As filed with the Securities and Exchange Commission on November
22, 1996.
Registration No. 33-__________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
QNB CORP.
(Exact name of Registrant as specified in its charter)
Pennsylvania 23-2318082
------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10 North Third Street, P.O. Box 9005
Quakertown, Pennsylvania 18951
--------------------------------- ---------------
(Address of Principal Executive Offices) (Zip Code)
QNB CORP. STOCK INCENTIVE PLAN,
QNB CORP. EMPLOYEE STOCK PURCHASE PLAN, AND
THE QUAKERTOWN NATIONAL BANK PROFIT SHARING
AND SECTION 401(K) SALARY DEFERRAL PLAN
(Full title of the plans)
----------------------------------
Thomas J. Bisko, President and CEO Copies To:
QNB CORP. Nicholas Bybel, Jr., Esquire
10 North Third Street Robin M. Wilder, Esquire
P. O. Box 9005 Shumaker Williams, P.C.
Quakertown, Pennsylvania Post Office Box 88
(215) 538-5715 Harrisburg, Pennsylvania 17108
- -------------------------------- (717) 763-1121
(Name, address, including zip code,
and telephone number, including
area code, of agent for service)
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
<S> <C> <C>
Title of Each Class Amount Proposed Maximum
of Securities to to be Offering Price
be Registered Registered <F1><F2> Per Share <F3>
Common Stock
$1.25 par value 107,000 $33.05
<S> <C> <C>
Title of Each Class Proposed Maximum Amount of
of Securities to Aggregate Registration
be Registered Offering Price <F3> Fee
Common Stock
$1.25 par value $3,536,350 $1,071.62
<FN>
<F1> Based on the maximum number of shares of QNB Corp. common
stock, par value $1.25 per share ("Common Stock") authorized for
issuance under the QNB Corp. Stock Incentive Plan(40,000
additional shares), QNB Employee Stock Purchase Plan (25,000
shares) and The Quakertown National Bank Profit Sharing and
Section 401(k) Salary Deferral Plan (42,000 shares)
(Collectively, the "Plans").
<F2> Includes 7,066 shares of Common Stock which have been
previously issued under The Quakertown National Bank Profit
Sharing and Section 401(K) Salary Deferral Plan.
<F3> Estimated pursuant to Rule 457(c) and (h)(1) solely for the
purpose of calculating the amount of the registration fee based
upon the average of the closing bid and asked prices of
Registrant's Common Stock on November 19, 1996, with respect to the
107,000 shares of Common Stock issuable under the Plans.
</FN>
</TABLE>
<PAGE>
TO PARTICIPANTS IN THE QNB CORP. STOCK INCENTIVE PLAN,
QNB CORP. EMPLOYEE STOCK PURCHASE PLAN, AND
THE QUAKERTOWN NATIONAL BANK PROFIT SHARING
AND SECTION 401(K) SALARY DEFERRAL PLAN
QNB Corp. (the "Company") has filed a registration statement
concerning its shares of common stock, $1.25 par value ("Common
Stock") that may, from time to time, be issued pursuant to the
QNB Corp. Stock Incentive Plan, the QNB Corp. Employee Stock
Purchase Plan and The Quakertown National Bank Profit Sharing and
Section 401(K) Salary Deferral Plan (collectively, the "Plans").
The Prospectus deemed to form a part of the registration
statement consists of certain documents and explanatory memoranda
regarding the Plans. Also deemed to comprise part of the
Prospectus, are the following documents, each of which is
specifically incorporated by reference into the registration
statement and each of which is on file with the United States
Securities and Exchange Commission ("SEC") (Periodic Report File
No. 0-17706):
(a) the Company's annual report on Form 10-KSB, for the year
ended December 31, 1995;
(b) the Company's Current Report on Form 8-K filed on June
21, 1996;
(c) the Company's quarterly report on Form 10-QSB for the
quarter ended September 30, 1996; and
(d) the description of the Company's Common Stock which
appears in the Company's Prospectus filed on or about August 4,
1989, which forms a part of the Company's Registration Statement
on Form 8-A (Registration No. 0-17706), the Company's Current
Report on Form 8-K filed on June 15, 1994, and the Company's
Report on Form 10-C filed on or about June 15, 1994.
In addition, the contents of the Company's Registration Statement
on Form S-8 (SEC File No. 33-79802) filed with the Securities and
Exchange Commission on or about June 3, 1994 are incorporated in
this Registration Statement on Form S-8 by reference.
All documents filed with the SEC by the Company pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
of 1934 after the date of the Prospectus and prior to the
termination of the offering made hereby shall be deemed to be
incorporated by reference in the Prospectus and to be a part
thereof from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded
for purposes of the Prospectus to the extent that a statement
contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of the Prospectus.
The Company will provide without charge to each Plan
participant who so requests, a copy of any or all of the
documents mentioned above as well as all documentation relating
to the Plan required to be delivered to Plan participants
pursuant to the rules adopted under the Securities Act of 1933.
Requests for such copies should be addressed orally or in writing
to: Attention: Corporate Secretary QNB Corp., 10 North Third
Street, P.O. Box 9005, Quakertown, Pennsylvania 18951; or
telephoning (215) 538-5600.
<PAGE>
REGISTRATION OF ADDITIONAL SECURITIES
INCREASE IN NUMBER OF SHARES ISSUABLE PURSUANT
TO THE QNB CORP. STOCK INCENTIVE PLAN
On April 19, 1988, the shareholders of the Company approved
the adoption of the QNB Corp. Stock Incentive Plan ("Stock
Incentive Plan"). The Stock Incentive Plan provides for the
issuance of an aggregate of 42,000 shares of common stock, par
value $1.25 per share (as adjusted for the Company's four-for-one
split on July 15, 1994)("Common Stock") pursuant to options
granted under the Stock Incentive Plan. On March 14, 1995, the
Board of Directors unanimously approved an amendment to the Stock
Incentive Plan providing for an increase in the number of shares
of Common Stock issuable under the Stock Incentive Plan by an
aggregate of 40,000 shares. On April 10, 1995, the shareholders
of the Company approved the amendment. As a result, an aggregate
total of 82,000 shares (subject to certain anti-dilution
provisions) are available for issuance pursuant to options
granted under the Stock Incentive Plan, as amended. The Company
previously registered 42,000 shares of Common Stock issuable
under the Stock Incentive plan on Form S-8 (SEC File No. 33-79802) and, pursuant
to General Instruction E of Form S-8, hereby registers an additional 40,000
shares of Common Stock issuable under the Stock Incentive Plan, as amended.
November 22, 1996
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
There are hereby incorporated by reference in this
registration statement the following documents filed by the
Company with the Commission (Periodic Report File No. 0-17706):
(a) Annual Report on Form 10-KSB for the year ended
December 31, 1995;
(b) The Company's Current Report on Form 8-K filed on June
21, 1996;
(c) The Company's quarterly report on Form 10-QSB for the
quarter ended September 30, 1996; and
(d) The description of the Company's Common Stock which
appears in the Company's Prospectus filed on or about August 4,
1989, which forms a part of the Company's Registration Statement
on Form 8-A, Registration No. 0-17706, and the Company's Report
on Form 10-C filed on June 15, 1994.
In addition, the contents of the Company's Registration Statement
on Form S-8 (SEC File No. 33-79802) filed with the Securities and
Exchange Commission on or about June 3, 1994 are incorporated in
this Registration Statement on Form S-8 by reference.
All documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act, and prior to the
termination of the offering made hereby shall be deemed to be
incorporated by reference in this registration statement and to
be a part hereof from the date of filing of such documents. Any
statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified
or superseded for purposes of the Prospectus to the extent that a
statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this
registration statement.
Information Required in the Section 10(a) Prospectus
The document(s) containing the information specified in
Items 1 and 2 of Part I of Form S-8 will be sent or given to plan
participants as specified in Rule 428(b)(1) and, in accordance
with the instructions to Part I of Form S-8, are not filed with
the Securities and Exchange Commission as part of this
registration statement.
II-1
<PAGE>
Item 4. Description of Securities
Inapplicable.
Item 5. Interests of Named Experts and Counsel
Inapplicable.
Item 6. Indemnification of Directors and Officers
Subchapter D of Chapter 17 of the Pennsylvania Business
Corporation Law of 1988, as amended (the "BCL"), (15 Pa. C.S.A.
Sections 1741-1750) provides that a business corporation shall have the
power under certain circumstances to indemnify directors,
officers, employees and agents against certain expenses incurred
by them in connection with any threatened, pending or completed
action, suit or proceeding.
Section 1721 of the BCL (relating to the Board of Directors)
declares that unless otherwise provided by statute or in a by-law
adopted by the shareholders, all powers enumerated in Section
1502 (relating to general powers) and elsewhere in the BCL or
otherwise vested by law in a business corporation shall be
exercised by or under the authority of, and the business and
affairs of every business corporation shall be managed under the
direction of, a board of directors. If any such provision is
made in the by-laws, the powers and duties conferred or imposed
upon the board of directors under the BCL shall be exercised or
performed to such extent and by such person or persons as shall
be provided in the by-laws.
Section 1712 of the BCL provides that a director shall stand
in a fiduciary relation to the corporation and shall perform his
duties as a director, including his duties as a member of any
committee of the board upon which he may serve, in good faith, in
a manner he reasonably believes to be in the best interests of
the corporation and with such care, including reasonable inquiry,
skill and diligence, as a person of ordinary prudence would use
under similar circumstances. In performing his duties, a
director shall be entitled to rely in good faith on information,
opinions, reports or statements, including financial statements
and other financial data, in each case prepared or presented by
any of the following:
(1) one or more officers or employees of the corporation
whom the director reasonably believes to be reliable and
competent in the matters presented;
(2) counsel, public accountants or other persons as to
matters which the director reasonably believes to be within the
professional or expert competence of such person; or
(3) a committee of the board upon which he does not serve,
duly designated in accordance with law, as to matters within its
designated authority, which committee the director reasonably
believes to merit confidence.
A director shall not be considered to be acting in good faith, if
he has knowledge concerning the matter in question that would
cause his reliance to be unwarranted.
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<PAGE>
Section 1716 also states that in discharging the duties of
their respective positions, the board of directors, committees of
the board and individual directors may, in considering the best
interests of the corporation, consider the effects of any action
upon employees, upon suppliers and customers of the corporation
and upon communities in which offices or other establishments of
the corporation are located, and all other pertinent factors.
The consideration of those factors shall not constitute a
violation of Section 1712. In addition, absent breach of
fiduciary duty, lack of good faith or self-dealing, actions taken
as a director or any failure to take any action shall be presumed
to be in the best interests of the corporation.
Moreover, Section 1713 addresses the personal liability of
directors and states that if a by-law adopted by the shareholders
so provides, a director shall not be personally liable, as such,
for monetary damages for any action taken, or any failure to take
any action, unless:
(1) the director has breached or failed to perform the duties
of his office under this section; and
(2) the breach or failure to perform constitutes
self-dealing, willful misconduct or recklessness.
The provisions discussed above shall not apply to:
(1) the responsibility or liability of a director pursuant to
any criminal statute; or
(2) the liability of a director for the payment of taxes
pursuant to local, state or federal law.
Finally, Section 1714 states that a director of a
corporation who is present at a meeting of its board of
directors, or of a committee of the board, at which action on any
corporate matter is taken shall be presumed to have assented to
the action taken unless his dissent is entered in the minutes of
the meeting or unless he files his written dissent to the action
with the secretary of the meeting before the adjournment thereof
or transmits the dissent in writing to the secretary of the
corporation immediately after the adjournment of the meeting.
The right to dissent shall not apply to a director who voted in
favor of the action. Nothing in this Section 1721 shall bar a
director from asserting that minutes of the meeting incorrectly
omitted his dissent if, promptly upon receipt of a copy of such
minutes, he notified the secretary, in writing, of the asserted
omission or inaccuracy.
Section 1741 of the BCL (relating to third party actions)
provides that unless otherwise restricted in its by-laws, a
business corporation shall have the power to indemnify any person
who was or is a party, or is threatened to be made a party to any
threatened, pending or completed action or proceeding, whether
civil, criminal, administrative or investigative (other than an
action by or in the right of the corporation), by reason of the
fact that such person is or was a representative of the
corporation, or is or was serving at the request of the
corporation as a representative of another domestic or foreign
corporation for profit or not-for-profit, partnership, joint
venture, trust or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection
with the action or proceeding if such person acted in good faith
and in a manner he reasonably believed to be in, or not opposed
to, the best interests of the corporation, and, with respect to
any criminal proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action or
proceeding by judgment, order, settlement or conviction or upon a
plea of nolo contendere or its equivalent shall not of itself
create a presumption that the person
II-3
<PAGE>
did not act in good faith and in a manner that he reasonably
believed to be in, or not opposed to, the best interests of the
corporation, and with respect to any criminal proceeding, had
reasonable cause to believe that his conduct was not unlawful.
Section 1742 of the BCL (relating to derivative actions)
provides that unless otherwise restricted in its by-laws, a
business corporation shall have the power to indemnify any person
who was or is a party, or is threatened to be made a party, to
any threatened, pending or completed action by or in the right of
the corporation to procure a judgment in its favor by reason of
the fact that such person is or was a representative of the
corporation, or is or was serving at the request of the
corporation as a representative of another domestic or foreign
corporation for profit or not-for-profit, partnership, joint
venture, trust or other enterprise, against expenses (including
attorneys' fees) actually and reasonably incurred by such person
in connection with the defense or settlement of the action if
such person acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the
corporation. Indemnification shall not be made under this
section in respect of any claim, issue or matter as to which such
person has been adjudged to be liable to the corporation unless,
and only to the extent that, the court of common pleas of the
judicial district embracing the county in which the registered
office of the corporation is located or the court in which such
action was brought determines upon application that, despite the
adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the court of common pleas or
such other court shall deem proper.
Section 1743 of the BCL (relating to mandatory
indemnification) provides for mandatory indemnification of
directors and officers such that to the extent that a
representative of the business corporation has been successful on
the merits or otherwise in defense of any action or proceeding
referred to in Sections 1741 (relating to third party actions) or
1742 (relating to derivative actions), or in defense of any
claim, issue or matter therein, such person shall be indemnified
against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection therewith.
Section 1744 of the BCL (relating to procedure for effecting
indemnification) provides the procedure for effecting
indemnification. Under this section unless ordered by a court,
any indemnification under Section 1741 (relating to third party
actions) or 1742 (relating to derivative actions) shall be made
by the business corporation only as authorized in the specific
case upon a determination that indemnification of the
representative is proper in the circumstances because such person
has met the applicable standard of conduct set forth in those
sections. The determination shall be made:
(1) by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to the action or
proceeding;
(2) if such quorum is not obtainable, or, if obtainable and a
majority vote of a quorum of disinterested directors so directs,
by independent legal counsel in a written opinion; or
(3) by the shareholders.
Section 1745 of the BCL (relating to advancing expenses)
provides that expenses (including attorneys' fees) incurred in
defending any action or proceeding referred to above may be paid
by the
II-4
<PAGE>
business corporation in advance of the final disposition of the
action or proceeding upon receipt of an undertaking by or on
behalf of the representative to repay such amount if it is
ultimately determined that such person is not entitled to be
indemnified by the corporation as authorized by the BCL or
otherwise.
Section 1746 of the BCL (relating to supplementary coverage)
provides that the indemnification and advancement of expenses
provided by or granted pursuant to the other sections of the BCL
shall not be deemed exclusive of any other rights to which a
person seeking indemnification or advancement of expenses may be
entitled under any other by-law, agreement, vote of shareholders
or disinterested directors or otherwise, both as to action in
such person's official capacity and as to action in another
capacity while holding such office.
Section 1746 of the BCL also provides that indemnification
referred to above shall not be made in any case where the act or
failure to act giving rise to the claim for indemnification is
determined by a court to have constituted willful misconduct or
recklessness.
Section 1746 further declares that indemnification under any
by-law, agreement, vote of shareholders or directors or
otherwise, may be granted for any action taken or any failure to
take any action and may be made whether or not the corporation
would have the power to indemnify the person under any other
provision of law except as provided in this section and whether
or not the indemnified liability arises or arose from any
threatened, pending or completed action by or in the right of the
corporation. Such indemnification is declared to be consistent
with the public policy of the Commonwealth of Pennsylvania.
Section 1747 of the BCL (relating to the power to purchase
insurance) provides that unless otherwise restricted in its
by-laws, a business corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a
representative of the corporation or is or was serving at the
request of the corporation as a representative of another
domestic or foreign corporation for profit or not-for-profit,
partnership, joint venture, trust or other enterprise against any
liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not
the corporation would have the power to indemnify him against
that liability under the provisions of the BCL. Such insurance
is declared to be consistent with the public policy of the
Commonwealth of Pennsylvania.
Section 1750 of the BCL (relating to duration and extent of
coverage) declares that the indemnification and advancement of
expenses provided by, or granted pursuant to, the BCL shall,
unless otherwise provided when authorized or ratified, continue
as to a person who has ceased to be a representative of the
corporation and shall inure to the benefit of the heirs and
personal representative of that person.
Section A of Article XIII of the Company's Articles of
Incorporation and Section 7-1 of Article VII of the Company's By-laws provide
that the Company shall indemnify, to the fullest extent now or hereafter
permitted by law, each director or officer (including each former director
or officer) of the Company who was or is made a party to or a witness in or
is threatened to be made a party to or a witness in any threatened,
pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact
that he is or was an authorized representative of the Company,
against all expenses (including attorney's fees and
disbursements), judgments, fines (including
II-5
<PAGE>
excise taxes and penalties) and amounts paid in settlement
actually and reasonably incurred by him in connection with such
action, suit or proceeding.
Section B of the Company's Articles of Incorporation and
Section 7-2 of Article VII of the Company's By-laws provide that
the Company shall pay expenses (including attorneys' fees and
disbursements) incurred by a director or officer of the Company
referred to in Section A and Section 7-1, respectively, thereof,
in defending or appearing as a witness in any civil or criminal
action, suit or proceeding described in Section A and Section 7-1,
respectively, thereof in advance of the final disposition of
such action, suit or proceeding. The expenses incurred by such
director officer shall be paid by the Company in advance of the
final disposition of such action, suit or proceeding referred to
in such Section C or Section 73 in advance of the final
disposition of such action, suit or proceeding only upon receipt
of an undertaking by or on behalf of such director pr officer to
repay all amounts advanced if it shall be determined that he is
not entitled to be indemnified by the Company.
Section C of Article XIII of the Company's Articles of
Incorporation and Section 7-3 of Article VII of the Company's By-laws provide
that the Company may, as determined by the Board of Directors from time to
time, indemnify to the fullest extent now or hereafter permitted by law, any
person who was or is a party to or a witness in or is threatened to be made
a party to or a witness in, or is otherwise involved in, any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is
or was an authorized representative of the Company, both as to
action is his official capacity and as to action in another
capacity while holding such office or position, against all
expenses (including attorney's fees and disbursements),
judgments, fines (including excise taxes and penalties), and
amounts paid in settlement actually and reasonably incurred by
him in connection with such action, suit or proceeding. The
Company may, as determined by the Board of Directors from time to
time, pay expenses incurred by any such person by reason of his
participation in an action, suit or proceeding upon receipt of an
undertaking by or on behalf of such person to repay such amount
if it shall ultimately be determined that he is not entitled to
be indemnified by the Company.
Section D Article XIII of the Company Articles of
Incorporation and Section 7-4 of Article VII of the Company's By-laws provide
that indemnification under such Articles is provided pursuant to Section 8365
of the Pennsylvania Director's Liability Act (or successor provision or
statute) and such Articles are intended to provide indemnification in
accordance with their terms whether the Company would have the power to so
indemnify under any other provision of law except such Act and whether or
not the indemnified liability arises or arose from any
threatened, pending or completed action by or in the right of the
Company; indemnification under such provisions shall not be made
by the Company in any case where the alleged act or failure to
act giving rise to the claim for indemnification is expressly
prohibited by the Pennsylvania Director's Liability Act or any
successor statue as in effect at the time of such alleged action
or failure to take action.
Section E of Article XIII of the Company's Articles of
Incorporation and Section 7-5 of Article VII of the Company's By-laws provide
that the Company shall have the power to purchase and maintain insurance on
behalf of any authorized representative of the Company against any liability
asserted against him and incurred by him in any such capacity, or arising
out of his status as such, whether or not the Company would have the power
to indemnify him against such liability. The Board of Directors,
without further approval of the shareholders, shall have the
power to borrow money on behalf of the
II-6
Company, including the power to pledge the assets of the Company,
from time to time, to discharge the Company's obligations with
respect to indemnification and the advancement and reimbursement
of expenses, and the purchase and maintenance of insurance on
behalf of each director and officer against any liability
asserted against or incurred by such director or officer in any
capacity.
Finally, Section F of Article XIII of the Company's Articles
of Incorporation and Section 7-6 of Article VII of the Company's
By-laws provide that each director and officer of the Company
shall be deemed to act in such capacity in reliance upon such
rights of indemnification and advancement of expenses. The
rights of indemnification and advancement of expenses provided
shall not be deemed exclusive of any other rights to which any
person seeking indemnification or advancement or expenses may be
entitled under any agreement, vote of shareholders or
disinterested directors, statute or otherwise, both as to action
in such person's official capacity and as to action in another
capacity while holding such office or position, and shall
continue as to a person who has ceased to be an authorized
representative of the Company and shall inure to the benefit of
the heirs, executors and administrators of such person. Any
repeal or modification such Articles or By-laws by the
shareholders or the Board of Directors of the Company shall not
adversely affect any right or protection existing at the time of
such repeal or modification to which any person may be entitled
under such Articles or By-laws.
The Company maintains insurance insuring its directors,
officer, employees or agents against certain liabilities which
they might incur as directors, officer, employees or agents
including, if possible, certain liabilities under the Securities
Act of 1933, as amended (the "1933 Act").
Insofar as indemnification for liabilities arising under the
1933 Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions or
otherwise, the Registrant has been advised that in the opinion of
the Commission such indemnification is against public policy as
expressed in the 1933 Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such
liabilities (other than the payment by Registrant of expenses
incurred or paid by a director, officer or controlling person of
the Registrant in the successful defense of any action, suit or
proceeding) is asserted by a director, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the manner
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the 1933 Act and will be governed by the final adjudication of
such issue.
Item 7. Exemption From Registration Claimed
Inapplicable.
II-7
<PAGE>
Items 8. Exhibits
Page Number in
Sequential Numbering
System
Exhibit No.
4A QNB Corp. Stock Incentive Plan (included in Exhibit 99A)
4B QNB Corp. Employee Stock Purchase Plan (included in Exhibit
99B)
4C The Quakertown National Bank Profit Sharing
and Section 401(K) Salary Deferral Plan(included in Exhibit
99C)
4D QNB Corp. Articles of Incorporation (incorporated by
reference to the Company's Registration Statement on Form
S-4, dated August 4, 1989)
5 Opinion of Shumaker Williams, P.C.
23A Consent of Coopers & Lybrand L.L.P.
23B Consent of Shumaker Williams, P.C. (included in
Exhibit 5)
24 Power of Attorney of Directors and Officers
(included on Signature Page)
99A QNB Corp. Stock Incentive Plan
99B QNB Corp. Employee Stock Purchase Plan
99C The Quakertown National Bank Profit Sharing
and Section 401(K) Salary Deferral Plan
Item 9. Undertakings
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to
this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
II-8
<PAGE>
(ii)To reflect in the prospectus any facts or events
arising after the effective date of the
registration statement (or the most recent post-
effective amendment thereof) which, individually
or in the aggregate, represent a fundamental
change in the information set forth in the
registration statement;
(iii) To include any material information with respect
to the plan of distribution not previously
disclosed in the registration statement or any
material change to such information in the
registration statement; provided, however, that
paragraphs (a)(1)(i) and (a)(1)(ii) shall not
apply if the information required to be included
in a post-effective amendment by those
paragraphs is contained in periodic reports
filed by the Registrant pursuant to Section 13
or Section 15(d) of the Securities Exchange Act
of 1934 that are incorporated by reference in
the registration statement.
(2) That, for the purpose of determining any
liability under the Securities Act of 1933, each
post-effective amendment shall be deemed to be a new
registration statement relating to the securities
offered therein, and the offering of such securities
at the time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-
effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
(b) The undersigned Registrant hereby undertakes that,
for purposes of determining any liability under the
Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange Act of
1934, and, where applicable, each filing of an
employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934,
that is incorporated by reference in the registration
statement shall be deemed to be a new registration
statement relating to the securities offered therein,
and the offering of such securities at that time
shall be deemed to be the initial bona fide offering
thereof.
(h) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission
such indemnification is against public policy as
expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim
for indemnification against such liabilities, other
than the payment of the Registrant of expenses
incurred or paid by a director, officer or
controlling person of the Registrant in the
successful defense of any action suit or proceeding,
is asserted by such director, officer or controlling
person in connection with the securities being
II-9
<PAGE>
registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
II-10
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form
S-8 and has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized in
the City of Quakertown, Commonwealth of Pennsylvania on
November 19, 1996.
QNB CORP.
By: /s/ Thomas J. Bisko
--------------------
President, Treasurer,
Chief Executive Officer
and Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Thomas J. Bisko
and Robert C. Werner, and each of them, his true and lawful
attorney-in-fact, as agent with full power of substitution and
resubstitution for him and in his name, place and stead, in any
and all capacity, to sign any or all amendments to this
Registration Statement and to file the same, will all exhibits
thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agents full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully
and to all intents and purposes as they might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or
their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
this registration statement has been signed by the following
persons in the capacities and on the dates indicated.
Capacity Date
- ----------------------- Director November 19, 1996
Norman L. Baringer
/s/ Thomas J. Bisko Director, November 19, 1996
- ----------------------- President
Thomas J. Bisko Treasurer
and Chief
Executive Officer
(Principal Executive
Officer)
/s/ Kenneth F. Brown, Jr. Director November 19, 1996
- ------------------------
Kenneth F. Brown, Jr.
II-11
<PAGE>
/s/ Donald T. Knauss Director November 19, 1996
- ---------------------------
Donald T. Knauss
/s/Charles M. Meredith, III Director November 19, 1996
- ---------------------------
Charles M. Meredith, III
/s/ Philip D. Miller Chairman November 19, 1996
- --------------------------- of the Board
Philip D. Miller and Director
/s/ Gary S. Parzych Director November 19, 1996
- --------------------------
Gary S. Parzych
/s/ Henry L. Rosenberger Director November 19, 1996
- --------------------------
Henry L. Rosenberger
- -------------------------- Director November 19, 1996
Edgar L. Stauffer
/s/ Bret H. Krevolin (Principal November 19, 1996
- -------------------------- Accounting
Bret H. Krevolin Officer)
II-12
<PAGE>
INDEX TO EXHIBITS
Exhibit No.
4A QNB Corp. Stock Incentive Plan (included in Exhibit 99A)
4B QNB Corp. Employee Stock Purchase Plan (included in Exhibit
99B)
4C The Quakertown National Bank Profit Sharing
and Section 401(K) Salary Deferral Plan(included in Exhibit
99C)
4D QNB Corp. Articles of Incorporation (incorporated by
reference to the Company's Registration Statement on Form
S-4, dated August 4, 1989)
5 Opinion of Shumaker Williams, P.C.
23A Consent of Coopers & Lybrand L.L.P.
23B Consent of Shumaker Williams, P.C. (included in
Exhibit 5)
24 Power of Attorney of Directors and Officers
(included on Signature Page)
99A QNB Corp. Stock Incentive Plan
99B QNB Corp. Employee Stock Purchase Plan
99C The Quakertown National Bank Profit Sharing
and Section 401(K) Salary Deferral Plan
II-13
:65113
EXHIBIT 4A
QNB Corp. Stock Incentive Plan
(included in Exhibit 99A)
EXHIBIT 4B
QNB Corp. Employee Stock Purchase Plan
(included in Exhibit 99B)
EXHIBIT 4C
The Quakertown National Bank Profit Sharing
and Section 401(K) Salary Deferral Plan
(included in Exhibit 99C)
EXHIBIT 4D
QNB Corp. Articles of Incorporation (incorporated
by reference to the Company's Registration
Statement on Form S-4, dated August 4, 1989)
EXHIBIT 5
Opinion of Shumaker Williams, P.C.
<PAGE>
SHUMAKER WILLIAMS, P.C.
3425 Simpson Ferry Road
Camp Hill, Pennsylvania 17011
November 19, 1996
Thomas J. Bisko, President and CEO
QNB CORP.
10 North Third Street
P. O. Box 9005
Quakertown, Pennsylvania 18951
Re: QNB CORP. (the "Corporation")
Registration Statement Form S-8
Our File No. 468-96
Dear Mr. Bisko:
In connection with the above-referenced registration
statement on form S-8 pertaining to the QNB Stock Incentive Plan,
the QNB Corp. Employee Stock Purchase Plan and The Quakertown
National Bank Profit Sharing and Section 401(K) Salary Deferral
Plan (Collectively, the "Plans"), we have acted as Special
Corporate Counsel to the Corporation and have examined all
documents, transactions and questions of law which we deem
necessary and appropriate for purposes of rendering the following
opinion.
Based on our examination, it is our opinion that when the
registration statement on Form S-8 is filed and becomes effective
under the Securities Act of 1933, those shares of $1.25 par value
of common stock of the Corporation issued or distributed
thereunder and paid for in accordance with the terms of the
Plans, will be duly authorized, validly issued, fully-paid and
nonassessable.
We hereby consent to the use of this opinion as an exhibit
to the registration statement on Form S-8.
SHUMAKER WILLIAMS, P.C.
By: /s/ Nicholas Bybel, Jr.
--------------------------
Nicholas Bybel, Jr.
NB/tb:65140
EXHIBIT 23A
Consent of Coopers & Lybrand L.L.P.
<PAGE>
Coopers Coopers & Lybrand L.L.P.
& Lybrand
a professional services firm
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statement of QNB Corp. on Form S-8 of our report dated January
25, 1996, on our audits of the consolidated financial statements
of QNB Corp. as of December 31, 1995 and 1994, and for the years
ended December 31, 1995, 1994, and 1993 which report is
incorporated by reference in its Annual Report on Form 10-K.
/s/ Coopers & Lybrand L.L.P.
----------------------------
Coopers & Lybrand L.L.P.
Philadelphia, Pennsylvania
November 19, 1996
EXHIBIT 23B
Consent of Shumaker Williams, P.C.
(included in Exhibit 5)
EXHIBIT 24
Power of Atorney of Directors and
Officers (included on Signature Page)
EXHIBIT 99A
QNB CORP. STOCK INCENTIVE PLAN
<PAGE>
QNB CORP.
STOCK INCENTIVE PLAN
1. Purpose.
The purpose of the QNB Corp. Stock Incentive Plan (the
"Plan") is to further the earnings of QNB Corp., its subsidiaries
and other affiliates (the "Company"). The Plan provides for the
award of long-term incentives to those officers and other key
executives who make substantial contributions to the Company by
their loyalty, industry, and invention. The Company intends that
the Plan will facilitate securing, retaining, and motivating
management employees of high caliber and potential.
2. Administration.
The Plan shall be administered by a Committee (the
"Committee") of the Board of Directors of QNB Corp. (the
"Board"). The Committee shall consist of three or more persons
selected by the Board of Directors who are ineligible and who
have been ineligible for a one year period prior to appointment
thereto for selection as a person to whom stock options may be
granted pursuant to this Plan or any other similar plan of the
Company. Without limiting the foregoing, the Committee shall
have full and final authority in its discretion to interpret the
provisions of the Plan and to decide all questions of fact
arising in its application; to determine the employees to whom
awards shall be made under the Plan; to determine the type of
awards to be made and the amount, size and terms of each such
award; to determine the time when awards shall be granted; and to
make all other determinations necessary or advisable for the
administration of the Plan.
3. Stock Subject to the Plan.
The shares that may be issued under the Plan shall not
exceed in the aggregate eighty two thousand (82,000) shares of
common stock of the Company. Such shares may be authorized and
unissued shares or treasury shares. Except as otherwise provided
herein, any shares subject to an option or right which for any
reason expires or is terminated unexercised as to such shares
shall again be available under the Plan.
4. Eligibility to Receive Awards.
Persons eligible to receive awards under the Plan shall
be limited to those full-time officers and other key executive
employees of the Company who are in positions in which their
decisions, actions and counsel will have a significant impact
upon the profitability and success of the Company. Directors of
the Company who are not otherwise full-time officers or employees
of the Company shall not be eligible to participate in the Plan.
5. Form of Awards.
Awards may be made from time to time by the Committee
in the form of stock options to purchase shares of common stock
of the Company. Stock options may be options which are intended
to qualify as incentive stock options within the meaning of
Section 422A of the Internal Revenue Code of 1986, or any
amendment or substitute thereto ("Incentive Stock Options") or
options which are not intended to so qualify ("Non-qualified
Stock Options").
6. Stock Options.
Stock options for the purchase of common stock of the
Company shall be evidenced by written agreements in such form not
inconsistent with the Plan as the Committee shall approve from
time to time, which shall contain in substance the following
terms and conditions:
(a) Type of Option.
Each option agreement shall identify the options
represented thereby as Incentive Stock Options or Non-Qualified
Stock Options, as the case may be.
<PAGE>
(b) Option Price.
The purchase price of stock subject to an option
shall be the fair market value at the time of grant, as
determined by the Committee.
(c) Exercise Term.
Each option agreement shall state the period or
periods of time within which the option may be exercised, in
whole or in part, which shall be such period or periods of time
as may be determined by the Committee, provided that no option
shall be exercisable after five (5) years from the date of grant
thereof. The Committee may, in its discretion, provide in the
option agreement circumstances under which the option shall
become immediately exercisable, and may, notwithstanding the
foregoing, accelerate the exercisability of any option at any
time.
(d) Payment for Shares.
The purchase price of the shares with respect to
which an option is exercised shall be payable in full at the time
of exercise in cash, common stock of the Company at fair market
value, or a combination thereof, as the Committee may determine
and subject to such terms and conditions prescribed by the
Committee for such purpose.
(e) Rights Upon Termination of Employment.
In the event that an optionee ceases to be an
employee of the Company for any cause other than death or
disability, the options shall terminate at the time of
termination. In the event that an optionee dies or becomes
disabled prior to the expiration of his option and without having
fully exercised his option, the optionee or his successor shall
have the right to exercise the option during its term within a
period of six months after termination of employment due to death
or disability to the extent that the option was exercisable at
the time of termination, or within such other period, and subject
to such terms and conditions, as may be specified by the
Committee.
(f) Nontransferability.
Each option agreement shall state that the option
is not transferable other than by will or the laws of descent and
distribution, and that during the lifetime of the optionee the
option is exercisable only by him.
(g) Incentive Stock Option.
In the case of an Incentive Stock Option, each
option agreement shall contain such other terms, conditions and
provisions as the Board determines necessary or desirable in
order to qualify such option as a tax favored option (within the
meaning of Section 422A of the Code, or any amendment or
substitute thereto or regulation thereunder) including without
limitation, the following:
(i) The purchase price of stock subject to an
Incentive Stock Option shall not be less than 100% of the fair
market value of such stock on the date the option is granted as,
determined by the Committee;
(ii) The aggregate fair market value (determined
as of the time the option is granted) of the stock with respect
to which Incentive Stock Options are exercisable for the first
time by any employee during any calendar year (under all plans of
the Company) shall not exceed $100,000; and
(iii) No Incentive Stock Option shall be granted
to any employee if at the time the option is granted the
individual owns
2
<PAGE>
stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company or its parent or
subsidiary corporation unless at the time such option is granted
the option price is at least 110% of the fair market value of the
stock subject to the option and such option by its terms is not
exercisable after the expiration of five years from the date of
grant.
7. General Restrictions.
Each award under the Plan shall be subject to the
requirement that if at any time the Committee shall determine
that (i) the listing, registration or qualification of the shares
of common stock subject or related thereto upon any securities
exchange or under any state or federal law, or (ii) the consent
or approval of any government regulatory body, or (iii) an
agreement by the recipient of an award with respect to the
disposition of shares of common stock is necessary or desirable
as a condition of or in connection with the granting of such
award or the issuance or purchase of shares of common stock
thereunder, such award shall not be consummated in whole or in
part unless such listing, registration, qualification, consent,
approval or agreement shall have been effected or obtained free
of any conditions not acceptable to the Committee.
8. Single or Multiple Agreements.
Multiple forms of awards or combinations thereof may be
evidenced by a single agreement or multiple agreements, as
determined by the Committee.
9. Rights of a Shareholder.
The recipient of any award under the Plan, unless
otherwise provided by the Plan, shall have no rights as a
shareholder with respect thereto unless and until certificates
for shares of common stock are issued to him.
10. Right to Terminate Employment.
Nothing in the Plan or in any agreement entered into
pursuant to the Plan shall confer upon any participant the right
to continue in the employment of the Company or affect any right
which the Company may have to terminate the employment of such
participant.
11. Withholding.
Whenever the Company proposes or is required to issue
or transfer shares of common stock under the Plan, the Company
shall have the right to require the recipient to remit to the
Company an amount sufficient to satisfy any federal, state or
local withholding tax requirements prior to the delivery of any
certificate or certificates for such shares.
12. Non-Assignability.
No award under the Plan shall be assignable or
transferable by the recipient thereof except by will or by the
laws of descent and distribution or by such other means as the
Committee may approve. During the life of the recipient, such
award shall be exercisable only by such person or by such
person's guardian or legal representative.
13. Non-Uniform Determinations.
The Committee's determination under the Plan (including
without limitation determinations of the persons to receive
awards, the form, amount and timing of such awards, the terms and
provisions of such awards and the agreements evidencing same, and
the establishment of values) need not be uniform and may be made
selectively among persons who receive, or are eligible to
receive, awards under the Plan, whether or not such persons are
similarly situated.
3
<PAGE>
14. Adjustments.
In the event of any change in the outstanding stock of
the Company, by reason of a stock dividend or distribution,
recapitalization, merger, consolidation, split-up, combination,
exchange of shares or the like, the Committee may, in its
discretion, adjust the number of shares of common stock which may
be issued under the Plan. In such event the Committee may make
any changes it deems equitable (subject to approval of the Board
of Directors, if necessary) in outstanding stock options, stock
appreciation rights, and restricted stock awards.
15. Amendment.
The Committee may terminate or amend the Plan at any
time, except without shareholder approval, the Committee may not
increase the maximum number of shares which may be issued under
the Plan (other than increases pursuant to paragraph 14 hereof),
extend the period during which any award may be exercised, extend
the term of the Plan or change the minimum option price. The
termination or any modification or amendment of the Plan shall
not, without the consent of a participant, affect his rights
under an award previously granted.
16. Effect on Other Plans.
Participation in this Plan shall not affect an
employee's eligibility to participate in any other benefit or
incentive plan of the Company. Any awards made pursuant to this
Plan shall not be used in determining the benefits provided under
any other plan of the Company unless specifically provided.
17. Duration of the Plan.
The Plan shall remain in effect until all awards under
the Plan have been satisfied by the issuance of shares, but no
award shall be granted more than ten years after the earlier of
the date the Plan is adopted by the Company or is approved by the
Company's shareholders.
Adopted February 23, 1988
by the Board of Directors
of QNB Corp. Shareholders
approved Plan April 19, 1988.
Amended March 14, 1995
by the Board of Directors
of QNB Corp. to increase the
number of shares covered by
the Plan to 82,000. Shareholders
approved the amendment on
May 9, 1995.
Amended December 19, 1995
by the Board of Directors
of QNB Corp. to delete
Original Section 6 (h)
-----
Right of First Refusal.
- -----------------------
Shareholders approval not
required.
/s/ Edgar L. Stauffer
-----------------------
Edgar L. Stauffer
Compensation Committee Chairman
4
:64505
EXHIBIT 99B
QNB Corp. Employee Stock Purchase Plan
<PAGE>
QNB CORP.
STOCK PURCHASE PLAN
1. Purpose. The purpose of the QNB Corp. Stock Purchase Plan
(Plan) is to provide an incentive for Eligible Employees to
remain in the employ of the Corporation and to devote their best
efforts to its success by affording such employees an opportunity
to acquire the Corporation's Common Stock in a convenient and
advantageous manner and to maintain a proprietary interest in the
Corporation. The Plan is intended to be an "employee stock
purchase plan" within the meaning of Section 423 of the Code.
2. Definitions. Whenever used in the Plan:
(a) "Alternative Offering Price" means 95 percent of the
Fair Market Value of Common Stock on the last day of the Offering
Period (November 30 or May 31) next following the beginning of
the Offering Period.
(b) "Beneficiary" means the person designated by an
Eligible Employee, in accordance with Section 11(e), to make the
elections prescribed in Section 11(d) in the event of such
Eligible Employee's death.
(c) "Board" means the Board of Directors of QNB Corp.
(d) "Code" means the Internal Revenue Code of 1986, as
amended.
(e) "Committee" means the Committee of officers appointed
by the Corporation's Board of Directors. The initial members of
the Committee shall be Thomas J. Bisko, President and Chief
Executive Officer, Robert C. Werner, Vice President, and Bret H.
Krevolin, Chief Accounting Officer.
(f) "Common Stock" means the Common Stock, par value
$1.25 per share, of QNB Corp.
(g) "Compensation" means the Eligible Employee's wages,
salaries, fees for professional services and other amounts
received for professional services actually rendered in the
course of employment with the Corporation to the extent that the
amounts are includible in gross income (including but not limited
to, commissions paid salesman, compensation for services on the
basis of percentage of the profits, commissions on insurance
premiums, tips, bonuses, fringe benefits, and reimbursements or
other expense allowances under a nonaccountable plan (as
described in Regulation 1.62-2(c) for a Plan Year).
(h) "Corporation" means QNB Corp. and such of its
Subsidiaries existing as of the effective date of the adoption of
the Plan, or thereafter acquired, as may be designated from time
to time by the Board.
(i) "Disability" means total disability as defined in the
long term disability plan of the Corporation.
(j) "Effective Date" shall mean June 1, 1996, the date
the initial offering will commence.
(k) "Eligible Employee" means any employee of the
Corporation and such additional Subsidiary or Subsidiaries as
shall be determined by the Board to participate in the Plan who
has been continuously employed by the Corporation or Subsidiary
for at least the one year preceding the Offering Date. Employees
who are scheduled to regularly work 20 hours or less a week are
not considered eligible to participate in the Plan.
(l) "Fair Market Value" means the average of the highest
and lowest selling prices of Common Stock as reported by a
national securities exchange on which the shares of the Common
Stock are traded on such date, including the NASDAQ National
Market, or the bid price as reported by one of the QNB Corp.
market makers.
Notwithstanding any provision of the Plan to the contrary,
no determination made with respect to the Fair Market Value of
Common Stock subject to an option shall be inconsistent with
Section 423 of the Code or regulations thereunder.
(m) "Offering Date" means June 1 or December 1, the days
designated by the Board for any offering made under the Plan.
(n) "Offer Period" means the period of six (6) months for
each offering made under the Plan during which payroll deductions
shall be made from the Compensation of Eligible Employees granted
an option under the offering.
(o) "Offering Price" means 95 percent (95%) of the Fair
Market Value of Common Stock on an Offering Date (June 1 or
December 1) of each year during the term of the Plan.
1
<PAGE>
(p) "Plan" means the QNB Corp. Stock Purchase Plan, as
amended from time to time.
(q) "Plan Administrator" means the person appointed by
the Board to administer the Plan in accordance with Section 3.
(r) "Plan Custodian" means the Corporation or a successor
Plan Custodian selected by the Committee.
(s) "Purchase Date" means the date on which the Plan
Custodian credits the Eligible Employee's account (customarily
the last day of each Offer Period) for shares purchased under the
Plan.
(t) "Retirement" means retirement under the Quakertown
National Bank Retirement Plan or any pension plan of a
Subsidiary.
(u) "Subsidiary" means a subsidiary corporation of QNB
Corp. as defined in Section 424(f) of the Code.
3. Administration.
(a) The Board shall appoint a Committee to serve as
Plan Administrator. Except where the Plan specifically reserves
the determination of matters to the Board, the Plan shall be
administered by the Plan Administrator. In addition to the Plan
Administrator's duties with respect to the Plan stated elsewhere
in the Plan, the Plan Administrator shall have full authority,
consistently with the Plan, to interpret the Plan, to promulgate
such rules and regulations with respect to the Plan as is deemed
desirable and to make all other determinations necessary or
desirable for the administration of the Plan. Except as provided
in paragraph (b), all decisions, determinations and
interpretations of the Plan Administrator shall be binding upon
all persons participating in the Plan.
(b) If a claim for benefits under the Plan is wholly
or partially denied by the Plan Administrator, the claimant may
request the Committee to review the denial of his or her claim.
The Committee shall make a decision and furnish such decision to
the claimant and the Plan Administrator within a reasonable
period of time after the request for review is made. All
decisions of the Committee shall be final and binding upon all
persons participating in the Plan.
(c) It is intended that the Plan shall constitute an
"Employee Stock Purchase Plan" within the meaning of Section 423
of the Code. The Plan Administrator shall administer the Plan in
such a manner as to carry out this intention.
4. Shares Subject to the Plan. The aggregate number of
shares of Common Stock which may be purchased pursuant to options
granted under the Plan is 25,000 shares, subject to adjustment
pursuant to Section 17. All options granted pursuant to the Plan
shall be subject to the same rights and privileges. The shares
of Common Stock delivered by the Corporation pursuant to the Plan
may be previously issued shares reacquired by the Corporation or
authorized but unissued shares. If any option expires or
terminates for any reason without having been exercised in full,
the shares covered by the unexercised portion of such option
shall again be available for options within the limit specified
above.
5. Offerings. Subject to the provisions of the Plan, the
Board shall from time to time in its discretion make offerings to
Eligible Employees to purchase Common Stock under the Plan. The
terms and conditions for each such offering shall specify the
Offering Date, the Offering Price, the Offer Period and the
number of shares of Common Stock that may be purchased under the
offering. It is anticipated, but not required, that additional
offerings of six months each will be made under the Plan
commencing on December 1 and June 1 of each year during the term
of the Plan. The initial offering will commence on June 1, 1996.
6. Number of Shares Employee May Purchase.
(a) Pursuant to any offering made under the Plan, and
subject to the provisions of the Plan, no Eligible Employee may
be granted an option to purchase shares of Common Stock under the
Plan which would permit him or her to purchase shares of Common
Stock which exceeds $15,000 of Fair Market Value of such stock
(determined at the time such option was granted) for each
calendar year for which such option was outstanding. The Board
may change from
2
<PAGE>
time to time the total dollar limit of shares that may be
purchased by an Eligible Employee for each calendar year for
which such option was outstanding.
(b) No Eligible Employee may be granted an option to
purchase shares of Common Stock under the Plan if such Eligible
Employee, immediately after the option is granted, would own
stock possessing five (5) percent or more of the total combined
voting power or value of all classes of stock of the Corporation
or its Subsidiaries. For purposes of determining stock ownership
under this paragraph, the rules of Section 424(d) of the Code
shall apply and stock which the Fair Market Value may purchase
under outstanding stock options shall be treated as stock owned
by such Eligible Employee.
7. Method of Participation.
(a) The Plan Administrator shall give notice to
Eligible Employees of each offering of options to purchase shares
of Common Stock pursuant to the Plan and the terms and conditions
for each offering.
(b) Each Eligible Employee who desires to accept all
or any part of the option to purchase shares of Common Stock
under an offering shall signify his or her election to do so by
authorizing the Corporation, in the form and manner prescribed by
the Plan Administrator, to make payroll deductions in any whole
percentage of Compensation of at least 1 percent (1%) and not
more than 5 percent (5%). Such election and authorization must
be made at least 15 days prior to an Offering Period and shall
continue in effect unless and until such Eligible Employee
changes his or her payroll deductions or terminates his or her
employment with the Corporation, as provided in Section 8 and 11
respectively.
(c) The Board may change from time to time the
minimum and maximum percentage limits of payroll deductions set
forth in Section 7(b) of the Plan.
8. Payroll Deductions.
(a) The percentage of Compensation elected by each
Eligible Employee for the purchase of shares of Common Stock
covered by the option granted to such Eligible Employee in any
offering shall be deducted during the Offer Period specified in
the offering through regular payroll deductions, and shall be
credited to an account maintained in his or her name. The
percentage of Compensation so deducted may not be increased or
decreased by the Eligible Employee at any time during the Offer
Period except as provided in Sections 7(b) and 8(b) of the Plan.
(b) At any time during the Offer Period for any
offering, an Eligible Employee granted an option to purchase
shares of Common Stock under such offering may direct the
Corporation to suspend further payroll deductions with respect to
such option, in which case all payroll deductions with respect to
such option shall cease as soon as administratively practical.
In that event, any amounts already credited to his or her account
during the Offer Period in which such suspension occurs shall be
retained by the Corporation until the end of such Offer Period,
at which time such amounts shall be used to purchase shares under
the option in accordance with Section 9. An Eligible Employee
who has suspended further payroll deductions may direct the
Corporation to reinstate deductions at the next Offer Period. An
Eligible Employee's election to suspend payroll deductions, or to
reinstate deductions, shall be made by the filing of a notice
with the Plan Administrator in the form and manner and within the
time period prescribed by the Plan Administrator, and such
changes shall be effective as soon as administratively practical.
9. Exercise of Options and Purchase of Shares.
(a) Unless an Eligible Employee granted an option
under any offering has subsequently suspended payroll deductions
pursuant to Section 8, such option shall be deemed to have been
exercised as of the last day of the Offer Period for such
offering and shall become on each date an irrevocable obligation
to purchase Common Stock in accordance with the provisions of the
Plan. The number of shares of Common Stock purchased each Offer
Period by each such Eligible Employee shall be determined by
dividing (i) the amount (including all payroll deductions and any
dividends paid by the Corporation on shares credited to such
Eligible Employee's account) accumulated in his or her account
during such Offer Period by (ii) the lower or the Offering Price
or the Alternative Offering Price, but in no event shall the
aggregate number of
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shares purchased in any Offer Period exceed the maximum number of
shares of such Eligible Employee was entitled to purchase
pursuant to the limitations provided in Section 6. The shares of
Common Stock purchased by each such Eligible Employee pursuant to
this Section 9 shall be credited to such Eligible Employee's
account, and shall be held in such account until withdrawn,
distributed or sold pursuant to Section 10, 11 or 19, whichever
is applicable.
(b) If, with respect to any offering made under the
Plan, the Eligible Employees participating in the offering
becoming entitled at the end of any Offer Period during the Offer
Period for such offering to purchase more than the aggregate
number of shares of Common Stock specified by the number of
shares, and any amounts remaining in the accounts of Eligible
Employees shall be refunded in each as soon as practicable
thereafter.
10. Withdrawal and Sale of Shares.
(a) An Eligible Employee may, at any time, elect to
withdraw part or all of the shares of Common Stock, except
fractional shares, held in his or her account pursuant to Section
9. As soon as practicable thereafter, a certificate for the
number of whole shares which such Eligible Employee has elected
to withdraw shall be issued to him or her. No certificate for
fractional shares shall be issued and the value of any such
fractional shares, as determined by the Plan Custodian, shall be
paid in cash.
(b) An Eligible Employee's election to withdraw or
sell shares of Common Stock pursuant to paragraphs (a) and (b),
respectively, shall be made by the filing of a notice with the
Plan Administrator in the form and manner prescribed by the Plan
Administrator.
11. Rights Upon Death or Other Termination of Employment.
(a) If the employment of an Eligible Employee granted
an option to purchase shares of Common Stock under any offering
terminates during the Offer Period for such offering because of
death, disability or retirement, the Eligible Employee or, if
applicable, such Eligible Employee's estate, may elect to (i)
cancel the option, in which event the Corporation shall
distribute the balance in such Eligible Employee's account as
soon as practicable thereafter, or (ii) exercise the semi-annual
installment of the option for the Offer Period during which such
termination of employment occurs, in which event any amounts
already credited to such Eligible Employee's account during such
Offer Period shall be retained by the Corporation until the end
of such Offer Period, at which time such amounts shall be used to
purchase shares under the option in accordance with Section 9,
and as soon as practicable thereafter the Corporation shall
distribute the balance of such account.
(b) If the employment of an Eligible Employee granted
an option under any offering terminates for any reason other than
death, disability or retirement, the Corporation shall distribute
such Eligible Employee's account as soon as practicable
thereafter.
(c) If shares of Common Stock represent any portion
of the balance in an Eligible Employee's account which is
required to be distributed pursuant to paragraph (a) or (b) of
this section, the Eligible Employee or if applicable, such
Eligible Employee's estate, may elect to receive a distribution
of such shares, in which event a certificate for such shares
shall be issued, provided that no certificate for fractional
shares shall be issued and the value of any remaining amounts, as
determined by the Plan Custodian, shall be distributed in cash.
(d) An election pursuant to paragraph (a) or (b) of
this section shall be made by the filing of a notice with the
Plan Administrator in the form and manner and within the time
period prescribed by the Plan Administrator. If no such notice
is filed within the time period prescribed by the Plan
Administrator, (i) in the case of the election provided in
paragraph (a), the Corporation shall treat the option as canceled
in accordance with subdivision (ii) of that paragraph, and (ii)
in the case of the election provided in paragraph (c), the Plan
Custodian shall distribute certificates for the shares in
accordance with subdivision (ii) of that paragraph.
(e) Each Eligible Employee may designate a
Beneficiary, in the form and manner prescribed by the Plan
Administrator, to make the elections prescribed in paragraph (d)
of the section in the event of such Eligible Employee's death.
Such Beneficiary designation may be changed by the Eligible
Employee at any time. If there is no valid Beneficiary
designation at the time
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of the Eligible Employee's death (because the designated
Beneficiary predeceased the Eligible Employee for any other
reason), the election shall be made by the executor or
administrator of the Eligible Employee's estate.
12. Shareholder Rights. An Eligible Employee granted an
option to purchase shares of Common Stock under the Plan shall
not be entitled to any rights as a shareholder with respect to
any shares covered by such option until such shares shall have
been registered on the transfer books of QNB Corp. in the name of
such person.
13. Rights Not Transferable. An Eligible Employee's rights
under the Plan are exercisable, during his or her lifetime, only
by such employee and may not be sold, pledged, assigned or
transferred in any manner other than by will or the laws of
descent and distribution. Any attempt to sell, pledge, assign or
transfer such rights shall be void and shall automatically cause
the option held by the Eligible Employee to be terminated. In
such event, any cash remaining in the account of such Eligible
Employee shall be refunded to him or her.
14. Notice Premature Disposition. If within two years after
the date of grant of an option to an Eligible Employee under the
Plan or within one year after the transfer of shares of Common
Stock to such Eligible Employee on any exercise of the option,
the Eligible Employee makes a disposition (as defined in Section
424 (c) of the Code) of shares of such Common Stock, such
Eligible Employee shall notify the Plan Administrator within 10
days after such disposition.
15. Use of Proceeds. The proceeds received by the
Corporation from the sale by it of shares of Common Stock to
persons exercising options pursuant to the Plan will be used for
the general purposes of the Corporation.
16. Laws, Regulations and Listings. All rights granted or to
be granted to Eligible Employees under the Plan are express
subject to all applicable laws and regulations and to the
approval of all governmental authorities required in connection
with the authorization, issuance, sale or transfer of the shares
of Common Stock reserved for the Plan including without
limitation, there being a current registration statement covering
the offer of shares of Common Stock purchasable under options on
the last day of the Offer Period applicable to such options. If
a registration statement shall not then be effective, the term of
such options and the Offer Period shall be extended until the
first business day after the effective date of such registration
statement, or post-effective amendment thereto, but in no event
later than 27 months after the date such options were granted.
In addition, all rights are subject to the due listing of such
shares of Common Stock on any stock exchanges where the Common
Stock is listed.
17. Adjustment Upon Changes in Capitalization. If there is a
change in the number or kind of outstanding shares of Common
Stock of QNB Corp., by reason of a stock dividend, stock split,
recapitalization, merger, consolidation, combination or other
similar event, appropriate adjustments shall be made by the Board
to the number and kind of shares subject to the Plan, the number
and kind of shares under options then outstanding, the maximum
number of shares available for options, the Offering Price and
Alternative Offering Price, and other relevant provisions, to the
extent that the Board, in its sole discretion, determines that
such change makes such adjustments necessary or equitable.
18. No Employment Rights. Nothing in the Plan shall confer
upon any employee of the Corporation any right to continued
employment, or interfere with the right of the Corporation to
terminate his or her employment at any time.
19. Termination: Amendments.
(a) The Board may, at any time, terminate the Plan.
Unless the Plan shall previously have been terminated by the
Board, it shall terminate on June 1, 2001. No option may be
granted after such termination. Upon termination of the Plan,
shares of Common Stock held in the accounts of Eligible Employees
shall be issued to them, and cash, if any, remaining in such
accounts
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shall be refunded to them, unless such shares and cash are
transferred to a successor plan, if any, at the election of the
Eligible Employee.
(b) The Board may, at any time or times, amend the
Plan or amend any outstanding options or options for the purpose
of satisfying the requirements of any changes in applicable laws
or regulations or for any other purpose which at the time may be
permitted by law.
(c) Except as provided in Section 17, no such
amendment of the Plan shall, without the approval of the
shareholders of QNB Corp. (which shall not occur more frequently
than once every six months): (i) increase the maximum number of
shares which may be purchased pursuant to options granted under
the Plan; (ii) reduce the price at which shares of Common Stock
subject to options granted under the Plan may be purchased; (iii)
change the definition of Subsidiaries eligible to participate in
the Plan; or (iv) materially increase the benefits accruing to
participants in the Plan.
(d) No termination or amendment of the Plan shall,
without the consent of an Eligible Employee, adversely affect the
Eligible Employee's rights under any option previously granted
under the Plan.
20. Effective Date. The Plan shall become effective upon
approval by the Board; provided, however, that the Plan shall be
submitted to the shareholders of QNB Corp. for approval in
accordance with corporate law of the Commonwealth of
Pennsylvania, and if not approved by the shareholders shall be of
no force and effect.
IN WITNESS WHEREOF, the Corporation has caused the Plan to
be duly executed by its officers as of the 12th day of March,
1996.
(SEAL)
Attest: QNB CORP.
/s/ Tara E. Zuck /s/ Thomas J. Bisko
- ------------------- --------------------
Tara E. Zuck Thomas J. Bisko
Assistant Secretary President/CEO
:64500
EXHIBIT 99C
The Quakertown National Bank Profit Sharing
and Section 401(K) Salary Deferral Plan
<PAGE>
THE QUAKERTOWN NATIONAL BANK
PROFIT SHARING AND
SECTION 401(K) SALARY DEFERRAL PLAN
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
ARTICLE II
TOP HEAVY AND ADMINISTRATION
2.1 TOP HEAVY PLAN REQUIREMENTS 13
2.2 DETERMINATION OF TOP HEAVY STATUS 13
2.3 POWERS AND RESPONSIBILITIES OF THE EMPLOYER 15
2.4 DESIGNATION OF ADMINISTRATIVE AUTHORITY 16
2.5 ALLOCATION AND DELEGATION OF RESPONSIBILITIES 16
2.6 POWERS AND DUTIES OF THE ADMINISTRATOR 16
2.7 RECORDS AND REPORTS 17
2.8 APPOINTMENT OF ADVISERS 17
2.9 INFORMATION FROM EMPLOYER 17
2.10 PAYMENT OF EXPENSES 17
2.11 MAJORITY ACTIONS 18
2.12 CLAIMS PROCEDURE 18
2.13 CLAIMS REVIEW PROCEDURE 18
ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY 18
3.2 APPLICATION FOR PARTICIPATION 18
3.3 EFFECTIVE DATE OF PARTICIPATION 19
3.4 DETERMINATION OF ELIGIBILITY 19
3.5 TERMINATION OF ELIGIBILITY 19
3.6 OMISSION OF ELIGIBLE EMPLOYEE 19
3.7 INCLUSION OF INELIGIBLE EMPLOYEE 19
3.8 ELECTION NOT TO PARTICIPATE 19
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER'S
CONTRIBUTION 20
4.2 PARTICIPANT'S SALARY REDUCTION ELECTION 20
4.3 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION 23
4.4 ALLOCATION OF CONTRIBUTION, FORFEITURES AND
EARNINGS 23
4.5 ACTUAL DEFERRAL PERCENTAGE TESTS 26
4.6 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS 28
4.7 ACTUAL CONTRIBUTION PERCENTAGE TESTS 29
4.8 ADJUSTMENT TO ACTUAL CONTRIBUTION PERCENTAGE
TESTS 31
4.9 MAXIMUM ANNUAL ADDITIONS 32
4.10 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS 35
4.11 TRANSFERS FROM QUALIFIED PLANS 35
4.12 DIRECTED INVESTMENT ACCOUNT 37
ARTICLE V
VALUATIONS
5.1 VALUATION OF THE TRUST FUND 37
5.2 METHOD OF VALUATION 37
<PAGE>
ARTICLE VI
DETERMINATION AND DISTRIBUTION OF BENEFITS
6.1 DETERMINATION OF BENEFITS UPON RETIREMENT 38
6.2 DETERMINATION OF BENEFITS UPON DEATH 38
6.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY 39
6.4 DETERMINATION OF BENEFITS UPON TERMINATION 39
6.5 DISTRIBUTION OF BENEFITS 41
6.6 DISTRIBUTION OF BENEFITS UPON DEATH 42
6.7 TIME OF SEGREGATION OR DISTRIBUTION 43
6.8 DISTRIBUTION FOR MINOR BENEFICIARY 43
6.9 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN 43
6.10 ADVANCE DISTRIBUTION FOR HARDSHIP 43
6.11 QUALIFIED DOMESTIC RELATIONS ORDER DISTRIBUTION 44
ARTICLE VII
TRUSTEE
7.1 BASIC RESPONSIBILITIES OF THE TRUSTEE 45
7.2 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE 45
7.3 OTHER POWERS OF THE TRUSTEE 45
7.4 DUTIES OF THE TRUSTEE REGARDING PAYMENTS 47
7.5 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES 47
7.6 ANNUAL REPORT OF THE TRUSTEE 48
7.7 AUDIT 48
7.8 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE 48
7.9 TRANSFER OF INTEREST 49
7.10 DIRECT ROLLOVER 49
7.11 EMPLOYER SECURITIES AND REAL PROPERTY 50
ARTICLE VIII
AMENDMENT, TERMINATION AND MERGERS
8.1 AMENDMENT 50
8.2 TERMINATION 51
8.3 MERGER OR CONSOLIDATION 51
ARTICLE IX
MISCELLANEOUS
9.1 PARTICIPANT'S RIGHTS 51
9.2 ALIENATION 51
9.3 CONSTRUCTION OF PLAN 52
9.4 GENDER AND NUMBER 52
9.5 LEGAL ACTION 52
9.6 PROHIBITION AGAINST DIVERSION OF FUNDS 52
9.7 BONDING 52
9.8 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE 53
9.9 INSURER'S PROTECTIVE CLAUSE 53
9.10 RECEIPT AND RELEASE FOR PAYMENTS 53
9.11 ACTION BY THE EMPLOYER 53
9.12 NAMED FIDUCIARIES AND ALLOCATION OF
RESPONSIBILITY 53
9.13 HEADINGS 54
9.14 APPROVAL BY INTERNAL REVENUE SERVICE 54
9.15 UNIFORMITY 54
ARTICLE X
PARTICIPATING EMPLOYERS
10.1 ADOPTION BY OTHER EMPLOYERS 54
10.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS 54
10.3 DESIGNATION OF AGENT 55
<PAGE>
10.4 EMPLOYEE TRANSFERS 55
10.5 PARTICIPATING EMPLOYER'S CONTRIBUTION 55
10.6 AMENDMENT 55
10.7 DISCONTINUANCE OF PARTICIPATION 55
10.8 ADMINISTRATOR'S AUTHORITY 56
10.9 PARTICIPATING EMPLOYER CONTRIBUTION
FOR AFFILIATE 56
<PAGE>
<PAGE>
THE QUAKERTOWN NATIONAL BANK
PROFIT SHARING AND
SECTION 401(K) SALARY DEFERRAL PLAN
THIS AGREEMENT, hereby made and entered into this _____
day of ______________________, 19___, by and between QNB Corp.
(herein referred to as the "Employer") and The Quakertown
National Bank (herein referred to as the "Trustee").
W I T N E S S E T H:
WHEREAS, the Employer heretofore established a Profit
Sharing Plan and Trust effective August 1, 1984, (hereinafter
called the "Effective Date") known as The Quakertown National
Bank Profit Sharing and Section 401(k) Salary Deferral Plan
(herein referred to as the "Plan") in recognition of the
contribution made to its successful operation by its employees
and for the exclusive benefit of its eligible employees; and
WHEREAS, under the terms of the Plan, the Employer has
the ability to amend the Plan, provided the Trustee joins in such
amendment if the provisions of the Plan affecting the Trustee are
amended;
NOW, THEREFORE, effective January 1, 1989, except as
otherwise provided, the Employer and the Trustee in accordance
with the provisions of the Plan pertaining to amendments thereof,
hereby amend the Plan in its entirety and restate the Plan to
provide as follows:
ARTICLE I
DEFINITIONS
1.1 "Act" means the Employee Retirement Income Security Act
of 1974, as it may be amended from time to time.
1.2 "Administrator" means the person or entity designated
by the Employer pursuant to Section 2.4 to administer the Plan on
behalf of the Employer.
1.3 "Affiliated Employer" means any corporation which is a
member of a controlled group of corporations (as defined in Code
Section 414(b)) which includes the Employer; any trade or
business (whether or not incorporated) which is under common
control (as defined in Code Section 414(c)) with the Employer;
any organization (whether or not incorporated) which is a member
of an affiliated service group (as defined in Code Section
414(m)) which includes the Employer; and any other entity
required to be aggregated with the Employer pursuant to
Regulations under Code Section 414(o).
1.4 "Aggregate Account" means, with respect to each
Participant, the value of all accounts maintained on behalf of a
Participant, whether attributable to Employer or Employee
contributions, subject to the provisions of Section 2.2.
1.5 "Anniversary Date" means December 31st.
1.6 "Beneficiary" means the person to whom the share of a
deceased Participant's total account is payable, subject to the
restrictions of Sections 6.2 and 6.6.
1.7 "Code" means the Internal Revenue Code of 1986, as
amended or replaced from time to time.
1.8 "Compensation" with respect to any Participant means
such Participant's wages, salaries, fees for professional
services and other amounts received (without regard to whether or
not an amount is paid in cash) for personal services actually
rendered in the course of employment with the Employer
maintaining the Plan to the extent that the amounts are
includible in
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gross income (including, but not limited to, commissions paid
salesmen, compensation for services on the basis of a percentage
of profits, commissions on insurance premiums, tips, bonuses,
fringe benefits, and reimbursements or other expense allowances
under a nonaccountable plan (as described in Regulation
1.62-2(c)) for a Plan Year.
Compensation shall exclude (a)(1) contributions made by
the Employer to a plan of deferred compensation to the extent
that, the contributions are not includible in the gross income of
the Participant for the taxable year in which contributed, (2)
Employer contributions made on behalf of an Employee to a
simplified employee pension plan described in Code Section 408(k)
to the extent such contributions are excludable from the
Employee's gross income, (3) any distributions from a plan of
deferred compensation; (b) amounts realized from the exercise of
a non-qualified stock option, or when restricted stock (or
property) held by an Employee either becomes freely transferable
or is no longer subject to a substantial risk of forfeiture; (c)
amounts realized from the sale, exchange or other disposition of
stock acquired under a qualified stock option; and (d) other
amounts which receive special tax benefits, or contributions made
by the Employer (whether or not under a salary reduction
agreement) towards the purchase of any annuity contract described
in Code Section 403(b) (whether or not the contributions are
actually excludable from the gross income of the Employee).
For purposes of this Section, the determination of
Compensation shall be made by:
(a) including amounts which are contributed by the
Employer pursuant to a salary reduction
agreement and which are not includible in the
gross income of the Participant under Code
Sections 125, 402(e)(3), 402(h), 403(b) or
457, and Employee contributions described in
Code Section 414(h)(2) that are treated as
Employer contributions.
For a Participant's initial year of participation,
Compensation shall be recognized for the entire Plan Year.
Compensation in excess of $200,000 shall be
disregarded. Such amount shall be adjusted at the same time and
in such manner as permitted under Code Section 415(d), except
that the dollar increase in effect on January I of any calendar
year shall be effective for the Plan Year beginning with or
within such calendar year and the first adjustment to the
$200,000 limitation shall be effective on January 1, 1990. For
any short Plan Year the Compensation limit shall be an amount
equal to the Compensation limit for the calendar year in which
the Plan Year begins multiplied by the ratio obtained by dividing
the number of full months in the short Plan Year by twelve (12).
In applying this limitation, the family group of a Highly
Compensated Participant who is subject to the Family Member
aggregation rules of Code Section 414(q)(6) because such
Participant is either a "five percent owner" of the Employer or
one of the ten (10) Highly Compensated Employees paid the
greatest "415 Compensation" during the year, shall be treated as
a single Participant, except that for this purpose Family Members
shall include only the affected Participant's spouse and any
lineal descendants who have not attained age nineteen (19) before
the close of the year. If, as a result of the application of
such rules the adjusted $200,000 limitation is exceeded, then the
limitation shall be prorated among the affected Family Members in
proportion to each such Family Member's Compensation prior to the
application of this limitation, or the limitation shall be
adjusted in accordance with any other method permitted by
Regulation.
If, as a result of such rules, the maximum "annual
addition" limit of Section 4.9 (a) would be exceeded for one or
more of the affected Family Members, the prorated Compensation of
all affected Family Members shall be adjusted to avoid or reduce
any excess. The prorated Compensation of any affected Family
Member whose allocation would exceed the limit shall be adjusted
downward to the level needed to provide an allocation equal to
such limit. The prorated Compensation of affected Family Members
not affected by
2
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such limit shall then be adjusted upward on a pro rata basis not
to exceed each such affected Family Member's Compensation as
determined prior to application of the Family Member rule. The
resulting allocation shall not exceed such individuals maximum
"annual addition" limit. If, after these adjustments, an "excess
amount" still results, such "excess amount" shall be disposed of
in the manner described in Section 4.10(a) pro rata among all
affected Family Members.
For purposes of this Section, if the Plan is a plan
described in Code Section 413(c) or 414(f) (a plan maintained by
more than one Employer), the $200,000 limitation applies
separately with respect to the Compensation of any Participant
from each Employer maintaining the Plan.
If, in connection with the adoption of this amendment
and restatement, the definition of Compensation has been
modified, then, for Plan Years prior to the Plan Year which
includes the adoption date of this amendment and restatement,
Compensation means compensation determined pursuant to the Plan
then in effect.
For Plan Years beginning prior to January 1, 1989, the
$200,000 limit (without regard to Family Member aggregation)
shall apply only for Top Heavy Plan Years and shall not be
adjusted.
1.9 "Contract" or "Policy" means any life insurance policy,
retirement income or annuity policy, or annuity contract (group
or individual) issued pursuant to the terms of the Plan.
1.10 "Deferred Compensation" with respect to any Participant
means the amount of the Participant's total Compensation which
has been contributed to the Plan in accordance with the
Participant's deferral election pursuant to Section 4.2 excluding
any such amounts distributed as excess "annual additions"
pursuant to Section 4.10(a).
1.11 "Early Retirement Date" means the first day of the
month (prior to the Normal Retirement Date) coinciding with or
following the date on which a Participant or Former Participant
attains age 55 and has completed at least 5 Years of Service with
the Employer (Early Retirement Age). A Participant shall become
fully Vested upon satisfying this requirement if still employed
at his Early Retirement Age.
A Former Participant who terminates employment after
satisfying the service requirement for Early Retirement and who
thereafter reaches the age requirement contained herein shall be
entitled to receive his benefits under this Plan.
1.12 "Elective Contribution" means the Employer's
contributions to the Plan of Deferred Compensation excluding any
such amounts distributed as excess "annual additions" pursuant to
Section 4.10(a). In addition, any Employer Qualified Non-Elective
Contribution made pursuant to Section 4.6 shall be considered an
Elective Contribution for purposes of the Plan. Any such
contributions deemed to be Elective Contributions shall be
subject to the requirements of Sections 4.2(b) and 4.2(c) and
shall further be required to satisfy the discrimination
requirements of Regulation 1.401(k) - 1(b)(5), the provisions of
which are specifically incorporated herein by reference.
1.13 "Eligible Employee" means any Employee.
Employees of Affiliated Employers shall not be eligible
to participate in this Plan unless such Affiliated Employers have
specifically adopted this Plan in writing.
1.14 "Employee" means any person who is employed by the
Employer or Affiliated Employer, but excludes any person who is
an independent contractor. Employee shall include Leased
Employees within the meaning of Code Sections 414(n)(2) and 414
(o)(2) unless such Leased Employees are covered by a plan
described in Code Section 414(n)(5) and such Leased Employees do
not constitute more than 20 percent (20%) of the recipient's
non-highly compensated work force.
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1.15 "Employer" means QNB Corp. and any Participating
Employer (as defined in Section 10.1) which shall adopt this
Plan; any successor which shall maintain this Plan; and any
predecessor which has maintained this Plan. The Employer is a
corporation, with principal offices in the Commonwealth of
Pennsylvania.
1.16 "Excess Aggregate Contributions" means, with respect to
any Plan Year, the excess of the aggregate amount of the Employer
matching contributions made pursuant to Section 4.1(b) and any
qualified non-elective contributions or elective deferrals taken
into account pursuant to Section 4.7(c) on behalf of Highly
Compensated Participants for such Plan Year, over the maximum
amount of such contributions permitted under the limitations of
Section 4.7(a).
1.17 "Excess Contributions" means, with respect to a Plan
Year, the excess of Elective Contributions made on behalf of
Highly Compensated Participants for the Plan Year over the
maximum amount of such contributions permitted under Section
4.5(a). Excess Contributions shall be treated as an "annual
addition" pursuant to Section 4.9(b).
1.18 "Excess Deferred Compensation" means, with respect to
any taxable year of a Participant, the excess of the aggregate
amount of such Participant's Deferred Compensation and the
elective deferrals pursuant to Section 4.2(f) actually made on
behalf of such Participant for such taxable year, over the dollar
limitation provided for in Code Section 402(g), which is
incorporated herein by reference. Excess Deferred Compensation
shall be treated as an "annual addition" pursuant to Section
4.9(b) when contributed to the Plan unless distributed to the
affected Participant not later than the first April 15th
following the close of the Participant's taxable year.
Additionally, for purposes of Sections 2.2 and 4.4(g), Excess
Deferred Compensation shall continue to be treated as Employer
contributions even if distributed pursuant to Section 4.2(f).
However, Excess Deferred Compensation of Non-Highly Compensated
Participants is not taken into account for purposes of Section
4.5(a) to the extent such Excess Deferred Compensation occurs
pursuant to Section 4.2(d).
1.19 "Family Member" means, with respect to an affected
Participant, such Participant's spouse, such Participant's lineal
descendants and ascendants and their spouses, all as described in
Code Section 414(q)(6)(B).
1.20 "Fiduciary" means any person who (a) exercises any
discretionary authority or discretionary control respecting
management of the Plan or exercises any authority or control
respecting management or disposition of its assets, (b) renders
investment advice for a fee or other compensation, direct or
indirect, with respect to any monies or other property of the
Plan or has any authority or responsibility to do so, or (c) has
any discretionary authority or discretionary responsibility in
the administration of the Plan, including, but not limited to,
the Trustee, the Employer and its, representative body, and the
Administrator.
1.21 "Fiscal Year" means the Employer's accounting year of
twelve (12) months commencing on January 1st of each year and
ending the following December 31st.
1.22 "Forfeiture" means that portion of a Participant's
Account that is not Vested, and occurs on the earlier of:
(a) the distribution of the entire Vested portion of a
Terminated Participant's Account, or
(b) the last day of the Plan Year in which the
Participant incurs five (5) consecutive 1-Year Breaks in Service.
Furthermore, for purposes of paragraph (a) above, in
the case of a Terminated Participant whose Vested benefit is
zero, such Terminated Participant shall be deemed to have
received a distribution of his Vested benefit upon his
termination of employment. Restoration of such amounts shall
occur pursuant to Section 6.4(f)(2). In addition, the term
Forfeiture shall also include amounts deemed to be Forfeitures
pursuant to any other provision of this Plan.
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1.23 "Former Participant" means a person who has been a
Participant, but who has ceased to be a Participant for any
reason.
1.24 "415 Compensation" with respect to any Participant
means such Participant's wages, salaries, fees for professional
services and other amounts received (without regard to whether or
not an amount is paid in cash) for personal services actually
rendered in the course of employment with the Employer
maintaining the Plan to the extent that the amounts are
includible in gross income (including, but not limited to,
commissions paid salesmen, compensation for services on the basis
of a percentage of profits, commissions on insurance premiums,
tips, bonuses, fringe benefits, and reimbursements or other
expense allowances under a nonaccountable plan (as described in
Regulation 1.62-2(c)) for a Plan Year.
"415 Compensation" shall exclude (a)(1) contributions
made by the Employer to a plan of deferred compensation to the
extent that, the contributions are not includible in the gross
income of the Participant for the taxable year in which
contributed, (2) Employer contributions made on behalf of an
Employee to a simplified employee pension plan described in Code
Section 408(k) to the extent such contributions are excludable
from the Employee's gross income, (3) any distributions from a
plan of deferred compensation; (b) amounts realized from the
exercise of a non-qualified stock option, or when restricted
stock (or property) held by an Employee either becomes freely
transferable or is no longer subject to a substantial risk of
forfeiture; (c) amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock option; and
(d) other amounts which receive special tax benefits, or
contributions made by the Employer (whether or not under a salary
reduction agreement) towards the purchase of any annuity contract
described in Code Section 403(b) (whether or not the
contributions are actually excludable from the gross income of
the Employee).
If, in connection with the adoption of this amendment
and restatement, the definition of "415 Compensation" has been
modified, then, for Plan Years prior to the Plan Year which
includes the adoption date of this amendment and restatement,
"415 Compensation" means compensation determined pursuant to the
Plan then in effect.
1.25 "414(s) Compensation" with respect to any Participant
means such Participant's "415 Compensation" paid during a Plan
Year. The amount of "414(s) Compensation" with respect to any
Participant shall include "414(s) Compensation" for the entire
twelve (12) month period ending on the last day of such Plan
Year.
For purposes of this Section, the determination of
"414(s) Compensation" shall be made by including amounts which
are contributed by the Employer pursuant to a salary reduction
agreement and which are not includible in the gross income of the
Participant under Code Sections 125, 402(e)(3), 402(h), 403(b) or
457, and Employee contributions described in Code Section 414(h)
(2) that are treated as Employer contributions.
"414(s) Compensation" in excess of $200,000 shall be
disregarded. Such amount shall be adjusted at the same time and
in such manner as permitted under Code Section 415(d), except
that the dollar increase in effect on January 1 of any calendar
year shall be effective for the Plan Year beginning with or
within such calendar year and the first adjustment to the
$200,000 limitation shall be effective on January 1, 1990. For
any short Plan Year the "414(s) Compensation" limit shall be an
amount equal to the "414(s) Compensation" limit for the calendar
year in which the Plan Year begins multiplied by the ratio
obtained by dividing the number of full months in the short Plan
Year by twelve (12). In applying this limitation, the family
group of a Highly Compensated Participant who is subject to the
Family Member aggregation rules of Code Section 414(q)(6) because
such Participant is either a "five percent owner" of the Employer
or one of the ten (10) Highly Compensated Employees paid the
greatest "415 Compensation" during the year, shall be treated as
a single Participant, except that for this purpose Family Members
shall include only the affected Participant's spouse and any
lineal descendants who have not attained age nineteen (19) before
the close of the year.
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If, in connection with the adoption of this amendment
and restatement, the definition of "414(s) Compensation" has been
modified, then, for Plan Years prior to the Plan Year which
includes the adoption date of this amendment and restatement,
"414(s) Compensation" means compensation determined pursuant to
the Plan then in effect.
1.26 "Highly Compensated Employee" means an Employee
described in Code Section 414(q) and the Regulations thereunder,
and generally means an Employee who performed services for the
Employer during the "determination year" and is in one or more of
the following groups:
(a) Employees who at any time during the
"determination year" or "look-back year" were
"five percent owners" as defined in Section
1.32(c).
(b) Employees who received "415 Compensation" during
the "look-back year" from the Employer in excess
of $75,000.
(c) Employees who received "415 Compensation" during
the "look-back year" from the Employer in excess
of $50,000 and were in the Top Paid Group of
Employees for the Plan Year.
(d) Employees who during the "look-back year" were
officers of the Employer (as that term is defined
within the meaning of the Regulations under Code
Section 416) and received "415 Compensation"
during the "look-back year" from the Employer
greater than 50 percent of the limit in
effect under Code Section 415(b)(1)(A) for any
such Plan Year. The number of officers shall be
limited to the lesser of (i) 50 employees; or (ii)
the greater of 3 employees or 10 percent of all
employees. For the purpose of determining the
number of officers, Employees described in Section
1.56(a), (b), (c) and (d) shall be excluded, but
such Employees shall still be considered for the
purpose of identifying the particular Employees
who are officers. If the Employer does not have
at least one officer whose annual "415
Compensation" is in excess of 50 percent of the
Code Section 415(b)(1)(A) limit, then the
highest paid officer of the Employer will be
treated as a Highly Compensated Employee.
(e) Employees who are in the group consisting of the
100 Employees paid the greatest "415 Compensation" during the
"determination year" and are also described in (b), (c) or (d)
above when these paragraphs are modified to substitute
"determination year" for "look-back year".
The "determination year" shall be the Plan Year for
which testing is being performed, and the "look-back year" shall
be the immediately preceding twelve (12) month period.
For purposes of this Section, the determination of "415
Compensation" shall be made by including amounts that would
otherwise be excluded from a Participant's gross income by reason
of the application of Code Sections 125, 402(e)(3), 402(h)(1)(B)
and, in the case of Employer contributions made pursuant to a
salary reduction agreement, by including amounts that would
otherwise be excluded from a Participant's gross Income by reason
of the application of Code Section 403(b). Additionally, the
dollar threshold amounts specified in (b) and (c) above shall be
adjusted at such time and in such manner as is provided in
Regulations. In the case of such an adjustment, the dollar
limits which shall be applied are those for the calendar year in
which the "determination year" or "look-back year" begins.
In determining who is a Highly Compensated Employee,
Employees who are non-resident aliens and who received no earned
income (within the meaning of Code Section 911(d)(2)) from the
Employer constituting United States source income within the
meaning of Code Section 861(a)(3) shall not be treated as
Employees. Additionally, all Affiliated Employers shall be taken
into account as a single employer and Leased Employees within the
meaning of Code
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Sections 414(n)(2) and 414(o)(2) shall be considered Employees
unless such Leased Employees are covered by a plan described in
Code Section 414(n)(5) and are not covered in any qualified plan
maintained by the Employer. The exclusion of Leased Employees
for this purpose shall be applied on a uniform and consistent
basis for all of the Employer's retirement plans. Highly
Compensated Former Employees shall be treated as Highly
Compensated Employees without regard to whether they performed
services during the "determination year".
1.27 "Highly Compensated Former Employee" means a former
Employee who had a separation year prior to the "determination
year" and was a Highly Compensated Employee in the year of
separation from service or in any "determination year" after
attaining age 55. Notwithstanding the foregoing, an Employee who
separated from service prior to 1987 will be treated as a Highly
Compensated Former Employee only if during the separation year
(or year preceding the separation year) or any year after the
Employee attains age 55 (or the last year ending before the
Employee's 55th birthday), the Employee either received "415
Compensation" in excess of $50,000 or was a "five percent owner".
For purposes of this Section, "determination year", "415
Compensation" and "five percent owner" shall be determined in
accordance with Section 1.26. Highly Compensated Former Employees
shall be treated as Highly Compensated Employees. The method set
forth in this Section for determining who is a "Highly
Compensated Former Employee" shall be applied on a uniform and
consistent basis for all purposes for which the Code Section
414(q) definition is applicable.
1.28 "Highly Compensated Participant" means any Highly
Compensated Employee who is eligible to participate in the Plan.
1.29 "Hour of Service" means (1) each hour for which an
Employee is directly or indirectly compensated or entitled to
compensation by the Employer for the performance of duties during
the applicable computation period; (2) each hour for which an
Employee is directly or indirectly compensated or entitled to
compensation by the Employer (irrespective of whether the
employment relationship has terminated) for reasons other than
performance of duties (such as vacation, holidays, sickness, jury
duty, disability, lay-off, military duty or leave of absence)
during the applicable computation period; (3) each hour for which
back pay is awarded or agreed to by the Employer without regard
to mitigation of damages. These hours will be credited to the
Employee for the computation period or periods to which the award
or agreement pertains rather than the computation period in which
the award, agreement or payment is made. The same Hours of
Service shall not be credited both under (1) or (2), as the case
may be, and under (3).
Notwithstanding the above, (i) no more than 501 Hours
of Service are required to be credited to an Employee on account
of any single continuous period during which the Employee
performs no duties (whether or not such period occurs in a single
computation period); (ii) an hour for which an Employee is
directly or indirectly paid, or entitled to payment, on account
of a period during which no duties are performed is not required
to be credited to the Employee if such payment is made or due
under a plan maintained solely for the purpose of complying with
applicable worker's compensation, or unemployment compensation or
disability insurance laws; and (iii) Hours of Service are not
required to be credited for a payment which solely reimburses an
Employee for medical or medically related expenses incurred by
the Employee.
For purposes of this Section, a payment shall be deemed
to be made by or due from the Employer regardless of whether such
payment is made by or due from the Employer directly, or
indirectly through, among others, a trust fund, or insurer, to
which the Employer contributes or pays premiums and regardless of
whether contributions made or due to the trust fund, insurer, or
other entity are for the benefit of particular Employees or are
on behalf of a group of Employees in the aggregate.
An Hour of Service must be counted for the purpose of
determining a Year of Service, a year of participation for
purposes of accrued benefits, a 1-Year Break in Service, and
employment commencement date (or reemployment
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commencement date). In addition, Hours of Service will be
credited for employment with other Affiliated Employers. The
provisions of Department of Labor regulations 2530.200b-2(b) and
(c) are incorporated herein by reference.
1.30 "Income" means the income or losses allocable to
"excess amounts" which shall equal the allocable gain or loss for
the "applicable computation period". The income allocable to
"excess amounts" for the "applicable computation period" is
determined by multiplying the income for the "applicable
computation period" by a fraction. The numerator of the fraction
is the "excess amount" for the "applicable computation period".
The denominator of the fraction is the total "account balance"
attributable to "Employer contributions" as of the end of the
"applicable computation period", reduced by the gain allocable to
such total amount for the "applicable computation period" and
increased by the loss allocable to such total amount for the
"applicable computation period". The provisions of this Section
shall be applied:
(a) For purposes of Section 4.2(f), by substituting:
(1) "Excess Deferred Compensation" for "excess
amounts";
(2) "Taxable year of the Participant" for
"applicable computation period";
(3) "Deferred Compensation" for "Employer
contributions"; and
(4) "Participant's Elective Account" for "account
balance".
(b) For purposes of Section 4.6(a), by substituting:
(1) "Excess Contributions" for "excess amounts";
(2) "Plan Year" for "applicable computation
period";
(3) "Elective Contributions" for "Employer
contributions"; and
(4) "Participant's Elective Account" for "account
balance".
(c) For purposes of Section 4.8(a), by substituting:
(1) "Excess Aggregate Contributions" for "excess
amounts";
(2) "Plan Year" for "applicable computation
period";
(3) "Employer matching contributions made pursuant
to Section 4.1(b) and any qualified non-elective
contributions or elective deferrals taken into
account pursuant to Section 4.7(c)" for "Employer
contributions"; and
(4) "Participant's Account" for "account balance".
Income allocable to any distribution of Excess Deferred
Compensation on or before the last day of the taxable year of the
Participant shall be calculated from the first day of the taxable
year of the Participant to the date on which the distribution is
made pursuant to either the "f Factional method" or the "safe
harbor method". Under such "safe harbor method", allocable
Income for such period shall be deemed to equal ten percent (10%)
of the Income allocable to such Excess Deferred Compensation
multiplied by the number of calendar months in such period. For
purposes of determining the number of calendar months in such
period, a distribution occurring on or before the fifteenth day
of the month shall be treated as having been made on the last day
of the preceding month and a distribution occurring after such
fifteenth day shall be treated as having been made on the first
day of the next subsequent month.
Notwithstanding the above, for "applicable computation
periods" which began in 1987, Income during the "gap period"
shall not be taken into account.
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1.31 "Investment Manager" means an entity that (a) has the
power to manage, acquire, or dispose of Plan assets and (b)
acknowledges fiduciary responsibility to the Plan in writing.
Such entity must be a person, firm, or corporation registered as
an investment adviser under the Investment Advisers Act of 1940,
a bank, or an insurance company.
1.32 "Key Employee" means an Employee as defined in Code
Section 416(i) and the Regulations thereunder. Generally, any
Employee or former Employee (as well as each of his
Beneficiaries) is considered a Key Employee if he, at any time
during the Plan Year that contains the "Determination Date" or
any of the preceding four (4) Plan Years, has been included in
one of the following categories:
(a) an officer of the Employer (as that term is defined
within the meaning of the Regulations under Code
Section 416) having annual "415 Compensation" greater
than 50 percent of the amount in effect under Code
Section 415(b)(1)(A) for any such Plan Year.
(b) one of the ten employees having annual "415
Compensation" from the Employer for a Plan Year
greater than the dollar limitation in effect
under Code Section 415(c)(1)(A) for the calendar year
in which such Plan Year ends and owning (or considered
as owning within the meaning of Code Section 318) both
more than one-half percent interest and the largest
interests in the Employer.
(c) a "five percent owner" of the Employer. "Five
percent owner" means any person who owns (or is
considered as owning within the meaning of Code Section
318) more than five percent (5%) of the outstanding
stock of the Employer or stock possessing more than
five percent (5%) of the total combined voting power of
all stock of the Employer or, in the case of an
unincorporated business, any person who owns more than
five percent (5%) of the capital or profits interest in
the Employer. In determining percentage ownership
hereunder, employers that would otherwise be aggregated
under Code Sections 414(b), (c),(m) and (o) shall be
treated as separate employers.
(d) a "one percent owner" of the Employer having an
annual "415 Compensation" from the Employer of more
than $150,000. "One percent owner" means any person
who owns (or is considered as owning within the meaning
of Code Section 318) more than one percent (1%) of the
outstanding stock of the Employer or stock possessing
more than one percent (1%) of the total combined voting
power of all stock of the Employer or, in the case of
an unincorporated business, any person who owns more
than one percent (1%) of the capital or profits
interest in the Employer. In determining percentage
ownership hereunder, employers that would otherwise be
aggregated under Code Sections 414(b), (c), (m) and
(o) shall be treated as separate employers. However,
in determining whether an individual has "415
Compensation" of more than $150,000, "415 Compensation"
from each employer required to be aggregated under Code
Sections 414(b), (c), (m) and (o) shall be taken into
account.
For purposes of this Section, the determination of "415
Compensation" shall be made by including amounts that would
otherwise be excluded from a Participant's gross income by reason
of the application of Code Sections 125, 402(e)(3), 402(h)(1)(B)
and, in the case of Employer contributions made pursuant to a
salary reduction agreement, by including amounts that would
otherwise be excluded from a Participant's gross income by reason
of the application of Code Section 403(b).
1.33 "Late Retirement Date" means the first day of the month
coinciding with or next following a Participant's actual
Retirement Date after having reached his Normal Retirement Date.
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1.34 "Leased Employee" means any person (other than an
Employee of the recipient) who pursuant to an agreement between
the recipient and any other person ("leasing organization") has
performed services for the recipient (or for the recipient and
related persons determined in accordance with Code Section
414(n)(6)) on a substantially full time basis for a period of at
least one year, and such services are of a type historically
performed by employees in the business field of the recipient
employer. Contributions or benefits provided a Leased Employee
by the leasing organization which are attributable to services
performed for the recipient employer shall be treated as provided
by the recipient employer. A Leased Employee shall not be
considered an Employee of the recipient:
(a) if such employee is covered by a money purchase
pension plan providing:
(1) a non-integrated employer contribution rate of
at least ten percent (10%) of compensation, as
defined in Code Section 415(c)(3), but including
amounts contributed pursuant to a salary
reduction agreement which are excludable from the
employee's gross income under Code Sections 125,
402(e)(3), 402(h) or 403(b);
(2) immediate participation; and
(3) full and immediate vesting; and
(b) if Leased Employees do not constitute more than
twenty percent (20%) of the recipient's non-highly
compensated work force.
1.35 "Net Profit" means with respect to any Fiscal Year the
Employer's net income or profit for such Fiscal Year determined
upon the basis of the Employer's books of account in accordance
with generally accepted accounting principles, without any
reduction for taxes based upon income, or for contributions made
by the Employer to this Plan.
1.36 "Non-Elective Contribution" means the Employer's
contributions to the Plan excluding, however, contributions made
pursuant to the Participant's deferral election provided for in
Section 4.2 and any Qualified Non-Elective Contribution.
1.37 "Non-Highly Compensated Participant" means any
Participant who is neither a Highly Compensated Employee nor a
Family Member.
1.38 "Non-Key Employee" means any Employee or former
Employee (and his Beneficiaries) who is not a Key Employee.
1.39 "Normal Retirement Age" means the Participant's 65th
birthday. A Participant shall become fully Vested in his
Participant's Account upon attaining his Normal Retirement Age.
1.40 "Normal Retirement Date" means the first day of the
month coinciding with or next following the Participant's Normal
Retirement Age.
1.41 "1-Year Break in Service" means the applicable
computation period during which an Employee has not completed
more than 500 Hours of Service with the Employer. Further,
solely for the purpose of determining whether a Participant has
incurred a 1-Year Break in Service, Hours of Service shall be
recognized for "authorized leaves of absence" and "maternity and
paternity leaves of absence". Years of Service and 1-Year Breaks
in Service shall be measured on the same computation period.
"Authorized leave of absence" means an unpaid,
temporary cessation from active employment with the Employer
pursuant to an established nondiscriminatory policy, whether
occasioned by illness, military service, or any other reason.
A "maternity or paternity leave of absence" means, for
Plan Years beginning after December 31, 1984, an absence from
work for any period by reason of the Employee's pregnancy, birth
of the Employee's child, placement of a child with the Employee
in connection with the adoption of such child, or any absence
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for the purpose of caring for such child for a period immediately
following such birth or placement. For this purpose, Hours of
Service shall be credited for the computation period in which the
absence from work begins, only if credit therefore is necessary
to prevent the Employee from incurring a 1-Year Break in Service,
or, in any other case, in the immediately following computation
period. The Hours of Service credited for a "maternity or
paternity leave of absence" shall be those which would normally
have been credited but for such absence, or, in any case in which
the Administrator is unable to determine such hours normally
credited, eight (8) Hours of Service per day. The total Hours of
Service required to be credited for a "maternity or paternity
leave of absence" shall not exceed 501.
1.42 "Participant" means any Eligible Employee who
participates in the Plan as provided in Sections 3.2 and 3.3, and
has not for any reason become ineligible to participate further
in the Plan.
1.43 "Participant's Account" means the account established
and maintained by the Administrator for each Participant with
respect to his total interest in the Plan and Trust resulting
from the Employer's Non-Elective Contributions.
A separate accounting shall be maintained with respect
to that portion of the Participant's Account attributable to
Employer matching contributions made pursuant to Section 4.1(b)
and Employer discretionary contributions made pursuant to Section
4.1(c).
1.44 "Participant's Combined Account" means the total
aggregate amount of each Participant's Elective Account and
Participant's Account.
1.45 "Participant's Elective Account" means the account
established and maintained by the Administrator for each
Participant with respect to his total interest in the Plan and
Trust resulting from the Employer's Elective Contributions. A
separate accounting shall be maintained with respect to that
portion of the Participant's Elective Account attributable to
Elective Contributions pursuant to Section 4.2 and any Employer
Qualified Non-Elective Contributions.
1.46 "Plan" means this instrument, including all amendments
thereto.
1.47 "Plan Year" means the Plan's accounting year of twelve
(12) months commencing on January 1st of each year and ending the
following December 31st.
1.48 "Qualified Non-Elective Contribution" means the
Employer's contributions to the Plan that are made pursuant to
Section 4.6. Such contributions shall be considered an Elective
Contribution for the purposes of the Plan and used to satisfy the
"Actual Deferral Percentage" tests.
In addition, the Employer's contributions to the Plan
that are made pursuant to Section 4.8(h) which are used to
satisfy the "Actual Contribution Percentage" tests shall be
considered Qualified Non-Elective Contributions and be subject to
the provisions of Sections 4.2(b) and 4.2(c).
1.49 "Regulation" means the Income Tax Regulations as
promulgated by the Secretary of the Treasury or his delegate, and
as amended from time to time.
1.50 "Retired Participant" means a person who has been a
Participant, but who has become entitled to retirement benefits
under the Plan.
1.51 "Retirement Date" means the date as of which a
Participant retires for reasons other than Total and Permanent
Disability, whether such retirement occurs on a Participant's
Normal Retirement Date, Early or Late Retirement Date (see
Section 6.1).
1.52 "Super Top Heavy Plan" means a plan described in
Section 2.2 (b).
1.53 "Terminated Participant" means a person who has been a
Participant, but whose employment has been terminated other than
by death, Total and Permanent Disability or retirement.
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1.54 "Top Heavy Plan" means a plan described. in Section 2.2
(a).
1.55 "Top Heavy Plan Year" means a Plan Year during which
the Plan is a Top Heavy Plan.
1.56 "Top Paid Group" means the top 20 percent of Employees
who performed services for the Employer during the applicable
year, ranked according to the amount of "415 Compensation"
(determined for this purpose in accordance with Section 1.26)
received from the Employer during such year. All Affiliated
Employers shall be taken into account as a single employer, and
Leased Employees within the meaning of Code Sections 414(n)(2)
and 414(o)(2) shall be considered Employees unless such Leased
Employees are covered by a plan described in Code Section
414(n)(5) and are not covered in any qualified plan maintained by
the Employer. Employees who are non-resident aliens and who
received no earned income (within the meaning of Code Section
911(d)(2)) from the Employer constituting United States source
income within the meaning of Code Section 861(a)(3) shall not be
treated as Employees. Additionally, for the purpose of
determining the number of active Employees in any year, the
following additional Employees shall also be excluded; however,
such Employees shall still be considered for the purpose of
identifying the particular Employees in the Top Paid Group:
(a) Employees with less than six (6) months of service;
(b) Employees who normally work less than 17 1/2 hours
per week;
(c) Employees who normally work less than six (6)
months during a year; and
(d) Employees who have not yet attained age 21.
In addition, if 90 percent or more of the Employees of
the Employer are covered under agreements the Secretary of Labor
finds to be collective bargaining agreements between Employee
representatives and the Employer, and the Plan covers only
Employees who are not covered under such agreements, then
Employees covered by such agreements shall be excluded from both
the total number of active Employees as well as from the
identification of particular Employees in the Top Paid Group.
The foregoing exclusions set forth in this Section
shall be applied on a uniform and consistent basis for all
purposes for which the Code Section 414(q) definition is
applicable.
1.57 "Total and Permanent Disability" means a physical or
mental condition of a Participant resulting from bodily injury,
disease, or mental disorder which renders him incapable of
continuing any gainful occupation and which condition constitutes
total disability under the federal Social Security Acts.
1.58 "Trustee" means the person or entity named as trustee
herein or in any separate trust forming a part of this Plan, and
any successors.
1.59 "Trust Fund" means the assets of the Plan and Trust as
the same shall exist from time to time.
1.60 "Vested" means the nonforfeitable portion of any
account maintained on behalf of a Participant.
1.61 "Year of Service" means the computation period of
twelve (12) consecutive months, herein set forth, during which an
Employee has at least one thousand (1,000) Hours of Service.
For vesting purposes, the computation period shall be
the Plan Year, including periods prior to the Effective Date of
the Plan.
For all other purposes, the computation period shall be
the Plan Year.
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Notwithstanding the foregoing, for any short Plan Year,
the determination of whether an Employee has completed a Year of
Service shall be made in accordance with Department of Labor
regulation 2530.203-2(c).
Years of Service with any Affiliated Employer shall be
recognized.
ARTICLE II
TOP HEAVY AND ADMINISTRATION
2.1 TOP HEAVY PLAN REQUIREMENTS
For any Top Heavy Plan Year, the Plan shall provide the
special vesting requirements of Code Section 416(b)
pursuant to Section 6.4 of the Plan and the special minimum
allocation requirements of Code Section 416(c) pursuant to
Section 4.4 of the Plan.
2.2 DETERMINATION OF TOP HEAVY STATUS
(a) This Plan shall be a Top Heavy Plan for any Plan
Year in which, as of the Determination Date, (1) the Present
Value of Accrued Benefits of Key Employees and (2) the sum
of the Aggregate Accounts of Key Employees under this Plan
and all plans of an Aggregation Group, exceeds sixty
percent (60%) of the Present Value of Accrued Benefits and
the Aggregate Accounts of all Key and Non-Key Employees
under this Plan and all plans of an Aggregation Group.
If any Participant is a Non-Key Employee for any Plan
Year, but such Participant was a Key Employee for any prior
Plan Year, such Participant's Present Value of Accrued
Benefit and/or Aggregate Account balance shall not be taken
into account for purposes of determining whether this Plan
is a Top Heavy or Super Top Heavy Plan (or whether any
Aggregation Group which includes this Plan is a Top Heavy
Group). In addition, for Plan Years beginning after
December 31, 1984, if a Participant or Former Participant
has not performed any services for any Employer maintaining
the Plan at any time during the five year period ending on
the Determination Date, any accrued benefit for such
Participant or Former Participant shall not be taken into
account for the purposes of determining whether this Plan is
a Top Heavy or Super Top Heavy Plan.
(b) This Plan shall be a Super Top Heavy Plan for any
Plan Year in which, as of the Determination Date, (1) the
Present Value of Accrued Benefits of Key Employees and (2)
the sum of the Aggregate Accounts of Key Employees under
this Plan and all plans of an Aggregation Group, exceeds
ninety percent (90%) of the Present Value of Accrued
Benefits and the Aggregate Accounts of all Key and Non-Key
Employees under this Plan and all plans of an Aggregation
Group.
(c) Aggregate Account: A Participant's Aggregate
Account as of the Determination Date is the sum of:
(1) his Participant's Combined Account balance as of
the most recent valuation occurring within a twelve
(12) month period ending on the Determination Date;
(2) an adjustment for any contributions due as of the
Determination Date. Such adjustment shall be the
amount of any contributions actually made after the
valuation date but due on or before the Determination
Date, except for the first Plan Year when such
adjustment shall also reflect the amount of any
contributions made after the Determination Date that
are allocated as of a date in that first Plan Year.
(3) any Plan distributions made within the Plan Year
that includes the Determination Date or within the four
(4) preceding Plan Years. However, in the case of
distributions made after the valuation date and prior
to the Determination Date, such distributions are not
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included as distributions for top heavy purposes to the
extent that such distributions are already included in
the Participant's Aggregate Account balance as of the
valuation date. Notwithstanding anything herein to the
contrary, all distributions, including distributions
made prior to January 1, 1984, and distributions under
a terminated plan which if it had not been terminated
would have been required to be included in an
Aggregation Group, will be counted. Further,
distributions from the Plan (including the cash value
of life insurance policies) of a Participant's account
balance because of death shall be treated as a
distribution for the purposes of this paragraph.
(4) any Employee contributions, whether voluntary or
mandatory. However, amounts attributable to tax
deductible qualified voluntary employee contributions
shall not be considered to be a part of the
Participant's Aggregate Account balance.
(5) with respect to unrelated rollovers and plan-to-
plan transfers (ones which are both initiated by the
Employee and made from a plan maintained by one
employer to a plan maintained by another employer), if
this Plan provides the rollovers or plan-to-plan
transfers, it shall always consider such rollovers or
plan-to-plan transfers as a distribution for the
purposes of this Section. If this Plan is the plan
accepting such rollovers or plan-to-plan transfers, it
shall not consider such rollovers of plan-to-plan
transfers as part of the Participant's Aggregate
Account balance.
(6) with respect to related rollovers and plan-to-plan
transfers (ones either not initiated by the Employee
or made to a plan maintained by the same employer), if
this Plan provides the rollover or plan-to-plan
transfer, it shall not be counted as a distribution
for purposes of this Section. If this Plan is the
plan accepting such rollover or plan-to-plan transfer,
it shall consider such rollover or plan-to-plan
transfer as part of the Participant's Aggregate
Account balance, irrespective of the date on which
such rollover or plan-to-plan transfer is accepted.
(7) For the purposes of determining whether two
employers are to be treated as the same employer in (5)
and (6) above, all employers aggregated under Code
Section 414(b), (c), (m) and (o) are treated as the
same employer.
(d) "Aggregation Group" means either a Required
Aggregation Group or a Permissive Aggregation Group as
hereinafter determined.
(1) Required Aggregation Group: In determining a
Required Aggregation Group hereunder, each plan of the
Employer in which a Key Employee is a participant in
the Plan Year containing the Determination Date or any
of the four preceding Plan Years, and each other plan
of the Employer which enables any plan in which a Key
Employee participates to meet the requirements of Code
Sections 401(a)(4) or 410, will be required to be
aggregated. Such group shall be known as a Required
Aggregation Group.
In the case of a Required Aggregation Group, each plan
in the group will be considered a Top Heavy Plan if the
Required Aggregation Group is a Top Heavy Group. No
plan in the Required Aggregation Group will be
considered a Top Heavy Plan if the Required Aggregation
Group is not a Top Heavy Group.
(2) Permissive Aggregation Group: The Employer may also
include any other plan not required to be included in
the Required Aggregation Group, provided the resulting
group, taken as a whole, would continue to satisfy the
provisions of Code Sections 401(a)(4) and 410. Such
group shall be known as a Permissive Aggregation Group.
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In the case of a Permissive Aggregation Group, only a
plan that is part of the Required Aggregation Group
will be considered a Top Heavy Plan if the Permissive
Aggregation Group is a Top Heavy Group. No plan in the
Permissive Aggregation Group will be considered a Top
Heavy Plan if the Permissive Aggregation Group is not a
Top Heavy Group.
(3) Only those plans of the Employer in which the
Determination Dates fall within the same calendar year
shall be aggregated in order to determine whether such
plans are Top Heavy Plans.
(4) An Aggregation Group shall include any terminated
plan of the Employer if it was maintained within the
last five (5) years ending on the Determination Date.
(e) "Determination Date" means (a) the last day of the
preceding Plan Year, or (b) in the case of the first Plan
Year, the last day of such Plan Year.
(f) Present Value of Accrued Benefit: In the case of
defined benefit plan, the Present value of Accrued Benefit
for a Participant other than a Key Employee, shall be as
determined using the single accrual method used for all
plans of the Employer and Affiliated Employers, or if no
such single method exists, using a method which results in
benefits accruing not more rapidly than the slowest accrual
rate permitted under Code Section 411(b)(1)(C). The
determination of the Present Value of Accrued Benefit shall
be determined as of the most recent valuation date that
falls within or ends with the twelve (12) month period
ending on the Determination Date except as provided in Code
Section 416 and the Regulations thereunder for the first and
second plan years of a defined benefit plan.
(g) "Top Heavy Group" means an Aggregation Group in
which, as of the Determination Date, the sum of:
(1) the Present Value of Accrued Benefits of Key
Employees under all defined benefit plans included in
the group, and
(2) the Aggregate Accounts of Key Employees under all
defined contribution plans included in the group,
exceeds sixty percent (60%) of a similar sum determined
for all Participants.
2.3 POWERS AND RESPONSIBILITIES OF THE EMPLOYER
(a) The Employer shall be empowered to appoint and
remove the Trustee and the Administrator from time to time
as it deems necessary for the proper administration of the
Plan to assure that the Plan is being operated for the
exclusive benefit of the Participants and their
Beneficiaries in accordance with the terms of the Plan, the
Code, and the Act.
(b) The Employer shall establish a "funding policy
and method", i.e., it shall determine whether the Plan has a
short run need for liquidity (e.g., to pay benefits) or
whether liquidity is a long run goal and investment growth
(and stability of same) is a more current need, or shall
appoint a qualified person to do so. The Employer or its
delegate shall communicate such needs and goals to the
Trustee, who shall coordinate such Plan needs with its
investment policy. The communication of such a "funding
policy and method" shall not, however, constitute a
directive to the Trustee as to investment of the Trust
Funds. Such "funding policy and method" shall be consistent
with the objectives of this Plan and with the requirements
of Title I of the Act.
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<PAGE>
(c) The Employer shall periodically review the
performance of any Fiduciary or other person to whom duties
have been delegated or allocated by it under the provisions
of this Plan or pursuant to procedures established
hereunder. This requirement may be satisfied by formal
periodic review by the Employer or by a qualified person
specifically designated by the Employer, through day-to-day
conduct and evaluation, or through other appropriate ways.
2.4 DESIGNATION OF ADMINISTRATIVE AUTHORITY
The Employer shall appoint one or more Administrators. Any
person, including, but not limited to, the Employees of the
Employer, shall be eligible to serve as an Administrator. Any
person so appointed shall signify his acceptance by filing
written acceptance with the Employer. An Administrator may
resign by delivering his written resignation to the Employer or
be removed by the Employer by delivery of written notice of
removal, to take effect at a date specified therein, or upon
delivery to the Administrator if no date is specified.
The Employer, upon the resignation or removal of an
Administrator, shall promptly designate in writing a successor to
this position. If the Employer does not appoint an
Administrator, the Employer will function as the Administrator.
2.5 ALLOCATION AND DELEGATION OF RESPONSIBILITIES
If more than one person is appointed as Administrator, the
responsibilities of each Administrator may be specified by the
Employer and accepted in writing by each Administrator. In the
event that no such delegation is made by the Employer, the
Administrators may allocate the responsibilities among
themselves, in which event the Administrators shall notify the
Employer and the Trustee in writing of such action and specify
the responsibilities of each Administrator. The Trustee
thereafter shall accept and rely upon any documents executed by
the appropriate Administrator until such time as the Employer or
the Administrators file with the Trustee a written revocation of
such designation.
2.6 POWERS AND DUTIES OF THE ADMINISTRATOR
The primary responsibility of the Administrator is to
administer the Plan for the exclusive benefit of the Participants
and their Beneficiaries, subject to the specific terms of the
Plan. The Administrator shall administer the Plan in accordance
with its terms and shall have the power and discretion to
construe the terms of the Plan and to determine all questions
arising in connection with the administration, interpretation,
and application of the Plan. Any such determination by the
Administrator shall be conclusive and binding upon all persons.
The Administrator may establish procedures, correct any defect,
supply any information, or reconcile any inconsistency in such
manner and to such extent as shall be deemed necessary or
advisable to carry out the purpose of the Plan; provided,
however, that any procedure, discretionary act, interpretation or
construction shall be done in a nondiscriminatory manner based
upon uniform principles consistently applied and shall be
consistent with the intent that the Plan shall continue to be
deemed a qualified plan under the terms of Code Section 401(a),
and shall comply with the terms of the Act and all regulations
issued pursuant thereto. The Administrator shall have all powers
necessary or appropriate to accomplish his duties under this
Plan.
The Administrator shall be charged with the duties of the
general administration of the Plan, including, but not limited
to, the following:
(a) the discretion to determine all questions relating
to the eligibility of Employees to participate or remain a
Participant hereunder and to receive benefits under the
Plan;
(b) to compute, certify, and direct the Trustee with
respect to the amount and the kind of benefits to which any
Participant shall be entitled hereunder;
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<PAGE>
(c) to authorize and direct the Trustee with respect to
all nondiscretionary or otherwise directed disbursements
from the Trust;
(d) to maintain all necessary records for the
administration of the Plan;
(e) to interpret the provisions of the Plan and to make
and publish such rules for regulation of the Plan as are
consistent with the terms hereof;
(f) to determine the size and type of any Contract to
be purchased from any insurer, and to designate the insurer
from which such Contract shall be purchased;
(g) to compute and certify to the Employer and to the
Trustee from time to time the sums of money necessary or
desirable to be contributed to the Plan;
(h) to consult with the Employer and the Trustee
regarding the short and long-term liquidity needs of the
Plan in order that the Trustee can exercise any investment
discretion in a manner designed to accomplish specific
objectives;
(i) to prepare and implement a procedure to notify
Eligible Employees that they may elect to have a portion of
their Compensation deferred or paid to them in cash;
(j) to assist any Participant regarding his rights,
benefits, or elections available under the Plan.
2.7 RECORDS AND REPORTS
The Administrator shall keep a record of all actions taken
and shall keep all other books of account, records, and other
data that may be necessary for proper administration of the Plan
and shall be responsible for supplying all information and
reports to the Internal Revenue Service, Department of Labor,
Participants, Beneficiaries and others as required by law.
2.8 APPOINTMENT OF ADVISERS
The Administrator, or the Trustee with the consent of the
Administrator, may appoint counsel, specialists, advisers, and
other persons as the Administrator or the Trustee deems necessary
or desirable in connection with the administration of this Plan.
2.9 INFORMATION FROM EMPLOYER
To enable the Administrator to perform his functions, the
Employer shall supply full and timely information to the
Administrator on all matters relating to the Compensation of all
Participants, their Hours of Service, their Years of Service,
their retirement, death, disability, or termination of
employment, and such other pertinent facts as the Administrator
may require; and the Administrator shall advise the Trustee of
such of the foregoing facts as may be pertinent to the Trustee's
duties under the Plan. The Administrator may rely upon such
information as is supplied by the Employer and shall have no duty
or responsibility to verify such information.
2.10 PAYMENT OF EXPENSES
All expenses of administration may be paid out of the Trust
Fund unless paid by the Employer. Such expenses shall include
any expenses incident to the functioning of the Administrator,
including, but not limited to, fees of accountants, counsel, and
other specialists and their agents, and other costs of
administering the Plan. Until paid, the expenses shall
constitute, a liability of the Trust Fund. However, the Employer
may reimburses the Trust Fund for any administration expense
incurred.
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<PAGE>
2.11 MAJORITY ACTIONS
Except where there has been an allocation and delegation of
administrative authority pursuant to Section 2.5, if there shall
be more than one Administrator, they shall act by a majority of
their number, but may authorize one or more of them to sign all
papers on their behalf.
2.12 CLAIMS PROCEDURE
Claims for benefits under the Plan may be filed with the
Administrator on forms supplied by the Employer. Written notice
of the disposition of a claim shall be furnished to the claimant
within ninety (90) days after the application is filed. In the
event the claim is denied, the reasons for the denial shall be
specifically set forth in the notice in language calculated to be
understood by the claimant, pertinent provisions of the Plan
shall be cited, and, where appropriate, an explanation as to how
the claimant can perfect the claim will be provided. In
addition, the claimant shall be furnished with an explanation of
the Plan's claims review procedure.
2.13 CLAIMS REVIEW PROCEDURE
Any Employee, former Employee, or Beneficiary of either, who
has been denied a benefit by a decision of the Administrator
pursuant to Section 2.12 shall be entitled to request the
Administrator to give further consideration to his claim by
filing with the Administrator (on a form which may be obtained
from the Administrator) a request for a hearing. Such request,
together with a written statement of the reasons why the claimant
believes his claim should be allowed, shall be filed with the
Administrator no later than sixty (60) days after receipt of the
written notification provided for in Section 2.12. The
Administrator shall then conduct a hearing within the next sixty
(60) days, at which the claimant may be represented by an
attorney or any other representative of his choosing and at which
the claimant shall have an opportunity to submit written and oral
evidence and arguments in support of his claim. At the hearing
(or prior thereto upon five (5) business days written notice to
the Administrator) the claimant or his representative shall have
an opportunity to review all documents in the possession of the
Administrator which are pertinent to the claim at issue and its
disallowance. Either the claimant or the Administrator may cause
a court reporter to attend the hearing and record the
proceedings. In such event, a complete written transcript of the
proceedings shall be furnished to both parties by the court
reporter. The full expense of any such court reporter and such
transcripts shall be borne by the party causing the court
reporter to attend the hearing. A final decision as to the
allowance of the claim shall be made by the Administrator within
sixty (60) days of receipt of the appeal (unless there has been
an extension of sixty (60) days due to special circumstances,
provided the delay and the special circumstances occasioning it
are communicated to the claimant within the sixty (60) day
period). Such communication shall be written in a manner
calculated to be understood by the claimant and shall include
specific reasons for the decision and specific references to the
pertinent Plan provisions on which the decision is based.
ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY
Any Eligible Employee shall be eligible to participate
hereunder after meeting the one thousand (1,000) hour
requirement. However, any Employee who was a Participant in the
Plan prior to the effective date of this amendment and
restatement shall continue to participate in the Plan. The
Employer shall give each prospective Eligible Employee written
notice of his eligibility to participate in the Plan prior to the
close of the Plan Year in which he first becomes an Eligible
Employee.
3.2 APPLICATION FOR PARTICIPATION
In order to become a Participant hereunder, each Eligible
Employee shall make application to the Employer for participation
in the Plan and agree to the terms hereof. Upon the acceptance
of any benefits under this Plan, such Employee shall
automatically be deemed to have made application and shall be
bound by the terms and conditions of the Plan and all amendments
hereto.
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3.3 EFFECTIVE DATE OF PARTICIPATION
An Eligible Employee shall become a Participant effective as
of the first day of the calendar quarter coinciding with or next
following the date such Employee met the eligibility requirements
of Section 3.1, provided said Employee was still employed as of
such date (or if not employed on such date, as of the date of
rehire if a 1-Year Break in Service has not occurred).
3.4 DETERMINATION OF ELIGIBILITY
The Administrator shall determine the eligibility of each
Employee for participation in the Plan based upon information
furnished by the Employer. Such determination shall be
conclusive and binding upon all persons, as long as the same is
made pursuant to the Plan and the Act. Such determination shall
be subject to review per Section 2.13.
3.5 TERMINATION OF ELIGIBILITY
(a) In the event a Participant shall go from a
classification of an Eligible Employee to an ineligible
Employee, such Former Participant shall continue to vest in
his interest in the Plan for each Year of Service completed
while a noneligible Employee, until such time as his
Participant's Account shall be forfeited or distributed
pursuant to the terms of the Plan. Additionally, his
interest in the Plan shall continue to share in the earnings
of the Trust Fund.
(b) In the event a Participant is no longer a member of
an eligible class of Employees and becomes ineligible to
participate but has not incurred a 1-Year Break in Service,
such Employee will participate immediately upon returning to
an eligible class of Employees. If such Participant incurs
a 1-Year Break in Service, eligibility will be determined
under the break in service rules of the Plan.
3.6 OMISSION OF ELIGIBLE EMPLOYEE
If, in any Plan Year, any Employee who should be included as
a Participant in the Plan is erroneously omitted and discovery of
such omission is not made until after a contribution by his
Employer for the year has been made, the Employer shall make a
subsequent contribution with respect to the omitted Employee in
the amount which the said Employer would have contributed with
respect to him had he not been omitted. Such contribution shall
be made regardless of whether or not it is deductible in whole or
in part in any taxable year under applicable provisions of the
Code.
3.7 INCLUSION OF INELIGIBLE EMPLOYEE
If, in any Plan Year, any person who should not have been
included as a Participant in the Plan is erroneously included and
discovery of such incorrect inclusion is not made until after a
contribution for the year has been made, the Employer shall not
be entitled to recover the contribution made with respect to the
ineligible person regardless of whether or not a deduction is
allowable with respect to such contribution. In such event, the
amount contributed with respect to the ineligible person shall
constitute a Forfeiture (except for Deferred Compensation which
shall be distributed to the ineligible person) for the Plan Year
in which the discovery is made.
3.8 ELECTION NOT TO PARTICIPATE
An Employee may, subject to the approval of the Employer,
elect voluntarily not to participate in the Plan. The election
not to participate must be communicated to the Employer, in
writing, at least thirty (30) days before the beginning of a Plan
Year.
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ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION
For each Plan Year, the Employer shall contribute to the
Plan:
(a) The amount of the total salary reduction elections
of all Participants made pursuant to Section 4.2(a), which
amount shall be deemed an Employer's Elective Contribution.
(b) On behalf of each Participant who is eligible to
share in matching contributions for the Plan Year, a
matching contribution equal to one hundred percent (100%) of
each such Participant's Deferred Compensation, which amount
shall be deemed an Employer's Non-Elective Contribution.
Except, however, in applying the matching percentage
specified above, only salary reductions up to three percent
(3%) of Compensation shall be considered.
(c) A discretionary amount out of its current or
accumulated Net Profit, which amount shall be deemed an
Employer's Non-Elective Contribution.
(d) Notwithstanding the foregoing, however, the
Employer's contributions for any Plan Year shall not exceed
the maximum amount allowable as a deduction to the Employer
under the provisions of Code Section 404. All contributions
by the Employer shall be made in cash or in such property as
is acceptable to the Trustee.
(e) Except, however, to the extent necessary to provide
the top heavy minimum allocations, the Employer shall make a
contribution even if it exceeds current or accumulated Net
Profit or the amount which is deductible under Code Section
404.
4.2 PARTICIPANT'S SALARY REDUCTION ELECTION
(a) Each Participant may elect to defer from one
percent (1%) to nine percent (9%) of his Compensation which
would have been received in the Plan Year, but for the
deferral election. A deferral election (or modification of
an earlier election) may not be made with respect to
Compensation which is currently available on or before the
date the Participant executed such election.
The amount by which Compensation is reduced shall be
that Participant's Deferred Compensation and be treated as
an Employer Elective Contribution and allocated to that
Participant's Elective Account.
(b) The balance in each Participant's Elective Account
shall be fully Vested at all times and shall not be subject
to Forfeiture for any reason.
(c) Amounts held in the Participant's Elective Account
may not be distributable earlier than:
(1) a Participant's termination of employment, Total
and Permanent Disability, or death;
(2) a Participant's attainment of age 59 1/2;
(3) the termination of the Plan - without the
establishment or existence of a "successor plan", as
that term is described in Regulation 1.401(k)-I(d)(3);
(4) the date of disposition by the Employer to an
entity that is not an Affiliated Employer of
substantially all of the assets (within the meaning of
Code Section 409(d)(2)) used in a trade or business
of such corporation if such corporation continues to
maintain this Plan after the disposition with respect
to a Participant who continues employment with the
corporation acquiring such assets;
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(5) the date of disposition by the Employer or an
Affiliated Employer who maintains the Plan of its
interest in a subsidiary (within the meaning of Code
Section 409(d)(3)) to an entity which is not an
Affiliated Employer but only with respect to a
Participant who continues employment with such
subsidiary; or
(6) the proven financial hardship of a Participant,
subject to the limitations of Section 6.10.
(d) For each Plan Year beginning after December 31,
1987, a Participant's Deferred Compensation made under this
Plan and all other plans, contracts or arrangements of the
Employer maintaining this Plan shall not exceed, during any
taxable year of the Participant, the limitation imposed by
Code Section 402(g), as in effect at the beginning of such
taxable year. If such dollar limitation is exceeded, a
Participant will be deemed to have notified the
Administrator of such excess amount which shall be
distributed in a manner consistent with 4.2(f). The
dollar limitation shall be adjusted annually pursuant to the
method provided in Code Section 415(d) in accordance with
Regulations.
(e) In the event a Participant has received a hardship
distribution from his Participant's Elective Account
pursuant to Section 6.10 or pursuant to Regulation 1.401
(k)-1(d)(2)(iv)(B) from any other plan maintained by
the Employer, then such Participant shall not be permitted
to elect to have Deferred Compensation contributed to the
Plan on his behalf for a period of twelve (12) months
following the receipt of the distribution. Furthermore, the
dollar limitation under Code Section 402(g) shall be
reduced, with respect to the Participant's taxable year
following the taxable year in which the hardship
distribution was made, by the amount of such Participant's
Deferred Compensation, if any, pursuant to this Plan (and
any other plan maintained by the Employer) for the taxable
year of the hardship distribution.
(f) If a Participant's Deferred Compensation under this
Plan together with any elective deferrals (as defined in
Regulation 1.402(g)-l(b)) under another qualified cash or
deferred arrangement (as defined in Code Section 401(k)), a
simplified employee pension (as defined in Code Section
408(k)), a salary reduction arrangement (within the meaning
of Code Section 3121(a)(5)(D)), a deferred compensation plan
under Code Section 457, or a trust described in Code Section
501(c)(18) cumulatively exceed the limitation imposed by
Code Section 402(g) (as adjusted annually in accordance with
the method provided in Code Section 415(d) pursuant to
Regulations) for such Participant's taxable year, the
Participant may, not later than March 1 following the close
of the Participant's taxable year, notify the Administrator
in writing of such excess and request that his Deferred
Compensation under this Plan be reduced an amount specified
by the Participant. In such event, the Administrator may
direct the Trustee to distribute such excess amount (and any
Income allocable to such excess amount) to the Participant
not later than the first April 15th following the close of
the Participant's taxable year. Distributions in accordance
with this paragraph may be made for any taxable year of the
Participant which begins after December 31, 1986. Any
distribution of less than the entire amount of Excess
Deferred Compensation and Income shall be treated as a pro
rata distribution of Excess Deferred Compensation and
Income. The amount distributed shall not exceed the
Participant's Deferred Compensation under the Plan for the
taxable year. Any distribution on or before the last day of
the Participant's taxable year must satisfy each of the
following conditions:
(1) the distribution must be made after the date on
which the Plan received the Excess Deferred
Compensation;
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(2) the Participant shall designate the distribution as
Excess Deferred Compensation; and
(3) the Plan must designate the distribution as a
distribution of Excess Deferred Compensation.
Any distribution made pursuant to this Section 4.2(f)
shall be made first from unmatched Deferred Compensation
and, thereafter, from Deferred Compensation which is
matched. Matching contributions which relate to such
Deferred Compensation shall be forfeited.
(g) Notwithstanding Section 4.2(f) above, a
Participant's Excess Deferred Compensation, shall be
reduced, but not below zero, by any distribution of Excess
Contributions pursuant to Section 4.6(a) for the Plan Year
beginning with or within the taxable year of the
Participant.
(h) At Normal Retirement Date, or such other date when
the Participant shall be entitled to receive benefits, the
fair market value of the Participant's Elective Account
shall be used to provide additional benefits to the
Participant or his Beneficiary.
(i) All amounts allocated to a Participant's Elective
Account may be treated as a Directed Investment Account
pursuant to Section 4.12.
(j) Employer Elective Contributions made pursuant to
this Section may be segregated into a separate account for
each Participant in a federally insured savings account,
certificate of deposit in a bank or savings and loan
association, money market certificate, or other short-term
debt security acceptable to the Trustee until such time as
the allocations pursuant to Section 4.4 have been made.
(k) The Employer and the Administrator shall implement
the salary reduction elections provided for herein in
accordance with the following:
(1) A Participant may commence making elective
deferrals to the Plan only after first satisfying the
eligibility and participation requirements specified in
Article III. However, the Participant must make his
initial salary deferral election within a reasonable
time, not to exceed thirty (30) days, after entering
the Plan pursuant to Section 3.3. If the Participant
fails to make an initial salary deferral election
within such time, then such Participant may thereafter
make an election in accordance with the rules governing
modifications. The Participant shall make such an
election by entering into a written salary reduction
agreement with the Employer and filing such agreement
with the Administrator. Such election shall initially
be effective beginning with the pay period following
the acceptance of the salary reduction agreement by the
Administrator, shall not have retroactive effect and
shall remain in force until revoked.
(2) A Participant may modify a prior election during
the Plan Year and concurrently make a new election by
filing a written notice with the Administrator within
a reasonable time before the pay period for which such
modification is to be effective. However,
modifications to a salary deferral election shall only
be permitted semi-annually, during election periods
established by the Administrator prior to the first day
of a Plan Year and the first day of the seventh (7th)
month of a Plan Year. Any modification shall not have
retroactive effect and shall remain in force until
revoked.
(3) A Participant may elect to prospectively revoke his
salary reduction agreement in its entirety at any time
during the Plan Year by providing the Administrator
with thirty (30) days written notice of such revocation
(or upon such shorter notice period as may be
acceptable to the Administrator). Such revocation
shall become effective as of the beginning of the first
pay period
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coincident with or next following the expiration of the
notice period. Furthermore, the termination of the
Participant's employment, or the cessation of
participation for any reason, shall be deemed to revoke
any salary reduction agreement then in effect,
effective immediately following the close of the pay
period within which such termination or cessation
occurs.
4.3 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION
The Employer shall generally pay to the Trustee its
contribution to the Plan for each Plan Year within the time
prescribed by law, including extensions of time, for the filing
of the Employer's federal income tax return for the Fiscal Year.
However, Employer Elective Contributions accumulated through
payroll deductions shall be paid to the Trustee as of the
earliest date on which such contributions can reasonably be
segregated from the Employer's general assets, but in any event
within ninety (90) days from the date on which such amounts would
otherwise have been payable to the Participant in cash. The
provisions of Department of Labor regulations 2510.3-102 are
incorporated herein by reference. Furthermore, any additional
Employer contributions which are allocable to the Participant's
Elective Account for a Plan Year shall be paid to the Plan no
later than the twelve (12) month period immediately following the
close of such Plan Year.
4.4 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS
(a) The Administrator shall establish and maintain an
account in the name of each Participant to which the
Administrator shall credit as of each Anniversary Date all
amounts allocated to each such Participant as set forth
herein.
(b) The Employer shall provide the Administrator with
all information required by the Administrator to make a
proper allocation of the Employer's contributions for each
Plan Year. Within a reasonable period of time after the
date of receipt by the Administrator of such information,
the Administrator shall allocate such contribution as
follows:
(1) With respect to the Employer's Elective
Contribution made pursuant to Section 4.1(a), to
each Participant's Elective Account in an amount equal
to each such Participant's Deferred Compensation for
the year.
(2) With respect to the Employer's Non-Elective
Contribution made pursuant to Section 4.1(b), to each
Participant's Account in accordance with Section
4.1(b).
Any Participant actively employed during the Plan Year
shall be eligible to share in the matching contribution
for the Plan Year. However, with respect to Plan Years
beginning after December 31, 1989, in lieu of the
foregoing, only Participants who are actively employed
during the Plan Year shall be eligible to share in the
matching contribution for the year.
(3) With respect to the Employer's Non-Elective
Contribution made pursuant to Section 4.1(c), to each
Participant's Account in the same proportion that each
such Participant's Compensation for the year bears to
the total Compensation of all Participants for such
year.
Only Participants who are actively employed on the last day
of the Plan Year shall be eligible to share in the
discretionary contribution for the year. However, with
respect to Plan Years beginning after December 31, 1989, in
lieu of the foregoing, only Participants who are actively
employed on the last day of the Plan Year shall be eligible
to share in the discretionary contribution for the year.
23
<PAGE>
(c) As of each Anniversary Date any amounts which
became Forfeitures since the last Anniversary Date shall
first be made available to reinstate previously forfeited
account balances of Former Participants, if any, in
accordance with Section 6.4(f)(2). The remaining
Forfeitures, if any, shall be used to reduce the
contribution of the Employer hereunder for the Plan Year in
which such Forfeitures occur in the following manner:
(1) Forfeitures attributable to Employer matching
contributions made pursuant to Section 4.1(b)
shall be used to reduce the Employer's contribution
for the Plan Year in which such Forfeitures occur.
(2) Forfeitures attributable to Employer discretionary
contributions made pursuant to Section 4.1(c) shall be
used to reduce the Employer's contribution for the Plan
Year in which such Forfeitures occur.
(d) For any Top Heavy Plan Year, Non-Key Employees not
otherwise eligible to share in the allocation of
contributions as provided above, shall receive the
minimum allocation provided for in Section 4.4(g) if
eligible pursuant to the provisions of Section 4.4(i).
(e) Notwithstanding the foregoing, Participants who are
not actively employed on the last day of the Plan Year
due to Retirement (Early, Normal or Late), Total and
Permanent Disability or death shall not share in the
allocation of contributions for that Plan Year.
(f) As of each Anniversary Date or other valuation
date, before one-half of the current valuation period
allocation of Employer contributions, any earnings or
losses (net appreciation or net depreciation) of the
Trust Fund shall be allocated in the same proportion
that each Participant's and Former Participant Is
nonsegregated accounts bear to the total of all
Participants' and Former Participants' nonsegregated
accounts as of such date.
Participants' transfers from other qualified plans
deposited in the general Trust Fund shall share in any
earnings and losses (net appreciation or net depreciation)
of the Trust Fund in the same manner provided above. Each
segregated account maintained on behalf of a Participant
shall be credited or charged with its separate earnings and
losses.
(g) Minimum Allocations Required for Top Heavy Plan
Years: Notwithstanding the foregoing, for any Top Heavy Plan
Year, the sum of the Employer's contributions allocated to
the Participant's Combined Account of each Non-Key Employee
shall be equal to at least three percent (3%) of such Non-
Key Employee's "415 Compensation" (reduced by contributions
and forfeitures, if any, allocated to each Non-Key Employee
in any defined contribution plan included with this plan in
a Required Aggregation Group). However, if (1) the sum of
the Employer's contributions allocated to the Participant's
Combined Account of each Key Employee for such Top Heavy
Plan Year is less than three percent (3%) of each Key
Employee's "415 Compensation" and (2) this Plan is not
required to be included in an Aggregation Group to enable a
defined benefit plan to meet the requirements of Code
Section 401(a)(4) or 410, the sum of the Employer's
contributions allocated to the Participant's Combined
Account of each Non-Key Employee shall be equal to the
largest percentage allocated to the Participant's Combined
Account of any Key Employee. However, in determining
whether a Non-Key Employee has received the required minimum
allocation, such Non-Key Employee's Deferred Compensation
and matching contributions needed to satisfy the "Actual
Contribution Percentage" tests pursuant to Section 4.7(a)
shall not be taken into account.
24
<PAGE>
However, no such minimum allocation shall be required
in this Plan for any Non-Key Employee who participates in
another defined contribution plan subject to Code Section
412 providing such benefits included with this Plan in a
Required Aggregation Group.
(h) For purposes of the minimum allocations set forth
above, the percentage allocated to the Participant's
Combined Account of any Key Employee shall be equal to the
ratio of the sum of the Employer's contributions allocated
on behalf of such Key Employee divided by the "415
Compensation" for such Key Employee.
(i) For any Top Heavy Plan Year, the minimum
allocations set forth above shall be allocated to the
Participant's Combined Account of all Non-Key Employees who
are Participants and who are employed by the Employer on the
last day of the Plan Year, including Non-Key Employees who
have (1) failed to complete a Year of Service; and (2)
declined to make mandatory contributions (if required) or,
in the case of a cash or deferred arrangement, elective
contributions to the Plan.
(j) For the purposes of this Section, "415
Compensation" shall be limited to $200,000. Such amount
shall be adjusted at the same time and in the same manner as
permitted under Code Section 415(d), except that the dollar
increase in effect on January 1 of any calendar year shall
be effective for the Plan Year beginning with or within such
calendar year and the first adjustment to the $200,000
limitation shall be effective on January 1, 1990. For any
short Plan Year the "415 Compensation" limit shall be an
amount equal to the "415 Compensation" limit for the
calendar year in which the Plan Year begins multiplied by
the ratio obtained by dividing the number of full months in
the short Plan Year by twelve (12). However, for Plan Years
beginning prior to January 1, 1989, the $200,000 limit
shall apply only for Top Heavy Plan Years and shall not be
adjusted.
(k) Notwithstanding anything herein to the contrary,
Participants who terminated employment for any reason during
the Plan Year shall share in the salary reduction
contributions made by the Employer for the year of
termination without regard to the Hours of Service credited.
(l) If a Former Participant is reemployed after five
(5) consecutive 1-Year Breaks in Service, then separate
accounts shall be maintained as follows:
(1) one account for nonforfeitable benefits
attributable to pre-break service; and
(2) one account representing his status in the Plan
attributable to post-break service.
(m) Notwithstanding anything to the contrary, for Plan
Years beginning after December 31, 1989, if this is a Plan
that would otherwise fail to meet the requirements of Code
Sections 401(a)(26), 410(b)(1) or 410(b)(2)(A)(i)
and the Regulations thereunder because Employer
contributions would not be allocated to a sufficient number
or percentage of Participants for a Plan Year, then the
following rules shall apply:
(1) The group of Participants eligible to share in the
Employer's contribution for the Plan Year shall be
expanded to include the minimum number of Participants
who would not otherwise be eligible as are necessary to
satisfy the applicable test specified above. The
specific Participants who shall become eligible under
the terms of this paragraph shall be those who are
actively employed on the last day of the Plan Year and,
when compared to similarly situated Participants, have
completed the greatest number of Hours of Service in
the Plan Year.
(2) If after application of paragraph (1) above, the
applicable test is still not satisfied, then the group
of Participants
25
<PAGE>
eligible to share in the Employer's contribution for
the Plan Year shall be further expanded to include the
minimum number of Participants who are not actively
employed on the last day of the Plan Year as are
necessary to satisfy the applicable test. The
specific Participants who shall become eligible to
share shall be those Participants, when compared to
similarly situated Participants, who have completed the
greatest number of Hours of Service in the Plan Year
before terminating employment.
(3) Nothing in this Section shall permit the reduction
of a Participant's accrued benefit. Therefore any
amounts that have previously been allocated to
Participants may not be reallocated to satisfy these
requirements. In such event, the Employer shall make
an additional contribution equal to the amount such
affected Participants would have received had they been
included in the allocations, even if it exceeds the
amount which would be deductible under Code Section
404. Any adjustment to the allocations pursuant to
this paragraph shall be considered a retroactive
amendment adopted by the last day of the Plan Year.
4.5 ACTUAL DEFERRAL PERCENTAGE TESTS
(a) Maximum Annual Allocation: For each Plan Year
beginning after December 31, 1986, the annual allocation
derived from Employer Elective Contributions to a
Participant's Elective Account shall satisfy one of the
following tests:
(1) The "Actual Deferral Percentage" for the Highly
Compensated Participant group shall not be more than
the "Actual Deferral Percentage" of the Non-Highly
Compensated Participant group multiplied by 1.25, or
(2) The excess of the "Actual Deferral Percentage" for
the Highly Compensated Participant group over the
"Actual Deferral Percentage" for the Non-Highly
Compensated Participant group shall not be more than
two percentage points. Additionally, the "Actual
Deferral Percentage" for the Highly Compensated
Participant group shall not exceed the "Actual Deferral
Percentage" for the Non-Highly Compensated Participant
group multiplied by 2. The provisions of Code Section
401(k)(3) and Regulation 1.401(k)-I(b) are incorporated
herein by reference.
However, for Plan Years beginning after December 31,
1988, in order to prevent the multiple use of the
alternative method described in (2) above and in Code
Section 401(m)(9)(A), any Highly Compensated
Participant eligible to make elective deferrals
pursuant to Section 4.2 and to make Employee
contributions or to receive matching contributions
under this Plan or under any other plan maintained by
the Employer or an Affiliated Employer shall have his
actual contribution ratio reduced pursuant to
Regulation 1.401.(m)-2, the provisions of which are
incorporated herein by reference.
(b) For the purposes of this Section "Actual Deferral
Percentage" means, with respect to the Highly Compensated
Participant group and Non-Highly Compensated Participant
group for a Plan Year, the average of the ratios, calculated
separately for each Participant in such group, of the amount
of Employer Elective Contributions allocated to each
Participant's Elective Account for such Plan Year, to such
Participant's "414(s) Compensation" for such Plan Year.
The actual deferral ratio for each Participant and the
"Actual Deferral Percentage" for each group shall be
calculated to the nearest one-hundredth of one percent for
Plan Years beginning after December 31, 1988. Employer
Elective Contributions allocated to each Non-Highly
Compensated Participant's Elective Account shall be reduced
by Excess Deferred Compensation to the extent such excess
amounts are made under this Plan or any other plan
maintained by the Employer.
26
<PAGE>
(c) For the purpose of determining the actual deferral
ratio of a Highly Compensated Employee who is subject to the
Family Member aggregation rules of Code Section 414(q)(6)
because such Participant is either a "five percent owner" of
the Employer or one of the ten (10) Highly Compensated
Employees paid the greatest "415 Compensation" during the
year, the following shall apply:
(1) The combined actual deferral ratio for the family
group (which shall be treated as one Highly Compensated
Participant) shall be determined by aggregating
Employer Elective Contributions and "414(s)
Compensation" of all eligible Family Members (including
Highly Compensated Participants). However, in applying
the $200,000 limit to "414(s) Compensation", for Plan
Years beginning after December 31, 1988, Family Members
shall include only the affected Employee's spouse and
any lineal descendants who have not attained age 19
before the close of the Plan Year. Notwithstanding the
foregoing, with respect to Plan Years beginning prior
to January 1, 1990, compliance with the Regulations
then in effect shall be deemed to be compliance with
this paragraph.
(2) The Employer Elective Contributions and "414(s)
Compensation" of all Family Members shall be
disregarded for purposes of determining the "Actual
Deferral Percentage" of the Non-Highly Compensated
Participant group except to the extent taken into
account in paragraph (1) above.
(3) If a Participant is required to be aggregated as a
member of more than one family group in a plan, all
Participants who are members of those family groups
that include the Participant are aggregated as one
family group in accordance with paragraphs (1) and (2)
above.
(d) For the purposes of Sections 4.5(a) and 4.6, a
Highly Compensated Participant and a Non-Highly Compensated
Participant shall include any Employee eligible to make a
deferral election pursuant to Section 4.2, whether or not
such deferral election was made or suspended pursuant to
Section 4.2.
(e) For the purposes of this Section and Code Sections
401(a)(4), 410(b) and 401(k) if two or more plans which
include cash or deferred arrangements are considered one
plan for the purposes: of Code Section 401(a)(4) or 410(b)
(other than Code Section 410(b)(2)(A)(ii) as in effect for
Plan Years beginning after December 31, 1988), the cash or
deferred arrangements included in such plans shall be
treated as one arrangement. In addition, two or more cash
or deferred arrangements may be considered as a single
arrangement for purposes of determining whether or
not such arrangements satisfy Code Sections 401(a)(4),
410(b) and 401(k). In such a case, the cash or deferred
arrangements included in such plans and the plans including
such arrangements shall be treated as one arrangement and as
one plan for purposes of this Section and Code Sections 401
(a)(4), 410(b) and 401(k). Plans may be aggregated
under this paragraph (e) only if they have the same plan
year.
Notwithstanding the above, for Plan Years beginning
after December 31, 1988, an employee stock ownership plan
described in Code Section 4975(e)(7) or 409 may not be
combined with this Plan for purposes of determining whether
the employee stock ownership plan or this Plan satisfies
this Section and Code Sections 401(a)(4), 410(b) and 401(k).
(f) For the purposes of this Section, if a Highly
Compensated Participant is a Participant under two or more
cash or deferred arrangements (other than a cash or deferred
arrangement which is part of an employee stock ownership
plan as defined in Code Section 4975(e)(7) or 409 for Plan
Years beginning after December 31, 1988) of the Employer or
an Affiliated Employer, all such cash or deferred
arrangements shall be treated as one cash or deferred
arrangement for the purpose of
27
<PAGE>
determining the actual deferral ratio with respect to such
Highly Compensated Participant. However, for Plan Years
beginning after December 31, 1988, if the cash or deferred
arrangements have different plan years, this paragraph shall
be applied by treating all cash or deferred arrangements
ending with or within the same calendar year as a single
arrangement.
4.6 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS
In the event that the initial allocations of the Employer's
Elective Contributions made pursuant to Section 4.4 do not
satisfy one of the tests set forth in Section 4.5(a) for Plan
Years beginning after December 31, 1986, the Administrator shall
adjust Excess Contributions pursuant to the options set forth
below:
(a) On or before the fifteenth day of the third month
following the end of each Plan Year, the Highly Compensated
Participant having the highest actual deferral ratio shall
have his portion of Excess Contributions distributed to him
until one of the tests set forth in Section 4.5(a) is
satisfied, or until his actual deferral ratio equals the
actual deferral ratio of the Highly Compensated Participant
having the second highest actual deferral ratio. This
process shall continue until one of the tests set forth in
Section 4.5(a) is satisfied. For each Highly Compensated
Participant, the amount of Excess Contributions is equal to
the Elective Contributions on behalf of such Highly
Compensated Participant (determined prior to the application
of this paragraph) minus the amount determined by
multiplying the Highly Compensated Participant's actual
deferral ratio (determined after application of this
paragraph) by his "414(s) Compensation". However, in
determining the amount of Excess Contributions to be
distributed with respect to an affected Highly Compensated
Participant as determined herein, such amount shall be
reduced by any Excess Deferred Compensation previously
distributed to such affected Highly Compensated Participant
for his taxable year ending with or within such Plan Year.
(1) With respect to the distribution of Excess
Contributions pursuant to (a) above, such distribution:
(i) may be postponed but not later than the close
of the Plan Year following the Plan Year to which
they are allocable;
(ii) shall be made first from unmatched Deferred
Compensation and, thereafter, from Deferred
Compensation which is matched. Matching
contributions which relate to such Deferred
Compensation shall be forfeited;
(iii) shall be adjusted for Income; and
(iv) shall be designated by the Employer as a
distribution of Excess Contributions (and Income).
(2) Any distribution of less than the entire amount of
Excess Contributions shall be treated as a pro rata
distribution of Excess Contributions and Income.
(3) The determination and correction of Excess
Contributions of a Highly Compensated Participant whose
actual deferral ratio is determined under the family
aggregation rules shall be accomplished by reducing the
actual deferral ratio as required herein, and the
Excess Contributions for the family unit shall then be
allocated among the Family Members in proportion to the
Elective Contributions of each Family Member that were
combined to determine the group actual deferral ratio.
Notwithstanding the foregoing, with respect to Plan
Years beginning prior to January 1, 1990, compliance
with the Regulations then in effect shall be deemed to
be compliance with this paragraph.
28
<PAGE>
(b) Within twelve (12) months after the end of the
Plan Year, the Employer may make a special Qualified Non-
Elective Contribution on behalf of Non-Highly Compensated
Participants in an amount sufficient to satisfy one of the
tests set forth in Section 4.5(a). Such contribution shall
be allocated to the Participant's Elective Account of each
Non-Highly Compensated Participant in the same proportion
that each Non-Highly Compensated Participant's Compensation
for the year bears to the total Compensation of all Non-
Highly Compensated Participants.
(c) If during a Plan Year the projected aggregate
amount of Elective Contributions to be allocated to all
Highly Compensated Participants under this Plan would, by
virtue of the tests set forth in Section 4.5(a), cause the
Plan to fail such tests, then the Administrator may
automatically reduce proportionately or in the order
provided in Section 4.6(a) each affected Highly Compensated
Participant's deferral election made pursuant to Section 4.2
by an amount necessary to satisfy one of the tests set forth
in Section 4.5(a).
4.7 ACTUAL CONTRIBUTION PERCENTAGE TESTS
(a) The "Actual Contribution Percentage" for Plan
Years beginning after December 31, 1986 for the Highly
Compensated Participant group shall not exceed the
greater of:
(1) 125 percent of such percentage for the Non-Highly
Compensated Participant group; or
(2) the lesser of 200 percent of such percentage for
the Non-Highly Compensated Participant group, or such
percentage for the Non-Highly Compensated Participant
group plus 2 percentage points. However, for Plan
Years beginning after December 31, 1988, to prevent the
multiple use of the alternative method described in
this paragraph and Code Section 401(m)(9)(A), any
Highly Compensated Participant eligible to make
elective deferrals pursuant to Section 4.2 or any other
cash or deferred arrangement maintained by the
Employer or an Affiliated Employer and to make Employee
contributions or to receive matching contributions
under this Plan or under any other plan maintained by
the Employer or an Affiliated Employer shall have his
actual contribution ratio reduced pursuant to
Regulation 1.401(m)-2. The provisions of Code Section
401(m) and Regulations 1.401(m)-l(b) and 1.401(m)-2 are
incorporated herein by reference.
(b) For the purposes of this Section and Section 4.8,
"Actual Contribution Percentage" for a Plan Year means,
with respect to the Highly Compensated Participant group
and Non-Highly Compensated Participant group, the average
of the ratios (calculated separately for each Participant in
each group) of:
(1) the Sum of Employer matching contributions made
pursuant to Section 4.1(b) on behalf of each such
Participant for such Plan Year; to
(2) the Participant's "414(s) Compensation" for such
Plan Year.
(c) For purposes of determining the "Actual
Contribution Percentage" and the amount of Excess Aggregate
Contributions pursuant to Section 4.8(d), only Employer
matching contributions (excluding Employer matching
contributions forfeited pursuant to Sections 4.2(f) and
4.6(a)(1) or forfeited pursuant to Section 4.8(a))
contributed to the Plan prior to the end of the succeeding
Plan Year shall be considered. In addition, the
Administrator may elect to take into account, with respect
to Employees eligible to have Employer matching
contributions pursuant to Section 4.1(b) Allocated to their
accounts, elective deferrals (as defined in Regulation
1.402(g)-l(b)) and qualified non-elective contributions (as
defined in Code Section 401(m)(4)(C)) contributed to any
plan maintained by the Employer. Such elective
29
<PAGE>
deferrals and qualified non-elective contributions shall be
treated as Employer matching contributions subject to
Regulation 1.401(m)-l(b)(5) which is incorporated herein by
reference. However, for Plan Years beginning after December
31, 1988, the Plan Year must be the same as the plan year of
the plan to which the elective deferrals and the qualified
non-elective contributions are made.
(d) For the purpose of determining the actual
contribution ratio of a Highly Compensated Employee who is
subject to the Family Member aggregation rules of Code
Section 414(q)(6) because such Employee is either a "five
percent owner" of the Employer or one of the ten (10) Highly
Compensated Employees paid the greatest "415 Compensation"
during the year, the following shall apply:
(1) The combined actual contribution ratio for the
family group (which shall be treated as one Highly
Compensated Participant) shall be determined by aggregating
Employer matching contributions made pursuant to Section
4.1(b) and "414(s) Compensation" of all eligible Family
Members (including Highly Compensated Participants).
However, in applying the $200,000 limit to "414(s)
Compensation" for Plan Years beginning after December 31,
1988, Family Members shall include only the affected
Employee's spouse and any lineal descendants who have not
attained age 19 before the close of the Plan Year.
Notwithstanding the foregoing, with respect to Plan Years
beginning prior to January 1, 1990, compliance with the
Regulations then in effect shall be deemed to be compliance
with this paragraph.
(2) The Employer matching contributions made pursuant
to Section 4.1(b) and "414(s) Compensation" of all
Family Members shall be disregarded for purposes of
determining the "Actual Contribution Percentage" of the
Non-Highly Compensated Participant group except to the
extent taken into account in paragraph (1) above.
(3) If a Participant is required to be aggregated as a
member of more than one family group in a plan, all
Participants who are members of those family groups
that include the Participant are aggregated as one
family group in accordance with paragraphs (1) and (2)
above.
(e) For purposes of this Section and Code Sections 401
(a)(4), 410(b) and 401(m), if two or more plans of the
Employer to which matching contributions, Employee
contributions, or both, are made are treated as one plan for
purposes of Code Sections 401(a)(4) or 410(b) (other than
the average benefits test under Code Section 410(b)(2)(A)
(ii) as in effect for Plan Years beginning after December
31, 1988), such plans shall be treated as one plan. In
addition, two or more plans of the Employer to which
matching contributions, Employee contributions, or both, are
made may be considered as a single plan for purposes of
determining whether or not such plans satisfy Code Sections
401(a)(4), 410(b) and 401(m). In such a case, the
aggregated plans must satisfy this Section and Code Sections
401(a)(4), 410(b) and 401(m) as though such aggregated
plans were a single plan. Plans may be aggregated under
this paragraph (e) for Plan Years beginning after December
31, 1988, only if they have the same plan year.
Notwithstanding the above, for Plan Years beginning
after December 31, 1988, an employee stock ownership plan
described in Code Section 4975(e)(7) or 409 may not be
aggregated with this Plan for purposes of determining
whether the employee stock ownership plan or this Plan
satisfies this Section and Code Sections 401(a)(4), 410(b)
and 401(m).
(f) If a Highly Compensated Participant is a
Participant under two or more plans (other than an employee
stock ownership plan as defined in Code Section 4975(e)(7)
or 409 for Plan Years beginning after December 31, 1988)
which are maintained by the Employer or an Affiliated
Employer to which matching, contributions, Employee
contributions, or both, are
30
<PAGE>
made, all such contributions on behalf of such Highly
Compensated Participant shall be aggregated for purposes of
determining such Highly Compensated Participant's actual
contribution ratio. However, for Plan Years beginning after
December 31, 1988, if the plans have different plan years,
this paragraph shall be applied by treating all plans ending
with or within the same calendar year as a single plan.
(g) For purposes of Sections 4.7(a) and 4.8, a Highly
Compensated Participant and Non-Highly Compensated
Participant shall include any Employee eligible to have
Employer matching contributions pursuant to Section 4.1(b)
(whether or not a deferral election was made or suspended
pursuant to Section 4.2(e)) allocated to his account for the
Plan Year.
4.8 ADJUSTMENT TO ACTUAL CONTRIBUTION PERCENTAGE TESTS
(a) In the event that, for Plan Years beginning after
December 31, 1986, the "Actual Contribution Percentage" for
the Highly Compensated Participant group exceeds the "Actual
Contribution Percentage" for the Non-Highly Compensated
Participant group pursuant to Section 4.7(a), the
Administrator (on or before the fifteenth day of the third
month following the end of the Plan Year, but in no event
later than the close of the following Plan Year) shall
direct the Trustee to distribute to the Highly Compensated
Participant having the highest actual contribution ratio,
his Vested portion of Excess Aggregate Contributions (and
Income allocable to such contributions) and, if forfeitable,
forfeit such non-Vested Excess Aggregate Contributions
attributable to Employer matching contributions (and Income
allocable to such forfeitures) until either one of the tests
set forth in Section 4.7(a) is satisfied, or until his
actual contribution ratio equals the actual contribution
ratio of the Highly Compensated Participant having the
second highest actual contribution ratio. This process
shall continue until one of the tests set forth in Section
4.7(a) is satisfied.
(b) Any distribution and/or forfeiture of less than
the entire amount of Excess Aggregate Contributions (and
Income) shall be treated as a pro rata distribution and/or
forfeiture of Excess Aggregate Contributions and Income.
Distribution of Excess Aggregate Contributions shall be
designated by the Employer as a distribution of Excess
Aggregate Contributions (and Income). Forfeitures of Excess
Aggregate Contributions shall be treated in accordance with
Section 4.4.
(c) Excess Aggregate Contributions, including
forfeited matching contributions, shall be treated as
Employer contributions for purposes of Code Sections 404 and
415 even if distributed from the Plan.
Forfeited matching contributions that are reallocated
to Participants' Accounts for the Plan Year in which the
forfeiture occurs shall be treated as an "annual addition"
pursuant to Section 4.9(b) for the Participants to whose
Accounts they are reallocated and for the Participants from
whose Accounts they are forfeited.
(d) For each Highly Compensated Participant, the
amount of Excess Aggregate Contributions is equal to the
Employer matching contributions made pursuant to Section
4.1(b) and any qualified non-elective contributions or
elective deferrals taken into account pursuant to Section
4.7(c) on behalf of the Highly Compensated Participant
(determined prior to the application of this-paragraph)
minus the amount determined by multiplying the Highly
Compensated Participant's actual contribution ratio
(determined after application of this paragraph) by his
"414(s) Compensation". The actual contribution ratio must
be rounded to the nearest one-hundredth of one percent for
Plan Years beginning after December 31, 1988. In no case
shall the amount of Excess Aggregate Contribution with
respect to any Highly Compensated Participant exceed the
amount of Employer matching contributions made pursuant to
Section 4.1(b) and any qualified non-elective contributions
or elective deferrals taken into account pursuant to Section
4.7(c) on behalf of such Highly Compensated Participant for
such Plan Year.
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(e) The determination of the amount of Excess
Aggregate Contributions with respect to any Plan Year shall
be made after first determining the Excess Contributions, if
any, to be treated as voluntary Employee contributions due
to recharacterization for the plan year of any other
qualified cash or deferred arrangement (as defined in Code
Section 401(k)) maintained by the Employer that ends with or
within the Plan Year.
(f) If the determination and correction of Excess
Aggregate Contributions of a Highly Compensated Participant
whose actual contribution ratio is determined under the
family aggregation rules, then the actual contribution ratio
shall be reduced and the Excess Aggregate Contributions for
the family unit shall be allocated among the Family Members
in proportion to the sum of Employer matching contributions
made pursuant to Section 4.1(b) and any qualified non-
elective, contributions or elective deferrals taken into
account pursuant to Section 4.7(c) of each Family Member
that were combined to determine the group actual
contribution ratio. Notwithstanding the foregoing, with
respect to Plan Years beginning prior to January 1, 1990,
compliance with the Regulations then in effect shall be
deemed to be compliance with this paragraph.
(g) If during a Plan Year the projected aggregate
amount of Employer matching contributions to be allocated to
all Highly Compensated Participants under this Plan would,
by virtue of the tests set forth in Section 4.7(a), cause
the Plan to fail such tests, then the Administrator may
automatically reduce proportionately or in the order
provided in Section 4.8(a) each affected Highly Compensated
Participant's projected share of such contributions by an
amount necessary to satisfy one of the tests set forth in
Section 4.7(a).
(h) Notwithstanding the above, within twelve (12)
months after the end of the Plan Year, the Employer may make
a special Qualified Non-Elective Contribution on behalf of
Non-Highly Compensated Participants in an amount sufficient
to satisfy one of the tests set forth in Section 4.7(a).
Such contribution shall be allocated to the Participant's
Elective Account of each Non-Highly Compensated Participant
in the same proportion that each Non-Highly Compensated
Participant Is Compensation for the year bears to the total
Compensation of all Non-Highly Compensated Participants. A
separate accounting shall be maintained for the purpose of
excluding such contributions from the "Actual Deferral
Percentage" tests pursuant to Section 4.5(a).
4.9 MAXIMUM ANNUAL ADDITIONS
(a) Notwithstanding the foregoing, the maximum "annual
additions" credited to a Participant's accounts for any
"limitation year" shall equal the lesser of: (1) $30,000
(or, if greater, one-fourth of the dollar limitation in
effect under Code Section 415(b)(1)(A)) or (2) twenty-
five percent (25%) of the Participant's "415 Compensation"
for such "limitation year". For any short "limitation
year", the dollar limitation in (1) above shall be reduced
by a fraction, the numerator of which is the number of full
months in the short "limitation year" and the denominator of
which is twelve(12).
(b) For purposes of applying the limitations of Code
Section 415, "annual additions" means the sum credited to a
Participant's accounts for any "limitation year" of (1)
Employer contributions, (2) Employee contributions for
"limitation years" beginning after December 31, 1986, (3)
forfeitures, (4) amounts allocated, after March 31, 1984, to
an individual medical account, as defined in Code Section
415(l)(2) which is part of a pension or annuity plan
maintained by the Employer and (5) amounts derived from
contributions paid or accrued after December 31, 1985, in
taxable years ending after such date, which are attributable
to post-retirement medical benefits allocated to the
separate account of a key employee (as defined in Code
Section 419A(d)(3)) under a welfare benefit plan (as
defined in Code Section 419(e)) maintained by the Employer.
Except, however, the "415 Compensation" percentage
limitation
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referred to in paragraph (a) (2) above shall not apply to:
(1) any contribution for medical benefits (within the
meaning of Code Section 419A(f)(2)) after separation from
service which is otherwise treated as an "annual addition",
or (2) any amount otherwise treated as an "annual addition"
under Code Section 415(l)(1).
(c) For purposes of applying the limitations of Code
Section 415, the transfer of funds from one qualified plan
to another is not an "annual addition". In addition, the
following are not Employee contributions for the purposes of
Section 4.9(b)(2): (1) rollover contributions (as defined in
Code Sections 402(a)(5), 403(a)(4), 403(b)(8) and
408(d)(3)); (2) repayments of loans made to a Participant
from the Plan; (3) repayments of distributions received by
an Employee pursuant to Code' Section 411(a)(7)(B) (cash-
outs); (4) repayments of distributions received by an
Employee pursuant to Code Section 411(a)(3)(D) (mandatory
contributions); and (5) Employee contributions to a
simplified employee pension excludable from gross income
under Code Section 408(k)(6).
(d) For purposes of applying the limitations of Code
Section 415, the "limitation year" shall be the Plan Year.
(e) The dollar limitation under Code Section 415(b)
(1)(A) stated in paragraph (a)(1) above shall be adjusted
annually as provided in Code Section 415(d) pursuant to the
Regulations. The adjusted limitation is effective as of
January lst of each calendar year and is applicable to
"limitation years" ending with or within that calendar year.
(f) For the purpose of this Section, all qualified
defined benefit plans (whether terminated or not) ever
maintained by the Employer shall be, treated as one defined
benefit plan, and all qualified defined contribution plans
(whether terminated or not) ever maintained by the Employer
shall be treated as one defined contribution plan.
(g) For the purpose of this Section, if the Employer
is a member of a controlled group of corporations, trades or
businesses under common control (as defined by Code Section
1563(a) or Code Section 414(b) and (c) as modified by Code
Section 415(h)), is a member of an affiliated service group
(as defined by Code Section 414(m)), or is a member of a
group of entities required to be aggregated pursuant to
Regulations under Code Section 414(o), all Employees of such
Employers shall be considered to be employed by a single
Employer.
(h) For the purpose of this Section, if this Plan is a
Code Section 413(c) plan, all Employers of a Participant who
maintain this Plan will be considered to be a single
Employer.
(i)(1) If a Participant participates in more than one
defined contribution plan maintained by the Employer which
have different Anniversary Dates, the maximum "annual
additions" under this Plan shall equal the maximum "annual
additions" for the "limitation year" minus any "annual
additions" previously credited to such Participant's
accounts during the "limitation year".
(2) If a Participant participates in both a defined
contribution plan subject to Code Section 412 and a
defined contribution plan not subject to Code Section
412 maintained by the Employer which have the same
Anniversary Date, "annual additions" will be credited
to the Participant's accounts under the defined
contribution plan subject to Code Section 412 prior to
crediting "annual additions" to the Participant's
accounts under the defined contribution plan not
subject to Code Section 412.
(3) If a Participant participates in more than one
defined contribution plan not subject to Code Section
412 maintained by the Employer which have the same
Anniversary Date, the maximum.
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<PAGE>
"annual additions" under this Plan shall equal the
product of (A) the maximum "annual additions" for the
"limitation year" minus any "annual additions"
previously credited under subparagraphs (1) or (2)
above, multiplied by (B) a fraction (i) the numerator
of which is the "annual additions" which would be
credited to such Participant's accounts under this Plan
without regard to the limitations of Code Section 415
and (ii) the denominator of which is such "annual
additions" for all plans described in this
subparagraph.
(j) If an Employee is (or has been) a Participant in
one or more defined benefit plans and one or more defined
contribution plans maintained by the Employer, the sum of
the defined benefit plan fraction and the defined
contribution plan fraction for any "limitation year" may not
exceed 1.0.
(k) The defined benefit plan fraction for any
"limitation year" is a fraction, the numerator of which is
the sum of the Participant's projected annual benefits under
all the defined benefit plans (whether or not terminated)
maintained by the Employer, and the denominator of which is
the lesser of 125 percent of the dollar limitation
determined for the "limitation year" under Code Sections
415(b) and (d) or 140 percent of the highest average
compensation, including any adjustments under Code Section
415(b).
Notwithstanding the above, if the Participant was a
Participant as of the first day of the first "limitation
year" beginning after December 31, 1986, in one or more
defined benefit plans maintained by the Employer which were
in existence on May 6, 1986, the denominator of this
fraction will not be less than 125 percent of the sum of the
annual benefits under such plans which the Participant had
accrued as of the close of the last "limitation year"
beginning before January 1, 1987, disregarding any changes
in the terms and conditions of the plan after May 5, 1986.
The preceding sentence applies only if the defined benefit
plans individually and in the aggregate satisfied the
requirements of Code Section 415 for all "limitation years"
beginning before January 1, 1987.
(l) The defined contribution plan fraction for any
"limitation year" is a fraction, the numerator of which is
the sum of the annual additions to the Participant's Account
under all the defined contribution plans (whether or not
terminated) maintained by the Employer for the current and
all prior "limitation years" (including the annual additions
attributable to the Participant's nondeductible Employee
contributions to all defined benefit plans, whether or not
terminated, maintained by the Employer, and the annual
additions attributable to all welfare benefit funds, as
defined in Code Section 419(e), and individual medical
accounts, as defined in Code Section 415(l)(2), maintained
by the Employer), and the denominator of which is the sum of
the maximum aggregate amounts for the current and all prior
"limitation years" of service with the Employer (regardless
of whether a defined contribution plan was maintained by the
Employer). The maximum aggregate amount in any "limitation
year" is the lesser of 125 percent of the dollar limitation
determined under Code Sections 415(b) and (d) in effect
under Code Section 415(c)(1)(A) or 35 percent (35%) of the
Participant's Compensation for such year.
If the Employee was a Participant as of the end of the
first day of the first "limitation year" beginning after
December 31, 1986, in one or more defined contribution plans
maintained by the Employer which were in existence on May 6,
1986, the numerator of this fraction will be adjusted if the
sum of this fraction and the defined benefit fraction would
otherwise exceed 1.0 under the terms of this Plan. Under
the adjustment, an amount equal to the product of (1) the
excess of the sum of the fractions over 1.0 times (2) the
denominator of this fraction, will be permanently subtracted
from the numerator of this fraction. The adjustment is
calculated using the fractions as they would be computed as
of the end of the last "limitation year" beginning before
January 1,
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<PAGE>
1987, and disregarding any changes in the terms and
conditions of the Plan made after May 5, 1986, but using the
Code Section 415 limitation applicable to the first
"limitation year" beginning on or after January 1, 1987.
The annual addition for any "limitation year" beginning
before January 1, 1987 shall not be recomputed to treat all
Employee contributions as annual additions.
(m) Notwithstanding the foregoing, for any "limitation
year" in which the Plan is a Top Heavy Plan, 100 percent
shall be substituted for 125 percent in Sections 4.9(k) and
4.9(l) unless the extra minimum allocation is being provided
pursuant to Section 4.4. However, for any "limitation year"
in which the Plan is a Super Top Heavy Plan, 100 percent
(100%) shall be substituted for 125 percent (125%)in any
event.
(n) Notwithstanding anything contained in this Section
to the contrary, the limitations, adjustments and other
requirements prescribed in this Section shall at all times
comply with the provisions of Code Section 415 and the
Regulations thereunder, the terms of which are specifically
incorporated herein by reference.
4.10 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS
(a) If, as a result of a reasonable error in
estimating a Participant's Compensation, a reasonable error
in determining the amount of elective deferrals (within the
meaning of Code Section 402(g)(3)) that may be made with
respect to any Participant under the limits of Section 4.9
or other facts and circumstances to which Regulation 1.415-
6(b)(6) shall be applicable, the "annual additions" under
this Plan would cause the maximum "annual additions" to be
exceeded for any Participant, the Administrator shall (1)
distribute any elective deferrals (within the meaning of
Code Section 402(g)(3)) or return any voluntary Employee
contributions credited for the "limitation year" to the
extent that the return would reduce the "excess amount" in
the Participant's accounts (2) hold any "excess amount"
remaining after the return of any elective deferrals or
voluntary Employee contributions in a "Section 415 suspense
account" (3) use the "Section 415 suspense account" in the
next "limitation year" (and succeeding "limitation years" if
necessary) to reduce Employer contributions for that
Participant if that Participant is covered by the Plan as of
the end of the "limitation year", or if the Participant is
not so covered, allocate and reallocate the "Section 415
suspense account" in the next "limitation year" (and
succeeding "limitation years" if necessary) to all
Participants in the Plan before any Employer or Employee
contributions which would constitute "annual additions" are
made to the Plan for such "limitation year" (4) reduce
Employer contributions to the Plan for such "limitation
year" by the amount of the "Section 415 suspense account"
allocated and reallocated during such "limitation year".
(b) For purposes of this Article, "excess amount" for
any Participant for a "limitation year" shall mean the
excess, if any, of (1) the "annual additions" which would be
credited to his account under the terms of the Plan without
regard to the limitations of Code Section 415 over (2) the
maximum "annual additions" determined pursuant to Section
4.9.
(c) For purposes of this Section, "Section 415
suspense account" shall mean an unallocated account equal to
the sum of "excess amounts" for all Participants in the Plan
during the "limitation year". The "Section 415 suspense
account" shall not share in any earnings or losses of the
Trust Fund.
4.11 TRANSFERS FROM QUALIFIED PLANS
(a) With the consent of the Administrator, amounts may
be transferred from other qualified plans by Employees,
provided that the trust from which such funds are
transferred permits the transfer to be made and the transfer
will not jeopardize the tax exempt status of the
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<PAGE>
Plan or Trust or create adverse tax consequences for the
Employer. The amounts transferred shall be set up in a
separate account herein referred to as a "Participant's
Rollover Account". Such account shall be fully Vested at
all times and shall not be subject to Forfeiture for any
reason.
(b) Amounts in a Participant's Rollover Account shall
be held by the Trustee pursuant to the provisions of this
Plan and may not be withdrawn by, or distributed to the
Participant, in whole or in part, except as provided in
paragraphs (c) and (d) of this Section.
(c) Except as permitted by Regulations (including
Regulation 1.411(d)-4), amounts attributable to elective
contributions (as defined in Regulation 1.401(k)-I(g)(3)),
including amounts treated as elective contributions, which
are transferred from another qualified plan in a plan-to-
lan transfer shall be subject to the distribution
limitations provided for in Regulation 1.401(k)-l(d).
(d) At Normal Retirement Date, or such other date when
the Participant or his Beneficiary shall be entitled to
receive benefits, the fair market value of the Participant's
Rollover Account shall be used to provide additional
benefits to the Participant or his Beneficiary. Any
distributions of amounts held in a Participant's Rollover
Account shall be made in a manner which is consistent with
and satisfies the provisions of Section 6.5, including, but
not limited to, all notice and consent requirements of Code
Section 411(a)(11) and the Regulations thereunder.
Furthermore, such amounts shall be considered as part of a
Participant's benefit in determining whether an involuntary
cash-out of benefits without Participant consent may be
made.
(e) The Administrator may direct that employee
transfers made after a valuation date be segregated into a
separate account for each Participant in a federally insured
savings account, certificate of deposit in a bank or savings
and loan association, money market certificate, or other
short term debt security acceptable to the Trustee until
such time as the allocations pursuant to this Plan have been
made, at which time they may remain segregated or be
invested as part of the general Trust Fund, to be determined
by the Administrator.
(f) All amounts allocated to a Participant's Rollover
Account may be treated as a Directed Investment Account
pursuant to Section 4.12.
(g) For purposes of this Section, the term "qualified
plan" shall mean any tax qualified plan under Code Section
401(a). The term "amounts transferred from other qualified
plans" shall mean: (i) amounts transferred to this Plan
directly from another qualified plan; (ii) lump-sum
distributions received by an Employee from another qualified
plan which are eligible for tax free rollover to a qualified
plan and which are transferred by the Employee to this Plan
within sixty (60) days following his receipt thereof; (iii)
amounts transferred to this Plan from a conduit individual
retirement account provided that the conduit individual
retirement account has no assets other than assets which (A)
were previously distributed to the Employee by another
qualified plan as a lump-sum distribution (B) were eligible
for tax-free rollover to a qualified plan and (C) were
deposited in such conduit individual retirement account
within sixty (60) days of receipt thereof and other than
earnings on said assets; and (iv) amounts distributed to the
Employee from a conduit individual retirement account
meeting the requirements of clause (iii) above, and
transferred by the Employee to this Plan within sixty (60)
days of his receipt thereof from such conduit individual
retirement account.
(h) Prior to accepting any transfers to which this
Section applies, the Administrator may require the Employee
to establish that the amounts to be transferred to this Plan
meet the requirements of this Section and may also require
the Employee to provide an opinion of counsel satisfactory
to the Employer that the amounts to be transferred meet the
requirements of this Section.
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<PAGE>
(i) This Plan shall not accept any direct or indirect
transfers (as that term is defined and interpreted under
Code Section 401(a)(11) and the Regulations thereunder) from
a defined benefit plan, money purchase plan (including a
target benefit plan), stock bonus or prof it sharing plan
which would otherwise have provided for a life annuity form
of payment to the Participant.
(j) Notwithstanding anything herein to the contrary, a
transfer directly to this Plan from another qualified plan
(or a transaction having the effect of such a transfer)
shall only be permitted if it will not result in the
elimination or reduction of any "Section 411(d)(6)
protected benefit" as described in Section 8.1.
4.12 DIRECTED INVESTMENT ACCOUNT
(a) The Administrator, in his sole discretion, may,
determine that all Participants be permitted to direct the
Trustee as to the investment of all or a portion of the
interest in any one or more of their individual account
balances. If such authorization is given, Participants may,
subject to a procedure established by the Administrator and
applied in a uniform nondiscriminatory manner, direct the
Trustee in writing to invest any portion of their account in
specific assets, specific funds or other investments
permitted under the Plan and the directed investment
procedure. That portion of the account of any Participant
so directing will thereupon be considered a Directed
Investment Account, which shall not share in Trust Fund
earnings.
(b) A separate Directed Investment Account shall be
established for each Participant who has directed an
investment. Transfers between the Participant's regular
account and his Directed Investment Account shall be charged
and credited as the case may be to each account. The
Directed Investment Account shall not share in Trust Fund
earnings, but it shall be charged or credited as appropriate
with the net earnings, gains, losses and expenses as well as
any appreciation or depreciation in market value during each
Plan Year attributable to such account.
ARTICLE V
VALUATIONS
5.1 VALUATION OF THE TRUST FUND
The Administrator shall direct the Trustee, as of each
Anniversary Date, and at such other date or dates deemed
necessary by the Administrator, herein called "valuation date",
to determine the net worth of the assets comprising the Trust
Fund as it exists on the "valuation date". In determining such
net worth, the Trustee shall value the assets comprising the
Trust Fund at their fair market value as of the "valuation date"
and shall deduct all expenses for which the Trustee has not yet
obtained reimbursement from the Employer or the Trust Fund.
5.2 METHOD OF VALUATION
In determining the fair market value of securities held in
the Trust Fund which are listed on a registered stock exchange,
the Administrator shall direct the Trustee to value the same at
the prices they were last traded on such exchange preceding the
close of business on the "valuation date". If such securities
were not traded on the "valuation date", or if the exchange on
which they are traded was not open for business on the "valuation
date", then the securities shall be valued at the prices at which
they were last traded prior to the "valuation date". Any
unlisted security held in the Trust Fund shall be valued at its
bid price next preceding the close of business on the "valuation
date", which bid price shall be obtained from a registered broker
or an investment banker. In determining the fair market value of
assets other than securities for which trading or bid prices can
be obtained, the Trustee may appraise such assets itself, or in
its discretion, employ one or more appraisers for that purpose
and rely on the values established by such appraiser or
appraisers.
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ARTICLE VI
DETERMINATION AND DISTRIBUTION OF BENEFITS
6.1 DETERMINATION OF BENEFITS UPON RETIREMENT
Every Participant may terminate his employment with the
Employer and retire for the purposes hereof on his Normal
Retirement Date or Early Retirement Date. However, a Participant
may postpone the termination of his employment with the Employer
to a later date, in which event the participation of such
Participant in the Plan, including the right to receive
allocations pursuant to Section 4.4, shall continue until his
Late Retirement Date. Upon a Participant's Retirement Date or
attainment of his Normal Retirement Date without termination of
employment with the Employer, or as soon thereafter as is
practicable, the Trustee shall distribute all amounts credited to
such Participant's Combined Account in accordance with Section
6.5.
6.2 DETERMINATION OF BENEFITS UPON DEATH
(a) Upon the death of a Participant before his
Retirement Date or other termination of his employment, all
amounts credited to such Participant's Combined Account
shall become fully Vested. The Administrator shall direct
the Trustee, in accordance with the provisions of Sections
6.6 and 6.7, to distribute the value of the deceased
Participant's accounts to the Participant's Beneficiary.
(b) Upon the death of a Former Participant, the
Administrator shall direct the Trustee, in accordance with
the provisions of Sections 6.6 and 6.7, to distribute any
remaining Vested amounts credited to the accounts of a
deceased Former Participant to such Former Participant's
Beneficiary.
(c) The Administrator may require such proper proof of
death and such evidence of the right of any person to
receive payment of the value of the account of a deceased
Participant or Former Participant as the Administrator may
deem desirable. The Administrator's determination of death
and of the right of any person to receive payment shall be
conclusive.
(d) The Beneficiary of the death benefit payable
pursuant to this Section shall be the Participant's spouse.
Except, however, the Participant: may designate a
Beneficiary other than his spouse if:
(1) the spouse has waived the right to be the
Participant's Beneficiary, or
(2) the Participant is legally separated or has been
abandoned (within the meaning of local law) and the
Participant has a court order to such effect (and there
is no "qualified domestic relations order" as defined
in Code Section 414(p) which provides otherwise), or
(3) the Participant has no spouse, or
(4) the spouse cannot be located.
In such event, the designation of a Beneficiary shall
be made on a form satisfactory to the Administrator. A
Participant may at any time revoke his designation of a
Beneficiary or change his Beneficiary by filing written notice of
such revocation or change with the Administrator. However, the
Participant's spouse must again consent in writing to any change
in Beneficiary unless the original consent acknowledged that the
spouse had the right to limit consent only to a specific
Beneficiary and that the spouse voluntarily elected to relinquish
such right. In the event no valid designation of Beneficiary
exists at the time of the Participant's death, the death benefit
shall be payable to his estate.
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<PAGE>
(e) Any consent by the Participant's spouse to waive
any rights to the death benefit must be in writing, must
acknowledge the effect of such waiver, and be witnessed by a
Plan representative or a notary public. Further, the
spouse's consent must be irrevocable and must acknowledge
the specific nonspouse Beneficiary.
6.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY
In the event of a Participant's Total and Permanent
Disability prior to his Retirement Date or other termination of
his employment, all amounts credited to such Participant's
Combined Account shall become fully Vested. In the event of a
Participant's Total and Permanent Disability, the Trustee, in
accordance with the provisions of Sections 6.5 and 6.7, shall
distribute to such Participant all amounts credited to such
Participant's Combined Account as though he had retired.
6.4 DETERMINATION OF BENEFITS UPON TERMINATION
(a) On or before the Anniversary Date coinciding with
or subsequent to the termination of a Participant's
employment for any reason other than death, Total and
Permanent Disability or retirement, the Administrator may
direct the Trustee to segregate the amount of the Vested
portion of such Terminated Participant's Combined Account
and invest the aggregate amount thereof in a separate,
federally insured savings account, certificate of deposit,
common or collective trust fund of a bank or a deferred
annuity. In the event the Vested portion of a Participant's
Combined Account is not segregated, the amount shall remain
in a separate account for the Terminated Participant and
share in allocations pursuant to Section 4.4 until such time
as a distribution is made to the Terminated Participant.
Distribution of the funds due to a Terminated
Participant shall be made on the occurrence of an event
which would result in the distribution had the Terminated
Participant remained in the employ of the Employer (upon the
Participant's death, Total and Permanent Disability, Early
or Normal Retirement). However, at the election of the
Participant, the Administrator shall direct the Trustee to
cause the entire Vested portion of the Terminated
Participant's Combined Account to be payable to such
Terminated Participant as of the next calendar quarter
following termination of employment. Any distribution under
this paragraph shall be made in a manner which is consistent
with and satisfies the provisions of Section 6.5, including,
but not limited to, all notice and consent requirements of
Code Section 411(a)(11) and the Regulations thereunder.
If the value of a Terminated Participant's Vested
benefit derived from Employer and Employee contributions
does not exceed $3,500 and has never exceeded $3,500 at the
time of any prior distribution, the Administrator shall
direct the Trustee to cause the entire Vested benefit to be
paid to such Participant in a single lump sum.
(b) The Vested portion of any Participant's Account
shall be a percentage of the total amount credited to his
Participant's Account determined on the basis of the
Participant's number of Years of Service according to the
following schedule:
Vesting Schedule
Years of Service Percentage
1 20 %
2 40 %
3 60 %
4 80 %
5 100 %
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<PAGE>
(c) Notwithstanding the vesting schedule above, the
Vested percentage of a Participant's Account shall not be
less than the Vested percentage attained as of the later of
the effective date or adoption date of this amendment and
restatement.
(d) Notwithstanding the vesting schedule above, upon
the complete discontinuance of the Employer's contributions
to the Plan or upon any full or partial termination of the
Plan, all amounts credited to the account of any affected
Participant shall become one hundred (100%) Vested and shall
not thereafter be subject to Forfeiture.
(e) The computation of a Participant's nonforfeitable
percentage of his interest in the Plan shall not be reduced
as the result of any direct or indirect amendment to this
Plan. For this purpose, the Plan shall be treated as having
been amended if the Plan provides for an automatic change in
vesting due to a change in top heavy status. In the event
that the Plan is amended to change or modify any vesting
schedule, a Participant with at least three (3) Years of
Service as of the expiration date of the election period may
elect to have his nonforfeitable percentage computed under
the Plan without regard to such amendment. If a Participant
fails to make such election, then such Participant shall be
subject to the new vesting schedule. The Participant's
election period shall commence on the adoption date of the
amendment and shall end sixty (60) days after the latest of:
(1) the adoption date of the amendment,
(2) the effective date of the amendment, or
(3) the date the Participant receives written notice
of the amendment from the Employer or Administrator.
(f)(1) If any Former Participant shall be reemployed by
the Employer before a 1-Year Break in Service occurs, he shall
continue to participate in the Plan in the same manner as if such
termination had not occurred.
(2) If any Former Participant shall be reemployed by
the Employer before five (5) consecutive 1-Year Breaks
in Service, and such Former Participant had received a
distribution of his entire Vested interest prior to his
reemployment, his forfeited account shall be reinstated
only if he repays the full amount distributed to him
before the earlier of five (5) years after the first
date on which the Participant is subsequently
reemployed by the Employer or the close of the first
period of five (5) consecutive 1-Year Breaks in Service
commencing after the distribution. In the event the
Former Participant does repay the full amount
distributed to him, the undistributed portion of the
Participant's Account must be restored in full,
unadjusted by any gains or losses occurring subsequent
to the Anniversary Date or other valuation date
coinciding with or preceding his termination. The
source for such reinstatement shall first be any
Forfeitures occurring during the year. If such source
is insufficient, then the Employer shall contribute an
amount which is sufficient to restore any such
forfeited Accounts provided, however, that if a
discretionary contribution is made for such year
pursuant to Section 4.1(c), such contribution shall
first be applied to restore any such Accounts and the
remainder shall be allocated in accordance with Section
4.4.
(3) If any Former Participant is reemployed after a 1-
Year Break in Service has occurred, Years of Service
shall include Years of Service prior to his 1-Year
Break in Service subject to the following rules:
(i) If a Former Participant has a 1-Year Break in
Service, his pre-break and post-break service
shall be used for computing
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Years of Service for eligibility and for vesting
purposes only after he has been employed for one
(1) Year of Service following the date of his
reemployment with the Employer;
(ii) Any Former Participant who under the Plan
does not have a nonforfeitable right to any
interest in the Plan resulting from Employer
contributions shall lose credits otherwise
allowable under (i) above if his consecutive 1-
Year Breaks in Service equal or, exceed the
greater of (A) five (5) or (B) the aggregate
number of his pre-break Years of Service;
(iii) After five (5) consecutive 1-Year Breaks in
Service, a Former Participant's Vested Account
balance attributable to pre-break service shall
not be increased as a result of post-break
service;
(iv) If a Former Participant who has not had his
Years of Service before a 1-Year Break in Service
disregarded pursuant to (ii) above completes one
(1) Year of Service for eligibility purposes
following his reemployment with the Employer, he
shall participate in the Plan retroactively from
his date of reemployment;
(v) If a Former Participant who has not had his
Years of Service before a 1-Year Break in Service
disregarded pursuant to (ii) above completes a
Year of Service (a 1-Year Break in Service
previously occurred, but employment had not
terminated), he shall participate in the Plan
retroactively from the first day of the Plan Year
during which he completes one (1) Year of Service.
6.5 DISTRIBUTION OF BENEFITS
(a) The Administrator, pursuant to the election of the
Participant, shall direct the Trustee to distribute to a
Participant or his Beneficiary any amount to which he is
entitled under the Plan in one lump-sum payment in cash.
(b) Any distribution to a Participant who has a
benefit which exceeds, or has ever exceeded, $3,500 at the
time of any prior distribution shall require such
Participant's consent if such distribution occurs prior to
the later of his Normal Retirement Age or age 62. With
regard to this required consent:
(1) The Participant must be informed of his right to
defer receipt of the distribution. If a Participant fails
to consent, it shall be deemed an election to defer the
distribution of any benefit. However, any election to defer
the receipt of benefits shall not apply with respect to
distributions which are required under Section 6.5(c).
(2) Notice of the rights specified under this
paragraph shall be provided no less than thirty (30) days
and no more than 90 days before the first day on which all
events have occurred which entitle the Participant to such
benefit.
(3) Written consent of the Participant to the
distribution must not be made before the Participant
receives the notice and must not be made more than ninety
(90) days before the first day on which all events have
occurred which entitle the Participant to such benefit.
(4) No consent shall be valid if a significant
detriment is imposed under the Plan on any Participant who
does not consent to the distribution.
(c) Notwithstanding any provision in the Plan to the
contrary, the
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distribution of a Participant's benefits made on or after
January 1, 1985 shall be made in accordance with the
following requirements and shall otherwise comply with Code
Section 401(a)(9) and the Regulations thereunder
(including Regulation 1. 401(a)(9)-2), the provisions of
which are incorporated herein by reference:
(1) A Participant's benefits shall be distributed to
him not later than April lst of the calendar' year
following the later of (i) the calendar year in which
the Participant attains age 70 1/2 or (ii) the calendar
year in which the Participant retires, provided,
however, that this clause (ii) shall not apply in the
case of a Participant who is a "five percent (5%)
owner" at any time during the five (5) Plan Year period
ending in the calendar year in which he attains age 70
1/2 or, in the case of a Participant who becomes a
"five percent(5%) owner" during any subsequent Plan
Year, clause (ii) shall no longer apply and the
required beginning date shall be the April lst of the
calendar year following the calendar year in which such
subsequent Plan Year ends. Notwithstanding the
foregoing, clause (ii) above shall not apply to any
Participant unless the Participant had attained age 70
1/2 before January 1, 1988 and was not a "five percent
(5%) owner" at any time during the Plan Year ending
with or within the calendar year in which the
Participant attained age 66 1/2 or any subsequent Plan
Year. (2) Distributions to a Participant and his,
Beneficiaries shall only be made in accordance with the
incidental death benefit requirements of Code Section
401(a)(9)(G) and the Regulations thereunder.
(d) All annuity Contracts under this Plan shall be
non-transferable when distributed. Furthermore, the terms
of any annuity Contract purchased and distributed to a
Participant or spouse shall comply with all of the
requirements of the Plan.
(e) If a distribution is made at a time when a
Participant is not fully Vested in his Participant's Account
(employment has not terminated) and the Participant may
increase the Vested percentage in such account:
(1) a separate account shall be established for the
Participant's interest in the Plan as of the time of
the distribution; and
(2) at any relevant time, the Participant's Vested
portion of the separate account shall be equal to an
amount ("X") determined by the formula:
X equals P(AB plus (R x D)) - (R x D)
For purposes of applying the formula: P is the Vested
percentage at the relevant time, AB is the account
balance at the relevant time, D is the amount of
distribution, and R is the ratio of the account balance
at the relevant time to the account balance after
distribution.
6.6 DISTRIBUTION OF BENEFITS UPON DEATH
(a) The death benefit payable pursuant to Section 6.2
shall be paid to the Participant's Beneficiary in one lump-
sum payment in cash subject to the rules of Section 6.6(b).
(b) Notwithstanding any provision in the Plan to the
contrary, distributions upon the death of a Participant made
on or after January 1, 1985 shall be made in accordance with
the following requirements and shall otherwise comply with
Code Section 401(a)(9) and the Regulations thereunder. If
it is determined pursuant to Regulations that the
distribution of a Participant's interest has begun and the
Participant dies before his entire interest has been
distributed to him, the remaining portion of such interest
shall be distributed at least as
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rapidly as under the method of distribution selected
pursuant to Section 6. 5 as of his date of death. If a
Participant dies before he has begun to receive any
distributions of his interest under the Plan or before
distributions are deemed to have begun pursuant to
Regulations, then his death benefit shall be distributed to
his Beneficiaries by December 31st of the calendar year in
which the fifth anniversary of his date of death occurs.
6.7 TIME OF SEGREGATION OR DISTRIBUTION
Except as limited by Sections 6.5 and 6.6, whenever the
Trustee is to make a distribution on or as of an Anniversary
Date, the distribution may be made on such date or as soon
thereafter as is practicable. However, unless a Former
Participant elects in writing to defer the receipt of benefits
(such election may not result in a death benefit that is more
than incidental), the payment of benefits shall occur not later
than the 60th day after the close of the Plan Year in which the
latest of the following events occurs: (a) the date on which the
Participant attains the earlier of age 65 or the Normal
Retirement Age specified herein; (b) the 10th anniversary of the
year in which the Participant commenced participation in the
Plan; or (c) the date the Participant terminates his service with
the Employer.
6.8 DISTRIBUTION FOR MINOR BENEFICIARY
In the event a distribution is to be made to a minor, then
the Administrator may direct that such distribution be paid to
the legal guardian, or if none, to a parent of such Beneficiary
or a responsible adult with whom the Beneficiary maintains his
residence, or to the custodian for such Beneficiary under the
Uniform Gift to Minors Act or Gift to Minors Act, if such is
permitted by the laws of the state in which said Beneficiary
resides. Such a payment to the legal guardian, custodian or
parent of a minor Beneficiary shall fully discharge the Trustee,
Employer, and Plan from further liability on account thereof.
6.9 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN
In the event that all, or any portion, of the distribution
payable to a Participant or his Beneficiary hereunder shall, at
the later of the Participant's attainment of age 62 or his Normal
Retirement Age, remain unpaid solely by reason of the inability
of the Administrator, after sending a registered letter, return
receipt requested, to the last known address, and after further
diligent effort, to ascertain the whereabouts of such Participant
or his Beneficiary, the amount so distributable shall be treated
as a Forfeiture pursuant to the Plan. In the event a Participant
or Beneficiary is located subsequent to his benefit being
reallocated, such benefit shall be restored.
6.10 ADVANCE DISTRIBUTION FOR HARDSHIP
(a) The Administrator, at the election of the
Participant, shall direct the Trustee to distribute to any
Participant in any one Plan Year up to the lesser of one
hundred percent(100%) of his Participant's Elective Account
valued as of the last Anniversary Date or other valuation
date or the amount necessary to satisfy the immediate and
heavy financial need of the Participant. Any distribution
made pursuant to this Section shall be deemed to be made as
of the first day of the Plan Year or, if later, the
valuation date immediately preceding the date of
distribution, and the Participant's Elective Account shall
be reduced accordingly. Withdrawal under this Section shall
be authorized only if the distribution is on account of:
(1) Expenses for medical care described in Code
Section 213(d) previously incurred by the Participant,
his spouse, or any of his dependents (as defined in
Code Section 152) or necessary for these persons to
obtain medical care;
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(2) The costs directly related to the purchase of a
principal residence for the Participant (excluding
mortgage payments);
(3) Payment of tuition and related educational fees
for the next twelve (12) months of post-secondary
education for the Participant, his spouse, children, or
dependents; or
(4) Payments necessary to prevent the eviction of the
Participant from his principal residence or foreclosure
on the mortgage of the Participant's principal
residence.
(b) No distribution shall be made pursuant to this
Section unless the Administrator, based upon the
Participant's representation and such other facts as are
known to the Administrator, determines that all of the
following conditions are satisfied:
(1) The distribution is not in excess of the amount of
the immediate and heavy financial need of the
Participant. The amount of the immediate and heavy
financial need may include any amounts necessary to pay
any federal, state, or local income taxes or penalties
reasonably anticipated to result from the distribution;
(2) The Participant has obtained all distributions,
other than hardship distributions, and all nontaxable
(at the time of the loan) loans currently available
under all plans maintained by the Employer;
(3) The Plan, and all other plans maintained by the
Employer, provide that the Participant's elective
deferrals and voluntary Employee contributions will be
suspended for at least twelve (12) months after receipt
of the hardship distribution or, the Participant,
pursuant to a legally enforceable agreement, will
suspend his elective deferrals and voluntary Employee
contributions to the Plan and all other plans
maintained by the Employer for at least twelve (12)
months after receipt of the hardship distribution; and
(4) The Plan, and all other plans maintained by the
Employer, provide that the Participant may not make
elective deferrals for the Participant's taxable year
immediately following the taxable year of the hardship
distribution in excess of the applicable limit under
Code Section 402(g) for such next taxable year less the
amount of such Participant's elective deferrals for the
taxable year of the hardship distribution.
(c) Notwithstanding the above, for Plan Years'
beginning after December 31, 1988, distributions from the
Participant's Elective Account pursuant to this Section
shall be limited, as of the date of distribution, to the
Participant's Elective Account as of the end of the last
Plan Year ending before July 1, 1989, plus the total
Participant's Deferred Compensation after such date, reduced
by the amount of any previous distributions pursuant to this
Section.
(d) Any distribution made pursuant to this Section
shall be made in a manner which is consistent with and
satisfies the provisions of Section 6.5, including, but not
limited to, all notice and consent requirements of Code
Section 411(a)(11) and the Regulations thereunder.
6.11 QUALIFIED DOMESTIC RELATIONS ORDER DISTRIBUTION
All rights and benefits, including elections, provided to a
Participant in this Plan shall be subject to the rights afforded
to any "alternate payee" under a "qualified domestic relations
order." Furthermore, a distribution to an "alternate payee" shall
be permitted if such distribution is authorized by a "qualified
domestic relations order," even if the affected Participant has
not separated from service and has not reached the "earliest
retirement age" under the Plan. For the purposes of this
Section, "alternate payee", "qualified
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domestic relations order" and "earliest retirement age" shall
have the meaning set forth under Code Section 414(p).
ARTICLE VII
TRUSTEE
7.1 BASIC RESPONSIBILITIES OF THE TRUSTEE
The Trustee shall have the following categories of
responsibilities:
(a) Consistent with the "funding policy and method"
determined by the Employer, to invest, manage, and control
the Plan assets subject, however, to the direction of an
Investment Manager if the Trustee should appoint such
manager as to all or a portion of the assets of the Plan;
(b) At the direction of the Administrator, to pay
benefits required under the Plan to be paid to Participants,
or, in the event of their death, to their Beneficiaries;
(c) To maintain records of receipts and disbursements
and furnish to the Employer and/or Administrator for each
Plan Year a written annual report per Section 7.6; and
(d) If there shall be more than one Trustee, they
shall act by a majority of their number, but may authorize
one or more of them to sign papers on their behalf.
7.2 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE
(a) The Trustee shall invest and reinvest the Trust
Fund to keep the Trust Fund invested without distinction
between principal and income and in such securities or
property, real or personal, wherever situated, as the
Trustee shall deem advisable, including, but not limited to,
stocks, common or preferred, bonds and other evidences of
indebtedness or ownership, and real estate or any interest
therein. The Trustee shall at all times in making
investments of the Trust Fund consider, among other factors,
the short and long-term financial needs of the Plan on the
basis of information furnished by the Employer. In making
such investments, the Trustee shall not be restricted to
securities or other property of the character expressly
authorized by the applicable law for trust investments;
however, the Trustee shall give due regard to any
limitations imposed by the Code or the Act so that at all
times the Plan may qualify as a qualified Profit Sharing
Plan and Trust.
(b) The Trustee may employ a bank or trust company
pursuant to the terms of its usual and customary bank agency
agreement, under which the duties of such bank or trust
company shall be of a custodial, clerical and record-keeping
nature.
(c) The Trustee may from time to time with the consent
of the Employer transfer to a common, collective, or pooled
trust fund maintained by any corporate Trustee hereunder,
all or such part of the Trust Fund as the Trustee may deem
advisable, and such part or all of the Trust Fund so
transferred shall be subject to all the terms and provisions
of the common, collective, or pooled trust fund which
contemplate the commingling for investment purposes of such
trust assets with trust assets of other trusts. The Trustee
may, from time to time with the consent of the Employer,
withdraw from such common, collective, or pooled trust fund
all or such part of the Trust Fund as the Trustee may deem
advisable.
7.3 OTHER POWERS OF THE TRUSTEE
The Trustee, in addition to all powers and authorities under
common law, statutory authority, including the Act, and other
provisions of the Plan, shall have the following powers and
authorities, to be exercised in the Trustee's sole discretion:
(a) To purchase, or subscribe for, any securities or
other property
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and to retain the same. In conjunction with the purchase of
securities, margin accounts may be opened and maintained;
(b) To sell, exchange, convey, transfer, grant options
to purchase, or otherwise dispose of any securities or other
property held by the Trustee, by private contract or at
public auction. No person dealing with the Trustee shall be
bound to see to the application of the purchase money or to
inquire into the validity, expediency, or propriety of any
such sale or other disposition, with or without
advertisement;
(c) To vote upon any stocks, bonds, or other
securities; to give general or special proxies or powers of
attorney with or without power of substitution; to exercise
any conversion privileges, subscription rights or other
options, and to make any payments incidental thereto; to
oppose, or to consent to, or otherwise participate in,
corporate reorganizations or other changes affecting
corporate securities, and to delegate discretionary powers,
and to pay any assessments or charges in connection
therewith; and generally to exercise any of the powers of an
owner with respect to stocks, bonds, securities, or other
property;
(d) To cause any securities or other property to be
registered in the Trustee's own name or in the name of one
or more of the Trustee's nominees, and to hold any
investments in bearer form, but the books and records of the
Trustee shall at all times show that all such investments
are part of the Trust Fund;
(e) To borrow or raise money for the purposes of the
Plan in such amount, and upon such terms and conditions, as
the Trustee shall deem advisable; and for any sum so
borrowed, to issue a promissory note as Trustee, and to
secure the repayment thereof by pledging all, or any part,
of the Trust Fund, and no person lending money to the
Trustee shall be bound to see to the application of the
money lent or to inquire into the validity, expediency, or
propriety of any borrowing;
(f) To keep such portion of the Trust Fund in cash or
cash balances as the Trustee may, from time to time, deem to
be in the best interests of the Plan, without liability for
interest thereon;
(g) To accept and retain for such time as the Trustee
may deem advisable any securities or other property received
or acquired as Trustee hereunder, whether or not such
securities or other property would normally be purchased as
investments hereunder;
(h) To make, execute, acknowledge, and deliver any,
and all documents of transfer and conveyance and any and all
other instruments that may be necessary or appropriate to
carry out the powers herein granted;
(i) To settle, compromise, or submit to arbitration
any claims, debts, or damages due or owing to or from the
Plan, to commence or defend suits or legal or administrative
proceedings, and to represent the Plan in all suits and
legal and administrative proceedings;
(j) To employ suitable agents and counsel and to pay
their reasonable expenses and compensation, and such agent
or counsel may or may not be agent or counsel for the
Employer;
(k) To apply for and procure from responsible
insurance companies, to be selected by the Administrator, as
an investment of the Trust Fund such annuity, or other
Contracts (on the life of any Participant) as the
Administrator shall deem proper; to exercise, at any time or
from time to time, whatever rights and privileges may be
granted under such annuity, or other Contracts; to collect,
receive, and settle for the proceeds of all such annuity or
other Contracts as and when entitled to do so under the
provisions thereof;
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(l) To invest funds of the Trust in time deposits or
savings accounts bearing a reasonable rate of interest in
the Trustee's bank;
(m) To invest in Treasury Bills and other forms of
United States government obligations;
(n) To invest in shares of investment companies
registered under the Investment Company Act of 1940;
(o) To sell, purchase and acquire put or call options
if the options are traded on and purchased through a
national securities exchange registered under the Securities
Exchange Act of 1934, as amended, or, if the options are not
traded on a national securities exchange, are guaranteed by
a member firm of the New York Stock Exchange;
(p) To deposit monies in federally insured savings
accounts or certificates of deposit in banks or savings and
loan associations;
(q) To pool all or any of the Trust Fund, from time to
time, with assets belonging to any other qualified employee
pension benefit trust created by the Employer or an
affiliated company of the Employer, and to commingle such
assets and make joint or common investments and carry joint
accounts on behalf of this Plan and such other trust or
trusts, allocating undivided shares or interests in such
investments or accounts or any pooled assets of the two or
more trusts in accordance with their respective interests;
(r) To do all such acts and exercise all such rights
and privileges, although not specifically mentioned herein,
as the Trustee may deem necessary to carry out the purposes
of the Plan.
(s) Directed Investment Account. The powers granted
to the Trustee shall be exercised in the sole fiduciary
discretion of the Trustee. However, if Participants are so
empowered by the Administrator, each Participant may direct
the Trustee to separate and keep separate all or a portion
of his account; and further each Participant is authorized
and empowered, in his sole and absolute discretion, to give
directions to the Trustee pursuant to the procedure
established by the Administrator and in such form as the
Trustee may require concerning the investment of the
Participant's Directed Investment Account. The Trustee
shall comply as promptly as practicable with directions
given by the Participant hereunder. The Trustee may refuse
to comply with any direction from the Participant in the
event the Trustee, in its sole and absolute discretion,
deems such directions improper by virtue of applicable law.
The Trustee shall not be responsible or liable for any loss
or expense which may result from the Trustee's refusal or
failure to comply with any directions from the Participant.
Any costs and expenses related to compliance with the
Participant's directions shall be borne by the Participant's
Directed Investment Account.
7.4 DUTIES OF THE TRUSTEE REGARDING PAYMENTS
At the direction of the Administrator, the Trustee shall,
from time to time, in accordance with the terms of the Plan, make
payments out of the Trust Fund. The Trustee shall not be
responsible in any way for the application of such payments.
7.5 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES
The Trustee shall be paid such reasonable compensation as
shall from time to time be agreed upon in writing by the Employer
and the Trustee. An individual serving as Trustee who already
receives full-time pay from the Employer shall not receive
compensation from the Plan. In addition, the Trustee shall be
reimbursed for any reasonable expenses, including reasonable
counsel fees incurred by it as Trustee. Such compensation and
expenses shall be paid from the Trust Fund unless paid or
advanced by the Employer. All taxes of any kind and all kinds
whatsoever that may be levied or assessed under
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existing or future laws upon, or in respect of, the Trust Fund or
the income thereof, shall be paid from the Trust Fund.
7.6 ANNUAL REPORT OF THE TRUSTEE
Within a reasonable period of time after the later of the
Anniversary Date or receipt of the Employer's contribution for
each Plan Year, the Trustee shall furnish to the Employer and
Administrator a written statement of account with respect to the
Plan Year for which such contribution was made setting forth:
(a) the net income, or loss, of the Trust Fund;
(b) the gains, or losses, realized by the Trust Fund
upon sales or other disposition of the assets;
(c) the increase, or decrease, in the value of the
Trust Fund;
(d) all payments and distributions made from the Trust
Fund; and
(e) such further information as the Trustee and/or
Administrator deems appropriate. The Employer, forthwith
upon its receipt of each such statement of account, shall
acknowledge receipt thereof in writing and advise the
Trustee and/or Administrator of its approval or disapproval
thereof. Failure by the Employer to disapprove any such
statement of account within thirty (30) days after its
receipt thereof shall be deemed an approval thereof. The
approval by the Employer of any statement of account shall
be binding as to all matters embraced therein as between the
Employer and the Trustee to the same extent as if the
account of the Trustee had been settled by judgment or
decree in an action for a judicial settlement of its account
in a court of competent jurisdiction in which the Trustee,
the Employer and all persons having or claiming an interest
in the Plan were parties; provided, however, that nothing
herein contained shall deprive the Trustee of its right to
have its accounts judicially settled if the Trustee so
desires.
7.7 AUDIT
(a) If an audit of the Plan's records shall be
required by the Act and the regulations thereunder for any
Plan Year, the Administrator shall direct the Trustee to
engage on behalf of all Participants an independent
qualified public accountant for that purpose. Such
accountant shall, after an audit of the books and records of
the Plan in accordance with generally accepted auditing
standards, within a reasonable period after the close of the
Plan Year, furnish to the Administrator and the Trustee a
report of his audit setting forth his opinion as to whether
any statements, schedules or lists that are required by Act
Section 103 or the Secretary of Labor to be filed with the
Plan's annual report, are presented fairly in conformity
with generally accepted accounting principles applied
consistently. All auditing and accounting fees shall be an
expense of and may, at the election of the Administrator, be
paid from the Trust Fund.
(b) If some or all of the information necessary to
enable the Administrator to comply with Act Section 103 is
maintained by a bank, insurance company, or similar
institution, regulated and supervised and subject to
periodic examination by a state or federal agency, it shall
transmit and certify the accuracy of that information to the
Administrator as provided in Act Section 103 (b) within one
hundred twenty (120) days after the end of the Plan Year or
by such other date as may be prescribed under regulations of
the Secretary of Labor.
7.8 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE
(a) The Trustee may resign at any time by delivering
to the Employer, at least thirty (30) days before its
effective date, a written notice of his resignation.
(b) The Employer may remove the Trustee by mailing by
registered or
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certified mail, addressed to such Trustee at his last known
address, at least thirty (30) days before its effective
date, a written notice of his removal.
(c) Upon the death, resignation, incapacity, or
removal of any Trustee, a successor may be appointed by the
Employer; and such successor, upon accepting such
appointment in writing and delivering same to the Employer,
shall, without further act, become vested with all the
estate, rights, powers, discretions, and duties of his
predecessor with like respect as if he were originally named
as a Trustee herein. Until such a successor is appointed,
the remaining Trustee or Trustees shall have full authority
to act under the terms of the Plan.
(d) The Employer may designate one or more successors
prior to the death, resignation, incapacity, or removal of a
Trustee. In the event a successor is so designated by the
Employer and accepts such designation, the successor shall,
without further act, become vested with all the estate,
rights, powers, discretions, and duties of his predecessor
with the like effect as if he were originally named as
Trustee herein immediately upon the death, resignation,
incapacity, or removal of his predecessor.
(e) Whenever any Trustee hereunder ceases to serve as
such, he shall furnish to the Employer and Administrator a
written statement of account with respect to the portion of
the Plan Year during which he served as Trustee. This
statement shall be either (i) included as part of the annual
statement of account for the Plan Year required under
Section 7.6 or (ii) set forth in a special statement. Any
such special statement of account should be rendered to the
Employer no later than the due date of the annual statement
of account for the Plan Year. The procedures set forth in
Section 7.6 for the approval by the Employer of annual
statements of account Shall apply to any special statement
of account rendered hereunder and approval by the Employer
of any such special statement in the manner provided, in
Section 7.6 shall have the same effect upon the statement as
the Employer's approval of an annual statement of account.
No successor to the Trustee shall have any duty or
responsibility to investigate the acts or transactions of
any predecessor who has rendered all statements of account
required by Section 7.6 and this subparagraph.
7.9 TRANSFER OF INTEREST
Notwithstanding any other provision contained in this Plan,
the Trustee at the direction of the Administrator shall transfer
the Vested interest, if any, of such Participant in his account
to another trust forming part of a pension, profit sharing or
stock bonus plan maintained by such Participant's new employer
and represented by said employer in writing as meeting the
requirements of Code Section 401(a), provided that the trust to
which such transfers are made permits the transfer to be made.
7.10 DIRECT ROLLOVER
(a) This Section applies to distributions 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, a distributee may
elect, at the time and in the manner prescribed by the Plan
Administrator, to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan
specified by the distributee in a direct rollover.
(1) 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
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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 employer securities).
(2) An eligible retirement plan is an individual
retirement account described in Section 408(a) of the
Code, an individual retirement annuity described in
Section 408(b) of the Code, an annuity plan described
in Section 403(a) of the Code, or a qualified trust
described in Section 401(a) of the Code, that accepts
the distributee's eligible rollover distribution.
However, in the case of an eligible rollover
distribution to the surviving spouse, an eligible
retirement plan is an individual retirement account or
individual retirement annuity.
(3) A distributee includes an Employee or former
Employee. In addition, the Employee's or former
Employee's surviving spouse and the Employee's or
former Employee's spouse or former spouse who is the
alternate payee under a qualified domestic relations
order, as defined in Section 414(p) of the Code, are
distributees with regard to the interest of the spouse
or former spouse.
(4) A direct rollover is a payment by the Plan to the
eligible retirement plan specified by the distributee.
7.11 EMPLOYER SECURITIES AND REAL PROPERTY
The Trustee shall be empowered to acquire and hold
"qualifying Employer securities" and "qualifying Employer real
property," as those terms are defined in the Act, provided,
however, that the Trustee shall not be permitted to acquire any
qualifying Employer securities or qualifying Employer real
property if, immediately after the acquisition of such securities
or property, the fair market value of all qualifying Employer
securities and qualifying Employer real property held by the
Trustee hereunder should amount to more than one hundred percent
(100%) of the fair market value of all the assets in the Trust
Fund.
ARTICLE VIII
AMENDMENT, TERMINATION AND MERGERS
8.1 AMENDMENT
(a) The Employer shall have the right at any time to
amend the Plan, subject to the limitations of this Section.
However, any amendment which affects the rights, duties or
responsibilities of the Trustee and, Administrator may only
be made with the Trustee's and Administrator's written
consent. Any such amendment shall become effective as
provided therein upon its execution. The Trustee shall not
be required to execute any such amendment unless the Trust
provisions contained herein are a part of the Plan and the
amendment affects the duties of the Trustee hereunder.
(b) No amendment to the Plan shall be effective if it
authorizes or permits any part of the Trust Fund (other than
such part as is required to pay taxes and administration
expenses) to be used for or diverted to any purpose other
than for the exclusive benefit of the Participants or their
Beneficiaries or estates; or causes any reduction in the
amount credited to the account of any Participant; or causes
or permits any portion of the Trust Fund to revert to or
become property of the Employer.
(c) Except as permitted by Regulations, no Plan
amendment or transaction having the effect of a Plan
amendment (such as a merger, plan transfer or similar
transaction) shall be effective to the extent it eliminates
or reduces any "Section 411(d)(6) protected
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benefit" or adds or modifies conditions relating to "Section
411(d)(6) protected benefits" the result of which is a
further restriction on such benefit unless such protected
benefits are preserved with respect to benefits accrued as
of the later of the adoption date or effective date of the
amendment. "Section 411(d)(6) protected benefits" are
benefits described in Code Section 411(d)(6)(A), early
retirement benefits and retirement-type subsidies, and
optional forms of benefit.
8.2 TERMINATION
(a) The Employer shall have the right at any time to
terminate the Plan by delivering to the Trustee and
Administrator written notice of such termination. Upon any
full or partial termination, all amounts credited to the
affected Participants I Combined Accounts shall become one
hundred percent (100%) Vested as provided in Section 6.4 and
shall not thereafter be subject to forfeiture, and all
unallocated amounts shall be allocated to the accounts of
all Participants in accordance with the provisions hereof.
(b) Upon the full termination of the Plan, the
Employer shall direct the distribution of the assets of the
Trust Fund to Participants in a manner which is consistent
with and satisfies the provisions of Section 6.5.
Distributions to a Participant shall be made in cash or
through the purchase of irrevocable nontransferable deferred
commitments from an insurer. Except as permitted by
Regulations, the termination of the Plan shall not result in
the reduction of "Section 411(d)(6) protected benefits" in
accordance with Section 8.1(c).
8.3 MERGER OR CONSOLIDATION
This Plan and Trust may be merged or consolidated with, or
its assets and/or liabilities may be transferred to any other
plan and trust only if the benefits which would be received by a
Participant of this Plan, in the event of a termination of the
plan immediately after such transfer, merger or consolidation,
are at least equal to the benefits the Participant would have
received if the Plan had terminated immediately before the
transfer, merger or consolidation, and such transfer, merger or
consolidation does not otherwise result in the elimination or
reduction of any "Section 411(d)(6) protected benefits" in
accordance with Section 8.1(c).
ARTICLE IX
MISCELLANEOUS
9.1 PARTICIPANT'S RIGHTS
This Plan shall not be deemed to constitute a contract
between the Employer and any Participant or to be a consideration
or an inducement for the employment of any Participant or
Employee. Nothing contained in this Plan shall be deemed to give
any Participant or Employee the right to be retained in the
service of the Employer or to interfere with the right of the
Employer to discharge any Participant or Employee at any time
regardless of the effect which such discharge shall have upon him
as a Participant of this Plan.
9.2 ALIENATION
(a) Subject to the exceptions provided below, no
benefit which shall be payable out of the Trust Fund to any
person (including a Participant or his Beneficiary) shall be
subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, or charge, and
any attempt to anticipate, alienate, sell, transfer, assign,
pledge, encumber, or charge the same shall be void; and no
such benefit shall in any manner be liable for, or subject
to, the debts, contracts, liabilities, engagements, or torts
of any such person, nor shall it be subject to attachment or
legal process for or against such person, and the same shall
not be recognized by the Trustee, except to such extent as
may be required by law.
(b) This provision shall not apply to a "qualified
domestic
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relations order" defined in Code Section 414(p), and those
other domestic relations orders permitted to be so treated
by the Administrator under the provisions of the Retirement
Equity Act of 1984. The Administrator shall establish a
written procedure to determine the qualified status of
domestic relations orders and to administer distributions
under such qualified orders. Further, to the extent
provided under a qualified domestic relations order", a
former spouse of a Participant shall be treated as the
spouse or surviving spouse for all purposes under the Plan.
9.3 CONSTRUCTION OF PLAN
This Plan and Trust shall be construed and enforced
according to the Act and the laws of the Commonwealth of
Pennsylvania, other than its laws respecting choice of law, to
the extent not preempted by the Act.
9.4 GENDER AND NUMBER
Wherever any words are used herein in the masculine,
feminine or neuter gender, they shall be construed as though they
were also used in another gender in all cases where they would so
apply, and whenever any words are used herein in the singular or
plural form, they shall be construed as though they were also
used in the other form in all cases where they would so apply.
9.5 LEGAL ACTION
In the event any claim, suit, or proceeding is brought
regarding the Trust and/or Plan established hereunder to which
the Trustee or the Administrator may be a party, and such claim,
suit, or proceeding is resolved in favor of the Trustee or
Administrator, they shall be entitled to be reimbursed from the
Trust Fund for any and all costs, attorney's fees, and other
expenses pertaining thereto incurred by them for which they shall
have become liable.
9.6 PROHIBITION AGAINST DIVERSION OF FUNDS
(a) Except as provided below and otherwise
specifically permitted by law, it shall be impossible by
operation of the Plan or of the Trust, by termination of
either, by power of revocation or amendment, by the
happening of any contingency, by collateral arrangement or
by any other means, for any part of the corpus or income of
any trust fund maintained pursuant to the Plan or any funds
contributed thereto to be used for, or diverted to, purposes
other than the exclusive benefit of Participants, Retired
Participants, or their Beneficiaries.
(b) In the event the Employer shall make an excessive
contribution under a mistake of fact pursuant to Act Section
403(c)(2)(A), the Employer may demand repayment of such
excessive contribution at any time within one (1) year
following the time of payment and the Trustees shall return
such amount to the Employer within the one (1) year period.
Earnings of the Plan attributable to the excess
contributions, may not be returned to the Employer but any
losses attributable thereto must reduce the amount so
returned.
9.7 BONDING
Every Fiduciary, except a bank or an insurance company,
unless exempted by the Act and regulations thereunder, shall be
bonded in an amount not less than ten percent (10%) of the amount
of the funds such Fiduciary handles; provided, however, that the
minimum bond shall be $1,000 and the maximum bond, $500,000. The
amount of funds handled shall be determined at the beginning of
each Plan Year by the amount of funds handled by such person,
group, or class to be covered and their predecessors, if any,
during the preceding Plan Year, or if there is no preceding Plan
Year, then by the amount of the funds to be handled during the
then current year. The bond shall provide protection to the Plan
against any loss by reason of acts of fraud or dishonesty by the
Fiduciary alone or in connivance with others. The surety shall
be a corporate surety company as
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such term is used in Act Section 412(a)(2), and the bond shall be
in a form approved by the Secretary of Labor. Notwithstanding
anything in the Plan to the contrary, the cost of such bonds
shall be an expense of and may, at the election of the
Administrator, be paid from the Trust Fund or by the Employer.
9.8 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE
Neither the Employer nor the Trustee, nor their successors,
shall be responsible for the validity of any Contract issued
hereunder or for the failure on the part of the insurer to make
payments provided by any such Contract, or for the action of any
person which may delay payment or render a Contract null and void
or unenforceable in whole or in part.
9.9 INSURER'S PROTECTIVE CLAUSE
Any insurer who shall issue Contracts hereunder shall not
have any responsibility for the validity of this Plan or for the
tax or legal aspects of this Plan. The insurer shall be
protected and held harmless in acting in accordance with any
written direction of the Trustee and shall have no duty to see to
the application of any funds paid to the Trustee, nor be required
to question any actions directed by the Trustee. Regardless of
any provision of this Plan, the insurer shall not be required to
take or permit any action or allow any benefit or privilege
contrary to the terms of any Contract which it issues hereunder,
or the rules of the insurer.
9.10 RECEIPT AND RELEASE FOR PAYMENTS
Any payment to any Participant, his legal representative,
Beneficiary, or to any guardian or committee appointed for such
Participant or Beneficiary in accordance with the provisions of
the Plan, shall, to the extent thereof, be in full satisfaction
of all claims hereunder against the Trustee and the Employer,
either of whom may require such Participant, legal
representative, Beneficiary, guardian or committee, as a
condition precedent to such payment, to execute a receipt and
release thereof in such form as shall be determined by the
Trustee or Employer.
9.11 ACTION BY THE EMPLOYER
Whenever the Employer under the terms of the Plan is
permitted or required to do or perform any act or matter or
thing, it shall be done and performed by a person duly authorized
by its legally constituted authority.
9.12 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY
The "named Fiduciaries" of this Plan are (1) the Employer,
(2) the Administrator and (3) the Trustee. The named Fiduciaries
shall have only those specific powers, duties, responsibilities,
and obligations as are specifically given them under the Plan.
In general, the Employer shall have the sole responsibility for
making the contributions provided for under Section 4.1; and
shall have the sole authority to appoint and remove the Trustee
and the Administrator; to formulate the Plan's "funding policy
and method"; and to amend or terminate, in whole or in part, the
Plan. The Administrator shall have the sole responsibility for
the administration of the Plan, which responsibility is
specifically described in the Plan. The Trustee shall have the
sole responsibility of management of the assets held under the
Trust, except those assets, the management of which has been
assigned to an Investment Manager, who shall be solely
responsible for the management of the assets assigned to it, all
as specifically provided in the Plan. Each named Fiduciary
warrants that any directions given, information furnished, or
action taken by it shall be in accordance with the provisions of
the Plan, authorizing or providing for such direction,
information or action. Furthermore, each named Fiduciary may
rely upon any such direction, information or action of another
named Fiduciary as being proper under the Plan, and is not
required under the Plan to inquire into the propriety of any such
direction, information or action. It is intended under the Plan
that each named Fiduciary shall be responsible for the proper
exercise of its own powers, duties, responsibilities and
obligations under the Plan. No named Fiduciary shall guarantee
the Trust
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Fund in any manner against investment loss or depreciation in
asset value. Any person or group may serve in more than one
Fiduciary capacity. In the furtherance of their responsibilities
hereunder, the "named Fiduciaries" shall be empowered to
interpret the Plan and Trust and to resolve ambiguities,
inconsistencies and omissions, which findings shall be binding,
final and conclusive.
9.13 HEADINGS
The headings and subheadings of this Plan have been inserted
for convenience of reference and are to be ignored in any
construction of the provisions hereof.
9.14 APPROVAL BY INTERNAL REVENUE SERVICE
(a) Notwithstanding anything herein to the contrary,
contributions to this Plan are conditioned upon the initial
qualification of the Plan under Code Section 401. If the
Plan receives an adverse determination with respect to its
initial qualification, then the Plan may return such
contributions to the Employer within one year after such
determination, provided the application for the
determination is made by the time prescribed by law for
filing the Employer's return for the taxable year in which
the Plan was adopted, or such later date as the Secretary of
the Treasury may prescribe.
(b) Notwithstanding any provisions to the contrary,
except Sections 3.6, 3.7, and 4.1(e), any contribution by
the Employer to the Trust Fund is conditioned upon the
deductibility of the contribution by the Employer under the
Code and, to the extent any such deduction is disallowed,
the Employer may, within one (1) year following the
disallowance of the deduction, demand repayment of such
disallowed contribution and the Trustee shall return such
contribution within one (1) year following the disallowance.
Earning of the Plan attributable to the excess contribution
may not be returned to the Employer, but any losses
attributable thereto must reduce the amount so returned.
9.15 UNIFORMITY
All provisions of this Plan shall be interpreted and applied
in a uniform, nondiscriminatory manner. In the event of any
conflict between the terms of this Plan and any Contract
purchased hereunder, the Plan provisions shall control.
ARTICLE X
PARTICIPATING EMPLOYERS
10.1 ADOPTION BY OTHER EMPLOYERS
Notwithstanding anything herein to the contrary, with the
consent of the Employer and Trustee, any other corporation or
entity, whether an affiliate or subsidiary or not, may adopt this
Plan and all of the provisions hereof, and participate herein and
be known as a Participating Employer, by a properly executed
document evidencing said intent and will of such Participating
Employer.
10.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS
(a) Each such Participating Employer shall be required
to use the same Trustee as provided in this Plan.
(b) The Trustee may, but shall not be required to,
commingle, hold and invest as one Trust Fund all
contributions made by Participating Employers, as well as
all increments thereof. However, the assets of the Plan
shall, on an ongoing basis, be available to pay benefits to
all Participants and Beneficiaries under the Plan without
regard to the Employer or Participating Employer who
contributed such assets.
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(c) The transfer of any Participant from or to an
Employer participating in this Plan, whether he be an
Employee of the Employer or a Participating Employer, shall
not affect such Participant's rights under the Plan, and all
amounts credited to such Participant's Combined Account as
well as his accumulated service time with the transferor or
predecessor, and his length of participation in the Plan,
shall continue to his credit.
(d) All rights and values forfeited by termination of
employment shall inure only to the benefit of the
Participants of the Employer or Participating Employer by
which the forfeiting Participant was employed.
(e) Any expenses of the Trust which are to be paid by
the Employer or borne by the Trust Fund shall be paid by
each Participating Employer in the same proportion that the
total amount standing to the credit of all Participants
employed by such Employer bears to the total standing to the
credit of all Participants.
10.3 DESIGNATION OF AGENT
Each Participating Employer shall be deemed to be a party to
this Plan; provided, however, that with respect to all of its
relations with the Trustee and Administrator for the purpose of
this Plan, each Participating Employer shall be deemed to have
designated irrevocably the Employer as its agent. Unless the
context of the Plan clearly indicates the contrary, the word
"Employer" shall be deemed to include each Participating Employer
as related to its adoption of the Plan.
10.4 EMPLOYEE TRANSFERS
It is anticipated that an Employee may be transferred
between Participating Employers, and in the event of any such
transfer, the Employee involved shall carry with him his
accumulated service and eligibility. No such transfer shall
effect a termination of employment hereunder, and the
Participating Employer to which the Employee is transferred shall
thereupon become obligated hereunder with respect to such
Employee in the same manner as was the Participating Employer
from whom the Employee was transferred.
10.5 PARTICIPATING EMPLOYER'S CONTRIBUTION
All contributions made by a Participating Employer, as
provided for in this Plan, shall be determined separately by each
Participating Employer, and shall be allocated only among the
Participants eligible to share of the Employer or Participating
Employer making the contribution. On the basis of the
information furnished by the Administrator, the Trustee shall
keep separate books and records concerning the affairs of each
Participating Employer hereunder and as to the accounts and
credits of the Employees of each Participating Employer. The
Trustee may, but need not, register Contracts so as to evidence
that a particular Participating Employer is the interested
Employer hereunder, but in the event of an Employee transfer from
one Participating Employer to another, the employing Employer
shall immediately notify the Trustee thereof.
10.6 AMENDMENT
Amendment of this Plan by the Employer at any time when
there shall be a Participating Employer hereunder shall only be
by the written action of each and every Participating Employer
and with the consent of the Trustee where such consent is
necessary in accordance with the terms of this Plan.
10.7 DISCONTINUANCE OF PARTICIPATION
Any Participating Employer shall be permitted to discontinue
or revoke its participation in the Plan. At the time of any such
discontinuance or revocation, satisfactory evidence thereof and
of any applicable conditions imposed shall be delivered to the
Trustee. The Trustee shall thereafter transfer, deliver and
assign Contracts and other Trust Fund assets allocable
55
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to the Participants of such Participating Employer to such new
Trustee as shall have been designated by such Participating
Employer, in the event that it has established a separate pension
plan for its Employees, provided however, that no such transfer
shall be made if the result is the elimination or reduction of
any "Section 411(d)(6) protected benefits" in accordance with
Section 8.1(c). If no successor is designated, the Trustee shall
retain such assets for the Employees of said Participating
Employer pursuant to the provisions of Article VII hereof. In no
such event shall any part of the corpus or income of the Trust as
it relates to such Participating Employer be used for or diverted
to purposes other than for the exclusive benefit of the Employees
of such Participating Employer.
10.8 ADMINISTRATOR'S AUTHORITY
The Administrator shall have authority to make any and all
necessary rules or regulations, binding upon all Participating
Employers and all Participants, to effectuate the purpose of this
Article.
10.9 PARTICIPATING EMPLOYER CONTRIBUTION FOR AFFILIATE
If any Participating Employer is prevented in whole or in
part from making a contribution to the Trust Fund which it would
otherwise have made under the Plan by reason of having no current
or accumulated earnings or profits, or because such earnings or
profits are less than the contribution which it would otherwise
have made, then, pursuant to Code Section 404(a)(3)(B), so much
of the contribution which such Participating Employer was so
prevented from making may be made, for the benefit of the
participating employees of such Participating Employer, by the
other Participating Employers who are members of the same
affiliated group within the meaning of Code Section 1504 to the
extent of their current or accumulated earnings or profits,
except that such contribution by each such other Participating
Employer shall be limited to the proportion of its total current
and accumulated earnings or profits remaining after adjustment
for its contribution to the Plan made without regard to this
paragraph which the total prevented contribution bears to the
total current and accumulated earnings or profits of all the
Participating Employers remaining after adjustment for all
contributions made to the Plan without regard to this paragraph.
A Participating Employer on behalf of whose employees a
contribution is made under this paragraph shall not reimburse the
contributing Participating Employers.
IN WITNESS WHEREOF, this Plan has been executed the day and
year first above written.
QNB Corp.
By /s/ Robert C. Werner
----------------------
Employer
The Quakertown National Bank
By /s/ Robert C. Werner
------------------------
Trustee
Attest /s/ Bret H. Krevolin
-------------------
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FIRST AMENDMENT TO
THE QUAKERTOWN NATIONAL BANK PROFIT SHARING AND
SECTION 401(k) SALARY DEFERRAL PLAN
The Effective Date of this Amendment is January 1, 1994.
The Parties of this Amendment are QNB Corp., a Pennsylvania
Corporation, (the "Company") and Quakertown National Bank
("Trustee").
The terms of this Amendment are as follows:
In addition to other applicable limitations set forth in the
plan, and notwithstanding any other provision of the plan to the
contrary, for plan years beginning on or after January 1, 1994,
the annual compensation of each employee taken into account under
the plan shall not exceed the OBRA '93 annual compensation limit.
The OBRA '93 annual compensation limit is $150,000, as adjusted
by the Commissioner for increases in the cost of living in
accordance with Section 401(a)(17)(B) of the Internal Revenue
Code. The cost of living adjustment in effect for a calendar
year applies to any period, not exceeding twelve (12) months,
over which compensation is determined (determination period)
beginning in such calendar year. If a determination period
consists of fewer than twelve (12) months, the OBRA '93 annual
compensation limit will be multiplied by a fraction, the
numerator of which is the number of months in the determination
period, and the denominator of which is twelve (12).
If compensation for any prior determination period is taken into
account in determining an employee's benefits accruing in the
current plan year, the compensation for that prior determination
period is subject to the OBRA '93 annual compensation limit in
effect for that prior determination period. For this purpose,
for determination periods beginning before the first day of the
first plan year beginning on or after January 1, 1994, the OBRA
'93 annual compensation limit is $150,000.
IN WITNESS WHEREOF, the undersigned have executed this Amendment
intending to be legally bound effective January 1, 1994.
QNB CORP.
/s/ Bret H. Krevolin By /s/ Robert C. Werner
- -------------------- ---------------------
Witness
/s/ Robert C. Werner
---------------------
The Quakertown National Bank, Trustee
<PAGE>
Amendment Number Two to
The Quakertown National Bank
Profit Sharing and Section 401(k)
Salary Deferral Plan
Summary Plan Description
Material Modifications
Effective: October 1, 1996
<PAGE>
The Quakertown National Bank Profit Sharing and Section 401(k)
Salary Deferral Plan
Summary Plan Description
Material Modifications
I
SUMMARY OF CHANGES
1. You may change your salary deferral elections at anytime
during the year. The change will become effective as of the
next pay period.
2. You may change the investment of your current contributions
and account balance as of each calendar quarter rather than
twice per year. Your choices still must be received by the
15th day prior to the end of each calendar quarter.
3. The current investment options are as follows:
a) Guaranteed Income Fund -- Provides for guarantee of
principal and interest. The funds are invested in the
general accounts of Nationwide Life Insurance Company.
b) Vanguard Fixed Income Government National Mortgage
Association Fund -- Provides high levels of current
income with safety of principal. Under normal
circumstances, at least eighty percent (80%) of the
fund invests in Government National Mortgage
Association certificates.
c) Strong Corporate Bond Fund -- Seeks current income by
purchasing primarily investment grade fixed income
securities.
d) Vanguard Wellesley Income Fund -- Provides current
income and growth by investing in both fixed income
securities and common stocks.
e) Vanguard Standard & Poor 500 Index Fund -- Seeks
investment results that correspond with the price and
yield performance of the S&P 500 index.
f) Gabelli Growth Fund -- Seeks capital appreciation by
investing in a diversified portfolio of common stocks.
g) Kaufmann Fund -- Seeks capital appreciation by
investing primarily in common stocks of small and
medium size companies.
h) Third Avenue Value Fund -- Seeks capital appreciation
by investing in equity securities issued by companies
that management believes to be undervalued and to have
strong financial positions with responsible management.
i) Founders Growth Fund -- Seeks capital appreciation with
current income secondary. At least sixty-five percent
(65%) of assets are invested in common stocks of
established companies. May also invest in convertible
securities, preferred stocks, bonds and foreign stocks.
j) QNB Corp. Stock -- Consists of shares of QNB Corp.
common stock.
