<PAGE>
<PAGE>
As filed with the Securities and Exchange Commission
on February 23, 1999
Registration No. 333-_____
________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
_______________________________________
1st STATE BANCORP, INC.
---------------------------------
(Exact name of registrant as specified in its charter)
Virginia Applied for
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) (Identification No.)
445 S. Main Street
Burlington, North Carolina 27215
(336) 227-8861
-----------------------------
(Address of Principal Executive Office)
1st State Bank Employees' Savings and Profit Sharing Plan
---------------------------------------------------------
(Full title of the Plan)
with copies to:
Gary R. Bronstein, Esquire
Joel E. Rappoport, Esquire
Housley Kantarian and Bronstein, P.C.
1220 19th Street, N.W., Suite 700
Washington, D.C. 20036
-------------------------------------
(Name and Address of Agent for Service)
(202) 822-9611
- -------------------------------------------------------------
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
==========================================================================================
<S> <C> <C> <C> <C>
Title of Proposed Maximum Proposed Maximum Amount of
Securities to Amount to Be Offering Price Aggregate Offering Registration
be registered(1) Registered (2) Per Share (3) Price (4) Fee
- ------------------------------------------------------------------------------------------
Common Stock,
$.01 par value 431,562 $16 $6,905,000 $1,919.59
per share
==========================================================================================
<FN>
(1) In addition, pursuant to Rule 416(c) under the Securities
Act of 1933, this registration statement also covers an
indeterminate amount of interests to be offered or sold pursuant
to the 1st State Bank Employees' Savings and Profit Sharing Plan
(the "Plan") described herein.
(2) Estimates the maximum number of shares expected to be
issued under the Plan assuming that all employer and employee
contributions to the Plan are used to purchase shares of Common
Stock of 1st State Bancorp, Inc. in the conversion of 1st State Bank
(the "Bank") from mutual to stock form ("Conversion"), together
with an indeterminate number of shares which may be necessary to
adjust the number of additional shares of Common Stock reserved
for issuance pursuant to the Plan and being registered herein,
as the result of a stock split, stock dividend,
reclassification, recapitalization or similar adjustment(s) of
the Common Stock of 1st State Bancorp, Inc.
(3) Estimated solely for the purpose of calculating the
registration fee and calculated pursuant to Rule 457(c) based on
the subscription price of $16 per share of the Common Stock of
1st State Bancorp, Inc., as currently offered in the Conversion.
(4) Estimated based on (2) and (3) above.
</FN>
</TABLE>
THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
AUTOMATICALLY UPON THE DATE OF FILING, IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933.<PAGE>
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
ITEM 1. PLAN INFORMATION*
- ------
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL
- ------ INFORMATION*
*This Registration Statement relates to the registration of
431,562 shares of Common Stock, $.01 par value per share, of 1st
State Bancorp, Inc. (the "Company") reserved for issuance and
delivery under the 1st State Bank Employees' Savings and Profit
Sharing Plan (the "Plan"). Documents containing the information
required by Part I of this Registration Statement will be sent
or given to participants in the Plan as specified by Rule
428(b)(1). Such documents are not filed with the Securities and
Exchange Commission (the "Commission") either as part of this
Registration Statement or as prospectuses or prospectus
supplements pursuant to Rule 424, in reliance on Rule 428.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
- ------
The Company became subject to the informational requirements
of the Securities Exchange Act of 1934 (the "1934 Act") on
February 11, 1999 and, accordingly, will be filing periodic
reports and other information with the Commission. Reports,
proxy statements and other information concerning the Company
filed with the Commission may be inspected and copies may be
obtained (at prescribed rates) at the Commission's Public
Reference Section, Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549.
The following document filed by the Company is incorporated
in this Registration Statement by reference: the Prospectus for
the Common Stock, included in the Company's Registration
Statement (Commission File No. 333-68091)
ALL DOCUMENTS FILED BY THE COMPANY AND THE PLAN PURSUANT TO
SECTIONS 13(A), 13(C), 14, AND 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED, AFTER THE DATE HEREOF AND 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 IN THIS REGISTRATION STATEMENT AND TO
BE A PART HEREOF FROM THE DATE OF FILING OF SUCH DOCUMENTS.
ITEM 4. DESCRIPTION OF SECURITIES
- ------
The information required by Item 202 of Regulation S-K is set
forth in the description of the Common Stock included in the
Prospectus for the Common Stock (dated February 11, 1999), as
incorporated by reference under Item 3 hereof, such description
being incorporated by reference herein.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
- ------
Not applicable.
<PAGE>
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS OF THE
- ------ COMPANY
The Amended and Restated Certificate of Incorporation of the
Bank provides that, to the fullest extent permitted by the North
Carolina Business Corporation Act (the "NCBCA"), no person who
serves as a director shall be personally liable to the Bank or
any of its stockholders or otherwise for monetary damages for
breach of any duty as director.
<PAGE>
<PAGE>
In addition, Article IX of the Amended and Restated Bylaws of
the Bank in its form as a stock savings bank after its
conversion to stock form (the "Converted Bank") state that any
individual who at any time serves or has served as a director,
officer, employee or agent of the Converted Bank, and any
individual who serves or has served at the request of the
Converted Bank as a director, officer, partner, trustee,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, or as a trustee or
administrator under an employee benefit plan, shall have a right
to be indemnified by the Converted Bank to the fullest extent
permitted by law against liability and litigation expense
arising out of such status or activities in such capacity.
Article IX of the Amended and Restated Bylaws of the Bank in its
form as a commercial bank after the conversion (the "Commercial
Bank") contain similar provisions.
Sections 55-8-50 through 55-8-58 of the NCBCA contain
provisions prescribing the extent to which directors and
officers of the Converted Bank and the Commercial Bank shall or
may be indemnified. Section 55-8-51 of the NCBCA permits a
corporation, with certain exceptions, to indemnify a present or
former director against liability if (i) the director conducted
himself in good faith, (ii) the director reasonably believed (x)
that the director's conduct in the director's official capacity
with the corporation was in its best interests and (y) in all
other cases the director's conduct was at least not opposed to
the corporation's best interests, and (iii) in the case of any
criminal proceeding, the director had no reasonable cause to
believe the director's conduct was unlawful. A corporation may
not indemnify a director in connection with a proceeding by or
in the right of the corporation in which the director was
adjudged liable to the corporation or in connection with a
proceeding charging improper personal benefit to the director.
The above standard of conduct is determined by a majority vote
of a quorum of the board of directors consisting of directors
not at the time parties to the proceeding, or majority vote of a
duly designated committee of the board of directors, special
legal counsel, or the shareholders as prescribed in Section 55-
8-55.
Sections 55-8-52 and 55-8-56 of the NCBCA require a
corporation to indemnify a director or officer in the defense of
any proceeding to which the director or officer was a party
against reasonable expenses when the director or officer is
wholly successful in the director's or officer's defense, unless
the articles of incorporation provide otherwise. Upon
application, the court may order indemnification of the director
or officer if the director or officer is adjudged fairly and
reasonably so entitled under Section 55-8-54.
In addition, Section 55-8-57 of the NCBCA permits a
corporation to provide for indemnification of directors,
officers, employees or agents, in its articles of incorporation
or bylaws or by contract or resolution, against liability in
various proceedings and to purchase and maintain insurance
policies on behalf of these individuals. The Savings Bank
currently maintains a directors and officers liability insurance
policy.
Directors, officers and employees of the Company may be
entitled to benefit from the indemnification provisions
contained in the Virginia Stock Corporation Act (the "VSCA") and
the Company's Articles of Incorporation. The general effect of
these provisions is summarized below.
In accordance with Sections 13.1-696 through 13.1-704 of the
VSCA, a director or officer of the Company generally shall be
indemnified in the defense of a proceeding if they are
successful. A corporation may indemnify a director, officer,
employee or agent under the circumstances in the preceding
sentence and in other circumstances if (i) he conducted himself
in good faith; and (ii) he believed (x) that his conduct in his
official capacity with the corporation was in its best interests
and (y) in all other cases his conduct was at least not opposed
to the corporation's best interests, and (iii) in the case of
any criminal proceeding, he had no reasonable cause to believe
that his conduct was unlawful. A corporation may not indemnify
a director, officer, employee or agent in connection with a
proceeding by or in the right of the corporation in which the
individual was adjudged liable to the corporation or in
connection with a proceeding charging improper personal benefit
to the individual. The above standard of conduct is determined
by a majority vote of a quorum of the board of directors
consisting of directors not at the time parties to the
proceeding, or majority vote of a duly designated committee of
the board of directors, special legal counsel, or the
shareholders as prescribed in Section 13.1-701.
Sections 13.1-698 and 13.1-702 of the VSCA require a
corporation to indemnify a director or officer in the defense of
any proceeding to which the director or officer was a party
against reasonable expenses when the director or officer is
wholly successful in the director's or officer's defense, unless
the articles of incorporation provide otherwise. Upon
<PAGE>
<PAGE>
application, the court may order indemnification of the director
or officer if the director or officer is adjudged fairly and
reasonably so entitled under Section 13.1-700.1.
In addition, Section 13.1-704 of the VSCA permits a
corporation to provide for indemnification of directors,
officers, employees or agents, in its articles of incorporation
or bylaws or by contract or resolution, against liability in
various proceedings and to purchase and maintain insurance
policies on behalf of these individuals, except an indemnity
against willful misconduct or a knowing violation of criminal
law.
Article XVI of the Company's Articles of Incorporation
provides that the Company shall indemnify, to the fullest extent
permissible under the VSCA, any individual who is or was a
director, officer, employee or agent of the Company, and any
individual who serves or served at the Company's request as a
director, officer, partner, trustee, employee or agent of
another corporation, partnership, joint venture, trust, other
enterprise or employee benefit plan, in any proceeding in which
the individual is made a party as a result of his service in
such capacity. In addition, the Company must pay reasonable
expenses incurred by any person identified in the preceding
sentence who is a party to a proceeding in advance of the final
disposition of the proceeding upon receipt by the Company of:
(i) a written affirmation by such person of his good faith
belief that the standard of conduct necessary for
indemnification by the Company as authorized in Article XVI has
been met; and (ii) a written undertaking by or on behalf of such
person to repay the amount if it shall ultimately be determined
that the standard of conduct has not been met.
Article XVI further provides that the Company shall purchase
and maintain insurance on behalf of any person who holds or who
has held any position as a director or officer of the Company
against any liability incurred by him or her in any such
position, or arising out of his status as such, whether or not
the Company would have power to indemnify him or her against
such liability under Article XVI.
The engagement letter dated July 24, 1998, between the
Savings Bank and Ferguson provides for the indemnification of
Ferguson and its employees under certain circumstances, in
connection with the appraisal services rendered under the terms
of that engagement letter. The engagement letter dated July 27,
1998, between the Savings Bank and Trident Securities provides
for the indemnification of Trident Securities and its
controlling persons under certain circumstances, in connection
with the Conversion and Trident Securities' engagement under the
engagement letter. The Sales Agency Agreement entered into
between Trident Securities and the Company provides for the
indemnification of Trident Securities, its affiliates, and their
respective officers, directors, employees, agents and
controlling persons under certain circumstances.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
- ------
Not applicable.
ITEM 8. EXHIBITS
- ------
The exhibits scheduled to be filed as part of this
registration statement are as follows:
4.1 1st State Bank Employees' Savings & Profit
Sharing Plan and Adoption Agreement (the
"Plan")
4.2 Summary Plan Description of the Plan
4.3 Form of Investment Election to be made
available to Plan Participants with respect to
the investment of their accounts under the
Plan
5.1 Opinion of Housley Kantarian & Bronstein, P.C.
as to the legality of the Common Stock being
registered
5.2 Favorable Determination Letter from the
Internal Revenue Service dated June 26, 1998,
regarding the tax-qualification of the Plan
documents
23.1 Consent of Housley Kantarian & Bronstein, P.C.
(appears in their opinion filed as Exhibit 5.1)
<PAGE>
<PAGE>
23.2 Consent of KPMG LLP
24 Power of Attorney (contained in the signature
page to this Registration Statement)
99.1 Copy of the Plan's most recent Annual Report, as
filed with the Internal Revenue Service on Form 5500
ITEM 9. UNDERTAKINGS
- ------
1. The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
registration statement --
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed
that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if in the aggregate, the changes in
volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement;
(iii) 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;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii)
do not apply if the registration statement is on Form S-3,
Form S-8 or Form F-3, and the information required to be
included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 that are incorporated
by reference in the registration statement.
(b) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) 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.
(2) The undersigned registrant hereby undertakes that,
for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange
Act of 1934 (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by
reference in 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.
(3) The undersigned registrant hereby undertakes to
deliver or cause to be delivered with the prospectus, to each
person to whom the prospectus is sent or given, the latest
annual report, to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and
meeting the requirements of Rule 14a-3 or Rule 14c-3 under the
Securities Exchange Act of 1934; and, where interim financial
information required to be presented by Article 3 of Regulation
S-X is not set forth in the prospectus, to deliver, or cause to
be delivered to each person to whom the prospectus is sent or
given, the latest quarterly report that is specifically
incorporated by reference in the prospectus to provide such
interim financial information.
<PAGE>
<PAGE>
(4) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 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 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 Act and will be governed by the final adjudication of such
issue.<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
as amended, 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 Burlington, State of
North Carolina, on February 19, 1999.
1ST STATE BANCORP, INC.
By:/s/ James C. McGill
----------------------------
James C. McGill, President
(Duly Authorized Representative)
POWER OF ATTORNEY
We, the undersigned Directors of 1st State Bancorp, Inc.,
hereby severally constitute and appoint James C. McGill with
full power of substitution, our true and lawful attorney and
agent, to do any and all things in our names in the capacities
indicated below which said James C. McGill may deem necessary or
advisable to enable 1st State Bancorp, Inc. to comply with the
Securities Act of 1933, as amended, and any rules, regulations
and requirements of the Securities and Exchange Commission, in
connection with the registration of 1st State Bancorp, Inc.
common stock, including specifically, but not limited to, power
and authority to sign for us in our names in the capacities
indicated below, the Registration Statement and any and all
amendments (including post-effective amendments) thereto; and we
hereby ratify and confirm all that said James C. McGill shall do
or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- -----
<S> <C> <C>
/s/ James C. McGill President, Chief Executive Officer February 19, 1999
- ----------------------- and Director (Principal Executive
James C. McGill Officer)
/s/ A. Christine Baker Executive Vice President-Chief February 19, 1999
- ----------------------- Financial Officer, Secretary and
A. Christine Baker Treasurer (Principal Financial and
Accounting Officer)
/s/ Richard C. Keziah Chairman of the Board February 19, 1999
- -----------------------
Richard C. Keziah
/s/ James A. Barnwell, Jr. Director February 19, 1999
- --------------------------
James A. Barnwell, Jr.
/s/ Bernie C. Bean Director February 19, 1999
- --------------------------
Bernie C. Bean
/s/ James G. McClure Director February 19, 1999
- --------------------------
James G. McClure
/s/ T. Scott Quakenbush Director February 19, 1999
- --------------------------
T. Scott Quakenbush
/s/ Richard H. Shirley Director February 19, 1999
- --------------------------
Richard H. Shirley
/s/ Virgil L. Stadler Director February 19, 1999
- --------------------------
Virgil L. Stadler
/TABLE
<PAGE>
<PAGE>
Pursuant to the requirements of the Securities Act of 1933,
the undersigned trustee of the 1st State Bank Employees' Savings
and Profit Sharing Plan has duly caused this Registration
Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New
York, on February 22, 1999.
The Bank of New York, as Trustee of the
1st State Bank Employees' Savings
and Profit Sharing Plan and Trust
By:/s/ Wolfgang Strauss
---------------------------------
Its: Vice President
-----------------------------
<PAGE>
<PAGE>
INDEX TO EXHIBITS
Exhibit Description
- ------- -----------
4.1 1st State Bank Employees' Savings & Profit
Sharing Plan and Adoption Agreement (the "Plan")
4.2 Summary Plan Description of the Plan
4.3 Form of Investment Election to be made available
to Plan Participants with respect to the
investment of their accounts under the Plan
5.1 Opinion of Housley Kantarian & Bronstein, P.C. as
to the legality of the Common Stock being
registered
5.2 Favorable Determination Letter from the Internal
Revenue Service dated June 26, 1998, regarding
the tax-qualification of the Plan documents
23.1 Consent of Housley Kantarian & Bronstein, P.C.
(appears in their opinion filed as Exhibit 5.1)
23.2 Consent of KPMG LLP
24 Power of Attorney (contained in the signature page
to this Registration Statement)
99.1 Copy of the Plan's most recent Annual Report, as
filed with the Internal Revenue Service on Form
5500
<PAGE>
PENTEGRA SERVICES, INC.
EMPLOYEES' SAVINGS & PROFIT SHARING PLAN
BASIC PLAN DOCUMENT
7/16/97<PAGE>
<PAGE>
TABLE OF CONTENTS
ARTICLE I PURPOSE AND DEFINITIONS
ARTICLE II PARTICIPATION AND MEMBERSHIP
ARTICLE III CONTRIBUTIONS
ARTICLE IV INVESTMENT OF CONTRIBUTIONS
ARTICLE V MEMBERS' ACCOUNTS, UNITS AND VALUATION
ARTICLE VI VESTING OF UNITS
ARTICLE VII WITHDRAWALS AND DISTRIBUTIONS
ARTICLE VIII LOAN PROGRAM
ARTICLE IX ADMINISTRATION OF PLAN AND ALLOCATION OF
RESPONSIBILITIES
ARTICLE X MISCELLANEOUS PROVISIONS
ARTICLE XI AMENDMENT AND TERMINATION
TRUSTS ESTABLISHED UNDER THE PLAN
<PAGE>
<PAGE>
ARTICLE I
PURPOSE AND DEFINITIONS
SECTION 1.1
This Plan and Trust, as evidenced hereby, and the applicable
Adoption Agreement and Trust Agreement(s), are designed and
intended to qualify in form as a qualified profit sharing plan
and trust under the applicable provisions of the Internal
Revenue Code of 1986, as now in effect or hereafter amended, or
any other applicable provisions of law including, without
limitation, the Employee Retirement Income Security Act of 1974,
as amended.
SECTION 1.2
The following words and phrases as used in this Plan shall have
the following meanings:
(A) "ACCOUNT" means the Plan account established and
maintained in respect of each Member pursuant to
Article V, including the Member's after-tax
amounts, 401(k) amounts, Employer matching, basic,
supplemental and qualified nonelective
contribution amounts, rollover amounts and
profit sharing amounts, as elected by the
Employer.
(B) "ADOPTION AGREEMENT" means the separate document by
which the Employer has adopted the Plan and
specified certain of the terms and provisions
hereof. If any term, provision or definition
contained in the Adoption Agreement is
inconsistent with any term, provision or
definition contained herein, the one set forth in
the Adoption Agreement shall govern. The Adoption
Agreement shall be incorporated into and form an
integral part of the Plan.
(C) "BENEFICIARY" means the person or persons
designated to receive any amount payable under the
Plan upon the death of a Member. Such designation
may be made or changed only by the Member on a
form provided by, and filed with, the TPA
Adminstrator prior to his death. If the Member is
not survived by a Spouse and if no Beneficiary
is designated, or if the designated Beneficiary
predeceases the Member, then any such amount
payable shall be paid to such Member's estate upon
his death.
(D) "BOARD" means the Board of Directors of the
Employer adopting the Plan.
(E) "BREAK IN SERVICE" means a Plan Year during which
an individual has not completed more than 500 Hours
of Employment, as determined by the Plan
Administrator in accordance with the IRS
Regulations. Solely for purposes of determining
whether a Break in Service has occurred, an
individual shall be credited with the Hours of
Employment which such individual would have
completed but for a maternity or paternity absence,
as determined
1
<PAGE>
<PAGE>
by the Plan Administrator in accordance with this
Paragraph, the Code and the applicable regulations
issued by the DOL and the IRS; provided, however,
that the total Hours of Employment so credited
shall not exceed 501 and the individual timely
provides the Plan Administrator with such
information as it may require. Hours of
Employment credited for a maternity or paternity
absence shall be credited entirely (i) in the Plan
Year in which the absence began if such Hours of
Employment are necessary to prevent a Break in
Service in such year, or (ii) in the following Plan
Year. For purposes of this Paragraph, maternity or
paternity absence shall mean an absence from work
by reason of the individual's pregnancy, the birth
of the individual's child or the placement of a
child with the individual in connection with the
adoption of the child by such individual, or for
purposes of caring for a child for the period
immediately following such birth or placement.
(F) "CODE" means the Internal Revenue Code of 1986, as
now in effect or as hereafter amended. All
citations to sections of the Code are to such
sections as they may from time to time be amended
or renumbered.
(G) "COMMENCEMENT DATE" means the date on which an
Employer begins to participate in the Plan.
(H) "CONTRIBUTION DETERMINATION PERIOD" means the Plan
Year, fiscal year, or calendar or fiscal quarter,
as elected by an Employer, upon which eligibility
for and the maximum permissible amount of any
Profit Sharing contribution, as defined in Article
III, is determined. Notwithstanding the foregoing,
for purposes of Article VI, Contribution
Determination Period means the Plan Year.
(I) "DISABILITY" means a Member's disability as defined
in Article VII, Section 7.4.
(J) "DOL" means the United States Department of Labor.
(K) "EMPLOYEE" means any person in the Employment of,
and who receives compensation from, the Employer,
and any leased employee within the meaning of
Section 414(n)(2) of the Code. Notwithstanding
the foregoing, if such leased employees constitute
less than twenty percent (20%) of the Employer's
nonhighly compensated work force within the meaning
of Section 414(n)(5)(C)(ii) of the Code, such
leased employees are not Employees if they are
covered by a plan meeting the requirements of
Section 414(n)(5)(B) of the Code.
(L) "EMPLOYER" means the proprietorship, partnership or
corporation named in the Adoption Agreement and any
corporation which, together therewith, constitutes
an affiliated service group, any corporation which,
together therewith, constitutes a controlled group
of corporations as defined in Section 1563 of the
Code, and any other trade or business
2<PAGE>
<PAGE>
(whether incorporated or not) which, together
therewith, are under common control as defined in
Section 414(c) of the Code, which have adopted the
Plan.
(M) "EMPLOYMENT" means service with an Employer or with
any domestic subsidiary affiliated or associated
with an Employer which is a member of the same
controlled group of corporations (within the
meaning of Section 1563(a) of the Code). In
accordance with DOL Regulations (Sections
2530.200-2(b) and (c)), service includes (a)
periods of vacation, (b) periods of layoff, (c)
periods of absence authorized by an Employer for
sickness, temporary disability or personal reasons
and (d) if and to the extent required by the
Military Selective Service Act as amended, or any
other federal law, service in the Armed Forces of
the United States.
(N) "ENROLLMENT DATE" means the date on which an
Employee becomes a Member as provided under Article
II.
(O) "ERISA" means the Employee Retirement Income
Security Act of 1974, as now in effect or as
hereafter amended.
(P) "FIDUCIARY" means any person who (i) exercises any
discretionary authority or control with respect to
the management of the Plan or control with respect
to the management or disposition of the assets
thereof, (ii) renders any investment advice for a
fee or other compensation, direct or indirect, with
respect to any moneys or other property of the
Plan, or has any discretionary authority or
responsibility to do so, or (iii) has any
discretionary authority or responsibility
in the administration of the Plan, including any
other persons (other than trustees) designated by
any Named Fiduciary to carry out fiduciary
responsibilities, except to the extent otherwise
provided by ERISA.
(Q) "HIGHLY COMPENSATED EMPLOYEE" or "Highly
Compensated Member" means an Employee or Member
who is employed during the determination year and
who during the look-back year: (i) received
compensation from the Employer in excess of $75,000
(as adjusted pursuant to Section 415(d) of the
Code); (ii) received compensation from the
Employer in excess of $50,000 (as adjusted pursuant
to Section 415(d) of the Code) and was a member of
the top-paid group for such year as defined in
Section 414(q) of the Code; or (iii) was an officer
of the Employer and received compensation during
such year that is greater than 50 percent of the
dollar limitation in effect under Section
415(b)(1)(A) of the Code. The term Highly
Compensated Employee also includes: (i) employees
who are both described in the preceding sentence if
the term "determination year" is substituted for
the term "look-back year" and are among the 100
employees who received the most compensation from
the Employer during the determination year; and
(ii) employees who
3<PAGE>
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are 5 percent owners at any time during the
look-back year or determination year.
If no officer has satisfied the compensation
requirement of (iii) above during either a
determination year or look-back year, the highest
paid officer for such year shall be treated as a
Highly Compensated Employee.
For this purpose, the determination year shall be
the Plan Year. The look-back year shall be the
twelve-month period immediately preceding the
determination year.
If an Employee is, during a determination year or
look-back year, a family member of either a 5
percent owner who is an active or former Employee
or a Highly Compensated Employee who is one of the
10 most highly compensated Employees ranked on the
basis of compensation paid by the Employer during
such year, then the family member and the 5 percent
owner or top-ten Highly Compensated Employee shall
be aggregated. In such case, the family member and
5 percent owner or top-ten Highly Compensated
Employee shall be treated as a single Employee
receiving compensation and plan contributions or
benefits equal to the sum of such compensation and
contributions or benefits of the family member and
5 percent owner or top-ten Highly Compensated
Employee. For purposes of this Paragraph, family
member includes the spouse, lineal ascendants and
descendants of the Employee or former Employee and
the spouses of such lineal ascendants and
descendants.
The determination of who is a Highly Compensated
Employee, including the determinations of the
number and identity of Employees in the top-paid
group, the top 100 Employees, the number of
Employees treated as officers
and the compensation that is considered, will be
made in accordance with Section 414(q) of the Code
and the IRS Regulations thereunder.
(R) "HOUR OF EMPLOYMENT" means each hour during which
an Employee performs service (or is treated as
performing service as required by law) for the
Employer and, except in the case of military
service, for which he is directly or indirectly
paid, or entitled to payment, by the Employer
(including any back pay irrespective of
mitigation of damages), all as determined in
accordance with applicable DOL Regulations.
(S) "INVESTMENT MANAGER" means any Fiduciary other than
a Trustee or Named Fiduciary who (i) has the power
to manage, acquire or dispose of any asset of the
Plan; (ii) is (a) registered as an investment
advisor under the Investment Advisors Act of 1940;
(b) is a bank, as defined in such Act, or (c) is an
insurance company qualified to perform the services
described in clause (I) hereof under the laws of
more than one state of the United States; and (iii)
has acknowledged in writing that he is a Fiduciary
with respect to the Plan.
4<PAGE>
<PAGE>
(T) "IRS" means the United States Internal Revenue
Service.
(U) "LEAVE OF ABSENCE" means an absence authorized by
an Employee's Employer and approved by the Plan
Administrator, on a uniform basis, in accordance
with Article X.
(V) "MEMBER" means an Employee enrolled in the
membership of the Plan under Article II.
(W) "MONTH" means any calendar month.
(X) "NAMED FIDUCIARY" means the Fiduciary or
Fiduciaries named herein or in the Adoption
Agreement who jointly or severally have the
authority to control and manage the
operation and administration of the Plan.
(Y) "NORMAL RETIREMENT AGE" means the Member's
sixty-fifth (65th) birthday unless otherwise
specified in the Adoption Agreement.
(Z) "PLAN" means the Employees' Savings & Profit
Sharing Plan as evidenced by this document, the
applicable Adoption Agreement and all subsequent
amendments thereto.
(AA) "PLAN ADMINISTRATOR" means the Named Fiduciary or,
as designated by such Named Fiduciary and approved
by the Board in accordance with Article IX, any
officer or Employee of the Employer.
(BB) "PLAN YEAR" means a consecutive 12-month period
ending December 31.
(CC) "REGULATIONS" means the applicable regulations
issued under the Code, ERISA or other applicable
law, by the IRS, the DOL or any other governmental
authority and any proposed or temporary regulations
or rules promulgated by such authorities pending
the issuance of such regulations.
(DD) "SALARY" means regular basic monthly salary or
wages, exclusive of special payments such as
overtime, bonuses, fees, deferred compensation
(other than pre-tax elective deferrals pursuant to
a Member's election under Article III), severance
payments, and contributions by the Employer under
this or any other plan (other than before-tax
contributions made on behalf of a Member under a
Code Section 125 cafeteria plan, unless the
Employer specifically elects to exclude such
contributions). Commissions shall be included at
the Employer's option within such limits, if any,
as may be set by the Employer in the Adoption
Agreement and applied uniformly to all its
commissioned Employees. In addition, Salary may
also include, at the Employer's option, special
payments such as (i) overtime or (ii) overtime
plus bonuses. As an alternative to the foregoing
definition, at the Employer's
5<PAGE>
<PAGE>
option, Salary may be defined to include total
taxable compensation reported on the Member's IRS
Form W-2, plus deferrals, if any, pursuant to
Section 401(k) of the Code and pursuant to Section
125 of the Code (unless the Employer specifically
elects to exclude such Section 125 deferrals), but
excluding compensation deferred from previous
years. In no event may a Member's Salary for any
Plan Year exceed for purposes of the Plan $150,000
(adjusted for cost of living to the extent
permitted by the Code and the IRS Regulations).
(EE) "SOCIAL SECURITY TAXABLE WAGE BASE" means the
contribution and benefit base attributable to the
OASDI portion of Social Security employment taxes
under Section 230 of the Social Security Act (42
U.S.C. Section 430) in effect on the first day of
each Plan Year.
(FF) "SPOUSE" or "SURVIVING SPOUSE" means the individual
to whom a Member or former Member was married on
the date such Member withdraws his Account, or if
such Member has not withdrawn his Account, the
individual to whom the Member or former Member was
married on the date of his death.
(GG) "THIRD PARTY ADMINISTRATOR" or "TPA" means Pentegra
Services, Inc., a non-fiduciary provider of
administrative services appointed and directed by
the Plan Administrator or the Named Fiduciary
either jointly or severally.
(HH) "TRUST" means the Trust or Trusts established and
maintained pursuant to the terms and provisions of
this document and any separately maintained Trust
Agreement or Agreements.
(II) "TRUSTEE" generally means the person, persons or
other entities designated by the Employer or its
Board as the Trustee or Trustees hereof and
specified as such in the Adoption Agreement and any
separately maintained Trust Agreement or
Agreements.
(JJ) "TRUST AGREEMENT" means the separate document by
which the Employer or its Board has appointed a
Trustee of the Plan, specified the terms and
conditions of such appointment and any fees
associated therewith.
(KK) "TRUST FUND" means the Trust Fund or Funds
established by the Trust Agreement or Agreements.
(LL) "UNIT" means the unit of measure described in
Article V of a Member's proportionate interest in
the available Investment Funds (as defined in
Article IV).
(MM) "VALUATION DATE" means any business day of any
month for the Trustee, except that
6<PAGE>
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in the event the underlying portfolio(s) of any
Investment Fund cannot be valued on such date, the
Valuation Date for such Investment Fund shall be
the next subsequent date on which the underlying
portfolio(s) can be valued. Valuations shall be
made as of the close of business on such Valuation
Date(s).
(NN) "YEAR OF EMPLOYMENT" means a 12-month period of
Employment.
(OO) "YEAR OF SERVICE" means any Plan Year during which
an individual completed at least 1,000 Hours of
Employment, or satisfied any alternative
requirement, as determined by the Plan
Administrator in accordance with any applicable
Regulations issued by the DOL and the IRS.
SECTION 1.3
The masculine pronoun wherever used shall include the feminine
pronoun.
7<PAGE>
<PAGE>
ARTICLE II
PARTICIPATION AND MEMBERSHIP
SECTION 2.1 ELIGIBILITY REQUIREMENTS
------------------------
The Employer may establish as a requirement for eligibility in
the Plan (i) the completion of any number of months not to
exceed 12 consecutive months, or (ii) the completion of one or
two 12-consecutive-month periods, and/or (iii) if the Employer
so elects, it may adopt a minimum age requirement of age 21.
Such election shall be made and reflected on the Adoption
Agreement. The eligibility requirement(s) designated by the
Employer shall apply uniformly to all Plan features elected by
the Employer. Notwithstanding the foregoing, in the case of an
Employer that adopts the 401(k) feature under Section 3.9, the
eligibility requirements under such feature and any other Plan
feature adopted by the Employer shall be identical and shall not
exceed the
period described in clause (i) above, and, at the election of
the Employer, attainment of age 21 as described in clause (iii)
above.
Where an Employer designates a one or two 12-consecutive-month
eligibility waiting period, an Employee must complete at least
1,000 Hours of Employment during each 12-consecutive-month
period (measured from his date of Employment and each
anniversary thereafter). Where an Employer designates an
eligibility waiting period of less than 12 months, an Employee
must, for purposes of eligibility, complete a required number of
hours (measured from his date of Employment and each anniversary
thereafter) which is arrived at by multiplying the number of
months of the eligibility waiting period requirement by 83 1/3.
SECTION 2.2 EXCLUSION OF CERTAIN EMPLOYEES
------------------------------
To the extent provided in the Adoption Agreement, the following
Employees may be excluded from participation in the Plan:
(i) Employees not meeting the age and service
requirements;
(ii) Employees who are included in a unit of Employees
covered by a collective bargaining agreement
between the Employee representatives and one or
more Employers if there is evidence that
retirement benefits were the subject of good
faith bargaining between such Employee
representatives and such Employer(s). For this
purpose, the term "Employee representative" does
not include any organization where more than
one-half of the membership is comprised of
owners, officers and executives of the Employer;
(iii) Employees who are nonresident aliens and who
receive no earned income from the Employer which
constitutes income from sources within the United
States; and
8<PAGE>
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(iv) Employees described in Section 2.4 or included in
any other ineligible job classifications set
forth in the Adoption Agreement.
SECTION 2.3 WAIVER OF ELIGIBILITY REQUIREMENTS
----------------------------------
The Employer, at its election, may waive the eligibility
requirement(s) for participation specified above for (i) all
Employees, or (ii) all those employed on or up to 12 months
after its Commencement Date under the Plan. Subject to the
requirements of the Code, the eligibility waiting period shall
be deemed to have been satisfied for an Employee who was
previously a Member of the Plan.
All Employees whose Employment commences after the expiration
date of the Employer's waiver of the eligibility requirement(s),
if any, shall be enrolled in the Plan in accordance with the
eligibility requirement(s) specified in the Adoption Agreement.
SECTION 2.4 EXCLUSION OF NON-SALARIED EMPLOYEES
-----------------------------------
The Employer, at its election, may exclude non-salaried (hourly
paid) Employees from participation in the Plan, regardless of
the number of Hours of Employment such Employees complete in any
Plan Year. Notwithstanding the foregoing, for purposes of this
Section and all purposes under the Plan, a non-salaried Employee
that is hired following the adoption date of the Plan by the
Employer, but prior to the adoption of this exclusion by the
Employer, shall continue to be deemed to be an Employee and will
continue to receive benefits on the same basis as a salaried
Member, despite classification as a non-salaried Employee.
SECTION 2.5 COMMENCEMENT OF PARTICIPATION
-----------------------------
Every eligible Employee (other than non-salaried or such other
Employees who, at the election of the Employer, are excluded
from participation) shall commence participation in the Plan on
the later of:
(1) The Employer's Commencement Date, or
(2) The first day of the month or calendar quarter (as
designated by the Employer in the Adoption Agreement)
coinciding with or next following his satisfaction of
the eligibility requirements as specified in the
Adoption Agreement.
The date that participation commences shall be hereinafter
referred to as his Enrollment Date. Notwithstanding the above,
no Employee shall under any circumstances become a Member unless
and until his enrollment application is filed with, and accepted
by, the Plan Administrator. The Plan
9<PAGE>
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Administrator shall notify each Employee of his eligibility for
membership in the Plan and shall furnish him with an enrollment
application in order that he may elect to make or receive
contributions on his behalf under Article III at the earliest
possible date consonant with this Article.
If an Employee fails to complete the enrollment form furnished
to him, the Plan Administrator shall do so on his behalf. In
the event the Plan Administrator processes the enrollment form
on behalf of the Employee, the Employee shall be deemed to have
elected not to make any contributions and/or elective deferrals
under the Plan, if applicable.
SECTION 2.6 TERMINATION OF PARTICIPATION
----------------------------
Membership under all features and provisions of the Plan shall
terminate upon the earlier of (a) a Member's termination of
Employment and payment to him of his entire vested interest, or
(b) his death.
10<PAGE>
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ARTICLE III
CONTRIBUTIONS
SECTION 3.1 CONTRIBUTIONS BY MEMBERS
------------------------
If the Adoption Agreement so provides, each Member may elect to
make non-deductible, after-tax contributions under the Plan,
based on increments of 1% of his Salary, provided the amount
thereof, when aggregated with the amount of any pre-tax
effective deferrals, does not exceed the limit established by
the Employer in the Adoption Agreement. All such after-tax
contributions shall be separately accounted for, nonforfeitable
and distributed with and in addition to any other benefit to
which the Member is entitled hereunder. A Member may change his
contribution rate as designated in the Adoption Agreement, but
reduced or suspended contributions may not subsequently be made
up.
SECTION 3.2 ELECTIVE DEFERRALS BY MEMBERS
-----------------------------
If the Adoption Agreement so provides, each Member may elect to
make monthly pre-tax elective deferrals (401(k) deferrals) under
the Plan, based on increments of 1% of his Salary, provided the
amount thereof, when aggregated with the amount of any after-tax
contributions, does not exceed the limit established by the
Employer in the Adoption Agreement. All such 401(k) deferrals
shall be separately accounted for, nonforfeitable and
distributed under the terms and conditions described under
Article VII with and in addition to any other benefit to which
the Member is entitled hereunder. A Member may change his
401(k) deferral rate or suspend his 401(k) deferrals as
designated in the Adoption Agreement, but reduced or suspended
deferrals may not subsequently be made up.
Notwithstanding any other provision of the Plan, no Member may
make 401(k) deferrals during any Plan Year in excess of $7,000
multiplied by the adjustment factor as provided by the Secretary
of the Treasury. The adjustment factor shall mean the cost of
living adjustment factor prescribed by the Secretary of the
Treasury under Section 402(g)(5) of the Code for years beginning
after December 31, 1987, as applied to such items and in such
manner as the Secretary shall provide. In the event that the
aggregate amount of such 401(k) deferrals for a Member exceeds
the limitation in the previous sentence, the amount of such
excess, increased by any income and decreased by any losses
attributable thereto, shall be refunded to such Member no later
than the April 15 of the Plan Year following the Plan Year for
which the 401(k) deferrals were made. If Member also
participates, in any Plan Year, in any other plans subject to
the limitations set forth in Section 402(g) of the Code and has
made excess 401(k) deferrals under this Plan when combined with
the other plans subject to such limits, to the extent the
Member, in writing submitted to the TPA no later than the March
1 of the Plan Year following the Plan Year for which the 401(k)
deferrals were
11<PAGE>
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made, designates any 401(k) deferrals under this Plan as excess
deferrals, the amount of such designated excess, increased by
any income and decreased by any losses attributable thereto,
shall be refunded to the Member no later than the April 15 of
the Plan Year following the Plan Year for which the 401(k)
deferrals were made.
SECTION 3.3 TRANSFER OF FUNDS AND ROLLOVER CONTRIBUTIONS BY
-----------------------------------------------
MEMBERS
-------
Each Member may elect to make, directly or indirectly, a
rollover contribution to the Plan of amounts held on his behalf
in (i) an employee benefit plan qualified under Section 401(a)
of the Code, or (ii) an individual retirement account or annuity
as described in Section 408(d)(3) of the Code. All such amounts
shall be certified in form and substance satisfactory to the
Plan Administrator by the Member as being all or part of an
"eligible rollover distribution" or a "rollover contribution"
within the meaning of Section 402(c)(4) or Section 408(d)(3),
respectively, of the Code. Such rollover amounts, along with
the earnings related thereto, will be accounted for separately
from any other amounts in the Member's Account. A Member shall
have a nonforfeitable vested interest in all such rollover
amounts.
The Employer may, at its option, permit Employees who have not
satisfied the eligibility requirements designated in the
Adoption Agreement to make a rollover contribution to the Plan.
The Trustee of the Plan may also accept a direct transfer of
funds, which meets the requirements of Section 1.411(d)-4 of the
IRS Regulations, from a plan which the Trustee reasonably
believes to be qualified under Section 401(a) of the Code in
which an Employee was, is, or will become, as the case may be, a
participant. If the funds so directly transferred are
transferred from a retirement plan subject to Code Section
401(a)(11), then such funds shall be accounted for separately
and any subsequent distribution of those funds, and earnings
thereon, shall be subject to the provisions of Section 7.3 which
are applicable when an Employer elects to provide an annuity
option under the Plan.
SECTION 3.4 EMPLOYER CONTRIBUTIONS - GENERAL
--------------------------------
The Employer may elect to make regular or discretionary
contributions under the Plan. Such Employer contributions may
be in the form of (i) matching contributions, (ii) basic
contributions, and/or (iii) profit sharing contributions as
designated by the Employer in the Adoption Agreement and/or (i)
supplemental contributions and/or (ii) qualified nonelective
contributions as permitted under the Plan. Each such
contribution type shall be separately accounted for by the TPA.
12<PAGE>
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SECTION 3.5 EMPLOYER MATCHING CONTRIBUTIONS
-------------------------------
The Employer may elect to make regular matching contributions
under the Plan. Such matching contributions on behalf of any
Member shall be conditioned upon the Member making after-tax
contributions under Section 3.1 and/or 401(k) deferrals under
Sections 3.2 and 3.9.
If so adopted, the Employer shall contribute monthly under the
Plan on behalf of each of its Members an amount equal to a
percentage (as specified by the Employer in the Adoption
Agreement) of the Member's after-tax contributions and/or 401(k)
deferrals not in excess of a maximum percentage as specified by
the Employer in the Adoption Agreement (in increments of 1%) of
his Salary. The percentage elected by the Employer shall be
based on 5% increments not to exceed 200% or in accordance with
one of the schedules of matching contribution formulas listed
below, and must be uniformly applicable to all Members.
Years of Employment Matching %
Formula Step 1 Less than 3 50%
At least 3 but less than 5 75%
5 or more 100%
Formula Step 2 Less than 3 100%
At least 3 but less than 5 150%
5 or more 200%
SECTION 3.6 EMPLOYER BASIC CONTRIBUTIONS
----------------------------
The Employer may elect to make regular basic contributions under
the Plan. Such basic contributions on behalf of any Member
shall not be conditioned upon the Member making after-tax
contributions and/or (401(k) deferrals under this Article III.
If so adopted, the Employer shall contribute monthly under the
Plan on behalf of each Member (as specified by the Employer in
the Adoption Agreement) an amount equal to a percentage not to
exceed 15% (as specified by the Employer in the Adoption
Agreement) in increments of 1% of the Member's Salary for such
month. The percentage elected by the Employer shall be
uniformly applicable to all Members. The Employer may elect to
restrict the allocation of such basic contribution to those
Members who were employed with the Employer on the last day of
the month for which the basic contribution is made.
SECTION 3.7 SUPPLEMENTAL CONTRIBUTIONS BY EMPLOYER
--------------------------------------
An Employer may, at its option, make a supplemental contribution
under Formula (1) or (2) below:
Formula (1) A uniform percentage (as specified by the Employer)
of each Member's contributions
13<PAGE>
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which were received by the Plan during the Plan
Year with respect to which the supplemental
contribution relates. If the Employer elects to
make such a supplemental contribution, it shall be
made on or before the last day of February in the
Plan Year following the Plan Year described
in the preceding sentence on behalf of all those
Members who were employed with the Employer on the
last working day of the Plan Year with respect to
which the supplemental contribution relates.
Formula (2) A uniform dollar amount per Member or a uniform
percentage of each Member's Salary for the Plan
Year (or, at the election of the Employer, the
Employer's fiscal year) to which the supplemental
contribution relates. If the Employer elects to
make such a supplemental contribution, it shall be
made on or before the last day of the second month
in the Plan Year (or the fiscal year) following the
Plan Year (or the fiscal year) described in the
preceding sentence on behalf of all those Members
who were employed with the Employer on the last
working day of the Plan Year (or the fiscal year)
to which the supplemental contribution relates.
The percentage contributed under this Formula (2)
shall be limited in accordance with the Employer's
matching formula and basic contribution rate, if
any, under this Article such that the sum of the
Employer's Formula (2) supplemental contribution
plus all other Employer contributions under this
Article shall not exceed 15% of Salary for such
year.
SECTION 3.8 THE PROFIT SHARING FEATURE
--------------------------
An Employer may, at its option, adopt the Profit Sharing Feature
as described herein, subject to any other provisions of the
Plan, where applicable. This Feature may be adopted either in
lieu of, or in addition to, any other Plan Feature contained in
this Article III. The Profit Sharing Feature is designed to
provide the Employer a means by which to provide discretionary
contributions on behalf of Employees eligible under the Plan.
If this Profit Sharing Feature is adopted, the Employer may
contribute on behalf of each of its eligible Members, on an
annual (or at the election of the Employer, quarterly) basis for
any Plan Year or fiscal year of the Employer (as the Employer
shall elect), a discretionary amount not to exceed the maximum
amount allowable as a deduction to the Employer under the
provisions of Section 404 of the Code, and further subject to
the provisions of Article X.
14<PAGE>
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Any such profit sharing contribution must be received by the
Trustee on or before the last business day of the second month
following the close of the Contribution Determination Period on
behalf of all those Members who are entitled to an allocation of
such profit sharing contribution as set forth in the Adoption
Agreement. For purposes of making the allocations described in
this paragraph, a Member who is on a Type 1 non-military Leave
of Absence (as defined in Sections 1.2(U) and 10.8(B)(1)) or a
Type 4 military Leave of Absence (as defined in Sections 1.2(U)
and 10.8(B)(4)) shall be treated as if he were a Member who was
an Employee in Employment on the last day of such Contribution
Determination Period.
Profit sharing contributions shall be allocated to each Member's
Account for the Contribution Determination Period at the
election of the Employer, in accordance with one of the
following options:
Profit Sharing Formula 1 - In the same ratio as each Member's
Salary during such Contribution
Determination Period bears to the
total of such Salary of all
Members.
Profit Sharing Formula 2 - In the same ratio as each Member's
Salary for the portion of the
Contribution Determination Period
during which the Member satisfied
the Employer's eligibility
requirement(s) bears to the total
of such Salary of all Members.
The Employer may integrate the Profit Sharing Feature with
Social Security in accordance with the following provision. The
annual (or quarterly, if applicable) profit sharing
contributions for any Contribution Determination Period (which
period shall include, for the purposes of the following maximum
integration levels provided hereunder where the Employer has
elected quarterly allocations of contributions, the four
quarters of a Plan Year or fiscal year) shall be allocated to
each Member's Account at the election of the Employer, in
accordance with one of the following options:
Profit Sharing Formula 3 - In a uniform percentage (as
specified by the Employer in the
Adoption Agreement) of each
Member's Salary during the
Contribution Determination Period
up to the Social Security Taxable
Wage Base for such Contribution
Determination Period (the "Base
Contribution Percentage"), plus a
uniform percentage (as specified
by the Employer in the Adoption
Agreement) of each Member's Salary
for the Contribution Determination
Period in excess of the Social
Security Taxable Wage Base for
such Contribution Determination
Period (the "Excess Contribution
Percentage").
Profit Sharing Formula 4 - In a uniform percentage (as
specified by the Employer in the
Adoption
15<PAGE>
<PAGE>
Agreement) of each Member's Salary
for the portion of the Contribution
Determination Period during which
the Member satisfied the Employer's
eligibility requirement(s), if
any, up to the Base Contribution
Percentage for such Contribution
Determination Period, plus a
uniform percentage (as specified
by the Employer in the Adoption
Agreement) of each Member's Salary
for the portion of the
Contribution Determination Period
during which the Member satisfied
the Employer's eligibility
requirement(s), equal to the
Excess Contribution Percentage.
The Excess Contribution Percentage described in Profit Sharing
Formulas 3 and 4 above may not exceed the lesser of (i) the Base
Contribution Percentage, or (ii) the greater of (1) 5.7% or (2)
the percentage equal to the portion of the Code Section 3111(a)
tax imposed on employers under the Federal Insurance
Contributions Act (as in effect as of the beginning of the Plan
Year) which is attributable to old-age insurance. For purposes
of this Subparagraph, "compensation" as defined in Section
414(s) of the Code shall be substituted for "Salary" in
determining the Excess Contribution Percentage and the Base
Contribution Percentage.
Notwithstanding the foregoing, the Employer may not adopt the
Social Security integration options provided above if any other
integrated defined contribution or defined benefit plan is
maintained by the Employer during any Contribution Determination
Period.
SECTION 3.9 THE 401(K) FEATURE
------------------
The Employer may, at its option, adopt the 401(k) Feature
described hereunder and in Section 3.2 above for the exclusive
purpose of permitting its Members to make 401(k) deferrals to
the Plan. The Employer may make, apart from any matching
contributions it may elect to make, Employer qualified
nonelective contributions as defined in Section
1.401(k)-1(g)(13) of the Regulations. The amount of such
contributions shall not exceed 15% of the Salary of all Members
eligible to share in the allocation when combined with all
Employer contributions (including 401(k) elective deferrals) to
the Plan for such Plan Year. Allocation of such contributions
shall be made, at the election of the Employer, to the accounts
of (i) all Members, or (ii) only Members who are not Highly
Compensated Employees. Allocation of such contributions shall
be made, at the election of the Employer, in the ratio (i) which
each eligible Member's Salary for the Plan Year bears to the
total Salary of all eligible Members for such Plan Year, or (ii)
which each eligible Member's Salary not in excess of a fixed
dollar amount specified by the Employer for the Plan Year bears
to the total Salary of all eligible Members taking into account
Salary for each such Member not in excess of the specified
dollar amount. Notwithstanding any provision of the Plan to the
contrary, such contributions shall be subject to the same
vesting requirements and distribution restrictions as
16<PAGE>
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Members' 401(k) deferrals and shall not be conditioned on any
election or contribution of the Member under the 401(k) feature.
Any such contributions must be made on or before the last day of
February after the Plan Year to which the contribution relates.
Further, for purposes of the actual deferral percentage or
actual contribution percentage tests described
below, the Employer may apply (in accordance with applicable
Regulations) all or any portion of the Employer qualified
nonelective contributions for the Plan Year toward the
satisfaction of the actual deferral percentage test. Any
remaining Employer qualified nonelective contributions not
utilized to satisfy the actual deferral percentage test may be
applied (in accordance with applicable Regulations) to satisfy
the actual contribution percentage test.
Notwithstanding any other provision of this 401(k) Feature, the
actual deferral percentages for the Plan Year for Highly
Compensated Employees shall not exceed the greater of the
following actual deferral percentages: (a) the actual deferral
percentage for such Plan Year of those Employees who are not
Highly Compensated Employees multiplied by 1.25; or (b) the
actual deferral percentage for the Plan Year of those Employees
who are not Highly Compensated Employees multiplied by 2.0,
provided that the actual deferral percentage for the Highly
Compensated Employees does not exceed the actual deferral
percentage for such other Employees by more than 2 percentage
points. This determination shall be made in accordance with the
procedure described in Section 3.10 below.
SECTION 3.10 DETERMINING THE ACTUAL DEFERRAL PERCENTAGES
-------------------------------------------
For purposes of this 401(k) Feature, the "actual deferral
percentage" for a Plan Year means, for each specified group of
Employees, the average of the ratios (calculated separately for
each Employee in such group) of (a) the amount of 401(k)
deferrals (including, as provided in Section 3.9, any Employer
qualified nonelective contributions) made to the Member's
account for the Plan Year, to (b) the amount of the Member's
compensation (as defined in Section 414(s) of the Code) for the
Plan Year or, alternatively, where specifically elected by the
Employer, for only that part of the Plan Year during which the
Member was eligible to participate in the Plan. An Employee's
actual deferral percentage shall be zero if no 401(k) deferral
(or, as provided in Section 3.9, Em-ployer qualified nonelective
contribution) is made on his behalf for such Plan Year. If the
Plan and one or more other plans which include cash or deferred
arrangements are considered as one plan for purposes of Sections
401(a)(4) and 410(b) of the Code, the cash or deferred
arrangements included in such plans shall be treated as one
arrangement for purposes of this 401(k) Feature.
17<PAGE>
<PAGE>
For purposes of determining the actual deferral percentage of a
Member who is a Highly Compensated Employee subject to the
family aggregation rules of Section 414(q)(6) of the Code
because such Employee is either a five-percent owner or one of
the ten most Highly Compensated Employees as described in
Section 414(q)(6) of the Code, the 401(k) deferrals,
contributions and compensation (as defined in Section 414(s) of
the Code) of such Member shall include 401(k) deferrals,
contributions and compensation (as defined in Section 414(s) of
the Code) of "family members", within the meaning of Section
414(q)(6) of the Code, and such "family members" shall not be
considered as separate Employees in determining actual deferral
percentages.
The TPA shall determine as of the end of the Plan Year whether
one of the actual deferral percentage tests specified in Section
3.9 above is satisfied for such Plan Year. This determination
shall be made after first determining the treatment of excess
deferrals within the meaning of Section 402(g) of the Code under
Section 3.2 above. In the event that neither of such actual
deferral percentage tests is satisfied, the TPA shall, to the
extent permissible under the Code and the IRS Regulations,
refund the excess contributions for the Plan Year in the
following order of priority: by (i) refunding such amounts
deferred by the Member which were not matched by his Employer
(and any earnings and losses allocable thereto), and (ii)
refunding amounts deferred for such Plan Year by the Member (and
any earnings and losses allocable thereto), and, solely to the
extent permitted under the Code and applicable IRS Regulations,
distributing to the Member amounts contributed for such Plan
Year by the Employer with respect to the Member's 401(k)
deferrals that are returned pursuant to this Paragraph (and any
earnings and losses allocable thereto).
The distribution of such excess contributions shall be made to
Highly Compensated Members to the extent practicable before the
15th day of the third month immediately following the Plan Year
for which such excess contributions were made, but in no event
later than the end of the Plan Year following such Plan Year or,
in the case of the termination of the Plan in accordance with
Article XI, no later than the end of the twelve-month period
immediately following the date of such termination.
For purposes of this 401(k) Feature, "excess contributions"
means, with respect to any Plan Year, the excess of the
aggregate amount of 401(k) deferrals (and any earnings and
losses allocable thereto) made to the accounts of Highly
Compensated Members for such Plan Year, over the maximum amount
of such deferrals that could be made by such Members without
violating the requirements described above, determined by
reducing 401(k) deferrals made by or on behalf of Highly
Compensated Members in order of the actual deferral percentages
beginning with the highest of such percentages.
18<PAGE>
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SECTION 3.11 DETERMINING THE ACTUAL CONTRIBUTION PERCENTAGES
-----------------------------------------------
Notwithstanding any other provision of this Section 3.11, the
actual contribution percentage for the Plan Year for Highly
Compensated Employees shall not exceed the greater of the
following actual contribution percentages: (a) the actual
contribution percentage for such Plan Year of those Employees
who are not Highly Compensated Employees multiplied by 1.25, or
(b) the actual contribution percentage for the Plan Year of
those Employees who are not Highly Compensated Employees
multiplied by 2.0, provided that the actual contribution
percentage for the Highly Compensated Employees does not exceed
the actual contribution percentage for such other Employees by
more than 2 percentage points. For purposes of this Article
III, the "actual contribution percentage" for a Plan Year means,
for each specified group of Employees, the average of the ratios
(calculated separately for each Employee in such group) of (A)
the sum of (i) Member after-tax contributions credited to his
Account for the Plan Year, (ii) Employer matching contributions
and/or supplemental contributions under Formula 1 credited to
his Account as described in this Article for the Plan Year, and
(iii) in accordance with and to the extent permitted by the IRS
Regulations, 401(k) deferrals (and, as provided in Section 3.9,
any Employer qualified nonelective contributions) credited to
his Account, to (B) the amount of the Member's compensation (as
defined in Section 414(s) of the Code) for the Plan Year or,
alternatively, where specifically elected by the Employer, for
only that part of the Plan Year during which the Member was
eligible to participate in the Plan. An Employee's actual
contribution percentage shall be zero if no such contributions
are made on his behalf for such Plan Year.
The actual contribution percentage taken into account for any
Highly Compensated Employee who is eligible to make Member
contributions or receive Employer matching contributions under
two or more plans described in Section 401(a) of the Code or
arrangements described in Section 401(k) of the Code that are
maintained by the Employer shall be determined as if all such
contributions were made under a single plan. For purposes of
determining the actual contribution percentage of a Member who
is a Highly Compensated Employee subject to the family
aggregation rules of Section 414(q)(6) of the Code because such
Member is either a five-percent owner or one of the ten most
Highly Compensated Employees as described in Section 414(q)(6)
of the Code, the Employer matching contributions and Member
contributions and compensation (as defined in Section 414(s) of
the Code) of such Member shall include the Employer matching and
Member contributions and compensation (as defined in Section
414(s) of the Code) of "family members," within the meaning of
Section 414(q)(6) of the Code, and such "family members" shall
not be considered as separate Employees in determining actual
contribution percentages.
The TPA shall determine as of the end of the Plan Year whether
one of the actual contribution percentage tests specified above
is satisfied for such Plan Year. This determination shall be
made after first determining the treatment of excess deferrals
within the meaning of Section 402(g) of
19<PAGE>
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the Code under Section 3.2 above and then determining the
treatment of excess contributions under Section 3.10 above. In
the event that neither of the actual contribution percentage
tests is satisfied, the TPA shall refund the excess aggregate
contributions in the manner described below.
For purposes of this Article III, "excess aggregate
contributions" means, with respect to any Plan Year and with
respect to any Member, the excess of the aggregate amount of
contributions (and any earnings and losses allocable thereto)
made as (i) Member after-tax contributions credited to his
Account for the Plan Year, (ii) Employer matching contributions
and/or supplemental contributions under Formula 1 credited to
his Account as described in this Article for the Plan Year, and
(iii) in accordance with and to the extent permitted by the IRS
Regulations, 401(k) deferrals (and, as provided in Section 3.9,
any Employer qualified nonelective contributions) credited to
his Account (if the Plan Administrator elects to take into
account such deferrals and contributions when calculating the
actual contribution percentage) of Highly Compensated Members
for such Plan Year, over the maximum amount of such
contributions that could be made as Employer contributions,
Member contributions and 401(k) deferrals of such Members
without violating the requirements of any Subparagraph of this
Section 3.11.
If the TPA is required to refund excess aggregate contributions
for any Highly Compensated Member for a Plan Year in order to
satisfy the requirements of any Subparagraph above, then the
refund of such excess aggregate contributions shall be made with
respect to such Highly Compensated Members to the extent
practicable before the 15th day of the third month immediately
following the Plan Year for which such excess aggregate
contributions were made, but in no event later than the end of
the Plan Year following such Plan Year or, in the case of the
termination of the Plan in accordance with Article XI, no later
than the end of the twelve-month period immediately following
the date of such termination.
For each such Member, the amounts so refunded shall be made in
the following order of priority: (i) to the extent that the
amounts contributed by the Member on an after-tax basis for such
Plan Year exceed the highest rate of such contributions with
respect to which amounts were contributed by the Employer, by
refunding such amounts contributed by the Member which were not
matched by his Employer (and any earnings and losses allocable
thereto) and (ii) by refunding amounts contributed for such Plan
Year by the Member which were matched by his Employer (and any
earnings and losses allocable thereto) and, solely to the extent
permitted under the Code and applicable IRS Regulations,
distributing to the Member amounts contributed for such Plan
Year by the Employer with respect to the amounts so returned
(and any earnings and losses allocable thereto). All such
distributions shall be made to, or shall be with respect to,
Highly Compensated Members on the basis of the respective
portions of such amounts attributable to each such Highly
Compensated Member.
20<PAGE>
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SECTION 3.12 THE AGGREGATE LIMIT TEST
------------------------
Notwithstanding any other provision of the Plan, the sum of the
actual deferral percentage and the actual contribution
percentage determined in accordance with the procedures
described above of those Employees who are Highly Compensated
Employees may not exceed the aggregate limit as determined
below.
For purposes of this Article III, the "aggregate limit" for a
Plan Year is the greater of:
(1) The sum of:
(a) 1.25 times the greater of the relevant actual
deferral percentage or the relevant actual
contribution percentage, and
(b) Two percentage points plus the lesser of the
relevant actual deferral percentage or the relevant
actual contribution percentage. In no event,
however, shall this amount exceed twice the lesser
of the relevant actual deferral percentage or the
relevant actual contribution percentage; or
(2) The sum of:
(a) 1.25 times the lesser of the relevant actual
deferral percentage or the relevant actual
contribution percentage, and
(b) Two percentage points plus the greater of the
relevant actual deferral percentage or the relevant
actual contribution percentage. In no event,
however, shall this amount exceed twice the greater
of the relevant actual deferral percentage or the
relevant actual contribution percentage; provided,
however, that if a less restrictive limitation is
prescribed by the IRS, such limitation shall be used
in lieu of the foregoing. The relevant actual
deferral percentage and relevant actual contribution
percentage are defined in accordance with the Code
and the IRS Regulations.
The TPA shall determine as of the end of the Plan Year whether
the aggregate limit has been exceeded. This determination shall
be made after first determining the treatment of excess defer-
rals within the meaning of Section 402(g) of the Code under
Section 3.2 above, then determining the treatment of excess
contributions under Section 3.10 above, and then determining the
treatment of excess aggregate contributions under this Article
III. In the event that the aggregate limit is exceeded, the
actual contribution percentage of those Employees who are Highly
Compensated Employees shall be reduced in the same manner as
described in Section 3.11 of this Article until the aggregate
limit is no longer exceeded, unless the TPA designates, in lieu
of the reduction of the actual contribution percentage a
reduction in the actual deferral percentage of those Employees
who
21<PAGE>
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are Highly Compensated Employees, which reduction shall
occur in the same manner as described in Section 3.10 of this
Article until the aggregate limit is no longer exceeded.
Notwithstanding the provisions of Sections 3.2 and 3.10 above,
the amount of excess contributions to be distributed, with
respect to a Member for a Plan Year, shall be reduced by any
excess deferrals distributed to such Member for such Plan Year.
SECTION 3.13 REMITTANCE OF CONTRIBUTIONS
---------------------------
The contributions of both the Employer and the Plan Members
shall be recorded by the Employer and remitted to the TPA for
transmittal to the Trustee or custodian or directly to the
Trustee or custodian so that the Trustee or custodian shall be
in receipt thereof by the 15th day of the month next following
the month in respect of which such contributions are payable.
Such amounts shall be used to provide additional Units pursuant
to Article V. Any contributions received by the Trustee or
custodian on the first working of a month shall be deemed to
have been received on the last working day of the immediately
preceding month. Working day shall be defined as any day
regular mail is delivered by the United States Postal Service.
22<PAGE>
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ARTICLE IV
INVESTMENT OF CONTRIBUTIONS
SECTION 4.1 INVESTMENT BY TRUSTEE OR CUSTODIAN
----------------------------------
All contributions to the Plan shall, upon receipt by the TPA, be
delivered to the Trustee or custodian to be held in the Trust
Fund and invested and distributed by the Trustee or custodian in
accordance with the provisions of the Plan and Trust Agreement.
The Trust Fund shall consist of one or more of the Investment
Funds designated by the Employer in the Adoption Agreement.
With the exception of the Employer Stock Fund, the Trustee may
in its discretion invest any amounts held by it in any
Investment Fund in any commingled or group trust fund described
in Section 401(a) of the Code and exempt under Section 501(a) of
the Code or in any common trust fund exempt under Section 584 of
the Code, provided that such trust fund satisfies any
requirements of the Plan applicable to such Investment Funds. To
the extent that the Investment Funds are at any time invested in
any commingled, group or common trust fund, the declaration of
trust or other instrument pertaining to such fund and any
amendments thereto are hereby adopted as part of the Plan.
The Employer will designate in the Adoption Agreement which of
the Investment Funds described therein will be made available to
Members and the terms and conditions under which such Funds will
operate with respect to employee direction of allocations to and
among such designated Funds and the types of contributions
and/or deferrals eligible for investment therein.
SECTION 4.2 MEMBER DIRECTED INVESTMENTS
---------------------------
To the extent permitted by the Employer as set forth in the
Adoption Agreement, each Member shall direct in writing that his
contributions and deferrals, if any, and the contributions made
by the Employer on his behalf shall be invested (a) entirely in
any one of the Investment Funds made available by the Employer,
or (b) among the available Investment Funds in any combination
of multiples of 1%. If a Member has made any Rollover
contributions in accordance with Article III, Section 3.3, such
Member may elect to apply separate investment directions to such
rollover amounts. Any such investment direction shall be
followed by the TPA until changed. Subject to the provisions of
the following paragraphs of this Section, as designated in the
Adoption Agreement, a Member may change his investment direction
as to future contributions and also as to the value of his
accumulated Units in each of the available Investment Funds by
filing written notice with the TPA. Such directed change(s)
will become effective upon the Valuation Date coinciding with or
next following the date which his notice was received by the TPA
or as soon as administratively practicable thereafter. If the
Adoption Agreement provides for Member directed
23<PAGE>
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investments, and if a Member does not make a written designation
of an Investment Fund or Funds, the Employer or its designee
shall direct the Trustee to invest all amounts held or received
on account of the such Member in the Investment Fund which in
the opinion of the Employer best protects principal.
Except as otherwise provided below, a Member may not direct a
transfer from the Stable Value Fund to the Government Money
Market Fund. A Member may direct a transfer from the 500 Stock
Index Fund, the Midcap 400 Stock Index Fund, and/or the Employer
Stock Fund to the Government Money Market Fund provided that
amounts previously transferred from the Stable Value Fund to the
500 Stock Index Fund, the Midcap 400 Stock Index Fund or the
Employer Stock Fund remain in such Funds for a period of three
months prior to being transferred to the Government Money Market
Fund.
SECTION 4.3 EMPLOYER SECURITIES
-------------------
If the Employer so elects in the Adoption Agreement, the
Employer and/or Members may direct that contributions will be
invested in Qualifying Employer Securities (within the meaning
of Section 407(d)(5) of ERISA) through the Employer Stock Fund.
24<PAGE>
<PAGE>
ARTICLE V
MEMBERS' ACCOUNTS, UNITS AND VALUATION
The TPA shall establish and maintain an Account for each Member
showing his interests in the available Investment Funds, as
designated by the Employer in the Adoption Agreement. The
interest in each Investment Fund shall be represented by Units.
As of each Valuation Date, the value of a Unit in each
Investment Fund shall be determined by dividing (a) the sum of
the net assets at market value determined by the Trustee by (b)
the total number of outstanding Units.
The number of additional Units to be credited to a Member's
interest in each available Investment Fund, as of any Valuation
Date, shall be determined by dividing (a) that portion of the
aggregate contributions and/or deferrals by and on behalf of the
Member which was directed to be invested in such Investment Fund
and received by the Trustee by the Trustee during the month in
which such Valuation Date occurs by (b) the Unit value of such
Investment Fund as of the next Valuation Date. For purposes of
the preceding sentence, in valuing a Member's Account,
contributions and/or deferrals of both Members and the Employer
which have been reported and received by the TPA on the first
working day of a month shall be deemed to have been received on
the last working day of the immediately preceding month.
Working day shall be defined as any day regular mail is
delivered by the United States Postal Service.
The value of a Member's Account may be determined as of any
Valuation Date by multiplying the number of Units to his credit
in each available Investment Fund by that Investment Fund's Unit
Value on such date and aggregating the results.
25<PAGE>
<PAGE>
ARTICLE VI
VESTING OF UNITS
SECTION 6.1 VESTING OF MEMBER CONTRIBUTIONS AND/OR DEFERRALS
------------------------------------------------
All Units credited to a Member's Account based on after-tax
contributions and/or 401(k) deferrals made by the Member and any
earnings related thereto (including any rollover contributions
allocated to a Member's Account under the Plan and any earnings
thereon) and, as provided in Section 3.9, Employer qualified
nonelective contributions made on behalf of such Member shall be
immediately and fully vested in him at all times.
SECTION 6.2 VESTING OF EMPLOYER CONTRIBUTIONS
---------------------------------
The Employer may, at its option, elect one of the available
vesting schedules described herein for each of the employer
contribution types applicable to the Plan as designated in the
Adoption Agreement.
SCHEDULE 1: All applicable Units shall immediately and fully
vest. If the eligibility requirement(s) selected
by the Employer under Article II require(s) that an
Employee complete a period of Employment which is
longer than 12 consecutive months, this vesting
Schedule 1 shall be automatically applicable.
SCHEDULE 2: All applicable Units shall become nonforfeitable
and fully vested in accordance with the schedule
set forth below:
Completed Vested
Years of Employment Percentage
------------------- ----------
Less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 but less than 6 80%
6 or more 100%
SCHEDULE 3: All applicable Units shall become nonforfeitable
and fully vested in accordance with the schedule
set forth below:
26<PAGE>
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Completed Vested
Years of Employment Percentage
------------------- ----------
Less than 5 0%
5 or more 100%
SCHEDULE 4: All applicable Units shall become nonforfeitable
and fully vested in accordance with the schedule
set forth below:
Completed Vested
Years of Employment Percentage
------------------- ----------
Less than 3 0%
3 or more 100%
SCHEDULE 5: All applicable Units shall become nonforfeitable
and fully vested in accordance with the schedule
set forth below:
Completed Vested
Years of Employment Percentage
------------------- ----------
Less than 1 0%
1 but less than 2 25%
2 but less than 3 50%
3 but less than 4 75%
4 or more 100%
SCHEDULE 6: All applicable Units shall become nonforfeitable
and fully vested in accordance with the schedule
set forth below:
Completed Vested
Years of Employment Percentage
------------------- ----------
Less than 3 0%
3 but less than 4 20%
4 but less than 5 40%
5 but less than 6 60%
6 but less than 7 80%
7 or more 100%
SCHEDULE 7: All applicable Units shall become nonforfeitable
and fully vested in accordance with the schedule
set forth in the Adoption Agreement created by the
Employer in accordance with applicable law.
27<PAGE>
<PAGE>
Notwithstanding the vesting schedules above, a Member's interest
in his Account shall become 100% vested in the event that
(i) the Member dies while in active Employment and the TPA has
received notification of death, (ii) the Member has been
approved for Disability, pursuant to the provisions of Article
VII, and the TPA has received notification of Disability, or
(iii) the Member has attained Normal Retirement Age.
Except as otherwise provided hereunder, in the event that the
Employer adopts the Plan as a successor plan to another defined
contribution plan qualified under Sections 401(a) and 501(a) of
the Code, or in the event that the Employer changes or amends a
vesting schedule adopted under this Article, any Member who was
covered under such predecessor plan or, in the case of a change
or amendment to the vesting schedule, any Member who has
completed at least 3 Years of Employment with the Employer may
elect to have the nonforfeitable percentage of the portion of
his Account which is subject to such vesting schedule computed
under such predecessor plan's vesting provisions, or computed
without regard to such change or amendment (a "Vesting
Election"). Any Vesting Election made under this Subparagraph
shall be made by notifying the TPA in writing within the
election period hereinafter described. The election period
shall begin on the date such amendment is adopted or the date
such change is effective, or the date the Plan which serves as a
successor plan is adopted or effective, as the case may be, and
shall end no earlier than the latest of the following dates:
(i) the date which is 60 days after the day such amendment is
adopted; (ii) the date which is 60 days after the day such
amendment or change becomes effective; (iii) the date which is
60 days after the day the Member is given written notice of such
amendment or change by the TPA; (iv) the date which is 60 days
after the day the Plan is adopted by the Employer or becomes
effective; or (v) the date which is 60 days after the day the
Member is given written notice that the Plan has been designated
as a successor plan. Any election made pursuant to this
Subparagraph shall be irrevocable.
To the extent permitted under the Code and Regulations, the
Employer may, at its option, elect to treat all Members who are
eligible to make a Vesting Election as having made such Vesting
Election. Furthermore, subject to the requirements of the
applicable Regulations, the Employer may elect to treat all
Members, who were employed by the Employer on or before the
effective date of the change or amendment, as subject to the
prior vesting schedule, provided such prior schedule is more
favorable.
SECTION 6.3 FORFEITURES
-----------
If a Member who was partially vested in his Account on the date
of his termination of Employment returns to Employment, his
Years of Employment prior to the Break(s) in Service shall be
included in determining future vesting and, if he returns before
incurring 5 consecutive one year Breaks in Service, any Units
forfeited from his Account shall be restored to his Account,
including all interest
28<PAGE>
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accrued during the intervening period; provided, however, that
if such a Member has received a distribution pursuant to Article
VII, his Account Units shall not be restored unless he repays
the full amount distributed to him to the Plan before the
earlier of (i) 5 years after the first date on which the Member
is subsequently reemployed by the Employer, or (ii) the close of
the first period of 5 consecutive one-year Breaks in Service
commencing after the withdrawal. The Units restored to the
Member's Account will be valued on the Valuation Date coinciding
with or next following the later of (i) the date the Employee is
rehired, or (ii) the date a new enrollment application is
received by the TPA. If a Member terminates Employment without
any vested interest in his Account, he shall (i) immediately be
deemed to have received a total distribution of his Account and
(ii) thereupon forfeit his entire Account; provided that if such
Member returns to Employment before the number of consecutive
one-year Breaks in Service equals or exceeds the greater of (i)
5, or (ii) the aggregate number of the Member's Years of Service
prior to such Break in Service, his Account shall be restored in
the same manner as if such Member had been partially vested at
the time of his termination of Employment, and his Years of
Employment prior to incurring the first Break in Service shall
be included in any subsequent determination of his vesting
service.
Forfeited amounts, as defined in the preceding paragraph, shall
be made available to the Employer, through transfer from the
Member's Account to the Employer Credit Account, upon: (1) if
the Member had a vested interest in his Account at his
termination of Employment, the earlier of (i) the date as of
which the Member receives a distribution of his entire vested
interest in his Account or (ii) the date upon which the Member
incurs 5 consecutive one-year Breaks in Service, or (2) the date
of the Member's termination of Employment, if the Member then
has no vested interest in his Account. Once so transferred,
such amounts shall be used at the option of the Employer to (i)
reduce administrative expenses for that Contribution
Determination Period, (ii) offset any contributions to be made
by the Employer for that Contribution Determination Period or
(iii) be allocated to all eligible Members deemed to be employed
as of the last day of the Contribution Determination Period.
The Employer Credit Account, referenced in this Subparagraph,
shall be maintained to receive, in addition to the forfeitures
described above, (i) contributions in excess of the limitations
contained in Section 415 of the Code and (ii) Employer
contributions made in advance of the date allocable to Members,
if any.
29<PAGE>
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ARTICLE VII
WITHDRAWALS AND DISTRIBUTIONS
SECTION 7.1 GENERAL PROVISIONS
------------------
The Employer will define in the Adoption Agreement the terms and
conditions under which withdrawals and distributions will be
permitted under the Plan. All payments in respect of a Member's
Account shall be made in cash from the Trust Fund and in
accordance with the provisions of this Article or Article XI.
The amount of payment will be determined in accordance with the
Unit values on the Valuation Date coinciding with or next
following the date proper notice is filed with the TPA, unless
following such Valuation Date a decrease in the Unit values of
the Member's investment in any of the available Investment Funds
occurs prior to the date such Units of the Member are redeemed
in which case that part of the payment which must be provided
through the sale of existing Units shall equal the value of such
Units determined on the date of redemption which date shall
occur as soon as administratively practicable on or following
the Valuation Date such proper notice is filed with the TPA.
The redemption date Unit value with respect to a Member's
investment in any of the available Investment Funds shall equal
the value of a Unit in such Investment Fund, as determined in
accordance with the valuation method applicable to Unit
investments in such Investment Fund on the date the Member's
investment is redeemed.
Except where otherwise specified, payments provided under this
Article will be made in a lump sum as soon as practicable after
such Valuation Date or date of redemption, as may be applicable,
subject to any applicable restriction on redemption imposed on
amounts invested in any of the available Investment Funds.
Any partial withdrawal shall be deemed to come:
. First from the Member's after-tax contributions made prior to
January 1, 1987.
. Next from the Member's after-tax contributions made after
December 31, 1986 plus earnings on all of the Member's after-
tax contributions.
. Next from the Member's rollover contributions plus earnings
thereon.
. Next from the Employer matching contributions plus earnings
thereon.
. Next from the Employer supplemental contributions plus
earnings thereon.
. Next from the Employer basic contributions plus earnings
thereon.
30<PAGE>
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. Next from the Member's 401(k) deferrals plus earnings thereon.
. Next from the Employer qualified nonelective contributions
plus earnings thereon.
. Next from the Employer profit sharing contributions plus
earnings thereon.
SECTION 7.2 WITHDRAWALS WHILE EMPLOYED
--------------------------
The Employer may, at its option, permit Members to make
withdrawals from one or more of the portions of their Accounts
while employed by the Employer, as designated in the Adoption
Agreement, under the terms and provisions described herein.
VOLUNTARY WITHDRAWALS - To the extent permitted by the Employer
as specified in the Adoption Agreement, a Member may voluntarily
withdraw some or all of his Account (other than his 401(k)
deferrals and Employer qualified nonelective contributions
treated as 401(k) deferrals except as hereinafter permitted)
while in Employment by filing a notice of withdrawal with the
TPA; provided, however, that in the event his Employer has
elected to provide annuity options under Section 7.3, no
withdrawals may be made from a married Member's Account without
the written consent of such Member's Spouse (which consent shall
be subject to the procedures set forth in Section 7.3). Only
one in-service withdrawal may be made in any Plan Year from each
of the rollover amount of the Member's Account and the remainder
of the Member's Account. This restriction shall not, however,
apply to a withdrawal under this Section in conjunction with a
hardship withdrawal.
Notwithstanding the foregoing paragraph, a Member may not
withdraw any matching, basic, supplemental, profit sharing or
qualified nonelective contributions made by the Employer under
Article III unless (i) the Member has completed 60 months of
participation in the Plan; (ii) the withdrawal occurs at least
24 months after such contributions were made by the Employer;
(iii) the Employer terminates the Plan without establishing a
qualified successor plan; or (iv) the Member dies, is disabled,
retires, attains age 59-1/2 or terminates Employment. For
purposes of the preceding requirements, if the Member's Account
includes amounts which have been transferred from a defined
contribution plan established prior to the adoption of the Plan
by the Employer, the period of time during which amounts were
held on behalf of such Member and the periods of participation
of such Member under such defined contribution plan shall be
taken into account.
HARDSHIP WITHDRAWALS - If designated by the Employer in the
Adoption Agreement, a Member may make a withdrawal of his 401(k)
deferrals, Employer qualified nonelective contributions which
are treated as elective deferrals, and any earnings credited
thereto prior to January 1, 1989, prior to attaining age 59 1/2,
provided that the withdrawal is solely on account of an
immediate and heavy financial need and is necessary to satisfy
such financial need. For the purposes of this Article, the term
"immediate and heavy financial need" shall be limited to the
need of funds for (i) the payment of medical expenses (described
in Section 213(d) of the Code) incurred by the Member, the
31<PAGE>
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Member's Spouse, or any of the Member's dependents (as defined
in Section 152 of the Code), (ii) the payment of tuition and
room and board for the next 12 months of post-secondary
education of the Member, the Member's Spouse, the Member's
children, or any of the Member's dependents (as defined in
Section 152 of the Code), (iii) the purchase (excluding mortgage
payments) of a principal residence for the Member, or (iv) the
prevention of eviction of the Member from his principal
residence or the prevention of foreclosure on the mortgage of
the Member's principal residence. For purposes of this Article,
a distribution generally may be treated as "necessary to satisfy
a financial need" if the Plan Administrator reasonably relies
upon the Member's written representation that the need cannot be
relieved (i) through reimbursement or compensation by insurance
or otherwise, (ii) by reasonable liquidation of the Member's
available assets, to the extent such liquidation would not
itself cause an immediate and heavy financial need, (iii) by
cessation of Member contributions and/or deferrals pursuant to
Article III of the Plan, to the extent such contributions and/or
deferrals are permitted by the Employer, or (iv) by other
distributions or nontaxable (at the time of the loan) loans from
plans maintained by the Employer or by any other employer, or by
borrowing from commercial sources on reasonable commercial
terms. The amount of any withdrawal pursuant to this Article
shall not exceed the amount required to meet the demonstrated
financial hardship, including any amounts necessary to pay any
federal income taxes and penalties reasonably anticipated to
result from the distribution as certified to the Plan
Administrator by the Member.
Notwithstanding the foregoing, no amounts may be withdrawn on
account of hardship pursuant to this Article prior to a Member's
withdrawal of his other available Plan assets without regard to
any other withdrawal restrictions adopted by the Employer.
SECTION 7.3 DISTRIBUTIONS UPON TERMINATION OF EMPLOYMENT
--------------------------------------------
In accordance with the provisions for distributions designated
by the Employer in the Adoption Agreement, a Member who
terminates Employment with the Employer may request a
distribution of his Account at any time thereafter up to
attainment of age 70 1/2. Except as otherwise provided, only
one distribution under this Section 7.3 may be made in any Plan
Year and any amounts paid under this Article may not be returned
to the Plan.
Any distribution made under this Section 7.3 requires that a
Request for Distribution be filed with the TPA. If a Member
does not file such a Request, the value of his Account will be
paid to him as soon as practicable after his attainment of age
70 1/2, but in no event shall payment commence later than April
1 of the calendar year following the calendar year in which the
Member attains age 70 1/2 unless otherwise provided by law.
LUMP SUM PAYMENTS - A Member may request a distribution of all
or a part of his Account no more frequently than once per
calendar year by filing the proper Request for Distribution with
the TPA.
32<PAGE>
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In the event the Employer has elected to provide an annuity
option under the Plan, no distributions may be made from a
married Member's Account without the written consent of such
married Member's spouse (which consent shall be subject to the
procedures set forth below).
INSTALLMENT PAYMENTS - To the extent designated by the Employer
in the Adoption Agreement and in lieu of any lump sum payment of
his total Account, a Member who has terminated his Employment
may elect in his Request for Distribution to be paid in up to 20
annual installments, provided that a Member shall not be
permitted to elect an installment period in excess of his
remaining life expectancy and if a Member attempts such an
election, the TPA shall deem him to have elected the installment
period with the next lowest multiple within the Member's
remaining life expectancy. The amount of each installment will
be equal to the value of the total Units in the Member's
Account, multiplied by a fraction, the numerator of which is one
and the denominator of which is the number of remaining annual
installments including the one then being paid, so that at the
end of the installment period so elected, the total Account will
be liquidated. The value of the Units will be determined in
accordance with the Unit values on the Valuation Date on or next
following the TPA's receipt of his Request for Distribution and
on each anniversary thereafter subject to applicable Regulations
under Code Section 401(a)(9). Payment will be made as soon as
practicable after each such Valuation Date, but in no event
shall payment commence later than April 1 of the calendar year
following the calendar year in which the Member attains age
70 1/2 subject to the procedure for making such distributions
described below. The election of installments hereunder may not
be subsequently changed by the Member, except that upon written
notice to the TPA, the Member may withdraw the balance of the
Units in his Account in a lump sum at any time, notwithstanding
the fact that the Member previously received a distribution in
the same calendar year.
ANNUITY PAYMENTS - The Employer may, at its option, elect to
provide an annuity option under the Plan. To the extent so
designated by the Employer in the Adoption Agreement and in lieu
of any lump sum payment of his total Account, a Member who has
terminated his Employment may elect in his Request for
Distribution to have the value of his total Account be paid as
an annuity secured for the Member by the Plan Administrator
through a Group Annuity Contract adopted by the Plan. In the
event the Employer elects to provide the annuity option, the
following provisions shall apply:
UNMARRIED MEMBERS -Any unmarried Member who has terminated his
Employment may elect, in lieu of any other available payment
option, to receive a benefit payable by purchase of a single
premium contract providing for (i) a single life annuity for the
life of the Member or (ii) an annuity for the life of the Member
and, if the Member dies leaving a designated Beneficiary, a 50%
survivor annuity for the life of such designated Beneficiary.
MARRIED MEMBERS - Except as otherwise provided below, (i) any
married Member who has terminated
33<PAGE>
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his Employment shall receive a benefit payable by purchase of a
single premium contract providing for a Qualified Joint and
Survivor Annuity, as defined below, and (ii) the Surviving
Spouse of any married Member who dies prior to the date payment
of his benefit commences shall be entitled to a Preretirement
Survivor Annuity, as defined below. Notwithstanding the
foregoing, any such married Member may elect to receive his
benefit in any other available form, and may waive the
Preretirement Survivor Annuity, in accordance with the spousal
consent requirements described herein.
For purposes of this Section 7.3, the term "Qualified Joint and
Survivor Annuity" means a benefit providing an annuity for the
life of the Member, ending with the payment due on the last day
of the month coinciding with or preceding the date of his death,
and, if the Member dies leaving a Surviving Spouse, a survivor
annuity for the life of such Surviving Spouse equal to one-half
of the annuity payable for the life of the Member under his
Qualified Joint and Survivor Annuity, commencing on the last day
of the month following the date of the Member's death and ending
with the payment due on the first day of the month coinciding
with or preceding the date of such Surviving Spouse's death.
For purposes of this Section 7.3, the term "Preretirement
Survivor Annuity" means a benefit providing for payment of 50%
of the Member's Account balance as of the Valuation Date coin-
ciding with or preceding the date of his death. Payment of a
Preretirement Survivor Annuity shall commence in the month
following the month in which the Member dies or as soon as
practicable thereafter; provided, however, that to the extent
required by law, if the value of the amount used to purchase a
Preretirement Survivor Annuity exceeds $3,500, then payment of
the Preretirement Survivor Annuity shall not commence prior to
the date the Member reached (or would have reached, had he
lived) Normal Retirement Age without the written consent of the
Member's Surviving Spouse. Absence of any required consent will
result in a deferral of payment of the Preretirement Survivor
Annuity to the month following the month in which occurs the
earlier of (i) the date the required consent is received by the
TPA or (ii) the date the Member would have reached Normal
Retirement Age had he lived.
The TPA shall furnish or cause to be furnished, to each married
Member with an Account subject to this Section 7.3, explanations
of the Qualified Joint and Survivor Annuity and Preretirement
Survivor Annuity. A Member may, with the written consent of his
Spouse (unless the TPA makes a written determination in
accordance with the Code and the Regulations that no such
consent is required), elect in writing (i) to receive his
benefit in a single lump sum payment within the 90-day period
ending on the date payment of his benefit commences; and (ii) to
waive the Preretirement Survivor Annuity within the period
beginning on the first day of the Plan Year in which the Member
attains age 35 and ending on the date of his death. Any
election made pursuant to this Subparagraph may be revoked by a
Member, without spousal consent, at any time within which
34<PAGE>
<PAGE>
such election could have been made. Such an election or
revocation must be made in accordance with procedures developed
by the TPA and shall be notarized.
Notwithstanding the preceding provisions of this Section 7.3,
any benefit of $3,500, subject to the limits of Article X, or
less, shall be paid in cash in a lump sum in full settlement of
the Plan's liability therefor; provided, however, that in the
case of a married Member, no such lump sum payment shall be made
after benefits have commenced without the consent of the Member
and his Spouse or, if the Member has died, the Member's
Surviving Spouse. Furthermore, if the value of the benefit
payable to a Member or his Surviving Spouse is greater than
$3,500 and the Member has or had not reached his Normal
Retirement Age, then to the extent required by law, unless the
Member (and, if the Member is married and his benefit is to be
paid in a form other than a Qualified Joint and Survivor
Annuity, his Spouse, or, if the Member was married, his
Surviving Spouse) consents in writing to an immediate
distribution of such benefit, his benefit shall continue to be
held in the Trust until a date following the earlier of (i) the
date of the TPA's receipt of all required consents or (ii) the
date the Member reaches his earliest possible Normal Retirement
Age under the Plan (or would have reached such date had he
lived), and thereafter shall be paid in accordance with this
Section 7.3.
Solely to the extent required under applicable law and
regulations, and notwithstanding any provisions of the Plan to
the contrary that would otherwise limit a Distributee's election
under this Subparagraph, a Distributee may elect, at the time
and in the manner prescribed by the TPA, to have any portion of
an Eligible Rollover Distribution paid directly to an Eligible
Retirement Plan specified by the Distributee in a Direct
Rollover. For purposes of this Subparagraph, the following
terms shall have the following meanings:
ELIGIBLE ROLLOVER DISTRIBUTION - 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).
ELIGIBLE RETIREMENT PLAN - An individual retirement account
described in Section 408(a) of the Code, an individual
retirement annuity described in Section 408(b) of the Code, an
annuity plan 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
35<PAGE>
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Eligible Rollover Distribution to a Surviving Spouse, an
Eligible Retirement Plan is an individual retirement account
or an individual retirement annuity.
DISTRIBUTEE - A Distributee may be (i) an Employee, (ii) a
former Employee, (iii) an Employee's Surviving Spouse, (iv) a
former Employee's Surviving Spouse, (v) an Employee's Spouse
or former Spouse who is an alternate payee under a qualified
domestic relations order, as defined in Section 414(p) of the
Code, or (vi) a former Employee's Spouse or former Spouse who
is an alternate payee under a qualified domestic relations
order, as defined in Section 414(p) of the Code, with respect
to the interest of the Spouse or former Spouse.
DIRECT ROLLOVER - A payment by the Plan to the Eligible
Retirement Plan specified by the Distributee.
SECTION 7.4 DISTRIBUTIONS DUE TO DISABILITY
-------------------------------
A Member who is separated from Employment by reason of a dis-
ability which is expected to last in excess of 12 consecutive
months and who is either (i) eligible for, or is receiving,
disability insurance benefits under the Federal Social Security
Act or (ii) approved for disability under the provisions of any
other benefit program or policy maintained by the Employer,
which policy or program is applied on a uniform and
nondiscriminatory basis to all Employees of the Employer, shall
be deemed to be disabled for all purposes under the Plan.
The Plan Administrator shall determine whether a Member is
disabled in accordance with the terms of the immediately
preceding paragraph; provided, however, approval of Disability
is conditioned upon notice to the Plan Administrator of such
Member's Disability within 13 months of the Member's separation
from Employment. The notice of Disability shall include a
certification that the Member meets one or more of the criteria
listed above.
Upon determination of Disability, a Member may withdraw his
total Account balance under the Plan and have such amounts paid
to him in accordance with the applicable provisions of this
Article VII, as designated by the Employer. If a disabled
Member becomes reemployed subsequent to withdrawal of some or
all of his Account balance, such Member may not repay to the
Plan any such withdrawn amounts.
SECTION 7.5 DISTRIBUTIONS DUE TO DEATH
--------------------------
Subject to the provisions of Section 7.3 above, if a married
Member dies, his Spouse, as Beneficiary, will receive a death
benefit equal to the value of the Member's Account determined on
the Valuation Date on or next following the TPA's receipt of
notice that such Member died; provided, however, that if such
Member's Spouse had consented in writing to the designation of
36<PAGE>
<PAGE>
a different Beneficiary, the Member's Account will be paid to
such designated Beneficiary. Such nonspousal designation may be
revoked by the Member without spousal consent at any time prior
to the Member's death. If a Member is not married at the time
of his death, his Account will be paid to his designated
Beneficiary.
A Member may elect that upon his death, his Beneficiary,
pursuant to this Section 7.5, may receive, in lieu of any lump
sum payment, payment in 5 annual installments (10 if the Spouse
is the Beneficiary, provided that the Spouse's remaining life
expectancy is at least 10 years) whereby the value of 1/5th of
such Member's Units (or 1/10th in the case of a spousal
Beneficiary, provided that the Spouse's remaining life
expectancy is at least 10 years) in each available Investment
Fund will be determined in accordance with the Unit values on
the Valuation Date on or next following the TPA's receipt of
notice of the Member's death and on each anniversary of such
Valuation Date. Payment will be made as soon as practicable
after each Valuation Date until the Member's Account is
exhausted. Such election may be filed at any time with the Plan
Administrator prior to the Member's death and may not be changed
or revoked after such Member's death. If such an election is
not in effect at the time of the Member's death, his Beneficiary
(including any spousal Beneficiary) may elect to receive
distributions in accordance with this Article, except that any
balance remaining in the deceased Member's Account must be
distributed on or before the December 31 of the calendar year
which contains the 5th anniversary (the 10th anniversary in the
case of a spousal Beneficiary, provided that the Spouse's
remaining life expectancy is at least 10 years) of the Member's
death. Notwithstanding the foregoing, payment of a Member's
Account shall commence not later than the December 31 of the
calendar year immediately following the calendar year in which
the Member died or, in the event such Beneficiary is the
Member's Surviving Spouse, on or before the December 31 of the
calendar year in which such Member would have attained age
70 1/2, if later (or, in either case, on any later date
prescribed by the IRS Regulations). If, upon the Spouse's or
Beneficiary's death, there is still a balance in the Account,
the value of the remaining Units will be paid in a lump sum to
such Spouse's or Beneficiary's estate.
SECTION 7.6 MINIMUM REQUIRED DISTRIBUTIONS
------------------------------
In no event may payment of a Member's Account begin later than
April 1 of the year following the calendar year in which a
Member attains age 70 1/2; provided, however, if a Member
attained age 70 1/2 prior to January 1, 1988, except as
otherwise provided below, any benefit payable to such Member
shall commence no later than the April 1 of the calendar year
following the later of (i) the calendar year in which the Member
attains age 70 1/2 or (ii) the calendar year in which the Member
retires. Such benefit shall be paid, in accordance with the
Regulations, over a period not extending beyond the life
expectancy of such Member. Life expectancy for purposes of this
Section shall not be recalculated annually in accordance with
the Regulations.
37<PAGE>
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If a Member who is a 5% owner attained age 70 1/2 before January
1, 1988, any benefit payable to such Member shall commence no
later than the April 1 of the calendar year following the later
of (i) the calendar year in which the Member attains age 701/2
or (ii) the earlier of (a) the calendar year within which the
Member becomes a 5% owner or (b) the calendar year in which the
Member retires. For purposes of the preceding sentence, 5%
owner shall mean a 5% owner of such Member's Employer as defined
in Section 416(i) of the Code at any time during the Plan Year
in which such owner attains age 661/2 or any subsequent Plan
Year. Distributions must continue to such Member even if such
Member ceases to own more than 5% of the Employer in a
subsequent year.
38
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ARTICLE VIII
LOAN PROGRAM
SECTION 8.1 GENERAL PROVISIONS
------------------
An Employer may, at its option, make available the loan program
described herein for any Member (and, if applicable under
Section 8.8 of this Article, any Beneficiary), subject to
applicable law. The Employer shall so designate its adoption of
the loan program and the terms and provisions of its operation
in the Adoption Agreement. In the event that the Employer has
elected to provide an annuity option under Article VII or
amounts are transferred to the Plan from a retirement plan
subject to Section 401(a)(11) of the Code, no loans may be made
from a married Member's Account without the written consent of
such Member's Spouse (in accordance with the spousal consent
rules set forth under Section 7.3). In the event the Employer
elects to permit loans to be made from rollover contributions
and earnings thereon, as designated in the Adoption Agreement,
loans shall be available from the Accounts of any Employees of
the Employer who have not yet become Members. Only one loan may
be made to a Member in the Plan Year.
SECTION 8.2 LOAN APPLICATION
----------------
Subject to the restrictions described in the paragraph
immediately following, a Member in Employment may borrow from
his Account in each of the available Investment Funds by filing
a loan application with the TPA. Such application (hereinafter
referred to as a "completed application") shall (i) specify the
terms pursuant to which the loan is requested to be made and
(ii) provide such information and documentation as the TPA shall
require, including a note, duly executed by the Member, granting
a security interest of an amount not greater than 50% of his
vested Account, to secure the loan. With respect to such
Member, the completed application shall authorize the repayment
of the loan through payroll deductions. Such loan will become
effective upon the Valuation Date coinciding with or next
following the date on which his completed application and other
required documents were submitted, subject to the same
conditions with respect to the amount to be transferred under
this Section which are specified in the Plan procedures for
determining the amount of payments made under Article VII of the
Plan.
The Employer shall establish standards in accordance with the
Code and ERISA which shall be uniformly applicable to all
Members eligible to borrow from their interests in the Trust
Fund similarly situated and shall govern the TPA's approval or
disapproval of completed applications. The terms for each loan
shall be set solely in accordance with such standards.
39<PAGE>
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The TPA shall, in accordance with the established standards,
review and approve or disapprove a completed application as soon
as practicable after its receipt thereof, and shall promptly
notify the applying Member of such approval or disapproval.
Notwithstanding the foregoing, the TPA may defer its review of a
completed application, or defer payment of the proceeds of an
approved loan, if the proceeds of the loan would otherwise be
paid during the period commencing on December 1 and ending on
the following January 31.
Subject to the preceding paragraph and Section 8.6, upon
approval of a completed application, the TPA shall cause payment
of the loan to be made from the available Investment Fund(s) in
the same proportion that the designated portion of the Member's
Account is invested at the time of the loan, and the relevant
portion of the Member's interest in such Investment Fund(s)
shall be cancelled and shall be transferred in cash to the
Member. The TPA shall maintain sufficient records regarding
such amounts to permit an accurate crediting of repayments of
the loan.
SECTION 8.3 PERMITTED LOAN AMOUNT
---------------------
The amount of each loan may not be less than $1,000 nor more
than the maximum amount as described below. The maximum amount
available for loan under the Plan (when added to the outstanding
balance of all other loans from the Plan to the borrowing
Member) shall not exceed the lesser of: (a) $50,000 reduced by
the excess (if any) of (i) the highest outstanding loan balance
attributable to the Account of the Member requesting the loan
from the Plan during the one-year period ending on the day
preceding the date of the loan, over (ii) the outstanding
balance of all other loans from the Plan to the Member on the
date of the loan, or (b) 50% of the value of the Member's vested
portion of his Account available for borrowing as of the
Valuation Date on or next following the date on which the TPA
receives the completed application for the loan and all other
required documents. The maximum amount available for a loan for
purposes of item (b) of the preceding sentence shall be
determined by valuing the Member's interest in that portion of
his Account from which the loan will be deducted as of the
applicable Valuation Date. In determining the maximum amount
that a Member may borrow, all vested assets of his Account,
regardless of whether any particular portion of his Account is
actually available for the loan, will be taken into
consideration, provided that, where the Employer has not elected
to make a Member's entire Account available for loans, in no
event shall the amount of the loan exceed the value of such
portion of the Member's Account from which loans are
permissible.
SECTION 8.4 SOURCE OF FUNDS FOR LOAN
------------------------
The amount of the loan will be deducted from the Member's
Account in the available Investment Funds in accordance with
Section 8.2 of this Article and the Plan procedures for
determining the amount of payments made under Article VII.
Loans shall be deemed to come (to the extent the
40<PAGE>
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Employer permits Members to take loans from one or more of the
portions of their Accounts, as designated in the Adoption
Agreement):
. First from the Employer profit sharing contributions plus
earnings thereon.
. Next from the Employer qualified nonelective contributions
plus earnings thereon.
. Next from the Member's 401(k) deferrals plus earnings thereon.
. Next from the Employer basic contributions plus earnings
thereon.
. Next from the Employer supplemental contributions plus
earnings thereon.
. Next from the Employer matching contributions plus earnings
thereon.
. Next from the Member's rollover contributions plus earnings
thereon.
. Next from the Member's after-tax contributions made after
December 31,1986 plus earnings on all of the Member's after-
tax contributions.
. Next from the Member's after-tax contributions made prior to
January 1,1987.
SECTION 8.5 CONDITIONS OF LOAN
------------------
Each loan to a Member under the Plan shall be repaid in level
monthly amounts through regular payroll deductions after the
effective date of the loan, and continuing thereafter with each
payroll. Except as otherwise required by the Code and the IRS
Regulations, each loan shall have a repayment period of not less
than 12 months and not in excess of 60 months, unless the
purpose of the loan is for the purchase of a primary residence,
in which case the loan may be for not more than 180 months.
The rate of interest for the term of the loan will be
established as of the loan date, and will be the Barron's Prime
Rate (base rate) plus 1% as published on the last Saturday of
the preceding month, or such other rate as may be required by
applicable law and determined by reference to the prevailing
interest rate charged by commercial lenders under similar
circumstances. The applicable rate would then be in effect
through the last business day of the month.
Repayment of all loans under the Plan shall be secured by 50% of
the Member's vested interest in his Account, determined as of
the origination of such loan.
41<PAGE>
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SECTION 8.6 CREDITING OF REPAYMENT
----------------------
Upon lending any amount to a Member, the TPA shall establish and
maintain a loan receivable account with respect to, and for the
term of, the loan. The allocations described in this Section
shall be made from the loan receivable account. Upon receipt of
each monthly installment payment and the crediting thereof to
the Member's loan receivable account, there shall be allocated
to the Member's Account in the available Investment Funds, in
accordance with his most recent investment instructions, the
principal portion of the installment payment plus that portion
of the interest equal to the rate determined in Section 8.5 of
this Article, less 2%. The unpaid balance owed by a Member on a
loan under the Plan shall not reduce the amount credited to his
Account. However, from the time of payment of the proceeds of
the loan to the Member, such Account shall be deemed invested,
to the extent of such unpaid balance, in such loan until the
complete repayment thereof or distribution from such Account.
Any loan repayment shall first be deemed allocable to the
portions of the Member's Account on the basis of a reverse
ordering of the manner in which the loan was originally
distributed to the Member.
SECTION 8.7 CESSATION OF PAYMENTS ON LOAN
-----------------------------
If a Member, while employed, fails to make a monthly installment
payment when due, as specified in the completed application,
subject to applicable law, he will be deemed to have received a
distribution of the outstanding balance of the loan. If such
default occurs after the first 12 monthly payments of the loan
have been satisfied, the Member may pay the outstanding balance,
including accrued interest from the due date, within 60 days the
due date of the last monthly installment payment, in which case
no such distribution will be deemed to have occurred. Subject
to applicable law, notwithstanding the foregoing, a Member that
borrows any of his 401(k) deferrals and any of the earnings
attributable thereto may not cease to make monthly installment
payments while employed and receiving a Salary from the
Employer.
Except as provided below, upon a Member's termination of
Employment, death or Disability, or the Employer's termination
of the Plan, no further monthly installment payments may be
made. Unless the outstanding balance, including accrued
interest from the due date, is paid within 60 days of the date
of such occurrence, the Member will be deemed to have received a
distribution of the outstanding balance of the loan including
accrued interest from the due date.
SECTION 8.8 LOANS TO FORMER MEMBERS
-----------------------
Notwithstanding any other provisions of this Article VIII, a
member who terminates Employment for any reason shall be
permitted to continue making scheduled repayments with respect
to any loan balance outstanding at the time he becomes a
terminated Member. In addition, a terminated Member may elect
to initiate a new loan from his Account, subject to the
conditions otherwise
42<PAGE>
<PAGE>
described in this Article VIII. If any terminated Member who
continues to make repayments or who borrows from his Account
pursuant to this Section 8.8 fails to make a scheduled monthly
installment payment within 60 days of the scheduled payment
date, he will be deemed to have received a distribution of the
outstanding balance of the loan.
43<PAGE>
<PAGE>
ARTICLE IX
ADMINISTRATION OF PLAN AND ALLOCATION OF RESPONSIBILITIES
SECTION 9.1 FIDUCIARIES
-----------
The following persons are Fiduciaries under the Plan.
a) The Trustee,
b) The Employer,
c) The Plan Administrator or committee, appointed by the
Employer pursuant to this Article IX of the Plan and
designated as the "Named Fiduciary" of the Plan and the Plan
Administrator, and
d) Any Investment Manager appointed by the Employer as provided
in Section 9.4.
Each of said Fiduciaries shall be bonded to the extent required
by ERISA.
The TPA is not intended to have the authority or
responsibilities which would cause it to be considered a
Fiduciary with respect to the Plan unless the TPA otherwise
agrees to accept such authority or responsibilities in a service
agreement or otherwise in writing.
SECTION 9.2 ALLOCATION OF RESPONSIBILITIES AMONG THE
----------------------------------------
FIDUCIARIES
-----------
a) The Trustee
-----------
The Employer shall enter into one or more Trust Agreements
with a Trustee or Trustees selected by the Employer. The
Trust established under any such agreement shall be a part of
the Plan and shall provide that all funds received by the
Trustee as contributions under the Plan and the income
therefrom (other than such part as is necessary to pay the
expenses and charges referred to in Paragraph (b) of this
Section) shall be held in the Trust Fund for the exclusive
benefit of the Members or their Beneficiaries, and managed,
invested and reinvested and distributed by the Trustee in
accordance with the Plan. Sums received for investment may
be invested (i) wholly or partly through the medium of any
common, collective or commingled trust fund maintained by a
bank or other financial institution and which is qualified
under Sections 401(a) and 501(a) of the Code and constitutes
a part of the Plan; (ii) wholly or partly through the medium
of a group annuity or other type of contract issued by an
insurance company and constituting a part of the Plan, and
utilizing, under any such contract,
44<PAGE>
<PAGE>
general, commingled or individual investment accounts; or
(iii) wholly or partly in securities issued by an investment
company registered under the Investment Company Act of 1940.
Subject to the provisions of Article XI, the Employer may
from time to time and without the consent of any Member or
Beneficiary (a) amend the Trust Agreement or any such
insurance contract in such manner as the Employer may deem
necessary or desirable to carry out the Plan, (b) remove the
Trustee and designate a successor Trustee upon such removal
or upon the resignation of the Trustee, and (c) provide for
an alternate funding agency under the Plan. The Trustee
shall make payments under the Plan only to the extent, in the
amounts, in the manner, at the time, and to the persons as
shall from time to time be set forth and designated in
written authorizations from the Plan Administrator or TPA.
The Trustee shall from time to time charge against and pay
out of the Trust Fund taxes of any and all kinds whatsoever
which are levied or assessed upon or become payable in
respect of such Fund, the income or any property forming a
part thereof, or any security transaction pertaining thereto.
To the extent not paid by the Employer, the Trustee shall
also charge against and pay out of the Trust Fund other
expenses incurred by the Trustee in the performance of its
duties under the Trust, the expenses incurred by the TPA in
the performance of its duties under the Plan (including
reasonable compensation for agents and cost of services
rendered in respect of the Plan), such compensation of the
Trustee as may be agreed upon from time to time between the
Employer and the Trustee, and all other proper charges and
disbursements of the Trustee or the Employer.
b) The Employer
------------
The Employer shall be responsible for all functions assigned
or reserved to it under the Plan and any related Trust
Agreement. Any authority so assigned or reserved to the
Employer, other than responsibilities assigned to the Plan
Administrator, shall be exercised by resolution of the
Employer's Board of Directors and shall become effective with
respect to the Trustee upon written notice to the Trustee
signed by the duly authorized officer of the Board advising
the Trustee of such exercise. By way of illustration and not
by limitation, the Employer shall have authority and
responsibility:
(1) to amend the Plan;
(2) to merge and consolidate the Plan with all or part of
the assets or liabilities of any other plan;
(3) to appoint, remove and replace the Trustee and the Plan
Administrator and to monitor their performances;
45<PAGE>
<PAGE>
(4) to appoint, remove and replace one or more Investment
Managers, or to refrain from such appointments, and to
monitor their performances;
(5) to communicate such information to the Plan
Administrator, TPA, Trustee and Investment Managers as
they may need for the proper performance of their
duties; and
(6) to perform such additional duties as are imposed by law.
Whenever, under the terms of this Plan, the Employer is
permitted or required to do or perform any act, it shall be
done and performed by an officer thereunto duly authorized by
its Board of Directors.
c) The Plan Administrator
----------------------
The Plan Administrator shall have responsibility and
discretionary authority to control the operation and
administration of the Plan in accordance with the provisions
of Article IX of the Plan, including, without limiting, the
generality of the foregoing:
(1) the determination of eligibility for benefits and the
amount and certification thereof to the Trustee;
(2) the hiring of persons to provide necessary services to
the Plan;
(3) the issuance of directions to the Trustee to pay any
fees, taxes, charges or other costs incidental to the
operation and management of the Plan;
(4) the preparation and filing of all reports required to be
filed with respect to the Plan with any governmental
agency; and
(5) the compliance with all disclosure requirements imposed
by state or federal law.
d) The Investment Manager
----------------------
Any Investment Manager appointed pursuant to Section 9.4
shall have sole responsibility for the investment of the
portion of the assets of the Trust Fund to be managed and
controlled by such Investment Manager. An Investment
Manager may place orders for the purchase and sale of
securities directly with brokers and dealers.
SECTION 9.3 NO JOINT FIDUCIARY RESPONSIBILITIES
-----------------------------------
This Article IX is intended to allocate to each Fiduciary the
individual responsibility for the prudent execution of the
functions assigned to him, and none of such responsibilities or
any other
46<PAGE>
<PAGE>
responsibilities shall be shared by two or more of such
Fiduciaries unless such sharing is provided by a specific
provision of the Plan or any related Trust Agreement. Whenever
one Fiduciary is required 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.
To the extent that fiduciary responsibilities are allocated to
an Investment Manager, such responsibilities are so allocated
solely to such Investment Manager alone, to be exercised by such
Investment Manager alone and not in conjunction with any other
Fiduciary, and the Trustee shall be under no obligation to
manage any asset of the Trust Fund which is subject to the
management of such Investment Manager.
SECTION 9.4 INVESTMENT MANAGER
------------------
The Employer may appoint a qualified Investment Manager or
Managers to manage any portion or all of the assets of the Trust
Fund. For the purpose of this Plan and the related Trust, a
"qualified Investment Manager" means an individual, firm or
corporation who has been so appointed by the Employer to serve
as Investment Manager hereunder, and who is and has acknowledged
in writing that he is (a) a Fiduciary with respect to the Plan,
(b) bonded as required by ERISA, and (c) either (i) registered
as an investment advisor under the Investment Advisors Act of
1940, (ii) a bank as defined in said Act, or (iii) an insurance
company qualified to perform investment management services
under the laws of more than one state of the United States.
Any such appointment shall be by a vote of the Board of
Directors of the Employer naming the Investment Manager so
appointed and designating the portion of the assets of the Trust
Fund to be managed and controlled by such Investment Manager.
Said vote shall be evidenced by a certificate in writing signed
by the duly authorized officer of the Board and shall become
effective on the date specified in such certificate but not
before delivery to the Trustee of a copy of such certificate,
together with a written acknowledgement by such Investment
Manager of the facts specified in the second sentence of this
Section.
SECTION 9.5 ADVISOR TO FIDUCIARY
--------------------
A Fiduciary may employ one or more persons to render advice
concerning any responsibility such Fiduciary has under the Plan
and related Trust Agreement.
SECTION 9.6 SERVICE IN MULTIPLE CAPACITIES
------------------------------
Any person or group of persons may serve in more than one
fiduciary capacity with respect to the Plan, specifically
including service both as Plan Administrator and as a Trustee of
the Trust;
47<PAGE>
<PAGE>
provided, however, that no person may serve in a
fiduciary capacity who is precluded from so serving pursuant to
Section 411 of ERISA.
SECTION 9.7 APPOINTMENT OF PLAN ADMINISTRATOR
---------------------------------
The Employer shall designate the Plan Administrator in the
Adoption Agreement. The Plan Administrator may be an
individual, a committee of two or more individuals, whether or
not, in either such case, the individual or any of such
individuals are Employees of the Employer, a consulting firm or
other independent agent, the Trustee (with its consent), the
Board of the Employer, or the Employer itself. Except as the
Employer shall otherwise expressly determine, the Plan
Administrator shall be charged with the full power and
responsibility for administering the Plan in all its details.
If no Plan Administrator has been appointed by the Employer, or
if the person designated as Plan Administrator is not serving as
such for any reason, the Employer shall be deemed to be the Plan
Administrator. The Plan Administrator may be removed by the
Employer or may resign by giving written notice to the Employer,
and, in the event of the removal, resignation, death or other
termination of service of the Plan Administrator, the Employer
shall, as soon as is practicable, appoint a successor Plan
Administrator, such successor thereafter to have all of the
rights, privileges, duties and obligations of the predecessor
Plan Administrator.
SECTION 9.8 POWERS OF THE PLAN ADMINISTRATOR
--------------------------------
The Plan Administrator is hereby vested with all powers and
authority necessary in order to carry out its duties and
responsibilities in connection with the administration of the
Plan as herein provided, and is authorized to make such rules
and regulations as it may deem necessary to carry out the
provisions of the Plan and the Trust Agreement. The Plan
Administrator may from time to time appoint agents to perform
such functions involved in the administration of the Plan as it
may deem advisable. The Plan Administrator shall have the
discretionary authority to determine any questions arising in
the administration, interpretation and application of the Plan,
including any questions submitted by the Trustee on a matter
necessary for it to properly discharge its duties; and the
decision of the Plan Administrator shall be conclusive and
binding on all persons.
SECTION 9.9 DUTIES OF THE PLAN ADMINISTRATOR
--------------------------------
The Plan Administrator shall keep on file a copy of the Plan and
the Trust Agreement(s), including any subsequent amendments, and
all annual reports of the Trustee(s), and such annual reports or
registration statements as may be required by the laws of the
United States, or other jurisdiction, for examination by Members
in the Plan during reasonable business hours. Upon request by
any Member, the Plan Administrator shall furnish him with a
statement of his interest in the Plan as determined by the Plan
Administrator as of the close of the preceding Plan Year.
48<PAGE>
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SECTION 9.10 ACTION BY THE PLAN ADMINISTRATOR
--------------------------------
In the event that there shall at any time be two or more persons
who constitute the Plan Administrator, such persons shall act by
concurrence of a majority thereof.
SECTION 9.11 DISCRETIONARY ACTION
--------------------
Wherever, under the provisions of this Plan, the Plan
Administrator is given any discretionary power or powers, such
power or powers shall not be exercised in such manner as to
cause any discrimination prohibited by the Code in favor of or
against any Member, Employee or class of Employees. Any
discretionary action taken by the Plan Administrator hereunder
shall be consistent with any prior discretionary action taken by
it under similar circumstances and to this end the Plan
Administrator shall keep a record of all discretionary action
taken by it under any provision hereof.
SECTION 9.12 COMPENSATION AND EXPENSES OF PLAN ADMINISTRATOR
-----------------------------------------------
Employees of the Employer shall serve without compensation for
services as Plan Administrator, but all expenses of the Plan
Administrator shall be paid by the Employer. Such expenses
shall include any expenses incidental to the functioning of the
Plan, including, but not limited to, attorney's fees, accounting
and clerical charges, and other costs of administering the Plan.
Non-Employee Plan Administrators shall receive such compensation
as the Employer shall determine.
SECTION 9.13 RELIANCE ON OTHERS
------------------
The Plan Administrator and the Employer shall be entitled to
rely upon all valuations, certificates and reports furnished by
the Trustee(s), upon all certificates and reports made by an
accountant or actuary selected by the Plan Administrator and
approved by the Employer and upon all opinions given by any
legal counsel selected by the Plan Administrator and approved by
the Employer, and the Plan Administrator and the Employer shall
be fully protected in respect of any action taken or suffered by
them in good faith in reliance upon such Trustee(s), accountant,
actuary or counsel and all action so taken or suffered shall be
conclusive upon each of them and upon all Members, retired
Members, and Former Members and their Beneficiaries, and all
other persons.
SECTION 9.14 SELF INTEREST
-------------
No person who is the Plan Administrator shall have any right to
decide upon any matter relating solely to himself or to any of
his rights or benefits under the Plan. Any such decision shall
be made by another Plan Administrator or the Employer.
49
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<PAGE>
SECTION 9.15 PERSONAL LIABILITY - INDEMNIFICATION
------------------------------------
The Plan Administrator shall not be personally liable by virtue
of any instrument executed by him or on his behalf. Neither the
Plan Administrator, the Employer, nor any of its officers or
directors shall be personally liable for any action or inaction
with respect to any duty or responsibility imposed upon such
person by the terms of the Plan unless such action or inaction
is judicially determined to be a breach of that person's
fiduciary responsibility with respect to the Plan under any
applicable law. The limitation contained in the preceding
sentence shall not, however, prevent or preclude a compromise
settlement of any controversy involving the Plan, the Plan
Administrator, the Employer, or any of its officers and
directors. The Employer may advance money in connection with
questions of liability prior to any final determination of a
question of liability. Any settlement made under this Article
IX shall not be determinative of any breach of fiduciary duty
hereunder.
The Employer will indemnify every person who is or was a Plan
Administrator, officer or member of the Board or a person who
provides services without compensation to the Plan for any
liability (including reasonable costs of defense and settlement)
arising by reason of any act or omission affecting the Plan or
affecting the Member or Beneficiaries thereof, including,
without limitation, any damages, civil penalty or excise tax
imposed pursuant to ERISA; provided (1) that the act or omission
shall have occurred in the course of the person's service as
Plan Administrator, officer of the Employer or member of the
Board or was within the scope of the Employment of any Employee
of the Employer or in connection with a service provided without
compensation to the Plan, (2) that the act or omission be in
good faith as determined by the Employer, whose determination,
made in good faith and not arbitrarily or capriciously, shall be
conclusive, and (3) that the Employer's obligation hereunder
shall be offset to the extent of any otherwise applicable
insurance coverage, under a policy maintained by the Employer,
or any other person, or other source of indemnification.
SECTION 9.16 INSURANCE
---------
The Plan Administrator shall have the right to purchase such
insurance as it deems necessary to protect the Plan and the
Trustee from loss due to any breach of fiduciary responsibility
by any person. Any premiums due on such insurance may be paid
from Plan assets provided that, if such premiums are so paid,
such policy of insurance must permit recourse by the insurer
against the person who breaches his fiduciary responsibility.
Nothing in this Article IX shall prevent the Plan Administrator
or the Employer, at its, or his, own expense, from providing
insurance to any person to cover potential liability of that
person as a result of a breach of fiduciary responsibility, nor
shall any provisions of the Plan preclude the Employer from
purchasing from any insurance company the right of recourse
under any policy by such insurance company.
50<PAGE>
<PAGE>
SECTION 9.17 CLAIMS PROCEDURES
-----------------
Claims for benefits under the Plan shall be filed with the Plan
Administrator on forms supplied by the Employer. Written notice
of the disposition of a claim shall be furnished to the claimant
within 90 days after the application thereof is filed unless
special circumstances require an extension of time for
processing the claim. If such an extension of time is required,
written notice of the extension shall be furnished to the
claimant prior to the termination of said 90-day period, and
such notice shall indicate the special circumstances which make
the postponement appropriate.
SECTION 9.18 CLAIMS REVIEW PROCEDURES
------------------------
In the event a claim is denied, the reasons for the denial shall
be specifically set forth in the notice described in this
Section 9.18 in language calculated to be understood by the
claimant. Pertinent provisions of the Plan shall be cited, and,
where appropriate, an explanation as to how the claimant can
request further consideration and review of the claim will be
provided. In addition, the claimant shall be furnished with an
explanation of the Plan's claims review procedures. Any
Employee, former Employee, or Beneficiary of either, who has
been denied a benefit by a decision of the Plan Administrator
pursuant to Section 9.17 shall be entitled to request the Plan
Administrator to give further consideration to his claim by
filing with the Plan Administrator (on a form which may be
obtained from the Plan Administrator) a request for a hearing.
Such request, together with a written statement of the reasons
why the claimant believes his claim should be allowed, shall be
filed with the Plan Administrator no later than 60 days after
receipt of the written notification provided for in Section
9.17. The Plan Administrator shall then conduct a hearing
within the next 60 days, at which the claimant may be
represented by an attorney or any other representative of his
choosing and at which the claimant shall have an opportunity to
submit written and oral evidence and arguments in support of his
claim. At the hearing (or prior thereto upon 5 business days'
written notice to the Plan Administrator), the claimant or his
representative shall have an opportunity to review all documents
in the possession of the Plan Administrator which are pertinent
to the claim at issue and its disallowance. A final disposition
of the claim shall be made by the Plan Administrator within 60
days of receipt of the appeal unless there has been an extension
of 60 days and shall be communicated in writing to the claimant.
Such communication shall be written in a manner calculated to be
understood by the claimant and shall include specific reasons
for the disposition and specific references to the pertinent
Plan provisions on which the disposition is based. For all
purposes under the Plan, such decision on claims (where no
review is requested) and decision on review (where review is
requested) shall be final, binding and conclusive on all
interested persons as to participation and benefits eligibility,
the amount of benefits and as to any other matter of fact or
interpretation relating to the Plan.
51<PAGE>
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ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1 GENERAL LIMITATIONS
-------------------
(A) In order that the Plan be maintained as a qualified plan
and trust under the Code, contributions in respect of a
Member shall be subject to the limitations set forth in
this Section, notwithstanding any other provision of the
Plan. The contributions in respect of a Member to which
this Section is applicable are his own contributions and/or
deferrals and the Employer's contributions.
For purposes of this Section 10.1, a Member's contributions
shall be determined without regard to any rollover
contributions as provided in Section 402(a)(5) of the Code.
(B) Annual additions to a Member's Account in respect of any
Plan Year may not exceed the limitations set forth in
Section 415 of the Code, which are incorporated herein by
reference. For these purposes, "annual additions" shall
have the meaning set forth in Section 415(c)(2) of the
Code, as modified elsewhere in the Code and the
Regulations, and the limitation year shall mean the Plan
Year unless any other twelve-consecutive-month period is
designated pursuant to a resolution adopted by the Employer
and designated in the Adoption Agreement. If a Member in
the Plan also participates in any defined benefit plan (as
defined in Sections 414(j) and 415(k) of the Code)
maintained by the Employer or any of its Affiliates, in the
event that in any Plan Year the sum of the Member's "defined
benefit fraction" (as defined in Section 415(e)(2) of the
Code) and the Member's "defined contribution fraction" (as
defined in Section 415(e)(3) of the Code) exceeds 1.0, the
benefit under such defined benefit plan or plans shall be
reduced in accordance with the provisions of that plan or
those plans, so that the sum of such fractions in respect
of the Member will not exceed 1.0. If this reduction does
not ensure that the limitation set forth in this Paragraph
(B) is not exceeded, then the annual addition to any
defined contribution plan, other than the Plan, shall be
reduced in accordance with the provisions of that plan but
only to the extent necessary to ensure that such limitation
is not exceeded.
(C) In the event that, due to forfeitures, reasonable error in
estimating a Member's compensation, or other limited facts
and circumstances, total contributions and/or deferrals to
a Member's Account are found to exceed the limitations of
this Section, the TPA, at the direction of the Plan
Administrator, shall cause contributions made under Article
III in excess of such limitations to be refunded to the
affected Member, with earnings thereon, and shall take
appropriate steps to reduce, if necessary, the Employer
contributions made with respect to those returned
contributions. Such refunds shall not be deemed to be
withdrawals, loans, or
52<PAGE>
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distributions from the Plan. If a Member's annual
contributions exceed the limitations contained in Paragraph
(B) of this Section after the Member's Article III
contributions, with earnings thereon, if any, have been
refunded to such Member, any Employer supplemental and/or
profit sharing contribution to be allocated to such Member
in respect of any Contribution Determination Period
(including allocations as provided in this Paragraph) shall
instead be allocated to or for the benefit of all other
Members who are Employees in Employment as of the last day
of the Contribution Determination Period as determined under
the Adoption Agreement and allocated in the same proportion
that each such Member's Salary for such Contribution
Determination Period bears to the total Salary for such
Contribution Determination Period of all such Members or,
the TPA may, at the election of the Employer, utilize such
excess to reduce the contributions which would otherwise be
made for the succeeding Contribution Determination Period by
the Employer. If, with respect to any Contribution
Determination Period, there is an excess profit sharing
contribution, and such excess cannot be fully allocated in
accordance with the preceding sentence because of the
limitations prescribed in Paragraph (B) of this Section,
the amount of such excess which cannot be so allocated
shall be allocated to the Employer Credit Account and made
available to the Employer pursuant to the terms of Article
VI. The TPA, at the direction of the Plan Administrator,
in accordance with Paragraph (D) of this Section, shall
take whatever additional action may be necessary to assure
that contributions to Members' Accounts meet the
requirements of this Section.
(D) In addition to the steps set forth in Paragraph (C) of this
Section, the Employer may from time to time adjust or
modify the maximum limitations applicable to contributions
made in respect of a Member under this Section 10.1 as may
be required or permitted by the Code or ERISA prior to or
following the date that allocation of any such
contributions commences and shall take appropriate action
to reallocate the annual contributions which would
otherwise have been made but for the application of this
Section.
(E) Membership in the Plan shall not give any Employee the
right to be retained in the Employment of the Employer and
shall not affect the right of the Employer to discharge any
Employee.
(F) Each Member, Spouse and Beneficiary assumes all risk in
connection with any decrease in the market value of the
assets of the Trust Fund. Neither the Employer nor the
Trustee guarantees that upon withdrawal, the value of a
Member's Account will be equal to or greater than the
amount of the Member's own deferrals or contributions, or
those credited on his behalf in which the Member has a
vested interest, under the Plan.
53<PAGE>
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(G) The establishment, maintenance or crediting of a Member's
Account pursuant to the Plan shall not vest in such Member
any right, title or interest in the Trust Fund except at
the times and upon the terms and conditions and to the
extent expressly set forth in the Plan and the Trust
Agreement.
(H) The Trust Fund shall be the sole source of payments under
the Plan and the Employer, Plan Administrator and TPA
assume no liability or responsibility for such payments,
and each Member, Spouse or Beneficiary who shall claim the
right to any payment under the Plan shall be entitled to
look only to the Trust Fund for such payment.
SECTION 10.2 TOP HEAVY PROVISIONS
--------------------
The Plan will be considered a Top Heavy Plan for any Plan Year
if it is determined to be a Top Heavy Plan as of the last day of
the preceding Plan Year. The provisions of this Section 10.2
shall apply and supersede all other provisions in the Plan
during each Plan Year with respect to which the Plan is
determined to be a Top Heavy Plan.
(A) For purposes of this Section 10.2, the following terms
shall have the meanings set forth below:
(1) "Affiliate" shall mean any entity affiliated with the
Employer within the meaning of Section 414(b), 414(c)
or 414(m) of the Code, or pursuant to the IRS
Regulations under Section 414(o) of the Code, except
that for purposes of applying the provisions hereof
with respect to the limitation on contributions,
Section 415(h) of the Code shall apply.
(2) "Aggregation Group" shall mean the group composed of
each qualified retirement plan of the Employer or an
Affiliate in which a Key Employee is a member and each
other qualified retirement plan of the Employer or an
Affiliate which enables a plan of the Employer or an
Affiliate in which a Key Employee is a member to
satisfy Sections 401(a)(4) or 410 of the Code. In
addition, the TPA, at the direction of the Plan
Administrator, may choose to treat any other qualified
retirement plan as a member of the Aggregation Group
if such Aggregation Group will continue to satisfy
Sections 401(a)(4) and 410 of the Code with such plan
being taken into account.
(3) "Key Employee" shall mean a "Key Employee" as defined in
Sections 416(i)(1) and (5) of the Code and the IRS
Regulations thereunder. For purposes of Section 416 of
the Code and for purposes of determining who is a Key
Employee, an Employer which is not a corporation may
have "officers" only for Plan Years beginning after
December 31, 1985. For purposes of determining who is
a Key Employee pursuant to this Subparagraph (3),
compensation shall have the meaning prescribed in
Section 414(s) of the Code, or to the
54<PAGE>
<PAGE>
extent required by the Code or the IRS Regulations,
Section 1.415-2(d) of the IRS Regulations.
(4) "Non-Key Employee" shall mean a "Non-Key Employee" as
defined in Section 416(i)(2) of the Code and the IRS
Regulations thereunder.
(5) "Top Heavy Plan" shall mean a "Top Heavy Plan" as
defined in Section 416(g) of the Code and the IRS
Regulations thereunder.
(B) Subject to the provisions of Paragraph (D) below, for each
Plan Year that the Plan is a Top Heavy Plan, the
Employer's contribution (including contributions
attributable to salary reduction or similar arrangements)
allocable to each Employee (other than a Key Employee) who
has satisfied the eligibility requirement(s) of Article
II, Section 2, and who is in service at the end of the
Plan Year, shall not be less than the lesser of (i) 3% of
such eligible Employee's compensation (as defined in
Section 414(s) of the Code or to the extent required by
the Code or the IRS Regulations, Section 1.415-2(d) of the
Regulations), or (ii) the percentage at which Employer
contributions for such Plan Year are made and allocated on
behalf of the Key Employee for whom such percentage is the
highest. For the purpose of determining the appropriate
percentage under clause (ii), all defined contribution
plans required to be included in an Aggregation Group
shall be treated as one plan. Clause (ii) shall not apply
if the Plan is required to be included in an Aggregation
Group which enables a defined benefit plan also required
to be included in said Aggregation Group to satisfy
Sections 401(a)(4) or 410 of the Code.
(C) If the Plan is a Top Heavy Plan for any Plan Year, and the
Employer has elected vesting Schedule 3 or 6 under Article
VI, the vested interest of each Member, who is credited
with at least one Hour of Employment on or after the Plan
becomes a Top Heavy Plan, in the Units allocated to his
Account shall not be less than the percentage determined
in accordance with the following schedule:
Completed Years of Vested
Employment Percentage
------------------ ----------
Less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 or more 100%
55<PAGE>
<PAGE>
(D) (1) For each Plan Year that the Plan is a Top Heavy Plan,
1.0 shall be substituted for 1.25 as the multiplicand
of the dollar limitation in determining the
denominator of the defined benefit plan fraction and
of the defined contribution plan fraction for purposes
of Section 415(e) of the Code.
(2) If, after substituting "90%" for "60%" wherever the
latter appears in Section 416(g) of the Code, the Plan
is not determined to be a Top Heavy Plan, the
provisions of Subparagraph (1) of this Paragraph (D)
shall not be applicable if the minimum Employer
contribution allocable to any Member who is a Non-Key
Employee as specified in Paragraph (B) of this Section
is determined by substituting "4%" for 3%.
(E) The TPA shall, to the maximum extent permitted by the Code
and in accordance with the IRS Regulations, apply the
provisions of this Section 10.2 by taking into account the
benefits payable and the contributions made under any
other qualified plan maintained by the Employer, to
prevent inappropriate omissions or required duplication of
minimum contributions.
SECTION 10.3 INFORMATION AND COMMUNICATIONS
------------------------------
Each Employer, Member, Spouse and Beneficiary shall be required
to furnish the TPA with such information and data as may be
considered necessary by the TPA. All notices, instructions and
other communications with respect to the Plan shall be in such
form as is prescribed from time to time by the TPA, shall be
mailed by first class mail or delivered personally, and shall be
deemed to have been duly given and delivered only upon actual
receipt thereof by the TPA. All information and data submitted
by an Employer or a Member, including a Member's birth date,
marital status, salary and circumstances of his Employment and
termination thereof, may be accepted and relied upon by the TPA.
All communications from the Employer or the Trustee to a Member,
Spouse or Beneficiary shall be deemed to have been duly given if
mailed by first class mail to the address of such person as last
shown on the records of the Plan.
SECTION 10.4 SMALL ACCOUNT BALANCES
----------------------
Notwithstanding the foregoing provisions of the Plan, if the
value of all portions of a Member's Account under the Plan, when
aggregated, is equal to or exceeds $3,500, then the Account will
not be distributed without the consent of the Member prior to
age 65 (at the earliest), but if the aggregate value of all
portions of his Account is less than $3,500, then his Account
will be distributed as soon as practicable following the
termination of Employment by the Member.
56<PAGE>
<PAGE>
SECTION 10.5 AMOUNTS PAYABLE TO INCOMPETENTS, MINORS OR ESTATES
--------------------------------------------------
If the Plan Administrator shall find that any person to whom any
amount is payable under the Plan is unable to care for his
affairs because of illness or accident, or is a minor, or has
died, then any payment due him or his estate (unless a prior
claim therefor has been made by a duly appointed legal
representative) may be paid to his Spouse, relative or any other
person deemed by the Plan Administrator to be a proper recipient
on behalf of such person otherwise entitled to payment. Any
such payment shall be a complete discharge of the liability of
the Trust Fund therefor.
SECTION 10.6 NON-ALIENATION OF AMOUNTS PAYABLE
---------------------------------
Except insofar as may otherwise be required by applicable law,
or Article VIII, or pursuant to the terms of a Qualified
Domestic Relations Order, no amount payable under the Plan shall
be subject in any manner to alienation by anticipation, sale,
transfer, assignment, bankruptcy, pledge, attachment, charge or
encumbrance of any kind, and any attempt to so alienate shall be
void; nor shall the Trust Fund in any manner be liable for or
subject to the debts or liabilities of any person entitled to
any such amount payable; and further, if for any reason any
amount payable under the Plan would not devolve upon such person
entitled thereto, then the Employer, in its discretion, may
terminate his interest and hold or apply such amount for the
benefit of such person or his dependents as it may deem proper.
For the purposes of the Plan, a "Qualified Domestic Relations
Order" means any judgment, decree or order (including approval
of a property settlement agreement) which has been determined by
the Plan Administrator, in accordance with procedures
established under the Plan, to constitute a Qualified Domestic
Relations Order within the meaning of Section 414(p)(1) of the
Code. No amounts may be withdrawn under Article VII, and no
loans granted under Article VIII, if the TPA has received a
document which may be determined following its receipt to be a
Qualified Domestic Relations Order prior to completion of review
of such order by the Plan Administrator within the time period
prescribed for such review by the IRS Regulations.
SECTION 10.7 UNCLAIMED AMOUNTS PAYABLE
-------------------------
If the TPA cannot ascertain the whereabouts of any person to
whom an amount is payable under the Plan, and if, after 5 years
from the date such payment is due, a notice of such payment due
is mailed to the address of such person, as last shown on the
records of the Plan, and within 3 months after such mailing such
person has not filed with the TPA or Plan Administrator written
claim therefor, the Plan Administrator may direct in accordance
with ERISA that the payment (including the amount allocable to
the Member's contributions) be cancelled, and used in abatement
of the Plan's administrative expenses, provided that appropriate
provision is made for recrediting the payment if such person
subsequently makes a claim therefor.
57<PAGE>
<PAGE>
SECTION 10.8 LEAVES OF ABSENCE
-----------------
(A) If the Employer's personnel policies allow leaves of
absence for all similarly situated Employees on a
uniformly available basis under the circumstances
described in Paragraphs (B)(1)-(4) below, then
contribution allocations and vesting service will continue
to the extent provided in Paragraphs (B)(1)-(4).
(B) For purposes of the Plan, there are only four types of
approved Leaves of Absence:
(1) Non-military leave granted to a Member for a period
not in excess of one year during which service is
recognized for vesting purposes and the Member is
entitled to share in any supplemental contributions
under Article III or forfeitures under Article VI, if
any, on a pro-rata basis, determined by the Salary
earned during the Plan Year or Contribution
Determination Period; or
(2) Non-military leave or layoff granted to a Member for a
period not in excess of one year during which service
is recognized for vesting purposes, but the Member is
not entitled to share in any contributions or
forfeitures as defined under (1) above, if any, during
the period of the leave; or
(3) To the extent not otherwise required by applicable
law, military or other governmental service leave
granted to a Member from which he returns directly to
the service of the Employer. Under this leave, a
Member may not share in any contributions or
forfeitures as defined under (1) above, if any, during
the period of the leave, but vesting service will
continue to accrue; or
(4) To the extent not otherwise required by applicable
law, a military leave granted at the option of the
Employer to a Member who is subject to military
service pursuant to an involuntary call-up in the
Reserves of the U.S. Armed Services from which he
returns to the service of the Employer within 90 days
of his discharge from such military service. Under
this leave, a Member is entitled to share in any
contributions or forfeitures as defined under (1)
above, if any, and vesting service will continue to
accrue. Notwithstanding any provision of the Plan to
the contrary, if a Member has one or more loans
outstanding at the time of this leave, repayments on
such loan(s) may be suspended, if the Member so
elects, until such time as the Member returns to the
service of the Employer or the end of the leave,
if earlier.
58<PAGE>
<PAGE>
SECTION 10.9 RETURN OF CONTRIBUTIONS TO EMPLOYER
-----------------------------------
(A) In the case of a contribution that is made by an Employer
by reason of a mistake of fact, the Employer may request
the return to it of such contribution within one year
after the payment of the contribution, provided such
refund is made within one year after the payment of the
contribution.
(B) In the case of a contribution made by an Employer or a
contribution otherwise deemed to be an Employer
contribution under the Code, such contribution shall be
conditioned upon the deductibility of the contribution by
the Employer under Section 404 of the Code. To the extent
the deduction for such contribution is disallowed, in
accordance with IRS Regulations, the Employer may request
the return to it of such contribution within one year
after the disallowance of the deduction.
(C) In the event that the IRS 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.
The contributions returned under (A), (B) or (C) above may not
include any gains on such excess contributions, but must be
reduced by any losses.
SECTION 10.10 CONTROLLING LAW
---------------
The Plan and all rights thereunder shall be governed by and
construed in accordance with ERISA and the laws of the State of
New York.
59<PAGE>
<PAGE>
ARTICLE XI
AMENDMENT & TERMINATION
SECTION 11.1 GENERAL
-------
While the Plan is intended to be permanent, the Plan may be
amended or terminated completely by the Employer at any time at
the discretion of its Board of Directors. Except where
necessary to qualify the Plan or to maintain qualification of
the Plan, no amendment shall reduce any interest of a Member
existing prior to such amendment. Subject to the terms of the
Adoption Agreement, written notice of such amendment or
termination as resolved by the Board shall be given to the
Trustee, the Plan Administrator and the TPA. Such notice shall
set forth the effective date of the amendment or termination or
cessation of contributions.
SECTION 11.2 TERMINATION OF PLAN AND TRUST
-----------------------------
This Plan and any related Trust Agreement shall in any event
terminate whenever all property held by the Trustee shall have
been distributed in accordance with the terms hereof.
SECTION 11.3 LIQUIDATION OF TRUST ASSETS IN THE EVENT OF
-------------------------------------------
TERMINATION
-----------
In the event that the Employer's Board of Directors shall decide
to terminate the Plan, or, in the event of complete cessation of
Employer contributions, the rights of Members to the amounts
standing to their credit in their Accounts shall be deemed fully
vested and the Plan Administrator shall direct the Trustee to
either continue the Trust in full force and effect and continue
so much of the Plan in full force and effect as is necessary to
carry out the orderly distribution of benefits to Members and
their Beneficiaries upon retirement, Disability, death or
termination of Employment; or (a) reduce to cash such part or
all of the Plan assets as the Plan Administrator may deem
appropriate; (b) pay the liabilities, if any, of the Plan; (c)
value the remaining assets of the Plan as of the date of
notification of termination and proportionately adjust Members'
Account balances; (d) distribute such assets in cash to the
credit of their respective Accounts as of the notification of
the termination date; and (e) distribute all balances which have
been segregated into a separate fund to the persons entitled
thereto; provided that no person in the event of termination
shall be required to accept distribution in any form other than
cash.
SECTION 11.4 PARTIAL TERMINATION
-------------------
The Employer may terminate the Plan in part without causing a
complete termination of the Plan. In the event a partial
termination occurs, the Plan Administrator shall determine the
portion of the Plan assets attributable to the Members affected
by such partial termination and the provisions of Section 11.3
shall apply with respect to such portion as if it were a
separate fund.
60<PAGE>
<PAGE>
SECTION 11.5 POWER TO AMEND
--------------
(A) Subject to Section 11.6, the Employer, through its Board
of Directors, shall have the power to amend the Plan in
any manner which it deems desirable, including, but not by
way of limitation, the right to change or modify the
method of allocation of such contributions, to change any
provision relating to the distribution of payment, or
both, of any of the assets of the Trust Fund. Further,
the Employer may (i) change the choice of options in the
Adoption Agreement; (ii) add overriding language in the
Adoption Agreement when such language is necessary to
satisfy Section 415 or Section 416 of the Code because of
the required aggregation of multiple plans; and (iii) add
certain model amendments published by the IRS which
specifically provide that their adoption will not cause
the Plan to be treated as individually designed. An
Employer that amends the Plan for any other reason,
including a waiver of the minimum funding requirement
under Section 412(d) of the Code, will be considered to
have an individually designed plan.
Any amendment shall become effective upon the vote of the
Board of Directors of the Employer, unless such vote of
the Board of Directors of the Employer specifies the
effective date of the amendment.
Such effective date of the amendment may be made
retroactive to the vote of the Board of Directors, to the
extent permitted by law.
(B) The Employer expressly recognizes the authority of the
Sponsor, Pentegra Services, Inc., to amend the Plan from
time to time, except with respect to elections of the
Employer in the Adoption Agreement, and the Employer shall
be deemed to have consented to any such amendment. The
Employer shall receive a written instrument indicating the
amendment of the Plan and such amendment shall become
effective as of the date of such instrument. No such
amendment shall in any way impair, reduce or affect any
Member's vested and nonforfeitable rights in the Plan and
Trust.
SECTION 11.6 SOLELY FOR BENEFIT OF MEMBERS, TERMINATED MEMBERS
-------------------------------------------------
AND THEIR BENEFICIARIES
-----------------------
No changes may be made in the Plan which shall vest in the
Employer, directly or indirectly, any interest, ownership or
control in any of the present or subsequent assets of the Trust
Fund.
No part of the funds of the Trust other than such part as may be
required to pay taxes, administration expenses and fees, shall
be reduced by any amendment or be otherwise used for or diverted
to purposes other than the exclusive benefit of Members, retired
Members, Former Members, and their Beneficiaries, except as
otherwise provided in Section 10.9 and under applicable law.
61<PAGE>
<PAGE>
No amendment shall become effective which reduces the
nonforfeitable percentage of benefit that would be payable to
any Member if his Employment were to terminate and no amendment
which modifies the method of determining that percentage shall
be made effective with respect to any Member with at least three
Years of Service unless such member is permitted to elect,
within a reasonable period after the adoption of such amendment,
to have that percentage determined without regard to such
amendment.
SECTION 11.7 SUCCESSOR TO BUSINESS OF THE EMPLOYER
-------------------------------------
Unless this Plan and the related Trust Agreement be sooner
terminated, a successor to the business of the Employer by
whatever form or manner resulting may continue the Plan and the
related Trust Agreement by executing appropriate supplementary
agreements and such successor shall thereupon succeed to all the
rights, powers and duties of the Employer hereunder. The
Employment of any Employee who has continued in the employ of
such successor shall not be deemed to have terminated or severed
for any purpose hereunder if such supplemental agreement so
provides.
SECTION 11.8 MERGER, CONSOLIDATION AND TRANSFER
----------------------------------
The Plan shall not be merged or consolidated, in whole or in
part, with any other plan, nor shall any assets or liabilities
of the Plan be transferred to any other plan unless the benefit
that would be payable to any affected Member under such plan if
it terminated immediately after the merger, consolidation or
transfer, is equal to or greater than the benefit that would be
payable to the affected Member under this Plan if it terminated
immediately before the merger, consolidation or transfer.
SECTION 11.9 REVOCABILITY
------------
This Plan is based upon the condition precedent that it shall be
approved by the Internal Revenue Service as qualified under
Section 401(a) of the Code and exempt from taxation under
Section 501(a) of the Code. Accordingly, notwithstanding
anything herein to the contrary, if a final ruling shall be
received in writing from the IRS that the Plan does not
initially qualify under the terms of Sections 401(a) and 501(a)
of the Code, there shall be no vesting in any Member of assets
contributed by the Employer and held by the Trustee under the
Plan. Upon receipt of notification from the IRS that the Plan
fails to qualify as aforesaid, the Employer reserves the right,
at its option, to either amend the Plan in such manner as may be
necessary or advisable so that the Plan may so qualify, or to
withdraw and terminate the Plan.
62<PAGE>
<PAGE>
Upon the event of withdrawal and termination, the Employer shall
notify the Trustee and provide the Trustee with a copy of such
ruling and the Trustee shall transfer and pay over to the
Employer all of the net assets contributed by the Employer
pursuant to the Plan which remain after deducting the proper
expense of termination and the Trust Agreement shall thereupon
terminate. For purposes of this Article XI, "final ruling"
shall mean either (1) the initial letter ruling from the
District Director in response to the Employer's original
application for such a ruling, or (2) if such letter ruling is
unfavorable and a written appeal is taken or protest filed
within 60 days of the date of such letter ruling, it shall mean
the ruling received in response to such appeal or protest.
If the Plan is terminated, the Plan Administrator shall promptly
notify the IRS and such other appropriate governmental authority
as applicable law may require. Neither the Employer nor its
Employees shall make any further contributions under the Plan
after the termination date, except that the Employer shall remit
to the TPA a reasonable administrative fee to be determined by
the TPA for each Member with a balance in his Account to defray
the cost of implementing its termination. Where the Employer
has terminated the Plan pursuant to this Article, the Employer
may elect to transfer assets from the Plan to a successor plan
qualified under Section 401(a) of the Code in which event the
Employer shall remit to the TPA an additional administrative fee
to be determined by the TPA to defray the cost of such transfer
transaction.
63<PAGE>
<PAGE>
TRUSTS ESTABLISHED UNDER THE PLAN
Assets of the Plan are held in trust under separate Trust
Agreements with the Trustee or Trustees. Any Eligible Employee
or Member may obtain a copy of these Trust Agreements from the
Plan Administrator.
IN WITNESS WHEREOF, and as conclusive evidence of the adoption
of the Plan by the Employer, the Employer has caused these
presents to be executed on its behalf and its corporate seal to
be hereunder affixed as of the _____ day of _____________, 19__.
ATTEST:
_____________________________ By ___________________________
Clerk
64<PAGE>
<PAGE>
PENTEGRA
108 Corporate Park Drive
White Plains, NY 10603-3805
Tel: 800-872-3473
Fax: 914-694-9384
<PAGE>
<PAGE>
<PAGE>
ADOPTION AGREEMENT
FOR
FIRST STATE SAVINGS BANK, SSB
EMPLOYEES' SAVINGS & PROFIT SHARING PLAN AND TRUST
Name of Employer: FIRST STATE SAVINGS BANK, SSB
---------------------------------------------
Address: 445 SOUTH MAIN STREET, BURLINGTON, NC 27216
---------------------------------------------
Phone No.: (910) 227-8861
---------------------------------------------
Contact Person: CHRIS BAKER, EXECUTIVE VICE PRESIDENT
---------------------------------------------
Name of Plan: FIRST STATE SAVINGS BANK, SSB EMPLOYEES'
---------------------------------------------
SAVINGS AND PROFIT SHARING PROFIT SHARING
---------------------------------------------
PLAN AND TRUST
---------------------------------------------
THIS ADOPTION AGREEMENT, upon execution by the Employer and the
Trustee, and subsequent approval by a duly authorized
representative of Pentegra Services, Inc. (the "Sponsor"),
together with the Sponsor's Employees' Savings & Profit Sharing
Plan and Trust Agreement (the "Agreement"), shall constitute the
First State Savings Bank, SSB Employees' Savings & Profit
Sharing Plan and Trust (the "Plan"). The terms and provisions
of the Agreement are hereby incorporated herein by this
reference; provided, however, that if there is any conflict
between the Adoption Agreement and the Agreement, this Adoption
Agreement shall control.
The elections hereinafter made by the Employer in this Adoption
Agreement may be changed by the Employer from time to time by
written instrument executed by a duly authorized representative
thereof; but if any other provision hereof or any provision of
the Agreement is changed by the Employer other than to satisfy
the requirements of Section 415 or 416 of the Internal Revenue
Code of 1986, as amended (the "Code"), because of the required
aggregation of multiple plans, or if as a result of any change
by the Employer the Plan fails to obtain or retain its tax-
qualified status under Section 401 (a) of the Code, the Employer
shall be deemed to have amended the Plan evidenced hereby and by
the Agreement into an individually designed plan, in which event
the Sponsor shall thereafter have no further responsibility for
the tax-qualified status of the Plan. However, the Sponsor may
amend any term, provision or definition of this Adoption
Agreement or the Agreement in such manner as the Sponsor may
deem necessary or advisable from time to time and the Employer
and the Trustee, by execution hereof, acknowledge and consent
thereto. Notwithstanding the foregoing, no amendment of this
Adoption Agreement or of the Agreement shall increase the duties
or responsibilities of the Trustee without the written consent
thereof.
1<PAGE>
<PAGE>
I. EFFECT OF EXECUTION OF ADOPTION AGREEMENT
The Employer, upon execution of this Adoption Agreement by
a duly authorized representative thereof, (choose 1 or 2):
1. ___ Establishes as a new plan the [ Name of Employer ]
Employees' Savings & Profit Sharing Plan and
Trust, effective ________________, 19__.
2. _X_ Amends its existing defined contribution plan
and trust First State Savings Bank, SSB Savings
Plan dated January 1, 1987, in its entirety into
the First State Savings Bank, SSB Employees'
Savings & Profit Sharing Plan and Trust, effective
July 1, 1996, except as otherwise provided herein
or in the Agreement.
II. DEFINITIONS
A. "Contribution Determination Period' for purposes of
determining and allocating Employer profit sharing
contributions means (choose 1, 2, 3 or 4):
1._X_ The Plan Year.
2.___ The Employer's Fiscal Year (defined as the
Plan's "limitation year") being the twelve
(12) consecutive month period commencing
___________(month/day) and ending __________
(month/day).
3.___ The three (3) consecutive monthly periods
that comprise each of the Plan Year
quarters.
4.___ The three (3) consecutive monthly periods
that comprise each of the Employer's Fiscal
Year quarters. (Employer's Fiscal Year is
the twelve (12) consecutive month period
commencing ____________ (month/day) and
ending ____________ (month/day).)
B. "Effective Date" means July 1, 1996.
C. Employer
1. "Employer," for purposes of the Plan, shall
mean:
First State Savings Bank, SSB
-------------------------------------------
2. The Employer is (choose whichever may apply):
(a) _X_ A member of a controlled group
of corporations under Section 414(b)
of the Code.
(b) _X_ A member of a group of entities under
common control under Section 414(c)
of the Code.
(c) ___ A member of an affiliated service
group under Section 414(m) of the
Code.
2<PAGE>
<PAGE>
(d) ___ A corporation.
(e) ___ A sole proprietorship or partnership.
(f) ___ A Subchapter S corporation.
3. Employer's Taxable Year Ends on 9/30
----
4. Employer's Federal Taxpayer Identification
Number is 56-0223240
----------
5. Employer's Plan Number is (enter 3-digit
number) 002
---
D. "Entry Date" means the first day of the (choose 1
or 2):
1._X_ Calendar month coinciding with or next
following the date the Employee satisfies
the Eligibility requirements described in
Section III.
2.___ Calendar quarter coinciding with or next
following the date the Employee satisfies
the Eligibility requirements described in
Section III.
E. "Member" means an Employee enrolled in the
membership of the Plan.
F. "Normal Retirement Age" means (choose 1 or 2):
1._X_ Attainment of age 65 (select an age not
less than 55 and not greater than 65).
2.___ Later of: (i) attainment of age 65 or (ii)
the fifth anniversary of the date the
Member commenced participation in the
Plan.
G. "Normal Retirement Date" means the first day of
the first calendar month coincident with or next
following the date upon which a Member attains his
or her Normal Retirement Age.
H. "Plan Year" means the twelve (12) consecutive
month period beginning on each January 1.
I. "Salary" for benefit purposes under the Plan means
(choose 1, 2 or 3):
1._X_ Basic Salary only.
2.___ Basic Salary plus one or more of the
following (if 2 is chosen, then choose
(a), (b) or (c), whichever shall apply):
(a) __ Commissions not in excess of $______
(b) __ Overtime
(c) __ Overtime and bonuses
3<PAGE>
<PAGE>
3.___ Total taxable compensation as reported on
Form W-2 (exclusive of any compensation
deferred from a prior year).
Note: Member pre-tax elective deferrals, if any,
are always included in Plan Salary.
J. "Salary" shall not include:
____ Member pre-tax contributions to a Code
Section 125 cafeteria plan.
III. ELIGIBILITY REQUIREMENTS
A. All Employees shall be eligible to participate in
the Plan in accordance with the provisions of
Article II of the Plan, except the following
Employees shall be excluded (choose whichever
shall apply):
1. _X_ Employees who have not attained age 21.
2. ___ Employees who have not, during the 12
consecutive month period (1-11, 12 or 24)
beginning with an Employee's Date of
Employment, Date of Reemployment or any
anniversary thereof, completed 1000 number
of Hours of Service (determined by
multiplying the number of months above by
83 1/3).
Note: Employers which permit Members to
make pre-tax elective deferrals to the Plan
(see V.A.3.) may not elect a 24 month
eligibility period.
3. ___ Employees included in a unit of Employees
covered by a collective bargaining
agreement, if retirement benefits were the
subject of good faith bargaining between
the Employer and Employee representatives.
4. ___ Employees who are nonresident aliens and
who receive no earned income from the
Employer which constitutes income from
sources within the United States.
5. ___ Employees included in the following job
classifications:
(a) ____ Hourly Employees
(b) ____ Salaried Employees
6. ___ Employees of the following employers which
are aggregated under Section 414(b),
414(c) or 414(m) of the Code:
_________________________________
_________________________________
_________________________________
Note: If no entries are made above, all Employees
shall be eligible to participate in the
4<PAGE>
<PAGE>
Plan on the later of: (i) the Effective
Date or (ii) the first day of the calendar
month or calendar quarter (as designated by
the Employer in Section II.D.) coinciding
with or immediately following the
Employee's Date of Employment or, as
applicable, Date of Reemployment.
B. Such Eligibility Computation Period established
above shall be applicable to (choose 1 or 2):
1. _X_ Both present and future Employees.
2. ___ Future Employees only.
C. Such Eligibility requirements established above
shall be (choose 1 or 2):
1. ___ Applied to the designated Employee group
on and after the Effective Date of the
Plan.
2. ___ Waived for the _____ consecutive monthly
period (may not exceed 12) beginning on
the Effective Date of the Plan.
IV. Hours of Employment and Prior Employment Credit
A. The number of Hours of Employment with which an
Employee or Member is credited shall be (choose 1
or 2):
1. _X_ The actual number of Hours of
Employment. (Hour of Service Method)
2. ___ 83 1/3 Hours of Employment for every
month of Employment. (Elapsed Time
Method)
B. Prior Employment Credit:
1. ___ Employment with the following entity or
entities shall be included for eligibility
and vesting purposes:
Note: If this Plan is a continuation of a
Predecessor Plan, service under the
Predecessor Plan shall be counted as
Employment under this Plan.
________________________________________________
________________________________________________
________________________________________________
V. Contributions
Note: Annual Member pre-tax elective deferrals, Employer
matching contributions, Employer basic
contributions, Employer supplemental
contributions, Employer profit sharing
contributions and Employer Qualified Non-Elective
contributions, in the aggregate, may not exceed
15% of all Members' Salary (excluding from Salary
Member pre-tax elective deferrals).
5<PAGE>
<PAGE>
A. Employee Contributions (choose 1 or 2; 3 or 4; 5
and/or 6):
1. ___ A Member may make after-tax
contributions to the Plan, based on
multiples of 1% of monthly Salary.
2. _X_ Member may not make after-tax
contributions to the Plan.
3. _X_ A Member may make pre-tax elective
deferrals to the Plan, based on
multiples of 1% of monthly Salary.
4. ___ A Member may not make pre-tax elective
deferrals to the Plan.
5. _X_ The maximum amount of monthly
contributions a Member may make to the
Plan is 15% (1-20) of the Member's
monthly Salary.
6. _X_ An Employee may allocate a rollover
contribution to the Plan prior to
satisfying the Eligibility requirements
described above.
B. A Member may change his or her contribution rate
(choose 1 or 2):
1. _X_ 1 time per calendar month.
2. ___ 1 time per calendar quarter.
C. Employer Matching Contributions (choose 1, 2, 3 or
4; and fill in 5 if applicable):
1. ___ No Employer matching contributions will
be made to the Plan.
2. _X_ The Employer shall allocate to each
contributing Member's Account an amount
equal to 50% (based on 5% increments not
to exceed 200%) of the Member's
contributions for that month.
3. ___ The Employer shall allocate to each
contributing Member's Account an amount
determined in accordance with the
following schedule:
Years of Employment Matching %
------------------- ----------
Less than 3 50%
At least 3, but less than 5 75%
5 or more 100%
4. ___ The Employer shall allocate to each
contributing Member's Account an amount
determined in accordance with the
following schedule:
Years of Employment Matching %
------------------- ----------
Less than 3 100%
At least 3, but less than 5 150%
5 or more 200%
6<PAGE>
<PAGE>
5. ___ The Employer matching contributions
under 2, 3 or 4 above shall be based on
the Member's contributions not in excess
of 6% (1-20 but not in excess of the
percentage specified in A.5. above) of
the Member's Salary.
D. Employer Basic Contributions (choose 1 or 2):
1. _X_ No Employer basic contributions will be
made to the Plan.
2. ___ The Employer shall allocate an amount
equal to _____% (based on 1% increments
not to exceed 15%) of Member's Salary
for the month to (choose (a) or (b)):
(a) ___ The Accounts of all Members
(b) ___ The Accounts of all Members who
were employed with the Employer
on the last day of such month.
E. Employer Supplemental Contributions:
The Employer may make supplemental contributions
for any Plan Year in accordance with Section 3.7
of the Plan.
F. Employer Profit Sharing Contributions (Choose 1,
2, 3, 4, or 5):
1. _X_ No Employer Profit Sharing Contributions
will be made to the Plan.
Non-Integrated Formula
2. ___ Profit sharing contributions shall be
allocated to each Member in the same
ratio as each Member's Salary during
such Contribution Determination Period
bears to the total of such Salary of all
Members.
3. ___ Profit sharing contributions shall be
allocated to each Member in the same
ratio as each Member's Salary for the
portion of the Contribution
Determination Period during which the
Member satisfied the Employer's
eligibility requirement(s) bears to the
total of such Salary of all Members.
Integrated Formula
4. ___ Profit sharing contributions shall be
allocated to each Member's Account in a
uniform percentage (specified by the
Employer as __%) of each Member's Salary
during the Contribution Determination
Period up to the Social Security
Taxable Wage Base as defined in Section
___ of the Plan ("Base Salary") for the
Plan Year that includes such Contribution
Determination Period, plus a uniform
percentage(specified by the Employer as
__%) of each Member's Salary for the
Contribution Determination Period in
excess of the Social Security Taxable
Wage Base ("Excess Salary") for the Plan
Year that includes such Contribution
Determination Period, in accordance with
Article III of the Plan.
7 <PAGE>
<PAGE>
5. ____ Profit sharing contributions shall be
allocated to each Member's Account in a
uniform percentage (specified by the
Employer as __%) of each Member's Salary
for the portion of the Contribution
Determination Period during which the
Member satisfied the Employer's
eligibility requirement(s), if any, up
to the Base Salary for the Plan Year
that includes such Contribution
Determination Period, plus a uniform
percentage (specified by the Employer as
__%) of each Member's Excess Salary for
the portion of the Contribution
Determination Period during which the
Member satisfied the Employer's
eligibility requirement(s) in accordance
with Article III of the Plan.
G. Allocation of Employer Profit Sharing
Contributions:
In accordance with Section V, G above, a Member
shall be eligible to share in Employer Profit
Sharing Contributions, if any, as follows (choose
1 or 2):
1. ___ A Member shall be eligible for an
allocation of Employer Profit Sharing
Contributions for a Contribution
Determination Period in all events.
2. ___ A Member shall be eligible for an
allocation of Employer Profit Sharing
Contributions for a Contribution
Determination Period only if he or she
(choose (a), (b) or (c) whichever shall
apply):
(a) ___ is employed on the last day of
the Contribution Determination
Period or retired, died or became
totally and permanently disabled
prior to the last day of the
Contribution Determination
Period.
(b) ___ completed 1,000 Hours of
Employment if the Contribution
Determination Period is a period
of 12 months (250 Hours of
Employment if the Contribution
Determination Period is a period
of 3 months) or retired, died or
became totally and permanently
disabled prior to the last day of
the Contribution Determination
Period.
(c) ___ is employed on the last day of
the Contribution Determination
Period and, if such period is 12
months, completed 1,000 Hours of
Employment (250 Hours of
Employment if the Contribution
Determination Period is a period
of 3 months) or retired, died or
became totally and permanently
disabled prior to the last day of
the Contribution Determination
Period.
H. Employer Qualified Nonelective Contributions:
The Employer may make qualified nonelective
contributions for any Plan Year in accordance with
Section 3.9 of the Plan.
8
<PAGE>
VI. INVESTMENT FUNDS
The Employer hereby selects the following Investment
Funds to be made available under the Plan (choose
whichever shall apply). The Employer agrees and
acknowledges that the selection of Investment Funds
made in this Section VI is solely its responsibility,
and no other person, including the Sponsor, has any
discretionary authority or control with respect to such
selection process.
1. _X_ 500 Stock Index Fund
2. _X_ Stable Value Fund
3. _X_ MidCap 400 Stock Index Fund
4. _X_ Government Money Market Fund
5. _X_ Bond Index Fund
6. _X_ Employer CD Fund
VII. EMPLOYER SECURITIES
A. If the Employer makes available an Employer Stock
Fund pursuant to Section VI of this Adoption
Agreement, then voting and tender offer rights
with respect to Employer Stock shall be delegated
and exercised as follows (choose 1 or 2):
1. ____ The Plan Administrator shall direct the
Trustee as to the voting of all Employer
Stock and as to all rights in the event
of a tender offer involving such
Employer Stock.
2. ____ Each Member shall be entitled to direct
the Plan Administrator as to the voting
and tender offer rights involving
Employer Stock held in such Member's
Account, and the Plan Administrator
shall follow or cause the Trustee to
follow such directions. If a Member
fails to provide the Plan Administrator
with directions as to voting or tender
offer rights, the Plan Administrator
shall exercise those rights as it
determines in its discretion and shall
direct the Trustee accordingly.
VIII. INVESTMENT DIRECTION
A. Members shall be entitled to designate what
percentage of employee contributions and employer
contributions made on their behalf will be
invested in the various Investment Funds offered
by the Employer as specified in Section VI of this
Adoption Agreement; provided, however, that the
following portions of a Member's Account must be
invested in the Employer CD Fund or Employer Stock
Fund (choose whichever shall apply):
9<PAGE>
<PAGE>
1. ___ Employer Profit Sharing Contributions
2. ___ Employer Matching Contributions
3. ___ Employer Basic Contributions
4. ___ Employer Supplemental Contributions
5. ___ Employer Qualified Nonelective
Contributions
B. A Member may change his or her investment
direction (choose 1 or 2):
1. _X_ 1 time per calendar month.
2. ___ 1 time per calendar quarter.
C. If a Member fails to make an effective investment
direction, the Member's contributions and Employer
contributions made on the Member's behalf shall be
invested in Employer CD Fund (insert one of the
Investment Funds selected in Section VI of this
Adoption Agreement).
IX. VESTING SCHEDULES; YEARS OF EMPLOYMENT FOR VESTING
PURPOSES
A. (Choose 1, 2, 3, 4, 5, 6 or 7)
<TABLE>
<CAPTION>
Schedule Years of Employment Vested
-------- ------------------- ------
<S> <C> <C>
1. ____ Immediate Upon Enrollment 100%
2. ____ 2-6 Year Graded Less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 but less than 6 80%
6 or more 100%
3. ____ 5-Year Cliff Less than 5 0%
5 or more 100%
4. ____ 3-Year Cliff Less than 3 0%
3 or more 100%
5. ____ 4-Year Graded Less than 1 0%
1 but less than 2 25%
2 but less than 3 50%
3 but less than 4 75%
4 or more 100%
</TABLE>
10<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Schedule Years of Employment Vested
-------- ------------------- ------
<S> <C> <C>
6. _X_ 3-7 Year Graded Less than 3 0%
3 but less than 4 20%
4 but less than 5 40%
5 but less than 6 60%
6 but less than 7 80%
7 or more 100%
7. ____ Other Less than ___ 0%
___ but less than ___ ___%
___ but less than ___ ___%
___ but less than ___ ___%
___ but less than ___ ___%
___ or more 100%
</TABLE>
B. With respect to the schedules listed above, the
Employer elects (choose 1, 2, 3 and 4; or 5):
1. Schedule ____ solely with respect to Employer
matching contributions.
2. Schedule ___ solely with respect to Employer
basic contributions.
3. Schedule ___ solely with respect to Employer
supplemental contributions.
4. Schedule ___ solely with respect to Employer
profit sharing contributions.
5. Schedule _X_ with respect to all Employer
contributions.
NOTE: Notwithstanding any election by the Employer
to the contrary, each Member shall acquire a
100% vested interest in his Account
attributable to all Employer contributions
made to the Plan upon the earlier of (i)
attainment of Normal Retirement Age, (ii)
approval for disability or (iii) death. In
addition, a Member shall at all times have a
100% vested interest in the Employer
Qualified Non-Elective Contributions, if
any, and in the pre-tax elective deferrals
and nondeductible after-tax Member
Contributions.
C. Years of Employment Excluded for Vesting Purposes
The following Years of Employment shall be
disregarded for vesting purposes (choose whichever
shall apply):
1. ____ Years of Employment during any period in
which neither the Plan nor any
predecessor plan was maintained by the
Employer.
2. ____ Years of Employment of a Member prior to
attaining age 18.
11<PAGE>
<PAGE>
X. WITHDRAWAL PROVISIONS
A. The following portions of a Member's Account will
be eligible for in-service withdrawals, subject to
the provisions of Article VII of the Plan (choose
whichever shall apply):
1. ___ Employee after-tax contributions and the
earnings thereon.
2. _X_ Employee pre-tax elective deferrals and
the earnings thereon.
3. ___ Employee rollover contributions and the
earnings thereon.
4. ___ Employer matching contributions and the
earnings thereon.
5. ___ Employer basic contributions and the
earnings thereon.
6. ___ Employer supplemental contributions and
the earnings thereon.
7. ___ Employer profit sharing contributions
and the earnings thereon.
8. ___ Employer qualified nonelective
contributions and earnings thereon.
9. _X_ In-service withdrawals permitted only in
the event of (choose (a) and/or (b)):
(a) _X_ Hardship.
(b) ___ Attainment of age 59 1/2.
10. ___ No in-service withdrawals shall be
allowed.
B. Notwithstanding any elections made in Subsection A
of this Section X above, the following portions of
a Member's Account shall be excluded from
eligibility for in-service withdrawals (choose
whichever shall apply):
1. ___ Employer contributions, and the earnings
thereon, credited to the Employer CD
Fund or Employer Stock Fund.
2. ___ All contributions and/or deferrals, and
the earnings thereon, credited to the
Employer CD Fund or Employer Stock Fund.
3. ___ Other: _______________________________
XI. DISTRIBUTION OPTION (CHOOSE 1 OR 2)
1. ___ Lump Sum and partial lump sum payments only.
9. _X_ Lump Sum and partial lump sum payments plus
one or more of the following (choose (a)
and/or (b)):
12<PAGE>
<PAGE>
(a) _X_ Installment payments.
(b) ___ Annuity payments.
XII. LOAN PROGRAM (CHOOSE 1, 2 OR 3)
1. ___ No loans will be permitted from the Plan.
2. _X_ Loans will be permitted from the Member's
Account.
3. ___ Loans will be permitted from the Member's
Account, excluding (choose whichever shall
apply):
(a) ___ Employer Profit sharing contributions
and the earnings thereon.
(b) ___ Employer matching contributions and
the earnings thereon.
(c) ___ Employer basic contributions and the
earnings thereon.
(d) ___ Employer supplemental contributions
and the earnings thereon.
(e) ___ Employee after-tax contributions and
the earnings thereon.
(f) ___ Employee pre-tax elective deferrals
and the earnings thereon.
(g)___ Employee rollover contributions and
the earnings thereon.
(h)___ Employer qualified nonelective
contributions and the earnings
thereon.
(i) ___ Any amounts to the extent invested in
the Employer CD fund Employer stock
fund.
XIII. ADDITIONAL INFORMATION
If additional space is needed to select or describe an
elective feature of the Plan, the Employer should
attach additional pages and use the following format:
The following is hereby made a part of Section --- of
the Adoption Agreement and is thus incorporated into
and made a part of the First State Savings Bank, SSB
Employees' Savings and Profit Sharing Plan Trust.
Signature of Employer's Authorized Representative
____________________________________________________
Signature of Trustee _______________________________
Supplementary Page -- of [total number of pages].
XIV. PLAN ADMINISTRATOR
The Named Plan Administrator under the Plan shall be
the (choose 1, 2, 3 or 4):
Note: Pentegra Services, Inc. may not be appointed Plan
Administrator.
13
<PAGE>
<PAGE>
1. _X_ Employer
2. ___ Employer's Board of Directors
3. ___ Plan's Administrative Committee
4. ___ Other (if chosen, then provide the following
information)
Name: ________________________________________
Address: _____________________________________
Tel No: ______________________________________
Contact: _____________________________________
NOTE: IF NO NAMED PLAN ADMINISTRATOR IS DESIGNATED
ABOVE, THE EMPLOYER SHALL BE DEEMED THE
NAMED PLAN ADMINISTRATOR.
XV. TRUSTEE
The Employer hereby appoints the following person or
entity to serve as Trustee under the Plan:
Name: MELLON BANK
-------------------------------------------
Address: 1 Mellon Bank Center, Pittsburgh, PA 15258
-------------------------------------------
Tel No: (412) 234-5507
-------------------------------------------
Contact: Allen Murray., Vice President
-------------------------------------------
THE PERSON OR ENTITY NAMED ABOVE HEREBY ACCEPTS THE APPOINTMENT
AS TRUSTEE OF THE TRUST CREATED AS PART OF THE PLAN AND AGREES
TO BE BOUND BY THE TERMS AND CONDITIONS OF THE PLAN.
MELLON BANK
Dated: _________________ By: ___________________________
Name: Allen Murray
Title: Vice President
14<PAGE>
<PAGE>
EXECUTION OF ADOPTION AGREEMENT
By execution of this Adoption Agreement by a duly authorized
representative of the Employer, the Employer acknowledges that
it has established or, as the case may be, amended a tax-
qualified retirement plan into the [ Name of Employer ]
Employees' Savings & Profit Sharing Plan and Trust (the 'Plan').
The Employer hereby represents and agrees that it will assume
full fiduciary responsibility for the operation of the Plan and
for complying with all duties and requirements imposed under
applicable law, including, but not limited to, the Employee
Retirement Income Security Act of 1974, as amended, and the
Internal Revenue Code of 1986, as amended. In addition, the
Employer represents and agrees that it will accept full
responsibility of complying with any applicable requirements of
federal or state securities law as such laws may apply to the
Plan and to any investments thereunder. The Employer further
acknowledges that any opinion letter issued with respect to the
Adoption Agreement and the Agreement by the Internal Revenue
Service ('IRS") to Pentegra Services, Inc., as sponsor of the
Employees' Savings & Profit Sharing Plan, does not constitute a
ruling or a determination with respect to the tax-qualified
status of the Plan and that the appropriate application must be
submitted to the IRS in order to obtain such a ruling or
determination with respect to the Plan.
THE FAILURE TO PROPERLY COMPLETE THE ADOPTION AGREEMENT MAY
RESULT IN DISQUALIFICATION OF THE PLAN AND TRUST EVIDENCED
THEREBY.
The Sponsor will inform the Employer of any amendments to the
Plan or Trust Agreement or of the discontinuance or abandonment
of the Plan or Trust.
Any inquiries regarding the adoption of the Plan should be
directed to the Sponsor as follows:
Pentegra Services, Inc.
108 Corporate Park Drive
White Plains, New York 10604
(914) 694-1300
IN WITNESS WHEREOF, the Employer has caused this Adoption
Agreement to be executed by its duly authorized officer this
18th day of June 1996.
FIRST STATE SAVINGS BANK, SSB
By /s/ James C. McGill
-----------------------------
Name: James C. McGill
-------------------------
Title: President and CEO
-------------------------
15
<PAGE>
<PAGE>
Amendment to Adoption Agreement
for
1ST STATE SAVINGS BANK, SSB
EMPLOYEES' SAVINGS & PROFIT SHARING PLAN AND TRUST
D05
Effective June 17, 1997, the Adoption Agreement for First Bank
of West Hartford Employees' Savings & Profit Sharing Plan and
Trust is amended as follows:
1.SECTION VI Investment Funds is replaced by the following
---------------------------------------------
Section VI:
----------
SECTION VI: Investment Funds:
----------------
The Employer hereby appoints Barclays Global Investors, N.A.
to serve as Investment Manager under the Plan.
The Employer hereby selects the following Investment Funds
to be made available under the Plan (choose whichever shall
apply) and consent to the lending of securities by such
funds to brokers and other borrowers. The Employer agrees
and acknowledges that the selection of Investment Funds made
in this Section VI is solely its responsibility, and no
other person, including the Sponsor or Investment Manager,
has any discretionary authority or control with respect to
such selection process. The Employer hereby holds
Investment Manager harmless from, and indemnifies it
against, any liability Investment Manager may incur with
respect to such Investment Funds so long as Investment
Manager is not negligent and has not breached its fiduciary
duties.
1. __X__ S&P 500 Stock Fund
2. __X__ Stable Value Fund
3. __X__ S&P MidCap Stock Fund
4. __X__ Money Market Fund
5. __X__ Government Bond Fund
6. _____ International Stock Fund
7. _____ Asset Allocation Funds (3)
. Income Plus
. Growth & Income
. Growth
8. _____ First Bank of West Hartford Stock Fund (the
"Employer Stock Fund")
9. _____ (Name of Employer) Certificate of Deposit Fund
Note: Investment Funds 6 and 7 above will be implemented
on July 2, 1997.
2.Section VIII Investment Direction is replaced by the
---------------------------------------
following Section VIII:
----------------------
Section VIII: Investment Direction/Transfers:
------------------------------
<PAGE>
<PAGE>
A. Members shall be entitled to designate what percentage
of employee contributions and employer contributions
made on their behalf will be invested in the various
Investment Funds offered by the Employer as specified
in Section VI of this Adoption Agreement; provided,
however, that the following portions of a Member's
Account must be invested in the Employer Stock Fund
(choose whichever shall apply):
1. _X_ Employer Profit Sharing Contributions
2. _X_ Employer Matching Contributions
3. _X_ Employer Basic Contributions
4. _X_ Employer Supplemental Contributions
5. _X_ Employer Qualified Nonelective Contributions
B. ____ Amounts invested in the Employer Stock Fund may
not be transferred to any other Investment Fund.
C. A Member may change his or her investment direction
(choose 1,2, or 3):
1. _X_ 1 time per business day.
2. ___ 1 time per calendar month.
3. ___ 1 time per calendar quarter.
D. If a Member fails to make an effective investment
direction, the employee's contributions and employer
contributions made on the Member's behalf shall be
invested in CD Fund (Fund 9)(insert one of the Investment
Funds selected in Section VI of this Adoption Agreement).
3. Section XV Trustee is replaced by the following Section
--------------------------------------------
XV:
--
Section XV: Trustee:
The Employer hereby appoints The Bank of New York to serve
as Trustee for all Investment Funds under the Plan except
the Employer Stock Fund.
The Employer hereby appoints the following person or
entity to serve as Trustee under the Plan for the Employer
Stock Fund.*
Name: ___________________________________________________
Address: ________________________________________________
Telephone No: _______________________ Contact: _________
_________________________________________________________
Signature of Trustee
(Required only if the Employer is serving as its own
Trustee)
* Subject to approval by The Bank of New York, if The Bank
of New York is appointed as Trustee for the Employer
Stock Fund.
2 <PAGE>
<PAGE>
The Employer hereby appoints The Bank of New York to serve
as Custodian under the Plan for the Employer Stock Fund in
the event The Bank of New York does not serve as Trustee for
such Trust.
EXECUTION OF AMENDMENT TO THE ADOPTION AGREEMENT
------------------------------------------------
Upon execution by the Employer of this Amendment, the Adoption
Agreement, as amended, together with the Sponsor's Employees'
Savings & Profit Sharing Plan and Trust Agreement (the
"Agreement"), shall constitute the 1ST STATE SAVINGS BANK, SSB
Employees' Savings & Profit Sharing Plan and Trust.
IN WITNESS WHEREOF, the Employer has caused this Amendment to
the Adoption Agreement to be executed by its duly authorized
officer this 10th day of June, 1997.
1ST STATE SAVINGS BANK, SSB
By: /s/ James C. McGill
----------------------------------
Name: James C. McGill
----------------------------------
Title: President and CEO
----------------------------------
3<PAGE>
<PAGE>
AMENDMENT TO ADOPTION AGREEMENT
FOR
1ST STATE BANK
EMPLOYEES' SAVINGS & PROFIT SHARING PLAN AND TRUST
D05
Effective December 15, 1998, the Adoption Agreement for 1ST
State Bank Employees' Savings & Profit Sharing Plan and
Trust is amended as follows:
1. SECTION VI Investment Funds is replaced by the following
---------------------------------------------
Section VI:
----------
SECTION VI: Investment Funds:
The Employer hereby appoints Barclays Global Investors, N.A.
to serve as Investment Manager under the Plan.
The Employer hereby selects the following Investment Funds
to be made available under the Plan (choose whichever shall
apply) and consent to the lending of securities by such
funds to brokers and other borrowers. The Employer agrees
and acknowledges that the selection of Investment Funds made
in this Section VI is solely its responsibility, and no
other person, including the Sponsor or Investment Manager,
has any discretionary authority or control with respect to
such selection process. The Employer hereby holds
Investment Manager harmless from, and indemnifies it
against, any liability Investment Manager may incur with
respect to such Investment Funds so long as Investment
Manager is not negligent and has not breached its fiduciary
duties.
1.__X__ S&P 500 Stock Fund
2.__X__ Stable Value Fund
3.__X__ S&P MidCap Stock Fund
4.__X__ Money Market Fund
5.__X__ Government Bond Fund
6.__X__ International Stock Fund
7.__X__ Asset Allocation Funds (3)
. Income Plus
. Growth & Income
. Growth
8.__X__ 1st State Bank's Stock Fund (the "Employer Stock
Fund")
9.__X__ 1st State Bank's Certificate of Deposit Fund
2. SECTION VIII Investment Direction is replaced by the
---------------------------------------
following Section VIII:
----------------------
SECTION VIII: Investment Direction/Transfers:
<PAGE>
<PAGE>
A. Members shall be entitled to designate what percentage
of employee contributions and employer contributions
made on their behalf will be invested in the various
Investment Funds offered by the Employer as specified in
Section VI of this Adoption Agreement; provided,
however, that the following portions of a Member's
Account must be invested in the Employer Stock Fund
(choose whichever shall apply):
1. ____ Employer Profit Sharing Contributions
2. ____ Employer Matching Contributions
3. ____ Employer Basic Contributions
4. ____ Employer Supplemental Contributions
5. ____ Employer Qualified Nonelective Contributions
B. ____ Amounts invested in the Employer Stock Fund may
not be transferred to any other Investment Fund.
C. A Member may change his or her investment direction
(choose 1,2, or 3):
1. ____ 1 time per business day.
2. ____ 1 time per calendar month.
3. ____ 1 time per calendar quarter.
D. If a Member fails to make an effective investment
direction, the employee's contributions and employer
contributions made on the Member's behalf shall be
invested in Money Market Fund (insert one of the
Investment Funds selected in Section VI of this Adoption
Agreement).
3. SECTION XV Trustee is replaced by the following Section
--------------------------------------------
XV:
--
SECTION XV: Trustee:
The Employer hereby appoints The Bank of New York to serve
as Trustee for all Investment Funds under the Plan except
the Employer Stock Fund.
The Employer hereby appoints the following person or entity
to serve as Trustee under the Plan for the Employer Stock
Fund.*
Name: The Bank of New York
____________________________________________________
Address: ____________________________________________________
Telephone No: _______________________ Contact: _____________
_____________________________________________________________
Signature of Trustee
(Required only if the Employer is serving as its own Trustee)
* Subject to approval by The Bank of New York, if The Bank
of New York is appointed as Trustee for the Employer
Stock Fund.
2<PAGE>
<PAGE>
The Employer hereby appoints The Bank of New York to serve
as Custodian under the Plan for the Employer Stock Fund in
the event The Bank of New York does not serve as Trustee for
such Trust.
EXECUTION OF AMENDMENT TO THE ADOPTION AGREEMENT
------------------------------------------------
Upon execution by the Employer of this Amendment, the Adoption
Agreement, as amended, together with the Sponsor's Employees'
Savings & Profit Sharing Plan and Trust Agreement (the
"Agreement"), shall constitute the 1st State Bank Employees'
Savings & Profit Sharing Plan and Trust.
IN WITNESS WHEREOF, the Employer has caused this Amendment to
the Adoption Agreement to be executed by its duly authorized
officer this 15th day of December, 1998.
1st STATE BANK
By: /s/ James C. McGill
----------------------------------
Name: James C. McGill
----------------------------------
Title: President and CEO
----------------------------------
3
<PAGE>
Pentegra Services, Inc.
---------------------------------------------------------
1st STATE SAVINGS BANK, SSB
EMPLOYEES' SAVINGS & PROFIT
SHARING PLAN AND TRUST
SUMMARY PLAN DESCRIPTION
<PAGE>
<PAGE>
SUMMARY PLAN DESCRIPTION
for
1ST STATE SAVINGS BANK, SSB
Burlington, NC
January 1, 1999
PENTEGRA SERVICES, INC.
108 Corporate Park Drive
White Plains, NY 10604<PAGE>
<PAGE>
TO PARTICIPATING EMPLOYEES OF 1ST STATE SAVINGS BANK, SSB:
We are pleased to present this booklet so that you may better
understand and appreciate the benefit which is provided by your
employer by establishing the 1st State Savings Bank, SSB
Employees' Savings & Profit Sharing Plan and Trust (the
"Plan").
The Plan enables you to save and invest on a regular, long
term basis. All contributions to the Plan (a defined
contribution plan) are paid to the Trustee to be invested in
the investment options offered under the Plan. An individual
account is maintained for each member. Under certain condi-
tions, a member may make withdrawals or loans from his account
based on its market value.
The Plan offers federal income tax advantages. The employee
does not pay taxes on employer contributions or investment
income until he/she withdraws them. An employer subject to
income tax may deduct its contributions.
This booklet highlights the main features of the Plan. The
Plan and Trust contain the governing provisions and should be
consulted as official text in all cases. If there is any
conflict between this booklet (Summary Plan Description) and
the Plan Document, the Plan Document will control.
YOUR EMPLOYER,
1ST STATE SAVINGS BANK, SSB
<PAGE>
<PAGE>
SUMMARY OF YOUR BENEFITS
- ----------------------------------------------------------------
ELIGIBILITY You will be eligible for membership in the
Plan on the first day of the month after you
complete 12 months of employment and attain
age 21.
PLAN SALARY Plan Salary is defined as Basic Salary. In
addition, any pre-tax contributions which you
make to an Internal Revenue Code Section 401(k)
or Section 125 cafeteria plan is included in
Plan Salary.
PLAN
CONTRIBUTIONS EMPLOYEE - You may elect to make a contribution
-------- of 1%, 2%, 3%, 4%, 5%, 6%, 7%, 8%,
9%, 10%, 11%, 12%, 13%, 14% or 15%
of Plan Salary.
EMPLOYER - Your employer will contribute 50%
-------- of your contribution to the Plan.
The above percentage rate shall apply to
only the first 6% of your Plan Salary (see
"Plan Salary" section of this booklet).
ILLUSTRATION
------------
Employee Employer
Contribution Rate Matching Contribution
------------------ ---------------------
1% 0.5%
2% 1.0%
3% 1.5%
4% 2.0%
5% 2.5%
6 up to 15% 3.0%
Please refer to the "Making Withdrawals From
Your Account" section of this booklet to
determine if there are any restrictions on
employer contributions on account of a
withdrawal.
VESTING Generally, you will be 100% vested in any
employer contributions after 7 years. You are
always 100% vested (i.e., you will not give up
any units when you terminate employment) in any
contributions you make to the Plan.
LOANS You may take a loan from your account and pay
your account back with interest.
WITHDRAWALS While you are working, you may withdraw all or
part of your vested account balance subject to
certain limitations. You may also make with-
drawals from your account after termination of
employment.
DISABILITY If you are disabled, you will be entitled to
the same withdrawal rights as if you had
terminated employment.
DEATH If you die before the value of your account is
paid to you, your beneficiary may receive the
full value of your account or may defer payment
within certain limits. If you are married,
your spouse will be your beneficiary unless
your spouse consents in writing to the
designation of a different beneficiary.<PAGE>
<PAGE>
TABLE OF CONTENTS
- ----------------------------------------------------------------
Determining Your Eligibility . . . . . . . . . . . . . . . . . 1
Reenrollment . . . . . . . . . . . . . . . . . . . . . . . . . 1
Making Contributions to the Plan . . . . . . . . . . . . . . . 2
Plan Contributions. . . . . . . . . . . . . . . . . . . 2
Allocation of Contributions . . . . . . . . . . . . . . 2
Rollovers . . . . . . . . . . . . . . . . . . . . . . . 2
Plan Salary . . . . . . . . . . . . . . . . . . . . . . 2
Investing Your Account . . . . . . . . . . . . . . . . . . . . 3
Investment of Contributions . . . . . . . . . . . . . . 3
Valuation of Accounts . . . . . . . . . . . . . . . . . 4
Reporting to Members. . . . . . . . . . . . . . . . . . 4
Vesting. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Making Withdrawals From Your Account . . . . . . . . . . . . . 6
Upon Termination of Employment. . . . . . . . . . . . . 6
Upon Disability . . . . . . . . . . . . . . . . . . . . 7
Upon Death. . . . . . . . . . . . . . . . . . . . . . . 7
Borrowing From Your Account. . . . . . . . . . . . . . . . . . 8
Plan Limitations . . . . . . . . . . . . . . . . . . . . . . . 9
Top Heavy Information . . . . . . . . . . . . . . . . . . . . 10
Disputed Claims Procedure . . . . . . . . . . . . . . . . . . 10
Statement of Member's Rights. . . . . . . . . . . . . . . . . 11
Plan Information. . . . . . . . . . . . . . . . . . . . . . . 12
<PAGE>
<PAGE>
DETERMINING YOUR ELIGIBILITY
- ----------------------------------------------------------------
EMPLOYEE You will be eligible for membership in the Plan
ELIGIBILITY on the first day of the month after you complete
12 months of employment and attain age 21. In
order for you to complete 12 months of employ-
ment, you must complete at least 1,000 of
employment in a 12 consecutive month period.
The initial 12 consecutive month period is
measured from your date of employment, and (if
you do not complete at least 1,000 hours of
employment in such period) subsequent 12 month
periods are measured.
In counting hours, you will be credited with an
hour of employment for every hour you have a
right to be paid. This includes vacation, sick
leave, jury duty, etc., and any hours for which
back pay may be due.
You will become a member as soon as a properly
executed enrollment application is received and
processed by Pentegra Services, Inc. Your
membership will continue until the earlier of
(a) your termination of employment and payment
to you of your entire account or (b) your death.
REENROLLMENT If you terminate employment and are subsequently
reemployed by the same employer, you may be
eligible for immediate reenrollment.
1
<PAGE>
<PAGE>
MAKING CONTRIBUTIONS TO THE PLAN
- ----------------------------------------------------------------
PLAN EMPLOYEE - You may elect to make pre-tax
CONTRIBUTIONS -------- contributions of 1%, 2%, 3%, 4%,
5%, 6%, 7%, 8%, 9%, 10%, 11%,
12%, 13%, 14% or 15% of Plan
Salary of this booklet). You may
elect not to make any contribu-
tions. You may change the rate
at which you are contributing one
time in any calendar month. You
You may suspend your contribu-
tions at any time, but suspended
contributions may not be subse-
quently made up.
EMPLOYER - Your employer will contribute 50%
-------- of your contribution to the Plan.
The above percentage rate shall
apply to only the first 6% of
your Plan Salary (see "Plan
Salary" section of this booklet).
ILLUSTRATION
------------
Employee Employer
Contribution Rate Matching Contribution
------------------ ---------------------
1% 0.5%
2% 1.0%
3% 1.5%
4% 2.0%
5% 2.5%
6 up to 15% 3.0%
Please refer to the "Account Withdrawal"
section of this booklet to determine if
there are any restrictions on employer
contributions on account of withdrawal.
ALLOCATION OF Your employer has an account for each
CONTRIBUTIONS member. All of your own contributions and
all employer contributions will be
allocated to this account. The total of
the value of your account represents your
interest in the Plan.
Internal Revenue Service Nondiscrimination
Rules
--------------------------------------------
If you are a highly compensated employee,
a portion of your contributions and/or
employer contributions, made on your behalf,
if any, may have to be returned to you in
order to comply with special Internal
Revenue Service (IRS) nondiscrimination
rules (See "Plan Limitations" section of
this booklet for other limitations). In
general, effective for years beginning after
December 31, 1996, a highly compensated
employee is an employee who:
(a) was a 5% owner at any time during the
current or preceding year, or
(b) received annual compensation from the
employer for the preceding year in
excess of $80,000 (indexed for cost-of-
living adjustments, if any).
ROLLOVERS You may make a rollover contribution of an
eligible rollover distribution from any
other Internal Revenue Service qualified
retirement plan or an individual retirement
arrangement (IRA). These funds will be
maintained in a separate rollover account
in which you will have a nonforfeitable
vested interest. Please note that you may
establish a "rollover" account within the
Plan prior to satisfying the Employer's
eligibility requirements. However, the
establishment of a "rollover" account prior
to satisfying such eligibility will not
constitute active membership in the Plan.
PLAN SALARY Plan Salary is defined as Basic Salary. In
addition, any pre-tax contribution which
addition, any pre-tax contribution which you
make to an Internal Revenue Code Section
401(k) plan or Section 125 Cafeteria Plan is
included in Plan Salary. However, Plan
Salary for any year may not exceed $160,000
for 1999 (indexed for cost-of-living
adjustments).
INVESTING YOUR ACCOUNT
- ----------------------------------------------------------------
INVESTMENT OF Contributions are invested at your direction
CONTRIBUTIONS in one or more of the following investment
funds:
2
<PAGE>
<PAGE>
ASSET ALLOCATION FUNDS (3)
Income Plus
Growth & Income
Growth
INTERNATIONAL STOCK FUND
S & P MIDCAP FUND
S & P 500 STOCK FUND
GOVERNMENT BOND FUND
STABLE VALUE FUND
MONEY MARKET FUND
1st STATE SAVINGS BANK, SSB
CERTIFICATE OF DEPOSIT FUND
1st STATE SAVINGS BANK, SSB STOCK
FUND
These funds are described in greater detail
on your quarterly statements.
Contributions made by you are invested at
your direction in one or more of these funds
in whole percentages. You may apply
different investment instructions to amounts
already accumulated as opposed to future
contributions. Certain restrictions may
apply. Changes in investment instructions
may be made by submitting a properly
completed form or by using Pentegra by
Phone, the Pentegra Voice Response System.
You may access Pentegra by Phone by calling
1-800-433-4422.
Any changes made by using Pentegra by Phone
which are received by Stock Market Closing
(usually 4 p.m. Eastern Time) will be
processed at the business day's closing
price. Transaction changes received after
Stock Market Closing will be processed on
the next business day. Your plan allows for
a change of investment allocation on a daily
basis.
Investment changes made by submitting a form
are effective on the valuation date (see
"Valuation of Accounts" section of this
booklet) on which your written notice is
processed.
No amounts invested in the Stable Value Fund
may be transferred directly to the Money
Market Fund. Stable Value fund amounts
transferred to and invested in the S&P 500
Stock Fund, the S&P Midcap Stock Fund,
Government Bond Fund, International Stock
Fund, Income Plus Asset Allocation Fund,
Growth and Income Asset Allocation Fund, the
Growth Asset Allocation Fund, and/or the 1st
State Savings Bank, SSB Stock Fund, for a
period of three months may be transferred
to the Money Market Fund upon the submission
of a separate Change of Investment form.
If no investment direction is given, all
contributions credited to a participant's
account will be invested in the Money Market
Fund.
INVESTING YOUR ACCOUNT
- ----------------------------------------------------------------
(continued)
VALUATION OF The Plan uses a unit system for valuing
ACCOUNTS each Investment Fund. Under this system
each participant's share in any Invest-
ment Fund is represented by units. The
unit value is determined as of the close
of business each regular business day
(daily valuation). The total dollar
value of a participant's share in any
Investment Fund as of any valuation date
is determined by multiplying the number
of units to the participant's credit by
the unit value of the Fund on that date.
The sum of the values of the Funds you
select represents the total value of your
Plan account.
3
<PAGE>
<PAGE>
Transaction requests, such as with-
drawals, change of investment elections,
distributions, that are received by
Pentegra Services, Inc. (assuming proper
receipt of all pertinent information)
will be processed as directed by the
Plan Administrator.
NOTE: If for some reason (such as shut
down of financial markets) the underlying
portfolio of any Investment Fund cannot
be valued, the valuation date for such
Investment Fund shall be the next day on
which the underlying portfolios can be
valued.
REPORTING TO As soon as practicable after the end of
MEMBERS each calendar quarter you will receive a
personal statement from the plan. This
statement provides information about your
account including its market value in
each investment fund. Activity for the
quarter is reported by investment fund
and contribution type.
4
<PAGE>
<PAGE>
VESTING
- ----------------------------------------------------------------
"Vesting" is the process under which you
earn a non-forfeitable right to the units
in your account. You are always 100%
vested (i.e., You will not give up any
units when you terminate employment) in
any contributions you make to the Plan.
With respect to any employer contributions
credited to your account, the following
schedule will dictate when vesting will
occur:
Years of Vesting
Employment Percentage
----------------- --------------
Less than 3 0%
3 but less than 4 20%
4 but less than 5 40%
5 but less than 6 60%
6 but less than 7 80%
7 or more years 100%
You will also become 100% vested in the
employer contributions and earnings
thereon credited to your account upon your
death, approved disability or attainment
of age 65 while employed with this
employer.
If you terminate employment with this
employer prior to completing 3 years of
service, you will forfeit all of the
employer contributions and earnings
thereon credited to your account.
However, if you are reemployed by this
employer prior to incurring 5 consecutive
1-year breaks in service, measured from
your date of termination, you are eligible
to have the amount of the forfeiture and
your corresponding vesting service
restored to your account.
If you terminate employment with this
employer after completing 3 years of
service, but prior to becoming 100%
vested, you will forfeit the non-vested
portion of the employer contributions and
earnings thereon credited to your account.
If your are reemployed by this employer
prior to incurring 5 consecutive 1-year
breaks in service, you are eligible to
have the amount of the forfeiture restored
to your account. If you received a
distribution of the vested portion of your
account prior to incurring 5 consecutive
1-year breaks in service, such restoration
is conditioned on your paying back to your
account the amount of your prior vested
balance within 5 years of the date it was
distributed to you. In either event, your
prior vesting service will be recredited
to your account.
5
<PAGE>
MAKING WITHDRAWALS FROM YOUR ACCOUNT
- ----------------------------------------------------------------
ACCOUNT You may make a total or partial withdrawal of
WITHDRAWAL the vested portion of your account by filing
the appropriate form with the Plan
Administrator for transmittal to Pentegra
Services, Inc. However, you may not withdraw
employer matching contributions credited to
your account until you terminate employment. A
withdrawal is based on the unit values on the
valuation date coinciding with the date that a
properly completed withdrawal form is received
and processed by Pentegra Services, Inc. (see
"Valuation of Accounts" section of this
booklet).
Under current law, an excise tax of 10% is
generally imposed on the taxable portion of
withdrawals occurring prior to your attainment
of age 59 1/2. There are certain exceptions to
the 10% excise tax. For example, the 10% excise
tax will not apply to withdrawals made on
account of separation from service at or after
attainment of age 55, death or disability.
As required by Internal Revenue Service
Regulations, a withdrawal of your pre-tax
contributions prior to age 59 1/2 or termination
of employment can only be made on account of a
hardship. The existence of an immediate and
heavy financial need, and the lack of any other
available financial resources to meet this need,
must be demonstrated for a hardship withdrawal.
The following situations will be considered to
constitute an immediate and heavy financial
need:
(1) Medical expenses (other than amounts paid
by insurance).
(2) The purchase of a principal residence
(mortgage payments are excluded).
(3) Tuition, including room and board, for the
next 12 months of post-secondary education.
(4) The prevention of the eviction from a
principal residence or foreclosure on the
mortgage of a principal residence.
Only one in-service withdrawal may be made in
any Plan Year.
UPON TERMINATION OF EMPLOYMENT
You may leave your account with the Plan and
defer commencement of receipt of your vested
balance until April 1 of the calendar year
following the calendar year in which you attain
age 70 1/2. However, if your account under the
plan, when aggregated, is less than $3,500.00
then your account will be distributed to you as
soon as practicable following your date of
termination. You may make one withdrawal each
plan year. You may continue to change the
investment instructions with respect to your
remaining account balance and make withdrawals
as provided above. (See "Investment of
Contributions" section of this booklet).
You may elect, in lieu of a lump sum payment, to
be paid in annual installments over a period of
2 10, 15 or 20 years with the right to take in a
lump sum the vested balance of your account at
any time during such payment period. If the
actuarial determination of your life expectancy
is less than the period you elect, the maximum
period over which you can receive annual
installments will be the next lower payment
period.
WHILE EMPLOYED
6
<PAGE>
<PAGE>
MAKING WITHDRAWALS FROM YOUR ACCOUNT
- ----------------------------------------------------------------
(continued)
UPON DISABILITY
If you are disabled in accordance with the
definition of disability under the Plan, you
will be entitled to the same withdrawal rights
as if you had terminated your employment.
You are disabled under the Plan if you are
eligible to receive (i) disability insurance
benefits under Title II of the Federal Social
Security Act or (ii) disability benefits under
any other Internal Revenue Service qualified
employee benefits plan or long-term disability
plan of your employer.
UPON DEATH
If you die when you are a participant of the
Plan, the value of your entire account will be
payable to your beneficiary. This payment will
be made in the form of a lump sum, unless the
payment would exceed $500, and you had elected
prior to your death that the payment be made in
annual installments over a period not to exceed
5 years (10 years if your spouse is your
beneficiary). If such an election is not in
effect at the time of your death, your
beneficiary may elect to receive the benefit in
the form of annual installments over a period
not to exceed 5 years (10 years if your spouse
is your beneficiary) or make withdrawals as
often as once per year, except that any balance
remaining must be withdrawn by the 5th anniver-
sary (10th anniversary if your spouse is your
beneficiary) of your death.
If you are married, your spouse will be your
beneficiary unless your spouse consents in
writing to the designation of a different
beneficiary.
BORROWING FROM YOUR ACCOUNT
- ----------------------------------------------------------------
LOANS You may borrow from the vested portion of your
account. You may borrow any amount between
$1,000 and $50,000 (reduced by your highest
outstanding loan balance(s) from
7
<PAGE>
<PAGE>
the Plan during the preceding 12 months). In no
event may you borrow more than 50% of the vested
balance of your account.
The amount of your loan will be deducted on the
valuation date (see "Valuation of Accounts"
section of this booklet) coinciding with the
date that Pentegra Services, Inc. receives and
processes your properly executed Loan
Application, Promissory Note and Disclosure
Statement and Truth-in-Lending Statement. On
request, the Plan Administrator will provide you
with the application form. The loan will not
affect your right to continue making contri-
butions or to receive the corresponding employer
contributions.
The rate of interest for the term of the loan
will be established as of the loan date, and
shall be a reasonable rate of interest generally
comparable to the rates of interest then in
effect at a major banking institution (e.g., the
Barron's Prime Rate (base rate) plus 1%).
Repayments are made through payroll deductions
and will be transmitted along with the Employer's
contribution reports. The repayment period is
between 1 and 15 years for loans used exclusively
for the purchase of a primary residence or 1 and
5 years for all other loans, at your option.
After 12 monthly payments have been made, you may
repay the outstanding balance of the loan. If a
loan includes any employee pre-tax amounts, you
will not be permitted to default on the loan
repayment while employed. Your employer is
required to withhold the loan repayments from
your salary.
As you repay the loan, the principal portion,
together with the interest, will be credited to
your account, after deducting 2% of the out-
standing balance to cover administrative
expenses. In this way, you will be paying
interest to yourself.
In the event that you leave employment or die
before repaying the loan, the outstanding balance
will be due and, if not paid by the end of the
calendar quarter following the calendar quarter
in which you terminate employment or die, will be
deemed a distribution and subject to the appli-
cable tax treatment. However, you may elect upon
termination of employment to continue to repay
the loan on a monthly basis directly to Pentegra
Services, Inc.
PLAN LIMITATIONS
- -----------------------------------------------------------------
PLAN Internal Revenue Service ("IRS") requirements
LIMITATIONS impose certain limitations on the amount of
contributions that may be made to this and other
qualified plans. In general, the annual
"contributions" made to a defined contribution
plan such as this Plan, in respect of any member,
may not exceed the lesser of 25% of the member's
total compensation or $30,000. (This amount may
be subject to periodic adjustment by the IRS at
some time in the future). For this purpose,
"contributions" include employer contributions,
member 401(k) contributions and member after-tax
contributions. The annual member contributions
allocated to a member's 401(k) account may not
exceed the lesser of 25% of the member's total
compensation or $7,000 (indexed for cost-of-
living adjustments, if
8
<PAGE>
<PAGE>
any - $10,000 in 1999). Further, if your
employer has another tax-qualified plan in
effect, these limits are subject to additional
restrictions.
Each member and beneficiary assumes the risk in
connection with any decrease in the market value
of his account. The benefit to which you may be
entitled upon your withdrawal of account cannot
be determined in advance.
As a defined contribution plan, the Plan is not
covered by the plan termination insurance
provisions of Title IV of the Employee Retirement
Income Security Act of 1974 ("ERISA"). Therefore,
your benefits are not insured by the Pension
Benefit Guaranty Corporation in the event of a
plan termination.
Except as may otherwise be required by applicable
law or pursuant to the terms of a Qualified
Domestic Relations Order, amounts payable by the
Plan generally may not be assigned, and if any
person entitled to a payment attempts to assign
it, his interest in the amount payable may be
terminated and held for the benefit of that
person or his dependents.
If Pentegra Services, Inc. cannot locate any per-
son entitled to a payment from the Plan and if 5
years have elapsed from the due date of such
payment, the Plan Administrator may cancel all
payments due him to the extent permitted by law.
Membership in the Plan does not give you the
right to continued employment with your employer
or affect your employer's right to terminate your
employment.
The Plan's qualified status is subject to IRS
approval and any requirements the IRS may impose.
The employer may terminate the Plan at any time.
If the Plan is terminated, there will be no
further contributions to the Plan for your
account.
- -----------------------------------------------------------------
TOP HEAVY A "top heavy" plan is a plan under which more than
INFORMATION 60% of the accrued benefits (account values) are
for key employees. Key employees generally
include officers and shareholders earning more
than $45,000 (indexed for cost-of-living
adjustments; $65,000 in 1999) per year. If your
employer's plan is top heavy for a particular plan
year, you may be entitled to a minimum employer
contribution equal to the lesser of 3% of your
Plan Salary or the greatest percentage contributed
by the employer for any key employee. This mini-
mum contribution would be offset by the regular
contribution made by your employer (See "Plan
Contributions" section of this booklet).
In order to receive the minimum contribution for
any plan year, you must be employed on the last
day of the plan year. If your employer also
provides a defined benefit or another defined
contribution plan, your minimum benefit may be
provided under such plan.
DISPUTED If you disagree with respect to any benefit to
CLAIMS which you feel you are entitled, you should make a
written claim to the Plan Administrator of the
Plan. If your claim is denied, you
9
<PAGE>
<PAGE>
PROCEDURE will receive written notice explaining the
reason for the denial within 90 days after the
claim is filed.
The Plan Administrator's decision shall be final
unless you appeal such decision in writing to the
Plan Administrator of the Plan, within 60 days
after receiving the notice of denial. The written
appeal should contain all information you wish to
be considered. The Plan Administrator will review
the claim within 60 days after the appeal is made.
Its decision shall be in writing, shall include
the reason for such decision and shall be final.
10
<PAGE>
<PAGE>
MEMBERS RIGHTS
- -----------------------------------------------------------------
STATEMENT OF As a member of the Plan, you are entitled to
MEMBER'S certain rights and protection under ERISA
RIGHTS which provides that all members shall be
entitled to:
. Examine, without charge, at the Plan
Administrator's office or at other
specified locations, all plan documents,
and copies of all documents filed by the
Plan Administrator with the U. S.
Department of Labor such as detailed
annual reports and plan descriptions.
. Obtain copies of all plan documents and
other plan information upon written
request to the Plan Administrator. The
Administrator may make a reasonable charge
for the copies.
. Receive a summary of the Plan's annual
financial report. The Plan Administrator
is required by law to furnish each member
with a copy of such summary.
In addition to creating rights for Plan
members, ERISA imposes duties upon the people
who are responsible for the operation of the
Plan. The people who operate your Plan,
called "fiduciaries", have a duty to do so
prudently and in the interest of you and other
plan members and beneficiaries. No one may
fire you or otherwise discriminate against you
in any way to prevent you from obtaining a
benefit or exercising your rights under ERISA.
If your claim for a benefit is denied in whole
or in part, you will receive a written expla-
nation of the reason for the denial. As
already explained, you also have the right
to have your claim reconsidered.
Under ERISA, there are steps you can take to
enforce the above rights. For instance, if
you request materials from the Plan Admini-
strator and do not receive them within 30
days, you may file suit in a federal court.
In such a case, the court may require the Plan
Administrator to provide the materials and pay
you up to $100 a day until you receive them,
unless such materials were not sent for rea-
sons beyond the Administrator's control. If
you have a claim for benefits which is denied
or ignored, in whole or in part, you may file
suit in a state or federal court.
If it should happen that Plan fiduciaries
misuse the Plan's money, or if you are
discriminated against for asserting your
rights, you may seek assistance from the U.S.
Department of Labor or you may file suit in a
federal court. The court will decide who
should pay court costs and legal fees. If you
are successful, the court may order the person
you have sued to pay these costs and fees. If
you lose, the court may order you to pay such
costs and fees (for example, if it finds your
claim is frivolous).
If you have any questions about your Plan, you
should contact the Plan Administrator. If you
have any questions about this statement or
your rights under ERISA, you should contact
the nearest Area Office of the U.S. Labor-
Management Services Administration, Department
of Labor.
This Statement of ERISA Rights is required by
federal law and regulation.
PLAN INFORMATION
- ----------------------------------------------------------------
PLAN NAME:
1st State Savings Bank, SSB Employees'
Savings & Profit Sharing Plan and Trust
11
<PAGE>
<PAGE>
PLAN ADMINISTRATOR:
1st State Savings Bank, SSB
445 South Main Street
Burlington, NC 27216
Phone No: (910) 227-8861
Employer Identification Number: 56-0223240
Plan Number: 002
Plan Year End: December 31
TRUSTEE:
The Bank of New York
1 Wall Street
New York, NY 10286
Phone: (212) 635-8115
AGENT FOR SERVICE OF LEGAL PROCESS:
1st State Savings Bank, SSB
ADMINISTRATIVE SERVICES:
Record-keeping services are provided by:
Pentegra Services, Inc.
108 Corporate Park Drive
White Plains, New York 10604
Phone No.: (914) 694-1300 FAX No.: (914) 694-6429
(800) 872-3473
12
1ST STATE BANK
CHANGE OF INVESTMENT ALLOCATION
- -------------------------------
1. MEMBER DATA
________________________________________________________________
Print your full name above (Last, first, middle initial)
________________________________________________________________
Social Security Number
________________________________________________________________
Street Address City State Zip
2. INSTRUCTIONS
1st State Bank Employees' Savings & Profit Sharing Plan and
Trust (the "Plan") is giving members a special opportunity to
invest their 401(k) account balances in a new investment fund -
the Employer Stock Fund - which is comprised primarily of common
stock ("Common Stock") issued by 1st State Bancorp, Inc. (the
"Company") in connection with the reorganization of 1st State
Bank into the two-tier holding company form of organization.
The percentage of a member's account transferred at the
direction of the member into the Employer Stock Fund will be
used to purchase shares of Common Stock during the Subscription
and Community Offering. Please review the Prospectus (the
"Prospectus") before making any decision.
In the event of an oversubscription in the Offering so that the
total amount you allocate to the Employer Stock Fund can not be
used by the trustee to purchase Common Stock, YOUR ACCOUNT WILL
BE ALLOCATED TO THE MONEY MARKET FUND.
Investing in Common Stock entails some risks, and we encourage
you to discuss this investment decision with your spouse and
investment advisor. The Plan trustee and the Plan administrator
are not authorized to make any representations about this
investment other than what appears in the Prospectus, and you
should not rely on any information other than what is contained
in the Prospectus. FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY EACH MEMBER AS TO AN INVESTMENT IN THE
COMMON STOCK, SEE PART II, "INVESTMENT ALTERNATIVES" BEGINNING ON
PAGE 2 OF THE PROSPECTUS. Any shares purchased by the Plan
pursuant to your election will be subject to the conditions or
restrictions otherwise applicable to Common Stock, as discussed
in the Prospectus.
3. INVESTMENT DIRECTIONS (APPLICABLE TO ACCUMULATED BALANCES
ONLY)
To direct a transfer of all or part of the funds credited to
your accounts to the Employer Stock Fund, you should complete
and file this form with Ms. Chris Baker, EVP/CFO, 1st State
Bank, no later than Monday, March 8, 1999 at 12:00 noon. If you
need any assistance in completing this form, please contact Ms.
Baker at (336) 227-8861. If you do not complete and return this
form to Ms. Baker by Monday, March 8, 1999 at 12:00 noon, the
funds credited to accounts under the Plan will continue to be
invested in accordance with your prior investment direction, or
in accordance with the terms of the 401(k) Plan if no investment
direction had been provided.<PAGE>
<PAGE>
I hereby revoke any previous investment direction and now direct
that the market value of the units that I have invested in the
following funds, to the extent permissible, be transferred out
of the specified fund and invested (in whole percentages) in the
Employer Stock Fund as follows:
FUND PERCENTAGE TO BE TRANSFERRED
---- ----------------------------
S&P 500 Stock Fund _____%
Stable Value Fund _____%
S&P MidCap Stock Fund _____%
Money Market Fund _____%
Government Bond Fund _____%
International Stock Fund _____%
Income Plus Fund _____%
Growth & Income Fund _____%
Growth Fund _____%
Certificate of Deposit Fund _____%
NOTE: The total amount transferred may not exceed the total value
of your accounts.
4. INVESTMENT DIRECTIONS (APPLICABLE TO FUTURE CONTRIBUTIONS
ONLY)
I hereby revoke any previous investment instructions and now
direct that any future contributions and/or loan repayments, if
any, made by me or on my behalf by 1st State Bank including
those contributions and/or repayments received by 1st State Bank
Employees' Savings & Profit Sharing Plan and Trust during the
same reporting period as this form, be invested in the following
whole percentages. If I elect to invest in 1st State Bancorp,
Inc. Common Stock, such future contributions or loan repayments,
if any, will be invested in the Employer Stock Fund the month
following the conclusion of the Offering.
FUND PERCENTAGE TO BE TRANSFERRED
---- ----------------------------
S&P 500 Stock Fund ____%
Stable Value Fund ____%
S&P MidCap Stock Fund ____%
Money Market Fund ____%
Government Bond Fund ____%
International Stock Fund ____%
Income Plus Fund ____%
Growth & Income Fund ____%
Growth Fund ____%
Certificate of Deposit Fund ____%
Employer Stock Fund ____%
Total (Important!) 100%
NOTES: No amounts invested in the Stable Value Fund or the
Certificate of Deposit Fund may be transferred directly to the
Money Market Fund. Stable Value Fund amounts invested in the
S&P 500 Stock Fund, S&P MidCap Stock Fund, Government Bond Fund,
International Stock Fund, Income Plus Fund, Growth & Income
Fund, Growth Fund and/or Employer Stock Fund, for a period of
three months may be transferred to the Money Market Fund upon
the submission of a separate Change of Investment Allocation
form.
The percentage that can be transferred to the Money Market Fund
may be limited by any amounts previously transferred from the
Stable Value Fund or the Certificate of Deposit Fund that have
not satisfied the equity wash requirement. Such amounts will
remain in either the S&P 500 Stock Fund, S&P MidCap Stock Fund,
Government Bond Fund, International Stock Fund, Income Plus Fund,
Growth & Income Fund, Growth Fund and/or Employer Stock Fund and
a separate direction to transfer them to the Money Market Fund
will be required when they become available.
<PAGE>
<PAGE>
5. PARTICIPANT SIGNATURE AND ACKNOWLEDGMENT - REQUIRED
By signing this Change Of Investment Allocation form, I authorize
and direct the Plan administrator and trustee to carry out my
instructions. I acknowledge that I have been provided with and
read a copy of the Prospectus relating to the issuance of Common
Stock. I am aware of the risks involved in the investment in
Common Stock, and understand that the trustee and Plan
administrator are not responsible for my choice of investment.
MEMBER'S SIGNATURE
____________________________ ____________________
Signature of Member Date
Pentegra Services, Inc. is hereby authorized to make the above
listed change(s) to this member's record.
________________________________________ _________
Signature of 1st State Bank Authorized Representative Date
PLEASE COMPLETE AND RETURN BY 12:00 NOON ON MONDAY,
MARCH 8, 1999.
[Letterhead of Housley Kantarian & Bronstein, P.C.]
February 22, 1999
Board of Directors
1st State Bank
445 S. Main Street
Burlington, North Carolina 27215
Re: 1st State Bank
Employees' Savings and Profit Sharing Plan
Registration Statement on Form S-8
------------------------------------------
Dear Board Members:
We have acted as special counsel to 1st State Bancorp,
Inc., a Virginia corporation (the "Company"), in connection with
the preparation of the Registration Statement on Form S-8 filed
with the Securities and Exchange Commission (the "Registration
Statement") under the Securities Act of 1933, as amended,
relating to participation interests in the 1st State Bank
Employees' Savings and Profit Sharing Plan (the "Plan") and the
sale to Plan participants of shares of common stock, $.01 per
share (the "Common Stock") of the Company, all as more fully
described in the Registration Statement. You have requested the
opinion of this firm with respect to certain legal aspects of
the proposed offering.
We have examined such documents, records and matters of
law as we have deemed necessary for purposes of this opinion and
based thereon, we are of the opinion that the Common Stock when
issued will be legally issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement on Form S-8 and to
references to our firm included under the caption "Legal
Opinion" in the Prospectus which is part of the Registration
Statement.
Very truly yours,
Housley Kantarian & Bronstein, P.C.
By: /s/ Gary R. Bronstein
---------------------------------
Gary R. Bronstein, Esquire
INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY
Plan Description: Prototype Non-standardized Profit Sharing Plan
with CODA
FFN: 50370030001-001 Case: 9700387 EIN: 13-3745616
BPD: 01 Plan: 001 Letter Serial No. D366852a
Washington, DC 20224
PENTEGRA SERVICES INC. Contact Person: Ms. Arrington
108 CORPORATE PARK DRIVE Telephone Number: (202) 622-8173
WHITE PLAINS, NY 10604 In Reference to: OP:E:EP:T1
Date: 06/26/98
Dear Applicant:
In our opinion, the form of the plan identified above is
acceptable under section 401 of the Internal Revenue Code for use
by employers for the benefit of their employees. This opinion
relates only to the acceptability of the form of the plan under
the Internal Revenue Code. It is not an opinion of the effect of
other Federal or local statutes.
You must furnish a copy of this letter to each employer who
adopts this plan. You are also required to send a copy of the
approved form of the plan, any approved amendments and related
documents to each Key District Director of Internal Revenue
Service in whose jurisdiction there are adopting employees.
Our opinion on the acceptability of the form of the plan is not a
ruling or determination as to whether an employer's plan
qualifies under Code section 401(a). Therefore, an employer
adopting the form of the plan should apply for a determination
letter by filing an application with the Key District Director of
Internal Revenue Service on Form 5307, Short Form Application for
Determination for Employee Benefit Plan.
Because you submitted this plan for approval after March 31,
1991, the continued, interim and extended reliance provisions of
sections 13 and 17.03 of Rev. Proc.95-12, 1995-3 I.R.B. 24.
This letter may not be relied upon with respect to whether the
plan satisfies the qualification requirements as amended by the
Uruquay Round Agreements Act, Pub. L. 103-465, and by the Small
Business Job Protection Act of 1996, Pub. L. 104-108.
If you, the sponsoring organization, have any questions
concerning the IRS processing of this case, please call the above
telephone number. This number is only for use of the sponsoring
organization. Individual participate and/or adopting employers
with questions concerning the plan should contact the sponsoring
organization. Individual participants and/or adopting employers
with questions concerning the plan should contact the sponsoring
organization. The plan's adoption agreement must include the
sponsoring organization's address and telephone number for
inquiries by adopting employers.
If you write to the IRS regarding this plan, please provide your
telephone number and the most convenient time for us to call in
case we need more information. Whether you call or write, please
refer to the Letter Serial Number and File Folder Number shown in
the heading of this letter.
You should keep this letter as a permanent record. Please notify
us if you modify or discontinue sponsorship of this plan.
Sincerely yours,
Chief, Employee Plans Technical Branch 1
INDEPENDENT AUDITORS' CONSENT
Board of Directors
1st State Bank:
We consent to the use of our report incorporated herein by
reference, and to the reference to our firm under the heading
"Experts" in the prospectus.
/s/ KPMG LLP
Greensboro, North Carolina
February 22, 1999
<TABLE>
<CAPTION>
Form 5500-C/R Return/Report of Employee Benefit Plan OMB Nos. 1210-0016
Department of the Treasury (With fewer than 100 participants) 1210-0089
Internal Revenue Service This form is required to be filed under sections 104 and 4065 of the Employee
---------- Retirement Income Security Act of 1974 and sections 6039D, 6047(e), -------------------
Department of Labor 6057(b), and 6058(a) of the Internal Revenue Code. 1997
Pension and Welfare Benefits Administration See separate instructions. -------------------
---------- This Form is Open
Pension Benefit Guaranty Corporation to Public Inspection.
- ------------------------------------------------------------------------------------------------------------------------------------
For the calendar plan year 1997 or fiscal plan year beginning and ending ,19
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
If A(1) through A(4), B, C, and/or D do not apply to this year's return/report For IRS Use Only
leave the boxes unmarked. EP-ID
You must check either box A(5) or A(6), whichever is applicable. See instructions. -------------------------------------------
A This return/report is: (5) Form 5500-C filer check here. . . . [_]
(1) [_] the first return/report filed for the plan; (Complete only pages 1 and 3 through 6)
(2) [_] an amended return/report (Code section 6039D filers see
(3) [_] the final return/report filed for the plan; or instructions on page 5.)
(4) [_] a short plan year return/report (less than 12 months). (6) Form 5500-R filer check here. . . . [X]
(Complete only pages 1 and 2. Detach
pages 3 through 6 before filing.) If
you checked box (1) or (3), you must
file a Form 5500-C. (See page 6 of the
instructions.)
IF ANY INFORMATION ON A PREPRINTED PAGE 1 IS INCORRECT, CORRECT IT. IF ANY INFORMATION IS MISSING, ADD IT. PLEASE USE RED INK WHEN
MAKING THESE CHANGES AND INCLUDE THE PREPRINTED PAGE 1 WITH YOUR COMPLETED RETURN/REPORT.
B Check here if any information reported in 1a, 2a, 2b, or 5a changed since the last return/report for this plan . . . . . [_]
C If your plan year changed since the last return/report, check here. . . . . . . . . . . . . . . . . . . . . . . . . . . . [_]
D If you filed for an extension of time to file this return/report, check here and attach a copy of the approved extension. [X]
- --------------------------------------------------------------------------------------------------------------------------------
1a Name and address of plan sponsor (employer, if for a single-employer plan) 1b Employer identification number (EIN)
(Address should include room or suite no.) 56-0223240
---------------------------------------
1c Sponsor's telephone number
1st State Savings Bank, SSB (910) 227-8861
445 South Main Street ---------------------------------------
Burlington, NC 27216 1d Business code (see instructions,
page 17)
6090
---------------------------------------
1e CUSIP issuer number
N/A
- --------------------------------------------------------------------------------------------------------------------------------
2a Name and address of administrator (if same as plan sponsor, enter "Same") 2b Administrator's EIN
SAME ---------------------------------------
2c Administrator's telephone number
- ---------------------------------------------------------------------------------------------------------------------------------
3 If you are filing this page without the preprinted historical plan information and the name, address, and EIN of the plan
sponsor or plan administrator has changed since the last return/report filed for this plan, enter the information from the last
return/report on lines 3a and/or 3b and complete line 3c.
a Sponsor ________________________________________________ EIN _________________ Plan number ________________
b Administrator ________________________________ EIN ____________________________________________
c If line 3a indicates a change in the sponsor's name, address, and EIN, is this a change in sponsorship only? (See line 3c on
page 8 of the instructions for the definition of sponsorship.) Enter "Yes" or "No."
- ------------------------------------------------------------------------------------------------------------------------------------
4 ENTITY CODE. (If not shown, enter the applicable code from page 8 of the instructions.) B
- ------------------------------------------------------------------------------------------------------------------------------------
5a Name of plan 1st State Savings Bank, SSB Employees' Savings & Profit Sharing Plan 5b Effective date of plan
-------------------------------------------------------------------- (mo., day, yr.)
01/01/87
--------------------------------------------------------------------------------- ---------------------------------------
5c Three-digit
All filers must complete 6a through 6d, as applicable. plan number 002
6a [_] Welfare benefit plan 6b [X] Pension benefit plan ---------------------------------------
(If the correct codes are not preprinted below, enter the applicable codes ] [2] [_] [_] [_] [_] [_] [_] [_]
in the boxes.) ] [_] [_] [_] [_] [_] [_] [_] [_]
6c Pension plan features. (If the correct codes are not preprinted below, enter the applicable
pension plan feature codes in the boxes.) [G] [K] [C] [_] [_] [_] [_] [_]
6d [_] Fringe benefit plan. Attach Schedule F (Form 5500).
- ------------------------------------------------------------------------------------------------------------------------------------
Caution: A penalty for the late or incomplete filing of this return/report will be assessed unless reasonable cause is established.
- ------------------------------------------------------------------------------------------------------------------------------------
Under penalties of perjury and other penalties set forth in the instructions, I declare that I have examined this return/report,
including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct, and complete.
Signature of employer/plan sponsor /s/ James C. McGill Date 10/14/98
-------------------------------------------------------------- ----------------------------
Type or print name of individual signing for employer/plan sponsor James C. McGill, President and CEO
----------------------------------------------------------------
Signature of plan administrator /s/ A. Christine Baker Date 10/14/98
-------------------------------------------------------------- ----------------------------
Type or print name of individual signing above A. Christine Baker, Executive Vice President and CFO
- -----------------------------------------------------------------------------------------------------------------------------------
For Paperwork Reduction Act Notice, see the instructions for Form 5500-C/R. Form 5500-C/R (1996)
/TABLE
<PAGE>
<PAGE>
<TABLE>
Form 5500-C/R (1996) Form 5500-R filers, complete pages 1 and 2 only. Form 5500-C filers, complete page 1, Page 2
skip page 2, and complete pages 3 through 6.
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
6e Check investment arrangement below
(1) [_] Master trust (2) [X] Common/Collective trust (3) [_] Pooled separate account
- ------------------------------------------------------------------------------------------------------------------------
7a Total participants: (1) At the beginning of plan year 56 (2) At the end of plan year 60
b Enter number of participants with account balances at the end of the plan year (defined benefit plans do not
complete this item) 60
c (1) Were any participants in the pension benefit plan separated from service with a deferred vested
benefit for which a Schedule SSA (Form 5500) is required to be attached?7c(1) (X)Yes (_)No
(2) If "Yes," enter the number of separated participants required to be reported 3
- ------------------------------------------------------------------------------------------------------------------------
8a Was this plan terminated during this plan year or any prior plan year? If "Yes," enter the year8a (_)Yes (X)No
b Were all the plan assets either distributed to participants or beneficiaries, transferred to another
plan, or brought under the control of PBGC? . . . . . . . . . .8b (_)Yes (X)No
c If line 8a is "yes" and the plan is covered by PBGC, is the plan continuing to file PBGC Form 1 and
pay premiums until the end of the plan year in which assets are distributed or brought under the
control of PBGC?. . . . . . . . . . . . . . . . . . . . . . . .8c
- ------------------------------------------------------------------------------------------------------------------------
9 Is this a plan established or maintained pursuant to one or more collective bargaining agreements?9 (_)Yes (X)No
- ------------------------------------------------------------------------------------------------------------------------
10 If any benefits are provided by an insurance company, insurance service, or similar organization, enter the number
of Schedules A (Form 5500), Insurance Information, that are attached. If none, enter - 0 -. - 0 -
- ------------------------------------------------------------------------------------------------------------------------
11a (1) Were any plan amendments adopted during this plan year?11a(1) (_)Yes (X)No
(2) Enter the date the most recent amendment was adopted Month 06 Day 10 Year 97
b If line 11a is "Yes," did any amendment result in a retroactive reduction of accrued benefits for any participant?
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11b(_)Yes (X)No
c If line 11a is "Yes," did any amendment change the information contained in the latest summary plan description or
summary description of modifications available at the time of the amendment?11c (X)Yes (_)No
d If line 11c is "Yes," has a summary plan description or summary description of modifications that reflects the plan
amendments referred to on line 11c been both furnished to participants and filed with the Department of Labor?
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11d (X)Yes (_)No
- ------------------------------------------------------------------------------------------------------------------------
12a If this is a pension benefit plan subject to the minimum funding standards, has the plan experienced a funding
deficiency for this plan year? . . . . . . . . . . . . . . . 12a (_)Yes (X)No
b If line 12a is "Yes," have you filed Form 5330 to pay the excise tax?12b
c Is the plan administrator making an election under section 412(c)(8) for an amendment adopted after the end of the
plan year? . . . . . . . . . . . . . . . . . . . . . . . . . 12c
d If a change in the actuarial funding method was made for the plan year pursuant to a Revenue Procedure
providing automatic approval for the change, indicate whether the plan sponsor/administrator agrees
to the change. . . . . . . . . . . . . . . . . . . . . . . . 12d
- ------------------------------------------------------------------------------------------------------------------------
13a Total plan assets as of the beginning 860,007 and end 1,155,800 of the plan year
b Total liabilities as of the beginning 0 and end 0 of the plan year
c Net assets as of the beginning 860,007 and end 1,155,800 of the plan year
- ------------------------------------------------------------------------------------------------------------------------
14 For this plan year, enter: a Plan income 312,732 d Plan contributions 158,949
b Expenses 16,939 e Total benefits paid 16,939
c Net income (loss)(subtract 14b from 14a) 295,793
- ------------------------------------------------------------------------------------------------------------------------
15 You may NOT use N/A in response to lines 15a through 15o. If you check "Yes," you must enter a dollar amount in the
amount column. During this plan year:
a Was this plan covered by a fidelity bond?. . . . . . . . . .15a (X)Yes (_)No
b If line 15a is "Yes," enter the name of the surety company St. Paul
c Was there any loss to the plan, whether or not reimbursed, caused by fraud or dishonesty?15c (_)Yes (X)No
d Was there any sale, exchange, or lease of any property between the plan and the employer, any fiduciary, any of the
five most highly paid employees of the employer, any owner of a 10% or more interest in the employer, or relatives
of any such persons? . . . . . . . . . . . . . . . . . . . . 15d (_)Yes (X)No
e Was there any loan or extension of credit by the plan to the employer, any fiduciary, any of the five most highly
paid employees of the employer, any owner of a 10% or more interest in the employer, or relatives of any such
persons? . . . . . . . . . . . . . . . . . . . . . . . . . . 15e (_)Yes (X)No
f Did the plan acquire or hold any employer security or employer real property?15f (_)Yes (X)No
g Has the plan granted an extension on any delinquent loan owed to the plan?15g (_)Yes (X)No
h Were any participant contributions transmitted to the plan more than 31 days after receipt or withholding by the
employer?. . . . . . . . . . . . . . . . . . . . . . . . . . 15h (_)Yes (X)No
i Were any loans by the plan or fixed income obligations due the plan classified as uncollectible or in default as of
the close of the plan year?. . . . . . . . . . . . . . . . . 15i (_)Yes (X)No
j Has any plan fiduciary had a financial interest in excess of 10% in any party providing services to the plan or
received anything of value from any such party?. . . . . . . 15j (_)Yes (X)No
k Did the plan at any time hold 20% or more of its assets in any single security, debt, mortgage, parcel of real
estate, or partnership/joint venture interests?15k (X)Yes (_)No 137,438Amount
l Did the plan at any time engage in any transaction or series of related transactions involving 20% or more of the
current value of plan assets?. . . . . . . . .15l (X)Yes (_)No 657,076Amount
m Were there any noncash contributions made to the plan the value of which was set without an appraisal by an
independent third party? . . . . . . . . . . . . . . . . . . 15m (_)Yes (X)No
n Were there any purchases of nonpublicly traded securities by the plan the value of which was set without an
appraisal by an independent third party? . . . . . . . . . . 15n (_)Yes (X)No
o Has the plan reduced or failed to provide any benefit when due under the plan because of insufficient assets?
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15o (_)Yes (X)No
- ------------------------------------------------------------------------------------------------------------------------
16a Is the plan covered under the Pension Benefit Guaranty Corporation termination insurance program? (_)Yes (X)No
(_)Not determined
b If line 16a is "Yes" or "Not determined," enter the employer identification number and the plan number used to
identify it.
Employer identification number Plan number
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
