1
EXHIBIT 10.5
SAC RIVER VALLEY BANK
EMPLOYEE STOCK OWNERSHIP PLAN
AND TRUST AGREEMENT
SAC RIVER VALLEY BANK, a bank organized under the laws of the State of
Missouri, makes this Agreement with XXXXX X. XXXXXXXX, as Trustee.
WITNESSETH;
SAC RIVER VALLEY BANK establishes within this Trust Agreement, a Plan
for the administration and distribution of contributions made by the Employer
for the purpose of providing retirement benefits for eligible Employees. The
provisions of this Plan apply solely to an Employee whose employment with the
Employer terminates on or after the Effective Date of the Employer's Plan. If an
Employee's employment with the Employer terminates prior to the Effective Date,
that Employee is not entitled to any benefit under the Plan.
Now, therefore, in consideration of their mutual covenants, the
Employer and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
1.01 "Plan" means the retirement plan established by the Employer in
the form of this Agreement, designated as the Sac River Valley Bank Employee
Stock Ownership Plan. The Employer has designed this Plan to invest primarily in
Employer Securities.
1.02 "Employer" means SAC RIVER VALLEY BANK.
1.03 "Trustee" means XXXXX X. XXXXXXXX, or any successor in office who
in writing accepts the position of Trustee.
1.04 "Plan Administrator" is the Employer unless the Employer
designates another person to hold the position of Plan Administrator. In
addition to his other duties, the Plan Administrator has full responsibility for
compliance with the reporting and disclosure rules under ERISA as respects this
Agreement.
1.05 "Advisory Committee" means the Employer's Advisory Committee as
from time to time constituted.
1.06 "Employee" means any employee of the Employer.
2
1.07 "Highly Compensated Employee" means an Employee who, during the
Plan Year or during the preceding 12-month period:
(a) is a more than 5% owner of the Employer (applying the
constructive ownership rules of Code ss.318);
(b) has Compensation in excess of $75,000.00 (as adjusted by
the Commissioner of Internal Revenue for the relevant year);
(c) has Compensation in excess of $50,000.00 (as adjusted by
the Commissioner of Internal Revenue for the relevant year) and is part
of the top-paid 20% group of employees (based on Compensation for the
relevant year);
(d) has Compensation in excess of 50% of the dollar amount
prescribed in Code Section 415(b)(1)(A) (relating to defined benefit
plans) and is an officer of the Employer.
If the Employee satisfies the definition in clause (b), (c) or (d) in
the Plan Year but not during the preceding 12-month period and does not satisfy
clause (a) in either period, the Employee is a Highly Compensated Employee only
if he is one of the 100 most highly compensated Employees for the Plan Year. The
number of officers taken into account under clause (d) will not exceed the
greater of 3 or 10% of the total number (after application of the Code Section
414(q) exclusions) of Employees, but no more than 50 officers. If no Employee
satisfies the Compensation requirement in clause (d) for the relevant year,
the Advisory Committee will treat the highest paid officer as satisfying
clause (d) for that year.
For purposes of this Section 1.07, "Compensation" means Compensation as
defined in Section 1.10, except any exclusions from Compensation other than the
exclusions described in paragraphs (a), (b), (c) and (d) of Section 1.10, and
Compensation must include: (i) elective deferrals under a Code ss.401(k)
arrangement or under a Simplified Employee Pension maintained by the Employer;
and (ii) amounts paid by the Employer which are not currently includible in the
Employee's gross income because of Code Sections 125 (cafeteria plans) or 403(b)
(tax-sheltered annuities). The Advisory Committee must make the determination of
who is a Highly Compensated Employee, including the determinations of the number
and identity of the top paid 20% group, the top 100 paid Employees, the number
of officers includible in clause (d) and the relevant Compensation, consistent
with Code Section 414(q) and regulations issued under that Code section. The
Employer may make a calendar year election to determine the Highly Compensated
Employees for the Plan Year, as prescribed by Treasury regulations. A calendar
year election must apply to all plans and arrangements of the Employer. For
purposes of applying any nondiscrimination test required under the Plan or
under the Code, in a manner consistent with applicable Treasury regulations,
the Advisory Committee will not treat as a separate Employee a family member
(a spouse, a lineal ascendant or descendant, or a spouse of a lineal ascendant
or descendant) of a Highly Compensated Employee described in clause (a) of this
Section, or a family member of one of
- 2 -
3
the ten Highly Compensated Employees with the greatest Compensation for
the Plan Year, but will treat the Highly Compensated Employee and all family
members as a single Highly Compensated Employee. This aggregation rule applies
to a family member even if that family member is a Highly Compensated Employee
without family aggregation.
The term "Highly Compensated Employee" also includes any former
Employee who separated from Service (or has a deemed Separation from Service, as
determined under Treasury regulations) prior to the Plan Year, performs no
Service for the Employer during the Plan Year, and was a Highly Compensated
Employee either for the separation year or any Plan Year ending on or after his
55th birthday. If the former Employee's Separation from Service occurred prior
to January 1, 1987, he is a Highly Compensated Employee only if he satisfied
clause (a) of this Section 1.07 or received Compensation in excess of $50,000.00
during: (1) the year of his Separation from Service (or the prior year); or (2)
any year ending after his 54th birthday.
1.08 "Participant" is an Employee who is eligible to be and becomes a
Participant in accordance with the provisions of Section 2.01.
1.09 "Beneficiary" is a person designated by a Participant who is or
may become entitled to a benefit under the Plan. A Beneficiary who becomes
entitled to a benefit under the Plan remains a Beneficiary under the Plan until
the Trustee has finally distributed his benefit to him. A Beneficiary's right to
(and the Plan Administrator's, the Advisory Committee's or a Trustee's duty to
provide to the Beneficiary) information or data concerning the Plan does not
arise until he first becomes entitled to receive a benefit under the Plan.
1.10 "Compensation" means the Participant's 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, compensation for services on the basis of a
percentage of profits, overtime pay, and bonuses). Compensation also includes
elective contributions made by the Employer on the Employee's behalf. "Elective
contributions" are amounts excludible from the Employee's gross income under
Code Section 402(a)(8) (relating to a Code Section 401(k) arrangement), Code
Section 402(h) (relating to a Simplified Employee Pension), Code Section 125
(relating to a cafeteria plan) or Code Section 403(b) (relating to a
tax-sheltered annuity). The term "Compensation" does not include:
(a) Employer contributions (other than "elective
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 to the extent such contributions are
excludible from the Employee's gross income, 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.
- 3 -
4
(b) 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.
(c) Amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock option.
(d) 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 Section 403(b) (whether or not the contributions are
excludible from the gross income of the Employee), other than "elective
contributions".
Any reference in this Plan to Compensation is a reference to the
definition in this Section 1.10, unless the Plan reference specifies a
modification to this definition. The Advisory Committee will take into account
only Compensation actually paid for the relevant period.
The Advisory Committee must take into account only the first
$200,000.00 (or beginning January 1, 1990, such larger amount as the
Commissioner of Internal Revenue may prescribe) of any Participant's
Compensation. The $200,000.00 Compensation limitation applies to the combined
Compensation of the Employee and of any family member aggregated with the
Employee under Section 1.09 and who is either (i) the Employee's spouse; or (ii)
the Employee's lineal descendant under the age of 19. If the $200,000.00 (or
adjusted) Compensation limitation applies to the combined Compensation of the
Employee and one or more family members, the Advisory Committee will apply the
contribution and allocation provisions of Article III by prorating the
$200,000.00 (or adjusted) limitation among the affected Participants in
proportion to each such Participant's Compensation determined prior to
application of this limitation.
NONDISCRIMINATION. For purposes of determining whether the Plan
discriminates in favor of Highly Compensated Employees, Compensation means
Compensation as defined in this Section 1.10 except any exclusions from
Compensation other than the exclusions described in paragraphs (a), (b), (c) and
(d), unless the Employer elects to use an alternate nondiscriminatory
definition, in accordance with the requirements of Code Section 414(s) and the
regulations issued under that Code section. The Employer may elect
to include all elective contributions made by the Employer on behalf of the
Employees. The Employer's election to include elective contributions must be
consistent and uniform with respect to Employees and all plans of the Employer
for any particular Plan Year. The Employer may make this election to include
elective contributions for nondiscrimination testing purposes, irrespective of
whether this Section 1.10 includes elective contributions in the general
Compensation definition applicable to the Plan.
- 4 -
5
1.11 "Account" means the separate account(s) which the Advisory
Committee or the Trustee maintains for a Participant under the Plan.
1.12 "Accrued Benefit" means the amount standing in a Participant's
Account(s) as of any date derived from both Employer contributions and Employee
contributions, if any.
1.13 "Nonforfeitable" means a Participant's or Beneficiary's
unconditional claim, legally enforceable against the Plan, to the Participant's
Accrued Benefit.
1.14 "Plan Year" means the fiscal year of the Plan, a 12 consecutive
month period ending every December 31.
1.15 "Effective Date" of this Plan is January 1, 1989.
1.16 "Plan Entry Date" means the Effective Date and every January 1 and
July 1 after the restated Effective Date.
1.17 "Accounting Date" is the last day of the Plan Year. Unless
otherwise specified in the Plan, the Advisory Committee will make all Plan
allocations for a particular Plan Year as of the Accounting Date of that Plan
Year.
1.18 "Trust" means the separate Trust created under the Plan.
1.19 "Trust Fund" means all property of every kind held or acquired by
the Trustee under the Plan.
1.20 "Nontransferable Annuity" means an annuity which by its terms
provides that it may not be sold, assigned, discounted, pledged as collateral
for a loan or security for the performance of an obligation or for any purpose
to any person other than the insurance company. If the Trustee distributes an
annuity contract, the contract must be a Nontransferable Annuity.
1.21 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
1.22 "Code" means the Internal Revenue Code of 1986, as amended.
1.23 "Service" means any period of time the Employee is in the employ
of the Employer, including any period the Employee is on an unpaid leave of
absence authorized by the Employer under a uniform, nondiscriminatory policy
applicable to all Employees. "Separation from Service" means a separation from
Service with the Employer maintaining this Plan.
1.24 "Hour of Service" means:
- 5 -
6
(a) Each Hour of Service for which the Employer, either
directly or indirectly, pays an Employee, or for which the Employee is
entitled to payment, for the performance of duties. The Advisory
Committee credits Hours of Service under this paragraph (a) to the
Employee for the computation period 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 has agreed or for which
the Employee has received an award. The Advisory Committee credits
Hours of Service under this paragraph (b) to the Employee for the
computation period(s) to which the award or the agreement pertains
rather than for the computation period in which the award, agreement or
payment is made; and
(c) Each Hour of Service for which the 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 computation period, such as leave of absence,
vacation, holiday, sick leave, illness, incapacity (including
disability), layoff, jury duty or military duty. The Advisory Committee
will credit no more than 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 computation period). The Advisory Committee
credits Hours of Service under this paragraph (c) in accordance with
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 (c).
The Advisory Committee will not credit an Hour of Service under more
than one of the above paragraphs. A computation period for purposes of this
Section 1.24 is the Plan Year, Year of Service period, Break in Service period
or other period, as determined under the Plan provision for which the Advisory
Committee is measuring an Employee's Hours of Service. The Advisory Committee
will resolve any ambiguity with respect to the crediting of an Hour of Service
in favor of the Employee.
The Employer will credit every Employee with Hours of Service on the
basis of the "actual" method. For purposes of the Plan, "actual" method means
the determination of Hours of Service from records of hours worked and hours for
which the Employer makes payment or for which payment is due from the Employer.
Solely for purposes of determining whether the Employee incurs a Break
in Service under any provision of this Plan, the Advisory Committee must credit
Hours of Service during an Employee's unpaid absence period due to maternity or
paternity leave. The Advisory Committee considers an Employee on maternity or
paternity leave if the Employee's absence is due to the Employee's pregnancy,
the birth of the Employee's child, the placement with the Employee of an adopted
child, or the care of the Employee's child
- 6 -
7
immediately following the child's birth or placement. The Advisory
Committee credits Hours of Service under this paragraph on the basis of the
number of Hours of Service the Employee would receive if he were paid during the
absence period or, if the Advisory Committee cannot determine the number of
Hours of Service the Employee would receive, on the basis of eight (8) hours per
day during the absence period. The Advisory Committee will credit only the
number (not exceeding 501) of Hours of Service necessary to prevent an
Employee's Break in Service. The Advisory Committee credits all Hours of Service
described in this paragraph to the computation period in which the absence
period begins or, if the Employee does not need these Hours of Service to
prevent a Break in Service in the computation period in which his absence period
begins, the Advisory Committee credits these Hours of Service to the immediately
following computation period.
1.25 "Disability" means the Participant, because of a physical or
mental disability, will be unable to perform the duties of his customary
position of employment (or is unable to engage in any substantial gainful
activity) for an indefinite period which the Advisory Committee considers will
be of long continued duration. A Participant also is disabled if he incurs the
permanent loss or loss of use of a member or function of the body, or is
permanently disfigured, and incurs a separation from Service. The Plan considers
a Participant disabled on the date the Advisory Committee determines the
Participant satisfies the definition of disability. The Advisory Committee may
require a Participant to submit to a physical examination in order to confirm
disability. The Advisory Committee will apply the provisions of this Section
1.25 in a nondiscriminatory, consistent and uniform manner.
1.26 SERVICE FOR PREDECESSOR EMPLOYER. If the Employer maintains the
plan of a predecessor employer, the Plan treats service of the Employee with the
predecessor employer as service with the Employer.
1.27 RELATED EMPLOYERS. A related group is a controlled group of
corporations (as defined in Code Section 414(b)), trades or businesses (whether
or not incorporated) which are under common control (as defined in Code
Section 414(c)) or an affiliated service group (as defined in Code Section
414(m) or in Code Section 414(o)). If the Employer is a member of a related
group, the term "Employer" includes the related group members for purposes of
crediting Hours of Service, determining Years of Service and Breaks in Service
under Articles II and V, applying the limitations on allocations in Part 2 of
Article III, applying the top heavy rules and the minimum allocation
requirements of Article III, the definitions of Employee, Highly Compensated
Employee, Compensation and Leased Employee, and for any other purpose required
by the applicable Code section or by a Plan provision. However, only Sac River
Valley Bank may contribute to the Plan and only an Employee employed by Sac
River Valley Bank is eligible to participate in this Plan.
1.28 LEASED EMPLOYEES. The Plan treats a Leased Employee as an Employee
of the Employer. A Leased Employee is an individual (who otherwise is not an
Employee of the Employer) who, pursuant to a leasing agreement between the
Employer and any other person, has performed services for the Employer (or for
the Employer and any persons
- 7 -
8
related to the Employer within the meaning of Code Section 144(a)(3)) on a
substantially full-time basis for at least one (1) year and who performs
services historically performed by employees in the Employer's business field.
If a Leased Employee is treated as an Employee by reason of this Section 1.28 of
the Plan, "Compensation" includes Compensation from the leasing organization
which is attributable to services performed for the Employer.
SAFE HARBOR PLAN EXCEPTION. The Plan does not treat a Leased Employee
as an Employee if the leasing organization covers the employee in a safe harbor
plan and, prior to application of this safe harbor plan exception, 20% or less
of the Employer's Employees (other than Highly Compensated Employees) are Leased
Employees. A safe harbor plan is a money purchase pension plan providing
immediate participation, full and immediate vesting, and a non- integrated
contribution formula equal to at least 10% of the employee's compensation
without regard to employment by the leasing organization on a specified date.
The safe harbor plan must determine the 10% contribution on the basis of
compensation as defined in Code Section 415(c)(3) plus elective contributions
(as defined in Section 1.10).
OTHER REQUIREMENTS. The Advisory Committee must apply this Section 1.28
in a manner consistent with Code Sections 414(n) and 414(o) and the regulations
issued under those Code sections.
1.29 DETERMINATION OF TOP HEAVY STATUS. If this Plan is the only
qualified plan maintained by the Employer, the Plan is top heavy for a Plan Year
if the top heavy ratio as of the Determination Date exceeds 60%. The top heavy
ratio is a fraction, the numerator of which is the sum of the present value of
Accrued Benefits of all Key Employees as of the Determination Date and the
denominator of which is a similar sum determined for all Employees. The Advisory
Committee must include in the top heavy ratio, as part of the present value of
Accrued Benefits, any contribution not made as of the Determination Date but
includible under Code Section 416 and the applicable Treasury regulations, and
distributions made within the Determination Period. The Advisory Committee must
calculate the top heavy ratio by disregarding the Accrued Benefit (and
distributions, if any, of the Accrued Benefit) of any Non-Key Employee who was
formerly a Key Employee, and by disregarding the Accrued Benefit (including
distributions, if any, of the Accrued Benefit) of an individual who has not
received credit for at least one Hour of Service with the Employer during the
Determination Period. The Advisory Committee must calculate the top heavy ratio,
including the extent to which it must take into account distributions, rollovers
and transfers, in accordance with Code Section 416 and the regulations under
that Code section.
If the Employer maintains other qualified plans (including a simplified
employee pension plan), or maintained another such plan which now is terminated,
this Plan is top heavy only if it is part of the Required Aggregation Group, and
the top heavy ratio for the Required Aggregation Group and for the Permissive
Aggregation Group, if any, each exceeds 60%. The Advisory Committee will
calculate the top heavy ratio in the same manner as required by the first
paragraph of this Section 1.29, taking into account all plans within the
Aggregation Group. To the extent the Advisory Committee must take into account
- 8 -
9
distributions to a Participant, the Advisory Committee must include
distributions from a terminated plan which would have been part of the Required
Aggregation Group if it were in existence on the Determination Date. The
Advisory Committee will calculate the present value of Accrued Benefits under
defined benefit plans or simplified employee pension plans included within the
group in accordance with the terms of those plans, Code Section 416 and the
regulations under that Code section. If a Participant in a defined benefit plan
is a Non-Key Employee, the Advisory Committee will determine his Accrued
Benefit under the accrual method, if any, which is applicable uniformly to all
defined benefit plans maintained by the Employer or, if there is no uniform
method, in accordance with the slowest accrual rate permitted under the
fractional rule accrual method described in Code Section 411(b)(1)(C). To
calculate the present value of benefits from a defined benefit plan, the
Advisory Committee will use the actuarial assumptions (interest and mortality
only) prescribed by the defined benefit plan(s) to value benefits for top heavy
purposes. If an aggregated plan does not have a valuation date coinciding with
the Determination Date, the Advisory Committee must value the Accrued Benefits
in the aggregated plan as of the most recent valuation date falling within the
12-month period ending on the Determination Date, except as Code Section 416
and applicable Treasury regulations require for the first and second plan year
of a defined benefit plan. The Advisory Committee will calculate the top heavy
ratio with reference to the Determination Dates that fall within the same
calendar year.
DEFINITIONS. For purposes of applying the provisions of this
Section 1.29:
(a) "Key Employee" means, as of any Determination Date, any
Employee or former Employee (or Beneficiary of such Employee) who, for
any Plan Year in the Determination Period: (i) has Compensation in
excess of 50% of the dollar amount prescribed in Code Section
415(b)(1)(A) (relating to defined benefit plans) and is an officer of
the Employer; (ii) has Compensation in excess of the dollar amount
prescribed in Code Section 415(c)(1)(A) (relating to defined
contribution plans) and is one of the Employees owing the ten largest
interests in the Employer; (iii) is a more than 5% owner of the
Employer; or (iv) is a more than 1% owner of the Employer and has
Compensation of more than $150,000.00. The constructive ownership
rules of Code Section 318 will apply to determine ownership in the
Employer. The number of officers taken into account under clause (i)
will not exceed the greater of 3 or 10% of the total number (after
application of the Code Section 414(q)(8) exclusions) of Employees,
but not more than 50 officers. The Advisory Committee will make the
determination of who is a Key Employee in accordance with Code Section
416(i)(1) and the regulations under that Code section.
(b) "Non-Key Employee" is an employee who does not meet the
definition of Key Employee.
(c) "Compensation" means Compensation as determined under
Section 1.07 (relating to the Highly Compensated Employee definition).
- 9 -
10
(d) "Required Aggregation Group" means: (1) each qualified
plan of the Employer in which at least one Key Employee participates at
any time during the Determination Period; and (2) any other qualified
plan of the Employer which enables a plan described in clause (1) to
meet the requirements of Code Section 401(a)(4) or Code Section 410.
(e) "Permissive Aggregation Group" is the Required Aggregation
Group plus any other qualified plans maintained by the Employer, but
only if such group would satisfy in the aggregate the requirements of
Code Section 401(a)(4) and Code Section 410. The Advisory Committee
will determine the Permissive Aggregation Group.
(f) "Employer" means the Employer that adopts this Plan and
any related employers described in Section 1.27.
(g) "Determination Date" for any Plan Year is the Accounting
Date of the preceding Plan Year or, in the case of the first Plan Year
of the Plan, the Accounting Date of that Plan Year. The "Determination
Period" is the five-year period ending on the Determination Date.
1.30 "Disqualified Person" has the meaning ascribed to that term under
Code Section 4975(e)(2).
1.31 "Employer Securities" means voting common stock issued by the
Employer, or by a corporation which is a member of the same controlled group of
corporations.
1.32 "Exempt Loan" means a loan made to this Plan by a Disqualified
Person, or a loan to this Plan which a Disqualified Person guarantees, provided
the loan satisfies the requirements of Treas. Reg. Section 54.4975-7(b).
1.33 "Leveraged Employer Securities" means Employer Securities acquired
by the Trust with the proceeds of an Exempt Loan and which satisfy the
definition of "qualifying employer securities" in Code Section 4975(e)(8).
ARTICLE II
EMPLOYEE PARTICIPANTS
2.01 ELIGIBILITY. Each Employee becomes a Participant in the Plan on
the Plan Entry Date (if employed on that date) coincident with or immediately
following the later of the date on which he completes one Year of Service or
attains age 21. Further, all Employees employed as of the date of adoption of
this Plan shall become a Participant in the Plan as of their Employment
Commencement Date (as defined in Section 2.02 hereof).
2.02 YEAR OF SERVICE - PARTICIPATION. For purposes of an Employee's
participation in the Plan under Section 2.01, the Plan takes into account all of
his Years of
- 10 -
11
Service with the Employer, except as provided in Section 2.03.
"Year of Service" means a 12 consecutive month period during which the Employee
completes not less than 1,000 Hours of Service, measuring the beginning of the
first 12 month period from the Employment Commencement Date. If the Employee
does not complete 1,000 Hours of Service during the 12-month period commencing
with the Employment Commencement Date, the Plan measures the second 12-month
period by reference to the Plan Year which includes the first anniversary of the
Employee's Employment Commencement Date. The Plan measures any subsequent 12-
month period necessary for a determination of Year of Service for participation
by reference to succeeding Plan Years. "Employment Commencement Date" means the
date on which the Employee first performs an Hour of Service for the Employer.
2.03 BREAK IN SERVICE - PARTICIPATION. For purposes of participation in
the Plan, the Plan does not apply any Break in Service rule.
2.04 PARTICIPATION UPON RE-EMPLOYMENT. A Participant whose employment
terminates re-enters the Plan as a Participant on the date of his re-employment.
An Employee who satisfies the Plan's eligibility conditions but who terminates
employment prior to becoming a Participant becomes a Participant in the Plan on
the later of the Plan Entry Date on which he would have entered the Plan had he
not terminated employment or the date of his re-employment. Any Employee who
terminates employment prior to satisfying the Plan's eligibility conditions
becomes a Participant in accordance with the provisions of Section 2.01.
2.05 ELECTION NOT TO PARTICIPATE. An Employee eligible to participate,
or any present Participant, may elect not to participate in the Plan. For an
election to be effective for a particular Plan Year, the Employee or Participant
must file the election in writing with the Plan Administrator not later than 60
days prior to the Accounting Date of that Plan Year. The Employer may not make a
contribution under the Plan for the Employee or for the Participant for the Plan
Year for which the election is effective, nor for any succeeding Plan Year
unless the Employee or Participant re-elects to participate in the Plan. After
an Employee's or Participant's election not to participate has been effective
for at least two Plan Years, the Employee or Participant may re-elect to
participate in the Plan for any Plan Year and subsequent Plan Years. An Employee
or Participant may re-elect to participate in the Plan by filing his election in
writing with the Plan Administrator not later than 60 days prior to the
Accounting Date of the Plan Year for which his election is to be effective. An
Employee or Participant who re-elects to participate may not again elect not to
participate. The Plan Administrator must furnish an Employee or a Participant
any form required for purposes of an election under this Section 2.05. An
election timely filed is effective for the entire Plan Year.
A Participant who elects not to participate may not receive a
distribution of his Accrued Benefit attributable either to Employer or to
Participant contributions except as
- 11 -
12
provided under Article IV or Under Article VI. However, for each Plan
Year for which a Participant's election not to participate is effective, the
Participant's Account, if any, continues to share in Trust Fund allocations
under Article IX. Furthermore, the Employee or the Participant receives vesting
credit under Article V for each included Year of Service during the period the
election not to participate is effective.
- 12 -
13
ARTICLE III
EMPLOYER CONTRIBUTIONS AND FORFEITURES
PART 1. AMOUNT OF EMPLOYER CONTRIBUTIONS AND PLAN ALLOCATIONS:
SECTIONS 3.01 THROUGH 3.06
3.01 AMOUNT. For each Plan year, the Employer will contribute to the
Trust an amount which the Employer may from time to time deem advisable. The
Employer may not make a contribution to the Trust for any Plan Year to the
extent the contribution would exceed the Participants' "Maximum Permissible
Amounts" under Section 3.08.
The Trustee, upon written request from the Employer, must return to the
Employer the amount of the Employer's contribution made by the Employer by
mistake of fact or the amount of the Employer's contribution disallowed as a
deduction under Code ss.404. The Trustee will not return any portion of the
Employer's contribution under the provisions of this paragraph more than one
year after:
(a) The Employer made the contribution by mistake of
fact; or
(b) The disallowance of the contribution as a deduction, and
then, only to the extent of the disallowance.
The Trustee will not increase the amount of the Employer contribution
returnable under this Section 3.01 for any earnings attributable to the
contribution, but the Trustee will decrease the Employer contribution returnable
for any losses attributable to it. The Trustee may require the Employer to
furnish him whatever evidence the Trustee deems necessary to enable the Trustee
to confirm the amount the Employer has requested be returned is properly
returnable under ERISA.
The Employer may make its contribution in cash or in Employer
Securities as the Employer from time to time may determine. The Employer may
make its contribution of Employer Securities at fair market value determined at
the time of contribution.
3.02 DETERMINATION OF CONTRIBUTION. The Employer, from its records,
determines the amount of any contributions to be made by it to the Trust under
the terms of the Plan.
3.03 TIME OF PAYMENT OF CONTRIBUTION. The Employer may pay its
contribution for each Plan Year in one or more installments without interest.
The Employer must make its contribution to the Trustee within the time
prescribed by the Code or applicable Treasury regulations.
- 13 -
14
3.04 CONTRIBUTION ALLOCATION.
(A) METHOD OF ALLOCATION. Subject to Section 3.04(B) and any
restoration allocation required under Section 5.04, the Advisory Committee will
allocate and credit each annual Employer contribution (and Participant
forfeitures, if any), to the Account of each Participant who satisfies the
conditions of Section 3.06, in the same ratio that each Participant's
Compensation for the Plan Year bears to the total Compensation of all
Participants for the Plan Year.
(B) TOP HEAVY MINIMUM ALLOCATION.
(1) MINIMUM ALLOCATION. If the Plan is top heavy in any
Plan Year:
(a) Each Non-Key Employee (as defined in Section
1.29) who is a Participant and is employed by the Employer on
the last day of the Plan Year will receive a top heavy minimum
allocation for that Plan Year, irrespective of whether he
satisfies the Hours of Service condition under Section 3.06;
and
(b) The top heavy minimum allocation is the lesser of
3% of the Non-Key Employee's Compensation for the Plan Year or
the highest contribution rate for the Plan Year made on behalf
of any Key Employee (as defined in Section 1.29).
For purposes of clause (b), "Compensation" means Compensation
as defined in Section 1.10, disregarding elective contributions and any
exclusions from Compensation, other than the exclusions described in
paragraphs (a), (b), (c) and (d) of Section 1.10 and disregarding the
requirements of Section 3.06. For purposes of this Section 3.04(B), a
Participant's contribution rate is the sum of Employer contributions
(not including Employer contributions to Social Security) and
forfeitures allocated to the Participant's Account for the Plan Year
divided by his Compensation for the entire Plan Year. A Non-Key
Employee's contribution rate does not include any elective
contributions Under a Code Section 401(k) arrangement nor any Employer
matching contributions subject to the nondiscrimination requirements
of Code Section 401(k) or of Code Section 401(m). To determine a
Participant's contribution rate, the Advisory Committee must treat all
qualified top heavy defined contribution plans maintained by the
Employer (or by any related Employers described in Section 1.27) as a
single plan.
(2) METHOD OF COMPLIANCE. The Plan will satisfy the top heavy
minimum allocation in accordance with this Section 3.04(B)(2). The
Advisory Committee first will allocate the Employer contributions (and
Participant forfeitures, if any) for the Plan Year in accordance with
the allocation formula under Section 3.04(A). The Employer then will
contribute an additional amount for the Account of any Participant who
is entitled under this Section 304(B) to a top heavy minimum allocation
and
- 14 -
15
whose contribution rate for the Plan Year is less than the top
heavy minimum allocation. The additional amount is the amount necessary
to increase the Participant's contribution rate to the top heavy
minimum allocation. The Advisory Committee will allocate the additional
contribution to the Account of the Participant on whose behalf the
Employer makes the contribution.
3.05 FORFEITURE ALLOCATION. The amount of a Participant's Accrued
Benefit forfeited under the Plan is a Participant forfeiture. Subject to any
restoration allocation required under Sections 5.04 or 9.14, the Advisory
Committee will allocate the forfeiture in accordance with Section 3.04, as an
Employer contribution for the Plan Year in which the forfeiture occurs, as if
the Participant forfeiture were an additional Employer contribution for that
Plan Year. The Advisory Committee will continue to hold the undistributed,
non-vested portion of a terminated Participant's Accrued Benefit in his Account
solely for his benefit until a forfeiture occurs at the time specified in
Section 5.09. Except as provided under Section 5.04, a Participant will not
share in the allocation of a forfeiture of any portion of his Accrued Benefit.
In making a forfeiture allocation under this Section 3.05, the Advisory
Committee will base forfeitures of Employer Securities upon the fair market
value of the Employer Securities as of the Accounting Date of the forfeitures.
3.06 ACCRUAL OF BENEFIT. The Advisory Committee will determine the
accrual of benefit (Employer contributions and Participant forfeitures) on the
basis of the Plan Year.
COMPENSATION TAKEN INTO ACCOUNT. In allocating an Employer contribution
to a Participant's Account, the Advisory Committee, will take into account all
Compensation paid the Employee during the Plan Year.
HOURS OF SERVICE REQUIREMENT. Subject to the top heavy minimum
allocation requirement of Section 3.04(B), the Advisory Committee will not
allocate any portion of an Employer contribution for a Plan Year to any
Participant's Account if the Participant does not complete a minimum of 1,000
Hours of Service during the Plan Year, unless the Participant terminates
employment during the Plan Year because of death or disability or because of the
attainment of Normal Retirement Age in the current Plan Year or in a prior Plan
Year.
EMPLOYMENT REQUIREMENT. A Participant who, during a particular Plan
Year, completes the Hours of Service requirement under this Section 3.06 will
share in the allocation of Employer contributions and Participant forfeitures,
if any, for that Plan Year without regard to whether he is employed by the
Employer on the Accounting Date of that Plan Year.
PART 2. LIMITATIONS ON ALLOCATIONS: SECTIONS 3.07 AND 3.08
- 15 -
16
3.07 LIMITATIONS ON ALLOCATIONS TO PARTICIPANTS' ACCOUNTS. The amount
of Annual Additions which the Advisory Committee may allocate under this Plan on
a Participant's behalf for a Limitation Year may not exceed the Maximum
Permissible Amount. 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 Permissible Amount, the Employer will reduce the amount of
its contribution so the Annual Additions for the Limitation Year will equal the
Maximum Permissible Amount. If an allocation of Employer contributions, pursuant
to Section 3.04, would result in an Excess Amount (other than an Excess Amount
resulting from the circumstances described in Section 3.07(B)) to the
Participant's Account, the Advisory Committee will reallocate the Excess Amount
to the remaining Participants who are eligible for an allocation of Employer
contributions for the Plan Year in which the Limitation Year ends. The Advisory
Committee will make this reallocation on the basis of the allocation method
under the Plan as if the Participant whose Account otherwise would receive the
Excess Amount is not eligible for an allocation of Employer contributions.
(A) ESTIMATION OF COMPENSATION. Prior to the determination of the Participant's
actual Compensation for a Limitation Year, the Advisory Committee may determine
the Maximum Permissible Amount on the basis of the participant's estimated
annual Compensation for such Limitation Year. The Advisory Committee must make
this determination on a reasonable and uniform basis for all Participants
similarly situated. The Advisory Committee must reduce any Employer
contributions (including any allocation of forfeitures) based on estimated
annual Compensation by any Excess Amount carried over from prior years. As soon
as is administratively feasible after the end of the Limitation Year, the
ADvisory Committee will determine the Maximum Permissible Amount for such
Limitation Year on the basis of the Participant's actual Compensation for such
Limitation Year.
MORE THAN ONE PLAN. If the Advisory Committee allocated an Excess
Amount to a Participant's Account on an allocation date of this Plan which
coincides with an allocation date of another defined contribution plan
maintained by the Employer, the Excess Amount attributed to this Plan will be
the product of:
(a) The total Excess Amount allocated as of such date
(including any amount which the Advisory Committee would have allocated
but for the limitations of Code Section 415); times
(b) The ratio of (i) the amount allocated to the Participant
as of such date under this Plan divided by (ii) the total amount
allocated as of such date under all qualified defined contribution
plans (determined without regard to the limitations of Code Section
415).
(B) (A) DISPOSITION OF EXCESS AMOUNT. If, pursuant to Section 3.07(A), or
because of the allocation of forfeitures, there is an Excess Amount with respect
to a Participant for a Limitation Year, the Advisory Committee will dispose of
such Excess Amount as follows:
- 16 -
17
(a) The Advisory Committee will return any nondeductible
voluntary Employee contributions to the Participant to the extent that
the return would reduce the Excess Amount.
(b) If, after the application of paragraph (a), an Excess
Amount still exists, and the Plan covers the Participant at the end of
the Limitation Year, then the Advisory Committee will use the Excess
Amount(s) to reduce future Employer contributions (including any
allocation of forfeitures) under the Plan for the next Limitation Year
and for each succeeding Limitation Year, as is necessary, for the
Participant.
(c) If, after the application of paragraph (a), an Excess
Amount still exists, and the Plan does not cover the Participant at the
end of the Limitation Year, then the Advisory Committee will hold the
Excess Amount unallocated in a suspense account. The Advisory Committee
will apply the suspense account to reduce Employer Contributions
(including allocation of forfeitures) for all remaining Participants in
the next Limitation Year, and in each succeeding Limitation Year, if
necessary.
(d) The Advisory Committee will not distribute any Excess
Amount(s) to Participants or to former Participants.
(C) DEFINED BENEFIT PLAN LIMITATION. 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 Limitation Year must not
exceed 1.0. To the extent necessary to satisfy the limitation under Section
3.08, the Employer will reduce its contribution or allocation on behalf of the
Participant to the Plan.
3.08 DEFINITIONS - ARTICLE III. For purposes of Article III, the following terms
mean:
(a) "Annual Addition" - The sum of the following amounts
allocated on behalf of a Participant for a Limitation year, of (i) all
Employer contributions; (ii) all forfeitures; and (iii) all Employee
contributions. Except to the extent provided in Treasury regulations,
Annual Additions include excess contributions described in Code
Section 401(k), excess aggregate contributions described in Code
Section 401(m) and excess deferrals described in Code Section 402(g),
irrespective of whether the plan distributes or forfeits such excess
amounts. Annual Additions also include Excess Amounts reapplied to
reduce Employer contributions under Section 3.07. Amounts allocated to
an individual medical account (as defined in Code Section 415(1)(2))
included as part of a defined benefit plan maintained by the Employer
are Annual Additions. Furthermore, Annual Additions include
contributions attributable to post-retirement medical benefits
allocated to the separate account of a key employee (as defined in
Code Section 419A(d)(3)) under a welfare benefit fund (as defined in
Code Section 419(e)) maintained by the
- 17 -
18
Employer, but only for purposes of the dollar limitation
applicable to the Maximum Permissible Amount.
"Annual Additions" do not include any Employer contributions applied by
the Advisory Committee (not later than the due date, including
extensions, for filing the Employer's Federal income tax return for
that Plan Year) to pay interest on an Exempt Loan, and any Leveraged
Employer Securities the Advisory Committee allocates as forfeitures;
provided, however, the provisions of this sentence do not apply in a
Plan Year for which the Advisory Committee allocates more than
one-third (1/3) of the Employer contributions applied to pay principal
and interest on an Exempt Loan to Restricted Participants. The Advisory
Committee may reallocate the Employer contributions in accordance with
Section 3.04 to the Accounts of non-Restricted Participants to the
extent necessary in order to satisfy this special limitation. For
purposes of this Section 3.08, "Restricted Participants" mean
Participants who are Highly Compensated Employees within the meaning of
Code Section 414(q).
(b) "Compensation" - For purposes of applying the limitations
of Part 2 of this Article III, "Compensation" means Compensation as
defined in Section 1.10, disregarding elective contributions and any
exclusions from Compensation, other than the exclusions described in
paragraphs (a), (b), (c) and (d) of Section 1.10.
(c) "Maximum Permissible Amount" - The lesser of (i)
$30,000.00 (or, if greater, one-fourth of the defined benefit dollar
limitation under Code ss.415(b)(1)(A)), or (ii) 25% of the
Participant's Compensation for the Limitation Year. The dollar amount
of clause (i) will increase by the lesser of (1) 100% of the dollar
amount in effect for the Plan Year; or (2) the amount of the Employer
Securities allocated to the Participant's Employer Securities Account
as an Employer contribution for the Plan Year. The immediately
preceding sentence does not apply for any Plan Year for which the
Advisory Committee allocates more than one-third of the Employer
contribution to Restricted Participants. If there is a short Limitation
Year because of a change in Limitation Year, the Advisory Committee
will multiply the $30,000.00 limitation (or larger limitation) by the
following fraction:
Number of Months in the short Limitation Year
12
(d) "Employer" - The Employer that adopts this Plan and any
related employers described in Section 1.27. Solely for purposes of
applying the limitations of Part 2 of this Article III, the Advisory
Committee will determine related employers described in Section 1.27 by
modifying Code Sections 414(b) and (c) in accordance with Code Section
415(h).
- 18 -
19
(e) "Excess Amount" - The excess of the Participant's Annual
Additions for the Limitation Year over the Maximum Permissible Amount.
(f) "Limitation Year" - The Plan Year. If the Employer amends
the Limitation Year to a different 12 consecutive month period, the new
Limitation Year must begin on a date within the Limitation year for
which the Employer makes the amendment, creating a short Limitation
Year.
(g) "Defined contribution plan" - A retirement plan which
provides for an individual account for each participant and for
benefits based solely on the amount contributed to the participant's
account, and any income, expenses, gains and losses, and any
forfeitures of accounts of other participants which the plan may
allocate to such participant's account. The Advisory Committee must
treat all defined contribution plans (whether or not terminated)
maintained by the Employer as a single plan. For purposes of the
limitations of Part 2 of this Article III, the Advisory Committee will
treat employee contributions made to a defined benefit plan maintained
by the Employer as a separate defined contribution plan. The Advisory
Committee also will treat as a defined contribution plan an individual
medical account (as defined in Code Section 415(1)(2)) included as
part of a defined benefit plan maintained by the Employer and a
welfare benefit fund under Code Section 419(e) maintained by the
Employer to the extent there are post-retirement medical benefits
allocated to the separate account of a key employee (as defined in
Code Section 419A(d)(3)).
(h) "Defined benefit plan" - A retirement plan which does not
provide for individual accounts for Employer contributions. The
Advisory Committee must treat all defined benefit plans (whether or not
terminated) maintained by the Employer as a single plan.
(i) "Defined benefit plan fraction" -
Projected annual benefit of the Participant under
the defined benefit plan(s)
------------------------------------------------------------------------
The lesser of (i) 125% (subject to the "100%
limitation" in paragraph (k)) 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 high
three consecutive years of service
To determine the denominator of this fraction, the Advisory
Committee will make any adjustment required under Code Section 415(b)
and will determine a Year of Service, unless otherwise provided in
this Section 3.08, as a Plan Year in which the Employee completed at
least 1,000 Hours of Service. The "projected annual benefit" is the
annual retirement benefit (adjusted to an actuarially equivalent
straight life
- 19 -
20
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 (or
current age, if later) 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.
CURRENT ACCRUED BENEFIT. If the Participant accrued benefits
in one or more defined benefit plans maintained by the Employer which
were in existence on May 5, 1986, the dollar limitation used in the
denominator of this fraction will not be less than the Participant's
Current Accrued Benefit. A Participant's Current Accrued Benefit is the
sum of the annual benefits under such defined benefit plans which the
Participant had accrued as of the end of the 1986 Limitation Year (the
last Limitation Year beginning before January 1, 1987), determined
without regard to any change in the terms or conditions of the Plan
made after May 5, 1986, and without regard to any cost of living
adjustment occurring after May 5, 1986. This Current Accrued Benefit
rule applies only 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 1986 Limitation Year.
(j) "Defined contribution plan fraction" -
The sum, as of the close of the Limitation Year, of the
Annual Additions to the Participant's Account Under the
defined contribution plan(s)
----------------------------
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% (subject to the "100% limitation" in
paragraph (k)) 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
For purposes of determining the defined contribution plan
fraction, the Advisory Committee will not recompute Annual Additions in
Limitation Years beginning prior to January 1, 1987, to treat all
Employee contributions as Annual Additions. If the Plan satisfied Code
ss.415 for Limitation Years beginning prior to January 1, 1987, the
Advisory Committee will redetermine the defined contribution plan
fraction and the defined benefit plan fraction as of the end of the
1986 Limitation Year, in accordance with this Section 3.08. If the sum
of the redetermined fractions exceeds 1.0, the Advisory Committee will
subtract permanently from the numerator
- 20 -
21
of the defined contribution plan 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 the defined contribution plan fraction. In
making the adjustment, the Advisory Committee must disregard any
accrued benefit under the defined benefit plan which is in excess of
the Current Accrued Benefit. This Plan continues any transitional rules
applicable to the determination of the defined contribution plan
fraction under the Employer's Plan as of the end of the 1986 Limitation
Year.
(k) "100% limitation." If the 100% limitation applies, the
Advisory Committee must determine the denominator of the defined
benefit plan fraction and the denominator of the defined contribution
plan fraction by substituting 100% for 125%. The 100% limitation
applies only if: (i) the Plan's top heavy ratio exceeds 90%, or (ii)
the Plan's top heavy ratio is greater than 60%, and the Employer does
not provide extra minimum benefits which satisfy Code Section
416(h)(2).
ARTICLE IV
PARTICIPANT CONTRIBUTIONS
4.01 PARTICIPANT VOLUNTARY CONTRIBUTIONS. The Plan does not permit nor
require Participant voluntary contributions.
4.02 PARTICIPANT ROLLOVER CONTRIBUTIONS. Any Participant, with the
Employer's written consent and after filing with the Trustee the form prescribed
by the Advisory Committee, may contribute cash to the Trust distributed to the
Participant from the Sac River Valley Bank Employees Pension Trust if the
contribution is a "rollover contribution" which the Code permits an employee to
transfer either directly or indirectly from one qualified plan to another
qualified plan. Before accepting such rollover contributions, the Trustee may
require an Employee to furnish satisfactory evidence that the proposed transfer
is, in fact, a "rollover contribution" which the Code permits an employee to
make to a qualified plan. A rollover contribution is not an Annual Addition
under Part 2 of Article III. The Trustee will hold, administer and distribute a
rollover contribution in the same manner as any Employer contribution made to
the Trust.
An eligible Employee, prior to satisfying the Plan's eligibility
conditions, may make a rollover contribution to the Trust to the same extent and
in the same manner as a Participant. If an Employee makes a rollover
contribution to the Trust prior to satisfying the Plan's eligibility conditions,
the Advisory Committee and Trust must treat the Employee as a Participant for
all purposes of the Plan except the Employee is not a Participant for purposes
of sharing in Employer contributions or Participant forfeitures under the Plan
until he actually becomes a Participant in the Plan. If the Employee has a
Separation from Service prior to becoming a Participant, the Trustee will
distribute his rollover contribution Account to him as if it were an Employer
contribution Account.
- 21 -
22
A Participant's Accrued Benefit is, at all times, one hundred percent
(100%) Nonforfeitable to the extent the value of his Accrued Benefit is derived
from rollover contributions made by him to the Trust.
The Advisory Committee must maintain, or must direct the Trustee to
maintain, a separate Account(s) in the name of each Participant to reflect the
Participant's Accrued Benefit under the Plan derived from his rollover
contributions. A Participant's Accrued Benefit derived from his rollover
contributions as of any applicable date is the balance of his separate rollover
contribution Account(s).
ARTICLE V
TERMINATION OF SERVICE - PARTICIPANT VESTING
5.01 NORMAL RETIREMENT AGE. A Participant's Normal Retirement Age is 65
years of age. A Participant who remains in the employ of the Employer after
attaining Normal Retirement Age will continue to participate in Employer
contributions. A Participant's Accrued Benefit derived from Employer
contributions is 100% Nonforfeitable upon and after his attaining Normal
Retirement Age (if employed by the Employer on or after that date).
5.02 PARTICIPANT DISABILITY OR DEATH. If a Participant's employment
with the Employer terminates as a result of death or disability, the
Participant's Accrued Benefit derived from Employer contributions will be 100%
Nonforfeitable.
5.03 VESTING SCHEDULE. Except as provided in Sections 5.01 and 5.02,
for each Year of Service, a Participant's Nonforfeitable percentage of his
Accrued Benefit derived from Employer contributions equals the percentage in the
following vesting schedule:
Years of Service Percent of
With the Employer Nonforfeitable
----------------- Accrued Benefit
----------------
Less than 3 . . . . . . . . . . . None
3 . . . . . . . . . . . . . . . . 20%
4 . . . . . . . . . . . . . . . . 40%
5 . . . . . . . . . . . . . . . . 60%
6 . . . . . . . . . . . . . . . . 80%
7 or more . . . . . . . . . . . . 100%
Effective the first Plan Year for which the Plan is a top heavy Plan (as defined
in Section 1.29), and in all subsequent Plan Years, the Advisory Committee will
calculate a Participant's Nonforfeitable Percentage of his Accrued Benefit under
the following schedule:
- 22 -
23
Years of Service Percent of
With the Employer Nonforfeitable
----------------- Accrued Benefit
---------------
Less than 2 . . . . . . . . . . . None
2 . . . . . . . . . . . . . . . . 20%
3 . . . . . . . . . . . . . . . . 40%
4 . . . . . . . . . . . . . . . . 60%
5 . . . . . . . . . . . . . . . . 80%
6 or more . . . . . . . . . . . . 100%
The Advisory Committee will apply the top heavy schedule to
Participants who earn at least one Hour of Service after the top heavy schedule
becomes effective. A shift between vesting schedules under this Section 5.03 is
an amendment to the vesting schedule and the Advisory Committee must apply the
rules of Section 7.05 accordingly. A shift to a new vesting schedule under this
Section 5.03 is effective on the first day of the Plan Year for which the top
heavy status of the Plan changes.
5.04 CASH-OUT DISTRIBUTIONS TO PARTIALLY-VESTED
PARTICIPANTS/RESTORATION OF FORFEITED ACCRUED BENEFIT. If, pursuant to Article
VI, a partially-vested Participant receives a cash-out distribution before he
incurs a Forfeiture Break in Service (as defined in Section 5.08), the cash-out
distribution will result in an immediate forfeiture of the non-vested portion of
the Participant's Accrued Benefit derived from Employer contributions. See
Section 5.09. A partially-vested Participant is a Participant whose
Nonforfeitable Percentage determined under SEction 5.03 is less than 100%. A
cash-out distribution is a distribution of the entire present value of the
Participant's Nonforfeitable Accrued Benefit.
(A) RESTORATION AND CONDITIONS UPON RESTORATION. A partially- vested Participant
who is re-employed by the Employer after receiving a cash-out distribution of
the Nonforfeitable percentage of his Accrued Benefit may repay the Trustee the
amount of the cash-out distribution attributable to Employer contributions,
unless the Participant no longer has a right to restoration under the
requirements of this Section 5.04. If a partially-vested Participant makes the
cash-out distribution repayment, the Advisory Committee, subject to the
conditions of this paragraph (A), must restore his Accrued Benefit attributable
to Employer contributions to the same dollar amount as the dollar amount of his
Accrued Benefit on the Accounting Date, or other valuation date, immediately
preceding the date of the cash-out distribution, unadjusted for any gains or
losses occurring subsequent to that Accounting Date, or other valuation date.
Restoration of the Participant's Accrued Benefit includes restoration of all
Code Section.411(d)(6) protected benefits with respect to that restored Accrued
Benefit, in accordance with applicable Treasury regulations. The Advisory
Committee will not restore a re-employed Participant's Accrued Benefit under
this paragraph if:
- 23 -
24
(1) 5 years have elapsed since the Participant's first
re-employment date following the cash-out distribution; or
(2) The Participant incurred a Forfeiture Break in Service (as
defined in Section 5.08). This condition also applies if the
Participant makes repayment within the Plan Year in which he incurs the
Forfeiture Break in Service and that Forfeiture Break in Service would
result in a complete forfeiture of the amount the Advisory Committee
otherwise would restore.
(B) TIME AND METHOD OF RESTORATION. If neither the two conditions preventing
restoration of the Participant's Accrued Benefit applies, the Advisory Committee
will restore the Participant's Accrued Benefit as of the Plan Year Accounting
Date coincident with or immediately following the repayment. To restore the
Participant's Accrued Benefit, the Advisory Committee, to the extent necessary,
will allocate to the Participant's Account:
(1) First, the amount, if any, of Participant forfeitures the
Advisory Committee would otherwise allocate under Section 3.05;
(2) Second, the amount, if any, of the Trust Fund net income
or gain for the Plan Year; and
(3) Third, the Employer contribution for the Plan Year to the
extent made under a discretionary formula.
To the extent the amounts described in clauses (1), (2) and (3) are
insufficient to enable the Advisory Committee to make the required restoration,
the Employer must contribute, without regard to any requirement or condition of
Section 3.01, the additional amount necessary to enable the Advisory Committee
to make the required restoration. If, for a particular Plan Year, the Advisory
Committee must restore the Accrued Benefit of more than one reemployed
Participant, then the Advisory Committee will make the restoration allocation(s)
to each such Participant's Account in the same proportion that a Participant's
restored amount for the Plan Year bears to the restored amount for the Plan Year
of all reemployed Participants. The Advisory Committee will not take into
account the allocation under this Section 5.04 in applying the limitation on
allocations under Part 2 of Article III.
(C) 0% VESTED PARTICIPANT. The deemed cash-out rule applies to a 0% vested
Participant. A 0% vested Participant is a Participant whose Accrued Benefit
derived from Employer contributions is entirely forfeitable at the time of his
Separation from Service. Under the deemed cash-out rule, the Advisory Committee
will treat the 0% vested Participant as having received a cash-out distribution
on the date of the Participant's Separation from Service or, if the
Participant's Account is entitled to an allocation of Employer contributions for
the Plan Year in which he separates from Service, on the last day of that Plan
Year. For purposes of applying the restoration provisions of this Section 5.04,
the Advisory Committee will treat
- 24 -
25
the 0% vested Participant as repaying his cash-out "distribution" on the first
date of his re-employment with the Employer.
5.05 SEGREGATED ACCOUNT FOR REPAID AMOUNT. Until the Advisory Committee
restores the Participant's Accrued Benefit, as described in Section 5.04, the
Trustee will invest the cash-out amount the Participant has repaid in a
segregated Account maintained solely for that Participant. The Trustee must
invest the amount in the Participant's segregated Account in Federally insured
interest bearing savings account(s) or time deposit(s) (or a combination of
both), or in other fixed income investments. Until commingled with the balance
of the Trust Fund on the date the Advisory Committee restores the Participant's
Accrued Benefit, the Participant's segregated Account remains a part of the
Trust, but it alone shares in any income it earns and it alone bears any
expense or loss it incurs. Unless the repayment qualifies as a rollover
contribution, the Advisory Committee will direct the Trustee to repay to the
Participant as soon as is administratively practicable the full amount of the
Participant's segregated Account if the Advisory Committee determines either of
the conditions of Section 5.04(A) prevents restoration as of the applicable
Accounting Date, notwithstanding the Participant's repayment.
The Advisory Committee will direct the Trustee to commingle the Participant's
segregated account with the balance of the Trust Fund as of the second
Accounting Date immediately following the date of the Participant's repayment.
5.06 YEAR OF SERVICE - VESTING. For purposes of vesting under Section
5.03, Year of Service means any Plan Year during which an Employee completes not
less than 1,000 Hours of Service with the Employer, including Plan Years prior
to the Effective Date of the Plan.
5.07 BREAK IN SERVICE - VESTING. For purposes of this Article V, a
Participant incurs a "Break in Service" if during any Plan Year he does not
complete more than 500 Hours of Service with the Employer.
5.08 INCLUDED YEARS OF SERVICE - VESTING. For purposes of determining
"Years of Service" under Section 5.06, the Plan takes into account all Years of
Service an Employee completes with the Employer. For the sole purpose of
determining a Participant's Nonforfeitable percentage of his Accrued Benefit
derived from Employer contributions which accrued for his benefit prior to a
Forfeiture Break in Service, the Plan disregards any Year of Service after the
Participant first incurs a Forfeiture Break in Service. The Participant incurs a
Forfeiture Break in Service when he incurs 5 consecutive Breaks in Service.
5.09 FORFEITURE OCCURS. A Participant's forfeiture, if any, of his
Accrued Benefit derived from Employer contributions occurs under the Plan on the
earlier of:
(a) The last day of the Plan Year in which the Participant
first incurs a Forfeiture Break in Service; or
- 25 -
26
(b) The date the Participant receives a cash-out distribution.
The Advisory Committee determines the percentage of a
Participant's Accrued Benefit forfeiture, if any, under this Section 5.09 solely
by reference to the vesting schedule of Section 5.03. A Participant will not
forfeit any portion of his Accrued Benefit for any other reason or cause except
as expressly provided by this Section 5.09 or as provided under Section 9.14.
- 26 -
27
ARTICLE VI
TIME AND METHOD OF PAYMENT OF BENEFITS
6.01 TIME OF PAYMENT OF ACCRUED BENEFIT. Unless, pursuant to Section
6.03, the Participant or the Beneficiary elects in writing to a different time
or method of payment, the Advisory Committee will direct the Trustee to commence
distribution of a Participant's Nonforfeitable Accrued Benefit in accordance
with this Section 6.01. A Participant must consent, in writing, to any
distribution required under this Section 6.01 if the present value of the
Participant's Nonforfeitable Accrued Benefit, at the time of the distribution to
the Participant, exceeds $3,500 and the Participant has not attained the later
of Normal Retirement Age or age 62. For all purposes of this Article VI, the
term "annuity starting date" means the first day of the first period for which
the Plan pays an amount as an annuity or in any other form. A distribution date
under this Article VI, unless otherwise specified within the Plan, is April 1st
of the Plan Year or as soon as administratively practicable following a
distribution date. For purposes of the consent requirements under this Article
VI, if the present value of the Participant's Nonforfeitable Accrued Benefit, at
the time of any distribution, exceeds $3,500, the Advisory Committee must treat
that present value as exceeding $3,500 for purposes of all subsequent Plan
distributions to the Participant.
(A) TERMINATION OF EMPLOYMENT FOR A REASON OTHER THAN DEATH. For a Participant
who terminates employment with the Employer for a reason other than death, the
Advisory Committee will direct the Trustee to commence distribution of the
Participant's Accrued Benefit, as follows:
(1) PARTICIPANT'S NON-FORFEITABLE ACCRUED BENEFIT NOT EXCEEDING $3,500.
In a lump sum, on the first distribution date in the first Plan Year beginning
after the Participant's Separation from Service, but in no event later than the
60th day following the close of the Plan Year in which the Participant attains
Normal Retirement Age. If the Participant has attained Normal Retirement Age
when he separates from Service, the distribution under this paragraph will occur
no later than the 60th day following the close of the Plan Year in which the
Participant's Separation from Service occurs.
(2) PARTICIPANT'S NONFORFEITABLE ACCRUED BENEFIT EXCEEDS $3,500. In a
form and at the time elected by the Participant, pursuant to Section 6.03. In
the absence of an election by the Participant, the Advisory Committee will
direct the Trustee to distribute the Participant's Nonforfeitable Accrued
Benefit in lump sum on the 60th day following the close of the Plan Year in
which the latest of the following events occurs: (a) the Participant attains
Normal Retirement Age; (b) the Participant attains age 62; or (c) the
Participant separates from Service.
(3) DISABILITY. If the Participant terminates employment because of
disability, in lump sum, on the first distribution date after the close of the
Plan Year in which the Participant terminates employment because of disability,
subject to the notice and consent
- 27 -
28
requirements of this Article VI and to the applicable mandatory commencement
dates described in Paragraph (1) or in Paragraph (2).
(B) REQUIRED BEGINNING DATE. If any distribution commencement date described
under Paragraph (A) of this Section 6.01, either by Plan provision or by
Participant election (or nonelection), is later than the Participant's Required
Beginning Date, the Advisory Committee instead must direct the Trustee to make
distribution under this Section 6.01 on the Participant's Required Beginning
Date. A Participant's Required Beginning Date is the April 1 following the close
of the calendar year in which the Participant attains age 70 1/2. However, if
the Participant, prior to incurring a Separation from Service, attained age 70
1/2 by January 1, 1988, and, for the five Plan Year period ending in the
calendar year in which he attained age 70 1/2 and for all subsequent years, the
Participant was not a more than 5% owner (as defined in Section 1.07(a)), the
Required Beginning Date is the April 1 following the close of the calendar year
in which the Participant separates from Service or, if earlier, the April 1
following the close of the calendar year in which the Participant becomes a more
than 5% owner. Furthermore, if a Participant who was not a more than 5% owner
attained age 70 1/2 during 1988 and did not incur a Separation from Service
prior to January 1, 1989, his Required Beginning Date is April 1, 1990. A
mandatory distribution at the Participant's Required Beginning Date will be in
lump sum unless the Participant, pursuant to the provisions of this Article VI,
makes a valid election to receive an alternative form of payment.
(C) DEATH OF THE PARTICIPANT. The Advisory Committee will direct the Trustee, in
accordance with this Section 6.01(C), to distribute to the Participant's
Beneficiary the Participant's Nonforfeitable Accrued Benefit remaining in the
Trust at the time of the
Participant's death.
(1) DECEASED PARTICIPANT'S NONFORFEITABLE ACCRUED BENEFIT DOES NOT
EXCEED $3,500. The Advisory Committee must direct the Trustee to pay the
deceased Participant's Nonforfeitable Accrued Benefit in a single cash sum, as
soon as administratively practicable following the Participant's death or, if
later, the date on which the Advisory Committee receives notification of or
otherwise confirms the Participant's death.
(2) DECEASED PARTICIPANT'S NONFORFEITABLE ACCRUED BENEFIT EXCEEDS
$3,500. The Advisory Committee will direct the Trustee to pay the deceased
Participant's Nonforfeitable Accrued Benefit at the time and in the form elected
by the Participant or, if applicable by the Beneficiary, as permitted under this
Article VI. In the absence of an election, the Advisory Committee will direct
the Trustee to distribute the Participant's undistributed Nonforfeitable Accrued
Benefit in a lump sum on the first distribution date following the close of the
Plan Year in which the Participant's death occurs or, if later, the first
distribution date following the date the Advisory Committee receives
notification of or otherwise confirms the Participant's death.
- 28 -
29
If the death benefit is payable to the Participant's surviving spouse
in full, the surviving spouse, in addition to the distribution options provided
in this Section 6.01(C), may elect distribution at any time or in any form this
Article VI would permit for a Participant.
6.02 METHOD OF PAYMENT OF ACCRUED BENEFIT. Subject to any restrictions
prescribed by Section 6.03, a Participant or Beneficiary may elect distribution
under one, or any combination, of the following methods: (a) by payment in a
lump sum; or (b) by payment in annual installments over a fixed reasonable
period of time, not exceeding the life expectancy of the Participant, or the
joint life and last survivor expectancy of the Participant and his Beneficiary.
The distribution options permitted under this Section 6.02 are
available only if the present value of the Participant Nonforfeitable Accrued
Benefit, at the time of the distribution to the Participant, exceeds $3,500. To
facilitate installment payments under this Article VI, the Advisory Committee
may direct the Trustee to segregate all or any part of the Participant's Accrued
Benefit in a separate Account. The Trustee will invest the Participant's
segregated Account in Federally insured interest bearing savings account(w) or
time deposit(s) (or a combination of both), or in other fixed income
investments. A segregated Account remains a part of the Trust, but it alone
shares in any income it earns, and it alone bears any expense or loss it incurs.
A Participant or Beneficiary may elect to receive an installment distribution in
the form of a Nontransferable Annuity Contract. Under an installment
distribution, the Participant or Beneficiary, at any time, may elect to
accelerate the payment of all, or any portion, of the Participant's unpaid
Nonforfeitable Accrued Benefit.
(A) MINIMUM DISTRIBUTION REQUIREMENTS FOR PARTICIPANTS. The Advisory
Committee may not direct the Trustee to distribute the Participant's
Nonforfeitable Accrued Benefit, nor may the Participant elect to have the
Trustee distribute his Nonforfeitable Accrued Benefit, under a method of payment
which, as of the Required Beginning Date, does not satisfy the minimum
distribution requirements under Code Section 401(a)(9) and the applicable
Treasury regulations. The minimum distribution for a calendar year equals
the Participant's Nonforfeitable Accrued Benefit as of the latest valuation
date preceding the beginning of the calendar year divided by the Participant's
life expectancy or, if applicable, the joint and last survivor expectancy of
the Participant and his designated Beneficiary (as determined under Article
VIII, subject to the requirements of the Code Section 401(a)(9) regulations).
The Advisory Committee will increase the Participant's Nonforfeitable Accrued
Benefit, as determined on the relevant valuation date, for contributions or
forfeitures allocated after the valuation date and by December 31 of the
valuation calendar year, and will decrease the valuation by distributions made
after the valuation date and by December 31 of the valuation calendar year. For
purposes of this valuation, the Advisory committee will treat any portion of
the minimum distribution for the first distribution calendar year made after
the close of that year as a distribution occurring in that first distribution
calendar year. In computing a minimum distribution, the Advisory Committee must
use the unisex life expectancy multiples under Treas. Reg. Section 1.72-9. The
Advisory Committee, only upon the Participant's written request,
- 29 -
30
may compute the minimum distribution for a calendar year subsequent to
the first calendar year for which the Plan requires a minimum distribution by
redetermining the applicable life expectancy. However, the Advisory Committee
may not redetermine the joint life and last survivor expectancy of the
Participant and a nonspouse designated Beneficiary in a manner which takes into
account any adjustment to a life expectancy other than the Participant's life
expectancy.
If the Participant's spouse is not his designated Beneficiary, a method
of payment to the Participant (whether by Participant election or by Advisory
Committee direction) may not provide more than incidental benefits to the
Beneficiary. The Plan must satisfy the minimum distribution incidental benefit
("MDIB") requirement in the Treasury regulations issued under Code Section 401
(a)(9) for distributions made on or after the Participant's Required Beginning
Date and before the Participant's death. To satisfy the MDIB requirement, the
Advisory Committee will compute the minimum distribution required by this
Section 6.02(A) by substituting the applicable MDIB divisor for the applicable
life expectancy factor, if the MDIB divisor is a lesser number. Following the
Participant's death, the Advisory Committee will compute the minimum
distribution required by this Section 6.02(A) solely on the basis of the
applicable life expectancy factor and will disregard the MDIB factor. The
Advisory Committee must determine whether benefits to the Beneficiary are
incidental as of the date the Trustee is to commence payment of the retirement
benefits to the Participant, or as of any date the Trustee redetermines the
payment period to the Participant.
The minimum distribution for the first distribution calendar year is
due by the Participant's Required Beginning Date. The minimum distribution for
each subsequent distribution calendar year, including the calendar year in which
the Participant's Required Beginning Date falls, is due by December 31 of that
year. If the Participant receives distribution in the form of a Nontransferable
Annuity Contract, the distribution satisfies this Section 6.02(A) if the
contract complies with the requirements of Code Section 401(a)(9) and the
applicable Treasury regulations.
(B) MINIMUM DISTRIBUTION REQUIREMENTS FOR BENEFICIARIES. The method of
distribution to the Participant's Beneficiary must satisfy Code Section 401(a)
(9) and the applicable Treasury regulations. If the Participant's death occurs
after his Required Beginning Date, the method of payment to the Beneficiary
must provide for completion of payment over a period which does not exceed the
payment period which had commenced for the Participant. If the Participant's
death occurs prior to his Required Beginning Date, the method of payment to the
Beneficiary must provide for completion of payment to the Beneficiary over a
period not exceeding: (i) 5 years after the date of the Participant's death; or
(ii) if the Beneficiary is a designated Beneficiary, the designated
Beneficiary's life expectancy. The Advisory Committee may not direct payment of
the Participant's Nonforfeitable Accrued Benefit over a period described in
clause (ii) unless the Trustee will commence payment to the designated
Beneficiary, no later than the December 31 following the close of the calendar
year in which the Participant's death occurred or, if later, and the designated
Beneficiary is the Participant's surviving spouse, December 31 of the calendar
year in which the Participant
- 30 -
31
would have attained age 70 1/2. If the Trustee will make distribution in
accordance with clause (ii), the minimum distribution for a calendar year equals
the Participant's Nonforfeitable Accrued Benefit as of the latest valuation date
preceding the beginning of the calendar year divided by the designated
Beneficiary's life expectancy. The Advisory Committee must use the unisex life
expectancy multiples under Treas. Reg. ss.1.72-9 for purposes of applying this
paragraph. The Advisory Committee, only upon the written request of the
Participant or of the Participant's surviving spouse, may recalculate the life
expectancy of the Participant's surviving spouse not more frequently than
annually, but may not recalculate the life expectancy of a nonspouse designated
Beneficiary after the trustee commences payment to the designated Beneficiary.
The Advisory Committee will apply this paragraph by treating any amount paid to
the Participant's child, which becomes payable to the Participant's surviving
spouse upon the child's attaining the age of majority, as paid to the
Participant's surviving spouse. Upon the Beneficiary's written request, the
Advisory Committee must direct the Trustee to accelerate payment of all, or any
portion, of the Participant's unpaid Accrued Benefit, as soon as
administratively practicable following the effective date of that request.
6.03 BENEFIT PAYMENT ELECTIONS. Not earlier than 90 days nor later than
30 days before the Participant's annuity starting date, the Plan Administrator
must provide a benefit notice to a Participant who is eligible to make an
election under this Section 6.03. The benefit notice must explain the optional
forms of benefit in the Plan, including the material features and relative
values of those options, and the Participant's right to defer distribution until
he attains the later of Normal Retirement Age or age 62.
If a Participant makes an election prescribed by this Section 6.03, the
Advisory Committee will direct the Trustee to distribute the Participant's
Nonforfeitable Accrued Benefit in accordance with that election. Any election
under this Section 6.03 is subject to the requirements of Section 6.02. The
Participant or Beneficiary must make an election under this Section 6.03 by
filing his election form with the Advisory Committee at any time before the
Trustee otherwise would commence to pay a Participant's Accrued Benefit in
accordance with the requirements of Article VI.
(A) PARTICIPANT ELECTIONS AFTER TERMINATION OF EMPLOYMENT. If the present value
of a Participant's Nonforfeitable Accrued Benefit exceeds $3,500, he may elect
to have the Trustee commence distribution as of any distribution date, but not
earlier than the first distribution date in the first Plan Year beginning after
the Participant's Separation from Service. The Participant may reconsider an
election at any time prior to the annuity starting date and elect to commence
distribution as of any other distribution date, but not earlier than the date
described in the first sentence of this Paragraph (A). A Participant who has
separated from Service may elect distribution as of any distribution date
following his attainment of Normal Retirement Age, irrespective of the
restrictions otherwise applicable under this Section 6.03(A). If the Participant
is partially-vested in his Accrued Benefit, an election under this Paragraph (A)
to distribute prior to the Participant's incurring a Forefeiture Break in
Service (as defined in Section 5.08), must be in the form of a cash-out
- 31 -
32
distribution (as defined in Article V). A Participant may not receive a cash-out
distribution if, prior to the time the Trustee actually makes the cash-out
distribution, the Participant returns to employment with the Employer.
(B) PARTICIPANT ELECTIONS PRIOR TO TERMINATION OF EMPLOYMENT. After a
Participant attains Normal Retirement Age, the Participant, until he retires,
has a continuing election to receive all or any portion of his Accrued Benefit.
A Participant must make an election under this Section 6.03(B) on a form
prescribed by the Advisory Committee at any time during the Plan Year for which
his election is to be effective. In his written election, the Participant must
specify the percentage of dollar amount he wishes the Trustee to distribute to
him. The Participant's election relates solely to the percentage or dollar
amount specified in his election form and his right to elect to receive an
amount, if any, for a particular Plan Year greater than the dollar amount or
percentage specified in his election form terminates on the Accounting Date. The
Trustee must make a distribution to a Participant in accordance with his
election under this Section 6.03(B) within the 90 day period (or as soon as
administratively practicable) after the Participant files his written election
with the Trustee. The Trustee will distribute the balance of the Participant's
Accrued Benefit not distributed pursuant to his election(s) in accordance with
the other distribution provisions of this Plan.
(C) DEATH BENEFIT ELECTIONS. If the present value of the deceased Participant's
Nonforfeitable Accrued Benefit exceeds $3,500, the Participant's Beneficiary may
elect to have the Trustee distribute the Participant's Nonforfeitable Accrued
Benefit in a form and within a period permitted under Section 6.02. The
Beneficiary's election is subject to any restrictions designated in writing by
the Participant and not revoked as of his date of death.
6.04 ANNUITY DISTRIBUTIONS TO PARTICIPANTS. The joint and survivor
annuity requirements of the Code do not apply to this Plan. The Plan does not
provide any annuity distributions to Participants. A transfer agreement
described in Section 14.05 may not permit a plan which is subject to the
provisions of Code Section 417 to transfer assets to this Plan.
6.05 SPECIAL DISTRIBUTION AND PAYMENT REQUIREMENTS. Unless the
Participant elects in writing to have the Trustee apply other distribution
provisions of the Plan, or unless other distribution provisions of the Plan
require earlier distribution of the Participant's Accrued Benefit, the Trustee
must distribute the portion of the Participant's Accrued Benefit attributable to
Employer Securities (the "Eligible Portion") no later than the time prescribed
by this Section 6.05, irrespective of any other provision of the Plan. The
distribution provisions of this Section 6.05 are subject to the consent and form
of distribution requirements of Articles V and VI of the Plan.
(a) If the Participant separates from Service by reason of the
attainment of Normal Retirement Age, death, or disability, the Advisory
Committee will direct the Trustee to commence distribution of the
Eligible Portion not later than one (1) year after the close of the
Plan Year in which that event occurs.
- 32 -
33
(b) If the Participant separates from Service for any reason
other than by reason of the attainment of Normal Retirement Age, death
or disability, the Advisory Committee will direct the Trustee to
commence distribution of the Eligible Portion not later than one year
after the Separation of Service. If the Participant resumes employment
with the Employer on or before the last day of the fifth Plan Year
following the Plan Year of his separation from Service, the
distribution provisions of this paragraph (b) do not apply.
For purposes of this Section 6.05, Employer Securities do not include
any Employer Securities acquired with the proceeds of an Exempt Loan until the
close of the Plan Year in which the borrower repays the Exempt Loan in full.
6.06 DISTRIBUTIONS UNDER DOMESTIC RELATIONS ORDERS. Nothing contained
in this Plan prevents the Trustee, in accordance with the direction of the
Advisory Committee, from complying with the provisions of a qualified domestic
relations order (as defined in Code Section 414(p)). This Plan specifically
permits distribution to an alternate payee under a qualified domestic relations
order at any time, irrespective of whether the Participant has attained his
earliest retirement age (as defined under Code Section 414(p)) under the Plan.
A distribution to an alternate payee prior to the Participant's attainment of
earliest retirement age is available only if: (1) the order specifies
distribution at that time or permits an agreement between the Plan and the
alternate payee to authorize an earlier distribution; and (2) if the present
value of the alternate payee's benefits under the Plan exceeds $3,500.00, and
the order requires, the alternate payee consents to any distribution occurring
prior to the Participant's attainment of earliest retirement age. Nothing in
this Section 6.06 permits a Participant a right to receive distribution at a
time otherwise not permitted under the Plan nor does it permit the alternate
payee to receive a form of payment not permitted under the Plan.
The Plan Administrator must establish reasonable procedures to
determine the qualified status of a domestic relations order. Upon receiving a
domestic relations order, the Plan Administrator promptly will notify the
Participant and any alternate payee named in the order, in writing, of the
receipt of the order and the Plan's procedures for determining the qualified
status of the order. Within a reasonable period of time, after receiving the
domestic relations order, the Plan Administrator must determine the qualified
status of the order and must notify the Participant and each alternate payee, in
writing, of its determination. The Plan Administrator must provide notice under
this paragraph by mailing to the individual's address specified in the domestic
relations order, or in a manner consistent with Department of Labor regulations.
If any portion of the Participant's Nonforfeitable Accrued Benefit is
payable during the period the Plan Administrator is making its determination of
the qualified status of the domestic relations order, the Advisory Committee
must make a separate accounting of the amounts payable. If the Plan
Administrator determines the order is a qualified domestic relations order
within 18 months of the date amounts first are payable following receipt of the
order, the Advisory Committee will direct the Trustee to distribute the payable
amounts
- 33 -
34
in accordance with the order. If the Plan Administrator does not make
its determination of the qualified status of the order within the 18 month
determination period, the Advisory Committee will direct the Trustee to
distribute the payable amounts in the manner the Plan would distribute if the
order did not exist and will apply the order prospectively if the Plan
Administrator later determines the order is a qualified domestic relations
order.
To the extent it is not inconsistent with the provisions of the
qualified domestic relations order, the Advisory Committee may direct the
Trustee to invest any partitioned amount in a segregated subaccount or separate
account and to invest the account in Federally insured, interest-bearing savings
account(s) or time deposit(s) (or a combination of both), or in other fixed
income investments. A segregated subaccount remains a part of the Trust, but it
alone shares in any income it earns, and it alone bears any expense or loss it
incurs. The Trustee will make any payments or distributions required under this
Section 6.06 by separate benefit checks or other separate distribution to the
alternate payee(s).
ARTICLE VII
EMPLOYER ADMINISTRATIVE PROVISIONS
7.01 INFORMATION TO COMMITTEE. The Employer must supply current
information to the Advisory Committee as to the name, date of birth, date of
employment, annual compensation, leaves of absence, Years of Service and date of
termination of employment of each Employee who is, or who will be eligible to
become, a Participant under the Plan, together with any other information which
the Advisory Committee considers necessary. The Employer's records as to the
current information the Employer furnishes to the Advisory Committee are
conclusive as to all persons.
7.02 NO LIABILITY. The Employer assumes no obligation or responsibility
to any of its Employees, Participants or Beneficiaries for any act of, or
failure to act, on the part of its Advisory Committee (unless the Employer is
the Advisory Committee), the Trustee or the Plan Administrator (unless the
Employer is the Plan Administrator).
7.03 INDEMNITY OF COMMITTEE. The Employer indemnifies and saves
harmless the Plan Administrator and the members of the Advisory Committee, and
each of them, from and against any and all loss resulting from liability to
which the Plan Administrator and the Advisory Committee, or the members of the
Advisory Committee, may be subjected by reason of any act or conduct (except
willful misconduct or gross negligence) in their official capacities in the
administration of this Trust or Plan 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 7.03 do not relieve the Plan
Administrator or any Advisory Committee member from any liability he may have
under ERISA for breach of a fiduciary duty. Furthermore, the Plan Administrator
and the Advisory Committee members and the Employer may execute a letter
agreement further delineating the indemnification agreement of this Section
7.03, provided the letter agreement must be consistent with and must not violate
ERISA. The indemnification provisions of this
- 34 -
35
Section 7.03 extend to the Trustee solely to the extent provided by a
letter agreement executed by the Trustee and the Employer.
7.04 EMPLOYER DIRECTION OF INVESTMENT. The Employer has the right to
direct the Trustee with respect to the investment and re- investment of assets
comprising the Trust Fund only if the Trustee consents in writing to permit such
direction. If the Trustee consents to Employer direction of investment, the
Trustee and the Employer must execute a letter agreement as a part of this Plan
containing such conditions, limitations and other provisions they deem
appropriate before the Trustee will follow any Employer direction as respects
the investment or re-investment of any part of the Trust Fund.
7.05 AMENDMENT TO VESTING SCHEDULE. Though the Employer reserves the
right to amend the vesting schedule at any time, the Advisory Committee will not
apply the amended vesting schedule to reduce the Nonforfeitable percentage of
any Participant's Accrued Benefit derived from Employer contributions
(determined as of the later of the date the Employer adopts the amendment, or
the date the amendment becomes effective) to a percentage less than the
Nonforfeitable percentage computed under the Plan without regard to the
amendment.
If the Employer makes a permissible amendment to the vesting schedule,
each Participant having at least three Years of Service with the Employer may
elect to have the percentage of his Nonforfeitable Accrued Benefit computed
under the Plan without regard to the amendment. The Participant must file his
election with the Plan Administrator within 60 days of the latest of (a) the
Employer's adoption of the amendment; (b) the effective date of the amendment;
or (c) his receipt of a copy of the amendment. The Plan Administrator, as soon
as practicable, must forward a true copy of any amendment to the vesting
schedule to each affected Participant, together with an explanation of the
effect of the amendment, the appropriate form upon which the Participant may
make an election to remain under the vesting schedule provided under the Plan
prior to the amendment and notice of the time within which the Participant must
make an election to remain under the prior vesting schedule. For purposes of
this Section 7.05, an amendment to the vesting schedule includes any Plan
amendment which directly or indirectly affects the computation of the
Nonforfeitable percentage of an Employee's rights to his Employer derived
Accrued Benefit.
- 35 -
36
ARTICLE VIII
PARTICIPANT ADMINISTRATIVE PROVISIONS
8.01 BENEFICIARY DESIGNATION. Any Participant may from time to time
designate, in writing, any person or persons, contingently or successively, to
whom the Trustee will pay his Accrued Benefit on event of his death and the
Participant may designate the form and method of payment. The Advisory Committee
will prescribe the form for the written designation of Beneficiary and, upon the
Participant's filing the form with the Advisory Committee, the form effectively
revokes all designations filed prior to that date by the same Participant.
A married Participant's Beneficiary designation is not valid unless the
Participant's spouse consents, in writing, to the Beneficiary designation. The
spouse's consent must acknowledge the effect of that consent and a notary public
or the Plan Administrator (or his representative) must witness that consent. The
spousal consent requirements of this paragraph do not apply if: (1) the
Participant and his spouse are not married throughout the one year period ending
on the date of the Participant's death; (2) the Participant's spouse is the
Participant's sole primary beneficiary; (3) the Plan Administrator is not able
to locate the Participant's spouse; (4) the Participant is legally separated or
has been abandoned (within the meaning of state law) and the Participant has a
court order to that effect; or (5) other circumstances exist under which the
Secretary of the Treasury will excuse the consent requirement. If the
Participant's spouse is legally incompetent to give consent, the spouse's legal
guardian (even if the guardian is the Participant) may give consent.
8.02 NO BENEFICIARY DESIGNATION. If a Participant fails to name a
Beneficiary in accordance with Section 8.01, or if the Beneficiary named by a
Participant predeceases him or dies before complete distribution of the
Participant's Accrued Benefit as prescribed by the Participant's Beneficiary
form, then the Trustee will pay the Participant's Accrued Benefit in accordance
with Section 6.02 in the following order of priority to:
(a) The Participant's surviving spouse;
(b) The Participant's surviving children, including adopted
children, in equal shares;
(c) The Participant's surviving parents, in equal shares; or
(d) The legal representative of the estate of the last to die
of the Participant and his Beneficiary.
The Advisory Committee will direct the Trustee as to the method and to
whom the Trustee will make payment under this Section 8.02.
- 36 -
37
8.03 PERSONAL DATA TO COMMITTEE. Each Participant and each Beneficiary
of a deceased Participant must furnish to the Advisory Committee such evidence,
data or information as the Advisory 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 Advisory Committee, provided the Advisory
Committee advises each Participant of the effect of his failure to comply with
its request.
8.04 ADDRESS FOR NOTIFICATION. Each Participant and each Beneficiary of
a deceased Participant must file with the Advisory Committee from time to time,
in writing, his post office address and any change of post office address. Any
communication, statement or notice addressed to a Participant, or Beneficiary,
at his last post office address filed with the Advisory Committee, or as shown
on the records of the Employer, binds the Participant, or Beneficiary, for all
purposes of this Plan.
8.05 ASSIGNMENT OR ALIENATION. Subject to Code Section 414(p)
relating to qualified domestic relations orders, neither a Participant nor a
Beneficiary may anticipate, assign or alienate (either at law or in equity) any
benefit provided under the Plan, and the Trustee will not recognize any such
anticipation, assignment or alienation. Furthermore, a benefit under the Plan
is not subject to attachment, garnishment, levy, execution or other legal or
equitable process.
8.06 NOTICE OF CHANGE IN TERMS. The Plan Administrator, within the time
prescribed by ERISA and the applicable regulations, must furnish all
Participants and Beneficiaries a summary description of any material amendment
to the Plan or notice of discontinuance of the Plan and all other information
required by ERISA to be furnished without charge.
8.07 LITIGATION AGAINST THE TRUST. A court of competent jurisdiction
may authorize any appropriate equitable relief to redress violations of ERISA or
to enforce any provisions of ERISA or the terms of the Plan. A fiduciary may
receive reimbursement of expenses properly and actually incurred in the
performance of his duties with the Plan.
8.08 INFORMATION AVAILABLE. Any Participant in the Plan or any
Beneficiary may examine copies of the Plan description, latest annual report,
this Plan and Trust, contract or any other instrument under which the Plan was
established or is operated. The Plan Administrator will maintain all of the
items listed in this Section 8.08 in his office, or in such other place or
places as he may designate from time to time in order to comply with the
regulations issued under ERISA, for examination during reasonable business
hours. Upon the written request of a Participant or Beneficiary the Plan
Administrator will furnish him with a copy of any item listed in this Section
8.08. The Plan Administrator may make a reasonable charge to the requesting
person for the copy so furnished.
- 37 -
38
8.09 APPEAL PROCEDURE FOR DENIAL OF BENEFITS. The Plan Administrator
will provide adequate notice in writing to any Participant or to any Beneficiary
("Claimant") whose claim for benefits under the Plan the Advisory Committee has
denied. The Plan Administrator's notice to the Claimant must set forth:
(a) The specific reason for the denial;
(b) Specific references to pertinent Plan provisions on which
the Advisory 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; and
(d) That any appeal the Claimant wishes to make of the adverse
determination must be in writing to the Advisory Committee within 75
days after receipt of the Plan Administrator's notice of denial of
benefits. The Plan Administrator's notice must further advise the
Claimant that his failure to appeal the action to the Advisory
Committee in writing within the 75-day period will render the Advisory
Committee's determination final, binding and conclusive.
If the Claimant should appeal to the Advisory 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
Claimant, or his duly authorized representative, may review pertinent Plan
documents. The Advisory Committee will 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 Advisory Committee must advise the
Claimant of its decision within 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 60-day limit unfeasible, but in no event may
the Advisory Committee render a decision respecting a denial for a claim for
benefits later than 120 days after its receipt of a request for review.
The Plan Administrator's notice of denial of benefits must identify the
name of each member of the Advisory Committee and the name and address of the
Advisory Committee member to whom the Claimant may forward his appeal.
8.10 PARTICIPANT DIRECTION OF INVESTMENT. Except as provided in this
Section 8.10, a Participant does not have the right to direct the Trustee with
respect to the investment or reinvestment of the assets comprising the
Participant's individual Account. Each Qualified Participant may direct the
Trustee as to the investment of 25% of the value of the Participant's Accrued
Benefit attributable to Employer Securities (the "Eligible Accrued Benefit")
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 8.10
- 38 -
39
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.
A Qualified Participant may choose one of the following investment
options:
(a) The distribution of the portion of his Eligible Accrued
Benefit covered by the election. The Trustee will make the distribution
within 90 days after the last day of the period during which the
Qualified Participant may make the election. The provisions of this
Plan applicable to a distribution of Employer Securities, including the
put option requirements of Article XI, apply to this investment option.
(b) The direct transfer of the portion of his Eligible Accrued
Benefit covered by the election to another qualified plan of the
Employer which accepts such transfers, but only if the transferee plan
permits employee-directed investment and does not invest in Employer
Securities to a substantial degree. The Trustee will make the direct
transfer no later than 90 days after the last day of the period during
which the Qualified Participant may make the election.
For purposes of this Section 8.10, the following definitions apply:
(i) "Qualified Participant" means a Participant who has
attained age 55 and who has completed at least ten 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 six Plan Year
period beginning with the Plan Year in which the Participant first
becomes a Qualified Participant.
8.11 PROHIBITED ALLOCATIONS. In the event the Trustee acquires Employer
Securities in a sale to which Code Section 1042 or Code Section 2057 applies,
the following provisions shall be applicable. No portion of the assets of the
Trust Fund attributable to (or allocable in lieu of) Employer Securities so
acquired may accrue (or be allocated directly or indirectly under any Plan of
the Employer meeting the requirements of Code Section 401(a)) -
(a) During the non-allocation period, for the benefit of -
(i) Any taxpayer who makes an election under Code
Section 1042(a) with respect to the Employer Securities or any
decedent if the executor of the estate of such decedent makes
a qualified sale to which Code Section 2057 applies,
- 39 -
40
(ii) Any individual who is related to the taxpayer or
the decedent (within the meaning of Code Section 267(b)), or
(b) For the benefit of any other person who owns (after
application of Code Section 318(a), applied without regard to the
exception of Code Section 318(a)(2)(B)(i)) more than twenty-five
percent (25%) of -
(i) Any class of outstanding stock of the Employer or
of any corporation which is a member of the same controlled
group of corporations (within the meaning of Code
Section 409(l)(4)) of the Employer, or
(ii) The total value of any class of outstanding
stock of any such corporation.
For purposes of this Section 8.11, the term "non-allocation period" shall have
such meaning as set forth in Code Section 409(n)(3)(C). Code Section 409(n)(3)
(B) shall be applied to determine those persons who are twenty-five percent
(25%) shareholders.
ARTICLE IX
ADVISORY COMMITTEE-DUTIES WITH RESPECT TO PARTICIPANTS'
ACCOUNTS
9.01 MEMBERS' COMPENSATION EXPENSES. The Employer must appoint an
Advisory Committee to administer the Plan, the members of which may or may not
be Participants in the Plan, or which may be the Plan Administrator acting
alone. The members of the Advisory Committee will serve without compensation for
services as such, but the Employer will pay all expenses of the Advisory
Committee, including the expense for any bond required under ERISA.
9.02 TERM. Each member of the Advisory Committee serves until the
appointment of his successor.
9.03 POWERS. In case of a vacancy in the membership of the Advisory
Committee, the remaining members of the Advisory Committee may exercise any and
all of the powers, authority, duties and discretion conferred upon the Advisory
Committee pending the filling of the vacancy.
9.04 GENERAL. The Advisory Committee has the following powers and
duties:
(a) To select a Secretary, who need not be a member of
the Advisory Committee;
- 40 -
41
(b) To determine the rights of eligibility of an Employee to
participate in the Plan, the value of a Participant's Accrued Benefit
and the Nonforfeitable percentage of each Participant's Accrued
Benefit;
(c) To adopt rules of procedure and regulations necessary for
the proper and efficient administration of the Plan provided the rules
are not inconsistent with the terms of this Agreement;
(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;
(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 agents whom it may deem advisable
to assist it with the performance of its duties;
(i) To engage the services of an Investment Manager or
Managers (as defined in ERISA Section 3(38)), each of whom will 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;
(j) To establish a nondiscriminatory policy which the Trustee
must observe in making loans, if any, to Participants; and
(k) To establish and maintain a funding standard account and
to make credits and charges to the account to the extent required by
and in accordance with the provisions of the Code.
The Advisory Committee must exercise all of its powers, duties and
discretion under the Plan in a uniform and nondiscriminatory manner.
LOAN POLICY. A loan policy described in paragraph (j) must be a written
document and must include: (1) the identity of the person or positions
authorized to administer the participant loan program; (2) a procedure for
applying for the loan; (3) the criteria for approving or denying a loan; (4) the
limitations, if any, on the types and amounts of loans available; (5) the
procedure for determining a reasonable rate of interest; (6) the types of
collateral which may secure the loan; and (7) the events constituting default
and the steps the Plan will take to preserve plan assets in the event of
default.
- 41 -
42
9.05 FUNDING POLICY. The Advisory Committee will review, not less often
than annually, all pertinent Employee information and Plan data in order to
establish the funding policy of the Plan and to determine the appropriate
methods of carrying out the Plan's objectives. The Advisory Committee must
communicate periodically, as it deems appropriate, to the Trustee and to any
Plan Investment Manager the Plan's short-term and long-term financial needs so
investment policy can be coordinated with Plan financial requirements.
9.06 MANNER OF ACTION. The decision of a majority of the
members appointed and qualified controls.
9.07 AUTHORIZED REPRESENTATIVE. The Advisory 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 Advisory Committee must evidence this authority by an
instrument signed by all members and filed with the Trustee.
9.08 INTERESTED MEMBER. No member of the Advisory Committee may decide
or determine any matter concerning the distribution, nature or method of
settlement of his own benefits under the Plan, except in exercising an election
available to that member in his capacity as a Participant, unless the Plan
Administrator is acting alone in the capacity of the Advisory Committee.
9.09 INDIVIDUAL ACCOUNTS. The Advisory Committee will maintain, or
direct the Trustee to maintain, a separate Account, or multiple separate
Accounts, in the name of each Participant to reflect the Participant's Accrued
Benefit under the Plan. The Advisory Committee must maintain one Account
designated as the Employer Securities Account to reflect a Participant's
interest in Employer Securities held by the Trust and another Account designated
as the General Investments Account to reflect the Participant's interest in the
Trust Fund attributable to assets other than Employer Securities. If a
Participant re-enters the Plan subsequent to his having a Forfeiture Break in
Service (as defined in Section 5.08), the Advisory Committee, or the Trustee,
must maintain a separate Account for the Participant's pre- Forfeiture Break in
Service Accrued Benefit and a separate Account for his post-Forfeiture Break in
Service Accrued Benefit unless the Participant's entire Accrued Benefit under
the Plan is 100% Nonforfeitable.
The Advisory Committee will make its allocations, or request the
Trustee to make its allocations, to the Accounts of the Participants in
accordance with the provisions of Section 9.11. The Advisory Committee may
direct the Trustee to maintain a temporary segregated investment Account in the
name of a Participant to prevent a distortion of income, gain or loss
allocations under Section 9.11. The Advisory Committee shall maintain records of
its activities.
- 42 -
43
9.10 VALUE OF PARTICIPANT'S ACCRUED BENEFIT. The value of each
Participant's Accrued Benefit consists of that proportion of the net worth (at
fair market value) of the Employer's Trust Fund which the net credit balance in
his Account bears to the total net credit balance in the Accounts of all
Participants. For purposes of a distribution under the Plan, the value of a
Participant's Accrued Benefit is its value as of the valuation date immediately
preceding the date of the distribution.
9.11 ALLOCATIONS TO PARTICIPANTS' ACCOUNTS. A "valuation date" under
this Plan is each Accounting Date and each interim valuation date determined
under Section 10.14. As of each valuation date the Advisory Committee must
adjust General Investment Accounts to reflect net income, gain or loss since the
last valuation date. The valuation period is the period beginning the day after
the last valuation date and ending on the current valuation date.
(A) Employer Securities Account. As of the Accounting DAte of each Plan
Year, the Advisory Committee first will reduce Employer Securities Accounts for
any forfeitures arising under Section 5.09 and then will credit the Employer
Securities Account maintained for each Participant with the Participant's
allocable share of Employer Securities (including fractional shares) purchased
and paid for by the Trust or contributed in kind to the Trust, with any
forfeitures of Employer Securities and with any stock dividends on Employer
Securities allocated to his Employer Securities Account. The Advisory Committee
will allocate Employer Securities acquired with an Exempt Loan under Section
10.03(C) in accordance with that Section. Except as otherwise specifically
provided in Section 10.03(C), the Advisory Committee will base allocations to
the Participants' Accounts on dollar values expressed as shares of Employer
Securities or on the basis of actual shares where there is a single class of
Employer Securities. In making a forfeiture reduction under this Section 9.11,
the Advisory Committee, to the extent possible, first must forfeit from a
Participant's General Investments Account before making a forfeiture from his
Employer Securities Account.
(B) GENERAL INVESTMENTS ACCOUNT.
TRUST FUND ACCOUNTS. The allocation provisions of this paragraph apply
to all Participant General Investment Accounts other than segregated investment
Accounts. The Advisory Committee first will adjust the Participant General
Investment Accounts, as those Accounts stood at the beginning of the current
valuation period, by reducing the Accounts for any forfeitures arising under
Section 5.09 or under Section 9.14, for amounts charged during the valuation
period to the Accounts in accordance with Section 9.13 (relating to
distributions) and for the amount of any General Investment Account which the
Trustee has fully distributed since the immediately preceding valuation date.
The Advisory Committee then, subject to the restoration allocation requirements
of Section 5.04 or of Section 9.14, will allocate the net income, gain or loss
pro rata to the adjusted Participant General Investment Accounts. The allocable
net income, gain or loss is the net income (or net loss), including the increase
or decrease in the fair market value of assets, since the last valuation
- 43 -
44
date. In making its allocations under this Section 9.11(B), the
Advisory Committee will exclude Employer Securities allocated to Employer
Securities Accounts, stock dividends on allocated Employer Securities and
interest paid by the Trust on an Exempt Loan. The Advisory Committee will
include as income (available for payment on a Exempt Loan) any cash dividends on
Employer Securities except cash dividends which the Advisory Committee has
directed the Trustee to distribute in accordance with Section 10.08.
SEGREGATED INVESTMENT ACCOUNTS. A segregated investment Account
receives all income it earns and bears all expense or loss it incurs. As of the
valuation date, the Advisory Committee must reduce a segregated Account for any
forfeiture arising under Section 5.09 after the Advisory Committee has made all
other allocations, changes or adjustments to the Account for the Plan Year.
ADDITIONAL RULES. An Excess Amount or suspense account described in
Part 2 of Article III does not share in the allocation of net income, gain or
loss described in this Section 9.11(B). This Section 9.11(B) applies solely to
the allocation of net income, gain or loss of the Trust. The Advisory Committee
will allocate the Employer contributions and Participant forfeitures, if any, in
accordance with Article III.
9.12 INDIVIDUAL STATEMENT. As soon as practicable after the Accounting
Date of each Plan Year, but within the time prescribed by ERISA and the
regulations under ERISA, the Plan Administrator 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 ERISA requires
be furnished the Participant or Beneficiary. No Participant, except a member of
the Advisory Committee, has the right to inspect the records reflecting the
Account of any other Participant.
9.13 ACCOUNT CHARGED. The Advisory Committee will charge all
distributions made to a Participant or to his Beneficiary from his Account
against the Account of the Participant when made.
9.14 UNCLAIMED ACCOUNT PROCEDURE. The Plan does not require either the
Trustee or the Advisory Committee to search for, or ascertain the whereabouts
of, any Participant or Beneficiary. At the time the Participant's or
Beneficiary's benefit becomes distributable under Article VI, the Advisory
Committee, by certified or registered mail addressed to his last known address
of record with the Advisory Committee or the Employer, must notify any
Participant, or Beneficiary, that he is entitled to a distribution under this
Plan. The notice must quote the provisions of this Section 9.14 and otherwise
must comply with the notice requirements of Article VI. If the Participant, or
Beneficiary, fails to claim his distributive share or make his whereabouts known
in writing to the Advisory Committee within six (6) months from the date of
mailing of the notice, the Advisory Committee will treat the Participant's or
Beneficiary's unclaimed payable Accrued Benefit as forfeited and will reallocate
the unclaimed payable Accrued Benefit in accordance with Section 3.05. Where the
benefit is distributable to the Participant, the forfeiture under this paragraph
- 44 -
45
occurs as of the last day of the notice period, if the Participant's
Nonforfeitable Accrued Benefit does not exceed $3,500.00, or as of the first day
the benefit is distributable without the Participant's consent, if the present
value of the Participant's Nonforfeitable Accrued Benefit exceeds $3,500.00.
Where the benefit is distributable to a Beneficiary, the forfeiture occurs on
the date the notice period ends except, if the Beneficiary is the Participant's
spouse and the Nonforfeitable Accrued Benefit payable to the spouse exceeds
$3,500.00, the forfeiture occurs as of the first day the benefit is
distributable without the spouse's consent. Pending forfeiture, the Advisory
Committee, following the expiration of the notice period, may direct the Trustee
to segregate the Nonforfeitable Accrued Benefit in a segregated Account and to
invest that segregated Account in Federally insured interest bearing savings
accounts or time deposits (or in a combination of both), or in other fixed
income investments.
If a Participant or Beneficiary who has incurred a forfeiture
of his Accrued Benefit under the provisions of the first paragraph
of this Section 9.14 makes a claim, at any time, for his forfeited Accrued
Benefit, the Advisory Committee must restore the Participant's or Beneficiary's
forfeited Accrued Benefit to the same dollar amount as the dollar amount of the
Accrued Benefit forfeited, unadjusted for any gains or losses occurring
subsequent to the date of the forfeiture. The Advisory Committee will make the
restoration during the Plan Year in which the Participant or Beneficiary makes
the claim, first from the amount, if any, of Participant forfeitures the
Advisory Committee otherwise would allocate for the Plan Year, then from the
amount, if any, of the Trust Fund net income or gain for the Plan Year and then
from the amount, or additional amount, the Employer contributes to enable the
Advisory Committee to make the required restoration. The Advisory Committee will
direct the Trustee to distribute the Participant's or Beneficiary's restored
Accrued Benefit to him not later than 60 days after the close of the Plan Year
in which the Advisory Committee restores the forfeited Accrued Benefit. The
forfeiture provisions of this Section 9.14 apply solely to the Participant's or
to the Beneficiary's Accrued Benefit derived from Employer contributions.
ARTICLE X
TRUSTEE, POWERS AND DUTIES
10.01 ACCEPTANCE. The Trustee accepts the Trust created under the Plan
and agrees to perform the obligations imposed. The Trustee must provide bond for
the faithful performance of his duties under the Trust to the extent required by
ERISA.
10.02 RECEIPT OF CONTRIBUTIONS. The Trustee is accountable to the
Employer for the funds contributed to him by the Employer, but does not have any
duty to see that the contributions received comply with the provisions of the
Plan. The Trustee is not obliged to collect any contributions from the Employer,
nor is obliged to see that funds deposited with him are deposited according to
the provisions of the Plan.
10.03 FULL INVESTMENT POWERS.
- 45 -
46
(A) TRUSTEE POWERS. The Trustee has full discretion and authority with regard to
the investment of the Trust Fund, except with respect to a Plan asset under the
control or direction of a properly appointed Investment Manager or with respect
to a Plan asset subject to Employer, Participant or Advisory Committee direction
of investment. The Trustee must coordinate its investment policy with Plan
financial needs as communicated to it by the Advisory Committee. The Trustee is
authorized and empowered, but not by way of limitation, with the following
powers, rights and duties:
(a) To invest the Trust Fund primarily in Employer Securities
("primarily" meaning the authority to hold and to acquire not more than
100% of the Trust Fund in Employer Securities) and to invest any part
or all of the Trust Fund in any common or preferred stocks, open-end or
closed-end mutual funds, put and call options traded on a national
exchange, United States retirement plan bonds, corporate bonds,
debentures, convertible debentures, commercial paper, U.S. Treasury
bills, U.S. Treasury notes and other direct or indirect obligations of
the United States Government or its agencies, improved or unimproved
real estate situated in the United States, limited partnerships,
insurance contracts of any type, mortgages, notes or other property of
any kind, real or personal, and to buy or sell options on common stock
on a nationally recognized exchange with or without holding the
underlying common stock, and to make any other investments the Trustee
deems appropriate, as a prudent man would do under like circumstances
with due regard for the purposes of this Plan. Any investment made or
retained by the Trustee in good faith is proper but must be of a kind
(with the exception of Employer Securities) constituting a
diversification considered by law suitable for trust investments;
(b) To retain in cash so much of the Trust Fund as he may deem
advisable to satisfy liquidity needs of the Plan and to deposit any
cash held in the Trust Fund in a bank account at reasonable interest.
If the Trustee is a bank or similar financial institution supervised by
the United States or by a State, this paragraph (b) includes specific
authority to invest in any type of deposit of the Trustee (or of a bank
related to the Trustee within the meaning of Code Section 414(b) at a
reasonable rate of interest or in a common trust fund (the provisions
of which govern the investment of such assets and which the Plan
incorporates by this reference) as described in Code Section 584 which
the Trustee (or its affiliate, as defined in Code Section 1504)
maintains exclusively for the collective investment of money
contributed by the bank (or the affiliate) in its capacity as trustee
and which conforms to the rules of the Comptroller of the Currency;
(c) To manage, sell, contract to sell, grant options to
purchase, convey, exchange, transfer, abandon, improve, repair, insure,
lease for any term even though commencing in the future or extending
beyond the term of the Trust, and otherwise deal with all property,
real or personal, in such manner, for such considerations and on such
terms and conditions as the Trustee decides;
- 46 -
47
(d) To credit and distribute the Trust as directed by the
Advisory Committee. The Trustee is not obliged to inquire as to whether
any payee or distributee is entitled to any payment or whether the
distribution is proper or within the terms of the Plan, or as to the
manner of making any payment or distribution. The Trustee is
accountable only to the Advisory Committee for any payment or
distribution made by him in good faith on the order or direction of the
Advisory Committee;
(e) To borrow money, to assume indebtedness, extend mortgages
and encumber by mortgage or pledge;
(f) To compromise, contest, arbitrate or abandon claims and
demands, in his discretion;
(g) To vote, subject to Section 10.16, all voting stock held
by the Trust Fund;
(h) To lease for oil, gas and other mineral purposes and to
create mineral severances by grant or reservation; to pool or unitize
interests in oil, gas and other minerals; and to enter into operating
agreements and to execute division and transfer orders;
(i) To hold any securities or other property in the name of
the Trustee or his nominee, with depositories or agent depositories or
in another form as he may deem best, with or without disclosing the
trust relationship;
(j) To perform any and all other acts in his judgment
necessary or appropriate for the proper and advantageous management,
investment and distribution of the Trust;
(k) To retain any funds or property subject to any dispute
without liability for the payment of interest, and to decline to make
payment or delivery of the funds or property until final adjudication
is made by a court of competent jurisdiction;
(l) To file all tax returns required of the Trustee;
(m) To furnish to the Employer, the Plan Administrator and the
Advisory Committee an annual statement of account showing the condition
of the Trust Fund and all investments, receipts, disbursements and
other transactions effected by the Trustee during the Plan Year covered
by the statement and also stating the assets of the Trust held at the
end of the Plan Year, which accounts are conclusive on all persons,
including the Employer, the Plan Administrator and the Advisory
Committee, except as to any act or transaction concerning which the
Employer, the Plan Administrator or the Advisory Committee files with
the Trustee written
- 47 -
48
exceptions or objections within 90 days after the receipt of
the accounts or for which ERISA authorizes a longer period within which
to object; and
(n) To begin, maintain or defend any litigation necessary in
connection with the administration of the Plan, except that the Trustee
is not obligated or required to do so unless indemnified to his
satisfaction.
The Trustee will allocate any insurance proceeds received from the
purchase of insurance contracts under paragraph (a) to Participants' Accounts in
the same manner as the allocation under Section 3.04 of the Employer
contribution for the Plan Year in which the death of the insured Participant
occurs.
(B) PARTICIPANT LOANS. This Section 10.03(B) specifically authorizes the Trustee
to make loans on a nondiscriminatory basis to a Participant in accordance with
the loan policy established by the Advisory Committee, provided: (1) the loan
policy satisfies the requirements of Section 9.04; (2) any loan is adequately
secured and bears a reasonable rate of interest; (3) the loan provides for
repayment within a specified time; (4) the default provisions of the note
prohibit offset of the Participant's Nonforfeitable Accrued Benefit prior to the
time the Trustee otherwise would distribute the Participant's Nonforfeitable
Accrued Benefit; (5) the amount of the loan does not exceed (at the time the
Plan extends the loan) the present value of the Participant's Nonforfeitable
Accrued Benefit; and (6) the loan otherwise conforms to the exemption provided
by Code Section 4975(d)(1).
(C) EXEMPT LOAN. This Section 10.03(C) specifically authorizes the Trustee to
enter into an Exempt Loan transaction. The following terms and conditions will
apply to any Exempt Loan:
(1) The Trustee will use the proceeds of the loan within a
reasonable time after receipt only for any or all of the following
purposes: (i) to acquire Employer Securities, (ii) to repay such loan,
or (iii) to repay a prior Exempt Loan. Except as provided under Article
XI, no Employer Security acquired with the proceeds of an Exempt Loan
may be subject to a put, call or other option, or buy-sell or similar
arrangement while held by and when distributed from this Plan, whether
or not this Plan is then an employee stock ownership plan.
(2) The interest rate of the loan may not be more than a
reasonable rate of interest.
(3) Any collateral the Trustee pledges to the creditor must
consist only of the assets purchased by the borrowed funds and those
assets the Trust used as collateral on the prior Exempt Loan repaid
with the proceeds of the current Exempt Loan.
(4) The creditor may have no recourse against the Trust under
the loan except with respect to such collateral given for the loan,
contributions (other than
- 48 -
49
contributions of Employer Securities) that the Employer makes
to the Trust to meet its obligations under the loan, and earnings
attributable to such collateral and the investment of such
contributions. The payment made with respect to an Exempt Loan by the
Plan during a Plan Year must not exceed an amount equal to the sum of
such contributions and earnings received during or prior to the year
less such payments in prior years. The Advisory Committee and the
Trustee must account separately for such contributions and earnings in
the books of account of the Plan until the Trust repays the loan.
(5) In the event of default upon the loan, the value of Plan
assets transferred in satisfaction of the loan must not exceed the
amount of the default, and if the lender is a Disqualified Person, the
loan must provide for transfer of Plan assets upon default only upon
and to the extent of the failure of the Plan to meet the payment
schedule of the loan.
(6) The Trustee must add and maintain all assets acquired with
the proceeds of an Exempt Loan in a suspense Account. In withdrawing
assets from the suspense Account, the Trustee will apply the provisions
of Treas. Reg. Sections 54.4975- 7(b)(8) and (15) as if all securities
in the suspense Account were encumbered. Upon the payment of any
portion of the loan, the Trustee will effect the release of assets in
the suspense Account from encumbrances. For each Plan Year during
the duration of the loan, the number of Employer Securities released
must equal the number of encumbered Employer Securities held
immediately before release for the current Plan Year multiplied by a
fraction. The numerator of the fraction is the amount of principal and
interest paid for the Plan Year. The denominator of the fraction is
the sum of the numerator plus the principal and interest to be paid
for all future Plan Years. Notwithstanding the three (3) preceding
sentences, the number of Employer Securities released for each Plan
Year may be determined with reference to principal payments only,
provided that (i) the loan must provide for annual payments of
principal and interest at a cumulative rate that is not less rapid at
any time than level annual payments of such amounts for ten (10)
years, (ii) the interest included in any payment shall be disregarded
only to the extent that it would be determined to be interest under
standard loan amortization tables, and (iii) this method of
determining the number of Employer Securities released shall not be
applicable from the time that, by reason of a renewal, extension, or
refinancing, the sum of the expired duration of the Exempt Loan, the
renewal period, the extension period, and the duration of the new
Exempt Loan exceeds ten (10) years. The number of future Plan Years
under the Loan must be definitely ascertainable and must be determined
without taking into account any possible extension or renewal periods.
If the interest rate under the loan is variable, the interest to be
paid in future Plan Years must be computed by using the interest rate
applicable as of the end of the Plan Year. If collateral includes more
than one class of Employer Securities, the number of Employer
Securities of each class to be released for a Plan Year must be
determined by applying the same fraction to each such class. The
Advisory Committee will allocate assets withdrawn from the
- 49 -
50
suspense Account to the Accounts of Participants who otherwise
share in the allocation of the Employer's contribution for the Plan
Year for which the Trustee has paid the portion of the loan resulting
in the release of the assets. The Advisory Committee consistently will
make this allocation as of each Accounting Date on the basis of
non-monetary units, taking into account the relative Compensation of
all such Participants for such Plan Year.
(7) The loan must be for a specific term and may not be
payable at the demand of any person except in the case of default.
(8) Notwithstanding the fact this Plan ceases to be an
employee stock ownership plan, Employer Securities acquired with the
proceeds of an Exempt Loan will continue after the Trustee repays the
loan to be subject to the provisions of Treas. Reg.
Sections 54.4975-7(b)(4), (10), (11) and (12) relating to put, call or
other options and to buy-sell or similar arrangements, except to the
extent these regulations are inconsistent with Code ss.409(h).
10.04 RECORDS AND STATEMENTS. The records of the Trustee pertaining to
the Plan must be open to the inspection of the Plan Administrator, Advisory
Committee and the Employer at all reasonable times and may be audited from time
to time by any person or persons as the Employer, Plan Administrator or Advisory
Committee may specify in writing. The Trustee must furnish the Plan
Administrator or Advisory Committee with whatever information relating to the
Trust Fund the Plan Administrator or Advisory Committee considers necessary.
10.05 FEES AND EXPENSES FROM FUND. The Trustee will receive reasonable
annual compensation as may be agreed upon from time to time between the Employer
and the Trustee. The Trustee will pay all fees and expenses reasonably incurred
by him in his administration of the Plan from the Trust Fund, unless the
Employer pays the fees and expenses. The Advisory Committee will not treat any
fee or expense paid, directly or indirectly, by the Employer as an Employer
contribution, provided the fee or expense relates to the ordinary and necessary
administration of the Fund. No person who is receiving full pay from the
Employer may receive compensation for services as Trustee.
10.06 PARTIES TO LITIGATION. Except as otherwise provided by ERISA,
only the Employer, the Plan Administrator, the Advisory Committee, and the
Trustee are necessary parties to any court proceeding involving the Trustee or
the Trust Fund. No Participant, or Beneficiary, is entitled to any notice of
process unless required by ERISA. Any final judgment entered in any proceeding
will be conclusive upon the Employer, the Plan Administrator, the Advisory
Committee, the Trustee, Participants and Beneficiaries.
10.07 PROFESSIONAL AGENTS. The Trustee may employ and pay from the
Trust Fund reasonable compensation to agents, attorneys, accountants and other
persons to advise the Trustee as in his opinion may be necessary. The Trustee
may delegate to any
- 50 -
51
agent, attorney, accountant or other person selected by him any non-Trustee
power or duty vested in him by the Plan, and the Trustee may
act or refrain from acting on the advice or opinion of any agent, attorney,
accountant or other person so selected.
10.08 DISTRIBUTION OF TRUST FUND. The Trustee will make all
distributions of benefits under the Plan in Employer Securities valued at fair
market value at the time of distribution. The Trustee will pay in cash any
fractional security share to which a Participant or his Beneficiary is entitled.
In the event the Trustee is to make a distribution in shares of Employer
Securities, the Trustee may apply any balance in a Participant's General
Investments Account to provide whole shares of Employer Securities for
distribution at the then fair market value.
Notwithstanding the preceding paragraph, (i) if the Employer's charter
or bylaws restrict ownership of substantially all shares of Employer Securities
to Employees and the Trust, as described in Code Section 409(h)(2), or (ii) the
Employer is prohibited by law from redeeming or purchasing its own securities,
as described in Code Section 409(h)(3), the Trustee will make the distribution
of a Participant's Accrued Benefit entirely in cash.
Notwithstanding the preceding provisions of this Section 10.08, the
Trustee, if directed in writing by the Advisory Committee, will pay, in cash,
any cash dividends on Employer Securities allocated, or allocable to
Participants' Employer Securities Accounts, irrespective of whether a
Participant is fully vested in his Employer Securities Account. The Advisory
Committee's direction must state whether the Trustee is to pay the cash dividend
distributions currently, or within the 90-day period following the close of the
Plan Year in which the Employer pays the dividends to the Trust. The Advisory
Committee may request the Employer to pay dividends on Employer Securities
directly to Participants.
In addition to the foregoing, the Trustee, if directed in writing by
the Advisory Committee, shall use any cash dividends paid to the Trustee by the
Employer with respect to the Employer Securities held by the Trust Fund to make
payments on a loan described in Code Section 404(a)(9).
10.09 DISTRIBUTION DIRECTIONS. If no one claims a payment or
distribution made from the Trust, the Trustee must promptly notify the Advisory
Committee and then dispose of the payment in accordance with the subsequent
direction of the Advisory Committee.
10.10 THIRD PARTY. No person dealing with the Trustee is obligated to
see to the proper application of any money paid or property delivered to the
Trustee, or to inquire whether the Trustee has acted pursuant to any of the
terms of the Plan. Each person dealing with the Trustee may act upon any notice,
request or representation in writing by the Trustee, or by the Trustee's duly
authorized agent, and is not liable to any person in so acting. The certificate
of the Trustee that it is acting in accordance with the Plan will be conclusive
in favor of any person relying on the certificate. If more than two persons act
as
- 51 -
52
Trustee, the decision of a majority of such persons controls with respect to
any decision regarding the administration or investment of the Trust Fund.
10.11 RESIGNATION. The Trustee may resign at any time as Trustee of the
Plan by giving 30 days' written notice in advance to the Employer and to the
Advisory Committee. If the Employer fails to appoint a successor Trustee within
60 days of its receipt of the Trustee's written notice of resignation, the
Trustee will treat the Employer as having appointed itself as Trustee and as
having filed its acceptance of appointment with the former Trustee.
10.12 REMOVAL. The Employer, by giving 30 days' written notice in
advance to the Trustee, may remove any Trustee. In the event of the resignation
or removal of a Trustee, the Employer must appoint a successor Trustee if it
intends to continue the Plan. If two or more persons hold the position of
Trustee, in the event of the removal of one such person, during any period the
selection of a replacement is pending, or during any period such person is
unable to serve for any reason, the remaining person or persons will act as the
Trustee.
10.13 INTERIM DUTIES AND SUCCESSOR TRUSTEE. Each successor Trustee
succeeds to the title to the Trust vested in his predecessor by accepting in
writing his appointment as successor Trustee and filing the acceptance with the
former Trustee and the Advisory Committee without the signing or filing of any
further statement. The resigning or removed Trustee, upon receipt of acceptance
in writing of the Trust by the successor Trustee, must execute all documents and
do all acts necessary to vest the title of record in any successor Trustee. Each
successor Trustee has and enjoys all of the powers, both discretionary and
ministerial, conferred under this Agreement upon his predecessor. A successor
Trustee is not personally liable for any act or failure to act of any
predecessor Trustee, except as required under ERISA. With the approval of the
Employer and the Advisory Committee, a successor Trustee, with respect to the
Plan, may accept the account rendered and the property delivered to him by a
predecessor Trustee without incurring any liability or responsibility for so
doing.
10.14 VALUATION OF TRUST. The Trustee must value the Trust Fund as of
each Accounting Date to determine the fair market value of each Participant's
Accrued Benefit in the Trust, and the Trustee also must value the Trust Fund on
such other dates, as directed by the Advisory Committee. With respect to
activities carried on by the Plan, an independent appraiser meeting requirements
similar to those prescribed by Treasury regulations under Code Section
170(a)(1) must perform all valuations of Employer Securities which are not
readily tradeable on an established securities market.
10.15 LIMITATION ON LIABILITY - IF INVESTMENT MANAGER APPOINTED. The
Trustee is not liable for the acts or omissions of any Investment Manager or
Managers the Advisory Committee may appoint, nor is the Trustee under any
obligation to invest or otherwise manage any asset of the Plan which is subject
to the
- 52 -
53
management of a properly appointed Investment Manager. The Advisory
Committee, the Trustee and any properly appointed Investment Manager may execute
a letter agreement as a part of this Plan delineating the duties,
responsibilities and liabilities of the Investment Manager with respect to any
part of the Trust Fund under the control of the Investment Manager.
10.16 PARTICIPANT VOTING RIGHTS - EMPLOYEE SECURITIES. With respect to
the voting of Employer Securities which are not part of a registration-type
class of securities (as defined in Code Section 409(e)(4)), a Participant has
the right to direct the Trustee regarding the voting of such Employer
Securities allocated to his Employer Securities Account with respect to any
corporate matter which involves the approval or disapproval of any
corporate merger or consolidation, recapitalization, reclassification,
liquidation, dissolution, sale of substantially all assets of a trade or
business, or such similar transaction as the Treasury may prescribe in
regulations. As to any Employer Securities allocated to the Participant's
Employer Securities Account which are part of a registration-type class of
securities, the voting rights provided in this Section 10.16 extend to all
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 10.16.
ARTICLE XI
REPURCHASE OF EMPLOYER SECURITIES
11.01 PUT OPTION. The Employer will issue a "put option" to each
Participant receiving a distribution of Employer Securities from the Trust. The
put option will permit the Participant to sell the Employer Securities to the
Employer, at any time during two option periods, at the current fair market
value. The first put option period runs for a period of at least 60 days
commencing on the date of distribution of Employer Securities to the
Participant. The second put option period runs for a period of at least 60 days
commencing after the new determination of the fair market value of Employer
Securities by the Advisory Committee and notice to the Participant of the new
fair market value. If a Participant (Beneficiary) exercises his put option, the
Employer must purchase the Employer Securities at fair market value upon the
terms provided under Section 11.04. The Employer may grant the Trust an option
to assume the Employer's rights and obligations at the time a Participant
exercises an option under this Section 11.01. Further, if Federal or state law
will be violated by the Employer's honoring of the put option, the Employer
Securities may be put, in a manner consistent with such law, to a third party
(e.g., an affiliate of the Employer or a shareholder other than the Trustee)
that has substantial net worth at the time the Exempt Loan is made and whose net
worth is reasonably expected to remain substantial.
11.02 RESTRICTION ON EMPLOYER SECURITIES. Except upon the prior written
consent of the Employer, no Participant (or Beneficiary) may sell, assign, give,
pledge, encumber, transfer or otherwise dispose of any Employer Securities now
owned or subsequently acquired by him without complying with the terms of this
Article XI. If a
- 53 -
54
Participant (or Beneficiary) pledges or encumbers any Employer
Securities with the required prior written consent, any security holder's rights
with respect to such Employer Securities are subordinate and subject to the
rights of the Employer.
11.03 LIFETIME TRANSFER/RIGHT OF FIRST REFUSAL. If any Participant (or
Beneficiary) who receives Employer Securities under this Plan desires to dispose
of any of his Employer Securities for any reason during his lifetime (whether by
sale, assignment, gift or any other method of transfer), he first must offer the
Employer Securities for sale to the Employer. The Advisory Committee may require
a Participant (or Beneficiary) entitled to a distribution of Employer Securities
to execute an appropriate stock transfer agreement (evidencing the right of
first refusal) prior to receiving a certificate for Employer Securities.
In the case of an offer by a third party, the offer to the Employer is
subject to all the terms and conditions set forth in SEction 11.04 based on the
price equal to the fair market value per share and payable in accordance with
the terms of Section 11.04 unless the selling price and terms offered to the
Participant by the third party are more favorable to the Participant than the
selling price and terms of Section 11.04, in the event the selling price and
terms of the offer of the third party apply. The Employer must give written
notice to the offering Participant of its acceptance of the Participant's offer
within 14 days after the Participant has given written notice to the Employer or
the Employer's rights under this Section 11.03 will lapse. The Employer may
grant the Trust the option to assume the Employer's rights and obligations with
respect to all or any part of the Employer Securities offered to the Employer
under this Section 11.03.
11.04 PAYMENT OF PURCHASE PRICE. If the Employer (or the Trustee, at
the direction of the Advisory Committee) exercises an option to purchase a
Participant's Employer Securities pursuant to an offer given under Section
11.03, the purchaser(s) must make payment in lump sum or, if the distribution to
the Participant (or to his Beneficiary) constitutes a Total Distribution, in
substantially equal installments over a period not exceeding five years. A
"Total Distribution" to a Participant (or to a Beneficiary) is the distribution,
within one taxable year of the recipient, of the entire balance to the
Participant's credit under the Plan. In the case of a distribution which is not
a Total Distribution or which is a Total Distribution with respect to which the
purchaser(s) will make payment in lump sum, the purchaser(s) must pay the
Participant (or Beneficiary) the fair market value of the Employer Securities
repurchased no later than 30 days after the date the Participant (or
Beneficiary) exercises the option. In the case of a Total Distribution with
respect to which the purchaser(s) will make installment payments, the
purchaser(s) must make the first installment payment no later than 30 days after
the Participant (or Beneficiary) exercises the put option. For installment
amounts not paid within 30 days of the exercise of the put option, the
purchaser(s) must evidence the balance of the purchase price by executing a
promissory note, delivered to the selling Participant at the Closing. The note
delivered at Closing must bear a reasonable rate of interest, determined as of
the Closing Date, and the purchaser(s) must provide adequate security. The note
must provide for equal annual installments with interest payable with each
installment, the first installment being due and
- 54 -
55
payable one year after the Closing Date. The note further must provide
for acceleration in the event of 30 days' default of the payment on interest or
principal and must grant to the maker of the note the right to prepay the note
in whole or in part at any time or times without penalty; provided, however, the
purchaser(s) may not have the right to make any prepayment during the calendar
year or fiscal year of the Participant (Beneficiary) in which the Closing Date
occurs.
11.05 NOTICE. A person has given Notice permitted or required under
this Article XI when the person deposits the Notice in the United States mail,
first class, postage prepaid, addressed to the person entitled to the Notice at
the address currently listed for him in the records of the Advisory Committee.
Any person affected by this Article XI has the obligation of notifying the
Advisory Committee of any change of address.
11.06 TERMS AND DEFINITIONS. For purposes of this Article XI:
(a) "Fair market value" means the value of the Employer
Securities (i) determined as of the date of the exercise of an option
if the exercise is by a Disqualified Person, or (ii) in all other
cases, determined as of the most recent Accounting Date. The Advisory
Committee must determine fair market value of Employer Securities for
all purposes of the Plan by engaging the services of an independent
appraiser. See Section 10.14.
(b) "Notice" means any offer, acceptance of an offer, payment
or any other communication.
(c) "Beneficiary" includes the legal representative of a
deceased Participant.
(d) "Closing" means the place, date and time ("Closing Date")
to which the selling Participant (or his Beneficiary) and purchaser may
agree for purposes of a sale and purchase under this Article XI,
provided Closing must take place not later than 30 days after the
exercise of an offer under Section 11.01.
ARTICLE XII
MISCELLANEOUS
12.01 EVIDENCE. Anyone required to give evidence under the terms of the
Plan may do so by certificate, affidavit, document or other information which
the person to act in reliance may consider pertinent, reliable and genuine, and
to have been signed, made or presented by the proper party or parties. Both the
Advisory Committee and the Trustee are fully protected in acting and relying
upon any evidence described under the immediately preceding sentence.
12.02 NO RESPONSIBILITY FOR EMPLOYER ACTION. Neither the Trustee nor
the Advisory Committee has any obligation or responsibility with respect to any
action
- 55 -
56
required by the Plan to be taken by the Employer, any Participant or
eligible Employee, or for 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. Furthermore, the Plan does not require the Trustee or the
Advisory Committee to collect any contribution required under the Plan, or to
determine the correctness of the amount of any Employer contribution. Neither
the Trustee nor the Advisory Committee need inquire into or be responsible for
any action or failure to act on the part of the others. Any action required of a
corporate Employer must be by its Board of Directors or its designate.
12.03 FIDUCIARIES NOT INSURERS. The Trustee, the Advisory Committee,
the Plan Administrator and the Employer in no way 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 Advisory Committee and the Trustee to make any payment from the Trust Fund
at any time and all times is limited to the then available assets of the Trust.
12.04 WAIVER OF NOTICE. Any person entitled to notice under
the Plan may waive the notice.
12.05 SUCCESSORS. The Plan is 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 and the Advisory
Committee and their successors.
12.06 WORD USAGE. Words used in the masculine also apply to the
feminine where applicable, and wherever the context of the Plan dictates, the
plural includes the singular and the singular includes the plural.
12.07 STATE LAW. Missouri law will determine all questions arising with
respect to the provisions of this Agreement except to the extent Federal statute
supersedes Missouri law.
12.08 EMPLOYMENT NOT GUARANTEED. Nothing contained in this Plan, or
with respect to the establishment of the Trust, or any modification or amendment
to the Plan or Trust, or in the creation of any Account, or the payment of any
benefit, gives any Employee, Employee-Participant or any Beneficiary any right
to continue employment, any legal or equitable right against the Employer, or
Employee of the Employer, or against the Trustee, or its agents or employees, or
against the Plan Administrator, except as expressly provided by the Plan, the
Trust, ERISA or by a separate agreement.
ARTICLE XIII
EXCLUSIVE BENEFIT, AMENDMENT, TERMINATION
- 56 -
57
13.01 EXCLUSIVE BENEFIT. Except as provided under Article III, the
Employer has no beneficial interest in any asset of the Trust and no part of any
asset in the Trust may ever revert to or be repaid to an Employer, either
directly or indirectly; nor, prior to the satisfaction of all liabilities with
respect to the Participants and their Beneficiaries under the Plan, may any part
of the corpus or income of the Trust Fund, or any asset of the Trust, be (at any
time) used for, or diverted to, purposes other than the exclusive benefit of the
Participants or their Beneficiaries. However, if the Commissioner of Internal
Revenue, upon the Employer's request for initial approval of this Plan,
determines that the Trust created under the Plan is not a qualified
trust exempt from Federal income tax, then (and only then) the Trustee, upon
written notice from the Employer, will return the Employer's contributions (and
increment attributable to the contributions) to the Employer. The Trustee must
make the return of the Employer contribution under this Section 13.01 within one
(1) year of a final disposition of the Employer's request for initial approval
of the Plan. The Plan and Trust will terminate upon the Trustee's return of the
Employer's contributions.
13.02 AMENDMENT BY EMPLOYER. The Employer has the right at
any time and from time to time:
(a) To amend this Agreement in any manner it deems necessary
or advisable in order to qualify (or maintain qualification of) this
Plan and the Trust created under it under the appropriate provisions of
Code Section 401(a); and
(b) To amend this Agreement in any other manner.
No amendment may 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 or estates. No amendment may cause or permit
any portion of the Trust Fund to revert to or become a property of the Employer.
The Employer also may not make any amendment which affects the rights, duties or
responsibilities of the Trustee, the Plan Administrator or the Advisory
Committee without the written consent of the affected Trustee, the Plan
Administrator or the affected member of the Advisory Committee.
CODE SECTION 411(d)(6) PROTECTED BENEFITS. An amendment may not
decrease a Participant's Accrued Benefit, except to the extent permitted under
Code Section 412(c)(8), and may not reduce or eliminate Code Section 411(d)(6)
protected benefits determined immediately prior to the adoption date (or,
if later, the effective date) of the amendment. An amendment reduces or
eliminates Code Section 411(d)(6) protected benefits if the amendment has the
effect of either (1) eliminating or reducing an early retirement benefit or a
retirement-type subsidy (as defined in Treasury regulations), or (2) except as
provided by Treasury regulations, eliminating an optional form of benefit. The
Advisory Committee must disregard an amendment to the extent application of the
amendment would fail to satisfy this paragraph. If the Advisory Committee must
disregard an amendment because the amendment would violate clause (1) or clause
(2), the Advisory Committee must maintain a schedule of the
- 57 -
58
early retirement option or other optional forms of benefit the Plan
must continue for the affected Participants.
The Employer must make all amendments in writing. Each amendment must
state the date to which it is either retroactively or prospectively effective.
13.03 DISCONTINUANCE. The Employer has the right, at any time, to
suspend or discontinue its contributions under the Plan, and to terminate, at
any time, this Plan and the Trust created under this Agreement. The Plan will
terminate upon the first to occur of the following:
(a) The date terminated by action of the Employer;
(b) The date the Employer is judicially declared bankrupt or
insolvent, unless the proceeding authorized continued maintenance of
the Plan;
(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 provision to
continue the Plan, in which event the successor or purchaser must
substitute itself as the Employer under this Plan.
13.04 FULL VESTING ON TERMINATION. Upon either full or partial
termination of the Plan, or, if applicable, upon complete discontinuance of
profit sharing plan contributions to the Plan, an affected Participant's right
to his Accrued Benefit is 100% Nonforfeitable, irrespective of the
Nonforfeitable percentage which otherwise would apply under Article V.
13.05 MERGER/DIRECT TRANSFER. The Trustee may not consent to, or be a
party to, any merger or consolidation with another plan, or to a transfer of
assets or liabilities to 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 or consolidation
or transfer. The Trustee possesses the specific authority to enter into merger
agreements or direct transfer of assets agreements with the trustees of other
retirement plans described in code Section 401(a), including an elective
transfer, and to accept the direct transfer of plan assets, or to
transfer plan assets, as a party to any such agreement.
The Trustee may accept a direct transfer of plan assets on behalf of an
Employee prior to the date the Employee satisfies the Plan's eligibility
conditions. If the Trustee accepts a direct transfer of plan assets, the
Advisory Committee and Trustee must treat the Employee as a Participant for all
purposes of the Plan except the Employee is not a Participant for purposes of
sharing in Employer contributions or Participant forfeitures under the Plan
until he actually becomes a Participant in the Plan.
- 58 -
59
The Trustee may not consent to, or be a party to a merger,
consolidation or transfer of assets with a defined benefit plan, except with
respect to an elective transfer. The Trustee will hold, administer and
distribute the transferred assets as a part of the Trust Fund and the Trustee
must maintain a separate Employer contribution Account for the benefit of the
Employee on whose behalf the Trustee accepted the transfer in order to reflect
the value of the transferred assets. Unless a transfer of assets to this Plan is
an elective transfer, the Plan will preserve all Code Section 411(d)(6)
protected benefits with respect to those transferred assets, in the manner
described in Section 13.02. A transfer is an elective transfer if: (1) the
transfer satisfies the first paragraph of this Section 13.05; (2) the transfer
is voluntary, under a fully informed election by the Participant; (3) the
Participant has an alternative that retains his Code Section 411(d)(6)
protected benefits (including an option to leave his benefit in the transferor
plan, if that plan is not terminating); (4) the transfer satisfies the
applicable spousal consent requirements of the Code; (5) the transferor plan
satisfies the joint and survivor notice requirements of the Code, if the
Participant's transferred benefit is subject to those requirements; (6) the
Participant has a right to immediate distribution from the transferor plan, in
lieu of the elective transfer; (7) the transferred benefit is at least the
greater of the single sum distribution provided by the transferor plan for
which the Participant is eligible or the present value of the Participant's
accrued benefit under the transferor plan payable at that plan's normal
retirement age; (8) the Participant has a 100% Nonforfeitable interest in the
transferred benefit; and (9) the transfer otherwise satisfies applicable
Treasury regulations. An elective transfer may occur between qualified plans of
any type.
DISTRIBUTION RESTRICTIONS UNDER CODE SECTION 401(K). If the Plan
receives a direct transfer (by merger or otherwise) of elective contributions
(or amounts treated as elective contributions) under a Plan with a Code
Section 401(k) arrangement, the distribution restrictions of Code Sections
401(k)(2) and (10) continue to apply to those transferred elective
contributions.
13.06 TERMINATION. Upon termination of the Plan, the distribution
provisions of Article VI2 remain operative, with the following exceptions:
(1) if the present value of the Participant's Nonforfeitable
Accrued Benefit does not exceed $3,500.00, the Advisory Committee will
direct the Trustee to distribute the Participant's Nonforfeitable
Accrued Benefit to him in a lump sum as soon as administratively
practicable after the Plan terminates; and
(2) if the present value of the Participant's Nonforfeitable
Accrued Benefit exceeds $3,500.00, the Participant or the Beneficiary,
in addition to the distribution events permitted under Article VI, may
elect to have the Trustee commence distribution of his Nonforfeitable
Accrued Benefit as soon as administratively practicable after the Plan
terminates.
To liquidate the Trust, the Advisory Committee will purchase a deferred
annuity contract for each Participant which protects the Participant's
distribution rights under the Plan, if the Participant's Nonforfeitable Accrued
Benefit exceeds $3,500.00 and the
- 59 -
60
Participant does not elect an immediate distribution pursuant to
Paragraph (2). The Trust will continue until the Trustee in accordance with the
direction of the Advisory Committee has distributed all of the benefits under
the Plan.
On each valuation date, the Advisory Committee will credit any part of
a Participant's Accrued Benefit retained in the Trust with its proportionate
share of the Trust's income, expenses, gains and losses, both realized and
unrealized. Upon termination of the Plan, the amount, if any, in a suspense
account under Article III will revert to the Employer, subject to the conditions
of the Treasury regulations permitting such a reversion. A resolution or
amendment to freeze all future benefit accrual, but otherwise to continue
maintenance of this Plan, is not a termination for purposes of this Section
13.06.
IN WITNESS WHEREOF, the Employer and Trustee have executed this Plan
and Trust in Stockton, Missouri, in duplicate counterparts, each of which shall
be deemed an original, this 13th day of December, 1989.
SAC RIVER VALLEY BANK
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------
Xxxxx X. Xxxxxxxx, President
(CORPORATE SEAL)
"EMPLOYER"
Attest:
-----------------------------
Secretary/Assistant Secretary
/s/ Xxxxx X. Xxxxxxxx
------------------------------
Xxxxx X. Xxxxxxxx
"TRUSTEE"
- 60 -
61
STATE OF MISSOURI )
) ss.
COUNTY OF )
---------
On this _____ day of November, 1989, before me personally appeared
Xxxxx X. Xxxxxxxx, to me personally known, who being duly sworn, did say that he
is the President of Sac River Valley Bank (the "Corporation"), that the seal
affixed to this instrument is the corporate seal of the Corporation, and that
the said instrument was signed and sealed on behalf of the Corporation by
authority of its Board of Directors, and the said Xxxxx X. Xxxxxxxx acknowledged
said instrument to be the free act and deed of the Corporation.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my
official seal, at my office in __________________________, the day and year
first above written.
------------------------------------
Notary Public
My commission expires:
--------------------
STATE OF MISSOURI )
) ss.
COUNTY OF )
--------
On this _____ day of November, 1989, before me personally appeared
Xxxxx X. Xxxxxxxx, to me known to be the person described in and who executed
the foregoing instrument, and acknowledged that he executed the same as his free
act and deed.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my
official seal, at my office in ___________________________, the day and year
first above written.
-------------------------------------
Notary Public
My commission expires:
------------------------
- 61 -
