SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter ended June 30, 1996. Commission file #0-15423
SOUTH ALABAMA BANCORPORATION,INC.
(Exact name of registrant as specified in its charter)
Delaware 63-0909434
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) Identification Number)
100 St. Joseph Street, Mobile, Alabama 36602
(Address of principal executive offices) (Zip Code)
(334) 431-7800
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X . No .
Shares of common stock ($0.01 Par) outstanding at June 30,
1996: 3,001,563
Page 1 of 17
SOUTH ALABAMA BANCORPORATION,INC AND SUBSIDIARIES
INDEX TO FORM 10 - Q
PART I. Financial Information Page Number
Consolidated Statements of Condition
June 30, 1996 and December 31, 1995 3
Consolidated Statements of Operations
Six Months Ended June 30, 1996 and 1995 4
Consolidated Statements of Operations
Three Months Ended June 30, 1996 and 1995 5
Consolidated Statements of Cash Flows
Six Months Ended June 30, 1996 and 1995 6
Notes to Consolidated Financial Statements
June 30, 1996 7-8
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 9-16
PART II. Other Information 16-17
. . PART I. FINANCIAL INFORMATION
<TABLE>
SOUTH ALABAMA BANCORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION (Unaudited)
<CAPTION>
June 30, December 31,
1996 1995
(Unaudited)
(Dollars in thousands)
A S S E T S
<S> <C> <C>
Cash and Due from Banks $ 11,700 $ 15,604
Federal Funds Sold 3,400 16,800
Total Cash and Cash Equivalents 15,100 32,404
Interest Bearing Deposits 400 652
Securities Available for Sale (at Market) 47,563 40,752
Securities Held to Maturity 20,822 21,441
(Market value of $20,861 and $21,664,
respectively)
Loans 150,268 144,147
Less: Unearned Loan Income <113> <122>
Allowance for Loan Losses <1,957> <2,222>
Loans, Net 148,198 141,803
Premises and Equipment 5,520 4,585
Other Real Estate Owned,Net 0 308
Accrued Income Receivable 2,543 2,377
Deferred Tax Asset 896 462
Other Assets 476 165
Total $241,518 $244,949
L I A B I L I T I E S
Non-interest Bearing Demand Deposits $ 38,400 $ 42,086
Interest Bearing Demand Deposits 72,670 73,623
Savings Deposits 14,376 12,699
Large Denomination Time Deposits
(of $100 or more) 28,956 30,184
Time Deposits 53,181 51,500
Total Deposits 207,583 210,092
Short-Term Borrowing 3,239 4,050
Other Liabilities 1,821 2,010
Total Liabilities 212,643 216,152
S H A R E H O L D E R S' E Q U I T Y
Common Stock
Par Value $0.01
Shares Authorized 4,500,000
Shares Outstanding 3,001,563 30 30
Capital Surplus 16,538 16,538
Retained Earnings 12,609 11,671
Net Unrealized Gain (Loss) on Securities
Available for Sale (302) 558
Total Shareholders' Equity 28,875 28,797
Total $241,518 $244,949
(See accompanying notes to consolidated financial statements.)
</TABLE>
<TABLE>
SOUTH ALABAMA BANCORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)
<CAPTION>
Six Months Ended June 30
1996 1995
(Dollars in thousands except
per share amounts)
<S> <C> <C>
Interest Revenue:
Loans $ 6,846 $ 6,584
Investments:Taxable 1,717 1,665
Non-Taxable 406 342
Other 278 130
Total Interest Revenue 9,247 8,721
Interest Expense:
Deposits 3,729 3,332
Other 81 119
Total Interest Expense 3,810 3,451
Net Interest Revenue 5,437 5,270
Provision for Loan Losses 131 3
Net Interest Revenue After Provision
for Loan Losses 5,306 5,267
Non-Interest Revenue:
Trust Department Income 548 483
Service Charges on Deposit Accounts 435 420
Securities Gains and Losses,net 103 51
Gain on sale of other real estate owned 18 0
Other Income, Charges and Fees 170 134
Total Non-Interest Revenue 1,274 1,088
Non-Interest Expense:
Salaries 1,888 1,752
Pensions and Employee Benefits 498 461
Net Occupancy Expense 317 297
Furniture and Equipment Expense 387 380
Other Expense 1,253 1,320
Total Non-Interest Expense 4,343 4,210
Income Before Income Taxes 2,237 2,145
Income Tax Expense 698 667
Net Income $1,539 $ 1,478
Earnings Per Common Share $ 0.51 $ .49
Average Shares Outstanding (000's) 3,002 2,999
(See accompanying notes to consolidated financial statements.)
</TABLE>
<TABLE>
SOUTH ALABAMA BANCORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)
<CAPTION>
Three Months Ended June 30
1996 1995
(Dollars in thousands except
per share amounts)
<S> <C> <C>
Interest Revenue:
Loans $ 3,457 $ 3,394
Investments:Taxable 860 824
Non-Taxable 214 170
Other 86 112
Total Interest Revenue 4,617 4,500
Interest Expense:
Deposits 1,824 1,823
Other 39 27
Total Interest Expense 1,863 1,850
Net Interest Revenue 2,754 2,650
Provision for Loan Losses 30 3
Net Interest Revenue After Provision
for Loan Losses 2,724 2,647
Non-Interest Revenue:
Trust Department Income 274 239
Service Charges on Deposit Accounts 225 216
Securities Gains and Losses,net (8) 46
Gain on sale of other real estate owned 18 0
Other Income, Charges and Fees 95 74
Total Non-Interest Revenue 604 575
Non-Interest Expense:
Salaries 973 903
Pensions and Employee Benefits 251 226
Net Occupancy Expense 162 154
Furniture and Equipment Expense 197 190
Other Expense 605 656
Total Non-Interest Expense 2,188 2,129
Income Before Income Taxes 1,140 1,093
Income Tax Expense 355 333
Net Income $ 785 $ 760
Earnings Per Common Share $ 0.26 $ .25
Average Shares Outstanding (000's) 3,002 2,999
(See accompanying notes to consolidated financial statements.)
</TABLE>
<TABLE>
SOUTH ALABAMA BANCORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
<CAPTION>
Six Months Ended June 30,
1996 1995
(Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net Income $ 1,539 $ 1,478
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 417 301
Provision for loan losses 131 3
Securities gains and losses,net <103> <51>
Gain on sale of other real estate owned <18> 0
(Increase) decrease in:
Deferred tax asset 75 291
Income receivable <166> <80>
Other assets <311> <338>
Increase (decrease) in other liabilities <189> 475
Net cash provided by operating activities 1,375 2,079
CASH FLOWS FROM INVESTING ACTIVITIES
Net decrease in interest bearing
deposits 252 4
Net increase in loans <6,526> <7,373>
Purchase of premises and equipment <1,245> <109>
Net decrease in other real estate owned 326 0
Proceeds from sale of securities
available for sale 4,780 561
Proceeds from maturities of investments 4,598 3,086
Purchase of investments <16,944> <1,842>
Net cash used in investing activities <14,759> <5,673>
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits <2,509> 9,038
Net increase (decrease) in short-
term borrowing <811> <669>
Dividends paid <600> <480>
Net cash used in financing activities <3,920> 7,889
NET INCREASE <DECREASE> IN CASH
AND CASH EQUIVALENTS <17,304> 4,295
Cash and cash equivalents at beginning
of period 32,404 16,299
Cash and cash equivalents at end of
period $15,100 $20,594
Supplemental disclosures of cash flow
information:
Interest paid in cash $ 3,859 $ 3,141
Income taxes paid in cash 840 660
(See accompanying notes to consolidated financial statements.)
</TABLE>
<PAGE>
SOUTH ALABAMA BANCORPORATION, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE A: The accompanying unaudited consolidated financial statements
have been prepared in accordance with generally accepted
accounting principles for interim financial information and
with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted
accounting principles for complete financial statements. The
information furnished reflects all adjustments, consisting of
normal and recurring accruals, which in the opinion of
management are necessary for a fair presentation of the
results of the interim periods. Results for interim periods
may not necessarily be indicative of results to be expected
for the year.
For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's
report on Form 10-K for the year ended December 31, 1995.
NOTE B: Per Share data is computed on the basis of the weighted
average number of shares of common stock outstanding during
the period. The dilutive effect of stock options is not
material.
NOTE C: The allowance for losses on loans for the six month periods
ended June 30, 1996 and 1995 are summarized as follows (in
thousands):
<TABLE>
<CAPTION>
1996 1995
Allowance for loan losses:
<S> <C> <C>
Balance at beginning of period $ 2,222 $ 2,212
Provision charged to
operating expense 131 3
Losses charged off <458> <51>
Recoveries 62 44
Balance at end of period $ 1,957 $ 2,208
</TABLE>
NOTE D: During May 1993, the Financial Accounting Standards
Board issued Statements of Financial Accounting Standards
(SFAS) No. 114, "Accounting by Creditors for the Impairment of
a Loan". This statement was later amended by SFAS No. 118.
The statements provide guidance on recognition of impairment
of a loan as well as methods for measurement of impairment.
SFAS No. 114 and No. 118 were adopted by the Company for the
year beginning January 1, 1995. Under the new standard, the
recorded investment in impaired loans at June 30, 1996 was
$785 thousand. The reserve for impaired loans was $293
thousand at June 30, 1996.
NOTE E: On May 31, 1996, the Company announced that a merger
agreement had been executed with First Monco Bancshares, Inc.,
parent company of Monroe County Bank, Monroeville, Alabama.
The Company expects that the merger transaction will be
consummated on or about December 31, 1996, at which time it
will issue shares of common stock for all outstanding common
stock of First Monco Bancshares.
Management's Discussion and Analysis
of Financial Condition and Results of Operations
Presented below is an analysis of the consolidated financial
condition and results of operations of South Alabama Bancorporation,
Inc. (the "Company") and its wholly owned subsidiaries, The Bank of
Mobile and First National Bank, Brewton. This analysis focuses upon
significant changes in financial condition between December 31, 1995 and
June 30, 1996 and significant changes for the two three month periods
ended June 30, 1996 and 1995, as well as significant changes in the
results of operation for the two six month periods ending June 30, 1996
and 1995.
Financial Condition
Total assets at June 30, 1996 were $241.5 million, a decrease of
$3.4 million or 1.4 percent from $244.9 million at December 31, 1995.
Cash and cash equivalents decreased $17.3 million due primarily to the
decrease in deposits of $2.5 million, or 1.2 percent, to the increase in
investment securities of $6.2 million, or 10.0 percent, and to the
increase in loans of $6.1 million or 4.2 percent.
Time deposits, consisting of certificates of deposit, increased
$1.7 million or 3.3 percent. Large denomination time deposits decreased
$1.2 million or 4.1 percent. The Company does not actively seek large
denomination time deposits as a source of funding. Non-interest bearing
demand deposits decreased $3.7 million or 8.8 percent while interest
bearing demand deposits decreased $1.0 million, or 1.3 percent. Core
deposits, defined as total deposits less time deposits, decreased by
$3.0 million, caused primarily by the reduction in non-interest bearing
deposits. Savings deposits grew 13.2 percent to $14.4 million. Short-
term borrowing decreased $811 thousand from year-end 1995.
The Company's equity as a percent of total assets at June 30, 1996
was 12.0 percent, compared to 11.8 percent at December 31, 1995. The
primary capital ratio (defined as the sum of common and preferred stock,
capital surplus, retained earnings, allowance for loan losses and
contingency and capital reserves divided by total assets) was 12.8
percent, compared to 12.7 percent at year-end.
The Company and its subsidiary banks are required by the various
depository institutions regulatory agencies to maintain certain capital-
to-asset ratios. Risk-based capital guidelines consider risk factors
associated with various components of assets, both on and off the
Statement of Condition. Under these guidelines, capital is measured in
two tiers. These capital tiers are used in conjunction with "risk-
adjusted" assets in determining "risk-adjusted" capital ratios. The
Company's Tier I capital, which is shareholders' equity less certain
adjustments, was $28.2 million at December 31, 1995 and $29.2 million at
June 30, 1996. Regulatory guidelines disallow a portion of capital
created by accounting for income taxes under SFAS No. 109 and all
capital created by accounting for securities under SFAS No. 115. Under
these guidelines, $302 thousand is included at June 30, 1996 for
regulatory capital purposes. Tier II capital, which is Tier I plus the
allowable portion of the allowance for loan losses, was $30.5 million at
December 31, 1995 and $31.1 million at June 30, 1996. The ratios,
expressed as a percent of total risk-adjusted assets for Tier I and Tier
II, were 11.39 percent and 12.28 percent, respectively, at December 31,
1995, and 11.95 percent and 12.75 percent, respectively, at June 30,
1996. Both the December 1995 and the June 1996 ratios exceed the
minimum ratios of four percent and eight percent for Tier I and Tier II,
respectively.
The components of the Company's risk-based capital calculations
for June 30, 1996 are shown below:
<TABLE>
<CAPTION>
June 30,
1996
Tier I capital--
<S> <C>
Common shareholders' equity $28,875
Net unrealized Gain (Loss) on
Securities Available for Sale 302
Tier I capital 29,177
Tier II capital--
Allowable portion of the allowance
for loan losses 1,957
Total capital (Tiers I and II) $31,134
Risk-adjusted assets $244,180
Quarterly average assets 240,084
Risk-based capital ratios:
Tier I capital 11.95%
Total capital (Tiers I and II) 12.75%
</TABLE>
The Company declared a regular quarterly dividend of $0.10 per
share, payable July 1, 1996, to shareholders of record June 17, 1996.
Liquidity
Liquidity management involves the ability to meet the day-to-day
cash flow requirements of customers, primarily depositors' withdrawals
and borrowers' requirements for funds. This is achieved by carefully
monitoring the amount of liquid assets available to meet these needs.
Liquid assets (cash and cash items, deposits with other banks, federal
funds sold and securities available for sale excluding pledged
securities) totaled $40.9 million at June 30, 1996. These assets
represented 16.9 percent of total assets at quarter end as compared to
21.0 percent at December 31, 1995. The net change in cash and cash
equivalents for the six month period ended June 30, 1996 was a decrease
of $17.3 million. Cash includes currency on hand and demand deposits
with other financial institutions. Cash equivalents are defined as
short-term and highly liquid investments, which are readily convertible
to known amounts of cash and so near maturity that there is
no significant risk of changes in value because of changes in interest
rates. The Company has federal fund lines of credit, Federal Reserve
discount window operations and Federal Home Loan Bank lines of credit
available.
Management is not aware of any trends, events or uncertainties that
will have or that are reasonably likely to have a material effect on the
liquidity, capital resources or operations of the Company. Management
is not aware of any current recommendations by regulatory authorities
which, if they were implemented, would have such an effect.
Non-Performing Assets
Non-performing assets include accruing loans 90 days or more past
due, loans on non-accrual, renegotiated loans and other real estate
owned. Commercial, business and installment loans are classified as
non-accrual by Management upon the earlier of: (i) a determination that
collection of interest is doubtful, or (ii) the time at which such loans
become 90 days past due, unless collateral or other circumstances
reasonably assure full collection of principal and interest.
<TABLE>
Summary of Non-Performing Assets
(Dollars in Thousands)
<CAPTION>
June 30, December 31,
1996 1995
<S> <C> <C>
Accruing loans 90 days or more past due $ 125 $ 62
Loans on non-accrual 660 490
Renegotiated loans 0 0
Total non-performing loans 785 552
Other real estate owned 0 308
Total non-performing assets $ 785 $ 860
Loans 90 days or more past due
as a percent of loans 0.08% 0.04%
Total non-performing loans as a
percent of loans 0.52% 0.38%
Total non-performing assets as a percent
of loans and other real estate owned 0.52% 0.60%
</TABLE>
While non-performing loans increased by $233 thousand for year-end
1995, total non-performing assets at June 30, 1996 decreased $75
thousand from year-end 1995.
The Company currently holds no properties in other real estate
owned.
The amount of impaired loans determined under SFAS No. 114 and 118
were not material. These credits were considered in determining the
adequacy of the allowance for loan losses and, while current, are
regularly monitored for changes within a particular industry or general
economic trends which could cause the borrowers severe financial
difficulties.
Any loans classified for regulatory purposes as loss, doubtful,
substandard or special mention, and not included above as non-performing
assets, do not (i) represent or result from trends or uncertainties
which management reasonably expects will materially impact future
operating results, or (ii) represent material credits about which
management is aware of any information which causes management to have
serious doubts as to the ability of such borrower to comply with the
loan repayment terms.
Results of Operations
THE SECOND QUARTER
The Company recorded net income of $785 thousand, or $0.26 per share
during the second quarter of 1996 compared to net income in the second
quarter of 1995 of $760 thousand, or $0.25 per share. Total interest
revenue increased by $117 thousand or 2.6 percent primarily due to
increased volume in loans. Interest expense increased by $13 thousand
or 0.7 percent due to the general rise in interest rates and the
increase in deposit levels. Management provided $30 thousand for loan
losses during the second quarter months of 1996 compared to a $3 thousand
provision for the second quarter of 1995. Net charge offs during the
first six months of 1996 were $396 thousand compared to $7 thousand in
the first six months of 1995. Included in net charge offs in the first
six months of 1996 were charged off loans to an individual of $75
thousand and charged off loans to a commercial customer of $304
thousand. The allowance for loan losses at June 30, 1996 and December
31, 1995 as a percent of loans was 1.30 percent and 1.54 percent
respectively. The decrease in the allowance for loan losses as a
percentage of loans was due primarily to net charge offs in the first
six months of 1996. The allowance for loan losses represented 2.49
times non-performing loans at June 30, 1996 and 4.03 times non-
performing loans at December 31, 1995. Management reviews the adequacy
of the allowance for loan losses on a continuous basis by assessing the
quality of the loan portfolio, including non-performing loans, and
adjusting the allowance when appropriate. The allowance for loan losses
was considered adequate at June 30, 1996.
Non-interest revenue was $604 thousand for the second quarter of
1996, compared to $575 thousand for the same period in 1995, an increase
of 5.0 percent. Excluding securities gains and losses and the gain on
sale of other real estate owned, non-interest revenue increased by $65
thousand.
Salary and employee benefit expense increased $95 thousand or 8.4
percent, caused by an increase in full time equivalent employees from
154 at June 30, 1995 to 159 at June 30, 1996 and by merit increases.
Net occupancy expense increased $8 thousand when compared to the same
period in 1995, while furniture and equipment expense increased $7
thousand.
Other expenses include data processing fees for the trust
departments, FDIC insurance, insurance costs, accounting and legal fees,
stationery and supplies, credit card service fees, loan collection fees
and advertising. Other non-interest expense in first quarter 1996
decreased by $51 thousand or 7.8 percent.
Income tax expense was $355 thousand for the second quarter of
1996, compared to $333 thousand for the same period in 1995. The
increase in income tax expense in 1996 compared to 1995 resulted
primarily from higher levels of pretax income.
THE SIX MONTHS
The Company recorded net income of $1.5 million, or $0.51 per share
during the first six months of 1996 compared to net income in the first
six months of 1995 of $1.5 million, or $0.49 per share. Total interest
revenue increased by $526 thousand or 6.0 percent due to increased
volume in loans and investment securities. Interest expense increased
by $359 thousand or 10.4 percent due to the general rise in interest
rates and the increase in deposit levels. Management provided $131
thousand for loan losses during the first six months of 1996 compared to
$3 thousand for the first six months of 1995.
Non-interest revenue was $1.3 million for the first six months of
1996, compared to $1.1 million for the same period in 1995, an increase
of 17.1 percent. Excluding securities gains and losses and the gain on
sale of other real estate owned, non-interest revenue increased by $116
thousand.
Non-interest expense in the six month period was $4.3 million in
1996, an increase of $133 thousand from 1995. Salary and employee
benefits increased $173 thousand or 7.8 percent, a combination of merit
increases and an increase in staff. Other expense decreased by $67
thousand.
Income tax expense was $698 thousand for the first six months of
1996, compared to $667 thousand for the same period in 1995. The
increase in income tax expense in 1996 compared to 1995 resulted
primarily from higher levels of pretax income.
Item 4. Submission of Matters to a Vote of Security Holders
The stockholders approved, during the annual meeting on May 9, 1996, the
Election of the Directors. A total of 2,594,181 shares of Common Stock,
or 86.42 percent of the total outstanding, were represented either in
person or by proxy at the meeting. The Election of the Board of
Directors was approved as to each nominee, as follows:
16
<TABLE>
<CAPTION>
Votes in Votes Broker
Nominee Favor Against Abstaining Non-Votes
<S> <C> <C> <C> <C>
Stephen G. Crawford 2,594,181 0 0 916
David C. DeLaney 2,594,181 0 0 916
Lowell J. Friedman 2,593,881 300 0 916
Broox G. Garrett, Jr. 2,594,181 0 0 916
James P. Hayes, Jr. 2,594,181 0 0 916
Clifton C. Inge 2,593,281 900 0 916
W. Bibb Lamar, Jr. 2,594,181 0 0 916
Thomas E. McMillan, Jr. 2,594,181 0 0 916
J. Richard Miller, III 2,594,181 0 0 916
J. Stephen Nelson 2,594,181 0 0 916
Earl H. Weaver 2,594,181 0 0 916
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(10) Material Contracts
.1 Retirement Plan for Employees of South Alabama
Bancorporation entered into December 13, 1994 is filed as Exhibit 10.1
hereto.
(b) Reports on Form 8-K
There were no reports filed of Form 8-K for the three month period ended
June 30, 1996.
Pursuant to the requirement of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
SOUTH ALABAMA BANCORPORATION
08/13/96 /s/ W. Bibb Lamar, Jr.
Date W. Bibb Lamar, Jr.
President
08/13/96 /s/ F. Michael Johnson
Date F. Michael Johnson
Chief Financial Officer
17
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<CASH> 11700
<INT-BEARING-DEPOSITS> 400
<FED-FUNDS-SOLD> 3400
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 47563
<INVESTMENTS-CARRYING> 20822
<INVESTMENTS-MARKET> 20861
<LOANS> 150268
<ALLOWANCE> 1957
<TOTAL-ASSETS> 241518
<DEPOSITS> 207583
<SHORT-TERM> 3239
<LIABILITIES-OTHER> 1821
<LONG-TERM> 0
0
0
<COMMON> 29177
<OTHER-SE> (302)
<TOTAL-LIABILITIES-AND-EQUITY> 241518
<INTEREST-LOAN> 6846
<INTEREST-INVEST> 2123
<INTEREST-OTHER> 278
<INTEREST-TOTAL> 9247
<INTEREST-DEPOSIT> 3729
<INTEREST-EXPENSE> 3810
<INTEREST-INCOME-NET> 5437
<LOAN-LOSSES> 131
<SECURITIES-GAINS> 103
<EXPENSE-OTHER> 4343
<INCOME-PRETAX> 2237
<INCOME-PRE-EXTRAORDINARY> 1539
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1539
<EPS-PRIMARY> .51
<EPS-DILUTED> .51
<YIELD-ACTUAL> 4.90
<LOANS-NON> 660
<LOANS-PAST> 125
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 753
<ALLOWANCE-OPEN> 2222
<CHARGE-OFFS> 458
<RECOVERIES> 62
<ALLOWANCE-CLOSE> 1957
<ALLOWANCE-DOMESTIC> 1624
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 333
</TABLE>
RETIREMENT PLAN FOR EMPLOYEES OF
SOUTH ALABAMA BANCORPORATION
T A B L E O F C O N T E N T S
A R T I C L E P A G E
I DEFINITIONS 1
II ELIGIBILITY AND PARTICIPATION
2.01 Eligibility 21
2.02 Entry and Participation 21
2.03 Reemployment 21
2.04 Acceptance 21
2.05 Employees who are Officers,
Shareholders or Highly Compensated 21
2.06 Absence in the Armed Service 22
2.07 Transfers Among Employers which are
Controlled Group Members 22
III FUNDING OF PLAN
3.01 Medium of Funding 23
3.02 Contributions 23
3.03 Maintenance of Funding
Standard Accounts 23
3.04 Prohibition of Reversion 23
IV BENEFITS
4.01 General Provisions Relating to
Determination and Payment of Benefits 25
4.02 Form of Benefit Payment 28
4.03 Limitation on Benefits 32
4.04 Normal Retirement 36
4.05 Early Retirement 37
4.06 Delayed Retirement 37
4.07 Disability Retirement 38
4.08 Termination of Employment 38
4.09 Pre-Retirement Death Benefit 40
4.10 Post-Retirement Death Benefit 41
4.11 No Duplication of Benefits 41
V OPTIONAL RETIREMENT BENEFITS
5.01 Election of Optional Retirement Benefit43
5.02 Determination of Optional Benefit 43
5.03 Description of Options 43
5.04 Cancellation of Election 44
5.05 Purchase of Annuities 44
5.06 Eligible Rollover Distributions 44
A R T I C L E P A G E
VI MODIFICATION FOR TOP-HEAVY
PLANS
6.01 Application of Article 46
6.02 Minimum Benefit 46
6.03 Accelerated Vesting 47
6.04 Modification of Defined Benefit and
Defined Contribution Plan Fraction 47
VII PARTICIPATING EMPLOYEES
7.01 Participation by Other Employers 48
7.02 Delegation of Authority 48
7.03 Employee Transfer 48
7.04 Discontinuance of Participation 48
7.05 Administrative Committee Authority 48
VIII ADMINISTRATION OF PLAN
8.01 Plan Administrator 49
8.02 Claims Procedure 50
8.03 Records 51
8.04 Delegation of Authority 51
8.05 Legal Incompetence 52
8.06 Correction of Errors 52
8.07 Qualified Domestic Relations
Order Procedure 52
IX AMENDMENT OR TERMINATION
9.01 Amendment of Plan 54
9.02 Termination of Plan 55
9.03 Mergers 55
9.04 Rights Nonforfeitable 55
9.05 Allocation of Assets 56
9.06 Restrictions on Benefits 57
X MISCELLANEOUS
10.01 Liability of Employer 59
10.02 Spendthrift Clause 59
10.03 Successor to Business of Employer 59
10.04 Conflict of Provisions 60
10.05 Successors to Trustee 60
10.06 Definition of Words 60
10.07 Titles 60
10.08 Execution of the Plan 60
A R T I C L E I
DEFINITIONS
As used herein, the following words and phrases shall have the meaning
indicated unless otherwise defined or required by the context:
Section 1.01 "Accrued Benefit" shall mean, for a Participant who has
not reached his Normal Retirement Date, the product of (a) and (b) where
(a) is a monthly amount commencing on the first day of the month next
following his Normal Retirement Date, and payable thereafter pursuant to
the normal form of settlement, calculated under Section 4.04(b) as though
his Employment had continued uninterrupted until his Normal Retirement
Date, but based on his Average Compensation as of the date of his
termination of Employment; and
(b) is a fraction, the numerator of which is the actual number of the
Participant's Years of Credited Service for Benefit Accrual and the
denominator of which is the number of years of Credited Service for
Benefit Accrual with which he would have been credited had his
Employment continued uninterrupted until his Normal Retirement Date.
Section 1.02 "Actuary" or "Actuarial Firm" shall mean a qualified
actuary who is enrolled by the Joint Board for the Enrollment of Actuaries
and who performs the annual actuarial valuations and other computations
required under the Plan, or a firm which employs such an actuary and which
provides such actuarial valuations.
Section 1.03 "Actuarial Equivalent" shall mean a benefit which is of
equal value at the date of determination to the benefit otherwise defined,
computed on the basis of an interest rate of seven percent (7%) per annum and
mortality rates from the 1983 Group Annuity Mortality Table. However, for
purposes of determining the equivalent present value of a benefit, the
interest rate shall be the lesser of the rate stated above or the immediate
and deferred interest rates for determining lump sum distributions under
terminating plans promulgated by the Pension Benefit Guaranty Corporation as
of the first day of the Plan Year in which the benefit is distributed.
Section 1.04 "Administrative Committee" or "Committee" shall mean the
committee to which the administrative duties and responsibilities under the
Plan are delegated pursuant to Section 7.04 hereof.
Section 1.05 "Administrator" or "Plan Administrator" shall mean, with
respect to the Plan, the Sponsor.
Section 1.06 "Alternate Payee" shall mean any Spouse, former Spouse,
child or other dependent of a Participant who is recognized by a Qualified
Domestic Relations Order as having a right to receive all or a portion of the
benefits payable under the Plan with respect to such Participant.
Section 1.07 "Annuity Starting Date" shall mean the first day of the
first period for which an amount is payable as an annuity, or in the case of
a benefit not payable in the form of an annuity, the first day in which all
events have occurred which entitle the Participant to the benefit.
Section 1.08 "Average" shall mean, with respect to a Participant's
Compensation, the average thereof over the five (5) consecutive whole Plan
Years of his Employment during the last ten (10) Plan Years during which his
Compensation was the greatest, or over the lesser number of such Plan Years
that he actually shall have completed.
Section 1.09 "Bargaining Unit" shall mean the bargaining unit described
in any collective bargaining agreement between the Employer any any union.
Whenever the Plan makes reference to an Employee in a Bargaining Unit, he
shall be deemed to be included if his status of Employment is such that
compensation, fringe benefits and working conditions are determined by such
collective bargaining agreement, whether or not he is a member of the union.
Section 1.10 "Beneficiary" shall mean the designated recipient or
recipients who shall receive any benefits payable under the Plan upon the
death of a Participant. If the Participant does not name a beneficiary, the
Trustee shall, upon the death of the Participant, pay any benefit payable
under the Plan to the Participant's estate. Notwithstanding the preceding,
for a married Participant, Beneficiary shall mean the Spouse of the
Participant unless an alternate Beneficiary is chosen in accordance with
Section 4.02(b)(3).
Section 1.11 "Board" shall mean the Board of Directors of the Sponsor.
Section 1.12 "Break in Employment" shall mean a Plan Year during which an
Employee has not been credited with more than five hundred (500) Hours of
Employment.
Section 1.13 "Cash-out Distribution" shall mean a distribution to a
Participant of the present value of his entire nonforfeitable benefit under
the Plan which is made no later than the close of the second Plan Year
following the Plan Year in which he terminates participation in the Plan.
Section 1.14 "Compensation" shall mean the following for each
respective purpose under the Plan:
(a) Section 415 Compensation. For the purpose of applying the limitations of
section 415 of the Code, Compensation shall mean the Participant's wages,
salaries, and other amounts received (without regard to whether an amount
is paid in cash) for personal services actually rendered in the course of
employment with the Employer to the extent that the amounts are
includable in gross income (including but not limited to commissions or
compensation for services on the basis of a percentage of profits, tips,
bonuses, fringe benefits, reimbursement and expense allowances) and such
other amounts as are included as Compensation under Treasury Regulation
section 1.415-2(d)(2). Compensation for this purpose does not include
the following: (1) Employer contributions to a plan of deferred
compensation to the extent that, before application of the section 415
limits, such contributions are not includable in the Employee's gross
income for the taxable year in which contributed (including amounts
contributed pursuant to a salary reduction agreement which are excludable
from gross income under sections 125, 402(e)(3) or 402(h) of the Code) or
distributions from a plan of deferred compensation; or (2) other amounts
which receive special tax benefits, such as premiums for group term life
insurance (but only to the extent such amounts are not includable in the
gross income of the Employee). At the election of the Employer, Section
415 Compensation shall mean any other definition of Compensation,
consistently applied, which is considered to be Compensation within the
meaning of section 415(c)(3) of the Code.
(b) Section 414(s) Compensation. Section 414(s) Compensation shall mean
Section 415 Compensation as described hereinabove plus any amount which
is not includable in the gross income of the Employee under sections 125,
402(e)(3), 402(h) or 403(b) of the Code.
(c) Compensation Used to Determine Benefits. For purposes of determining
benefits under the Plan, Compensation shall mean Section 414(s)
Compensation paid by the Employer to the Employee for the Plan Year.
(d) Highly Compensated Employees. For purposes of determining Highly
Compensated Employees under section 414(q) of the Code as defined in
Section 1.37, Compensation shall mean Section 414(s) Compensation as
defined herein paid by the Employer to the Employee for the twelve
(12)-month period preceding the determination date.
(e) Compensation Limits. Compensation, for all purposes, shall exclude
amounts in excess of two hundred thousand dollars ($200,000) (or such
other amount as determined in accordance with the cost-of-living
adjustment procedures described in section 415(d) of the Code). In the
event of a Plan Year that contains fewer than twelve (12) calendar months,
then the annual compensation limit is an amount equal to the annual
compensation limit for the calendar year in which the compensation period
begins multiplied by the ratio obtained by dividing the number of full
months in the period by twelve (12). In determining Compensation of a
Highly Compensated Employee who is a Five Percent Owner or among the ten
(10) most highly compensated Employees for such Plan Year, the
Compensation of the Family Unit shall be aggregated pursuant to sections
414(q)(6) and 401(a)(17) of the Code. If as a result of the application
of such rules the two hundred thousand dollar ($200,000) limitation is
exceeded, then (except for purposes of determining the portion of
Compensation up to the integration formula if the Plan provides for
permitted disparity) the limitation shall be prorated among the affected
Participants in proportion to each such Participant's Compensation as
determined under this Section prior to the application of this
limitation. In addition to other applicable limitations set forth in the
Plan, and notwithstanding any other provision of the Plan to the
contrary, for Plan Years beginning on or after January 1, 1994, the
annual Compensation of each employee taken into account under the Plan
shall not exceed the OBRA '93 Annual Compensation Limit. The OBRA '93
Annual Compensation Limit is $150,000, as adjusted by the Commissioner
for increases in the cost of living in accordance with section 401(a)(17)
(B) of the Code. The cost-of-living adjustment in effect for a calendar
year applies to any period, not exceeding twelve (12) months, over which
Compensation is determined (determination period) beginning in such
calendar year. If a determination period consists of fewer than twelve
(12) months, the OBRA '93 Annual Compensation Limit will be multiplied by
a fraction, the numerator of which is the number of months in the
determination period and the denominator of which is twelve (12). For
Plan Years beginning on or after January 1, 1994, any reference in this
Plan to the limitation under section 401(a)(17) of the Code shall mean
the OBRA '93 Annual Compensation Limit set forth in this provision. If
Compensation for any prior determination period is taken into account in
determining an employee's benefits accruing in the current Plan Year, the
Compensation for that prior determination period is subject to the
OBRA '93 Annual Compensation Limit in effect for that prior determination
period. For this purpose, for determination periods beginning before the
first day of the first Plan Year beginning on or after January 1, 1994,
the OBRA '93 Annual Compensation Limit is $150,000."
For all Self-Employed Individuals, Compensation shall mean Earned Income.
Section 1.15 "Controlled Group Member" shall mean
(a) any corporation which is a member of a controlled group of corporation
(as defined by section 414(b) of the Code) of which the Employer is a
member,
(b) any other trade or business (whether or not incorporated) which is under
common control with respect to the Employer (as defined by section 414(c)
of the Code), or
(c) any organization which is a member of an affiliated service group (as
defined by section 414(m) of the Code); but only for the period during
which such other corporation, trade, business or organization and the
Employer are members of such controlled group of corporation, are under
such common control or are serving as an affiliated service group. All
employees of the Controlled Group Members shall be treated as employed by
a single employer.
Section 1.16 "Credited Service for Benefit Accrual" shall mean the sum
of an Employee's Years of Employment; excluding, however
(a) Years of Employment with respect to which he receives a Cash-out
Distribution unless he repays to the Plan, in accordance with repayment
procedures specified under Section 4.01(b) hereunder, the full amount of
the distribution plus interest thereon; and
(b) in the case of an Employee not entitled to a Vested Benefit as of prior
termination of Employment, Years of Employment prior to a Break in
Employment if the number of consecutive Breaks in Employment equals or
exceeds the greater of: (a) five, or (b) the total number of Years of
Employment before the Break in Employment.
Section 1.17 "Credited Service for Vesting" shall mean the sum of an
Employee's Years of Employment; excluding, however, in the case of an
Employee not entitled to a Vested Benefit as of a prior termination of
Employment, Years of Employment prior to a Break in Employment if the number
of consecutive Breaks in Employment equals or exceeds the greater of: (a)
five, or (b) the total number of Years of Employment before the Break in
Employment.
Section 1.18 "Delayed Retirement Benefit" shall mean the benefit to
which a Participant is entitled at his Delayed Retirement Date.
Section 1.19 "Delayed Retirement Date" shall mean the first day of the
month following the date after a Participant's Normal Retirement Date on
which he actually retires.
Section 1.20 "Determination Date" shall mean, for any Plan Year
subsequent to the first Plan Year, the last day of the preceding Plan Year
and, for the first Plan Year of the Plan, the last day of that year.
Section 1.21 "Disability Retirement Benefit" shall mean the benefit to
which a Participant is entitled at his Disability Retirement Date.
Section 1.22 "Disability Retirement Date" shall mean the first day of
the month following the date on which a Participant is determined to be
disabled as defined in Section 4.06 which date is on or after the later of
the date on which the Participant attains age fifty (50) or the date the
Participants completes ten (10) Years of Employment.
Section 1.23 "Domestic Relations Order" shall mean a judgment, decree,
or order (including approval of a property settlement agreement) made
pursuant to state domestic relations law or community property law that
relates to the provision of child support or alimony payments to, or marital
property rights of a Spouse, former Spouse, child or other dependent of a
Participant.
Section 1.24 "Earliest Retirement Age" shall mean the earliest date on
which, under the Plan, the Participant could elect to receive retirement
benefits.
Section 1.25 "Early Retirement Age" shall mean for each Participant,
the later of the date on which he attains age fifty-five (55) or the date he
completes ten (10) years of Credited Service for Vesting.
Section 1.26 "Early Retirement Benefit" shall mean the benefit to which
a Participant is entitled at his Early Retirement Date.
Section 1.27 "Early Retirement Date" shall mean, for each Participant,
the first day of the month coincident with or next following the date on
which he attains his Early Retirement Age.
Section 1.28 "Effective Date" shall mean the effective date of this
amendment and restatement of the Plan which shall be January 1, 1995. The
original effective date of the Plan is January 1, 1987, and the original
effective date of the Prior Plan is December 21, 1973.
Section 1.29 "Employee" shall mean an individual employed by the
Employer or by any other employer required to be aggregated with the Employer
under sections 414(b), (c), (m) or (o) of the Code, including any Bargaining
Unit or Leased Employee.
Section 1.30 "Employer" shall mean:
(i) South Alabama Bancorporation, a holding corporation,
(ii) The Bank of Mobile, a corporation with its principal place of
business in Mobile, Alabama;
(iii) First National Bank, a National Banking Association with its
principal place of business in Brewton, Alabama; and
(iv) any other trade or business which, with the consent of the Sponsor
in accordance with Article VII, adopts this Plan.
Section 1.31 "Employment" shall mean the employment relationship as an
Employee of the Employer.
Section 1.32 "Employment Date" shall mean the date as of which an
Employee is credited with the first Hour of Employment upon his initial
Employment.
Section 1.33 "ERISA" shall mean the Employee Retirement Income Security
Act of 1974.
Section 1.34 "Family Members" shall mean such Employee's spouse (at any
time during the Plan Year) and lineal ascendants and descendants and their
spouses.
Section 1.35 "Family Unit", shall mean such Employee's Spouse (at any
time during the Plan Year) and lineal descendants who have not attained age
nineteen (19) as of the last day of the Plan Year.
Section 1.36 "Five-Percent Owner" shall mean any person who owns (or is
considered as owning within the meaning of Section 318 of the Code) more than
five percent (5%) of the capital or profits interest of the Employer.
Section 1.37 "Highly Compensated Employee" shall mean with respect to a
Plan Year, any Employee who at any time during the Plan Year or the preceding
twelve (12) consecutive month period, met one of the criteria below:
(a) a Five-Percent Owner,
(b) an Employee receiving more than seventy-five thousand dollars ($75,000)
in Compensation from the Employer,
(c) an Employee receiving more than fifty thousand dollars ($50,000) in
Compensation from the Employer and who, when all Employees are ranked on
the basis of Compensation is in the group consisting of the top twenty
percent (20%) of Employees,
(d) an officer of the Employer who received Compensation of more than fifty
percent (50%) of the dollar limit on annual benefits from a defined
benefit plan under Code section 415(b)(1)(A). If for any year no officer
of the Employer received Compensation in excess of this level, the
highest paid officer of the Employer shall be treated as a Highly
Compensated Employee, or
(e) a former Employee who separated from Service prior to the year containing
the current Determination Date, and who was a Highly Compensated
Employee during the year he separated from Service, or who was a Highly
Compensated Employee during any year, containing any Determination Date,
ending on or after the Employee's attainment of age fifty-five (55).
Notwithstanding, any Employee who is described under (b), (c) or (d) above
for the current Plan Year and who was not described as such for the preceding
twelve (12) consecutive month period shall be considered a Highly Compensated
Employee under (b), (c) or (d) above only if, in the current Plan Year, such
Employee is a member of the group consisting of the top one hundred (100)
paid Employees. If an Employee is, during a Determination Year or the
preceding twelve (12) consecutive month period, a Family Member of either a
Five Percent Owner who is an active or former Employee or a Highly
Compensated Employee who is one of the ten (10) most Highly Compensated
Employees ranked on the basis of Compensation paid by the Employer during
such year, then the Family Member and the Five Percent Owner or top ten (10)
Highly Compensated Employee shall be aggregated. In such case, the Family
Member and Five Percent Owner or top ten Highly Compensated Employee shall be
treated as a single Employee receiving Compensation and Plan benefits equal
to the sum of such Compensation and benefits of the Family Member and Five
Percent Owner or top ten (10) Highly Compensated Employee. These criteria
shall be applied in accordance with section 414(q) of the Code and regulations
thereunder as may be prescribed by the Secretary of the Treasury. The dollar
amounts prescribed under (b) and (c) hereinabove will be adjusted according
to procedures issued by the Secretary of the Treasury.
Section 1.38 "Hour of Employment" shall mean the following:
(a) Each hour for which an Employee is paid, or entitled to payment of
Compensation as defined in this Article I, for the performance of duties
for the Employer or any other Controlled Group Member during the
applicable computation period.
(b) Each hour for which an Employee is paid, or entitled to payment of
Compensation as defined in this Article I, by the Employer or any other
Controlled Group Member 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), jury duty, military duty or leave of absence;
provided, however, that with respect to this subsection (b):
(1) no more than five hundred and one (501) Hours of Employment shall be
credited to an Employee on account of any single continuous period
during which the Employee performs no duties (whether or not such
period occurs in a single computation period),
(2) hours for which an Employee is directly or indirectly paid, or
entitled to payment, on account of a period during which no duties
are performed shall not be credited if such payment is made or due
under a plan maintained solely for the purpose of complying with
applicable workers' compensation, unemployment compensation or
disability insurance laws, and
(3) hours shall not be credited for a payment which solely reimburses
an Employee for medical or medically-related expenses incurred by
the Employee.
For purposes of this subsection (b), a payment shall be deemed to be made
by or due from the Employer regardless of whether such payment is made by
or due from the Employer directly, or indirectly through, among others, a
trust fund, or insurer to which the Employer contributes or pays premiums
and regardless of whether contributions made or due to the trust fund,
insurer or other entity are for the benefit of particular Employees or
are on behalf of a group of Employees in the aggregate.
(c) Solely for determining whether an Employee has incurred a Break in
Employment, Hours of Employment shall include each hour for which an
Employee is absent from work for any period by reason of the pregnancy of
the Employee, the birth of a child of the Employee, placement of a child
with the Employee in connection with the adoption of such child by such
Employee or for purposes of caring for such child. The hours to be credited
to such Employee in accordance with this subparagraph (c) shall be the
Hours of Employment which otherwise would normally have been credited to
such Employee but for such absence, or in any case in which the Plan
Administrator is unable to determine such Hours of Employment, eight (8)
Hours of Employment per day of such absence; provided, however, that with
respect to this subsection (c):
(1) no more than five hundred and one (501) Hours of Employment shall be
credited to an Employee by reason of any one such pregnancy or
placement,
(2) such hours shall be treated as Hours of Employment in the Plan Year
in which the absence from work begins, if the Employee would be
prevented from incurring a Break in Employment in such Plan Year
solely because periods of absence are treated as Hours of
Employment, or in any other case, in the immediately following year,
and
(3) no Hours of Employment will be credited unless the Employee
furnishes to the Plan Administrator such timely information as the
Plan Administrator may reasonably require to establish that the
absence from work is for reasons referred to in this subsection (c)
including a statement of the number of days for which there was such
an absence.
(d) Each hour for which back pay, irrespective of mitigation of damages, is
either awarded or agreed to by the Employer. The same hours shall not
be credited both under subsection (a), (b) or (c) and under this
subsection. Hours credited for back pay under this subsection with
respect to periods described in subsection (b) shall be subject to the
limitations set forth in subsection (b).
The provisions of paragraphs (b) and (c) of 29 CFR 2530.200b-2 shall be
observed in crediting Hours of Employment under this Section, which
paragraphs are incorporated herein by reference. Section 1.39 "Key
Employee" shall mean any Employee, former Employee or Beneficiary thereof,
who, at any time during the Plan Year in question or during any of the four
(4) preceding Plan Years, is:
(a) an officer of the Employer who received Compensation of more than fifty
percent (50%) of the dollar limit on annual benefits from a defined
benefit plan under Code section 415(b)(1)(A) for the calendar year in
which such Plan Year ends,
(b) one of the ten (10) Employees having annual Compensation greater than the
limitation in effect under Code section 415(c)(1)(A) and owning both the
largest interests in the Employer and more than a one-half of one percent
(0.5%) interest in the Employer and one of the ten (10) largest interest
in the Employer,
(c) a Five-Percent Owner or
(d) a one-percent owner of the Employer having an annual Compensation from
the Employer of more than one hundred and fifty thousand dollars
($150,000).
For the purposes of paragraph (a), no more than fifty (50) Employees (or, if
less, the greater of three (3), or ten percent (10%), of the Employees) shall
be treated as officers. For the purposes of paragraph (b), if two (2)
Employees have the same interest in the Employer, the Employee having greater
annual Compensation shall be treated as having the larger interest. For the
purposes of applying the terms of this definition, the provisions of Code
section 416(i) are incorporated herein by reference.
Section 1.40 "Leased Employee" shall mean an individual who is not
employed by the Employer but shall be considered an Employee of the Employer if:
(a) the services of the Leased Employee are provided pursuant to an implied
or express agreement between the Employer and a leasing organization;
(b) the Leased Employee has performed such services for the Employer on a
substantially full-time basis for a period of at least one (1) year; and
(c) such services are of a type actually or historically performed by
Employees of the Employer or by employees of an employer in the business
field of the Employer.
Provided however, that a Leased Employee shall not be considered an Employee
of the Employer if:
(d) such Leased Employee is covered by a plan maintained by the leasing
organization which is a qualified non-integrated money purchase pension
plan providing: (1) an employer contribution of at least ten percent
(10%) of the Leased Employee's compensation, (2) full and immediate
vesting, and (3) immediate eligibility to participate for any Leased
Employee who, in each plan year during the four (4)-year period ending
with the current plan year, has compensation in excess of one thousand
dollars ($1,000); and
(e) the number of Leased Employees do not constitute more than twenty percent
(20%) of the non-Highly Compensated Employees of the Employer.
Section 1.41 "Limitation Year" shall mean the Plan Year.
Section 1.42 "Non-Key Employee" shall mean an Employee who is not a Key
Employee.
Section 1.43 "Normal Retirement Age" shall mean, for each Participant
the date on which he attains age sixty-five (65) and completes five (5) years
of participation under the Plan.
Section 1.44 "Normal Retirement Benefit" shall mean the benefit to
which a Participant is entitled at his Normal Retirement Date.
Section 1.45 "Normal Retirement Date" shall mean, for each Participant,
the first day of the month coinciding with or next following the date on
which he attains his Normal Retirement Age.
Section 1.46 "Participant" shall mean any Employee who becomes a
participant in the Plan as provided in Article II.
Section 1.47 "Permissive Aggregation Group" shall mean 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.
Section 1.48 "Plan" shall mean the the Retirement Plan for Employees of
South Alabama Bancorporation as contained herein and as amended from time to
time and shall include the Trust Agreement, as it may be amended from time to
time, and the Trust established under said Agreement. This Plan is an
amendment and restatement of The Bank of Mobile Retirement Plan.
Section 1.49 "Plan Year" shall mean the consecutive twelve (12)-month
period ending on December 31.
Section 1.50 "Prior Plan" shall mean the First National Bank Employees'
Pension Plan, which was merged into this Plan effective January 1, 1995.
Section 1.51 "Qualified Domestic Relations Order" shall mean a Domestic
Relations Order which creates or recognizes the existence of an Alternate
Payee's right to, or assigns to an Alternate Payee, the right to receive all
or a portion of the benefits payable to a Participant under the Plan and does
not alter the amount or form of Plan benefits. Any order that is qualified
under this Section shall remain qualified with respect to a successor Plan of
the Employer or a Plan of a successor Employer.
(a) To be a Qualified Domestic Relations Order, a Domestic Relations Order
shall specify the following:
(1) the name and the last known mailing address, if any, of the
Participant and the name and mailing address of each Alternate Payee
covered by the order,
(2) the amount or percentage of the Participant's benefits to be paid by
the Plan to each such Alternate Payee, or the manner in which such
amount or percentage is to be determined,
(3) the number of payments or period to which such order applies, and
(4) a statement that such order applies to this Plan.
(b) Such order shall not require:
(1) the Plan to provide any type or form of benefits, or any option, not
otherwise provided under the Plan,
(2) the Plan to provide an increased benefit determined on the basis of
actuarial value, or
(3) the payment of benefits to an Alternate Payee which are required to
be paid to another Alternate Payee under another order previously
determined to be a Qualified Domestic Relations Order.
(c) In the case of any payment before a Participant has separated from
service, a Domestic Relations Order shall not be treated as failing to
meet the requirements of subparagraph (b)(1) above solely because such
order requires that payment of benefits be made to an Alternate Payee:
(1) on or after the date on which the Participant attains (or would have
attained) his Earliest Retirement Age, or
(2) as if the Participant had retired on the date on which such payment
is to begin under such order (but taking into account only the
benefits actually accrued and not taking into account the present
value of any employer subsidy for early retirement), and
(3) in any form in which such benefits may be paid under the Plan to the
Participant.
Section 1.52 "Qualified Joint and Survivor Annuity" shall mean, for a
married Participant, an immediate annuity for the life of the Participant
with a survivor annuity for the life of his Spouse which is equal to fifty
percent (50%) of the amount of the annuity payable during the joint lives of
the Participant and his Spouse, and which is the Actuarial Equivalent of the
normal form of settlement under the Plan. For a Participant who is not
married, Qualified Joint and Survivor Annuity shall mean an immediate annuity
for the life of the Participant.
Section 1.53 "Qualified Preretirement Survivor Annuity" shall mean, for
a Participant who dies after his Earliest Retirement Age, the survivor's
portion of the benefit that would have been payable if the Participant had
retired with an immediate Qualified Joint and Survivor Annuity on the day
before his date of death. For a Participant who dies on or before his Earliest
Retirement Age, this term shall mean the survivor's portion of the benefit
that would have been payable if the Participant had
(a) separated from service on the date of death (or actual date of
separation from service, if earlier),
(b) survived to his Earliest Retirement Age,
(c) retired with an immediate Qualified Joint and Survivor Annuity at
his Earliest Retirement Age, and
(d) died on the following day.
Section 1.54 "Required Aggregation Group" shall mean (a) each qualified
plan of the Employer in which at least one Key Employee participates or
participated at any time during the determination period (regardless of
whether the plan has terminated), and (b) any other qualified plan of the
Employer which enables a plan described in (a) to meet the requirements of
sections 401(a)(4) or 410 of the Code.
Section 1.55 "Reemployment Date" shall mean the date as of which an
Employee is credited with the first Hour of Employment after an interruption
in Employment.
Section 1.56 "Retirement Equity Act" shall mean Public Law 98-397 as in
effect on the relevant date to be interpreted under the Plan.
Section 1.57 "Social Security Retirement Age" shall mean that age set
by the Social Security Administration at which time an individual shall be
eligible for social security normal retirement benefits, as follows:
Social Security
Year of Birth Retirement Age
Before 1938 65
1938 - 1954 66
1955 or later 67
Section 1.58 "Sponsor" shall mean South Alabama Bancorporation.
Section 1.59 "Spouse" or "Surviving Spouse" shall mean the spouse or
surviving spouse of the Participant, provided that a former spouse will be
treated as the Spouse or Surviving Spouse to the extent provided under a
Qualified Domestic Relations Order.
Section 1.60 "Tax Reform Act" shall mean Public Law 98-369 as in effect
on the relevant date to be interpreted under the Plan and regulations
relative thereto.
Section 1.61 "Top Heavy Plan" shall mean this Plan for any Plan Year
if, as of the Determination Date, any of the following conditions exist:
(a) the Top Heavy Ratio for this Plan exceeds sixty percent (60%) and this
Plan is not part of any Required Aggregation Group or Permissive
Aggregation Group of plans,
(b) this 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 sixty percent (60%), or
(c) this Plan is a part of the Required Aggregation Group and part of a
Permissive Aggregation Group of plans and the Top Heavy Ratio for the
Permissive Aggregation Group exceeds sixty percent (60%).
Section 1.62 "Top Heavy Ratio" shall mean, for any Required or
Permissive Aggregation Group, as appropriate, a fraction, the numerator of
which is the sum of the present value of Accrued Benefits plus, if the
Employer maintains a defined contribution plan, the account balances
thereunder, for all Key Employees as of the Determination Date(s), and the
denominator of which is the sum of the account balances and the present value
of Accrued Benefits 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 and account balances in both the numerator
and denominator of the Top Heavy Ratio are increased for any distribution
made in the five (5)-year period ending on the Determination Date. The
preceding sentence shall also apply to distributions under a terminated plan
which, if it had not been terminated, would have been required to be included
in a Required Aggregation Group.
For purposes of the above, the value of account balances and the present
value of Accrued Benefits will be determined as of the most recent Valuation
Date that falls within or ends with the twelve (12)-month period ending on
the Determination Date, except as provided in section 416 of the Code and the
regulations thereunder. The account balances and Accrued Benefits of a
Participant who is not a Key Employee but who was a Key Employee in a prior
year, or who has not been credited with at least one (1) Hour of Employment
with the Employer at any time during the five (5)-year period ending on the
Determination Date will be disregarded. The account balances and Accrued
Benefits of a former Employee who has performed no services for the Employer
for five (5) years shall be disregarded in determining whether the Plan is Top
Heavy. 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.
Employee contributions and salary deferrals will be taken into account for
purposes of computing the Top Heavy Ratio. When aggregating plans, the value of
account balances and Accrued Benefits will be calculated with reference to
the Determination Dates that fall within the same calendar year.
Section 1.63 "Trust Agreement" shall mean the trust agreement and any
and all amendments and successor agreements entered into between the Sponsor
and the Trustee for the purpose of finding benefits under the Plan. The
Trust Agreement shall be deemed to be part of this Plan as if all its terms
and provisions were fully set forth herein.
Section 1.64 "Trust Fund" or "Fund" shall mean the assets, consisting
of cash and such other property as shall be paid or delivered to the Trustee,
including earnings thereon.
Section 1.65 "Trustee" shall mean the party or parties designated as
such in the Trust Agreement.
Section 1.66 "Valuation Date" shall mean January 1 which is the first
day of each Plan Year.
Section 1.67 "Vested Benefit" shall mean the nonforfeitable percentage
of an Accrued Benefit to which a Participant is entitled as determined under
Section 4.07.
Section 1.68 "Year of Employment" shall mean the computation period of
twelve (12) consecutive months, as set forth herein below, during which an
Employee has been credited with at least one thousand (1,000) Hours of
Employment.
(a) For purposes of eligibility for participation, the initial computation
period shall begin with the date on which the Employee first performs an
Hour of Employment. The computation period beginning after a Break in
Employment shall be measured from the date on which the Employee again
performs an Hour of Employment. After the initial computation period,
the participation computation period shall shift to the Plan Year which
includes the anniversary of the date on which the Employee first
performed an Hour of Employment. For these purposes, an Employee who is
credited with one thousand (1,000) Hours of Employment in both the
initial computation period and the succeeding computation period shall be
credited with two (2) Years of Employment.
(b) For purposes of determining Credited Service for Benefit Accrual and
Credited Service for Vesting, the computation period shall be the Plan
Year.
A R T I C L E II
ELIGIBILITY AND PARTICIPATION
Section 2.01 Eligibility. Any Employee who was a Participant in this
Plan or in the Prior Plan immediately prior to the Effective Date, shall
continue his participation uninterrupted. Each other Employee who is not a
Leased Employee or a Bargaining Unit Employer shall be eligible to become a
Participant upon the later of:
(a) the date on which he completes one (1) Year of Employment, or
(b) the date on which he attains age twenty-one (21).
Section 2.02 Entry and Participation. Each Employee who is eligible
shall become a Participant and enter the Plan on the date he shall have
satisfied the conditions of eligibility.
Section 2.03 Reemployment. Notwithstanding the foregoing Section, an
Employee who is reemployed and who was a Participant, or who had satisfied
the conditions of eligibility as of a prior termination of Employment, shall
become a Participant and enter the Plan on his Reemployment Date.
Section 2.04 Acceptance. The Plan shall not be deemed to constitute a
contract between the Employer and a Participant or to be a consideration or
an inducement for the Employment of any Employee. No provisions of the Plan
shall be deemed to abridge or limit any managerial right of the Employer, or
to give any Employee or Participant the right to be retained in Employment,
or to interfere with the right of the Employer to discharge any Employee or
Participant at any time regardless of the effect which such discharge may
have on him as a Participant. By his act of participation in the Plan, each
Participant, on behalf of himself, his heirs, assigns and Beneficiary shall
be deemed conclusively to have agreed to and accepted the terms and
conditions of this Plan.
Section 2.05 Employees Who Are Officers, Shareholders or Highly
Compensated.
Employees who are highly compensated or who are officers or shareholders of
the Employer may participate hereunder on and after the Effective Date only
if they meet the same eligibility requirements which must be met by other
Employees as stated herein in Section 2.01.
Section 2.06 Absence in the Armed Services. In the case of an Employee
who leaves Employment to enter the Armed Services of the United States of
America and who returns to Employment on or before the expiration of ninety
(90) days after the date on which he is entitled to be released from active
duty in the Armed Services (or at such other date as the law may specify as
to reemployment), such Employment, to the extent required by law, shall be
treated as continuous despite such absence and such period of absence shall
be included in determining Years of Employment for purposes of the Plan.
Section 2.07 Transfers Among Employers which are Controlled Group
Members. A transfer of an Employee directly from this Employer to another
Controlled Group Member shall not constitute a termination of Employment or
an interruption in Credited Employment; provided, however, that there shall
be no duplication of benefits. Upon the transfer of an employee from another
Controlled Group Member to this Employer, the years of employment with which
he was credited with the previous employer shall count as Years of Employment
under the Plan.
A R T I C L E III
FUNDING OF PLAN
Section 3.01 Medium of Funding. Investment of all contributions under
the Plan and all transactions of the Trust Fund shall be made in accordance
with the terms of the Trust Agreement.
Section 3.02 Contributions. The Employer shall contribute to the Plan
for each Plan Year such amount as is necessary to satisfy the funding
requirements of the Plan. Such amount shall be determined each year by the
Actuary under the funding and asset valuation methods used to determine the
costs and liabilities of the Plan; provided, however, that such actuarial
methods shall be reasonable and not otherwise inconsistent with applicable
regulations. All contributions shall be made only to the extent deductible
under section 404 of the Internal Revenue code. the employer shall make
contributions in such amounts and at such times as determined by the Employer
in accordance with the funding policy and method established by the Employer
which will be consistent with Plan objectives and which are required to keep
the Plan qualified under section 401 of the code any other relevant section
of the Code or successor thereto, subject to its right to amend or
discontinue the Plan and to discontinue contributions.
Section 3.03 Maintenance of Funding Standard Account. A funding
standard account shall be maintained by the Actuary for the purpose of
determining the funding requirements of the Plan as provided in Section 3.02
hereof.
Section 3.04 Prohibition of Reversion. Contributions made by the
Employer to the Plan shall be made irrevocably and it shall be impossible for
the assets of the Plan to inure to the benefit of the Employer or to be used
in any manner other than for the exclusive purpose of providing benefits to
Participants and Beneficiaries, and for defraying reasonable expenses of
administering the Plan; provided, however, that nothing herein shall be
construed to prohibit the return to the Employer of all or part of a
contribution:
(a) which is made by the Employer by a mistake of fact provided the return is
made within one year after the payment thereof; or
(b) to the extent a deduction thereof under section 404 of the Code is
disallowed, provided the return of such contribution is limited to the
amount disallowed and is made within one year after the disallowance.
Provided further, that nothing herein shall be construed to prohibit a
distribution to the Employer of any residual assets of the Plan pursuant to
Section 8.05(c) hereof after satisfaction of all liabilities of the Plan to
Participants and Beneficiaries in the event of termination of the Plan.
A R T I C L E IV
BENEFITS
Section 4.01 General Provisions Relating to Determination and Payment
of Benefits.
(a) General Conditions.
(1) Before payment of any benefit hereunder, the Administrator may
require that written application therefor must be made by the
Participant or Beneficiary, as the case may be, and submitted to the
Administrator in such form and manner as it shall uniformly and
nondiscriminatorily prescribe.
(2) The Plan Administrator shall require the written consent of the
Participant and his Spouse, prior to the commencement of the
distribution of any part of his benefit if the value of such benefit
is greater than three thousand five hundred dollars ($3,500) and if
the distribution is to be made in a form other than a Qualified
Joint and Survivor Annuity or if the distribution is to be made in
any form prior to the time the Participant has reached his Normal
Retirement Age.
(3) Any payment made in accordance with the provisions of the Plan to a
Participant or Beneficiary, or to their legal representative, shall,
to the extent of the method of computation as well as the amount
thereof, constitute full satisfaction of claims hereunder against
the Trustee, the Committee and the Administrator, any of whom may
require such Participant, Beneficiary or legal representative, as a
condition precedent to such payment, to execute a receipt and
release therefor.
(4) Any benefits available under the Plan which are protected benefits
as defined under section 411(d)(6) of the Code and the regulations
promulgated thereunder will be available to Participants without
regard to the Administrator's consent or discretion.
(b) Cash-outs and Plan Repayment Provisions. If a Participant terminates
Employment and the present value of such Participant's Accrued Benefit is
not in excess of three thousand five hundred dollars ($3,500) (or any
lesser or greater amount which may be established by the Secretary of the
Treasury as the maximum amount which may be paid to a Participant without
his consent) the Participant will receive a distribution of the present
value of the entire vested portion of such Accrued Benefit and the
nonvested portion will be forfeited. Payment of such benefit shall be
made in a lump sum in lieu of any other form of benefit otherwise payable
hereunder in accordance with Section 1.12 hereinabove. For calculating
the present value of the benefit, the interest rate used in the calculation
shall be the interest rate which would be used (as of the date of
distribution) by the Pension Benefit Guaranty Corporation for purposes of
determining the present value of a lump sum distribution on plan
termination. For purposes of this Section, if the present value of a
Participant's Accrued Benefit is zero the Participant shall be deemed to
have received a distribution of such vested Accrued Benefit.
If a Participant terminates Employment and the present value of such
Participant's vested Accrued Benefit exceeds three thousand five hundred
dollars ($3,500), the Participant may elect, in accordance with Section
4.08 of the Plan, to receive a distribution of the present value of the
entire vested portion of such Accrued Benefit and the nonvested portion
will forfeited.
If a Participant receives a distribution pursuant to this Section and the
Participant resumes Employment under the Plan, such Participant shall
have the right to restore his Accrued Benefit (including all optional
forms of benefits and subsidies relating to such benefits) to the extent
forfeited upon the repayment to the Plan of the full amount of the
distribution plus interest, compounded annually from the date of
distribution at the rate determined for purposes of section 411(c)(2)(C)
of the Code (assessed from the date of the previous distribution).
Repayment must be made before the earlier of five (5) years after the first
date on which the Participant is subsequently reemployed by the Employer,
or the close of the first period of five (5) consecutive one-year Breaks
in Employment commencing after the distribution. Calculation of such
Participant's Accrued Benefit hereunder shall not recognize Benefit
Service and Compensation attributable to his prior period of employment
unless he repays to the Plan.
Notwithstanding any other provision of the Plan to the contrary, the
right of any Participant to receive any benefit payable upon termination
of Employment shall not be forfeited or waived if such Participant's
Employment is terminated for any reason, provided that such termination
occurs after such Participant has met the requirements which would
qualify him for benefits hereunder. In the event a Participant
terminates Employment without qualifying for a Vested Benefit, he shall
be deemed to have received a distribution from the Plan.
(c) Time of Distribution. Benefits shall be paid as soon as is practicable
after the value thereof shall have been determined, in accordance with
this Article IV, and when a Participant becomes eligible for a benefit,
in accordance with the terms of this Article IV. Unless a Participant
elects to defer the payment of his benefits until a later date, the
payment shall be made or commenced not later than sixty (60) days after
the close of the Plan Year in which the later of the following events
occurs:
(i) the Participant reaches his Normal Retirement Date,
(ii) the 10th anniversary of the year in which the Participant
began participating in the Plan, or
(iii) the Participant terminates his Employment with the Employer.
Notwithstanding the foregoing, the failure of a Participant and Spouse to
consent to a distribution while a benefit is immediately distributable
within the meaning of Section 4.01(a)(2) of the Plan, shall be deemed to
be an election to defer commencement of payment of any benefit sufficient
to satisfy this Section.
(d) Required Distribution. Distribution of benefits shall commence no later
than April 1st following the calendar year in which the Participant
attains age seventy and one-half (70 1/2) without regard to the actual
date of Retirement or termination of Employment. Provided however, for
any Participant who is at least age seventy and one-half (70 1/2) as of
January 1, 1988 and who was not a Five-Percent Owner at any time after
attaining age sixty-six and one-half (66 1/2), distribution of benefits
shall commence no later than the end of the taxable year in which the
Participant attains age seventy and one-half (70 1/2) or in which he
retires, whichever is later.
Section 4.02 Form of Benefit Payment.
(a) Normal Form of Settlement. The normal form of settlement of any benefit
provided under the Plan shall be in the form described as a single life
annuity. Any other form of benefit payment provided under this Section
or optional form of payment under Article V shall be the Actuarial
Equivalent of such normal form of settlement.
(b) Joint and Survivor Annuity Requirements. The provisions of this Section
shall take precedence over any conflicting provision in this Plan, and
shall apply to any Participant who is credited with at least one (1) Hour
of Employment with the Employer on or after August 23, 1984.
(1) Qualified Joint and Survivor Annuity. Unless an optional form of
benefit is selected pursuant to a Qualified Election within the
ninety (90)-day period ending on the Annuity Starting Date, a
Participant's benefits under the Plan will be paid in the form of a
Qualified Joint and Survivor Annuity. The Participant may elect to
have such annuity distributed upon attainment of his Earliest
Retirement Age.
(2) Qualified Preretirement Survivor Annuity. Unless an election has
been made by the Participant to waive the Qualified Preretirement
Survivor Annuity and an optional form of benefit has been selected
pursuant to a Qualified Election made at any time during the
Election Period, his Surviving Spouse shall be entitled to receive a
death benefit in the form of a Qualified Preretirement Survivor
Annuity. Such Surviving Spouse may elect to commence payment under
such annuity within a reasonable period after the Participant's
death. The actuarial value of benefits which commence later than
the date on which payments would have been made to the Surviving Spouse
under a Qualified Joint and Survivor Annuity in accordance with this
provision shall be adjusted to reflect the delayed payment.
For these purposes, the "Election Period" shall mean the period
which begins on the first day of the Plan Year in which the
Participant attains age thirty-five (35) and ends on the date of the
Participant's death. If a Participant separates from Employment
prior to the first day of the Plan Year in which age thirty-five
(35) is attained, the Election Period shall begin on the date of
separation. A Participant who will not yet attain age thirty-five
(35) as of the last day of any current Plan Year may make a special
Qualified Election to waive the Qualified Preretirement Survivor
Annuity for the period beginning on the date of such election and
ending on the first day of the Plan Year in which the Participant
will attain age thirty-five (35). Such election will not be valid
unless the Participant receives a written explanation of the
Qualified Preretirement Survivor Annuity in such terms as described
in subsection (6) hereunder. Qualified Preretirement Survivor Annuity
coverage will be automatically reinstated as of the first day of the
Plan Year in which the Participant attains age thirty-five (35).
Any new waiver on or after such date shall be subject to the full
requirements of this Section.
(3) Qualified Election. A waiver of a Qualified Joint and Survivor
Annuity or a Qualified Preretirement Survivor Annuity shall be
deemed a Qualified Election if it is made in writing on forms
provided by the Administrator and if (i) the Participant's Spouse
consents in writing to such waiver, (ii) the Spouse's consent
acknowledges the effect of such election and (iii) such election is
witnessed by the Plan Administrator or a Notary Public, or it is
established to the satisfaction of the Plan Administrator that the
consent required under (i) above may not be obtained because there
is no Spouse or because the Spouse cannot be located. Any consent by a
Spouse (or establishment that the consent of a Spouse may not be
obtained) under the preceding sentence shall be effective only with
respect to such Spouse, and any subsequent change in the Beneficiary
is invalid without a new consent from the Spouse. The election must
designate a specific Beneficiary or a form of benefits, which
designations may not be changed without spousal consent. The
consent of the Spouse may expressly permit designations by the
Participant without further consent by the Spouse; in this event,
the Spouse must acknowledge that he has the right to limit consent
to a specific Beneficiary and/or a form of benefit and that he
voluntarily elects to relinquish either or both of such rights.
The number of revocations by the Participant shall not be limited,
but the consent of the Spouse to any applicable waiver shall be
irrevocable.
(4) Additional Information. If a Participant makes a request for
additional information in a timely manner, the Administrator shall
furnish such information by personal delivery or mail (first class,
postage prepaid) to the Participant within thirty (30) days after
receipt of the Participant's written request therefor. Such
additional information shall consist of a written explanation, in
nontechnical language, of the terms and conditions of the Qualified
Joint and Survivor Annuity and the financial effect upon the
particular Participant's benefit of making an election under this
subsection. Such financial effect shall be expressed in terms of
dollars per annuity payment. The Administrator shall not
accommodate more than one (1) such request by a Participant.
(5) Lump Sum Distribution. Notwithstanding the foregoing, a Qualified
Joint and Survivor Annuity or a Qualified Preretirement Survivor
Annuity shall not be required with respect to a distribution of the
present value of a Participant's entire nonforfeitable benefit
derived from Employer and employee contributions which is not in
excess of three thousand, five hundred dollars ($3,500) and which is
made pursuant to Section 4.01(b). No such distribution may be made
after the Annuity Starting Date unless the Participant and his
Spouse (or where the Participant has died, the surviving Spouse)
consents in writing to such distribution.
(6) Notice Requirements. In the case of a Qualified Joint and Survivor
Annuity, the Plan Administrator shall provide each Participant no
less than thirty (30) days and no more than ninety (90) days prior
to the Annuity Starting Date a written explanation of
(i) the terms and conditions of a Qualified Joint and Survivor
Annuity;
(ii) the Participant's right to make and the effect of an election
to waive the Qualified Joint and Survivor Annuity;
(iii) the rights of the Participant's Spouse;
(iv) the right to make, and the effect of, a revocation of a
previous election to waive the Qualified Joint and Survivor
Annuity; and
(v) the relative values of the various optional forms of benefit
under the Plan.
In the case of a Qualified Preretirement Survivor Annuity, the Plan
Administrator shall provide each Participant within the applicable
period, a written explanation of the Qualified Preretirement
Survivor Annuity in such terms and in such manner as would be
comparable to the explanation provided for meeting the requirements
above applicable to a Qualified Joint and Survivor Annuity.
The applicable period within which notice is required to be provided
to a Participant whichever of the following periods ends last:
(i) the period beginning with the first day of the Plan Year in
which the Participant attains age thirty-two (32) and ending
with the close of the Plan Year preceding the Plan Year in
which the Participant attains age thirty-five (35);
(ii) a reasonable period of time ending after the individual
becomes a Participant;
(iii) a reasonable period of time ending after the survivor benefit
applicable to a Participant is no longer subsidized as defined
in section 417(a)(5) of the Code;
(iv) a reasonable period of time ending after the survivor benefit
provisions become applicable with respect to a Participant; or
(v) a reasonable period of time ending after separation of service
in the case of a Participant who separates before attaining
age thirty-five (35).
For these purposes, a reasonable period ending after the enumerated
events described in (ii), (iii) and (iv) is the end of the two year
period beginning one year prior to the date the event occurs and ending
one year after that date. On the occurrence of (v) above, notice
shall be provided within the two year period beginning one year after
separation. If such a Participant thereafter returns to employment with
the Employer, the applicable period for such Participant shall be
redetermined.
(c) Unmarried/Electing Participants. If a Participant entitled to a benefit
under this Article is not married or has made an election under
subsection (b)(3) of this Section, the benefit payable to him shall be
in the form described in subsection (a) of this Section unless an
optional form of benefit is elected by the Participant under Article V.
Section 4.03 Limitation on Benefits.
(a) Maximum Permissible Amount. The annual benefit otherwise payable to a
Participant at any time shall not exceed the Maximum Permissible Amount.
If the benefit the Participant would otherwise accrue in a Limitation
Year would produce an annual benefit in excess of the Maximum Permissible
Amount, the rate of accrual will be reduced so that the annual
benefit will equal the Maximum Permissible Amount. The Maximum
Permissible Amount under the Plan means the lesser of ninety thousand
($90,000) or one hundred percent (100%) of the Participant's Section 415
Compensation.
If the benefit commences before the Participant's Social Security
Retirement Age, this dollar limitation is reduced as follows:
(i) If the Participant's Social Security Retirement Age is sixty-five
(65), the dollar limitation for benefits commencing on or after age
sixty-two (62) is reduced by five- ninths (5/9) of one (1) percent
for each month by which the Participant attains age sixty-five (65).
(ii) If the Participant's Social Security Retirement Age is greater than
sixty-five (65), the dollar limitation for benefits commencing on or
after age sixty-two (62) is reduced by five-ninths (5/9) of one (1)
percent for each of the first thirty-six (36) months and
five-twelfths (5/12) for each of the additional months (up to
twenty-four (24) months) by which benefits commence before the month
of the Participant's Social Security Retirement Age.
(iii) If the annual benefit of a Participant commences prior to age
sixty-two (62), the dollar limitation shall be the actuarial
equivalent of the limitation determined under (i) or (ii), reduced
for each month by which benefits commence before the month in
which the Participant attains age sixty-two (62). To determine
actuarial equivalence, the interest rate assumption used is the
greater of five percent (5%) or the rate specified in Section 1.03
(relating to benefit options). Any decrease in the dollar
limitation determined under this paragraph shall not reflect the
mortality decrement to the extent that benefits will not be
forfeited upon the death of the Participant.
If the benefit commences after the Participant's Social Security
Retirement Age, the dollar limitation is adjusted to the actuarial
equivalent of a ninety thousand dollar ($90,000) annual benefit
commencing at the Social Security Retirement Age. The interest rate
assumption used is the lesser of five percent (5%) or the rate
specified in Section 1.03 (relating to benefit options). The
foregoing adjustments are governed by Code sections 415(b)(2)(C),
(D) and (E), as appropriate, and section 415(b)(8) as implemented by
the Tax Reform Act of 1986, which are incorporated herein by reference.
(b) Adjustments to Limitations. The dollar limitation under subsection (a)
hereof shall be adjusted with respect to each Plan Year to reflect any
cost-of-living adjustments made by the Secretary of the Treasury or his
delegate, as in effect at the end of the Plan Year; provided, however,
that anticipated future increases in such dollar limitation beyond the
current Plan Year shall not be taken into account by the Actuary for
purposes of determining the funding requirements of the Plan under
Article III hereof. If the Participant has less than ten (10) years of
participation under the Plan, the dollar limitation under subsection (a)
hereof is reduced by one-tenth (1/10) for each year of participation (or
part thereof) less than ten (10). To the extent provided in regulations or
in other guidance issued by the Internal Revenue Service, the preceding
shall apply separately with respect to each change in the benefit
structure of the Plan. If the Participant has less than ten years of
service with the Employer, the compensation limitation under subsection
(a) hereof is reduced by one-tenth (1/10) for each year of service (or
part thereof) less than ten (10).
(c) Projected Annual Benefit. For purposes of this Section, a Participant's
projected annual benefit shall be equal to the annual benefit to which he
would be entitled based on the assumptions that his Employment continues
until his Normal Retirement Date, that his Compensation remains constant
from the Plan Year under consideration until his Normal Retirement Date,
and that all other relevant factors used to determine benefits remain
constant as of the current Plan Year for all future Plan Years.
(d) Benefits Not in Excess of $10,000. Notwithstanding subsection (a),
benefits payable shall not be deemed to exceed the limitation of such
subsection if such benefits do not exceed one thousand dollar ($1,000)
multiplied by the Participant's Years of Employment (or parts thereof) up
to a maximum of ten (10) years, and the Employer has not at any time
maintained a defined contribution plan, a welfare benefit plan as defined
in section 419(e) of the Code or an individual medical account as defined
in section 415(l)(2) of the Code in which the Participant participated.
(e) 1.00 Limitation. If, in addition to this Plan, the Employer maintains or
at any time maintained a defined contribution plan covering any
Participant in this Plan, a welfare benefit fund as defined in section
419(e) of the Code or an individual medical account as defined in section
415(l)(2) of the Code, then for a Participant covered by such plan(s), the
sum of the "defined benefit plan fraction", hereinafter described, and
the "defined contribution plan fraction", also hereinafter described, for
any Limitation Year shall not exceed one (1.00) and the annual benefit
otherwise payable under the Plan shall be limited in accordance with
Section 4.03(a) above.
(1) The defined benefit plan fraction for any Limitation Year is a
fraction, the numerator of which is the Participant's projected
annual benefit under all the defined benefit plans (whether or not
terminated) maintained by the Employer (determined as of the close
of the Limitation Year), and the denominator of which is the lesser
of the maximum dollar limit for such year multiplied by one and
one-quarter (1.25) or the percentage of Compensation limit for such
year multiplied by one and fourth-tenths (1.4), if such plan
provided the maximum benefit allowable under section 415(b) of
the Code.
Notwithstanding the above, if the Participant was a Participant as
of the first day of the first Limitation Year beginning after
December 31, 1986, in one or more defined benefit plans maintained
by the Employer which were in existence on May 6, 1986, the
denominator of this fraction will not be less than 125 percent of
the sum of the annual benefits under such plans which the
Participant had accrued as of the close of the last Limitation Year
beginning before January 1, 1987, disregarding any changes in the
terms and conditions of the plans 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) The defined contribution plan fraction for any Limitation Year is a
fraction, the numerator of which is the sum of the annual additions
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 this and all
other 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 or
individual medical accounts, as defined in section 415(1)(2) of the
Code, maintained by the Employer), and the denominator of which is
the sum for all years of an Employee's service of the lesser of the
maximum dollar limit multiplied by one and one-quarter (1.25) or the
amount determined under the percentage of Compensation limit for
such year multiplied by one and fourth-tenths (1.4) as provided for
in section 415(c) of the Code.
If the Employee was a Participant as of the first day of the first
Limitation Year beginning after December 31, 1986, in one or more
defined contribution plans maintained by the Employer which were in
existence on May 6, 1986, the numerator of this fraction will be
adjusted if the sum of this fraction and the defined benefit
fraction would otherwise exceed 1.0 under the terms of this plan.
Under the adjustment, an amount equal to the product of (a) the
excess of the sum of the fractions over 1.0 times (b) the
denominator of this fraction, will be permanently subtracted from
the numerator of this fraction. This adjustment is calculated using
the fractions as they would be computed as of the close of the last
Limitation Year beginning before January 1, 1987, disregarding any
changes in the terms and conditions of the plans after May 5, 1986,
but using the section 415 limitation applicable to the first
Limitation Year beginning on or after January 1, 1987. The annual
addition for any Limitation Year beginning before January 1, 1987,
shall not be recomputed to treat all employee contributions as
annual additions.
(3) Adjustments made under subsection (b) hereof shall be applied in the
denominator of the defined benefit plan fraction based upon Years of
Employment, including future years occurring before the
Participant's Normal Retirement Age. Such future years shall
include the year in which the Participant reaches Normal Retirement
Age only if it can be reasonably anticipated that the Participant
will receive a year of service for such year.
(f) Aggregation of Plans. In the case of an individual who was a Participant
in one or more defined benefit plans of the Employer as of the first day
of the first limitation year beginning after December 31, 1986, the
application of the limitations of this article shall not cause the
maximum permissible amount for such individual under all such defined
benefit plans to be less than the individual's current accrued benefit.
The preceding sentence applies only if such defined benefit plans met the
requirements of section 415 of the Code, for all limitation years
beginning before January 1, 1987.
Section 4.04 Normal Retirement.
(a) Condition. A Participant whose Employment is terminated on his Normal
Retirement Date shall be entitled to receive a Normal Retirement Benefit.
(b) Normal Retirement Benefit. The monthly Normal Retirement Benefit, which
shall commence on the Participant's Normal Retirement Date, shall be
determined as one-twelfth (1/12) of one percent (1%) of the Participant's
Average Compensation multiplied by his years of Credited Service for
Benefit Accrual to a maximum of forty (40) years. Notwithstanding the
foregoing, the Normal Retirement Benefit of any Participant whose
Employment Date is prior to the Effective Date shall not be less than the
greater of: (i) the Normal Retirement Benefit calculated as provided
above, (ii) the Normal Retirement Benefit calculated under the terms of
this Plan as in effect immediately prior to the Effective Date, but based
upon the Participant's Average Compensation as defined in this Plan, or
(iii) the Normal Retirement Benefit calculated under the terms of the
Prior Plan as in effect immediately prior to the Effective Date.
(c) Normal Retirement Benefit Fully Vested. Notwithstanding any other
provision in the Plan, a Participant's Normal Retirement Benefit shall be
nonforfeitable upon his attainment of his Normal Retirement Age.
Section 4.05 Early Retirement.
(a) Condition. A Participant whose employment is terminated on or after his
Early Retirement Date, but before his Normal Retirement Date shall be
entitled to receive an Early Retirement Benefit.
(b) Early Retirement Benefit. The Early Retirement Benefit, determined as of
a Participant's Early Retirement Date, may be either (1) or (2), as the
Participant elects, where
(1) is a deferred Early Retirement Benefit which shall commence on his
otherwise Normal Retirement Date, in an amount equal to his Accrued
Benefit; and
(2) is an actuarially reduced immediate Early Retirement Benefit which
shall commence on the Participant's Early Retirement Date, in an
amount equal to his Accrued Benefit.
Section 4.06 Delayed Retirement.
(a) Condition. A Participant whose Employment continues beyond his Normal
Retirement Date and then terminates shall be entitled to a Delayed
Retirement Benefit.
(b) Delayed Retirement Benefit. The Delayed Retirement Benefit, determined
as of the Participant's Delayed Retirement Date, shall be computed in the
manner set forth in Section 4.04(b), but based upon the Participant's
Average Compensation and Credited Service for Benefit Accrual as of his
Delayed Retirement Date. Notwithstanding the foregoing, in no event shall
a Participant's Delayed Retirement Benefit be less than the
actuarial equivalent of the Participant's Normal Retirement Benefit.
Section 4.07 Disability Retirement.
(a) Definition and Determination of Disability. A Participant will be
considered disabled, or under a disability, if he suffers from a physical
or mental condition resulting from bodily injury or disease or mental
disorder which renders him incapable of performing his usual and
customary duties of Employment. The decision as to the existence of a
disability shall be made by the Plan Administrator on the basis of
competent medical opinion, supplied by a licensed physician selected by
the Plan Administrator. In the event a Participant becomes disabled, he
shall be deemed to be fully vested as of the date of such disability.
(b) Condition. A Participant, who has been determined to be disabled, as
provided above, whose Employment is terminated on or after his Disability
Retirement Date as a result of the disability, shall be entitled to
receive a Disability Retirement Benefit.
(c) Disability Retirement Benefit. The Disability Benefit, determined as of
the Participant's Disability Retirement Date, may be either (1) or (2),
as the Participant elects, where
(1) is a deferred Disability Retirement Benefit which shall commence on
his otherwise Normal Retirement Date, in an amount equal to his
Accrued Benefit, and
(2) is an actuarially reduced immediate Disability Retirement Benefit,
which shall commence on his Disability Retirement Date, determined
as his Accrued Benefit.
Section 4.08 Termination of Employment.
(a) Condition. If a Participant terminates Employment and if he then does
not become entitled to receive a benefit under any preceding Section of
this Article IV, he may be entitled to a Vested Benefit under this Section.
(b) Vested Benefit. The Vested Benefit shall be computed by multiplying the
amount of the Participant's Accrued Benefit by the nonforfeitable
percentage applicable as of the date of the Participant's termination of
Employment determined from the following schedule:
Credited Nonforfeitable
Service for Vesting Percentage
Less than 5 0%
5 or more 100%
Notwithstanding the foregoing, in no event shall the Vested Benefit of a
Participant who was a Participant in this Plan prior to the Effective
Date be less than the Vested Benefit determined under the schedule
contained in this Plan immediately prior to the Effective Date. In
addition, any such Participant with three (3) or more Years of Credited
Service for Vesting Purposes as of the date immediately prior to the
Effective Date shall have the right to select betwwen the above schedule
and the schedule in the Plan immediately prior to the Effective Date to
determine how their Vested Benefit will be determined. Notwithstanding
any other provision of the Plan to the contrary, the right of any
Participant to receive any benefit payable under this Section shall not
be forfeited or waived if such Participant's Employment is terminated for
any reason, provided that such termination occurs after such Participant
has met the requirements which would qualify him for benefits hereunder.
A terminated Participant who has received a full distribution of his
Vested Benefit and who has not been reemployed as of the date of
termination of this Plan shall have no right to the restoration of his
Vested Benefit, and any Accrued Benefit remaining, in which the
Participant was not vested at the time of the Plan termination, shall be
forfeited.
(c) Payment of Vested Benefit. The Vested Benefit shall be a deferred
benefit commencing on the Participant's Normal Retirement Date;
Provided, however that in the event a Participant terminates his Employment
after satisfying the service requirement for an Early Retirement Benefit but
before satisfying the age requirement, he shall be entitled to an Early
Retirement Benefit upon satisfaction of such age requirement.
Section 4.09 Preretirement Death Benefit.
(a) Condition. In the event of a Participant's death while employed by the
Employer, a death benefit shall be payable as provided in subsection (b)
hereof.
(b) Death Benefit.
(1) Participant With No Surviving Spouse. If the Participant is not
married at the time of his death, or if he has waived the Qualified
Preretirement Survivor Annuity pursuant to Section 4.02(b)(4), the
Death Benefit shall be a lump sum amount payable to the
Participant's Beneficiary, determined as the present value of the
Accrued Benefit.
(2) Participant With Surviving Spouse - Qualified Preretirement Survivor
Annuity. If the Participant is married at the time of his death and
has not elected otherwise pursuant to Section 4.02(b)(4), the Death
Benefit shall be a monthly amount, payable to the Participant's
Spouse, equal to the greater of:
(A) the Actuarially Equivalent benefit for the life of the Spouse
which can be provided by the lump sum amount described in
Section 4.09(b)(1) or
(B) the Qualified Preretirement Survivor Annuity under Section
4.02(b)(2).
Generally, payment of the benefit to the surviving Spouse will commence
at the Earliest Retirement Age. However, the Spouse may elect to have
the Death Benefit commence at some earlier or later date, in an amount
equal to the Actuarial Equivalent of the benefit payable hereunder.
Further, the Spouse of a Participant with respect to whom the Death
Benefit under this paragraph is payable may elect to have such benefit
payable in an Actuarially Equivalent lump sum in lieu of the lifetime
benefit, provided such election is made prior to the date the lifetime
benefit would otherwise commence. The Employer shall furnish to the
Spouse, within a reasonable time, a written explanation in non-technical
language of the lifetime benefit and the lump sum alternative, and the
financial effect (in terms of dollars) of each form of payment.
Section 4.10 Post-Retirement Death Benefit. If a Participant dies
after he has retired or has terminated Employment and before the payment of
benefits, if any, has commenced, a death benefit shall be payable as provided
under Section 4.09(b). If the Participant dies after distribution of his
interest has commenced, the remaining unpaid benefits, if any, will continue
to be distributed at least as rapidly as under the method of distribution
being used prior to the Participant's death. If the Participant dies before
distribution of his interest commences, the Participant's entire interest
will be distributed no later than five (5) years after the Participant's
death except to the extent that an election is made to receive distributions
in accordance with (a) or (b) below:
(a) if any portion of any benefit payable after the Participant's death is
payable to a designated Beneficiary (other than the Surviving Spouse) and
if the distribution commences no later than one (1) year after the
Participant's death (or such later date as the Secretary of the Treasury
may prescribe by regulations) such portion may be distributed over the
life or life expectancy of the Beneficiary;
(b) if any portion of any benefit payable after the Participant's death is
payable to his Surviving Spouse and if the distribution commences no
later than the date on which the Participant would have attained age
seventy and one-half (70 1/2) such portion may be distributed over the
life or life expectancy of the Surviving Spouse.
For purposes of this Section, life expectancy will be calculated by use of
the return multiples specified in section 1.72-9 of the regulations. Any
amount paid to a child of the Participant will be treated as if it had been
paid to the Surviving Spouse if the amount becomes payable to the Surviving
Spouse when the child reaches the age of majority.
Section 4.11 No Duplication of Benefits. Notwithstanding any
provision of the Plan which may be construed to the contrary, a Participant
or Beneficiary shall not be entitled to two separate benefits under the Plan
which are attributable to the same period of Employment. Accordingly, if
benefit payments are made to or in respect of the same Participant the
determination of which is based upon the same period of Employment as the
benefits previously paid, the benefit currently payable shall be reduced to
reflect the Actuarial Equivalent value of the benefits previously paid.
A R T I C L E V
OPTIONAL RETIREMENT BENEFITS
Section 5.01 Election of Optional Retirement Benefit. Subject to
written notice of a Participant's election filed with the Administrator in
such form and manner as the Administrator shall require, at least 60 days
prior to the earlier of the date benefit payments are to commence or the
Participant's Retirement date, any Participant entitled to receive a benefit
under the Plan may elect to receive a benefit payable in accordance with one
of the options hereinafter set forth in lieu of the base form of settlement
(or the Qualified Joint and Survivor Annuity, if applicable) under the Plan.
Election of any such option shall not be subject to the approval of the
Administrator. In no event may an optional form of payment be elected which
provides for payment of the benefit over a period of time exceeding the
Participant's life expectancy or the joint life expectancy of the Participant
and his Spouse or designated Beneficiary.
Section 5.02 Determination of Optional Benefit. The amount of any
benefit payable in accordance with options provided in this Article shall be
determined as of the date payment thereof is made or commenced as the
Actuarial Equivalent of the base form of settlement. Under any option
elected which provides for payments to a Beneficiary after the death of a
Participant, except under Option 1 if the Participant's Spouse is the
Beneficiary, the actuarial present value of all payments to the Participant
must be more than fifty percent (50%) of the actuarial present value of
payments to the Participant and his Beneficiary.
Section 5.03 Description of Options.
Option 1 Optional Joint and 100% Survivor Annuity. This form of
benefit is payable monthly to the Participant for life and one hundred
percent (100%) of such amount, shall continue after his death to his
surviving Spouse for life.
Option 2 Life Annuity with 120 Payments Guaranteed. This form of
benefit is payable monthly to the Participant for life with the first one
hundred twenty (120) monthly payments guaranteed. Any guaranteed payments
due after the death of the Participant shall be payable to his designated
Beneficiary, if any, who survives the Participant. In the event there is no
surviving designated Beneficiary, the commuted value of any remaining
guaranteed payments shall be payable in a lump sum to the Participant's
estate. If the surviving designated Beneficiary should die before all
guaranteed payments have been paid, the commuted value of any remaining
guaranteed payments shall be payable in a lump sum to the estate of such
Beneficiary.
Option 3 Lump Sum. This form of benefit is a single lump sum payment
to the Participant.
Option 4 Protected Benefits. In addition to the foregoing forms of
payment, for any Participant who was a Participant in the Plan immediately
prior to the Effective Date, and with respect to that portion of their
benefit which accrued prior to the Effective Date, those optional forms of
payment under the Plan immediately prior to the Effective Date shall also be
available.
Section 5.04 Cancellation of Election. The election of a Participant
of any option under this Article involving survivor payments shall be null
and void if the Participant's designated Beneficiary shall die before benefit
payments commence, and benefits shall be payable pursuant to the base form of
settlement.
Section 5.05 Purchase of Annuities. The Administrator may at any time
in its discretion direct the Trustee to purchase annuities from an insurance
company to provide benefits otherwise payable under the Plan. Any such
annuity which is distributed to a Participant or Beneficiary shall be
endorsed as "nontransferable."
Section 5.06 Eligible Rollover Distributions. 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. For
purposes of this Section 5.06 the following words and phrases shall have
meaning as defined hereinbelow.
"Eligible Rollover Distribution" shall mean 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.
"Eligible Retirement Plan" shall mean an individual retirement account
described in section 408(a) of the Code, an individual retirement annuity
described in section 408(b) of the Code, an annuity plan described in section
403(a) of the Code, or a qualified trust described in section 401(a) of the
Code, that accepts the Distributee's Eligible Rollover Distribution.
However, in the case of an Eligible Rollover Distribution to a surviving
spouse, an Eligible Retirement Plan is an individual retirement account or
individual retirement annuity.
"Distributee" shall mean a Participant. In addition, the Participant's
surviving spouse and the Participant's spouse or former spouse who is the
Alternate Payee under a Qualified Domestic Relations Order are Distributees
with regard to the interest of the spouse or former spouse.
"Direct Rollover" shall mean a payment by the Plan to the Eligible Retirement
Plan specified by the Distributee.
Notice Requirements. If an Eligible Rollover Distribution is one to which
sections 401(a)(11) and 417 of the Code do not apply, the distribution may
commence less than thirty (30) days after the notice required under section
1.411(a)-11(c) of the Income Tax Regulations is given, provided that: (i) the
Plan Administrator clearly informs the Distributee that the Distributee has a
right to a period of at least thirty (30) days after receiving the notice in
which to consider the decision of whether or not to elect a distribution
(and, if applicable, a particular distribution option), and (ii) the
Distributee, after receiving the notice, affirmatively elects a distribution.
A R T I C L E VI
MODIFICATIONS FOR TOP HEAVY PLANS
Section 6.01 Application of Article. Should a determination be made
that this Plan constitutes a Top Heavy Plan, the provisions of this Article
VI shall be applicable notwithstanding any other provisions of this Plan to
the contrary.
Section 6.02 Minimum Benefit. For any Plan Year in which this Plan is
determined to be a Top Heavy Plan, each Participant who is not a Key Employee
will accrue a benefit (to be provided solely by Employer contributions and
expressed as a life annuity commencing at Normal Retirement Age) equal to two
percent (2%) of his average Compensation for the five (5) consecutive Plan
Years for which his Compensation was highest. To determine this highest
average Compensation, the aggregate Compensation for the years during such
five-year period in which the Participant was credited with a Year of Service
should be divided by the number of such years.
All accrued benefits attributable to Employer contributions, whether or not
attributable to years for which the Plan is a Top Heavy Plan, may be used in
computing whether the minimum accrual requirements of this Section 5.02 are
satisfied. This minimum accrual shall be determined without regard to any
Social Security contribution and shall apply even though under other Plan
provisions the Participant would not otherwise be entitled to receive an
accrual (or would have received a lesser accrual for the Plan Year) because
(a) the Non Key Employee failed to make mandatory contributions to the Plan,
(b) the Non Key Employee's Compensation is less than a stated amount, (c) the
Non Key Employee is not employed on the last day of the Plan Year, or (d) the
Plan is integrated with Social Security.
No additional benefit accrual shall be provided pursuant to the foregoing
paragraph to the extent that the total accrual on behalf of the Participant
attributable to Employer contributions will provide a benefit expressed as a
life annuity commencing at Normal Retirement Age that equals or exceeds
twenty percent (20%) of the Participant's average Compensation for the five (5)
consecutive Plan Years for which his Compensation was the highest.
Section 6.03 Accelerated Vesting. The Plan provides a vesting schedule
in Section 4.08. For any Plan Year in which this Plan is deemed to be a Top
Heavy Plan, the vesting schedule shall be as follows:
Credited Service
Nonforfeitable for Vesting Percentage
Less than 3 0%
3 or more 100%
Should this Plan, in a later year, not be deemed a Top Heavy Plan, after
previously being so categorized, the original vesting schedule shall again be
effective, except that the vested percentage attained by Participants shall
not be reduced thereby and Participants with three (3) or more Years of
Employment shall have the right to select the schedule under which their
Vested Benefit will be determined.
Section 6.04 Modification of Defined Benefit and Defined Contribution
Plan Fraction.
For any Plan Year in which the Plan is deemed to be a Top Heavy Plan, the
denominators of the defined benefit plan fraction and the defined
contribution plan fraction contained in Section 4.03(e) shall be modified by
substituting in the formulas given therein 1.00 wherever appears 1.25.
Notwithstanding the above, if this Plan would not be deemed to be a Top Heavy
Plan if 90% were substituted for 60% in Section 1.63, then the reduction in
the defined benefit plan fraction and the defined contribution plan fraction
as set forth in the preceding sentence, shall not be made if the following
special minimum benefit is provided for Non-Key Employees covered by the
defined benefit plan. Such a minimum non-integrated benefit shall be in an
amount, which when expressed as an annual retirement benefit, is no less than
3% of such non-Key Employee's average annual Compensation for his highest
consecutive Years of Employment, not exceeding five (5) years, multiplied by
the Employee's Years of Employment with the Employer, not exceeding ten (10)
years. For this purpose, Years of Employment with the Employer shall not
include Years of Employment completed during a Plan Year for which the Plan
is not a Top Heavy Plan. Further, Years of Employment with the Employer
shall not include any Years of Employment completed in any calendar year
which begins before January 1, 1984.
A R T I C L E VII
PARTICIPATING EMPLOYERS
Section 7.01 Participation by Other Employers. Anything contained
herein to the contrary notwithstanding, with the consent of the Sponsor, any
subsidiary or related Employer of the Sponsor may participate in this Plan
and be known as a participating Employer.
Section 7.02 Delegation of Authority. With respect to all of its
relations with the Trustee and Administrative Committee for the purpose of
this Plan, such participating Employers and each of them shall be deemed to
have authorized and empowered the Sponsor to execute the Plan on behalf of
such Employer. Further, the participating Employers and each of them shall
be deemed to have authorized and empowered the Sponsor to execute the trust
agreement which constitutes a part hereof, and any amendments to the Plan and
to take any other actions as he may deem necessary to implement and maintain
the Plan.
Section 7.03 Employee Transfer. In the event that an Employee is
transferred between participating Employers, the Employee involved shall
carry with him his accumulated years of employment and eligibility. No such
transfer shall effect a termination of Employment hereunder, and the
participating Employer to which the Employee is transferred shall thereupon
become obligated hereunder with respect to such Employee in the same manner
as was the participating Employer from whom the Employee was transferred,
provided, however, that no duplication of benefits shall result.
Section 7.04 Discontinuance of Participation. Any participating
Employer may, with the consent of the Sponsor, discontinue or revoke its
participation in the Plan. At the time of any such discontinuance or
revocation, satisfactory evidence thereof and of any applicable conditions
imposed shall be delivered to the Trustee.
Section 7.05 Administrative Committee Authority. The Administrative
Committee shall have authority to make any and all necessary rules or
regulations, binding upon all participating Employers and all Participants,
to effectuate the purpose of the Article.
A R T I C L E VIII
ADMINISTRATION OF PLAN
Section 8.01 Plan Administrator. The Administrator of the Plan shall
have the sole power, duty and responsibility of directing the administration
of the Plan in accordance with the provisions herein set forth. The
Administrator shall have the sole and absolute right and power to construe
and interpret the provisions of the Plan and administer it for the best
interests of Employees including, but not limited to, the following powers
and duties:
(a) to construe any ambiguity and interpret any provision of the Plan or
supply any omission or reconcile any inconsistencies in such manner as it
deems proper;
(b) to determine eligibility to become a Participant in the Plan in
accordance with its terms;
(c) to decide all questions of eligibility for, and determine the amount,
manner, and time of payment of, any benefits hereunder, and to afford any
person dissatisfied with such decision or determination, upon written
notice thereof, the right to a full and fair hearing thereon;
(d) to establish uniform rules and procedures to be followed by Participants
and Beneficiaries in filing applications for benefits, in furnishing and
verifying proofs necessary to determine age, and in any other matters
required to administer the Plan;
(e) to adopt such reasonable funding policy and method and actuarial
valuation method as it deems necessary or desirable, and to receive and
review the annual actuarial valuation report on the Plan;
(f) to receive and review reports of the financial condition and of the
receipts and disbursements of the Fund from the Trustee, and to determine
and communicate to the Trustee the long-term and short-term financial
goals of the Plan;
(g) to file such reports and statements with, and to make such disclosures
to, the Secretary of Labor or his delegate and the Internal Revenue
Service as required by law;
(h) to furnish to Participants and Beneficiaries such information and
statements, with respect to the Plan and their individual interests
therein, as required by law, and any additional information as deemed to
be appropriate by the Administrator; and
(i) to establish reasonable procedures for determining whether a Domestic
Relations Order is a Qualified Domestic Relations Order pursuant to the
Plan and the Retirement Equity Act.
All directions by the Administrator shall be conclusive on all parties
concerned, including the Trustee, and all decisions of the Administrator as
to the facts of any case and the meaning, intent, or proper construction of
any provision of the Plan, or as to any rule or regulation in its application
to any case shall be final and conclusive; provided, however, that all rules
and decisions of the Administrator shall be uniformly and consistently
applied to all Employees in similar circumstances, and the Administrator
shall have no power to administratively add to, subtract from or modify any
of the terms of the Plan, or to change, add to or subtract from any
benefits provided by the Plan, or to waive or fail to apply any requirements
of eligibility for participation or for benefits under the Plan.
Section 8.02 Claims Procedure. If, upon application for benefits made
by a Participant or Beneficiary pursuant to Section 4.01, the Administrator
shall determine that benefits applied for shall be denied either in whole or
in part, the following provisions shall govern:
(a) Notice of Denial. The Administrator shall, upon its denial of a claim
for benefits under the Plan, provide the applicant with written notice of
such denial setting forth (1) the specific reason or reasons for the
denial, (2) specific reference to pertinent Plan provisions upon which
the denial is based, (3) a description of any additional material or
information necessary for the claimant to perfect the claim, and (4) an
explanation of the claimant's rights with respect to the claims review
procedure as provided in subsection (b) of this Section.
(b) Claims Review. Every claimant with respect to whom a claim is denied
shall, upon written notice of such denial, have the right to (1) request
a review of the denial of benefits by written notice delivered to the
Administrator, (2) review pertinent documents, and (3) submit issues and
comments in writing.
(c) Decision on Review. The Administrator shall, upon receipt of a request
for review submitted by the claimant in accordance with subsection (b),
appoint a committee for the purpose of conducting such review, and
provide the claimant with written notice of the decision reached by the
said committee setting forth the specific reasons for the decision and
specific references to the provisions of the Plan upon which the decision
is based. Such notice shall be delivered to the claimant not later than
sixty (60) days following the receipt of the claimant' request, or, in
the event that the Administrator shall determine that a hearing is
needed, not later than one hundred and twenty (120) days following
receipt of such request.
Section 8.03 Records. All acts, determinations and correspondence with
respect to the Plan shall be duly recorded and all such records, together
with such other documents, including the Plan and all amendments thereto, if
any, pertinent to the Plan or the administration thereof, shall be preserved
in the custody of the Administrator and shall at all reasonable times be made
available to Participants and Beneficiaries for examination.
Section 8.04 Delegation of Authority. The administrative duties and
responsibilities of the Administrator as set forth in this Article and
elsewhere in the Plan may be delegated by the Administrator in whatever
manner it chooses, in whole or in part, to an Administrative Committee
consisting of such persons as the Administrator shall select. The
Administrator shall certify to the Trustee in writing as to the membership
and extent of authority of such Committee and any changes relative thereto
as may occur from time to time. The authority of the Committee shall be
deemed to be that of the Administrator to the extent so certified by the
Administrator. The Trustee shall be entitled to rely on the last such
certification received and to continue to rely thereon until subsequent
written certification to the contrary is received from the Administrator.
The Administrator shall indemnify and hold harmless the members of the
Administrative Committee, and each of them, from any liability arising from
the effects and consequences of their acts, omissions and conduct in their
official capacity with respect to the Plan and the administration thereof,
except to the extent that such liability shall result from their own willful
misconduct or gross negligence.
The Administrator, or the Administrative Committee to which it has delegated
its duties and responsibilities hereunder, may employ such competent agent or
agents as it may deem appropriate or desirable to perform such ministerial
duties or consultative, actuarial, or other services as the Administrator or
its Committee may in its discretion deem necessary to facilitate the
efficient and proper administration of the Plan. The Administrator and its
Administrative Committee shall be entitled to rely upon all reports, advice
and information furnished by such agent or agents, and all action taken or
suffered by them in good faith in reliance thereon shall be conclusive upon
all such agents, Participants, Beneficiaries and other persons interested in
the Plan.
Section 8.05 Legal Incompetence. If any Participant or Beneficiary is
a minor, or is in the judgment of the Administrator otherwise legally
incapable of personally receiving and giving a valid receipt for any payment
due him hereunder, the Administrator may, unless and until a claim shall have
been made by a guardian or conservator of such person duly appointed
by a court of competent jurisdiction, direct the Trustee that payment be made
to such person's spouse, child, parent, brother or sister, or other person
deemed by the Administrator to be a proper person to receive such payment.
Any payment so made shall be a complete discharge of any liability under the
Plan for such payment.
Section 8.06 Correction of Errors. If any change in records or error
results in any Participant or Beneficiary receiving from the Plan more or
less than he would have been entitled to receive had the records been correct
or had the error not been made, the Administrator, upon discovery of such
error, shall correct the error by adjusting, as far as is practicable, the
payments in such manner that the benefits to which such person was correctly
entitled shall be paid.
Section 8.07 Qualified Domestic Relations Order Procedure. In the case
of any Domestic Relations Order received by the Plan Administrator, the Plan
Administrator shall promptly notify the Participant and the Alternate Payee
of the receipt of such order and the Plan's procedures for determining the
qualified status of Domestic Relations Orders, and within a reasonable period
after receipt of such order, the Plan Administrator shall determine whether
such order is a Qualified Domestic Relations Order and notify the Participant
and each Alternate Payee of such determination.
The Plan shall establish reasonable procedures to determine the qualified
status of Domestic Relations Orders and to administer distributions under
such qualified orders. Such procedures shall be in writing, shall provide
for the notification of each person specified in a Domestic Relations Order
as entitled to payment of benefits under the Plan (at the address included in
the Domestic Relations Order) of such procedures promptly upon receipt by the
Plan of the Domestic Relations Order, and shall permit an Alternate Payee to
designate a representative for receipt of copies of notices that are sent to
the Alternate Payee with respect to a Domestic Relations Order. During any
period in which the issue of whether a Domestic Relations Order is a Qualified
Domestic Relations Order is being determined (by the Plan Administrator, by
a court of competent jurisdiction, or otherwise), the Plan Administrator
shall segregate in a separate account in the Plan or in an escrow account the
amounts which would have been payable to the Alternate Payee during such
period if the order had been determined to be a Qualified Domestic Relations
Order. If within eighteen (18) months, it is determined that the order is
not a Qualified Domestic Relations Order, or the issue as to whether such
order is a Qualified Domestic Relations Order is not resolved, then the Plan
Administrator shall pay the segregated amounts (plus any interest thereon) to
the person or persons who would have been entitled to such amounts if there
had been no order. Any determination that an order is a Qualified Domestic
Relations Order which is made after the close of the eighteen (18)-month
period shall be applied prospectively only. If the Plan Administrator or any
fiduciary acts in accordance with this subtitle in treating a Domestic
Relations Order as being (or not being) a Qualified Domestic Relations Order, or
taking action under the preceding paragraph, then the Plan's obligation to the
Participant and each Alternate Payee shall be discharged to the extent of any
payment made pursuant to the Retirement Equity Act.
A R T I C L E IX
AMENDMENT OR TERMINATION
Section 9.01 Amendment of Plan. The Employer shall have the right at
any time to modify, alter or amend the Plan in whole or in part by instrument
in writing duly executed by the Employer and delivered to and acknowledged by
the Trustee; provided, however, that no amendment shall have the effect of
causing or permitting any part of the Fund to be used for or diverted to,
purposes other than for the exclusive benefit of Participants and
Beneficiaries and no amendment shall have the effect of revesting in the
Employer any portion of the Fund. No amendment to the vesting schedule shall
deprive a Participant of his nonforfeitable rights to benefits accrued to the
date of the amendment. If the vesting schedule of the Plan is amended, or if
the Plan is amended in any way which directly or indirectly affects the
computation of a Participant's nonforfeitable percentage of benefits, each
Participant with at least three (3) Years of Employment may elect, within a
reasonable period after such amendment is adopted, to have his nonforfeitable
percentage computed under the Plan without regard to such amendment. The
period during which the election may be made shall commence on the date of
adoption of the amendment and shall end on the latest of
(a) Sixty (60) days after the amendment is adopted;
(b) Sixty (60) days after the amendment is effective; or
(c) Sixty (60) days after the Participant is given written notice of the
amendment by the Administrator.
No amendment shall operate to increase the duties and responsibilities of the
Trustee except by written instrument duly executed by and between the
Employer and the Trustee. No amendment shall decrease a Participant's
Accrued Benefit, as of the date of amendment, by eliminating an optional
form of payment or reducing a subsidy for an early retirement benefit. No
amendment to the Plan (including a change in the actuarial basis for
determining optional or Early Retirement Benefits) shall have the effect of
decreasing a Participant's Accrued Benefit. Notwithstanding the preceding
sentence, a Participant's Accrued Benefit may be reduced to the extent
permitted under section 412(c)(8) of the Code. For purposes of this
paragraph, a Plan amendment which has the effect of (1) eliminating or
reducing an Early Retirement Benefit or a retirement-type subsidy, or (2)
eliminating an optional form of benefit, with respect to benefits
attributable to Employment before the amendment shall be treated as reducing
Accrued Benefits. In the case of a retirement-type subsidy, the preceding
sentence shall apply only with respect to a Participant who satisfied (either
before or after the amendment) the pre-amendment conditions for the subsidy.
In general, a retirement-type subsidy is a subsidy that continues after
Retirement, but does not include a qualified disability benefit, a medical
benefit, a social security supplement, a Death Benefit (including life
insurance), or a plant shutdown benefit (that does not continue after
retirement age). Furthermore, no amendment to the Plan shall have the effect of
decreasing a Participant's vested interest determined without regard to such
amendment as of the later of the date such amendment is adopted or becomes
effective.
Section 9.02 Termination of Plan. Although the Employer expects the
Plan to be continued indefinitely, it reserves the right to at any time
terminate the Plan by action of the Board. In the event of termination of
the Plan, the Employer shall notify the Trustee in writing of such
termination and, prior to any distribution of assets hereunder, shall file
notice, in such form and manner as is required by law with the Internal
Revenue Service, and, if applicable, with the Pension Benefit Guaranty
Corporation.
Section 9.03 Mergers. In the event of any merger or consolidation with,
or transfer of assets or liabilities to, any other retirement plan, the
benefit hereunder to which a Participant or Beneficiary would be entitled,
shall, immediately after such merger, consolidation or transfer (if the Plan
then terminated), be equal to or greater than such benefit would have been
immediately before such merger, consolidation or transfer (if the Plan had
then terminated).
Section 9.04 Rights Nonforfeitable. Upon termination or partial
termination of the Plan, the rights of all affected Participants and
Beneficiaries, to the extent then funded, shall be nonforfeitable without
regard to Section 4.07, and shall be determined in accordance with this
Article IX. Distribution of assets shall be made by the Trustee in
accordance with this Article IX. Any annuity contracts distributed shall be
nontransferable.
Section 9.05 Allocation of Assets.
(a) Priority Classes. Upon termination of the Plan, the assets of the Plan
held to provide benefits shall be allocated and distributed among
Participants and Beneficiaries in the following order:
(1) to benefits being paid in the form of annuity payments from the Plan
to Participants and Beneficiaries who began receiving benefits as of
the date thirty-six (36) months prior to the termination date of
the Plan, including benefits which would have been received on such
date had the Participant retired on or before such date, based on
Plan provisions in effect during the five-year period ending on the
termination date of the Plan under which such benefit would be the
least;
(2) to all other nonforfeitable benefits;
(3) to all other benefits payable under the Plan.
(b) Insufficiency of Assets.
(1) If the assets available for allocation under paragraphs (1) and (2)
of subsection (a) of this Section are insufficient to satisfy in
full the benefits of all individuals to whom such paragraphs are
applicable, the assets shall be allocated pro rata among such
individuals on the basis of the present value, as of the termination
date, of their respective benefits.
(2) If the assets available for allocation under paragraph (3) of
subsection (a) of this Section are insufficient to satisfy in full
the benefits of all individuals to whom such paragraph is
applicable, the assets shall be allocated to the benefits of such
individuals on the basis of such benefits as in effect at the
beginning of the five- year period ending on the Plan termination
date, or if then sufficient, on the basis of the most recent
amendment effective during such five-year period under which the
assets are sufficient to satisfy such benefits, and any assets
remaining shall be allocated on the basis of the amendment, if any,
next succeeding.
<PAGE>
(c) Residual Assets. Any residual assets may be distributed to the Employer
if:
(1) all liabilities with respect to Participants and Beneficiaries have
been satisfied in full,
and
(2) such distribution does not contravene any provision of law.
Section 9.06 Restrictions on Benefits. This Section shall apply only
to the extent required by regulations promulgated by the Secretary of the
Treasury in accordance with section 401(a)(4) of the Internal Revenue Code.
(a) In the event the Plan is terminated, the benefit of any Highly
Compensated Employee and any highly compensated former employee (within
the meaning of Section 414(q) of the Code and the regulations thereunder)
shall be limited to a benefit that is nondiscriminatory under section
401(a)(4) of the Code. In addition, annual payments to an Employee who
is among the twenty-five (25) Highly Compensated Employees or highly
compensated former Employees with the greatest Compensation in the
current or any prior year shall not exceed an amount equal to the
payments that would be made on behalf of the Employee under:
(1) a straight life annuity that is the Actuarial Equivalent of the
Employee's Accrued Benefit and the other benefits to which the
Employee is entitled under the Plan (other than any Social Security
Supplement); and
(2) the amount of the payments that the Employee is entitled to receive
under any Social Security supplement.
(b) The restrictions of subsection (a) do not apply if any one of the
following is satisfied:
(1) after payment to such Employee of all benefits (as described in
Treasury Regulation section 1.401(a)(4)-5(b)(3)(iii)), the value of
Plan assets equals or exceeds one hundred ten percent (110%) of the
value of current liabilities, as defined in section 412(1)(7) of the
Code;
(2) the value of the benefits (as described in Treasury Regulation
section 1.401(a)(4)-5(b)(3)(iii)) for such Employee is less than
one percent (1%) of the value of current liabilities before
distribution; or
(3) the value of the benefits (as described in Treasury Regulation
section 1.401(a)(4)- 5(b)(3)(iii)) for such Employee does not exceed
the amount described in section 411(a)(11)(A) of the Code.
These provisions shall apply only to the extent required by section
401(a)(4) of the Code and regulations thereunder.
A R T I C L E X
MISCELLANEOUS
Section 10.01 Liability of Employer. No Employee, Participant or
Beneficiary shall have any right or claim to any benefit under the Plan
except in accordance with its provisions. The adoption of the Plan shall not
be construed as creating any contract of employment between the Employer and
any Employee or otherwise conferring upon any Employee or other person any
legal right to continuation of Employment, nor as limiting or qualifying the
right of the Employer to discharge any Employee without regard to the effect
that such discharge might have upon his rights under the Plan.
Section 10.02 Spendthrift Clause. No interest, right or claim in or to
any part of the Trust Fund or any payment therefrom shall be assignable,
transferable or subject to sale, mortgage, pledge, hypothecation,
garnishment, attachment, execution, or levy of any kind whatsoever, and the
Trustee shall not issue any certificate or other documentation representing
any interest, right or claim in or to any part of the Trust Fund.
Notwithstanding the preceding, payment to an Alternate Payee according to the
terms of a Qualified Domestic Relations Order and the withholding of federal
income tax shall not be considered an assignment or alienation of benefits
under the Plan.
Section 10.03 Successor to Business of Employer. Any successor to the
business of the Employer may continue the Plan and such successor shall
thereupon succeed to all the rights, powers and duties of the Employer
hereunder. The Employment of any Employee who has continued in the employ of
such successor shall not be deemed to have been terminated or severed for any
purpose hereunder.
In the event that the Employer is reorganized or all or substantially all of
its assets are sold without any provision being made for the continuance of
this Plan by a successor to the business of the Employer, the Plan shall
terminate and the assets shall be distributed as provided in Section 7.05
hereof.
Section 10.04 Conflict of Provisions. If any provision or term of this
Plan, or of the Trust Agreement entered into pursuant hereto, is deemed to be
at variance with, or contrary to, any law of the United States or applicable
state law, the provision of the law shall be deemed to govern.
Section 10.05 Successors to Trustee. The provisions of this Plan, and
of the Trust Agreement entered into pursuant hereto, shall bind and inure to
the benefit of the successors to the Trustee named in said Agreement.
Section 10.06 Definition of Words. Feminine or neuter pronouns shall be
substituted for those of the masculine form, and the plural shall be
substituted for the singular, in any place or places herein where the context
may require such substitution or substitutions.
Section 10.07 Titles. The titles of Articles and Sections are included
for convenience only and shall not be construed as a part of the Plan or in
any respect to affect or modify its provisions.
Section 10.08 Execution of the Plan. This document may be executed in
any number of counterparts and each fully executed counterpart shall be
deemed an original.
IN WITNESS WHEREOF, the Employer has caused the Plan to be signed by its
duly authorized officer and adopted this 13 day of December, 1994.
SOUTH ALABAMA BANCORPORATION
Attest:/s/Raymond F. Lynn, Jr. By: /s/ J. Stephen Nelson
Title: Chairman
FIRST NATIONAL BANK,
A NATIONAL BANKING ASSOCIATION
Attest:/s/ Raymond F. Lynn, Jr. By: /s/ J. Stephen Nelson
Title: Chairman and CEO
THE BANK OF MOBILE
Attest:/s/ Raymond F. Lynn, Jr. By: /s/ W. Bibb Lamar, Jr.
Title: President and CEO
