% of the annual benefit limit for defined benefit plans,
as indexed, pursuant to Code Section 415(b)(1)(A)), (ii) an owner
(or considered an owner under Code Section 318) of one of the ten
largest interests in the Employer, (if such individual's
Compensation exceeds the dollar limit on Annual Additions to a
Defined Contribution Plan under Code Section 415), (iii) a five
percent Owner of the Employer, or (iv) a one percent Owner of the
Employer who has an annual Compensation of more than $150,000. The
determination period is the Plan Year containing the Determination
Date and the four preceding Plan Years. The determination of who is
a Key Employee will be made in accordance with Section 416(i) (1)
and the regulations thereunder. A Non-Key Employee is any Employee
who does not meet the definition of Key Employee contained herein.
(b) Top-Heavy Plan: For any Plan Year after December 31, 1983, this Plan
is Top-Heavy if any of the following conditions exists:
(1) If the Top-Heavy Ratio for this Plan exceeds 60 percent, and
this Plan is not part of any Required Aggregation Group or
Permissive Aggregation Group of plans, or
(2) If this Plan is a part of a Required Aggregation Group of
plans, but not part of a Permissive Aggregation Group, and the
Top-Heavy Ratio for the group of plans exceeds 60 percent, or
(3) If this Plan is a part of a Required Aggregation Group, and
part of a Permissive Aggregation Group of plans, and the
Top-Heavy Ratio for the Permissive Aggregation Group exceeds
60 percent.
(c) Top-Heavy Ratio:
(1) If the Employer maintains one or more Defined Contribution
Plans (including any Simplified Employee Pension Plan) and the
Employer has never maintained any Defined Benefit 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 Account balances of all Key Employees as of the
Determination Date (including any part of any Account balance
distributed in the five-year period ending on the
Determination Date), and the denominator of which is the sum
of all Account balances (including any part of any Account
balance distributed in
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the five-year period ending on the Determination Date) of all
Participants as of the Determination Date. Both the numerator
and denominator of the Top-Heavy Ratio are adjusted to reflect
any distributions of any Account balances or any Accrued
Benefits made in the five-year period ending on the
Determination Date and contribution which is due but unpaid as
of the Determination Date.
(2) If the Employer maintains one or more Defined Contribution
Plans (including any Simplified Employee Pension Plan) and the
Employer maintains or has maintained one or more Defined
Benefit Plans, 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 Account balances under the Defined
Contribution Plans for all Key Employees and the present value
of Accrued Benefits under the Defined Benefit Plans for all
Key Employees, and the denominator of which is the sum of the
Account balances under the Defined Contribution Plans for all
Participants and the present value of the Accrued Benefits
under the Defined Benefit Plans for all Participants. Both the
numerator and denominator of the Top-Heavy Ratio are adjusted
for any distributions of any Account balances or any Accrued
Benefits made in the five-year period ending on the
Determination Date and any contribution due but unpaid as of
the Determination Date.
(3) For purposes of (2) and (3) above, the value of Account
balances and the Present Value of Accrued Benefits will be
determined as of the most recent Allocation 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 (1) who is not a Key Employee but who was a
Key Employee in a prior year, or (2) who has not been credited
with at least one hour of service with any employer
maintaining the plan at any time during the 5-year period
ending on the determination date will be disregarded. The
calculation of the Top-Heavy Ratio, and the extent to which
distributions, rollovers, and the transfers are taken into
account will be made in accordance with Code Section 416 and
the regulations thereunder. Deductible employee contributions
will not be taken into account for purposes of computing the
Top-Heavy Ratio. 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.
(d) Permissive Aggregation Group: The Required Aggregation Group of
plans plus any other plan or plans of the Employer, which when
considered as a group with the Required Aggregation Group, would
continue to satisfy the requirements of Code Sections 401(a)(4) and
410.
(e) Required Aggregation Group: (i) Each qualified plan of the Employer
in which at least one Key Employee participates in the Plan Year
containing the Determination Date or any of the four preceding Plan
Years, and (ii) any other
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qualified plan of the Employer which enables a plan described in (i)
to meet the requirements of Code Sections 401(a)(4) and 410.
Solely for the purpose of determining if the Plan, or any other plan
included in a Required Aggregation Group of which this Plan is a
part, is Top-Heavy, the Accrued Benefit of an Employee other than a
Key Employee (within the meaning of Code Section 416(i)(1)) shall be
determined under (a) the method, if any, that uniformly applies for
accrual purposes under all plans maintained by the Affiliated
Employers, or (b) if there is no such method, as if such benefit
accrued not more rapidly than the slowest accrual rate permitted
under the fractional accrual rate of Code Section 411(b)(1)(C). In
determining the Accrued Benefits of a Key Employee, distributions
from a terminated Plan shall be included, if the plan terminated
within the 5-year period ending in the Determination Date and such
plan would have been required to be included in an aggregation
group.
(f) Determination Date: For any Plan Year subsequent to the first Plan
Year, the last day of the preceding Plan Year. For the first Plan
Year of the Plan, the last day of that year.
(g) Allocation Date: The last day of the Limitation Year for which
Account balances or Accrued Benefits are valued for purposes of
calculating the Top-Heavy Ratio.
(h) Present Value: Present value shall be based upon assumptions
provided for under Section 416 of the Code and regulations.
17.02 Limitation on Allocations. If, during any Limitation Year, beginning prior
to January 1, 2000, the Participant is a Participant in both a defined
contribution plan and a defined benefit plan both of which are a part of a
Top-Heavy Aggregation Group, the Committee must apply the limitations of
Section 8.13 to such Participant by substituting "1.0%" for "1.25" each
place it appears in the definition of Defined Benefit Fraction and Defined
Contribution Fraction under Section 8.13. This Section 14.04 shall not
apply (no adjustments made) if:
(a) the Employer provides under a defined benefit plan an additional
benefit of 1% of average annual Compensation multiplied by Years of
Service, not to exceed 10%.
(b) the Employer contribution rate under the Employer's defined
contribution plan for each Participant who is not a Key Employee is
not less than the lesser of:
(1) 4% of such Participant's total Compensation or
(2) the percentage at which contributions are made under the Plan
for the year for the Key Employee for whom such percentage is
highest;
(c) the sum of the Account Balances under the Plan of Participants who
are Key Employees does not exceed 90% of the sum of the Account
Balances of all Participants; and
70
(d) the sum of (i) the present value of the cumulative Accrued Benefits
for Key Employees under all Defined Benefit Plans in the Aggregation
Group and (ii) the aggregate of the Accounts of Key Employees under
all defined contribution plans in the Aggregation Group does not
exceed 90% of such sum determined for all Employees.
Minimum Allocation.
(a) Except as otherwise provided in (c) and (d) below, the Employer
Profit Sharing Contributions, and Forfeitures attributed to
previously allocated Employer Profit Sharing Contribution, allocated
on behalf of any Participant who is not a Key Employee shall not be
less than the lesser of 3% of such Participant's Compensation, or in
the case where the Employer has no Defined Benefit Plan which
designates this plan to satisfy section 401 of the Code, the largest
percentage of Employer Contributions and Forfeitures, as a
percentage of the Key Employee's Compensation, allocated on behalf
of any Key Employee for that year. If the highest rate allocated to
a Key Employee for a year in which the Plan is Top-Heavy is less
than 3%, then amounts contributed as a result of a Salary Deferral
Agreement must be included in determining contributions made on
behalf of Key Employees. The Minimum Allocation is determined
without regard to any Social Security contribution. This Minimum
Allocation shall be made even though, under other Plan provisions,
the Participant would not otherwise be entitled to receive an
allocation, or would have received a lesser allocation for the Plan
Year because of (i) the Participant's failure to complete 1,000
Hours of Service (or any equivalent provided in the Plan), or (ii)
the Participant's failure to make mandatory Employee Contributions
to the Plan, or (iii) Compensation less than a stated amount.
(b) For purposes of computing the Minimum Allocation, Compensation will
mean Compensation as defined in Section 2.12.
(c) The provision in (a) above shall not apply to any Participant who
was not employed by the Employer on the last day of the Plan Year.
(d) The provision in (a) above shall not apply to any Participant to the
extent the Participant is covered under any other plan or plans of
the Employer and the Employer has provided the Minimum Allocation or
benefit requirement applicable to Top-Heavy plans will be met in the
other plan or plans.
17.03 Minimum Vesting. For any Plan Year in which this Plan is Top-Heavy, one of
the minimum vesting schedules will automatically apply to the Plan. The
minimum vesting schedule applies to all benefits within the meaning of
Section 411(a)(7), including benefits accrued before the effective date of
Section 416 and benefits accrued before the Plan became Top-Heavy.
Further, no reduction in vested benefits may occur in the event the Plan's
status as Top-Heavy changes for any Plan Year. However, this Section does
not apply to the
71
Account balances of any Employee who does not have an Hour of Service
after the Plan has initially become Top-Heavy, and such Employee's Account
balance attributable to Employer Contributions and Forfeitures will be
determined without regard to this Section.
The nonforfeitable interest of each Employee in his or her Account balance
attributable to Employer Contributions shall be determined on the basis of
the following:
Years of Vesting Service Vesting Percentage
------------------------ ------------------
Less than 3 Years 0%
3 years or more 100%
If the vesting schedule under the plan shifts in or out of the preceding
schedule for any Plan Year because of the Plan's Top-Heavy status, such
shift is an amendment to the vesting schedule, and the election in Section
13.02(d) of the Plan applies.
17.04 Limitation on Allocations. If, during any Limitation Year, beginning prior
to January 1, 2000, the Participant is a participant in both a Defined
Contribution Plan and a Defined Benefit Plan, which are a part of a
Top-Heavy group, the Retirement Committee shall apply the limitations of
Article VI to such Participant by substituting "100%" for "125%" each
place it appears in Section 6.09. This Section 17.04 shall not apply if:
(a) The Plan would satisfy Section 17.02 if the guaranteed minimum
contribution was one percent (1%) greater than the guaranteed
minimum contribution the Retirement Committee otherwise would
calculate; and
(b) The Top-Heavy Ratio does not exceed ninety percent (90%).
17.05 Compensation Limitations. Shall mean the first $150,000 (or such larger
amount as the Commissioner of Internal Revenue may prescribe) of
Compensation pursuant to Code Section 401(a)(17).
17.06 Participation In More Than One Plan. If a Non-Key Employee participates in
a Top-Heavy Defined Benefit Plan maintained by the Employer, Section 17.02
will apply to the Non-Key Employee and this Defined Contribution will
provide the "minimum benefit accrual."
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ARTICLE XVIII
MISCELLANEOUS
18.01 Execution of Receipts and Releases. Any payment to any Participant, or to
his legal representative or Beneficiary, in accordance with the provisions
of the Plan, shall to the extent thereof be in full satisfaction of all
claims hereunder against the Plan and Trust Fund. The Retirement Committee
may require such a Participant, legal representative, or Beneficiary, as a
condition precedent to such payment, to execute a receipt and release
therefore in such form as it shall determine.
18.02 No Guarantee of Interests. Neither the Trustee (if applicable), the
Retirement Committee, nor the Employer guarantee the Trust Fund from loss
or depreciation. The Employer does not guarantee the payment of any money
which may be or becomes due to any person from the Trust Fund. The
liability of the Retirement Committee and the Trustee to make any payment
from the Trust Fund is limited to the then available assets of the Trust
Fund.
18.03 Payment of Expenses. All expenses incident to the administration,
termination, protection of the Plan and Trust Fund, including but not
limited to legal, accounting, and Trustee or investment management fees,
shall be paid by the Trustee, except that in case of failure of Trustee to
pay the expenses, they will be paid from the Trust Fund, and until paid,
shall constitute a first and prior claim and lien against the Trust Fund,
unless the Employer elects to pay such expenses in lieu of the Trustee.
18.04 Employer Records. Records of the Employer as to an Employee's or
Participant's period of employment, termination of employment and the
reason therefore, leaves of absence, re-employment, and compensation will
be conclusive for all persons, unless determined to be incorrect.
18.05 Interpretations and Adjustments. To the extent permitted by law, an
interpretation of the Plan and a decision of any matter within the Named
Fiduciary's discretion made in good faith is binding on all persons. A
misstatement or other mistake of fact shall be corrected when it becomes
known and the person responsible shall make such adjustment on account
thereof as he considers equitable and practicable.
18.06 Uniform Rules. In the administration of the Plan, uniform rules will be
applied to all Participants similarly situated.
18.07 Evidence. Evidence required of anyone under the Plan may be by
certificate, affidavit, document, or other information, which the person
acting on it considers pertinent and reliable, and signed, made or
presented by the proper party or parties.
18.08 Severability. In the event any provision of the Plan shall be held to be
illegal or invalid for any reason, the illegal or invalid provisions of
the Plan shall be fully severable and the Plan shall be construed and
enforced as if the illegal or invalid provision had never
73
been included herein.
18.09 Notice. Any notice required to be given herein by the Trustee, the
Employer, or the Retirement Committee, shall be deemed delivered, when
personally delivered, or placed in the United States mail, in an envelope
addressed to the last known address of the person to whom the notice is
given.
18.10 Waiver of Notice. Any person entitled to notice under the Plan may waive
the notice.
18.11 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 Trustee, the
Retirement Committee, and their successors.
18.12 Headings. The titles and headings of Articles and sections are included
for convenience of reference only and are not to be considered in
construction of the provisions hereof.
18.13 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 North Carolina, except to the extent North Carolina law is preempted by
Federal statute.
Signed the ______________ day of __________________________, 2000, but effective
as of the 1st day of October, 1999.
COOPERATIVE BANK FOR SAVINGS, INC., SSB
President
ATTEST:
- Secretary
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