<PAGE>
As filed with the Securities and Exchange Commission on January 4, 1999
Registration No. 333-______________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
--------------------------------
FRONTIER NATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
ALABAMA 72-1355228
(State of Incorporation) (I.R.S. Employer
Identification No.)
43 North Broadway
Sylacauga, Alabama 35150
(Address of principal executive offices)
FRONTIER NATIONAL CORPORATION KSOP
(Full Title of the Plan)
STEVEN R. TOWNSON
1011 North Lanier Avenue
Lanett, Alabama 36863-0682
(334) 644-3171
(Name, address and telephone number of agent for service)
(with copies to:)
STEVEN J. EISEN
Baker, Donelson, Bearman & Caldwell
511 Union Street, Suite 1700
Nashville, Tennessee 37219
(615) 726-5600
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
============================================================================================================================
TITLE OF SECURITIES TO BE AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
REGISTERED REGISTERED OFFERING PRICE PER SHARE AGGREGATE OFFERING PRICE REGISTRATION FEE
============================================================================================================================
<S> <C> <C> <C> <C>
Plan Interests related to An Indeterminate N/A N/A N/A(2)
the Frontier National Amount of Plan
Corporation KSOP Interests(1)
- ----------------------------------------------------------------------------------------------------------------------------
Common Stock, $.001 30,512 $22.50(3) $625,496 $173.89
par value
============================================================================================================================
</TABLE>
(1) 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 describe, herein.
(2) Since this registration statement registers securities of the registrant and
plan interests constituting separate securities, no separate fee is required
with respect to the plan interests pursuant to Rule 457(h)(2).
(3) Pursuant to Rule 457(c) and (h), the proposed offering price per share, the
proposed aggregate offering price and the amount of the registration fee for the
common stock have been computed based upon the average of the bid and asked
price as of December 28, 1998.
<PAGE>
PART II
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed with the Securities and Exchange Commission
("SEC") are incorporated herein by reference:
1. Frontier National Corporation's (the "Company") most recent prospectus filed
with the SEC pursuant to Rule 424(b) on August 4, 1998 and including the
Company's audited financial statements for the most recent fiscal year.
2. All reports filed by the Company pursuant to Section 13(a) or 15(d) of the
Exchange Act of 1934, as amended, since July 21,1998.
3. The description of the Company's Common Stock contained in its Registration
Statement on Form 8-A, as amended, effective with the SEC on September 1, 1998.
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the 1934 Act, prior to the filing of a post-effective
amendment which indicates that all securities offered have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference herein and to be a part thereof from the date of
filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES
No response is required to this item.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
No response is required to this item.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Alabama Business Corporation Act (the "ABCA") gives Alabama
corporations broad powers to indemnify their present and former directors and
officers against expenses incurred in the defense of any lawsuit to which they
are made parties by reason of being or having been such directors or officers.
In general, the ABCA requires indemnification of directors and officers who
successfully defend actions and permits indemnification in most other situations
at the option of the corporation, if certain statutory standards are met. The
ABCA also authorizes Alabama corporations to buy directors' and officers'
liability insurance.
The Company has in effect a directors' and officers' liability policy with
The Fidelity and Deposit Companies Insurance in the amount of $5,000,000. This
policy provides for indemnification of the Company's officers and directors
against losses arising from claims asserted against them in their capacities as
officers and directors, subject to the limitations and conditions set forth in
the policy.
In general, the ABCA will allow indemnification if the director acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
Company's Bylaws require a written finding of independent legal counsel, or
other disinterested persons, selected and compensated by the Company's Board of
Directors, that such director or officer met the standards of conduct discussed
above before indemnification is allowed, unless the director or officer has been
successful in defending the proceeding. The ABCA
<PAGE>
provides that, if the officer or director is successful in defending the
proceeding, indemnification is mandatory without reference to any standard of
conduct. On the other hand, indemnification is not permitted with respect to
litigation brought by or in the right of the corporation in which the officer or
director is adjudged liable to the corporation or in connection with any
proceeding in which the officer or director is adjudged liable on the basis that
personal benefit was improperly received by him. This restriction does not
apply, however, to the extent that the court in which the action is brought
determines that such officer or director is entitled to indemnity for particular
expenses.
The Company's Articles of Incorporation, limit a director's liability to
the corporation or its shareholders for money damages to the full extent
permitted by the ABCA; provided that the director's liability will not be
limited with regard to: (i) any financial benefit received by a director to
which he is not entitled; (ii) an intentional infliction of harm on the
corporation or the shareholders; (iii) unlawful payments of dividends; (iv) an
intentional violation of criminal law; or (v) a breach of the director's duty of
loyalty.
In addition, the Company's Bylaws provide that Company employees or agents
who are not officers or directors may be indemnified, at the option of the Board
of Directors, to the extent authorized by the ABCA. The ABCA, generally,
provides that employees and agents may be indemnified to the same extent as
officers and directors.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
No response is required to this item.
ITEM 8. EXHIBITS
In lieu of an opinion of counsel concerning compliance with the
requirements of ERISA and Section 401 of the Internal Revenue Code, the Company
undertakes that it will submit the plan and any amendments thereto to the
Internal Revenue Service in a timely manner and has made or will make all
changes required by the Internal Revenue Service in order to qualify the plan.
Exhibit Number Description
- -------------- -----------
10 Frontier National Corporation KSOP
23.1 Consent of Jackson Thornton & Co., P.C.
23.2 Consent of Schauer, Taylor, Cox & Edwards, P.C.
25 Power of Attorney (Included on signature page)
ITEM 9. UNDERTAKINGS
(a) The undersigned registrant hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933 (the "1933 Act"), each such posteffective 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.
-2-
<PAGE>
(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 registrant hereby undertakes that, for the purposes of
determining any liability under the 1933 Act, each filing of the registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the 1934 Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Act) that is incorporated by reference in the
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 1933 Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the 1933 Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant 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 1933 Act and will be governed by the final
adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of 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 Lanett, State of Alabama, on December 30, 1998.
FRONTIER NATIONAL CORPORATION
By: /s/ Steven R. Townson
--------------------------------------
Steven R. Townson, Chief Operating Officer
and Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Steven R. Townson his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments to this registration statement, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary fully to all intents and purposes as he might or could
do in person thereby ratifying and confirming all that said attorney-in-fact and
agent or his substitutes or substitute, may lawfully do or cause to be done by
virtue hereof.
-3-
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ---------------------------- ------------------------------------------------ -----------------
<S> <C> <C>
/s/ Harry I. Brown, Jr. Chairman of the Board, Chief Executive Officer December 30, 1998
- ---------------------------- and Director (Principal Executive Officer)
Harry I. Brown, Jr.
/s/ Steven R. Townson President, Chief Operating Officer, Chief December 30, 1998
- ---------------------------- Financial Officer, Vice Chairman of the Board
Steven R. Townson and Director (Principal Executive and Financial
Officer)
/s/ Kerri C. Newton Comptroller (Principal Accounting Officer) December 30, 1998
- ----------------------------
Kerri C. Newton
Director December __, 1998
____________________________
Charles M. Reeves
/s/ Harry I. Brown, Sr. Director December 29, 1998
- ----------------------------
Harry I. Brown, Sr.
Director December __, 1998
- ----------------------------
Christopher N. Zodrow
/s/ Wesley L. Bowden, Jr. Director December 29, 1998
- ----------------------------
Wesley L. Bowden, Jr.
/s/ Raymond C. Styres Director December 29, 1998
- ----------------------------
Raymond C. Styres
/s/ Steven E. Sprayberry Director December 30, 1998
- ----------------------------
Steven E. Sprayberry
</TABLE>
The Plan. Pursuant to the requirements of the Securities Act of 1933, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Birmingham, state of
Alabama, on December 30, 1998.
Frontier National Corporation KSOP
The Trust Company of Sterne, Agee & Leach, Inc.
Trustee
By: /s/ William Keith
--------------------------------
Its: President & CEO
-------------------------------
-4-
<PAGE>
EXHIBIT 10
----------
FRONTIER NATIONAL CORPORATION KSOP
----------------------------------
<PAGE>
STATE OF ALABAMA
TALLADEGA COUNTY
FRONTIER NATIONAL CORPORATION
KSOP
FRONTIER NATIONAL CORPORATION, a Corporation organized and existing
under the laws of the State of Alabama, with its principal place of business in
Sylacauga, Alabama (hereinafter called the "Employer"), hereby adopts and
publishes on this the 4th day of January, 1999 this KSOP Plan for
the exclusive benefit of such of its Employees who may become Participants and
their Beneficiaries as set forth in this document, pursuant to Section 401(a) of
the Internal Revenue Code, as follows:
ARTICLE I
---------
PURPOSE
-------
1.1 The Trust Fund will be devoted to the exclusive benefit of the
participating employees and their beneficiaries, and in no event will any part
of the corpus or trust income revert to Employer or be used for or devoted to
any purpose other than the following:
(a) to provide one central plan as a receptacle for funds
transferred from plans of Employer's subsidiaries;
(b) to provide a regular method whereby Employer will make
contributions in the form of Qualifying Employer Securities and cash to a Trust
Fund, to be received, held and disbursed pursuant to the terms of a Trust
Agreement dated the 4th day of January, 1999 (hereinafter for brevity
referred to as the "Trust Agreement") and to provide financial security for its
employees upon their retirement or disability and for their beneficiaries in the
event of death;
(c) to provide a method for employees to contribute a portion of
their compensation pursuant to a written salary reduction agreement;
(d) to qualify as a profit sharing plan for purposes of Section
401(a) of the Code and as a cash or deferred arrangement pursuant to Section
401(k) of the Code;
(e) to invest a substantial portion of Employee Elective
Deferrals and Employer contributions into Qualifying Employer Securities. It is
intended that the Trustee be permitted to hold more than ten percent (10%) of
Plan assets in the form of Qualifying Employer Securities.
<PAGE>
ARTICLE II
----------
NAME AND EFFECTIVE DATE
-----------------------
2.1 Name of Plan. The name of this Plan shall be the Frontier
------------
National Corporation KSOP Plan.
2.2 Effective Date. The Effective Date of the Plan is January 1,
--------------
1999.
2.3 Contribution Date. The contributing date shall be as of the
-----------------
Anniversary Date of the Plan.
ARTICLE III
-----------
DEFINITIONS
-----------
When used herein, the following words and phrases shall have the
following meanings, unless the context clearly indicates otherwise.
3.1 "Accrued Benefit" shall mean the sum, as of the last Valuation
Date, of balances in all accounts maintained for a Participant.
3.2 "Actual Contribution Percentage" shall mean the average of ratios
(expressed as a percentage to the nearest one-hundredth of one percent) of
Employees in the group for a Plan Year, calculated separately for each Employee
in such group as follows:
(a) The numerator of such ratio is the sum of Employer Matching
Contribution and Qualified Employer Matching Contributions (to the extent not
taken into account for purposes of the Actual Deferral test).
(b) The denominator of such ratio is the federal W-2
compensation of each Employee in the group for the portion of such Plan Year
that the Employee was a Participant in the Plan.
(c) At the Employer's election, the numerator may include
Qualified Discretionary Employer Contributions and Elective Deferrals, provided
the Actual Deferral Percentage test is met before the Elective Deferrals are
used in the Actual Contribution Percentage test and continues to be met
following the exclusion of such Elective Deferrals that are used in the Actual
Contribution Percentage test.
(d) The numerator shall not include Employer Matching
Contributions that are forfeited either to correct Excess Aggregate
Contributions or because the contributions to which they relate are Excess
Deferrals, Excess Contributions, or Excess Aggregate Contributions.
(e) The ratio shall be zero for a Participant for whom no
Employer Matching Contributions, Qualified Discretionary Employer Contributions
or Elective Deferrals are made.
2
<PAGE>
3.3 "Actual Deferral Percentage" shall mean the average of ratios
(expressed as a percentage to the nearest one-hundredth of one percent) of
Employees in the group for a Plan Year, calculated separately for each Employee
in the group as follows:
(a) The numerator of such ratio is the sum of the following
Employer contributions actually paid over to the Trust on behalf of each
Employee in the group for the Plan Year:
(i) Elective Deferrals made pursuant to the Participant's
deferral election (including Excess Elective Deferrals of Highly Compensated
Employees, excluding Excess Elective Deferrals of non-highly Compensated
Employees that arise solely from Elective Deferrals made under the Plan or plans
of the Employer, and excluding Elective Deferrals that are taken into account in
the Actual Contribution Percentage), and
(ii) At the election of the Employer, Qualified
Discretionary Employer Contributions and Qualified Employer Matching
Contributions of each Employee in the group.
(b) The denominator of such ratio is the federal W-2
compensation of each Employee in the group for the portion of such Plan Year
that the Employee was a Participant in the Plan.
(c) The ratio shall be zero for an Employee who would be a
Participant but for the failure to make Elective Deferrals.
3.4 "Affiliated Service Group" shall mean:
(a) a group of service Organizations consisting of the Employer
and one or more of the following:
(i) Any service Organization which --
(A) is a shareholder or partner of the Employer, and
(B) regularly performs services for the Employer or is
regularly associated with the Employer in performing services for third persons,
and
(ii) Any other Organization if
(A) a significant portion of the business of such
Organization is the performance of services for the Employer, for Organizations
described in subparagraph (a)(i) hereinabove, or for both, which is of a type
historically performed in such service field by employees, and
(B) ten percent (10%) or more of the interests in such
Organization is held by persons who are highly compensated employees (within the
meaning of Section 414(q) of the Code) of the Employer or an Organization
described in subparagraph (a)(i) hereinabove; or
3
<PAGE>
(b) a group of Organizations consisting of:
(i) an Organization the principal business of which is
performing, on a regular and continuing basis, management functions for the
Employer or any Organization which is a "Related Organization" to the Employer;
and
(ii) the Employer and the Related Organization for which
said services are performed.
(iii) for purposes of this Section, "Related Organization"
shall mean:
(A) any Organization which would be a member of the
Controlled Group pursuant to Section 1563(a) of the Code, except that for
purposes of Section 415 of the Code, the phrase "more than 50%" shall be
substituted for the phrase "at least 80%" each place it appears in Section
1563(a) of the Code; or
(B) the relationship of the Employer and the
Organization would result in a disallowance of losses under Sections 267 or
707(b) of the Code.
(c) For purposes of this Section, after December 31, 1984, the
term "Organization" shall mean a corporation, partnership, or other Organization
and, in determining ownership pursuant to subsection (a) hereinabove, the
principles of Section 318(a) of the Code shall apply.
3.5 "Age" shall mean attained age.
3.6 "Allocation Date" shall mean the last day of each quarter of the
Plan Year or other such date selected by the Administrator.
3.7 "Anniversary Date" shall mean the last day of the Plan Year.
3.8 "Annual Addition Suspense Account" shall mean the account
maintained in the Plan to record reductions in the annual addition as required
by Section 7.4 hereof.
3.9 "Annuity Starting Date" shall mean the first day of the first
period for which an amount is paid as an annuity or, in the case of a benefit
not payable in the form of an annuity, the first day on which all events have
occurred which entitle the Participant to such benefit.
3.10 "Beneficiary" shall mean, subject to the distribution provisions
of Article VIII, the person or persons selected in writing by the Participant to
receive the benefits under the Plan in the event of the Participant's death.
Wherever the rights of a Participant are stated or limited herein, his
Beneficiary shall be deemed bound thereby. If any Participant shall fail to
designate a Beneficiary, or if there is no designated Beneficiary surviving at
the Participant's death, the Administrator shall be empowered to designate a
Beneficiary or Beneficiaries on his behalf, but only from among the following,
in the order named: (1) spouse, (2) children, in equal shares, (3) parents, in
equal shares or survivor, (4) brothers and sisters, per stirpes, and (5) estate
of the Participant. In the event any of the above shall be under the age of
majority, the Administrator shall pay the share of such minor to his or her
parents or legally appointed guardian, as custodian under the Alabama Uniform
Transfers to Minors Act.
4
<PAGE>
3.11 "Board" shall mean the Board of Directors of the Employer.
3.12 "Break In Service" shall mean a Plan Year during which a
Participant has not completed more than five hundred (500) Hours of Service.
3.13 "Code" shall mean the Internal Revenue Code of 1986, as amended.
3.14 "Compensation" shall mean:
(a) Except as provided hereinbelow, a Participant's compensation
which would be included on his Federal W-2 Form for the Plan Year for which the
contribution is made, excluding contributions to any Qualified Plan or any non-
qualified deferred compensation plan.
(b) Compensation shall include Elective Deferrals made pursuant
-------
to a salary reduction agreement which are not includible in the gross income of
the Employee under Sections 125, 402(e)(3), 402(h) or 403(b) of the Code.
(c) In addition to other applicable limitations set forth in the
Plan, and notwithstanding any other provision of the Plan to the contrary, the
annual Compensation of each Employee taken into account under the Plan shall not
exceed the OBRA '93 annual compensation limit. The OBRA '93 annual compensation
limit is $150,000, as adjusted by the Commissioner for increases in the cost of
living in accordance with Section 401(a)(17)(B) of the Internal Revenue Code.
The cost-of-living adjustment in effect for a calendar year applies to any
period, not exceeding 12 months, over which compensation is determined
(determination period) beginning in such calendar year. If a determination
period consists of fewer than 12 months, the OBRA '93 annual compensation limit
will be multiplied by a fraction, the numerator of which is the number of months
in the determination period, and the denominator of which is 12. Any reference
in this Plan to the limitation under Section 401(a)(17) of the Code shall mean
the OBRA '93 annual compensation limit set forth in this provision.
(d) If compensation for any prior determination period is taken
into account in determining an Employee's benefits accruing in the current Plan
Year, the compensation for the prior determination period is subject to the OBRA
'93 annual compensation limit in effect for that prior determination period.
(e) In the case of an Employee who becomes eligible to
participate in the Plan on July 1 of a Plan Year, for purposes of allocating any
Discretionary Employer Contributions, Compensation with respect to such Year
shall mean fifty percent (50%) of the amount determined hereinabove.
3.15 "Compensation Committee" shall mean two or more individuals
selected by the Board and empowered to: (a) direct the Trustee how to vote
Qualifying Employer Securities held in the Trust, (b) select the investment
options described in ARTICLE XII hereinbelow, (c) review and respond to claims
in accordance with ARTICLE XVI hereinbelow and (d) perform any other duties
assigned to it by the Board.
3.16 "Controlled Group" shall mean any group of corporations which,
together with the Employer, are members of a Controlled Group within the meaning
of Section 1563(a) of the Code,
5
<PAGE>
determined without regard to Section 1563(a)(4) or (e)(3)(c) or would be a part
of such a group if Section 1563(a) applied to partnerships or proprietorships.
3.17 "Disability" shall mean, for all purposes under this Plan, a
condition under which a Participant is deemed to be totally and permanently
disabled, if, supported by medical evidence, he will be totally unable, due to
physical or mental disability, ever to discharge or to resume full duties of the
same general nature as those which he performed immediately prior to such
disability provided that: (a) such disability did not arise while engaged in or
as a result of having engaged in a wrongful, illegal or criminal act, or an act
contrary to the best interest of Employer; or (b) such disability did not result
from habitual drunkenness or addiction to narcotics or self-inflicted injury
while sane or insane.
3.18 "Discretionary Employer Contribution" shall mean a contribution
made by the Employer pursuant to Section 6.1(a).
3.19 "Discretionary Employer Contribution Account" shall mean the
account maintained for a Participant to record his share of Discretionary
Employer Contributions and forfeitures, and adjustments relating thereto.
3.20 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
3.21 "Elective Deferrals" shall mean any Employer contributions made
to the Plan at the election of the Participant, in lieu of cash compensation,
and shall include contributions made pursuant to a salary reduction agreement or
other deferral mechanism. With respect to any taxable year, a Participant's
Elective Deferral is the sum of Employer contributions made on behalf of such
Participant pursuant to an election to defer under any qualified CODA as
described in Section 401(k) of the Code, any simplified employee pension cash or
deferred arrangement as described in Section 402(h)(1)(B), any eligible deferred
compensation plan under Section 457, any plan as described under Section
501(c)(18), and any Employer contributions made on behalf of a participant for
the purchase of an annuity contract under Section 403(b) pursuant to a salary
reduction agreement. Elective Deferrals shall not include any deferrals properly
distributed as excess annual additions.
3.22 "Elective Deferral Account" shall mean the account maintained for
a Participant to record his Elective Deferrals with adjustments relating
thereto.
3.23 "Eligibility Computation Period" shall mean the period of twelve
(12) consecutive months beginning with an Employee's Employment Commencement
Date, and thereafter, shall mean the next succeeding Plan Year which includes
the first anniversary of the Participant's Employment Commencement Date. An
Employee who is credited with 1000 Hours of Service in both the initial
Eligibility Computation Period and the first Plan year which commences prior to
the first anniversary of the Employee's initial Eligibility Computation Period
will be credited with two Years of Service.
3.24 "Eligibility Date" shall mean (a) the first day of a Plan Year,
or (b) the date which is six (6) months after the first day of a Plan Year.
3.25 "Employee" shall mean any person employed by Employer maintaining
the Plan or any other employer required to be aggregated with such Employer
under Sections 414(b), (c), (m) or
6
<PAGE>
(o) of the Code. For purposes of determining whether or not the Plan meets the
requirements of Section 10.2 hereof, the term Employee shall also include the
Beneficiary of an Employee. The term Employee shall also include leased
employees within the meaning of Section 414(n) or 414(o) of the Code.
3.26 "Employer" shall mean Frontier National Corporation, a
Corporation having its principal office at Sylacauga, Alabama, or any successor
thereto by merger, purchase, or otherwise, and any participating employer which
adopts the Plan.
3.27 "Employer Matching Contribution" shall mean a contribution made
by the Employer on behalf of a Participant on account of an Elective Deferral
made pursuant to Section 6.1(b).
3.28 "Employer Matching Contribution Account" shall mean the account
maintained for a Participant to record Employer Matching Contributions (and
adjustments thereto) made on his behalf.
3.29 "Employment Commencement Date" shall mean the date on which an
Employee first performed an Hour of Service for the Employer. In the case of a
re-hired Employee, "Employment Commencement Date" shall mean the date on which
the Employee first performed an Hour of Service after being re-hired.
3.30 "Five-Percent Owner" shall mean any person who is defined as a
Five-Percent Owner in Section 416(i)(1)(B) of the Code and the Regulations
promulgated thereunder, which are hereby incorporated by reference as if fully
set out herein.
3.31 "Highly Compensated Employee" shall mean an Employee who:
(a) was a Five-Percent Owner during the Plan Year or the
preceding Plan Year, or
(b) for the preceding Plan Year, had Compensation from the
Employer greater than $80,000 (adjusted at the same time and in the same manner
as under Section 415(d) of the Code).
3.32 "Hour of Service" shall mean:
(a) Each hour for which an Employee is paid, or entitled to
payment, for the performance of duties for the Employer. These hours shall be
credited to the Employee for the computation period or periods in which the
duties are performed; and
(b) Each hour for which an Employee is paid, or entitled to
payment, by the Employer on account of a period of time during which no duties
are performed (irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military duty or leave of absence. No more than
501 Hours of Service shall be credited under this paragraph for any single
continuous period (whether or not such period occurs in a single computation
period); and
(c) Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer. The same Hours of
Service shall not be credited under both paragraph (a) or paragraph (b), as the
case may be, and under this paragraph (c). These hours shall be
7
<PAGE>
credited to the Employees 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.
(d) The provisions of Sections 2530.200(b)-2(b) and 2530.200(b)-
2(c) of the regulations of the Labor Department (relating to determining Hours
of Service for reasons other than the performance of duties and crediting of
Hours of Service to computation periods) are hereby incorporated by reference as
if fully set out herein.
(e) An Employee who is not paid on an hourly basis and whose
hours are not counted and recorded shall be credited with ten (10) Hours of
Service for each day during the Plan Year for which he actually performs
services for any portion of that day. An Employee shall also be credited with
ten (10) Hours of Service for any day during the Plan Year for which no services
are performed if the Employee would be entitled to be credited with at least one
(1) Hour of Service for that day under paragraph (b) or (c) hereinabove.
(f) Solely for purposes of determining whether a Break In
Service (as defined in Section 312) has occurred in a computation period, for
participation and vesting purposes, a Participant who is absent from work for
maternity or paternity reasons shall receive credit for the Hours of Service
which would otherwise have been credited to such Participant but for such
absence, or in any case in which such hours cannot be determined, eight (8)
Hours of Service per day of absence. For purposes of this paragraph, an absence
from work for maternity or paternity reasons means an absence: (1) by reason of
the pregnancy of the Participant, (2) by reason of a birth of a child of the
Participant, (3) by reason of the placement of a child with the Participant in
connection with the adoption of such child by such Participant or (4) for
purposes of caring for such child for a period beginning immediately following
such birth or placement. The Hours of Service credited under this Section shall
be credited: (1) in the computation period in which the absence begins if the
crediting is necessary to prevent a Break In Service in that period, or (2) in
all other cases, in the following computation period. No credit will be given
under this Section, however, unless the Participant furnishes to the Plan
Administrator such timely information as the Administrator may reasonably
require to establish that the absence from work is for reasons qualifying for
the maternity/paternity provisions set forth above, and the number of days for
which there was such an absence.
(g) Hours of service will be credited for employment with other
members of an affiliated service group (under Section 414(m)), a controlled
group of corporations (under Section 414(b)), or a group of trades or businesses
under common control (under Section 414(c)) of which the adopting employer is a
member, and any other entity required to be aggregated with the employer
pursuant to Section 414(o) and the regulations thereunder.
(h) Hours of service will also be credited for any individual
considered an employee for purposes of this Plan under Section 414(n) or Section
414(o) and the regulations thereunder.
(i) Notwithstanding any provision of this Plan to the contrary,
effective December 12, 1994, contributions, benefits and service credit with
respect to qualified military service will be provided in accordance with
Section 414(u) of the Code.
3.33 "Inactive Participant" shall mean a Participant who has separated
from service with the Employer.
8
<PAGE>
3.34 "Key-Employee" shall mean any person who is defined as a Key-
Employee in Section 416(i)(1) of the Code, and the Regulations promulgated
thereunder, which are hereby incorporated by reference as if fully set out
herein. For purposes of determining whether the Plan is a Top-Heavy Plan as
defined in Section 10.2 hereof, the term Key-Employee shall also include the
Beneficiary of a Key-Employee. The term "non-key employee" means any Employee
who is not a Key Employee and shall also include Employees who are former Key-
Employees.
3.35 "Limitation Year" shall mean the Plan Year.
3.36 "Named Fiduciary" shall be the Employer or such other party,
individual or otherwise, appointed by the Board.
3.37 "Nonhighly Compensated Participant" shall mean a participant who
is not a Highly Compensated Employee.
3.38 "Normal Retirement Age" shall mean the attainment of age sixty-
five (65) by a Participant.
3.39 "Participant" shall mean any Employee who meets (or has met in
prior plan years) the participation and eligibility requirements set out in the
Plan, and whose nonforfeitable benefits have not been fully distributed.
3.40 "Participating Employer" shall mean any corporation,
partnership, professional corporation or professional association which has
adopted the Plan pursuant to ARTICLE XIII of the Plan.
3.41 "Permissive Aggregation Group" shall mean all plans in the
Required Aggregation Group and any other Qualified Plans maintained by the
Employer or by any member of the Controlled Group or Affiliated Service Group,
but only if such group of plans would satisfy, in the aggregate, the
requirements of Sections 401(a)(4) and 410 of the Code and contributions or
benefits in the other Qualified Plan are comparable to contributions or benefits
of plans in the Required Aggregation Group. The Plan Administrator shall
determine which plan or plans shall be taken into account in determining the
Permissive Aggregation Group.
3.42 "Plan" shall mean Frontier National Corporation KSOP Plan, as
set forth by this document and all amendments thereto.
3.43 "Plan Administrator" (hereinafter sometimes for brevity referred
to as "Administrator") shall be Frontier National Corporation, or such other
party, individual or otherwise, appointed by the Board.
3.44 "Plan Year" shall mean the period of twelve (12) consecutive
months beginning on the first day of January and ending on the last day of
December.
3.45 "Qualified Discretionary Employer Contribution" shall mean a
Discretionary Employer Contribution which is subject to the distribution and
nonforfeitability requirements under Code Section 401(k) when made.
9
<PAGE>
3.46 "Qualified Employer Matching Contribution" shall mean an
Employer Matching Contribution that is subject to the distribution and
nonforfeitability requirements under Code Section 401(k) when made.
3.47 "Qualified Plan" shall mean any plan which is qualified under
Section 401(a) of the Code.
3.48 "Qualifying Employer Securities" shall mean securities of
Frontier National Corporation which are stock or marketable obligations (as
defined in Section 407(e) of ERISA).
3.49 "Required Aggregation Group" shall mean:
(a) Each Qualified Plan of the Employer or any member of the
Controlled Group or the Affiliated Service Group in which at least one (1) Key-
Employee participates; and
(b) Any other Qualified Plan of the Employer or any member of
the Controlled Group or the Affiliated Service Group which enables a Plan
described in Subsection (a) hereinabove to meet the requirements of Sections
401(a)(4) and 410 of the Code.
3.50 "Rollover Account" shall mean the account maintained by the
Employer to record transfers to the Trust Fund pursuant to ARTICLE of the Plan.
Each Rollover Account shall be designated as one of the following:
(a) Unrelated Post-TEFRA Rollover Account shall mean the account
maintained to record a transfer to the Trust Fund which is accepted after
December 31, 1983, and which is initiated by the Employee and made to this Plan
from a plan which is not maintained by the Employer or any member of the
Controlled Group or the Affiliated Service Group.
(b) Unrelated Pre-TEFRA Rollover Account shall mean the account
maintained to record a transfer to the Trust Fund which is accepted before
January 1, 1984 and which is initiated by the Employee and made to this Plan
from a plan which is not maintained by the Employer or any member of the
Controlled Group or the Affiliated Service Group.
(c) Related Rollover Account shall mean the account maintained
to record a transfer to the Trust Fund which is either: (1) not initiated by the
Employee; or (2) made to this Plan from a plan which is maintained by either the
Employer or any member of the Controlled Group or the Affiliated Service Group.
(d) Rollover Account - Self-Employed shall mean the account
maintained for each Participant to record assets or funds transferred to the
Trust Fund from another Qualified Plan in which the Participant was an employee
as defined in Section 401(c)(1) of the Code.
3.51 "Taxable Year" shall mean the annual accounting period for which
the Employer regularly computes income for federal income tax purposes.
3.52 "Top-Heavy Plan" shall mean the Plan for any Plan Year in which
it is determined to be top-heavy under Section 10.2 hereof.
10
<PAGE>
3.53 "Trust Agreement" shall mean the Frontier National Corporation
KSOP Trust Agreement executed by the Employer and the Trustee contemporaneously
with the execution of this Plan, and as it may subsequently be amended from time
to time.
3.54 "Trustee" shall mean the individuals or duly authorized corporate
trustee selected by the Board to perform the duties of Trustee as set out in the
Trust Agreement.
3.55 "Trust Fund" shall mean all funds and property received by the
Trustee, including Contracts, if any, together with all income, profits or other
increments thereon.
3.56 "Valuation Date" shall mean the date as of which the Trust Fund
is valued, account balances are determined, and adjustments and allocations are
made to each account by the Administrator.
3.57 "Vested" shall mean the portion of the Participant's Accrued
Benefit which is nonforfeitable; fully Vested shall mean totally nonforfeitable.
3.58 "Vesting Computation Period" shall mean the Plan Year.
3.59 "Year of Credited Service" shall mean each Vesting Computation
Period during which an Employee has completed not less than one thousand (1,000)
Hours of Service with the Employer, with City Bank of Childersburg (a
predecessor employer), or with any member of the Controlled Group or Affiliated
Service Group. If the Employer or its subsidiaries acquire eighty percent (80%)
or more of the stock or substantially all assets of an entity, service performed
by an Employee for such entity shall be counted in determining such Employee's
Years of Credited Service.
3.60 "Year of Service" shall mean each Eligibility Computation Period
during which an Employee has completed not less than one thousand (1,000) Hours
of Service with the Employer or with City Bank of Childersburg (a predecessor
employer). If the Employer or its subsidiaries acquire eighty percent (80%) or
more of the stock or substantially all assets of an entity, service performed by
an Employee for such entity shall be counted in determining such Employee's
Years of Service.
11
<PAGE>
ARTICLE IV
----------
ADMINISTRATION OF THE PLAN
--------------------------
4.1 Powers of the Administrator. The Administrator is empowered to
---------------------------
administer the Plan in accordance with its terms and shall have all powers and
authority necessary to carry out the provisions of the Plan. The Administrator
shall perform the following functions:
(a) Construe and interpret the provisions of the Plan, and all
parts thereof, including the interpretation of any ambiguity, the supplying of
any language which is omitted and the reconciling of any inconsistency so that
the Plan is given a reasonable interpretation and construction in light of what
was intended in establishing the Plan;
(b) To determine all questions with respect to the individual
rights of the Participants and their Beneficiaries under the Plan, including,
but not limited to, all issues with respect to a Participant's eligibility for
participation and eligibility for benefits, a Participant's Compensation, a
Participant's eligibility for disability benefits and retirement benefits;
(c) To decide and resolve any disputes which may arise relative
to the rights of Employees, current and former, and their Beneficiaries, under
the terms of the Plan, except to the extent that the claims procedure set forth
herein shall authorize any other person or party to determine or review claims
of Participants or Beneficiaries.
(d) To provide the Trustee with such directions and instructions
as may be necessary to carry out the terms of the Plan.
(e) To maintain all Plan records and relevant data, including
Employee data relating to Hours of Service, other than those required to be
maintained by the Trustee.
(f) If all or any part of a Participant's Compensation received
from the Employer is determined to be unreasonable in amount by the Internal
Revenue Service, the Administrator shall be empowered and authorized to adjust
the Employer's contribution, which is based on the unreasonable Compensation, in
any manner permitted by Revenue Ruling 67-341, and subsequent rulings,
regulations and laws pertaining thereto; or, in the alternative, the
Administrator shall be empowered and authorized to reallocate the contribution
among other Participants in any manner permitted by Revenue Ruling 67-341, and
subsequent rulings, regulations and laws pertaining thereto.
(g) To make allocations of contributions, earnings, losses and
forfeitures among Participants, from year to year.
(h) To provide appropriate parties, including government
agencies, with such returns, reports, schedules, descriptions and individual
statements as are required by law within the times prescribed by law; and to
furnish to the Employer, upon request, copies of any or all such materials, and
further, to make copies of such instruments, reports and descriptions as are
required by law available for
12
<PAGE>
examination by Participants and such of their Beneficiaries who are or may be
entitled to benefits under the Plan in such places and in such manner as
required by law.
(i) To ascertain from the Employer the eligible Employees who
shall become Participants in the Plan and the Participants who have terminated
employment.
(j) To communicate with each eligible Employee and inform him of
the existence of the Plan and its pertinent provisions and to make certain that
such additional disclosure requirements which may be imposed by the Department
of Labor or the Department of Treasury are carried out.
(k) To give necessary instructions and directions to the Trustee
to assure the payment of benefits to any Participant or his Beneficiary, at such
time as the Participant or Beneficiary may become entitled thereto.
(l) To give appropriate instructions and directions to the
Trustee where any Participant terminates his participation under the Plan or
ceases to be entitled to benefits.
(m) To make certain that all benefits are paid to a Participant
or his Beneficiary in accordance with the terms and provisions of this Plan.
(n) To determine whether a Disability (as defined in ARTICLE
III) exists. The Administrator may require as a condition precedent to the
receipt of any benefits hereunder, that the Employee submit to examination by
one or more duly licensed and practicing physicians. The Administrator shall
have the right from time to time to have medical examinations made by a duly
licensed physician or physicians to determine whether such disability is
continuing, and the degree thereof, and to ascertain from the Participant by
warranties or otherwise the extent to which he has had his earning power
restored and upon such findings to discontinue the payments being made. If the
disabled Participant refuses to submit to such physical examination or to give
any other information requested, the Administrator shall have the power to
suspend or withhold payment of any benefit until the Participant does so submit
or comply. The Administrator shall have the right to accept evidence for the
purpose of determining whether the Participant is still eligible to receive any
disability payments and to act upon such evidence.
(o) To hire persons to provide necessary services to the Plan.
(p) To issue directions to the Trustee to pay any fees, taxes,
charges or other costs incidental to the operation and management of the Plan.
(q) To comply with all disclosure requirements imposed by state
or federal law.
4.2 Employer as Administrator. If the Administrator is the Employer,
-------------------------
then the Administrator shall only act by and through the Board in accordance
with the authority of the Board as provided under the Articles and by-laws of
the Employer. In such event, the action of the Administrator shall be deemed to
be the action of the entire Board, and not the action of any individual member
thereof. Any documents, reports, forms or returns, which are to be executed by
the Administrator, shall be
13
<PAGE>
executed by a member of the Board who is so authorized, and the execution
thereof shall be deemed to be made on behalf of the entire Board and not by that
individual Board member.
4.3 Administrative Records. The records of the Administrator and of
----------------------
all its proceedings and acts shall be made a part of the records and minutes of
the Board.
4.4 Bonding of the Administrator. Bonding shall be made in
----------------------------
accordance with Act Section 412 of ERISA.
4.5 Non-Discriminatory Administration. Wherever under the provisions
---------------------------------
of this Plan discretion is granted to the Administrator, which shall affect the
benefits, rights and privileges of Participants or their Beneficiaries under
this Plan, such discretion shall be exercised uniformly so that all Participants
or Beneficiaries similarly situated shall be similarly treated.
4.6 Terminated Participant Statement. The Administrator shall
--------------------------------
furnish to each Participant who during a Plan Year has separated from the
service of the Employer, or who is entitled to a deferred vested benefit under
the Plan as of the end of such Plan Year, and with respect to whom retirement
benefits were not paid under the Plan during such Plan Year, an individual
statement setting forth the following: (a) the name of the Plan; (b) the name
and address of the Plan Administrator; (c) the nature, amount and form of the
deferred vested benefit to which such Participant is entitled; and (d) such
additional information as the Secretary of the Treasury or his delegate may
require. Such statement shall be furnished by the Administrator within such
period after the end of a Plan Year as prescribed by the Secretary of the
Treasury in Regulations.
4.7 Delegation by Administrator. The Administrator may delegate to
---------------------------
the Trustee or any other agent, advisor or consultant any of its functions,
particularly those set forth in ARTICLE VII hereinbelow.
ARTICLE V
---------
PARTICIPATION OF EMPLOYEES
--------------------------
5.1 Requirements.
------------
(a) An Employee shall participate under the terms of this Plan
commencing with the Eligibility Date next following the day on which he
completes one (1) Year of Service. For purposes of meeting the requirements of
this Section, a Year of Service shall include service with any member of the
Controlled Group or Affiliated Service Group.
(b) For purposes of determining eligibility under this Section
5.1, all Years of Service with the Employer shall be taken into account, except
that in the case of an Employee who has a Break In Service, Years of Service
before such Break shall not be required to be taken into account until he has
completed a Year of Service after his return.
14
<PAGE>
5.2 Re-Hired Employees.
------------------
(a) An Inactive Participant who is later rehired shall
participate immediately upon reemployment, provided, however, that if such
Inactive Participant is not Vested in his Accrued Benefit derived from Employer
Contributions and if the number of his consecutive 1-year Breaks In Service
equals or exceeds the greater of five (5) or the aggregate number of Years of
Service before such Breaks, he must satisfy the eligibility requirements set
forth in Section 5.1.
(b) If an Employee terminates employment after meeting the
eligibility requirements of Section 5.1 but prior to his first Eligibility Date,
and if such Employee is later rehired by the Employer, such Employee shall
participate commencing with the next Eligibility Date following his rehire date,
provided, however, that if the number of the Employee's consecutive 1-year
Breaks In Service equals or exceeds the greater of five (5) or the aggregate
number of Years of Service before such Breaks, he must satisfy the eligibility
requirements set forth in Section 5.1.
(c) If an Employee terminates employment prior to meeting the
eligibility requirements of Section 5.1 and is later rehired by the Employer,
such Employee's prior service shall count toward satisfying the requirements of
Section 5.1, provided, however, that if the number of the Employee's consecutive
1-year Breaks In Service equals or exceeds the greater of five (5) or the
aggregate number of Years of Service before such Breaks, he must satisfy the
eligibility requirements set forth in Section 5.1.
5.3 Participation Agreement. Within ninety (90) days after becoming
-----------------------
eligible to participate in the Plan, each Participant may be required to execute
a written statement, on a form or forms to be furnished by the Administrator,
wherein he shall evidence (a) his designation of a Beneficiary or Beneficiaries
to receive any benefits payable under the Plan; and (b) his consent to be bound
by all the terms and conditions of this Plan and the Trust Agreement and all
amendments thereto.
5.4 Leave of Absence. A Participant's employment is not considered
----------------
terminated for purposes of the Plan while he is on leave of absence with the
consent of the Employer, provided that he returns to the employ of the Employer
at the expiration of such leave. Leaves of absence shall mean leaves granted by
the Employer, in accordance with established rules uniformly applied to all
Employees, for reasons of health or public service, for reasons set forth under
the Family and Medical Leave Act of 1993, or for reasons determined by the
Employer to be in its best interests. The taking of leave under this Section
5.4 shall not result in the loss of any benefit accrued under the Plan prior to
the date on which the leave commenced. A Participant's employment shall also
not be deemed to have terminated while he is a member of the Armed Forces of the
United States, provided that he returns to the employment of the Employer within
ninety (90) days (or such longer period as may be prescribed by law) from the
date he first became entitled to his discharge. Participants who do not return
to the employ of the Employer within sixty (60) days following the end of the
leave of absence, or within the required time in case of service with the Armed
Forces, shall be deemed to have terminated their employment as of the date when
their leaves of absence began, unless such failure to return was the result of
Normal Retirement, deferred retirement, Disability or death.
15
<PAGE>
ARTICLE VI
----------
CONTRIBUTIONS
-------------
6.1 Employer Contributions: Types and Amounts.
------------------------------------------
(a) Discretionary Employer Contributions. From time to time
------------------------------------
during the continuance of this Plan, the Employer may make Discretionary
Employer Contributions, in cash or in kind, to the Trust Fund in an amount
determined by the Board, on or before the date prescribed in the Code for the
filing of the Employer's Federal Income Tax Return, including extensions
thereof, for the Taxable Year of the Employer for which the contribution has
been made.
(b) Employer Matching Contributions. Subject to the Actual
-------------------------------
Contribution Percentage limitations hereinbelow, the Employer shall make
Employer Matching Contributions in an amount equal to:
(i) with respect to Elective Deferrals invested pursuant
to Section 12.1(a), twenty-five percent (25%) of the first four percent (4%) of
Compensation a Participant elects to defer pursuant to Section 6.2 below, and
(ii) with respect to Elective Deferrals invested in
Qualifying Employer Securities pursuant to Section 12.1(b) hereinbelow, seventy-
five percent (75%) of the first fifteen percent (15%) of Compensation a
Participant elects to defer pursuant to Section 6.2 below.
Such contribution shall be paid in the form of Qualifying Employer Securities or
cash to the Trust Fund on or before the date prescribed in the Code for the
filing of the Employer's Federal Income Tax Return, including extensions
thereof, for the Taxable Year of the Employer for which the contribution is
made.
(c) Elective Deferrals as Employer Contributions. Contributions
--------------------------------------------
made pursuant to Section 62 hereinbelow, unless otherwise specifically provided
in the Code or Treasury regulations, are treated as a contribution of the
Employer for purposes of Sections 401(a), 401(k), 404, 411, 415, 416 and 417 of
the Code.
6.2 Elective Deferrals: Amounts and Procedures. The amounts of
------------------------------------------
Elective Deferrals by Participants under the Plan shall be accumulated through
payroll deductions and shall be paid to the Trustee with reasonable promptness
but not later than the 15th business day of the month following the month in
which such amounts would otherwise have been payable to the Participant in cash.
Elective Deferrals may be made as follows:
(a) Subject to the limitations in Sections 63, 65, 67, and 74,
each Participant may elect to defer a portion of his Compensation by directing
the Employer in a written salary reduction agreement to withhold such
contribution through payroll deduction.
(b) The Employer and Administrator shall adopt procedures
necessary to implement all arrangements for the election and payment of Elective
Deferrals. Elections to commence,
16
<PAGE>
modify or terminate such Elective Deferrals may be made by the Participant as
often as the Administrator determines, but not less frequently than annually.
Participant elections described in this subparagraph must be made before the
Compensation to be deferred becomes currently available to the Employee and may
not be applied retroactively.
6.3 Elective Deferral Dollar Limitations.
------------------------------------
(a) No Participant shall be permitted to make Elective Deferrals
during any taxable year of the Participant, in excess of Ten Thousand Dollars
($10,000). The sum of $10,000 shall be adjusted for increases in the cost of
living pursuant to Code Section 402(g) and the regulations thereunder.
(b) "Excess Elective Deferrals" shall mean those Elective
Deferrals that are includible in a Participant's gross income under Code Section
402(g) to the extent such Participant's Elective Deferrals for a taxable year
exceed the dollar limitation under such Code Section.
(c) In the event the limitation set forth in this paragraph is
exceeded, one of the following actions shall be taken:
(i) Distribution After Taxable Year. By March 1 of the
-------------------------------
year following the close of his taxable year, the Participant must notify the
Plan Administrator in writing of the excess and the amount of the excess to be
allocated to the Plan. The Participant is deemed to have notified the Plan of
excess deferrals to the extent such Participant has excess deferrals for the
taxable year calculated by taking into account only elective deferrals under the
Plan and other plans of the Employer. Under such circumstances, the Employer may
notify the Plan on behalf of the Participant. Notwithstanding any other
provision of the Plan, and provided notification has been given in accordance
with this subparagraph, the excess amount (adjusted for gains/losses) shall be
distributed to the Participant no later than April 15 following the close of the
Participant's taxable year in which the excess deferral occurred.
(ii) Distribution During Taxable Year. A Participant may
--------------------------------
receive a corrective distribution of excess deferrals during the same taxable
year in which the excess deferral occurred, provided the Participant and the
Plan designate the distribution as an excess deferral, and the correcting
distribution is made after the date on which the Plan received the excess
deferral.
(iii) Retention in Plan. Elective Deferrals which are not
-----------------
distributed on or before April 15 following the close of the Participant's
taxable year shall remain in the Plan until such time that distributions are
otherwise allowed in accordance with the terms and provisions of ARTICLE
hereinbelow.
(d) Determination of income or loss: Excess Elective Deferrals
shall be adjusted for any income of loss for the taxable year of the
Participant. The Plan shall compute the income or loss allocable to Excess
Elective Deferrals in the same manner specified in Section 7.1 hereinbelow for
allocating income to Participant's accounts.
(e) In the event any of the foregoing provisions of this Section
are not in conformity with regulations of the Department of the Treasury that
are, from time to time promulgated, the non-conforming provision or provisions
may be amended retroactively to insure conformity.
17
<PAGE>
6.4 Restrictions Against Employee Contributions. A Participant shall
-------------------------------------------
not be required nor permitted to make non-deductible contributions to the Trust
Fund.
6.5 Actual Deferral Percentage Limitations.
--------------------------------------
(a) The Plan shall meet and incorporate by reference the Actual
Deferral Percentage test set forth in Code Section 401(k)(3) and the regulations
thereunder, using the prior year testing method. The Plan further incorporates
by reference any subsequent guidance from the Internal Revenue Service issued
under the applicable Code provisions.
(b) Corrective Measures. In the event the Actual Deferral
-------------------
Percentage for Highly Compensated Employees does not satisfy the test set forth
in subparagraph (a) hereinabove, the Administrator shall utilize one or more of
the following corrective measures with respect to the Elective Deferrals that
exceed those permitted under such tests (hereinafter referred to as "Excess
Contributions"):
(i) Distributions. Excess Contributions (adjusted for any
-------------
income or loss) that are specifically designated as such by the Employer may be
distributed to the appropriate Highly Compensated Employees within two and one-
half (2 1/2) months after the close of the Plan Year for which such Excess
Contributions were made. The amount of Excess Contributions to be distributed
shall be determined on the basis of the amount of contributions made by each
Highly-Compensated Employee, taking into account those Excess Contributions
attributable first to the Highly-Compensated Employees who have the greatest
dollar amount of elective deferrals. The following additional provisions apply
to distributions under this subparagraph (b)(i):
(A) Distributions may be postponed but not later than
the close of the Plan Year following the Plan Year for which such Excess
Contributions were made. Distributions that are postponed pursuant to the
preceding sentence shall cause the Employer to be subject to the excise tax
imposed by Code Section 4979.
(B) Excess Contributions shall be distributed from a
Participant's Elective Deferral Account and Qualified Employer Matching
Contribution Account (if applicable) in proportion to his Elective Deferrals and
Qualified Employer Matching Contribution Account (to the extent used in the
Actual Deferral Percentage test) for the Plan Year. Excess Contributions shall
be distributed from the Participants Qualified Discretionary Employer
Contribution Account only to the extent that such Excess Contributions exceed
the balance in the Participant's Elective Deferral Account and Qualified
Employer Matching Contribution Account.
(C) Determination of income or loss: Excess
Contributions shall be adjusted for any income or loss for the Plan Year. The
Plan shall compute the income or loss allocable to Excess Contributions in the
same manner specified in Section 7.1 hereinbelow for allocating income to
Participant's accounts.
(D) If, pursuant to Section 6.3 above, Excess Elective
Deferrals have been distributed for the Employee's taxable year ending with or
within the Plan Year, the Plan shall offset such distribution from the amount of
such Employee's Excess Contributions to be distributed for such Plan Year. The
amount of Excess Elective Deferrals that may be distributed by the Plan for a
taxable year
18
<PAGE>
of the Employee must be reduced by the amount of Excess Contributions previously
distributed for the Plan Year beginning with or within that taxable year.
(ii) Additional Contributions. Within twelve (12) months
------------------------
after the end of the Plan Year, the Employer may make a Qualified Employer
Matching Contribution or a Qualified Discretionary Employer Contribution on
behalf of Non-Highly Compensated Employees in an amount sufficient to satisfy
the test set forth in subparagraph (a) hereinabove. Such contribution shall be
allocated to the Qualified Discretionary Employer Contribution Account or
Qualified Matching Employer Contribution Account of each Non-Highly Compensated
Employee on the same basis on which such Employer contributions are made.
Additional contributions under this subparagraph shall meet the additional
requirements of Section 1.401(k)-1(b)(5) of the proposed regulations, which are
incorporated herein by reference.
(c) If a Highly Compensated Employee participates in two or more
cash or deferred arrangements that have different Plan Years, all cash or
deferred arrangements ending with or within the same calendar year shall be
treated as a single arrangement.
(d) Plans may be aggregated in order to satisfy Section 401(k)
of the Code only if such plans have the same Plan Year and use the same Actual
Deferral Percentage testing method (prior year or current year).
(e) The Employer shall maintain records sufficient to
demonstrate satisfaction of the Actual Deferral Percentage test.
6.6 Actual Contribution Percentage.
------------------------------
(a) The Plan shall meet and incorporate by reference the Actual
Contribution Percentage test set forth in Code Section 401(m)(2) and the
regulations thereunder, using the prior year testing method. The Plan further
incorporates by reference any subsequent guidance from the Internal Revenue
Service issued under the applicable Code provisions.
(b) Corrective Measures. In the event the Actual Contribution
-------------------
Percentage for Highly Compensated Employees does not satisfy the test set forth
in subparagraph (a) hereinabove, the Administrator shall utilize one or more of
the following corrective measures with respect to the contributions that exceed
those permitted under such tests (hereinafter referred to as "Excess Aggregate
Contributions"):
(i) Additional Contributions. Within twelve (12) months
------------------------
after the end of the Plan Year, the Employer may make a Qualified Discretionary
Employer Contribution or a Qualified Employer Matching Contribution on behalf of
Non-Highly Compensated Employees in an amount sufficient to satisfy the test set
forth in subparagraph (a) hereinabove. Such contribution shall be allocated to
the Qualified Discretionary Employer Contribution Account or Qualified Employer
Matching Contribution of each Non-Highly Compensated Employee on the same basis
on which such Employer contributions are made. Additional contributions under
this subparagraph shall meet the additional requirements of Section 1.401(m)-
1(b)(5) of the proposed regulations, which are incorporated herein by reference.
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<PAGE>
(ii) Distributions and Forfeitures. Excess Aggregate
-----------------------------
Contributions (adjusted for any income or loss) that are specifically designated
as such by the Employer may be forfeited, if forfeitable, or may be distributed
to the appropriate Highly Compensated Employees within two and one-half (2 1/2)
months after the close of the Plan Year for which such Excess Aggregate
Contributions were made. The amount of Excess Aggregate Contributions to be
distributed shall be determined on the basis of the amount of contributions made
on behalf of each Highly-Compensated Employee, taking into account those Excess
Aggregate Contributions attributable first to the Highly-Compensated Employees
who have the greatest dollar amount of Employer Matching Contributions.
(iii) Amounts shall be forfeited or distributed, as
applicable, on a pro rata basis from the Participant's Employer Matching
Contribution Account and Qualified Employer Matching Contribution Account (and
if applicable, the Participant's Qualified Discretionary Employer Contribution
Account or Elective Deferral account, or both), to the extent not used in the
actual deferral percentage test. Amounts forfeited by Highly Compensated
Employees under this Section shall be allocated or applied in accordance with
Section 9.3, provided that no forfeitures arising under this Section shall be
allocated to the Account of any Highly Compensated Employee.
(iv) Distributions and forfeitures under this Section may
be postponed but not later than the close of the Plan Year following the Plan
Year for which such Excess Contributions were made. Distributions and/or
forfeitures that are postponed pursuant to the preceding sentence shall cause
the Employer to be subject to the excise tax imposed by Code Section 4979.
(v) Determination of income or loss: Excess Aggregate
Contributions shall be adjusted for any income or loss for the Plan Year. The
Plan shall compute the income or loss allocable to Excess Aggregate
Contributions in the same manner specified in Section 7.1 hereinbelow for
allocating income to Participant's accounts.
(c) If a Highly Compensated Employee participates in two or more
cash or deferred arrangements that have different Plan Years, all cash or
deferred arrangements ending with or within the same calendar year shall be
treated as a single arrangement.
(d) Plans may be aggregated in order to satisfy Section 401(m)
of the Code only if such plans have the same Plan Year and use the same Actual
Contribution Percentage testing method (prior year or current year).
(e) The Employer shall maintain records sufficient to
demonstrate satisfaction of the Average Contribution Percentage test.
6.7 Aggregate Limit for Multiple Use of Alternative Limitation.
----------------------------------------------------------
(a) This Section 67 applies if the Plan relies on the following
alternative limitations to satisfy the Actual Deferral Percentage and Actual
---
Contribution Percentage tests, respectively:
(i) The Actual Deferral Percentage for Highly Compensated
Employees for the Plan Year shall not be more than two hundred percent (200%) of
the Actual Deferral Percentage for all Nonhighly Compensated Employees, provided
the difference between such percentages is not more than two (2) percentage
points.
20
<PAGE>
(ii) The Actual Contribution Percentage for Highly Compensated
Employees for the Plan Year shall not be more than two hundred percent (200%) of
the Actual Contribution Percentage for all Nonhighly Compensated Employees,
provided the difference between such percentages is not more than two (2)
percentage points.
(b) If subparagraph (a) above applies, the sum of the Actual Deferral
Percentage and Actual Contribution Percentage for Highly Compensated Employees
is subject to the aggregate limit. For purposes of this Section, the aggregate
limit is the greater of:
(i) The sum of:
(A) 125 percent of the greater of (1) the Actual Deferral
Percentage of the group of Non-Highly Compensated Employees eligible under the
arrangement subject to Code Section 401(k) for the Plan Year, or (2) the Actual
Contribution Percentage of the group of Non-Highly Compensated Employees
eligible under this Plan which is subject to Code Section 401(m) for the Plan
Year, and
(B) Two plus the lesser of (1) or (2) above (provided that in no
event shall this amount exceed 200 percent of the lesser of (1) or (2) above);
or
(ii) The limit in subparagraph (b)(i) above modified by substituting
the word "lesser" for "greater" each time it appears in (b)(i)(A) and by
substituting the word "greater" for "lesser" each time it appears in (b)(i)(B).
(c) If the aggregate limit set forth in this Section 6.7 is exceeded, the
Employer shall utilize one or more of the following corrective measures:
(i) The Administrator shall reduce the Actual Deferral Percentage
of all Highly-Compensated Employees in the Plan to the extent that the combined
Actual Deferral Percentage and Actual Contribution Percentage does not exceed
the aggregate limit described in this Section 6.7. The amount of the reduction
must be distributed to the Highly Compensated Employees according to the
allocation produced by the levelling method described in Section 6.5(b)(i)
hereinabove. Such amount shall be treated as an Excess Contribution.
(ii) The Administrator shall reduce the Actual Contribution
Percentage of all Highly-Compensated Employees in the Plan to the extent that
the combined Actual Deferral Percentage and Actual Contribution Percentage does
not exceed the aggregate limit described in this Section 6.7. The amount of the
reduction must be distributed to the Highly Compensated Employees according to
the allocation produced by the levelling method described in Section 6.6(b)(ii)
hereinabove. Such amount shall be treated as an Excess Aggregate Contribution.
(iii) The Employer shall make additional Qualified Discretionary
Employer Contributions in accordance with Section 6.5(b)(ii) hereinabove. Such
Qualified Discretionary Employer Contributions shall be on behalf of Non-Highly
Compensated Employees to the extent that the combined Actual Deferral Percentage
and Actual Contribution Percentage does not exceed the aggregate limit described
in this Section 6.7.
21
<PAGE>
6.8 Additional Contribution to Restore Cashed-Out Benefits. In the
------------------------------------------------------
event a Participant who has received a distribution of his Vested Accrued
Benefit under Section 9.2 hereinbelow, and who is subsequently reemployed by the
Employer, repays the amount of such distribution as required by Section 9.2, the
Employer shall, as of the next succeeding Anniversary Date, make a contribution
to such Participant's Accounts in an amount equal to the part of his Accounts
which was forfeited.
6.9 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
the Employer for the year has been made, the Employer shall make an additional
contribution so that the omitted Employee receives a total amount which the said
Employee would have received 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.
6.10 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 for the Plan Year in which the
discovery is made.
22
<PAGE>
ARTICLE VII
-----------
ALLOCATIONS AND ADJUSTMENTS TO ACCOUNTS
---------------------------------------
7.1 Procedure. The balance in each Participant's Accounts shall be
---------
determined as of each Allocation Date. After such balance has been determined,
adjustments and allocations shall be made to each account by the Administrator
according to the following procedure:
(a) As of each Allocation Date, the Administrator shall determine
the earnings, losses and increases or decreases in the fair market value of each
of the investment pools established per ARTICLE XII since the immediately
preceding Allocation Date, or in the case of the first Allocation Date of the
Plan, since the effective date of the Plan. The earnings or losses within each
pool shall be allocated to each active and inactive Participant's account(s)
based on each Participant's prorata share of such pool, valued as of the
immediately preceding Allocation Date.
(b) If a Participant has forfeited all or part of his Accrued
Benefit, pursuant to ARTICLE IX, his Accounts which included the part forfeited
shall be reduced by the amount of such forfeiture.
(c) Elective Deferrals made pursuant to Sections 61 and 62
hereinabove shall be allocated to each Participant's Elective Deferral
Account(s) in an amount equal to the Elective Deferrals.
(d) As of each Allocation Date, Employer Matching Contributions
made pursuant to Section 6.1(b) hereinabove shall be allocated to the Employer
Matching Contribution Account of each Participant in the amount contributed on
his behalf.
(e) As of each Anniversary Date, Discretionary Employer
contributions shall be allocated to the Discretionary Employer Contribution
Account of each Participant who is to share in such allocation, as provided in
Section 7.2, in the proportion that the Compensation of each such Participant
bears to the Compensation of all Participants.
7.2 Accrual of Contributions.
------------------------
(a) Except as provided in Section 7.2(b) and 7.2(c) hereof, a
Participant shall share in Discretionary Employer Contributions (and
forfeitures) only if he has completed one thousand (1,000) Hours of Service with
the Employer during the Plan Year for which the contribution is made and is
employed by the Employer on the Anniversary Date of such Plan Year.
(b) A contribution shall be allocated to a retired, deceased or
disabled Participant, or a Participant on leave of absence, for the year in
which he attains his Normal Retirement Age (or, if he continues to be employed
by the Employer, the year in which he separates from service after attainment of
Normal Retirement Age), dies or becomes disabled, or is on leave of absence,
without regard to the requirements that he complete one thousand (1,000) Hours
of Service and be employed on the Anniversary Date of the Plan Year for which
the contribution is made.
23
<PAGE>
(c) In the event the Plan is determined to be a Top-Heavy Plan as
defined in Section 10.2 for any Plan Year, a contribution of up to three percent
(3%) of a Participant's Compensation (for the year for which the contribution is
made) shall be allocated to a Participant for such Plan Year even though such
Participant fails to complete One Thousand (1,000) Hours of Service during such
Plan Year, provided such Participant is employed on the Anniversary Date of such
Plan Year. The allocation in this subparagraph shall be applicable to all
Participants.
7.3 Accounts. The Administrator shall maintain for each Participant a
--------
Discretionary (and Qualified Discretionary) Employer Contribution Account, an
Elective Deferral Account, and an Employer Matching (and Qualified Employer
Matching) Contribution Account. In the case of a Participant to whom Section
9.4(c) is applicable, the Administrator shall divide the Participant's
Discretionary Employer Contribution Account and Employer Matching Contribution
Account into separate sub-accounts for pre-break Accrued Benefits and post-break
Accrued Benefits. Each account shall consist of contributions and forfeitures
allocable to such Participant and the earnings, losses, expenses, and increases
or decreases in the fair market value of the Trust Fund attributable to the
account.
7.4 Limitations on Annual Additions.
-------------------------------
(a) Limitations. The maximum annual addition that may be contributed
-----------
or allocated to a Participant's Employer and Employee Contribution Accounts in
the Plan or any Qualified Plan of members of the Controlled Group or Affiliated
Service Group shall not exceed, for any Taxable Year of the Plan, the lesser of
(1) $30,000 (as adjusted for cost of living increases, such increases to be in
multiples of $5000) or (2) twenty-five percent (25%) of a Participant's "Section
415 Compensation." Any adjustments to the sum of $30,000 above shall be
effective commencing the first day of the Plan Year for which the adjustment
applies. The compensation limitation referred to above shall not apply to any
contribution for medical benefits (within the meaning of Section 419A(f)(2) of
the Code) after separation from service which is otherwise treated as an annual
addition under Section 415(l)(1) or 419A(d)(2) of the Code.
(b) Annual Additions. For purposes of this Section, the term "annual
----------------
addition" shall mean the sum for any such Taxable Year of (1) Discretionary
Employer Contributions, (2) Employer Matching Contributions, (3) Elective
Deferrals, (4) forfeitures, if any, (5) any amount attributable to post-
retirement medical benefits allocated to an account established pursuant to
Section 419A(d) of the Code, and (6) any amounts described in Section 415(l)(1)
of the Code.
(c) Treatment of Excess Deferrals and Excess Contributions.
------------------------------------------------------
Contributions do not fail to be annual additions merely because they are excess
deferrals, excess contributions or excess aggregate contributions or merely
because excess contributions or excess aggregate contributions are corrected
through distribution or recharacterization. Excess deferrals that are
distributed in accordance with Section 6.3 hereinabove are not annual additions.
(d) Section 415 Compensation.
------------------------
(i) Notwithstanding anything herein to the contrary, "Section 415
Compensation" shall include wages, salaries, fees for professional services,
amounts received (without regard to whether or not an amount is paid in cash)
for personal services actually rendered in the course of employment with the
Employer to the extent that the amounts are includible in gross income
(including,
24
<PAGE>
but not limited to, commissions paid salesmen, compensation for service on the
basis of a percentage of profits, commissions on insurance premiums, tips,
bonuses, fringe benefits, and reimbursements or other expense allowances under a
non-accountable plan (as described in Section 1.62-2(c) of the Treasury
regulations)), earned income, if applicable, as described in Code Section
401(c)(2), amounts described in Code Sections 104(a)(3), 105(a) and 105(h) to
the extent such amounts are included in the gross income of the Employee, IRC
Section 911 earned income, if any, moving expenses paid or reimbursed by the
Employer to the extent not deductible by the Employee under Section 217 of the
Code, the value of non-qualified stock options to the extent includible in gross
income for the taxable year in which granted, and the value of property
transferred, in accordance with Code Section 83(b), in connection with the
performance of services which an Employee elects to include in gross income.
(ii) For Limitation Years beginning after December 31, 1997,
"Section 415 Compensation" shall also include an Employee's elective deferrals
-------
under Section 402(g)(3) of the Code and any amount which is contributed or
deferred by the Employer at the election of the Employee and which is not
includible in the Employee's gross income by reason of Sections 125 or 457 of
the Code.
(iii) "Section 415 Compensation" shall exclude any distribution from
a deferred compensation plan, amounts realized from the exercise of a non-
qualified stock option or when restricted stock or property held by the Employee
becomes freely transferable, amounts realized from disposition of stock acquired
under a qualified stock option, premiums for group term life insurance, or
contributions toward the purchase of a qualified annuity contract.
(iv) For purposes of applying the limitations of this Section,
Compensation for a Limitation Year is the Compensation actually paid or
includible in gross income during such Limitation year. "Section 415
Compensation" shall be limited to the amount specified in Section 401(a)(17) of
the Code, as adjusted in the same manner permitted under Code Section 415(d).
(v) A Participant's "Section 415 Compensation" shall include any
amounts earned by such Participant from the Employer or from any member of the
Controlled Group or Affiliated Service Group which maintains a plan which is
qualified under Section 401(a) of the Code.
(e) Other Defined Contribution Plan. If the Employer maintains one or
-------------------------------
more defined contribution plans, as defined in Section 414(i) of the Code, the
amount of the annual additions allocable under this Plan shall not exceed the
maximum amount provided for in Section 7.4(a), reduced by the sum of any
allocations of annual additions made to the Participant's Accounts under any
such other Plan.
(f) Excess Annual Additions. If, as a result of the allocation of
-----------------------
forfeitures, a reasonable error in estimating a Participant's "Section 415
Compensation," a reasonable error in determining the amount of elective
deferrals (within the meaning of Section 402(g)(3)) of the Code that may be made
with respect to any individual under limits of Section 415, or under other
limited facts and circumstances which the Commissioner may determine, the annual
additions exceed the maximum limitation, the excess amount will be reduced by
any one of the following methods:
(i) Any Elective Deferrals and nondeductible Employee Contributions,
to the extent they would reduce the excess amount, and gains attributable
thereto, will be returned to the Participant. Such amounts shall be disregarded
for purposes of Section 402(g) of the Code, the actual
25
<PAGE>
deferral percentage test of Section 401(k)(3) of the Code, and the actual
contribution percentage test of Section 401(m) of the Code.
(ii) The excess amounts in the Participant's account may be
allocated and reallocated to other Participants in the Plan. However, if the
allocation or reallocation of the excess amounts pursuant to this subparagraph
causes the limitations of this Section 7.4 to be exceeded with respect to each
Plan Participant for the Limitation Year, then these amounts must be held
unallocated in a suspense account. If a suspense account is in existence at any
time during a particular Limitation Year, other than the Limitation Year
described in the preceding sentence, all amounts in the suspense account must be
allocated and reallocated to Participants' accounts (subject to the limitations
of this Section 7.4) before any Employer Contributions and Employee
Contributions which would constitute annual additions may be made to the Plan
for that Limitation Year.
(ii) If the Participant is covered by the Plan at the end of the
Limitation Year, the excess amount in the Participant's account shall be used to
reduce Employer Contributions (including any allocation of forfeitures) for such
Participant in the next Limitation Year, and each succeeding Limitation Year if
necessary. If the Participant is not covered by the Plan at the end of a
Limitation Year, the excess amount shall be held unallocated in a suspense
account. The suspense account shall be applied to reduce future Employer
Contributions for all remaining Participants in the next Limitation Year, and
each succeeding Limitation Year if necessary.
(iv) If a suspense account is in existence at any time during a
Limitation Year pursuant to this Section, it will not participate in the
allocation of the Trust's investment gains and losses. If a suspense account is
in existence at any time during a particular Limitation Year, all amounts in the
suspense account must be allocated and reallocated to Participants' accounts
before any Employer or any Employee Contributions may be made to the Plan for
that Limitation Year. Excess amounts may not be distributed to Participants or
former Participants.
(v) In the event the Plan is terminated, the Annual Addition
Suspense Account shall be returned to the Employer to the extent it may not then
be allocated to any Participant's Account.
(vi) In the event Employer has another Qualified Plan in addition to
the Plan, a Participant's Employer Contribution Account in the other plan may
first be reduced in accordance with said plan.
26
<PAGE>
ARTICLE VII
-----------
BENEFITS
--------
8.1 Participant's Rights and General Rules. Notwithstanding anything
--------------------------------------
in this Plan to the contrary, a Participant shall not have a right to receive
his Accrued Benefit or any of the assets held in the Trust Fund except in
accordance with the terms and provisions of ARTICLE . The Accrued Benefit and
assets of a Participant reflected in his Elective Deferral Account, Qualified
Discretionary Employer Contribution Account and Qualified Employer Matching
Contribution Account shall not be distributed to a Participant or Beneficiary
before one of the following events:
(a) The Employee's retirement, death, Disability or separation
from service.
(b) The termination of the Plan without the establishment of a
successor plan as described in Section 15.3 of the Plan and as limited by such
Section. Distributions due to the occurrence of this event shall be made in a
lump sum.
(c) The disposition by the Employer to an unrelated corporation
of substantially all of the assets (within the meaning of Section 409(d)(3) of
the Code) used in a trade or business of the Employer if the Employer continues
to maintain the Plan after the disposition, but only with respect to Employees
who continue employment with the corporation acquiring such assets.
Distributions due to the occurrence of this event shall be made in a lump sum.
(d) The disposition by the Employer to an unrelated entity of the
Employer's interest in a subsidiary (within the meaning of Section 409(d)(3) of
the Code) if the Employer continues to maintain the Plan, but only with respect
to Employees who continue employment with such subsidiary. Distributions due to
the occurrence of this event shall be made in a lump sum.
(e) The Participant's attainment of age 59 1/2, provided that in-
service withdrawals are permitted under this ARTICLE.
(f) The Participant's hardship, provided hardship distributions
are permitted under this ARTICLE.
8.2 Normal Retirement Benefit. A Participant who attains his Normal
-------------------------
Retirement Age shall have a normal retirement benefit equal to his Accrued
Benefit. Subject to the provisions of Section 8.3 hereinbelow, payment of his
normal retirement benefit shall commence as soon as administratively possible
following the end of the quarter during which he attains his Normal Retirement
Age.
8.3 Deferred Retirement Benefits. If a Participant continues to be
----------------------------
employed by the Employer after he has attained his Normal Retirement Age, such
Participant shall continue to share in the allocation of contributions and
forfeitures in accordance with ARTICLE VII. Such Participant may elect to
receive all or a portion of his Normal Retirement Benefit at any time up to his
actual termination of employment, at which time payment of any portion of his
Normal Retirement Benefit that has not been distributed under this Section shall
commence as soon as administratively possible following such termination. In no
event shall benefit payments be delayed beyond a Participant's required
beginning date
27
<PAGE>
set forth in this ARTICLE, nor is this Section intended to provide any
Participant with a right to continue in the employ of Employer.
8.4 Disability Benefit. A Participant who, while an Employee, incurs
------------------
a total and permanent Disability prior to his Normal Retirement Age shall have a
benefit equal to his Accrued Benefit. Upon termination of employment due to such
Disability, payment of such benefit shall commence as soon as administratively
possible following the end of the quarter during which such Disability occurs.
8.5 Death Benefit. A Participant who dies shall have a benefit equal
-------------
to his Accrued Benefit. Payment of such benefit shall be in accordance with
this Article and shall commence as soon as administratively possible following
the end of the quarter during which the death of the Participant occurs.
(a) Unless otherwise elected as provided below, the Beneficiary
of a Participant's death benefit shall be the Participant's spouse. The
Participant may designate a Beneficiary other than his spouse if:
(i) the Participant and his spouse validly waive the
spouse's right to be the Participant's Beneficiary and the spouse consents to
the designated alternative beneficiary. Such waiver and consent must be in
writing and signed by both the Participant and the Participant's spouse and
witnessed by a Plan representative or notary public; or
(ii) the Participant has no spouse and can establish such
fact to the satisfaction of a Plan representative; or
(iii) the spouse cannot be located and the Participant can
establish such fact to the satisfaction of a Plan representative.
(b) Any consent by a spouse (or the establishment that the
consent of the spouse may not be obtained) under subparagraph (a) above shall be
effective only with respect to such spouse. Additionally, a Participant may
revoke a prior waiver without the consent of the spouse at any time prior to the
commencement of benefits. The number of revocations shall not be limited.
8.6 Benefit Upon Other Termination of Employment. A Participant who
--------------------------------------------
terminates employment, whether voluntarily or involuntarily, for any reason
other than attainment of Normal Retirement Age, Disability, death or deferred
retirement, shall be entitled to his Vested Accrued Benefit in accordance with
Article IX hereof. Payment of such Vested Accrued Benefit shall be in
accordance with this Article and shall commence as soon as administratively
possible following the end of the quarter during which the Participant separates
from service.
8.7 Method of Distribution.
----------------------
(a) All distributions shall be shall be in a cash lump sum,
Qualifying Employer Securities or a combination thereof as elected by the
Participant.
(b) Shares of Qualifying Employer Securities distributed by the
Trustee shall be subject to a "right of first refusal." The right of first
refusal shall provide that, prior to any subsequent transfer, such Qualifying
Employer Securities must first be offered in writing to the Employer. A
28
<PAGE>
Participant (or Beneficiary) entitled to a distribution of Qualifying Employer
Securities may be required to execute an appropriate stock transfer agreement
(evidencing the right of first refusal) prior to receiving a certificate for
Qualifying Employer Securities. Shares of Qualifying Employer Securities held or
distributed by the Trustee may include such legend restrictions on
transferability as the Employer may reasonably require in order to assure
compliance with applicable Federal and state securities laws.
8.8 General Consent Rules.
---------------------
(a) The Administrator will distribute the present value of a
Participant's Vested Accrued Benefit without the consent of the Participant if
such value does not exceed Five Thousand Dollars ($5,000). If such value
exceeds $5,000 (or has ever exceeded $5,000 at the time of any prior
distribution), and such benefit is immediately distributable, such benefit may
not be distributed without the written consent of the Participant. A
Participant's Vested Accrued Benefit is considered immediately distributable if
any part of the benefit could be distributed to the Participant (or surviving
spouse) before the Participant attains (or would have attained if not deceased)
the later of his Normal Retirement Age or age 62. At least 30 but not more than
90 days prior to the Participant's Annuity Starting Date, the Administrator
shall provide the Participant with a written notice of his distribution options.
(b) A distribution may commence less than 30 days (but not less
than seven days) after the notice of distribution options is given, provided
that:
(i) The Plan 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
(ii) The Participant, after receiving the notice,
affirmatively elects a distribution.
8.9 Pre-Termination Distributions (Hardship Withdrawals). Subject to
----------------------------------------------------
the limitations and requirements of this Section, the Administrator may, upon
the request of a Participant, make a lump sum distribution to the Participant
from his Vested Employer Matching Contribution Account and Elective Deferral
Accounts (excluding earnings from his Elective Deferral Account effective
January 1, 1989) as of the Valuation Date coinciding with or immediately
preceding the date a request is made hereunder, for the purposes set forth
below, subject to the following:
(a) IMMEDIATE AND HEAVY FINANCIAL NEED. Any distribution under
this Section must be on account of an immediate and heavy financial need. A
distribution will be deemed to be made on account of an immediate and heavy
financial need of the Participant if the distribution is on account of:
(i) Medical expenses described in IRC Section 213(d)
incurred by the Participant, the Participant's spouse, or any dependents of the
Participant (as defined in Section 152) or necessary for these persons to obtain
medical care described in Section 213(d);
(ii) Purchase (excluding mortgage payments) of a principal
residence for the Participant;
29
<PAGE>
(iii) Payment of tuition, related educational fees, and room and
board expenses for the next 12 months of post-secondary education for the
Participant, his or her spouse, children, or dependents; or
(iv) The need to prevent the eviction of the Participant from
his principal residence or foreclosure on the mortgage of the Participant's
principal residence.
(b) DISTRIBUTION NECESSARY TO SATISFY FINANCIAL NEED. Once the
distribution is determined to be for an immediate and heavy financial need, it
must be determined that the distribution is necessary to satisfy the need. A
distribution is deemed to be necessary to satisfy an immediate and heavy
financial need of a Participant if all of the following requirements are
satisfied:
(i) The distribution is not in excess of the amount of the
immediate and heavy financial need of the Participant. The amount may include
any amounts necessary to pay any federal, state, or local income taxes or
penalties reasonably anticipated to result from the distribution.
(ii) The Participant has obtained all distributions, other than
hardship distributions, and all nontaxable loans currently available under all
plans maintained by the Employer;
(iii) The Participant is prohibited, under the terms of the Plan
or an otherwise legally enforceable agreement, from making elective
contributions and employee contributions to the Plan and all other plans
maintained by the Employer for at least 12 months after receipt of the hardship
distribution. For this purpose, the phrase "all other plans maintained by the
Employer" means all qualified and nonqualified plans of deferred compensation
maintained by the Employer. The phrase includes a stock option, stock purchase,
or similar plan, or a cash or deferred arrangement that is part of a cafeteria
plan within the meaning of Section 125. However, it does not include the
mandatory employee contribution portion of a defined benefit plan. It also does
not include a health or welfare benefit plan, including one that is part of a
cafeteria plan within the meaning of Section 125.
(iv) For this Plan, and all other plans maintained by the
Employer, the Participant may not make elective contributions for the
Participant's taxable year immediately following the taxable year of the
hardship distribution in excess of the applicable limit under Section 402(g) for
such next taxable year less the amount of such Participant's elective
contributions for the taxable year of the hardship distribution.
(c) Each request for a distribution must be made by written
application to the Administrator supported by such evidence as the Administrator
may require.
(d) A request for a distribution pursuant to this Section shall be
approved or denied by written instrument given by the Administrator to the
Participant within sixty (60) days after the date the written request is given
to the Administrator by the Participant. In the event that such request is
approved, the distribution shall be made within thirty (30) days after notice of
approval is given by the Administrator to the Participant.
8.10 Protected Benefits from Transferor Plans. Notwithstanding anything
----------------------------------------
herein to the contrary, if a Participant's Accrued Benefit includes funds
transferred from a Qualified Plan ("Transferor Plan"), in addition to a cash
lump sum, the optional forms of benefit (as described in Section 411(d)(6) of
30
<PAGE>
the Code and the regulations thereunder) available under the Transferor Plan may
not be eliminated or reduced except as otherwise permitted under the regulations
(with respect to any Participant's benefit accrued under the Transferor Plan).
This provision shall apply only to the separate accounts of such Participant to
which such funds have been transferred. The Transferor Plans and protected
benefits related to funds transferred from such Plans are listed on the attached
Exhibit A.
8.11 Statutory Commencement of Benefits. Payment of a Participant's
----------------------------------
Accrued Benefit must commence not later than the sixtieth (60th) day after the
close of a Plan Year in which the latest of the following events occurs:
(a) The attainment by the Participant of his Normal Retirement
Age;
(b) The tenth (10th) anniversary of the date on which the
Participant commenced participation in the Plan; or
(c) Termination of employment by the Participant.
8.12 General Rules for Required Distributions.
----------------------------------------
(a) The following shall apply to any distribution of a
Participant's interest and shall take precedence over any inconsistent
provisions of the Plan. Unless otherwise specified, the provisions of this
Section apply to calendar years beginning after December 31, 1984.
(b) All distributions required under this Article shall be
determined and made in accordance with the Income Tax Regulations under IRC
401(a)(9), including the minimum distribution incidental benefit requirement of
Section 1.401(a)(9)-2 of the Regulations.
(c) Distributions shall be made in a form under which the
present value of the retirement benefit projected to be made to the Participant,
while living, is more than fifty percent (50%) of the present value of the total
payments projected to be made to the Participant and the Participant's
Beneficiary.
(d) Notwithstanding the requirements of this Section, a
Participant who duly and properly made an Election of the Time and Distribution
of Retirement Plan Benefits as provided for in Section 242(b)(2) of the Tax
Equity and Fiscal Responsibility Act of 1982 may receive his distribution in
accordance with such election, provided: (1) the distribution is one which would
not have disqualified the trust under Section 401(a)(9) of the Code as in effect
on December 31, 1983, (2) the election was in writing and signed by the
Participant or Beneficiary prior to January 1, 1984, (3) the Participant had
accrued a benefit under the Plan as of December 31, 1983, and (4) the election
satisfies IRC 401(a)(11) and 417, provided, however, that payments pursuant to
such election would not subject the distribution to the annuity requirements of
Sections 401(a)(11)(A) and 417 of the Code.
8.13 Required Beginning Date.
-----------------------
(a) Non-Five Percent (5%) Owners. The required beginning date of
----------------------------
a Participant who is not a Five Percent Owner is the April 1 of the calendar
year following the calendar year in which occurs the later of retirement or
attainment of age 70-1/2.
31
<PAGE>
(b) Five Percent (5%) Owners. The required beginning date of a
------------------------
Participant who is a Five Percent Owner is the April 1 following the later of:
(i) the calendar year in which the Participant attains
age 70-1/2; or
(ii) the earlier of the calendar year with or within which
ends the Plan Year in which the Participant becomes a Five Percent Owner, or the
calendar year in which the Participant retires.
Once distributions have begun to a Five Percent Owner under this Section, they
must continue to be made even if the Participant ceases to be a Five Percent
Owner.
8.14 Statutory Distributions Upon Death.
----------------------------------
(a) If a Participant dies prior to the Annuity Starting Date,
the nonforfeitable portion of the Participant's Accrued Benefit shall be
distributed in its entirety prior to the December 31 of the calendar year
containing the fifth anniversary of the Participant's death, except to the
extent that an election is made to receive distributions in accordance with (i)
or (ii) below:
(i) If any portion of the Participant's Vested Accrued
Benefit is payable to (or for the benefit of) a specifically designated
Beneficiary, distributions may be made over the life of such Beneficiary (or
over a period not extending beyond the life expectancy of such Beneficiary),
commencing on or before the December 31 immediately following the calendar year
in which the Participant died (or such later date as may be prescribed by
regulations);
(ii) If the Beneficiary is the Participant's spouse,
distributions must commence on or before the later of (1) the December 31
immediately following the calendar year in which the Participant died and (2)
December 31 of the calendar year in which the deceased Participant would have
attained age seventy and one-half (70-1/2). If the surviving spouse dies before
the distribution begins, then the requirements of this Section shall apply as if
the spouse were the Participant.
(b) If the Participant has not made an election pursuant to
subparagraph (a) above by the time of his death, the Participant's designated
beneficiary must elect the method of distribution no later than the earlier of
(1) December 31 of the calendar year in which distributions would be required to
begin under this Section, or (2) December 31 of the calendar year which contains
the fifth anniversary of the date of death of the Participant. If the
Participant has no designated beneficiary, or if the designated beneficiary does
not elect a method of distribution, distribution of the Participant's entire
interest must be completed by December 31 of the calendar year containing the
fifth anniversary of the Participant's death.
(c) For purposes of this Section, the life expectancy of the
Participant and his spouse (other than in the case of a life annuity) may be re-
determined, but not more frequently than annually. In addition, under
regulations prescribed by the Secretary, for purposes of this Section, any
amount paid to a child of the Participant shall be treated as if it had been
paid to the surviving spouse, if such amount will become payable to the
surviving spouse upon such child reaching majority (or other designated event
permitted under regulations).
32
<PAGE>
(d) Upon the death of a former Participant who was receiving
payments from the Trustee at the time of his death, payments may continue in
accordance with the option selected, or may be made to the Beneficiary under any
other option which provides for payments which are at least as rapid as under
the method of distribution as of the date of the Participant's death.
8.15 Location of Participants and Beneficiaries.
------------------------------------------
(a) It is the duty of Participants who have terminated
employment, or Beneficiaries of Participants, to keep the Administrator informed
as to their correct address. If a participant or Beneficiary fails to inform the
Administrator in writing of a change of address and if the Administrator is
unable to locate such Participant or Beneficiary by reasonable means, the
Administrator shall notify the Participant or Beneficiary of available benefits
by registered mail at the last address noted on the records of the
Administrator. If the delivery of the notice by registered mail is refused or
returned with address unknown, any benefits due such Participant or Beneficiary
shall be segregated into a federally insured savings account for the benefit of
the Participant or Beneficiary. The segregated account shall not share in the
earnings and losses in the fair market value of the assets held in the Trust
Fund. The Administrator shall determine earnings and losses in the fair market
value of the assets held in the segregated account and shall allocate such
earnings and losses to the segregated account. Such benefit shall remain in the
segregated account until distributed in accordance with the Lost or Unclaimed
Property Laws of the State in which the Plan Sponsor is domiciled.
(b) If the Plan has terminated and the Administrator is unable
to locate a Participant or Beneficiary using the means described in (a) above,
the Administrator shall establish a savings account for the benefit of the
Participant or Beneficiary at a federally insured banking institution within the
geographic vicinity in which the Employer is located. Any benefits due such
Participant or Beneficiary shall be deposited in said savings account at the
same time distributions are otherwise allowed under the Plan termination
procedures. Such benefit shall remain in the savings account until the
Participant or Beneficiary is located or the account ceases to exist.
8.16 Payments for the Benefit of Incompetents. If the Administrator
----------------------------------------
receives evidence that (a) a Participant or Beneficiary entitled to receive any
payment under the Plan is a minor or is otherwise physically or mentally
incompetent to receive such payment and to give a valid release therefor, and
(b) another person or institution is then maintaining or has custody of such
person, and no guardian, committee or other representative of the estate of such
person has been duly appointed by a court of competent jurisdiction, payment may
be made to such other person or institution, and the release of such other
person or institution shall be valid in a complete discharge for the payment.
8.17 Distributions to Alternate Payee. Upon the issuance of a
--------------------------------
Qualified Domestic Relations Order (as defined in Section 414(p) of the Code)
which requires payment of the alternate payee's benefits as soon as
administratively possible or which does not specify when payment is to commence,
payment of the alternate payee's portion of the Participant's Accrued Benefit
shall commence as soon as administratively possible after such Order is
approved, provided, however, that if the alternate payee is also a Participant
in the Plan, such alternate payee may elect to defer distribution until such
time as he or she is otherwise entitled to receive a distribution of his or her
own Accrued Benefit.
33
<PAGE>
ARTICLE IX
----------
VESTING
-------
9.1 Requirements.
------------
(a) A Participant's Accrued Benefit derived from Employer
contributions shall be fully Vested upon the earlier of: (1) attainment of
Normal Retirement Age, (2) the later of age 65 or the 5th anniversary of the
time the Participant commenced participation in the Plan, (3) total and
permanent disability of such Participant, or (4) death of the Participant.
(b) In the event the employment of a Participant is terminated,
whether voluntarily or involuntarily, with or without cause on his part, prior
to his Normal Retirement Age, for any reason other than death or permanent and
total disability, a Participant shall have a Vested interest in his Accrued
Benefit derived from Employer contributions in accordance with the following
schedule:
Years of Credited Service Vested Percentage
------------------------- -----------------
less than 2 0%
2 20%
3 40%
4 60%
5 80%
6 100%
(c) A Participant's Vested percentage in his Accrued Benefit
attributable to funds transferred from another Qualified Plan shall not be
reduced by this or any Amendment to the Plan.
(d) The Accrued Benefit derived from Elective Deferrals,
Qualified Discretionary Employer Contributions and Qualified Employer Matching
Contributions shall be fully Vested at all times.
(e) Notwithstanding the provisions of this Section, Employer
Matching Contributions and Qualified Employer Matching Contributions (if
accrued) shall be forfeited if the contributions to which they relate are
treated as Excess Deferrals, Excess Contributions or Excess Aggregate
Contributions.
9.2 Cash-Out; Buy-Back.
------------------
(a) If a Participant terminates participation in the Plan and
thereafter is re-employed and again becomes eligible to participate in the Plan,
the following Years of Credited Service shall be disregarded for purposes of
determining the Accrued Benefit of such Participant; but shall be taken into
account for purposes of such Participant's eligibility and vesting upon re-
employment:
34
<PAGE>
(i) Years of Credited Service with respect to which he has
received a distribution of the present value of his Vested Accrued Benefit if
such distribution does not exceed $5,000 (or any other sum as may be established
by regulations promulgated by the Secretary of the Treasury as the maximum
amount that may be paid out in such event without the Participant's consent); or
(ii) Years of Credited Service with respect to which he has
received a distribution of his Vested Accrued Benefit attributable to such Years
of Credited Service, which he elected to receive.
(b) A Participant who has received a distribution of his Vested
Accrued Benefit, as described hereinabove in subparagraph (a) of this Section,
may repay the amount of such distribution to the Trust Fund, provided
(i) such Participant is subsequently re-employed by
Employer; and
(ii) repayment is made before the earlier of 5 years
after the first date on which the Participant is subsequently re-employed, or
the close of the period in which the Employee incurs five (5) consecutive 1-year
Breaks In Service following the date of distribution.
(c) Upon such repayment, he shall be credited on the vesting
schedule with all Years of Credited Service prior to his Break In Service, and
the Employer shall make a contribution to his Employer Contribution Account as
required by Section 68. Immediately after such repayment, his Accrued Benefit
shall, in no event, be less than his Accrued Benefit immediately prior to
termination of employment.
(d) A Participant who has been deemed to receive a zero cash-out
distribution per Section 9.3 below and who is re-employed before incurring five
(5) consecutive 1-year Breaks In Service following the date of distribution is
deemed to have repaid the zero distribution and shall be credited on the vesting
schedule with all Years of Credited Service prior to his Break In Service, and
the non-vested portion of his Accrued Benefit shall be restored immediately upon
re-employment. Immediately after such deemed repayment, his Accrued Benefit
shall, in no event, be less than his Accrued Benefit immediately prior to
termination of employment.
9.3 Forfeitures. Notwithstanding the provisions of Section 9.2
-----------
hereinabove, upon termination of employment, the portion of a Participant's
Accrued Benefit derived from Employer Contributions which is not Vested shall be
forfeited upon the earlier of a cash-out distribution to the Participant or when
such Participant incurs five (5) consecutive Breaks-In-Service. Forfeitures
attributable to Discretionary Employer Contributions shall be allocated during
the Plan Year in which such forfeitable event occurs according to Section
7.1(e). Forfeitures attributable to Employer Matching Contributions shall be
used to reduce future Employer Matching Contributions. For purposes of this
Section, a Participant who terminates employment with a zero Vested Accrued
Benefit shall be deemed to have received a cash-out distribution as of the date
on which he separates from service.
9.4 Computation of Years of Credited Service. For purposes of
----------------------------------------
computing Years of Credited Service under the Plan to determine the Vested
percentage under Section 9.1, all of an Employee's Years of Credited Service
shall be taken into account, except that the following Years of Credited Service
shall be excluded:
35
<PAGE>
(a) In the case of any Participant who has a Break In Service,
Years of Credited Service before such Break shall not be required to be taken
into account until he has completed one (1) Year of Credited Service after his
return.
(b) In the case of a Participant who has 5 or more consecutive
1-year Breaks In Service, the Participant's pre-break service will count in
vesting of his employer-derived Accrued Benefit only if either:
(i) such Participant has any Vested interest in his or her
employer-derived Accrued Benefit at the time of separation from service; or
(ii) upon returning to service the number of consecutive 1-
year Breaks In Service is less than the number of Years of Credited Service.
(c) In the case of a Participant who has 5 consecutive 1-year
Breaks In Service, all Years of Credited Service after such Breaks In Service
will be disregarded for the purpose of vesting the employer-derived Accrued
Benefit that accrued before such Breaks, but both pre-break and post-break
service will count for the purposes of vesting the employer-derived Accrued
Benefit that accrues after such Breaks. Separate accounts will be maintained for
the Participant's pre-break and post-break employer-derived Accrued Benefit
pursuant to Section 7.3 hereof. Both accounts will share in the earnings and
losses of the Trust Fund.
(d) In the case of a Participant who does not have 5 consecutive
1-year Breaks In Service, both the pre-break and post-break service will count
in vesting both the pre-break and post-break employer-derived Accrued Benefit.
9.5 Hours of Service Requirement. A Participant who has more than
----------------------------
five hundred (500) Hours of Service but less than one thousand (1,000) Hours of
Service in any Plan Year and who has not separated from the service of Employer
shall not advance on the vesting schedule.
ARTICLE X
----------
TOP-HEAVY PLAN
--------------
10.1 Top-Heavy Requirements. For any Plan Year in which the Plan is
----------------------
determined to be a Top-Heavy Plan as determined in accordance with Section 10.2
hereof, the allocable share of the Employer contribution for each Participant
who is a non-key employee shall not be less than the lesser of: (i) three
percent (3%) of such Participant's Compensation, or (ii) the largest percentage
of the Employer contribution made (or required to be made), including salary
deferrals, for any Key Employee for such Plan Year. For purposes of this
subparagraph, Compensation shall mean a Participant's compensation which would
be included on his Federal W-2 Form for the Plan Year for which the contribution
is made.
36
<PAGE>
10.2 Top-Heavy Determination.
-----------------------
(a) The Plan shall be considered a Top-Heavy Plan and shall be
subject to the additional requirements of Section 10.1 hereinabove, with respect
to any Plan Year, if, as of the Anniversary Date of the preceding Plan Year or
in the case of the first Plan Year, the Anniversary Date of such Plan Year
(hereinafter referred to as the "Determination Date") either:
(i) the Sum of the Value of the Aggregate Accounts of Key-
Employees exceeds sixty percent (60%) of a similar sum determined for all
Employees, excluding former Key-Employees, (the "60% Test"); or
(ii) the Plan is part of a Required Aggregation Group, and
the sum of the Present Value of Accrued Benefits and the Value of the Aggregate
Accounts of Key-Employees in all Plans in such Group exceeds sixty percent (60%)
of a similar sum determined for all Employees, excluding former Key-Employees.
(b) For purposes of this Section 10.2, the Aggregate Account of
an Employee as of the Determination Date is the sum of:
(i) a Participant's Accounts holding contributions made
by the Employer pursuant to Section 6.1 hereinabove as of the Determination Date
adjusted for any contributions due as of the Determination Date, and further
adjusted by including any Plan distributions made within the Plan Year that
includes the Determination Date or within the preceding four (4) Plan Years; and
(ii) a Participant's non-deductible Employee Contribution
Account, if any; and
(iii) a Participant's Unrelated Pre-TEFRA Rollover Account;
and
(iv) a Participant's Related Rollover Account.
(v) a Participant's Rollover Account - Self-Employed, if
any.
(vi) The aggregate of any Plan distributions made within
the Plan Year that includes the Determination Date or within the preceding four
(4) Plan Years from a Qualified Plan of the Employer which has been terminated,
which, if it had not been terminated, would have been required to be included in
a Required Aggregation Group.
(c) For purposes of this Section, Present Value of Accrued
Benefits shall be determined, in the case of a defined benefit pension plan,
under the provisions of such a plan or plans.
(d) Notwithstanding the provisions of subsection (a)
hereinabove, the Plan shall not be a Top-Heavy Plan, if the Administrator elects
to treat the Plan as part of a Permissive Aggregation Group, and the Permissive
Aggregation Group is not determined to be Top-Heavy using the criteria of the
"60% Test" hereinabove.
37
<PAGE>
(e) Only those plans in which the Determination Dates fall
within the same calendar year shall be included in a Required or a Permissive
Aggregation Group in order to determine whether the Plan is a Top-Heavy Plan.
(f) For Plan Years beginning after December 31, 1984, if a
Participant or former Participant (a Participant who no longer shares in
contributions or forfeitures and/or no longer accrues a benefit for a Plan Year)
has not performed any services for the Employer maintaining the Plan at any time
during the five year period ending on the Determination Date, the Aggregate
Account and/or Present Value of Accrued Benefit for such Participant shall not
be taken into account for purposes of subsection (a) hereinabove.
(g) For Plan Years beginning after December 31, 1986, solely for
the purpose of determining if the Plan, or any other plan included in a required
or permissive aggregation group of which this Plan is a part, is top-heavy
(within the meaning of Section 416(g) of the Code) the Accrued Benefit of an
Employee other than a key employee (within the meaning of Section 416(i)(1) of
the Code) shall be determined under (a) the method, if any, that uniformly
applies for accrual purposes under all plans maintained by the Affiliated
Employers, or (b) if there is no such method, as if such benefit accrued not
more rapidly than the slowest accrual rate permitted under the fractional
accrual rate of Section 411(b)(1)(C) of the Code.
ARTICLE XI
----------
ROLLOVERS AND TRANSFERS
-----------------------
11.1 Direct Rollovers by Employees. Notwithstanding any provisions of
-----------------------------
the Plan to the contrary that would otherwise limit a Distributee's election
under this Section, a Distributee may elect, at the time and in the manner
prescribed by the Plan Administrator, to have any portion of an Eligible
Rollover Distribution paid directly to an Eligible Retirement Plan specified by
the Distributee in a direct rollover.
11.2 Definitions. For purposes of this ARTICLE, the following
-----------
definitions shall apply:
(a) "Eligible Rollover Distribution" shall mean any distribution
of all or any portion of the balance to the credit of the Distributee, except
that an Eligible Rollover Distribution does not include: any distribution that
is one of a series of substantially equal periodic payments (not less frequently
than annually) made for the life (or life expectancy) of the Distributee or the
joint lives (or joint life expectancies) of the Distributee and the
Distributee's designated Beneficiary, or for a specified period of ten years or
more; any distribution to the extent such distribution is required under Section
401(a)(9) of the Code; and the portion of any distribution that is not
includable in gross income (determined without regard to the exclusion for net
unrealized appreciation with respect to Employer securities).
(b) "Eligible Retirement Plan" shall mean an individual
retirement account described in Section 408(a) of the Code, an individual
retirement annuity described in Section 403(a) of the Code, or a qualified trust
described in Section 401(a) of the Code, that accepts the Distributee's Eligible
Rollover Distribution. However, in the case of an Eligible Rollover Distribution
to the surviving spouse, an Eligible Retirement Plan is an individual retirement
account or individual retirement annuity.
38
<PAGE>
(c) "Distributee" shall mean an Employee or former Employee. In
addition, 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
Section 414(p) of the Code, are Distributees with regard to the interest of the
spouse or former spouse.
(d) "Direct Rollover" shall mean a payment by the Plan to the
Eligible Retirement Plan specified by the Distributee.
11.3 Rollovers Other than Direct Rollover. An Employee may transfer
------------------------------------
to the Plan all or any portion of the proceeds received from another Qualified
Plan (the "Other Plan"), including a plan in which the Employee was an employee
within the meaning of Section 401(c)(1) of the Code, in accordance with
procedures established by the Administrator, provided the transfer occurs on or
before the sixtieth (60th) day following receipt of the distribution by the
Employee from the Other Plan, and, if the proceeds received from the Other Plan
were received by the Employee as a partial distribution, such distribution must
qualify under Section 402(a)(5)(D) of the Code, or, provided the transfer is
directly made from an Individual Retirement Account (as defined in Section
408(a) of the Code) which held only the proceeds from such Other Plan and which
were transferred to the Individual Retirement Account on or before the 60th day
following receipt of the distribution by the Employee from the Other Plan.
11.4 Direct Rollovers From Other Plan. If an Employee is entitled to
--------------------------------
an Eligible Rollover Distribution of his accrued benefit in another Qualified
Plan (the "Other Plan) maintained by the Employer or by the Employee's former
employer, the Employee may effect a Direct Rollover of such accrued benefit (or
any portion thereof) to the Plan.
11.5 Procedures and Information. The Administrator shall develop such
--------------------------
procedures and may require such other information from an Employee desiring to
make (or to have made) such rollover or transfer as described in this Article as
it deems necessary or desirable to determine that the proposed transfer will
meet the requirements of this Article and of the Code.
11.6 Allocations to Rollover Account. Upon approval by the
-------------------------------
Administrator, the amount transferred shall be deposited in the Trust Fund and
shall be allocated to the Employee's Rollover Account.
11.7 Vesting of Rollover Account. An Employee's Rollover Account
---------------------------
shall be fully Vested at all times.
11.8 Distributions of Rollover Account. When a Participant terminates
---------------------------------
his employment with the Employer upon retirement, death or disability, or when
the Plan is terminated, the total amount in his Rollover Account shall be
distributed to him in accordance with ARTICLE VIII.
11.9 Eligible Employees. An Employee shall be eligible to make or
------------------
direct the transfers permitted in this ARTICLE even though he is not eligible to
participate in the Plan as required by ARTICLE V.
39
<PAGE>
ARTICLE XII
------------
DESIGNATED INVESTMENTS
----------------------
12.1 Participant Direction. A Participant shall direct the investment
---------------------
of his Accrued Benefit under one or a combination of the following:
(a) INVESTMENT MENU: A Participant may direct the Trustee to
invest all or a portion of his Accrued Benefit into one or more separate
investment options within the Trust Fund. Each option will have a different
investment strategy and philosophy. The Trustee, as directed by the Compensation
Committee, may, from time to time, change the options by adding new choices or
deleting existing choices.
(b) QUALIFYING EMPLOYER SECURITIES: A Participant may direct
the Trustee to invest all or a portion of his Accrued Benefit in Qualifying
Employer Securities. An Employer Stock Account shall be established for a
Participant to record his share of Qualifying Employer Securities purchased
under this ARTICLE. Any investment in Qualifying Employer Securities shall be
subject to the following additional provisions or restrictions:
(i) Participants shall not be entitled to vote the
Qualifying Employer Securities allocated to their Employer Stock Accounts. All
Qualifying Employer Securities shall be voted by the Trustee at the instruction
of the Compensation Committee, to the extent not inconsistent with its fiduciary
obligations under ERISA.
(ii) Any cash dividends received by the Trust on
shares of Qualifying Employer Securities allocated to Participants' Employer
Stock Accounts shall automatically be reinvested in the purchase of additional
Qualifying Employer Securities.
(iii) A Participant shall not be permitted to direct
any portion of his Accrued Benefit attributable to funds transferred from
another Qualified Plan in Qualifying Employer Securities. Such funds must be
invested in the options described in (a) above.
12.2 Default Option. Any part of a Participant's Accrued Benefit not
--------------
initially directed into one of the options in 12.1(a) or 12.1(b) shall be
invested by the Trustee as directed by the Compensation Committee.
12.3 Time for Direction. A Participant may direct the investment of
------------------
his Accrued Benefit on a quarterly basis.
12.4 ERISA Section 404(c) Compliance. It is intended that Participant
-------------------------------
directed investments under Section 12.1(a) shall satisfy the requirements of
Section 404(c) of ERISA. Plan provisions are to be interpreted to provide an
opportunity for each Participant to exercise control over his account balances
by: (1) choosing from a broad range of investment alternatives, (2) giving
investment instructions at least once within any three-month period, (3)
diversifying investments within and among investment alternatives, and (4)
obtaining sufficient information to make informed investment decisions.
12.5 Procedures and Information Provided to Participants. The
---------------------------------------------------
Administrator shall establish procedures and provide forms as may be necessary
to implement the provisions of this ARTICLE.
40
<PAGE>
Upon receiving a Participant's direction, the Trustee shall proceed to act
thereon as promptly as possible. The Administrator shall provide periodic
information, not less frequently than annually, to a Participant which reflects
the portion of his Accrued Benefit invested in each fund or option according to
the Participant's direction.
ARTICLE XII
-----------
ADOPTION OF PLAN BY PARTICIPATING EMPLOYERS
-------------------------------------------
13.1 Right of Participating Employers to Participate.
-----------------------------------------------
(a) A corporation, limited liability company, partnership or
proprietorship (hereinafter referred to as a "Participating Employer"), may
adopt and participate in the Plan if such corporation, limited liability
company, partnership or proprietorship is a member of the Controlled Group or
Affiliated Service Group, and the Plan Administrator approves such adoption and
participation. Control shall be determined under the provisions of Section
1563(a) of the Code, except as limited by Section 415(h), and Affiliated Service
Group shall be determined under the provisions of Section 414(m).
(b) If approved by the Plan Sponsor in writing, an employer may
adopt the Plan even though such employer is not a member of the controlled
group. In such event, the Plan shall be a multiple employer plan.
(c) Adoption of the Plan by a Participating Employer shall be
evidenced by written action of the Participating Employer either in the form of
a written resolution of such Board or a separate agreement executed by a duly
authorized officer of such Participating Employer (or in the case of a
partnership or proprietorship written authorization of a general partner or the
proprietor) wherein it is agreed that the Participating Employer adopts the Plan
and agrees to be bound by all the terms and provisions of the Plan. In
addition, such Participating Employer shall give written notice of such adoption
to the Administrator of the Plan.
(d) Approval of the adoption of the Plan by a Participating
Employer shall be evidenced by written action of the Administrator and Named
Fiduciary wherein they approve adoption of the Plan by the Participating
Employer.
13.2 Participant Accounts. A Participant who is employed or has been
--------------------
employed by Employer and/or Participating Employer shall have a separate
Employer Contribution Account for Employer and each Participating Employer to
which shall be allocated contributions and forfeitures from Employer and each
Participating Employer together with earnings and losses thereon.
13.3 Administrative Powers of Plan Administrator. The administrative
-------------------------------------------
powers and control of the Administrator shall not be diminished under the Plan
by reason of the participation of any Participating Employer in the Plan and
such administrative powers and controls specifically granted herein to the
Administrator shall apply only to the Administrator. The right to amend the
Plan shall apply only to the Named Fiduciary.
41
<PAGE>
13.4 Creation of Trust. A Participating Employer shall be required to
-----------------
appoint the Trustee which has been appointed by the Named Fiduciary to serve as
Trustee of any funds contributed for its Employees and shall authorize the Named
Fiduciary to appoint such successor or co-Trustees as it deems necessary and
advisable. A Participating Employer shall also be required to make
contributions on behalf of its Employees to such Trustee to hold, invest and
maintain pursuant to the terms and provisions of the Trust Agreement entered
into between the Trustee and Employer.
13.5 Transfer of Employment.
----------------------
(a) For purposes of determining a Year of Credited Service, a
Break in Service and an Hour of Service, the transfer of a Participant between
Employer and any Participating Employer shall not be deemed a termination of
employment.
(b) For purposes of determining participation in the Plan, all
service with Employer and with each Participating Employer shall be taken into
account.
(c) For purposes of determining an Employee's Years of Credited
Service under the Plan, all Years of Credited Service with Employer and each
Participating Employer shall be taken into account.
13.6 Withdrawal of Participating Employers.
-------------------------------------
(a) A Participating Employer may withdraw from the Plan by
giving written notice of such withdrawal to the Administrator. Such notice shall
contain: (1) the effective date of withdrawal; (2) a statement whether the
withdrawal constitutes a termination of the Plan as to its Employees; and (3)
the disposition to be made of assets held by the Trustee for the Employees of
such Participating Employer.
(b) Employer may require a Participating Employer to withdraw
from the Plan by giving sixty (60) days written notice thereof to the
Administrator and to the President of such Participating Employer (or in the
case of a partnership or proprietorship to a general partner or the proprietor).
Such notice shall contain: (1) the effective date of withdrawal, and (2) the
date the Trustee will release assets held by it for the Employees of such
Participating Employer. Upon receipt of such notice, the Participating Employer
shall, within thirty (30) days thereafter, notify the Administrator, in writing,
(1) whether it intends to create its own plan, intends to terminate the Plan for
its Employees, or intends to adopt the plan of another company; and (2) the name
and address of the trustee or other party who is to receive the assets held by
the Trustee for the Employees of the Participating Employer.
(c) Upon withdrawal of a Participating Employer from the Plan,
either under subsection (a) or (b) hereinabove, the Administrator shall give
written notification to the Trustee of such withdrawal and shall direct the
Trustee to transfer and pay over the assets held by the Trustee for the
Employees of the Participating Employer to a successor Trustee or another party
or to the Employees. For purposes of this Section, if the Employees of the
withdrawing Participating Employer cease participation in the Plan as a result
of the withdrawal, the employment of such Employees shall be terminated. Except
as may be restricted by Section 8.1 (applicable to cash or deferred
arrangements), distribution of the vested account balance of each such Employee
shall be made in the same manner and at the same time as provided
42
<PAGE>
in Section 8.6. The non-vested account balance of each such Employee shall be
forfeited in accordance with the provisions of Section 9.3.
(d) If the Participating Employer, which is required to withdraw
under subsection (b) hereinabove, does not cooperate or fully comply with the
terms of subsection (b), then the Administrator may direct the Trustee to
distribute to each Employee of the Participating Employer his Accrued Benefit in
the same manner and at the same time as provided in Section 8.6, subject to any
restrictions under Section 8.1 (applicable to cash or deferred arrangements).
Upon such distribution, the duties, obligations and responsibilities of the
Administrator and Trustee to the Employees of the Participating Employer shall
terminate.
(e) Upon withdrawal by such Participating Employer, all
administration and control which the Employer and the Administrator had
heretofore exercised with respect to such Participating Employer shall cease and
all administration and controls shall be the responsibility of such withdrawing
Participating Employer or the Administrator appointed by it. The Named Fiduciary
and the Administrator shall be relieved of any further liability therefor.
13.7 Internal Revenue Service Approval of Plan for a Participating
-------------------------------------------------------------
Employer. Promptly upon becoming a Participating Employer, such Participating
- --------
Employer may make initial application to the Internal Revenue Service for
approval of the Plan as it pertains to such Participating Employer. In the
event the Internal Revenue Service issues an adverse letter with respect to such
application and determines that the Plan as it pertains to such Participating
Employer fails to qualify under Section 401 of the Code, then the adoption of
the Plan by the Participating Employer shall become null and void, ab initio.
-- ------
Upon a failure to obtain initial qualification of the Plan, any contributions
made by the Participating Employer to the Trustee shall be returned to the
Participating Employer, to the extent allowed under Section 17.6. If application
is not made to the Internal Revenue Service, then, at a minimum the
Participating Employer shall notify the Internal Revenue Service that its
Employees are participating in the Plan.
13.8 Joint Venture Restriction. Neither the adoption of this Plan by
-------------------------
a Participating Employer nor the act performed by it in relation to this Plan
shall ever create a joint venture or partnership between Employer and any
Participating Employer.
13.9 Commingled Assets. Notwithstanding anything to the contrary, it
-----------------
is the intention of the Employer and the Participating Employer that the Trust
Fund shall be available to pay benefits to all of the employees who are
participating in the Plan and their beneficiaries.
ARTICLE XIV
-----------
FIDUCIARY RESPONSIBILITIES
--------------------------
14.1 Allocation of Responsibilities Among Fiduciaries.
------------------------------------------------
(a) Trustee: The Trustee shall have exclusive responsibility
for the control and management of the Trust Fund as provided in the Trust
Agreement and specifically, but not in limitation of its general authority,
investment and reinvestment of the Trust Fund.
43
<PAGE>
(b) Administrator: The Administrator shall have responsibility
and authority to control the operation and administration of the Plan as
specifically set forth in ARTICLE IV of the Plan.
(c) The Employer:
(i) The Employer shall have the authority and
responsibility for (i) the design of the Plan, including the right to amend the
Plan; (ii) the qualification under applicable law of the Plan, any amendments to
the Plan, and any document relating to the Plan; (iii) the funding of the Plan;
(iv) the designation of the Named Fiduciary; (v) review of disallowed claims of
Participants; (vi) appointment of an Investment Manager; and (vii) the exercise
of all fiduciary functions provided in the Plan or in the Trust Agreement or
necessary to the operation of the Plan except such functions as are assigned to
other fiduciaries pursuant to the Plan or Trust Agreement, including the
authority to allocate or delegate fiduciary responsibilities which do not
involve the management and control of the Trust Fund.
(ii) Any authority assigned or reserved to the Employer
under the Plan and Trust Agreement shall be exercised by resolution of the
Employer's Board and shall become effective, with respect to the Trustee, upon
written notice to the Trustee signed by the President, Treasurer or Secretary of
the Employer advising the Trustee of such exercise.
(iii) The Employer as Named Fiduciary shall allocate and
delegate fiduciary responsibilities by giving written notice thereof to the Plan
Administrator and the Trustee of the responsibilities to be allocated and the
person or persons to whom the responsibilities are to be allocated. In
implementing the procedure for the allocation and delegation of fiduciary
responsibilities, the Employer shall discharge its duties with respect to such
allocation and delegation with the care, prudence and diligence under the
circumstances then prevailing that a prudent man acting in a like capacity and
familiar with such matters would use in the conduct of an enterprise of like
character with like aims; and it shall discharge its duties solely in the
interest of the Participants and their Beneficiaries. The Employer shall make a
formal periodic review of the performance of any fiduciary to whom it allocates
or delegates fiduciary responsibilities and of any person which it employs to
render advice in regard to any fiduciary responsibility which it has under the
Plan and Trust Agreement.
14.2 No Joint Fiduciary Responsibilities.
-----------------------------------
(a) It is intended under the Plan and Trust Agreement, that the
Plan Administrator, Named Fiduciary, Employer and Trustee, shall be responsible
for the proper exercise of their respective powers, duties, responsibilities and
obligations and they shall not be responsible for any act or failure to act of
each other.
(b) This ARTICLE is intended to allocate to each fiduciary
individual responsibility for the prudent execution of the functions assigned to
him, and none of such responsibilities or any other responsibility shall be
shared by two or more of such fiduciaries unless such sharing shall be provided
by a specific provision of the Plan or Trust Agreement. Whenever one fiduciary
is required by the Plan or Trust Agreement to follow the directions of another
fiduciary, the two fiduciaries shall not be deemed to have been assigned a
shared responsibility, but the responsibility of the fiduciary giving the
directions shall be deemed his sole responsibility, and the responsibility of
the fiduciary receiving those directions shall be to follow them insofar as such
instructions are on their face proper under applicable law. Each fiduciary,
other than the Trustee, may rely upon any direction, information or action with
respect to
44
<PAGE>
the investment and reinvestment of the Trust Fund as being proper under the Plan
and Trust Agreement and they are not required by the terms of the Plan and Trust
Agreement to inquire into the propriety of any investment or reinvestment of the
Trust Fund. Nothing in the Plan or Trust Agreement shall be deemed to enlarge
the responsibilities or liabilities of any fiduciary with respect to the Plan
and Trust Agreement beyond those imposed by ERISA.
14.3 Advisor to Named Fiduciary. The Named Fiduciary may employ one
--------------------------
or more persons to render advice concerning any responsibility of the Named
Fiduciary under the Plan or Trust Agreement, and all other fiduciaries may rely
on such advice, any written opinions or certificates without further
investigation.
45
<PAGE>
ARTICLE XV
----------
AMENDMENT AND TERMINATION
-------------------------
15.1 Amendments. The Employer shall have the right at any time and
----------
from time to time, to amend, in whole or in part, any or all of the provisions
of this Plan, so long as such amendment or amendments in no way reduce the value
of a Participant's Accrued Benefit or eliminate an optional form of
distribution. No such amendment shall authorize or permit any part of the Trust
Fund to be used for or diverted to purposes other than for the exclusive benefit
of the Participants or their Beneficiaries. Any such amendment shall become
effective upon delivery of a written instrument executed by order of the Board
to the Plan Administrator and Trustee. The provisions of this Section shall be
deemed a procedure for amending the Plan and for identifying the persons who
have authority to amend the Plan and is intended to satisfy the requirements of
Section 402(b)(3) of ERISA.
15.2 Election of Pre-Amendment Vesting Schedule. In the event the
------------------------------------------
Plan is amended to change or modify Section 9.1, a Participant with at least
three (3) Years of Credited Service, as defined for purposes of ARTICLE IX, as
of the expiration of the election period described below, may elect to be
subject to the pre-amendment vesting schedule. If a Participant fails to make
such an election, then such Participant shall be subject to the new vesting
schedule. The election of the pre-amendment vesting schedule shall be made by
giving written notice to the Plan Administrator during the election period. The
election period shall begin on the date such amendment is adopted and shall end
no earlier than the latest of the following dates:
(a) The date which is sixty (60) days after the date the
amendment is adopted;
(b) The date which is sixty (60) days after the date the Plan
amendment becomes effective; or
(c) The date which is sixty (60) days after the date the
Participant is issued written notice of the amendment by the Employer or
Administrator.
Such election shall be made only by an individual who is a Participant at the
time such election is made and such election shall be irrevocable. Such
amendment shall not reduce the Vested percentage of a Participant's Accrued
Benefit as of the later of the date on which such amendment is adopted or the
effective date of such amendment.
15.3 Termination.
-----------
(a) General. The Employer shall have the right at any time to
-------
terminate this Plan, by delivering to the Trustee written notice of such
termination. This Plan shall also terminate in the event the Employer is
legally adjudicated as bankrupt, or makes a general assignment for the benefit
of creditors, or is dissolved, except a dissolution in connection with the
reorganization of the Employer. Upon any such termination or upon a partial
termination, or upon a complete discontinuance of contributions to the Trust
Fund, the rights of all affected Participants or their Beneficiaries to benefits
accrued to the date of such termination, partial termination or discontinuance,
shall be fully Vested in accordance with the terms and provisions of the Plan.
At such time that the Trust is liquidated and
46
<PAGE>
distributions are to be made, the Trustee may distribute a Participant's accrued
benefit without the Participant's consent, provided: (1) the Plan does not offer
an annuity option, purchased from a commercial provider, and (2) the Employer or
any entity within the same Controlled Group as the Employer does not maintain
another defined contribution plan, other than an employee stock ownership plan
defined in Code Section 4975(e)(7). If another such plan is maintained, the
Participant's accrued benefit may be transferred without consent to the other
plan if the Participant does not consent to an immediate distribution from the
terminating plan.
(b) Distribution Limitation for Elective Deferrals. A
----------------------------------------------
distribution of a Participant's Elective Deferrals may not be made under
subparagraph (a) above if the Employer establishes or maintains a "successor
plan." For purposes of this rule, a successor plan is any other defined
contribution plan maintained by the Employer. However, if fewer than two percent
of the Employees who are eligible under the Plan at the time of its termination
are or were eligible under another defined contribution plan at any time during
the 24-month period beginning 12 months before the time of the termination, the
other plan is not a successor plan. The term "defined contribution plan" means a
plan that is a defined contribution plan as defined in Code Section 414(i), but
does not include an employee stock ownership plan as defined in section 4975(e)
or 409 or a simplified employee pension as defined in Section 408(k) of the
Code. A plan is a successor plan only if it exists at the time the Plan is
terminated or within the period ending 12 months after distribution of all
assets from the Plan.
47
<PAGE>
ARTICLE XVI
-----------
CLAIMS PROCEDURE
----------------
16.1 Initial Filing. Claims for benefits under the Plan may be filed
--------------
with the Compensation Committee on forms supplied by the Administrator. The
Compensation Committee, within sixty (60) days after receipt of a duly and
properly filed claim, shall render a written decision on the claim. If the claim
shall be denied, either in whole or in part, the decision shall include the
reason or reasons for the denial; the reference to the Plan provision or
provisions which are the basis for the denial; a description of any additional
material or information necessary for the claimant to effect the claim; an
explanation why the information or material is necessary; and an explanation of
the Plan claim review procedure.
16.2 Review Procedure for Disallowed Claims. Within sixty (60) days
--------------------------------------
after receiving notification from the Compensation Committee denying, in whole
or in part, the claim, the claimant may file with the Named Fiduciary: (a) a
written notice of request for review of the Compensation Committee's decision,
(b) a written notice of request for review of any pertinent documents, and (c) a
written notice of request to submit issues and comments in writing. Within
sixty (60) days after receipt of the request for review, the Named Fiduciary
shall render a written decision on the claim containing specific reasons for the
decision and specific reference to the pertinent Plan provisions on which the
decision is based, all in a manner calculated to be understood by the claimant.
48
<PAGE>
ARTICLE XVII
------------
MISCELLANEOUS
-------------
17.1 Participant's Rights; Acquittance. Neither the establishment of
---------------------------------
the Plan hereby created, nor any modification thereof, nor the creation of any
fund or account, nor the payment of any benefits, shall be construed as giving
to any Participant or other person any legal or equitable right against the
Employer, or any officer or employee thereof, or the Trustee, except as provided
herein. Under no circumstances shall the terms of employment of any Participant
be modified or in any way affected hereby.
Nothing contained in this Plan shall be construed to add directly or
indirectly to the rights of the Employees against the Employer. The action of
the Employer in creating this Plan or any other action contemplated by either
the Employer or its Employees, shall not be construed to constitute or evidence
any contractual relationship between the Employer and any Employee, or as a
right of any Employee to continue in the employment of the Employer, or as a
limitation of the right of the Employer to discharge any of its Employees, with
or without cause. The Employer shall have the absolute right to deal with any
Employee who may be a Participant hereunder at any time as if the Plan had never
been created. Nothing herein contained shall be construed as placing any
obligation whatever upon the Employer to see that any distribution to a
Participant is made at any time from the Trust Fund herein created, and the
Employer shall not be liable to any person whatever in respect to payments from
the Trust Fund.
17.2 Board Authorization. Whenever the Employer, under the terms of
-------------------
this Plan, is permitted or required to do or perform any act or matter or thing,
it shall be done and performed by any officer thereunto duly authorized by the
Board.
17.3 ERISA Preemption. This Plan shall be administered in the United
----------------
States of America, and its validity, construction and all rights hereunder shall
be governed by the laws of the United States under ERISA. To the extent the
ERISA shall not be held to have preempted local law, the Plan shall be
administered and construed under and governed by the laws of the State of
Alabama.
17.4 Indemnification By Employer. The Employer does hereby indemnify
---------------------------
and hold harmless any person, other than a corporation, who may be named as
Trustee under the Trust Agreement against any and all losses, claims, damages,
expense (including court costs and attorney's fees) and liabilities arising from
his or its duties and responsibilities in connection with the Plan and Trust
Agreement unless the same is determined to be due to criminal acts or acts
involving fraud or wanton conduct.
17.5 Exclusive Benefit Rule. The Trust Fund shall never inure to the
----------------------
benefit of any Employer and shall be held for the exclusive purpose of providing
benefits to Participants in the Plan and their Beneficiaries and for any
reasonable expenses of administering the Plan, except that:
(a) Contributions made by the Employer under a mistake of fact
shall be returned to the Employer within one (1) calendar year of the payment of
such contribution.
49
<PAGE>
(b) If a contribution is conditioned upon the deductibility of
such contribution under Section 404 of the Internal Revenue Code of 1986, as
amended, then, to the extent the deduction is disallowed, the contribution shall
be returned to the Employer within one (1) calendar year after the disallowance
of the deduction.
17.6 Employer Reversion Upon Initial Disqualification.
------------------------------------------------
Notwithstanding any contrary provisions contained in any portion of this Plan,
in the event the Commissioner of Internal Revenue determines that the Plan is
not initially qualified under the Code, any contribution made incident to that
initial qualification by the Employer must be returned to the Employer within
one year after the date the initial qualification is denied, but only if the
application for the qualification is made by the time prescribed by law for
filing the Employer's return for the taxable year in which the Plan is adopted,
or such later date as the Secretary of the Treasury may prescribe.
17.7 Merger or Consolidation. In the case of any merger or
-----------------------
consolidation with, or transfer of assets or liabilities to, any other plan,
each Participant shall, if the Plan is terminated, receive a benefit immediately
after the merger, consolidation, or transfer which is equal to or greater than
the benefit he would have been entitled to receive immediately before the
merger, consolidation, or transfer, if the Plan had been terminated.
17.8 Non-Alienation Provision.
------------------------
(a) In General. Except as may be provided in this Section,
----------
neither the Trust nor any of the assets, nor any interest herein shall be
subject to any conveyance, transfer, assignment, sequestration, garnishment,
attachment, levy, encumbrance, or other judicial process or order of any kind to
satisfy the claims of creditors, and the Trustee shall not give any effect to
such conveyance, transfer, assignment, sequestration, garnishment, attachment,
levy, encumbrance, or other judicial process or order. The interests of
Participants and their Beneficiaries under the Plan and Trust shall not be
subject to the claims of any creditors and shall not be liable for their debts,
contracts or torts. Participants and their Beneficiaries shall not in any way
convey, transfer, assign, sequester, garnish, attach, levy, or otherwise
encumber their interests in the Plan in law or in equity, and any such
conveyance, transfer, assignment, sequestration, garnishment, attachment, levy,
or encumbrance shall be void.
(b) Domestic Relations Orders.
-------------------------
(i) The Plan Administrator shall comply with the terms of
a Qualified Domestic Relations Order as defined in Section 414(p) of the Code.
(ii) Any such domestic relations order shall not require
the Plan to provide any type or form of benefit, or any option not otherwise
provided under the Plan, nor to provide increased benefits (determined on the
basis of actuarial value) or the payment of benefits to an alternate payee which
are required to be paid to another alternate payee under another order
previously determined to be a qualified domestic relations order.
(iii) The Plan Administrator shall promptly notify the
Participant and each alternate payee of the receipt of a domestic relations
order by the Plan and the Plan's procedures for determining the qualified status
of domestic relations orders. Within a reasonable period after receipt of a
domestic relations order, the Plan Administrator shall determine whether such
order is a qualified
50
<PAGE>
domestic relations order and shall notify the Participant and each alternate
payee of such determination. If the Participant or any affected alternate payee
disagrees with the determinations of the Plan Administrator, the disagreeing
party shall be treated as a claimant and the claims procedure of the Plan shall
be followed. The Plan Administrator may bring an action for a declaratory
judgment in a court of competent jurisdiction to determine the proper recipient
of the benefits to be paid by the Plan.
(iv) During any period in which the issue of whether a
domestic relations order is a qualified domestic relations order is being
determined (by the Plan Administrator, by a court of competent jurisdiction or
otherwise), the Plan Administrator shall separately account for the amounts
which would have been payable to the alternate payee during such period if the
order had been determined to be a qualified domestic relations order. If, within
the eighteen (18) month period beginning on the date on which the first payment
would be required to be made under the domestic relations order, the order (or
modification thereof) is determined to be a qualified domestic relations order,
the Plan Administrator shall pay the segregated amounts, including any interest
thereon, to the person or persons entitled thereto. If within such eighteen (18)
month period it is determined that the order is not a qualified domestic
relations order or the issue as to whether such order is a qualified domestic
relations order is not resolved, then the Plan Administrator shall pay the
segregated amounts, including any interest thereon, to the person or persons who
would have been entitled to such amounts if there had been no order. Any
determination that an order is a qualified domestic relations order which is
made after the close of the eighteen (18) month period shall be applied
prospectively only.
(v) The Plan Administrator shall establish reasonable
procedures to determine the status of domestic relations orders and to
administer distributions under qualified orders.
17.9 Delegation of Responsibilities by Named Fiduciary. The Named
-------------------------------------------------
Fiduciary may designate any other person or persons, including the Trustee, to
perform and carry out the responsibilities and duties herein imposed on the
Administrator, and the Named Fiduciary may revoke any such delegation of
responsibility. Any action of such person or persons in the exercise of such
delegated responsibility shall have the same force and effect for all purposes
as if such action had been taken by the Administrator.
17.10 Trust. The Employer and the Trustee have entered into a Trust
-----
Agreement which provides for the holding of funds necessary to fund the benefits
set forth in this Plan. The Trust Fund shall be received, held and disbursed in
accordance with the provisions of the Trust Agreement and the Plan. No part of
the Trust Fund shall be used for or diverted to purposes other than for the
exclusive benefit of the Participants, former Participants and their
Beneficiaries.
17.11 Non-Contractual Obligation of Employer. Although it is the
--------------------------------------
intention of the Employer that this Plan continue from year to year and
contributions be made regularly, continuation of the Plan is entirely voluntary
and the payments thereunder are not assumed as a contractual obligation of the
Employer.
17.12 Basis for Payments From the Plan. The basis for making payments
--------------------------------
from the Plan is contained in ARTICLE VIII which are intended to satisfy the
requirements of ERISA.
17.13 Funding Policy. ARTICLE VI shall be deemed the procedure for
--------------
establishing and carrying out the funding policy and method of this Plan. The
Named Fiduciary shall be authorized to adopt such additional procedures and
methods as necessary, which shall be communicated in writing to the
51
<PAGE>
Administrator and Trustee. Such funding policy and method shall be consistent
with the objectives of this Plan and with the requirements of Title I of ERISA.
As part of such funding policy, the Named Fiduciary may, from time to time,
direct the Trustee to exercise its investment discretion so as to provide
sufficient cash, in an amount determined by the Named Fiduciary under the
funding policy then in effect, necessary to meet the liquidity requirements for
the administration of the Plan. In addition, the provisions of ARTICLE VI shall
be deemed the basis on which payments are made to this Plan.
THE EMPLOYER has caused this Plan to be executed by its duly
authorized officer and duly attested, and its corporate seal to be hereunto
affixed, on this, the 4th day of January, 1999.
FRONTIER NATIONAL CORPORATION
By /s/ Steven R. Townson
----------------------------
Steven R. Townson
President
Attest: (EMPLOYER)
/s/ Kerri C. Newton
- ---------------------------
Kerri C. Newton
Secretary
[CORPORATE SEAL]
52
<PAGE>
EXHIBIT A - PROTECTED BENEFITS FROM TRANSFEROR PLANS
----------------------------------------------------
Valley National Bank (401(k) Profit Sharing Plan
- ------------------------------------------------
In-service distributions from Elective Deferral Accounts on or after age 59-1/2.
First National - America's Bank Profit Sharing Retirement Plan
- --------------------------------------------------------------
Periodic payments of substantially equal amounts for a specified number of
years, not in excess of 15.
First National - America's Bank 401(k) Plan
- -------------------------------------------
(a) Qualified Joint & 50% Survivor Annuity (normal form)
(b) Joint & 100% Survivor Annuity
(c) Life Annuity
The Qualified Joint and Survivor Annuity and Pre-Retirement Survivor Annuity
provisions below apply only with respect to the funds transferred from First
National - America's Bank 401(k) Plan.
1. Qualified Joint and Survivor Annuity.
------------------------------------
(A) In the case of a Participant who has been married throughout the
twelve-month period ending with his Annuity Starting Date, benefits shall be
payable in the form of a Qualified Joint and Survivor Annuity, which shall be
the actuarial equivalent of a Participant's Vested Accrued Benefit and in all
events shall be at least as valuable as any other optional form of benefit
payable under the Plan at the same time, unless a Participant and his spouse
duly elect to waive the Qualified Joint and Survivor Annuity pursuant to this
Article. Such election shall be made by the Participant in writing during the
ninety (90) day period ending on the Annuity Starting Date. Notwithstanding the
provisions of this Subparagraph (i), however, if a Participant marries within
the twelve-month period ending on his Annuity Starting Date, and the Participant
and spouse in such marriage remain married to each other for at least one (1)
year, such Participant and spouse shall be treated as having been married
throughout the twelve-month period ending on the Participant's Annuity Starting
Date. If the Participant and spouse do not remain married for one year, the Plan
shall treat the Participant as having not been married on the Annuity Starting
Date. In such event, any survivor benefit rights of the spouse shall be
forfeited, and the Participant shall not be entitled to a retroactive correction
of the amount paid to such Participant.
(B) No less than 30 days and no more than 90 days before the Annuity
Starting Date, the Administrator shall provide the Participant with a written
explanation of: (i) the terms and conditions of a Qualified Joint and Survivor
Annuity, (ii) the Participant's right to make and the effect of an election to
waive the Qualified Joint and Survivor Annuity form of benefit, (iii) the rights
of the Participant's spouse concerning the Qualified Joint and Survivor Annuity,
and (iv) the right of the Participant to revoke such
53
<PAGE>
an election, and the effect of a revocation. A distribution may commence less
than 30 days (but not less than seven days) after the notice required under this
subparagraph is given, provided that:
(i) The Plan 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
(ii) The Participant, after receiving the notice,
affirmatively elects a distribution.
2. Qualified Pre-Retirement Survivor Annuity. In the event the provisions of
-----------------------------------------
Section 1 apply to a Participant, if such Participant who has been married
throughout the twelve-month period ending on the date of his death dies prior to
the Annuity Starting Date, the benefits to which a Participant is entitled under
this Article shall be paid to his surviving spouse in the form of a Pre-
Retirement Survivor Annuity unless an optional form of benefit has been
selected. The surviving spouse may elect to have such annuity distributed within
a reasonable time after the Participant's death.
3. Pre-Retirement Survivor Annuity Election and Notice.
---------------------------------------------------
(A) Election. An election to waive the Pre-Retirement Survivor Annuity
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must be made by the Participant, in writing, and consented to by the spouse.
Such election must be made during the period which begins on the first day of
the Plan Year in which the Participant attains age thirty-five (35) and ends on
the date of the Participant's death. In the event a Vested Participant
terminates employment prior to the beginning of the Plan Year in which he
attains age thirty-five (35), the election period shall begin on the date of his
separation from service.
(B) Notice. The Administrator shall provide each Participant, within the
------
applicable period, a written explanation of: (i) the terms and conditions of a
Pre-Retirement Survivor Annuity, (ii) the Participant's right to make and the
effect of an election to waive the Pre-Retirement Survivor Annuity form of
benefit, (iii) the rights of the Participant's spouse concerning the Pre-
Retirement Survivor Annuity, and (iv) the right of the Participant to revoke
such an election, and the effect of a revocation.
(C) Applicable Period. For purposes of subsection (b) hereinabove, the
-----------------
"applicable period" shall mean, with respect to the Participant, whichever of
the following period ends last: (i) The period beginning with the first day of
the Plan Year in which the Participant attains age 32 and ending with the close
of the Plan Year preceding the Plan Year in which the Participant attains age
35; (ii) A reasonable period ending after the individual becomes a Participant;
(iii) A reasonable period ending after the survivor benefits become applicable
to a Participant. In the case of a Participant who separates from service before
attaining age 35, "applicable period" means the period beginning one year before
the separation from service and ending one year after such separation.
(D) For purposes of applying paragraph (C), a reasonable period ending
after the enumerated events described in subparagraphs (C)(ii)(iii) is the end
of the one-year period beginning with the date the applicable event occurs. The
applicable period for such events begins one year prior to the occurrence of the
enumerated events.
54
<PAGE>
EXHIBIT 23.1
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CONSENT OF JACKSON THORNTON & CO., P.C.
---------------------------------------
Consent of Independent Public Accountants
We consent to the incorporation by reference in the Registration Statement on
Form S-8 pertaining to the Frontier National Corporation KSOP of our report
dated March 6, 1998 with respect to the Consolidated Financial Statement of
First National Sylacauga Corporation as of December 31, 1997 and 1996 appearing
in the Registration Statement of Frontier National Corporation (formerly Valley
National Corporation) on Form S-4, as amended, File No. 333-52465 and the
prospectus filed with the SEC pursuant to Rule 424(b) on August 4, 1998.
/s/ Jackson Thornton & Co., P.C.
Montgomery, Alabama
December 30, 1998
<PAGE>
EXHIBIT 23.2
-------------
CONSENT OF SCHAUER, TAYLOR, COX & EDWARDS, P.C.
-----------------------------------------------
Consent of Independent Public Accountants
We consent to the incorporation by reference in the Registration Statement on
Form S-8 pertaining to the Frontier National Corporation KSOP of our report
dated February 19, 1998 with respect to the Consolidated Financial Statement of
Valley National Corporation as of December 31, 1997 and 1996 appearing in the
Registration Statement of Frontier National Corporation (formerly Valley
National Corporation) on Form S-4, as amended, File No. 333-52465 and the
prospectus filed with the SEC pursuant to Rule 424(b) on August 4, 1998.
/s/ Schauer, Taylor, Cox & Edwards,
P.C.
Birmingham, Alabama
December 30, 1998
