<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 15, 1998
REGISTRATION NO. 333-__________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------------------------------
Cortland Bancorp
----------------------------------
(Exact name of registrant as specified in its charter)
Ohio 34-1451118
- ------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
194 West Main Street, Cortland, Ohio 44410
------------------------------------------
(Address of Principal Executive Offices)(Zip Code)
The Cortland Savings And Banking Company 401(k) Plan
----------------------------------------------------
(Full title of the plan)
Copy to:
Dennis E. Linville Michael D. Martz, Esq.
Cortland Bancorp Vorys, Sater, Seymour and
194 West Main Street Pease LLP
Cortland, Ohio 44410 52 East Gay Street
(Name and address of agent for service) Columbus, Ohio 43512
- --------------------------------------- --------------------
(330) 637-8040
----------------------------------
(Telephone number, including area code, of agent for service)
---------------------------------
Calculation of Registration Fee
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Proposed maximum
Title of securities Proposed maximum aggregate offering Amount of
to be registered Amount to be offering price price (1) registration fee
registered per unit (1)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Shares, 250,000 $62.00 $15,500,000.00 $4,573.00
Without Par Value
- ---------------------------------------------------------------------------------------------------------
</TABLE>
(1) Pursuant to Rule 457(c), the proposed maximum aggregate offering price
is based on the average per share of the high and low prices of the
Common Shares reported on the Over-the-Counter Bulletin Board on May
11, 1998. (within five business days of filing)
In addition, pursuant to Rule 416 (C) under the Securities Act of 1933,
this registration statement also covers an indeterminate amount of
interests to be offered or sold pursuant to the employee benefit plan
described herein.
Page 0 of 123 pages.
Index to Exhibits at Page 16
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed by Cortland Bancorp (the
"Registrant") with the Securities and Exchange Commission (the "Commission") are
incorporated by reference herein: (i) The Annual Report on Form 10-K for the
fiscal year ended December 31, 1997, (ii) the Annual Report on Form 11-K for the
Cortland Savings and Banking Company 401(k) Plan for the fiscal year ended
December 31, 1996, (iii) the Corporation's Quarterly Report on Form 10-Q filed
with the Commission for the quarter ended March 31, 1998; (iv) all other reports
filed with the Commission pursuant to the requirements of Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), since that date and (v) the description of the Registrant's Common
Shares contained in Registrant's Registration Statement filed with the
Commission pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended, including any and all amendments or reports filed for the purpose of
updating such description.
Any definitive Proxy Statement or Information Statement filed
pursuant to Section 14 of the Exchange Act, and all documents which may be filed
with the Commission pursuant to Sections 13, 14 or 15(d) of the Exchange Act
subsequent to the date hereof and prior to the completion of the offering
contemplated hereby, shall also be deemed to be incorporated herein by reference
and to be made a part hereof from the date of filing of such documents;
provided, however, that no report of the Board of Directors of the Registrant on
executive compensation and no performance graph included in any Proxy Statement
or Information Statement filed pursuant to Section 14 of the Exchange Act shall
be deemed to be incorporated herein by reference.
ITEM 4. DESCRIPTION OF SECURITIES.
NOT APPLICABLE.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
The validity of the issuance of the Common Shares of the
Registrant being registered on this Registration Statement on Form S-8 will be
passed upon for the Registrant by Vorys, Sater, Seymour and Pease LLP, 52 East
Gay Street, P.O. Box 1008, Columbus, Ohio 43216-1008. Members of Vorys, Sater,
Seymour and Pease LLP and attorneys employed thereby, together with members of
their immediate families, beneficially own less than $50,000 worth of the Common
Shares of the Registrant.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Division (E) of Section 1701.13 of the Ohio Revised Code
governs indemnification by an Ohio corporation and provides as follows:
<PAGE> 3
(E)(1) A corporation may indemnify or agree 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, suit, or proceeding,
whether civil, criminal, administrative, or investigative, other than
an action by or in the right of the corporation, by reason of the fact
that he is or was a director, officer, employee, or agent of the
corporation, or is or was serving at the request of the corporation as
a director, trustee, officer, employee, member, manager, or agent of
another corporation, domestic or foreign, nonprofit or for profit, a
limited liability company, or a partnership, joint venture, trust, or
other enterprise, against expenses, including attorney's fees,
judgments, fines, and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit, or
proceeding if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, if
he had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit, 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
did not act 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 action or proceeding, he had reasonable cause
to believe that his conduct was unlawful.
(2) A corporation may indemnify or agree 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 suit by or in the right
of the corporation to procure a judgment in its favor, by reason of the
fact that he is or was a director, officer, employee, or agent of the
corporation, or is or was serving at the request of the corporation as
a director, trustee, officer, employee, member, manager, or agent of
another corporation, domestic or foreign, nonprofit or for profit, a
limited liability company, or a partnership, joint venture, trust, or
other enterprise, against expenses, including attorney's fees, actually
and reasonably incurred by him in connection with the defense or
settlement of such action or suit, if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be
made in respect of any of the following:
(a) Any claim, issue, or matter as to which such
person is adjudged to be liable for negligence or misconduct
in the performance of his duty to the corporation unless, and
only to the extent that the court of common pleas or the court
in which such action or suit was brought determines, upon
application, that, despite the adjudication of liability, but
in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses
as the court of common pleas or such other court shall deem
proper;
2
<PAGE> 4
(b) Any action or suit in which the only liability
asserted against a director is pursuant to section 1701.95 of
the Revised Code.
(3) To the extent that a director, trustee, officer, employee,
member, manager, or agent has been successful on the merits or
otherwise in defense of any action, suit, or proceeding referred to in
division (E)(1) or (2) of this section, or in defense of any claim,
issue, or matter therein, he shall be indemnified against expenses,
including attorney's fees, actually and reasonably incurred by him in
connection with the action, suit, or proceeding.
(4) Any indemnification under division (E)(1) or (2) of this
section, unless ordered by a court, shall be made by the corporation
only as authorized in the specific case, upon a determination that
indemnification of the director, trustee, officer, employee, member,
manager, or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in division (E)(1) or (2) of
this section. Such determination shall be made as follows:
(a) By a majority vote of a quorum consisting of
directors of the indemnifying corporation who were not and are
not parties to or threatened with the action, suit, or
proceeding referred to in division (E)(1) or (2) of this
section;
(b) If the quorum described in division (E)(4)(a) of
this section is not obtainable or if a majority vote of a
quorum of disinterested directors so directs, in a written
opinion by independent legal counsel other than an attorney,
or a firm having associated with it an attorney, who has been
retained by or who has performed services for the corporation
or any person to be indemnified within the past five years;
(c) By the shareholders;
(d) By the court of common pleas or the court in
which the action, suit, or proceeding referred to in division
(E)(1) or (2) of this section was brought.
Any determination made by the disinterested directors under
division (E)(4)(a) or by independent legal counsel under division
(E)(4)(b) of this section shall be promptly communicated to the person
who threatened or brought the action or suit by or in the right of the
corporation under division (E)(2) of this section, and within ten days
after receipt of such notification, such person shall have the right to
3
<PAGE> 5
petition the court of common pleas or the court in which such action or
suit was brought to review the reasonableness of such determination.
(5)(a) Unless at the time of a director's act or omission that
is the subject of an action, suit, or proceeding referred to in
division (E)(1) or (2) of this section, the articles or the regulations
of a corporation state, by specific reference to this division, that
the provisions of this division do not apply to the corporation and
unless the only liability asserted against a director in an action,
suit, or proceeding referred to in division (E)(1) or (2) of this
section is pursuant to section 1701.95 of the Revised Code, expenses,
including attorney's fees, incurred by a director in defending the
action, suit or proceeding shall be paid by the corporation as they are
incurred, in advance of the final disposition of the action, suit, or
proceeding upon receipt of an undertaking by or on behalf of the
director in which he agrees to do both of the following:
(i) Repay such amount if it is proved by clear and
convincing evidence in a court of competent jurisdiction that
his action or failure to act involved an act or omission
undertaken with deliberate intent to cause injury to the
corporation or undertaken with reckless disregard for the best
interests of the corporation;
(ii) Reasonably cooperate with the corporation
concerning the action, suit, or proceeding.
(b) Expenses, including attorney's fees, incurred by a
director, trustee, officer, employee, member, manager, or agent in
defending any action, suit, or proceeding referred to in division
(E)(1) or (2) of this section, may be paid by the corporation as they
are incurred, in advance of the final disposition of the action, suit,
or proceeding, as authorized by the directors in the specific case,
upon receipt of an undertaking by or on behalf of the director,
trustee, officer, employee, member, manager, or agent to repay such
amount, if it ultimately is determined that he is not entitled to be
indemnified by the corporation.
(6) The indemnification authorized by this section shall not
be exclusive of, and shall be in addition to, any other rights granted
to those seeking indemnification under the articles, the regulations,
any agreement, a vote of shareholders or disinterested directors, or
otherwise, both as to action in their official capacities and as to
action in another capacity while holding their offices or positions,
and shall continue as to a person who has ceased to be a director,
trustee, officer, employee, member, manager, or agent and shall inure
to the benefit of the heirs, executors, and administrators of such a
person.
(7) A corporation may purchase and maintain insurance or
furnish similar protection, including, but not limited to, trust funds,
letters of credit, or self-
4
<PAGE> 6
insurance, on behalf of or for any person who is or was a director,
officer, employee, or agent of the corporation, or is or was serving at
the request of the corporation as a director, trustee, officer,
employee, member, manager, or agent of another corporation, domestic or
foreign, nonprofit or for profit, a limited liability company, or a
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 such
liability under this section. Insurance may be purchased from or
maintained with a person in which the corporation has a financial
interest.
(8) The authority of a corporation to indemnify persons
pursuant to division (E)(1) or (2) of this section does not limit the
payment of expenses as they are incurred, indemnification, insurance,
or other protection that may be provided pursuant to divisions
(E)(5),(6), and (7) of this section. Divisions (E)(1) and (2) of this
section do not create any obligation to repay or return payments made
by the corporation pursuant to division (E)(5),(6) or (7).
(9) As used in division (E) of this section, "corporation"
includes all constituent entities in a consolidation or merger and the
new or surviving corporation, so that any person who is or was a
director, officer, employee, trustee, member, manager, or agent of such
a constituent entity, or is or was serving at the request of such
constituent entity as a director, trustee, officer, employee, member,
manager, or agent of another corporation, domestic or foreign,
nonprofit or for profit, a limited liability company, a partnership,
joint venture, trust, or other enterprise, shall stand in the same
position under this section with respect to the new or surviving
corporation as he would if he had served the new or surviving
corporation in the same capacity.
Article FIVE of the Code of Regulations of the Registrant
governs indemnification by the Registrant and provides as follows:
5.01. MANDATORY INDEMNIFICATION. The corporation shall indemnify any
officer or director of the Corporation who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (including, without limitation, any action threatened or
instituted by or in the right of the corporation), by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as
a director, trustee, officer, employee or agent of another corporation
(domestic or foreign, nonprofit or for profit), partnership, joint
venture, trust or other enterprise, against expenses (including,
without limitation, attorneys' fees, filing fees, court reporters' fees
and transcript costs), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action,
suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not
5
<PAGE> 7
opposed to the best interests of the corporation and, with respect to
any criminal action or proceeding, he had no reasonable cause to
believe his conduct was unlawful. A person claiming indemnification
under this Section 5.01 shall be presumed, in respect of any act or
omission giving rise to such claim for indemnification, to have 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 matter, to have had no reasonable cause to believe his
conduct was unlawful, and the termination of any action, suit or
proceeding by judgment, order, settlement or conviction, or upon a plea
of nolo contendere or its equivalent, shall not, of itself, rebut such
presumption.
5.02. COURT-APPROVED INDEMNIFICATION. Anything
contained in the regulations or elsewhere to the contrary
notwithstanding:
(A) the corporation shall not indemnify any
officer or director of the corporation who was a party to any completed
action or suit instituted by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he is or was
a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, trustee,
officer, employee or agent of another corporation (domestic or foreign,
nonprofit or for profit), partnership, joint venture, trust or other
enterprise, in respect of any claim, issue or matter asserted in such
action or suit as to which he shall have been adjudged to be liable for
acting with reckless disregard for the best interests of the
corporation or misconduct (other than negligence) in the performance of
his duty to the corporation unless and only to the extent that the
Court of Common Pleas of Trumbull County, Ohio or the court in which
such action or suit was brought shall determine upon application that,
despite such adjudication of liability, and, in view of all the
circumstances of the case, he is fairly and reasonably entitled to such
indemnity as such Court of Common Pleas or such other court shall deem
proper; and
(B) the corporation shall promptly make any
such unpaid indemnification as is determined by a court to be proper as
contemplated by this Section 5.02.
5.03. INDEMNIFICATION FOR EXPENSES. Anything
contained in the regulations or elsewhere to the contrary
notwithstanding, to the extent that an officer or director of the
corporation has been successful on the merits or otherwise in defense
of any action, suit or proceeding referred to in Section 5.01, or in
defense of any claim, issue or matter therein, he shall be promptly
indemnified by the corporation against expenses (including, without
limitation, attorneys' fees, filing fees, court reporters' fees and
transcript costs) actually and reasonably incurred by him in connection
therewith.
6
<PAGE> 8
5.04. DETERMINATION REQUIRED. Any indemnification
required under Section 5.01 and not precluded under Section 5.02 shall
be made by the corporation only upon a determination that such
indemnification of the officer or director is proper in the
circumstances because he has met the applicable standard of conduct set
forth in Section 5.01. Such determination may be made only (A) by a
majority vote of a quorum consisting of directors of the corporation
who were not and are not parties to, or threatened with, any such
action, suit or proceeding, or (B) if such a quorum is not obtainable
or if a majority of a quorum of disinterested directors so directs, in
a written opinion by independent legal counsel other than an attorney,
or a firm having associated with it an attorney, who has been retained
by or who has performed services for the corporation, or any person to
be indemnified, within the past five years, or (C) by the shareholders,
or (D) by the Court of Common Pleas of Trumbull County, Ohio or (if the
corporation is a party thereto) the court in which such action, suit or
proceeding was brought, if any. Any such determination may be made by a
court under division (D) of this Section 5.04 at any time [including,
without limitation, any time before, during or after the time when any
such determination may be requested of, be under consideration by or
have been denied or disregarded by the disinterested directors under
division (A) or by independent legal counsel under division (B) or by
the shareholders under division (C) of this Section 5.04]. No failure
for any reason to make any such determination, and no decision for any
reason to deny any such determination, by the disinterested directors
under division (A) or by independent legal counsel under division (B)
or by shareholders under division (C) of this Section 5.04 shall be
evidence in rebuttal of the presumption recited in Section 5.01. Any
determination made by the disinterested directors under division (A) or
by independent legal counsel under division (B) of this Section 5.04 to
make indemnification in respect of any claim, issue or matter asserted
in an action or suit threatened or brought by or in the right of the
corporation shall be promptly communicated to the person who threatened
or brought such action or suit. Within ten (10) days after receipt of
such notification, such person shall have the right to petition the
Court of Common Pleas of Trumbull County, Ohio or the court in which
such action or suit was brought, if any, to review the reasonableness
of such determination.
5.05. ADVANCES FOR EXPENSES. Expenses (including,
without limitation, attorneys' fees, filing fees, court reporters' fees
and transcript costs) incurred in defending any action, suit or
proceeding referred to in Section 5.01 shall be paid by the corporation
in advance of the final disposition of such action, suit or proceeding
to or on behalf of the officer or director promptly as such expenses
are incurred by him, but only if such officer or director shall first
agree, in writing, to repay all amounts so paid in respect of any
claim, issue or other matter asserted in such action, suit or
proceeding in defense of which he shall not have been successful on the
merits or otherwise:
7
<PAGE> 9
(A) if it shall ultimately be determined as
provided in Section 5.04 that he is not entitled to be indemnified by
the corporation as provided under Section 5.01; or
(B) if, in respect of any claim, issue or
other matter asserted by or in the right of the corporation in such
action or suit, he shall have been adjudged to be liable for acting
with reckless disregard for the best interests of the corporation or
misconduct (other than negligence) in the performance of his duty to
the corporation, unless and only to the extent that the Court of Common
Pleas of Trumbull County, Ohio or the court in which such action or
suit was brought shall determine upon application that, despite such
adjudication of liability, and in view of all the circumstances, he is
fairly and reasonably entitled to all or part of such indemnification.
5.06. ARTICLE FIVE NOT EXCLUSIVE. The indemnification
provided by this Article Five shall not be exclusive of, and shall be
in addition to, any other rights to which any person seeking
indemnification may be entitled under the articles or the regulations
or any agreement, vote of shareholders or disinterested directors, or
otherwise, both as to action in his official capacity and as to action
in another capacity while holding such office, and shall continue as to
a person who has ceased to be an officer or director of the corporation
and shall inure to the benefit of the heirs, executors, and
administrators of such a person.
5.07. INSURANCE. The corporation may purchase and
maintain insurance or furnish similar protection, including but not
limited to trust funds, letters of credit, or self- insurance, on
behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, trustee, officer, employee, or agent of
another corporation (domestic or foreign, nonprofit or for profit),
partnership, joint venture, trust or other enterprise, against any
liability asserted against him and incurred by him in any capacity, or
arising out of his status as such, whether or not the corporation would
have the obligation or the power to indemnify him against such
liability under the provisions of this Article Five. Insurance may be
purchased from or maintained with a person in which the corporation has
a financial interest.
5.08. CERTAIN DEFINITIONS. For purposes of this
Article Five, and as examples and not by way of limitation:
(A) A person claiming indemnification under
this Article 5 shall be deemed to have been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in
Section 5.01, or in defense of any claim, issue or other matter
therein, if such action, suit or proceeding shall be terminated as to
such person, with or without prejudice, without the entry of a
8
<PAGE> 10
judgment or order against him, without a conviction of him, without the
imposition of a fine upon him and without his payment or agreement to
pay any amount in settlement thereof (whether or not any such
termination is based upon a judicial or other determination of the lack
of merit of the claims made against him or otherwise results in a
vindication of him); and
(B) References to an "other enterprise"
shall include employee benefit plans; references to a "fine" shall
include any excise taxes assessed on a person with respect to an
employee benefit plan; and references to "serving at the request of the
corporation" shall include any service as a director, officer, employee
or agent of the corporation which imposes duties on, or involves
services by, such director, officer, employee or agent with respect to
an employee benefit plan, its participants or beneficiaries. A person
who acted in good faith and in a manner he reasonably believed to be in
the best interests of the participants and beneficiaries of an employee
benefit plan shall be deemed to have acted in a manner "not opposed to
the best interests of the corporation" within the meaning of that term
as used in this Article Five.
5.09. VENUE. Any action, suit or proceeding to
determine a claim for indemnification under this Article Five may be
maintained by the person claiming such indemnification, or by the
corporation, in the Court of Common Pleas of Trumbull County, Ohio. The
corporation and (by claiming such indemnification) each such person
consent to the exercise of jurisdiction over its or his person by the
Court of Common Pleas of Trumbull County, Ohio in any such action, suit
or proceeding.
b. Ohio Revised Code Section 1701.13(E) provides as
follows:
(1) A corporation may indemnify or agree 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, suit, or proceeding,
whether civil, criminal, administrative, or investigative, other than
an action by or in the right of the corporation, by reason of the fact
that he is or was a director, officer, employee, or agent of the
corporation, or is or was serving at the request of the corporation as
a director, trustee, officer, employee, or agent of another
corporation, domestic or foreign, nonprofit or for profit, partnership,
joint venture, trust, or other enterprise, against expenses, including
attorney's fees, judgments, fines, and amounts paid in settlement
actually and reasonably incurred by him in connection with such action,
suit, or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of
the corporation, and with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit, 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
9
<PAGE> 11
that the person did not act 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 action or proceeding, he
had reasonable cause to believe that his conduct was unlawful.
(2) A corporation may indemnify or agree 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 suit by or in the
right of the corporation to procure a judgment in its favor by reason
of the fact that he is or was a director, officer, employee, or agent
of the corporation, or is or was serving at the request of the
corporation as a director, trustee, officer, employee, or agent of
another corporation, domestic or foreign, nonprofit or for profit,
partnership, joint venture, trust, or other enterprise, against
expenses, including attorney's fees, actually and reasonably incurred
by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation,
except that no indemnification shall be made in respect of any of the
following:
(a) Any claim, issue, or matter as to which
such person is adjusted to be liable for negligence or misconduct in
the performance of his duty to the corporation unless, and only to the
extent that the court of common pleas or the court in which such action
or suit was brought determines upon application that, despite the
adjudication of liability, but in view of all the circumstances of the
case, such person is fairly and reasonably entitled to indemnity for
such expenses as the court of common pleas or such other court shall
deem proper;
(b) Any action or suit in which the only
liability asserted against a director is pursuant to section 1701.95 of
the Revised Code.
(3) To the extent that a director, trustee, officer,
employee, or agent has been successful on the merits or otherwise in
defense of any action, suit, or proceedings referred to in divisions
(E)(1) and (2) of this section, or in defense of any claim, issue, or
matter therein, he shall be indemnified against expenses, including
attorney's fees, actually and reasonably incurred by him in connection
with the action, suit or proceeding.
(4) Any indemnification under divisions (E)(1) and
(2) of this section, unless ordered by a court, shall be made by the
corporation only as authorized in the specific case upon a
determination that indemnification of the director, trustee, officer,
employee, or agent is proper in the circumstances because he has met
the applicable standard of conduct set forth in divisions (E)(1) and
(2) of this section. Such determination shall be made as follows:
10
<PAGE> 12
(a) By a majority vote of a quorum
consisting of directors of the indemnifying corporation who were not
and are not parties to or threatened with any such action, suit or
proceeding;
(b) If the quorum described in division
(E)(4)(a) of this section is not obtainable or if a majority vote of a
quorum of disinterested directors so directs, in a written opinion by
independent legal counsel other than an attorney, or a firm having
associated with it an attorney, who has been retained by or who has
performed services for the corporation or any person to be indemnified
within the past five years;
(c) By the shareholders;
(d) By the court of common pleas or the
court in which such action, suit, or proceeding was brought.
Any determination made by the disinterested directors
under division (E)(4)(a) or by independent legal counsel under division
(E)(4)(b) of this section shall be promptly communicated to the person
who threatened or brought the action or suit by or in the right of the
corporation under division (E)(2) of this section, and within ten days
after receipt of such notification, such person shall have the right to
petition the court of common pleas or the court in which such action or
suit was brought to review the reasonableness of such determination.
(5)(a) Unless at the time of a director's act or
omission that is the subject of an action, suit, or proceeding referred
to in divisions (E)(1) and (2) of this section, the articles or the
regulations of a corporation state by specific reference to this
division that the provisions of this division do not apply to the
corporation and unless the only liability asserted against a director
in an action, suit or proceeding referred to in divisions (E)(1) and
(2) of this section is pursuant to section 1701.95 of the Revised Code,
expense, including attorney's fees, incurred by a director in defending
the action, suit or proceeding shall be paid by the corporation as they
are incurred, in advance of the final disposition of the action, suit,
or proceeding upon receipt of an undertaking by or on behalf of the
director in which he agrees to do both of the following:
(i) Repay such amount if it is
proved by clear and convincing evidence in a court of competent
jurisdiction that his action or failure to act involved an act or
omission undertaken with deliberate intent to cause injury to the
corporation or undertaken with reckless disregard for the best
interests of the corporation;
(ii) Reasonably cooperate with the
corporation concerning the action, suit or proceeding.
11
<PAGE> 13
(b) Expenses, including attorney's fees,
incurred by a director, trustee, officer, employee, or agent in
defending any action, suit or proceeding referred to in divisions
(E)(1) and (2) of this section, may be paid by the corporation as they
are incurred, in advance of the final disposition of the action, suit,
or proceeding as authorized by the directors in the specific case upon
receipt of an undertaking by or on behalf of the director, trustee,
officer, employee, or agent to repay such amount, if it ultimately is
determined that he is not entitled to be indemnified by the
corporation.
(6) The indemnification authorized by this section
shall not be exclusive of, and shall be in addition to, any other
rights granted to those seeking indemnification under the articles or
the regulations or any agreement, vote of shareholders or disinterested
directors, or otherwise, both as to action in his official capacity and
as to action in another capacity while holding such office, and shall
continue as to a person who has ceased to be a director, trustee,
officer, employee, or agent and shall inure to the benefit of the
heirs, executors, and administrators of such a person.
(7) A corporation may purchase and maintain insurance
or furnish similar protection, including but not limited to trust
funds, letters of credit, or self-insurance, on behalf of or for any
person who is or was a director, officer, employee, or agent of the
corporation, or is or was serving at the request of the corporation as
a director, trustee, officer, employee or agent of another corporation,
domestic or foreign, nonprofit or 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 such liability under this section. Insurance
may be purchased from or maintained with a person in which the
corporation has a financial interest.
(8) The authority of the corporation to indemnify
persons pursuant to divisions (E)(1) and (2) of this section does not
limit the payment of expenses as they are incurred, indemnification,
insurance, or other protection that may be provided pursuant to
divisions (E)(5), (6) and (7) of this section. Divisions (E)(1) and (2)
of this section do not create any obligation to repay or return
payments made by the corporation pursuant to divisions (E)(5), (6), or
(7).
(9) As used in this division, references to
"corporation" includes all constituent corporations in a consolidation
or merger and the new or surviving corporation, so that any person who
is or was a director, officer, employee, or agent of such a constituent
corporation, or is or was serving at the request of such constituent
corporation as a director, trustee, officer, employee, or agent of
another corporation, domestic or foreign, nonprofit or for profit,
12
<PAGE> 14
partnership, joint venture, trust, or other enterprise, shall stand in
the same position under this section with respect to the new or
surviving corporation as he would if he had served the new or surviving
corporation in the same capacity.
The Corporation has obtained liability insurance on behalf of
its directors and officers as authorized by Ohio Revised Code Section
1701.13(E)(7).
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
NOT APPLICABLE.
ITEM 8. EXHIBITS.
See the Index to Exhibits attached hereto at page - 16.
ITEM 9. UNDERTAKINGS.
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective 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;
and
(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) do 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 this registration
statement.
13
<PAGE> 15
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
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 that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions described in Item
6 of this Part II, or otherwise, the Registrant has been advised that
in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
D. The undersigned Registrant hereby undertakes to submit any amendment to
the Plan to the Internal Revenue Service in a timely manner and has
made or will make all changes required by the IRS in order to continue
to qualify the Plan under Section 401 of the Internal Revenue Code.
14
<PAGE> 16
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 Cortland, State of Ohio, on the 15th day of May,
1998.
CORTLAND BANCORP
By: /s/ Rodger W. Platt
-------------------
Rodger W. Platt, Chairman of the Board and President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ Rodger W. Platt Chairman of the Board, May 15,
- ------------------- President and Director 1998
Rodger W. Platt
Dennis E. Linville* Executive Vice President, *
Secretary and
Director
Lawrence A. Fantauzzi* Treasurer and Controller *
James M. Gasior* Chief Operations Officer *
P. Bennett Bowers* Director *
David C. Cole* Director *
George E. Gessner* Director *
William A. Hagood* Director *
James E. Hoffman, III* Director *
Richard L. Hoover* Director *
K. Ray Mahan* Director *
Timothy K. Woofter* Director *
*By /s/ Rodger W. Platt
-------------------
Rodger W. Platt,
Attorney-in-Fact
Date: May 15, 1998
15
<PAGE> 17
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT LOCATION
------ ------- --------
<S> <C> <C>
4(a) The Amended and Restated Articles of Cortland Bancorp, Incorporated herein by reference to Registrant's
as in effect on the date of filing Registration Statement on Form S-3 filed on
October 28, 1993 (Registration No. 33-70882
(Exhibit 4(a))
4(b) The Amended and Restated Regulations of Cortland Incorporated herein by reference to Registrant's
Bancorp, as in effect on the date of filing Registration Statement on Form S-3 filed on
October 28, 1993 (Registration No. 33-70882
(Exhibit 4(b))
5(a) Opinion of Vorys, Sater, Seymour and Pease LLP Pages 17 - 18*
5(b) Internal Revenue Service Determination letter that the Pages 19 - 20*
Plan is qualified under Section 401 of the Internal
Revenue Code
23 Consent of Packer, Thomas & Co. Page 21*
23(b) Consent of Vorys, Sater, Seymour and Pease LLP Contained in the firm's Opinion included herein
as Exhibit 5
24 Powers of Attorney Pages 22 - 32*
99(a) Summary Plan Description for The Cortland Savings & Pages 33 - 47*
Banking Company 401(k) Plan dated January 12, 1994
99(b) The Cortland Savings and Banking Company 401(k) Plan Pages 48 - 123*
dated January 12, 1994, and Amendments dated August 24,
1994, July 11, 1995, September 26, 1997 and December 23,
1997.
</TABLE>
* As consecutively numbered
<PAGE> 1
EXHIBIT 5(a)
------------
(614) 464-6400
May 15, 1998
Cortland Bancorp.
194 West Main Street
Cortland, Ohio 44410
Ladies and Gentlemen:
We have acted as special counsel for Cortland Bancorp., an
Ohio corporation (the "Corporation"), in connection with the proposed issuance
and sale of shares of common stock of the Corporation, no par value (the "Common
Shares"), pursuant to The Cortland Savings and Banking Company 401(k) Plan (the
"Plan") as described in the Registration Statement on Form S-8 (the
"Registration Statement") to be filed with the Securities and Exchange
Commission on May 15, 1998. The purpose of the Registration Statement is to
register 250,000 Common Shares reserved for issuance under the Plan pursuant to
the provisions of the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
In connection with this opinion, we have examined an original
or copy of, and have relied upon the accuracy of, without independent
verification or investigation: (a) the Registration Statement; (b) the
Corporation's Amended Articles; (c) the Corporation's Amended Regulations; and
(d) a certificate of good standing with respect to the Corporation by the
Secretary of State of Ohio dated May 14, 1998. We have also relied upon such
other certificates and representations of the Corporation and officers of the
Corporation and such authorities of law as we have deemed relevant as a basis
for this opinion.
In our examinations and in rendering this opinion, we have
assumed, without independent investigation or examination, (a) the genuineness
of all signatures, the authenticity of all documents submitted to us as
originals, the conformity to original documents of documents submitted to us as
certified or photostatic copies, specimen, confirmed copies or drafts, and the
authenticity of such originals of such latter documents; (b) the due completion,
execution and acknowledgement as indicated thereon and delivery of all documents
and instruments; and (c) compliance with applicable state securities laws.
We have relied solely upon the examinations and inquiries
related herein, and we have not undertaken any independent investigation to
determine the existence or absence of any facts, and no inference as to our
knowledge concerning such facts should be drawn.
Based upon and subject to the foregoing and the further
qualifications and limitations set forth below, as of the date hereof we are of
the opinion that, after the 250,000 Common Shares of the Corporation shall have
been issued by the Corporation upon payment
<PAGE> 2
therefor in the manner provided in the Plan and in the Registration Statement
(when it becomes effective), such Common Shares issued will be validly issued,
fully paid and non-assessable.
This opinion is limited to the federal laws of the United
States and to the laws of the State of Ohio having effect as of the date hereof.
This opinion is furnished by us solely for the benefit of the Corporation in
connection with the offering of the Common Shares and the filing of the
Registration Statement and any amendments thereto. This opinion may not be
relied upon by any other person or assigned, quoted or otherwise used without
our specific written consent.
Notwithstanding the foregoing, we consent to the filing of
this opinion as an exhibit to the Registration Statement and to the reference of
us in the Registration Statement under the caption "Experts".
Very truly yours,
/s/ Vorys, Sater Seymour and Pease LLP
--------------------------------------
VORYS, SATER, SEYMOUR AND PEASE LLP
2
<PAGE> 1
EXHIBIT 5(b)
INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY
DISTRICT DIRECTOR
P. O. BOX 2508
CINCINNATI, OH 45201
Employer Identification Number:
Date: Jun 10 1994 34--0165477
File Folder Number:
CORTLAND SAVINGS AND BANKING 340028412
COMPANY Person to Contact:
C/O BEN F. WELLS G. BAKER
CROWE CHIZEK Contact Telephone Number:
ONE COLUMBUS, 10 W. BROAD STREET (513) 684-3347
COLUMBUS, OH 43215 Plan Name:
CORTLAND SAVINGS AND BANKING
COMPANY 401(K) PLAN
Plan Number. 002
Dear Applicant:
We have made a favorable determination on your plan, identified above, based on
the information supplied. Please keep this letter in your permanent records.
Continued qualification of the plan under its present form will depend on its
effect in operation. (See section 1.401.--1(b)(3) of the Income Tax
Regulations.) We will review the status of the plan in Operation periodically.
The enclosed document explains the significance of this favorable determination
letter, points out some features that may affect the qualified status of your
employee retirement plan and provides information on the reporting requirements
for your plan. It also describes some events that automatically nullify it. It
is very important that you read the publication.
This letter relates only to the status of your plan under the Internal Revenue
Code. It is not a determination regarding the effect of other federal or local
statutes.
This determination is subject to your adoption of the proposed amendments
submitted in your letter dated April 28, 1994. The proposed amendments should be
adopted on or before the date prescribed by the regulations under Code section
401(b).
This determination letter is applicable for the amendments adopted on January
12, 1994.
This plan has been mandatorily disaggregated, permissively aggregated or
restructured to satisfy the nondiscrimination requirements.
This plan satisfies the nondiscrimination in amount requirement of section
1.401(a)(4)--l(b)(2) of the regulations on the basis of a design--based safe
harbor described in the regulations.
This letter is issued under Rev. Proc. 93-39 and considers the amendments
required by the Tax Reform Act of 1986 except as otherwise specified in this
letter.
We have sent a copy of this letter to your representative as indicated in
Letter 835 (DO/CG)
<PAGE> 2
-2-
CORTLAND SAVINGS AND BANKING
the power of attorney.
If you have questions concerning this matter please contact the person whose
name and telephone number are shown above.
Sincerely yours,
/s/ C. Ashley Bullard
---------------------------------
Ashley Bullard
District Director
Enclosures:
Publication 794
<PAGE> 1
EXHIBIT 23(a)
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration
Statement on Form S-8 to be filed with the Securities and Exchange Commission
("SEC") on or about May 15, 1998 of our report dated February 13, 1998 with
respect to the December 31, 1997 consolidated financial statements of Cortland
Bancorp and subsidiaries incorporated by reference in its Annual Report on Form
10-K and our report dated May 16, 1997 with respect to the December 31, 1996
financial statements and schedules of the Cortland Savings and Banking Company
401(k) Plan (the "Plan") included in the Plan's Annual Report on Form 11-K,
both of which were filed with the SEC.
Youngstown, Ohio /s/ Packer, Thomas & Co.
May 12, 1998 ------------------------------
Packer, Thomas & Co.
<PAGE> 1
EXHIBIT 24
POWER OF ATTORNEY
The undersigned officer and/or director of Cortland Bancorp
(the "Company"), does hereby constitute and appoint Rodger W. Platt my true and
lawful attorney and agent, with power of substitution, to do any and all acts
and things in my name and on my behalf in any and all capacities, and to execute
any and all instruments for me and in my name in any and all capacities, which
said attorney or agent may deem necessary or advisable to enable the Company to
comply with the Securities Act of 1933, as amended, and any rules, regulations
and requirements of the Securities and Exchange Commission, in connection with
the filing of a Registration Statement on Form S-8 in connection with the
offering of 250,000 Common Shares of the Company pursuant to the Cortland
Savings and Banking Company 401(k) Plan, including specifically but without
limitation, power and authority to sign for me in my name in any and all
capacities, any and all amendments (including post-effective amendments) to such
Registration Statement; and I do hereby ratify and confirm all that the said
attorneys and agents, or their substitute or substitutes, or any of them, shall
do or cause to be done by virtue hereof.
/s/ Dennis E. Linville
--------------------------
Dennis E. Linville
<PAGE> 2
POWER OF ATTORNEY
The undersigned officer and/or director of Cortland Bancorp
(the "Company"), does hereby constitute and appoint Rodger W. Platt my true and
lawful attorney and agent, with power of substitution, to do any and all acts
and things in my name and on my behalf in any and all capacities, and to execute
any and all instruments for me and in my name in any and all capacities, which
said attorney or agent may deem necessary or advisable to enable the Company to
comply with the Securities Act of 1933, as amended, and any rules, regulations
and requirements of the Securities and Exchange Commission, in connection with
the filing of a Registration Statement on Form S-8 in connection with the
offering of 250,000 Common Shares of the Company pursuant to the Cortland
Savings and Banking Company 401(k) Plan, including specifically but without
limitation, power and authority to sign for me in my name in any and all
capacities, any and all amendments (including post-effective amendments) to such
Registration Statement; and I do hereby ratify and confirm all that the said
attorneys and agents, or their substitute or substitutes, or any of them, shall
do or cause to be done by virtue hereof.
/s/ Lawrence A. Fantauzzi
--------------------------------
Lawrence A. Fantauzzi
<PAGE> 3
POWER OF ATTORNEY
The undersigned officer and/or director of Cortland Bancorp
(the "Company"), does hereby constitute and appoint Rodger W. Platt my true and
lawful attorney and agent, with power of substitution, to do any and all acts
and things in my name and on my behalf in any and all capacities, and to execute
any and all instruments for me and in my name in any and all capacities, which
said attorney or agent may deem necessary or advisable to enable the Company to
comply with the Securities Act of 1933, as amended, and any rules, regulations
and requirements of the Securities and Exchange Commission, in connection with
the filing of a Registration Statement on Form S-8 in connection with the
offering of 250,000 Common Shares of the Company pursuant to the Cortland
Savings and Banking Company 401(k) Plan, including specifically but without
limitation, power and authority to sign for me in my name in any and all
capacities, any and all amendments (including post-effective amendments) to such
Registration Statement; and I do hereby ratify and confirm all that the said
attorneys and agents, or their substitute or substitutes, or any of them, shall
do or cause to be done by virtue hereof.
/s/ James M. Gasior
--------------------------
James M. Gasior
<PAGE> 4
POWER OF ATTORNEY
The undersigned officer and/or director of Cortland Bancorp
(the "Company"), does hereby constitute and appoint Rodger W. Platt my true and
lawful attorney and agent, with power of substitution, to do any and all acts
and things in my name and on my behalf in any and all capacities, and to execute
any and all instruments for me and in my name in any and all capacities, which
said attorney or agent may deem necessary or advisable to enable the Company to
comply with the Securities Act of 1933, as amended, and any rules, regulations
and requirements of the Securities and Exchange Commission, in connection with
the filing of a Registration Statement on Form S-8 in connection with the
offering of 250,000 Common Shares of the Company pursuant to the Cortland
Savings and Banking Company 401(k) Plan, including specifically but without
limitation, power and authority to sign for me in my name in any and all
capacities, any and all amendments (including post-effective amendments) to such
Registration Statement; and I do hereby ratify and confirm all that the said
attorneys and agents, or their substitute or substitutes, or any of them, shall
do or cause to be done by virtue hereof.
/s/ P. Bennett Bowers
--------------------------
P. Bennett Bowers
<PAGE> 5
POWER OF ATTORNEY
The undersigned officer and/or director of Cortland Bancorp
(the "Company"), does hereby constitute and appoint Rodger W. Platt my true and
lawful attorney and agent, with power of substitution, to do any and all acts
and things in my name and on my behalf in any and all capacities, and to execute
any and all instruments for me and in my name in any and all capacities, which
said attorney or agent may deem necessary or advisable to enable the Company to
comply with the Securities Act of 1933, as amended, and any rules, regulations
and requirements of the Securities and Exchange Commission, in connection with
the filing of a Registration Statement on Form S-8 in connection with the
offering of 250,000 Common Shares of the Company pursuant to the Cortland
Savings and Banking Company 401(k) Plan, including specifically but without
limitation, power and authority to sign for me in my name in any and all
capacities, any and all amendments (including post-effective amendments) to such
Registration Statement; and I do hereby ratify and confirm all that the said
attorneys and agents, or their substitute or substitutes, or any of them, shall
do or cause to be done by virtue hereof.
/s/ David C. Cole
--------------------------
David C. Cole
<PAGE> 6
POWER OF ATTORNEY
The undersigned officer and/or director of Cortland Bancorp
(the "Company"), does hereby constitute and appoint Rodger W. Platt my true and
lawful attorney and agent, with power of substitution, to do any and all acts
and things in my name and on my behalf in any and all capacities, and to execute
any and all instruments for me and in my name in any and all capacities, which
said attorney or agent may deem necessary or advisable to enable the Company to
comply with the Securities Act of 1933, as amended, and any rules, regulations
and requirements of the Securities and Exchange Commission, in connection with
the filing of a Registration Statement on Form S-8 in connection with the
offering of 250,000 Common Shares of the Company pursuant to the Cortland
Savings and Banking Company 401(k) Plan, including specifically but without
limitation, power and authority to sign for me in my name in any and all
capacities, any and all amendments (including post-effective amendments) to such
Registration Statement; and I do hereby ratify and confirm all that the said
attorneys and agents, or their substitute or substitutes, or any of them, shall
do or cause to be done by virtue hereof.
/s/ George E. Gessner
--------------------------
George E. Gessner
<PAGE> 7
POWER OF ATTORNEY
The undersigned officer and/or director of Cortland Bancorp
(the "Company"), does hereby constitute and appoint Rodger W. Platt my true and
lawful attorney and agent, with power of substitution, to do any and all acts
and things in my name and on my behalf in any and all capacities, and to execute
any and all instruments for me and in my name in any and all capacities, which
said attorney or agent may deem necessary or advisable to enable the Company to
comply with the Securities Act of 1933, as amended, and any rules, regulations
and requirements of the Securities and Exchange Commission, in connection with
the filing of a Registration Statement on Form S-8 in connection with the
offering of 250,000 Common Shares of the Company pursuant to the Cortland
Savings and Banking Company 401(k) Plan, including specifically but without
limitation, power and authority to sign for me in my name in any and all
capacities, any and all amendments (including post-effective amendments) to such
Registration Statement; and I do hereby ratify and confirm all that the said
attorneys and agents, or their substitute or substitutes, or any of them, shall
do or cause to be done by virtue hereof.
/S/ William A. Hagood
--------------------------
William A. Hagood
<PAGE> 8
POWER OF ATTORNEY
The undersigned officer and/or director of Cortland Bancorp
(the "Company"), does hereby constitute and appoint Rodger W. Platt my true and
lawful attorney and agent, with power of substitution, to do any and all acts
and things in my name and on my behalf in any and all capacities, and to execute
any and all instruments for me and in my name in any and all capacities, which
said attorney or agent may deem necessary or advisable to enable the Company to
comply with the Securities Act of 1933, as amended, and any rules, regulations
and requirements of the Securities and Exchange Commission, in connection with
the filing of a Registration Statement on Form S-8 in connection with the
offering of 250,000 Common Shares of the Company pursuant to the Cortland
Savings and Banking Company 401(k) Plan, including specifically but without
limitation, power and authority to sign for me in my name in any and all
capacities, any and all amendments (including post-effective amendments) to such
Registration Statement; and I do hereby ratify and confirm all that the said
attorneys and agents, or their substitute or substitutes, or any of them, shall
do or cause to be done by virtue hereof.
/s/ James E. Hoffman, III
--------------------------
James E. Hoffman, III
<PAGE> 9
POWER OF ATTORNEY
The undersigned officer and/or director of Cortland Bancorp
(the "Company"), does hereby constitute and appoint Rodger W. Platt my true and
lawful attorney and agent, with power of substitution, to do any and all acts
and things in my name and on my behalf in any and all capacities, and to execute
any and all instruments for me and in my name in any and all capacities, which
said attorney or agent may deem necessary or advisable to enable the Company to
comply with the Securities Act of 1933, as amended, and any rules, regulations
and requirements of the Securities and Exchange Commission, in connection with
the filing of a Registration Statement on Form S-8 in connection with the
offering of 250,000 Common Shares of the Company pursuant to the Cortland
Savings and Banking Company 401(k) Plan, including specifically but without
limitation, power and authority to sign for me in my name in any and all
capacities, any and all amendments (including post-effective amendments) to such
Registration Statement; and I do hereby ratify and confirm all that the said
attorneys and agents, or their substitute or substitutes, or any of them, shall
do or cause to be done by virtue hereof.
/s/ Richard L. Hoover
--------------------------
Richard L. Hoover
<PAGE> 10
POWER OF ATTORNEY
The undersigned officer and/or director of Cortland Bancorp
(the "Company"), does hereby constitute and appoint Rodger W. Platt my true and
lawful attorney and agent, with power of substitution, to do any and all acts
and things in my name and on my behalf in any and all capacities, and to execute
any and all instruments for me and in my name in any and all capacities, which
said attorney or agent may deem necessary or advisable to enable the Company to
comply with the Securities Act of 1933, as amended, and any rules, regulations
and requirements of the Securities and Exchange Commission, in connection with
the filing of a Registration Statement on Form S-8 in connection with the
offering of 250,000 Common Shares of the Company pursuant to the Cortland
Savings and Banking Company 401(k) Plan, including specifically but without
limitation, power and authority to sign for me in my name in any and all
capacities, any and all amendments (including post-effective amendments) to such
Registration Statement; and I do hereby ratify and confirm all that the said
attorneys and agents, or their substitute or substitutes, or any of them, shall
do or cause to be done by virtue hereof.
/s/ K. Ray Mahan
--------------------------
K. Ray Mahan
<PAGE> 11
POWER OF ATTORNEY
The undersigned officer and/or director of Cortland Bancorp
(the "Company"), does hereby constitute and appoint Rodger W. Platt my true and
lawful attorney and agent, with power of substitution, to do any and all acts
and things in my name and on my behalf in any and all capacities, and to execute
any and all instruments for me and in my name in any and all capacities, which
said attorney or agent may deem necessary or advisable to enable the Company to
comply with the Securities Act of 1933, as amended, and any rules, regulations
and requirements of the Securities and Exchange Commission, in connection with
the filing of a Registration Statement on Form S-8 in connection with the
offering of 250,000 Common Shares of the Company pursuant to the Cortland
Savings and Banking Company 401(k) Plan, including specifically but without
limitation, power and authority to sign for me in my name in any and all
capacities, any and all amendments (including post-effective amendments) to such
Registration Statement; and I do hereby ratify and confirm all that the said
attorneys and agents, or their substitute or substitutes, or any of them, shall
do or cause to be done by virtue hereof.
/s/ Timothy K. Woofter
--------------------------
Timothy K. Woofter
<PAGE> 1
EXHIBIT 99(a)
SUMMARY PLAN DESCRIPTION
FOR THE
CORTLAND SAVINGS AND BANKING COMPANY
401(k) PLAN
<PAGE> 2
TABLE OF CONTENTS
Am I Eligible? 2
What Is The Plan Year? 2
What Is A Year Of Service? 2
What Is An Hour Of Service? 2
How Are My Benefits Determined? 3
How Are The Contributions And Forfeitures Allocated? 4
How Is Compensation Defined? 4
Can My Benefit Be Assigned or Transferred? 4
What Are My Voting Rights? 5
When Is The Plan "Top Heavy"? 5
Are There Any Limits On Contributions'? 5
May I Still Contribute To An Individual Retirement Account? 5
How Are Earnings / (Losses) Allocated? 6
When Do I Become Eligible To Receive Benefits? 6
When May I Retire? 7
What If I Die Before Retirement? 7
What if I Die After I Retire? 7
How Do I Name A Beneficiary? 7
What Does Disability Mean? 7
What Happens if I Terminate Employment? 8
How Are Benefits Paid? 8
Is Income Tax Withheld on My Distribution? 8
What Are hardship Distributions? 9
May I Receive A Loan From The Plan? 9
Is There A Penalty For Early Distribution Of Benefits? 10
How Do I Claim Benefits? 10
What if My Claim Is Turned Down? 11
What Rules Apply if I Terminate Service And Am Later Rehired? 11
Are My Benefits Guaranteed? 11
What if The Plan Ends? 12
Who Manages The Plan? 12
What Are Some Of The Administrative Details Of The Plan? 12
What Are My Legal Rights As A Plan Member? 13
Where Can I Get More Information? 13
<PAGE> 3
CORTLAND SAVINGS AND BANKING COMPANY
401(k) PLAN
As an employee of Cortland Savings and Banking Company, you are eligible to
participate in the Cortland Savings and Banking Company 401(k) Plan (hereinafter
referred to as the "Plan"). The Plan is a way of helping to provide for your
retirement years.
Please read this Summary Plan Description carefully. Share it with other members
of your family and keep it for future years. It outlines your benefits and
rights as a Plan Participant. If you have questions, contact the Plan
Administrator.
Note: These pages have tried to describe the Plan in easy-to-understand terms as
accurately as possible. However, if these pages inadvertently say anything that
disagrees with the formal Plan documents, -the Plan Sponsor, Administrator and
Trustee must follow the formal Plan Documents.
<PAGE> 4
Am I Eligible?
If you are an employee of Cortland Savings and Banking Company (referred to as
the "Employer"), you are generally eligible to participate in the Plan on the
first day of the Plan Year or the first day of the seventh month of the Plan
Year which coincides with or immediately follows the date on which you have
attained age 18 and completed one year of service.
For example, if you complete the eligibility requirement on February 1, you will
become a Participant in the Plan on July 1. If you complete the eligibility
requirement on October 15, you will become a Participant in the Plan on the
following January 1.
However, the following employees are not eligible to participate in the Plan,
whether or not they fulfill the eligibility requirements:
- any employee covered by a collective bargaining agreement,
- any non-resident alien; and
- any leased employee.
You may be asked to sign some forms when you enter the Plan such as a
Beneficiary designation form. What Is The Plan Year? The Plan Year for purposes
of administering the Plan is the fiscal year of the Employer. As of the date of
this Summary Plan Description, the fiscal year of the Employer is the 12 month
period ending on December 31.
What Is A Year Of Service?
A year of service is a 12 month computation period during which you earn not
less than 1,000 Hours of Service. For eligibility purposes, the 12 month
computation period will be the period beginning with the date you began work for
the Employer, and each anniversary of that date.
For purposes of vesting, the computation period will be the Plan Year.
What Is An Hour Of Service?
An Hour of Service is any hour for which the Employer paid you, or for which you
were entitled to pay. This includes:
- hours you actually worked;
- hours that you didn't work, such as for vacations, holidays,
sickness disability leave and military duty (up to 501 hours
during a Plan Year);
- hours covered by a back pay award (up to 501 hours during a Plan
Year); and
- hours that you didn't work due to maternity or paternity leave (up
to 501 hours less any other "Hours of Service" credited for the
Plan Year).
2
<PAGE> 5
How Are My Benefits Determined?
The Plan Administrator maintains an "Account" for you. Your Plan benefits are
based on the following types of contributions which may be allocated to your
Account under the Plan:
- Voluntary Salary Redirection Contributions ("Salary Redirections") -
For each Plan Year, you may have Salary Redirections made to the Plan
by the Employer on your behalf by electing in writing to have a
stated whole percentage of your salary (up to 10%) redirected from
your pay to your Account (see "How Are My Salary Redirections
Made?"). The maximum amount of Salary Redirections which you may make
in any calendar year is limited to a dollar amount which is indexed
for inflation annually. The maximum amount is indexed to $9,240 for
1994.
The amount of your Salary Redirections contributed to the Plan (and
the future earnings or losses on such amounts) will not be subject to
federal or state income tax until they are distributed to you.
However, FICA tax will be withheld on the Salary Redirection amounts.
Your Salary Redirections are always 100% vested. The Plan
Administrator has the right to reduce or revoke any or all Salary
Redirection elections on a nondiscriminatory basis to meet any
applicable discrimination or limitation requirement of the Internal
Revenue Code and its Regulations.
- Employer Basic Contributions ("Basic Contributions") - Each Plan
Year, the Employer may elect to make a contribution to the Plan in an
amount as determined at the sole discretion of the Board of
Directors.
- Employer Matching Contributions ("Matching Contributions") - The
Employer may make a Matching Contribution for each Plan Year on
behalf of each Participant who elected to make a Salary Redirection
Contribution during the year in an amount determined at the
discretion of the Employer.
- Qualified Non-elective Contributions ("QNEC") - Each year, the
Employer will make a QNEC to the account of each participant who (i)
is eligible to make Salary Redirections for the Plan Year, and (ii)
is eligible to receive an allocation of Employer Contributions for
the Plan Year. (See the section titled "How are the Contributions and
Forfeitures Allocated?") The QNEC will be equal to 2% of the
compensation of each eligible participant. QNEC contributions will be
100% vested, and are subject to the same distribution rules which
apply to Salary Redirections.
Contributions made to the Plan in the form of Employer Stock will be credited
to an "Employer Stock Fund" maintained by the Plan.
Your Salary Redirections and QNEC's will not be forfeited for any reason.
Generally, your Basic Contributions and Matching Contributions will become
nonforfeitable, or "vest" according to the following schedule:
3
<PAGE> 6
<TABLE>
<CAPTION>
FULL YEARS OF SERVICE VESTED PERCENTAGE
--------------------- -----------------
<S> <C>
Less than 1 0%
1 10%
2 20%
3 40%
4 60%
5 80%
6 or more 100%
</TABLE>
If you terminate employment on account of death or retirement, you will be 100%
vested in your Account. If you terminate service before you are fully vested,
then you will only receive the portion of your Account which is vested. For
instance, if you terminate employment after 2 Years of Service, and the balance
in your Account which comes from Employer Basic or Matching Contributions is.
$1,000, you will receive a distribution of $200. The remaining $800 will be
forfeited and allocated to the remaining Participants as part of any Employer
Contributions to the Plan.
How Are The Contributions And Forfeitures Allocated?
Basic Contributions, Matching Contributions, QNEC's and forfeitures will be
allocated among the accounts of all Participants who, during the course of the
Plan Year, complete at least 500 Hours of Service and are employed by the
Employer as of the last day of the Plan Year. Participants who died or became
disabled, or who separated from service during the Plan Year after reaching
their Normal Retirement Date, will also share in the allocation of Basic
Contributions, Matching Contributions, QNEC's and forfeitures.
Basic Contributions and QNEC's are allocated to the account of each eligible
Participant according to the ratio that the Participant's Compensation for the
Plan Year bears to the total Compensation of all Participants eligible to share
in the allocation.
Matching Contributions will be allocated among the accounts of Participants in
proportion to each participant's Salary Redirection Contributions. However, for
this purpose, any Salary Redirections which exceed 2% of the contributing
Participant's compensation are ignored. That is, they are not matched. The Plan
Administrator may choose to increase this 2% amount for employees who are not
considered "highly compensated" under federal law.
How Is Compensation Defined?
For purposes of the Plan, "Compensation" means total earnings from the Employer,
as reported on your Form W-2, plus your Salary Redirections and any elective
deferrals to a Section 125 Plan.
Can My Benefit Be Assigned or Transferred?
Generally, no, with one exception.
4
<PAGE> 7
All or a portion of your vested Account Balance can be assigned to your spouse
or dependent by a court in the form of a "Qualified Domestic Relations Order"
(QDRO). A QDRO is an order, judgment or decree (commonly part of a divorce
proceeding) that relates to the provision of child support, alimony or marital
property rights. If you believe that your Plan benefit may be subject to a QDRO,
notify the Plan Administrator.
What Are My Voting Rights?
A Participant is entitled to vote Employer Stock allocated to his Account due to
investment in the Employer Stock Fund on any corporate matter with respect to
which Shareholders are entitled to vote. The Plan Administrator will provide
each Participant eligible to vote with notice of stockholder meetings and of
matters to be voted on at the meetings. The Trustee shall receive and execute
instructions from each Participant with respect to the voting of Employer Stock
that is allocated to such Participant's Account. The Trustee shall not vote any
Employer Stock allocated to a Participant's Account who fails to timely instruct
the Trustee with respect to voting such Employer Stock at the meeting.
When Is The Plan "Top Heavy"?
The Plan is "Top Heavy" if the sum of the Account Balances under this Plan and
any other defined contribution plan maintained by the Employer and the present
value of accrued benefits under any defined benefit plan maintained by the
Employer for "key employees" exceeds 60% of the sum total for all Participants.
For this purpose, a key employee generally means any Participant who, during the
current Plan Year or any of the four preceding Plan Years is:
- an officer of the Employer (with some limitations);
- one of the 10 largest owners of the Employer;
- a 5% owner of the Employer; or
- a 1% owner of the Employer, earning annual wages of more than
$150,000.
If the Plan is determined to be "Top Heavy", each Participant who is a non-key
employee will receive a minimum contribution from the Employer under this Plan
equal to such Participant's total wages multiplied by the lesser of 3% or the
highest contribution rate for any key employee.
Are There Any Limits On Contributions?
All private plans like this one are subject to the Internal Revenue Code and its
Regulations. Contributions, when combined with forfeitures (if any) from all
defined contribution plans of the Employer, may not exceed the lesser of 25% of
your Compensation or $30,000 for a Plan Year. For purposes of this limitation,
Compensation means gross wages reduced by any salary deferrals made by you under
any other plan during the Plan Year.
May I Still Contribute To An Individual Retirement Account?
If you or your spouse are "active participants" in an "employer maintained
retirement plan" the following rules apply for determining whether you may make
a deductible IRA contribution:
5
<PAGE> 8
- Joint taxpayers - deductible IRA contributions are permitted for
taxpayers with less than $40,000 of adjusted gross income (the
$2,000 deductible limit is phased out between $40,000 and $50,000
of adjusted gross income).
- Single taxpayers - deductible IRA contributions are permitted for
taxpayers with less than $25,000 of adjusted gross income (the
$2,000 deductible limit is phased out between $25,000 and $35,000
of adjusted gross income).
An "employer maintained retirement plan" includes this Plan.
The determination of "active participant' status is dependent on the type of
plan maintained. Under this Plan, you are an active participant if any
contributions are made on your behalf during the year or if a forfeiture is
allocated to you during the year.
You are permitted to make non-deductible IRA contributions to the extent you are
not eligible to make deductible contributions. The same dollar limits that apply
for deductible contributions also apply to non-deductible contributions.
How Are Earnings/(Losses) Allocated?
As of the last day of the Plan Year, earnings and losses will be generally
allocated based on the ratio that each Participant's Account Balance as of the
beginning of the Plan Year bears to the total of such amounts for all
Participants. The Plan may allocate earnings and losses on funds attributable to
Employer Contributions made to the Plan but not allocated prior to the valuation
date. Any such allocation will be made in a nondiscriminatory manner (as
determined by the Plan Administrator) that accurately matches earnings and
losses of the various investment funds with Participants' Accounts. The
valuation date is the last day of the Plan Year and any other date selected by
the Plan Administrator.
When Do I Become Eligible To Receive Benefits?
You become eligible to receive your benefits under the Plan upon retirement,
death, disability or separation from service.
Upon your separation from service for reasons of retirement (on or after
retirement age as defined below), disability or death, payment of the adjusted
balance of your accounts as of the valuation date coinciding with or next
succeeding the date of termination will be made as soon as is reasonably
practicable after such valuation date. In the case of death, payment will be
made to your Beneficiary.
In general, upon termination of your employment for any reason other than
retirement or death, the vested portion of your accounts as of the valuation
date coinciding with or next following the date on which you terminate service
will be paid as soon as is reasonably practicable after such valuation date.
Distributions must commence not later than April 1 following the end of the
calendar year in which you attain age seventy and one-half (70 1/2), regardless
of whether you have terminated employment with the Employer.
6
<PAGE> 9
When May I Retire?
The Normal Retirement Age under the Plan is age 65. You may work past age 65
and continue to participate in the Plan until the date of your actual
retirement.
What If I Die Before Retirement?
If you die while in the service of the Employer, the Plan will pay the entire
amount of your Account Balance to your Beneficiary or your estate.
In general, payments will begin as soon as possible after the valuation is
complete for the Valuation Period (generally the Plan Year) in which you die.
What If I Die After I Retire?
If you die after you retire, benefits will be paid to your Beneficiary
according to the payment option then in effect. If benefits had commenced
prior to death, the remaining portion of your Account Balance must be
distributed to your Beneficiary at least as rapidly as the method of
distribution in effect on your date of death.
If your Beneficiary dies before you do, benefits will go to your contingent
Beneficiary, if you had named one. If your Beneficiary dies after you do, but
before receiving the entire Account Balance, the remainder will go to your
Beneficiary's estate.
How Do I Name A Beneficiary?
During your employment, usually when you are first eligible to participate in
the Plan, you'll name your Beneficiary on a special form provided by the Plan
Administrator. You may also name one or more contingent Beneficiaries if you
wish. if you are married, your Beneficiary is automatically your spouse unless
you elect otherwise. However, to name a Beneficiary other than your spouse,
you must obtain. a written consent from your spouse witnessed by a Plan
representative or notary public.
If your Beneficiary dies before you do, benefits will go to your contingent
Beneficiary, if you had named one.
What Does Disability Mean?
You are totally and permanently disabled when you receive disability benefits
under the Social Security Act, receive disability benefits under a disability
income plan maintained by the Employer, or are determined by a physician
chosen by the Plan Administrator to be totally and permanently disabled.
7
<PAGE> 10
What Happens If I Terminate Employment?
If you quit or lose your job for any reason other than Death, Disability, or
retirement on or after your Normal Retirement Age, your vested Account Balance
will generally be distributed to you as soon as possible following the Valuation
Period (generally the Plan Year) in which you separated from service.
However, if your vested Account Balance is greater than $3,500, your benefit
will not be paid before the later of age 62 or the Normal Retirement Age, unless
you die or consent to an earlier distribution. Whenever a distribution is made,
the portion of your Account Balance in which you are not vested will be
forfeited and allocated to remaining eligible Participants in the same manner as
Employer Basic Contributions. Refer to the Section entitled "Is There A Penalty
For Early Distribution of Benefits?" for an explanation of an additional tax
that may apply to the distribution
How Are Benefits Paid?
When you retire or separate from service, you will be entitled to a distribution
of your vested Accrued Benefit.
Distribution of your Accrued Benefit will be made in whole shares of Employer
Stock allocated to your Employer Stock Fund or in cash. Within a reasonable time
prior to the date of distribution, the Plan Administrator will notify you in
writing of your right to demand the portion of the distribution which is
attributable to your Employer Stock Fund be made in whole shares of Employer
Stock. Within a reasonable time following this notice, you must notify the Plan
Administrator in writing of your decision to receive whole shares of Employer
Stock. If you give no written notice, the distribution of your Account will be
made in whole shares of Employer Stock or in cash or partially in whole shares
of Employer Stock and partially in cash as determined by the Plan Administrator.
The remaining part of your Account will be distributed in cash.
If the vested portion of your Account Balance is $3,500 or less, your benefit
will be paid in the form of a lump sum. If the vested portion of your Account
Balance is greater than $3,500, you may choose from one of the following
distribution methods:
1) a lump sum, or
2) monthly, quarterly, semi-annual or annual installments over a period
not to exceed the lesser of (i) five years, or (ii) the life
expectancy of you or your beneficiary.
Is Income Tax Withheld on My Distribution?
If you receive a cash lump sum, and the amount of your lump sum payment is more
than $200, you may elect to have the Plan pay your benefit directly to an
individual retirement account or to another qualified retirement plan in which
you are a participant. If you do not elect this direct rollover of your lump
sum, a mandatory 20% of your payment will be withheld by the Plan and paid to
the Internal Revenue Service. This withholding amount will be applied by the IRS
to the taxes due on your distribution.
8
<PAGE> 11
If you receive a distribution in the form of an annuity or in installments over
more than 10 years, you may elect whether you want to have income tax withheld
from your distribution.
What Are Hardship Distributions?
You may receive a distribution of your Salary Redirection Contributions on
account of severe financial hardship if the Plan Administrator finds that you
are suffering from an immediate and necessary heavy financial need. Events
entitling you to a hardship distribution generally include the following:
- Certain medical expenses incurred by you, your spouse, or your
dependents;
- Purchase (excluding mortgage payments) of a principal residence
for you,
- Payment of tuition and related fees for the next twelve months of
post-secondary education for you, your spouse, children, or
dependents; or
- The need to prevent your eviction from your principal residence or
foreclosure on-the mortgage of your principal residence.
The amount of the hardship distribution cannot exceed the financial need and
must not be a need that may be met from another resource reasonably available to
you. A distribution on account of hardship may not exceed your Account Balance
derived from Salary Redirection contributions (excluding any investment
earnings).
In order to be eligible to receive a hardship distribution, you must satisfy the
following conditions:
- you may not receive more than one hardship distribution during a
Plan Year;
- the distribution cannot be in excess of the amount of your
demonstrated immediate and heavy financial need;
- you must have obtained all other distributions (other than
hardship withdrawals) and all nontaxable loans available under all
plans maintained by the Employer;
- you may not make Salary Redirections for 12 months after receipt
of the withdrawal; and
- for the taxable year following the taxable year in which you
receive the hardship distribution, the applicable annual limit on
your Salary Redirections will be reduced. The reduction is equal
to the amount of the Participant's Salary Redirections made in the
year the hardship distribution was received.
Refer to the Section entitled "Is There A Penalty For Early Distribution Of
Benefits?" for an explanation of an additional tax that may apply to a hardship
distribution.
May I Receive A Loan From The Plan?
Participants (or Beneficiaries of deceased Participants) may elect to receive a
loan from the Plan. The decision as to whether a loan shall be made is
determined solely by the Plan Administrator based on uniform and
non-discriminatory loan policies. In any event, the total outstanding balance
due upon loans made to you from this Plan and any other Plans of the Employer
may not exceed the lesser of:
1) $50,000, reduced by the excess of the highest outstanding balance of
loans to you during the 12 month period preceding the date of any new
loan, over the outstanding balance of loans on the date on which the
loan is made; or
9
<PAGE> 12
2) 1/2 of your total vested benefits in this Plan and any other Plans
of the Employer.
In addition to such rules and policies as the Plan Administrator may adopt, all
loans shall comply with the following terms and conditions:
- An application for a loan shall be made in writing to the Plan
Administrator, whose response shall be final. A loan may not be
made to a married Participant unless the Participant's spouse
consents to the loan in writing, as witnessed by a Plan
representative or notary.
- The period of repayment of any loan shall be set by the Plan
Administrator but such period shall not exceed five (5) years.
However, if the loan is used to acquire your principal residence,
then the repayment period may be up to thirty (30) years, rather
than five (5) years. The loan may be repaid in whole or in part at
any time during the repayment period without penalty.
- Each loan shall be secured with adequate security and evidenced by
a promissory note payable to the Trustee.
- Each loan shall bear interest at a rate comparable to that charged
by commercial lenders on similar loans. The Plan Administrator
shall not discriminate among Participants in the matter of
interest rates and amounts of security. However, loans granted at
different times or for different loan periods may have different
terms and conditions.
- Interest paid on loans is not deductible if the loan is secured by
Salary Redirection Contributions or if the loan is made to a key
employee. Also, interest paid on any plan loan generally will not
be deductible unless the loan is secured by the participant's
principal residence (up to the cost basis of the residence). You
should consult your tax advisor for more details regarding the
deductibility of interest on plan loans.
- If any payment of principal or interest is due and unpaid for a
period of 10 days, the amount of the loan plus accrued interest
may, at the option of the Plan Administrator, become immediately
due and payable.
- If an individual who has received a loan receives a distribution,
the amount of the loan plus the accrued interest due may become
immediately due and payable. The principal and interest due on the
loan will be deducted from the distribution.
Is There A Penalty For Early Distribution Of Benefits?
Distributions made from the Plan may be subject to a 10% penalty tax unless
certain exceptions are met. In particular, a distribution on account of severe
financial hardship will generally be subject to the penalty tax unless the
distribution is made on account of medical expenses or after you have attained
age 59 1/2. The Plan Administrator will furnish more details to you about the
tax treatment of your distributions at the time distributions are made to you
from the Plan. However, to be sure of the tax treatment that applies to you, you
should consult your tax advisor when you expect to receive a distribution.
How Do I Claim Benefits?
When you become eligible for benefits, contact the Plan Administrator in
writing. The Plan Administrator will provide you with an explanation of the
distribution method and how it will affect you. For death benefits, your
Beneficiary must contact the Plan Administrator and provide proof of your death.
10
<PAGE> 13
What If My Claim Is Turned Down?
If all or part of your claim for benefits is turned down, the government
requires that you be given a written notice of the denial. You should receive
this notice within the 90 day period after you filed your claim. If your claim
is denied, the denial notice must state:
- the specific reason or reasons for denial;
- specific references to the Plan provisions on which denial is
based;
- a description of any material or information needed to complete
your claim and why the material or information is needed; and
- an explanation of the Plan's claims procedures.
You have 60 days after receiving the above material to ask for a review of the
decision. You (or someone representing you) may:
- file a request in writing with the Plan Administrator to ask for
- review; review Retirement Plan documents;
- submit comments and questions in writing.
You'll receive a written notice of the final decision within 60 days (or 120
days in special cases) after you request the review.
What Rules Apply If I Terminate Service And Am Later Rehired?
Once you enter the Plan, if you separate from service with the Employer and
you're later rehired prior to incurring a Break in Service (as defined below),
you can re-enter the Plan as a Participant on the date you are rehired. If you
are rehired prior to incurring a Break in Service (as defined below), you will
continue to vest in the Employer Basic and Matching Contributions at the point
in the vesting schedule where you left employment. If you are rehired after
incurring a Break in Service, special rules will apply to determine your Years
of Service for eligibility and vesting purposes. These rules will be explained
to you by the Plan Administrator if they apply.
For purposes of the above rules, a Break in Service is generally a Plan Year in
which you have completed not more than 500 Hours of Service. A Break in Service
shall not be deemed to have occurred if you leave the Employer to serve in the
armed forces of the United States for a period during which your reemployment
rights are guaranteed by law and you return or offer to return to work for the
Employer prior to the expiration of your reemployment rights. You may also
receive credit for this purpose for hours missed due to a maternity or paternity
leave.
Are My Benefits Guaranteed?
The benefits under this Retirement Plan are not guaranteed by the Pension
Benefit Guaranty Corporation. This is a government agency that insures defined
benefit pension plan benefits. Your Retirement Plan is a defined contribution
plan which cannot be guaranteed by the PBGC. Therefore, your benefits held under
the Plan may increase or decrease depending on investment results. However, the
Employee Retirement Income Security Act (ERISA) protects your benefits from the
improper handling of funds by representative for the Plan.
11
<PAGE> 14
What If The Plan Ends?
Although the Employer intends to continue this Plan, the Plan is completely
voluntary and can be amended or terminated at any time. If the Plan does
terminate, your Account Balance will become 100% vested and will be made
available to you.
Who Manages The Plan?
PLAN SPONSOR
Cortland Savings and Banking Company is the sponsor of the Plan. Its
address is:
194 West Main Street
Cortland, OH 44410
(330) 637-8040
PLAN ADMINISTRATOR
It is the Plan Administrator's responsibility to handle the day-to-day
business of the Plan, keep records of Plan members' benefits, provide
Plan members with information about the Plan, and handle claims for
benefits. The Plan Administrator is Cortland Savings and Banking Company
(address shown above).
TRUSTEE
The Trustee for the Plan holds and invests all of the money that is held
by the Plan to finance benefits. The Trustee for the Plan is Cortland
Savings and Banking Company (address shown above).
LEGAL NOTICE
Legal notice of the Plan must be addressed to Cortland Savings and
Banking Company (address shown above).
What Are Some Of The Administrative Details Of The Plan?
There are a number of details you may need to know, as follows:
FORMAL PLAN Name: The formal Plan name is the Cortland Savings and
Banking Company 401(k) Plan.
EMPLOYER IDENTIFICATION NUMBER: The Internal Revenue Service has
assigned the Employer a special number, which is 34-0165477.
PLAN NUMBER: The Employer has assigned a number to this Plan - - it is
002.
12
<PAGE> 15
What Are My Legal Rights As A Plan Member?
As a Plan participant, you have certain rights and protections under the
Employee Retirement income Security Act of 1974 (ERISA). For example, the law
states that every Plan participant must receive a "Summary Plan Description"
describing the Plan. That is what this handout is all about.
Each year, you will receive a summary of the Plan's annual financial report. The
law requires the Plan Administrator to give each member a copy of this
information. Furthermore, you can examine, without charge, certain papers
relating to the Plan. These papers include legal Plan documents and copies of
all the reports filed with the U.S. Department of Labor. These papers are
available to you from the Plan Administrator during regular business hours.
You can also write to the Plan Administrator for copies of these papers. The law
allows the Plan Administrator to charge up to $.25 a page for the cost of
copying these items. In addition to creating rights for Plan members, ERISA
defines the duties of people who operate employee benefit plans. These people,
called "fiduciaries", must act in the interest of Plan members and
beneficiaries.
The law also provides that you can't be fired or discriminated against to
prevent you from getting a benefit or exercising your rights guaranteed under
ERISA.
If all or part of your claim to a benefit is denied, you must receive a written
explanation of the reason for the denial. You have the right to an appeal. Under
ERISA, you can take certain steps to enforce your rights. For example, if you
ask for Plan materials, you must get them within 30 days. If you haven't
received the materials after about 20 days, check with the Plan Administrator to
see if there are any problems in giving you the materials you request. Then if
you haven't received them within 30 days of your request, you can file suit in
federal court. The court can require the Plan Administrator to give you the
materials you asked for and pay up to $100 for each day of delay until you
receive the materials (unless they weren't sent because of reasons beyond the
Plan Administrator's control). If all or part of your claim for benefit is
denied or ignored, or if you think Plan fiduciaries are misusing the Plan's
money, or if you think you're being discriminated against for exercising your
rights, you can get assistance from the U.S. Department of Labor or file suit in
federal court. However, anytime you sue, the court will decide who should pay
the court costs and legal fees. If you win, the court may order the person that
you sued to cover these costs. If you lose however, you may be required to pay
these costs.
If you have any questions about the plan, contact the Plan Administrator. If you
have questions about your rights under ERISA, contact the nearest area office of
the U.S. Department of Labor-Management Services Administration, Department of
Labor. The Plan Administrator can give you the address.
Where Can I Get More Information?
For more about how the Plan works and the benefits it provides, check with the
Director of Human Resources of Cortland Savings and Banking Company.
13
<PAGE> 1
Exhibit 99(b)
THE CORTLAND SAVINGS AND BANKING COMPANY 401(k) PLAN
TABLE OF CONTENTS
ARTICLE I - BASIC DEFINITIONS ...............................................1
1.01 Accounts.............................................................1
1.02 Accrued Benefit......................................................1
1.03 Actual Deferral Percentage...........................................1
1.04 Adjustment Factor....................................................2
1.05 Affiliated Business..................................................2
1.06 Average Actual Deferral Percentage...................................2
1.07 Average Contribution Percentage......................................2
1.08 Beneficiary..........................................................2
1.09 Break in Service.....................................................2
1.10 Code.................................................................2
1.11 Compensation.........................................................3
1.12 Computation Period...................................................3
1.13 Contribution Percentage..............................................3
1.14 Contributions........................................................4
1.15 Defined Contribution Dollar Limitation...............................4
1.16 Earned Income........................................................4
1.17 Effective Date.......................................................4
1.18 Election Period......................................................4
1.19 Eligible Participant.................................................4
1.20 Employee.............................................................5
1.21 Employee Deferral Contributions......................................5
1.22 Employer.............................................................5
1.23 Employer Non-elective Contributions..................................5
1.24 Employer Stock.......................................................5
1.25 Employer Stock Fund..................................................5
1.26 Employment Commencement Date.........................................5
1.27 Entry Date...........................................................5
1.28 ERISA................................................................5
1.29 Excess Aggregate Contributions.......................................5
1.30 Excess Contributions.................................................6
1.31 Excess Deferral Amount...............................................7
1.32 Family Member........................................................8
1.33 Fiduciaries..........................................................8
1.34 Highly Compensated Employee..........................................8
1.35 Hour of Service......................................................9
1.36 Investment Fund.....................................................10
1.37 Leased Employee.....................................................11
1.38 Limitation Year.....................................................11
1.39 Matching Contributions..............................................12
1.40 Net Gain or Net Loss................................................12
1.41 Non-highly Compensated Employee.....................................12
1.42 Normal Retirement Age...............................................12
1.43 Normal Retirement Date..............................................12
1.44 Owner-Employee......................................................12
1.45 Participant.........................................................12
1.46 Plan................................................................12
1.47 Plan Administrator..................................................12
1.48 Plan Year...........................................................12
1.49 Qualified Non-elective Contributions................................12
1.50 Qualified Matching Contributions....................................12
1.51 Salary Reduction Agreement..........................................12
1.52 Self-Employed Individual............................................12
1.53 Spouse (Surviving Spouse)...........................................12
1.54 Trustee.............................................................13
1.55 Trust Fund..........................................................13
<PAGE> 2
1.56 Value...............................................................13
1.57 Valuation Date(s)...................................................13
1.58 Year of Eligibility Service.........................................13
1.59 Year of Vesting Service.............................................13
ARTICLE II - ELIGIBILITY REQUIREMENTS.......................................14
2.01 Participation.......................................................14
2.02 Excluded Employees..................................................14
2.03 Plan Information....................................................14
2.04 Conditions of Continued Participation...............................14
2.05 Rehired Participant.................................................15
ARTICLE III CONTRIBUTIONS...................................................15
3.01 Accounts............................................................15
3.02 Employer Non-elective Contributions.................................15
3.03 Employee Deferral Contributions.....................................15
3.04 Matching Contributions..............................................18
3.05 Qualified Non-Elective and Qualified Matching Contributions.........19
3.06 Transfers from Qualified Plans......................................19
ARTICLE IV - ALLOCATIONS TO PARTICIPANTS' ACCOUNTS..........................20
4.01 Amounts Allocated...................................................20
4.02 Eligible Participants...............................................20
4.03 Allocation of Net Gain and Net Loss of Trust Fund to Accounts.......21
ARTICLE V - LIMITATIONS ON ALLOCATIONS......................................23
5.01 Limitations on Annual Additions to Accounts.........................23
5.02 Deduction Limitation................................................25
5.03 Overall Limitations.................................................25
5.04 Limitations on Employee Deferral Contributions......................27
5.05 Limitations on Matching Contributions...............................28
5.06 Multiple Use Test...................................................30
5.07 Distribution of Excess Deferrals....................................31
5.08 Distribution of Excess Contributions................................32
5.09 Distribution of Excess Aggregate Contributions......................33
ARTICLE VI - RETIREMENT BENEFITS............................................34
6.01 Events Entitling Participant to Distribution........................34
6.02 Property Distributed................................................34
6.03 Methods of Benefit Payment..........................................35
6.04 Plan Rollovers......................................................35
ARTICLE VII - JOINT AND SURVIVOR ANNUITY REQUIREMENTS.......................36
ARTICLE VIII - VOTING EMPLOYER STOCK........................................36
8.01 Voting Rights.......................................................36
8.02 Employer Stock Fund.................................................36
ARTICLE IX - DEATH BENEFITS.................................................37
9.01 Amount of Death Benefit.............................................37
9.02 Payment of Death Benefit............................................37
9.03 Beneficiary Designation.............................................37
9.04 Selection by Beneficiary............................................37
ARTICLE X - TERMINATION BENEFITS............................................37
10.01 Vesting Schedule....................................................37
10.02 Determination of Accrued Benefit....................................38
10.03 Payment of Accrued Benefit..........................................38
ARTICLE XI - DISTRIBUTION REQUIREMENTS......................................39
<PAGE> 3
11.01 General Rules.......................................................39
11.02 Required Beginning Date.............................................39
11.03 Limits on Distribution Periods......................................39
11.04 Determination of Amount to be Distributed Each Year.................39
11.05 Death Distribution Provisions.......................................40
11.06 Commencement of Benefits............................................41
11.07 Definitions.........................................................41
ARTICLE XII - PLAN ADMINISTRATION...........................................43
12.01 Allocation of Fiduciary Powers......................................43
12.02 Plan Administration.................................................43
12.03 Claim Procedure.....................................................43
12.04 Reporting and Disclosure............................................44
12.05 Plan Administrator's Duties and Powers..............................44
12.06 Administrative Rules................................................44
12.07 Directions to Trustee...............................................45
12.08 Benefit Applications................................................45
12.09 Discretion and Delegation...........................................45
12.10 Domestic Relations Order............................................45
ARTICLE XIII - TOP HEAVY RULES..............................................45
13.01 Effective Date......................................................45
13.02 Determination of Top Heavy Status...................................45
13-03 Definitions and Special Rules.......................................46
13-04 Effect of Top Heavy Status..........................................49
ARTICLE XIV - THE TRUSTEE...................................................50
14.01 Resignation and Removal.............................................50
14.02 Information to be Furnished to Trustee..............................51
14.03 Accounting..........................................................51
14.04 Trustee's Right to Judicial Settlement..............................51
14.05 Trustee's Expenses..................................................51
14.06 Payment of Benefits to Incompetent..................................51
14.07 Trustee's Investment Powers.........................................52
14.08 Form of Plan Contributions..........................................54
14.09 Payments Made at Direction of Plan Administrator....................54
ARTICLE XV - FIDUCIARY RESPONSIBILITY.......................................55
15.01 Fiduciary Standards.................................................55
15.02 Situs of Plan Assets................................................55
ARTICLE XVI - EXCLUSIVE BENEFIT REQUIREMENTS................................55
16.01 Trustee Receipt of Funds............................................55
16.02 Plan Assets for Exclusive Benefit of Participants...................55
16.03 Return of Contributions.............................................56
ARTICLE XVII - PLAN TERMINATION RESPONSIBILITY AMENDMENTS...................56
17.01 Termination or Partial Termination..................................56
17.02 Limitations on Amendments by Employer...............................57
17.03 Amendments Required for Qualification...............................57
17.04 Participant's Consent to Amendment..................................58
ARTICLE XVIII - OTHER REQUIRED PROVISIONS...................................58
18.01 Plan Merger or Consolidation........................................58
18.02 Nonalienation of Benefits...........................................58
18.03 Form of Benefit Payments............................................58
ARTICLE IX - LOANS TO PARTICIPATION.........................................58
19.01 Loans to Participants...............................................58
19.02 Maximum Loan Amount.................................................59
<PAGE> 4
19.03 Repayment of Loans ................................................59
19.04 Terms..............................................................60
ARTICLE XX - MISCELLANEOUS.................................................61
20.01 No Guarantee of Employment.........................................61
20.02 Construction of Agreement..........................................61
20.03 Duration of Plan...................................................62
20.04 Illegality.........................................................62
20.05 Withdrawal by an Employer..........................................62
20.06 Gender and Number..................................................62
20.07 Successor Employer.................................................62
20.08 Indemnification....................................................62
20.09 Expenses of Administration.........................................62
<PAGE> 5
CORTLAND SAVINGS AND BANKING COMPANY
401(k) PLAN
WHEREAS, effective as of March 1, 1984, Cortland Savings and Banking
Company (the "Employer") established the Cortland Savings and Banking Company
401(k) Plan (the "Plan') to provide retirement and other related benefits for
the Employer's eligible employees; and
WHEREAS, the Employer has determined that the Plan shall be amended in
its entirety and restated to comply with the Tax Reform Act of 1986 and other
relevant legal and regulatory changes; and
WHEREAS, the Plan is intended to constitute an eligible individual
account plan, as that term is defined in Section 407(d)(3) of ERISA.
NOW THEREFORE, as of the Effective Date, the Employer hereby adopts
this amended and restated Plan, the provisions of which shall be as follows:
ARTICLE I - BASIC DEFINITIONS
When used in this Plan, the following words and phrases shall have the
following meanings, unless the context clearly indicates otherwise. Under no
circumstances shall any of the following definitions be interpreted or construed
in a manner which shall be inconsistent with ERISA or the Code or any valid
regulations issued pursuant thereto.
1.01 ACCOUNTS: The accounts maintained by the Plan Administrator on
behalf of each Participant, which shall reflect the value of the
Participant's interest in all Contributions and adjustments made to
such contributions.
1.02 ACCRUED Benefit: The balance in a Participant's Accounts.
1.03 ACTUAL DEFERRAL PERCENTAGE: For a specified group of Participants
for a Plan Year, the average of the ratios (calculated separately
for each Participant in the group) of (i) the amount of the ADP
contributions paid over to the Plan trust on behalf of such
Participant for the Plan Year, to (ii) the Participant's
Compensation for the Plan Year. For the purposes of this
subsection, the following rules shall apply:
(a) "ADP" contributions shall include:
(1) Employee Deferral Contributions for the Plan Year,
including any Excess Deferral Amounts of Highly
Compensated Employees, but excluding Employee
Deferral Contributions taken into account for the
purposes of determining the Participant's
Contribution Percentage (provided that the
requirements of this section are satisfied both with
and without regard to the exclusion of these Employee
Deferral Contributions); and
(2) Qualified Non-elective Contributions and Qualified
Matching Contributions.
page 1
<PAGE> 6
(b) For the purposes of this section, an Employee who would be a
Participant but for the failure to make Employee Deferral
Contributions shall be treated as a Participant on whose
behalf no Employee Deferral Contributions are made.
(c) "ADP" contributions shall not include Employee Deferral
Contributions distributed pursuant to Sections 5.06 or 5.07
of the Plan.
1.04 ADJUSTMENT FACTOR: The cost of living adjustment factor prescribed
by the Secretary of the Treasury under Section 415(d) of the Code
for years beginning after December 31, 1987, as applied to such
items and in such manner as the Secretary shall provide.
1.05 AFFILIATED BUSINESS: Each entity that, with the Employer,
constitutes a member of a controlled group of corporations (as
defined in Section 414(b) of the Code) a group of trades or
businesses under common control (as defined in Section 414(c) of
the Code) or an affiliated service group (as defined in Section
414(m) of the Code), or any other entity required to be aggregated
with the Employer pursuant to Section 414(o) of the Code. For
purposes of applying the limitations of Sections 5.01 and 5.02,
Sections 414(b) and 414(c) of the Code are modified by Section
415(h) of the Code.
1.06 AVERAGE ACTUAL DEFERRAL PERCENTAGE: The average (expressed as a
percentage) of the Actual Deferral Percentages of the Eligible
Participants in a group.
1.07 AVERAGE CONTRIBUTION PERCENTAGE: The average (expressed as
percentage) of the Contribution Percentages of the Eligible
Participants in a group.
1.08 Beneficiary: A person or entity designated to receive the benefits
of a deceased Participant. If the Participant is married as of the
date of death, the Beneficiary shall be the Participant's Spouse,
unless:
(a) the Spouse has consented in writing to the designation of
a different Beneficiary;
(b) the Beneficiary may not be changed without the consent of
the Spouse (unless the consent of the Spouse expressly
permits further designation by the Participant without any
requirement of further consent by the Spouse);
(c) the Spouse's consent is witnessed by a Plan Representative
or a Notary Public; and
(d) the consent of the Spouse is only valid with respect to
the Spouse who signs the consent.
1.09 BREAK IN SERVICE: A Computation Period in which a Participant does
not complete more than 500 Hours of Service.
1.10 CODE: The Internal Revenue Code of 1986, as amended from time to
time. For this purpose, a reference to the Code shall be deemed to
incorporate a reference to regulations and official interpretations
promulgated thereunder.
page 2
<PAGE> 7
1.11 COMPENSATION: The amount of W-2 earnings which is actually paid to
the Participant by the Employer during the Plan Year, plus any
amount which is contributed by the Employer on behalf of an
Employee pursuant to a salary reduction agreement and which is not
includible in the gross income of the Employee under Sections 125,
402(a)(8), 402(h) or 403(b) of the Code. For any Self-Employed
Individual, Compensation shall be Earned Income derived from the
trade or business carried on by such individual.
(a) The annual Compensation of each Participant taken into
account under the Plan for any Plan Year shall not exceed
$200,000, as adjusted by the Secretary of the Treasury at
the same time and in the same manner as under Section 415(d)
of the Code. In determining the Compensation of a
Participant for purposes of this limitation, the rules of
Section 414(q)(6) of the Code shall apply, except in
applying such rules, the term "family" shall include only
the spouse of the Participant and any lineal descendants of
the Participant who have not attained age 19 before the
close of the Plan Year. If, as a result of the application
of such rules, the adjusted $200,000 limitation is exceeded,
then (except for purposes of determining the portion of
Compensation up to the integration level if this Plan
provides for permitted disparity), the limitation shall be
prorated among the affected individuals in proportion to
each such individual's Compensation, as determined under
this section prior to the application of this limitation.
(b) Notwithstanding the above, for purposes of applying the
limitations of Sections 5.01, 5.02 and 5.03, and for
purposes of computing the top heavy minimum allocation under
Section 13.04, Compensation includes only a Participant's
Earned Income, wages, salaries, and fees for professional
services and other amounts received for personal services
actually rendered in the course of employment with the
Employer (including, but not limited to, commissions paid
salesmen, compensation for services on the basis of a
percentage of profits, commissions on insurance premiums,
tips and bonuses).
1.12 COMPUTATION PERIOD:
(a) YEAR OF ELIGIBILITY SERVICE: For purposes of determining a
Participant's Years of Eligibility Service, Computation
Period with respect to a participant shall mean a twelve
consecutive month period, beginning on the Participant
Employment Commencement Date, and on each anniversary of
that date.
(b) YEAR OF VESTING SERVICE: For purposes of determining a
Participant's Years of Vesting Service, Computation Period
shall mean the Plan Year.
1.13 CONTRIBUTION PERCENTAGE: The ratio (expressed as a percentage), of
the Contribution Percentage Amounts under the Plan on behalf of an
Eligible Participant for the Plan Year to the Eligible
Participant's Covered Compensation for the Plan Year.
For this purpose "Contribution Percentage Amount" shall mean the sum of the
Matching Contributions and (to the extent not taken into account for the
purposes of Section 5.04) Qualified Matching Contributions made under the Plan
on behalf of the
page 3
<PAGE> 8
Participant for the Plan Year. Such amounts shall include any
forfeitures, Excess Aggregate Contributions or Matching
Contributions allocated to the Participant's Accounts, which shall
be taken into account for the Plan Year in which the forfeiture is
allocated. Qualified Non-Elective Contributions (to the extent not
taken into account for the purposes of Section 5.04) may be
included in the Contribution Percentage Amount. To the extent that
the requirements of Section 5.04 are met both before and after the
application of this sentence, Employee Deferral Contributions may
be included in the Contribution Percentage Amount. "Contribution
Percentage Amount" shall not include Employee Deferral
Contributions distributed pursuant to Section 5.01(d) of the Plan.
1.14 CONTRIBUTIONS: for a Plan Year shall mean the Employee Deferral
Contributions, Employer Non-elective Contributions, Matching
Contributions, Qualified Non-elective Contributions and Qualified
Matching Contributions with respect to the Plan Year.
1.15 DEFINED CONTRIBUTION DOLLAR LIMITATION: $30,000 or, if greater,
one-fourth of the defined benefit dollar limitation set forth in
Section 415(b)(1) of the Code as in effect for the Limitation Year.
1.16 EARNED INCOME: Net earnings from self-employment in the trade or
business with respect to which the Employer has established the
Plan, for which personal services of the individual are a material
income-producing factor. The Plan Administrator will determine net
earnings without regard to items not included in gross income and
deductions allocable to those items. Net earnings are reduced by
contributions by the Employer to a qualified plan to the extent
deductible under Section 404 of the Code. In taxable years
beginning after 1989, net earnings shall be determined with regard
to the deduction for one-half of self-employment taxes allowed to
the Employer by Section 164(f) of the Code.
1.17 EFFECTIVE DATE: January 1, 1993, except where another effective
date is specified herein.
1.18 ELECTION PERIOD: The period to which a Participant's Salary
Reduction Agreement applies. Such period shall correspond to a
calendar quarter, or such other period as designated by the
Employer or the Plan Administrator from time to time.
1.19 ELIGIBLE PARTICIPANT: Shall be defined as follows:
(a) For purposes of the limitations on Employee Deferral
Contributions contained in Section 5.04, "Eligible
Participant" shall mean any Employee of the Employer who is
otherwise authorized under the terms of the Plan to have
Employee Deferral Contributions or Qualified Non-elective
Contributions allocated to his Account for the Plan Year.
(b) For purposes of the limitations on Matching Contributions
contained in Section 5.05, "Eligible Participant" shall mean
any Employee of the Employer who is otherwise authorized
under the terms of the Plan to have Matching Contributions
allocated to his Accounts for the Plan Year.
page 4
<PAGE> 9
1.20 EMPLOYEE. Any person (including Self-Employed Individuals) employed
by the Employer. Employment shall not be deemed to have been
terminated where
(a) an Employee is on leave of absence for a period not
exceeding two years, if such leave of absence is granted
pursuant to uniform rules established by the Employer and if
all Employees in similar circumstances are treated alike, or
(b) an employee is in the armed service of the United States
while any form of law requiring compulsory military service
shall be in effect, if the person shall have directly
entered such armed forces, shall not have re-enlisted after
the date first entering the same, and shall have made
application for restoration to active employment with the
Employer within ninety (90) days after discharge or release
from the armed services or from hospitalization continuing
for a period of not more than one (1) year after such
discharge or release from the armed services.
1.21 EMPLOYEE DEFERRAL CONTRIBUTIONS: Contributions made to the Plan by
Participants pursuant to Section 3.03.
1.22 EMPLOYER: Cortland Savings and Banking Company, any succeeding
entity and any other entity which, with the approval of the
Employer's Board of Directors, adopts and assumes the obligations
of this Plan with respect to its Employees. For purposes of
applying the limitations of Sections 5.01 and 5.03, Employer shall
mean the Employer and each Affiliated Business.
1.23 EMPLOYER NON-ELECTIVE CONTRIBUTIONS: Contributions made by the
Employer to the Plan pursuant to Section 3.02.
1.24 EMPLOYER STOCK: Any security which, with respect to the Plan, is a
qualifying employer security within the meaning of Section
407(d)(5) of ERISA.
1.25 EMPLOYER STOCK FUND: An Investment Fund which consists of cash and
the Cortland Savings and Banking Company Stock purchased by the
Trust or contributed to the Trust.
1.26 EMPLOYMENT COMMENCEMENT DATE: The date an Employee is first
credited with an Hour of Service by the Employer.
1.27 ENTRY DATE: The first day of the Plan Year or the first day of the
seventh month of the Plan Year.
1.28 ERISA: The Employee Retirement Income Security Act of 1974, as
amended from time to time.
1.29 EXCESS AGGREGATE CONTRIBUTIONS:
(a) GENERAL RULE. "Excess Aggregate Contributions" shall mean,
with respect to the entire Plan Year, the excess of the
aggregate amount of Matching Contributions actually paid
over to the trust on behalf of Highly Compensated Employees
for such Plan Year, over the limitations set forth in
Sections 5.05 and 5.06.
page 5
<PAGE> 10
(b) DETERMINATION OF EXCESS AGGREGATE CONTRIBUTIONS. Excess
Aggregate Contributions for a Plan Year shall be determined
in the following manner. First, reduce the Average
Contribution Percentage of the Highly Compensated Employee
with the highest Average Contribution Percentage to the
extent required to (i) enable the Plan to satisfy Sections
5.05 and 5.06, or (ii) cause the Highly Compensated
Employee's Average Contribution Percentage to equal that of
the Highly Compensated Employee with the next highest Average
Contribution Percentage. Second, repeat this process until
the Plan satisfies Sections 5.05 and 5.06. For each Highly
Compensated Employee, the amount of Excess Aggregate
Contributions is equal to his total Matching Contributions
for the Plan Year, reduced by the product obtained by
multiplying the Highly Compensated Employee's Average
Contribution Percentage (after application of this
subsection) for the Plan Year by his Covered Compensation
used in determining that Average Contribution Percentage.
(c) If the Average Contribution Percentage of a Highly Compensated
Employee is determined by aggregating the Matching
Contributions and Covered Compensation of Family Members, then
the Excess Aggregate Contributions for the Highly Compensated
Employee produced by the application of subsection (b) shall
be allocated among the Highly Compensated Employee and Family
Members in proportion to the Matching Contributions of the
Highly Compensated Employee and each such Family Member.
(d) If the Average Contribution Percentage of a Highly Compensated
Employee was determined by combining the Covered Compensation
and Matching Contributions of only those Family Members who
are Highly Compensated Employees without regard to the
application of the family aggregation rules, then the
application of subsection (c) shall require the following
steps: First, the Average Contribution Percentage of the
Highly Compensated Employee shall be reduced in accordance
with subsection (b) but not below the Average Contribution
Percentage of those Family Members who are not Highly
Compensated Employees (without regard to the family
aggregation rules). The resulting Excess Aggregate
Contributions are allocated among the Highly Compensated
Employee and such Family Members in proportion to their
Matching Contributions. Second, if a further reduction in the
Average Contribution Percentage of the Highly Compensated
Employee is required, the Excess Aggregate Contributions shall
be determined by taking into account the Matching
Contributions of all eligible Family Members, and shall be
allocated among such Family Members in proportion to their
Matching Contributions.
1.30 EXCESS CONTRIBUTIONS:
(a) GENERAL RULE. "Excess Contributions" shall mean, with respect
to the entire Plan Year, the excess of the aggregate amount of
Employee Deferral Contributions actually paid over to the
trust on behalf of Highly Compensated Employees for such Plan
Year, over the limitations set forth in Section 5.04.
page 6
<PAGE> 11
(b) DETERMINATION OF EXCESS CONTRIBUTIONS: Excess
Contributions for a Plan Year shall be determined in the
following manner. First, reduce the Actual Deferral
Percentage of the Highly Compensated Employee with the
highest Actual Deferral Percentage to the extent required
to (i) enable the Plan to satisfy Section 5.04, or
(ii) cause the Highly Compensated Employee's Actual
Deferral Percentage to equal that of the Highly
Compensated Employee with the next highest Actual
Deferral Percentage. Second, repeat this process until the
Plan satisfies Section 5.04. For each Highly Compensated
Employee, the amount of Excess Contributions is equal to his
total Employee Deferral Contributions and Qualified
Non-elective Contributions for the Plan Year, reduced by the
product obtained by multiplying the Highly Compensated
Employee's Actual Deferral Percentage (after application of
this subsection) for the Plan Year by his Covered Compensation
used in determining that Actual Deferral Percentage.
(c) If the Actual Deferral Percentage of a Highly Compensated
Employee is determined by aggregating the Employee Deferral
Contributions and Covered Compensation of Family Members, then
the Excess Contributions for the Highly Compensated Employee
produced by the application of subsection (b) shall be
allocated among the Highly Compensated Employee and Family
Members in proportion to the Employee Deferral Contributions
of the Highly Compensated Employee and each such Family
Member.
(d) If the Actual Deferral Percentage of a Highly Compensated
Employee was determined by combining the Covered Compensation
and Employee Deferral Contributions of only those Family
Members who are Highly Compensated Employees without regard to
the application of the family aggregation rules, then the
application of subsection (c) shall require the following
steps: First, the Actual Deferral Percentage of the Highly
Compensated Employee shall be reduced in accordance with
subsection (b), but not below the Actual Deferral Percentage
of those Family Members who are not Highly Compensated
Employees (without regard to the family aggregation rules).
The resulting Excess Contributions are allocated among the
Highly Compensated Employee and such Family Members in
proportion to their Employee Deferral Contributions. Second,
if a further reduction in the Actual Deferral Percentage of
the Highly Compensated Employee is required, the Excess
Contributions shall be determined by taking into account the
Employee Deferral Contributions of all eligible Family
Members, and shall be allocated among such Family Members in
proportion to their Employee Deferral Contributions.
1.31 EXCESS DEFERRAL AMOUNT: The amount of Employee Deferral
Contributions for a calendar year that the Participant allocates to
this Plan pursuant to the claim procedure set forth in the
following paragraph.
A Participant's claim of an Excess Deferral Amount (i) shall be in writing, (ii)
shall be submitted to the Plan Administrator no later than March 1 of the
calendar year following the year of the Excess Deferral Amount, (iii) shall
specify the Participant's Excess Deferral Amount for the preceding calendar
year, and (iv) shall be accompanied by the Participant's written statement that
if such amounts are not distributed, such Excess Deferral Amount, when added to
amounts deferred under other plans or
page 7
<PAGE> 12
arrangements described in Sections 401(k), 408(k) or 403(b)
of the Code, exceeds the limit imposed on the Participant by
Section 402(g) of the Code for the year in which the deferral
occurred.
132 FAMILY MEMBER: With respect to any Participant, the Participant's
Spouse and lineal ascendants or descendants and the spouses of such
ascendants or descendants.
1.33 FIDUCIARIES: The Trustee and the Plan Administrator, but only to
the extent of the specific responsibilities as provided under the
Plan. Any person or entity may serve in more than one fiduciary
capacity.
1.34 HIGHLY COMPENSATED EMPLOYEE:
(a) GENERAL RULE: "Highly Compensated Employee" means an
Employee who is, with respect to the Employer, an individual
described in Section 414(q) of the Code; which generally
shall include highly compensated active Employees and highly
compensated former Employees.
(b) A highly compensated active employee generally includes any
Employee who performs service for the Employer during the
determination year and who, during the determination year or
the look-back year:
(1) received Compensation from the Employer in excess of
$75,000 (multiplied by the Adjustment Factor);
(2) received Compensation from the Employer in excess of
$50,000 (multiplied by the Adjustment Factor);
(3) was an officer of the Employer and received
Compensation during such year that is greater than 50
percent of the dollar limitation in effect under
Section 415(b)(1)(A) of the Code; or
(4) was a 5-percent (5%) owner.
(c) An Employee not described in paragraphs (1), (2) or (3) of
subsection (b) for the look-back year shall not be treated
as such for the determination year unless the Employee is
one of the 100 Employees who received the most Compensation
from the Employer during the determination year.
(d) The determination year shall be the Plan Year. The look-back
year shall be the twelve month period immediately preceding
the determination year.
(e) Former Employees: A former Employee generally shall be
treated as a Highly Compensated Employee if -
(1) the Employee was a Highly Compensated Employee
when the Employee separated from service, or
page 8
<PAGE> 13
(2) the Employee was a Highly Compensated Employee at any time
after attaining age 55.
(f) Family Members: If any individual is a Family Member of a
5-percent owner of the Employer (as defined in Section
416(i)(1) of the Code) or the group consisting of the 10
Highly Compensated Employees paid the greatest Compensation
during the year, then, for the purposes of this section,
(1) the individual shall not be considered a separate
Employee, and
(2) any Compensation paid to the individual (and any
applicable contribution or benefit on behalf of the
individual) shall be treated as if it were paid to
(or on behalf of) the 5-percent owner or Highly
Compensated Employee.
1.35 HOUR OF SERVICE: An "Hour of Service" shall include:
(a) Each hour for which an Employee is paid or entitled to
payment by the Employer for the performance of duties for
the Employer. These hours shall be credited to the Employee
for the computation period in which the duties were
performed.
(b) Each hour for which an Employee is paid, or entitled to
payment by the Employer, either directly or indirectly, on
account of a period of time during which no duties are
performed (irrespective of whether the employment
relationship has terminated) due to vacation, holiday,
illness, incapacity (including disability), layoff, jury
duty, maternity or paternity leave pursuant to subsection
(c), military duty or leave of absence, but excluding
payments under a plan maintained solely for the purpose of
complying with workmen's compensation, unemployment
compensation, or disability insurance laws and also
excluding payments for medical or medically related
expenses. No more than 501 Hours of Service shall be
credited under this subsection (b) for any single continuous
period (whether or not such period occurs in a single
computation period).
(c) Solely for purposes of determining whether a Break in
Service has occurred in a Computation Period, an Employee
who is absent from work for maternity or paternity reasons
shall receive credit for the Hours of Service which would
otherwise have been credited to such Employee but for such
absence. In any case in which such hours cannot be
determined, ten (10) Hours of Service shall be credited per
day of such absence. For purposes of this paragraph, an
absence from work for maternity or paternity reasons means
an absence by reason of:
(1) the pregnancy of the Employee;
(2) a birth of a child of the Employee;
(3) the placement of a child with the Employee in
connection with the adoption of such child by the
Employee; or,
page 9
<PAGE> 14
(4) caring for the child for a period beginning immediately
following the child's birth or placement.
The Hours of Service credited under this subsection (c)
shall be credited in the Computation Period in which the
absence begins if the crediting is necessary to prevent a
Break in Service for that computation period, or in all
other cases, in the following computation period. The Hours
of Service credited under this subsection (c) shall be
credited only for purposes of determining whether a Break in
Service has occurred, and not for purposes of determining
whether the Participant is entitled to share in the
allocation of Employer Non-elective Contributions for a
given Plan Year.
(d) Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer. The
same Hours of Service shall not be credited both under
either subsection (a), (b) or (c), as the case may be, and
this subsection (d). Further, no more than 501 Hours of
Service shall be credited for payment of back pay to the
extent it is agreed to or awarded for a period of time
during which an Employee did not or would not have performed
duties. These Hours shall be credited to the Employee for
the Computation Period or periods to which the award or
agreement pertains rather than the Computation Period in
which the award, agreement or payment is made.
(e) Hours of Service under subsections (a), (b), (c) and (d)
shall be calculated and credited pursuant to Section
2530.200b-2 of the Department of Labor Regulations, which is
incorporated herein by this reference. For the purposes of
determining an Employee's eligibility to become a
Participant in the Plan, Hours of Service will be credited
for employment as an Employee, or as a Leased Employee, of
the Employer or an Affiliated Business.
(f) If the Employer maintains the plan of a predecessor
employer, service with such employer will be treated as
service for the Employer.
(g) In the case of any Employee for whom the Employer does not
maintain adequate records of actual Hours of Service, such
Employee shall be credited with 10 Hours of Service for each
day for which the Employer would be required to be credited
with an Hour of Service under this section.
1.36 INVESTMENT FUND: Each portion of the Trust Fund designated from
time to time by the Plan Administrator, with the consent of the
Trustee, that is invested in such assets of the Trust Fund as (i)
the Plan Administrator, with the consent of the Trustee, selects
from time to time, or (ii) if permitted by the Plan Administrator
with the consent of the Trustee, as a Participant or Beneficiary,
with the consent of the Trustee, selects from time to time, for the
investment of the Accounts of the Participant or Beneficiary.
Assets which constitute an Investment Fund may include, but shall
not be limited to, interests in funds consisting of common trust
funds, qualified pooled trusts or mutual funds, or any other funds
selected by the Plan Administrator consisting of common stock,
corporate debt, U.S. government debt, or other appropriate
investments.
page 10
<PAGE> 15
1.37 LEASED EMPLOYEE: "Leased Employee" shall mean, with respect to the
Employer, a person who is not employed by the Employer, but who,
under an agreement between the Employer and any other person (a
"leasing organization") has performed services for the Employer (or
for the Employer and related persons determined in accordance with
Section 414(n)(6) of the Code) on a substantially full time basis
for a period of at least one year, if the services are of a type
historically performed by employees in the business field of the
Employer. However, for the purposes of this section, the following
rules will apply.
(a) If a person is a Leased Employee, then contributions or
benefits provided by the leasing organization which are
attributable to services performed for the Employer shall be
treated as provided by the Employer.
(b) A person will not be treated as a Leased Employee if -
(1) the person is covered by a money purchase pension
plan maintained by the leasing organization that
provides
(A) a non-integrated employer contribution rate of
at least 10% of compensation (as defined in
Section 415(c)(3) of the Code, but including
amounts contributed to a salary reduction
agreement which are excludable from the
person's gross income under Section
125,402(a)(8),402(h) or 403(b) of the Code),
(B) immediate participation, and
(C) full and immediate vesting; and
(2) Leased Employees, determined without regard to this
subsection, do not constitute more than 20% of the
Employer's Non-Highly Compensated Workforce.
(c) For the purposes of this section, the term "Non-Highly
Compensated Workforce" shall mean the aggregate number of
individuals (other than Highly Compensated Employees) who -
(1) are employed by Employer (without regard to this
section) and have performed services for the
Employer, or for the Employer and related persons (as
that term is defined in Section 144(a)(3) of the
Internal Revenue Code) on a substantially full-time
basis for at least one year; or
(2) are Leased Employees with respect to the Employer
(determined without regard to subsection (b)).
1.38 LIMITATION YEAR: The twelve (12) month period used for computing
the limitations imposed by Code Section 415. The Employer hereby
elects to use the Plan Year as the Limitation Year.
page 11
<PAGE> 16
1.39 MATCHING CONTRIBUTIONS: Contributions made by the Employer to the
Plan pursuant to Section 3.04.
1.40 NET GAIN OR NET LOSS: The increases and decreases, respectively, in
the value of the Trust Fund and each Investment Fund between
Valuation Dates.
1.41 NON-HIGHLY COMPENSATED EMPLOYEE: An Employee of the Employer who is
not a Highly Compensated Employee.
1.42 NORMAL RETIREMENT AGE: The date on which a Participant attains age
65.
1.43 NORMAL RETIREMENT DATE: The last day of the Plan Year which
coincides with or immediately follows the date on which the
Participant reached the Normal Retirement Age.
1.44 OWNER-EMPLOYEE: An individual who is a sole proprietor of the
Employer, or who is a partner of the Employer owning more than 10%
of either the capital or profits interest of the partnership.
1.45 PARTICIPANT: An Employee who satisfies the eligibility requirements
set forth herein and who participates in the Plan.
1.46 PLAN: The Plan and Trust evidenced by this agreement, as amended
from time to time.
1.47 PLAN ADMINISTRATOR: The Employer, or any person, committee or other
entity appointed by the Employer to act in that capacity.
1.48 PLAN YEAR: The fiscal year of the Employer.
1.49 QUALIFIED NON-ELECTIVE CONTRIBUTIONS: Contributions made by the
Employer to the Plan and allocated to Participants' Accounts that
the Participants may not elect to receive in cash until distributed
from the Plan, that are nonforfeitable when made, and that are
distributable only in accordance with the distribution provisions
that are applicable to Employee Deferral Contributions.
1.50 QUALIFIED MATCHING CONTRIBUTIONS: Matching Contributions which are
subject to the distribution and nonforfeitability requirements
applicable to Employee Deferral Contributions.
1.51 SALARY REDUCTION AGREEMENT: A Participant's election to make
Employee Deferral Contributions to the Plan, pursuant to the
requirements of Section 3.03.
1.52 SELF-EMPLOYED INDIVIDUAL: An individual who has Earned Income (or
who would have had Earned Income but for the fact that the trade or
business did not have net profits) for the taxable year from the
trade or business for which the Plan is established.
1.53 SPOUSE (SURVIVING SPOUSE): The spouse or surviving spouse of a
Participant or a deceased Participant, respectively. A former
spouse will be treated as a Spouse or
page 12
<PAGE> 17
Surviving Spouse to the extent provided under an order which
constitutes a qualified domestic relations order as described in
Section 414(p) of the Code.
1.54 TRUSTEE: The person or entity named as Trustee on the signature
page of the Plan, and any successors to such person or entity.
1.55 TRUST FUND: The property held by the Trustee pursuant to this Plan,
together with any income therefrom.
1.56 VALUE: The Value as of any date of any securities which constitute
Employer Stock shall mean:
(a) in the case of securities listed on a national exchange, the
closing price of securities for the trading day immediately
preceding the date; and
(b) in the case of any other securities, the fair market value
of the securities, determined by the Trustee in good faith
and in accordance with the requirements of the Code and with
other applicable laws and regulations.
1.57 VALUATION DATE(S): The last day of each calendar quarter, and any
other date that the Plan Administrator elects on a
non-discriminatory basis.
1.58 YEAR OF ELIGIBILITY SERVICE:
(a) GENERAL RULE: Subject to the requirements of subsection (b),
an Employee shall earn a "Year of Eligibility Service" with
respect to each Computation Period, provided that the
Employee has earned not less than 1,000 Hours of Service
with the Employer during the Computation Period.
(b) SERVICE THAT MAY BE DISREGARDED: Years of Eligibility
Service before a Break in Service are not counted until the
completion of a Year of Eligibility Service after returning
to the service of the Employer. To determine when that Year
of Eligibility Service is completed, the first Computation
Period after the Break in Service begins on the first date
after the Break in Service on which the Employee performs an
Hour of Service for the Employer.
1.59 YEAR OF VESTING SERVICE:
(a) GENERAL RULE: Subject to the requirements of subsection (b),
an Employee shall earn a "Year of Vesting Service" with
respect to each Computation Period, provided that the
Employee has earned not less than 1,000 Hours of Service
with the Employer during the Computation Period.
(b) SERVICE THAT MAY BE DISREGARDED:
(1) BREAK IN SERVICE: Years of Vesting Service before a
Break in Service are not counted until the completion
of a Year of Vesting Service after returning to the
service of the Employer.
page 13
<PAGE> 18
(2) AGE 18: For the purposes of this section, all Hours
of Service completed prior to age 18 are disregarded.
(3) NONVESTED PARTICIPANTS: If an Employee who is not
entitled to any vested interest in his Employer
Non-elective Contributions or Matching Contributions
incurs a Break in Service and again becomes an
Employee, his aggregate one year Breaks in Service
before he again performs an Hour of Service shall be
compared to his Years of Vesting Service before the
Break in Service that are not otherwise disregarded.
If the Employee's aggregate one year Breaks in
Service equal or exceed the greater of
(A) five, or
(B) the Employee's Years of Vesting Service before
the Break in Service,
then his Years of Vesting Service before the Break in
Service will not be counted. If any Years of Vesting
Service are not counted because of the application of
this paragraph, such Years of Vesting Service shall
not be counted in any subsequent application of this
paragraph.
ARTICLE II - ELIGIBILITY REQUIREMENTS
2.01 PARTICIPATION: An Employee not excluded under Section 2.02 shall
become a Participant as of the first Entry Date which coincides or
immediately follows the date on which he
(a) reaches age 18, and
(b) completes a Year of Eligibility Service.
2.02 EXCLUDED EMPLOYEES: The following Employees shall be excluded from
participation in the Plan:
(a) Any employee who is included in a unit of employees covered
by a collective bargaining agreement between employee
representatives and the Employer, if retirement benefits
were the subject of good faith bargaining;
(b) Any employee who is a non-resident alien and who receives no
earned income from the Employer which constitutes income
from sources within the United States; and
(c) Any Leased Employee.
2.03 PLAN INFORMATION: To the extent required by ERISA, the Plan
Administrator shall make available to Participants information
concerning their rights under this Plan.
2.04 CONDITIONS OF CONTINUED PARTICIPATION: Each Participant agrees to
look solely to the assets of the Plan for the payment of any
benefits to which the Participant is entitled, unless otherwise
provided by law.
page 14
<PAGE> 19
2.05 REHIRED PARTICIPANT: A former Participant whose employment with the
Employer was terminated for any reason and who is rehired by the
Employer shall become a Participant on the date on which he first
satisfies the eligibility requirements of Section 2.01. An Employee
who terminates service with the Employer prior to satisfying the
eligibility requirements of Section 2.01 and who later resumes
service with the Employer before incurring a Break in Service shall
become a Participant on the latest of (i) the date he returns to
the status of an Employee, (ii) the date he fulfills the
requirements of Section 2.01, taking into account his period of
service prior to the date he terminated his service, or (iii) the
date he would have become a Participant, taking into account his
period of service prior to the date he terminated his service and
after the date he returned to the status of an Employee.
ARTICLE III - CONTRIBUTIONS
3.01 ACCOUNTS: The Plan Administrator shall establish Accounts for each
Participant. Each Participant's Accounts shall reflect and account
for the Participant's interest in any Contributions made under the
Plan. The maintenance of Accounts is only for accounting purposes,
and segregation of the assets of the Plan to Accounts shall not be
required.
3.02 EMPLOYER NON-ELECTIVE CONTRIBUTIONS:
(a) For each Plan Year, Employer Non-elective Contributions
under the Plan shall be paid to the Trust in an amount equal
to the discretionary contribution, if any, as determined by
the Employer's Board of Directors. Employer Non-elective
Contributions under the Plan for a Plan Year shall be paid
no later than the due date for filing the Employer's Federal
income tax return for that year, including any extensions of
such due date. However, Employer Non-elective Contributions
under the Plan for any Plan Year shall not be paid to the
Trust in amounts which would exceed the limitations of
Article V.
(b) Employer Non-elective Contributions may be paid to the Trust
in cash or in shares of Employer Stock, as determined by the
Employer's Board of Directors.
(c) All Employer Non-elective Contributions for a Plan Year
shall be allocated to Participants' Accounts as provided in
Article IV.
3.03 EMPLOYEE DEFERRAL CONTRIBUTIONS:
(a) For each Election Period, a Participant may choose to enter
into a written Salary Reduction Agreement with the Employer,
which will apply to all payroll periods within an Election
Period and to each subsequent Election Period, unless
revoked. The terms of the Salary Reduction Agreement shall
provide that the Participant agrees to accept a reduction in
Covered Compensation. The amount of this reduction shall be
designated as the Employee Deferral Contribution, which
shall be contributed by the Employer to the Plan on behalf
of the Participant for such Election Period. A Participant
shall at all times have a 100%
page 15
<PAGE> 20
Vested Interest in his Employee Deferral Contributions and
any earnings thereon. The Salary Reduction Agreement may not
provide that the total amount of a Participant's Employee
Deferral for a Plan Year shall exceed the lesser of (i) 10%
of the Participant's Compensation (or such lower amount
uniformly applicable to all Participants as determined by
the Company and communicated to Participants), or (ii) the
maximum amount of Employee Deferral Contributions which may
be contributed without violation of the limitations set
forth in Section 5.04.
(b) A Participant's initial Salary Reduction Agreement, and any
subsequent Salary Reduction Agreement, must be filed with
the Plan Administrator on or before the fifteenth day of the
month (or such later date as permitted by the Plan
Administrator) immediately preceding the Election Period for
which it is to become effective. Except as provided in
subsections (c), (d) or (e), the Salary Reduction Agreement
may not be changed for the Election Period in which it
becomes effective.
(c) A Participant may elect at any time to amend or discontinue
his Salary Reduction Agreement for any Election Period by
filing a written notice of amendment or discontinuance with
the Plan Administrator on forms provided by the Plan
Administrator. The amendment or discontinuance shall be
effective for the first payroll period occurring on or after
the date that the election is received by the Plan
Administrator.
(d) The Plan Administrator or the Employer may amend or revoke a
Salary Reduction Agreement with any Participant at any time
if either the Plan Administrator or the Employer determines
that such revocation or amendment is necessary to satisfy
the requirements of Section 5.04.
(e) An Eligible Employee will be entitled to make an election as
to the amount of his or her contribution prior to entering
the plan, and for each Election Period thereafter. An
employee will not be entitled to change an election during
an Election Period, except at the designated times.
A Participant's Employee Deferral Contributions, and any income
attributable thereto, may not be distributed before the occurrence
of the earliest of the following events;
(1) the Participant's separation from service or death;
(2) the termination of the Plan without the establishment
of another defined contribution plan;
(3) the disposition by the Employer to an unrelated
corporation of substantially all the assets (within
the meaning of Section 409(d)(2) of the Code) used in
a trade or business of the Employer, if the Employer
continues to maintain this Plan after the
disposition, but only with respect to Employees who
become employed by the corporation acquiring the
assets;
page 16
<PAGE> 21
(4) the disposition by the Employer to an unrelated
entity of its interest in a subsidiary (within the
meaning of Section 409(d)(3) of the Code) if the
Employer continues to maintain this Plan, but only
with respect to the Employees who continue employment
with the subsidiary;
(5) the Participant's attainment of age 59 1/2; or
(6) the Participant's hardship, as defined in subsection
(g).
(g) For purposes of this section, a distribution is on account
of hardship only if the distribution both is (i) made on
account of any immediate and heavy financial need of the
Participant and (ii) does not exceed the amount necessary to
satisfy such financial need.
(1) IMMEDIATE AND HEAVY NEED. The determination of
whether a Participant has an immediate and heavy
financial need is to be made by the Plan
Administrator on the basis of all relevant facts and
circumstances. A financial need shall not fail to
qualify as immediate and heavy merely because such
need was reasonably foreseeable or voluntarily
incurred by the Participant.
(A) SAFE HARBOR RULE. A distribution will be
made on account of an immediate and heavy
financial need of a Participant only if the
distribution is on account of:
(i) expenses for medical care described
in Code Section 213(d) previously
incurred by the Participant, the
Participant's spouse, or any
dependents of the Participant (as
defined in Code Section 152), or
necessary for those persons to
obtain such medical care; or
(ii) costs directly related to the
purchase (excluding mortgage
payments) of a principal residence
for the Participant; or
(iii) payment of tuition and related
educational fees for the next 12
months post-secondary education for
the Participant, his or her spouse,
children, or dependents; or
(iv) the need to prevent the eviction of
the Participant from his principal
residence or foreclosure on the
mortgage of the Participant's
principal residence.
(2) DISTRIBUTION NECESSARY. A distribution will not be
treated as necessary to satisfy an immediate and
heavy financial need of a Participant unless all of
the following requirements are satisfied:
(A) the distribution is not in excess of the
amount of the immediate and heavy financial
need of the Participant (including federal,
state and
page 17
<PAGE> 22
local income taxes and penalties reasonably
anticipated to result from the distribution);
(B) the Participant has obtained all
distributions, other than hardship
distributions, and all nontaxable loans
currently available under all plans maintained
by the Employer;
(C) the Plan, and all other plans maintained by
the Employer, suspend the Participant's
elective contributions (such as Employee
Deferral Contributions) and employee
contributions for at least 12 months after
receipt of the hardship distribution; and
(D) the Plan, and all other plans maintained by
the Employer, prohibit the Participant from
making contributions for the Participant's
taxable year immediately following the taxable
year of the hardship distribution in excess of
the applicable limit under Section 402(g) for
such next taxable year, less the amount of
such Participant's elective contributions for
the taxable year of the hardship
distributions.
A Participant shall not fail to be treated as an
Eligible Participant merely because his Elective
Deferral Contributions are suspended in accordance
with clause (iii) above.
(3) Amounts attributable to Employee Deferral
Contributions may not be distributed on account of
any event not described in this section, such as
completion of a stated period of Plan participation
or the lapse of a fixed number of years.
(4) A distribution based upon hardship may not be made
to a Participant more than once per Plan Year.
(5) Income attributable to Employee Deferral
Contributions, Qualified Non-Elective Contributions
and Qualified Matching Contributions shall not be
included as Employee Deferral Contributions
eligible for distribution pursuant to this section.
3.04 MATCHING CONTRIBUTIONS.
(a) GENERAL RULE. For each Plan Year, the Employer shall make a
Matching Contribution equal to the sum of the Employee
Deferral Contributions made by Participants for the Plan
Year. Provided, however, that for this purpose, any Employee
Deferral Contributions which exceed 2% of the contributing
Participant's Compensation for the Plan Year shall be
ignored. The Matching Contribution shall be allocated in
accordance with Section 4.01, but subject to the Limitations
contained in Sections 5.05 and 5.06, among the Accounts of
eligible Participants described in Section 4.02.
(b) SUPPLEMENTAL MATCHING CONTRIBUTIONS. To satisfy the
requirements of Sections 5.05 and 5.06, the Employer may, in
its discretion, make a Supplemental
page 18
<PAGE> 23
Matching Contribution to the Plan in an amount determined
by the Employer. The Supplemental Matching Contribution
will be allocated in the manner described in Section
4.01(d) among the Accounts of Participants who are
eligible to receive an allocation of Matching
Contributions, but who are not Highly Compensated
Employees.
3.05 QUALIFIED NON-ELECTIVE AND QUALIFIED MATCHING CONTRIBUTIONS: For
each Plan Year, the Employer shall make a Qualified Non-Elective
Contribution equal to 2% of the Compensation of Participants who
(i) are eligible to make an Employee Deferral Contribution for
the Plan Year, and (ii) who meet the requirements of Section
4.02. In addition, the Employer may elect to make Qualified
Non-elective Contributions or Qualified Matching Contributions,
or both, to Participants who are not Highly Compensated
Employees, to the extent necessary to satisfy the requirements of
Sections 5.04, 5.05 or 5.06, and to the extent authorized by
Treasury Regulations. Subject to such other requirements as may
be prescribed by the Secretary of the Treasury, the amount of
such contributions taken into account as Employee Deferral
Contributions shall be only those amounts necessary to meet the
requirements of Article V.
3.06 TRANSFERS FROM QUALIFIED PLANS: Subject to the requirements set
forth below, a Participant may direct that the Plan accept the
transfer of amounts attributable to the Participant's accrued
benefit in another plan which is qualified under Section 401 (a)
of the Code. Such amounts, referred to as "Transferred Assets,"
shall be subject to the following requirements.
(a) The Plan need not accept any Transferred Assets if the
Plan Administrator, in the exercise of its discretion,
determines that the acceptance of such Transferred Assets
would jeopardize the status of the Plan as a qualified
plan under Section 401 (a) of the Code.
(b) Any Transferred Assets with respect to a Participant shall
be maintained in a separate Transferred Assets Account for
the Participant. Such Account may, at the discretion of
the Plan Administrator, but need not be, segregated from
other Plan assets. The Participant shall at all times have
a fully vested non-forfeitable interest in such
Transferred Assets Account.
(c) The balance of a Participant's Transferred Assets Account
shall be distributed to the Participant along with the
remainder of the Participant's Accrued Benefit in
accordance with the terms of the Plan.
(d) A Participant's Transferred Assets Account (except to the
extent that it is segregated pursuant to subsection (b)
shall share in the Net Gain or Net Loss of the Trust Fund
in accordance with a uniform and nondiscriminatory policy
determined by the Plan Administrator.
(e) For the purposes of this section, Transferred Assets may
include any amounts which, with respect to the
contributing Participant, are eligible for exclusion from
taxable income under Section 401(c) of the Code. Provided,
however, that Transferred Assets may not include any
amounts attributable to a distribution
page 19
<PAGE> 24
from a qualified retirement plan which is subject to the
qualified annuity requirements of Section 401(a)(11) of
the Code.
ARTICLE IV - ALLOCATIONS TO PARTICIPANTS' ACCOUNTS
4.01 AMOUNTS ALLOCATED:
(a) NET GAIN: As of the last day of each Valuation Period, the
Account of each Participant shall be credited with any Net
Gain or Net Loss allocated to the Account for the Valuation
Period under Section 4.03.
(b) EMPLOYER NON-ELECTIVE CONTRIBUTIONS: As of the last day of
each Plan Year the Account of each Eligible Participant
described in Section 4.02 shall be credited with a fraction
of the Employer Non-elective Contribution and forfeitures
for the Plan Year. The numerator of the fraction shall equal
the Compensation of the Eligible Participant for the Plan
Year, and the denominator shall equal the sum of the
Compensation of all such eligible Participants for the Plan
Year.
(c) EMPLOYEE DEFERRAL CONTRIBUTIONS: As of the last day of each
Valuation Period, each Participant's Employee Deferral
Contributions for the Valuation Period shall be allocated to
the Participant's Account.
(d) MATCHING CONTRIBUTIONS: As of the last day of each Plan
Year, the Matching Contribution for the Plan Year shall be
allocated among the Accounts of Participants. The Matching
Contribution shall be allocated to each Participant
according to the ratio that the Participant's Employee
Deferral Contributions for the Plan Year bears to the sum of
the Employee Deferral Contributions for all Participants for
the Plan Year. Provided, however, that the ratio described
in the preceding sentence shall be determined without regard
to any Employee Deferral Contributions which exceed (i) two
percent of each contributing Participant's Compensation for
the Plan Year, or (ii) with respect to Participants who are
not Highly Compensated Employees and who are to receive an
allocation of Supplemental Matching Contributions pursuant
to Section 3.04(b), a percentage as specified from time to
time by the Employer in its sole and absolute discretion.
(e) QUALIFIED NON-ELECTIVE AND QUALIFIED MATCHING CONTRIBUTIONS:
As of the last day of each Plan Year, Qualified Non-elective
and Qualified Matching Contributions shall be allocated to
the Accounts of Participants who are not Highly Compensated
Employees in the amounts and in a manner consistent with
Section 3.05, as directed by the Employer.
4.02 ELIGIBLE PARTICIPANTS: Subject to the limitations of this Article,
the Plan Administrator shall make allocations under Section 4.01 of
amounts attributable to Employer Non-elective Contributions,
Qualified Non-elective Contributions, and Matching Contributions to
each Participant
page 20
<PAGE> 25
(1) who terminated employment with the Employer during
the Plan Year after reaching the Normal Retirement
Date or becoming totally and permanently disabled
during the Plan Year, or
(2) who earned 500 or more Hours of Service during the
Plan Year, or
(3) who is an Employee of the Employer as of the last day
of the Plan Year, or
(4) who died during the Plan Year.
4.03 ALLOCATION OF NET GAIN AND NET LOSS OF TRUST FUND TO ACCOUNTS:
(a) DATE OF VALUATION - As of the close of business on the last
day of the Plan Year and, if the Employer or the Plan
Administrator has designated a Valuation Date or Valuation
Dates in addition to the last day of the Plan Year, as of
the close of business on each such Valuation Date, the
Trustee shall value the assets in the Trust Fund at their
then market value.
(b) ADJUSTMENT OF ACCOUNTS AS OF VALUATION DATES - The value of
each Account as of a Valuation Date shall be equal to the
value of the Account as of the preceding Valuation Date, and
adjusted in the following order and manner:
(1) Each Account shall be reduced by the amount of any
distributions and withdrawals from the Account since
the preceding Valuation Date.
(2) Each Account shall be increased or decreased by the
Net Gain or Net Loss of the Trust Fund allocated
under subsection (c).
(3) Each Account shall be increased by the amount of
Employer Contributions allocated to the Account under
Article IV.
(c) ALLOCATION OF NET GAIN AND NET LOSS - As of each Valuation
Date, there shall be allocated to each Account its
proportionate share of the Net Gain or Net Loss incurred
by the Trust Fund since the last Valuation Date.
(1) For the purpose of determining the Net Gain or Net
Loss as of any current Valuation Date for the period
since the preceding Valuation Date, the assets of the
Trust Fund attributable to the affected Accounts
shall be valued as of the current Valuation Date
based on the then fair market values, which shall
give effect to gains, earnings, losses and other
items of income and expense as of the current
Valuation Date. The Net Gain or Net Loss for the
period shall be the amount by which the total net
value of all such assets determined as of the current
Valuation Date exceed the total net value of all such
assets determined as of the preceding Valuation Date,
reduced by the total of any Contributions made with
respect to the Accounts since the next preceding
Valuation Date, and increased by the total of any
withdrawals and distributions paid since the
preceding Valuation Date.
page 21
<PAGE> 26
(2) A fraction of the Net Gain or Net Loss shall be
allocated to the Account of each Participant in a
uniform and nondiscriminatory manner, as determined
by the Plan Administrator.
(d) USE OF INVESTMENT FUNDS:
(1) The portion of a Participant's Account attributable
to Matching Contributions or Qualified Matching
Contributions shall be invested in the Employer Stock
Fund. The Plan Administrator may from time to time
permit Participants and Beneficiaries to direct the
investment of the remaining portion of their Accounts
between or among Investment Funds.
(2) Each Participant or Beneficiary otherwise eligible to
direct the investment of a portion of his Account
shall designate, prior to the dates selected by the
Plan Administrator with the consent of the Trustee,
the percentage (consisting of integral multiples
determined by the Plan Administrator with the consent
of the Trustee) of the Account to be invested in each
Investment Fund. If no election is made on time, the
affected Accounts shall be invested in the Investment
Fund designated from time to time by the Plan
Administrator for that purpose.
(3) If the provisions of this subsection are in effect at
any time, then the previous provisions of this
section shall instead apply to each Investment Fund.
Those provisions of this section requiring the
valuation of the Trust Fund as of the last day of the
Plan Year shall continue to apply to the Trust Fund.
(e) ALLOCATION OF EXPENSES: Expenses incurred which relate to
the Accounts of a particular Participant, such as expenses
relating to the self direction of investments, expenses
relating to a domestic relations order, and any other
extraordinary expenses deemed attributable by the Plan
Administrator to such Participant's Accounts, may be
allocated to the Participant's Accounts based on the actual
expenses incurred by such Participant. Other expenses
incurred by the Plan that do not directly relate to an
individual Participant shall be allocated among all
Participants' Accounts on a nondiscriminatory basis.
(f) ACCOUNTING FOR ALLOCATIONS: The Plan Administrator shall
adopt accounting procedures for the purpose of making the
allocations, valuations and adjustments to Participants'
Accounts provided for in the Plan. Employer Stock acquired
by the Employer Stock Fund shall be accounted for as
provided under Treasury Regulation 1.402(a)-l(b)(2)(ii).
Allocations of Employer Stock shall be made separately for
each class of Employer Stock. The Plan Administrator shall
maintain adequate records of the cost basis of all shares of
Employer Stock allocated to each Participant's Employer
Stock Account. From time to time, the Plan Administrator may
modify the accounting procedures for the purpose of
achieving equitable and nondiscriminatory allocations among
the Accounts of Participants in accordance with the general
concepts of the Plan and the provisions of this section.
page 22
<PAGE> 27
(g) CASH DIVIDENDS: Any cash dividends paid upon Employer Stock
allocated to the Employer Stock Fund shall be held in the
Employer Stock Fund and shall, to the extent possible, be
used to purchase additional shares of Employer Stock.
ARTICLE V - LIMITATIONS ON ALLOCATIONS
5.01 LIMITATIONS ON ANNUAL ADDITIONS TO ACCOUNTS: Notwithstanding
anything in this Plan to the contrary, the Annual Additions which
may be credited to a Participant's Accounts under this Plan with
respect to any Limitation Year will not exceed the Maximum
Permissible Amount, reduced by the annual additions credited to a
Participant's account for the same Limitation Year under another
qualified defined contribution plan maintained by the Employer, a
welfare benefit fund, as defined in Section 419(e) of the Code
maintained by the Employer, or an individual medical account, as
defined in Section 415(1)(2) of the Code, maintained by the
Employer.
(a) ANNUAL ADDITIONS
(1) GENERAL RULE: The term "Annual Additions" shall
mean the sum of the following amounts credited to a
Participant's account for the Limitation Year:
(A) Contributions,
(B) forfeitures,
(C) amounts allocated, after March 31, 1984, to
an individual medical account, as defined in
Section 415(l)(2) of the Code, which is part
of a pension or annuity plan maintained by
the Employer; and
(D) 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 Section
419A(d)(3) of the Code) under a welfare
benefit fund (as defined in Section 419(e)
of the Code) maintained by the Employer.
(2) SPECIAL RULE: Any Excess Amount applied under
subsection (d) in a Limitation Year to reduce
Employer Non-elective Contributions will be
considered Annual Additions for the Limitation
Year.
(b) MAXIMUM PERMISSIBLE AMOUNT: The term "Maximum Permissible
Amount" shall mean the lesser of.
(1) the Defined Contribution Dollar Limitation, or
(2) twenty-five percent (25%) of the Participant's
Compensation for the Limitation Year.
page 23
<PAGE> 28
(c) The term "Excess Amount" shall mean the excess of the Participant's
Annual Additions with respect to the Plan for the Limitation Year
over the Maximum Permissible Amount.
(d) If, after the application of subsection (e), due to a reasonable
error in estimating a Participant's annual Compensation, or through
an allocation of forfeitures, or under such other facts and
circumstances as the Secretary of the Treasury or his delegate finds
justifies the availability of relief, any Excess Amount will be
disposed of as follows.
(1) If the Participant is covered by the Plan at the end of the
Limitation Year, the Excess Amount in the Participant's
Accounts will be used to reduce Contributions (including any
allocation of forfeitures) for such Participant in the next
Limitation Year, and each succeeding Limitation Year if
necessary.
(2) If after the application of paragraph (1) an Excess Amount
still exists, and the Participant is not covered by the Plan
at the end of a Limitation Year, the Excess Amount will be
held unallocated in a suspense account. The suspense account
will be applied to reduce future Contributions for all
remaining Participants in the next Limitation Year, and each
succeeding Limitation Year if necessary.
(3) If a suspense account is in existence at any time during a
Limitation Year pursuant to this section, it will not
participate in the allocation of Net Gains and Net Losses
for that Plan Year. If a suspense account is in existence at
any time during a particular Limitation Year, all amounts
in the suspense account must be allocated and reallocated
to Participants' Accounts before any Contributions may be
made to the Plan for that Limitation Year. Except to the
extent provided under subsection (e), Excess Amounts may
not be distributed to Participants or former Participants.
(e) If as a result of 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 individual under the limits of
Code Section 415, the Annual Additions under the terms of the Plan
for a particular Participant would cause the limitations of Section
415 applicable to that participant for the limitation year to be
exceeded, the following rules shall apply to the Excess Amounts.
(1) Not withstanding paragraphs (a), (b), (c) and (d) above, the
Plan shall provide for the distribution of elective deferrals
(within the meaning of Section 402(g)(3)) or the return of
employee contributions (whether voluntary or mandatory), to
the extent that the distribution or return would reduce the
excess amounts in the Participant's account. These amounts are
disregarded for purposes of Section 401(g), the actual
deferral percentage test of Section 401(k)(3), and the actual
contribution percentage test of Section 401(m)(2).
page 24
<PAGE> 29
(2) Any gains attributable to the returned employee
contributions shall be considered as an employee
contribution for the limitation year in which the
returned contribution was made. If a suspense account
is in existence at any time during the limitation
year in accordance with this section, investment
gains and losses and other income may, but need not,
be allocated to the suspense account. To the extent
that investment gains or other income or investments
losses are allocated to the suspense account, the
entire amount allocated to Participants from the
suspense account, including any such gains or other
income or less any losses, is considered an Annual
Addition.
(f) If the annual additions with respect to the Participant
under other defined contribution plans and welfare benefit
funds maintained by the Employer are less than the Maximum
Permissible Amount, and the Contributions that would
otherwise be contributed or allocated to the Participant's
Accounts under this Plan would cause the annual additions
for the Limitation Year to exceed the Maximum Permissible
Amount, the amount contributed or allocated under this Plan
will be reduced so that the annual additions under all such
plans and funds for the Limitation Year will equal the
Maximum Permissible Amount. If the annual additions with
respect to the Participant under such other defined
contribution plans and welfare benefit funds in the
aggregate are equal to or greater than the Maximum
Permissible Amount, no amount will be contributed or
allocated to the Participant's Accounts under this Plan for
the Limitation Year.
5.02 DEDUCTION LIMITATION: The Employer shall not make Contributions to
this Plan for any taxable year which exceed the limitations on
deductions contained in Section 404 of the Code. Any Contributions
to the Plan are hereby expressly conditioned upon their
deductibility under Section 404 of the Code. Any Contributions
which are not a deductible expense of the Employer under Section
404 of the Code shall be returned to the Employer in accordance
with the procedures described in Section 16.03.
5.03 OVERALL LIMITATIONS:
(a) GENERAL RULE: This section applies if the Employer
maintains, or at any time maintained, a qualified defined
benefit plan covering any Participant in this Plan. In that
event, the Annual Additions which may be credited to the
Participant's Accounts under this Plan for any limitation
year will be limited so that the sum of the Participant's
defined benefit plan fraction and defined contribution plan
fraction will not exceed 1.0 in any Limitation Year.
(b) DEFINITIONS:
(1) DEFINED BENEFIT PLAN FRACTION
(A) Defined benefit plan fraction shall mean 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
page 25
<PAGE> 30
under Sections 415(b) and (d) of the Code or
140 percent of the Participant's highest
average compensation, including any
adjustments under Section 415(b) of the Code.
(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 dose 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
Section 415 for all Limitation Years beginning
before January 1, 1987.
(2) HIGHEST AVERAGE COMPENSATION: Highest average
compensation of a Participant shall mean the average
Compensation for the three consecutive Years of
Service with the Employer that produces the highest
average.
(3) DEFINED CONTRIBUTION PLAN FRACTION
(A) Defined contribution fraction shall mean 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 Section
419(e) of the Code, and individual medical
accounts, as defined in Section 415(l)(2) of
the Code, 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 the Participant's
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 Sections 415(b) and (d) of
the Code in effect under Section 415(c)(1)(A)
of the Code, or 35 percent of the
Participant's Compensation for such year.
(B) If an 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 adjustment, an
page 26
<PAGE> 31
amount equal to the product of (i) the
excess of the sum of the fractions over 1.0
times (ii) the denominator of this fraction,
will be permanently subtracted from the
numerator of this fraction. The adjustment
is calculating using the fractions as they
would be computed as of the end of the last
Limitation Year beginning before January 1,
1987, and disregarding any changes in the
terms and conditions of the Plan made after
May 5, 1986, but using the limitation
contained in Section 415 of the Code, as
applicable to the first Limitation Year
beginning on or after January 1, 1987.
(C) The annual addition for any Limitation Year
beginning before January 1, 1987, shall not
be recomputed to treat all employee
contributions as annual additions.
(4) PROJECTED ANNUAL BENEFIT: Projected annual benefit
shall mean the annual retirement benefit (adjusted
to be an actuarially equivalent straight life
annuity if such benefit is expressed in a form
other than a straight life annuity) to which the
Participant would be entitled under the terms of a
defined benefit plan assuming:
(A) the Participant continued employment until
normal retirement age under the plan (or
current age, if later), and
(B) the Participant's Compensation for the
current limitation year and all other
relevant factors used to determine benefits
under the plan will remain constant for all
future Limitation Years.
5.04 LIMITATIONS ON EMPLOYEE DEFERRAL CONTRIBUTIONS.
(a) No Employee shall be permitted to have Employee Deferral
Contributions made under this Plan during any calendar year
in excess of an amount equal to $7,000, multiplied by the
Adjustment Factor.
(b) The Average Actual Deferral Percentage for Eligible
Participants who are Highly Compensated Employees for the
Plan Year shall not exceed:
(1) the Average Actual Deferral Percentage for Eligible
Participants who are Non-highly Compensated Employees
for the Plan Year multiplied by 1.25; or
(2) the Average Actual Deferral Percentage for Eligible
Participants who are Non-highly Compensated Employees
for the Plan Year multiplied by 2, provided that the
Average Actual Deferral percentage for Eligible
Participants who are Highly Compensated Employees
does not exceed the Average Actual Deferral
Percentage for Eligible Participants who are
Non-highly Compensated Employees by more than two (2)
percentage points, or such lesser amount as the
Secretary of the Treasury shall prescribe to prevent
the multiple use of this alternative limitation with
respect to any Highly Compensated Employee.
page 27
<PAGE> 32
(c) Special Rules: For purposes of this section:
(1) The Actual Deferral Percentage for any Highly
Compensated Employee for the Plan Year who is eligible
to participate in two or more plans described in
Section 401(k) of the Employer or an Affiliated Company
to which Employee Deferral Contributions or Qualified
Non-Elective Contributions are allocated to his account
shall be determined as if all such Employee Deferral
Contributions and Qualified Non-elective Contributions
were made under a single arrangement. If a Highly
Compensated Employee participates in two or more cash
or, deferred arrangements which use different plan
years, all cash or deferred arrangements ending with or
within the same calendar year shall be treated as a
single arrangement.
If this Plan satisfies the requirements of Sections
401(k), 401(a)(4) or 410(b) of the Code only if
aggregated with one or more other plans, or if one or
more other plans satisfy the requirements of such
sections only if aggregated with this Plan, then this
section shall be applied by determining the Actual
Deferral Percentage of Employees as if all such plans
were a single plan. For plan years beginning after
December 31, 1989, plans may be aggregated to satisfy
Section 401(k) of the Code only if the plans use the
same plan year, or (ii) if the plans use different plan
years, then the plans are treated as a single
arrangement with respect to the plan years ending with
or within the same calendar year.
(2) For purposes of determining the Actual Deferral
Percentage of a Participant who is a five percent owner
of the Employer or one of the ten most highly paid
Highly Compensated Employees, the Employee Deferral
Contributions, Qualified Non-elective Contributions and
Covered Compensation of such Participant shall include
the Employee Deferral Contributions, Qualified
Non-Elective Contributions and Covered Compensation for
the Plan Year of Family Members, and such Family
Members shall be disregarded in determining the Actual
Deferral Percentage for Participants who are Non-highly
Compensated Employees.
(3) The Employer shall maintain records sufficient to
demonstrate (i) the extent to which the requirements of
this section have been satisfied, and (ii) the amount
of any Qualified Non-Elective Contributions or
Qualified Matching Contributions used to satisfy this
section.
(4) The determination and treatment of the Employee
Deferral Contributions, Qualified Non-Elective
Contributions and Actual Deferral Percentage of any
Participant shall satisfy such other requirements as
may be prescribed by the Secretary of the Treasury.
5.05 LIMITATIONS ON MATCHING CONTRIBUTIONS:
(a) The Average Contribution Percentage for Eligible
Participants who are Highly Compensated Employees for the
Plan Year shall not exceed:
page 28
<PAGE> 33
(1) the Average Contribution Percentage for Eligible Participants who
are Non-highly Compensated Employees for the Plan Year multiplied
by 1.25; or
(2) the Average Contribution Percentage for Eligible Participants who
are Non-highly Compensated Employees for the Plan Year multiplied
by 2, provided that the Average Contribution Percentage for
Eligible Participants who are Highly Compensated Employees does
not exceed the Average Contribution Percentage for Eligible
Participants who are Non-highly Compensated Employees by more
than two (2) percentage points, or such lesser amount as the
Secretary of the Treasury shall prescribe to prevent the multiple
use of this alternative limitation with respect to any Highly
Compensated Employee.
(b) SPECIAL RULES. For purposes of this section:
(1) The Contribution Percentage for any Highly Compensated Employee
for the Plan Year who is eligible to participate in two or more
plans of the Employer or an Affiliated Company to which Matching
Contributions, Employer Non-elective Contributions, or Employee
Deferral Contributions are allocated to his account shall be
determined as if all such contributions and Employee Deferral
Contributions were made under a single plan. If a Highly
Compensated Employee participates in two or more cash or deferred
arrangements which use different plan years, all cash or deferred
arrangements ending with or within the same calendar year shall
be treated as a single arrangement.
(2) In the event that this Plan satisfies the requirements of Section
410(b) of the Code only if aggregated with one or more other
plans, or if one or more other plans satisfy the requirements of
Section 410(b) of the Code only if aggregated with this Plan,
then this section shall be applied by determining the
Contribution Percentages of Eligible Participants as if all such
plans were a single plan. However, plans may be aggregated for
the purpose of satisfying the requirements of paragraph (1) only
if (i) the plans use the same plan year, or (ii) if the plans use
different plan years, then the plans are treated as a single
arrangement with respect to the plan years ending with or within
the same calendar year.
(3) For purposes of determining the Contribution Percentage of an
Eligible Participant who is a five percent owner of the Employer
or one of the ten most highly-paid Highly Compensated Employees,
the Matching Contributions and Covered Compensation of such
Participant shall include the Matching Contributions and Covered
Compensation for the Plan Year of Family Members, and such Family
Members shall be disregarded in determining the Contribution
Percentage for Eligible Participants who are Non-highly
Compensated Employees.
page 29
<PAGE> 34
(4) The determination and treatment of the Contribution
Percentage of any Participant shall satisfy such
other requirements as may be prescribed by the
Secretary of the Treasury.
(5) The Employer shall maintain records sufficient to
demonstrate (i) the extent to which the Plan
satisfies the requirements of this section, and
(ii) the amount of any Qualified Non-Elective
Contributions or Qualified Matching Contributions
used to satisfy this section.
(6) Any Qualified Non-Elective Contributions or
Qualified Matching Contributions used to satisfy
the requirements of Section 5.04 may not be used to
satisfy the requirements of this section.
5.06 MULTIPLE USE TEST:
(a) APPLICATION. This section shall apply for a Plan Year if
each of the following conditions are satisfied:
(1) The sum of the Average Actual Deferral Percentage and
the Average Contribution Percentage for the group of
Highly Compensated Employees under the Plan exceeds
the Aggregate Limit.
(2) The Average Actual Deferral Percentage of the group
of Highly Compensated Employees for the Plan Year
exceeds the Average Actual Deferral Percentage of the
Non-highly Compensated Employees for the Plan Year
multiplied by 1.25.
(3) The Average Contribution Percentage of the group of
Highly Compensated Employees for the Plan Year
exceeds the Average Contribution Percentage of the
Non-highly Compensated Employees for the Plan Year
multiplied by 1.25.
(b) AGGREGATE LIMIT. For purposes of this section, the
Aggregate Limit is the greater of
(1) the sum of
(A) 1.25 multiplied by the greater of the
Relevant Actual Deferral Percentage or the
Relevant Average Contribution Percentage,
and
(B) two percentage points plus the lesser of the
Relevant Actual Deferral Percentage or the
Relevant Average Contribution Percentage. In
no event, however, may this amount exceed
twice the lesser of the Relevant Actual
Deferral Percentage or the Relevant Average
Contribution Percentage; or
(2) the sum of
page 30
<PAGE> 35
(A) 1.25 multiplied by the lesser of the Relevant
Actual Deferral Percentage or the Relevant
Average Contribution Percentage, and
(B) two percentage points plus the greater of the
Relevant Actual Deferral Percentage or the
Relevant Average Contribution Percentage. In
no event, however, may this amount exceed
twice the greater of the Relevant Actual
Deferral Percentage or the Relevant Average
Contribution Percentage.
(3) For this purpose, "Relevant Actual Deferral
Percentage" shall mean the Average Actual Deferral
Percentage of the Non-highly Compensated Employees
for the Plan Year, and "Relevant Average Contribution
Percentage" shall mean the Average Contribution
Percentage of the Non-highly Compensated Employees
for the Plan Year.
(c) CORRECTION OF MULTIPLE USE.
(1) GENERAL RULE. If this section applies to the Plan for
a Plan Year, then either (i) the Average Actual
Deferral Percentage or the Average Contribution
Percentage of Highly Compensated Employees must be
reduced in the manner specified below, or (ii) the
Employer may eliminate the multiple use by Qualified
Non-elective Contributions or Qualified Matching
Contributions to the Plan in accordance with Section
1.401(m)-l(b)(5)(F)(i) or 1.401(k)-l(b)(5) of the
Treasury Regulations.
(2) REQUIRED REDUCTION. The reduction in the Actual
Deferral Percentage or Average Contribution
Percentage of Highly Compensated Employees shall be
accomplished by use of the leveling method described
in Sections 1.31 and 1.32.
(d) SPECIAL RULES.
(1) The Actual Deferral Percentage and Average
Contribution Percentage of the Highly Compensated
Employees shall be determined after the application
of any Qualified Non-elective Contributions and
Qualified Matching Contributions which are used to
meet the requirements of Sections 5.04 and 5.05, and
after distribution or forfeiture of any Excess
Deferral Amounts, Excess Contributions or Excess
Aggregate Contributions pursuant to Sections 5.07,
5.08 and 5.09.
(2) If the Employer maintains two or more cash or
deferred arrangements which are not aggregated
pursuant to Section 1.401(k)-l(g)(11)(iii) of the
Treasury Regulations, then this section shall be
applied separately to each plan.
5.07 DISTRIBUTION OF EXCESS DEFERRALS.
(a) Notwithstanding any other provision of the Plan, Excess
Deferral Amounts and income allocable thereto shall be
distributed no later than each April 15 to
page 31
<PAGE> 36
Participants who claim such allocable Excess Deferral
Amounts for the preceding calendar year.
(b) The Excess Deferral Amount distributed to a Participant with
respect to a calendar year shall be adjusted for Net Gain or
Net Loss up to the date of the distribution. The Net Gain or
Net Loss allocable to a distribution of Excess Deferral
Amounts for a taxable year of a Participant is equal to the
sum of the following amounts:
(1) The Net Gain or Net Loss allocable to the portion of
the Participant's Account attributable to Employee
Deferral Contributions for the Plan Year ending with
or within the taxable year, multiplied by a fraction,
the numerator of which is the Participant's Excess
Deferral Amount, and the denominator of which is
portion of the Participant's Account attributable to
Employee Deferral Contributions, without regard to
any Net Gain or Net Loss occurring during the Plan
Year.
(2) Ten percent of the amount determined under paragraph
(1) multiplied by the number of whole calendar months
between the end of the Participant's taxable year and
the date of the distribution (counting the month of
the distribution if the distribution occurs after the
15th of the month.)
(3) The Plan Administrator may, in its discretion, use
any other method allowable under the Code or the
Treasury Regulations to calculate income allocable to
Excess Deferrals.
5.08 DISTRIBUTION OF EXCESS CONTRIBUTIONS.
(a) Notwithstanding any other provision of the Plan, Excess
Contributions, adjusted for any Net Gain or Net Loss
allocable thereto, shall be distributed no later than the
last day of each Plan Year to Participants to whose Accounts
such Excess Contributions were allocated for the preceding
Plan Year. A distribution of Excess Contributions shall be
made to a Highly Compensated Employee on the basis of the
portion of the Excess Contributions attributable to the
Highly Compensated Employee.
(b) The Net Gain or Net Loss allocable to Excess Contributions
shall be the sum of.
(1) the Net Gain or Net Loss allocable to the
Participant's Employee Deferral Contributions (and,
if applicable, to the Participant's Qualified
Nonelective Contributions and Qualified Matching
Contributions) for the Plan Year, multiplied by a
fraction. The numerator of the fraction is the
Participant's Excess Contributions for the Plan Year,
and the denominator of the fraction is the sum of the
Participant's Account balance attributable to
Employee Deferral Contributions (and Qualified
Non-Elective Contributions or Qualified Matching
Contributions, or both, if any such contribution are
taken into account for the purposes of Sections 5.05
or 5.06, on the last day of the preceding Plan Year,
reduced by the Net Gain
page 32
<PAGE> 37
allocable to such amounts for the Plan Year and
increased by Net Loss allocable to such amounts for
the Plan Year; and
(2) ten percent (10%) of the amount determined in
paragraph (1) multiplied by the number of whole
calendar months between the end of the Plan Year and
the date of distribution, counting the month of
distribution if distribution occurs after the 15th of
such month.
(3) The Plan Administrator may, in its discretion, use
any other method allowable under the Code or the
Treasury Regulations to calculate Net Gain allocable
to Excess Contributions.
(c) For the purposes of this section, the following rules shall
apply:
(1) If any Excess Contribution is distributed more than 2
1/2 months after the end of the Plan Year in which
the Excess Contribution arose, an excise tax may be
imposed on the Employer with respect to such amounts.
(2) Excess Contributions shall be allocated to the Family
Members of Highly Compensated Employees in the manner
prescribed by the Treasury Regulations.
(3) Excess Contributions shall be treated as Annual
Additions.
(d) The Excess Contributions which would otherwise be
distributed to Participants shall be reduced, in accordance
with the Treasury Regulations, by the amount of Excess
Deferrals distributed to the Participant under this section.
However, the amount distributed shall, if there is a Net
Loss allocable to the Excess Contributions, in no event be
less than the lesser of the Participant's Account under the
Plan or the Participant's Employee Deferral Contributions
and Qualified Non-Elective Contributions for the Plan Year.
(e) Amounts distributed under this section shall first be
treated as distributable from the portion of the
Participant's Account attributable to Employee Deferral
Contributions and shall be treated as distributed from the
portion of the Participant's Account attributable to
Qualified Non-Elective Contributions only to the extent such
Excess Contributions exceed the balance in the Participant's
Account attributable to Employee Deferral Contributions.
5.09 DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS.
(a) Excess Aggregate Contributions, adjusted for any Net Gain or
Net Loss allocable thereto, shall be forfeited, if otherwise
forfeitable under the terms of this Plan, or if not
forfeitable, distributed no later than the last day of each
Plan Year to Participants to whose Accounts Matching
Contributions were allocated for the preceding Plan Year.
(b) The Net Gain or Net Loss allocable to Excess Aggregate
Contributions shall be determined by multiplying the Net
Gain or Net Loss allocable to the Participant's
page 33
<PAGE> 38
Matching Contributions for the Plan Year by a fraction, the
numerator of which is the Excess Aggregate Contributions on
behalf of the Participant for the preceding Plan Year and
the denominator of which is the portion of the Participant's
Account balance attributable to Matching Contributions on
the last day of the preceding Plan Year.
(c) The Plan Administrator may, in its discretion, use any other
method allowable under the Code or the Treasury Regulations
to calculate Net Gain or Net Loss allocated to Excess
Aggregate Contributions.
(d) The Excess Aggregate Contributions to be distributed to a
Participant shall in no event be less than the lesser of the
Participant's Plan Account or the Participant's Matching
Contributions for the Plan Year.
(e) Amounts forfeited by Highly Compensated Employees under this
section shall be treated as Annual Additions under the Plan
and either:
(1) Applied to reduce Contributions made by the Employer
if Forfeitures of Matching Contributions under the
Plan are applied to reduce such Contributions; or
(2) Allocated, after all other Forfeitures under the
Plan, to the same Participants and in the same manner
as such other Forfeitures are allocated to other
Participants under the Plan.
Notwithstanding the foregoing, no Forfeitures arising under
this section shall be allocated to the Account of any
I-Highly Compensated Employee who was subject to forfeitures
under this subsection.
ARTICLE VI - RETIREMENT BENEFITS
6.01 EVENTS ENTITLING PARTICIPANT TO DISTRIBUTION: A Participant shall
be entitled to a distribution of his or her Accrued Benefit upon
the Participant's retirement from the service of the Employer after
attainment of Normal Retirement Date. A Participant who attains
Normal Retirement Date and continues to be an Employee shall
continue to share in the allocation of Employer Non-elective
Contributions, and earnings and losses.
6.02 PROPERTY DISTRIBUTED: Distribution of the portion of a
Participant's Accrued Benefit invested in the Employer Stock Fund
will be made in whole shares of Employer Stock or in cash in the
following manner. A Participant or Beneficiary, as the case may be,
may, within a reasonable time prior to the date of a distribution
from the Plan, notify the Plan Administrator in writing of his
demand that all or a portion of the distribution be made in whole
shares of Employer Stock. In the absence of the timely exercise of
such right as set forth above, or if the Participant demands that
less than all of such portion of the distribution be made in whole
shares of Employer Stock, distribution of the portion of the
Participant's Account invested in the Employer Stock Fund, or the
page 34
<PAGE> 39
portion thereof not demanded in whole shares of Employer Stock,
will be made in whole shares of Employer Stock or in cash or
partially in shares of Employer Stock and partially in cash, as
determined by the Plan Administrator.
6.03 METHODS OF BENEFIT PAYMENT: Subject to the requirements of Article
VII, if a Participant's Accrued Benefit becomes payable under
Section 6.01, the Accrued Benefit shall be paid in one of the
settlement options described in subsections (a), (b), or (c), as
the Participant shall elect:
(a) in the form of a lump sum, or
(b) if the value of the Participant's Accrued Benefit exceeds
$3,500, in the form of monthly, quarterly, semi-annual or
annual installments over a period not to exceed the lesser
of (i) five years, or (ii) the life expectancy of the
Participant and the Participant's Beneficiary, or
(c) in the manner described in Section 6.04 with respect to
distributions made after December 31,1992.
6.04 PLAN ROLLOVERS:
(a) This Section 6.04 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.
(b) DEFINITIONS:
(1) ELIGIBLE ROLLOVER DISTRIBUTION:
An Eligible Rollover Distribution is any distribution of all
or any portion of the balance to the credit of the
Distributee, except that an Eligible Rollover Distribution
does not include: any distribution that is one of a series
of substantially equal periodic payments (not less
frequently than annually) made for the life (or life
expectancy) of the Distributee or the joint lives (or joint
life expectancies) of the Distributee and the Distributee's
designated Beneficiary, or for a specified period of ten
years or more; any distribution to the extent such
distribution is required under Section 401(a)(9) of the
Code; and the portion of any distribution that is not
includible in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to
employer securities).
(2) ELIGIBLE RETIREMENT PLAN:
An Eligible Retirement Plan is an individual retirement
account described in section 408(a) of the Code, an
individual retirement annuity described in section 408(b) of
the Code, an annuity plan described in section 403(a) of
page 35
<PAGE> 40
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) DISTRIBUTEE:
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) DIRECT ROLLOVER:
A Direct Rollover is a payment by the Plan to the Eligible
Retirement Plan specified by the Distributee.
ARTICLE VII - JOINT AND SURVIVOR ANNUITY REQUIREMENTS
7.01 The Plan shall not offer a Qualified joint and Survivor Annuity or
a Qualified Preretirement Survivor Annuity.
ARTICLE VIII - VOTING EMPLOYER STOCK
8.01 VOTING RIGHTS: The Trustee shall be entitled to vote, and shall
vote, any Employer Stock held in the Trust only in accordance with
the provisions of this Article.
8.02 EMPLOYER STOCK FUND:
(a) The Plan Administrator shall adopt procedures to notify the
Participants who have all or a portion of their Accounts
invested in the Employer Stock Fund of the time and place of
each meeting at which holders of such Employer Stock shall
be entitled to vote. The Trustee shall receive and execute
instructions from each Participant with respect to the
voting of the number of shares of Employer Stock that is
allocated to such Participant's Account through the Employer
Stock Fund.
(b) The Trustee shall not vote any Employer Stock allocated to
the Account of a Participant who fails to timely instruct
the Trustee with respect to voting such Employer Stock at
the meeting.
page 36
<PAGE> 41
ARTICLE IX - DEATH BENEFITS
9.01 AMOUNT OF DEATH BENEFIT The Beneficiary of a Participant who dies
prior to receiving benefits hereunder shall be entitled to receive
death benefits as provided hereinafter.
9.02 PAYMENT OF DEATH BENEFIT The amount of the Accrued Benefit payable
to a Beneficiary under this Article shall be determined as of the
Valuation Date immediately following the Participant's date of
death- The Trustee shall distribute a decreased Participant's
Accrued Benefit to the Participant's Beneficiary in the manner
described in Section 6.03. The distribution shall occur as soon as
administratively feasible after the end of the Plan Year during
which the Participant died.
9.03 BENEFICIARY DESIGNATION: Each Participant shall have the right to
designate and change his or her Beneficiary or contingent
Beneficiary, subject to Section 1.08. The Participant shall also
have the right to designate for such Beneficiary any settlement
option or combination thereof provided in this Plan, or to confer
upon the Beneficiary the power to elect any settlement options
provided hereunder. Such right shall be exercised by a written
instruction signed by the Participant.
9.04 SELECTION BY BENEFICIARY: Notwithstanding any contrary provisions
contained herein, and subject to the approval of the Trustee, a
Beneficiary shall have the power to elect any settlement option
hereunder. This election is intended to provide the Beneficiary
with the specific power to revoke a prior designation of a
settlement option by a Participant.
ARTICLE X - TERMINATION BENEFITS
10.01 VESTING SCHEDULE: The nonforfeitable interest of each Participant
in his Accounts shall be determined as follows:
(a) Each Participant shall have a nonforfeitable interest in
the entire portion of his Accounts attributable to
Employee Deferral Contributions, Qualified Non-elective
Contributions and Qualified Matching Contributions.
(b) Each Participant shall have a nonforfeitable interest in
the entire portion of his Accounts upon the earliest to
occur of the following events:
(1) The Participant reaches the Normal Retirement Age;
(2) The Participant dies prior to the termination of
his employment by the Employer;
(3) The Participant reaches the later of (i) his 65th
birthday, or (ii) the fifth anniversary of the date
he became a Participant in the Plan.
(c) Subject to subsections (b) and (d), the nonforfeitable
interest of a Participant in the portion of his Account
attributable to Employer Non-elective Contributions
page 37
<PAGE> 42
or Matching Contributions shall be determined according to
the following schedule:
<TABLE>
<CAPTION>
YEARS OF VESTING SERVICE NONFORFEITABLE PERCENTAGE
<S> <C>
Less than 1 0%
1 10%
2 20%
3 40%
4 60%
5 80%
6 or more 100%
</TABLE>
10.02 DETERMINATION OF ACCRUED BENEFIT: The amount of the Accrued Benefit
shall be determined as of the last day of the Plan Year during
which the termination of employment takes place. In no event will
the Participant's Accounts be credited with Net Gains or Net Losses
which occur after the Valuation Date immediately preceding the date
such Participant's benefits are actually distributed from the Plan.
10.03 PAYMENT OF ACCRUED BENEFIT:
(a) Subject to the consent requirements contained in
subsection (b), the Trustee shall distribute a terminated
Participant's Accrued Benefit to the Participant, in one
of the methods elected in accordance with Section 6.03, as
soon as administratively feasible following the last day
of the Plan Year during which such Participant has died or
attained Normal Retirement Age. The Participant shall not
share in an allocation of Net Gain or Net Loss since the
Valuation Date preceding the date of the distribution.
(b) CONSENT REQUIREMENTS
(1) Payment of a Participant's Accrued Benefit may not
begin before the Participant reaches the later of
age 62 or Normal Retirement Age, unless
(A) prior to the Annuity Starting Date, the
Participant's Account Balance does not
exceed $3,500;
(B) the Participant requests the payment; or
(C) the Participant is deceased.
(2) For purposes of this section, the term "Annuity
Starting Date" means the first day of the first
period for which an amount of the Participant's
Accrued Benefit is paid in any form.
(c) The non-vested portion of a Participant's Account shall
be forfeited as of the date on which the Participant
incurs five consecutive one year Breaks
page 38
<PAGE> 43
in Service. Any such forfeiture for a Plan Year shall be
allocated to the Accounts of remaining Participants in
accordance with Article IV.
ARTICLE XI - DISTRIBUTION REQUIREMENTS
11.01 GENERAL RULES:
(a) The requirements of this Article shall apply to any
distribution of a Participant's interest in his Accounts,
and will take precedence over any inconsistent provisions of
this Plan.
(b) All distributions required under this Article shall be
determined and made in accordance with the proposed Treasury
Regulations under Section 401(a)(9) of the Code, including
the minimum distribution incidental benefit requirement of
Section 1.401(a)(9)-2 of the proposed Treasury Regulations.
11.02 REQUIRED BEGINNING DATE: The entire interest of a Participant must
be distributed or begin to be distributed no later than the
Participant's Required Beginning Date.
11.03 LIMITS ON DISTRIBUTION PERIODS: As of the first distribution
calendar year, distributions, if not made in a single-sum, may only
be made over one of the following periods (or a combination
thereof):
(a) the life of the Participant;
(b) the life of the Participant and a designated beneficiary;
(c) a period certain not extending beyond the life expectancy of
the Participant; or
(d) a period certain not extending beyond the joint and last
survivor expectancy of the Participant and a designated
beneficiary.
11.04 DETERMINATION OF AMOUNT TO BE DISTRIBUTED EACH YEAR: If the
Participant's Accrued Benefit is to be distributed in other than a
single sum, the following minimum distribution rules shall apply on
or after the Required Beginning Date:
(a) If a Participant's Accrued Benefit is to be distributed over
(1) a period not extending beyond the life expectancy of
the Participant or the joint life and last survivor
expectancy of the Participant and the Participant's
designated beneficiary, or
(2) a period not extending beyond the life expectancy of
the designated beneficiary,
the amount required to be distributed for each calendar
year, beginning with distributions for the first
distribution calendar year, must at least equal the
page 39
<PAGE> 44
quotient obtained by dividing the Participant's Accrued
Benefit by the applicable life expectancy.
(b) For calendar years beginning before January 1, 1989, if the
Participant's spouse is not the designated beneficiary, the
method of distribution selected must assure that at least
50% of the Accrued Benefit is paid within the fife
expectancy of the Participant.
(c) For calendar years beginning after December 31, 1988, the
amount to be distributed each year, beginning with
distributions for the first distribution calendar year shall
not be less than the quotient obtained by dividing the
participant's Accrued Benefit by the lesser of
(1) the applicable life expectancy, or
(2) if the Participant's Spouse is not the designated
beneficiary, the applicable divisor determined from
the table set forth in Q&A-4 of Section 1.401(a)(9)2
of the Proposed Treasury Regulations.
Distributions after the death of the Participant shall be
distributed using the applicable life expectancy in
subsection (a) above as the relevant divisor without regard
to Proposed Treasury Regulations Section 1.401(a)(9)-2.
(d) (1) The minimum distribution required for the
Participant's first distribution calendar year must
be made on or before the Participant's Required
Beginning Date. The minimum distribution for other
calendar years, including the minimum distribution
for the distribution calendar year in which the
Employee's Required Beginning Date occurs, must be
made on or before December 31 of that distribution
calendar year.
(2) For purposes of determining a Participant's minimum
distribution, if any portion of the minimum
distribution for the first distribution calendar
year is made in the second distribution calendar
year on or before the required beginning date, the
amount of the minimum distribution made in the
second distribution calendar year shall be treated
as if it had been made in the immediately preceding
distribution calendar year.
11.05 DEATH DISTRIBUTION PROVISIONS:
(a) DISTRIBUTION BEGINNING BEFORE DEATH: If the Participant dies
after distribution of his or her Accrued Benefit has begun,
the remaining portion of such Accrued Benefit will continue
to be distributed at least as rapidly as under the method of
distribution being used prior to the Participant's death.
(b) DISTRIBUTION BEGINNING AFTER DEATH: If the Participant dies
before distribution of his or her Accrued Benefit begins,
distribution of the Participant's entire Accrued Benefit
shall be completed in accordance with Section 9.02 above.
page 40
<PAGE> 45
11.06 COMMENCEMENT OF BENEFITS:
(a) Unless the Participant otherwise elects by submitting to the
Plan Administrator a written statement, signed by the
Participant, which describes the benefit and the date on
which the payment of such benefit shall commence, payment of
benefits shall begin no later than the sixtieth (60th) day
after the close of the Plan Year in which the Participant
became entitled to distribution of benefits under Section
6.01, subject to the provisions of subsections (b), (c) and
(d).
(b) In the event that the Trustee has not completed valuations
necessary for a determination of the exact amount of
benefits to be distributed as of a Valuation Date, or the
Plan Administrator has been unable to locate the Participant
after making reasonable efforts to do so, to the extent not
prohibited by the Code or ERISA and valid regulations
thereunder, the beginning of such distribution may be
delayed until sixty (60) days after such valuation has been
completed or such Participant has been located.
(c) In the event that a Participant has not been located within
seven (7) years from the date that such Participant's
benefit under this Plan first become payable, the
Participant's Accounts shall be deemed abandoned and shall
be reallocated among the remaining Participants in a
nondiscriminatory manner. In the event that a Participant,
whose Accounts was deemed abandoned and reallocated, is
later located, such Participant's Accounts shall be restored
and distribution of such benefit shall commence no later
than the sixtieth (60th) day after the close of the Plan
Year in which the Participant is located.
(d) To avoid hardship to a Participant, the Trustee, upon a
recommendation from the Plan Administrator, may begin to
make partial payment to a Participant at any time after
retirement or disability, even though the precise amount of
the Accrued Benefit has not yet been determined.
11.07 DEFINITIONS:
(a) APPLICABLE LIFE EXPECTANCY The life expectancy (or joint
and last survivor expectancy) shall be calculated using
the attained age of the Participant (or Beneficiary) as of
the Participant's (or Beneficiary's) birthday in the
applicable calendar year, reduced by one for each calendar
year which has elapsed since the date life expectancy was
first calculated. If life expectancy is being
recalculated, the applicable life expectancy shall be the
life expectancy as so recalculated. The applicable
calendar year shall be the first distribution calendar
year, and if the life expectancy is being recalculated
such succeeding calendar year.
(b) DISTRIBUTION CALENDAR YEAR: A calendar year for which a
minimum distribution is required. For distributions
beginning before the Participant's death, the first
distribution calendar year is the calendar year
immediately preceding the calendar year which contains the
Participant's Required Beginning Date. For distributions
beginning after the Participant's death, the first
distribution calendar year is the calendar year in which
distributions are required to begin pursuant to Section
401(a)(9) of the Code.
page 41
<PAGE> 46
(c) PARTICIPANTS BENEFIT: The Accounts balance as of the last
Valuation Date in the calendar year immediately preceding
the distribution calendar year (valuation calendar year)
increased by the amount of any contributions or forfeitures
allocated to the Accounts balance as of dates in the
valuation calendar year after the valuation date and
decreased by distributions made in the valuation calendar
year after the valuation date.
(d) REQUIRED BEGINNING DATE:
(1) General Rule: The required beginning date of a
Participant is the first day of April of the calendar
year following the calendar year in which the
Participant attains age 70 1/2.
(2) Transitional Rules: The required beginning date of a
Participant who attains age 70 1/2 before January 1,
1988, shall be determined in accordance with (A) or
(B) below:
(A) Non-5-percent owners: The required beginning
date of a Participant who is not a 5-percent
owner is the first day of April of the
calendar year following the calendar year in
which the later of retirement or attainment of
age 70 1/2 occurs.
(B) 5-percent owners: The required beginning date
of a Participant who is a 5-percent owner
during any year beginning after December 31,
1979, is the first day of April following the
later of:
(i) the calendar year in which the
Participant attains age 70 1/2, or
(ii) the earlier of the calendar year
with or within which ends the plan
year in which the Participant
becomes a 5-percent owner, or the
calendar year in which the
Participant retires.
The required beginning date of a Participant
who is not a 5-percent owner who attains age
70 1/2 during 1988 and who has not retired
as of January 1, 1989, is April 1, 1990.
(3) 5-percent owner: A Participant is treated as a
5-percent owner for purposes of this Section if
such Participant is a 5-percent owner as defined in
Section 416(i) of the Code (determined in
accordance with Section 416 but without regard to
whether the Plan is top heavy) at any time during
the Plan Year ending with or within the calendar
year in which such owner attains age 66 1/2 or
any subsequent Plan Year.
(4) Once distributions have begun to a 5-percent owner
under this Section, they must continue to be
distributed, even if the Participant ceases to be a
5-percent owner in a subsequent year.
page 42
<PAGE> 47
ARTICLE XII - PLAN ADMINISTRATION
12.01 ALLOCATION OF FIDUCIARY POWERS: Each of the Fiduciaries shall have
only those powers and responsibilities that are specifically given
to them under the Plan. The Employer shall have the exclusive
responsibility for making the contributions provided for herein,
the exclusive power to appoint and remove the Trustee and the Plan
Administrator, and the exclusive power to amend or terminate this
Plan. The Employer shall have no other exclusive authority,
discretion and responsibility to manage and control the assets of
the Plan. The Trustee shall have no other responsibilities other
than those provided in this Plan. The Plan Administrator shall have
the exclusive authority and responsibility, in its sole and
absolute discretion, to interpret the provisions of the Plan,
determine eligibility for benefits under the Plan, to control and
manage the operation and administration of this Plan in accordance
with the terms and conditions described in this Plan, and to
exercise all Fiduciary functions provided in the Plan or necessary
to the operation of the Plan except such functions as are assigned
to other Fiduciaries pursuant to this Plan. Each 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 such direction, information or action.
Furthermore, each Fiduciary may rely upon such direction,
information or action of another Fiduciary as being proper under
this Plan, and is not required to inquire into the propriety of any
such direction, information or other action. It is intended under
this Plan that each Fiduciary shall be responsible for the proper
exercise of its own powers, duties, responsibilities and
obligations. Each fiduciary shall not be responsible for any act or
failure to act of another Fiduciary except in circumstances where
ERISA imposes liability for the breach of a co-Fiduciary. No
Fiduciary guarantees the trust fund in any manner against
investment loss or depreciation in asset value except in
circumstances where ERISA imposes liability for such loss or
depreciation.
12.02 PLAN ADMINISTRATION: The Plan shall be administered by the Plan
Administrator. All usual and reasonable expenses of the Plan
Administrator may be paid in whole or in part by the Employer, and
any expenses not paid by the Employer shall be paid by the Trustee
out of the principal or income of the Trust Fund.
12.03 CLAIM PROCEDURE: The Plan Administrator shall make all
determinations as to the right of any person to a benefit under the
Plan. In accordance with regulations of the Secretary of Labor
issued under Section 503 of ERISA, the Plan Administrator shall
provide adequate notice in writing to any Participant or
Beneficiary whose claim for benefits under the Plan has been
denied, setting forth the specific reasons for denial, written in a
manner calculated to be understood by the Participant or
Beneficiary, and afford a reasonable opportunity to any Participant
or Beneficiary whose claim for benefits had been denied for a full
and fair review by the Plan Administrator of the decisions denying
the claim. A Participant or Beneficiary may claim any benefits due
under the Plan by mailing to the last known address of the Plan
Administrator a written application outlining to the best of the
Participant's knowledge or ability, the nature, amount and form of
such benefit.
page 43
<PAGE> 48
12.04 REPORTING AND DISCLOSURE: The Plan Administrator shall exercise
such authority and responsibility as it deems necessary to comply
with the reporting and disclosure requirements of ERISA and any
valid governmental regulations issued thereunder relating to the
preparation and filing of all reports and registrations required to
be filed by the Plan with any governmental agency; compliance with
all disclosure requirements imposed by state or federal laws;
maintenance of all records of the Plan other than those required to
be maintained by other Fiduciaries; and the preparation and
delivery of all reports, information and notifications required to
be given to Participants or Beneficiaries in accordance with state
or federal laws.
12.05 PLAN ADMINISTRATOR'S DUTIES AND POWERS: The Plan Administrator
shall have absolute power and authority to carry out its duties
under the Plan. By way of illustration and not limitation, the Plan
Administrator is empowered and authorized to make rules and
regulations in respect of the Plan not inconsistent with the Plan,
the Code or ERISA; to determine, consistently therewith, all
questions that may arise as to the eligibility, benefits, status
and right of any person claiming benefits under the Plan, including
(without limitation) Participants, former Participants, Surviving
Spouses of Participants and Beneficiaries; and subject to and
consistent with ERISA, to construe and interpret the Plan and
correct any defect, supply any omissions or reconcile any
inconsistencies in the Plan, such action to be final and conclusive
on all persons claiming benefits under the Plan.
In addition, the Plan Administrator shall have any other duties and powers as
may be necessary to discharge its duties hereunder, including, but not by way of
limitation, the following:
(a) To prescribe procedures to be followed by Participants or
Beneficiaries filing applications for benefits;
(b) To prepare and distribute, in such manner as the Plan
Administrator determines to be appropriate, information
explaining the Plan;
(c) To receive from the Employer and from Participants such
information as shall be necessary for the proper
administration of the Plan;
(d) To furnish the Employer, upon request, such annual reports
with respect to the administration of the Plan as are
reasonable and appropriate;
(e) To receive, review and keep on file (as it deems
convenient or proper) reports of the financial condition,
and of the receipts and disbursements, of the trust fund
from the Trustee;
(f) To appoint or employ individuals to assist in the
administration of the Plan and any other agents it deems
advisable, including legal and actuarial counsel, and to
pay such individuals reasonable fees for the performance
of services.
12.06 ADMINISTRATIVE RULES: The Plan Administrator may adopt such rules
as it deems necessary, desirable, or appropriate. All rules and
decisions of the Plan Administrator shall be uniformly and
consistently applied to all Participants in similar circumstances.
page 44
<PAGE> 49
Upon making a determination or calculation, the Plan Administrator
shall be entitled to rely upon information furnished by a
Participant or Beneficiary, the Employer, the legal counsel of the
Employer, or the Trustee.
12.07 DIRECTIONS TO TRUSTEE: The Plan Administrator shall issue
directions to the Trustee concerning all benefits which are to be
paid from the Trust Fund pursuant to the provisions of the Plan.
12.08 The Plan Administrator may require a Participant to complete and
file an application for a benefit, to complete all other forms
furnished by the Plan Administrator, and to furnish all pertinent
information requested by the Plan Administrator.
12.09 DISCRETION AND DELEGATION: The Plan Administrator shall have
absolute discretion in interpreting the provisions of the Plan and
in carrying its duties hereunder. The Plan Administrator may
delegate all or part of its duties hereunder to one or more agents,
and may retain advisors to assist it.
12.10 DOMESTIC RELATIONS ORDER: The Plan Administrator shall develop
written procedures to determine whether a domestic relations court
order meets the requirements of a qualified domestic relations
order as defined in Code Section 414(p) and to determine the method
of distributing benefits in compliance with the order. If the Plan
Administrator determines that a domestic relations order is
qualified under Code Section 414(p), then the date of such
determination shall be deemed the "earliest retirement age" under
Code Section 414(p) with respect to the Participant against whom
the domestic relations order is entered, and the Plan Administrator
may make an immediate distribution only to the alternate payee(s)
under such order. A domestic relations order entered before January
1. 1985, will be treated as a qualified domestic relations order if
payment of benefits pursuant to the order has commenced as of such
date, and may be treated as a qualified domestic relations order if
payment of benefits has not commenced as of such date, even though
the order does not satisfy the requirements of Section 414(p) of
the Code.
ARTICLE XIII - TOP HEAVY RULES
13.01 Effective Date: If the Plan is or becomes top heavy in any Plan
Year, the provisions of this Article will supersede any conflicting
provisions in the Plan.
13.02 DETERMINATION OF TOP HEAVY STATUS: The Plan is top heavy for a
particular Plan Year if, as of the determination date, any of the
following conditions exists:
(a) If the top heavy ratio for this Plan exceeds 60 percent
and this Plan is not part of any Required Aggregation
Group or Permissive Aggregation Group of plans.
(b) If the Plan is a part of a Required Aggregation Group of
plans but not part of a Permissive Aggregation Group and
the top heavy ratio for the group of plans exceeds 60
percent.
page 45
<PAGE> 50
(c) If the Plan is a part of a Required Aggregation Group
and part of a Permissive Aggregation Group of plans and
the top heavy ratio for the Permissive Aggregation Group
exceeds 60 percent.
In the case of a Required Aggregation Group, each plan
in the group will be considered to be top heavy if the
Required Aggregation Group is determined to be top
heavy. No plan in the Required Aggregation Group will be
considered to be top heavy if the Required Aggregation
Group is not top heavy. The Employer may also include
any other plan not required to be included in the
Required Aggregation Group, providing the resulting
group, taken as a whole, will continue to satisfy the
provisions of the Code Sections 401(a)(4) and 410 of the
Code. Such group hereinafter shall be known as a
Permissive Aggregation Group. In the case of a
Permissive Aggregation Group, only a plan that is part
of the Required Aggregation Group will be considered top
heavy if the Permissive Group is top heavy. No plan in
the Permissive Aggregation Group win be considered top
heavy if the Permissive Aggregation Group is not top
heavy. Only those plans of the Employer in which the
determination dates fall within the same calendar year
are aggregated in order to determine whether such plans
are top heavy. For Plan Years beginning after December
31, 1984, the Accounts of a Participant who has not
performed any services for the Employer during the five
(5) year period ending on the determination date shall
be disregarded for purposes of making the determination
of top heavy status.
13.03 DEFINITIONS AND SPECIAL RULES: The following definitions shall
apply for purposes of this Article:
(a) TOP HEAVY RATIO:
(1) If the Employer maintains one or more defined
contribution plans (including any Simplified Employee
Pension Plan) and the Employer has not maintained any
defined benefit plan which during the 5-year period
ending on the determination date(s) has or has had
accrued benefits, the top heavy ratio for this Plan
alone or for the Required or Permissive Aggregation
Group as appropriate is a fraction, the numerator of
which is the sum of the Account Balances of all Key
Employees as of the determination date(s) (including
any part of any Accounts Balance distributed in the
5-year period ending on the determination date(s)),
and the denominator of which is the sum of the
Accounts Balances of all Participants (including any
part of any Accounts Balance distributed in the
5-year period ending on the determination date(s)),
both computed in accordance with Section 416 of the
Code and the regulations thereunder. Both the
numerator and denominator of the top heavy ratio are
increased to reflect any contribution not actually
made as of the determination date, but which is
required to be taken into account on that date under
Section 416 of the Code and the regulations
thereunder.
(2) If the Employer maintains one or more defined
contribution plans (including any Simplified Employee
Pension Plan) and the Employer maintains or has
maintained one or more defined benefit plans which
during the 5-year period ending on the determination
date(s) has or has
page 46
<PAGE> 51
had any accrued benefits, the top heavy ratio for any
Required or Permissive Aggregation Group as
appropriate is a fraction, the numerator of which is
the sum of the account balances under the aggregated
defined contribution plan or plans for all Key
Employees, determined in accordance with paragraph
(1) above, and the present value of accrued benefits
under the aggregated defined benefit plan or plans
for all Key Employees as of the determination date(s)
and the denominator of which is the sum of the
account balances under the aggregated defined
contribution plan or plans for all Participants,
determined in accordance with paragraph (1) above,
and the present value of accrued benefits under the
defined benefit plan or plans for all participants as
of the determination date(s), all determined in
accordance with Section 416 of the Code and the
regulations thereunder. The accrued benefits under a
defined benefit plan in both the numerator and
denominator of the top heavy ratio are increased for
any distribution of an accrued benefit made in the
five-year period ending on the determination date.
(3) For purposes of paragraphs (1) and (2) above the
value of the account balances and the present value
of accrued benefits will be determined as of the most
recent valuation date that falls within or ends with
the 12-month period ending on the determination date,
except as provided in Section 416 of the Code and the
Treasury Regulations thereunder for the first and
second plan years of a defined benefit plan. The
account balances and accrued benefits of a
Participant (i) who is not a Key Employee but who was
a Key Employee in a prior year, or (ii) who has not
been credited with at least one Hour of Service with
any Employer maintaining the Plan at any time during
the 5-year period ending on the determination date
will be disregarded. The calculation of the top-heavy
ratio, and the extent to which distributions,
rollovers, and transfers are taken into account will
be made in accordance with Section 416 of the Code
and the regulations thereunder.
(4) Deductible employee contributions will not be taken
into account for purposes of computing the top heavy
ratio. When aggregating plans the value of Accounts
Balances and Accrued Benefits will be calculated with
reference to the determination dates that fall within
the same calendar year.
(5) The accrued benefit of a Participant other than a Key
Employee shall be determined under (i) the method, if
any, that uniformly applies for accrual purposes
under all defined benefit plans maintained by the
Employer, or (ii) if there is no such method, as if
such benefit accrued not more rapidly than the
slowest accrual rate permitted under the fractional
rule of Section 411(b)(1)(c) of the Code.
(b) KEY EMPLOYEE: Any Employee or former Employee (and the
Beneficiaries of each such Employee) who, at any time
during the determination period was:
page 47
<PAGE> 52
(1) an officer of the Employer whose annual Compensation exceeds 50%
of the dollar limitation under Section 415(b)(1)(A) of the Code;
(2) an owner (or considered an owner under Section 318 of the Code of
one of the ten largest interests in the Employer if such
individual's Compensation exceeds 100 percent of the dollar
limitation under Section 415(c)(1)(A) of the Code;
(3) a five percent (5%) owner of the Employer; or
(4) a one percent (1%) owner of the Employer who has an annual
Compensation of more than $150,000.
Annual Compensation means Compensation as defined in Section 415(c)(3)
of the Code, but including amounts contributed by the Employer pursuant
to a salary reduction agreement which are excludable from the Employee's
gross income under Section 125, Section 402(a)(8), Section 402(h) or
Section 403(b) of the Code. The determination period is the Plan Year
containing the determination date and the 4 preceding Plan Years.
The determination of Key Employee status will be made in accordance with
Code Section 416(i)(1) of the Code.
(c) DETERMINATION DATE: For any Plan Year subsequent to the first Plan Year,
the last day of the preceding Plan Year. For the first Plan Year of the
Plan, the last day of that Year.
(d) PRESENT VALUE: For purposes of establishing present value to compute the
top heavy ratio, any benefit shall be discounted only for mortality and
interest based on a 6% interest rate and the Unisex Pension 1984
Mortality Table.
(e) VALUATION DATE: For purposes of computing the top heavy ratio, the
valuation date shall be the last day of each Plan Year.
(f) PERMISSIVE AGGREGATION GROUP: The Required Aggregation Group of plans
plus any other plan or plans of the Employer which, when considered as a
group with the Required Aggregation Group, would continue to satisfy the
requirements of Sections 401(a)(4) and 410 of the Code.
(g) REQUIRED AGGREGATION GROUP:
(1) Each qualified plan of the Employer in which at least one Key
Employee participates or participated at any time during the
determination period (regardless of whether the plan has
terminated), and
(2) any other qualified plan of the Employer which enables a plan
described in (1) to meet the requirements of Sections 401(a)(4)
or 410 of the Code.
page 48
<PAGE> 53
13.04 EFFECT OF TOP HEAVY STATUS: The following rules shall apply to any
Participant who earns an Hour of Service during any Plan Year in
which the Plan is determined to be top heavy.
(a) Minimum Allocation:
(1) Except as otherwise provided in paragraphs (3) and
(4) below, the Employer Non-elective Contributions
and forfeitures allocated on behalf of any
Participant who is not a Key Employee shall not be
less than the lesser of three percent of such
Participant's Compensation or, in the case where
the Employer has no defined benefit plan which
designates this Plan to satisfy Section 401 of the
Code, the largest Employer Non-elective
Contributions and forfeitures, expressed as a
percentage of the Key Employee's Compensation,
allocated on behalf of any Key Employee for that
year. The minimum allocation is determined without
regard to any Social Security contribution. Also,
elective deferrals described in Section 401(k) of
the Code and matching contributions described in
Section 401(m) of the Code may not be treated as
Employer Non-elective Contributions for purposes of
satisfying this Minimum Allocation. This Minimum
Allocation shall be made even though, under other
Plan provisions, the Participant would not
otherwise be entitled to receive an allocation, or
would have received a lesser allocation for the
year because of (i) the Participant's failure to
complete 1,000 Hours of Service during the Plan
Year (or any equivalent provided in the plan), or
(ii) the Participant's failure to make mandatory
employee contributions to the Plan, or (iii) the
Participant earns Compensation less than a stated
amount.
(2) For purposes of computing the minimum allocation,
Compensation shall mean Compensation as defined in
Section 1.11 of the Plan.
(3) Paragraph (1) above shall not apply to any
Participant who was not employed by the Employer on
the last day of the Plan Year.
(4) For purposes of Paragraph (1) above, Employer
Non-elective Contributions and forfeitures
allocated under any other defined contribution plan
of the Employer, in which any Key Employee
participates or which enables another defined
contribution plan to meet the requirements of Code
Section 401(a)(4) or 410, shall be considered
contributions and forfeitures allocated under this
Plan.
(5) In the case of any Participants who are not Key
Employees and who participate in both this Plan and
a defined benefit plan of the Employer, the
foregoing provisions of this subsection shall be
inapplicable and the Employer shall provide that
each Non-Key Employee eligible to participate in
this Plan has, at any time, a minimum accrued
benefit under the defined benefit plan, expressed
as a life annuity commencing at Normal Retirement
Age, equal to at least the product of (i) the
Employee's average compensation for the five
consecutive years when the Employee had the highest
aggregate compensation from the Employer and (ii)
the
page 49
<PAGE> 54
lesser of 2% per Year of Service or 20%. For purposes
of computing the product in the foregoing sentence,
compensation in years before January 1, 1984 and in
years after the close of the last Plan Year in which
the Plan is top heavy shall be disregarded, and
similarly, Years of Service shall exclude Years of
Service when the Plan was not top heavy (for any Plan
Year ending during such Year of Service) and Years of
Service completed in a Plan Year beginning before
January 1, 1984. Although accruals of Employer
derived benefits, whether or not attributable to
years for which the Plan is top heavy, may be used to
satisfy the defined benefit plan minimum, all accrued
benefits attributable to Employee Contributions and
for Plan Years beginning before January 1, 1985,
Employer Non-elective Contributions attributable to a
salary reduction or similar arrangement made pursuant
to Code Section 401 (k)), shall be ignored.
(6) To the extent required under Section 416(b) of the
Code the minimum allocation provided by this
subsection (a) may not be forfeited under Section
411(a)(3)(B) or 411(a)(3)(D) of the Code.
(7) If an Employee is a Participant in this Plan and
another defined contribution plan included in a
Required Aggregation Group, this Plan shall be the
last defined contribution plan to provide a minimum
allocation for such Non-Key Employee.
(b) If the Plan is determined to be top heavy during any
Limitation Year, the Plan Administrator shall apply the
limitations of Section 5.01 to the Participant by
substituting 100 percent for 125 percent in each place in
which it appears in the fractions described in such section.
Provided, however that the foregoing sentence shall not
apply if:
(1) the top heavy ratio is 0.90 or less, and
(2) each Non-Key Employee receives an additional minimum
contribution or benefit under a plan of the Employer.
In the case of a Non-Key Employee participating only
in a defined benefit plan, the additional minimum
benefit for each Year of Service counted is one
percentage point, up to a maximum of ten percentage
points, of the Employee's average Compensation for
the five consecutive years when the Employee had the
highest aggregate compensation from the Employer. In
the case of a Non-Key Employee participating only in
this Plan or another defined contribution plan, the
additional minimum contribution is one percent of the
Employee's Compensation. In the case of a Non-Key
employee participating both in a defined benefit plan
and this or another defined contribution plan, there
is no additional minimum benefit.
ARTICLE XIV - THE TRUSTEE
14.01 RESIGNATION AND REMOVAL: A Trustee may resign by written instrument
addressed to the Employer. The Employer may remove the Trustee by a
written instrument
page 50
<PAGE> 55
addressed to the Trustee. Appointments to vacancies shall be made
by the Employer and any successor Trustee shall evidence its
acceptance of such appointment by written instrument addressed to
the Employer. Upon written acceptance of such appointment by the
successor Trustee, the Trustee shall assign, transfer and pay over
to such successor Trustee, the funds and properties then
constituting the trust fund together with the proper accounting
therefore. if such accounting is not objected to within 60 days
after the receipt thereof by the Employer or the successor Trustee,
the Trustee shall be deemed to be discharged of all duties under
the Plan except to the extent otherwise provided by law.
14.02 INFORMATION TO BE FURNISHED TO TRUSTEE: The Employer and the Plan
Administrator shall furnish to the Trustee such information as
required or desirable for the purpose of enabling the Trustee to
carry out the provisions of the Plan, and the Trustee may rely upon
such information as being correct.
14.03 ACCOUNTING: The Trustee shall keep accurate and detailed accounts
of investments, receipts, disbursements and other transactions
hereunder and all such accounts and other records relating thereto
shall be open to inspection and audit at all reasonable times by
any person designated by the Employer or the Plan Administrator.
Within ninety (90) days following the close of the Plan Year and
within ninety (90) days after the removal or resignation of the
Trustee as provided herein, the Trustee shall file with the
Employer a written account setting forth all investments, receipts,
disbursements and other transactions effected by it during such
Plan Year or during the period from the close of the last Plan Year
to the date of such removal or resignation. Subject to any express
provision of applicable law as may be in effect from time to time
to the contrary, no person other than the Employer may require an
accounting or bring any action against the Trustee with respect to
the trust fund or its actions as Trustee.
14.04 TRUSTEE'S RIGHT TO JUDICIAL SETTLEMENT: Notwithstanding any other
provision of this Article, the Trustee shall have the right to have
a judicial settlement of its accounts. In any proceeding for a
judicial settlement of the Trustee's accounts, or for instructions
in connection with the trust fund, the only necessary parties
thereto in addition to the Trustee shall be the Employer and the
Plan Administrator. If the Trustee so elects, it may bring in any
other person or persons as a party or parties defendant.
14.05 TRUSTEE'S EXPENSES: To the extent not paid by the Employer,
expenses incurred by the Trustee in the performance of its duties
under the Plan, including reasonable compensation for agents and
for the services of counsel rendered to the Trustee, expenses
related thereto and all other proper charges and disbursements of
the Trustee including all taxes of any kinds whatsoever that may be
levied or assessed under existing or future laws shall be paid by
the Trustee out of the Plan, and such expenses shall constitute a
charge upon the Plan.
14.06 PAYMENT OF BENEFITS TO INCOMPETENT: In the event that any benefit
under the Plan is payable to a minor or other legally incompetent
person, the Trustee shall not require the appointment of a guardian
but shall be authorized to pay the same to any person having
custody of such minor or incompetent person, to pay to such minor
or incompetent person without the intervention of the guardian, or
to pay the same to a legal guardian of such minor or incompetent
person if one has already been appointed.
page 51
<PAGE> 56
14.07 TRUSTEE'S INVESTMENT POWERS: Subject to the fiduciary
responsibility provisions of ERISA, the Trustee may hold and
invest, all trust funds as follows:
(a) To invest or reinvest all or any part of the trust funds in
any real or personal property as the Trustee may deem
advisable, including but not limited to:
(1) Employer Stock;
(2) any stocks, bonds and other securities as the Trustee
may deem advisable, including interests in investment
trusts, mutual funds, and legal or discretionary
common trust funds (including, in the case of a
corporate trustee, a common trust funds established
and maintained by such trustee);
(3) any shares of an investment company registered under
the Investment Company Act of 1940, as amended;
(4) the deposit of any and all trust funds with an
Insurer for the payment of interest thereon; and
(5) any securities issued or guaranteed by the United
States of America or any of the instrumentalities or
States thereof or of any county, city, town, village,
school district, or other political subdivision of
any said states.
(b) To sell or exchange any part of the assets of the Plan.
(c) To vote, subject to the requirements of Article VIII, in
person or by proxy the securities and investment company
shares which it holds as Trustee, and to delegate such power
subject to Article VIII.
(d) To consent to or participate in dissolutions,
reorganizations, consolidations, mergers, sales, transfers
or other changes in securities and investment company shares
which it holds as Trustee, and, in such connection, to
delegate its powers, and to pay all assessments,
subscriptions and other charges.
(e) To exercise all rights, privileges, options, and elections
in any Insurance Contracts and to pay the premiums thereon.
(f) To retain in cash and keep unproductive of income such
amount as the Trustee may deem advisable in his discretion
and the Trustee shall not be required to pay interest on
such cash balances or on cash in its hands pending
investment.
(g) To sell, exchange, convey or transfer any property at any
time held by the Trustee upon such terms as it may deem
advisable and no person dealing with the Trustee shall be
bound to see the application of the purchase money or to
inquire into the propriety of any such transaction.
page 52
<PAGE> 57
(h) To enter into, compromise, compound and settle any debt or
obligation due to or from the Trustee and to reduce the rate
of interest on, to extend or otherwise modify, or to
foreclose upon default or otherwise enforce any such
obligation.
(i) To cause any bonds, stocks or other securities held by the
Trustee to be registered in or transferred into its name as
Trustees or the name of its nominee or nominees, or to hold
them unregistered or in form permitting transferability by
delivery, but at all times with full responsibility
therefore as Trustee.
(j) To borrow money if the direction of the Employer upon such
terms and conditions as may be deemed advisable to carry out
the purposes of the trust and to pledge securities or other
property in repayment of any such loan; provided, that loans
or advances may be made by the Trustee hereunder by way of
overdrafts or otherwise on a temporary basis on which no
interest is payable.
(k) To manage, administer, operate, repair, improve and mortgage
or lease for any number of years, regardless of any
restrictions on leases made by trustees or to otherwise deal
with any real property or interest therein; to renew or
extend or to participate in the renewal or extension of any
mortgage, and to agree to the reduction in the interest on
any mortgage or other modification or change in terms of any
mortgage or guarantee thereof in any manner and upon such
terms as may be deemed advisable; to waive any defaults
whether in performance of any covenant or condition of any
mortgage or in the performance of any guarantee or to
enforce any such default in such manner as may be deemed
advisable, including the exercise and enforcement of any and
all rights of foreclosure.
(1) To invest all or part of the trust fund in interest-bearing
deposits of the Trustee bank, which is included, but is not
limited to investments in time deposits, savings deposits,
certificates of deposit or time accounts which bear a
reasonable interest rate.
(m) To employ suitable agents, accountants and counsel and to
pay their reasonable expenses and compensation.
(n) To transfer, at any time and from time to time, such part or
all of the trust fund as it shall deem advisable to the
trustees of any trust which has been qualified under Section
401(a) and is exempt under Section 501(a) of the Code, and
which is maintained by it as a medium for the collective
investment of funds of pension, profit sharing or other
employee benefit trust, and to withdraw any part or all of
the trust fund so transferred; in which event the provisions
of any such trust shall be deemed a part of this Agreement
to the extent that they shall not be inconsistent with the
provisions hereof.
(o) To make, execute and deliver as Trustee any and all deeds,
leases, mortgages, advances, contracts, waivers, releases or
other instruments in writing necessary or proper in the
employment of any of the foregoing powers.
page 53
<PAGE> 58
(p) To exercise, generally, any of the powers which an
individual owner might exercise in connection with property
either real, personal or mixed held by the trust fund, and
to do all other acts that the Trustee may deem necessary or
proper to carry out any of the powers set forth in this
Article or otherwise in the best interests of the Trust
Fund.
(q) To settle, compromise or abandon all claims and demands in
favor of or against the Trust Fund.
(r) To appoint and/or employ business entities and/or
individuals to act as investment advisers and/or managers on
behalf of this Plan in order to manage any portion or all of
the assets of this Plan. However, the appointment of such an
investment adviser and/or manager:
(1) shall be subject to the approval of the Employer,
(2) will render any such investment adviser and/or
manager who is appointed a fiduciary under this Plan
to the extent of such adviser's and/or manager's
investment duties and responsibilities to the Plan,
and
(3) in no event shall cause the assets of this Plan to be
taken out of Trust or cause the Trustee hereof to be
eliminated.
(s) Upon the election of the Employer, to approve, devise and/or
implement a system or policy to permit Participants and/or
Beneficiaries hereunder an election, which shall be granted
to all Participants and/or Beneficiaries in a
nondiscriminatory manner, to execute investment control over
a portion or all of their Accounts. In the event that a
Participant or Beneficiary does not choose to exercise such
investment control, the Trustee shall continue to invest the
Accounts of such Participant or Beneficiary. In the event
that the Participant or the Beneficiary directs the Trustee
to invest some or all of that portion of the Participant's
or Beneficiary's Accounts in an investment which is
prohibited by the terms of the Plan, the direction of the
Participant or the Beneficiary shall be deemed to control
and the Trustee shall have no liability for violating the
terms of the Plan by following the Participant's or the
Beneficiary's investment instructions. To the extent
provided by ERISA, in the event that a Participant or a
Beneficiary exercises investment control over the assets in
such person's Accounts, no Fiduciary shall be subject to
liability for any loss or any breach of the fiduciary
responsibility standards of ERISA.
14.08 FORM OF PLAN CONTRIBUTIONS: The Trustee shall receive any
Contributions paid to it in cash or in the form of such other
property as it may from time to time deem acceptable and which
shall have been delivered to it. The Employer shall make
contributions in such manner and at such times as shall be
appropriate. The Trustee shall not be responsible for the
calculation or collection of any Contribution under or required by
the Plan, but shall be responsible only for property received by it
pursuant to this Plan.
14.09 PAYMENTS MADE AT DIRECTION OF PLAN ADMINISTRATOR: The Trustee
shall, on the written directions of the Plan Administrator, make
payments out of the Trust fund to such
page 54
<PAGE> 59
persons, in such amounts and or purposes as may be specified in the
written directions of the Plan Administrator. To the extent
permitted by law, the Trustee shall be under no liability for any
payment made pursuant to the direction of the Plan Administrator.
Any written direction of the Plan Administrator shall constitute a
certification that the distribution or payment so directed is one
which the Plan Administrator is authorized to direct.
ARTICLE XV - FIDUCIARY RESPONSIBILITY
15.01 FIDUCIARY STANDARDS: Each Fiduciary shall discharge his duties
under the Plan solely in the interest of the Participants and their
Beneficiaries and
(a) for the exclusive purpose of providing benefits for such
Participant and their Beneficiaries and defraying reasonable
expenses of administering the Plan;
(b) with the care, skill prudence, and diligence under the
circumstances then prevailing that a prudent person acting
in a like capacity and familiar with such matters would use
in the conduct of an enterprise of a like character and with
like aims; and
(c) in accordance with the Plan insofar as the Plan is
consistent with the provisions of ERISA.
The Trustee shall diversify the investments of the Plan so as to
minimize the risk of large losses, unless under the circumstances
it is clearly prudent not to do so. The requirements set forth
above shall not be deemed to be violated merely because the Trustee
invests the trust funds partly or wholly in (i) shares of Employer
Stock, (ii) shares of a mutual fund, or (iii) shares of a pooled
investment fund maintained by a bank.
15.02 SITUS OF PLAN ASSETS: Except as authorized by regulations
prescribed by the Secretary of Labor, the Trustee shall not
maintain ownership of any Plan assets outside the jurisdiction of
the District Courts of the United States.
ARTICLE XVI - EXCLUSIVE BENEFIT REQUIREMENTS
16.01 TRUSTEE RECEIPT OF FUNDS: All Contributions to the Plan shall be
transmitted directly or indirectly to the Trustee. All
Contributions so received by the Trustee shall constitute part of
the Trust Fund, and shall be held and managed and administered by
the Trustee pursuant to the terms of the Plan.
16.02 PLAN ASSETS FOR EXCLUSIVE BENEFIT OF PARTICIPANTS: Except to the
extent permitted by Section 16.03, the assets of this Plan shall
never inure to the benefit of the Employer and shall be held for
the exclusive purposes of providing benefits to Participants in the
Plan and their Beneficiaries and defraying reasonable expenses of
administering the Plan.
page 55
<PAGE> 60
16.03 RETURN OF CONTRIBUTIONS: Notwithstanding Section 16.02,
Contributions to the Plan may be returned to the Employer in the
following circumstances:
(a) If a Contribution is made by reason of a mistake of fact,
such Contribution may be returned to the Employer within one
(1) year after the payment thereof
(b) In the event that the Commissioner of Internal Revenue or
his delegate determines that the Plan is not initially
qualified under the Internal Revenue Code, any Contribution
(other than salary deferrals under a cash or deferred
arrangement) made incident to that initial qualification by
the Employer (plus any earnings on such contributions) may
be returned to the Employer within one year after the date
the initial qualification is denied, but only if the
application for the qualification is made by the time
prescribed by law for filing the Employer's return for the
taxable year in which the Plan is adopted, or such later
date as the Secretary of the Treasury may prescribe.
However, any Employee Deferral Contributions contributed by
or on behalf of Employees (plus any earnings on such
Contributions or deferrals) shall be returned to such
Employees.
(c) Since any Contribution under this Plan is expressly
conditioned upon its deductibility under Section 404 of the
Code, then, to the extent the deduction is disallowed, such
Contribution shall be returned to the Employer within one
year after the disallowance of the deduction.
(d) The amount which shall be returned to the Employer under
subsections (a) or (c) is the excess of
(1) the amount contributed, over
(2) the amount that would have been contributed had there
not occurred a mistake of fact or a disallowance of
the deduction.
Earnings attributable to the excess contribution may not be
returned to the Employer, but losses attributable thereto
must reduce the amount to be so returned. Furthermore, if
the return of any such amount would cause the balance of the
Accounts of any Participant to be reduced to less than the
balance which would have been in the Accounts had the
mistaken amount not be contributed, then the amount to be
returned to the Employer will be limited so as to avoid such
reduction.
ARTICLE XVII - PLAN TERMINATION AND AMENDMENTS
17.01 TERMINATION OR PARTIAL TERMINATION: While it is the intention of
the Employer that the Plan shall be permanent, the Employer
reserves the right to terminate it. Such termination shall become
effective upon receipt by the Trustee of a written instrument of
termination signed by the Employer. Upon termination of the Plan
or upon a partial termination of the Plan within the meaning of
Section 411(d)(3) of the Code, or upon a complete discontinuance
of Contributions under the Plan, the rights of all affected
Employees to their Accrued Benefits shall become nonforfeitable.
page 56
<PAGE> 61
17.02 LIMITATIONS ON AMENDMENTS BY EMPLOYER: This Plan may be amended by
the Employer in writing at any time, subject to the following.
(a) Such amendment shall not increase the duties of the Trustee
without its written consent;
(b) (1) if the Plan's vesting schedule is amended, or the
Plan is amended in any way that directly or
indirectly affects the computation of a
Participant's nonforfeitable Accounts balance, or
if the Plan is deemed amended by an automatic
change to or from a top heavy vesting schedule,
each Participant with at least 3 Years of Vesting
Service may elect, within a reasonable period after
the adoption of the amendment or change, to have
the nonforfeitable percentage computed under the
Plan without regard to such amendment or change.
(2) The period during which the election may be made
shall commence with the date the amendment is
adopted or deemed to be made and shall end on the
latest of:
(A) 60 days after the amendment is adopted;
(B) 60 days after the amendment becomes
effective; or
(C) 60 days after the Participant is issued
written notice of the amendment by the
Employer or Plan Administrator.
(3) Notwithstanding the foregoing, a Participant whose
nonforfeitable percentage under the Plan, as
amended, at any time cannot be less than such
percentage determined without regard to such
amendment shall not be entitled to any election
under this subsection (b).
(c) No amendment to the Plan shall be effective to the extent
that it has the effect of decreasing a Participant's Accrued
Benefit. For purposes of this paragraph, a plan amendment
which has the effect of decreasing a Participant's Account
Balance or eliminating an optional form of benefit, with
respect to benefits attributable to service before the
amendment shall be treated as reducing an Accrued Benefit.
Furthermore, if the vesting schedule of a Plan is amended,
in the case of an Employee who is a Participant as of the
later of the date such amendment is adopted or the date it
becomes effective, the nonforfeitable interest (determined
as of such date) of such Employee will not be less than his
nonforfeitable interest computed under the Plan without
regard to such amendment.
17.03 AMENDMENTS REQUIRED FOR QUALIFICATION: Any provision of this Plan
may be amended in any respect, without regard to the limitations
set forth in Section 17.02 above, if the amendment is required for
initial or continued qualification of the Plan under Section 401
(a) of the Code. Such amendment may be made retroactive to the
extent permitted by Section 401(b) of the Code.
page 57
<PAGE> 62
17.04 PARTICIPANT'S CONSENT TO AMENDMENT: Except as otherwise provided in
this Article, neither the consent of a Participant nor that of any
Beneficiary is required of any amendment to the Plan consistent
with the provisions of Sections 17.02 and 17.03.
ARTICLE XVIII - OTHER REQUIRED PROVISIONS
18.01 PLAN MERGER OR CONSOLIDATION: In the event of a merger or
consolidation with, or transfer of assets or liabilities to any
other plan, each Participant will be entitled to receive a benefit
immediately after such merger, etc. (determined as if the plan then
terminated) which is at least equal to the benefit the Participant
was entitled to receive immediately before such merger, etc.
(determined as if the Plan had then terminated).
18.02 NONALIENATION OF BENEFITS: Unless otherwise required by law, none
of the benefits, payments, proceeds, claims or rights of any
Participant or Beneficiary hereunder shall be subject to any claim
of any creditor of any Participant or Beneficiary, and in
particular, the same shall not be subject to attachment or
garnishment or other legal process by any creditor or any
Participant or any Beneficiary, nor shall such Participant or
Beneficiary have any rights to alienate, anticipate, pledge,
encumber, or assign any of the benefits or payments or proceeds
which he may expect to receive, contingently or otherwise, under
the Plan.
No benefit or interest available hereunder will be subject to assignment or
alienation, either voluntarily or involuntarily. The preceding sentence shall
also apply to the creation, assignment, or recognition of a right to any benefit
payable with respect to a Participant pursuant to a domestic relations order,
unless such order is determined by the Plan Administrator to be a qualified
domestic relations order, as defined in Section 414(p) of the Code.
18.03 FORM OF BENEFIT PAYMENTS: Except as otherwise required herein,
benefits payable under the Plan may be paid directly by the Trustee
in cash or in kind, or partially in each.
ARTICLE XIX - LOANS TO PARTICIPANTS
19.01 LOANS TO PARTICIPANTS:
(a) The provisions of this Article shall apply to any
Participant loans granted or renewed after October 18,
1989.
(b) Pursuant to a uniform written loan policy set forth in
this Article and on Appendix A to the Plan, attached
hereto and hereby made a part of the Plan, the Plan
Administrator may direct the Trustee to make a loan or
loans to Participants in cases of necessity or when
otherwise deemed warranted by the Plan Administrator. Such
loan or loans shall be in an amount or amounts which do
not in the aggregate exceed the amount set forth in
Section 19.02 below. A Participant's application to
receive a loan shall be made in writing and on forms
provided by the Plan Administrator, subject to Sections
19.03 and 19.04, and my
page 58
<PAGE> 63
other procedure established in Appendix A. In exercising
its discretion to make loans, the Plan Administrator shall
not discriminate in favor of or against any Participant or
group of Participants. The Plan Administrator shall
approve or deny loans based on the applicant's
creditworthiness, financial need, and such other factors
setting by an entity in the business of making similar
types of loans, including any such factors specified in
Appendix A. - Notwithstanding the foregoing, a loan may
not be made to a married Participant unless such
Participant's Spouse consents to the use of the
Participant's Account as security for the loan, and such
consent is witnessed by a Plan representative or Notary
Public.
19.02 MAXIMUM LOAN AMOUNT:
(a) In no event shall any loan made to a Participant pursuant to
this Article be in an amount which shall cause the
outstanding aggregate balance of all loans made to the
Participant under this Plan and all other qualified plans
maintained by the Employer to exceed the lesser of:
(1) $50,000, reduced by the excess (if any) of the
Participant's highest outstanding balance of loans
from such plans during the 1-year period ending on
the day before the date on which such loan was made,
over the outstanding balance of loans from such plans
on the date on which such loan was made, or
(2) one-half of the total of:
(A) the Participant's vested Account balance;
(B) the amount of the Participant's vested
interest in his account balances in each other
defined contribution plan maintained by the
Employer; and
(C) the present value of the nonforfeitable
accrued benefit of the Participant in each
defined benefit plan maintained by the
Employer.
(b) For purposes of this Article, the balances of the
Participant's accounts or a Participant's accrued benefit in
this Plan and each other qualified plan of the Employer
shall be determined as of the last available valuation of
such accounts or accrued benefit made within the twelve (12)
month period preceding the date on which an application for
a loan under this Article is made, adjusted for
distributions or contributions made after the date of such
valuation but not for earnings, gains or losses subsequent
to the date of such valuation.
19.03 REPAYMENT OF LOANS:
(a) Except as provided under paragraph (b) below, any loan made
under this Article shall mature and be payable in full
within five (5) years from the date the loan is made.
page 59
<PAGE> 64
(b) A loan used to acquire any dwelling unit which within a
reasonable time is to be used (determined at the time the
loan is made) as the principal residence of the Participant
shall mature and be payable in full within thirty (30)
years from the date such loan is made.
19.04 TERMS:
(a) Loans to Participants shall be made according to the following
terms:
(1) the security for such loans shall be up to 50% of the
present value of the vested Accrued Benefit of the
borrowing Participant, and such additional security
as the Plan Administrator may specify in Appendix A
or may from time to time demand to insure that the
loan remains adequately secured;
(2) interest shall be charged on the loans at rates the
Plan Administrator shall determine to be reasonable
(In order to determine whether an interest rate is
reasonable, the Plan Administrator (i) shall contact
persons in the business of lending money to ensure
that the loan provides the Plan with a return
commensurate with the interest rates charged by such
persons for loans which would be made under similar
circumstances; or (ii) shall follow such other
procedures outlined in Appendix A for determining a
reasonable rate of interest.);
(3) the loans shall be evidenced by such forms of
obligations, and shall be made upon such additional
terms as to default, prepayment, security and
otherwise as the Plan Administrator shall determine;
(4) the loans shall be repaid under a substantially level
amortization schedule, with payments required not
less frequently than quarterly.
(b) The entire unpaid balance of any loan made under this
Article and all interest due thereon, including all
arrearages thereon, shall, at the option of the Plan
Administrator, immediately become due and payable without
further notice or demand, upon the occurrence, with respect
to the borrowing Participant, of any of the following events
of default:
(1) if any payment of principal and accrued interest on
the loan remains due and unpaid for a period of ten
(10) days after the same becomes due and payable
under the terms of the loan;
(2) the commencement of a proceeding in bankruptcy,
receivership or insolvency by or against the
borrowing Participant;
(3) the termination of the employment of the borrowing
Participant with the Employer for any reason; or
page 60
<PAGE> 65
(4) the borrowing Participant attempts to make an
assignment for the benefit of creditors of his
Accrued Benefit under the Plan, or of any other
security for the loan.
(5) if the Plan Administrator determines that the
security for the loan is inadequate.
Any payments of principal and interest on the loan not paid
when due shall bear interest thereafter, to the extent
permitted by law, at the rate specified by the terms of the
loan. The payment and acceptance of any sum at any time on
account of the loan after an event of default, or any
failure to act to enforce the rights granted hereunder upon
an event of default, shall not be a waiver of the right of
acceleration set forth in this paragraph.
(c) If an event of default and an acceleration of the unpaid
balance of the loan and interest due thereon shall occur,
the Plan Administrator shall have the right to direct the
Trustee to pursue any remedies available to a creditor under
the terms of the loan, including the right to execute on the
security for the loan, and to apply any amounts credited to
the Account of the borrowing Participant at the time of
execution or at any time thereafter in satisfaction of the
unpaid balance of the loan and interest due thereon.
(d) A Participant's Accrued Benefit may be used to repay any
such loan if:
(1) any portion of a loan or loans shall be outstanding;
and
(2) an event occurs which entitles the Participant or his
estate or his Beneficiaries to receive a distribution
from the Plan, then such distribution shall, to the
extent necessary to liquidate the unpaid portion of
the loan or loans, be made to the Trustee as payment
on the loan or loans. No distribution shall be made
to a Participant or his estate or his Beneficiaries
in an amount greater than the excess of the portion
of his Accrued Benefit otherwise distributable over
the aggregate of the amounts owing with respect to
such loan or loans, plus interest, if any accrued
thereon.
ARTICLE XX - MISCELLANEOUS
20.01 NO GUARANTEE OF EMPLOYMENT: No Employee of the Employer nor anyone
else shall have any rights whatsoever against the Employer or the
Trustee as a result of this agreement except those expressly
granted to them hereunder. Nothing herein shall be construed to
give any Participant the right to remain an Employee of the
Employer.
20.02 CONSTRUCTION OF AGREEMENT: This agreement may be executed and/or
conformed in any number of counterparts, each of which shall be
deemed an original and shall be construed and enforced according to
the laws of the State of Ohio, to the extent not inconsistent with
the applicable provisions of the Code or ERISA.
page 61
<PAGE> 66
20.03 DURATION OF PLAN: Subject to the provisions herein contained with
respect to earlier termination, the trust created hereunder shall
continue in existence for the longest period permitted by law.
20.04 ILLEGALITY: In case any provisions of this agreement shall be held
illegal or invalid for any reason, said illegal or invalid
provision shall not affect the remaining parts of this agreement
but this agreement shall be construed and enforced as if said
illegal or invalid provisions had never been inserted therein.
20.05 WITHDRAWAL BY AN EMPLOYER: Any Affiliated Business or other
participating Employer may withdraw from the Plan at any time upon
written notice to the Trustee.
20.06 GENDER AND NUMBER: Pronouns and other similar words used in the
masculine gender shall be read as the feminine gender where
appropriate and the singular form of words shall be read as the
plural where appropriate.
20.07 SUCCESSOR EMPLOYER: In the event of the merger, consolidation, sale
of assets, liquidation or other reorganization of the Employer,
under circumstances in which a successor shall continue and carry
on all or a substantial part of the business of the Employer and
shall elect to continue this Plan, the successor shall be
substituted for the Employer under the terms and provisions of this
Plan upon filing its written election to that effect with the
Trustee and the Plan Administrator.
20.08 INDEMNIFICATION: The Employer may indemnify, through insurance or
otherwise, any one or more of the fiduciaries with respect to the
Plan against any claims, losses, expenses, damages or liabilities
arising out of the performance (or failure of performance) of their
responsibilities under the Plan.
20.09 EXPENSES OF ADMINISTRATION: The Employer may, but does not obligate
itself to, pay all or part of the expenses of administration of the
Plan, including the compensation and expenses of the Trustee, the
expenses of the Plan Administrator and any other expenses incurred
at the direction of the Administrator. To the extent that any of
these expenses are not paid by the Employer, these expenses shall
be paid by the Trustee from the Trust Fund.
page 62
<PAGE> 67
IN WITNESS WHEREOF, this document is executed on behalf of the Employer
and the Trustee by their duly authorized officers this 12TH day of
JANUARY, 1994 to be effective as of the Effective Date.
EMPLOYER:
CORTLAND SAVINGS AND BANKNG COMPANY
By: /s/ Dennis E. Linville
-----------------------------------------
Title: Executive V.P. & Corporate Secretary
--------------------------------------
TRUSTEE:
CORTLAND SAVINGS AND BANKING COMPANY
By: /s/ Joyce P. Ratcliff
-----------------------------------------
Title: Trust Officer
--------------------------------------
page 63
<PAGE> 68
APPENDIX A
----------
SPECIFIC LOAN PROVISIONS
------------------------
The following provisions shall supplement or modify the provisions
governing Participant loans in Article XIX of the Plan (attach additional pages,
if necessary). To the extent not modified by this Appendix A, and to the extent
any of the following items are left blank, the provisions of Article XIX shall
continue to govern Participant loans. (Item 1 must be completed. Items 2 through
8 need to be completed only if the Employer desires to supplement or modify
provisions contained in Article X of the Plan.)
1. Person or positions authorized to administer the Participant loan
program:
2. Procedures for applying for loans:
3. Basis on which loans will be approved or denied:
4. Limitations (if any) in addition to limits in Article X on the types
and amounts of loans offered:
5. Procedures for determining reasonable rate of interest:
6. Types of collateral (in addition to the maximum 50% of the
Participant's vested Accrued Benefit) which may secure a participant
loan:
<PAGE> 69
7. Additional events constituting default:
8. Additional steps that will be taken to preserve plan assets in the
event of such default:
<PAGE> 70
FIRST AMENDMENT
TO THE
CORTLAND SAVINGS AND BANKING COMPANY 401(k) PLAN
WHEREAS, effective March 1, 1984, Cortland Savings and Banking Company
(hereinafter referred to as the "Employer") established the Cortland Savings and
Banking Company 401(k) Plan (the 'Plan'); and
WHEREAS, the Plan was amended in its entirety and restated to comply
with the Tax Reform Act of 1986 and other relevant legal and regulatory changes;
and
WHEREAS, the Employer wishes to amend the Plan to comply with Section
401(a)(17) of the Internal Revenue Code; and
NOW THEREFORE, effective as of January 1, 1994, the Employer hereby
amends the Plan as follows:
1. Section 1.11 shall be amended by the addition of the following
language at the end of the section:
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 Participant 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 of Internal Revenue for increases in the cost of
living in accordance with Section 401(A)(17)(B) of the Code. The
cost-of-living adjustment in effect for a calendar year applies to
any period, not exceeding 12 months, over which compensation is
determined (Compensation Computation Period) beginning in such
calendar year. If a Compensation Computation Period consists of
fewer than 12 months, the OBRA '93 annual compensation limit will
be multiplied by a fraction, the numerator of which is the number
of months in the Compensation Computation Period, and the
denominator of which is 12.
For plan years beginning on or after January 1, 1994, any reference
in this Plan to the limitation under Section 401(a)(17) of the Code
shall mean the OBRA '93 annual compensation limit set forth in this
provision.
If Compensation for any prior Compensation Computation Period is
taken into account in determining a Participant's benefits accruing
in the current Plan Year, the Compensation for that prior
Compensation Computation Period is subject to the OBRA '93 annual
compensation limit in effect for that prior determination period.
For this purpose, for Compensation Computation 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.
II. In all other respects, the Plan shall remain unchanged.
<PAGE> 71
WITNESS WHEREOF, the employer and the Trustees affix their
signatures on this 24TH day of AUGUST, 1994.
EMPLOYER.
CORTLAND SAVINGS AND BANKING COMPANY
By: /s/ Dennis E. Linville
--------------------------------------------------
Dennis E. Linville
Title: EXECUTIVE VICE PRESIDENT & CORPORATE SECRETARY
-----------------------------------------------
TRUSTEE:
CORTLAND SAVINGS AND BANKING COMPANY
By: /s/ Joyce P. Ratcliff
--------------------------------------------------
Joyce P. Ratcliff
Title: TRUST OFFICER
-----------------------------------------------
<PAGE> 72
RESOLUTION OF THE BOARD OF DIRECTORS
OF
THE CORTLAND SAVINGS & BANKING CO.
WHEREAS, effective January 1, 1987, The Cortland Savings & Banking Company
(hereinafter referred to as the "Employer") established the Cortland Savings &
Banking Co. 401(k) Plan ("the Plan"); and
WHEREAS, the Employer wishes to amend the Plan.
NOW THEREFORE, effective July 11, 1995, the Employer hereby amends the plan as
follows:
I. The Plan shall be amended to accept rollovers or direct transfers from
employees who are not participants in the Plan.
II. The Plan shall be amended to allow the employees of Bank One,
Bloomfield to enter the Plan upon their date of hire.
Cortland Savings & Banking Co.
JULY 11, 1995 /s/ Dennis E. Linville
- -------------------------- --------------------------------------
DATE Executive Vice President &
Corporate Secretary
<PAGE> 73
RESOLUTION OF BOARD OF DIRECTORS
OF
THE CORTLAND SAVINGS & BANKING CO.
WHEREAS, effective January 1, 1987, the Cortland Savings & Banking Co.
(hereinafter referred to as the "Employer") established the Cortland Savings &
Banking Co. 401(k) Plan ("the Plan"); and
WHEREAS, the employer wishes to amend the Plan.
NOW THEREFORE, effective December 23, 1997, the Employer retroactively amends
Section 11:07(d) of the Plan to read:
Effective for years beginning after December 31, 1996, the required beginning
date for a participant who is not a 5% owner is April I of the calendar year
following the later of the calendar year in which he or she reaches age 70-1/2
or the calendar year in which the participant terminates employment. The old
rule continues to apply to 5% owners.
Cortland Savings & Banking Co.
DECEMBER 23, 1997 /s/ Dennis E. Linville
- ----------------------------- -----------------------------------
Date Executive Vice President &
Corporate Secretary
<PAGE> 74
LOAN PROCEDURES
Revised 09/26/97
The Cortland Savings & Banking Co. 401(k) Plan has adopted a loan provision to
assist Plan Participants in raising funds to meet certain immediate and heavy
financial needs. Participants in the Plan will be entitled to apply for a loan
in accordance with the following rules:
1. APPLICATION
All loan applications will be made on forms provided by the Trust
Department. Each form will be completed in its entirety before being
considered for approval. Each application will be reviewed on a
nondiscriminatory basis, by the Pension Committee members and then
signed by the Plan Administrator. Applications for loans must be
completed and returned to the Trust Department by March 20th, June
20th, September 20th, and December 20th. The loan proceeds will be
distributed in April, July, October, and January.
2. APPROVAL PROCESS
Loans will be permitted for the following reasons only:
[X] For the purpose of acquiring or constructing any dwelling
unit that will be used as the principal residence of the
Participant within a reasonable time.
[X] For the purpose of paying deductible medical expenses (under
Code Section 213(d)) of the participant, his or her spouse,
or other dependents;
[X] For the purpose of paying tuition for post-secondary
education for the participant, his or her spouse, or other
dependents;
[X] To prevent eviction from, or foreclosure on the mortgage of,
the participant's principal residence.
[X] Other: LOAN REQUESTS FOUND TO BE REASONABLE BY THE PLAN
ADMINISTRATORS. All decisions will be rendered in a
non-discriminatory basis.
3. LOAN AMOUNT
All loans will be limited to 50% of the Participant's vested account
balance, provided such loan does not exceed $50,000. The $50,000
maximum amount will be reduced by the Participant's highest outstanding
loan balance in the previous 12 months, even if amounts have been
repaid.
<PAGE> 75
3. LOAN AMOUNT (Continued)
[X] The Plan also includes a minimum loan amount of $1,000.
[X] No Participant may have more than two (2) loans outstanding at
any one time.
[X] A Participant may be denied future loans if he or she defaulted
on any previous loan.
4. REPAYMENT PROCEDURE
Principal and interest payments will be made monthly.
[X] Principal and interest payments shall be made by the means
of payroll withholding according to the terms of the
promissory note.
5. INTEREST
Prime rate at date of loan application + 1 %.
6. TERM OR LOAN
The period of repayment of any loan shall not exceed five (5) years.
However, if the loan is used to acquire your principal residence, then
the repayment period may be up to thirty (30) years. The loan may be
repaid in whole or in part at any time during the repayment period
without penalty.
7. DEFAULT
A loan shall be deemed to be in default when a scheduled installment
payment is 45 (i.e., 45) days late. If payment has not been made within
15 (i.e., 15) days of the installment due date, the administrator will
send the participant a letter notifying him or her that payment is due
within 30 (i.e., 30) days of the date of the letter. If payment is not
received within such stipulated time period, the following will take
place:
1. The loan is considered to be in default as of the date the first
payment was due.
2. The remaining principal and interest on the loan is due and payable
as of the date the last payment was due.
3. The balance of the loan is now a taxable event, subject to personal
income and penalty taxes, but will not relieve the participant's
obligation to repay the loan. Form 1099R will be completed and
given to the Participant; however, the loan will not be charged
against the Participant's vested account balance until he or she
terminates service, retires, dies,
2
<PAGE> 76
7. DEFAULT (Continued)
becomes disabled, attains age 59-1/2 or reaches the earliest date
distribution is permitted under the Plan.
4. To the extent necessary, any collateral pledged as additional
security will be foreclosed upon.
5. If permitted in the Plan, the loan will be deemed an in-service
withdrawal. Such withdrawal will be subject to personal income and
possibly penalty taxes. Form 1099R will be issued to the
participant showing such withdrawal.
6. To the extent possible, the loan will be renegotiated and payments
will be made through payroll withholding.
NOTE: If a participant contacts the loan administrator before the
due date of loan payment, and agrees to item 4, 5, or 6
above, the loan will not go into default.
8. ADMINISTRATOR
The Trust Department Officer is responsible for the administration of
this loan program. All questions and applications should be addressed
to:
Cortland Banks, Attention: Trust Department Officer
194 W. Main Street
Cortland, Ohio 44410
Phone: (330) 637-8040
9. EMPLOYERS AUTHORIZATION
The Plan Administrators (the Pension Committee) certify that the
above loan provisions will be administered in a consistent and
uniform manner for all Participants in the Plan.
/s/ Dennis E. Linville
-------------------------------
Dennis E. Linville,
Exec. Vice Pres. & Corp. Sec.
3
