SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
FORM 11-K
X ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________________ to _________________
Commission file number 0-11113
Full Title of the Plan and the Address of the Plan:
Santa Barbara Bank & Trust
Employee Stock Ownership Plan and Trust
1021 Anacapa Street
Santa Barbara, CA 93101
Name of Issuer of the securities held pursuant to the plan and the
address of the principal executive office:
Santa Barbara Bancorp
1021 Anacapa Street
Santa Barbara, CA 93101
Exhibit Index on Page 14
<PAGE> 2
Item 1 Changes in the Plan
The Plan was amended in its entirety and restated on JuneXXXXX 28, 1994
to reflect all prior amendments to the Plan and the requirements of the
Tax Reform Act of 1986 and subsequent legislation.
Item 2 Changes in Investment Policy
- - not applicable -
Item 3 Contributions Under the Plan
The Issuer, Santa Barbara Bank & Trust, has made the following
contributions
during the last five fiscal years:
Plan Year Contribution
1990 $2,269,000
1991 $1,234,443
1992 $ 942,023
1993 $1,403,638
1994 $ 0
Item 4 Participating Employees
As of December 31, 1994 there were 417 employees participating in the Plan.
Item 5 Administration of the Plan
a. The names and addresses of the persons who administer the plan, the
capacity in which they act, and their positions or offices with the
issuer are as follows:
Managers:
Donald M. Anderson Chairman of Board of Directors
David W. Spainhour President, Chief Executive Officer
William S. Thomas, Jr. Executive Vice President
Chief Operating Officer
John J. McGrath Senior Vice President,
Chief Credit Officer
Jay D. Smith Senior Vice President, General
Counsel and Corporate Secretary
Kent M. Vining Senior Vice President,
Chief Financial Officer
Trustee:
Santa Barbara Bank & Trust
Paulette Posch, Trust Officer
Vice President, EBT and Plan
Administration Manager
The address for all of the above is Santa Barbara Bank & Trust,
P.O. Box 1119, Santa Barbara, CA 93102.
b. None of the above received any compensation from the Plan for services
in any capacity during the last fiscal year.
<PAGE> 3
Item 6 Custodian of Investments
a. The name, address, and business of the custodian of the securities
and investments of the Plan is Paulette Posch, Trust Division, Santa
Barbara Bank & trust, P.O. Box 1119, Santa Barbara, CA 93102. She is EBT
and Plan Administration Manager for the Issuer of the Plan.
b. The above person received no compensation from the Plan for services
rendered in any capacity during the last fiscal year.
c. The Bank holds an errors and omissions bond in the amount of
$5,000,000 in connection with the custody of security investments
including those of the Plan.
Item 7 Reports to Participating Employees
Each employee received a Certificate of Participation in the Plan on or
about February 24, 1995. This certificate sets forth the status of the
individual's account as of the end of the Plan year. The Summary Annual
Report is distributed during the third quarter of the year. This report
summarizes operations for the Plan year and explains participants' rights.
Item 8 Investment of Funds
- - not applicable -
Item 9 Financial Statements and Exhibits
a. Financial Statements of the Plan for the years ended
December 31, 1994 and 1993 filed herewith include:
i. Statements of Net Assets Available for Plan Benefits
ii. Statements of Changes in Net Assets Available for Plan Benefits
b. Exhibits:
The following exhibits are included herewith:
i. Consents of experts and counsel.
ii. Amended and restated Employee Stock Ownership Plan and Trust.
<PAGE> 4
Signatures:
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the Plan) have duly caused this
annual report to be signed by the undersigned thereunto duly authorized.
Santa Barbara Bank & Trust
Employee Stock Ownership Plan & Trust
Date June 28, 1995 By /X/Jay Donald Smith
Jay Donald Smith
Senior Vice President
of Santa Barbara Bank & Trust, Trustee
<PAGE> 5
SANTA BARBARA BANK & TRUST EMPLOYEE STOCK OWNERSHIP PLAN & TRUST
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
FOR THE YEARS DECEMBER 31, 1994 AND 1993
AUDITORS' REPORT
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Plan Benefits as of
December 31, 1994 and 1993
Statements of Changes in Net Assets Available for Plan Benefits for the
Years Ended December 31, 1994 and 1993
Notes to Financial Statements
SUPPLEMENTAL SCHEDULE:
Schedule of Assets Held for Investment as of December 31, 1994
<PAGE> 6
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Trustees of the Santa Barbara Bank & Trust
Employee Stock Ownership Plan & Trust
We have audited the accompanying statements of net assets available for
plan benefits of Santa Barbara Bank & Trust Employee Stock Ownership Plan
& Trust (the Plan) as of December 31, 1994 and 1993, and the related
statements of changes in net assets available for plan benefits for the
years then ended. These financial statements are the responsibility of
the Plans Management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those Standards require that we plan and perform an audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the net assets available for plan benefits as of
December 31, 1994 and 1993, and the changes in its net assets available for
plan benefits for the years then ended in conformity with generally
accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets
held for investment as of December 31, 1994 is presented for the purpose of
additional analysis and is not a required part of the basic financial
statements but is supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the
Employee Retirement Income Security Act of 1974. The supplemental schedule
has been subjected to the auditing procedures applied in the audit of the
basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
Arthur Andersen & Co.
Los Angeles, California
June 15, 1995
<PAGE> 7
Santa Barbara Bank & Trust
Plan Number 003
EIN 95-2089059P
Employee Stock Ownership Plan & Trust
Statements of Net Assets Available for Plan Benefits
as of December 31, 1994 and 1993
ASSETS: 1994 1993
Investment in Common Stock of
Santa Barbara Bancorp (Notes 1 and 4) $13,821,800 $12,515,666
Investment in Mutual Funds 440,147 0
Cash 11,776 464,535
Dividend receivable 434 0
Interest receivable 229 1,033
Total assets 14,274,386 12,981,234
LESS LIABILITIES:
Liability to plan participants (Note 6) 470,631 200,533
Total Liabilities 470,631 200,533
NET ASSETS AVAILABLE FOR
PLAN BENEFITS $13,803,755 $12,780,701
The accompanying notes are an integral part of these statements.
<PAGE> 8
Santa Barbara Bank & Trust
Plan Number 003
EIN 95-2089059P
Employee Stock Ownership Plan & Trust
Statements of Changes in Net Assets Available for Plan Benefits
for the Years Ended December 31, 1994 and 1993
1994 1993
Net assets at beginning of year $12,780,701 $9,857,546
Net investment gain:
Realized appreciation on Common Stock of
Santa Barbara Bancorp 60,501 59,337
Realized depreciation on Mutual Funds (1,176) 0
Unrealized appreciation
on Common Stock of Santa Barbara Bancorp 1,934,971 2,037,378
Unrealized depreciation on Mutual Funds (12,568) 0
Dividends on Common Stock of
Santa Barbara Bancorp 434,098 411,332
Dividends on Mutual Funds 8,518 0
Interest income 3,100 9,889
Capital gain distribution 4,534 0
Total net investment gain 2,431,978 2,517,936
Employer contribution 0 1,403,638
Employee buy back 0 7,069
Interest expense 0 (3,638)
Payment of dividends to participants (418,806) (358,120)
Distributions to Plan participants (990,118) (643,730)
Net assets at end of year $13,803,755 $12,780,701
The accompanying notes are an integral part of these statements.
<PAGE> 9
Santa Barbara Bank & Trust
Employee Stock Ownership Plan & Trust
Plan Number 003
EIN 95-2089059P
Notes to Financial Statements as of December 31, 1994 and 1993
1. Plan Description and Significant Accounting Policies
The Santa Barbara Bank & Trust Employee Stock
Ownership Plan & Trust (the Plan) was approved by the
Board of Directors of Santa Barbara Bank & Trust (the
Bank) on January 8, 1985. The Bank is a wholly owned
subsidiary of Santa Barbara Bancorp (the Company).
Since the initial purchase of common stock of the
Company in January, 1985, the plan has made several
other large purchases of the Company's stock.
The Plan covers employees of the Bank after one year
of employment who are full-time or part-time and who
work more than 1,000 hours during the plan year.
Contributions by the bank to the plan are
discretionary, but generally have been approximately
10 percent of pre-tax Bank profits prior to employer
contributions to the Plan, reduced by the amounts paid
to the Salary Savings Plan and adjusted for the
difference between the provision for loan loss and
actual net charge-offs, unless additional amounts are
required by the Plan for debt service and/or stock
purchases. The plan is noncontributory.
The Plan is subject to the applicable provisions of
the Employee Retirement Income Security Act of 1974,
as amended.
When employees have been participating in an ESOP
for ten years and have attained age 55, the Internal
Revenue Code requires the ESOP to permit those
"qualified" employees to begin to diversify the assets
that are held in their accounts. In 1995, the Plan will
have been in effect ten years. To begin the diversification
process, in 1993, the Bank decided to permit those
participants who would become "qualified participants"
in the years 1995 - 2000 to diversify a portion of their
vested account balance by having the Plan sell a
number of their allocated shares representing not more
than 25% of the value of their account balance. The
shares were purchased by the Company through the
tender offer that the Company made to its shareholders
on October 1, 1993. The first diversification occurred
in 1994.
Participants in the Plan receive allocations of
forfeitures and bank contributions based on their
eligible compensation. The plan's invested assets
consist solely of Santa Barbara Bancorp stock, a
money market fund invested at Santa Barbara Bank &
Trust and shares in various mutual funds as shown in
the supplemental Schedule of Assets Held for Investment
as of December 31, 1994. The realized appreciation shown
on the Statements of Changes in Net Assets Available for Plan
Benefits arise from distribution of participants'
shares upon their termination.
<PAGE> 10
Participants vest in their account as follows:
Plan Years of Service Percent Vested
Less than 2 years 0%
2 years 20%
3 years 30%
4 years 40%
5 years 60%
6 years 80%
7 years 100%
All participants are considered fully vested upon
attainment of retirement age (65) or their earlier
qualifying retirement or disability, or their death.
In the event of termination of the Plan, all
participants will be fully vested and the Bank, as the
Trustee, will be directed to distribute the
participants' equity to participants in proportion to
their accounts.
All administrative expenses are paid by the Bank.
The significant accounting policies of the Plan are as
follows:
A. Contributions from the Bank are recorded on an
accrual basis and are allocated annually to
individual participants' accounts as provided by
the Plan and in accordance with the law, net of
amounts used to make payments on any debt such as
that described in Note 3 below.
B. Investment income is accrued and is allocated to
individual participants' accounts quarterly.
C. The Plan requires unvested amounts forfeited by
former participants to be allocated among the
individual accounts of active participants at the
end of the next plan year.
D. Investments in the Common Stock of the Company
are stated at fair value and unrealized
appreciation or depreciation is recorded in
income currently, but is not allocated to
individual participants' accounts. Fair value is
determined by an independent appraiser. Realized
appreciation on investments represents the excess
of fair value over cost (cost equals the market
value at the beginning of the period as more
fully described below) of vested shares
distributed to terminated plan participants.
E. The Plan accounts for investments by means of the
current value approach whereby the realized and
unrealized appreciation and depreciation of Plan
assets is based on the value of the assets at the
beginning of the plan year or at the time of
purchase during the year. The use of the current
value approach is required for reporting to the
U.S. Department of Labor.
<PAGE> 11
2. Tax Status
The United States Treasury Department advised on
September 24, 1985 that the Plan constitutes an
Employee Stock Ownership Plan (ESOP) under section
4975(e)(7) of the Internal Revenue Code and a
qualified Stock Bonus Plan under section 401(a) of the
Internal Revenue Code. Subsequent to year end, the
Internal Revenue Service ("IRS") advised on
February 23, 1995 that the plan, as updated for plan
amendments continues to meet the IRS requirements
and that the trust continues to be tax-exempt.
3. Note Payable
In 1990, the Plan obtained a loan to partially finance
the purchase of Common Stock of the Company. The
terms of the note required quarterly principal
payments of $200,000 and monthly interest payments.
Interest was set at a fluctuating rate per annum equal
to: (i) one half of one percent in excess of the
lending bank's prime rate until March 31, 1993, (ii)
three quarters of one percent in excess of the lending
bank's prime rate from March 31, 1993 to March 31,
1994 and one percent in excess of the lending bank's
prime rate from March 31, 1994 until the note was to
mature on December 31, 1995. The note was secured by
pledged shares of the Company's Common Stock. The
note was guaranteed by the Company.
The outstanding balance of $1,400,000 was paid off by
the plan on January 15, 1993.
4. Investment in Common Stock of Santa Barbara Bancorp
The changes in the investment account for the year
ended December 31, 1994 are summarized as follows:
Allocated
Total number of shares as of January 1, 1994 582,124
Distributions to plan participants (29,252)
Balance as of December 31, 1994 552,872
Fair value per share as of December 31, 1994 $25.00
Number of participants 417
As explained in Note 1, under the current value method
of accounting for investments, the cost of investments
is equal to the market value of the investment at the
level of the previous year. The cost for shares of Santa
Barbara Bancorp for determining realized and unrealized
appreciation for the year ended December 31, 1994 is
$21.50 per share.
<PAGE> 12
5. Repurchase of Shares
By the terms of the Plan, terminating employees at the
time of their termination may require that the Plan
repurchase Santa Barbara Bancorp stock that was
distributed to them. If requested to repurchase by the
employee, the Plan repurchases the stock at the fair
value of the stock at the end of the preceding quarter.
Repurchased shares are retained by the Plan and
therefore are not reported in the table as a change in
the Investment in Common Stock of the Company.
The market value of investments other than stock is
distributed to terminating employees in cash so there
is no repurchase provision needed with respect to the
diversification assets.
6. Liabilities to Plan Participants
Participants have direct ownership of the shares of
Company stock in their accounts. Upon their
termination of employment, they receive the vested
portion of these shares of stock. Amounts of cash
and stock not yet distributed are shown in these
statements as a liability owed to Plan participants.
7. Dividends
In 1993, with the note payable, described in Note 3,
having been repaid, the Advisory Committee of the plan
decided to begin distributing the cash dividends on
allocated shares directly to participants as received from
the Company. Cash dividends on unallocated shares were
allocated to participants' accounts at the end of year.
<PAGE> 13
Santa Barbara Bank & Trust
Plan Number 003
EIN 95-2089059P
Employee Stock Ownership Plan
Schedule of Assets Held for Investment as of December 31, 1994
<TABLE>
<CAPTION>
Identity of issue,
borrower, lessor, or Current
similar party Description of investment Cost Value
- -------------------- ------------------------- ---------- -----------
<S> <C> <C>
Santa Barbara Bancorp* 552,872 common stock shares $11,886,829 $13,821,800
Fed. St Inter Govt TR 4,232 shares 43,566 42,787
Federated Income Trust 6,950 shares 68,578 66,721
Federated Stock Trust 130 common stock shares 3,228 3,130
Fed. Index Tr Mid-Cap 10,502 common stock shares 112,864 109,012
Fed. Index Tr Mini-Cap 3,899 common stock shares 44,214 44,137
Fed. Index Tr Max-Cap 11,427 common stock shares 134,348 133,243
International Equity Fund 2,367 common stock shares 45,917 41,117
Money Market Fund* 11,776 shares 11,776 11,776
Total Investments $12,351,320 $14,273,723
* Party in interest to the Plan.
The accompanying notes to the financial statements are an integral part
of this schedule.
</TABLE>
<PAGE> 14
EXHIBIT INDEX
Sequential
Page
Exhibit Number
23 Consent of Independent Public Accountants 15
99 Amended and Restated Employee Stock
Ownership Plan and Trust 16
<PAGE> 15
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report dated May 31, 1995, into this Form 11-K and into Santa Barbara
Bancorp's previously filed Form S-8 Registration Statements File
Nos. 33-5493, 2-83293, 33-43560 and 33-48724. It should be noted that we
have not audited any financial statements of Santa Barbara Bancorp and
Subsidiaries subsequent to December 31, 1994 or performed any audit
procedures subsequent to the date of our report.
Arthur Andersen LLP
Los Angeles, California
May 31, 1995
<PAGE> 16
EXHIBIT 99
AMENDED AND RESTATED EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST
SANTA BARBARA BANK & TRUST
EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST
TABLE OF CONTENTS
Section Page
1. DEFINITIONS 1
2. TOP HEAVY AND ADMINISTRATION 15
2.1 Top Heavy Plan Requirements 15
2.2 Determination Of Top Heavy Status 16
2.3 Powers and Responsibilities of the Employer 19
2.4 Administrator 19
2.5 Allocation and Delegation of Responsibilities 20
2.6 Powers and Duties of the Administrator 20
2.7 Records and Reports 21
2.8 Appointment of Advisers 22
2.9 Information From Employer 22
2.10 Payment of Expenses 22
2.11 Majority Actions 22
2.12 Claims Procedure 22
2.13 Claims Review Procedure 23
3. ELIGIBILITY 23
3.1 Conditions of Eligibility 23
3.2 Application for Participation 24
3.3 Effective Date of Participation 24
3.4 Determination of Eligibility 24
3.5 Termination of Eligibility 24
3.6 Omission Of Eligible Employee 24
3.7 Inclusion of Ineligible Employee 25
3.8 Election Not to Participate 25
4. CONTRIBUTION AND ALLOCATION 25
4.1 Formula For Determining Employer's Contribution 25
4.2 Time of Payment of Employer's Contribution 25
4.3 Allocation of Contribution, Forfeitures and Earnings 25
4.4 Maximum Annual Additions 30
4.5 Adjustment For Excessive Annual Additions 35
4.6 Directed Investment of Accounts 36
5. FUNDING AND INVESTMENT POLICY 39
5.1 Investment Policy 39
5.2 Application Of Cash 40
5.3 Transactions Involving Company Stock 40
5.4 Loans to the Trust 41
6. VALUATIONS 42
6.1 Valuation of the Trust Fund 42
6.2 Method of Valuation 42
7. DETERMINATION AND DISTRIBUTION OF BENEFITS. 43
7.1 Determination of Benefits Upon Retirement 43
7.2 Determination of Benefits Upon Death 43
7.3 Determination of Benefits in Event of Disability 44
7.4 Determination of Benefits Upon Termination 44
7.5 Distribution of Benefits 49
7.6 How Plan Benefit Will be Distributed 53
7.7 Distribution for Minor Beneficiary 54
7.8 Location of Participant or Beneficiary Unknown 54
7.9 Right of First Refusal 54
7.10 Stock Certificate Legend 56
7.11 Put Option 56
7.12 Nonterminable Protections and Rights 58
7.13 Qualified Domestic Relations Order Distribution 58
8. TRUSTEE 58
8.1 Basic Responsibilities of the Trustee 58
8.2 Investment Powers and Duties of the Trustee 59
8.3 Other Powers of the Trustee 60
8.4 Voting Company Stock 63
8.5 Duties Of The Trustee Regarding Payments 64
8.6 Trustee's Compensation and Expenses and Taxes 64
8.7 Annual Report of the Trustee 65
8.8 Audit 66
8.9 Resignation, Removal and Succession of Trustee 66
8.10 Transfer of Interest 67
8.11 Direct Rollover 67
9. AMENDMENT, TERMINATION AND MERGERS 68
9.1 Amendment 68
9.2 Termination 69
9.3 Merger or Consolidation 69
10. MISCELLANEOUS 70
10.1 Participant's Rights 70
10.2 Alienation 70
10.3 Construction of Plan 70
10.4 Gender and Number 71
10.5 Legal Action 71
10.6 Prohibition Against Diversion of Funds 71
10.7 Bonding 71
10.8 Employer's and Trustee's Protective Clause 72
10.9 Insurer's Protective Clause 72
10.10 Receipt and Release for Payments 72
10.11 Action by the Employer 72
10.12 Named Fiduciaries and Allocation of Responsibility 72
10.13 Headings 73
10.14 Approval by Internal Revenue Service 73
10.15 Uniformity 74
10.16 Securities and Exchange Commission Approval 74
THIS AGREEMENT is made and entered into this ____ day of June, 1994,
by and between SANTA BARBARA BANK & TRUST, a California corporation, as
Employer (herein referred to as the "Employer"), and SANTA BARBARA BANK &
TRUST, a California corporation, as Trustee (herein referred to as the
"Trustee"), with reference to the following facts:
RECITALS:
A. The Employer established an Employee Stock Ownership Plan and
Trust effective January 1, 1985 (the "Effective Date"), known as Santa
Barbara Bank & Trust Employee Stock Ownership Plan and Trust (herein
referred to as the "Plan"), in recognition of the contribution made to its
successful operation by its employees and for the exclusive benefit of its
eligible employees.
B. Contributions to the trust under the Plan will be made by the
Employer and invested by the Trustee primarily in the stock of the
Employer.
C. Under the terms of the Plan, the Employer has the ability to
amend the Plan, provided the Trustee joins in such amendment if the
provisions of the Plan affecting the Trustee are amended.
D. The Employer desires to amend and restate the Plan to reflect
the requirements of the Tax Reform Act of 1986, and subsequent legislation,
judicial decisions, and rulings.
AGREEMENT:
NOW, THEREFORE, effective January 1, 1989, except as otherwise
provided, the Employer and the Trustee in accordance with the provisions of
the Plan pertaining to amendments thereof, hereby amend and restate the
Plan in its entirety to provide as follows:
1. DEFINITIONS
1.1 "Act" or "ERISA" means the Employee Retirement Income
Security Act of 1974, as it may be amended from time to time.
1.2 "Administrator" means the person or entity designated by the
Employer pursuant to Section 2.4 to administer the Plan on behalf of the
Employer.
1.3 "Affiliated Employer" means any corporation which is a member
of a controlled group of corporations (as defined in Code Section 414(b))
which includes the Employer; any trade or business (whether or not
incorporated) which is under common control (as defined in Code Section
414(c)) with the Employer; any organization (whether or not incorporated)
which is a member of an affiliated service group (as defined in Code
Section 414(m)) which includes the Employer; and any other entity required
to be aggregated with the Employer pursuant to Regulations under Code
Section 414(o).
1.4 "Aggregate Account" means, with respect to each Participant,
the value of all accounts maintained on behalf of a Participant, whether
attributable to Employer or Employee contributions, subject to the
provisions of Section 2.2.
1.5 "Anniversary Date" means last day of each calendar quarter in
the Plan Year.
1.6 "Beneficiary" means the person to whom the share of a
deceased Participant's total account is payable, subject to the
restrictions of Sections 7.2 and 7.5.
1.7 "Code" means the Internal Revenue Code of 1986, as amended or
replaced from time to time.
1.8 "Company Stock" means common stock issued by the Employer (or
by a corporation which is a member of the controlled group of corporations
of which the Employer is a member) which is readily tradeable on an
established securities market. If there is no common stock which meets the
foregoing requirement, the term "Company Stock" means common stock issued
by the Employer (or by a corporation which is a member of the same
controlled group) having a combination of voting power and dividend rights
equal to or in excess of: (A) that class of common stock of the Employer
(or of any other such corporation) having the greatest voting power, and
(B) that class of common stock of the Employer (or of any other such
corporation) having the greatest dividend rights. Noncallable preferred
stock shall be deemed to be "Company Stock" if such stock is convertible
at any time into stock which constitutes "Company Stock" hereunder and if
such conversion is at a conversion price which (as of the date of the
acquisition by the Trust) is reasonable. For purposes of the preceding
sentence, pursuant to Regulations, preferred stock shall be treated as
noncallable if after the call there will be a reasonable opportunity for a
conversion which meets the requirements of the preceding sentence.
1.9 "Company Stock Account" means the account of a Participant
which is credited with the shares of Company Stock purchased and paid for
by the Trust Fund or contributed to the Trust Fund.
1.10 "Compensation" with respect to any Participant means such
Participant's wages as defined in Code Section 3401(a) and all other
payments of compensation by the Employer (in the course of the Employer's
trade or business) for a Plan Year for which the Employer is required to
furnish the Participant a written statement under Code Sections 6041(d),
6051(a)(3) and 6052. Compensation must be determined without regard to any
rules under Code Section 3401(a) that limit the remuneration included in
wages based on the nature or location of the employment or the services
performed (such as the exception for agricultural labor in Code Section
3401(a)(2)).
1.10.1 Adjustments. For purposes of this Section, the
determination of Compensation shall be made by including amounts which are
contributed by the Employer pursuant to a salary reduction agreement and
which are not includable in the gross income of the Participant under Code
Sections 125, 402(e)(3), 402(h), 403(b) or 457, and Employee contributions
described in Code Section 414(h)(2) that are treated as Employer
contributions.
1.10.2 Initial Year. For a Participant's initial year of
participation, Compensation shall be recognized as of such Employee's
effective date of participation pursuant to Section 3.3.
1.10.3 Limit on Amount. For the Plan Years beginning:
A. Prior to January 1, 1994, Compensation in excess of
$200,000 shall be disregarded. Such amount shall be adjusted at the same
time and in such manner as permitted under Code Section 415(d), except that
the dollar increase in effect on January 1 of any calendar year shall be
effective for the Plan Year beginning with or within such calendar year and
the first adjustment to the $200,000 limitation shall be effective on
January 1, 1990. For any short Plan Year the Compensation limit shall be
an amount equal to the Compensation limit for the calendar year in which
the Plan Year begins multiplied by the ratio obtained by dividing the
number of full months in the short Plan Year by twelve (12). In applying
this limitation, the family group of a Highly Compensated Participant who
is subject to the Family Member aggregation rules of Code Section 414(q)(6)
because such Participant is either a "five percent owner" of the Employer
or one of the ten (10) Highly Compensated Employees paid the greatest "415
Compensation" during the year, shall be treated as a single Participant,
except that for this purpose Family Members shall include only the affected
Participant's spouse and any lineal descendants who have not attained age
nineteen (19) before the close of the year. If, as a result of the
application of such rules the adjusted $200,000 limitation is exceeded,
then the limitation shall be prorated among the affected Family Members in
proportion to each such Family Member's Compensation prior to the
application of this limitation, or the limitation shall be adjusted in
accordance with any other method permitted by Regulation.
B. In addition to the other limitations set forth in
this Plan, and notwithstanding any of the provision of this Plan to the
contrary, for Plan Years beginning on or after January 1, 1994, the annual
Compensation of each Employee taken into account under this Plan shall not
exceed the One Hundred Fifty Thousand Dollars ($150,000), as adjusted by
the Internal Revenue Service for cost of living increases in accordance
with Code Section 401(a)(17)(B).
(1) The cost of living adjustment in effect for a
calendar year applies to any period which begins in that calendar year,
does not exceed twelve months, and for which Compensation is required to be
determined (the "determination period"). If a determination period
consists of fewer than twelve (12) months, then the annual compensation
limit for such period shall be $150,000 (or such greater amount determined
in accordance with Code Section 401(a)(17)(B)), multiplied by a fraction,
the numerator of which is the number of months in such determination
period, and the denominator of which is twelve (12). For Plan Years
beginning on or after January 1, 1994, any reference in this Plan to the
limitation under Code Section 401(a)(17) shall mean such $150,000 limit
(has adjusted pursuant to Code Section 401(a)(17)(B)) set forth in this
Section 1.8.4.
(2) If an Employee's benefits accruing in any Plan
Year are determined by reference to the Employee's Compensation for any
determination period commencing prior to such Plan Year, then the
Compensation for such prior determination period shall be subject to the
$150,000 limit (as adjusted pursuant to Code Section 401(a)(17)(B)) in
effect for that prior determination period. For any such determination
period beginning prior to the first day of the first Plan Year beginning on
or after January 1, 1994, the annual compensation limit under this Section
1.8.3 shall be $150,000.
1.10.4 Family Aggregation. If, as a result of such rules,
the maximum "annual addition" limit of Section 4.4(a) would be exceeded for
one or more of the affected Family Members, the prorated Compensation of
all affected Family Members shall be adjusted to avoid or reduce any
excess. The prorated Compensation of any affected Family Member whose
allocation would exceed the limit shall be adjusted downward to the level
needed to provide an allocation equal to such limit. The prorated
Compensation of affected Family Members not affected by such limit shall
then be adjusted upward on a pro rata basis not to exceed each such
affected Family Member's Compensation as determined prior to application of
the Family Member rule. The resulting allocation shall not exceed such
individual's maximum "annual addition" limit. If, after these adjustments,
an "excess amount" still results, such "excess amount" shall be disposed of
in the manner described in Section 4.5.1 pro rata among all affected Family
Members.
1.10.5 Prior Definition. If, in connection with the
adoption of this amendment and restatement, the definition of Compensation
has been modified, then, for Plan Years prior to the Plan Year which
includes the adoption date of this amendment and restatement, Compensation
means compensation determined pursuant to the Plan then in effect.
1.10.6 Prior Plan Years. For Plan Years beginning prior to
January 1, 1989, the $200,000 limit (without regard to Family Member
aggregation) shall apply only for Top Heavy Plan Years and shall not be
adjusted.
1.11 "Contract" or "Policy" means any life insurance policy,
retirement income or annuity policy, or annuity contract (group or
individual) issued pursuant to the terms of the Plan.
1.12 "Current Obligations" means Trust obligations arising from
extension of credit to the Trust and payable in cash within (1) year from
the date an Employer contribution is due. With respect to the estates of
decedents who died prior to July 13, 1989, Trust obligations shall include
the liability for payment of taxes imposed by Code Section 2001, which
liability is incurred pursuant to Code Section 2210(b).
1.13 "Early Retirement Date" means the first day of the month
(prior to the Normal Retirement Date) coinciding with or following the date
on which a Participant or Former Participant attains age 55 and has
completed at least 20 Years of Service with the Employer (Early Retirement
Age). A Participant shall become fully Vested upon satisfying this
requirement if still employed at his Early Retirement Age.
A Former Participant who terminates employment after satisfying
the service requirement for Early Retirement and who thereafter reaches the
age requirement contained herein shall be entitled to receive his benefits
under this Plan.
1.14 "Eligible Employee" means any Employee. Employees of
Affiliated Employers shall not be eligible to participate in this Plan
unless such Affiliated Employers have specifically adopted this Plan in
writing.
1.15 "Employee" means any person who is employed by the Employer
or Affiliated Employer, but excludes any person who is an independent
contractor. Employee shall include Leased Employees within the meaning of
Code Sections 414(n)(2) and 414(o)(2) unless such Leased Employees are
covered by a plan described in Code Section 414(n)(5) and such Leased
Employees do not constitute more than 20% of the recipient's non-highly
compensated work force.
1.16 "Employer" means Santa Barbara Bank & Trust and any
successor which shall maintain this Plan; and any predecessor which has
maintained this Plan. The Employer is a corporation with principal offices
in the State of California.
1.17 "ESOP" means an employee stock ownership plan that meets the
requirements of Code Section 4975(e)(7) and Regulation 54.4975-11.
1.18 "Exempt Loan" means a loan made to the Plan by a
disqualified person or a loan to the Plan which is guaranteed by a
disqualified person and which satisfies the requirements of Section
2550.408b-3 of the Department of Labor Regulations, Section 54.4975-7(b) of
the Treasury Regulations and Section 5.4 hereof.
1.19 "Family Member" means, with respect to an affected
Participant, such Participant's spouse, such Participant's lineal
descendants and ascendant and their spouses, all as described in Code
Section 414(q)(6)(B).
1.20 "Fiduciary" means any person who (a) exercises any
discretionary authority or discretionary control respecting management of
the Plan or exercises any authority or control respecting management or
disposition of its assets, (b) renders investment advice for a fee or other
compensation, direct or indirect, with respect to any monies or other
property of the Plan or has any authority or responsibility to do so, or
(c) has any discretionary authority or discretionary responsibility in the
administration of the Plan, including, but not limited to, the Trustee, the
Employer and its representative body, and the Administrator.
1.21 "Fiscal Year" means the Employer's accounting year of 12
months commencing on January 1st of each year and ending the following
December 31st.
1.22 "Forfeiture" means that portion of a Participant's Account
that is not Vested, and occurs on the earlier of (a) the distribution of
the entire Vested portion of a Terminated Participant's Account, or (b) the
last day of the Plan Year in which the Participant incurs five (5)
consecutive 1-Year Breaks in Service. For purposes of Clause (a), above, in
the case of a Terminated Participant whose Vested benefit is zero, such
Terminated Participant shall be deemed to have received a distribution of
his Vested benefit upon his termination of employment. Restoration of such
amounts shall occur pursuant to Section 7.4.7.B, below. In addition, the
term Forfeiture shall also include amounts deemed to be Forfeitures
pursuant to any other provision of this Plan.
1.23 "Former Participant" means a person who has been a
Participant, but who has ceased to be a Participant for any reason.
1.24 "415 Compensation" with respect to any Participant means
such Participant's wages as defined in Code Section 3401(a) and all other
payments of compensation by the Employer (in the course of the Employer's
trade or business) for a Plan Year for which the Employer is required to
furnish the Participant a written statement under Code Sections 6041(d),
6051(a)(3) and 6052. "415 Compensation" must be determined without regard
to any rules under Code Section 3401(a) that limit the remuneration
included in wages based on the nature or location of the employment or the
services performed (such as the exception for agricultural labor in Code
Section 3401(a)(2)). If, in connection with the adoption of this amendment
and restatement, the definition of "415 Compensation" has been modified,
then, for Plan Years prior to the Plan Year which includes the adoption
date of this amendment and restatement, "415 Compensation" means
compensation determined pursuant to the Plan then in effect.
1.25 "Highly Compensated Employee" means an Employee described in
Code Section 414(q) and the Regulations thereunder.
1.25.1 General. Generally, the term "Highly Compensated
Employee" means an Employee who performed services for the Employer during
the "determination year" and is in one or more of the following groups:
A. Employees who at any time during the "determination
year" or "look-back year" were "five percent owners" as defined in Section
1.30.3.
B. Employees who received "415 Compensation" during the
"look-back year" from the Employer in excess of $75,000.
C. Employees who received "415 Compensation" during the
"look-back year" from the Employer in excess of $50,000 and were in the Top
Paid Group of Employees for the Plan Year.
D. Employees who during the "look-back year" were
officers of the Employer (as that term is defined within the meaning of the
Regulations under Code Section 416) and received "415 Compensation" during
the "look-back year" from the Employer greater than 50 percent of the limit
in effect under Code Section 415(b)(1)(A) for any such Plan Year. The
number of officers shall be limited to the lesser of (i) 50 employees; or
(ii) the greater of 3 employees or 10 percent of all employees. For the
purpose of determining the number of officers, Employees described in
Sections 1.50.3(A), 1.50.3(B), 1.50.3(C) and 1.50.3(D) shall be excluded,
but such Employees shall still be considered for the purpose of identifying
the particular Employees who are officers. If the Employer does not have at
least one officer whose annual "415 Compensation" is in excess of 50
percent of the Code Section 415(b)(1)(A) limit, then the highest paid
officer of the Employer will be treated as a Highly Compensated Employee.
E. Employees who are in the group consisting of the 100
Employees paid the greatest "415 Compensation" during the "determination
year" and are also described in Paragraphs B, C, or D, above, when these
Paragraphs are modified to substitute "determination year" for "look-back
year".
1.25.2 Look Back Year. The "look-back year" shall be the
calendar year ending with or within the Plan Year for which testing is
being performed, and the "determination year" (if applicable) shall be the
period of time, if any, which extends beyond the "look-back year" and ends
on the last day of the Plan Year for which testing is being performed (the
"lag period"). If the "lag period" is less than twelve months long, the
dollar threshold amounts specified in Sections 1.25.2, 1.25.3, or 1.25.4
above shall be prorated based upon the number of months in the "lag
period".
1.25.3 Compensation. For purposes of this Section, the
determination of "415 Compensation" shall be made by including amounts that
would otherwise be excluded from a Participant's gross income by reason of
the application of Code Sections 125, 402(e)(3), 402(h)(1)(B) and, in the
case of Employer contributions made pursuant to a salary reduction
agreement, by including amounts that would otherwise be excluded from a
Participant's gross income by reason of the application of Code Section
403(b). Additionally, the dollar threshold amounts specified in Sections
1.25.2 and 1.25.3 above shall be adjusted at such time and in such manner
as is provided in Regulations. In the case of such an adjustment, the
dollar limits which shall be applied are those for the calendar year in
which the "determination year" or "look-back year" begins.
1.25.4 Other Rules. In determining who is a Highly
Compensated Employee, Employees who are non-resident aliens and who
received no earned income (within the meaning of Code Section 911(d)(2))
from the Employer constituting United States source income within the
meaning of Code Section 861(a)(3) shall not be treated as Employees.
Additionally, all Affiliated Employers shall be taken into account as a
single employer and Leased Employees within the meaning of Code Sections
414(n)(2) and 414(o)(2) shall be considered Employees unless such Leased
Employees are covered by a plan described in Code Section 414(n)(5) and are
not covered in any qualified plan maintained by the Employer. The
exclusion of Leased Employees for this purpose shall be applied on a
uniform and consistent basis for all of the Employer's retirement plans.
Highly Compensated Former Employees shall be treated as Highly Compensated
Employees without regard to whether they performed services during the
"determination year".
1.26 "Highly Compensated Former Employee" means a former Employee
who had a separation year prior to the "determination year" and was a
Highly Compensated Employee in the year of separation from service or in
any "determination year" after attaining age 55. Notwithstanding the
foregoing, an Employee who separated from service prior to 1987 will be
treated as a Highly Compensated Former Employee only if during the
separation year (or year preceding the separation year) or any year after
the Employee attains age 55 (or the last year ending before the Employee's
55th birthday), the Employee either received "415 Compensation" in excess
of $50,000 or was a "five percent owner". For purposes of this Section,
"determination year", "415 Compensation" and "five percent owner" shall be
determined in accordance with Section 1.25. Highly Compensated Former
Employees shall be treated as Highly Compensated Employees. The method set
forth in this Section for determining who is a "Highly Compensated Former
Employee" shall be applied on a uniform and consistent basis for all
purposes for which the Code Section 414(q) definition is applicable.
1.27 "Highly Compensated Participant" means any Highly
Compensated Employee who is eligible to participate in the Plan.
1.28 "Hour of Service" means (a) each hour for which an Employee
is directly or indirectly compensated or entitled to compensation by the
Employer for the performance of duties during the applicable computation
period; (b) each hour for which an Employee is directly or indirectly
compensated or entitled to compensation by the Employer (irrespective of
whether the employment relationship has terminated) for reasons other than
performance of duties (such as vacation, holidays, sickness, jury duty,
disability, lay-off, military duty or leave of absence) during the
applicable computation period; (c) each hour for which back pay is awarded
or agreed to by the Employer without regard to mitigation of damages.
These hours will be credited to the Employee for the computation period or
periods to which the award or agreement pertains rather than the
computation period in which the award, agreement or payment is made. The
same Hours of Service shall not be credited both under (a) or (b), as the
case may be, and under (c).
1.28.1 Limitations. Notwithstanding the above, (a) no more
than 501 Hours of Service are required to be credited to an Employee on
account of any single continuous period during which the Employee performs
no duties (whether or not such period occurs in a single computation
period); (b) an hour for which an Employee is directly or indirectly paid,
or entitled to payment, on account of a period during which no duties are
performed is not required to be credited to the Employee if such payment is
made or due under a plan maintained solely for the purpose of complying
with applicable worker's compensation, or unemployment compensation or
disability insurance laws; and (c) Hours of Service are not required to be
credited for a payment which solely reimburses an Employee for medical or
medically related expenses incurred by the Employee.
1.28.2 Payments. For purposes of this Section, a payment
shall be deemed to be made by or due from the Employer regardless of
whether such payment is made by or due from the Employer directly, or
indirectly through, among others, a trust fund, or insurer, to which the
Employer contributes or pays premiums and regardless of whether
contributions made or due to the trust fund, insurer, or other entity are
for the benefit of particular Employees or are on behalf of a group of
Employees in the aggregate.
1.28.3 Crediting Hours. An Hour of Service must be credited
for the purpose of determining a Year of Service, a year of participation
for purposes of accrued benefits, a 1-Year Break in Service, and employment
commencement date (or reemployment commencement date). In addition, Hours
of Service will be credited for employment with other Affiliated Employers.
The provisions of Department of Labor regulations 2530.200b-2(b) and (c)
are incorporated herein by reference.
1.29 "Investment Manager" means an entity that (a) has the power
to manage, acquire, or dispose of Plan assets and (b) acknowledges
fiduciary responsibility to the Plan in writing. Such entity must be a
person, firm, or corporation registered as an investment adviser under the
Investment Advisers Act of 1940, a bank, or an insurance company.
1.30 "Key Employee" means an Employee as defined in Code Section
416(i) and the Regulations thereunder.
1.30.1 General. Generally, any Employee or former Employee
(as well as each of his Beneficiaries) is considered a Key Employee if he,
at any time during the Plan Year that contains the "Determination Date" or
any of the preceding four (4) Plan Years, has been included in one of the
following categories:
A. An officer of the Employer (as that term is defined
within the meaning of the Regulations under Code Section 416) having annual
"415 Compensation" greater than 50 percent of the amount in effect under
Code Section 415(b)(1)(A) for any such Plan Year.
B. One of the ten employees having annual "415
Compensation" from the Employer for a Plan Year greater than the dollar
limitation in effect under Code Section 415(c)(1)(A) for the calendar year
in which such Plan Year ends and owning (or considered as owning within the
meaning of Code Section 318) both more than one-half percent interest and
the largest interests in the Employer.
C. A "five percent owner" of the Employer. "Five
percent owner" means any person who owns (or is considered as owning within
the meaning of Code Section 318) more than five percent (5%) of the
outstanding stock of the Employer or stock possessing more than five
percent (5%) of the total combined voting power of ail stock of the
Employer or, in the case of an unincorporated business, any person who owns
more than five percent (5%) of the capital or profits interest in the
Employer. In determining percentage ownership hereunder, employers that
would otherwise be aggregated under Code Sections 414(b), (c), (m) and (o)
shall be treated as separate employers.
D. A "one percent owner" of the Employer having an
annual "415 Compensation" from the Employer of more than $150,000. "One
percent owner" means any person who owns (or is considered as owning within
the meaning of Code Section 318) more than one percent (1%) of the
outstanding stock of the Employer or stock possessing more than one percent
(1%) of the total combined voting power of all stock of the Employer or, in
the case of an unincorporated business, any person who owns more than one
percent (1%) of the capital or profits interest in the Employer. In
determining percentage ownership hereunder, employers that would otherwise
be aggregated under Code Sections 414(b), (c), (m) and (o) shall be treated
as separate employers. However, in determining whether an individual has
"415 Compensation" of more than $150,000, "415 Compensation" from each
employer required to be aggregated under Code Sections 414(b), (c), (m) and
(o) shall be taken into account.
1.30.2 Compensation. For purposes of this Section, the
determination of "415 Compensation" shall be made by including amounts that
would otherwise be excluded from a Participant's gross income by reason of
the application of Code Sections 125, 402(e)(3), 402(h)(1)(B) and, in the
case of Employer contributions made pursuant to a salary reduction
agreement, by including amounts that would otherwise be excluded from a
Participant's gross income by reason of the application of Code Section
403(b).
1.31 "Late Retirement Date" means the first day of the month
coinciding with or next following a Participant's actual Retirement Date
after having reached his Normal Retirement Date.
1.32 "Leased Employee" means any person (other than an Employee
of the recipient) who pursuant to an agreement between the recipient and
any other person ("leasing organization") has performed services for the
recipient (or for the recipient and related persons determined in
accordance with Code Section 414(n)(6)) on a substantially full time basis
for a period of at least one year, and such services are of a type
historically performed by employees in the business field of the recipient
employer. Contributions or benefits provided a Leased Employee by the
leasing organization which are attributable to services performed for the
recipient employer shall be treated as provided by the recipient employer.
A Leased Employee shall not be considered an Employee of the recipient if
both of the following requirements are satisfied:
1.32.1 Money Purchase Pension Plan. Such employee is
covered by a money purchase pension plan providing:
A. A non-integrated employer contribution rate of at
least 10% of compensation, as defined in Code Section 415(c)(3), but
including amounts contributed pursuant to a salary reduction agreement
which are excludable from the employee's gross income under Code Sections
125, 402(e)(3), 402(h) or 403(b);
B. Immediate participation; and
C. Full and immediate vesting; and
1.32.2 20% Limit. Leased Employees do not constitute more
than 20% of the recipient's non-highly compensated work force.
1.33 "Non-Highly Compensated Participant" means any Participant
who is neither a Highly Compensated Employee nor a Family Member.
1.34 "Non-Key Employee" means any Employee or former Employee
(and his Beneficiaries) who is not a Key Employee.
1.35 "Normal Retirement Age" means the Participant's 65th
birthday. A Participant shall become fully Vested in his Participant's
Account upon attaining his Normal Retirement Age.
1.36 "Normal Retirement Date" means the first day of the month
coinciding with or next following the Participant's Normal Retirement Age.
1.37 "1-Year Break in Service" means the applicable computation
period during which an Employee has not completed more than 500 Hours of
Service with the Employer. Further, solely for the purpose of determining
whether a Participant has incurred a 1-Year Break in Service, Hours of
Service shall be recognized for "authorized leaves of absence" and
"maternity and paternity leaves of absence." Years of Service and 1-Year
Breaks in Service shall be measured on the same computation period.
1.37.1 Authorized Leaves. "Authorized leave of absence"
means an unpaid, temporary cessation from active employment with the
Employer pursuant to an established nondiscriminatory policy, whether
occasioned by illness, military service, or any other reason.
1.37.2 Maternity, Etc. A "maternity or paternity leave of
absence" means, for Plan Years beginning after December 31, 1984, an
absence from work for any period by reason of the Employee's pregnancy,
birth of the Employee's child, placement of a child with the Employee in
connection with the adoption of such child, or any absence for the purpose
of caring for such child for a period immediately following such birth or
placement. For this purpose, Hours of Service shall be credited for the
computation period in which the absence from work begins, only if credit
therefore is necessary to prevent the Employee from incurring a 1- Year
Break in Service, or, in any other case, in the immediately following
computation period. The Hours of Service credited for a "maternity or
paternity leave of absence" shall be those which would normally have been
credited but for such absence, or, in any case in which the Administrator
is unable to determine such hours normally credited, eight (8) Hours of
Service per day. The total Hours of Service required to be credited for a
"maternity or paternity leave of absence" shall not exceed 501.
1.38 "Other Investments Account" means the account of a
Participant which is credited with his share of the net gain (or loss) of
the Plan, Forfeitures and Employer contributions in other than Company
Stock and which is debited with payments made to pay for Company Stock.
1.39 "Participant" means any Eligible Employee who participates
in the Plan as provided in Sections 3.2 and 3.3, and has not for any reason
become ineligible to participate further in the Plan.
1.40 "Participant's Account" means the account established and
maintained by the Administrator for each Participant with respect to his
total interest in the Plan and Trust resulting from the Employer's
contributions.
1.41 "Plan" means this instrument, including all amendments
thereto.
1.42 "Plan Year" means the Plan's accounting year of twelve (12)
months commencing on January 1st of each year and ending the following
December 31st.
1.43 "Regulation" means the Income Tax Regulations as promulgated
by the Secretary of the Treasury or his delegate, and as amended from time
to time.
1.44 "Retired Participant" means a person who has been a
Participant, but who has become entitled to retirement benefits under the
Plan.
1.45 "Retirement Date" means the date as of which a Participant
retires for reasons other than Total and Permanent Disability, whether such
retirement occurs on a Participant's Normal Retirement Date, Early or Late
Retirement Date (see Section 7.1).
1.46 "Super Top Heavy Plan" means a plan described in Section
2.2.2.
1.47 "Terminated Participant" means a person who has been a
Participant, but whose employment has been terminated other than by death,
Total and Permanent Disability or retirement.
1.48 "Top Heavy Plan" means a plan described in Section 2.2.1.
1.49 "Top Heavy Plan Year" means a Plan Year during which the
Plan is a Top Heavy Plan.
1.50 "Top Paid Group" means the top 20 percent of Employees who
performed services for the Employer during the applicable year, ranked
according to the amount of "415 Compensation" (determined for this purpose
in accordance with Section 1.25) received from the Employer during such
year.
1.50.1 Affiliated Employers. All Affiliated Employers shall
be taken into account as a single employer, and Leased Employees within the
meaning of Code Sections 414(n)(2) and 414(o)(2) shall be considered
Employees unless such Leased Employees are covered by a plan described in
Code Section 414(n)(5) and are not covered in any qualified plan maintained
by the Employer.
1.50.2 Non-Residents, Etc. Employees who are non- resident
aliens and who received no earned income (within the meaning of Code
Section 911(d)(2)) from the Employer constituting United States source
income within the meaning of Code Section 861(a)(3) shall not be treated as
Employees.
1.50.3 Exclusions. Additionally, for the purpose of
determining the number of active Employees in any year, the following
additional Employees shall also be excluded (however, such Employees shall
still be considered for the purpose of identifying the particular Employees
in the Top Paid Group):
A. Employees with less than six (6) months of service;
B. Employees who normally work less than 17 1/2 hours
per week;
C. Employees who normally work less than six (6) months
during a year;
D. Employees who have not yet attained age 21; and
E. If 90 percent or more of the Employees of the
Employer are covered under agreements the Secretary of Labor finds to be
collective bargaining agreements between Employee representatives and the
Employer, and the Plan covers only Employees who are not covered under such
agreements, then Employees covered by such agreements shall be excluded
from both the total number of active Employees as well as from the
identification of particular Employees in the Top Paid Group.
The foregoing exclusions set forth in this Section 1.50.3 shall be applied
on a uniform and consistent basis for all purposes for which the Code
Section 414(q) definition is applicable.
1.51 "Total and Permanent Disability" means a physical or mental
condition of a Participant resulting from bodily injury, disease, or mental
disorder which renders him incapable of continuing any gainful occupation
and which condition constitutes total disability under the federal Social
Security Acts.
1.52 "Trustee" means the person or entity named as trustee herein
or in any separate trust forming a part of this Plan, and any successors.
1.53 "Trust Fund" means the assets of the Plan and Trust as the
same shall exist from time to time.
1.54 "Unallocated Company Stock Suspense Account" means an
account containing Company Stock acquired with the proceeds of an Exempt
Loan and which has not been released from such account and allocated to the
Participants' Company Stock Accounts.
1.55 "Vested" means the nonforfeitable portion of any account
maintained on behalf of a Participant.
1.56 "Year of Service" means the computation period of twelve
(12) consecutive months, herein set forth, during which an Employee has at
least 1000 Hours of Service.
1.56.1 Eligibility. For purposes of eligibility for
participation, the initial computation period shall begin with the date on
which the Employee first performs an Hour of Service. The participation
computation period beginning after a 1-Year Break in Service shall be
measured from the date on which an Employee again performs an Hour of
Service. The participation computation period shall shift to the Plan Year
which includes the anniversary of the date on which the Employee first
performed an Hour of Service. An Employee who is credited with the
required Hours of Service in both the initial computation period (or the
computation period beginning after a 1-Year Break in Service) and the Plan
Year which includes the anniversary of the date on which the Employee first
performed an Hour of Service, shall be credited with two (2) Years of
Service for purposes of eligibility to participate.
1.56.2 Vesting. For vesting purposes, the computation
period shall be the Plan Year, including periods prior to the Effective
Date of the Plan.
1.56.3 Other. For all other purposes, the computation
period shall be the Plan Year.
1.56.4 Short Plan Year. Notwithstanding the foregoing, for
any short Plan Year, the determination of whether an Employee has completed
a Year of Service shall be made in accordance with Department of Labor
regulation 2530.203-2(c). However, in determining whether an Employee has
completed a Year of Service for benefit accrual purposes in the short Plan
Year, the number of the Hours of Service required shall be proportionately
reduced based on the number of full months in the short Plan Year.
1.56.5 Prior Service. Years of Service with Community Bank
of Santa Ynez Valley shall be recognized.
1.56.6 Service With Affiliates. Years of Service with any
Affiliated Employer shall be recognized.
2. TOP HEAVY AND ADMINISTRATION
2.1 Top Heavy Plan Requirements. For any Top Heavy Plan Year,
the Plan shall provide the special vesting requirements of Code Section
416(b) pursuant to Section 7.4 of the Plan and the special minimum
allocation requirements of Code Section 416(c) pursuant to Section 4.3 of
the Plan.
2.2 Determination Of Top Heavy Status.
2.2.1 Top Heavy. This Plan shall be a Top Heavy Plan for
any Plan Year in which, as of the Determination Date, (1) the Present Value
of Accrued Benefits of Key Employees and (2) the sum of the Aggregate
Accounts of Key Employees under this Plan and all plans of an Aggregation
Group, exceeds sixty percent (60%) of the Present Value of Accrued Benefits
and the Aggregate Accounts of all Key and Non-Key Employees under this Plan
and all plans of an Aggregation Group.
A. If any Participant is a Non-Key Employee for any Plan
Year, but such Participant was a Key Employee for any prior Plan Year, such
Participant's Present Value of Accrued Benefit and/or Aggregate Account
balance shall not be taken into account for purposes of determining whether
this Plan is a Top Heavy or Super Top Heavy Plan (or whether any
Aggregation Group which includes this Plan is a Top Heavy Group).
B. In addition, if a Participant or Former Participant
has not performed any services for any Employer maintaining the Plan at any
time during the five year period ending on the Determination Date, any
accrued benefit for such Participant or Former Participant shall not be
taken into account for the purposes of determining whether this Plan is a
Top Heavy or Super Top Heavy Plan.
2.2.2 Super Top Heavy. This Plan shall be a Super Top Heavy
Plan for any Plan Year in which, as of the Determination Date, (1) the
Present Value of Accrued Benefits of Key Employees and (2) the sum of the
Aggregate Accounts of Key Employees under this Plan and all plans of an
Aggregation Group, exceeds ninety percent (90%) of the Present Value of
Accrued Benefits and the Aggregate Accounts of all Key and Non-Key
Employees under this Plan and all plans of an Aggregation Group.
2.2.3 Aggregate Account. A Participant's Aggregate Account
as of the Determination Date is the sum of:
A. The Participant's Account balance as of the most
recent valuation occurring within a twelve (12) month period ending on the
Determination Date;
B. An adjustment for any contributions due as of the
Determination Date. Such adjustment shall be the amount of any
contributions actually made after the valuation date but due on or before
the Determination Date, except for the first Plan Year when such adjustment
shall also reflect the amount of any contributions made after the
Determination Date that are allocated as of a date in that first Plan Year.
C. Any Plan distributions made within the Plan Year
that includes the Determination Date or within the four (4) preceding Plan
Years. However, in the case of distributions made after the valuation date
and prior to the Determination Date, such distributions are not included as
distributions for top heavy purposes to the extent that such distributions
are already included in the Participant's Aggregate Account balance as of
the valuation date. Notwithstanding anything herein to the contrary, all
distributions, including distributions made prior to January 1, 1984, and
distributions under a terminated plan which if it had not been terminated
would have been required to be included in an Aggregation Group, will be
counted. Further, distributions from the Plan (including the cash value of
life insurance policies) of a Participant's account balance because of
death shall be treated as a distribution for the purposes of this Section.
D. Any Employee contributions, whether voluntary or
mandatory. However, amounts attributable to tax deductible qualified
voluntary employee contributions shall not be considered to be a part of
the Participant's Aggregate Account balance.
E. With respect to unrelated rollovers and plan- to-
plan transfers (ones which are both initiated by the Employee and made from
a plan maintained by one employer to a plan maintained by another
employer), if this Plan provides the rollovers or plan-to-plan transfers,
it shall always consider such rollovers or plan-to-plan transfers as a
distribution for the purposes of this Section. If this Plan is the plan
accepting such rollovers or plan-to-plan transfers, it shall not consider
such rollovers or plan-to-plan transfers as part of the Participant's
Aggregate Account balance.
F. With respect to related rollovers and plan-to- plan
transfers (ones either not initiated by the Employee or made to a plan
maintained by the same employer), if this Plan provides the rollover or
plan-to-plan transfer, it shall not be counted as a distribution for
purposes of this Section. If this Plan is the plan accepting such rollover
or plan-to-plan transfer, it shall consider such rollover or plan-to-plan
transfer as part of the Participant's Aggregate Account balance,
irrespective of the date on which such rollover or plan-to-plan transfer is
accepted.
G. For the purposes of determining whether two
employers are to be treated as the same employer in (5) and (6) above, all
employers aggregated under Code Section 414(b), (c), (m) and (o) are
treated as the same employer.
2.2.4 Aggregation Group. For purposes of this Plan, the
term "Aggregation Group" means either a Required Aggregation Group or a
Permissive Aggregation Group as hereinafter determined.
A. In determining a Required Aggregation Group
hereunder, each plan of the Employer in which a Key Employee is a
participant in the Plan Year containing the Determination Date or any of
the four preceding Plan Years, and each other plan of the Employer which
enables any plan in which a Key Employee participates to meet the
requirements of Code Sections 401(a)(4) or 410, will be required to be
aggregated. Such group shall be known as a Required Aggregation Group. In
the case of a Required Aggregation Group, each plan in the group will be
considered a Top Heavy Plan if the Required Aggregation Group is a Top
Heavy Group. No plan in the Required Aggregation Group will be considered
a Top Heavy Plan if the Required Aggregation Group is not a Top Heavy
Group.
B. The Employer may also include any other plan not
required to be included in the Required Aggregation Group, provided the
resulting group, taken as a whole, would continue to satisfy the provisions
of Code Sections 401(a)(4) and 410. Such group shall be known as a
Permissive Aggregation Group. In the case of a Permissive Aggregation
Group, only a plan that is part of the Required Aggregation Group will be
considered a Top Heavy Plan if the Permissive Aggregation Group is a Top
Heavy Group. No plan in the Permissive Aggregation Group will be
considered a Top Heavy Plan if the Permissive Aggregation Group is not a
Top Heavy Group.
C. Only those plans of the Employer in which the
Determination Dates fall within the same calendar year shall be aggregated
in order to determine whether such plans are Top Heavy Plans.
D. An Aggregation Group shall include any terminated
plan of the Employer if it was maintained within the last five (5) years
ending on the Determination Date.
E. "Determination Date" means (a) the last day of the
preceding Plan Year, or (b) in the case of the first Plan Year, the last
day of such Plan Year.
F. Present Value of Accrued Benefit: In the case of a
defined benefit plan, the Present Value of Accrued Benefit for a
Participant other than a Key Employee, shall be as determined using the
single accrual method used for all plans of the Employer and Affiliated
Employers, or if no such single method exists, using a method which results
in benefits accruing not more rapidly than the slowest accrual rate
permitted under Code Section 411(b)(1)(C). The determination of the Present
Value of Accrued Benefit shall be determined as of the most recent
valuation date that falls within or ends with the 12-month period ending on
the Determination Date except as provided in Code Section 416 and the
Regulations thereunder for the first and second plan years of a defined
benefit plan.
G. "Top Heavy Group" means an Aggregation Group in
which, as of the Determination Date, (1) the sum of (a) the Present Value
of Accrued Benefits of Key Employees under all defined benefit plans
included in the group, and (b) the Aggregate Accounts of Key Employees
under all defined contribution plans included in the group; exceeds (2)
sixty percent (60%) of a similar sum determined for all Participants.
2.3 Powers and Responsibilities of the Employer.
2.3.1 Appoint and Remove. The Employer shall be empowered
to appoint and remove the Trustee and the Administrator from time to time
as the Employer deems necessary for the proper administration of the Plan
to assure that the Plan is being operated for the exclusive benefit of the
Participants and their Beneficiaries in accordance with the terms of the
Plan, the Code, and the Act.
2.3.2 Funding Policy and Method. The Employer shall
establish a "funding policy and method", i.e., it shall determine whether
the Plan has a short run need for liquidity (e.g., to pay benefits) or
whether liquidity is a long run goal and investment growth (and stability
of same) is a more current need, or shall appoint a qualified person to do
so. The Employer or its delegate shall communicate such needs and goals to
the Trustee, who shall coordinate such Plan needs with its investment
policy. The communication of such a "funding policy and method" shall not,
however, constitute a directive to the Trustee as to investment of the
Trust Funds. Such "funding policy and method" shall be consistent with the
objectives of this Plan and with the requirements of Title I of the Act.
2.3.3 Review. The Employer shall periodically review the
performance of any Fiduciary or other person to whom duties have been
delegated or allocated by it under the provisions of this Plan or pursuant
to procedures established hereunder. This requirement may be satisfied by
formal periodic review by the Employer or by a qualified person
specifically designated by the Employer, through day-today conduct and
evaluation, or through other appropriate ways.
2.3.4 Notices. The Employer will furnish Plan
Fiduciaries and Participants with notices and information statements when
voting rights must be exercised pursuant to Section 8.4.
2.4 Administrator. The Employer shall appoint one or more
Administrators. Any person, including, but not limited to, the Employees
of the Employer, shall be eligible to serve as an Administrator. Any
person so appointed shall signify his acceptance by filing written
acceptance with the Employer. An Administrator may resign by delivering
his written resignation to the Employer or be removed by the Employer by
delivery of written notice of removal, to take effect at a date specified
therein, or upon delivery to the Administrator if no date is specified.
The Employer, upon the resignation or removal of an Administrator, shall
promptly designate in writing a successor to this position. If the Employer
does not appoint an Administrator, the Employer will function as the
Administrator.
2.5 Allocation and Delegation of Responsibilities. If more than
one person is appointed as Administrator, then the responsibilities of each
Administrator may be specified by the Employer and accepted in writing by
each Administrator. In the event that no such delegation is made by the
Employer, the Administrators may allocate the responsibilities among
themselves, in which event the Administrators shall notify the Employer and
the Trustee in writing of such action and specify the responsibilities of
each Administrator. The Trustee thereafter shall accept and rely upon any
documents executed by the appropriate Administrator until such time as the
Employer or the Administrators file with the Trustee a written revocation
of such designation.
2.6 Powers and Duties of the Administrator. The primary
responsibility of the Administrator is to administer the Plan for the
exclusive benefit of the Participants and their Beneficiaries, subject to
the specific terms of the Plan.
2.6.1 General. The Administrator shall administer the Plan
in accordance with its terms and shall have the power and discretion to
construe the terms of the Plan and to determine all questions arising in
connection with the administration, interpretation, and application of the
Plan. Any such determination by the Administrator shall be conclusive and
binding upon all persons. The Administrator may establish procedures,
correct any defect, supply any information, or reconcile any inconsistency
in such manner and to such extent as shall be deemed necessary or advisable
to carry out the purpose of the Plan; provided, however, that any
procedure, discretionary act, interpretation or construction shall be done
in a nondiscriminatory manner based upon uniform principles consistently
applied and shall be consistent with the intent that the Plan shall
continue to be deemed a qualified plan under the terms of Code Section
401(a), and shall comply with the terms of the Act and all regulations
issued pursuant thereto. The Administrator shall have all powers necessary
or appropriate to accomplish his duties under this Plan.
2.6.2 Duties. The Administrator shall be charged with the
duties of the general administration of the Plan, including, but not
limited to, the following:
A. The discretion to determine all questions relating
to the eligibility of Employees to participate or remain a Participant
hereunder and to receive benefits under the Plan;
B. To compute, certify, and direct the Trustee with
respect to the amount and the kind of benefits to which any Participant
shall be entitled hereunder;
C. To authorize and direct the Trustee with respect to
all nondiscretionary or otherwise directed disbursements from the Trust;
D. To maintain all necessary records for the
administration of the Plan;
E. To interpret the provisions of the Plan and to make
and publish such rules for regulation of the Plan as are consistent with
the terms hereof;
F. To determine the size and type of any Contract to be
purchased from any insurer, and to designate the insurer from which such
Contract shall be purchased;
G. To compute and certify to the Employer and to the
Trustee from time to time the sums of money necessary or desirable to be
contributed to the Plan;
H. To consult with the Employer and the Trustee
regarding the short and long-term liquidity needs of the Plan in order that
the Trustee can exercise any investment discretion in a manner designed to
accomplish specific objectives;
I. To establish and communicate to Participants
a procedure for allowing each Participant to direct the
Trustee as to the distribution of his Company Stock
Account pursuant to Section 4.6;
J. To establish and communicate to Participants a
procedure and method to insure that each Participant will vote Company
Stock allocated to such Participant's Company Stock Account pursuant to
Section 8.4;
K. To enter into a written agreement with regard to the
payment of federal estate tax pursuant to Code Section 2210(b); and
L. To assist any Participant regarding his rights,
benefits, or elections available under the Plan.
2.7 Records and Reports. The Administrator shall keep a record
of all actions taken and shall keep all other books of account, records,
and other data that may be necessary for proper administration of the Plan
and shall be responsible for supplying all information and reports to the
Internal Revenue Service, Department of Labor, Participants, Beneficiaries
and others as required by law.
2.8 Appointment of Advisers. The Administrator, or the Trustee
with the consent of the Administrator, may appoint counsel, specialists,
advisers, and other persons as the Administrator or the Trustee deems
necessary or desirable in connection with the administration of this Plan.
2.9 Information From Employer. To enable the Administrator to
perform its functions, the Employer shall supply full and timely
information to the Administrator on all matters relating to the
Compensation of all Participants, their Hours of Service, their Years of
Service, their retirement, death, disability, or termination of employment,
and such other pertinent facts as the Administrator may require; and the
Administrator shall advise the Trustee of such of the foregoing facts as
may be pertinent to the Trustee's duties under the Plan. The Administrator
may rely upon such information as is supplied by the Employer and shall
have no duty or responsibility to verify such information.
2.10 Payment of Expenses. All expenses of administration may be
paid out of the Trust Fund unless paid by the Employer. Such expenses shall
include any expenses incident to the functioning of the Administrator,
including, but not limited to, fees of accountants, counsel, and other
specialists and their agents, and other costs of administering the Plan.
Until paid, the expenses shall constitute a liability of the Trust Fund.
However, the Employer may reimburse the Trust Fund for any administration
expense incurred.
2.11 Majority Actions. Except where there has been an allocation
and delegation of administrative authority pursuant to Section 2.5, if
there shall be more than one Administrator, they shall act by a majority of
their number, but may authorize one or more of them to sign all papers on
their behalf.
2.12 Claims Procedure. Claims for benefits under the Plan may be
filed with the 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 is filed. In the event the claim is
denied, the reasons for the denial shall be specifically set forth in the
notice in language calculated to be understood by the claimant, pertinent
provisions of the Plan shall be cited, and, where appropriate, an
explanation as to how the claimant can perfect the claim will be provided.
In addition, the claimant shall be furnished with an explanation of the
Plan's claims review procedure.
2.13 Claims Review Procedure. Any Employee, former Employee, or
Beneficiary of either, who has been denied a benefit by a decision of the
Administrator pursuant to Section 2.12 shall be entitled to request the
Administrator to give further consideration to his claim by filing with the
Administrator (on a form which may be obtained from the Administrator) a
request for a hearing. Such request, together with a written statement of
the reasons why the claimant believes his claim should be allowed, shall be
filed with the Administrator no later than 60 days after receipt of the
written notification provided for in Section 2.12.
2.13.1 Hearing. The Administrator shall then conduct a
hearing within the next 60 days, at which the claimant may be represented
by an attorney or any other representative of his choosing and at which the
claimant shall have an opportunity to submit written and oral evidence and
arguments in support of his claim. At the hearing (or prior thereto upon
five (5) business days' written notice to the Administrator) the claimant
or his representative shall have an opportunity to review all documents in
the possession of the Administrator which are pertinent to the claim at
issue and its disallowance. Either the claimant or the Administrator may
cause a court reporter to attend the hearing and record the proceedings.
In such event, a complete written transcript of the proceedings shall be
furnished to both parties by the court reporter. The full expense of any
such court reporter and such transcripts shall be borne by the party
causing the court reporter to attend the hearing.
2.13.2 Final Decision. A final decision as to the allowance
of the claim shall be made by the Administrator within 60 days of receipt
of the appeal (unless there has been an extension of 60 days due to special
circumstances, provided the delay and the special circumstances occasioning
it are communicated to the claimant within the 60 day period). Such
communication shall be written in a manner calculated to be understood by
the claimant and shall include specific reasons for the decision and
specific references to the pertinent Plan provisions on which the decision
is based.
3. ELIGIBILITY
3.1 Conditions of Eligibility. Any Eligible Employee who has
completed one (1) Year of Service and has attained age 18 shall be eligible
to participate hereunder as of the date he has satisfied such requirements.
However, any Employee who was a Participant in the Plan prior to the
effective date of this amendment and restatement shall continue to
participate in the Plan. The Employer shall give each prospective Eligible
Employee written notice of his eligibility to participate in the Plan prior
to the close of the Plan Year in which he first becomes an Eligible
Employee.
3.2 Application for Participation. In order to become a
Participant hereunder, each Eligible Employee shall make application to the
Employer for participation in the Plan and agree to the terms hereof. Upon
the acceptance' of any benefits under this Plan, such Employee shall
automatically be deemed to have made application and shall be bound by the
terms and conditions of the Plan and all amendments hereto.
3.3 Effective Date of Participation. An Eligible Employee shall
become a Participant effective as of the first day of the month coinciding
with or next following the date on which such Employee met the eligibility
requirements of Section 3.1, provided said Employee was still employed as
of such date (or if not employed on such date, as of the date of rehire if
a 1-Year Break in Service has not occurred).
3.4 Determination of Eligibility. The Administrator shall
determine the eligibility of each Employee for participation in the Plan
based upon information furnished by the Employer. Such determination shall
be conclusive and binding upon all persons, as long as the same is made
pursuant to the Plan and the Act. Such determination shall be subject to
review per Section 2.13.
3.5 Termination of Eligibility.
3.5.1 Vesting and Trust Fund. In the event a Participant
shall go from a classification of an Eligible Employee to an ineligible
Employee, such Former Participant shall continue to vest in his interest in
the Plan for each Year of Service completed while a noneligible Employee,
until such time as his Participant's Account shall be forfeited or
distributed pursuant to the terms of the Plan. Additionally, his interest
in the Plan shall continue to share in the earnings of the Trust Fund.
3.5.2 Break in Service. In the event a Participant is no
longer a member of an eligible class of Employees and becomes ineligible to
participate but has not incurred a 1-Year Break in Service, such Employee
will participate immediately upon returning to an eligible class of
Employees. If such Participant incurs a 1- Year Break in Service,
eligibility will be determined under the break in service rules of the
Plan.
3.6 Omission Of Eligible Employee. If, in any Plan Year, any
Employee who should be included as a Participant in the Plan is erroneously
omitted and discovery of such omission is not made until after a
contribution by his Employer for the year has been made, the Employer shall
make a subsequent contribution with respect to the omitted Employee in the
amount which the said Employer would have contributed with respect to him
had he not been omitted. Such contribution shall be made regardless of
whether or not it is deductible in whole or in part in any taxable year
under applicable provisions of the Code.
3.7 Inclusion of Ineligible Employee. If, in any Plan Year, any
person who should not have been included as a Participant in the Plan is
erroneously included and discovery of such incorrect inclusion is not made
until after a contribution for the year has been made, the Employer shall
not be entitled to recover the contribution made with respect to the
ineligible person regardless of whether or not a deduction is allowable
with respect to such contribution. In such event, the amount contributed
with respect to the ineligible person shall constitute a Forfeiture for the
Plan Year in which the discovery is made.
3.8 Election Not to Participate. An Employee may, subject to the
approval of the Employer, elect voluntarily not to participate in the Plan.
The election not to participate must be communicated to the Employer, in
writing, at least thirty (30) days before the beginning of a Plan Year.
4. CONTRIBUTION AND ALLOCATION
4.1 Formula For Determining Employer's Contribution.
4.1.1 Discretionary Contributions. For each Plan Year, the
Employer shall contribute to the Plan such amount as shall be determined by
the Employer.
4.1.2 Limitation Per Deduction. Notwithstanding the
foregoing, however, the Employer's contributions for any Plan Year shall
not exceed the maximum amount allowable as a deduction to the Employer
under the provisions of Code Section 404; provided, however, to the extent
necessary to provide the top heavy minimum allocations, the Employer shall
make a contribution even if it exceeds the amount which is deductible under
Code Section 404.
4.1.3 Form of Contribution. All contributions by the
Employer shall be made in cash, Company Stock or in such property as is
determined by the Employer and acceptable to the Trustee. Company Stock
and other property will be valued at their then fair market value.
4.2 Time of Payment of Employer's Contribution. The Employer
shall pay to the Trustee its contribution to the Plan for each Plan Year
within the time prescribed by law, including extensions of time, for the
filing of the Employer's federal income tax return for the Fiscal Year.
4.3 Allocation of Contribution, Forfeitures and Earnings.
4.3.1 Participant Accounts. The Administrator shall
establish and maintain an account in the name of each Participant to which
the Administrator shall credit as of each Anniversary Date all amounts
allocated to each such Participant as set forth herein.
4.3.2 Allocations of Contributions. Only Participants who
have completed a Year of Service during the Plan Year and are actively
employed on the last day of the Plan Year shall be eligible to share in the
discretionary contribution for the year. The Employer shall provide the
Administrator with all information required by the Administrator to make a
proper allocation of the Employer's contributions for each Plan Year.
Within a reasonable period of time after the date of receipt by the
Administrator of such information, the Administrator shall allocate such
contribution to each Participant's Account in the same proportion that each
such Participant's Compensation for the year bears to the total
Compensation of all Participants for such year.
4.3.3 Company Stock Account. The Company Stock Account of
each Participant shall be credited as of each Anniversary Date with
Forfeitures of Company Stock and his allocable share of Company Stock
(including fractional shares) purchased and paid for by the Plan. Stock
dividends on Company Stock held in his Company Stock Account shall be
credited to his Company Stock Account when paid. Subject to Section 7.5.4,
below, cash dividends on Company Stock held in his Company Stock Account
shall, in the discretion of the Administrator, either be credited to his
Other Investments Account when paid or be used to repay an Exempt Loan;
provided, when cash dividends are used to repay an Exempt Loan, Company
Stock shall be released from the Unallocated Company Stock Suspense Account
and allocated to the Participant's Company Stock Account pursuant to
Section 4.3.6 and, provided further, that Company Stock allocated to the
Participant's Company Stock Account shall have a fair market value not less
than the amount of cash dividends which would have been allocated to such
Participant's Other Investments Account for the year. Company Stock
acquired by the Plan with the proceeds of an Exempt Loan shall only be
allocated to each Participant's Company Stock Account upon release from the
Unallocated Company Stock Suspense Account as provided in Section 4.3.6
herein. Company Stock acquired with the proceeds of an Exempt Loan shall
be an asset of the Trust Fund and maintained in the Unallocated Company
Stock Suspense Account.
4.3.4 Trust Fund Earnings and Losses. As of each
Anniversary Date or other valuation date, before the current valuation
period allocation of Employer contributions and Forfeitures, any earnings
or losses (net appreciation or net depreciation) of the Trust Fund shall be
allocated in the same proportion that each Participant's and Former
Participant's nonsegregated accounts (other than each Participant's Company
Stock Account) bear to the total of all Participants' and Former
Participants' nonsegregated accounts (other than Participants' Company
Stock Accounts) as of such date. Earnings or losses do not include the
interest paid under any installment contract for the purchase of Company
Stock by the Trust Fund or on any loan used by the Trust Fund to purchase
Company Stock, nor does it include income received by the Trust Fund with
respect to Company Stock acquired with the proceeds of an Exempt Loan; all
income received by the Trust Fund from Company Stock acquired with the
proceeds of an Exempt Loan may, at the discretion of the Administrator, be
used to repay such loan.
4.3.5 Insurance. Participants' accounts shall be debited
for any insurance or annuity premiums paid, if any, and credited with any
dividends received on insurance contracts.
4.3.6 Suspense Account. All Company Stock acquired by the
Plan with the proceeds of an Exempt Loan must be added to and maintained in
the Unallocated Company Stock Suspense Account. Such Company Stock shall be
released and withdrawn from that account as if all Company Stock in that
account were encumbered. For each Plan Year during the duration of the
loan, the number of shares of Company Stock released shall equal the number
of encumbered shares held immediately before release for the current Plan
Year multiplied by a fraction, the numerator of which is the amount of
principal and interest paid for the Plan Year and the denominator of which
is the sum of the numerator plus the principal and interest to be paid for
all future Plan Years. As of each Anniversary Date, the Plan must
consistently allocate to each Participant's Account, in the same manner as
Employer discretionary contributions pursuant to Section 4.1.1 are
allocated, non-monetary units (shares and fractional shares of Company
Stock) representing each Participant's interest in Company Stock withdrawn
from the Unallocated Company Stock Suspense Account. However, Company
Stock released from the Unallocated Company Stock Suspense Account with
cash dividends pursuant to Section 4.3.3 shall be allocated to each
Participant's Company Stock Account in the same proportion that each such
Participant's number of shares of Company Stock sharing in such cash
dividends bears to the total number of shares of all Participants' Company
Stock sharing in such cash dividends. Income earned with respect to
Company Stock in the Unallocated Company Stock Suspense Account shall be
used, at the discretion of the Administrator, to repay the Exempt Loan used
to purchase such Company Stock. Company Stock released from the
Unallocated Company Stock Suspense Account with such income, and any income
which is not so used, shall be allocated as of each Anniversary Date or
other valuation date in the same proportion that each Participant's and
Former Participant's nonsegregated accounts after the allocation of any
earnings or losses pursuant to Section 4.3.4 bear to the total of all
Participants, and Former Participants' nonsegregated accounts after the
allocation of any earnings or losses pursuant to Section 4.3.4.
4.3.7 Allocations of Forfeitures. As of each Anniversary
Date any amounts which became Forfeitures since the last Anniversary Date
shall first be made available to reinstate previously forfeited account
balances of Former Participants, if any, in accordance with Section
7.4.7.B. The remaining Forfeitures, if any, shall be allocated among the
Participants' Accounts of Participants otherwise eligible to share in the
allocation of discretionary contributions in the same proportion that each
such Participant's Compensation for the year bears to the total
Compensation of all such Participants for the year; provided, however, that
in the event the allocation of Forfeitures provided herein shall cause the
"annual addition" (as defined in Section 4.4) to any Participant's Account
to exceed the amount allowable by the Code, the excess shall be reallocated
in accordance with Section 4.5.
4.3.8 Top Heavy Allocation. For any Top Heavy Plan Year,
Employees not otherwise eligible to share in the allocation of
contributions and Forfeitures as provided above, shall receive the minimum
allocation provided for in Section 4.3.10, below, if eligible pursuant to
the provisions of that Section.
4.3.9 Retirees and Disabled Participants. Notwithstanding
the foregoing, Participants who are not actively employed on the last day
of the Plan Year due to Retirement (Early, Normal or Late), Total and
Permanent Disability or death shall share in the allocation of
contributions and Forfeitures for that Plan Year.
4.3.10 Top Heavy Minimum. Notwithstanding the foregoing,
for any Top Heavy Plan Year, the sum of the Employer's contributions and
Forfeitures allocated to the Participant's Account of each Employee shall
be equal to at least three percent (3%) of such Employee's "415
Compensation" (reduced by contributions and forfeitures, if any, allocated
to each Employee in any defined contribution plan included with this plan
in a Required Aggregation Group). However, if (1) the sum of the
Employer's contributions and Forfeitures allocated to the Participant's
Account of each Key Employee for such Top Heavy Plan Year is less than
three percent (3%) of each Key Employee's "415 Compensation" and (2) this
Plan is not required to be included in an Aggregation Group to enable a
defined benefit plan to meet the requirements of Code Section 401(a)(4) or
410, the sum of the Employer's contributions and Forfeitures allocated to
the Participant's Account of each Employee shall be equal to the largest
percentage allocated to the Participant's Account of any Key Employee;
provided, no such minimum allocation shall be required in this Plan for any
Employee who participates in another defined contribution plan subject to
Code Section 412 providing such benefits included with this Plan in a
Required Aggregation Group.
A. For purposes of the minimum allocations set forth
above, the percentage allocated to the Participant's Account of any Key
Employee shall be equal to the ratio of the sum of the Employer's
contributions and Forfeitures allocated on behalf of such Key Employee
divided by the "415 Compensation" for such Key Employee.
B. For any Top Heavy Plan Year, the minimum allocations
set forth above shall be allocated to the Participant's Account of all
Employees who are Participants and who are employed by the Employer on the
last day of the Plan Year, including Employees who have (1) failed to
complete a Year of Service; and (2) declined to make mandatory
contributions (if required) to the Plan.
C. Subject to Section 1.10.3, above, for the purposes of
this Section, "415 Compensation" shall be limited to $200,000. Such amount
shall be adjusted at the same time and in the same manner as permitted
under Code Section 415(d), except that the dollar increase in effect on
January 1 of any calendar year shall be effective for the Plan Year
beginning with or within such calendar year and the first adjustment to the
$200,000 limitation shall be effective on January 1, 1990. For any short
Plan Year the "415 Compensation" limit shall be an amount equal to the "415
Compensation" limit for the calendar year in which the Plan Year begins
multiplied by the ratio obtained by dividing the number of full months in
the short Plan Year by twelve (12). However, for Plan Years beginning
prior to January 1, 1989, the $200,000 limit shall apply only for Top Heavy
Plan Years and shall not be adjusted.
4.3.11 Reeemployed Former Participant. If a Former
Participant is reemployed after five (5) consecutive 1-Year Breaks in
Service, then separate accounts shall be maintained as follows:
A. one account for nonforfeitable benefits attributable
to pre-break service; and
B. one account representing his status in the Plan
attributable to post-break service.
4.3.12 Fail-Safe Allocations. Notwithstanding anything to
the contrary, for Plan Years beginning after December 31, 1989, if this is
a Plan that would otherwise fail to meet the requirements of Code Sections
401(a)(26), 410(b)(1) or 410(b)(2)(A)(i) and the Regulations thereunder
because Employer contributions would not be allocated to a sufficient
number or percentage of Participants for a Plan Year, then the following
rules shall apply:
A. The group of Participants eligible to share in the
Employer's contribution and Forfeitures for the Plan Year shall be expanded
to include the minimum number of Participants who would not otherwise be
eligible as are necessary to satisfy the applicable test specified above.
The specific Participants who shall become eligible under the terms of this
Section shall be those who are actively employed on the last day of the
Plan Year and, when compared to similarly situated Participants, have
completed the greatest number of Hours of Service in the Plan Year.
B. If after application of Section 4.3.15A. above, the
applicable test is still not satisfied, then the group of Participants
eligible to share in the Employer's contribution and Forfeitures for the
Plan Year shall be further expanded to include the minimum number of
Participants who are not actively employed on the last day of the Plan Year
as are necessary to satisfy the applicable test. The specific Participants
who shall become eligible to share shall be those Participants, when
compared to similarly situated Participants, who have completed the
greatest number of Hours of Service in the Plan Year before terminating
employment.
C. Nothing in this Section shall permit the reduction
of a Participant's accrued benefit. Therefore any amounts that have
previously been allocated to Participants may not be reallocated to satisfy
these requirements. In such event, the Employer shall make an additional
contribution equal to the amount such affected Participants would have
received had they been included in the allocations, even if it exceeds the
amount which would be deductible under Code Section 404. Any adjustment to
the allocations pursuant to this Section shall be considered a retroactive
amendment adopted by the last day of the Plan Year.
D. Notwithstanding the foregoing, for any Top Heavy
Plan Year beginning after December 31, 1992, if the plan would fail to
satisfy Code Section 410(b) if the coverage tests were applied by treating
those Participants whose only allocation would otherwise be provided under
the top heavy formula as if they were not currently benefiting under the
Plan, then, for purposes of this Section 4.3.15, such Participants shall be
treated as not benefiting and shall therefore be eligible to be included in
the expanded class of Participants who will share in the allocation
provided under the Plan's non top heavy formula.
4.3.13 HCP in CODAs. For the purposes of this Section, if a
Highly Compensated Participant is a Participant under two or more cash or
deferred arrangements of the Employer or an Affiliated Employer, then all
such cash or deferred arrangements shall be treated as one cash or deferred
arrangement for the purpose of determining the actual deferral ratio with
respect to such Highly Compensated Participant. However, for Plan Years
beginning after December 31, 1988, no such aggregation of cash or deferred
arrangements is required.
4.4 Maximum Annual Additions.
4.4.1 Limitation. Notwithstanding the foregoing, the
maximum "annual additions" credited to a Participant's accounts for any
"limitation year" shall equal the lesser of: (a) $30,000 (or, if greater,
one-fourth of the dollar limitation in effect under Code Section
415(b)(1)(A)) or (b) twenty-five percent (25%) of the Participant's "415
Compensation" for such "limitation year". For any short "limitation year",
the dollar limitation in clause (a), above, shall be reduced by a fraction,
the numerator of which is the number of full months in the short
"limitation year" and the denominator of which is twelve (12).
A. Any amount which would be allocable to a
Participant's accounts under this Plan in a Plan Year but for the
application of the foregoing limitation of Code Section 415 shall be
reallocated to other Participants in that Plan Year in accordance with
Section 4.3, above.
B. The Employer maintains an Incentive & Investment and
Salary Savings Plan (the "I&I and Salary Savings Plan"), in which many
Participants in this Plan also participate. In applying the limitations of
Code Section 415 to each Participant, the Participant (1) first shall be
credited under the I&I and Salary Savings Plan with the maximum amount that
the Participant is entitled to receive under that Plan, and (2) thereafter
shall be credited under this Plan with the maximum additional amount which
can be allocated to the Participant hereunder in accordance with Section
4.3, above, and the limitations of Code Section 415.
4.4.2 Pre-1989 Limitation Years. For "limitation years"
beginning prior to July 13, 1989, the dollar amount provided for in Section
4.4.1(a), above, shall be increased by the lesser of the dollar amount
determined under Section 4.4.1(a), above, or the amount of Company Stock
contributed, or purchased with cash contributed. The dollar amount shall
be increased provided no more than one-third of the Employer's
contributions for the year are allocated to Highly Compensated
Participants. In applying this limitation, the family group of a Highly
Compensated Participant who is subject to the Family Member aggregation
rules of Code Section 414(q)(6) shall be determined pursuant to
Regulations.
4.4.3 Annual Additions Defined. For purposes of applying
the limitations of Code Section 415, "annual additions" means the sum
credited to a Participant's accounts for any "limitation year" of (a)
Employer contributions, (b) Employee contributions for "limitation years"
beginning after December 31, 1986, (c) forfeitures, (d) amounts allocated,
after March 31, 1984, to an individual medical account, as defined in Code
Section 415(1)(2) which is part of a pension or annuity plan maintained by
the Employer, and (e) amounts derived from contributions paid or accrued
after December 31, 1985, in taxable years ending after such date, which are
attributable to post-retirement medical benefits allocated to the separate
account of a key employee (as defined in Code Section 419A(d)(3)) under a
welfare benefit plan (as defined in Code Section 419(e)) maintained by the
Employer; provided, however, the "415 Compensation" percentage limitation
referred to in Section 4.4.1(b), above, shall not apply to: (1) any
contribution for medical benefits (within the meaning of Code Section
419A(f)(2)) after separation from service which is otherwise treated as an
"annual addition", or (2) any amount otherwise treated as an "annual
addition" under Code Section 415(1)(1).
4.4.4 Exclusions From Annual Additions. For purposes of
applying the limitations of Code Section 415:
A. The following are not "annual additions": (a) the
transfer of funds from one qualified plan to another and (b) provided no
more than one-third of the Employer contributions for the year are
allocated to Highly Compensated Participants, Forfeitures of Company Stock
purchased with the proceeds of an Exempt Loan and Employer contributions
applied to the payment of interest on an Exempt Loan.
B. The following are not Employee contributions for the
purposes of Section 4.4.3(b): (1) rollover contributions (as defined in
Code Sections 402(a)(5), 403(a)(4), 403(b)(8) and 408(d)(3)); (2)
repayments of loans made to a Participant from the Plan; (3) repayments of
distributions received by an Employee pursuant to Code Section 411(a)(7)(B)
(cash-outs); (4) repayments of distributions received by an Employee
pursuant to Code Section 411(a)(3)(D) (mandatory contributions); and (5)
Employee contributions to a simplified employee pension excludable from
gross income under Code Section 408(k)(6).
4.4.5 Limitation Year. For purposes of applying the
limitations of Code Section 415, the "limitation year" shall be the Plan
Year.
4.4.6 Dollar Limitation Adjustment. The dollar limitation
under Code Section 415(b)(1)(A) stated in Section 4.4.1(a), above, shall be
adjusted annually as provided in Code Section 415(d) pursuant to the
Regulations. The adjusted limitation is effective as of January 1st of
each calendar year and is applicable to "limitation years" ending with or
within that calendar year.
4.4.7 Defined Benefit Plans. For the purpose of this
Section, all qualified defined benefit plans (whether terminated or not)
ever maintained by the Employer shall be treated as one defined benefit
plan, and all qualified defined contribution plans (whether terminated or
not) ever maintained by the Employer shall be treated as one defined
contribution plan.
4.4.8 Controlled Groups. For the purpose of this Section,
if the Employer is a member of a controlled group of corporations, trades
or businesses under common control (as defined by Code Section 1563(a) or
Code Section 414(b) and (c) as modified by Code Section 415(h)), is a
member of an affiliated service group (as defined by Code Section 414(m)),
or is a member of a group of entities required to be aggregated pursuant to
Regulations under Code Section 414(o), all Employees of such Employers
shall be considered to be employed by a single Employer.
4.4.9 Collectively Bargained Plans. For the purpose of this
Section, if this Plan is a Code Section 413(c) plan, all Employers of a
Participant who maintain this Plan will be considered to be a single
Employer.
4.4.10 Combined Plan Limits: Annual Additions.
A. If a Participant participates in more than one
defined contribution plan maintained by the Employer which have different
Anniversary Dates, the maximum "annual additions" under this Plan shall
equal the maximum "annual additions" for the "limitation year" minus any
"annual additions" previously credited to such Participant's accounts
during the "limitation year".
B. If a Participant participates in both a defined
contribution plan subject to Code Section 412 and a defined contribution
plan not subject to Code Section 412 maintained by the Employer which have
the same Anniversary Date, "annual additions" will be credited to the
Participant's accounts under the defined contribution plan subject to Code
Section 412 prior to crediting "annual additions" to the Participant's
accounts under the defined contribution plan not subject to Code Section
412.
C. If a Participant participates in more than one
defined contribution plan not subject to Code Section 412 maintained by the
Employer which have the same Anniversary Date, the maximum "annual
additions" under this Plan shall equal the product of (A) the maximum
"annual additions" for the "limitation year" minus any "annual additions"
previously credited under Sections 4.4.10A. or 4.4.10B. above, multiplied
by (B) a fraction (i) the numerator of which is the "annual additions"
which would be credited to such Participant's accounts under this Plan
without regard to the limitations of Code Section 415 and (ii) the
denominator of which is such "annual additions" for all plans described in
this subsection.
4.4.11 Combined Plan Fraction. If an Employee is (or has
been) a Participant in one or more defined benefit plans and one or more
defined contribution plans maintained by the Employer, the sum of the
defined benefit plan fraction and the defined contribution plan fraction
for any "limitation year" may not exceed 1.0.
4.4.12 Defined Benefit Plan Fraction. The defined benefit
plan fraction for any "limitation year" is a fraction, the numerator of
which is the sum of the Participant's projected annual benefits under all
the defined benefit plans (whether or not terminated) maintained by the
Employer, and the denominator of which is tho lesser of 125 percent of the
dollar limitation determined for the "limitation year" under Code Sections
415(b) and (d) or 140 percent of the highest average compensation,
including any adjustments under Code Section 415(b). Notwithstanding the
foregoing, if the Participant was a Participant as of the first day of the
first "limitation year" beginning after December 31, 1986, in one or more
defined benefit plans maintained by the Employer which were in existence on
May 6, 1986, the denominator of this fraction will not be less than 125
percent of the sum of the annual benefits under such plans which the
Participant had accrued as of the close of the last "limitation year"
beginning before January 1, 1987, disregarding any changes in the terms and
conditions of the plan after May 5, 1986. The preceding sentence applies
only if the defined benefit plans individually and in the aggregate
satisfied the requirements of Code Section 415 for all "limitation years"
beginning before January 1, 1987.
4.4.13 Defined Contribution Plan Fraction. The defined
contribution plan fraction for any "limitation year" is a fraction, the
numerator of which is the sum of the annual additions to the Participant's
Account under all the defined contribution plans (whether or not
terminated) maintained by the Employer for the current and all prior
"limitation years" (including the annual additions attributable to the
Participant's nondeductible Employee contributions to all defined benefit
plans, whether or not terminated, maintained by the Employer, and the
annual additions attributable to all welfare benefit funds, as defined in
Code Section 419(e), and individual medical accounts, as defined in Code
Section 415(1)(2), maintained by the Employer), and the denominator of
which is the sum of the maximum aggregate amounts for the current and all
prior "limitation years" of service with the Employer (regardless of
whether a defined contribution plan was maintained by the Employer).
A. The maximum aggregate amount in any "limitation year"
is the lesser of 125 percent of the dollar limitation determined under Code
Sections 415(b) and (d) in effect under Code Section 415(c)(1)(A) or 35
percent of the Participant's Compensation for such year.
B. If the Employee was a Participant as of the end of
the first day of the first "limitation year" beginning after December 31,
1986, in one or more defined contribution plans maintained by the Employer
which were in existence on May 6, 1986, the numerator of this fraction will
be adjusted if the sum of this fraction and the defined benefit fraction
would otherwise exceed 1.0 under the terms of this Plan. Under the
adjustment, an amount equal to the product of (1) the excess of the sum of
the fractions over 1.0 times (2) the denominator of this fraction, will be
permanently subtracted from the numerator of this fraction. The adjustment
is calculated using the fractions as they would be computed as of the end
of the last "limitation year" beginning before January 1, 1987, and
disregarding any changes in the terms and conditions of the Plan made after
May 5, 1986, but using the Code Section 415 limitation applicable to the
first "limitation year" beginning on or after January 1, 1987. The annual
addition for any "limitation year" beginning before January 1, 1987 shall
not be recomputed to treat all Employee contributions as annual additions.
4.4.14 Top Heavy Plan Year. Notwithstanding the foregoing,
for any "limitation year" in which the Plan is a Top Heavy Plan, 100
percent shall be substituted for 125 percent in Sections 4.4.12 and 4.4.13
unless the extra minimum allocation is being provided pursuant to Section
4.3. However, for any "limitation year" in which the Plan is a Super Top
Heavy Plan, 100 percent shall be substituted for 125 percent in any event.
4.4.15 Code and Regulations. Notwithstanding anything
contained in this Section to the contrary, the limitations, adjustments and
other requirements prescribed in this Section shall at all times comply
with the provisions of Code Section 415 and the Regulations thereunder, the
terms of which are specifically incorporated herein by reference.
4.4.16 ESOP Allocation Limitation. Notwithstanding any
other provision of this plan to the contrary, in no event shall more than
one-third (1/3) of the Employer's contribution and forfeitures be allocated
for any Plan Year to the Participant's Accounts of the Participants who are
Highly Compensated Employees. In the event the limitations set forth in
this Section 4.4.16 are exceeded in any Plan Year, then the Participant's
accounts of those Highly Compensated Employees shall be reduced equally
until the limitations set forth in this Section 4.4.16 is met. The amount
by which the accounts of those Highly Compensated Employees are reduced
pursuant to this Section 4.4.16 shall be added to the Employer's
contribution and allocated amongst the Participant's Accounts of the
remaining Participants in accordance with their respective Compensation.
4.5 Adjustment For Excessive Annual Additions.
4.5.1 Definitions. For purposes of this Section 4.5, the
term:
A. "Excess amount" shall mean, for each Participant in
each limitation year, the excess, if any, of (1) the "annual additions"
which would be credited to his account under the terms of the Plan without
regard to the limitations of Code Section 415, over (2) the maximum "annual
additions" permitted by Code Section 415, as determined pursuant to Section
4.4, above.
B. "Section 415 suspense account" shall mean an
unallocated account equal to the sum of "excess amounts" for all
Participants in the Plan during the limitation year. The amount allocated
to the "Section 415 suspense account" shall not share in any earnings or
losses of the Trust Fund.
4.5.2 Treatment of Excess Amounts. If the allocation of
Forfeitures, a reasonable error in estimating a Participant's Compensation,
a reasonable error in determining the amount of elective deferrals (within
the meaning of Code Section 402(g)(3)) that may be made with respect to any
Participant under the limits of Section 4.4, above, or other facts and
circumstances to which Regulation Section 1.415-6(b)(6) shall be
applicable, the "annual additions" under this Plan would cause the maximum
"annual additions" to be exceeded for any Participant, then the
Administrator shall:
A. Allocate and reallocate such excess amount to other
Participants in accordance with Section 4.3, above, but subject to the
limits on annual additions under Section 4.4, above;
B. Hold in a "Section 415 suspense account" any "excess
amount" remaining after application of Paragraph A, above; and
C. Allocate and reallocate the Section 415 suspense
account in the next limitation year (and, if the amount in that Section 415
suspense account is not fully allocated in the next limitation year, in
succeeding limitation years) to all Participants in the Plan before any
Employer or Employee contributions which would constitute annual additions
are made to the Plan for such limitation year, and reduce Employer
contributions to the Plan for such limitation year by the amount of the
Section 415 suspense account allocated and reallocated during such
limitation year.
4.5.3 Distribution of Excess Amounts. The Plan may not
distribute excess amounts, other than voluntary Employee contributions, to
Participants or Former Participants.
4.6 Directed Investment of Accounts. Except as otherwise
provided in this Section 4.6, no Participant shall be entitled to direct
the investment of amounts allocated to the Participant's accounts under
this Plan.
4.6.1 Diversification by Qualified Participant. For Plan
Years beginning after December 31, 1986, each "Qualified Participant" may
elect, within ninety (90) days after the close of each Plan Year during the
Qualified Participant's "Qualified Election Period," to direct the Trustee,
in writing, as to the investment of the number of shares of Company Stock
determined pursuant to this Section 4.6.1.
A. For purposes of this Section 4.6, the term (a)
"Qualified Participant" means any Participant or Former Participant who has
completed ten (10) Plan Years of Service as a Participant and has attained
age 55, and (b) "Qualified Election Period" means the six-Plan-Year-period
beginning with the later of (1) the first Plan Year in which the
Participant first became a "Qualified Participant," or (2) the first Plan
Year beginning after December 31, 1986.
B. With respect to each Plan Year during the Qualified
Election Period, the Qualified Participant may elect to direct the
investment of twenty-five percent (25%) of the total number of shares of
Company Stock acquired by or contributed to the Plan that have ever been
allocated to the Qualified Participant's Company Stock Account (reduced by
the number of shares of Company Stock which the Participant previously was
entitled to elect to diversify). With respect to the last year in the
Qualified Election Period, the preceding sentence shall be applied by
substituting "fifty percent (50%)" for "twenty-five percent (25%)."
C. The Trustee shall satisfy the diversification
direction of a Qualified Participant under this Section 4.6.1 by either (1)
offering at least three (3) investment options into which the proceeds from
the sale of the designated number of shares of Company Stock shall be
invested not later than 180 days after the close of the Plan Year to which
the Qualified Participant's investment direction relates, or (2)
distributing to the Qualified Participant, not later than 180 days after
the close of the Plan Year to which the Participant's investment direction
applies, such shares of Company Stock; provided, any such shares of Company
Stock distributed to a Qualified Participant shall be subject to the
requirements of Section 7.11, below.
D. Notwithstanding the provisions of Paragraphs B and C
of this Section 4.6.1, if the fair market value (determined pursuant to
Section 6.1, below, at the Plan valuation date immediately preceding the
first day in which a Qualified Participant is eligible to make an election)
of Company Stock acquired by or contributed to the Plan after December 31,
1986, and allocated to a Qualified Participant's Company Stock Account is
not greater than five hundred dollars ($500.00), then no portion of the
shares of Company Stock allocated to that account shall be subject to the
requirements of this Section 4.6.1. For purposes of determining whether
the fair market value of such stock exceeds $500, all Company Stock held in
accounts of all employee stock ownership plans (as defined in Code Section
4975(e)(7)) and tax credit employee stock ownership plans (as defined in
Code Section 409(a)) maintained by the Employer or any Affiliated Employer
shall be considered pursuant to this Plan.
4.6.2 Early Diversification in Employer Tenders. Subject to
the issuance by the Internal Revenue Service of a favorable determination
letter with respect to this Plan document (including this Section 4.6.2),
if, at any time on or after January 1, 1993, the Employer or any Affiliated
Employer undertakes a tender offer in which the Employer or any Affiliated
Employer offers to purchase pro rata from its shareholders (including the
Trustee as trustee of the Trust Fund) outstanding shares of Company Stock,
then each "Eligible Participant" shall have the right to elect to direct
the Trustee as to the investment of the Eligible Participant's account in
the manner provided in this Section 4.6.2.
A. For purposes of this Section 4.6.2, the term
"Eligible Participant" shall mean (1) for any such tender offers occurring
on or before December 31, 1993, each Participant who would become a
"Qualified Participant" (as defined in Section 4.6.1 (A), above) in any
Plan Year ending on or before December 31, 2000, assuming that such
Eligible Participant continued to be a Participant until such date; and (2)
for any such tender offer occurring in Plan Years beginning on or after
January 1, 1994, each Participant who is or would become a "Qualified
Participant" (as defined in Section 4.6.1 (A), above) in any of the seven
(7) Plan Years next succeeding the Plan Year in which such tender offer
occurs, assuming that such Eligible Participant continued to be a
Participant until the last day of the seventh such Plan Year (or, if
greater, the minimum number of succeeding Plan Years as may be necessary to
ensure that the class of "Eligible Participant" satisfies the requirements
of Code Section 401(a)(4)).
B. Prior to implementing any sales of Company Stock
pursuant to this Section 4.6.2, the Trustee first shall determine, in the
exercise of its independent discretion, that the sale of the number of
shares of Company Stock which would be sold in any tender offer pursuant to
this Section 4.6.2 would represent a prudent investment decision consistent
with the duties and obligations of the Trustee under the Code and ERISA.
C. In connection with each tender offer, each Eligible
Participant shall be entitled to direct the Trustee to sell in the tender
offer such number of the shares of Company Stock allocated to the Eligible
Participant's Company Stock Account as is determined by the Trustee in a
nondiscriminatory manner; provided, such amount shall not exceed the number
of shares of Company Stock that the Eligible Participant would be entitled
to diversify pursuant to Section 4.6.1, above, in the first year in which
the Eligible Participant becomes a "Qualified Participant" (as defined in
Section 4.6.1, above).
D. The Trustee shall implement any investment directions
received pursuant to this Section 4.6.2 from all Eligible Participants by
(1) selling in the tender offer such number of shares of Company Stock as
the Eligible Participant has elected and is entitled to direct be sold in
such tender offer, (2) offering the Eligible Participant at least three (3)
investment options in which the proceeds from the sale of such Company
Stock can be invested, and (3) investing such proceeds, within ninety (90)
days after completion of such tender offer, in the particular investment
options selected by the Eligible Participant, provided, in the case of any
shares sold in a tender offer effected prior to December 31, 1993, such
proceeds shall be so invested within ninety (90) days after the Internal
Revenue Service issues a determination letter approving the terms of this
Plan, including this Section 4.6.2.
E. Notwithstanding any other provision of this Section
4.6.2 to the contrary, if (1) the Trustee sells any shares of Company Stock
pursuant to this Section 4.6.2 and the Internal Revenue Service
subsequently determines that the provisions of this section are
inconsistent with any provision of the Code or ERISA, then (2) all such
shares sold in the tender offer shall be deemed to have been tendered pro
rata from all accounts of all Participants as a pooled investment decision
made by the Trustee with respect to the aggregate assets of the Trust Fund.
4.6.3 Directed Investment Accounts. A separate Directed
Investment Account shall be established for each Participant who is
entitled to direct the investment of any portion of the Participant's
Account pursuant to this Section 4.6. The Directed Investment Account
shall not share in Trust Fund earnings or losses, but rather shall be
charged or credited, as appropriate, with the net earnings, gains, losses,
and expenses, as well as any appreciation or depreciation in fair market
value during each Plan Year, of investments allocable separately to such
account.
5. FUNDING AND INVESTMENT POLICY
5.1 Investment Policy.
5.1.1 General. The Plan is designed to invest primarily in
Company Stock.
5.1.2 Other Investments. With due regard to Section 5.1.1
above, the Administrator may also direct the Trustee to invest funds under
the Plan in other property described in the Trust or in life insurance
policies to the extent permitted by Section 5.1.3 below, or the Trustee may
hold such funds in cash or cash equivalents.
5.1.3 Keyman Insurance. With due regard to Section 5.1.1
above, the Administrator may also direct the Trustee to invest funds under
the Plan in insurance policies on the life of any "keyman" Employee. The
proceeds of a "keyman" insurance policy may not be used for the repayment
of any indebtedness owed by the Plan which is secured by Company Stock. In
the event any "keyman" insurance is purchased by the Trustee, the premiums
paid thereon during any Plan Year, net of any policy dividends and
increases in cash surrender values, shall be treated as the cost of Plan
investment and any death benefit or cash surrender value received shall be
treated as proceeds from an investment of the Plan.
5.1.4 Limit on Stock Acquisition. The Plan may not obligate
itself to acquire Company Stock (a) from a particular holder thereof at an
indefinite time determined upon the happening of an event such as the death
of the holder, or (b) under a put option binding upon the Plan. However,
at the time a put option is exercised, the Plan may be given an option to
assume the rights and obligations of the Employer under a put option
binding upon the Employer.
5.1.5 Price of Company Stock. All purchases of Company
Stock shall be made at a price which, in the judgment of the Administrator,
does not exceed the fair market value thereof. All sales of Company Stock
shall be made at a price which, in the judgment of the Administrator, is
not less than the fair market value thereof. The valuation rules set forth
in Article VI, below, shall be applicable to all such purchases and sales.
5.2 Application Of Cash. Employer contributions in cash and
other cash received by the Trust Fund shall first be applied to pay any
Current Obligations of the Trust Fund.
5.3 Transactions Involving Company Stock.
5.3.1 Limitations On Allocations. No portion of the Trust
Fund attributable to (or allocable in lieu of) Company Stock acquired by
the Plan after October 22, 1986 in a sale to which Code Section 1042 or,
for estates of decedents who died prior to December 20, 1989, Code Section
2057 applies may accrue or be allocated directly or indirectly under any
plan maintained by the Employer meeting the requirements of Code Section
401(a):
A. During the "Nonallocation Period", for the benefit
of (1) any taxpayer who makes an election under Code Section 1042(a) with
respect to Company Stock or any decedent if the executor of the estate of
the decedent makes a qualified sale to which Code Section 2057 applies, or
(2) any individual who is related to the taxpayer or the decedent (within
the meaning of Code Section 267(b)); or
B. For the benefit of any other person who owns (after
application of Code Section 318(a) applied without regard to the employee
trust exception in Code Section 318(a)(2)(B)(i)) more than 25 percent of
(1) any class of outstanding stock of the Employer or Affiliated Employer
which issued such Company Stock, or (2) the total value of any class of
outstanding stock of the Employer or Affiliated Employer; provided,
however, Section 5.3.1A.(2), above, shall not apply to lineal descendants
of the taxpayer, provided that the aggregate amount allocated to the
benefit of all such lineal descendants during the "Nonallocation Period"
does not exceed more than five percent (5%) of the Company Stock (or
amounts allocated in lieu thereof) held by the Plan which are attributable
to a sale to the Plan by any person related to such descendants (within the
meaning of Code Section 267(c)(4)) in a transaction to which Code Section
1042 or Code Section 2057 is applied.
5.3.2 Stock Ownership. A person shall be treated as failing
to meet the stock ownership limitation under Section 5.3.1B. above if such
person fails such limitation:
A. at any time during the one (1) year period ending on
the date of sale of Company Stock to the Plan, or
B. on the date as of which Company Stock is allocated
to Participants in the Plan.
5.3.3 Nonallocation Period. For purposes of this Section,
"Nonallocation Period," for Plan Years beginning after December 31, 1986,
means the period beginning on the date of the sale of the Company Stock and
ending on the later of:
A. The date which is ten (10) years after the date of
sale, or
B. The date of the Plan allocation attributable to the
final payment of the Exempt Loan incurred in connection with such sale.
5.4 Loans to the Trust.
5.4.1 Loans Permitted. The Plan may borrow money for any
lawful purpose, provided the proceeds of an Exempt Loan are used within a
reasonable time after receipt only for any or all of the following
purposes:
A. To acquire Company Stock.
B. To repay such loan.
C. To repay a prior Exempt Loan.
5.4.2 Loans Involving Disqualified Persons. All loans to
the Trust which are made or guaranteed by a disqualified person must
satisfy all requirements applicable to Exempt Loans, including but not
limited to the following:
A. The loan must be at a reasonable rate of interest;
B. Any collateral pledged to the creditor by the Plan
shall consist only of the Company Stock purchased with the borrowed funds;
C. Under the terms of the loan, any pledge of Company
Stock shall provide for the release of shares so pledged on a pro-rata
basis pursuant to Section 4.3.6;
D. Under the terms of the loan, the creditor shall have
no recourse against the Plan except with respect to such collateral,
earnings attributable to such collateral, Employer contributions (other
than contributions of Company Stock) that are made to meet Current
Obligations and earnings attributable to such contributions;
E. The loan must be for a specific term and may not be
payable at the demand of any person, except in the case of default;
F. In the event of default upon an Exempt Loan, the
value of the Trust Fund transferred in satisfaction of the Exempt Loan
shall not exceed the amount of default. If the lender is a disqualified
person, an Exempt Loan shall provide for a transfer of Trust Funds upon
default only upon and to the extent of the failure of the Plan to meet the
payment schedule of the Exempt Loan;
G. Exempt Loan payments during a Plan Year must not
exceed an amount equal to: (1) the sum, over all Plan Years, of all
contributions and cash dividends paid by the Employer to the Plan with
respect to such Exempt Loan and earnings on such Employer contributions and
cash dividends, less (2) the sum of the Exempt Loan payments in all
preceding Plan Years. A separate accounting shall be maintained for such
Employer contributions, cash dividends and earnings until the Exempt Loan
is repaid.
5.4.3 Disqualified Person. For purposes of this Section,
the term "disqualified person" means a person who is a Fiduciary, a person
providing services to the Plan, an Employer any of whose Employees are
covered by the Plan, an employee organization any of whose members are
covered by the Plan, an owner, direct or indirect, of 50% or more of the
total combined voting power of all classes of voting stock or of the total
value of all classes of the stock, or an officer, director, 10% or more
shareholder, or a highly compensated Employee.
6. VALUATIONS
6.1 Valuation of the Trust Fund. The Administrator shall direct
the Trustee, as of each Anniversary Date, and at such other date or dates
deemed necessary by the Administrator, herein called "valuation date", to
determine the net worth of the assets comprising the Trust Fund as it
exists on the "valuation date." In determining such net worth, the Trustee
shall value the assets comprising the Trust Fund at their fair market value
as of the "valuation date, and shall deduct all expenses for which the
Trustee has not yet obtained reimbursement from the Employer or the Trust
Fund.
6.2 Method of Valuation. Valuations must be made in good faith
and based on all relevant factors for determining the fair market value of
securities. In the case of a transaction between a Plan and a disqualified
person, value must be determined as of the date of the transaction. For
all other Plan purposes, value must be determined as of the most recent
"valuation date" under the Plan. An independent appraisal will not in
itself be a good faith determination of value in the case of a transaction
between the Plan and a disqualified person. However, in other cases, a
determination of fair market value based on at least an annual appraisal
independently arrived at by a person who customarily makes such appraisals
and who is independent of any party to the transaction will be deemed to be
a good faith determination of value. Company Stock not readily tradeable
on an established securities market shall be valued by an independent
appraiser meeting requirements similar to the requirements of the
Regulations prescribed under Code Section 170(a)(1).
7. DETERMINATION AND DISTRIBUTION OF BENEFITS.
7.1 Determination of Benefits Upon Retirement. Every Participant
may terminate his employment with the Employer and retire for the purposes
hereof on his Normal Retirement Date or Early Retirement Date. However, a
Participant may postpone the termination of his employment with the
Employer to a later date, in which event the participation of such
Participant in the Plan, including the right to receive allocations
pursuant to Section 4.3, shall continue until his Late Retirement Date.
Upon a Participant's Retirement Date or attainment of his Normal Retirement
Date without termination of employment with the Employer, or as soon
thereafter as is practicable, the Trustee shall distribute all amounts
credited to such Participant's Account in accordance with Sections 7.5 and
7.6.
7.2 Determination of Benefits Upon Death.
7.2.1 Vesting and Distribution. Upon the death of a
Participant before his Retirement Date or other termination of his
employment, all amounts credited to such Participant's Account shall become
fully Vested. If elected, distribution of the Participant's Account shall
commence not later than one (1) year after the close of the Plan Year in
which such Participant's death occurs. The Administrator shall direct the
Trustee, in accordance with the provisions of Sections 7.5 and 7.6, to
distribute the value of the deceased Participant's accounts to the
Participant's Beneficiary.
7.2.2 Distributions. Upon the death of a Former
Participant, the Administrator shall direct the Trustee, in accordance with
the provisions of Sections 7.5 and 7.6, to distribute any remaining Vested
amounts credited to the accounts of a deceased Former Participant to such
Former Participant's Beneficiary.
7.2.3 Proof of Death. The Administrator may require such
proper proof of death and such evidence of the right of any person to
receive payment of the value of the account of a deceased Participant or
Former Participant as the Administrator may deem desirable. The
Administrator's determination of death and of the right of any person to
receive payment shall be conclusive.
7.2.4 Beneficiary. The Beneficiary of the death benefit
payable pursuant to this Section shall be the Participant's spouse.
A. Notwithstanding the foregoing, the Participant may
designate a Beneficiary other than his spouse if: (1) the spouse has waived
the right to be the Participant's Beneficiary; or (2) the Participant is
legally separated or has been abandoned (within the meaning of local law)
and the Participant has a court order to such effect (and there is no
"qualified domestic relations order, as defined in Code Section 414(p)
which provides otherwise); or (3) the Participant has no spouse; or (4) the
spouse cannot be located.
B. In the event of the occurrence of any of the
circumstances described in Paragraph A, above, the designation of a
Beneficiary shall be made on a form satisfactory to the Administrator. A
Participant may at any time revoke his designation of a Beneficiary or
change his Beneficiary by filing written notice of such revocation or
change with the Administrator. However, the Participant's spouse must
again consent in writing to any change in Beneficiary unless the original
consent acknowledged that the spouse had the right to limit consent only to
a specific Beneficiary and that the spouse voluntarily elected to
relinquish such right. In the event no valid designation of Beneficiary
exists at the time of the Participant's death, the death benefit shall be
payable to his estate.
7.2.5 Form of Spousal Waiver. Any consent by the
Participant's spouse to waive any rights to the death benefit must be in
writing, must acknowledge the effect of such waiver, and be witnessed by a
Plan representative or a notary public. Further, the spouse's consent must
be irrevocable and must acknowledge the specific nonspouse Beneficiary.
7.3 Determination of Benefits in Event of Disability. In the
event of a Participant's Total and Permanent Disability prior to his
Retirement Date or other termination of his employment, all amounts
credited to such Participant's Account shall become fully Vested. In the
event of a Participant's Total and Permanent Disability, the Trustee, in
accordance with the provisions of Sections 7.5 and 7.6, shall distribute to
such Participant all amounts credited to such Participant's Account as
though he had retired. If such Participant elects, distribution shall
commence not later than one (1) year after the close of the Plan Year in
which Total and Permanent Disability occurs.
7.4 Determination of Benefits Upon Termination.
7.4.1 Segregation of Accounts. On or before the Anniversary
Date coinciding with or subsequent to the termination of a Participant's
employment for any reason other than death, Total and Permanent Disability
or retirement, the Administrator may direct the Trustee to segregate the
amount of the Vested portion of such Terminated Participant's Account and
invest the aggregate amount thereof in a separate, federally insured
savings account, certificate of deposit, common or collective trust fund of
a bank or a deferred annuity. In the event the Vested portion of a
Participant's Account is not segregated, the amount shall remain in a
separate account for the Terminated Participant and share in allocations
pursuant to Section 4.3 until such time as a distribution is made to the
Terminated Participant.
A. If a portion of a Participant's Account is forfeited,
Company Stock allocated to the Participant's Company Stock Account must be
forfeited only after the Participant's Other Investments Account has been
depleted. If interest in more than one class of Company Stock has been
allocated to a Participant's Account, the Participant must be treated as
forfeiting the same proportion of each such class.
B. In the event that the amount of the Vested portion of
the Terminated Participant's Account equals or exceeds the fair market
value of any insurance Contracts, the Trustee, when so directed by the
Administrator and agreed to by the Terminated Participant, shall assign,
transfer, and set over to such Terminated Participant all Contracts on his
life in such form or with such endorsements so that the settlement options
and forms of payment are consistent with the provisions of Section 7.5. In
the event that the Terminated Participant's Vested portion does not at
least equal the fair market value of the Contracts, if any, the Terminated
Participant may pay over to the Trustee the sum needed to make the
distribution equal to the value of the Contracts being assigned or
transferred, or the Trustee, pursuant to the Participant's election, may
borrow the cash value of the Contracts from the insurer so that the value
of the Contracts is equal to the Vested portion of the Terminated
Participant's Account and then assign the Contracts to the Terminated
Participant.
C. Distribution of the funds due to a Terminated
Participant shall be made on the occurrence of an event which would result
in the distribution had the Terminated Participant remained in the employ
of the Employer (upon the Participant's death, Total and Permanent
Disability, Early or Normal Retirement). However, at the election of the
Participant, the Administrator shall direct the Trustee to cause the entire
Vested portion of the Terminated Participant's Account to be payable to
such Terminated Participant on or after the Anniversary Date coinciding
with or next following termination of employment. Distribution to a
Participant shall not include any Company Stock acquired with the proceeds
of an Exempt Loan until the close of the Plan Year in which such loan is
repaid in full. Any distribution under this Section shall be made in a
manner which is consistent with and satisfies the provisions of Sections
7.5 and 7.6, including, but not limited to, all notice and consent
requirements of Code Section 411(a)(11) and the Regulations thereunder.
D. If the value of a Terminated Participant's Vested
benefit derived from Employer and Employee contributions does not exceed
$3,500 and has never exceeded $3,500 at the time of any prior
distribution, the Administrator shall direct the Trustee to cause the
entire Vested benefit to be paid to such Participant in a single lump sum.
E. For purposes of this Section 7.4, if the value of a
Terminated Participant's Vested benefit is zero, the Terminated Participant
shall be deemed to have received a distribution of such vested benefit.
7.4.2 Regular Vesting Percentage. The Vested portion of any
Participant's Account shall be a percentage of the total amount credited to
his Participant's Account determined on the basis of the Participant's
number of Years of Service according to the following schedule:
Vesting Schedule
Years of Service Percentage
Less than 2 0
2 20%
3 30%
4 40%
5 60%
6 80%
7 100%
7.4.3 Top Heavy Vesting Schedule. Notwithstanding the
vesting schedule provided for in Section 7.4.2 above, for any Top Heavy
Plan Year, the Vested portion of the Participant's Account of any
Participant who has an Hour of Service after the Plan becomes top heavy
shall be a percentage of the total amount credited to his Participant's
Account determined on the basis of the Participant's number of Years of
Service according to the following schedule:
Vesting Schedule
Years of Service Percentage
Less than 2 0%
2 20%
3 40%
4 60%
5 80%
6 100%
If in any subsequent Plan Year, the Plan ceases to be a
Top Heavy Plan, the Administrator shall revert to the vesting schedule in
effect before this Plan became a Top Heavy Plan. Any such reversion shall
be treated as a Plan amendment pursuant to the terms of the Plan.
7.4.4 Effect of Amendment. Notwithstanding the vesting
schedule above, the Vested percentage of a Participant's Account shall not
be less than the Vested percentage attained as of the later of the
effective date or adoption date of this amendment and restatement.
7.4.5 Effect of Terminations, Etc. Notwithstanding the
vesting schedule above, upon the complete discontinuance of the Employer's
contributions to the Plan or upon any full or partial termination of the
Plan, all amounts credited to the account of any affected Participant shall
become 100% Vested and shall not thereafter be subject to Forfeiture.
7.4.6 No Reduction in Vesting. The computation of a
Participant's nonforfeitable percentage of his interest in the Plan shall
not be reduced as the result of any direct or indirect amendment to this
Plan. For this purpose, the Plan shall be treated as having been amended
if the Plan provides for an automatic change in vesting due to a change in
top heavy status. In the event that the Plan is amended to change or modify
any vesting schedule, a Participant with at least three (3) Years of
Service as of the expiration date of the election period may elect to have
his nonforfeitable percentage computed under the Plan without regard to
such amendment. If a Participant fails to make such election, then such
Participant shall be subject to the new vesting schedule. The
Participant's election period shall commence on the adoption date of the
amendment and shall end 60 days after the latest of (a) the adoption date
of the amendment, (b) the effective date of the amendment, or (c) the date
the Participant receives written notice of the amendment from the Employer
or Administrator.
7.4.7 Reemployment of Former Participant.
A. If any Former Participant shall be reemployed by the
Employer before a 1-Year Break in Service occurs, he shall continue to
participate in the Plan in the same manner as if such termination had not
occurred.
B. If any Former Participant shall be reemployed by the
Employer before five (5) consecutive 1-Year Breaks in Service, and such
Former Participant had received, or was deemed to have received, a
distribution of his entire Vested interest prior to his reemployment, his
forfeited account shall be reinstated only if he repays the full amount
distributed to him before the earlier of five (5) years after the first
date on which the Participant is subsequently reemployed by the Employer or
the close of the first period of five (5) consecutive 1-Year Breaks in
Service commencing after the distribution, or in the event of a deemed
distribution, upon the reemployment of such Former Participant. In the
event the Former Participant does repay the full amount distributed to him,
or in the event of a deemed distribution, the undistributed portion of the
Participant's Account must be restored in full, unadjusted by any gains or
losses occurring subsequent to the Anniversary Date or other valuation date
coinciding with or preceding his termination. The source for such
reinstatement shall first be any Forfeitures occurring during the year. If
such source is insufficient, then the Employer shall contribute an amount
which is sufficient to restore any such forfeited Accounts provided,
however, that if a discretionary contribution is made for such year, such
contribution shall first be applied to restore any such Accounts and the
remainder shall be allocated in accordance with Section 4.3.
C. If any Former Participant is reemployed after a 1-
Year Break in Service has occurred, Years of Service shall include Years of
Service prior to his 1-Year Break in Service subject to the following
rules:
(1) If a Former Participant has a 1-Year Break in
Service, his pre-break and post-break service shall be used for computing
Years of Service for eligibility and for vesting purposes only after he has
been employed for one (1) Year of Service following the date of his
reemployment with the Employer;
(2) Any Former Participant who under the Plan does
not have a nonforfeitable right to any interest in the Plan resulting from
Employer contributions shall lose credits otherwise allowable under
Paragraph C(1), above, if the number of his consecutive 1-Year Breaks in
Service equals or exceed the greater of (a) five (5) or (b) the aggregate
number of his pre- break Years of Service;
(3) After five (5) consecutive 1-Year Breaks in
Service, a Former Participant's Vested Account balance attributable to pre-
break service shall not be increased as a result of post-break service;
(4) If a Former Participant who has not had his
Years of Service before a 1-Year Break in Service disregarded pursuant to
Paragraph C(2), above, completes one (1) Year of Service for eligibility
purposes following his reemployment with the Employer, he shall participate
in the Plan retroactively from his date of reemployment;
(5) If a Former Participant who has not had his
Years of Service before a 1-Year Break in Service disregarded pursuant to
Paragraph C(2), above, completes a Year of Service (a 1-Year Break in
Service previously occurred, but employment had not terminated), he shall
participate in the Plan retroactively from the first day of the Plan Year
during which he completes one (1) Year of Service.
7.4.8 Pre-Age-18 Service. In determining Years of Service
for purposes of vesting under the Plan, Years of Service prior to the
vesting computation period in which an Employee attained his eighteenth
birthday shall be excluded.
7.5 Distribution of Benefits.
7.5.1 Form of Distribution. The Administrator, pursuant to
the election of the Participant (or if no election has been made prior to
the Participant's death, by his Beneficiary), shall direct the Trustee to
distribute to a Participant or his Beneficiary any amount to which he is
entitled under the Plan in one or more of the following methods:
A. One lump-sum payment; or
B. Payments over a period certain in monthly,
quarterly, semiannual, or annual installments. The period over which such
payment is to be made shall not extend beyond the earlier of the
Participant's life expectancy (or the life expectancy of the Participant
and his designated Beneficiary) or the limited distribution period provided
for in Section 7.5.2.
7.5.2 Period of Installments. Unless the Participant elects
in writing a longer distribution period, distributions to a Participant or
his Beneficiary attributable to Company Stock shall be in substantially
equal monthly, quarterly, semiannual, or annual installments over a period
not longer than five (5) years. In the case of a Participant with an
account balance attributable to Company Stock in excess of $500,000, the
five (5) year period shall be extended one (1) additional year (but not
more than five (5) additional years) for each $100,000 or fraction thereof
by which such balance exceeds $500,000. The dollar limits shall be
adjusted at the same time and in the same manner as provided in Code
Section 415(d).
7.5.3 Participant Consent. Any distribution to a
Participant who has a benefit which exceeds, or has ever exceeded, $3,500
at the time of any prior distribution shall require such Participant's
consent if such distribution commences prior to the later of his Normal
Retirement Age or age 62. With regard to this required consent:
A. The Participant must be informed of his right to
defer receipt of the distribution. If a Participant fails to consent, it
shall be deemed an election to defer the commencement of payment of any
benefit. However, any election to defer the receipt of benefits shall not
apply with respect to distributions which are required under Section 7.5.6.
B. Notice of the rights specified under this Section
shall be provided no less than 30 days and no more than 90 days before the
first day on which all events have occurred which entitle the Participant
to such benefit.
C. Written consent of the Participant to the
distribution must not be made before the Participant receives the notice
and must not be made more than 90 days before the first day on which all
events have occurred which entitle the Participant to such benefit.
D. No consent shall be valid if a significant detriment
is imposed under the Plan on any Participant who does not consent to the
distribution.
E. Notwithstanding the foregoing provisions of this
Section 7.5.3, if a distribution is one to which Code Sections 401(a)(11)
and 417 do not apply, then such distribution may commence less than thirty
(30) days after the participant receives the notice required under Treasury
Regulation Section 1.411(a)-11(c), provided that (1) the Administrator
clearly informs the Participant that the Participant has a right to a
period of at least thirty (30) days after receiving the notice to consider
the decision of whether or not to elect a distribution (and, if applicable,
a particular distribution option), and (2) the Participant, after receiving
the notice, affirmatively elects a distribution.
7.5.4 Distribution of Dividends. Notwithstanding anything
herein to the contrary, the Administrator, in its sole discretion, may
direct that cash dividends on shares of Company Stock allocable to
Participants' or Former Participants, Company Stock Accounts be distributed
to such Participants or Former Participants within 90 days after the close
of the Plan Year in which the dividends are paid.
7.5.5 Treatment of Accounts. Any part of a Participant's
benefit which is retained in the Plan after the Anniversary Date on which
his participation ends will continue to be treated as a Company Stock
Account or as an Other Investments Account (subject to Section 7.4.1) as
provided in Article IV. However, neither account will be credited with any
further Employer contributions or Forfeitures.
7.5.6 Required Distributions. Notwithstanding any provision
in the Plan to the contrary, the distribution of a Participant's benefits
shall be made in accordance with the following requirements and shall
otherwise comply with Code Section 401(a)(9) and the Regulations thereunder
(including Regulation 1.401(a)(9)-2), the provisions of which are
incorporated herein by reference:
A. A Participant's benefits shall be distributed to him
not later than April 1st of the calendar year following the later of (i)
the calendar year in which the Participant attains age 70 1/2 or (ii) the
calendar year in which the Participant retires, provided, however, that
this clause (ii) shall not apply in the case of a Participant who is a
"five (5) percent owner" at any time during the five (5) Plan Year period
ending in the calendar year in which he attains age 70 1/2 or, in the case
of a Participant who becomes a "five (5) percent owner" during any
subsequent Plan Year, clause (ii) shall no longer apply and the required
beginning date shall be the April 1st of the calendar year following the
calendar year in which such subsequent Plan Year ends. Alternatively,
distributions to a Participant must begin no later than the applicable
April 1st as determined under the preceding sentence and must be made over
a period certain measured by the life expectancy of the Participant (or the
life expectancies of the Participant and his designated Beneficiary) in
accordance with Regulations. Notwithstanding the foregoing, clause (ii)
above shall not apply to any Participant unless the Participant had
attained age 70 1/2 before January 1, 1988 and was not a "five (5) percent
owner" at any time during the Plan Year ending with or within the calendar
year in which the Participant attained age 66 1/2 or any subsequent Plan
Year.
B. Distributions to a Participant and his Beneficiaries
shall only be made in accordance with the incidental death benefit
requirements of Code Section 401(a)(9)(G) and the Regulations thereunder.
C. Additionally, for calendar years beginning before
1989, distributions may also be made under an alternative method which
provides that the then present value of the payments to be made over the
period of the Participant's life expectancy exceeds fifty percent (50%) of
the then present value of the total payments to be made to the Participant
and his Beneficiaries.
7.5.7 Post-Death Distributions. Notwithstanding any
provision in the Plan to the contrary, distributions upon the death of a
Participant shall be made in accordance with the following requirements and
shall otherwise comply with Code Section 401(a)(9) and the Regulations
thereunder. If it is determined pursuant to Regulations that the
distribution of a Participant's interest has begun and the Participant dies
before his entire interest has been distributed to him, the remaining
portion of such interest shall be distributed at least as rapidly as under
the method of distribution selected pursuant to this Section 7.5 as of his
date of death.
A. If a Participant dies before he has begun to receive
any distributions of his interest under the Plan or before distributions
are deemed to have begun pursuant to Regulations, then his death benefit
shall be distributed to his Beneficiaries by December 31st of the calendar
year in which the fifth anniversary of his date of death occurs.
B. However, in the event that the Participant's spouse
(determined as of the date of the Participant's death) is his Beneficiary,
then in lieu of the preceding rules, distributions must be made over a
period not extending beyond the life expectancy of the spouse and must
commence on or before the later of: (1) December 31st of the calendar year
immediately following the calendar year in which the Participant died; or
(2) December 31st of the calendar year in which the Participant would have
attained age 70 1/2. If the surviving spouse dies before distributions to
such spouse begin, then the 5-year distribution requirement of this Section
shall apply as if the spouse was the Participant.
7.5.8 Life Expectancy. For purposes of this Section 7.5,
the life expectancy of a Participant and a Participant's spouse may, at the
election of the Participant or the Participant's spouse, be redetermined in
accordance with Regulations. The election, once made, shall be
irrevocable. If no election is made by the time distributions must
commence, then the life expectancy of the Participant and the Participant's
spouse shall not be subject to recalculation. Life expectancy and joint
and last survivor expectancy shall be computed using the return multiples
in Tables V and VI of Regulation 1.72-9.
7.5.9 Commencement of Distributions. Except as limited by
Sections 7.5 and 7.6, whenever the Trustee is to make a distribution or to
commence a series of payments on or as of an Anniversary Date, the
distribution or series of payments may be made or begun on such date or as
soon thereafter as is practicable. However, unless a Former Participant
elects in writing to defer the receipt of benefits (such election may not
result in a death benefit that is more than incidental), the payment of
benefits shall begin not later than the 60th day after the close of the
Plan Year in which the latest of the following events occurs:
A. the date on which the Participant attains the
earlier of age 65 or the Normal Retirement Age specified herein;
B. the 10th anniversary of the year in which the
Participant commenced participation in the Plan; or
C. the date the Participant terminates his service with
the Employer.
7.5.10 Segregation of Account. If a distribution is made at
a time when a Participant is not fully Vested in his Participant's Account
(employment has not terminated) and the Participant may increase the Vested
percentage in such account:
A. A separate account shall be established for the
Participant's interest in the Plan as of the time of the distribution; and
B. At any relevant time, the Participant's Vested
portion of the separate account shall be equal to an amount ("X")
determined by the formula:
X equals P(AB plus (R x D)) - (R x D)
For purposes of applying the formula: P is the Vested
percentage at the relevant time, AB is the account balance at the relevant
time, D is the amount of distribution, and R is the ratio of the account
balance at the relevant time to the account balance after distribution.
7.6 How Plan Benefit Will be Distributed.
7.6.1 Form of Distribution. Distribution of a Participant's
benefit may be made in cash or Company Stock or both, provided, however,
that if a Participant or Beneficiary so demands, such benefit shall be
distributed only in the form of Company Stock. Prior to making a
distribution of benefits, the Administrator shall advise the Participant or
his Beneficiary, in writing, of the right to demand that benefits be
distributed solely in Company Stock.
7.6.2 Distribution of Stock. If a Participant or
Beneficiary demands that benefits be distributed solely in Company Stock,
distribution of a Participant's benefit will be made entirely in whole
shares or other units of Company Stock. Any balance in a Participant's
Other Investments Account will be applied to acquire for distribution the
maximum number of whole shares or other units of Company Stock at the then
fair market value. Any fractional unit value unexpended will be
distributed in cash. If Company Stock is not available for purchase by the
Trustee, then the Trustee shall hold such balance until Company Stock is
acquired and then make such distribution, subject to Sections 7.5.9 and
7.5.6.
7.6.3 Instructions to Trustee. The Trustee will make
distribution from the Trust only on instructions from the Administrator.
7.6.4 Restricted Ownership. Notwithstanding anything
contained herein to the contrary, if the Employer's charter or by-laws
restrict ownership of substantially all shares of Company Stock to
Employees and the Trust Fund, as described in Code Section 409(h)(2), the
Administrator shall distribute a Participant's Account entirely in cash
without granting the Participant the right to demand distribution in shares
of Company Stock.
7.6.5 Restrictions on Resale. Except as otherwise provided
herein, Company Stock distributed by the Trustee may be restricted as to
sale or transfer by the by-laws or articles of incorporation of the
Employer, provided restrictions are applicable to all Company Stock of the
same class. If a Participant is required to offer the sale of his Company
Stock to the Employer before offering to sell his Company Stock to a third
party, in no event may the Employer pay a price less than that offered to
the distributee by another potential buyer making a bona fide offer and in
no event shall the Trustee pay a price less than the fair market value of
the Company Stock.
7.6.6 Multiple Classes of Stock. If Company Stock acquired
with the proceeds of an Exempt Loan (described in Section 5.4 hereof) is
available for distribution and consists of more than one class, a
Participant or his Beneficiary must receive substantially the same
proportion of each such class.
7.7 Distribution for Minor Beneficiary. In the event a
distribution is to be made to a minor, then the Administrator may direct
that such distribution be paid to the legal guardian, or if none, to a
parent of such Beneficiary or a responsible adult with whom the Beneficiary
maintains his residence, or to the custodian for such Beneficiary under the
Uniform Gift to Minors Act or Gift to Minors Act, if such is permitted by
the laws of the state in which said Beneficiary resides. Such a payment to
the legal guardian, custodian or parent of a minor Beneficiary shall fully
discharge the Trustee, Employer, and Plan from further liability on account
thereof.
7.8 Location of Participant or Beneficiary Unknown. In the event
that all, or any portion, of the distribution payable to a Participant or
his Beneficiary hereunder shall, at the later of the Participant's
attainment of age 62 or his Normal Retirement Age, remain unpaid solely by
reason of the inability of the Administrator, after sending a registered
letter, return receipt requested, to the last known address, and after
further diligent effort, to ascertain the whereabouts of such Participant
or his Beneficiary, the amount so distributable shall be treated as a
Forfeiture pursuant to the Plan. In the event a Participant or Beneficiary
is located subsequent to his benefit being reallocated, such benefit shall
be restored.
7.9 Right of First Refusal. The provisions of this Section 7.9
shall apply only in Plan Years beginning prior to January 1, 1992.
Effective January 1, 1992, the Employer shall not have any rights of first
refusal under this Plan with respect to any shares of Company Stock,
regardless whether such shares previously may have been held and
distributed pursuant to this Plan, are then held by the Trustee pursuant to
this Plan, or thereafter are distributed pursuant to this Plan.
7.9.1 Notice. If any Participant, his Beneficiary or any
other person to whom shares of Company Stock are distributed from the Plan
(the "Selling Participant") shall, at any time, desire to sell some or all
of such shares (the "Offered Shares") to a third party (the "Third
Party"), the Selling Participant shall give written notice of such desire
to the Employer and the Administrator, which notice shall contain the
number of shares offered for sale, the proposed terms of the sale and the
names and addresses of both the Selling Participant and Third Party. Both
the Trust Fund and the Employer shall each have the right of first refusal
for a period of fourteen (14) days from the date the Selling Participant
gives such written notice to the Employer and the Administrator (such
fourteen (14) day period to run concurrently against the Trust Fund and the
Employer) to acquire the Offered Shares. As between the Trust Fund and the
Employer, the Trust Fund shall have priority to acquire the shares pursuant
to the right of first refusal. The selling price and terms shall be the
same as offered by the Third Party.
7.9.2 Failure to Exercise. If the Trust Fund and the
Employer do not exercise their right of first refusal within the required
fourteen (14) day period provided above, the Selling Participant shall have
the right, at any time following the expiration of such fourteen (14) day
period, to dispose of the Offered Shares to the Third Party; provided,
however, that (a) no disposition shall be made to the Third Party on terms
more favorable to the Third Party than those set forth in the written
notice delivered by the Selling Participant above, and (b) if such
disposition shall not be made to a third party on the terms offered to the
Employer and the Trust Fund, the offered Shares shall again be subject to
the right of first refusal set forth above.
7.9.3 Closing. The closing pursuant to the exercise of the
right of first refusal under Section 7.9.1 above shall take place at such
place agreed upon between the Administrator and the Selling Participant,
but not later than ten (10) days after the Employer or the Trust Fund shall
have notified the Selling Participant of the exercise of the right of first
refusal. At such closing, the Selling Participant shall deliver
certificates representing the Offered Shares duly endorsed in blank for
transfer, or with stock powers attached duly executed in blank with all
required transfer tax stamps attached or provided for, and the Employer or
the Trust Fund shall deliver the purchase price, or an appropriate portion
thereof, to the Selling Participant.
7.9.4 Stock Acquired with Exempt Loan. Except as provided
in this Section 7.9.4, no Company Stock acquired with the proceeds of an
Exempt Loan complying with the requirements of Section 5.4 hereof shall be
subject to a right of first refusal. Company Stock acquired with the
proceeds of an Exempt Loan, which is distributed to a Participant or
Beneficiary, shall be subject to the right of first refusal provided for in
Section 7.9.1 Section only so long as the Company Stock is not publicly
traded. The term "publicly traded" refers to a securities exchange
registered under Section 6 of the Securities Exchange Act of 1934 (15
U.S.C. 78f) or that is quoted on a system sponsored by a national
securities association registered under Section 15A(b) of the Securities
Exchange Act (15 U.S.C. 780). In addition, in the case of Company Stock
which was acquired with the proceeds of a loan described in Section 5.4,
the selling price and other terms under the right must not be less
favorable to the seller than the greater of the value of the security
determined under Section 6.2, or the purchase price and other terms offered
by a buyer (other than the Employer or the Trust Fund), making a good faith
offer to purchase the security. The right of first refusal must lapse no
later than fourteen (14) days after the security holder gives notice to the
holder of the right that an offer by a third party to purchase the security
has been made. The right of first refusal shall comply with the provisions
of Sections 7.9.1, 7.9.2 and 7.9.3, except to the extent those provisions
may conflict with the provisions of this Section.
7.10 Stock Certificate Legend. Certificates for shares
distributed pursuant to the Plan prior to January 1, 1992, shall contain
the following legend:
"The shares represented by this certificate are transferable only upon
compliance with the terms of SANTA BARBARA BANK & TRUST EMPLOYEE STOCK
OWNERSHIP PLAN AND TRUST effective as of January 1, 1989, which grants to
Santa Barbara Bank & Trust a right of first refusal, a copy of said Plan
being on file in the office of the Company."
7.11 Put Option.
7.11.1 Participant Right. If Company Stock which was not
acquired with the proceeds of an Exempt Loan is distributed to a
Participant and such Company Stock is not readily tradeable on an
established securities market, a Participant has a right to require the
Employer to repurchase the Company Stock distributed to such Participant
under a fair valuation formula. Such Stock shall be subject to the
provisions of Section 7.11.3.
7.11.2 Required Put Option. Company Stock which is acquired
with the proceeds of an Exempt Loan and which is not publicly traded when
distributed, or if it is subject to a trading limitation when distributed,
must be subject to a put option. For purposes of this Section, a "trading
limitation" on a Company Stock is a restriction under any Federal or State
securities law or any regulation thereunder, or an agreement (not
prohibited by Section 7.12) affecting the Company Stock which would make
the Company Stock not as freely tradeable as stock not subject to such
restriction.
7.11.3 Exercise of Put Option. The put option shall be
exercisable during the period commencing as of the first day following the
date the Company Stock is distributed to the Former Participant and ending
60 days thereafter and if not exercised within such 60-day period, an
additional 60-day option period shall commence on the first day of the Plan
Year following the date the Company Stock was distributed to the Former
Participant (or, if later, the first day following the end of the initial
60-day period as is provided in regulations promulgated by the Secretary of
the Treasury.
A. The put option shall commence as of the day following
the date the Company Stock is distributed to the Former Participant and end
60 days thereafter and if not exercised within such 60-day period, an
additional 60-day option shall commence on the first day of the fifth month
of the Plan Year next following the date the stock was distributed to the
Former Participant (or such other 60-day period as provided in regulations
promulgated by the Secretary of the Treasury). However, in the case of
Company Stock that is publicly traded without restrictions when distributed
but ceases to be so traded within either of the 60-day periods described
herein after distribution, the Employer must notify each holder of such
Company Stock in writing on or before the tenth day after the date the
Company Stock ceases to be so traded that for the remainder of the
applicable 60-day period the Company Stock is subject to the put option.
The number of days between the tenth day and the date on which notice is
actually given, if later than the tenth day, must be added to the duration
of the put option. The notice must inform distributees of the term of the
put options that they are to hold. The terms must satisfy the requirements
of this Section.
B. The put option is exercised by the holder notifying
the Employer in writing that the put option is being exercised; the notice
shall state the name and address of the holder and the number of shares to
be sold. The period during which a put option is exercisable does not
include any time when a distributee is unable to exercise it because the
party bound by the put option is prohibited from honoring it by applicable
Federal or State law. The price at which a put option must be exercisable
is the value of the Company Stock determined in accordance with Section
6.2. Payment under the put option involving a "Total Distribution" shall
be paid in substantially equal monthly, quarterly, semiannual or annual
installments over a period certain beginning not later than thirty (30)
days after the exercise of the put option and not extending beyond (5)
years. The deferral of payment is reasonable if adequate security and a
reasonable interest rate on the unpaid amounts are provided. The amount to
be paid under the put option involving installment distributions must be
paid not later than thirty (30) days after the exercise of the put option.
Payment under a put option must not be restricted by the provisions of a
loan or any other arrangement, including the terms of the Employer's
articles of incorporation, unless so required by applicable state law.
C. For purposes of this Section, "Total Distribution"
means a distribution to a Participant or his Beneficiary within one taxable
year of the entire Vested Participant's Account.
7.11.4 Limitation. An arrangement involving the Plan that
creates a put option must not provide for the issuance of put options other
than as provided under this Section. The Plan (and the Trust Fund) must
not otherwise obligate itself to acquire Company Stock from a particular
holder thereof at an indefinite time determined upon the happening of an
event such as the death of the holder.
7.12 Nonterminable Protections and Rights. No Company Stock,
except as provided in Section 4.3.15 and Section 7.11.2, acquired with the
proceeds of a loan described in Section 5.4 hereof may be subject to a put,
call, or other option, or buy-sell or similar arrangement when held by and
when distributed from the Trust Fund, whether or not the Plan is then an
ESOP. The protections and rights granted in this Section are
nonterminable, and such protections and rights shall continue to exist
under the terms of this Plan so long as any Company Stock acquired with the
proceeds of a loan described in Section 5.4 hereof is held by the Trust
Fund or by any Participant or other person for whose benefit such
protections and rights have been created, and neither the repayment of such
loan nor the failure of the Plan to be an ESOP, nor an amendment of the
Plan shall cause a termination of said protections and rights.
7.13 Qualified Domestic Relations Order Distribution. All rights
and benefits, including elections, provided to a Participant in this Plan
shall be subject to the rights afforded to any "alternate payee" under a
"qualified domestic relations order." Furthermore, a distribution to an
"alternate payee" shall be permitted if such distribution is authorized by
a "qualified domestic relations order," even if the affected Participant
has not separated from service and has not reached the "earliest retirement
age" under the Plan. For the purposes of this Section, "alternate payee,"
"qualified domestic relations order" and "earliest retirement age" shall
have the meaning set forth under Code Section 414(p).
8. TRUSTEE
8.1 Basic Responsibilities of the Trustee. The Trustee shall
have the following categories of responsibilities:
8.1.1 Investment. Consistent with the "funding policy and
method" determined by the Employer, to invest, manage, and control the Plan
assets subject, however, to the direction of an Investment Manager if the
Trustee should appoint such manager as to all or a portion of the assets of
the Plan;
8.1.2 Benefits. At the direction of the Administrator, to
pay benefits required under the Plan to be paid to Participants, or, in the
event of their death, to their Beneficiaries;
8.1.3 Records. To maintain records of receipts and
disbursements and furnish to the Employer and/or Administrator for each
Plan Year a written annual report per Section 8.7; and
8.1.4 Co-Trustees. If there shall be more than one Trustee,
they shall act by a majority of their number, but may authorize one or more
of them to sign papers on their behalf.
8.2 Investment Powers and Duties of the Trustee.
8.2.1 General. The Trustee shall invest and reinvest the
Trust Fund to keep the Trust Fund invested without distinction between
principal and income and in such securities or property, real or personal,
wherever situated, as the Trustee shall deem advisable, including, but not
limited to, stocks, common or preferred, bonds and other evidences of
indebtedness or ownership, and real estate or any interest therein. The
Trustee shall at all times in making investments of the Trust Fund
consider, among other factors, the short and long-term financial needs of
the Plan on the basis of information furnished by the Employer. In making
such investments, the Trustee shall not be restricted to securities or
other property of the character expressly authorized by the applicable law
for trust investments; however, the Trustee shall give due regard to any
limitations imposed by the Code or the Act so that at all times the Plan
may qualify as an Employee Stock Ownership Plan and Trust.
8.2.2 Banks. The Trustee may employ a bank or trust company
pursuant to the terms of its usual and customary bank agency agreement,
under which the duties of such bank or trust company shall be of a
custodial, clerical and record-keeping nature.
8.2.3 Pooled Funds. The Trustee may from time to time with
the consent of the Employer transfer to a common, collective, or pooled
trust fund maintained by any corporate Trustee hereunder, all or such part
of the Trust Fund as the Trustee may deem advisable, and such part or all
of the Trust Fund so transferred shall be subject to all the terms and
provisions of the common, collective, or pooled trust fund which
contemplate the commingling for investment purposes of such trust assets
with trust assets of other trusts. The Trustee may, from time to time with
the consent of the Employer, withdraw from such common, collective, or
pooled trust fund all or such part of the Trust Fund as the Trustee may
deem advisable.
8.2.4 Sale of Company Stock. In the event the Trustee
invests any part of the Trust Fund, pursuant to the directions of the
Administrator, in any shares of stock issued by the Employer, and the
Administrator thereafter directs the Trustee to dispose of such investment,
or any part thereof, under circumstances which, in the opinion of counsel
for the Trustee, require registration of the securities under the
Securities Act of 1933 and/or qualification of the securities under the
Blue Sky laws of any state or states, then the Employer at its own expense,
will take or cause to be taken any and all such action as may be necessary
or appropriate to effect such registration and/or qualification.
8.2.5 Insurance. The Trustee, at the direction of the
Administrator, shall ratably apply for, own, and pay premiums on Contracts
on the lives of the Participants. If a life insurance policy is to be
purchased for a Participant, the aggregate premium for ordinary life
insurance for each Participant must be less than 50% of the aggregate of
the contributions and Forfeitures to the credit of the Participant at any
particular time. If term insurance is purchased with such contributions,
the aggregate premium must be less than 25% of the aggregate contributions
and Forfeitures allocated to a Participant's Account. If both term
insurance and ordinary life insurance are purchased with such
contributions, the amount expended for term insurance plus one-half of the
premium for ordinary life insurance may not in the aggregate exceed 25% of
the aggregate contributions and Forfeitures allocated to a Participant's
Account. The Trustee must convert the entire value of the life insurance
contracts at or before retirement into cash or provide for a periodic
income so that no portion of such value may be used to continue life
insurance protection beyond retirement, or distribute the Contracts to the
Participant. In the event of any conflict between the terms of this Plan
and the terms of any insurance Contract purchased hereunder, the Plan
provisions shall control.
8.3 Other Powers of the Trustee. The Trustee, in addition to all
powers and authorities under common law, statutory authority, including the
Act, and other provisions of the Plan, shall have the following powers and
authorities, to be exercised in the Trustee's sole discretion:
8.3.1 Purchase Securities. To purchase, or subscribe for,
any securities or other property and to retain the same. In conjunction
with the purchase of securities, margin accounts may be opened and
maintained;
8.3.2 Sell Securities. To sell, exchange, convey, transfer,
grant options to purchase, or otherwise dispose of any securities or other
property held by the Trustee, by private contract or at public auction. No
person dealing with the Trustee shall be bound to see to the application of
the purchase money or to inquire into the validity, expediency, or
propriety of any such sale or other disposition, with or without
advertisement;
8.3.3 Voting, Etc. To vote upon any stocks, bonds, or other
securities; to give general or special proxies or powers of attorney with
or without power of substitution; to exercise any conversion privileges,
subscription rights or other options, and to make any payments incidental
thereto; to oppose, or to consent to, or otherwise participate in,
corporate reorganizations or other changes affecting corporate securities,
and to delegate discretionary powers, and to pay any assessments or charges
in connection therewith; and generally to exercise any of the powers of an
owner with respect to stocks, bonds, securities, or other property;
8.3.4 Title. To cause any securities or other property to
be registered in the Trustee's own name or in the name of one or more of
the Trustee's nominees, and to hold any investments in bearer form, but the
books and records of the Trustee shall at all times show that all such
investments are part of the Trust Fund;
8.3.5 Borrow. To borrow or raise money for the purposes of
the Plan in such amount, and upon such terms and conditions, as the Trustee
shall deem advisable; and for any sum so borrowed, to issue a promissory
note as Trustee, and to secure the repayment thereof by pledging all, or
any part, of the Trust Fund; and no person lending money to the Trustee
shall be bound to see to the application of the money lent or to inquire
into the validity, expediency, or propriety of any borrowing;
8.3.6 Liquid Investments. To keep such portion of the Trust
Fund in cash or cash balances as the Trustee may, from time to time, deem
to be in the best interests of the Plan, without liability for interest
thereon;
8.3.7 Holding Period. To accept and retain for such time as
the Trustee may deem advisable any securities or other property received or
acquired as Trustee hereunder, whether or not such securities or other
property would normally be purchased as investments hereunder;
8.3.8 Transfer Payments. To make, execute, acknowledge, and
deliver any and all documents of transfer and conveyance and any and all
other instruments that may be necessary or appropriate to carry out the
powers herein granted;
8.3.9 Disputes. To settle, compromise, or submit to
arbitration any claims, debts, or damages due or owing to or from the Plan,
to commence or defend suits or legal or administrative proceedings, and to
represent the Plan in all suits and legal and administrative proceedings;
8.3.10 Agents. To employ suitable agents and counsel and to
pay their reasonable expenses and compensation, and such agent or counsel
may or may not be agent or counsel for the Employer;
8.3.11 Insurance. To apply for and procure from responsible
insurance companies, to be selected by the Administrator, as an investment
of the Trust Fund such annuity, or other Contracts (on the life of any
Participant) as the Administrator shall deem proper; to exercise, at any
time or from time to time, whatever rights and privileges may be granted
under such annuity, or other Contracts; to collect, receive, and settle for
the proceeds of all such annuity or other Contracts as and when entitled to
do so under the provisions thereof;
8.3.12 Accounts. To invest funds of the Trust in time
deposits or savings accounts bearing a reasonable rate of interest in the
Trustee's bank;
8.3.13 Treasury Securities. To invest in Treasury Bills and
other forms of United States government obligations;
8.3.14 Mutual Funds. To invest in shares of investment
companies registered under the Investment Company Act of 1940;
8.3.15 Insured Deposits. To deposit monies in federally
insured savings accounts or certificates of deposit in banks or savings and
loan associations;
8.3.16 Voting Company Stock. To vote Company Stock as
provided in Section 8.4;
8.3.17 Reorganizations, Etc. To consent to or otherwise
participate in reorganizations, recapitalizations, consolidations, mergers
and similar transactions with respect to Company Stock or any other
securities and to pay any assessments or charges in connection therewith;
8.3.18 Voting Trust, Etc. To deposit such Company Stock
(but only if such deposit does not violate the provisions of Section 8.4
hereof) or other securities in any voting trust, or with any protective or
like committee, or with a trustee or with depositories designated thereby;
8.3.19 Options, Etc. To sell or exercise any options,
subscription rights and conversion privileges and to make any payments
incidental thereto;
8.3.20 Exercise Powers. To exercise any of the powers of an
owner, with respect to such Company Stock and other securities or other
property comprising the Trust Fund. The Administrator, with the Trustee's
approval, may authorize the Trustee to act on any administrative matter or
class of matters with respect to which direction or instruction to the
Trustee by the Administrator is called for hereunder without specific
direction or other instruction from the Administrator;
8.3.21 Options. To sell, purchase and acquire put or call
options if the options are traded on and purchased through a national
securities exchange registered under the Securities Exchange Act of 1934,
as amended, or, if the options are not traded on a national securities
exchange, are guaranteed by a member firm of the New York Stock Exchange;
8.3.22 Other. To do all such acts and exercise all such
rights and privileges, although not specifically mentioned herein, as the
Trustee may deem necessary to carry out the purposes of the Plan.
8.4 Voting Company Stock. The Trustee shall vote all Company
Stock held by it as part of the Plan assets; provided, however, that if any
agreement entered into by the Trust provides for voting of any shares of
Company Stock pledged as security for any obligation of the Plan, then such
shares of Company Stock shall be voted in accordance with such agreement.
The Trustee shall not vote Company Stock which a Participant or Beneficiary
fails to exercise pursuant to this Section.
8.4.1 Voting Rights Pass-Through. Notwithstanding the
foregoing, if the Employer has a registration-type class of securities or,
with respect to Company Stock acquired by, or transferred to, the Plan in
connection with a securities acquisition loan (as defined in Code Section
133(b)) after July 10, 1989, each Participant or Beneficiary shall be
entitled to direct the Trustee as to the manner in which the Company Stock
which is entitled to vote and which is allocated to the Company Stock
Account of such Participant or Beneficiary is to be voted. If the Employer
does not have a registration-type class of securities, with respect to
Company Stock other than Company Stock acquired by, or transferred to, the
Plan in connection with a securities acquisition loan (as defined in Code
Section 133(b)) after July 10, 1989, each Participant or Beneficiary in the
Plan shall be entitled to direct the Trustee as to the manner in which
voting rights on shares of Company Stock which are allocated to the Company
Stock Account of such Participant or Beneficiary are to be exercised with
respect to any corporate matter which involves the voting of such shares
with respect to the approval or disapproval of any corporate merger or
consolidation, recapitalization, reclassification, liquidation,
dissolution, sale of substantially all assets of a trade or business, or
such similar transaction as prescribed in Regulations. For purposes of
this Section the term "registration- type class of securities" means: (A) a
class of securities required to be registered under Section 12 of the
Securities Exchange Act of 1934; and (B) a class of securities which would
be required to be so registered except for the exemption from registration
provided in subsection (g)(2)(H) of such Section 12.
8.4.2 Other. If the Employer does not have a registration-
type class of securities and the by-laws of the Employer require the Plan
to vote an issue in a manner that reflects a one-man, one-vote philosophy,
each Participant or Beneficiary shall be entitled to cast one vote on an
issue and the Trustee shall vote the shares held by the Plan in proportion
to the results of the votes cast on the issue by the Participants and
Beneficiaries.
8.5 Duties Of The Trustee Regarding Payments.
8.5.1 Distributions. The Trustee shall make distributions
from the Trust Fund at such times and in such numbers of shares or other
units of Company Stock and amounts of cash to or for the benefit of the
person entitled thereto under the Plan as the Administrator directs in
writing. Any undistributed part of a Participant's interest in his
accounts shall be retained in the Trust Fund until the Administrator
directs its distribution. Where distribution is directed in Company Stock,
the Trustee shall cause an appropriate certificate to be issued to the
person entitled thereto and mailed to the address furnished it by the
Administrator. Any portion of a Participant's Account to be distributed in
cash shall be paid by the Trustee mailing its check to the same person at
the same address. If a dispute arises as to who is entitled to or should
receive any benefit or payment, the Trustee may withhold or cause to be
withheld such payment until the dispute has been resolved.
8.5.2 Administrator Directions. As directed by the
Administrator, the Trustee shall make payments out of the Trust Fund. Such
directions or instructions need not specify the purpose of the payments so
directed and the Trustee shall not be responsible in any way respecting the
purpose or propriety of such payments except as mandated by the Act.
8.5.3 Returned Payment. In the event that any distribution
or payment directed by the Administrator shall be mailed by the Trustee to
the person specified in such direction at the latest address of such person
filed with the Administrator, and shall be returned to the Trustee because
such person cannot be located at such address, the Trustee shall promptly
notify the Administrator of such return. Upon the expiration of sixty (60)
days after such notification, such direction shall become void and unless
and until a further direction by the Administrator is received by the
Trustee with respect to such distribution or payment, the Trustee shall
thereafter continue to administer the Trust as if such direction had not
been made by the Administrator. The Trustee shall not be obligated to
search for or ascertain the whereabouts of any such person.
8.6 Trustee's Compensation and Expenses and Taxes. The Trustee
shall be paid such reasonable compensation as shall from time to time be
agreed upon in writing by the Employer and the Trustee. An individual
serving as Trustee who already receives full-time pay from the Employer
shall not receive compensation from the Plan. In addition, the Trustee
shall be reimbursed for any reasonable expenses, including reasonable
counsel fees incurred by it as Trustee. Such compensation and expenses
shall be paid from the Trust Fund unless paid or advanced by the Employer.
All taxes of any kind and all kinds whatsoever that may be levied or
assessed under existing or future laws upon, or in respect of, the Trust
Fund or the income thereof, shall be paid from the Trust Fund.
8.7 Annual Report of the Trustee. Within a reasonable period of
time after the later of the Anniversary Date or receipt of the Employer's
contribution for each Plan Year, the Trustee shall furnish to the Employer
and Administrator a written statement of account with respect to the Plan
Year for which such contribution was made.
8.7.1 Contents. Such report shall set forth:
A. The net income, or loss, of the Trust Fund;
B. The gains, or losses, realized by the Trust Fund upon
sales or other disposition of the assets;
C. The increase, or decrease, in the value of the Trust
Fund;
D. All payments and distributions made from the Trust
Fund; and
E. Such further information as the Trustee or
Administrator deems appropriate.
8.7.2 Employer Review. The Employer, forthwith upon its
receipt of each such statement of account, shall acknowledge receipt
thereof in writing and advise the Trustee and/or Administrator of its
approval or disapproval thereof. Failure by the Employer to disapprove any
such statement of account within thirty (30) days after its receipt thereof
shall be deemed an approval thereof. The approval by the Employer of any
statement of account shall be binding as to all matters embraced therein as
between the Employer and the Trustee to the same extent as if the account
of the Trustee had been settled by judgment or decree in an action for a
judicial settlement of its account in a court of competent jurisdiction in
which the Trustee, the Employer and all persons having or claiming an
interest in the Plan were parties; provided, however, that nothing herein
contained shall deprive the Trustee of its right to have its accounts
judicially settled if the Trustee so desires.
8.8 Audit.
8.8.1 Conduct. If an audit of the Plan's records shall be
required by the Act and the regulations thereunder for any Plan Year, the
Administrator shall direct the Trustee to engage on behalf of all
Participants an independent qualified public accountant for that purpose.
Such accountant shall, after an audit of the books and records of the Plan
in accordance with generally accepted auditing standards, within a
reasonable period after the close of the Plan Year, furnish to the
Administrator and the Trustee a report of his audit setting forth his
opinion as to whether any statements, schedules or lists that are required
by Act Section 103 or the Secretary of Labor to be filed with the Plan's
annual report, are presented fairly in conformity with generally accepted
accounting principles applied consistently. All auditing and accounting
fees shall be an expense of and may, at the election of the Administrator,
be paid from the Trust Fund.
8.8.2 Information. If some or all of the information
necessary to enable the Administrator to comply with Act Section 103 is
maintained by a bank, insurance company, or similar institution, regulated
and supervised and subject to periodic examination by a state or federal
agency, it shall transmit and certify the accuracy of that information to
the Administrator as provided in Act Section 103(b) within one hundred
twenty (120) days after the end of the Plan Year or by such other date as
may be prescribed under regulations of the Secretary of Labor.
8.9 Resignation, Removal and Succession of Trustee.
8.9.1 Resignation. The Trustee may resign at any time by
delivering to the Employer, at least thirty (30) days before its effective
date, a written notice of his resignation.
8.9.2 Removal. The Employer may remove the Trustee by
mailing by registered or certified mail, addressed to such Trustee at his
last known address, at least thirty (30) days before its effective date, a
written notice of his removal.
8.9.3 Successor. Upon the death, resignation, incapacity,
or removal of any Trustee, a successor may be appointed by the Employer;
and such successor, upon accepting such appointment in writing and
delivering same to the Employer, shall, without further act, become vested
with all the estate, rights, powers, discretions, and duties of his
predecessor with like respect as if he were originally named as a Trustee
herein. Until such a successor is appointed, the remaining Trustee or
Trustees shall have full authority to act under the terms of the Plan.
8.9.4 Designation of Successor. The Employer may designate
one or more successors prior to the death, resignation, incapacity, or
removal of a Trustee. In the event a successor is so designated by the
Employer and accepts such designation, the successor shall, without further
act, become vested with all the estate, rights, powers, discretions, and
duties of his predecessor with the like effect as if he were originally
named as Trustee herein immediately upon the death, resignation,
incapacity, or removal of his predecessor.
8.9.5 Statement. Whenever any Trustee hereunder ceases to
serve as such, he shall furnish to the Employer and Administrator a written
statement of account with respect to the portion of the Plan Year during
which he served as Trustee. This statement shall be either (a) included as
part of the annual statement of account for the Plan Year required under
Section 8.7, or (b) set forth in a special statement. Any such special
statement of account should be rendered to the Employer no later than the
due date of the annual statement of account for the Plan Year. The
procedures set forth in Section 8.7 for the approval by the Employer of
annual statements of account shall apply to any special statement of
account rendered hereunder and approval by the Employer of any such special
statement in the manner provided in Section 8.7 shall have the same effect
upon the statement as the Employer's approval of an annual statement of
account. No successor to the Trustee shall have any duty or responsibility
to investigate the acts or transactions of any predecessor who has rendered
ali statements of account required by Section 8.7 and this subsection.
8.10 Transfer of Interest. Notwithstanding any other provision
contained in this Plan, the Trustee at the direction of the Administrator
shall transfer the Vested interest, if any, of such Participant in his
account to another trust forming part of a pension, profit sharing or stock
bonus plan maintained by such Participant's new employer and represented by
said employer in writing as meeting the requirements of Code Section
401(a), provided that the trust to which such transfers are made permits
the transfer to be made.
8.11 Direct Rollover. This Section applies to distributions made
on or after January 1, 1993.
8.11.1 Rule. Notwithstanding any provision of the Plan to
the contrary that would otherwise limit a distributees election under this
Section, a "distributee" may elect, at the time and in the manner
prescribed by the Plan Administrator, to have any portion of an "eligible
rollover distribution" paid directly to an "eligible retirement plan"
specified by the distributee in a "direct rollover."
8.11.2 Definitions. For purposes of this Section 8.11:
A. An "eligible rollover" distribution is 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 distributees designated
beneficiary, or for a specified period of ten years or more; any
distribution to the extent such distribution is required under section
401(a)(9) of the Code; and the portion of any distribution that is not
includable in gross income (determined without regard to the exclusion for
net unrealized appreciation with respect to employer securities).
B. An "eligible retirement plan" is 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 the surviving spouse, an eligible retirement plan is an
individual retirement account or individual retirement annuity.
C. A "distributee" includes an Employee or former
Employee. In addition, the Employee's or former Employee's surviving
spouse and the Employee's or former Employee's spouse or former spouse who
is the alternate payee under a qualified domestic relations order, as
defined in section 414(p) of the Code, are distributees with regard to the
interest of the spouse or former spouse.
D. A "direct rollover" is a payment by the plan to the
eligible retirement plan specified by the distributee.
9. AMENDMENT, TERMINATION AND MERGERS
9.1 Amendment.
9.1.1 General. The Employer shall have the right at any
time to amend the Plan, subject to the limitations of this Section, by
action of its Board of Directors or such committe as the Board may
designate or authorize to amend the Plan. However, any amendment which
affects the rights, duties or responsibilities of the Trustee and
Administrator may only be made with the Trustee's and Administrator's
written consent. Any such amendment shall become effective as provided
therein upon its execution. The Trustee shall not be required to execute
any such amendment unless the Trust provisions contained herein are a part
of the Plan and the amendment affects the duties of the Trustee hereunder.
9.1.2 Limitation. No amendment to the Plan shall be
effective if it authorizes or permits any part of the Trust Fund (other
than such part as is required to pay taxes and administration expenses) to
be used for or diverted to any purpose other than for the exclusive benefit
of the Participants or their Beneficiaries or estates; or causes any
reduction in the amount credited to the account of any Participant; or
causes or permits any portion of the Trust Fund to revert to or become
property of the Employer.
9.1.3 Protected Benefits. Except as permitted by
Regulations, no Plan amendment or transaction having the effect of a Plan
amendment (such as a merger, plan transfer or similar transaction) shall be
effective to the extent it eliminates or reduces any "Section 411(d)(6)
protected benefit" or adds or modifies conditions relating to "Section
411(d)(6) protected benefits" the result of which is a further restriction
on such benefit unless such protected benefits are preserved with respect
to benefits accrued as of the later of the adoption date or effective date
of the amendment. "Section 411(d)(6) protected benefits" are benefits
described in Code Section 411(d)(6)(A), early retirement benefits and
retirement-type subsidies, and optional forms of benefit. In addition, no
such amendment shall have the effect of terminating the protections and
rights set forth in Section 7.12, unless such termination shall then be
permitted under the applicable provisions of the Code and Regulations; such
a termination is currently expressly prohibited by Regulation 54.4975-
11(a)(3)(ii).
9.2 Termination.
9.2.1 Employer Right; Vesting. The Employer shall have the
right at any time to terminate the Plan by delivering to the Trustee and
Administrator written notice of such termination. Upon any full or partial
termination, all amounts credited to the affected Participants' Accounts
shall become 100% Vested as provided in Section 7.4 and shall not
thereafter be subject to forfeiture, and all unallocated amounts shall be
allocated to the accounts of all Participants in accordance with the
provisions hereof.
9.2.2 Distribution of Trust Fund. Upon the full termination
of the Plan, the Employer shall direct the distribution of the assets of
the Trust Fund to Participants in a manner which is consistent with and
satisfies the provisions of Sections 7.5 and 7.6. Except as permitted by
Regulations, the termination of the Plan shall not result in the reduction
of "Section 411(d)(6) protected benefits" in accordance with Section 9.1.3,
above.
9.3 Merger or Consolidation. This Plan and Trust may be merged
or consolidated with, or its assets and/or liabilities may be transferred
to any other plan and trust only if the benefits which would be received by
a Participant of this Plan, in the event of a termination of the plan
immediately after such transfer, merger or consolidation, are at least
equal to the benefits the Participant would have received if the Plan had
terminated immediately before the transfer, merger or consolidation, and
such transfer, merger or consolidation does not otherwise result in the
elimination or reduction of any "Section 411(d)(6) protected benefits" in
accordance with Section 9.1.3, above.
10. MISCELLANEOUS
10.1 Participant's Rights. This Plan shall not be deemed to
constitute a contract between the Employer and any Participant or to be a
consideration or an inducement for the employment of any Participant or
Employee. Nothing contained in this Plan shall be deemed to give any
Participant or Employee the right to be retained in the service of the
Employer or to interfere with the right of the Employer to discharge any
Participant or Employee at any time regardless of the effect which such
discharge shall have upon him as a Participant of this Plan.
10.2 Alienation.
10.2.1 Prohibition. Subject to the exceptions provided
below, no benefit which shall be payable out of the Trust Fund to any
person (including a Participant or his Beneficiary) shall be subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, or charge, and any attempt to anticipate, alienate, sell,
transfer, assign, pledge, encumber, or charge the same shall be void; and
no such benefit shall in any manner be liable for, or subject to, the
debts, contracts, liabilities, engagements, or torts of any such person,
nor shall it be subject to attachment or legal process for or against such
person, and the same shall not be recognized by the Trustee, except to such
extent as may be required by law.
10.2.2 Exception: QDROS. This provision shall not apply to
a "qualified domestic relations order" defined in Code Section 414(p), and
those other domestic relations orders permitted to be so treated by the
Administrator under the provisions of the Retirement Equity Act of 1984.
The Administrator shall establish a written procedure to determine the
qualified status of domestic relations orders and to administer
distributions under such qualified orders. Further, to the extent provided
under a "qualified domestic relations order", a former spouse of a
Participant shall be treated as the spouse or surviving spouse for all
purposes under the Plan.
10.3 Construction of Plan. This Plan and Trust shall be
construed and enforced according to the Act and the laws of the State of
California, other than its laws respecting choice of law, to the extent not
preempted by the Act.
10.4 Gender and Number. Wherever any words are used herein in
the masculine, feminine or neuter gender, they shall be construed as though
they were also used in another gender in all cases where they would so
apply, and whenever any words are used herein in the singular or plural
form, they shall be construed as though they were also used in the other
form in all cases where they would so apply.
10.5 Legal Action. In the event any claim, suit, or proceeding
is brought regarding the Trust and/or Plan established hereunder to which
the Trustee or the Administrator may be a party, and such claim, suit, or
proceeding is resolved in favor of the Trustee or Administrator, they shall
be entitled to be reimbursed from the Trust Fund for any and all costs,
attorney's fees, and other expenses pertaining thereto incurred by them for
which they shall have become liable.
10.6 Prohibition Against Diversion of Funds.
10.6.1 Exclusive Benefit. Except as provided below and
otherwise specifically permitted by law, it shall be impossible by
operation of the Plan or of the Trust, by termination of either, by power
of revocation or amendment, by the happening of any contingency, by
collateral arrangement or by any other means, for any part of the corpus or
income of any trust fund maintained pursuant to the Plan or any funds
contributed thereto to be used for, or diverted to, purposes other than the
exclusive benefit of Participants, Retired Participants, or their
Beneficiaries.
10.6.2 Excess Contributions. In the event the Employer
shall make an excessive contribution under a mistake of fact pursuant to
Act Section 403(c)(2)(A), the Employer may demand repayment of such
excessive contribution at any time within one (1) year following the time
of payment and the Trustees shall return such amount to the Employer within
the one (1) year period. Earnings of the Plan attributable to the excess
contributions may not be returned to the Employer but any losses
attributable thereto must reduce the amount so returned.
10.7 Bonding. Every Fiduciary, except a bank or an insurance
company, unless exempted by the Act and regulations thereunder, shall be
bonded in an amount not less than 10% of the amount of the funds such
Fiduciary handles; provided, however, that the minimum bond shall be $1,000
and the maximum bond, $500,000. The amount of funds handled shall be
determined at the beginning of each Plan Year by the amount of funds
handled by such person, group, or class to be covered and their
predecessors, if any, during the preceding Plan Year, or if there is no
preceding Plan Year, then by the amount of the funds to be handled during
the then current year. The bond shall provide protection to the Plan
against any loss by reason of acts of fraud or dishonesty by the Fiduciary
alone or in connivance with others. The surety shall be a corporate surety
company (as such term is used in Act Section 412(a)(2)), and the bond shall
be in a form approved by the Secretary of Labor. Notwithstanding anything
in the Plan to the contrary, the cost of such bonds shall be an expense of
and may, at the election of the Administrator, be paid from the Trust Fund
or by the Employer.
10.8 Employer's and Trustee's Protective Clause. Neither the
Employer nor the Trustee, nor their successors, shall be responsible for
the validity of any Contract issued hereunder or for the failure on the
part of the insurer to make payments provided by any such Contract, or for
the action of any person which may delay payment or render a Contract null
and void or unenforceable in whole or in part.
10.9 Insurer's Protective Clause. Any insurer who shall issue
Contracts hereunder shall not have any responsibility for the validity of
this Plan or for the tax or legal aspects of this Plan. The insurer shall
be protected and held harmless in acting in accordance with any written
direction of the Trustee, and shall have no duty to see to the application
of any funds paid to the Trustee, nor be required to question any actions
directed by the Trustee. Regardless of any provision of this Plan, the
insurer shall not be required to take or permit any action or allow any
benefit or privilege contrary to the terms of any Contract which it issues
hereunder, or the rules of the insurer.
10.10 Receipt and Release for Payments. Any payment to any
Participant, his legal representative, Beneficiary, or to any guardian or
committee appointed for such Participant or Beneficiary in accordance with
the provisions of the Plan, shall, to the extent thereof, be in full
satisfaction of all claims hereunder against the Trustee and the Employer,
either of whom may require such Participant, legal representative,
Beneficiary, guardian or committee, as a condition precedent to such
payment, to execute a receipt and release thereof in such form as shall be
determined by the Trustee or Employer.
10.11 Action by the Employer. Whenever the Employer under the
terms of the Plan is permitted or required to do or perform any act or
matter or thing, it shall be done and performed by a person duly authorized
by its legally constituted authority.
10.12 Named Fiduciaries and Allocation of Responsibility. The
"named Fiduciaries" of this Plan are (1) the Employer, (2) the
Administrator and (3) the Trustee. The named Fiduciaries shall have only
those specific powers, duties, responsibilities, and obligations as are
specifically given them under the Plan. In general, the Employer shall
have the sole responsibility for making the contributions provided for
under Section 4.1; and shall have the sole authority to appoint and remove
the Trustee and the Administrator; to formulate the Plan's "funding policy
and method"; and to amend or terminate, in whole or in part, the Plan. The
Administrator shall have the sole responsibility for the administration of
the Plan, which responsibility is specifically described in the Plan. The
Trustee shall have the sole responsibility of management of the assets held
under the Trust, except those assets, the management of which has been
assigned to an Investment Manager, who shall be solely responsible for the
management of the assets assigned to it, all as specifically provided in
the Plan. Each named Fiduciary warrants that any directions given,
information furnished, or action taken by it shall be in accordance with
the provisions of the Plan, authorizing or providing for such direction,
information or action. Furthermore, each named Fiduciary may rely upon any
such direction, information or action of another named Fiduciary as being
proper under the Plan, and is not required under the Plan to inquire into
the propriety of any such direction, information or action. It is intended
under the Plan that each named Fiduciary shall be responsible for the
proper exercise of its own powers, duties, responsibilities and obligations
under the Plan. No named Fiduciary shall guarantee the Trust Fund in any
manner against investment loss or depreciation in asset value. Any person
or group may serve in more than one Fiduciary capacity. In the furtherance
of their responsibilities hereunder, the "named Fiduciaries" shall be
empowered to interpret the Plan and Trust and to resolve ambiguities,
inconsistencies and omissions, which findings shall be binding, final and
conclusive.
10.13 Headings. The headings and subheadings of this Plan have
been inserted for convenience of reference and are to be ignored in any
construction of the provisions hereof.
10.14 Approval by Internal Revenue Service.
10.14.1 Qualification. Notwithstanding anything herein to
the contrary, contributions to this Plan are conditioned upon the initial
qualification of the Plan under Code Section 401. if the Plan receives an
adverse determination with respect to its initial qualification, then the
Plan may return such contributions to the Employer within one year after
such determination, provided the application for the determination is made
by the time prescribed by law for filing the Employer's return for the
taxable year in which the Plan was adopted, or such later date as the
Secretary of the Treasury may prescribe.
10.14.2 Deductibility. Notwithstanding any provisions to
the contrary, except Sections 3.6, and 3.7, and the last clause of Section
4.1.3, any contribution by the Employer to the Trust Fund is conditioned
upon the deductibility of the contribution by the Employer under the Code
and, to the extent any such deduction is disallowed, the Employer may,
within one (1) year following the disallowance of the deduction, demand
repayment of such disallowed contribution and the Trustee shall return such
contribution within one (1) year following the disallowance. Earnings of
the Plan attributable to the excess contribution may not be returned to the
Employer, but any losses attributable thereto must reduce the amount so
returned.
10.15 Uniformity. All provisions of this Plan shall be
interpreted and applied in a uniform, nondiscriminatory manner. In the
event of any conflict between the terms of this Plan and any Contract
purchased hereunder, the Plan provisions shall control.
10.16 Securities and Exchange Commission Approval. The Employer
may request an interpretative letter from the Securities and Exchange
Commission stating that the transfers of Company Stock contemplated
hereunder do not involve transactions requiring a registration of such
Company Stock under the Securities Act of 1933. In the event that a
favorable interpretative letter is not obtained, the Employer reserves the
right to amend the Plan and Trust retroactively to their Effective Dates in
order to obtain a favorable interpretative letter or to terminate the Plan.
IN WITNESS WHEREOF, this Plan has been executed the day and year first
above written.
"EMPLOYER:"
SANTA BARBARA BANK & TRUST, a California corporation
By
Jay D. Smith, Senior Vice President
"TRUSTEE:"
SANTA BARBARA BANK & TRUST, a California corporation
By
Janice Kroekel, Assistant Vice President
