<PAGE>
As filed with the Securities and Exchange Commission on May 25, 1999.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
____________________
FIRST COMMUNITY FINANCIAL
CORPORATION
(Exact name of Registrant as specified in its charter)
North Carolina 56-2119954
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
708 South Church Street
P. O. Box 1837
Burlington, North Carolina 27216-1837
(Address of Principal Executive Offices)
COMMUNITY SAVINGS BANK, SSB
EMPLOYEES' SAVINGS AND PROFIT SHARING PLAN
(Full title of the Plan)
____________________
William R. Gilliam, President and Chief Executive Officer
First Community Financial Corporation
708 South Church Street
P. O. Box 1837
Burlington, North Carolina 27216-1837
(336) 227-3631
(Name and address, including zip code, and telephone number, including area
code, of agent for service)
Copies to:
RANDALL A. UNDERWOOD
Brooks, Pierce, McLendon,
Humphrey & Leonard, L.L.P.
Post Office Box 26000
2000 Renaissance Plaza
230 North Elm Street
Greensboro, North Carolina 27420
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
================================================================================================
Title of Securities Amount to be Proposed Maximum Proposed Maximum Amount of
to be Registered/1/ Registered/2/ Offering Price Aggregate Offering Registration
Per Unit Price Fee/3/
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
Common Stock, no par value 117,431 $15.00 $1,761,465.00 $489.69
================================================================================================
</TABLE>
(Footnotes on Next Page)
This Registration Statement shall become effective upon filing in accordance
with Section 8(a) of the Securities Act of 1933, as amended, and 17
C.F.R.(S)230.462.
1 Pursuant to Rule 416(c) under the Securities Act of 1933, as amended, this
registration statement also covers an indeterminate amount of interests to
be offered or sold pursuant to the employer benefit plan described herein.
2 Represents the maximum number of shares of First Community Financial
Corporation common stock which could be purchased by the Community Savings
Bank, SSB Employees' Savings and Profit Sharing Plan if all employer and
employee contributions to the plan are used to purchase shares of such
common stock in First Community Financial Corporation's initial public
offering. This registration statement also includes an indeterminate
number of shares which may be necessary to adjust the number of shares
purchased by such plan as a result of a stock split, stock dividend,
reclassification, recapitalization or similar adjustments to the common
stock of First Community Financial Corporation.
3 Pursuant to Rule 457(h)(2), no separate fee is payable with respect to the
interests in the employee benefit plan.
================================================================================
<PAGE>
Part I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information.
This Registration Statement relates to the registration of up to 117,431
shares of common stock, no par value, of First Community Financial Corporation
(the "Registrant") which could be issued pursuant to the Community Savings Bank,
SSB Employees' Savings and Profit Sharing Plan (the "401(k) Plan") and an
indeterminate amount of participation interests in the 401(k) Plan. Documents
containing the information specified in Part I of Form S-8 will be sent or given
to the participants in the 401(k) 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.
Item 2. Registration Information and Employee Plan Annual Information.
The required statement is contained in the prospectus to be delivered
pursuant to Part I of this Registration Statement as specified by Rule
428(b)(1).
Part II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents filed with the Commission are incorporated herein
by reference:
(a) The Registrant's Prospectus dated May 7, 1999 filed pursuant to Rule
424(b) on May 14, 1999 in connection with Registrant's Registration
Statement on Form SB-2, as amended (Registration No. 333-70981) filed
pursuant to the Securities Act of 1933, as amended (the "Securities
Act").
(b) The description of the Registrant's Common Stock contained in the
Registrant's Registration Statement on Form SB-2, as amended,
Registration No. 333-70981, incorporated by reference in the
Registration Statement on Form 8-A filed with the Commission under
Section 12(g) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") on May 18, 1999 (File No. 000-26117), including any
amendment or report filed for the purpose of updating such
description.
All documents subsequently filed by the Registrant and the 401(k) pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing
of a post-effective amendment which indicates that all securities registered
hereby have been sold or which deregisters all securities then remaining unsold,
shall be deemed incorporated by reference herein and to be a part hereof from
the date of the filing of such documents. Any statement contained in this
Registration Statement, or in a document incorporated or deemed to be
incorporated by reference herein, shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
<PAGE>
contained herein, or in any other subsequently filed document which is also
incorporated or deemed to be incorporated by reference herein, modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
The Registrant's Articles of Incorporation provide 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 Registrant
or any of its stockholders or otherwise for monetary damages for breach of any
duty as director. The Registrant's Bylaws state that any person who at any time
serves or has served as a director or officer of the Registrant, or who, while
serving as a director or officer of the Registrant, serves or has served at the
request of the Registrant 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 Registrant to the fullest extent
permitted by law against liability and litigation expense arising out of such
status or activities in such capacity. "Liability and litigation expense" is
defined in the Bylaws as including costs and expenses of litigation (including
reasonable attorneys' fees), judgments, fines and amounts paid in settlement
which are actually and reasonably incurred in connection with or as a
consequence of any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, including appeals.
Litigation expense, as described above, may be paid by the Registrant in
advance of the final disposition or termination of the litigation matter, if the
Registrant receives an undertaking, dated, in writing and signed by the person
to be indemnified, to repay all such sums unless such person is ultimately
determined to be entitled to be indemnified by the Registrant as provided in the
Registrant's Bylaws.
Sections 55-8-50 through 55-8-58 of the NCBCA contain provisions
prescribing the extent to which directors and officers 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
2
<PAGE>
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 the
board of directors, or a committee or 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 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 foregoing is only a general summary of certain aspects of North
Carolina law dealing with indemnification of directors and officers and does not
purport to be complete. It is qualified in its entirety by reference to the
relevant statutes, which contain detailed specific provisions regarding the
circumstances under which, and the persons for whose benefit, indemnification
shall or may be made.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits
The following exhibits are filed with or incorporated by reference into
this Registration Statement on Form S-8 (numbering corresponds to Exhibit Table
in Item 601 of Regulation S-B):
3
<PAGE>
Exhibit No. Description of Document
----------- -----------------------
4.1 Specimen Stock Certificate for the Registrant
(incorporated by reference to Exhibit 4.1 of the
Registration Statement on Form SB-2,
Registration No. 333-70981, filed January 22,
1999, as amended).
4.2 Community Savings Bank, SSB Employees' Savings
& Profit Sharing Plan.
4.3 Community Savings Bank, SSB Employees' Savings
& Profit Sharing Plan Adoption Agreement.
4.4 Community Savings Bank, SSB Employees' Savings
& Profit Sharing Plan and Trust - Summary Plan
Description.
4.5 Form of Investment Allocation to be made
available to participants under the Community
Savings Bank, SSB Employees' Savings and Profit
Sharing Plan.
5.0 Opinion of Brooks, Pierce, McLendon, Humphrey &
Leonard, L.L.P. as to legality of securities
being registered (incorporated by reference to
Exhibit 5.1 of the Registration Statement on
Form SB-2, Registration No. 333-70981, filed
January 22, 1999, as amended).
23.1 Consent of Brooks, Pierce, McLendon, Humphrey
& Leonard, L.L.P.
23.2 Consent of PricewaterhouseCoopers LLP.
24.0 Power of Attorney (contained on the signature
page to this Registration Statement).
99.1 Copy of the 401(k) Plan's most recent Annual
Report on Form 5500 filed with the IRS.
The Registrant will submit or has submitted the 401(k) Plan and any
amendments thereto to the Internal Revenue Service ("IRS") in a timely manner
and has made or will make all changes required by the IRS in order to qualify
the 401(k) Plan under Section 401 of the Internal Revenue Code.
Item 9. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to the Registration Statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act;
4
<PAGE>
(ii) Reflect in the prospectus any facts or events arising which,
individually or in the aggregate, represent a fundamental change
in the information 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 a 20% change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in the
Registration Statement;
(iii) 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 (1)(i) and (1)(ii) above do not apply if
-------- -------
the information required 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 Section 15(d) of the Exchange Act that are
incorporated by reference in the Registration Statement.
(2) For determining liability under the Securities Act, each such post-
effective amendment shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered that remain unsold at the termination of the
offering.
(4) For purposes of determining any liability under the Securities Act,
each filing of the Registrant's annual report pursuant to section 13(a) or
section 15(d) of the Exchange Act (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the Exchange
Act) that is incorporated by reference in the Registration Statement shall be
deemed to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the provisions discussed in Item 6 hereof, or otherwise,
the Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities 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 Securities Act and will be governed by
the final adjudication of such issue.
5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the 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 the 14th
day of May, 1999.
FIRST COMMUNITY FINANCIAL CORPORATION
Registrant
By: /s/ William R. Gilliam
--------------------------------------------
William R. Gilliam, President
and Chief Executive Officer
Each person whose individual signature appears below hereby makes,
constitutes and appoints William R. Gilliam to sign for such person and in such
person's name and capacity indicated below, any and all amendments to this
Registration Statement, including any and all post-effective amendments.
6
<PAGE>
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
Date: May 14, 1999 By: /s/ William R. Gilliam
------------------------------------------
William R. Gilliam, President and Director
(Chief Executive Officer)
Date: May 14, 1999 By: /s/ Christopher B. Redcay
------------------------------------------
Christopher B. Redcay, Treasurer
(Principal Accounting Officer and
Principal Financial Officer)
Date: May 14, 1999 By: /s/ Jimmy l. Byrd
------------------------------------------
Jimmy L. Byrd, Director
Date: May 14, 1999 By: /s/ Julian P. Griffin
------------------------------------------
Julian P. Griffin, Director
Date: May 14, 1999 By: /s/ Edgar L. Hartgrove
------------------------------------------
Edgar L. Hartgrove, Director
Date: May 14, 1999 By: /s/ William C. Ingold
------------------------------------------
William C. Ingold, Director
Date: May 14, 1999 By: /s/ Charles A. LeGrand
------------------------------------------
Charles A. LeGrand, Director
Date: May 14, 1999 By: /s/ James D. Moser, Jr.
------------------------------------------
James D. Moser, Jr., Director
Date: May 14, 1999 By: /s/ W. Joseph Rich
------------------------------------------
W. Joseph Rich, Director
Date: May 14, 1999 By: /s/ Alfred J. Spitzner
------------------------------------------
Alfred J. Spitzner, Director
Date: May 14, 1999 By: /s/ Herbert N. Wellons
------------------------------------------
Herbert N. Wellons, Director
7
<PAGE>
EXHIBIT INDEX
Method of
Exhibit No. Description Filing
- ----------- ----------- ---------
4.1 Specimen Stock Certificate for the Registrant Incorporated by
Reference
4.2 Community Savings Bank, SSB Employees' Filed Herewith
Savings & Profit Sharing Plan
4.3 Community Savings Bank, SSB Employees' Filed Herewith
Savings & Profit Sharing Plan Adoption
Agreement
4.4 Community Savings' Bank, SSB Employees' Filed Herewith
Savings & Profit Sharing Plan and Trust -
Summary Plan Description
4.5 Form of Investment Election to be made Filed Herewith
available to participants under the Community
Savings Bank, SSB Employees' Savings and
Profit Sharing Plan.
5.0 Opinion of Brooks, Pierce, McLendon, Incorporated by
Humphrey & Leonard, L.L.P. as to legality of Reference
securities being registered
23.1 Consent of Brooks, Pierce, McLendon, Filed Herewith
Humphrey & Leonard, L.L.P.
23.2 Consent of PricewaterhouseCoopers LLP Filed Herewith
24.0 Power of Attorney Filed Herewith
(on
signature page)
99.1 Copy of the 401(k) Plan's most recent Annual Filed Herewith
Report on Form 5500 filed with the IRS.
<PAGE>
PENTEGRA SERVICES, INC.
EMPLOYEES' SAVINGS & PROFIT SHARING PLAN
BASIC PLAN DOCUMENT
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
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
</TABLE>
<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 Third Party 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
1
<PAGE>
individual would have completed but for a maternity or paternity
absence, as determined 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
2
<PAGE>
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 (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
3
<PAGE>
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 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)
4
<PAGE>
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.
(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
unless otherwise specified in the Adoption Agreement.
(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
5
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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 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. (S)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.
6
<PAGE>
(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 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>
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. 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 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
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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>
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.
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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 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
11
<PAGE>
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 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.
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<PAGE>
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 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 1% 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:
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<PAGE>
Formula (1) A uniform percentage (as specified by the Employer) of each
Member's contributions 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 the
second month 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.
Any such profit sharing contribution must be received by the Trustee on or
before the last business
14
<PAGE>
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").
15
<PAGE>
Profit Sharing Formula 4 - In 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),
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
16
<PAGE>
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 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 the second month 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, Employer
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>
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.
Section 3.11 Determining the Actual Contribution Percentages
-----------------------------------------------
18
<PAGE>
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 the Code under Section 3.2
above and then determining the treatment of excess contributions
19
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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
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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:
21
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(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 deferrals 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 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.
22
<PAGE>
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.
23
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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 or, if applicable, the Employer
Certificate of Deposit 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
24
<PAGE>
as administratively practicable thereafter. If the Adoption Agreement provides
for Member directed 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.
25
<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 (b) the Unit value of such Investment Fund.
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.
26
<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:
27
<PAGE>
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.
28
<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
29
<PAGE>
Service, any Units forfeited from his Account shall be restored to his Account,
including all interest 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.
30
<PAGE>
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.
31
<PAGE>
. Next from the Member's 401(k) deferrals plus earnings thereon.
32
<PAGE>
. 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
33
<PAGE>
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 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
34
<PAGE>
70 1/2 unless otherwise provided by law.
35
<PAGE>
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. 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
36
<PAGE>
annuity for the life of such designated Beneficiary.
Married Members - Except as otherwise provided below, (i) any married Member who
has terminated 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 coinciding 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
37
<PAGE>
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 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).
38
<PAGE>
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 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 disability 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.
39
<PAGE>
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 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
40
<PAGE>
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 annualy in accordance with the Regulations.
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 70 1/2 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 66 1/2 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.
41
<PAGE>
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.
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<PAGE>
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
43
<PAGE>
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.
44
<PAGE>
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, by the last day of the calendar quarter
following the calendar quarter which contains 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 by the last day of the calendar
quarter following the calendar quarter which contains 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
45
<PAGE>
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 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 by the last day of the calendar quarter following the
calendar quarter which contains the scheduled payment date, he will be deemed to
have received a distribution of the outstanding balance of the loan.
46
<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,
47
<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;
48
<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
49
<PAGE>
execution of the functions assigned to him, and none of such responsibilities or
any other 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
------------------------------
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<PAGE>
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; 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
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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.
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
52
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by another Plan Administrator or the Employer.
53
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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.
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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.
55
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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
56
<PAGE>
to those returned contributions. Such refunds shall not be deemed to be
withdrawals, loans, or 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.
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<PAGE>
(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
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Subparagraph (3), compensation shall have the meaning prescribed 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 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%
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(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.
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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.
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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.
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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.
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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
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Section 11.3 shall apply with respect to such portion as if it were a separate
fund.
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
65
<PAGE>
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.
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
66
<PAGE>
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.
67
<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.
68
<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
69
<PAGE>
ADOPTION AGREEMENT
- --------------------------------------------------------------------------------
For Community Savings Bank, SSB
Employees' Savings & Profit Sharing Plan and Trust
Client No. D17
Effective April 1, 1999
Pentegra
<PAGE>
ADOPTION AGREEMENT
FOR
Community Savings Bank, SSB
EMPLOYEES' SAVINGS & PROFIT SHARING PLAN AND TRUST
Name of Employer: Community Savings Bank, SSB
-------------------------------------------------------------
Address: 708 South Church Street, Burlington, NC 27215
-------------------------------------------------------------
Telephone Number: (336) 227-3631 FAX (336) 227-3654
-------------------------------------------------------------
Contact Person: Mr. W. R. Gilliam
-------------------------------------------------------------
Name of Plan: Community Savings Bank, SSB Employees' Savings & 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
Community 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>
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 Community Savings Bank, SSB Employees'
Savings & Profit Sharing Plan and Trust, effective _________________,
19 ____ (the "Effective Date").
2. X Amends its existing defined contribution plan and trust (the
--- ---
Community Savings Bank, SSB Employees' Savings & Profit Sharing Plan
--------------------------------------------------------------------
and Trust) dated April 1, 1998, in its entirety into the Community
--------- -------------
Savings Bank, SSB Employees' Savings & Profit Sharing Plan and Trust,
effective April 1, 1999, except as otherwise provided herein or in
-------------
the Agreement (the "Effective Date").
II. Definitions
A. Employer
1. "Employer," for purposes of the Plan, shall mean:
Community Savings Bank, SSB
----------------------------------------------------------------------
2. The Employer is (choose whichever may apply):
(a) ___ A member of a controlled group of corporations under Section
414(b) of the Code.
(b) ___ 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.
(d) X A corporation.
---
(e) ___ A sole proprietorship or partnership.
(f) ___ A Subchapter S corporation.
3. Employer's Taxable Year Ends on December 31
--------------------------------------
4. Employer's Federal Taxpayer Identification Number is 56 - 0185960.
---------------
5. Employer's Plan Number is (enter 3-digit number) 001.
-----
B. "Entry Date" means the first day of the (choose 1 or 2):
1. ___ Calendar month coinciding with or next following the date the
Employee satisfies the Eligibility requirements described in
Section III.
2. X Calendar quarter (January 1, April 1, July 1, October 1)
---
coinciding with or next following the date the Employee satisfies
the Eligibility requirements described in Section III.
2
<PAGE>
C. "Member" means an Employee enrolled in the membership of the Plan.
D. "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.
E. "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.
F. "Plan Year" means the twelve (12) consecutive month period ending on
December 31 (month/day).
-----------
G. "Salary" for benefit purposes under the Plan means (choose 1, 2 or 3):
1. X Total taxable compensation as reported on Form W-2 (exclusive of
---
any compensation deferred from a prior year).
2. ___ Basic Salary only.
3. ___ Basic Salary plus one or more of the following (if 3 is chosen,
then choose (a), (b), (c) or (d), whichever shall apply):
(a) _____ Commissions not in excess of $______________
(b) _____ Commissions to the extent that Basic Salary plus
Commissions do not exceed $______________
(c) _____ Overtime
(d) _____ Overtime and bonuses
Note: Member pre-tax contributions to a Section 401(k) plan are always
included in Plan Salary.
Member pre-tax contributions to a Section 125 cafeteria plan are
also to be included in Plan Salary, unless the Employer elects
to exclude such amounts by checking this line _____.
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.
---
3
<PAGE>
2. X Employees who have not, during the 6 consecutive month period
--- -----
(1-11, 12 or 24) beginning with an Employee's Date of Employment,
Date of Reemployment or any anniversary thereof.
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. X 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. X 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 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. X 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.
4
<PAGE>
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. ___ 190 Hours of Employment for every month of Employment.
(Equivalency Method)
Note: This election is relevant if you selected an eligibility
requirement under III.A.2. or a vesting schedule under VIII.A.
other than immediate vesting.
B. Prior Employment Credit:
X 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.
Community Savings Bank, SSB Profit Sharing and Savings Plan and Trust
---------------------------------------------------------------------
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).
A. Employee Contributions (fill in 1 and/or 6 if applicable; choose 2 or 3;
4 or 5):
1. X The maximum amount of monthly contributions a Member may make to
---
the Plan is 15 % (1-20) of the Member's monthly Salary.
---
2. X A Member may make pre-tax elective deferrals to the Plan, based
---
on multiples of 1% of monthly Salary.
3. ___ A Member may not make pre-tax elective deferrals to the Plan.
4. ___ A Member may make after-tax contributions to the Plan, based on
multiples of 1% of monthly Salary.
5. X A Member may not make after-tax contributions to the Plan.
---
6. X An Employee may allocate a rollover contribution to the Plan
---
prior to satisfying the Eligibility requirements described
above.
5
<PAGE>
B. A Member may change his or her contribution rate (choose 1, 2 or 3):
1. ____ 1 time per pay period.
2. ____ 1 time per calendar month.
3. X 1 time per calendar quarter.
----
C. Employer Matching Contributions (fill in 1 if applicable; and choose 2, 3,
4 or 5):
1. The Employer matching contributions under 2, 3 or 4 below 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.1. above) of the Member's
Salary.
2. X The Employer shall allocate to each contributing Member's Account
---
an amount equal to 50 % (based on 1% 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%
5. ___ No Employer matching contributions will be made to the Plan.
D. Employer Basic Contributions (choose 1 or 2):
1. ___ 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.
2. X No Employer basic contributions will be made to the Plan.
---
6
<PAGE>
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.
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.
7
<PAGE>
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 Contributi on
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. "Contribution Determination Period" for purposes of determining and
allocating Employer profit sharing contributions means (choose 1,2, 3 or
4):
1. ____ 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).)
I. Employer Qualified Nonelective Contributions:
The Employer may make qualified nonelective contributions for any Plan
Year in accordance with Section 3.9 of the Plan.
VI. Investment Funds
The Employer hereby appoints Barclays Global Investors, N.A. to serve as
Investment Manager under the Plan.
8
<PAGE>
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 First Community Financial Corporation Stock Fund (Investment in the
---
Employer Stock Fund is permitted only at the IPO. No transfers are
permitted into the Employer Stock Fund from the other nine
Investment Funds.)
9. ___ Certificate of Deposit 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. X 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.
2. ___ 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.
9
<PAGE>
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 Stock Fund or, if applicable, the Employer Certificate of
Deposit 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 or, if applicable, the
Employer Certificate of Deposit Fund may not be transferred to any
other Investment Fund.
1. ____ Notwithstanding this election in B, a Member may transfer such
amounts upon (choose whichever may apply):
(a) ____ the attainment of age______ (insert 45 or greater)
(b) ____ the completion of _____ (insert 10 or greater) years
of employment
(c) ____ the attainment of age plus years of employment equal
to ______ (insert 55 or greater)
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
Member's contributions and employer contributions made on the Member's
behalf shall be invested in the Money Market 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)
Schedule Years of Employment Vested %
-------- ------------------- --------
1. ____ Immediate Upon Enrollment 100%
10
<PAGE>
Schedule Years of Employment Vested %
-------- ------------------- --------
2. X 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%
6. ___ 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%
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 2 with respect to all Employer contributions.
-----
11
<PAGE>
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.
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. X Employee after-tax contributions and the earnings thereon.
---
In-service withdrawals permitted only in the event of (choose
whichever shall apply):
(a) X Hardship.
---
(b) X Attainment of age 59 1/2.
---
2. X Employee pre-tax elective deferrals and the earnings thereon.
---
Note: In-service withdrawals of all employee pre-tax elective
deferrals and earnings thereon as of December 31, 1988 are
permitted only in the event of hardship or attainment of age
59 1/2. In-service withdrawals of earnings after December 31,
1988 are permitted only in the event of attainment of age 59
1/2.
3. X Employee rollover contributions and the earnings thereon.
---
In-service withdrawals permitted only in the event of (choose
whichever shall apply):
(a) X Hardship.
---
(b) X Attainment of age 59 1/2.
---
12
<PAGE>
4. X Employer matching contributions and the earnings thereon.
---
In-service withdrawals permitted only in the event of
(choose whichever shall apply):
(a) X Hardship.
---
(b) X Attainment of age 59 1/2.
---
5. ___ Employer basic contributions and the earnings thereon.
In-service withdrawals permitted only in the event of (choose
whichever shall apply):
(a) ___ Hardship.
(b) ___ Attainment of age 59 1/2.
6. X Employer supplemental contributions and the earnings thereon.
---
In-service withdrawals permitted only in the event of (choose
whichever shall apply):
(a) X Hardship.
---
(b) X Attainment of age 59 1/2.
---
7. ___ Employer profit sharing contributions and the earnings thereon.
In-service withdrawals permitted only in the event of (choose
whichever shall apply):
(a) ___ Hardship.
(b) ___ Attainment of age 59 1/2.
8. ___ Employer qualified nonelective contributions and earnings thereon.
Note: In-service withdrawals of all employer qualified
nonelective contributions and earnings thereon are
permitted only in the event of attainment of age 59 1/2
9. ___ 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 Stock Fund or, if applicable, the Employer Certificate
of Deposit Fund.
2. ___ All contributions and/or deferrals, and the earnings thereon,
credited to the Employer Stock Fund or, if applicable, the
Employer Certificate of Deposit Fund.
3. ___ Other: ______________________________________________________
13
<PAGE>
XI. Distribution Option (choose whichever shall apply)
1. ___ Lump Sum and partial lump sum payments only.
2. X Lump Sum and partial lump sum payments plus one or more of the
---
following (choose (a) and /or (b)):
(a) X Installment payments.
---
(b) X Annuity payments.
---
3. X Distributions in kind of Employer Stock.
---
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
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 Community
Savings Bank, SSB Employees' Saving & Profit Sharing Plan and Trust.
Signature of Employer's Authorized Representative ________________________
Signature of Trustee_______________________________________
Supplementary Page ____ of [total number of pages].
14
<PAGE>
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.
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 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: W. R. Gilliam
------------------------------------------------------------------------
Address: 708 South Church Street, Burlington, NC 27215
---------------------------------------------------------------------
Telephone No: (336) 227-3631 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.
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 Fund.
15
<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 Community Savings Bank,
SSB 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 __________ day of
______________________________, 19_____.
Community Savings Bank, SSB
By: ____________________________________
Name: ____________________________________
Title: ____________________________________
16
<PAGE>
Pentegra Services, Inc.
- --------------------------------------------------------------------------------
COMMUNITY SAVINGS BANK, SSB
EMPLOYEES' SAVINGS & PROFIT SHARING PLAN AND TRUST
Summary Plan Description
<PAGE>
SUMMARY PLAN DESCRIPTION
for
COMMUNITY SAVINGS BANK, SSB
Burlington, North Carolina
January 1, 1999
PENTEGRA SERVICES, INC.
108 Corporate Park Drive
White Plains, NY 10604
<PAGE>
To Participating Employees of Community 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
Community Savings Bank, SSB Employees' Savings and 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 conditions, 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,
Community Savings Bank, SSB
<PAGE>
SUMMARY OF YOUR BENEFITS
- --------------------------------------------------------------------------------
ELIGIBILITY You will be eligible for membership in the Plan on the first
day of the calendar quarter after you complete 6 months of
employment and attain age 21.
PLAN SALARY Plan Salary is defined as W-2 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 Employee - You may elect to make a contribution of 1%, 2%, 3%,
--------
CONTRIBUTIONS 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 rates 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 - 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 6 years of employment. 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 withdrawals 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>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
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
</TABLE>
<PAGE>
DETERMINING YOUR ELIGIBILITY
- --------------------------------------------------------------------------------
EMPLOYEE You will be eligible for membership in the Plan on the
ELIGIBILITY first day of the calendar quarter after you complete 6
months of employment and attain age 21. In order for
you to complete 6 months of employment, you must
complete at least 500 hours of employment in a 6
consecutive month period. The initial 6 consecutive
month period is measured from your date of employment,
and (if you do not complete at least 500 hours of
employment in such period) subsequent 6 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.
All employees shall be eligible to participate as
stated above, except employees covered by a collective
bargaining agreement and nonresident aliens who receive
no earned income from the employer which constitutes
income from sources in the United States.
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 will be eligible
for immediate reenrollment.
<PAGE>
MAKING CONTRIBUTIONS TO THE PLAN
- --------------------------------------------------------------------------------
PLAN Employee - You may elect to make pre-tax contributions of
--------
CONTRIBUTIONS 1%, 2%, 3%, 4%, 5%, 6%, 7%, 8%, 9%, 10%, 11%, 12%, 13%, 14%
or 15% of Plan Salary (see "Plan Salary" section of this
booklet). You may elect not to make any contributions. You
may change the rate at which you are contributing one time
in any calendar quarter. You may suspend your contributions
at any time, but suspended contributions may not be
subsequently 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 - 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 member. All of your
CONTRIBUTIONS 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 W-2 Salary. In addition, any pre-
tax contributions 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 in one or more
of the following investment
2
<PAGE>
CONTRIBUTIONS funds:
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
FIRST COMMUNITY FINANCIAL CORPORATION STOCK FUND
These funds are described in greater detail on your
quarterly investment 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 First
Community Financial Corporation 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 each Investment
ACCOUNTS Fund. Under this system each participant's share in any
Investment 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>
Transaction requests, such as withdrawals, 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 each calendar
MEMBERS 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>
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 Employment Vesting Percentage
------------------- ------------------
Less than 2 0%
2 20%
3 40%
4 60%
5 80%
6 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 2 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 2 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 the vested
WITHDRAWAL portion of your account byfiling the appropriate form with
the Plan Administrator for transmittal to Pentegra
Services, Inc. However, if you are married at the time of
the total or partial withdrawal, your spouse must consent
in writing to the withdrawal. 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 591/2. 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.
In general, employer contributions credited on your behalf
will not be available for in-service withdrawal until such
employer contributions have been invested in the Plan for
at least 24 months (2 years) or you have been a participant
in the Plan for at least 60 months (5 years) or the
attainment of age 59 1/2.
As required by Internal Revenue Service Regulations, a
withdrawal of your pre-tax contributions prior to age 591/2
or termination of employment can only be made on account of
a hardship. In addition, in-service withdrawals of employee
rollover contributions, Employee after-tax contributions
(if any), Employer supplemental contributions (if any)
and/or employer matching contributions can only be made
after you attain age 591/2 or demonstrate 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 701/2. You may make one withdrawal each plan
year. However, if you elect a distribution option other
than in the form of an annuity payment, your spouse, if
any, must waive the annuity form of payment option.
With spousal consent, if applicable, you may elect in lieu
of an annuity payment, to receive a lump sum payment or
annual installments to be paid 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.
While Employed
6
<PAGE>
MAKING WITHDRAWALS FROM YOUR ACCOUNT
- --------------------------------------------------------------------------------
(continued)
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.
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).
In addition, withdrawals from the First Community Financial
Corporation Stock Fund can be made in the form of First
Community Financial Corporation Common Stock.
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. If you are married at the time of your death,
your spouse will be the beneficiary of the death benefit,
(unless your spouse consents in writing to the designation
of a different beneficiary). If you are not married at the
time of your death or your spouse consents to a different
beneficiary, such beneficiary may elect to receive the
benefit in the form of a lump sum or in the form of annual
installments (unless the account value is less than $500),
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 5/th/ anniversary (10/th/ anniversary if
your spouse is your beneficiary) of your death.
If a valid waiver is not in effect, the death benefit
payable to your spouse will be in the form of a survivor
annuity, that is, periodic payments over the life of your
spouse. Your spouse may direct that payments begin within a
reasonable period of time after your death. The size of the
monthly payments will depend on the value of your account
at the time of your death. The death benefit may be
distributed in an alternative method, such as a single lump
sum or in installments, provided your spouse consents in
writing to an alternative form.
In addition, withdrawals from the First Community Financial
Corporation Stock Fund can be made in the form of First
Community Financial Corporation Common Stock.
BORROWING FROM YOUR ACCOUNT
- --------------------------------------------------------------------------------
LOANS You may borrow from the vested portion of your account. If
you are married at the time you request a loan from your
account, your spouse must consent to your loan request.
7
<PAGE>
You may borrow any amount between $1,000 and $50,000
(reduced by your highest outstanding loan balance(s) from
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
contributions 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 outstanding 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
applicable 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 impose
LIMITATIONS 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>
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 person
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 60% of
INFORMATION 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 minimum 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 which you
CLAIMS 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>
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>
MEMBERS RIGHTS
- --------------------------------------------------------------------------------
STATEMENT OF As a member of the Plan, you are entitled to certain
MEMBER'S rights and protection under ERISA which provides that all
RIGHTS 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 explanation 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 Administrator 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 reasons
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:
Community Savings Bank, SSB Employees' Savings
& Profit Sharing Plan and Trust
11
<PAGE>
<TABLE>
<S> <C>
Plan Administrator:
Community Savings Bank, SSB
708 S. Church Street
Burlington, NC 27215
Phone No: (336) 227-3631
Employer Identification Number: 56-0185960
Plan Number: 001
Plan Year End: December 31
Trustee(s):
The Bank of New York
1 Wall Street
New York, NY 10286
Phone: (212) 635-8115
Agent for Service of Legal Process:
Community 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
</TABLE>
12
<PAGE>
COMMUNITY SAVINGS BANK, SSB
CHANGE OF INVESTMENT ALLOCATION
1. Member Data
<TABLE>
<S> <C> <C> <C>
___________________________________________________________________________________________________________________
Print your full name above (Last, first, middle initial) Social Security Number
___________________________________________________________________________________________________________________
Street Address City State Zip
</TABLE>
2. Instructions
Community Savings Bank, SSB 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 First Community
Financial Corporation (the "Company") in connection with the reorganization of
Community Savings Bank, SSB 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") and the Prospectus Supplement (the "Supplement")
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 reinvested in the other funds of the Plan as
previously directed in your last investment election.
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 Supplement, and you should not rely on any information other than what is
contained in the Prospectus and Supplement. For a discussion of certain factors
that should be considered by each member as to an investment in the Common
Stock, see "Risk Factors" beginning on page 11 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 and Supplement.
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 Mr. William
R. Gilliam, President, Community Savings Bank, SSB, no later than June 1, 1999
at 12:00 noon. If you need any assistance in completing this form, please
contact Mr. Gilliam at (336) 227-3631. If you do not complete and return this
form to Mr. Gilliam by June 1, 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>
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:
<TABLE>
<CAPTION>
------------------------------------------------------------------------
FUND PERCENTAGE TO BE TRANSFERRED
---- ----------------------------
<S> <C>
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 ___ %
Growth Fund ___ %
------------------------------------------------------------------------
</TABLE>
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 Community Savings Bank, SSB, including those contributions and/or repayments
received by Community Savings Bank, SSB Employees' Savings & Profit Sharing Plan
and Trust during the same reporting period as this form, be invested in the
following whole percentages.
<TABLE>
<CAPTION>
------------------------------------------------------------------------
FUND PERCENTAGE
---- ----------
<S> <C>
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 ____ %
Total (Important!) 100 %
------------------------------------------------------------------------
</TABLE>
Notes: No amounts invested in the Stable Value 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 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>
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 and Supplement
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 Community Savings Bank, SSB Date
Authorized Representative
Please complete and return by 12:00 noon on June 1, 1999.
<PAGE>
[LETTERHEAD OF BROOKS, PIERCE, McLENDON, HUMPHREY & LEONARD, L.L.P.]
May 20, 1999
Board of Directors
First Community Financial Corporation
708 South Church Street
P. O. Box 1837
Burlington, North Carolina 27216-1837
Gentlemen:
We hereby consent to the incorporation by reference into the Registration
Statement on Form S-8 of First Community Financial Corporation of our opinion
filed as Exhibit 5.1 to First Community's Registration Statement on Form SB-2,
Number 333-70981, filed January 22, 1999, as amended.
Very truly yours,
BROOKS, PIERCE, MCLENDON,
HUMPHREY & LEONARD, L.L.P.
By: /s/ Randall A. Underwood
----------------------------
Randall A. Underwood
RAU/sw
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement on
Form S-8 of First Community Financial Corporation of our report, dated February
17, 1999, on our audits of the consolidated financial statements of Community
Savings Bank, SSB as of December 31, 1998 and 1997 and for each of the three
years in the period ended December 31, 1998, included in the Registration
Statement on Form SB-2, as amended, filed by First Community Financial
Corporation.
/s/PricewaterhouseCoopers LLP
Raleigh, North Carolina
May 13, 1999
<PAGE>
<TABLE>
<S> <C>
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 1997
---------------------
_________ Employee Retirement Income Security Act of 1974 and sections 6039D, This Form is Open
Department of Labor 6047(e), 6057(b), and 6058(a) of the Internal Revenue Code. to Public Inspection.
Pension and Welfare Benefits Administration * See separate instructions
_________
Pension Benefit Guaranty Corporation
- ------------------------------------------------------------------------------------------------------------------------------------
For the calendar plan year 1997 or fiscal plan year beginning , 1997, and ending DECEMBER , 1997
- ------------------------------------------------------------------------------------------------------------------------------------
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 OL-560185960-001-199712
----------------------------------------------
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 . . . . . [X]
(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 instructions
(3) [_] the final return/report filed for the plan; or on page 5.)
(4) [_] a short plan year return/report (less than 12 months). (6) Form 5500-R filer check here . . . . . [_]
(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 . . . . . . *[X]
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 . *[_]
- ------------------------------------------------------------------------------------------------------------------------------------
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.) 56-0185960
--------------------------------------------
1c Sponsor's telephone number
(336) 227-3631
--------------------------------------------
COMMUNITY SAVINGS BANK SSB 1d Business code (see instructions, page 17
PO BOX 1837 6120
--------------------------------------------
BURLINGTON, NC 27216-1837 1e CUSIP issuer number
- ------------------------------------------------------------------------------------------------------------------------------------
2a Name and address of plan administrator (if same as plan sponsor, enter "Same" 2b Administrator's EIN
COMMUNITY SAVINGS BANK SSB 56-0185960
--------------------------------------------
PO BOX 1837 2c Administrator's telephone number
BURLINGTON, NC 27216-1837
- ------------------------------------------------------------------------------------------------------------------------------------
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 applicable code from page 8 of the instructions.) * A-SINGLE-EMPLOYER PLAN
- ------------------------------------------------------------------------------------------------------------------------------------
5a Name of plan * COMMUNITY SAVINGS BANK SSB PROFIT 5b Effective date of plan (mo., day, yr.
-----------------------------------------------------------------------
SHARING AND SAVINGS PLAN AND TRUST 07/01/1956
- ----------------------------------------------------------------------------------------- -----------------------------------------
5c Three-digit
- -----------------------------------------------------------------------------------------
All filers must complete 6a through 6d, as applicable. plan number > 001
-----------------------------------------
6a [_] Welfare benefit plan 6b [X] Pension benefit plan
-----------------------------------------
(If the correct codes are not preprinted below, enter the applicable codes from
-----------------------------------------
page 8 of the instructions in the boxes.)
2-DEF.CON.-PROFIT SHARING
6c Pension plan features. (If the correct codes are not preprinted below, enter the -----------------------------------------
applicable pension plan feature codes from page 9 of the instructions in the boxes.)
-----------------------------------------
6d [_] Fringe benefit plan. Attach Schedule F (Form 5500). See instructions.
- ------------------------------------------------------------------------------------------------------------------------------------
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 * ________________________________________________________________ Date * _______________________
Type or print name of individual signing above William R. Gilliam -- President
-------------------------------------------------------------------------------------
Signature of plan administrator * ___________________________________________________________________ Date * _______________________
Type or print name of individual signing above William R. Gilliam -- President
- ------------------------------------------------------------------------------------------------------------------------------------
For Paperwork Reduction Act Notice, see the instructions for Form 5500-C/R. Cat. No. 10957K Form 5500-C/R (1997
</TABLE>
<PAGE>
<TABLE>
<CAPTION> Page 2
Form 5500-C-R (1997) Form 5500-R filers, complete pages 1 and 2 only. Form 5500-C filers, complete page 1 skip page 2,
and complete pages 3 through 6.
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
6e Check investment arrangement(s): (1)[_] Master trust (2)[_] Common/Collective trust
(3) [_] Pooled separate account Yes No
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
7a Total participants; (1) At the beginning of plan year * ............ (2) At the end
of plan year * ............................................................................................
b Enter number of participants with account balances at the end of the plan year (defined benefit
plans do not complete this item)*..........................................................................
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? (See instructions.) .............. 7c(1)
(2) If "Yes", enter the number of separated participants required to be reported *
- ---------------------------------------------------------------------------------------------------------------------------------
8a Was this plan terminated during this plan year or any prior plan year? If "Yes" enter the
year * .................................................................................................... 8a
b Were all the plan assets either distributed to participants or beneficiaries, transferred to another
plan, or brought under the control of PBGC? 8b
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 plan a established or maintained pursuant to one or more collective bargaining
agreements? ................................................................................................ 9
- ---------------------------------------------------------------------------------------------------------------------------------
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-. *
- ----------------------------------------------------------------------------------------------------------------------------------
11a (1) Were any plan amendments adopted during this plan year? ................................................ 11a(1)
(2) Enter the date the most recent amendment was adopted * Month ............ Day .............
Year ....................
b If line 11a is "Yes", did any amendment result in a retroactive reduction of accrued benefits for
any participant? ....................................................................................... 11b
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
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 furnished to participants? (see instructions) . 11d
- --------------------------------------------------------------------------------------------------------------------------------
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? (See instructions.) ........................................... 12a
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? (See instructions.) ........................................................... 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 ................... and end ......................... of the plan year
b Total liabilities as of the beginning ................... and end ......................... of the plan year
c Net assets as of the beginning * and end * of the plan year
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
14 For this plan year, enter: a Plan income ........................ d Plan contributions ..................
b Expenses ........................... e Total benefits paid .................
c Net income (loss) (subtract 14b from 14a) ........
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
15 You may NOT use N/A in response to lines 15a through 15o. If you check "Yes", you must enter a Yes No Amount
dollar amount in the amount column. During this plan year:
<S> <C> <C> <C> <C>
-------------------------
a Was this plan covered by a fidelity bond? . . . . . . . . . . . . . . . . . . . . . . . . . . 15a
-------------------------
b If line 15a is "Yes", enter the name of the surety company * ..............................
-------------------------
-------------------------
c Was there any loss to the plan, whether or not reimbursed, caused by fraud or dishonesty? . . . 15c
-------------------------
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
-------------------------
-------------------------
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
-------------------------
f Did the plan acquire or hold any employer security or employer real property? . . . . . . . . 15f
-------------------------
g Has the plan granted an extension on any delinquent loan owned to the plan? . . . . . . . . . . 15g
-------------------------
-------------------------
h Were any participant contributions transmitted to the plan more than 31 days after receipt or
withholding by the employer? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15h
-------------------------
-------------------------
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
-------------------------
-------------------------
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
-------------------------
-------------------------
k Did the plan at any time hold 20% or more of its assets in any single security, debt,
mortgage, parcel or real estate, or partnership/joint venture interests? . . . . . . . . . . . . 15k
-------------------------
-------------------------
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
-------------------------
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
-------------------------
-------------------------
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
-------------------------
o Has the plan reduced or failed to provide any benefit when due under the plan because of
insufficient assets? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15o
-------------------------
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
16a Is the plan covered under the Pension Benefit Guaranty Corporation termination insurance program [_] Yes [_] 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>
<PAGE>
<TABLE>
<S> <C> <C>
Complete page 1, and pages 3 through 6 only, if you are filing Form 5500-C. (See instruction on page 13.) Page 3
- ------------------------------------------------------------------------------------------------------------------------------------
6e Check all applicable investment arrangements below. (See instructions on page 12.):
(1) [_] Master trust (2) [_] 103-12 investment entity
(3) [_] Common/collective trust (4) [_] Pooled separate account
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
f Single-employer plans enter the tax year end of the employer in which this plan year ends * Month 12 Day 31 Year 97
g Is any part of this plan funded by an insurance contract described in Code section 417(i)?............... [_] Yes [X] No
h If line 6g is "Yes," was the part subject to the minimum funding standards for either of the prior 2
plan years?........ N/A................................................................................. [_] Yes [_] No
- ------------------------------------------------------------------------------------------------------------------------------------
7a Total participants: (1) At the beginning of plan year * 48 (2) At the end of plan year * 44
b Enter number of participants with account balances at the end of the plan year. (Defined benefits plans
do not complete this item.) * 39
c Number of participants that terminated employment during the plan year with accrued benefits that were
less than 100% vested * 1
----------
Yes No
---------------
d (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?............................. 7d(1) X
(2) If "Yes," enter the number of separated participants required to be reported * 3
- ------------------------------------------------------------------------------------------------------------------------------------
8a Was this plan ever amended since its effective date? If "Yes," complete line 8b and, if the amendment
was adopted in this plan year, complete lines 8c through 8e.............................................. 8a X
b If line 8a is "Yes," enter the date the most recent amendment was adopted * Month 1 Day 1 Year 97
c Did any amendment during the current plan year result in the retroactive reduction of accrued benefits
for any participant?..................................................................................... 8c X
d During this plan year, did any amendment change the information contained in the latest summary plan
description or summary description of modifications available at the time of amendment?.................. 8d X
e If line 8d is "Yes," has a summary plan description or summary description of modifications that
reflects the plan amendments referred to on line 8d been furnished to participants? (See instructions)... 8e
- ------------------------------------------------------------------------------------------------------------------------------------
9a Was this plan terminated during this plan year or any prior plan year? If "Yes," enter year * ________ 9a X
b Were all plan assets either distributed to participants or beneficiaries, transferred to another plan,
or brought under the control of PBGC?.................................................................... 9b N/A
c Was a resolution to terminate this plan adopted during this plan year or any prior plan year?............ 9c X
d If line 9a or line 9c is "Yes," have you received a favorable determination letter from the IRS for the
termination?............................................................................................. 9d N/A
e If line 9d is "No," has a determination letter been requested from the IRS?.............................. 9e N/A
f If line 9a or line 9c is "Yes," have participants and beneficiaries been notified of the termination or
the proposed termination?................................................................................ 9f N/A
g If line 9a is "Yes," and the plan is covered by PBGC, is the plan continuing to file a 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?................................................................................................. 9g N/A
h During this plan year, did any trust assets revert to the employer for which the Code section 4980
excise tax is due?....................................................................................... 9h X
i If line 9h is "Yes," enter the amount of tax paid with Form 5330 * $ N/A
- ------------------------------------------------------------------------------------------------------------------------------------
10a Was this plan merged or consolidated into another plan(s), or were assets or liabilities transferred to
another plan(s) since the end of the plan year covered by the last return/report Form 5500 or 5500-C
that was filed for this plan (or during this plan year if this is the first return/report)? If "Yes,"
complete lines 10b through 10e........................................................................... 10a X
---------------
If "Yes," identify the other plan(s): c Employer identification number(s) d Plan number(s)
b Name of plan(s) * N/A ------------------------------------- ---------------------
------------------------------------------------ ------------------------------------- ---------------------
e If required, has a Form 5310-A been filed?............................................. N/A [_] Yes [_] No
- ------------------------------------------------------------------------------------------------------------------------------------
11 Enter the plan funding arrangement code 12 Enter the plan benefit arrangement code from Yes No
from page 13 of the instructions * 1 page 13 of the instructions * 1
- ------------------------------------------------------------------------------------------------------------------------------------
13 Is this a plan established or maintained pursuant to one or more collective bargaining agreements?....... 13 X
14 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-
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Form 5500-C/R (1997) Complete page 1, and pages 3 through 6 only, if you are filing Form 5500-C. Page 4
- ----------------------------------------------------------------------------------------------------------------------------
Welfare Plans Do Not Complete Lines 15 Through 25. Skip to Line 26 on page 5.
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
15a If this is a defined benefit plan subject to the minimum funding standards for this plan year, is Yes No
Schedule B (Form 5500) required to be attached? (If this is a defined contribution plan,
leave blank.)...................................................................................... 15a X
If "Yes," attach Schedule B (Form 5500).
b If this is a defined contribution plan (i.e., money purchase or target benefit), is it subject to
the minimum funding standards (if a waiver was granted, see instructions)? (If this is a defined
benefit plan, leave blank.)........................................................................ 15b X
If "Yes," complete (1), (2), and (3) below:
(1) Amount of employer contribution required for the plan year under Code
section 412............................................................... 15b(1) $ N/A
(2) Amount of contribution paid by the employer for the Plan year............. 15b(2) $ N/A
Enter date of last payment by employer * Month ----- Day
----- Year ------
(3) If (1) is greater than (2), subtract (2) from (1) and
enter the funding deficiency here. Otherwise, enter -0-.
(If you have a funding deficiency, file Form 5330.)..................... 15b(3) $ N/A
- ----------------------------------------------------------------------------------------------------------------------------
16 Has the annual compensation of each participant taken into account under the current plan year been limited
as required by section 401(a)(17)? (See instructions).............................................. 16 X
- ----------------------------------------------------------------------------------------------------------------------------
17a (1) Did the plan distribute any annuity contracts this year? (See instructions.)................... 17a(1) X
(2) If (1) is "Yes," did these contracts contain a requirement that the spouse consent before
any distributions under the contract are made in a form other than a qualified joint
and survivor annuity?.......................................................................... 17a(2) N/A
b Did the plan make distributions or loans to married participants and beneficiaries without
the required consent of the participant's spouse?.................................................. 17 (b) X
C Upon plan amendment or termination, do the accrued benefits of every participant include
the subsidized benefits that the participant may become entitled to receive subsequent
to the plan amendment or termination?.............................................................. 17 (c) X
- ----------------------------------------------------------------------------------------------------------------------------
18 Is the plan administrator making an election under section 412(c)(8) for an amendment adopted
after the end of the plan year? (See instructions)................................................. 18 X
19 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................................................................. 19 N/A
20 Is the employer electing to compute minimum funding for this plan year or either of the two
immediately preceeding plan years using the transition rule of Code section 412(1)(1)1?............ 20 N/A
- ----------------------------------------------------------------------------------------------------------------------------
21 Check if you are applying the substantiation guidelines from Revenue Procedure 93-42, in
completing lines 21a through 21o (see instructions)................................................ [X]
If you checked the box, enter the first day of the plan year for which data is being
submitted * Month .1.Day 1-- Year 97
a Does the employer apply the separate line of business rules of Code section 414(r) when
testing this plan for the coverage and discrimination tests requirements of Code sections
410(b) and 401(a)(4)?.............................................................................. 21(a) X
b If line 21a is "Yes," enter the total number of separate lines of business claimed by the
employer * N/A if more than one separate line of business, see instructions for additional
---
information to attach.
c Does the employer apply the mandatory disaggregation rules under Income Tax Regulations section
1.410(b)-7(c)? If "Yes," see instructions for additional information to attach..
See Attachment..................................................................................... 21c X
d In testing whether this plan satisfies the coverage and discrimination tests of Code sections
410(b) and 410(a), does the employer aggregate plans?.............................................. 21d X
e Does the employer restructure the plan into component plans to satisfy the coverage and
discrimination tests of Code sections 410(b) and 401(a)(4)?........................................ 21e X
f If you meet either one of the following exceptions, check the applicable box to tell us
which exception you meet and DO NOT complete the rest of question 21:
(1) [ ] No highly compensated employee benefited under the plan at any time during
the plan year;
(2) [ ] This is a collectively bargained plan that benefits only collectively bargained
employees, no more than 2% of whom are professional employees.
g Did any leased employee perform services for the employer at any time
during the plan year?.............................................................................. 21g X
Number
h Enter the total number of employees of the employer, Employer includes entities
aggregated with the employer under Code section 414(b), (c), or (m). Include leased
employees and self-employed individuals............................................................ 21h 49
i Enter the total number of employees excludable under the plan because of:(1)
failure to meet requirements for minimum age and years of service; (2) collectively
bargained employees; (3) nonresident aliens who receive no earned income from U.S.
sources; and (4) 500 hours of service/last day rule................................................ 21i 14
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Form 5500-C/R (1997) Complete page 1, and pages 3 through 6 only, if you are filing Form 5500-C. Page 5
- ------------------------------------------------------------------------------------------------------------------------------------
Number
------------------
<S> <C> <C> <C>
j Enter the number of nonexcludable employees. Subtract line 21i from line 21h............................... 21j 35
------------------
k Do 100% of the nonexcludable employees entered on line 21j benefit under the plan?........ [x] Yes [_] No
If line 21k is "Yes," DO NOT complete lines 21l through 21o.
l Enter the number of nonexcludable employees (line 21j) who are highly compensated employees................ 21l N/A
------------------
m Enter the number of nonexcludable employees who benefit under the plan..................................... 21m N/A
------------------
n Enter the number of employees entered on line 21m who are highly compensated employees..................... 21n N/A
------------------
o This plan satisfies the coverage requirements on the basis of (check one):
-------------------
(1) [_] The average benefits test (2) [_] The ratio percentage test-enter percentage N/A %
------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Yes No
------------------
22a Is it or was it ever intended that this plan qualify under Code section 401(a)? If "Yes," complete lines
22b and 22c. 22a X
------------------
b Enter the date of the most recent IRS determination letter.......................... Month 5 Year 97
--- ----
c Is a determination letter request pending with the IRS?.................................................. 22c X
- ------------------------------------------------------------------------------------------------------------------------------------
23a Does the plan hold any assets that have a fair market value that is not readily determinable on an
established market?
(If "Yes," complete line 23b.) (See instructions.)....................................................... 23a X
------------------
b Were all the assets referred to on line 23a valued for the 1997 plan year by an independent third-party
appraiser?............................................................................................... 23b X
c If line 23b is "No," enter the value of the assets that were not valued by an independent
third-party appraiser for the 1997 plan year............................................. 23c N/A
--------------
d Enter the most recent date the assets on line 23c were valued by an independent third-party appraiser. (If
more than one asset, see instructions.) Month __________ Day ________ Year _______ N/A
(If this plan has NO ESOP features, leave line 23e blank and go to line 24.)
e If dividends paid on employer securities held by the ESOP were used to make payments
on ESOP loans, enter the amount of the dividends used to make the payments............... 23e N/A
--------------
- ------------------------------------------------------------------------------------------------------------------------------------
24 Does the employer/sponsor listed in 1a of this form maintain other qualified pension benefit plans?........ 24 X
If "Yes," enter the total number of plans, including this plan
- ------------------------------------------------------------------------------------------------------------------------------------
25a Is the plan covered under the Pension Benefit Guaranty Corporation termination insurance
program?................................................................................ [_] Yes [x] No [_] Not determined
b If line 25a is "Yes," or "Not determined," enter the EIN and the plan number used to
identify it. N/A
EIN Plan number
- ------------------------------------------------------------------------------------------------------------------------------------
26 You may NOT use N/A in response to any line 26 item. If you check "Yes," you must enter a dollar Yes No Amount
amount in the amount column.
During this plan year:
a Was this plan covered by a fidelity bond?...................................................... 26a X 2,000,000
-----------------------------
b If line 26a is "Yes," enter the name of the surety company The St. Paul
------------------------------------
c Was there any loss to the plan, whether or not reimbursed, caused by fraud or dishonesty? ..... 26c X
-----------------------------
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?.................................... 26d X
-----------------------------
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?.................................................... 26e X
-----------------------------
f Did the plan acquire or hold any employer security or employer real property?.................. 26f X
-----------------------------
g Has the plan granted an extension on any delinquent loan owed to the plan?..................... 26g X
-----------------------------
h Were any participant contributions transmitted to the plan more than 31 days after receipt or
withholding by the employer?................................................................... 26h X
-----------------------------
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?................................................ 26i X
-----------------------------
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?................................ 26j X
-----------------------------
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? See attached statement......... 26k X 1,692,236
-----------------------------
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?............................................... 26l X
-----------------------------
m Were there any noncash contributions made to the plan whose value was set without an appraisal
by an independent third party?................................................................. 26m X
-----------------------------
n Were there any purchases of nonpublicly traded securities by the plan whose value was set
without an appraisal by an independent third party?............................................ 26n X
-----------------------------
0 Has the plan reduced or failed to provide any benefit when due under the terms of the plan
because of insufficient assets?................................................................ 26o X
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Form 5500-C/R (1997) Complete page 1, and pages 3 through 6 only, if you are filing Form 5500-C. Page 6
- -----------------------------------------------------------------------------------------------------------------------------------
27 Current value of plan assets and liabilities at the beginning and end of the plan year. combine the value of plan assets held in
more than one trust. Allocate the value of the plan's interest in a commingled trust containing the assets of more than one
plan on a line-by-line basis unless the trust meets one of the specific exceptions described in the instructions. Do not enter
the value of the portion of an insurance contract that guarantees during this plan year to pay a specific dollar benefit at a
future date. Round off amounts to the nearest dollar. Any other amounts are subject to rejection. Plans with no assets at the
beginning and end of the plan year enter -0- on line 27f.
- ------------------------------------------------------------------------------------------------------------------------------------
-------------------------------
(a) Beginning (b) End of
Assets of year year
------------------------------------
<S> <C> <C> <C>
a Cash........................................................... 27a 74,105 128,908
------------------------------------
b Receivables.................................................... 27b
------------------------------------
c Investments:
------------------------------------
(1) U.S. Government Securities................................. 27c(1)
------------------------------------
(2) Corporate debt and equity instruments...................... 27c(2)
------------------------------------
(3) Real estate and mortgages (other than to participants)..... 27c(3)
------------------------------------
(4) Loans to participants:
------------------------------------
A Mortgages................................................ (4)A
------------------------------------
B Other.................................................... (4)B
------------------------------------
(5) Other................. Certificates of Deposit............. 27c(5) 2,770,991 2,948,465
------------------------------------
(6) Total investments. Add lines 27c (1) through 27c (5)....... * 27c(6) 2,845,096 3,077,373
------------------------------------
d Buildings and other property used in plan operations........... 27d
------------------------------------
e Other assets................................................... 27e
------------------------------------
f Total assets, Add lines 27a, 27b, 27c(6), 27d, and 27e......... * 27f 2,845,096 3,077,373
------------------------------------
Liabilities
------------------------------------
g Payables....................................................... 27g
------------------------------------
h Acquisition Indebtedness....................................... 27h
------------------------------------
i Other liabilities.............................................. 27i 6,351 9,740
------------------------------------
j Total liabilities, Add lines 27g through 27i................... * 27j 6,351 9,740
------------------------------------
k Net assets. Subtract line 27j from line 27f.................... * 27k 2,838,745 3,067,633
- --------------------------------------------------------------------------------------------------------------
28 Plan income, expenses, and changes in net assets for the plan year. Include all income and expenses of the plan including any
trust(s) or separately maintained funds(s) and any payments/receipts to/from insurance carriers. Round off amounts to the
nearest dollar. Any other amounts are subject to rejection.
<CAPTION>
--------------------------------
Income (a) Amount (b) Total
------------------------------------
<S> <C> <C> <C>
a Contributions received or receivable in cash from:
---------------------
(1) Employer(s) including contributions on behalf of self-
employed individuals)................................... 28a(1) 85,329
------------------------------------
(2) Employees................................................. 28a(2) 47,534
------------------------------------
(3) Others.................................................... 28a(3)
------------------------------------
(4) Add lines 28a(1) through 28a(3)........................... 28a(4) 132,863
------------------------------------
b Noncash contributions. Enter the total of lines 28a(4) and
lines 28b in column (b)....................................... 28b 132,863
------------------------------------
c Earnings from investments (interest, dividends, rents,
royalties).................................................... 28c 179,415
------------------------------------
d Net realized gain (loss) on sale or exchange of assets......... 28d
------------------------------------
e Other income (specify)......................................... 28e
------------------------------------
f Total income. Add lines 28b through 28e........................ * 28f 312,278
------------------------------------
Expenses
g Distributions of benefits and payments to provide benefits:
------------------------------------
(1) Directly to participants or their beneficiaries........... 28g(1) 83,393
------------------------------------
(2) Other..................................................... 28g(2)
------------------------------------
(3) Total distribution of benefits and payments to provide
benefits................................................. 28g(3) 83,393
------------------------------------
h Administrative expenses (salaries, fees, commissions,
insurance premiums).......................................... 28h
------------------------------------
i Other expenses (specify)....................................... 28i
------------------------------------
j Total expenses. Add lines 28g through 28i...................... * 28j 83,393
------------------------------------
k Net income (loss). Subtract line 28j from line 28f..............* 28k 228,885
- --------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
SCHEDULE SSA Annual Registration Statement Identifying Separated OMB No. 1210-0016
(Form 5500) Participants with Deferred Vested Benefits -----------------
1997
Under Section 8057(a) of the Internal Revenue Code -----------------
* File as an attachment to Form 5500-C/R This Form is Not
Department of the Treasury Open to Public
Internal Revenue Service * For Paperwork Reduction Act Notice, see the Instructions for Form 5500 or 5500-C/R Inspection
- ------------------------------------------------------------------------------------------------------------------------------------
For the calendar year 1997 or fiscal Plan year begining 1997,and ending ,19
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
1a Name of plan sponsor (employer if for a single employer plan) 1b Sponsor's employer identification number (EIN)
Community Savings Bank, SSB 56 0185960
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
2a Name of plan Community Savings Bank, SSB Profit Sharing and 2b Three digit
Savings Plan and Trust Plan number* 0 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
3 Enter one of the following Entry Codes in column (a) for each separated
participant with deferred vested benefits that:
Code A- has not previously been reported.
Code B- has previously been reported under the above plan number but
requires revisions to the information previously reported.
Code C- has previously been reported under another plan number but will be
receiving their benefits from the plan listed above Instead.
Code D- has previously been reported under the above plan number but is no
longer entitled to those deferred vested benefits.
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Use with entry code Use with entry code Use with entry code
"A","B","C", or"D" "A" or "B" "C"
- -----------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) Enter code for Amount of vested benefit
Entry Social security Name of participant nature and --------------------------
code number from of Defined (i) (j)
benefit (f) contribution plan Previous sponsor's Previous
--------------- ----------------- employer plan
(d) (e) Defined benefit (g) (h) identification number
Type of Payment plan-periodic Units or Total number
annuity frequency payment shares value of
account
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
A ###-##-#### Betty R. King a a 13,286.28
A ###-##-#### Debra Matthews a a 21,566.93
A ###-##-#### Holly Sims a a 7,882.92
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
[_] Check here if additional participants are shown on attachments. All attachments must include the sponsor's name,EIN,
name of plan, plan number and column identification letter for each column completed for line 3
- ------------------------------------------------------------------------------------------------------------------------------------
[_] Check here if plan is a government, church or other plan that elects to voluntarily file Schedule SSA. If so, complete lines 4
through 5c, and the signature area. Otherwise, complete the signature area only.
- ------------------------------------------------------------------------------------------------------------------------------------
4 Plan sponsor's address (number, street, and room or suite no.) (if a P.O. box, see the instructions for line 4,)
P. O. Box 1837
- ------------------------------------------------------------------------------------------------------------------------------------
City or town, state, and Zip code
Burlington, NC 27216
- -----------------------------------------------------------------------------------------------------------------------------------
5a Name of plan administrator (if other than sponsor) 5b Administrator's EIN
Same
- -----------------------------------------------------------------------------------------------------------------------------------
5c Number, street, and room or suite no, (If a P.O. box, see the instructions for line 4.)
- -----------------------------------------------------------------------------------------------------------------------------------
City or town, state, and ZIP code
- ----------------------------------------------------------------------------------------------------------------------------------
Under penalties of perjury, I declare that I have examined this report, and to the best of my knowledge and belief, it is true
correct, and complete.
Signature of plan administrator *----------------------------------------------------------------------------------------------
Phone number of plan administrator * (336) 227-3631 Date *
- -----------------------------------------------------------------------------------------------------------------------------------
Cat. No. 13506T Schedule SSA (form 5500) (1997)
</TABLE>
<PAGE>
MANDATORY DISAGGREGATION - DEMO 4
COMMUNITY SAVINGS BANK, SSB
EIN: 56-0185960
The plan consists of employee and matching contributions under Section
401(m) of the Code (the "401(m) plan"), discretionary Employer contributions
(the "Discretionary Contribution Plan"), and qualified nonelective contributions
(the "Qualified Non-Elective Plan"). See ARTICLE IV of the Plan. Accordingly,
---
pursuant to Regulation Section 1.410(b)-7(c)(l), the plan is treated as three
separate plans for purposes of Section 410(b) of the Code - the 401(m) Plan, the
Discretionary Contribution Plan and the Qualified Non-Elective Plan.
I. 401(m) Plan
-----------
A. Minimum Coverage Requirements.
1. Total number of employees on December 31, 1997 49
------
2. Number of employees excludable
a. Nonresident aliens = 0
------
b. Employees failing to meet minimum
age and service requirements = 14
------
c. Collectively bargained employees = 0
------
Total 14
------
3. Number of nonexcludable employees 35
------
4. Number of nonexcludable employees who are
highly compensated employees 1
------
5. Number of nonexcludable employees who are
nonhighly compensated employees 34
------
6. Number of nonexcludable, highly compensated
employees who are eligible to receive matching
contributions under the 401(m) Plan 1
------
7. Number of nonexcludable, nonhighly compensated
employees who are eligible to receive matching
contributions under the 401(m) Plan 34
------
8. Enter the percentage of nonexcludable, highly
compensated employees who are eligible to receive
matching contributions under the 401(m) Plan,
(i.e., divide 6. by 4.) 100%
---- ------
<PAGE>
9. Enter the percentage of nonexcludable, nonhighly
compensated employees who are eligible to receive
matching contributions under the 401(m) Plan 100%
------
10. Divide the percentage of nonexcludable, nonhighly
compensated employees who are eligible to receive
matching contributions under the 401(m) Plan by the
percentage of nonexcludable, highly compensated
employees who are eligible to receive matching
contributions under the 401(m) Plan 1
------
The 401(m) Plan satisfies the ratio percentage test.
B. Nondiscrimination in Amount Requirement.
The 401(m) Plan satisfies the nondiscrimination in amount requirement
because it satisfies Regulation Sections 1.401(m)-1(b). See Regulation Section
---
1.401(a)(4)-1(b)(2)(ii)(B).
II. Discretionary Contribution Plan
-------------------------------
A. Minimum Coverage Requirements.
1. Total number of employees on December 31, 1997 49
------
2. Number of employees excludable
a. Nonresident aliens = 0
------
b. Employees failing to meet minimum
age and service requirements = 14
------
c. Collectively bargained employees = 0
------
Total 14
------
3. Number of nonexcludable employees 35
------
4. Number of nonexcludable employees who are
highly compensated employees 1
------
5. Number of nonexcludable employees who are
nonhighly compensated employees 34
------
6. Number of nonexcludable, highly compensated
employees who are eligible to receive discretionary
Employer contributions under the Discretionary
Contribution Plan 1
------
2
<PAGE>
7. Number of nonexcludable, nonhighly compensated
employees who are eligible to receive discretionary
Employer contributions under the Discretionary
Contribution Plan 34
------
8. Enter the percentage of nonexcludable, highly
compensated employees who are eligible to receive
discretionary Employer contributions under the
Discretionary Contribution Plan (i.e., divide 6. by
----
4.)
100%
------
9. Enter the percentage of nonexcludable, nonhighly
compensated employees who are eligible to receive
discretionary Employer contributions under the
Discretionary Contribution Plan 100%
------
10. Divide the percentage of nonexcludable, nonhighly
compensated employees who are eligible to receive
discretionary Employer contributions under the
Discretionary Contribution Plan by the percentage
of nonexcludable, highly compensated employees
who are eligible to receive discretionary Employer
contributions under the Discretionary Contribution
Plan 1
------
The Discretionary Contribution Plan satisfies the ratio percentage
test.
B. Nondiscrimination in Amount Requirement.
The Discretionary Contribution Plan satisfies the safe harbor for
defined contributions plans found in Regulation Section 1.401(a)(4)-
1(b)(2)(ii)(A).
III. Qualified Non-Elective Plan
---------------------------
A. Minimum Coverage Requirements
The qualified Non-Elective Plan automatically satisfies the minimum
coverage requirements because it benefits no highly compensated employees
pursuant to Section 4.9(h) of the plan. See Regulation Section 1.410(b)-
---
2(b)(6).
B. Nondiscrimination in Amount Requirement.
The qualified nonelective contributions, if any, automatically satisfy
the nondiscrimination in amount requirement because they will only be made on
behalf of nonhighly compensated employees.
3
<PAGE>
COMMUNITY SAVINGS BANK, SSB
BURLINGTON, NORTH CAROLINA
56-0185960
1997 FORM 5500-C/R
RE: QUESTION 26
The plan sponsor is a State chartered and supervised financial institution
which is Federally insured. The plan covers only employees of the sponsor.
The plan sponsor is empowered as fiduciary and expressly authorized to
invest all or part of the plan's assets in deposits which bear a reasonable
interest rate in a bank or similar financial institution. As such, the plan
invests all of its assets in certificates of deposit and savings accounts
of the plan sponsor. IRC Sec. 4975(d)(4) provides that such investments
are not prohibited transactions.
<PAGE>
SCHEDULE P Annual Return of Fiduciary OMB No. 1210-0016
---------------------
(Form 5500) of Employee Benefit Trust 1997
---------------------
Department of the File as an attachment to Form 5500, This Form is Open to
Treasury 5500-C/R, or 5500-EZ. Public Inspection.
Internal Revenue For the Paperwork Reduction Notice, see
Service the Form 5500 instructions.
- --------------------------------------------------------------------------------
For trust calendar year 1997 or fiscal year beginning , 1997 and
ending , 19.
- --------------------------------------------------------------------------------
Please type 1a Name of trustee or custodian
or print
William R. Gilliam
- --------------------------------------------------------------------------------
b Number, street, and room or suite no. (If a P.O. box, see the
instructions for Form 5500, 5500-C/R, or 5500-EZ.)
P.O. Box 1837
- --------------------------------------------------------------------------------
c City or town, state, and ZIP code
Burlington, NC 27216
- --------------------------------------------------------------------------------
2a Name of trust
Community Savings Bank, SSB Profit b Trust's employer identification
Sharing and Savings Plan and Trust number 56 0185960
- --------------------------------------------------------------------------------
3 Name of plan if different from name of trust
Same
- --------------------------------------------------------------------------------
4 Have you furnished the participating employee benefit plan(s) with
the trust financial information required to be reported by the
plan(s)?................................................... [X] Yes [_] No
- --------------------------------------------------------------------------------
5 Enter the plan sponsor's employer identification number as shown on
Form 5500,
5500-C/R, or 5500-EZ..................................* 56 0185960
- --------------------------------------------------------------------------------
Under penalties of perjury. I declare that I have examined this schedule, and to
the best of my knowledge and belief it is true, correct, and complete.
Signature of fiduciary Date
- --------------------------------------------------------------------------------
Instructions
Section references are to the Internal Revenue Code.
Purpose of Form
You may use this schedule to satisfy the requirements under section 6033(a) for
an annual information return from every section 401(a) organization exempt from
tax under section 501(a).
Filing this form will start the running of the statute of limitations under
section 6501(a) for any trust described in section 401 (a), which is exempt from
tax under section 501(a).
Who May File
1. Every trustee of a trust created as part of an employee benefit plan as
described in section 401(a).
2. Every custodian of a custodial account described in section 401(f).
How To File
File Schedule P (Form 5500) for the trust year ending with or within any
participating plan's plan year. Attach it to the Form 5500, 5500-C/R, or
5500-EZ filed by the plan for that plan year. A separately filed Schedule P
(Form 5500) will not be accepted.
If the trust or custodial account is used by more than one plan, file one
Schedule P (Form 5500). If a plan uses more than one trust or custodial account
for its funds, file one Schedule P (Form 5500) for each or custodial account.
Trust's Employer Identification Number
Enter the trust employer identification number (EIN) assigned to the employee
benefit trust or custodial account, if one has been issued to you. The trust
EIN should be used for transactions conducted for the trust. If you do not
have a trust EIN, enter the EIN you would use on Form 1099-R to report
distributions from employee benefit plans and on Form 945 to report withheld
amounts of income tax from those payments.
Note: Trustees who do not have an EIN may apply for one on Form SS-4,
Application for Employer Identification Number. You must be consistent and use
the same EIN for all trust reporting purposes.
Signature
The fiduciary (trustee or custodian) must sign this schedule. If there is more
than one fiduciary, the fiduciary authorized by the others may sign.
Other Returns and Forms That May Be Required
. Form 990-T--For trusts described in section 401(a), a tax is imposed on
income derived from business that is unrelated to the purpose for which the
trust received a tax exemption. Report this income and tax on Form 990-T,
Exempt Organization Business Income Tax Return. (See sections 511 through 514
and the related regulations.)
. Form 1099-R--If you made payments or distributions to individual
beneficiaries of a plan, report those payments on Form 1099-R. (See the
instruction for Forms 1099, 1098, 5498, and W-2G.)
. Form 945--If you made payments or distributions to individual beneficiaries
of a plan, you may be required to withhold income tax from those payments. Use
Form 945, Annual Return of Withheld Federal Income Tax, to report taxes withheld
from nonpayroll items. (See Circular E, Employer's Tax Guide (Pub. 15), for more
information.)
- --------------------------------------------------------------------------------
Cat. No. 13504X Schedule P (Form 5500) 1997
<PAGE>
SUMMARY ANNUAL REPORT
For
COMMUNITY SAVINGS BANK, S.B.
PROFIT SHARING AND SAVINGS PLAN & TRUST
This is a summary of the annual report for Community Savings Bank, S.B.
Profit Sharing and Savings Plan & Trust, 56-0185960, for the plan year beginning
January 1, 1997 and ending December 31, 1997. The annual report has been filed
with the Internal Revenue Service, as required under the Employee Retirement
Income Security Act of 1974 (ERISA).
Basic Financial Statement
- -------------------------
Benefits under the plan are provided by trust.
Plan expenses were $83,393.
These expenses included -0- in administrative expenses and $83,393 in
benefits paid to participants and beneficiaries, and -0- in other expenses. A
total of 44 persons were participants in or beneficiaries of the plan at the end
of the plan year, although not all of these persons had yet earned the right to
receive benefits.
The value of plan assets, after subtracting liabilities of the plan, was
$3,067,633 as of December 31, 1997, compared to $2,838,745 as of January 1,
1997. During the plan year, the plan experienced an increase in its net assets
of $228,885. The plan had total income of $312,278 including employer
contributions of $85,329 and employee contributions of $47,534.
Your Rights to Additional Information
-------------------------------------
You have the right to receive a copy of the full annual report, or any part
thereof, on request.
To obtain a copy of the full annual report, or any part thereof, write or
call the office of Community Savings Bank, SSB, who is plan administrator, Post
Office Box 1837, Burlington, North Carolina 27216, (336) 227-3631. There is no
charge to cover copying costs.
You also have the right to receive from the plan administrator, on request
and at no charge, a statement of the assets and liabilities of the plan and
accompanying notes, or a statement of income and expenses of the plan and
accompanying notes, or both. If you request a copy of the full annual report
from the plan administrator, these two statements and accompanying notes will be
included as part of that report. There is no charge to cover copying costs.
You also have the legally protected right to examine the annual report at
the main office of the plan, Burlington, North Carolina and at the U.S.
Department of Labor in Washington, D.C. or to obtain a copy from the US
Department of Labor upon payment of copying costs. Requests to the Department
should be addressed to: Public Disclosure Room, N4677, Pension and Welfare
Benefit Programs, Department of Labor, 200 Constitution Avenue, NW, Washington,
D.C. 20216.
