SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM S-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Community Bancorp.
(Exact name of registrant as specified in its charter)
Vermont
(State or other jurisdiction of incorporation or organization)
03-0284070
(I.R.S. Employer Identification No.)
Derby Road, Derby, Vermont 05829 (802)334-7915
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Richard C. White, President With a copy to:
Community Bancorp. Denise J. Deschenes, Esq.
Derby Road Primmer & Piper, P.C.
P.O. Box 259, Derby, VT 05829 PO Box 159, St. Johnsbury, VT 05819
(802)334-7915 (802)748-5061
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Approximate date of commencement of proposed sale to the public: As soon
as practicable after this registration statement becomes effective and
from time to time thereafter.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933 check the following box. [x]
If the registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item
11(a)(1) of this Form, check the following box. [x]
Calculation of Registration Fee
<TABLE>
<CAPTION>
Proposed
Title of each Proposed maximum
class of maximum aggregate
securities to be Amount to be offering price offering Amount of
registered (1) registered per unit(2) price(2) Registration fee
<S> <C> <C> <C> <C>
Common Stock
$2.50 par value
per share 71,805 shs. $ 18.25 $1,310,441.25 $397.10
<FN>
<F01> Pursuant to Rule 416(a) of the Commission the registrant intends to
include in this registration any additional shares issued as stock
dividends or pursuant to stock splits with respect to the shares listed
in the table.
<F02> Solely for purposes of this table, and pursuant to Rule 457(c), based
on the average bid and asked prices for the Company's common stock on
December 18, 1996.
</TABLE>
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with section 8(a)
of the Securities Act of 1933 or until the registration statement shall
become effective on such date as the Commission, acting pursuant to said
section 8(a), may determine.
PROSPECTUS
COMMUNITY BANCORP.
71,805 Shares of Common Stock
(par value $2.50 per share)
______________
This Prospectus relates to the offering of up to 71,805 shares of Common
Stock, par value $2.50 per share (the "Common Stock") of Community Bancorp.,
(the "Company") by certain selling stockholders who are directors and/or
executive officers of the Company and who may be deemed to be affiliates of
the Company (the "Selling Stockholders") under applicable rules of the
Securities and Exchange Commission. See "Selling Stockholders." The Common
Stock was acquired by the Selling Stockholders from the Company in various
registered offerings, pursuant to stock dividends or pursuant to conversion
of convertible debentures of the Company. In addition, shares of the Common
Stock may have been acquired by Selling Stockholders in secondary transactions,
including purchases through brokers and privately negotiated purchases not
involving any broker or dealer. This Prospectus also relates to shares of
the Company's Common Stock that may be issued to the Selling Stockholders upon
conversion in the future of convertible debentures held by them. The Company
will not receive any of the proceeds from the sale of the Common Stock by the
Selling Stockholders.
The Common Stock may be offered by the Selling Stockholders from time
to time in negotiated transactions, at fixed prices which may be changed,
at trading prices prevailing at the time of sale, at prices related to such
prevailing trading prices or at negotiated prices. The Selling Stockholders
may effect such transactions directly with the purchaser of the stock or by
selling the Common Stock to or through broker-dealers, and such broker-dealers
may receive compensation in the form of discounts, concessions or commissions
from the Selling Stockholders and/or the purchasers of the Common Stock for
whom such broker-dealers may act as agents or to whom they may sell as
principals, or both (which compensation as to a particular broker-dealer might
be in excess of customary commissions). The Selling Stockholders may also
offer and sell the Common Stock from time to time in reliance upon applicable
exemptive provisions of the Securities Act of 1933 rather than pursuant to the
Company's registration statement relating to the Common Stock offered hereby.
See "Plan of Distribution."
The Common Stock is not traded through the National Association of
Securities Dealers Automated Quotation ("NASDAQ") system nor is it listed
for trading on any securities exchange. There is no organized public trading
market in the Common Stock and trading in the Common Stock is limited. There
can be no assurance that a public trading market will ever develop in the
future. See "Nature of Trading Market; Book Value." For information regarding
the rights of the holders of the Common Stock see "Description of Common Stock."
The Company is bearing expenses in connection with this offering in the
amount of approximately $10,000, consisting primarily of legal and accounting
charges.
FOR A DISCUSSION OF CERTAIN RISK FACTORS THAT SHOULD BE CONSIDERED BY
EACH PROSPECTIVE INVESTOR, SEE "INVESTMENT CONSIDERATIONS."
THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER FEDERAL AGENCY.
______________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY OTHER REGULATORY AGENCY, NOR HAS THE
COMMISSION OR ANY OTHER REGULATORY AGENCY PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
______________
The date of this Prospectus is ______________, 1996
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 and in accordance therewith files proxy statements,
reports and other information with the Securities and Exchange Commission (the
"Commission" or the "SEC"). Such proxy statements, reports and other
information may be inspected without charge at the public reference facilities
maintained at the Commission's office at 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the following regional offices of the Commission:
Northwestern Atrium Center, 500 West Madison Street, Suite 500, Chicago,
Illinois 60621-2511; and 75 Park Place, 14th floor, New York, New York 10007.
Copies of such material may be obtained at prescribed rates from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549.
The Company has filed with the Commission a Registration Statement under
the Securities Act of 1933 with respect to the securities offered hereby.
This Prospectus does not contain all of the information set forth in such
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission, and reference is hereby made to
the Registration Statement and exhibits thereto for further information with
respect to the Company and the securities to which this Prospectus relates.
Summaries of and references to various documents in this Prospectus do not
purport to be complete and in each case reference is made to the copy of such
document filed as an exhibit to the Registration Statement or otherwise filed
with the Commission.
The principal executive offices of the Company are located at Derby Road,
U.S. Route 5, Derby, Vermont 05829, telephone (802) 334-7915.
________________________
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference:
1. The Company's Annual Report on Form 10-KSB for the year ended December
31, 1995; and
2. The Company's Quarterly Reports on Form 10-QSB for the quarters ended
March 31, June 30, and September 30, 1996.
Any statement contained in a document incorporated by reference herein
shall be modified or superseded for purposes of this Prospectus to the extent
that a statement contained herein, or in any amendment or supplement hereto,
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company undertakes to provide without charge to each person (including
a beneficial owner of the Company's Common Stock) to whom a copy of this
Prospectus has been delivered, on the written or oral request of any such
person, a copy of any or all of the documents referred to above which have been
incorporated in this Prospectus by reference other than exhibits to such
documents (unless such exhibits are specifically incorporated by reference into
such documents). Requests for such copies should be directed to: Stephen P.
Marsh, Vice President - Treasurer, Community Bancorp., P.O. Box 259, Derby
Vermont 05829 (telephone (802) 334-7915).
ANNUAL REPORTS TO SECURITY HOLDERS
The Company provides and will continue to provide its shareholders with an
Annual Report not later than 120 days after the close of its fiscal year. Such
report contains audited financial information about the Company, including a
consolidated balance sheet as of the end of the fiscal year and a consolidated
income statement and statement of changes in financial position for such fiscal
year. The Company also provides its shareholders with other periodic reports
which contain unaudited financial information and with proxy solicitation
materials for its annual shareholders' meeting which contain information about
the directors and executive officers of the Company.
PROSPECTUS SUMMARY
This summary is qualified in its entirety by the more detailed information
appearing elsewhere in this Prospectus or incorporated by reference herein.
THE COMPANY
Community Bancorp. (the "Company") is a Vermont corporation and registered
one-bank holding company which, through its subsidiary, Community National Bank
(the "Bank"), is engaged in commercial and consumer banking in northern Vermont.
The bank is a national bank and is a member of the Federal Reserve System and
its deposits are insured up to applicable limits by the Bank Insurance Fund,
which is administered by the Federal Deposit Insurance Corporation ("FDIC").
The Company's and the Bank's principal offices are located on U.S. Route 5,
Derby Road in Derby, Vermont. At September 30, 1996 the Company had total
consolidated assets, deposits and stockholders' equity of approximately
$208,759,297, $189,362,176 and $18,552,889, respectively.
The Company is a legal entity separate and distinct from the Bank. The
principal source of the Company's funds is dividends paid by the Bank. Various
legal restrictions limit the extent to which the Bank can supply funds to the
Company. See "INVESTMENT CONSIDERATIONS" and "REGULATION AND SUPERVISION."
THE OFFERING
Securities Offered and Purpose of the Offering. The offering relates to up to
71,805 shares of the Common Stock of the Company, $2.50 par value per share (the
"Common Stock"), which may be offered for sale from time to time by certain
stockholders, who are directors and/or executive officers of the Company and
who may be considered "affiliates" of the Company (the "Selling Stockholders")
under applicable rules of the Securities and Exchange Commission (the "SEC").
The shares included in the offering represent approximately 5.24% of the
Company's outstanding Common Stock, and have been registered for sale with the
SEC. The purpose of the registration of the shares with the SEC is to provide
on-going liquidity for the Selling Stockholders should they need or desire to
sell some or all of their shareholdings in the Company. Unlike the Company's
other shareholders, as affiliates the Selling Stockholders would otherwise be
severely limited by applicable law in their ability to sell their Common Stock,
and in some circumstances they might be effectively prohibited from selling such
stock entirely. See "SELLING STOCKHOLDERS".
Offering Price and Plan of Distribution. This offering consists of shares of
Common Stock already outstanding that are owned by the Selling Stockholders and
shares that may be issued to them in the future upon conversion of the
convertible debentures of the Company held by them. The Common Stock may be
sold by them from time to time in negotiated transactions, at fixed prices which
may be changed, at trading prices prevailing at the time of sale, at prices
related to such prevailing trading prices or at negotiated prices. The Selling
Stockholders may effect such transactions directly with the purchaser of the
Common Stock or by selling the Common Stock to or through broker-dealers, and
such broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the Selling Stockholders and/or the purchasers
of the Common Stock for whom such broker-dealers may act as agents or to whom
they sell as principals, or both (which compensation as to a particular broker-
dealer might be in excess of customary commissions). The Selling Stockholders
may also offer and sell the Common Stock from time to time in reliance upon
applicable exemptive provisions of the Securities Act of 1933 rather than
pursuant to the Company's registration statement relating to the Common Stock
offered hereby. See "PLAN OF DISTRIBUTION" and "SELLING SHAREHOLDERS."
The individual Selling Stockholders may sell their Common Stock from time to
time in one or more transactions, or in their discretion may sell all of such
stock as a block, in a single transaction.
Use of Proceeds. All of the Common Stock offered hereby is being sold by the
Selling Stockholders, not the Company. Accordingly, the Company will not
receive any proceeds from the sale of such stock. See "SELLING STOCKHOLDERS."
Investment Considerations. Prospective purchasers of the Common Stock should
give special attention to certain factors discussed below under the caption
"INVESTMENT CONSIDERATIONS," including statutory limitations on dividend
payments, the absence of an established trading market in the Common Stock and
antitakeover provisions in the Company's Articles of Association and By-laws.
THE COMMON STOCK
The rights of the Company's stockholders are governed generally by Vermont
corporate law and the provisions of the Company's Articles of Association and
By-laws. See "DESCRIPTION OF COMMON STOCK."
Voting Rights. Shareholders are entitled to one vote per share on all matters
requiring shareholder action. See "DESCRIPTION OF COMMON STOCK."
Dividends. Shareholders are entitled to dividends when and as declared by the
Board of Directors. Historically, the Company has paid quarterly cash
dividends. See "DIVIDENDS." The Company's principal source of income for
payment of dividends is dividend payments from the Bank. National banks are
subject to statutory limitations on the amount of dividends they may pay. Bank
holding companies are also subject to certain restrictions in the payment of
dividends under certain circumstances. See "INVESTMENT CONSIDERATIONS."
Trading Market. There is no active public trading market in the Company's
Common Stock and no assurance can be given that such a market will ever develop
in the future, or if such a market develops, that it can be sustained over time.
See "INVESTMENT CONSIDERATIONS" and "NATURE OF TRADING MARKET; BOOK VALUE."
Outstanding Shares. As of September 30, 1996, there were 1,369,274 shares of
Common Stock outstanding held by approximately 767 shareholders of record. The
Company also had outstanding as of such date convertible debentures, which if
fully converted on such date would have resulted in the issuance of an
additional 25,807 shares of the Company's Common Stock. The Company also issues
additional shares from time to time pursuant to its Dividend Reinvestment Plan
and may issue shares in the future pursuant to the Company's Retirement Savings
Plan or as otherwise permitted by law. See "DESCRIPTION OF COMMON STOCK."
INVESTMENT CONSIDERATIONS
Before investing in the Common Stock offered hereby, prospective investors
should consider carefully the information presented below.
Absence of Established Trading Market.
The Common Stock is not quoted on NASDAQ nor is it listed for trading on
any securities exchange. There is no active public trading market in such
Common Stock and there can be no assurance that a trading market for the Common
Stock will ever develop in the future, or if developed, that such a trading
market would be sustained over time. The absence of an established trading
market in the Common Stock adversely affects the liquidity of an investment
in that stock inasmuch as investors who may wish or need to sell all or part
of their investment in the stock may not be able to do so, or may have less
control over the timing of such a sale. See "NATURE OF TRADING MARKET; BOOK
VALUE."
Ability to Make Dividend Payments.
Federal law limits the amount of cash dividends that the Bank may pay to
the Company and could in some circumstances restrict the amount of dividends
payable by the Company. The Company's ability to pay dividends to holders of
the Common Stock is dependent on receipt of cash dividends from the Bank.
Failure to obtain sufficient funds from the Bank to make periodic dividend
payments would therefore adversely affect the Company's ability to pay dividends
to the holders of Common Stock. See "DIVIDENDS" and "REGULATION AND
SUPERVISION."
The Board of Governors of the Federal Reserve System (the "FRB") has the
power to prohibit the payment of dividends by a bank holding company if actions
by such a company constitute an unsafe or unsound practice. The FRB has issued
a policy statement on the payment of cash dividends by bank holding companies,
which expresses the FRB's view that a bank holding company should pay cash
dividends only to the extent that the company's net income for the past year is
sufficient to cover both the cash dividends and a rate of earning retention that
is consistent with the company's capital needs, asset quality, and overall
financial condition. The FRB also indicated that it would be inappropriate for
a company experiencing serious financial problems to borrow funds to pay
dividends. FRB policy also requires that a bank holding company serve as a
source of financial strength to its subsidiary banks by standing ready to use
available resources to provide adequate capital funds to those banks during
periods of financial stress or adversity. These policies could affect the
ability of the Company to pay cash dividends in some circumstances.
The Bank's ability to make dividend payments to the Company is subject to
the Bank maintaining profitable operations. There can be no assurance that
future earnings will support dividend payments to the Company. As a national
bank, the Bank's ability to pay dividends is subject to certain legal
restrictions. Pursuant to the National Bank Act, no national bank may pay
dividends from its capital. All dividends must be paid out of net profits,
after deducting reserves for losses and bad debts. The National Bank Act
further restricts the payment of dividends out of net profits by prohibiting a
national bank from declaring a dividend on its shares of common stock until the
surplus funds equals the amount of capital stock or, if the surplus fund
does not equal the amount of capital stock, until one-tenth of a bank's net
profits for the preceding half year in the case of quarterly or semi-annual
dividends, or the preceding two half years in the case of annual dividends, are
transferred to the surplus fund.
Pursuant to federal regulations, the approval of the OCC is required prior
to the payment of a dividend if the total of all dividends declared by a
national bank in any calendar year would exceed the total of its retained net
profits for that year combined with its net profits for the two preceding years,
less any required transfers to surplus or a fund for the retirement of any
preferred stock. Further, the OCC also has authority to prohibit the payment of
dividends by a national bank when it determines such payment to be an unsafe and
unsound banking practice.
Federal law also prohibits FDIC-insured depository institutions from paying
dividends or making capital distributions that would cause the institution to
fail to meet minimum regulatory capital requirements.
Antitakeover Provisions.
The provisions described below for classification of the Board of Directors
and the availability for issuance of additional Common Stock, as well as certain
provisions of state and federal law which may prohibit acquisition of control of
the Company or the Bank without prior regulatory approval, could make it more
difficult for a person or entity to acquire control of the Company without
negotiating with the Board of Directors and could have the possible effect of
deterring an offer for the Company at a substantial premium over the current
trading price of the Company's Common Stock. See "DESCRIPTION OF COMMON STOCK."
Classified Board. The Company's Articles of Association provide for the
division of the Company's Board of Directors into three classes having staggered
terms of office, with approximately one third of the directors elected each
year. The affirmative vote of at least 75 percent of the issued and outstanding
shares is required in order to change the total number of directors fixed by the
Board within the permissible range (between 9 and 25), and in order to amend or
appeal the classification provisions.
Authorized Common Stock. The Company's Articles of Association authorize the
Company to issue up to two million shares of Common Stock, $2.50 par value per
share. As of September 30, 1996 approximately 1,369,274 shares of such Common
Stock were issued and outstanding. As of September 30, 1996 the Company had
reserved for issuance pursuant to the conversion rights under its outstanding
debentures an additional 25,807 shares of Common Stock. Although the Board has
no present intention of doing so, shares of authorized and unissued Common Stock
could be issued in one or more transactions that would make a takeover of the
Company more difficult. For example, additional shares could be issued by the
Board, without seeking shareholder approval, to dilute the stock ownership of
any person seeking to obtain control of the Company or could be privately placed
with purchasers who would support the Board in opposing a hostile takeover
attempt.
Competition, Economic Conditions and Government Regulation.
The Company and the Bank operate in an increasingly competitive environment
for banking and financial services and compete with a number of other commercial
banks, savings and loan associations, money market funds, credit unions and
other financial institutions, many of which have substantially greater financial
resources than the Company. In addition, the banking business is significantly
affected by general economic and political conditions, and by governmental
monetary and fiscal policies. Conditions such as inflation, recession,
unemployment, interest rates, short money supply, scarce natural resources, and
other factors are beyond the Company's control and could adversely affect its
profitability. Further, the Company is subject to extensive governmental
supervision, regulation and control, and there can be no assurance that future
legislation, regulations or government policy will not adversely affect the
banking industry or the operations of the Company and the Bank. See "THE
COMPANY AND THE BANK" and "REGULATION AND SUPERVISION".
THE COMPANY AND BANK
Organization and Business.
Community Bancorp. (the "Company") was organized under the laws of the
State of Vermont in 1982 and became a registered bank holding company under the
Bank Holding Company Act of 1956, as amended, in October 1983 when it acquired
all of the voting shares of Community National Bank (the "Bank"). The Bank is
the only subsidiary of the Company and principally all of the Company's business
operations are presently conducted through it.
The Bank was organized in 1851 as the Peoples Bank, and was subsequently
reorganized as the National Bank of Derby Line in 1865. In 1975, after 110
continuous years of operation as the National Bank of Derby Line, the Bank
acquired the Island Pond National Bank and changed its name to "Community
National Bank."
Community National Bank provides a complete range of retail and commercial
banking services to the residents and businesses in northeastern Vermont. These
services include checking, savings and time deposit accounts, mortgage, consumer
and commercial loans, safe deposit and night deposit services, credit card
services, and a full line of personal fiduciary services.
Competition and Market Areas.
The Bank's seven offices are located in Orleans, Essex and Caledonia
Counties in northeastern Vermont. Its primary service area is in the towns of
Derby and Newport, Vermont, with approximately 64 percent of its total deposits
as of December 31, 1995 derived from that area. The Bank's (and the Company's)
main office is located on the Derby Road, Route 5 in Derby, Vermont.
The Bank competes in all aspects of its business with other banks and
credit unions in northern Vermont, including two of the largest banks in the
state, which maintain branch offices throughout the Bank's service area.
Historically, competition in Orleans and Essex Counties has come from The
Chittenden Trust Company and The Howard Bank, N.A., a subsidiary of Banknorth
Group, Inc., based in Burlington, Vermont. The Chittenden Trust Company
maintains a branch office in Newport, and The Howard Bank maintains one office
in Barton and one office in Orleans. The Bank also competes with the Newport
branch offices of the Passumpsic Savings Bank, based in St. Johnsbury, and the
Lyndonville Savings Bank and Trust Company, based in Lyndonville, and with two
local credit unions for deposits and consumer loans. In 1995 the Bank opened
its newest branch office, in St. Johnsbury in Caledonia County. Competitors of
that branch include the locally-based Passumpsic Savings Bank, Citizens Savings
Bank and Trust Company and Lyndonville Savings Bank and Trust Company, as well
as with the local branch offices of The Howard Bank, N.A. and the Merchants
Bank, both based in Burlington.
With recent changes in applicable banking regulations and the continued
evolution of the financial services industry, the competition for deposits and
loans has broadened to include not only traditional rivals such as mutual
savings banks and stock savings banks, but also several non-traditional rivals
such as mutual funds and brokerage firms, mortgage companies, insurance
companies and non-bank lending institutions such as finance companies. This
trend of increasing competition in the financial services industry is likely to
continue in the future.
Although competition is strong, the Bank has to date successfully responded
to that competition by offering quality products and services and by maintaining
a strong community orientation. The Bank's commitment to the communities it
serves is evidenced in various lending programs it has sponsored, such as its
1993 Community Booster Loan Program, involving more than $6 million in loans to
small businesses, farmers and individuals at low fixed rates to stimulate the
local economy, its lending activities through the Vermont Housing Finance
Agency, the U.S. Veterans' Administration and its contributions to local
charities and schools and its sponsorship of the Community Circle social club
for senior citizens who are Bank depositors and the Community Business Circle
networking group for its business customers. As a result of its strong ties to
the community the Bank's lending and investment activities are funded almost
entirely by core deposits.
Employees.
The Company does not have any employees. As of September 30, 1996, the
Bank employed approximately 93 full-time employees and 33 part-time employees.
Management of the Bank considers its employee relations to be good.
REGULATION AND SUPERVISION
Bank Holding Company Regulation.
As a registered bank holding company, the Company is subject to on-going
regulation, supervision and examination by the Board of Governors of the
Federal Reserve System, under the Bank Holding Company Act of 1956, as amended
(the "Act"). A bank holding company for example, must obtain the prior approval
of the Board before it may merge or consolidate with another company or before
it acquires all or substantially all of the assets of any bank, or acquires
ownership or control of more than 5 percent of the voting shares of a bank. In
addition, the Company is generally prohibited under the Act from engaging in, or
acquiring direct or indirect ownership or control of more than 5% of the voting
shares of any company engaged in non-banking activities unless the Federal
Reserve, by order or regulation, has found such activities to be so closely
related to banking or managing or controlling banks as to be a proper incident
thereto. Some of the activities that the Federal Reserve Board has determined
by regulation to be closely related to banking are: (1) making and servicing
loans that could be made by mortgage, finance, credit card or factoring
companies; (2) performing the functions of a trust company; (3) certain leasing
of real or personal property; (4) providing certain financial, banking or
economic data processing services; (5) except as otherwise prohibited by law,
acting as an insurance agent or broker with respect to insurance that is
directly related to the extension of credit or the provision of other financial
services or, under certain circumstances, with respect to insurance that is sold
in certain small communities in which the bank holding system maintains banking
offices; (6) acting as an underwriter for credit life insurance and credit
health and accident insurance directly related to extensions of credit by the
holding company system; (7) providing certain kinds of management consulting
advice to unaffiliated banks and non-bank depository institutions; (8)
performing real estate appraisals; (9) issuing and selling money order and
similar instruments and travelers checks and selling U.S. Savings Bonds; (10)
providing certain securities brokerage and related services for the account of
bank customers; (11) underwriting and dealing in certain government obligations
such as bankers' acceptances and certificates of deposit; (12) providing
consumer financial counselling; (13) providing tax planning and preparation
services; (14) providing check guarantee services to merchants; (15) operating
a collection agency; and (16) operating a credit bureau.
The Company does not at present engage, directly or indirectly, in any non-
banking activities, nor can any prediction be made as to which such activities,
if any, the Company may subsequently engage in or when any such activities might
be undertaken.
Unless it meets specified regulatory criteria for well-capitalized
institutions, a bank holding company must also obtain prior Federal Reserve
approval in order to purchase or redeem its own stock if the gross consideration
to be paid, when added to the net consideration paid by the company for all
purchases or redemptions by the company of its equity securities within the
preceding 12 months, will equal 10 percent or more of the company's consolidated
net worth.
Under the Riegle-Neal Interstate Banking and Efficiency Act of 1994
substantially all state law barriers to the acquisition of banks by out-of-state
bank holding companies have been eliminated effective September 29, 1995. The
law will also permit interstate branching by banks effective as of June 1, 1997,
subject to the ability of states to opt-out completely or to set an earlier
effective date. Earlier this year the Vermont legislature adopted legislation
"opting in" to interstate branching effective May 30, 1996, for banks from
states with similar branching reciprocity for Vermont banks. The Company
anticipates that the effect of the new laws may be to increase competition
within the markets in which the Company operates, although the Company cannot
predict the effect to which competition will increase in such markets or the
timing of such increase.
The Company is required to file with the Federal Reserve Board an annual
report and such additional information as the Board may require pursuant to the
Act. The Board may also make examinations of the Company and any direct or
indirect subsidiary of the Company.
The Company has registered its Common Stock under Section 12(g) of the
Securities Exchange Act of 1934 and is required to file annual and periodic
reports and proxy statements and other information with the Securities and
Exchange Commission.
The Company and the Bank as its subsidiary are considered "affiliates" for
the purposes of Section 18(j) of the Federal Deposit Insurance Act, as amended,
and Sections 23A and 23B of the Federal Reserve Act, as amended. Accordingly,
they are subject to limitations with respect to the Bank's ability to make loans
and other extensions of credit to or investments in the Company or in any other
subsidiaries that the Company may acquire. All affiliate transactions must
satisfy certain limitations and otherwise be on terms and conditions that are
consistent with safe and sound banking practices. In that regard, the Bank may
not purchase from any affiliate a low quality asset (as that term is defined in
the Federal Reserve Act). In addition, transactions by the Bank with an
affiliate must be on substantially the same terms as would be available to
non-affiliates. The Company and the Bank are also prohibited by federal banking
laws from engaging in certain tie-in arrangements in connection with any
extension of credit or lease or sale of any property or the furnishing of
services. For example, the Bank may not extend credit on the condition that the
customer obtain some additional service from the Bank or the Company (other than
certain routine banking services or relationships such as maintenance of a
deposit account), or refrain from obtaining such service from a competitor.
Bank Regulation.
The Bank is a national banking association and subject to the provisions of
the National Bank Act and federal and state statutes and rules and regulations
applicable to national banks. The primary supervisory authority for the Bank is
the Comptroller of the Currency. The Bank is subject to periodic examination by
the Comptroller and must file periodic reports with the Comptroller containing a
full and accurate statement of its affairs. The Comptroller's examinations are
designed for the protection of the Bank's depositors and not for its
shareholders. The Bank is a member of the Federal Reserve System and is subject
to applicable provisions of the Federal Reserve Act and the rules and
regulations promulgated thereunder by the Board of Governors of the Federal
Reserve System. The deposits of the Bank up to applicable limits are insured by
the Bank Insurance Fund, which is administered by the Federal Deposit Insurance
Corporation ("FDIC"). Accordingly, the Bank is also subject to regulation by
the FDIC.
The statutes and regulations administered by these agencies govern most
aspects of the Bank's business, including required reserves against deposits,
loans, investments, dividends, and the establishment of branches and other
banking facilities.
Regulatory Capital Requirements.
Bank holding companies are required to comply with the Federal Reserve
Board's risk- based capital requirements. Regulatory risk-based capital
requirements take into account the differing risk profiles of banking
organizations by assigning risk weights to both assets and off-balance-sheet
exposures. In addition, capital is divided into two tiers. Tier 1 capital
includes common stockholders' equity and qualifying preferred stock. Tier 2, or
supplementary capital, includes, subject to certain limitations, limited-life
preferred stock, mandatory convertible securities, subordinated debt and a
portion of the reserve for credit losses. Total capital is defined as the sum
of tier 1 and tier 2 capital.
Banking organizations are currently required by federal regulation to meet
a minimum total capital ratio of 8%, with at least one-half being in the form of
tier 1 capital and a minimum tier 1 capital-to-risk adjusted assets ratio of 4%.
Higher tier 1-to-risk-weighted assets and total capital ratios can be imposed on
particular institutions at the discretion of the regulatory agencies. Banking
organizations are also subject to a minimum leverage capital ratio, which is
defined as the ratio of tier 1 capital to total adjusted quarterly average
assets, of at least 3%. All but the most highly rated organizations are
expected to maintain an additional cushion of at least 1% to 2% above the stated
minimum. As of December 31, 1995 the Company's total capital ratio and tier 1
capital ratio were in excess of 19.31% and 8.86% respectively. The Company's
leverage ratio as of such date was in excess of 9%.
The Company's and the Bank's capital ratios as of December 31, 1995 not
only met the minimum regulatory capital requirements, they also met the capital
ratio aspects of the "well capitalized" category under the Federal Deposit
Insurance Corporation Improvement Act of 1991 (FDICIA) (see further discussion
of FDICIA below). The "well capitalized" minimum ratios are 10% for total
capital, 6% for tier 1 capital and 5% for leverage.
Additional information regarding the Company's historical regulatory
capital ratios is set forth in the Company's 1995 Annual Report to Shareholders,
which accompanies this Prospectus.
Company Support of Subsidiary Banks.
The Financial Institutions Reform, Recovery, and Enforcement Act of 1989
("FIRREA"), among other things, imposes liability on an institution the deposits
of which are insured by the FDIC, such as the Bank, for certain potential
obligations to the FDIC incurred in connection with other FDIC-insured
institutions under common control with such institution.
Under the National Bank Act, if the capital stock of a national bank is
impaired by losses or otherwise, the OCC is authorized to require payment of the
deficiency by assessment upon the bank's stockholders, pro rata, and to the
extent necessary, if any such assessment is not paid by any stockholder after
three months notice, to sell the stock of such stockholder to make good the
deficiency. Under Federal Reserve Board policy, a bank holding company is
expected to act as a source of financial strength to its subsidiary banks and to
commit resources to support such subsidiaries. This support may be required at
times when, absent such Federal Reserve policy, the Company may not find itself
able to provide it.
In the event of a receivership of a bank subsidiary, any obligation of such
bank to an affiliate such as a bank holding company would be subordinated. In
the event of a bank holding company's bankruptcy, any commitment by the bank
holding company to a federal bank regulatory agency to maintain the capital of a
subsidiary bank would be assumed by the bankruptcy trustee and entitled to a
priority of payment.
Community Reinvestment Act.
The Bank is subject to the federal Community Reinvestment Act ("CRA"),
which requires banks to demonstrate their commitment to serving the credit needs
of low-income residents of their communities. The Bank participates in a
variety of direct and indirect lending programs and other investments for the
benefit of the low-income residents of its communities. The Bank received a
rating of "Outstanding" at its last CRA examination conducted by the Comptroller
of the Currency.
Deposit Insurance Premium Assessments.
Under applicable federal laws and regulations, deposit insurance premium
assessments to the Bank Insurance Fund ("BIF") are based on a supervisory risk
rating system, with the most favorably rated institutions paying the lowest
premiums. The deposits of the Bank are insured under the BIF. The Bank is
currently in the most favorable deposit insurance assessment category, and pays
the statutory annual minimum deposit premium assessment of $2,000.
FDICIA.
FDICIA has provided for expanded regulation of financial institutions. The
applicability of many of its provisions is based upon an institution's capital
category in relation to the five categories established by FDICIA (for which the
banking agencies have set specific capital ratio and other requirements). The
federal banking agencies have issued regulations in a number of areas to
implement FDICIA's provisions and these regulations impose progressively more
restrictive constraints on the operations and management of banks, which are not
at least "adequately capitalized," as they move into lower capital categories.
As noted above, both the Company and the Bank have capital ratios that meet the
requirements of the "well capitalized" category under the FDICIA.
Additionally, the regulations issued by the banking agencies under FDICIA,
among other things: establish a risk-based system for deposit insurance
premiums; limit the ability of many banks to use brokered deposits; increase
requirements related to independent audits; restrict investments and activities
of state-chartered banks; set standards for real estate lending; increase
lending restrictions with respect to a bank's executive officers and directors,
and establish standards in a number of areas with respect to safety and
soundness.
It is anticipated that FDICIA, and the regulations promulgated thereunder,
will continue to result in more limitations on banking activities generally,
and increased costs for the Company, the Bank and the banking industry as a
whole because of higher FDIC assessments, and higher costs of compliance,
documentation and recordkeeping.
Effects of Government Monetary Policy.
The earnings of the Bank are affected by general and local economic
conditions and by the policies of various governmental regulatory authorities.
In particular, the Federal Reserve Board regulates money and credit conditions
and interest rates in order to influence general economic conditions, primarily
through open market operations and United States Government Securities, varying
the discount rate on member bank borrowings and setting reserve requirements
against member and nonmember bank deposits. Federal Reserve Board monetary
policies have in the past had a significant effect on the operating results of
commercial banks, including the Bank, and are expected to continue to do so in
the future.
USE OF PROCEEDS
The Common Stock offered hereby is being sold by the Selling Stockholders,
not the Company. (See "SELLING STOCKHOLDERS.") Accordingly, the Company will
not receive any of the proceeds from the sale of the Common Stock in this
Offering.
NATURE OF TRADING MARKET; BOOK VALUE
Trading Market.
The Common Stock is not traded through the NASDAQ system, nor is it listed
for trading on any securities exchange. There is at present no established
public trading market for the Company's Common Stock and no assurance can be
given that a market will develop in the future, or that if such a market were
to develop, that it could be sustained. While the brokerage firms of First
Albany Corp., Smith Barney Shearson, Dean Witter Reynolds Inc. and A.G. Edwards
generally attempt to match buyers and sellers of the Company's stock when they
receive buy or sell orders, trading is not active. In addition there are
occasional trades through other brokerage firms or as a result of private
transactions not involving any broker or dealer. A public trading market having
the desirable characteristics of depth, liquidity and orderliness depends
upon the presence in the marketplace of both willing buyers and willing sellers
of the stock at any given time and such presence is, in turn, dependent upon
the individual decisions of purchasers and sellers over which neither the
Company nor any broker or dealer has control.
The table below sets forth the ranges of high and low per share purchase
prices for the Company's Common Stock, and the trading volume, in trades
effected through First Albany Corp. (the only brokerage firm from which the
Company receives such information) during each calendar quarter for the last
three years and during the first three quarters of 1996. The information in the
table does not reflect all trades in the Common Stock during the periods shown
and may reflect as few as a single transaction during the periods reported on.
Purchase prices shown are gross prices paid by the purchasers and do not reflect
the amount received by the sellers net of any fees or commissions.
<TABLE>
<CAPTION>
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
<S> <C> <C> <C> <C>
1996
Purchase Price
High............ $17.25 $18.00 $19.00
Low............. $16.50 $17.50 $17.50
Trading Volume....... 3,945 shs. 5,062 shs. 6,709 shs.
1995
Purchase Price
High............ $17.00 $17.50 $17.50 $17.50
Low............. $16.50 $16.75 $17.00 $17.00
Trading Volume....... 4,548 shs. 7,180 shs. 3,565 shs. 3,012 shs.
1994
Purchase Price
High............ $18.00 $18.50 $19.00 $18.50
Low............. $16.50 $17.00 $17.91 $16.25
Trading Volume....... 10,445 shs. 8,513 shs. 3,845 shs. 5,480 shs.
1993
Purchase Price
High............ $14.50 $15.00 $15.50 $16.75
Low............. $13.50 $13.625 $14.50 $15.50
Trading Volume....... 12,483 shs. 10,615 shs. 7,769 shs. 4,448 shs.
</TABLE>
Management of the Company does not know the price at which all trades were
conducted during the periods indicated and the prices set forth above might not
be indicative of the prices that might have been obtained had there been an
active, established trading market in the Common Stock. In addition past
trading prices are not necessarily indicative of future trading prices.
Book Value.
The table below shows the per share book value of the Common Stock
outstanding as of the dates indicated. Except for year-end figures, which are
based on audited financial information, the book values below are based on
unaudited financial information as of the dates indicated.
<TABLE>
<CAPTION>
1996 1995 1994 1993
<S> <C> <C> <C> <C>
March 31............... $13.28 $12.44 $12.03 $10.81
June 30................ 13.39 12.66 12.04 11.29
September 30........... 13.55 12.82 12.14 11.45
December 31............ ------ 13.21 12.27 11.90
</TABLE>
DIVIDENDS
The Board of Directors of the Company has customarily declared and paid
cash dividends on a quarterly basis. Quarterly cash dividends paid for the
past four years are indicated in tabular form below.
<TABLE>
<CAPTION>
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
<C> <C> <C> <C> <C>
1996 $.26 $.26 $.26 $.26
1995 $.24 $.24 $.24 $.24
1994 $.22 $.22 $.22 $.22
1993 $.20 $.20 $.20 $.20
</TABLE>
It is the present intention of the Company's Board of Directors to continue
its past policy of declaring and paying cash dividends quarterly. Nevertheless
declaration and payment of future dividends is in the sole discretion of the
Board of Directors and the amount and frequency of such dividends, if any, will
be dependent upon many factors, including earnings, general economic conditions,
and the financial condition and capital needs of the business, as well as on
restrictions arising from federal banking laws and regulations to which the
Company and the Bank are subject. See "INVESTMENT CONSIDERATIONS."
Although the Company paid a 5% stock dividend during the first quarter of 1993,
and had previously paid stock dividends on other occasions, it does not
ordinarily declare stock dividends and no prediction can be made as to whether,
or when, any stock dividends will be paid in the future.
CAPITALIZATION
The table below sets forth the consolidated capital structure and long-term
debt of the Company and the Bank at December 31, 1995 and September 30, 1996.
Because the proceeds of the Offering contemplated in this Prospectus will be
paid to the Selling Stockholders, not the Company, the Offering will not have
any effect on the Company's capitalization.
<TABLE>
<CAPTION>
12/31/95 09/30/96
<S> <C> <C>
Long Term Debt
(9% Convertible Subordinated
Debentures due August 1, 1998) 191,000 136,000
(11% Convertible Subordinated
Debentures due August 1, 2001) 74,000 65,000
</TABLE>
<TABLE>
<CAPTION>
12/31/95 09/30/96
<S> <C> <C>
Stockholders' Equity
(Common Stock, $2.50 par value)
Authorized: 2,000,000 shares
Issued: 1,359,869 (12/31/95)
1,398,638 (09/30/96) 3,399,674 3,496,596
Capital Surplus 5,513,703 5,968,568
Retained Earnings 9,056,562 9,527,226
Net Realized Loss on Marketable Equity Securities
Unrealized gain (loss) on securities available
for sale (net of tax) 50,501 681
Less Treasury Stock (1) <440,023> <440,182>
Total Stockholders' Equity 17,580,417 18,552,889
Total Stockholders' Equity and Long Term Debt 17,845,417 18,753,889
<FN>
<F01> 29,355 shares and 29,364 shares, at December 31, 1995 and September 30,
1996, respectively.
</TABLE>
SELLING STOCKHOLDERS
All of the Selling Stockholders are currently directors and/or executive
officers of the Company. Because of their position with the Company, under
applicable rules of the SEC they may be considered to be affiliates of the
Company and therefore subject to the same limitations as the Company on the
sale of Common Stock. Generally affiliates of a Company may not sell the
stock of their company except pursuant to a registration statement covering
the shares or pursuant to an applicable exemption from the registration
requirements of federal securities laws. Although affiliates of public
companies ordinarily rely on the SEC's exemptive Rule 144 in effecting sales
of their company's stock, certain of the requirements of that rule effectively
preclude reliance on it for sales of stock (such as that of the Company) in
which there is no active public trading market.
The purpose of the registration of shares in this Offering is to provide
the Company's directors and executive officers with some measure of liquidity
for their investment in the Company, by affording them an opportunity to engage
in sales of Company stock from time to time in compliance with applicable
federal securities laws. Management believes that providing the Company's
directors and executive officers with a means by which they may make sales of
Common Stock from time to time will assist the Company in retaining and
recruiting individuals of high caliber to serve as executive officers and
directors of the Company. Further, the Company believes that investment in the
Common Stock by directors and executive officers helps to increase their
identification with shareholder interests and should be encouraged. The
registration of shares in this Offering is intended to remove the disincentive
to such investment created by the restrictions on stock transfers by affiliates.
The following table sets forth certain information regarding the Selling
Stockholders. The shares of Common Stock offered hereby were acquired by the
Selling Stockholders from the Company in various registered public offerings,
pursuant to stock dividends or pursuant to conversion rights under the Company's
9% convertible subordinated debentures. Shares of the Common Stock may also
have been acquired by Selling Stockholders in secondary transactions, including
purchases through brokers and privately negotiated purchases not involving any
broker or dealer. The convertible debentures to which some of the shares
included in the table relate were acquired by the Selling Stockholders from the
Company at the time of their original issuance in registered offerings of such
debentures. All fractional shares have been rounded to the nearest full share.
<TABLE>
<CAPTION>
Number of Shares
Number of Shares Number of and Percentage
and Percentage of Shares of Outstanding
Name of Selling of Outstanding Common Stock Common Stock to
Stockholder and Position Common Stock Included in be Owned After
with the Company Currently Owned (1) the Offering the Offering (2)
<S> <C> <C> <C> <C> <C>
Thomas E. Adams, 10,350 (.76%) 5,000 (3) $ 5,350 (.39%)
Director
Francis P. Allard, 3,540 (.26%) 500 (4) 3,040 (.22%)
Director
Elwood Duckless, 43,896 (3.21%) 39,465 (5) 4,431 (.32%)
Director
Stephen P. Marsh, 23,960 (1.75%) 5,000 (6) 18,960 (1.38%)
Vice President & Treasurer
Anne T. Moore, 16,578 (1.21%) 16,578 (7) -0- -0-
Director
Rosemary M. Rowe, 1,759 (.13%) 1,759 -0- -0-
Secretary
Alan A. Wing, 2,623 (.19%) 1,222 (8) 1,401 (.10%)
Vice President
Richard C. White, 23,684 (1.73%) 2,000 (9) 21,684 (1.58%)
President, Chief Executive
Officer and Director
TOTALS 126,390 71,805 54,866
<FN>
<F01> As of September 30, 1996, except for shares held indirectly by certain
of the executive officers through investment in the Company stock fund
under the Employee Savings (401(k)) plan, which are as of June 30, 1996,
the date of the most recent plan report.
<F02> Assumes the sale of all shares to which this Prospectus relates.
<F03> Includes 4,309 shares held in an IRA for Mr. Adams' benefit.
<F04> Includes 3,043 shares held by Mr. Allard jointly with his wife,.
<F05> Includes 358 shares held by Mrs. Duckless and 7,169 shares held by Mr.
Duckless jointly with his wife.
<F06> Includes 3,871 shares indirectly owned by Mr. Marsh by virtue of his
participation in the Community Bancorp. stock fund under the Company's
Retirement Savings Plan.
<F07> Includes 7,959 shares held by Mrs. Moore's husband.
<F08> Includes 194 shares Mr. Wing has the right to acquire upon conversion of
9% Convertible Subordinated Debentures of the Company held by him; and
1,420 shares indirectly owned by Mr. Wing by virtue of his participation
in the Community Bancorp. stock fund under the Company's Retirement
Savings Plan. Except for his holdings through the company's Retirement
Savings Plan, all of Mr. Wing's shares and debentures are held jointly
with his wife.
<F09> Includes 1,709 shares held in an IRA for Mr. White's benefit, 9,019
shares indirectly owned by Mr. White by virtue of his participation in
the Community Bancorp. stock fund under the Company's Retirement Savings
Plan; and 644 shares held by Mr. White jointly with his wife.
</TABLE>
Additional Information.
The following table sets forth certain information concerning the
Company's directors and executive officers. Except for directors Jacques R.
Couture, Rosemary M. Lalime, Marcel M. Locke and Dale Wells who do not
propose to sell any of their shares in this Offering, each of the individuals
named below is a Selling Stockholder.
<TABLE>
<CAPTION>
Director/
Executive
Officer of
Community
Name and age(1) Principal Employment Bancorp. Since
<S> <S> <C>
Directors, Term Expiring in 1997:
Anne T. Moore Principal Real Estate Broker, 1993
Age 53 Taylor Moore Agency, Inc.
Derby, VT
(insurance and real estate)
Elwood Duckless Past President, 1987
Age 55 Newport Electric Company
Newport, VT
Rosemary M. Lalime Principal Broker and Owner, 1985
Age 50 All Seasons Realty
Newport, VT
Directors, Term Expiring in 1998:
Francis P. Allard Retired, 1993
Age 69 Canadian National Railway
Island Pond, VT
Marcel M. Locke Proprietor, 1986
Age 57 Parkview Garage
Orleans, VT
Dale Wells President 1996
Age 50 Dale Wells Building
Contractor, Inc.
St. Johnsbury, VT
Directors, Term Expiring in 1997:
Thomas E. Adams Owner, 1986
Age 49 NPC Realty, Inc.
Holland, VT
Jacques R. Couture Dairy Farmer/Maple Producer 1992
Age 46 Westfield, VT
Richard C. White President, Chief Executive 1983
Age 50 Officer and Director,
Community Bancorp.
and Community National Bank
Derby, VT
Executive Officers:(2)
Stephen P. Marsh Vice President and Treasurer 1980
Age 48 Community Bancorp.,
Senior Vice President & Cashier,
Community National Bank
Alan A. Wing Vice President, 1980
Age 52 Community Bancorp.,
Senior Vice President,
Community National Bank
Rosemary M. Rowe Secretary, 1986
Age 55 Community Bancorp.,
Senior Vice President,
Community National Bank
<FN>
<F01> Each is a director of both the Company and the Bank. The dates
indicated in the table reflect only service on the Board of Directors
of the Company and not the Bank.
<F02> Other than Mr. White, President of the Company, who is also a director
and is previously named in the table.
</TABLE>
PLAN OF DISTRIBUTION
The Common Stock offered hereby is not being offered through an
underwriter. Rather, the Common Stock is being offered directly by the
Selling Stockholders. The Common Stock may be sold from time to time in
negotiated transactions, at fixed prices which may be changed, at trading
prices prevailing at the time of sale, at prices related to such prevailing
trading prices or at negotiated prices. The Selling Stockholders may effect
such transactions directly with the purchaser of the stock or by selling the
Common Stock to or through broker-dealers, and such broker-dealers may
receive compensation in the form of discounts, concessions or commissions
from the Selling Stockholders and/or the purchasers of the Common Stock for
whom such broker-dealers may act as agents or to whom they sell as principals,
or both (which compensation as to a particular broker-dealer might be in
excess of customary commissions.) The Selling Stockholders may also offer
and sell the Common Stock from time to time in reliance upon applicable
exemptive provisions of the Securities Act of 1933 rather than pursuant to
this registration statement.
The individual Selling Stockholders may sell their shares of Common
Stock offered hereby in multiple transactions or may sell all of such shares
as a block, in a single transaction.
DESCRIPTION OF COMMON STOCK
The rights of the Company's common shareholders are governed generally
by the Vermont Business Corporation Act (11A V.S.A. Sections 1.01 et seq.)
and by the Company's Articles of Association, as amended, and its By-Laws,
as amended and restated.
Authorized Common Stock.
The Company has authorized capital stock consisting of 2,000,000 shares
of $2.50 par value Common Stock, of which 1,369,274 shares were issued and
outstanding as of September 30, 1996, held by approximately 767 shareholders
of record, leaving 630,726 shares authorized but unissued. No other classes
of stock are authorized.
There are no present plans to issue any additional shares of the Company's
Common Stock, except pursuant to the Company's Dividend Reinvestment Plan or
as may be required upon the exercise of any conversion privileges by holders
of the Company's convertible subordinated debentures. The Company has
outstanding two classes of convertible debt securities: 11% Convertible
Subordinated Debentures due 2004 and 9% Convertible Subordinated Debentures
due 1998. Approximately 25,807 additional shares of Common Stock would be
issued and outstanding if all such Debentures outstanding as of September 30,
1996 had been converted into Common Stock of the Company based on conversion
ratios in effect as of such date. In addition, authorized but unissued shares
could, but would not necessarily, be issued in connection with any future
affiliations with other banks or companies. Although there are no present
plans for any such affiliations, the Company will continue its past policy of
exploring favorable opportunities for acquisitions or investments.
Further, shares could be issued by the Board of Directors in one or more
transactions that would make a takeover of the Company more difficult. For
example, additional shares could be issued by the Board to dilute the stock
ownership of any person seeking to obtain control of the Company or could be
privately placed with purchasers who would support the Board in opposing
a hostile takeover attempt.
Dividends.
The holders of the Company's Common Stock are entitled to receive dividends
when and as declared by the Company's Board of Directors out of funds legally
available therefor. The Company's primary source of revenue, including funds
for the payment of cash dividends, is dividends paid to the Company by the
Company's subsidiary, Community National Bank (the "Bank"). Under national
banking laws, the approval of the Comptroller of the Currency is required for
the payment of a dividend to the Company by the Bank if the total of all
dividends (including any proposed dividend) declared by the Bank in any
calendar year exceeds the total of its net profits for that year combined with
its retained net profits for the preceding two years, less any required
transfers to surplus or to a fund for the retirement of any preferred stock.
Payment of dividends by the Company to its shareholders is subject to applicable
provisions of Vermont corporate law and applicable regulations and policies of
the Federal Reserve. See "REGULATION AND SUPERVISION."
While the Company intends to continue its past policy (and that of its
predecessor, the Bank) of declaring and paying cash dividends quarterly, no
assurance can be given as to the amount or frequency of future dividends, as
they are dependent upon many factors, including earnings, general economic
conditions, and the financial condition of the business. See "DIVIDENDS."
In the past the Company has not issued stock dividends on any regular basis
and no prediction can be made as to whether any such dividends will be issued
in the future.
Voting Rights.
Holders of the Company's Common Stock are entitled to one vote per share
on all matters requiring shareholder action, including election of Directors.
Classified Board of Directors.
The Company's Articles of Association provide for a Board of Directors
consisting of not more than 25 nor fewer than 9 individuals, to be divided into
three classes having staggered terms of office, with approximately one-third of
the directors elected each year. The number of directors within the permissible
range fixed by resolution of the Board, but that number may be increased or
decreased by the affirmative vote of at least 75% of the issued and outstanding
Common shares. In addition, the affirmative vote of at least 75% of the issued
and outstanding Common shares is required in order to amend or repeal the
classification provisions. As a result of the division of the Board into three
classes, a change in composition of the whole Board would take up to three years
and change of a majority of the Directors would require two successive annual
meetings.
The provisions for classification of the Board are intended to help to
promote continuity in the management and control of the Company and to
discourage hostile attempts to takeover control of the Company by putting
persons who might contemplate a surprise takeover on notice that control of
the Board of Directors may not be obtainable in a short period of time. Those
provisions, as well as the availability for issuance of a large number of
authorized but unissued shares, and the requirements of applicable federal and
state law prohibiting changes of control of the Company or the Bank without
prior regulatory approval, could have the possible effect of deterring an offer
for the Company at a substantial premium over the current trading price of the
Company's Common Stock.
Preemptive Rights.
Shareholders of the Company do not have preemptive rights to subscribe to
additional shares of the Company's stock.
Redemption.
The shares of the Company's Common Stock are not callable by the Company.
Upon agreement with a shareholder, however, the Company may repurchase its own
shares out of funds legally available therefor. A redemption would be subject
to prior approval by the Federal Reserve Board if the gross consideration to be
paid, when added to the net consideration paid by the Company for all other
redemptions during the preceding twelve months, would equal or exceed 10% of the
Company's net worth.
Liquidation Rights.
The Company's shareholders are entitled to share, on a share-for-share
basis, in any assets distributable after payment to creditors (including holders
of the Company's convertible debentures), upon a liquidation, dissolution or
winding up of the Company.
Statutory Liability; Calls or Assessments.
The shares of the Company's Common Stock are not subject to any statutory
liability nor are they subject to any calls or assessments.
Registration Under Section 12 of Exchange Act.
The Common Stock is registered under Section 12(g) of the Securities and
Exchange Act of 1934 and in accordance with that Act the Company files with the
Securities and Exchange Commission proxy statements and annual and other
periodic reports and information.
INDEMNIFICATION
The officers, Directors, agents and employees of the Company and persons
serving as directors, officers, agents or employees of another entity at the
request of the Company are entitled to indemnification under the Articles of
Association of the Company. Generally, such persons are entitled to
indemnification against expenses incurred in connection with any suit, action
or proceeding to which they are made a party by reason of their position with
the Company.
The Company is not currently involved in any pending or threatened
litigation which might result in claims for indemnification against the Company
by any of the Company's Directors or executive officers.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities
Act of 1933 and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Company of expenses incurred or paid by a
director, officer or controlling person of the Company in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final
adjudication of such issue.
EXPERTS
The consolidated financial statements and schedules of the Company for the
year ended December 31, 1995, incorporated herein by reference to its Annual
Report on Form 10-KSB for the year then ended, and to its Annual Report to
Shareholders for the same period, have been examined by A.M. Peisch & Company,
independent public accountants, as indicated in their report thereon, and are
incorporated herein in reliance upon the authority of said firm as experts
in accounting and auditing.
FINANCIAL INFORMATION
This Prospectus is accompanied by, and should be read in conjunction with,
the Company's Annual Report on Form 10-KSB for the year ended December 31, 1995,
and the Company's quarterly reports on Form 10-QSB for the quarter ended
September 30, 1996, which have been incorporated herein by reference.
No person has been authorized to give any
information or to make any representations other than
as contained in or incorporated by reference in this
Prospectus, and if given or made, any such
information or representation must not be relied upon
as having been authorized by the Company. Neither
the delivery of this Prospectus nor any sale hereunder
shall under any circumstances create any implication
that there has been no change in the affairs of the
Company since any of the dates as of which
information is furnished herein or since the date
hereof. This Prospectus does not constitute an offer
to sell, or a solicitation of an offer to buy, any of the
securities offered hereby in any jurisdiction to any
person to whom it is unlawful to make such an offer.
===============================================
Table of Contents
Page
Available Information 2
Incorporation of Certain Documents by
Reference 2
Annual Reports to Security Holders 3
Prospectus Summary 3
The Company 3
The Offering 4
The Common Stock 5
Investment Considerations 5
The Company and Bank 8
Regulation and Supervision 9
Use of Proceeds 14
Nature of Trading Market; Book Value 14
Dividends 16
Capitalization 16
Selling Stockholders 17
Plan of Distribution 21
Description of Common Stock 21
Indemnification 24
Experts 25
Financial Information 25
===============================================
===============================================
COMMUNITY BANCORP.
71,805 shares of
Common Stock
par value $2.50 per share
------------------
PROSPECTUS
------------------
____________, 1996
===============================================
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
* SEC registration fee. . . . $ 397.10
* Printing and word processing . . 500.00
* Legal fees and expenses . . 6,000.00
* Accounting fees and expenses . . 1,500.00
* Blue Sky filing fees and expenses
(including counsel fees) 0.00
* Other Expenses. . . . . . . 0.00
Total. . . . . . . . . . $ 8,397.10
* Estimated
Item 15. Indemnification of Directors and Officers
Sections 8.50 through 8.58 of the Vermont Business Corporation Act contain
provisions governing the indemnification of corporate directors and officers.
In general, the statute permits a corporation to indemnify any person who
was or is a party to or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
corporation), by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee or agent of another corporation
or entity, against expenses (including attorney's fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation. With respect to any criminal action or proceeding, the indemnified
individual must have had no reasonable cause to believe his conduct was
unlawful. With respect to actions or suits by or in the right of the
corporation, such indemnification is limited to expenses (including attorneys'
fees) actually and reasonably incurred by such person in connection with the
defense or settlement of such action or suit. Indemnification is not permitted
with respect to any claim, issue or matter as to which such person has been
adjudged to be liable to the corporation unless and only to the extent that the
court in which such action or suit was brought determines upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the court shall deem proper. Additionally, a corporation is
required to indemnify its directors and officers against expenses to the extent
that such directors or officers have been successful on the merits or otherwise
in defense of any action, suit or proceeding referred to above or in defense of
any claim, issue or matter therein.
Indemnification can be made by a corporation only upon a determination
made in the manner prescribed by the statute that indemnification is proper in
the circumstances because the party seeking indemnification has met the
applicable standard of conduct as set forth in the Vermont Business Corporation
Act. That statutory indemnification is not deemed to be exclusive of any other
rights to which those seeking indemnification may be entitled under any bylaw,
agreement, vote of stockholders or disinterested directors, or otherwise. A
corporation also has the power to purchase and maintain insurance on behalf of
any person covering any liability incurred by such person in his capacity as a
director, officer, employee or agent of the corporation, or arising out of his
status as such, whether or not the corporation would have the power to indemnify
him against such liability. The indemnification provided by the Vermont
Business Corporation Act, unless otherwise provided when authorized or ratified,
continues as to a person who has ceased to be a director, officer, employee or
agent and inures to the benefit of the heirs, executors and administrators of
such a person.
Article 12 of the Company's Articles of Association contain similar provisions
for indemnification of directors and officers.
The Company has purchased Directors and Officers Liability Insurance.
Item 16. Exhibits
(10)(i) Description of Community Bancorp. Officer Incentive Plan
(ii) Prototype Cash or Deferred Profit-Sharing Plan and Trust/Custodial
Account sponsored by First Vermont Bank and Trust Company, Basic Plan
Document #04 (February, 1993).
(iii) Nonstandardized Adoption Agreement Prototype Cash or Deferred Profit-
Sharing Plan and Trust/Custodial Account sponsored by First Vermont
Bank and Trust Company (December, 1994).
(iv) Lease dated January 6, 1994 by and between Community National
Bank as lessee and the Town of Brighton, VT as lessor, relating
to Island Pond branch office.
(v) Lease dated March 28, 1985 by and between Community National bank
as lessee and Dean M. and Barbara W. Comstock as lessors, relating
to Barton branch office, as amended by letter dated June 15, 1994.
(vi) Lease dated November 30, 1994, by and between Community National Bank
as lessee and Roger F. Ames as lessor, relating to Newport branch
office.
(vii) Lease dated April 27, 1995 between Community National Bank as lessee
and Murphy Realty Company, Inc. as lessor, relating to the St.
Johnsbury branch office.
(viii) Bid and Acceptance Documents dated June 5, July 24, and September 4,
1996, between Community National Bank as pruchaser and the State of
Vermont as seller, relating to construction and purchase of a condo-
minium in Emory A. Hebard State Office Building in Newport, Vermont.
(13) (i) Annual Report of Community Bancorp. on Form 10-KSB for the year
ended December 31, 1995. *
(ii) Quarterly Report of Community Bancorp. on Form 10-QSB for the
Quarter ended September 30, 1996.*
(23) Consent of A.M. Peisch & Company, independent public accountants.
[FN]
<F*> Previously filed with the Commission pursuant to Section 13 of the
Securities Exchange Act of 1934, and incorporated by reference herein.
The Company's SEC file number is 0-16435.
Item 17. Undertakings
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereto) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
(4) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions described in Item 15 above
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person of the Registrant in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-2 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Town of Derby, State of Vermont, on October 8, 1996.
COMMUNITY BANCORP. (Registrant)
By: /s/ Richard C. White, President
Signature and Title
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
Name Title Date
/s/ Thomas E. Adams Director 10/08/96
Thomas E. Adams
/s/ Francis P. Allard Director 10/08/96
Francis P. Allard
/s/ Jacques R. Couture Director 10/08/96
Jacques R. Couture
/s/ E. Duckless Director 10/08/96
Elwood Duckless
/s/ Rosemary M. Lalime Director 10/08/96
Rosemary M. Lalime
/s/ Marcel M. Locke Director 10/08/96
Marcel M. Locke
/s/ Stephen P. Marsh Vice President and Treasurer; 10/08/96
Stephen P. Marsh Principal Financial &
Accounting Officer
/s/ Anne T. Moore Director 10/08/96
Anne T. Moore
/s/ Dale Wells Director 10/08/96
Dale Wells
/s/ Richard C. White President, Chief Executive 10/02/96
Richard C. White Officer and Director
Exhibit 10(i)
Description of Officer Incentive Plan *
The Company's wholly-owned subsidiary, Community National Bank, maintains
an Officer Incentive Plan (the "Plan") for its executive and other officers.
Each officer having at least one year of service is eligible to participate in
the Plan. Under the Plan, two separate incentive pools are established, one for
the four executive officers and another for all other officers. the incentive
bonus pool for executive officers is determined by the Bank's annual rating
issued by IDC Financial Publishing, Inc., an industry-wide recognized ranking
service, and a weighted average return on equity over the preceding four year
period. The bonus pool under the Plan is determined according to the following
schedule:
IDC Rating Percent of After-Tax Earnings
Below Average 0
Average 1.00%
Excellent 2.75%
Superior 4.50%
Top 3 in State and Superior 6.00%
Average Return on Equity(1) Percent of After-Tax Earnings
8.75 to 11.00% 0
11.01 to 12.50% 1.25%
12.51 to 14.00% 2.75%
14.01 to 15.50% 3.75%
15.51 to 17.00% 4.75%
17.01 to 18.50% 5.75%
18.51% and over 6.50%
(1) For calculation of 1995 bonuses, weighted average return on equity gives
40% weight to 1995, 30% to 1994, 20% to 1993 and 10% to 1992.
The results determined under the formulas in the above two tables are
averaged to determine the amount of the incentive pool for the Bank's executive
officers. The pool is divided into units and these units are distributed to the
four executive officers. The return on equity targets, the applicable
percentages of after-tax earnings and the allocation of the incentive units
among the executive officers are determined by the Personnel Committee of the
Bank's Board of Directors, subject to the approval of the full Board.
* There is no written plan document.
PROTOTYPE CASH OR DEFERRED PROFIT-SHARING PLAN
AND TRUST/CUSTODIAL ACCOUNT
Sponsored By
FIRST VERMONT BANK & TRUST COMPANY
Brattleboro, Vermont
BASIC PLAN DOCUMENT #04
February 1993
COPYRIGHT 1993 THE McKAY HOCHMAN COMPANY, INC.
THIS DOCUMENT IS COPYRIGHTED UNDER THE LAWS OF THE UNITED STATES. USE,
DUPLICATION OR REPRODUCTION, INCLUDING THE USE OF ELECTRONIC MEANS, IS
PROHIBITED BY LAW WITHOUT THE EXPRESS CONSENT OF THE AUTHOR.
TABLE OF CONTENTS
PARAGRAPH PAGE
ARTICLE I
DEFINITIONS
1.1 Actual Deferral Percentage 1
1.2 Adoption Agreement 1
1.3 Aggregate Limit 1
1.4 Annual Additions 2
1.5 Annuity Starting Date 2
1.6 Applicable Calendar Year 2
1.7 Applicable Life Expectancy 2
1.8 Average Contribution Percentage (ACP) 2
1.9 Average Deferral Percentage (ADP) 2
1.10 Break In Service 2
1.11 Code 3
1.12 Compensation 3
1.13 Contribution Percentage 4
1.14 Custodian 5
1.15 Defined Benefit Plan 5
1.16 Defined Benefit (Plan) Fraction 5
1.17 Defined Contribution Dollar Limitation 5
1.18 Defined Contribution Plan 5
1.19 Defined Contribution (Plan) Fraction 5
1.20 Designated Beneficiary 6
1.21 Disability 6
1.22 Distribution Calendar Year 6
1.23 Early Retirement Age 6
1.24 Earned Income 6
1.25 Effective Date 6
1.26 Election Period 6
1.27 Elective Deferral 6
1.28 Eligible Participant 7
1.29 Employee 7
1.30 Employer 7
1.31 Entry Date 7
1.32 Excess Aggregate Contributions 7
1.33 Excess Amount 7
1.34 Excess Contribution 7
1.35 Excess Elective Deferrals 8
1.36 Family Member 8
1.37 First Distribution Calendar Year 8
1.38 Fund 8
1.39 Hardship 8
1.40 Highest Average Compensation 8
1.41 Highly Compensated Employee 8
1.42 Hour Of Service 9
1.43 Key Employee 10
1.44 Leased Employee 10
1.45 Limitation Year 10
1.46 Master Or Prototype Plan 10
1.47 Matching Contribution 10
1.48 Maximum Permissible Amount 10
1.49 Net Profit 10
1.50 Normal Retirement Age 11
1.51 Owner-Employee 11
1.52 Paired Plans 11
1.53 Participant 11
1.54 Participant's Benefit 11
1.55 Permissive Aggregation Group 11
1.56 Plan 11
1.57 Plan Administrator 11
1.58 Plan Year 11
1.59 Present Value 11
1.60 Projected Annual Benefit 11
1.61 Qualified Deferred Compensation Plan 12
1.62 Qualified Domestic Relations Order 12
1.63 Qualified Early Retirement Age 12
1.64 Qualified Joint And Survivor Annuity 12
1.65 Qualified Matching Contribution 12
1.66 Qualified Non-Elective Contributions 12
1.67 Qualified Voluntary Contribution 12
1.68 Required Aggregation Group 12
1.69 Required Beginning Date 13
1.70 Rollover Contribution 13
1.71 Salary Savings Agreement 13
1.72 Self-Employed Individual 13
1.73 Service 13
1.74 Shareholder Employee 13
1.75 Simplified Employee Pension Plan 13
1.76 Sponsor 13
1.77 Spouse (Surviving Spouse) 13
1.78 Super Top-Heavy Plan 13
1.79 Taxable Wage Base 14
1.80 Top-Heavy Determination Date 14
1.81 Top-Heavy Plan 14
1.82 Top-Heavy Ratio 14
1.83 Top-Paid Group 15
1.84 Transfer Contribution 16
1.85 Trustee 16
1.86 Valuation Date 16
1.87 Vested Account Balance 16
1.88 Voluntary Contribution 16
1.89 Welfare Benefit Fund 16
1.90 Year Of Service 16
ARTICLE 11
ELIGIBILITY REQUIREMENTS
2.1 Participation 17
2.2 Change In Classification Of Employment 17
2.3 Computation Period 17
2.4 Employment Rights 17
2.5 Service With Controlled Groups 17
2.6 Owner-Employees 17
2.7 Leased Employees 18
2.8 Thrift Plans 18
ARTICLE III
EMPLOYER CONTRIBUTIONS
3.1 Amount 19
3.2 Expenses And Fees 19
3.3 Responsibility For Contributions 19
3.4 Return Of Contributions 19
ARTICLE IV
EMPLOYEE CONTRIBUTIONS
4.1 Voluntary Contributions 20
4.2 Qualified Voluntary Contributions 20
4.3 Rollover Contribution 20
4.4 Transfer Contribution 21
4.5 Employer Approval Of Transfer Contributions 21
4.6 Elective Deferrals 21
4.7 Required Voluntary Contributions 21
4.8 Direct Rollover of Benefits 22
ARTICLE V
PARTICIPANT ACCOUNT'S
5.1 Separate Accounts 23
5.2 Adjustments To Participant Accounts 23
5.3 Allocating Employer Contributions 24
5.4 Allocating Investment Earnings And Losses 24
5.5 Participant Statements 24
ARTICLE VI
RETIREMENT BENEFIT'S AND DISTRIBUTIONS
6.1 Normal Retirement Benefits 25
6.2 Early Retirement Benefits 25
6.3 Benefits On Termination Of Employment 25
6.4 Restrictions On Immediate Distributions 26
6.5 Normal Form Of Payment 27
6.6 Commencement Of Benefits 28
6.7 Claims Procedures 28
6.8 In-Service Withdrawals 28
6.9 Hardship Withdrawal 29
ARTICLE VII
DISTRIBUTION REQUIREMENTS
7.1 Joint And Survivor Annuity Requirements 32
7.2 Minimum Distribution Requirements 32
7.3 Limits On Distribution Periods 32
7.4 Required Distributions On Or After The Required Beginning Date 32
7.5 Required Beginning Date 33
7.6 Transitional Rule 34
7.7 Designation Of Beneficiary For Death Benefit 35
7.8 Nonexistence Of Beneficiary 35
7.9 Distribution Beginning Before Death 35
7.10 Distribution Beginning After Death 35
7.11 Distribution Of Excess Elective Deferrals 36
7.12 Distributions of Excess Contributions 37
7.13 Distribution Of Excess Aggregate Contributions 37
ARTICLE VIII
JOINT AND SURVIVOR ANNUITY REQUIREMENTS
8.1 Applicability Of Provisions 39
8.2 Payment Of Qualified Joint And Survivor Annuity 39
8.3 Payment Of Qualified Pre-Retirement Survivor Annuity 39
8.4 Qualified Election 39
8.5 Notice Requirements For Qualified Joint And Survivor Annuity 40
8.6 Notice Requirements For Qualified Pre-Retirement Survivor
Annuity 40
8.7 Special Safe-Harbor Exception For Certain Profit-Sharing Plans 40
8.8 Transitional Joint And Survivor Annuity Rules 41
8.9 Automatic Joint And Survivor Annuity And Early Survivor Annuity 41
8.10 Annuity Contracts 42
ARTICLE IX
VESTING
9.1 Employee Contributions 43
9.2 Employer Contributions 43
9.3 Computation Period 43
9.4 Requalification Prior To Five Consecutive One-Year Breaks In
Service 43
9.5 Requalification After Five Consecutive One-Year Breaks In
Service 43
9.6 Calculating Vested Interest 43
9.7 Forfeitures 43
9.8 Amendment Of Vesting Schedule 44
9.9 Service With Controlled Groups 44
ARTICLE X
LIMITATIONS ON ALLOCATIONS
AND ANTIDISCRIMINATION TESTING
10.1 Participation In This Plan Only 45
10.2 Disposition Of Excess Annual Additions 45
10.3 Participation In This Plan And Another Master and Prototype
Defined Contribution Plan, Welfare Benefit Fund Or
Individual Medical Account Maintained By The Employer 46
10.4 Disposition Of Excess Annual Additions Under Two Plans 46
10.5 Participation In This Plan And Another Defined Contribution
Plan Which Is Not A Master Or Prototype Plan 47
10.6 Participation In This Plan And A Defined Benefit Plan 47
10.7 Average Deferral Percentage (ADP) Test 47
10.8 Special Rules Relating To Application Of ADP Test 47
10.9 Recharacterization 48
10.10 Average Contribution Percentage (ACP) Test 49
10.11 Special Rules Relating To Application Of ACP Test 49
ARTICLE XI
ADMINISTRATION
11.1 Plan Administrator 51
11.2 Trustee/Custodian 51
11.3 Administrative Fees And Expenses 52
11.4 Division Of Duties And Indemnification 52
ARTICLE XII
TRUST FUND/CUSTODIAL ACCOUNT
12.1 The Fund 54
12.2 Control Of Plan Assets 54
12.3 Exclusive Benefit Rules 54
12.4 Assignment And Alienation Of Benefits 54
12.5 Determination Of Qualified Domestic Relations Order(QDRO) 54
ARTICLE XIII
INVESTMENTS
13.1 Fiduciary Standards 56
13.2 Funding Arrangement 56
13.3 Investment Alternatives Of The Trustee 56
13.4 Duties Of The Custodian 57
13.5 Participant Loans 57
13.6 Insurance Policies 59
13.7 Employer Investment Direction 60
13.8 Employee Investment Direction 60
Continued 61
ARTICLE XIV
TOP-HEAVY PROVISIONS
14.1 Applicability Of Rules 62
14.2 Minimum Contribution 62
14.3 Minimum Vesting 62
14.4 Limitations On Allocations 63
ARTICLE XV
AMENDMENT AND TERMINATION
15.1 Amendment By Sponsor 64
15.2 Amendment By Employer 64
15.3 Termination 64
15.4 Qualification Of Employer's Plan 64
15.5 Mergers And Consolidations 64
15.6 Resignation And Removal 65
15.7 Qualification Of Prototype 65
ARTICLE XVI
GOVERNING LAW
PROTOTYPE CASH OR DEFERRED PROFIT-SHARING PLAN AND TRUST/CUSTODIAL ACCOUNT
Sponsored By
FIRST VERMONT BANK & TRUST COMPANY
The Sponsor hereby establishes the following Prototype Retirement Plan and
Trust/Custodial Account for use by those of its customers who qualify and wish
to adopt a qualified retirement program. Any Plan and Trust/Custodial Account
established hereunder shall be administered for the exclusive benefit of
Participants and their beneficiaries under the following terms and conditions:
ARTICLE I
DEFINITIONS
1.1 Actual Deferral Percentage The ratio (expressed as a percentage and
calculated separately for each Participant) of:
(a) the amount of Employer contributions [as defined at (c) and (d)]
actually paid over to the Fund on behalf of such Participant for
the Plan Year to
(b) the Participant's Compensation for such Plan Year. Compensation
will only include amounts for the period during which the Employee
was eligible to participate.
Employer contributions on behalf of any Participant shall include:
(c) any Elective Deferrals made pursuant to the Participant's deferral
election, including Excess Elective Deferrals, but excluding Elective
Deferrals that are either taken into account in the Contribution
Percentage test (provided the ADP test is satisfied both with and
without exclusion of these Elective Deferrals) or are returned as
excess Annual Additions; and
(d) at the election of the Employer, Qualified Non-Elective Contributions
and Qualified Matching Contributions.
For purposes of computing Actual Deferral Percentages, an Employee who would be
a Participant but for the failure to make Elective Deferrals shall be treated as
a Participant on whose behalf no Elective Deferrals are made.
1.2 Adoption Agreement The document attached to this Plan by which an
Employer elects to establish a qualified retirement plan and trust/custodial
account under the terms of this Prototype Plan and Trust/Custodial Account.
1.3 Aggregate Limit The sum of:
(a) 125 percent of the greater of the ADP of the non-Highly Compensated
Employees for the Plan Year or the ACP of non-Highly Compensated
Employees under the Plan subject to Code Section 401(m) for the Plan
Year beginning with or within the Plan Year of the cash or deferred
arrangement as described in Code Section 401(k) or Code Section
402(h)(1)(B), and
(b) the lesser of 200% or two percent plus the lesser of such ADP or ACP.
Alternatively, the aggregate limit can be determined by substituting "the lesser
of 200% or 2 percent plus" for "125% of" in (a) above, and substituting "125%
of" for "the lesser of 200% or 2 percent plus" in (b) above.
1.4 Annual Additions The sum of the following amounts credited to a
Participant's account for the Limitation Year:
(a) Employer Contributions,
(b) Employee Contributions (under Article IV),
(c) forfeitures,
(d) amounts allocated after March 31, 1984 to an individual medical
account, as defined in Code Section 415(l)(2), which is part of a
pension or annuity plan maintained by the Employer (these amounts
are treated as Annual Additions to a Defined Contribution Plan
though they arise under a Defined Benefit Plan), and
(e) amounts derived from contributions paid or accrued after 1985, in
taxable years ending after 1985, which are either attributable to
post-retirement medical benefits allocated to the account of a Key
Employee, or to a Welfare Benefit Fund maintained by the Employer,
are also treated as Annual Additions to a Defined Contribution Plan.
For purposes of this paragraph, an Employee is a Key Employee if
he or she meets the requirements of paragraph 1.43 at any time
during the Plan Year or any preceding Plan Year. Welfare Benefit
Fund is defined at paragraph 1.89.
Excess amounts applied in a Limitation Year to reduce Employer contributions
will be considered Annual Additions for such Limitation Year, pursuant to the
provisions of Article X.
1.5 Annuity Starting Date The first day of the first period for which an
amount is paid as an annuity or in any other form.
1.6 Applicable Calendar Year The First Distribution Calendar Year, and in
the event of the recalculation of life expectancy, such succeeding calendar
year. If payments commence in accordance with paragraph 7.4(e) before the
Required Beginning Date, the Applicable Calendar Year is the year such payments
commence. If distribution is in the form of an immediate annuity purchased
after the Participant's death with the Participant's remaining interest, the
Applicable Calendar Year is the year of purchase.
1.7 Applicable Life Expectancy Used in determining, the required minimum
distribution. The life expectancy (or joint and last survivor expectancy)
calculated using the attained age of the Participant (or Designated Beneficiary)
as of the Participant's (or Designated Beneficiary's) birthday in the Applicable
Calendar Year reduced by one for each calendar year which has elapsed since the
date life expectancy was first calculated. If life expectancy is being
recalculated, the Applicable Life Expectancy shall be the life expectancy as so
recalculated. The life expectancy of a non-Spouse Beneficiary may not be
recalculated.
1.8 Average Contribution Percentage(ACP) The average of the Contribution
Percentages for each Highly Compensated Employee and for each non-Highly
Compensated Employee.
1.9 Average Deferral Percentage (ADP) The average of the Actual Deferral
Percentages for each Highly Compensated Employee and for each non-Highly
Compensated Employee.
1.10 Break In Service A 12-consecutive month period during which an
Employee fails to complete more than 500 Hours of Service.
1.11 Code The Internal Revenue Code of 1986, including any amendments.
1.12 Compensation The Employer may select one of the following three safe-
harbor definitions of Compensation in the Adoption Agreement. Compensation
shall only include amounts earned while a Participant if Plan Year is chosen as
the applicable computation period.
(a) Code Section 3401(a) Wages. Compensation is defined as wages within
the meaning of Code Section 3401(a) for the purposes of Federal income
tax withholding at the source but determined without regard to any
rules 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)].
(b) Code Section 6041 and 6051 Wages. Compensation is defined as wages
as defined in Code Section 3401(a) and all other payments of
compensation to an Employee by the Employer (in the course of the
Employer's trade or business) for which the Employer is required
to furnish the employee a written statement under Code Section
6041(d) and 6051(a)(3). 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)].
(c) Code Section 415 Compensation. For purposes of applying the
limitations of Article X and Top-Heavy Minimums, the definition of
Compensation shall be Code Section 415 Compensation defined as
follows: a Participant's Earned Income, wages, salaries, and fees
for professional services and other amounts received (without
regard to whether or not an amount is paid in cash) for personal
services actually rendered in the course of employment with the
Employer maintaining the Plan to the extent that the amounts are
includible in gross income [including, but not limited to, commissions
paid salesmen, Compensation for services .on the basis of a percentage
of profits, commissions on insurance premiums, tips, bonuses, fringe
benefits and reimbursements or other expense allowances under a non-
accountable plan (as described in Regulation 1.62-2(c)], and
excluding the following:
1. Employer contributions to a plan of deferred compensation
which are not includible in the Employee's gross income
for the taxable year in which contributed, or Employer
contributions under a Simplified Employee Pension Plan or
any distributions from a plan of deferred compensation,
2. Amounts realized from the exercise of a non-qualified
stock option, or when restricted stock (or property) held
by the Employee either becomes freely transferable or is
no longer subject to a substantial risk of forfeiture,
3. Amounts realized from the sale, exchange or other disposition
of stock acquired under a qualified stock option; and
4. other amounts which received special tax benefits, or
contributions made by the Employer (whether or not under
a salary reduction agreement) towards the purchase of an
annuity contract described in Code Section 403(b)
(whether or not the contributions are actually excludable
from the gross income of the Employee).
For purposes of applying the limitations of Article X and Top-Heavy Minimums,
the definition of Compensation shall be Code Section 415 Compensation described
in this paragraph 1.12(c). Also, for purposes of applying the limitations of
Article X, Compensation for a Limitation Year is the Compensation actually paid
or made available during such Limitation Year. Notwithstanding the preceding
sentence, Compensation for a Participant in a defined contribution plan who is
permanently and totally disabled [as defined in Code Section 22 e)(3)], is the
Compensation such Participant would have received for the Limitation Year if the
Participant had been paid at the rate of Compensation paid immediately before
becoming permanently and totally disabled. Such imputed Compensation for the
disabled Participant may be taken into account only if the participant is not
a Highly Compensated Employee [as defined in Code Section 414(q)] and
contributions made on behalf of such Participant are nonforfeitable when made.
If the Employer falls to pick the applicable period in the Adoption Agreement,
the Plan Year shall be used. Unless otherwise specified by the Employer in the
Adoption Agreement, Compensation shall be determined as provided in Code Section
3401 (a) [as defined in this paragraph 1.12(a)]. In nonstandardized Adoption
Agreement 002, the Employer may choose to eliminate or exclude categories of
Compensation which do not violate the provisions of Code Sections 401(a)(4),
414(s) the regulations thereunder and Revenue Procedure 89-65.
Beginning with 1989 Plan Years, the annual Compensation of each Participant
which may be taken into account for determining all benefits provided under the
Plan (including benefits under Article XIV) for any year shall not exceed
$200,000, as adjusted under Code Section 415(d). In determining the
Compensation of a Participant for purposes of this limitation, the rules of Code
Section 414(q)(6) shall apply, except in applying such rules, the term "family"
shall include only the Spouse of the Participant and any lineal descendants of
the Participant who have not attained age 19 before the end of the Plan year.
If, as a result of the application of such rules the adjusted $200,000 limit-
ation is exceeded, then (except for purposes of determining the portion of
Compensation up to the integration level if this Plan provides for permitted
disparity), the limitation shall be prorated among the affected individuals in
proportion to each such individual's Compensation as determined under this
section prior to the application of this limitation.
If a Plan has a Plan Year that contains fewer than 12 calendar months, then the
annual Compensation limit for that period is an amount equal to the $200,000 as
adjusted for the calendar year in which the Compensation period begins,
multiplied by a fraction the numerator of which is the number of full months in
the Short Plan Year and the denominator of which is 12. If Compensation for any
prior Plan Year is taken into account in determining an Employee's contributions
or benefits for the current year, the Compensation for such prior year is
subject to the applicable annual Compensation limit in effect for that prior
year. For this purpose, for years beginning before January 1, 1990, the
applicable annual Compensation limit is $200,000.
Compensation shall not include deferred Compensation other than contributions
through a salary reduction agreement to a cash or deferred plan under Code
Section 401(k), a Simplified Employee Pension Plan under Code Section
402(h)(1)(B), a cafeteria plan under Code Section 125 or a tax-deferred annuity
under Code Section 403(b). Unless elected otherwise by the Employer in the
Adoption Agreement, these deferred amounts will be considered as Compensation
for Plan purposes. These deferred amounts are not counted as Compensation for
purposes of Articles X and XIV. When applicable to a Self-Employed Individual,
Compensation shall mean Earned Income.
1.13 Contribution Percentage The ratio (expressed as a percentage and
calculated separately for each Participant) of:
(a) the Participant's Contribution Percentage Amounts [as defined at
(c)-(f)] for the Plan Year, to
(b) the Participant's Compensation for the Plan Year. Compensation
will only include amounts for the period during which the Employee
was eligible to participate.
Contribution Percentage Amounts on behalf of any Participant shall include:
(c) the amount of Employee Voluntary Contributions, Matching
Contributions, and Qualified Matching Contributions (to the
extent not taken into account for purposes of the ADP test) made
under the Plan on behalf of the Participant for the Plan Year,
(d) forfeitures of Excess Aggregate Contributions or Matching Contributions
allocated to the Participant's account which shall be taken into
account in the year in which such forfeiture is allocated,
(e) at the election of the Employer, Qualified Non-Elective Contributions,
and
(f) the Employer also may elect to use Elective Deferrals in the
Contribution Percentage Amounts so long as the ADP test is met
before the Elective Deferrals are used in the ACP test and
continues to be met following the exclusion of those Elective
Deferrals that are used to meet the ACP test.
Contribution Percentage Amounts shall not include Matching Contributions,
whether or not Qualified, that are forfeited either to correct Excess Aggregate
Contributions, or because the contributions to which they relate are Excess
Deferrals, Excess Contributions, or Excess Aggregate Contributions.
1.14 Custodian The Sponsor of this Prototype Plan, or if applicable, an
affiliate or successor, shall serve as Custodian, if a Custodian is appointed in
the Adoption Agreement.
1.15 Defined Benefit Plan A Plan under which a Participant's benefit is
determined by a formula contained in the Plan and no individual accounts are
maintained for Participants.
1.16 Defined Benefit (Plan) Fraction A fraction, the numerator of which is
the sum of the Participant's Projected Annual Benefits under all the Defined
Benefit Plans (whether or not terminated) maintained by the Employer, and the
denominator of which is the lesser of 125 percent of the dollar limitation
determined for the Limitation Year under Code Sections 415(b) and (d) or 140
percent of the Highest Average Compensation, including any adjustments under
Code Section 415(b).
Notwithstanding the above, if the Participant was a Participant as of the first
day of the first Limitation Year beginning after 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 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 Section 415 for all Limitation Years
beginning before 1987.
1.17 Defined Contribution Dollar Limitation Thirty thousand dollars
($30,000) or if greater, one-fourth of the defined benefit dollar limitation set
forth in Code Section 415(b)(1) as in effect for the Limitation Year.
1.18 Defined Contribution Plan A Plan under which individual accounts are
maintained for each Participant to which all contributions, forfeitures,
investment income and gains or losses, and expenses are credited or deducted. A
Participant's benefit under such Plan is, based solely on the fair market value
of his or her account balance.
1.19 Defined Contribution (Plan) Fraction 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 paragraph 1.89 and individual medical accounts, as defined in Code
Section 415(i)(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). The maximum aggregate amount
in the Limitation Year is the lesser of 125 percent of the dollar limitation
determined under Code Sections 415(b) and (d) in effect under Code Section
415(c)(1)(A) or 35 percent of the Participant's Compensation for such year.
If the Employee was a Participant as of the end of the first day of the first
Limitation Year beginning after 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 1987, and disregarding any changes in the
terms and conditions of the Plan made after May 6, 1986, but using the 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
1987, shall not be re-computed to treat all Employee Contributions as Annual
Additions.
1.20 Designated Beneficiary The individual who is designated as the
beneficiary under the Plan in accordance with Code Section 401(a)(9) and the
regulations thereunder.
1.21 Disability An illness or injury of a potentially permanent nature,
expected to last for a continuous period of not less than 12 months, certified
by a physician selected by or satisfactory to the Employer, which prevents the
Employee from engaging in any occupation for wage or profit for which the
Employee is reasonably fitted by training, education or experience.
1.22 Distribution Calendar Year A calendar year for which a minimum
distribution is required.
1.23 Early Retirement Age The age set by the Employer in the Adoption
Agreement (but not less than 55), which is the earliest age at which a
Participant may retire and receive his or her benefits under the Plan.
1.24 Earned Income Net earnings from self-employment in the trade or
business with respect to which the Plan is established, determined without
regard to items not included in gross income and the deductions allocable to
such items, provided that personal services of the individual are a material
income-producing factor. Earned income shall be reduced by contributions made
by an Employer to a qualified plan to the extent deductible under Code Section
404. For tax years beginning after 1989, net earnings shall be determined
taking into account the deduction for one-half of self-employment taxes allowed
to the Employer under Code Section 164(f) to the extent deductible.
1.25 Effective Date The date on which the Employer's retirement plan or
amendment to such plan becomes effective. For amendments reflecting statutory
and regulatory changes post Tax Reform Act of 1986, the Effective Date will be
the earlier of the date upon which such amendment is first administratively
applied or the first day of the Plan Year following the date of adoption of such
amendment.
1.26 Election Period The period which begins on the first day of the Plan
Year in which the Participant attains age 35 and ends on the date of the
Participant's death. If a Participant separates from service prior to the first
day of the Plan Year in which age 35 is attained, the Election Period shall
begin on the date of separation, with respect to the account balance as of the
date of separation.
1.27 Elective Deferral Employer contributions made to the Plan at the
election of the Participant, in lieu of cash Compensation. Elective Deferrals
shall also include contributions made pursuant to a Salary Savings Agreement or
other deferral mechanism, such as a cash option contribution. With respect to
any taxable year, a Participant's Elective Deferral is the sum of all Employer
contributions made on behalf of such Participant pursuant to an election to
defer under any qualified cash or deferred arrangement as described in Code
Section 401(k), any simplified employee pension cash or deferred arrangement as
described in Code Section 402(h)(1)(B), any eligible deferred compensation plan
under Code Section 457, any plan as described under Code Section 501(c)(18), and
any Employer contributions made on the behalf of a Participant for the purchase
of an annuity contract under Code Section 403(b) pursuant to a Salary Savings
Agreement. Elective Deferrals shall not include any deferrals properly
distributed as Excess Annual Additions.
1.28 Eligible Participant Any Employee who is eligible to make a Voluntary
Contribution, or an Elective Deferral (if the Employer takes such contributions
into account in the calculation of the Contribution Percentage), or to receive
a Matching Contribution (including forfeitures) or a Qualified Matching
Contribution. If a Voluntary Contribution or Elective Deferral is required as
a condition of participation in the Plan, any Employee who would be a
Participant in the Plan if such Employee made such a contribution shall be
treated as an Eligible Participant even though no Voluntary Contributions or
Elective Deferrals are made.
1.29 Employee Any person employed by the Employer (including Self-Employed
Individuals and partners), an Employees of a member of an affiliated service
group [as defined in Code Section 414(m)], Employees of a controlled group of
corporations [as defined in Code Section 414(b)], all Employees of any
incorporated or unincorporated trade or business which is under common control
[as defined in Code Section 414(c)], Leased Employees [as defined in Code
Section 414(n)] and any Employee required to be aggregated by Code Section
414(o). All such Employees shall be treated as employed by a single Employer.
1.30 Employer The Self-Employed Individual, partnership, corporation or
other organization which adopts this Plan including any firm that succeeds the
Employer and adopts this Plan. For purposes of Article X, Limitations on
Allocations, Employer shall mean the Employer that adopts this Plan, and all
members of a controlled group of corporations [as defined in Code Section 414(b)
as modified by Code Section 415(h)], all commonly controlled trades or
businesses [as defined in Code Section 414(c) as modified by Code Section
415(h)] or affiliated service groups [as defined in Code Section 414(m)] of
which the adopting Employer is a part, and any other entity required to be
aggregated with the Employer pursuant to regulations under Code Section 414(o).
1.31 Entry Date The date on which an Employee commences participation in
the Plan as determined by the Employer in the Adoption Agreement.
1.32 Excess Aggregate Contributions The excess, with respect to any Plan
Year, of:
(a) The aggregate Contribution Percentage Amounts taken into account in
computing the numerator of the Contribution Percentage actually made
on behalf of Highly Compensated Employees for such Plan Year, over
(b) The maximum Contribution Percentage Amounts permitted by the ACP
test (determined by reducing contributions made on behalf of Highly
Compensated Employees in order of their Contribution Percentages
beginning with the highest of such percentages).
Such determination shall be made after first determining Excess Elective
Deferrals pursuant to paragraph 1.35 and then determining Excess Contributions
pursuant to paragraph 1.34.
1.33 Excess Amount The excess of the Participant's Annual Additions for
the Limitation Year over the Maximum Permissible Amount.
1.34 Excess Contribution With respect to any Plan Year, the excess of:
(a) The aggregate amount of Employer contributions actually taken into
account in computing the ADP of Highly Compensated Employees for
such Plan Year, over
(b) The maximum amount of such contributions permitted by the ADP test
(determined by reducing contributions made on behalf of Highly
Compensated Employees in order of the ADPS, beginning with the
highest of such percentages).
1.35 Excess Elective Deferrals Those Elective Deferrals that are
includible in a Participant's gross income under Code Section 402(g) to the
extent such Participant's Elective Deferrals for a taxable year exceed the
dollar limitation under such Code Section. Excess Elective Deferrals shall be
treated as Annual Additions under the Plan, unless such amounts are distributed
no later than the first April 15th following the close of the Participant's
taxable year.
1.36 Family Member The Employee's Spouse, any lineal descendants and
ascendants and the Spouse of such lineal descendants and ascendants.
1.37 First Distribution Calendar Year For distributions beginning before
the Participant's death, the First Distribution Calendar Year is the calendar
year immediately preceding the calendar year which contains the Participant's
Required Beginning Date. For distributions beginning after the Participant's
death, the First Distribution Calendar Year is the calendar year in which
distributions are required to begin pursuant to paragraph 7.10.
1.38 Fund All contributions received by the Trustee/Custodian under this
Plan and Trust/Custodial Account, investments thereof and earnings and
appreciation thereon.
1.39 Hardship An immediate and heavy financial need of the Employee where
such Employee lacks other available resources.
1.40 Highest Average Compensation The average Compensation for the three
consecutive Years of Service with the Employer that produces the highest
average. A Year of Service with the Employer is the 12-consecutive month period
defined in the Adoption Agreement.
1.41 Highly Compensated Employee Any Employee who performs service for the
Employer during the determination year and who, during the immediate prior year:
(a) received Compensation from the Employer in excess of $75,000 [as
adjusted pursuant to Code Section 415(d)]; or
(b) received Compensation from the Employer in excess of $50,000 [as
adjusted pursuant to Code Section 415(d)] and was a member of the
Top-Paid Group for such year; or
(c) was an officer of the Employer and received Compensation during such
year that is greater than 50 percent of the dollar limitation in
effect under Code Section 415(b)(1)(A).
Notwithstanding (a), (b) and (c), an Employee who was not Highly Compensated
during the preceding Plan Year shall not be treated as a Highly Compensated
Employee with respect to the current Plan Year unless such Employee is a member
of the 100 Employees paid the greatest Compensation during the year for which
such determination is being made.
(d) Employees who are five percent (5%) Owners at any time during the
immediate prior year or determination year.
Highly Compensated Employee includes Highly Compensated active Employees and
Highly Compensated former Employees.
1.42 Hour Of Service
(a) Each hour for which an Employee is paid, or entitled to payment, for
the performance of duties for the Employer. These hours shall be
credited to the Employee for the computation period in which the duties
are performed; and
(b) Each hour for which an Employee is paid, or entitled to payment, by
the Employer on account of a period of time during which no duties are
performed (irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military duty or leave of absence.
No more than 501 Hours of Service shall be credited under this
paragraph for any single continuous period (whether or not such period
occurs in a single computation period). Hours under this paragraph
shall be calculated and credited pursuant to Section 2530.200b-2 of
the Department of Labor Regulations which are incorporated herein by
this reference; and
(c) Each hour for which back pay, irrespective of mitigation of damages,
is either awarded or agreed to by the Employer. The same Hours of
Service shall not be credited both under paragraph (a) or paragraph
(b), as the case may be, and under this paragraph (c). These hours
shall 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.
(d) Hours of Service shall be credited for employment with the Employer
and with other members of an affiliated service group [as defined in
Code Section 414(m)], a controlled group of corporations [as defined
in Code Section 414(b)], or a group of trades or businesses under
common control [as defined in Code Section 414(c)] of which the
adopting Employer is a member, and any other entity required to be
aggregated with the Employer pursuant to Code Section 414(o) and the
regulations thereunder. Hours of Service shall also be credited for
any individual considered an Employee for purposes of this Plan under
Code Section 414(n) or Code Section 414(o) and the regulations
thereunder.
(e) Solely for purposes of determining whether a Break in Service, as
defined in paragraph 1.10, for participation and vesting purposes
has occurred in a computation period, an individual who is absent from
work for maternity or paternity reasons shall receive credit for the
Hours of Service which would otherwise have been credited to such
individual but for such absence, or in any case in which such hours
cannot be determined, 8 Hours of Service per day of such absence. For
purposes of this paragraph, an absence from work for maternity or
paternity reasons means an absence by reason of the pregnancy of the
individual by reason of a birth of a child of the individual, by
reason of the placement of a child with the individual in connection
with the adoption of such child by such individual or for purposes of
caring for such child for a period beginning immediately following
such birth or placement. The Hours of Service credited under this
paragraph shall be credited, in the computation period in which the
absence begins if the crediting is necessary to prevent a Break in
Service in that period, or in all other cases, in the following
computation period. No more than 501 hours will be credited under
this paragraph.
(f) Hours of Service shall be determined on the basis of the method
selected in the Adoption Agreement.
1.43 Key Employee Any Employee or former Employee (and the beneficiaries
of such employee) who at any time during the determination period was an officer
of the Employer if such individual's annual compensation exceeds 50% of the
dollar limitation under Code Section 415(b)(1)(A) (the defined benefit maximum
annual benefit), an owner (or considered an owner under Code Section 318) of one
of the ten largest interests in the employer if such individual's compensation
exceeds 100% of the dollar limitation under Code Section 415(c)(1)(A), a 5%
owner of the Employer, or a 1% owner of the Employer who has an annual
compensation of more than $150,000. For purposes of determining who is a Key
Employee, annual compensation shall mean Compensation as defined for Article X,
but including amounts deferred through a salary reduction agreement to a cash
or deferred plan under Code Section 401(k), a Simplified Employee Pension Plan
under Code Section 408(k), a cafeteria plan under Code Section 125 or a tax-
deferred annuity under Code Section 403(b). The determination period is the
Plan Year containing the Determination Date and the four preceding Plan Years.
The determination of who is a Key Employee will be made in accordance with
Code Section 416(i)(1) and the regulations thereunder.
1.44 Leased Employee 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.
1.45 Limitation Year The calendar year or such other 12-consecutive month
period designated by the Employer in the Adoption Agreement for purposes of
determining the maximum Annual Addition to a Participant's account. All
qualified plans maintained by the Employer must use the same Limitation Year.
If the Limitation Year is amended to a different 12-consecutive month period,
the new Limitation Year must begin on a date within the Limitation Year in which
the amendment is made.
1.46 Master Or Prototype Plan A plan, the form of which is the subject
of a favorable opinion letter from the Internal Revenue Service.
1.47 Matching Contribution An Employer contribution made to this or any
other defined contribution plan on behalf of a Participant on account of an
Employee Voluntary Contribution made by such Participant, or on account of a
Participant's Elective Deferral under a Plan maintained by the Employer.
1.48 Maximum Permissible Amount The maximum Annual Addition that may be
contributed or allocated to Participant's account under the plan for any
Limitation Year shall not exceed the lesser of:
(a) the Defined Contribution Dollar Limitation, or
(b) 25% of the Participant's Compensation for the Limitation Year.
The compensation limitation referred to in (b) shall not apply to any
contribution for medical benefits [within the meaning of Code Section 401(h)
or Code Section 419A(f)(2)] which is otherwise treated as an Annual Addition
under Code Section 415(l)(1) or 419(d)(2). If a short Limitation Year is
created because of an amendment changing the Limitation Year to a different
12-consecutive month period, the Maximum Permissible Amount will not exceed
the Defined Contribution Dollar Limitation multiplied by the following
fraction: Number of months in the short Limitation Year divided by 12.
1.49 Net Profit The current and accumulated operating earnings of the
Employer before Federal and State income taxes, excluding nonrecurring or
unusual items of income, and before contributions to this and any other
qualified plan of the Employer. Alternatively, the Employer may fix another
definition in the Adoption Agreement.
1.50 Normal Retirement Age The age, set by the Employer in the Adoption
Agreement, at which a Participant may retire and receive his or her benefits
under the Plan.
1.51 Owner-Employee A sole proprietor, or a partner owning more than 10%
of either the capital or profits interest of the partnership.
1.52 Paired Plans Two or more Plans maintained by the Sponsor designed so
that a single or any combination of Plans adopted by an Employer will meet the
antidiscrimination rules, the contribution and benefit limitations, and the Top-
Heavy provisions of the Code.
1.53 Participant Any Employee who has met the eligibility requirements and
is participating in the Plan.
1.54 Participant's Benefit The account balance as of the last Valuation
Date in the calendar year immediately preceding the Distribution Calendar Year
(valuation calendar year) increased by the amount of any contributions or
forfeitures allocated to the account balance as of the dates in the valuation
calendar year after the Valuation Date and decreased by distributions made in
the valuation calendar year after the Valuation Date. A special exception
exists for the second distribution Calendar Year. For purposes of this
paragraph, if any portion of the minimum distribution for the First Distribution
Calendar Year is made in the second Distribution Calendar Year on or before the
Required Beginning Date, the amount of the minimum distribution made in the
second distribution calendar year shall be treated as if it had been made in the
immediately preceding Distribution Calendar Year.
1.55 Permissive Aggregation Group Used for Top-Heavy testing purposes, it
is the Required Aggregation Group of plans plus any other plan or plans of the
Employer which, when considered as a group with the Required Aggregation Group,
would continue to satisfy the requirements of Code Sections 401(a)(4) and 410.
1.56 Plan The Employer's retirement plan as embodied herein and in the
Adoption Agreement.
1.57 Plan Administrator The Employer.
1.58 Plan Year The 12-consecutive month period designated by the Employer
in the Adoption Agreement.
1.59 Present Value Used for Top-Heavy test and determination purposes,
when determining the Present Value of accrued benefits, with respect to any
Defined Benefit Plan maintained by the Employer, interest and mortality rates
shall be determined in accordance with the provisions of the respective plan. If
applicable, interest and mortality assumptions will be specified in Section II
of the Adoption Agreement.
1.60 Projected Annual Benefit Used to test the maximum benefit which may
be obtained from a combination of retirement plans, it is the annual retirement
benefit (adjusted to an actuarial equivalent straight life annuity if such
benefit is expressed in a form other than a straight life annuity or Qualified
Joint and Survivor Annuity) to which the Participant would be entitled under the
terms of a Defined Benefit Plan or plans, assuming:
(a) the Participant will continue employment until Normal Retirement Age
under the plan (or current age, if later), and
(b) the Participant's Compensation for the current Limitation Year and
all other relevant factors used to determine benefits under the plan
will remain constant for all future Limitation Years.
1.61 Qualified Deferred Compensation Plan Any pension, profit-sharing,
stock bonus, or other plan which meets the requirements of Code Section 401 and
includes a trust exempt from tax under Code Section 501(a) or any annuity plan
described in Code Section 403(a).
An Eligible Retirement Plan is an individual retirement account (IRA) as
described in Code Section 408(a), an individual retirement annuity (IRA) as
described in Code Section 408(b), an annuity plan as described in Code Section
403(a), or a qualified trust as described in Code Section 401(a), which accepts
Eligible Rollover Distributions. However in the case of an Eligible Rollover
Distribution to a Surviving Spouse, an Eligible Retirement Plan is an individual
retirement account or individual retirement annuity.
1.62 Qualified Domestic Relations Order A QDRO is a signed Domestic
Relations Order issued by a State Court which creates, recognizes or assigns to
an alternate payee(s) the right to receive all or part of a Participant's Plan
benefit and which meets the requirements of Code Section 414(p). An alternate
payee is a Spouse, former Spouse, child, or other dependent who is treated as a
beneficiary under the Plan as a result of the QDRO.
1.63 Qualified Early Retirement Age For purposes of paragraph 8.9,
Qualified Early Retirement Age is the latest of:
(a) the earliest date, under the Plan, on which the Participant may
elect to receive retirement benefits, or
(b) the first day of the 120th month beginning before the Participant
reaches Normal Retirement Age, or
(c) the date the Participant begins participation.
1.64 Qualified Joint And Survivor Annuity An immediate annuity for the
life of the Participant with a survivor annuity for the life of the Partici-
pant's Spouse which is at least one-half of but not more than the amount of the
annuity payable during the joint lives of the Participant and the Participant's
Spouse. The exact amount of the Survivor Annuity is to be specified by the
Employer in the Adoption Agreement. If not designated by the Employer, the
Survivor Annuity will be 1/2 of the amount paid to the Participant during his or
her lifetime. The Qualified Joint and Survivor Annuity will be the amount of
benefit which can be provided by the Participant's Vested Account Balance.
1.65 Qualified Matching Contribution Matching Contributions which when
made are subject to the distribution and nonforfeitability requirements under
Code Section 401(k).
1.66 Qualified Non-Elective Contributions Contributions (other than
Matching Contributions or Qualified Matching Contributions) made by the Employer
and allocated to Participants' accounts that the Participants may not elect to
receive in cash until distributed from the Plan; that are nonforfeitable when
made; and that are distributable only in accordance with the distribution
provisions that are applicable to Elective Deferrals and Qualified Matching
Contributions.
1.67 Qualified Voluntary Contribution A tax-deductible voluntary Employee
contribution. These contributions may no longer be made to the Plan.
1.68 Required Aggregation Group Used for Top-Heavy testing purposes, it
consists of:
(a) each qualified plan of the Employer in which at least one Key Employee
participates or participated at any time during the determination
period (regardless of whether the plan has terminated), and
(b) any other qualified plan of the Employer which enables a plan described
in (a) to meet the requirements of Code Sections 401(a)(4) or 410.
1.69 Required Beginning Date The date on which a Participant is required
to take his or her first minimum distribution under the Plan. The rules are set
forth at paragraph 7.5.
1.70 Rollover Contribution A contribution made by a Participant of an
amount distributed to such Participant from another Qualified Deferred
Compensation Plan in accordance with Code Sections 402(a)(5), (6), and (7).
An Eligible Rollover Distribution is any distribution of all or any portion of
the balance to the credit of the Participant except that an Eligible Rollover
Distribution does not include:
(a) 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 Participant or the joint lives (or
joint life expectancies) of the Participant and the Participant's
Designated Beneficiary, or for a specified period of ten years or more;
(b) any distribution to the extent such distribution is required under Code
Section 401(a)(9); and
(c) the portion of any distribution that is not includible in gross income
(determined without regard to the exclusion for net unrealized
appreciation with respect to Employer securities).
A Direct Rollover is a payment by the plan to the Eligible Retirement Plan
specified by the Participant.
1.71 Salary Savings Agreement An agreement between the Employer and a
participating Employee where the Employee authorizes the Employer to withhold a
specified percentage of his or her Compensation for deposit to the Plan on
behalf of such Employee.
1.72 Self-Employed Individual An individual who has Earned Income for the
taxable year from the trade or business for which the Plan is established
including an individual who would have had Earned Income but for the fact that
the trade or business had no Net Profit for the taxable year.
1.73 Service The period of current or prior employment with the Employer.
If the Employer maintains a plan of a predecessor employer, Service for such
predecessor shall be treated as Service for the Employer.
1.74 Shareholder Employee An Employee or Officer who owns [or is
considered as owning within the meaning of Code Section 318(a)(1)], on any day
during the taxable year of an electing small business corporation (S
Corporation), more than 5% of such corporation's outstanding stock.
1.75 Simplified Employee Pension Plan An individual retirement account
which meets the requirements of Code Section 408(k), and to which the Employer
makes contributions pursuant to a written formula. These plans are considered
for contribution limitation and Top-Heavy testing purposes.
1.76 Sponsor First Vermont Bank & Trust Company, or any successor(s) or
assign(s).
1.77 Spouse (Surviving Spouse) The Spouse or Surviving Spouse of the
Participant, provided that a former Spouse will be treated as the Spouse or
Surviving Spouse and a current Spouse will not be treated as the Spouse or
Surviving Spouse to the extent provided under a Qualified Domestic Relations
Order as described in Code Section 414(p).
1.78 Super Top-Heavy Plan A Plan described at paragraph 1.81 under which
the Top-Heavy Ratio [as defined at paragraph 1.82] exceeds 90%.
1.79 Taxable Wage Base For plans with an allocation formula which takes
into account the Employer's contribution under the Federal Insurance
Contributions Act (FICA), the maximum amount of earnings which may be considered
wages for such Plan Year under the Social Security Act [Code Section
3121(a)(1)], or the amount elected by the Employer in the Adoption Agreement.
1.80 Top-Heavy Determination Date For any Plan Year subsequent to the
first Plan Year, the last day of the preceding Plan Year. For the first Plan
Year of the Plan, the last day of that year.
1.81 Top-Heavy Plan For any Plan Year beginning after 1983, the Employer's
Plan is top-heavy if any of the following conditions exist:
(a) If the Top-Heavy Ratio for the Employer's Plan exceeds 60% and this
Plan is not part of any required Aggregation Group or Permissive
Aggregation Group of Plans.
(b) If the Employer's plan is a part of a Required Aggregation Group of
plans but not part of a Permissive Aggregation Group and the Top-Heavy
Ratio for the group of plans exceeds 60%.
(c) If the Employer's plan is a part of a Required Aggregation Group and
part of a Permissive Aggregation Group of plans and the Top-Heavy Ratio
for the Permissive Aggregation Group exceeds 60%.
1.82 Top-Heavy Ratio
(a) If the Employer maintains one or more Defined Contribution plans
(including any Simplified Employee Pension Plan) and the Employer has
not maintained any Defined Benefit Plan which during the 5-year period
ending on the Determination Date(s) has or has had accrued benefits,
Top-Heavy Ratio for this Plan alone, or for the Required or Permissive
Aggregation Group as appropriate, is a fraction,
(1) the numerator of which is the sum of the account balances of all Key
Employees as of the Determination Date(s) [including any part of any
account balance distributed in the 5-year period ending on the
Determination Date(s)], and
(2) the denominator of which is the sum of all account balances [including
any part of any account balance distributed in the 5-year period
ending, on the Determination Date(s)], both computed in accordance
with Code Section 416 and the regulations thereunder.
Both the numerator and denominator of the Top-Heavy Ratio are
increased to reflect any contribution not actually made as of the
Determination Date, but which is required to be taken into account
on that date under Code Section 416 and the regulations thereunder.
(b) If the Employer maintains one or more Defined Contribution Plans
(including any Simplified Employee Pension Plan) and the Employer
maintains or has maintained one or more Defined Benefit Plans which
during the 5-year period ending on the Determination Date(s) has or
has had any accrued benefits, the Top-Heavy Ratio for any Required
or Permissive Aggregation Group as appropriate is a fraction, the
numerator of which is the sum of account balances under the aggregated
Defined Contribution Plan or Plans for all Key Employees, determined
in accordance with (a) above, and the Present Value of accrued benefits
under the aggregated Defined Benefit Plan or Plans for any Key
Employees as of the Determination Date(s), and the denominator of
which is the sum of the account balances under the aggregated Defined
Contribution Plan or Plans for all Participants, determined in
accordance with (a) above, and the Present Value of accrued benefits
under the Defined Benefit Plan or Plans for all Participants as of the
Determination Date(s), all determined in accordance with Code Section
416 and the regulations thereunder. The accrued benefits under a
Defined Benefit Plan in both the numerator and denominator of the Top-
Heavy Ratio are increased for any distribution of an accrued benefit
made in the 5-year period ending on the Determination Date.
(c) For purposes of (a) and (b) above, the value of account balances and
the Present Value of accrued benefits will 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. The account balances and accrued
benefits of a participant (1) who is not a Key Employee but who was a
Key Employee in a prior year, or (2) who has not been credited with at
least one hour of service with any Employer maintaining the Plan at any
time during the 5-year period ending on the Determination Date, will be
disregarded. The calculation of the Top-Heavy Ratio, and the extent to
which distributions, rollovers, and transfers are taken into account
will be made in accordance with Code Section 416 and the regulations
thereunder. Qualified Voluntary Employee Contributions will not be
taken into account for purposes of computing the Top-Heavy Ratio. When
aggregating plans the value of account balances and accrued benefits
will be calculated with reference to the Determination Dates that fall
within the same calendar year. The accrued benefit of a Participant
other than a Key Employee shall be determined under (1) the method, if
any, that uniformly applies for accrual purposes under all Defined
Benefit Plans maintained by the Employer, or (2) if there is no such
method, as if such benefit accrued not more rapidly than the slowest
accrual rate permitted under the fractional rule of Code Section
411(b)(1)(C).
1.83 Top-Paid Group The group consisting of the top 20% of Employees when
ranked on the basis of Compensation paid during such year. For purposes of
determining the number of Employees in the group (but not who is in it), the
following Employees shall be excluded:
(a) Employees who have not completed 6 months of Service.
(b) Employees who normally work less than 17-1/2 hours per week.
(c) Employees who normally do not work more than 6 months during any year.
(d) Employees who have not attained age 21.
(e) Employees included in a collective bargaining unit, covered by an
agreement between employee representatives and the Employer, where
retirement benefits were the subject of good faith bargaining and
provided that 90% or more of the Employer's Employees are covered by
the agreement.
(f) Employees who are nonresident aliens and who receive no earned income
which constitutes income from sources within the United States.
1.84 Transfer Contribution A non-taxable transfer of a Participant's
benefit directly from a Qualified Deferred Compensation Plan to this Plan.
1.85 Trustee The Sponsor of this Prototype or the individual(s) appointed
by the Employer in the Adoption Agreement.
1.86 Valuation Date The last day of the Plan Year or such other date
as agreed to by the Employer and the Trustee/Custodian on which Participant
accounts are revalued in accordance with Article V hereof for Top-Heavy
purposes, the date selected by the Employer as of which the Top-Heavy Ratio
is calculated.
1.87 Vested Account Balance The aggregate value of the Participant's
Vested Account Balances derived from Employer and Employee contributions
(including Rollovers), whether vested before or upon death, including the
proceeds of insurance contracts, if any, on the Participant's life. The
provisions of Article VII shall apply to a Participant who is vested in amounts
attributable to Employer contributions, Employee contributions (or both) at the
time of death or distribution.
1.88 Voluntary Contribution An Employee contribution made to the Plan by
or on behalf of a Participant that is included in the Participant's gross income
in the year in which made and that is maintained under a separate account to
which earnings and losses are allocated.
1.89 Welfare Benefit Fund Any fund that is part of a plan of the Employer,
or has the effect of a plan, through which the Employer provides welfare
benefits to Employees or their beneficiaries. For these purposes, Welfare
Benefits means any benefit other than those with respect to which Code Section
83(h) (relating to transfers of property in connection with the performance of
services), Code Section 404 (relating to deductions for contributions to an
Employee's trust or annuity and Compensation under a deferred payment plan),
Code Section 404A (relating to certain foreign deferred compensation plans)
apply. A "Fund" is any social club, voluntary employee benefit association,
supplemental unemployment benefit trust or qualified group legal service
organization described in Code Section 501(c)(7), (9), (17) or (20); any trust,
corporation, or other organization not exempt from income tax, or to the extent
provided in regulations, any account held for an Employer by any person.
1.90 Year Of Service A 12-consecutive month period during which an
Employee is credited with not less than 1,000 (or such lesser number as
specified by the Employer in the Adoption Agreement) Hours of Service.
ARTICLE II
ELIGIBILITY REQUIREMENTS
2.1 Participation Employees who meet the eligibility requirements in the
Adoption Agreement on the Effective Date of the Plan shall become Participants
as of the Effective Date of the Plan. If so elected in the Adoption Agreement,
all Employees employed on the Effective Date of the Plan may participate, even
if they have not satisfied the Plan's specified eligibility requirements.
Other Employees shall become Participants on the Entry Date coinciding with or
immediately following the date on which they meet the eligibility requirements.
The Employee must satisfy the eligibility requirements specified in the Adoption
Agreement and be employed on the Entry Date to become a Participant in the Plan.
In the event an Employee who is not a member of the eligible class of Employees
becomes a member of the eligible class, such Employee shall participate immed-
iately if such Employee has satisfied the minimum age and service requirements
and would have previously become a Participant had he or she been in the
eligible class. A former Participant shall again become a Participant upon
returning to the employ of the Employer at the next Entry Date or if earlier,
the next Valuation Date. For this purpose, Participant's Compensation and
Service shall be considered from date of rehire.
2.2 Change In Classification Of Employment In the event a Participant
becomes ineligible to participate because he or she is no longer a member of an
eligible class of Employees, such Employee shall participate upon his or her
return to an eligible class of Employees.
2.3 Computation Period To determine Years of Service and Breaks in
Service for purposes of eligibility, the 12-consecutive month period shall
commence on the date on which an Employee first performs an Hour of Service for
the Employer and each anniversary thereof, such that the succeeding 12-
consecutive month period commences with the employee's first anniversary of
employment and so on. If, however, the period so specified is one year or less,
the succeeding 12-consecutive month period shall commence on the first day of
the Plan Year prior to the anniversary of the date they first performed an Hour
of Service regardless of whether the Employee is entitled to be credited with
1,000 (or such lesser number as specified by the Employer in the Adoption
Agreement) Hours of Service during their first employment year.
2.4 Employment Rights Participation in the Plan shall not confer upon a
Participant any employment rights, nor shall it interfere with the Employer's
right to terminate the employment of any Employee at any time.
2.5 Service With Controlled Groups All Years of Service with other
members of a controlled group of corporations [as defined in Code Section
414(b)], trades or businesses under common control [as defined in Code Section
414(c)], or members of an affiliated service group [as defined in Code Section
414(m)] shall be credited for purposes of determining an Employee's eligibility
to participate.
2.6 Owner-Employees If this Plan provides contributions or benefits for
one or more Owner-Employees who control both the business for which this Plan is
established and one or more other trades or businesses, this Plan and the Plan
established for other trades or businesses must, when looked at as a single
Plan, satisfy Code Sections 401(a) and (d) for the Employees of this and all
other trades or businesses.
If the Plan provides contributions or benefits for one or more Owner-Employees
who control one or more other trades or businesses, the Employees of the other
trades or businesses must be included in a Plan which satisfies Code Sections
401(a) and (d) and which provides contributions and benefits not less favorable
than provided for Owner-Employees under this Plan.
If an individual is covered as an Owner-Employee under the plans of two or more
trades or businesses which are not controlled, and the individual controls a
trade or business, then the contributions or benefits of the Employees under the
plan of the trades or businesses which are controlled must be as favorable as
those provided for him or her under the most favorable plan of the trade or
business which is not controlled.
For purposes of the preceding sentences, an Owner-Employee, or two or more
Owner-Employees, will be considered to control a trade or business if the Owner-
Employee, or two or more Owner-Employees together:
(a) own the entire interest in an unincorporated trade or business, or
(b) in the case of a partnership, own more than 50% of either the capital
interest or the profits interest in the partnership.
For purposes of the preceding sentence, an Owner-Employee, or two or more Owner-
Employees shall be treated as owning any interest in a partnership which is
owned, directly or indirectly, by a partnership which such Owner-Employee, or
such two or more Owner-Employees, are considered to control within the meaning
of the preceding sentence.
2.7 Leased Employees Any Leased Employee shall be treated as an Employee
of the recipient Employer; however, contributions or benefits provided 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 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 by the Employer pursuant to a salary reduction
agreement, which are excludable from the Employee's gross income
under a cafeteria plan covered by Code Section 125, a cash or
deferred profit-sharing plan under Section 401(k) of the Code, a
Simplified Employee Pension Plan under Code Section 402(h)(1)(B)
and a tax-sheltered annuity under Code Section 403(b)],
(b) immediate participation, and
(c) full and immediate vesting.
This exclusion is only available if Leased Employees do not constitute more than
twenty percent (20%) of the recipient's non-highly compensated work force.
2.8 Thrift Plans If the Employer makes an election in the Adoption
Agreement to require Voluntary Contributions to participate in this Plan, the
Employer shall notify each eligible Employee in writing of his or her
eligibility for participation at least 30 days prior to the appropriate Entry
Date. The Employee shall indicate his or her intention to join the Plan by
authorizing the Employer to withhold a percentage of his or her Compensation as
provided in the Plan. Such authorization shall be returned to the Employer at
least 10 days prior to the Employee's Entry Date. The Employee may decline
participation by so indicating on the enrollment form or by failure to return
the enrollment form to the Employer prior to the Employee's Entry Date. If the
Employee declines to participate, such Employee shall be given the opportunity
to join the Plan on the next Entry Date. The taking of a Hardship Withdrawal
under the provisions of paragraph 6.9 will impact the Participant's ability
to make these contributions.
ARTICLE III
EMPLOYER CONTRIBUTIONS
3.1 Amount The Employer intends to make periodic contributions to the
Plan in accordance with the formula or formulas selected in the Adoption
Agreement. However, the Employer's contribution for any Plan Year shall be
subject to the limitations on allocations contained in Article X.
3.2 Expenses And Fees The Employer shall also be authorized to reimburse
the Fund for all expenses and fees incurred in the administration of the Plan or
Trust/Custodial Account and paid out of the assets of the Fund. Such expenses
shall include, but shall not be limited to, fees for professional services,
printing and postage. Brokerage commissions may not be reimbursed.
3.3 Responsibility For Contributions Neither the Trustee/Custodian nor
the Sponsor shall be required to determine if the Employer has made a
contribution or if the amount contributed is in accordance with the Adoption
Agreement or the Code. The Employer shall have sole responsibility in this
regard. The Trustee/Custodian shall be accountable solely for contributions
actually received by it, within the limits of Article XI.
3.4 Return Of Contributions Contributions made to the Fund by the
Employer shall be irrevocable except as provided below:
(a) Any contribution forwarded to the Trustee/Custodian because of a
mistake of fact, provided that the contribution is returned to the
Employer within one year of the contribution.
(b) In the event that the Commissioner of Internal Revenue determines
that the Plan is not initially qualified under the Internal Revenue
Code, any contribution made incident to that initial qualification
by the Employer must be returned to the Employer within one year
after the date the initial qualification is denied, but only if the
application for the qualification is made by the time prescribed by
law for filing the Employer's return for the taxable year in which
the Plan is adopted, or such later date as the Secretary of the
Treasury may prescribe.
(c) Contributions forwarded to the Trustee/Custodian are presumed to be
deductible and are conditioned on their deductibility. Contributions
which are determined to not be deductible will be returned to the
Employer.
ARTICLE IV
EMPLOYEE CONTRIBUTIONS
4.1 Voluntary Contributions An Employee may make Voluntary Contributions
to the Plan established hereunder if so authorized by the Employer in a uniform
and nondiscriminatory manner. Such contributions are subject to the limitations
on Annual Additions and are subject to antidiscrimination testing.
4.2 Qualified Voluntary Contributions A Participant may no longer make
Qualified Voluntary Contributions to the Plan. Amounts already contributed may
remain in the Trust Fund/Custodial Account until distributed to the Participant.
Such amounts will be maintained in a separate account which will be
nonforfeitable at all times. The account will share in the gains and losses of
the Trust in the same manner as described at paragraph 5.4 of the Plan. No part
of the Qualified Voluntary Contribution account will be used to purchase life
insurance. Subject to Article VIII, Joint and Survivor Annuity Requirements (if
applicable), the Participant may withdraw any part of the Qualified Voluntary
Contribution account by making a written application to the Plan Administrator.
4.3 Rollover Contribution Unless provided otherwise in the Adoption Agree-
ment, a Participant may make a Rollover Contribution to any Defined Contribution
Plan established hereunder of all or any part of an amount distributed or dis-
tributable to him or her from a Qualified Deferred Compensation Plan provided:
(a) the amount distributed to the Participant is deposited to the Plan no
later than the sixtieth day after such distribution was received by the
Participant,
(b) the amount distributed is not one of a series of substantially equal
periodic payments made for the life (or life expectancy) of the
Participant or the joint lives (or joint life expectancies) of the
Participant and the Participant's Designated Beneficiary, or for a
specified period of ten years or more;
(c) the amount distributed is not required under Code Section 401(a)(9);
(d) if the amount distributed included property such property is rolled
over, or if sold the proceeds of such property may be rolled over,
(e) the amount distributed is not includible in gross income (determined
without regard to the exclusion for net unrealized appreciation with
respect to employer securities).
In addition, if the Adoption Agreement allows Rollover Contributions, the Plan
will also accept any Eligible Rollover Distribution (as defined at paragraph
1.70) directly to the Plan.
Rollover Contributions, which relate to distributions prior to January 1, 1993,
must be made in accordance with paragraphs (a) through (e) and additionally meet
the requirements of paragraph (f):
(f) The distribution from the Qualified Deferred Compensation Plan
constituted the Participant's entire interest in such Plan and was
distributed within one taxable year to the Participant:
(1) on account of separation from Service, a Plan termination, or in
the case of a profit-sharing or stock bonus plan, a complete
discontinuance of contributions under such plan within the meaning
of Code Section 402(a)(6)(A), or
(2) in one or more distributions which constitute a qualified lump sum
distribution within the meaning of Code Section 402(e)(4)(A),
determined without reference to subparagraphs (B) and (H).
Such Rollover Contribution may also be made through an individual retirement
account qualified under Code Section 408 where the IRA was used as a conduit
from the Qualified Deferred Compensation Plan, the Rollover Contribution is made
in accordance with the rules provided under paragraphs (a) through (e) and the
Rollover Contribution does not include any regular IRA contributions, or
earnings thereon, which the Participant may have made to the IRA. Rollover
Contributions, which relate to distributions prior to January 1, 1993, may be
made through an IRA in accordance with paragraphs (a) through (f) and additional
requirements as provided in the previous sentence. The Trustee/Custodian shall
not be held responsible for determining the tax-free status of any Rollover
Contribution made under this Plan.
4.4 Transfer Contribution Unless provided otherwise in the Adoption
Agreement a Participant may, subject to the provisions of paragraph 4.5, also
arrange for the direct transfer of his or her benefit from a Qualified Deferred
Compensation Plan to this Plan. For accounting and record keeping purposes,
Transfer Contributions shall be treated in the same manner as Rollover
Contributions.
In the event the Employer accepts a Transfer Contribution from a Plan in which
the Employee was directing the investments of his or her account, the Employer
may continue to permit the Employee to direct his or her investments in
accordance with paragraph 13.7 with respect only to such Transfer Contribution.
Notwithstanding the above, the Employer may refuse to accept such Transfer
Contributions.
4.5 Employer Approval Of Transfer Contributions The Employer maintaining
a Safe-Harbor Profit-Sharing Plan in accordance with the provisions of paragraph
8.7, acting in a nondiscriminatory manner, may in its sole discretion refuse to
allow Transfer Contributions to its profit-sharing plan, if such contributions
are directly or indirectly being transferred from a defined benefit plan, a
money purchase pension plan (including a target benefit plan), a stock bonus
plan, or another profit-sharing plan which would otherwise provide for a life
annuity form of payment to the Participant.
4.6 Elective Deferrals A Participant may enter into a Salary Savings
Agreement with the Employer authorizing the Employer to withhold a portion of
such Participant's Compensation not to exceed $7,000 per calendar year as
adjusted under Code Section 415(d) or, if lesser, the percentage of Compensation
specified in the Adoption Agreement and to deposit such amount to the Plan. No
Participant shall be permitted to have Elective Deferrals made under this Plan
or any other qualified plan maintained by the Employer, during any taxable year,
in excess of the dollar limitation contained in Code Section 402(g) in effect at
the beginning of such taxable year. Thus, the $7,000 limit may be reduced if a
Participant contributes pre-tax contributions to qualified plans of this or
other Employers. Any such contribution shall be credited to the Employee's
Salary Savings Account. Unless otherwise specified in the Adoption Agreement, a
Participant may amend his or her Salary Savings Agreement to increase, decrease
or terminate the percentage upon 30 days written notice to the Employer. If a
Participant terminates his or her agreement, such Participant shall not be
permitted to put a new Salary Savings Agreement into effect until the first pay
period in the next Plan Year, unless otherwise stated in the Adoption Agreement.
The Employer may also amend or terminate said agreement on written notice to the
Participant. If a Participant has not authorized the Employer to withhold at
the maximum rate and desires to increase the total withheld for a Plan Year,
such Participant may authorize the Employer upon 30 days notice to withhold a
supplemental amount up to 100% of his or her Compensation for one or more pay
periods. In no event may the sum of the amounts withheld under the Salary
Savings Agreement plus the supplemental withholding exceed 25% of a Partici-
pant's Compensation for a Plan Year. The Employer may also recharacterize as
after-tax Voluntary Contributions all or any portion of amounts previously
withheld under any Salary Savings Agreement within the Plan Year as provided for
at paragraph 10.9. This may be done to insure that the Plan will meet one of
the antidiscrimination tests under Code Section 401(k). Elective Deferrals
shall be deposited in the Trust within 30 days after being withheld from the
Participant's pay.
4.7 Required Voluntary Contributions If the Employer makes a thrift
election in the Adoption Agreement, each eligible Participant shall be required
to make Voluntary Contributions to the Plan for credit to his or her account as
provided in the Adoption Agreement. Such Voluntary Contributions shall be with-
held from the Employee's Compensation and shall be transmitted by the Employer
to the Trustee/Custodian as agreed between the Employer and Trustee/Custodian.
A Participant may discontinue participation or change his or her Voluntary
Contribution percentage by so advising the Employer at least 10 days prior to
the date on which such discontinuance or change is to be effective. If a
Participant discontinues his or her Voluntary Contributions, such Participant
may not again authorize Voluntary Contributions for a period of one year from
the date of discontinuance. A Participant may voluntarily change his or her
Voluntary Contribution percentage once during any Plan Year and may also agree
to have a reduction in his or her contribution, if required to satisfy the
requirements of the ACP test.
4.8 Direct Rollover of Benefits Notwithstanding any provision of the
Plan to the contrary that would otherwise limit a Participant's election under
this paragraph, for distributions made on or after January 1, 1993, a
Participant 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 Participant in a Direct
Rollover. Any portion of a distribution which is not paid directly to an
Eligible Retirement Plan shall be distributed to the Participant. For purposes
of this paragraph, a Surviving Spouse or a Spouse or former Spouse who is an
alternate payee under a Qualified Domestic Relations Order as defined in Code
Section 414(p), will be permitted to elect to have any Eligible Rollover
Distribution paid directly to an individual retirement account (IRA) or an
individual retirement annuity (IRA).
The plan provisions otherwise applicable to distributions continue to apply to
Rollover and Transfer Contributions.
ARTICLE V
PARTICIPANT ACCOUNTS
5.1 Separate Accounts The Employer shall establish a separate bookkeeping
account for each Participant showing the total value of his or her interest in
the Fund. Each Participant's account shall be separated for bookkeeping
purposes into the following sub-accounts:
(a) Employer contributions.
(1) Matching Contributions.
(2) Qualified Matching Contributions.
(3) Qualified Non-Elective Contributions.
(4) Discretionary Contributions.
(5) Elective Deferrals.
(b) Voluntary Contributions (and additional amounts including required
contributions and, if applicable, either repayments of loans previously
defaulted on and treated as "deemed distributions" on which a tax report has
been issued, which a tax report has been issued, and amounts paid out upon a
separation from service which have been included in income and which are repaid
after being re-hired by the Employer).
(c) Qualified Voluntary Contributions (if the Plan previously accepted
these).
(d) Rollover Contributions and Transfer Contributions.
5.2 Adjustments To Participant Accounts As of each Valuation Date of the
Plan, the Employer shall add to each account:
(a) the Participant's share of the Employer's contribution and forfeitures
as determined in the Adoption Agreement,
(b) any Elective Deferrals, Voluntary, Rollover or Transfer Contributions
made by the Participant,
(c) any repayment of amounts previously paid out to a Participant upon a
separation from Service and repaid by the Participant since the last
Valuation Date, and
(d) the Participant's proportionate share of any investment earnings and
increase in the fair market value of the Fund since the last Valuation
Date, as determined at paragraph 5.4.
The Employer shall deduct from each account:
(e) any withdrawals or payments made from the Participant's account since
the last Valuation Date, and
(f) the Participant's proportionate share of any decrease in the fair
market value of the Fund since the last Valuation Date, as determined
at paragraph 5.4.
5.3 Allocating Employer Contributions The Employer's contribution shall be
allocated to Participants in accordance with the allocation formula selected by
the Employer in the Adoption Agreement, and the minimum contribution and allo-
cation requirements for Top-Heavy Plans. Beginning with the 1990 Plan Year and
thereafter, for plans on Standardized Adoption Agreement 001, Particpants who
are credited with more than 500 Hours of Service or are employed on the last day
of the Plan Year must receive a full allocation of Employer contributions. In
Nonstandardized Adoption Agreement 002, Employer contributions shall be allo-
cated to the accounts of Participants employed by the Employer on the last day
of the Plan Year unless indicated otherwise in the Adoption Agreement. In the
case of a non-Top-Heavy, Nonstandardized Plan, Participants must also have
completed a Year of Service unless otherwise specified in the Adoption Agree-
ment. For Nonstandardized Adoption Agreement 002, the Employer may only apply
the last day of the Plan Year and Year of Service requirements if the Plan
satisfies the requirements of Code Sections 401(a)(26) and 410(b) and the
regulations thereunder including the exception for 401(k) plans. If, when
applying the last day and Year of Service requirements, the Plan fails to
satisfy the aforementioned requirements, additional Participants will be
eligible to receive an allocation of Employer contributions until the require-
ments are satisfied. Participants who are credited with a Year of Service, but
not employed at Plan Year end, are the first category of additional Participants
eligible to receive an allocation. If the requirements are still not satisfied,
Participants credited with more than 500 Hours of Service and employed at Plan
Year end are the next category of Participants eligible to receive an allo-
cation. Finally, if necessary to satisfy the said requirements, any Participant
credited with more than 500 Hours of Service will be eligible for an allocation
of Employer Contributions. The Service requirement is not applicable with
respect to any Plan Year during which the Employer's Plan is Top-Heavy.
5.4 Allocating Investment Earnings And Losses A Participant's share of
investment earnings and any increase or decrease in the fair market value of the
Fund shall be based on the proportionate value of all active accounts (other
than accounts with segregated investments) as of the last Valuation Date less
withdrawals since the last Valuation Date. If Employer contributions are made
monthly, made monthly, quarterly, or on some other systematic basis, the
adjusted value of such accounts for allocation of investment income and gains or
losses shall include one-half the Employer contributions for such period. If
contributions are not made on a systematic basis, it is assumed that they are
made at the end of the valuation period and therefore will not receive an
allocation of investment earnings and gains or losses for such period. Account
balances not yet forfeited shall receive an allocation of earnings and/or
losses. Accounts with segregated investments shall receive only the income or
loss on such segregated investments.
5.5 Participant Statements Upon completing the allocations described above
for the Valuation Date coinciding with the end of the Plan Year, the Employer
shall prepare a statement for each Participant showing the additions to and
subtractions from his or her account since the last such statement and the fair
market value of his or her account as of the current Valuation Date. Employers
so choosing may prepare Participant statements for each Valuation Date.
ARTICLE VI
RETIREMENT BENEFITS AND DISTRIBUTIONS
6.1 Normal Retirement Benefits A Participant shall be entitled to receive
the balance held in his or her account from Employer contributions upon
attaining Normal Retirement Age or at such earlier dates as the provisions of
this Article VI may allow. If the Participant elects to continue working past
his or her Normal Retirement Age, he or she will continue as an active Plan
Participant and no distribution shall be made to such Participant until his or
her actual retirement date unless the employer elects otherwise in the Adoption
Agreement, or a minimum distribution is required by law. Settlement shall be
made in the normal form, or if elected, in one of the optional forms of payment
provided below.
6.2 Early Retirement Benefits If the Employer so provides in the Adoption
Agreement, an Early Retirement Benefit will be available to individuals who meet
the age and Service requirements. An individual who meets the Early Retirement
Age requirements and requirements and separates from Service, will become fully
vested, regardless of any vesting schedule which otherwise might apply. If a
Participant separates from Service before satisfying the age requirements, but
after having satisfied the Service requirement, the Participant will be entitled
to elect an Early Retirement benefit upon satisfaction of the age requirement.
6.3 Benefits On Termination Of Employment
(a) If a Participant terminates employment prior to Normal Retirement Age,
such Participant shall be entitled to receive the vested balance held
in his or her account payable at Normal Retirement Age in the normal
form, or if elected, in one of the optional forms of payment provided
hereunder. If applicable, the Early Retirement Benefit provisions may
be elected. Notwithstanding the preceding sentence, a former Partic-
ipant may, if allowed in the Adoption Agreement, make application to
the Employer requesting early payment of any deferred vested and
nonforfeitable benefit due.
(b) If a Participant terminates employment, and the value of that Partici-
pant's Vested Account Balance derived from Employer and Employee
contributions is not greater than $3,500, the Participant may receive
a lump sum distribution of the value of the entire vested portion of
such account balance and the non-vested portion will be treated as a
forfeiture. The Employer shall continue to follow their consistent
policy, as may be established, regarding immediate cash-outs of Vested
Account Balances of $3,500 or less. For purposes of this Article, if
the value of a Participant's Vested Account Balance is zero, the
Participant shall be deemed to have received a distribution of such
Vested Account Balance immediately following termination. Likewise, if
the Participant is reemployed prior to incurring 5 consecutive 1-year
Breaks in Service they will be deemed to have immediately repaid such
distribution. For Plan Years beginning prior to 1989, a Participant's
Vested Account Balance shall not include Qualified Voluntary Contri-
butions. Notwithstanding the above, if the Employer maintains or has
maintained a policy of not distributing any amounts until the Partici-
pant's Normal Retirement Age, the Employer can continue to uniformly
apply such policy.
(c) If a Participant terminates employment with a Vested Account Balance
derived from Employer and Employee contributions in excess of $3,500,
and elects (with his or her Spouse's consent, if required) to receive
100% of the value of his or her Vested Account Balance in a lump sum,
the non-vested portion will be treated as a forfeiture. The Partici-
pant (and his or her Spouse, if required) must consent to any distri-
bution, when the Vested Account Balance described above exceeds $3,500
or if at the time of any prior distribution it exceeded $3,500. For
purposes of this paragraph, for Plan Years beginning prior to 1989, a
Participant's Vested Account Balance shall not include Qualified
Voluntary Contributions.
(d) Distribution of less than 100% of the Participant's Vested Account
Balance shall only be permitted if the Participant is fully vested
upon termination of employment.
(e) If a Participant who is not 100% vested receives or is deemed to
receive a distribution pursuant to this paragraph and resumes
employment covered under this Plan, the Participant shall have the
right to repay to the Plan the full amount of the distribution
attributable to Employer contributions on or before the earlier of
the date that the Participant incurs 5 consecutive 1-year Breaks in
Service following the date of distribution or five years after the
first date on which the Participant is subsequently reemployed. In
such event, the Participant's account shall be restored to the value
thereof at the time the distribution was made and may further be
increased by the Plan's income and investment gains and/or losses
on the undistributed amount from the date of distribution to the date
of repayment.
(f) A Participant shall also have the option, to postpone payment of his or
her Plan benefits until the first day of April following the calendar
year in which he or she attains age 70-1/2. Any balance of a Partici-
pant's account resulting from his or her Employee contributions not
previously withdrawn, if any, may be withdrawn by the Participant
immediately following separation from Service.
(g) If a Participant ceases to be an active Employee as a result of a
Disability as defined at paragraph 1.21, such Participant shall be able
to make an application for a disability retirement benefit payment.
The Participant's account balance will be deemed "immediately
distributable" as set forth in paragraph 6.4, and will be fully vested
pursuant to paragraph 9.2.
6.4 Restrictions On Immediate Distributions
(a) An account balance is immediately distributable if any part of the
account balance could be distributed to the Participant (or Surviving
Spouse) before the Participant attains (or would have attained if not
deceased) the later of the Normal Retirement Age or age 62.
(b) If the value of a Participant's Vested Account Balance derived from
Employer and Employee Contributions exceeds (or at the time of any
prior distribution exceeded) $3,500, and the account balance is
immediately distributable, the Participant and his or her Spouse (or
where either the Participant or the Spouse has died, the survivor) must
consent to any distribution of such account balance. The consent of
the Participant and the Spouse shall be obtained in writing within
the 90-day period ending on the annuity starting date, which is the
first day of the first period for which an amount is paid as an annuity
or any other form. The Plan Administrator shall notify the Participant
and the Participant's Spouse of the right to defer any distribution
until the Participant's account balance is no longer immediately
distributable. Such notification shall include a general description
of the material features, and an explanation of the relative values of,
the optional forms of benefit available under the plan in a manner that
would satisfy the notice requirements of Code Section 417(a)(3), and
shall be provided no less than 30 days and no more than 90 days prior
to the annuity starting date.
(c) Notwithstanding the foregoing, only the Participant need consent to
the commencement of a distribution in the form of a qualified Joint
and Survivor Annuity while the account balance is immediately
distributable. Furthermore, if payment in the form of a Qualified
Joint and Survivor Annuity is not required with respect to the
Participant pursuant to paragraph 8.7 of the Plan, only the Participant
need consent to the distribution of an account balance that is
immediately distributable. Neither the consent of the Participant nor
the Participant's Spouse shall be required to the extent that a
distribution is required to satisfy Code Section 401(a)(9) or Code
Section 415. In addition, upon termination of this Plan if the Plan
does not offer an annuity option (purchased from a commercial
provider), the Participant's account balance may, without the Partici-
pant's consent, be distributed to the Participant or transferred to
another Defined Contribution Plan [other than an employee stock
ownership plan as defined in Code Section 4975(e)(7)] within the same
controlled group.
(d) For purposes of determining the applicability of the foregoing consent
requirements to distributions made before the first day of the first
Plan Year beginning after 1988, the Participant's Vested Account
Balance shall not include amounts attributable to Qualified Voluntary
Contributions.
6.5 Normal Form Of Payment The normal form of payment for a profit-sharing
plan satisfying the requirements of paragraph 8.7 hereof shall be a lump sum
with no option for annuity payments. For all other plans, the normal form of
payment hereunder shall be a Qualified Joint and Survivor Annuity as provided
under Article VIII. A Participant whose Vested Account Balance derived from
Employer and Employee contributions exceeds $3,500, or if at the time of any
prior distribution it exceeded $3,500, shall (with the consent of his or her
Spouse) have the right to receive his or her benefit in a lump sum or in
monthly, quarterly, semi-annual or annual payments from the Fund over any period
not extending beyond the life expectancy of the Participant and his or her
Beneficiary. For purposes of this paragraph, for Plan Years prior to 1989, a
Participant's Vested Account Balance shall not include Qualified Voluntary
Contributions. The normal form of payment shall be automatic, unless the
Participant files a written request with the Employer prior to the date on which
the benefit is automatically payable, electing a lump sum or installment payment
option. No amendment to the Plan may eliminate one of the optional distribution
forms listed above.
6.6 Commencement Of Benefits
(a) Unless the Participant elects otherwise, distribution of benefits will
begin no later than the 60th day after the close of the Plan Year in
which the latest of the following events occurs:
(1) the Participant attains age 65 (or normal retirement age if
earlier),
(2) the 10th anniversary of the year in which the Participant
commenced participation in the Plan, or
(3) the Participant terminates Service with the Employer.
(b) Notwithstanding the foregoing, the failure of a Participant and Spouse
(if necessary) to consent to a distribution while a benefit is
immediately distributable, within the meaning of paragraph 6.4 hereof,
shall be deemed an election to defer commencement of payment of any
benefit sufficient to satisfy this paragraph.
6.7 Claims Procedures Upon retirement, death, or other severance of employ-
ment, the Participant or his or her representative may make application to the
Employer requesting payment of benefits due and the manner of payment. If no
application for benefits is made, the Employer shall automatically pay any
vested benefit due hereunder in the normal form at the time prescribed at
paragraph 6.4. If an application for benefits is made, the Employer shall
accept, reject, or modify such request and shall notify the Participant in
writing setting forth the response of the Employer and in the case of a denial
or modification the Employer shall:
(a) state the specific reason or reasons for the denial,
(b) provide specific reference to pertinent Plan provisions on which the
denial is based,
(c) provide a description of any additional material or information
necessary for the Participant or his representative to perfect the
claim and an explanation of why such material or information is
necessary, and
(d) explain the Plan's claim review procedure as contained in this Plan.
In the event the request is rejected or modified, the Participant or his or her
representative may within 60 days following receipt by the Participant or
representative of such rejection or modification, submit a written request for
review by the Employer of its initial decision. Within 60 days following such
request for review, the Employer shall render its final decision in writing to
the Participant or representative stating specific reasons for such decision. If
the Participant or representative is not satisfied with the Employer's final
decision, the Participant or representative can institute an action in a federal
court of competent jurisdiction; for this purpose, process would be served on
the Employer.
6.8 In-Service Withdrawals An Employee may withdraw all or any part of the
fair market value of his or her Mandatory Contributions, Voluntary Contri-
butions, Qualified Voluntary Contributions or Rollover Contributions, upon
written request to the Employer. Transfer Contributions, which originate from a
Plan meeting the safe-harbor provisions of paragraph 8.7, may also be withdrawn
by an Employee upon written request to the Employer. Transfer Contributions not
meeting the safe-harbor provisions may only be withdrawn upon retirement, death,
Disability, termination or termination of the Plan, and will be subject to
Spousal consent requirements contained in Code Sections 411(a)(11) and 417. No
such withdrawals are permitted from a money purchase plan until the participant
reaches Normal Retirement Age. Such request shall include the Employee's
address, social security number, birthdate, and amount of the withdrawal. If at
the time a distribution of Qualified Voluntary Contributions is received the
Participant has not attained age 59-1/2 and is not disabled, as defined at Code
Section 22(e)(3), the Participant will be subject to a federal income tax
penalty, unless the distribution is rolled over to a qualified plan or individ-
ual retirement plan within 60 days of the date of distribution. A Participant
may withdraw all or any part of the fair market value of his or her pre-1987
Voluntary Contributions with or without withdrawing the earnings attributable
thereto. Post-1986 Voluntary Contributions may only be withdrawn along with a
portion of the earnings thereon. The amount of the earnings to be withdrawn is
determined by using the formula: DA [1-(V + V+E)], where DA is the distribution
amount, V is the amount of Voluntary Contributions and V+E is the amount of
Voluntary Contributions plus the earnings attributable thereto. A Participant
withdrawing his or her other contributions prior to attaining age 59-1/2, will
be subject to a federal tax penalty to the extent that the withdrawn amounts are
includible in income. Unless the Employer provides otherwise in the Adoption
Agreement, any Participant in a profit-sharing plan who is 100% fully vested in
his or her Employer contributions may withdraw all or any part of the fair
market value of any of such contributions that have been in the account at least
two years, plus the investment earnings thereon, after attaining 59-1/2 without
separation from Service. Such Employer contributions may not have been used to
satisfy the antidiscrimination test of Code Section 401(k). Such distributions
shall not be eligible for redeposit to the Fund. A withdrawal under this para-
graph shall not prohibit such Participant from sharing in any future Employer
Contribution he or she would otherwise be eligible to share in. A request to
withdraw amounts pursuant to this paragraph must if applicable, be consented to
by the Participant's Spouse. The consent shall comply with the requirements of
paragraph 6.4 relating to immediate distributions. Elective Deferrals,
Qualified Non-elective Contributions, and Qualified Matching Contributions, and
income allocable to each are not distributable to a Participant or his or her
Beneficiary or Beneficiaries, in accordance with such Participant's or
Beneficiary's or Beneficiaries' election, earlier than upon separation from
Service, Death, or Disability. Such amounts may also be distributed upon:
(a) Termination of the Plan without the establishment of another Defined
Contribution Plan.
(b) The disposition by a corporation to an unrelated corporation of
substantially all of the assets [within the meaning of Code Section
409(d)(2)] used in a trade or business of such corporation if such
corporation continues to maintain this Plan after the disposition, but
only with respect to Employees who continue employment with the
corporation acquiring such assets.
(c) The disposition by a corporation to an unrelated entity of such
corporation's interest in a subsidiary [within the meaning of Code
Section 409(d)(3)] if such corporation continues to maintain this
plan, but only with respect to Employees who continue employment with
such subsidiary.
(d) The attainment of age 59-1/2.
(e) The Hardship of the Participant as described in paragraph 6.9.
All distributions that may be made pursuant to one or more of the foregoing
distributable events are subject to the Spousal and Participant consent require-
ments, if applicable, contained in Code Sections 401(a)(11) and 417.
6.9 Hardship Withdrawal If permitted by the Trustee/Custodian and the
Employer in the Adoption Agreement, a Participant may request a Hardship
withdrawal prior to attaining age 59-1/2. If the Participant has not attained
age 59-1/2, the Participant may be subject to a federal income tax penalty.
Such request shall be in writing to the Employer who shall have sole authority
to authorize a hardship withdrawal pursuant to the rules below. Hardship
withdrawals may include Elective Deferrals regardless of when contributed and
any earnings accrued and credited thereon as of the last day of the Plan Year
ending before July 1, 1989 and Employer related contributions, including but not
limited to Employer Matching Contributions, plus the investment earnings thereon
to the extent vested. Qualified Matching Contributions, Qualified Non-Elective
Contributions and Elective Deferrals reclassified as Voluntary Contributions
plus the investment earnings thereon are only available for Hardship withdrawal
prior to age 59-1/2 to the extent that they were credited to the Participant's
Account as of the last day of the Plan Year ending prior to July 1, 1989. The
Plan Administrator may limit withdrawals to Elective Deferrals and the earnings
thereon as stipulated above. Hardship withdrawals are subject to the Spousal
consent requirements contained in Code Sections 401(a)(11) and 417. Only the
following reasons are valid to obtain hardship withdrawal:
(a) medical expenses [within the meaning of Code Section 213(d)], incurred
or necessary for the medical care, of the Participant, his or her
Spouse, children and other dependents,
(b) the purchase (excluding mortgage payments) of the principal residence
for the Participant,
(c) payment of tuition and related educational expenses for the next twelve
(12) months of post-secondary education for the Participant, his or her
Spouse, children or other dependents, or
(d) the need to prevent eviction of the Employee from or a foreclosure on
the mortgage of, the Employee's principal residence.
Furthermore, the following conditions must be met in order for a withdrawal to
be authorized:
(e) the Participant has obtained all distributions, other than hardship
distributions, and all nontaxable loans under all plans maintained by
the Employer,
(f) all plans maintained by the Employer provide that the Employee's
Elective Deferrals and Voluntary Contributions will be suspended for
twelve months after the receipt of the Hardship distribution,
(g) the distribution is not in excess of the amount of the immediate and
heavy financial need [(a) through (d)] above, and
(h) all plans maintained by the Employer provide that an Employee may not
make Elective Deferrals for the Employee's taxable year immediately
following the taxable year of the hardship distribution in excess of
the applicable limit under Code Section 402(g) for such taxable year,
less the amount of such Employee's pre-tax contributions for the
taxable year of the hardship distribution.
If a distribution is made at a time when a Participant has a nonforfeitable
right to less than 100% of the account balance derived from Employer
contributions and the Participant may increase the nonforfeitable percentage in
the account:
(a) A separate account will 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 nonforfeitable portion of the
separate account will be equal to an amount ("X") determined by the
formula:
X = P [AB + (R X D)] - (R X D)
For purposes of applying the formula: "P" is the nonforfeitable percentage at
the relevant time, "AB" is the account balance at the relevant time, "D" is the
amount of the distribution and "R" is the ratio of the account balance at the
relevant time to the account balance after distribution.
ARTICLE VII
DISTRIBUTION REQUIREMENTS
7.1 Joint And Survivor Annuity Requirements All distributions made under
the terms of this Plan must comply with the provisions of Article VIII
including, if applicable, the safe harbor provisions thereunder.
7.2 Minimum Distribution Requirements All distributions required under this
Article shall be determined and made in accordance with the minimum distribution
requirements of Code Section 401(a)(9) and the regulations thereunder, including
the minimum distribution incidental benefit rules found at Regulations Section
1.401(a)(9)-2. The entire interest of a Participant must be distributed or begin
to be distributed no later than the Participant's Required Beginning Date. Life
expectancy and joint and last survivor life expectancy are computed by using the
expected return multiples found in Tables V and VI of Regulations Section
1.72-9.
7.3 Limits On Distribution Periods As of the First Distribution Calendar
Year, distributions if not made in a single-sum, may only be made over one of
the following periods (or a combination thereof):
(a) the life of the Participant,
(b) the life of the Participant and a Designated Beneficiary,
(c) a period certain not extending beyond the life expectancy of the
participant, or
(d) a period certain not extending beyond the joint and last survivor
expectancy of the Participant and a designated beneficiary.
7.4 Required Distributions On Or After The Required Beginning Date
(a) If a participant's benefit is to be distributed over (1) a period not
extending beyond the life expectancy of the Participant or the joint
life and last survivor expectancy of the Participant and the
Participant's Designated Beneficiary or (2) a period not extending
beyond the life expectancy of the Designated Beneficiary, the amount
required to be distributed for each calendar year, beginning with
distributions for the First Distribution Calendar Year, must at least
equal the quotient obtained by dividing the Participant's benefit by
the Applicable Life Expectancy.
(b) For calendar years beginning before 1989, if the Participant's Spouse
is not the Designated Beneficiary, the method of distribution selected
must have assured that at least 50% of the Present Value of the amount
available for distribution was to be paid within the life expectancy of
the Participant.
(c) For calendar years beginning after 1988, the amount to be distributed
each year, beginning with distributions for the First Distribution
Calendar Year shall not be less than the quotient obtained by dividing
the Participant's benefit by the lesser of (1) the Applicable Life
Expectancy or (2) if the Participant's Spouse is not the Designated
Beneficiary, the applicable divisor determined from the table set forth
in Q&A-4 of Regulations Section 1.401(a)(9)-2. Distributions after the
death of the Participant shall be distributed using the Applicable Life
Expectancy as the relevant divisor without regard to Regulations
Section 1.401(a)(9)-2.
(d) The minimum distribution required for the Participant's First
Distribution Calendar Year must be made on or before the Participant's
Required Beginning Date. The minimum distribution for other calendar
years, including the minimum distribution for the Distribution Calendar
Year in which the Participant's Required Beginning Date occurs, must be
made on or before December 31 of that Distribution Calendar Year.
(e) If the Participant's benefit is distributed in the form of an annuity
purchased from an insurance company, distribution thereunder shall be
made in accordance with the requirements of Code Section 401(a)(9) and
the Regulations thereunder.
(f) For purposes of determining the amount of the required distribution for
each Distribution Calendar Year, the account balance to be used is the
account balance determined as of the last valuation preceding the
Distribution Calendar Year. This balance will be increased by the
amount of any contributions or forfeitures allocated to the account
balance after the valuation date in such preceding calendar year. Such
balance will also be decreased by distributions made after the
Valuation Date in such preceding Calendar Year.
(g) For purposes of subparagraph 7.4(f), if any portion of the minimum
distribution for the First Distribution Calendar Year is made in the
second Distribution Calendar Year on or before the Required Beginning
Date, the amount of the minimum distribution made in the second
Distribution Calendar Year shall be treated as if it had been made in
the immediately preceding Distribution Calendar Year.
7.5 Required Beginning Date
(a) General Rule. The Required Beginning Date of a Participant is the
first day of April of the calendar year following the calendar year in
which the Participant attains age 70-1/2.
(b) Transitional Rules. The Required Beginning Date of a Participant who
attains age 70-1/2 before 1988, shall be determined in accordance with
(1) or (2) below:
(1) Non-5-percent owners. The Required Beginning Date of a Participant
who is not a 5-percent owner is the first day of April of the calendar
year following the calendar year in which the later of retirement of
attainment of age 70-1/2 occurs. In the case of a Participant who is
not a 5-percent owner who attains age 70-1/2 during 1988 and who has
not retired as of January 1, 1989, the Required Beginning Date is April
1, 1990.
(2) 5-percent owners. The Required Beginning Date of a Participant who is
a 5-percent owner during any year beginning after 1979, is the first
day of April following the later of:
(i) the calendar year in which the Participant attains age 70-1/2, or
(ii) the earlier of the calendar year with or within which ends the plan
year in which the Participant becomes a 5-percent owner, or the
calendar year in which the Participant retires.
(c) A Participant is treated as a 5-percent owner for purposes of this
Paragraph if such Participant is a 5-percent owner as defined in Code
Section 416 (i) (determined in accordance with Code Section 416 but
without regard to whether the Plan is Top-Heavy) at any time during the
Plan Year ending with or within the calendar year in which such Owner
attains age 66-1/2 or any subsequent Plan Year.
(d) Once distributions have begun to a 5-percent owner under this
paragraph, they must continue to be distributed, even if the
Participant ceases to be a 5-percent owner in a subsequent year.
7.6 Transitional Rule
(a) Notwithstanding the other requirements of this Article and subject
to the requirements of Article VIII, Joint and Survivor Annuity
Requirements, distribution on behalf of any Employee, including a
5-percent owner, may be made in accordance with all of the following
requirements (regardless of when such distribution commences):
(1) The distribution by the Trust is one which would not have disqualified
such Trust under Code Section 401(a)(9) as in effect prior to amendment
by the Deficit Reduction Act of 1984.
(2) The distribution is in accordance with a method of distribution
designated by the Employee whose interest in the Trust is being
distributed or, if the Employee is deceased, by a beneficiary of such
Employee.
(3) Such designation was in writing, was signed by the Employee or the
beneficiary, and was made before 1984.
(4) The Employee had accrued a benefit under the Plan as of December 31,
1983.
(5) The method of distribution designated by the Employee or the
beneficiary specifies the time at which distribution will commence, the
period over which distributions will be made, and in the case of any
distribution upon the Employee's death, the beneficiaries of the
Employee listed in order of priority.
(b) A distribution upon death will not be covered by this transitional
rule unless the information in the designation contains the required
information described above with respect to the distributions to be
made upon the death of the Employee.
(c) For any distribution which commences before 1984, but continues
after 1983, the Employee or the beneficiary, to whom such distribution
is being made, will be presumed to have designated the method of
distribution under which the distribution is being made if the method
of distribution was specified in writing and the distribution satisfies
the requirements in subparagraphs (a)(1) and (5) above.
(d) If a designation is revoked, any subsequent distribution must satisfy
the requirements of Code Section 401(a)(9) and the regulations
thereunder. If a designation is revoked subsequent to the date
distributions are required to begin, the Trust must distribute by the
end of the calendar year following the calendar year in which the
revocation occurs the total amount not yet distributed which would have
been required to have been distributed to satisfy Code Section
401(a)(9) and the regulations thereunder, but for the section 242(b)(2)
election of the Tax Equity and Fiscal Responsibility Act of 1982. For
calendar years beginning after 1988, such distributions must meet the
minimum distribution incidental benefit requirements in section
1.401(a)(9)-2 of the Income Tax Regulations. Any changes in the
designation will be considered to be a revocation of the designation.
However, the mere substitution or addition of another beneficiary
(one not named in the designation) under the designation will not be
not be considered to be a revocation of the designation, so long as
such substitution or addition does not alter the period over which
distributions are to be made under the designation, directly or
indirectly (for example, by altering the relevant measuring life). In
the case in which an amount is transferred or rolled over from one plan
to another plan, the rules in Q&A J-2 and Q&A J-3 of the regulations
shall apply.
7.7 Designation Of Beneficiary For Death Benefit Each Participant shall
file a written designation of beneficiary with the Employer upon qualifying for
participation in this Plan. Such designation shall remain in force until
revoked by the Participant by filing a new beneficiary form with the Employer.
The Participant may elect to have a portion of his or her account balance
invested in an insurance contract. If an insurance contract is purchased under
the Plan, the Trustee must be named as Beneficiary under the terms of the
contract. However, the Participant shall designate a Beneficiary to receive the
proceeds of the contract after settlement is received by the Trustee. Under a
profit-sharing plan satisfying the requirements of paragraph 8.7, the Designated
Beneficiary shall be the Participant's Surviving Spouse, if any, unless such
Spouse properly consents otherwise.
7.8 Nonexistence Of Beneficiary Any portion of the amount payable hereunder
which is not disposed of because of the Participant's or former Participant's
failure to designate a beneficiary, or because all of the Designated
Beneficiaries predeceased the Participant, shall be paid to his or her Spouse.
If the Participant had no Spouse at the time of death, payment shall be made to
the personal representative of his or her estate in a lump sum.
7.9 Distribution Beginning Before Death If the Participant dies after
distribution of his or her interest has begun, the remaining portion of such.
interest will continue to be distributed at least as rapidly as under the method
of distribution being used prior to the Participant's death.
7.10 Distribution Beginning After Death If the Participant dies before
distribution of his or her interest distribution of the Participant's entire
interest shall be completed by December 31 of the calendar year containing the
fifth anniversary of the Participant's death except to the extent that an
election is made to receive distributions in accordance with (a) or (b) below:
(a) If any portion of the Participant's interest is payable to a Designated
Beneficiary, distributions may be made over the life or over a period
certain not greater than the life expectancy of the Designated
Beneficiary commencing on or before December 31 of the calendar year
immediately following the calendar year in which the Participant died;
(b) If the Designated Beneficiary is the Participant's surviving Spouse,
the date distributions are required to begin in accordance with (a)
above shall not be earlier than the later of (1) December 31 of the
calendar year immediately following the calendar year in which the
participant died or (2) December 31 of the calendar year in which the
Participant would have attained age 70-1/2.
If the Participant has not made an election pursuant to this paragraph 7.10 by
the time of his or her death, the Participant's Designated Beneficiary must
elect the method of distribution no later than the earlier of (1) December 31 of
the calendar year in which distributions would be required to begin under this
section, or (2) December 31 of the calendar year which contains the fifth
anniversary of the date of death of the participant. If the Participant has no
Designated Beneficiary, or if the Designated Beneficiary does not elect a method
of distribution, then distribution of the Participant's entire interest must be
completed by December 31 of the calendar year containing the fifth anniversary
of the Participant's death.
For purposes of this paragraph if the Surviving Spouse dies after the
Participant, but before payments to such Spouse begin, the provisions of this
paragraph with the exception of paragraph (b) therein, shall be applied as if
the Surviving Spouse were the Participant. For the purposes of this paragraph
and paragraph 7.9, distribution of a Participant's interest is considered to
begin on the Participant's Required Beginning Date (or, if the preceding
sentence is applicable, the date distribution is required to begin to the
Surviving Spouse). If distribution in the form of an annuity described in
paragraph 7.4(e) irrevocably commences to the Participant before the Required
Beginning Date, the date distribution is considered to begin is the date
distribution actually commences.
For purposes of paragraph 7.9 and this paragraph, if an amount is payable to
either a minor or an individual who has been declared incompetent, the benefits
shall be paid to the legally appointed guardian for the benefit of said minor or
incompetent individual unless the court which appointed the guardian has ordered
otherwise.
7.11 Distribution Of Excess Elective Deferrals
(a) Notwithstanding any other provision of the Plan, Excess Elective
Deferrals plus any income and minus any loss allocable thereto, shall
be distributed no later than April 15, 1988, and each April 15
thereafter, to Participants to whose accounts Excess Elective Deferrals
were allocated for the preceding taxable year, and who claim Excess
Elective Deferrals for such taxable year. Excess Elective Deferrals
shall be treated as Annual Additions under the Plan, unless such
amounts are distributed no later than the first April 15th following
the close of the Participant's taxable year. A Participant is deemed
to notify the Plan Administrator of any Excess Elective Deferrals that
arise by taking into account only those Elective Deferrals made to this
Plan and any other plans of this Employer.
(b) Furthermore, a Participant who participates in another plan allowing
Elective Deferrals may assign to this Plan any Excess Elective
Deferrals made during a taxable year of the Participant, by notifying
the Plan Administrator of the amount of the Excess Elective Deferrals
to be assigned. The Participant's claim shall be in writing; shall be
submitted to the Plan Administrator not later than March 1 of each
year; shall specify the amount of the Participant's Excess Elective
Deferrals for the preceding taxable year; and shall be accompanied by
the Participant's written statement that if such amounts are not
distributed. such Excess Elective Deferrals, when added to amounts
deferred under other plans or arrangements described in Code Sections
401(k), 408(k) [Simplified Employee Pensions], or 403(b) [annuity
programs for public schools and charitable organizations] will exceed
the $7,000 limit as adjusted under Code Section 415(d) imposed on the
Participant by Code Section 402(g) for the year in which the deferral
occurred.
(c) Excess Elective Deferrals shall be adjusted for any income or loss up
to the end of the taxable year, during which such excess was deferred.
Income or loss will be calculated under the method used to calculate
investment earnings and losses elsewhere in the Plan.
(d) If the Participant receives a return of his or her Elective Deferrals,
the amount of such contributions which are returned must be brought
into the Employee's taxable income.
7.12 Distributions of Excess Contributions
(a) Notwithstanding any other provision of this Plan, Excess Contributions,
plus any income and minus any loss allocable thereto, shall be
distributed no later than the last day of each Plan Year to
Participants to whose accounts such Excess Contributions were allocated
for the preceding Plan Year. If such excess amounts are distributed
more than 2-1/2 months after the last day of the Plan Year in which
such excess amounts arose, a ten (10) percent excise tax will be
imposed on the Employer maintaining the Plan with respect to such
amounts. Such distributions shall be made to Highly Compensated
Employees on the basis of the respective portions of the Excess
Contributions attributable to each of such Employees. Excess
Contributions shall be allocated to Participants who are subject to the
Family Member aggregation rules of Code Section 414(q)(6) in the manner
prescribed by the regulations.
(b) Excess Contributions (including the amounts recharacterized) shall be
treated as Annual Additions under the Plan.
(c) Excess Contributions shall be adjusted for any income or loss up to the
end of the Plan Year. Income or loss will be calculated under the
method used to calculate investment earnings and losses elsewhere in
the Plan.
(d) Excess Contributions shall be distributed from the Participant's
Elective Deferral account and Qualified Matching Contribution account
(if applicable) in proportion to the Participant's Elective Deferrals
and Qualified Matching Contributions (to the extent used in the ADP
test) for the Plan Year. Excess Contributions shall be distributed
from the Participant's Qualified Non-Elective Contribution account only
to the extent that such Excess Contributions exceed the balance in the
Participant's Elective Deferral account and Qualified Matching
Contribution account.
7.13 Distribution Of Excess Aggregate Contributions
(a) Notwithstanding any other provision of this Plan, Excess Aggregate
Contributions, plus any income and minus any loss allocable thereto,
shall be forfeited, if forfeitable, or if not forfeitable, distributed
no later than the last day of each Plan Year to Participants to whose
accounts such Excess Aggregate Contributions were allocated for the
preceding Plan Year. Excess Aggregate Contributions shall be allocated
to Participants who are subject to the Family Member aggregation rules
of Code Section 414(q)(6) in the manner prescribed by the regulations.
If such Excess Aggregate Contributions are distributed more than 2-1/2
months after the last day of the Plan Year in which such excess amounts
arose, a ten (10) percent excise tax will be imposed on the Employer
maintaining the Plan with respect to those amounts. Excess Aggregate
Contributions shall be treated as Annual Additions under the plan.
(b) Excess Aggregate Contributions shall be adjusted for any income or loss
up to the end of the Plan Year. The income or loss allocable to Excess
Aggregate Contributions is the sum of income or loss for the Plan Year
allocable to the Participant's Voluntary Contribution account, Matching
Contribution account (if any, and if all amounts therein are not used
in the ADP test) and, if applicable, Qualified Non-Elective
Contribution account and Elective Deferral account. Income or loss
will be calculated under the method used to calculate investment
earnings and losses elsewhere in the Plan.
(c) Forfeitures of Excess Aggregate Contributions may either be reallocated
to the accounts of non-Highly Compensated Employees or applied to
reduce Employer contributions, as elected by the employer in the
Adoption Agreement.
(d) Excess Aggregate Contributions shall be forfeited if such amount is not
vested. If vested, such excess shall be distributed on a pro-rata
basis from the Participant's Voluntary Contribution account (and, if
applicable, the Participant's Qualified Non-Elective Contribution
account, Matching Contribution account, Qualified Matching Contribution
account, or Elective Deferral account, or both).
ARTICLE VIII
JOINT AND SURVIVOR ANNUITY REQUIREMENTS
8.1 Applicability Of Provisions The provisions of this Article shall apply
to any participant who is credited with at least one Hour of Service with the
Employer on or after August 23, 1984 and such other Participants as provided in
paragraph 8.8.
8.2 Payment Of Qualified Joint And Survivor Annuity Unless an optional form
of benefit is selected pursuant to a Qualified Election within the 90-day period
ending on the Annuity Starting Date, a married Participant's Vested Account
Balance will be paid in the form of a Qualified Joint and Survivor Annuity and
an unmarried Participant's Vested Account Balance will be paid in the form of a
life annuity. The Participant may elect to have such annuity distributed upon
attainment of the Early Retirement Age under the Plan.
8.3 Payment Of Qualified Pre-Retirement Survivor Annuity Unless an optional
form of benefit has been selected within the Election Period pursuant to a
Qualified Election, if a Participant dies before benefits have commenced then
the Participant's Vested Account Balance shall be paid in the form of an annuity
for the life of the Surviving Spouse. The Surviving Spouse may elect to have
such annuity distributed within a reasonable period after the Participant's
death.
A Participant who does not meet the age 35 requirement set forth in the Election
Period as of the end of any current Plan Year may make a special qualified
election to waive the qualified Pre-retirement Survivor Annuity for the period
beginning on the date of such election and ending on the first day of the Plan
Year in which the Participant will attain age 35. Such election shall not be
valid unless the Participant receives a written explanation of the Qualified
Pre-retirement Survivor Annuity in such terms as are comparable to the
explanation required under paragraph 8.5. Qualified Pre-retirement Survivor
Annuity coverage will be automatically reinstated as of the first day of the
Plan Year in which the Participant attains age 35. Any new waiver on or after
such date shall be subject to the full requirements of this Article.
8.4 Qualified Election A Qualified Election is an election to either waive a
Qualified Joint and Survivor Annuity or a qualified pre-retirement survivor
annuity. Any such election shall not be effective unless:
(a) the Participant's Spouse consents in writing to the election;
(b) the election designates a specific beneficiary, including any class of
beneficiaries or any contingent beneficiaries, which may not be changed
without spousal consent (or the Spouse expressly permits designations
by the Participant without any further spousal consent);
(c) the Spouse's consent acknowledges the effect of the election; and
(d) the Spouse's consent is witnessed by a Plan representative or notary
public.
Additionally, a Participant's waiver of the Qualified Joint and Survivor Annuity
shall not be effective unless the election designates a form of benefit payment
which may not be changed without spousal con sent (or the Spouse expressly
permits designations by the Participant without any further spousal consent).
If it is established to the satisfaction of the Plan Administrator that there is
no Spouse or that the Spouse cannot be located, a waiver will be deemed a
Qualified Election. Any consent by a Spouse obtained under this provision (or
establishment that the consent of a Spouse may not be obtained) shall be
effective only with respect to such Spouse. A consent that permits designations
by the Participant without any requirement of further consent by such Spouse
must acknowledge that the Spouse has the right to limit consent to a specific
beneficiary, and a specific form of benefit where applicable, and that the
Spouse voluntarily elects to relinquish either or both of such rights. A
revocation of a prior waiver may be made by a Participant without the consent of
the Spouse at any time before the commencement of benefits. The number of
revocations shall not be limited. No consent obtained under this provision
shall be valid unless the Participant has received notice as provided in
paragraphs 8.5 and 8.6 below.
8.5 Notice Requirements For Qualified Joint And Survivor Annuity In the
case of a Qualified Joint and Survivor Annuity, the Plan Administrator shall, no
less than 30 days and no more than 90 days prior to the Annuity Starting date,
provide each Participant a written explanation of:
(a) the terms and conditions of a Qualified Joint and Survivor Annuity;
(b) the Participant's right to make and the effect of an election to waive
the Qualified Joint and Survivor Annuity form of benefit;
(c) the rights of a Participant's Spouse; and
(d) the right to make, and the effect of, a revocation of a previous
election to waive the Qualified Joint and Survivor Annuity.
8.6 Notice Requirements For Qualified Pre-Retirement Survivor Annuity In
the case of a qualified pre-retirement survivor annuity as described in
paragraph 8.3, the Plan Administrator shall provide each Participant within the
applicable period for such Participant a written explanation of the qualified
pre-retirement survivor annuity in such terms and in such manner as would be
comparable to the explanation provided for meeting the requirements of paragraph
8.5 applicable to a Qualified Joint and Survivor Annuity. The applicable period
for a Participant is whichever of the following periods ends last:
(a) the period beginning with the first day of the Plan Year in which the
Participant attains age 32 and ending with the close of the Plan Year
preceding the Plan Year in which the Participant attains age 35;
(b) a reasonable period ending after the individual becomes a Participant;
(c) a reasonable period ending after this Article first applies to the
Participant. Notwithstanding the foregoing, notice must be provided
within a reasonable period ending after separation from Service in
the case of a Participant who separates from Service before attaining
age 35.
For purposes of applying the preceding paragraph, a reasonable period ending
after the events described in (b) and (c) is the end of the two-year period
beginning one-year prior to the date the applicable event occurs, and ending
one-year after that date. In the case of a Participant who separates from
Service before the Plan Year in which age 35 is attained, notice shall be
provided within the two-year period beginning one year prior to separation and
ending one year after separation. If such a Participant subsequently returns to
employment with the Employer, the applicable period for such Participant shall
be re-determined.
8.7 Special Safe-Harbor Exception For Certain Profit-Sharing Plans
(a) This paragraph shall apply to a Participant in a profit-sharing plan,
and to any distribution, made on or after the first day of the first
plan year beginning after 1988, from or under a separate account
attributable solely to Qualified Voluntary contributions, as maintained
on behalf of a Participant in a money purchase pension plan, (including
a target benefit plan) if the following conditions are satisfied:
(1) the Participant does not or cannot elect payments in the form of a
life annuity, and
(2) on the death of a Participant, the Participant's Vested Account
Balance will be paid to the Participant's Surviving Spouse, but if
there is no Surviving Spouse, or if the Surviving Spouse has
consented in a manner conforming to a Qualified Election, then to
the Participant's Designated Beneficiary.
The Surviving Spouse may elect to have distribution of the Vested Account
Balance commence within the 90-day period following the date of the
Participant's death. The account balance shall be adjusted for gains or losses
occurring after the Participant's death in accordance with the provisions of the
Plan governing the adjustment of account balances for other types of
distributions. These safe-harbor rules shall not be operative with respect to a
Participant in a profit-sharing plan if that plan is a direct or indirect
transferee of a Defined Benefit Plan, money purchase plan, a target benefit
plan, stock bonus plan, or profit-sharing plan which is subject to the survivor
annuity requirements of Code Section 401(a)(11) and Code Section 417, and would
therefore have a Qualified Joint and Survivor Annuity as its normal form of
benefit.
(b) The Participant may waive the spousal death benefit described in this
paragraph at any time provided that no such waiver shall be effective
unless it satisfies the conditions (described in paragraph 8.4) that
would apply to the Participant's waiver of the Qualified Pre-Retirement
Survivor Annuity.
(c) If this paragraph 8.7 is operative, then all other provisions of this
Article other than paragraph 8.8 are inoperative.
8.8 Transitional Joint And Survivor Annuity Rules Special transition rules
apply to Participants who were not receiving benefits on August 23, 1984.
(a) Any living Participant not receiving benefits on August 23, 1984, who
would otherwise not receive the benefits prescribed by the previous
paragraphs of this Article, must be given the opportunity to elect to
have the prior paragraphs of this Article apply if such Participant is
credited with at least one Hour of Service under this Plan or a
predecessor Plan in a Plan Year beginning on or after January 1, 1976
and such Participant had at least 10 Years of Service for vesting
purposes when he or she separated from Service.
(b) Any living Participant not receiving benefits on August 23, 1984,
who was credited with at least one Hour of Service under this Plan
or a predecessor Plan on or after September 2, 1974, and who is not
otherwise credited with any Service in a Plan Year beginning on or
after January 1, 1976, must be given the opportunity to have his or
her benefits paid in accordance with paragraph 8.9.
(c) The respective opportunities to elect [as described in (a) and (b)
above] must be afforded to the appropriate Participants during the
period commencing on August 23, 1984 and ending on the date benefits
would otherwise commence to said Participants.
8.9 Automatic Joint And Survivor Annuity And Early Survivor Annuity Any
Participant who has elected pursuant to paragraph 8.8(b) and any Participant who
does not elect under paragraph 8.8(a) or who meets the requirements of paragraph
8.8(a), except that such Participant does not have at least 10 years of vesting
Service when he or she separates from Service, shall have his or her benefits
distributed in accordance with all of the following requirements if benefits
would have been payable in the form of a life annuity.
(a) Automatic Joint and Survivor Annuity. If benefits in the form of life
annuity become payable to a married Participant who:
(1) begins to receive payments under the Plan on or after Normal
Retirement Age, or
(2) dies on or after Normal Retirement Age while still working for the
Employer, or
(3) begins to receive payments on or after the Qualified Early
Retirement Age, or
(4) separates from Service on or after attaining Normal Retirement
(or the Qualified Early Retirement Age) and after satisfying the
eligibility requirements for the payment of benefits under the Plan
and thereafter dies before beginning to receive such benefits,
then such benefits will be received under this Plan in the form of
a Qualified Joint and Survivor Annuity, unless the Participant has
elected otherwise during the Election Period. The Election Period
must begin at least 6 months before the Participant attains
Qualified Early Retirement Age and end not more than 90 days before
the commencement of benefits. Any election will be in writing and
may be changed by the Participant at any time.
(b) Election of Early Survivor Annuity. A Participant who is employed
after attaining the Qualified Early Retirement Age will be given the
opportunity to elect, during the Election Period, to have a survivor
annuity payable on death. If the Participant elects the survivor
annuity, payments under such annuity must not be less than the payments
which would have been made to the Spouse under the Qualified Joint and
Survivor Annuity if the Participant had retired on the day before his
or her death. Any election under this provision will be in writing and
may be changed by the Participant at any time. The Election Period
begins on the later of:
(1) the 90th day before the Participant attains the Qualified Early
Retirement Age, or
(2) the date on which participation begins, and ends on the date the
Participant terminates employment.
8.10 Annuity Contracts Any annuity contract distributed under this Plan
must be non transferable. The terms of any annuity contract purchased and
distributed by the Plan to a Participant or Spouse shall comply with the
requirements of this Plan.
ARTICLE IX
VESTING
9.1 Employee Contributions A Participant shall always have a 100% vested
and nonforfeitable interest in his or her Elective Deferrals, Voluntary
Contributions, Qualified Voluntary Contributions, Rollover Contributions, and
Transfer Contributions plus the earnings thereon. No forfeiture of Employer
related contributions (including any minimum contributions made under paragraph
14.2) will occur solely as a result of an Employee's withdrawal of any Employee
contributions.
9.2 Employer Contributions A Participant shall acquire a vested and
nonforfeitable interest in his or her account attributable to Employer
contributions in accordance with the table selected in the Adoption Agreement,
provided that if a Participant is not already fully vested, he or she shall
become so upon attaining Normal Retirement Age, Early Retirement Age, on death
prior to normal retirement, on retirement due to Disability, or on termination
of the Plan.
9.3 Computation Period The computation period for purposes of determining
Years of Service and Breaks in Service for purposes of computing a Participant's
nonforfeitable right to his or her account balance derived from Employer
contributions shall be determined by the Employer in the Adoption Agreement. In
the event a former Participant with no vested interest in his or her Employer
contribution account requalifies for participation in the Plan after incurring a
Break in Service, such Participant shall be credited for vesting with all pre-
break and post-break Service.
9.4 Requalification Prior To Five Consecutive One-Year Breaks In Service
The account balance of such Participant shall consist of any undistributed
amount in his or her account as of the date of re-employment plus any future
contributions added to such account plus the investment earnings on the account.
The Vested Account Balance of such Participant shall be determined by
multiplying the Participant's account balance (adjusted to include any
distribution or redeposit made under paragraph 6.3) by such Participant's vested
percentage. All Service of the Participant, both prior to and following the
break, shall be counted when computing the Participant's vested percentage.
9.5 Requalification After Five Consecutive One-Year Breaks In Service If
such Participant is not fully vested upon re-employment, a new account shall be
established for such Participant to separate his or her deferred vested and
nonforfeitable account, if any, from the account to which new allocations will
be made. The Participant's deferred account to the extent remaining shall be
fully vested and shall continue to share in earnings and losses of the Fund.
When computing the Participant's vested portion of the new account, all pre-
break and post-break Service shall be counted. However, notwithstanding this
provision, no such former Participant who has had five consecutive one-year
Breaks in Service shall acquire a larger vested and nonforfeitable interest in
his or her prior account balance as a result of requalification hereunder.
9.6 Calculating Vested Interest A Participant's vested and nonforfeitable
interest shall be calculated by multiplying the fair market value of his or her
account attributable to Employer contributions on the Valuation Date preceding
distribution by the decimal equivalent of the vested percentage as of his or her
termination date. The amount attributable to Employer contributions for
purposes of the calculation includes amounts previously paid out pursuant to
paragraph 6.3 and not repaid. The Participant's vested and nonforfeitable
interest, once calculated above, shall be reduced to reflect those amounts
previously paid out to the Participant and not repaid by the Participant. 'Me
Participant's vested and nonforfeitable interest so determined shall continue to
share in the investment earnings and any increase or decrease in the fair market
value of the Fund up to the Valuation Date preceding or coinciding with payment.
9.7 Forfeitures Any balance in the account of a Participant who has
separated from Service to which he or she is not entitled under the foregoing
provisions, shall be forfeited and applied as provided in the Adoption
Agreement. A forfeiture may only occur if the Participant has received a
distribution from the Plan or if the Participant has incurred five consecutive
1-year Breaks in Service. Furthermore, a Highly Compensated Employee's Matching
Contributions may be forfeited, even if vested, if the contributions to which
they relate are Excess Deferrals, Excess Contributions or Excess Aggregate
Contributions.
9.8 Amendment Of Vesting Schedule No amendment to the Plan shall have the
effect of decreasing a Participant's vested interest determined without regard
to such amendment as of the later of the date such amendment is adopted or the
date it becomes effective. Further, if the vesting schedule of the Plan is
amended, or the Plan is amended in any way that directly or indirectly affects
the computation of any Participant's nonforfeitable percentage or if the Plan is
deemed amended by an automatic change to or from a Top-Heavy vesting schedule,
each Participant with at least three Years of Service with the Employer may
elect, within a reasonable period after the adoption of the amendment, to have
his or her nonforfeitable percentage computed under the Plan without regard to
such amendment. For Participants who do not have at least one Hour of Service
in any Plan Year beginning after 1988, the preceding sentence shall be applied
by substituting "Five Years of Service" for "Three Years of Service" where such
language appears. The period during which the election may be made shall
commence with the date the amendment is adopted and shall end on the later of:
(a) 60 days after the amendment is adopted;
(b) 60 days after the amendment becomes effective; or
(c) 60 days after the Participant is issued written notice of the amendment
by the Employer or the Trustee/Custodian. If the Trustee/Custodian
is asked to so notify, the Fund will be charged for the costs thereof
No amendment to the Plan shall be effective to the extent that it has the effect
of decreasing a Participant's accrued benefit. Notwithstanding the preceding
sentence, a Participant's account balance may be reduced to the extent permitted
under section 412(c)(8) of the Code (relating to financial hardships). For
purposes of this paragraph, a Plan amendment which has the effect of decreasing
a Participant's account balance or eliminating an optional form of benefit, with
respect to benefits attributable to service before the amendment, shall be
treated as reducing an accrued benefit.
9.9 Service With Controlled Groups All Years of Service with other members
of a controlled group of corporations [as defined in Code Section 414(b)],
trades or businesses under common control [as defined in Code Section 414(c)],
or members of an affiliated service group [as defined in Code Section 414(m)]
shall be considered for purposes of determining a Participant's nonforfeitable
percentage.
ARTICLE X
LIMITATIONS ON ALLOCATIONS
AND ANTIDISCRIMINATION TESTING
10.1 Participation In This Plan Only If the Participant does not
participate in and has never participated in another qualified plan, a Welfare
Benefit Fund (as defined in paragraph 1.89) or an individual medical account, as
defined in Code Section 415(l)(2), maintained by the adopting Employer, which
provides an Annual Addition as defined in paragraph 1.4, the amount of Annual
Additions which may be credited to the Participant's account for any Limitation
Year will not exceed the lesser of the Maximum Permissible Amount or any other
limitation contained in this Plan. If the Employer contribution that would
otherwise be contributed or allocated to the Participant's account would cause
the Annual Additions for the Limitation Year to exceed the Maximum Permissible
Amount, the amount contributed or allocated will be reduced so that the Annual
Additions for the Limitation Year will equal the Maximum Permissible Amount.
Prior to determining the Participant's actual Compensation for the Limitation
Year, the Employer may determine the Maximum Permissible Amount for a
Participant on the basis of a reasonable estimate of the Participant's
Compensation for the Limitation Year, uniformly determined for all Participants
similarly situated. As soon as is administratively feasible after the end of
the Limitation Year, the Maximum Permissible Amount for the Limitation Year will
be determined on the basis of the Participant's actual Compensation for the
Limitation Year.
10.2 Disposition Of Excess Annual Additions If, pursuant to paragraph 10.1
or as a result of the allocation of forfeitures, there is an Excess Amount, the
excess will be disposed of under one of the following methods as determined in
the Adoption Agreement. If no election is made in the Adoption Agreement then
method "(a)" below shall apply.
(a) Suspense Account Method
(1) Any nondeductible Employee Voluntary, Required Voluntary
Contributions and unmatched Elective Deferrals to the extent they
would reduce the Excess Amount will be returned to the Participant.
To the extent necessary to reduce the Excess Amount, non-Highly
Compensated Employees will have all Elective Deferrals returned
whether or not there was a corresponding match.
(2) If after the application of paragraph (1) an Excess Amount still
exists, and the Participant is covered by the Plan at the end
of the Limitation Year, the Excess Amount in the Participant's
account will be used to reduce Employer contributions (including
any allocation of forfeitures) for such Participant in the next
Limitation Year, and each succeeding Limitation Year if necessary;
(3) If after the application of paragraph (1) an Excess Amount still
exists, and the Participant is not covered by the Plan at the end of
the Limitation Year, the Excess Amount will be held unallocated in a
suspense account. The suspense account will be applied to reduce
future Employer contributions (including allocation of any
forfeitures) for all remaining Participants in the next Limitation
Year, and each succeeding Limitation Year if necessary;
(4) If a suspense account is in existence at any time during the
Limitation Year pursuant to this paragraph, it will not participate
in the allocation of investment gains and losses. If a suspense
account is in existence at any time during a particular Limitation
Year, all amounts in the suspense account must be allocated and
reallocated to Participants' accounts before any Employer
contributions or any Employee Contributions may be made to the Plan
for that Limitation Year. Excess amounts may not be distributed to
Participants or former Participants.
(b) Spillover Method
(1) Any nondeductible Employee Voluntary, Required Voluntary
Contributions and unmatched Elective Deferrals to the extent they
would reduce the Excess Amount will be returned to the Participant.
To the extent necessary to reduce the Excess Amount, non-Highly
Compensated Employees will have all Elective Deferrals returned
whether or not there was a corresponding match.
(2) Any Excess Amount which would be allocated to the account of
an individual Participant under the Plan's allocation formula will
be reallocated to other Participants in the same manner as other
Employer contributions. No such reallocation shall be made to the
extent that it will result in an Excess Amount being created in such
Participant's own account.
(3) To the extent that amounts cannot be reallocated under (1) above,
the suspense account provisions of (a) above will apply.
10.3 Participation In This Plan And Another Master and Prototype Defined
Contribution Plan, Welfare Benefit Fund Or Individual Medical Account Maintained
By The Employer The Annual Additions which may be credited to a Participant's
account under this Plan for any Limitation Year will not exceed the Maximum
Permissible Amount reduced by the Annual Additions credited to a Participant's
account under the other Master or Prototype Defined Contribution Plans, Welfare
Benefit Funds, and individual medical accounts as defined in Code Section
415(l)(2), maintained by the Employer, which provide an Annual Addition as
defined in paragraph 1.4 for the same Limitation Year. If the Annual Additions,
with respect to the Participant under other Defined Contribution Plans and
Welfare Benefit Funds maintained by the Employer, are less than the Maximum
Permissible Amount and the Employer contribution that would otherwise be
contributed or allocated to the Participant's account under this Plan would
cause the Annual Additions for the Limitation Year to exceed this limitation,
the amount contributed or allocated will be reduced so that the Annual Additions
under all such plans and funds for the Limitation Year will equal the Maximum
Permissible Amount. If the Annual Additions with respect to the Participant
under such other Defined Contribution Plans and Welfare Benefit Funds in the
aggregate are equal to or greater than the Maximum Permissible Amount, no amount
will be contributed or allocated to the Participant's account under this Plan
for the Limitation Year. Prior to determining the Participant's actual
Compensation for the Limitation Year, the Employer may determine the Maximum
Permissible Amount for a Participant in the manner described in paragraph 10.1.
As soon as administratively feasible after the end of the Limitation Year, the
Maximum Permissible Amount for the Limitation Year will be determined on the
basis of the Participant's actual Compensation for the Limitation Year.
10.4 Disposition Of Excess Annual Additions Under Two Plans If, pursuant to
paragraph 10.3 or as a result of forfeitures, a Participant's Annual Additions
under this Plan and such other plans would result in an Excess Amount for a
Limitation Year, the Excess Amount will be deemed to consist of the Annual
Additions last allocated except that Annual Additions attributable to a Welfare
Benefit Fund or Individual Medical Account as defined in Code Section 415(l)(2)
will be deemed to have been allocated first regardless of the actual allocation
date. If an Excess Amount was allocated to a Participant on an allocation date
of this Plan which coincides with an allocation date of another plan, the Excess
Amount attributed to this Plan will be the product of:
(a) the total Excess Amount allocated as of such date, times
(b) the ratio of:
(1) the Annual Additions allocated to the Participant for the
Limitation Year as of such date under the Plan, to
(2) the total Annual Additions allocated to the Participant for the
Limitation Year as of such date under this and all the other
qualified Master or Prototype Defined Contribution Plans.
Any Excess Amount attributed to this Plan will be disposed of in the manner
described in paragraph 10.2.
10.5 Participation In This Plan And Another Defined Contribution Plan Which
Is Not A Master Or Prototype If the Participant is covered under another
qualified Defined Contribution Plan maintained by the Employer which is not a
Master or Prototype Plan, Annual Additions which may be credited to the
Participant's account under this Plan for any Limitation Year will be limited in
accordance with paragraphs 10.3 and 10.4 as though the other plan were a Master
or Prototype Plan, unless the Employer provides other limitations in the
Adoption Agreement.
10.6 Participation In This Plan And A Defined Benefit Plan If the Employer
maintains, or at any time maintained, a qualified Defined Benefit Plan covering
any Participant in this Plan, the sum of the Participant's Defined Benefit Plan
Fraction and Defined Contribution Plan Fraction will not exceed 1.0 in any
Limitation Year. For any Plan Year during which the Plan is Top-Heavy, the
Defined Benefit and Defined Contribution Plan Fractions shall be calculated in
accordance with Code Section 416(h). The Annual Additions which may be credited
to the Participant's account under this Plan for any Limitation Year will be
limited in accordance with the provisions set forth in the Adoption Agreement.
10.7 Average Deferral Percentage (ADP) Test With respect to any Plan Year,
the Average Deferral Percentage for Participants who are Highly Compensated
Employees and the Average Deferral Percentage for Participants who are non-
Highly Compensated Employees must satisfy one of the following tests:
(a) Basic Test - The Average Deferral Percentage for Participants who
are Highly Compensated Employees for the Plan Year is not more than
1.25 times the Average Deferral Percentage for Participants who are
non-Highly Compensated Employees for the same Plan Year, or
(b) Alternative Test - The Average Deferral Percentage for Participants
who are Highly Compensated Employees for the Plan Year does not
exceed the Average Deferral Percentage for Participants who are
non-Highly Compensated Employees for the same Plan Year by more
than 2 percentage points provided that the Average Deferral
Percentage for Participants who are Highly Compensated Employees
is not more than 2.0 times the Average Deferral Percentage for
Participants who are non-Highly Compensated Employees.
10.8 Special Rules Relating To Application Of ADP Test
(a) The Actual Deferral Percentage for any Participant who is a Highly
Compensated Employee for the Plan Year and who is eligible to have
Elective Deferrals (and Qualified Non-Elective Contributions or
Qualified Matching Contributions, or both, if treated as Elective
Deferrals for purposes of the ADP test) allocated to his or her
accounts under two or more arrangements described in Code Section
401(k), that are maintained by the Employer, shall be determined as
if such Elective Deferrals (and, if applicable, such Qualified Non-
Elective Contributions or Qualified Matching Contributions, or both)
were made under a single arrangement. If a Highly Compensated Employee
participates in two or more cash or deferred arrangements that have
different Plan Years, all cash or deferred arrangements ending with or
within the same calendar year shall be treated as a single arrangement.
(b) In the event that this Plan satisfies the requirements of Code Sections
401(k), 401(a)(4), or 410(b), only if aggregated with one or more
other plans, or if one or more other plans satisfy the requirements of
such Code Sections only if aggregated with this Plan, then this
Section shall be applied by determining the Actual Deferral Percentage
of Employees as if all such plans were a single plan. For Plan Years
beginning after 1989, plans may be aggregated in order to satisfy
Code Section 401(k) only if they have the same Plan Year.
(c) For purposes of determining the Actual Deferral Percentage of a
Participant who is a 5-percent owner or one of the ten most highly-paid
Highly Compensated Employees, the Elective Deferrals (and Qualified
Non-Elective Contributions or Qualified Matching Contributions, or
both, if treated as Elective Deferrals for purposes of the ADP test)
and Compensation of such Participant shall include the Elective
Deferrals (and, if applicable, Qualified Non-Elective Contributions
and Qualified Matching Contributions, or both) for the Plan Year of
Family Members as defined in paragraph 1.36 of this Plan. Family
Members, with respect to such Highly Compensated Employees,
shall be disregarded as separate Employees in determining the ADP
both for Participants who are non-Highly Compensated Employees and
for Participants who are Highly Compensated Employees. In the event
of repeal of the family aggregation rules under Code Section 414(q)(6),
all applications of such rules under this Plan will cease as of the
effective date of such repeal.
(d) For purposes of determining the ADP test, Elective Deferrals, Qualified
Non-Elective Contributions and Qualified Matching Contributions must
be made before the last day of the twelve-month period immediately
following the Plan Year to which contributions relate.
(e) The Employer shall maintain records sufficient to demonstrate
satisfaction of the ADP test and the amount of Qualified Non-Elective
Contributions or Qualified Matching Contributions, or both, used in
such test.
(f) The determination and treatment of the Actual Deferral Percentage
amounts of any Participant shall satisfy such other requirements as
may be prescribed by the Secretary of the Treasury.
10.9 Recharacterization If the Employer allows for Voluntary Contributions
in the Adoption Agreement, a Participant may treat his or her Excess
Contributions as an amount distributed to the Participant and then contributed
by the Participant to the Plan. Recharacterized amounts will remain
nonforfeitable and subject to the same distribution requirements as Elective
Deferrals. Amounts may not be recharacterized by a Highly Compensated Employee
to the extent that such amount in combination with other Employee Contributions
made by that Employee would exceed any stated limit under the Plan on Voluntary
Contributions. Recharacterization must occur no later than two and one-half
months after the last day of the Plan Year in which such Excess Contributions
arose and is deemed to occur no earlier than the date the last Highly
Compensated Employee is informed in writing of the amount recharacterized and
the consequences thereof. Recharacterized amounts will be taxable to the
Participant for the Participant's tax year in which the Participant would have
received them in cash.
10.10 Average Contribution Percentage (ACP) Test If the Employer makes
Matching Contributions or if the Plan allows Employees to make Voluntary
Contributions the Plan must meet additional nondiscrimination requirements
provided under Code Section 401(m). If Employee Contributions (including any
Elective Deferrals recharacterized as Voluntary Contributions) are made pursuant
to this Plan, then in addition to the ADP test referenced in paragraph 10.7,
the Average Contribution Percentage test is also applicable. The Average
Contribution Percentage for Participants who are Highly Compensated Employees
for each Plan Year and the Average Contribution Percentage for Participants who
are Non-Highly Compensated Employees for the same Plan Year must satisfy one of
the following tests:
(a) Basic Test - The Average Contribution Percentage for Participants
who are Highly Compensated Employees for the Plan Year shall not
exceed the Average Contribution Percentage for Participants who
are non-Highly Compensated Employees for the same Plan Year
multiplied by 1.25; or
(b) Alternative Test - The ACP for Participants who are Highly Compensated
Employees for the Plan Year shall not exceed the Average Contribution
Percentage for Participants who are non-Highly Compensated Employees
for the same Plan Year multiplied by two (2), provided that the Average
Contribution Percentage for Participants who are Highly Compensated
Employees does not exceed the Average Contribution Percentage for
Participants who are non-Highly Compensated Employees by more than two
(2) percentage points.
10.11 Special Rules Relating To Application Of ACP Test
(a) If one or more Highly Compensated Employees participate in both a
cash or deferred arrangement and a plan subject to the ACP test
maintained by the Employer and the sum of the ADP and ACP of those
Highly Compensated Employees subject to either or both tests exceeds
the Aggregate Limit, then the ADP or ACP of those Highly Compensated
Employees who also participate in a cash or deferred arrangement will
be reduced (beginning with such Highly Compensated Employee whose ADP
or ACP is the highest) as set forth in the Adoption Agreement so that
the limit is not exceeded. The amount by which each Highly Compensated
Employee's Contribution Percentage Amounts is reduced shall be treated
as an Excess Aggregate Contribution. The ADP and ACP of the Highly
Compensated Employees are determined after any corrections required to
meet the ADP and ACP tests. Multiple use does not occur if both the
ADP and ACP of the Highly Compensated Employees does not exceed 1.25
multiplied by the ADP and ACP of the non-Highly Compensated Employees.
(b) For purposes of this Article, the Contribution Percentage for any
Participant who is a Highly Compensated Employee and who is eligible
to have Contribution Percentage Amounts allocated to his or her account
under two or more plans described in Code Section 401(a), or arrange-
ments described in Code Section 401(k) that are maintained by the
Employer, shall be determined as if the total of such Contribution
Percentage Amounts was made under each Plan. If a Highly Compensated
Employee participates in two or more cash or deferred arrangements
that have different plan years, all cash or deferred arrangements
ending with or within the same calendar year shall be treated as a
single arrangement.
(c) In the event that this Plan satisfies the requirements of Code Sections
401(a)(4), 401(m), or 410(b) only if aggregated with one or more other
plans, or if one or more other plans satisfy the requirements of such
Code Sections only if aggregated with this Plan, then this Section
shall be applied by determining the Contribution Percentage of
Employees as if all such plans were a single plan. For plan years
beginning after 1989, plans may be aggregated in order to satisfy Code
Section 401(m) only if the aggregated plans have the same Plan Year.
(d) For purposes of determining the Contribution percentage of a
Participant who is a five-percent owner or one of the ten most highly-
paid, Highly Compensated Employees, the Contribution Percentage Amounts
and Compensation of such Participant shall include the Contribution
Percentage Amounts and Compensation for the Plan Year of Family Members
as defined in Paragraph 1.36 of this Plan. Family Members, with
respect to Highly Compensated Employees, shall be disregarded as
separate Employees in determining the Contribution Percentage both for
Participants who are non-Highly Compensated Employees and for
Participants who are Highly Compensated Employees. In the event of
repeal of the family aggregation rules under Code Section 414(q)(6),
all applications of such rules under this Plan will cease as of the
effective date of such repeal.
(e) For purposes of determining the Contribution Percentage test, Employee
Contributions are considered to have been made in the Plan Year in
which contributed to the trust. Matching Contributions and Qualified
Non-Elective Contributions will be considered made for a Plan Year if
made no later than the end of the twelve-month period beginning on the
day after the close of the Plan Year.
(f) The Employer shall maintain records sufficient to demonstrate
satisfaction of the ACP test and the amount of Qualified Non-Elective
Contributions or Qualified Matching Contributions, or both, used in
such test.
(g) The determination and treatment of the Contribution Percentage of any
Participant shall satisfy such other requirements as may be prescribed
by the Secretary of the Treasury.
(h) Qualified Matching Contributions and Qualified Non-Elective
Contributions used to satisfy the ADP test may not be used to satisfy
the ACP test.
ARTICLE XI
ADMINISTRATION
11.1 Plan Administrator The Employer shall be the named fiduciary and Plan
Administrator. These duties shall include:
(a) appointing the Plan's attorney, accountant, actuary, or any other
party needed to administer the Plan,
(b) directing the Trustee/Custodian with respect to payments from the Fund,
(c) communicating with Employees regarding their participation and benefits
under the Plan, including the administration of all claims procedures,
(d) filing any returns and reports with the Internal Revenue Service,
Department of Labor, or any other governmental agency,
(e) reviewing and approving any financial reports, investment reviews,
or other reports prepared by any party appointed by the Employer
under paragraph (a),
(f) establishing a funding policy and investment objectives consistent
with the purposes of the Plan and the Employee Retirement Income
Security Act of 1974, and
(g) construing and resolving any question of Plan interpretation. The
Plan Administrator's interpretation of Plan provisions including
eligibility and benefits under the Plan is final, and unless it can be
shown to be arbitrary and capricious will not be subject to "de novo"
review.
11.2 Trustee/Custodian The Trustee/Custodian shall be responsible for the
administration of investments held in the Fund. These duties shall include:
(a) receiving contributions under the terms of the Plan,
(b) making distributions from the Fund in accordance with written
instructions received from an authorized representative of the
Employer, and
(c) keeping accurate records reflecting its administration of the Fund
and making such records available to the Employer for review and
audit. Within 90 days after each Plan Year, and within 90 days
after its removal or resignation, the Trustee/Custodian shall file
with the Employer an accounting of its administration of the Fund
during such year or from the end of the preceding Plan Year to the
date of removal or resignation. Such accounting shall include a
statement of cash receipts and disbursements since the date of its
last accounting and shall contain an asset list showing the fair
market value of investments held in the Fund as of the end of the
Plan Year. The value of marketable investments shall be determined
using the most recent price quoted on a national securities exchange
or over the counter market. The value of non-marketable investments
shall be determined in the sole judgement of the Trustee/Custodian
which determination shall be binding and conclusive. The value of
investments in securities or obligations of the Employer in which there
is no market shall be determined in the sole judgement of the Employer
and the Trustee/Custodian shall have no responsibility with respect
to the valuation of such assets. The Employer shall review the
Trustee/Custodian's accounting and notify the Trustee/Custodian in the
event of its disapproval of the report within 90 days, providing the
Trustee/Custodian with a written description of the items in question.
The Trustee/Custodian shall have 60 days to provide the Employer with
a written explanation of the items in question. If the Employer again
disapproves, the Trustee/Custodian shall file its accounting in a court
of competent jurisdiction for audit and adjudication.
(d) employing such agents, attorneys or other professionals as the Trustee
may deem necessary or advisable in the performance of its duties.
The Trustee's/Custodian's duties shall be limited to those described above.
The Employer shall be responsible for any other administrative duties required
under the Plan or by applicable law.
11.3 Administrative Fees And Expenses All reasonable costs, charges and
expenses incurred by the Trustee/Custodian in connection with the administration
of the Fund and all reasonable costs, charges and expenses incurred by the Plan
Administrator in connection with the administration of the Plan (including fees
for legal services rendered to the Trustee/Custodian or Plan Administrator) may
be paid by the Employer, but if not paid by the Employer when due, shall be paid
from the Fund. Such reasonable compensation to the Trustee/Custodian as may be
agreed upon from time to time between the Employer and the Trustee/Custodian and
such reasonable compensation to the Plan Administrator as may be agreed upon
from time to time between the Employer and Plan Administrator may be paid by the
Employer, but if not paid by the Employer when due shall be paid by the Fund.
The Trustee shall have the right to liquidate trust assets to cover its fees.
Notwithstanding the foregoing, no compensation other than reimbursement for
expenses shall be paid to a Plan Administrator who is the Employer or a full-
time Employee of the Employer. In the event any part of the Trust/Custodial
Account becomes subject to tax, all taxes incurred will be paid from the Fund
unless the Plan Administrator advises the Trustee/Custodian not to pay such tax.
11.4 Division Of Duties And Indemnification
(a) The Trustee/Custodian shall have the authority and discretion to
manage and govern the Fund to the extent provided in this instrument,
but does not guarantee the Fund in any manner against investment loss
or depreciation in asset value, or guarantee the adequacy of the Fund
to meet and discharge all or any liabilities of the Plan.
(b) The Trustee/Custodian shall not be liable for the making, retention
or sale of any investment or reinvestment made by it, as herein
provided, or for any loss to, or diminution of the Fund, or for any
other loss or damage which may result from the discharge of its duties
hereunder except to the extent it is judicially determined that the
Trustee/Custodian has failed to exercise the care, skill prudence and
diligence under the circumstances then prevailing that a prudent
person acting in a like capacity and familiar with such matters would
use in the conduct of an enterprise of a like character with like aims.
(c) The Employer warrants that all directions issued to the
Trustee/Custodian by it or the Plan Administrator will be in
accordance with the terms of the Plan and not contrary to the
provisions of the Employee Retirement Income Security Act of
1974 and regulations issued thereunder.
(d) The Trustee/Custodian shall not be answerable for any action taken
pursuant to any direction, consent, certificate, or other paper or
document on the belief that the same is genuine and signed by the
proper person. All directions by the Employer, Participant or the Plan
Administrator shall be in writing. The Employer shall deliver to the
Trustee/Custodian certificates evidencing the individual or individuals
authorized to act as set forth in the Adoption Agreement or as the
Employer may subsequently inform the Trustee/Custodian in writing and
shall deliver to the Trustee/Custodian specimens of their signatures.
(e) The duties and obligations of the Trustee/Custodian shall be limited to
those expressly imposed upon it by this instrument or subsequently
agreed upon by the parties. Responsibility for administrative duties
required under the Plan or applicable law not expressly imposed upon or
agreed to by the Trustee/Custodian, shall rest solely with the
Employer.
(f) The Trustee shall be indemnified and saved harmless by the Employer
from and against any and all liability to which the Trustee/Custodian
may be subjected, including all expenses reasonably incurred in its
defense, for any action or failure to act resulting from compliance
with the instructions of the Employer, the employees or agents of the
Employer, the Plan Administrator, or any other fiduciary to the Plan,
and for any liability arising from the actions or non-actions of any
predecessor Trustee/Custodian or fiduciary or other fiduciaries of the
Plan.
(g) The Trustee/Custodian shall not be responsible in any way for the
application of any payments it is directed to make or for the adequacy
of the Fund to meet and discharge any and all liabilities under the
Plan.
ARTICLE XII
TRUST FUND / CUSTODIAL ACCOUNT
12.1 The Fund The Fund shall consist of all contributions made under
Article III and Article IV of the Plan and the investment thereof and earnings
thereon. All contributions and the earnings thereon less payments made under
the terms of the Plan, shall constitute the Fund. The Fund shall be
administered as provided in this document.
12.2 Control Of Plan Assets The assets of the Fund or evidence of owner-
ship shall be held by the Trustee/Custodian under the terms of the Plan and
Trust/Custodial Account. if the assets represent amounts transferred from
another trustee/custodian under a former plan, the Trustee/Custodian named
hereunder shall not be responsible for the propriety of any investment under the
former plan.
12.3 Exclusive Benefit Rules No part of the Fund shall be used for, or
diverted to, purposes other than for the exclusive benefit of Participants,
former Participants with a vested interest, and the beneficiary or beneficiaries
of deceased Participants having a vested interest in the Fund at death.
12.4 Assignment And Alienation Of Benefits No right or claim to, or
interest in any part of the Fund, or any payment from the Fund, shall be
assignable, transferable, or subject to sale, mortgage, pledge, hypothecation,
commutation, anticipation, garnishment, attachment, execution, or levy of any
kind. The Trustee/Custodian shall not recognize any attempt to assign,
transfer, sell mortgage, pledge, hypothecate, commute, or anticipate the same,
except to the extent required by law. The preceding sentences shall also apply
to the creation, assignment, or recognition of a right to any benefit payable
with respect to a Participant pursuant to a domestic relations order, unless
such order is determined to be a qualified domestic relations order, as defined
in Code Section 414(p), or any domestic relations order entered before January
1, 1985 which the Plan attorney and Plan Administrator deem to be qualified.
12.5 Determination Of Qualified Domestic Relations Order(QDRO) A Domestic
Relations Order shall specifically state all of the following in order
to be deemed a Qualified Domestic Relations Order ("QDRO'):
(a) The name and last known mailing address (if any) of the Participant
and of each alternate payee covered by the QDRO. However, if the
QDRO does not specify the current mailing address of the alternate
payee, but the Plan Administrator has independent knowledge of that
address, the QDRO will still be valid.
(b) The dollar amount or percentage of the Participant's benefit to be
paid by the Plan to each alternate payee, or the manner in which the
amount or percentage will be determined.
(c) The number of payments or period for which the order applies.
(d) The specific plan (by name) to which the Domestic Relations
Order applies.
The Domestic Relations Order shall not be deemed a QDRO if it requires
the Plan to provide:
(e) any type or form of benefit, or any option not already provided
for in the Plan;
(f) increased benefits, or benefits in excess of the Participant's vested
rights;
(g) payment of a benefit earlier than allowed by the Plan's earliest
retirement provisions or in the case of a profit-sharing plan, prior
to the allowability of in-service withdrawals, or
(h) payment of benefits to an alternate payee which are required to be
to another alternate payee under another QDRO.
Promptly, upon receipt of a Domestic Relations Order ("Order") which may or
may not be "Qualified", the Plan Administrator shall notify the Participant
and any alternate payee(s) named in the Order of such receipt, and include a
copy of this paragraph 12.5. The Plan Administrator shall then forward the
Order to the Plan's legal counsel for an opinion as to whether or not the Order
is in fact "Qualified" as defined in Code Section 414(p). Within a reasonable
time after receipt of the Order, not to exceed 60 days, the Plan's legal counsel
shall make a determination as to its "Qualified" status and the Participant and
any alternate payee(s) shall be promptly notified in writing of the
determination.
If the "Qualified" status of the Order is in question, there will be a delay in
any payout to any payee including the Participant, until the status is resolved.
In such event, the Plan Administrator shall segregate the amount that would have
been payable to the alternate payee(s) if the Order had been deemed a QDRO. If
the Order is not Qualified, or the status is not resolved (for example, it has
been sent back to the Court for clarification or modification) within 18 months
beginning with the date the first payment would have to be made under the Order,
the Plan Administrator shall pay the segregated amounts plus interest to the
person(s) who would have been entitled to the benefits had there been no Order.
If a determination as to the Qualified status of the Order is made after the
18-month period described above, then the Order shall only be applied on a
prospective basis. if the Order is determined to be a QDRO, the Participant and
alternate payee(s) shall again be notified promptly after such determination.
Once an Order is deemed a QDRO, the Plan Administrator shall pay to the
alternate payee(s) all the amounts due under the QDRO, including segregated
amounts plus interest which may have accrued during a dispute as to the Order's
qualification.
ARTICLE XIII
INVESTMENTS
13.1 Fiduciary Standards The Trustee/Custodian shall invest and reinvest
principal and income in the same Fund in accordance with the investment
objectives established by the Employer, provided that:
(a) such investments are prudent under the Employee Retirement Income
Security Act of 1974 and the regulations thereunder,
(b) such investments are sufficiently diversified or otherwise insured
or guaranteed to minimize the risk of large losses, and
(c) such investments are similar to those which would be purchased by
another professional money manager for a like plan with similar
investment objectives.
13.2 Funding Arrangement The Employer shall, in the Adoption Agreement,
appoint the Sponsor or an individual or individuals to serve as Trustee of the
Fund. If the Sponsor is not named Trustee, the Sponsor will serve as Custodian
under the Plan as provided at paragraph 13.4 herein.
13.3 Investment Alternatives Of The Trustee As Trustee, the Sponsor shall
implement an investment program based on the Employer's investment objectives
and the Employee Retirement Income Security Act of 1974. In addition to powers
given by law, the Trustee may:
(a) invest the Fund in any form of property, including common and
preferred stocks, exchange traded put and call options, bonds, money
market instruments, mutual funds (including funds for which the
Trustee or its affiliates serve as investment advisor), savings
accounts, certificates of deposit, Treasury bills, insurance policies
and contracts, or in any other property, real or personal having a
ready market including securities issued by the Trustee and/or
affiliates of the Trustee. The Trustee may invest in its own deposits
and, if applicable, those of affiliates, which bear a reasonable
interest rate. No portion of any Qualified Voluntary Contribution, or
the earnings thereon, may be invested in life insurance contracts or,
as with any Participant-directed investment, in tangible personal
property characterized by the IRS as a collectible,
(b) transfer any assets of the Fund to a group or collective trust
established to permit the pooling of funds of separate pension and
profit-sharing trusts, provided the Internal Revenue Service has
ruled such group or collective trust to be qualified under Code
Section 401(a) and exempt under Code Section 501(a) (or the
applicable corresponding provision of any other Revenue Act) or to
any other common, collective, or commingled trust fund which has
been or may hereafter be established and maintained by the Trustee
and/or affiliates of the Trustee. Such commingling of assets of the
Fund with assets of other qualified trusts is specifically authorized,
and to the extent of the investment of the Fund in such a group or
collective trust, the terms of the instrument establishing the group or
collective trust shall be a part hereof as though set forth herein,
(c) invest up to 100% of the Fund in the common stock, debt obligations,
or any other security issued by the Employer or by an affiliate of
the Employer within the limitations provided under Sections 406,
407, and 408 of the Employee Retirement Income Security Act of
1974 and further provided that such investment does not constitute a
prohibited transaction under Code Section 4975. Any such investment
in Employer securities shall only be made upon written direction of the
Employer who shall be solely responsible for propriety of such
investment,
(d) hold cash uninvested and deposit same with any banking or savings
institution, including its own banking department,
(e) join in or oppose the reorganization, recapitalization, consolidation,
sale or merger of corporations or properties, including those in
which it is interested as Trustee, upon such terms as it deems wise,
(f) hold investments in nominee or bearer form,
(g) vote proxies and, if appropriate, pass them on to any investment
manager which may have directed the investment in the equity giving
rise to the proxy,
(h) exercise all ownership rights with respect to assets held in the Fund.
13.4 Duties Of The Custodian As Custodian, the Sponsor shall be depository
of all or part of the Fund and shall, at the direction of the Trustee hold any
assets received from the Trustee or its agents. The Custodian shall receive and
deliver assets as instructed by the Trustee or its agents. To the extent that
the Custodian holds title to Plan assets and such ownership requires action on
the part of the registered owner, such action will be taken by the Custodian
only upon receipt of specific instructions from the Trustee or its agents.
Proxies shall be voted by or pursuant to the express direction of the Trustee or
authorized agent of the Trustee. As Custodian, the Sponsor shall not give any
investment advice, including any opinion on the prudence of directed
investments. The Employer and Trustee and the agents thereof assume all
responsibility for adherence to fiduciary standards under the Employee
Retirement Income Security Act of 1974 (ERISA) and all amendments thereof, and
regulations thereunder.
13.5 Participant Loans If agreed upon by the Trustee and permitted by the
Employer in the Adoption Agreement, a Plan Participant may make application
to the Employer requesting a loan from the Fund. The Employer shall have the
sole right to approve or disapprove a Participant's application provided that
loans shall be made available to all Participants on a reasonably equivalent
basis. Loans shall not be made available to highly compensated employees [as
defined in Code Section 414(q)] in an amount greater than the amount made
available to other Employees. Any loan granted hereunder shall be made subject
to the following rules:
(a) No loan, when aggregated with any outstanding Participant loan(s),
shall exceed the lesser of (i) $50,000 reduced by the excess, if any,
of the highest outstanding balance of loans during the one year period
ending on the day before the loan is made, over the outstanding balance
of loans from the Plan on the date the loan is made or (ii) one-half of
the fair market value of a Participant's vested account balance built
up from Employer Contributions, Voluntary Contributions, and Rollover
Contributions. If the Participant's vested account balance is $20,000
or less, the maximum loan shall not exceed the lesser of $10,000 or
100% of the Participant's vested account balance. For the purpose of
the above limitation, all loans from all plans of the Employer and
other members of a group of employers described in Code Sections
414(b), 414(c), and 414(m) are aggregated. An assignment or pledge of
any portion of the Participant's interest in the Plan and a loan,
pledge, or assignment with respect to any insurance contract purchased
under the Plan, will be treated as a loan under this paragraph.
(b) All applications must be made on forms provided by the Employer and
must be signed by the Participant.
(c) Any loan granted hereunder shall bear interest at a rate reasonable at
the time of application, considering the purpose of the loan and the
rate being charged by representative commercial banks in the local area
for a similar loan unless the Employer sets forth a different method
for determining loan interest rates in its loan procedures. The loan
agreement shall also provide that the payment of principal and interest
be amortized in level payments not less frequently than quarterly.
(d) The term of such loan shall not exceed five years except in the case
of a loan for the purpose of acquiring any house, apartment, condo-
minium, or mobile home (not used on a transient basis) which is used or
is to be used within a reasonable time as the principal residence of
the Participant. The term of such loan shall be determined by the
Employer considering the maturity dates quoted by representative
commercial banks in the local area for a similar loan.
(e) The principal and interest paid by a Participant on his or her loan
shall be credited to the Fund in the same manner as for any other Plan
investment. If elected in the Adoption Agreement, loans may be treated
as segregated investments of the individual Participants. This
provision is not available if its election will result in discrimin-
ation in operation of the Plan.
(f) If a Participant's loan application is approved by the Employer, such
Participant shall be required to sign a note, loan agreement, and
assignment of one-half of his or her interest in the Fund as collateral
for the loan. The Participant, except in the case of a profit-sharing
plan satisfying the requirements of paragraph 8.7 must obtain the
consent of his or her Spouse, if any, within the 90 day period before
the time his or her account balance is used as security for the loan.
A new consent is required if the account balance is used for any
renegotiation, extension, renewal or other revision of the loan,
including an increase in the amount thereof. The consent must be
written, must acknowledge the effect of the loan, and must be witnessed
by a plan representative or notary public. Such consent shall there-
after be binding with respect to the consenting Spouse or any
subsequent Spouse.
(g) If a valid Spousal consent has been obtained, then, notwithstanding any
other provision of this Plan, the portion of the Participant's vested
account balance used as a security interest held by the Plan by reason
of a loan outstanding to the Participant shall be taken into account
for purposes of determining the amount of the account balance payable
at the time of death or distribution, but only if the reduction is used
as repayment of the loan. If less than 100% of the Participant's
vested account balance (determined without regard to the preceding
sentence) is payable to the surviving Spouse, then the account balance
shall be adjusted by first reducing the vested account balance by the
amount of the security used as repayment of the loan, and then
determining the benefit payable to the Surviving Spouse.
(h) The Employer may also require additional collateral in order to
adequately secure the loan.
(i) A Participant's loan shall immediately become due and payable if such
Participant terminates employment for any reason or fails to make a
principal and/or interest payment as provided in the loan agreement.
If such Participant terminates employment, the Employer shall
immediately request payment of principal and interest on the loan. If
the Participant refuses payment following termination, the Employer
shall reduce the Participant's vested account balance by the remaining
principal and interest on his or her loan. If the Participant's vested
account balance is less than the amount due, the Employer shall take
whatever steps are necessary to collect the balance due directly from
the Participant. However, no foreclosure on the Participant's note or
attachment of the Participant's account balance will occur until a
distributable event occurs in the Plan. No loans will be made to
Owner-Employees (as defined in paragraph 1.51) or Shareholder-Employees
(as defined in paragraph 1.74), unless an exemption from the prohibited
transactions rules is first obtained from the Department of Labor.
13.6 Insurance Policies If agreed upon by the Trustee and approved by the
Employer in the Adoption Agreement, Employees may elect the purchase of life
insurance policies under the Plan. If elected, the maximum annual premium for a
whole life policy shall not exceed 50% of the aggregate Employer contributions
allocated to the account of a Participant. For profit-sharing plans the 50%
test need only be applied against Employer contributions allocated in the last
two years. Whole life policies are policies with both nondecreasing death
benefits and nonincreasing premiums. The maximum annual premium for term
contracts or universal life policies and all other policies which are not whole
life shall not exceed 25% of aggregate Employer contributions allocated to the
account of a Participant. The two year rule for profit-sharing plans again
applies. The maximum annual premiums for a Participant with both a whole life
and a term contract or universal life policies shall be limited to one-half of
the whole life premiums plus the term premium but shall not exceed one-half of
the whole life premium plus the term premium shall not exceed 25% of the
aggregate Employer contributions allocated to the account of a Participant,
subject to the two year rule for profit-sharing plans. Any policies purchased
hereunder shall be held subject to the following rules:
(a) The Trustee shall be applicant and owner of any policies issued
hereunder.
(b) All policies or contracts purchased hereunder, shall be endorsed as
nontransferable, and must provide that proceeds will be payable to
the Trustee; however, the Trustee shall be required to pay over all
proceeds of the contracts to the Participant's Designated Beneficiary
in accordance with the distribution provisions of this Plan. Under no
circumstances shall the Trust retain any part of the proceeds.
(c) Each Participant shall be entitled to designate a beneficiary under
the terms of any contract issued hereunder; however, such designation
will be given to the Trustee which must be the named beneficiary on
any policy. Such designation shall remain in force, until revoked by
the Participant, by filing a new beneficiary form with the Trustee.
A Participant's Spouse will be the Designated Beneficiary of the
proceeds in all circumstances unless a Qualified Election has been
made in accordance with paragraph 8.4. The beneficiary of a deceased
Participant shall receive in addition to the proceeds of the
Participant's policy or policies, the amount credited to such
Participant's investment account.
(d) A Participant who is uninsurable or insurable at substandard rates,
may elect to receive a reduced amount of insurance, if available, or
may waive the purchase of any insurance.
(e) All dividends or other returns received on any policy purchased
hereunder, shall be applied to reduce the next premium due on
such policy, or if no further premium is due, such amount shall be
credited to the Fund as part of the account of the Participant for
whom the policy is held.
(f) If Employer contributions are inadequate to pay all premiums on all
insurance policies, the Trustee may, at the option of the Employer,
utilize other amounts remaining in each Participant's account to pay
the premiums on his respective policy or policies, allow the policies
to lapse, reduce the policies to a level at which they may be main-
tained, or borrow against the policies on a prorated basis, provided
that the borrowing does not discriminate in favor of the policies on
the lives of Officers, Shareholders, and highly compensated Employees.
(g) On retirement or termination of employment of a Participant, the
Employer shall direct the Trustee to cash surrender the Participant's
policy and credit the proceeds to his or her account for distribution
under the terms of the Plan. However, before so doing, the Trustee
shall first offer to transfer ownership of the policy to the
Participant in exchange for payment, by the Participant of the cash
value of the policy at the time of transfer. Such payment shall be
credited to the Participant's account for distribution under the terms
of the Plan. All distributions resulting from the application of this
paragraph shall be subject to the Joint and Survivor Annuity Rules of
Article VIII, if applicable.
(h) The Employer shall be solely responsible to see that these insurance
provisions are administered properly and that if there is any conflict
between the provisions of this Plan and any insurance contracts
issued hereunder that the terms of this Plan will control.
13.7 Employer Investment Direction If agreed upon by the Trustee and
approved by the Employer in the Adoption Agreement, the Employer shall have the
right to direct the Trustee with respect to investments of the Fund, may appoint
an investment manager (registered as an investment advisor under the Investment
Advisors Act of 1940) to direct investments, or may give the Trustee sole
investment management responsibility. The Employer may purchase and sell
interests in a registered investment company (i.e., mutual funds) for which the
Sponsor, its parent, affiliates, or successors, may serve as investment advisor
and receive compensation from the registered investment company for its services
as investment advisor. The Employer shall advise the Trustee in writing
regarding the retention of investment powers, the appointment of an investment
manager, or the delegation of investment powers to the Trustee. Any investment
directive hereunder shall be made in writing by the Employer or investment
manager, as the case may be. In the absence of such written directive, the
Trustee shall automatically invest the available cash in its discretion in an
appropriate interim investment until specific investment directions are
received. Such instructions regarding the delegation of investment
responsibility shall remain in force until revoked or amended in writing. The
Trustee shall not be responsible for the propriety of any directed investment
made hereunder and shall not be required to consult with or advise the Employer
regarding the investment quality of any directed investment held hereunder. If
the Employer fails to designate an investment manager, the Trustee shall have
full investment authority. If the Employer does not issue investment
directions, the Trustee shall have authority to invest the Fund in its sole
discretion. While the Employer may direct the Trustee with respect to Plan
investments, the Employer may not:
(a) borrow from the Fund or pledge any of the assets of the Fund
as security for a loan,
(b) buy property or assets from or sell property or assets to the Fund,
(c) charge any fee for services rendered to the Fund, or
(d) receive any services from the Fund on a preferential basis.
13.8 Employee Investment Direction If agreed to by the Trustee and approved
by the Employer in the Adoption Agreement, Participants shall be given the
option to direct the investment of their personal contributions and their share
of the Employer's contribution among alternative investment funds established as
part of the overall Fund. Unless otherwise specified by the Employer in the
Adoption Agreement, such investment funds shall be restricted to funds offered
by the Trustee. In this connection, a Participant's right to direct the
investment of any contribution shall apply only to selection of the desired
fund. The following rules shall apply to the administration of such funds.
(a) At the time an Employee becomes eligible for the Plan, he or she
shall complete an investment designation form stating the percentage
of his or her contributions to be invested in the available funds.
(b) A Participant may change his or her election with respect to
future contributions by filing a new investment designation form
with the Employer in accordance with the procedures established
by the Plan Administrator.
(c) A Participant may elect to transfer all or part of his or her balance
from one investment fund to another by filing an investment designation
form with the Employer in accordance with the procedures established
by the Plan Administrator.
(d) The Employer shall be responsible when transmitting Employee and
Employer contributions to show the dollar amount to be credited to
each investment fund for each Employee.
(e) Except as otherwise provided in the Plan, neither the Trustee, nor
the Employer, nor any fiduciary of the Plan shall be liable to the
Participant or any of his or her beneficiaries for any loss resulting
from action taken at the direction of the Participant.
ARTICLE XIV
TOP-HEAVY PROVISIONS
14.1 Applicability Of Rules If the Plan is or becomes Top-Heavy in any
Plan Year beginning after 1983, the provisions of this Article will supersede
any conflicting provisions in the Plan or Adoption Agreement.
14.2 Minimum Contribution Notwithstanding any other provision in the
Employer's Plan, for any Plan Year in which the Plan is Top-Heavy or Super Top-
Heavy, the aggregate Employer contributions and forfeitures allocated on behalf
of any Participant (without regard to any Social Security contribution) under
this Plan and any other Defined Contribution Plan of the Employer shall be
lesser of 3% of such Participant's Compensation or the largest percentage of
Employer contributions and forfeitures, as a percentage of the first $200,000,
as adjusted under Code Section 415(d), of the Key Employee's Compensation,
allocated on behalf of any Key Employee for that year.
Each Participant who is employed by the Employer on the last day of the Plan
Year shall be entitled to receive an allocation of the Employer's minimum
contribution for such Plan Year. The minimum allocation applies even though
under other Plan provisions the Participant would not otherwise be entitled to
receive an allocation, or would have received a lesser allocation for the year
because the Participant fails to make Mandatory Contributions to the Plan, the
Participant's Compensation is less than a stated amount, or the Participant
fails to complete 1,000 Hours of Service (or such lesser number designated by
the Employer in the Adoption Agreement) during the Plan Year. A Paired profit-
sharing plan designated to provide the minimum Top-Heavy contribution must
do so regardless of profits. An Employer may make the minimum Top-Heavy
contribution available to all Participants or just non-Key Employees.
For purposes of computing the minimum allocation, Compensation shall mean
Compensation as defined in paragraph 1.12(c) of the Plan.
The Top-Heavy minimum contribution does not apply to any Participant to the
extent the Participant is covered under any other plan(s) of the Employer and
the Employer has provided in Section 11 of the Adoption Agreement that the
minimum allocation or benefit requirements applicable to Top-Heavy Plans will
be met in the other plan(s).
If a Key Employee makes an Elective Deferral or has an allocation of Matching
Contributions made to his or her account, a Top-Heavy minimum will be required
for non-Key Employees who are Participants, however, neither Elective Deferrals
by nor Matching Contributions to non-Key Employees may be taken into account for
purposes of satisfying the top-heavy Minimum Contribution requirement.
14.3 Minimum Vesting For any Plan Year in which this Plan is Top-Heavy,
the minimum vesting schedule elected by the Employer in the Adoption Agreement
will automatically apply to the Plan. If the vesting schedule selected by the
Employer in the Adoption Agreement is less liberal than the allowable schedule,
the schedule will automatically be modified. If the vesting schedule under the
Employer's Plan shifts in or out of the Top-Heavy schedule for any Plan Year,
such shift is an amendment to the vesting schedule and the election in paragraph
9.8 of the Plan applies. The minimum vesting schedule applies to all accrued
benefits within the meaning of Code Section 411(a)(7) except those attributable
to Employee contributions, including benefits accrued before the effective date
of Code Section 416 and benefits accrued before the Plan became Top-Heavy.
Further, no reduction in vested benefits may occur in the event the Plan's
status as Top-Heavy changes for any Plan Year. However, this paragraph does not
apply to the account balances of any Employee who does not have an Hour of
Service after the Plan initially becomes Top-Heavy and such Employee's account
balance attributable to Employer contributions and forfeitures will be
determined without regard to this paragraph.
14.4 Limitations On Allocations In any Plan Year in which the Top-Heavy
Ratio exceeds 90% (i.e., the Plan becomes Super Top-Heavy), the denominators of
the Defined Benefit Fraction (as defined in paragraph 1.16) and Defined
Contribution Fraction (as defined in paragraph 1. 19) shall be computed using
100 % of the dollar limitation instead of 125%.
ARTICLE XV
AMENDMENT AND TERMINATION
15.1 Amendment By Sponsor The Sponsor may amend any or all provisions of
this Plan and Trust/Custodial Account at any time without obtaining the approval
or consent of any Employer which has adopted this Plan and Trust/Custodial
Account provided that no amendment shall authorize or permit any part of the
corpus or income of the Fund to be used for or diverted to purposes other than
for the exclusive benefit of Participants and their beneficiaries, or eliminate
an optional form of distribution. In the case of a mass-submitted plan, the
mass-submitter shall amend the Plan on behalf of the Sponsor.
15.2 Amendment By Employer The Employer may amend any option in the Adoption
Agreement, and may include language as permitted in the Adoption Agreement,
(a) to satisfy Code Section 415, or
(b) to avoid duplication of minimums under Code Section 416 because
of the required aggregation of multiple plans.
The Employer may add certain model amendments published by the Internal Revenue
Service which specifically provide that their adoption will not cause the Plan
to be treated as an individually designed plan for which the Employer must
obtain a separate determination letter.
If the Employer amends the Plan and Trust/Custodial Account other than as
provided above, the Employer's Plan shall no longer participate in this Proto-
type Plan and will be considered an individually designed plan.
15.3 Termination Employers shall have the right to terminate their Plans
upon 60 days notice in writing to the Trustee/Custodian. If the Plan is
terminated, partially terminated, or if there is a complete discontinuance of
contributions under a profit-sharing plan maintained by the Employer, all
amounts credited to the accounts of Participants shall vest and become
nonforfeitable. In the event of a partial termination, only those who are
affected by such partial termination shall be fully vested. In the event of
termination, the Employer shall direct the Trustee/Custodian with respect to the
distribution of accounts to or for the exclusive benefit of Participants or
their beneficiaries. The Trustee/Custodian shall dispose of the Fund in
accordance with the written directions of the Plan Administrator, provided that
no liquidation of assets and payment of benefits, (or provision therefor), shall
actually be made by the Trustee/Custodian until after it is established by the
Employer in a manner satisfactory to the Trustee/Custodian, that the applicable
requirements, if any, of the Employee Retirement Income Security Act of 1974 and
the Internal Revenue Code governing the termination of employee benefit plans,
have been or are being, complied with, or that appropriate authorizations,
waivers, exemptions, or variances have been, or are being obtained.
15.4 Qualification Of Employer's Plan If the adopting Employer fails to
attain or retain internal Revenue Service qualification, such Employer's Plan
shall no longer participate in this Prototype Plan and will be considered an
individually designed plan.
15.5 Mergers And Consolidations
(a) In the case of any merger or consolidation of the Employer's Plan
with, or transfer of assets or liabilities of the Employer's Plan to,
any other plan, Participants in the Employer's Plan shall be entitled
to receive benefits immediately after the merger, consolidation, or
transfer which are equal to or greater than the benefits they would
have been entitled to receive immediately before the merger,
consolidation, or transfer if the Plan had then terminated.
(b) Any corporation into which the Trustee/Custodian or any successor
trustee/custodian may be merged or with which it may be consolidated,
or any corporation resulting from any merger or consolidation to
which the Trustee/Custodian or any successor trustee/custodian may be a
party, or any corporation to which all or substantially all the trust
business of the Trustee/Custodian or any successor trustee/custodian
may be transferred, shall be the successor of such Trustee/Custodian
without the filing of any instrument or performance of any further act,
before any court.
15.6 Resignation And Removal The Trustee/Custodian may resign by written
notice to the Employer which shall be effective 60 days after delivery. The
Employer may discontinue its participation in this Prototype Plan and
Trust/Custodial Account effective upon 60 days written notice to the Sponsor.
In such event the Employer shall prior to the effective date thereof, amend the
Plan to eliminate any reference to this Prototype Plan and Trust/Custodial
Account and appoint a successor trustee or custodian or arrange for another
funding agent. The Trustee/Custodian shall deliver the Fund to its successor
on the effective date of the resignation or removal or as soon thereafter as
practicable, provided that this shall not waive any lien the Trustee/Custodian
may have upon the Fund for its compensation or expenses. If the Employer
fails to amend the Plan and appoint a successor trustee, custodian, or other
funding agent within the said 60 days, or such longer period as the Trustee/
Custodian may specify in writing, the Plan shall be deemed individually
designed and the Employer shall be deemed the successor trustee/custodian.
The Employer must then obtain its own determination letter.
15.7 Qualification Of Prototype The Sponsor intends that this Prototype
Plan will meet the requirements of the Code as a qualified Prototype
Retirement Plan and Trust/Custodial Account. Should the Commissioner of
Internal Revenue or any delegate of the Commissioner at any time determine
that the Plan and Trust/Custodial Account fails to meet the requirements of
the Code, the Sponsor will amend the Plan and Trust/Custodial Account
to maintain its qualified status.
ARTICLE XVI
GOVERNING LAW
Construction, validity and administration of the Prototype Plan and
Trust/Custodial Account, and any Employer Plan and Trust/Custodial Account as
embodied in the Prototype document and accompanying Adoption Agreement, shall be
governed by Federal law to the extent applicable and to the extent not
applicable by the laws of the State/Commonwealth in which the principal office
of the Sponsor is located.
MODEL AMENDMENT
Revenue Procedure 93-47
(This model amendment allows Participants receiving distribution from
safe-harbored profit sharing plans to waive the 30-day period required under the
Unemployment Compensation Act of 1992. Non-safe harbored plans must still
provide notice not less than 30 days and not more than 90 days prior to the
distribution.)
If a distribution is one to which Section 401(a)(11) and 417 of the Internal
Revenue Code do not apply, such distribution may commence less than 30 days
after the notice required under Section 1.411(a)-ll(c) of the Income Tax
Regulations is given, provided that:
(1) the plan administrator clearly informs the Participant that the
Participant has a right to a period of at least 30 days after receiving
the notice to consider the decision of whether or not to elect a
distribution (and, if applicable, a particular distribution option),
and
(2) the Participant, after receiving the notice, affirmatively elects a
distribution.
PART I - SECTION 401(a)(17) LIMITATION
[MAY BE ADOPTED BY DEFINED CONTRIBUTION
AND DEFINED BENEFIT PLANS]
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for Plan Years
beginning on or after January 1, 1994, the annual Compensation of each Employee
taken into account under the Plan shall not exceed the OBRA '93 annual
compensation limit. The OBRA '93 annual compensation limit is $150,000, as
adjusted by the Commissioner for increases in the cost of living in accordance
with Section 401(a)(17)(B) of the Internal Revenue Code. The cost-of-living in
effect for a calendar year applies to any period, not exceeding 12 months, over
which Compensation is determined (determination period) beginning in such
calendar year. If a determination period consists of fewer than 12 months, the
OBRA '93 annual compensation limit will be multiplied by a fraction, the
numerator of which is the number of months in the determination period, and the
denominator of which is 12.
For Plan Years beginning on or after January 1, 1994, any reference in
this Plan to the limitation under Section 401(a)(17) of the Code shall mean the
OBRA '93 annual compensation limit set forth in this provision.
If Compensation for any prior determination period is taken into
account in determining an Employee's benefits accruing in the current Plan
Year, the Compensation for that prior determination period is subject to the
OBRA'93 annual compensation limit in effect for that prior determination period.
For this purpose, for determination periods beginning before the first day of
the first Plan Year beginning on or after January 1, 1994, the OBRA '93 annual
compensation limit is $150,000.
Plan #004
NONSTANDARDIZED
ADOPTION AGREEMENT
PROTOTYPE CASH OR DEFERRED PROFIT-SHARING
PLAN AND TRUST/CUSTODIAL ACCOUNT
Sponsored by
FIRST VERMONT BANK AND TRUST COMPANY
The Employer named below hereby establishes a Cash or Deferred Profit-Sharing
Plan for eligible Employees as provided in this Adoption Agreement and the
accompanying Basic Prototype Plan and Trust/Custodial Account Basic Plan
Document #04.
1. EMPLOYER INFORMATION
NOTE: If multiple Employers are adopting the Plan, complete this section
based on the lead Employer. Additional Employers may adopt this
Plan by attaching executed signature pages to the back of the
Employer's Adoption Agreement.
(a) NAME AND ADDRESS:
Community Bancorp.
P.O. Box 259
Derby, VT 05829
(b) TELEPHONE NUMBER: (802)334-7915
(c) TAX ID NUMBER: 03-0288082
(d) FORM OF BUSINESS:
[ ] (i) Sole Proprietor
[ ] (ii) Partnership
[x] (iii) Corporation
[ ] (iv) "S" Corporation (formerly known as Subchapter S)
[ ] (v) Other:
Prototype Cash or
Deferred Profit-
Sharing Plan #004
(e) NAME OF INDIVIDUAL AUTHORIZED TO ISSUE INSTRUCTIONS TO THE
TRUSTEE/CUSTODIAN:
Richard White, Stephen Marsh, Kathryn Austin
(f) NAME OF PLAN: Community Bancorp. and Designated
Subsidiaries Retirement Savings Plan
(g) THREE DIGIT PLAN NUMBER FOR ANNUAL RETURN/REPORT: 002
2. EFFECTIVE DATE
(a) This is a new Plan having an effective date of:
(b) This is an amended Plan.
The effective date of the original Plan was January 1. 1991
The effective date of the amended Plan is January 1. 1994
(c) If different from above, the Effective Date for the Plan's Elective
Deferral provisions shall be:
3. DEFINITIONS
(a) "Collective or Commingled Funds" (Applicable to institutional Trustees
only.) Investment in collective or commingled funds as permitted at
paragraph 13.3(b) of the Basic Plan Document #04 shall only be made to
the following specifically named fund(s):
FVBTCO Employee Benefits Income Fund
FVBTCO Employee Benefits Equity Income Fund
FVBTCO Employee Benefits Capital Appreciation Fund
Funds made available after the execution of this Adoption Agreement
will be listed on schedules attached to the end of this Adoption
Agreement.
(b) "Compensation" Compensation shall be determined on the basis of the:
[X] (i) Plan Year.
[ ] (ii) Employer's Taxable Year.
2
Prototype Cash or
Deferred Profit-
Sharing Plan #004
[ ] (iii) Calendar Year.
Compensation shall be determined on the basis of the following
safe-harbor definition of Compensation in IRS Regulation Section
1.414(s)-1(c):
[x] (iv) Code Section 6041 and 6051 Compensation,
[ ] (v) Code Section 3401(a) Compensation, or
[ ] (vi) Code Section 415 Compensation.
Compensation [x] shall [ ] shall not include Employer contributions
made pursuant to a Salary Savings Agreement which are not includible
in the gross income of the Employee for the reasons indicated in the
definition of Compensation at 1.12 of the Basic Plan Document #04.
For purposes of the Plan, Compensation shall be limited to $ ,
the maximum amount which will be considered for Plan purposes. [If
an amount is specified, it will limit the amount of contributions
allowed on behalf of higher compensated Employees. Completion of
this section is not intended to coordinate with the $200,000 of Code
Section 415(d), thus the amount should be less than $200,000 as
adjusted for cost-of-living increases.]
(iii) Exclusions From Compensation:
(1) overtime.
(2) bonuses.
(3) commissions.
(4) (other)
Type of Contribution(s) Exclusion(s)
Elective Deferrals [Section 7(b)]
Matching Contributions [Section 7(c)]
Qualified Non-Elective Contributions [Section 7(d)]
and Non-Elective Contributions [Section 7(e)]
(c) "Entry Date"
3
Prototype Cash or
Deferred Profit-
Sharing Plan #004
[ ] (i) The first day of the Plan Year nearest the date on which an
Employee meets the eligibility requirements.
[x] (ii) The earlier of the first day of the Plan Year or the first
day of the seventh month of the Plan Year coinciding with
or following the date on which an Employee meets the
eligibility requirements.
[ ] (iii) The first day of the Plan Year following the date on which
the Employee meets the eligibility requirements. If this
election is made, the Service requirement at 4(a)(ii) may
not exceed 1/2 year and the age requirement at 4(b)(ii) may
not exceed 20-1/2.
[ ] (iv) The first day of the month coinciding with or following
the date on which an Employee meets the eligibility
requirements.
[ ] (v) The first day of the Plan Year, or the first day of the
fourth month, or the first day of the seventh month or the
first day of the tenth month, of the Plan Year coinciding
with or following the date on which an Employee meets the
eligibility requirements.
(d) "Hours of Service" Shall be determined on the basis of the method
selected below. Only one method may be selected. The method selected
shall be applied to all Employees covered under the Plan as follows:
[x] (i) On the basis of actual hours for which an Employee is
paid or entitled to payment.
[ ] (ii) On the basis of days worked.
An Employee shall be credited with ten (10) Hours of
Service if under paragraph 1.42 of the Basic Plan Document
#04 such Employee would be credited with at least one (1)
Hour of Service during the day.
[ ] (iii) On the basis of weeks worked.
An Employee shall be credited with forty-five (45) Hours
of Service if under paragraph 1.42 of the Basic Plan
Document #04 such Employee would be credited with at least
one (1) Hour of Service during the week.
[ ] (iv) On the basis of semi-monthly payroll periods.
An Employee shall be credited with ninety-five (95) Hours
of Service if under paragraph 1.42 of the Basic Plan
Document #04 such Employee would be credited with at
4
Prototype Cash or
Deferred Profit-
Sharing Plan #004
least one (1) Hour of Service during the semi-monthly
payroll period.
[ ] (v) On the basis of months worked.
An Employee shall be credited with one-hundred-ninety (190)
Hours of Service if under paragraph 1.42 of the Basic Plan
Document #04 such Employee would be credited with at least
one(1) Hour of Service during the month.
(e) "Limitation Year" The 12-consecutive month period commencing on January
1 and ending on December 31.
If applicable, the Limitation Year will be a short Limitation Year
commencing on and ending on Thereafter, the Limitation Year shall end
on the date last specified above.
(f) "Net Profit"
[x] (i) Not applicable (profits will not be required for any
contributions to the Plan).
[ ] (ii) As defined in paragraph 1.49 of the Basic Plan Document
#04.
[ ] (iii) Shall be defined as:
(Only use if definition in paragraph 1.49 of the Basic Plan Document
#04 is to be superseded.)
(g) "Plan Year" The 12-consecutive month period commencing on January 1 and
ending on December 31.
If applicable, the Plan Year will be a short Plan Year commencing
on_____ and ending on____. Thereafter, the Plan Year shall end on the
date last specified above.
(h) "Qualified Early Retirement Age" For purposes of making distributions
under the provisions of a Qualified Domestic Relations Order, the
Plan's Qualified Early Retirement Age with regard to the Participant
against whom the order is entered [x] shall [ ] shall not be the date
the order is determined to be qualified. If "shall" is elected, this
will only allow payout to the alternate payee(s).
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(i) "Qualified Joint and Survivor Annuity" The safe-harbor provisions of
paragraph 8.7 of the Basic Plan Document #04 [ ] are [x] are not
applicable. If not applicable, the survivor annuity shall be 50 %
(50%, 66-2/3%, 75% or 100%) of the annuity payable during the lives
of the Participant and Spouse. If no answer is specified, 50% will
be used.
(j) "Taxable Wage Base"
[ ] (i) Not Applicable - Plan is not integrated with Social
Security.
[x] (ii) The maximum earnings considered wages for such Plan Year
under Code Section 3121(a).
[ ] (iii) ___% (not more than 100%) of the amount considered wages
for such Plan Year under Code Section 3121(a).
[ ] (iv) $_____, provided that such amount is not in excess of the
amount determined under paragraph 30)(ii) above.
[ ] (v) For the 1989 Plan Year $10,000. For all subsequent Plan
Years, 20% of the maximum earnings considered wages for
such Plan Year under Code Section 3121(a).
NOTE: Using less than the maximum at (ii) may result in a
change in the allocation formula in Section 7.
(k) "Valuation Date(s)" Allocations to Participant Accounts will be done
in accordance with Article V of the Basic Plan Document #04:
(i) Daily (v) Quarterly
(ii) Weekly (vi) Semi-Annually
(iii) Monthly (vii) Annually
(iv) Bi-Monthly
Indicate Valuation Date(s) to be used by specifying option from list
above:
Type of Contribution(s) Valuation Date(s)
After-Tax Voluntary Contributions [Section 6] N/A
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Elective Deferrals [Section 7(b)] VI
Matching Contributions [Section 7(c)] VI
Qualified Non-Elective Contributions [Section 7(d)] VII
Non-Elective Contributions [Section 7(e), (f) and (g)] VII
Minimum Top-Heavy Contributions [Section 7(i)] VII
(l) "Year of Service"
(i) For Eligibility Purposes: The 12-consecutive month period during
which an Employee is credited with 1000 (not more than 1,000)
Hours of Service.
(ii) For Allocation Accrual Purposes: The 12-consecutive month period
during which an Employee is credited with 1000 (not more than
1,000) Hours of Service.
(iii) For Vesting Purposes: The 12-consecutive month period during
which an Employee is credited with 1000 (not more than 1,000)
Hours of Service.
4. ELIGIBILITY REQUIREMENTS
(a) Service:
[ I (i) The Plan shall have no service requirement.
[x] (ii) The Plan shall cover only Employees having completed at
least 1 [not more than three (3)] Years of Service. If
more than one (1) is specified, for Plan Years beginning
in 1989 and later, the answer will be deemed to be one (1).
NOTE: If the eligibility period selected is less than one year,
an Employee will not be required to complete any specified
number of Hours of Service to receive credit for such
period.
(b) Age:
[ ] (i) The Plan shall have no minimum age requirement.
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[x] (ii) The Plan shall cover only Employees having attained age
21 (not more than age 21).
(c) Classification:
The Plan shall cover all Employees who have met the age and service
requirements with the following exceptions:
[x] (i) No exceptions.
[ ] (ii) The Plan shall exclude Employees included in a unit of
Employees covered by a collective bargaining agreement
between the Employer and Employee Representatives, if
retirement benefits were the subject of good faith
bargaining. For this purpose, the term "Employee
Representative" does not include any organization more
than half of whose members are Employees who are owners,
officers, or executives of the Employer.
[ ] (iii) The Plan shall exclude Employees who are nonresident
aliens and who receive no earned income from the Employer
which constitutes income from sources within the United
States.
[ ] (iv) The Plan shall exclude from participation any
nondiscriminatory classification of Employees determined
as follows:
(d) Employees on Effective Date:
[x] (i) Not Applicable. All Employees will be required to satisfy
both the age and Service requirements specified above.
[ ] (ii) Employees employed on the Plan's Effective Date do not
have to satisfy the Service requirements specified above.
[ ] (iii) Employees employed on the Plan's Effective Date do not
have to satisfy the age requirements specified above.
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5. RETIREMENT AGES
(a) Normal Retirement Age:
If the Employer imposes a requirement that Employees retire upon
reaching a specified age, the Normal Retirement Age selected below may
not exceed the Employer imposed mandatory retirement age.
[x] (i) Normal Retirement Age shall be 65 (not to exceed age 65).
[ ] (ii) Normal Retirement Age shall be the later of attaining age
___(not to exceed age 65) or the___(not to exceed the 5th)
anniversary of the first day of the first Plan Year in
which the Participant commenced participation in the Plan.
(b) Early Retirement Age:
[ ] (i) Not Applicable.
[x] (ii) The Plan shall have an Early Retirement Age of 55 (not
less than 55) and completion of 7 Years of Service.
6. EMPLOYEE CONTRIBUTIONS
[x] (a) Participants shall be permitted to make Elective Deferrals
in any amount from 1 % up to 15 % of their Compensation.
If (a) is applicable, Participants shall be permitted to
amend their Salary Savings Agreements to change the
contribution percentage as provided below:
[ ] (i) On the Anniversary Date of the Plan,
[x] (ii) On the Anniversary Date of the Plan and on the
first day of the seventh month of the Plan
Year,
[ ] (iii) On the Anniversary Date of the Plan and on the
first day following any Valuation Date, or
[ ] (iv) Upon 30 days notice to the Employer.
[ ] (b) Participants shall be permitted to make after tax Voluntary
Contributions.
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[ ] (c) Participants shall be required to make after tax Voluntary
Contributions as follows (Thrift Savings Plan):
[ ] (i) ___% of Compensation.
[ ] (ii) A percentage determined by the Employee on his
or her enrollment form.
[x] (d) If necessary to pass the Average Deferral Percentage Test,
Participants [ ] may [X] may not have Elective Deferrals
recharacterized as Voluntary Contributions.
NOTE: The Average Deferral Percentage Test will apply to
contributions under (a) above. The Average Contribution
Percentage Test will apply to contributions under (b)
and (c) above, and may apply to (a).
7. EMPLOYER CONTRIBUTIONS AND ALLOCATION THEREOF
NOTE: The Employer shall make contributions to the Plan in accordance with
the formula or formulas selected below. The Employer's contribution
shall be subject to the limitations contained in Articles III and X.
For this purpose, a contribution for a Plan Year shall be limited for
the Limitation Year which ends with or within such Plan Year. Also,
the integrated allocation formulas below are for Plan Years beginning
in 1989 and later. The Employer's allocation for earlier years shall
be as specified in its Plan prior to amendment for the Tax Reform Act
of 1986.
(a) Profits Requirement:
(i) Current or Accumulated Net Profits are required for:
[ ] (A) Matching Contributions.
[ ] (B) Qualified Non-Elective Contributions.
[ ] (C) discretionary contributions.
(ii) No Net Profits are required for:
[X] (A) Matching Contributions.
[X] (B) Qualified Non-Elective Contributions.
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[x] (C) discretionary contributions.
NOTE: Elective Deferrals can always be contributed regardless of profits.
[x] (b) Salary Savings Agreement:
The Employer shall contribute and allocate to each Participant's
account an amount equal to the amount withheld from the Compensation
of such Participant pursuant to his or her Salary Savings Agreement.
If applicable, the maximum percentage is specified in Section 6 above.
An Employee who has terminated his or her election under the Salary
Savings Agreement other than for hardship reasons may not make another
Elective Deferral:
[ ] (i) until the first day of the next Plan Year.
[x] (ii) until the first day of the next valuation period.
[ ] (iii) for a period of___month(s) (not to exceed 12 months).
[x] (c) Matching Employer Contribution [See paragraphs (h) and (i)]:
[ ] (i) Percentage Match: The Employer shall contribute and
allocate to each eligible Participant's account an
amount equal to___% of the amount contributed and
allocated in accordance with paragraph 7(b) above and
(if checked)___% of [ ] the amount of Voluntary
Contributions made in accordance with paragraph 4.1 of
the Basic Plan Document #04. The Employer shall not
match Participant Elective Deferrals as provided above in
excess of $____or in excess of__ % of the Participant's
Compensation or if applicable, Voluntary Contributions in
excess of $____or in excess of__ % of the Participant's
Compensation. In no event will the match on both Elective
Deferrals and Voluntary Contributions exceed a combined
amount of $____or__ %.
[x] (ii) Discretionary Match: The Employer shall contribute and
allocate to each eligible Participant's account a
percentage of the Participant's Elective Deferral
contributed and allocated in accordance with paragraph
7(b) above. The Employer shall set such percentage prior
to the end of the Plan Year. The Employer shall not match
Participant Elective Deferrals in excess of $____or in
excess of 5 % of the Participant's Compensation.
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[ ] (iii) Tiered Match: The Employer shall contribute and allocate to
each Participant's account an amount equal to__% of the
first__% of the Participant's Compensation,
__% of the next__% of the Participant's Compensation,
__% of the next__% of the Participant's Compensation.
NOTE: Percentages specified in (iii) above may not increase as the percentage
of Participant's contribution increases.
[ ] (iv) Flat Dollar Match: The Employer shall contribute and
allocate to each Participant's account $____ if the
Participant defers at least 1% of Compensation.
[ ] (v) Percentage of Compensation Match: The Employer shall
contribute and allocate to each Participant's account__% of
Compensation if the Participant defers at least 1% of
Compensation.
[ ] (vi) Proportionate Compensation Match: The Employer shall
contribute and allocate to each Participant who defers at
least 1% of Compensation, an amount determined by
multiplying such Employer Matching Contribution by a
fraction the numerator of which is the Participant's
Compensation and the denominator of which is the
Compensation of all Participants eligible to receive such
an allocation. The Employer shall set such discretionary
contribution prior to the end of the Plan Year.
[x] (vii) Qualified Match: Employer Matching Contributions will be
treated as Qualified Matching Contributions to the extent
specified below:
[ ] (A) All Matching Contributions.
[ ] (B) None.
[ ] (C) __ % of the Employer's Matching Contribution.
[ ] (D) Up to __% of each Participant's Compensation.
[X] (E) The amount necessary to meet the [ ] Average
Deferral Percentage (ADP) Test, [ ] Average
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Contribution Percentage (ACP) Test, [x] Both the
ADP and ACP Tests.
[ ] (viii) Matching Contribution Computation Period: The time period
upon which matching contributions will be based shall be
[ ] (A) weekly
[ ] (B) biweekly
[ ] (C) semi-monthly
[ ] (D) monthly
[ ] (E) quarterly
[ ] (F) semiannually
[x] (G) annually
(ix) Eligibility for Match: Employer Matching Contributions,
whether or not Qualified, will only be made on Employee
Contributions not withdrawn prior to the end of the
[x] valuation period [ ] Plan Year.
[x] (d) Qualified Non-Elective Employer Contribution - [See paragraphs (h) and
(i)] These contributions are fully vested when contributed.
The Employer shall have the right to make an additional discretionary
contribution which shall be allocated to each eligible Employee in
proportion to his or her Compensation as a percentage of the
Compensation of all eligible Employees. This part of the Employer's
contribution and the allocation thereof shall be unrelated to any
Employee contributions made hereunder. The amount of Qualified non-
Elective Contributions taken into account for purposes of meeting the
ADP or ACP test requirements is:
[ ] (i) All such Qualified non-Elective Contributions.
[x] (ii) The amount necessary to meet the [ ] ADP test, the [ ] ACP
test, [x] Both the ADP and ACP tests.
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Qualified non-Elective Contributions will be made to:
[ ] (iii) All Employees eligible to participate.
[x] (iv) Only non-Highly Compensated Employees eligible to
participate.
[ ] (e) Additional Employer Contribution Other Than Qualified Non-Elective
Contributions - Non-Integrated [See paragraphs (h) and (i)]
The Employer shall have the right to make an additional discretionary
contribution which shall be allocated to each eligible Employee in
proportion to his or her Compensation as a percentage of the
Compensation of all eligible Employees. This part of the Employer's
contribution and the allocation thereof shall be unrelated to any
Employee contributions made hereunder.
[x] (f) Additional Employer Contribution - Integrated Allocation Formula (See
paragraphs (h) and (i)]
The Employer shall have the right to make an additional discretionary
contribution. The Employer's contribution for the Plan Year plus any
forfeitures shall be allocated to the accounts of eligible Participants
as follows:
(i) First, to the extent contributions and forfeitures are
sufficient, all Participants will receive an allocation equal to
3% of their Compensation.
(ii) Next, any remaining Employer Contributions and forfeitures will
be allocated to Participants who have Compensation in excess of
the Taxable Wage Base (excess Compensation). Each such
Participant will receive an allocation in the ratio that his or
her excess compensation bears to the excess Compensation of all
Participants. Participants may only receive an allocation of 3%
of excess Compensation.
(iii) Next, any remaining Employer contributions and forfeitures will
be allocated to all Participants in the ratio that their Compen-
sation plus excess Compensation bears to the total Compensation
plus excess Compensation of all Participants. Participants may
only receive an allocation of up to 2.7% of their Compensation
plus excess Compensation, under this allocation method. If the
Taxable Wage Base defined at Section 3(j) is less than or equal
to the greater of $ 10,000 or 20% of the maximum, the 2.7% need
not be reduced. If the amount specified is greater than the
greater of $10,000 or 20% of the maximum Taxable Wage Base, but
not more than 80%, 2.7% must be reduced to 1.3%. If the amount
specified
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is greater than 80% but less than 100% of the maximum Taxable
Wage Base, the 2.7% must be reduced to 2.4%.
NOTE: If the Plan is not Top-Heavy or if the Top-Heavy minimum
contribution or benefit is provided under another Plan (see
Section 1 l(c)(ii)] covering the same Employees, sub-paragraphs
(i) and (ii) above may be disregarded and 5.7%, 4.3% or 5.4%
may be substituted for 2.7%, 1.3% or 2.4% where it appears in
(iii) above.
(iv) Next, any remaining Employer contributions and forfeitures will
be allocated to all Participants (whether or not they
received an allocation under the preceding paragraphs) in the
ratio that each Participant's Compensation bears to all
Participants' Compensation.
[ ] (g) Additional Employer Contribution-Alternative Integrated Allocation
Formula. [See paragraph (h) and (i)]
The Employer shall have the right to make an additional discretionary
contribution. To the extent that such contributions are sufficient,
they shall be allocated as follows:
__% of each eligible Participant's Compensation plus__% of Compensation
in excess of the Taxable Wage Base defined at Section 3(j) hereof. The
percentage on excess compensation may not exceed the lesser of (i) the
amount first specified in this paragraph or (ii) the greater of 5.7% or
the percentage rate of tax under Code Section 3111(a) as in effect on
the first day of the Plan Year attributable to the Old Age (OA) portion
of the OASDI provisions of the Social Security Act. If the Employer
specifies a Taxable Wage Base in Section 3(j) which is lower than the
Taxable Wage Base for Social Security purposes (SSTWB) in effect as of
the first day of the Plan Year, the percentage contributed with respect
to excess Compensation must be adjusted. If the Plan's Taxable Wage
Base is greater than the larger of $10,000 or 20% of the SSTWB but not
more than 80% of the SSTWB, the excess percentage is 4.3%. If the
Plan's Taxable Wage Base is greater than 80% of the SSTWB but less than
100% of the SSTWB, the excess percentage is 5.4%.
NOTE: Only one plan maintained by the Employer may be integrated with
Social Security.
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(h) Allocation of Excess Amounts (Annual Additions)
In the event that the allocation formula above results in an Excess
Amount, such excess shall be:
[ ] (i) placed in a suspense account accruing no gains or losses
for the benefit of the Participant.
[x] (ii) reallocated as additional Employer contributions to all
other Participants to the extent that they do not have any
Excess Amount.
(i) Minimum Employer Contribution Under Top-Heavy Plans:
For any Plan Year during which the Plan is Top-Heavy, the sum of the
contributions and forfeitures as allocated to eligible Employees under
paragraphs 7(d), 7(e), 7(f), 7(g) and 9 of this Adoption Agreement
shall not be less than the amount required under paragraph 14.2 of the
Basic Plan document #04. Top-Heavy minimums will be allocated to:
[x] (i) all eligible Participants.
[ ] (ii) only eligible non-Key Employees who are Participants.
(j) Return of Excess Contributions and/or Excess Aggregate Contributions:
In the event that one or more Highly Compensated Employees is subject
to both the ADP and ACP tests and the sum of such tests exceeds the
Aggregate Limit, the limit will be satisfied by reducing the:
[ ] (i) the ADP of the affected Highly Compensated Employees.
[ ] (ii) the ACP of the affected Highly Compensated Employees.
[x] (iii) a combination of the ADP and ACP of the affected Highly
Compensated Employees.
8. ALLOCATIONS TO TERMINATED EMPLOYEES
[X] (a) The Employer will not allocate Employer related contributions to
Employees who terminate during a Plan Year, unless required to
satisfy the requirements of Code Section 401(a)(26) and 410(b).
(These requirements are effective for 1989 and subsequent Plan
Years.)
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[x] (b) The Employer will allocate Employer matching and other related
contributions as indicated below to Employees who terminate during
the Plan Year as a result of:
Matching Other
[x] [x] (i) Retirement.
[x] [x] (ii) Disability.
[x] [x] (iii) Death.
[ ] [ ] (iv) Other termination of employment provided that
the Participant has completed a Year of Service
as defined for Allocation Accrual Purposes.
[x] [ ] (v) Other termination of employment even though the
Participant has not completed a Year of Service.
[ ] [ ] (vi) Termination of employment (for any reason)
provided that the Participant had completed a
Year of Service for Allocation Accrual Purposes.
9. ALLOCATION OF FORFEITURES
NOTE: Subsections (a), (b) and (c) below apply to forfeitures of amounts
other than Excess Aggregate Contributions.
(a) Allocation Alternatives:
[ ] (i) Not Applicable. All contributions are always fully vested.
[ ] (ii) Forfeitures shall be allocated to Participants in the same
manner as the Employer's contribution.
If allocation to other Participants is selected, the
allocation shall be as follows:
[1] Amount attributable to Employer discretionary contri-
butions and Top-Heavy minimums will be allocated to:
[ ] all eligible Participants under the Plan.
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[ ] only those Participants eligible for an
allocation of Employer contributions in the
current year.
[ ] only those Participants eligible for an
allocation of matching contributions in the
current year.
[2] Amounts attributable to Employer Matching contri-
butions will be allocated to:
[ ] all eligible Participants.
[ ] only those Participants eligible for allocations
of matching contributions in the current year.
[X] (iii) Forfeitures shall be applied to reduce the Employer's
contribution for such Plan Year.
[ ] (iv) Forfeitures shall be applied to offset administrative
expenses of the Plan. If forfeitures exceed these
expenses, (iii) above shall apply.
(b) Date for Reallocation:
NOTE: If no distribution has been made to a former Participant, sub-section
(i) below will apply to such Participant even if the Employer elects
(ii), (iii) or (iv) below as its normal administrative policy.
[ ] (i) Forfeitures shall be reallocated at the end of the Plan
Year during which the former Participant incurs his or her
fifth consecutive one year Break In Service.
[ ] (ii) Forfeitures will be reallocated immediately (as of the
next Valuation Date).
[x] (iii) Forfeitures shall be reallocated at the end of the Plan
Year during which the former Employee incurs his or her
1st (1st, 2nd, 3rd, or 4th) consecutive one year Break In
Service.
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[ ] (iv) Forfeitures will be reallocated immediately (as of the
Plan Year end).
(c) Restoration of Forfeitures:
If amounts are forfeited prior to five consecutive 1-year Breaks in
Service, the Funds for restoration of account balances will be obtained
from the following resources in the order indicated (fill in the
appropriate number):
[1] (i) Current year's forfeitures.
[2] (ii) Additional Employer contribution.
[3] (iii) Income or gain to the Plan.
(d) Forfeitures of Excess Aggregate Contributions shall be:
[x] (i) Applied to reduce Employer contributions.
[ ] (ii) Allocated, after all other forfeitures under the Plan,
to the Matching Contribution account of each non-highly
compensated Participant who made Elective deferrals or
Voluntary Contributions in the ratio which each such
Participant's Compensation for the Plan Year bears to the
total Compensation of all Participants for such Plan Year.
Such forfeitures cannot be allocated to the account of any
Highly Compensated Employee.
Forfeitures of Excess Aggregate Contributions will be so
applied at the end of the Plan Year in which they occur.
10. CASH OPTION
[ ] (a) The Employer may permit a Participant to elect to defer to
the Plan, an amount not to exceed__% of any Employer paid cash
bonus made for such Participant for any year. A Participant
must file an election to defer such contribution at least fifteen
(15) days prior to the end of the Plan Year. If the Employee
fails to make such an election, the entire Employer paid cash
bonus to which the Participant would be entitled shall be paid as
cash and not to the Plan. Amounts deferred under this section
shall be treated for all purposes as Elective Deferrals. Notwith-
standing the above, the election to defer must be made before the
bonus is made available to the Participant.
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[X] (b) Not Applicable.
1. LIMITATIONS ON ALLOCATIONS
[ ] This is the only Plan the Employer maintains or ever maintained,
therefore, this section is not applicable.
[X] The Employer does maintain or has maintained another Plan (including
a Welfare Benefit Fund or an individual medical account (as defined
in Code Section 415(i)(2)), under which accounts are treated as Annual
Additions) and has completed the proper sections below.
Complete (a), (b) and (c) only if the Employer maintains or ever main-
tained another qualified plan, including a Welfare Benefit Fund or an
individual medical account [as defined in Code Section 415(1)(2)] in
which any Participant in this Plan is (or was) a participant or could
possibly become a participant.
(a) If the Participant is covered under another qualified Defined
Contribution Plan maintained by the Employer, other than a Master
or Prototype Plan:
[x] (i) the provisions of Article X of the Basic Plan Document #04
will apply, as if the other plan were a Master or Prototype
Plan.
[ [ (ii) Attach provisions stating the method under which the plans
will limit total Annual Additions to the Maximum
Permissible Amount, and will properly reduce any Excess
Amounts, in a manner that precludes Employer discretion.
(b) If a Participant is or ever has been a participant in a Defined Benefit
Plan maintained by the Employer:
Attach provisions which will satisfy the 1.0 limitation of Code Section
415(e). Such language must preclude Employer discretion. The Employer
must also specify the interest and mortality assumptions used in
determining Present Value in the Defined Benefit Plan.
(c) The minimum contribution or benefit required under Code Section 416
relating to Top-Heavy Plans shall be satisfied by:
[X] (i) this Plan.
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[ ] (ii) (Name of other qualified plan of the Employer).
[ ] (iii) Attach provisions stating the method under which the
minimum contribution and benefit provisions of Code
Section 416 will be satisfied. If a Defined Benefit
Plan is or was maintained, an attachment must be
provided showing interest and mortality assumptions
used in the Top-Heavy Ratio.
12. VESTING
Employees shall have a fully vested and nonforfeitable interest in any
Employer contribution and the investment earnings thereon made in accordance
with paragraphs (select one or more options) [ ] 7(c), [ ] 7(e), [ ] 7(f),
[ ] 7(g) and [ ] 7(i) hereof Contributions under paragraph 7(b), 7(c)(vii)
and 7(d) are always fully vested. If one or more of the foregoing options
are not selected, such Employer contributions shall be subject to the
vesting table selected by the Employer.
Each Participant shall acquire a vested and nonforfeitable percentage in
his or her account balance attributable to Employer contributions and the
earnings thereon under the procedures selected below except with respect to
any Plan Year during which the Plan is Top-Heavy, in which case the Two-
twenty vesting schedule [Option (b)(iv)] shall automatically apply unless
the Employer has already elected a faster vesting schedule. If the Plan
is switched to option (b)(iv), because of its Top-Heavy status, that vesting
schedule will remain in effect even if the Plan later becomes non-Top-Heavy
until the Employer executes an amendment of this Adoption Agreement
indicating otherwise.
(a) Computation Period:
The computation period for, purposes of determining Years of Service
and Breaks in Service for purposes of computing a Participant's
nonforfeitable right to his or her account balance derived from
Employer contributions:
[ ] (i) shall not be applicable since Participants are always
fully vested,
[ ] (ii) shall commence on the date on which an Employee first
performs an Hour of Service for the Employer and each
subsequent 12-consecutive month period shall commence on
the anniversary thereof, or
[X] (iii) shall commence on the first day of the Plan Year during
which an Employee first performs an Hour of Service for the
Employer and
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each subsequent 12-consecutive month period shall commence
on the anniversary thereof.
A Participant shall receive credit for a Year of Service if he or she
completes at least 1,000 Hours of Service [or if lesser, the number of
hours specified at 3(1)(iii) of this Adoption Agreement] at any time
during the 12-consecutive month computation period. Consequently, a Year
of Service may be earned prior to the end of the 12-consecutive month
computation period and the Participant need not be employed at the end of
the 12-consecutive month computation period to receive credit for a Year
of Service.
(b) Vesting Schedules:
NOTE: The vesting schedules below only apply to a Participant who has at
least one Hour of Service during or after the 1989 Plan Year. If
applicable, Participants who separated from Service prior to the
1989 Plan Year will remain under the vesting schedule as in effect
in the Plan prior to amendment for the Tax Reform Act of 1986.
(i) Full and immediate vesting.
<TABLE>
<CAPTION>
Years of Service
1 2 3 4 5 6 7
<C> <C> <C> <C> <C> <C> <C> <C>
(ii) % 100%
(iii) % % 100%
(iv) % 20% 40% 60% 80% 100%
(v) 0% 0% 20% 40% 60% 80% 100%
(vi) 10% 20% 30% 40% 60% 80% 100%
(vii) % % % % 100%
(vii) % % % % % % 100%
</TABLE>
NOTE: The percentages selected for schedule (viii) may not be less for
any year than the percentages shown at schedule (v).
[x] All contributions other than those which are fully vested when
contributed will vest under schedule V above.
22
Prototype Cash or
Deferred Profit-
Sharing Plan #004
[X] Contributions other than those which are fully vested when
contributed will vest as provided below:
Vesting
Option Selected Type Of Employer Contribution
V 7(c) Employer Match on Salary Savings
7(c) Employer Match on Employee Voluntary
7(e) Employer Discretionary
V 7(f) & (g) Employer Discretionary - Integrated
(c) Service disregarded for Vesting:
[X] (i) Not Applicable. All Service shall be considered.
[ ] (ii) Service prior to the Effective Date of this Plan or a
predecessor plan shall be disregarded when computing a
Participant's vested and nonforfeitable interest.
[ ] (iii) Service prior to a Participant having attained age 18
shall be disregarded when computing a Participant's
vested and nonforfeitable interest.
13. SERVICE WITH PREDECESSOR ORGANIZATION
For purposes of satisfying the Service requirements for eligibility, Hours
of Service shall include Service with the following predecessor
organization(s): (These hours will also be used for vesting purposes.)
14. ROLLOVER/TRANSFER CONTRIBUTIONS
(a) Rollover Contributions, as described at paragraph 4.3 of the Basic
Plan Document #04, [x] shall [ ] shall not be permitted. If permitted,
Employees [x] may [ ] may not make Rollover Contributions prior to
meeting the eligibility requirements for participation in the Plan.
23
Prototype Cash or
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(b) Transfer Contributions, as described at paragraph 4.4 of the Basic
Plan Document #04 [x] shall [ ] shall not be permitted. If permitted,
Employees [x] may [ ] may not make Transfer Contributions prior to
meeting the eligibility requirements for participation in the Plan.
NOTE: Even if available, the Employer may refuse to accept such
contributions if its Plan meets the safe-harbor rules of
paragraph 8.7 of the Basic Plan Document #04.
15. HARDSHIP WITHDRAWALS
Hardship withdrawals, as provided for in paragraph 6.9 of the Basic Plan
Document #04, [x] are [ ] are not permitted.
16. PARTICIPANT LOANS
Participant loans, as provided for in paragraph 13.5 of the Basic Plan
Document #04, [x] are [ ] are not permitted. If permitted, repayments of
principal and interest shall be repaid to [x] the Participant's segregated
account or the general Fund.
17. INSURANCE POLICIES
The insurance provisions of paragraph 13.6 of the Basic Plan Document #04
[ ] shall [x] shall not be applicable.
18. EMPLOYER INVESTMENT DIRECTION
The Employer investment direction provisions, as set forth in paragraph
13.7 of the Basic Plan Document #04, [ ] shall [x] shall not be applicable.
19. EMPLOYEE INVESTMENT DIRECTION
(a) The Employee investment direction provisions, as set forth in
paragraph 13.8 of the Basic Plan Document #04, [x] shall [ ] shall
not be applicable.
If applicable, Participants may direct their investments:
[x] (i) among funds offered by the Trustee.
[ ] (ii) among any allowable investments.
24
Prototype Cash or
Deferred Profit-
Sharing Plan #004
(b) Participants may direct the following kinds of contributions and the
earnings thereon (check all applicable):
[x] (i) All Contributions
[ ] (ii) Elective Deferrals
[ ] (iii) Employee Voluntary Contributions (after-tax)
[ ] (iv) Employee Mandatory Contributions (after-tax)
[ ] (v) Employer Qualified Matching Contributions
[ ] (vi) Other Employer Matching Contributions
[ ] (vii) Employer Qualified Non-Elective Contributions
[ ] (viii) Employer Discretionary Contributions
[ ] (ix) Rollover Contributions
[ ] (x) Transfer Contributions
[ ] (X]) All of above which are checked, but only to the extent
that the Participant is vested in those contributions.
NOTE: To the extent that Employee investment direction was previously
allowed, it shall continue to be allowed on those amounts and the
earnings thereon.
20. EARLY PAYMENT OPTION
(a) A Participant who separates from Service prior to retirement, death
or Disability [x] may [ ] may not make application to the Employer
requesting an early payment of his or her vested account balance.
(b) A Participant who has attained age 59-1/2 and who has not separated
from Service [x] may [ ] may not obtain a distribution of his or her
vested Employer contributions. Distribution can only be made if the
Participant is 100% vested.
(c) A Participant who has attained the Plan's Normal Retirement Age and
who has not separated from Service [x] may [ ] may not receive a
distribution of his or her vested account balance.
25
Prototype Cash or
Deferred Profit-
Sharing Plan #004
NOTE: If the Participant has had the right to withdraw his or her
account balance in the past, this right may not be taken away.
Notwithstanding the above, to the contrary, required minimum
distributions will be paid. For timing of distributions, see item
21(a) below.
21. DISTRIBUTION OPTIONS
(a) Timing of Distributions:
In cases of termination for other than death, Disability or retirement,
benefits shall be paid:
[x] (i) As soon as administratively feasible, following the close
of the valuation period during which a distribution is
requested or is otherwise payable.
[ ] (ii) As soon as administratively feasible following the close
of the Plan Year during which a distribution is requested
or is otherwise payable.
[ ] (iii) As soon as administratively feasible, following the date
on which a distribution is requested or is otherwise
payable.
[ ] (iv) As soon as administratively feasible, after the close of
the Plan Year during which the Participant incurs ___
consecutive one-year Breaks in Service.
[ ] (v) Only after the Participant has achieved the Plan's Normal
Retirement Age, or Early Retirement Age, if applicable.
In cases of death, Disability or retirement, benefits shall be paid:
[ ] (vi) As soon as administratively feasible, following the close
of the valuation period during which a distribution is
requested or is otherwise payable.
[ ] (vii) As soon as administratively feasible following the close
of the Plan Year during which a distribution is requested
or is otherwise payable.
[x] (viii) As soon as administratively feasible, following the date
on which a distribution is requested or is otherwise
payable.
26
Prototype Cash or
Deferred Profit-
Sharing Plan #004
(b) Optional Forms of Payment:
[x] (i) Lump Sum.
[x] (ii) Installment Payments.
[x] (iii) Life Annuity*.
[ ] (iv) Life Annuity Term Certain*.
Life Annuity with payments guaranteed for___years (not to
exceed 20 years, specify all applicable).
[x] (v) Joint and [ ] 50%, [ ] 66-2/3%, [x] 75% or [x] 100%
survivor annuity* (specify all applicable).
[ ] (vi) Other form(s) specified:
*Not available in Plan meeting provisions of paragraph 8.7 of Basic
Plan Document #04.
(c) Recalculation of Life Expectancy:
In determining required distributions under the Plan, Participants
and/or their Spouse (Surviving Spouse) [ ] shall [x] shall not have the
right to have their life expectancy recalculated annually.
If "shall",
[ ] only the Participant shall be recalculated.
[ ] both the Participant and Spouse shall be recalculated.
[ ] who is recalculated shall be determined by the Participant.
27
Prototype Cash or
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22. SPONSOR CONTACT
Employers should direct questions concerning the language contained in
and qualification of the Prototype to:
Susan J. Klein
(Job Title) Employee Benefits Officer
(Phone Number) 802-257-6553
In the event that the Sponsor amends, discontinues or abandons this
Prototype Plan, notification will be provided to the Employer's address
provided on the first page of this Agreement.
28
Prototype Cash or
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23. SIGNATURES:
Due to the significant tax ramifications, the Sponsor recommends that before
you execute this Adoption Agreement, you contact your attorney or tax
advisor, if any.
(a) EMPLOYER:
Name and address of Employer if different than specified in Section 1
above.
This agreement and the corresponding provisions of the Plan and
Trust/Custodial Account Basic Plan Document #04 were adopted by the
Employer the 22 day of December , 1994.
Signed for the Employer by:
Title: Human Resources Officer
Signature: /s/ Kathryn M. Austin
The Employer understands that its failure to properly complete the
Adoption Agreement may result in disqualification of its Plan.
Employer's Reliance: The adopting Employer may not rely on an opinion
letter issued by the National Office of the Internal Revenue Service
as evidence that the Plan is qualified under Code Section 401. In
order to obtain reliance with respect to Plan qualification, the
Employer must apply to the appropriate Key District Office for a
determination letter.
This Adoption Agreement may only be used in conjunction with Basic
Plan Document #04.
29
Prototype Cash or
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(b) TRUSTEE:
Name of Trustee:
First Vermont Bank and Trust Company
The assets of the Fund shall be invested in accordance with paragraph
13.3 of the Basic Plan Document #04 as a Trust. As such, the
Employer's Plan as contained herein was accepted by the Trustee the
22 day of December, 1994.
Signed for the Trustee by:
First Vermont Bank and Trust Company
Title:
Signature: BY. /s/ Susan J. Klein
Susan J. Klein
Benefits Plan Officer
(c) CUSTODIAN:
Name of Custodian:
First Vermont Bank and Trust Company
The assets of the Fund shall be invested in accordance with paragraph
13.4 of the Basic Plan Document #04 as a Custodial Account. As such,
the Employer's Plan as contained herein was accepted by the Custodian
the ___day of___________, 19__.
Signed for the Custodian by:
Title:
Signature:
(d) SPONSOR:
The Employer's Agreement and the corresponding provisions of the Plan
and Trust/Custodial Account Basic Plan Document #04 were accepted by
the Sponsor the 22 day of December, 1994.
Signed for the Sponsor by:
Title: First Vermont Bank and Trust Company
Signature: By: /s/ Susan J. Klein
Susan J. Klein
Benefits Plan Officer
30
ATTACHMENT TO ADOPTION AGREEMENT
SECTION 3(A) COLLECTIVE OR COMMINGLED FUNDS
The following additional Collective or Commingled funds are made available by
the Trustee for investment as provided by the Plan and Trust Document:
FVBTCO Employee Benefit Short Term Income Fund
FVBTCO Employee Benefit Balanced Fund
LEASE
This agreement is made and entered into by and between the TOWN OF
BRIGHTON, a municipal entity with situs in the County of Essex and State of
Vermont, hereinafter referred to as Lessor, and COMMUNITY NATIONAL BANK, a
banking corporation organized and existing under and by virtue of the laws
of the United States of America and the State of Vermont, having an office
located in the Town of Brighton, County of Essex and State of Vermont,
hereinafter referred to as Lessee.
WITNESSETH:
1. Premises.
The Lessor has agreed to let and does hereby let to the Lessee, and
the Lessee has agreed to take and hereby does take from the Lessor, the
following described premises, viz:
Being that portion of the ground floor of the Railroad Station
building depicted on APPENDIX A attached hereto and incorporated
herein by reference, which are a portion of those lands and
premises conveyed to the Town of Brighton by deed of St. Lawrence
& Atlantic Railroad Company dated September 17, 1991, recorded in
Book 47 at Page 446-447 of the Brighton Land Records.
Subject premises shall be used by the Lessee only for the purpose of
conducting banking operations and such activities normally incident thereto.
2. Term and Rental Provisions.
This lease shall be for a term of twenty (20) years, commencing January
1, 1994, and ending at twelve o'clock midnight December 31, 2013.
3. Rent.
Annual rent during the term of this lease shall be in the amount of
Eighteen Thousand Dollars ($18,000.00) payable in equal monthly installments,
each installment in the amount of One Thousand Five Hundred Dollars ($1,500.00)
commencing January 1, 1994 and on the 1st day of each consecutive month
thereafter during said term.
4. Option to Renew.
Nothing in this agreement shall bind the Lessor or the Lessee to agree
to a renewal of this lease agreement. However, if the Lessor consents to lease
the space hereinabove described, the Lessee shall have the first option to
negotiate with the Town of Brighton for said space.
5. Heat, Utilities and Taxes.
The Lessor shall, at its expense, heat the demised premises and
maintain the heating system in an adequate manner at all times when heat is
needed. The Lessee shall be responsible for the payment of all other utilities
associated with the use of the demised premises, including, but not limited to,
electricity, telephone, water and sewer fees.
The Lessor and the Lessee shall share in the cost of snow removal.
Any real estate taxes assessed on the building in which the demised
premises are located shall be the responsibility of the Lessor. Any personal
property taxes on the personal property of the Lessee located within the demised
premises shall be the responsibility of the Lessee.
6. Maintenance and repairs.
The Lessor agrees to keep and maintain the Railroad Station, so-called,
in which the demised premises are located in good and sufficient repair, and
shall be responsible for all repairs, maintenance, and alterations to the
exterior of the premises hereby leased and demised, together with any interior
damage which may be occasioned by Lessor's failure to so maintain the premises.
The Lessee shall be responsible for the maintenance and repairs and alterations
to the interior of the premises hereby leased and demised. The Lessee shall be
responsible for the maintenance of the air conditioning system.
The Lessor further agrees to make all necessary extraordinary repairs
to the plumbing, heating and electrical systems within the demised premises,
provided that such repairs were not made necessary by the carelessness,
omission, neglect, or improper conduct of the Lessee. The Lessee agrees to
notify the Lessor of the necessity of such repairs as soon as possible.
For the purposes of the above written paragraph, "extraordinary
repairs" refers to and means a single repair or a replacement which involves a
cost of more than Five Hundred Dollars ($500.00), it being the intent and
agreement of the Lessor and the Lessee that the Lessee make all necessary minor
repairs (less than Five Hundred Dollars ($500.00)) at its sole expense. In the
event that the Lessee undertakes to repair the plumbing, heating or electrical
system, based on appropriate contractors' estimates or bids, and the cost
exceeds Five Hundred Dollars ($500.00), then the Lessee shall notify the Lessor
thereof prior to proceeding with work.
Any other provisions of this agreement notwithstanding any repairs
or modifications to the electrical system which are occasioned or necessitated
by the electrical demands of the Lessee's machinery or equipment shall be the
responsibility of the Lessee.
The Lessee shall not undertake any renovations involving structural
alterations of the demised premises without the written approval of the Lessor.
It is further agreed between the Lessor and the Lessee that if during
the term of this lease, the demised premises or the improvements thereon, shall
be destroyed by fire or the elements, or through any other cause, so as to
render the demised premises unfit for occupancy, or make it impossible to
conduct the business of the Lessee thereon, or to such an extent that they
cannot be repaired with reasonable diligence within thirty (30) days from the
happening of such event, then the Lessor may terminate this lease as of the date
of such event, and the Lessee shall immediately surrender the demised premises
and all interest therein to the Lessor and pay the rent only to the time of such
surrender; but if the demised premises can be restored within 30 days from the
happening of said event, then the Lessor agrees to repair and restore said
premises and this lease shall not end or terminate, but the monthly rent shall
be reduced in proportion to that portion of the demised premises which may be
occupied and used during the time required for said repair and restoration.
7. Insurance.
Insurance against liability for bodily injury and property damage, all
to be in amounts and in forms of insurance policies acceptable to the Lessor,
shall be provided by the Lessee. The Lessor shall bear no responsibility for
the insurance of personal property or fixtures of the Lessee located on the
demised premises.
8. Binding Effect.
This agreement shall supersede any previous agreements between the
parties hereto. This agreement shall be binding on the parties, their
successors and assigns.
9. Lessee's Right to Remove Personalty.
Upon termination of the agreement, Lessee shall have the right to
remove all of its personal property from the demised premises, including the
vault doors, night depository, safe deposit boxes and all other furnishings and
fixtures located within the demised premises.
10. Future Good Faith Dealings.
The parties acknowledge that this lease is for a substantial term and
that the rent is fixed. It is further acknowledged that the Lessee is providing
Lessor with long term financing of the improvements to the building of which the
demised premises is a part. In addition, the parties recognize that the
building has been newly renovated and that there is no reliable basis on which
to determine the costs of heating and maintenance or increases in those costs
beyond the control of the parties. The parties contemplate that the remaining
space in the building can be renovated and rented for an amount that will at
least cover the cost of those renovations and the maintenance and heating of the
building. Should this prove impossible in spite of the good faith efforts of
Lessor, the Lessee affirms its willingness to participate with and to assist
Lessor in the development of substantive proposals to assure that this under
taking remains productive and beneficial to both.
DATED AT BRIGHTON, Vermont this 6th day of January, 1994.
IN PRESENCE OF:
TOWN OF BRIGHTON SELECTBOARD
/s/ Lucille Stevens /s/ Francis Manning
Witness to all signatures Francis Manning, Chairman
/s/ Joel Cope /s/ John M. Allen
Witness to all signatures John Allen
/s/ Pauline Biron
Pauline Biron
STATE OF VERMONT
COUNTY OF ESSEX, SS. At Brighton this 6th day of January, 1994.
personally appeared Francis Manning, John Allen and Pauline Biron, Select
persons of the Town of Brighton, and they acknowledged this instrument to be
their free act and deed and the free act and deed of said municipality.
Before me: /s/ Lucille Stevens
NOTARY PUBLIC
DATED AT DERBY, this 15th day of March, 1994.
IN PRESENCE OF: COMMUNITY NATIONAL BANK
/s/ Kelly Paul By: /s/ Carmi M. Marsh
Witness Its duly authorized officer
STATE OF VERMONT
COUNTY OF ORLEANS, SS. At DERBY this 15th day of March, 1994, personally
appeared /s/ Carmi M. Marsh, duly authorized officer of COMMUNITY NATIONAL BANK,
and he acknowledged this instrument, by him sealed and subscribed, to be his
free act and deed, and the free act and deed of Said banking corporation.
Before me: /s/ Kelly Paul
NOTARY PUBLIC
June 15,1994
Mr. Steve Marsh
Community National Bank
Derby, Vt. 05829
Dear Steve:
Once again it's time to adjust our lease rate for the ensuing 3 year
lease period. (Actually 1 month late)
This lease period will be July 1, 1994 to June 30, 1997.
The formula states an average of the previous 3 years C.P.I. and the
currant C.N.B. commercial loan rate from a base of 12% set in 1985.
C.P.I - '91 3.1%
C.P.I.- '92 2.9%
C.P.I.- '93 2.7%
6/15/94 Loan Rate -11% -1.0%
7.7% divided by 4 = 1.925%
Applying the adjustment percentage of 1.925% to the currant square foot
rate of $12.94 makes the following changes:
(a) New square foot rate - $13.19
(b) New rate applied to 2409.75 square feet equals $31,782.42 per year
(c) New monthly lease rent $2,648.54 (effective July l,'94)
Per our conversation; there will be NO rent or lease expense relative
to the A.T.M. area/structure for the term of this lease.
If these figures and the A.T.M. memo above meet with your approval, I
feel we are set for another 3 years.
The original 15 year lease term; with modifications; runs thru May 31,
2000.
Yours truly;
/s/ Dean M. Comstock
Dean M. Comstock
DMC/sd
L E A S E
KNOW ALL MEN BY THESE PRESENTS, that we, Dean M. Comstock and Barbara W.
Comstock, husband and wife of Barton, in the County of Orleans and State of
Vermont, hereinafter called the Lessors; and It, The Community National Bank, a
banking corporation having its principal place of business at Derby, in the
County of Orleans and State of Vermont, hereinafter called the Lessee, do hereby
stipulate and agree as follows:
WITNESSETH
1. That for and in consideration of the mutual undertakings and
agreements of the parties hereto as hereinafter contained and set forth, Lessors
hereby agree to lease to the Lessee, and Lessee hereby agrees to take from the
Lessors, the following described premises situated in Barton Village, Town of
Barton, County of Orleans, and State of Vermont, viz:
It being a portion of the premises situated on Church Street in Barton
Village, commonly known as the Phoenix Block premises, which premises are
further described as being all and the whole of the same land and premises
conveyed by Warranty Deed dated August 14, 1984 and recorded in Book 69, Pages
303-304 of Barton Land Records from J. Robert Audette, Julian J. Richards, and
Kimball Enterprises, Inc. to Dean M. Comstock and Barbara W. Comstock, the
portion thereof being hereby leased and demised being the first floor of said
building, containing 1,884.75 square feet, more or less, together with the
basement area located under that portion of the building closest to Church
Street, consisting of 720 square feet, more or less; together with the right on
the part of the Lessee to utilize in common with the Lessor hereof the parking
lot and land and premises utilized as access to said building said right to run
to the benefit of the Lessee, its employees, agents, customers and business
invitees.
2. The term of this Lease shall be for a period of fifteen years,
commencing June 1, 1985 and terminating May 31, 2000.
3. The Lessee hereof shall pay to the Lessors hereof the monthly
rental in the amount of one Thousand Nine Hundred Sixty-Three and 28/100ths
Dollars ($1,963.28), which monthly rental shall be due and payable on or before
the first day of June, 1985 and on or before the first day of each and every
succeeding month thereafter during the term of this Lease, said amount to be
adjusted as hereinafter set forth.
4. The parties hereto acknowledge that the land and premises the
subject of this instrument are presently undergoing extensive renovations, with
construction expected to be completed prior to the commencement of the term of
this Lease. However, in the event the land and premises shall not be ready for
occupancy on June 1, 1985, then and in that event, shall no rental payments
hereunder be due from the Lessee hereof to the Lessor hereof until such
construction shall have been completed and the premise made ready for occupancy.
5. The amount of the rental payments called for hereunder shall be
adjusted on June 1, 1988, and on June 1 of each and every succeeding three year
period during the term hereof in accordance with the following formula:
The newly established monthly rental shall be that amount of money
representing the prior monthly rental, plus or minus that additional percentage
of the monthly rental then in effect which percentage shall. be the average of
the change in the consumer price index over the preceding three year period of
time, and the percentage change, from a base of twelve percent (12%) of the
Community National Bank's commercial loan rate in effect at the time of
adjustment.
6. The Lessee hereof upon the termination of this Lease, shall have
the option of renewing the same under the same terms and conditions for a period
of ten additional years.
7. The Lessors hereof hereby grant unto the Lessee hereof a Right of
First Refusal to purchase the land and premises of which the land and premises
hereby leased and demised constitute a portion, in the event the Lessors shall,
during the term of this Lease or any renewal thereof, desire to sell the same,
at such price and according to such terms as the Lessors shall have an offer to
purchase the same from another bona fide purchaser. The Lessees shall have 15
days from the delivery of such offer by the Lessor in which to exercise such
Right of First Refusal.
8. The Lessee hereof shall have the right during the term hereof to
sublet the land and premises hereby leased and demised, or any portion hereof,
subject only to the approval of Lessors hereof which approval shall not be
reasonably withheld. The Lessee hereof, however, hereby covenants and agrees
that it shall not sublease the land and premises the subject of this agreement
for utilization as a grocery store in any event. No prior approval of the
Lessors hereof shall be required in the event the Lessee hereof shall desire to
assign this Lease to any subsidiary or parent corporation of the Lessee.
9. During the term hereof, the Lessors hereby convenant and agree that
they shall maintain sufficient fire and casualty insurance on the structure
hereby leased and demised. The Lessee hereof shall be responsible for maintain-
ing fire and casualty insurance on any personal property owned by the Lessee
located within the land and premises leased and demised, and the Lessee hereof
shall maintain tenant liability insurance upon the land and premises hereby
leased and demised.
10. The Lessor hereof covenants and agrees that they shall install
central air conditioning and vacuum system to service that portion of the
building hereby leased and demised; and shall install quarry tile, or facsimile
suitable to the Lessee, in both entrance foyers and the lobby area, and shall
install carpeting in the offices and basement board room of the building located
upon the land and premises hereby leased and demised. Any replacement of the
carpeting during the term of this Lease or any renewal thereof shall be the
responsibility and obligation of the Lessee hereof.
11. The Lessors hereof shall be responsible for snow removal, rubbish
removal, building maintenance and ground maintenance; and shall incur all
expenses created by any exterior wall repair and remodelling expenses necessary
and occasioned at the Lessee's current location in the C & C Supermarket
Building, so-called; and shall cause to be installed at their expense an
appropriate standard in the front of the Church Street end of the land and
premises hereby leased and demised suitable for receiving an illuminated sign of
the Lessee.
12. The Lessee hereof shall be responsible for payment of all
electric, water, sewer and other utility expenses during the term of this Lease;
the cost of removing vaults and teller stations from their present location
within the C & C Supermarket Building, so-called; for any and all janitorial
services; for the installation of a flag pole in the rotary; should they so
desire, for the removal of the illuminated bank sign from its present location
and the installation of the bank sign in the new location.
13. The Lessor hereof shall be responsible for the payment of all real
estate taxes assessed against the land and premises the subject of this Lease
during the term hereof; the Lessees hereof shall be responsible for the payment
of all personal property taxes assessed against the personal property of the
Lessee during the term of this Lease.
14. The parties hereto hereby covenant and agree that the execution of
this instrument shall serve as a termination of the existing Lease between the
parties, at such time as the Lessee hereof shall be able to occupy the land and
premises the subject of this agreement.
15. In the event the premises hereby leased and demised shall be
damaged by fire, the elements, unavoidable accident or other casualty but are
not thereby rendered untenantable in whole or in part, Lessors shall at their
own expense cause such damage to be repaired and the rent shall be abated. If
by reason of such occurrence the premises shall be rendered untenantable in
whole or in part, the Lessors at their own expense may cause such damage to be
repaired, or at their option, terminate this Lease and the rent meanwhile shall
abate until the leased premises have been restored and rendered tenantable.
Nothing herein contained shall obligate the Lessors to make any such repairs
which may have been caused by such casualty or loss, but in the event such
repairs are not made, then and in that event, shall the Lessee hereof have the
option of terminating this Lease and their obligation here under shall cease.
In the event, a casualty loss as described herein affects not only the premises
leased by the Lessees but also the premises owned and operated by the Lessor
adjacent thereto and because of said loss, the Lessors determine to rebuild
their premises, then and in that event, Lessors agree that they will construct
for the benefit of the Lessee, premises similar to those described in this
Agreement for Lessee's use for the remainder of the initial or any renewal term
hereof.
16. In the event that any portion of the premises hereby leased and
demised shall be acquired or condemned by eminent domain and in the event that
such partial taking or condemnation shall render the leased premises unsuitable
for the business operation of the Lessee, then the terms of this Lease shall
cease and terminate as of the date of title vesting in such proceedings. In the
event of a partial taking or condemnation which is not extensive enough to
render the premises unsuitable for the business of the Lessee, this Lease shall
continue in full force and effect but the rent shall be abated in proportion to
the amount of the property taken or condemned thereby.
This agreement shall be binding upon the heirs, administrators and
assigns of the parties hereto.
IN WITNESS WHEREOF, the parties hereunto affix their hands and seals at
Barton, Vermont, this 28 day of March, 1985.
IN THE PRESENCE OF:
/s/ Dean M. Comstock
Dean M. Comstock, Lessor
/s/ Bonnie J. Currier
/s/ Barbara W. Comstock
/s/ Dolores J. Pion Barbara W. Comstock, Lessor
Two witnesses to signatures
of Dean M. Comstock and
Barbara W. Comstock, Lessors
THE COMMUNITY NATIONAL BANK
/s/ Jane P. Quintal
/s/ Christianne Bumps By: /s/ Stephen P. Marsh
Two witnesses to signature Its Agent, duly authorized
of duly authorized agent of
The Community National Bank
STATE OF VERMONT
ORLEANS COUNTY, SS.
At Barton, in said County and State, this 28th day of March, A.D.,
1985, Dean M. Comstock and Barbara W. Comstock personally appeared and they
acknowledged this instrument by them sealed and subscribed to be their free act
and deed.
Before Me: /s/ Bonnie J. Currier
Notary Public
STATE OF VERMONT
ORLEANS COUNTY, SS.
At Derby, in said County and State, this 1st day of April, A.D., 1985,
Stephen P. Marsh, duly authorized agent of The Community National Bank,
personally appeared and he acknowledged this instrument by him sealed and
subscribed to be free act and deed and the free act and deed of The Community
National Bank.
Before Me: /s/ Jane P. Quintal
Notary Public
LEASE
This Lease is made and entered into on the date hereinafter set forth,
by and between the ROGER F. AMES, of the City of Newport, County of Orleans and
State of Vermont, hereinafter called the Landlord, and COMMUNITY NATIONAL BANK,
a banking corporation organized and existing under and by virtue of the laws of
the United States and the State of Vermont with its principal place of business
in the Town of Derby, County of Orleans and State of Vermont, hereinafter called
the Tenant.
WITNESSETH:
1. LEASED PREMISES.
The Landlord has agreed to let and hereby does let to the Tenant and
the Tenant has agreed to take and hereby does take from the Landlord, the
following described premises:
Nine hundred seventy-two (972) square feet of commercial space located
on the first floor of a building owned by the Landlord and commonly known as the
RJ's Friendly Market situated at 84 Main Street in City of Newport. The leased
premises shall also include certain rights and easements as follows:
(a) The right of ingress and egress to and from said leased premises
for said Tenant and all employees, business invitees and persons properly in
attendance to or upon the leased premises.
(b) The right of the Tenant and all employees, business invitees and
persons properly in attendance to or upon said leased premises to have access to
said premises in common with the Landlord through Landlord's store premises
during regular business hours.
(c) The right of the Tenant and its employees, business invitees and
persons properly in attendance to or upon the leased premises to have and use in
common with the Landlord parking spaces and parking privileges on lands of the
Landlord adjacent to the leased premises all under such general rules and
regulations as shall from time to time be prescribed by the Landlord for the
regular and most feasible utilization of such parking facilities. Provided,
however, that Tenant's employees shall not be permitted to park in Landlord's
parking lot.
The above described lands and premises are subject to prior mortgages
of Fedeles Partnership, Community National Bank, and Fleet Bank (F.D.I.C).
2. TERM
This lease is for and during the term of three (3) years which term
will begin on January 1, 1995 at 12:01 A.M. and end at mid-night on December 31,
1997.
3. RENT and RENT ADJUSTMENTS.
The Tenant agrees to pay to the Landlord a monthly rent of One Thousand
Two Hundred Fifty Dollars ($1,250.00) beginning on January 1, 1995 and
continuing on the first day of each and every month thereafter during the
initial term. Rent during any renewal term shall be at a rate to be agreed upon
by the parties.
4. DEFAULT.
If the leased premises shall be deserted or abandoned or if proceedings
are commenced against the Tenant in any court under a bankruptcy act or
insolvency act for the appointment of a trustee or receiver of the Tenant's
property, or if there shall be a default in the payment of the rent or any part
thereof for more than ten (10) days after receipt of written notice of such
default by the Landlord, or if there shall be a default in the performance of
any other covenant, agreement, condition, rule or regulation herein contained or
hereafter established, on the part of the Tenant, for more than thirty (30)
days after written notice of such default by the Landlord, this Lease, if the
Landlord so elects, shall thereupon become null and void and the Landlord shall
have the right to re-enter or repossess the premises.
5. CASUALTY INSURANCE.
The Landlord shall keep the building in which the leased premises are
located adequately insured against loss or damage by fire or other casualty and
shall not hold the Tenant responsible or liable for any damage or destruction
resulting from fire or other casualty or through any other cause not
attributable to the Tenant. The Tenant shall keep the contents of the leased
premises which are owned by the Tenant or its employees or invitees, insured
against loss and damage by fire, theft or other casualty, and shall save
harmless the Landlord from any claims for such losses.
6. LIABILITY INSURANCE OF TENANT.
The Tenant shall maintain in full force and effect general public
liability insurance for the leased premises in the minimum amount of $300,000
which shall include the Landlord as an additional insured and a certificate of
such insurance shall be exhibited to the Landlord upon its request. In the
event the Tenant fails to maintain such insurance at anytime during the term of
this Lease, the Landlord shall have the right to procure such insurance on
behalf of the Tenant and add the cost thereof to the rent provided for herein.
7. REAL ESTATE TAXES.
Landlord shall pay the real estate taxes, if any, assessed against the
leased premises by the City of Newport and Tenant shall pay all personal
property taxes, if any, assessed against the Tenant's personal property located
on said premises by the City of Newport.
8. REPAIRS AND MAINTENANCE.
The Landlord shall be responsible for all ordinary and necessary
repairs required to keep the building in which the leased premises are located
and its appurtenances in good working order and condition. The Landlord shall
also be responsible for the customary and ordinary repair and maintenance of the
common areas including the parking lot and walkways.
The Tenant shall have the right to redecorate at its expense that
portion of the leased premises occupied exclusively by the Tenant including the
right to paint, paper and carpet said areas.
9. IMPROVEMENTS AND REMOVAL.
No improvements or fixtures shall be constructed, place upon the leased
premises by the Tenant without the prior written consent of the Landlord. In
the event the Landlord consents to any improvements or fixtures placed upon the
leased premises by the Tenant, said improvements and fixtures may be removed by
the Tenant upon the expiration of the term of this lease, provided, however,
that any damages to the leased premises caused by such removal shall be paid by
the Tenant to the Landlord.
10. SUBLETTING OR ASSIGNMENT.
The Tenant shall not have the right to sublet, mortgage or assign this
Lease, without the prior written consent of the Landlord.
11. HEAT, LIGHT, POWER, TRASH REMOVAL, ETC.
All heat, light and power as well as trash removal and janitorial
services furnished to the leased premises shall be paid by the Tenant at its
expense.
12. PERMITS AND LICENSES.
The Tenant shall, at its expense, procure each and every permit,
license, certificate or other authorization and any renewals, extensions or
continuances of the same, required in connection with the lawful and proper use
of the demised premises. Neither a failure on the part of the Tenant to procure
such permit, license, certificate or other authorization, nor the revocation of
the same, shall in any way affect the liability of the Tenant for the payment of
the rent herein reserved or the performance or observance of any of the
covenants or conditions herein contained on the Tenant's part to be performed
and observed.
13. DESTRUCTION OF PREMISES.
If the demised premises or any part thereof, during the term of this
Lease or any extension or renewal thereof, should be destroyed or damaged by
fire or other casualty, then the rent hereinbefore reserved, or a fair and just
proportion thereof, according to the nature and extent of the damages sustained,
shall be suspended or abated until the demised premises shall have been rebuilt
and put in proper condition by the Landlord; or these presents shall, at the
election of either the Landlord or the Tenant, upon written notice thereof to be
given within thirty (30) days after such damage or destruction, thereby be
determined and ended.
14. WAIVER OF SUBROGATION BY LANDLORD
Landlord waives as against Tenant and covenants and agrees to hold
Tenant harmless from all claims by Landlord or any person claiming by, through
or under Landlord, by way of subrogation or otherwise, arising from the
destruction of, loss of or damage to the demised premises or any part thereof,
whether or not caused by the negligence of the Tenant, its agents, employees,
servants, invitees, or guests, to the extent that such destruction, loss or
damage is covered by insurance carried by Landlord in order that no insurance
carrier shall have a claim by way of subrogation against Tenant for such damage,
destruction or loss, unless the same is caused by the willful misconduct of
Tenant.
15. ACCESS BY LANDLORD
Landlord shall have access to the leased premises during reasonable
hours for the purpose of examining and inspecting the demised premises, provided
such access does not unnecessarily interfere with the Tenant's use of said
premises.
16. USE OF PREMISES
The leased premises are to be used by the Tenant for a commercial bank
branch and if said premises are used for any other purpose by the Tenant, this
Lease may be terminated at the option of the Landlord.
17. BINDING EFFECT
This Agreement shall be binding upon and inure to the benefit of the
respective heirs, personal representatives, successors and assigns of the
parties hereto.
18. NOTICES
Whenever during the term of this Agreement is shall be required or
permitted that notice of demand be given or served by either party to this
Agreement to or on the other, such notice or demand shall be given or served and
shall not be deemed to have been duly given or served unless in writing and
forwarded by regular mail, addressed as follows:
TO LANDLORD: ROGER F. AMES
7 Helene Street
Newport, Vermont 05855
TO TENANT: COMMUNITY NATIONAL BANK
BOX 259
Derby, Vermont 05829
Attn: Stephen Marsh
19. ENTIRE AGREEMENT.
This Agreement constitutes the complete agreement between the parties
and can not be amended or changed without the written consent of all parties.
IN WITNESS WHEREOF, we hereunto set our hands and seals this 30th day
of November, 1994.
IN PRESENCE OF:
/s/ Cynthia Gardyne /s/ Roger F. Ames
Witness to signature Roger F. Ames, Landlord
/s/ Christianne Bumps
Witness to signature
STATE OF VERMONT
ORLEANS COUNTY, SS.
At Newport, this 30th day of November, 1994, personally appeared ROGER
F. AMES, and he acknowledged this instrument by him sealed and subscribed, to be
his free act and deed.
Before me, /s/ Christianne Bumps
NOTARY PUBLIC
IN WITNESS WHEREOF, COMMUNITY NATIONAL BANK causes its hand and seal to
be hereunto affixed by the hand of its duly authorized officer, this 30th day of
November, 1994.
COMMUNITY NATIONAL BANK,
IN PRESENCE OF:
By, /s/ Stephen P. Marsh
/s/ Cynthia Gardyne Duly Authorized Agent
Witness to signature Tenant
/s/ Christianne Bumps
Witness to signature
STATE OF VERMONT
ORLEANS COUNTY, SS.
At Newport, this 30th day of November, 1994, personally appeared
Stephen P. Marsh, duly authorized Officer of COMMUNITY NATIONAL BANK and he
acknowledged this instrument by him sealed and subscribed, to be his free act
and deed and the free act and deed of said Bank.
Before me, /s/ Christianne Bumps
NOTARY PUBLIC
LEASE AGREEMENT
between
MURPHY REALTY COMPANY, INC.
(Landlord)
and
COMMUNITY NATIONAL BANK
(Tenant)
April 27, 1995
LEASE AGREEMENT
(SHOPPING CENTER SPACE)
SUMMARY PAGE
1. LANDLORD: Murphy Realty Company, Inc.
2. TENANT: Community National Bank
3. BUILDING: Shopping Center, Route 5, St. Johnsbury, Vermont
4. PREMISES: 2,394 Square Feet of Interior Space, and Exterior Drive-Up Window
5. TERM: Ten (10) Years from the Commencement Date, with Two
Renewal options of Five (5) Years Each
6. COMMENCEMENT DATE: The latest of (i) June 20, 1995, (ii) substantial
completion of premises, (iii) the date Price
Chopper opens for business, or (iv) fifteen (15)
days following Tenant's receipt of regulatory
approval from the Comptroller of the Currency
7. MONTHLY BASE RENT: $4,009.17*
8. ANNUAL BASE RENT: $48,110.00*
9. TENANT'S GROSS INTERIOR RENTABLE FLOOR AREA: 2,394 Square Feet
10. GROSS RENTABLE INTERIOR FLOOR AREA OF BUILDING: 47,054 Square Feet
11. TENANT'S PERCENTAGE SHARE OF BUILDING: 5%
[FN]
<F*> Tenant shall also pay as additional rent its percentage share of
property taxes assessed and levied against the real estate, as
described in ARTICLE II of this Lease.
INDEX
PAGE
ARTICLE I. PREMISES 1
1.01 Demised Premises 1
1.02 Parking Lot 1
1.03 Common Areas; Limitations 2
1.04 Removal of Movable Trade Fixtures 2
1.05 Shared Wall with Price Chopper 2
ARTICLE II. TERM AND RENT 3
2.01 Original Term 3
2.02 Annual Rent 3
2.03 Real Estate Taxes 3
2.04 Personal Property Taxes 4
2.05 Renewal Options and Rent 4
2.06 Voluntary Early Termination 5
2.07 Regulatory Approval 5
2.08 Abandonment of Lease Transaction 6
2.09 Effect of Termination or Abandonment 6
ARTICLE III. CONSTRUCTION AND POSSESSION OF PREMISES 6
3.01 Shopping Center Construction; Tenant's Work 6
3.02 Substantial Completion 7
3.03 Permits, Approvals, Etc. 7
3.04 Compliance with Lease 7
ARTICLE IV. USE OF PREMISES 7
4.01 Use of Premises 7
4.02 Negative Covenants 8
ARTICLE V. LANLORD'S COVENANTS 8
5.01 Landlord's Obligation to Repair 8
5.02 Maintenance and Repair of Common Areas 9
ARTICLE VI. TENANT'S COVENANTS 9
6.01 Utilities 9
6.02 Tenant's Obligation to Repair 9
6.03 Signs 10
6.04 Substantial Repairs or Renovations;
Landlord Consent 11
6.05 Tenant's Property Insurance 11
6.06 Rules and Regulations 11
6.07 Security and Fire Prevention Devices 11
PAGE
ARTICLE VII. INDEMNITY AND INSURANCE 11
7.01 Tenant's Indemnification 12
7.02 Tenant's Liability Insurance 12
7.03 Landlord's Indemnification 12
7.04 Landlord's Insurance 13
ARTICLE VIII. ACCESS TO PREMISES 13
ARTICLE IX. FIRE, FLOOD AND OTHER CASUALTY 13
9.01 Damage or Destruction 13
9.02 Substantial Destruction 14
ARTICLE X. EMINENT DOMAIN 14
10.01 Entire Premises 14
10.02 Portion of Premises 14
10.03 Rights of Parties Inter Se 15
ARTICLE XI. TENANT'S DEFAULT 15
11.01 Events of Default; Remedies 15
11.02 Payment of Remaining Rent 16
ARTICLE XII. SUBORDINATION TO MORTGAGES, ETC 16
12.01 Subordination 16
12.02 Non-Disturbance 17
12.03 Certificates 17
ARTICLE XIII. ASSIGNMENT 17
13.01 Assignment, etc. Prohibited 17
13.02 Tenant to Remain Liable 17
ARTICLE XIV. HOLDING OVER 18
ARTICLE XV. WAIVERS AND CONSENTS 18
15.01 Waivers and Consents 18
15.02 Remedies 18
ARTICLE XVI. QUIET ENJOYMENT 19
ARTICLE XVII. FAILURE OF PERFORMANCE 19
17.01 Tenant's Failure 19
17.02 Landlord's Failure 20
17.03 Payment of Certain Expenses 20
PAGE
ARTICLE XVIII. HAZARDOUS SUBSTANCES 20
18.01 Definitions 20
18.02 Restrictions 20
18.03 Discharge 21
18.04 Copies of Notices 21
18.05 Site Assessments 21
18.06 Similar Covenants 22
18.07 Bulk Storage Tanks 22
18.08 Indemnification by Tenant 22
18.09 Indemnification by Landlord 22
ARTICLE XIX. MISCELLANEOUS 23
19.01 Binding Effect 23
19.02 Severability 23
19.03 Entire Agreement; Modification 23
19.04 Delays 23
19.05 Notices 23
19.06 Section Headings 24
19.07 Waiver of Subrogation 24
19.08 Costs 24
19.09 Brokers 24
19.10 Short Form Lease 24
LEASE dated as of April 27, 1995, between Murphy Realty Company, Inc.,
a Vermont corporation with offices at 20 Hastings Street, St. Johnsbury,
Vermont, as landlord (hereinafter called "Landlord"), and Community National
Bank, a national banking association with principal offices at Route 5, Derby,
Vermont, as tenant (hereinafter called "Tenant").
ARTICLE I. PREMISES
1.01 Demised Premises. In consideration of the rents, agreements and
conditions herein reserved and contained on the part of Tenant to be paid,
performed and observed, Landlord does hereby demise and lease to Tenant, or the
term hereinafter set forth, the premises hereinafter described (the "demised
premises") within the shopping center hereinafter described ("the Shopping
Center") on the westerly side of U.S. Route #5 in St. Johnsbury, Caledonia
County, Vermont, together with an area adjacent to the building for a drive-up
banking window (the "Drive-Up Window") and an area for loading and unloading
adjacent to each service door of the demised premises. The Shopping Center
consists of the "Land (and all improvements that may from time to time be
erected thereon) represented by the area outlined by a bold line upon a certain
plan ("the lease plan") attached to this Lease and marked Exhibit A, which land
is also described in Exhibit A-1 attached hereto. The demised premises consist
of (i) that portion of a one-story shopping center building designated as
"Community National Bank" on Exhibit A-2, and containing approximately two
thousand three hundred ninety-four (2,394) square feet of ground floor area
having a frontage and width of 90 feet and a depth of 25 feet plus an entrance
vestibule of approximately 12 feet by 12 feet, (ii) an area adjacent to the
north exterior wall of the demised premises, approximately 12 feet by 20 feet,
for a Drive-Up Window, and (iii) the land thereunder.
1.02 Parking Lot. Landlord agrees that throughout the term of this
Lease, there shall be parking spaces for automobiles in the common areas of the
Shopping Center for use by Tenant, its employees, agents and invitees in common
with the tenant of the Food Store premises in the Shopping Center and its
employees, agents and invitees. Landlord agrees that except for causes beyond
the reasonable control of Landlord, there will be reasonable and adequate access
from U.S. Route 5 to the parking lot, the Drive-up Window and all exterior doors
of the demised premises. Tenant shall, by agreement with the tenant of the
adjoining premises in the Shopping Center, the Price Chopper Operating Co.
("Price Chopper") , obtain Price Chopper's acknowledgement of Tenant's right to
use the Shopping Center parking lot in common with Price Chopper. Landlord
agrees that, if for any reason the Landlord's lease with Price Chopper is
terminated, at Tenant's request Landlord will provide Tenant with written
assurances of Tenant's continued right to use the parking lot and Landlord shall
make appropriate provisions in any lease with a subsequent tenant of all or a
portion of the Price Chopper premises acknowledging Tenant's rights to use the
parking lot in common with such subsequent tenant.
1.03 Common Areas; Limitations. Tenant, its agents, employees and
invitees shall have the right to use, in common with all other tenants of the
Shopping Center and their respective agents, employees and invitees, all parking
areas, driveways and footways of the Shopping Center, except only that (a) the
area consisting of the Drive-Up Window and the area of the parking lot
designated on Exhibit A for ingress and egress to and from the Drive-Up Window
and shall be available for the exclusive use of Tenant, its employees, agents
and business invitees, (b) the walkway area adjacent to Tenant's premises may
not be used by Landlord for the storage or display of merchandise for sale or
other property, and (c) adjacent to each service door of any leased premises a
reasonable area may be reserved for the exclusive use of said premises for
loading and unloading.
1.04 Removal of Movable Trade Fixtures. Whether or not affixed to the
demised premises, signs and other movable trade fixtures installed by Tenant at
Tenant's own expense, and all items of Tenant's personal property, shall not be
deemed part of the demised premises and may be removed by Tenant at any time or
times during the term of this Lease or upon the termination of this Lease;
provided that Tenant shall not then be in default in the performance or
observance of any material term of this Lease and provided further that all
damage arising from such removal shall be promptly repaired by Tenant. Movable
trade fixtures shall include, without limitation, trade fixtures and other
installations not affixed to the realty and trade fixtures and other
installations affixed by nails, screws or similar means, and shall include any
vault(s), safes, night depositories, computer equipment, drive-up window
components, teller cages, automated teller machines, security systems,
telephones and related equipment.
1.05 Shared Wall with Price Chopper. (a) Tenant has agreed with Price
Chopper that a door shall be constructed in the common wall separating Tenant's
and Price Chopper's space to permit interior access by the public between the
Supermarket and the bank premises. Landlord consents to such provisions for
interior access, and agrees that, if Landlord's lease with Price Chopper is
terminated for any reason, any lease with a subsequent tenant of all or a
portion of the Supermarket premises will contain a provision granting Tenant the
right, at its own election and expense, to retain such interior access, or to
terminate such access and return the wall to a standard wall.
(b) In the event this Lease is terminated by Tenant or by Landlord for
any reason in accordance with the terms of this Lease, or Tenant fails to
exercise any renewal option as set forth and in the manner provided in Section
2.05, Tenant will, upon Landlord's request and at Tenant's own cost and expense,
restore the common wall separating the bank premises from the adjoining premises
to a standard wall.
ARTICLE II. TERM AND RENT
2.01 Original Term. The original term of this Lease shall be for a
period of ten (10) years commencing upon the latest to occur of (a) June 20,
1995; (b) the date of substantial completion of Tenant's Work, as defined in
Section 3.01; (c) the date the Price Chopper Supermarket opens to the public for
business in the Shopping Center; and (d) a date that is fifteen (15) calendar
days following the receipt by Tenant of the regulatory approval referred to in
Section 2.07 (or such earlier date following receipt of such approval as
Landlord and Tenant may agree upon) . In the event that the commencement date
falls on a day other than the first day of a month, the term of this Lease shall
be extended by the number of days between the commencement date and the last day
of the month in which the commencement date falls, so that the term of the Lease
shall expire on the last day of a month and the rent for such partial month
shall be prorated, based on the annual rate specified in Section 2.02.
2.02 Annual Rent. Tenant agrees to pay Landlord rent at the rate of
Forty-Eight Thousand One Hundred Ten Dollars ($48,110.00) per year during the
original term hereof and during the renewal term(s), if any, referred to in
Section 2.05. All such rent shall be payable in equal monthly installments of
one-twelfth thereof, in advance, on the first day of each calendar month during
the original term. Checks for rent payments shall be made payable to Murphy
Realty Company, Inc. and sent to 20 Hastings Street, St. Johnsbury, VT 05819 via
first class mail or hand delivery.
2.03 Real Estate Taxes. (a) Landlord and Tenant shall use their best
reasonable efforts to have the Town of St. Johnsbury separately assess the
demised premises for local real estate tax purposes. If successful, Tenant
shall pay as additional rent the real estate taxes assessed on the demised
premises for each tax year. In the event Landlord and Tenant are not successful
in obtaining the assessment of the demised premises separately, Tenant shall pay
to Landlord, as additional rent its prorated portion of the real estate taxes
upon the demised premises for each tax year (or portion of a tax year) during
the term of this Lease. Computation of any prorated real estate taxes for any
partial year shall be on a per diem basis. If there shall be more than one
taxing authority, the real estate taxes for any period shall be the sum of the
real estate taxes for said period attributable to each taxing authority. Real
estate taxes upon the demised premises shall be equal to the product of the real
estate taxes upon the land and buildings of the Shopping Center multiplied by
Tenant's Fraction (as hereinafter defined). Tenant's Fraction shall be a
fraction the numerator of which is the number of square feet of ground floor
area in the demised premises (2,394 square feet) and the denominator of which is
the number of square feet of ground floor area in the entire shopping center
building (including the demised premises) (approximately 47,054 square feet), as
shown on the attached Exhibit A. Whether or not the demised premises are
separately assessed, the Tenant's share of the real estate taxes assessed
against the common area and the land comprising the Shopping Center shall be
equal to the product of the real estate taxes assessed upon the common area and
the land comprising the Shopping Center multiplied by the Tenant's fraction.
Landlord shall give to Tenant a copy of each tax bill received by Landlord for
the Shopping Center, together with a computation showing Tenant's share thereof
as above provided. Tenant shall pay to Landlord Tenant's portion of the real
estate taxes upon the demised premises not separately assessed to Tenant no
later than seven (7) days prior to the due date(s) therefor for any tax year.
Tenant shall pay promptly to the appropriate taxing authority on or before the
due date therefor all property taxes separately assessed to Tenant against the
demised premises, provided, however, that Tenant reserves its right to protest
or appeal any such assessment or tax appraisal in accordance with applicable
provisions of law.
(b) In the event of any abatements, refunds or rebates of the real
estate taxes upon the Shopping Center, an appropriate adjustment shall be made
between Landlord and Tenant to take into account Tenant's prorata share of such
abatements, refunds or rebates, less all reasonable costs of securing the same.
Furthermore, an equitable adjustment shall be made in the event of any change in
the method or system of taxation from that which is now applicable, including
without limitation, any change in the taxing authorities or in the dates and
periods for which such taxes are levied.
2.04 Personal Property Taxes. Tenant shall pay all taxes upon its
personal property in or upon the demised premises and shall not be liable for
any portion of such taxes on personal property of Landlord or any other tenant.
2.05 Renewal Options and Rent. (a) Tenant shall have the option of
extending the term of this Lease for two (2) consecutive terms of five (5) years
each, upon all of the terms and conditions of this Lease, including the
provisions of Section 2.02 relating to the amount of rent. Tenant may exercise
its renewal option by furnishing written notice to the Landlord at least two
hundred seventy (270) days before the expiration of the original term, or
renewal term, as the case may be.
(b) Tenant may exercise a renewal option under this Lease only if
Tenant is not then in default in the performance or observance of any material
term or condition of this Lease. Following the exercise of a renewal option by
Tenant, all references in this Lease to the term hereof, or expressions of
similar import, shall be deemed to refer to the term as so extended.
2.06 Voluntary Early Termination. (a) In addition to any other
termination rights Tenant may have under this Lease, so long as Tenant is not
then in default under any material provision of this Lease, Tenant shall have
the right to terminate this Lease and quit the demised premises for any reason
prior to expiration of the original term (or any renewal term, as the case may
be) upon at least sixty days prior written notice to Landlord. In the event of
any such termination Tenant (i) shall continue to pay to Landlord, when due,
rent and Tenant's share of real estate taxes and common area maintenance
expenses, in the same manner provided for in Sections 2.02, 2.03 and 5.02,
subject, however, to the Landlord's obligation to mitigate damages to the same
extent described in Section 11.02; and (ii) may remove its trade fixtures and
other property from the demised premises as contemplated in Section 1. 04;
(b) Notwithstanding anything herein to the contrary, if during the
term of this Lease (or any renewal term) (A) the Price Chopper Supermarket shall
(1) cease to conduct a grocery store business at the Food Store premises in the
Shopping Center or (2) suspend the conduct of such business for a period of one
year, whether or not it intends to resume such business operations in the
future, and (B) Landlord shall have failed, on or before the first anniversary
of the cessation or suspension of the Price Chopper's business in the Shopping
center, to re-let at least 20,000 square feet of interior floor area to one or
more suitable retail seller(s) of goods (as defined) having a reasonably high
daily volume of customer traffic and which seller(s) are open for business, at a
minimum, during ordinary business days and hours, then Tenant shall have the
right, at Tenant's own election to terminate this Lease, without penalty, upon
at least ninety (90) days prior written notice to Landlord. A subsequent tenant
will be deemed a "suitable retail seller of goods" within the meaning of this
section if such tenant proposes to engage in a retail operation (other than a
banking business) of a type consistent with the businesses generally conducted
at shopping centers of comparable size in Northern New England.
2.07 Regulatory Approval. The parties acknowledge that under national
banking laws Tenant requires the prior approval of the Comptroller of the
currency in order to establish and operate a branch office at the demised
premises. Tenant undertakes to use its best efforts to obtain such approval as
expeditiously as reasonably possible; provided, however that this covenant shall
not be construed to require Tenant to agree to any conditions or limitations to
such regulatory approval that it reasonably believes would be unduly burdensome
to it.
2.08 Abandonment of Lease Transaction. In the event the Tenant's
application to the Comptroller of the Currency for approval of its branch office
in the Shopping Center is denied, or such approval has not been received, on or
before July 31, 1995, Tenant may elect to abandon this lease transaction, upon
thirty (30) days prior written notice to Landlord. If Tenant abandons this
lease transaction pursuant to the preceding sentence, Landlord may elect to
purchase from Tenant, at Tenant's actual cost, all site work and building
construction completed by Tenant up to the date of such abandonment. If
Landlord does not elect to purchase, Tenant shall restore the premises to the
same condition in which they were in before commencement of any of Tenant's Work
(as defined in Section 3.01).
2.09 Effect of Termination or Abandonment. In the event of any
termination of this Lease pursuant to the provisions hereof, or abandonment of
this lease transaction pursuant to Section 2.08, Tenant shall comply with
Sections 1.04 and (if applicable) Sections 1.05, 2.02, 2.03, 2.06, 2.08 and
5.02, but shall otherwise have no further liability or obligation, or rights,
under this Lease, except with respect to any obligation that Landlord may owe to
it to mitigate damages suffered by reason of such termination.
ARTICLE III. CONSTRUCTION AND POSSESSION OF PREMISES
3.01 Shopping Center Construction; Tenant's Work. (a) The parties
acknowledge that as of the date of execution of this Lease Agreement the
Shopping Center is still under construction. Tenant agrees to construct the
demised premises, at its own cost and expense (except for Tenant's Allowance),
substantially in accordance with the plans and specifications set forth as
Exhibit B attached to and made a part of this Lease. Such work to be performed
by Tenant is referred to herein as "Tenant's Work." The parties acknowledge that
as of the date hereof, the plans and specifications for Tenant's Work are not
yet complete. Accordingly, Tenant agrees to deliver to landlord promptly upon
completion of Tenant's Work, as-built plans for Tenant's Work, and upon such
delivery, Exhibit B to this Lease shall be deemed to be automatically amended to
include such plans, without requirement of a further writing by the parties. It
is understood and agreed that Tenant shall not, without Landlord's prior written
consent, make any changes from the provisions of Exhibit B other than
insubstantial changes and changes which may be reasonably necessary for reasons
of health, safety, or legal or building code compliance. Substantial changes
from the provisions of Exhibit B shall require the approval of Landlord, but
Landlord agrees that it will not unreasonably withhold its approval thereof.
Tenant agrees that all of Tenant's Work will be performed in a sound and
workmanlike manner. Tenant agrees to use its best efforts to complete Tenant's
Work on or before June 20, 1995. Landlord shall pay to tenant upon Substantial
Completion of Tenant's Work a sum equal to $60.00 per square foot of the total
rentable area of the demised premises (2,394 square feet) as its share of the
construction cost ("Tenant's Allowance").
(b) Tenant agrees that it will construct the demised premises with a
roof covering having a warranty and expected useful life of at least 20 years
and will assign such warranty to Landlord upon commencement of the Lease term.
(c) In addition, Tenant shall, at its own cost and expense, outfit the
demised premises for its own use as a bank branch, including finish work on
interior spaces, installation of a heating and cooling system, a security
system, safes, vaults, night depositories and one or more automated teller
machines (ATMS), teller cages and a Drive-Up Window.
3.02 Substantial Completion. Subject to the provisions of Section
2.07, Tenant shall open for business as soon as is possible after substantial
completion of Tenant's Work. Tenant's Work shall be deemed substantially
complete upon completion of the work called for in Tenant's contract with its
contractor, other than punch list items having a contract value of $10,000 or
less. Substantial completion shall be evidenced by a Certificate of Substantial
Completion from Tenant's architect.
3.03 Permits, Approvals, Etc. Tenant shall be responsible for
obtaining, at its own cost and expense, all such permits, consents and approvals
as may be required under applicable local, state and federal laws for the
performance of Tenant's Work pursuant to this Article III. Landlord shall
cooperate with Tenant in obtaining such permits, consents or approvals.
3.04 Compliance with Lease. During the period commencing upon the
first entry by Tenant or its agents for the purpose of performing Tenant's Work
and ending upon the commencement date of the term of this Lease, Tenant shall
comply with all of the provisions of this Lease as if said period were part of
the term of this Lease, except that no rent (including property taxes) shall be
payable to Landlord for said period.
ARTICLE IV. USE OF PREMISES
4.01 Use of Premises. Tenant agrees that during the term of this
Lease the demised premises will be used and occupied for the following purposes
and for no other purposes, without the written consent of Landlord: a commercial
banking business (and related support functions) and the provision of such
financial products and services as may now or hereafter be permitted to be sold
or performed, as the case may be, by a state or national bank, by a bank holding
company (within the meaning of the federal Bank Holding Company Act of 1956, as
amended), or by an affiliate thereof.
4.02 Negative Covenants. Landlord and Tenant agree that during the
term of this Lease: no nuisance will be permitted on or about the demised
premises; nothing shall be done upon or about the demised premises which shall
be unlawful, improper, noisy or offensive, or contrary to any law, ordinance,
regulation or requirement of any public authority or insurance inspection or
rating bureau or similar organization having jurisdiction, or which may be
injurious to or adversely affect the quality or tone of the demised premises or
the Shopping Center; the demised premises will not be overloaded, damaged or
defaced; Tenant will not drill or make any holes in the stone or brickwork
(except as contemplated as part of Tenant's Work); Tenant will not permit the
emission of any objectionable noise or odor from the demised premises; Tenant
will procure all licenses and permits which may be required for any use made of
the demised premises; Tenant will cooperate with Landlord and with other tenants
of the Shopping Center in promotional and advertising campaigns and in the use
of Shopping Center trade names and advertising slogans; provided that all such
advertising shall comply with all laws, rules and regulations applicable to
national banks and to banks insured by the Federal Deposit Insurance
Corporation. Tenant will not do, or suffer to be done, or keep, or suffer to be
kept, or omit to do anything in, upon or about the demised premises which may
prevent the obtaining of any insurance on the demised premises or any other
premises of the Shopping Center or on any property therein, including, but
without limitation, fire, extended coverage and public liability insurance, or
which may make void or voidable any such insurance, or which may create any
extra premiums for, or increase the rate of, any such insurance.
ARTICLE V. LANLORD'S COVENANTS
5.01 Landlord's Obligation to Repair. Landlord shall, during the
entire term hereof, keep the building in a structurally sound and weathertight
condition and maintain in good order and repair the exterior walls, roof,
structural beams and columns and other structural elements of the demised
premises. Landlord agrees that it will procure all necessary permits, licenses,
consents and approvals before making any repairs during the Lease term. Tenant
agrees that it will cooperate with Landlord in obtaining such permits, licenses,
consents and approvals. Landlord agrees that all repairs done by it will be
done in a workmanlike manner, that the same will be done in conformity with all
laws, ordinances and regulations of all public authorities and all insurance
inspection or rating bureaus having jurisdiction and that Landlord will repair
any and all damage caused to the demised premises by or resulting from any of
Landlord's repairs. Landlord agrees to pay promptly when due all charges for
labor and materials in connection with any work done by Landlord upon the
demised premises, so that the demised premises will at all times be free of
liens. Landlord agrees to save Tenant harmless from, and indemnify Tenant
against, any and all claims for injury, loss or damage to person or property
caused by or resulting from the doing of any such work.
5.02 Maintenance and Repair of Common Areas. (a) Landlord shall,
during the entire term hereof, keep in good condition and repair all common
areas of the Shopping Center and the lighting system and drainage system serving
such common areas; keep the parking areas and driveways suitably paved and in
good condition and repair, and marked for parking and traffic flow; keep all
common areas free of refuse and obstruction and free of snow and ice; and keep
all common areas adequately lighted at all times. Landlord reserves the right
to delegate its common area maintenance obligation (as defined herein) to
another tenant in the Shopping Center acceptable to Tenant, on terms reasonably
acceptable to Tenant, and Tenant agrees to reimburse Landlord monthly for any
such charges incurred by Landlord. Landlord will furnish, or cause to be
furnished, to Tenant, copies of invoices or other underlying documents
evidencing such charges, at least semi-annually, and with an annual
reconciliation of Tenant's overpayment or underpayment for such services.
Tenant hereby consents to delegation to Price Chopper of Landlord's maintenance
obligation.
(b) For purposes of this section, the term "common area maintenance"
shall not be deemed to include (i) any expenditures for capital equipment or
improvements ("capital equipment and improvements," for the purpose hereof,
being defined to mean those items which may be depreciated for federal income
tax purposes and not deducted as an expense in the year purchased); (ii) any
depreciation of capital equipment or improvements; (iii) any cost or expenses
associated with the maintenance of any enclosed "mall" or interior common areas;
(iv) any charges for Price Chopper's executive or management personnel; or (v)
any charges for administration or overhead or for the maintenance of Price
Chopper's offices, except that Price Shopper may add to the cost of maintaining
the parking areas and common facilities an administrative fee equal to fifteen
percent (15%) of such cost.
ARTICLE VI. TENANT'S COVENANTS
6.01 Utilities. Tenant agrees to pay all charges for heat, air
conditioning, water, gas, electricity and any other utilities used by the
demised premises. An appropriate allocation, as agreed between Landlord and
Tenant, shall be made if any of the foregoing shall not be separately metered
and/or supplied. If a charge shall be made from time to time by the public
authority having jurisdiction for the use of the sanitary sewer system and/or
for the use of the storm sewer system, Tenant shall pay its prorata share
thereof.
6.02 Tenant's obligation to Repair. Subject to Landlord's obligations
in Article V, Tenant agrees that it will during the term of this Lease make all
necessary repairs, replacements and alterations to the demised premises which
may be necessary to maintain the same in good repair and condition or which may
be required by any laws, ordinances, regulations or requirements of any public
authorities having jurisdiction. Tenant agrees that all construction, repairs
and installations done by it will be done in a workmanlike manner and in
accordance with the laws, ordinances and regulations of all public authorities
and all insurance inspection or rating bureaus having jurisdiction. Tenant
agrees that it will repair any and all damage caused to the demised premises by
or resulting from any repairs made by the Tenant. Tenant agrees that it will
procure all necessary permits, licenses, consents and approvals before making
any repairs or installations during the Lease Term. Tenant agrees to pay
promptly when due all charges for labor and materials in connection with any
work done by Tenant upon the demised premises, so that the demised premises will
at all times be free of liens. Tenant agrees to save Landlord harmless from,
and indemnify Landlord against, any and all claims for injury, loss or damage to
person or property caused by or resulting from the doing of any such work.
Subject to Section 1.04, Tenant agrees that it will upon the expiration or other
termination of the term of this Lease remove its property and that of all
persons claiming under it and will yield up peaceably to Landlord the demised
premises, broom clean and in good repair and condition.
6.03 Signs. Tenant may erect or install (1) one or more signs on the
exterior of the demised premises, (2) one or more signs identifying Tenant in
the interior of the Price Chopper Supermarket, to be located on the common wall
shared by such premises and Tenant's premises, and elsewhere within the Price
Chopper Supermarket as Tenant and Price Chopper may agree upon, (3) window signs
customary in banking offices, (4) signs listing days and hours of operation, the
availability of an ATM on the premises, Tenant's membership in the Federal
Deposit Insurance Corporation fund and other advertising material permitted to
banks or financial service providers, and (5) interior or exterior signs
advertising the availability of financial services or products at the demised
premises, from any third party licensee of Tenant. Except for the foregoing, no
sign, symbol, advertisement, neon light, other light or other object or thing
visible to public view on the exterior of the demised premises may be installed
or maintained by Tenant upon the demised premises without the prior written
approval of Landlord, which approval may not be unreasonably withheld. All
interior or exterior signs erected by Tenant or any party claiming under Tenant
shall comply with all applicable laws, rules and regulations. Landlord shall
permit Tenant to install and maintain a sign panel upon any pylon sign or
similar sign at the entrance to the Shopping Center parking lot, at Tenant's
expense and otherwise in accordance with the provisions hereof. Tenant's rights
to erect signs hereunder are subject to the provisions of the Lease Agreement
between Landlord and Price Chopper and Tenant's License Agreement with Price
Chopper.
6.04 Substantial Repairs or Renovations; Landlord Consent. Tenant
agrees that during the Lease term neither it nor anyone claiming under it will
make any installations, alterations, additions or improvements to or upon the
demised premises which involve the structure or any structural component of the
demised premises or which shall have an anticipated cost in excess of Twenty-
Five Thousand Dollars ($25,000) without the prior written approval of Landlord,
which approval may not be unreasonably withheld. Except as otherwise
contemplated in Section 1.04, all installations, alterations, additions and
improvements made to or upon the demised premises, made by Tenant shall be
deemed part of the demised premises, and upon the expiration or other
termination of the term of this Lease shall be surrendered with the demised
premises as a part thereof.
6.05 Tenant's Property Insurance. Tenant shall keep the demised
premises insured, at its own cost and expense, against loss due to fire and the
usual extended coverage casualties as well as against loss due to flood if the
demised premises in whole or in part lies within the 100-year floodplain. In
addition, Tenant shall keep all personal property of Tenant and all leasehold
improvements made by Tenant fully insured, by well-rated insurance companies
licensed to issue such policies in the state of Vermont naming Tenant and (with
respect to leasehold improvements) Landlord, as insureds as their interests may
appear. Tenant shall deliver to Landlord a Certificate of Insurance, relating
to leasehold improvements, at least fifteen (15) days prior to the commencement
of the term of this Lease, and each renewal policy, or certificate thereof, at
least fifteen (15) days prior to the expiration of the policy it renews. Any
policy naming Landlord as an additional insured shall provide that it may not be
cancelled without thirty (30) days prior written notice to Landlord.
6.06 Rules and Regulations. Tenant will observe and comply with, and
will cause its subtenants and concessionaires, and its and their employees and
agents, to observe and comply with reasonable Shopping Center rules and
regulations, if any, from time to time promulgated by Landlord for the benefit
of the entire Shopping Center. However, neither Tenant nor anyone claiming
under it shall be bound by any such rules and regulations until such time as
Tenant receives a copy thereof, and Landlord agrees to enforce such rules and
regulations uniformly.
6.07 Security and Fire Prevention Devices. Tenant agrees to supply
and maintain in the demised premises at its own expense, any security, alarm and
fire prevention equipment required pursuant to any law, ordinance, regulation or
requirement of any public authority or insurance inspection or rating bureau or
similar organization having jurisdiction.
ARTICLE VII. INDEMNITY AND INSURANCE
7.01 Tenant's Indemnification. Tenant agrees to save Landlord
harmless from, and indemnify Landlord against, any and all injury, loss or
damage, and any and all claims therefor, of whatever nature caused by or
resulting from any act, omission or negligence of Tenant or Tenant's subtenants,
agents, employees, licensees, invitees or contractors. This indemnity shall be
deemed to include indemnity against all costs, expenses and liabilities incurred
in connection with any such injury, loss or damage or any such claim, or any
proceeding brought thereon or in the defense thereof. This provision shall not
be construed to make Tenant responsible for any loss, damage, liability or
expense resulting from injuries to the persons or property of any third parties
caused by any act, omission or negligence of Landlord or of any tenants or
subtenants occupying any other part of the Shopping Center or any of their
respective subtenants, contractors, licensees, agents, employees, or invitees.
7.02 Tenant's Liability Insurance. Tenant shall maintain general
comprehensive public liability insurance with respect to the demised premises
and its appurtenances, issued by a well-rated insurance company licensed to
issue such policies in the state of Vermont, in amounts of not less than One
Million Dollars ($1,000,000) combined single limit with respect to personal
injuries suffered in any one accident and not less than Five Hundred Thousand
Dollars ($500,000) with respect to damage to property. Such policy of insurance
will name Landlord as an additional insured, as its interests may appear.
Tenant may maintain such insurance under a blanket policy affecting the demised
premises and other premises of Tenant or any business organization affiliated
with Tenant. Tenant shall deliver to Landlord a Certificate of Insurance
relating to such coverage at least fifteen (15) days prior to commencement of
the term of this Lease, and a Certificate of Insurance relating to renewal of
coverage, at least fifteen (15) days prior to any expiration date of such
policy. Tenant's public liability insurance policy shall provide that it may
not be cancelled without thirty (30) days prior written notice to Landlord.
7.03 Landlord's Indemnification. Landlord agrees to save Tenant
harmless from, and indemnify Tenant against, any and all injury, loss or damage,
and any and all claims therefor, of whatever nature caused by or resulting from
any act, omission or negligence of Landlord or Landlord's subtenants, agents,
employees, licensees, invitees or contractors. This indemnity shall be deemed
to include indemnity against all costs, expenses and liabilities incurred in
connection with any such injury, loss or damage or any such claim, or any
proceeding brought thereon or in the defense thereof. This provision shall not
be construed to make Landlord responsible for any loss, damage, liability or
expense resulting from injuries to the persons or property of any third parties
caused by any act, omission or negligence of Tenant or of any tenant or
subtenant occupying any other part of the Shopping Center, or any of their
respective contractors, licensees, agents, employees, or invitees.
7.04 Landlord's Insurance. Landlord shall maintain Lessor's risk only
general comprehensive public liability insurance with respect to the Shopping
Center (including the common areas and the demised premises), issued by a well-
rated insurance company licensed to issue such policies in the State of Vermont,
in amounts of not less than One Million Dollars ($1,000,000) combined single
limit with respect to personal injuries suffered in any one occurrence and not
less than Five Hundred Thousand Dollars ($500,000) with respect to damage to
property. Such policy of insurance will name Tenant as an additional insured,
as its interests may appear. Landlord may maintain such insurance under a
blanket policy affecting the demised premises and other premises of Landlord or
any business organization affiliated with Landlord. Landlord shall deliver to
Tenant a Certificate of Insurance relating to such coverage at least fifteen
(15) days prior to commencement of the term of this Lease, and a Certificate of
Insurance relating to renewal of coverage, at least fifteen (15) days prior to
any expiration date of such policy. Landlord's public liability insurance
policy shall provide that it may not be cancelled without thirty (30) days prior
written notice to Tenant.
ARTICLE VIII. ACCESS TO PREMISES
Landlord shall have the right to enter upon the demised premises or any
part thereof, without charge, at all reasonable times during business hours, and
in case of emergency at any time, to inspect the same, to show the demised
premises to prospective purchasers or tenants, and to make or facilitate any
repairs, alterations, additions or improvements to any part of the Shopping
Center, including, without limitation, to install and maintain in, and remove
from, the demised premises pipes, wires and other conduits. Any such entry
shall be made at a time and in a manner which will minimize the disruption to
Tenant's business, with due regard to maintaining the security of the premises,
and under the supervision of an officer or designated agent of Tenant. No
forcible entry shall be made by Landlord unless such entry shall be reasonably
necessary to prevent serious injury, loss or damage to person or property.
Landlord shall repair any damage to property of Tenant or anyone claiming under
Tenant caused by or resulting from Landlord's making any such repairs,
alterations, additions or improvements, except only such damage resulting from
the making of repairs, alterations, additions or improvements by Landlord that
shall have been necessitated by the default, fault or negligence of Tenant or
anyone claiming under Tenant.
ARTICLE IX. FIRE, FLOOD AND OTHER CASUALTY
9.01 Damage or Destruction. If the demised premises shall be damaged
or destroyed by fire, flood or other unavoidable casualty, then Tenant shall
give notice thereof to Landlord, and, except as hereinafter otherwise provided,
Landlord and Tenant shall each, within a reasonable time thereafter, repair or
restore that portion of the demised premises that such party is responsible for
repairing and maintaining under Articles V and VI of this Lease, to
substantially the same condition they were in prior to the casualty. The
parties shall cooperate and coordinate their respective repairs in order to
restore the premises as expeditiously as possible to their previous condition.
9.02 Substantial Destruction. Notwithstanding Section 9.01, it is
agreed and understood that if the demised premises as a whole (taking into
account both the portions of such premises required to be repaired by Landlord,
as well as by Tenant) shall be damaged or destroyed as aforesaid to the extent
of fifteen percent (15%) or more of its replacement cost, or if the demised
premises shall be damaged or destroyed by fire, flood or other casualty so that
they cannot reasonably be expected to be repaired and restored within three (3)
months after the commencement of such repair and restoration, then Tenant, at
its election, may terminate this Lease, without penalty, by giving written
notice to Landlord within thirty (30) days after such damage or destruction. In
the event of any termination of the term of this Lease pursuant to the
provisions of this Article IX, the termination shall become effective on the
fifteenth day after the giving of the notice of termination, and rent (including
real estate taxes) shall be apportioned as of the time of such fire, flood or
other casualty. If the demised premises shall be repaired or restored after
damage or destruction, as contemplated in Section 9.01, during the period of
such repair and reconstruction, a just proration of the rent according to the
nature and extent of the injury to the demised premises shall be made, or rent
shall be suspended or abated as appropriate in the circumstances, from the date
of such damage or destruction until the demised premises shall be repaired or
restored as aforesaid for the full use and occupancy of Tenant.
ARTICLE X. EMINENT DOMAIN
10.01 Entire Premises. If prior to the expiration of the term of this
Lease the whole of the demised premises shall be taken under the power of
eminent domain, then the term of this Lease shall cease as of the time when
Landlord shall be divested of its title in the demised premises and rent paid by
Tenant in advance (including real estate taxes) shall be apportioned and
adjusted as of the time of termination.
10.02 Portion of Premises. If only a part of the demised premises
shall be taken under the power of eminent domain, and if as a result thereof (i)
the ground floor area of the demised premises shall be reduced by more than ten
percent and the part remaining shall not be reasonably adequate for the
operation of the business conducted in the demised premises prior to the taking,
or (ii) more than twenty-five percent (25%) of the square footage of the parking
areas of the Shopping Center shall be taken under the power of eminent domain,
Tenant may terminate this Lease, without penalty, on thirty (30) days notice to
Landlord. In the event of such taking and termination, the rent paid by Tenant
up to the date of such termination shall be apportioned and adjusted as of the
time of termination. If only a part of the demised premises shall be taken
under the power of eminent domain and if the term of this Lease shall not be
terminated as aforesaid, then the term of this Lease shall continue in full
force and effect and Landlord shall, within a reasonable time after possession
is required for public use, repair and rebuild what may remain of the demised
premises so as to put the same into condition for use and occupancy by Tenant.
A just proportion of the rent according to the nature and extent of the injury
to the demised premises shall be suspended or abated until what may remain of
the demised premises shall be put into such condition by Landlord, and
thereafter a just proportion of the rent according to the nature and extent of
the part so taken shall be abated for the balance of the term of this Lease.
10.03 Rights of Parties Inter Se. Landlord reserves to itself, and
Tenant assigns to Landlord, all rights to damages for the value of the leasehold
accruing on account of any taking under the power of eminent domain or by reason
of any act of any public or quasi public authority for which damages are or may
be payable. Tenant agrees to execute such instruments of assignment as may be
reasonably required by Landlord in any proceeding for the recovery of such
damages, and to turn over to Landlord any such damages that may be recovered in
such proceeding. It is agreed and understood, however, that Landlord does not
reserve to itself, and Tenant does not assign to Landlord, any damages payable
for movable fixtures installed by Tenant at Tenant's sole cost, for relocation
expenses of Tenant or for the cost to Tenant of Tenant's Work (other than
Tenant's Allowance) or other leasehold improvements to the demised premises made
and paid for by Tenant.
ARTICLE XI. TENANT'S DEFAULT
11.01 Events of Default; Remedies. (1) If Tenant shall default in the
payment of rent and shall fail to cure said default within five (5) days after
the due date of such payment, or (2) if Tenant shall default in the performance
or observance of any other material agreement or condition on its part to be
performed or observed hereunder and if Tenant shall fail to cure said default
within thirty (30) days after Landlord shall have given written notice thereof
to Tenant, or (3) if any person shall levy upon, or take this leasehold interest
or any part thereof, upon execution, attachment or other process of law, or (4)
if Tenant shall make an assignment of its property for the benefit of creditors,
or (5) if Tenant shall be declared bankrupt or insolvent according to law, or
(6) if any bankruptcy or insolvency proceedings shall be commenced by or against
Tenant, or (7) if a receiver, trustee or assignee shall be appointed for whole
or any part of Tenant's property, then, in any of such cases, Landlord lawfully
may, immediately or at any time thereafter, and without any further notice or
demand, enter into and upon the demised premises, by force or otherwise, and
hold the demised premises as if this Lease had not been made, and expel Tenant
and those claiming under it and remove its or their property (forcibly if
necessary), without being taken or deemed to be guilty in any manner of trespass
(or Landlord may send written notice to Tenant of the termination of this
Lease), and upon entry as aforesaid (or in the event that Landlord shall send to
Tenant notice of termination as above provided, on the fifth (5th) day next
following the date of the sending of the notice), the Lease shall terminate.
The parties acknowledge that, notwithstanding the foregoing, Landlord's remedies
under this Section 11.01 may be limited by applicable laws governing the
insolvency, liquidation or receivership of financial institutions.
11.02 Pavement of Remaining Rent. Tenant covenants that in case of a
termination of this Lease pursuant to this Article XI, Tenant will during the
remainder of the original term, and of any extension thereof which has been
properly exercised hereunder prior to the occurrence of such termination, pay to
Landlord on the last day of each calendar month the difference, if any, between
the rental which would have been due for such month had there been no such
termination and the sum of the amount being received by Landlord as rent from
occupants of the premises, if any, and if none, the entire amount of rent which
would have been due hereunder for such month in the absence of such termination.
The Landlord shall make all reasonable, good faith efforts to secure one or more
replacement tenants for the demised premises, at a rental equal to the then
prevailing local rate for similar premises. In addition, Tenant agrees to pay
to Landlord, as damages for any above described breach, all reasonable costs of
reletting the premises including real estate commissions and costs of renovating
the premises to suit the new tenant.
ARTICLE XII. SUBORDINATION TO MORTGAGES, ETC.
12.01 Subordination. Tenant agrees that upon the request of Landlord
it will subordinate this Lease to any present or future mortgage(s) upon the
demised premises or property of which the demised premises are a part,
irrespective of the time of execution or recording of any such mortgage(s).
Tenant agrees that it will upon the request of Landlord execute, acknowledge and
deliver any and all instruments deemed by Landlord necessary or desirable to
give effect to or notice of such subordination. The word "mortgage" as used
herein includes mortgages, deeds of trust or other similar instruments, and
modifications, consolidations, extensions, renewals, replacements and
substitutes thereof. Whether the lien of any mortgage upon the demised premises
of any property of which the demised premises are a part shall be superior or
subordinate to this Lease, Tenant agrees that it will, upon request, attorney to
the holder of such mortgage or any one claiming under such holder and their
respective successors and assigns in the event of foreclosure of or similar
action taken under such mortgage.
12.02 Non-Disturbance. Notwithstanding the foregoing, Tenant's
obligation to subordinate this Lease to any mortgages, and to attorney to any
such party, is subject to the condition precedent that the holder of such
mortgage, or anyone claiming under such holder execute and deliver to the Tenant
an agreement not to disturb the Tenant's possession in the event of any
foreclosure action against Landlord, or otherwise as long as the Tenant is not
in default with respect to any of the material covenants or conditions of the
Lease to be performed and observed by the Tenant.
12.03 Certificates. After the commencement of the term of this Lease
and within five (5) days after written request therefor or by either party
hereto, the other party agrees to deliver to the requesting party and/or to any
mortgagee, or any regulatory authority having jurisdiction in the matter, a
certificate stating: for Tenant, that Tenant has entered into occupancy of the
demised premises in accordance with the provisions of this Lease; and for both
parties, that this Lease is in full force and effect, and any other information
reasonably requested.
ARTICLE XIII. ASSIGNMENT
13.01 Assignment, etc. Prohibited. Tenant agrees that it will not
assign, mortgage, pledge or otherwise encumber this Lease or any interest
herein, or sublet the whole or any part of the demised premises, or permit the
demised premises to be occupied or used by anyone other than Tenant, without
obtaining on each occasion the written consent of Landlord, which consent shall
not be unreasonably withheld and Landlord's mortgagee, if any. Landlord shall
not refuse to consent to any assignment or subletting of the premises solely on
the basis that the proposed use by the assignee or subtenant is not within the
Permitted Uses described in Section 4.01, so long as (i) such proposed uses do
not conflict with the terms of the Lease Agreement between the Landlord and
Price Chopper Operating Company of Vermont, Inc., executed on August 26, 1994,
as amended, and (ii) such proposed uses are not inconsistent with the uses
generally made of Shopping Centers of comparable size in Northern New England.
13.02 Tenant to Remain Liable. The granting by Tenant of concessions
or licenses to any third party vendor(s) of financial products or services in
the demised premises shall not be prohibited deemed under Section 13.01 and no
consent of Landlord thereto shall be required. Notwithstanding any assignment
of Tenant's interest in this Lease or any subletting of the whole or any part of
the demised premises, and unless Landlord shall otherwise consent in writing,
Tenant named herein shall remain fully, primarily and unconditionally liable
under this Lease and shall not thereby be released from the performance and
observance of all the agreements and conditions on the part of Tenant to be
performed hereunder.
ARTICLE XIV. HOLDING OVER
If Tenant or anyone claiming under Tenant shall remain in possession of
the demised premises or any part thereof after the expiration of the term of
this Lease without any agreement in writing between Landlord and Tenant with
respect thereto, the person remaining in possession shall prior to acceptance of
rent by Landlord be deemed a tenant at sufferance, and after acceptance of rent
by Landlord, a tenant at will, subject to the provisions of this Lease insofar
as the same may be made applicable to a month-to-month tenancy at will.
ARTICLE XV. WAIVERS AND CONSENTS
15.01 Waivers and Consents. Failure of either party to complain of
any act or omission on the part of the other party, no matter how long the same
may continue, shall not be deemed to be a waiver by said party of any of its
rights hereunder. No waiver by either party at any time, express or implied, of
any breach of any provisions of this Lease shall be deemed a waiver of a breach
of any other provision of this Lease or a consent to any subsequent breach of
the same or any other provision. If any action by either party shall require
the consent or approval of the other party, the other party's consent to or
approval of such action on any one occasion shall not be deemed a consent to or
approval of said action on any subsequent occasion or a consent to or approval
of any other action on the same or any subsequent occasion. Waivers or consents
hereunder shall not be unreasonably withheld.
15.02 Remedies. Except as otherwise provided in this Lease, any and
all rights and remedies which either party may have under this Lease or by
operation of law, either at law or in equity, upon any breach, shall be
distinct, separate and cumulative and shall not be deemed inconsistent with each
other; and no one of them, whether exercised by said party or not, shall be
deemed to be in exclusion of any other, and any two or more or all of such
rights and remedies may be exercised at the same time. Without limiting the
generality of the foregoing, if any restriction contained in this Lease for the
benefit of either party shall be violated, said party, without waiving any claim
for breach of agreement against the other party, may bring such proceedings as
it may deem necessary, either at law or in equity, in its own name or in the
name of the other party, against the person violating said restriction. It is
agreed that if at any time a dispute shall arise as to any amount or sum of
money to be paid by one party to the other under the provisions hereof, the
party against whom the obligation to pay the money is asserted shall have the
right to make payment "under protest" and such payment shall not be regarded as
a voluntary payment and there shall survive the right on the part of said party
to institute suit for the recovery of such sum, and if at any time a dispute
shall arise between the parties hereto as to any obligation to perform work or
to provide a service, the party against whom the obligation is asserted may
perform such work or provide such service and pay the cost thereof "under
protest" and such action shall in no event be regarded as a voluntary
performance, and there shall survive the right on the part of said party to
institute suit for the recovery of the cost of such work, and, if it shall be
adjudged that there was no legal obligation on the part of said party to perform
or provide the same or any part thereof, said party shall be entitled to recover
the cost of so much thereof as said party was not legally required to perform or
provide under the provisions of this Lease.
ARTICLE XVI. QUIET ENJOYMENT
Landlord agrees that upon Tenant's paying the rent and performing and
observing all material agreements, conditions and other provisions of this Lease
on its part to be performed and observed, Tenant shall and may peaceably and
quietly have, hold and enjoy the demised premises during the term of this Lease
without any manner of hindrance or molestation from Landlord or anyone lawfully
claiming under Landlord. In connection herewith, Landlord represents and
warrants to Tenant that Landlord owns the Shopping Center in fee simple, subject
to encumbrances of record including those disclosed on Exhibit C hereto.
ARTICLE XVII. FAILURE OF PERFORMANCE
17.01 Tenant's Failure. If Tenant shall default in the performance or
observance of any material agreement or condition in this Lease contained on its
part to be performed or observed, other than an obligation to pay money, and
shall not cure such default within thirty (30) days after notice from Landlord
specifying the default, Landlord may, at its option, without waiving any claim
for damages for breach of agreement, at any time thereafter cure such default
for the account of Tenant, and any amount paid or any contractual liability
incurred by Landlord in so doing shall be deemed paid or incurred for the
account of Tenant, and Tenant agrees to reimburse Landlord promptly therefor or
save Landlord harmless therefrom. Landlord may cure any such default as
aforesaid prior to the expiration of said waiting period, but after notice to
Tenant, if the curing of such default prior to the expiration of the waiting
period is reasonably necessary to protect the real estate or Landlord's interest
therein or to prevent serious injury or damage to persons or property. If
Tenant shall fail to reimburse Landlord upon demand for any amount paid for the
account of Tenant hereunder, such amount shall be added to and become due as a
part of the next payment of rent due hereunder.
17.02 Landlord's Failure. Tenant shall have a similar right of "self-
help," exercisable in the manner and subject to the same time periods as
provided in subsection 17.01 above, in the event that Landlord shall fail to pay
any tax or other charge the failure to pay which would result in a lien upon the
demised premises prior in lien to the lien of this Lease or otherwise impair
Tenant's rights under the Lease, or if Landlord shall fail to perform any
obligation imposed upon Landlord under this Lease, including Landlord's
obligations of repair and maintenance under Article V. Any amount expended by
Tenant pursuant to this Section may be deducted from the next payment(s) of rent
due Landlord hereunder.
17.03 Payment of Certain Expenses. If Landlord shall commence legal
proceedings against Tenant on account of a default by Tenant in the performance
or observance of any material agreement or condition in this Lease contained on
the part of Tenant to be performed or observed, in addition to all other amounts
payable by Tenant under this Lease, Tenant shall pay to Landlord the costs and
expenses, including without limitation, attorneys' fees, incurred by Landlord in
connection with any such proceedings which shall be finally adjudicated in favor
of Landlord. Similarly, Landlord shall pay to Tenant the cost and expenses,
including without limitation, attorneys' fees, incurred by Tenant in connection
with any legal proceedings brought by Tenant against Landlord which shall be
finally adjudicated in favor of Tenant.
ARTICLE XVIII. HAZARDOUS SUBSTANCES
18.01 Definitions. For the purposes of this Lease, the expression
"Hazardous Substance" shall mean any hazardous, toxic or dangerous waste,
substance, material, smoke, gas or particulate matter, as from time to time
defined by or for purposes of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. 9061 et seq., the
Resource Conservation and Recovery Act of 1976, 42 U.S.C. 6901 et seq., as
amended, the Hazardous Material Transportation Act, 49 U.S.C. 1802, the Toxic
Substances Act, 15 U.S.C. 2601 et seq., the Vermont Waste Management Act, 10
V.S.A. Chapter 159 and/or any law referred to as of the date hereof as
"superfund" or "super lien" or hazardous or toxic waste law or the like, or any
successor to such laws, or any other federal, state or local environmental,
health or safety statute, ordinance, code, rule, regulation, order or decree
regulating, relating to or imposing liability or standards concerning or in
connection with hazardous, toxic or dangerous wastes, substances, material, gas
or particulate matter, as now or at any time hereafter in effect (collectively,
the "Environmental Laws").
18.02 Restrictions. Neither Landlord nor Tenant shall cause or permit
any Hazardous Substance to be brought upon, kept, stored or used in or about the
Shopping Center premises except, with respect to Tenant, for such Hazardous
Substances as may be necessary in the regular course of Tenant's business. Any
Hazardous Substance permitted on the demised premises, and all containers
therefor, shall be used, kept, stored and disposed of in a manner that strictly
complies with all applicable provisions of the Environmental Laws. Landlord and
Tenant each agrees to pay all fees, costs and penalties assessed against it by
any governmental authority, including the Vermont Agency of Natural Resources
and the United States Environmental Protection Agency, relating to such party's
handling, use, generation, treatment, storage, transportation or disposal of
Hazardous Substances in or upon the demised premises. Landlord and Tenant shall
each remove or cause to be removed, in accordance with all Environmental Laws,
all Hazardous Substances placed by them on the Shopping Center premises,
including, but limited to, all spent cleaning solvents from the Shopping Center
premises immediately after such Hazardous Substances cease to be required for
use by such party.
18.03 Discharge. Neither Landlord nor Tenant shall discharge, leak or
emit or permit to be discharged, leaked or emitted, into the atmosphere, ground,
sewer system or any body of water or otherwise, in or about the Shopping Center
premises any Hazardous Substance or any other material which does or may pollute
or contaminate the same, or may materially and adversely affect (i) the health,
welfare or safety of persons, whether located on the demised premises or
elsewhere in or upon the Shopping Center premises, or (ii) the condition, use,
or enjoyment of the demised premises or any other portion of the Shopping
Center. In the event any Hazardous Substances escape or seep or are emitted,
discharged, disposed or released into or upon the Shopping Center premises in
violation of this covenant, the party responsible shall immediately contain and
remove the same, in strict compliance with all Environmental Laws.
18.04 Copies of Notices. Each party shall immediately provide the
other with copies of all notices, including, without limitation, all notices of
violations and notices of responsibility or demand for action received from any
federal, state or local authority or official in connection with Hazardous
Substances in or upon the demised premises or any other portion of the Shopping
Center.
18.05 Site Assessments. Landlord, in its sole discretion and with
reasonable notice to Tenant, may at any time and from time to time cause one or
more environmental site assessments of the demised premises to be undertaken.
Environmental site assessments may include a detailed visual inspection of the
demised premises, including, without limitation, all storage areas, storage
tanks, drains, dry wells and leaching areas, as well as the taking of soil
samples, surface water samples and ground water samples, and such other
investigation or analysis as Landlord may reasonably require. Unless there
shall have been a discharge or other release of Hazardous Substances caused by
Tenant, the cost of any such assessment shall be borne by Landlord. Access to
the demised premises in connection with any site assessment will be made with
due regard to maintaining the security of the premises and under the supervision
of an agent or officer of Tenant.
18.06 Similar Covenants. Landlord agrees to obtain from each other
tenant of premises within the Shopping Center environmental covenants
substantially equivalent in scope to those contained in this Article XVIII.
18.07 Bulk Storage Tanks. Tenant shall be responsible for
installation, maintenance and repair of any underground fuel storage tanks
included in Tenant's Work, for compliance with all notification, filing or other
legal requirements relating thereto, and for any damage caused by malfunction or
leakage of such tanks. Except as expressly provided in the preceding sentence,
Landlord shall be responsible for the installation, maintenance and repair of
any underground fuel storage tanks relating to the Shopping Center premises, for
compliance with all notification, filing or other legal requirements relating
thereto and for any damage caused by malfunction or leakage of such tanks.
18.08 Indemnification by Tenant. Tenant agrees to hold harmless,
defend and indemnify Landlord from and against any and all loss, damage, cost,
liability, penalty, fine, settlement or expense (including reasonable attorneys'
and consultants' fees and court costs) relating to personal, property or
economic injury arising from a violation under the Environmental Laws by Tenant
or arising from a failure by Tenant to comply with the provisions of this
Article XVIII. The provisions of this Section 18.08 shall be in addition to any
other obligations and liabilities Tenant may have to Landlord at law or equity
and shall survive the transactions contemplated herein and shall survive the
expiration or earlier termination of this Lease.
18.09 Indemnification by Landlord. Landlord has delivered to Tenant
copies of the site reports of the Shopping Center prepared by Griffin
International, Inc. Landlord agrees to hold harmless, defend and indemnify
Tenant from and against any and all loss, damage, cost, liability, penalty,
fine, settlement or expense (including reasonable attorneys' and consultants'
fees and court costs) relating to personal, property or economic injury arising
from any existing or future violation of any of the Environmental Laws by
Landlord or by any other tenant of the Shopping Center, or other person directly
or indirectly claiming under Landlord. The provisions of this Section 18.09
shall be in addition to any other obligations and liabilities Landlord may have
to Tenant at law or equity and shall survive the transactions contemplated
herein and shall survive the expiration or earlier termination of this Lease.
ARTICLE XIX. MISCELLANEOUS
19.01 Binding Effect. The words "Landlord" and "Tenant" and the
pronouns referring thereto, as used in this Lease, shall mean, where the context
requires or admits, the persons named herein as Landlord and as Tenant,
respectively, and their respective heirs, legal representatives, successors and
assigns, irrespective of whether singular or plural, masculine, feminine or
neuter. The provisions of this Lease shall be binding upon, and inure to the
benefit of, Landlord and Tenant and their respective successors and assigns.
19.02 Severability. If any provisions of this Lease shall be
determined to be void by any court of competent jurisdiction such determination
shall not affect any other provisions of this Lease, all of which other
provisions shall remain in full force and effect. It is the intention of the
parties hereto that if any provision of this Lease is capable of two
constructions one of which would render the provision void and the other of
which would render the provision valid, the provision shall have the meaning
which renders it valid.
19.03 Entire Agreement; Modification. This instrument contains the
entire and only agreement between the parties with respect to the subject matter
hereof, and no oral statements or representations or prior written matter not
contained in this instrument shall have any force or effect. This Lease may not
be modified in any way except by a writing subscribed by both parties.
19.04 Delays. In any case where either party hereto is required to do
any act, delays caused by or resulting from Act of God, war, civil commotion,
fire or other casualty, labor difficulties, shortages of labor, materials or
equipment, government regulations or other causes beyond such party's reasonable
control shall not be counted in determining the time during which such work
shall be completed, whether such time be designated by a fixed date, a fixed
time or a "reasonable time." In any case where work is to be paid for out of
insurance proceeds or condemnation awards, due allowance shall be made, both to
the party required to perform such work and to the party required to make such
payment, for delays in collection of such proceeds and awards.
19.05 Notices. All notices and other communications authorized or
required hereunder shall be in writing and shall be given by hand delivery or
mailing the same by certified or registered mail, return receipt requested,
postage prepaid. If given to Tenant, the same shall be mailed to Tenant at P.O.
Box 259, Derby, VT 05829, Attn: President, or to such other address as Tenant
may hereafter designate by written notice to Landlord; if given to Landlord the
same shall be mailed to Landlord at 20 Hastings Street, St. Johnsbury, VT 05819,
Attn: President, or to such other person or at such other address as Landlord
may hereafter designate by written notice to Tenant.
19.06 Section Headings. The section and subsection headings for the
various provisions of this Lease are used only as a matter of convenience for
reference, and are not to be considered a part of this Lease or to be used in
determining the intent of the parties to this Lease.
19.07 Waiver of Subrogation. Landlord and Tenant hereby release each
other, to the extent of their respective insurance coverages, from any and all
liability for any loss or damage caused by fire, flood, any of the extended
coverage casualties, or other casualties insured against, even if such fire,
flood or other casualty shall be brought about by the fault or negligence of the
party benefitted by the release, or by its agents, employees or invitees;
provided, however, this release shall be in force and effect only with respect
to loss or damage occurring during such time as the policies of fire, extended
coverage and other insurance maintained by the releasing party shall contain a
clause to the effect that such release shall not affect said policies or the
right of releasing party to recover thereunder. Landlord and Tenant each agree
that their respective fire, flood, extended coverage and other insurance
policies will include such a clause so long as the same is obtainable and
includable without extra cost, or if extra cost is chargeable therefor, so long
as the party benefitted by such clause pays such extra cost. If cost is
chargeable therefor, the party maintaining such insurance will so advise the
other party of the amount of such charge. The other party, at its election, may
pay the same, but shall not be obligated to do so.
19.08 Costs. Wherever in this Lease provision is made for the doing
of any act by any person it is understood and agreed that such act shall be done
by such person at its own cost and expense, unless a contrary intent is
expressed.
19.09 Brokers. Landlord and Tenant each hereby represents and
warrants to the other that it has dealt with no broker in connection with this
Lease and there are no brokerage commissions or other finders' fees in
connection herewith and each party agrees to hold the other harmless from, and
indemnified against, all loss or damage (including, without limitation, the cost
of defending same) arising from any claim by any broker claiming to have dealt
with such indemnifying party.
19.10 Short Form Lease. At the request of either party, after the
commencement of the term of this Lease, Landlord and Tenant shall execute an
instrument in recordable form setting forth the terms of this Lease, the
commencement and expiration dates, renewal periods and such other information as
is necessary to constitute a short form lease, and such instrument shall be
recorded in the St. Johnsbury Land Records.
IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease
Agreement to be executed as a sealed instrument as of the date first above
written.
WITNESS: LANDLORD:
MURPHY REALTY COMPANY, INC.
/s/ James G. Wheeler Jr. By: /s/ Peter J. Murphy
/s/ Denise J. Deschenes Peter J. Murphy, President
TENANT:
COMMUNITY NATIONAL BANK
By: /s/ Richard C. White
Richard C. White, President
State of Vermont
County of Caledonia,
At St. Johnsbury, this 27th day of April, 1995, personally appeared
Peter J. Murphy, President of Murphy Realty Company, Inc., to me known, and
subscribed to the foregoing instrument as representing his free act and deed,
and the free act and deed of Murphy Realty Company, Inc.
Before me: /s/ Denise J. Deschenes
Notary Public
My commission expires: 2/10/99
State of Vermont
County of Caledonia
At St. Johnsbury, this 27th day April, 1995, personally appeared
Richard C. White, President of Community National Bank, to me known, and
subscribed to the foregoing instrument as representing his free act and deed.
and the free act and deed of Community National Bank.
Before me: /s/ Denise J. Deschenes
Notary Public
My commission expires: 2/10/99
PROPOSAL OF PARTNERSHIP
EMORY A. HEBARD STATE OFFICE BUILDING
AND
WATERFRONT DEVELOPMENT
1. Proposal of: Community National Bank (herein after called "PROPOSER")
organized and existing under the laws of the State of Vermont and doing
business as Corporation (insert the words "a corporation", "a
partnership", or "an individual").
2. The undersigned PROPOSER has examined the RFP documents, listed appendices,
and is familiar with the project site.
3. The PROPOSER is interested in participating in the project: (indicate
category of space interested in by circling "A", "B", or "C" below and
answering associated questions.)
CATEGORY A
CONDOMINIUM PARTNERSHIP IN STATE DESIGNED BUILDING
By purchasing 3064 +- square feet (enter number of square feet interested in)
of condominium commercial space located on the First Floor (enter "First Floor"
and/or "Garage Level") for the purpose of (describe activity)
Operating a full service banking office in the southeast corner of
the building
The PROPOSER submits a purchase price of $65.00 per square foot for a total
purchase price of $ 199,160.00. The requested space has been indicated by the
PROPOSER on the attached plans (Drawings A-1.0 and A-1.1). The PROPOSER is
interested in purchasing 2 (enter number) reserved garage parking spaces for
a purchase price of $ 15,000.00 per space.
The following supporting documents have been attached by the PROPOSER to the
Proposal for the Evaluation Committee to review (list documents by title and
date):
1) 1995 Annual Report of Community Bancorp and Community National Bank.
12/31/95
2) Copy of Mission Statement of Community Bancorp and Community National
Bank.
3) Copy of Office of Comptroller of the Currency, Community Reinvestment
Act Public Disclosure
1 of 3
CATEGORY B
LEASED SPACE
By leasing Space within building (enter "tour boat dock space", "fishing
pier concession space" or "space within the building") for a proposed annual
rent of $ negotiable per square foot per year. The location of the requested
leased space has been indicated on the attached drawing (Al.0, Al.1 or SD-1).
The space will be used for:
operation of a full service banking office.
(describe type of business activity).
The following supporting documents have been attached to the proposal for
evaluation purposes (list documents by title and date).
see "A"
CATEGORY C
ALTERNATE DESIGN AND PARTNERSHIP PROPOSAL
By entering an alternate building design proposal for the purpose of providing:
(describe activity).
Contractual arrangement between the PROPOSER and the STATE would be a:
(describe arrangement).
The following supporting documents have been attached to the proposal for
evaluation purposes (list documents by title and date):
2 of 3
4. The undersigned agrees to hold his/her proposal open for sixty (60) days
after the date of submission for evaluation purposes and will furnish
additional information as requested by the Proposal Evaluation Committee.
5. By submission of this Proposal, each PROPOSER certifies that this Proposal
has been arrived at independently without consultation, communication or
agreement with any other PROPOSER.
6. The undersigned PROPOSER acknowledges receipt of the following Addendum(s)
issued during the proposal period and understands the addendums will be
made part of the RFP document.
Addendum No. Dated:
Addendum No. Dated:
Addendum No. Dated:
7. The undersigned PROPOSER acknowledges the right of the Department of State
Buildings to accept or reject any or all Proposals, and to waive any
irregularities or informalities during the proposal period and during the
sixty (60) day proposal evaluation period.
8. The undersigned proposer acknowledges responsibility for payment of all
proposal preparation and submission costs.
9. FIRM NAME: Community National Bank
ADDRESS: P.O. Box 259 Derby Road
Derby, Vermont 05829
STATE OF INCORPORATION: Vermont
SIGNATURE: /s/ Stephen P. Marsh
PRINT OR
TYPE NAME: Stephen P. Marsh
TITLE: Senior Vice President & Cashier
TELEPHONE/FAX NUMBERS: Phone-- (802)334-7915
Fax-- (802)334-3484
CORPORATE SEAL
(NOTE: IF PROPOSER IS A PARTNERSHIP
GIVE FULL NAMES OF ALL PARTNERS)
3 of 3
STATE OF VERMONT
AGENCY OF ADMINISTRATION
DEPARTMENT OF STATE BUILDINGS
TWO GOVERNOR AIKEN AVENUE, DRAWER 33
MONTPELIER, VERMONT 05633-5801
TEL: (802) 828-3314
FAX: (802) 828-3533
September 4, 1996
Stephen P. Marsh, Senior Vice President
Community National Bank
P.O. Box 257, Derby Road
Derby, VT 05829
Subject: Emory A. Hebard State Office Building - Condominium Space Purchase
Proposal
Dear Mr. Marsh:
The Department of State Buildings and General Services has received your June 5,
1996 proposal for +-3,064 square feet of space on the building's first floor at
the purchase price of $65.00 per square foot and your July 24, 1996 proposal for
4,794 square feet of space on the building's second floor at the purchase price
of $75.00 per square foot in accordance with bid documents dated May 8, 1996.
It is understood by both parties that ownership of the land will remain with the
State and that all costs for design and fit-up construction of the interior of
the space will be borne by the bank.
The Department finds the Community National Bank's offer acceptable and intends
to enter into a Purchase and Sales Agreement and a Condominium Agreement with
the bank for the bank's purchase of the noted space subject to all required
State approvals and project funding.
Congratulations on your successful proposal! On behalf of the State of Vermont,
Agency of Administration, Department of Buildings and General Services, I
welcome you to the project and look forward to a successful partnership.
A public "demolition groundbreaking" ceremony is being planned for late
September or early October. I would like to announce the Bank's participation
in the project at that time if we are able to sign the Purchase and Sales
Agreement prior to the ceremony date.
Please contact my Project Engineer, John Ostrum, at 828-3314, to set up a time
when our respective Attorneys can meet to begin work on the Purchase and Sales
Agreement and other required documents.
Sincerely,
/s/ Thomas W. Torti
Thomas W. Torti
Deputy Secretary of Administration
TWT/JPO/pn
Community NATIONAL BANK
P.O. Box 259, Derby, Vermont 05829
Tel. 802/334-7915 Fax 802/334/8266
July 24, 1996
State of Vermont
Department of State Buildings
Attn: John P. Ostrum
Drawer 33, 2 Governor Aiken Avenue
Montpelier, Vermont 05633-5801
Dear John:
Please accept this letter as an offer from Community National Bank to purchase
the 4,794 square feet on the second floor of the new office building in Newport.
Our proposed purchase price is $75.00 per square foot. This offer is in
addition to our previous offer of $65.00 per square foot for 3,064 square feet
on the first floor. This offer is contingent, of course, on proper regulatory
approval.
As you are well aware, Community National Bank has been committed to this
project from the very beginning, and we are excited about the economic impact it
will have on our region. We feel that we should play a significant part in this
ambitious project.
John, we look forward to a long relationship with the State as this project goes
ahead, and to a favorable reply to this offer.
If there is additional information or anything that we can assist you with,
please feel free to contact me. Thank you.
Sincerely,
COMMUNITY NATIONAL BANK
/s/ Stephen P. Marsh
Stephen P. Marsh
Senior Vice President & Cashier
SPM/kp
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in this Form S-2
Registration Statement of our report dated January 3, 1996 on the consolidated
financial statements included or incorporated by reference in the Community
Bancorp. and Subsidiary Annual Report on Form 10-KSB for the year ended December
31, 1995, and to all references to our firm included in this registration
statement.
December 18, 1996
St. Johnsbury, Vermont /S/ A.M. Peisch & Company
