<PAGE> 1
FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
----------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
----------------------- --------------------
Commission file number 0-22008
----------------
MISSISSIPPI VALLEY BANCSHARES, INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
MISSOURI 43-1336298
- --------------------------------------------- ------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
700 Corporate Park Drive, St. Louis, Missouri 63105
- ------------------------------------------------------- --------------------
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (314) 268-2580
--------------------------
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
----- -----
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES
OF COMMON STOCK, AS OF APRIL 30, 1999:
Common Stock, $1.00 par value 9,347,912
- ----------------------------- ------------------------
Class Number of Shares
<PAGE> 2
<TABLE>
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING
SECURITIES THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
MISSISSIPPI VALLEY BANCSHARES, INC.
-----------------------------------
INDEX
-----
<CAPTION>
Page No.
--------
<S> <C>
PART I. FINANCIAL INFORMATION
--------------------------
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets
March 31, 1999 and December 31, 1998 3
Condensed Consolidated Statements of
Income -- Quarters Ended March 31, 1999
and March 31, 1998 4
Consolidated Statements of Changes in
Shareholders' Equity -- Three Months
Ended March 31, 1999 and March 31, 1998 5
Condensed Consolidated Statements of
Cash Flows -- Three Months Ended
March 31, 1999 and March 31, 1998 6
Notes to Condensed Consolidated
Financial Statements 7-8
ITEM 2. Management's Discussion and Analysis
of Results of Operations and
Financial Condition 9-17
PART II. OTHER INFORMATION
--------------------------
ITEM 6. Exhibits and Reports on Form 8-K 18
SIGNATURE 19
- ---------
EXHIBIT INDEX 20
- -------------
</TABLE>
<PAGE> 3
<TABLE>
PART I. FINANCIAL INFORMATION
- ------------------------------
ITEM 1. FINANCIAL STATEMENTS
- ---------------- --------------------
MISSISSIPPI VALLEY BANCSHARES, INC.
-----------------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
<CAPTION>
March 31, December 31,
1999 1998
(Derived from
(Unaudited) Unaudited Statements)
----------- ---------------------
(dollars in thousands)
<S> <C> <C>
ASSETS
- ------
Cash and due from banks $ 22,574 $ 27,017
Held to maturity securities
(fair value of $39,896 and
$40,283, respectively) 38,842 38,815
Available for sale securities 320,997 400,087
Trading account securities 1,247 302
Loans, net of
unearned income 1,002,555 925,961
Allowance for possible loan losses 19,677 18,144
---------- ----------
Net loans 982,878 907,817
Premises and equipment 23,644 20,755
Other assets 39,487 35,264
---------- ----------
TOTAL ASSETS $1,429,669 $1,430,057
========== ==========
LIABILITIES
- -----------
Deposits:
Non-interest bearing $ 115,706 $ 125,235
Interest bearing 1,099,866 1,086,570
---------- ----------
Total deposits 1,215,572 1,211,805
Securities sold under agreements
to repurchase 37,726 41,605
Other short-term borrowings 41,644 36,853
Guaranteed preferred beneficial interests
in subordinated debentures 14,950 14,950
Other liabilities 11,355 15,066
---------- ----------
TOTAL LIABILITIES 1,321,247 1,320,279
---------- ----------
SHAREHOLDERS' EQUITY
- --------------------
Common stock-par value $1
Authorized 20,000,000 shares,
issued 9,642,812 in 1999
and 9,631,312 in 1998 9,643 9,631
Capital surplus 19,839 19,627
Retained earnings 83,637 79,003
Accumulated other comprehensive income 2,478 6,265
Treasury stock, at cost, 214,900 shares
at March 31, 1999 and 139,400 shares
at December 31, 1998 (7,175) (4,748)
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 108,422 109,778
---------- ----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $1,429,669 $1,430,057
========== ==========
See accompanying notes.
</TABLE>
3
<PAGE> 4
<TABLE>
MISSISSIPPI VALLEY BANCSHARES, INC.
-----------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
-------------------------------------------
(UNAUDITED)
<CAPTION>
Three Months Ended
March 31,
----------------------------
1999 1998
------- -------
<S> <C> <C>
Interest income:
Interest and fees on loans $20,126 $18,842
Held to maturity securities:
Taxable 480 750
Tax-exempt 144 152
Available for sale securities 5,274 5,231
Other 82 177
------- -------
TOTAL INTEREST INCOME 26,106 25,152
------- -------
Interest expense:
Deposits 11,746 12,202
Short-term borrowings 750 1,005
Long-term borrowings 256 288
------- -------
TOTAL INTEREST EXPENSE 12,752 13,495
------- -------
NET INTEREST INCOME 13,354 11,657
Provision for possible loan losses 1,749 900
------- -------
NET INTEREST INCOME AFTER
PROVISION FOR POSSIBLE LOAN LOSSES 11,605 10,757
------- -------
Other income:
Service charges 542 470
Securities gains/(losses), net on:
Sales of available for sale securities (830) 172
Trading profits and commissions 3,050 422
Other 799 655
------- -------
3,561 1,719
------- -------
Other expenses:
Employee compensation and
other benefits 3,242 3,002
Net occupancy 356 312
Equipment 352 310
Advertising 280 237
Other 2,188 1,696
------- -------
6,418 5,557
------- -------
INCOME BEFORE INCOME TAXES 8,748 6,919
Income taxes 3,259 2,479
------- -------
NET INCOME $ 5,489 $ 4,440
======= =======
Earnings per common share:
Basic $ .58 $ .47
Diluted $ .57 $ .45
See accompanying notes.
</TABLE>
4
<PAGE> 5
<TABLE>
MISSISSIPPI VALLEY BANCSHARES, INC.
-----------------------------------
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
----------------------------------------------------------
YEAR TO DATE MARCH 31, 1999 AND 1998
(UNAUDITED)
(Dollars in Thousands)
<CAPTION>
Accumulated
Other- Total
Commmon Stock Compre- Share- Compre-
------------- Capital Retained hensive Treasury holders' hensive
Shares Amount Surplus Earnings Income Stock Equity Income
------ ------ ------- -------- ----------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1998
Balance at Jan. 1, 1998 9,519,212 $9,519 $17,561 $63,541 $2,486 $ $ 93,107 $
Net Income 4,440 4,440 4,440
Issuance of common stock 57,000 57 447 504
Treasury Stock Purchased (839) (839)
Cash dividends on:
common stock (764) (764)
Other comprehensive income,
net of tax
Unrealized gain on available
for sale securities 228 228 228
--------- ------ ------- ------- ------ ------- -------- -------
Balance at March 31,
1998 9,576,212 $9,576 $18,008 $67,217 $2,714 $ (839) $ 96,676
========= ====== ======= ======= ====== ======= ========
Comprehensive Income $ 4,668
=======
1999
Balance at Jan. 1, 1999 9,631,312 $9,631 $19,627 $79,003 $6,265 $(4,748) $109,778 $
Net Income 5,489 5,489 5,489
Issuance of common stock 11,500 12 212 224
Treasury stock purchased (2,427) (2,427)
Cash dividends on:
common stock (855) (855)
Other comprehensive
income, net of tax
Unrealized loss, on available
for sale securities (3,787) (3,787) (3,787)
--------- ------ ------- ------- ------ ------- -------- -------
Balance at March 31,
1999 9,642,812 $9,643 $19,839 $83,637 $2,478 $(7,175) $108,422
========= ====== ======= ======= ====== ======= ========
Comprehensive Income $ 1,702
=======
See accompanying notes.
</TABLE>
5
<PAGE> 6
<TABLE>
MISSISSIPPI VALLEY BANCSHARES, INC.
-----------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
(UNAUDITED)
<CAPTION>
Three Months Ended
March 31,
-----------------------------
1999 1998
--------- ---------
(dollars in thousands)
<S> <C> <C>
OPERATING ACTIVITIES
- --------------------
Net income $ 5,489 $ 4,440
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for possible loan losses 1,749 900
Provision for depreciation and amortization 577 417
Accretion of discounts and amortization of
premiums on securities (90) 85
Realized securities (gains) and losses, net 830 (172)
Net decrease (increase) in trading account securities (945) 1,241
(Increase) decrease in interest receivable 687 (181)
Increase (decrease) in interest payable 119 (1)
Other, net (6,944) 3,524
-------- --------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 1,472 10,253
-------- --------
INVESTING ACTIVITIES
- --------------------
Proceeds from maturities of held to maturity securities 6,000
Purchases of available for sale securities (49,986) (22,897)
Proceeds from maturities of available for sale securities 2,000
Proceeds from sales and paydowns of
available for sale securities 120,483 58,388
Purchases of premises and equipment (3,223) (942)
Increase in loans outstanding, net (76,810) (23,051)
-------- --------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES (7,536) 17,498
-------- --------
FINANCING ACTIVITIES
- --------------------
Net increase (decrease) in deposits 3,767 (11,193)
Net increase in repurchase agreements
and other short-term borrowings 912 9,082
Proceeds from sale of common stock 224 504
Purchase of treasury stock (2,427) (839)
Cash dividends (855) (764)
-------- --------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 1,621 (3,210)
-------- --------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (4,443) 24,541
Cash and cash equivalents at beginning of period 27,017 47,442
-------- --------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 22,574 $ 71,983
======== ========
See accompanying notes.
</TABLE>
6
<PAGE> 7
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
1. Basis of Presentation
The condensed consolidated financial statements include the accounts of
Mississippi Valley Bancshares, Inc. (the "Company") and its wholly-owned
subsidiaries, Southwest Bank of St. Louis, Southwest Bank, Belleville (the
"Banks") and MVBI Capital Trust. Significant intercompany accounts and
transactions have been eliminated in consolidation. The results of
operations for the interim periods shown in this report are not necessarily
indicative of results to be expected for the entire year. In the opinion of
management, the information contained herein reflects all adjustments
necessary to make the results of operations for the interim periods a fair
statement of such operations. All such adjustments are of a normal recurring
nature.
For further information, refer to the consolidated financial statements
and footnotes thereto included in the Company's annual report on Form 10-K
for the year ended December 31, 1998.
2. Comprehensive Income
In 1997, the Financial Accounting Standards Board (FASB) issued SFAS No.
130, Reporting Comprehensive Income, that established standards for the
------------------------------
reporting and display of comprehensive income and its components. Following
is a summary of other comprehensive income components and related income tax
effects:
<TABLE>
For the Three Months Ended March 31, 1999
-----------------------------------------
<CAPTION>
Before-Tax Tax Net-of-Tax
Amount Expense Amount
---------- ------- ----------
(dollars in thousands)
<S> <C> <C> <C>
Unrealized losses on available
for sale securities $(6,656) $(2,329) $(4,327)
Less: reclassification adjustment
for losses realized in net
income (830) (290) (540)
------- ------- -------
Net unrealized losses (5,826) (2,039) (3,787)
------- ------- -------
Other comprehensive income $(5,826) $(2,039) $(3,787)
======= ======= =======
<CAPTION>
For the Three Months Ended March 31, 1998
-----------------------------------------
Before-Tax Tax Net-of-Tax
Amount Expense Amount
---------- ------- ----------
(dollars in thousands)
<S> <C> <C> <C>
Unrealized gains (losses) on
available for sale securities $523 $183 $340
Less: reclassification adjustment
for gains realized in net
income 172 60 112
---- ---- ----
Net unrealized gains 351 123 228
---- ---- ----
Other comprehensive
income (loss) $351 $123 $228
==== ==== ====
</TABLE>
7
<PAGE> 8
3. Earnings per Share
Basic earnings per share is computed by dividing net income by
the weighted average common shares outstanding.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------------------
1999 1998
------------- -------------
(dollars in thousands, except per share data)
<S> <C> <C>
BASIC:
Average common shares outstanding 9,495,556 9,541,949
========== ==========
Net income $ 5,489 $ 4,440
========== ==========
Basic earnings per common share $ .58 $ .47
========== ==========
</TABLE>
Diluted earnings per share gives effect to the weighted average shares
outstanding and average dilutive common share equivalents outstanding.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------------------
1999 1998
------------- -------------
(dollars in thousands, except per share data)
<S> <C> <C>
DILUTED:
Average common shares outstanding 9,495,556 9,541,949
Average common stock equivalents of
options outstanding-based on the
treasury stock method using market price 152,022 339,079
---------- ----------
9,647,578 9,881,028
========== ==========
Net income $ 5,489 $ 4,440
========== ==========
Diluted earnings per common share $ .57 $ .45
========== ==========
</TABLE>
8
<PAGE> 9
ITEM 2.
- -------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
-----------------------------------------------
OF OPERATIONS AND FINANCIAL CONDITION
-------------------------------------
The following discussion should be read in conjunction with the attached
condensed consolidated financial statements and notes thereto, and with the
Company's audited financial statements and notes thereto for the year ended
December 31, 1998.
SUMMARY OF EARNINGS
- -------------------
Consolidated net income for the first quarter of 1999 was $5,489,000, up
$1,049,000 or 23.6% from the $4,440,000 earned during the first quarter of
1998. On a per share basis, net income was $.57, up 26.7% from $.45 in the
same period of the prior year. The improved performance was due to a
combination of factors. Greater net interest income and interest rate hedging
activities which generated trading profits of $2.7 million were two factors
aiding the first quarter's earnings performance. Limiting the first three
months of 1999's earnings were securities losses of $830,000 and an increased
loan loss provision of $1,749,000 compared with $900,000 in the first quarter
of 1998. Due to sharp loan growth and net loan charge-offs of $216,000 in
the first quarter of 1999, the Company increased its loan loss provision.
For the quarter, the Company's return on average assets was 1.56%, up from
1.37% in the first quarter of 1998. The Company's return on equity was
19.62%, up from 18.39% in the first three months of 1998. Total assets at
March 31, 1999 were $1.430 billion, total loans were $1.003 billion and
deposits were $1.216 billion at the Company's six banking locations. At
March 31, 1999, total equity capital was $108.4 million or 7.58% of assets.
NET INTEREST INCOME
- -------------------
The following discussion and tables set forth the composition of average
interest-earning assets and interest-bearing liabilities along with
accompanying interest income, expense, yields and rates, on a tax-equivalent
basis. The tax-equivalent adjustments were approximately $63,000 and
$68,000, for the three months ended March 31, 1999 and 1998, respectively.
Net interest income on a tax equivalent basis, divided by average
interest-earning assets, represents the Company's net interest margin.
Three months ended March 31, 1999 and 1998
- ------------------------------------------
Total tax-equivalent interest income for the three months ended March 31,
1999 was $26,169,000, up $949,000 compared to the same period in 1998. The
$96 million increase in the volume of average loans outstanding was primarily
responsible for the increased interest earnings. Lower yields on all earning
assets reduced the positive impact
9
<PAGE> 10
of the increased loans. Overall asset yields were 7.81% in the first quarter
of 1999 compared to 8.12% in the same period of 1998. Funding the Company's
asset growth was a $102 million increased in average total deposits. Average
money market deposits grew $128 million while time deposits declined $46
million. All other deposits increased $20 million above prior year levels.
Total interest expense for the first quarter of 1999 was $12,752,000, down
$743,000 from $13,495,000 in the first quarter of 1998. Lower rates paid on
all interest bearing liabilities were primarily responsible for the reduced
interest expense in the first quarter of 1999 compared to 1998. Overall
rates paid on total interest bearing liabilities declined to 4.39% from 4.97%
in the first quarter of 1998.
Total tax equivalent net interest income increased $1,692,000 due to the
combination of increased interest income and lower interest expense. The
Company's net interest margin rose to 3.99% in the first quarter of 1999, up
from 3.77% in the same period in 1998 as the decline in rates paid exceeded
the reduced asset yields.
10
<PAGE> 11
<TABLE>
AVERAGE BALANCES, INTEREST AND RATES
<CAPTION>
THREE MONTHS ENDED MARCH 31,
------------------------------------------------------------------------------------
1999 1998
-------------------------------------- --------------------------------------
INTEREST INTEREST
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
BALANCE EXPENSE RATE BALANCE EXPENSE RATE
---------- ------- ------ ---------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-earning assets:
Loans<F1><F2>
Taxable $ 946,504 $20,126 8.61% $ 850,403 $18,842 8.97%
Tax-exempt<F3>
Held to maturity securities
Taxable 30,712 480 6.27 47,530 750 6.36
Tax-exempt<F3> 8,117 207 10.20 8,538 220 10.32
Available for sale securities 363,726 5,274 5.83 337,041 5,231 6.26
Trading account securities 576 10 7.02 867 15 7.23
Federal Funds sold and other short-
term investments 6,141 72 4.78 11,722 162 5.60
---------- ------- ---------- -------
Total interest-earning assets $1,355,776 26,169 7.81% 1,256,101 25,220 8.12%
Noninterest-earning assets: ------- -------
Cash and due from banks 23,799 23,900
Bank premises and equipment 22,451 13,848
Other assets 23,524 21,724
Allowance for possible loan losses (18,436) (15,019)
---------- ----------
Total assets $1,407,114 $1,300,554
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
NOW accounts $ 27,270 $ 93 1.38% $ 23,887 $ 101 1.72%
Money market accounts 715,533 7,399 4.19 587,055 6,907 4.77
Savings deposits 25,668 188 2.97 23,501 172 2.97
Time deposits of $100,000 or more 36,318 440 4.91 33,819 449 5.39
Other time deposits 288,970 3,626 5.09 338,016 4,573 5.49
---------- ------- ---------- -------
Total interest-bearing deposits 1,093,759 11,746 4.36 1,006,278 12,202 4.92
Federal funds purchased, repurchase
agreements and other short-term
borrowings 70,316 750 4.33 79,928 1,005 5.08
Capital trust debentures 14,950 256 6.84 14,950 288 7.70
---------- ------- ---------- -------
Total interest-bearing liabilities 1,179,025 12,752 4.39% 1,101,156 13,495 4.97%
------- -------
Noninterest-bearing liabilities:
Demand deposits 112,369 98,050
Other liabilities 3,831 4,794
Shareholders' equity 111,889 96,554
---------- ----------
Total liabilities and
shareholders' equity $1,407,114 $1,300,554
========== ==========
Net interest income $13,417 $11,725
======= =======
Net interest margin 3.99% 3.77%
===== =====
<FN>
- --------------------------
<F1> For purposes of these computations, nonaccrual loans are included in the
average loan amounts outstanding. Interest on nonaccrual loans is
recorded when received.
<F2> Interest income on loans includes loan fees, which were not material to
any period presented.
<F3> Information is presented on a tax-equivalent basis assuming a tax rate
of 35%. The tax-equivalent adjustments were approximately $63,000 and
$68,000 for the three months ended March 31, 1999 and 1998,
respectively.
</TABLE>
11
<PAGE> 12
The following table indicates, on a tax-equivalent basis, the changes in
interest income and interest expense which are attributable to changes in
average volume and changes in average rates, in comparison with the same
period in the preceding year. The change in interest due to the combined
rate-volume variance has been allocated to rate and volume changes in
proportion to the absolute dollar amounts of the changes in each.
<TABLE>
CHANGES IN INTEREST INCOME AND EXPENSE, VOLUME AND RATE VARIANCES
<CAPTION>
THREE MONTHS ENDED
MARCH 31, 1999
COMPARED TO
MARCH 31, 1998
----------------------------------------------
INCREASE (DECREASE) ATTRIBUTABLE TO CHANGE IN:
----------------------------------------------
YIELD/ NET
VOLUME RATE CHANGE
-------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
INTEREST EARNED ON:
Loans<F1><F2> $2,062 $ (778) $1,284
Held to maturity securities:
Taxable (259) (11) (270)
Tax-exempt<F1> (10) (3) (13)
Available for sale securities 406 (363) 43
Trading account securities (5) (5)
Federal funds sold and other short-
term investments (69) (21) (90)
------ ------- ------
Total interest income 2,125 (1,176) 949
------ ------- ------
INTEREST PAID ON:
NOW accounts 13 (21) (8)
Money market accounts 1,396 (904) 492
Savings 16 16
Time deposits of $100,000 or more 32 (41) (9)
Other time deposits (631) (316) (947)
Federal funds purchased, repurchase
agreements and other short-term
borrowings (114) (141) (255)
Long-term borrowings (16) (16) (32)
------ ------- ------
Total interest expense 696 (1,439) (743)
------ ------- ------
Net interest income $1,429 $ 263 $1,692
====== ======= ======
<FN>
- -------------------------------
<F1> Information is presented on a tax-equivalent basis assuming a tax rate
of 35%. The approximate tax equivalent adjustment was $63,000 and
$68,000 for the three months ended March 31, 1999 and 1998.
<F2> Average balances included nonaccrual loans.
</TABLE>
12
<PAGE> 13
PROVISION FOR POSSIBLE LOAN LOSSES
- ----------------------------------
The provision for possible loan losses for the first quarter of 1999 was
$1,749,000, up from $900,000 for the same period last year. The Company
increased its provision expense for the quarter primarily because of the
sharp loan growth and net loan charge-offs. The annualized ratio of net
charge-offs to average loans for the first three months of 1999 was .09%,
down from the first quarter last year. Net loan charge-offs were $216,000 and
$490,000 for the first quarter of 1999 and 1998, respectively.
The allowance for possible loan losses was $19.7 million or 1.96% of loans
outstanding at March 31, 1999. This compared to $18.1 million at the end of
1998 and $15.3 million, or 1.76% of loans at March 31, 1998. In management's
judgement, the allowance for possible loan losses is considered adequate to
absorb potential losses in the loan portfolio.
The following table summarizes, for the periods indicated, activity in the
allowance for possible loan losses:
<TABLE>
Summary of Loan Loss Experience and Related Information
-------------------------------------------------------
<CAPTION>
Three Months
Ended March 31,
-----------------------------------
1999 1998
----------- ---------
(dollars in thousands)
<S> <C> <C>
Allowance for possible loan losses
(beginning of period) $ 18,144 $ 14,892
Loans charged off (467) (718)
Recoveries of loans previously
charged off 251 228
---------- --------
Net loans charged off (216) (490)
---------- --------
Provision for possible loan losses 1,749 900
---------- --------
Allowance for possible loan losses
(end of period) $ 19,677 $ 15,302
========== ========
Loans outstanding:
Average $ 946,504 $850,403
End of period 1,002,555 869,652
Ratio of allowance for possible
loan losses to loans outstanding:
Average 2.08% 1.80%
End of period 1.96% 1.76%
Ratio of net charge-offs to
average loans outstanding, annualized: .09 .23
</TABLE>
13
<PAGE> 14
The following table summarizes nonperforming assets at the dates
indicated:
<TABLE>
<CAPTION>
March 31, December 31, March 31,
1999 1998 1998
---------- ------------ ---------
(dollars in thousands)
<S> <C> <C> <C>
Nonaccrual loans $ 1,078 $ 1,457 $ 3,003
Loans past due 90 days or more 33
Restructured loans 108 112 131
---------- -------- --------
Total nonperforming loans 1,219 1,569 3,134
Other real estate 160 160 340
---------- -------- --------
Total nonperforming assets $ 1,379 $ 1,729 $ 3,474
========== ======== ========
Loans, net of unearned discount $1,002,555 $925,961 $869,652
Allowance for possible loan
losses to loans 1.96% 1.96% 1.76%
Nonperforming loans to loans .12 .17 .36
Allowance for possible loan losses
to nonperforming loans 1,614.19 1,156.41 488.26
Nonperforming assets to loans
and foreclosed assets .14 .19 .40
</TABLE>
NONINTEREST INCOME
- ------------------
For the first quarter of 1999 total noninterest income was $3,561,000, up from
$1,719,000 in the same period in 1998. Net realized securities losses of
$830,000 in 1999 compared to securities gains of $172,000 in 1998. During the
first quarter of 1999 the Company entered into short positions in various
futures contracts to hedge against the possibility of higher interest rates and
the resulting potential impact on the securities portfolio. Mark-to-market
adjustments, as well as realized gains on these interest-rate derivative
trading activities advanced 1999 trading profits and commissions approximately
$2.7 million above prior year first quarter levels. Additional service charges
on deposit accounts and greater operating lease income further increased total
noninterest income for the first three months of 1999.
NONINTEREST EXPENSE
- -------------------
Total noninterest expense for the first quarter of 1999 was $6,418,000, up
$861,000 from $5,557,000 in the first three months of 1998. Overall Company
growth, merit increases and greater benefit expenses were partially responsible
for the increased overhead costs. Increased advertising, occupancy and
equipment costs and other operating expenses, due in part to the operating
costs for the Belleville office which opened in September 1998, also advanced
total noninterest expense costs for 1999 above prior year levels.
14
<PAGE> 15
CAPITAL MANAGEMENT AND RESOURCES
- --------------------------------
As of March 31, 1999, the Company's total shareholders' equity was $108.4
million. New capital was provided by the Company's first quarter net
earnings and by the exercise of stock options. Offsetting the Company's
capital accumulation were the payments of cash dividends on common stock and
the repurchase of 75,500 shares of common stock in connection with the
Company's stock repurchase plan.
During the first quarter of 1997 the Company formed MVBI Capital Trust
("MVBI Capital"), a statutory business trust. The Company owns all the
common stock of MVBI Capital. MVBI Capital sold 598,000 preferred
securities, having a liquidation amount of $25 per security, for a total of
$14,950,000. The distributions payable on the preferred securities will
float with the 3-month Treasury plus 2.25%. All accounts of MVBI Capital are
included in the consolidated financial statements of the Company. The
preferred securities are considered long-term borrowings and entitled
"Guaranteed preferred beneficial interests in subordinated debentures" for
financial reporting purposes. For risk-based capital guidelines the amount
is considered to be Tier 1 capital.
The analysis of capital is dependent upon a number of factors including
asset quality, earnings strength, liquidity, economic conditions and
combinations thereof. The two primary criteria currently in effect are the
risk-based capital guidelines and the minimum capital to total assets or
leverage ratio requirement.
These regulatory guidelines require that Tier 1 capital equal or exceed
4.00% of risk-weighted assets, and that the risk-based capital ratio equal or
exceed 8.00%. As of March 31, 1999 and December 31, 1998 the Company's Tier
1 capital was 11.43% and 11.96 of risk-weighted assets, and total risk-based
capital was 12.70% and 13.22% of risk-weighted assets, respectively.
The minimum acceptable ratio of Tier 1 capital to total assets, or leverage
ratio, has been established at 3.00%. As of March 31, 1999 and December 31,
1998, the Company's leverage ratio was 8.64% and 8.56%, respectively.
Management believes that a strong capital position provided by a mix of
equity and long-term debt is essential. It provides safety and security for
depositors, and enhances Company value for shareholders by providing
opportunities for growth with the selective use of leverage.
15
<PAGE> 16
IMPACT OF YEAR 2000
Like many financial institutions, the Company and its subsidiaries rely upon
computers for the daily conduct of their business and for data processing
generally. There is concern among industry experts that commencing on
January 1, 2000, computers will be unable to read the new year and that there
may be widespread computer malfunctions. In order for computer systems to
function properly, systems must be Year 2000 compliant or able to accurately
identify date information in the 20th and 21st centuries. The Company has
defined Year 2000 compliant as the ability of software and hardware systems
to correctly receive, process and provide date data within and between the
20th and 21st centuries. The inability to accurately process data related
information would have a material impact on the Company's operation and
financial condition. To mitigate the risks of a Year 2000 failure, a Year
2000 action plan has been developed and implemented.
Company Readiness - A comprehensive plan for addressing Year 2000 issues was
formulated, including allocating sufficient human and financial resources to
insure successful implementation. A detailed inventory was conducted of all
hardware and software products that are utilized by the Company. An
inventory of equipment that uses embedded computer chips (i.e. facilities)
has been completed. Hardware and software systems that possess date
sensitive applications were identified and prioritized based on their level
of importance in maintaining financial integrity and in delivery of services
to the Company's customers. The renovation phase of the plan included
upgrading necessary systems to Year 2000 compliant status, which is 95%
complete. The Company does not possess any internally developed or
programmed software or hardware. All hardware and software has been provided
by third parties under licensing agreements. Upgraded systems that are
certified by the vendor as Year 2000 compliant have and will be installed as
needed. The testing phase of the plan includes testing all critical hardware
and software systems to validate the compliant and upgraded systems. In
addition, systems have and will continue to be tested for compatibility with
other system interfaces.
Year 2000 Status - To date, all critical systems have been tested. Although
most of the Company's significant systems, including general ledger, deposits
and loans would be materially impacted by a year 2000 failure, this risk is
mitigated by vendor Year 2000 certifications and comprehensive internal
testing. Testing will continue during 1999 on less significant systems and
interfaces with outside parties.
Third Party Exposure - The Company has gathered information about the Year
2000 compliance status of customers with significant credit relationships and
with providers of certain third party services. To date, the Company is not
aware of any third party service providers or loan customers that would
materially impact the Company's results of operations, liquidity or capital
resources. However, the Company has no means of ensuring that these entities
will be Year 2000 ready. The inability of third parties to complete their
Year 2000 programs in a timely manner could materially impact the Company.
Contingency Planning - The Company has existing business continuity plans
that address its response to disruption to business due to natural disasters,
utility outages or other occurrences.
16
<PAGE> 17
The Company is developing business continuity plans specific to Year 2000
issues that are based on these existing plans. The plans involve, among other
actions, manual workarounds and adjusting staffing strategies. The Company
intends to complete these detailed business continuity plans during the second
quarter of 1999. Testing these plans is scheduled to take place in the second
quarter of 1999. In addition, funding plans are being developed to insure that
adequate levels of liquid assets are available for customers.
Year 2000 Costs - The total cost of the Year 2000 project is estimated at
$200,000 and is funded through operating cash flows. To date, the Company
has incurred approximately $149,000 related to all phases of the Year 2000
project.
Overall Year 2000 Risks - Management of the Company believes it has a
reasonably effective program in place to resolve any substantial Year 2000
issues which it has identified. Disruptions in the economy generally
resulting from Year 2000 issues could adversely affect the Company. The
Company could be subject to litigation for computer system failures of its
own or a third party with which it does business. If a major borrower
experiences disruption in its own business, it could have a material impact
on the Company. The amount of potential liability cannot be reasonably
estimated at this time.
This is a Year 2000 Readiness Disclosure pursuant to the Year 2000 Readiness
Disclosure Act. Forward-looking statements contained in this Year 2000
discussion should be read in conjunction with the cautionary statements
included below under the caption "Forward-Looking Statements."
FORWARD-LOOKING STATEMENTS
Certain statements in this report that relate to the plans, objectives or
future performance of Mississippi Valley Bancshares, Inc. may be deemed to be
forward-looking statements within the meaning of The Private Securities
Litigation Reform Act of 1995. Such statements are based on Mississippi
Valley Bancshares, Inc.'s current management expectations. Actual strategies
and results in future periods may differ materially from those currently
expected because of various risks and uncertainties. Additional discussion
of factors affecting Mississippi Valley Bancshares, Inc.'s business and
prospects is contained in the Company's periodic filings with the Securities
and Exchange Commission.
17
<PAGE> 18
PART II. OTHER INFORMATION
- ----------------------------
ITEM 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) For a list of Exhibits, see "EXHIBIT INDEX"
appearing elsewhere herein.
(b) Reports on Form 8-K: NONE
18
<PAGE> 19
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned therunto duly authorized.
MISSISSIPPI VALLEY BANCSHARES, INC.
-----------------------------------
(Registrant)
Date: May 13, 1999 /s/ Paul M. Strieker
------------ ------------------------------------------
Paul M. Strieker, Executive Vice President,
Controller and Chief Financial Officer
(on behalf of the Registrant and as
Principal Financial and Accounting Officer)
19
<PAGE> 20
<TABLE>
MISSISSIPPI VALLEY BANCSHARES, INC.
EXHIBIT INDEX
FORM 10-Q
For the quarterly period ended March 31, 1999
<CAPTION>
Exhibit
Number Description of Exhibit
- ------- ----------------------
<C> <S>
4.1 Mississippi Valley Bancshares,
Inc. 1991 Stock Option Plan
(Five-Year Options)(As
Amended through 2-17-99)
4.2 Second Amendment and
Restatement of the Southwest
Bank 401(k) Retirement
Savings Plan
4.3 Amendment and Restatement
of the Southwest Bank 401(k)
Retirement Savings Trust
Agreement
</TABLE>
20
<PAGE> 1
EXHIBIT 4.1
-----------
MISSISSIPPI VALLEY BANCSHARES, INC.
1991 STOCK OPTION PLAN (FIVE-YEAR OPTIONS)
(As Amended Through 2/17/99)
1. Purpose of Plan: The purpose of this 1991 Stock Option Plan
---------------
(Five-Year Options) (the "Plan") is to aid Mississippi Valley Bancshares,
Inc. (the "Company") and its subsidiaries in securing and retaining officers
by making it possible to offer them an increased incentive, in the form of a
proprietary interest in the Company, to join or continue in the service of
the Company (including its subsidiaries) and increase their efforts for its
welfare.
2. Granting of Options: The Compensation and Employee Benefits
-------------------
Committee ("Committee") of the Company's Board of Directors ("Board") may
from time to time grant options to purchase shares of the Company's common
stock ("Stock") to officers of the Company or any of its subsidiaries
pursuant to this Plan. In granting options, the Committee may consider the
recommendations of the Company's Chairman and the chief executive officers of
the Company's subsidiaries. No member of the Committee shall be eligible to
participate in the decision to grant options under this Plan if such member
has been granted or awarded equity securities of the Company under this Plan
or any other plan of the Company during the one year before the commencement
of such member's service on the Committee or during such service.
The total number of Shares that may be optioned under the Plan from
time to time is 1,340,000 less the number of shares subject to outstanding or
exercised options under the Company's 1988 Stock Option Plan (Five-Year
Options). Shares optioned may consist, in whole or in part, of unissued
Shares or reacquired Shares. If any Shares that have been optioned cease to
be subject to option, they may again be optioned under the Plan and for the
purpose of this Section 2 shall not be considered as having been theretofore
optioned. The foregoing number of Shares may be increased or decreased by
events stated in Section 4.
No option may be granted under the Plan before the date on which this
Plan is adopted by the Board or after December 31, 2004, unless this Plan is
extended, but options theretofore granted may
<PAGE> 2
extend beyond that date. No option holder ("Participant") shall have any
rights of a stockholder as to Shares under option until such Shares shall have
been issued to the Participant upon due exercise of the option.
3. Terms of Options: The terms of each option granted under the
----------------
Plan shall be as determined from time to time by the Committee, consistent
however, with the following:
(a) The option price shall be not less than the last sale price of
the Stock as reported on the NASDAQ National Market System on
the date the option is granted. Payment in full in cash shall
be made for all Shares purchased.
(b) No option shall be exercisable after five years from the date
it is granted, except as provided in subparagraph (e).
(c) Each option shall be for a maximum of 15,000 Shares and shall
not vest earlier than at the rate of 25% of the total number of
Shares subject to the option for each full year elapsed since
the date the option is granted, subject to acceleration in the
event of a change in control of the Company.
(d) The option shall not be transferable by the Participant
otherwise than by will or by laws of descent and distribution,
and except as provided in subparagraph (e) the option shall be
exercisable only by the Participant and only during the period
of the Participant's employment by the Company or any of its
subsidiaries.
(e) In the event of the death of the Participant or the termination
of the Participant's employment by reason of disability or
incapacity, then to the extent that the Option was vested and
exercisable on the date of the Participant's death or of such
termination of employment, it may be exercised by the
Participant's personal representative, conservator (if any) or
guardian (if any), respectively, for a period of ninety days
following the date of the Participant's death or of such
termination of employment.
-2-
<PAGE> 3
(f) The option agreements authorized under the Plan shall contain
such other provisions and restrictions as the Committee shall
deem advisable.
(g) The grant of an option pursuant to the Plan shall not affect in
any way the right or power of the Company to make adjustments,
reclassifications, reorganizations, or changes of its capital
or business structure or to merge or to consolidate or to
dissolve, liquidate or sell, or transfer all or any of its
business or assets.
4. Stock Adjustment: In the event of any stock dividend on,
----------------
split-up or combination of, or other change in, the Company's common stock,
then the number or kind of Shares available for option under the Plan or
subject to an option thereunder shall be correspondingly added to, increased,
diminished or changed, without increase or decrease in the aggregate purchase
price of all Shares subject to option before and after such change.
5. Administration of Plan: The Committee shall have the power to
----------------------
interpret the Plan, and to make rules for carrying it out. It shall have no
power (without the consent of the Participant) to change the terms and
conditions of any option except to the extent, if any, provided in such
option. The Board or the Executive Committee of the Board may amend, suspend
or terminate the Plan at any time. No such amendment, suspension or
termination shall affect options then in effect without the consent of the
Participant.
-3-
<PAGE> 4
MISSISSIPPI VALLEY BANCSHARES, INC.
-----------------------------------
1991 NON-QUALIFIED STOCK OPTION PLAN (FIVE-YEAR OPTIONS)
--------------------------------------------------------
OPTION AGREEMENT
----------------
This Option Agreement is entered into effective -------------, 19--,
between Mississippi Valley Bancshares, Inc., a Missouri corporation (the
"Company"), and
---------------------------- (the "Optionee").
WHEREAS, the Company deems it to be in its best interests to promote the
loyalty and facilitate the retention of certain officers of the Company or
its subsidiaries by offering them an increased incentive, in the form of
proprietary interests in the Company, to continue in the service of the
Company (including its subsidiaries) and increase their efforts for its
welfare, and
WHEREAS, in furtherance of the above purposes the Company has adopted
its 1991 Stock Option Plan (Five-Year Options) (the "Plan"), and desires to
afford the Optionee an opportunity to purchase shares of its common stock
pursuant to the Plan as hereafter described,
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the parties hereto do hereby agree as follows:
1. Grant of Option. The Company hereby grants to the Optionee the
---------------
right and option (the "Option") to purchase all or any part of the number of
shares of the Common Stock of the Company set forth below (the "Shares"), at
the purchase price set forth below and on the other terms and conditions
herein set forth.
TOTAL NUMBER OF SHARES: --------
PURCHASE PRICE PER SHARE: $-----
2. Dates When Option Exercisable.
-----------------------------
(a) The Option shall vest and first become exercisable as follows:
---% ON -------------, 200-;
---% ON -------------, 200-;
---% ON -------------, 200-; AND
---% ON -------------, 200-.
(b) Except as otherwise provided in paragraph 2(e), the Option shall
expire, to the extent it has not already been exercised, at the close of
business on the following date:
EXPIRATION DATE: --------------, 200-
(c) Notwithstanding paragraph 2(a) above, in the event of a Change in
Control, as hereinafter defined, the Option shall immediately vest and become
exercisable in full. For the purpose of this Option, "Change in Control"
shall mean (i) a merger or consolidation of the Company with or into any
other entity after which the holders of the voting stock of the Company
immediately prior to such merger or consolidation do not own, in
substantially the same proportions
<PAGE> 5
as they owned the voting stock of the Company immediately prior to such merger
or consolidation, at least a majority of the voting power of the surviving or
resulting entity immediately following such merger or consolidation, or (ii)
any change or changes in the beneficial ownership of a majority of the
Company's voting stock within any one-year period, including any such change or
changes effected in whole or in part by the redemption of outstanding shares or
the issuance of new shares.
(d) Notwithstanding paragraph 2(a) above, in the event of any
transaction in which the holders of the Company's common stock shall receive
or may elect to receive either cash or securities of an entity other than the
Company, the Option shall vest and become exercisable in full not less than
10 days before the last date upon which the shareholders of the Company
eligible to participate in, and receive the consideration payable in, such
transaction is determined, so as to permit the Optionee to participate in,
and receive the consideration payable in, the transaction with respect to the
Shares.
(e) Notwithstanding paragraph 2(b) and Section 3, in the event of the
death of the Optionee or termination of the Optionee's employment by reason
of his or her disability or incapacity, the Option may be exercised (but only
to the extent it was exercisable by the Optionee immediately prior to his or
her death or such termination of employment), by the Optionee's personal
representative, conservator (if any) or guardian (if any), respectively, in
the manner set forth below, for a period of 90 days after the date of the
Optionee's death or of such termination of employment.
3. Additional Condition to Exercise. Except as provided in paragraph
--------------------------------
2(e), the Option may be exercised only if the Optionee shall have
continuously served as an employee of the Company or its subsidiaries from
the date hereof to and including the date of exercise. It is expressly
understood and agreed that nothing herein is intended or shall be construed
as an employment contract or as implying any obligation on the part of the
Company to continue the Optionee's employment during a period sufficient to
permit the Option to vest.
4. Method of Exercising Option. The Optionee may exercise the Option
---------------------------
hereby granted on one or more occasions at his or her discretion, on each
occasion for all or any part of the Shares for which the Option is then
exercisable, by each time delivering to the Secretary of the Company a
written notice stating his or her election to exercise the Option and the
number of Shares to be purchased, together with cash or check in full payment
of the purchase price of the Shares then purchased, plus the amount of any
Federal and state withholding taxes payable by the Company as a result of
such exercise. The Option shall be deemed to be exercised only upon receipt
of such notice and payment by the Secretary.
5. Non-Transferability of Option. The Option shall not be
-----------------------------
transferable, and may be exercised only by the Optionee or as otherwise
provided in paragraph 2(e) or by the Plan. More particularly, but without
limiting the generality of the foregoing, the Option may not be assigned,
transferred, pledged or hypothecated in any way, other than by will or by
operation of law and shall not be subject to execution, attachment or similar
process. In the event of the bankruptcy of the Optionee or in the event of
any prohibited assignment, transfer, pledge, hypothecation or other
disposition of the Option, or the levy of any execution, attachment or
similar process upon the Option, the Option shall automatically expire and
shall be null and void.
6. Share Adjustments. In the event of any stock dividend on,
-----------------
reclassification, split-up or combination of, or other change in, the
Company's Common Stock, then the number or kind of Shares available for
Option shall be correspondingly added to, reclassified, increased, diminished
or changed proportionately, without increase or decrease in the aggregate
purchase price of all Shares subject to Option before and after such change.
-2-
<PAGE> 6
7. No Rights of Optionee as Shareholder. The Optionee shall have no
------------------------------------
rights respecting this Option or the Shares issuable upon exercise of this
Option, except as expressly set forth herein; and the Optionee shall have no
rights as a shareholder with respect to such Shares until this Option has
been duly exercised in accordance with the terms hereof.
8. General. The Company shall at all times during the term of the
-------
Option reserve and keep available such number of Shares as will be sufficient
to satisfy the requirements of this Option, and shall pay all original issue
and transfer taxes with respect to the issue and transfer of Shares pursuant
hereto and all other fees and expenses necessarily incurred by the Company
incurred in connection therewith.
IN WITNESS WHEREOF, the Company and the Optionee have executed this
Option Agreement as of the date first above written.
Company: MISSISSIPPI VALLEY BANCSHARES, INC.
By:------------------------------------
President
ATTEST:
- -------------------------------
Optionee: -----------------------------
-3-
<PAGE> 1
EXHIBIT 4.2
-----------
SECOND AMENDMENT AND RESTATEMENT
OF THE
SOUTHWEST BANK 401(K) RETIREMENT SAVINGS PLAN
March 1999
<PAGE> 2
<TABLE>
TABLE OF CONTENTS
-----------------
<CAPTION>
Page
----
<S> <C>
ARTICLE I -- DEFINITIONS
- ------------------------
1.1 Administrator 2
1.2 Affiliated Employer 2
1.3 Anniversary Year 2
1.4 Bank 2
1.5 Bank Elective Contributions 2
1.6 Bank Elective Contribution Accounts 2
1.7 Beneficiary 2
1.8 Benefits 2
1.9 Code 2
1.10 Compensation 2
1.11 Defined Benefit Plan 3
1.12 Defined Contribution Plan 3
1.13 Determination Date 3
1.14 Effective Date 3
1.15 Elective Contributions 3
1.16 Eligible Employee 3
1.17 Employee 3
1.18 Employment Commencement Date 3
1.19 Employee Savings Contributions 3
1.20 Employee Savings Contributions Account 3
1.21 Employee Savings Contribution Agreement 3
1.22 Entry Date 3
1.23 Excess Aggregate Contributions 4
1.24 Excess Contributions 4
1.25 Excess Employee Savings Contributions 4
1.26 Five Percent Owner 4
1.27 Highly Compensated Employee 4
1.28 Highly Compensated Former Employee 5
1.29 Highly Compensated Participant 5
1.30 Highly Compensated Participant Group 5
1.31 Hour of Service 5
1.32 Income 6
1.33 Key Employee 7
1.34 Matching Contributions 7
1.35 Matching Contributions Account 8
1.36 Net Income 8
1.37 Non-Highly Compensated Employee 8
1.38 Non-Highly Compensated Participant Group 8
1.39 Normal Retirement Date 8
i
<PAGE> 3
1.40 One Percent Owner 8
1.41 One Year Break in Service 8
1.42 Participant 9
1.43 Plan 9
1.44 Plan Year 9
1.45 Qualified Domestic Relations Order 9
1.46 Qualified Military Service 9
1.47 Required Beginning Date 9
1.48 Regulation 9
1.49 Rollover Contributions 9
1.50 Rollover Contribution Account 10
1.51 Section 414(s) Compensation 10
1.52 Section 415 Compensation 10
1.53 Super Matching Contributions 11
1.54 Super Matching Contributions Account 11
1.55 Top Heavy Plan Year 11
1.56 Top Paid Group 11
1.57 Total and Permanent Disability 12
1.58 Trustee 12
1.59 Trust 12
1.60 Valuation Date 12
1.61 Year of Service 12
ARTICLE II -- ADMINISTRATION
- ----------------------------
2.1 Responsibilities 13
2.2 Powers and Duties 13
2.3 Committee Provisions 14
ARTICLE III -- ELIGIBILITY AND PARTICIPATION
- --------------------------------------------
3.1 Entry 15
3.2 Reentry after Termination 15
3.3 Losing and Regaining Employee Status 15
3.4 Term of Participation 15
3.5 Failure to Include or Exclude a Participant 15
ARTICLE IV -- CONTRIBUTIONS
- ---------------------------
4.1 Company Contributions 17
4.2 Employee Savings Contributions 17
4.3 Distribution of Excess Employee Savings Contributions 17
4.4 Election to Make Employee Savings Contributions 18
4.5 Voluntary Contributions 19
4.6 Timing of Contributions 19
ii
<PAGE> 4
4.7 Crediting Contributions 20
4.8 Contributions for Qualified Military Service 20
ARTICLE V -- ACCOUNTING
- -----------------------
5.1 Crediting Contributions 21
5.2 Establishing and Maintaining Accounts 21
5.3 Valuation 21
5.4 Allocations 21
5.5 Income, Gain and Losses23
5.6 Section 415 Definitions 23
5.7 Defined Contribution Limitations 25
5.8 Combined Defined Benefit and Defined Contribution Limitation 25
5.9 Treatment of Excess Amounts 25
5.10 Statements 26
ARTICLE VI -- INVESTMENT OF ASSETS
- ----------------------------------
6.1 Directed Investments 27
6.2 Funds 27
6.3 Selection of Funds 27
6.4 Transfers between Funds 27
6.5 Accounting 27
6.6 Allocation of Earnings 27
6.7 Voting Mississippi Valley Bancshares Stock 28
6.8 Tender Offers 28
ARTICLE VII -- RETIREMENT BENEFITS
- ----------------------------------
7.1 Retirement 29
7.2 Distribution of Retirement Benefits 29
7.3 Value of Retirement Benefits 29
ARTICLE VIII -- DEATH BENEFITS
- ------------------------------
8.1 Distribution of Death Benefits 30
8.2 Value of Death Benefits 30
8.3 Beneficiary Designation 30
8.4 No Designation of Beneficiary 30
ARTICLE IX -- DISABILITY BENEFITS
- ---------------------------------
9.1 Distribution of Disability Benefits 31
9.2 Value of Disability Benefits 31
iii
<PAGE> 5
ARTICLE X -- SEVERANCE BENEFITS
- -------------------------------
10.1 Severance 32
10.2 Leaves of Absence 32
10.3 Distributions 32
10.4 Forfeitures 32
10.5 Restoration of Accounts 33
ARTICLE XI -- DISTRIBUTION OF BENEFITS
- --------------------------------------
11.1 Timing of Distributions 35
11.2 Commencement of Distributions 35
11.3 Form of Distribution 35
11.4 Mailing Address 35
11.5 Lump Sum Distributions 35
11.6 Payment to Minors and Incompetents 35
11.7 Lost Beneficiary 35
11.8 Qualified Domestic Relations Order 36
11.9 Withdrawal of Rollover Contributions 37
11.10 Hardship Withdrawals 37
11.11 Rollover Distributions 39
11.12 Withdrawal by Participant over Age 59-1/2 40
ARTICLE XII -- AMENDMENT AND TERMINATION
- ----------------------------------------
12.1 Reservation of Right to Amend 40
12.2 Reservation of Right to Terminate 40
12.3 Complete Termination 40
12.4 Partial Termination 40
ARTICLE XIII -- TOP HEAVY RULES
- -------------------------------
13.1 Definitions 41
13.2 Minimum Contribution 42
13.3 Make-Up Contribution 42
13.4 Top Heavy Vesting Schedule 42
13.5 Top Heavy Status 43
13.6 Super Top Heavy Status 43
ARTICLE XIV -- LIMITATIONS ON ELECTIVE CONTRIBUTIONS
- ----------------------------------------------------
14.1 Actual Deferral Percentage Tests 44
14.2 Definitions 44
14.3 December 31, 1997 Tests 44
14.4 Inclusion in Highly Compensated and Non-Highly
Compensated Group 44
iv
<PAGE> 6
14.5 Plan Sponsor Maintains Two or More Plans 45
14.6 Participant in Two or More Plans 45
14.7 Adjustments 45
ARTICLE XV -- LIMITATIONS ON ACP CONTRIBUTIONS
- ----------------------------------------------
15.1 Definitions 47
15.2 Actual Contribution Percentage 47
15.3 Two or More Plans Maintained by Company 48
15.4 Participation in Two or More Plans 48
15.5 Inclusion in Highly Compensated and Non-Highly
Compensated Groups 48
15.6 Adjustments 48
15.7 Distributions 48
15.8 Computation of Excess Aggregate Contributions 47
ARTICLE XVI -- ALLOCATION OF DUTIES
- -----------------------------------
16.1 Trustee's Powers and Duties 50
16.2 Allocation of Powers and Duties 50
16.3 Reliance 50
16.4 Multiple Capacities 50
ARTICLE XVII -- MISCELLANEOUS PROVISIONS
- ----------------------------------------
17.1 Exclusive Benefit 51
17.2 Construction 51
17.3 Employment Rights 51
17.4 Non-Alienation 51
17.5 Successors to Company 51
17.6 Merger 51
17.7 Terms Binding on Successors 52
17.8 Expenses 52
17.9 Adoption by Other Employers 52
17.10 Gender 52
17.11 Excessive Company Contributions 52
</TABLE>
v
<PAGE> 7
SECOND AMENDMENT AND RESTATEMENT
OF THE
SOUTHWEST BANK 401(K) RETIREMENT SAVINGS PLAN
This Plan document executed on March 9th, 1999 by the Bank,
WITNESSETH:
----------
WHEREAS, Southwest Bank of St. Louis ("Bank"), a Missouri banking
institution, established the Southwest Bank 401(k) Retirement Savings Plan
("Plan") on November 24, 1986 effective January 1, 1986; and
WHEREAS, the Bank amended and restated the Plan on August 14, 1998,
and amended the amended and restated Plan on August 12, 1992; December 21,
1992; and July 12, 1994; and
WHEREAS, the Bank wants to further amend and restate the Plan; and
WHEREAS, the adoption and execution and the amended and restated Plan
document have been approved by the board of directors of the Bank;
NOW, THEREFORE, the Bank amends the Plan by deleting it in its
entirety and restating it, effective January 1, 1997, unless otherwise
provided, as follows:
<PAGE> 8
ARTICLE I -- DEFINITIONS
------------------------
1.1 "Administrator" means a committee of one or more individuals
appointed by the governing body of the Bank.
1.2 "Affiliated Employer" means the Bank and any corporation which
is a member of a controlled group of corporations (as defined in Code
Section 414(b)) which includes the Bank; any trade or business (whether
incorporated) which is under common control (as defined in Code Section 414(c))
with the Bank; any organization (whether incorporated) which is a member of
an affiliated service group (as defined in Code Section 414(m)) which includes
the Bank; and any other entity required to be aggregated with the Bank
pursuant to Regulations under Code Section 414(o).
1.3 "Anniversary Year" means an Employee's annual period of
employment with the Bank commencing on his Employment Commencement Date.
1.4 "Bank" means Southwest Bank of St. Louis, a Missouri banking
corporation.
1.5 "Bank Elective Contributions" mean those contributions made by
the Bank pursuant to Subsection 4.1(d).
1.6 "Bank Elective Contribution Accounts" means the separate account
established for each Participant to which Bank Elective Contributions are
credited.
1.7 "Beneficiary" is the person designated by a Participant who is
or may become entitled to Benefits under the Plan. A Beneficiary who becomes
entitled to Benefits under the Plan shall remain a Beneficiary under the Plan
until the Trustee has fully distributed his Benefits to him. A Beneficiary's
right to (and the Administrator's and/or the Trustee's duty to provide to the
Beneficiary) information or data concerning the Plan shall not arise until he
first becomes entitled to receive Benefits under the Plan.
1.8 "Benefits" means the amount standing in the Participant's
Employee Savings, Bank Elective, Matching, Super Matching or Rollover
Contribution Accounts as of any date.
1.9 "Code" means the Internal Revenue Code of 1986, as amended, or
any successor statute.
1.10 "Compensation" means, with respect to any Participant, the total
earnings paid by the Bank to the Participant for the Plan Year, including
salary reduction contributions made on behalf of a Participant under Code
Sections 125, 402(e) and 402(h)(B). Compensation shall not include any
earnings paid to a Participant in a Plan Year prior to the individual
becoming a Participant. Compensation in excess of $150,000 shall be
disregarded. Such amount shall be adjusted at the same time and in such
manner as permitted under Code Section 415(d); said Compensation shall not
exceed the limitation in effect under Code Section 401(a)(17).
2
<PAGE> 9
1.11 "Defined Benefit Plan" means a retirement plan which does not
provide for individual accounts for Bank contributions. The Administrator
shall treat all Defined Benefit Plans ever maintained by the Affiliated
Employer as a single plan.
1.12 "Defined Contribution Plan" means a retirement plan which does
provide for individual accounts for Bank contributions. The Administrator
shall treat all Defined Contribution Plans ever maintained by the Affiliated
Employer as a single plan.
1.13 "Determination Date" means, with respect to any Plan Year, the
last day of the preceding Plan Year, or, in the case of the Plan's initial
Plan Year, the last day of such Plan Year.
1.14 "Effective Date" means January 1, 1997.
1.15 "Elective Contributions" mean Employee Savings Contributions and
Bank Elective Contributions. At the election of the Bank, "Elective
Contributions" also includes Super Matching Contributions for a Plan Year.
1.16 "Eligible Employee" means an Employee who has completed one Year
of Service and who has attained age twenty-one. Employees whose employment
is governed by the terms of a collective bargaining agreement between the
Employee representatives (within the meaning of Code Section 7701(a)(46)) and
the Bank under which retirement benefits were the subject of good faith
bargaining between the parties, unless such agreement expressly provides for
such coverage in the Plan, will not be eligible to participate in the Plan.
1.17 "Employee" means any person in the employment of the Bank or of
any other employer required to be aggregated with the Bank under Code
Sections 414(b), (c), (m) or (o). Employee shall include leased employees
within the meaning of Code Sections 414(n)(2) and 414(o)(2) unless such leased
employees are covered by a plan described in Code Section 414(n)(5) and such
leased employees do not constitute more than twenty percent of the Bank's
Employees who are not Highly Compensated Employees.
1.18 "Employment Commencement Date" means that date upon which an
Employee first performs an Hour of Service.
1.19 "Employee Savings Contributions" mean the contributions made by
a Participant pursuant to Section 4.2.
1.20 "Employee Savings Contributions Account" means the separate
account established for each Participant to which Employee Savings
Contributions are credited.
1.21 "Employee Savings Contribution Agreement" means the agreement
made by a Participant to make Employee Savings Contributions under Section
4.2.
1.22 "Entry Date" means January 1, April 1, July 1 and October 1 of
each Plan Year.
3
<PAGE> 10
1.23 "Excess Aggregate Contributions" means, with respect to any Plan
Year, the excess of the aggregate amount of ACP Contributions (as defined in
Section 15.1(a)) made on behalf of the Highly Compensated Participant Group
for such Plan Year, over the maximum amount of such Contributions permitted
under the limitations of Section 15.2.
1.24 "Excess Contributions" mean, with respect to a Plan Year, the
excess of Elective Contributions made on behalf of Highly Compensated
Participants for the Plan Year over the maximum amount of such Contributions
permitted under Section 14.1.
1.25 "Excess Employee Savings Contributions" mean, with respect to
any taxable year of a Participant, the excess of the aggregate amount of such
Participant's Employees Savings Contributions actually made on behalf of such
Participant for such taxable year, over the dollar limitations provided in
Code Section 402(g).
1.26 "Five Percent Owner" means an individual who owns, or who is
considered as owning, within the meaning of Code Section 318, more than five
percent of the outstanding stock of the Bank or stock possessing more than
five percent of the total combined voting power of all stock the Bank. For
purposes of determining ownership under this section, the aggregation rules
of Code Section 414(b), (c), (m) or (o) shall not apply.
1.27 "Highly Compensated Employee" means an individual who:
(a) Is a Five Percent Owner at any time during the determination
year and/or the look back year;
(b) Receives Section 415 Compensation from the Bank in excess of
$80,000 during the look back year;
(c) If elected by the Bank for a Plan Year, received Section 415
Compensation from the Bank in excess of $80,000 and was in the
Top Paid Group of Employees during the look back year.
For purposes of this Section and Section 1.28, the "determination year"
shall be the Plan Year and the "look back" year shall be the twelve month
period immediately preceding the determination year.
For purposes of this Section, the determination of Section 415
Compensation shall be based on Section 415 Compensation which is actually
paid and shall be made without regard to Code Sections 125, 402(h)(1)(B).
Additionally the dollar threshold amounts specified in (b) and (c) above
shall be adjusted at such time and in such manner as is provided in
Regulations. In the case of such an adjustment, the dollar limits which
shall be applied are those for the calendar year in which the Plan Year or
the immediately preceding twelve month period begins.
The Administrator must make the determination as to who is a Highly
Compensated Employee, including the determinations of the number and identity
of the Top Paid Group and the
4
<PAGE> 11
relevant Section 415 Compensation, consistent with Code Section 414(q) and the
Regulations under that Code section. The Bank may make a calendar year
election to determine the Highly Compensated Employees for the Plan Year, as
prescribed by Regulations. A calendar year election must apply to all plans
and arrangements of the Bank.
In determining who is a Highly Compensated Employee, all Affiliated
Employers shall be taken into account as a single employer and leased
employees within the meaning of Code Sections 414(n)(2) and 414(o)(5) shall be
considered Employees unless such leased employees are covered by a plan
described in Code Section 414(n)(5) and are not covered in any qualified plan
maintained by the Bank.
1.28 "Highly Compensated Former Employee" means a former Employee who
had a separation year prior to the Plan Year and was a Highly Compensated
Employee in the year of separation from service or in any Plan Year after
attaining age fifty-five. Highly Compensated Former Employees shall be
treated as Highly Compensated Employees. The determination of whether an
Employee is a Highly Compensated Former Employee is based on the rules
applicable to determining whether Highly Compensated Employee status was in
effect for the determination year in accordance with Section 1.414(g)-IT, A-4 of
the temporary Income Tax Regulations and Internal Revenue Service Notice
97-75.
1.29 "Highly Compensated Participant" means any Highly Compensated
Employee who is eligible to participate in the Plan.
1.30 "Highly Compensated Participant Group" means the group of
Participants who are Highly Compensated Participants.
1.31 "Hour of Service" means:
(a) Each hour for which an Employee is directly or indirectly
entitled to payment by the Bank for the performance of duties,
and
(b) Each hour for which an Employee is directly or indirectly
entitled to payment, other than for the performance of duties,
by the Bank (irrespective of whether the employment relationship
has terminated) due to vacation, holiday, illness, incapacity
(including disability), absence, and
(c) Each hour for which back pay, irrespective of mitigation of
damages, has either been awarded or agreed to by the Bank.
Hours of Service defined in (a) shall be credited to the
Employee for the computation period in which duties are
performed. Hours of Service defined in (b) shall be credited to
the Employee for the computation period in which nonperformance
of duties occurred. Hours of Service defined in (c) shall be
credited to the Employee for the computation period to which the
award or agreement pertains. The same hour shall not be
credited under both (a) and (c). An Employee who is compensated
on other than an hourly basis shall receive forty-five hours of
credit for each calendar week during which he performs at least
one Hour
5
<PAGE> 12
of Service. However, the preceding sentence shall apply only if
the Employee performs services in at least twenty-three calendar
weeks in the applicable computation period. Hours of Service shall
be credited in accordance with the rules of Department of Labor
Regulations Section 2530.200b-2(c) and (d).
1.32 "Income" means the income allocable to excess amounts which
shall equal the sum of the allocable gain or loss for the applicable
computation period and the allocable gain or loss for the period between the
end of the applicable computation period and the date of distribution ("gap
period"). The income allocable to excess amounts for the applicable
computation period and the gap period is calculated separately and is
determined by multiplying the income for the applicable computation period,
or the gap period, by a fraction. The numerator of the fraction is the
excess amount for the applicable computation period. The denominator of the
fraction is the total account balance attributable to Contributions as of the
end of the applicable computation period or the gap period, reduced by the
gain allocable to such total amount for the applicable computation period or
the gap period and increased by the loss allocable to such total amount for
the applicable computation period or the gap period. The provision of this
section shall be applied:
(a) For purposes of Section 4.3, by substituting:
(i) "Excess Employee Savings Contributions" for "excess
amounts";
(ii) "Taxable year of the Participant" for "applicable
computation period";
(iii) "Employee Savings Contribution" for "Contributions";
and
(iv) "Participant's Employee Savings Contribution
Account" for "account balance".
(b) For purposes of Section 14.6(a) by substituting:
(i) "Excess Contributions" for "excess amount";
(ii) "Plan Year" for "applicable computation period";
(iii) "Employee Savings Contributions" for
"contributions"; and
(iv) "Participant's Employee Savings Account" for account
balance".
(c) For purposes of Section 15.5, by substituting:
(i) "Excess Aggregate Contributions" for "excess
amounts";
(ii) "Plan Year" for "applicable computation period";
(iii) "Bank Matching Contributions" for "Contributions";
and
6
<PAGE> 13
In lieu of the fractional method described above, a safe harbor method
may be used to calculate the allocable Income for the gap period. Under such
"safe harbor method" allocable Income for the gap period shall be deemed to
equal ten percent of the Income allocable to excess amounts for the
applicable computation period multiplied by the number of calendar months in
the gap period. For purposes of determining the number of calendar months in
the gap period, a distribution occurring on or before the fifteenth day of
the month shall be treated as having been made on the last day of the
preceding month and a distribution occurring after such fifteenth day shall
be treated as having been made on the first day of the next subsequent month.
Income allocable to any distribution of Excess Contributions on or
before the last day of the taxable year of the Participant shall be
calculated from the first day of the taxable year of the Participant to the
date on which the distribution is made pursuant to either the fractional
method or the safe harbor method.
1.33 "Key Employee" means an Employee as defined in Code Section 416(i)
and the Regulations thereunder. Generally, any Employee or former Employee
(as well as each of his Beneficiaries) is considered a Key Employee if he, at
any time during the Plan Year that contains the Determination Date or any of
the preceding four Plan Years, has been included in one of the following
categories:
(a) An officer of the Bank, as that term is defined within the
meaning of Regulations under Code Section 416, having annual
Section 415 Compensation greater than fifty percent of the amount
in effect under Code Section 415(b)(1)(A) for any such Plan Year.
(b) One of the ten Employees have annual Section 415 Compensation
from the Bank for a Plan Year greater than the dollar limitation
in effect under Code Section 415(c)(1)(A) for the calendar year in
which such Plan Year ends and owning, or considered as owning
within the meaning of Code Section 318, both more than one-half
percent interest and the largest interests in the Bank.
(c) A Five Percent Owner.
(d) A One Percent Owner having annual Section 415 Compensation from
the Bank of more than $150,000. In determining whether an
individual has Section 415 Compensation of more than $150,000,
Section 415 Compensation from each employer required to be
aggregated under Code Section 414(b), (c), (m) and (o) shall be
taken into account.
For purposes of this Section, the determination of Section 415
Compensation shall be based only on Section 415 Compensation which is
actually paid and shall be made without regard to Code Sections 125,
402(a)(8), 402(h)(1)(B) and, in the case of Bank contributions made pursuant
to a employees savings agreement, without regard to Code Section 403(b).
1.34 "Matching Contributions" mean those contributions made by the
Bank pursuant to Section 4.1(b).
7
<PAGE> 14
1.35 "Matching Contribution Account" means the separate account
established for each Participant to which the Bank's Matching Contributions
are credited.
1.36 "Net Income" means the entire amount of the accumulated or
current operating profits (excluding capital gains from the sale or
involuntary conversion of capital or business assets) of the Bank after all
expenses and charges other than (i) the Bank's Matching Contribution to the
Plan, and (ii) federal or state or local taxes based upon or measured by
income, as determined by the Bank, either on an estimated basis or a final
basis, in accordance with the generally accepted accounting principles used
by the Bank. For any plan year, Net Income shall also include any
forfeitures provided for in Section 10.4. When the amount of Net Income has
been determined by the Bank, and the Bank's Matching Contribution made on the
basis of such determination, for any Plan Year, such determination and
contribution shall be final and conclusive and shall not be subject to change
because of any adjustments in income or expense which may be required by the
Internal Revenue Service or otherwise. Such determination and Contribution
shall not be open to question by any Participant either before or after the
Bank's Matching Contribution has been made.
1.37 "Non-Highly Compensated Employee" means an Employee who is not a
Highly Compensated Employee.
1.38 "Non-Highly Compensated Participant Group" means the group of
Participants who are Non-Highly Compensated Employees.
1.39 "Normal Retirement Date" means the first day of the month
coinciding with or next following the Participant attaining age sixty-five.
1.40 "One Percent Owner" means any person who owns, or is considered
as owning, within the meaning of Code Section 318, more than one percent of the
outstanding stock of the Bank or stock possessing more than five percent of
the total combined voting power of all stock the Bank. For purposes of
determining ownership under this Section, the aggregation rules of Code
Section 414(b), (c), (m) or (o) shall not apply.
1.41 "One Year Break in Service" means the applicable computation
period of twelve consecutive months during which an Employee fails to
complete at least 1000 Hours of Service. Further, solely for the purpose of
determining whether a Participant has incurred a One Year Break in Service,
Hours of Service shall be recognized for "authorized leaves of absence" and
"maternity and paternity leaves of absence".
An Employee shall not be deemed to have incurred a One Year Break in
Service if he completes an Hour of Service within twelve months following the
last day of the month during which his employment terminated.
"Authorized leave of absence" means an unpaid, temporary cessation from
active employment with the Bank pursuant to an established nondiscriminatory
policy, whether due to illness, military service or any other reason.
8
<PAGE> 15
"Maternity or paternity leave of absence" means an absence from work for
any period by reason of the Employee's pregnancy, birth of the Employee's
child, placement of a child with the Employee in connection with the adoption
of such child, or any absence for the purpose of caring for such child for a
period immediately following such birth or placement. For this purpose,
Hours of Service shall be credited for the computation period in which the
absence from work begins only if credit therefore is necessary to prevent the
Employee from incurring a One Year Break in Service, or, in any other case,
in the immediately following computation period. The Hours of Service
credited for a "maternity or paternity leave of absence" shall be those which
would normally have been credited but for such absence, or, in any case in
which the Administrator is unable to determine such Hours normally credited,
eight Hours of Service per day.
Notwithstanding anything in this Section to the contrary, an Employee
will not incur a One Year Break in Service for a period of Qualified Military
Service provided he returns to the employment of the Bank at the end of such
Service in accordance with applicable Federal law.
1.42 "Participant" means any Employee who participates in the Plan as
provided in Section 3.1 and who has not, for any reason, become ineligible to
participate further in the Plan.
1.43 "Plan" means this Southwest Bank 401(k) Retirement Savings Plan,
including all amendments thereto.
1.44 "Plan Year" means the annual period ending on December 31.
1.45 "Qualified Domestic Relations Order" means a judgement, decree
or order as defined in Code Section 414(p).
1.46 "Qualified Military Service" means service in the Uniformed
Services as defined in Code Section 414(u)(5).
1.47 "Required Beginning Date" means April 1 immediately following
the close of the calendar year in which the Participant attains age seventy
and one-half or in which the Participant retires, or, in the case of a
deceased Participant, would have attained age seventy and one-half had he
survived. For a Five Percent Owner, "Required Beginning Date" means the
April following the close of the calendar year in which the Participant
attains age seventy and one-half, or, in the case of a deceased Participant,
would have attained age seventy and one-half had he survived.
1.48 "Regulation" means Federal income tax regulations as promulgated
by the Secretary of Treasury or his delegate, as amended from time to time.
1.49 "Rollover Contributions" means:
(a) Amounts directly transferred to the Trustee from the trust under
a Plan qualified under Code Section 401(a).
9
<PAGE> 16
(b) Amounts transferred to the Trustee by an Employee who has
received such amounts as a distribution from a trust under a
plan qualified under Code Section 401(a) provided that such amounts
may be transferred to the Trust without Federal income tax
consequences to the Employee pursuant to Code Section 402(a)(5).
(c) Amounts directly transferred to the Trustee which are described
in Code Section 408(d)(a)(ii).
1.50 "Rollover Contribution Account" means the separate account
established for each Participant or Employee who or on whose behalf Rollover
Contributions are made.
1.51 "Section 414(s) Compensation" means, with respect to any
Employee, his Employee Savings Contributions plus Section 415 Compensation
paid during a Plan Year. The amount of Section 414(s) Compensation with
respect to any Employee shall include Section 414(s) Compensation during the
entire twelve month period ending on the last day of such Plan Year. The
determination of Section 414(s) Compensation shall be made with regard to
employees savings contributions made on behalf of an Employee to a plan
maintained under Code Section 125. Section 414(s) Compensation in excess of
$150,000 shall be disregarded. Such amount shall be adjusted at the same
time and in the same manner as permitted under Code Section 415(d).
1.52 "Section 415 Compensation" means a Participant's earned income
(as described in Code Section 402(c)(2) and Regulations thereunder), wages,
salary, fees for professional services and other amounts paid or made
available during the Plan Year for personal services actually rendered in the
course of employment with the Bank (including, but not limited to,
commissions paid salesmen, compensation for services on the basis of a
percentage of profits, commissions on insurance premiums, tips and bonuses,
fringe benefits, and reimbursements or other expense allowances under a
non-accountability plan (as described in Regulation 1.62-2(c)). The term
"Section 415 Compensation" does not mean:
(a) (i) Bank contributions on behalf of an Employee to a
plan of deferred compensation which are not included
in the gross income of the Employee for his taxable
year in which contributed;
(ii) Bank contributions on behalf of an Employee to a
simplified employee pension plan described in Code
Section 408(k); and
(iii) Any distribution from a plan of deferred
compensation, regardless of whether such amounts are
includible in the gross income of the Employee when
distributed, except any amounts received by an
Employee pursuant to an unfunded, non-qualified plan
to the extent such amounts are includible in the
gross income of the Employee.
(b) Amounts realized from the exercise of a non-qualified stock
option, or when restricted stock or property held by an Employee
becomes either freely transferable or is no longer subject to a
substantial risk of forfeiture.
10
<PAGE> 17
(c) Amounts realized from the sale, exchange or other disposition of
stock acquired under a qualified stock option.
(d) Other amounts which receive special tax benefits, such as
premiums for group term life insurance (but only to the extent
that the premiums are not includible in the gross income of the
Employee), or contributions made by the Bank (whether or not
under a salary reduction agreement) toward the purchase of an
annuity contract described in Code Section 403(b) (regardless of
whether the contributions are excludible from the gross income
of the Employee).
Section 415 Compensation shall be limited to $150,000, unless adjusted in the
same manner as permitted under Code Section 415(d).
1.53 "Super Matching Contributions" means those contributions made by
the Bank pursuant to Section 4.1(c).
1.54 "Super Matching Contributions Account" means the separate
account established for each Participant to which the Bank's Super Matching
Contributions are credited.
1.55 "Top Heavy Plan Year" means a Plan Year during which the Plan
was top heavy pursuant to Section 13.5.
1.56 "Top Paid Group" means the top twenty percent of Employees who
performed services for the Bank during the applicable year, ranked according
to the amount of Section 415 Compensation received from the Bank during such
year. All Affiliated Employers shall be taken into account as a single
employer and leased employees, within the meaning of Code Sections 414(n)(2)
and 414(o)(2), shall be considered Employees unless such leased employees are
covered by a plan described in Code Section 414(n)(5) and are not covered in any
qualified plan maintained by the Employer. For purposes of determining the
number of active Employees in any year, the following Employees shall be
excluded; however, such Employees shall be considered for the purpose of
identifying the particular Employees in the Top Paid Group:
(a) Employees with less than six months of service;
(b) Employees who normally work less than seventeen and a half hours
a week;
(c) Employees who normally work less than six months during a year.
(d) Employees who have not attained age twenty-one.
(e) Employees who are non-resident aliens and who receive no earned
income, within the meaning of Code Section 911(d)(6), from the Bank
constituting United States source income within the meaning of
Code Section 861(a)(3).
11
<PAGE> 18
In addition, if ninety percent or more of the Employees of the Bank are
covered under agreements the Secretary of Labor finds to be collective
bargaining agreements between Employee representatives and the Employer, and
the Plan covers only Employees who are not covered under such agreements, the
Employees covered by such agreements shall be excluded from both the total
number of active Employees as well as from the identification of particular
Employees in the Top Paid Group.
1.57 "Total and Permanent Disability" means a physical or mental
condition of a Participant resulting from bodily injury, disease, or mental
disorder which renders him incapable of continuing his usual and customary
employment with the Bank. The disability of a Participant shall be
determined by a licensed physician chosen by the Administrator. The
determination shall be applied uniformly to all Participants.
1.58 "Trustee" means the person or entity named as trustee under the
Trust.
1.59 "Trust" means the Southwest Bank 401(k) Retirement Savings
Trust.
1.60 "Valuation Date" means each business day of the Plan Year on
which the New York Stock Exchange is open to trading.
1.61 "Year of Service" means a twelve consecutive month period during
which an Employee has completed at least 1000 Hours of Service.
For purposes of eligibility for participation and vesting, the
computation period shall be measured from the date on which the Employee
first performs an Hour of Service and anniversaries thereof. The
participation computation periods beginning after a One Year Break in Service
shall be measured from the date on which an Employee again performs and Hour
of Service and anniversaries thereof.
Years of Service with any Affiliated Employer and for Qualified Military
Service (provided the Employee returns to the employment of the Bank in
accordance with applicable Federal law) shall be recognized for vesting
purposes.
For purposes of Years of Service and Breaks in Service for vesting, the
computation period shall be the Plan Year. However, active participation as
of the last day of the Plan Year is not required in order for a Participant
to be credited with a Year of Service for vesting purposes.
12
<PAGE> 19
ARTICLE II -- ADMINISTRATION
----------------------------
2.1 The Administrator shall have the sole responsibility for the
administration of the Plan. The Administrator shall have full power and
authority to administer the Plan and to interpret its provisions. Its
decisions, interpretations and administration made in good faith may be
relied upon by Employees, the Trustee and all other parties in interest as
proper under the Plan. A misstatement or other mistake of fact shall be
corrected when it becomes known, and such adjustment shall be made as the
Administrator considers equitable and practical.
2.2 The Administrator shall have the following powers and duties in
addition to those specified elsewhere in this Plan document:
(a) To adopt such uniform and nondiscriminatory regulations and
procedures as it shall deem necessary or appropriate for the
administration of the Plan.
(b) To delegate one or more of its duties to another party or
parties, provided that the nature of the duties allocated shall
be specifically stated.
(c) To require Plan Participants to furnish all pertinent
information. The Administrator may rely on information
furnished by a Participant.
(d) To determine eligibility for participation and Benefits and to
certify such information to the Trustee.
(e) To make determinations as to the right of any person to
Benefits. If the Administrator denies a claim for Benefits
under the Plan, the claiming Participant or Beneficiary shall
receive a written notice setting forth the specific reasons for
the denial. The Administrator shall afford the claiming
Participant or Beneficiary a reasonable opportunity for a full
and fair review of the decision resulting in denial.
(f) To prepare and distribute, in such manner as the Administrator
deems appropriate, reports and information explaining the Plan
and the status of a Participant under the Plan.
(g) To establish procedures to determine whether orders constitute
Qualified Domestic Relations Orders and to administer
distributions under such orders.
(h) To determine facts required in the administration of the Plan
from information furnished by the Bank. Such information shall
be certified by the Bank and may be relied upon conclusively by
the Administrator without inquiry.
13
<PAGE> 20
(i) Shall designate an individual to be the agent of the
Administrator for service of legal process.
(j) May employ advisors and counsel, who may be advisors or counsel
for the Bank, and may arrange for such clerical, accounting and
other services as it may require to carry out the provisions of
the Plan. Fees for services to the Plan shall be paid by the
Trust unless the Bank shall elect to pay the same directly.
Fees for services to the Plan shall be billed separately from
any fees for services to the Bank.
(k) Shall maintain, or cause to be maintained, all books of account,
records and other data as it may deem necessary or advisable for
the proper administration of the Plan.
2.3 If the Administrator is a committee consisting of more than one
individual, the following provisions shall apply:
(a) Members of the committee shall hold office at the pleasure of
Bank and may resign by submitting a written resignation to the
Bank.
(b) In order to carry out its duties, the Administrator:
(i) Shall act by a majority of the members either by
vote at a meeting or in writing without a meeting.
(ii) Shall designate one of its members to be the agent
of the Administrator for the service of legal
process.
(iii) May delegate duties of the Administrator to and
among its members including the designation of one
of its members to act for the Administrator,
provided that such delegated duties are specifically
stated.
14
<PAGE> 21
ARTICLE III. -- ELIGIBILITY AND PARTICIPATION
---------------------------------------------
3.1 Each Employee who is a Participant on the Effective Date shall
remain a Participant. As of and following the Effective Date, each Employee
shall become a Participant as of the first Entry Date coinciding with or next
following his qualification as an Eligible Employee.
3.2 An Employee who previously participated in the Plan and
terminated employment with the Bank or any Eligible Employee who is absent
from active employment with the Bank on the date he would otherwise become a
Participant, need not requalify under Section 3.1 to again become a
Participant but shall participate again immediately upon his reemployment.
However, if such Employee terminates his employment for any reason before
again completing twelve consecutive months of employment commencing on the
date of his reemployment, he shall be deemed retroactively not to have become
a Participant and all of his Matching Contribution Account shall be forfeited
under Section 10.5 as of the last day of the Plan Year in which his
termination of employment occurs. For purposes of this Section, "date of his
reemployment" means the date on which the Employee completes his first Hour
of Service following his termination under Section 10.1.
3.3 If a Participant ceases to be an Employee but remains in the
employment of the Bank, such individual shall not share in the allocation of
Bank Elective, Matching and Super Matching Contributions and forfeitures and
shall not make Employee Savings Contributions during the period of time he is
not an Employee. During such period, the individual's Accounts shall
continue to share in the gain or loss of the Trust fund pursuant to Article
V.
If an individual, who is in the employment of the Bank, but is not an
Employee, becomes an Employee, he shall participate in the Plan as of the
first Entry Date coinciding with or immediately following his becoming an
Eligible Employee.
3.4 An Employee who becomes a Participant shall continue to
participate in the Plan through the date of his death, retirement, becoming
Totally and Permanently Disabled, termination under Section 10.1 or loss of
Employee status.
3.5 If, in any Plan Year, an Employee who should be included as a
Participant is erroneously omitted and discovery of such omission is not made
until after Bank Elective, Matching and Super Matching Contributions have
been made on his behalf for such Year, the Bank shall make subsequent Bank
Elective, Matching and Super Matching Contributions with respect to the
omitted Employee in the amount the Bank would have contributed with respect
to him had he not been omitted. Such Contributions shall be made regardless
of whether they are deductible in whole or in part in any taxable year under
applicable provisions of the Code.
If, in any Plan Year, any person who should not have been included as a
Participant is erroneously included and discovery of such incorrect inclusion
is not made until after Bank Elective, Matching and Super Matching
Contributions for the year have been made, the Bank shall not be entitled to
recover such Contributions made with respect to the ineligible person
regardless of whether a deduction is allowable with respect to such
Contributions. In such event, the Bank
15
<PAGE> 22
Elective, Matching and Super Matching Contributions, and Income attributable to
such Contributions, contributed with respect to the ineligible person shall
constitute a forfeiture for the Plan Year in which the discovery is made and
such Participant's Employee Savings Contributions, and Income attributable is
such Contributions, shall be returned to the Participant.
16
<PAGE> 23
ARTICLE IV -- CONTRIBUTIONS
---------------------------
4.1 For each Plan Year, the Bank will contribute to the Trust for
purposes of the Plan the following amounts out of its Net Income:
(a) The amount of Employee Savings Contributions elected by
Participants pursuant to Section 4.2;
(b) Matching Contributions in the amount of fifty percent of
Employee Savings Contributions. No Matching Contributions shall
be made with respect to a Participant's Employee Savings
Contributions which exceed five percent of the Participant's
Compensation;
(c) As designated by the Board of Directors, Super Matching
Contributions in the amount of fifty percent of Employee Savings
Contributions. No Super Matching Contributions shall be made
with respect to a Participant's Employee Savings Contributions
which exceed five percent of the Participant's Compensation; and
(d) Contributions, called "Bank Elective Contributions" in an amount
determined by the Board of Directors of the Bank.
Should there be insufficient Net Income of the Bank for such Matching or
Super Matching Contributions, the amount of such Contribution will be
diminished to the amount that can be made from the Bank's Net Income.
Matching and Super Matching Contributions shall be paid to the Trustee not
less frequently than monthly. Forfeitures for a Plan Year, to the extent not
used to restore Accounts pursuant to Sections 10.5 and 11.11, shall reduce
Matching and Super Matching Contributions for the Plan Year. In no event
shall the Contributions pursuant to this Section on account of any fiscal
year of the Bank exceed the maximum amount deductible from its income for
such year under Code Section 404 or any successor statute; provided, however,
the Bank shall make Contributions in excess of the limitations of this Section
if such Contributions are necessary to comply with the top heavy minimum
contribution rules of Section 13.2.
4.2 Each Participant may elect to have contributed to the Trust by
the Bank, Employee Savings Contributions. Subject to rules promulgated by
the Administrator, such Contributions shall be in an amount equal to not less
than one percent nor more than eighteen percent of Compensation.
4.3 If a Participant's Employee Savings Contributions under this
Plan, together with any elective deferrals (as defined in Regulation
1.402(g)-1(b)) under another qualified cash or deferred arrangement (as
defined in Code Section 401(k)), a simplified employee pension (as defined in
Code Section 408(k)), an employees savings arrangement (within the meaning of
Code Section 3121(a)(5)(D)), a deferred compensation plan under Code Section
457, or a trust described in Code Section 501(c)(18) cumulatively exceed the
limitation imposed by Code Section 402(g) (as adjusted annually in accordance
with the method provided in Code Section 415(d) pursuant to Regulations) for
such Participant's taxable year, the Participant may, not later than March 1
following the close of his taxable year, notify the Administrator in writing
of such excess and request that his Employee Savings Contributions under this
Plan be
17
<PAGE> 24
reduced by an amount specified by the Participant. In such event, the
Administrator may direct the Trustee to distribute such excess amount (and any
Income allocable to such excess amount) to the Participant not later than the
first April 15th following the close of the Participant's taxable year.
Distributions in accordance with this paragraph may be made for any taxable
year of the Participant. Any distribution of less than the entire amount of
Employee Savings Contributions and Income shall be treated as a pro rata
distribution of Excess Employee Savings Contributions and Income under the Plan
for the taxable year. Any distribution on or before the last day of the
Participant's taxable year must satisfy each of the following conditions:
(a) the Participant shall designate the distribution as Excess
Employee Savings Contributions;
(b) the distribution must be made after the date on which the Plan
received the Employee Savings Contribution; and
(c) the Plan must designate the distribution as a distribution of
Excess Employee Savings Contributions.
Notwithstanding this Section, a Participant's Excess Employee Savings
Contribution shall be reduced, but not below zero, by any distribution pur
suant to this Section for the Plan Year beginning with or within the taxable
year of the Participant.
4.4 Employee Savings Contributions shall be made as follows:
(a) A Participant may commence making Employee Savings Contributions
to the Plan at any time following his becoming an Eligible
Employee. The Participant shall make such an election by
entering into a written Employee Savings Contribution Agreement
with the Bank and filing such agreement with the Administrator.
Such election shall initially be effective as soon as
practicable following the acceptance of the Employee Savings
Contribution Agreement by the Administrator, shall not have
retroactive effect and shall remain in force until revoked;
provided, however, the termination of the Participant's
employment, or the cessation of participation for any reason,
shall be deemed to revoke any Employee Savings Contribution
Agreement then in effect, effective immediately following the
close of the pay period within which such termination or
cessation occurs.
(b) In accordance with Administration rules, a Participant may
modify a prior election at any time during a Plan Year and
concurrently make a new election by filing a written notice with
the Administrator at least thirty days (or such shorter period
as may be acceptable to the Administrator) prior to the date for
which such modification is to be effective.
(c) A Participant may elect to prospectively revoke his Employee
Savings Contribution Agreement in its entirety at any time
during the Plan Year by providing the Administrator with thirty
days written notice of such revocation (or upon such shorter
notice
18
<PAGE> 25
period as may be acceptable to the Administrator). Such
revocation shall become effective as of date specified in such
notice, but in no event earlier than the next pay period.
(d) A Participant who is absent from employment on account of an
authorized leave of absence or military leave shall have his
Employee Savings Contribution Agreement suspended during such
leave. Such suspension of Contributions shall be effective on
the date payment of Compensation by the Bank to him ceases, and
shall remain in effect until payment of Compensation is resumed.
On the first payroll period following the expiration of the
suspension period, the Participant's Savings Contribution
Agreement shall become effective again, and such applicable
contributions shall be resumed on behalf of the Participant.
(e) The Bank shall change or suspend the amounts by which a
Participant's Compensation is deferred pursuant to an Employee
Savings Contribution Agreement with all Participants in a
nondiscriminatory manner, if it determines that it will not have
sufficient current accumulated profits to make the contributions
to the Plan required by the Employee Savings Contribution
Agreements.
(f) If the Administrator determines that the Employee Savings
Contributions made by Highly Compensated Employees may violate
Code Section 401(k), then on such occasion, the Bank may change
or suspend the amounts by which a Participant's Compensation is
deferred pursuant to the Employee Savings Contribution
Agreements.
(g) If the Bank changes or suspends its Employee Savings
Contribution Agreements in (e) and (f) above, then the affected
Participants shall continue to participate in the Plan. When the
situation which resulted in the change or suspension of the
Employee Savings Contribution Agreements described in (e) and
(f) above ceases to exist, the Employer shall reinstate the
Employee Savings Contribution Agreements to the fullest extent
possible for all affected Participants in a nondiscriminatory
manner.
4.5 Effective January 1, 1999, a Participant may not contribute
voluntary contributions to the Trust for purposes of the Plan.
4.6 The Bank may make Contributions from time to time during its
fiscal year. However, all Contributions made by the Bank must be paid to the
Trustee on or before the last day for filing the Bank's Federal income tax
return, including extensions, for the fiscal year on account of which the
Contributions are made. If the Bank pays a Contribution to the Trustee after
the last day of the fiscal year on account of which the Contribution is made,
the Bank shall designate in writing to the Administrator that the payment is
on account of the preceding fiscal year. However, Employee Savings
Contributions accumulated through payroll deductions shall be paid to the
Trustee at the earliest date such contributions can be reasonably segregated
from the Bank's general assets, but in any event, within ninety days from the
date such amounts would have otherwise been payable to the Participant in
cash. The provisions of Department of Labor Regulations 2510.3-102 are
incorporated
19
<PAGE> 26
herein by reference. Furthermore, any additional Bank Elective Contributions
shall be paid to the Trustee no later than the last day of the twelve month
period immediately following the close of the Plan Year.
4.7 All Matching, Super Matching, Employee Savings, Bank Elective
and Rollover Contributions shall be added to and become part of the Trust.
As of the last day of each Plan Year, such Contributions on account of that
Plan Year shall be credited to Participant's Account's in accord with Section
5.4. If the Bank's fiscal year is the same as the Plan Year, Contributions
made by the Bank on account of any fiscal year shall be deemed to be on
account of the same Plan Year. If the Bank's fiscal year is different from
the Plan Year, Contributions made by the Bank on account of any fiscal year
shall be deemed to be on account of the Plan Year in which the fiscal year
ends.
4.8 An Employee may contribute Make Up Employee Contributions upon
return to employment of the Bank following Qualified Military Service. Such
Contributions must be made no later than the last day of a period equal to
three times the period of the Employee's Qualified Military Service or the
last day of a five year period, whichever first occurs after the Employee's
reemployment with the Bank. The Bank will contribute Make Up Bank
Contributions on behalf of an Employee who returns to the employment of the
Bank following Qualified Military Service within sixty days of such return to
employment. "Make Up Employee Contributions" means Employee Savings
Contributions an Employee could have made during a period of Qualified
Military Service and "Make Up Bank Contributions" means the Bank Elective and
Matching Contributions and forfeitures that would have been allocated to the
accounts of an Employee during a period of Qualified Military Service. Such
Contributions shall be based upon the Employee's average Compensation for the
twelve month period immediately preceding the commencement of his Qualified
Military Service. Make Up Employee and Bank Contributions shall be made
without regard to the limitations of Sections 4.3, 5.8, 14.1 and 15.1 for the
Plan Year in which they are paid. At the time of payment, Make Up Employee
Contributions shall be credited to Employee Savings Contributions Accounts
and Make Up Bank Contributions shall be credited to Bank Elective and
Profit-Sharing Contributions Accounts. No earnings shall be credited to Make
Up Employee and Bank Contributions for any period before such Contributions are
paid.
20
<PAGE> 27
ARTICLE V -- ACCOUNTING
-----------------------
5.1 Contributions shall be credited as follows:
(a) Matching Contributions to Matching Contribution Accounts;
(b) Super Matching Contributions to Super Matching Contributions
Accounts;
(c) Employee Savings Contributions to Employee Savings Contribution
Accounts;
(d) Rollover Contributions to Rollover Contribution Accounts.
(e) Bank Elective Contributions to Bank Elective Contribution
Accounts.
5.2 The Administrator shall establish and maintain separate
Matching, Super Matching, Bank Elective and Employee Savings Contribution
Accounts for each Participant. The Administrator shall also establish and
maintain, where relevant, a separate Rollover Contribution Account for each
Employee making Rollover Contributions, and a Section 415 Suspense Account
described in Subsection 5.6(f). Matching, Super Matching, Bank Elective,
Employee Savings and forfeitures credited to each Matching, Super Matching,
Bank Elective and Employee Savings Contribution Account, and where relevant,
Rollover Contributions credited to each Rollover Contribution Account, as
adjusted for investment experience and other appropriate credits or charges,
shall represent the proportionate interest in the Trust of each Participant
and Employee. The maintenance of an Account or Accounts for a Participant or
Employee shall not give him a right or claim to, or an interest in, any
specific asset or assets of the Trust, but only the right to receive Benefits
in the amount and form and at the time provided in the Plan.
5.3 Within sixty days after each calendar quarter, the Trustee shall
furnish the Administrator a written schedule of the total assets of the Trust
on such Valuation Date, showing the valuation at fair market value placed on
each asset. The Trustee's determination of the value of the assets of the
Trust, except for patent errors, may be relied upon conclusively by the
Administrator, the Bank, Employees, Participants and Beneficiaries without
further inquiry. Upon request by the Administrator, the Trustee shall
furnish a statement of purchases, sales, gains, losses, income, expenses,
taxes, contributions from the Bank and distributions to Participants and
Beneficiaries since the last accounting.
Notwithstanding anything to the contrary, the Administrator shall, in
its sole discretion, have the authority to direct the Trustee to value Plan
assets within sixty days of any date. Any such special valuation of assets
may be used in lieu of the valuation provided in the first sentence of this
Section 5.3. In making allocations to a Participant's Account or Accounts,
the Administrator shall follow the steps set forth in Section 5.4 and 5.5, as
appropriate, taking into account distributions from such Accounts and the
amount of such distributions.
5.4 Subject to Sections 5.6 and 5.7, Contributions shall be
allocated to Accounts as follows:
21
<PAGE> 28
(a) Allocate fifty percent of the amount of Employee Savings
Contributions made by a Participant as Matching Contributions to
the Plan on account of Plan Year to the Matching Contribution
Account of each Participant who made Employee Savings
Contributions. No Matching Contributions shall be allocated
with respect to Employee Savings Contributions which exceed five
percent of a Participant's Compensation. Matching Contributions
shall be reduced by forfeitures to the extent not used to
restore accounts under Sections 10.5 and 11.11.
(b) In the event Super Matching Contributions are made, allocate
fifty percent of the amount of Employee Savings Contributions
made by a Participant as Super Matching Contributions to the
Plan on account of the Plan Year to the Super Matching Account
of each Participant who made Employee Savings Contributions. No
Super Matching Contributions shall be allocated with respect to
Employee Savings Contributions which exceed five percent of a
Participant's Compensation. Super Matching Contributions shall
be reduced by forfeitures to the extent not used to restore
Accounts under Sections 10.5 and 11.1.
(c) Allocate Employee Savings Contributions directly to the Employee
Savings Account of the Participant who made the Contributions.
(d) Allocate the Bank Elective Contributions to the Plan on account
of the Plan Year to the Bank Elective Contributions Accounts of
Participants under one or any combination of the following
methods in order to satisfy the requirements of Code
Section 401(k)(3)(A)(ii):
(i) Apportion to the Bank Elective Contribution Account
of some or all Participants who are Non-Highly
Compensated Employees in a manner as determined by
the Administrator.
(ii) Apportion to the Bank Elective Contributions Account
of each Participant who made Employee Savings
Contributions during the Plan Year in the ratio that
Employee Savings Contributions made by such
Participant bear to the Employee Savings
Contributions made by all Participants during the
Plan Year.
(iii) Apportion to the Bank Elective Contributions Account
of each Participant in the ratio that the
Compensation of such Participant for the Plan Year
bears to the Compensation of all Participants for the
Plan Year.
The Board of Directors of the Bank shall determine which of the above methods
or combinations thereof to use and, if combinations of methods are used, the
amount to allocate under each method.
(e) Allocate any Rollover Contributions directly to the Rollover
Contribution Account of the Participant who made the Contribution.
22
<PAGE> 29
5.5 As of each Valuation Date, Accounts of each Participant and
Beneficiary and segregated accounts, if any, shall be credited with the
income, gain and loss attributable to such Accounts for the period from the
preceding Valuation Date to the current Valuation Date based upon the
investment experience of the particular investment Fund or Funds for such
period and Accounts of each Participant shall be reduced by amounts which are
paid out, used or set aside because of retirement, death, disability or
termination under Section 10.1.
5.6 For purposes of applying the provisions of Sections 5.7, 5.8 and
5.9:
(a) "Annual Additions" means the following amounts credited to a
Participant's Account or Accounts for a Plan Year under all
Defined Contribution Plans maintained by the Bank:
(i) Bank Contributions.
(ii) Participant Contributions.
(iii) Forfeitures.
(iv) Amounts allocated after March 31, 1984 to an
individual medical account, as defined in Code
Section 415(l)(2), which is part of a Defined Benefit
Plan maintained by the Bank.
(v) Amounts paid or accrued after December 31, 1985 by
the Bank which are attributable to post retirement
medical benefits allocable to the separate account
of a Key Employee under a welfare benefit fund, as
defined in Code Section 419(e), which is maintained
by the Bank.
The following items shall not be treated as Annual Additions:
(i) For purposes of the percentage limitation under
Section 5.7(b), contributions for medical benefits
(within the meaning of Code Section 419A(f)(2))
after separation from service which are otherwise
treated as Annual Additions and any amount otherwise
treated as an Annual Addition under Code
Section 415(l)(1).
(ii) Rollover Contributions.
(iii) Repayment of loans made to a Participant from the
Trust.
(iv) Repayment of distributions received by a Participant
pursuant to Code Section 411(a)(7)(B).
(v) Employee contributions to a simplified employee
pension excludible from gross income under Code
Section 408(k)(6).
23
<PAGE> 30
(vi) Contributions required to be repaid or as Excess
Employee Savings Contributions pursuant to Section
4.3, Excess Aggregate Contributions pursuant to
Section 15.6 and Excess Employee Savings
Contributions pursuant to Section 14.7.
(b) "Defined Benefit Fraction" means the projected annual benefit of
a Participant under the Defined Benefit Plan divided by the
lesser of:
(i) One hundred and twenty five percent of the dollar
limit in effect under Code Section 415(b)(1)(A) for the
Plan Year; or
(ii) One hundred and forty percent of the Participant's
average Section 415 Compensation for his high three
consecutive Years of Service.
If the Participant was a participant in a Defined Benefit Plan
maintained by the Bank which was in existence on July 1, 1982,
the denominator of the fraction will not be less than one
hundred and twenty five percent of the annual benefits under
such plan which the Participant had accrued as of the end of the
plan year for such plan ending after January 1, 1983.
(c) "Defined Contribution Fraction" means the sum of Annual
Additions to the Participant's Accounts as of the close of the
Plan Year divided by the sum of the lesser of the following
amounts determined for the Plan Year and for each Plan Year in
which the Participant is employed by the Bank:
(i) One hundred and twenty five percent of the dollar
limitation in effect under Code Section 415(c)(1)(A)
for the Plan Year; or
(ii) Thirty-five percent of the Participant's Section 415
Compensation for the Plan Year.
(d) Excess Amounts" means, for any Participant for a Plan Year, the
excess, if any, of:
(i) The Annual Additions which would be credited to a
Participant's Account or Accounts, without regard to
the limitations of Sections 5.7 and 5.8.
(ii) The maximum Annual Additions which may be credited
to a Participant's Account or Accounts under
Sections 5.7 and 5.8.
(e) "Projected Annual Benefit" means the annual retirement benefit
(adjusted to any actuarialy equivalent straight life annuity if
the plan expresses such benefit in a form other than a straight
life annuity or a qualified joint and survivor annuity) of the
Participant under the terms of the Defined Benefit Plan on the
assumption he continues employment until his normal retirement
age as stated in the Defined
24
<PAGE> 31
Benefit Plan, his compensation continues at the same rate in
effect in the Plan Year under consideration until the date of his
normal retirement age and all other relevant factors used to
determine benefits under the Defined Benefit Plan remain constant
as of the current Plan Year and all future Plan Years.
(f) "Section 415 Suspense Account" means the unallocated account
established for the purpose of holding Excess Amounts.
5.7 Allocation of Annual Additions to the Account or Accounts of any
Participant for a Plan Year under this Plan and all other Defined
Contribution Plans maintained by the Bank shall be limited to the lesser of:
(a) Thirty thousand dollars or the amount specified in Code
Section 415(c)(1)(A), as adjusted annually for increases in the
cost of living in accordance with Code Section 415(d), or
(b) Twenty-five percent of the Participant's Section 415
Compensation for the Plan Year.
Bank contributions and forfeitures in excess of this limit shall be utilized
as provided in Subsection 5.9. For purposes of this Section, Section 415
Compensation includes any elective deferral (as defined in Code Section
402(g)(3)), and any amount contributed or deferred by the Bank at the
election of the Employee and which is not included in the gross income of the
Employee by reason of Code Section 125 or 457.
5.8 Effective for Plan Years commencing before December 31, 1999, if
the Participant presently participates or has ever participated under a
Defined Benefit Plan maintained by the Bank, the sum of the Defined Benefit
Fraction and the Defined Contribution Fraction for a Participant for a Plan
Year shall not exceed 1.0.
5.9 If the provisions of Sections 5.7 and 5.8 apply to limit
benefits otherwise payable under a Defined Benefit Plan and/or Annual
Additions to be allocated to a Participant's account or accounts under a
Defined Contribution Plan, the Participant's benefits under the Defined
Benefit Plan and/or Annual Additions under the Defined Contribution Plan
shall be reduced, to the extent necessary, as follows:
(a) First, Participant contributions recognized in the compensation
of Annual Additions, if any, shall be returned under all other
plans permitting such returns.
(b) Second, if the other plan(s) do not contain any provisions
permitting a reduction in benefits or contributions thereunder,
the necessary reduction shall be made under this Plan. If the
other plan(s) permit reduction but are silent as to the amount
of the reduction permitted thereunder, and if the terms of such
other plan(s) permit such action, the reduction shall be
apportioned between this Plan and the other plan(s) in such a
way that the plan having the larger Defined Benefit or Defined
Contribution Fraction, as appropriate, shall first absorb the
reduction until the plan fractions of all plans are equal, and
then the reductions shall be ratable between plans. If the
terms
25
<PAGE> 32
of such other plan(s) do not permit such action, the reduction
shall be apportioned entirely to any one plan or between or among
all plans for which a reduction is appropriate as the Participant
may direct by written instructions filed with the Administrator
and the plan administrator(s) of such other plan(s).
(c) Third, Excess Amounts remaining after adjustments under
Subsections (a) and (b), above, shall be credited to the Section
415 Suspense Account. Amounts credited to the Section 415
Suspense Account shall be credited to Matching and Super
Matching Contribution Accounts of Participants for the Plan Year
immediately following the Plan Year in which such amounts are
credited to the Section 415 Suspense Account in the same manner
as provided for the allocation of Matching or Super Matching
Contributions under Section 5.4(a) and (b). Amounts shall be
allocated from the Section 415 Suspense Account before
allocation of Matching or Super Matching Contributions for such
Plan Year. The Section 415 Suspense Account shall not share in
any earnings or losses of the Trust. Excess Amounts may not be
distributed to Participants or Beneficiaries.
5.10 The Administrator shall furnish each Participant an annual
statement of his Account or Accounts as soon as practical following the last
day of the Plan Year.
26
<PAGE> 33
ARTICLE VI -- INVESTMENT OF ASSETS
----------------------------------
6.1 Each Participant and Beneficiary shall be entitled to direct the
manner in which assets credited to his respective accounts shall be invested
and reinvested, at the times and in the manner provided by this Article.
6.2 The Trustee shall offer Funds selected by the Administrator
which shall include a fund which is invested in common stock of Mississippi
Valley Bancshares, Inc.
6.3 Each Participant or Beneficiary shall direct the investment of
all contributions made by him and on his behalf in any one, or a combination,
of the Funds selected by the Administrator.
An investment direction shall specify the particular Fund or Funds in
which amounts credited to the respective Accounts of a Participant shall be
invested. A Participant or Beneficiary may, in accordance with Administrator
rules, direct investment of a portion of his Account balances in one Fund and
the remaining portion in another Fund or Funds.
Such investment directions by a Participant or Beneficiary shall cover
the full amount credited to his Accounts. In the event a Participant or
Beneficiary fails to direct the manner in which assets credited to his
Accounts shall be invested, the Trustee shall invest all assets with respect
to which no Participant or Beneficiary investment direction is effective in
the Fund which is least subject to market risk.
An investment direction once given shall be deemed to be a continuing
direction until explicitly changed by the Participant or Beneficiary in
accordance with Administrator rules. An investment direction for future
Contributions may differ from the direction for prior Contributions.
6.4 In addition to directing the manner of the initial investment of
Contributions made to his respective Accounts, a Participant or Beneficiary
from time to time may direct reinvestment of assets credited to his
respective Accounts as of each Valuation Date in accordance with
Administrator rules.
An investment direction change in terms of whole dollar amounts or
percentages of the amounts credited to the Account of the Participant or
Beneficiary but may not be in excess of the amount credited to such Account
as of such Valuation Date.
As soon as practical after each Valuation Date, the Trustee shall
transfer amounts between the respective Funds equal to the net change in
investments as directed by the Participants or Beneficiaries as of such Date.
6.5 Accounts shall be reduced by amounts paid out, used or set aside
because of retirement, death, disability or termination under Section 10.1.
6.6 As of each Valuation Date, the Administrator shall credit to the
Accounts of each Participant or Beneficiary the income, gain and losses
attributable to such Accounts for the period
27
<PAGE> 34
from the last Valuation Date to the current Valuation Date based upon the
investment experience of the Funds for such period.
6.7 Effective January 1, 1999, each Participant and Beneficiary may
direct the Trustee how to vote the shares of the Mississippi Valley
Bancshares, Inc. common stock held by the Trustee and credited to his
Accounts on the record date established for each meeting or solicitation of
consents of the shareholders of Mississippi Valley Bancshares, Inc. For this
purpose, the Administrator shall furnish each such Participant and
Beneficiary within a reasonable period of time prior to each such meeting for
the proxy materials provided to shareholders for the meeting or consent
solicitation, together with a form to be returned to the Trustee on which may
be set forth the Participant's or Beneficiary's confidential instructions as
to the manner of voting such shares of stock. Upon receipt of such
instructions, the Trustee shall vote such shares, in person or by proxy, in
accordance therewith. If within a reasonable period of time prior to any
meeting or conclusion of any consent solicitation of the shareholders of
Mississippi Valley Bancshares, Inc., as specified by the Administrator, no
instructions have been received by the Trustee from a Participant or
Beneficiary, the Trustee shall vote the shares of Mississippi Valley
Bancshares, Inc. common stock allocated to his Account, in person or by
proxy, in the same manner as the Trustee votes the majority of the shares of
Mississippi Valley Bancshares, Inc. common stock for which instructions are
received. Unallocated shares of Mississippi Valley Bancshares, Inc. common
stock, if any, held by the Trustee, shall also be voted by the Trustee, in
person or by proxy, in the same manner as the Trustee votes the majority of
the shares of Mississippi Valley Bancshares, Inc. common stock for which
instructions are received.
6.8 Effective January 1, 1999, each Participant or Beneficiary may
direct the Trustee to tender for purchase or acquisition the shares of
Mississippi Valley Bancshares, Inc. common stock held by the Trustee and
allocated to his Accounts in the event an offer to purchase, exchange or
otherwise acquire such shares is made to all shareholders of Mississippi
Valley Bancshares, Inc. common stock. For this purpose, the Administrator
shall furnish to each Participant and Beneficiary within a reasonable period
of time the materials provided to shareholders with respect to the offer
together with a form to be returned to the Trustee on which the Participant
and Beneficiary may set forth confidential instructions with respect to the
offer. If within a reasonable period of time, as specified by the
Administrator, no instructions have been received by the Trustee from a
Participant or Beneficiary relating to the offer, the Trustee shall not
tender any shares of Mississippi Valley Bancshares, Inc. common stock
allocated to such Participant's or Beneficiary's Accounts. The Trustee shall
also not tender those shares of Mississippi Valley Bancshares, Inc. common
stock it holds, if any, which are not allocated to an Account.
28
<PAGE> 35
ARTICLE VII. -- RETIREMENT BENEFITS
-----------------------------------
7.1 A Participant may retire at anytime coincident with or following
his Normal Retirement Date. A Participant may make a written election on or
after his Normal Retirement Date, in accordance with Administrator rules, to
be treated as retired for purposes of the Plan even though he remains in the
employment of the Bank. Payment of a Participant's Retirement Benefits shall
commence pursuant to Article 11 no later than his Required Beginning Date
even though he is still employed by the Bank on such date.
7.2 If the value of a Participant's Accounts is $5,000 or less on
the Valuation Date immediately following the date the Participant retires,
the Administrator shall cause the Trustee to distribute retirement Benefits
to him in accordance with Article 11 as of such Valuation Date. If the value
of a Participant's Accounts is more than $5,000 on the Valuation Date
immediately following the date the Participant retires, the Administrator
shall cause the Trustee to distribute Retirement Benefits in accordance with
Article XI as of such Valuation Date only if the Participant consents in
writing to such distribution. If the Participant does not so consent, the
Administrator shall cause the Trustee to distribute such Benefits following
the earliest to occur of the Valuation Date immediately following the date
the Participant dies or consents in writing to distribution. Provided,
however, that distribution must commence on or before the Participant's
Required Beginning Date.
7.3 Retirement Benefits shall be full value of the Participant's
Accounts on the Valuation Date immediately preceding the distribution of such
Benefits.
29
<PAGE> 36
ARTICLE VIII. -- DEATH BENEFITS
-------------------------------
8.1 If the value of a Participant's Accounts is $5,000 or less on
the Valuation Date immediately following his death, the Administrator shall
cause the Trustee to distribute death Benefits to his Beneficiary in
accordance with Article 11 as of such Valuation Date. If the value of a
Participant's Accounts is more than $5,000 on the Valuation Date immediately
following his death, the Administrator shall cause the Trustee to distribute
death Benefits to his Beneficiary in accordance with Article 11 as of such
Valuation Date only if the Beneficiary consents in writing to such
distribution. If the Beneficiary does not so consent, the Administrator
shall cause the Trustee to distribute such Benefits following the earliest to
occur of the Valuation Date immediately following the date the Beneficiary
dies or consents in writing to distribution. Provided, however, that
distribution must commence on or before what would have been the
Participant's Required Beginning Date had he survived to such date.
8.2 Death Benefits shall equal the full value of the Participant's
Accounts on the Valuation Date immediately preceding the distribution of such
Benefits.
8.3 Each Participant shall designate a Beneficiary or Beneficiaries
on a form prescribed by and filed with the Administrator. Each designation
may be changed by the Participant by signing and filing with the
Administrator a new Beneficiary designation, subject to the provisions of
this Section 8.3. The Beneficiary designation form shall designate the
Participant's spouse as Beneficiary unless such spouse consents in writing to
the designation of a person other than the spouse as Beneficiary and such
consent is witnessed by a notary public, or the person to whom the
Administrator has delegated the responsibility of Plan administration. The
spouse's consent under this Section 8.3 is not required if there is no spouse
or the spouse cannot be located.
8.4 In the event a written designation cannot be located or all the
designated Beneficiaries predecease or die simultaneously with the deceased
Participant, and the provisions of Section 8.3 do not control, the
Administrator shall direct the Trustee to distribute all of the Participant's
Benefits to his spouse. If there is no spouse, the spouse has predeceased
the Participant, or the spouse cannot be located, the Administrator shall
direct the Trustee to distribute Benefits to the estate of the deceased
Participant.
30
<PAGE> 37
ARTICLE IX. -- DISABILITY BENEFITS
----------------------------------
9.1 If the value of a Participant's Accounts is $5,000 or less on
the Valuation Date immediately following the date the Participant's Total and
Permanent Disability occurs, the Administrator shall cause the Trustee to
distribute Disability Benefits to him in accordance with Article 11 as of
such Valuation Date. If the value of a Participant's Accounts is more than
$5,000 on the Valuation Date immediately following the date the Participant's
Total and Permanent Disability occurs, the Administrator shall cause the
Trustee to distribute disability Benefits in accordance with Article 11 as of
such Valuation Date only if the Participant consents in writing to such
distribution. If the Participant does not so consent, the Administrator
shall cause the Trustee to distribute such Benefits following the earliest to
occur of the Valuation Date immediately following the date the Participant
dies or consents in writing to distribution. Provided, however, that
distribution must commence on or before the Participant's Required Beginning
Date.
9.2 Disability Benefits shall equal the full value of the
Participant's Accounts on the Valuation Date immediately preceding the
distribution of such Benefits.
31
<PAGE> 38
ARTICLE X. -- SEVERANCE BENEFITS
--------------------------------
10.1 A Participant has severed when he terminates employment for a
reason other than retirement, death or Total and Permanent Disability. The
interests and rights of a severed Participant shall be limited as described
in this Article 10.
10.2 If the Bank grants a Participant a leave of absence, he shall
not be deemed to have terminated his employment under Section 10.1 during his
leave. However, if the Participant fails to return to the service of the
Bank on or prior to the expiration date of his leave, he shall be deemed to
have terminated his employment under Section 10.1 on such expiration date.
The Bank shall grant leaves of absence only on a uniform basis to all
Participants under similar circumstances.
10.3 If the value of the vested portion, determined under Section
10.4, of a severed Participant's Accounts is $5,000 or less on the Valuation
Date immediately following the date the Participant severs under Section
10.1, the Administrator shall cause the Trustee to distribute Severance
Benefits to him in accordance with Article 11 as of such Valuation Date. If
the value of the vested portion, determined under Section 10.4, of a severed
Participant's Accounts is more than $5,000 on the Valuation Date immediately
following the date the Participant severs under Section 10.1, the
Administrator shall cause the Trustee to distribute Severance Benefits to him
in accordance with Article XI as of such Valuation Date only if the severed
Participant consents in writing to such distribution. If such Participant
does not so consent, the Administrator shall cause the Trustee to distribute
Severance Benefits to him in accordance with Article XI following the
earliest of the Valuation Date immediately following the day the Participant
dies or consents in writing to distribution. Provided, however, that
distribution must commence on or before the Participant's Required Beginning
Date.
10.4 Severance Benefits shall consist of the full value, on the
Valuation Date immediately preceding the date of distribution under Section
10.3, of the Participant's Employee Savings, Bank Elective, Super Matching
and Rollover Contribution Accounts and the following percentage of the value,
on the Valuation Date immediately preceding the date of distribution under
Section 10.3, of the Participant's Matching Contribution Account:
<TABLE>
<CAPTION>
Years of Service Vesting Percentage
---------------- ------------------
<S> <C>
Less than 3 0%
3 but less than 4 50%
4 but less than 5 75%
5 or more 100%
</TABLE>
In the event the Plan is amended to change or modify any vesting
schedule, a Participant with at least five Years of Service as of the
expiration date of the election period described in this Section 10.4 may
elect to have his vesting percentage in his Matching Contribution Account
computed under the Plan without regard to such amendment. If a Participant
fails to make an election, then such Participant shall be subject to the new
vesting schedule. The Participant's election period shall commence as of the
adoption date of the amendment and shall end sixty days after the latest of:
32
<PAGE> 39
(a) The adoption date of the amendment,
(b) The Effective Date, or
(c) The day the Participant receives written notice of the amendment
from the Bank or Administrator.
The remaining portion of the Matching Contribution Account shall be a
forfeiture as of the earlier of the last day of the Plan Year in which the
Participant's Accounts are distributed or in which the Participant incurs
five successive One Year Breaks in Service. Forfeitures shall be used to
restore Matching or Super Matching Contribution Accounts as provided in
Section 10.5, restore Accounts of lost Participants as provided in Section
11.11 and reduce Matching Contributions as provided in Section 5.4(a). A
Participant's Matching Contribution Account shall be deemed paid to the
Participant even though the Participant's vested percentage in such Account,
under this Section, is zero percent.
10.5 The Bank shall cause the Matching Contribution Account of a
Participant, who severed under Section 10.1, received a distribution of his
vested Benefits and forfeited the nonvested portion of his Bank Contribution
Account under Section 10.4, to be restored in an amount equal to the portion
of such Account which was forfeited under Section 10.4 because of his
severance upon the occurrence of the following conditions:
(a) The Participant is re-employed by the Bank prior to incurring
five successive One Year Breaks in Service; and
(b) The Participant repays the Trustee the amount distributed to him
on account of his severance, unadjusted for gains and losses, no later than
five years following the date of his reemployment by the Bank.
Such restoration shall be made as of the last day of the Plan Year in which
the above conditions occur. A Participant, who has a zero percent vested
interest at the time of his severance, is deemed to receive a distribution of
his vested Benefits at such time and is deemed to have repaid such Benefits
upon his re-employment. Until such restoration is made, the Trustee shall
invest the amount repaid by the Participant in a Federally insured interest
bearing savings account(s) or time deposit(s) (or a combination of both) or
in other fixed income investments. Until the last day of the Plan Year in
which the Participant makes the payment, his segregated account shall remain
a part of the Trust, but it alone shall share in any income it earns and it
also shall bear any expense or loss it incurs. The Administrator shall
direct the Trustee to repay to the Participant as soon as practicable the
full amount of his segregated account if the Administrator determines that
one or more of the conditions of this Section have not been satisfied.
To restore the Account, the Administrator, to the extent necessary, will
allocate to the Account the amount, if any, of forfeitures for the Plan Year
which would otherwise be allocated under Subsection 5.4(a);
33
<PAGE> 40
To the extent forfeitures are insufficient to enable the Administrator to
make the required restoration, the Bank shall contribute, without regard to
any requirement or restriction of Section 4.1, the additional amount
necessary to enable the Administrator to make the required restoration. If,
for a particular Plan Year, the Administrator must restore the Accounts of
more than one reemployed Participant, the Administrator shall make the
restorations to each such Account in the same preparation that a
Participant's restored amount for a Plan Year bears to the restored amount
for the Plan Year of all such reemployed Participants. The limitation on
allocations of Sections 5.6 and 5.7 shall not apply to allocations under this
Section 10.5.
34
<PAGE> 41
ARTICLE XI -- DISTRIBUTION OF BENEFITS
--------------------------------------
11.1 Benefits shall be distributed in accordance with this Article XI
following the Valuation Date as of which Benefits are distributable.
11.2 The distribution of Benefits shall occur or commence within
sixty days after the Valuation Date as of which Benefits are distributable.
However, if the amount of Benefits cannot be ascertained by the end of such
sixty day period, the distribution of Benefits shall occur or commence within
sixty days following the ascertainment of the amount of Benefits due.
11.3 Distribution of Benefits shall be in cash except the
distribution of a Participant's or Beneficiary's Benefits, to the extent such
Benefits are invested in the Mississippi Valley Bancshares, Inc. common
stock, shall be, at the written election of the Participant, distributed in
shares of Mississippi Valley Bancshares, Inc. common stock allocable to the
Participant's or Beneficiary's Accounts. Provided, however, that any
fractional share of Mississippi Valley Bancshares, Inc. common stock
allocable to a Participant's or Beneficiary's Accounts shall be distributed
in cash instead of in kind based upon the value of such stock on the date of
distribution.
11.4 Each Participant and Beneficiary shall submit to the
Administrator, on a form provided by it, his current mailing address. It
shall be the duty of each Participant and Beneficiary to promptly notify the
Administrator of any change of address. In the absence of such notice, the
Administrator shall be entitled for all purposes to rely on the last known
address of the Participant or Beneficiary.
11.5 The Administrator shall direct the Trustee to distribute
Benefits, in the form of a single lump sum payment.
11.6 Any amount payable to or for the benefit of a minor, an
incompetent person or other person incapable of receipting therefore shall be
deemed paid when paid to the conservator of such person's estate or to the
party providing or reasonably appearing to provide for the care of such
person, and such payment shall fully discharge the Trustee, the Administrator
and the Bank with respect thereto.
11.7 The Plan does not require either the Trustee or the
Administrator to search for, or ascertain the whereabouts of, any Participant
or Beneficiary. The Administrator, by certified or registered mail addressed
to his last known address of record with the Administrator, shall notify any
Participant or Beneficiary that he is entitled to a distribution under the
Plan. Such notice shall quote the provisions of this Section. If the
Participant or Beneficiary fails to claim his Benefits or make his
whereabouts known to the Administrator within two years of the date of
mailing the notice, or before termination of this Plan, whichever should
first occur, the Administrator shall treat the Participant's or Beneficiary's
unclaimed Benefits as forfeited and shall reallocate the unclaimed payable
Benefits in the same manner as if such Benefits are forfeitures under
Subsection 5.4(a).
If the Participant or Beneficiary who has incurred a forfeiture of his
Benefits under the provisions of the first paragraph of this Section makes a
claim at anytime for his forfeited Benefits,
35
<PAGE> 42
the Administrator shall restore the Participant's or Beneficiary's forfeited
Benefits to the same dollar amount as the dollar amount of the Benefits
forfeited, unadjusted for any gains or losses occurring subsequent to the date
of forfeiture. The Administrator shall make the restoration during the Plan
Year in which the Participant or Beneficiary makes the claim as follows from
forfeitures for the Plan Year of restoration to the extent not used to restore
accounts pursuant to Section 10.5 which would otherwise be used to reduce the
Bank's Matching or Super Matching Contributions pursuant to Subsection 4.1(b).
To the extent amounts described in the preceding paragraph are
insufficient to enable the Administrator to make the required restoration,
the Bank shall contribute, without regard to any requirement or restriction
of Section 4.1, the additional amount necessary to enable the Administrator
to make the required restoration. If, for a particular Plan Year, the
Administrator must restore the Accounts of more than former Participants, the
Administrator shall make the restorations to each such Account in the same
proportion that a Participant's restored amount for a Plan Year bears to the
restored amount for the Plan Year of such former Participants. The
limitation on allocations of Sections 5.7 and 5.8 shall not apply to
allocations under this Section 11.7.
The Administrator shall direct the Trustee to distribute the
Participant's or Beneficiary's restored Benefits to him not later than sixty
days after the close of the Plan Year in which the Administrator restores
Benefits.
11.8 The following rules and procedures apply with respect to a
domestic relations order received by the Administrator:
(a) Payments under a Qualified Domestic Relations Order may be made
as of any Valuation Date following the date of distribution
designated in such order. The amount to be distributed
undersuch order shall be based on the value of the Participant's
Accounts as of such Valuation Date.
(b) A Qualified Domestic Relations Order may require a Participant's
former spouse to be treated as a spouse for purposes of Article
VIII if the Participant and such former spouse were married for
twelve consecutive months.
(c) An alternate payee under a Qualified Domestic Relations Order
may be a spouse, former spouse, child or other dependent of a
Participant.
(d) The Administrator shall promptly notify the Participant and
alternate payees in writing of its receipt of a domestic
relations order and the procedures for determining whether such
order is a Qualified Domestic Relations Order. Within a
reasonable period of time after receipt of a domestic relations
order, the Administrator shall determine whether such order is a
Qualified Domestic Relations Order and notify the Participant
and each alternate payee of such determination.
(e) The Administrator, upon receipt of a domestic relations order
with respect to a Participant whose Benefits are distributable
pursuant to Section 10.1 but the
36
<PAGE> 43
distribution of which has not yet commenced or whose Benefits have
not been completely distributed at the time of receipt of such
order, shall, upon receipt of such order, segregate the balance of
the Benefits in question, based upon the value of the
Participant's Accounts as of the last day of the prior Plan Year,
and deposit such amount in a separate, interest bearing bank or
savings and loan account pending the Administrator's determination
as to whether such order constitutes a Qualified Domestic
Relations Order. The Administrator shall direct the Trustee to
pay the amounts segregated under this Subsection, plus interest
earned on such amounts, as follows:
(i) If the Administrator determines, within eighteen
months after receipt of the order, that it is a
Qualified Domestic Relations Order, payment shall be
made to the alternate payee or payees specified in
such order.
(ii) If the Administrator determines, within eighteen
months after receipt of the order, that it is not a
Qualified Domestic Relations Order, payment shall be
made to the Participant or his Beneficiary.
(iii) If the Administrator has not determined, within
eighteen months after receipt of the order, whether
it is a Qualified Domestic Relations Order, payment
shall be made to those individuals or entities who
or which would be entitled to payment if the order
did not exist. If the Administrator subsequently
determines the order is a Qualified Domestic
Relations Order, the Administrator shall only direct
the Trustee to make payments to the alternate payee
under the order upon such determination and the
Administrator and Trustee shall have no
responsibility to retroactively modify payments made
prior to such determination under this Subsection
11.8(e)(iii).
11.9 Notwithstanding any other provision of this Plan to the
contrary, any Participant who has a Rollover Contribution Account may elect
to withdraw, in one lump sum payment, all amounts credited to his Rollover
Contribution Account. An election to withdraw must be made by a Participant
under this Section 11.9. An amount that a Participant shall elect to with
draw pursuant to this Section 11.9 shall be paid to the Participant as soon
as practical after the effective date of the withdrawal. An election by a
Participant under this Section 11.13 shall not restrict his ability to make
Employee Savings Contributions in accordance with the provisions of Article
IV of the Plan.
11.10 Each Participant who has exercised any withdrawal rights under
Sections 11.9 and 11.12 and who has suffered financial hardship may, prior to
his termination of employment, request to withdraw a specified portion of his
Employee Savings Contributions (disregarding any earnings on such
contributions). "Financial Hardship", as determined by the Administrator,
shall mean the existence of a Participant's immediate and heavy financial
need. Such need shall exist if it is necessary for:
(a) The payment of medical expenses of the Participant, his spouse
or dependents;
37
<PAGE> 44
(b) The payment of tuition for post-secondary education of the
Participant, his spouse, children or dependents;
(c) The purchase of the Participant's principal residence.
(d) Payments necessary to prevent eviction of the Participant from
his principal residence or foreclosure on his principal
residence; and
(e) Other expenses which the Commissioner of Internal Revenue
Service indicates will be deemed to be made on account of such
need.
The Participant must demonstrate to the Administrator that a withdrawal
under this Section 11.10 is necessary to satisfy a Financial Hardship. The
Participant may demonstrate such need by certifying to the Administrator that
the Fianacial Hardship cannot be relieved:
(a) Through reimbursement or compensation by insurance or otherwise;
(b) By reasonable liquidation of the Participant's assets, to the
extent such liquidation would not itself cause an immediate and
heavy financial need;
(c) By cessation of Employee Savings Contributions or other
contributions under the Plan or other plans maintained by the
Bank or any other employer;
(d) By other distributions or nontaxable loans from plans maintained
by the Bank or any other employer; or
(e) By borrowing from commercial sources on reasonable commercial
terms.
Assets owned by a Participant's spouse or minor children that are reasonably
available to the Participant shall be considered resources of the
Participant.
In lieu of satisfying the five conditions in the preceding paragraph, a
Participant may receive a distribution not in excess of the amount necessary
to satisfy the expense of a Financial Hardship if the Participant has
obtained all other distributions and all nontaxable loans currently available
under this Plan and all other qualified plans maintained by the Bank. In
order to receive a distribution under this paragraph, the Participant shall
not be entitled to make Employee Savings Contributions to any qualified or
nonqualified plan of the Bank, except for mandatory employee contributions to
a defined benefit plan of the Bank and employee contributions to health or
welfare plans of the Bank, within twelve months after the Financial Hardship
withdrawal. In addition, the Employee Savings Contributions made in the
calendar year following a withdrawal on account of a Financial Hardship under
this paragraph shall not exceed the limit under Section 402(g), reduced by
the Employee Savings Contributions which were made in the calendar year of
the Financial Hardship withdrawal.
38
<PAGE> 45
Any withdrawals under this Section 11.10 shall be effective as of the
payroll period coincident with or next following the Administrator's approval
of the withdrawal.
11.11 The following rules apply to an "Eligible Rollover
Distribution":
(a) 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 any time and in the manner
prescribed by the Administrator, to have any portion of an
Eligible Rollover Distribution paid directly to an Eligible
Retirement Plan specified by the Distributee in a Direct
Rollover.
(b) For purposes of applying the provisions of this Section 11.11:
(i) "Eligible Rollover Distribution" means 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 Code Section 401(a)(9); and the portion
of any distribution that is not includible in gross
income (determined without regard to the exclusion
for net unrealized appreciation with respect to
employer securities).
(ii) "Eligible Retirement Plan" means an individual
retirement account described in Code Section 408(a), an
individual retirement annuity described in Code
Section 408(b), an annuity plan described in Code
Section 403(a), or a qualified trust described in Code
Section 401(a), that accepts the Distributee's Eligible
Rollover Distribution. However, in the case of an
Eligible Rollover Distribution to the surviving
spouse, an Eligible Retirement Plan is an individual
retirement account or individual retirement annuity.
(iii) "Distributee" means an Employee or former Employee.
In addition, the Employee's or former Employee's
surviving spouse and the Employee's or former
Employee's spouse or former spouse who is the
alternate payee under a qualified domestic relations
order as defined in Code Section 414(p), are
Distributees with regard to the interest of the
spouse or former spouse.
(iv) "Direct Rollover" means a payment by the Plan to the
Eligible Retirement Plan specified by the
Distributee.
39
<PAGE> 46
11.12 Notwithstanding any other provision of this Plan to the
contrary, any Participant, who has attained age fifty-nine and one-half, may
elect to withdraw in one lump sum payment, subject to rules promulgated by
the Administrator, the vested portion of all amounts credited to his Accounts
effective as of any Valuation Date. An election to so withdraw must be made
on a form suitable to the Administrator. Only one election in a Plan Year
may be made by a Participant under this Section. An amount that a
Participant shall elect to withdraw pursuant to this Section shall be paid to
the Participant as soon as practical after the effective date of the
withdrawal. An election by a Participant under this Section shall not
restrict his ability to make Employee Savings Contributions in accordance
with the provisions of Article 4 of the Plan.
40
<PAGE> 47
ARTICLE XII. -- AMENDMENT AND TERMINATION
-----------------------------------------
12.1 The Bank reserves the right to amend the Plan and Trust.
However, no amendment shall diminish or adversely affect any accrued interest
or Benefits of Participants or their Beneficiaries.
12.2 The Bank reserves the right to discontinue Contributions to the
Plan, to completely terminate the Plan and to partially terminate the Plan.
In any such event, all assets of the Trust shall be retained by the Trustee
until the Participants or their Beneficiaries are entitled to them under the
terms of the Plan. If the Bank discontinues Contributions to the Plan, the
rights of Participants to Benefits accrued to the date of discontinuance
shall be non-forfeitable. If the Bank partially terminates the Plan, the
rights of affected Participants, in that part of the Plan which is
terminated, to Benefits accrued to the date of termination shall be
non-forfeitable.
12.3 The Bank reserves the right to completely terminate the Plan and
the Trust. In such event, the assets of the Trust will be distributed as
soon a practical to Participants or their Beneficiaries. If the Bank
completely terminates the Plan and Trust, the rights of Participants to
Benefits accrued to the date of termination shall be non-forfeitable.
12.4 The Bank reserves the right to partially terminate the Plan and
Trust. In such event, the assets of the terminated portion of the Trust will
be distributed as soon as practical to affected Participants or their
Beneficiaries. If the Bank partially terminates the Plan and Trust, the
rights of affected Participants, in that part of the Plan which is
terminated, to Benefits accrued to the date of partial termination shall be
non-forfeitable.
41
<PAGE> 48
ARTICLE XIII. -- TOP HEAVY RULES
--------------------------------
13.1 For purposes of applying the provisions of this Article 13:
(a) Non-Key Employee" means an Employee, or former Employee, and his
Beneficiaries who is not a Key Employee.
(b) "Permissive Aggregation Group" means the Required Aggregation
Group plus any other qualified plans maintained by the Bank, but
only if such group would satisfy in the aggregate the
requirements of Code Sections 401(a)(4) and 410. The
Administrator shall determine which plans to take into account
in determining the Permissive Aggregation Group. In the case of
a Permissive Aggregation Group, only a plan that is part of the
Required Aggregation Group will be considered a Top Heavy Plan
if the Permissive Aggregation Group is a Top Heavy Group. No
plan in the Permissive Aggregation Group will be considered a
Top Heavy Plan if the Permissive Aggregation Group is not a Top
Heavy Group.
(c) "Required Aggregation Group" means:
(i) Each qualified plan of the Bank in which at least
one Key Employee participates in the Plan Year
containing the Determination Date or any of the four
preceding Plan Years; and
(ii) Any other qualified plan of the Bank which enables a
plan described in (i), above, to meet the
requirements of Code Sections 401(a)(4) or 410.
In the case of a Required Aggregation Group, each plan in the
group will be considered a top heavy plan if the Required
Aggregation Group is a Top Heavy Group. No Plan in the Required
Aggregation Group will be considered a top heavy plan if the
Required Aggregation Group is not a Top Heavy Group. An
Aggregation Group shall include any terminated plan of the Bank
if it was maintained within the last five years ending on the
Determination Date.
(d) "Present Value of Accrued Benefit" means, in the case of a
Defined Benefit Plan, the Present Value of Accrued Benefits for
a Participant other than a Key Employee, determined using the
single accrual method used for all plans of the Bank and
Affiliated Employers, or, if no such single method exists, using
a method which results in benefits accruing not more rapidly
than the slowest accrual rate permitted under Code
Section 411(b)(1)(C).
(e) "Top Heavy Group" means an Aggregation Group in which, as of the
Determination Date, the sum of:
(i) The Present Value of Accrued Benefits of Key
Employees under all Defined Benefit Plans included
in the group, and
42
<PAGE> 49
(ii) The aggregate Accounts of Key Employees under all
defined contribution plans included in the group,
exceeds sixty percent of a similar sum determined
for all Participants.
13.2 If the Plan is top heavy in any Plan Year, the Plan guarantees a
minimum contribution of three percent of Compensation for each Non-Key
Employee who is a Participant employed by the Bank on the last day of the
Plan Year. The Plan satisfies the guaranteed minimum contribution for the
Non-Key Employee if the Non-Key Employee's contribution rate is at least
equal to the minimum contribution. For purposes of this paragraph, a Non-Key
Employee Participant includes any Employee otherwise eligible to participate
in the Plan but who is not a Participant because his Compensation does not
exceed a specified level.
If the contribution rate for the Key Employee with the highest
contribution rate is less than three percent, the guaranteed minimum
contribution for Non-Key Employees shall equal the highest contribution rate
received by a Key Employee. The contribution rate is the sum of the Bank
contributions (not including Employer Federal Insurance Contribution Act
taxes) and forfeitures allocated to the Participant's Account for the Plan
Year divided by his Compensation for the Plan Year. To determine the
contribution rate, the Administrator shall treat all qualified Defined
Contribution Plans maintained by the Bank as a single Plan.
13.3 If the contribution rate for a Plan Year with respect to a
Non-Key Employee described is less than the minimum contribution, the Bank will
increase its contribution for such Employee to the extent necessary so his
contribution rate for the Plan Year will equal the guaranteed minimum
contribution. If this Plan is a profit-sharing plan, the Bank must make any
additional contribution required by this section from net profits. The
Administrator shall allocate the additional contribution to the Account of
the Non-Key Employee for whom the Bank makes the contribution.
13.4 Notwithstanding the vested percentage determined in Section
10.5, for any Plan Year in which the Plan is top heavy, the portion of any
Participant's Matching Contribution Account which is non-forfeitable shall be
a percentage of the total amount credited to his Account determined on the
basis of the Participant's number of Years of Service according to the
following schedule:
<TABLE>
<CAPTION>
Years of Service Vested Percentage
---------------- -----------------
<S> <C>
Less than 2 Years 0%
2 years but less than 3 years 20%
3 years but less than 4 years 40%
4 years but less than 5 years 60%
5 years but less than 6 years 80%
6 years or more 100%
</TABLE>
If in any subsequent Plan Year the Plan ceases to be top heavy, the
Administrator may elect to continue to apply the vesting schedule in
determining the non-forfeitable portion of any Participant's Matching
Contribution Account, or revert to the vesting schedule in effect before the
Plan became top heavy. However, the computation of a Participant's
non-forfeitable percentage of his interest in the Plan shall not be reduced
as a result of any such reversion. In the event of any change in the
43
<PAGE> 50
vesting schedule because the Plan becomes or ceases to be top heavy, a
Participant with at least five years of Vesting Service as of the effective
date of such change may elect to have his non-forfeitable percentage computed
under the Plan without regard to such change. If a Participant fails to make
such election, then such Participant shall be subject to the new vesting
schedule. The Participant's election period shall commence as of the effective
date of change and shall end sixty days after the latest of the effective date
of the change or the date the Participant receives written notice of the
amendment from the Administrator.
13.5 The Plan is top heavy for a Plan Year if the top heavy ratio as
of the Determination Date exceeds sixty percent. The top heavy ratio is a
fraction, the numerator of which is the sum of the present value of the
Accounts of all Key Employees as of the Determination Date, plus the
contribution due as of the Determination Date, and the Denominator of which
is a similar sum determined for all Employees. The Administrator shall
calculate the top heavy ratio without regard to any Non-Key Employee who was
formerly a Key Employee. For Plan Years beginning after December 31, 1984,
if a Participant or former Participant has not performed any services for the
Bank at anytime during the five year period ending on the Determination Date,
any accrued benefit for such Participant or Former Participant shall not be
taken into account for purposes of determining whether this Plan is a Top
Heavy or Super Top Heavy Plan. The Administrator shall calculate the top
heavy ratio, including the extent to which it must make take into account
distributions, rollovers and transfers, in accordance with Code Section 416 and
Regulations under that Code section.
If the Bank maintains other qualified plans (including a simplified
employee pension plan), this Plan is top heavy only if it is part of the
Required Aggregation Group and the Permissive Aggregation Group and the top
heavy ratio exceeds sixty percent. The Administrator will calculate the top
heavy ratio in the same manner as is required by the first paragraph of this
Section by taking into account all plans within the Aggregation Group. The
Administrator shall calculate the present value of accounts and the other
amounts the Administrator must take into account, under Defined Benefit Plans
or simplified employee pension plans included within the group in accordance
with the terms of those plans, Code Section 416 and Regulations under that Code
section. The Administrator shall calculate the top heavy ratio with
reference to the Determination Dates that fall within the same calendar year.
13.6 If during any Plan Year the Participant is a participant in both
a Defined Contribution Plan and a Defined Benefit Plan which are part of a
Top Heavy Group, the Administrator shall apply the limitations of Section 5.7
to such Participant by substituting 100 percent for 125 percent each place it
appears in Subsections 5.6(b) and (c). This Section 13.6 shall not apply if:
(a) The Plan would satisfy Section 13.2 if the minimum contribution
was one percent greater than the guaranteed minimum contribution
the Administrator otherwise would calculate, and
(b) The top heavy ratio does not exceed ninety percent.
44
<PAGE> 51
ARTICLE XIV -- LIMITATIONS ON ELECTIVE CONTRIBUTIONS
-----------------------------------------------------
14.1 The annual allocations derived from Elective Contributions to a
Participant's Employee Savings and Bank Contribution Elective Accounts and,
if applicable, Super Matching Contributions Account, shall satisfy one of the
following tests:
(a) The Actual Deferral Percentage for the Highly Compensated
Participant Group shall not be more than the Actual Deferral
Percentage for the Non-Highly Compensated Participant Group
multiplied by 1.25, or
(b) The excess of the Actual Deferral Percentage for the Highly
Compensated Participant Group over the Actual Deferral
Percentage for the Non-Highly Compensated Participant Group
shall not be more than two percentage points. Additionally, the
Actual Deferral Percentage for the Highly Compensated
Participant Group shall not exceed the Actual Deferral
Percentage for the Non-Highly Compensated Participant Group
multiplied by two. The provisions of Code Section 401(k)(3) and
Regulation 1.401(k)-1(b) are incorporated herein by reference.
In order to prevent the multiple use of the alternative method described in
(b) above and in Section 401(m)(9)(A), any Highly Compensated Participant
eligible to make elective deferrals pursuant to Section 4.2 or to receive
matching contributions under this Plan or under any other plan maintained by
the Bank or an Affiliated Employer shall have his actual contribution ratio
reduced pursuant to Regulation 1.401(m)-2, the provisions of which are
incorporated herein by reference.
14.2 For the purposes of this Article, Actual Deferral Percentage
means, with respect to the Highly Compensated Participant Group and
Non-Highly Compensated Participant Group for a Plan Year, the average of the
ratios, calculated separately for each Participant in such group, of the
amount of Elective Contributions allocated to each Participant's Accounts for
the immediately preceding Plan Year, to such Participant's Section 414(s)
Compensation for such Plan Year. The Actual Deferral Percentage for each
Participant and the Actual Deferral Percentage for each Group shall be
calculated to the nearest one-hundredth of one percent. Elective
Contributions allocated to each Non-Highly Compensated Participant's Accounts
shall be reduced by Excess Employee Savings Contributions to the extent such
excess amounts are made under this Plan or any other plan maintained by the
Bank.
14.3 For the Plan Year ending December 31, 1997, the Average Deferral
Percentage shall be determined on the basis of Elective and, if applicable,
Super Matching Contributions and Section 414(s) Compensation for such Year.
The Administrator may elect, in accordance with Regulations, to use Elective
and, if applicable, Super Matching Contributions and Section 414(s)
Compensation for the Plan Year to which the limitation of Section 14.1
applies to determine the applicable Actual Deferral Percentage for such Year.
14.4 For the purposes of this Article, a Highly Compensated
Participant and a Non-Highly Compensated Participant shall include any
Employee eligible to make an Employee Savings Contri-
45
<PAGE> 52
bution pursuant to Section 4.2, whether or not such deferral election was made
or suspended pursuant to Section 4.2.
14.5 For the purposes of this Section and Code Sections 401(a)(4),
410(b) and 410(k), if two or more plans which include cash or deferred
arrangements are considered one plan for the purposes of Code
Sections 401(a)(4) or 410(b) (other than Code Section 410(b)(2)(A)(ii)) the cash
or deferred arrangements included in such plans shall be treated as one
arrangement. In addition, two or more cash or deferred arrangements may be
considered as a single arrangement for purposes of determining whether such
arrangements satisfy Code Sections 401(a)(4), 410(b) and 401(k). In such a
case, the cash or deferred arrangements included in such plans and the plans
including such arrangements shall be treated as one arrangement and as one
plan for purposes of this Section and Code Sections 401(a)(4), 410(b) and
401(k). Plans may be aggregated under this Section only if they have the
same plan year.
14.6 For the purposes of this Section, if a Highly Compensated
Participant is a Participant under two or more cash or deferred arrangements
(other than a cash or deferred arrangement which is part of an employee stock
ownership plan as defined in Code Section 4975(e)(7)) of the Bank or an
Affiliated Employer, all such cash or deferred arrangements shall be treated
as one cash or deferred arrangement for the purpose of determining the Actual
Deferral Percentage with respect to such Highly Compensated Participant.
This paragraph shall be applied by treating all cash or deferred arrangements
ending with or within the same calendar year as a single arrangement.
14.7 In the event that the initial allocations of Elective
Contributions do not satisfy one of the tests set forth in Section 14.1, the
Administrator shall adjust Excess Contributions pursuant to the options set
forth below:
(a) On or before the fifteenth day of the third month following the
end of each Plan Year, the Highly Compensated Participant having
the largest amount of Employee Savings Contributions contributed
for such year shall have his portion of Employee Savings
Contributions and, if applicable, Super Matching Contributions,
distributed to him until one of the tests set forth in Section
14.1 is satisfied, or until his Actual Deferral Percentage
equals the Actual Deferral Percentage of the Highly Compensated
Participant having the second highest Actual Deferral
Percentage. This process shall continue until one of the tests
set forth in Section 14.1 is satisfied. For each Highly
Compensated Participant, the amount of Excess Contributions is
equal to the Elective Contributions on behalf of such Highly
Compensated Participant (determined prior to the application of
this paragraph) minus the amount determined by multiplying the
Highly Compensated Participant's Actual Deferral Percentage
(determined after application of this paragraph) by his Section
414(s) Compensation. However, in determining the amount of
Excess Contributions to be distributed with respect to an
affected Highly Compensated Participant as determined herein,
such amount shall be reduced by any Excess Contributions
previously distributed to such affected Highly Compensated
Participant for his taxable year ending with or within such Plan
Year.
46
<PAGE> 53
(b) With respect to the distribution of Excess Contributions
pursuant to (a) above, such distribution:
(i) May be postponed but not later than the close of the
succeeding Plan Year;
(ii) Shall be made first from unmatched Employees Savings
Contributions and, thereafter, simultaneously from
Employees Savings Contributions which are matched
and Matching and Super Matching Contributions which
relate to such Contributions; provided, however,
that Matching Contributions, to the extent they are
not vested under Section 10.5, shall be forfeited
instead of returned to a Participant;
(iii) Shall be made from Bank Elective Contributions only
to the extent that Excess Contributions exceed the
balance in the Participant's Employee Savings
Contributions Account attributable to Employee
Savings Contributions and, if applicable, to the
Participant's Matching or Super Matching
Contributions Account attributable to Matching or
Super Matching Contributions.
(iv) Shall be adjusted for Income; and
(iv) Shall be designated by the Bank as a distribution of
Excess Contributions and Income.
(c) Any distribution of less than the entire amount of Excess
Contributions shall be treated as a pro rata distribution of
Excess Contributions and Income.
47
<PAGE> 54
ARTICLE XV. -- LIMITATIONS ON ACP CONTRIBUTIONS
-----------------------------------------------
15.1 For purposes of applying the provisions of this Article 15:
(a) "ACP Contributions" means Matching, Super Matching and Bank
Elective Contributions allocated on the basis of Elective
Contributions.
(b) "Actual Contribution Percentage" for a Plan Year means, with
respect to the Highly Compensated Participant Group and
Non-Highly Compensated Participant Group, the average of the
ratios, calculated separately for each Participant in each
group, of:
(i) The sum of ACP Contributions made on behalf of each
such Participant for such Plan Year, to
(ii) The Participant's Section 414(s) Compensation for
such Plan Year.
For each Plan Year, the Company may elect either to include Matching and/or
Bank Elective Contributions made pursuant to Article 4 for such Plan Year in
the numerator of the fraction described in this Section or as Elective
Contributions.
For the Plan Year ending December 31, 1997, the Average Contribution
Percentage shall be determined on the basis of Matching and Company Elective
Contributions and Section 414(s) Compensation for such Year. The
Administrator may elect, in accordance with regulations, to use Matching and
Elective Contributions and Section 414(s) Compensation for the Plan Year for
which the limitation of Section 15.1 applies to determine the applicable
Actual Contribution Percentage for such Year.
15.2 The "Actual Contribution Percentage" for Plan Years beginning
after December 31, 1986 for the Highly Compensated Participant Group shall
not exceed the greater of:
(a) One hundred and twenty five percent of such percentage for the
Non-Highly Compensated Participant Group; or
(b) The lesser of 200 percent of such percentage for the Non Highly
Compensated Participant Group, or such percentage for the Non
Highly Compensated Participant Group plus two percentage points.
However, to prevent the multiple use of the alternative method
described in this paragraph and Code Section 401(m)(9)(A), any
Highly Compensated Participant, eligible to make elective
deferrals pursuant to any cash or deferred arrangement
maintained by the Bank or an Affiliated Employer and/or to make
employee contributions or to receive matching contributions
under any other plan maintained by the Bank or an Affiliated
Employer, shall have his Actual Contribution Percentage reduced
pursuant to Regulations 1.401(m)-1(b) and 1.401(m)-2. The
provisions of Code Section 401(m) and Regulations 1.401(m)-1(b) and
1.401(m)-2 are incorporated herein by reference.
48
<PAGE> 55
15.3 For purposes of this Article 15, if two or more plans of the
Bank (other than an employee stock ownership plan as defined in Code
Section 4975(e)(7)) to which Employee contributions are made are treated as one
plan for purposes of Code Sections 401(a)(4) or 410(b) (other than the average
benefits test under Code Section 410(b)(2)(A)(ii)), such plans shall be treated
as one plan for purposes of this Article. In addition, two or more plans of
the Bank to which Employee contributions are made may be considered as a
single plan for purposes of this Article. In such a case, the aggregated
plans must satisfy Code Section 401(a)(4) and 410(b) as though such aggregated
plans were a single plan. Notwithstanding the above, contributions to an
employee stock ownership plan as defined in Code Section 4975(e)(7) shall not be
aggregated with the Plan.
15.4 If a Highly Compensated Participant participates in two or more
plans, other than an employee stock ownership plan as defined in Code Section
4975(e)(7), for Plan Years beginning after December 31, 1988 which are
maintained by the Bank or an Affiliated Employer to which ACP Contributions
are made, all such contributions on behalf of such Highly Compensated
Participant shall be aggregated for purposes of this Article.
15.5 For purposes of this Article, a Highly Compensated Participant
and Non Highly Compensated Participant shall include any Employee eligible to
make ACP Contributions, regardless of whether such Participant in fact makes
such contributions.
15.6 In the event that for a Plan Year the Actual Contribution
Percentage for the Highly Compensated Participant Group exceeds the Actual
Contribution Percentage for the Non-Highly Compensated Participant Group
pursuant to Section 15.1, the Administrator, on or before the fifteenth day
of the third month following the end of the Plan Year, but in no event later
than the close of the following Plan Year, shall direct the Trustee to
distribute to the Highly Compensated Participant having the largest amount of
ACP Contributions contributed for each year, his portion of Excess Aggregate
Contributions, and Income allocable to such Contributions, until either one
of the tests specified in Section 15.2 is satisfied, or until his Actual
Contribution Percentage equals the highest Actual Contribution Percentage of
the Highly Compensated Participant having the second highest Actual
Contribution Percentage. This process shall continue until one of the tests
set forth in Section 15.2 is satisfied. The distribution shall be made in
the following order:
(a) Matching Contributions distributed pursuant to Section 14.6(a);
(b) Remaining Matching and, if applicable, Super Matching
Contributions.
15.7 Matching Contributions, included in Excess Aggregate
Contributions, shall be forfeited. Any distribution pursuant to this Section
of less than the entire amount of Excess Aggregate Contributions and Income
attributable thereto shall be treated as a pro rata distribution of Excess
Aggregate Contributions and Income.
15.8 For each Highly Compensated Participant, the amount of Excess
Aggregate Contributions is equal to the total of such Contributions made on
behalf of the Highly Compensated Participant, determined prior to the
application of this paragraph, less the amount determined by multiplying the
Highly Compensated Participant's Actual Contribution Percentage, determined
after
49
<PAGE> 56
application of this paragraph, by his Section 414(s) Compensation for
the Plan Year. The Actual Contribution Percentage must be rounded to the
nearest one-hundredth of one percent. In no case shall the amount of Excess
Aggregate Contributions with respect to any Highly Compensated Participant
exceed the amount of ACP Contributions made on behalf of such Highly
Compensated Participant for such Plan Year.
50
<PAGE> 57
ARTICLE XVI. -- ALLOCATION OF DUTIES
-------------------------------------
16.1 The Trustee shall have the powers and duties given to it
pursuant to the Trust, including the power to invest the funds of the Plan.
16.2 The Bank, the Administrator and the Trustee each shall have only
the powers and duties specifically given to it pursuant to the Plan and
Trust. Neither the Bank, the Administrator nor the Trustee shall be
responsible for powers or duties allocated to the other pursuant to the Plan
or the Trust or for duties delegated to another party or parties in
accordance with the Plan or the Trust. The Administrator and the Trustee
shall each be a named fiduciary for purposes of the Plan.
16.3 The Bank, the Administrator and the Trustee each may rely upon
any direction or action of or information from the other as proper pursuant
to the Plan and Trust without inquiry.
16.4 Notwithstanding the forgoing, any individual or party may serve
in one or more capacities with regard to the Plan and Trust in addition to
being a Participant in the Plan.
51
<PAGE> 58
ARTICLE XVII. -- MISCELLANEOUS PROVISIONS
-----------------------------------------
17.1 The Plan and Trust are created for the exclusive benefit of
Employees of the Bank and their Beneficiaries. No assets of the Trust shall
ever revert to or be used or enjoyed by the Bank, nor shall such assets ever
be used other than for the exclusive benefit of Participants or their
Beneficiaries.
17.2 Construction of the Plan shall be governed by the law of the
state of Missouri. However, the Bank intends the Plan to be a qualified
profit-sharing plan under Code Section 401(a) and any ambiguities in
construction shall be interpreted to effectuage such intent.
17.3 Nothing in the Plan or any amendment thereto shall give a
Participant, Beneficiary, Employee or other person a right unless it is
specifically provided or is accorded by the Bank or the Administrator
pursuant to the Plan. Nothing in the Plan or any amendment thereto shall be
construed as giving a Participant or Beneficiary the right to be retained in
the employ of the Bank and all persons shall remain subject to discharge at
any time to the same extent as if the Plan had not been adopted.
17.4 The interests of Participants and their Beneficiaries are not
subject to claims, indebtedness, attachment, execution, garnishment or other
legal or equitable process and such interests may not be voluntarily or
involuntarily sold, transferred or assigned except that Benefits may be
distributed pursuant to a Qualified Domestic Relations Order.
17.5 A successor to the business of the Bank, by whatever form or
manner arising, may continue the Plan and Trust by executing an appropriate
written instrument to this effect. If the Plan and Trust are continued, the
following rules shall apply:
(a) The successor company shall succeed to the rights and
obligations of the Bank under the Plan.
(b) Employees who accept a position with the successor company shall
continue as Participants. If an Employee is offered a position
with the successor company at compensation not less than that he
was receiving from the Bank and does not accept the position, he
shall be deemed to have terminated his employment within Section
10.1. Any other Employee who does not accept a position with
the successor company shall be deemed to have retired,
irrespective of his age.
(c) Every reference to the Bank shall be treated as reference to the
successor company.
17.6 The Plan shall not be merged or consolidated with, or its assets
or liabilities transferred to, any other plan, unless the benefit to which
each Participant would be entitled if the Plan terminated immediately
following such merger, consolidation or transfer is equal to or greater than
the benefit to which each Participant would have been entitled if the Plan
had terminated immediately prior to such merger, consolidation or transfer.
52
<PAGE> 59
17.7 The terms of the Plan shall be binding upon the heirs, personal
representatives, administrators, successors and assigns of all parties in
interest, except for a successor to the Bank electing not to continue the
Plan and Trust under Section 17.5.
17.8 The cost of administering the Plan and Trust may be paid by the
Bank. If the Bank does not pay the cost of administering the Plan and Trust,
it shall be paid from assets of the Trust. Taxes relating to assets of the
Trust will be paid by the Trustee and charged against the assets to which
they are applicable.
17.9 Any employer may adopt the Plan and Trust for the benefit of its
employees with the consent of the board of directors of the Bank. The
adoption of the Plan and Trust by an employer shall subject it to the
provisions of the Plan and Trust and shall constitute an automatic delegation
to the Bank of full authority to amend, alter or modify the Plan and/or
Trust. Any such amendment, alteration or modification made by the Bank shall
be binding upon and effective with respect to each employer. The delegation
of authority, however, shall not be deemed to constitute a delegation of
authority to terminate the Plan as respects such employer or to terminate the
participation of such employer in the Plan and Trust. Any participating
employer, through action of its board of directors, shall cease to
participate in the Plan and shall have the proportionate interest of the
funds of the Trust for its Participants set aside and held as a separate
trust to be used and applied according to the provisions of the Plan and
Trust from which such funds were withdrawn.
17.10 Terms in the masculine shall be deemed to include the feminine,
and terms in the singular shall be deemed to include the plural, and vice
versa, wherever the context to admits or requires.
17.11 In the event the Bank makes an excessive Bank Contribution under
a mistake of fact, as that term is used in Section 403(c)(2)(A) of Title I of
the Employee Retirement Income Security Act of 1974, the Bank may demand
repayment of such excess amount at any time within one year following the
time of payment and the Trustee shall return such amount to the Bank within
sixty days after such demand.
IN WITNESS WHEREOF, the Bank has caused this Plan document to be
executed by its duly authorized officer or representative.
SOUTHWEST BANK
By: /s/Mary P. Sherrill
------------------------------
Vice Chairman
53
<PAGE> 1
EXHIBIT 4.3
-----------
AMENDMENT & RESTATEMENT OF THE SOUTHWEST BANK
401(K) RETIREMENT SAVINGS TRUST AGREEMENT
THIS TRUST AGREEMENT made and entered into as of the 12th day of August
1998, by and between Southwest Bank of St. Louis, a corporation organized
under the laws of the State of Missouri (hereinafter called the "Company"),
a
n
d
Investors Fiduciary Trust Company, a Missouri trust company (hereinafter
called the "Trustee").
WITNESSETH:
WHEREAS, the Board of Directors of the Company ("Board") has adopted the
Southwest Bank 401(k) Retirement Savings Plan ("Plan") and the Southwest Bank
401(k) Retirement Savings Trust for certain employees of the Company,
effective January 1, 1986, and
WHEREAS, the Company wants to amend and restate the Trust for the
purpose of entering into an agreement with the Trustee for the purpose of
holding plan assets pursuant to the Plan and;
WHEREAS, effective as of the date first written above, the Company has
designated the Trustee as trustee under the Plan, and the Trustee agrees to
accept said designation and to be bound by the terms of this Trust Agreement;
NOW, THEREFORE, the Company and the Trustee, intending to be legally
bound hereby, agree as follows:
SECTION 1
1.1 The Trust is intended to comply with the Employee Retirement Income
Security Act of 1974, as amended ("Act"), and to be a "qualified trust" as
such term is used in Sections 401 and 501 of the Internal Revenue Code of
1986, as amended ("Code").
1.2 As used herein, the term "Plan", shall, to the extent appropriate, mean
the Southwest Bank 401(k) Retirement Savings Plan, a copy of which is
attached hereto as Exhibit A ("Plan"). The terms used herein shall have the
meanings ascribed to them by the Act or, where defined by the Plan, the Plan,
unless the context clearly indicates a different intended meaning. With
respect to the terms and conditions of any prior trust arrangement relating
to a Plan, this Trust Agreement shall supersede and replace any such prior
arrangement. Further, the Trustee shall in
- 1 -
<PAGE> 2
no way be deemed accountable, responsible or liable for the actions (or any
failure to act) of any predecessor trustee.
SECTION 2
2.1 Subject to the terms and conditions of this Trust Agreement, the Company
hereby establishes with the Trustee a trust consisting of (a) the assets of
the Plan from and after the date such assets are transferred to the Trustee,
and (b) such other sums of money and such property acceptable to the Trustee
as shall from time to time be paid or delivered by the Company or other
Contributing Company ("Employer") to the Trustee. All such money and
property and all earnings and profits thereon, less any losses and
disbursements made by the Trustee, as authorized herein or in the Plan, shall
constitute the Trust which shall be held and administered in accordance with
the provisions of the Plan and this Trust Agreement by the Trustee, who
hereby accepts the Trust created hereunder. All monies and properties which
become subject to this Trust Agreement, all investments and reinvestments
made therewith and proceeds thereof and all earnings and profits thereon,
less the payments which at the time of reference shall have been made by the
Trustee as authorized herein, and any losses thereto, are referred to herein
as the "Fund". The Fund shall be held by the Trustee in trust and dealt with
in accordance with the provisions of this Trust Agreement. The duties and
responsibilities of the Trustee shall be determined solely in accordance with
this Trust Agreement and shall not be deemed to be enlarged by the provisions
of the Plan. In the event any provision of this Agreement should conflict
with the terms and conditions of the Plan with respect to the duties of the
Trustee, the provisions contained herein shall control.
2.2 The Trustee shall have no duty to determine or collect any Plan
contributions and shall be solely accountable for monies or properties
actually received by it. The Employer shall have the sole duty and
responsibility for the determination of the accuracy or sufficiency of the
contributions to be made under the Plan, the transmittal of the same to the
Trustee and compliance with any statute, regulation or rule applicable to
such contributions.
2.3 The Trustee shall not have any duty or responsibility to determine the
type and form of investment which may be selected by the Company, any Plan
participant ("Participant"), the Committee (as defined in Section 3), the
Fiduciary (as defined in Section 6), or any Investment Manager (as defined in
Section 6). The assets of the Plan which are held in the Fund may be
invested in any of the following investments:
(a) open-end and closed-end investment companies which are from time
to time made available through Aon Consulting, Inc., a Pennsylvania
corporation, which shall perform Participant recordkeeping services for the
Plan ("Recordkeeper") to plans for which it provides recordkeeping services,
regardless of the purposes for which such fund or funds were created,
including those managed, serviced or advised by the Trustee or any affiliate
of the Trustee;
(b) any collective, common or pooled trust funds operated or
maintained by any banks or trust companies, including the Trustee or any
affiliate of the Trustee, exclusively for the commingling and collective
investment of assets held under or as part of plans which are
- 2 -
<PAGE> 3
established in conformity with and qualify under Section 401(a) of the Code,
which funds are from time to time made available through the Recordkeeper to
plans for which it provides recordkeeping services;
(c) contracts issued by insurance companies or other financial
institutions, including but not limited to guaranteed investment contracts
("GICs"), synthetic GICs, bank investment contracts, group annuity contracts,
benefit responsive contracts and similar instruments, including contracts
under which an insurance company holds Plan assets in a separate account or
commingled separate account managed by the insurance company; provided, the
Fiduciary shall be responsible for selecting the issuer and terms thereof and
for performing all functions and responsibilities in connection therewith
(except that the Trustee shall place monies therein pursuant to the terms
hereof, determine the value thereof as provided in Section 8.6 hereof and
execute documents incidental thereto on the written instructions of the
Fiduciary);
(d) any "qualifying employer security," as defined in Section 407(d)
of the Act, which is publicly traded on a national exchange in an amount up
to 100 percent of the value of the Fund; and
(e) such other lawful investments as the Company and the Trustee may
agree upon in writing from time to time, but in no event any interest in real
property or any tangible personal property.
The Trustee shall only be liable for placement of monies or other
property received by it in such permitted investments as the Trustee shall be
directed from time to time by the Committee, the Fiduciary or by the
Recordkeeper. Notwithstanding anything in this Trust Agreement to the
contrary, the Recordkeeper's role in transmitting investment, distribution,
and voting instructions to the Trustee shall be solely in its ministerial
capacity as the conduit for transmitting such instructions from the Company,
Committee and/or Plan Participants to the Trustee.
2.4 Except as may be provided by law for the purpose of returning an
Employer's contributions based on mistake of fact or lack of deductibility
(and all Employer contributions are hereby conditioned on such
deductibility), or in case the Plan provides for the return of the Employer's
contributions in the event such Plan fails to initially qualify under the
applicable provisions of the Code, at no time prior to the satisfaction of
all liabilities for benefits under such Plan shall any part of the Fund be
used for, or diverted to, purposes other than for the exclusive benefit of
Participants or retired Participants under such Plan, or their beneficiaries,
and for the payment of the expenses of such Plan.
2.5 To the extent permitted by law, the Trustee may commingle the Fund with
funds of other trusts of similar nature created by the Employer for the
exclusive benefit of its employees. Where commingling is effected with other
trusts maintained by the Employer, the combined trust, to the extent that
assets are attributable to contributions made under this Trust Agreement,
shall be the Fund referred to herein. By agreement the Trustee may maintain
such records as the Trustee deems necessary in order to separate the Fund
from the funds of the other trusts
- 3 -
<PAGE> 4
maintained by the Employer. Should separation be required of the Fund from
other trusts maintained by the Employer, the Trustee shall make such separation
in accordance with generally accepted accounting principles and, where
applicable, upon the certification of an Enrolled Actuary.
2.6 The Recordkeeper and the Committee, and not the Trustee, shall be
responsible and shall be held responsible by the Company for the
administration (solely in accordance with the terms of the Plan and the
administration policies of the Plan Administrator) of all loans made from the
Fund to Participants, including the daily transmission of information to the
Trustee regarding the principal payments made by Participants on outstanding
loans and the timely notification of Participants of amounts due on
outstanding loans.
2.7 With respect to the voting of the securities held by each Plan, the
Trustee shall vote in accordance with the directions provided to it by any of
the Recordkeeper or the Committee. The Trustee shall not be responsible for
the tabulation of any voting instructions. In the event either the
Recordkeeper or the Plan Administrator fails or declines to timely direct the
Trustee as to voting any securities held by the Plan, such failure or
declination to direct shall be deemed to be a direction not to vote such
shares.
SECTION 3
3.1 The Plan shall be administered by the Committee which is designated by
the terms of such Plan to administer it ("Committee") and the Committee shall
have the sole fiduciary duty as to such Plan administration. The Trustee
shall not be responsible in any respect for such administration.
3.2 The Company shall notify the Trustee in writing of all persons who will
function as members of the Committee under the terms of the Plan and this
Trust Agreement and the rights, powers and duties of each such person. In
the absence of such notice, the Trustee shall rely solely upon the Company.
The Trustee shall be entitled to deal with any person or entity identified by
the Company as a member of the Committee until notified otherwise by the
Company in writing.
3.3 The Trustee shall not be responsible in any way for the collection of
contributions provided for under the Plan, the purposes or propriety of any
distribution made pursuant to this Trust Agreement or any other action taken
at the Committee's, the Company's, the Employer's, any Fiduciary's, or the
Recordkeeper's request (including requests communicated by any of the
foregoing on behalf of Participants), nor shall the Trustee be responsible
for the validity or effect or the qualification of the Plan or of the Trust
Agreement under the Code. The Trustee shall not be required to examine the
Plan or be charged with notice of its provisions. The Trustee shall not be
required to take any action upon receipt of any notice from the Internal
Revenue Service ("IRS") except to forward a copy thereof to the Employer or
Committee with a request for written instructions. The Company shall, at all
times, fully indemnify and save harmless the trustee, its successors and
assigns, from and against any and all loss resulting from liability to which
the Trustee may be subject by reason of any act or conduct (except for the
Trustee's own
- 4 -
<PAGE> 5
negligence or willful misconduct) in its capacity as Trustee hereunder,
including all expenses reasonably incurred in its defense, in case the Company
fails to provide such defense. The Trustee shall be under no duty to take any
action other than as herein specified with respect to the Trust unless the
Company shall furnish the Trustee with instructions in proper form and as
authorized by the terms of the Plan; or to defend or engage in any suit with
respect to the Trust unless the Trustee shall have first agreed in writing to
do so and shall have been fully indemnified to the satisfaction of the Trustee.
The Trustee shall be protected in acting upon any order from the Fiduciary,
Company, Recordkeeper, Committee or Employer (including orders communicated by
any of the foregoing on behalf of Participants) or any other notice, request,
consent, certificate or other instrument or paper believed by it to be genuine
and to have been properly executed, and, so long as it acts in good faith, in
taking or omitting to take any other action. The Trustee shall not be liable
for interest on any cash or cash balances maintained in the Trust pending
investment.
SECTION 4
4.1 The Trustee shall make such payments out of the Fund as the appropriate
Committee or the Recordkeeper may from time to time in writing direct,
including payment of any expenses of the Fund.
4.2 The Trustee shall be fully protected in making such payments from time
to time and shall be charged with no responsibility whatsoever respecting the
application of such monies provided that such payments are made in accordance
with direction of the Committee, the Company or the Recordkeeper, as
appropriate.
4.3 Monies being transferred to and disbursed by the Trustee may be held in
non-interest bearing transaction accounts in financial institutions selected
by the Trustee (including but not limited to financial institutions
affiliated with the Trustee) and in such accounts in other financial
institutions, as instructed by the Committee or Recordkeeper, for purposes of
collections and processing transfers and disbursements. The Trustee may
transfer monies payable by the Plan from the Fund to such accounts prior to
issuance of wire transfer orders or checks, drafts or other instruments
payable from such accounts.
SECTION 5
5.1 The Committee shall direct the Trustee to establish on its books and
records the same number of accounts as there are investment options available
to the Participants or are specified by the Plan.
5.2 The Recordkeeper shall, upon the making of any contribution to this
Trust by an Employer, or, if applicable, a Participant, instruct the Trustee
in writing of the manner that such contribution is to be allocated among the
accounts previously established.
5.3 The Trustee shall not be responsible nor liable to establish or maintain
a record or account in the name of any individual Plan Participant. The
Trustee shall not be required to
- 5 -
<PAGE> 6
establish the value of any Participant's individual interest in the Fund or any
account established hereunder.
SECTION 6
6.1 The Plan of which this Trust Agreement forms a part has therein
designated, either by name or through a procedure contained therein, a
fiduciary ("Fiduciary"), which may be the Committee, which has been invested
with the power to manage and control the assets of such Plan. Such power
includes the authority for the Fiduciary to appoint one or more investment
managers ("Investment Managers"), who shall each be deemed a "Fiduciary" for
purposes of this Trust Agreement.
The Fiduciary shall exercise the sole and exclusive power to manage and
control the Plan's assets held as part of the Fund. The Trustee, as to those
assets, shall be released and relieved of all investment duties,
responsibilities and liabilities normally or statutorily incident to a
trustee. In particular, the Trustee shall have no discretion as to
investment or administration of the Plan provided, however, the foregoing
shall not limit any liability to the Plan that the Trustee may otherwise
incur. The other powers of the Trustee shall only be exercised upon the
written directions of the Fiduciary.
The Recordkeeper, pursuant to a services agreement between the
Recordkeeper and Trustee, may accept and transmit orders to the Trustee from
Employers, the Company, the Committee, Plan Fiduciaries or Plan Participants.
The Trustee may rely on the completeness and accuracy of all orders
transmitted to the Trustee by the Recordkeeper, on behalf of the Plan
Fiduciaries or Plan Participants. The Company shall hold the Trustee
harmless for any losses or expenses arising out of the Trustee's proper
execution of orders transmitted to it by the Recordkeeper. The Company
acknowledges that the Trustee will place such orders only if, in the sole
discretion of the Trustee, sufficient funds are available in the account of
the applicable Plan for use in placing orders.
The Trustee is authorized, in its sole discretion, to advance funds or
to arrange for another financial institution (which may be an affiliate of
the Trustee) to advance funds from time to time for the purchase of
investment assets, for distributions from the Plan and for other Plan
purposes prior to receipt of sufficient funds (whether contributions or
proceeds of the liquidation of other investments). All such advances shall
be made subject to the requirements of the Act and the rules, regulations,
rulings and interpretations thereunder, including but not limited to the U.S.
Department of Labor's Prohibited Transaction Class Exemption 80-26, as
amended from time to time. If sufficient funds to repay any such advance are
not received by the following business day, the Trustee may, in its
discretion, then or at any time thereafter prior to such repayment, sell,
redeem or otherwise liquidate any assets of the Plan in order to repay such
advance. Any gain realized upon such liquidation, after payment of any
related costs and expenses, shall belong to the Plan. The Company shall pay
to the Trustee on demand any portion of any such advance and the related
costs and expenses not repaid from the proceeds of the liquidation.
- 6 -
<PAGE> 7
Should the Fiduciary at any time direct the Trustee to utilize the
services of any broker, dealer, employee or representative of either, or any
other person ("Broker") to render services to the Fund, or should the Trustee
require the services of such persons in order to fulfill its obligations
pursuant to this Agreement, the Fiduciary shall be solely responsible for the
selection of such Broker and shall be solely responsible for the acts of such
Broker. The Trustee shall fully comply with the written instructions, if of
a continuing nature, until revoked, unless the Trustee has actual knowledge
that the instructions of the Fiduciary are in contravention of the Act or the
Plan.
6.2 The Trustee shall not maintain indicia of ownership of any asset held in
the Fund outside the jurisdiction of the District Courts of the United States
unless such holding is approved through ruling or regulation promulgated
under the Act by the Secretary of Labor.
6.3 The Trustee shall keep such portion of the Fund in cash or cash balances
as may be specified from time to time by the Recordkeeper pursuant to the
Plan to meet required payments from the Fund. The Trustee shall not be
liable for any interest on any cash balances so maintained.
6.4 In performing its obligations under this Agreement, the Trustee shall be
entitled to employ suitable agents, counsel, and other service providers.
SECTION 7
7.1 The Trustee shall be compensated for services rendered by it under this
Trust Agreement based on its current fee schedule in effect from time to
time. Notwithstanding anything herein to the contrary, as long as Aon
Consulting, Inc. is Recordkeeper, the Trustee's fees (including any expenses
incurred pursuant to the next sentence) shall be paid by the Recordkeeper
pursuant to its fee arrangement with the Company. The Trustee also shall be
reimbursed for any expenses incurred as a result of the execution of its
duties hereunder, including, but not limited to, reasonable legal and
accounting expenses, expenses incurred as a result of disbursements and
payments made by the Trustee, and reasonable compensation for agents, counsel
or other services rendered to the Trustee by third parties and expenses
incident thereto. Expenses for which the Trustee shall be reimbursed also
include taxes of any kind whatsoever that may be levied or assessed under
existing or future laws of any jurisdiction upon or in respect of the Fund.
The Trustee's and its affiliated financial institution's ability to earn
income on amounts held hereunder in non-interest bearing transaction accounts
for processing receipts and disbursements has been taken into consideration
in establishing the Trustee's fees hereunder. The Trustee or any affiliated
financial institution shall be entitled to retain any such income as a part
of the Trustee's agreed compensation hereunder, and such income shall not be
or become a part of the Fund.
7.2 All compensation, expenses, taxes and assessments specified in Section
7.1 may be paid by the Employer or Recordkeeper, as applicable, but to the
extent that they are not paid by the Employer or the Recordkeeper, shall
constitute a charge upon the Fund.
- 7 -
<PAGE> 8
7.3 The Trustee shall notify the Company with regard to any tax assessments
which it receives on any income or property maintained in the Fund and,
unless notified to the contrary by the Company within ninety (90) days, shall
pay any such assessments. If the Company notifies the Trustee within said
period that it is its opinion or the opinion of counsel that such assessments
are invalid or that they should be contested, then the Trustee shall take
whatever action is indicated in the notice received from the Company or
counsel, including contesting the assessment or litigating any claims. The
Company shall reimburse the Trustee all necessary and reasonable expenses
incurred by the Trustee in contesting any such assessments or litigating any
such claims.
SECTION 8
8.1 The Trustee shall keep accurate and detailed accounts of all
investments, receipts and disbursements and other transactions hereunder, and
all accounts, books and records relating thereto shall be open at all
reasonable times to inspection and audit by any person designated by the
applicable Committee. The Trustee may rely on the Recordkeeper for the
maintenance and provision of any or all of the records specified in this
Section 8. The Trustee shall reconcile periodically with the Recordkeeper
all Plan-related transactions and Plan balances.
8.2 At the reasonable request of the Committee or the Company or upon the
removal or resignation of the Trustee, the Trustee shall provide information
relating to all investments, receipts and disbursements, and other
transactions, effected during the past fiscal year or other annual period or
during the period from the close of the preceding fiscal year or other
preceding period to the date of such removal or resignation, including a
description of all securities and investment purchases and sales with the
cost or net proceeds of such purchases or sales and showing all cash,
securities and other property held at the close of such fiscal year or other
period, valued currently, and such other information as may be required of
the Trustee, provided however, that the Trustee shall not be obligated
pursuant to this Section 8.2 to provide any information that it is not
otherwise maintaining in the course of its discharge of duties as Trustee. At
the direction of the Recordkeeper, the Trustee also shall forward to the IRS
income tax withholding information. The Recordkeeper shall provide the
Trustee with all information with respect to such withholding which is
required to be filed by the Trustee with the IRS. The Company shall hold the
Trustee harmless from any costs, expenses or liabilities that arise as a
result of the Trustee's submission to the IRS of information provided to the
Trustee by the Recordkeeper.
8.3 Neither the Company nor the Committee shall have the right to demand or
be entitled to any further or different accounting by the Trustee and no
Participant or his beneficiary or any other person shall have the right to
demand or be entitled to any accounting by the Trustee, other than those to
which they may be entitled under the law.
8.4 Nothing contained herein will be construed or interpreted to deny the
Trustee or the Company the right to have its account established pursuant to
this Agreement judicially determined.
- 8 -
<PAGE> 9
8.5 For the purposes of this Section, the Trustee shall conclusively presume
that the Committee has made all Federal filings required by federal law as of
the date required. Should the Trustee incur any liability by reason of the
Committee's failure to timely file, the Company shall fully reimburse the
Trustee for any and all obligations, including penalties, interest or
expenses, so incurred by the Trustee.
8.6 The Trustee shall determine or have determined the fair value of the
Fund at such times as may be required to carry out the provisions of the Plan
or this Trust Agreement, but shall do so at least annually. In connection
with the Trustee's duties and obligations pursuant to this Section 8.6, the
Trustee shall rely exclusively upon and shall not be responsible for values
established by third parties or by the Trustee in its capacity as a mutual
fund recordkeeper, transfer agent or custodian, including but not limited to:
(a) in connection with mutual funds, the net asset value reported to
the Trustee by such mutual funds or the transfer or other agents of such
mutual funds;
(b) in connection with policies and contracts with insurance companies
or other financial institutions, the book value or other value ascribed to
such policies or contracts by the insurance company or its agent or other
financial institution or its agent;
(c) in connection with bank collective funds, the unit value as
reported by the trustee of such funds; and
(d) in connection with publicly traded securities, the market price of
such securities as reported to the public in a generally available form.
If values for any investment of a Fund are not generally available, the
Trustee may rely upon instructions provided to it by the Committee as to
valuation procedures.
8.7 All records and accounts maintained by the Trustee with respect to the
Fund shall be preserved for such period as may be required under any
applicable law. Upon the expiration of any such required retention period,
the Trustee shall have the right to destroy such records and accounts after
first notifying the Company in writing of its intention and transferring to
the Company any such records and accounts requested. The Trustee shall have
the right to preserve all records and accounts in original form, or on
microfilm, magnetic tape, or any other similar process.
SECTION 9
9.1 The Trustee may be removed by the Company, upon written notice to the
Trustee to that effect. The Trustee may resign as Trustee hereunder, upon
written notice to that effect delivered to the Company.
9.2 Such removal or resignation shall become effective as of the last day of
the month which coincides with, or next follows, the expiration of thirty
(30) days from the date of the delivery of
- 9 -
<PAGE> 10
such written notice, unless an earlier or later date is agreed upon by the
Company and the Trustee.
9.3 In the event of such removal or resignation, a successor trustee shall
be appointed by the Company to become the trustee as of the time such removal
or resignation becomes effective. Such successor trustee shall accept such
appointment by an instrument in writing delivered to the Company and upon
becoming a successor trustee shall be vested with all the rights, powers,
duties, privileges and immunities as successor trustee hereunder as if
originally designated as trustee in this Trust Agreement. The Trustee shall
have no responsibility or liability for the acts, or failure to act when
required to act, of any successor trustee.
SECTION 10
The Employer shall furnish the Trustee from time to time with certified
copies of resolutions of its Board of Directors evidencing the appointment,
identity and term of office of any persons acting as, or constituting, the
members of the applicable Committee or acting as the Plan Recordkeeper under
the Plan with respect to any right, power or duty specified in this Trust
Agreement.
SECTION 11
11.1 The Company reserves the right at any time and from time to time by
appropriate action acceptable to the Trustee to modify or amend in whole or
in part any or all of the provisions of this Trust Agreement upon notice in
writing to the Trustee; provided, however, that no modification or amendment
which affects the rights, duties, or responsibilities of the Trustee may be
made without the Trustee's consent.
11.2 Upon the termination of the Plan, the Trustee shall either distribute
all cash, securities and other property then constituting the allocable
portion of the Fund, less any amounts constituting charges and expenses
allocable to the Plan payable from the Fund, on the date or dates specified
by the Committee to such persons and in such manner as the Committee shall
direct, or, if the Fund is to be maintained as a wasting trust as to the
Plan, continue the allocable portion of the Fund in accordance with the
directions of the Committee pursuant to the terms of the Plan. In making
such distributions, the Trustee shall be entitled to assume that any
distributions or actions are in full compliance with, and are not in
violation of, any applicable law regulating the termination of retirement
plans such as the Plan, and the Trustee may require the Company or the
Committee to furnish it with evidence that such distributions do not violate
any such applicable law. The Company assumes all liability of any kind
whatsoever arising from any distribution made by the Trustee at the direction
of the Committee as a result of the termination of this Trust Agreement and
shall indemnify and save the Trustee harmless from any attempt to impose any
liability on the Trustee with respect to any such distribution.
11.3 The Trustee reserves the right to retain such property as is not
suitable for distribution at the time of termination of this Trust Agreement
and shall hold such property as custodian for those persons or other entities
entitled to such property until such time as the Trustee is able to
- 10 -
<PAGE> 11
make distribution. The Trustee's duties and obligations with respect to any
property held in accordance with the above shall be purely custodial in
nature and the Trustee shall only be obligated to see to the safekeeping of
such property prior to its distribution. Upon complete distribution of all
property constituting the Fund, this Trust Agreement shall be deemed
terminated.
11.4 In the event no direction is provided by the Company or the Committee
with respect to the distribution of the Fund or any portion thereof upon
termination of this Trust Agreement, the Trustee shall make such
distributions as are specified by the Plan. In the event the Plan is silent
as to the distributions to be made upon termination of the Plan or the terms
of the Plan are inconsistent with the then applicable law, the Trustee shall
distribute the Fund to Participants and their beneficiaries under the Plan in
an equitable manner that will not adversely affect the qualified status of
the Plan under Section 401(a) of the Code or any other statute of similar
import and that will comply with any applicable provisions of the Act
regulating the allocation of assets upon termination of plans such as the
Plan. The Trustee reserves the right to seek a judicial and administrative
determination as to the proper method of distribution of the Fund upon
termination of this Trust Agreement.
11.5 In the event this Trust Agreement is terminated pursuant to this Section
11, this Trust Agreement shall become void and have no effect, except that
the provisions contained herein relating to indemnification, allocation of
liability and allocation of expenses shall survive such termination. Nothing
contained in this Section 11.5 shall relieve any party from liability for any
breach of this Agreement.
SECTION 12
The Trustee accepts the Trust created hereunder and agrees to be bound
by all the terms of this Trust Agreement.
SECTION 13
Except as heretofore provided and as provided in the Plan, no entity or
Participant or beneficiary of the Plan shall have any interest in or right to
the assets of the Fund, and to the full extent of all applicable laws, the
assets of the Fund shall not be subject to any form of attachment,
garnishment, sequestration or other actions of collection afforded creditors
of an Employer, Participants or beneficiaries. The Trustee shall take
cognizance of no assignment or alienation of benefits unless, and then only
to the extent that, written notices are received from the Committee, Company,
or Recordkeeper.
SECTION 14
This Agreement shall be construed and enforced, to the extent possible,
according to the laws of the State of Missouri, and all provisions hereof
shall be administered according to the laws of said State and any Federal
laws, regulations or rules which may from time to time be applicable.
- 11 -
<PAGE> 12
SECTION 15
To the extent permitted by law, only the Trustee and the Company shall
be necessary parties in any application to the courts for an interpretation
of this Trust Agreement or for an accounting by the Trustee, and no
Participant under the Plan or other person having an interest in the Fund
shall be entitled to any notice or service of process. Any final judgment
entered in such an action or proceeding shall, to the extent permitted by
law, be conclusive upon all persons claiming under this Trust Agreement or
the Plan.
ATTEST: SOUTHWEST BANK OF ST. LOUIS
/s/ Carol B. Solenz By: /s/ Donna F. Bess
- --------------------------------- ---------------------------------
[Corporate Seal] Name: Donna F. Bess
Title: Vice President
INVESTORS FIDUCIARY TRUST
COMPANY, TRUSTEE
By:
---------------------------------
Name:
Title:
- 12 -
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 22,574
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 1,247
<INVESTMENTS-HELD-FOR-SALE> 320,997
<INVESTMENTS-CARRYING> 38,842
<INVESTMENTS-MARKET> 39,896
<LOANS> 1,002,555
<ALLOWANCE> 19,677
<TOTAL-ASSETS> 1,429,669
<DEPOSITS> 1,215,572
<SHORT-TERM> 79,370
<LIABILITIES-OTHER> 11,355
<LONG-TERM> 14,950
0
0
<COMMON> 9,643
<OTHER-SE> 98,779
<TOTAL-LIABILITIES-AND-EQUITY> 1,429,669
<INTEREST-LOAN> 20,126
<INTEREST-INVEST> 5,898
<INTEREST-OTHER> 82
<INTEREST-TOTAL> 26,106
<INTEREST-DEPOSIT> 11,746
<INTEREST-EXPENSE> 12,752
<INTEREST-INCOME-NET> 13,354
<LOAN-LOSSES> 1,749
<SECURITIES-GAINS> (830)
<EXPENSE-OTHER> 6,418
<INCOME-PRETAX> 8,748
<INCOME-PRE-EXTRAORDINARY> 8,748
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,489
<EPS-PRIMARY> 0.58
<EPS-DILUTED> 0.57
<YIELD-ACTUAL> 7.81
<LOANS-NON> 1,078
<LOANS-PAST> 33
<LOANS-TROUBLED> 108
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 18,144
<CHARGE-OFFS> 467
<RECOVERIES> 251
<ALLOWANCE-CLOSE> 19,677
<ALLOWANCE-DOMESTIC> 19,677
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 8,989
</TABLE>
