<PAGE>
As filed with the Securities and Exchange Commission on September 21, 1999.
Registration No. 333-_____________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
______________________________________
HERITAGE FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
WASHINGTON 91-1857900
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification number)
201 5th AVENUE S.W., OLYMPIA, WASHINGTON 98501
(Address, including zip code and telephone number, including
area code of registrant's principal executive offices)
HERITAGE FINANCIAL CORPORATION 401(K) EMPLOYEE STOCK OWNERSHIP PLAN
(Full title of the plan)
DONALD V. RHODES
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
HERITAGE FINANCIAL CORPORATION
201 5TH AVENUE S.W.
OLYMPIA, WASHINGTON 98501
(360) 943-1500
Copies of communications to:
Jeffrey C. Gerrish, Esq.
GERRISH & MCCREARY, P.C.
700 Colonial Road - Suite 200
Memphis, Tennessee 38117
(901) 767-0900
(Name, address, including zip code and telephone number, including area code,
of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Maximum
Title of Securities to be Amount to be Maximum Offering Price Aggregate Offering Amount of
Registered Registered Per Share Price Registration Fee
__________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Common Stock, N/A N/A N/A N/A
no par value
Interests in 401(k) Indeterminate N/A N/A N/A
Employee Stock
Ownership Plan
__________________________________________________________________________________________________________
</TABLE>
_____________________________
(1) This Registration Statement does not include the registration of any shares
of the Registrant. Pursuant to Rule 416(c) under the Securities Act of 1933, as
amended, this Registration Statement covers an indeterminate amount of plan
interests to be offered or sold pursuant to the employee benefit plan described
herein.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The documents containing the information required by PART I of this
Registration Statement on Form S-8 (the "Registration Statement") will be sent
or given to Plan participants as specified by Rule 428(b)(1) under the
Securities Act of 1933, as amended. Such documents and the documents
incorporated by reference herein pursuant to Item 3 of PART II hereof, taken
together, constitute a prospectus that meets the requirements of Section 10(a)
of the Securities Act.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents have been filed with the Securities and Exchange
Commission by Heritage Financial Corporation (the "Company") and are
incorporated herein by reference and made a part hereof:
1. The Company's Annual Report on Form 10-K for the six month period ended
December 31, 1998, provided that any information included or incorporated
by reference in response to Items 402(a)(8), (i), (k) or (l) of Regulation
S-K of the Securities and Exchange Commission shall not be deemed to be
incorporated herein and is not a part of the Registration Statement.
2. The description of the Common Stock of the Company contained in the
Company's Registration Statement on Form 8-A filed with the Commission.
3. All reports filed by the Company pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 since the end of the fiscal year covered by
the financial statements in the Annual Report on Form 10-K referred to in
paragraph 1 above, including the Company's Quarterly Reports on Form 10-Q
for the three month periods ended March 31, 1999 and June 30, 1999.
4. All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Securities Exchange Act of 1934 subsequent to the date
hereof and prior to the filing of a post-effective amendment which
indicates that all securities offered hereby have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference herein and to be part hereof from the date of the
filing of such documents. Any statement contained in a document
incorporated by reference herein and filed prior to the filing hereof
2
<PAGE>
shall be deemed to be modified or superseded for purposes of this
Registration Statement to the extent that a statement contained herein
modifies or supersedes such statement, and any statement contained herein
or in any other document incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Registration Statement to
the extent that a statement contained in any other subsequently filed
document which also is incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a
part of this Registration Statement.
The Heritage Financial Corporation 401(k) Employee Stock Ownership Plan is
an amendment to the Heritage Bank Employee Stock Ownership Plan ("ESOP")
effective October 1, 1999. The ESOP did not file its general reports with the
Securities and Exchange Commission. The Heritage Financial Corporation 401(k)
Employee Stock Ownership Plan has not completed its first fiscal year and has
not been in existence for 90 days prior to the filing of this Statement.
ITEM 4. DESCRIPTION OF SECURITIES
Plan interests under the Heritage Financial Corporation 401(k) Employee
Stock Ownership Plan are being registered hereunder. All shares of Company stock
purchased by this Plan will be previously issued shares purchased by the Plan
Trustee in the open market.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Attorneys who are members or who are employed by Gerrish & McCreary, P.C.,
who have provided advice with respect to this matter in the aggregate own,
directly and indirectly 10,000 shares of the Common Stock of the Company.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Washington Business Corporation Act, RCW Chapter 23B.08, authorizes
indemnification of directors, officers and employees under certain
circumstances. The Company's Articles of Incorporation provide, among other
things, for the indemnification of directors and authorize the Board to pay
reasonable expenses incurred by, or to satisfy a judgment or fine against a
current or former director in connection with any personal legal liability
incurred by the individual while acting for the Company within the scope of his
or her employment, and which was not the result of conduct finally adjudged to
be "egregious" conduct. "Egregious" conduct is defined as intentional
misconduct, a knowing violation of law, or participation in any transaction from
which the person will personally receive a benefit in money, property or
services to which that person is not legally entitled. The Articles of
3
<PAGE>
Incorporation also include a provision that limits the liability of directors of
the Company from any personal liability to the Company or its shareholders for
conduct not found to have been egregious. The Company has purchased an officers
and directors liability insurance policy which provides for insurance of
directors and officers of the Company against certain liabilities they may incur
in their capacities as such.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
See the Exhibit Index which is incorporated herein by reference.
The Company undertakes to cause the Heritage Financial Corporation 401(k)
Employee Stock Ownership Plan and any amendments thereto to be submitted to the
Internal Revenue Service ("IRS") in a timely manner and will make all changes
required by the IRS in order to qualify the Plan.
ITEM 9. UNDERTAKINGS
(a) The Company hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement;
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement;
Provided, however, that paragraph (a)(1)(i) and (a)(1)(ii) shall
not apply if the Registration Statement is on Form S-3, Form S-8
or
4
<PAGE>
Form F-3 and the information required to be included in a post-
effective amendment by those paragraphs is contained in periodic
reports filed by the Company pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new Registration Statement relating to the securities
offered therein and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Company hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the
Company's Annual Report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the Company pursuant to the foregoing provisions or otherwise, the Company
has been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in
the act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Company of expenses incurred or paid by a director, officer or controlling
persons of the Company in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling persons in
connection with the securities being registered, the Company will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such issue.
5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Trustee of
the Heritage Financial Corporation 401(k) Employee Stock Ownership Plan
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Olympia, State of Washington, on September 21, 1999.
HERITAGE FINANCIAL CORPORATION 401(k)
EMPLOYEE STOCK OWNERSHIP PLAN TRUSTEE:
U.S. BANK, NATIONAL ASSOCIATION
By: /s/ Paul Scheu
-----------------------
Paul Scheu
Vice President
6
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Olympia, State of Washington, on September 20, 1999.
HERITAGE FINANCIAL CORPORATION
(Registrant)
By: /s/ Donald V. Rhodes
------------------------
Donald V. Rhodes
Chairman, President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated, on September 20, 1999.
Signature Title
/s/ Donald V. Rhodes Chairman, President and Chief Executive Officer
- ------------------------ (Principal Executive Officer)
Donald V. Rhodes
/s/ Edward D. Cameron Vice President/Treasurer
- ------------------------- (Principal Financial Officer)
Edward D. Cameron
Donald V. Rhodes Director
Lynn M. Brunton Director
John A. Clees Director
Daryl D. Jensen Director
H. Edward Odegard Director
James P. Senna Director
Peter K. Wallerich Director
Philip S. Weigand Director
Donald V. Rhodes, by signing his name hereto, does hereby sign this
document in his capacity as a director and pursuant to powers of attorney duly
executed by the persons named, filed with the Securities and Exchange Commission
as an exhibit to this document, on behalf of such persons, all in the capacities
and on the date stated, such persons including a majority of the directors of
the Registrant.
/s/ Donald V. Rhodes
--------------------
Donald V. Rhodes
Attorney-in-Fact
7
<PAGE>
EXHIBIT INDEX
TO REGISTRATION STATEMENT ON FORM S-8
4.1 Articles of Incorporation filed as an exhibit to the Company's Registration
Statement on Form S-1 (Registration No. 333-35573) and incorporated by this
reference.
23.1 Consent of KPMG LLP.*
24.1 Power of Attorney pursuant to which certain directors have signed this
Form S-8 Registration Statement.*
99.1 Heritage Financial Corporation 401(k) Employee Stock Ownership Plan.*
- -----------------------------------------------
* Filed herewith.
8
<PAGE>
EXHIBIT 23.1
[ LETTERHEAD OF KPMG LLP ]
3100 Two Union Square
601 Union Street
Seattle, WA 98101-2327
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Heritage Financial Corporation:
We consent to the use of our report dated January 29, 1999, with respect to the
consolidated statements of financial condition of Heritage Financial Corporation
and subsidiaries as of June 30, 1998 and December 31, 1998, and the related
consolidated statements of income, stockholders' equity and comprehensive
income, and cash flows for each of the years in the three-year period ended June
30, 1998 and for the six month period ended December 31, 1998, incorporated
herein by reference.
/s/ KPMG LLP
Seattle, Washington
September 20, 1999
<PAGE>
EXHIBIT 24.1
POWER OF ATTORNEY
Each director of Heritage Financial Corporation (the "Company") whose signature
appears below, hereby appoints Donald V. Rhodes, as his or her attorney to sign,
in his or her name and behalf and in any and all capacities stated below, the
Company's Registration Statement on Form S-8 (the "Registration Statement(s)")
for the registration of interests in connection with the participation of
employees in and acquisition of securities through the Company's 401(k) Employee
Stock Ownership Plan and likewise to sign any and all amendments and other
documents relating thereto as shall be necessary to cause the Registration
Statement(s) to become effective (including post-effective amendments) and to
sign any and all such documents upon the advice of legal counsel to carry out
the exercise and sale of the option shares, each such person hereby granting to
each such attorney power to act with or without the other and full power of
substitution and revocation and hereby ratifying all of that any such attorney
or his substitute may do by virtue hereof. This Power of Attorney has been
signed by the following persons in the capacities indicated on the 16th day of
September, 1999.
Signature Title
/s/ Donald V. Rhodes Director
- --------------------
Donald V. Rhodes
/s/ Lynn M. Brunton Director
- -------------------
Lynn M. Brunton
/s/ John A. Clees Director
- -----------------
John A. Clees
/s/ Daryl D. Jensen Director
- -------------------
Daryl D. Jensen
/s/ H. Edward Odegard Director
- ---------------------
H. Edward Odegard
Director
- ---------------------
James P. Senna
Director
- ---------------------
Peter K. Wallerich
/s/ Philip S. Weigand Director
- ---------------------
Philip S. Weigand
<PAGE>
HERITAGE FINANCIAL CORPORATION
401(K) EMPLOYEE STOCK OWNERSHIP PLAN & TRUST
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
ARTICLE II
ADMINISTRATION
<TABLE>
<CAPTION>
<S> <C> <C>
2.1 POWERS AND RESPONSIBILITIES OF THE EMPLOYER........... 18
2.2 DESIGNATION OF ADMINISTRATIVE AUTHORITY............... 19
2.3 ALLOCATION AND DELEGATION OF RESPONSIBILITIES......... 19
2.4 POWERS AND DUTIES OF THE ADMINISTRATOR................ 19
2.5 RECORDS AND REPORTS................................... 21
2.6 APPOINTMENT OF ADVISERS............................... 21
2.7 PAYMENT OF EXPENSES................................... 21
2.8 CLAIMS PROCEDURE...................................... 21
2.9 CLAIMS REVIEW PROCEDURE............................... 22
</TABLE>
ARTICLE III
ELIGIBILITY
<TABLE>
<CAPTION>
<S> <C> <C>
3.1 CONDITIONS OF ELIGIBILITY............................. 22
3.2 EFFECTIVE DATE OF PARTICIPATION....................... 22
3.3 DETERMINATION OF ELIGIBILITY.......................... 23
3.4 TERMINATION OF ELIGIBILITY............................ 23
3.5 OMISSION OF ELIGIBLE EMPLOYEE......................... 23
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
3.6 INCLUSION OF INELIGIBLE EMPLOYEE...................... 23
3.7 ELECTION NOT TO PARTICIPATE........................... 24
</TABLE>
ARTICLE IV
CONTRIBUTION AND ALLOCATION
<TABLE>
<CAPTION>
<S> <C> <C>
4.1 FORMULA FOR DETERMINING EMPLOYER CONTRIBUTION......... 24
4.2 PARTICIPANT'S SALARY REDUCTION ELECTION............... 25
4.3 TIME OF PAYMENT OF EMPLOYER CONTRIBUTION.............. 28
4.4 ALLOCATION OF CONTRIBUTION, FORFEITURES AND
EARNINGS............................................. 29
4.5 ACTUAL DEFERRAL PERCENTAGE TESTS...................... 33
4.6 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS........ 34
4.7 ACTUAL CONTRIBUTION PERCENTAGE TESTS.................. 36
4.8 ADJUSTMENT TO ACTUAL CONTRIBUTION PERCENTAGE
TESTS................................................ 37
4.9 MAXIMUM ANNUAL ADDITIONS.............................. 39
4.10 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS............. 42
4.11 TRANSFERS FROM QUALIFIED PLANS........................ 43
4.12 DIRECTED INVESTMENT ACCOUNT........................... 44
</TABLE>
ARTICLE V
FUNDING AND INVESTMENT POLICY
<TABLE>
<CAPTION>
<S> <C> <C>
5.1 INVESTMENT POLICY..................................... 46
5.2 APPLICATION OF CASH................................... 47
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
5.3 LOANS TO THE TRUST.................................... 47
</TABLE>
ARTICLE VI
VALUATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
6.1 VALUATION OF THE TRUST FUND........................... 48
6.2 METHOD OF VALUATION................................... 48
</TABLE>
ARTICLE VII
DETERMINATION AND DISTRIBUTION OF BENEFITS
<TABLE>
<CAPTION>
<S> <C> <C>
7.1 DETERMINATION OF BENEFITS UPON RETIREMENT............. 49
7.2 DETERMINATION OF BENEFITS UPON DEATH.................. 49
7.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY...... 50
7.4 DETERMINATION OF BENEFITS UPON TERMINATION............ 51
7.5 DISTRIBUTION OF BENEFITS.............................. 55
7.6 HOW PLAN BENEFIT WILL BE DISTRIBUTED.................. 59
7.7 DISTRIBUTION FOR MINOR BENEFICIARY.................... 60
7.8 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN........ 60
7.9 PUT OPTION............................................ 60
7.10 NONTERMINABLE PROJECTIONS AND RIGHTS.................. 62
7.11 ADVANCE DISTRIBUTION FOR HARDSHIP..................... 62
7.12 QUALIFIED DOMESTIC RELATIONS ORDER DISTRIBUTION....... 64
</TABLE>
ARTICLE VIII
TRUSTEE
<TABLE>
<CAPTION>
<S> <C> <C>
8.1 BASIC RESPONSIBILITIES OF THE TRUSTEE................. 64
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
8.2 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE........... 65
8.3 OTHER POWERS OF THE TRUSTEE........................... 66
8.4 LOANS TO PARTICIPANTS................................. 70
8.5 VOTING COMPANY STOCK.................................. 71
8.6 DUTIES OF THE TRUSTEE REGARDING PAYMENTS.............. 72
8.7 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES......... 73
8.8 ANNUAL REPORT OF THE TRUSTEE.......................... 73
8.9 AUDIT................................................. 74
8.10 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE........ 74
8.11 TRANSFER OF INTEREST.................................. 75
8.12 DIRECT ROLLOVER....................................... 75
</TABLE>
ARTICLE IX
AMENDMENT, TERMINATION AND MERGERS
<TABLE>
<CAPTION>
<S> <C> <C>
9.1 AMENDMENT............................................. 76
9.2 TERMINATION........................................... 77
9.3 MERGER OR CONSOLIDATION............................... 78
</TABLE>
ARTICLE X
TOP HEAVY
<TABLE>
<CAPTION>
<S> <C> <C>
10.1 TOP HEAVY PLAN REQUIREMENTS........................... 78
10.2 DETERMINATION OF TOP HEAVY STATUS..................... 78
</TABLE>
ARTICLE XI
<PAGE>
MISCELLANEOUS
<TABLE>
<CAPTION>
<S> <C> <C>
11.1 PARTICIPANT'S RIGHTS.................................. 81
11.2 ALIENATION............................................ 82
11.3 CONSTRUCTION OF PLAN.................................. 82
11.4 GENDER AND NUMBER..................................... 83
11.5 LEGAL ACTION.......................................... 83
11.6 PROHIBITION AGAINST DIVERSION OF FUNDS................ 83
11.7 BONDING............................................... 83
11.8 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE............ 84
11.9 INSURER'S PROTECTIVE CLAUSE........................... 84
11.10 RECEIPT AND RELEASE FOR PAYMENTS...................... 84
11.11 ACTION BY THE EMPLOYER................................ 84
11.12 NAMED FIDUCIARIES AND ALLOCATION OF
RESPONSIBILITY...................................... 84
11.13 HEADINGS.............................................. 85
11.14 APPROVAL BY INTERNAL REVENUE SERVICE.................. 85
11.15 UNIFORMITY............................................ 86
11.16 WAIVER OF FUNDING..................................... 86
11.17 SECURITIES AND EXCHANGE COMMISSION APPROVAL........... 87
</TABLE>
ARTICLE XII
PARTICIPATING EMPLOYERS
<TABLE>
<CAPTION>
<S> <C> <C>
12.1 ADOPTION BY OTHER EMPLOYERS........................... 87
12.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS............... 87
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
12.3 DESIGNATION OF AGENT.................................. 88
12.4 EMPLOYEE TRANSFERS.................................... 88
12.5 PARTICIPATING EMPLOYER CONTRIBUTION................... 89
12.6 AMENDMENT............................................. 89
12.7 DISCONTINUANCE OF PARTICIPATION....................... 89
12.8 ADMINISTRATOR'S AUTHORITY............................. 89
12.9 INDEMNIFICATION OF TRUSTEE............................ 89
</TABLE>
<PAGE>
HERITAGE FINANCIAL CORPORATION
401(K) EMPLOYEE STOCK OWNERSHIP PLAN & TRUST
THIS AGREEMENT, hereby made and entered into this _______________ day
of ________________________________, 19______, by and between Heritage Bank
(herein referred to as the "Employer") and U.S. Bank National Association
(herein referred to as the "Trustee").
W I T N E S S E T H:
WHEREAS, the Employer heretofore established an Employee Stock
Ownership Plan and Trust effective July 1, 1993 (hereinafter called the
"Effective Date"), known as Heritage Bank Employee Stock Ownership Plan & Trust
and which Plan shall hereinafter be known as Heritage Financial Corporation
401(k) Employee Stock Ownership Plan & Trust (herein referred to as the "Plan")
in recognition of the contribution made to its successful operation by its
employees and for the exclusive benefit of its eligible employees; and
WHEREAS, the Employer heretofore established a Money Purchase Pension
Plan and Trust effective February 2, 1957 known as Heritage Federal Savings and
Loan Association Money Purchase Pension Plan and Trust, later known as the
Heritage Bank Money Purchase Pension Plan and Trust ("Money Purchase Pension
Plan"), and which Plan has been merged into the Heritage Bank Employee Stock
Ownership Plan and Trust ("ESOP") simultaneously with the amendment and
restatement of the ESOP as a 401(k) ESOP as provided herein; and
WHEREAS, the Employer heretofore established a profit sharing plan
effective October 1, 1984 known as Heritage Federal Savings and Loan Association
401(k) Profit Sharing Plan and Trust, later known as Heritage Bank 401(k) Profit
Sharing Plan and Trust ("401 (k) Plan"), and which 401(k) Plan has been merged
into the ESOP simultaneously with the amendment and restatement of the ESOP as a
401(k) ESOP as provided herein; and
WHEREAS, the Employer heretofore established the ESOP effective
January 1, 1993 known as the Heritage Bank Employee Stock Ownership Plan and
Trust in recognition of the contribution made to its successful operation by its
Employees and for the exclusive benefit of its Eligible Employees; and
WHEREAS, the Money Purchase Pension Plan and the 401(k) Plan have been
merged into this Plan simultaneously with this Plan's amendment and restatement
as a 401(k) ESOP as of October 1, 1999. Notwithstanding any other provision
herein all optional forms of benefits, including methods and timing of
distributions applicable to benefits accrued under the 401(k) Plan and the Money
Purchase Pension Plan as of the effective date of this Agreement, and which are
"protected benefits" under the provisions of Code Section 411(d)(6), shall be
preserved following the plan merger, to the extent different or inconsistent
with the optional benefit forms otherwise provided under this amended and
restated 401(k) ESOP with respect to those accounts merged into the 401(k) ESOP
Plan. The account balances of the Participants in the 401(k) and Money Purchase
Pension Plan shall be continued under the vesting schedule in this 401(k) ESOP,
which vesting schedule is the same as the vesting schedules in the 401(k)
1
<PAGE>
ESOP, which vesting schedule is the same as the vesting schedules in the 401(k)
Plan and Money Purchase Pension Plan. Following the merger of the plans, the
account balances shall not be less than the account balances credited to the
Participants immediately before the merger. After the merger of the plans, each
Participant will be entitled to receive a termination benefit which is equal to
or greater than the benefit he or she would have been entitled to receive
immediately before the merger, as required by Code Section 414(a)(f1). With
regard to the accrued benefit under the Money Purchase Pension Plan, no
distributions of account balances including post merger earnings thereon are
permitted prior to retirement, death, disability, severance of employment or
termination of the Plan. The accounting for such assets under this Plan shall be
segregated from other assets of this Plan as deemed necessary by the
Administrator to comply with applicable law. The provisions herein as to joint
and survivor annuities as a benefit shall include such benefit for applicable
distributions under the assets accounted for under the Money Purchase Pension
Plan and 401(k) Plan.
WHEREAS, under the terms of the Plan, the Employer has the ability to
amend all Plans, provided the Trustee joins in such amendment if the provisions
of the Plan affecting the Trustee are amended; and
WHEREAS, contributions other than salary reduction contributions to
the ESOP will be made by the Employer and such contributions made to the trust
will be invested primarily in the capital stock of the Employer;
NOW, THEREFORE, effective September 1, 1997, except as otherwise
provided, the Employer and the Trustee in accordance with the provisions of all
Plans pertaining to amendments thereof, hereby amend the Plans in their its
entirety and restate the Plans to provide as follows:
ARTICLE I
DEFINITIONS
1.1 "Act" means the Employee Retirement Income Security Act of 1974, as it
may be amended from time to time.
1.2 "Administrator" means the Employer unless another person or entity has
been designated by the Employer pursuant to Section 2.2 to administer the Plan
on behalf of the Employer.
1.3 "Affiliated Employer" means any corporation which is a member of a
controlled group of corporations (as defined in Code Section 414(b)) which
includes the Employer; any trade or business (whether or not incorporated) which
is under common control (as defined in Code Section 414(c)) with the Employer;
any organization (whether or not incorporated) which is a member of an
affiliated service group (as defined in Code Section 414(m)) which includes the
Employer; and any other entity required to be aggregated with the Employer
pursuant to Regulations under Code Section 414(o).
2
<PAGE>
1.4 "Aggregate Account" means, with respect to each Participant, the value
of all accounts maintained on behalf of a Participant, whether attributable to
Employer or Employee contributions, subject to the provisions of Section 10.2.
1.5 "Anniversary Date" means December 31st.
1.6 "Beneficiary" means the person to whom the share of a deceased
Participant's total account is payable, subject to the restrictions of Sections
7.2 and 7.5.
1.7 "Code" means the Internal Revenue Code of 1986, as amended or replaced
from time to time.
1.8 "Company Stock" means common stock issued by the Employer (or by a
corporation which is a member of the controlled group of corporations of which
the Employer is a member) which is readily tradeable on an established
securities market. If there is no common stock which meets the foregoing
requirement, the term "Company Stock" means common stock issued by the Employer
(or by a corporation which is a member of the same controlled group) having a
combination of voting power and dividend rights equal to or in excess of: (A)
that class of common stock of the Employer (or of any other such corporation)
having the greatest voting power, and (B) that class of common stock of the
Employer (or of any other such corporation) having the greatest dividend rights.
Noncallable preferred stock shall be deemed to be "Company Stock" if such stock
is convertible at any time into stock which constitutes "Company Stock"
hereunder and if such conversion is at a conversion price which (as of the date
of the acquisition by the Trust) is reasonable. For purposes of the preceding
sentence, pursuant to Regulations, preferred stock shall be treated as
noncallable if after the call there will be a reasonable opportunity for a
conversion which meets the requirements of the preceding sentence.
1.9 "Company Stock Account" means the account of a Participant which is
credited with the shares of Company Stock purchased and paid for by the Trust
fund or contributed to the Trust Fund.
A separate accounting shall be maintained with respect to that portion
of the Company Stock Account attributable to 3.
1.10 "Compensation" with respect to any Participant means such
Participant's wages as defined in Code Section 3401(a) and all other payments of
compensation by the Employer (in the course of the Employer's trade or business)
for a Plan Year for which the Employer is required to furnish the Participant a
written statement under Code Sections 6041(d), 6051(a)(3) and 6052.
Compensation must be determined without regard to any rules under Code Section
3401(a) that limit the remuneration included in wages based on the nature or
location of the employment or the services performed (such as the exception for
agricultural labor in Code Section 3401(a)(2)).
For purposes of this Section, the determination of Compensation shall
be made by:
3
<PAGE>
(a) including amounts which are contributed by the Employer
pursuant to a salary reduction agreement and which are not includible
in the gross income of the Participant under Code Sections 125,
402(e)(3), 402(h)(1)(B), 403(b) or 457(b), and Employee contributions
described in Code Section 414(h)(2) that are treated as Employer
contributions.
For a Participant's initial year of participation, Compensation shall
be recognized as of such Employee's effective date of participation pursuant to
Section 3.2.
Compensation in excess of $150,000 shall be disregarded. Such amount
shall be adjusted for increases in the cost of living in accordance with Code
Section 401(a)(17), except that the dollar increase in effect on January 1 of
any calendar year shall be effective for the Plan Year beginning with or within
such calendar year. For any short Plan Year the Compensation limit shall be an
amount equal to the Compensation limit for the calendar year in which the Plan
Year begins multiplied by the ratio obtained by dividing the number of full
months in the short Plan Year by twelve (12).
For purposes of this Section, if the Plan is a plan described in Code
Section 413(c) or 414(f) (a plan maintained by more than one Employer), the
limitation applies separately with respect to the Compensation of any
Participant from each Employer maintaining the Plan.
If, in connection with the adoption of this amendment and restatement,
the definition of Compensation has been modified, then, for Plan Years prior to
the Plan Year which includes the adoption date of this amendment and
restatement, Compensation means compensation determined pursuant to the Plan
then in effect.
1.11 "Contract" or "Policy" means any life insurance policy, retirement
income or annuity policy, or annuity contract (group or individual) issued
pursuant to the terms of the Plan.
1.12 "Current Obligations" means Trust obligations arising from extension
of credit to the Trust and payable in cash within (1) year from the date an
Employer contribution is due.
1.13 "Deferred Compensation" with respect to any Participant means the
amount of the Participant's total Compensation which has been contributed to the
Plan in accordance with the Participant's deferral election pursuant to Section
4.2 excluding any such amounts distributed as excess "annual additions" pursuant
to Section 4.10(a).
1.14 "Early Retirement Date" means any Anniversary Date (prior to the
Normal Retirement Date) coinciding with or following the date on which a
Participant or Former Participant attains age 55. A Participant shall become
fully Vested upon satisfying this requirement if still employed at his Early
Retirement Age.
A Former Participant who terminates employment and who thereafter
reaches the age requirement contained herein shall be entitled to receive his
benefits under this Plan.
4
<PAGE>
1.15 "Elective Contribution" means the Employer contributions to the Plan
of Deferred Compensation excluding any such amounts distributed as excess
"annual additions" pursuant to Section 4.10(a). In addition, any Employer
Qualified Non-Elective Contribution made pursuant to Section 4.6(b) which is
used to satisfy the "Actual Deferral Percentage" tests shall be considered an
Elective Contribution for purposes of the Plan. Any contributions deemed to be
Elective Contributions (whether or not used to satisfy the "Actual Deferral
Percentage" tests) shall be subject to the requirements of Sections 4.2(b) and
4.2(c) and shall further be required to satisfy the nondiscrimination
requirements of Regulation 1.401(k)-1(b)(5), the provisions of which are
specifically incorporated herein by reference.
1.16 "Eligible Employee" means the Employee.
Employees whose employment is governed by the terms of a collective
bargaining agreement between Employee representatives (within the meaning of
Code Section 7701(a)(46)) and the Employer under which retirement benefits were
the subject to good faith bargaining between the parties will not be eligible to
participate in this Plan unless such agreement expressly provides for coverage
in this Plan.
Employees of Affiliated Employers shall not be eligible to participate
in this Plan unless such Affiliated Employers have specifically adopted this
Plan in writing.
1.17 "Employee" means any person who is employed by the Employer or
Affiliated Employer, but excludes any person who is an independent contractor.
Employee shall include Leased Employees within the meaning of Code Sections
414(n)(2) and 414(o)(2) unless such Leased Employees are covered by a plan
described in Code Section 414(n)(5) and such Leased Employees do not constitute
more than 20% of the recipient's non-highly compensated work force.
1.18 "Employer" means Heritage Bank and any successor which shall maintain
this Plan; and any predecessor which has maintained this Plan. The Employer is
a state bank with principal offices in the State of Washington. In addition,
where appropriate, the term Employer shall include any Participating Employer
(as defined in Section 12.1) which shall adopt this Plan.
1.19 "Excess Aggregate Contributions" means, with respect to any Plan Year,
the excess of the aggregate amount of the Employer matching contributions made
pursuant to Section 4.1(b) and any qualified non-elective contributions or
elective deferrals taken into account pursuant to Section 4.7(c) on behalf of
Highly Compensated Participants for such Plan Year, over the maximum amount of
such contributions permitted under the limitations of Section 4.7(a).
1.20 "Excess Contributions" means, with respect to a Plan Year, the excess
of Elective Contributions used to satisfy the "Actual Deferral Percentage" tests
made on behalf of Highly Compensated Participants for the Plan Year over the
maximum amount of such contributions permitted under Section 4.5(a). Excess
Contributions shall be treated as an "annual addition" pursuant to Section
4.9(b).
5
<PAGE>
1.21 "Excess Deferred Compensation" means, with respect to any taxable
year of a Participant, the excess of the aggregate amount of such Participant's
Deferred Compensation and the elective deferrals pursuant to Section 4.2(f)
actually made on behalf of such Participant for such taxable year, over the
dollar limitation provided for in Code Section 402(g), which is incorporated
herein by reference. Excess Deferred Compensation shall be treated as an
"annual addition" pursuant to Section 4.9(b) when contributed to the Plan unless
distributed to the affected Participant not later than the first April 15th
following the close of the Participant's taxable year. Additionally, for
purposes of Sections 10.2 and 4.4(k), Excess Deferred Compensation shall
continue to be treated as Employer contributions even if distributed pursuant to
Section 4.2(f). However, Excess Deferred Compensation of Non-Highly Compensated
Participants is not taken into account for purposes of Section 4.5(a) to the
extent such Excess Deferred Compensation occurs pursuant to Section 4.2(d).
1.22 "ESOP" means an employee stock ownership plan that meets the
requirements of Code Section 4975(e)(7) and Regulation 54.4975-11.
1.23 "Exempt Loan" means a loan made to the Plan by a disqualified person
or a loan to the Plan which is guaranteed by a disqualified person and which
satisfies the requirements of Section 2550.408b-3 of the Department of Labor
Regulations, Section 54.4975-7(b) of the Treasury Regulations and Section 5.3
hereof.
1.24 "Family Member" means, with respect to an affected Participant, such
Participant's spouse and such Participant's lineal descendants and ascendants
and their spouses, all as described in Code Section 414(q)(6)(B).
1.25 "Fiduciary" means any person who (a) exercises any discretionary
authority or discretionary control respecting management of the Plan or
exercises any authority or control respecting management or disposition of its
assets, (b) renders investment advice for a fee or other compensation, direct or
indirect, with respect to any monies or other property of the Plan or has any
authority or responsibility to do so, or (c) has any discretionary authority or
discretionary responsibility in the administration of the Plan, including, but
not limited to, the Trustee, the Employer and its representative body, and the
Administrator.
1.26 "Fiscal Year" means the Employer's accounting year of 12 months
commencing on January 1st of each year and ending the following December 31st.
1.27 "Forfeiture" means that portion of a Participant's Account that is
not Vested, and occurs on the earlier of:
(a) the distribution of the entire Vested portion of a
Terminated Participant's Account, or
(b) the last day of the Plan Year in which the Participant
incurs five
(5) consecutive 1-Year Breaks in Service.
6
<PAGE>
Furthermore, for purposes of paragraph (a) above, in the case of a
Terminated Participant whose Vested benefit is zero, such Terminated Participant
shall be deemed to have received a distribution of his Vested benefit upon his
termination of employment. Restoration of such amounts shall occur pursuant to
Section 7.4(g)(2). In addition, the term Forfeiture shall also include amounts
deemed to be Forfeitures pursuant to any other provision of this Plan.
1.28 "Former Participant" means a person who has been a Participant, but
who has ceased to be a Participant for any reason.
1.29 "415 Compensation" with respect to any Participant means such
Participant's wages as defined in Code Section 3401(a) and all other payments of
compensation by the Employer (in the course of the Employer's trade or business)
for a Plan Year for which the Employer is required to furnish the Participant a
written statement under Code Sections 6041(d), 6051(a)(3) and 6052. "415
Compensation" must be determined without regard to any rules under Code Section
3401(a) that limit the remuneration included in wages based on the nature or
location of the employment or the services performed (such as the exception for
agricultural labor in Code Section 3401(a)(2)).
For Plan Years beginning after December 31, 1997, for purposes of this
Section, the determination of "415 Compensation" shall be made by including
amounts which are contributed by the Employer pursuant to a salary reduction
agreement and which are not includible in the gross income of the Participant
under Code Sections 125, 402(e)(3), 402(h)(1)(B), 403(b) or 457(b), and Employee
contributions described in Code Section 414(h)(2) that are treated as Employer
contributions.
If, in connection with the adoption of this amendment and restatement,
the definition of "415 Compensation" has been modified, then, for Plan Years
prior to the Plan Year which includes the adoption date of this amendment and
restatement, "415 Compensation" means compensation determined pursuant to the
Plan then in effect.
1.30 "414(s) Compensation" with respect to any Participant means such
Participant's "415 Compensation" paid during a Plan Year. The amount of "414(s)
Compensation" with respect to any Participant shall include "414(s)
Compensation" for the entire twelve (12) month period ending on the last day of
such Plan Year, except that "414(s) Compensation" shall only be recognized for
that portion of the Plan Year during which an Employee was a Participant in the
Plan.
For purposes of this Section, the determination of "414(s)
Compensation" shall be made by including amounts which are contributed by the
Employer pursuant to a salary reduction agreement and which are not includible
in the gross income of the Participant under Code Sections 125, 402(e)(3),
402(h)(1)(B), 403(b) or 457(b), and Employee contributions described in Code
Section 414(h)(2) that are treated as Employer contributions.
"414(s) Compensation" in excess of $150,000 shall be disregarded.
Such amount shall be adjusted for increases in the cost of living in accordance
with Code Section 401(a)(17), except that the dollar increase in effect on
January 1 of any calendar year shall be effective for
7
<PAGE>
the Plan Year beginning with or within such calendar year. For any short Plan
Year the "414(s) Compensation" limit shall be an amount equal to the "414(s)
Compensation" limit for the calendar year in which the Plan Year begins
multiplied by the ratio obtained by dividing the number of full months in the
short Plan Year by twelve (12). In applying this limitation, the family group of
a Highly Compensated Participant who is subject to the Family Member aggregation
rules of Code Section 414(q)(6) because such Participant is either a "five
percent owner" of the Employer or one of the ten (10) Highly Compensated
Employees paid the greatest "415 Compensation" during the year, shall be treated
as a single Participant, except that for this purpose Family Members shall
include only the affected Participant's spouse and any lineal descendants who
have not attained age nineteen (19) before the close of the year.
If, in connection with the adoption of this amendment and restatement,
the definition of "414(s) Compensation" has been modified, then, for Plan Years
prior to the Plan Year which includes the adoption date of this amendment and
restatement, "414(s) Compensation" means compensation determined pursuant to the
Plan then in effect.
1.31 "Highly Compensated Employee" means an Employee described in Code
Section 414(q) and the Regulations thereunder, and generally means an Employee
who performed services for the Employer during the "determination year" and is
in one or more of the following groups:
(a) Employees who at any time during the "determination year" or
"look-back year" were "five percent owners" as defined in Section
1.37(c).
(b) Employees who received "415 Compensation" during the "look-
back year" from the Employer in excess of $80,000 and were in the Top
Paid Group of Employees during the "look-back year."
The "determination year" shall be the Plan Year for which testing is
being performed, and the "look-back year" shall be the immediately preceding
twelve-month period.
Notwithstanding the above, for the first Plan Year beginning after
December 31, 1996, the "look-back year" shall be the calendar year ending with
or within the Plan Year for which testing is being performed, and the
"determination year" (if applicable) shall be the period of time, if any, which
extends beyond the "look-back year" and ends on the last day of the Plan Year
for which testing is being performed (the "lag period").
For purposes of this Section, the determination of "415 Compensation"
shall be made by including amounts which are contributed by the Employer
pursuant to a salary reduction agreement and which are not includible in the
gross income of the Participant under Code Sections 125, 402(e)(3),
402(h)(1)(B), 403(b) or 457(b), and Employee contributions described in Code
Section 414(h)(2) that are treated as Employer contributions. Additionally, the
dollar threshold amount specified in (b) above shall be adjusted at such time
and in the same manner as under Code Section 415(d), except that the base period
shall be the calendar quarter ending September 30, 1996. In the case of such an
adjustment, the dollar limit which shall be applied is the limit for the
calendar year in which the "look-back year" begins.
8
<PAGE>
In determining who is a Highly Compensated Employee, Employees who are
non-resident aliens and who received no earned income (within the meaning of
Code Section 911 (d)(2)) from the Employer constituting United States source
income within the meaning of Code Section 861(a)(3) shall not be treated as
Employees. Additionally, all Affiliated Employers shall be taken into account
as a single employer and Leased Employees within the meaning of Code Sections
414(n)(2) and 414(o)(2) shall be considered Employees unless such Leased
Employees are covered by a plan described in Code Section 414(n)(5) and are not
covered in any qualified plan maintained by the Employer. The exclusion of
Leased Employees for this purpose shall be applied on a uniform and consistent
basis for all of the Employer's retirement plans. Highly Compensated Former
Employees shall be treated as Highly Compensated Employees without regard to
whether they performed services during the "determination year."
1.32 "Highly Compensated Former Employee" means a former Employee who had a
separation year prior to the "determination year" and was a Highly Compensated
Employee in the year of separation from service or in any "determination year"
after attaining age 55. Notwithstanding the foregoing, an Employee who separated
from service prior to 1987 will be treated as a Highly Compensated Former
Employee only if during the separation year (or year preceding the separation
year) or any year after the Employee attains age 55 (or the last year ending
before the Employee's 55th birthday), the Employee either received "415
Compensation" in excess of $50,000 or was a "five percent owner." For purposes
of this Section, "determination year," "415 Compensation" and "five percent
owner" shall be determined in accordance with Section 1.31. Highly Compensated
Former Employees shall be treated as Highly Compensated Employees. The method
set forth in this Section for determining who is a "Highly Compensated Former
Employee" shall be applied on a uniform and consistent basis for all purposes
for which the Code Section 414(q) definition is applicable.
1.33 "Highly Compensated Participant" means any Highly Compensated
Employee who is eligible to participate in the Plan.
1.34 "Hour of Service" means (1) each hour for which an Employee is
directly or indirectly compensated or entitled to compensation by the Employer
for the performance of duties (these hours will be credited to the Employee for
the computation period. in which the duties are performed); (2) each hour for
which an Employee is directly or indirectly compensated or entitled to
compensation by the Employer (irrespective of whether the employment
relationship has terminated) for reasons other than performance of duties (such
as vacation, holidays, sickness, jury duty, disability, lay-off, military duty
or leave of absence) during the applicable computation period (these hours will
be calculated and credited pursuant to Department of Labor regulation 2530.200b-
2 which is incorporated herein by reference); (3) each hour for which back pay
is awarded or agreed to by the Employer without regard to mitigation of damages
(these hours will be credited to the Employee for the computation period or
periods to which the award or agreement pertains rather than the computation
period in which the award, agreement or payment is made). The same Hours of
Service shall not be credited both under (1) or (2), as the case may be, and
under (3).
9
<PAGE>
Notwithstanding the above, (i) no more than 501 Hours of Service are
required to be credited to an Employee on account of any single continuous
period during which the Employee performs no duties (whether or not such period
occurs in a single computation period); (ii) an hour for which an Employee is
directly or indirectly paid, or entitled to payment, on account of a period
during which no duties are performed is not required to be credited to the
Employee if such payment is made or due under a plan maintained solely for the
purpose of complying with applicable worker's compensation, or unemployment
compensation or disability insurance laws; and (iii) Hours of Service are not
required to be credited for a payment which solely reimburses an Employee for
medical or medically related expenses incurred by the Employee.
For purposes of this Section, a payment shall be deemed to be made by
or due from the Employer regardless of whether such payment is made by or due
from the Employer directly, or indirectly through, among others, a trust fund,
or insurer, to which the Employer contributes or pays premiums and regardless of
whether contributions made or due to the trust fund, insurer, or other entity
are for the benefit of particular Employees or are on behalf of a group of
Employees in the aggregate.
For purposes of this Section, Hours of Service will be credited for
employment with other Affiliated Employers. The provisions of Department of
Labor regulations 2530.200b-2(b) and (c) are incorporated herein by reference.
1.35 "Income" means the income or losses allocable to "excess amounts"
which shall equal the allocable gain or loss for the "applicable computation
period". The income allocable to "excess amounts" for the "applicable
computation period" is determined by multiplying the income for the "applicable
computation period" by a fraction. The numerator of the fraction is the "excess
amount" for the "applicable computation period." The denominator of the fraction
is the total "account balance" attributable to "Employer contributions" as of
the end of the "applicable computation period", reduced by the gain allocable to
such total amount for the "applicable computation period" and increased by the
loss allocable to such total amount for the "applicable computation period".
The provisions of this Section shall be applied:
(a) For purposes of Section 4.2(f), by substituting:
(1) "Excess Deferred Compensation" for "excess amounts";
(2) "taxable year of the Participant" for "applicable computation
period";
(3) "Deferred Compensation" for "Employer contributions"; and
(4) "Participant's Elective Account" for "account balance."
(b) For purposes of Section 4.6(a), by substituting:
(1) "Excess Contributions" for "excess amounts";
10
<PAGE>
(2) "Plan Year" for "applicable computation period";
(3) "Elective Contributions" for "Employer contributions"; and
(4) "Participant's Elective Account" for "account balance."
(c) For purposes of Section 4.8(a), by substituting:
(1) "Excess Aggregate Contributions" for "excess amounts";
(2) "Plan Year" for "applicable computation period";
(3) "Employer matching contributions made pursuant to Section
4.1(b) and any qualified non-elective contributions or elective
deferrals
taken into account pursuant to Section 4.7(c)" for "Employer
contributions"; and
(4) "Participant's Account" for "account balance."
Income allocable to any distribution of Excess Deferred Compensation
on or before the last day of the taxable year of the Participant shall be
calculated from the first day of the taxable year of the Participant to the date
on which the distribution is made pursuant to either the "fractional method" or
the "safe harbor method." Under such "safe harbor method," allocable Income for
such period shall be deemed to equal ten percent (10%) of the Income allocable
to such Excess Deferred Compensation multiplied by the number of calendar months
in such period. For purposes of determining the number of calendar months in
such period, a distribution occurring on or before the fifteenth day of the
month shall be treated as having been made on the last day of the preceding
month and a distribution occurring after such fifteenth day shall be treated as
having been made on the first day of the next subsequent month.
1.36 "Investment Manager" means an entity that (a) has the power to
manage, acquire, or dispose of Plan assets and (b) acknowledges fiduciary
responsibility to the Plan in writing. Such entity must be a person, firm, or
corporation registered as an investment adviser under the Investment Advisers
Act of 1940, a bank, or an insurance company.
1.37 "Key Employee" means an Employee as defined in Code Section 416(i)
and the Regulations thereunder. Generally, any Employee or former Employee (as
well as each of his Beneficiaries) is considered a Key Employee if he, at any
time during the Plan Year that contains the "Determination Date" or any of the
preceding four (4) Plan Years, has been included in one of the following
categories:
(a) an officer of the Employer (as that term is defined within
the meaning of the Regulations under Code Section 416) having annual
"415 Compensation" greater than 50 percent of the amount in effect
under Code Section 415(b)(1)(A) for any such Plan Year.
11
<PAGE>
(b) one of the ten employees having annual "415 Compensation"
from the Employer for a Plan Year greater than the dollar limitation
in effect under Code Section 415(c)(1)(A) for the calendar year in
which such Plan Year ends and owning (or considered as owning within
the meaning of Code Section 318) both more than one-half percent
interest and the largest interests in the Employer.
(c) a "five percent owner" of the Employer. "Five percent
owner" means any person who owns (or is considered as owning within
the meaning of Code Section 318) more than five percent (5%) of the
outstanding stock of the Employer or stock possessing more than five
percent (5%) of the total combined voting power of all stock of the
Employer or, in the case of an unincorporated business, any person
who owns more than five percent (5%) of the capital or profits
interest in the Employer. In determining percentage ownership
hereunder, employers that would otherwise be aggregated under Code
Sections 414(b), (c), (m) and (o) shall be treated as separate
employers.
(d) a "one percent owner" of the Employer having an annual "415
Compensation" from the Employer of more than $150,000. "One percent
owner" means any person who owns (or is considered as owning within
the meaning of Code Section 318) more than one percent (1%) of the
outstanding stock of the Employer or stock possessing more than one
percent (1%) of the total combined voting power of all stock of the
Employer or, in the case of an unincorporated business, any person
who owns more than one percent (1%) of the capital or profits
interest in the Employer. In determining percentage ownership
hereunder, employers that would otherwise be aggregated under Code
Sections 414(b), (c), (m) and (o) shall be treated as separate
employers. However, in determining whether an individual has "415
Compensation" of more than $150,000, "415 Compensation" from each
employer required to be aggregated under Code Sections 414(b), (c),
(m) and (o) shall be taken into account.
For purposes of this Section, the determination of "415 Compensation"
shall be made by including amounts which are contributed by the Employer
pursuant to a salary reduction agreement and which are not includible in the
gross income of the Participant under Code Sections 125, 402(e)(3),
402(h)(1)(B), 403(b) or 457(b), and Employee contributions described in Code
Section 414(h)(2) that are treated as Employer contributions.
1.38 "Late Retirement Date" means the Anniversary Date coinciding with or
next following a Participant's actual Retirement Date after having reached his
Normal Retirement Date.
1.39 "Leased Employee" means any person (other than an Employee of the
recipient) who pursuant to an agreement between the recipient and any other
person ("leasing organization") has performed services for the recipient (or for
the recipient and related persons
12
<PAGE>
determined in accordance with Code Section 414(n)(6)) on a substantially full
time basis for a period of at least one year, and such services are performed
under primary direction or control by the recipient. Contributions or benefits
provided a Leased Employee by the leasing organization which are attributable to
services performed for the recipient employer shall be treated as provided by
the recipient employer. A Leased Employee shall not be considered an Employee of
the recipient:
(a) if such employee is covered by a money purchase pension plan
providing:
(1) a non-integrated employer contribution rate of at least 10%
of compensation, as defined in Code Section 415(c)(3), but
including amounts which are contributed by the Employer pursuant
to a salary reduction agreement and which are not includible in
the gross income of the Participant under Code Sections 125,
402(e)(3), 402(h)(1)(B), 403(b) or 457(b), and Employee
contributions described in Code Section 414(h)(2) that are
treated as Employer contributions.
(2) immediate participation; and
(3) full and immediate vesting; and
(b) if Leased Employees do not constitute more than 20% of the
recipient's non-highly compensated work force.
1.40 "Money Purchase Pension Plan" means the portion of the Plan that is
designed to qualify as such pursuant to Code Section 401(a).
1.41 "Non-Elective Contribution" means the Employer contributions to the
Plan excluding, however, contributions made pursuant to the Participant's
deferral election provided for in Section 4.2 and any Qualified Non-Elective
Contribution used in the "Actual Deferral Percentage" tests.
1.42 "Non-Highly Compensated Participant" means any Participant who is
neither a Highly Compensated Employee nor a Family Member.
1.43 "Non-Key Employee" means any Employee or former Employee (and his
Beneficiaries) who is not a Key Employee.
1.44 "Normal Retirement Age" means the Participant's 65th birthday. A
Participant shall become fully Vested in his Participant's Account upon
attaining his Normal Retirement Age.
1.45 "Normal Retirement Date" means the Anniversary Date coinciding with
or next following the Participant's Normal Retirement Age.
13
<PAGE>
1.46 "1-Year Break in Service" means the applicable computation period
during which an Employee has not completed more than 500 Hours of Service with
the Employer. Further, solely for the purpose of determining whether a
Participant has incurred a 1-Year Break in Service, Hours of Service shall be
recognized for "authorized leaves of absence" and "maternity and paternity
leaves of absence." Years of Service and 1-Year Breaks in Service shall be
measured on the same computation period.
"Authorized leave of absence" means an unpaid, temporary cessation
from active employment with the Employer pursuant to an established
nondiscriminatory policy, whether occasioned by illness, military service, or
any other reason.
A "maternity or paternity leave of absence" means, for Plan Years
beginning after December 31, 1984, an absence from work for any period by reason
of the Employee's pregnancy, birth of the Employee's child, placement of a child
with the Employee in connection with the adoption of such child, or any absence
for the purpose of caring for such child for a period immediately following such
birth or placement. For this purpose, Hours of Service shall be credited for
the computation period in which the absence from work begins, only if credit
therefore is necessary to prevent the Employee from incurring a 1-Year Break in
Service, or, in any other case, in the immediately following computation period.
The Hours of Service credited for a "maternity or paternity leave of absence"
shall be those which would normally have been credited but for such absence, or,
in any case in which the Administrator is unable to determine such hours
normally credited, eight (8) Hours of Service per day. The total Hours of
Service required to be credited for a "maternity or paternity leave of absence"
shall not exceed 501.
1.47 "Other Investments Account" means the account of a Participant which
is credited with his share of the net gain (or loss) of the Plan and Employer
contributions in other than Company Stock and which is debited with payments
made to pay for Company Stock.
A separate accounting shall be maintained with respect to that portion
of the Other Investments Account attributable to 14.
1.48 "Participant" means any Eligible Employee who participates in the
Plan and has not for any reason become ineligible to participate further in the
Plan.
1.49 "Participant Direction Procedures" means such instructions,
guidelines or policies, the terms of which are incorporated herein, as shall be
established pursuant to Section 4.12 and observed by the Administrator and
applied to Participants who have Participant Directed Accounts.
1.50 "Participant's Account" means the account established and maintained
by the Administrator for each Participant with respect to his total interest in
the Plan and Trust resulting from the Employer Non-Elective Contributions.
A separate accounting shall be maintained with respect to that portion
of the Participant's Account attributable to Employer matching contributions
made pursuant to Section
14
<PAGE>
4.1(b), Employer discretionary contributions made pursuant to Section 4.1(c) and
any Employer Qualified Non-Elective Contributions.
1.51 "Participant's Combined Account" means the total aggregate amount of
each Participant's Elective Account and Participant's Account.
1.52 "Participant's Directed Account" means that portion of a
Participant's interest in the Plan with respect to which the Participant has
directed the investment in accordance with the Participant Direction Procedure.
1.53 "Participant's Elective Account" means the account established and
maintained by the Administrator for each Participant with respect to his total
interest in the Plan and Trust resulting from the Employer Elective
Contributions used to satisfy the "Actual Deferral Percentage" tests. A
separate accounting shall be maintained with respect to that portion of the
Participant's Elective Account attributable to such Elective Contributions
pursuant to Section 4.2 and any Employer Qualified Non-Elective Contributions.
1.54 "Plan" means this instrument, including all amendments thereto.
1.55 "Plan Year" means the Plan's accounting year of twelve (12) months
commencing on January 1st of each year and ending the following December 31st.
1.56 "Qualified Non-Elective Contribution" means any Employer
contributions made pursuant to Section 4.6(b) and Section 4.8(h). Such
contributions shall be considered an Elective Contribution for the purposes of
the Plan and used to satisfy the "Actual Deferral Percentage" tests or the
"Actual Contribution Percentage" tests.
1.57 "Regulation" means the Income Tax Regulations as promulgated by the
Secretary of the Treasury or his delegate, and as amended from time to time.
1.58 "Retired Participant" means a person who has been a Participant, but
who has become entitled to retirement benefits under the Plan.
1.59 "Retirement Date" means the date as of which a Participant retires
for reasons other than Total and Permanent Disability, whether such retirement
occurs on a Participant's Normal Retirement Date, Early or Late Retirement Date
(see Section 7.1).
1.60 "Stock Bonus Plan" means the portion of the Plan that is designed to
qualify as such pursuant to Code Section 401(a).
1.61 "Super Top Heavy Plan" means a plan described in Section 10.2(b).
1.62 "Terminated Participant" means a person who has been a Participant,
but whose employment has been terminated other than by death, Total and
Permanent Disability or retirement.
15
<PAGE>
1.63 "Top Heavy Plan" means a plan described in Section 10.2(a).
1.64 "Top Heavy Plan Year" means a Plan Year during which the Plan is a Top
Heavy Plan.
1.65 "Top Paid Group" means the top 20 percent of Employees who performed
services for the Employer during the applicable year, ranked according to the
amount of "415 Compensation" (determined for this purpose in accordance with
Section 1.31) received from the Employer during such year. All Affiliated
Employers shall be taken into account as a single employer, and Leased Employees
within the meaning of Code Sections 414(n)(2) and 414(o)(2) shall be considered
Employees unless such Leased Employees are covered by a plan described in Code
Section 414(n)(5) and are not covered in any qualified plan maintained by the
Employer. Employees who are non-resident aliens and who received no earned
income (within the meaning of Code Section 911(d)(2)) from the Employer
constituting United States source income within the meaning of Code Section
861(a)(3) shall not be treated as Employees. Additionally, for the purpose of
determining the number of active Employees in any year, the following additional
Employees shall also be excluded; however, such Employees shall still be
considered for the purpose of identifying the particular Employees in the Top
Paid Group:
(a) Employees with less than six (6) months of service;
(b) Employees who normally work less than 17 1/2 hours per week;
(c) Employees who normally work less than six (6) months during
a year; and
(d) Employees who have not yet attained age 21.
In addition, if 90 percent or more of the Employees of the Employer
are covered under agreements the Secretary of Labor finds to be collective
bargaining agreements between Employee representatives and the Employer, and the
Plan covers only Employees who are not covered under such agreements, then
Employees covered by such agreements shall be excluded from both the total
number of active Employees as well as from the identification of particular
Employees in the Top Paid Group.
The foregoing exclusions set forth in this Section shall be applied on
a uniform and consistent basis for all purposes for which the Code Section
414(q) definition is applicable.
1.66 "Total and Permanent Disability" means a physical or mental condition
of a Participant resulting from bodily injury, disease, or mental disorder which
renders him incapable of continuing his usual and customary employment with the
Employer. The disability of a Participant shall be determined by a licensed
physician chosen by the Administrator. The determination shall be applied
uniformly to all Participants.
1.67 "Trustee" means the person or entity named as trustee herein or in
any separate trust forming a part of this Plan, and any successors. The Trustee
designated hereunder shall be
16
<PAGE>
a directed, custodial Trustee to the extent the Trustee acts pursuant to
investment directions authorized hereunder.
1.68 "Trust Fund" means the assets of the Plan and Trust as the same shall
exist from time to time.
1.69 "Unallocated Company Stock Suspense Account" means an account
containing Company Stock acquired with the proceeds of an Exempt Loan and which
has not been released from such account and allocated to the Participant's
Company Stock Accounts.
1.70 "USERRA" means the Uniformed Services Employment and Reemployment
Rights Act of 1994. Notwithstanding any provision of this Plan to the contrary,
contributions, benefits and service credit with respect to qualified military
service will be provided in accordance with Section 414(u).
1.71 "Valuation Date" means the Anniversary Date and such other date or
dates deemed necessary by the Administrator. The Valuation Date may include any
day during the Plan Year that the Trustee, any transfer agent appointed by the
Trustee or the Employer and any stock exchange used by such agent are open for
business.
1.72 "Vested" means the nonforfeitable portion of any account maintained on
behalf of a Participant.
1.73 "Year of Service" means the computation period of twelve (12)
consecutive months, herein set forth, during which an Employee has at least 1000
Hours of Service.
For purposes of eligibility for participation, the initial computation
period shall begin with the date on which the Employee first performs an Hour of
Service. The participation computation period beginning after a 1-Year Break in
Service shall be measured from the date on which an Employee again performs an
Hour of Service. The participation computation period shall shift to the Plan
Year which includes the anniversary of the date on which the Employee first
performed an Hour of Service. An Employee who is credited with the required
Hours of Service in both the initial computation period (or the computation
period beginning after a 1-Year Break in Service) and the Plan Year which
includes the anniversary of the date on which the Employee first performed an
Hour of Service, shall be credited with two (2) Years of Service for purposes of
eligibility to participate.
For vesting purposes, the computation periods shall be the Plan Year,
including periods prior to the Effective Date of the Plan, except as provided in
Section 7.4(b).
The computation period shall be the Plan Year if not otherwise set
forth herein.
Notwithstanding the foregoing, for any short Plan Year, the
determination of whether an Employee has completed a Year of Service shall be
made in accordance with Department of Labor regulation 2530.203-2(c). However,
in determining whether an Employee has completed a Year of Service for benefit
accrual purposes in the short Plan Year, the number
17
<PAGE>
of the Hours of Service required shall be proportionately reduced based on the
number of full months in the short Plan Year.
Years of Service with North Pacific Bank and Central Valley Bank, N.A.
since July 1, 1993 shall be recognized.
Years of Service with any Affiliated Employer shall be recognized.
ARTICLE II
ADMINISTRATION
2.1 POWERS AND RESPONSIBILITIES OF THE EMPLOYER
(a) In addition to the general powers and responsibilities
otherwise provided for in this Plan, the Employer shall be empowered
to appoint and remove the Trustee and the Administrator from time to
time as it deems necessary for the proper administration of the Plan
to ensure that the Plan is being operated for the exclusive benefit of
the Participants and their Beneficiaries in accordance with terms of
the Plan, the Code, and the Act. The Employer may appoint counsel,
specialists, advisers, agents (including any nonfiduciary agent) and
other persons as the Employer deems necessary or desirable in
connection with the exercise of its fiduciary duties under this Plan.
The Employer may compensate such agents or advisers from the assets of
the Plan as fiduciary expenses (but not including any business
(settlor) expenses of the Employer), to the extent not paid by the
Employer.
(b) The Employer may, by written agreement or designation,
appoint at its option an Investment Manager (qualified under the
Investment Company Act of 1940 as amended), investment adviser, or
other agent to provide direction to the Trustee with respect to any or
all of the Plan assets. Such appointment shall be given by the
Employer in writing in a form acceptable to the Trustee and shall
specifically identify the Plan assets with respect to which the
Investment Manager or other agent shall have authority to direct the
investment. Additionally, the Employer in its capacity as
Administrator and named fiduciary, may direct the Trustee with respect
to Plan investments.
(c) The Employer shall establish a "funding policy and method,"
i.e., it shall determine whether the Plan has a short run need for
liquidity (e.g., to pay benefits) or whether liquidity is a long run
goal and investment growth (and stability of same) is a more current
need, or shall appoint a qualified person to do so. The Employer or
its delegate shall communicate such needs and goals to the Trustee,
who shall coordinate such Plan needs with its investment policy. The
communication of such a "funding policy and method" shall not,
however, constitute a directive to the Trustee as to investment of
the Trust Funds. Such "funding policy and method" shall be
consistent with the objectives of this Plan and with the requirements
of Title I of the Act.
18
<PAGE>
(d) The Employer shall periodically review the performance of
any Fiduciary or other person to whom duties have been delegated or
allocated by it under the provisions of this Plan or pursuant to
procedures established hereunder. This requirement may be satisfied
by formal periodic review by the Employer or by a qualified person
specifically designated by the Employer, through day-to-day conduct
and evaluation, or through other appropriate ways.
(e) The Employer will furnish Plan Fiduciaries and Participants
with notices and information statements when voting rights must be
exercised pursuant to Section 8.5.
2.2 DESIGNATION OF ADMINISTRATIVE AUTHORITY
The Employer shall be the Administrator. The Employer may appoint any
person, including, but not limited to, the Employees of the Employer, to perform
the duties of the Administrator. Any person so appointed shall signify his
acceptance by filing written acceptance with the Employer. Upon the resignation
or removal of any individual performing the duties of the Administrator, the
Employer may designate a successor.
2.3 ALLOCATION AND DELEGATION OF RESPONSIBILITIES
If more than one person is appointed as Administrator, the
responsibilities of each Administrator may be specified by the Employer and
accepted in writing by each Administrator. In the event that no such delegation
is made by the Employer, the Administrators may allocate the responsibilities
among themselves, in which event the Administrators shall notify the Employer
and the Trustee in writing of such action and specify the responsibilities of
each Administrator. The Trustee thereafter shall accept and rely upon any
documents executed by the appropriate Administrator until such time as the
Employer or the Administrators file with the Trustee a written revocation of
such designation.
2.4 POWERS AND DUTIES OF THE ADMINISTRATOR
The primary responsibility of the Administrator is to administer the
Plan for the exclusive benefit of the Participants and their Beneficiaries,
subject to the specific terms of the Plan. The Administrator shall administer
the Plan in accordance with its terms and shall have the power and discretion to
construe the terms of the Plan and to determine all questions arising in
connection with the administration, interpretation, and application of the Plan.
Any such determination by the Administrator shall be conclusive and binding upon
all persons. The Administrator may establish procedures, correct any defect,
supply any information, or reconcile any inconsistency in such manner and to
such extent as shall be deemed necessary or advisable to carry out the purpose
of the Plan; provided, however, that any procedure, discretionary act,
interpretation or construction shall be done in a nondiscriminatory manner based
upon uniform principles consistently applied and shall be consistent with the
intent that the Plan shall continue to be deemed a qualified plan under the
terms of Code Section 401(a), and shall comply with the
19
<PAGE>
terms of the Act and all regulations issued pursuant thereto. The Administrator
shall have all powers necessary or appropriate to accomplish his duties under
this Plan.
The Administrator shall be charged with the duties of the general
administration of the Plan, including, but not limited to, the following:
(a) the discretion to determine all questions relating to the
eligibility of Employees to participate or remain a Participant
hereunder and to receive benefits under the Plan;
(b) to compute, certify, and direct the Trustee with respect to
the amount and the kind of benefits to which any Participant shall be
entitled hereunder;
(c) to authorize and direct the Trustee with respect to all
nondiscretionary or otherwise directed disbursements from the Trust;
(d) to maintain all necessary records for the administration of
the Plan;
(e) to interpret the provisions of the Plan and to make and
publish such rules for regulation of the Plan as are consistent with
the terms hereof;
(f) to determine the size and type of any Contract to be
purchased from any insurer, and to designate the insurer from which
such Contract shall be purchased;
(g) to compute and certify to the Employer and to the Trustee
from time to time the sums of money necessary or desirable to be
contributed to the Plan;
(h) to consult with the Employer regarding the short and long-
term liquidity needs of the Plan in order that the Administrator can
exercise any investment discretion in a manner designated to
accomplish specific objectives;
(i) to prepare and implement a procedure to notify Eligible
Employees that they may elect to have a portion of their Compensation
deferred or paid to them in cash;
(j) to establish and communicate to Participants a procedure for
allowing each Participant to direct the Trustee as to the distribution
of his Company Stock Account pursuant to Section 4.12;
(k) to establish and communicate to Participants a procedure and
method to insure that each Participant will vote Company stock
allocated to such Participant's Company Stock Account pursuant to
Section 8.5;
20
<PAGE>
(1) to assist any Participant regarding his rights, benefits, or
elections available under the Plan;
(m) to direct that the Plan engage in an Exempt Loan
transaction;
(n) to direct the Trustee with respect to Plan investments,
including the purchase, retention, and sale of Company Stock.
2.5 RECORDS AND REPORTS
The Administrator shall keep a record of all actions taken and shall
keep all other books of account, records, policies, and other data that may be
necessary for proper administration of the Plan and shall be responsible for
supplying all information and reports to the Internal Revenue Service,
Department of Labor, Participants, Beneficiaries, and others as required by law.
2.6 APPOINTMENT OF ADVISERS
The Administrator, or the Trustee with the consent of the
Administrator, may appoint counsel, specialists, advisers, agents (including
nonfiduciary agents) and other persons as the Administrator or the Trustee deems
necessary or desirable in connection with the administration of this Plan,
including but not limited to agents and advisers to assist with the
administration and management of the Plan, and thereby to provide, among such
other duties as the Administrator may appoint, assistance with maintaining Plan
records and the providing of investment information to the Plan's investment
fiduciaries and the Plan Participants.
2.7 PAYMENT OF EXPENSES
All expenses of administration may be paid out of the Trust Fund
unless paid by the Employer. Such expenses shall include any expenses incident
to the functioning of the Administrator, or any person or persons retained or
appointed by any Named Fiduciary incident to the exercise of their duties under
the Plan, including, but not limited to, fees of accountants, counsel,
Investment Managers, agents (including nonfiduciary agents) appointed for the
purpose of assisting the Administrator or the Trustee in carrying out the
instructions of Participants as to the directed investment of their accounts and
other specialists and their agents, and other costs of administering the Plan.
Until paid, the expenses shall constitute a liability of the Trust Fund.
2.8 CLAIMS PROCEDURE
Claims for benefits under the Plan may be filed in writing with the
Administrator. Written notice of the disposition of a claim shall be furnished
to the claimant within 90 days after the application is filed. In the event the
claim is denied, the reasons for the denial shall be specifically set forth in
the notice in language calculated to be understood by the claimant, pertinent
provisions of the Plan shall be cited, and, where appropriate, an explanation as
to how the claimant can perfect the claim will be provided. In addition, the
claimant shall be furnished with an explanation of the Plan's claims review
procedure.
21
<PAGE>
2.9 CLAIMS REVIEW PROCEDURE
Any Employee, former Employee, or Beneficiary of either, who has been
denied a benefit by a decision of the Administrator pursuant to Section 2.8
shall be entitled to request the Administrator to give further consideration to
his claim by filing with the Administrator (on a form which may be obtained from
the Administrator) a request for a hearing. Such request, together with a
written statement of the reasons why the claimant believes his claim should be
allowed, shall be filed with the Administrator no later than 60 days after
receipt of the written notification provided for in Section 2.8. The
Administrator shall then conduct a hearing within the next 60 days, at which the
claimant may be represented by an attorney or any other representative of his
choosing and at which the claimant shall have an opportunity to submit written
and oral evidence and arguments in support of his claim. At the hearing (or
prior thereto upon 5 business days written notice to the Administrator) the
claimant or his representative shall have an opportunity to review all documents
in the possession of the Administrator which are pertinent to the claim at issue
and its disallowance. Either the claimant or the Administrator may cause a
court reporter to attend the hearing and record the proceedings. In such event,
a complete written transcript of the proceedings shall be furnished to both
parties by the court reporter. The full expense of any such court reporter and
such transcripts shall be borne by the party causing the court reporter to
attend the hearing. A final decision as to the allowance of the claim shall be
made by the Administrator within 60 days of receipt of the appeal (unless there
has been an extension of 60 days due to special circumstances, provided the
delay and the special circumstances occasioning it are communicated to the
claimant within the 60 day period). Such communication shall be written in a
manner calculated to be understood by the claimant and shall include specific
reasons for the decision and specific references to the pertinent Plan
provisions on which the decision is based.
ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY
Any Eligible Employee who has completed one (1) Year of Service and
has attained age 21 shall be eligible to participate hereunder as of the date he
has satisfied such requirements. However, any Employee who was a Participant in
the Plan prior to the effective date of this amendment and restatement shall
continue to participate in the Plan.
3.2 EFFECTIVE DATE OF PARTICIPATION
An Eligible Employee shall become a Participant effective as of the
earlier of the first day of the Plan Year or the first day of the seventh month
of such Plan Year coinciding with or next following the date such Employee met
the eligibility requirements of Section 3.1, provided said Employee was still
employed as of such date (or if not employed on such date, as of the date of
rehire if a 1-Year Break in Service has not occurred).
22
<PAGE>
In the event an Employee who is not a member of an eligible class of
Employees becomes a member of an eligible class, such Employee will participate
immediately if such Employee has satisfied the minimum age and service
requirements and would have otherwise previously become a Participant.
3.3 DETERMINATION OF ELIGIBILITY
The Administrator shall determine the eligibility of each Employee for
participation in the Plan based upon information furnished by the Employer.
Such determination shall be conclusive and binding upon all persons, as long as
the same is made pursuant to the Plan and the Act. Such determination shall be
subject to review per Section 2.9.
3.4 TERMINATION OF ELIGIBILITY
(a) In the event a Participant shall go from a classification of
an Eligible Employee to an ineligible Employee, such Former
Participant shall continue to vest in his interest in the Plan for
each Year of Service completed while a noneligible Employee, until
such time as his Participant's Account shall be forfeited or
distributed pursuant to the terms of the Plan. Additionally, his
interest in the Plan shall continue to share in the earnings of the
Trust Fund.
(b) In the event a Participant is no longer a member of an
eligible class of Employees and becomes ineligible to participate but
has not incurred a 1-Year Break in Service, such Employee will
participate immediately upon returning to an eligible class of
Employees. If such Participant incurs a 1-Year Break in Service,
eligibility will be determined under the break in service rules of the
Plan.
3.5 OMISSION OF ELIGIBLE EMPLOYEE
If, in any Plan Year, any Employee who should be included as a
Participant in the Plan is erroneously omitted and discovery of such omission is
not made until after a contribution by his Employer for the year has been made,
the Employer shall make a subsequent contribution with respect to the omitted
Employee in the amount which the said Employer would have contributed with
respect to him had he not been omitted. Such contribution shall be made
regardless of whether or not it is deductible in whole or in part in any taxable
year under applicable provisions of the Code.
3.6 INCLUSION OF INELIGIBLE EMPLOYEE
If, in any Plan Year, any person who should not have been included as
a Participant in the Plan is erroneously included and discovery of such
incorrect inclusion is not made until after a contribution for the year has been
made, the Employer shall not be entitled to recover the contribution made with
respect to the ineligible person regardless of whether or not a deduction is
allowable with respect to such contribution. In such event, the amount
contributed with respect to the ineligible person shall constitute a Forfeiture
(except for Deferred
23
<PAGE>
Compensation which shall be distributed to the ineligible person) for the Plan
Year in which the discovery is made.
3.7 ELECTION NOT TO PARTICIPATE
An Employee may, subject to the approval of the Employer, elect
voluntarily not to participate in the Plan. The election not to participate
must be communicated to the Employer, in writing, at least thirty (30) days
before the beginning of a Plan Year.
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER CONTRIBUTION
For each Plan Year, the Employer shall contribute to the Plan:
(a) The amount of the total salary reduction elections of all
Participants made pursuant to Section 4.2(a), which amount shall be
deemed an Employer Elective Contribution.
(b) On behalf of each Participant who is eligible to share in
matching contributions for the Plan Year, a matching contribution
equal to 50% of each such Participant's Deferred Compensation plus a
uniform discretionary percentage of each such Participant's Deferred
Compensation, the exact percentage, if any, to be determined each year
by the Employer, which amount, if any, shall be deemed an Employer
Non-Elective Contribution.
Except, however, in applying the matching percentage
specified above, only salary reductions up to 6% of the annual
Compensation shall be considered.
(c) A discretionary amount, which amount, if any, shall be deemed
an Employer Non-Elective Contribution.
(d) The Employer shall make contributions to the Money Purchase
Pension Plan over such period of years as the Employer may determine
on the following basis. On behalf of each Participant eligible to
share in allocations, for each year of his participation in this Plan,
the Employer shall contribute 2% of his annual Compensation.
Only Participants who have completed a Year of Service
during the Plan Year and are actively employed on the last day of the
Plan Year shall be eligible to share in the Employer contribution to
the Money Purchase Pension Plan for the year.
24
<PAGE>
(e) Additionally, to the extent necessary, the Employer shall
contribute to the Plan the amount necessary to provide the top heavy
minimum contribution. All contributions by the Employer shall be made
in cash or in such property as is acceptable to the Trustee.
(f) Should the Employer, for any reason, fail to make a
contribution to the Money Purchase Pension Plan as provided for
herein, then such deficiency shall be made up in subsequent years
pursuant to Section 11.16.
4.2 PARTICIPANT'S SALARY REDUCTION ELECTION
(a) Each Participant may elect to defer a portion of his
Compensation which would have been received in the Plan Year (except
for the deferral election) by up to the maximum amount which will not
cause the Plan to violate the provisions of Sections 4.5(a) and 4.9. A
deferral election (or modification of an earlier election) may not be
made with respect to Compensation which is currently available on or
before the date the Participant executed such election. For purposes
of this Section, Compensation shall be determined prior to any
reductions made pursuant to Code Sections 125, 402(e)(3),
402(h)(1)(B), 403(b) or 457(b), and Employee contributions described
in Code Section 414(h)(2) that are treated as Employer contributions.
The amount by which Compensation is reduced shall be that
Participant's Deferred Compensation and be treated as an Employer
Elective Contribution and allocated to that Participant's Elective
Account.
(b) The balance in each Participant's Elective Account shall be
fully Vested at all times and shall not be subject to Forfeiture for
any reason.
(c) Notwithstanding anything in the Plan to the contrary, amounts
held in the Participant's Elective Account may not be distributable
(including any offset of loans) earlier than:
(1) a Participant's separation from service, Total and Permanent
Disability, or death;
(2) a Participant's attainment of age 59 1/2;
(3) the termination of the Plan without the establishment or
existence of a "successor plan," as that term is described in
Regulation 1.401(k)-1(d)(3);
(4) the date of disposition by the Employer to an entity that is
not an Affiliated Employer of substantially all of the assets
(within the meaning of Code Section 409(d)(2)) used in a trade or
business of such corporation if such corporation continues to
maintain this Plan after the disposition
25
<PAGE>
with respect to a Participant who continues employment with the
corporation acquiring such assets;
(5) the date of disposition by the Employer or an Affiliated
Employer who maintains the Plan of its interest in a subsidiary
(within the meaning of Code Section 409(d)(3)) to an entity which
is not an Affiliated Employer but only with respect to a
Participant who continues employment with such subsidiary; or
(6) the proven financial hardship of a Participant, subject to
the limitations of Section 7.1 1.
(d) For each Plan Year, a Participant's Deferred Compensation
made under this Plan and all other plans, contracts or arrangements of
the Employer maintaining this Plan shall not exceed, during any
taxable year of the Participant, the limitation imposed by Code
Section 402(g), as in effect at the beginning of such taxable year.
If such dollar limitation is exceeded, a Participant will be deemed to
have notified the Administrator of such excess amount which shall be
distributed in a manner consistent with Section 4.2(f). The dollar
limitation shall be adjusted annually pursuant to the method provided
in Code Section 415(d) in accordance with Regulations.
(e) In the event a Participant has received a hardship
distribution from his Participant's Elective Account pursuant to
Section 7.11(b) or pursuant to Regulation 1.401(k)-1(d)(2)(iv)(B) from
any other plan maintained by the Employer, then such Participant shall
not be permitted to elect to have Deferred Compensation contributed to
the Plan on his behalf for a period of twelve (12) months following
the receipt of the distribution. Furthermore, the dollar limitation
under Code Section 402(g) shall be reduced, with respect to the
Participant's taxable year following the taxable year in which the
hardship distribution was made, by the amount of such Participant's
Deferred Compensation, if any, pursuant to this Plan (and any other
plan maintained by .the Employer) for the taxable year of the hardship
distribution.
(f) If a Participant's Deferred Compensation under this Plan
together with any elective deferrals (as defined in Regulation
1.402(g)-1(b)) under another qualified cash or deferred arrangement
(as defined in Code Section 401(k)), a simplified employee pension (as
defined in Code Section 408(k)), a salary reduction arrangement
(within the meaning of Code Section 3121(a)(5)(D)), a deferred
compensation plan under Code Section 457(b), or a trust described in
Code Section 501(c)(18) cumulatively exceed the limitation imposed by
Code Section 402(g) (as adjusted annually in accordance with the
method provided in Code Section 415(d) pursuant to Regulations) for
such Participant's taxable year, the Participant may, not later than
March 1 following the close of the Participant's taxable year, notify
the Administrator in writing of such excess and request that his
Deferred Compensation under this Plan be reduced by an amount
specified by
26
<PAGE>
the Participant. In such event, the Administrator may direct the
Trustee to distribute such excess amount (and any Income allocable to
such excess amount) to the Participant not later than the first April
15th following the close of the Participant's taxable year. Any
distribution of less than the entire amount of Excess Deferred
Compensation and Income shall be treated as a pro rata distribution of
Excess Deferred Compensation and Income. The amount distributed shall
not exceed the Participant's Deferred Compensation under the Plan for
the taxable year (and any Income allocable to such excess amount). Any
distribution on or before the last day of the Participant's taxable
year must satisfy each of the following conditions:
(1) the distribution must be made after the date on which the
Plan received the Excess Deferred Compensation;
(2) the Participant shall designate the distribution as Excess
Deferred Compensation; and
(3) the Plan must designate the distribution as a distribution of
Excess Deferred Compensation.
Any distribution made pursuant to this Section 4.2(f) shall be
made first from unmatched Deferred Compensation and, thereafter, from
Deferred Compensation which is matched. Matching contributions which
relate to such Deferred Compensation shall be forfeited.
(g) Notwithstanding Section 4.2(f) above, a Participant's Excess
Deferred Compensation shall be reduced, but not below zero, by any
distribution of Excess Contributions pursuant to Section 4.6(a) for
the Plan Year beginning with or within the taxable year of the
Participant.
(h) At Normal Retirement Date, or such other date when the
Participant shall be entitled to receive benefits, the fair market
value of the Participant's Elective Account shall be used to provide
additional benefits to the Participant or his Beneficiary.
(i) Employer Elective Contributions made pursuant to this Section
may be segregated into a separate account for each Participant in a
federally insured savings account, certificate of deposit in a bank or
savings and loan association, money market certificate, or other
short-term debt security acceptable to the Trustee until such time as
the allocations pursuant to Section 4.4 have been made.
(j) The Employer and the Administrator shall implement the salary
reduction elections provided for herein in accordance with the
following:
27
<PAGE>
(1) A Participant must make his initial salary deferral election
within a reasonable time, not to exceed thirty (30) days, after
entering the Plan pursuant to Section 3.2. If the Participant
fails to make an initial salary deferral election within such
time, then such Participant may thereafter make an election in
accordance with the rules governing modifications. The
Participant shall make such an election by entering into a
written salary reduction agreement with the Employer and filing
such agreement with the Administrator. Such election shall
initially be effective beginning with the pay period following
the acceptance of the salary reduction agreement by the
Administrator, shall not have retroactive effect and shall remain
in force until revoked.
(2) A Participant may modify a prior election during the Plan
Year and concurrently make a new election by filing a written
notice with the Administrator within a reasonable time before the
pay period for which such modification is to be effective.
However, modifications to a salary deferral election shall only
be permitted quarterly, during election periods established by
the Administrator prior to the first day of each Plan Year
quarter. Any modification shall not have retroactive effect and
shall remain in force until revoked.
(3) A Participant may elect to prospectively revoke his salary
reduction agreement in its entirety at any time during the Plan
Year by providing the Administrator with thirty (30) days written
notice of such revocation (or upon such shorter notice period as
may be acceptable to the Administrator). Such revocation shall
become effective as of the beginning of the first pay period
coincident with or next following the expiration of the notice
period. Furthermore, the termination of the Participant's
employment, or the cessation of participation for any reason,
shall be deemed to revoke any salary reduction agreement then in
effect, effective immediately following the close of the pay
period within which such termination or cessation occurs.
4.3 TIME OF PAYMENT OF EMPLOYER CONTRIBUTION
Employer contributions will be paid in cash, Company Stock or other
property a the Employer may from time to time determine. Company Stock and
other property will be valued at their then fair market value. The Employer
shall generally pay to the Trustee its contribution to the Plan for each Plan
Year, within the time prescribed by law, including extensions of time, for the
filing of the Employer federal income tax return for the Fiscal Year.
However, Employer Elective Contributions accumulated through payroll
deductions shall be paid to the Trustee as of the earliest date on which such
contributions can reasonably be segregated from the Employer general assets, but
in any event within fifteen (15) days after the end of the month in which the
deferral is made. The provisions of Department of Labor regulations 2510.3-102
are incorporated herein by reference. Furthermore, any additional
28
<PAGE>
Employer contributions which are allocable to the Participant's Elective Account
for a Plan Year shall be paid to the Plan no later than the twelve-month period
immediately following the close of such Plan Year.
4.4 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS
(a) The Administrator shall establish and maintain an account in
the name of each Participant to which the Administrator shall credit
as of each Anniversary Date all amounts allocated to each such
Participant as set forth herein.
(b) The Employer shall provide the Administrator with all
information required by the Administrator to make a proper allocation
of the Employer Stock Bonus Plan contributions for each Plan Year.
Within a reasonable period of time after the date of receipt by the
Administrator of such information, the Administrator shall allocate
such contribution as follows:
(1) With respect to the Employer Elective Contribution made
pursuant to Section 4.1(a), to each Participant's Elective
Account in an amount equal to each such Participant's Deferred
Compensation for the year.
(2) With respect to the Employer Non-Elective Contribution made
pursuant to Section 4.1(b), to each Participant's Account in
accordance with Section 4.1(b).
Any Participant who contributes Deferred Compensation to the Plan
and completed a Year of Service shall be eligible to share in the
matching contribution for the year.
(3) With respect to the Employer Non-Elective Contribution made
pursuant to Section 4.1(c), to each Participant's Account in the
same proportion that each such Participant's Compensation for the
year bears to the total Compensation of all Participants for such
year.
Only Participants who have completed a Year of Service during the
Plan Year and who are actively employed on the last day of the
Plan Year shall be eligible to share in the discretionary
contribution for the year.
(c) The Employer shall provide the Administrator with all
information required by the Administrator to make a proper allocation
of the Employer Money Purchase Pension Plan contributions for each
Plan Year. Within a reasonable period of time after the date of
receipt by the Administrator of such information, the Administrator
shall allocate such contributions as follows: With respect to Money
Purchase Pension Plan contributions made pursuant to Section 4.1(d),
to each Participant's Account in the same proportion that each
Participant's
29
<PAGE>
Compensation for the year bears to the total compensation of all
Participants for such year.
Only Participants who have completed a Year of Service
during the Plan Year and who are actively employed on the last day of
the Plan Year shall be eligible to share in the discretionary
contribution for the year.
(d) The Company Stock Account of each Participant shall be
credited as of each Anniversary Date with his allocable share of
Company Stock (including fractional shares) purchased and paid for by
the Plan or contributed in kind by the Employer. Stock dividends on
Company Stock held in his Company Stock Account shall be credited to
his Company Stock Account when paid. Cash dividends on Company Stock
held in his Company Stock Account shall, in the sole discretion of the
Administrator, either be credited to his Other Investments Account
when paid or be used to repay an Exempt Loan; provided, however, that
when cash dividends are used to repay an Exempt Loan, Company Stock
shall be released from the Unallocated Company Stock Suspense Account
and, allocated to the Participant's Company Stock Account pursuant to
Section 4.4(g) and, provided further, that Company Stock allocated to
the Participant's Company Stock Account shall have a fair market value
not less than the amount of cash dividends which would have been
allocated to such Participant's Other Investments Account for the
year.
Company Stock acquired by the Plan with the proceeds of an Exempt
Loan shall only be allocated to each Participant's Company Stock
Account upon release from the Unallocated Company Stock Suspense
Account as provided in Section 4.4(g) herein. Company Stock acquired
with the proceeds of an Exempt Loan shall be an asset of the Trust
Fund and maintained in the Unallocated Company Stock Suspense Account.
(e) As of each Valuation Date, before allocation of one-half of
the Employer contributions for the entire Plan Year, any earnings or
losses (net appreciation or net depreciation) of the Trust Fund shall
be allocated in the same proportion that each Participant's and Former
Participant's nonsegregated accounts (other than each Participant's
Company Stock Account) bear to the total of all Participants' and
Former Participants' nonsegregated accounts (other than Participants'
Company Stock Accounts) as of such date. Earnings or losses with
respect to a Participant's Directed Account shall be allocated in
accordance with Section 4.12.
Earnings or losses do not include the interest paid under
any installment contract for the purchase of Company Stock by the
Trust Fund or on any loan used by the Trust Fund to purchase Company
Stock, nor does it include income received by the Trust Fund with
respect to Company Stock acquired with the proceeds of an Exempt Loan;
all income received by the Trust Fund from
30
<PAGE>
Company Stock acquired with the proceeds of an Exempt Loan may, at the
discretion of the Administrator, be used to repay such loan.
Participants' transfers from other qualified plans deposited
in the general Trust Fund shall share in any earnings and losses (net
appreciation or net depreciation) of the Trust Fund in the same manner
provided above. Each segregated account maintained on behalf of a
Participant shall be credited or charged with its separate earnings
and losses.
(f) Participants' accounts shall be debited for any insurance or
annuity premiums paid, if any, and credited with any dividends
received on insurance contracts.
(g) All Company Stock acquired by the Plan with the proceeds of
an Exempt Loan must be added to and maintained in the Unallocated
Company Stock Suspense Account. Such Company Stock shall be released
and withdrawn from that account as if all Company Stock in that
account were encumbered. For each Plan Year during the duration of
the loan, the number of shares of Company Stock released shall equal
the number of encumbered shares held immediately before release for
the current Plan Year multiplied by a fraction, the numerator of which
is the amount of principal and interest paid for the Plan Year and the
denominator of which is the sum of the numerator plus the principal
and interest to be paid for all future Plan Years. As of each
Anniversary Date, the Plan must consistently allocate to each
Participant's Account, in the same manner as Employer discretionary
contributions pursuant to Section 4.1(c) are allocated, non-monetary
units (shares and fractional shares of Company Stock) representing
each Participant's interest in Company Stock withdrawn from the
Unallocated Company Stock Suspense Account. However, Company Stock
released from the Unallocated Company Stock Suspense Account with cash
dividends pursuant to Section 4.4(d) shall be allocated to each
Participant's Company Stock Account in the same proportion that each
such Participant's number of shares of Company Stock sharing in such
cash dividends bears to the total number of shares of all
Participants' Company Stock sharing in such cash dividends. Income
earned with respect to Company Stock in the Unallocated Company Stock
Suspense Account shall be used, at the discretion of the
Administrator, to repay the Exempt Loan used to purchase such Company
Stock. Company Stock released from the Unallocated Company Stock
Suspense Account with such income, and any income which is not so
used, shall be allocated as of each Anniversary Date in the same
proportion that each Participant's and Former Participant's
nonsegregated accounts after the allocation of any earnings or losses
pursuant to Section 4.4(e) bear to the total of all Participant's and
Former Participant's nonsegregated accounts after the allocation of
any earnings or losses pursuant to Section 4.4(e).
(h) As of each Anniversary Date any amounts which became
Forfeitures since the last Anniversary Date shall first be made
available to reinstate previously forfeited account balances of Former
Participants, if any, in
31
<PAGE>
accordance with Section 7.4(g)(2). The remaining Forfeitures, if any,
shall be used to reduce the contribution of the Employer hereunder for
the Plan Year in which such Forfeitures occur in the following manner:
(1) Forfeitures attributable to Employer matching contributions
made pursuant to Section 4.1(b) shall be used to reduce the
Employer contribution for the Plan Year in which such Forfeitures
occur.
(2) Forfeitures attributable to Employer discretionary
contributions made pursuant to Section 4.1(c) shall be used to
reduce the Employer contribution for the Plan Year in which such
Forfeitures occur.
(i) For any Top Heavy Plan Year, Non-Key Employees not otherwise
eligible to share in the allocation of contributions as provided
above, shall receive the minimum allocation provided for in Section
4.4(k) if eligible pursuant to the provisions of Section 4.4(m).
(j) Notwithstanding the foregoing, Participants who have not
completed a Year of Service during the Plan Year or are not actively
employed on the last day of the Plan Year due to Retirement (Early,
Normal or Late), Total and Permanent Disability or death shall share
in the allocation of contributions for that Plan Year.
(k) Minimum Allocations Required for Top Heavy Plan Years:
Notwithstanding the foregoing, for any Top Heavy Plan Year, the sum of
the Employer contributions allocated to the Participant's Combined
Account of each Non-Key Employee shall be equal to at least three
percent (3%) of such Non-Key Employee's "415 Compensation" (reduced by
contributions and forfeitures, if any, allocated to each Non-Key
Employee in any defined contribution plan included with this plan in a
Required Aggregation Group). However, if (1) the sum of the Employer
contributions allocated to the Participant's Combined Account of each
Key Employee for such Top Heavy Plan Year is less than three percent
(3%) of each Key Employee's "415 Compensation" and (2) this Plan is
not required to be included in an Aggregation Group to enable a
defined benefit plan to meet the requirements of Code Section
401(a)(4) or 410, the sum of the Employer contributions allocated to
the Participant's Combined Account of each Non-Key Employee shall be
equal to the largest percentage allocated to the Participant's
Combined Account of any Key Employee. However, in determining whether
a Non-Key Employee has received the required minimum allocation, such
Non-Key Employee's Deferred Compensation and matching contributions
needed to satisfy the "Actual Contribution Percentage" tests pursuant
to Section 4.7(a) shall not be taken into account.
(l) For purposes of the minimum allocations set forth above, the
percentage allocated to the Participant's Combined Account of any Key
Employee shall be equal to the ratio of the sum of the Employer
contributions allocated on
32
<PAGE>
behalf of such Key Employee divided by the "415 Compensation" for such
Key Employee.
(m) For any Top Heavy Plan Year, the minimum allocations set
forth above shall be allocated to the Participant's Combined Account
of all Non-Key Employees who are Participants and who are employed by
the Employer on the last day of the Plan Year, including Non-Key
Employees who have (1) failed to complete a Year of Service; and (2)
declined to make mandatory contributions (if required) or, in the case
of a cash or deferred arrangement, elective contributions to the Plan.
(n) For the purposes of this Section, "415 Compensation" shall be
limited to $150,000. Such amount shall be adjusted for increases in
the cost of living in accordance with Code Section 401(a)(17), except
that the dollar increase in effect on January 1 of any calendar year
shall be effective for the Plan Year beginning with or within such
calendar year. For any short Plan Year the "415 Compensation" limit
shall be an amount equal to the "415 Compensation" limit for the
calendar year in which the Plan Year begins multiplied by the ratio
obtained by dividing the number of full months in the short Plan Year
by twelve (12).
(o) Notwithstanding anything herein to the contrary, Participants
who terminated employment for any reason during the Plan Year shall
share in the salary reduction contributions made by the Employer for
the year of termination without regard to the Hours of Service
credited.
(p) If a Former Participant is reemployed after five (5)
consecutive 1-Year Breaks in Service, then separate accounts shall be
maintained as follows:
(1) one account for nonforfeitable benefits attributable to pre-
break service; and
(2) one account representing his status in the Plan attributable
to post-break service.
4.5 ACTUAL DEFERRAL PERCENTAGE TESTS
(a) Maximum Annual Allocation: For each Plan Year, the annual
allocation derived from Employer Elective Contributions to a
Participant's Elective Account shall satisfy one of the following
tests:
(1) The "Actual Deferral Percentage" for the Highly Compensated
Participant group shall not be more than the "Actual Deferral
Percentage" of the Non-Highly Compensated Participant group
multiplied by 1.25, or
33
<PAGE>
(2) The excess of the "Actual Deferral Percentage" for the Highly
Compensated Participant group over the "Actual Deferral
Percentage" for the Non-Highly Compensated Participant group
shall not be more than two percentage points. Additionally, the
"Actual Deferral Percentage" for the Highly Compensated
Participant group shall not exceed the "Actual Deferral
Percentage" for the Non-Highly Compensated Participant group
multiplied by 2. The provisions of Code Section 401(k)(3) and
Regulation 1.401(k)-l(b) are incorporated herein by reference.
However, in order to prevent the multiple use of the alternative
method described in (2) above and in Code Section 401(m)(9)(A),
any Highly Compensated Participant eligible to make elective
deferrals pursuant to Section 4.2 and to make Employee
contributions or to receive matching contributions under this
Plan or under any other plan maintained by the Employer or an
Affiliated Employer shall have a combination of his actual
deferral ratio and his actual contribution ratio reduced pursuant
to Regulation 1.401(m)-2, the provisions of which are
incorporated herein by reference.
(b) For the purposes of this Section "Actual Deferral
Percentage" means, with respect to the Highly Compensated Participant
group and Non-Highly Compensated Participant group for a Plan Year,
the average of the ratios, calculated separately for each Participant
in such group, of the amount of Employer Elective Contributions
allocated to each Participant's Elective Account for such Plan Year,
to such Participant's "414(s) Compensation" for such Plan Year. The
actual deferral ratio for each Participant and the "Actual Deferral
Percentage" for each group shall be calculated to the nearest one-
hundredth of one percent. Employer Elective Contributions allocated
to each Non-Highly Compensated Participant's Elective Account shall be
reduced by Excess Deferred Compensation to the extent such excess
amounts are made under this Plan or any other plan maintained by the
Employer.
(c) For the purposes of Sections 4.5(a) and 4.6, a Highly
Compensated Participant and a Non-Highly Compensated Participant shall
include any Employee eligible to make a deferral election pursuant to
Section 4.2, whether or not such deferral election was made or
suspended pursuant to Section 4.2.
(d) For purposes of this Section and Code Sections 401(a)(4),
410(b) and 401(k), this Plan may not be combined with any other plan.
4.6 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS
In the event that the initial allocations of the Employer Elective
Contributions made pursuant to Section 4.4 do not satisfy one of the tests set
forth in Section 4.5(a), the Administrator shall adjust Excess Contributions
pursuant to the options set forth below:
34
<PAGE>
(a) On or before the fifteenth day of the third month following the
end of each Plan Year, the Highly Compensated Participant having the
highest actual deferral ratio shall have his portion of Excess
Contributions distributed to him until one of the tests set forth in
Section 4.5(a) is satisfied, or until his actual deferral ratio equals
the actual deferral ratio of the Highly Compensated Participant having
the second highest actual deferral ratio. This process shall continue
until one of the tests set forth in Section 4.5(a) is satisfied. For
each Highly Compensated Participant, the amount of Excess
Contributions is equal to the Elective Contributions used to satisfy
the "Actual Deferral Percentage" tests on behalf of such Highly
Compensated Participant (determined prior to the application of this
paragraph) minus the amount determined by multiplying the Highly
Compensated Participant's actual deferral ratio (determined after
application of this paragraph) by his "414(s) Compensation." However,
in determining the amount of Excess Contributions to be distributed
with respect to an affected Highly Compensated Participant as
determined herein, such amount shall be reduced pursuant to Section
4.2(f) by any Excess Deferred Compensation previously distributed to
such affected Highly Compensated Participant for his taxable year
ending with or within such Plan Year.
(1) With respect to the distribution of Excess Contributions
pursuant to (a) above, such distribution:
(i) may be postponed but not later than the close of the
Plan Year following the Plan Year to which they are
allocable;
(ii) shall be adjusted for Income; and
(iii) shall be designated by the Employer as a distribution
of
Excess Contributions (and Income).
(2) Any distribution of less than the entire amount of Excess
Contributions shall be treated as a pro rata distribution of
Excess Contributions and Income.
(3) Matching contributions which relate to Excess Contributions
shall be forfeited unless the related matching contribution is
distributed as an Excess Aggregate Contribution pursuant to
Section 4.8.
(b) Within twelve (12) months after the end of the Plan Year, the
Employer may make a special Qualified Non-Elective Contribution on
behalf of Non-Highly Compensated Participants in an amount sufficient
to satisfy one of the tests set forth in Section 4.5(a). Such
contribution shall be allocated to the Participant's Elective Account
of each Non-Highly Compensated Participant in the same proportion
that each Non-Highly Compensated Participant's Compensation for the
year bears to the total Compensation of all Non-Highly Compensated
Participants.
35
<PAGE>
(c) If during a Plan Year the projected aggregate amount of
Elective Contributions to be allocated to all Highly Compensated
Participants under this Plan would, by virtue of the tests set forth
in Section 4.5(a), cause the Plan to fail such tests, then the
Administrator may automatically reduce proportionately or in the order
provided in Section 4.6(a) each affected Highly Compensated
Participant's deferral election made pursuant to Section 4.2 by an
amount necessary to satisfy one of the tests set forth in Section
4.5(a).
4.7 ACTUAL CONTRIBUTION PERCENTAGE TESTS
(a) The "Actual Contribution Percentage" for the Highly
Compensated Participant group shall not exceed the greater of:
(1) 125 percent of such percentage for the Non-Highly
Compensated Participant group; or
(2) the lesser of 200 percent of such percentage for the Non-
Highly Compensated Participant group, or such percentage for the
Non-Highly Compensated Participant group plus 2 percentage
points. However, to prevent the multiple use of the alternative
method described in this paragraph and Code Section 401(m)(9)(A),
any Highly Compensated Participant eligible to make elective
deferrals pursuant to Section 4.2 or any other cash or deferred
arrangement maintained by the Employer or an Affiliated Employer
and to make Employee contributions or to receive matching
contributions under this Plan or under any other plan maintained
by the Employer or an Affiliated Employer shall have a
combination of his actual deferral ratio and his actual
contribution ratio reduced pursuant to Regulation 1.401(m)-2. The
provisions of Code Section 401(m) and Regulations 1.401(m)-1(b)
and 1.401(m)-2 are incorporated herein by reference.
(b) For the purposes of this Section and Section 4.8, "Actual
Contribution Percentage" for a Plan Year means, with respect to the
Highly Compensated Participant group and Non-Highly Compensated
Participant group, the average of the ratios (calculated separately
for each Participant in each group) of:
(1) the sum of Employer matching contributions made pursuant to
Section 4.1(b) on behalf of each such Participant for such Plan
Year; to
(2) the Participant's "414(s) Compensation" for such Plan Year.
(c) For purposes of determining the "Actual Contribution
Percentage" and the amount of Excess Aggregate Contributions pursuant
to Section 4.8(d), only Employer matching contributions contributed to
the Plan prior to the end of
36
<PAGE>
the succeeding Plan Year shall be considered. In addition, the
Administrator may elect to take into account, with respect to
Employees eligible to have Employer matching contributions pursuant to
Section 4.1(b) allocated to their accounts, elective deferrals (as
defined in Regulation 1.402(g)-1(b)) and qualified non-elective
contributions (as defined in Code Section 401(m)(4)(C)) contributed to
any plan maintained by the Employer. Such elective deferrals and
qualified non-elective contributions shall be treated as Employer
matching contributions subject to Regulation 1.401(m)-l(b)(5) which is
incorporated herein by reference. However, the Plan Year must be the
same as the plan year of the plan to which the elective deferrals and
the qualified non-elective contributions are made.
(d) For purposes of this Section and Code Sections 401(a)(4),
410(b) and 401(m), this Plan may not be combined with any other plan.
(e) For purposes of Sections 4.7(a) and 4.8, a Highly Compensated
Participant and Non-Highly Compensated Participant shall include any
Employee eligible to have Employer matching contributions pursuant to
Section 4.1(b) (whether or not a deferral election was made or
suspended pursuant to Section 4.2(e)) allocated to his account for the
Plan Year.
4.8 ADJUSTMENT TO ACTUAL CONTRIBUTION PERCENTAGE TESTS
(a) In the event that the "Actual Contribution Percentage" for
the Highly Compensated Participant group exceeds the "Actual
Contribution Percentage" for the Non-Highly Compensated Participant
group pursuant to Section 4.7(a), the Administrator (on or before the
fifteenth day of the third month following the end of the Plan Year,
but in no event later than the close of the following Plan Year) shall
direct the Trustee to distribute to the Highly Compensated Participant
having the highest actual contribution ratio, his Vested portion of
Excess Aggregate Contributions (and Income allocable to such
contributions) and, if forfeitable, forfeit such non-Vested Excess
Aggregate Contributions attributable to Employer matching
contributions (and Income allocable to such forfeitures) until either
one of the tests set forth in Section 4.7(a) is satisfied, or until
his actual contribution ratio equals the actual contribution ratio of
the Highly Compensated Participant having the second highest actual
contribution ratio. This process shall continue until one of the
tests set forth in Section 4.7(a) is satisfied.
If the correction of Excess Aggregate Contributions
attributable to Employer matching contributions is not in proportion
to the Vested and non-Vested portion of such contributions, then the
Vested portion of the Participant's Account attributable to Employer
matching contributions after the correction shall be subject to
Section 7.5(j).
(b) Any distribution and/or Forfeiture of less than the entire
amount of Excess Aggregate Contributions (and Income) shall be treated
as a pro rata
37
<PAGE>
distribution and/or Forfeiture of Excess Aggregate Contributions and
Income. Distribution of Excess Aggregate Contributions shall be
designated by the Employer as a distribution of Excess Aggregate
Contributions (and Income). Forfeitures of Excess Aggregate
Contributions shall be treated in accordance with Section 4.4.
(c) Excess Aggregate Contributions, including forfeited matching
contributions, shall be treated as Employer contributions for purposes
of Code Sections 404 and 415 even if distributed from the Plan.
Forfeited matching contributions that are reallocated to
Participants' Accounts for the Plan Year in which the forfeiture
occurs shall be treated as an "annual addition" pursuant to Section
4.9(b) for the
Participants to whose Accounts they are reallocated and for the
Participants from whose Accounts they are forfeited.
(d) For each Highly Compensated Participant, the amount of Excess
Aggregate Contributions is equal to the Employer matching
contributions made pursuant to Section 4.1(b) and any qualified non-
elective contributions or elective deferrals taken into account
pursuant to Section 4.7(c) on behalf of the Highly Compensated
Participant (determined prior to the application of this paragraph)
minus the amount determined by multiplying the Highly Compensated
Participant's actual contribution ratio (determined after application
of this paragraph) by his "414(s) Compensation." The actual
contribution ratio must be rounded to the nearest one-hundredth of one
percent. In no case, shall the amount of Excess Aggregate
Contribution with respect to any Highly Compensated Participant exceed
the amount of Employer matching contributions made pursuant to
Section 4.1(b) and any qualified non-elective contributions or
elective deferrals taken into account pursuant to Section 4.7(c) on
behalf of such Highly Compensated Participant for such Plan Year.
(e) The determination of the amount of Excess Aggregate
Contributions with respect to any Plan Year shall be made after first
determining the Excess Contributions, if any, to be treated as
voluntary Employee contributions due to recharacterization for the
plan year of any other qualified cash or deferred arrangement (as
defined in Code Section 401(k)) maintained by the Employer that ends
with or within the Plan Year.
(f) If during a Plan Year the projected aggregate amount of
Employer matching contributions to be allocated to all Highly
Compensated Participants under this Plan would, by virtue of the tests
set forth in Section 4.7(a), cause the Plan to fail such tests, then
the Administrator may automatically reduce proportionately or in the
order provided in Section 4.8(a) each affected Highly Compensated
Participant's projected share of such contributions by an amount
necessary to satisfy one of the tests set forth in Section 4.7(a).
38
<PAGE>
(g) Notwithstanding the above, within twelve (12) months after
the end of the Plan Year, the Employer may make a special Qualified
Non-Elective Contribution on behalf of Non-Highly Compensated
Participants in an amount sufficient to satisfy one of the tests set
forth in Section 4.7(a). Such contribution shall be allocated to the
Participant's Account of each Non-Highly Compensated Participant in
the same proportion that each Non-Highly Compensated Participant's
Compensation for the year bears to the total Compensation of all Non-
Highly Compensated Participants. A separate accounting of any special
Qualified Non-Elective Contribution shall be maintained in the
Participant's Account.
4.9 MAXIMUM ANNUAL ADDITIONS
(a) Notwithstanding the foregoing, the maximum "annual additions"
credited to a Participant's accounts for any "limitation year" shall
equal the lesser of: (1) $30,000 adjusted annually as provided in Code
Section 415(d) pursuant to the Regulations, or (2) twenty-five percent
(25%) of the Participant's "415 Compensation" for such "limitation
year." For any short "limitation year," the dollar limitation in (1)
above shall be reduced by a fraction, the numerator of which is the
number of full months in the short "limitation year" and the
denominator of which is twelve (12).
(b) For purposes of applying the limitations of Code Section 415,
"annual additions" means the sum credited to a Participant's accounts
for any "limitation year" of (1) Employer contributions, (2) Employee
contributions, (3) forfeitures, (4) amounts allocated, after March 31,
1984, to an individual medical account, as defined in Code Section
415(l)(2) which is part of a pension or annuity plan maintained by the
Employer and (5) amounts derived from contributions paid or accrued
after December 31, 1985, in taxable years ending after such date,
which are attributable to post-retirement medical benefits allocated
to the separate account of a key employee (as defined in Code Section
419A(d)(3)) under a welfare benefit plan (as defined in Code Section
419(e)) maintained by the Employer. Except, however, the "415
Compensation" percentage limitation referred to in paragraph (a)(2)
above shall not apply to: (1) any contribution for medical benefits
(within the meaning of Code Section 419A(f)(2)) after separation from
service which is otherwise treated as an "annual addition," or (2) any
amount otherwise treated as an "annual addition" under Code Section
415(l)(1).
(c) For purposes of applying the limitations of Code Section 415,
the following are not "annual additions": (1) the transfer of funds
from one qualified plan to another and (2) provided no more than one-
third of the Employer contributions for the year are allocated to
Highly Compensated Participants, Forfeitures of Company Stock
purchased with the proceeds of an Exempt Loan and Employer
contributions applied to the payment of interest on an Exempt
39
<PAGE>
Loan. In addition, the following are not Employee contributions for
the purposes of Section 4.9(b)(2): (1) rollover contributions (as
defined in Code Sections 402(a)(5), 403(a)(4), 403(b)(8) and
408(d)(3)); (2) repayments of loans made to a Participant from the
Plan; (3) repayments of distributions received by an Employee pursuant
to Code Section 411(a)(7)(B) (cash-outs); (4) repayments of
distributions received by an Employee pursuant to Code Section
411(a)(3)(D) (mandatory contributions); and (5) Employee contributions
to a simplified employee pension excludable from gross income under
Code Section 408(k)(6).
(d) For purposes of applying the limitations of Code Section 415,
the "limitation year" shall be the Plan Year.
(e) For the purpose of this Section, all qualified defined
benefit plans (whether terminated or not) ever maintained by the
Employer shall be treated as one defined benefit plan, and all
qualified defined contribution plans (whether terminated or not) ever
maintained by the Employer shall be treated as one defined
contribution plan.
(f) For the purpose of this Section, if the Employer is a member
of a controlled group of corporations, trades or businesses under
common control (as defined by Code Section 1563(a) or Code Section
414(b) and (c) as modified by Code Section 415(h)), is a member of an
affiliated service group (as defined by Code Section 414(m)), or is a
member of a group of entities required to be aggregated pursuant to
Regulations under Code Section 414(o), all Employees of such Employers
shall be considered to be employed by a single Employer.
(g) For the purpose of this Section, if this Plan is a Code
Section 413(c) plan, each Employer who maintains this Plan will be
considered to be a separate Employer.
(h)(1) If a Participant participates in more than one defined
contribution plan maintained by the Employer which have different
Anniversary Dates, the maximum "annual additions" under this Plan
shall equal the maximum "annual additions" for the "limitation year"
minus any "annual additions" previously credited to such Participant's
accounts during the "limitation year."
(2) If a Participant participates in both a defined contribution
plan subject to Code Section 412 and a defined contribution plan
not subject to Code Section 412 maintained by the Employer which
have the same Anniversary Date, "annual additions" will be
credited to the Participant's accounts under the defined
contribution plan subject to Code Section 412 prior to crediting
"annual additions" to the Participant's accounts under the
defined contribution plan not subject to Code Section 412.
40
<PAGE>
(3) If a Participant participates in more than one defined
contribution plan not subject to Code Section 412 maintained by
the Employer which have the same Anniversary Date, the maximum
"annual additions" under this Stock Bonus Plan shall equal the
product of (A) the maximum "annual additions" for the "limitation
year" minus any "annual additions" previously credited under
subparagraphs (1) or (2) above, multiplied by (B) a fraction (i)
the numerator of which is the "annual additions" which would be
credited to such Participant's accounts under this Stock Bonus
Plan without regard to the limitations of Code Section 415 and
(ii) the denominator of which is such "annual additions" for all
plans described in this subparagraph.
(i) If an Employee is (or has been) a Participant in one or more
defined benefit plans and one or more defined contribution plans
maintained by the Employer, the sum of the defined benefit plan
fraction and the defined contribution plan fraction for any
"limitation year" may not exceed 1.0.
(j) The defined benefit plan fraction for any "limitation year"
is a fraction, the numerator of which is the sum of the Participant's
projected annual benefits under all the defined benefit plans (whether
or not terminated) maintained by the Employer, and the denominator of
which is the lesser of 125 percent of the dollar limitation determined
for the "limitation year" under Code Sections 415(b) and (d) or 140
percent of the highest average compensation, including any adjustments
under Code Section 415(b).
Notwithstanding the above, if the Participant was a Participant
as of the first day of the first "limitation year" beginning after
December 31, 1986, in one or more defined benefit plans maintained by
the Employer which were in existence on May 6, 1986, the denominator
of this fraction will not be less than 125 percent of the sum of the
annual benefits under such plans which the Participant had accrued as
of the close of the last "limitation year" beginning before January 1,
1987, disregarding any changes in the terms and conditions of the plan
after May 5, 1986. The preceding sentence applies only if the defined
benefit plans individually and in the aggregate satisfied the
requirements of Code Section 415 for all "limitation years" beginning
before January 1, 1987.
(k) The defined contribution plan fraction for any "limitation
year" is a fraction, the numerator of which is the sum of the annual
additions to the Participant's Account under all the defined
contribution plans (whether or not terminated) maintained by the
Employer for the current and all prior "limitation years" (including
the annual additions attributable to the Participant's nondeductible
Employee contributions to all defined benefit plans, whether or not
terminated, maintained by the Employer, and the annual additions
attributable to all welfare benefit funds, as defined in Code Section
419(e), and individual medical accounts, as defined in Code Section
415(l)(2), maintained by the Employer), and the denominator of which
is the sum of the maximum aggregate
41
<PAGE>
amounts for the current and all prior "limitation years" of service
with the Employer (regardless of whether a defined contribution plan
was maintained by the Employer). The maximum aggregate amount in any
"limitation year" is the lesser of 125 percent of the dollar
limitation determined under Code Sections 415(b) and (d) in effect
under Code Section 415(c)(1)(A) or 35 percent of the Participant's
Compensation for such year.
If the Employee was a Participant as of the end of the first day
of the first "limitation year" beginning after December 31, 1986, in
one or more defined contribution plans maintained by the Employer
which were in existence on May 6, 1986, the numerator of this fraction
will be adjusted if the sum of this fraction and the defined benefit
fraction would otherwise exceed 1.0 under the terms of this Plan.
Under the adjustment, an amount equal to the product of (1) the excess
of the sum of the fractions over 1.0 times (2) the denominator of this
fraction, will be permanently subtracted from the numerator of this
fraction. The adjustment is calculated using the fractions as they
would be computed as of the end of the last "limitation year"
beginning before January 1, 1987, and disregarding any changes in the
terms and conditions of the Plan made after May 5, 1986, but using the
Code Section 415 limitation applicable to the first "limitation year"
beginning on or after January 1, 1987. The annual addition for any
"limitation year" beginning before January 1, 1987 shall not be
recomputed to treat all Employee contributions as annual additions.
(l) Notwithstanding anything contained in this Section to the
contrary, the limitations, adjustments and other requirements
prescribed in this Section shall at all times comply with the
provisions of Code Section 415 and the Regulations thereunder, the
terms of which are specifically incorporated herein by reference.
4.10 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS
(a) If, as a result of a reasonable error in estimating a
Participant's Compensation, a reasonable error in determining the
amount of elective deferrals (within the meaning of Code Section
402(g)(3)) that may be made with respect to any Participant under the
limits of Section 4.9 or other facts and circumstances to which
Regulation 1.415-6(b)(6) shall be applicable, the "annual additions"
under this Plan would cause the maximum "annual additions" to be
exceeded for any Participant, the Administrator shall (1) distribute
any elective deferrals (within the meaning of Code Section 402(g)(3))
or return any Employee contributions (whether voluntary or mandatory),
and for the distribution of gains attributable to those elective
deferrals and Employee contributions, to the extent that the
distribution or return would reduce the "excess amount" in the
Participant's accounts (2) hold any "excess amount" remaining after
the return of any elective deferrals or voluntary Employee
contributions in a "Section 415 suspense account" (3) use the "Section
415 suspense account" in the next "limitation year" (and succeeding
"limitation years" if necessary) to reduce Employer contributions
42
<PAGE>
for that Participant if that Participant is covered by the Plan as of
the end of the "limitation year," or if the Participant is not so
covered, allocate and reallocate the "Section 415 suspense account" in
the next "limitation year" (and succeeding "limitation years" if
necessary) to all Participants in the Plan before any Employer or
Employee contributions which would constitute "annual additions" are
made to the Plan for such "limitation year" (4) reduce Employer
contributions to the Plan for such "limitation year" by the amount of
the "Section 415 suspense account" allocated and reallocated during
such "limitation year."
(b) For purposes of this Article, "excess amount" for any
Participant for a "limitation year" shall mean the excess, if any, of
(1) the "annual additions" which would be credited to his account
under the terms of the Plan without regard to the limitations of Code
Section 415 over (2) the maximum "annual additions" determined
pursuant to Section 4.9.
(c) For purposes of this Section, "Section 415 suspense account"
shall mean an unallocated account equal to the sum of "excess amounts"
for all Participants in the Plan during the "limitation year." The
"Section 415 suspense account" shall not share in any earnings or
losses of the Trust Fund.
4.11 TRANSFERS FROM QUALIFIED PLANS
(a) With the consent of the Administrator, amounts may be
transferred from other qualified plans by Eligible Employees
(regardless of whether such Eligible Employee is eligible to
participate in the Plan), provided that the trust from which such
funds are transferred permits the transfer to be made and the transfer
will not jeopardize the tax exempt status of the Plan or Trust or
create adverse tax consequences for the Employer. The amounts
transferred shall be set up in a separate account herein referred to
as a "Participant's Rollover Account." Such account shall be fully
Vested at all times and shall not be subject to Forfeiture for any
reason.
(b) Amounts in a Participant's Rollover Account shall be held by
the Trustee pursuant to the provisions of this Plan and may not be
withdrawn by, or distributed to the Participant, in whole or in part,
except as provided in paragraphs (c) and (d) of this Section.
(c) Except as permitted by Regulations (including Regulation
1.411 (d)-4), amounts attributable to elective contributions (as
defined in Regulation 1.401(k)-1(g)(3)), including amounts treated as
elective contributions, which are transferred from another qualified
plan in a plan-to-plan transfer shall be subject to the distribution
limitations provided for in Regulation 1.401 (k)-1(d).
(d) At Normal Retirement Date, or such other date when the
Participant or his Beneficiary shall be entitled to receive benefits,
the fair market value of the Participant's Rollover Account shall be
used to provide additional
43
<PAGE>
benefits to the Participant or his Beneficiary. Any distributions of
amounts held in a Participant's Rollover Account shall be made in a
manner which is consistent with and satisfies the provisions of
Section 7.5, including, but not limited to, all notice an consent
requirements of Code Section 41l(a)(11) and the Regulations
thereunder. Furthermore, such amounts shall be considered as part of a
Participant's benefit in determining whether an involuntary cash-out
of benefits without Participant consent may be made.
(e) The Administrator may direct that employee transfers made
after a valuation date be segregated into a separate account for each
Participant in a federally insured savings account, certificate of
deposit in a bank or savings and loan association, money market
certificate, or other short term debt security acceptable to the
Trustee until such time as the allocations pursuant to this Plan have
been made, at which time they may remain segregated or be invested as
part of the general Trust Fund, to be determined by the Administrator.
(f) For purposes of this Section, the term "qualified plan" shall
mean any tax qualified plan under Code Section 401(a). The term
"amounts transferred from other qualified plans" shall mean: (i)
amounts transferred to this Plan directly from another qualified plan;
(ii) distributions from another qualified plan which are eligible
rollover distributions and which are either transferred by the
Employee to this Plan within sixty (60) days following his receipt
thereof or are transferred pursuant to a direct rollover; (iii)
amounts transferred to this Plan from a conduit individual retirement
account provided that the conduit individual retirement account has no
assets other than assets which (A) were previously distributed to the
Employee by another qualified plan as a lump-sum distribution (B) were
eligible for tax-free rollover to a qualified plan and (C) were
deposited in such conduit individual retirement account within sixty
(60) days of receipt thereof and other than earnings on said assets;
and (iv) amounts distributed to the Employee from a conduit individual
retirement account meeting the requirements of clause (iii) above, and
transferred by the Employee to this Plan within sixty (60) days of his
receipt thereof from such conduit individual retirement account.
(g) Prior to accepting any transfers to which this Section
applies, the Administrator may require the Employee to establish that
the amounts to be transferred to this Plan meet the requirements of
this Section and may also require the Employee to provide an opinion
of counsel satisfactory to the Employer that the amounts to be
transferred meet the requirements of this Section.
(h) Notwithstanding anything herein to the contrary, a transfer
directly to this Plan from another qualified plan (or a transaction
having the effect of such a transfer) shall only be permitted if it
will not result in the elimination or reduction of any "Section
411(d)(6) protected benefit" as described in Section 9.1.
4.12 DIRECTED INVESTMENT ACCOUNT
44
<PAGE>
(a) Participants may, subject to Section 4.12(c) and a procedure
established by the Administrator (the Participant Direction
Procedures) and applied in a uniform nondiscriminatory manner, direct
the Trustee to invest all or a portion of their individual account
balances in specific assets, specific funds or other investments
permitted under the Plan and the Participant Direction Procedures.
That portion of the interest of any Participant so directing will
thereupon be considered a Participant's Directed Account.
(b) As of each Valuation Date, all Participant Directed Accounts
shall be charged or credited with the net earnings, gains, losses and
expenses as well as any appreciation or depreciation in the market
value using publicly listed fair market values when available or
appropriate.
(1) To the extent that the assets in a Participant's Directed
Account are accounted for as pooled assets or investments, the
allocation of earnings, gains and losses of each Participant's
Directed Account shall be based upon the total amount of funds so
invested, in a manner proportionate to the Participant's share of
such pooled investment.
(2) To the extent that the assets in the Participant's Directed
Account are accounted for as segregated assets, the allocation
of earnings, gains and losses from such assets shall be made on
a separate and distinct basis.
(c) Each "Qualified Participant" may elect within ninety (90)
days after the close of each Plan Year during the "Qualified Election
Period" to direct the Trustee in writing as to the distribution in
cash of 25 percent of the total number of shares of Company Stock
acquired by or contributed to the Plan that have ever been allocated
to such "Qualified Participant's" Company Stock Account (reduced by
the number of shares of Company Stock previously distributed in cash
pursuant to a prior election). In the case of the election year in
which the Participant can make his last election, the preceding
sentence shall be applied by substituting "50 percent" for "25
percent." If the "Qualified Participant" elects to direct the Trustee
as to the distribution of his Company Stock Account, such direction
shall be effective no later than 180 days after the close of the Plan
Year to which such direction applies.
Notwithstanding the above, if the fair market value (determined
pursuant to Section 6.1 at the Plan Valuation Date immediately
preceding the first day on which a "Qualified Participant" is eligible
to make an election) of Company Stock acquired by or contributed to
the Plan and allocated to a "Qualified Participant's" Company Stock
Account is $500 or less, then such Company Stock shall not be subject
to this paragraph. For purposes of determining whether the fair
market value exceeds $500, Company Stock held in accounts of all
employee stock ownership plans (as defined in Code Section 4975(e)(7))
and tax credit employee
45
<PAGE>
stock ownership plans (as defined in Code Section 409(a)) maintained
by the Employer or any Affiliated Employer shall be considered as held
by the Plan.
(d) For the purposes of this Section the following definitions
shall apply:
(1) "Qualified Participant" means any Participant or Former
Participant who has completed ten (10) Years of Service as a
Participant and has attained age 55.
(2) "Qualified Election Period" means the six (6) Plan Year
period beginning with the later of (i) the first Plan Year in
which the Participant first became a "Qualified Participant," or
(ii) the first Plan Year beginning after December 31, 1986.
ARTICLE V
FUNDING AND INVESTMENT POLICY
5.1 INVESTMENT POLICY
(a) The Plan is designed to invest primarily in Company Stock.
No portion of an Employee's Deferred Compensation shall be
invested in Company Stock unless directed by the contributing
Participant (or such Participant's Beneficiary).
(b) With due regard to subparagraph (a) above, the Administrator
may also direct the Trustee to invest funds under the Plan in other
property described in the Trust or in life insurance policies to the
extent permitted by subparagraph (c) below, or the Trustee may hold
such funds in cash or cash equivalents.
(c) With due regard to subparagraph (a) above, the Administrator
may also direct the Trustee to invest funds under the Plan in
insurance policies on the life of any "keyman" Employee. The proceeds
of a "keyman" insurance policy may not be used for the repayment of
any indebtedness owed by the Plan which is secured by Company Stock.
In the event any "keyman" insurance is purchased by the Trustee, the
premiums paid thereon during any Plan Year, net of any policy
dividends and increases in cash surrender values, shall be treated as
the cost of Plan investment and any death benefit or cash surrender
value received shall be treated as proceeds from an investment of the
Plan.
(d) The Plan may not obligate itself to acquire Company Stock
from a particular holder thereof at an indefinite time determined upon
the happening of an event such as the death of the holder;
46
<PAGE>
(e) The Plan may not obligate itself to acquire Company Stock
under a put option binding upon the Plan. However, at the time a put
option is exercised, the Plan may be given an option to assume the
rights and obligations of the Employer under a put option binding upon
the Employer.
(f) All purchases of Company Stock shall be made at a price
which, in the judgment of the Administrator, does not exceed the fair
market value thereof. All sales of Company Stock shall be made at a
price which, in the judgment of the Administrator, is not less than
the fair market value thereof. The valuation rules set forth in
Article VI shall be applicable.
5.2 APPLICATION OF CASH
Employer contributions in cash and other cash received by the Trust
Fund shall first be applied to pay any Current Obligations of the Trust Fund.
5.3 LOANS TO THE TRUST
(a) As directed by the Administrator the Plan may borrow money
for any lawful purpose, provided the proceeds of an Exempt Loan are
used within a reasonable time after receipt only for any or all of the
following purposes:
(1) To acquire Company Stock.
(2) To repay such loan.
(3) To repay a prior Exempt Loan.
(b) The Administrator shall assume that all loans to the Trust
which are made or guaranteed by a disqualified person must satisfy all
requirements applicable to Exempt Loans including but not limited to
the following:
(1) The loan must be at a reasonable rate of interest;
(2) Any collateral pledged to the creditor by the Plan shall
consist only of the Company Stock purchased with the borrowed
funds;
(3) Under the terms of the loan, any pledge of Company Stock
shall
provide for the release of shares so pledged on a pro-rata basis
pursuant to Section 4.4(g);
(4) Under the terms of the loan, the creditor shall have no
recourse against the Plan except with respect to such collateral,
earnings attributable to such collateral, Employer contributions
(other than contributions of Company Stock) that are made to meet
Current Obligations and earnings attributable to such
contributions;
47
<PAGE>
(5) 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;
(6) In the event of default upon an Exempt Loan, the value of the
Trust Fund transferred in satisfaction of the Exempt Loan shall
not exceed the amount of default. If the lender is a
disqualified person, an Exempt Loan shall provide for a transfer
of Trust Funds upon default only upon and to the extent of the
failure of the Plan to meet the payment schedule of the Exempt
Loan;
(7) Exempt Loan payments during a Plan Year must not exceed an
amount equal to: (A) the sum, over all Plan Years, of all
contributions and cash dividends paid by the Employer to the Plan
with respect to such Exempt Loan and earnings on such Employer
contributions and cash dividends, less (B) the sum of the Exempt
Loan payments in all preceding Plan Years. A separate accounting
shall be maintained for such Employer contributions, cash
dividends and earnings until the Exempt Loan is repaid.
(c) For purposes of this Section, the term "disqualified person"
means a person who is a Fiduciary, a person providing services to the
Plan, an Employer any of whose Employees are covered by the Plan, an
employee organization any of whose members are covered by the Plan, an
owner, direct or indirect, of 50% or more of the total combined voting
power of all classes of voting stock or of the total value of all
classes of the stock, or an officer, director, 10% or more
shareholder, or a highly compensated Employee.
ARTICLE VI
VALUATIONS
6.1 VALUATION OF THE TRUST FUND
The Administrator shall direct the Trustee, as of each Valuation Date,
to determine the net worth of the assets comprising the Trust Fund as it exists
on the Valuation Date. In determining such net worth, the Trustee shall value
the assets comprising the Trust Fund at their fair market value as of the
Valuation Date and shall deduct all expenses for which the Trustee has not yet
obtained reimbursement from the Employer or the Trust Fund. The Trustee may
update the value of any shares held in the Participant Directed Account by
reference to the number of shares held by that Participant, priced at the market
value as of the Valuation Date.
6.2 METHOD OF VALUATION
Valuations must be made in good faith and based on all relevant
factors for determining the fair market value of securities. In the case of a
transaction between a Plan and a
48
<PAGE>
disqualified person, value must be determined as of the date of the transaction.
For all other Plan purposes, value must be determined as of the most recent
Valuation Date under the Plan. An independent appraisal will not in itself be a
good faith determination of value in the case of a transaction between the Plan
and a disqualified person. However, in other cases, a determination of fair
market value based on at least an annual appraisal independently arrived at by a
person who customarily makes such appraisals and who is independent of any party
to the transaction will be deemed to be a good faith determination of value.
Company Stock not readily tradeable on an established securities market shall be
valued by an independent appraiser meeting requirements similar to the
requirements of the Regulations prescribed under Code Section 170(a)(1).
ARTICLE VII
DETERMINATION AND DISTRIBUTION OF BENEFITS
7.1 DETERMINATION OF BENEFITS UPON RETIREMENT
Every Participant may terminate his employment with the Employer and
retire for the purposes hereof on his Normal Retirement Date or Early Retirement
Date. However, a Participant may postpone the termination of his employment
with the Employer to a later date, in which event the participation of such
Participant in the Plan, including the right to receive allocations pursuant to
Section 4.4, shall continue until his Late Retirement Date. Upon a
Participant's Retirement Date, or as soon thereafter as is practicable, the
Trustee shall, at the election of the Participant, distribute all amounts
credited to such Participant's Combined Account in accordance with Sections 7.5
and 7.6.
7.2 DETERMINATION OF BENEFITS UPON DEATH
(a) Upon the death of a Participant before his Retirement Date or
other termination of his employment, all amounts credited to such
Participant's Combined Account shall become fully Vested. If elected,
distribution of the Participant's Combined Account shall commence not
later than one (1) year after the close of the Plan Year in which such
Participant's death occurs. The Administrator shall direct the
Trustee, in accordance with the provisions of Sections 7.5 and 7.6, to
distribute the value of the deceased Participant's accounts to the
Participant's Beneficiary.
(b) Upon the death of a Former Participant, the Administrator
shall direct the Trustee, in accordance with the provisions of
Sections 7.5 and 7.6, to distribute any remaining Vested amounts
credited to the accounts of a deceased Former Participant to such
Former Participant's Beneficiary.
(c) Any security interest held by the Plan by reason of an
outstanding loan to the Participant or Former Participant shall be
taken into account in determining the amount of the death benefit.
49
<PAGE>
(d) The Administrator may require such proper proof of death and
such evidence of the right of any person to receive payment of the
value of the account of a deceased Participant or Former Participant
as the Administrator may deem desirable. The Administrator's
determination of death and of the right of any person to receive
payment shall be conclusive.
(e) The Beneficiary of the death benefit payable pursuant to this
Section shall be the Participant's spouse. Except, however, the
Participant may designate a Beneficiary other than his spouse if:
(1) the spouse has waived the right to be the Participant's
Beneficiary, or
(2) the Participant is legally separated or has been abandoned
(within the meaning of local law) and the Participant has a court
order to such effect (and there is no "qualified domestic
relations order" as defined in Code Section 414(p) which provides
otherwise), or
(3) the Participant has no spouse, or
(4) the spouse cannot be located.
In such event, the designation of a Beneficiary shall be
made on a form satisfactory to the Administrator. A Participant may
at any time revoke his designation of a Beneficiary or change his
Beneficiary by filing written notice of such revocation or change with
the Administrator. However, the Participant's spouse must again
consent in writing to any change in Beneficiary unless the original
consent acknowledged that the spouse had the right to limit consent
only to a specific Beneficiary and that the spouse voluntarily elected
to relinquish such right. In the event no valid designation of
Beneficiary exists at the time of the Participant's death, the death
benefit shall be payable to his estate.
(f) Any consent by the Participant's spouse to waive any rights
to the death benefit must be in writing, must acknowledge the effect
of such waiver, and be witnessed by a Plan representative or a notary
public. Further, the spouse's consent must be irrevocable and must
acknowledge the specific nonspouse Beneficiary.
7.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY
In the event of a Participant's Total and Permanent Disability prior
to his Retirement Date or other termination of his employment, all amounts
credited to such Participant's Combined Account shall become fully Vested. In
the event of a Participant's Total and Permanent Disability, the Trustee, in
accordance with the provisions of Sections 7.5 and 7.6, shall distribute to such
Participant all amounts credited to such Participant's Combined Account
50
<PAGE>
as though he had retired. If such Participant elects, distribution shall
commence not later than one (1) year after the close of the Plan Year in which
Total and Permanent Disability occurs.
7.4 DETERMINATION OF BENEFITS UPON TERMINATION
(a) If a Participant's employment with the Employer is terminated
for any reason other than death, Total and Permanent Disability or
retirement, such Participant shall be entitled to such benefits as are
provided hereinafter pursuant to this Section 7.4.
If a portion of a Participant's Account is forfeited,
Company Stock allocated to the Participant's Company Stock Account
must be forfeited only after the Participant's Other Investments
Account has been depleted. If interest in more than one class of
Company Stock has been allocated to a Participant's Account, the
Participant must be treated as forfeiting the same proportion of each
such class.
In the event that the amount of the Vested portion of the
Terminated Participant's Combined Account equals or exceeds the fair
market value of any insurance Contracts, the Trustee, when so directed
by the Administrator and agreed to by the Terminated Participant,
shall assign, transfer, and set over to such Terminated Participant
all Contracts on his life in such form or with such endorsements so
that the settlement options and forms of payment are consistent with
the provisions of Section 7.5. In the event that the Terminated
Participant's Vested portion does not at least equal the fair market
value of the Contracts, if any, the Terminated Participant may pay
over to the Trustee the sum needed to make the distribution equal to
the value of the Contracts being assigned or transferred, or the
Trustee, pursuant to the Participant's election, may borrow the cash
value of the Contracts from the insurer so that the value of the
Contracts is equal to the Vested portion of the Terminated
Participant's Account and then assign the Contracts to the Terminated
Participant.
Distribution of the funds due to a Terminated Participant
shall be made on the occurrence of an event which would result in the
distribution had the Terminated Participant remained in the employ of
the Employer (upon the Participant's death, Total and Permanent
Disability, Early or Normal Retirement). However, at the election of
the Participant, the Administrator shall direct the Trustee to cause
the entire Vested portion of the Terminated Participant's Combined
Account to be payable to such Terminated Participant. Any
distribution under this paragraph shall be made in a manner which is
consistent with and satisfies the provisions of Sections 7.5 and 7.6,
including, but not limited to, all notice and consent requirements of
Code Section 411(a)(11) and the Regulations thereunder.
If the value of a Terminated Participant's Vested benefit
derived from Employer and Employee contributions does not exceed
$3,500 ($5,000 for
51
<PAGE>
Plan Years beginning after August 5, 1997) and has never exceeded
$3,500 or $5,000, whichever is applicable, at the time of any prior
distribution, the Administrator shall direct the Trustee to cause the
entire Vested benefit to be paid to such Participant in a single lump
sum.
For purposes of this Section 7.4, if the value of a
Terminated Participant's Vested benefit is zero, the Terminated
Participant shall be deemed to have received a distribution of such
Vested benefit.
(b) The Vested portion of any Participant's Account shall be a
percentage of the total number credited to his Participant's Account
deter-mined on the basis of the Participant's number of Years of
Service according to the following schedule:
Vesting Schedule
Years of Service Percentage
Less than 3 0%
3 20%
4 40%
5 60%
6 80%
7 100%
Vesting for the Participant's Accounts in the Money Purchase
Pension Plan and the 401(k) Plan which have been merged into this Plan
shall continue after such merger in accordance with the schedule set
forth above as provided in such prior plans. For ESOP Participant
Accounts at the time of the conversion of this Plan from an ESOP to a
401(k) ESOP, Years of Service prior to July 1, 1993 (the prior
effective date of the ESOP) will not be counted for vesting purposes.
After the time the prior plans are merged into the ESOP and the ESOP
is converted into a 401(k) Plan, Years of Service prior to July 1,
1993 will not be counted for vesting purposes for any contributions
after the time of such conversion for purposes of vesting.
(c) Notwithstanding the vesting schedule provided for in
paragraph (b) above, for any Top Heavy Plan Year, the Vested portion
of the Participant's Account of any Participant who has an Hour of
Service after the Plan becomes top heavy shall be a percentage of the
total amount credited to his Participant's Account determined on the
basis of the Participant's number of Years of Service according to the
following schedule:
Vesting Schedule
Years of Service Percentage
Less than 2 0%
52
<PAGE>
2 20%
3 40%
4 60%
5 80%
6 100%
If in any subsequent Plan Year, the Plan ceases to be a Top
Heavy Plan, the Administrator shall revert to the vesting schedule in
effect before this Plan became a Top Heavy Plan. Any such reversion
shall be treated as a Plan amendment pursuant to the terms of the
Plan.
(d) Notwithstanding the vesting schedule above, the Vested
percentage of a Participant's Account shall not be less than the
Vested percentage attained as of the later of the effective date or
adoption date of this amendment and restatement.
(e) Notwithstanding the vesting schedule above, upon the complete
discontinuance of the Employer contributions to the Plan or upon any
full or partial termination of the Plan, all amounts credited to the
account of any affected Participant shall become 100% Vested and shall
not thereafter be subject to Forfeiture.
(f) The computation of a Participant's nonforfeitable percentage
of his interest in the Plan shall not be reduced as the result of any
direct or indirect amendment to this Plan. For this purpose, the Plan
shall be treated as having been amended if the Plan provides for an
automatic change in vesting due to a change in top heavy status. In
the event that the Plan is amended to change or modify any vesting
schedule, a Participant with at least three (3) Years of Service as of
the expiration date of the election period may elect to have his
nonforfeitable percentage computed under the Plan without regard to
such amendment. If a Participant fails to make such election, then
such Participant shall be subject to the new vesting schedule. The
Participant's election period shall commence on the adoption date of
the amendment and shall end 60 days after the latest of:
(1) the adoption date of the amendment,
(2) the effective date of the amendment, or
(3) the date the Participant receives written notice of the
amendment from the Employer or Administrator.
(g)(1) If any Former Participant shall be reemployed by the
Employer before a 1-Year Break in Service occurs, he shall continue to
participate in the Plan in the same manner as if such termination had
not occurred.
53
<PAGE>
(2) If any Former Participant shall be reemployed by the Employer
before five (5) consecutive 1-Year Breaks in Service, and such
Former Participant had received, or was deemed to have received,
a distribution of his entire Vested interest prior to his
reemployment, his forfeited account shall be reinstated only if
he repays the full amount distributed to him before the earlier
of five (5) years after the first date on which the Participant
is subsequently reemployed by the Employer or the close of the
first period of five (5) consecutive 1-Year Breaks in Service
commencing after the distribution, or in the event of a deemed
distribution, upon the reemployment of such Former Participant.
In the event the Former Participant does repay the full amount
distributed to him, or in the event of a deemed distribution, the
undistributed portion of the Participant's Account must be
restored in full, unadjusted by any gains or losses occurring
subsequent to the Valuation Date coinciding with or preceding his
termination. The source for such reinstatement shall first be
any Forfeitures occurring during the year. If such source is
insufficient, then the Employer shall contribute an amount which
is sufficient to restore any such forfeited Accounts provided,
however, that if a discretionary contribution is made for such
year pursuant to Section 4.1(c), such contribution shall first be
applied to restore any such Accounts and the remainder shall be
allocated in accordance with Section 4.4.
(3) If any Former Participant is reemployed after a 1-Year Break
in Service has occurred, Years of Service shall include Years of
Service prior to his 1-Year Break in Service subject to the
following rules:
(i) If a Former Participant has a 1-Year Break in Service,
his pre-break and post-break service shall be used for
computing Years of Service for eligibility and for vesting
purposes only after he has been employed for one (1) Year of
Service following the date of his reemployment with the
Employer;
(ii) Any Former Participant who under the Plan does not have
a nonforfeitable right to any interest in the Plan resulting
from Employer contributions shall lose credits otherwise
allowable under (i) above if his consecutive 1-Year Breaks
in Service equal or exceed the greater of (A) five (5) or
(B) the aggregate number of his pre-break Years of Service;
(iii) After five (5) consecutive 1-Year Breaks in Service,
a Former Participant's Vested Account balance attributable
to pre-break service shall not be increased as a result of
post-break service;
(iv) If a Former Participant who has not had his Years of
Service before a 1 -Year Break in Service disregarded
pursuant to
54
<PAGE>
(ii) above completes a Year of Service for eligibility
purposes following his reemployment with the Employer, he
shall participate in the Plan retroactively from his date of
reemployment;
(v) If a Former Participant who has not had his Years of
Service before a 1-Year Break in Service disregarded
pursuant to (ii) above completes a Year of Service (a 1-Year
Break in Service previously occurred, but employment had not
terminated), he shall participate in the Plan retroactively
from the first day on which he is credited with an Hour of
Service after the first eligibility computation period in
which he incurs a 1-Year Break in Service.
7.5 DISTRIBUTION OF BENEFITS
(a) The Administrator, pursuant to the election of the
Participant (or if no election has been made prior to the
Participant's death, by his Beneficiary), shall direct the Trustee to
distribute to a Participant or his Beneficiary any amount to which he
is entitled under the Plan in one or more of the following methods:
(1) One lump-sum payment;
(2) Payments over a period certain in monthly, quarterly,
semiannual, or annual installments. The period over which such
payment is to be made shall not extend beyond the earlier of the
Participant's life expectancy (or the life expectancy of the
Participant and his designated Beneficiary) or the limited
distribution period provided for in Section 7.5(b).
(b) Unless the Participant elects in writing a longer
distribution period, distributions to a Participant or his Beneficiary
attributable to Company Stock may be in substantially equal monthly,
quarterly, semiannual, or annual installments over a period not longer
than five (5) years. In the case of a Participant with an account
balance attributable to Company Stock in excess of $500,000, the five
(5) year period shall be extended one (1) additional year (but not
more than five (5) additional years) for each $1 00,000 or fraction
thereof by which such balance exceeds $500,000. The dollar limits
shall be adjusted at the same time and in the same manner as provided
in Code Sections 415(d).
(c) Any distribution to a Participant who has a benefit which
exceeds, or has ever exceeded, $3,500 ($5,000 for Plan Years beginning
after August 5, 1997) at the time of any prior distribution shall
require such Participant's consent if such distribution commences
prior to the later of his Normal Retirement Age or age 62. With
regard to this required consent:
(1) The Participant must be informed of his right to defer
receipt of the distribution. If a Participant fails to consent,
it shall be deemed an election to defer the commencement of
payment of any benefit. However, any
55
<PAGE>
election to defer the receipt of benefits shall not apply with
respect to distributions which are required under Section 7.5(f).
(2) Notice of the rights specified under this paragraph shall be
provided no less than 30 days and no more than 90 days before the
date the distribution commences.
(3) Written consent of the Participant to the distribution must
not
be made before the Participant receives the notice and must not
be made more than 90 days before the date the distribution
commences.
(4) No consent shall be valid if a significant detriment is
imposed under the Plan on any Participant who does not consent to
the distribution.
Any such distribution may commence less than 30 days after the
notice required under Regulation 1.411(a)-11(c) is given, provided
that: (1) the Administrator clearly informs the Participant that the
Participant has a right to a period of at least 30 days after
receiving the notice to consider the decision of whether or not to
elect a distribution (and, if applicable, a particular distribution
option), and (2) the Participant, after receiving the notice,
affirmatively elects a distribution.
(d) Notwithstanding anything herein to the contrary, the
Administrator, in his sole discretion, may direct that cash dividends
on shares of Company Stock allocable to Participants' or Former
Participants' Company Stock Accounts be distributed to such
Participants or Former Participants within 90 days after the close of
the Plan Year in which the dividends are paid.
(e) Any part of a Participant's benefit which is retained in the
Plan after the Anniversary Date on which his participation ends will
continue to be treated as a Company Stock Account or as an Other
Investments Account (subject to Section 7.4(a)) as provided in Article
IV. However, neither account will be credited with any further
Employer contributions.
(f) Notwithstanding any provision in the Plan to the contrary,
the distribution of a Participant's benefits shall be made in
accordance with the following requirements and shall otherwise comply
with Code Section 401(a)(9) and the Regulations thereunder (including
Regulation 1.401 (a)(9)-2), the provisions of which are incorporated
herein by reference:
(1) A Participant's benefits shall be distributed or must begin
to be distributed to him not later than April 1st of the calendar
year following the later of (i) the calendar year in which the
Participant attains age 70 1/2 or (ii) the calendar year in which
the Participant retires, provided, however, that this clause (ii)
shall not apply in the case of a Participant who is a "five (5)
percent owner" at any time during the five (5) Plan Year
56
<PAGE>
period ending in the calendar year in which he attains age 70 1/2
or, in the case of a Participant who becomes a "five (5) percent
owner" during any subsequent Plan Year, clause (ii) shall no
longer apply and the required beginning date shall be the April
1st of the calendar year following the calendar year in which
such subsequent Plan Year ends. Such distributions shall be equal
to or greater than any required distribution. Notwithstanding the
foregoing, clause (ii) above shall not apply to any Participant
unless the Participant had attained age 70 1/2 before January 1,
1988 and was not a "five (5) percent owner" at any time during
the Plan Year ending with or within the calendar year in which
the Participant attained age 66 1/2 or any subsequent Plan Year.
However, any Participant who is not a "five (5) percent owner"
and who attains age 70 1/2 in or after a calendar year that
begins after the later of (i) December 31, 1998, or (ii) the
adoption date of this amendment and restatement, provided that
the adoption date is no later than the last day of any remedial
amendment period that applies to the Plan for changes under the
Small Business Job Protection Act of 1996, shall have his
benefits distributed in accordance with the first sentence of
this subparagraph (1).
Alternatively, distributions to a Participant must begin no later
than the applicable April 1st as determined under the preceding
paragraph and must be made over a period certain measured by the
life expectancy of the Participant (or the life expectancies of
the Participant and his designated Beneficiary) in accordance
with Regulations.
(2) Distributions to a Participant and his Beneficiaries shall
only be made in accordance with the incidental death benefit
requirements of Code Section 401(a)(9)(G) and the Regulations
thereunder.
(g) Notwithstanding any provision in the Plan to the contrary,
distributions upon the death of a Participant shall be made in
accordance with the following requirements and shall otherwise comply
with Code Section 401(a)(9) and the Regulations thereunder. If it is
determined pursuant to Regulations that the distribution of a
Participant's interest has begun and the Participant dies before his
entire interest has been distributed to him, the remaining portion of
such interest shall be distributed at least as rapidly as under the
method of distribution selected pursuant to Section 7.5 as of his date
of death. If a Participant dies before he has begun to receive any
distributions of his interest under the Plan or before distributions
are deemed to have begun pursuant to Regulations, then his death
benefit shall be distributed to his Beneficiaries by December 31st of
the calendar year in which the fifth anniversary of his date of death
occurs.
However, the 5-year distribution requirement of the
preceding paragraph shall not apply to any portion of the deceased
Participant's interest which is payable to or for the benefit of a
designated Beneficiary. In such event, such portion shall be
distributed over a period not extending beyond the life
57
<PAGE>
expectancy of such designated Beneficiary provided such distribution
begins not later than December 31st of the calendar year immediately
following the calendar year in which the Participant died. However, in
the event the Participant's spouse (determined as of the date of the
Participant's death) is his Beneficiary, the requirement that
distributions commence within one year of a Participant's death shall
not apply. In lieu thereof, distributions must commence on or before
the later of: (1) December 31st of the calendar year immediately
following the calendar year in which the Participant died; or (2)
December 31st of the calendar year in which the Participant would have
attained age 70 1/2. If the surviving spouse dies before distributions
to such spouse begin, then the 5-year distribution requirement of this
Section shall apply as if the spouse was the Participant.
(h) For purposes of this Section, the life expectancy of a
Participant and a Participant's spouse shall be redetermined annually
in accordance with Regulations. Life expectancy and joint and last
survivor expectancy shall be computed using the return multiples in
Tables V and VI of Regulation 1.72-9.
(i) Except as limited by Sections 7.5 and 7.6, whenever the
Trustee is to make a distribution or to commence a series of payments,
the distribution or series of payments may be made or begun as soon as
is practicable. However, unless a Former Participant elects in
writing to defer the receipt of benefits (such election may not result
in a death benefit that is more than incidental), the payment of
benefits shall begin not later than the 60th day after the close of
the Plan Year in which the latest of the following events occurs:
(1) the date on which the Participant attains the earlier of age
65 or the Normal Retirement Age specified herein;
(2) the 10th anniversary of the year in which the Participant
commenced participation in the Plan; or
(3) the date the Participant terminates his service with the
Employer;
(j) If a distribution is made at a time when a Participant is not
fully Vested in his Participant's Account and the Participant may
increase the Vested percentage in such account:
(1) a separate account shall be established for the Participant's
interest in the Plan as of the time of the distribution; and
(2) at any relevant time, the Participant's Vested portion of the
separate account shall be equal to an amount ("X") determined by
the formula:
X equals P(AB plus (R x D)) - (R x D)
58
<PAGE>
For purposes of applying the formula: P is the Vested percentage
at the relevant time, AB is the account balance at the relevant
time, D is the amount of distribution, and R is the ratio of the
account balance at the relevant time to the account balance after
distribution.
7.6 HOW PLAN BENEFIT WILL BE DISTRIBUTED
(a) Distribution of a Participant's benefit may be made in cash
or Company Stock or both, provided, however, that if a Participant or
Beneficiary so demands, such benefit shall be distributed only in the
form of Company Stock. Prior to making a distribution of benefits,
the Administrator shall advise the Participant or his Beneficiary, in
writing, of the right to demand that benefits be distributed solely in
Company Stock.
(b) If a Participant or Beneficiary demands that benefits be
distributed solely in Company Stock, distribution of a Participant's
benefit will be made entirely in whole shares or other units of
Company Stock. Any balance in a Participant's Other Investments
Account will be applied to acquire for distribution the maximum number
of whole shares or other units of Company Stock at the then fair
market value. Any fractional unit value unexpended will be
distributed in cash. If Company Stock is not available for purchase
by the Trustee, then the Trustee shall hold such balance until Company
Stock is acquired and then make such distribution, subject to Sections
7.5(i) and 7.5(f).
(c) The Trustee will make distribution from the Trust only on
directions from the Administrator.
(d) Notwithstanding anything contained herein to the contrary,
if the Employer charter or by-laws restrict ownership of substantially
all shares of Company Stock to Employees and the Trust Fund, as
described in Code Section 409(h)(2), the Administrator shall
distribute a Participant's Combined Account entirely in cash without
granting the Participant the night to demand distribution in shares of
Company Stock.
(e) Except as otherwise provided herein, Company Stock
distributed by the Trustee may be restricted as to sale or transfer by
the by-laws or articles of incorporation of the Employer, provided
restrictions are applicable to all Company Stock of the same class.
If a Participant is required to offer the sale of his Company Stock to
the Employer before offering to sell his Company Stock to a third
party, in no event may the Employer pay a price less than that offered
to the distributes by another potential buyer making a bona fide offer
and in no event shall the Trustee pay a price less than the fair
market value of the Company Stock.
(f) If Company Stock acquired with the proceeds of an Exempt Loan
(described in Section 5.3 hereof) is available for distribution and
consists of more
59
<PAGE>
than one class, a Participant or his Beneficiary must receive
substantially the same proportion of each such class.
7.7 DISTRIBUTION FOR MINOR BENEFICIARY
In the event a distribution is to be made to a minor, then the
Administrator may direct that such distribution be paid to the legal guardian,
or if none, to a parent of such Beneficiary or a responsible adult with whom the
Beneficiary maintains his residence, or to the custodian for such Beneficiary
under the Uniform Gift to Minors Act or Gift to Minors Act, if such is permitted
by the laws of the state in which said Beneficiary resides. Such a payment to
the legal guardian, custodian or parent of a minor Beneficiary shall fully
discharge the Trustee, Employer, and Plan from further liability on account
thereof.
7.8 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN
In the event that all, or any portion, of the distribution payable to
a Participant or his Beneficiary hereunder shall, at the later of the
Participant's attainment of age 62 or his Normal Retirement Age, remain unpaid
solely by reason of the inability of the Administrator, after sending a
registered letter, return receipt requested, to the last known address, and
after further diligent effort, to ascertain the whereabouts of such Participant
or his Beneficiary, the amount so distributable shall be treated as a Forfeiture
pursuant to the Plan. In the event a Participant or Beneficiary is located
subsequent to his benefit being reallocated, such benefit shall be restored
unadjusted for earnings or losses.
7.9 PUT OPTION
(a) If Company Stock which was not acquired with the proceeds of
an Exempt Loan is distributed to a Participant and such Company Stock
is not readily tradeable on an established securities market, a
Participant has a right to require the Employer to repurchase the
Company Stock distributed to such Participant under a fair valuation
formula. Such Stock shall be subject to the provisions of Section
7.9(c).
(b) Company Stock which is acquired with the proceeds of an
Exempt Loan and which is not publicly traded when distributed, or if
it is subject to a trading limitation when distributed, must be
subject to a put option. For purposes of this paragraph, a "trading
limitation" on a Company Stock is a restriction under any Federal or
State securities law or any regulation thereunder, or an agreement
(not prohibited by Section 7.10) affecting the Company Stock which
would make the Company Stock not as freely tradeable as stock not
subject to such restriction.
(c) The put option must be exercisable only by a Participant, by
the Participant's donees, or by a person (including an estate or its
distributes) to whom the Company Stock passes by reason of a
Participant's death. (Under this paragraph Participant or Former
Participant means a Participant or Former Participant and the
beneficiaries of the Participant or Former Participant under the
60
<PAGE>
Plan.) The put option must permit a Participant to put the Company
Stock to the Employer. Under no circumstances may the put option bind
the Plan. However, it shall grant the Plan an option to assume the
fights and obligations of the Employer at the time that the put option
is exercised. If it is known at the time a loan is made that Federal
or State law will be violated by the Employer honoring such put
option, the put option must permit the Company Stock to 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 Plan) that has
substantial net worth at the time the loan is made and whose net worth
is reasonably expected to remain substantial.
The put option shall commence as of the day following the
date the Company Stock is distributed to the Former Participant and
end 60 days thereafter and if not exercised within such 60-day period,
an additional 60-day option shall commence on the first day of the
fifth month of the Plan Year next following the date the stock was
distributed to the Former Participant (or such other 60-day period as
provided in Regulations). However, in the case of Company Stock that
is publicly traded without restrictions when distributed but ceases to
be so traded within either of the 60-day periods described herein
after distribution, the Employer must notify each holder of such
Company Stock in writing on or before the tenth day after the date the
Company Stock ceases to be so traded that for the remainder of the
applicable 60-day period the Company Stock is subject to the put
option. The number of days between the tenth day and the date on
which notice is actually given, if later than the tenth day, must be
added to the duration of the put option. The notice must inform
distributees of the term of the put options that they are to hold.
The terms must satisfy the requirements of this paragraph.
The put option is exercised by the holder notifying the
Employer in writing that the put option is being exercised; the notice
shall state the name and address of the holder and the number of
shares to be sold. The period during which a put option is
exercisable does not include any time when a distributes is unable to
exercise it because the party bound by the put option is prohibited
from honoring it by applicable Federal or State law. The price at
which a put option must be exercisable is the value of the Company
Stock determined in accordance with Section 6.2. Payment under the put
option involving a "Total Distribution" shall be paid in substantially
equal monthly, quarterly, semiannual or annual installments over a
period certain beginning not later than thirty (30) days after the
exercise of the put option and not extending beyond five (5) years.
The deferral of payment is reasonable if adequate security and a
reasonable interest rate on the unpaid amounts are provided. The
amount to be paid under the put option involving installment
distributions must be paid not later than thirty (30) days after the
exercise of the put option. Payment under a put option must not be
restricted by the provisions of a loan or any other arrangement,
including the terms of the Employer articles of incorporation, unless
so required by applicable state law.
61
<PAGE>
For purposes of this Section, "Total Distribution" means a
distribution to a Participant or his Beneficiary within one taxable
year of the entire Vested Participant's Combined Account.
(d) An arrangement involving the Plan that creates a put option
must not provide for the issuance of put options other than as
provided under this Section. The Plan (and the Trust Fund) must not
otherwise obligate itself to acquire Company Stock from a particular
holder thereof at an indefinite time determined upon the happening of
an event such as the death of the holder.
7.10 NONTERMINABLE PROTECTIONS AND RIGHTS
No Company Stock, except as provided in Section 7.9(b), acquired with
the proceeds of a loan described in Section 5.3 hereof may be subject to a put,
call, or other option, or buy-sell or similar arrangement when held by and when
distributed from the Trust Fund, whether or not the Plan is then an ESOP. The
protections and rights granted in this Section are nonterminable, and such
protections and rights shall continue to exist under the terms of this Plan so
long as any Company Stock acquired with the proceeds of a loan described in
Section 5.3 hereof is held by the Trust Fund or by any Participant or other
person for whose benefit such protections and rights have been created, and
neither the repayment of such loan nor the failure of the Plan to be an ESOP,
nor an amendment of the Plan shall cause a termination of said protections and
rights.
7.11 ADVANCE DISTRIBUTION FOR HARDSHIP
(a) The Administrator, at the election of the Participant, shall
direct the Trustee to distribute to any Participant in any one Plan
Year up to the lesser of 100% of his Participant's Elective Account
and Participant's Rollover Account valued as of the last Valuation
Date or the amount necessary to satisfy the immediate and heavy
financial need of the Participant. Any distribution made pursuant to
this Section shall be deemed to be made as of the first day of the
Plan Year or, if later, the Valuation Date immediately preceding the
date of distribution, and the Participant's Elective Account and
Participant's Rollover Account shall be reduced accordingly.
Withdrawal under this Section shall be limited to amounts attributable
to the Stock Bonus Plan and shall be authorized only if the
distribution is on account of:
(1) Expenses for medical care described in Code Section 213(d)
previously incurred by the Participant, his spouse, or any of his
dependents (as defined in Code Section 152) or necessary for
these persons to obtain medical care;
(2) The costs directly related to the purchase of a principal
residence for the Participant (excluding mortgage payments);
62
<PAGE>
(3) Payment of tuition, related educational fees, and room and
board expenses for the next twelve (12) months of post-secondary
education for the Participant, his spouse, children, or
dependents; or
(4) Payments necessary to prevent the eviction of the Participant
from his principal residence or foreclosure on the mortgage of
the Participant's principal residence.
(b) No distribution shall be made pursuant to this Section unless
the Administrator, based upon the Participant's representation and
such other facts as are known to the Administrator, determines that
all of the following conditions are satisfied:
(1) The distribution is not in excess of the amount of the
immediate and heavy financial need of the Participant. The
amount of the immediate and heavy financial need may include any
amounts necessary to pay any federal, state, or local income
taxes or penalties reasonably anticipated to result from the
distribution;
(2) The Participant has obtained all distributions, other than
hardship distributions, and all nontaxable (at the time of the
loan) loans currently available under all plans maintained by the
Employer;
(3) The Plan, and all other plans maintained by the Employer,
provide that the Participant's elective deferrals and voluntary
Employee contributions will be suspended for at least twelve (12)
months after receipt of the hardship distribution or, the
Participant, pursuant to a legally enforceable agreement, will
suspend his elective deferrals and voluntary Employee
contributions to the Plan and all other plans maintained by the
Employer for at least twelve (12) months after receipt of the
hardship distribution; and
(4) The Plan, and all other plans maintained by the Employer,
provide that the Participant may not make elective deferrals for
the Participant's taxable year immediately following the taxable
year of the hardship distribution in excess of the applicable
limit under Code Section 402(g) for such next taxable year less
the amount of such Participant's elective deferrals for the
taxable year of the hardship distribution.
(c) Notwithstanding the above, distributions from the
Participant's Elective Account pursuant to this Section shall be
limited, as of the date of distribution, to the Participant's Elective
Account as of the end of the last Plan Year ending before July 1,
1989, plus the total Participant's Deferred Compensation after such
date, reduced by the amount of any previous distributions pursuant to
this Section.
63
<PAGE>
(d) Any distribution made pursuant to this Section shall be made
in a manner which is consistent with and satisfies the provisions of
Section 7.5 and 7.6, including, but not limited to, all notice and
consent requirements of Code Section 411(a)(11) and the Regulations
thereunder.
7.12 QUALIFIED DOMESTIC RELATIONS ORDER DISTRIBUTION
All rights and benefits, including elections, provided to a
Participant in this Plan shall be subject to the rights afforded to any
"alternate payee" under a "qualified domestic relations order," as such is
determined by the Administrator. Furthermore, a distribution to an "alternate
payee" shall be permitted if such distribution is authorized by a "qualified
domestic relations order," even if the affected Participant has not separated
from service and has not reached the "earliest retirement age" under the Plan.
For the purposes of this Section, "alternate payee," "qualified domestic
relations order" and "earliest retirement age" shall have the meaning set forth
under Code Section 414(p).
ARTICLE VIII
TRUSTEE
8.1 BASIC RESPONSIBILITIES OF THE TRUSTEE
(a) The Trustee shall have the following categories of
responsibilities:
(1) Consistent with the "funding policy and method" determined by
the Employer, to invest, manage, and control the Plan assets
subject, however, to the discretion of a Participant with respect
to his Participant Directed Accounts, the Employer or an
Investment Manager appointed by the Employer or any agent of the
Employer;
(2) At the direction of the Administrator, to pay benefits
required
under the Plan to be paid to Participants, or, in the event of
their death, to
their Beneficiaries; and
(3) To maintain records of receipts and disbursements and
furnish to
the Employer and/or Administrator for each Plan Year a written
annual report per Section 8.8.
(b) In the event that the Trustee shall be directed by a
Participant (pursuant to the Participant Direction Procedures), or the
Employer, or an Investment Manager or other agent appointed by the
Employer with respect to the investment of any or all Plan assets, the
Trustee shall have no liability with respect to the investment of such
assets, but shall be responsible only to execute such investment
instructions as so directed.
(1) The Trustee shall be entitled to rely fully on the written
directions of a Participant (pursuant to the Participation
Direction Procedures), or the
64
<PAGE>
Employer, or any Fiduciary or nonfiduciary agent of the Employer,
in the discharge of such duties, and shall not be liable for any
loss or other liability, resulting from such direction (or lack
of direction) of the investment of any part of the Plan assets.
(2) The Trustee may delegate the duty to execute such directions
to any nonfiduciary agent, which may be an affiliate of the
Trustee or any Plan representative.
(3) The Trustee may refuse to comply with any direction from the
Participant in the event the Trustee, in its sole and absolute
discretion, deems such directions improper by virtue of
applicable law. The Trustee shall not be responsible or liable
for any loss of expense which may result from the Trustee's
refusal or failure to comply with any directions from the
Participant. The Trustee has no obligation to determine whether
specific directions violate applicable law.
(4) Any costs and expenses related to compliance with the
Participant's directions shall be home by the Participant's
Directed
Account, unless paid by the Employer.
(c) If there shall be more than one Trustee, they shall act by a
majority of their number, but may authorize one or more of them to
sign papers on their behalf.
8.2 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE
(a) The Trustee shall invest and reinvest the Trust Fund to keep
the Trust Fund invested without distinction between principal and
income and in such securities or property, real or personal, wherever
situated, as the Trustee shall deem advisable, including, but not
limited to, stocks, common or preferred bonds and other evidences of
indebtedness or ownership, and real estate or any interest therein.
The Trustee shall at all times in making investments of the Trust Fund
consider, among other factors, the short and long-term financial needs
of the Plan on the basis of information furnished by the Employer. In
making such investments, the Trustee shall not be restricted to
securities or other property of the character expressly authorized by
the applicable law for trust investments; however, the Trustee shall
give due regard to any limitations imposed by the Code or the Act so
that at all times the Plan may qualify as an Employee Stock Ownership
Plan and Trust.
(b) The Trustee may employ a bank or trust company pursuant to
the terms of its usual and customary bank agency agreement under which
the duties of such bank or trust company shall be of a custodial,
clerical and record-keeping nature.
65
<PAGE>
(c) In the event the Trustee invests any part of the Trust Fund,
pursuant to the directions of the Administrator, in any shares of
stock issued by the Employer, and the Administrator thereafter directs
the Trustee to dispose of such investment, or any part thereof, under
circumstances which, in the opinion of counsel for the Administrator,
require registration of the securities under the Securities Act of
1933 and/or qualification of the securities under the Blue Sky laws of
any state or states, then the Employer at its own expense, will take
or cause to be taken any and all such action as may be necessary or
appropriate to effect such registration and/or qualification. It
shall be the Administrator's responsibility to determine the
applicability of securities laws to shares of stock issued by the
Employer purchased for or held by the Trust Fund.. To the extent
directed by the Administrator, the Trustee shall attempt to purchase
company stock in the open market. If company stock is not immediately
available in the open market, but becomes available in the future, the
Trustee shall purchase company stock as it becomes available without
further direction from the Administrator.
(d) At the election of each Participant, the Trustee, at the
direction of the Administrator, shall apply for, own, and pay premiums
on Contracts on the lives of the Participants. If a life insurance
Policy is to be purchased for a Participant, the aggregate premium for
ordinary life insurance for each Participant must be less than 50% of
the aggregate of the contributions and Forfeitures to the credit of
the Participant at any particular time. If term insurance is
purchased with such contributions, the aggregate premium must be less
than 25% of the aggregate contributions and Forfeitures allocated to a
Participant's Combined Account. If both term insurance and ordinary
life insurance are purchased with such contributions, the amount
expended for term insurance plus one-half (1/2 of the premium for
ordinary life insurance may not in the aggregate exceed 25% of the
aggregate contributions and Forfeitures allocated to a Participant's
Combined Account. The Trustee must convert the entire value of the
life insurance Contracts at or before retirement into cash or provide
for a periodic income so that no portion of such value may be used to
continue life insurance protection beyond retirement, or distribute
the Contracts to the Participant. In the event of any conflict
between the terms of this Plan and the terms of any insurance Contract
purchased hereunder, the Plan provisions shall control.
8.3 OTHER POWERS OF THE TRUSTEE
The Trustee, in addition to all powers and authorities under common
law, statutory authority, including the Act, and other provisions of the Plan,
shall have the following powers and authorities, to be exercised in the
Trustee's sole discretion or as directed by those parties identified in
paragraph 8.1(b).
(a) To purchase, or subscribe for, any securities or other
property and to retain the same. In conjunction with the purchase of
securities, margin accounts may be opened and maintained;
66
<PAGE>
(b) To sell, exchange, convey, transfer, grant options to
purchase, or otherwise dispose of any securities or other property
held by the Trustee, by private contract or at public auction. No
person dealing with the Trustee shall be bound to see to the
application of the purchase money or to inquire into the validity,
expediency, or propriety of any such sale or other disposition, with
or without advertisement;
(c) To vote upon any stocks, bonds, or other securities; to give
general or special proxies or powers of attorney with or without power
of substitution; to exercise any conversion privileges, subscription
rights or other options, and to make any payments incidental thereto;
to oppose, or to consent to, or otherwise participate in, corporate
reorganizations or other changes affecting corporate securities, and
to delegate discretionary powers, and to pay any assessments or
charges in connection therewith; and generally to exercise any of the
powers of any owner with respect to stocks, bonds, securities, or
other property. However, the Trustee shall not vote proxies relating
to securities for which it has not been assigned full investment
management responsibilities. In those cases where another party has
such investment authority or discretion, the Trustee will deliver all
proxies to said party who will then have full responsibility for
voting those proxies;
(d) To cause any securities or other property to be registered in
the Trustee's own name or in the name of one or more of the Trustee's
nominees and to hold any investments in bearer form, but the books and
records of the Trustee shall at all times show that all such
investments are part of the Trust Fund;
(e) To borrow or raise money for the purposes of the Plan in such
amount, and upon such terms and conditions as the Trustee shall deem
advisable; and for any sum so borrowed, to issue a promissory note as
Trustee, and to secure the repayment thereof by pledging all, or any
part, of the Trust Fund; and no person lending money to the Trustee
shall be bound to see to the application of the money lent or to
inquire into the validity, expediency, or propriety of any borrowing;
(f) To keep such portion of the Trust Fund in cash or cash
balances as the Trustee may, from time to time, deem to be in the best
interests of the Plan, without liability for interest thereon. Such
reasonable practice is expressly authorized notwithstanding the
Trustee's receipt of "float" from such cash balance;
(g) To accept and retain for such time as the Trustee may deem
advisable any securities or other property received or acquired as
Trustee hereunder, whether or not such securities or other property
would normally be purchased as investments hereunder;
67
<PAGE>
(h) To make, execute, acknowledge, and deliver any and all
documents of transfer and conveyance and any and all other instruments
that may be necessary or appropriate to carry out the powers herein
granted;
(i) To settle, compromise, or submit to arbitration any claims,
debts, or damages due or owning to or from the Plan, to commence or
defend suits or legal or administrative proceedings, and to represent
the Plan in all suits and legal and administrative proceedings;
(j) To employ suitable agents and counsel and to pay their
reasonable expenses and compensation from the Trust Fund, and such
agent or counsel may or may not be agent or counsel for the Employer;
(k) To apply for and procure from responsible insurance
companies, to be selected by the Administrator, as an investment of
the Trust Fund such annuity, or other Contracts (on the life of any
Participant) as the Administrator shall deem proper; to exercise, at
any time or from time to time, whatever rights and privileges may be
granted under such annuity, or other Contracts; to collect, receive,
and settle for the proceeds of all such annuity or other Contracts as
and when entitled to do so under the provisions thereof,
(l) To invest funds of the Trust in time deposits or savings
accounts bearing a reasonable rate of interest in the Trustee's bank;
(m) To invest in Treasury Bills from other forms of United States
government obligations;
(n) To invest in shares of investment companies registered under
the Investment Company Act of 1940 (i.e., mutual funds) including any
mutual fund for which the Trustee or any affiliate that serves as
advisor, custodian or other service provider as disclosed in the
current prospectus for any such mutual fund;
(o) To deposit monies in federally insured savings accounts or if
certificates of deposit in banks or savings and loan associations;
(p) To vote Company Stock as provided in Section 8.5;
(q) To consent to or otherwise participate in reorganizations,
recapitalizations, consolidations, mergers and similar transactions
with respect to Company Stock or any other securities and to pay any
assessments or charges in connection therewith;
(r) At the direction of the Administrator, to deposit such
Company Stock (but only if such deposit does not violate the
provisions of Section 8.5 hereof) or other securities in any voting
trust, or with any protective or life committee, or with a trustee or
with depositories designated thereby;
68
<PAGE>
(s) To sell or exercise any options, subscription rights and
conversion privileges and to make any payments incidental thereto;
(t) To exercise any of the powers of an owner, with respect to
such Company Stock and other securities or other property comprising
the Trust Fund. The Administrator, with the Trustee's approval, may
authorize the Trustee to act on any administrative matter or class of
matters with respect to which direction or instruction to the Trustee
by the Administrator is called for hereunder without specific
direction or other instruction from the Administrator;
(u) To sell, purchase and acquire put or call options of the
options are traded on and purchased through a national securities
exchange registered under the Securities Exchange Act of 1934, as
amended, or, if the options are not traded on a national securities
exchange, are guaranteed by a member firm of the New York Stock
Exchange;
(v) To appoint a nonfiduciary agent or agents to assist the
Trustee in carrying out any investment instructions of Participants
and of any Investment Manager or Fiduciary, and to compensate such
agent(s) from the assets of the Plan, to the extent not paid by the
Employer;
(w) To do all such acts and exercise all such rights and
privileges, although not specifically mentioned herein, as the Trustee
may deem necessary to carry out the purposes of the Plan.
(x) The Trustee is expressly authorized to the fullest extent
permitted by law to (i) retain the services of U.S. Bancorp Piper
Jaffray Inc. and/or U.S. Bancorp Investments, Inc., each being
affiliates of U.S. Bank National Association, and/or any other
registered broker-dealer organization hereafter affiliated with U.S.
Bank National Association, and any future successors in interest
thereto (collectively for the purposes of this paragraph referred to
as the "Affiliated Entities"), to provide services to assist in or
facilitate the purchase or sale of investment securities in the Trust,
(ii) acquire as assets of the Trust shares of mutual funds to which
Affiliated Entities provides, for a fee, services in any capacity and
(iii) acquire in the Trust any other services or products of any kind
or nature from the Affiliated Entities regardless of whether the same
or similar services or products are available from other institutions.
The Trust may directly or indirectly (through mutual funds fees and
charges for example) pay management fees, transaction fees and other
commissions to the Affiliated Entities for the services or products
provided to the Trust and/or such mutual funds at such Affiliated
Entities' standard or published rates without offset (unless required
by law) from any fees charged by the Trustee for its services as
Trustee. The Trustee may also deal directly with the Affiliated
Entities regardless of the capacity in which it is then acting, to
purchase, sell, exchange or transfer assets of the Trust even though
the Affiliated Entities are receiving compensation or
69
<PAGE>
otherwise profiting from such transaction or are acting as a principal
in such transaction. Each of the Affiliated Entities is authorized to
(i) effect transactions on national securities exchanges for the Trust
as directed by the Trustee, and (ii) retain any transactional fees
related thereto, consistent with Section 11 (a)(1) of the Securities
Exchange Act of 1934, as amended, and related Rule 11a2-2(T). Included
specifically, but not by way of limitation, in the transactions
authorized by this provision are transactions in which any of the
Affiliated Entities are serving as an underwriter or member of an
underwriting syndicate for a security being purchased or are
purchasing or selling a security for its own account. In the event the
Trustee is directed by the Employer, Administrator, named Fiduciary,
any designated Investment Manager, Participant and/or Beneficiary, as
applicable hereunder (collectively referred to for purposes of this
paragraph as the "Directing Party"), the Directing Party shall be
authorized, and expressly retains the right hereunder, to direct the
Trustee to retain the services of, and conduct transactions with,
Affiliated Entities fully in the manner described above.
8.4 LOANS TO PARTICIPANTS
(a) The Administrator may, in the Administrator's discretion,
make loans to Participants and Beneficiaries under the following
circumstances: (1) loans shall be made available to all Participants
and Beneficiaries on a reasonably equivalent basis; (2) loans shall
not be made available to Highly Compensated Employees in an amount
greater than the amount made available to other Participants and
Beneficiaries; (3) loans shall bear a reasonable rate of interest; (4)
loans shall be adequately secured; and (5) shall provide for repayment
over a reasonable period of time.
(b) Loans made pursuant to this Section (when added to the
outstanding balance of all other loans made by the Plan to the
Participant) shall be limited to the lesser of-
(1) $50,000 reduced by the excess (if any) of the highest
outstanding balance of loans from the Plan to the Participant
during the one year period ending on the day before the date on
which such loan is made, over the outstanding balance of loans
from the Plan to the Participant on the date on which such loan
was made, or
(2) one-half (1/2) of the present value of the non-forfeitable
accrued benefit of the
Participant under the Plan.
For purposes of this limit, all plans of the Employer
shall be
considered one plan.
(c) Loans shall provide for level amortization with payments to
be made not less frequently than quarterly over a period not to exceed
five (5) years. However, loans used to acquire any dwelling unit
which, within a reasonable
70
<PAGE>
time, is to be used (determined at the time the loan is made) as a
principal residence of the Participant shall provide for periodic
repayment over a reasonable period of time that may exceed five (5)
years. For this purpose, a principal residence has the same meaning as
a principal residence under Code Section 1034. Loan repayments will be
suspended under this Plan as permitted under Code Section 414(u)(4).
(d) Any loans granted or renewed shall be made pursuant to a
Participant loan program. Such loan program shall be established in
writing and must include, but need not be limited to, the following:
(1) the identity of the person or positions authorized to
administer the
Participant loan program;
(2) a procedure for applying for loans;
(3) the basis on which loans will be approved or denied;
(4) limitations, if any, on the types and amounts of loans
offered;
(5) the procedure under the program for determining a reasonable
rate of interest;
(6) the types of collateral which may secure a Participant loan;
and
(7) the events constituting default and the steps that will be
taken to
preserve Plan assets.
Such Participant loan program shall be contained in a
separate
written document which, when properly executed, is hereby incorporated
by reference and made a part of the Plan. Furthermore, such
Participant loan program may be modified or amended in writing from
time to time without the necessity of amending this Section.
8.5 VOTING COMPANY STOCK
The Trustee shall vote all Company Stock held by it as part of the
Plan assets. Provided, however, that if any agreement entered into by the Trust
provides for voting of any shares of Company Stock pledged as security for any
obligation of the Plan, then such shares of Company Stock shall be voted in
accordance with such agreement. If the Trustee does not timely receive voting
directions from a Participant or Beneficiary with respect to any Company Stock
allocated to that Participant's or Beneficiary's Company Stock account, the
Administrator shall direct the Trustee with respect to such vote.
Notwithstanding the foregoing, if the Employer has a registration-type
class of securities or, with respect to Company Stock acquired by, or
transferred to, the Plan in
71
<PAGE>
connection with a securities acquisition loan (as defined in Code Section
133(b)) after July 10, 1989, each Participant or Beneficiary shall be entitled
to direct the Trustee as to the manner in which the Company Stock which is
entitled to vote and which is allocated to the Company Stock Account of such
Participant or Beneficiary is to be voted. If the Employer does not have a
registration-type class of securities, with respect to Company Stock other than
Company Stock acquired by, or transferred to, the Plan in connection with a
securities acquisition loan (as defined in Code Section 133(b)) after July 10,
1989, each Participant or Beneficiary in the Plan shall be entitled to direct
the Trustee as to the manner in which voting rights on shares of Company Stock
which are allocated to the Company Stock Account of such Participant or
Beneficiary are to be exercised with respect to any corporate matter which
involves the voting of such shares with respect to 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 prescribed in Regulations. For purposes
of this Section the term "registration-type class of securities" means: (A) a
class of securities required to be registered under Section 12 of the Securities
Exchange Act of 1934; and (B) a class of securities which would be required to
be so registered except for the exemption from registration provided in
subsection (g)(2)(H) of such Section 12.
If the Employer does not have a registration-type class of securities
and the bylaws of the Employer require the Plan to vote an issue in a manner
that reflects a one-man, one-vote philosophy, each Participant or Beneficiary
shall be entitled to cast one vote on an issue and the Trustee shall vote the
shares held by the Plan in proportion to the results of the votes cast on the
issue by the Participants and Beneficiaries. In such case, the Administrator
shall assure that Participants receive notice of this procedure with proxy
materials for any such vote.
8.6 DUTIES OF THE TRUSTEE REGARDING PAYMENT
(a) The Trustee shall make distributions from the Trust Fund at
such times and in such numbers of shares or other units of Company
Stock and amounts of cash to or for the benefit of the person entitled
thereto under the Plan as the Administrator directs in writing. Any
undistributed part of a Participant's interest in his accounts shall
be retained in the Trust Fund until the Administrator directs its
distribution. Where distribution is directed in Company Stock, the
Trustee shall cause an appropriate certificate to be issued to the
person entitled thereto and mailed to the address furnished it by the
Administrator. Any portion of a Participant's Combined Account to be
distributed in cash shall be paid by the Trustee mailing its check to
the same person at the same address. If a dispute arises as to who is
entitled to or should receive any benefit or payment, the Trustee may
withhold or cause to be withheld such payment until the dispute has
been resolved.
(b) As directed by the Administrator, the Trustee shall make
payments out of the Trust Fund. Such directions or instructions need
not specify the purpose of the payments so directed and the Trustee
shall not be responsible in any way respecting the purpose or
propriety of such payment except as mandated by the Act.
72
<PAGE>
(c) In the event that any distribution or payment directed by the
Administrator shall be mailed by the Trustee to the person specified
in such direction at the latest address of such person filed with the
Administrator, and shall be returned to the Trustee because such
person cannot be located at such address, the Trustee shall promptly
notify the Administrator of such return. Upon the expiration of sixty
(60) days after such notification, such direction shall become void
and unless and until a further direction by the Administrator is
received by the Trustee with respect to such distribution or payment,
the Trustee shall thereafter continue to administer the Trust as if
such direction had not been made by the Administrator. The Trustee
shall not be obligated to search for or ascertain the whereabouts of
any such person.
8.7 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES
The Trustee shall be paid such reasonable compensation as shall from
time to time be agreed upon between the Employer and the Trustee. An individual
serving as Trustee who already received full-time pay from the Employer shall
not receive compensation from the Plan. In addition, the Trustee shall be
reimbursed for any reasonable expenses, including reasonable counsel fees
incurred by it as Trustee. Such compensation and expenses shall be paid from
the Trust Fund unless paid or advanced by the Employer. All taxes of any kind
and all kinds whatsoever that may be levied or assessed under existing or future
laws upon, or in respect of, the Trust Fund or the income thereof, shall be paid
from the Trust Fund.
8.8 ANNUAL REPORT OF THE TRUSTEE
Within a reasonable period of time after the later of the Anniversary
Date or receipt of the Employer contribution for each Plan Year, the Trustee
shall furnish to the Employer and Administrator a written statement of account
with respect to the Plan Year for which such contribution was made setting
forth:
(a) the net income, or loss, of the Trust Fund;
(b) the gains, or losses, realized by the Trust Fund upon sales
or other disposition of the assets;
(c) The increase, or decrease, in the value of the Trust Fund;
(d) all payments and distributions made from the Trust Fund; and
(e) such further information as the Trustee and/or Administrator
deems appropriate. The Employer, forthwith upon its receipt of each
such statement of account, shall acknowledge receipt thereof in
writing and advise the Trustee and/or Administrator of its approval or
disapproval thereof. Failure by the Employer to disapprove any such
statement of account within thirty (30) days after its receipt thereof
shall be deemed an approval thereof.
73
<PAGE>
The approval by the Employer of any statement of account shall be
binding as to all matters embraced therein as between the Employer and
the Trustee to the same extent as if the account of the Trustee had
been settled by judgment or decree in an action for a judicial
settlement of its account in a court of competent jurisdiction in
which the Trustee, the Employer and all persons having or claiming an
interest in the Plan were parties; provided, however, that nothing
herein contained shall deprive the Trustee of its right to have its
accounts judicially settled if the Trustee so desires.
8.9 AUDIT
(a) If an audit of the Plan's records shall be required by the
Act and the regulations thereunder for any Plan Year, the
Administrator shall direct the Trustee to engage on behalf of all
Participants an independent qualified public accountant for that
purpose. Such accountant shall, after an audit of the books and
records of the Plan in accordance with generally accepted auditing
standards, within a reasonable period after the close of the Plan
Year, furnish to the Administrator and the Trustee a report of his
audit setting forth his opinion as to whether any statements,
schedules or lists that are required by Act Section 103 or the
Secretary of Labor to be filed with the Plan's annual report, are
presented fairly in conformity with generally accepted accounting
principles applied consistently. All auditing and accounting fees
shall be an expense of and may, at the election of the Administrator,
be paid from the Trust Fund.
(b) If some or all of the information necessary to enable the
Administrator to comply with Act Section 103 is maintained by a bank,
insurance company, or similar institution, regulated and supervised
and subject to periodic examination by a state or federal agency, it
shall transmit and certify the accuracy of that information to the
Administrator as provided in Act Section 103(b) within one hundred
twenty (120) days after the end of the Plan Year or by such other date
as may be prescribed under regulations of the Secretary of Labor.
8.10 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE
(a) The Trustee may resign at any time by delivering to the
Employer, at least thirty (30) days before its effective date, a
written notice of his resignation.
(b) The Employer may remove the Trustee by mailing by registered
or certified mail, addressed to such Trustee at his last known
address, at least thirty (30) days before its effective date, a
written notice of his removal.
(c) Upon the death, resignation, incapacity, or removal of any
Trustee, a successor may be appointed by the Employer; and such
successor, upon accepting such appointment in writing and delivering
same to the Employer, shall,
74
<PAGE>
without further act, become vested with all the estate, rights,
powers, discretions, and duties of his predecessor with like respect
as if he were originally named as a Trustee herein. Until such a
successor is appointed, the remaining Trustee or Trustees shall have
full authority to act under the terms of the Plan.
(d) The Employer may designate one or more successors prior to
the death, resignation, incapacity, or removal of a Trustee. In the
event a successor is so designated by the Employer and accepts such
designation, the successor shall, without further act, become vested
with all the estate, rights, powers, discretions, and duties of his
predecessor with the like effect as if he were originally named as
Trustee herein immediately upon the death, resignation, incapacity,
or removal of his predecessor.
(e) Whenever any Trustee hereunder ceases to serve as such, he
shall furnish to the Employer and Administrator a written statement of
account with respect to the portion of the Plan Year during which he
served as Trustee. This statement shall be either (i) included as
part of the annual statement of account for the Plan Year required
under Section 8.8 or (ii) set forth in a special statement. Any such
special statement of account should be rendered to the Employer no
later than the due date of the annual statement of account for the
Plan Year. The procedures set forth in Section 8.8 for the approval
by the Employer of annual statements of account shall apply to any
special statement of account rendered hereunder and approval by the
Employer of any such special statement in the manner provided in
Section 8.8 shall have the same effect upon the statement as the
Employer's approval of an annual statement of account. No successor
to the Trustee shall have any duty or responsibility to investigate
the acts or transactions of any predecessor who has rendered all
statements of account required by Section 8.8 and this subparagraph.
8.11 TRANSFER OF INTEREST
Notwithstanding any other provision contained in this Plan, the
Trustee at the direction of the Administrator shall transfer the Vested
interest, if any, of such Participant in his account to another trust forming
part of a pension, profit sharing or stock bonus plan maintained by such
Participant's new employer and represented by said employer in writing as
meeting the requirements of Code Section 401(a), provided that the trust to
which such transfers are made permits the transfer to be made.
8.12 DIRECT ROLLOVER
(a) Notwithstanding any provision of the Plan to the contrary
that would otherwise limit a distributee's election under this
Section, a distributes may elect, at the time and in the manner
prescribed by the Administrator, to have any portion of an eligible
rollover distribution that is equal to at least $500 paid directly to
an eligible retirement plan specified by the distributes in a direct
rollover.
75
<PAGE>
(b) For purposes of this Section the following definitions shall
apply:
(1) An eligible rollover distribution is any distribution of all
or any portion of the balance to the credit of the distributes,
except that an eligible rollover distribution does not include:
any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for
the life (or life expectancy) of the distributes or the joint
lives (or joint life expectancies) of the distributes and the
distributee's designated beneficiary, or for a specified period
of ten years or more; any distribution to the extent such
distribution is required under Code Section 401(a)(9); the
portion of any other distribution that is not includible in gross
income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities); and
any other distribution that is reasonably expected to total less
than $200 during a year.
(2) An eligible retirement plan is an individual retirement
account described in Code Section 408(a), an individual
retirement annuity described in Code Section 408(b), an annuity
plan described in Code Section 403(a), or a qualified trust
described in Code Section 401(a), that accepts the distributee's
eligible rollover distribution. However, in the case of an
eligible rollover distribution to the surviving spouse, an
eligible retirement plan is an individual retirement account or
individual retirement annuity.
(3) A distributes includes an Employee or former Employee. In
addition, the Employee's or former Employee's surviving spouse
and the Employee's or former Employee's spouse or former spouse
who is the alternate payee under a qualified domestic relations
order, as defined in Code Section 414(p), are distributees with
regard to the interest of the spouse or former spouse.
(4) A direct rollover is a payment by the Plan to the eligible
retirement plan specified by the distributes.
ARTICLE IX
AMENDMENT, TERMINATION AND MERGERS
9.1 AMENDMENT
(a) The Employer shall have the right at any time to amend the
Plan, subject to the limitations of this Section. However, any
amendment which affects the rights, duties or responsibilities of the
Trustee and Administrator, other than an amendment to remove the
Trustee or Administrator, may only be made with
76
<PAGE>
the Trustee's and Administrator's written consent. Any such amendment
shall become effective as provided therein upon its execution. The
Trustee shall not be required to execute any such amendment unless the
Trust provisions contained herein are a part of the Plan and the
amendment affects the duties of the Trustee hereunder.
(b) No amendment to the Plan shall be effective if it authorizes
or permits any part of the Trust Fund (other than such part as is
required to pay taxes and administration expenses) to be used for or
diverted to any purpose other than for the exclusive benefit of the
Participants or their Beneficiaries or estates; or causes any
reduction in the amount credited to the account of any Participant; or
causes or permits any portion of the Trust Fund to revert to or become
property of the Employer.
(c) Except as permitted by Regulations, no Plan amendment or
transaction having the effect of a Plan amendment (such as a merger,
plan transfer or similar transaction) shall be effective to the extent
it eliminates or reduces any "Section 411(d)(6) protected benefit" or
adds or modifies conditions relating to "Section 411(d)(6) protected
benefits" the result of which is a further restriction on such benefit
unless such protected benefits are preserved with respect to benefits
accrued as of the later of the adoption date or effective date of the
amendment. "Section 411(d)(6) protected benefits" are benefits
described in Code Section 411(d)(6)(A), early retirement benefits and
retirement-type subsidies, and optional forms of benefit.
In addition, no such amendment shall have the effect of
terminating the protections and rights set forth in Section 7.10,
unless such termination shall then be permitted under the applicable
provisions of the Code and Regulations; such a termination is
currently expressly prohibited by Regulation 54.4975-11(a)(3)(ii).
9.2 TERMINATION
(a) The Employer shall have the right at any time to terminate
the Plan by delivering to the Trustee and Administrator written notice
of such termination. Upon any full or partial termination, all
amounts Credited to the affected Participants' Combined Accounts shall
become 100% Vested as provided in Section 7.4 and shall not thereafter
be subject to forfeiture, and all unallocated amounts shall be
allocated to the accounts of all Participants in accordance with the
provisions hereof.
(b) Upon the full termination of the Plan, the Employer shall
direct the distribution of the assets of the Trust Fund to
Participants in a manner which is consistent with and satisfies the
provisions of Sections 7.5 and 7.6. Except as permitted by
Regulations, the termination of the Plan shall not result in the
77
<PAGE>
reduction of "Section 411(d)(6) protected benefits" in accordance with
Section 9.1(c).
9.3 MERGER OR CONSOLIDATION
This Plan and Trust may be merged or consolidated with, or its assets
and/or liabilities may be transferred to any other plan and trust only if the
benefits which would be received by a Participant of this Plan, in the event of
a termination of the plan immediately after such transfer, merger or
consolidation, are at least equal to the benefits the Participant would have
received if the Plan had terminated immediately before the transfer, merger or
consolidation, and such transfer, merger or consolidation does not otherwise
result in the elimination or reduction of any "Section 411(d)(6) protected
benefits" in accordance with Section 9.1 (c).
ARTICLE X
TOP HEAVY
10.1 TOP HEAVY PLAN REQUIREMENTS
For any Top Heavy Plan Year, the Plan shall provide the special
vesting requirements of Code Section 416(b) pursuant to Section 7.4 of the Plan
and the special minimum allocation requirements of Code Section 416(c) pursuant
to Section 4.4 of the Plan.
10.2 DETERMINATION OF TOP HEAVY STATUS
(a) This Plan shall be a Top Heavy Plan for any Plan Year in
which, as of the Determination Date, (1) the Present Value of Accrued
Benefits of Key Employees and (2) the sum of the Aggregate Accounts of
Key Employees under this Plan and all plans of an Aggregation Group,
exceeds sixty percent (60%) of the Present Value of Accrued Benefits
and the Aggregate Accounts of all Key and Non-Key Employees under this
Plan and all plans of an Aggregation Group.
If any Participant is a Non-Key Employee for any Plan Year,
but such Participant was a Key Employee for any prior Plan Year, such
Participant's Present Value of Accrued Benefit and/or Aggregate
Account balance shall not be taken into account for purposes of
determining whether this Plan is a Top Heavy or Super Top Heavy Plan
(or whether any Aggregation Group which includes this Plan is a Top
Heavy Group). In addition, if a Participant or Former Participant has
not performed any services for any Employer maintaining the Plan at
any time during the five year period ending on the Determination Date,
any accrued benefit for such Participant or Former Participant shall
not be taken into account for the purposes of determining whether this
Plan is a Top Heavy or Super Top Heavy Plan.
(b) This Plan shall be a Super Top Heavy Plan for any Plan Year
in which, as of the Determination Date, (1) the Present Value of
Accrued Benefits of
78
<PAGE>
Key Employees and (2) the sum of the Aggregate Accounts of Key
Employees under this Plan and all plans of an Aggregation Group,
exceeds ninety percent (90%) of the Present Value of Accrued Benefits
and the Aggregate Accounts of all Key and Non-Key Employees under this
Plan and all plans of an Aggregation Group.
(c) Aggregate Account: A Participant's Aggregate Account as of
the Determination Date is the sum of:
(1) his Participant's Combined Account balance as of the most
recent valuation occurring within a twelve (12) month period
ending on the Determination Date;
(2) an adjustment for any contributions due as of the
Determination
Date. Such adjustment shall be the amount of any contributions
actually made after the Valuation Date but due on or before the
Determination Date, except for the first Plan Year when such
adjustment shall also reflect the amount of any contributions
made after the Determination Date that are allocated as of a date
in that first Plan Year.
(3) any Plan distributions made within the Plan Year that
includes the Determination Date or within the four (4) preceding
Plan Years. However, in the case of distributions made after the
Valuation Date and prior to the Determination Date, such
distributions are not included as distributions for top heavy
purposes to the extent that such distributions are already
included in the Participant's Aggregate Account balance as of the
Valuation Date. Notwithstanding anything herein to the contrary,
all distributions, including distributions under a terminated
plan which if it had not been terminated would have been required
to be included in an Aggregation Group, will be counted.
Further, distributions from the Plan (including the cash value of
life insurance policies) of a Participant's account balance
because of death shall be treated as a distribution for the
purposes of this paragraph.
(4) any Employee contributions, whether voluntary or mandatory.
However, amounts attributable to tax deductible qualified
voluntary employee contributions shall not be considered to be a
part of the Participant's Aggregate Account balance.
(5) with respect to unrelated rollovers and plan-to-plan
transfers (ones which are both initiated by the Employee and made
from a plan maintained by one employer to a plan maintained by
another employer), if this Plan provides the rollovers or plan-
to-plan transfers, it shall always consider such rollovers or
plan-to-plan transfers as a distribution for the purposes of this
Section. If this Plan is the plan accepting such rollovers or
79
<PAGE>
plan-to-plan transfers, it shall not consider such rollovers or
plan-to-plan transfers as part of the Participant's Aggregate
Account balance.
(6) with respect to related rollovers and plan-to-plan transfers
(ones either not initiated by the Employee or made to a plan
maintained by the same employer), if this Plan provides the
rollover or plan-to-plan transfer, it shall not be counted as a
distribution for purposes of this Section. If this Plan is the
plan accepting such rollover or plan-to-plan transfer, it shall
consider such rollover or plan-to-plan transfer as part of the
Participant's Aggregate Account balance, irrespective of the date
on which such rollover or plan-to-plan transfer is accepted.
(7) For the purposes of determining whether two employers are to
be treated as the same employer in (5) and (6) above, all
employers aggregated under Code Section 414(b), (c), (m) and (o)
are treated as the same employer.
(d) "Aggregation Group" means either a Required Aggregation
Group or a Permissive Aggregation Group as hereinafter determined.
(1) Required Aggregation Group: In determining a Required
Aggregation Group hereunder, each plan of the Employer in which a
Key Employee is a participant in the Plan Year containing the
Determination Date or any of the four preceding Plan Years, and
each other plan of the Employer which enables any plan in which a
Key Employee participates to meet the requirements of Code
Sections 401(a)(4) or 410, will be required to be aggregated.
Such group shall be known as a Required Aggregation Group.
In the case of a Required Aggregation Group, each plan in the
group will be considered a Top Heavy Plan if the Required
Aggregation Group is a Top Heavy Group. No plan in the Required
Aggregation Group will be considered a Top Heavy Plan if the
Required Aggregation Group is not a Top Heavy Group.
(2) Permissive Aggregation Group: The Employer may also include
any other plan not required to be included in the Required
Aggregation Group, provided the resulting group, taken as a
whole, would continue to satisfy the provisions of Code Sections
401(a)(4) and 410. Such group shall be known as a Permissive
Aggregation Group.
In the case of a Permissive Aggregation Group, only a plan that
is part of the Required Aggregation Group will be considered a
Top Heavy Plan if the Permissive Aggregation Group is a Top Heavy
Group. No plan in the Permissive Aggregation Group will be
considered a Top Heavy Plan if the Permissive Aggregation Group
is not a Top Heavy Group.
80
<PAGE>
(3) Only those plans of the Employer in which the Determination
Dates fall within the same calendar year shall be aggregated in
order to determine whether such plans are Top Heavy Plans.
(4) An Aggregation Group shall include any terminated plan of the
Employer if it was maintained within the last five (5) years
ending on the Determination Date.
(e) "Determination Date" means (a) the last day of the preceding
Plan Year, or (b) in the case of the first Plan Year, the last day of
such Plan Year.
(f) Present Value of Accrued Benefit: In the case of a defined
benefit plan, the Present Value of Accrued Benefit for a Participant
other than a Key Employee, shall be as determined using the single
accrual method used for all plans of the Employer and Affiliated
Employers, or if no such single method exists, using a method which
results in benefits accruing not more rapidly than the slowest accrual
rate permitted under Code Section 411(b)(1)(C). The determination of
the Present Value of Accrued Benefit shall be determined as of the
most recent Valuation Date that falls within or ends with the 12-month
period ending on the Determination Date except as provided in Code
Section 416 and the Regulations thereunder for the first and second
plan years of a defined benefit plan.
(g) "Top Heavy Group" means an Aggregation Group in which, as of
the Determination Date, the sum of:
(1) the Present Value of Accrued Benefits of Key Employees
under
all defined benefit plans included in the group, and
(2) the Aggregate Accounts of Key Employees under all defined
contribution plans included in the group, exceeds sixty percent
(60%) of a similar sum determined for all Participants.
ARTICLE XI
MISCELLANEOUS
11.1 PARTICIPANT'S RIGHTS
This Plan shall not be deemed to constitute a contract between the
Employer and any Participant or to be a consideration or an inducement for the
employment of any Participant or Employee. Nothing contained in this Plan shall
be deemed to give any Participant or Employee the right to be retained in the
service of the Employer or to interfere with the right of the Employer to
discharge any Participant or Employee at any time regardless of the effect which
such discharge shall have upon him as a Participant of this Plan.
81
<PAGE>
11.2 ALIENATION
(a) Subject to the exceptions provided below, no benefit which
shall be payable out of the Trust Fund to any person (including a
Participant or his Beneficiary) shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, or charge, and any attempt to anticipate, alienate, sell,
transfer, assign, pledge, encumber, or charge the same shall be void;
and no such benefit shall in any manner be liable for, or subject to,
the debts, contracts, liabilities, engagements, or torts of any such
person, nor shall it be subject to attachment or legal process for or
against such person, and the same shall not be recognized by the
Trustee, except to such extent as may be required by law.
(b) This provision shall not apply to the extent a Participant or
Beneficiary is indebted to the Plan, as a result of a loan from the
Plan. At the time a distribution is to be made to or for a
Participant's or Beneficiary's benefit, such proportion of the amount
distributed as shall equal such loan indebtedness shall be paid by the
Trustee to the Trustee or the Administrator, at the direction of the
Administrator, to apply against or discharge such loan indebtedness.
Prior to making a payment, however, the Participant or Beneficiary
must be given written notice by the Administrator that such loan
indebtedness is to be so paid in whole or part from his Participant's
Combined Account. If the Participant or Beneficiary does not agree
that the loan indebtedness is a valid claim against his Vested
Participant's Combined Account, he shall be entitled to a review of
the validity of the claim in accordance with procedures provided in
Sections 2.8 and 2.9.
(c) This provision shall not apply to a "qualified domestic
relations order" defined in Code Section 414(p), and those other
domestic relations orders permitted to be so treated by the
Administrator under the provisions of the Retirement Equity Act of
1984. The Administrator shall establish a written procedure to
determine the qualified status of domestic relations orders and to
administer distributions under such qualified orders. Further, to the
extent provided under a "qualified domestic relations order," a former
spouse of a Participant shall be treated as the spouse or surviving
spouse for all purposes under the Plan.
Notwithstanding any provision of this Section to the
contrary, an offset to a Participant's accrued benefit against an
amount that the Participant is ordered or required to pay the Plan
with respect to a judgment, order, or decree issued, or a settlement
entered into, on or after August 5, 1997, shall be permitted in
accordance with Code Sections 401(a)(13)(C) and (D).
11.3 CONSTRUCTION OF PLAN
82
<PAGE>
This Plan and Trust shall be construed and enforced according to the
Act and the laws of the State of Washington, other than its laws respecting
choice of law, to the extent not preempted by the Act.
11.4 GENDER AND NUMBER
Wherever any words are used herein in the masculine, feminine or
neuter gender, they shall be construed as though they were also used in another
gender in all cases where they would so apply, and whenever any words are used
herein in the singular or plural form, they shall be construed as though they
were also used in the other form in all cases where they would so apply.
11.5 LEGAL ACTION
In the event any claim, suit, or proceeding is brought regarding the
Trust and/or Plan established hereunder to which the Trustee, the Employer or
the Administrator may be a party, and such claim, suit, or proceeding is
resolved in favor of the Trustee, the Employer or the Administrator, they shall
be entitled to be reimbursed from the Trust Fund for any and all costs,
attorney's fees, and other expenses pertaining thereto incurred by them for
which they shall have become liable.
11.6 PROHIBITION AGAINST DIVERSION OF FUNDS
(a) Except as provided below and otherwise specifically permitted
by law, it shall be impossible by operation of the Plan or of the
Trust, by termination of either, by power of revocation or amendment,
by the happening of any contingency, by collateral arrangement or by
any other means, for any part of the corpus or income of any trust
fund maintained pursuant to the Plan or any funds contributed thereto
to be used for, or diverted to, purposes other than the exclusive
benefit of Participants, Retired Participants, or their Beneficiaries.
(b) In the event the Employer shall make an excessive
contribution under a mistake of fact pursuant to Act Section
403(c)(2)(A), the Employer may demand repayment of such excessive
contribution at any time within one (1) year following the time of
payment and the Trustees shall return such amount to the Employer
within the one (1) year period. Earnings of the Plan attributable to
the excess contributions may not be returned to the Employer but any
losses attributable thereto must reduce the amount so returned.
11.7 BONDING
Every Fiduciary, except a bank or an insurance company, unless
exempted by the Act and regulations thereunder, shall be bonded in an amount not
less than 10% of the amount of the funds such Fiduciary handles; provided,
however, that the minimum bond shall be $1,000 and the maximum bond, $500,000.
The amount of funds handled shall be determined at the beginning of each Plan
Year by the amount of funds handled by such person, group, or class to
83
<PAGE>
be covered and their predecessors, if any, during the preceding Plan Year, or if
there is no preceding Plan Year, then by the amount of the funds to be handled
during the then current year. The bond shall provide protection to the Plan
against any loss by reason of acts of fraud or dishonesty by the Fiduciary alone
or in connivance with others. The surety shall be a corporate surety company (as
such term is used in Act Section 412(a)(2)), and the bond shall be in a form
approved by the Secretary of Labor. Notwithstanding anything in the Plan to the
contrary, the cost of such bonds shall be an expense of and may, at the election
of the Administrator, be paid from the Trust Fund or by the Employer.
11.8 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE
Neither the Employer, the Administrator, nor the Trustee, nor their
successors shall be responsible for the validity of any Contract issued
hereunder or for the failure on the part of the insurer to make payments
provided by any, such Contract, or for the action of any person which may delay
payment or render a Contract null and void or unenforceable in whole or in part.
11.9 INSURER'S PROTECTIVE CLAUSE
Any insurer who shall issue Contracts hereunder shall not have any
responsibility for the validity of this Plan or for the tax or legal aspects of
this Plan. The insurer shall be protected and held harmless in acting in
accordance with any written direction of the Trustee, and shall have no duty to
see to the application of any funds paid to the Trustee, nor be required to
question any actions directed by the Trustee. Regardless of any provision of
this Plan, the insurer shall not be required to take or permit any action or
allow any benefit or privilege contrary to the terms of any Contract which it
issues hereunder, or the rules of the insurer.
11.10 RECEIPT AND RELEASE FOR PAYMENTS
Any payment to any Participant, his legal representative, Beneficiary,
or to any guardian or committee appointed for such Participant or Beneficiary in
accordance with the provisions of the Plan, shall, to the extent thereof, be in
full satisfaction of all claims hereunder against the Trustee and the Employer,
either of whom may require such Participant, legal representative, Beneficiary,
guardian or committee, as a condition precedent to such payment, to execute a
receipt and release thereof in such form as shall be determined by the Trustee
or Employer.
11.11 ACTION BY THE EMPLOYER
Whenever the Employer under the terms of the Plan is permitted or
required to do or perform any act or matter or thing, it shall be done and
performed by a person duly authorized by its legally constituted authority.
11.12 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY
84
<PAGE>
The "named Fiduciaries" of this Plan are (1) the Employer, (2) the
Administrator and (3) the Trustee. The named Fiduciaries shall have only those
specific powers, duties, responsibilities, and obligations as are specifically
given them under the Plan or as accepted by or assigned to them pursuant to any
procedure provided under the Plan, including but not limited to any agreement
allocating or delegating their responsibilities, the terms of which are
incorporated herein by reference. In general, unless otherwise indicated herein
or pursuant to such agreements, the Employer shall have the duties specified in
Article 11 hereof, as the same may be allocated or delegated thereunder,
including but not limited to the responsibility for making the contributions
provided for under Section 4.1; and shall have the authority to appoint and
remove the Trustee and the Administrator; to formulate the Plan's "funding
policy and method"; and to amend or terminate, in whole or in part, the Plan.
The Administrator shall have the responsibility for the administration of the
Plan, including but not limited to the items specified at Article 11 of the
Plan, as the same may be allocated or delegated thereunder. The Trustee shall
have the responsibility of management and control of the assets held under the
Trust, except to the extent directed pursuant to Article 11 or with respect to
those assets, the management of which has been assigned to an Investment
Manager, who shall be solely responsible for the management of the assets
assigned to it, all as specifically provided in the Plan and any agreement with
the Trustee. Each named Fiduciary warrants that any directions given,
information furnished, or action taken by it shall be in accordance with the
provisions of the Plan, authorizing or providing for such direction, information
or action. Furthermore, each named Fiduciary may rely upon any such direction,
information or action of another named Fiduciary as being proper under the Plan,
and is not required under the Plan to inquire into the propriety of any such
direction, information or action. It is intended under the Plan that each named
Fiduciary shall be responsible for the proper exercise of its own powers,
duties, responsibilities and obligations under the Plan as specified or
allocated herein. No named Fiduciary shall guarantee the Trust Fund in any
manner against investment loss or depreciation in asset value. Any person or
group may serve in more than one Fiduciary capacity. In the furtherance of
their responsibilities hereunder, the "named Fiduciaries" shall be empowered to
interpret the Plan and Trust and to resolve ambiguities, inconsistencies and
omissions, which findings shall be binding, final and conclusive.
11.13 HEADINGS
The headings and subheadings of this Plan have been inserted for
convenience of reference and are to be ignored in any construction of the
provisions hereof.
11.14 APPROVAL BY INTERNAL REVENUE SERVICE
(a) Notwithstanding anything herein to the contrary,
contributions to this Plan are conditioned upon the initial
qualification of the Plan under Code Section 401. If the Plan
receives an adverse determination with respect to its initial
qualification, then the Plan may return such contributions to the
Employer within one year after such determination, provided the
application for the determination is made by the time prescribed by
law for filing the Employer's return for the taxable year in which the
Plan was adopted, or such later date as the Secretary of the Treasury
may prescribe.
85
<PAGE>
(b) Notwithstanding any provisions to the contrary, except
Sections 3.5, 3.6, and 4.1(e), any contribution by the Employer to the
Trust Fund is conditioned upon the deductibility of the contribution
by the Employer under the Code and, to the extent any such deduction
is disallowed, the Employer may, within one (1) year following the
disallowance of the deduction, demand repayment of such disallowed
contribution and the Trustee shall return such contribution within one
(1) year following the disallowance. Earnings of the Plan
attributable to the excess contribution may not be returned to the
Employer, but any losses attributable thereto must reduce the amount
so returned.
11.15 UNIFORMITY
All provisions of this Plan shall be interpreted and applied in a
uniform, nondiscriminatory manner. In the event of any conflict between the
terms of this Plan and any Contract purchased hereunder, the Plan provisions
shall control.
11.16 WAIVER OF FUNDING
(a) In the event that the minimum funding requirement for a
particular Plan Year has been waived in whole or in part, then, an
Adjusted Account Balance shall be established for each Participant
which shall reflect the Account balance the Participant would have
had, had the waived amount been contributed. The Adjusted Account
Balance shall remain in effect until such time as the value of the
Participant's Account equals the value of the Participant's Adjusted
Account Balance:
(1) The excess of the value of each Participant's Adjusted
Account Balance over the value of the Participant's Account
balance will be credited with earnings equal to 150 percent of
the Federal mid-term rate (as in effect under Code Section 1274
for the first month of such Plan Year).
(2) The waiver payment to be made by the Employer in the year
after the waiver is granted shall at least equal the amount
necessary to amortize over 5 years, at the appropriate interest
rate, the excess of the sum of the Adjusted Account Balances over
the total value of the Trust Fund attributable to Employer
contributions. In the next year, the excess for such subsequent
year, if any, is amortized over 4 years. In each succeeding year
the amortization period is reduced by one year. The Employer
may, however, make such larger payments at any time as the
Employer shall deem appropriate.
(3) An unallocated Waiver Suspense Account shall be created, to
which shall be made all payments designed to reduce the waived
deficiency. If at the time of a distribution, the nonforfeitable
portion of a
86
<PAGE>
Participant's Adjusted Account Balance exceeds that Participant's
actual Account balance, that Participant will receive the larger
amount to the extent that there are then funds in the unallocated
Waiver Suspense Account to cover the excess. If at any time, a
Participant may not be able to receive a total distribution of
the entire nonforfeitable portion of his Adjusted Account
Balance, such Participant would receive subsequent distributions
derived from future waiver payments.
(b) When the total value of the Trust Fund equals the sum of the
Adjusted Account Balances, the Waiver Suspense Account shall be
allocated to the affected Participants so that each Participant's
actual Account balance equals that Participant's Adjusted Account
Balance.
11.17 SECURITIES AND EXCHANGE COMMISSION APPROVAL
The Employer may request an interpretative letter from the Securities
and Exchange Commission stating that the transfers of Company Stock contemplated
hereunder do not involve transactions requiring a registration of such Company
Stock under the Securities Act of 1933. In the event that a favorable
interpretative letter is not obtained, the Employer reserves the right to amend
the Plan and Trust retroactively to their Effective Dates in order to obtain a
favorable interpretative letter or to terminate the Plan.
ARTICLE XII
PARTICIPATING EMPLOYERS
12.1 ADOPTION BY OTHER EMPLOYERS
Notwithstanding anything herein to the contrary, with the consent of
the Employer, any other corporation or entity, whether an affiliate or
subsidiary or not, may adopt this Plan and all of the provisions hereof, and
participate herein and be known as a Participating Employer, by a properly
executed document evidencing said intent and will of such Participating
Employer.
12.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS
(a) Each such Participating Employer shall be required to use the
same Trustee as provided in this Plan.
(b) At the direction of the Administrator, the Trustee may
commingle, hold and invest as one Trust Fund all contributions made by
Participating Employers, as well as all increments thereof. However,
the assets of the Plan shall, on an ongoing basis, be available to pay
benefits to all Participants and Beneficiaries under the Plan without
regard to the Employer or Participating Employer who contributed such
assets.
87
<PAGE>
(c) The transfer of any Participant from or to an Employer
participating in this Plan, whether he be an Employee of the Employer
or a Participating Employer, shall not affect such Participant's
rights under the Plan, and all amounts credited to such Participant's
Combined Account as well as his accumulated service time with the
transferor or predecessor, and his length of participating in the
Plan, shall continue to his credit.
(d) All rights and values forfeited by termination of employment
shall inure only to the benefit of the Participants of the Employer or
Participating Employer by which the forfeiting Participating was
employed, except if the Forfeiture is for an Employee whose Employer
is an Affiliated Employer, then said Forfeiture shall inure to the
benefit of the Participants of those Employers who are Affiliated
Employers. Should an Employee of one ("First") Employer be
transferred to an associated ("Second") Employer which is an
Affiliated Employer, such transfer shall not cause his account balance
(generated while an Employee of "First" Employer) in any manner, or by
any amount to be forfeited. Such Employee's Participant Combined
Account balance for all purposes of the Plan, including length of
service, shall be considered as though he had always been employed by
the "Second" Employer and as such had received contributions,
forfeitures, earnings or losses, and appreciation or depreciation in
value of assets totaling the amount so transferred.
(e) Any expenses of the Trust which are to be paid by the
Employer or bone by the Trust Fund shall be paid by each
Participating Employer in the same proportion that the total amount
standing to the credit of all Participants employed by such Employer
bears to the total standing to the credit of all Participants.
12.3 DESIGNATION OF AGENT
Each Participating Employer shall be deemed to be a party to this
Plan; provided, however, that with respect to all of its relations with the
Trustee and Administrator for the purpose of this Plan, each Participating
Employer shall be deemed to have designated irrevocably the Employer as its
agent. Unless the context of the Plan clearly indicates the contrary, the word
"Employer" shall be deemed to include each Participating Employer as related to
its adoption of the Plan.
12.4 EMPLOYEE TRANSFERS
It is anticipated that an Employee may be transferred between
Participating Employers, and in the event of any such transfer, the Employee
involved shall carry with him his accumulated service and eligibility. No such
transfer shall effect a termination of employment hereunder, and the
Participating Employer to which the Employee is transferred shall thereupon
become obligated hereunder with respect to such Employee in the same manner as
was the Participating Employer from whom the Employee was transferred.
88
<PAGE>
12.5 PARTICIPATING EMPLOYER CONTRIBUTION
Any contribution subject to allocation during each Plan Year shall be
allocated only among those Participants of the Employer or Participating
Employer making the contribution, except if the contribution is made by an
Affiliated Employer, in which event such contribution shall be allocated among
all Participants of all Participating Employers who are Affiliated Employers in
accordance with the provisions of this Plan. On the basis of the information
furnished by the Administrator, the Trustee shall keep separate books and
records concerning the affairs of each Participating Employer hereunder and as
to the accounts and credits of the Employees of each Participating Employer.
The Trustee may, but need not, register Contracts so as to evidence that a
particular Participating Employer is the interested Employer hereunder, but in
the event of an Employee transfer from one Participating Employer to another,
the employing Employer shall immediately notify the Trustee thereof.
12.6 AMENDMENT
Amendment of this Plan by the Employer at any time when there shall be
a Participating Employer hereunder shall only be by the written action of each
and every Participating Employer and with the consent of the Trustee where such
consent is necessary in accordance with the terms of this Plan.
12.7 DISCONTINUANCE OF PARTICIPATION
Any Participating Employer shall be permitted to discontinue or revoke
its participation in the Plan. At the time of any such discontinuance or
revocation, satisfactory evidence thereof and of any applicable conditions
imposed shall be delivered to the Trustee. The Trustee shall thereafter
transfer, deliver and assign Contracts and other Trust Fund assets allocable to
the Participants of such Participating Employer to such new Trustee as shall
have been designated by such Participating Employer, in the event that it has
established a separate pension plan for its Employees, provided however, that no
such transfer shall be made if the result is the elimination or reduction of any
"Section 411(d)(6) protected benefits" in accordance with Section 9.1(c). If no
successor is designated, the Trustee shall retain such assets for the Employees
of said Participating Employer pursuant to the provisions of Article VII hereof.
In no such event shall any part of the corpus or income of the Trust as it
related to such Participating Employer be used for or diverted to purposes other
than for the exclusive benefit of the Employees of such Participating Employer.
12.8 ADMINISTRATOR'S AUTHORITY
The Administrator shall have authority to make any and all necessary
rules or regulations, binding upon all Participating Employers and all
Participants, to effectuate the purpose of this Article.
12.9 INDEMNIFICATION OF TRUSTEE
89
<PAGE>
To the extent the Trustee is directed with respect to Plan investments
by the Employer, Administrator, any designated Investment Manager or Plan
Participant or Beneficiary (collectively referred to for purposes of this
paragraph as the "Directing Party"), the Trustee shall be under no duty to
question any such investment direction, to review or monitor any securities or
property held in the Trust Fund, or to advise the Directing Party with respect
to the investment, retention or disposition of any assets in the Trust Fund.
The Trustee in acting pursuant to and in reliance on such directions shall be
fully and completely indemnified and held harmless by the Employer from any
liability, loss or expense (including legal or other professional fees) arising
out of its actions so directed notwithstanding that such directions, and the
Trustee's conduct pursuant thereto, may constitute a breach of fiduciary
obligations to the Plan, the Participants and Beneficiaries. In particular, it
is expressly acknowledged that the Trustee shall always be acting as a directed,
custodial trustee with respect to Plan investments in Company Stock. Whether
the Trustee shall be a directed, custodial trustee with respect to Plan assets
other than Company Stock shall depend on what authorized party directed the
purchase of such assets. The parties expressly acknowledge that this
indemnification provision is a legal and enforceable indemnification agreement
and each party respectively represents and warrants that it shall not assert
otherwise under any circumstance.
IN WITNESS WHEREOF, this Plan has been executed the day and year first
above written.
EMPLOYER:
Heritage Bank
By:______________________
Printed Name:____________
Title:___________________
TRUSTEE:
U.S. Bank National Association
By:______________________
Printed Name:____________
Title:___________________
90
