As filed with the Securities and Exchange Commission on February 5, 1998.
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
--------------------
PROVIDENT BANKSHARES CORPORATION
(Exact name of registrant as specified in its charter)
MARYLAND 52-1518642
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
114 EAST LEXINGTON STREET
BALTIMORE, MARYLAND 21202
(Address of principal executive offices)
--------------------
EMPLOYEES' RETIREMENT SAVINGS PLAN OF PROVIDENT BANK OF MARYLAND
(Full title of the plan)
--------------------
ROBERT L. DAVIS, ESQUIRE
MANAGING DIRECTOR AND GENERAL COUNSEL
PROVIDENT BANKSHARES CORPORATION
114 EAST LEXINGTON STREET
BALTIMORE, MARYLAND 21202
(410) 277-2848
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
EDWARD J. ADKINS, ESQUIRE
MILES & STOCKBRIDGE,
A PROFESSIONAL CORPORATION
10 LIGHT STREET
BALTIMORE, MARYLAND 21202
(410) 727-6464
--------------------
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
========================================================================================================================
Proposed Proposed
maximum maximum Amount of
Title of securities Amount to be offering price aggregate registration
to be registered registered per share(1) offering price(1) fee
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
Common Stock, par value $1.00
per share(2)....................... 750,000 $63.00 $47,250,000 $14,319
- ------------------------------------------------------------------------------------------------------------------------
Preferred Share Purchase
Rights(3).......................... 750,000 (3) (3) (3)
- ------------------------------------------------------------------------------------------------------------------------
(1) Determined pursuant to Rule 457(c) under the Securities Act of 1933,
solely for the purpose of calculating the registration fee, based on
the average of the high and low sale prices as reported on The NASDAQ
Stock Market on January 30, 1998.
(2) In addition, pursuant to Rule 416(c) under the Securities Act of 1933,
this registration statement also covers an indeterminate amount of
interests to be offered or sold pursuant to the employee benefit plan
described herein.
(3) The Preferred Share Purchase Rights are to be issued in tandem with the
shares of Common Stock. No separate consideration is to be paid for the
Preferred Share Purchase Rights.
========================================================================================================================
</TABLE>
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. Incorporation of Documents by Reference.
----------------------------------------
The following documents filed by Provident Bankshares Corporation (the
"Registrant") and the Employees' Retirement Savings Plan of Provident Bank of
Maryland (the "Plan") with the Securities and Exchange Commission (the
"Commission") are incorporated by reference and made a part hereof:
(a) The Registrant's Annual Report on Form 10-K for the year
ended December 31, 1996, including the Annual Report on Form 11-K of the Plan
for the year ended December 31, 1996, included therein;
(b) The Registrant's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1997, June 30, 1997 and September 30, 1997;
(c) The Registrant's Current Reports on Form 8-K filed with
the Commission on March 18, 1997 and August 26, 1997; and
(d) The description of the Registrant's Common Stock and
Preferred Share Purchase Rights contained in the Registrant's Registration
Statements on Form 8-A filed with the Commission pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), on December 4,
1987 and January 25, 1995, respectively, and any amendment or report filed for
the purpose of updating such descriptions.
All documents subsequently filed by the Registrant or by the Plan
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to
filing of a post-effective amendment which indicates that all securities offered
have been sold or which removes from registration all securities then remaining
unsold, shall be deemed to be incorporated by reference into this Registration
Statement and to be a part hereof from the date of the filing of such documents.
ITEM 4. Description of Securities.
--------------------------
Not Applicable
ITEM 5. Interests of Named Experts and Counsel.
---------------------------------------
Not Applicable
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<PAGE>
ITEM 6. Indemnification of Directors and Officers.
------------------------------------------
The Registrant's Bylaws provide that the Registrant shall indemnify, to
the fullest extent permitted by the Maryland General Corporation Law ("MGCL"),
any person (or his or her legal representative) who is or was a director,
officer, employee or agent of the Registrant or is or was serving at the request
of the Registrant as a director, officer, employee or agent of another
corporation or of a partnership, joint venture or other enterprise (including
service with respect to employee benefit plans). Section 2-418 of the MGCL
permits indemnification of any director or officer with respect to any
proceedings by reason of service in that capacity unless it is established that
(a) the act or omission of the director or officer was material to the matter
giving rise to the proceeding and was either committed in bad faith or was the
result of active and deliberate dishonesty; (b) the director or officer actually
received an improper personal benefit in money, property or services or (c) in
the case of criminal proceedings, the director or officer had reasonable cause
to believe that the act or omission was unlawful. Indemnification under the MGCL
may include judgments, penalties, fines, settlements and reasonable expenses
actually incurred by the director or officer in connection with the proceedings;
provided, however, that if the proceeding is by or in the right of the
corporation, indemnification may not be made with respect to any proceeding in
which the director or officer shall have been adjudged to be liable to the
corporation. The termination of any proceeding by judgment, order or settlement
does not create a presumption that the director or officer did not meet the
requisite standard of conduct required for permitted indemnification. The
termination of any proceeding by conviction, or a plea of nolo contendere or its
equivalent, or an entry of an order of probation prior to judgment, creates a
rebuttable presumption that the director or officer did not meet the standard of
conduct for permissive indemnification under the MGCL.
The Registrant's Charter limits the liability of directors and officers
to the fullest extent permitted by Maryland statutory or decisional law. The
MGCL authorizes Maryland corporations to limit the liability of directors and
officers to the Corporation and its stockholders for money damages, except (a)
to the extent that it is proved that the director or officer actually received
an improper benefit or profit in money, property or services, for the amount of
the benefit or profit actually received, (b) to the extent that a judgment or
other final adjudication adverse to the director of officers entered in a
proceeding based on a finding in the proceeding that the director's or officer's
action, or failure to act, with the result of active and deliberate dishonesty
and was material to the cause of action adjudicated in the proceeding, or (c) in
respect of certain other specified actions.
The Registrant currently maintains director and officer liability
insurance coverage for officers and directors.
- 3 -
<PAGE>
To the extent that the indemnification provisions described above may
be related to liabilities arising under the Securities Act of 1933, the
Commission takes the position that such indemnification is against public policy
as expressed in the Securities Act of 1933 and is, therefore, unenforceable.
Various state securities administrators take a similar position.
ITEM 7. Exemption from Registration Claimed.
------------------------------------
Not Applicable
ITEM 8. Exhibits.
---------
4(a) Charter of Provident Bankshares Corporation filed as an Exhibit to the
Registrant's Registration Statement on Form S-3, filed with the
Commission on August 18, 1994, is incorporated herein by reference.
4(b) Bylaws of Provident Bankshares Corporation, as amended, filed as an
Exhibit to the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1994, is incorporated herein by reference.
4(c) Rights Agreement filed as an Exhibit to the Registrant's Registration
Statement on Form 8-A, filed with the Commission on January 25, 1995,
is incorporated herein by reference.
4(d) The Employees' Retirement Savings Plan of Provident Bank
of Maryland, as amended.
23(a) Consent of Coopers & Lybrand L.L.P.
24 Powers of Attorney.
The undersigned Registrant hereby undertakes that it will submit or has
submitted the Plan and any amendment thereto to the Internal Revenue Service in
a timely manner and will make or has made all changes required by the Internal
Revenue Service in order to qualify the Plan under Section 401 of the Internal
Revenue Code.
ITEM 9. Undertakings.
-------------
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3)
of the Securities Act of 1933;
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<PAGE>
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20% change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3 or Form S-8, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing
- 5 -
<PAGE>
provisions, or otherwise, the registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Baltimore, State of Maryland on the 5th day of
February 1998.
PROVIDENT BANKSHARES CORPORATION
By: /s/ Robert L. Davis
_______________________________
Robert L. Davis
Managing Director and General
Counsel
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.
Signature Title Date
--------- ----- ----
* Chairman of the Board February 5, 1998
________________________ and Chief Executive
Carl W. Stearn Officer (Principal
Executive Officer)
* Executive Vice February 5, 1998
________________________ President and Chief
James R. Wallis Financial Officer and
Chief Operating
Officer (Principal
Financial Officer)
* Treasurer (Principal February 5, 1998
________________________ Accounting Officer)
R. Wayne Hall
* Director February 5, 1998
________________________
Robert B. Barnhill, Jr.
* Director February 5, 1998
________________________
Melvin A. Bilal
* February 5, 1998
________________________
Dr. Calvin W. Burnett
<PAGE>
*
________________________ Director February 5, 1998
M. Jenkins Cromwell, Jr.
* Director February 5, 1998
________________________
Pierce B. Dunn
* Director February 5, 1998
________________________
Enos K. Fry
* Director February 5, 1998
________________________
Herbert W. Jorgensen
* Director February 5, 1998
________________________
Peter M. Martin
* Director February 5, 1998
________________________
Frederick W. Meier, Jr.
* Director February 5, 1998
________________________
Francis G. Riggs
* Director February 5, 1998
________________________
Sheila K. Riggs
- ----------
*By: /s/ Robert L. Davis February 5, 1998
-------------------------
Robert L. Davis
(Attorney-in-Fact)
<PAGE>
Index to Exhibits
-----------------
<TABLE>
<CAPTION>
Exhibit
Number Description Page
- ------ ----------- ----
<S><C>
4(a) Charter of Provident Bankshares Corporation filed as an
Exhibit to the Registrant's Registration Statement on Form
S-3, filed with the Commission on August 18, 1994, is
incorporated herein by reference.
4(b) Bylaws of Provident Bankshares Corporation, as amended, filed
as an Exhibit to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1994, is incorporated herein
by reference.
4(c) Rights Agreement filed as an Exhibit to the Registrant's
Registration Statement on Form 8-A, filed with the Commission
on January 25, 1995, is incorporated herein by reference.
4(d) Employees' Retirement Savings Plan of Provident Bank of
Maryland, as amended.
23 Consent of Coopers & Lybrand L.L.P.
24 Powers of Attorney.
</TABLE>
Exhibit 4(d)
EMPLOYEES' RETIREMENT SAVINGS PLAN OF PROVIDENT BANK OF MARYLAND
As Amended Through
October 1, 1997
<PAGE>
Table Of Contents
ARTICLE I Definitions.................................................1
ARTICLE II Service....................................................16
ARTICLE III Eligibility, Enrollment and Participation..................19
ARTICLE IV Contributions..............................................20
ARTICLE V Limitations on Allocations.................................31
ARTICLE VI Distribution of Benefits...................................38
ARTICLE VI-A Direct Rollovers...........................................46
ARTICLE VII Retirement Benefits........................................48
ARTICLE VIII Joint and Survivor Requirements............................49
ARTICLE IX Termination of Employment..................................52
ARTICLE X Withdrawals................................................54
ARTICLE X-A Loans......................................................57
ARTICLE XI Fiduciary Duties and Responsibilities......................58
ARTICLE XII The Administrator..........................................59
ARTICLE XIII Participants' Rights.......................................61
ARTICLE XIV Amendment or Termination of the Plan.......................64
ARTICLE XV Substitution of Plans......................................66
ARTICLE XVI Miscellaneous..............................................67
ARTICLE XVI-A Top-Heavy Provisions.......................................69
<PAGE>
ARTICLE I
DEFINITIONS
1.1 ACCRUED BENEFIT. The term Accrued Benefit means the value on any
applicable date of the Participant's Account.
1.2 ACTIVE PARTICIPANT. The term Active Participant means any Participant
who (a) performs duties as an Employee for the Employer, and (b) is not
an Inactive Participant.
1.3 ACTUAL CONTRIBUTION PERCENTAGE. The term Actual Contribution Percentage
means the average of the Actual Contribution Ratios of a specified
group computed to the nearest one-hundredth of one percent.
1.4 ACTUAL CONTRIBUTION PERCENTAGE TEST.
(A) For each Plan Year, the Plan shall satisfy the contribution
percentage requirement described in section 401(m)(2) of the
Code and the regulations thereunder, which are incorporated
herein.
The Plan satisfies the Actual Contribution Percentage Test if:
(1) The Actual Contribution Percentage for the group of
eligible Highly Compensated Employees is not more
than the Actual Contribution Percentage for the group
of all other eligible Employees multiplied by 1.25;
or
(2) The excess of the Actual Contribution Percentage for
the group of eligible Highly Compensated Employees
over the Actual Contribution Percentage for the group
of all other eligible Employees is not more than two
percentage points, and the Actual Contribution
Percentage for the group of eligible Highly
Compensated Employees is not more than the Actual
Contribution Percentage for the group of all other
eligible Employees multiplied by two.
(B) Special Rules.
(1) Matching Contributions and Qualified Nonelective
Contributions will be considered for a Plan Year only
if allocated to the Employee's Account as of any date
within the Plan Year being tested and only if made
before the last day of the twelve month period
immediately following the Plan Year to which such
contributions relate.
(2) A Matching Contribution that is forfeited to correct
Excess Aggregate Contributions, or because the
contribution to which it relates is treated as an
Excess Contribution, Excess Deferral, or Excess
Aggregate Contribution, shall not be taken into
account for purposes of the Actual Contribution
Percentage Test.
(3) The Employer shall maintain records sufficient to
demonstrate satisfaction of the Actual Contribution
Percentage Test, including records showing the extent
to which Qualified Nonelective Contributions and
Elective Deferral Contributions are taken into
account.
1
<PAGE>
1.5 ACTUAL CONTRIBUTION RATIO.
(A) An Employee's Actual Contribution Ratio is the sum of the
Contribution Percentage Amounts allocated to the Employee's
Account for the Plan Year (including any amounts required to
be taken into account under subparagraphs (B)(1) and (B)(2) of
this section) divided by the Employee's Compensation for the
Plan Year. If no Matching Contributions, Qualified Nonelective
Contributions, or Elective Deferral Contributions are taken
into account with respect to an eligible Employee, the Actual
Contribution Ratio of the Employee is zero.
(B) Special Rules.
(1) In the event that this Plan is aggregated with one or
more plans for purposes of section 410(b) of the Code
(other than for purposes of the average benefit
percentage test), or if one or more other plans
satisfy the requirements of section 410(b) of the
Code (other than the average benefit percentage test)
only if aggregated with this Plan, then this section
shall be applied by determining the Actual
Contribution Ratios of Employees as if all such plans
were a single plan. Plans may be aggregated only if
they have the same Plan Year.
(2) The Actual Contribution Ratio of a Highly Compensated
Employee who is eligible to participate in more than
one plan of the Employer to which Matching
Contributions are made shall be calculated by
treating all such plans in which the Employee is
eligible to participate as one plan. For Plan Years
beginning after December 31, 1988, if a Highly
Compensated Employee participates in two or more
plans that have different plan years, all plans
ending with or within the same calendar year shall be
treated as a single plan. However, plans that are not
permitted to be aggregated under Treasury Regulation
section 1.401(m)-1(b)(3)(ii) shall not be aggregated
for purposes of this section.
(3) For purposes of determining the Actual Contribution
Ratio of a Participant who is a 5-percent owner or
one of the ten most highly-paid Highly Compensated
Employees, the Contribution Percentage Amounts and
Compensation of such Participant shall include the
Contribution Percentage Amounts (including any
amounts required to be taken into account under
subparagraphs (B)(1) and (B)(2) of this section) and
Compensation for the Plan Year of all Family Members.
If the Participant is required to be aggregated as a
member of more than one family group under the Plan,
all eligible Employees who are members of those
family groups that include that Employee are
aggregated as one family group.
Family Members, with respect to Highly Compensated
Employees, shall be disregarded as separate Employees
in determining the Actual Contribution Ratio both for
Participants who are Nonhighly Compensated Employees
and for Participants who are Highly Compensated
Employees.
(4) The determination and treatment of the Actual
Contribution Ratio amounts of any Participant shall
satisfy such other requirements as may be prescribed
by the Secretary of the Treasury.
1.6 ACTUAL DEFERRAL PERCENTAGE. The term Actual Deferral Percentage means
the average of the Actual Deferral Ratios of a specified group,
computed to the nearest one-hundredth of one percent.
2
<PAGE>
1.7 ACTUAL DEFERRAL PERCENTAGE TEST.
(A) For each Plan Year, the Plan shall satisfy the Actual Deferral
Percentage Test described in section 401(k)(3) and the
regulations thereunder, which are herein incorporated by
reference.
The Plan satisfies the Actual Deferral Percentage Test for a
Plan Year only if:
(1) The Actual Deferral Percentage for the group of
eligible Highly Compensated Employees is not more
than the Actual Deferral Percentage for the group of
all other eligible Employees multiplied by 1.25; or
(2) The excess of the Actual Deferral Percentage for the
group of eligible Highly Compensated Employees over
the Actual Deferral Percentage for the group of all
other eligible Employees is not more than two
percentage points, and the Actual Deferral Percentage
for the group of eligible Highly Compensated
Employees is not more than the Actual Deferral
Percentage for the group of all other eligible
Employees multiplied by two.
(B) Special Rules.
(1) For purposes of determining the Actual Deferral
Percentage Test, Elective Deferral Contributions,
Qualified Nonelective Contributions, and Qualified
Matching Contributions must be allocated to the
Employee's Account as of a date within the Plan Year
being tested and must be made before the last day of
the twelve-month period immediately following the
Plan Year to which such contributions relate.
(2) The Excess Deferrals of a Highly Compensated Employee
shall be taken into account for purposes of the
Actual Deferral Percentage Test. Conversely, the
Excess Deferrals of an Employee who is a Nonhighly
Compensated Employee shall not be taken into account
for purposes of the Actual Deferral Percentage Test.
(3) The Employer shall maintain records sufficient to
demonstrate satisfaction of the Actual Deferral
Percentage Test, including the extent to which
Qualified Nonelective Contributions and Qualified
Matching Contributions are taken into account.
1.8 ACTUAL DEFERRAL RATIO.
(A) An Employee's Actual Deferral Ratio for the Plan Year is the
sum of the Employee's Deferral Percentage Amounts allocated to
the Employee's Account for the Plan Year (including any
amounts required to be taken into account under subparagraphs
(B)(1) and (B)(2) of this section), divided by the Employee's
Compensation taken into account for the Plan Year. If an
eligible Employee makes no Elective Deferral Contributions,
and no Qualified Matching Contributions or Qualified
Nonelective Contributions are taken into account with respect
to the Employee, the Actual Deferral Ratio of the Employee is
zero.
(B) Special Rules.
(1) In the event that this Plan is aggregated with one or
more plans for purposes of section 410(b) of the Code
(other than for purposes of the average benefit
percentage test), or if
3
<PAGE>
one or more other plans satisfy the requirements of
section 410(b) of the Code (other than the average
benefit percentage test) only if aggregated with this
Plan, then this section shall be applied by
determining the Actual Deferral Ratio of Employees as
if all such plans were a single plan. Plans may be
aggregated only if they have the same Plan Year.
(2) The Actual Deferral Ratio of a Highly Compensated
Employee who is eligible to participate in more than
one cash or deferred arrangement (as described in
section 401(k) of the Code) of the same Employer
shall be calculated by treating all the cash or
deferred arrangements in which the Employee is
eligible to participate as one arrangement. If the
cash or deferred arrangements that are treated as a
single arrangement under the preceding sentence are
parts of plans that have different Plan Years, the
cash or deferred arrangements are treated as a single
arrangement with respect to the Plan Years ending
with or within the same calendar year. However, plans
that are not permitted to be aggregated under
Treasury Regulation section 1.401(k)-1(b)(3)(ii)(B)
are not aggregated for purposes of this section.
(3) For purposes of determining the Actual Deferral Ratio
of a Participant who is a 5 percent owner or one of
the 10 most Highly Compensated Employees, the
Deferral Percentage Amounts and Compensation of such
Participant shall include the Deferral Percentage
Amounts (including any amounts required to be taken
into account under subparagraphs (B)(1) and (B)(2) of
this section) and Compensation for the Plan Year of
Family Members.
If an Employee is required to be aggregated as a
member of more than one family group under the Plan,
all eligible Employees who are members of those
family groups that include that Employee are
aggregated as one family group.
Family Members, with respect to such Highly
Compensated Employees, shall be disregarded as
separate Employees in determining the Actual Deferral
Percentage both for Participants who are Non-highly
Compensated Employees and for Participants who are
Highly Compensated Employees.
(4) The determination and treatment of the Actual
Deferral Ratio amounts of any Participant shall
satisfy such other requirements as may be prescribed
by the Secretary of the Treasury.
1.9 BENEFICIARY. The Participant's Spouse is the designated Beneficiary of
the Participant's entire Vested Interest. However, each Participant
shall have the right to designate another Beneficiary, subject to the
requirements of the "Qualified Election" provisions of Article VIII,
Joint and Survivor Requirements. The Participant may change the
Beneficiary at any time, subject to the requirements of the "Qualified
Election" provisions of Article VIII, Joint and Survivor Requirements.
If a Beneficiary has not been designated, or if a Beneficiary
designation or change of Beneficiary designation does not meet the
requirements of the "Qualified Election" provisions of Article VIII,
Joint and Survivor Requirements, (including any designation made prior
to August 23, 1984 by a married Participant who has an Hour of Service
on or after August 23, 1984), or if no designated Beneficiary survives
the Participant, the Participant's entire Vested Interest shall be
distributed to the Participant's Spouse, if living; otherwise in equal
shares to any surviving children of the Participant. In the event none
of the above named individuals survives the Participant, the
Participant's entire Vested Interest shall be paid to the executor or
administrator of the Participant's estate.
4
<PAGE>
1.10 BOARD OF DIRECTORS. The term Board of Directors means the Employer's
board of directors or other comparable governing body.
1.10A CITIZENS PLAN. The term Citizens Plan means the Citizens Savings Bank,
F.S.B. 401(k) Savings Plan, as amended and restated effective as of
January 1, 1995, which was merged into this Plan effective as of
October 1, 1997.
1.11 CODE. The term Code means the Internal Revenue Code of 1986, as amended
from time to time.
1.12 COMPENSATION.
(A) Except as otherwise provided in the Plan, the term
Compensation means wages within the meaning of section 3401(a)
of the Code and all other payments of Compensation to an
Employee by the Employer (in the course of the Employer's
trade or business) paid to the Employee in cash during the
Plan Year for which the Employer is required to furnish the
Employee a written statement under sections 6041(d),
6051(a)(3), and 6052 of the Code. Compensation shall be
determined without regard to any rules under section 3401(a)
that limit the remuneration included in wages based on the
nature or location of the employment or the services performed
(such as the exception for agricultural labor in section
3401(a)(2) of the Code). Notwithstanding the foregoing,
Compensation does not include the following items: (i) any
remuneration relating to periods when the Employee was not
eligible to participate in this Plan; (ii) hiring bonuses;
(iii) stock bonuses, appreciation rights or options, or any
other non-cash remuneration (other than amounts described in
(C) below); (iv) any remuneration accrued but not paid during
the Plan Year (other than amounts described in (C) below); (v)
reimbursements and allowances for expenses, including (but not
limited to) relocation or moving expenses but not including
automobile allowances; (vi) imputed income relating to life
insurance provided by the Employer; (vii) severance payments;
and (viii) other extraordinary compensation items designated
by the Plan Administrator.
(B) Compensation shall include only that Compensation which is
actually paid to the Participant during the determination
period. Except as provided elsewhere in the Plan, the
determination period shall be the Plan Year.
(C) Compensation shall include any amount which is contributed by
the Employer pursuant to a salary reduction agreement and
which is not includible in the gross income of the employee
under sections 125, 402(e)(3), 402(h), or 403(b) of the Code;
Compensation deferred under an eligible deferred compensation
plan within the meaning of section 457(d) of the Code; and
employee contributions described in section 414(h)(2) of the
Code that are picked up by the employing unit and, thus, are
treated as employer contributions.
(D) The annual Compensation of each Participant taken into account
for determining all benefits provided under the Plan for any
determination period shall not exceed $200,000. This
limitation shall be adjusted by the Secretary of the Treasury
at the time and in the same manner as under section 415(d) of
the Code, except that the dollar increase in effect on January
1 of any calendar year is effective for determination periods
beginning in such calendar year and the first adjustment to
the $200,000 limitation is effected on January 1, 1990. If the
period for determining Compensation used in calculating an
Employee's allocation for a determination period is a short
Plan Year (i.e., shorter than 12 months), the annual
Compensation limit is an amount equal to the otherwise
applicable annual Compensation limit multiplied by a fraction,
the numerator of which is the number of months in the short
Plan Year, and the denominator of which is 12.
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In determining the Compensation of a Participant for purposes
of this limitation, the rules of section 414(q)(6) of the Code
shall apply, except in applying such rules, the term "family"
shall include only the Spouse of the Participant and any
lineal descendants of the Participant who have not attained
age 19 before the close of the year. If, as a result of the
application of such rules, the adjusted $200,000 limitation is
exceeded, then either the limitation shall be prorated among
the affected individuals in proportion to each such
individual's Compensation as determined under this section
prior to the application of this limitation, or the limitation
shall be allocated among the affected individuals in an
objective and nondiscriminatory manner based on a reasonable,
good faith interpretation of section 401(a)(17) of the Code.
The method chosen in the preceding sentence shall be uniformly
applied to all affected individuals in a Plan Year and shall
be applied consistently from year to year.
If Compensation for any prior determination period is taken
into account in determining an Employee's allocations or
benefits for the current determination period, the
Compensation for such prior determination period is subject to
the applicable annual Compensation limit in effect for that
prior year. For this purpose, for years beginning before
January 1, 1990, the applicable annual Compensation limit is
$200,000.
(E) In addition to other applicable limitations set forth in the
Plan, and notwithstanding any other provision of the Plan to
the contrary, for Plan Years beginning on or after January 1,
1994, the annual Compensation of each Employee taken into
account under the Plan shall not exceed the OBRA '93 annual
Compensation limit. The OBRA '93 annual Compensation limit is
$150,000, as adjusted by the Commissioner for increases in the
cost of living in accordance with section 401(a)(17)(B) of the
Code. The cost-of-living adjustment in effect for a calendar
year applies to any period, not exceeding 12 months, over
which Compensation is determined (determination period)
beginning in such calendar year. If a determination period
consists of fewer than 12 months, the OBRA '93 annual
Compensation limit will be multiplied by a fraction, the
numerator of which is the number of months in the
determination period, and the denominator of which is 12. For
Plan Years beginning on or after January 1, 1994, any
reference in this Plan to the limitation under section
401(a)(17) of the Code shall mean the OBRA '93 annual
Compensation limit set forth in this provision. If
Compensation for any prior determination period is taken into
account in determining an employee's benefits accruing in the
current Plan Year, the Compensation for that prior
determination period is subject to the OBRA '93 annual
Compensation limit in effect for that prior determination
period. For this purpose, for determination periods beginning
before the first day of the first Plan Year beginning on or
after January 1, 1994, the OBRA '93 annual Compensation limit
is $150,000.
For purposes of the Actual Deferral Percentage Test or the
Actual Contribution Percentage Test, or both, the definition
of Compensation shall be any definition of Compensation that
satisfies Code Section 414(s) or 415(c)(3).
1.13 CONSIDERED NET PROFITS. The term Considered Net Profits 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 Employer after all expenses and
charges other than (i) the contributions made by the Employer to the
Plan, and (ii) federal or state or local taxes based upon or measured
by income, as determined by the Employer, either on an estimated basis
or a final basis, in accordance with the generally accepted accounting
principles used by the Employer. When the amount of Considered Net
Profits has been determined by the Employer, and the contributions are
made by the Employer 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
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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 contributions by the Employer have been made.
1.14 CONTRIBUTION PERCENTAGE AMOUNTS. The term Contribution Percentage
Amounts means the sum of the Matching Contributions and Qualified
Matching Contributions (to the extent not taken into account for
purposes of the Actual Deferral Percentage Test) made under the Plan on
behalf of the Employee for the Plan Year. The term Contribution
Percentage Amounts also includes Qualified Nonelective Contributions
and Elective Deferral Contributions treated as Matching Contributions
and taken into account in determining the Employee's Actual
Contribution Ratio for the Plan Year.
1.15 CONTRIBUTION PERIOD. The term Contribution Period means that regular
period specified by the Employer in Article IV for which contributions
shall be made.
1.16 DEFERRAL PERCENTAGE AMOUNTS. The term Deferral Percentage Amounts means
an Employee's Elective Deferral Contributions for the Plan Year. The
term Deferral Percentage Amounts also includes Qualified Nonelective
Contributions and Qualified Matching Contributions treated as Elective
Deferral Contributions and taken into account in determining the
Employee's Actual Deferral Ratio for the Plan Year.
1.17 DISABILITY. The term Disability means the Participant is disabled and
receiving benefits under the terms of the Employer's long-term
disability plan.
1.18 DISABILITY RETIREMENT DATE. The term Disability Retirement Date means
the first day of the month after the Plan Administrator has determined
that a Participant's incapacity is a Disability.
1.19 EARLY RETIREMENT DATE. The term Early Retirement Date means the first
day of the month coinciding with or next following the date a
Participant is separated from Service with the Employer on or after the
date he attains age 55 and has five Years of Service for any reason
other than death or Disability, provided that on such date the
Participant has not attained his Normal Retirement Age.
1.20 EFFECTIVE DATE. The term Effective Date means January 1, 1995.
1.21 ELECTIVE DEFERRAL CONTRIBUTION. The term Elective Deferral Contribution
means any Employer Contribution made to the Plan at the election of the
Participant, in lieu of cash compensation, and includes contributions
made pursuant to an Enrollment Form or other deferral mechanism.
Solely for purposes of the dollar limitation specified in section
402(g) of the Code, with respect to any taxable year, a Participant's
Elective Deferral Contributions are the sum of all employer
contributions made on behalf of such Participant pursuant to an
election to defer under any qualified cash or deferred arrangement as
described in section 401(k) of the Code, any simplified employee
pension cash or deferred arrangement described in section 402(h)(1)(B)
of the Code, any plan as described under section 501(c)(18) of the
Code, and any employer contributions made on behalf of a Participant
for the purchase of a tax sheltered annuity contract under section
403(b) of the Code pursuant to a salary reduction agreement.
The term Elective Deferral Contribution shall not include any deferrals
properly distributed as excess annual additions.
1.22 EMPLOYEE. The term Employee means an individual who performs services
for the Employer and who is either a common law employee of the
Employer or a self-employed individual/owner employee treated as an
Employee pursuant to Code section 401(c)(1). The term Employee also
includes a Leased Employee
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who is treated as an Employee of the Employer-recipient pursuant to the
provisions of Code section 414(n) or 414(o). For purposes of
determining the Highly Compensated Employees, the Employer may elect,
on a reasonable and consistent basis, to treat such Leased Employees
covered by a plan described in Code section 414(n)(5) as Employees.
1.23 EMPLOYER. The term Employer means Provident Bank of Maryland, Provident
Mortgage Corp. Inc., Provident Financial Services, Inc., Provident
Investment Center, Inc. and PB Investment Corporation and any successor
organization to such Employer which elects to continue the Plan. In the
case of a group of employers which constitutes a controlled group of
corporations (as defined in Code section 414(b)), or which constitutes
trades or businesses (whether or not incorporated) which are under
common control (as defined in Code section 414(c)), or which
constitutes an affiliated service group (as defined in Code section
414(m)), all such employers shall be considered a single employer for
purposes of participation, vesting, Top-Heavy provisions and
determination of Highly Compensated Employees.
1.24 EMPLOYER CONTRIBUTION. The term Employer Contribution means any
contribution made to the Plan by the Employer on behalf of a
Participant, other than a Rollover Contribution or a mandatory or
voluntary contribution made to the Plan by the Employee that is treated
at the time of contribution as an after-tax employee contribution.
1.25 ENROLLMENT FORM. The term Enrollment Form means an agreement between a
Participant and the Employer to defer the Participant's Compensation
for the purpose of making Elective Deferral Contributions to the Plan.
1.26 ENTRY DATE. The term Entry Date means either the Effective Date or the
first day of the month thereafter when an Employee who has fulfilled
the eligibility requirements commences participation in the Plan.
If an Employee is not in the active Service of the Employer as of his
initial Entry Date, his subsequent Entry Date shall be the date he
returns to the active Service of the Employer, provided he still meets
the eligibility requirements. If an Employee does not enroll as a
Participant as of his initial Entry Date, his subsequent Entry Date
shall be the applicable Entry Date as specified above when the Employee
actually enrolls as a Participant.
1.27 ERISA. The term ERISA means the Employee Retirement Income Security Act
of 1974 (PL 93-406) as it may be amended from time to time, and any
regulations issued pursuant thereto as such Act and such regulations
affect this Plan and Trust.
1.28 EXCESS AGGREGATE CONTRIBUTIONS.
(A) The term Excess Aggregate Contributions means, with respect to
any Plan Year, the excess of the aggregate amount of the
Contribution Percentage Amounts actually made on behalf of
Highly Compensated Employees for the Plan Year (including any
amounts required to be taken into account under subparagraphs
(B)(1) and (B)(2) of Section 1.5 of the Plan), over the
maximum amount of contributions permitted under the Actual
Contribution Percentage Test. The amount of Excess Aggregate
Contributions for each Highly Compensated Employee is
determined by using the method described in paragraph (B) of
this section.
(B) The amount of Excess Aggregate Contributions for a Highly
Compensated Employee for a Plan Year is the amount (if any) by
which the Employee's Matching Contributions must be reduced
for
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the Employee's Actual Contribution Ratio to equal the highest
permitted Actual Contribution Ratio under the Plan.
To calculate the highest permitted Actual Contribution Ratio
under the Plan, the Actual Contribution Ratio of the Highly
Compensated Employee with the highest Actual Contribution
Ratio is reduced by the amount required to cause the
Employee's Actual Contribution Ratio to equal the ratio of the
Highly Compensated Employee with the next highest Actual
Contribution Ratio. If a lesser reduction would enable the
Plan to satisfy the Actual Contribution Percentage Test, only
this lesser reduction may be made. This process shall be
repeated until the Plan satisfies the Actual Contribution
Percentage Test. The highest Actual Contribution Percentage
Ratio remaining under the Plan after leveling is the highest
permitted Actual Contribution Ratio.
For each Highly Compensated Employee, the amount of Excess
Aggregate Contributions for a Plan Year is equal to the total
Contribution Percentage Amounts (including any amounts
required to be taken into account under subparagraphs (B)(1)
and (B)(2) of Section 1.5 of the Plan), minus the amount
determined by multiplying the Employees' highest permitted
Actual Contribution Ratio (determined after application of
this section) by the compensation used in determining the
ratio.
1.29 EXCESS CONTRIBUTION.
(A) The term Excess Contribution means, with respect to a Plan
Year, the excess of Deferral Percentage Amounts made on behalf
of eligible Highly Compensated Employees for the Plan Year
(including any amounts required to be taken into account under
subparagraphs (B)(1) and (B)(2) of Section 1.8 of the Plan)
over the maximum amount of such contributions permitted under
the Actual Deferral Percentage Test for the Plan Year. The
amount of Excess Contributions for each Highly Compensated
Employee is determined by using the method described in
paragraph (B) of this section.
(B) The amount of Excess Contributions for a Highly Compensated
Employee for a Plan Year is the amount (if any) by which the
Employee's Elective Deferral Contributions must be reduced for
the Employee's Actual Deferral Ratio to equal the highest
permitted Actual Deferral Ratio under the Plan.
To calculate the highest permitted Actual Deferral Ratio under
the Plan, the Actual Deferral Ratio of the Highly Compensated
Employee with the highest Actual Deferral Ratio is reduced by
the amount required to cause the Employee's Actual Deferral
Ratio to equal the ratio of the Highly Compensated Employee
with the next highest Actual Deferral Ratio. If a lesser
reduction would enable the arrangement to satisfy the Actual
Deferral Percentage Test, only this lesser reduction shall be
made. This process shall be repeated until the cash or
deferred arrangement satisfies the Actual Deferral Percentage
Test. The highest Actual Deferral Ratio remaining under the
Plan after leveling is the highest permitted Actual Deferral
Ratio.
1.30 EXCESS DEFERRALS. The term Excess Deferrals means those Elective
Deferral Contributions that are includible in a Participant's gross
income under section 402(g) of the Code to the extent such
Participant's Elective Deferral Contributions for a taxable year exceed
the dollar limitation under such Code section.
1.31 FAIL-SAFE CONTRIBUTION. The term Fail-Safe Contribution means a
Nonelective Contribution, designated by the Employer at the time of
contribution as a Qualified Nonelective Contribution, which is
contributed to the Plan solely for the purposes of satisfying either
the Actual Deferral Percentage Test or
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the Actual Contribution Percentage Test and is made in accordance with
the provisions of Article IV of this Plan.
1.32 FAMILY MEMBER. The term Family Member means, with respect to any
Employee, such Employee's Spouse and lineal ascendants and descendants
and the spouses of such lineal ascendants and descendants.
1.33 FIDUCIARY. The term Fiduciary means any, or all, of the following, as
applicable:
(A) Any Person who exercises any discretionary authority or
control respecting the management of the Plan or its assets;
or
(B) Any Person who renders investment advice for a fee or other
compensation, direct or indirect, respecting any monies or
other property of the Plan or has authority or responsibility
to do so; or
(C) Any Person who has discretionary authority or responsibility
in the administration of the Plan; or
(D) Any Person who has been designated by a Named Fiduciary
pursuant to authority granted by the Plan, who acts to carry
out a fiduciary responsibility, subject to any exceptions
granted directly or indirectly by ERISA.
1.34 FORFEITURE. The term Forfeiture means the amount, if any, by which the
value of a Participant's Account exceeds his Vested Interest following
such Participant's Termination of Employment, and at the time specified
in Section 9.1.
1.35 HIGHLY COMPENSATED EMPLOYEE. The term Highly Compensated Employee means
any Highly Compensated Active Employee or Highly Compensated Former
Employee as further defined herein.
For purposes of the determination of Highly Compensated Employees, the
term Compensation means Compensation as defined in Article V of the
Plan, but includes the amount of any elective contributions made by the
Employer on the Employee's behalf to a cafeteria plan established in
accordance with the provisions of Code section 125, a qualified cash or
deferred arrangement in accordance with the provisions of Code section
402(e)(3), a simplified employee pension plan in accordance with the
provisions of Code section 402(h), or a tax sheltered annuity plan
maintained in accordance with the provisions of Code section 403(b).
A "Highly Compensated Active Employee" is any Employee who performs
services for the Employer during the current Plan Year and who, during
the current Plan Year or the 12-month period immediately preceding such
Plan Year:
(A) Owns (or is considered to own within the meaning of section
318 of the Code, as modified by section 416(i)(1)(B)(iii) of
the Code), more than 5% of the outstanding stock of the
Employer or stock possessing more than 5% of the total
combined voting power of all stock of the Employer, or, if the
Employer is other than a corporation, owns more than 5% of the
capital or profits interest in the Employer. The determination
of 5% ownership shall be made separately for each member of a
controlled group of corporations (as defined in Code section
414(b)), or of a group of trades or businesses (whether or not
incorporated) that are under common control (as defined in
Code section 414(c)), or of an affiliated service group (as
defined in Code section 414(m)); or
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(B) Receives Compensation in excess of $75,000 multiplied by the
applicable cost-of-living adjustment factor prescribed under
Code section 415(d) and then prorated in the case of a short
Plan Year; or
(C) Receives Compensation in excess of $50,000, as adjusted for
cost-of-living increases in accordance with Code section
415(d) and then prorated in the case of a short Plan Year, and
is in the top 20% of Employees ranked by Compensation; or
(D) Is, at any time, an officer of the Employer and receives
Compensation in excess of 50% of the amount in effect under
Code section 415(b)(1)(A) for the applicable period.
If no officer receives Compensation in excess of the amount
specified above, the highest paid officer for the applicable
period shall be a Highly Compensated Employee.
In no event if there are more than 500 Employees, shall more
than 50 Employees or, if there are less than 500 Employees,
shall the greater of three Employees or 10% of all Employees,
be taken into account as officers.
In determining both the top 20% of Employees ranked by Compensation for
purposes of paragraph (C) above, and officers of the Employer for
purposes of paragraph (D) above, Employees who have not completed six
months of Service by the end of the applicable period, Employees who
normally work less than 17-1/2 hours per week, Employees who normally
work less than six months during a year, Employees who have not
attained 21, and nonresident aliens who receive no earned income from
U.S. sources shall be excluded.
Also excluded under the above paragraph are Employees who are covered
by an agreement which the Secretary of Labor finds to be a collective
bargaining agreement. Such Employees will be excluded only if
retirement benefits were the subject of good faith bargaining, 90% of
the Employees of the Employer are covered by the agreement, and the
Plan covers only Employees who are not covered by the agreement.
Notwithstanding the above provisions, an Employee, other than a 5%
owner as described in paragraph (A) above who was not highly
compensated during the 12-month period immediately preceding the
current Plan Year will not be considered to be a Highly Compensated
Employee in the current Plan Year unless such Employee is one of the
top 100 Employees ranked by Compensation for the current Plan Year.
A "Highly Compensated Former Employee" is any former Employee who
separated from Service with the Employer in a Plan Year preceding the
current Plan Year and was a Highly Compensated Active Employee in
either:
(A) the Plan Year in which his separation from Service occurred;
or
(B) any Plan Year ending on or after such former Employee's 55th
birthday.
A former Employee is an Employee who performs no services for the
Employer during a Plan Year (for example, by reason of a leave of
absence).
The "look back year" for the purpose of determining Highly Compensated
Employees is the 12-month period immediately preceding the
determination year or, if the Employer elects, the calendar year ending
with or within the determination year. Alternatively, instead of using
the preceding definition of Highly Compensated Employee in any year,
the Administrator may apply the simplified definition described in
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Code Section 414(q)(12), provided that at all times during that year
the Employer maintains significant business activities in at least two
significantly separate geographic locations.
1.36 INACTIVE PARTICIPANT. The term Inactive Participant means any
Participant who does not currently meet the requirements to be an
Active Participant due to a suspension of the performance of duties for
the Employer.
In addition, a Participant who ceases to meet the eligibility
requirements in accordance with Section 3.1 shall be considered an
Inactive Participant.
1.37 LATE RETIREMENT DATE. The term Late Retirement Date means the first day
of the month coinciding with or next following the date a Participant
is separated from Service with the Employer after his Normal Retirement
Age, for any reason other than death.
1.38 LEASED EMPLOYEE. The term Leased Employee means any person (other than
an Employee of the recipient) who, pursuant to an agreement between the
recipient and any other person ("leasing organization"), has performed
services for the recipient (or for the Employer and related persons
determined in accordance with Code section 414(n)(6)) on a
substantially full-time basis for a period of at least one year, and
such services are of a type historically performed by employees in the
business field of the recipient Employer.
1.39 MATCHING CONTRIBUTIONS. The term Matching Contributions means
contributions made by the Employer to the Plan on behalf of a
Participant on account of either Elective Deferral Contributions, if
any, or required contributions, if any.
1.40 NAMED FIDUCIARY. The term Named Fiduciary means the Plan Administrator,
the Trustee and any other Fiduciary designated in writing by the
Employer, and any successor thereto.
1.41 NONELECTIVE CONTRIBUTIONS. The term Nonelective Contributions means
contributions made by the Employer (other than Matching Contributions)
that the Participant may not elect to have paid in cash or other
benefits instead of being contributed to the Plan.
1.42 NONHIGHLY COMPENSATED EMPLOYEE. The term Nonhighly Compensated Employee
means an Employee who is not a Highly Compensated Employee.
1.43 NORMAL RETIREMENT AGE. The term Normal Retirement Age means the date
the Participant attains age 65.
1.44 NORMAL RETIREMENT DATE. The term Normal Retirement Date means the first
day of the month coinciding with or next following the date a
Participant attains his Normal Retirement Age.
1.45 PARTICIPANT. The term Participant means any Employee of the Employer,
who is or becomes eligible to participate under this Plan in accordance
with its provisions and shall include an Active Participant and an
Inactive Participant.
1.46 PARTICIPANT'S ACCOUNT. The term Participant's Account means the sum of
the following sub-accounts held on behalf of each Participant:
o Elective Deferral Contributions, if any, and earnings thereon.
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o Matching Contributions, if any, and earnings thereon.
o Qualified Matching Contributions, if any, and earnings
thereon.
o Qualified Nonelective Contributions, if any, and earnings
thereon.
o Rollover Contributions, if any, and earnings thereon.
A Participant's Account shall be invested in accordance with the rules
established by the Plan Administrator, which shall be applied in a
consistent and nondiscriminatory manner.
1.47 PARTICIPANT'S EMPLOYER STOCK ACCOUNT. The term Participant's Employer
Stock Account means that portion, if any, of the Participant's Account
which is invested in shares of the Employer's stock. Such Participant's
Employer Stock Account shall be credited with dividends paid, if any.
Such Participant's Employer Stock Account will be valued on the last
day of each month that the public exchange over which the Employer's
stock is traded is open for unrestricted trading.
Amounts which are to be invested in the Participant's Employer Stock
Account may be invested in any short-term account prior to actual
investment in the Participant's Employer Stock Account.
The Trustee will vote the shares of the Employer's stock invested in
the Participant's Employer Stock Account.
1.48 PERSON. The term Person means any natural person, partnership,
corporation, trust or estate.
1.49 PLAN. The term Plan means Employees' Retirement Savings Plan of
Provident Bank of Maryland, the terms of which are set forth herein as
it may be amended from time to time.
1.50 PLAN ADMINISTRATOR. The terms Plan Administrator and Administrator are
used interchangeably throughout the Plan and shall mean the Employer.
1.51 PLAN YEAR. The term Plan Year means the 12-month period commencing on
January 1 and ending on the following December 31.
1.52 QUALIFIED MATCHING CONTRIBUTIONS. The term Qualified Matching
Contributions shall mean Matching Contributions which are subject to
the distribution and nonforfeitability requirements under section
401(k) of the Code when made.
1.53 QUALIFIED NONELECTIVE CONTRIBUTIONS. The term Qualified Nonelective
Contributions shall mean Nonelective Contributions which are subject to
the distribution and nonforfeitability requirements under section
401(k) of the Code when made.
1.54 ROLLOVER CONTRIBUTION. The term Rollover Contribution means an amount
representing all or part of a distribution from a pension or
profit-sharing plan meeting the requirements of Code section 401(a)
that is eligible for rollover to this Plan in accordance with the
requirements set forth in Code section 402 or Code section 408(d)(3),
whichever is applicable.
1.55 TERMINATION OF EMPLOYMENT. The term Termination of Employment means a
severance of the Employer-Employee relationship which occurs prior to a
Participant's Normal Retirement Age for any reason other than Early
Retirement, Disability or death.
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1.56 TRUST. The term Trust means the trust agreement entered into by the
Employer, the Administrator and the Trustee.
1.57 TRUSTEE. The term Trustee means one or more persons collectively
appointed and acting under the trust agreement, and any successor
thereto.
1.58 VESTED INTEREST. The term Vested Interest on any date means the
nonforfeitable right to an immediate or deferred benefit in the amount
which is equal to the following:
(A) the value on that date of that portion of the Participant's
Account that is attributable to the following contributions:
o Elective Deferral Contributions, if any
o Rollover Contributions, if any
o Qualified Matching Contributions, if any
o Qualified Nonelective Contributions, if any
(B) plus the value on that date of that portion of the
Participant's Account that is attributable to and derived
from:
o Matching Contributions, if any
Such contributions pursuant to Subsection (B), plus the
earnings thereon, shall be, at any relevant time, a part of
the Participant's Vested Interest equal to an amount ("X")
determined by the following formula:
X = P(AB + D) - D
For the purposes of applying this formula:
P = The Participant's Vesting Percentage at the
relevant time.
AB = The account balance attributable to such
contributions, plus the earnings thereon, at
the relevant time.
D = The amount of the distribution.
1.59 VESTING PERCENTAGE. The term Vesting Percentage means the percentage
used to determine a Participant's Vested Interest in contributions made
by the Employer, plus the earnings thereon, credited to his
Participant's Account that are not 100% immediately vested. The Vesting
Percentage for each Participant shall be determined in accordance with
the following schedule based on Years of Service with the Employer:
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Years of Service Vesting Percentage
---------------- ------------------
Less than 1 0%
1 but less than 2 20%
2 but less than 3 40%
3 but less than 4 60%
4 but less than 5 80%
5 or more 100%
However, if an Active Participant dies prior to attaining his Normal
Retirement Age, his Vesting Percentage shall be 100%. Notwithstanding
anything to the contrary, any Participant who was eligible to
participate in the Citizens Plan on August 22, 1997 (whether or not the
Participant was enrolled in the Citizens Plan on that date) shall have
a Vesting Percentage equal to 100% at all times on and after October 1,
1997.
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ARTICLE II
SERVICE
2.1 SERVICE. The term Service means active employment with the Employer as
an Employee. For purposes of determining Service, employment with any
company which is under common control with the Employer as specified in
section 414 of the Internal Revenue Code shall be treated as employment
with the Employer.
2.2 ABSENCE FROM EMPLOYMENT. Absence from employment on account of a leave
of absence authorized by the Employer pursuant to the Employer's
established leave policy will be counted as employment with the
Employer provided that such leave of absence is of not more than two
years' duration. Absence from employment on account of active duty with
the Armed Forces of the United States will be counted as employment
with the Employer. If the Employee does not return to active employment
with the Employer, his Service will be deemed to have ceased on the
date the Administrator receives notice that such Employee will not
return to the active Service of the Employer. The Employer's leave
policy shall be applied in a uniform and nondiscriminatory manner to
all Participants under similar circumstances.
2.3 HOUR OF SERVICE. The term Hour of Service means a period of Service
during which an Employee shall be credited with one Hour of Service as
described in (A), (B), (C), and (D) below:
(A) Each hour for which an Employee is directly or indirectly
paid, or entitled to payment, by the Employer for the
performance of duties. These hours shall be credited to the
Employee for the computation period or periods in which the
duties are performed; and
(B) Each hour for which an Employee is directly or indirectly
paid, or entitled to payment, by the Employer for reasons
(such as vacation, sickness or Disability) other than for the
performance of duties. Hours under this Subsection shall be
calculated and credited pursuant to section 2530.200b-2 of the
Department of Labor Regulations which are incorporated herein
by this reference; and
(C) Each hour for which back pay, irrespective of mitigation of
damages, has been either awarded or agreed to by the Employer.
These hours shall be credited to the Employee for the
computation period or periods to which the award or agreement
pertains rather than the computation period in which the
award, agreement or payment is made; and
(D) Each hour for which an Employee is on an authorized unpaid
leave (such as service with the Armed Forces, jury duty,
educational leave). These hours shall be credited to the
Employee for the computation period or periods in which such
authorized leave takes place. However, no more than 501 hours
shall be credited under this subparagraph (D).
Hours of Service will be credited for employment with other members of
an affiliated service group (under Internal Revenue Code section
414(m)), a controlled group of corporations (under Internal Revenue
Code section 414(b)), or a group of trades or businesses under common
control (under Internal Revenue Code section 414(c)), of which the
adopting employer is a member. Hours of Service will also be credited
for any individual considered an Employee under Internal Revenue Code
section 414(n).
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Solely for purposes of determining whether a One-Year Break in Service,
as defined in Section 2.4, for participation and vesting purposes has
occurred in a computation period, an individual who is absent from work
for maternity or paternity reasons shall receive credit for the Hours
of Service which would otherwise have been credited to such individual
but for such absence, or in any case in which such hours cannot be
determined, eight Hours of Service per day of such absence. For
purposes of this paragraph, an absence from work for maternity or
paternity reasons means an absence (1) by reason of the pregnancy of
the individual, (2) by reason of a birth of a child of the individual,
(3) by reason of the placement of a child with the individual in
connection with the adoption of such child by such individual, or (4)
for purposes of caring for such child for a period beginning
immediately following such birth or placement. The Hours of Service
credited under this paragraph shall be credited (1) in the computation
period in which the absence begins if the crediting is necessary to
prevent a Break in Service in that period, or (2) in all other cases,
in the following computation period.
2.4 ONE-YEAR BREAK IN SERVICE. Except as provided below regarding
eligibility, the term One-Year Break in Service means any Plan Year
during which an Employee fails to complete more than 500 Hours of
Service.
2.5 DETERMINING ELIGIBILITY. For purposes of determining eligibility, the
required six months of service shall begin with the date on which an
Employee's employment commenced. The employment commencement date is
the date on which the Employee first performs an Hour of Service for
the Employer maintaining the Plan. Effective as of October 1, 1997,
service for eligibility purposes shall include service with Citizens
Savings Bank, F.S.B.
The eligibility requirement specified in Article III is six months of
Service with 500 Hours of Service.
2.6 DETERMINING VESTING PERCENTAGE. Vesting credit shall be given for each
Year of Service except those periods specified in Section 2.7.
If a Participant completes less than 1,000 Hours of Service during a
Plan Year while remaining in the Service of the Employer, his Vesting
Percentage shall not be increased for such Plan Year. However, at such
time as the Participant again completes at least 1,000 Hours of Service
in any subsequent Plan Year, his Vesting Percentage shall then take
into account all Year(s) of Service with the Employer except those
specified in Section 2.7.
If an individual who ceases to be an Employee and is subsequently
rehired as an Employee enrolls (or re-enrolls) in the Plan, upon his
participation (or subsequent participation) his Vesting Percentage
shall then take into account all Year(s) of Service except those
specified in Section 2.7.
2.7 YEAR(S) OF SERVICE. The term Year(s) of Service means a
12-consecutive-month period during which an Employee has completed at
least 1,000 Hours of Service.
In computing Years of Service and Breaks in Service for vesting, the
12-consecutive-month 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.
For purposes of the Vesting Computation Period, if any Plan Year is
less than 12-consecutive months, and if a Participant would have been
credited with a Year of Service during the 12-consecutive-month period
beginning on the first day of the short Plan Year, then the Participant
will receive a Year of Service for the
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short Plan Year. The Participant receives credit for an additional Year
of Service if the Participant would have been credited with a Year of
Service for the Plan Year immediately following the short Plan Year.
In computing Years of Service and Breaks in Service for vesting,
employment by Citizens Savings Bank, F.S.B. prior to August 22, 1997
shall be counted under this Plan as though it were employment by the
Employer and the Years of Service for vesting purposes credited under
this Plan for periods prior to August 22, 1997 to any participant in
the Citizens Plan shall not be less than the years of vesting service
credited to that participant as of August 22, 1997 under the terms of
the Citizens Plan as then in effect.
2.8 EXCLUDED YEARS OF SERVICE. In determining the Vesting Percentage of an
Employee, all Years of Service with the Employer shall be taken into
account except:
o Plan Years during which a Participant did not complete at
least 1,000 Hours of Service.
o Years of Service prior to a Break in Service if:
o the Participant had no vested interest in Employer
Contributions at the time the break occurred, and
o the Participant has incurred five consecutive
One-Year Breaks in Service, and
o the number of consecutive One-Year Breaks in Service
is at least as great as the Years of Service before
the break occurred.
2.9 PREDECESSOR ORGANIZATION SERVICE. For purposes of this Article, Service
with a predecessor organization of the Employer shall be treated as
Service with the Employer in any case in which the Employer maintains
the Plan of such predecessor organization.
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ARTICLE III
ELIGIBILITY, ENROLLMENT AND PARTICIPATION
3.1 ELIGIBILITY. Each Employee who was a Participant prior to the Effective
Date and who is in the Service of the Employer on the Effective Date
shall continue as a Participant in the Plan. Each other Employee shall
be eligible to become a Participant as of the Effective Date or the
Entry Date when he first meets the following requirement(s):
o Six months of Service with 500 Hours of Service
o All Employees excluding leased employees and/or Employees
classified for payroll purposes as "on-call", "peak-time",
"summer help", "intern", "work-study", "temporary", or
Directors.
Any Employee who, on September 30, 1997, was a participant in the
Citizens Plan and who does not qualify as an eligible Employee on
October 1, 1997 under the foregoing requirements of this Section 3.1,
shall be deemed to be an Inactive Participant as of October 1, 1997.
3.2 ENROLLMENT AND PARTICIPATION. Each eligible Employee may enroll as of
his Entry Date by completing and delivering to the Administrator an
enrollment form. He will then become a Participant as of his Entry
Date.
3.3 RE-EMPLOYED EMPLOYEE. In the case of an individual who ceases to be an
Employee and is subsequently rehired as an Employee, the following
provisions shall apply in determining his eligibility to again
participate in the Plan:
(A) If the Employee had met the eligibility requirement(s)
specified in Section 3.1 prior to his separation from
employment, he shall become an Active Participant in the Plan
as of the date he is re-employed, after completing the
applicable form(s), in accordance with Section 3.2.
(B) If the Employee had not met the eligibility requirement(s)
specified in Section 3.1 prior to his separation from
employment, he shall be eligible to participate in the Plan on
the first Entry Date following his fulfillment of such
eligibility requirement(s).
For purposes of this Subsection, all Years of Service with the
Employer, including any Years of Service prior to any Breaks in
Service, shall be taken into account.
3.4 ELIGIBLE CLASS. In the event a Participant becomes ineligible to
participate because he is no longer a member of an eligible class of
Employees, such Employee shall participate immediately upon his return
to an eligible class of Employees.
In the event an Employee who is not a member of the eligible class of
Employees becomes a member of the eligible class, such Employee shall
participate immediately if such Employee has satisfied the minimum
service requirement and would have previously become a Participant had
he been in the eligible class.
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ARTICLE IV
CONTRIBUTIONS
4.1 ELECTIVE DEFERRAL CONTRIBUTIONS. Each Active Participant may enter into
a written Enrollment Form with the Employer in an amount equal to not
less than 1% nor more than 16% of his Compensation for the Contribution
Period. Each Active Participant that is determined to be a Highly
Compensated Employee is limited to contributing an amount equal to not
less than 1% nor more than 8% of his Compensation for the Contribution
Period. In consideration of such agreement, the Employer will make a
contribution for each Contribution Period on behalf of the Participant
in an amount equal to the total amount by which the Participant's
Compensation from the Employer was deferred during the Contribution
Period pursuant to the Enrollment Form then in effect. Elective
Deferral Contributions shall be paid by the Employer to the Trust not
less frequently than semi-monthly, but in no event later than 90 days
following the date the amounts were deferred.
Enrollment Forms shall be governed by the following provisions:
(A) Amounts contributed pursuant to an Enrollment Form shall be
100% vested and non-forfeitable at all times.
(B) No Participant shall be permitted to have Elective Deferral
Contributions made under this Plan, or any other qualified
plan maintained by the Employer, during any taxable year, in
excess of the dollar limitation contained in section 402(g) of
the Code in effect at the beginning of the taxable year.
However, this $7,000 limit shall not apply to certain amounts
deferred in 1987 that were attributable to Service performed
in 1986.
(C) Amounts contributed pursuant to an Enrollment Form, which are
not in excess of the limit described in Subsection (B) above,
shall be subject to the Limitations on Allocations in
accordance with Article V. Elective Deferral Contributions
that are in excess of the limit described in Subsection (B)
shall also be subject to the Limitations on Allocations in
accordance with Article V.
(D) An Enrollment Form may be changed by a Participant four times
during the Plan Year, on January 1, April 1, July 1 and
October 1, by filing written notice thereof with the
Administrator. Such notice shall be effective, and the
Enrollment Form shall be changed on the date specified in such
notice or as soon as administratively possible, which date
must be at least 15 days after such notice is filed.
(E) Elective Deferral Contributions shall be subject to the Actual
Deferral Percentage Test limitations.
(F) Correction of Excess Contributions.
(1) If the Employer determines prior to the end of the
Plan Year that the Actual Deferral Percentage Test
may not be satisfied, the Employer may take the
corrective action specified in Section 4.10 of the
Plan.
(2) If, after the end of the Plan Year, the Employer
determines that the Plan will fail the Actual
Deferral Percentage Test, the Employer shall take the
corrective action specified in Section
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4.12 or Section 4.15 of the Plan, or a combination of
such corrective actions, in order to ensure that the
Plan does not fail the Actual Deferral Percentage
Test for the Plan Year being tested.
4.2 MATCHING CONTRIBUTIONS. The Employer shall make a Matching Contribution
in an amount equal to $.75 for each $1.00 by which a Participant defers
his Compensation pursuant to a Salary Deferral Agreement up to a
maximum Salary Deferral of 6% of his Compensation, subject to the
Limitations on Allocations specified in Article V. The Matching
Contribution shall be paid to the Trust not less frequently than
semi-monthly. Matching Contributions shall be subject to the Actual
Contribution Percentage Test. The Employer may designate at the time of
contribution that all or a portion of such Matching Contributions be
treated as Qualified Matching Contributions.
If the Employer determines prior to the end of the Plan Year that the
Actual Contribution Percentage Test may not be satisfied, the Employer
may take the corrective action specified in Section 4.11 of the Plan.
If, after the end of the Plan Year, the Employer determines that the
Plan will fail the Actual Contribution Percentage Test, the Employer
shall take the corrective action specified in Section 4.13 or Section
4.15 of the Plan, or a combination of such corrective actions, in order
to ensure that the Plan does not fail the Actual Contribution
Percentage Test for the Plan Year being tested.
Such Matching Contribution shall be allocated as of the last day of the
Contribution Period for which such contribution is made to each
Participant who is an Active Participant as of any day of the
Contribution Period.
Notwithstanding the above provision, an allocation will be made on
behalf of a Participant who dies, retires, or becomes disabled during
the Contribution Period.
4.3 FAIL-SAFE CONTRIBUTION. The Employer reserves the right to make a
discretionary Nonelective Contribution to the Plan for any Plan Year,
if the Employer determines that such a contribution is necessary to
ensure that either the Actual Deferral Percentage Test or the Actual
Contribution Percentage Test will be satisfied for that Plan Year. Such
amount shall be designated by the Employer at the time of contribution
as a Qualified Nonelective Contribution and shall be known as a
Fail-Safe Contribution.
The Fail-Safe Contribution shall be made on behalf of all eligible
non-Highly Compensated Employees who are Participants and who are
considered under the Actual Deferral Percentage Test or the Actual
Contribution Percentage Test. This contribution shall be allocated to
the Participant's Account of each such Participant in an amount equal
to a fixed percentage of such Participant's Compensation. The fixed
percentage shall be equal to the minimum fixed percentage necessary to
be contributed by the Employer on behalf of each eligible non-Highly
Compensated Employee who is a Participant so that the Actual Deferral
Percentage Test or the Actual Contribution Percentage Test is
satisfied.
The Fail-Safe Contribution for any Plan Year as determined above shall
be paid to the Trust at the end of the Plan Year, or as soon as
possible on or after the last day of such Plan Year, but in no event
later than the date which is prescribed by law for filing the
Employer's income tax return, including any extensions thereof.
4.4 PROFITS NOT REQUIRED. Contributions to this Plan shall not be precluded
because the Employer does not have Considered Net Profits.
Notwithstanding the existence of Considered Net Profits, the Employer
may determine in its sole discretion that it will make no contributions
for such Plan Year.
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4.5 PAYMENT OF EXPENSES. The Employer may contribute to the Plan the amount
necessary, to pay any applicable expense charges and administration
charges. In lieu of the Employer's contributing the amount necessary to
pay such charges, these expenses may be paid from the Trust fund.
4.6 ALLOCATION OF FORFEITURES. The contributions made by the Employer shall
be reduced by any Forfeitures available as an Employer credit in
accordance with Section 9.3.
4.7 CREDITING OF ELECTIVE DEFERRAL AND OTHER CONTRIBUTIONS. Elective
Deferral Contributions and other contributions made by the Employer
shall be credited to the Participant Account of each Participant for
whom such contributions are made, in accordance with the provisions of
Article XIII.
4.8 ROLLOVER CONTRIBUTIONS. The Plan may receive Rollover Contributions on
behalf of an Employee. Receipt of a Rollover Contribution shall be
subject to the approval of the Plan Administrator. Before approving the
receipt of a Rollover Contribution, the Plan Administrator may request
any documents or other information from an Employee or opinions of
counsel which the Plan Administrator deems necessary to establish that
such amount is a Rollover Contribution.
A Participant's Account shall be maintained on behalf of each Employee
from whom Rollover Contributions are received, regardless of such
Employee's eligibility to participate in the Plan in accordance with
the requirements of Article III, and Rollover Contributions may be
invested in any manner authorized under the provisions of this Plan.
Rollover Contributions received from an Employee who is not otherwise
eligible to participate in the Plan may not be withdrawn in accordance
with the provisions of Article X until such Employee becomes a
Participant, except that such Employee may receive a distribution of
his Participant's Account if his Termination of Employment occurs.
Rollover Contributions shall be credited to the Participant's Account
and may be invested in any manner authorized under the provisions of
this Plan.
4.9 SUSPENSION OF ELECTIVE DEFERRAL CONTRIBUTIONS. The following provisions
shall apply with respect to suspension of Elective Deferral
Contributions.
(A) Elective Suspension. An Active Participant may elect to
suspend his Enrollment Form for Elective Deferral
Contributions by filing a written notice thereof with the
Administrator at any time. The Enrollment Form shall be
suspended on the date specified in such notice, which date
must be at least 15 days after such notice is filed. The
notice shall specify the period for which such suspension
shall be effective. Such period may extend indefinitely.
(B) Suspension for Leave. A Participant who is absent from
employment on account of an authorized leave of absence or
military leave shall have his Enrollment Form suspended during
such leave. Such suspension of contributions shall be
effective on the date payment of Compensation by the Employer
to him ceases, and shall remain in effect until payment of
Compensation is resumed.
(C) Withdrawal Suspension. An Active Participant who elects a
serious financial hardship withdrawal in accordance with
Article X will have his Enrollment Form suspended on the date
such election becomes effective, for a period of 12 months.
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(D) Non-Elective Suspension. An Active Participant who ceases to
meet the eligibility requirements as specified in Section 3.1
but who remains in the employ of the Employer, shall have his
Enrollment Form suspended, effective as of the date he ceases
to meet the eligibility requirements. Such suspension shall
remain in effect until he again meets such eligibility
requirements.
The Participant may elect to reactivate his Enrollment Form for
Elective Deferral Contributions by filing a written notice thereof with
the Plan Administrator. The Enrollment Form shall be reactivated on the
first day of the month following the expiration of the suspension
period described above.
4.10 LIMITATION OF ELECTIVE DEFERRAL CONTRIBUTIONS. If the Employer
determines prior to the end of the Plan Year that the Plan may not
satisfy the Actual Deferral Percentage Test for the Plan Year, the
Employer may require that the amount of Elective Deferral Contributions
being allocated to the accounts of Highly Compensated Employees be
reduced to the extent necessary to prevent Excess Contributions from
being made to the Plan.
Although the Employer may reduce the amount of Elective Deferral
Contributions that may be allocated to the Participant's Account of
Highly Compensated Employees, the affected Employees shall continue to
participate in the Plan. When the situation that resulted in the
reduction of Elective Deferral Contributions ceases to exist, the
Employer shall reinstate the amount of Elective Deferral Contributions
elected by the Participant in the Enrollment Form to the fullest extent
possible for all affected Participants in a nondiscriminatory manner.
4.11 LIMITATION OF MATCHING CONTRIBUTIONS. If the Employer determines prior
to the end of the Plan Year that the Plan may not satisfy the Actual
Contribution Percentage Test for the Plan Year, the Employer may
require that the amount of Matching Contributions being allocated to
the Accounts of Highly Compensated Employees be reduced to the extent
necessary to prevent Excess Aggregate Contributions from being made to
the Plan.
4.12 CORRECTIVE DISTRIBUTION OF EXCESS CONTRIBUTIONS.
(A) The Employer may distribute Excess Contributions (and income
allocable thereto) to the appropriate Highly Compensated
Employee after the close of the Plan Year in which the Excess
Contribution arose and within 12 months after the close of
that Plan Year.
(B) The income allocable to Excess Contributions is equal to the
sum of the allocable gain or loss for the Plan Year and shall
be determined as follows:
(1) The income allocable to Excess Contributions is
determined by multiplying the income for the Plan
Year allocable to Deferral Percentage Amounts by a
fraction. The numerator of the fraction is the Excess
Contributions attributable to the Employee for the
Plan Year. The denominator of the fraction is equal
to the sum of (A) the total account balance of the
Employee attributable to Deferral Percentage Amounts
as of the beginning of the Plan Year, plus (B) the
Employee's Deferral Percentage Amounts for the Plan
Year.
(2) The allocable gain or loss for the period between the
end of the Plan Year and the date of distribution
shall not be taken into consideration when
determining the income allocable to Excess
Contributions.
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(C) The amount of Excess Contributions to be distributed with
respect to an Employee for a Plan Year shall be reduced by
Excess Deferrals previously distributed to the Employee for
the Employee's taxable year ending with or within the Plan
Year.
(D) The distribution of Excess Contributions made to the Family
Members of a family group that was combined for purposes of
determining a Highly Compensated Employee's Actual Deferral
Ratio shall be allocated among the Family Members in
proportion to the Elective Deferral Contribution (including
any amounts required to be taken into account under
subparagraphs (B)(1) and (B)(2) of Section 1.8 of the Plan) of
each Family Member that is combined to determine the Actual
Deferral Ratio.
(E) A corrective distribution of Excess Contributions (and income)
shall be made without regard to any Participant or spousal
consent or any notice otherwise required under sections
411(a)(11) and 417 of the Code.
(F) Any Matching Contributions or Qualified Matching Contributions
that relate to the Excess Contribution being distributed shall
be forfeited. The Matching Contribution so forfeited shall be
the Employee's nonvested portion of the Matching Contributions
under the Plan for the Plan Year in which the Excess
Contribution arose. Forfeitures of Matching Contributions or
Qualified Matching Contributions that relate to Excess
Contributions shall be applied to reduce Employer
contributions or pay Plan expenses.
(G) In no case may the amount of Excess Contributions to be
distributed for a Plan Year with respect to any Highly
Compensated Employee exceed the amount of Elective Deferral
Contributions made on behalf of the Highly Compensated
Employee for the Plan Year.
(H) In the event of a complete termination of the Plan during the
Plan Year in which an Excess Contribution arose, the
corrective distribution must be made as soon as
administratively feasible after the date of the termination of
the Plan, but in no event later than 12 months after the date
of termination.
(I) Any distribution of less than the entire amount of Excess
Contributions with respect to any Highly Compensated Employee
shall be treated as a pro-rata distribution of Excess
Contributions and allocable income or loss.
4.13 CORRECTION OF EXCESS AGGREGATE CONTRIBUTIONS.
(A) Excess Aggregate Contributions may be corrected using one of
the methods described in subparagraphs (1) and (2) below. The
Employer shall elect the method of correction to be used and
shall apply such method to the correction of the Excess Annual
Contribution for the Plan Year.
(1) Method 1:
(a) The Excess Aggregate Contribution (and
income) shall be forfeited, if forfeitable,
or distributed on a pro-rata basis from the
Employee's Account attributable to
Contribution Percentage Amounts. The
distribution or forfeiture shall be made
after the close of the Plan Year in which
the Excess Aggregate Contribution arose and
within 12 months after the close of that
Plan Year. Whether an amount is
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distributed or forfeited under this
subparagraph (a) shall be determined based
on the rules set forth in paragraph (B) of
this section.
(2) Method 2:
(a) Any Matching Contributions (and Qualified
Matching Contributions, to the extent not
taken into account for purposes of the
Actual Deferral Percentage Test), and income
allocable thereto, shall be forfeited, if
forfeitable, or distributed to the
appropriate Highly Compensated Employee. The
distribution or forfeiture shall be made
after the close of the Plan Year in which
the Excess Aggregate Contribution arose and
within 12 months after the close of that
Plan Year. Whether an amount is forfeited or
distributed shall be determined under the
rules set forth in paragraph (B) of this
section.
(B) Determination of Distributable and Forfeitable Amounts. For
purposes of paragraph (A) of this section:
(1) An Excess Aggregate Contribution attributable to
vested Matching Contributions, Qualified Matching
Contributions (and, if applicable, Qualified
Nonelective Contributions and Elective Deferral
Contributions) shall be distributed to the
appropriate Highly Compensated Employee in accordance
with the terms of this section.
(2) An Excess Aggregate Contribution attributable to an
Employee's nonvested Matching Contributions shall be
forfeited in accordance with the terms of this
section.
(3) A Highly Compensated Employee's vested and nonvested
interest in Matching Contributions (and income
allocable thereto) attributable to Excess Aggregate
Contributions shall be based on the proportion that
represents the Employee's Vested Interest in Matching
Contributions under the Plan for the Plan Year in
which the Excess Aggregate Contribution arose.
(C) Forfeited Excess Aggregate Contributions. In accordance with
paragraph (B) of this section, the amount that represents the
Employee's nonvested interest in Matching Contributions (and
income), and is attributable to Excess Aggregate
Contributions, shall be forfeited and, as such, shall be
applied to reduce Employer contributions or pay expenses.
(D) Income Allocable to Excess Aggregate Contributions. For
purposes of this section, the income allocable to Excess
Aggregate Contributions is equal to the sum of the allocable
gain or loss for the Plan Year, and shall be determined as
follows:
(1) The income allocable to Excess Aggregate
Contributions is determined by multiplying the income
for the Plan Year allocable to Contribution
Percentage Amounts by a fraction. The numerator of
the fraction is the Excess Aggregate Contributions
for the Employee for the Plan Year. The denominator
of the fraction is equal to the sum of (A) the total
account balance of the Employee attributable to
Contribution Percentage Amounts as of the beginning
of the Plan Year, plus (B) the Contribution
Percentage Amounts for the Plan Year.
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<PAGE>
(2) The allocable gain or loss for the period between the
end of the Plan Year and the date of correction shall
not be taken into consideration when determining the
income allocable to Excess Aggregate Contributions.
(E) The distribution of Excess Aggregate Contributions (and
income) made to Family Members of a family group that was
combined for purposes of determining a Highly Compensated
Employee's Actual Contribution Ratio shall be allocated among
Family Members in proportion to the Contribution Percentage
Amounts (including any amounts required to be taken into
account under subparagraphs (B)(1) and (B)(2) of Section 1.5
of the Plan) of each Family Member that are combined to
determine the Actual Contribution Ratio.
(F) In the event of a complete termination of the Plan during the
Plan Year in which an Excess Aggregate Contribution arose, the
corrective distribution or forfeiture shall be made as soon as
administratively feasible after the date of termination of the
Plan, but in no event later than 12 months after the date of
termination.
(G) If the entire account balance of a Highly Compensated Employee
is distributed during the Plan Year in which the Excess
Aggregate Contribution arose, the distribution shall be deemed
to have been a corrective distribution of Excess Aggregate
Contributions (and income) to the extent that a corrective
distribution would otherwise have been required.
(H) Any distribution of less than the entire amount of Excess
Aggregate Contributions (and income) shall be treated as a
pro-rata distribution of Excess Aggregate Contributions and
allocable income or loss.
(I) In no case may the amount of Excess Aggregate Contributions
distributed to a Highly Compensated Employee exceed the amount
of Matching Contributions made on behalf of the Highly
Compensated Employee for the Plan Year.
(J) A distribution of Excess Aggregate Contributions (and income)
shall be made under this section without regard to any notice
or consent otherwise required under sections 411(a)(11) and
417 of the Code.
4.14 CORRECTIVE DISTRIBUTION OF EXCESS DEFERRALS. Notwithstanding any other
provision of the Plan, Excess Deferrals, plus any income and minus any
loss allocable thereto, may be distributed to any Participant to whose
account Excess Deferrals were allocated for the individual's taxable
year. Such a corrective distribution shall be made in accordance with
this section.
(A) Correction of Excess Deferrals After Taxable Year.
(1) Not later than the March 15 following the close of a
Participant's taxable year, the Participant may
notify the Plan of the amount of Excess Deferrals
received by the Plan during that taxable year. The
notification shall be in writing, shall specify the
Participant's Excess Deferrals, and shall be
accompanied by the Participant's written statement
that if such amounts are not distributed, these
amounts, when added to all other Elective Deferral
Contributions made on behalf of the Participant
during the taxable year, shall exceed the dollar
limitation specified in section 402(g) of the Code.
(2) The Participant is deemed to have notified the Plan
of Excess Deferrals if, not later than the March 1
following the close of a Participant's taxable year,
the Employer notifies the
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<PAGE>
Plan on behalf of the Participant of the Excess
Deferrals. Such Excess Deferrals shall be calculated
by taking into account only Elective Deferral
Contributions under the Plan and any other plans of
the Employer.
(3) Not later than the April 15 following the close of
the taxable year, the Plan shall distribute to the
Participant the amount of Excess Deferrals designated
under subparagraphs (1) or (2) above.
(B) Correction of Excess Deferrals During the Taxable Year. A
Participant who has an Excess Deferral during a taxable year
may receive a corrective distribution during the same year.
Such a corrective distribution shall be made if:
(1) The Participant designates the distribution as an
Excess Deferral. The designation shall be made in the
same manner as the notification described in
subparagraph (A)(1) of this section. The Participant
will be deemed to have designated the distribution as
an Excess Deferral if the Employer makes the
designation on behalf of the Participant to the
extent that the Participant has Excess Deferrals for
the taxable year calculated by taking into account
only Elective Deferral Contributions to the Plan and
other plans of the Employer.
(2) The corrective distribution is made after the date on
which the Plan received the Excess Deferral.
(3) The Plan designates the distribution as a
distribution of Excess Deferrals.
(C) If the Participant provides the Employer with satisfactory
evidence and written notice to demonstrate that all Elective
Deferral Contributions by the participant in this Plan and any
other qualified plan exceed the applicable limit under section
402(g) of the Code for such individual's taxable year, then
the Plan Administrator may (but is not required to) distribute
sufficient Elective Deferral Contributions (not to exceed the
amount of Elective Deferral Contributions actually contributed
on behalf of the Participant to this Plan during the
Participant's taxable year) from this Plan to allow the
Participant to comply with the applicable limit. The evidence
provided by the Participant must establish clearly the amount
of Excess Deferrals. The Participant must present this
evidence to the Plan Administrator by the March 1 following
the end of the calendar year in which the Excess Deferrals
occurred.
(D) Income Allocable to Excess Deferrals. The income allocable to
Excess Deferrals is equal to the sum of allocable gain or loss
for the taxable year of the individual and shall be determined
as follows:
(1) The gain or loss allocable to Excess Deferrals is
determined by multiplying the income for the taxable
year allocable to Elective Deferral Contributions by
a fraction. The numerator of the fraction is the
Excess Deferrals by the Employee for the taxable
year. The denominator of the fraction is equal to the
sum of:
(a) The total account balance of the Employee
attributable to Elective Deferral
Contributions as of the beginning of the
Plan Year, plus
(b) The Employee's Elective Deferral
Contributions for the taxable year.
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(2) The income allocable to Excess Deferrals shall not
include the allocable gain or loss for the period
between the end of the taxable year and the date of
distribution.
(E) No Employee or Spousal Consent Required. A corrective
distribution of Excess Deferrals (and income) shall be made
without regard to any notice or consent otherwise required
under sections 411(a)(11) and 417 of the Code.
(F) Any Matching Contributions or Qualified Matching Contributions
that relate to the Excess Deferral being distributed shall be
forfeited. The Matching Contribution so forfeited shall be in
proportion to the applicable Employee's vested and nonvested
interest in Matching Contributions under the Plan for the Plan
Year in which the Excess Deferral arose. Forfeitures of
Matching Contributions or Qualified Matching Contributions
that relate to Excess Deferrals shall be applied to reduce
Employer contributions or pay Plan expenses.
4.15 QUALIFIED CONTRIBUTIONS. In lieu of distributing Excess Contributions
as provided in Section 4.12 of the Plan, or Excess Aggregate
Contributions as provided in Section 4.13 of the Plan, the Employer may
take the actions specified below in order to satisfy the Actual
Deferral Percentage Test or the Actual Contribution Percentage Test, or
both, pursuant to the regulations under the Code.
(A) At the election of the Employer, Qualified Nonelective
Contributions or Qualified Matching Contributions, or both,
may be taken into account as Elective Deferral Contributions
for purposes of calculating the Actual Deferral Ratio of a
Participant.
The amount of Qualified Nonelective Contributions or Qualified
Matching Contributions made under the terms of this Plan and
taken into account as Elective Deferral Contributions for
purposes of calculating the Actual Deferral Ratio, subject to
such other requirements as may be prescribed by the Secretary
of the Treasury, shall be such Qualified Nonelective
Contributions or Qualified Matching Contributions, or both,
that are needed to meet the Actual Deferral Percentage Test.
(B) At the election of the Employer, Qualified Nonelective
Contributions or Elective Deferral Contributions, or both, may
be taken into account as Matching Contributions for purposes
of calculating the Actual Contribution Ratio of a Participant.
The amount of Qualified Nonelective Contributions or Elective
Deferral Contributions made under the terms of this Plan and
taken into account for purposes of calculating the Actual
Contribution Ratio, subject to such other requirements as may
be prescribed by the Secretary of the Treasury, shall be such
Qualified Nonelective Contributions or Elective Deferral
Contributions, or both, that are needed to meet the Actual
Contribution Percentage Test.
(C) Any Qualified Nonelective Contribution, Qualified Matching
Contribution, and Elective Deferral Contribution taken into
account under paragraphs (A) or (B) must be allocated to the
Employee's Account as of a date within the Plan Year in which
the Excess Contribution or Excess Aggregate Contribution arose
and must be paid to the Plan no later than the 12-month period
immediately following the Plan Year to which the contribution
relates.
4.16 MULTIPLE USE OF ALTERNATIVE LIMITATION.
(A) Multiple use of the alternative limitation occurs if all of
the conditions of this paragraph (A) are satisfied:
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(1) One or more Highly Compensated Employee of the
Employer are eligible employees in both a cash or
deferred arrangement subject to section 401(k) and a
plan maintained by the Employer subject to section
401(m).
(2) The sum of the Actual Deferral Percentage of the
entire group of eligible Highly Compensated Employees
under the arrangement subject to section 401(k) and
the Actual Contribution Percentage of the entire
group of eligible Highly Compensated Employees under
the Plan subject to section 401(m) exceeds the
aggregate limit of paragraph (C) of this section.
(3) Actual Deferral Percentage of the entire group of
eligible Highly Compensated Employees under the
arrangement subject to section 401(k) exceeds the
amount described in section 401(k)(3)(A)(ii)(I).
(4) The Actual Contribution Percentage of the entire
group of eligible Highly Compensated Employees under
the arrangement subject to section 401(m) exceeds the
amount described in section 401(m)(2)(A)(i).
(B) For purposes of this section, the aggregate limit is the greater
of:
(1) The sum of-
(a) 1.25 times the greater of the relevant
Actual Deferral Percentage or the relevant
Actual Contribution Percentage, and
(b) Two percentage points plus the lesser of the
relevant Actual Deferral Percentage or the
relevant Actual Contribution Percentage. In
no event, however, may this amount exceed
twice the lesser of the relevant Actual
Deferral Percentage or the Actual
Contribution Percentage; or
(2) The sum of-
(a) 1.25 times the lesser of the relevant Actual
Deferral Percentage or the relevant Actual
Contribution Percentage, and
(b) Two percentage points plus the greater of
the relevant Actual Deferral Percentage or
the relevant Actual Contribution Percentage.
In no event, however, may this amount exceed
twice the greater of the relevant Actual
Deferral Percentage or the relevant Actual
Contribution Percentage.
(C) For purposes of paragraph (B) of this section, the term
"relevant Actual Deferral Percentage" means the Actual
Deferral Percentage of the group of Nonhighly Compensated
Employees under the arrangement subject to section 401(k) for
the Plan Year, and the term "relevant Actual Contribution
Percentage" means the Actual Contribution Percentage of the
group of Nonhighly Compensated Employees eligible under the
Plan subject to section 401(m) for the Plan Year beginning
with or within the Plan Year of the arrangement subject to
section 401(k).
(D) The Actual Deferral Percentage and Actual Contribution
Percentage of the group of eligible Highly Compensated
Employees are determined after use of Qualified Nonelective
Contributions and Qualified Matching Contributions to meet the
requirements of the Actual Deferral Percentage Test
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and after use of Qualified Nonelective Contributions and
Elective Deferral Contributions to meet the requirements of
the Actual Contribution Percentage Test. The Actual Deferral
Percentage and Actual Contribution Percentage of the group of
Highly Compensated Employees are determined after any
corrective distribution or forfeiture of Excess Deferrals,
Excess Contributions, or Excess Aggregate Contributions and
after recharacterization of Excess Contributions required
without regard to this section. Only plans and arrangements
maintained by the Employer are taken into account under
paragraph (B). If the Employer maintains two or more cash or
deferred arrangements subject to section 401(k) that must be
mandatorily disaggregated pursuant to section
401(k)-1(g)(11)(iii) multiple use is tested separately with
respect to each plan.
(E) If multiple use of the alternative limit occurs with respect
to two or more plans or arrangements maintained by the
Employer, it shall be corrected by reducing the Actual
Contribution Percentage of Highly Compensated Employees in the
manner described in paragraph (F) of this section. Instead of
making this reduction, the Employer may eliminate the multiple
use of the alternative limitation by making Qualified
Nonelective Contributions to the Plan.
(F) The amount of the reduction by which each Highly Compensated
Employee's Actual Contribution Ratio is reduced shall be
treated as an Excess Aggregate Contribution. The Actual
Contribution Percentage of all Highly Compensated Employees
under the plan subject to reduction shall be reduced so that
there is no multiple use of the alternative limitation.
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ARTICLE V
LIMITATIONS ON ALLOCATIONS
5.1 LIMITATIONS ON ALLOCATIONS. Definitions - The following definitions are
atypical terms which refer only to terms used in the Limitations on
Allocations Sections of this Article V.
(A) Annual Additions. The term Annual Additions shall mean the sum
of the following amounts allocated on behalf of a Participant
for a Limitation Year:
(1) all contributions made by the Employer which shall
include:
o Elective Deferral Contributions, if any;
o Matching Contributions, if any;
o Qualified Matching Contributions, if any;
o Nonelective Contributions, if any;
o Qualified Nonelective Contributions, if any;
(2) all Forfeitures, if any.
For the purposes of this Article, Excess Amounts reapplied
under Section 5.2(D) shall also be included as Annual
Additions.
Amounts allocated after March 31, 1984, to an individual
medical account, as defined in Internal Revenue Code section
415(l)(1), which is part of a defined benefit plan maintained
by the Employer, are treated as Annual Additions to a defined
contribution plan. Also, amounts derived from contributions
paid or accrued attributable to post-retirement medical
benefits allocated to the separate account of a key employee,
as defined in Internal Revenue Code section 419A(d)(3), under
a welfare benefit fund, as defined in Internal Revenue Code
section 419(e), maintained by the Employer, are treated as
Annual Additions to a defined contribution plan.
Contributions do not fail to be Annual Additions merely
because they are Excess Deferrals, Excess Contributions or
Excess Aggregate Contributions or merely because Excess
Contributions or Excess Aggregate Contributions are corrected
through distribution or recharacterization. Excess Deferrals
that are distributed in accordance with Section 4.14 of the
Plan are not Annual Additions.
Forfeited Matching Contributions that are forfeited because
the contributions to which they relate are treated as Excess
Aggregate Contributions, Excess Contributions, or Excess
Deferrals and that are reallocated to the Participant Accounts
of other Participants for the Plan Year in which the
forfeiture occurs, are treated as Annual Additions for the
Participants to whose accounts they are reallocated and for
the Participants from whose accounts they are forfeited.
(B) Compensation. The term Compensation means wages, salaries, and
fees for professional services and other amounts received
(without regard to whether or not an amount is paid in cash)
for personal services actually rendered in the course of
employment with the Employer maintaining the Plan to the
extent that the amounts are includible in gross income
(including, but not limited to,
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commissions paid employees for services on the basis of a
percentage of profits, commissions on insurance premiums,
tips, bonuses, fringe benefits, and reimbursements, or other
expense allowances under a nonaccountable plan (as described
in 1.62-2(c)), and foreign earned income (as defined in
section 911(b) of the Code) whether or not excludable from
gross income under section 911 of the Code. The term
Compensation does not include:
(1) Employer Contributions to a plan of deferred
compensation which are not includible in the
employee's gross income for the taxable year in which
contributed, or Employer Contributions under a
simplified employee pension plan to the extent such
contributions are deductible by the employee, or any
distributions from a plan of deferred compensation;
(2) Amounts realized from the exercise of a non-qualified
stock option, or when restricted stock (or property)
held by the Employee either becomes freely
transferable or is no longer subject to substantial
risk of forfeiture;
(3) Amounts realized from the sale, exchange, or other
disposition of stock acquired under a qualified stock
option; and
(4) Other amounts which received special tax benefits, or
contributions made by the Employer (whether or not
under a salary reduction agreement) towards the
purchase of an annuity contract described in section
403(b) of the Code (whether or not the contributions
are actually excludable from the gross income of the
Employee).
For Limitation Years beginning after December 31, 1991, for
purposes of applying the limitations of this article,
Compensation for a Limitation Year is the Compensation
actually paid or made available during such Limitation Year.
(C) Defined Contribution Dollar Limitation. The term Defined
Contribution Dollar Limitation shall mean $30,000 or, if
greater, one-fourth of the defined benefit dollar limitation
set forth in Internal Revenue Code section 415(b)(1) as in
effect for the Limitation Year.
(D) Employer. The term Employer shall mean the Employer that
adopts this Plan. In the case of a group of employers which
constitutes a controlled group of corporations (as defined in
Internal Revenue Code section 414(b) as modified by section
415(h)), or which constitutes trades or business (whether or
not incorporated) which are under common control (as defined
in section 414(c) as modified by section 415(h)), or
affiliated service groups (as defined in section 414(m)) of
which the adopting Employer is a part, all such employers
shall be considered a single Employer for purposes of applying
the limitations of this Article.
(E) Excess Amount. The term Excess Amount shall mean the excess of
the Participant's Annual Additions for the Limitation Year
over the Maximum Permissible Amount.
(F) Limitation Year. The term Limitation Year shall mean the
calendar year.
(G) Maximum Permissible Amount. The term Maximum Permissible
Amount shall mean the lesser of (1) the Defined Contribution
Dollar Limitation, or (2) 25% of the Participant's
Compensation for the Limitation Year.
If a short Limitation Year is created because of an amendment
changing the Limitation Year to a different period of 12
consecutive months, the Maximum Permissible Amount for the
short
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Limitation Year will be the lesser of (1) the Defined
Contribution Dollar Limitation multiplied by a fraction, the
numerator of which is the number of months in the short
Limitation Year, and the denominator of which is 12, or (2)
25% of the Participant's Compensation for the short Limitation
Year.
5.2 LIMITATIONS ON ALLOCATIONS. If the Employer does not maintain any
qualified plan in addition to this Plan:
(A) The amount of Annual Additions which may be allocated under
this Plan on a Participant's behalf for a Limitation Year
shall not exceed the lesser of the Maximum Permissible Amount
or any other limitation contained in this Plan.
(B) Prior to the determination of the Participant's actual
Compensation for a Limitation Year, the Maximum Permissible
Amount may be determined on the basis of the Participant's
estimated annual Compensation. Such Compensation shall be
determined on a reasonable basis and shall be uniformly
determined for all Participants similarly situated. Any
employer contributions based on estimated annual Compensation
shall be reduced by any Excess Amounts carried over from prior
years.
(C) As soon as is administratively feasible after the end of the
Limitation Year, the Maximum Permissible Amount for such
Limitation Year shall be determined on the basis of the
Participant's actual Compensation for such Limitation Year. In
the event a Participant separates from the Service of the
Employer prior to the end of the Limitation Year, the Maximum
Permissible Amount for such Participant shall be determined
prior to any distribution of his Participant's Account on the
basis of his actual Compensation. Any Excess Amounts shall be
disposed of in accordance with Section 5.2(D).
(D) If there is an Excess Amount with respect to a Participant for
a Limitation Year as a result of a reasonable error in
estimating the Participant's annual compensation, an
allocation of forfeitures, a reasonable error in determining
the amount of elective deferrals (within the meaning of
section 402(g)(3) of the Code) that may be made with respect
to any individual under the limits of section 415 of the Code,
or under other limited facts and circumstances which the
commissioner finds justified, such Excess Amount shall be
disposed of as follows:
(1) If an Excess Amount exists, the Excess Amount in the
Participant's Account (excluding Elective Deferral
Contributions) shall be held unallocated in a
suspense account for the Limitation Year and
allocated and reallocated in the next Limitation Year
to all Participants in the Plan. The excess amount
must be used to reduce Employer Contributions for the
next Limitation Year (and succeeding Limitation
Years, as necessary) for all of the Participants in
the Plan. For purposes of this subparagraph, the
Excess Amount may not be distributed to Participants
or former Participants.
(2) If, after the application of subparagraph (1) an
Excess Amount still exists, then the Participant's
Elective Deferral Contributions (including earnings
and losses thereon) allocated for the Limitation Year
shall be returned to the Participant to the extent
that an Excess Amount exists. This distribution shall
be made as soon as administratively feasible after
the Excess Amount is determined. Any Elective
Deferral Contributions returned under this paragraph
shall be disregarded for purposes of the Actual
Deferral Percentage Test.
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(3) Alternatively, the Plan Administrator may elect to
dispose of the Excess Amount by applying the
procedure in subparagraph (2) before applying the
procedure in subparagraph (1). If the Plan
Administrator makes this election, the Plan
Administrator must apply it uniformly to all
Participants in a Limitation Year.
(4) If a suspense account is in existence at any time
during a Limitation Year pursuant to this section, it
will not participate in the allocation of investment
gains or losses. If a suspense account is in
existence at any time during a particular Limitation
Year, all amounts in the suspense account must be
allocated and reallocated to Participants' Accounts
before any Employer Contributions which would
constitute Annual Additions may be made to the Plan
for that Limitation Year.
5.3 LIMITATIONS ON ALLOCATIONS. If the Employer maintains one or more
defined contribution plans in addition to this Plan:
(A) The amount of Annual Additions which may be allocated under
this Plan on a Participant's behalf for a Limitation Year,
shall not exceed the lesser of:
(1) The Maximum Permissible Amount, reduced by the sum of
any Annual Additions allocated to the Participant's
Account for the same Limitation Year under this Plan
and such other defined contribution plan; or
(2) Any other limitation contained in this Plan.
Prior to the determination of the Participant's actual
Compensation for the Limitation Year, the amounts referred to
in Subsection (1) above may be determined on the basis of the
Participant's estimated annual Compensation for such
Limitation Year. Such estimated annual Compensation shall be
determined for all Participants similarly situated.
Any contribution made by the Employer based on estimated
annual Compensation shall be reduced by any Excess Amounts
carried over from prior years, if applicable.
(B) As soon as is administratively feasible after the end of the
Limitation Year, the amounts referred to in Section 5.3(A)
shall be determined on the basis of the Participant's actual
Compensation for such Limitation Year.
(C) If amounts are contributed to a Participant's Account under
this Plan on an allocation date which does not coincide with
the allocation date(s) for all such other plans, and if a
Participant's Annual Additions under this Plan and all such
other plans result in an Excess Amount, such Excess Amount
shall be deemed to have derived from those contributions last
allocated.
(D) If an Excess Amount was allocated to a Participant on an
allocation date of this Plan which coincides with an
allocation date of another plan, the Excess Amount
attributable to this Plan will be the product of (1) and (2)
below:
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(1) The total Excess Amount allocated as of such date
(including any amount which would have been allocated
but for the limitations of Internal Revenue Code
section 415).
(2) The ratio of (1) the amount allocated to the
Participant as of such date under this Plan, divided
by (2) the total amount allocated as of such date
under all qualified defined contribution plans
(determined without regard to the limitations of
Internal Revenue Code section 415).
(E) Any Excess Amounts attributed to this Plan shall be disposed
of as provided in Section 5.2(D).
5.4 LIMITATIONS ON ALLOCATIONS. If the Employer maintains a defined benefit
plan in addition to this Plan:
(A) If an individual is a Participant at any time in both this
Plan and a defined benefit plan maintained by the Employer,
the sum of the Defined Benefit Plan Fraction and the Defined
Contribution Plan Fraction for any year may not exceed 1.0. In
the event that the sum of the Defined Contribution Plan
Fraction and the Defined Benefit Plan Fraction exceeds 1.0,
the Defined Contribution Plan Fraction will be reduced until
the sum of the Defined Contribution Plan Fraction and the
Defined Benefit Plan Fraction does not exceed 1.0.
If an individual was a Participant in this Plan or in any
other defined contribution plan maintained by the Employer
which was in existence on July 1, 1982, the numerator of the
Defined Contribution Plan Fraction will be adjusted if the sum
of the Defined Contribution Plan Fraction and the Defined
Benefit Plan Fraction would otherwise exceed 1.0 under the
terms of this Plan. Under the adjustment, an amount equal to
the product of (1) the excess of the sum of the Fractions over
1.0 times (2) the denominator of the Defined Contribution Plan
Fraction, will be permanently subtracted from the numerator of
the Defined Contribution Plan Fraction. The adjustment is
calculated using the Fractions as they would be computed as of
the later of the end of the last Limitation Year beginning
before January 1, 1983, or June 30, 1983. This adjustment also
will be made if at the end of the last Limitation Year
beginning before January 1, 1984, the sum of the Fractions
exceeds 1.0 because of accruals or additions that were made
before the limitations of this Article became effective to any
plans of the Employer in existence on July 1, 1982.
In addition, if an individual was a Participant in this Plan
or in any other defined contribution plan maintained by the
Employer which was in existence on May 6, 1986, the numerator
of the Defined Contribution Plan Fraction will be adjusted if
the Employer's defined benefit plan was also in existence on
May 6, 1986, and the sum of the Defined Contribution Plan
Fraction and the Defined Benefit Plan Fraction would otherwise
exceed 1.0 under the terms of this Plan. Under the adjustment,
an amount equal to the product of (1) the excess of the sum of
the Fractions over 1.0 times (2) the denominator of the
Defined Contribution Plan Fraction, will be permanently
subtracted from the numerator of the Defined Contribution Plan
Fraction. This adjustment is calculated using the Fractions as
they would be computed as of the end of the last Limitation
Year beginning before January 1, 1987. In the event that a
Participant's accrued benefit as of December 31, 1986, under
the defined benefit plan exceeds the defined benefit dollar
limitation set forth in Internal Revenue Code section
415(b)(1), the amount of that accrued benefit shall be used in
both the numerator and the denominator of the Defined Benefit
Plan Fraction in making this adjustment.
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For purposes of this Section 5.4, all defined benefit plans of
the Employer, whether or not terminated, will be treated as
one defined benefit plan and all defined contribution plans of
the Employer, whether or not terminated, will be treated as
one defined contribution plan.
(B) The Defined Benefit Plan Fraction for any year is a fraction,
the numerator of which is the Participant's Projected Annual
Benefit under the defined benefit plan (determined as of the
close of the Limitation Year), and the denominator of which is
the lesser of (1) or (2) below:
(1) 1.25 times the dollar limitation in effect under
Internal Revenue Code section 415(b)(1)(A) on the
last day of the Limitation Year; or
(2) 1.4 times the amount which may be taken into account
under Internal Revenue Code section 415(b)(1)(B) with
respect to such Participant for the Limitation Year.
Notwithstanding the above, if the Participant was a
participant in one or more defined benefit plans maintained by
the Employer which were in existence on July 1, 1982, the
denominator of the Defined Benefit Plan Fraction will not be
less than 125% of the sum of the annual benefits under such
plans which the Participant had accrued as of the later of the
end of the last Limitation Year beginning before January 1,
1983 or June 30, 1983. The preceding sentence applies only if
the defined benefit plans individually and in the aggregate
satisfied the requirements of Internal Revenue Code section
415 as in effect at the end of the 1982 Limitation Year.
(C) A Participant's Projected Annual Benefit is equal to the
annual benefit to which the Participant would be entitled
under the terms of the defined benefit plan based upon the
following assumptions:
(1) The Participant will continue employment until
reaching Normal Retirement Age as determined under
the terms of the plan (or current age, if that is
later);
(2) The Participant's Compensation for the Limitation
Year under consideration will remain the same until
the date the Participant attains the age described in
sub-division (1) of this subparagraph; and
(3) All other relevant factors used to determine benefits
under the plan for the Limitation Year under
consideration will remain constant for all future
Limitation Years.
(D) The Defined Contribution Plan Fraction for any Limitation Year
is a fraction, the numerator of which is the sum of the Annual
Additions to the Participant's Accounts in such Limitation
Year and for all prior Limitation Years, and the denominator
of which is the lesser of (1) or (2) below for such Limitation
Year and for all prior Limitation Years of such Participant's
employment (assuming for this purpose, that Internal Revenue
Code section 415(c) had been in effect during such prior
Limitation Years):
(1) 1.25 times the dollar limitation in effect under
Internal Revenue Code section 415(c)(1)(A) on the
last day of the Limitation Year; or
(2) 1.4 times the amount which may be taken into account
under Internal Revenue Code section 415(c)(1)(B) with
respect to such Participant for the Limitation Year.
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For the purposes of determining these Limitations on
Allocations, any non-deductible employee contributions made
under a defined benefit plan will be considered to be a
separate defined contribution plan and will be considered to
be part of the Annual Additions for the appropriate Limitation
Year.
(E) Notwithstanding the foregoing, at the election of the Plan
Administrator, in computing the Defined Contribution Plan
Fraction with respect to any Plan Year ending after December
31, 1982, the denominator shall be an amount equal to the
product of:
(1) The denominator of the Defined Contribution Plan
Fraction, computed in accordance with the rules in
effect for the Plan Year ending in 1982; and
(2) the transition fraction, which is a fraction
(a) the numerator of which is the lesser of:
(i) $51,875, or
(ii) 1.4 times 25% of the Compensation of
the Participant for the Plan Year
ending in 1981, and
(b) the denominator of which is the lesser of:
(i) $41,500, or
(ii) 25% of the Compensation of the
Participant for the Plan Year ending
in 1981.
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ARTICLE VI
DISTRIBUTION OF BENEFITS
6.1 DISTRIBUTIONS IN GENERAL. Distributions from the Plan shall be made in
the form of a single sum cash payment unless the Participant shall
elect in writing to receive all or a portion of such distribution in
the form of shares of Employer stock or unless the Participant elects
in writing to receive the distribution in one of the optional forms of
payment described in Section 6.5A. If the Participant elects to receive
Employer stock as part of a lump sum distribution, the number of shares
of Employer stock to be distributed shall be based on the value of that
portion of the Participant's account attributable to the Employer Stock
Fund at the time of distribution. Distributions in the form of Employer
stock shall be available in the form of a lump sum distribution in the
event of a Participant's termination of employment, retirement,
disability, or death. All cash and stock distributions are subject to
the provisions of Article VIII, Joint and Survivor Requirements.
6.2 TIMING OF DISTRIBUTIONS. If the value of a Participant's Vested
Interest exceeds (or at the time of any prior distribution exceeded)
$3,500 and is immediately distributable (as defined in Section 8.5),
the Participant must consent to the distribution before it is made.
Instead of consenting to a distribution, the Participant may make a
written election to defer the distribution for a specified period of
time ending no later than the Participant's Normal Retirement Age. A
Participant whose actual retirement date is on or after his Normal
Retirement Date may make a written election to defer the distribution
for a specified period of time subject to the requirements of Section
6.4. All such elections to defer shall be revocable.
If the Participant does not consent to a distribution or if no election
to defer is made within 90 days after receiving a written explanation
of the right to defer such distribution pursuant to Income Tax
Regulation 1.411(a)(11), all benefits shall be deferred to, and
distribution shall be made as of the Participant's Normal Retirement
Age.
If the value of a Participant's Vested Interest is $3,500 or less at
the time it becomes payable, the distribution shall be made upon such
Participant's Termination of Employment. Such a distribution may not be
deferred.
Unless the Participant elects otherwise, the payment of benefits under
this Plan to the Participant shall begin not later than the 60th day
after the close of the Plan Year in which the later of (A) or (B),
below, occurs:
(A) the date on which the Participant attains his Normal
Retirement Age or age 62, if later; or
(B) the date on which the Participant terminates his Service
(including Termination of Employment, death or Disability)
with the Employer.
Notwithstanding the foregoing, the failure of a Participant and Spouse,
if required, to consent to a distribution while a benefit is
immediately distributable shall be deemed to be an election to defer
commencement of payment of any benefit sufficient to satisfy the above
paragraph.
6.3 DISTRIBUTION LIMITATION. Elective Deferral Contributions, Qualified
Nonelective Contributions and Qualified Matching Contributions, and
income allocable to each, are not distributable to a Participant
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or a Beneficiary, in accordance with such Participant's or
Beneficiary's election, earlier than upon the Participant's Termination
of Employment, death, or disability.
Such amounts may also be distributed upon:
(A) Termination of the Plan without the establishment or
maintenance of a successor plan.
For purposes of this paragraph, a successor plan is any other
defined contribution plan maintained by the same employer.
However, if fewer than two percent of the Employees who are
eligible under the Plan at the time of its termination are or
were eligible under another defined contribution plan at any
time during the 24 month period beginning 12 months before the
time of the termination, the other plan is not a successor
plan. The term "defined contribution plan" means a plan that
is a defined contribution plan as defined in section 414(i) of
the Code, but does not include an employee stock ownership
plan as defined in section 4975(e) or 409 of the Code or a
simplified employee pension as defined in section 408(k) of
the Code. A plan is a successor plan only if it exists at the
time the Plan is terminated or within the period ending 12
months after distribution of all assets from the Plan.
After March 31, 1988, a distribution may be made under this
paragraph only if it is a lump sum distribution. The term
"lump sum distribution" has the same meaning provided in
section 402(e)(4) of the Code, without regard to subparagraphs
(A)(i) through (iv), (B), and (H) of that section.
(B) The disposition by the Employer to an unrelated corporation of
substantially all the assets (within the meaning of section
409(b)(2) of the Code) used in the trade or business of the
Employer if the Employer continues to maintain this Plan after
the disposition. However, a distribution may be made under
this paragraph only to an Employee who continues employment
with the corporation acquiring such assets.
In addition, this requirement is satisfied only if the
purchaser does not maintain the Plan after the disposition. A
purchaser maintains the plan of the seller if it adopts the
plan or otherwise becomes an employer whose employees accrue
benefits under the Plan. A purchaser also maintains the Plan
if the Plan is merged or consolidated with, or any assets or
liabilities are transferred from the Plan to a plan maintained
by the purchaser in a transaction subject to section 414(l)(1)
of the Code. A purchaser is not treated as maintaining the
Plan merely because the Plan that it maintains accepts
rollover contributions of amounts distributed by the Plan.
For purposes of this paragraph, the sale of "substantially
all" the assets used in a trade or business means the sale of
at least 85 percent of the assets.
After March 31, 1988, a distribution may be made under this
paragraph only if it is a lump sum distribution. The term
"lump sum distribution" has the same meaning provided in
section 402(e)(4) of the Code, without regard to subparagraphs
(A)(i) through (iv), (B), and (H) of that section.
(C) The disposition by the Employer to an unrelated entity or
individual of the Employer's interest in a subsidiary (within
the meaning of section 409(d)(3) of the Code) if the Employer
continues to maintain this Plan. However, a distribution may
be made under this paragraph only to an Employee who continues
employment with such subsidiary.
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In addition, this requirement is satisfied only if the
purchaser does not maintain the Plan after the disposition. A
purchaser maintains the plan of the seller if it adopts the
plan or otherwise becomes an employer whose employees accrue
benefits under the Plan. A purchaser also maintains the Plan
if the Plan is merged or consolidated with, or any assets or
liabilities are transferred from the Plan to a plan maintained
by the purchaser in a transaction subject to section 414(l)(1)
of the Code. A purchaser is not treated as maintaining the
Plan merely because the Plan that it maintains accepts
rollover contributions of amounts distributed by the Plan.
After March 31, 1988, a distribution may be made under this
paragraph only if it is a lump sum distribution. The term
"lump sum distribution" has the same meaning provided in
section 402(e)(4) of the Code, without regard to subparagraphs
(A)(i) through (iv), (B), and (H) of that section.
(D) In the case of Elective Deferral Contributions only, the
attainment of age 59-1/2, as described in Section 10.1 of the
Plan.
(E) In the case of Elective Deferral Contributions only, the
hardship of the Participant, as described in Section 10.3 of
the Plan.
6.4 COMMENCEMENT OF DISTRIBUTIONS. Notwithstanding the provisions of the
preceding Timing of Distributions Section, distributions to a
Participant will commence no later than the date determined in
accordance with the provisions of this Section.
Distribution to a Participant must be made no later than the required
beginning date. The first required beginning date of a Participant is
the first day of April of the calendar year following the calendar year
in which the Participant attains age 70-1/2.
The required beginning date of a Participant who attains age 70-1/2
before January 1, 1988, shall be the first day of April of the calendar
year following the calendar year in which the later of retirement or
attainment of age 70-1/2 occurs, provided the Participant was not a 5%
owner in the Plan Year ending in the year in which the Participant
attained age 66-1/2 or any later Plan Year. A Participant is treated as
a 5% owner for purposes of this section if such Participant is a 5%
owner as defined in section 416(i) of the Code (determined in
accordance with section 416 but without regard to whether the Plan is
Top-Heavy). The required beginning date of a Participant who is a 5%
owner during any year beginning after December 31, 1979, is the first
day of April following the later of:
(A) the calendar year in which the Participant attained age
70-1/2, or
(B) the earlier of the calendar year with or within which ends the
Plan Year in which the Participant becomes a 5% owner, or the
calendar year in which the Participant retires.
Once distributions have begun to a 5% owner under this section, they
must continue to be distributed, even if the Participant ceases to be a
5% owner in a subsequent year. Distribution to such Participant must be
made no later than the first day of April following the calendar year
in which the Participant's Termination of Employment occurs.
6.5 SELECTION OF PAYMENT DATE AND PAYMENT FORM.
(A) PARTICIPANT'S ELECTION: The Participant may elect the payment
date and payment form to be used for his benefits under the
Plan. That election is to be made on a written form acceptable
to the
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Administrator and filed with the Administrator at least 3
months before the Participant's desired payment date (unless a
shorter filing period is approved by the Administrator),
provided that the payment date shall not be earlier than
permitted under Sections 6.3 and not later than permitted
under Section 6.4. The Participant may change or revoke that
election by filing a new election at any time before his
actual payment date. Any valid election filed by the
Participant automatically revokes any earlier election. The
Participant's election will be effective only to the extent
that the Administrator determines it conforms to the Plan's
requirements and that, with respect to matters left to the
Administrator's discretion, it is acceptable to the
Administrator.
(B) ADMINISTRATOR'S DISCRETION: In addition to any discretionary
authority granted to the Administrator by other Plan
provisions, the Administrator may postpone the Participant's
payment date for any reasonable period appropriate for the
Plan's convenient administration (including, for example, the
delay of the payment date for a reasonable period after the
next valuation date to allow for the allocation of
contributions and investment return, losses and expenses to
the Participant's Account), provided the delayed payment date
does not extend beyond the Participant's latest payment date
permitted under Section 6.4.
(C) NOTICE OF RIGHT TO DEFER PAYMENT: Except with respect to a
cash-out payment of a benefit in an amount of $3,500 or less
made pursuant to Section 6.2, if a Participant elects a
payment date that is prior to his Normal Retirement Date, then
no less than 30 days and no more than 90 days before such
payment date, the Administrator is to provide the Participant
with a written notice explaining the Participant's right to
defer payment to his Normal Retirement Date.
6.5A SELECTION OF PAYMENT FORM.
(A) IN GENERAL: A Participant's vested Account may be paid in any
of the payment forms described below, subject to all
restrictions and limitations described in other Plan terms. If
no payment form has been validly elected by the Participant
before his actual payment date, the payment form is to be a
lump sum payment.
LUMP-SUM: Under the "lump sum" form, payment of the
Participant's Vested Interest will be made in one lump-sum
payment on the payment date.
INSTALLMENTS: Under the "installment" form, payment of the
Participant's Vested Interest will be made in substantially
equal monthly, quarterly, semi-annual or annual installments
for a specified period not extending beyond the life
expectancies of the Participant and his designated
Beneficiary, if any. The value of any installment payments is
to be based on the value of the Participant's Vested Interest
at the payment date and no installment payment may exceed the
balance of the Participant's Vested Interest at the time that
payment is made.
ANNUITY OPTIONS: The value of the Participant's Vested
Interest at the payment date may be used to purchase a
single-premium, nontransferable, immediate or deferred annuity
contract from a licensed insurer and providing one of the
following annuity payments. If a deferred annuity contract is
elected, the payments under that contract must commence by the
latest retirement date described in Section 6.4. The annuity
contract is to be selected by the Administrator and must
conform to all limitations in this Section. The following
annuity forms are available:
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SINGLE-LIFE ANNUITY: Under the "single-life annuity"
form, the Participant will receive equal monthly
payments starting on or about the payment date and
terminating at his death. No further benefits will be
payable after his death to his Spouse, Beneficiary or
anyone else.
JOINT AND SURVIVOR ANNUITY: Under the "joint and
survivor annuity" form, the Participant will receive
equal monthly payments commencing on or about the
payment date and continuing for his life. At the
Participant's death, monthly payments will be made to
the individual he designated as his Beneficiary for
the Beneficiary's life, provided that the Beneficiary
survives the Participant. The monthly payments to the
Beneficiary will begin immediately after the
Participant's death and continue until the
Beneficiary's death, in a monthly amount equal to
100%, 66-2/3% or 50% (as designated by the
Participant in his election) of the monthly amount
being paid to the Participant before his death. If
the Beneficiary dies on or after the payment date and
before the Participant's death, no adjustment will be
made in the Participant's monthly payment amount. No
further benefits will be payable to anyone after the
deaths of the Participant and his Beneficiary.
10-YEAR GUARANTEED ANNUITY: Under the "10-year
guaranteed annuity" form, the Participant will
receive equal monthly payments commencing on or about
the payment date and continuing for his life. If the
Participant dies before receiving monthly payments
for 10 years (the "10-year guaranteed period"), the
individual he designated as his Beneficiary will
continue to receive monthly payments for the balance
of that 10-year guaranteed period. If the Participant
dies after receiving monthly payments for at least
the 10-year guaranteed period, no further benefits
will be payable after his death to his Spouse,
Beneficiary or anyone else.
FULL REFUND ANNUITY: Under the "full refund annuity"
form, the Participant will receive equal monthly
payments commencing on or about the payment date and
continuing for his life. If the Participant dies
before receiving monthly payments, the sum of which,
when added together, equals or exceeds the amount
paid to purchase the annuity contract, a benefit will
be paid to the Participant's Spouse or other
Beneficiary in a lump sum equal to the amount paid to
purchase the annuity contract minus the monthly
payments made to the Participant. If the Participant
dies after receiving monthly payments, the sum of
which equals or exceeds the amount paid to purchase
the annuity, no further benefits will be payable
after the Participant's death to his Spouse,
Beneficiary or anyone else.
(B) LIMITATIONS APPLICABLE TO PAYMENT FORMS: The following
limitations apply to a Participant's payment form:
* No Participant may receive benefits in a
payment form which, together with the
applicable payment date, is expected to
result in the complete distribution of his
Vested Interest over a period extending
beyond the longest of the actual life of the
Participant or his designated Beneficiary or
the life expectancy of the Participant or
his designated Beneficiary.
* A payment form may not be used if that
payment form would provide payments to the
Participant's designated Beneficiary (other
than his Spouse), with an actuarial value
that exceeds 49% of the actuarial value of
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the Participant's total Vested Interest at
the payment date. This restriction is not to
apply, however, where the Participant's
Spouse is the Beneficiary.
* The amount to be paid each year under the
payment form applicable to the Participant's
Plan benefits (other than the lump sum form)
for Plan Years beginning prior to January 1,
1989 must be at least an amount equal to the
quotient obtained by dividing the
Participant's Vested Interest by his life
expectancy or the joint and last survivor
expectancy of the Participant and his
Beneficiary. For Plan Years beginning after
December 31, 1988, the quotient is obtained
by dividing the Participant's Vested
Interest by the lesser of (i) his life
expectancy or the joint and last survivor
expectancy of the Participant and his
Beneficiary, or (ii) if the Participant's
Spouse is not the Beneficiary, the
applicable divisor determined from the table
set forth in Q&A-4 of ss.1.401(a)(9)-2 of
Proposed IRS regulations or any successor
regulations. The life expectancies are to be
computed using the return multiples
in ss.1.72-9 of the IRS regulations. In the
case of installment payments, a
Participant's and his Spouse's life
expectancies may be recalculated annually;
the life expectancy of a Beneficiary who is
not the Participant's Spouse may not be
recalculated after the payment date.
6.6 NON-TRANSFERABLE. The Participant's right to any payments, benefits,
and refunds is not transferable and shall be free from the claims of
all creditors to the fullest extent permitted by law.
6.7 DEATH DISTRIBUTION PROVISIONS.
(A) DEATH AFTER START OF PLAN BENEFITS. If the Participant dies
while receiving Plan benefits in the installment form, those
installment payments are to continue to be paid to his
Beneficiary, in the manner and over the period which would
have applied to the Participant but for his death. However,
the Beneficiary may elect at any time to receive the entire
balance of the Participant's Vested Interest in the lump sum
form, payable immediately, or to receive larger installment
payments over a shorter period. If the Participant dies while
receiving annuity payments, the Participant's Beneficiary
shall receive the death benefits, if any, provided under the
annuity payment form under which the Participant's benefits
are being paid.
(B) DEATH BEFORE START OF RETIREMENT PAYMENTS.
(1) PAYMENTS TO DESIGNATED BENEFICIARY: If a Participant
dies before he begins to receive Plan benefits, then
by December 31st of the calendar year following the
year of the Participant's death, the Beneficiary may
elect to receive the entire Vested Interest in one of
the methods described in this Section. The
Beneficiary's election must be in writing using a
form acceptable to the Administrator and filed with
the Administrator within that election period. If the
Beneficiary is the Participant's Spouse, the Spouse
may extend the election period but not beyond the
Spouse's "Required Payment Date." The Spouse's
"Required Payment Date" is the later of December 31st
of the year following the calendar year of the
Participant's death or December 31st of the calendar
year in which the Participant would have reached age
70-1/2. If the Beneficiary fails to file a valid
election within the election period, then the death
benefits will automatically be paid under the method
designated below as the "automatic method" applicable
to that Beneficiary.
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(a) SPOUSE'S ANNUITY: If the
Beneficiary is the Participant's
Spouse, the death benefits will be
paid in the single-life annuity
form for the Spouse's life, with
payments beginning at any payment
date elected by the Spouse but not
later than the Spouse's Required
Payment Date. This "Spouse's Death
Benefit" is the automatic method
for the Participant's Spouse. If no
valid payment date is elected by
the Spouse, the payment date will
be the Spouse's Required Payment
Date. In lieu of this Spouse's
Annuity, the Spouse may elect any
other payment form permitted under
this Section.
(b) LUMP SUM: Any Beneficiary may elect
to receive the death benefits in
the lump sum form at any payment
date occurring no later than
December 31st of the calendar year
following the calendar year in
which the 5th anniversary of the
Participant's death occurs or, if
the Participant's Spouse is the
Beneficiary, no later than the
Spouse's Required Payment Date. If
no payment date is elected by the
Beneficiary, then the payment date
will be on or about the date one
year after the Participant's death.
This is the automatic method for
all Beneficiaries except the
Participant's Spouse.
(c) LIFE ANNUITY: Any Beneficiary other
than the Participant's Spouse may
elect to receive the death benefits
in the form of a single-life
annuity for the Beneficiary's life
starting at any payment date
occurring no later than December
31st of the calendar year following
the calendar year in which the
Participant's death occurs.
(d) INSTALLMENTS: Any Beneficiary may
elect to receive the death benefits
in the installment form for a
period not extending beyond the
Beneficiary's life expectancy and
provided that those payments begin
no later than December 31st of the
calendar year following the
calendar year in which the
Participant's death occurs or, if
the Participant's Spouse is the
Beneficiary, by no later than the
Spouse's Required Payment Date.
(2) PAYMENTS WHERE NO DESIGNATED BENEFICIARY.
Notwithstanding anything in this Plan to the
contrary, if the Participant dies before beginning to
receive Plan benefits and his Beneficiary is his
estate (because the Spouse's Death Benefit does not
apply and either the Participant failed to make a
valid designation or his designated Beneficiary
predeceased him), then the Participant's Vested
Interest is to be paid to the Participant's estate in
one lump sum payment within 1 year after the
Participant's death.
(C) DISTRIBUTIONS AFTER BENEFICIARY'S DEATH. If the Beneficiary
dies after the Participant's death but before receiving the
entire death benefits available under this Section, then the
undistributed balance of those benefits is to be distributed
to the Successor Beneficiary in the following manner:
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* NON-SPOUSE BENEFICIARY: If the deceased
Beneficiary is someone other than the
Participant's Spouse, the death benefits
unpaid at the deceased Beneficiary's death
are to continue to be paid to the Successor
Beneficiary at the times and in the amounts
that would have applied to the deceased
Beneficiary but for his death. However, the
Administrator shall, upon the successor
Beneficiary's request, commute those
remaining payments and pay their present
value to the successor Beneficiary in one
lump sum payment.
* SPOUSE: If the deceased Beneficiary is the
Participant's Spouse, the death benefits
unpaid at the Spouse's death are to be paid
under the terms of this Article applied as
if the deceased Spouse were the Participant.
For the purposes of this Section, the term "Successor
Beneficiary" means the person (determined at the deceased
Beneficiary's death) who would have been the Participant's
Beneficiary, if the Participant had died immediately after the
deceased Beneficiary's death. Notwithstanding any conflicting
Plan provision, no death benefits under this Plan are payable
to anyone after the Beneficiary's death to the extent that all
death benefit payments were made during the Beneficiary's life
or the value of those death benefits was applied before that
Beneficiary's death to purchase a single-life annuity contract
providing for payments for that Beneficiary's life.
(D) CASH-OUTS: Notwithstanding any Plan provision to the contrary,
the Administrator shall make a lump sum payment to the
Beneficiary after the Participant's death if the Participant's
Vested Interest is $3,500 or less on the payment date.
(E) LIMITATIONS APPLICABLE TO DEATH BENEFITS: Notwithstanding any
Plan provision to the contrary, all death benefits payable
under this Section 6.7 shall be made in accordance with Code
ss.401(a)(9)(B) and the Treasury regulations issued
thereunder.
6.8 ALTERNATE PAYEE SPECIAL DISTRIBUTION. Distributions pursuant to Section
16.8 may be made without regard to the age or employment status of the
Participant.
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ARTICLE VI-A
DIRECT ROLLOVERS
6A.1 Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a Distributee's election under this Article, a
Distributee may elect, at the time and in the manner prescribed by the
Plan Administrator, to have any portion of an Eligible Rollover
Distribution paid directly to an Eligible Retirement Plan specified by
the Distributee in a Direct Rollover, except as otherwise provided by
the Employer's administrative procedures as permitted by regulations.
In addition, a Distributee's election of a Direct Rollover shall be
subject to the following requirements:
(A) If the Distributee elects to have only a portion of an
Eligible Rollover Distribution paid to an Eligible Retirement
Plan in a Direct Rollover, that portion must be equal to at
least $500.
(B) If the entire amount of a Distributee's Eligible Rollover
Distribution is $500 or less, the distribution may not be
divided. Instead, the entire amount must either be paid to the
Distributee or to an Eligible Retirement Plan in a Direct
Rollover.
(C) A Distributee may not elect a Direct Rollover if the
Distributee's Eligible Rollover Distributions during a year
are reasonably expected by the Plan Administrator to total
less than $200 (or any lower minimum amount specified by the
Plan Administrator).
(D) A Distributee may not elect a Direct Rollover of an Offset
Amount.
6A.2 Definitions.
(A) Direct Rollover: A Direct Rollover is a payment by the plan to
the Eligible Retirement Plan specified by the Distributee.
(B) Distributee: A Distributee includes an Employee or former
Employee. In addition, the Employee's or former Employee's
Surviving Spouse and the Employee's or former Employee's
Spouse who is the alternate payee under a qualified domestic
relations order, as defined in section 414(p) of the Code, are
Distributees with regard to the interest of the Spouse or
former Spouse.
(C) Eligible Retirement Plan: An Eligible Retirement Plan is an
individual retirement account described in section 408(a) of
the code, an individual retirement annuity described in
section 408(b) of the Code, an annuity plan described in
section 403(a) of the Code, or a qualified trust described in
section 401(a) of the Code, that accepts the Distributee's
Eligible Rollover Distribution. However, in the case of an
Eligible Rollover Distribution to the Surviving Spouse, an
Eligible Retirement Plan is an individual retirement account
or an individual retirement annuity.
(D) Eligible Rollover Distribution: An Eligible Rollover
Distribution is any distribution of all or any portion of the
balance to the credit of the Distributee, except that an
Eligible Rollover Distribution does not include: any
distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for
the life (or life expectancy) of the Distributee or the joint
lives (or joint life expectancies) of the Distributee and the
Distributee's designated beneficiary, or for a specified
period of ten years or more; any distribution to the extent
such distribution is required under section 401(a)(9) of the
Code; and the portion of any distribution that is not
includible in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to
employer securities).
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(E) Offset Amount: An Offset Amount is the amount by which a
Participant's Account is reduced to repay a loan from the Plan
(including the enforcement of the Plan's security interest in
the Participant's Account).
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ARTICLE VII
RETIREMENT BENEFITS
7.1 NORMAL RETIREMENT. A Participant who attains his Normal Retirement Age
shall have a Vesting Percentage of 100%. If a Participant retires from
the active Service of the Employer on his Normal Retirement Date, he
shall be entitled to receive a distribution of the entire value of his
Participant's Account as of his Normal Retirement Date.
7.2 EARLY RETIREMENT. A Participant who retires from the Service of the
Employer on his Early Retirement Date shall have a Vesting Percentage
of 100% and shall be entitled to receive a distribution of the entire
value of his Participant's Account as of his Early Retirement Date.
7.3 LATE RETIREMENT. A Participant may continue in the Service of the
Employer after his Normal Retirement Age, and in such event he shall
retire on his Late Retirement Date. Such Participant shall continue as
a Participant under this Plan until such Late Retirement Date. The
Participant shall have a Vesting Percentage of 100% and shall be
entitled to receive a distribution of the entire value of his
Participant's Account as of his Late Retirement Date.
7.4 DISABILITY RETIREMENT. A Participant who retires from the Service of
the Employer on account of Disability shall have a Vesting Percentage
of 100% and shall be entitled to receive a distribution of the entire
value of his Participant's Account as of his Disability Retirement
Date.
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ARTICLE VIII
JOINT AND SURVIVOR REQUIREMENTS
8.1 GENERAL. The provisions of this Article shall take precedence over any
conflicting provision in this Plan.
8.2 JOINT AND SURVIVOR RULES FOR PAYMENTS TO MARRIED PARTICIPANTS: This
Section describes certain "Joint and Survivor Requirements" that apply
to annuity payments to married Participants. These Joint and Survivor
Requirements apply and supersede any conflicting Plan provisions in any
case where payments are to be made under any annuity form to any
Participant who is legally married at the payment date.
(A) SPOUSE'S JOINT AND SURVIVOR ANNUITY REQUIRED: When the Joint
and Survivor Requirements apply, the Participant's benefits
may only be paid as retirement benefits beginning on or after
his termination date and paid in the form of a "Spouse's Joint
and Survivor Annuity" -- that is, a joint and survivor annuity
providing equal monthly payments for the Participant's life
and, upon his death, continuing payments to his Spouse for
life in a monthly amount not less than 50% nor more than 100%
of the monthly payment to the Participant before his death.
(B) WAIVER AND SPOUSE'S CONSENT: These Joint and Survivor Annuity
Rules may be waived by the Participant with his Spouse's
consent at any time within the 90-day period ending on the
payment date for his retirement benefits. To be effective, the
Participant's waiver must: (i) be in writing on a form
acceptable to the Administrator, signed by the Participant,
filed with the Administrator within that 90-day period; (ii)
if applicable, designate a specific Beneficiary which may not
be changed without further spousal consent unless the Spouse
expressly consents to designations by the Participant without
such further consent, and (iii) designate a specific payment
form which may not be changed without further spousal consent
unless the Spouse expressly consents to designations by the
Participant without such further consent. The Spouse's consent
must be filed during the same 90-day period, conform to the
requirements of Section 8.5 and acknowledge both the Spouse's
consent to, and the effect of the Participant's waiver under
this Section. The Participant's waiver may be revoked and new
waivers may be filed without limit during that 3-month period.
(C) NOTICE TO PARTICIPANTS: Not less than 30 days nor more than 90
days before the payment date for any benefits that would be
subject to the Joint and Survivor Annuity Rules, the
Administrator is to provide written notice to the Participant
of: (i) the terms and conditions of the Spouse's Joint and
Survivor Annuity; (ii) the Participant's right to waive the
Spouse's Joint and Survivor Annuity and the effect of that
waiver; (iii) the Spouse's rights under the Joint and Survivor
Annuity Rules; (iv) the Participant's right to revoke any
previous waiver of the Spouse's Joint and Survivor Annuity and
the effect of that revocation; and (v) the payment forms
available under the Plan, including a general description of
the material features and an explanation of the relative
values of such payment forms.
8.3 SPOUSE'S DEATH BENEFIT AND QUALIFIED ELECTION:
(A) IN GENERAL: When the "Spouse's Death Benefit" applies, as
described in this Section, it supersedes the Participant's
Beneficiary designation and any other conflicting Plan
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<PAGE>
provisions. The Spouse's Death Benefit automatically applies
at the Participant's death except in any of the following
cases:
(1) if the Participant is not legally married at his
death or his Spouse does not survive him;
(2) if the Participant validly waived the Spouse's Death
Benefit by designating someone other than his Spouse
as his Beneficiary and his Spouse consented to that
designation;
(3) if the Participant's entire Vested Interest was paid
to him before his death; or
(4) if the Participant dies while receiving Plan benefits
under a periodic payment form.
When the Spouse's Death Benefit applies, the Participant's
surviving Spouse is automatically designated as his sole
Beneficiary and entitled to receive all death benefits payable
with respect to the Participant.
(B) QUALIFIED ELECTION TO WAIVE SPOUSE'S DEATH BENEFIT: The
Spouse's Death Benefit may be waived by the Participant at any
time by making a Qualified Election as described in this
Section. To be a Qualified Election, the Participant's waiver
must: (i) be in writing, signed by the Participant, (ii) be
filed with the Administrator, (iii) designate a specific
Beneficiary or Beneficiaries which may not be changed without
the Spouse's consent (unless the Spouse expressly permits
future designations by the Participant without further
consent), and (iv) be accompanied by his Spouse's consent to
that waiver. The Spouse's consent must acknowledge both the
Spouse's consent to, and the effect of the Participant's
waiver under this Section. The Participant's waiver may be
revoked and new waivers may be filed without limit during the
waiver period described above.
(C) NOTICE TO PARTICIPANTS: The Administrator is to provide each
Participant a written explanation of: (i) the terms and
conditions of the Spouse's Death Benefit; (ii) the
Participant's right to waive the Spouse's Death Benefit and
the effect of that waiver; (iii) the Spouse's rights with
respect to the Spouse's Death Benefit; and (iv) the
Participant's right to revoke any previous waiver of the
Spouse's Death Benefit and the effect of that revocation. That
notice is to be provided within one year after the
Participant's enrollment. Notwithstanding the foregoing, in
the case of a Participant whose termination date occurs before
he receives notice under the foregoing provisions, the notice
must be provided no later than one year after such date.
8.4 SPOUSE (SURVIVING SPOUSE). The Spouse or Surviving Spouse of the
Participant. A former Spouse may be treated as the Spouse or Surviving
Spouse to the extent provided under a Qualified Domestic Relations
Order as described in Internal Revenue Code section 414(p).
8.5 CONSENT REQUIREMENTS. The Participant's consent shall not be required
to the extent that a distribution is required to satisfy section
401(a)(9) or section 415 of the Code. An account balance is immediately
distributable if any part of the account balance could be distributed
to the Participant (or Surviving Spouse) before the Participant attains
(or would have attained, if not deceased) the later of the Normal
Retirement Date or age 62. Whenever the Spouse's consent is required
under this Plan to an election or waiver made by the Participant, that
consent must be in writing, signed by the Spouse,
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witnessed by a Notary Public or an authorized Plan representative and
filed with the Administrator. Only the Spouse who is married at the
relevant payment date may give an effective consent under the Plan,
except that the Participant's former Spouse must consent with respect
to any portion of the Participant's Plan Account that is subject to a
Qualified Domestic Relations Order if that former Spouse is treated as
the Participant's current Spouse under such order. The Administrator
may waive the Spouse's consent required under any Plan provision if the
Administrator determines, based on evidence satisfactory to it, that
the Participant has no Spouse, that the Spouse cannot be located or
that other circumstances exist that prevent the Participant from
obtaining his Spouse's consent and that alleviate the need for the
Spouse's consent under existing IRS guidelines. Any consent by a Spouse
obtained under this provision (or establishment that the consent of the
Spouse may not be obtained) shall be effective only with respect to
that Spouse. A consent that permits designations by the Participant
without any requirement of further consent by that Spouse must
acknowledge that the Spouse has the right to limit consent to a
specific Beneficiary and a specific form of benefit where applicable
and that the Spouse voluntarily elects to relinquish either or both of
those rights.
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ARTICLE IX
TERMINATION OF EMPLOYMENT
9.1 DISTRIBUTION. As of a Participant's Termination of Employment, he shall
be entitled to receive a distribution of his entire Vested Interest.
Such distribution shall be further subject to the terms and conditions
of Article VI.
If at the time of his Termination of Employment the Participant's
Vesting Percentage is not 100% and the Participant does not take a
distribution from the portion of his Vested Interest subject to the
Vesting Percentage, the non-vested portion of his Participant's Account
will become a Forfeiture upon the date the Participant incurs five
consecutive One-Year Breaks in Service.
If at the time of his Termination of Employment the Participant's
Vesting Percentage is not 100% and such Participant does take a
distribution from the portion of his Vested Interest subject to the
Vesting Percentage, or if the Participant's Vesting Percentage is 0%,
the non-vested portion of his Participant's Account will become a
Forfeiture immediately.
If the Participant, whose non-vested portion of his Participant's
Account became a Forfeiture in accordance with the terms of the
preceding paragraph, is later rehired by the Employer and re-enrolls in
the Plan, Subsection (A), (B) or (C) below, as applicable, will apply:
(A) If the Participant was 0% vested at his Termination of
Employment and did not incur five consecutive One-Year Breaks
in Service after such date, the amount which became a
Forfeiture, if any, shall be restored by the Employer at the
time such Participant re-enrolls in the Plan. The Forfeiture,
so restored, shall be included as part of that portion of his
Participant's Account subject to the Vesting Percentage.
(B) If the Participant's Vesting Percentage was not 100% at his
Termination of Employment and if the Participant did not incur
five consecutive One-Year Breaks in Service after such date,
the Participant shall be entitled to repay the portion of the
distribution made at his Termination of Employment derived
from Employer Contributions. The portion of the repayment that
is attributable to amounts that were subject to the Vesting
Percentage will no longer be considered a distribution for
purposes of determining the Participant's Vested Interest. The
repayment of such portion must be made before the Participant
has incurred five consecutive One-Year Breaks in Service
following the date he received the distribution or five years
after the Participant is rehired by the Employer, whichever is
earlier.
If the Participant elects to make such repayment, the amount
which became a Forfeiture, if any, shall be restored by the
Employer at the same time such repayment is made. The
Forfeiture, so restored, and the repayment shall be included
as part of that portion of his Participant's Account subject
to the Vesting Percentage. However, if the Participant does
not elect to repay the distribution made in accordance with
this Article within the period of time specified above, that
Forfeiture shall remain a Forfeiture.
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(C) If the Participant had incurred five consecutive One-Year
Breaks in Service after his Termination of Employment, the
amount which became a Forfeiture shall remain a Forfeiture and
such Participant shall be prohibited from repaying a
distribution made at his Termination of Employment.
9.2 NO FURTHER RIGHTS OR INTEREST. A Participant shall have no further
interest in or any rights to any portion of his Participant's Account
that becomes a Forfeiture due to his Termination of Employment once the
Participant incurs five consecutive One-Year Breaks in Service in
accordance with Article II.
9.3 APPLICATION OF FORFEITURES. Any Forfeiture arising in accordance with
the provisions of Section 9.1 shall be used by the Employer to reduce
and in lieu of the contributions made by the Employer next due under
Article IV, or to pay Plan expenses, at the earliest opportunity after
such Forfeiture becomes available.
The provisions of the preceding sentence notwithstanding, in the event
that a former Participant is rehired by the Employer and the Employer
is required by the provisions of Section 9.1 of this Plan to restore
the amount of a separate account that had been created upon such
Participant's prior Termination of Employment and later forfeited,
Forfeitures, if any, will first be used to restore such separate
account to its value as of such Participant's prior Termination of
Employment date. In the event that the available Forfeitures are not
sufficient to make such restoration, the Employer will make an
additional contribution sufficient to make such restoration.
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ARTICLE X
WITHDRAWALS
10.1 WITHDRAWAL AFTER AGE 59-1/2. A Participant who has attained age 59-1/2,
may elect to withdraw from his Participant's Account, at any time, an
amount which is equal to any whole percentage (not exceeding 100%) of
his Vested Interest in his Participant's Account attributable to:
o Elective Deferral Contributions, including earnings
o Matching Contributions, including earnings
o Rollover Contributions, including earnings.
10.2 WITHDRAWAL FOR SERIOUS FINANCIAL HARDSHIP OF CONTRIBUTIONS OTHER THAN
ELECTIVE DEFERRAL CONTRIBUTIONS. In the event a Participant suffers a
Serious Financial Hardship, such Participant may withdraw a portion of
his Vested Interest attributable to the following to meet such need:
o Matching Contributions that are not designated as Qualified
Matching Contributions, including earnings
o Rollover Contributions, including earnings.
In no event may any such withdrawal exceed the amount required to meet
the immediate financial need created by the Serious Financial Hardship.
Such Serious Financial Hardship must be shown by positive evidence
submitted to the Plan Administrator that the hardship is of sufficient
magnitude to impair the Participant's financial security. Withdrawals
shall be determined in a consistent and nondiscriminatory manner, and
shall not affect the Participant's right under the Plan to make
additional withdrawals or to continue to be a Participant.
10.3 WITHDRAWAL FOR SERIOUS FINANCIAL HARDSHIP OF ELECTIVE DEFERRAL
CONTRIBUTIONS. Distributions of Elective Deferral Contributions may be
made to a Participant in the event of a hardship. For purposes of this
section, a distribution is made on account of hardship only if the
distribution is made both on account of an immediate and heavy
financial need of the Employee and is necessary to satisfy the
financial need. In addition, for Plan Years beginning after December
31, 1988 any distribution on account of hardship shall be limited to
the distributable amount described in paragraph (C) of this section.
(A) The following are the only financial needs considered
immediate and heavy for purposes of this section:
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(1) Expenses for medical care described in section 213(d)
of the Code previously incurred by the Employee, the
Employee's Spouse, or any dependents of the Employee
(as defined in section 152 of the Code) or necessary
for these persons to obtain medical care described in
section 213(d) of the Code;
(2) Payment of tuition and related educational fees for
the next 12 months of post-secondary education for
the Employee, his Spouse, children, or dependents (as
defined in section 152 of the Code);
(3) Costs directly related to the purchase of a principal
residence for the Employee (excluding mortgage
payments); or
(4) Payments necessary to prevent the eviction of the
Employee from the Employee's principal residence or
foreclosure on the mortgage on that residence.
(B) A distribution will be considered as necessary to satisfy an
immediate and heavy financial need of the Employee only if all
of the following requirements are satisfied:
(1) The hardship distribution is not in excess of the
amount of the immediate and heavy financial need of
the Employee. The amount of an immediate and heavy
financial need may include the amounts necessary to
apply any federal, state, or local income taxes or
penalties reasonably anticipated to result from the
distribution.
(2) The Employee had obtained all distributions, other
than hardship distributions, and all nontaxable (at
the time of the loan) loans currently available under
all plans maintained by the Employer.
(3) The Employee is suspended from making Elective
Deferral Contributions to the Plan for at least 12
months after receipt of the hardship distribution. In
addition, the Employee must be prohibited under the
terms of the plan or an otherwise enforceable
agreement from making Elective Deferral Contributions
to all other plans maintained by the Employer for at
least 12 months after receipt of the hardship
distribution.
For this purpose, the phrase "all other plans of the
Employer" means all qualified and nonqualified plans
of deferred compensation maintained by the Employer.
The phrase includes a stock option, stock purchase,
or similar plan, or a cash or deferred arrangement
that is part of a cafeteria plan within the meaning
of section 125 of the Code. However, it does not
include the mandatory employee contribution part of a
defined benefit plan. It also does not include a
health or welfare benefit plan, including one that is
part of a cafeteria plan within the meaning of
section 125 of the Code.
(4) The Employee may not make Elective Deferral
Contributions to the Plan for the Employee's taxable
year immediately following the taxable year of the
hardship distribution in excess of the applicable
limit under section 402(g) of the Code for such
taxable year less the amount of such Employee's
Elective Deferral Contributions for the taxable year
of the hardship distribution. In addition, all other
plans maintained by the Employer must limit the
Employee's Elective Deferral Contributions for the
next taxable year to the applicable limit under
section 402(g) of the Code for that year minus the
Employee's Elective Deferral Contributions for the
year of the hardship distribution.
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(C) The distributable amount is equal to the Employee's total
Elective Deferral Contribution as of the date of distribution,
reduced by the amount of previous distributions of Elective
Deferral Contributions on account of hardship. The Employee's
total Elective Deferral Contributions shall be increased by
income allocable to Elective Deferral Contributions. In the
case of income allocable to Elective Deferral Contributions,
the distributable amount may only include amounts that were
credited to the Employee's Account as of December 31, 1988.
10.4 WITHDRAWAL OF ROLLOVER CONTRIBUTIONS. At any time a Participant may
elect to withdraw from his Participant's Account an amount up to 100%
of the value of that portion of his account attributable to his
Rollover Contributions as defined in Article IV. Such an election shall
become effective in accordance with the Notification Section below.
10.5 NOTIFICATION. The Participant shall notify the Administrator in writing
of his election to make a withdrawal under the preceding provisions of
this Article X. Any such election shall be effective as of the date
specified in such notice, which date must be at least 15 days after
such notice is filed. Payment of the withdrawal shall be subject to the
terms and conditions of Article VI.
10.6 NON-REPAYMENT. Withdrawals made in accordance with this Article X may
not be repaid.
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ARTICLE X-A
LOANS
10A.1 LOANS TO PARTICIPANTS. The Plan Administrator may make a bona fide loan
to a Participant, in an amount which, when added to the outstanding
balance of all other loans to the Participant from all qualified plans
of the Employer, does not exceed the lesser of $50,000 reduced by the
excess of the Participant's highest outstanding loan balance during the
12 months preceding the date on which the loan is made over the
outstanding loan balance on the date the new loan is made, or 50% of
the Participant's Vested Interest in his Participant's Account.
The loan shall be made under such terms, security interest, and
conditions as the Plan Administrator deems appropriate, provided,
however, that all loans granted hereunder:
(A) are available to all Participants and Beneficiaries, who are
parties-in-interest pursuant to section 3(14) of ERISA, on a
reasonably equivalent basis;
(B) are not made available to Highly Compensated Employees on a
basis greater than the basis made available to other
Employees;
(C) bear a reasonable rate of interest;
(D) are adequately secured;
(E) are made in accordance with and subject to all of the
provisions of this Article.
10A.2 LOAN PROCEDURES. The Plan Administrator shall establish a written set
of procedures, set forth in the summary plan description, by which all
loans will be administered. Such rules, which are incorporated herein
by reference, will include, but not be limited to, the following:
(A) the person or persons authorized to administer the loan
program, identified by name or position;
(B) the loan application procedure;
(C) the basis for approving or denying loans;
(D) any limits on the types of loans permitted;
(E) the procedure for determining a "reasonable" interest rate;
(F) acceptable collateral;
(G) default conditions; and
(H) steps which will be taken to preserve Plan assets in the event
of default.
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ARTICLE XI
FIDUCIARY DUTIES AND RESPONSIBILITIES
11.1 GENERAL FIDUCIARY STANDARD OF CONDUCT. Each Fiduciary of the Plan shall
discharge his duties hereunder solely in the interest of the
Participants and their Beneficiaries and for the exclusive purpose of
providing benefits to Participants and their Beneficiaries and
defraying reasonable expenses of administering the Plan. Each Fiduciary
shall act with the care, skill, prudence, and diligence under the
circumstances that a prudent man acting in a like capacity and familiar
with such matters would use in conducting an enterprise of like
character and with like aims, in accordance with the documents and
instruments governing this Plan, insofar as such documents and
instruments are consistent with this standard.
11.2 SERVICE IN MULTIPLE CAPACITIES. Any Person or group of persons may
serve in more than one fiduciary capacity with respect to this Plan.
11.3 LIMITATIONS ON FIDUCIARY LIABILITY. Nothing in this Plan shall be
construed to prevent any Fiduciary from receiving any benefit to which
he may be entitled as a Participant or Beneficiary in this Plan, so
long as the benefit is computed and paid on a basis which is consistent
with the terms of this Plan as applied to all other Participants and
Beneficiaries. Nor shall this Plan be interpreted to prevent any
Fiduciary from receiving any reasonable compensation for services
rendered, or for the reimbursement of expenses properly and actually
incurred in the performance of his duties with the Plan; except that no
Person so serving who already receives full-time pay from an Employer
shall receive compensation from this Plan, except for reimbursement of
expenses properly and actually incurred.
11.4 INVESTMENT MANAGER. When an Investment Manager has been appointed, he
is required to acknowledge in writing that he has undertaken a
Fiduciary responsibility with respect to the Plan.
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ARTICLE XII
THE ADMINISTRATOR
12.1 DESIGNATION AND ACCEPTANCE. The Employer shall designate a person or
persons to serve as Administrator under the Plan and such person, by
joining in the execution of this Plan and Trust Agreement accepts such
appointment and agrees to act in accordance with the terms of the Plan.
The Emplioyer shall also appoint a Retirement Benefits Committee, which
is specifically authorized, on behalf of the Employer's Board of
Directors, to approve the adoption of, and continued participation in
this plan by any other Employer for the benefit of that Employer's
employees, upon such terms as this plan's sponsoring Employer may
require from time to time.
12.2 DUTIES AND AUTHORITY. The Administrator shall administer the Plan in a
nondiscriminatory manner for the exclusive benefit of Participants and
their Beneficiaries.
The Administrator shall perform all such duties as are necessary to
operate, administer, and manage the Plan in accordance with the terms
thereof, including but not limited to the following:
(A) To determine all questions relating to a Participant's
coverage under the Plan;
(B) To maintain all necessary records for the administration of
the Plan;
(C) To compute and authorize the payment of retirement income and
other benefit payments to eligible Participants and
Beneficiaries;
(D) To interpret and construe the provisions of the Plan and to
make regulations which are not inconsistent with the terms
thereof; and
(E) To advise or assist Participants regarding any rights,
benefits, or elections available under the Plan.
The Administrator shall take all such actions as are necessary to
operate, administer, and manage the Plan as a retirement program which
is at all times in full compliance with any law or regulation affecting
this Plan.
The Administrator may allocate certain specified duties of plan
administration to an individual or group of individuals who, with
respect to such duties, shall have all reasonable powers necessary or
appropriate to accomplish them.
12.3 EXPENSES AND COMPENSATION. All expenses of administration may be paid
out of the Trust fund unless paid by the Employer. Such expenses shall
include any expenses incident to the functioning of the Administrator,
including, but not limited to, fees of accountants, counsel, and other
specialists and their agents, and other costs of administering the
Plan. Until paid, the expenses shall constitute a liability of the
Trust fund. However, the Employer may reimburse the Trust fund for any
administration expense incurred. Any administration expense paid to the
Trust fund as a reimbursement shall not be considered an Employer
Contribution. Nothing shall prevent the Administrator from receiving
reasonable compensation for services rendered in administering this
Plan, unless the Administrator already receives full-time pay from any
Employer adopting the Plan.
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12.4 INFORMATION FROM EMPLOYER. To enable the Administrator to perform his
functions, the Employer shall supply full and timely information to the
Administrator on all matters relating to this Plan as the Administrator
may require.
12.5 RETIREMENT BENEFITS COMMITTEE; MULTIPLE SIGNATURES. In the event that
more than one person has been duly nominated to serve on the Retirement
Benefits Committee and has signified in writing the acceptance of such
designation, the signature(s) of one or more persons may be accepted by
an interested party as conclusive evidence that the Retirement Benefits
Committee has duly authorized the action therein set forth and as
representing the will of and binding upon the whole Retirement Benefits
Committee. No person receiving such documents or written instructions
and acting in good faith and in reliance thereon shall be obliged to
ascertain the validity of such action under the terms of this Plan. The
Retirement Benefits Committee shall act by a majority of its members at
the time in office and such action may be taken either by a vote at a
meeting or in writing without a meeting.
12.6 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR. The Administrator,
or any member of the Retirement Benefits Committee, may resign at any
time by delivering to the Employer a written notice of resignation, to
take effect at a date specified therein, which shall not be less than
30 days after the delivery thereof, unless such notice shall be waived.
The Administrator may be removed with or without cause by the Employer
by delivery of written notice of removal, to take effect at a date
specified therein, which shall be not less than 3O days after delivery
thereof, unless such notice shall be waived.
The Employer, upon receipt of or giving notice of the resignation or
removal of the Administrator, shall promptly designate a successor
Administrator who must signify acceptance of this position in writing.
In the event no successor is appointed, the Board of Directors of the
Employer will function as the Retirement Benefits Committee until a new
Administrator has been appointed and has accepted such appointment.
12.7 INVESTMENT MANAGER. The Administrator may appoint, in writing, an
Investment Manager or Managers to whom is delegated the authority to
manage, acquire, invest or dispose of all or any part of the Trust
assets. With regard to the assets entrusted to his care, the Investment
Manager shall provide written instructions and directions to the
Trustee, who shall in turn be entitled to rely upon such written
direction. This appointment and delegation shall be evidenced by a
signed written agreement.
12.8 DELEGATION OF DUTIES. The Administrator shall have the power, to the
extent permitted by law, to delegate the performance of such Fiduciary
and non-Fiduciary duties, responsibilities and functions as the
Administrator shall deem advisable for the proper management and
administration of the Plan in the best interests of the Participants
and their Beneficiaries.
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ARTICLE XIII
PARTICIPANTS' RIGHTS
13.1 GENERAL RIGHTS OF PARTICIPANTS AND BENEFICIARIES. The Plan is
established and the Trust assets are held for the exclusive purpose of
providing benefits for such Employees and their Beneficiaries as have
qualified to participate under the terms of the Plan.
13.2 FILING A CLAIM FOR BENEFITS. A Participant or Beneficiary or the
Employer acting in his behalf, shall notify the Administrator of a
claim of benefits under the Plan. Such request shall be in writing to
the Administrator and shall set forth the basis of such claim and shall
authorize the Administrator to conduct such examinations as may be
necessary to determine the validity of the claim and to take such steps
as may be necessary to facilitate the payment of any benefits to which
the Participant or Beneficiary may be entitled under the terms of the
Plan.
A decision by the Administrator shall be made promptly and not later
than 90 days after the Administrator's receipt of the claim of benefits
under the Plan, unless special circumstances require an extension of
the time for processing, in which case a decision shall be rendered as
soon as possible, but not later than 180 days after the initial receipt
of the claim of benefits.
13.3 DENIAL OF CLAIM. Whenever a claim for benefits by any Participant or
Beneficiary has been denied by a Plan Administrator, a written notice,
prepared in a manner calculated to be understood by the Participant,
must be provided, setting forth (1) the specific reasons for the
denial; (2) the specific reference to pertinent Plan provisions on
which the denial is based; (3) a description of any additional material
or information necessary for the claimant to perfect the claim and an
explanation of why such material or information is necessary; and (4)
an explanation of the Plan's claim review procedure.
13.4 REMEDIES AVAILABLE TO PARTICIPANTS. A Participant or Beneficiary may
(1) request a review by a Named Fiduciary, other than the
Administrator, upon written application to the Plan; (2) review
pertinent Plan documents; and (3) submit issues and comments in writing
to a Named Fiduciary. A Participant or Beneficiary shall have 60 days
after receipt by the claimant of written notification of a denial of a
claim to request a review of a denied claim.
A decision by a Named Fiduciary shall be made promptly and not later
than 60 days after the Named Fiduciary's receipt of a request for
review, unless special circumstances require an extension of the time
for processing, in which case a decision shall be rendered as soon as
possible, but not later than 120 days after receipt of a request for
review. The decision on review by a Named Fiduciary shall be in writing
and shall include specific reasons for the decision, written in a
manner calculated to be understood by the claimant, and specific
references to the pertinent Plan provisions on which the decision is
based.
A Participant or Beneficiary shall be entitled, either in his own name
or in conjunction with any other interested parties, to bring such
actions in law or equity or to undertake such administrative actions or
to seek such relief as may be necessary or appropriate to compel the
disclosure of any required information, to enforce or protect his
rights, to recover present benefits due to him, or to clarify his
rights to future benefits under the Plan.
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13.5 REINSTATEMENT OF BENEFIT. In the event any portion of a distribution
which is payable to a Participant or a Beneficiary shall remain unpaid
on account of the inability of the Plan Administrator, after diligent
effort, to locate such Participant or Beneficiary, the amount so
distributable shall be treated as a Forfeiture under the Plan. If a
claim is made by the Participant or Beneficiary for any benefit
forfeited under this section, such benefit shall be reinstated.
13.6 LIMITATION OF RIGHTS. Participation hereunder shall not grant any
Participant the right to be retained in the Service of the Employer or
any other rights or interest in the Plan or Trust fund other than those
specifically herein set forth.
13.7 PARTICIPANT CONTRIBUTIONS. Each Participant, regardless of his length
of Service with the Employer, shall be fully vested (100%) at all times
in any portion of his Participant's Account attributable to the
following:
o Rollover Contributions.
13.8 MERGERS OR TRANSFERS. In the case of any merger or consolidation with
or transfer of assets or liabilities to any other qualified plan after
September 2, 1974, the following conditions must be met:
(A) The sum of the account balances in each plan shall equal the
fair market value (determined as of the date of the merger or
transfer as if the plans had then terminated) of the entire
plan assets.
(B) The assets of each plan shall be combined to form the assets
of the plan as merged (or transferred).
(C) Immediately after the merger (or transfer), each Participant
in the plan merged (or transferred) shall have an account
balance equal to the sum of the account balances the
Participant had in the plans immediately prior to the merger
(or transfer).
(D) Immediately after the merger (or transfer) each Participant in
the plan merged (or transferred) shall be entitled to the same
optional benefit forms as he was entitled to immediately prior
to the merger (or transfer).
In the case of any merger or consolidation with or transfer of assets
or liabilities to any defined benefit plan after September 2, 1974, one
of the plans before such merger, consolidation, or transfer shall be
converted into the other type of plan and either the rules described
above, applicable to the merger of two defined contribution plans, or
the rules applicable to the merger of two defined benefit plans, as
appropriate, shall be applied.
13.9 PARTICIPANT'S ACCOUNT AND VALUATION. A Participant's Account shall be
maintained on behalf of each Participant until such account is
distributed in accordance with the terms of this Plan. At least once
per year, as of the last day of the Plan Year, each Participant's
Account shall be adjusted for any earnings, gains, losses,
contributions, withdrawals, loans, and expenses, attributable to such
Plan Year, in order to obtain a new valuation of the Participant's
Account.
13.10 INVESTMENT OF CONTRIBUTIONS. Each Participant shall have the exclusive
authority to direct the investment of contributions made to his
Participant's Account. In accordance with the procedures established by
the Plan Administrator, the Participant shall elect to have a specified
percentage invested in one or more investment funds, as long as the
designated percentage for each fund is a whole number, and the sum of
the percentages allocated is equal to 100%. In addition, the
Participant may change such
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election four times per Plan Year, once every 90 days. All investment
changes are subject to the rules of the investment fund(s) in which the
Participant's Account is or is to be invested.
13.11 TRANSFERS BETWEEN INVESTMENT FUNDS. A Participant may designate amounts
invested pursuant to the section above to be transferred between the
investment funds four times per Plan Year, once every 90 days, in
accordance with the procedures established by the Plan Administrator.
Notwithstanding the above, the transfer of amounts between investment
funds shall be subject to the rules of the investment funds in which
the Participant's Account is invested or is to be invested.
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ARTICLE XIV
AMENDMENT OR TERMINATION OF THE PLAN
14.1 AMENDMENT OF PLAN. The Employer shall have the right from time to time
to modify or amend, in whole or in part, any or all provisions of the
Plan. All Plan amendments may be adopted on behalf of the Employer by
action of the Retirement Benefits Committee appointed by the Employer,
except an amendment that the Committee reasonably determines would
result in a material increase in Plan costs, in which case, the
amendment shall be adopted only by action of the Employer's Board of
Directors. Such modification or amendment shall be signed by the
Employer and the Administrator. Upon any such modification or amendment
the Administrator, the Retirement Benefits Committee, and the Trustee
shall be furnished a copy thereof. No amendment shall deprive any
Participant or Beneficiary of any Vested Interest hereunder. Any
Participant having not less than three Years of Service shall be
permitted to elect, in writing, to have his Vesting Percentage computed
under the Plan without regard to such amendment.
The period during which the election must be made by the Participant
shall begin no later than the date the Plan Amendment is adopted and
end no later than after the latest of the following dates:
(A) The date which is 60 days after the day the amendment is
adopted; or
(B) The date which is 60 days after the day the amendment becomes
effective; or
(C) The date which is 60 days after the day the Participant is
issued written notice of the amendment by the Employer or
Administrator.
Such written election by a Participant shall be made to the
Administrator.
No amendment to the Plan shall decrease a Participant's Account balance
or eliminate an optional form of distribution. Notwithstanding the
preceding sentence, a Participant's Account balance may be reduced to
the extent permitted under Internal Revenue Code section 412(c)(8).
Furthermore, no amendment to the Plan shall have the effect of
decreasing a Participant's Vested Interest determined without regard to
such amendment as of the later of the date such amendment is adopted or
the date it becomes effective.
14.2 CONDITIONS OF AMENDMENT. The Employer shall not make any amendment
which would cause the Plan to lose its status as a qualified plan
within the meaning of section 401(a) of the Code.
14.3 TERMINATION OF THE PLAN. The Employer intends to continue the Plan
indefinitely for the benefit of its Employees, but reserves the right
to terminate the Plan at any time by resolution of its Board of
Directors. Upon such termination, the liability of the Employer to make
contributions hereunder shall terminate.
14.4 FULL VESTING. Upon the termination or partial termination of the Plan,
or upon complete discontinuance of Employer contributions, the rights
of all affected Participants in and to the amounts credited to each
such Participant's Account shall be 100% vested and nonforfeitable.
14.5 DISTRIBUTIONS UPON PLAN TERMINATION. If this Plan is terminated and the
Employer does not maintain or establish another defined contribution
plan, pursuant to Code section 401(k)(10)(A)(i), each
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Participant shall receive a total distribution, in the form of a
lump-sum distribution as defined in Code section 401(k)(10)(B)(ii), of
his Participant's Account in accordance with the terms and conditions
of Article VI.
However, if this Plan is terminated and the Employer does maintain or
establish another defined contribution plan as discussed in the above
paragraph, or if the Plan is only partially terminated, each
Participant shall receive a total distribution of his Participant's
Account, excluding any amounts attributable to Elective Deferral
Contributions and contributions made by the Employer designated as
401(k) contributions in accordance with the terms and conditions of
Article VI. In such a situation, any amounts in a Participant's Account
attributable to Elective Deferral Contributions and contributions made
by the Employer designated as 401(k) contributions may be distributed
only upon the occurrence of an event described in Article VI.
No Participant consent will be required for a distribution where no
successor plan exists. However, if the Employer does maintain a
successor plan, Participant consent is required for a distribution
exceeding $3,500. The Participant's Account will be transferred to such
successor plan if the required consents are not received.
14.6 APPLICATION OF FORFEITURES. Upon the termination of the Plan, any
Forfeitures which have not been applied as of such termination to
reduce the contribution made by the Employer shall be credited on a pro
rata basis to the Participant's Account of the then Active Participants
in the same manner as the last contribution made by the Employer under
the Plan.
14.7 APPROVAL BY THE INTERNAL REVENUE SERVICE. Notwithstanding any other
provisions of this Plan, the Employer's adoption of this Plan is
subject to the condition precedent that the Employer's Plan shall be
approved and qualified by the Internal Revenue Service as meeting the
requirements of section 401(a) of the Internal Revenue Code and that
the Trust established in connection herewith shall be entitled to
exemption under the provisions of section 501(a). In the event the Plan
initially fails to qualify and the Internal Revenue Service issues a
final ruling that the Employer's Plan or Trust fails to so qualify as
of the Effective Date, all liability of the Employer to make further
contributions hereunder shall cease. The Plan Administrator, Trustee
and any other Named Fiduciary shall be notified immediately by the
Employer, in writing, of such failure to qualify. Upon such
notification, the value of the Participants' Accounts shall be
distributed in cash to the Employer, subject to the terms and
conditions of Article VI.
That portion of such distribution which is attributable to Participant
Contributions as specified in Section 13.7, if any, shall be paid to
the Participant, and the balance of such distribution shall be paid to
the Employer.
14.8 SUBSEQUENT UNFAVORABLE DETERMINATION. If the Employer is notified
subsequent to initial favorable qualification that the Plan is no
longer qualified within the meaning of section 401(a) of the Internal
Revenue Code, or that the Trust is no longer entitled to exemption
under the provisions of section 501(a), and if the Employer shall fail
within a reasonable time to make any necessary changes in order that
the Plan and/or Trust shall so qualify, the Participants' Accounts
shall be fully vested and nonforfeitable and shall be disposed of as if
the Plan had terminated, in the manner set forth in this Article XIV.
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ARTICLE XV
SUBSTITUTION OF PLANS
15.1 SUBSTITUTION OF PLANS. Subject to the provisions of Section 13.8 the
Employer may substitute an individually designed plan or a master or
prototype plan for this Plan without terminating this Plan as embodied
herein and this shall be deemed to constitute an amendment and
restatement in its entirety of this Plan as heretofore adopted by the
Employer; provided, however, that the Employer shall have certified to
the Trustee that this Plan is being continued on a restated basis which
meets the requirements of section 4Ol(a) of the Internal Revenue Code
and ERISA.
15.2 TRANSFER OF ASSETS. Upon 90 days written notification from the Employer
that a different plan meeting the requirements set forth in Section
15.1 above has been executed and entered into by the Administrator and
the Employer, and after the Trustee has been furnished the Employer's
certification in writing that the Employer intends to continue the Plan
as a qualified Plan under section 40l(a) of the Internal Revenue Code
and ERISA, assets which represent the value of all Participant's
Accounts may be transferred in accordance with the instructions
received from or on behalf of the Employer. The Trustee may rely fully
on the representations or directions of the Employer with respect to
any such transfer and shall be fully protected and discharged with
respect to any such transfer made in accordance with such
representations, instructions, or directions.
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ARTICLE XVI
MISCELLANEOUS
16.1 NON-REVERSION. This Plan has been established by the Employer for the
exclusive benefit of the Participants and their Beneficiaries. Except
as otherwise provided in Sections 14.7, 16.7, and 16.8, under no
circumstances shall any funds contributed hereunder, at any time,
revert to or be used by the Employer, nor shall any such funds or
assets of any kind be used other than for the benefit of the
Participants or their Beneficiaries.
16.2 GENDER AND NUMBER. When necessary to the meaning hereof, and except
when otherwise indicated by the context, either the masculine or the
neuter pronoun shall be deemed to include the masculine, the feminine,
and the neuter, and the singular shall be deemed to include the plural.
16.3 REFERENCE TO THE CODE AND ERISA. Any reference to any section of the
Internal Revenue Code, ERISA, or to any other statute or law shall be
deemed to include any successor law of similar import.
16.4 GOVERNING LAW. The Plan and Trust shall be governed and construed in
accordance with the laws of the state where the Trustee has its
principal office if the Trustee is a corporation or an association,
otherwise under the laws of the state where the Employer has its
principal office.
16.5 COMPLIANCE WITH THE CODE AND ERISA. This Plan is intended to comply
with all requirements for qualification under the Internal Revenue Code
and ERISA, and if any provision hereof is subject to more than one
interpretation or any term used herein is subject to more than one
construction, such ambiguity shall be resolved in favor of that
interpretation or construction which is consistent with the Plan being
so qualified. If any provision of the Plan is held invalid or
unenforceable, such invalidity or unenforceability shall not affect any
other provisions, and this Plan shall be construed and enforced as if
such provision had not been included.
16.6 NON-ALIENATION. It is a condition of the Plan, and all rights of each
Participant shall be subject thereto, that no right or interest of any
Participant in the Plan shall be assignable or transferable in whole or
in part, either directly or by operation of law or otherwise,
including, but without limitation, execution, levy, garnishment,
attachment, pledge, bankruptcy or in any other manner, and no right or
interest of any Participant in the Plan shall be liable for or subject
to any obligation or liability of such Participant. The preceding
sentence shall not preclude the enforcement of a federal tax levy made
pursuant to section 6331 of the Code or the collection by the United
States on a judgement resulting from an unpaid tax assessment.
16.7 CONTRIBUTION RECAPTURE. Notwithstanding any other provisions of this
Plan, (1) in the case of a contribution which is made by an Employer by
a mistake of fact, Section 16.1 shall not prohibit the return of such
contribution to the Employer within one year after the payment of the
contribution, and (2) if a contribution is conditioned upon the
deductibility of the contribution under section 404 of the Code, then,
to the extent the deduction is disallowed, Section 16.1 shall not
prohibit the return to the Employer of such contribution (to the extent
disallowed) within one year after the disallowance of the deduction.
The amount which may be returned to the Employer is the excess of (1)
the amount contributed over (2) the amount that would have been
contributed had there not occurred a mistake of fact or a mistake in
determining the deduction. Earnings attributable to the excess
contribution may not be returned to the Employer, but losses
attributable thereto must reduce the amount to be so returned.
Furthermore, if the
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<PAGE>
withdrawal of the amount attributable to the mistaken contribution
would cause the balance of the individual account of any Participant to
be reduced to less than the balance which would have been in the
account had the mistaken amount not been contributed, then the amount
to be returned to the Employer would have to be limited so as to avoid
such reduction.
16.8 QUALIFIED DOMESTIC RELATIONS ORDERS. Notwithstanding any other
provisions of this Plan, the Participant's Account may be segregated
and distributed pursuant to a Qualified Domestic Relations Order within
the meaning of Internal Revenue Code section 414(p). The Plan
Administrator shall establish procedures for determining if a Domestic
Relations Order is qualified within the meaning of section 414(p).
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<PAGE>
ARTICLE XVI-A
TOP-HEAVY PROVISIONS
16A.1 DEFINITIONS. The following definitions are atypical terms used only in
this Article XVI-A.
(A) Compensation. The term Compensation, whenever used in this
Article XVI-A, means Compensation as defined in Article V of
the Plan, but includes the amount of any elective
contributions made by the Employer on the Employee's behalf to
a cafeteria plan established in accordance with the provisions
of Code section 125, a qualified cash or deferred arrangement
in accordance with the provisions of Code section 402(e)(3), a
simplified employee pension plan in accordance with the
provisions of Code section 402(h), or a tax sheltered annuity
plan maintained in accordance with the provisions of Code
section 403(b).
(B) Key Employee. The term Key Employee means any Employee or
former Employee (including deceased Employees) of the Employer
who at any time during the Plan Year or the four preceding
Plan Years was:
(1) An officer of the Employer, but in no event if there
are more than 500 Employees, shall more than 50
Employees be considered Key Employees. If there are
less than 500 Employees, in no event shall the
greater of three Employees or 10% of all Employees,
be taken into account under this Subsection as Key
Employees. If the number of officers is limited by
the terms of the preceding sentence, the Employees
with the highest Compensation will be considered to
be officers.
In no event shall an officer whose annual
Compensation is less than 50% of the dollar
limitation in effect under Code section 415(b)(1)(A)
as adjusted from time to time, be a Key Employee for
any such Plan Year.
In making a determination under this Subsection,
Employees who have not completed six months of
Service by the end of the applicable Plan Year,
Employees who normally work less than 17-1/2 hours
per week, Employees who normally work less than six
months during a year, Employees who have not attained
21, and nonresident aliens who receive no earned
income from U.S. sources, shall be excluded.
Also excluded under the above paragraph are Employees
who are covered by an agreement which the Secretary
of Labor finds to be a collective bargaining
agreement. Such Employees will be excluded only if
retirement benefits were the subject of good faith
bargaining, 90% of the Employees of the Employer are
covered by the agreement, and the Plan covers only
Employees who are not covered by the agreement.
(2) One of the 10 Employees who has annual Compensation
greater than the amount in effect under Internal
Revenue Code section 415(c)(1)(A) and who owns (or is
considered to own within the meaning of Internal
Revenue Code section 318, as modified by section
416(i)(1)(B)(iii)) both more than 1/2% interest and
the largest interest in the Employer. If
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<PAGE>
two or more Employees own equal interests in the
Employer, the ranking of ownership share will be in
descending order of such Employees' Compensation. If
the Employer is other than a corporation, the term
"interest" as used herein shall refer to capital or
profits interest.
(3) An Employee who owns (or is considered to own within
the meaning of Internal Revenue Code section 318, as
modified by section 416(i)(1)(B)(iii)) more than 5%
of the outstanding stock of the Employer or stock
possessing more than 5% of the total combined voting
power of all stock of the Employer. If the Employer
is other than a corporation, an Employee who owns, or
is considered to own, more than 5% of the capital or
profits interest in the Employer. The determination
of 5% ownership shall be made separately for each
member of a controlled group of corporations (as
defined in Code section 414(b)), or of a group of
trades or businesses (whether or not incorporated)
that are under common control (as defined in Code
section 414(c)), or of an affiliated service group
(as defined in Code section 414(m)).
(4) An Employee who owns (or is considered to own within
the meaning of Internal Revenue Code section 318, as
modified by section 416(i)(1)(B)(iii)) more than 1%
of the outstanding stock of the Employer or stock
possessing more than 1% of the total combined voting
power of all stock of the Employer, and whose annual
Compensation is more than $150,000. If the Employer
is other than a corporation, an Employee who owns, or
is considered to own, more than 1% of the capital or
profits interest in the Employer, and whose annual
Compensation is more than $150,000.
For the purposes of paragraphs (2), (3) and (4) above, if an
Employee's ownership interest changes during a given Plan
Year, his ownership interest for that Plan Year is the largest
interest owned at any time during the Plan Year.
The Beneficiary of any deceased Employee who was a Key
Employee shall be considered a Key Employee for the same
period as the deceased Employee would have been so considered.
(C) Non-Key Employee. The term Non-Key Employee means any Employee
or former Employee of the Employer who is not a Key Employee.
The Beneficiary of any deceased Employee who is a Non-Key
Employee shall be considered a Non-Key Employee for the same
period as the deceased Employee would have been so considered.
(D) Determination Date. The term Determination Date means, with
respect to a Plan Year, the last day of the preceding Plan
Year, or, in the case of the first Plan Year of a plan, the
last day of the first Plan Year.
(E) Valuation Date. The term Valuation Date means, with respect to
a Plan Year, the last day of the preceding Plan Year and is
the date on which Account Balances are valued for the purpose
of determining the Plan's Top-Heavy status.
(F) Account Balance. The term Account Balance means the value of
the Participant's Account standing to the credit of a
Participant, a former Participant, or the Beneficiary of a
former Participant, as the case may be, as of the Valuation
Date. Such Account Balance shall include any contributions due
as of the Determination Date and all distributions made to the
Participant (or former Participant or Beneficiary, as the case
may be) during the Plan Year or the preceding four
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Plan Years, except for distributions of Related Rollovers.
However, the Account Balance shall not include any Unrelated
Rollovers made to the Plan after December 31, 1983.
A Related Rollover is a Rollover Contribution or Transfer that
either was not initiated by the Employee or was made to a plan
maintained by the same Employer.
An Unrelated Rollover is a Rollover Contribution or Transfer
that was initiated by the Employee and was made from a plan
maintained by one employer to a plan maintained by another
employer.
For purposes of this Subsection (F), the term Employer shall
include all employers that are required to be aggregated in
accordance with Internal Revenue Code sections 414(b), (c) or
(m).
(G) Required Aggregation Group. The term Required Aggregation
Group means all of the plans of the Employer which cover a Key
Employee, including any such plan maintained by the Employer
pursuant to the terms of a collective bargaining agreement,
and each other plan of the Employer which enables any plan in
which a Key Employee participates to satisfy the requirements
of Internal Revenue Code sections 401(a)(4) or 410.
(H) Permissive Aggregation Group. The term Permissive Aggregation
Group means all of the plans of the Employer which are
included in the Required Aggregation Group plus any plans of
the Employer which provide comparable benefits to the benefits
provided by the plans in the Required Aggregation Group and
are not included in the Required Aggregation Group, but which
satisfy the requirements of Internal Revenue Code sections
401(a)(4) and 410 when considered together with the Required
Aggregation Group, including any plan maintained by the
Employer pursuant to a collective bargaining agreement which
does not include a Key Employee.
(I) Top-Heavy Plan. The Plan is Top-Heavy if it meets the
requirements of Section 16A.2.
(J) Super Top-Heavy Plan. The Plan is Super Top-Heavy if it meets
the requirements of Section 16A.3.
(K) Terminated Plan. A plan shall be considered to be a Terminated
Plan if it:
(1) has been formally terminated;
(2) has ceased crediting service for benefit accruals and
vesting; or
(3) has been or is distributing all plan assets to
Participants (or Beneficiaries) as soon as
administratively possible.
With the exception of the Minimum Employer Contribution
Requirements and the Minimum Vesting Requirements, the
Top-Heavy provisions of this Article XVI-A will apply to any
Terminated Plan which was maintained at any time during the
five years ending on the Determination Date.
(L) Frozen Plan. A plan shall be considered to be a Frozen Plan if
all benefit accruals have ceased but all assets have not been
distributed to Participants or Beneficiaries. The Top-Heavy
provisions of this Article XVI-A will apply to any such Frozen
Plan.
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16A.2 TOP-HEAVY PLAN STATUS. This Plan shall be determined to be Top-Heavy
if, as of the Determination Date, the aggregate of the Account Balances
of Key Employees exceeds 60% of the aggregate of the Account Balances
of all Employees covered by the Plan. The determination of whether the
Plan is Top-Heavy shall be made after aggregating all plans in the
Required Aggregation Group, and after aggregating any other plans which
are in the Permissive Aggregation Group, if such permissive aggregation
thereby eliminates the Top-Heavy status of any plan within such
Required Aggregation Group.
In determining whether this Plan is Top-Heavy, the Account Balance of a
former Key Employee who is now a Non-Key Employee will be disregarded.
Likewise, for Plan Years beginning after December 31, 1984, the Account
Balance of any Employee who has not performed an Hour of Service during
the five-year period ending on the Determination Date will be excluded.
16A.3 SUPER TOP-HEAVY PLAN STATUS. This Plan shall be determined to be Super
Top-Heavy if, as of the Determination Date, the Plan would meet the
test specified in Section 16A.2 above, if 90% were substituted for 60%
in each place where it appears. The Plan may be permissively aggregated
in order to avoid being Super Top-Heavy.
16A.4 TOP-HEAVY REQUIREMENTS. Notwithstanding anything in the Plan to the
contrary, if the Plan is Top-Heavy with respect to any Plan Year
beginning after December 31, 1983, then the Plan shall meet the
following requirements for such Plan Year:
(A) Compensation Limit. The annual Compensation of each
Participant taken into account under the Plan shall not exceed
$150,000; however, such dollar limitation shall be adjusted to
take into account any adjustments made by the Secretary of the
Treasury or his delegate pursuant to Internal Revenue Code
section 416(d)(2).
(B) Minimum Employer Contribution Requirements. A Minimum Employer
Contribution of 3% of each Eligible Employee's Compensation
will be made on behalf of each Eligible Employee in the Plan.
If the actual Employer Contribution made or required to be
made for Key Employees is less than 3%, the Minimum Employer
Contribution required hereunder shall not exceed the
percentage contribution made for the Key Employee for whom the
percentage of Employer Contributions and Forfeitures relative
to the first $150,000 of Compensation is the highest for the
Plan Year after taking into account contributions or benefits
under other qualified plans in the Plan's Required Aggregation
Group.
However, if a Participant in this Plan is also a participant
in a defined benefit plan maintained by the Employer, such
Participant shall receive the Top-Heavy minimum benefit under
the defined benefit plan in lieu of the Minimum Employer
Contribution described herein. Such minimum benefit will be
equal to the Participant's average yearly Compensation during
his five highest-paid consecutive years, multiplied by the
lesser of 2% per Year of Service or 20%. Compensation periods
and Years of Service to be taken into account in the
calculation of this benefit shall be subject to any
limitations set forth in the defined benefit plan.
For any Limitation Year in which this Plan is Top-Heavy but
not Super Top-Heavy, the Minimum Employer Contribution shall
be increased to 4% of each Eligible Employee's Compensation in
order to preserve the use of the factor 1.25 in the
denominators of the fractions described in Section 5.4(B)(1)
and Section 5.4(D)(1). A Participant who receives the
Top-Heavy minimum benefit in lieu of the Minimum Employer
Contribution shall receive an increased minimum benefit
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<PAGE>
equal to the Participant's average yearly Compensation during
his five highest-paid consecutive years, multiplied by the
lesser of 3% per Year of Service or 20% plus one percentage
point (to a maximum of 10 percentage points) for each year
that this Plan is maintained. Compensation periods and Years
of Service to be taken into account in the calculation of this
increased minimum benefit shall be subject to any limitations
set forth in the defined benefit plan.
For any Limitation Year in which this Plan is Super Top-Heavy,
the factor of 1.25 in the denominators of the fractions
described in Sections 5.4(B)(1) and 5.4(D)(1) shall be reduced
to 1.0. The Minimum Employer Contribution payable in such
years shall be 3% of each Eligible Employee's Compensation and
the defined benefit Top-Heavy minimum benefit shall be average
Compensation multiplied by the lesser of 2% per Year of
Service or 20%.
Eligible Employees are all Non-Key Employees who are
Participants in the Plan as of the last day of the Plan Year
regardless of whether they had completed 1,000 Hours of
Service during the Plan Year. Also included are Non-Key
Employees who would have been Participants as of the last day
of the Plan Year except:
o The Employee's Compensation was below a required
minimum level; or
o The Employee chose not to make Elective Deferral
Contributions when he was eligible to do so.
Elective Deferral Contributions and Matching Contributions
made to Key Employees shall be taken into account as Employer
Contributions allocated to such Key Employees when determining
whether a lower Minimum Employer Contribution is permissible
for purposes of this section. However, Elective Deferral
Contributions made by Non-Key Employees shall not be used
towards satisfying the Minimum Employer Contribution required
to be allocated to Non-Key Employees pursuant to this section.
Matching Contributions made on behalf of Non-Key Employees
may, at the option of the Employer, be used to satisfy the
Minimum Employer Contribution requirement. However, for Plan
Years beginning after December 31, 1988, to the extent that
Matching Contributions are used for this purpose, they shall
not be used to satisfy the Actual Contribution Percentage
Test.
(C) Minimum Vesting Requirements. The vesting provisions set forth
in the definition of Vesting Percentage in Article I shall
continue to apply whether or not the Plan is a Top-Heavy Plan.
Such vesting provisions satisfy the requirements of section
416(b) of the Internal Revenue Code, as applicable to
Top-Heavy Plans.
73
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration
Statement of Provident Bankshares Corporation on Form S-8 of our report dated
January 15, 1997 on our audits of the consolidated financial statements of
Provident Bankshares Corporation as of December 31, 1996 and 1995 and for the
years ended December 31, 1996, 1995 and 1994, which report is included in
Provident Bankshares Corporation's Annual Report on Form 10-K for the year ended
December 31, 1996; and, our report dated June 27, 1997 on our audits of the
Employees' Retirement Savings Plan of Provident Bank of Maryland as of December
31, 1996 and 1995 and for the years ended December 31, 1996 and 1995, which
report is included in the Employees' Retirement Savings Plan of Provident Bank
of Maryland Annual Report on Form 11-K for the year ended December 31, 1996.
/s/ COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
February 2, 1998
POWER OF ATTORNEY
We, the undersigned Officers and Directors of Provident Bankshares
Corporation (the "Corporation") hereby constitute and appoint James R. Wallis
and Robert L. Davis, and each of them, with power of substitution, our true and
lawful attorneys-in-fact with full power to sign for us, in our names and in the
capacities indicated below, a registration statement or registration statements
on Form S-8, and all amendments thereto (including post-effective amendments),
for the purpose of registering under the Securities Act of 1933 up to 750,000
shares of the Common Stock (and related Preferred Share Purchase Rights) of the
Corporation which may be offered or sold from time to time pursuant to the terms
of the Employees' Retirement Savings Plan of the Provident Bank of Maryland (the
"Plan"), together with an indeterminate number of participation interests in the
Plan.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S><C>
/s/ Carl W. Stearn
- ------------------------
Carl W. Stearn Chairman of the Board, January 21, 1998
Chief Executive Officer
and Director (Principal
Executive Officer)
/s/ James R. Wallis
- ------------------------
James R. Wallis Executive Vice January 21, 1998
President and Chief
Financial Officer
(Principal Financial
Officer)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S><C>
/s/ R. Wayne Hall
- ----------------------------
R. Wayne Hall Treasurer (Principal January 21, 1998
Accounting Officer)
/s/ Robert B. Barnhill, Jr.
- ----------------------------
Robert B. Barnhill, Jr. Director January 21, 1998
/s/ Melvin A. Bilal
- ----------------------------
Melvin A. Bilal Director January 21, 1998
/s/ Dr. Calvin W. Burnett
- ----------------------------
Dr. Calvin W. Burnett Director January 21, 1998
/s/ M. Jenkins Cromwell, Jr.
- ----------------------------
M. Jenkins Cromwell, Jr. Director January 21, 1998
/s/ Pierce B. Dunn
- ----------------------------
Pierce B. Dunn Director January 21, 1998
/s/ Enos K. Fry
- ----------------------------
Enos K. Fry Director January 21, 1998
/s/ Herbert W. Jorgensen
- ----------------------------
Herbert W. Jorgensen Director January 21, 1998
/s/ Peter M. Martin
- ----------------------------
Peter M. Martin Director January 21, 1998
/s/ Frederick W. Meier, Jr.
- ----------------------------
Frederick W. Meier, Jr. Director January 21, 1998
/s/ Francis G. Riggs
- ----------------------------
Francis G. Riggs Director January 21, 1998
/s/ Sheila K. Riggs
- ----------------------------
Sheila K. Riggs Director January 21, 1998
</TABLE>
- 2 -
