As filed with the Securities and Exchange Commission on July 12,
1999
Registration No. 333-_______
_________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
FRANKLIN FINANCIAL SERVICES CORPORATION
(Exact name of registrant as specified in its charter)
Pennsylvania 0-12126
(State or other jurisdiction of (Commission File No.)
incorporation or organization)
25-1440803
(I.R.S. Employer
Identification Number)
20 South Main Street, Chambersburg, Pennsylvania 17201-0819
(Address of Principal Executive Offices Including Zip Code)
FARMERS AND MERCHANTS TRUST COMPANY
PROFIT-SHARING PLAN
(Exact name of registrant as specified in its charter)
Franklin Financial Services Corporation
20 South Main Street, Chambersburg, Pennsylvania 17201-0819
(Address of Principal Executive Offices)
FARMERS AND MERCHANTS TRUST COMPANY
PROFIT-SHARING PLAN
(Full title of the Plan)
Elaine G. Meyers
Chief Financial Officer
20 South Main Street, Chambersburg, Pennsylvania 17201-0819
(717) 264-6116
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
CALCULATION OF REGISTRATION FEE(1)
Proposed Proposed
Title of each Maximum Maximum Amount
Class of Amount Offering Aggregate of
Securities to to be Price per Offering Registration
Registered Registered(2) Share(2) Price Fee
<PAGE 1>
Common 100,000 $ 29.75 $2,975,000 $828
Stock, shares
par value
$1.00 per
share
________________________
(1) In addition, pursuant to Rule 416(c) under the Securities
Act of 1933, this registration statement also covers an
indeterminate amount of interests to be offered or sold
pursuant to the employee benefit plan described herein.
(2) Estimated solely for calculating the amount of the
registration fee, pursuant to paragraphs (c) and (h) of
Rule 457 under the Securities Act of 1933, on the basis of
the average of the high and low sale prices of such
securities on the NASDAQ National Market on July 8, 1999,
which date is within five business days prior to filing.
<PAGE 2>
<PAGE>
PART II
This Registration Statement relates to 100,000 shares
of Common Stock, par value $1.00 per share (the "Common Stock"),
of Franklin Financial Services Corporation (the "Registrant" or
the "Company"), being registered for use under Farmers and
Merchants Trust Company Profit-Sharing Plan (the "Plan").
Item 3. Incorporation of Documents by Reference
The following documents previously filed by the
Registrant with the Securities and Exchange Commission (the
"Commission") are incorporated herein by reference:
(i) the Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1998;
(ii) the Registrant's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1999; and
(iii) the Annual Report on Form 11-K of the Plan filed
June 29, 1999.
All Documents subsequently filed by the Registrant or
the Plan pursuant to Sections 13(a), 13(c) and 15(d) of the
Securities Exchange Act of 1934, prior to the filing of a post-
effective amendment which indicates that all securities offered
have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated herein by reference
and to be part hereof from the date of filing of such documents.
Item 4. Description of Securities
Authorized Capital Stock
Franklin Financial Services Corporation's authorized
capital stock consists of 5,000,000 shares of common stock, $1.00
par value per share (the "Common Stock"), and 5,000,000 shares of
no par value stock (the "Blank Check Stock"). The Board of
Directors of the Company has the authority to issue shares of the
Blank Check Stock in one or more classes or series as common or
preferred stock and to establish by resolution the voting rights,
conversion rights, redemption rights, and dividend and
liquidation rights and preferences, if any, of any such class or
series.
Cumulative Voting
Except as provided in any resolution adopted by the
Board of Directors of the Company establishing the terms of any
class or series of Blank Check Stock, each outstanding share of
capital stock of the Company is entitled to one vote on all
matters presented to the shareholders. No shareholder of the
<PAGE 3> Company may cumulate his or her votes for the election
of directors of the Company.
Amendment of Articles or Bylaws
Unless the Board of Directors has previously approved
an amendment to the Articles of Incorporation of the Company,
such amendment to the Articles of Incorporation must be approved
by the holders of two-thirds of the outstanding shares entitled
to vote. If the amendment was previously approved by the Board
of Directors, then only the affirmative vote of the holders of a
majority of the outstanding shares entitled to vote is necessary
to approve such amendment.
The Board of Directors of the Company has the power to
amend the Bylaws of the Company, subject to the right of
shareholders of the Company to amend, repeal, or alter any
provision of the Bylaws by an affirmative vote of the holders of
two-thirds of the outstanding shares entitled to vote.
Antitakeover Provisions
Certain provisions of the Company's Articles of
Incorporation may have the effect of deterring an unsolicitated
tender offer for the Company's stock or a proxy contest to obtain
control of the Company's Board of Directors. Certain of these
provisions are summarized below.
The Articles of Incorporation of the Company provide
that the affirmative vote of holders of two-thirds of the
outstanding shares entitled to vote is required to approve any
merger or consolidation of the Company with or into another
corporation or any dissolution of the Company, unless such action
was approved in advance by the Board of Directors of the Company.
If such action was approved in advance by the Board of Directors,
then the affirmative vote of the holders of only a majority of
the outstanding shares entitled to vote is required to approve
any such merger, consolidation or dissolution.
The Articles of Incorporation of the Company provide
that if any person or corporation (an "Interested Shareholder")
shall acquire beneficial ownership of 50% or more of the
outstanding Common Stock of the Company, then the Company shall
within 30 days offer in writing to redeem all or any shares of
Common Stock of the Company held by any shareholder of the
Company, except the Interested Shareholder, at a price equal to
the greatest of:
(1) the highest price paid by the Interested
Shareholder for any share of the Company's Common Stock during
the 12 month period preceding the date of such redemption offer
(the "Offer Date");
<PAGE 4>
(2) the highest market price for the Company's Common
Stock on any trading day during the 12 month period preceding the
Offer Date; or
(3) the book value per share of the Company's Common
Stock as reported in its statement of condition for the quarterly
period immediately preceding the Offer Date.
The Company is not required to make such redemption
offer if the Board of Directors approved the acquisition by the
Interested Shareholder of 50% or more of the Company's Common
Stock prior to the Interested Shareholder's acquisition of
beneficial ownership of 5% or more of the Company's outstanding
Common Stock.
In addition, in determining whether to oppose any
tender offer for the Company's outstanding stock, the Board of
Directors may consider the effect of such offer on the Company's
employees, customers and depositors and the communities served by
the Company and its subsidiaries.
Staggered Board
The Company's Bylaws provide that the Board of
Directors shall be divided into three classes, with one class of
directors being elected each year. Accordingly, any person who
desires to acquire control of the Board of Directors through a
proxy contest must wait for two years to elect a majority of the
Directors.
Item 5. Interests of Named Experts and Counsel
None.
Item 6. Indemnification of Directors and Officers
Pennsylvania law provides that a Pennsylvania
corporation may indemnify directors, officers, employees and
agents of the corporation against liabilities they may incur in
such capacities for any action taken or any failure to act,
whether or not the corporation would have the power to indemnify
the person under any provision of law, unless such action or
failure to act is determined by a court to have constituted
recklessness or willful misconduct. Pennsylvania law also
permits the adoption of a bylaw amendment, approved by
shareholders, providing for the elimination of a director's
liability for monetary damages for any action taken or any
failure to take any action unless (1) the director has breached
or failed to perform the duties of his office and (2) the breach
or failure to perform constitutes self-dealing, willful
misconduct or recklessness.
The Bylaws of the Registrant provide for
(1) indemnification of directors, officers, employees and agents
<PAGE 5> of the registrant and its subsidiaries and (2) the
elimination of a director's liability for monetary damages, to
the fullest extent permitted by Pennsylvania law.
Item 7. Exemption from Registration Claims
Not Applicable.
Item 8. Exhibits
4.1 Farmers and Merchants Trust Company Profit-Sharing
Plan.
4.2 Articles of Incorporation of Franklin Financial
Services Corporation (Incorporated by Reference to
Exhibit 4 to Franklin Financial Services
Corporation's Registration Statement on Form S-8
(No. 33-36509)).
4.3 Bylaws of Franklin Financial Services Corporation
(Incorporated by Reference to Exhibit 4 to
Franklin Financial Services Corporation's
Registration Statement on Form S-8 (No. 33-
36509)).
5.1 Opinion of Stevens & Lee regarding legality of
shares.
23.1 Consent of Stevens & Lee (included in
Exhibit 5.1).
23.2 Consent of Arthur Andersen LLP.
The undersigned Registrant hereby undertakes to submit the Plan
to the Internal Revenue Service (the "IRS") in a timely manner in
order to obtain a determination letter that the Plan is qualified
under Section 401 of the Internal Revenue Code and to make any
changes in the Plan required by the IRS in order to issue such a
determination letter.
Item 9. Undertakings
(a) 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
<PAGE 6> date of the Registration
Statement (or the most recent post-
effective amendment thereof) which,
individually or in the aggregate,
represent a fundamental change in the
information set forth in the
Registration Statement. Notwithstanding
the foregoing, any increase or decrease
in volume of securities offered (if the
total dollar value of securities offered
would not exceed that which was
registered) and any deviation from the
low or high end of the estimated maximum
offering range may be reflected in the
form of prospectus filed with the
Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume
and price represent no more than a 20%
change in the maximum aggregate offering
price set forth in the "Calculation of
Registration Fee" table in the effective
Registration Statement;
(iii) To include any material information with
respect to the plan of distribution not
previously disclosed in the Registration
Statement or any material change to such
information in the Registration
Statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(ii) do not
apply if the Registration Statement is on Form S-3,
Form S-8, or Form F-3, and the information required to
be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with
or furnished to the Commission by the Registrant
pursuant to Section 13 or Section 15(d) of the Exchange
Act of 1934 that are incorporated by reference 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.
<PAGE 7>
(b) The undersigned Registrant hereby undertakes that,
for purposes of determining any liability under
the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by
reference in the Registration Statement shall be
deemed to be a new Registration Statement relating
to the securities offered therein, and the
offering of such securities at that time shall be
deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted
to directors, officers and controlling persons of
the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and
Exchange Commission such indemnification is
against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities
(other than the payment by the Registrant of
expenses incurred or paid by a director, officer
or controlling person of the Registrant in the
successful defense of any action, suit or
proceeding) is asserted by such director, officer
or controlling person in connection with the
securities being registered, the Registrant will,
unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the
question of whether such indemnification by it is
against public policy as expressed in the Act and
will be governed by the final adjudication of such
issue.
<PAGE 8>
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, the Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on
Form S-8 and has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in Chambersburg, Pennsylvania, on July 8, 1999.
FRANKLIN FINANCIAL SERVICES
CORPORATION
By:/s/William E. Snell, Jr.
William E. Snell, Jr.
President and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of
1933, the trustees (or other persons who administer the Plan)
have duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in
Chambersburg, Pennsylvania, on July 7, 1999.
FARMERS AND MERCHANTS TRUST COMPANY
PROFIT SHARING PLAN
By: Plan Administrative Committee,
as Plan Administrator
By:/s/Deborah M. Kepics
Deborah M. Kepics,
Vice President
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 date indicated.
Signature Title Date
/s/William E. Snell, Jr. President; Director July 8, 1999
William E. Snell, Jr. (Chief Executive
Officer)
/s/Elaine G. Meyers Treasurer and Chief July 7, 1999
Elaine G. Meyers Financial Officer
(Chief Financial and
Accounting Officer)
/s/Jay L. Benedict, Jr. Chairman of the July 8, 1999
Jay L. Benedict, Jr. Board and Director
<PAGE 9>
/s/Robert G. Zulliner Vice Chairman and July 8, 1999
Robert G. Zullinger Director
/s/Charles S. Bender II Executive Vice July 8, 1999
Charles S. Bender II President and
Director
/s/G. Warren Elliott Director July 8, 1999
G. Warren Elliott
Director July __, 1999
Omer L. Eshleman
/s/Donald A. Fry Director July 8, 1999
Donald A. Fry
Director July __, 1999
Dennis W. Good, Jr.
/s/H. Huber McCleary Director July 8, 1999
H. Huber McCleary
/s/Jeryl C. Miller Director July 8, 1999
Jeryl C. Miller
/s/Stephen E. Patterson Director July 8, 1999
Stephen E. Patterson
/s/Charles M. Sioberg Director July 8, 1999
Charles M. Sioberg
/s/Martha B. Walker Director July 8, 1999
Martha B. Walker
<PAGE 10>
FARMERS AND MERCHANTS TRUST CO.
PROFIT SHARING PLAN
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
ARTICLE II
TOP HEAVY AND ADMINISTRATION
2.1 TOP HEAVY PLAN REQUIREMENTS 15
2.2 DETERMINATION OF TOP HEAVY STATUS 15
2.3 POWERS AND RESPONSIBILITIES OF THE EMPLOYER 19
2.4 DESIGNATION OF ADMINISTRATIVE AUTHORITY 20
2.5 ALLOCATION AND DELEGATION OF RESPONSIBILITIES 20
2.6 POWERS AND DUTIES OF THE ADMINISTRATOR 20
2.7 RECORDS AND REPORTS 22
2.8 APPOINTMENT OF ADVISERS 22
2.9 INFORMATION FROM EMPLOYER 22
2.10 PAYMENT OF EXPENSES 22
2.11 MAJORITY ACTIONS 23
2.12 CLAIMS PROCEDURE 23
2.13 CLAIMS REVIEW PROCEDURE 23
ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY 24
3.2 APPLICATION FOR PARTICIPATION 24
3.3 EFFECTIVE DATE OF PARTICIPATION 24
3.4 DETERMINATION OF ELIGIBILITY 24
3.5 TERMINATION OF ELIGIBILITY 25
3.6 OMISSION OF ELIGIBLE EMPLOYEE 25
3.7 INCLUSION OF INELIGIBLE EMPLOYEE 25
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION 26
4.2 PARTICIPANT'S SALARY REDUCTION ELECTION 26
4.3 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION 30
4.4 ALLOCATION OF CONTRIBUTION AND EARNINGS 31
4.5 ACTUAL DEFERRAL PERCENTAGE TESTS 35
4.6 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS 37
4.7 MAXIMUM ANNUAL ADDITIONS 39
4.8 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS 44
4.9 TRANSFERS FROM QUALIFIED PLANS 45
4.10 INVESTMENT FUNDS 47
ARTICLE V
VALUATIONS
5.1 VALUATION OF THE TRUST FUND 47
5.2 METHOD OF VALUATION 48
ARTICLE VI
DETERMINATION AND DISTRIBUTION OF BENEFITS
6.1 DETERMINATION OF BENEFITS UPON RETIREMENT 48
6.2 DETERMINATION OF BENEFITS UPON DEATH 48
6.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY 50
6.4 DETERMINATION OF BENEFITS UPON TERMINATION 50
6.5 DISTRIBUTION OF BENEFITS 52
6.6 DISTRIBUTION OF BENEFITS UPON DEATH 57
6.7 TIME OF SEGREGATION OR DISTRIBUTION 61
6.8 DISTRIBUTION FOR MINOR BENEFICIARY 61
6.9 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN 61
6.10 PRE-RETIREMENT DISTRIBUTION 61
6.11 LIMITATIONS ON BENEFITS AND DISTRIBUTIONS 62
ARTICLE VII
TRUSTEE
7.1 BASIC RESPONSIBILITIES OF THE TRUSTEE 62
7.2 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE 63
7.3 OTHER POWERS OF THE TRUSTEE 63
7.4 LOANS TO PARTICIPANTS 66
7.5 DUTIES OF THE TRUSTEE REGARDING PAYMENTS 68
7.6 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES 68
7.7 ANNUAL REPORT OF THE TRUSTEE 69
7.8 AUDIT 69
7.9 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE 70
7.10 TRANSFER OF INTEREST 71
7.11 EMPLOYER SECURITIES AND REAL PROPERTY 71
ARTICLE VIII
AMENDMENT, TERMINATION AND MERGERS
8.1 AMENDMENT 72
8.2 TERMINATION 72
8.3 MERGER OR CONSOLIDATION 73
ARTICLE IX
MISCELLANEOUS
9.1 PARTICIPANT'S RIGHTS 73
9.2 ALIENATION 73
9.3 CONSTRUCTION OF PLAN 74
9.4 GENDER AND NUMBER 74
9.5 LEGAL ACTION 75
9.6 PROHIBITION AGAINST DIVERSION OF FUNDS 75
9.7 BONDING 75
9.8 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE 76
9.9 INSURER'S PROTECTIVE CLAUSE 76
9.10 RECEIPT AND RELEASE FOR PAYMENTS 76
9.11 ACTION BY THE EMPLOYER 76
9.12 NAMED FIDUCIARIES AND ALLOCATION OF
RESPONSIBILITY 76
9.13 HEADINGS 77
9.14 APPROVAL BY INTERNAL REVENUE SERVICE 77
9.15 UNIFORMITY 78
ARTICLE X
PARTICIPATING EMPLOYERS
10.1 ADOPTION BY OTHER EMPLOYERS 78
10.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS 78
10.3 DESIGNATION OF AGENT 79
10.4 EMPLOYEE TRANSFERS 79
10.5 PARTICIPATING EMPLOYER'S CONTRIBUTION 80
10.6 AMENDMENT 80
10.7 DISCONTINUANCE OF PARTICIPATION 80
10.8 ADMINISTRATOR'S AUTHORITY 81
10.9 PARTICIPATING EMPLOYER CONTRIBUTION FOR
AFFILIATE 81
FARMERS AND MERCHANTS TRUST CO.
PROFIT SHARING PLAN
THIS AGREEMENT, hereby made and entered into this 31st
day of December, 1991, between Farmers and Merchants Trust Co.
(herein referred to as the "Employer") and Farmers and Merchants
Trust Co. (herein referred to as the "Trustee").
W I T N E S S E T H:
WHEREAS, the Employer heretofore established a Profit
Sharing Plan and Trust effective January 1, 1983, (hereinafter
called the "Effective Date") known as Farmers and Merchants Trust
Co. Profit Sharing Plan (herein referred to as the "Plan") in
recognition of the contribution made to its successful operation
by its employees and for the exclusive benefit of its eligible
employees; and
WHEREAS, under the terms of the Plan, the Employer has
the ability to amend the Plan, provided the Trustee joins in such
amendment if the provisions of the Plan affecting the Trustee are
amended;
NOW, THEREFORE, effective January 1, 1989, except as
otherwise provided, the Employer and the Trustee in accordance
with the provisions of the Plan pertaining to amendments thereof,
hereby amend the Plan in its entirety and restate the Plan to
provide as follows:
ARTICLE I
DEFINITIONS
1.1 "Act" means the Employee Retirement Income
Security Act of 1974, as it may be amended from time to time.
1.2 "Administrator" means the Employer or the person
designated by the Employer pursuant to Section 2.4 to administer
the Plan on behalf of the Employer.
1.3 "Affiliated Employer" means the Employer and any
corporation which is a member of a controlled group of
corporations (as defined in Code Section 414(b)) which includes
the Employer; any trade or business (whether or not incorporated)
which is under common control (as defined in Code Section 414(c))
with the Employer; any organization (whether or not incorporated)
which is a member of an affiliated service group (as defined in
Code Section 414(m)) which includes the Employer; and any other
entity required to be aggregated with the Employer pursuant to
Regulations under Code Section 414(o).
1.4 "Aggregate Account" means, with respect to each
Participant, the value of all accounts maintained on behalf of a
<PAGE 1> Participant, whether attributable to Employer or
Employee contributions, subject to the provisions of Section 2.2.
1.5 "Anniversary Date" means December 31st.
1.6 "Beneficiary" means the person to whom the share
of a deceased Participant's total account is payable, subject to
the restrictions of Sections 6.2 and 6.6.
1.7 "Code" means the Internal Revenue Code of 1986,
as amended or replaced from time to time.
1.8 "Compensation" with respect to any Participant
means such Participant's regular salary and wages including
overtime and bonuses paid by the Employer for a Plan Year, but
excluding incentive compensation. Amounts contributed by the
Employer under the within Plan, except for an Employee's
Compensation that is deferred pursuant to Section 4.2, and any
non-taxable fringe benefits shall not be considered as
Compensation.
For purposes of this Section, the determination of
Compensation shall be made by including salary reduction
contributions made on behalf of an Employee to a plan maintained
under Code Section 125.
Compensation shall be recognized as of an Employee's
effective date of participation pursuant to Section 3.3.
Compensation in excess of $200,000 shall be
disregarded. Such amount shall be adjusted at the same time and
in such manner as permitted under Code Section 415(d). In
applying this limitation, the family group of a Highly
Compensated Participant who is subject to the Family Member
aggregation rules of Code Section 414(q)(6) because such
Participant is either a "five percent owner" of the Employer or
one of the ten (10) Highly Compensated-Employees paid the
greatest "415 Compensation" during the year, shall be treated as
a single Participant, except that for this purpose Family Members
shall include only the affected Participant's spouse and any
lineal descendants who have not attained age nineteen (19) before
the close of the year. If, as a result of the application of
such rules the adjusted $200,000 limitation is exceeded, then the
limitation shall be prorated among the affected Family Members in
proportion to each such Family Member's Compensation prior to the
of this limitation.
For Plan Years beginning prior to January 1, 1989, the
$200,000 limit (without regard to Family Member aggregation)
shall apply only for Top Heavy Plan Years and shall not be
adjusted.
<PAGE 2>
1.9 "Contract" or "Policy" means a life insurance
policy or annuity contract (group or individual) issued by the
insurer as elected.
1.10 "Deferred Compensation" with respect to any
Participant means that portion of the Participant's total
Compensation which has been contributed to the Plan in accordance
with the Participant's deferral election pursuant to Section 4.2.
1.11 "Early Retirement Date". This Plan does not
provide for a retirement date prior to Normal Retirement Date.
1.12 "Elective Contribution" means the Employer's
contributions to the Plan that are made pursuant to the
Participant's deferral election provided in Section 4.2. In
addition, the Employer's matching contribution made pursuant to
Section 4.1(b) and any Employer Qualified Non-Elective
Contribution made pursuant to Section 4.6 shall be considered an
Elective Contribution for purposes of the Plan. Any such
contributions deemed to be Elective Contributions shall be
subject to the requirements of Sections 4.2(b) and 4.2(c) and
shall further be required to satisfy the discrimination
requirements of Regulation 1.401(k)-l(b)(3), the provisions of
which are specifically incorporated herein by reference.
1.13 "Eligible Employee" means any Employee.
Employees of any Employer shall be eligible to
participate in this Plan provided such Employer has specifically
adopted this Plan in writing.
1.14 "Employee" means any person who is employed by
the Employer or Affiliated Employer, but excludes any person who
is an independent contractor. Employee shall include Leased
Employees within the meaning of Code Sections 414(n)(2) and
414(o)(2) unless such Leased Employees are covered by a plan
described in Code Section 414(n)(5) and such Leased Employees do
not constitute more than 20% of the recipient's non-highly
compensated work force.
1.15 "Employer" means Farmers and Merchants Trust Co.
and any Participating Employer (as defined in Section 10.1) which
shall adopt this Plan; any successor which shall maintain this
Plan; and any predecessor which has maintained this Plan. The
Employer is a corporation, with principal offices in the
Commonwealth of Pennsylvania.
1.16 "Excess Contributions" means, with respect to a
Plan Year, the excess of Elective Contributions made on behalf of
Highly Compensated Participants for the Plan Year over the
maximum amount of such contributions permitted under
Section 4.5(a). Excess Contributions shall be treated as an
"annual addition" pursuant to Section 4.7(b).
<PAGE 3>
1.17 "Excess Deferred Compensation" means, with
respect to any: taxable year of a Participant, the excess of the
aggregate amount of such Participant's Deferred Compensation and
the elective deferrals pursuant to Section 4.2(f) actually made
on behalf of such Participant for such taxable year, over the
dollar limitation provided for in Code Section 402(g), which is
incorporated herein by reference. Excess Deferred Compensation
shall be treated as an "annual addition" pursuant to
Section 4.7(b).
1.18 "Family Member" means, with respect to an
affected Participant, such Participant's spouse, such
Participant's lineal descendants and ascendants and their
spouses, all as described in Code Section 414(q)(6)(B).
1.19 "Fiduciary" means any person who (a) exercises
any discretionary authority or discretionary control respecting
management of the Plan or exercises any authority or control
respecting management or disposition of its assets, (b) renders
investment advice for a fee or other compensation, direct or
indirect, with respect to any monies or other property of the
Plan or has any authority or responsibility to do so, or (c) has
any discretionary authority or discretionary responsibility in
the administration of the Plan, including, but not limited to,
the Trustee, the Employer and its representative body and the
Administrator.
1.20 "Fiscal Year" means the Employer's accounting
year of 12 months commencing on January 1st of each year and
ending the following December 31st.
1.21 "Forfeiture." Under this Plan, Participant
accounts are 100% Vested at all times. Any amounts that may
otherwise be forfeited under the Plan pursuant to Section 3.7 or
6.9 shall be used to reduce the contribution of the Employer.
1.22 "Former Participant" means a person who has been
a Participant, but who has ceased to be a Participant for any
reason.
1.23 "415 Compensation" means compensation as defined
in Section 4.7(d).
1.24 "414(s) Compensation" with respect to any
Employee means his Deferred Compensation plus "415 Compensation"
paid during a Plan Year. The amount of "414(s) Compensation"
with respect to any Employee shall include "414(s) Compensation"
during the entire twelve (12) month period ending on the last day
of such Plan Year, except that for Plan Years beginning prior to
the later of January 1, 1992 or the date that is sixty (60) days
after the date final Regulations are issued, "414(s)
Compensation" shall only be recognized as of an Employee's
effective date of participation.
<PAGE 4>
For purposes of this Section, the determination of
"414(s) Compensation" shall be made by including salary reduction
contributions made on behalf of an Employee to a plan maintained
under Code Section 125.
"414(s) Compensation" in excess of $200,000 shall be
disregarded. Such amount shall be adjusted at the same time and
in such manner as permitted under Code Section 415(d). However,
for Plan Years beginning prior to January 1, 1989, the $200,000
limit shall apply only for Top Heavy Plan Years and shall not be
adjusted.
1.25 "Highly Compensated Employee" means an Employee
described in Code Section 414(q) and the Regulations thereunder,
and generally means an Employee who performed services for the
Employer during the "determination year" and is in one or more of
the following groups:
(a) Employees who at any time during the
"determination year" or "look-back year" were "five percent
owners" as defined in Section 1.31(c).
(b) Employees who received "415 Compensation"
during the "look-back year" from the Employer in excess of
$75,000.
(c) Employees who received "415 Compensation"
during the "look-back year" from the Employer in excess of
$50,000 and were in the Top Paid Group of Employees for the
Plan Year.
(d) Employees who during the "look-back year"
were officers of the Employer (as that term is defined
within the meaning of the Regulations under Code
Section 416) and received "415 Compensation" during the
"look-back year" from the Employer greater than 50 percent
of the limit in effect under Code Section 415(b)(1)(A) for
any such Plan Year. The number of officers shall be limited
to the lesser of (i) 50 employees; or (ii) the greater of 3
employees or 10 percent of all employees. For the purpose
of determining the number of officers, Employees described
in Section 1.55(a), (b), (c) and (d) shall be excluded, but
such Employees shall still be considered for the purpose of
identifying the particular Employees who are officers. If
the Employer does not have at least one officer whose annual
"415 Compensation" is in excess of 50 percent of the Code
Section 415(b)(1)(A) limit, then the highest paid officer of
the Employer will be treated as a Highly Compensated
Employee.
(e) Employees who are in the group consisting
of the 100 Employees paid the greatest "415 Compensation"
during the "determination year" and are also described in
<PAGE 5> (b), (c) or (d) above when these paragraphs are
modified to substitute "determination year" for "look-back
year".
The "look-back year" shall be the calendar year ending
with or within the Plan Year for which testing is being
performed, and the "determination year" (if applicable) shall be
the period of time, if any, which extends beyond the "look-back
year" and ends on the last day of the Plan Year for which testing
is being performed (the "lag period"). If the "lag period" is
less than twelve months long, the dollar threshold amounts
specified in (b), (c) and (d) above shall be prorated based upon
the number of months in the "lag period".
For purposes of this Section, the determination of
"415 Compensation" shall be made by including amounts that would
otherwise be excluded from a Participant's gross income by reason
of the application of Code Sections 125, 402(a)(8), 402(h)(1)(B)
and, in the case of Employer contributions made pursuant to a
salary reduction agreement, by including amounts that would
otherwise be excluded from a Participant's gross income by reason
of the application of Code Section 403(b). Additionally, the
dollar threshold amounts specified in (b) and (c) above shall be
adjusted at such time and in such manner as is provided in
Regulations. In the case of such an adjustment, the dollar
limits which shall be applied are those for the calendar year in
which the "determination year" or "look-back year" begins.
In determining who is a Highly Compensated Employee,
Employees who are non-resident aliens and who received no earned
income (within the meaning of Code Section 911(d)(2)) from the
Employer constituting United States source income within the
meaning of Code Section 861(a)(3) shall not be treated as
Employees. Additionally, all Affiliated Employers shall be taken
into account as a single employer and Leased Employees within the
meaning of Code Sections 414(n)(2) and 414(o)(2) shall be
considered Employees unless such Leased Employees are covered by
a plan described in Code Section 414(n)(5) and are not covered in
any qualified plan maintained by the Employer. The exclusion of
Leased Employees for this purpose shall be applied on a uniform
and consistent basis for all of the Employer's retirement plans.
Highly Compensated Former Employees shall be treated as Highly
Compensated Employees without regard to whether they performed
services during the "determination year".
1.26 "Highly Compensated Former Employee" means a
former Employee who had a separation year prior to the
"determination year" and was a Highly Compensated Employee in the
year of separation from service or in any "determination year"
after attaining age 55. Notwithstanding the foregoing, an
Employee who separated from service prior to 1987 will be treated
as a Highly Compensated Former Employee only if during the
separation year (or year preceding the separation year) or any
year after the Employee attains age 55 (or the last year ending
<PAGE 6> before the Employee's 55th birthday), the Employee
either received "415 Compensation" in excess of $50,000 or was a
"five percent owner". For purposes of this Section,
"determination year", "415 Compensation" and "five percent owner"
shall be determined in accordance with Section 1.25. Highly
Compensated Former Employees shall be treated as Highly
Compensated Employees. The method set forth in this Section for
determining who is a "Highly Compensated Former Employee" shall
be applied on a uniform and consistent basis for all purposes for
which the Code Section 414(q) definition is applicable.
1.27 "Highly Compensated Participant" means any
Highly Compensated Employee who is eligible to participate in the
Plan.
1.28 "Hour of Service" means (1) each hour for which
an Employee is directly or indirectly compensated or entitled to
compensation by the Employer for the performance of duties during
the applicable computation period; (2) each hour for which an
Employee is directly or indirectly compensated or entitled to
compensation by the Employer (irrespective of whether the
employment relationship has terminated) for reasons other than
performance of duties (such as vacation, holidays, sickness, jury
duty, disability, lay-off, military duty or leave of absence)
during the applicable computation period; (3) each hour for which
back pay is awarded or agreed to by the Employer without regard
to mitigation of damages. These hours will be credited to the
Employee for the computation period or periods to which the award
or agreement pertains rather than the computation period in which
the award, agreement or payment is made. The same Hours of
Service shall not be credited both under (1) or (2), as the case
may be, and under (3).
Notwithstanding the above, (i) no more than 501 Hours
of Service are required to be credited to an Employee on account
of any single continuous period during which the Employee
performs no duties (whether or not such period occurs in a single
computation period); (ii) an hour for which an Employee is
directly or indirectly paid, or entitled to payment, on account
of a period during which no duties are performed is not required
to be credited to the Employee if such payment is made or due
under a plan maintained solely for the purpose of complying with
applicable worker's compensation, or unemployment compensation or
disability insurance laws; and (iii) Hours of Service are not
required to be credited for a payment which solely reimburses an
Employee for medical or medically related expenses incurred by
the Employee.
For purposes of this Section, a payment shall be
deemed to be made by or due from the Employer regardless of
whether such payment is made by or due from the Employer
directly, or indirectly through, among others, a trust fund, or
insurer, to which the Employer contributes or pays premiums and
regardless of whether contributions made or due to the trust
<PAGE 7> fund, insurer, or other entity are for the benefit of
particular Employees or are on behalf of a group of Employees in
the aggregate.
An Hour of Service must be counted for the purpose of
determining a Year of Service, a year of participation for
purposes of accrued benefits, a 1-Year Break in Service, and
employment commencement date (or reemployment commencement date).
In addition, Hours of Service will be credited for employment
with other Affiliated Employers. The provisions of Department of
Labor regulations 2530.200b-2(b) and (c) are incorporated herein
by reference.
1.29 "Income" means the income allocable to "excess
amounts" which shall equal the sum of the allocable gain or loss
for the "applicable computation period" and the allocable gain or
loss for the period between the end of the "applicable
computation period" and the date of distribution ("gap period").
The income allocable to "excess amounts" for the "applicable
computation period" and the "gap period" is calculated separately
and is determined by multiplying the income for the "applicable
computation period" or the "gap period" by a fraction. The
numerator of the fraction is the "excess amount" for the
"applicable computation period". The denominator of the fraction
is the total "account balance" attributable to "Employer
contributions" as of the end of the "applicable computation
period" or the "gap period", reduced by the gain allocable to
such total amount for the "applicable computation period" or the
"gap period" and increased by the loss allocable to such total
amount for the "applicable computation period" or the "gap
period". The provisions of this Section shall be applied:
(a) For purposes of Section 4.2(f), by
substituting:
(1) "Excess Deferred Compensation" for
"excess amounts";
(2) "taxable year of the Participant" for
applicable computation period";
(3) "Deferred Compensation" for "Employer
contributions"; and
(4) "Participant's Elective Account" for
"account balance".
(b) For purposes of Section 4.6(a), by
substituting:
(1) "Excess Contributions" for "excess
amount";
<PAGE 8>
(2) "Plan Year" for "applicable computation
period";
(3) "Elective Contributions" for "Employer
contributions"; and
(4) "Participant's Elective Account" for
"account balance".
In lieu of the "fractional method" described above, a
"safe harbor method" may be used to calculate the allocable
Income for the "gap period". Under such "safe harbor method",
allocable Income for the "gap period" shall be deemed to equal
ten percent (10%) of the Income allocable to "excess amounts" for
the "applicable computation period" multiplied by the number of
calendar months in the "gap period". For purposes of determining
the number of calendar months in the "gap period", a distribution
occurring on or before the fifteenth day of the month, shall be
treated as having been made on the last day of the preceding
month and a distribution occurring after such fifteenth day shall
be treated as having been made on the first day of the next
subsequent month.
Income allocable to any distribution of Excess
Deferred Compensation on or before the last day of the taxable
year of the Participant shall be calculated from the first day of
the taxable year of the Participant to the date on which the
distribution is made pursuant to either the "fractional method"
or the "safe harbor method".
Notwithstanding the above, for "applicable computation
periods" which began in 1987, Income during the "gap period"
shall not be taken into account.
1.30 "Investment Manager" means an entity that
(a) has the power to manage, acquire, or dispose of Plan assets
and (b) acknowledges fiduciary responsibility to the Plan in
writing. Such entity must be a person, firm, or corporation
registered as and investment adviser under the Investment
Advisers Act of 1940, a bank, or an insurance company.
1.31 "Key Employee" means an Employee as defined in
Code Section 416(i) and the Regulations thereunder. Generally,
any Employee or former Employee (as well as each of his
Beneficiaries) is considered a Key Employee if he, at any time
during the Plan Year that contains the "Determination Date" or
any of the preceding four (4) Plan Years, has been included in
one of the following categories:
(a) an officer of the Employer (as that term is
defined within the meaning of the Regulations under Code
Section 416) having annual "415 Compensation" greater than
50 percent of the amount in effect under Code Section
415(b)(1)(A) for any such Plan Year. <PAGE 9>
(b) one of the ten employees having annual "415
Compensation" from the Employer for a Plan Year greater than
the dollar limitation in effect under Code Section
415(c)(1)(A) for the calendar year in which such Plan Year
ends and owning (or considered as owning within the meaning
of Code Section 318) both more than one-half percent
interest and the largest interests in the Employer.
(c) a "five percent owner" of the Employer.
"Five percent owner" means any person who owns (or is
considered as owning within the meaning of Code Section 318)
more than five percent (5%) of the outstanding stock of the
Employer or stock possessing more than five percent (5%) of
the total combined voting power of all stock of the Employer
or, in the case of an unincorporated business, any person
who owns more than five percent (5%) of the capital or
profits interest in the Employer. In determining percentage
ownership hereunder, employers that would otherwise be
aggregated under Code Sections 414(b), (c), (m) and (o)
shall be treated as separate employers.
(d) a "one percent owner" of the Employer
having an annual "415 Compensation" from the Employer of
more than $150,000. "One percent owner" means any person
who owns (or is considered as owning within the meaning of
Code Section 318) more than one percent (1%) of the
outstanding stock of the Employer or stock possessing more
than one percent (1%) of the total combined voting power of
all stock of the Employer or, in the case of an
unincorporated business, any person who owns more than one
percent (1%) of the capital or profits interest in the
Employer. In determining percentage ownership hereunder,
employers that would otherwise be aggregated under Code
Sections 414(b), (c), (m) and (o) shall be treated as
separate employers. However, in determining whether an
individual has "415 Compensation" of more than $150,000,
"415 Compensation" from each employer required to be
aggregated under Code Sections 414(b), (c), (m) and (o)
shall be taken into account.
For purposes of this Section, the determination of
"415 Compensation" shall be made by including amounts that would
otherwise be excluded from a Participant's gross income by reason
of the application of Code Sections 125, 402(a)(8), 402(h)(1)(B)
and, in the case of Employer contributions made pursuant to a
salary reduction agreement, by including amounts that would
otherwise be excluded from a Participant's gross income by reason
of the application of Code Section 403(b).
1.32 "Late Retirement Date" means the Anniversary
Date coinciding with or next following a Participant's actual
Retirement Date after having reached his Normal Retirement Date.
<PAGE 10>
1.33 "Leased Employee" means any person (other than
an Employee of the recipient) who pursuant to an agreement
between the recipient and any other person ("leasing
organization") has performed services for the recipient (or for
the recipient and related persons determined in accordance with
Code Section 414(n)(6)) on a substantially full time basis for a
period of at least one year, and such services are of a type
historically performed by employees in the business field of the
recipient employer. Contributions or benefits provided a Leased
Employee by the leasing organization which are attributable to
services performed for the recipient employer shall be treated as
provided by the recipient employer. A Leased Employee shall not
be considered an Employee of the recipient if:
(a) such employee is covered by a money
purchase pension plan providing:
(1) a non-integrated employer contribution
rate of at least 10% of compensation, as defined in
Code Section 415(c)(3), but including amounts
contributed pursuant to a salary reduction agreement
which are excludable from the employee's gross income
under Code Sections 125, 402(a)(8), 402(h) or 403(b);
(2) immediate participation; and
(3) full and immediate vesting.
(b) Leased Employees do not constitute more
than 20% of the recipient's non-highly compensated work
force.
1.34 "Net Profit" means with respect to any Fiscal
Year the Employer's net income or profit for such Fiscal Year
determined upon the basis of the Employer's books of account in
accordance with generally accepted accounting principles, without
any reduction for taxes based upon income, or for contributions
made by the Employer to this Plan.
1.35 "Non-Elective Contribution" means the Employer's
contributions to the Plan excluding however, contributions made
pursuant to the Participant's deferral election provided for in
Section 4.2, matching contributions made pursuant to
Section 4.1(b) and any Qualified Non-Elective Contribution.
1.36 "Non-Highly Compensated Participant" means any
Participant who is neither a Highly Compensated Employee nor a
Family Member.
1.37 "Non-Key Employee" means any Employee or former
Employee (and his Beneficiaries) who is not a Key Employee.
1.38 "Normal Retirement Date" means the Anniversary
Date coinciding with or next following the Participant's Normal
<PAGE 11> Retirement Age (65th birthday). A Participant shall
become fully Vested in his Account upon attaining his Normal
Retirement Age.
1.39 "1-Year Break in Service" means the applicable
computation period during which an Employee has not completed
more than 500 Hours of Service with the Employer. Further,
solely for the purpose of determining whether a Participant has
incurred a 1-Year Break in Service, Hours of Service shall be
recognized for "authorized leaves of absence" and "maternity and
paternity leaves of absence." Years of Service and 1-Year Breaks
in Service shall be measured on the same computation period.
"Authorized leave of absence" means an unpaid,
temporary cessation from active employment with the Employer
pursuant to an established nondiscriminatory policy, whether
occasioned by illness, military service, or any other reason.
A "maternity or paternity leave of absence" means, for
Plan Years beginning after December 31, 1984, an absence from
work for any period by reason of the Employee's pregnancy, birth
of the Employee's child, placement of a child with the Employee
in connection with the adoption of such child, or any absence for
the purpose of caring for such child for a period immediately
following such birth or placement. For this purpose, Hours of
Service shall be credited for the computation period in which the
absence from work begins, only if credit therefore is necessary
to prevent the Employee from incurring a 1-Year Break in Service,
or, in any other case, in the immediately following computation
period. The Hours of Service credited for a "maternity or
paternity leave of absence" shall be those which would normally
have been credited but for such absence, or, in any case in which
the Administrator is unable to determine such hours normally
credited, eight (8) Hours of Service per day. The total Hours of
Service required to be credited for a "maternity or paternity
leave of absence" shall not exceed 501.
1.40 "Participant" means any Eligible Employee who
participates in the Plan as provided in Sections 3.2 and 3.3, and
has not for any reason become ineligible to participate further
in the Plan.
1.41 "Participant's Account" means the account
established and maintained by the Administrator for each
Participant with respect to his total interest in the Plan and
Trust resulting from the Employer's Non-Elective Contributions.
1.42 "Participant's Combined Account" means the total
aggregate amount of each Participant's Elective Account and
Participant's Account.
1.43 "Participant's Elective Account" means the
account established and maintained by the Administrator for each
Participant with respect to his total interest in the Plan and
<PAGE 12> Trust resulting from the Employer's Elective
Contributions. A separate accounting shall be maintained with
respect to that portion of the Participant's Elective Account
attributable to Elective Contributions pursuant to Section 4.2,
Employer matching contributions pursuant to Section 4.1(b) and
any Employer Qualified Non-Elective Contributions.
1.44 "Plan" means this instrument, including all
amendments thereto.
1.45 "Plan Year" means the Plan's accounting year of
twelve (12) months commencing on January 1st of each year and
ending the following December 31st.
LIN\ "Pre-Retirement Survivor Annuity" is an
immediate annuity for the life of the Participant's spouse the
payments under which must be equal to the amount of benefit which
can be purchased with the accounts of a Participant used to
provide the death benefit under the Plan.
1.47 "Qualified Non-Elective Contribution" means the
Employer's contributions to the Plan that are made pursuant to
Section 4.6. Such contributions shall be considered an Elective
Contribution for the purposes of the Plan and used to satisfy the
"Actual Deferral Percentage" tests.
1.48 "Regulation" means the Income Tax Regulations as
promulgated by the Secretary of the Treasury or his delegate, and
as amended from time to time.
1.49 "Retired Participant" means a person who has
been a Participant, but who has become entitled to retirement
benefits under the Plan.
1.50 "Retirement Date" means the date as of which a
Participant retires for reasons other than Total and Permanent
Disability, whether such retirement occurs on a Participant's
Normal Retirement Date or Late Retirement Date (see Section 6.1).
1.51 "Super Top Heavy Plan" means a plan described in
Section 2.2(b).
1.52 "Terminated Participant" means a person who has
been a Participant, but whose employment has been terminated
other than by death, Total and Permanent Disability or
retirement.
1.53 "Top Heavy Plan" means a plan described in
Section 2.2(a).
1.54 "Top Heavy Plan Year" means a Plan Year
commencing after December 31, 1983 during which the Plan is a Top
Heavy Plan.
<PAGE 13>
1.55 "Top Paid Group" means the top 20 percent of
Employees who performed services for the Employer during the
applicable year, ranked according to the amount of "415
Compensation" (determined for this purpose in accordance with
Section 1.25) received from the Employer during such year. All
Affiliated Employers shall be taken into account as a single
employer, and Leased Employees within the meaning of Code
Sections 414(n)(2) and 414(o)(2) shall be considered Employees
unless such Leased Employees are covered by a plan described in
Code Section 414(n)(5) and are not covered in any qualified plan
maintained by the Employer. Employees who are non-resident
aliens and who received no earned income (within the meaning of
Code Section 911(d)(2)) from the Employer constituting United
States source income within the meaning of Code Section 861(a)(3)
shall not be treated as Employees. Additionally, for the purpose
of determining the number of active Employees in any year, the
following additional Employees shall also be excluded; however,
such Employees shall still be considered for the purpose of
identifying the particular Employees in the Top Paid Group:
(a) Employees with less than six (6) months of
service;
(b) Employees who normally work less than
17 1/2 hours per week;
(c) Employees who normally work less than six
(6) months during a year; and
(d) Employees who have not yet attained age 21.
In addition, if 90 percent or more of the Employees of
the Employer are covered under agreements the Secretary of Labor
finds to be collective bargaining agreements between Employee
representatives and the Employer, and the Plan covers only
Employees who are not covered under such agreements, then
Employees covered by such agreements shall be excluded from both
the total number of active Employees as well as from the
identification of particular Employees in the Top Paid Group.
The foregoing exclusions set forth in this
Section shall be applied on a uniform and consistent basis for
all purposes for which the Code Section 414(q) definition is
applicable.
1.56 "Total and Permanent Disability" means a
physical or mental condition of a Participant resulting from
bodily injury, disease, or mental disorder which renders him
incapable of continuing his usual and customary employment with
the Employer. The disability of a Participant shall be
determined by a licensed physician chosen by the Administrator.
The determination shall be applied uniformly to all Participants.
<PAGE 14>
1.57 "Trustee" means the person or entity named as
trustee herein or in any separate trust forming a part of this
Plan, and any successors.
1.58 "Trust Fund" means the assets of the Plan and
Trust as the same shall exist from time to time.
1.59 "Vested" means the nonforfeitable portion of any
account maintained on behalf of a Participant.
1.60 "Year of Service" means the computation period
of twelve (12) consecutive months, herein set forth, during which
an Employee has at least 1000 Hours of Service.
For purposes of eligibility for participation, the
initial computation period shall begin with the date on which the
Employee first performs an Hour of Service. The participation
computation period beginning after a 1-Year Break in Service
shall be measured from the date on which an Employee again
performs an Hour of Service. The participation computation
period shall shift to the Plan Year which includes the
anniversary of the date on which the Employee first performed an
Hour of Service. An Employee who is credited with the required
Hours of Service in both the initial computation period (or the
computation period beginning after a 1-Year Break in Service) and
the Plan Year which includes the anniversary of the date on which
the Employee first performed an Hour of Service, shall be
credited with two (2) Years of Service for purposes of
eligibility to participate.
For all other purposes, the computation period shall
be the Plan Year.
Years of Service with any Affiliated Employer shall be
recognized.
ARTICLE II
TOP HEAVY AND ADMINISTRATION
2.1 TOP HEAVY PLAN REQUIREMENTS
For any Top Heavy Plan Year, the Plan shall provide
the special vesting requirements of Code Section 416(b) pursuant
to Section 6.4 of the Plan and the special minimum allocation
requirements of Code Section 416(c) pursuant to Section 4.4 of
the Plan.
2.2 DETERMINATION OF TOP HEAVY STATUS
(a) This Plan shall be a Top Heavy Plan for any
Plan Year commencing after December 31, 1983 in which, as of
the Determination Date, (1) the Present Value of Accrued
Benefits of Key Employees and (2) the sum of the Aggregate
Accounts of Key Employees under this Plan and all plans of
<PAGE 15> an Aggregation Group, exceeds sixty percent (60%)
of the Present Value of Accrued Benefits and the Aggregate
Accounts of all Key and Non-Key Employees under this Plan
and all plans of an Aggregation Group.
If any Participant is a Non-Key Employee for any
Plan Year, but such Participant was a Key Employee for any
prior Plan Year, such Participant's Present Value of Accrued
Benefit and/or Aggregate Account balance shall not be taken
into account for purposes of determining whether this Plan
is a Top Heavy or Super Top Heavy Plan (or whether any
Aggregation Group which includes this Plan is a Top Heavy
Group). In addition, for Plan Years beginning after
December 31, 1984, if a Participant or Former Participant
has not performed any services for any Employer maintaining
the Plan at any time during the five year period ending on
the Determination Date, any accrued benefit for such
Participant or Former Participant shall not be taken into
account for the purposes of determining whether this Plan is
a Top Heavy or Super Top Heavy Plan.
(b) This Plan shall be a Super Top Heavy Plan
for any Plan Year commencing after December 31, 1983 in
which, as of the Determination Date, (1) the Present Value
of Accrued Benefits of Key Employees and (2) the sum of the
Aggregate Accounts of Key Employees under this Plan and all
plans of an Aggregation Group, exceeds ninety percent (90%)
of the Present Value of Accrued Benefits and the Aggregate
Accounts of all Key and Non-Key Employees under this Plan
and all plans of an Aggregation Group.
(c) Aggregate Account: A Participant's
Aggregate Account as of the Determination Date is the sum
of:
(1) his Participant's Combined Account
balance as of the most recent valuation occurring
within a twelve (12) month period ending on the
Determination Date;
\AP an adjustment for any contributions due
as of the Determination Date. Such adjustment shall
be the amount of any contributions actually made after
the valuation date but due on or before the
Determination Date, except for the first Plan Year
when such adjustment shall also reflect the amount of
any contributions made after the Determination Date
that are allocated as of a date in that first Plan
Year;
(3) any Plan distributions made within the
Plan Year that includes the Determination Date or
within the four (4) preceding Plan Years. However, in
the case of distributions made after the valuation
<PAGE 16> date and prior to the Determination Date,
such distributions are not included as distributions
for top heavy purposes to the extent that such
distributions are already included in the
Participant's Aggregate Account balance as of the
valuation date. Notwithstanding anything herein to
the contrary, all distributions, including
distributions made prior to January 1, 1984, and
distributions under a terminated plan which if it had
not been terminated would have been required to be
included in an Aggregation Group, will be counted.
Further, distributions from the Plan (including the
cash value of life insurance policies) of a
Participant's account balance because of death shall
be treated as a distribution for the purposes of this
paragraph.
(4) any Employee contributions, whether
voluntary or mandatory. However, amounts attributable
to tax deductible qualified voluntary employee
contributions shall not be considered to be a part of
the Participant's Aggregate Account balance.
(5) with respect to unrelated rollovers and
plan-to-plan transfers (ones which are both initiated
by the Employee and made from a plan maintained by one
employer to a plan maintained by another employer), if
this Plan provides the rollovers or plan-to-plan
transfers, it shall always consider such rollovers or
plan-to-plan transfers as a distribution for the
purposes of this Section. If this Plan is the plan
accepting such rollovers or plan-to-plan transfers, it
shall not consider such rollovers or plan-to-plan
transfers accepted after December 31, 1983 as part of
the Participant's Aggregate Account balance. However,
rollovers or plan-to-plan transfers accepted prior to
January 1, 1984 shall be considered as part of the
Participant's Aggregate Account balance.
(6) with respect to related rollovers and
plan-to-plan transfers (ones either not initiated by
the Employee or made to a plan maintained by the same
employer), if this Plan provides the rollover or plan-
to-plan transfer, it shall not be counted as a
distribution for purposes of this Section. If this
Plan is the plan accepting such rollover or plan-to-
plan transfer, it shall consider such rollover or
plan-to-plan transfer as part of the Participant's
Aggregate Account balance, irrespective of the date on
which such rollover or plan-to-plan transfer is
accepted.
(7) For the purposes of determining whether
two employers are to be treated as the same employer
<PAGE 17> in (5) and (6) above, all employers
aggregated under Code Section 414(b), (c), (m) and (o)
are treated as the same employer.
(d) "Aggregation Group" means either a Required
Aggregation Group or a Permissive Aggregation Group as
hereinafter determined.
(1) Required Aggregation Group: In
determining a Required Aggregation Group hereunder,
each plan of the Employer in which a Key Employee is a
participant in the Plan Year containing the
Determination Date or any of the four preceding Plan
Years, and each other plan of the Employer which
enables any plan in which a Key Employee participates
to meet the requirements of Code Sections 401(a)(4) or
410, will be required to be aggregated. Such group
shall be known as a Required Aggregation Group.
In the case of a Required Aggregation
Group, each plan in the group will be considered a Top
Heavy Plan if the Required Aggregation Group is a Top
Heavy Group. No plan in the Required Aggregation
Group will be considered a Top Heavy Plan if the
Required Aggregation Group is not a Top Heavy Group.
(2) Permissive Aggregation Group: The
Employer may also include any other plan not required
to be included in the Required Aggregation Group,
provided the resulting group, taken as a whole, would
continue to satisfy the provisions of Code Sections
401(a)(4) and 410. Such group shall be known as a
Permissive Aggregation Group.
In the case of a Permissive Aggregation Group, only a
plan that is part of the Required Aggregation Group
will be considered a Top Heavy Plan if the Permissive
Aggregation Group is a Top Heavy Group. No plan in
the Permissive Aggregation Group will be considered a
Top Heavy Plan if the Permissive Aggregation Group is
not a Top Heavy Group.
(3) Only those plans of the Employer in
which the Determination Dates fall within the same
calendar year shall be aggregated in order to
determine whether such plans are Top Heavy Plans.
(4) An Aggregation Group shall include any
terminated plan of the Employer if it was maintained
within the last five (5) years ending on the
Determination Date.
<PAGE 18>
(e) "Determination Date" means (a) the last day
of the preceding Plan Year, or (b) in the case of the first
Plan Year, the last day of such Plan Year.
(f) Present Value of Accrued Benefit: In the
case of a defined benefit plan, the Present Value of Accrued
Benefit for a Participant other than a Key Employee, shall
be as determined using the single accrual method used for
all plans of the Employer and Affiliated Employers, or if no
such single method exists, using a method which results in
benefits accruing not more rapidly than the slowest accrual
rate permitted under Code Section 411(b)(1)(C). The
determination of the Present Value of Accrued Benefit shall
be determined as of the most recent valuation date that
falls within or ends with the 12-month period ending on the
Determination Date except as provided in Code Section 416
and the Regulations thereunder for the first and second plan
years of a defined benefit plan.
(g) "Top Heavy Group" means an Aggregation
Group in which, as of the Determination Date, the sum of:
(1) the Present Value of Accrued Benefits
of Key Employees under all defined benefit plans
included in the group, and
(2) the Aggregate Accounts of Key Employees
under all defined contribution plans included in the
group,
exceeds sixty percent (60%) of a similar sum
determined for all Participants.
2.3 POWERS AND RESPONSIBILITIES OF THE EMPLOYER
(a) The Employer shall be empowered to appoint
and remove the Trustee and the Administrator from time to
time as it deems necessary for the proper administration of
the Plan to assure that the Plan is being operated for the
exclusive benefit of the Participants and their
Beneficiaries in accordance with the terms of the Plan, the
Code, and the Act.
(b) The Employer shall establish a "funding
policy and method", i.e., it shall determine whether the
Plan has a short run need for liquidity (e.g., to pay
benefits) or whether liquidity is a long run goal and
investment growth (and stability of same) is a more current
need, or shall appoint a qualified person to do so. The
Employer or its delegate shall communicate such needs and
goals to the Trustee, who shall coordinate such Plan needs
with its investment policy. The communication of such a
"funding policy and method" shall not, however, constitute a
directive to the Trustee as to investment of the Trust
<PAGE 19> Funds. Such "funding policy and method" shall be
consistent with the objectives of this Plan and with the
requirements of Title I of the Act.
(c) The Employer shall periodically review the
performance of any Fiduciary or other person to whom duties
have been delegated or allocated by it under the provisions
of this Plan or pursuant to procedures established
hereunder. This requirement may be satisfied by formal
periodic review by the Employer or by a qualified person
specifically designated by the Employer, through day-to-day
conduct and evaluation, or through other appropriate ways.
2.4 DESIGNATION OF ADMINISTRATIVE AUTHORITY
The Employer may appoint one or more Administrators.
Any person, including, but not limited to, the Employees of the
Employer, shall be eligible to serve as an Administrator. Any
person so appointed shall signify his acceptance by filing
written acceptance with the Employer. An Administrator may
resign by delivering his written resignation to the Employer or
be removed by the Employer by delivery of written notice of
removal, to take effect at a date specified therein, or upon
delivery to the Administrator if no date is specified.
The Employer, upon the resignation or removal of an
Administrator, shall promptly designate in writing a successor to
this position. If the Employer does not appoint an
Administrator, the Employer will function as the Administrator.
2.5 ALLOCATION AND DELEGATION OF RESPONSIBILITIES
If more than one person is appointed as Administrator,
the responsibilities of each Administrator may be specified by
the Employer and accepted in writing by each Administrator. In
the event that no such delegation is made by the Employer, the
Administrators may allocate the responsibilities among
themselves, in which event the Administrators shall notify the
Employer and the Trustee in writing of such action and specify
the responsibilities of each Administrator. The Trustee
thereafter shall accept and rely upon any documents executed by
the appropriate Administrator until such time as the Employer or
the Administrators file with the Trustee a written revocation of
such designation.
2.6 POWERS AND DUTIES OF THE ADMINISTRATOR
The primary responsibility of the Administrator is to
administer the Plan for the exclusive benefit of the Participants
and their Beneficiaries, subject to the specific terms of the
Plan. The Administrator shall administer the Plan in accordance
with its terms and shall have the power and discretion to
construe the terms of the Plan and to determine all questions
arising in connection with the administration, interpretation,
<PAGE 20> and application of the Plan. Any such determination by
the Administrator shall be conclusive and binding upon all
persons. The Administrator may establish procedures, correct any
defect, supply any information, or reconcile any inconsistency in
such manner and to such extent as shall be deemed necessary or
advisable to carry out the purpose of the Plan; provided,
however, that any procedure, discretionary act, interpretation or
reconstruction shall be done in a nondiscriminatory manner based
upon uniform principles consistently applied and shall be
consistent with the intent that the Plan shall continue to be
deemed a qualified plan under the terms of Code Section 401(a),
and shall comply with the terms of the Act and all regulations
issued pursuant thereto. The Administrator shall have all powers
necessary or appropriate to accomplish his duties under this
Plan.
The Administrator shall be charged with the duties of
the general administration of the Plan, including, but not
limited to, the following:
(a) the discretion to determine all questions
relating to the eligibility of Employees to participate or
remain a Participant hereunder and to receive benefits under
the Plan;
(b) to compute, certify, and direct the Trustee
with respect to the amount and the kind of benefits to which
any Participant shall be entitled hereunder;
(c) to authorize and direct the Trustee with
respect to all nondiscretionary or otherwise directed
disbursements from the Trust;
(d) to maintain all necessary records for the
administration of the Plan;
(e) to interpret the provisions of the Plan and
to make and publish such rules for regulation of the Plan as
are consistent with the terms hereof;
(f) to determine the size and type of any
Contract to be purchased from any insurer, and to designate
the insurer from which such Contract shall be purchased;
(g) to compute and certify to the Employer and
to the Trustee from time to time the sums of money necessary
or desirable to be contributed to the Plan;
(h) to consult with the Employer and the
Trustee regarding the short and long-term liquidity needs of
the Plan in order that the Trustee can exercise any
investment discretion in a manner designed to accomplish
specific objectives;
<PAGE 21>
(i) to prepare and distribute to Employees a
procedure for notifying Participants and Beneficiaries of
their rights to elect joint and survivor annuities and Pre-
Retirement Survivor Annuities as required by the Act and
Regulations thereunder;
(j) to prepare and implement a procedure to
notify Eligible Employees that they may elect to have a
portion of their Compensation deferred or paid to them in
cash;
(k) to assist any Participant regarding his
rights, benefits, or elections available under the Plan.
2.7 RECORDS AND REPORTS
The Administrator shall keep a record of all actions
taken and shall keep all other books of account, records, and
other data that may be necessary for proper administration of the
Plan and shall be responsible for supplying all information and
reports to the Internal Revenue Service, Department of Labor,
Participants, Beneficiaries and others as required by law.
2.8 APPOINTMENT OF ADVISERS
The Administrator, or the Trustee with the consent of
the Administrator, may appoint counsel, specialists, advisers,
and other persons as the Administrator or the Trustee deems
necessary or desirable in connection with the administration of
this Plan.
2.9 INFORMATION FROM EMPLOYER
To enable the Administrator to perform his functions,
the Employer shall supply full and timely information to the
Administrator on all matters relating to the Compensation of all
Participants, their Hours of Service, their Years of Service,
their retirement, death, disability, or termination of
employment, and such other pertinent facts as the Administrator
may require; and the Administrator shall advise the Trustee of
such of the foregoing facts as may be pertinent to the Trustee's
duties under the Plan. The Administrator may rely upon such
information as is supplied by the Employer and shall have no duty
or responsibility to verify such information.
2.10 PAYMENT OF EXPENSES
All expenses of administration may be paid out of the
Trust Fund unless paid by the Employer. Such expenses shall
include any expenses incident to the functioning of the
Administrator, including, but not limited to, fees of
accountants, counsel, and other specialists and their agents, and
other costs of administering the Plan. Until paid, the expenses
shall constitute a liability of the Trust Fund. However, the
<PAGE 22> Employer may reimburse the Trust Fund for any
administration expense incurred. Any administration expense paid
to the Trust Fund as a reimbursement shall not be considered an
Employer contribution.
2.11 MAJORITY ACTIONS
Except where there has been an allocation and
delegation of administrative authority pursuant to Section 2.5,
if there shall be more than one Administrator, they shall act by
a majority of their number, but may authorize one or more of them
to sign all papers on their behalf.
2.12 CLAIMS PROCEDURE
Claims for benefits under the Plan may be filed with
the Administrator on forms supplied by the Employer. Written
notice of the disposition of a claim shall be furnished to the
claimant within 90 days after the application is filed. In the
event the claim is denied, the reasons for the denial shall be
specifically set forth in the notice in language calculated to be
.understood by the claimant, pertinent provisions of the Plan
shall be cited, and, where appropriate, an explanation as to how
the claimant can perfect the claim will be provided. In
addition, the claimant shall be furnished with an explanation of
the Plan's claims review procedure.
2.13 CLAIMS REVIEW PROCEDURE
Any Employee, former Employee, or Beneficiary of
either, who has been denied a benefit by a decision of the
Administrator pursuant to Section 2.12 shall be entitled to
request the Administrator to give further consideration to his
claim by filing with the Administrator (on a form which may be
obtained from the Administrator) a request for a hearing. Such
request, together with a written statement of the reasons why the
claimant believes his claim should be allowed, shall be filed
with the Administrator no later than 60 days after receipt of the
notification provided for in Section 2.12. The Administrator
shall then conduct a hearing within the next 60 days, at which
the claimant may be represented by an attorney or any other
representative of his choosing and at which the claimant shall
have an opportunity to submit written and oral evidence and
arguments in support of his claim. At the hearing (or prior
thereto upon 5 business days written notice to the Administrator)
the claimant or his representative shall have an opportunity to
review all documents in the possession of the Administrator which
are pertinent to the claim at issue and its disallowance. Either
the claimant or the Administrator may cause a court reporter to
attend the hearing and record the proceedings. In such event, a
complete written transcript of the proceedings shall be furnished
to both parties by the court reporter. The full expense of any
such court reporter and such transcripts shall be borne by the
party causing the court reporter to attend the hearing. A final
<PAGE 23> decision as to the allowance of the claim shall be made
by the Administrator within 60 days of receipt of the appeal
(unless there has been an extension of 60 days due to special
circumstances, provided the delay and the special circumstances
occasioning it are communicated to the claimant within the 60 day
period). Such communication shall be written in a manner
calculated to be understood by the claimant and shall include
specific reasons for the decision and specific references to the
pertinent Plan provisions on which the decision is based.
ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY
Any Eligible Employee who has completed one (1) Year
of Service shall be eligible to participate hereunder as of the
date he has satisfied such requirements. However, any Employee
who was a Participant in the Plan prior to the effective date of
this amendment and restatement shall continue to participate in
the Plan. The Employer shall give each prospective Eligible
Employee written notice of his eligibility to participate in the
Plan prior to the close of the Plan Year in which he first
becomes an Eligible Employee.
3.2 APPLICATION FOR PARTICIPATION
In order to become a Participant hereunder, each
Eligible Employee shall make application to the Employer for
participation in the Plan and agree to the terms hereof. Upon
the acceptance of any benefits under this Plan, such Employee
shall automatically be deemed to have made application and shall
be bound by the terms and conditions of the Plan and all
amendments hereto.
3.3 EFFECTIVE DATE OF PARTICIPATION
An Eligible Employee shall become a Participant
effective as of the first day of the month coinciding with or
next following the date on which such Employee met the
eligibility requirements of Section 3.1, provided said Employee
was still employed as of such date (or if not employed on such
date, as of the date of rehire if a 1-Year Break in Service has
not occurred).
3.4 DETERMINATION OF ELIGIBILITY
The Administrator shall determine the eligibility of
each Employee for participation in the Plan based upon
information furnished by the Employer. Such determination shall
be conclusive and binding upon all persons, as long as the same
is made pursuant to the Plan and the Act. Such determination
shall be subject to review per Section 2.13.
<PAGE 24>
3.5 TERMINATION OF ELIGIBILITY
(a) In the event a Participant shall go from a
classification of an Eligible Employee to an ineligible
Employee, such Former Participant shall continue to vest in
his interest in the Plan for each Year of Service completed
while a noneligible Employee, until such time as his
Participant's Account shall be forfeited or distributed
pursuant to the terms of the Plan. Additionally, his
interest in the Plan shall continue to share in the earnings
of the Trust Fund.
(b) In the event a Participant is no longer a
member of an eligible class of Employees and becomes
ineligible to participate.but has not incurred a 1-Year
Break in Service, such Employee will participate immediately
upon returning to an eligible class of Employees. If such
Participant incurs a 1-Year Break in Service, eligibility
will be determined under the break in service rules of the
Plan.
(c) In the event an Employee who is not a
member of an eligible class of Employees becomes a member of
an eligible class, such Employee will participate
immediately if such Employee has satisfied the minimum age
and service requirements and would have otherwise previously
become a Participant.
3.6 OMISSION OF ELIGIBLE EMPLOYEE
If, in any Plan Year, any Employee who should be
included as a Participant in the Plan is erroneously omitted and
discovery of such omission is not made until after a contribution
by his Employer for the year has been made, the Employer shall
make a subsequent contribution with respect to the omitted
Employee in the amount which the said Employer would have
contributed with respect to him had he not been omitted. Such
contribution shall be made regardless of whether or not it is
deductible in whole or in part in any taxable year under
applicable provisions of the Code.
IN\ INCLUSION OF INELIGIBLE EMPLOYEE
If, in any Plan Year, any person who should not have
been included as a Participant in the Plan is erroneously
included and discovery of such incorrect inclusion is not made
until after a contribution for the year has been made, the
Employer shall not be entitled to recover the contribution made
with respect to the ineligible person regardless of whether or
not a deduction is allowable with respect to such contribution.
In such event, the amount contributed with respect to the
ineligible person shall constitute a Forfeiture (except for
Deferred Compensation which shall be distributed to the
<PAGE 25> ineligible person) for the Plan Year in which the
discovery is made.
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION
For each Plan Year, the Employer shall contribute to
the Plan:
(a) The amount of the total salary reduction
elections of all Participants made pursuant to
Section 4.2(a), which amount shall be deemed an Employer's
Elective Contribution.
(b) On behalf of each Participant who is
eligible to share in matching contributions for the Plan
Year, a discretionary matching contribution equal to a
percentage of each such Participant's Deferred Compensation,
the exact percentage to be determined each year by the
Employer, which amount shall be deemed an Employer's
Elective Contribution.
Except, however, in applying the matching
percentage specified above, only salary reductions up to 4%
of Compensation shall be considered.
(c) A discretionary amount of its current or
accumulated Net Profit, which amount shall be deemed an
Employer's Non-Elective Contribution.
(d) Notwithstanding the foregoing, however, the
Employer's contributions for any Plan Year shall not exceed
the maximum amount allowable as a deduction to the Employer
under the provisions of Code Section 404. All contributions
by the Employer shall be made in cash or in such property as
is acceptable to the Trustee.
(e) Except, however, to the extent necessary to
provide the top heavy minimum allocations, the Employer
shall make a contribution even if it exceeds current or
accumulated Net Profit or the amount which is deductible
under Code Section 404.
4.2 PARTICIPANT'S SALARY REDUCTION ELECTION
(a) Each Participant may, beginning January 1,
1992, elect to defer his Compensation which would have been
received in the Plan Year, but for the deferral election, by
up to 15%. A deferral election (or modification of an
earlier election) may not be made with respect to
Compensation which is currently available on or before the
date the Participant executed such election. <PAGE 26>
The amount by which Compensation is reduced
shall be that Participant's Deferred Compensation and be
treated as an Employer Elective Contribution and allocated
to that Participant's Elective Account.
(b) The balance in each Participant's Elective
Account shall be fully Vested at all times and shall not be
subject to Forfeiture for any reason.
\AP Amounts held in the Participant's Elective
Account may not be distributable earlier than:
(1) a Participant's termination of
employment, Total and Permanent Disability, or death;
(2) a Participant's attainment of age
59 1/2;
(3) the termination of the Plan without the
existence at the time of Plan termination of another
defined contribution plan (other than an employee
stock ownership plan as defined in Code
Section 4975(e)(7)) or the establishment of a
successor defined contribution plan (other than an
employee stock ownership plan as defined in Code
Section 4975(e)(7)) by the Employer or an Affiliated
Employer within the period ending twelve months after
distribution of all assets from the Plan maintained by
the Employer;
(4) the date of disposition by the Employer
to an entity that is not an Affiliated Employer 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 with respect
to a Participant who continues employment with the
corporation acquiring such assets; or
(5) the date of disposition by the Employer
or an Affiliated Employer who maintains the Plan of
its interest in a subsidiary (within the meaning of
Code Section 409(d)(3)) to an entity which is not an
Affiliated Employer but only with respect to a
Participant who continues employment with such
subsidiary.
(d) In any Plan Year beginning after
December 31, 1987, a Participant's Deferred Compensation
made under this Plan and all other plans, contracts or
arrangements of the Employer maintaining this Plan shall not
exceed, during any taxable year, the limitation imposed by
Code Section 402(g), as in effect at the beginning of such
taxable year. This dollar limitation shall be adjusted
<PAGE 27> annually pursuant to the method provided in Code
Section 415(d) in accordance with Regulations.
(e) In the event a Participant has received a
hardship distribution pursuant to Regulation 1.401(k)-
l(d)(2)(iii)(B) from any other plan maintained by the
Employer, then such Participant shall not be permitted to
elect to have Deferred Compensation contributed to the Plan
on his behalf for a period of twelve (12) months following
the receipt of the distribution. Furthermore, the dollar
limitation under Code Section 402(g) shall be reduced, with
respect to the Participant's taxable year following the
taxable year in which the hardship distribution was made, by
the amount of such Participant's Deferred Compensation, if
any, pursuant to this Plan (and any other plan maintained by
the Employer) for the taxable year of the hardship
distribution.
(f) If a Participant's Deferred Compensation
under this Plan together with any elective deferrals (as
defined in Regulation 1.402(g)-l(b)) under another qualified
cash or deferred arrangement (as defined in Code
Section 401(k)), a simplified employee pension (as defined
in Code Section 408(k)), a salary reduction arrangement
(within the meaning of Code Section 3121(a)(5)(D)), a
deferred compensation plan under Code Section 457, or a
trust described in Code Section 501(c)(18) cumulatively
exceed the limitation imposed by Code Section 402(g) (as
adjusted annually in accordance with the method provided in
Code Section 415(d) pursuant to Regulations) for such
Participant's taxable year, the Participant may, not later
than March 1 following the close of his taxable year, notify
the Administrator in writing of such excess and request that
his Deferred Compensation under this Plan be reduced by an
amount specified by the Participant. In such event, the
Administrator may direct the Trustee to distribute such
excess amount (and any Income allocable to such excess
amount) to the Participant not later than the first
April 15th following the close of the Participant's taxable
year. Distributions in accordance with this paragraph may
be made for any taxable year of the Participant which begins
after December 31, 1986. Any distribution of less than the
entire amount of Excess Deferred Compensation and Income
shall be treated as a pro rata distribution of Excess
Deferred Compensation and Income. The amount distributed
shall hot exceed the Participant's Deferred Compensation
under the Plan for the taxable year. Any distribution on or
before the last day of the Participant's taxable year must
satisfy each of the following conditions:
(1) the Participant shall designate the
distribution as Excess Deferred Compensation;
<PAGE 28>
(2) the distribution must be made after the
date on which the Plan received the Excess Deferred
Compensation; and
(3) the Plan must designate the
distribution as a distribution of Excess Deferred
Compensation.
(g) Notwithstanding Section 4.2(f) above, a
Participant's Excess Deferred Compensation shall be reduced,
but not below zero, by any distribution of Excess
Contributions pursuant to Section 4.6(a) for the Plan Year
beginning with or within the taxable year of the
Participant.
(h) At Normal Retirement Date, or such other
date when the Participant shall be entitled to receive
benefits, the fair market value of the Participant's
Elective Account shall be used to provide additional
benefits to the Participant or his Beneficiary.
(i) All amounts allocated to a Participant's
Elective Account may be treated as a Directed Investment
Account pursuant to Section 4.10.
(j) Employer Elective Contributions made
pursuant to this Section may be segregated into a separate
account for each Participant in a federally insured savings
account, certificate of deposit in a bank or savings and
loan association, money market certificate, or other short-
term debt security acceptable to the Trustee until such time
as the allocations pursuant to Section 4.4 have been made.
(k) The Employer and the Administrator shall
implement the salary reduction elections provided for herein
in accordance with the following:
(1) A Participant may commence making
elective deferrals to the Plan only after first
satisfying the eligibility and participation
requirements specified in Article III. However, the
Participant must make his initial salary deferral
election within a reasonable time, not to exceed
thirty (30) days, after entering the Plan pursuant to
Section 3.3. If the Participant fails to make an
initial salary deferral election within such time,
then such Participant may thereafter make an election
in accordance with the rules governing modifications.
The Participant shall make such an election by
entering into a written salary reduction agreement
with the Employer and filing such agreement with the
Administrator. Such election shall initially be
effective beginning with the pay period following the
acceptance of the salary reduction agreement by the
<PAGE 29> Administrator, shall not have retroactive
effect and shall remain in force until revoked.
(2) A Participant may modify a prior
election during the Plan Year and concurrently make a
new election by filing a written notice with the
Administrator within a reasonable time before the pay
period for which such modification is to be effective.
However, modifications to a salary deferral election
shall only be permitted annually, during an election
period established by the Administrator prior to the
first day of a Plan Year. Any modification shall not
have retroactive effect and shall remain in force
until revoked.
(3) A Participant may elect to
prospectively revoke his salary reduction agreement in
its entirety at any time during the Plan Year by
providing the Administrator with thirty (30) days
written notice of such revocation (or upon such
shorter notice period as may be acceptable to the
Administrator). Such revocation shall become
effective as of the beginning of the first pay period
coincident with or next following the expiration of
the notice period. Furthermore, the termination of
the Participant's employment, or the cessation of
participation for any reason, shall be deemed to
revoke any salary reduction agreement then in effect,
effective immediately following the close of the pay
period within which such termination or cessation
occurs.
4.3 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION
The Employer shall generally pay to the Trustee its
contribution to the Plan for each Plan Year within the time
prescribed by law, including extensions of time, for the filing
of the Employer's federal income tax return for the Fiscal Year.
However, Employer Elective Contributions accumulated
through payroll deductions shall be paid to the Trustee as of the
earliest date on which such contributions can reasonably be
segregated from the Employer's general assets, but in any event
within ninety (90) days from the date on which such amounts would
otherwise have been payable to the Participant in cash. The
provisions of Department of Labor regulations 2510.3-102 are
incorporated herein by reference. Furthermore, any additional
Employer contributions which are allocable to the Participant's
Elective Account for a Plan Year shall be paid to the Plan no
later than the twelve-month period immediately following the
close of such Plan Year.
<PAGE 30>
4.4 ALLOCATION OF CONTRIBUTION AND EARNINGS
(a) The Administrator shall establish and
maintain an account in the name of each Participant to which
the Administrator shall credit as of each Anniversary Date
all amounts allocated to each such Participant as set forth
herein.
(b) The Employer shall provide the
Administrator with all information required by the
Administrator to make a proper allocation of the Employer's
contributions for each Plan Year. Within a reasonable
period of time after the date of receipt by the
Administrator of such information, the Administrator shall
allocate such contribution as follows:
(1) With respect to the Employer's Elective
Contribution made pursuant to Section 4.1(a), to each
Participant's Elective Account in an amount equal to
each such Participant's Deferred Compensation for the
year.
(2) With respect to the Employer's Elective
Contribution made pursuant to Section 4.1(b), to each
Participant's Elective Account in accordance with
Section 4.1(b).
Any Participant actively employed during the Plan
.Year shall be eligible to share in the matching
contribution for the Plan Year.
(3) With respect to the Employer's Non-
Elective Contribution made pursuant to Section 4.1(c),
to each Participant's Account in the same proportion
that each such Participant's Compensation for the year
bears to the total Compensation of all Participants
for such year.
Only Participants who have completed a Year of Service
during the Plan Year and are actively employed on the
last day of the Plan Year shall be eligible to share
in the discretionary contribution for the year.
However, with respect to Plan Years beginning after
December 31, 1989, in lieu of the foregoing, only
Participants who are actively employed on the last day
of the Plan Year shall be eligible to share in the
discretionary contribution for the year.
(c) For any Top Heavy Plan Year, Non-Key
Employees not otherwise eligible to share in the allocation
of contributions as provided above, shall receive the
minimum allocation provided for in Section 4.4(f) if
eligible pursuant to the provisions of Section 4.4(h).
<PAGE 31>
(d) Notwithstanding the foregoing, Participants
who are not actively employed on the last day of the Plan
Year due to Retirement (Normal or Late), Total and Permanent
Disability or death shall share in the allocation of
contributions for that Plan Year.
(e) As of each Anniversary Date or other
valuation date, before allocation of Employer contributions,
any earnings or losses (net appreciation or net
depreciation) of the Trust Fund shall be allocated in the
same proportion that each Participant's and Former
Participant's nonsegregated accounts bear to the total of
all Participants' and Former Participants' nonsegregated
accounts as of such date.
Participants' transfers from other qualified
plans deposited in the general Trust Fund after a valuation
date shall not share in any earnings and losses (net
appreciation or net depreciation) of the Trust Fund for such
period. Each segregated account maintained on behalf of a
Participant shall be credited or charged with its separate
earnings and losses.
(f) Minimum Allocations Required for Top Heavy
Plan Years: Notwithstanding the foregoing, for any Top
Heavy Plan Year, the sum of the Employer's contributions
allocated to the Participant's Combined Account of each Non-
Key Employee shall be equal to at least three percent (3%)
of such Non-Key Employee's "415 Compensation" (reduced by
contributions and forfeitures, if any, allocated to each
Non-Key Employee in any defined contribution plan included
with this plan in a Required Aggregation Group). However,
if (i) the sum of the Employer's contributions allocated to
the Participant's Combined Account of each Key Employee for
such Top Heavy Plan Year is less than three percent (3%) of
each Key Employee's "415 Compensation" and (ii) this Plan is
not required to be included in an Aggregation Group to
enable a defined benefit plan to meet the requirements of
Code Section 401(a)(4) or 410, the sum of the Employer's
contributions allocated to the Participant's Combined
Account of each Non-Key Employee shall be equal to the
largest percentage allocated to the Participant's Combined
Account of any Key Employee. However, in determining
whether a Non-Key Employee has received the required minimum
allocation, such Non-Key Employee's Deferred Compensation
and matching contributions needed to satisfy the "Actual
Deferral Percentage" tests pursuant to Section 4.5(a) shall
not be taken into account.
However, no such minimum allocation shall be
required in this Plan for any Non-Key Employee who
participates in another defined contribution plan subject to
Code Section 412 providing such benefits included with this
Plan in a Required Aggregation Group. <PAGE 32>
(g) For purposes of the minimum allocations set
forth above, the percentage allocated to the Participant's
Combined Account of any Key Employee shall be equal to the
ratio of the sum of the Employer's contributions allocated
on behalf of such Key Employee divided by the "415
Compensation" for such Key Employee.
(h) For any Top Heavy Plan Year, the minimum
allocations set forth above shall be allocated to the
Participant's Combined Account of all Non-Key Employees who
are Participants and who are employed by the Employer on the
last day of the Plan Year, including Non-Key Employees who
have (1) failed to complete a Year of Service; and
(2) declined to make mandatory contributions (if required)
or, in the case of a cash or deferred arrangement, elective
contributions to the Plan.
(i) In lieu of the above, in any Plan Year in
which a Non-Key Employee is a Participant in both this Plan
and a defined benefit pension plan included in a Required
Aggregation Group which is top heavy, the Employer shall not
be required to provide such Non-Key Employee with both the
full separate defined benefit plan minimum benefit and the
full separate defined contribution plan minimum allocation.
Therefore, for any Plan Year when the Plan is a
Top Heavy Plan, a Non-Key Employee who is participating in
this Plan and a defined benefit plan maintained by the
Employer shall receive a minimum monthly accrued benefit in
the defined benefit plan equal to the product of (1) one-
twelfth (1/12th) of "415 Compensation" averaged over the
five (5) consecutive "limitation years" (or actual
"limitation years", if less) which produce the highest
average and (2) the lesser of (i) two percent (2%)
multiplied by Years of Service when the plan is top heavy or
(ii) twenty percent (20%). Further, the extra minimum allocation
(required by Section 4.7(n) to provide higher limitations)
shall not be provided.
(j) For the purposes of this Section, "415
Compensation" shall be limited to $200,000 (unless adjusted
in such manner as permitted under Code Section 415(d)).
However, for Plan Years beginning prior to January 1, 1989,
the $200,000 limit shall apply only for Top Heavy Plan Years
and shall not be adjusted.
(k) Notwithstanding anything herein to the
contrary, Participants who terminated employment for any
reason during the Plan Year shall share in the salary
reduction contributions made by the Employer for the year of
termination without regard to the Hours of Service credited.
<PAGE 33>
(l) If a Former Participant is reemployed after
five (5) consecutive 1-Year Breaks in Service, then separate
accounts shall be maintained as follows:
(1) one account for nonforfeitable benefits
attributable to pre-break service; and
(2) one account representing his status in
the Plan attributable to post-break service.
(m) Notwithstanding anything to the contrary,
for Plan Years beginning after December 31, 1989, if this is
a Plan that would otherwise fail to meet the requirements of
Code Sections 401(a)(26), 410(b)(1) or 410(b)(2)(A)(i) and
the Regulations thereunder because Employer contributions
have not been allocated to a sufficient number or percentage
of Participants for a Plan Year, then the following rules
shall apply:
(1) The group of Participants eligible to
share in the Employer's contribution for the Plan Year
shall be expanded to include the minimum number of
Participants who would not otherwise be eligible as
are necessary to satisfy the applicable test specified
above. The specific Participants who shall become
eligible under the terms of this paragraph shall be
those who are actively employed on the last day of the
Plan Year and, when compared to similarly situated
Participants, have completed the greatest number of
Hours of Service in the Plan Year.
(2) If after application of paragraph (1)
above, the applicable test is still not satisfied,
then the group of Participants eligible to share in
the Employer's contribution for the Plan Year shall be
further expanded to include the minimum number of
Participants who are not actively employed on the last
day of the Plan Year as are necessary to satisfy the
applicable test. The specific Participants who shall
become eligible to share shall be those Participants,
when compared to similarly situated Participants, who
have completed the greatest number of Hours of Service
in the Plan Year before terminating employment.
(3) Nothing in this Section shall permit
the reduction of a Participant's accrued benefit.
Therefore any amounts that have previously been
allocated to Participants may not be reallocated to
satisfy these requirements. In such event, the
Employer shall make an additional contribution equal
to the amount such affected Participants would have
received had they been included in the allocations,
even if it exceeds the amount which would be
deductible under Code Section 404. Any adjustment to
<PAGE 34> the allocations pursuant to this paragraph
shall be considered a retroactive amendment adopted by
the last day of the Plan Year.
4.5 ACTUAL DEFERRAL PERCENTAGE TESTS
(a) Maximum Annual Allocation: For each Plan
Year beginning after December 31, 1986, the annual
allocation derived from Employer Elective Contributions to a
Participant's Elective Account shall satisfy one of the
following tests:
(1) The "Actual Deferral Percentage" for
the Highly Compensated Participant group shall not be
more than the "Actual Deferral Percentage" of the Non-
Highly Compensated Participant group multiplied by
1.25, or
(2) The excess of the "Actual Deferral
Percentage" for the Highly Compensated Participant
group over the "Actual Deferral Percentage" for the
Non-Highly Compensated participant group shall not be
more than two percentage points. Additionally, the
"Actual Deferral Percentage" for the Highly
Compensated Participant group shall not exceed the
"Actual Deferral Percentage" for the Non-Highly
Compensated Participant group multiplied by 2. The
provisions of Code Section 401(k)(3) and
Regulation 1.401(k)-l(b) are incorporated herein by
reference.
However, for Plan Years beginning after December 31,
1988, in order to prevent the multiple use of the
alternative method described in (2) above and in Code
Section 401(m)(9)(A), any Highly Compensated
Participant eligible to make elective deferrals
pursuant to Section 4.2 and to make Employee
contributions or to receive matching contributions
under any other plan maintained by the Employer or an
Affiliated Employer shall have his actual contribution
ratio reduced pursuant to Regulation 1.401(m)-2, the
provisions of which are incorporated herein by
reference.
(b) For the purposes of this Section "Actual
Deferral Percentage" means, with respect to the Highly
Compensated Participant group and Non-Highly Compensated
Participant group for a Plan Year, the average of the
ratios, calculated separately for each Participant in such
group, of the amount of Employer Elective Contributions
allocated to each Participant's Elective Account for such
Plan Year, to such Participant's "414(s) Compensation" for
such Plan Year. The actual deferral ratio for each
Participant and the "Actual Deferral Percentage" for each
<PAGE 35> group shall be calculated to the nearest one-
hundredth of one percent for Plan Years beginning after
December 31, 1988. Employer Elective Contributions
allocated to each Non-Highly Compensated Participant's
Elective Account shall be reduced by Excess Deferred
Compensation to the extent such excess amounts are made
under this Plan or any other plan maintained by the
Employer.
(c) For the purpose of determining the actual
deferral ratio of a Highly Compensated Employee who is
subject to the Family Member aggregation rules of Code
Section 414(q)(6) because such Participant is either a "five
percent owner" of the Employer or one of the ten (10) Highly
Compensated Employees paid the greatest "415 Compensation"
during the year, the following shall apply:
(1) The combined actual deferral ratio for
the family group (which shall be treated as one Highly
Compensated Participant) shall be determined by
aggregating Employer Elective Contributions and
"414(s) Compensation" of all eligible Family Members
(including Highly Compensated Participants). However,
in applying the $200,000 limit to "414(s)
Compensation", for Plan Years beginning after
December 31, 1988, Family Members shall include only
the affected Employee's spouse and any lineal
descendants who have not attained age 19 before the
close of the Plan Year. Notwithstanding the
foregoing, with respect to Plan Years beginning prior
to January 1, 1990, compliance with the Regulations
then in effect shall be deemed to be compliance with
this paragraph.
(2) The Employer Elective Contributions and
"414(s) Compensation" of all Family Members shall be
disregarded for purposes of determining the "Actual
Deferral Percentage" of the Non-Highly Compensated
Participant group except to the extent taken into
account in paragraph (1) above.
(3) If a Participant is required to be
aggregated as a member of more than one family group
in a plan, all Participants who are members of those
family groups that include the Participant are
aggregated as one family group in accordance with
paragraphs (1) and (2) above.
(d) For the purposes of Sections 4.5(a) and
4.6, a Highly Compensated Participant and a Non-Highly
Compensated Participant shall include any Employee eligible
to make a deferral election pursuant to Section 4.2, whether
or not such deferral election was made or suspended pursuant
to Section 4.2. <PAGE 36>
(e) For the purposes of this Section and Code
Sections 401(a)(4), 410(b) and 401(k), if two or more plans
which include cash or deferred arrangements are considered
one plan for the purposes of Code Section 401(a)(4) or
410(b) (other than Code Section 410(b)(2)(A)(ii) as in
effect for Plan Years beginning after December 31, 1988),
the cash or deferred arrangements included in such plans
shall be treated as one arrangement. In addition, two or
more cash or deferred arrangements may be considered as a
single arrangement for purposes of determining whether or
not such arrangements satisfy Code Sections 401(a)(4),
410(b) and 401(k). In such a case, the cash or deferred
arrangements included in such plans and the plans including
such arrangements shall be treated as one arrangement and as
one plan for purposes of this Section and Code Sections
401(a)(4), 410(b) and 401(k). For Plan Years beginning
after December 31, 1989, plans may be aggregated under this
paragraph (e) only if they have the same plan year.
Notwithstanding the above, for Plan Years
beginning after December 31, 1988, an employee stock
ownership plan described in Code Section 4975(e)(7) may not
be combined with this Plan for purposes of determining
whether the employee stock ownership plan or this Plan
satisfies this Section and Code Sections 401(a)(4), 410(b)
and 401(k).
(f) For the purposes of this Section, if a
Highly Compensated Participant is a Participant under two or
more cash or deferred arrangements (other than a cash or
deferred arrangement which is part of an employee stock
ownership plan as defined in Code Section 4975(e)(7) for
Plan Years beginning after December 31, 1988) of the
Employer or an Affiliated Employer, all such cash or
deferred arrangements shall be treated as one cash or
deferred arrangement for the purpose of determining the
actual deferral ratio with respect to such Highly
Compensated Participant. However, for Plan Years beginning
after December 31, 1988, if the cash or deferred
arrangements have different Plan Years, this paragraph shall
be applied by treating all cash or deferred arrangements
ending with or within the same calendar year as a single
arrangement.
4.6 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS
In the event that the initial allocations of the
Employer's Elective Contributions made pursuant to Section 4.4 do
not satisfy one of the tests set forth in Section 4.5(a) for Plan
Years beginning after December 31, 1986, the Administrator shall
adjust Excess Contributions pursuant to the options set forth
below:
<PAGE 37>
(a) On or before the fifteenth day of the third
month following the end of each Plan Year, the Highly
Compensated Participant having the highest actual deferral
ratio shall have his portion of Excess Contributions
distributed to him until one of the tests set forth in
Section 4.5(a) is satisfied, or until his actual deferral
ratio equals the actual deferral ratio of the Highly
Compensated Participant having the second highest actual
deferral ratio. This process shall continue until one of
the tests set forth in Section 4.5(a) is satisfied. For
each Highly Compensated Participant, the amount of Excess
Contributions is equal to the Elective Contributions on
behalf of such Highly Compensated Participant (determined
prior to the application of this paragraph) minus the amount
determined by multiplying the Highly Compensated
Participant's actual deferral ratio (determined after
application of this paragraph) by his "414(s) Compensation".
However, in determining the amount of Excess Contributions
to be distributed with respect to an affected Highly
Compensated Participant as determined herein, such amount
shall be reduced by any Excess Deferred Compensation
previously distributed to such affected Highly Compensated
Participant, for his taxable year ending with or within such
Plan Year.
(1) With respect to the distribution of
Excess Contributions pursuant to (a) above, such
distribution:
(i) may be postponed but not later
than the close of the Plan Year following the
Plan Year to which they are allocable;
(ii) shall be made first from
unmatched Deferred Compensation and, thereafter,
simultaneously from Deferred Compensation which
is matched and matching contributions which
relate to such Deferred Compensation;
(iii) shall be adjusted for Income;
and
(iv) shall be designated by the
Employer as a distribution of Excess
Contributions (and Income).
(2) Any distribution of less than the
entire amount of Excess Contributions shall be treated
as a pro rata distribution of Excess Contributions and
Income.
(3) If the determination and correction of
Excess Contributions of a Highly Compensated
Participant whose actual deferral ratio is determined
<PAGE 38> under the family aggregation rules, then the
actual deferral ratio shall be reduced as required
herein, and the Excess Contributions for the family
unit shall be allocated among the Family Members in
proportion to the Elective Contributions of each
Family Member that were combined to determine the
group actual deferral ratio. Notwithstanding the
foregoing, with respect to Plan Years beginning prior
to January 1, 1990, compliance with the Regulations
then in effect shall be deemed to be compliance with
this paragraph.
(b) Within twelve (12) months after the end of
the Plan Year, the Employer may make a special Qualified
Non-Elective Contribution on behalf of Non-Highly
Compensated Participants in an amount sufficient to satisfy
one of the tests set forth in Section 4.5(a). Such
contribution shall be allocated to the Participant's
Elective Account of each Non-Highly Compensated Participant
in the same proportion that each Non-Highly Compensated
Participant's Compensation for the year bears to the total
Compensation of all Non-Highly Compensated Participants.
4.7 MAXIMUM ANNUAL ADDITIONS
(a) Notwithstanding the foregoing, the maximum
"annual additions" credited to a Participant's accounts for
any "limitation year" shall equal the lesser of:
(1) $30,000 (or, if greater, one-fourth of the dollar
limitation in effect under Code Section 415(b)(1)(A)) or
(2) twenty-five percent (25%) of the Participant's "415
Compensation" for such "limitation year".
(b) For purposes of applying the limitations of
Code Section 415, "annual additions" means the sum credited
to a Participant's accounts for any "limitation year" of
(1) Employer contributions, (2) Employee contributions for
"limitation years" beginning after December 31, 1986,
(3) forfeitures, (4) 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 and (5) amounts derived from
contributions paid or accrued after December 31, 1985, in
taxable years ending after such date, which are attributable
to post-retirement medical benefits allocated to the
separate account of a key employee (as defined in Code
Section 419A(d)(3)) under a welfare benefit plan (as defined
in Code Section 419(e)) maintained by the Employer. Except,
however, the "415 Compensation" percentage limitation
referred to in paragraph (a)(2) above shall not apply to:
(1) any contribution for medical benefits (within the
meaning of Code Section 419A(f)(2)) after separation from
service which is otherwise treated as an "annual addition",
<PAGE 39> or (2) any amount otherwise treated as an "annual
addition" under Code Section 415(l)(1).
(c) For purposes of applying the limitations of
Code Section 415, the transfer of funds from one qualified
plan to another is not an "annual addition". In addition,
the following are not Employee contributions for the
purposes of Section 4.7(b)(2): (1) rollover contributions
(as defined in Code Sections 402(a)(5), 403(a)(4), 403(b)(8)
and 408(d)(3)); (2) repayments of loans made to a
Participant from the Plan; (3) repayments of distributions
received by an Employee pursuant to Code Section
411(a)(7)(B) (cash-outs); (4) repayments of distributions
received by an Employee pursuant to Code Section
411(a)(3)(D) (mandatory contributions); and (5) Employee
contributions to a simplified employee pension excludable
from gross income under Code Section 408(k)(6).
(d) For purposes of applying the limitations of
Code Section 415, "415 Compensation" shall include the
Participant's wages, salaries, fees for professional service
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 an Employer
maintaining the Plan to the extent that the amounts are
includable 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, reimbursements,
and expense allowances, and in the case of a Participant who
is an Employee within the meaning of Code Section 401(c)(1)
and the regulations thereunder, the Participant's earned
income (as described in Code Section 401(c)(2) and the
regulations thereunder)) paid during the "limitation year".
"415 Compensation" shall exclude
(1)(A) contributions made by the Employer to a plan of
deferred compensation to the extent that, before the
application of the Code Section 415 limitations to the Plan,
the contributions are not includable in the gross income of
the Employee for the taxable year in which contributed,
(B) contributions made by the Employer to a plan of deferred
compensation to the extent that all or a portion of such
contributions are recharacterized as a voluntary Employee
contribution, (C) Employer contributions made on behalf of
an Employee to a simplified employee pension plan described
in Code Section 408(k) to the extent such contributions are
excludable from the Employee's gross income, (D) any
distributions from a plan of deferred compensation
regardless of whether such amounts are includable in the
gross income of the Employee when distributed except any
amounts received by an Employee pursuant to an unfunded non-
qualified plan to the extent such amounts are includable in
the gross income of the Employee; (2) amounts realized from
<PAGE 40> the exercise of a non-qualified stock option or
when restricted stock (or property) held by an 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 receive special tax benefits, such as premiums
for group term life insurance (but only to the extent that
the premiums are not includable in the gross income of the
Employee), or contributions made by the Employer (whether or
not under a salary reduction agreement) towards the purchase
of any annuity contract described in Code Section 403(b)
(whether or not the contributions are excludable from the
gross income of the Employee). For the purposes of this
Section, the determination of "415 Compensation" shall be
made by not including amounts that would otherwise be
excluded from a Participant's gross income by reason of the
application of Code Sections 125, 402(a)(8), 402(h)(1)(B)
and, in the case of Employer contributions made pursuant to
a salary reduction agreement, Code Section 403(b).
(e) For purposes of applying the limitations of
Code Section 415, the "limitation year" shall be the Plan
Year.
(f) The dollar limitation under Code Section
415(b)(1)(A) stated in paragraph (a)(1) above shall be
adjusted annually as provided in Code Section 415(d)
pursuant to the Regulations. The adjusted limitation is
effective as of January 1st of each calendar year and is
applicable to "limitation years" ending with or within that
calendar year.
(g) For the purpose of this Section, all
qualified defined benefit plans (whether terminated or not)
ever maintained by the Employer shall be treated as one
defined benefit plan, and all qualified defined contribution
plans (whether terminated or not) ever maintained by the
Employer shall be treated as one defined contribution plan.
(h) For the purpose of this Section, if the
Employer is a member of a controlled group of corporations,
trades or businesses under common control (as defined by
Code Section 1563(a) or Code Section 414(b) and (c) as
modified by Code Section 415(h)), is a member of an
affiliated service group (as defined by Code
Section 414(m)), or is a member of a group of entities
required to be aggregated pursuant to Regulations under Code
Section 414(o), all Employees of such Employers shall be
considered to be employed by a single Employer.
(i) For the purpose of this Section, if this
Plan is a Code Section 413(c) plan, all Employers of a
<PAGE 41> Participant who maintain this Plan will be
considered to be a single Employer.
(j) (1) If a Participant participates in more
than one defined contribution plan maintained by the
Employer which have different Anniversary Dates, the maximum
"annual additions" under this Plan shall equal the maximum
"annual additions" for the "limitation year" minus any
"annual additions" previously credited to such Participant's
accounts during the "limitation year".
(2) If a Participant participates in both a
defined contribution plan subject to Code Section 412
and a defined contribution plan not subject to Code
Section 412 maintained by the Employer which have the
same Anniversary Date, "annual additions" will be
credited to the Participant's accounts under the
defined contribution plan subject to Code Section 412
prior to crediting "annual additions" to the
Participant's accounts under the defined contribution
plan not subject to Code Section 412.
(3) If a Participant participates in more
than one defined contribution plan not subject to Code
Section 412 maintained by the Employer which have the
same Anniversary Date, the maximum "annual additions"
under this Plan shall equal the product of (A) the
maximum "annual additions" for the "limitation year"
minus any "annual additions" previously credited under
subparagraphs (1) or (2) above, multiplied by (B) a
fraction (i) the numerator of which is the "annual
additions" which would be credited to such
Participant's accounts under this Plan without regard
to the limitations of Code Section 415 and (ii) the
denominator of which is such "annual additions" for
all plans described in this subparagraph.
(k) If an Employee is (or has been) a
Participant in one or more defined benefit plans and one or
more defined contribution plans maintained by the Employer,
the sum of the defined benefit plan fraction and the defined
contribution plan fraction for any "limitation year" may not
exceed 1.0.
(l) The defined benefit plan fraction for any
"limitation year" is a fraction, the numerator of which is
the sum of the Participant's projected annual benefits under
all the defined benefit plans (whether or not terminated)
maintained by the Employer, and the denominator of which is
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). <PAGE 42>
Notwithstanding the above, if the Participant
was a Participant as of the first day of the first
"limitation year" beginning after December 31, 1986, in one
or more defined benefit plans maintained by the Employer
which were in existence on May 6, 1986, the denominator of
this fraction will not be less than 125 percent of the sum
of the annual benefits under such plans which the
Participant had accrued as of the close of the last
"limitation year" beginning before January 1, 1987,
disregarding any changes in the terms and conditions of the
plan after May 5, 1986. The preceding sentence applies only
if the defined benefit plans individually and in the
aggregate satisfied the requirements of Code Section 415 for
all "limitation years" beginning before January 1, 1987.
(m) The defined contribution plan fraction for
any "limitation year" is a fraction, the numerator of which
is the sum of the annual additions to the Participant's
Account under all the defined contribution plans (whether or
not terminated) maintained by the Employer for the current
and all prior "limitation years" (including the annual
additions attributable to the Participant's nondeductible
Employee contributions to all defined benefit plans, whether
or not terminated, maintained by the Employer, and the
annual additions attributable to all welfare benefit funds,
as defined in Code Section 419(e), and individual medical
accounts, as defined in Code Section 415(l)(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 any "limitation
year" is the lesser of 125 percent of the dollar limitation
determined under Code Sections 415(b) and (d) in effect
under Code Section 415(c)(1)(A) or 35 percent of the
Participant's Compensation for such year.
If the Employee was a Participant as of the end
of the first day of the first "limitation year" beginning
after December 31, 1986, in one or more defined contribution
plans maintained by the Employer which were in existence on
May 6, 1986, the numerator of this fraction will be adjusted
if the sum of this fraction and the defined benefit fraction
would otherwise exceed 1.0 under the terms of this Plan.
Under the adjustment, an amount equal to the product of
(1) the excess of the sum of the fractions over 1.0 times
(2) the denominator of this fraction, will be permanently
subtracted from the numerator of this fraction. The
adjustment is calculated using the fractions as they would
be computed as of the end of the last "limitation year"
beginning before January 1, 1987, and disregarding any
changes in the terms and conditions of the Plan made after
May 6, 1986, but using the Code Section 415 limitation
applicable to the first "limitation year" beginning on or
<PAGE 43> after January 1, 1987. The annual addition for
any "limitation year" beginning before January 1, 1987 shall
not be recomputed to treat all Employee contributions as
annual additions.
(n) Notwithstanding the foregoing, for any
"limitation year" in which the Plan is a Top Heavy Plan,
100% shall be substituted for 125% in Sections 4.7(l) and
4.7(m) unless the extra minimum allocation is being provided
pursuant to Section 4.4. However, for any "limitation year"
in which the Plan is a Super Top Heavy Plan, 100% shall be
substituted for 125% in any event.
(o) If the sum of the defined benefit plan
fraction and the defined contribution plan fraction shall
exceed 1.0 in any "limitation year" for any Participant in
this Plan, the Administrator shall adjust the numerator of
the defined benefit plan fraction so that the sum of both
fractions shall not exceed 1.0 in any "limitation year" for
such Participant.
(p) Notwithstanding anything contained in this
Section to the contrary, the limitations, adjustments and
other requirements prescribed in this Section shall at all
times comply with the provisions of Code Section 415 and the
Regulations thereunder, the terms of which are specifically
incorporated herein by reference.
4.8 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS
(a) If, as a result of a reasonable error in
estimating a Participant's Compensation or other facts and
circumstances to which Regulation 1.415-6(b)(6) shall be
applicable, the "annual additions" under this Plan would
cause the maximum "annual additions" to be exceeded for any
Participant, the Administrator shall (1) return any
voluntary Employee contributions credited for the
"limitation year" to the extent that the return would reduce
the "excess amount" in the Participant's accounts (2) hold
any "excess amount" remaining after the return of any
voluntary Employee contributions in a "Section 415 suspense
account" (3) use the "Section 415 suspense account" in the
next "limitation year" (and succeeding "limitation years" if
necessary) to reduce Employer contributions for that
Participant if that Participant is covered by the Plan as of
the end of the "limitation year", or if the Participant is
not so covered, allocate and reallocate the "Section 415
suspense account" in the next "limitation year" (and
succeeding "limitation years" if necessary) to all
Participants in the Plan before any Employer or Employee
contributions which would constitute "annual additions" are
made to the Plan for such "limitation year" (4) reduce
Employer contributions to the Plan for such "limitation
<PAGE 44> year" by the amount of the "Section 415 suspense
account" allocated and reallocated during such "limitation
year".
(b) For purposes of this Article, "excess
amount" for any Participant for a "limitation year" shall
mean the excess, if any, of (1) the "annual additions" which
would be credited to his account under the terms of the Plan
without regard to the limitations of Code Section 415 over
(2) the maximum "annual additions" determined pursuant to
Section 4.7.
(c) For purposes of this Section, "Section 415
suspense account" shall mean an unallocated account equal to
the sum of "excess amounts" for all Participants in the Plan
during the "limitation year". The "Section 415 suspense
account" shall not share in any earnings or losses of the
Trust Fund.
(d) The Plan may not distribute "excess
amounts", other than voluntary Employee contributions, to
Participants or Former Participants.
4.9 TRANSFERS FROM QUALIFIED PLANS
(a) With the consent of the Administrator,
amounts may be transferred from other qualified plans by
Employees, provided that the trust from which such funds are
transferred permits the transfer to be made and the transfer
will not jeopardize the tax exempt status of the Plan or
Trust or create adverse tax consequences for the Employer.
The amounts transferred shall be set up in a separate
account herein referred to as a "Participant's Rollover
Account". Such account shall be fully Vested at all times
and shall not be subject to Forfeiture for any reason.
(b) Amounts in a Participant's Rollover Account
shall be held by the Trustee pursuant to the provisions of
this Plan and may not be withdrawn by, or distributed to the
Participant, in whole or in part, except as provided in
Paragraphs (c) and (d) of this Section.
(c) Except as permitted by Regulations
(including Regulation 1.411(d)-4), amounts attributable to
elective contributions (as defined in Regulation 1.401(k)-
l(g)(4)), including amounts treated as elective
contributions, which are transferred from another qualified
plan in a plan-to-plan transfer shall be subject to the
distribution limitations provided for in Regulation
1.401(k)-l(d).
(d) At Normal Retirement Date, or such other
date when the Participant or his Beneficiary shall be
entitled to receive benefits, the fair market value of the
<PAGE 45> Participant's Rollover Account shall be used to
provide additional benefits to the Participant or his
Beneficiary. Any distributions of amounts held in a
Participant's Rollover Account shall be made in a manner
which is consistent with and satisfies the provisions of
Section 6.5, including, but not limited to, all notice and
consent requirements of Code Sections 417 and 411(a)(11) and
the Regulations thereunder. Furthermore, such amounts shall
be considered as part of a Participant's benefit in
determining whether an involuntary cash-out of benefits
without Participant consent may be made.
(e) The Administrator may direct that employee
transfers made after a valuation date be segregated into a
separate account for each Participant in a federally insured
savings account, certificate of deposit in a bank or savings
and loan association, money market certificate, or other
short term debt security acceptable to the Trustee until
such time as the allocations pursuant to this Plan have been
made, at which time they may remain segregated or be
invested as part of the general Trust Fund, to be determined
by the Administrator.
(f) All amounts allocated to a Participant's
Rollover Account may be treated as a Directed Investment
Account pursuant to Section 4.10.
(g) For purposes of this Section, the term
"qualified plan" shall mean any tax qualified plan under
Code Section 401(a). The term "amounts transferred from
other qualified plans" shall mean: (i) amounts transferred
to this Plan directly from another qualified plan;
(ii) lump-sum distributions received by an Employee from
another qualified plan which are eligible for tax free
rollover to a qualified plan and which are transferred by
the Employee to this Plan within sixty (60) days following
his receipt thereof; (iii) amounts transferred to this Plan
from a conduit individual retirement account provided that
the conduit individual retirement account has no assets
other than assets which (A) were previously distributed to
the Employee by another qualified plan as a lump-sum
distribution (B) were eligible for tax-free rollover to a
qualified plan and (C) were deposited in such conduit
individual retirement account within sixty (60) days of
receipt thereof and other than earnings on said assets; and
(iv) amounts distributed to the Employee from a conduit
individual retirement account meeting the requirements of
clause (iii) above, and transferred by the Employee to this
Plan within sixty (60) days of his receipt thereof from such
conduit individual retirement account.
(h) Prior to accepting any transfers to which
this Section applies, the Administrator may require the
Employee to establish that the amounts to be transferred to
<PAGE 46> this Plan meet the requirements of this
Section and may also require the Employee to provide an
opinion of counsel satisfactory to the Employer that the
amounts to be transferred meet the requirements of this
Section.
(i) Notwithstanding anything herein to the
contrary, a transfer directly to this Plan from another
qualified plan (or a transaction having the effect of such a
transfer) shall only be permitted if it will not result in
the elimination or reduction of any "Section 411(d)(6)
protected benefit" as described in Section 8.1.
4.10 INVESTMENT FUNDS
(a) At the direction of the Administrator,
investment funds (hereinafter "Funds") may be created by the
Trustee for the investment of amounts in the Accounts of all
Participants. Such Funds may include a Fixed Income Fund, a
Fixed Income and Equity Fund, a Fixed Income and Company
Stock Fund, and such additional funds as may be created from
time to time. Rules and regulations concerning the
investment of Accounts in the Funds, and transfers between
such Funds, may be adopted and amended from time to time by
the Administrator; such rules and regulations shall be
communicated by the Administrator in writing to the
Participants.
(b) A separate Account shall be established for
each Participant who has invested in the Funds. The
Investment Account shall not share in Trust Fund earnings,
but it shall be charged or credited as appropriate with the
net earnings, gains, losses, and expenses as well as any
appreciation or depreciation in market value during each
Plan Year attributable to such account. The maintenance of
the Account is for accounting purposes only, and a
segregation of the assets of the Funds to each Account shall
not be required.
ARTICLE V
VALUATIONS
5.1 VALUATION OF THE TRUST FUND
The Administrator shall direct the Trustee, as of each
Anniversary Date, and at such other date or dates deemed
necessary by the Administrator, herein called "valuation date",
to determine the net worth of the assets comprising the Trust
Fund as it exists on the "valuation date" prior to taking into
consideration any contribution to be allocated for that Plan
Year. In determining such net worth, the Trustee shall value the
assets comprising the Trust Fund at their fair market value as of
the "valuation date" and shall deduct all expenses for which the
<PAGE 47> Trustee has not yet obtained reimbursement from the
Employer or the Trust Fund.
5.2 METHOD OF VALUATION
In determining the fair market value of securities
held in the Trust Fund which are listed on a registered stock
exchange, the Administrator shall direct the Trustee to value the
same at the prices they were last traded on such exchange
preceding the close of business on the "valuation date". If such
securities were not traded on the "valuation date", or if the
exchange on which they are traded was not open for business on
the "valuation date", then the securities shall be valued at the
prices at which they were last traded prior to the "valuation
date". Any unlisted security held in the Trust Fund shall be
valued at its bid price next preceding the close of business on
the "valuation date", which bid price shall be obtained from a
registered broker or an investment banker. In determining the
fair market value of assets other than securities for which
trading or bid prices can be obtained, the Trustee may appraise
such assets itself, or in its discretion, employ one or more
appraisers for that purpose and rely on the values established by
such appraiser or appraisers.
ARTICLE VI
DETERMINATION AND DISTRIBUTION OF BENEFITS
6.1 DETERMINATION OF BENEFITS UPON RETIREMENT
Every Participant may terminate his employment with
the Employer and retire for the purposes hereof on his Normal
Retirement Date. Upon such Normal Retirement Date, all amounts
credited to such Participant's Combined Account shall become
distributable. However, a Participant may postpone the
termination of his employment with the Employer to a later date,
in which event the participation of such Participant in the Plan,
including the right to receive allocations pursuant to
Section 4.4, shall continue until his Late Retirement Date. Upon
a Participant's Retirement Date, or as soon thereafter as is
practicable, the Trustee shall distribute all amounts credited to
such Participant's Combined Account in accordance with
Section 6.5.
6.2 DETERMINATION OF BENEFITS UPON DEATH
(a) Upon the death of a Participant before his
Retirement Date or other termination of his employment, all
amounts credited to such Participant's Combined Account
shall become fully Vested. The Administrator shall direct
the Trustee, in accordance with the provisions of
Sections 6.6 and 6.7, to distribute the value of the
deceased Participant's accounts to the Participant's
Beneficiary.
<PAGE 48>
(b) Upon the death of a Former Participant, the
Administrator shall direct the Trustee, in accordance with
the provisions of Sections 6.6 and 6.7, to distribute any
remaining amounts credited to the accounts of a deceased
Former Participant to such Former Participant's Beneficiary.
(c) Any security interest held by the Plan by
reason of an outstanding loan to the Participant or Former
Participant shall be taken into account in determining the
amount of the Pre-Retirement Survivor Annuity.
(d) The Administrator may require such proper
proof of death and such evidence of the right of any person
to receive payment of the value of the account of a deceased
Participant or Former Participant as the Administrator may
deem desirable. The Administrator's determination of death
and of the right of any person to receive payment shall be
conclusive.
(e) Unless otherwise elected in the manner
prescribed in Section 6.6, the Beneficiary of the death
benefit shall be the Participant's spouse, who shall receive
such benefit in the form of a Pre-Retirement Survivor
Annuity pursuant to Section 6.6. Except, however, the
Participant may designate a Beneficiary other than his
spouse if:
(1) the Participant and his spouse have
validly waived the Pre-Retirement Survivor Annuity in
the manner prescribed in Section 6.6, and the spouse
has waived his or her right to be the Participant's
Beneficiary, or
(2) the Participant is legally separated or
has been abandoned (within the meaning of local law)
and the Participant has a court order to such effect
(and there is no "qualified domestic relations order"
as defined in Code Section 414(p) which provides
otherwise), or
(3) the Participant has no spouse, or
(4) the spouse cannot be located.
In such event, the designation of a Beneficiary
shall be made on a form satisfactory to the Administrator.
A Participant may at any time revoke his designation of a
Beneficiary or change his Beneficiary by filing written
notice of such revocation or change with the Administrator.
However, the Participant's spouse must again consent in
writing to any change in Beneficiary unless the original
consent acknowledged that the spouse had the right to limit
consent only to a specific Beneficiary and that the spouse
voluntarily elected to relinquish such right. In the event
<PAGE 49> no valid designation of Beneficiary exists at the
time of the Participant's death, the death benefit shall be
payable to his estate.
6.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY
In the event of a Participant's Total and Permanent
Disability prior to his Retirement Date or other termination of
his employment, all amounts credited to such Participant's
Combined Account shall become fully Vested. In the event of a
Participant's Total and Permanent Disability, the Trustee, in
accordance with the provisions of Sections 6.5 and 6.7, shall
distribute to such Participant all amounts credited to such
Participant's Combined Account as though he had retired.
6.4 DETERMINATION OF BENEFITS UPON TERMINATION
(a) On or before the Anniversary Date
coinciding with or subsequent to the termination of a
Participant's employment for any reason other than death,
Total and Permanent Disability or retirement, the
Administrator may direct the Trustee to segregate the amount
of the vested portion of such Terminated Participant's
Combined Account and invest the aggregate amount thereof in
a separate, federally insured savings account, certificate
of deposit, common or collective trust fund of a bank or a
deferred annuity. In the event the Vested portion of a
Participant's Combined Account is not segregated, the amount
shall remain in a separate account for the Terminated
Participant and share in allocations pursuant to Section 4.4
until such time as a distribution is made to the Terminated
Participant.
Distribution of the funds due to a Terminated
Participant shall be made on the occurrence of an event
which would result in the distribution had the Terminated
Participant remained in the employ of the Employer (upon the
Participant's death, Total and Permanent Disability or
Normal Retirement). However, at the election of the
Participant, the Administrator shall direct the Trustee to
cause the entire vested portion of the Terminated
Participant's Combined Account to be payable to such
Terminated Participant on or after the Anniversary Date
coinciding with or next following termination of employment.
Any distribution under this paragraph shall be made in a
manner which is consistent with and satisfies the provisions
of Section 6.5, including, but not limited to, all notice
and consent requirements of Code Sections 417 and 411(a)(11)
and the Regulations thereunder.
If the value of a Terminated Participant's
Vested benefit derived from Employer and Employee
contributions does not exceed $3,500 and has never exceeded
$3,500 at the time of any prior distribution, the <PAGE 50>
Administrator shall direct the Trustee to cause the entire
Vested benefit to be paid to such Participant in a single
lump sum.
(b) A Participant shall become fully Vested in
his Participant's Account immediately upon entry into the
Plan.
(c) The computation of a Participant's
nonforfeitable percentage of his interest in the Plan shall
not be reduced as the result of any direct or indirect
amendment to this Plan. For this purpose, the Plan shall be
treated as having been amended if the Plan provides for an
automatic change in vesting due to a change in top heavy
status. In the event that the Plan is amended to change or
modify any vesting schedule, a Participant with at least
three (3) Years of Service as of the expiration date of the
election period may elect to have his nonforfeitable
percentage computed under the Plan without regard to such
amendment. If a Participant fails to make such election,
then such Participant shall be subject to the new vesting
schedule. The Participant's election period shall commence
on the adoption date of the amendment and shall end 60 days
after the latest of:
(1) the adoption date of the amendment,
(2) the effective date of the amendment, or
(3) the date the Participant receives
written notice of the amendment from the Employer or
Administrator.
(d) (1) If any Former Participant shall be
reemployed by the Employer before a 1-Year Break in Service
occurs, he shall continue to participate in the Plan in the
same manner as if such termination had not occurred.
(2) If a Former Participant completes one
(1) Year of Service for eligibility purposes following
his reemployment with the Employer, he shall
participate in the Plan retroactively from his date of
reemployment.
(3) If a Former Participant completes a
Year of Service (a 1-Year Break in Service previously
occurred, but employment had not terminated), he shall
participate in the Plan retroactively from the first
day of the Plan Year during which he completes one (1)
Year of Service.
<PAGE 51>
6.5 DISTRIBUTION OF BENEFITS
(a) (1) Unless otherwise elected as provided
below a Participant who is married on the "annuity starting
date" and who does not die before the "annuity starting
date" shall receive the value of all of his benefits in the
form of a joint and survivor annuity. The joint and
survivor annuity is an annuity that commences immediately
and shall be equal in value to a single life annuity. Such
joint and survivor benefits following the Participant's
death shall continue to the spouse during the spouse's
lifetime at a rate equal to 50% of the rate at which such
benefits were payable to the Participant. This joint and
50% survivor annuity shall be considered the designated
qualified joint and survivor annuity and automatic form of
payment for the purposes of this Plan. However, the
Participant may elect to receive a smaller annuity benefit
with continuation of payments to the spouse at a rate of
seventy-five percent (75%) or one hundred percent (100%) of
the rate payable to a Participant during his lifetime, which
alternative joint and survivor annuity shall be equal in
value to the automatic joint and 50% survivor annuity. An
unmarried Participant shall receive the value of his benefit
in the form of a life annuity. Such unmarried Participant,
however, may elect in writing to waive the life annuity.
The election must comply with the provisions of this
Section as if it were an election to waive the joint and
survivor annuity by a married Participant, but without the
spousal consent requirement. The Participant may elect to
have any annuity provided for in this Section distributed
upon the attainment of the "earliest retirement age" under
the Plan. The "earliest retirement age" is the earliest
date on which, under the Plan, the Participant could elect
to receive retirement benefits.
(2) Any election to waive the joint and
survivor annuity must be made by the Participant in
writing during the election period and be consented to
by the Participant's spouse. If the spouse is legally
incompetent to give consent, the spouse's legal
guardian, even if such guardian is the Participant,
may give consent. Such election shall designate a
Beneficiary (or a form of benefits) that may not be
changed without spousal consent (unless the consent of
the spouse expressly permits designations by the
Participant without the requirement of further consent
by the spouse). Such spouse's consent shall be
irrevocable and must acknowledge the effect of such
election and be witnessed by a Plan representative or
a notary public. Such consent shall not be required
if it is established to the satisfaction of the
Administrator that the required consent cannot be
obtained because there is no spouse, the spouse cannot
be located, or other circumstances that may be
<PAGE 52> prescribed by Regulations. The election
made by the Participant and consented to by his spouse
may be revoked by the Participant in writing without
the consent of the spouse at any time during the
election period. The number of revocations shall not
be limited. Any new election must comply with the
requirements of this paragraph. A former spouse's
waiver shall not be binding on a new spouse.
(3) The election period to waive the joint
and survivor annuity shall be the 90 day period ending
on the "annuity starting date."
(4) For purposes of this Section, the
"annuity starting date" means the first day of the
first period for which an amount is paid as an
annuity, or, in the case of a benefit not payable in
the form of an annuity, the first day on which all
events have occurred which entitle the Participant to
such benefit.
(5) With regard to the election, the
Administrator shall provide to the Participant no less
than 30 days and no more than 90 days before the
"annuity starting date" a written explanation of:
(i) the terms and conditions of the
joint and survivor annuity, and
(ii) the Participant's right to make,
and the effect of, an election to waive the
joint and survivor annuity, and
(iii) the right of the Participant's
spouse to consent to any election to waive the
joint and survivor annuity, and
(iv) the right of the Participant to
revoke such election, and the effect of such
revocation.
(b) In the event a married Participant duly
elects pursuant to paragraph (a)(2) above not to receive his
benefit in the form of a joint and survivor annuity, or if
such Participant is not married, in the form of a life
annuity, the Administrator, pursuant to the election of the
Participant, shall direct the Trustee to distribute to a
Participant or his Beneficiary any amount to which he is
entitled under the Plan in one or more of the following
methods:
(1) one lump-sum payment in cash;
<PAGE 53>
(2) Payments over a period certain in
monthly, quarterly, semiannual, or annual cash
installments. In order to provide such installment
payments, the Administrator may (A) segregate the
aggregate amount thereof in a separate, federally
insured savings account, certificate of deposit in a
bank or savings and loan association, money market
certificate or other liquid short-term security or
(B) purchase a nontransferable annuity contract for a
term certain (with no life contingencies) providing
for such payment. The period over which such payment
is to be made shall not extend beyond the
Participant's life expectancy (or the life expectancy
of the Participant and his designated Beneficiary).
(3) Purchase of or providing an annuity.
However, such annuity may not be in any form that will
provide for payments over a period extending beyond
either the life of the Participant (or the lives of
the Participant and his designated Beneficiary) or the
life expectancy of the Participant (or the life
expectancy of the Participant and his designated
Beneficiary).
(c) The present value of a Participant's joint
and survivor annuity derived from Employer and Employee
contributions may not be paid without his written consent if
the value exceeds, or has ever exceeded, $3,500 at the time
of any prior distribution. Further, the spouse of a
Participant must consent in writing to any immediate
distribution. If the value of the Participant's benefit
derived from Employer and Employee contributions does not
exceed $3,500 and has never exceeded $3,500 at the time of
any prior distribution, the Administrator may immediately
distribute such benefit without such Participant's consent.
No distribution may be made under the preceding sentence
after the "annuity starting date" unless the Participant and
his spouse consent in writing to such distribution. Any
written consent required under this paragraph must be
obtained not more than 90 days before commencement of the
distribution and shall be made in a manner consistent with
Section 6.5(a)2.
(d) Any distribution to a Participant who has a
benefit which exceeds or has ever exceeded, $3,500 at the
time of any prior distribution shall require such
Participant's consent if such distribution commences prior
to the later of his Normal Retirement Age or age 62. With
regard to this required consent:
(1) No consent shall be valid unless the
Participant has received a general description of the
material features and an explanation of the relative
values of the optional forms of benefit available
<PAGE 54> under the Plan that would satisfy the notice
requirements of Code Section 417.
(2) The Participant must be informed of his
right to defer receipt of the distribution. If a
Participant fails to consent, it shall be deemed an
election to defer the commencement of payment of any
benefit. However, any election to defer the receipt
of benefits shall not apply with respect to
distributions which are required under Section 6.5(e).
(3) Notice of the rights specified under
this paragraph shall be provided no less than 30 days
and no more than 90 days before the "annuity starting
date".
(4) Written consent of the Participant to
the distribution must not be made before the
Participant receives the notice and must not be made
more than 90 days before the "annuity starting date".
(5) No consent shall be valid if a
significant detriment is imposed under the Plan on any
Participant who does not consent to the distribution.
(e) Notwithstanding any provision in the Plan
to the contrary, the distribution of a Participant's
benefits made on or after January 1, 1985, whether under the
Plan or through the purchase of an annuity contract, shall
be made in accordance with the following requirements and
shall otherwise comply with Code Section 401(a)(9) and the
Regulations thereunder (including Regulation 1.401(a)(9)-2),
the provisions of which-are incorporated herein by
reference:
(1) A Participant's benefits shall be
distributed to him not later than April 1st of the
calendar year following the later of (i) the calendar
year in which the Participant attains age 70 1/2 or
(ii) the calendar year in which the Participant
retires, provided, however, that this clause (ii)
shall not apply in the case of a Participant who is a
"five (5) percent owner" at any time during the five
(5) Plan Year period ending in the calendar year in
which he attains age 70 1/2 or, in the case of a
Participant who becomes a "five (5) percent-owner"
during any subsequent Plan Year, clause (ii) shall no
longer apply and the required beginning date shall be
the April 1st of the calendar year following the
calendar year in which such subsequent Plan Year ends.
Alternatively, distributions to a Participant must
begin no later than the applicable April 1st as
determined under the preceding sentence and must be
made over the life of the Participant (or the lives of
<PAGE 55> the Participant and the Participant's
designated Beneficiary) or the life expectancy of the
Participant (or the life expectancies of the
Participant and his designated Beneficiary) in
accordance with Regulations. Notwithstanding the
foregoing, clause (ii) above shall not apply to any
Participant unless the Participant had attained age
70 1/2 before January 1, 1988 and was not a "five (5)
percent owner" at any time during the Plan Year ending
with or within the calendar year in which the
Participant attained age 66 1/2 or any subsequent Plan
Year.
(2) Distributions to a Participant and his
Beneficiaries shall only be made in accordance with
the incidental death benefit requirements of Code
Section 401(a)(9)(G) and the Regulations thereunder.
Additionally, for calendar years beginning before
1989, distributions may also be made under an
alternative method which provides that the then
present value of the payments to be made over the
period of the Participant's life expectancy exceeds
fifty percent (50%) of the then present value of the
total payments to be made to the Participant and his
Beneficiaries.
(f) For purposes of this Section, the life
expectancy of a Participant and a Participant's spouse
(other than in the case of a life annuity) shall not be
redetermined in accordance with Code Section 401(a)(9)(D).
Life expectancy and joint and last survivor expectancy shall
be computed using the return multiples in Tables V and VI of
Regulation 1.72-9.
(g) Subject to the spouse's right of consent
afforded under the Plan, the restrictions imposed by this
Section shall not apply if a Participant has, prior to
January 1, 1984, made a written designation to have his
retirement benefit paid in an alternative method acceptable
under Code Section 401(a) as in effect prior to the
enactment of the Tax Equity and Fiscal Responsibility Act of
1982.
(h) All annuity Contracts under this Plan shall
be non-transferable when distributed. Furthermore, the
terms of any annuity Contract purchased and distributed to a
Participant or spouse shall comply with all of the
requirements of the Plan.
<PAGE 56>
6.6 DISTRIBUTION OF BENEFITS UPON DEATH
(a) Unless otherwise elected as provided below,
a Vested Participant who dies before the annuity starting
date and who has a surviving spouse shall have his death
benefit paid to his surviving spouse in the form of a Pre-
Retirement Survivor Annuity. The Participant's spouse may
direct that payment of the Pre-Retirement Survivor Annuity
commence within a reasonable period after the Participant's
death. If the spouse does not so direct, payment of such
benefit will commence at the time the Participant would have
attained the later of his Normal Retirement Age or age 62.
However, the spouse may elect a later commencement date.
Any distribution to the Participant's spouse shall be
subject to the rules specified in Section 6.6(g).
(b) Any election to waive the Pre-Retirement
Survivor Annuity before the Participant's death must be made
by the Participant in writing during the election period and
shall require the spouse's irrevocable consent in the same
manner provided for in Section 6.5(a)(2). Further, the
spouse's consent must acknowledge the specific nonspouse
Beneficiary. Notwithstanding the foregoing, the nonspouse
Beneficiary need not be acknowledged, provided the consent
of the spouse acknowledges that the spouse has the right to
limit consent only to a specific Beneficiary and that the
spouse voluntarily elects to relinquish such right.
(c) The election period to waive the Pre-
Retirement Survivor Annuity shall begin on the first day of
the Plan Year in which the Participant attains age 35 and
end on the date of the Participant's death. An earlier
waiver (with spousal consent) may be made provided a written
explanation of the Pre-Retirement Survivor Annuity is given
to the Participant and such waiver becomes invalid at the
beginning of the Plan Year in which the Participant turns
age 35. In the event a Vested Participant separates from
service prior to the beginning of the election period, the
election period shall begin on the date of such separation
from service.
(d) With regard to the election, the
Administrator shall provide each Participant within the
applicable period, with respect to such Participant (and
consistent with Regulations), a written explanation of the
Pre-Retirement Survivor Annuity containing comparable
information to that required pursuant to Section 6.5(a)(5).
For the purposes of this paragraph, the term "applicable
period" means, with respect to a Participant, whichever of
the following periods ends last:
(1) 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
<PAGE 57> preceding the Plan Year in which the
Participant attains age 35;
(2) A reasonable period after the
individual becomes a Participant. For this purpose,
in the case of an individual who becomes a Participant
after age 32, the explanation must be provided by the
end of the three-year period beginning with the first
day of the first Plan Year for which the individual is
a Participant;
(3) A reasonable period ending after the
Plan no longer fully subsidizes the cost of the Pre-
Retirement Survivor Annuity with respect to the
Participant;
(4) A reasonable period ending after Code
Section 401(a)(11) applies to the Participant; or
(5) A reasonable period after separation
from service in the case of a Participant who
separates before attaining age 35. For this purpose,
the Administrator must provide the explanation
beginning one year before the separation from service
and ending one-year after such separation.
(e) If the value of the Pre-Retirement Survivor
Annuity derived from Employer and Employee contributions
does not exceed $3,500 and has never exceeded $3,500 at the
time of any prior distribution, the Administrator shall
direct the immediate distribution of such amount to the
Participant's spouse. No distribution may be made under the
preceding sentence after the annuity starting date unless
the spouse consents in writing. If the value exceeds, or
has ever exceeded, $3,500 at the time of any prior
distribution, an immediate distribution of the entire amount
may be made to the surviving spouse, provided such surviving
spouse consents in writing to such distribution. Any
written consent required under this paragraph must be
obtained not more than 90 days before commencement of the
distribution and shall be made in a manner consistent with
Section 6.5(a)(2).
(f) (1) In the event the death benefit is not
paid in the form of a Pre-Retirement Survivor Annuity, it
shall be paid to the Participant's Beneficiary by either of
the following methods, as elected by the Participant (or if
no election has been made prior to the Participant's death,
by his Beneficiary), subject to the rules specified in
Section 6.6(g):
\AP One lump-sum payment in cash;
(ii) Payment in monthly, quarterly,
<PAGE 58>
semi-annual, or annual cash installments over a period
to be determined by the Participant or his
Beneficiary. After periodic installments commence,
the Beneficiary shall have the right to direct the
Trustee to reduce the period over which such periodic
installments shall be made, and the Trustee shall
adjust the cash amount of such periodic installments
accordingly.
(2) In the event the death benefit payable
pursuant to Section 6.2 is payable in installments,
then, upon the death of the Participant, the
Administrator may direct the Trustee to segregate the
death benefit into a separate account, and the Trustee
shall invest such segregated account separately, and
the funds accumulated in such account shall be used
for the payment of the installments.
(g) Notwithstanding any provision in the Plan
to the contrary, distributions upon the death of a
Participant made on or after January 1, 1985 shall be made
in accordance with the following requirements and shall
otherwise comply with Code Section 401(a)(9) and the
Regulations thereunder. If the death benefit is paid in the
form of a Pre-Retirement Survivor Annuity, then
distributions to the Participant's surviving spouse must
commence on or before the later of: (1) December 31st of
the calendar year immediately following the calendar year in
which the Participant died; or (2) December 31st of the
calendar year in which the Participant would have attained
age 70 1/2. If it is determined pursuant to Regulations
that the distribution of a Participant's interest has begun
and the Participant dies before his entire interest has been
distributed to him, the remaining portion of such interest
shall be distributed at least as rapidly as under the method
of distribution selected pursuant to Section 6.5 as of his
date of death. If a Participant dies before he has begun to
receive any distributions of his interest under the Plan or
before distributions are deemed to have begun pursuant to
Regulations (and distributions are not to be made in the
form of a Pre-Retirement Survivor Annuity), then his death
benefit shall be distributed to his Beneficiaries by
December 31st of the calendar year in which the fifth
anniversary of his date of death occurs.
However, the 5-year distribution requirement of
the preceding paragraph shall not apply to any portion of
the deceased Participant's interest which is payable to or
for the benefit of a designated Beneficiary. In such event,
such portion may, at the election of the Participant (or the
Participant's designated Beneficiary), be distributed over
the life of such designated Beneficiary (or over a period
<PAGE 59> not extending beyond the life expectancy of such
designated Beneficiary) provided such distribution begins
not later than December 31st of the calendar year
immediately following the calendar year in which the
Participant died. However, in the event the Participant's
spouse (determined as of the date of the Participant's
death) is his Beneficiary, the requirement that
distributions commence within one year of a Participant's
death shall not apply. In lieu thereof, distributions must
commence on or before the later of: (1) December 31st of
the calendar year immediately following the calendar year in
which the Participant died; or (2) December 31st of the
calendar year in which the Participant would have attained
age 70 1/2. If the surviving spouse dies before
distributions to such spouse begin, then the 5-year
distribution requirement of this Section shall apply as if
the spouse was the Participant.
\ZZ For purposes of Section 6.6(g), the
election by a designated Beneficiary to be excepted from the
5-year distribution requirement must be made no later than
December 31st of the calendar year following the calendar
year of the Participant's death. Except, however, with
respect to a designated Beneficiary who is the Participant's
surviving spouse, the election must be made by the earlier
of: (1) December 31st of the calendar year immediately
following the calendar year in which the Participant died
or, if later, the calendar year in which the Participant
would have attained age 70 1/2; or (2) December 31st of the
calendar year which contains the fifth anniversary of the
date of the Participant's death. An election by a
.designated Beneficiary must be in writing and shall be
irrevocable as of the last day of the election period stated
herein. In the absence of an election by the Participant or
a designated Beneficiary, the 5-year distribution
requirement shall apply.
(i) For purposes of this Section, the life
expectancy of a Participant and a Participant's spouse
(other than in the case of a life annuity) shall not be
redetermined in accordance with Code Section 401(a)(9)(D).
Life expectancy and joint and last survivor expectancy shall
be computed using the return multiples in Tables V and VI of
Regulation 1.72-9.
(j) Subject to the spouse's right of consent
afforded under the Plan, the restrictions imposed by this
Section shall not apply if a Participant has, prior to
January 1, 1984, made a written designation to have his
death benefits paid in an alternative method acceptable
under Code Section 401(a) as in effect prior to the
enactment of the Tax Equity and Fiscal Responsibility Act of
1982.
<PAGE 60>
6.7 TIME OF SEGREGATION OR DISTRIBUTION
Except as limited by Sections 6.5 and 6.6, whenever
the Trustee is to make a distribution or to commence a series of
payments on or as of an Anniversary Date, the distribution may be
made or begun on such date or as soon thereafter as is
practicable, but in no event later than 180 days after the
Anniversary Date. However, unless a Former Participant elects in
writing to defer the receipt of benefits (such election may not
result in a death benefit that is more than incidental), the
payment of benefits shall begin not later than the 60th day after
the close of the Plan Year in which the latest of the following
events occurs: (a) the date on which the Participant attains the
earlier of age 65 or the Normal Retirement Age specified herein;
(b) the 10th anniversary of the year in which the Participant
commenced participation in the Plan; or (c) the date the
Participant terminates his service with the Employer.
6.8 DISTRIBUTION FOR MINOR BENEFICIARY
In the event a distribution is to be made to a minor,
then the Administrator may direct that such distribution be paid
to the legal guardian, or if none, to a parent of such
Beneficiary or a responsible adult with whom the Beneficiary
maintains his residence, or to the custodian for such Beneficiary
under the Uniform Gift to Minors Act or Gift to Minors Act, if
such is permitted by the laws of the state in which said
Beneficiary resides. Such a payment to the legal guardian,
custodian or parent of a minor Beneficiary shall fully discharge
the Trustee, Employer, and Plan from further liability on account
thereof.
6.9 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN
In the event that all, or any portion, of the
distribution payable to a Participant or his Beneficiary
hereunder shall, at the later of the Participant's attainment of
age 62 or his Normal Retirement Age, remain unpaid solely by
reason of the inability of the Administrator, after sending a
registered letter, return receipt requested, to the last known
address, and after further diligent effort, to ascertain the
whereabouts of such Participant or his Beneficiary, the amount so
distributable shall be treated as a Forfeiture pursuant to the
Plan. In the event a Participant or Beneficiary is located
subsequent to his benefit being reallocated, such benefit shall
be restored.
6.10 PRE-RETIREMENT DISTRIBUTION
At such time as a Participant shall have attained the
age of 60 years, the Administrator, at the election of the
Participant, shall direct the Trustee to distribute all or a
portion of the amount then credited to the accounts maintained on
behalf of the Participant. In the event that the Administrator
<PAGE 61> makes such a distribution, the Participant shall
continue to be eligible to participate in the Plan on the same
basis as any other Employee. Any distribution made pursuant to
this Section shall be made in a manner consistent with
Section 6.5, including, but not limited to, all notice and
consent requirements of Code Sections 417 and 411(a)(11) and the
Regulations thereunder.
Notwithstanding the above, pre-retirement
distributions from a Participant's Elective Account shall not be
permitted prior to the Participant attaining age 59 1/2 except as
otherwise permitted under the terms of the Plan.
6.11 LIMITATIONS ON BENEFITS AND DISTRIBUTIONS
All rights and benefits, including elections, provided
to a Participant in this Plan shall be subject to the rights
afforded to any "alternate payee" under a "qualified domestic
relations order." Furthermore, a distribution to an "alternate
payee" shall be permitted if such distribution is authorized by a
"qualified domestic relations order," even if the affected
Participant has not reached the "earliest retirement age" under
the Plan. For the purposes of this Section, "alternate payee,"
"qualified domestic relations order" and "earliest retirement
age" shall have the meaning set forth under Code Section 414(p).
ARTICLE VII
TRUSTEE
7.1 BASIC RESPONSIBILITIES OF THE TRUSTEE
The Trustee shall have the following categories of
responsibilities:
(a) Consistent with the "funding policy and
method" determined by the Employer, to invest, manage, and
control the Plan assets subject, however, to the direction
of an Investment Manager if the Trustee should appoint such
manager as to all or a portion of the assets of the Plan;
(b) At the direction of the Administrator, to
pay benefits required under the Plan to be paid to
Participants, or, in the event of their death, to their
Beneficiaries;
(c) To maintain records of receipts and
disbursements and furnish to the Employer and/or
Administrator for each Plan Year a written annual report per
Section 7.7; and
(d) If there shall be more than one Trustee,
they shall act by a majority of their number, but may
authorize one or more of them to sign papers on their
behalf. <PAGE 62>
7.2 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE
(a) The Trustee shall invest and reinvest the
Trust Fund to keep the Trust Fund invested without
distinction between principal and income and in such
securities or property, real or personal, wherever situated,
as the Trustee shall deem advisable, including, but not
limited to, stocks, common or preferred, bonds and other
evidences of indebtedness or ownership, and real estate or
any interest therein. The Trustee shall at all times in
making investments of the Trust Fund consider, among other
factors, the short and long-term financial needs of the Plan
on the basis of information furnished by the Employer. In
making such investments, the Trustee shall not be restricted
to securities or other property of the character expressly
authorized by the applicable law for trust investments;
however, the Trustee shall give due regard to any
limitations imposed by the Code or the Act so that at all
times the Plan may qualify as a qualified Profit Sharing
Plan and Trust.
(b) The Trustee may employ a bank or trust
company pursuant to the terms of its usual and customary
bank agency agreement, under which the duties of such bank
or trust company shall be of a custodial, clerical and
record-keeping nature.
(c) The Trustee may from time to time with the
consent of the Employer transfer to a common, collective, or
pooled trust fund maintained by any corporate Trustee or any
affiliate of any corporate Trustee, all or such part of the
Trust Fund as the Trustee may deem advisable, and such part
or all of the Trust Fund so transferred shall be subject to
all the terms and provisions of the common, collective, or
pooled trust fund which contemplate the commingling for
investment purposes of such trust assets with trust assets
of other trusts. The Trustee may, from time to time with
the consent of the Employer, withdraw from such common,
collective, or pooled trust fund all or such part of the
Trust Fund as the Trustee may deem advisable.
7.3 OTHER POWERS OF THE TRUSTEE
The Trustee, in addition to all powers and authorities
under common law, statutory authority, including the Act, and
other provisions of the Plan, shall have the following powers and
authorities, to be exercised in the Trustee's sole discretion:
(a) To purchase, or subscribe for, any
securities or other property and to retain the same. In
conjunction with the purchase of securities, margin accounts
may be opened and maintained;
<PAGE 63>
(b) To sell, exchange, convey, transfer, grant
options to purchase, or otherwise dispose of any securities
or other property held by the Trustee, by private contract
or at public auction. No person dealing with the Trustee
shall be bound to see to the application of the purchase
money or to inquire into the validity, expediency, or
propriety of any such sale or other disposition, with or
without advertisement;
(c) To vote upon any stocks, bonds, or other
securities; to give general or special proxies or powers of
attorney with or without power of substitution; to exercise
any conversion privileges, subscription rights or other
options, and to make any payments incidental thereto; to
oppose, or to consent to, or otherwise participate in,
corporate reorganizations or other changes affecting
corporate securities, and to delegate discretionary powers,
and to pay any assessments or charges in connection
therewith; and generally to exercise any of the powers of an
owner with respect to stocks, bonds, securities, or other
property;
(d) To cause any securities or other property
to be registered in the Trustee's own name or in the name of
one or more of the Trustee's nominees, and to hold any
investments in bearer form, but the books and records of the
Trustee shall at all times show that all such investments
are part of the Trust Fund;
(e) To borrow or raise money for the purposes
of the Plan in such amount, and upon such terms and
conditions, as the Trustee shall deem advisable; and for any
sum so borrowed, to issue a promissory note as Trustee, and
to secure the repayment thereof by pledging all, or any
part, of the Trust Fund; and no person lending money to the
Trustee shall be bound to see to the application of the
money lent or to inquire into the validity, expediency, or
propriety of any borrowing;
(f) To keep such portion of the Trust Fund in
cash or cash balances as the Trustee may, from time to time,
deem to be in the best interests of the Plan, without
liability for interest thereon;
(g) To accept and retain for such time as the
Trustee may deem advisable any securities or other property
received or acquired as Trustee hereunder, whether or not
such securities or other property would normally be
purchased as investments hereunder;
(h) To make, execute, acknowledge, and deliver
any and all documents of transfer and conveyance and any and
all other instruments that may be necessary or appropriate
to carry out the powers herein granted; <PAGE 64>
(i) To settle, compromise, or submit to
arbitration any claims, debts, or damages due or owing to or
from the Plan, to commence or defend suits or legal or
administrative proceedings, and to represent the Plan in all
suits and legal and administrative proceedings;
(j) To employ suitable agents and counsel and
to pay their reasonable expenses and compensation, and such
agent or counsel may or may not be agent or counsel for the
Employer;
(k) To apply for and procure from responsible
insurance companies, to be selected by the Administrator, as
an investment of the Trust Fund such annuity, or other
Contracts (on the life of any Participant) as the
Administrator shall deem proper; to exercise, at any time or
from time to time, whatever rights and privileges may be
granted under such annuity, or other Contracts; to collect,
receive, and settle for the proceeds of all such annuity or
other Contracts as and when entitled to do so under the
provisions thereof;
(l) To invest funds of the Trust in time
deposits or savings accounts bearing a reasonable rate of
interest in the Trustee's bank;
(m) To invest in Treasury Bills and other forms
of United States government obligations;
(n) To sell, purchase and acquire put or call
options if the options are traded on and purchased through a
national securities exchange registered under the Securities
Exchange Act of 1934, as amended, or, if the options are not
traded on a national securities exchange, are guaranteed by
a member firm of the New York Stock Exchange;
(o) To deposit monies in federally insured
savings accounts or certificates of deposit in banks or
savings and loan associations;
\AP To pool all or any of the Trust Fund, from
time to time, with assets belonging to any other qualified
employee pension benefit trust created by the Employer or an
affiliated company of the Employer, and to commingle such
assets and make joint or common investments and carry joint
accounts on behalf of this Plan and such other trust or
trusts, allocating undivided shares or interests in such
investments or accounts or any pooled assets of the two or
more trusts in accordance with their respective interests;
(q) To do all such acts and exercise all such
rights and privileges, although not specifically mentioned
herein, as the Trustee may deem necessary to carry out the
purposes of the Plan. <PAGE 65>
(r) Directed Investment Account. The powers
granted to the Trustee shall be exercised in the sole
fiduciary discretion of the Trustee. However, if
Participants are so empowered by the Administrator, each
Participant may direct the Trustee to separate and keep
separate all or a portion of his share of his account; and
further each Participant is authorized and empowered, in his
sole and absolute discretion, to give directions to the.
Trustee in such form as the Trustee may require concerning
the investment of the Participant's Directed Investment
Account, which directions must be followed by the Trustee
subject, however, to restrictions on payment of life
insurance premiums. Neither the Trustee nor any other
persons including the Administrator or otherwise shall be
under any duty to question any such direction of the
Participant or to review any securities or other property,
real or personal, or to make any suggestions to the
Participant in connection therewith, and the Trustee shall
comply as promptly as practicable with directions given by
the Participant hereunder. Any such direction may be of a
continuing nature or otherwise and may be revoked by the
Participant at any time in such form as the Trustee may
require. The Trustee may refuse to comply with any
direction from the Participant in the event the Trustee, in
its sole and absolute discretion, deems such directions
improper by virtue of applicable law. The Trustee shall not
be responsible or liable for any loss or expense which may
result from the Trustee's refusal or failure to comply with
any directions from the Participant. Any costs and expenses
related to compliance with the Participant's directions
shall be borne by the Participant's Directed Investment
Account.
7.4 LOANS TO PARTICIPANTS
(a) The Trustee may, in the Trustee's
discretion, make loans to Participants and Beneficiaries
under the following circumstances: (1) loans shall be made
available for payment of tuition for the next semester or
quarter of post-secondary education for the Participant, his
spouse, children, or dependents; (2) loans shall be made
available for the purchase (excluding mortgage payments) of
a principal residence for the Participant; (3) loans shall
be made available to all Participants and Beneficiaries on a
reasonably equivalent basis; (4) loans shall not be made
available to Highly Compensated Employees in an amount
greater than the amount made available to other Participants
and Beneficiaries; (5) loans shall bear a reasonable rate of
interest; (6) loans shall be adequately secured; and
(7) shall provide for repayment over a reasonable period of
time.
(b) Loans shall not be granted to any
Participant or his Beneficiary that provide for a repayment
<PAGE 66> period extending beyond such Participant's Normal
Retirement Date.
(c) Loans made pursuant to this Section (when
added to the outstanding balance of all other loans made by
the Plan to the Participant) shall be limited to the lesser
of:
(1) $50,000 reduced by the excess (if any)
of the highest outstanding balance of loans from the
Plan to the Participant during the one year period
ending on the day before the date on which such loan
is made, over the outstanding balance of loans from
the Plan to the Participant on the date on which such
loan was made, or
(2) one-half (1/2) of the present value of
the non-forfeitable accrued benefit of the Participant
under the Plan.
For purposes of this limit, all plans of the
Employer shall be considered one plan. Additionally, with
respect to any loan made prior to January 1, 1987, the
$50,000 limit specified in (1) above shall be unreduced.
(d) Loans shall provide for level amortization
with payments to be made not less frequently than quarter y
over a per3od not to exceed five 5 years. However, loans
used to acquire any dwelling unit which, within a reasonable
time, is to be used (determined at the time the loan is
made) as a principal residence of the Participant shall
provide for periodic repayment over a reasonable period of
time that may exceed five (5) years. Notwithstanding the
foregoing, loans made prior to January 1, 1987 which are
used to acquire, construct, reconstruct or substantially
rehabilitate any dwelling unit which, within a reasonable
period of time is to be used (determined at the time the
loan is made) as a principal residence of the Participant or
a member of his family (within the meaning of Code
Section 267(c)(4)) may provide for periodic repayment over a
reasonable period of time that may exceed five (5) years.
Additionally, loans made prior to January 1, 1987, may
provide for periodic payments which are made less frequently
than quarterly and which do not necessarily result in level
amortization.
(e) Any loan made pursuant to this
Section after August 18, 1985 where the Vested interest of
the Participant is used to secure such loan shall require
the written consent of the Participant's spouse in a manner
consistent with Section 6.5(a). Such written consent must
be obtained within the 90-day period prior to the date the
loan is made. However, no spousal consent shall be required
<PAGE 67> under this paragraph if the total accrued benefit
subject to the security is not in excess of $3,500.
(f) Any loans granted or renewed on or after
the last day of the first Plan Year beginning after
December 31, 1988 shall be made pursuant to a Participant
loan program. Such loan program shall be established in
writing and must include, but need not be limited to, the
following:
(1) the identity of the person or positions
authorized to administer the Participant loan program;
(2) a procedure for applying for loans;
(3) the basis on which loans will be
approved or denied;
(4) limitations, if any, on the types and
amounts of loans offered;
(5) the procedure under the program for
determining a reasonable rate of interest;
(6) the types of collateral which may
secure a Participant loan; and
(7) the events constituting default and the
steps that will be taken to preserve Plan assets.
Such Participant loan program shall be contained
in a separate written document which, when properly
executed, is hereby incorporated by reference and made a
part of the Plan. Furthermore, such Participant loan
program may be modified or amended in writing from time to
time without the necessity of amending this Section.
7.5 DUTIES OF THE TRUSTEE REGARDING PAYMENTS
At the direction of the Administrator, the Trustee
shall, from time to time, in accordance with the terms of the
Plan, make payments out of the Trust Fund. The Trustee shall not
be responsible in any way for the application of such payments.
7.6 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES
The Trustee shall be paid such reasonable compensation
as shall from time to time be agreed upon in writing by the
Employer and the Trustee. An individual serving as Trustee who
already receives full-time pay from the Employer shall not
receive compensation from the Plan. In addition, the Trustee
shall be reimbursed for any reasonable expenses, including
reasonable counsel fees incurred by it as Trustee. Such
compensation and expenses shall be paid from the Trust Fund
<PAGE 68> unless paid or advanced by the Employer. All taxes of
any kind and all kinds whatsoever that may be levied or assessed
under existing or future laws upon, or in respect of, the Trust
Fund or the income thereof, shall be paid from the Trust Fund.
KLI ANNUAL REPORT OF THE TRUSTEE
Within a reasonable period of time after the later of
the Anniversary Date or receipt of the Employer's contribution
for each Plan Year, the Trustee shall furnish to the Employer and
Administrator a written statement of account with respect to the
Plan Year for which such contribution was made setting forth:
(a) the net income, or loss, of the Trust Fund;
(b) the gains, or losses, realized by the Trust
Fund upon sales or other disposition of the assets;
(c) the increase, or decrease, in the value of
the Trust Fund;
(d) all payments and distributions made from
the Trust Fund; and
(e) such further information as the Trustee
and/or Administrator deems appropriate. The Employer,
forthwith upon its receipt of each such statement of
account, shall acknowledge receipt thereof in writing and
advise the Trustee and/or Administrator of its approval or
disapproval thereof. Failure by the Employer to disapprove
any such statement of account within thirty (30) days after
its receipt thereof shall be deemed an approval thereof.
The approval by the Employer of any statement of account
shall be binding as to all matters embraced therein as
between the Employer and the Trustee to the same extent as
if the account of the Trustee had been settled by judgment
or decree in an action for a judicial settlement of its
account in a court of competent jurisdiction in which the
Trustee, the Employer and all persons having or claiming an
interest in the Plan were parties; provided, however, that
nothing herein contained shall deprive the Trustee of its
right to have its accounts judicially settled if the Trustee
so desires.
7.8 AUDIT
(a) If an audit of the Plan's records shall be
required by the Act and the regulations thereunder for any
Plan Year, the Administrator shall direct the Trustee to
engage on behalf of all Participants an independent
qualified public accountant for that purpose. Such
accountant shall, after an audit of the books and records of
the Plan in accordance with generally accepted auditing
standards, within a reasonable period after the close of the
<PAGE 69> Plan Year, furnish to the Administrator and the
Trustee a report of his audit setting forth his opinion as
to whether any statements, schedules or lists that are
required by Act Section 103 or the Secretary of Labor to be
filed with the Plan's annual report, are presented fairly in
conformity with generally accepted accounting principles
applied consistently. All auditing and accounting fees
shall be an expense of and may, at the election of the
Administrator, be paid from the Trust Fund.
(b) If some or all of the information necessary
to enable the Administrator to comply with Act Section 103
is maintained by a bank, insurance company, or similar
institution, regulated and supervised and subject to
periodic examination by a state or federal agency, it shall
transmit and certify the accuracy of that information to the
Administrator as provided in Act Section 103(b) within one
hundred twenty (120) days after the end of the Plan Year or
by such other date as may be prescribed under regulations of
the Secretary of Labor.
7.9 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE
\ZZ The Trustee may resign at any time by
delivering to the Employer, at least thirty (30) days before
its effective date, a written notice of his resignation.
(b) The Employer may remove the Trustee by
mailing by registered or certified mail, addressed to such
Trustee at his last known address, at least thirty (30) days
before its effective date, a written notice of his removal.
(c) Upon the death, resignation, incapacity, or
removal of any Trustee, a successor may be appointed by the
Employer; and such successor, upon accepting such
appointment in writing and delivering same to the Employer,
shall, without further act, become vested with all the
estate, rights, powers, discretions, and duties of his
predecessor with like respect as if he were originally named
as a Trustee herein. Until such a successor is appointed,
the remaining Trustee or Trustees shall have full authority
to act under the terms of the Plan.
(d) The Employer may designate one or more
successors prior to the death, resignation, incapacity, or
removal of a Trustee. In the event a successor is so
designated by the Employer and accepts such designation, the
successor shall, without further act, become vested with all
the estate, rights, powers, discretions, and duties of his
predecessor with the like effect as if he were originally
named as Trustee herein immediately upon the death,
resignation, incapacity, or removal of his predecessor.
<PAGE 70>
(e) Whenever any Trustee hereunder ceases to
serve as such, he shall furnish to the Employer and
Administrator a written statement of account with respect to
the portion of the Plan Year during which he served as
Trustee. This statement shall be either (i) included as
part of the annual statement of account for the Plan Year
required under Section 7.7 or (ii) set forth in a special
statement. Any such special statement of account should be
rendered to the Employer no later than the due date of the
annual statement of account for the Plan Year. The
procedures set forth in Section 7.7 for the approval by the
Employer of annual statements of account shall apply to any
special statement of account rendered hereunder and approval
by the Employer of any such special statement in the manner
provided in Section 7.7 shall have the same effect upon the
statement as the Employer's approval of an annual statement
of account. No successor to the Trustee shall have any duty
or responsibility to investigate the acts or transactions of
any predecessor who has rendered all statements of account
required by Section 7.7 and this subparagraph.
7.10 TRANSFER OF INTEREST
Notwithstanding any other provision contained in this
Plan, the Trustee at the direction of the Administrator shall
transfer the Vested interest, if any, of such Participant in his
account to another trust forming part of a pension, profit
sharing or stock bonus plan maintained by such Participant's new
employer and represented by said employer in writing as meeting
the requirements of Code Section 401(a), provided that the trust
to which such transfers are made permits the transfer to be made.
7.11 EMPLOYER SECURITIES AND REAL PROPERTY
The Trustee shall be empowered to acquire and hold
"qualifying Employer securities" and "qualifying Employer real
property," as those terms are defined in the Act, provided,
however, that the Trustee shall not be permitted to acquire any
qualifying Employer securities or qualifying Employer real
property if, immediately after the acquisition of such securities
or property, the fair market value of all qualifying Employer
securities and qualifying Employer real property held by the
Trustee hereunder should amount to more than 100% of the fair
market value of all the assets in the Trust Fund.
ARTICLE VIII
AMENDMENT, TERMINATION AND MERGERS
8.1 AMENDMENT
(a) The Employer shall have the right at any
time to amend the Plan, subject to the limitations of this
Section. However, any amendment which affects the rights,
<PAGE 71> duties or responsibilities of the Trustee and
Administrator may only be made with the Trustee's and
Administrator's written consent. Any such amendment shall
become effective as provided therein upon its execution.
The Trustee shall not be required to execute any such
amendment unless the Trust provisions contained herein are a
part of the Plan and the amendment affects the duties of the
Trustee hereunder.
(b) No amendment to the Plan shall be effective
if it authorizes or permits any part of the Trust Fund
(other than such part as is required to pay taxes and
administration expenses) to be used for or diverted to any
purpose other than for the exclusive benefit of the
Participants or their Beneficiaries or estates; or causes
any reduction in the amount credited to the account of any
Participant; or causes or permits any portion of the Trust
Fund to revert to or become property of the Employer.
(c) Except as permitted by Regulations, no Plan
amendment or transaction having the effect of a Plan
amendment (such as a merger, plan transfer or similar
transaction) shall be effective if it eliminates or reduces
any "Section 411(d)(6) protected benefit" or adds or
modifies conditions relating to "Section 411(d)(6) protected
benefits" the result of which is a further restriction on
such benefit unless such protected benefits are preserved
with respect to benefits accrued as of the later of the
adoption date or effective date of the amendment.
"Section 411(d)(6) protected benefits" are benefits
described in Code Section 411(d)(6)(A), early retirement
benefits and retirement-type subsidies, and optional forms
of benefit.
8.2 TERMINATION
(a) The Employer shall have the right at any
time to terminate the Plan by delivering to the Trustee and
Administrator written notice of such termination. Upon any
full or partial termination, all amounts credited to the
affected Participants' Combined Accounts shall become 100%
Vested as provided in Section 6.4 and shall not thereafter
be subject to forfeiture, and all unallocated amounts shall
be allocated to the accounts of all Participants in
accordance with the provisions hereof.
(b) Upon the full termination of the Plan, the
Employer shall direct the distribution of the assets of the
Trust Fund to Participants in a manner which is consistent
with and satisfies the provisions of Section 6.5.
Distributions to a Participant shall be made in cash or
through the purchase of irrevocable nontransferable deferred
commitments from an insurer. Except as permitted by
Regulations, the termination of the Plan shall not result in
<PAGE 72> the reduction of "Section 411(d)(6) protected
benefits" in accordance with Section 8.1(c).
8.3 MERGER OR CONSOLIDATION
This Plan and Trust may be merged or consolidated
with, or its assets and/or liabilities may be transferred to any
other plan and trust only if the benefits which would be received
by a Participant of this Plan, in the event of a termination of
the plan immediately after such transfer, merger or
consolidation, are at least equal to the benefits the Participant
would have received if the Plan had terminated immediately before
the transfer, merger or consolidation, and such transfer, merger
or consolidation does not otherwise result in the elimination or
reduction of any "Section 411(d)(6) protected benefits" in
accordance with Section 8.1(c).
ARTICLE IX
MISCELLANEOUS
9.1 PARTICIPANT'S RIGHTS
This Plan shall not be deemed to constitute a contract
between the Employer and any Participant or to be a consideration
or an inducement for the employment of any Participant or
Employee. Nothing contained in this Plan shall be deemed to give
any Participant or Employee the right to be retained in the
service of the Employer or to interfere with the right of the
Employer to discharge any Participant or Employee at any time
regardless of the effect which such discharge shall have upon him
as a Participant of this Plan.
9.2 ALIENATION
(a) Subject to the exceptions provided below,
no benefit which shall be payable out of the Trust Fund to
any person (including a Participant or his Beneficiary)
shall be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance, or charge,
and any attempt to anticipate, alienate, sell, transfer,
assign, pledge, encumber, or charge the same shall be void;
and no such benefit shall in any manner be liable for, or
subject@@to, the debts, contracts, liabilities, engagements,
or torts of any such person, nor shall it be subject to
attachment or legal process for or against such person, and
the same shall not be recognized by the Trustee, except to
such extent as may be required by law.
(b) This provision shall not apply to the
extent a Participant or Beneficiary is indebted to the Plan,
as a result of a loan from the Plan. At the time a
distribution is to be made to or for a Participant's or
Beneficiary's benefit, such proportion of the amount
distributed as shall equal such loan indebtedness shall be
<PAGE 73> paid by the Trustee to the Trustee or the
Administrator, at the direction of the Administrator, to
apply against or discharge such loan indebtedness. Prior to
making a payment, however, the Participant or Beneficiary
must be given written notice by the Administrator that such
loan indebtedness is to be so paid in whole or part from his
Participant's Combined Account. If the Participant or
Beneficiary does not agree that the loan indebtedness is a
valid claim against his Vested Participant's Combined
Account, he shall be entitled to a review of the validity of
the claim in accordance with procedures provided in
Sections 2.12 and 2.13.
(c) This provision shall not apply to a
"qualified domestic relations order" defined in Code
Section 414(p), and those other domestic relations orders
permitted to be so treated by the Administrator under the
provisions of the Retirement Equity Act of 1984. The
Administrator shall establish a written procedure to
determine the qualified status of domestic relations orders
and to administer distributions under such qualified orders.
Further, to the extent provided under a "qualified domestic
relations order", a former spouse of a Participant shall be
treated as the spouse or surviving spouse for all purposes
under the Plan.
9.3 CONSTRUCTION OF PLAN
This Plan and Trust shall be construed and enforced
according to the Act and the laws of the Commonwealth of
Pennsylvania, other than its laws respecting choice of law, to
the extent not preempted by the Act.
9.4 GENDER AND NUMBER
Wherever any words are used herein in the masculine,
feminine or neuter gender, they shall be construed as though they
were also used in another gender in all cases where they would so
apply, and whenever any words are used herein in the singular or
plural form, they shall be construed as though they were also
used in the other form in all cases where they would so apply.
9.5 LEGAL ACTION
In the event any claim, suit, or proceeding is brought
regarding the Trust and/or Plan established hereunder to which
the Trustee or the Administrator may be a party, and such claim,
suit, or proceeding is resolved in favor of the Trustee or
Administrator, they shall be entitled to be reimbursed from the
Trust Fund for any and all costs, attorney's fees, and other
expenses pertaining thereto incurred by them for which they shall
have become liable.
<PAGE 74>
9.6 PROHIBITION AGAINST DIVERSION OF FUNDS
(a) Except as provided below and otherwise
specifically permitted by law, it shall be impossible by
operation of the Plan or of the Trust, by termination of
either, by power of revocation or amendment, by the
happening of any contingency, by collateral arrangement or
by any other means, for any part of the corpus or income of
any trust fund maintained pursuant to the Plan or any funds
contributed thereto to be used for, or diverted to, purposes
other than the exclusive benefit of Participants, Retired
Participants, or their Beneficiaries.
(b) In the event the Employer shall make an
excessive contribution under a mistake of fact pursuant to
Act Section 403(c)(2)(A), the Employer may demand repayment
of such excessive contribution at any time within one (1)
year following the time of payment and the Trustees shall
return such amount to the Employer within the one (1) year
period. Earnings of the Plan attributable to the excess
contributions may not be returned to the Employer but any
losses attributable thereto must reduce the amount so
returned.
9.7 BONDING
Every Fiduciary, except a bank or an insurance
company, unless exempted by the Act and regulations thereunder,
shall be bonded in an amount not less than 10% of the amount of
the funds such Fiduciary handles; provided, however, that the
minimum bond shall be $1,000 and the maximum bond, $500,000. The
amount of funds handled shall be determined at the beginning of
each Plan Year by the amount of funds handled by such person,
group, or class to be covered and their predecessors, if any,
during the preceding Plan Year, or if there is no preceding Plan
Year, then by the amount of the funds to be handled during the
then current year. The bond shall provide protection to the Plan
against any loss by reason of acts of fraud or dishonesty by the
Fiduciary alone or in connivance with others. The surety shall
be a corporate surety company (as such term is used in Act
Section 412(a)(2)), and the bond shall be in a form approved by
the Secretary of Labor. Notwithstanding anything in the Plan to
the contrary, the cost of such bonds shall be an expense of and
may, at the election of the Administrator, be paid from the Trust
Fund or by the Employer.
9.8 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE
Neither the Employer nor the Trustee, nor their
successors, shall be responsible for the validity of any Contract
issued hereunder or for the failure on the part of the insurer to
make payments provided by any such Contract, or for the action of
any person which may delay payment or render a Contract null and
void or unenforceable in whole or in part. <PAGE 75>
9.9 INSURER'S PROTECTIVE CLAUSE
Any insurer who shall issue Contracts hereunder shall
not have any responsibility for the validity of this Plan or for
the tax or legal aspects of this Plan. The insurer shall be
protected and held harmless in acting in accordance with any
written direction of the Trustee, and shall have no duty to see
to the application of any funds paid to the Trustee, nor be
required to question any actions directed by the Trustee.
Regardless of any provision of this Plan, the insurer shall not
be required to take or permit any action or allow any benefit or
privilege contrary to the terms of any Contract which it issues
hereunder, or the rules of the insurer.
9.10 RECEIPT AND RELEASE FOR PAYMENTS
Any payment to any Participant, his legal
representative, Beneficiary, or to any guardian or committee
appointed for such Participant or Beneficiary in accordance with
the provisions of the Plan, shall, to the extent thereof, be in
full satisfaction of all claims hereunder against the Trustee and
the Employer, either of whom may require such Participant, legal
representative, Beneficiary, guardian or committee, as a
condition precedent to such payment, to execute a receipt and
release thereof in such form as shall be determined by the
Trustee or Employer.
9.11 ACTION BY THE EMPLOYER
Whenever the Employer under the terms of the Plan is
permitted or required to do or perform any act or matter or
thing, it shall be done and performed by a person duly authorized
by its legally constituted authority.
9.12 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY
The "named Fiduciaries" of this Plan are (1) the
Employer, (2) the Administrator and (3) the Trustee. The named
Fiduciaries shall have only those specific powers, duties,
responsibilities, and obligations as are specifically given them
under the Plan. In general, the Employer shall have the sole
responsibility for making the contributions provided for under
Section 4.1; and shall have the sole authority to appoint and
remove the Trustee and the Administrator; to formulate the Plan's
"funding policy and method"; and to amend or terminate, in whole
or in part, the Plan. The Administrator shall have the sole
responsibility for the administration of the Plan, which
responsibility is specifically described in the Plan. The
Trustee shall have the sole responsibility of management of the
assets held under the Trust, except those assets, the management
of which has been assigned to an Investment Manager, who shall be
solely responsible for the management of the assets assigned to
it, all as specifically provided in the Plan. Each named
Fiduciary warrants that any directions given, information
<PAGE 76> furnished, or action taken by it shall be in accordance
with the provisions of the Plan, authorizing or providing for
such direction, information or action. Furthermore, each named
Fiduciary may rely upon any such direction, information or action
of another named Fiduciary as being proper under the Plan, and is
not required under the Plan to inquire into the propriety of any
such direction, information or action. It is intended under the
Plan that each named Fiduciary shall be responsible for the
proper exercise of its own powers, duties, responsibilities and
obligations under the Plan. No named Fiduciary shall guarantee
the Trust Fund in any manner against investment loss or
depreciation in asset value. Any person or group may serve in
more than one Fiduciary capacity. In the furtherance of their
responsibilities hereunder, the "named Fiduciaries" shall be
empowered to interpret the Plan and Trust and to resolve
ambiguities, inconsistencies and omissions, which findings shall
be binding, final and conclusive.
9.13 HEADINGS
The headings and subheadings of this Plan have been
inserted for convenience of reference and are to be ignored in
any construction of the provisions hereof.
9.14 APPROVAL BY INTERNAL REVENUE SERVICE
(a) Notwithstanding anything herein to the
contrary, contributions to this Plan are conditioned upon
the initial qualification of the Plan under Code
Section 401. If the Plan receives an adverse determination
with respect to its initial qualification, then the Plan may
return such contributions to the Employer within one year
after such determination, provided the application for the
determination is made by the time prescribed by law for
filing the Employer's return for the taxable year in which
the Plan was adopted, or such later date as the Secretary of
the Treasury may prescribe.
(b) Notwithstanding any provisions to the
contrary, except Sections 3.6, 3.7, and 4.1(e), any
contribution by the Employer to the Trust Fund is
conditioned upon the deductibility of the contribution by
the Employer under the Code and, to the extent any such
deduction is disallowed, the Employer may, within one (1)
year following the disallowance of the deduction, demand
repayment of such disallowed contribution and the Trustee
shall return such contribution within one (1) year following
the disallowance. Earnings of the Plan attributable to the
excess contribution may not be returned to the Employer, but
any losses attributable thereto must reduce the amount so
returned.
<PAGE 77>
9.15 UNIFORMITY
All provisions of this Plan shall be interpreted and
applied in a uniform, nondiscriminatory manner. In the event of
any conflict between the terms of this Plan and any Contract
purchased hereunder, the Plan provisions shall control.
ARTICLE X
PARTICIPATING EMPLOYERS
10.1 ADOPTION BY OTHER EMPLOYERS
Notwithstanding anything herein to the contrary, with
the consent of the Employer and Trustee, any other corporation or
entity, whether an affiliate or subsidiary or not, may adopt this
Plan and all of the provisions hereof, and participate herein and
be known as a Participating Employer, by a properly executed
document evidencing said intent and will of such Participating
Employer.
10.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS
(a) Each such Participating Employer shall be
required to use the same Trustee as provided in this Plan.
(b) The Trustee may, but shall not be required
to, commingle, hold and invest as one Trust Fund all
contributions made by Participating Employers, as well as
all increments thereof. However, the assets of the Plan
shall, on an ongoing basis, be available to pay benefits to
all Participants and Beneficiaries under the Plan without
regard to the Employer or Participating Employer who
contributed such assets.
(c) The transfer of any Participant from or to
an Employer participating in this Plan, whether he be an
Employee of the Employer or a Participating Employer, shall
not affect such Participant's rights under the Plan, and all
amounts credited to such Participant's Combined Account as
well as his accumulated service time with the transferor or
predecessor, and his length of participation in the Plan,
shall continue to his credit.
(d) All rights and values forfeited by
termination of employment shall inure only to the benefit of
the Participants of the Employer or Participating Employer
by which the forfeiting Participant was employed, except if
the Forfeiture is for an Employee whose Employer is an
Affiliated Employer, then said Forfeiture shall inure to the
benefit of the Participants of those Employers who are
Affiliated Employers. Should an Employee of one ("First")
Employer be transferred to an associated ("Second') Employer
which is an Affiliated Employer such transfer shall not
cause his account balance (generated while an Employee of
<PAGE 78> "First" Employer) in any manner, or by any amount
to be forfeited. Such Employee's Participant Combined
Account balance for all purposes of the Plan, including
length of service, shall be considered as though he had
always been employed by the "Second" Employer and as such
had received contributions, forfeitures, earnings or losses,
and appreciation or depreciation in value of assets totaling
amount so transferred.
(e) Any expenses of the Trust which are to be
paid by the Employer or borne by the Trust Fund shall be
paid by each Participating Employer in the same proportion
that the total amount standing to the credit of all
Participants employed by such Employer bears to the total
standing to the credit of all Participants.
10.3 DESIGNATION OF AGENT
Each Participating Employer shall be deemed to be a
part of this Plan; provided, however, that with respect to all of
its relations with the Trustee and Administrator for the purpose
of this Plan, each Participating Employer shall be deemed to have
designated irrevocably the Employer as its agent. Unless the
context of the Plan clearly indicates the contrary, the word
"Employer" shall be deemed to include each Participating Employer
as related to its adoption of the Plan.
10.4 EMPLOYEE TRANSFERS
It is anticipated that an Employee may be transferred
between Participating Employers, and in the event of any such
transfer, the Employee involved shall carry with him his
accumulated service and eligibility. No such transfer shall
effect a termination of employment hereunder, and the
Participating Employer to which the Employee is transferred shall
thereupon become obligated hereunder with respect to such
Employee in the same manner as was the Participating Employer
from whom the Employee was transferred.
10.5 PARTICIPATING EMPLOYER'S CONTRIBUTION
Any contribution subject to allocation during each
Plan Year shall be allocated only among those Participants of the
Employer or Participating Employer making the contribution,
except if the contribution is made by an Affiliated Employer, in
which event such contribution shall be allocated among all
Participants of all Participating Employers who are Affiliated
Employers in accordance with the provisions of this Plan. On the
basis of the information furnished by the Administrator, the
Trustee shall keep separate books and records concerning the
affairs of each Participating Employer hereunder and as to the
accounts and credits of the Employees of each Participating
Employer. The Trustee may, but need not, register Contracts so
as to evidence that a particular Participating Employer is the
<PAGE 79> interested Employer hereunder, but in the event of an
Employee transfer from one Participating Employer to another, the
employing Employer shall immediately notify the Trustee thereof.
10.6 AMENDMENT
Amendment of this Plan by the Employer at any time
when there shall be a Participating Employer hereunder shall only
be by the written action of each and every Participating Employer
and with the consent of the Trustee where such consent is
necessary in accordance with the terms of this Plan.
10.7 DISCONTINUANCE OF PARTICIPATION
Any Participating Employer shall be permitted to
discontinue or revoke its participation in the Plan. At the time
of any such discontinuance or revocation, satisfactory evidence
thereof and of any applicable conditions imposed shall be
delivered to the Trustee. The Trustee shall thereafter transfer,
deliver and assign Contracts and other Trust Fund assets
allocable to the Participants of such Participating Employer to
such new Trustee as shall have been designated by such
Participating Employer, in the event that it has established a
separate pension plan for its Employees provided, however, that
no such transfer shall be made if the result is the elimination
or reduction of any "Section 411(d)(6) protected benefits" in
accordance with Section 8.1(c). If no successor is designated,
the Trustee shall retain such assets for the Employees of said
Participating Employer pursuant to the provisions of Article VII
hereof. In no such event shall any part of the corpus or income
of the Trust as it relates to such Participating Employer be used
for or diverted for purposes other than for the exclusive benefit
of the Employees of such Participating Employer.
10.8 ADMINISTRATOR'S AUTHORITY
The Administrator shall have authority to make any and
all necessary rules or regulations, binding upon all
Participating Employers and all Participants, to effectuate the
purpose of this Article.
10.9 PARTICIPATING EMPLOYER CONTRIBUTION FOR AFFILIATE
If any Participating Employer is prevented in whole or
in part from making a contribution to the Trust Fund which it
would otherwise have made under the Plan by reason of having no
current or accumulated earnings or profits, or because such
earnings or profits are less than the contribution which it would
otherwise have made, then, pursuant to Code Section 404(a)(3)(B),
so much of the contribution which such Participating Employer was
so prevented from making may be made, for the benefit of the
participating employees of such Participating Employer, by the
other Participating Employers who are members of the same
affiliated group within the meaning of Code Section 1504 to the
<PAGE 80> extent of their current or accumulated earnings or
profits, except that such contribution by each such other
Participating Employer shall be limited to the proportion of its
total current and accumulated earnings or profits remaining after
adjustment for its contribution to the Plan made without regard
to this paragraph which the total prevented contribution bears to
the total current and accumulated earnings or profits of all the
Participating Employers remaining after adjustment for all
contributions made to the Plan without regard to this paragraph.
A Participating Employer on behalf of whose employees
a contribution is made under this paragraph shall not reimburse
the contributing Participating Employers.
IN WITNESS WHEREOF, this Plan has been executed the
day and year first above written.
Farmers and Merchants Trust Co.
By /s/ Robert G. Zullinger,
President
EMPLOYER
ATTEST /s/ Sally A. Gettel
Farmers and Merchants Trust Co.
By /s/ William M.L. Etter, Jr.,
Vice President
TRUSTEE
ATTEST /s/ Sally A. Gettel
<PAGE 81>
<PAGE>
AMENDMENT NO. 3
TO
FARMERS AND MERCHANTS TRUST COMPANY OF CHAMBERSBURG
PROFIT SHARING PLAN
THIS AMENDMENT is made this 19th day of December,
1996.
BY FARMERS AND MERCHANTS TRUST COMPANY OF CHAMBERSBURG
(the "Employer").
WITNESSETH:
WHEREAS, the Employer has heretofore adopted the
Farmers and Merchants Trust Company of Chambersburg Profit
Sharing Plan (the "Plan") for the benefit of its Employees; and
WHEREAS, the Employer desires to amend certain
provisions of the Plan which govern Plan loans to Participants.
NOW, THEREFORE, effective as of the date hereof, the
Plan is hereby amended as follows:
1. Subsection 4.9(a) of the Plan is amended by
adding the following new sentence thereto:
Notwithstanding the foregoing, no
promissory notes or other instruments evidencing a loan
from a qualified plan to a participant may be
transferred to or accepted by this Plan.
2. In Subsection 7.4(a) of the Plan, the phrase
"Administrator or its designee" replaces the term "Trustee"
wherever such term appears.
3. Subsection 7.4(a)(7) of the Plan is deleted and
replaced in its entirety with the following provision:
(7) shall provide for repayment over a
period of time not to exceed five (5) years.
4. Subsection 7.4(d) of the Plan is deleted and
replaced in its entirety with the following provision:
(d) Loans shall provide for level
amortization payments to be made not less frequently
than quarterly over a period not to exceed five (5)
years, as determined by the Administrator or its
designee on a uniform and nondiscriminatory basis.
<PAGE 1>
5. Section 7 is amended by adding the following new
provision thereto:
(g) No more than one loan may be issued to
the Participant during a Plan Year. No loan in an
amount less than $1,000.00 is permitted under this
Section.
6. In all other respects, the Plan shall remain in
force and effect.
IN WITNESS WHEREOF, this Amendment is executed the day
and year first above written.
ATTEST: FARMERS AND MERCHANTS TRUST
COMPANY OF CHAMBERSBURG
/s/ April E. Rosenbaum By: /s/ William E. Snell, Jr.
<PAGE 2>
<PAGE>
AMENDMENT NO. 4
TO
FARMERS AND MERCHANTS TRUST COMPANY OF CHAMBERSBURG
PROFIT SHARING PLAN
THIS AMENDMENT is made this 27th day of December,
1996.
BY FARMERS AND MERCHANTS TRUST COMPANY OF CHAMBERSBURG
(the "Employer").
WITNESSETH:
WHEREAS, the Employer has heretofore adopted the
Farmers and Merchants Trust Company of Chambersburg Profit
Sharing Plan (the "Plan") for the benefit of its Employees; and
WHEREAS, the Employer desires to amend the Plan in the
manner set forth below.
NOW, THEREFORE, effective January 1, 1997, the Plan is
hereby amended as follows:
1. Subsection 4.1(b) of the Plan is amended by
substituting the phrase "5% of Compensation" for the phrase "4%
of Compensation" in the last sentence thereof.
2. In all other respects, the Plan shall remain in
force and effect.
IN WITNESS WHEREOF, this Amendment is executed the day
and year first above written.
ATTEST: FARMERS AND MERCHANTS TRUST
COMPANY OF CHAMBERSBURG
/s/ April E. Rosenbaum By:/s/ William E. Snell, Jr.
Corporate Secretary President and CEO
Exhibit 5.1
July 12, 1999
Board of Directors
Franklin Financial Services Corporation
20 South Main Street
P.O. Box T
Chambersburg, Pennsylvania 17201-0819
Re: Farmers and Merchants Trust Company Profit Sharing Plan
Gentlemen:
You have asked us to provide you with our opinion whether
the 100,000 shares of common stock, par value $1.00 per share
(the "Common Stock"), of Franklin Financial Services Corporation
(the "Company") issuable from time to time pursuant to Farmers
and Merchants Trust Company Profit Sharing Plan (the "Plan"),
when and if such shares are issued pursuant to and in accordance
with the Plan, will be duly and validly issued, fully paid and
nonassessable. We, as counsel to the Company, have reviewed:
1. The Pennsylvania Business Corporation Law of 1988, as
amended;
2. The Articles of Incorporation of the Company;
3. The By-laws of the Company; and
4. The Resolutions of the Board of Directors of the
Company adopted on April 27, 1999.
Based on our review of such documents, it is our opinion
that the Common Stock issuable under the Plan, when and as issued
in accordance with the provisions of the Plan, will be duly and
validly issued, fully paid and nonassessable. In giving the
foregoing opinion, we have assumed that the Company will have, at
the time of the issuance of such Common Stock, a sufficient
number of authorized shares available for issue.
We consent to the filing of this opinion as an exhibit to
the registration statement on Form S-8 the Company is filing
today in connection with the registration of 100,000 shares of
the Company's Common Stock, and to the reference to us under the
heading "legal matters" in the related Prospectus. In giving
this consent, we do not thereby admit that we come within the
category of persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, or the Rules and
Regulations of the Securities and Exchange Commission thereunder.
Very truly yours
STEVENS & LEE
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our
report dated April 19, 1999 on the financial statements of the
Farmers and Merchants Trust Company Profit - Sharing Plan as of
December 31, 1998 included in the Form 11-K and our report dated
January 29, 1999 on the consolidated financial statements of
Franklin Financial Services Corporation's Form 10-K for the year
ended December 31, 1998.
/s/ Arthur Andersen LLP
Lancaster, Pa.
June 28, 1999
