EXHIBIT 10.(vi)
MONROE BANCORP
EMPLOYEE STOCK OWNERSHIP PLAN
Amended and Restated
Generally Effective January 1, 1991
Rev. 12/94
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MONROE BANCORP
EMPLOYEE STOCK OWNERSHIP PLAN
TABLE OF CONTENTS
ARTICLE PAGE
I PURPOSE OF THE PLAN 1
II DEFINITIONS 2
2.1 Adjusted Balance 2
2 2 Adjustment Factor 2
2.3 Annual Additions 2
2.4 Beneficiary 3
2.5 Board 3
2.6 Break in Service 3
2.7 Code 4
2.8 Committee 4
2.9 Company 4
2.10 Company Contribution Account 5
2.11 Company Stock 5
2.12 Company Stock Account 5
2.13 Compensation 5
2.14 Debt 6
2.15 Defined Benefit Plan 7
2.16 Defined Contribution Plan 7
2.17 Effective Date 7
2.18 Employee 7
2.19 Employment Commencement Date 8
2.20 ERISA 8
2.21 Fiduciary 8
2.22 Highly Compensated Employee 8
2.23 Hour of Service 10
2.24 Inactive Participant 11
2.25 Key Employee 11
2.26 Limitation Year 12
2.27 Loan 12
2.28 Maximum Permissible Amount 13
2.29 Non-Highly Compensated Employee 13
2.30 Other Investments Account 13
2.31 Participant 13
2.32 Plan 13
2.33 Plan Year 13
2.34 Qualified Participant 13
2.35 Qualified Election Period 13
2.36 Related Plan 14
2.37 Service 14
2.38 Top Heavy Provisions 14
2.39 Total and Permanent Disability 19
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ARTICLE PAGE
2.40 Total Distribution 19
2.41 Trust 19
2.42 Trust Agreement 19
2.43 Trustee 19
2.44 Valuation Date 19
III PARTICIPATION 19
3.1 Eligibility and Participation 19
3.2 Plan Binding 21
3.3 Reemployment 21
3.4 Beneficiary Designation 22
3.5 No Credit Upon Acquisition and Recognition
of Past Service 22
IV CONTRIBUTIONS 23
4.1 Company Contributions 23
4.2 Exclusive Benefit of Employees 24
V INVESTMENT OF TRUST ASSETS 25
5.1 Investments 25
5.2 Purchase of Company Stock 25
5.3 Suspense Account 26
VI EXEMPT LOANS 27
6.1 Loans 27
6.2 Loan Payments 29
6.3 Right of First Refusal 31
6.4 Put Option 31
6.5 Continuation of Rights of Put Option 33
VII ALLOCATIONS TO PARTICIPANTS' ACCOUNTS 33
7.1 Separate Accounts 33
7.2 Company Stock 33
7.3 Other Investments 33
7.4 Allocations of Company Contributions
and Forfeitures 34
7.5 Maximum Allocations 36
7.6 Limitations on Participants Who
Participate in More Than One Plan 37
7.7 Vesting 39
7.8 Allocation of Dividends 44
7.9 Net Income (or Loss) of the Trust 45
7.10 Accounting for Allocations 45
7.11 Benefits to Minors and Incompetents 46
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ARTICLE PAGE
VIII DISTRIBUTION OF BENEFITS 46
8.1 Time of Payment of Benefits 46
8.2 Method of Payment 49
8.3 Property Distributed 49
8.4 Valuation of Company Stock and
Other Investments Accounts 50
8.5 Minimum Required Distributions 51
8.6 Dividends 51
8.7 Distributions Under Qualified Domestic
Relations Orders 52
8.8 Direct Rollovers 53
IX VOTING COMPANY STOCK 54
9.1 Voting Company Stock 54
9.2 Tender Offers 55
X DIVERSIFICATION OF INVESTMENT IN COMPANY STOCK 56
10.1 Election by Qualified Participant 56
10.2 Method of Directing Investment 56
10.3 Investment Options 56
XI FUNDING AND PLAN ADMINISTRATION 57
11.1 Funding Policy 57
11.2 Fiduciaries 58
11.3 Company 58
11.4 Trustee 59
11.5 Benefits Committee 59
11.6 Claims Procedures 60
11.7 Records 62
11.8 Disclosures to Participants 62
11.9 No Liability 63
11.10 Indemnity of Committee Members 63
11.11 Company Direction of Investment 63
11.12 Amendment to Vesting Schedule 64
11.13 Discretionary Powers and Authority of the
Company and Committee 64
XII AMENDMENT AND TERMINATION OF THE PLAN 65
12.1 Amendment of the Plan 65
12.2 Termination of the Plan 66
12.3 Limitation on Amendment or Termination 66
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ARTICLE PAGE
XIII MISCELLANEOUS 67
13.1 Governing Law 67
13.2 Headings and Gender 67
13.3 Administration Expenses 67
13.4 Participants' Rights; Acquittance 67
13.5 Spendthrift Clause 67
13.6 Merger, Consolidation or Transfer 67
13.7 Counterparts 68
13.8 Mistake of Fact 68
13.9 No Enlargement of Employment Rights 69
13.10 No Guarantee 69
13.11 Federal and State Securities Law Compliance 69
13.12 Prudent Man Rule 69
13.13 Limitations on Liability 70
XIV ADOPTION OF THE PLAN 70
SIGNATURES 71
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MONROE BANCORP
EMPLOYEE STOCK OWNERSHIP PLAN
ARTICLE I
PURPOSE OF THE PLAN
The purpose of this Plan is to enable participating Employees to share
in the growth and prosperity of the Company, to provide participating Employees
with an opportunity to accumulate capital for their future economic security, to
furnish additional security to participating Employees who become Totally and
Permanently Disabled, and to enable participating Employees to acquire stock
ownership interests in the Company. Consequently, Company contributions to the
Plan will be invested primarily in Company Stock.
The Plan is designed to assist the Company in meeting some of its
corporate finance objectives. Accordingly, it may be used to accomplish the
following objectives:
(1) To provide an entity which may purchase Company Stock from
time to time in the existing market for such stock or
directly from the Company; and, if such stock is purchased
directly from the Company, to provide the Company with
additional capital;
(2) To provide participating Employees with beneficial ownership
of Company Stock, substantially in proportion to their
relative Compensation, without requiring any cash outlay, any
reduction in pay or other benefits, or the surrender of any
other rights on the part of Employees; and
(3) To receive loans (or other extensions of credit) to
finance the acquisition of Company Stock, with such
loans (or credit) secured primarily by a commitment by
the Company to make (subject to the limitations in
Sections 7.5 and 7.6) Company contributions to the
Trust in amounts sufficient to enable principal and
interest on such loans to be repaid.
The Plan, originally effective as of January 1, 1985, constitutes a
continuation and complete restatement, generally effective January 1, 1991, and
on such other dates as provided herein and as may be provided by applicable law,
shall continue to constitute an employee stock ownership plan as described in
Section 4975(e)(7) of the Code and Section 407(d)(6) of ERISA and a stock bonus
plan intended to be qualified under Section 401(a) of the Code. All assets
acquired under this Plan as a result of Company contributions, income and other
additions to the Trust will be administered, distributed, forfeited and
otherwise governed by the provisions of this Plan. The applicable provisions of
this amended and restated Plan shall apply to an employee whose employment is
terminated on or after the 1st day of January, 1991 or such later date as
provided herein or by applicable law with respect to certain provisions of the
Plan. The rights and benefits, if any, of an employee whose employment
terminated before such date(s) shall be determined in accordance with the
provisions of the Plan that were in effect on the date that such employment was
terminated; provided, however, that if full distribution of such an employee's
accounts did not occur prior to January 1, 1991, or such later date as may
otherwise apply, then the provisions of this amended and restated Plan shall
apply.
ARTICLE II
DEFINITIONS
Whenever the initial letter of a word or phrase is capitalized herein,
the following words and phrases shall have the meanings stated below unless a
different meaning is plainly required by the context:
2.1 "Adjusted Balance" means the balance in a Participant's account or
accounts under the Plan, as adjusted in accordance with Sections 7.7 through
7.10 and by distributions made pursuant to Article VIII as of the applicable
Valuation Date.
2.2 "Adjustment Factor" means the cost of living adjustment factor
described by the Secretary of the Treasury under Section 415(d) of the Code, as
applied to such items and in such manner as the Secretary of the Treasury shall
provide.
2.3 "Annual Additions" means the sum of the Company contributions,
voluntary contributions and forfeitures credited or debited to a Participant's
accounts for the Limitation Year under all Defined Contribution Plans maintained
by the Company. Amounts allocated, after March 31, 1984, to an individual
medical account, as defined in Section 415(l)(2) of the Code, which is part of a
pension or annuity plan maintained by the Company shall be treated as Annual
Additions to a Defined Contribution Plan. Also, amounts derived from
contributions paid or accrued after December 31, 1985, and 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 Section
419A(d)(3) of the Code, under a welfare benefit fund, as defined in Section
419(e) of the Code, maintained by the Company, are treated as Annual Additions
to a Defined Contribution Plan, but only for purposes of the dollar limitation
applicable to the Maximum Permissible Amount, as defined in Section 2.28. The
preceding provisions of this Section 2.3 shall be effective for Plan Years
commencing after December 31, 1986.
For the purposes of this Section 2.3 and Section 2.28, compensation
shall mean Compensation as defined in Section 2.13, disregarding elective
contributions and any exclusions from compensation.
2.4 "Beneficiary" means the surviving spouse of a Participant, or, if
such Participant has no surviving spouse or if the Participant's spouse has made
a Qualified Consent to the selection of a different beneficiary, any person
designated by a Participant to receive such benefits as may become payable
hereunder after the death of such Participant. For purposes of this Section 2.4,
a Qualified Consent means a consent by the Participant's spouse which consent
acknowledges the effect of the designation and has been executed by such spouse
in writing and witnessed by a member of the Committee or a notary public. A
Qualified Consent must either designate a beneficiary and a form of benefits or
expressly permit designations by the Participant without further consent by the
spouse. Any consent necessary under this Section 2.4 will be valid only with
respect to the spouse who signs the consent. Additionally, a revocation of a
prior consent may be made at any time by such spouse. A Qualified Consent need
not be furnished by a Participant if the Participant establishes to the
satisfaction of the Committee that no consent is required because (i) there is
no spouse, (ii) the spouse cannot be located, (iii) the Participant is legally
separated or the spouse has abandoned the Participant as evidenced by a court
order to such effect, or (iv) the spouse is legally incompetent to give consent
(in which case the legal guardian of the spouse may give consent even if the
Participant is the legal guardian), or because of other circumstances which may
be prescribed by the Code or Treasury Regulations. The Qualified Consent
provisions of this Section 2.4 shall apply to a former spouse of the
Participant, to the extent required by a qualified domestic relations order.
2.5 "Board" means the Board of Directors of the Company.
2.6 "Break in Service" means a computation period, as specified in
Section 2.37, during which a Participant is not credited with more than five
hundred (500) Hours of Service. Solely for purposes of determining whether a
Break in Service, as defined in this Section 2.6, for participation and vesting
purposes, has occurred in a computation period, an individual who is absent from
work for maternity or paternity reasons shall receive credit for the Hours of
Service which would otherwise have been credited to such individual but for such
absence, or in any case in which such hours cannot be determined, eight (8)
Hours of Service per day of such absence. For purposes of this Section 2.6, an
absence from work for maternity or paternity reasons means an absence (1) by
reason of the pregnancy of the individual, (2) by reason of a birth of a child
of the individual, (3) by reason of the placement of a child with the individual
in connection with the adoption of such child by such individual, or (4) for
purposes of caring for such child for a period beginning immediately following
such birth or placement. The Hours of Service credited under this Section 2.6
shall be credited (1) in the computation period in which the absence begins if
the crediting is necessary to prevent a Break in Service in that period, or (2)
in all other cases, in the following computation period. The total number of
Hours of Service required to be treated as completed for any computation period
shall not exceed five hundred one (501) Hours of Service.
2.7 "Code" means the Internal Revenue Code of 1986, as amended from
time to time. Reference to a Section of the Code shall include that Section and
any comparable Section or Sections of any future legislation that amends,
supplements or supersedes said Section.
2.8 "Committee" means the Benefits Committee described in
Section 11.5.
2.9 "Company" means Monroe Bancorp, an Indiana corporation, and
wherever required by the context of this Plan, an Affiliated Company, which, by
action of its board of directors, adopts this Plan subject to the acceptance of
such participation by the Board, and any successor to one or more of such
entities if such successor shall adopt and continue the Plan by appropriate
corporate action. All employees of: (i) any corporation which is a member of a
controlled group of corporations (as defined in Section 414(b) of the Code) with
the Company; (ii) any trade or business (whether or not incorporated) which is
under common control (as defined in Section 414(c) of the Code) with the
Company; (iii) any member of an affiliated service group (as defined in Section
414(m) of the Code) which includes the Company; and (iv) any other entity
required to be aggregated with the Company pursuant to Section 414(o) of the
Code and the Treasury Regulations promulgated thereunder, shall be treated as
employed by the Company only for purposes of determining the definitions of
Compensation, Employee and leased employee under Sections 2.13 and 2.18,
respectively; determining Breaks in Service under Section 2.6, crediting Hours
of Service under Section 2.23; determining Service under Section 2.37; applying
the top-heavy rules under Section 2.38; determining eligibility to participate
under Section 3.1 (unless such employees are specifically excluded from coverage
under the Plan by the Board); determining the limitations on allocations to
Participants' accounts under Article VII; and determination of Vesting Service
under Sections 2.38, and 7.7. In addition, the entities and any other
organization described in (i) through (iv), above shall constitute an Affiliated
Company.
Notwithstanding anything to the contrary contained in this Section 2.9, no
provision of this Section 2.9 shall be construed or interpreted to require the
Company to make a Company contribution under the Plan for any individual who is
not an Employee.
2.10 "Company Contribution Account" means the Company Stock and other
assets held by the Trustee for the Plan derived from Company contributions to
the Trust. The Company Contribution Account shall consist of the Company Stock
Contribution Account and the Company Other Investments Contribution Account to
which contributions to the Plan and earnings thereon shall be allocated in
accordance with the provisions of Articles IV through VII.
2.11 "Company Stock" means any qualifying employer security within the
meaning of Section 4975(e)(8) of the Code and Section 407(d)(1) of ERISA and
Treasury and Department of Labor Regulations promulgated thereunder.
2.12 "Company Stock Account" means an account of a Participant which is
credited with his allocable share of Company Stock purchased and paid for by the
Trust or contributed to the Trust.
2.13 "Compensation" means a Participant's wages, salaries and fees for
professional services and other amounts received (without regard to whether or
not an amount is paid in cash) paid during a Plan Year for personal services
actually rendered in the course of employment with the Company as reported for
federal income tax purposes on IRS Form W-2. Compensation shall include (i)
elective contributions to the Plan or any other plan maintained by the Company
on the Employee's behalf; (ii) compensation deferred under an eligible deferred
compensation plan within the meaning of Section 457(b) (relating to deferred
compensation plans maintained by state and local governments and tax-exempt
organizations); and (iii) employee contributions (under governmental plans)
described in Section 414(h)(2) of the Code that are picked up by the employing
unit and thus are treated as company contributions. "Elective contributions" are
amounts excludable from the Employee's gross income under Section 402(a)(8) of
the Code (relating to an arrangement under Section 401(k)), Section 402(h) of
the Code (relating to a simplified employee pension plan), Section 125 of the
Code (relating to a cafeteria plan) or Section 403(b) of the Code (relating to a
tax-sheltered annuity). Effective January 1, 1994, Compensation shall not
include any salary reduction contributions under the Monroe Bancorp Executives'
Deferred Compensation Plan. Effective July 1, 1994, Compensation shall exclude
all amounts paid to Participants during a Plan Year under the "Quality Award
Program" sponsored by the Company.
Any reference in this Plan to Compensation is a reference to the
definition in this Section 2.13, unless the Plan reference specifies a
modification to this definition. The Committee will take into account only
Compensation actually paid during the Plan Year.
For any Plan Year beginning after December 31, 1988, the Committee
shall take into account for all purposes under the Plan (including without
limitation contributions and allocations for a Plan Year) only the first Two
Hundred Thousand Dollars ($200,000), as adjusted by the Adjustment Factor, of
any Participant's Compensation. For this purpose, any increase in the Two
Hundred Thousand Dollar ($200,000) limit due to the application of the
Adjustment Factor shall only apply to Compensation taken into account for the
Plan Year of such increase and subsequent years and shall not apply to
Compensation for prior Plan Years in determining a Participant's allocations
under or contributions to the Plan on behalf of such Participant. The Two
Hundred Thousand Dollar ($200,000) Compensation limitation applies to the
combined Compensation of the Participant and of any Family Member aggregated
with the Employee under Section 2.22 and who is either (i) the Employee's spouse
or (ii) the Employee's lineal descendant under the age of nineteen (19). If such
Compensation limitation applies to the combined Compensation of the Participant
and one or more Family Members, the Committee will apply the contribution and
allocation provisions of Articles III and IV by prorating such limitation among
the affected individuals in proportion to each such individual's Compensation
determined prior to application of this limitation.
Effective for Plan Years commencing after December 31, 1993, the amount
of "$200,000", wherever it appears in the preceding paragraphs, shall be
replaced by the amount of "$150,000". Provided, further, for purposes of
applying the Adjustment Factor to the $150,000 amount, the base period under
Section 415(d)(1)(A) of the Code shall be the calendar quarter commencing
October 1, 1994.
For purposes of determining whether the Plan discriminates in favor of
Highly Compensated Employees, Compensation means Compensation as defined in
Section 415(c)(3)(A) of the Code, unless the Company elects to use an alternate
nondiscriminatory definition, in accordance with the requirements of Section
414(s) of the Code and the Treasury Regulations promulgated thereunder. The
Company may elect to include all elective contributions made by the Company on
behalf of Participants. The Company's election to include elective contributions
must be consistent and uniform with respect to all Participants and all plans of
the Company for any particular Plan Year. The Company may make this election to
include elective contributions for nondiscrimination testing purposes,
irrespective of whether this Section 1.13 includes elective contributions in the
general Compensation definition applicable to the Plan.
2.14 "Debt" means any borrowing obligation incurred by the
Trustee that is not a Loan.
2.15 "Defined Benefit Plan" means a plan which is established and
qualified under Section 401 or Section 404 of the Code, except to the extent it
is, or is treated as, a Defined Contribution Plan.
2.16 "Defined Contribution Plan" means a plan which is established and
qualified under Section 401 or Section 403 of the Code, which provides for an
individual account for each participant therein and for benefits based solely on
the amount contributed to each participant's account and any income and expenses
or gains or losses (both realized and unrealized) which may be allocated to such
accounts.
2.17 "Effective Date" of the Plan, as completely amended and restated,
means January 1, 1991, unless otherwise specified herein or required by
applicable law.
2.18 "Employee" means
(a) Any individual who is employed as an employee (whether
on a full-time, part-time, regular, temporary or other
basis) by the Company.
(b) An individual (who otherwise is not an Employee of the
Company) who, pursuant to a leasing agreement between
the Company and any other person ("leasing
organization"), has performed services for the Company
(or for the Company and any persons related to the
Company within the meaning of Section 414(n)(6) of the
Code) on a substantially full-time basis for at least
one (1) year and to perform services historically
performed by employees in the Employer's business
field. If a leased employee is treated as an Employee
by reason of this Section 2.18, Compensation shall
include compensation from the leasing organization
which is attributable to services performed for the
Company and contributions or benefits provided to a
leased employee by the leasing organization which are
attributable to services performed for the Company
shall be treated as provided for the Company.
(i) The Plan does not treat a leased employee as an
Employee if the leasing organization covers the
Employee in a safe harbor plan and prior to
application of this safe harbor plan exception,
twenty percent (20%) or less of the Company's
Employees other than highly compensated employees,
as defined in Section 414(q) of the Code, are
leased employees. For this purpose, a "safe
harbor plan" is a money purchase pension plan
which provides immediate participation, full and
immediate vesting, and a nonintegrated
contribution formula equal to at least ten
percent (10%) of the employee's compensation
without regard to employment by the leasing
organization on a specified date. The safe harbor
plan must determine the ten percent (10%)
contribution on the basis of compensation as
defined in Section 415(c)(3) of the Code plus
amounts contributed pursuant to a salary
redirection agreement which are excludable from
the Employee's gross income under Sections 125
(relating to a cafeteria plan), 402(a)(8)
(relating to an arrangement under Section 401(k)),
402(h) (relating to a simplified employee pension
plan) or 403(b) (relating to a tax sheltered
annuity) of the Code.
(ii) The Committee shall apply this Section 2.18 in a
manner consistent with Sections 414(n) and 414(o)
of the Code and the Treasury Regulations
promulgated thereunder. The Committee shall
reduce a leased employee's allocation of Company
contributions under this Plan by the leased
employee's allocation under the leasing
organization's plan, but only to the extent that
the allocation is attributable to the leased
employee's service provided to the Company. The
leasing organization's plan must be a money
purchase pension plan which would satisfy the
definition of a safe harbor plan under paragraph
(i).
2.19 "Employment Commencement Date" means the date on which an Employee
is first credited with an Hour of Service under the Plan.
2.20 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time. References to a Section of ERISA shall include
that Section and any comparable Section or Sections of any future legislation
that amends, supplements or supersedes said section.
2.21 "Fiduciary" means the Company, the Trustee, the Committee and any
individual, corporation, firm or other entity which assumes responsibility of
the Company, the Trustee or the Committee respecting management of the Plan or
the disposition of its assets.
2.22 "Highly Compensated Employee" means an Employee who, during the
Plan Year or during the preceding twelve (12) month period:
(a) Is a more than five percent (5%) owner of the Company
(applying the constructive ownership rules of Section 318 of
the Code and applying the principles of Section 318 of the
Code for an unincorporated entity);
(b) Has Compensation in excess of Seventy-Five Thousand
Dollars ($75,000), as adjusted by the Adjustment
Factor;
(c) Has Compensation in excess of Fifty Thousand Dollars
($50,000), as adjusted by the Adjustment Factor and is part
of the top-paid twenty percent (20%) group of employees
(based on Compensation for the relevant year);
(d) Has Compensation in excess of fifty percent (50%) of the
dollar amount prescribed in Section 415(b)(1)(A) of the Code
(relating to Defined Benefit Plans) and is an officer of the
Company.
If the Employee satisfies the definition in subsection (b), (c) or (d)
in the Plan Year but not during the preceding twelve (12) month period and does
not satisfy subsection (a) in either period, the Employee is a Highly
Compensated Employee only if he is one of the one hundred (100) most highly
compensated Employees for the Plan Year. For purposes of subsection (d), no more
than fifty (50) Employees (or, if lesser, the greater of three (3) Employees or
ten percent (10%) of the Employees) shall be treated as officers. If no Employee
satisfies the Compensation requirement in subsection (d) for the relevant year,
the Committee will treat the highest paid officer as satisfying subsection (d)
for that year. For purposes of determining the number of officers taken into
account under subsection (d), Employees described in Section 414(q)(8) of the
Code shall be excluded.
For purposes of this Section 2.22, "Compensation" means Compensation as
defined in Section 415(c)(3)(A) of the Code except any exclusions from
Compensation and Compensation shall include (i) elective deferrals under an
arrangement described in Section 401(k) of the Code or under a simplified
employee pension plan maintained by the Company and (ii) amounts paid by the
Company which are not currently includable in the Employee's gross income
because of Section 125 (cafeteria plans) or 403(b) (tax-sheltered annuities) of
the Code. The Committee shall make the determination of who is a Highly
Compensated Employee, including the determinations of the number and identity of
the top-paid twenty percent (20%) group, the top one hundred (100) paid
Employees, the number of officers includable in subsection (d) and the relevant
Compensation, consistent with Section 414(q) of the Code and Treasury
Regulations promulgated thereunder. The Company may make a calendar year
election to determine the Highly Compensated Employees for the Plan Year, as
prescribed by Treasury Regulations. A calendar year election must apply to all
plans and arrangements of the Company. For purposes of applying any
nondiscrimination test required under the Plan or under the Code, in a manner
consistent with applicable Treasury Regulations, the Committee will not treat as
a separate Employee a Family Member of a Highly Compensated Employee described
in subsection (a) of this Section 2.22, or a Family Member of one of the ten
(10) Highly Compensated Employees with the greatest Compensation for the Plan
Year, but will treat the Highly Compensated Employee and all Family Members as a
single Highly Compensated Employee. This aggregation rule applies to a Family
Member even if that Family Member is a Highly Compensated Employee without
family aggregation. For purposes of this Section 2.22 and Section 2.13, Family
Member means, with respect to any Employee, such Employee's spouse and lineal
ascendants or descendants and the spouses of such lineal ascendants or
descendants.
The term "Highly Compensated Employee" also includes any former
Employee who separated from Service (or has a deemed Separation from Service, as
determined under Treasury Regulations) prior to the Plan Year, performs no
Service for the Company during the Plan Year, and was a Highly Compensated
Employee either for the separation year or any Plan Year ending on or after his
fifty-fifth (55th) birthday.
The preceding provisions of this Section 2.22 shall be effective for
Plan Years commencing after December 31, 1986.
2.23 "Hour of Service" means:
(a) Each Hour of Service for which the Company, either
directly or indirectly, pays an Employee, or for which
the Employee is entitled to payment, for the
performance of duties. The Committee shall credit
Hours of Service under this subsection (a) to the
Employee for the computation period in which the
Employee performs the duties, irrespective of when
paid;
(b) Each Hour of Service for back pay, irrespective of
mitigation of damages, to which the Company has agreed
or for which the Employee has received an award. The
Committee shall credit Hours of Service under this
subsection (b) to the Employee for the computation
period(s) to which the award or the agreement pertains
rather than for the computation period in which the
award, agreement or payment is made; and
(c) Each Hour of Service for which the Company, either
directly or indirectly, pays an Employee, or for which
the Employee is entitled to payment (irrespective of
whether the employment relationship is terminated), for
reasons other than for the performance of duties during
a computation period, such as leave of absence,
vacation, holiday, sick leave, illness, incapacity
(including disability), layoff, jury duty or military
duty. The Committee will credit no more than five
hundred and one (501) Hours of Service under this
subsection (c) to an Employee on account of any single
continuous period during which the Employee does not
perform any duties (whether or not such period occurs
during a single Plan Year). The Committee shall credit
Hours of Service under this subsection (c) in
accordance with the rules of subparagraphs (b) and (c)
of Section 2530.200b-2 of Department of Labor
Regulations, which the Plan, by this reference,
specifically incorporates in full within this
subsection (c).
The Committee shall not credit an Hour of Service under more than one
of the above subsections. A computation period for purposes of this Section 2.23
is the Plan Year, Year of Service period, Break in Service period or other
period, as determined under the Plan provision for which the Committee is
measuring an Employee's Hours of Service. The Committee will resolve any
ambiguity with respect to the crediting of an Hour of Service in favor of the
Employee.
The Committee shall credit every Employee with Hours of Service on the
basis of the "actual" method. For purposes of the Plan, the "actual" method
means the determination of Hours of Service from records of hours worked and
hours for which the Company makes payment or for which payment is due from the
Company.
Nothing in this Section 2.23 shall be construed to alter, amend,
modify, invalidate, impair or supersede any law of the United States or any rule
or regulation issued under any such law. The nature and extent of any credit for
Hours of Service under this Section 2.23 shall be determined under such law.
2.24 "Inactive Participant" means any Employee or former Employee who
has ceased to be a Participant and on whose behalf an account is maintained
under the Plan.
2.25 "Key Employee" means an Employee or former Employee (including
the Beneficiaries of such Employees) who at any time during the Plan Year or any
of the four (4) preceding Plan Years is:
(a) An Employee or former Employee (and the beneficiaries of
such Employee) who was an officer of the Company and such
individual's annual compensation exceeded fifty percent
(50%) of the dollar limitation in effect under Section
415(b)(1)(A) of the Code;
(b) One (1) of the ten (10) Employees having annual
compensation from the Company of more than the
limitation in effect under Section 415(c)(1)(A) of the
Code and owning (or considered as owning within the
meaning of Section 318 of the Code) one (1) of the ten
(10) largest interests in the Company if such Employee's
compensation exceeds one hundred percent (100%) of the
dollar limitation in effect under Section 415(c)(1)(A)
of the Code;
(c) A five percent (5%) owner of the Company, as described
in Section 416(i)(1)(B)(i) of the Code; or
(d) A one percent (1%) owner of the Company, as described in
Section 416(i)(1)(B)(ii) of the Code, having an annual
compensation from the Company of more than One Hundred
Fifty Thousand Dollars ($150,000.00).
For purposes of this Section 2.25, compensation means compensation as
defined in Section 415(c)(1)(A) of the Code, but including amounts contributed
by the Company pursuant to a salary reduction agreement which are excludable
from the Employee's gross income under Section 402(a)(8) of the Code (relating
to an arrangement under Section 401(k)), Section 402(h) of the Code (relating to
a simplified employee pension) or Section 403(b) of the Code (relating to a
tax-sheltered annuity).
For purposes of subsection (a), no more than fifty (50) Employees
(or, if lesser, the greater of three (3) or ten percent (10%) of the Employees)
shall be treated as officers. For purposes of subsection (b), if two (2)
Employees have the same interest in the Company the Employee having greater
annual compensation from the Company shall be treated as having a larger
interest. Such term shall not include any officer or employee of an entity
referred to in Section 414(d) of the Code. For purposes of determining the
number of officers taken into account under subsection (a), Employees described
in Section 418(q)(8) of the Code shall be excluded. As used herein, "Employer"
means the Company and any Affiliated Company.
2.26 "Limitation Year" means the Plan Year, unless the Board
specifies another twelve (12) consecutive month period through adoption of
appropriate resolutions in which case the new Limitation Year must begin on a
date within the Limitation Year for which the Company makes the amendment,
creating a short Limitation Year.
2.27 "Loan" means any loan, extension of credit or purchase money
transaction, as described in Section 4975(d)(1) of the Code and Treasury
Regulation Section 54.4975-7(b)(1)(ii), to the Trustee made or guaranteed by a
disqualified person (within the meaning of Section 4975(e)(2) of the Code),
including, but not limited to, a direct loan of cash, a purchase money
transaction, an assumption of an obligation of the Trustee, an unsecured
guarantee or the use of assets of a disqualified person (within the meaning of
Section 4975(e)(2) of the Code) as collateral for a loan.
2.28 "Maximum Permissible Amount" means the lesser of: (i) Thirty
Thousand Dollars ($30,000) (or if greater, one-fourth (1/4) of the defined
benefit dollar limitation prescribed by Section 415(b)(1)(A) of the Code as in
effect for the Limitation Year) or (ii) twenty-five percent (25%) of the
Participant's compensation as defined in Section 415(c)(3) of the Code. The
compensation limitation referred to in (ii) of the preceding sentence shall not
apply to any contribution for medical benefits (within the meaning of Section
419A(f)(2) of the Code) after Separation from Service which is otherwise treated
as an Annual Addition or any amount otherwise treated as an Annual Addition
under Section 415(l)(2) of the Code.
If there is a short Limitation Year because of a change therein, the
Committee will multiply the Thirty-Thousand Dollar ($30,000) (as adjusted)
limitation by the following fraction:
Number of months in short Limitation Year
12
The preceding provisions of this Section 2.28 shall be effective for
Plan Years commencing after December 31, 1986.
2.29 "Non-Highly Compensated Employee" means an Employee of the
Company who is neither a Highly Compensated Employee nor a Family Member.
2.30 "Other Investments Account" means an account of a Participant
which is credited with his share of the net income (or loss) of the Trust and
Company contributions and forfeitures in other than Company Stock, and which is
debited with payments made to pay for Company Stock.
2.31 "Participant" means an Employee who becomes a
Participant under the provisions of Section 3.1 of the Plan.
2.32 "Plan" means the Monroe Bancorp Employee Stock Ownership
Plan.
2.33 "Plan Year" means the twelve (12) month period beginning on
January 1 and each anniversary thereof.
2.34 "Qualified Participant" means a Participant who has both
attained age fifty-five (55) and who has completed at least ten (10) years of
participation in the Plan.
2.35 "Qualified Election Period" means the six (6) Plan Year period
commencing with the Plan Year during which the Participant attains age
fifty-five (55) and ends with the fifth (5th) succeeding Plan Year. Provided,
however, if a Participant has not completed ten (10) years of participation in
the Plan by the end of the Plan Year in which the Participant attains age
fifty-five (55), the Qualified Election Period shall begin with the Plan Year in
which the Participant completes ten (10) years of participation in the Plan and
ends with the fifth (5th) succeeding Plan Year.
The preceding provisions of Sections 2.34 and Section 2.35; shall be
effective with respect to Company Stock acquired by the Plan after December 31,
1986.
2.36 "Related Plan" means any other Defined Contribution Plan
maintained by the Company or by an Affiliated Company.
2.37 "Service", except as it may be disregarded under the
provisions of Articles III or VII, means the following:
(a) "Eligibility Service" means the years which are credited to
an Employee for the purpose of determining eligibility for
participation under the Plan, as described in Section 3.1.
(b) "Vesting Service" means the years which are credited to a
Participant for the purpose of determining his vested
percentage in his Company Stock and Other Investments
Accounts and eligibility for various benefits under the
Plan, as described in Articles VII and VIII.
(c) "Separation from Service" means a separation from
employment with the Employer.
For purposes of determining an Employee's eligibility to participate
under the Plan and for determining his nonforfeitable right to his Company Stock
and Other Investments Accounts, years of Service and Breaks in Service (as
defined in Section 2.6) shall initially be based on the period beginning on the
Employee's Employment Commencement Date and thereafter shall be based on each
Plan Year (which includes the first anniversary of the Employee's Employment
Commencement Date) beginning after the Employee's Employment Commencement Date.
2.38 "Top Heavy Provisions" The following provisions shall become
effective in any Plan Year in which the Plan is determined to be a Top Heavy
Plan.
(a) Determination of Top Heavy. The Plan will be considered
a Top-Heavy Plan for the Plan Year if (1) as of the last
day of the preceding Plan Year (the "Determination
Date"), the sum of the present value, determined on the
Determination Date, of the accounts under the Plan (but
not including any allocations to be made as of such last
day of the Plan Year except contributions actually made
on or before that date) of Participants who are Key
Employees exceed sixty percent (60%) of the sum of the
present value, determined on the Determination Date, of
the accounts under the Plan
(but not including any allocations to be made as of such
last day of the Plan Year except contributions actually
made on or before that date) of all Participants (the
"60% Test"); or (2) the Plan is part of a Required
Aggregation Group and the Required Aggregation Group is
Top-Heavy. However, and notwithstanding the results of
the sixty percent (60%) Test, the Plan shall not be
considered a Top-Heavy Plan for any Plan Year in which
the Plan is part of a Required or Permissive Aggregation
Group which is not top-heavy. For the first Plan Year
that the Plan is in effect, the determination of whether
the Plan is Top-Heavy shall be made as of the last day
of such Plan Year and, in applying the Top-Heavy
determination for such first Plan Year, the accounts of
all Participants shall be deemed to include any
contributions made thereto after the Determination Date
that are allocated as of a date in such first Plan Year.
The Top-Heavy ratio shall be computed in accordance with
Section 416(g) of the Code and the Treasury Regulations
promulgated thereunder.
(i) If the Company maintains another Defined Benefit
Plan or Defined Contribution Plan (including a
simplified employee pension plan), or maintained
another such plan which is now terminated, this
Plan is Top-Heavy only if it is part of the
Required Aggregation Group, and the Top Heavy
ratio for the Required Aggregation Group and for
the Permissive Aggregation Group, if any, each
exceeds sixty percent (60%). The Committee will
calculate the Top Heavy ratio taking into account
all plans within the Required Aggregation Group.
To the extent the Committee must take into
account distributions to a Participant, the
Committee shall include distributions from a
terminated plan which would have been part of the
Required Aggregation Group if it were in
existence on the Determination Date. The
Committee will calculate the present value of
accrued benefits under Defined Benefit Plans or
simplified employee pension plans included within
the group in accordance with the terms of those
plans, Section 416 of the Code and the Treasury
Regulations promulgated thereunder. If a
Participant in a Defined Benefit Plan is a non-
key Employee, the Committee will determine his
accrued benefit under the accrual method, if any,
which is applicable uniformly to all Defined
Benefit Plans maintained by the Employer or, if
there is no uniform method, in accordance with
the slowest accrual rate permitted under the
fractional rule accrual method described in
Section 411(b)(1)(C) of the Code. To calculate
the present value of benefits under a Defined
Benefit Plan, the Committee will use the
actuarial assumptions (interest and mortality
only) prescribed by the Defined Benefit Plan(s)
to value benefits for top heavy purposes. If an
aggregated plan does not have a Valuation Date
coinciding with the Determination Date, the
Committee must value the accrued benefits in the
aggregated plan as of the most recent Valuation
Date falling within the twelve (12) month period
ending on the Determination Date except as
Section 416 of the Code and applicable Treasury
Regulations require for the first (1st) and
second (2nd) plan year of a Defined Benefit Plan.
The Committee will calculate the top heavy ratio
with reference to the Determination Dates that
fall within the same calendar year.
(ii) In determining whether or not the Plan is a
Top-Heavy Plan, the account balances and accrued
benefits of a Participant who has not performed
Service for the Company during the five (5) year
period ending on the Determination Date shall be
disregarded.
(iii) For purposes of this Section 2.38, "Required
Aggregation Group" shall mean: (A) each plan of
the Company in which a Key Employee is a
Participant and (B) each other plan of the
Company which enables any plan described in (A)
to meet the requirements of Section 401(a)(4) or
410 of the Code. Required Aggregation Group
shall also include each terminated plan of the
Company if such plan was maintained within the
last five (5) years ending on the Determination
Date for the Plan Year in question and would, but
for the fact that it terminated, be part of a
Required Aggregation Group for such Plan Year.
"Permissive Aggregation Group" shall mean the
Required Aggregation Group combined with any
other plan maintained by the Company, providing
the resulting combination group would continue to
satisfy the requirements of Section 401(a)(4) and
410 of the Code once such other plan was taken
into account. The Committee shall determine
which plan or plans maintained by the Company
shall be taken into account in determining the
Permissive Aggregation Group.
(b) For any Plan Year during which the Plan is deemed to
constitute a Top-Heavy Plan, the Company contributions for
such Plan Year shall be allocated as follows:
(i) Each Participant as of the Determination Date and
who is not a participant in another plan
maintained by the Company qualified under Section
401(a) of the Code shall receive a minimum
"Contribution" equal to the lesser of: (i) three
percent (3%) of the Participant's compensation
(within the meaning of Section 415 of the Code)
for the Plan Year, or (ii) the highest percentage
of compensation (within the meaning of Section 415
of the Code) contributed on behalf of a Key
Employee. Such Contribution shall be made on
behalf of all Participants who are Employees and
who have not incurred a Separation from Service at
the end of the Plan Year in which the Contribution
shall be made. Participants who have become
Participants but who subsequently failed to
complete one thousand (1,000) Hours of Service at
the end of the Plan Year shall be considered as
employees covered by the Plan for purposes of this
paragraph (i). For purposes of this
paragraph (i), "Contribution" shall include (A)
Company contributions and forfeitures, and shall,
effective for Plan Years before January 1, 1989,
include salary reduction contributions under
Section 401(k) of the Code (and shall exclude such
contributions for plan Years commencing after
December 31, 1988; (B) amounts paid by the Company
to provide social security benefits; and (C)
qualified nonelective contributions described in
Section 401(m)(4)(C) of the Code. Such
contribution (to the extent required to be
nonforfeitable under subsection (c)) shall not be
forfeitable under Section 411(a)(3)(B) or
411(a)(3)(D) of the Code.
(ii) If Employees of the Company are covered under a
Defined Benefit Plan maintained by the Company and
both this Plan and the Defined Benefit Plan are
Top-Heavy Plans in any Plan Year, all non-key
Employees covered by both the Defined Benefit Plan
and this Plan shall receive, for all such Plan
Years, the minimum benefit prescribed by this Plan.
If Employees of the Company are covered by another
Defined Contribution Plan maintained by the Company
and both this Plan and the other Defined
Contribution Plan are Top-Heavy Plans in any Plan
Year, all non-key Employees covered by both the
other Defined Contribution Plan and this Plan shall
receive, for all such Plan Years, the minimum
benefit prescribed by this Plan.
Provided, however, such other Defined Contribution
Plan shall meet the top-heavy vesting requirement.
(c) Notwithstanding the provisions of Section 7.7, for any Plan
Year in which the Plan is a Top-Heavy Plan, such
Participant's vested percentage in his Company Stock and
Other Investment Accounts shall not be less than the
percentage determined in accordance with the following table:
Years of Vested Forfeited
Vesting Service Percentage Percentage
0-3 0% 100%
3 or more 100% 0%
(i) Subject to the provisions of Section 7.7, if
the Plan becomes a Top-Heavy Plan and
subsequently ceases to be such, the above
vesting schedule shall continue to apply, at
the option of the affected Participant, in
determining the vested percentage of any
Participant who had at least six (6) years
of Vesting Service as of the last day in the
last Plan Year in which the Plan was a
Top-Heavy Plan. For all other Participants,
said vesting schedule shall continue to apply
only to their Company Stock and Other
Investments Accounts as of such last day of
the Plan Year.
(ii) Notwithstanding the provisions of subsection
(c) and paragraph (i) above, subsection (c)
shall not apply to the account balance of any
Employee who does not have at least one (1)
Hour of Service after the Plan has initially
become Top-Heavy and such Employee's vested
account balance shall be determined without
regard to subsection (c).
The provisions of this subsection (c) shall be applicable
for Plan Years commencing on and after January 1, 1989.
(d) For any Plan Year in which the Plan is a Top-Heavy Plan,
Section 7.6 shall be read by substituting the number "1.00"
for the number "1.25" wherever it appears therein except
such substitution shall not have the effect of reducing any
benefit accrued under a Defined Benefit Plan prior to the
first day of the Plan Year in which this provision becomes
applicable.
(e) For purposes of this Section 2.38, a non-key Employee
is any Employee who is not a Key Employee.
2.39 "Total and Permanent Disability" (or Totally and Permanently
Disabled) means a disability as determined for purposes of the Federal Social
Security Act which qualifies the Participant for permanent disability insurance
payments in accordance with such Act. Disability for purposes of the Plan shall
not include any disability which is incurred while the Participant is on leave
of absence because of military or similar service and for which a governmental
pension is payable. The Committee may require subsequent proof of continued
Disability, prior to the Participant's sixty-fifth (65th) birthday, at intervals
of not less than six (6) months. A minimal level of earnings in restricted
activity during any period of disability shall not disqualify a Participant from
receiving disability benefits for such period if the disabled Participant
receives disability benefits under the Social Security Act for the same period.
2.40 "Total Distribution" means a distribution to a Participant or
Beneficiary, within one (1) taxable year of the recipient, of the entire balance
to the credit of the Participant's accounts under the Plan.
2.41 "Trust" or "Trust Fund" means all money, securities and other
property held under the Trust Agreement for the purposes of the Plan.
2.42 "Trust Agreement" means the agreement entered into between the
Company and the Trustee pursuant to Section 11.4.
2.43 "Trustee" means such individual(s) or financial institution as
shall be designated in the Trust Agreement to hold in trust any assets of the
Plan for the purpose of providing benefits under the Plan, and shall include any
successor to the Trustee designated thereunder.
2.44 "Valuation Date" means the last day of December of each Plan Year,
as of which date the Trust Fund shall be valued at fair market value. The
Committee may from time to time value the Trust Fund as of any other date or
dates as it deems desirable in its discretion.
ARTICLE III
PARTICIPATION
3.1 Eligibility and Participation
(a) Conditions of Eligibility.
Each Employee who was a Participant as of the Effective Date
shall continue to participate in accordance with the
provisions of this amended and restated Plan.
Any Employee who has completed one (1) year of Eligibility
Service and has attained the age of twenty-one (21) shall be
eligible to become a Participant effective as of the date
specified in subsection (b).
(b) Date of Participation.
Each Employee shall become a Participant on the first Plan
Entry Date coincident with or next following the date on
which the Employee satisfies the requirements of subsection
(a). The Plan Entry Dates shall fall on January 1 and July 1
of each Plan Year.
For purposes of this Section 3.1, a year of Eligibility
Service shall initially be based on the period of twelve (12)
consecutive months following the Employee's Employment
Commencement Date during which the Employee is credited with
at least one thousand (1,000) Hours of Service and thereafter
shall be based on each Plan Year (which includes the first
anniversary of the Employee's Employment Commencement Date)
beginning after the Employee's Employment Commencement Date
during which the Employee is credited with at least one
thousand (1,000) Hours of Service.
(c) Participation in the Plan shall continue until terminated
following retirement, Total and Permanent Disability, death
or other Separation from Service with the Company, except as
otherwise provided in Section 7.7.
(d) Employees who are included in a unit of employees
covered by an agreement which the Secretary of Labor
finds to be a collective bargaining agreement between
employee representatives and the Company, if there is
evidence that retirement benefits were the subject of
good faith bargaining between such employee
representatives and the Company, shall not be eligible
to participate in the Plan. Provided, however, in the
event an employee described in the preceding sentence
ceases to be covered by such a collective bargaining
agreement, then such Employee shall become a
Participant on the first Plan Entry Date, as defined in
Section 3.1(b), coinciding with or immediately
following the date such Employee ceases to be covered
by such collective bargaining agreement, after which
such Employee satisfies the eligibility requirements
specified in Section 3.1(a). For purposes of this
subsection (d), in determining such Employee's
Eligibility Service, his years of Eligibility Service
commencing on his Employment Commencement Date shall be
credited to him.
(e) Self-employed individuals shall not be eligible to
participate in this Plan.
(f) In the case of a Participant who does not have a
nonforfeitable right to his account balance derived
from Company contributions, years of Eligibility
Service before a period of consecutive one-year Breaks
in Service will not be taken into account in computing
Eligibility Service if the number of consecutive one-
year Breaks in Service in such period equals or exceeds
the greater of five (5) or the aggregate number of
years of Eligibility Service. Such aggregate number of
years of Eligibility Service will not include any years
of Eligibility Service disregarded under the preceding
sentence by reason of prior Breaks in Service.
(g) An Inactive Participant who did not have a
nonforfeitable right to any portion of his Individual
Account balance derived from Company contributions at
the time of Separation from Service will be considered
a new Employee, for eligibility purposes, if the number
of consecutive one year Breaks in Service equals or
exceeds the greater of five (5) or the aggregate number
of years of Eligibility Service before such Breaks in
Service. If such Inactive Participant's years of
Eligibility Service before Separation from Service may
not be disregarded pursuant to the preceding sentence,
such Inactive Participant shall participate immediately
upon reemployment.
3.2 Plan Binding. Upon becoming a Participant, a Participant shall be
bound then and thereafter by the terms of this Plan and the Trust Agreement,
including all amendments to the Plan and the Trust Agreement made in the manner
herein authorized.
3.3 Reemployment. A terminated Employee who is reemployed
by the Company shall become a Participant in accordance with
whichever of subsection (a) or (b) is applicable.
(a) A terminated Participant who later resumes his employment
with the Company shall again become a Participant on his
reemployment date.
(b) An Employee who terminated employment with the Company
prior to becoming a Participant pursuant to Section
3.1, and who later resumes his employment with the
Company shall become a Participant on the latter of (i)
his reemployment date, provided he has met the
eligibility requirements contained in Section 3.1, or
(ii) the date he would have become a Participant had he
not terminated employment.
3.4 Beneficiary Designation. Subject to the provisions of Section 2.4,
upon commencing participation, each Participant shall designate a Beneficiary on
forms furnished by the Committee. Such Participant may then from time to time
change his designated Beneficiary by written notice to the Committee and, upon
such change, the rights of all previously designated Beneficiaries to receive
any benefits under this Plan shall cease. If, at the time of a Participant's
death while benefits are still outstanding, his named Beneficiary does not
survive him, the benefits shall be paid to his named contingent Beneficiary. If
a deceased Participant is not survived by either a named Beneficiary or
contingent Beneficiary (or if no Beneficiary was effectively named), his benefit
shall be paid in a single sum to the person or persons in the first of the
following classes of successive preference beneficiaries then surviving: the
Participant's (a) widow or widower, (b) children, (c) grandchildren, (d)
parents, (e) brothers and sisters, (f) executors and administrators. If a
Beneficiary or contingent Beneficiary is living at the death of the Participant,
but such person dies prior to receiving the Participant's death benefit, such
death benefit shall be paid in a single sum to the estate of such deceased
Beneficiary or contingent Beneficiary.
3.5 No Credit Upon Acquisition and Recognition of Past
Service.
(a) If the Company acquires an entity or division or other
section of an entity under an arrangement whereby the
acquired entity is not or ceases to be a separate
entity and is merged into the Company or becomes a
division, subsidiary, or an affiliate of the Company or
an Affiliated Company, the Employees of the acquired
entity shall be considered as new employees of the
Company for purposes of eligibility and vesting on the
effective date of the acquisition and shall become
Participants hereunder in accordance with Section 3.1.
Notwithstanding the preceding sentence, the Board of
Directors of the Company may, in its sole discretion,
provide for recognition of employment (including, if
desired, compensation) by the acquired entity prior to
the effective date of the acquisition for purposes of
eligibility and/or vesting. Recognition of employment
under this Section 3.5 shall be evidenced by resolution
of the Board of Directors of the Company and such other
documentation and
records as the Committee shall specify. In the case of
an individual whose employment is to be recognized
under this Section 3.5, the Committee may require from
the individual or the acquired entity such evidence of
employment as the Committee deems reasonable and
proper.
(b) Notwithstanding the provisions of subsection (a), all
service prior to the Effective Date with the Company
shall be recognized for purposes of eligibility to
participate under Section 3.1 and for purposes of
vesting under Section 7.7, to the extent such Service
would be credited under the terms of the Plan (as in
effect on the Effective Date) for eligibility and
vesting purposes if the Plan were in existence in such
prior years.
ARTICLE IV
CONTRIBUTIONS
4.1 Company Contributions.
(a) For each Plan Year, Company contributions under the
Plan, if any, may be paid to the Trust in such amounts
(or under such formula) and at such times as may be
determined by the Board. Company contributions under
the Plan for a Plan Year may be paid during the Plan
Year and shall in any event be paid not later than the
due date for filing the Company's Federal income tax
return for that year, including any extensions of such
due date. Except as otherwise permitted under Section
404(a)(9) of the Code (concerning contributions to the
Plan to repay the principal and interest on a Loan),
Company contributions under the Plan for any Plan Year
shall not be paid to the Trust in amounts which would
exceed fifteen percent (15%) of the Compensation of all
Participants entitled to share in allocations thereof
for that Plan Year, including any carryover amount from
previous Plan Years allowable by Section 404(a)(3)(A)
of the Code. In no event shall Company contributions
in any Limitation Year exceed an amount which would
cause: (a) Annual Additions to the accounts of any
Participant to exceed the Maximum Permissible Amount
for that Limitation Year (except as provided in
Sections 7.5 and 7.6); or (b) the sum of the Defined
Benefit Plan fraction (as defined in Section 7.6) and
the Defined Contribution Plan fraction (as defined in
Section 7.6) to exceed one (1.0) for that Limitation
Year.
(b) Company contributions may be paid to the Trust in cash
or in whole shares of Company Stock, as determined by
the Board; provided that Company contributions shall be
paid in cash in such amounts, and at such times
(subject to the limitations described in Sections 7.5
and 7.6), as needed to provide the Trust with funds
sufficient to pay in full when due any principal and
interest payments required by a Loan incurred by the
Trustee pursuant to Article VI to finance the
acquisition of Company Stock, except to the extent such
principal and interest payments have been satisfied by
the Trustee from cash dividends paid to it with respect
to Company Stock.
(c) All Company contributions for a Plan Year shall be allocated
to the Company Contribution Account when paid. As of the last
day of each Plan Year amounts in the Company Contribution
Account, including amounts contributed after such last day
under subsection (a) above shall be allocated to
Participants' accounts as provided in Article VII.
(d) No Participant shall be required or permitted to make
contributions to the Plan or Trust.
4.2 Exclusive Benefit of Employees. All contributions made pursuant to
the Plan shall be held by the Trustee in accordance with the terms of the Trust
Agreement for the exclusive benefit of those Employees who are Participants
under the Plan, and their Beneficiaries, and shall be applied to provide
benefits under the Plan and to pay reasonable expenses of administration of the
Plan and the Trust, to the extent that such expenses are not otherwise paid. At
no time prior to the satisfaction of all liabilities with respect to such
Employees and their Beneficiaries shall any part of the Trust Fund (other than
such part as may be required to pay reasonable administration expenses and
taxes) be used for, or diverted to, purposes other than for the exclusive
benefit of such Employees and their Beneficiaries. However, without regard to
the provisions of this Section 4.2:
(a) All contributions under the Plan are conditioned on initial
qualification of the Plan under Section 401(a) of the Code,
and if the Plan does not so qualify the Trustee shall, upon
written request of the Company, return to the Company the
amount of such contribution within one (1) calendar year
after the date that qualification of the Plan is denied;
(b) All contributions are conditioned upon the deductibility of
the contribution under Section 404 of the Code, and, to the
extent the deduction is disallowed, the Trustee shall, upon
written request of the Company, return the contribution (to
the extent disallowed) to the Company within one (1) year
after the date the deduction is disallowed; and
(c) If a contribution or any portion thereof is made by the
Company by a mistake of fact, the Trustee shall, upon written
request of the Company, return the contribution or such
portion to the Company within one (1) year after the date of
payment to the Trustee.
The Trustee shall not increase the amount of the Company contribution returnable
under this Section 4.2 for any income attributable to such contribution;
however, the Trustee shall decrease the Company contribution returnable by any
losses allocable thereto. The Trustee may require the Company to furnish it with
whatever evidence the Trustee considers reasonably necessary to enable the
Trustee to confirm the amount the Company has requested to be returned as
properly returnable under the applicable provisions of ERISA.
ARTICLE V
INVESTMENT OF TRUST ASSETS
5.1 Investments. Subject to the provisions of Article X, The Trust Fund
will be invested primarily in Company Stock. The Committee may direct the
Trustee to incur Debt from time to time to finance the acquisition of Company
Stock by the Trust or otherwise. The Trust Fund may be used to acquire shares of
Company Stock from Company shareholders (including former Participants) or from
the Company. Subject to the provisions of Article X, the Trustee may also invest
the Trust Fund in savings accounts, certificates of deposit, high-grade
short-term securities, equity stock, bonds, or other investments desirable for
the Trust, or the Trust Fund may be held in cash or such other investments as
are provided in the Trust Agreement. Subject to the provisions of Article X, all
investments will be made by the Trustee upon the direction of the Committee;
provided, however, the Committee shall have the authority to delegate all or any
part of its investment discretion under the Plan to the Trustee or to an
investment manager, in a written instrument which, to be effective and binding
upon the Trustee or to an investment manager, shall be accepted in writing by
the Trustee or investment manager. The Committee may direct that the entire
Trust Fund assets be invested and held in Company Stock.
5.2 Purchase of Company Stock. All purchases of Company Stock by the
Trust will be made at a price, or at prices, which, in the judgment of the
Committee, do not exceed the fair market value of such Company Stock. The
determination of fair market value of Company Stock for all purposes under the
Plan shall be made by the Committee which shall consider the following criteria:
(a) Any current and historical practices which have been
consistently and uniformly utilized to value Company Stock in
sales transactions between the Company and the stockholders,
or among and between stockholders;
(b) Any agreements, restrictions or limitations with
respect to or imposed upon the sale or transfer of
Company Stock which establish or stipulate the price at
which the Company or Trust may or must purchase such
stock under the provisions of the Articles of
Incorporation or By-Laws of the Company, or written
agreements, including, but not limited to, buy-sell or
redemption agreements; provided the same or similar
restrictions are applicable to substantially all of the
outstanding Company Stock and are uniformly and
consistently complied with;
(c) Such other information concerning the Company and its
condition and prospects, financial and otherwise,
generally used in the determination of the fair market
value of corporate stock of comparable public or
private companies engaged in the same or similar
industries, by independent investment analysts
recognized as having expertise in rendering such
evaluations;
(d) Such other evaluation techniques, such as use of
capitalization ratios, deemed appropriate by the Committee
and executed by independent and recognized analysts having
expertise in rendering such evaluations; and
(e) Effective with respect to shares of Company Stock
acquired by the Plan after December 31, 1986, if
Company Stock is not readily tradable on an established
securities market, with respect to activities carried
on by the Plan, all valuations of Company Stock shall
be made by an independent appraiser meeting
requirements similar to those contained in the Treasury
Regulations promulgated under Section 170(a)(1) of the
Code. All such appraisals shall satisfy the
requirements of the Department of Labor Regulations
promulgated under Section 3(18) of ERISA. The
Committee shall have the exclusive responsibility for
selecting the independent appraiser.
5.3 Suspense Account. Company Stock purchased with the proceeds of a
Loan shall be held in a suspense account pending release and reallocation to
other accounts as the Loan is paid. Company Stock purchased with amounts
allocated to Participants' Other Investments Accounts or the Company Other
Investments Contribution Account shall immediately upon purchase be credited pro
rata to the corresponding Participants' Company Stock or the Company Stock
Contribution Account, as the case may be.
The Committee may direct the Trustee to sell or resell shares of
Company Stock to any person, including the Company, provided that any such sales
to any disqualified person, including the Company, will be made at no less than
the fair market value thereof, as determined under Section 5.2, and no
commission is charged with respect to such sale. Any such sale shall be made in
conformance with Section 408(e) of ERISA and the Department of Labor Regulations
promulgated thereunder. All sales of Company Stock (except Company Stock held in
a suspense account or the Company Contribution Account) by the Trustee will be
charged pro rata to the Company Stock Accounts of Participants.
ARTICLE VI
EXEMPT LOANS
6.1 Loans. The Committee may direct the Trustee to obtain Loans. Any
such Loan will meet all requirements necessary to constitute an "exempt loan"
within the meaning of Section 4975(d)(3) of the Code and Treasury Regulation
Section 54.4975-7(b)(1)(iii) and shall be used primarily for the benefit of
Participants and their Beneficiaries. The proceeds, if any, of any such Loan
shall be used, within a reasonable time after the Loan is obtained, only to
purchase Company Stock, repay the Loan, or repay any prior Loan. Any such Loan
shall provide for no more than a reasonable rate of interest (as determined
under Treasury Regulation Section 54.4975-7(b)(7)) and must be without recourse
against the Plan. The number of years to maturity under the Loan must be
definitely ascertainable at all times. The only assets of the Plan that may be
given as collateral on a Loan are shares of Company Stock acquired with the
proceeds of the Loan and shares of Company Stock that were used as collateral on
a prior Loan repaid with the proceeds of the current Loan. Such Company Stock so
pledged shall be placed in a suspense account. No person entitled to payment
under a Loan shall have recourse against Trust assets other than such
collateral, contributions (other than contributions of Company Stock) that are
available under the Plan to meet obligations under the Loan, and earnings
attributable to such collateral and the investment of such contributions. All
Company contributions paid during the Plan Year in which a Loan is made (whether
before or after the date the proceeds of the Loan are received), all Company
contributions paid thereafter until the Loan has been repaid in full, and all
earnings from investment of such Company contributions, without regard to
whether any such Company contributions and earnings have been allocated to
Participants' Other Investments Accounts, shall be available to meet obligations
under the Loan as such obligations accrue, or prior to the time such obligations
accrue, unless otherwise provided by the Company at the time any such
contribution is made. Any pledge of Company Stock must provide for the release
of shares so pledged upon the payment of any portion of the Loan. The number of
shares to be released will be determined in the following manner:
(a) If the Loan provides annual payments of principal and
interest at a cumulative rate that is not less rapid at
any time than level annual payments of principal and
interest over ten (10) years, then for each Plan Year
during the duration of the Loan, the number of shares
of Company Stock released from such pledge shall equal
the number of encumbered securities held immediately
before release for the current Plan Year multiplied by
a fraction. The numerator of the fraction is the
principal paid for such Plan Year. The denominator of
the fraction is the sum of the numerator plus the
principal to be paid for all future years. Such years
will be determined without taking into account any
possible extension or renewal periods. To the extent
that the net proceeds received by the Plan in respect
of any Loan exceed the stated principal amount of the
Loan, that portion of any interest payment that would
be deemed to be a repayment of principal under standard
loan amortization tables shall be treated as principal
paid or principal to be paid, as the case may be, for
purposes of the above calculation. This subsection (a)
shall not be applicable to a Loan from the time that,
by reason of a renewal, extension, or refinancing, the
sum of the expired duration of the Loan, the renewal
period, and the duration of a new Loan exceeds ten (10)
years.
(b) If the Loan does not satisfy the conditions stated in
subsection (a), then for each Plan Year during the
duration of the Loan, the number of shares of Company
Stock released from such pledge shall equal the number
of encumbered securities held immediately before
release for the current Plan Year multiplied by a
fraction. The numerator of the fraction is the sum of
principal and interest paid in such Plan Year. The
denominator of the fraction is the sum of the numerator
plus the principal and interest to be paid for all
future years. Such years will be determined without
taking into account any possible extensions or renewal
periods. If interest on any Loan is variable, the
interest to be paid in future years under the Loan
shall be computed by using the interest rate applicable
as of the end of the Plan Year. If the collateral
includes more than one class of Company Stock, the
number of shares of each class to be released for a
Plan Year must be determined by applying the same
fraction to each class. Should a Loan initially
satisfying the conditions stated in subsection (a) at
some subsequent date cease to satisfy the conditions of
such subsection, by reason of a renewal, extension, or
refinancing of the Loan, then subsection (b) shall be
applied in determining the shares released upon payment
of any principal or interest after such date.
6.2 Loan Payments.
(a) Payments of principal and interest on any Loan during a
Plan Year shall be made by the Trustee (as directed by
the Committee) only from (i) Company Contributions to
the Trust made to meet the Plan's obligation under a
Loan (other than contributions of Company Stock) and
from any earnings attributable to Company Stock held as
collateral for a Loan and investments of such
contributions (both received during or prior to the
Plan Year); (ii) the proceeds of a subsequent Loan made
to repay a prior Loan; (iii) the proceeds of the sale
of any Company Stock held as collateral for a Loan; and
(iv) pursuant to Treasury Regulation Section
54.4975-11(d)(3), income from Company Stock acquired with
the proceeds of a Loan which is not allocated as income
of the Plan. Such contribution and earnings must be
accounted for separately by the Plan until the Loan is
repaid.
(b) Company Stock released by reason of the payment of principal
or interest on a Loan from amounts allocated to Participants'
Other Investments Contribution Accounts or the Company Other
Investments Account shall immediately upon payment be
allocated as set forth in Sections 7.2 and 7.4 to the
corresponding Participants' Company Stock or Company Stock
Contribution Account.
(c) The Company shall contribute to the Trust sufficient
amounts to enable the Trust to pay principal and
interest on any such Loans as they come due; provided,
however, that no such contribution shall exceed the
limitations contained in Sections 7.5 and 7.6. In the
event that such contributions, by reason of the
limitations in Sections 7.5 or 7.6, are insufficient to
enable the Trust to pay principal and interest on such
Loan as it is due, then upon the Trustee's request the
Company shall:
(i) Make a Loan to the Trust as described in
Treasury Regulation Section
54.4975-7(b)(4)(iii), in sufficient amounts to
meet such principal and interest payments.
Such new Loan shall also meet all requirements
of an "exempt loan" within the meaning of
Treasury Regulation Section
54.4975-7(b)(1)(iii) and shall be subordinated
to the prior Loan. Company Stock released
from the pledge of the prior Loan shall be
pledged as collateral to secure the new Loan.
Such Company Stock will be released from this
new pledge and allocated to the accounts of
the Participants in accordance with applicable
provisions of the Plan;
(ii) Purchase any Company Stock pledged as
collateral in an amount necessary to provide
the Trustee with sufficient funds to meet the
principal and interest repayments. Any such
sale by the Plan shall meet the requirements
of Section 408(e) of ERISA and the Department
of Labor Regulations promulgated thereunder;
or
(iii) Any combination of the foregoing. However, the
Company shall not, pursuant to the provisions
of this subsection, do, fail to do, or cause to
be done any act or thing which would result in
a disqualification of the Plan as an employee
stock ownership plan under the Code.
(d) Except as provided in Sections 6.3 and 6.4, and
notwithstanding any amendment to or termination of the
Plan which causes it to cease to qualify as an employee
stock ownership plan within the meaning of Section
4975(e)(7) of the Code, or any repayment of a Loan, no
shares of Company Stock acquired with the proceeds of a
Loan obtained by the Trust to purchase Company Stock
may be subject to a put, call or other option, or buy-
sell or similar arrangement while such shares are held
by and when distributed from the Plan.
(e) Notwithstanding any provision of the Plan to the
contrary, in the event the Plan is terminated, any
shares of Company Stock pledged as collateral for a
Loan and held in the suspense account provided for in
Section 5.3 (or the proceeds of the sale of such
Company Stock) shall be applied to repay the
outstanding balance of the Loan. Any shares of Company
Stock or cash proceeds from the sale thereof which
remain in the suspense account after repayment of the
Loan shall be allocated to Participants who are
actively employed on the effective date of termination
in the ratio that the Adjusted Balance of each
eligible Participant's Company Stock and Other
Investments Accounts bears to the Adjusted Balance of
the Company Stock and Other Investments Accounts of all
Participants entitled to share in such allocation.
Such ratio shall be calculated after completion of the
allocations prescribed in Article VII for the Plan Year
in which the effective date of the termination of the
Plan occurs and the completion of any subsequent
allocations in succeeding Plan Years. Such
allocation(s) shall be made as of the Valuation Date(s)
which coincide with or next follow the effective date
of the termination.
6.3 Right of First Refusal. Shares of Company Stock purchased with the
proceeds of a Loan and distributed by the Trustee may, in the discretion of the
Committee, be subject to a "right of first refusal." Such a "right" shall
provide that, prior to any subsequent transfer, the shares must first be offered
in writing to the Trust and then, if refused by the Trust, to the Company at a
price equal to the greater of (i) the then fair market value of such shares of
Company Stock, as determined by the Committee in accordance with Treasury
Regulation Section 54.4975-11(d)(5), or (ii) the purchase price offered by a
buyer, other than the Company or Trustee, making a good faith offer (as
determined by the Committee) to purchase such shares of Company Stock. The Trust
or the Company, as the case may be, may accept the offer as to part or all of
the Company Stock at any time during a period not exceeding fourteen (14) days
after receipt of such offer by the Trust, on terms and conditions no less
favorable to the shareholder than those offered by the independent third party
buyer. Any installment purchase shall be made pursuant to a note secured by the
shares purchased and shall bear a reasonable rate of interest as determined by
the Committee. If the offer is not accepted by the Trust, the Company, or both,
then the proposed transfer may be completed within a reasonable period following
the end of the fourteen (14) day period, but only upon terms and conditions no
less favorable to the shareholder than the terms and conditions of the third
party buyer's prior offer. Shares of Company Stock which are publicly traded
within the meaning of Treasury Regulation Section 54.4975-7(b)(iv) at the time
such right may otherwise be exercised shall not be subject to this "right of
first refusal."
6.4 Put Option. All shares of Company Stock acquired by the Plan shall
be subject to a "put" option at the time of distribution, provided that at such
time the shares are not publicly traded within the meaning of Treasury
Regulation ss.54.4975-7(b)(iv) or subject to a trading restriction within the
meaning of Treasury Regulation Section 54.4975(b)(10). The "put" option shall be
exercisable by the Participant or his Beneficiary, by the donees of either, or
by a person (including an estate or its distributee) to whom the Company Stock
passes by reason of the Participant's or Beneficiary's death. The "put" option
shall provide that for a period of sixty (60) days after such shares are
distributed, the holder of the option shall have the right to cause the Company,
by notifying it in writing, to purchase such shares at their fair market value,
as determined by the Committee, in accordance with Treasury Regulation Section
54.4975-11(d)(5). Provided, however, that if the holder of such "put" options
shall not exercise such option within such sixty (60) day period, an additional
exercise period of sixty (60) days shall be available during the Plan Year
following the Plan Year in which the distribution was made after the new
valuation of Company Stock has been determined and communicated to the holder of
the option. The Committee may give the Trustee the option to assume the rights
and obligations of the Company at the time the "put" option is exercised,
insofar as the repurchase of Company Stock is concerned. The period during which
the "put" option is exercisable shall not include any period during which the
holder is unable to exercise such "put" option because the Company is prohibited
from honoring it by Federal or State law. The terms of payment for the purchase
of such shares of Company Stock shall be as set forth in the "put" option and
may be either in a lump sum or in installments, as determined by the Committee.
An installment payment in connection with such "put" option shall:
(a) Be adequately secured, as determined by the Committee;
(b) Bear a reasonable rate of interest, as determined by
the Committee;
(c) Require equal annual payments;
(d) If the distribution constitutes a Total Distribution, payment
of the fair market value of a Participant's Company Stock
Account balance shall be made in five (5) substantially equal
annual payments. The first installment shall not be paid
later than thirty (30) days after the Participant exercises
the "put" option; and
(e) In all respects satisfy the requirements of
Section 409(h) of the Code and Treasury Regulation
Sectiom 54.4975-7(b)(12).
If the distribution does not constitute a Total Distribution, the Plan
shall pay the Participant an amount equal to the fair market value of
the Company Stock repurchased no later than thirty (30) days after the
Participant exercises the "put" option.
The provisions of this Section 6.4 shall apply to all shares of Company
Stock acquired by the Plan.
6.5 Continuation of Rights of Put Option. The rights set forth in
Section 6.2(d) and the "put" option provided for by Section 6.4 are
nonterminable and shall continue to apply to shares of Company Stock purchased
by the Trustee with the proceeds of a Loan as described herein or to shares of
Company Stock distributed hereunder notwithstanding the repayment of the Loan or
any amendment to, or termination of, this Plan which causes the Plan to cease to
be an employee stock ownership plan within the meaning of Section 4975(e)(7) of
the Code.
ARTICLE VII
ALLOCATIONS TO PARTICIPANTS' ACCOUNTS
7.1 Separate Accounts. Separate Company Stock and Other Investments
Accounts will be established to reflect Participants' interests under the Plan.
The Committee shall also establish the suspense account referred to in Section
5.3 if a Loan is incurred by the Trust. Records shall be kept by the Committee
from which it can be determined the portion of each Other Investments Accounts
which at any time is available to meet obligations under a Loan in accordance
with Section 6.1 and the portion which is not so available.
7.2 Company Stock. The Company Stock Account under the Plan maintained
for each Participant will be credited with his allocable share, determined under
Section 7.4, of the Company Stock (including fractional shares) purchased and
paid for by the Trustee or contributed in kind to the Trust, with forfeitures of
Company Stock and with any stock dividends on Company Stock (i) allocated to his
Company Stock Account and (ii) which constitute a portion of his allocable share
of Trust income (or loss). Company Stock acquired by the Trust with the proceeds
of a Loan obtained pursuant to Article VI shall be allocated to the Company
Stock Accounts of Participants according to the method set forth in Section 7.4,
as the Company Stock is released from suspense account as provided for in
Section 6.1.
7.3 Other Investments. The Other Investments Account under the Plan
maintained for each Participant will be credited (or debited) with its allocable
share, as determined under Section 7.9, of the net income (or loss) of the
Trust, with Company Contributions which have not been used to make principal and
interest payments on a Loan or other Debt or to purchase Company Stock, and with
forfeitures in other than Company Stock. Each Other Investments Account will be
debited for its share of any cash payments for the acquisition of Company Stock
for the benefit of Company Stock Accounts and for any repayment of principal or
interest on any Loan or other Debt chargeable to Participants' Company Stock
Accounts; provided that only the portion of each Other Investments Account which
is available to meet obligations under Loans shall be used to pay principal or
interest on a Loan.
7.4 Allocations of Company Contributions and Forfeitures.
(a) The Company Stock and other investments held in the
Company Contribution Account under the Plan, and
forfeitures incurred under the Plan for each Plan Year,
shall be allocated after the allocation of the net
income (or loss) of the Trust for the Plan Year, as
provided in Section 7.9, as of the last day of such
Plan Year (even though receipt of the Company
contributions by the Trustee may take place after the
close of such Plan Year) among the Company Stock and
Other Investments Accounts of all Participants who,
during the course of such Plan Year: (i) (except as
otherwise provided in Section 2.38) completed at least
one thousand (1,000) Hours of Service and were employed
on the last day of the Plan Year; (ii) retired on or
after attaining Normal Retirement Age; (iii) died; or
(iv) became Totally and Permanently Disabled. Such
allocation shall be allocated in the proportion that
the Participant's Compensation for the Plan Year bears
to the total Compensation of all such Participants for
such Plan Year. Provided, however, effective for Plan
Years commencing on and after January 1, 1994, for
purposes of this Section 7.4, in the case of a
Participant who enters the Plan on other than the first
day of the Plan Year, such Participant's Compensation
shall include only that Compensation paid to the
Participant on and after becoming a Participant.
Notwithstanding the preceding provisions of this Section 7.4,
in no event shall an allocation be made to the account of any
Participant, for any Limitation Year, which would cause: (i)
Annual Additions to the accounts of such Participant to
exceed the Maximum Permissible Amount for that Year (except
as permitted in Sections 7.5 and 7.6); or (ii) the sum of the
Defined Benefit Plan fraction and Defined Contribution Plan
fraction (as such terms are defined in Section 7.6) to exceed
one (1.0) for such Participant for that Limitation Year.
(b) Effective with respect to sales of Company Stock to the
Plan after October 22, 1986, no portion of the assets
of the Plan attributable to (or allocable in lieu of)
Company Stock acquired by the Plan in a sale to which
Section 1042 of the Code applies may accrue (or may be
allocated directly or indirectly under any other plan
of the Company which meets the requirements of Section
401(a) of the Code) (i) during the
nonallocation period, for the benefit of (A) any
taxpayer who makes an election under Section 1042(a) of
the Code with respect to Company Stock or (B) any
individual who is related to the taxpayer (within the
meaning of Section 267(b) of the Code); or (ii) for the
benefit of any other person who owns (after the
application of Section 318(a) of the Code without
regard to the employee trust exception in paragraph
(2)(B)(i) of Section 318) more than twenty-five percent
(25%) of (A) any class of outstanding stock of the
Company or of any corporation which is a member of the
same controlled group of corporations with the Company
(within the meaning of Section 409(l)(4) of the Code)
or (B) the total value of any class of outstanding
stock of the Company or any such corporation.
(i) For purposes of this subsection (b),
(A) The term "nonallocation period" means the
period beginning on the date of the sale of Company
Stock to the Plan and ending on the later of the
date which is ten (10) years after the effective
date of such sale or the date of the allocation of
Company Stock under Section 7.4 attributable to the
final payment of the Loan incurred in connection
with such sale.
(B) A person shall not be treated as a more than
twenty-five percent (25%) shareholder if such
person does not own, under the provisions of
Section 318 of the Code specified in subsection
(b)(ii), at any time during the one (1) year period
ending on the date of the sale of Company Stock to
the Plan or on the effective date of the allocation
of Company Stock to the Company Stock Accounts of
Participants under the Plan, more than twenty-five
percent (25%) of the stock described in subsection
(b)(ii)(A) and (B).
(ii) The provisions of subsection (b) regarding the
nonallocation of Company Stock to certain
individuals who are related to a taxpayer who makes
an election under Section 1042(a) of the Code with
respect to Company Stock, shall not apply to an
individual if:
(A) such individual is a lineal decedent of the
taxpayer; and
(B) the aggregate fair market value, determined
under Section 5.2, of Company Stock allocated under
the Plan to the Company Stock Accounts of all such
lineal descendants during the nonallocation period,
does not exceed more than five percent (5%) of the
Company Stock (or amounts allocated in lieu
thereof) held by the Plan which are attributable to
a sale to the Plan by any person related to such
descendants (within the meaning of Section
267(c)(4) of the Code) in a transaction to which
Section 1042 of the Code applied.
(iii) Notwithstanding the foregoing provisions of this subsection
(b), the nonallocation provisions of this subsection (b)
shall not apply to Company Stock that is acquired by the
Trustee directly from the Company in conjunction with or
separately from a sale to the Plan by an individual
shareholder of the Company or the executor of the estate of
such a shareholder to which Section 1042 applies.
7.5 Maximum Allocations.
(a) Except as provided in subsection (b), the allocations to the
accounts of any Participant in any Limitation Year shall be
limited so that the Participant's Annual Additions for such
Year do not exceed the Maximum Permissible Amount.
(b) Notwithstanding the provisions of subsection (a), if no
more than one-third (1/3) of the Company contributions
for a Limitation Year which are deductible as principal
or interest payments on a Loan pursuant to the
provisions of Section 404(a)(9) of the Code, are
allocated to Highly Compensated Employees, then the
limitations imposed by subsection (a) shall not apply
to:
(i) Forfeitures of Company Stock under the Plan if the
Company Stock was acquired with the proceeds of a
Loan; or
(ii) Company contributions which are deductible as
interest payments on a Loan under Section
404(a)(9)(B) of the Code and charged against a
Participant's account.
(c) If the foregoing limitation on allocations would be
exceeded in any Limitation Year for any Participant as
a result of the allocation of forfeitures under the
Plan, reasonable error in estimating a Participant's
Compensation, or under such other limited facts and
circumstances which the Commissioner of the Internal
Revenue Service, pursuant to Treasury Regulation
Section 1.415-6(b)(6), finds justify the availability of this
subsection (c), the following corrective adjustments
shall be made:
(i) The excess amounts in the Participant's Company
Stock and Other Investments Accounts shall be
reduced, first by reducing the Participant's
Other Investments Account and second, if
necessary, by reducing the Participant's Company
Stock Account, to insure compliance with
subsection (a) by reducing Company contributions
for the next Limitation Year (and succeeding
Limitation Years, as necessary) for that
Participant if the Participant is covered by the
Plan and entitled to an allocation hereunder in
accordance with Section 7.4.
(ii) If the Participant is not entitled to share in
the allocation of Company contributions as of the
end of the Limitation Year, then the excess
amount shall be held unallocated in a suspense
account for the Limitation Year and allocated and
reallocated in the next Limitation Year to all
remaining Participants in the Plan who are
entitled to an allocation of Company
contributions. The excess amount held in such
suspense account shall be (A) allocated and
reallocated (subject to the limits of this
Article VII) before any Annual Additions may be
made to the Plan for the Limitation Year and (B)
used to reduce Company contributions for that
Limitation Year (and any succeeding Limitation
Years, as necessary) for all remaining
Participants entitled to receive an allocation of
such Company contribution. No excess amount or
any portion thereof may be distributed to
Participants, Inactive Participants or their
Beneficiaries.
(iii) As used in this subsection (c), "excess amount"
means the excess of a Participant's Annual
Additions for a Limitation Year over the amounts
prescribed in subsections (a) and (b).
(d) Upon termination of the Plan, any amounts in a
Limitation Account at the time of such termination
shall revert to the Company.
7.6 Limitations on Participants Who Participate in More
Than One Plan.
(a) Notwithstanding the provisions of Section 7.5, the
otherwise permissible Annual Additions for any
Participant under this Plan may be further reduced to
the extent necessary, as determined by the Committee,
to prevent disqualification of the Plan under Section
415 of the Code, which imposes the following additional
limitations on the benefits payable to Participants who
also may be participating in another tax qualified
pension, profit sharing, savings or stock bonus plan
maintained by the Company:
(i) If an individual is a Participant at any time in
both a Defined Benefit Plan and Defined
Contribution Plan maintained by the Company, the
sum of the Defined Benefit Plan fraction and the
Defined Contribution Plan fraction for any
Limitation Year may not exceed one (1.0) if the
sum of the Defined Benefit Plan fraction and the
Defined Contribution Plan fraction for any
Limitation Year exceeds one (1.0), the numerator
of the Defined Contribution Plan fraction shall
be reduced in order that the sum of the Defined
Contribution Plan fraction and the Defined
Benefit Plan fraction do not exceed one (1.0).
(ii) The Defined Benefit Plan fraction for any
Limitation Year is a fraction, the numerator of
which is the Participant's projected annual
benefit under the Plan (determined at the close
of the Limitation Year) and the denominator of
which is the lesser of 1.25 multiplied by Ninety
Thousand Dollars ($90,000) or such greater amount
permitted by Treasury Regulations to reflect
cost-of-living adjustments; or 1.4 multiplied by
one hundred percent (100%) of the Participant's
average monthly compensation, as defined in
Treasury Regulation Section 1.415-2(d)(1)(i)
during the three (3) consecutive years when the
total compensation paid to him was highest. 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 accounts in such Limitation Year
and for all prior Plan Years and the denominator
of which is the sum of the applicable maximum
amounts of Annual Additions which could have been
made under Section 415(c) of the Code for such
Plan Year and for all prior years of such
Participant's employment (assuming for this
purpose, that said Section 415(c) had been in
effect during such prior years). The applicable
maximum amount for any Limitation Year shall be
equal to the lesser of 1.25 multiplied by the
dollar limitation in effect for such Limitation
Year under Section 415(c)(1)(A) of the Code; or
1.4 multiplied by twenty-five percent (25%) of
the Participant's Compensation for such Plan
Year.
(iii) If the Plan satisfied the applicable requirements
of Section 415 of the Code as in effect for all
Limitation Years beginning before January 1,
1989, an amount shall be subtracted from the
numerator of the Defined Contribution Plan
Fraction (not exceeding such numerator) as
prescribed by the Secretary of the Treasury so
that the sum of the Defined Benefit Plan fraction
and the Defined Contribution Plan fraction
computed under Section 415(e)(1) of the Code does
not exceed 1.0 for such Limitation Year.
(b) For purposes of the limitation provided for by this
Section 7.6, all Defined Benefit Plans of the Company,
whether or not terminated, are to be treated as one
Defined Benefit Plan and all Defined Contribution Plans
of the Company, whether or not terminated, are to be
treated as one Defined Contribution Plan. The extent
to which Annual Additions under the Plan shall be
reduced as compared with the extent to which the annual
benefit under any Defined Benefit Plan shall be reduced
in order to achieve compliance with the limitations of
Section 415 of the Code shall be determined by the
Committee in such a manner so as to maximize the
aggregate benefits payable to such Participant. If
such reduction is under this Plan, the Committee shall
advise affected Participants of any additional
limitation on their annual benefits required by this
Section 7.6.
(c) The above limitations are intended to comply with the
provisions of Section 415 of the Code so that the
maximum benefits provided by plans of the Company shall
be exactly equal to the maximum amounts allowed under
Section 415 of the Code and Treasury Regulations
thereunder. If there is any discrepancy between the
provisions of this Section 7.6 and the provisions of
Section 415 of the Code and Treasury Regulations
thereunder, such discrepancy shall be resolved in such
a way as to give full effect to the provisions of
Section 415 of the Code.
7.7 Vesting.
(a) Vesting on Termination of Service. A Participant
shall be one hundred percent (100%) vested in the
Adjusted Balance of his Company Stock and Other
Investments Accounts as follows: (i) upon attaining
Normal Retirement Age (age 65); (ii) upon the
Committee's determination that the Participant is
Totally and Permanently Disabled and (iii) upon the
death of the Participant while still employed. Should
a Participant's Separation from Service occur under any
circumstances other than those set forth in (i), (ii)
or (iii), his vested interest in his Company Stock And
Other Investments Accounts shall be determined based on
his completed years of Vesting Service as follows:
Years of Vested Forfeited
Vesting Service Percentage Percentage
0-5 0% 100%
5 or more 100% 0%
The provisions of this subsection (a) shall be applicable to
Plan Years commencing on and after January 1, 1989.
(b) Breaks in Service. In the case of a Participant who
has five (5) or more consecutive one (1) year Breaks in
Service, all Service after such Breaks in Service shall
be disregarded for the purpose of vesting the
Participant's Company Stock and Other Investments
Accounts attributable to Company contributions that
accrued before such Breaks in Service. Such
Participant's pre-break Service will count in vesting
his post-break Company Stock and Other Investments
Accounts under the Plan only if either:
(i) Such Participant has any nonforfeitable interest
in his Company Stock and Other Investments
Accounts under the Plan at the time of Separation
from Service; or
(ii) Upon returning to Service, the number of
consecutive one-year Breaks in Service is less than
the number of Years of Vesting Service.
Separate accounts will be maintained for the Participant's
pre-break and post-break account balances. Both accounts will
share in allocations under Sections 7.8 and 7.9.
Upon Separation from Service of such a Participant, he shall
be entitled to the vested interest in his Company Stock and
Other Investments Accounts under the Plan, based upon his
completed years of Vesting Service. The nonvested portion, if
any, shall be forfeited and reallocated to the Company Stock
and Other Investments Accounts of all other Participants, as
provided in subsections (b) through (g).
(c) Application of Forfeitures to Company Stock Account.
The amount of any forfeiture hereunder shall first be
deducted from the Participant's Other Investments
Account. If forfeiture of the Participant's Other
Investments Account is not sufficient to reduce the
fair market value of the vested portion of the Adjusted
Balances of his accounts to the percentage of the total
value of his accounts determined under this Section
7.7, the remainder of the forfeiture shall be deducted
from the Participant's Company Stock Account. If a
Participant's Company Stock Account includes more than
one class of Company Stock, the forfeiture shall
consist of the same proportion of each class of stock.
All forfeitures shall be applied in the manner
described in subsections (c) through (g).
(d) Cash-Out Distributions to Partially-Vested
Participants/Restoration of Forfeited Accrued Benefits.
If, pursuant to Article VIII, a partially-vested
Participant receives a cash-out distribution before he
incurs a forfeiture break in service (as defined in
subsection (f), the cash-out distribution will result
in an immediate forfeiture of the nonvested portion of
the Participant's Company Stock and Other Investments
Accounts. A partially vested Participant is a
Participant whose nonforfeitable percentage of his
Company Stock and Other Investments Accounts determined
under Section 7.7 (or Section 2.38, whichever is
applicable) is less than one hundred percent (100%). A
cash-out distribution is a distribution of the entire
present value of the Participant's nonforfeitable
balance in his Company Stock and Other Investments
Accounts.
(i) Restoration and Conditions Upon Restoration. A
partially-vested Participant who is re-employed
after receiving a cash-out distribution of the
nonforfeitable percentage of his Company Stock
and Other Investments Accounts may repay to the
Trustee the amount of the cash-out distribution,
unless the Participant no longer has a right to
restoration under the requirements of this
subsection (c). If a partially-vested
Participant makes the cash-out distribution
repayment, the Committee, subject to the
conditions of this subsection (c), shall restore
his Company Stock and Other Investments Accounts
to the same dollar amount as the dollar amount of
his Company Stock and Other Investments Accounts
on the last day of the Plan Year, or other
applicable Valuation Date, immediately preceding
the date of the cash-out distribution, unadjusted
for any adjustments for earnings and
losses occurring subsequent to such last day of
the Plan Year or other Valuation Date.
Restoration of the Participant's Company Stock
and Other Investments Accounts shall include
restoration of all Section 411(d)(6) protected
benefits with respect to that Company Stock and
Other Investments Accounts, in accordance with
applicable Treasury Regulations. The Committee
shall not restore a re-employed Participant's
Company Stock and Other Investments Accounts
under this subsection (c) if:
(A) Five (5) years have elapsed since the
Participant's first re-employment date
with the Company following the
cash-out distribution; or
(B) The Participant incurred a forfeiture
break in service (as defined in
subsection (f)). This condition also
applies if the Participant makes
repayment within the Plan Year in
which he incurs the forfeiture break
in service and that forfeiture break
in service would result in a complete
forfeiture of the amount the Committee
otherwise would restore.
(ii) Time and Method of Restoration. If neither of
the two conditions specified in subsection (c)(i)
preventing restoration of the Participant's
Company Stock and Other Investments Accounts
applies, the Committee will restore the
Participant's Company Stock and Other Investments
Account as of the last day of the Plan Year
coincident with or immediately following the
repayment. To restore the Participant's Company
Stock and Other Investments Accounts, the
Committee, to the extent necessary, shall
allocate to the Participant's Company Stock and
Other Investments Accounts:
(A) First, the amount, if any, of
forfeitures the Committee would
otherwise allocate under Section 7.4.
(B) Second, the amount, if any, of the
adjustments for earnings or losses for
the Plan Year; and
(C) Third, the Company's contribution for
the Plan Year, to the extent made
under a discretionary formula.
To the extent the amounts described in
paragraphs (A), (B) and (C) are
insufficient to enable the Committee
to make the required restoration, the
Company shall contribute, without
regard to any requirement or condition
of Article VI, the additional amount
necessary to enable the Committee to
make the required restoration. If, for
a particular Plan Year, the Committee
must restore the Company Stock and
Other Investments Accounts of more
than one re-employed Participant, then
the Committee will make the
restoration allocation(s) to each such
Participant's Company Stock and Other
Investments Accounts in the same
proportion that a Participant's
restored amount for the Plan Year
bears to the restored amount for the
Plan Year of all re-employed
Participants. The Committee shall not
take into account the allocation under
this Section 7.7 in applying the
limitation on allocations under
Sections 7.5 and 7.6.
(iii) Zero Percent (0%) Vested Participant. The deemed
cash-out rule applies to a zero percent (0%)
vested Participant. A zero percent (0%) vested
Participant is a Participant whose Company Stock
and Other Investments Accounts are entirely
forfeitable at the time of his Separation from
Service. Under the deemed cash-out rule, the
Committee shall treat the zero percent (0%)
vested Participant as having received a cash-out
distribution on the date of the Participant's
Separation from Service or, if the Participant's
Company Stock and Other Investments Accounts are
entitled to an allocation of Company
contributions for the Plan Year in which he
incurs a Separation from Service, on the last day
of that Plan Year. For purposes of applying the
restoration provisions of this Section 7.7 the
Committee shall treat the zero percent (0%)
vested Participant as repaying his cash-out
"distribution" on the first date of his re-
employment with the Company.
(e) Segregated Account for Repaid Amount. Until the
Committee restores the Participant's Company Stock and
Other Investments Accounts, as provided in subsection
(c), the Trustee will invest the cash-out amount the
Participant has repaid in a segregated account
maintained solely for that Participant. To the extent
the segregated account includes assets other than
Company Stock, the Trustee shall invest the amount in
the Participant's segregated account in federally
insured interest bearing savings accounts(s) or time
deposit(s) (or a combination of both), or in other
fixed income investments. Until commingled with the
balance of the Fund on the date the Committee restores
the Participant's Company Stock and Other Investments
Accounts, the Participant's segregated account remains
a part of the Fund, but it alone shares in any income
it earns and it alone bears any expense or loss it
incurs. Unless the repayment qualifies as a rollover
contribution, the Committee will direct the Trustee to
repay to the Participant as soon as administratively
practicable the full amount of the Participant's
segregated account if the Committee determines either
of the conditions of subsection (c) prevent restoration
as of the applicable Valuation Date, notwithstanding
the Participant's repayment.
(f) Year of Service - Vesting. Except as otherwise provided in
Section 2.37, regarding a Participant's initial vesting
computation period, for purposes of vesting under Sections
2.38 and 7.7, a Year of Service means any Plan Year during
which an Employee completes not less than one thousand
(1,000) Hours of Service.
(g) Included Years of Service - Vesting. For the sole
purpose of determining a Participant's nonforfeitable
percentage of his Company Stock and Other Investments
Accounts attributable to Company contributions which
accrued for his benefit prior to a forfeiture break in
service, the Plan disregards any year of Service after
the Participant first incurs a forfeiture break in
service. The Participant incurs a forfeiture break in
service when he incurs five (5) consecutive one-year
Breaks in Service.
(h) Forfeiture Occurs. A Participant's forfeiture, if any,
of the portion of his Company Stock and Other
Investments Accounts attributable to Company
contributions shall occur under the Plan on the earlier
of:
(i) The last day of the Plan Year in which the
Participant first incurs a forfeiture break in
service; or
(ii) The date the Participant receives a cash-out
distribution.
7.8 Allocation of Dividends. All cash dividends on Company Stock held
by the Plan shall constitute Trust income and shall be allocated in accordance
with the provisions of Section 7.9 except to the extent cash dividends on
Company Stock acquired with the proceeds of a Loan are used to pay principal or
interest on a Loan as provided by Treasury Regulation ss.54.4975-11(d)(3) or are
distributed to Participants in accordance with the provisions of Section 8.6.
Dividends on Company Stock allocated to a Participant's Company Stock Account
may be utilized to pay principal or interest on a Loan so long as such Account
receives an allocation of Company Stock with a fair market value, as determined
under Section 5.2, that is not less than the amount of the dividend that would
have been allocated to the Participant's Other Investments Account but for the
use of the dividends to make the payment on the Loan. Such allocation of Company
Stock must be made for the Plan Year in which the dividends would otherwise have
been allocated to the Participant's Other Investments Account.
7.9 Net Income (or Loss) of the Trust. The net income (or loss) of the
Trust for each Plan Year will be determined as of each Valuation Date. Prior to
the allocations of Company contributions and forfeitures for the Plan Year, each
Participant's share of the net income (or loss), other than stock dividends on
Company Stock, will be allocated to his Other Investments Account in the ratio
which the Adjusted Balance of all of the Participant's accounts on the preceding
Anniversary Date (reduced by the amount of any distribution from such accounts)
bears to the sum of such balances for all Participants as of that date. The net
income (or loss) of the Trust includes (i) the increase (or decrease) in the
fair market value of the Trust Fund (other than Company Stock), (ii) interest
income, and (iii) except as provided in Section 7.8, dividends and other income
(or loss) attributable to the Trust Fund since the preceding Valuation Date. Net
income (or loss) of the Trust shall not include (i) Company contributions, (ii)
forfeitures, or (iii) any gains or losses upon sales or exchanges of unallocated
Company Stock. Net income (or loss) attributable to any Limitation Account
established under Section 7.5 shall be allocated to the Other Investments
Accounts of Participants in the manner set forth in the second sentence of this
Section, and the Limitation Account shall not share in the allocation of net
income (or loss) of the Trust under this Section 7.9.
The provisions of Section 7.9 shall be applicable to Plan Years
commencing on and after January 1, 1989.
7.10 Accounting for Allocations. The Committee shall adopt accounting
procedures for the purpose of making the allocations, valuations and adjustments
to Participants' accounts provided for in this Article VII. Except as provided
in Treasury Regulation Section 54.4975-11(d), Company Stock acquired by the Plan
shall be accounted for as provided under Treasury Regulation ss.1.402(a)-1(b),
allocations of Company Stock shall be made separately for each class of stock,
and the Committee shall maintain adequate records of the cost basis of all
shares of Company Stock allocated to each Participant's Rollover and Company
Stock Accounts. From time to time, the Committee may modify the accounting
procedures for the purpose of achieving equitable and nondiscriminatory
allocations among the accounts of Participants in accordance with the general
concepts of the Plan and the provisions of this Section. Valuations of Trust
Assets shall be made at fair market value, as described in Section 5.2.
7.11 Benefits to Minors and Incompetents.
(a) Minors. In case any person entitled to receive payment under
the Plan shall be a minor, the Committee, in its discretion,
may dispose of such amount in any one or more of the
following ways:
(i) By payment thereof directly to such minor;
(ii) By application thereof for the benefit of such
minor; or
(iii) By payment thereof to either parent of such minor
or to any adult person with whom such minor may
at the time be living or to any person who shall
be legally qualified and shall be acting as
guardian of the person or the property of such
minor; provided only that the parent or adult
person to whom any amount shall be paid shall
have advised the Committee in writing that he
will hold or use such amount for the benefit of
such minor.
(b) Incompetents. In the event that it shall be found that
a person entitled to receive payment under the Plan is
physically or mentally incapable of personally
receiving and giving a valid receipt for any payment
due (unless prior claim therefor shall have been made
by duly qualified committee or other legal
representative), such payments may be made to the
spouse, son, daughter, parent, brother, sister, or
other person deemed by the Committee to have incurred
expense for such person otherwise entitled to payment.
ARTICLE VIII
DISTRIBUTION OF BENEFITS
8.1 Time of Payment of Benefits. The Committee shall direct the Trustee
to commence distribution of the nonforfeitable portion of the Participant's
Company Stock and Other Investments Accounts in accordance with the provisions
of this Section 8.1. A Participant must consent, in writing, to any distribution
required under this Section 8.1 if the present value of the nonforfeitable
portion of the Participant's Company Stock and Other Investments Accounts, at
the time of the distribution to the Participant, exceeds Three Thousand Five
Hundred Dollars ($3,500) and the Participant has not attained his Normal
Retirement Age. A distribution date under this Article VIII, unless otherwise
specified under the Plan, is on or as soon as administratively practicable
following a distribution date. For purposes of the consent to distribution
requirements under this Article VIII, if the present value of the nonforfeitable
portion of the Participant's Company Stock and Other Investments Accounts, at
the time of any distribution, exceeds Three Thousand Five Hundred Dollars
($3,500), the Committee shall treat that present value as exceeding Three
Thousand Five Hundred Dollars ($3,500) for purposes of all subsequent
distributions to the Participant. If a distribution is one to which Sections
401(a)(11) and 417 of the Internal Revenue Code do not apply, such distribution
may commence less than thirty (30) days after the notice required under Section
1.411(a)(11)(c) of the Treasury Regulations is given, provided that:
(i) The Committee clearly informs the Participant that
the Participant has a right to a period of at least
thirty (30) days after receiving the notice to
consider the decision of whether or not to elect a
distribution (and, if applicable, a particular
distribution option); and
(ii) The Participant, after receiving the notice,
affirmatively elects a distribution.
(a) Termination of Employment For a Reason Other Than
Death, Permanent and Total Disability or Retirement.
In the case of a Participant who terminates employment
with the Company for a reason other than death, Total
and Permanent Disability or retirement on or after
attaining his Normal Retirement Age, the Committee
shall direct the Trustee to commence distribution of
the Participant's Company Stock and Other Investments
Accounts as follows:
(i) Participant's Nonforfeitable Company Stock and
Other Investments Accounts do not Exceed $3,500.
In a single sum on the first distribution date
provided in Section 8.4, but in no event later
than the sixtieth (60th) day following the close
of the Plan Year in which the Participant attains
his Normal Retirement Age. If the Participant has
attained his Normal Retirement Age when his
Separation from Service occurs, the distribution
under this paragraph will occur no later than the
sixtieth (60th) day following the close of the
Plan Year in which the Participant's Separation
from Service occurs.
(ii) Participant's Nonforfeitable Company Stock and
Other Investments Accounts Exceed $3,500. Unless
a later distribution date is elected by the
Participant, on the first distribution date
provided in Section 8.4. In the absence of an
election by the Participant, the Committee will
direct the Trustee to distribute the
nonforfeitable portion of the Participant's
Company Stock and Other Investments Accounts in a
single sum on the sixtieth (60th) day following
the close of the Plan Year in which the latest of
the following events occurs: (A) the Participant
attains his Normal Retirement Age or (B) the
Participant incurs a Separation from Service.
(iii) Total and Permanent Disability. If the Participant incurs a
Separation from Service because of Total and Permanent
Disability, in a single sum, on the first distribution date
provided in Section 8.4, subject to the notice and consent
requirements of this Article VIII and to the applicable
mandatory commencement dates described in paragraph (i) or
(ii).
(b) Required Beginning Date. If any distribution date
described under subsection (a), either by Plan
provision or by Participant election (or nonelection),
is later than the Participant's required beginning date
(as defined below), the Committee instead shall direct
the Trustee to make distribution under this Section 8.1
on the Participant's required beginning date. A
Participant's required beginning date is the April 1
following the close of the calendar year in which the
Participant attains age seventy and one-half (70-1/2).
However, if the Participant, prior to incurring a Separation
from Service, attained age seventy and one-half (70-1/2) by
January 1, 1988, and for the five (5) Plan Year period ending
in the calendar year in which he attained age seventy and
one-half (70-1/2) and for all subsequent years, the
Participant was not a more than five percent (5%) owner, the
required beginning date shall be the April 1 following the
close of the calendar year in which the Participant incurs a
Separation from Service or, if earlier, the April 1 following
the close of the calendar year in which the Participant
becomes a more than five percent (5%) owner. Furthermore, if
a Participant attains age seventy and one-half (70-1/2)
during 1988, the Participant does not incur a Separation from
Service prior to January 1, 1989, and for the five (5) Plan
Year period ending in 1988, the Participant was not a more
than five percent (5%) owner, his required beginning date is
April 1, 1990. A mandatory distribution at the Participant's
required beginning date will be in a single sum.
(c) Death of the Participant. The amount of the death
benefit under this Plan shall be the Adjusted Balance
of the Participant's Company Stock and Other
Investments Accounts at the time of the Participant's
death. The Committee shall direct the Trustee to pay
the deceased Participant's Company Stock and Other
Investments Accounts at the time elected by his
designated Beneficiary. In the absence of an election,
the Committee shall direct the Trustee to distribute
the Participant's Company Stock and Other Investments
Accounts in a single sum on the first distribution date
provided in Section 8.4 or, if later, the first
distribution date following the date the Committee
receives notification of or otherwise confirms the
Participant's death.
If all or any portion of the Participant's Company Stock and Other Investments
Accounts is payable to his surviving spouse, the surviving spouse may elect to
receive distribution at any time this Article VIII would permit a Participant to
receive a distribution.
8.2 Method of Payment. A Participant, Inactive Participant or
Beneficiary will receive all distributions by payment in a single sum.
8.3 Property Distributed. Distribution of the vested portion of the
Adjusted Balance of a Participant's Company Stock and Other Investments Accounts
will be made in whole shares of Company Stock or in cash in the following
manner: at least thirty (30) but not more than ninety (90) days prior to the
date specified by the Committee for distribution, the Participant or Beneficiary
entitled to such distribution will be notified in writing by the Committee of
his right to demand that all or any part of the distribution be made in whole
shares of Company Stock, except for cash in lieu of fractional shares. The
Participant or Beneficiary, as the case may be, may, within fifteen (15) days
following the date of the Committee's notification of such right, notify the
Committee in writing of his demand that all or a specified portion of the
distribution be made in whole shares of Company Stock. If the Participant or
Beneficiary, as the case may be, exercises such right of demand, the balance in
the Participant's Other Investments Account, to the extent necessary to comply
with such demand, will be used to acquire whole shares of Company Stock for
distribution at the then fair market value (as determined by the Committee as
set forth in Section 5.2), with the value of fractional shares distributed in
cash. In the absence of the timely exercise of such right as set forth above, or
if the Participant demands that less than all of such distribution be made in
whole shares of Company Stock, distribution of the vested portion of the
Adjusted Balance of a Participant's accounts, or the portion thereof not
demanded in whole shares of Company Stock, will be made in whole shares of
Company Stock or in cash or partially in shares of Company Stock and partially
in cash, as determined by the Committee. Notwithstanding the foregoing
provisions of this Section 8.3, a Participant shall not have the right to
specify his benefit be distributed in the form of Company Stock to the extent
the Participant has diversified the investment of his or her Company Stock
Account in assets other than Company Stock under Article X.
8.4 Valuation of Company Stock and Other Investments Accounts.
Subject to the mandatory distribution provisions of Section 8.1, valuation of
the Participant's Company Stock and Other Investments Accounts for purposes of
determining the amount to be distributed shall be made as follows:
(a) Termination of Employment for a Reason Other Than
Death, Total and Permanent Disability or Retirement.
In the case of a Participant who terminates employment
with the Company for any reason other than death,
Total and Permanent Disability or retirement on or
after attaining Normal Retirement Age, the
Participant's Company Stock and Other Investments
Accounts shall be valued as of the Valuation Date
coinciding with or immediately following the date of
the Participant's termination of employment, and such
Company Stock and Other Investments Accounts shall be
entitled to share in the allocation of any
adjustments, in the manner prescribed in Article VII,
attributable to the Participant's Company Stock and
Other Investments Accounts for the Plan Year in which
such Separation from Service occurs.
(b) Termination of Employment Due to Death, Total and
Permanent Disability or Retirement. In the case of a
Participant who terminates employment with the Company
due to death, Total and Permanent Disability or
retirement upon or after attaining his Normal
Retirement Age, the Participant's Company Stock and
Other Investments Accounts shall be valued as of the
Valuation Date coinciding with or immediately
following the date of the Participant's termination of
employment, and such Company Stock and Other
Investments Accounts shall be entitled to share in the
allocation of Company contributions and any
adjustments, in the manner prescribed in Article VII,
attributable to the Participant's Company Stock and
Other Investments Accounts for the Plan Year in which
such Separation from Service occurs.
8.5 Minimum Required Distributions. Notwithstanding any provision of
this Plan to the contrary, unless a Participant otherwise elects, the payment of
benefits under the Plan to the Participant shall not commence later than the
sixtieth (60th) day after the latest of the close of the Plan Year in which (i)
the Participant attains Normal Retirement Age, (ii) the tenth anniversary of the
year in which the Participant commenced participation under the Plan, or (iii)
the Participant terminates employment with the Company.
8.6 Dividends. As determined by the Committee, in its sole
discretion, cash dividends received by the Trustee on Company Stock held by the
Plan may be utilized in one or more of the following ways:
(a) Distributed to Participants (and former Participants
or Beneficiaries who have not received a distribution
of the Adjusted Balance of their Accounts and who are
entitled to receive an allocation of Trust income in
accordance with the provisions of Sections 7.8 and 7.9
and this Article VIII) in a nondiscriminatory manner
who are or were one hundred percent (100%) vested in
the Adjusted Balance of their Company Stock and Other
Investments Accounts on the record date for payment of
the dividend, provided that (A) any current payment
determined by the Committee to be paid to such
Participants in cash must be made during the taxable
year and paid directly to Participants or paid to the
Plan and distributed in cash by the Plan to the
Participants not later than ninety (90) days after the
close of the Plan Year in which the dividends are paid
and (B) payments under this Section 8.7 shall only be
made pursuant to a written election made by an
eligible Participant on forms furnished by the
Committee which provide that one hundred percent
(100%) of the amount of the dividends allocable to the
Company Stock in the Participants Company Stock
Account determined to be distributed will be received
by the Participant and no portion of such
Participant's allocable share of such dividends will
be allocated to his Other Investments Account. An
election by a Participant to receive less than one
hundred percent (100%) of his allocable share of
dividends or the failure by a Participant to make an
election hereunder will be treated by the Committee as
an election to have one hundred percent (100%) of
such dividends allocated to his Other Investments
Account. In the case of a Participant who is not one
hundred percent (100%) vested in the Adjusted Balance
of his Company Stock and Other Investments Accounts on
the record date for payment of the dividend, such
Participant's allocable share of the dividends shall
automatically be allocated to his Other Investments
Account. Any payment of cash dividends to
Participants on shares of Company Stock shall be
accounted for as if the Participant or former
Participant receiving such dividends was the direct
owner of such shares of Company Stock and such payment
shall not be treated as a distribution under the Plan.
(b) Utilized to pay principal or interest on a Loan.
Effective for cash dividends paid after October 22,
1986, cash dividends on Company Stock which have been
allocated to the Company Stock Accounts of
Participants on the record date for such dividends may
subsequently be utilized to pay principal or interest
on a Loan only if the Company Stock Accounts of
Participants to which such dividends would have been
allocated receive an allocation of Company Stock with
a fair market value, as determined in accordance with
Section 5.2, that is not less than the amount of the
dividend that would have been allocated to such
Company Stock Accounts but for the loan repayment.
Such allocation to Participants' Company Stock
Accounts shall be made in the Plan Year in which the
dividend would otherwise have been allocated. The
preceding provisions of this subsection (b) shall not
apply to cash dividends on Company Stock which have
not been allocated to Participants' Company Stock
Accounts on or before the record date for such
dividend.
(c) Allocated to the Other Investments Accounts of Participants
who are entitled, in accordance with the provisions of
Sections 7.8 and 7.9 and this Article VIII, to receive an
allocation of Trust income for the Plan Year in which the
dividend is paid.
8.7 Distributions Under Qualified Domestic Relations Orders. Nothing
contained in this Plan shall prevent the Trustee, in accordance with the
direction of the Committee, from complying with the provisions of a qualified
domestic relations order (as defined in Section 414(p) of the Code). This Plan
specifically permits distribution to an alternate payee under a qualified
domestic relations order at any time, irrespective of whether the Participant
has attained his earliest retirement age (as defined under Section 414(p) of the
Code) under the Plan. A distribution to an alternate payee prior to the
Participant's attainment of his earliest retirement age is available only if:
(a) the order specifies distribution at that time or permits an agreement
between the Plan and the alternate payee to authorize an earlier distribution
and (b) if the present value of the alternate payee's benefits under the Plan
exceeds Three Thousand Five Hundred Dollars ($3,500), the alternate payee
consents to any distribution which occurs prior to the participant's attainment
of his earliest retirement age. Nothing in this Section 8.8 shall permit a
Participant to receive a distribution at a time not otherwise permitted under
the Plan nor does it permit the alternate payee to receive a form of payment not
permitted under the Plan.
8.8 Direct Rollovers.
(a) This Section 8.5 applies to distributions from
the Plan made on or after January 1, 1993.
Notwithstanding any provision of the Plan to the
contrary that would otherwise limit a
distributee's election under this Section 8.5, a
distributee may elect, at the time and in the
manner prescribed by the Committee, to have any
portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified
by the distributee in a direct rollover.
(b) Definitions.
(i) Eligible rollover distribution. An eligible
rollover distribution is any distribution of
all or any portion of the balance to the
credit of the distributee, except that an
eligible rollover distribution does not
include: any distribution that is one of a
series of substantially equal periodic
payments (not less frequently than annually)
made for the life (or life expectancy) of
the distributee or the joint lives (or joint
life expectancies) of the distributee and
the distributee's designated beneficiary, or
for a specified period of ten years or more;
any distribution to the extent such
distribution is required under section
401(a)(9) of the Code; and the portion of
any distribution that is not includible in
gross income (determined without regard to
the exclusion for net unrealized
appreciation with respect to Company Stock).
(ii) Eligible retirement plan. An eligible retirement
plan is an individual retirement account
described in Section 408(a) of the Code, an
individual retirement annuity described in
Section 408(b) of the Code, an annuity plan
described in Section 403(a) of the Code, or a
Defined Benefit or Defined Contribution Plan that
accepts the distributee's eligible rollover
distribution. However, in the case of an eligible
rollover distribution to the surviving spouse, an
eligible retirement plan is an individual
retirement account or individual retirement
annuity.
(iii) Distributee. A distributee includes a Participant
or Inactive Participant. In addition, the
surviving spouse of the Participant or Inactive
Participant and the Participant or Inactive
Participant's spouse or former spouse who is the
alternate payee under a qualified domestic
relations order, as defined in Section 414(p) of
the Code, are distributees with regard to the
interest of the spouse or former spouse.
(iv) Direct Rollover. A direct rollover is a
payment by the Plan to the eligible
retirement plan specified by the
distributee.
ARTICLE IX
VOTING COMPANY STOCK
9.1 Voting Company Stock.
(a) A Participant, Inactive Participant or Beneficiary shall be
entitled to direct the Trustee as to the manner in which
voting rights of shares of the Company's common stock which
is acquired by the Trust and allocated to his Company Stock
Accounts are to be exercised with respect to all matters
with regard to which the Company Stock is entitled to vote.
(b) The Committee shall, at least thirty (30) days prior
to each meeting of holders of Company stock, provide
each Participant entitled under this subsection (a) to
direct the voting of Company stock, with notice of
such meeting and of those matters which at the time of
the mailing of such notice are subject to
direction by a Participant, as set forth in this
Section 9.1, and are expected to be presented at such
meeting for action by holders of Company stock,
together with an appropriate form with which the
Participant can direct the manner of voting on such
matters. If instructions on such matters are received
by the Committee with respect to any Company stock at
least ten (10) days prior to such meeting, the
Committee shall instruct the Trustee to vote the
allocated shares of Company Stock with respect to
which such instructions were received in accordance
with such instructions.
(c) The Committee shall instruct the Trustee as to the
manner of voting any Company stock in a Company Stock
Account of a Participant with respect to such matters
and as to which no such instructions have been
received and (ii) Company Stock held in the suspense
account provided for in Section 5.3 and in the Company
Stock Contribution Account. The Committee shall
direct the Trustee to vote the shares of Company Stock
specified in the preceding sentence in the same
proportion and in the same manner as the shares
allocated to Company Stock Accounts with respect to
which timely and proper instructions by Participants
have been received.
9.2 Tender Offers. If the Plan receives a written offer or offer for
tenders ("Offer") to purchase Company Stock held by the Plan, the Trustee shall
not sell or tender any shares of Company Stock held by the Plan unless
instructed to do so by the Participants, as provided below. A Participant shall
be entitled to direct the Trustee as to whether the Company Stock allocated to
his Company Stock Account will be tendered or not tendered in response to the
Offer.
Upon receipt of an Offer, the Committee shall, as soon as
practicable, notify Participants of the Offer and the terms and conditions
thereof. Such notification may include the Company's position with respect to
the Offer and an appropriate form on which Participants can direct whether or
not, and the conditions, if any, upon which, the Company Stock allocated to a
Participant's Company Stock Account shall be sold or tendered. If no
instructions are received from a Participant within ten (10) days from the date
of notification, the shares of Company Stock allocated to his Company Stock
Account shall not be sold or tendered and it shall be conclusively presumed that
such Participant elects not to have Company Stock allocated to his Company Stock
Account sold or tendered. The Participants may also instruct the Trustee to
revoke their tender and withdraw any tender previously made.
ARTICLE X
DIVERSIFICATION OF INVESTMENT IN COMPANY STOCK
The provisions of this Article X shall apply to all shares of Company
stock acquired by the Plan. Provided, however, the provisions of this Article X
shall not apply to the extent the Adjusted Balance of a Participant's Company
Stock Account as of the Valuation Date immediately preceding any year during the
Qualified Election Period does not exceed Five Hundred Dollars ($500).
10.1 Election by Qualified Participant. Each Qualified Participant
shall be permitted to direct the Committee as to the investment of a portion of
the Participant's Company Stock Account within ninety (90) days after the last
day of each Plan Year during the Participant's Qualified Election Period. Such
election may be modified, revoked or superceded by a new election at any time
during such ninety (90) day election period. The portion of a Qualified
Participant's Company Stock Account subject to such diversification election in
each of the years during such Qualified Election Period, other than the last
year of such period, shall be equal to:
(a) Twenty-five percent (25%) of the total number of whole
shares of Company Stock acquired by or contributed to the
Plan that have ever been allocated to the Qualified
Participant's Company Stock Account and which are subject
to this election; less
(b) The number of whole shares of Company Stock previously
distributed, transferred or diversified pursuant to this
Section 10.1. With respect to the last year of the
Qualified Election Period, "fifty percent (50%)" shall be
substituted for "twenty-five percent (25%)" in determining
the amount subject to the diversification election.
10.2 Method of Directing Investment. A Qualified Participant's
direction shall be provided to the Committee in writing, shall be effective no
later than one hundred eighty (180) days after the close of the Plan Year in
which the direction applies and shall specify which, if any, of the options set
forth in Section 10.3 the Qualified Participant elects.
10.3 Investment Options.
(a) At the election of a Qualified Participant, the Plan
shall distribute the portion of the Participant's
Company Stock Account that is covered by the election
within ninety (90) days after the last day of the
period during which the election can be made. Such
distribution shall be subject to the requirements of
Section 6.4, concerning put options, as would
otherwise apply to a distribution of Company Stock
from the Plan. Such distribution shall also be made
in accordance with the provisions of Section 8.3,
concerning the Committee's ability to direct that the
Participant receive his distribution in the form of
cash. This subsection (a) shall apply notwithstanding
any other provisions of the Plan other than such
provisions as require the consent of the Participant
to a distribution of the Adjusted Balance of the
Participant's vested accounts under the Plan in excess
of Three Thousand Five Hundred Dollars ($3,500). If
the Participant does not provide his consent to the
distribution in a manner which satisfies the
requirements of Section 8.1, such amount shall be
retained in the Plan.
(b) In lieu of distribution under subsection (a), a
Qualified Participant who has the right to receive a
distribution under subsection (a) may direct the Plan
to transfer the portion of the Participant's Company
Stock Account that is covered by the election to
another qualified plan of the Company which accepts
such transfers, provided that such plan permits
Employee-directed investment and does not invest in
Company Stock to a substantial degree. Such transfers
shall be made no later than ninety (90) days after the
last day of the period during which the election can
be made.
ARTICLE XI
FUNDING AND PLAN ADMINISTRATION
11.1 Funding Policy. The funding policy for the Plan shall be
determined by the Company from time to time as required by ERISA. The Company
shall also establish investment guidelines for the Plan which are consistent
with the objectives of the Plan and the requirements of ERISA. At least annually
the Company shall review such investment guidelines. The Committee shall make a
written record of all actions taken with respect to establishing and reviewing
such investment guidelines. The Committee shall from time to time determine the
cash requirements of the Plan and communicate the same to the Trustee or
investment manager. The Trustee or investment manager shall make investments
consistent with the investment guidelines and the cash requirements of the Plan,
as advised by the Committee.
11.2 Fiduciaries.
(a) Each Fiduciary who is allocated specific duties or
responsibilities under the Plan or any Fiduciary who
assumes such a position with the Plan shall discharge
his duties solely in the interest of the Participants,
Inactive Participants and Beneficiaries and for the
exclusive purpose of providing such benefits as
stipulated herein to such Participants, Inactive
Participants and Beneficiaries, or defraying
reasonable expenses of administering the Plan. Each
Fiduciary, in carrying out such duties and
responsibilities, shall act with the care, skill,
prudence, and diligence under the circumstances then
prevailing that a prudent man acting in a like
capacity and familiar with such matters would use in
exercising such authority or duties.
(b) A Fiduciary may serve in more than one Fiduciary capacity
and may employ one or more persons to render advice with
regard to his Fiduciary responsibilities. If the Fiduciary
is serving as such without compensation, all expenses
reasonably incurred by such Fiduciary shall be reimbursed
by the Company or, at the Committee's direction, from the
Trustee.
(c) A Fiduciary may delegate any of his responsibilities
for the operation and administration of the Plan. In
limitation of this right, a Fiduciary may not delegate
any responsibilities as contained herein relating to
the management or control of the Trust Fund except
through the employment of an investment manager as
provided in Section 11.4 and in the Trust Agreement
relating to the Trust Fund.
11.3 Company.
(a) The Company, in establishing and maintaining the Plan
for the benefit of its Employees, and the Employees of
any Affiliated Company, of necessity retains control
of the operation and administration of the Plan. The
Company, in accordance with specific provisions of the
Plan, has, as herein indicated, delegated certain of
these rights and obligations to the Trustee and the
Committee and these parties shall be solely
responsible for these, and only these, delegated
rights and obligations.
(b) The Company shall supply such full and timely information
for all matters relating to the Plan as (i) the Committee,
(ii) the Trustee, (iii) the accountant, and (iv) any other
agents engaged on behalf of the Plan by the Company may
require for the effective discharge of their respective
duties.
11.4 Trustee. The Company shall appoint a bank or trust company or an
individual or individuals to act as Trustee or Trustees under the Trust
Agreement. The Trustee shall serve at the pleasure of the Company and its powers
and responsibilities shall be set forth in a Trust Agreement entered into
between the Company and the Trustee. No person who receives full-time pay from
the Company shall receive compensation paid by the Trust Fund except for
reimbursement of expenses properly incurred. All contributions made pursuant to
the Plan shall be held by the Trustee in accordance with the terms of the Trust
Agreement and Section 4.2 of the Plan for the exclusive benefit of those
Employees who are Participants under the Plan, including Inactive Participants
and their Beneficiaries, and shall be applied to provide benefits under the Plan
and to pay expenses of administration of the Plan and the Trust, to the extent
that such expenses are not otherwise paid. The Company may appoint an investment
manager or managers to manage any assets of the Plan. Likewise, with the written
consent of the Company, the Trustee may appoint an investment manager. In either
such event, the responsibility for investment decisions shall be clearly
allocated in writing between the investment manager and the Trustee and neither
shall be responsible for the action or inaction of the other.
11.5 Benefits Committee.
(a) The Company shall appoint a committee of not less than
three (3) persons to hold office at the pleasure of
the Company, such committee to be known as the
Benefits Committee ("Committee"). No compensation
shall be paid members of the Committee from the Trust
Fund for service on such Committee. The Committee
shall choose from among its members a chairman and a
secretary. Any action of the Committee shall be
determined by the vote of a majority of its members.
Either the chairman or the secretary may execute any
certificate or written direction on behalf of the
Committee. If the Company shall fail to appoint the
Committee, then the Company shall constitute the plan
administrator of the Plan and all references to the
Committee under the Plan shall be deemed for all
purposes to refer to the Company.
(b) The Committee shall hold meetings upon such notice, at such
place or places and at such time or times as the Committee
may from time to time determine. A majority of the members
of the Committee at the time in office shall constitute a
quorum for the transaction of business.
(c) All disbursements by the Trustee, except for the
expenses properly attributable to the administration
of the Plan or Trust or the reimbursement of
reasonable expenses at the direction of the Company,
as provided herein, shall be made upon, and in
accordance with, the written directions of the
Committee. When the Committee is required in the
performance of its duties hereunder to administer or
construe, or to reach a determination, under any of
the provisions of the Plan, it shall do so on a
uniform, equitable and nondiscriminatory basis.
(d) The Committee shall establish rules and procedures to
be followed by the Participants, Inactive Participants
and Beneficiaries in filing applications for benefits
and for furnishing and verifying proofs necessary to
establish age and any other matters required in order
to establish their rights to benefits in accordance
with the Plan. Additionally, the Committee shall
establish accounting procedures for the purpose of
making the allocations, valuations and adjustments to
Participants' accounts. Should the Committee
determine that the strict application of its
accounting procedures will not result in an equitable
and nondiscriminatory allocation among the accounts of
Participants, it may modify its procedures for the
purpose of achieving an equitable and
nondiscriminatory allocation in accordance with the
general concepts of the Plan, provided, however, that
such adjustments to achieve equity shall not reduce
the vested portion of a Participant's Company Stock
and Other Investments Accounts.
(e) The Committee may employ such counsel, accountants, and
other agents as it shall deem advisable. The Company shall
pay, or cause to be paid from the Trust Fund, the
reasonable compensation of such counsel, accountants, and
other agents and any other reasonable expenses incurred by
the Committee in the administration of the Plan and Trust.
(f) All members of the Committee shall serve until their
resignation or dismissal by the Board and vacancies shall
be filled in the same manner as the original appointments.
The Board may dismiss any member of the Committee with or
without cause.
11.6 Claims Procedures.
(a) The Committee shall receive all applications for
benefits. Upon receipt by the Committee of such an
application, it shall determine all facts which are
necessary to establish the right of an application to
benefits under the provisions of the Plan and the
amount thereof as herein provided. Upon request, the
Committee will afford the applicant the right of a
hearing with respect to any finding of fact or
determination. The applicant shall be notified in
writing of any adverse decision with respect to his
claim within sixty (60) days after its submission.
The notice shall be written in a manner calculated to
be understood by the applicant and shall include:
(i) The specific reason or reasons for the denial;
(ii) Specific references to the pertinent Plan
provisions on which the denial is based;
(iii) A description of any additional material or
information necessary for the applicant to
perfect the claim and an explanation why such
material or information is necessary; and
(iv) An explanation of the Plan's claim review
procedures.
(b) If special circumstances require an extension of time for
processing the initial claim, a written notice of the
extension and the reason therefor shall be furnished to the
claimant before the end of the initial sixty (60) day period.
In no event shall such extension exceed sixty (60) days.
(c) In the event a claim for benefits is denied or if the
claimant has had no response to such claim within sixty
(60) days of its submission (in which case the claim
for benefits shall be deemed to have been denied), the
claimant or his duly authorized representative, at the
claimant's sole expense, may appeal the denial to the
Committee within sixty (60) days of the receipt of
written notice of denial or sixty (60) days from the
date such claim is deemed to be denied. In pursuing
such appeal the claimant or his duly authorized
representative:
(i) May request in writing that the Committee review
the denial;
(ii) May review pertinent documents; and
(iii) May submit issues and comments in writing.
(d) The decision on review shall be made within sixty (60)
days of receipt of the request for review, unless
special circumstances require an extension of time for
processing, in which case a decision shall be rendered
as soon as possible, but not later than one hundred
twenty (120) days after receipt of request for review.
If such an extension of time is required, written
notice of the extension shall be furnished to the
claimant before the end of the original sixty (60) day
period. The decision on review shall be made in
writing, shall be written in a manner calculated to be
understood by the claimant, and shall include specific
references to the provisions of the Plan on which such
denial is based. If the decision on review is not
furnished within the time specified above, the claims
shall be deemed denied on review.
11.7 Records. All acts and determinations of the Committee shall be
duly recorded by the secretary thereof and all such records together with such
other documents as may be necessary in exercising its duties under the Plan
shall be reserved in the custody of such secretary. Such records and documents
shall at all times be open for inspection and for the purpose of making copies
by any person designated by Monroe Bancorp. The Committee shall provide such
timely information, resulting from the application of its responsibilities under
the Plan, as needed by the Trustee and the accountant engaged on behalf of the
Plan by Monroe Bancorp, for the effective discharge of their respective duties.
11.8 Disclosures to Participants.
(a) Each Participant shall be furnished with the summary plan
description of the Plan, as required by Sections 102(a)(1)
and 104(b)(1) of ERISA. Such summary plan description shall
be updated from time to time as required under ERISA and
Department of Labor regulations.
(b) Within nine (9) months after the December 31 Valuation Date,
each Participant shall be furnished with the summary annual
report of the Plan required by Section 104(b)(3) of ERISA, in
the form prescribed in Department of Labor Regulations.
(c) Following each December 31 Valuation Date, each Participant
shall be furnished with a statement reflecting the following
information:
(i) The total balance (if any) in his Company Stock
and Other Investments Accounts as of the beginning
of the Plan Year.
(ii) The aggregate amounts of all contributions to the
Company Stock and Other Investments Accounts and
net income (or loss) allocated to his Company Stock
and Other Investments Accounts for the Plan Year.
(iii) The amount of Company contributions, if any, to his Company
Stock and Other Investments Accounts for the Plan Year and
the new Adjusted Balance in each such account as of that
Valuation Date.
(iv) The new balance in his Company Stock and Other
Investments Accounts as of that Valuation Date.
(d) The Committee shall make available for examination by
any Participant copies of the Plan, the Trust Agreement
and the latest annual report of the Plan filed (on Form
5500) with the Internal Revenue Service. Upon written
request of any Participants, the Committee shall
furnish copies of such documents, and may make a
reasonable charge to cover the cost of furnishing such
copies, as provided in Department of Labor Regulations.
11.9 No Liability. The Company assumes no obligation or
responsibility to any of its Employees, Participants, Inactive
Participants or Beneficiaries for any act of, or failure to act,
on the part of the Committee (unless the Company is the
Committee) or the Trustee.
11.10 Indemnity of Committee Members. The Company shall indemnify and
save harmless the members of the Committee, and each of them, from and against
any and all loss resulting from liability to which the Committee, or the members
of the Committee, may be subjected by reason of any act or conduct (except
willful misconduct or gross negligence) in their official capacities in the
administration of the Plan, including all expenses reasonably incurred in their
defense, in case the Company fails to provide such defense. The indemnification
provisions of this Section 11.10 do not relieve any Committee member from any
liability he may have under ERISA for breach of fiduciary duty. Furthermore, the
Committee members and the Company may execute a letter agreement further
delineating the indemnification agreement of this Section 11.10, provided the
letter agreement is consistent with and does not violate ERISA. The
indemnification provisions of this Section 11.10 shall extend to the Trustee
solely to the extent provided by a letter agreement executed by the Trustee and
the Company.
11.11 Company Direction of Investment. Except to the extent the Trust
Fund is determined by the Company or Committee to be invested in Company Stock,
the Company has the right to direct the Trustee with respect to the investment
and reinvestment of assets comprising the Trust Fund only if the Trustee
consents in writing to permit such direction. If the Trustee consents to Company
direction of investment, the Trustee and the Company must execute a letter
agreement which contains such conditions, limitations and other provisions they
deem appropriate before the Trustee shall be obligated to follow any Company
direction with respect to the investment or reinvestment of any part of the
Fund.
11.12 Amendment to Vesting Schedule. Although the Company reserves the
right to amend the vesting schedules contained in Sections 2.38 and 7.7 at any
time, the Committee shall not apply the amended vesting schedule to reduce the
nonforfeitable percentage of any Participant's accounts (determined as of the
later of the date the Company adopts the amendment, or the date the amendment
becomes effective) to a percentage less than the nonforfeitable percentage
computed under the Plan without regard to the amendment. If the Company makes a
permissible amendment to the vesting schedule, each Participant having at least
three (3) years of Vesting Service with the Company may elect to have the
percentage of his nonforfeitable accounts computed under the Plan without regard
to the amendment. For Plan Years beginning prior to January 1, 1989, the
election described in the preceding sentence applies only to Participants having
at least five (5) years of Vesting Service with the Company.
The Participant must file his election with the Committee within sixty
(60) days of the latest of (a) the Company's adoption of the amendment; (b) the
effective date of the amendment; or (c) his receipt of a copy of the amendment.
The Committee, as soon as practicable, must forward a true copy of any amendment
to the vesting schedule to each affected Participant, together with an
explanation of the effect of the amendment, the appropriate form upon which the
Participant may make an election to remain under the vesting schedule provided
under the Plan prior to the amendment and notice of the time within which the
Participant must make an election to remain under the prior vesting schedule.
For purposes of this Section 11.12, an amendment to the vesting schedule
includes any Plan amendment which directly or indirectly affects the computation
of the nonforfeitable percentage of a Participant's rights to his accounts.
11.13 Discretionary Powers and Authority of the Company and Committee.
The Company and the Committee shall have any and all power and authority
(including discretion with respect to the exercise of that power and authority)
which shall be necessary, properly advisable, desirable or convenient to enable
them to carry out their responsibilities under the Plan and Trust. By way of
illustration and not limitation, the Company and Committee are empowered and
authorized to (a) make rules and regulations with respect to the Plan and Trust
which are not inconsistent with the provisions of the Plan and Trust, the Code
or ERISA; (b) determine, consistently therewith, all questions that may arise
concerning coverage, eligibility, benefits, status and rights of any person
claiming particular status under the Plan, including without limitation
Participants, Inactive Participants, former Participants, Beneficiaries and the
spouses and beneficiaries thereof; and (c) subject to and consistent with the
Code and ERISA, to construe and interpret the Plan and correct any defect,
supply any omissions or reconcile any inconsistencies in the Plan. Subject to
the provisions of Section 11.6, such action shall be final, conclusive and
binding upon all persons, whether or not claiming benefits under the Plan.
ARTICLE XII
AMENDMENT AND TERMINATION OF THE PLAN
12.1 Amendment of the Plan.
(a) Company's Right to Amend. The Company shall have the
right at any time by action of the Board to modify,
alter or amend the Plan in whole or in part; provided,
however, that the duties, powers and liabilities of the
Trustee hereunder shall not be increased without its
written consent; and provided, further, that the amount
of benefits which, at the time of any such
modification, alteration or amendment, shall appear as
a credit in the accounts under the Plan of any
Participant, Inactive Participant or Beneficiary
hereunder shall not be adversely affected or reduced
thereby; and provided, further, that no such amendment
shall have the effect of revesting in the Company any
part of the principal or income of the Trust Fund.
(b) Section 411(d)(6) Protected Benefits. No amendment to
the Plan (including the adoption of this Plan as a
restatement of an existing plan) may decrease a
Participant's Company Stock or Other Investments
Account balance except to the extent permitted under
Section 412(c)(8) of the Code, and may not reduce or
eliminate Section 411(d)(6) protected benefits
determined immediately prior to the adoption date (or,
if later, the effective date) of the amendment. An
amendment reduces or eliminates Section 411(d)(6)
protected benefits if the amendment has the effect of
either (i) eliminating or reducing an early retirement
benefit or a retirement-type subsidy (as defined in
Treasury Regulations), or (ii) except as provided by
Treasury Regulations, eliminating an optional form of
benefit. The Committee shall disregard an amendment to
the extent application of the amendment would fail to
satisfy this subsection (b). If the Committee must
disregard an amendment because the amendment would
violate either (i) or (ii) above, the Committee shall
maintain a schedule of the early retirement option or
other optional forms of benefits the Plan must continue
for the affected Participants.
12.2 Termination of the Plan.
(a) The Company expects to continue the Plan indefinitely,
but continuance is not assumed as a contractual
obligation. Monroe Bancorp reserves the right at any
time by action of its Board to terminate the Plan by
resolution of the Board or to reduce or cease
contributions at any time if it determines that
business, financial or other good cause make it
necessary or desirable to do so. Upon termination,
partial termination or permanent discontinuance of
contributions to the Plan, the Board shall give written
notice of permanent discontinuance to the Trustee and
participating Affiliated Companies. Upon termination
or partial termination of the Plan or complete
discontinuance of contributions under the Plan, the
rights of all affected Employees to the amounts
credited to their accounts under the Plan shall be
nonforfeitable.
(b) In the event of termination of the Plan, or the sale,
to an entity that is not an Affiliated Company, of
substantially all of the assets used by the Company in
the trade or business in which the Participant is
employed, the Committee shall value the Trust Fund as
of the date of such termination or sale of assets. If,
as of the date the Plan is terminated, a Loan is
outstanding, the shares of Company Stock held in the
suspense account referred to in Section 6.1 as of such
date and pledged as collateral for such Loan (or the
proceeds from the sale of such Company Stock) shall be
applied by the Trustee solely to discharge the Loan.
The accounts of the Participants, Inactive Participants
and Beneficiaries as determined by the Committee, shall
continue to be administered as a part of the Trust Fund
or distributed in a single sum to such Participants,
Inactive Participants or Beneficiaries, as determined
by the Committee.
12.3 Limitation on Amendment or Termination. Notwithstanding the
provisions of Sections 12.1 and 12.2, the Company shall not terminate the Plan,
or make any amendment to the Plan while any Debt or Loan shall remain
outstanding and unpaid in whole or in part, without the prior written consent to
any such termination or amendment by all holders and guarantors, if any, of the
Plan's obligations under such Debt or Loan. Where any holder or guarantor has a
representative on the Committee, such prior written consent will not be required
if such representative approves the amendment.
ARTICLE XIII
MISCELLANEOUS
13.1 Governing Law. The Plan shall be construed, regulated and
administered according to the laws of the State of Indiana, except in those
areas preempted by the laws of the United States of America in which case such
laws will control.
13.2 Headings and Gender. The headings and subheadings in the Plan have
been inserted for convenience of reference only and shall not affect the
construction of the provisions hereof. In any necessary construction the
masculine shall include the feminine and the singular the plural, and vice
versa.
13.3 Administration Expenses The expenses of administering the Trust
Fund and the Plan may be paid either by the Company or from the Trust Fund.
13.4 Participant's Rights; Acquittance. No Participant shall acquire
any right to be retained in the Company's employ by virtue of the Plan, nor,
upon his dismissal, or upon his voluntary termination of employment, shall he
have any right or interest in and to the Trust Fund other than as specifically
provided herein. The Company shall not be liable for the payment of any benefit
provided for herein; all benefits hereunder shall be payable only from the Trust
Fund.
13.5 Spendthrift Clause. No benefit or interest available hereunder
will be subject to assignment or alienation, either voluntarily or
involuntarily. The preceding sentence shall also apply to the creation,
assignment, or recognition of a right to any benefit payable with respect to a
Participant pursuant to a domestic relations order, unless such order is
determined to be a qualified domestic relations order, as defined in Section
414(p) of the Code.
13.6 Merger, Consolidation or Transfer.
(a) In the event of the merger or consolidation of the Plan
with another plan, no Participant, Inactive Participant
or Beneficiary shall, as a result of such event, be
entitled on the day following such merger,
consolidation or transfer under the termination of the
Plan provisions to a lesser benefit than the benefit he
was entitled to on the date prior to the merger,
consolidation or transfer if the Plan had then
terminated. Neither the Company, the Committee nor the
Trustee shall accept a transfer of benefits or
liabilities to the Plan from any other plan. The
Trustee shall not consent to, or be a party to a
merger, consolidation or transfer of assets with a
Defined Benefit or Defined Contribution Plan, except
with respect to an elective transfer. The Trustee
shall hold, administer and distribute the transferred
assets as a part of the Fund and the Trustee must
maintain a separate account for the benefit of the
Employee on whose behalf the Trustee accepted the
transfer in order to reflect the value of the
transferred assets. Unless a transfer of assets to
this Plan is an elective transfer, the Plan will
preserve all Section 411(d)(6) protected benefits with
respect to those transferred assets, in the manner
described in Section 12.2.
(b) For purposes of this Section 13.6, a transfer is an
elective transfer if: (a) the transfer satisfied
subsection (a) of this Section 13.6; (b) the transfer
is voluntary and under a fully informed election by the
Participant; (c) the Participant has an alternative
that retains his Section 411(d)(6) protected benefits
(including an option to leave his benefit in the
transferor plan, if that plan is not terminating); (d)
the transfer satisfied the applicable spousal consent
requirements of the Code; (e) the transferor plan
satisfied the qualified joint and survivor annuity
notice requirements of the Code, if the Participant's
transferred benefit is subject to those requirements;
(f) the Participant has a right to an immediate
distribution from the transferor plan, in lieu of the
elective transfer; (g) the transferred benefit is at
least the greater of the single sum distribution
provided by the transferor plan for which the
Participant is eligible or the present value of the
Participant's accrued benefit under the transferor plan
payable at that plan's normal retirement age; (h) the
Participant has a one hundred percent (100%)
nonforfeitable interest in the transferred benefit; and
(i) the transfer otherwise satisfied the Treasury
Regulations promulgated under Section 411(d)(6) of the
Code.
13.7 Counterparts. The Plan and the Trust Agreement may be executed in
any number of counterparts, each of which shall constitute but one and the same
instrument and may be sufficiently evidenced by any one counterpart.
13.8 Mistake of Fact. Notwithstanding anything herein to the contrary,
upon the Company's request, a contribution which was made by a mistake of fact,
or conditioned upon the initial qualification of the Plan, either may be
returned to the Company by the Trustee within one (1) year after the payment of
the Contribution or the denial of the qualification, whichever is applicable,
or, only if permitted under the Code, be carried over to a future year.
Contributions to the Trustee are specifically conditioned upon the receipt of a
determination from the Internal Revenue Service that the Plan initially
satisfies the requirements of Sections 401(a) and 4975(e)(7) of the Code. In the
event of an adverse determination by the Internal Revenue Service, all Trust
assets held may be returned by the Trustee to the Company (within one year after
such determination) upon its request.
13.9 No Enlargement of Employment Rights. Nothing contained in the Plan
shall be construed as a contract of employment between the Company and any
person, nor shall the Plan be deemed to give any person the right to be retained
in the employ of the Company or limit the right of the Company to employ or
discharge any person with or without cause, or to discipline any Employee.
13.10 No Guarantee. Neither the Trustee, the Committee, nor the Company
in any way guarantees the assets in the Trust from loss or depreciation nor the
payment of any money or other assets which may be or become due to any person
from the Plan.
No Participant, Inactive Participant or Beneficiary shall have any recourse
against the Trustee, the Company or the Committee if Plan assets are
insufficient to provide benefits under the Plan.
13.11 Federal and State Securities Law Compliance.
(a) Each Participant or Beneficiary may be required by the
Committee, prior to the transfer of Company Stock to
such Participant or Beneficiary, to execute and deliver
an agreement, in form and substance acceptable to the
Committee, certifying such person's intent to hold such
Company Stock and containing such other representations
and agreements relating to the Company Stock as the
Committee may reasonably request;
(b) The Committee shall take all necessary steps to comply with
any applicable registration or other requirements of federal
or state securities laws from which no exemption is
available; and
(c) Stock certificates distributed to Participants may bear such
legends concerning restrictions imposed by federal or state
securities laws, and concerning other restrictions and rights
under the Plan, as the Committee in its discretion may
determine.
13.12 Prudent Man Rule. Notwithstanding any other provision of this
Plan, and the Trust Agreement, the Trustee, the Committee and the Company shall
exercise their powers and discharge their duties under the Plan and Trust
Agreement for the exclusive purpose of providing benefits to Employees and their
Beneficiaries, and shall act with the care, skill and diligence under the
circumstances that a prudent man acting in a like capacity and familiar with
such matters would use in the conduct of an enterprise of a like character and
with like aims.
13.13 Limitations on Liability. Notwithstanding any of the preceding
provisions of the Plan, none of the Trustee, the Company, the Committee and each
individual acting as an employee or agent of any of them shall be liable to any
Participant, Inactive Participant, Employee or Beneficiary for any claim, loss,
liability or expense incurred in connection with the Plan, except when the same
shall have been judicially determined to be due to the gross negligence or
willful misconduct of such person.
ARTICLE XIV
ADOPTION OF THE PLAN
This Plan, as amended and restated, is intended to constitute an
employee stock ownership plan and meet the requirements of Sections 401(a), 409,
and 4975(d)(3) and (e)(7) of the Code, and Sections 407(d)(6) and 408(b)(3) of
ERISA, to the extent applicable, as now in effect or hereafter amended, so that
the income of the Trust Fund may be exempt from taxation under Section 501(a) of
the Code, contributions of the Company under the Plan may be deductible for
Federal income tax purposes under Section 404 of the Code, and Loans to the
Trustee will be exempt under Section 4975(d)(2) of the Code and Section
408(b)(3) of ERISA from the prohibited transaction provisions of Section 4975(c)
of the Code and Section 406 of ERISA, all as now in effect or hereafter amended.
Any modification or amendment of the Plan may be made retroactively, as
necessary or appropriate, to establish and maintain such qualification and to
meet any requirement of the Code or ERISA.
<PAGE>
SIGNATURES
As evidence of its adoption of this amended and restated Plan, Monroe
Bancorp has caused this instrument to be signed by its officers thereunder duly
authorized this day of , 1994, but generally effective as of January 1, 1991,
unless otherwise specified herein or required by applicable law.
MONROE BANCORP
By:
David D. Baer, President
ATTEST: [SEAL]
By:
R. Scott Walters,
Vice President and Trust Officer
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