<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 4, 1998
REGISTRATION NO. 333-____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________
FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
__________
COMMERCIAL NATIONAL FINANCIAL CORPORATION
(Exact name of Registrant as specified in its charter)
MICHIGAN 38-2799780
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
101 NORTH PINE RIVER STREET
ITHACA, MICHIGAN 48847
(Address of Principal executive offices) (Zip Code)
COMMERCIAL BANK
EMPLOYEE SAVINGS AND STOCK OWNERSHIP PLAN
(Full title of the plan)
JEFFREY S. BARKER, PRESIDENT
101 NORTH PINE RIVER STREET
ITHACA, MI 48847
(Name and address of agent for service)
517/875-4144
(Telephone number, including area code, of agent for service)
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CALCULATION OF REGISTRATION FEE
=======================================================================================
Proposed Proposed
Amount Maximum Maximum Amount of
Title of Securities to be Offering Price Aggregate Registration
to be Registered Registered Per Share Offering Price Fee
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Shares 50,000 Sh (1)(2) $ 36.50(3) $1,825,000(3) $507(3)
- ---------------------------------------------------------------------------------------
</TABLE>
(1) 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.
(2) Subject to adjustment for stock splits and similar events.
(3) The registration fee has been calculated pursuant to Rule 457(h) and (c),
based on the average price of the shares on December 3, 1998.
<PAGE> 2
PART I
Information Required In the Section 10(a) Prospectus
Item 1. Plan Information.*
Item 2. Registrant Information and Employee Plan Annual Information.*
*The document(s) containing the information specified in Part I of Form
S-8 will be sent or given to participants as specified by Rule 428(b)(1)
promulgated by the Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "Securities Act"). Such document(s) are
not being filed with the SEC, but constitute (along with the documents
incorporated by reference into the Registration Statement pursuant to Item 3 of
Part II hereof) a prospectus that meets the requirements of Section 10(a) of the
Securities Act.
PART II
Information Required In the Registration Statement
Item 3. Incorporation of Documents by Reference.
The following documents filed by Commercial National Financial
Corporation (the "Company") and the Commercial Bank Employee Savings and Stock
Ownership Plan (the "Plan") with the SEC are incorporated in and made a part of
this Registration Statement by reference, except to the extent that any
statement of information therein is modified, superseded or replaced by a
statement or information contained in any other subsequently filed document
incorporated herein by reference:
(a) The Company's and the Plan's latest annual report filed
pursuant to Section 13(a) or 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and, in the case
of the Company, the latest prospectus filed pursuant to Rule
424(b) under the Securities Act, which contains audited
financial statements for the Company's latest fiscal year for
which such statements have been filed or the Company's
effective registration statement on Form 10 or 20F filed under
the Exchange Act containing audited financial statements for
the Company's last fiscal year.
(b) All other reports, by the Company or the Plan filed pursuant
to Section 13(a) or 15(d) of the Exchange Act since the end of
the fiscal year covered by the registration document referred
to in (a) above.
(c) If the class of securities to be offered is registered under
Section 12 of the Exchange Act, the description of that class
of securities which is contained in a
1
<PAGE> 3
registration statement filed under the Exchange Act, including
any amendment or report filed for the purpose of updating that
description.
All reports and other documents subsequently filed by the Company or
the Plan pursuant to Sections 13(a) and (c), 14 and 15(d) of the Exchange Act,
prior to the filing of a post-effective amendment which indicates that all
securities offered hereby have been sold or which deregisters all securities
remaining unsold, shall be deemed to be incorporated by reference herein and to
be a part hereof from the date of the filing of such reports and documents.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
The bylaws of the Registrant provide that the Registrant shall
indemnify to the full extent permitted by law, any person who is made, or
threatened to be made, a party to any action, suit or proceeding, including
those brought by or in the right of the Registrant, (whether civil, criminal,
administrative or investigative) by reason of the fact that he is or was a
director of the Registrant or serves or served any other enterprise at the
request of the Registrant.
The Registrant's articles of incorporation also provide that a director
of the Registrant shall not be personally liable to the Registrant or its
shareholders for money damages for any action taken or failure to take any
action as a director. However, it does not eliminate or limit the liability of a
director for any of the following: (1) the amount of a financial benefit
received by a director to which he or she is not entitled, (2) intentional
infliction of harm on the corporation or the shareholders, (3) a violation of
Section 551 of the Michigan Business Corporation Act, or (4) an intentional
criminal act.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
The Exhibits to this Registration Statement are listed in the Exhibit
Index of this Registration Statement, which Index is incorporated herein by
reference.
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The Registrant will submit the Plan, attached as Exhibit 4, to the
Internal Revenue Service ("IRS") in a timely manner and will make all changes
required by the IRS in order to qualify the Plan.
Item 9. Undertakings.
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
Registration Statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement.
provided, however, that paragraphs (A)(1)(i) and (A)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in the periodic reports filed by the Registrant pursuant
to Section 13 or 15(d) of the Exchange Act, as amended, that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act, 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, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act, as amended, (and, where applicable, each filing of the Plan's
annual report pursuant to Section 15(d) of the Exchange Act, as amended) 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.
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<PAGE> 5
C. The undersigned registrant hereby undertakes to deliver or cause to
be delivered with the prospectus, to each person to whom the prospectus is sent
or given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
D. Insofar as indemnification for liabilities arising under the
Securities Act, may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the SEC 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.
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act of
1933, as amended, 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 Ithaca, State of
Michigan, on December 3, 1998.
COMMERCIAL NATIONAL FINANCIAL CORPORATION
By: /s/ Jeffrey S. Barker
-----------------------------
Jeffrey S. Barker, President and
Principal Executive Officer
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Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
Signature Title Date
- --------- ----- ----
/s/ Jeffrey S. Barker
- --------------------------- President December 3, 1998
Jeffrey S. Barker (Principal Executive
Officer) and Director
/s/ Patrick G. Duffy
- --------------------------- Vice President & Chief December 3, 1998
Patrick G. Duffy Financial Officer (Principal
Financial and Accounting Officer)
/s/ Richard F. Abbott
- --------------------------- Director December 3, 1998
Richard F. Abbott
/s/ Jefferson P. Arnold
- --------------------------- Director December 3, 1998
Jefferson P. Arnold
/s/ Don J. Dewey
- --------------------------- Director December 3, 1998
Don J. Dewey
/s/ David A. Ferguson
- --------------------------- Director December 3, 1998
David A. Ferguson
/s/ Kenneth R. Luneack
- --------------------------- Director December 3, 1998
Kenneth R. Luneack
/s/ Kim C. Newson
- --------------------------- Director December 3, 1998
Kim C. Newson
/s/ Howard D. Poindexter
- --------------------------- Director December 3, 1998
Howard D. Poindexter
/s/ Russell M. Simmet
- --------------------------- Director December 3, 1998
Russell M. Simmet
/s/ Scott E. Sheldon
- --------------------------- Director December 3, 1998
Scott E. Sheldon
5
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The Plan. Pursuant to the requirements of the Securities Act of 1933,
as amended the plan administrator of the employee benefit plan has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Ithaca, State of Michigan, on December
3, 1998.
HUMAN RESOURCES COMMITTEE
PLAN ADMINISTRATOR
By:/s/ David A. Ferguson
------------------------
David A. Ferguson
for the Committee
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EXHIBIT INDEX
-------------
Sequentially
Exhibit Numbered
Number Page
------ ------------
4 The Commercial Bank Employee 8 - 115
Savings and Stock Ownership Plan
5 Opinion of Foster, Swift, Collins & 116 - 118
Smith, P.C. regarding the legality of
securities being registered
23.1 Consent of Crowe, Chizek and Company LLP 119 - 120
23.2 Consent of Foster, Swift, Collins &
Smith, P.C. (included in Exhibit 5)
7
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Exhibit 4
8
<PAGE> 2
EXHIBIT 4
COMMERCIAL BANK
EMPLOYEE SAVINGS AND STOCK OWNERSHIP PLAN
9
<PAGE> 3
<TABLE>
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<S> <C>
ARTICLE I -PURPOSE...............................................................................................12
ARTICLE II -DEFINITIONS..........................................................................................12
2.1 Definitions....................................................................................12
ARTICLE III -PARTICIPATION AND SERVICE...........................................................................28
3.1 Participation..................................................................................28
3.2 Service........................................................................................28
3.3 Inactive Status................................................................................28
3.4 Participation and Service Upon Reemployment....................................................29
ARTICLE IV -CONTRIBUTIONS AND FORFEITURES........................................................................30
4.1 Employer Contributions.........................................................................30
4.2 Participant Elective Deferrals.................................................................32
4.3 After-Tax Contributions by Participants........................................................37
4.4 Limitations on Employee and Matching Contributions.............................................37
4.5 Final Disposition of Forfeitures...............................................................42
4.6 Rollover or Transfer Amount from Other Plans...................................................43
4.7 Independent Appraisal of Employer Stock........................................................44
ARTICLE V -ALLOCATIONS TO PARTICIPANTS' ACCOUNTS.................................................................44
5.1 Maintenance of Accounts:.......................................................................44
5.2 Account Adjustments............................................................................47
5.3 Limitation on Allocations......................................................................50
ARTICLE VI -BENEFITS.............................................................................................57
6.1 Benefit Distributions..........................................................................57
6.2 Normal Retirement, Early Retirement or Disability..............................................57
6.3 Death..........................................................................................58
6.4 Termination for Other Reasons..................................................................59
6.5 Payments of Benefits...........................................................................61
6.6 Distribution Restrictions......................................................................69
6.7 Waiver of Distribution Restrictions............................................................73
6.8 Investment Direction...........................................................................73
6.9 Dividend Distributions.........................................................................74
6.10 Voting Employer Stock..........................................................................75
6.11 Diversification of Investments.................................................................76
6.12 Rights, Options and Restrictions on Employer Stock.............................................77
6.13 Securities and Exchange Commission Approval....................................................78
6.14 Hardship Withdrawals of Elective Deferrals.....................................................78
6.15 Loans to Participants..........................................................................79
ARTICLE VII -TRUST FUND..........................................................................................81
7.1 Trust Contributions............................................................................81
7.2 Investment of Trust Assets.....................................................................82
ARTICLE VIII -ADMINISTRATION.....................................................................................84
8.1 Allocation of Responsibility Among Fiduciaries.................................................84
8.2 Appointment of Committee.......................................................................85
8.3 Claims Procedure...............................................................................86
8.4 Records and Reports............................................................................86
8.5 Other Committee Powers and Duties..............................................................86
</TABLE>
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<TABLE>
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<S> <C> <C>
8.6 Rules and Decisions............................................................................87
8.7 Authorization of Benefit Payments..............................................................87
8.8 Application and Forms for Benefits.............................................................87
8.9 Facility of Payment............................................................................87
8.10 Indemnification of the Committee...............................................................87
ARTICLE IX -MISCELLANEOUS........................................................................................88
9.1 Nonguarantee of Employment.....................................................................88
9.2 Rights to Trust Assets.........................................................................88
9.3 Nonalienation of Benefits......................................................................88
9.4 Discontinuance of Employer Contributions.......................................................88
9.5 Controlled Group of Corporations...............................................................88
9.6 Control of Trades or Businesses by Owner-Employee..............................................88
9.7 Leased Employees...............................................................................89
9.8 Unclaimed Pension Checks.......................................................................90
9.9 Correction of Errors...........................................................................90
9.10 Construction...................................................................................90
ARTICLE X -AMENDMENTS AND ACTION BY EMPLOYER.....................................................................90
10.1 Amendments.....................................................................................90
10.2 Action by Employer.............................................................................91
10.3 Amendment or Change of Vesting Schedule........................................................91
ARTICLE XI -SUCCESSOR EMPLOYER, MERGER OR CONSOLIDATION..........................................................91
11.1 Successor Employer.............................................................................91
11.2 Plan Assets....................................................................................91
ARTICLE XII -PLAN TERMINATION....................................................................................92
12.1 Right to Terminate.............................................................................92
12.2 Partial Termination............................................................................92
12.3 Liquidation of the Trust Fund..................................................................92
12.4 Manner of Distribution.........................................................................93
ARTICLE XIII -TOP-HEAVY PLAN RESTRICTIONS........................................................................93
13.1 General Rule...................................................................................93
13.2 Top-Heavy Test.................................................................................93
13.3 Superseding Rules..............................................................................95
13.4 Special Definitions............................................................................96
</TABLE>
COMMERCIAL BANK
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EMPLOYEE SAVINGS AND STOCK OWNERSHIP PLAN
ARTICLE I - PURPOSE
Effective January 1, 1989, Commercial National Bank adopted a restated
version of the Commercial National Bank Employee Retirement and Savings
Investment Plan. Effective as of January 1, 1997 Commercial Bank has amended and
restated and changed the name of such plan to the Commercial Bank Employee
Savings and Stock Ownership Plan the purpose of which is to enable present and
future employees to acquire stock ownership interests in Commercial National
Financial Corporation.
The Plan consists of two portions. The first portion (the "ESOP
Portion") is a stock bonus plan under Section 401(a) of the Internal Revenue
Code of 1986, as amended and an employee savings and stock ownership plan under
Section 4975(e)(7) of the Code. Therefore, funds accumulated pursuant to this
Plan and the Trust established hereunder will be invested primarily or totally
in qualifying employer securities, as defined in Section 409(1) of the Internal
Revenue Code and Section 407(d)(5) of ERISA, in the form of shares of common
stock or preferred stock (meeting certain requirements) of Commercial National
Financial Corporation or an Affiliated Employer.
The second portion (the "401(k) Portion") is a profit sharing plan
under Section 401(a) of the Code that includes a "cash or deferred arrangement"
under Section 401(k) of the Code. If permitted by the Employer's Board of
Directors, employees may invest their elective deferrals in Employer Stock.
The provisions of this Plan shall apply only to an Employee who
terminates employment on or after the Effective Date. The rights and benefits,
if any, of an Employee who terminates employment prior to the Effective Date
shall be determined in accordance with the prior provisions of the Plan in
effect on the date of his employment termination.
ARTICLE II - DEFINITIONS
2.1 Definitions: The following words and phrases shall, when used
herein, have the following respective meanings unless their context clearly
indicates otherwise:
(a) Acquisition Loan: A loan or other extension of credit used
by the Trustee to finance the acquisition of Employer Stock.
(b) Actual Deferral Percentage or ADP:
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(1) For a specified group of Participants for a
Plan Year, the average of the ratios (calculated separately for each Participant
in such group) of:
[a] the amount of Employer Contributions
actually paid to the Trust on behalf of each such Eligible Participant for such
Plan Year, to
[b] the Eligible Participant's Compensation
for such Plan Year (whether or not the Employee was a Participant for the entire
Plan Year).
(2) Employer contributions on behalf of any
Participant shall include:
[a] any Elective Deferrals made pursuant to
the Participant's deferral election, including Excess Elective Deferrals of
Highly Compensated Employees, but excluding:
[1] Excess Elective Deferrals of
Non-Highly Compensated Employees that arise solely from Elective Deferrals made
under the Plan or Plans of this Employer; and
[2] Elective Deferrals that are
taken into account in the Contribution Percentage test (provided the ADP test is
satisfied both with and without exclusion of these Elective Deferrals); and
[b] at the election of the Employer,
Qualified Nonelective Contributions and Qualified Matching Contributions.
For purposes of computing Actual Deferral
Percentages, an Employee who would be a Participant but for the failure to make
Elective Deferrals shall be treated as a Participant on whose behalf no Elective
Deferrals are made.
(3) The ADP for any Eligible Participant who is
a Highly Compensated Employee for the Plan Year and who is eligible to have
Elective Deferrals (and Qualified Nonelective Contributions or Qualified
Matching Contributions, or both, if treated as Elective Deferrals for purposes
of the ADP test) allocated to his or her accounts under two (2) or more plans or
arrangements described in Code Section 401(k) that are maintained by the
Employer shall be determined as if such Elective Deferrals (and, if applicable,
such Qualified Nonelective Contributions or Qualified Matching Contributions, or
both) were made under a single arrangement. If a Highly Compensated Employee
participates in two (2) or more cash or deferred arrangements that have
different Plan Years, all cash or deferred arrangements ending with or within
the same calendar year shall be treated as a single arrangement. Notwithstanding
the foregoing, certain
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<PAGE> 7
plans shall be treated as separate if mandatorily disaggregated under
regulations under Code Section 401(k).
(4) In the event that this Plan satisfies the
requirements of Code Sections 401(k), 401(a)(4), or 410(b) only if aggregated
with one or more other plans, or if one or more other plans satisfy the
requirements of such Code Sections only if aggregated with this Plan, then this
section shall be applied by determining the ADP of employees as if all such
plans were a single plan. For Plan Years beginning after December 31, 1989 plans
may be aggregated in order to satisfy Code Section 401(k) only if they have the
same Plan Year.
(5) For purposes of determining the ADP of a
Participant who is a five percent owner or one of the ten most highly paid
Highly Compensated Employees, the Elective Deferrals (and Qualified Nonelective
Contributions or Qualified Matching Contributions, or both, if treated as
Elective Deferrals for purposes of the ADP test) and Compensation of such
Participant shall include the Elective Deferrals (and, if applicable, Qualified
Nonelective Contributions and Qualified Matching Contributions, or both) and
Compensation for the Plan Year of Family Members (as defined in Code Section
414(q)(6)). Family Members, with respect to such Highly Compensated Employees,
shall be disregarded as separate employees in determining the ADP both for
Participants who are Nonhighly Compensated Employees and for Participants who
are Highly Compensated Employees.
(c) Adjustment Factor: The cost of living adjustment factor
prescribed by the Secretary of the Treasury under Section 415(d) of the Code for
years beginning after December 31, 1987, as applied to such items and in such
manner as the Secretary shall provide.
(d) Affiliated Employer: The Employer and any corporation
which is a member of a controlled group of corporations (as defined in Section
414(b) of the Code) which includes the Employer; any trade or business (whether
or not incorporated) which is under common control (as defined in Section 414(c)
of the Code) with the Employer; any organization (whether or not incorporated)
which is a member of an affiliated service group (as defined in Section 414(m)
of the Code) which includes the Employer; and any other entity required to be
aggregated with the Employer pursuant to regulations under Section 414(o) of the
Code.
(e) Annual Additions: With respect to each Plan Year, the sum
of the following amounts allocated to a Participant's account during the
Limitation Year:
(1) Employer contributions,
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(2) Employee contributions,
(3) Forfeitures, and
(4) Amounts allocated after March 31, 1984 to an
individual medical account, as defined in Code Section 415(l)(2), which is part
of a pension or annuity plan maintained by the Employer are treated as Annual
Additions to a defined contribution plan. Also, amounts derived from
contributions paid or accrued after December 31, 1985, in taxable years ending
after such date, which are attributable to post-retirement medical benefits,
allocated to the separate account of a key employee, as defined in Code Section
419A(d)(3), under a welfare benefit fund, as defined in Code Section 419(e),
maintained by the Employer are treated as Annual Additions to a defined
contribution plan.
For this purpose, any excess amount applied
under Sections 5.3(a)(1)-(4) or Section 5.3(b) in the Limitation Year to reduce
Employer contributions will be considered Annual Additions for such Limitation
Year.
Employee contributions shall not include Rollover or
Transfer Amounts for purposes of this definition of Annual Additions.
The Annual Addition for any Limitation Year beginning
before January 1, 1987 shall not be recomputed to treat all Employee
contributions as an Annual Addition.
(f) Authorized Leave of Absence: Any absence authorized by the
Employer under the Employer's standard personnel practices provided that all
persons under similar circumstances must be treated alike in the granting of
such Authorized Leaves of Absence and provided further that the Participant
returns within the period of authorized absence. An absence due to service in
the Armed Forces of the United States shall be considered an Authorized Leave of
Absence provided that the absence is caused by war or other emergency, or
provided that the Employee is required to serve under the laws of conscription
in time of peace, and further provided that the Employee returns to employment
with the Employer within the period provided by law.
(g) Beneficiary: A person or persons (natural or otherwise)
designated by a Participant in accordance with the provisions of Section 6.4 to
receive any death benefit which shall be payable under this Plan.
(h) Board of Directors: The Employer's governing body
according to law and the Employer's governing documents.
(i) Break in Service: A twelve consecutive month
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period during which an Employee completes 500 or fewer Hours of Service shall
constitute a one year Break in Service. Breaks in Service will be measured on
the same Eligibility Computation Period as are Years of Service.
(j) Committee: The ESOP Committee appointed by the Board of
Directors in accordance with Article VIII.
(k) Compensation: Compensation shall mean the total of all
amounts paid to a Participant by the Employer for personal services determined
on the same basis as reported on the Participant's Federal Income Tax
Withholding Statement (Form W-2).
The following rules shall apply for purposes of this
definition:
(1) Any Employee pre-tax salary reduction
contributions to a tax deferred annuity under Code Section 403(b) or to a
cafeteria plan under Code Section 125 or to a deferred compensation plan under
either of Code Sections 401(k) or 402(h)(1)(B) shall be included in Compensation
for purposes hereof.
(2) Any benefits paid under this and any other
deferred compensation plan and any qualified retirement plan shall be excluded
from Compensation for purposes hereof.
(3) For purposes of Employer contributions
under Section 4.1(b) and allocations thereof under Section 5.2, Compensation
shall not include any Compensation paid to the Participant prior to the date his
participation in the Plan commenced.
(4) For any Plan Year beginning on or after
January 1, 1989, the annual Compensation of each Participant taken into account
under the Plan for any year shall not exceed $200,000, as adjusted by the
Secretary at the same time and in the same manner as under Code Section 415(d).
In determining the Compensation of a Participant for purposes of this
limitation, the rules of Code Section 414(q)(6) 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 (except for purposes of
determining the portion of Compensation up to the integration level if this Plan
provides for permitted disparity), the limitation shall be prorated among the
affected individuals in proportion to each such individual's Compensation as
determined under this section prior to the application of this limitation.
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(5) In addition to other applicable limitations
set forth in the Plan, and notwithstanding any other provision of the Plan to
the contrary, for Plan years beginning on or after January 1, 1994, the annual
compensation of each employee taken into account under the Plan shall not exceed
the OBRA '93 annual compensation limit. The OBRA '93 annual compensation limit
is $150,000, as adjusted by the Commissioner for increases in the cost of living
in accordance with section 401(a)(17)(B) of the Internal Revenue Code. The
cost-of-living adjustment in effect for a calendar year applies to any period,
not exceeding 12 months, over which compensation is determined (determination
period) beginning in such calendar year. If a determination period consists of
few 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.
(l) Disability: Disability means a physical or mental disorder
resulting from a bodily injury or disease or mental disorder which renders a
Participant incapable of continuing in the employment of the Employer within the
meaning of the Social Security laws.
(m) Disqualified Person: Fiduciaries, a person providing
services to the Plan, an Employer any of whose Employees are covered by the
Plan, an employee organization any of whose members are covered by the Plan, an
owner, direct or indirect, of 50% or more of the total combined voting power of
all classes of voting stock or of the total value of all classes of the stock,
or an officer, director, 10% or more shareholder, or a highly compensated
employee as this term is defined in Code Section 4975(e)(2).
(n) Effective Date: January 1, 1997, the date on which the
provisions of this restated Plan become effective.
(o) Elective Deferral Account: The account maintained
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<PAGE> 11
for the purpose of recording a Participant's Elective Deferral Contributions and
adjustments relating thereto.
(p) Elective Deferral Contributions or Elective Deferrals: The
contributions made to the Plan during the Plan Year by the Employer at the
election of the Participant in lieu of cash compensation. These contributions
shall be made pursuant to an elective deferral agreement.
(q) Eligibility Computation Period: The 12 consecutive month
period used to determine whether an Employee has completed a Year of Service or
incurred a Break in Service for purposes of determining his or her eligibility
to participate under Article III. The initial Eligibility Computation Period
shall commence on the employment commencement date (the date on which the
Employee first performs an Hour of Service). The Eligibility Computation Period
thereafter shall be the same as a Plan Year, commencing with the Plan Year which
includes the first anniversary of the Employee's employment commencement date
and succeeding Plan Years.
In the event that a reemployed Employee does not
participate as of his reemployment date, said Employee's Eligibility Computation
Period shall commence on his reemployment commencement date (the date on which
the reemployed Employee first performs an Hour of Service during his
reemployment). The reemployment Eligibility Computation Period thereafter shall
be the same as the Plan Year commencing with the Plan Year which includes the
first anniversary of the Employee's reemployment commencement date, and
succeeding Plan Years.
(r) Employee: Any person other than an independent contractor
who, on or after the Effective Date, is receiving remuneration for personal
services rendered the Employer (or who would be receiving such remuneration
except for an Authorized Leave of Absence) or for personal services rendered to
any other employer required to be aggregated with such Employer under Code
Sections 414(b), (c), (m) or (o). Employee shall also include any Leased
Employee deemed to be an Employee of any Employer described in the previous
sentence as provided in Code Sections 414(n) or (o). Employee shall not include
any individual who is a member of a collective bargaining unit for whom
retirement benefits have been the subject of good faith bargaining.
(s) Employee Contribution Account: The account maintained for
a Participant to record his contributions and adjustments relating thereto.
(t) Employer: Commercial Bank, a banking organization
organized and existing under the laws of the State of Michigan, or its
successors. For purposes of this Plan, Employer also includes an Affiliated
Employer and all members of a controlled
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<PAGE> 12
group of corporations (as defined in Code Section 414(b) as modified by Code
Section 415(h)), all commonly controlled trades or businesses (as defined in
Code Section 414(c) as modified by Code Section 415(h)) or affiliated service
groups (as defined in Code Section 414(m)) of which the Employer is a part, and
any other entity required to be aggregated with the Employer pursuant to
regulations under Code Section 414(o).
(u) Employer Discretionary Contribution Account: The account
maintained for a Participant to record his share of the Employer Profit Sharing
Contributions made pursuant to Section 4.1(b)(1) and adjustments related
thereto.
(v) Employer Matching Contributions: Any contribution to the
Plan made by the Employer for the Plan Year and allocated to a Participant's
account by reason of the Participant's Employee Contributions or Elective
Deferrals.
(w) Employer Matching Contribution Account: The account
maintained for a Participant to record his share of the Employer Matching
Contributions made pursuant to Section 4.1(b)(2) and adjustments relating
thereto.
(x) Employer Profit Sharing Contributions: Those discretionary
Nonelective Contributions made pursuant to Section 4.1(b)(1).
(y) Employer Stock: Common stock of the Employer or an
Affiliated Employer which is a qualifying employer security as defined in
Section 4975(e)(8) of the Internal Revenue Code and Section 407(d)(5) of ERISA
and which, except as otherwise herein provided, is not subject to a put, call,
or other option or buy-sell or similar agreement while held by and when
distributed from the Plan, regardless of whether the Plan is then a leveraged
employee savings and stock ownership plan. Employer Stock may also mean
preferred stock of the Employer or an Affiliated Employer as defined in Section
409(l) of the Internal Revenue Code.
(z) Employer Stock Account: The sub-account maintained for a
Participant to record his share of the contributions of Employer Stock and
adjustments relating thereto.
(aa) ERISA: Public Law No. 93-406, the Employee Retirement
Income Security Act of 1974, as amended from time to time.
(bb) ESOP Portion: The portion of the Plan which is a stock
bonus plan under Section 401(a) of the Code and an employee savings and stock
ownership plan described in Section 4975(e)(7) of the Code which became
effective January 1, 1997.
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<PAGE> 13
(cc) 401(k) Portion: The portion of the Plan which is a profit
sharing plan under Section 401(a) of the Code that includes a "cash or deferred
arrangement" under Section 401(k) of the Code.
(dd) Family Member: An individual described in Section
414(q)(6)(B) of the Code.
(ee) Fiduciaries: The Employer, the Committee, the Trustee and
any designated Investment Manager, but only with respect to the specific
responsibilities of each for Plan and Trust administration, all as described in
Section 8.1.
(ff) Financed Shares: Shares of Employer Stock acquired by the
Trustee with the proceeds of an Acquisition Loan.
(gg) Forfeitures: The non-vested portion of a Participant's
Nonelective Contribution Account which is forfeited in accordance with Section
4.5.
(hh) Highly Compensated Employee: The term Highly Compensated
Employee includes Highly Compensated Active Employees and Highly Compensated
Former Employees.
(1) A Highly Compensated Active Employee
includes any Employee who performs service for the Employer during the
determination year and who, during the look-back year:
[a] received compensation from the Employer
in excess of $75,000 (as adjusted pursuant to Code Section 415(d));
[b] received compensation from the Employer
in excess of $50,000 (as adjusted pursuant to Code Section 415(d)) and was a
member of the top-paid group for such year; or
[c] was an officer of the Employer and
received compensation during such year that is greater than fifty percent (50%)
of the dollar limitation in effect under Code Section 415(b)(1)(A).
(2) The term Highly Compensated Employee also
includes:
[a] Employees who are both described in the
preceding sentence if the term "determination year" is substituted for the term
"look-back year" and the Employee is one of the one hundred (100) Employees who
received the most compensation from the Employer during the determination year;
and
[b] Employees who are five percent (5%)
owners at any time during the look-back year or determination year.
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<PAGE> 14
(3) If no officer has satisfied the compensation
requirement of (1)[b] above during either a determination year or look-back
year, the highest paid officer for such year shall be treated as a Highly
Compensated Employee.
(4) For purposes of this Section, the
determination year is the Plan Year. The look-back year is the twelve-month
period immediately preceding the determination year.
(5) A Highly Compensated Former Employee
includes any Employee who separated from service (or was deemed to have
separated) prior to the determination year, performs no service for the Employer
during the determination year, and was a Highly Compensated Active Employee for
either the separation year or any determination year ending on or after the
Employee's 55th birthday.
(6) If an Employee is, during a determination
year or look-back year, a family member of either a five percent (5%) owner who
is an active or former Employee or a Highly Compensated Employee who is one of
the ten (10) most highly compensated Employees ranked on the basis of
Compensation paid by the Employer during such year, then the family member and
the five percent (5%) owner or top-ten Highly Compensated Employee shall be
aggregated. In such case, the family member and five percent (5%) owner or
top-ten Highly Compensated Employee shall be treated as a single Employee
receiving Compensation and Plan contributions or benefits equal to the sum of
such Compensation and contributions or benefits of the family member and five
percent (5%) owner or top-ten Highly Compensated Employee. For purposes of this
section, family member includes the spouse, lineal ascendants and descendants of
the Employee or former Employee and the spouses of such lineal ascendants and
descendants.
(7) The determination of who is a Highly
Compensated Employee, including the determinations of the number and identity of
Employees in the top-paid group, the top one hundred (100) Employees, the number
of Employees treated as officers and the Compensation that is considered, will
be made in accordance with Code Section 414(q) and the regulations thereunder.
(ii) Hour of Service:
(1) Each hour for which an Employee is paid, or
entitled to payment, for the performance of duties for the Employer. These hours
shall be credited to the Employee for the computation period in which the duties
are performed.
(2) Each hour for which an Employee is paid, or
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<PAGE> 15
entitled to payment, by the Employer on account of a period of time during which
no duties are performed (irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military duty or leave of absence. No more than
501 Hours of Service will be credited under this paragraph for any single
continuous period (whether or not such period occurs in a single computation
period). Hours under this paragraph will be calculated and credited pursuant to
Section 2530.200b-2 of the Department of Labor Regulations which is incorporated
herein by this reference.
(3) Each hour for which back pay, irrespective
of mitigation of damages, is either awarded or agreed to by the Employer. The
same Hours of Service will not be credited both under paragraph (1) or paragraph
(2), as the case may be, and under this paragraph (3). 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.
(4) Hours of Service shall be determined on the
basis of actual hours for which an Employee is paid or entitled to payment.
(5) Where the Employer maintains the plan of a
predecessor employer, service for such predecessor employer shall be treated as
service for the Employer.
(6) Hours of Service will be credited for
employment with other members of an affiliated service group (under Code Section
414(m)), a controlled group of corporations (under Code Section 414(b)), or a
group of trades or businesses under common control (under Code Section 414(c)),
of which the Employer is a member and any other entity required to be aggregated
with the Employer pursuant to Code Section 414(o) and the regulations
thereunder.
(7) Hours of Service will also be credited for
any individual considered an Employee for purposes of this Plan under Code
Section 414(n) or Code Section 414(o) and the regulations thereunder.
(8) Solely for purposes of determining whether a
Break in Service (as defined in Section 2.1) has occurred in a computation
period under the Plan, 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, for 8 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:
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<PAGE> 16
[a] by reason of the pregnancy of the
individual;
[b] by reason of a birth of a child of the
individual;
[c] by reason of the placement of a child
with the individual in connection with the adoption of such child by such
individual; or
[d] 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 (8) shall be credited in the computation period in which the absence
begins if the crediting is necessary to prevent a Break in Service in that
period. In all other cases, Hours of Service credited under this paragraph shall
be credited in the next following computation period.
(9) For purposes of vesting, an individual shall
not receive credit for any Hours of Service completed with the Employer prior to
the time he or she attains age eighteen (18).
(jj) Income: The net gain or loss of the Trust Fund from
investments, as reflected by interest payments, dividends, realized and
unrealized gains and losses on securities, other investment transactions and
expenses paid from the Trust Fund. In determining the Income of the Trust Fund
for any period, assets shall be valued on the basis of their fair market value.
(kk) Internal Revenue Code or Code: The Internal Revenue Code
of 1986, as amended.
(ll) Joint and One-Half Survivor Annuity: Joint and One-Half
Survivor Annuity is an immediate annuity for the life of the Participant with a
survivor annuity payable to the Participant's Spouse or Beneficiary in periodic
payments equal to one-half of the amount payable during the life of the
Participant. The combined value of both annuities shall be an amount equal to
the Participant's account balance at the date of determination.
Notwithstanding the foregoing, a Joint and One-Half
Survivor Annuity for a Participant who is not married is an immediate annuity
for the life of the Participant.
(mm) Leased Employee: Any person (other than an employee
of the recipient) who, pursuant to an agreement between the recipient and any
other person ("leasing organization") has performed services for the recipient
(or for the recipient and
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<PAGE> 17
related persons determined in accordance with Code Section 414(n)(6)) on a
substantially full time basis for a period of at least one year, and such
services are of a type historically performed by employees in the business field
of the recipient Employer. Contributions or benefits provided to a Leased
Employee by the leasing organization which are attributable to services
performed for the recipient Employer will be treated as provided by the
recipient Employer.
A Leased Employee will not be considered an Employee
of the recipient if the requirements of (1) and (2) below are met:
(1) Such employee is covered by a money purchase
pension plan providing:
[a] a nonintegrated employer contribution
rate of at least ten percent (10%) of compensation (as defined in Code Section
415(c)(3), but including amounts contributed by the employer pursuant to a
salary reduction agreement which are excludible from the employee's gross income
under any of Code Sections 125, 402(a)(8), 402(h) or 403(b));
[b] immediate participation; and
[c] full and immediate vesting.
(2) Leased Employees do not constitute more than
twenty percent (20%) of the recipient's nonhighly compensated workforce.
(nn) Loan Suspense Account: The account to which Financed
Shares are initially allocated. Financed Shares shall be released from the Loan
Suspense Account in accordance with Section 5.1.
(oo) Nonhighly Compensated Participant: An Employee of the
Employer who is neither a Highly Compensated Employee nor a Family Member.
(pp) Normal Retirement Age: For all purposes under this Plan,
the Normal Retirement Age shall be 62.
(qq) Other Investments Account: The sub-account maintained for
a Participant to record his share of contributions of Trust assets other than
Employer Stock and adjustments relating thereto.
(rr) Participant: An Employee participating in the Plan in
accordance with the provisions of Section 3.1.
(ss) Plan: The Commercial Bank Employee Savings and
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<PAGE> 18
Stock Ownership Plan, the Plan set forth herein, as amended from time to time.
(tt) Plan Administrator: The person or entity appointed under
the provisions of Article VIII to administer the Plan.
(uu) Plan Year: The 12-month period commencing on January 1
and ending on December 31.
(vv) Qualified Election Period: For purposes of Section 6.10,
"Qualified Election Period" shall mean the six Plan Year period beginning with
the later of (i) the first Plan Year in which the Participant first became a
Qualified Participant; or, (ii) the first Plan Year beginning after December 31,
1986; provided, however, that the Committee may elect to treat an Employee first
becoming a Qualified Participant in the Plan Year beginning in 1987 as having
become a Qualified Participant in the Plan Year beginning in 1988.
(ww) Qualified Matching Contributions: Matching contributions
made by the Employer and allocated to a Participant's accounts that the
Participant may not elect to receive in cash until distributed from the Plan;
that are 100% vested and nonforfeitable when made; and that are not
distributable under the terms of the Plan to Participants or their Beneficiaries
earlier than the earliest of:
(1) separation from service, death or disability of
the Participant;
(2) attainment of age 59 1/2 by the Participant;
(3) termination of the Plan without establishment of
a successor plan;
(4) the events specified in Section 12.3 hereof; or
(5) for Plan Years beginning before January 1, 1989,
upon hardship of the Participant.
In lieu of distributing Excess Contributions as
provided in Section 4.2 or Excess Aggregate Contributions as provided in Section
4.4, the Employer may, as determined by the Board of Directors, make Qualified
Matching Contributions on behalf of Nonhighly Compensated Employees that are
sufficient to satisfy either the ADP test or the ACP test, or both, pursuant to
regulations under the Code.
In the event that the Employer Matching Contributions
provided for in Section 4.1(b) meet all of the
25
<PAGE> 19
requirements of this Section, they shall be deemed to be Qualified Matching
Contributions for purposes of the ADP and ACP tests.
(xx) Qualified Nonelective Contributions: Contributions (other
than Matching Employer Contributions) made by the Employer and allocated to a
Participant's accounts that the Participant may not elect to receive in cash
until distributed from the Plan; that are 100% vested and nonforfeitable when
made; and that are not distributable under the terms of the Plan to Participants
or their Beneficiaries earlier than the earliest of:
(1) separation from service, death, or disability of
the Participant;
(2) attainment of age 59 1/2 by the Participant;
(3) termination of the Plan without establishment of
a successor plan;
(4) the events specified in Section 12.3 hereof; or
(5) for Plan Years beginning before January 1, 1989,
upon hardship of the Participant.
In lieu of distributing Excess Contributions as
provided in Section 4.2 or Excess Aggregate Contributions as provided in Section
4.4, the Employer may, as determined by the Board of Directors, make Qualified
Nonelective Contributions on behalf of Nonhighly Compensated Employees that are
sufficient to satisfy either the ADP test or the ACP test, or both, pursuant to
regulations under the Code.
In the event that the Employer Profit Sharing
Contributions provided for in Section 4.1(a) meet all of the requirements of
this Section, they shall be deemed to be Qualified Nonelective Contributions for
purposes of the ADP and ACP tests.
(yy) Qualified Participant: For purposes of Section 6.10,
"Qualified Participant" shall mean a Participant who has attained age 55 and who
has completed at least 10 years of participation.
(zz) Service: A Participant's period of employment with the
Employer determined in accordance with Section 3.2.
(aaa) Shareholder-Employee: Any Employee who is a shareholder
of an electing small business corporation under Internal Revenue Code Section
1362.
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<PAGE> 20
(bbb) Spouse or Surviving Spouse: The spouse or surviving
spouse of the Participant, provided that a former spouse will be treated as the
spouse or surviving spouse to the extent provided under a qualified domestic
relations order as described in Code Section 414(p).
(ccc) Transfer Account: The account maintained for a
Participant to record amounts transferred to the Trust Fund pursuant to Section
4.6 and adjustments relating thereto.
(ddd) Trust (or Trust Fund): The fund known as the Commercial
Bank Employee Stock Ownership Trust, maintained in accordance with the terms of
the trust agreement, as from time to time amended, which constitutes a part of
this Plan.
(eee) Trustee: The corporation or individual(s) appointed by
the Board of Directors of the Employer to administer the Trust.
(fff) Valuation Date: The last day of each Plan Year or the
date on which a special valuation is made in the sole discretion of the
Committee.
(ggg) Year of Service: A 12-consecutive month period during
which an Employee has not less than 1,000 Hours of Service. Employment at either
the beginning or the end of the applicable computation period shall not be
determinative of whether a Year of Service has been completed, a Year of Service
having been completed if the Employee has 1,000 or more Hours of Service at any
time during the applicable computation period; provided, however, for purposes
of allocating contributions, income and forfeitures, an Employee who terminates
employment on or after normal retirement age or who dies or is Disabled during a
given Plan Year shall always be deemed to have completed 1,000 Hours during said
Year. If the Plan's service requirement for purposes of eligibility to
participate includes a fraction less than one (1), said fraction will be deemed
to be completed upon completion of one Hour of Service in the relevant
computation period.
If the Employer maintains the Plan of a predecessor
employer, Service with such employer shall be treated as service for the
Employer.
The method of crediting Years of Service for purposes
of vesting and eligibility for any entity not included as an Employer as of the
date this restated Plan is adopted shall be determined pursuant to Board
Resolutions of Commercial Bank when approving the participation of the new
entity as an Employer Member. Such method of crediting Years of Service for
purposes of eligibility and vesting shall be recorded in the
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<PAGE> 21
Administrative Procedures of the Plan.
(hhh) Vesting Computation Period: The 12 consecutive month
period used to determine whether an Employee has completed a Year of Service for
purposes of vesting. The initial Vesting Computation Period shall be measured on
the basis of the Plan Year commencing with the Plan Year during which the
Employee first performs an Hour of Service for the Employer and continuing with
each subsequent Plan Year thereafter.
ARTICLE III - PARTICIPATION AND SERVICE
3.1 Participation: Any Employee included under the prior provisions of
the Plan as of December 31, 1996 shall continue to participate in accordance
with the provisions of this amended and restated Plan. Effective for the Plan
Year beginning January 1, 1997, any other Employee shall become a Participant as
of the January 1 or July 1 thereafter coinciding with, or next following, the
date upon which the Employee satisfies the following:
(a) Completion of ninety (90) days of employment with the
Employer, and
(b) Attainment of 21 years of age, provided such Employee is
so employed on such January 1 or July 1.
3.2 Service: A Participant's eligibility for benefits under the Plan
shall be based on his period of Service, determined in accordance with the
following:
(a) Service Prior to the Effective Date for Continuing
Participants: For a Participant as of the Effective Date who had been covered
under the prior provisions of the Plan, the Participant's Service credit under
the Plan prior to the Effective Date shall be counted as Service.
(b) Service for Employees Participating From and After the
Effective Date: Subject to the reemployment provisions of Section 3.4, an
Employee shall accrue a Year of Service for each Eligibility Computation Period
or Vesting Computation Period in which he has 1,000 or more Hours of Service.
3.3 Inactive Status: In the event that any Participant shall fail, in
any Plan Year of his employment after the
28
<PAGE> 22
Effective Date, to accumulate 1,000 Hours of Service, his accounts shall be
placed on inactive status. In such case, such Plan Year shall not be considered
as a period of Service for the purpose of determining the Participant's vested
interest in accordance with Section 6.3, and the Participant shall not share in
the Employer Profit Sharing Contribution under Section 4.1(b) or in the
Forfeiture allocations for any such Plan Year, but he shall continue to receive
Income allocations in accordance with Section 5.2. In the event such Participant
accumulates 1,000 Hours of Service in a subsequent Plan Year, his accounts shall
revert to active status with full rights and privileges under this Plan
restored.
3.4 Participation and Service Upon Reemployment: If an Employee has a
one-year Break in Service before satisfying the Plan's requirement for
eligibility, service before such Break will not be taken into account. Upon the
reemployment of any person after the Effective Date who had previously been
employed by the Employer prior to the Effective Date his rights upon
reemployment shall be determined in accordance with the Plan in effect on the
date of his employment termination. Upon the reemployment of any person after
the Effective Date who had previously been employed by the Employer on or after
the Effective Date, the following rules shall apply in determining his
Participation in the Plan and his Service under Section 3.2:
(a) Participation: A former Participant shall become a
Participant immediately upon his return to the employ of the Employer if such
former Participant had a nonforfeitable right to all or a portion of his account
balance derived from Employer contributions at the time of his termination.
A former Employee who did not have a nonforfeitable
right to any portion of his account balance derived from Employer contributions
at the time of his termination shall be considered a new Employee, for
eligibility purposes, if the number of consecutive one-year Breaks in Service
equals or exceeds the greater of 5 or the aggregate number of Years of Service
before such Break. If such former Employee's Years of Service before his
termination may not be disregarded under other provisions of this Plan in
circumstances described in the preceding sentence, such Employee shall
participate immediately upon his reemployment.
In the event a Participant becomes ineligible to
participate because he is no longer a member of an eligible class of Employees,
but has not incurred a Break in Service, such Employee shall participate
immediately upon his return to an eligible class of Employees. If such
Participant incurs a Break in Service his eligibility to participate shall be
determined pursuant to the two preceding paragraphs.
29
<PAGE> 23
In the event an Employee who is not a member of an
eligible class of Employees becomes a member of the eligible class, such
Employee shall participate immediately if such Employee has satisfied any
minimum age and service requirements and would previously have become a
Participant had he been in the eligible class.
(b) Service: In the case of a Participant who has 5 or more
consecutive one year Breaks in Service, all service after such Breaks in Service
will be disregarded for the purpose of vesting the Employer-derived account
balance that accrued before such Breaks in Service. Such Participant's pre-Break
Service will count in vesting the post-Break Employer-derived account balance
only if either:
(l) Such Participant had a nonforfeitable interest in
the account balance attributable to Employer contributions at the time of
separation from service; or
(2) Upon returning to service the number of
consecutive one year Breaks in Service is less than the number of Years of
Service.
Separate accounts will be maintained for the Participant's pre-Break and
post-Break Employer-derived account balance. Both accounts will share in the
earnings and losses of the fund.
In the case of a Participant who has fewer than five
consecutive one year Breaks in Service, service shall be credited pursuant to
Section 3.2 hereof.
Notwithstanding the foregoing, for purposes of computing
vested benefits under Section 6.3 in the case of any Employee who has any
one-year Break in Service, Years of Service before such Break shall not be taken
into account until the Employee has completed one Year of Service after his
reemployment.
ARTICLE IV - CONTRIBUTIONS AND FORFEITURES
4.1 Employer Contributions: All of the following types of Employer
Contributions shall be made to the Plan without regard to current or accumulated
earnings and profits for the taxable year or years in question. Notwithstanding
the foregoing, the Plan shall continue to be designed to qualify as a profit
sharing plan and an employee savings and stock ownership plan for purposes of
Code Sections 401(a), 402, 412 and 417. In no event will the total of all
contributions made by the Employer pursuant to this Section 4.1 exceed the
maximum deductible amount permitted by the Internal Revenue Code of 1986, as
amended, nor shall it exceed the maximum addition allowable for such year as
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provided in Section 5.3.
(a) Elective Deferral Contributions: The Employer shall, for
each Plan Year, contribute to the Trust Fund an amount equal to the total amount
of contributions agreed to be made by it pursuant to elective deferral
agreements under Plan Section 4.2 entered into between the Employer and
Participants for said Plan Year. Contributions made by the Employer for a given
Plan Year pursuant to elective deferral agreements under Section 4.2 shall be
deposited in the Trust Fund no later than the earlier of (a) 30 days following
the end of said Plan Year or (b) the date the Employer files its federal income
tax return for said Plan Year. Any such contributions, once deposited in the
Trust, shall remain in the Trust and will be administered according to the terms
of this Plan, regardless of whether the Participant for whom such contributions
were made is placed on inactive status during said Plan Year.
(b) Nonelective Contributions:
(1) Employer Profit Sharing Contributions: The
Employer shall, for each Plan Year, contribute to the Trust Fund the amount
determined by resolution of the Board of Directors adopted on or before the last
day of each Plan Year, to be held and administered in Trust by the Trustee
according to the terms of this Plan. In no case, however, shall the Employer's
contribution exceed the maximum deductible amount permitted by the Internal
Revenue Code of 1986, as amended. A contribution may be made in either cash or
shares of Employer Stock as determined by the Board of Directors; provided,
however, that the Board of Directors may determine that Employer Profit Sharing
Contributions may be paid as provided in Section 7.2(d), with notice to the
Trustee. The Employer may make discretionary contributions to the Trust Fund to
the extent necessary to provide the Trustee with sufficient funds to pay any
currently maturing obligations under any Acquisition Loan.
(2) Employer Matching Contributions: Subject to the
limitations of Section 4.4, the Employer shall for each Plan Year contribute to
the Trust Fund an amount equal to such amount for every one dollar ($1.00) of
Elective Deferral Contributions made by each Participant who was not placed on
inactive status during the Year and who was employed by the Employer on the last
day of the Plan Year (unless such Participant fails to satisfy these standards
as a result of terminating employment on or after Normal Retirement Age or due
to death or Disability) as is determined by resolution of the Board of Directors
adopted on or before the last day of each Plan Year. Employer Matching
Contributions may be made in the form of cash or Employer Stock as determined by
the Board of Directors; provided, however, that the Board of Directors may
determine that Employer Matching
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<PAGE> 25
Contributions may be paid as provided in Section 7.2(d) with notice to the
Trustee. Employer Matching Contributions may also be used to repay any currently
maturing obligations under any Acquisition Loan.
If a Participant does not make Elective Deferral
Contributions to the Plan during the entire Plan Year, he or she shall be
entitled to Employer Matching Contributions based on Compensation paid during
the time period during which he or she made Elective Deferrals. All such
Employer Matching Contributions shall be deposited in the Trust Fund not later
than the date prescribed by law for filing the Employer's federal income tax
return, including extensions which have been granted for the filing of such
return.
Notwithstanding the foregoing, the following special
rules apply:
[a] If in any given Plan Year the
requirement that Participants be active (complete 1,000 or more Hours of Service
during the Plan Year) in order to receive an Employer Matching Contribution
would cause the Plan to fail the minimum participation rules of Code Section
401(a)(26) or the minimum coverage rules of Code Section 410(b), the number of
Hours of Service which constitutes active status shall be reduced in a uniform
manner to the extent necessary to satisfy Code Sections 401(a)(26) and/or
410(b).
[b] If in any given Plan Year the
requirement that Participants be employed by the Employer on the last day of the
Plan Year in order to receive an Employer Matching Contribution would cause the
Plan to fail the minimum participation rules of Code Section 401(a)(26) or the
minimum coverage rules of Code Section 410(b), the date on which employment is
required during the given Plan Year shall be backed up in a uniform manner to
the extent necessary to satisfy Code Sections 401(a)(26) and/or 410(b).
4.2 Participant Elective Deferrals: A Participant may, with the
Employer's consent, elect to enter into a written elective deferral agreement
with the Employer as of the dates set forth in Administrative Procedures adopted
by the Employer which will be applicable to all subsequent payroll periods
within such Plan Year. The terms of any such elective deferral agreement shall
provide that the Participant agrees to accept a reduction in salary from the
Employer equal to any amount consistent with rules adopted and uniformly
administered by the Plan Administrator not to exceed such percent of said
Compensation as the Plan Administrator deems appropriate in view of the
anti-discrimination provisions of Code Section 401(k) and regulations thereunder
(but in no event greater than 15% of said Compensation). No Employee shall be
permitted to have Elective
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Deferrals made under this Plan or any other qualified plan maintained by the
Employer during any calendar year in excess of the dollar limitation contained
in Code Section 402(g) in effect at the beginning of such taxable year. In the
event any Participant's Elective Deferrals exceed this limit, the Excess
Deferral Amount shall be distributed to said Participant in the manner set forth
in Section 4.2(i) below. Said Elective Deferrals may be made either from the
Participant's periodic payroll checks or from any bonus compensation checks
issued to the Participant as elected by the Participant in the elective deferral
agreement. All such Elective Deferrals are subject to the approval of the Plan
Administrator pursuant to rules adopted by and uniformly administered by the
Plan Administrator. In consideration of such agreement, the Employer will make
an Elective Deferral contribution to the Participant's Elective Deferral Account
on behalf of the Participant for such year in an amount equal to the total
amount by which the Participant's Compensation from the Employer was reduced
during the Plan Year pursuant to the elective deferral agreement.
Amounts credited to a Participant's Elective Deferral Account
shall be 100% vested and nonforfeitable at all times. If a Participant enters
into an elective deferral agreement with the Employer for a given Plan Year, his
Compensation for such Plan Year for all other purposes of this Plan, unless
otherwise noted, shall be equal to his Compensation before application of the
elective deferral agreement.
The following additional rules shall apply to the elective
deferral agreement:
(a) A Participant's elective deferral agreement may be amended
by the Participant as of the dates set forth in Administrative Procedures
adopted by the Employer. A Participant may cease deferrals at any time.
(b) Elective deferral agreements and amendments to elective
deferral agreements shall be effective as of, and shall not apply to any payroll
or bonus period preceding, the payroll or bonus period next following the day
the elective deferral agreement or amendment to the elective deferral agreement
is executed by the Participant and the Employer.
(c) The Employer may amend or revoke its elective deferral
agreement with any Participant at any time if the Employer determines that such
revocation or amendment is necessary to ensure that a Participant's Annual
Additions for any Plan Year will not exceed the limitations of Plan Section 5.3
for such Plan Year.
(d) Except as provided in this Section 4.2, an elective
deferral agreement applicable to any given Plan Year,
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<PAGE> 27
once made, may not be revoked or amended by the Participant or the Employer.
(e) If, for any Plan Year, the Average Actual Deferral
Percentage for Eligible Participants who are Highly Compensated Employees for
the Plan Year is larger than the greater of:
(1) the ADP for Eligible Participants who are
Nonhighly Compensated Employees for the Plan Year multiplied by 1.25, or
(2) the ADP for Eligible Participants who are
Nonhighly Compensated Employees for the Plan Year multiplied by 2, provided that
the ADP for Eligible Participants who are Highly Compensated Employees does not
exceed the ADP for Eligible Participants who are Nonhighly Compensated Employees
by more than two (2) percentage points, the deferral amount specified in the
elective deferral agreements of the Highly Compensated Employee Participants
shall be reduced to the extent necessary so that the ADP for the group of Highly
Compensated Employees is not more than the greater of (1) or (2) above. Such
reduction shall be accomplished as set forth in Section 4.2(f) below.
For purposes of determining the ADP test, Elective
Deferrals, Qualified Nonelective Contributions and Qualified Matching
Contributions must be made before the last day of the twelve (12) month period
immediately following the Plan Year to which contributions relate.
The Employer shall maintain records sufficient to
demonstrate satisfaction of the ADP test and the amount of Qualified Nonelective
Contributions or Qualified Matching Contributions, or both, used in such test.
(f) Any adjustment to Elective Deferral amounts determined
under paragraph (e) above shall be made by one or both of the following means:
(1) First, the elective deferral agreement of such
Participant shall be amended to reduce the contribution set forth therein so
that the total amount of Elective Deferral Contributions for such Participant
for the Plan Year does not exceed the maximum amount determined under paragraph
(e) above.
(2) Next, any Excess Contributions plus any income
and minus any loss allocable thereto shall be distributed not later than the
last day of each Plan Year to Participants on whose behalf such Excess
Contributions were made for the preceding Plan Year. If such excess amounts are
distributed more than two and one-half (2 1/2) months after the last day of the
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<PAGE> 28
Plan Year in which such excess amounts arose, a ten percent (10%) excise tax
will be imposed on the Employer maintaining the Plan with respect to such
amounts. Such distributions shall be made to Highly Compensated Employees on the
basis of the respective portions of the Excess Contributions attributable to
each of such Employees. Excess Contributions of Participants who are subject to
the family member aggregation rules shall be allocated among the family members
in proportion to the Elective Deferrals (and amounts treated as Elective
Deferrals) of each family member that is combined to determine the combined ADP.
Excess Contributions shall be treated as Annual Additions
under the Plan.
Excess Contributions shall be adjusted for any income or loss
up to the date of distribution. The income or loss allocable to Excess
Contributions is the sum of:
(1) income or loss allocable to the Participant's
Elective Deferral Account (and, if applicable, the Qualified Nonelective
Contributions or the Qualified Matching Contributions, or both) for the Plan
Year multiplied by a fraction, the numerator of which is such Participant's
Excess Contributions for the year and the denominator is the Participant's
account balance attributable to Elective Deferrals (and Qualified Nonelective
Contributions or Qualified Matching Contributions, or both, if any such
contributions are included in the ADP test) without regard to any income or loss
occurring during such Plan Year; and
(2) ten percent (10%) of the amount determined under
(1) above multiplied by the number of whole calendar months between the end of
the Plan Year and the date of distribution, counting the month of distribution
if distribution occurs after the 15th of such month.
Notwithstanding the foregoing, the Plan Administrator may,
pursuant to a uniform and nondiscriminatory written policy, adopt a different
reasonable method of allocating income or loss to Excess Contributions.
Excess Contributions shall be distributed from the
Participant's Elective Deferral Account and Qualified Matching Contributions (if
applicable) in proportion to the Participant's Elective Deferrals and Qualified
Matching Contributions (to the extent used in the ADP test) for the Plan Year.
Excess Contributions shall be distributed from the Participant's Qualified
Nonelective Contributions only to the extent that such Excess Contributions
exceed the balance in the Participant's Elective Deferral Account and the amount
of Qualified Matching Contributions.
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Excess Contributions shall mean, with respect to any Plan
Year, the excess of:
(1) The aggregate amount of Employer contributions
actually taken into account in computing the ADP of Highly Compensated Employees
for such Plan Year, over
(2) The maximum amount of such contributions
permitted by the ADP test (determined by reducing contributions made on behalf
of Highly Compensated Employees in order of the ADPs, beginning with the highest
of such percentages).
(g) For purposes of this Section 4.2 and for purposes of
Section 2.1(a), the following definitions shall apply:
(1) Actual Deferral Percentage shall be as defined in
Section 2.1.
(2) Eligible Participant shall mean any Employee of
the Employer who has met any age and service requirements of Section 3.1.
(h) The determination and treatment of the Elective Deferrals,
Qualified Nonelective Contributions and Actual Deferral Percentage of any
Participant shall satisfy such other requirements as may be prescribed by the
Secretary of the Treasury.
(i) If the amount of Elective Deferrals made by a Participant
during any calendar year, when added to amounts deferred under other plans or
arrangements described in Code Sections 401(k), 408(k), 403(b), 457 or
501(c)(18) exceed the limit imposed on the Participant by Code Section 402(g)
for the year in which the deferral occurred, the Excess Deferral Amount and
income allocable thereto shall be distributed not later than the April 15
following the calendar year in which the Excess Deferral Amount was contributed
to the Plan, provided any such Participant files a claim for said Excess
Deferral Amount in accordance with (2) below.
(1) For purposes of this Section 4.2(i), Excess
Deferral Amount shall mean those elective deferrals allocated to a Participant
under this Plan which are includible in the Participant's gross income under
Code Section 402(g) to the extent such Participant's Elective Deferrals for a
taxable year exceed the dollar limitation under such Code Section. Excess
Elective Deferrals shall be treated as Annual Additions under the Plan, unless
such amounts are distributed no later than the first April 15 following the
close of the Participant's taxable year.
(2) A Participant is deemed to notify the Plan
Administrator of any Excess Elective Deferrals that arise by taking into account
only those Elective Deferrals made to this
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<PAGE> 30
Plan and any other plans of the Employer. Otherwise, any Participant's claim for
Excess Deferral Amounts shall:
[a] be in writing;
[b] be submitted to the Plan Administrator
not later than March 1 following the calendar year in which the Excess Deferral
Amount was contributed to the Plan;
[c] specify the Participant's Excess
Deferral Amount for the preceding calendar year; and
[d] be accompanied by the Participant's
written statement that if such amounts are not distributed, such Excess Deferral
Amount will exceed the limit imposed on the Participant by Code Section 402(g)
for the year in which the deferral occurred.
(3) The Excess Deferral Amount distributed to a
Participant with respect to a calendar year shall be adjusted for income or loss
up to the date of distribution. The income or loss allocable to Excess Deferral
Amounts is the sum of:
[a] income or loss allocable to the
Participant's Elective Deferral Account for the taxable year multiplied by a
fraction, the numerator of which is such Participant's Excess Deferral Amount
for the year and the denominator of which is the Participant's account balance
attributable to Elective Deferrals without regard to any income or loss
occurring during such taxable year; and
[b] ten percent (10%) of the amount
determined under [a] multiplied by the number of whole calendar months between
the end of the Participant's taxable year and the date of distribution, counting
the month of distribution if distribution occurs after the 15th of such month.
4.3 After-Tax Contributions by Participants: No Employee Contributions
are allowed under this Plan.
4.4 Limitations on Employee and Matching Contributions:
(a) If, for any Plan Year, the Average Contribution Percentage
(the "ACP") for Eligible Participants who are Highly Compensated Employees is
larger than the greater of:
(1) the ACP for Eligible Participants who are
Nonhighly Compensated Employees for the Plan Year multiplied by 1.25, or,
(2) the ACP for Eligible Participants who are
Nonhighly Compensated Employees for the Plan Year multiplied by 2, provided that
the ACP for Eligible Participants who are Highly
37
<PAGE> 31
Compensated Employees does not exceed the ACP for Eligible Participants who are
Nonhighly Compensated Employees by more than two (2) percentage points,
the amount of Employee Contributions and Matching Employer Contributions of the
Highly Compensated Participants shall be reduced to the extent necessary so that
the ACP for the group of Highly Compensated Employees is not more than the
greater of (1) or (2). Such reduction shall be accomplished as set forth in
Section 4.4(d) below.
(b) For purposes of this Section 4.4, the following
definitions shall apply:
(1) Aggregate Limit shall mean the sum of:
[a] One hundred twenty-five percent (125%)
of the greater of the ADP of the Nonhighly Compensated Employees for the Plan
Year or the ACP of Nonhighly Compensated Employees under the Plan subject to
Code Section 401(m) for the Plan Year beginning with or within the Plan Year of
the CODA; and
[b] The lesser of two hundred percent (200%)
or two (2) plus the lesser of such ADP or ACP.
(2) Average Contribution Percentage means the average
of the Contribution Percentages of the Eligible Participants in a group.
(3) Contribution Percentage shall mean the ratio
(expressed as a percentage) of a Participant's Contribution Percentage Amounts
to the Participant's Compensation for the Plan Year (whether or not the Employee
was a Participant for the entire Plan Year).
(4) Contribution Percentage Amounts shall mean the
sum of the Employee Contributions, Matching Contributions and Qualified Matching
Contributions (to the extent not taken into account for purposes of the ADP
test) made under the Plan on behalf of the Participant for the Plan Year. Such
Contribution Percentage Amounts shall not include Matching Contributions that
are forfeited either to correct Excess Aggregate Contributions or because the
contributions to which they relate are Excess Deferrals, Excess Contributions or
Excess Aggregate Contributions. The Employer may include Qualified Nonelective
Contributions in the Contribution Percentage Amounts. The Employer may also
elect to use Elective Deferrals in the Contribution Percentage Amounts so long
as the ADP test is met before the Elective Deferrals are used in the ACP test
and continues to be met following the exclusion of those Elective Deferrals that
are used to meet the ACP test.
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<PAGE> 32
(5) Eligible Participant shall mean any Employee who
is eligible to make an Employee Contribution, or an Elective Deferral (if the
Employer takes such contributions into account in the calculation of the
Contribution Percentage), or to receive a Matching Contribution or a Qualified
Matching Contribution. If an Employee Contribution is required as a condition of
participation in the Plan, any Employee who would be a Participant in the Plan
if such Employee made such a contribution shall be treated as an eligible
Participant on behalf of whom no Employee Contributions are made.
(6) Employee Contribution shall mean any contribution
made to the Plan by or on behalf of a Participant that is included in the
Participant's gross income in the year in which made and that is maintained
under a separate account to which earnings and losses are allocated.
(7) Matching Contribution shall mean an Employer
contribution made to this or any other defined contribution Plan on behalf of a
Participant on account of an Employee Contribution made by such Participant, or
on account of a Participant's Elective Deferral, under a plan maintained by the
Employer.
(8) Excess Aggregate Contributions shall mean, with
respect to any Plan Year, the excess of:
[a] the aggregate Contribution Percentage
Amounts taken into account in computing the numerator of the Contribution
Percentage actually made on behalf of Highly Compensated Employees for such Plan
Year, over
[b] the maximum Contribution Percentage
Amounts permitted by the ACP test (determined by reducing contributions made on
behalf of Highly Compensated Employees in order of their Contribution
Percentages beginning with the highest of such percentages).
(c) For purposes of this Section 4.4, the following special
rules shall apply:
(1) If one or more Highly Compensated Employees
participate in both a CODA and a plan subject to the ACP test maintained by the
Employer, and the sum of the ADP and ACP of those Highly Compensated Employees
subject to either or both tests exceeds the Aggregate Limit, then the ACP of
those Highly Compensated Employees who also participate in a CODA will be
reduced (beginning with such Highly Compensated Employee whose ACP is the
highest) so that the limit is not exceeded. The amount by which each Highly
Compensated Employee's Contribution Percentage Amounts is reduced shall be
treated as an Excess Aggregate Contribution. The ADP and ACP of the Highly
Compensated Employees are determined after any corrections
39
<PAGE> 33
required to meet the ADP and ACP tests. Multiple use does not occur if both the
ADP and ACP of the Highly Compensated Employees does not exceed 1.25 multiplied
by the ADP and ACP of the Nonhighly Compensated Employees.
(2) The Contribution Percentage for any Eligible
Participant who is a Highly Compensated Employee for the Plan Year and who is
eligible to have Contribution Percentage Amounts allocated to his or her account
under two (2) or more plans described in Code Section 401(a) or arrangements
described in Code Section 401(k) that are maintained by the Employer shall be
determined as if the total of such Contribution Percentage Amounts was made
under each plan. If a Highly Compensated Employee participates in two (2) or
more cash or deferred arrangements that have different Plan Years, all cash or
deferred arrangements ending with or within the same calendar year shall be
treated as a single arrangement. Notwithstanding the foregoing, certain plans
shall be treated as separate if mandatorily disaggregated under regulations
under Code Section 401(m).
(3) In the event that this Plan satisfies the
requirements of Code Sections 401(m), 401(a)(4) or 410(b) only if aggregated
with one or more other plans, or if one or more other plans satisfy the
requirements of such Code Sections only if aggregated with this Plan, then this
Section 4.4 shall be applied by determining the Contribution Percentage of
Eligible Participants as if all such plans were a single plan. For Plan Years
beginning after December 31, 1989, plans may be aggregated in order to satisfy
Code Section 401(m) only if they have the same Plan Year.
(4) For purposes of determining the Contribution
Percentage of an Eligible Participant who is a five percent owner or one of the
ten (10) most highly-paid Highly Compensated Employees, the Contribution
Percentage Amounts and Compensation of such Participant shall include the
Contribution Percentage Amounts and Compensation of Family Members (as defined
in Code Section 414(q)(6)). Family Members with respect to Highly Compensated
Employees shall be disregarded as separate Employees in determining the
Contribution Percentage both for Eligible Participants who are Nonhighly
Compensated Employees and for Eligible Participants who are Highly Compensated
Employees.
(5) For purposes of determining the Contribution
Percentage test, Employee Contributions are considered to have been made in the
Plan Year in which contributed to the Trust. Matching Contributions and
Qualified Nonelective Contributions will be considered made for a Plan Year if
made no later than the end of the twelve-month period beginning on the day after
the close of the Plan Year.
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<PAGE> 34
(6) The Employer shall maintain records sufficient to
demonstrate satisfaction of the ACP test and the amount of Qualified Nonelective
Contributions or Qualified Matching Contributions, or both, used in such test.
(7) The determination and treatment of the
Contribution Percentage of any Participant shall satisfy such other requirements
as may be prescribed by the Secretary of the Treasury.
(d) Any Excess Aggregate Contributions, as determined pursuant
to Section 4.4(a) above and Code Section 401(m)(6)(B), plus any income and minus
any loss allocable thereto shall be forfeited or distributed not later than the
last day of each Plan Year to Participants to whose accounts such Excess
Aggregate Contributions were allocated for the preceding Plan Year. Excess
Aggregate Contributions of Participants who are subject to the family member
aggregation rules shall be allocated among the family members in proportion to
the Employee and Matching Contributions (or amounts treated as Matching
Contributions) of each family member that is combined to determine the combined
ACP. If such Excess Aggregate Contributions are distributed more than two and
one-half (2 1/2) months after the last day of the Plan Year in which such excess
amounts arose, a ten percent (10%) excise tax will be imposed on the Employer
maintaining the Plan with respect to those amounts. Excess Aggregate
Contributions shall be treated as Annual Additions under the Plan.
Excess Aggregate Contributions shall be adjusted for
any income or loss up to the date of distribution. The income or loss allocable
to Excess Aggregate Contributions is the sum of:
(1) income or loss allocable to the Participant's
Employee Contribution Account, Employer Matching Contribution amount (if any,
and if all such amounts are not used in the ADP test) and, if applicable,
Qualified Nonelective Contribution amounts and Elective Deferral Account for the
Plan Year multiplied by a fraction, the numerator of which is such Participant's
Excess Aggregate Contributions for the year and the denominator is the
Participant's account balance(s) attributable to Contribution Percentage Amounts
without regard to any income or loss occurring during such Plan Year; and
(2) ten percent (10%) of the amount determined under
(1) above multiplied by the number of whole calendar months between the end of
the Plan Year and the date of distribution, counting the month of distribution
if distribution occurs after the 15th of such month.
Notwithstanding the foregoing, the Plan Administrator
may, pursuant to a uniform and nondiscriminatory written policy, adopt a
different reasonable method of allocating
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<PAGE> 35
income or loss to Excess Aggregate Contributions.
Excess Aggregate Contributions shall be distributed
in accordance with the foregoing from the Participant's Employee Contribution
Account, and forfeited from the Participant's Employer Matching Contributions in
proportion to the Participant's Employee Contributions and Employer Matching
Contributions for the Plan Year. Amounts forfeited by Highly Compensated
Employees under this Section 4.4 will be allocated, after all other forfeitures
under the Plan, to the same Participants, excluding Highly Compensated
Employees, in the same manner as set forth in Section 4.5.
4.5 Final Disposition of Forfeitures: All nonvested amounts will be
forfeited as of the last day of the Plan Year in which the terminated
Participant's termination of employment occurs. All forfeited, nonvested amounts
shall be allocated among the accounts of other Participants as of the earlier of
the last day of the Plan Year in which:
(a) distributions commence to the terminated Participant, or
(b) such Participant incurs his fifth consecutive one year
Break in Service.
If a Participant receives a distribution pursuant to Section
6.3, and the Participant resumes employment covered under the Plan, the
Participant's Employer-derived account balance will be restored to the amount
reflected therein on the date of distribution if the Participant repays to the
Plan the full amount of the distribution attributable to Employer contributions
before the earlier of 5 years after the first date on which the Participant is
subsequently reemployed by the Employer, or the date the Participant incurs 5
consecutive one year Breaks in Service following the date of the distribution.
If a Participant is deemed to receive a distribution pursuant to Section 6.3,
and the Participant resumes employment covered under this Plan before the date
the Participant incurs 5 consecutive one year Breaks in Service, then the
Employer-derived account balance of the Participant will be restored to the
amount of such deemed distribution as of the Participant's reemployment date.
Notwithstanding the foregoing provisions of Section 4.5,
forfeitures shall first be charged against a Participant's Other Investments
Account, with any remaining amount charged against his Employer Stock Account
(at the current fair market value of Employer Stock on the last day of the Plan
Year in which the stock is forfeited). Financed Shares shall be forfeited only
after other shares of Employer Stock have been forfeited.
If the Participant repays a distribution pursuant to
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<PAGE> 36
this Section 4.5 with after-tax dollars, any such repayment will be subject to
the limitations contained in Section 4.4.
4.6 Rollover or Transfer Amount from Other Plans:
(a) If an Employee who is eligible to participate in the Plan
(regardless of whether he has satisfied any age and/or service requirements of
Section 3.1), has received or is entitled to receive a distribution from a plan
which meets the requirements of Code Section 401(a) (the "Other Plan"), such
Participant may, in accordance with procedures approved by the Plan
Administrator, rollover or transfer the distribution from the Other Plan to the
Trustee provided the following conditions are met:
(1) the rollover or transfer occurs on or before the
60th day following his receipt of the distribution from the Other Plan, or if
such distribution had previously been deposited in an Individual Retirement
Account (as defined in Code Section 408), the rollover or transfer occurs on or
before the 60th day following his receipt of such distribution plus earnings
thereon from the Individual Retirement Account;
(2) the distribution from the Other Plan is eligible
for rollover treatment or transfer pursuant to the requirements of the Code and
applicable regulations, including the requirements of Code Section 402(c)
applicable to eligible rollover distributions.
The Plan Administrator shall develop such procedures,
and may require such information from an Employee on whose behalf such a
rollover or transfer is to be made, as it deems necessary or desirable to
determine that the proposed rollover or transfer will meet the requirements of
this Section. Upon approval of the Plan Administrator, the amount rolled over or
transferred shall be deposited in the Trust Fund and shall be credited to a
Transfer Account. Such account shall be 100% vested in the Employee, shall share
in income allocations in accordance with Section 5.2(a), but shall not share in
Employer contribution allocations. Upon termination of employment, the total
amount of the Employee's Transfer Account shall be distributed in accordance
with Article VI.
Upon such a rollover or transfer by an Employee who is
otherwise eligible to participate in the Plan but who has not yet completed any
age and/or service requirements of Section 3.1, his Transfer Account shall
represent his sole interest in the Plan until he becomes a Participant.
(b) The Trustee may accept a direct transfer of an account
balance from any Other Plan on behalf of any Employee eligible to participate in
the Plan (regardless of whether he has satisfied any age and/or service
requirements of Section 3.1)
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<PAGE> 37
according to such procedures and requirements as are imposed by the Plan
Administrator in its sole discretion.
The Plan Administrator shall develop such procedures,
and may require such information from an Employee on whose behalf such a
transfer is to be made, as it deems necessary or desirable to determine that the
proposed transfer will meet the requirements of this Section. Upon approval of
the Plan Administrator, the amount transferred shall be deposited in the Trust
Fund and shall be credited to a Transfer Account. Such account shall share in
income allocations in accordance with Section 5.2(a), but shall not share in
Employer contribution allocations. Upon termination of employment, the total
amount of the Employee's Transfer Account shall be distributed in accordance
with Article VI.
Upon such a transfer by an Employee who is otherwise
eligible to participate in the Plan but who has not yet completed any age and/or
service requirements of Section 3.1, his Transfer Account shall represent his
sole interest in the Plan until he becomes a Participant.
(c) In the case of any rollover or transfer of assets to this
Plan from a Keogh plan, the Plan Administrator shall maintain records which
enable the Plan Administrator to identify which portion of the Transfer Account
is comprised of the Keogh plan amounts (and earnings thereon).
4.7 Independent Appraisal of Employer Stock: When applicable, all
valuations of shares of Employer Stock that are not readily tradeable on an
established securities market will be made by an independent appraiser as
defined by Code Section 401(a)(28). These valuations may be used for purposes of
determining Employer contributions, account adjustments under Article V, and
other purposes for which valuations of Employer Stock may be required under the
Plan.
ARTICLE V - ALLOCATIONS TO PARTICIPANTS' ACCOUNTS
5.1 Maintenance of Accounts:
(a) Individual Accounts: The Plan Administrator shall create
and maintain adequate records to disclose the interest in the Trust of each
Participant, former Participant and Beneficiary. Such records shall be in the
form of individual accounts and credits and charges shall be made to such
accounts in the manner herein described. When appropriate, a Participant shall
have certain separate accounts: an Elective Deferral Account, an Employer
Discretionary Contribution Account, an Employer Matching Contribution Account,
an Employee Contribution Account and a Transfer Account, as well as sub-accounts
therein
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(if applicable): an Employer Stock Account and an Other Investments Account. The
maintenance of individual accounts is only for accounting purposes, and a
segregation of the assets of the Trust Fund to each account shall not be
required, except where a Participant directs the investment of accounts if
authorized in Article VI below. Distributions and withdrawals made from any
account shall be charged to the account as of the date paid. In no event will
the amount allocated to any Participant's accounts hereunder exceed the maximum
addition allowable for such year as provided in Section 5.3. Each sub-account
(if applicable) shall be maintained as described below.
(1) The Employer Stock Account maintained for each
Participant will be credited annually with the Participant's allocable share of
Employer Stock (including fractional shares) purchased and paid for or
contributed in kind, together with any Forfeitures of Employer Stock and with
any stock dividends on Employer Stock allocated to his Employer Stock Account.
(2) The Other Investments Account maintained for each
Participant will be credited annually with the Participant's allocable share of
[a] Employer contributions in cash, [b] any Forfeitures from a Participant's
Other Investments Account, and [c] net income (or loss) of the Trust
attributable to Trust Assets, together with any cash dividends on Employer Stock
allocated to the Participant's Employer Stock Account (other than dividends
distributed pursuant to Section 6.9). Such Other Investments Account will be
debited for the Participant's share of any cash payments made by the Trustee for
the acquisition of Employer Stock or for the payment of any principal and/or
interest on an Acquisition Loan.
In addition, the Committee shall maintain adequate
records of the aggregate cost basis of each class of Employer Stock allocated to
each Participant's Accounts. The Committee shall also keep separate records of
Financed Shares and of Employer Contributions (and any earnings thereon) made
for the purpose of enabling the Trustee to repay any Acquisition Loan. From time
to time, the Committee, in its discretion, may modify the accounting procedures
for the purpose of achieving equitable and nondiscriminatory allocations among
the Accounts of Participants in accordance with the general concepts of the Plan
and applicable law, including the ability to implement within the Trust a
Participant's investment direction regarding the purchase or sale of Employer
Stock.
(b) Loan Suspense Account: Any Financed Shares acquired by the
Trust shall initially be credited to a Loan Suspense Account and will be
allocated to the Employer Stock Accounts of Participants only as payments on the
Acquisition Loan are made by the Trustee. The number of Financed Shares to be
released from the Loan Suspense Account for allocations to
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Participants' Employer Stock Accounts for each Plan Year shall be determined by
the Committee (as of each Plan Year end) as described immediately below.
(1) Principal and Interest Rule: The number of
Financed Shares held in the Loan Suspense Account immediately before the release
(rounded upward to the nearest whole number of shares) for the current Plan Year
shall be multiplied by a fraction, the numerator of which shall be the amount of
principal and/or interest paid on the Acquisition Loan for that Plan Year, and
the denominator of which shall be the sum of the numerator plus the total
payments of principal and interest on that Acquisition Loan projected to be paid
for all future Plan Years. For this purpose, the interest to be paid in future
years is to be computed using the interest rate in effect as of the current
Valuation Date.
(2) Principal Only Rule: The Committee may elect (at
the time an Acquisition Loan is incurred) or the provisions of the Acquisition
Loan may provide for the release of Financed Shares from the Loan Suspense
Account based solely on the ratio that the payments of principal for each Plan
Year bear to the total principal amount of the Acquisition Loan. This method may
be used only to the extent that: [a] the Acquisition Loan provides for annual
payments of principal and interest at a cumulative rate that is not less rapid
at any time than level annual payments of such combined amounts for ten (10)
years; [b] interest included in any payment on the Acquisition Loan is
disregarded only to the extent that it would be determined to be interest under
standard loan amortization tables; and [c] the entire duration of the
Acquisition Loan repayment period does not exceed ten (10) years, even in the
event of a renewal, extension or refinancing of the Acquisition Loan.
If subsection 5.1(b)(1) is applicable and if no
amount of principal and interest is paid for the Plan Year, or if subsection
5.1(b)(2) is applicable and no amount of principal is paid for the Plan Year,
there shall be no release of shares of Employer Stock from the Loan Suspense
Account for the Plan Year. Therefore, by establishing the terms of an
Acquisition Loan or by extending, renewing or renegotiating the terms of a loan,
the Employer may, in its sole and exclusive discretion, cause no shares of
Employer Stock to be released from the Loan Suspense Account for a Plan Year or
reduce or eliminate the number of said shares which would have been so released
had the Employer not extended, renewed or renegotiated the terms of the
Acquisition Loan.
In each Plan Year in which Trust Assets are applied
to make payments on an Acquisition Loan, the Financed Shares released from the
Loan Suspense Account in accordance with the provisions of this Section shall be
allocated among the
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<PAGE> 40
Employer Stock Accounts of Participants in the manner determined by the
Committee based upon the source of funds (Employer Contributions, earnings
attributable to Employer Contributions and cash dividends on Financed Shares
allocated to Participants' Employer Stock Accounts or cash dividends on Financed
Shares credited to the Loan Suspense Account) used to make the payments on the
Acquisition Loan. Cash dividends on Financed Shares used for payment of an
Acquisition Loan shall be allocated pursuant to Section 5.2(b).
5.2 Account Adjustments: The accounts of Participants, former
Participants and Beneficiaries shall be adjusted in accordance with the
following:
(a) Income: The Income or loss of the Trust Fund (other than
dividends on Employer Stock) for each relevant accounting period selected by the
Committee shall be allocated in a uniform and nondiscriminatory manner to the
Other Investments Accounts of Participants, former Participants and
Beneficiaries who had unpaid balances in their Other Investments Accounts on the
last day of the accounting period by using such time weighted method of
allocation as may be approved from time to time by the Plan Administrator. For
purposes of the foregoing, net income (or loss) includes the increase or
decrease in the fair market value of Trust Assets, interest income, dividends
and other income and gains or losses attributable to Trust Assets reduced by any
expenses charged to said Trust Assets for that accounting period. The
determination of said net income (or loss) of the Trust shall not take into
account any interest paid by the Trust under an Acquisition Loan. Each valuation
shall be based on the fair market value of assets in the Trust Fund on the
Valuation Date.
(b) Dividends on Employer Stock: Any cash dividend received on
shares of Employer Stock allocated to Participants' Employer Stock Accounts as
of the record date relating to the cash dividend will be allocated to the Other
Investments Account sub-account within the Employer Discretionary Contribution
Account of such Participants. Any cash dividend received on unallocated shares
of Employer Stock, including any Financed Shares credited to the Loan Suspense
Account, shall be allocated in accordance with Section 5.2(a). Any stock
dividend received on Employer Stock shall be credited to the Accounts to which
such Employer Stock was allocated as of the record date relating to the stock
dividend. Notwithstanding the foregoing, any cash dividends which are currently
distributed to Participants pursuant to Section 6.9 shall not be credited to
their respective Other Investments Accounts.
If cash dividends on Financed Shares allocated to a
Participant's Employer Stock Account are used for payments on an Acquisition
Loan, Financed Shares (representing that portion of such payments and whose Fair
Market Value is at least equal to
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<PAGE> 41
the amount of such dividends) released from the Loan Suspense Account shall be
allocated to that Participant's Employer Stock Account.
(c) Employer Contributions:
(1) The Employer Contribution for a Plan Year which
is made pursuant to elective deferral agreements entered into with Participants
pursuant to Section 4.2 for such Plan Year shall be allocated to the respective
Participants' Elective Deferral Account and to his or her Employer Stock Account
and/or Other Investments Account as of the last day of the calendar quarter
which includes the last day of the payroll or bonus period with regard to which
the Elective Deferral occurs.
(2) As of the end of each Plan Year, the Employer's
Profit Sharing Contribution for the Plan Year shall be allocated to the
respective Participant's Employer Discretionary Contribution Account and to his
or her Employer Stock Account and/or Other Investments Account of Participants
who were not placed on inactive status during the Plan Year and who were
employed by the Employer on the last day of the Plan Year (unless such
Participant fails to satisfy these standards as a result of terminating
employment on or after Normal Retirement Age or due to death or Disability). The
amount allocated to each Participant's Employer Discretionary Contribution
Account shall be in the same proportion as such Participant's Compensation for
the Plan Year bears to the total Compensation of all Participants for such Plan
Year.
(3) Notwithstanding the foregoing, the following
special rules apply:
[a] If in any given Plan Year the
requirement that Participants be active (complete 1,000 or more Hours of Service
during the Plan Year) in order to receive an Employer Discretionary Contribution
would cause the Plan to fail the minimum participation rules of Code Section
401(a)(26) or the minimum coverage rules of Code Section 410(b), the number of
Hours of Service which constitutes active status shall be reduced in a uniform
manner to the extent necessary to satisfy Code Sections 401(a)(26) and/or
410(b).
[b] If in any given Plan Year the
requirement that Participants be employed by the Employer on the last day of the
Plan Year in order to receive an Employer Discretionary Contribution would cause
the Plan to fail the minimum participation rules of Code Section 401(a)(26) or
the minimum coverage rules of Code Section 410(b), the date on which employment
is required during the given Plan Year shall be backed up in a uniform manner to
the extent necessary to satisfy Code Sections 401(a)(26) and/or 410(b).
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<PAGE> 42
[c] In no event will the amount allocated to
each Participant's accounts hereunder exceed the maximum addition allowable for
such year as provided in Section 5.3.
[d] If this Plan is a Top-Heavy plan under
Article XIII hereof, no allocations shall be made hereunder until the minimum
contribution allocations set forth in Section 13.3 have been made.
(4) As of the end of each Plan Year, any Employer
Matching Contributions for a Plan Year which are made pursuant to Section 4.1(b)
shall be allocated to the respective Employer Matching Contribution Accounts,
Employer Stock Accounts and/or Other Investments Accounts of those Participants
for whom the Employer Matching Contributions were made.
Notwithstanding the foregoing, all Employer contributions made
for the Plan Years beginning in 1990, 1991, 1992, and 1993 will be allocated in
accordance with the prior terms of the Plan as in effect on the date such
contributions were made.
(d) Forfeitures: As of the end of each Plan Year, any
Forfeitures which have become available for allocation during such Plan Year
pursuant to Section 4.3, shall be credited to the Employer Stock Accounts or
Other Investments Accounts of the same Participants who are entitled to an
Employer Contribution for the Plan Year under Section 4.1(b). Such amounts shall
be allocated according to the ratio that each such Participant's Compensation
for the Plan Year bears to the total Compensation of all such Participants for
the Plan Year.
(e) Limitations on Allocations to Certain Participants:
(1) No portion of the Trust Fund attributable to (or
allocable in lieu of) Employer Stock acquired by the Plan after October 22, 1986
in a sale to which Code Section 1042 or Code Section 2057 applies may accrue or
be allocated directly or indirectly under any plan maintained by the Employer
meeting the requirements of Code Section 401(a):
[a] during the "Nonallocation Period", for
the benefit of
(i) any taxpayer who makes an
election under Code Section 1042(a) with respect to Employer Stock or any
decedent if the executor of the estate of the decedent makes a qualified sale to
which Code Section 2057 applies,
(ii) any individual who is related
to
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<PAGE> 43
the taxpayer or the decedent (within the meaning of Code Section 267(b)) or,
[b] for the benefit of any other person who
owns (after application of Code Section 318(a) applied without regard to the
employee trust exception in Code Section 318(a)(2)(B)(i)) more than 25 percent
of
(i) any class of outstanding stock
of the Employer or Affiliated Employer which issued such Employer Stock, or
(ii) the total value of any class of
outstanding stock of the Employer or Affiliated Employer.
(2) Except, however, subparagraph [1][a](ii) above
shall not apply to lineal descendants of the taxpayer, provided that the
aggregate amount allocated to the benefit of all such lineal descendants during
the "Nonallocation Period" does not exceed more than five (5) percent of the
Employer Stock (or amounts allocated in lieu thereof) held by the Plan which are
attributable to a sale to the Plan by any person related to such descendants
(within the meaning of Code Section 267(c)(4)) in a transaction to which Code
Section 1042 or Code Section 2057 is applied.
(3) A person shall be treated as failing to meet the
stock ownership limitation under paragraph [1][b] above if such person fails
such limitation:
[a] at any time during the one (1) year
period ending on the date of sale of Employer Stock to the Plan, or
[b] on the date as of which Employer Stock
is allocated to Participants in the Plan.
(4) For purposes of this Section, "Nonallocation
Period" means the period beginning on the date of the sale of Employer Stock and
ending on the later of:
[a] the date which is ten (10) years after
the date of sale, or
[b] the date of the Plan allocation
attributable to the final payment of the Acquisition Loan incurred in connection
with such sale.
5.3 Limitation on Allocations: This Section 5.3 applies notwithstanding
any other provision in this Plan to the contrary.
(a) If the Participant does not participate in, and
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<PAGE> 44
has never participated in another qualified plan or a welfare benefit fund, as
defined in Section 419(e) of the Code, maintained by the Employer, or an
individual medical account, as defined in Code Section 415(l)(2), maintained by
the Employer, which provides an Annual Addition as defined in Section 2.1, the
amount of Annual Additions which may be credited to the Participant's account
for any Limitation Year will not exceed the lesser of the maximum permissible
amount or any other limitation contained in this Plan. If the Employer
contribution that would otherwise be contributed or allocated to the
Participant's account would cause the Annual Additions for the Limitation Year
to exceed the maximum permissible amount, the amount contributed or allocated
will be reduced so that the Annual Additions for the Limitation Year will equal
the maximum permissible amount.
Prior to determining the Participant's actual compensation for
the Limitation Year, the Employer may determine the maximum permissible amount
for a Participant on the basis of a reasonable estimation of the Participant's
compensation for the Limitation Year, uniformly determined for all Participants
similarly situated.
As soon as is administratively feasible after the end of the
Limitation Year, the maximum permissible amount for the Limitation Year will be
determined on the basis of the Participant's actual compensation for the
Limitation Year.
If pursuant to the preceding paragraph or as a result of the
allocation of forfeitures, or as a result of a reasonable error in determining
the amount of elective deferrals (within the meaning of Code Section 402(g)(3))
that may be made with respect to any individual under the limits of Code Section
415, there is an excess amount, the excess will be disposed of as follows:
(1) Any nondeductible voluntary Employee
Contributions, to the extent they would reduce the excess amount, will be
returned to the Participant.
(2) If after the application of paragraph (1) an
excess amount still exists, and the Participant is covered by the Plan at the
end of a Limitation Year, the excess amount in the Participant's account will be
used to reduce Employer contributions (including any allocation of forfeitures)
for such Participant in the next Limitation Year, and each succeeding Limitation
Year if necessary.
(3) If after the application of paragraph (1) an
excess amount still exists, and the Participant is not covered by the Plan at
the end of a Limitation Year, the excess amount will be held unallocated in a
suspense account. The suspense account will be applied to reduce future Employer
contributions (including any allocation of forfeitures) for all remaining
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<PAGE> 45
Participants in the next Limitation Year, and each succeeding Limitation Year if
necessary.
(4) If a suspense account is in existence at any time
during the Limitation Year pursuant to this section, it will not participate in
the allocation of the trust's investment gains and 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 may be made to the Plan for that Limitation
Year. Excess amounts may not be distributed to Participants or former
Participants.
(b) This section applies if, in addition to this Plan, the
Participant is covered under another qualified defined contribution plan or
welfare benefit fund, as defined in Section 419(e) of the Code, maintained by
the Employer or an individual medical account, as defined in Code Section
415(l)(2) maintained by the Employer which provides an Annual Addition as
defined in Section 2.1, during any Limitation Year. The Annual Additions which
may be credited to a Participant's account under this Plan for any such
Limitation Year will not exceed the maximum permissible amount reduced by the
Annual Additions credited to a Participant's account under the other plans and
welfare benefit funds for the same Limitation Year. If the Annual Additions with
respect to the Participant under other defined contribution plans and welfare
benefit funds maintained by the Employer are less than the maximum permissible
amount and the Employer contribution that would otherwise be contributed or
allocated to the Participant's account under this Plan would cause the Annual
Additions for the Limitation Year to exceed this limitation, the amount
contributed or allocated will be reduced so that the Annual Additions under all
such plans and funds for the Limitation Year will equal the maximum permissible
amount. If the Annual Additions with respect to the Participant under such other
defined contribution plans and welfare benefit funds in the aggregate are equal
to or greater than the maximum permissible amount, no amount will be contributed
or allocated to the Participant's account under this Plan for the Limitation
Year.
Prior to determining the Participant's actual compensation for
the Limitation Year, the Employer may determine the maximum permissible amount
for a Participant in the manner described in Section 5.3(a).
As soon as is administratively feasible after the end of the
Limitation Year, the maximum permissible amount for the Limitation Year will be
determined on the basis of the Participant's actual compensation for the
Limitation Year.
If, pursuant to the preceding paragraph, or as a result of the
allocation of forfeitures, or as a result of a reasonable
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<PAGE> 46
error in determining the amount of elective deferrals (within the meaning of
Code Section 402(g)(3)) that may be made with respect to any individual under
the limits of Code Section 415, a Participant's Annual Additions under this Plan
and such other plans would result in an excess amount for a Limitation Year, the
excess amount will be deemed to consist of the Annual Additions last allocated,
except that Annual Additions attributable to a welfare benefit fund or
individual medical account will be deemed to have been allocated first
regardless of the actual allocation date.
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 attributed to this Plan will be the product of,
(1) the total excess amount allocated as of such
date, times
(2) the ratio of (i) the Annual Additions allocated
to the Participant for the Limitation Year as of such date under this Plan to
(ii) the total Annual Additions allocated to the Participant for the Limitation
Year as of such date under this and all the other qualified defined contribution
plans.
(c) If the Employer maintains, or at any time maintained, a
qualified defined benefit plan covering any Participant in this Plan, the sum of
the Participant's defined benefit plan fraction and defined contribution plan
fraction will not exceed 1.0 in any Limitation Year.
(d) For purposes of this Section 5.3 the following definitions
shall apply:
(1) Compensation: A Participant's earned income,
wages, salaries, and fees for professional services and other amounts received
for personal services actually rendered in the course of employment with the
Employer (including, but not limited to, commissions paid salesmen, compensation
for services on the basis of a percentage of profits, commissions on insurance
premiums, tips and bonuses), and excluding the following:
[a] 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.
[b] 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
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<PAGE> 47
or is no longer subject to a substantial risk of forfeiture;
[c] Amounts realized from the sale, exchange
or other disposition of stock acquired under a qualified stock option; and
[d] Other amounts which received special tax
benefits, or contributions made by the Employer (whether or not under a salary
reduction agreement) towards the purchase of an annuity described in Section
403(b) of the Internal Revenue Code (whether or not the amounts are actually
excludible from the gross income of the Employee).
For purposes of applying the limitations of
this Section 5.3(d)(1), compensation for a Limitation Year is compensation
actually paid or includible in gross income during such Limitation Year.
(2) Defined benefit fraction: A fraction, the
numerator of which is the sum of the Participant's projected annual benefits
under all the defined benefit plans (whether or not terminated) maintained by
the Employer, and the denominator of which is the lesser of 125 percent of the
dollar limitation determined for the Limitation Year under Code Sections 415(b)
and (d) or 140 percent of the highest average compensation, including any
adjustments under Code Section 415(b).
Notwithstanding the above, if the Participant was a
Participant as of the first day of the first Limitation Year beginning after
December 31, 1986 in one or more defined benefit plans maintained by the
Employer which were in existence on May 6, 1986, the denominator of this
fraction will not be less than 125 percent of the sum of the annual benefits
under such plans which the Participant had accrued as of the close of the last
Limitation Year beginning before January 1, 1987, disregarding any changes in
the terms and conditions of the Plan after May 5, 1986. The preceding sentence
applies only if the defined benefit plans individually and in the aggregate
satisfied the requirements of Code Section 415 for all Limitation Years
beginning before January 1, 1987.
(3) Defined contribution dollar limitation: $30,000
or if greater, one-fourth of the defined benefit dollar limitation set forth in
Code Section 415(b)(1) as in effect for the Limitation Year.
(4) Defined contribution fraction: A fraction, the
numerator of which is the sum of the Annual Additions to the Participant's
account under all the defined contribution plans (whether or not terminated)
maintained by the Employer for the current and all prior Limitation Years
(including the Annual Additions attributable to the Participant's nondeductible
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<PAGE> 48
Employee contributions to all defined benefit plans, whether or not terminated,
maintained by the Employer, and the Annual Additions attributable to all welfare
benefit funds, as defined in Code Section 419(e), and individual medical
accounts, as defined in Code Section 415(l)(2), maintained by the Employer), and
the denominator of which is the sum of the maximum aggregate amounts for the
current and all prior Limitation Years of Service with the Employer (regardless
of whether a defined contribution plan was maintained by the Employer). The
maximum aggregate amount in any Limitation Year is the lesser of 125 percent of
the dollar limitation determined under Code Sections 415(b) and (d) or 35
percent of the Participant's compensation for such year.
If the Employee was a Participant as of the end of the first
day of the first Limitation Year beginning after December 31, 1986 in one or
more defined contribution plans maintained by the Employer which were in
existence on May 6, 1986, the numerator of this fraction will be adjusted if the
sum of this fraction and the defined benefit fraction would otherwise exceed 1.0
under the terms of this Plan. Under the adjustment, an amount equal to the
product of (i) the excess of the sum of the fractions over 1.0 times (ii) the
denominator of this fraction, will be permanently subtracted from the numerator
of this fraction. The adjustment is calculated using the fractions as they would
be computed as of the end of the last Limitation Year beginning before January
1, 1987, and disregarding any changes in the terms and conditions of the Plan
made after May 5, 1986, but using the Section 415 limitation applicable to the
first Limitation Year beginning on or after January 1, 1987.
The Annual Addition for any Limitation Year beginning before
January 1, 1987 shall not be recomputed to treat all Employee contributions as
Annual Additions.
(5) Excess amount: The excess of the Participant's
Annual Additions for the Limitation Year over the maximum permissible amount.
(6) Highest average compensation: The average
compensation for the three consecutive years of service with the Employer that
produces the highest average. A Year of Service with the Employer is the 12
consecutive month period defined in Section 2.1 of this Plan.
(7) Limitation Year: A calendar year, or the 12-
consecutive month period elected by the Employer. All qualified plans maintained
by the Employer must use the same Limitation Year. If the Limitation Year is
amended to a different 12-consecutive month period, the new Limitation Year
must begin on a date within the Limitation Year in which the amendment is made.
The Limitation Year for purposes of this Plan shall be the same as the Plan
Year.
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(8) Maximum permissible amount: The Maximum Annual
Addition that may be contributed or allocated to a Participant's account under
the Plan for any Limitation Year shall not exceed the lesser of:
[a] the defined contribution dollar
limitation; or
[b] 25 percent of the Participant's
compensation for the Limitation Year.
The compensation limitation referred to in [b] shall not apply
to any contribution for medical benefits (within the meaning of Code Section
401(h) or Code Section 419A(f)(2)) which is otherwise treated as an Annual
Addition under Code Section 415(l)(1) or Code Section 419A(d)(2).
If a short Limitation Year is created because of an amendment
changing the Limitation Year to a different 12-consecutive month period, the
maximum permissible amount will not exceed the defined contribution dollar
limitation multiplied by the following fraction:
Number of months in the short limitation year
---------------------------------------------
12
(9) Projected annual benefit: The annual retirement
benefit (adjusted to an actuarially equivalent straight life annuity if such
benefit is expressed in a form other than a straight life annuity or qualified
joint and survivor annuity) to which the Participant would be entitled under the
terms of the plan assuming:
[a] the Participant will continue employment
until normal retirement age under the plan (or current age, if later), and
[b] the Participant's compensation for the
current Limitation Year and all other relevant factors used to determine
benefits under the plan will remain constant for all future Limitation Years.
(e) Special Acquisition Loan Rules: Any Employer Contributions
which are used by the Trust (not later than the due date, including extensions,
for filing the Employer's Federal income tax return for the Plan Year) to pay
interest on an Acquisition Loan, and any Financed Shares which are allocated as
Forfeitures, shall not be included as Annual Additions under Section 5.3(a);
provided, however, that the provisions of this Section 5.3(e) shall be
applicable only for a Plan Year in which not more than one-third (1/3) of the
contributions applied to pay
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<PAGE> 50
principal and/or interest on an Acquisition Loan are allocated to Participants
who are Highly Compensated Employees (within the meaning of Code Section
414(q)). The Committee may reallocate such contributions to the extent necessary
to satisfy this special rule.
Employer Stock that is released from the Loan
Suspense Account by reason of payments on an Acquisition Loan for the Plan Year
shall be deemed to be contributed to the Trust for that Plan Year for purposes
of Section 5.3.
ARTICLE VI - BENEFITS
6.1 Benefit Distributions:
(a) The Trustee will make distributions from the Trust only as
directed by the Committee. Distribution of a Participant's benefit will be made
in whole shares of Employer Stock, cash or a combination of both, as determined
by the Committee; provided, however, that the Committee shall notify the
Participant of his right (subject to Section 6.1(b)) to demand distribution of
his benefit entirely in whole shares of Employer Stock (with only the value of
any fractional share paid in cash).
(b) Notwithstanding anything herein to the contrary, if the
Employer's charter or by-laws restrict the ownership of substantially all
outstanding shares of Employer Stock to current Employees and the Trust or any
other trust qualified under Code Sections 401(a) and 501(a), the distribution of
a Participant's benefit shall be made entirely in cash without granting him the
right to demand distribution in shares of Employer Stock. Alternatively,
Employer Stock may be distributed subject to the requirement that it be
immediately resold to the Employer under payment terms that comply with Section
6.12(a).
6.2 Normal Retirement, Early Retirement or Disability: If a
Participant's employment with the Employer is terminated at or after he reaches
his Normal Retirement Age or his Early Retirement Age, or if his employment is
terminated at an earlier age because of Disability, he shall be entitled to
receive the entire amount then in each of his accounts in accordance with
Section 6.5 within a reasonable time after he retires or becomes disabled.
A Participant's Early Retirement Age shall be the date upon
which he attains age 59 1/2 and 6 years of service. If a Participant separates
from service before satisfying the age requirement for Early Retirement, but has
satisfied any service requirement, the Participant will be entitled to elect an
Early Retirement benefit upon satisfaction of such age requirement.
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In addition, any Participant who has attained age 59 1/2 and
continues to be employed by the Employer shall be entitled to receive the entire
amount then in each of his accounts in accordance with Section 6.4 within a
reasonable time after he requests distribution to be made.
6.3 Death:
(a) This Section 6.3(a) applies when a Participant dies before
distribution of benefits under the Plan has commenced. Within a reasonable time
after receipt by the Plan Administrator of acceptable proof of death, the entire
amount then in all of his accounts shall be paid to his Spouse or Beneficiary as
determined in accordance with Section 6.5 in one of the forms set forth below if
the Spouse or Beneficiary properly consents to said commencement. If the Spouse
or Beneficiary does not so consent, commencement of benefits shall be postponed
until the later date (not later than the latest date permitted by Section
6.5(a)) consented to by the Spouse or Beneficiary.
(1) If the requirements of Section 6.5(b)(1) are met
with regard to a Participant, the death benefit provided for above shall be paid
in one of the optional forms set forth in Section 6.5(b)(3). If this Section
6.3(a)(1) applies and the Participant had not elected a form of payment prior to
his death, the Beneficiary, in its sole discretion, shall determine the form of
payment.
(2) If the requirements of Section 6.5(b)(1) are not
met with regard to a Participant, the death benefit provided for above shall be
applied toward the purchase of an annuity for the life of the Surviving Spouse
or Beneficiary; provided, however, that if a Participant who filed a Qualified
Election in accordance with Section 6.5, any benefit payable under Section
6.3(a)(2) shall be paid in accordance with said election.
The "entire amount" in a Participant's account at
termination of employment shall include any Elective Deferral Contributions,
Employer Matching Contributions or Employee after- tax Contributions made
pursuant to any of Plan Sections 4.1, 4.2 or 4.3, respectively, for the Plan
Year in which employment termination occurs where such contributions are not yet
allocated to an account.
(b) If a Participant dies after distribution of his or her
interest has commenced, the remaining portion of such interest will continue to
be distributed at least as rapidly as under the method of distribution being
used prior to the Participant's death.
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6.4 Termination for Other Reasons:
(a) At any given time, a Participant's vesting in his accounts
will be determined in accordance with paragraphs (1) and (2) below. If a
Participant's employment with the Employer is terminated before the Normal
Retirement Age for any reason other than Early Retirement, Disability or Death,
the Participant shall be entitled to the sum of:
(1) The entire amount credited to his Elective
Deferral Account, if any, his Employee Contribution Account, if any, (including
any Employer or Employee contributions made or to be made to such accounts for
the Plan Year in which employment termination occurs but not yet allocated on
the employment termination date), his Transfer Account, if any and his Employer
Matching Contribution Account plus
(2) An amount equal to the "vested percentage" of his
Employer Profit Sharing Contribution Account determined in accordance with the
following schedule:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
No. of Years of Service Credit Vested Forfeited
for Purposes of Vesting Percentage Percentage
- --------------------------------------------------------------------------
<S> <C> <C>
0-1 0% 100%
2 20% 80%
3 40% 60%
4 60% 40%
5 80% 20%
6 100% 0%
</TABLE>
(b) Notwithstanding the foregoing, the vested percentage, if
any, of the Employer Profit Sharing Contribution Account and the Employer
Matching Contribution Account of a Participant who had been covered under the
prior provisions of the Plan shall not be less than the vested percentage the
Participant would have had if the provisions of the Plan as in effect
immediately prior to the Effective Date had continued without change.
Furthermore, the interest of a Participant shall be 100% vested and
nonforfeitable upon the first to occur of attainment of: (1) age 62; (2) the
Normal Retirement Age; and (3) the Early Retirement Age irrespective of the
foregoing vesting schedule.
(c) If the value of a Participant's vested interest in the
Trust exceeds (or at the time of any prior distribution exceeded) $3,500,
payment of benefits due under this Section 6.4 shall commence within a
reasonable time following the Participant's employment termination in accordance
with Section
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<PAGE> 53
6.5 if the Participant (and, if applicable, the Participant's Spouse) properly
consents to said commencement in accordance with Section 6.4(d) below. If the
Participant does not so consent, commencement of benefits shall be postponed
until the later date (not later than the latest date permitted by Section
6.5(a)) consented to by the Participant. In the event that such an early
distribution has been made in the case of a terminated Participant who is less
than 100% vested in his Employer Profit Sharing Contribution Account and/or his
Employer Matching Contribution Account, the nonvested portion of his or her
account will be disposed of in accordance with Section 4.5.
If the value of a Participant's vested interest in the Trust
at the time of distribution (or at the time of any prior distribution) does not
exceed $3,500, any benefit payable hereunder will be paid within one year after
termination of employment in the form of a lump sum distribution ("Involuntary
Cash Out"). For purposes of this paragraph, if the value of a Participant's
vested account balance is zero, the Participant shall be deemed to have received
a distribution of such vested account balance. Any portion of his
Employer-derived account balance which is not vested on the date of Involuntary
Cash Out shall be forfeited in accordance with Section 4.5.
If the amount of a Participant's Employer Stock
Account balance cannot be determined by the Committee by the date on which a
distribution is to commence, or if the Participant cannot be located,
distribution of his benefit shall commence within sixty (60) days after the date
on which his Employer Stock Account balance can be determined or after the date
on which the Committee locates the Participant, whichever applies.
(d) The consent of the Participant and the Participant's
spouse shall be obtained in writing within the 90-day period ending on the
annuity starting date. The annuity starting date is the first day of the first
period for which an amount is paid as an annuity or any other form. Prior to
making any distributions under this Plan, the Committee shall notify the
Participant and the Participant's spouse of the right to defer any distribution
until the latest payment date set forth in Section 6.5(a). Such notification
shall include a general description of the material features, and an explanation
of the relative values of the optional forms of benefit available under the Plan
in a manner that would satisfy the notice requirements of Code Section
417(a)(3), and shall be provided not less than 30 days and no more than 90 days
prior to the annuity starting date.
Notwithstanding the foregoing, only the Participant need
consent to the commencement of a distribution in the form of a Joint and
One-Half Survivor Annuity while the account balance is immediately
distributable. Furthermore, if payment in the form of a Joint and One-Half
Survivor Annuity is not required with respect to the Participant pursuant to
Section 6.5(b), only
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<PAGE> 54
the Participant need consent to the distribution of an account balance that is
immediately distributable. Neither the consent of the Participant nor the
Participant's spouse shall be required to the extent that a distribution is
required to satisfy either of Code Sections 401(a)(9) or 415. In addition, upon
termination of this Plan, if the Plan does not offer an annuity option
(purchased from a commercial provider), the Participant's account balance may,
without the Participant's consent, be distributed to the Participant or
transferred to another defined contribution plan (other than an employee savings
and stock ownership plan as defined in Code Section 4975(e)(7)) within the same
controlled group.
For purposes of this Section, 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 Normal Retirement
Age or age 62.
(e) Payment of benefits due under this Section shall be made
in accordance with Section 6.5.
6.5 Payments of Benefits: When an amount credited to a Participant's
account vests or is forfeited under any of the foregoing provisions of this
Plan, the valuation of such amount of the Participant's account shall be made as
of such date as the Plan Administrator deems appropriate.
(a) Time of Payment:
(1) In general, the time of payment will be as
determined in Section 6.2, 6.3 and 6.4. In any event, payment of the retired,
disabled, deceased or terminated Participant's vested benefits must, unless the
Participant elects otherwise in writing, commence not later than the 60th day
after the close of the Plan Year in which the latest of the following events
occurs:
[a] the Participant attains the earlier of
the Plan's Normal Retirement Age or 65;
[b] the 10th anniversary of the Plan Year in
which the Participant commenced participation in the Plan; or
[c] the Participant terminates his service
with the Employer.
(2) Notwithstanding the foregoing, the failure of a
Participant and spouse to consent to a distribution while a benefit is
immediately distributable, within the meaning of Section 6.4(d), shall be deemed
to be an election to defer commencement of payment of any benefit sufficient to
satisfy this Section.
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<PAGE> 55
(3) No written election may defer distribution of a
Participant's account balance to a date later than the required beginning date.
The required beginning date of a Participant is the first day of April of the
calendar year following the calendar year in which the Participant attains age
70 1/2. However, the required beginning date of a Participant who attains age 70
1/2 before January 1, 1988 shall be determined in accordance with [a] or [b]
below:
[a] Non-5-percent owners. The required
beginning date of a Participant who is not a 5-percent owner is the first day of
April of the calendar year following the calendar year in which the later of
retirement or attainment of age 70 1/2 occurs.
[b] 5-percent owners. The required beginning
date of a Participant who is a 5-percent owner during any year beginning after
December 31, 1979 is the first day of April following the later of:
[1] the calendar year in which the
Participant attains age 70 1/2, or
[2] the earlier of the calendar year
with or within which ends the Plan Year in which the Participant becomes a
5-percent owner, or the calendar year in which the Participant retires.
The required beginning date of a Participant
who is not a 5-percent owner who attains age 70 1/2 during 1988 and who has not
retired as of January 1, 1989 is April 1, 1990.
A Participant is treated as a 5-percent
owner for purposes of this section if such Participant is a 5-percent owner as
defined in Code Section 416(i) (without regard to whether the Plan is top-heavy)
at any time during the Plan Year ending with or within the calendar year in
which such owner attains age 66 1/2 or any subsequent Plan Year.
After distributions have begun to a
5-percent owner under this section, they must continue to be distributed, even
if the Participant ceases to be a 5-percent owner in a subsequent year.
(4) Elective Deferrals, Qualified Nonelective
Contributions and Qualified Matching Contributions, and income allocable to
each, are not distributable to a Participant or his or her beneficiary, in
accordance with such Participant's or beneficiary's election, earlier than the
earliest to occur of the following events:
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<PAGE> 56
[a] Separation from service, death or
disability.
[b] Termination of the Plan without the
establishment of another defined contribution plan, other than an employee
savings and stock ownership plan (as defined in Code Section 4975(e) or Code
Section 409) or a simplified employee pension plan as defined in Code Section
408(k).
[c] The disposition by a corporation to an
unrelated corporation of substantially all of the assets (within the meaning of
Code Section 409(d)(2)) used in a trade or business of such corporation if such
corporation continues to maintain this Plan after the disposition, but only with
respect to Employees who continue employment with the corporation acquiring such
assets.
[d] The disposition by a corporation to an
unrelated entity of such corporation's interest in a subsidiary (within the
meaning of Code Section 409(d)(3)) if such corporation continues to maintain
this Plan, but only with respect to Employees who continue employment with such
subsidiary.
[e] The attainment of age 59 1/2.
Distributions after March 31, 1988 that are
triggered by any of [b], [c] or [d] above must be made in a lump sum.
(b) Form of Benefit: Except as otherwise noted in Plan Section
6.3, the distribution of a Participant's benefit shall be made in one of the
following methods:
(1) If:
[a] the Participant does not elect payments
in the form of a life annuity; and
[b] on the death of the Participant the
Participant's vested account balance will be paid to his Surviving Spouse, if
any, or, in the absence of a Surviving Spouse, to his designated Beneficiary;
and
[c] this Plan is not a direct or indirect
transferee of a defined benefit plan, money purchase pension plan (including a
target benefit plan), stock bonus, or profit sharing plan which is subject to
the survivor annuity requirements of Code Sections 401(a)(11) and 417,
then any benefit payable under the Plan shall be paid in any of the optional
forms set forth in Section 6.5(b)(3) as elected by
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<PAGE> 57
the Participant. In that event, the other provisions of Sections 6.5(b) and (c)
shall not apply.
(2) If the requirements set forth in Section
6.5(b)(1) above are not met with regard to said Participant, a Participant's
vested account balance will be paid in the form of a Joint and One-Half Survivor
Annuity unless he has elected an optional form of benefit pursuant to a
Qualified Election within the Election Period. The amount of the Joint and
One-Half Survivor Annuity is the amount of benefit which can be purchased with
the Participant's vested account balance.
(3) If he has elected an optional form of benefit
pursuant to a Qualified Election within the Election Period, a Participant's
vested account balance may be paid in one of the following forms as elected by
the Participant (and in the case of Participant's vested account balance in the
ESOP Portion of the Plan, and approved by the Committee):
[a] A lump sum payment equal to the vested
portion of the amount standing to the Participant's account as of his benefit
commencement date including the surrender values of any policies and/or
contracts that had been in force under this Plan on the Participant's life.
[b] A direct transfer of the Participant's
vested account balance to another plan that satisfies the requirements of Code
Section 401(a). Effective January 1, 1993, a distributee may elect, at the time
and in the manner prescribed by the Plan Administrator, to have any portion of
an eligible rollover distribution paid directly to an eligible retirement plan
specified by the distributee in a direct rollover. For purposes of this Section
6.4(b)(3)[b], the following definitions shall apply:
[1] Eligible rollover distribution:
An eligible rollover distribution is any distribution of all or any portion of
the balance to the credit of the distributee, except that an eligible rollover
distribution does not include: any distribution that is one of a series of
substantially equal periodic payments (not less frequently than annually) made
for the life (or life expectancy) of the distributee or the joint lives (or
joint life expectancies) of the distributee and the distributee's designated
beneficiary, or for a specified period of ten years or more; any distribution to
the extent such distribution is required under Code Section 401(a)(9); and the
portion of any distribution that is not includible in gross income (determined
without regard to the exclusion for net unrealized appreciation with respect to
Employer securities).
[2] Eligible retirement plan: An
eligible retirement plan is an individual retirement account
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<PAGE> 58
described in Code Section 408(a), an individual retirement annuity described in
Code Section 408(b), an annuity plan described in Code Section 403(a), or a
qualified trust described in Code Section 401(a), that accepts the distributee's
eligible rollover distribution. However, in the case of an eligible rollover
distribution to the surviving spouse, an eligible retirement plan is an
individual retirement account or individual retirement annuity.
[3] Distributee: A distributee
includes an Employee or former Employee. In addition, the Employee's or former
Employee's surviving spouse and the Employee's or former Employee's spouse or
former spouse who is the alternate payee under a qualified domestic relations
order, as defined in Code Section 414(p), are distributees with regard to the
interest of the spouse or former spouse.
[4] Direct rollover: A direct
rollover is a payment by the Plan to the eligible retirement plan specified by
the distributee.
[c] In the case of benefits payable pursuant
to Section 6.3, the Participant may elect to allow his Surviving Spouse or
Beneficiary to select the form in which any such benefits will be paid. When
selecting such form, the Surviving Spouse or Beneficiary may choose among the
optional forms listed in this Section 6.5(b)(3).
Any benefit which is required to be
distributed in the form of an annuity pursuant to the terms of this Plan may be
made by the purchase of an annuity contract from a commercial insurance company,
and distribution of that contract to the Participant or Beneficiary. Any annuity
contract distributed herefrom must be nontransferable. The terms of any annuity
contract purchased and distributable by the Plan to a Participant or Beneficiary
shall comply with the requirements of this Plan.
For purposes of this Section 6.5, a Participant's vested
account balance shall mean the aggregate value of the Participant's vested
account balances derived from Employer and Employee contributions (including
rollovers), whether vested before or upon death, including the proceeds of
insurance contracts, if any, on the Participant's life. The provisions of this
Section shall apply to a Participant who is vested in amounts attributable to
Employer contributions, Employee Contributions, or both, at the time of death or
distribution.
For purposes of benefits payable pursuant to Section 6.2 or
6.4, the Election Period shall be the 90-day period ending on the annuity
starting date. For purposes of this Section 6.5, annuity starting date means the
first day of the first period for
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<PAGE> 59
which an amount is payable as an annuity or any other form. For purposes of
benefits payable pursuant to Section 6.3, the Election Period shall begin on the
first day of the Plan Year in which the Participant attains age 35 and ends on
the date of the Participant's death. If a Participant separates from service
prior to the first day of the Plan Year in which age 35 is attained, the
Election Period shall begin on the date of separation solely with respect to the
account balance as of the date of separation.
A Qualified Election is a waiver of the preretirement survivor
annuity or the Joint and One-Half Survivor Annuity payable to a Participant
pursuant to Section 6.3 or 6.5. The waiver must be in writing and must be
consented to by the Participant's Spouse. Pursuant to the waiver, the
Participant may designate any person or persons (who may be designated
contingently or successively and who may be an entity other than a natural
person) as his Beneficiary or Beneficiaries to whom his Plan benefits are paid
if he dies before receipt of all such benefits and the form in which those
benefits will be paid. However, the Participant's Spouse must also consent in
writing to any Beneficiary named and the form of benefit selected pursuant to
the waiver. The Spouse's consent to a waiver must be witnessed by a Plan
representative or notary public. Notwithstanding this consent requirement, if
the Participant establishes to the satisfaction of the Committee that such
written consent may not be obtained because there is no Spouse or the Spouse
cannot be located, a waiver will be deemed a Qualified Election. Any consent
necessary under this provision will be valid only with respect to the Spouse who
signs the consent or in the event of a deemed Qualified Election, the designated
Spouse. In addition, a revocation of a prior waiver may be made by a Participant
without the consent of the Spouse at any time before the commencement of
benefits. The number of revocations shall not be limited. Any consent obtained
under this provision shall not be valid unless the Participant has received the
notice provided in Section 6.5(c)(1).
Each waiver and Beneficiary designation shall be in the form
prescribed by the Committee and will be effective only when filed with the
Committee during the Participant's lifetime. In the absence of a legally
enforceable written Beneficiary designation pursuant to the foregoing, a
Participant's Surviving Spouse, if any, shall be considered to be the designated
Beneficiary. If there is no Surviving Spouse, then a Participant's estate shall
be considered to be the designated Beneficiary.
(c) Notice Requirements.
(1) In the case of the Joint and One-Half Survivor
Annuity payable under this Section 6.5, the Committee
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<PAGE> 60
shall no less than thirty (30) days and no more than ninety (90) days prior to
the annuity starting date provide each Participant a written explanation of:
[a] the terms and conditions of the Joint
and One-Half Survivor Annuity;
[b] the Participant's right to make, and the
effect of an election to waive the qualified Joint and One-Half Survivor Annuity
form of benefit;
[c] the rights of a Participant's Spouse;
and
[d] the right to make, and the effect of, a
revocation of a previous election to waive the Joint and One-Half Survivor
Annuity.
(2) In the case of a qualified preretirement survivor
annuity as discussed in Section 6.3, the Plan Administrator shall provide each
Participant within the notice period set forth below, a written explanation of
the qualified preretirement survivor annuity in such terms and in such manner as
would be comparable to the explanation provided for meeting the requirements of
the preceding paragraph. The notice period means, with respect to a Participant,
whichever of the following periods ends last:
[a] The period beginning with the first day
of the Plan Year in which the Participant attains age 32 and ending with the
close of the Plan Year preceding the Plan Year in which the Participant attains
age 35.
[b] A reasonable period ending after the
individual becomes a Participant.
[c] A reasonable period ending after Section
6.4(b)(2) applies to the Participant.
[d] A reasonable period ending after
separation from service in the case of the Participant who separates before
attaining age 35.
For purposes of applying this Section 6.5(c)(2), a
reasonable period ending after the enumerated events described in [b] and [c] is
the end of the two-year period beginning one year prior to the date the
applicable event occurs, and ending one year after that date. In the case of a
Participant who separates from service before the Plan Year in which age 35 is
attained, notice shall be provided within the two-year period beginning one year
prior to separation and ending one year after separation. If such a Participant
thereafter returns to employment with the
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<PAGE> 61
Employer, the applicable period for such Participant shall be redetermined.
(3) If a distribution is one to which Code Sections
401(a)(11) and 417 do not apply, such distribution may commence less than 30
days after the notice required under Regulation Section 1.411(a)-11(c) is given,
provided that:
[a] the Plan Administrator clearly informs
the Participant that the Participant has a right to a period of at least 30 days
after receiving the notice to consider the decision of whether or not to elect a
distribution (and, if applicable, a particularly distribution option), and
[b] the Participant, after receiving the
notice, affirmatively elects a distribution.
(d) Committee Discretion:
(1) Timing of Distribution: At the Participant's
election in writing and subject to Section 6.5(a), payment of a Participant's
ESOP Portion account balance(s) will generally begin at the time set forth in
Section 6.2, 6.3 or 6.4, as applicable; provided, however, that notwithstanding
any provision in this Plan to the contrary, the Committee shall have discretion,
with respect to that portion of a Participant's account balance(s) that is
invested in Employer Stock (regardless of whether such Employer Stock was
purchased at the Participant's direction pursuant to Section 6.8) to:
[a] postpone payment to a date not later
than the Valuation Date of the Plan Year following the Plan Year in which a
Participant's Normal Retirement, disability or death occurs; or
[b] postpone payment to a date not later
than the Valuation Date of the sixth year following the Plan Year during which
the Participant separates from service for any other reason.
If a Participant's account balance includes Financed
Shares, such shares shall not be deemed to be a part of his account balance
until the Valuation Date of the Plan Year in which the Acquisition Loan has been
fully repaid and all indebtedness incurred in connection with a single
acquisition of Employer Stock shall be treated as one Acquisition Loan.
(2) Form of Distribution: In general, distributions
under this Article VI shall occur in the form requested by the Participant. The
Committee may, in its discretion and based on the liquidity of the Trust Fund
and the Employer and other relevant considerations, decide to pay any
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<PAGE> 62
benefit in substantially equal periodic payments over a period not to exceed
five (5) years; provided that this period over which installments may be made
may be extended an additional year (up to five (5) additional years) for each
$100,000 or fraction thereof by which the value of the distribution exceeds
$500,000. Further, the Committee may, in its discretion, use a combination of
equal and unequal installment payments.
(3) The Committee may, in its discretion, segregate
the vested interest in the Trust of a Participant and invest such amounts in
assets other than Employer Stock in the certain circumstances, including, but
not limited to, the following:
[a] A Participant whose vested interest in
the Trust exceeds $3,500 and the Participant does not consent to his or her
commencement of benefits in accordance with Section 6.4(c);
[b] A Participant who is entitled to a
distribution cannot be located;
[c] A Participant (whether terminated or
employed) is receiving installment payments from the Trust;
[d] A Participant has terminated employment,
but is not yet entitled to receive a distribution from the Plan;
[e] A portion of a Participant's account has
been or is eligible to be segregated for the benefit of an alternate payee
pursuant to a Qualified Domestic Relations Order;
[f] Any other time that the Committee deems
appropriate when such segregation would be in the best interests of the
remaining Participants in the Plan.
6.6 Distribution Restrictions: The restrictions contained in this
section will apply to all of the optional forms of benefit listed in Section
6.5. Nothing contained in this Section 6.6 will have the effect of offering
optional forms of benefit not contained in Section 6.5. All distributions
required under this Section will be determined and made in accordance with the
Proposed Income Tax Regulations under Section 401(a)(9), including the minimum
distribution incidental benefit requirement of Proposed Regulation Section
1.401(a)(9)-2.
(a) As of the first distribution calendar year, distributions,
if not made in a single sum, may only be made over one of the following periods
(or a combination thereof):
(1) the life of the Participant,
(2) the life of the Participant and a designated
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<PAGE> 63
beneficiary,
(3) a period certain not extending beyond the life
expectancy of the Participant, or
(4) a period certain not extending beyond the joint
and last survivor expectancy of the Participant and a designated Beneficiary.
(b) If a Participant's interest is to be distributed in other
than a single sum, the following minimum distribution rules shall apply on or
after the required beginning date (as defined in Section 6.5(a)):
(1) If a Participant's benefit is to be distributed
over:
[a] a period not extending beyond the life
expectancy of the Participant or the joint life and last survivor expectancy of
the Participant and the Participant's designated Beneficiary, or
[b] a period not extending beyond the life
expectancy of the designated beneficiary,
the amount required to be distributed for each calendar year, beginning with
distributions for the first distribution calendar year, must at least equal the
quotient obtained by dividing the Participant's benefit by the applicable life
expectancy.
(2) For calendar years beginning before January 1,
1989, if the Participant's spouse is not the designated Beneficiary, the method
of distribution selected must assure that at least 50% of the present value of
the amount available for distribution is paid within the life expectancy of the
Participant.
(3) For calendar years beginning after December 31,
1988, the amount to be distributed each year, beginning with distributions for
the first distribution calendar year shall not be less than the quotient
obtained by dividing the Participant's benefit by the lesser of:
[a] the applicable life expectancy, or
[b] if the Participant's spouse is not the
designated Beneficiary, the applicable divisor determined from the table set
forth in Q&A-4 of Section 1.401(a)(9)-2 of the Proposed Income Tax Regulations.
Distributions after the death of the Participant shall be distributed using the
applicable life expectancy in Section 6.5(b)(1) above as the relevant divisor
without regard to
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Proposed Regulations Section 1.401(a)(9)-2.
(4) The minimum distribution required for the
Participant's first distribution calendar year must be made on or before the
Participant's required beginning date. The minimum distribution for other
calendar years, including the minimum distribution for the distribution calendar
year in which the Participant's required beginning date occurs, must be made on
or before December 31 of that distribution calendar year.
(c) If the Participant's benefit is distributed in the form of
an annuity purchased from an insurance company, distributions thereunder shall
be made in accordance with the requirements of Code Section 401(a)(9) and the
proposed regulations thereunder.
(d) If the Participant dies before distribution of his or her
interest begins, distribution of the Participant's entire interest shall be
completed by December 31 of the calendar year containing the fifth anniversary
of the Participant's death except to the extent that an election is made to
receive distributions in accordance with (1) or (2) below:
(1) If any portion of the Participant's interest is
payable to a designated beneficiary, distributions may be made over the life or
over a period certain not greater than the life expectancy of the designated
beneficiary commencing on or before December 31 of the calendar year immediately
following the calendar year in which the Participant died.
(2) If the designated Beneficiary is the
Participant's surviving spouse, the date distributions are required to begin in
accordance with (1) above shall not be earlier than the later of:
[a] December 31 of the calendar year
immediately following the calendar year in which the Participant died; or
[b] December 31 of the calendar year in
which the Participant would have attained age 70 1/2.
(e) If the Participant has not made an election pursuant to
Section 6.6(d) by the time of his or her death, the Participant's designated
Beneficiary must elect the method of distribution not later than the earlier of:
(1) December 31 of the calendar year in which
distributions would be required to begin under this section, or
(2) December 31 of the calendar year which contains
the fifth anniversary of the date of death of the
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Participant.
If the Participant has no designated beneficiary, or if the designated
beneficiary does not elect a method of distribution, distribution of the
Participant's entire interest must be completed by December 31 of the calendar
year containing the fifth anniversary of the Participant's death.
(f) For purposes of Section 6.6(d) above, if the surviving
spouse dies after the Participant, but before payments to such spouse begin, the
provisions of Section 6.6(d), with the exception of Section 6.6(d)(2), shall be
applied as if the surviving spouse were the Participant.
(g) For purposes of this Section 6.6, any amount paid to a
child of the Participant will be treated as if it had been paid to the surviving
spouse if the amount becomes payable to the surviving spouse when the child
reaches the age of majority.
(h) If distribution in the form of an annuity irrevocably
commences to the Participant before the required beginning date, the date
distribution is considered to begin is the date distribution actually commences.
(i) For purposes of this Section 6.6, the following
definitions shall apply:
(1) Applicable life expectancy. The life expectancy
(or joint and last survivor expectancy) calculated using the attained age of the
Participant (or designated Beneficiary) as of the Participant's (or designated
Beneficiary's) birthday in the applicable calendar year reduced by one for each
calendar year which has elapsed since the date life expectancy was first
calculated. If life expectancy is being recalculated, the applicable life
expectancy shall be the life expectancy as so recalculated. The applicable
calendar year shall be the first distribution calendar year, and if life
expectancy is being recalculated such succeeding calendar year.
(2) Designated Beneficiary. The individual who is
designated as the Beneficiary under the Plan in accordance with Section
401(a)(9) and the regulations thereunder.
(3) Distribution calendar year. A calendar year for
which a minimum distribution is required. For distributions beginning before the
Participant's death, the first distribution calendar year is the calendar year
immediately preceding the calendar year which contains the Participant's
required beginning date. For distributions beginning after the Participant's
death, the first distribution calendar year is the calendar year in which
distributions are required to begin pursuant to Sections 6.6(d)-(h) above.
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(4) Life expectancy. Life expectancy and joint and
last survivor expectancy are computed by use of the expected return multiplies
in Tables V and VI of Section 1.72-9 of the Income Tax Regulations.
For purposes of this Section 6.6, life
expectancies shall not be recalculated.
(5) Participant's benefit.
[a] The account balance as of the last
valuation date in the calendar year immediately preceding the distribution
calendar year (valuation calendar year) increased by the amount of any
contributions or forfeitures allocated to the account balance as of dates in the
valuation calendar year after the valuation date and decreased by distributions
made in the valuation calendar year after the valuation date.
[b] For purposes of paragraph [a] above, if
any portion of the minimum distribution for the first distribution calendar year
is made in the second distribution calendar year on or before the required
beginning date, the amount of the minimum distribution made in the second
distribution calendar year shall be treated as if it had been made in the
immediately preceding distribution calendar year.
6.7 Waiver of Distribution Restrictions: Notwithstanding any other
provisions of this Article VI restricting distributions from the Plan, the
Committee may pay benefits to an alternate payee pursuant to the terms of a
qualified domestic relations order (as defined in Code Section 414(p)).
Distribution to the alternate payee will be made in accordance with the
distribution rules of the Plan which are otherwise applicable to all
Participants, however, in the case of a distribution to the alternate payee of
benefits from the 401(k) Portion of the Plan, the Committee may pay benefits to
the alternate payee regardless of whether the Participant has attained the
earliest retirement age (as defined in Code Section 414(p)(4)(B)) under the
Plan. In addition, the Committee may designate separate accounts within the
Trust those amounts which are the subject of a qualified domestic relations
order in accordance with Code Section 414(p) and may segregate such assets in
accordance with Section 6.5(d)(3).
6.8 Investment Direction: A Participant may, with the Employer's
consent, direct the Committee to invest his Elective Deferral Account balance
and Transfer Account balance in one or more investment options (including
Employer Stock) determined from time to time by the Trustee and the Committee.
If no election is made by a Participant, the Trustee, in its sole discretion,
shall direct the investment of said Participant's entire interest in the Trust.
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(a) Allocation of Contributions to Investment Options. A
Participant may elect the manner in which the balances in his or her directed
Accounts shall be allocated among the investment Funds at such time, in such
manner and on such form as the Committee shall prescribe in a uniform and
nondiscriminatory manner.
(b) Transfers of Investments. A Participant, or a former
Participant or Beneficiary receiving installment distributions under the Plan,
may elect to transfer amounts among any of the optional investment funds at such
time, in such manner and in such form as the Committee shall prescribe in a
uniform and nondiscriminatory manner.
(c) Changes in Investments. The Committee reserves the right
to change the investment options under the Plan.
(d) Loans. Participants may receive loans from the Plan
pursuant to the provisions of Section 6.15. A loan to a Participant shall be
made from those accounts, the investment of which is being directed by the
Participant, and shall reduce the amounts invested in the optional Funds.
Repayments of a loan shall reduce the amount of the loan investment and shall be
invested in such optional Funds in accordance with the Participant's then
current investment direction. Loans and loan repayments shall not be treated as
elections of allocations or transfers under paragraphs (a) and (b) above.
6.9 Dividend Distributions: Subject to Section 5.2(b), with regard to
cash dividends on Employer Stock allocated to the accounts of Participants, the
Board of Directors may direct that:
(a) any such dividends be paid currently (or within ninety
(90) days after the end of the Plan Year in which the dividends are paid to the
Trust) in cash to such Participants on a nondiscriminatory basis; or
(b) The Employer will pay such dividends directly to
Participants; or
(c) any such dividends are used to make payments on a loan
described in Code Section 404(a)(9).
Such payment (if any) of cash dividends to Participants
pursuant to Section 6.9(a) or (b) may be limited to dividends on shares of
Employer Stock which are then vested or may be applicable to dividends on all
shares allocated to Participants' Accounts.
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6.10 Voting Employer Stock:
(a) Effective for the Plan Year beginning January 1, 1997,
each Participant (or, in the event of his death, his Beneficiary) shall have the
right to direct the Committee as to the manner in which whole and partial shares
of Employer Stock allocated to his Employer Stock Account as of the record date
are to be voted on each matter brought before an annual or special shareholders'
meeting. Before each such meeting of shareholders, the Committee shall furnish
to each Participant (or Beneficiary) a copy of the proxy solicitation material,
together with a form requesting directions on how such shares of Employer Stock
allocated to such Participant's account shall be voted on each such matter. Upon
timely receipt of such directions from each Participant, the Committee shall
instruct the Trustee to vote the number of shares (including fractional shares)
of Employer Stock allocated to such Participant's Stock Account as directed by
each Participant or Beneficiary, and the Committee shall have no discretion in
such matter. The directions received by the Committee from Participants shall be
held by the Committee in confidence.
The Committee shall direct the Trustee vote unallocated shares
of Employer Stock and allocated shares for which it has not received direction
in the same proportion as directed shares are voted and the Committee shall have
no discretion in such matter.
If the Committee fails or refuses to give the Trustee timely
directions as to how to vote any Employer Stock as to which the Trustee
otherwise has the right to vote, the Trustee shall not exercise its power to
vote such Employer Stock and shall consider the Committee's failure or refusal
to give timely instructions as an exercise of the Committee's rights and a
directive to the Trustee not to vote said Employer Stock.
Notwithstanding the foregoing, if any agreement entered into
by the Trust provides for voting of any shares of Employer Stock pledged as
security for any obligation of the Trust, such shares of Employer Stock shall be
voted in accordance with such agreement to the extent such agreement complies
with relevant provisions of ERISA and the Code.
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(b) If a tender or exchange offer is commenced for Employer
Stock:
(i) The Committee shall distribute in a timely manner
to each Participant (or Beneficiary) such information as is distributed
to holders of Employer Stock in connection with the tender or exchange
offer.
(ii) All Employer Stock held by the Trustee in
Employer Stock Accounts shall be tendered or not tendered by the
Trustee in accordance with the directions it receives from the
Committee. Each Participant (or Beneficiary) (subject to subparagraph
(b)(iii) below) shall be entitled to direct the Committee with respect
to the tender of such Employer Stock allocated to his account. The
instructions received by the Committee shall be held by the Committee
in confidence.
(iii) With respect to Employer Stock allocated to an
Employer Stock Account with respect to which directions by Participants
(or Beneficiaries) are not received and Employer Stock held by the
Trustee that is not allocated to Employer Stock Accounts, the Committee
shall instruct the Trustee to tender or not tender such Employer Stock
in the same proportion as directed shares are voted in 6.10(b)(ii)
above.
(c) The Committee and Trustee shall make no recommendations
regarding the manner of exercising any rights under this Paragraph, including
whether or not such rights should be exercised.
6.11 Diversification of Investments:
(a) Election by Qualified Participant. Each Qualified
Participant (determined by excluding any years of participation in the Prior
Plan) shall be permitted to direct the Plan as to the investment of 25 percent
of the value of the Participant's account(s) in the ESOP Portion of the Plan
within 90 days after the last day of each Plan Year during the Participant's
Qualified Election Period as defined in Section 2.1(vv). Within 90 days after
the close of the last Plan Year in the Participant's Qualified Election Period,
a Qualified Participant may direct the Plan as to the investment of 50 percent
of the value of such account balance.
(b) Method of Directing Investment. The Participant's
direction shall be provided to the Committee in writing, and shall be effective
as soon as administratively feasible, but in no event later than 180 days after
the close of the Plan Year to which the direction applies.
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(c) Distribution for Investment. At the election of the
Qualified Participant, the Plan shall distribute (notwithstanding Section 409(d)
of the Code) the portion of the Participant's account that is covered by the
election described in Section 6.11(a) above within 90 days after the last day of
the period during which the election can be made. Such distribution shall be
subject to such requirements of the Plan concerning put options as would
otherwise apply to a distribution of Employer Securities from the Plan. This
Section 6.11(c) shall apply notwithstanding any other provision of the Plan
other than such provisions as require the consent of the Participant and the
Participant's spouse to a distribution with a present value in excess of $3,500.
If the Participant and the Participant's spouse do not consent, such amount
shall be retained in this Plan.
6.12 Rights, Options and Restrictions on Employer Stock:
(a) The Employer shall provide a "put option" to any
Participant (or Beneficiary) who receives a distribution of Employer Stock which
is or becomes not readily tradeable on an established securities market. The put
option shall permit the Participant (or Beneficiary) to sell such Employer Stock
to the Employer at any time during two option periods, at the most recently
completed valuation determined pursuant to Plan Section 4.7. The first put
option period shall be for at least 60 days beginning on the date of
distribution. The second put option period shall be for at least 60 days
beginning after the new determination of valuation pursuant to Plan Section 4.7
(and notice to the Participant thereof) in the following Plan Year. The Employer
may allow the Committee to direct the Trustee to purchase shares of Employer
Stock tendered to the Employer under a put option. The payment for any Employer
Stock sold under a put option shall be made within 30 days if the shares were
distributed as part of an installment obligation. If the shares are distributed
in a lump sum distribution, payment shall commence within 30 days and may be
made in a lump sum or in substantially equal, annual installments over a period
not exceeding five years, with adequate security provided and interest payable
at a reasonable rate on any unpaid installment balance (as determined by the
Employer or the Committee). This "put option" shall be nonterminable within the
meaning of Internal Revenue Service Regulation 54.4975-(11)(a)(ii).
(b) To the extent applicable under relevant law, shares of
Employer Stock distributed by the Trust shall be subject to a "right of first
refusal." The right of first refusal shall provide that, prior to any subsequent
transfer, the shares must first be offered for purchase in writing to the
Employer, and then to the Trust, at a "fair market value". A bona fide written
offer from an independent prospective buyer shall be deemed to be a "fair market
value" for this purpose. The Employer and the Committee (on behalf of the Trust)
shall have total of 14 days to exercise the right of first refusal on the same
terms offered by a prospective buyer. The Employer may require that a
Participant entitled to a distribution of Employer
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Stock execute an appropriate stock transfer agreement (evidencing right of first
refusal) prior to receiving a certificate of Employer Stock.
(c) Shares of Employer Stock held or distributed by the
Trustee may include such legend restrictions on transferability as the Employer
may reasonably require in order to assure compliance with applicable federal and
state securities laws.
(d) Non-Terminable Protections and Rights. No Employer Stock,
except as provided in Section 6.12, acquired with the proceeds of an Acquisition
Loan may be subject to a put, call, or other option, or buy-sell or similar
arrangement when held by and when distributed from the Trust Fund, whether or
not the Plan is then an ESOP. The protections and rights granted in this Section
are nonterminable, and such protections and rights shall continue to exist under
the terms of this Plan so long as any Stock acquired with the proceeds of an
Acquisition Loan is held by the Trust Fund or by any Participant or other person
for whose benefit such protections and rights have been created, and neither the
repayment of such loan nor the failure of the Plan to be an ESOP, or an
amendment of the Plan shall cause a termination of said protections and rights.
6.13 Securities and Exchange Commission Approval: The Employer may
request an interpretive letter from the Securities and Exchange Commission
stating that the transfers of Employer Stock contemplated hereunder do not
involve transactions requiring a registration of such Employer Stock under the
Securities Act of 1933. In the event that a favorable interpretive letter is not
obtained, the Employer reserves the right to amend the Plan and Trust
retroactively to their Effective Dates in order to obtain a favorable
interpretive letter or to terminate the Plan.
6.14 Hardship Withdrawals of Elective Deferrals:
(a) At any time, but not more frequently than once in each
Plan Year, a Participant may elect, with the written consent of his or her
Spouse, to withdraw up to an amount equal to the balance then credited to his or
her Elective Deferral Account, not including earnings credited to the Account
after December 31, 1988. Such withdrawals may be made only if the purpose of the
withdrawal is to meet immediate and significant financial needs of the
Participant where the amount of the withdrawal is not reasonably available from
the resources of the Participant.
(b) The only financial needs considered to be immediate and
significant are:
(1) Deductible medical expenses incurred or necessary
(within the meaning of Code Section 213(d)) of the Participant, the
Participant's spouse, children or dependents.
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(2) The purchase (excluding mortgage payments) of a
principal residence for the Participant.
(3) Payment of tuition for the next twelve (12)
months of post-secondary education for the Participant, the Participant's
spouse, children or dependents.
(4) The need to prevent the eviction of the
Participant from, or a foreclosure on the mortgage of, the Participant's
principal residence.
(c) A distribution will be considered as necessary to satisfy
an immediate and significant financial need of the Participant only if:
(1) The Participant has obtained all distributions,
other than hardship distributions, and all nontaxable loans under all plans
maintained by the Employer.
(2) All plans maintained by the Employer provide that
the Participant's Elective Deferrals (and Employee Contributions) will be
suspended for twelve months after the receipt of the hardship distribution.
(3) The distribution is not in excess of the amount
of an immediate and significant financial need (including amounts necessary to
pay any federal, state or local income taxes or penalties reasonably anticipated
to result from the distribution).
(4) All plans maintained by the Employer provide that
the Participant may not make Elective Deferrals for the Participant's taxable
year immediately following the taxable year of the hardship distribution in
excess of the applicable limit under Code Section 402(g) for such taxable year
less the amount of such Participant's Elective Deferrals for the taxable year of
the hardship distribution.
(d) All withdrawal elections shall be made by a Participant on
written forms supplied by the Plan Administrator for that purpose. Upon
employment termination, a Participant's remaining Elective Deferral Account
shall be distributed in a manner consistent with Article VI hereof.
6.15 Loans to Participants: The Trustee may lend a Participant or
Beneficiary an amount not in excess of 50% of the vested portion of his or her
Elective Deferral Account as of the date on which the loan is approved subject
to those special limits described in Section 6.15(g) hereof. The Plan
Administrator may approve loans to a Participant or Beneficiary only to meet a
Participant's immediate and heavy financial need as defined in Code section
414(g). Loans shall be available to all Participants and Beneficiaries on a
reasonably equivalent basis, and they shall not be made available to Highly
Compensated Employees as defined in Code Section 414(q) or shareholders in an
amount greater than the amount made available to other Employees.
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In addition to such rules and regulations as the Plan
Administrator may adopt, all loans shall comply with the following terms and
conditions:
(a) An application for a loan by a Participant or Beneficiary
shall be made in writing to the Plan Administrator, whose action thereon shall
be final.
(b) The period of repayment for any loan shall be arrived at
by mutual agreement between the Plan Administrator and the borrower. Loans shall
provide for level amortization with payments to be made not less frequently than
quarter annually over a period not to exceed five years. However, if the loan is
used to acquire a dwelling unit that is to be used within a reasonable time as
determined at the time the loan is made as the principal residence of the
Participant, the repayment period shall not exceed such period as may be
determined by the Plan Administrator and the Trustee.
(c) Each loan shall be made against such collateral as the
Trustee and the Plan Administrator may require, supported by the borrower's
collateral promissory note for the amount of the loan including interest,
payable to the order of the Trustee. In the event of default, where the sole
security for the loan is the Participant's interest in the Trust, foreclosure on
the note and attachment of security will not occur until a distributable event
occurs under the Plan.
Notwithstanding the foregoing, any portion of a loan
made on or after August 19, 1985 which is secured by a married Participant's
interest in the Trust must be consented to by the Participant's Spouse not more
than 90 day prior to the date the loan proceeds are distributed. The consent
must be in writing, must acknowledge the effect of the loan, and must be
witnessed by a notary public. Such consent shall thereafter be binding with
respect to the consenting spouse or any subsequent spouse with respect to that
loan. A new consent shall be required if the account balance is used for
renegotiation, extension, renewal, or other revision of the loan.
(d) Each loan shall bear interest at a rate to be fixed by the
Plan Administrator determining the interest rate; the Plan Administrator shall
take into consideration the interest rates currently being charged. The Plan
Administrator shall not discriminate among Participants or Beneficiaries in the
matter of interest rates; but loans granted at different times may bear
different interest rates if, in the opinion of the Plan Administrator, the
difference in rates is justified by a change in general economic conditions.
Each loan shall bear interest at an effective annual percentage rate which is
commercially reasonable. Whether an interest rate is commercially reasonable
shall be determined with reference to the interest rate charged by banks in the
surrounding area in a similar transaction.
(e) No distribution shall be made to any Participant or former
Participant or to the Beneficiary of any such Participant or former Participant
unless and until all unpaid loans, including
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accrued interest thereon, have been liquidated.
(f) No loans will be made to Shareholder-Employees or
Owner-Employees. For purposes of this requirement, a Shareholder-Employee means
an Employee or officer of an electing small business corporation (Subchapter S
corporation) who owns, or is considered as owning within the meaning of the Code
Section 318(a)(1), on any day during the taxable year of such corporation, more
than 5% of the outstanding stock of the corporation.
(g) Notwithstanding the foregoing, no Participant or
Beneficiary may borrow an amount which (when added to the outstanding balances
of all other loans from the Plan) exceeds the lesser of:
(i) $50,000 reduced by the amount by which [the
highest outstanding loan balance owing by the Participant to the Plan during the
one year period ending on the day before the new loan proceeds are to be
disbursed] exceeds [the participant's loan balance immediately before the
promissory note relating to the new loan proceeds is executed]; or
(ii) One-half of the sum of his vested
Employer-derived account balance.
This maximum loan limit as contained in this Section
6.15(g) shall be applied to all qualified plans of the Employer (as well as all
qualified plans treated as sponsored by a single Employer under any of Sections
414(b), (c), and (m) of the Code) in the aggregate. In no event will the
limitation imposed by this Section 6.15(g) operate to limit the dollar amount of
loans permitted under other provisions of this Section 6.15 to less than $10,000
(from all qualified plans of the Employer or related Employers in the
aggregate).
ARTICLE VII - TRUST FUND
7.1 Trust Contributions: All contributions under this Plan shall be
paid to the Trustee and deposited in the Trust Fund. All contributions made by
the Employer are expressly conditioned upon the initial qualification of the
Plan under the Internal Revenue Code and upon the deductibility under Section
404 of the Internal Revenue Code of contributions made to provide Plan benefits.
Contributions being expressly conditioned upon the initial qualification of the
Plan must be returned to the Employer within one year after the date the initial
qualification is denied, provided that the application for qualification is made
by the time prescribed by law for filing the Employer's tax return for the
taxable year in which the Plan is adopted. All assets of the Trust Fund,
including investment income, shall be retained for the exclusive benefit of
Participants, former Participants, and Beneficiaries and shall be used to pay
benefits to such persons or to pay administrative expenses of the Plan and Trust
Fund to the extent not paid by the Employer and shall not revert to or inure to
the benefit of the Employer.
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Notwithstanding anything herein to the contrary, the Employer may
request that a contribution which was made due to a mistake of fact, or which
was not deductible under Section 404 of the Internal Revenue Code of 1986, shall
be returned to the Employer within one year after the payment of the
contribution or the disallowance of the deduction (to the extent disallowed).
7.2 Investment of Trust Assets:
(a) Purchase of Employer Stock. Trust Assets (including
Employer Profit Sharing Contributions and Employer Matching Contributions
pursuant to Section 4.1(b)) will be invested by the Trustee primarily in
Employer Stock in accordance with directions from the Committee. Contributions
(and other Trust Assets) may be used to acquire shares of Employer Stock from
any shareholder of the Employer or an Affiliated Employer, from the Employer or
an Affiliated Employer, from an estate, or from any other person or entity
deemed appropriate by the Committee. The Trustee may also invest Trust Assets in
such other prudent investments as the Committee deems to be desirable for the
Trust, or Trust Assets may be held in cash. Subject to Participant investment
direction in Section 6.8, the Committee may direct the Trustee to invest and
hold up to 100% of the Trust Assets in Employer Stock. All purchases or sales of
Employer Stock by the Trustee shall be made only as directed by the Committee
and only at prices which do not exceed the fair market value of Employer Stock
as determined in good faith by the Committee pursuant to applicable law. The
Plan or Trust may not obligate itself to acquire Employer Stock from a
particular holder thereof at an indefinite time determined upon the happening of
an event such as the death of the holder.
(b) Borrowing to Acquire Employer Stock. Subject to the
approval of the Board of Directors, the Committee may direct the Trustee to
enter into Acquisition Loans (including an Acquisition Loan with a Disqualified
Person) from time to time to finance the acquisition of Employer Stock (Financed
Shares) or to repay a prior Acquisition Loan. An installment obligation incurred
in connection with the purchase of Employer Stock shall be treated as an
Acquisition Loan. An Acquisition Loan shall meet the requirements of Section
4975(d)(3) of the Internal Revenue Code and Section 408(b)(3) of ERISA and
regulations thereunder. Those requirements include (among others) the
requirements described below.
(1) The loan shall be for a specific term and not
payable upon demand except in the event of default.
(2) The loan is primarily for the benefit of
Participants and Beneficiaries, at a reasonable rate of interest, and under
terms at the time the loan is made which are at least as favorable to the Plan
as the terms of a comparable loan resulting from arms-length negotiations
between independent parties.
(3) The proceeds of the loan must be used within a
reasonable time after their receipt to acquire Employer Stock or for making
repayment of an outstanding Acquisition Loan.
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(4) The loan shall be without recourse against the
Plan and collateral for the loan shall be limited to Employer Stock acquired
with the proceeds of the loan or used as collateral on an outstanding
Acquisition Loan which is being repaid. The lender shall have no right to any
assets of the Plan other than the collateral, Employer Contributions (excluding
contributions of Employer Stock) and earnings on such collateral and
contributions (including but not limited to dividends paid on unallocated
Employer Stock).
(5) In the event of a loan default, the value of the
Plan assets transferred in satisfaction of the loan shall not exceed the amount
of the default and, if the lender is a party in interest or Disqualified Person,
shall not exceed an amount of Plan assets equal to the amount of the payment
schedule with respect to which there is a failure to pay.
(6) The loan terms may provide that there shall be no
required payments of principal and/or interest for one or more years. The
Employer may from time to time direct the Trustee to renegotiate any such loan
to change the payment terms with respect to payments not then due and payable,
to extend the period of payment, or to reduce or eliminate the amount of any
payment or payments or principal and/or interest not then due and payable.
(7) Any pledge of Financed Shares must provide for
the release of shares so pledged as payments on the Acquisition Loan are made by
the Trustee and such Financed Shares are allocated to Participants' Employer
Stock Accounts under Article V.
These rules shall be changed by amendment to the Plan to the
extent changes in applicable law require or permit.
(c) Acquisition Loan Payments. Payments of principal and/or
interest on any Acquisition Loan shall be made by the Trustee (as directed by
the Committee) only from Employer Contributions including Employer Profit
Sharing Contributions and/or Employer Matching Contributions paid in cash to
enable the Trust to repay such Acquisition Loan, from earnings attributable to
such Employer Contributions and from any cash dividends received by the Trust on
shares of Employer Stock (whether allocated or unallocated) acquired with the
proceeds of the Acquisition Loan. The payments made with respect to an
Acquisition Loan for a Plan Year must not exceed the sum of such Employer
Contributions, earnings and dividends for that Plan Year (and prior Plan Years),
less the amount of such payments for prior Plan Years. If the Employer is the
lender with respect to an Acquisition Loan, Employer Profit Sharing
Contributions and Employer Matching Contributions may be paid in the form of
cancellation of indebtedness under the Acquisition Loan. If the Employer is not
the lender with respect to an Acquisition Loan, the Employer may elect to make
payments on the Acquisition Loan directly to the lender and to treat such
payments as Employer Contributions.
(d) Sales of Employer Stock. Subject to the approval of the
Board of Directors and at the direction of the Committee, the
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Trustee may sell shares of Employer Stock to any person (including the
Employer), provided that any such sale must be made at a price which satisfies
applicable law as of the date of the sale. Notwithstanding the provisions of
Section 7.2(d), the Trustee may apply the proceeds from the sale of unallocated
Financed Shares to repay the Acquisition Loan (incurred to finance the purchase
of such Financed Shares) in the event of the sale of the Company or the
termination of the ESOP or if the ESOP ceases to be an employee savings and
stock trust Agreement under Section 4975(e)(7) of the Code. If the Trustee is
unable to make payments of principal and/or interest on an Acquisition Loan when
due, the Trustee (with the approval of the Board of Directors and at the
direction of the Committee) may either sell any Financed Shares that have not
yet been allocated to Participants' Employer Stock Accounts or obtain an
Acquisition Loan in an amount sufficient to make such payments (if currently
permitted by applicable law). Any sale of Employer Stock under this Section
7.2(d) must comply with the fiduciary duties applicable to the Trustee under
Section 404(a)(1) of ERISA.
ARTICLE VIII - ADMINISTRATION
8.1 Allocation of Responsibility Among Fiduciaries: The Fiduciaries
shall have only those specific powers, duties, responsibilities and obligations
as are specifically given them under this Plan or the Trust. In general, the
Employer shall have the sole responsibility for making the contributions
provided for under Section 4.1. The Employer shall have the sole authority to
appoint and remove the Trustee, Committee, any Committee Member and any
Investment Manager which may be provided for under the Trust, and to amend or
terminate, in whole or in part, this Plan or the Trust. The Committee shall be
the Plan Administrator and shall have the sole responsibility for the
administration of this Plan, which responsibility is specifically described in
this Plan and the Trust. The Trustee shall have the sole responsibility for the
administration of the Trust and the management of the assets held under the
Trust, all as specifically provided in the Trust. Each Fiduciary warrants that
any directions given, information furnished, or action taken by it shall be in
accordance with the provisions of the Plan or the Trust, as the case may be,
authorizing or providing for such direction, information or action. Furthermore,
each Fiduciary may rely upon any such direction, information or action of
another Fiduciary as being proper under this Plan or the Trust, and is not
required under this Plan or the Trust to inquire into the propriety of any such
direction, information or action. It is intended under this Plan and the Trust
that each Fiduciary shall be responsible for the proper exercise of its own
powers, duties, responsibilities and obligations under this Plan and the Trust
and shall not be responsible for any act or failure to act of another Fiduciary.
No Fiduciary guarantees the Trust Fund in any manner against investment loss or
depreciation in asset value.
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8.2 Appointment of Committee: The Plan shall be administered by the
ESOP Committee which is composed of individuals appointed by the Board of
Directors of the Employer to serve at its pleasure and without compensation. The
Committee members shall be the named fiduciaries with authority to control and
manage the operation and administration of the Plan. The Trustee shall be
notified in writing by the Employer of the names of the Committee members. The
Trustee may conclusively assume that the members of the Committee will continue
to act in that capacity until the Trustee has been notified by the Employer to
the contrary in writing.
Committee action will be by vote of a majority of the members at a
meeting or in writing without a meeting. Minutes of each meeting of the
Committee shall be kept. The Committee will direct the Trustee on all matters
which require instructions or directions, as provided in this Plan and the Trust
Agreement. The Committee may allocate its fiduciary responsibilities among its
members and may designate other persons (including the Trustee) to carry out its
fiduciary responsibilities (other than investment responsibilities) under the
Plan. The Committee may designate any one or more of its members to have
authority to sign any documents on its behalf. The Trustee shall be fully
protected in complying with any instructions received from the Committee
member(s) so designated.
The Committee shall be responsible for directing the Trustee as to
the investment of the Trust Assets. The Committee may delegate to the Trustee
the responsibility for investing Trust Assets other than Employer Stock. The
Committee shall establish a funding policy and method for directing the Trustee
to acquire Employer Stock (and for otherwise investing the Trust Assets) in a
manner that is consistent with the objectives of the Plan and the requirements
of ERISA.
The Committee is empowered, on behalf of the Plan, to employ
investment advisers, accountants, legal counsel and other agents to assist it in
the performance of its duties under the Plan. All usual and reasonable expenses
of the Committee may be paid in whole or in part by the Employer and any
expenses not paid by the Employer shall, upon the written consent of the
Committee, be paid by the Trustee out of the principal or income of the Trust
fund. The Employer shall secure fidelity bonding for the fiduciaries of the
Plan, as required by Section 412 of ERISA.
The Employer or the Trustee (as directed by the Committee) may
purchase insurance for the Committee (and other fiduciaries of the Plan) to
cover liability or loss occurring by reason of the act or omission of a
fiduciary. If such insurance is purchased with Trust Assets, the insurance must
permit recourse by the insurer against the fiduciary in the case of breach of a
fiduciary obligation by such fiduciary. The Employer shall indemnify each member
of the Committee (to the extent permitted by law) against any personal liability
or expense, except such liability or expense as may result from his own willful
misconduct.
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The Committee shall be the Committee under Section 414(g) of the
Code and under Section 3(16)(A) of ERISA. The Committee shall be the designated
agent of the Plan for the service of legal process.
8.3 Claims Procedure: The Committee shall have discretionary authority
regarding claims for benefits and shall make all determinations as to the right
of any person to a benefit. Any denial by the Committee of the claim for
benefits under the Plan by a Participant or Beneficiary shall be stated in
writing by the Committee and delivered or mailed to the Participant or
Beneficiary; and such notice shall set forth the specific reasons for the
denial, written to the best of the Committee's ability in a manner that may be
understood without legal or actuarial counsel. Approval or denial of a claim is
to be delivered or mailed to the claimant within 60 days of the time such claim
is made. In addition, the Committee shall afford a reasonable opportunity to any
Participant or Beneficiary whose claim for benefits has been denied in whole or
in part for a review of the decision denying the claim. Review must be applied
for by written request to the Committee within 60 days after denial of the
claim. The Committee will advise the claimant of its decision within 60 days
after such request is made.
8.4 Records and Reports: The Committee shall exercise such authority
and responsibility as it deems appropriate in order to comply with ERISA and
governmental regulations issued thereunder relating to records of Participant's
Service, account balances and the percentage of such account balances which are
nonforfeitable under the Plan; notification to Participants; annual registration
with the Internal Revenue Service; and annual reports to the Department of
Labor.
8.5 Other Committee Powers and Duties: The Committee shall have such
duties and powers as may be necessary to discharge its duties hereunder,
including, but not by way of limitation, the following:
(a) discretionary authority to construe and interpret the Plan,
decide all questions of eligibility and determine the amount, manner and time of
payment of any benefits hereunder;
(b) to prescribe procedures to be followed by Participants or
Beneficiaries filing applications for benefits;
(c) to prepare and distribute, in such manner as the Committee
determines to be appropriate, information explaining the Plan;
(d) to receive from the Employer and from Participants such
information as shall be necessary for the proper administration of the Plan;
(e) to furnish the Employer, upon request such annual reports with
respect to the administration of the Plan as are reasonable and appropriate;
(f) to receive, review and keep on file (as it deems
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convenient and proper) reports of the financial condition and of the receipts
and disbursements of the Trust Fund from the Trustee;
(g) to appoint or employ individuals to assist in the
administration of the Plan and any other agents it deems advisable, including
legal and actuarial counsel.
The Committee shall have no power to add to, subtract from or
modify any of the terms of the Plan, or to change or add to any benefits
provided by the Plan, or to waive or fail to apply any requirements of
eligibility for a benefit under the Plan.
8.6 Rules and Decisions: The Committee may adopt such rules as it deems
necessary, desirable or appropriate. All rules and decisions of the Committee
shall be uniformly and consistently applied to all Participants in similar
circumstances. When making a determination or calculation, the Committee shall
be entitled to rely upon information furnished by a Participant or Beneficiary,
the Employer, the legal counsel of the Employer, or the Trustee.
8.7 Authorization of Benefit Payments: The Committee shall issue
directions to the Trustee concerning all benefits which are to be paid from the
Trust Fund pursuant to the provisions of the Plan, and warrants that all such
directions are in accordance with this Plan.
8.8 Application and Forms for Benefits: Claims for benefits under the
Plan are to be made on forms supplied by the Employer. Such forms are available
at the Personnel Office of the Employer. Claims are to be submitted to the
Committee, in care of the Employer. The Committee may rely upon all such
information so furnished it, including the claimant's current mailing address.
8.9 Facility of Payment: Whenever, in the Committee's opinion, a person
entitled to receive any payment of a benefit or installment thereof hereunder is
under a legal disability or is incapacitated in any way so as to be unable to
manage his financial affairs, the Committee may direct the Trustee to make
payments to such person or to his legal representative or to a relative or
friend of such person for his benefit, or the Committee may direct the Trustee
to apply the payment for the benefit of such person in such manner as the
Committee considers advisable. Any payment of a benefit or installment thereof
in accordance with the provisions of this Section shall be a complete discharge
of any liability for the making of such payment under the provisions of the
Plan.
8.10 Indemnification of the Committee: The Committee shall be
indemnified by the Employer against any and all liabilities arising by reason of
any act or failure to act made in good faith pursuant to the provisions of the
Plan, including expenses reasonably incurred in the defense of any claim
relating thereto.
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ARTICLE IX - MISCELLANEOUS
9.1 Nonguarantee of Employment: Nothing contained in this Plan shall be
construed as a contract of employment between the Employer and any Employee, or
as a right of any Employee to be continued in the employment of the Employer, or
as a limitation of the right of the Employer to discharge any of its Employees,
with or without cause.
9.2 Rights to Trust Assets: No Employee or Beneficiary shall have any
right to, or interest in, any assets of the Trust Fund, upon termination of his
employment or otherwise, except as provided from time to time under this Plan,
and then only to the extent of the benefits payable under the Plan to such
Employee or Beneficiary out of the assets of the Trust Fund. All payments of
benefits as provided for in this Plan shall be made solely out of the assets of
the Trust Fund and none of the Fiduciaries shall be liable therefor in any
manner.
9.3 Nonalienation of Benefits: Except as provided in Article VI, no
benefit, right or interest payable under this Plan shall be subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, charge, garnishment, execution, seizure, attachment or levy of any
kind, either voluntary or involuntary, or any other legal, equitable or other
process. The preceding sentence shall also apply to the creation, assignment or
recognition of a right to any benefit payable with respect to a Participant
pursuant to a domestic relations order, unless such order is determined to be a
qualified domestic relations order, as defined in Code Section 414(p), or any
domestic relations order entered before January 1, 1985. The Trust Fund shall
not in any manner be liable for, or subject to, the debts, contracts,
liabilities, engagements, or torts of any person entitled to benefits hereunder.
9.4 Discontinuance of Employer Contributions: In the event of a
permanent discontinuance of contributions to the Plan by the Employer, the
accounts of each affected Participant shall, as of the date of such
discontinuance, become nonforfeitable.
9.5 Controlled Group of Corporations: Except as provided in Regulations
issued under IRC Section 414(a), all employees of all Affiliated Employers shall
be treated as employed by a single Employer.
Further, all Years of Service with other Affiliated Employers shall
be credited for purposes of determining an Employee's eligibility to participate
or his nonforfeitable percentage of his Accrued Benefit under the Plan.
9.6 Control of Trades or Businesses by Owner-Employee: If this Plan
provides contributions or benefits for one or more Owner-Employees who control
both the business for which this Plan is established and one or more other
trades or businesses, this Plan and the plan established for other trades or
businesses must, when looked at as a single plan, satisfy Code Sections 40l(a)
and (d) for the Employees of this and all other trades or businesses.
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If the Plan provides contributions or benefits for one or more
Owner-Employees who control one or more other trades or businesses, the
Employees of the other trades or businesses must be included in a plan which
satisfies Code Sections 40l(a) and (d) and which provides contributions and
benefits not less favorable than provided for Owner-Employees under this Plan.
If an individual is covered as an Owner-Employee under the plans of
two or more trades or businesses which are not controlled and the individual
controls a trade or business, then the contributions or benefits of the
Employees under the plan of the trades or businesses which are controlled must
be as favorable as those provided for him under the most favorable plan of the
trade or business which is not controlled.
For purposes of the preceding paragraphs, an Owner- Employee, or
two or more Owner-Employees, will be considered to control a trade or business
if the Owner-Employee, or two or more Owner-Employees together:
(1) own the entire interest in an unincorporated trade or
business, or
(2) in the case of a partnership, own more than 50 percent of
either the capital interest or the profits interest in the partnership.
For purposes of the preceding sentence, an Owner- Employee, or two
or more Owner-Employees shall be treated as owning an interest in a partnership
which is owned, directly or indirectly, by a partnership which such
Owner-Employee, or such two or more Owner-Employees, are considered to control
within the meaning of the preceding sentence.
9.7 Leased Employees: Any leased employee shall be treated as an
Employee of the Employer. However, contributions or benefits provided by the
leasing organization which are attributable to services performed for the
Employer shall be treated as provided by the Employer. The preceding sentence
shall not apply to any leased Employee if such Employee is covered by a money
purchase pension plan providing: (1) a nonintegrated employer contribution rate
of at least 10 percent of compensation, (2) immediate participation, and (3)
full and immediate vesting. For purposes of this paragraph, the term "leased
Employee" means any person (other than an Employee of the Employer) who,
pursuant to an agreement between the Employer and any other person ("leasing
organization") has performed services for the Employer (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 where such
services are a type historically performed by Employees in the business field of
the Employer.
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9.8 Unclaimed Pension Checks: If a check in payment of a benefit
payable under this Plan has been mailed by regular United States mail to the
last address of the payee furnished to the Trustee and the check is returned
unclaimed, payments to such payee shall be discontinued and shall be held in his
respective Accounts until his correct address shall become known to the Trustee.
Any such amounts will be credited with fund earnings in accordance with Section
5.2. If the Trustee does not receive written notice from the payee of a new
address within the time provided by Michigan law for escheat of unclaimed
property of this kind, all right to receive such benefits shall cease and the
property shall escheat to the State of Michigan.
9.9 Correction of Errors: Notwithstanding any other provision of this
Plan to the contrary, the Employer and the Plan Administrator reserve the right
to correct (retroactively, if necessary) any error in the Plan language or in
the administration of the Plan which was inadvertently made in the good faith
creation and/or administration of this retirement program.
9.10 Construction: The masculine gender, where appearing in the Plan,
shall be deemed to include the feminine gender, unless the context clearly
indicates to the contrary. The words "hereof", "herein", "hereunder" and other
similar compounds of the word "here" shall mean and refer to the entire Plan and
not to any particular provision or section.
ARTICLE X - AMENDMENTS AND ACTION BY EMPLOYER
10.1 Amendments: The Employer reserves the right to make from time to
time any amendment or amendments to this Plan which do not cause any part of the
Trust Fund to be used for, or diverted to, any purpose other than the exclusive
benefit of Participants, former Participants or their Beneficiaries, provided,
however, that the Employer may make any amendment it determines necessary or
desirable, with or without retroactive effect, to comply with ERISA.
No amendment to the Plan shall be effective to the extent that it
has the effect of decreasing a Participant's accrued benefit, including any
optional forms of benefits contained in the Plan prior to this restatement.
Notwithstanding the preceding sentence, a Participant's account balance may be
reduced to the extent permitted under Code Section 412(c)(8). For purposes of
this paragraph, a Plan amendment which has the effect of decreasing a
Participant's account balance or eliminating an optional form of benefit, with
respect to benefits attributable to service before the amendment shall be
treated as reducing an accrued benefit. Furthermore, if the vesting schedule of
the Plan is amended, in the case of an Employee who is a Participant as of the
later of the date such amendment is adopted or the date it becomes effective,
the nonforfeitable percentage (determined as of such date) of such Employee's
Employer-derived account balance will not be less than the percentage computed
under the Plan without regard to such amendment.
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The Employer may amend the Plan by adding overriding plan language
where such language is necessary to satisfy Code Sections 415 or 416 because of
the required aggregation of multiple plans under these Sections.
10.2 Action by Employer: Any action by the Employer under this Plan may
be by resolution of its Board of Directors, or by any person or persons duly
authorized by resolution of said Board to take such action.
10.3 Amendment or Change of Vesting Schedule: No amendment to the
vesting schedule set forth at Section 6.4 above, nor any change thereof due to
change in the top-heavy status of the Plan, shall deprive a Participant of his
nonforfeitable rights to benefits accrued to the date of the amendment. Further,
if the then operative vesting schedule of this Plan is amended or deemed amended
due to a change in the top-heavy status of the Plan, each Participant with at
least three Years of Service with the Employer at the date of amendment may
elect, within a reasonable period after the adoption of the amendment or the
change, to have his nonforfeitable percentage computed under this Plan without
regard to such amendment or change. For Participants who do not have at least
one Hour of Service in any Plan Year beginning after December 31, 1988, the
preceding sentence shall be applied by substituting five Years of Service for
three Years of Service where such language appears. The period within which the
election may be made shall commence with the date the amendment is adopted or
deemed to be made and shall end on the later of:
(1) 60 days after the amendment is adopted; or
(2) 60 days after the amendment becomes effective; or
(3) 60 days after the Participant is issued written notice of the
amendment by the Employer or Plan Administrator.
ARTICLE XI - SUCCESSOR EMPLOYER, MERGER OR CONSOLIDATION
11.1 Successor Employer: In the event of the dissolution, merger,
consolidation or reorganization of the Employer, provision may be made by which
the Plan and Trust will be continued by the successor; and, in that event, such
successor shall be substituted for the Employer under the Plan. The substitution
of the successor shall constitute an assumption of Plan liabilities by the
successor and the successor shall have all of the powers, duties and
responsibilities of the Employer under the Plan.
11.2 Plan Assets: In the event of any merger or consolidation of the
Plan with, or transfer in whole or in part of the assets and liabilities of the
Trust Fund to another trust fund held under, any other plan of deferred
compensation maintained or to be established for the benefit of all or some of
the Participants of this Plan, the assets of the Trust Fund applicable to such
Participants shall be merged or consolidated with, or transferred to, the other
trust fund only if:
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(a) each Participant would (if either this Plan or the other plan
then terminated) receive a benefit immediately after the merger, consolidation
or transfer which is equal to or greater than the benefit he would have been
entitled to receive immediately before the merger, consolidation or transfer (if
this Plan had then terminated);
(b) resolutions of the Boards of Directors of the Employer under
this Plan, or of any new or successor employer of the affected Participants,
shall authorize such transfer of assets; and, in the case of the new or
successor employer of the affected Participants, its resolutions shall include
an assumption of liabilities with respect to such Participants' inclusion in the
new employer's plan; and
(c) such other plan and trust are qualified under Sections 401(a)
and 501(a) of the Internal Revenue Code.
ARTICLE XII - PLAN TERMINATION
12.1 Right to Terminate: In accordance with the procedures set forth in
this Article, the Employer may terminate the Plan at any time. In the event of
the dissolution, merger, consolidation or reorganization of the Employer, the
Plan shall terminate and the Trust Fund shall be liquidated unless the Plan is
continued by a successor to the Employer in accordance with Section 11.1.
In the event of the termination or partial termination of the
Plan, or in the event of a discontinuance of contributions thereunder, the
accrued benefit of each affected Participant shall become fully vested as of the
date of such termination or discontinuance, and no forfeiture shall then or
thereafter occur.
12.2 Partial Termination: Upon termination of the Plan with respect to
a group of Participants which constitutes a partial termination of the Plan, the
Trustee shall, in accordance with the directions of the Plan Administrator,
allocate and segregate for the benefit of the Employees then or theretofore
employed by the Employer with respect to which the Plan is being terminated the
proportionate interest of such Participants in the Trust Fund. The funds so
allocated and segregated shall be used by the Trustee to pay benefits to or on
behalf of Participants in accordance with Section 12.3.
12.3 Liquidation of the Trust Fund: Upon complete or partial
termination of the Plan, or upon complete discontinuance of contributions to the
Plan, the accounts of all Participants affected thereby shall become fully
vested and nonforfeitable, and the Plan Administrator shall direct the Trustee
to distribute the assets remaining in the Trust Fund, after payment of any
expenses properly chargeable thereto, to Participants, former Participants and
Beneficiaries in proportion to their respective account balances; provided,
however, that neither the Employer nor an Affiliated Employer maintains a
successor plan. All distributions on plan
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termination will be made in accordance with Section 6.5. In the event Employer
Stock is sold in connection with the termination of the Plan or an amendment to
the Plan to become a Plan that is not a stock bonus plan, all benefits under the
ESOP Portion of the Plan may be distributed in cash.
12.4 Manner of Distribution: To the extent that no discrimination in
value results, any distribution after termination of the Plan may be made, in
whole or in part, in cash, in securities or other assets in kind, or in
nontransferable annuity contracts, as the Plan Administrator (in its discretion)
may determine. All non-cash distributions shall be valued at fair market value
at date of distribution.
ARTICLE XIII - TOP-HEAVY PLAN RESTRICTIONS
13.1 General Rule. If, for any Plan Year beginning after December 31,
1983, the Plan is a top-heavy plan as determined under Section 13.2, then the
requirements in Section 13.3 shall apply to the extent indicated by that
paragraph; provided, however, that the Employer-derived account balances which
are subject to a vesting schedule pursuant to Section 6.5 of any employee who
does not complete an Hour of Service after the Plan becomes top-heavy is not
subject to any top-heavy vesting schedule set forth in Section 6.4.
13.2 Top-Heavy Test. The Plan's status as a top-heavy plan for any Plan
Year shall be determined in accordance with the following five step procedure.
(a) Required Plan Aggregation. First, there shall be aggregated
with this Plan (1) each qualified plan, whether or not terminated, of the
Employer in which a key employee is or was a Participant at any time during the
determination period and (2) each other plan of the Employer which enables a
plan described in Section 13.2(a)(1) to meet the requirements of Code Section
401(a)(4) or 410.
(b) Key Employee Sum. Second, there shall be computed, as of the
determination date, the sum of the account balances of all key employees under
all defined contribution plans, including this Plan, required to be aggregated
under Section 13.2(a) hereof and the present values of the cumulative accrued
benefits of all key employees under all defined benefit plans required to be
aggregated under Section 13.2(a) hereof. For purposes of this computation:
(1) there shall be included in the said sum any distributions
made to an employee from this Plan, or from another plan required to be
aggregated under Section 13.2(a), within the five year period ending on the
determination date;
(2) in calculating any employee's accrued benefit for purposes
of Section 13.2, rollovers shall be treated in the following manner:
[a] Unrelated rollovers:
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[1] the plan providing the distribution always counts
the distribution as a distribution under Code Section 416(g)(3)(B); and
[2] the plan accepting the rollover does not consider
the rollover part of the accrued benefit if said rollover was accepted after
December 31, 1983. If the rollover was accepted before December 31, 1983, it is
considered part of the accrued benefit.
[b] Related rollovers (whether or not occurring before
December 31, 1983):
[1] the plan providing the rollover does not count the
rollover as a distribution under Code Section 416(g)(3)(B); and
[2] the plan accepting the rollover counts the
rollover as part of the accrued benefit.
(3) there shall be excluded from said sum the account balance
and present value of the accrued benefit of any employee who:
[a] formerly was a key employee but who is not a key
employee for the year ending on the determination date; or
[b] has not performed any service for any Employer
maintaining the Plan at any time during the 5 year period ending on the
determination date.
(c) All Employee Sum. Third, under the same procedures as set
forth in Section 13.2(b) above (including the special rules in Section
13.2(b)(1), (2), and (3)) the sum of account balances and present values of
accrued benefits for all employees shall be computed.
Solely for the purpose of determining if the plan, or any
other plan included in a required aggregation group of which this plan is a
part, is top-heavy (within the meaning of Section 416(g) of the Code) the
accrued benefit of an Employee other than a key employee (within the meaning of
Section 416(i)(1) of the Code) shall be determined under:
(1) the method, if any, that uniformly applies for accrual
purposes under all defined benefit plans maintained by all Affiliated Employers,
or
(2) if there is no such method, as if such benefit accrued not
more rapidly than the slowest accrual rate permitted under the fractional
accrual rate of Section 411(b)(1)(C) of the Code.
(d) Top-Heavy Test Fraction. Fourth, the sum computed in Section
13.2(b) shall be divided by the sum computed in Section 13.2(c). If the
resulting fraction is 0.60 or less, the Plan is not a top-heavy plan for the
Plan Year with regard to which the
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determination was made. If the fraction is greater than 0.60, the Plan is a
top-heavy plan for the Plan Year in question, unless after the permissive plan
aggregation described in Section 13.2(e) below, the recomputed fraction is 0.60
or less.
(e) Permissive Plan Aggregation. At the election of the Plan
Administrator, plans of the Employer other than those required to be aggregated
under Section 13.2(a) may be aggregated with the required aggregation group (for
purposes of the topheaviness determination) so long as such aggregate group
would meet the requirements of Code Sections 401(a)(4) and 410. Those steps
described in Section 13.2(b), (c), and (d) may then be repeated, based on this
permissively aggregated group. If the top-heavy test fraction computed in
Section 13.2(d) is 0.60 or less for this permissive group, then the Plan is not
a top-heavy plan for the Plan Year in question. However, if the top-heavy test
fraction computed in 13.2(d) is greater than 0.60 for this permissive group,
only this Plan (and any plans of the Employer that are required to be aggregated
under Section 13.2(a)) is top-heavy for the Plan Year in question. Any plans
which may be aggregated with this Plan under this Section 13.2(e) are not, as
the result of permissive aggregation with this Plan, top-heavy.
13.3 Superseding Rules. For each Plan Year with regard to which the Plan
is a top-heavy plan, the requirements in this Section 13.3 shall supersede any
other provisions of the Plan which otherwise would apply for that Plan Year.
(a) Adjusted Code Section 415 Limitations. In order to reduce the
overall limitations on combined plan contributions and benefits under Code
Section 415, the number 1.00 shall be substituted for 1.25 in the definitions of
defined contribution fraction and defined benefit fraction in Section 5.3 of the
Plan, and "$41,500" shall be substituted for "$51,875" in the numerator of the
Transition Fraction in Section 5.3 of the Plan; provided, however, that if the
Plan is not super top-heavy and if (1) the Plan provides in a given Plan Year a
minimum nonintegrated contribution for non-key employees which is 7 1/2% of
Compensation, or (2) the Participant does not participate in the Employer's
defined benefit plan but receives a minimum nonintegrated contribution to this
Plan equal to 4% of his or her Compensation, then this Section 13.3(a) shall not
supersede Plan Section 5.3.
(b) Minimum Contributions for Non-Key Employee Participants.
Nonintegrated Employer contributions and forfeitures allocated for the Plan Year
on behalf of each non-key employee Participant shall equal at least (1) 3% of
Compensation or, if less, (2) the maximum percentage of Employer contributions
including Elective Deferrals (as a percentage of Compensation not in excess of
$200,000) allocated on behalf of any key employee Participant for the Plan Year
multiplied by the non-key employee Participant's Compensation for the Plan Year.
This minimum allocation shall be made even though, under the other plan
provisions, the Participant would not otherwise be entitled to receive an
allocation, or would have received a lesser allocation for the Year because of
(1) the Participant's failure to complete 1,000 Hours of Service, or (2) the
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Participant's failure to make any mandatory employee contributions to the Plan,
or (3) compensation less than a stated amount. For purposes of this rule,
Employer contributions made under any other defined contribution plan of the
Employer in which any key employee participates or which enables another defined
contribution plan of the Employer to meet the requirements of Code Section
401(a)(4) or 410 shall be considered contributions made under this Plan. These
minimum contribution rules shall apply to each Participant in a top-heavy plan
regardless of whether the Participant is classified for purposes of the Plan as
active or inactive. These minimum contribution rules shall not apply to any
Participant who was not employed by the Employer on the last day of the Plan
Year. The minimum allocation required (to the extent required to be
nonforfeitable under Code Section 416(b)) may not be forfeited under Code
Section 411(a)(3)(B) or 411(a)(3)(D).
If any non-key employee Participant is also a Participant in any one or
more defined benefit plans maintained by the Employer, the percentage Employer
contribution allocable to any non-key employee Participant pursuant to the
foregoing paragraph shall be at least 5% of Compensation.
13.4 Special Definitions. For purposes of this Article XIII, the
following terms shall have the meanings indicated:
(a) "determination date" means, with respect to any Plan Year, the
last day of the preceding Plan Year, except that in the case of the first Plan
Year, the determination date shall be the last day of that Plan Year.
(b) "employee" means a common-law employee of the Employer who is
or once was a Participant, including any Beneficiary, but excluding any employee
who is a member of a unit of employees covered by a collective bargaining
agreement under which retirement benefits were the subject of good faith
bargaining with the Employer.
(c) "key employee" means each employee (or former employee) who,
at any time during the Plan Year or any of the four preceding Plan Years:
(1) is an officer of the Employer whose annual compensation
for the Plan Year exceeds 50% of the dollar limitation under Code Section
415(b)(1)(A);
(2) is one of the ten employees owning or considered owning
(under Code Section 318) the largest interests in the Employer (except that an
employee will not be considered a top ten owner for a Plan Year if the employee
earns less than 100% of the dollar limitation under Code Section 415(c)(1)(A) as
in effect for the calendar year in which the determination date falls);
(3) owns more than 5% of the outstanding stock or voting power
of all stock of an incorporated Employer or more than 5% of the capital or
profit interest of an unincorporated Employer;
(4) owns more than 1% of the outstanding stock or
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voting power of all stock of an incorporated Employer or more than 1% of the
capital or profit interest of an unincorporated Employer and has annual
Compensation from the Employer of more than $150,000; or
(5) a beneficiary of any person included in (c)(1)-(c)(4)
above.
The determination of who is a key employee will be made in
accordance with Section 416(i)(l) of the Code and the regulations thereunder.
For purposes of Section 13.4(c)(2), (3), and (4), the
constructive ownership rules of Code Section 318 shall apply with the
modification that 5 percent shall be substituted for 50 percent in Section
318(a)(2).
(d) "related rollover" means a rollover either (1) not initiated
by the employee or (2) made to a qualified retirement plan maintained by another
employer required to be aggregated under any of Code Sections 414(b), (c) or (m)
with the employer sponsor of the Plan from which the rollover distribution was
made.
(e) "unrelated rollover" means a rollover initiated by the
employee and made from a plan maintained by one employer to a plan maintained by
another employer not required to be aggregated with the first employer under any
of Code Sections 414(b), (c), or (m).
(f) "super top-heavy" means a top-heavy plan in which the fraction
computed under Section 13.2(d) hereof exceeds 0.90.
(g) "Valuation Date". The date as of which account balances or
accrued benefits are valued for purposes of calculating the top-heavy ratio
shall be the last day of each Plan Year.
(h) "Compensation" or "annual compensation" means compensation as
defined in Code Section 415(c)(3) but including amounts contributed by the
Employer pursuant to an elective deferral agreement which are excludible from
the employee's gross income under Code Sections 125, 402(a)(8), 402(h) or
403(b).
DATED this 20 day of December , 1996.
---- -----------
COMMERCIAL BANK
/s/ Dean E. Milligan
By:
----------------------------------
Dean E. Milligan, President
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FIRST AMENDMENT TO THE
COMMERCIAL BANK
EMPLOYEE SAVINGS AND STOCK OWNERSHIP PLAN
The Commercial Bank Employee Savings and Stock Ownership Plan
is hereby amended effective January 1, 1997, by making the following changes:
1. Section 4.1(b)(2) is replaced in its entirety with the
following:
(2) Employer Matching Contributions: Subject to the
limitations of Section 4.4, the Employer shall for each Plan
Year contribute to the Trust Fund an amount equal to such
amount for every one dollar ($1.00) of Elective Deferral
Contributions made by each Participant who was not placed on
inactive status during the Year and who was employed by the
Employer on the last day of the Plan Year (unless such
Participant fails to satisfy these standards as a result of
terminating employment on or after Normal Retirement Age or
due to death or Disability) as is determined by resolution of
the Board of Directors adopted on or before the last day of
each Plan Year. Employer Matching Contributions may be made in
the form of cash or Employer Stock as determined by the Board
of Directors; provided, however, that the Board of Directors
may determine that Employer Matching Contributions may be paid
as provided in Section 7.2(d) with notice to the Trustee.
Employer Matching Contributions may also be used to repay any
currently maturing obligations under any Acquisition Loan.
If a Participant does not make Elective Deferral
Contributions to the Plan during the entire Plan Year, he or
she shall be entitled to Employer Matching Contributions based
on Compensation paid during the time period during which he or
she made Elective Deferrals. All such Employer Matching
Contributions shall be deposited in the Trust Fund not later
than the date prescribed by law for filing the Employer's
federal income tax return, including extensions which have
been granted for the filing of such return.
2. The first paragraph of Section 4.5 is replaced with the
following:
4.5 Final Disposition of Forfeitures: All nonvested amounts
will be forfeited and allocated among the accounts of other
Participants as of the earlier of the last day of the Plan
Year in which:
(a) distribution commences to the terminated Participant,
or
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(b) such Participant incurs his fifth consecutive one year
Break in Service.
3. Sections 5.2(c)(3)[a] and [b] are deleted.
4. The seventh line of the first paragraph of Section 13.3(b)
is replaced with the following:
in excess of $150,000) allocated on behalf of any key
employee
COMMERCIAL BANK
Dated: December 3, 1998 By: /s/ Jeffrey S. Barker
--------------------------- --------------------------
Jeffrey S. Barker
Its: President
-------------------------
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SECOND AMENDMENT TO THE
COMMERCIAL BANK
EMPLOYEE SAVINGS AND STOCK OWNERSHIP PLAN
The Commercial Bank Employee Savings and Stock Ownership Plan
is hereby amended effective January 1, 1998, unless specifically noted to the
contrary as set forth below, by making the following changes:
1. Section 4.1 is amended by adding a new paragraph after the
first full paragraph to read as follows:
All activities and contributions hereunder shall be assumed
to relate to the 401(k) portion of the Plan and not the ESOP
portion of the Plan unless specifically stated otherwise in
resolutions of the Board of Directors.
2. Section 4.7 shall be replaced in its entirety to read as
follows:
4.7 Independent Appraisal of Employer Stock: When applicable,
all valuations of shares of Employer Stock (relating solely to
the ESOP portion of the Plan) that are not readily tradeable
on an established securities market will be made by an
independent appraiser as defined by Code Section 401(a)(28).
These valuations may be used for purposes of determining
Employer contributions, account adjustments under Article V,
and other purposes for which valuations of Employer Stock may
be required under the Plan, but only as such valuations relate
solely to the ESOP portion of the Plan.
3. The first full paragraph of Section 6.8 shall be replaced
with the following:
6.8 Investment Direction: A participant may, with the
Employer's consent, direct the Committee to purchase or sell
certain investment options (including Employer Stock) under
such terms and conditions as determined from time to time by
the Employer and the Committee as set forth in Administrative
Procedures.
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4. Section 7.2(d) shall be amended in a manner so that the
second line shall read as follows:
of the Board of Directors and at the direction of the
Committee (consistent with Section 6.8 hereof)
COMMERCIAL BANK
Dated: December 3, 1998 By: /s/ Jeffrey S. Barker
-------------------- ---------------------------------
Jeffrey S. Barker, President
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FIRST AMENDMENT TO THE
COMMERCIAL BANK EMPLOYEE SAVINGS AND STOCK OWNERSHIP
TRUST AGREEMENT
The Commercial Bank Employee Savings and Stock Ownership Trust
Agreement is hereby amended effective January 1, 1999 by making the following
changes:
1. Section 1.01(f) is hereby replaced in its entirety with
the following:
(f) Trustees: Jeffrey S. Barker
Patrick G. Duffy
2. Section 5.01(o) is replaced in its entirety with the
following:
(o) To transfer, at any time and from time to time, such part
or all of the Trust Fund as it shall deem advisable to a state
or national banking institution as trustee of any trust
maintained by it as a medium for the collective investment of
trust funds of which it may from time to time be acting as
Trustee, and to withdraw any part or all of the Trust Fund so
transferred; in which event the provisions of any such trust
shall be deemed a part of this Agreement to the extent that
they shall not be inconsistent with the provisions hereof.
COMMERCIAL BANK
Dated: December 3, 1998 By: /s/ Jeffrey S. Barker
----------------------- ---------------------------
Jeffrey S. Barker, President
By their signatures hereto, the new Trustees agree to be bound
by the terms of the Trust Agreement, a copy of which has been attached hereto.
Dated: December 3, 1998 By: /s/ Jeffrey S. Barker
------------------------ ---------------------------
Jeffrey S. Barker
Dated: December 3, 1998 By: /s/ Patrick G. Duffy
------------------------ ---------------------------
Patrick G. Duffy
102
<PAGE> 96
COMMERCIAL BANK
EMPLOYEE SAVINGS AND STOCK OWNERSHIP
TRUST AGREEMENT
This Agreement, made this 20th day of December , 1996, by and
between the Employer named in Article I of this Agreement (hereinafter referred
to as the "Employer") and the Trustee named in Article I of this Agreement
(hereinafter referred to as the "Trustee").
WITNESSETH:
WHEREAS, it is the policy of the Employer to so finance and
conduct its operations as to enable Employees to acquire stock ownership
interests in the Employer; and
WHEREAS, Commercial Bank adopted the Commercial Bank Employee
Savings and Stock Ownership Plan and Trust Agreement for its eligible employees
effective January 1, 1997 (hereinafter referred to as the "Plan"); and
WHEREAS, an ESOP Committee has been appointed to administer
the Plan; and
WHEREAS, under the Plan (the terms of which are incorporated
herein for purposes hereof), funds will from time to time be contributed to the
Trustee, which funds will constitute a trust fund to be held for the exclusive
benefit of the participants in the Plan or their beneficiaries, including
payment of certain expenses; and
WHEREAS, the Employer wants the Trustee to hold, invest,
reinvest and otherwise to administer the funds, and the Trustee has indicated
its willingness to do so, all pursuant to the terms of this Agreement;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants herein contained, the Employer and the Trustee do hereby
covenant and agree as follows:
ARTICLE I - DEFINITIONS AND CONSTRUCTION
1.01 Definitions: The following words and phrases shall, when used
herein, have the following respective meanings unless their context clearly
indicates otherwise:
(a) Committee: The person or entity appointed under the
provisions of the Plan to administer the Plan.
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(b) Employer: Commercial Bank, a banking organization
organized and existing under the laws of the State of Michigan, or its
respective successor or successors.
(c) Plan: The Commercial Bank Employee Savings and Stock
Ownership Plan, as amended from time to time.
(d) Primary Employer: The Primary Employer for purposes of
this Trust shall be Commercial Bank.
(e) Trust (or Trust Fund): The fund known as the Commercial
Bank Employee Savings and Stock Ownership Trust, as set forth in this Agreement,
as from time to time amended.
(f) Trustees: Citizens Bank.
1.02 Construction: The masculine gender, where appearing in this
Agreement, shall be deemed to include the feminine gender, unless the context
clearly indicates to the contrary. The words "hereof", "herein", "hereunder" and
other similar compounds of the word "here" shall mean and refer to the entire
Trust and not to any particular provision or section.
ARTICLE II - RECEIPT OF CONTRIBUTIONS
AND PAYMENTS FROM TRUST FUND
2.01 The Trustee shall receive any contributions paid to it in cash
or in the form of such other property including Employer Stock as it may from
time to time deem acceptable and which shall have been delivered to it. Subject
to Article III, the Trust assets shall be invested by the Trustee pursuant to
written instructions from the Committee appointed by the Employer to administer
the Plan. All contributions so received, together with the income therefrom and
any other increment thereon, (hereinafter collectively referred to as the "Trust
Fund") shall be held, invested, reinvested and administered by the Trustee
pursuant to the terms of this Agreement without distinction between principal
and income and without liability for the payment of interest thereon. The
Employer may make contributions in cash or Employer Stock in such manner and at
such times as shall be appropriate. Employer contributions and other Trust
assets may be used to acquire shares of Employer Stock. The Trustee shall not be
responsible for the calculation or collection of any contribution under or
required by the Plan, but shall be responsible only for property received by it
pursuant to this Agreement.
2.02 The Plan, this Agreement and the Trust Fund thereunder are
intended to meet all the requirements of Sections 401(a) and 501(a) of the
Internal Revenue Code of 1986, and the Employee Retirement Income Security Act
of 1974, as the same may be amended from time to time.
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2.03 Subject to the limitations imposed by Section 2.04 of this
Article, the Trustee shall from time to time on the written directions of the
Committee make payments out of the Trust Fund to such persons, including the
Committee, in such amounts and for such purposes as may be specified in the
written directions of the Committee, including the purchase of annuity
contracts. To the extent permitted by law, the Trustee shall be under no
liability for any payment made pursuant to the direction of the Committee. Any
written direction of the Committee shall constitute a certification that the
distribution or payment so directed is one which the Committee is authorized to
direct. If distribution is directed in Employer Stock, the Trustee or the
Committee shall cause the Employer to issue an appropriate stock certificate to
the person entitled thereto to be delivered to such person by the Committee. Any
cash distribution shall be made by the Trustee furnishing its check to the
Committee for delivery to the Participant or Beneficiary.
2.04 Anything contained in this Agreement to the contrary
notwithstanding, it shall be impossible at any time prior to the satisfaction of
all liabilities with respect to participants and their beneficiaries, for any
part of the Trust Fund to be used for or diverted to purposes other than for the
exclusive benefit of the participants under the Plan and their beneficiaries,
except that payment of taxes and administration expenses may be made from the
Trust Fund as provided in Article VI hereof.
ARTICLE III - INVESTMENTS
3.01 As directed by the Committee and subject to the provisions of
Section 3.04 hereof, the Trustee shall invest and reinvest the principal and
income of the Trust Fund and keep the Trust Fund invested, without distinction
between principal and income, in such securities or in such property, real or
personal, tangible or intangible, or part interest therein, wherever situated,
whether or not productive of income, or consisting of wasting assets, as the
Trustee shall deem advisable, including but not limited to stocks, common or
preferred, including Employer Stock, trust and participation certificates,
interests in investment companies whether so-called "open-end mutual funds" or
"closed-end mutual funds", common investment funds, leaseholds, fee titles,
bonds or notes and mortgages, and other evidences of indebtedness or ownership,
irrespective of whether such securities or such property shall be of the
character authorized by any state law from time to time for trust investments.
The primary purpose of this Trust is to invest primarily or totally in Employer
Stock. Therefore, the Trustee shall be exempt from otherwise applicable rules
relating to diversification of investments with respect to investments made in
Employer Stock. The Trustee may dispose of Employer Stock for reasons other than
those described in Article II only if
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specifically directed in writing by the Committee with the approval of the Board
of Directors of the Employer or in accordance with Section 3.04 hereof. The
Committee shall assume the responsibility and liability for the prudence of
investments directed by it under Section 3.01. The Committee may delegate in
writing to the Trustee the responsibility for investing Trust Assets other than
Employer Stock.
3.02 The term "investment company" as used in Section 3.01 above shall
include shares of open-end investment companies, including, without limiting the
generality of the foregoing, such investment companies as are commonly known as
"money-market funds". The Trustee shall use the price established and provided
from time to time by any such open-end investment company for any valuation
required under the terms of this Agreement.
3.03 The term "Employer Stock" as used herein shall mean shares of
stock as defined in Section 2.1 of the Plan. If the Trustee is directed to
dispose of any Employer Stock held as Trust Assets under circumstances which
require registration and/or qualification of the securities under applicable
federal or state securities laws, then the Employer (at its own expense) will
take, or cause to be taken, any and all such actions as may be necessary or
appropriate to effect such registration and/or qualification.
3.04 This Section 3.04 shall control where inconsistent with other
Trust provisions. The Plan allows any Participant to direct the investment of a
portion of his interest in the Trust. Consistent therewith, each Participant's
directed interest in the Trust shall be placed in a segregated account within
the Trust. This segregated account shall be invested in any security or other
property or other form that the Trustee has the power to invest in hereunder, as
directed by the Participant and consistent with the terms of the Plan. Such
investment shall not be restricted by any law governing investments by
fiduciaries. Each Participant so directing may, subject to the terms of the
Plan, subsequently notify the Trustee that he desires any investment made from
the fund so segregated sold, converted to any other investment or otherwise
disposed of. The Trustee shall then purchase such investment or dispose of such
investment as stated in the notice received from the Participant. The Trustee
shall incur no liability whatsoever for carrying out the Participant's written
instructions. Investments so acquired shall be held by the Trustee for the
Participant and all income and/or losses thereon shall be credited to the
Participant's account from which the investment was made. Investments so
acquired shall be held by the Trustee until distributed in accordance with the
Plan or until the Trustee is directed to dispose of the assets by the
Participant on the basis indicated below. Such segregated accounts shall not
share any Trust valuation gains or losses as otherwise provided herein. Any
Trust assets not the subject of a valid written election shall be
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invested by the Trustee in accordance with the Plan. In any event, this directed
investment provision shall be administered in a manner consistent with ERISA
Section 404 or any successor thereto.
ARTICLE IV - FUNDING POLICY
4.01 The discretion of the Trustee in investing and reinvesting the
principal and income of the Trust Fund other than investments in Employer Stock
shall be subject to such funding policy, and any changes thereof from time to
time, as the Committee may, pursuant to the Plan, adopt from time to time and
communicate to the Trustee in writing. It shall be the duty of the Trustee to
act strictly in accordance with such funding policy, and any changes therein, as
so communicated to the Trustee from time to time in writing.
4.02 The Plan Administrator shall establish and carry out a funding
policy consistent with the purposes of the Plan and the requirements of
applicable law, as may be appropriate from time to time. As part of such funding
policy, the named fiduciary shall from time to time direct the Trustee or the
Investment Manager (if an Investment Manager has been appointed), to exercise
its investment discretion so as to provide sufficient cash assets in an amount
determined by the named fiduciary, under the funding policy then in effect, to
be necessary to meet the liquidity requirements for the administration of the
Plan.
ARTICLE V - TRUSTEE'S POWERS
5.01 As directed by the Committee when administering the Trust Fund,
the Trustee is authorized and empowered, subject to the provisions of Articles
III and IV hereof:
(a) To purchase and subscribe (including transactions with the
Employer, or any Affiliated Employer, or any shareholder of the Employer or
Affiliated Employer) for any securities including Employer Stock or other
property and to retain such securities or other property in trust;
(b) To sell at public or private sale, for cash, or upon credit,
or otherwise dispose of any property, real or personal; and no person dealing
with the Trustee shall be bound to see to the application or to inquire into the
validity, expediency or propriety of any such sale or other disposition;
(c) To adjust, settle, contest, compromise and arbitrate any
claims, debts, or damages due or owing to or from the Trust Fund, and to sue,
commence or defend any legal proceedings in reference thereto;
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(d) To exercise any conversion privilege subscription rights or
other options pertaining to or in connection with securities or other property
held by it; to consent to or otherwise participate in any reorganization,
consolidation, merger or adjustment pertaining to any corporate reorganization
or other changes affecting corporate securities, to deposit any property with
any committee or depositary, and to pay any assessments or other charges in
connection therewith;
(e) To exercise itself, or by general or limited power of
attorney, any right, including the right to vote, incident to any securities or
other property held by it;
(f) To borrow money from any lender including the Employer upon
such terms and conditions as may be deemed advisable to carry out the purposes
of the trust, to finance the acquisition of Employer Stock and to pledge
securities in repayment of any such loan; provided, however, that loans or
advances may be made by the Trustee hereunder by way of overdrafts or otherwise
on a temporary basis on which no interest is payable;
(g) To manage, administer, operate, repair, improve and mortgage
or lease for any number of years, regardless of any restrictions on leases made
by trustees or to otherwise deal with any real property or interest therein; to
renew or extend or to participate in the renewal or extension of any mortgage,
and to agree to the reduction in the interest on any mortgage or other
modification or change in the terms of any mortgage or guarantee thereof in any
manner and upon such terms as may be deemed advisable; to waive any defaults
whether in the performance of any covenant or condition of any mortgage or in
the performance of any guarantee or to enforce any such default in such manner
as may be deemed advisable, including the exercise and enforcement of any and
all rights of foreclosure;
(h) To invest all or part of the Trust Fund in interest-bearing
deposits with the Trustee (if the Trustee is a bank), or with a bank or similar
financial institution related to the Trustee if such bank or other institution
is a fiduciary with respect to the Plan as defined in the Employee Retirement
Income Security Act of 1974, including but not limited to investments in time
deposits, savings deposits, certificates of deposit or time accounts which bear
a reasonable interest rate;
(i) To register any investment held in the Trust Fund, including
Employer Stock, in its own name or in the name of a nominee or to hold any
investment in bearer form;
(j) To employ suitable agents, accountants and counsel and to pay
their reasonable expenses and compensation or to reimburse the Employer for such
expenses and compensation paid by the Employer, all as permitted by law;
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(k) To hold any part or all of the Trust Fund uninvested;
(l) To form corporations and to create trusts to hold title to any
securities or other property, all upon such terms and conditions as it may deem
advisable;
(m) To make, execute and deliver as Trustee any and all deeds,
leases, mortgages, advances, contracts, waivers, releases or other instruments
in writing necessary or proper in the employment of any of the foregoing powers;
(n) To exercise, generally, any of the powers which an individual
owner might exercise in connection with property either real, personal or mixed
held by the Trust Fund, and to do all other acts that the Trustee may deem
necessary or proper to carry out any of the powers set forth in this Article V
or otherwise in the best interests of the Trust Fund;
(o) To transfer, at any time and from time to time, such part or
all of the Trust Fund as it shall deem advisable to a state or national banking
institution as trustee of any trust maintained by it as a medium for the
collective investment of trust funds of which it may from time to time be acting
as Trustee, and to withdraw any part or all of the Trust Fund so transferred; in
which event the provisions of any such trust shall be deemed a part of this
Agreement to the extent that they shall not be inconsistent with the provisions
hereof.
(p) To vote any stocks (including Employer Stock as provided in
Article VI of the Plan), bonds or other securities held in the Trust, or
otherwise consent to or request any action on the part of the issuer in person
or by proxy;
(q) To participate in reorganizations, recapitalizations,
consolidations, mergers and similar transactions with respect to Employer Stock
or any other securities;
(r) To enter into an Acquisition Loan.
The Committee may authorize the Trustee to act on any matter (or
class of matters) with respect to which directions or instructions from the
Committee are called for hereunder without specific directions or instructions
from the Committee.
5.02 Notwithstanding anything to the contrary herein contained, in the
event that an Investment Manager is appointed by the Employer to direct the
investment and reinvestment of all or a portion of the Trust Fund pursuant to
Article III hereof, the Plan Administrator may direct the Trustee, by written
notice, to segregate said portion of the Trust Fund into a separate
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investment account or investment accounts.
5.03 Any such Investment Manager shall either (i) be registered as an
investment adviser under the Investment Advisers Act of 1940; (ii) be a bank, as
defined in that Act; or (iii) be an insurance company qualified to perform
investment management services under the laws of more than one state. If
investment of the Trust Fund is to be directed in whole or in part by an
Investment Manager, the Employer shall deliver to the Trustee a copy of the
instruments appointing the Investment Manager and evidencing the Investment
Manager's acceptance of such appointment, an acknowledgment by the Investment
Manager that it is a fiduciary of the Plan, and a certificate evidencing the
Investment Manager's current registration under said Act. The Trustee shall be
fully protected in relying upon such instruments and certificate until otherwise
notified in writing by the Employer.
5.04 The Trustee shall follow the directions of the Investment Manager
regarding the investment and reinvestment of the Trust Fund, or such portion
thereof as shall be under management by the Investment Manager and shall
exercise the powers set forth in Section 5.01(a), (b), (c), (d), (e), (f), (g),
and (h) as directed by the Investment Manager. The Trustee shall be under no
duty or obligation to review any investment to be acquired, held or disposed of
pursuant to such directions nor to make any recommendations with respect to the
disposition or continued retention of any such investment or the exercise or
non-exercise of the powers in Section 5.01 of this Article V. The Trustee shall
have no liability or responsibility for acting or not acting pursuant to the
direction of, or failing to act in the absence of any direction from, the
Investment Manager, unless the Trustee knows that by such action or failure to
act it would be itself committing or participating in a breach of fiduciary duty
by the Investment Manager. The Employer hereby agrees to indemnify the Trustee
and hold it harmless from and against any claim or liability which may be
asserted against the Trustee by reason of its acting or not acting pursuant to
any direction from the Investment Manager or failing to act in the absence of
any such direction.
5.05 The Investment Manager at any time and from time to time may issue
orders for the purchase or sale of securities directly to a broker; and in order
to facilitate such transaction, the Trustee upon request shall execute and
deliver appropriate trading authorizations. Written notification of the issuance
of each such order shall be given promptly to the Trustee by the Investment
Manager, and the execution of each such order shall be confirmed by written
advice to the Trustee by the broker. Such notification shall be authority for
the Trustee to pay for securities purchased against receipt thereof and to
deliver securities sold against payment therefor, as the case may be.
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5.06 In the event that an Investment Manager should resign or be
removed by the Employer, or if no Investment Manager is appointed, the Trustee
shall manage the investment of the Trust Fund pursuant to Articles III, IV and V
unless and until it shall be notified of the appointment of another Investment
Manager with respect thereto as provided in this Article V.
5.07 The accounts, books and records of the Trustee shall reflect the
segregation, pursuant to the provisions of Article V hereof, of any portion or
portions of the Trust Fund in a separate investment account or accounts.
ARTICLE VI - FEES AND EXPENSES
6.01 The expenses incurred by the Trustee in the performance of its
duties, including fees for legal services, and such compensation to the Trustee
as may be agreed upon in writing from time to time between the Employer and the
Trustee, and all other proper charges and disbursements of the Trustee,
including any and all taxes assessed against the Trustee or the Trust Fund,
shall be paid from the Trust Fund unless paid by the Employer.
ARTICLE VII - TRUSTEE'S DUTIES AND OBLIGATIONS
7.01 The Trustee shall discharge its duties under this Agreement solely
in the interest of the participants in the Plan and their beneficiaries and for
the exclusive purpose of providing benefits to such participants and their
beneficiaries and defraying reasonable expenses of administering the Plans, with
the care, skill, prudence and diligence under the circumstances then prevailing
that a prudent man acting in a like capacity and familiar with such matters
would use in the conduct of an enterprise of a like character and with like
aims, and, subject to Participants' rights to direct the investment of their
accounts (if permitted by the Plan) and insofar as investments are made in
Employer Stock, by diversifying the investments of the Plan so as to minimize
the risk of large losses, unless under the circumstances it is clearly prudent
not to do so, all in accordance with the provisions of this Agreement insofar as
they are consistent with the provisions of the Employee Retirement Income
Security Act of 1974, as this Agreement and the said Act may be from time to
time amended; but the duties and obligations of the Trustee as such shall be
limited to those expressly imposed upon it by this Agreement notwithstanding any
reference herein to the Plan, or to the provisions thereof, it being hereby
expressly agreed that the Trustee is not a party to the Plan.
7.02 The Trustee may consult with counsel (who may be counsel for the
Employer or for the Trustee in its individual capacity), and the Trustee shall
not be deemed imprudent by
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reason of its taking or refraining from taking any action in accordance with the
opinion of counsel. The Employer agrees, to the extent permitted by law, to
indemnify and hold the Trustee harmless from and against any liability that the
Trustee may incur in the administration of the Trust Fund, unless arising from
the Trustee's own negligent or willful breach of the provisions of this
Agreement. The Trustee shall not be required to give any bond or any other
security for the faithful performance of its duties under this Agreement, except
such as may be required by a law which prohibits the waiver thereof.
7.03 The Trustee shall be entitled, as it may deem appropriate from
time to time, to require of the Employer, the named fiduciary or any other
person involved in the administration of the Plan or investment of the Trust
Fund, or having any interest under the Plan or in, to, or under this Agreement
or to the Trust Fund held hereunder, such certifications and proofs of facts as
shall permit the Trustee to perform its duties under the Employee Retirement
Income Security Act of 1974 (or any regulation thereunder) as may be in effect
from time to time, or to exercise the powers granted the Trustee under this
Agreement.
ARTICLE VIII - ACCOUNTS AND RECORDS
8.01 The Trustee shall keep accurate and detailed accounts of all
investments, receipts, disbursements and other transactions hereunder and all
such accounts and other records relating thereto shall be open to inspection and
audit at all reasonable times by any person designated by the Employer or the
Committee. Within ninety (90) days following the close of the fiscal year of the
Trust Fund and within ninety (90) days after the removal or resignation of the
Trustee as provided under Article IX hereof, the Trustee shall file with the
Employer a written account setting forth all investments, receipts,
disbursements and other transactions effected by it during such fiscal year or
during the period from the close of the last fiscal year to the date of such
removal or resignation. Upon the expiration of sixty (60) days from the filing
of such account, the Trustee shall be forever released, remised and discharged
from all liability and accountability to anyone with respect to the propriety of
its accounts and transactions shown in such accounts except with respect to any
such account or transactions as to which the Employer shall within such sixty
(60) day period file written exceptions and objections. To the extent permitted
by law, but subject to any express provision of applicable law as may be in
effect from time to time to the contrary, no person other than the Employer may
require an accounting or bring any action against the Trustee with respect to
the Trust Funds or its actions as Trustee.
8.02 Notwithstanding any other provision of this Article
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VIII, the Trustee shall have the right to have a judicial settlement of the
Trustee's accounts, or for instructions in connection with the Trust Fund, the
only necessary parties thereto in addition to the Trustee shall be the Employer
and the Plan Administrator. If the Trustee so elects, it may bring in any other
person or persons as a party or parties defendant.
ARTICLE IX - TRUSTEE'S REMOVAL OR RESIGNATION
9.01 Any Trustee may be removed by the Employer at any time upon sixty
(60) days' notice in writing to the Trustee and the Committee. Any Trustee may
resign at any time upon sixty (60) days' notice in writing to the Employer. Upon
such resignation or removal, the Employer shall appoint a successor trustee and
such successor trustee shall have the same powers and duties as those conferred
upon each Trustee named in this Agreement. The removal of a Trustee and the
appointment of a successor trustee shall be by written instrument delivered to
the Trustee.
ARTICLE X - LIMITATION ON TRUSTEE'S LIABILITY
10.01 The Committee shall administer the Plan as provided therein, and
the Trustee shall not be responsible in any respect for administering the Plan
nor shall the Trustee be responsible for the adequacy of the Trust Fund to meet
or discharge any payments or liabilities under the Plan. The Trustee shall not
be liable for any loss to or diminution in value of Employer Stock held as Trust
Assets. The Trustee shall be fully protected in relying upon any written notice,
instruction, direction or other communication of the Committee when signed by
the Committee. The Employer from time to time shall furnish the Trustee with the
names and specimen signatures of the Committee and officers of the Employer, and
shall promptly notify the Trustee of the termination of office of the Committee
or officer of the Employer and the appointment of such person's successor. Until
notified to the contrary in writing, the Trustee shall be fully protected in
relying upon the most recent certification of the Committee and officers of the
Employer furnished to it by the Employer.
10.02 Any action required by any provision of this Agreement to be
taken by the Board of Directors of the Employer shall be evidenced by a
resolution of the Board of Directors certified to the Trustee by the Secretary
or an Assistant Secretary of the Employer, and the Trustee shall be fully
protected in relying upon any resolution so certified to it. Unless other
evidence with respect thereto has been expressly prescribed in this Agreement,
any other action of the Employer under any provision of this Agreement,
including any approval of or exceptions to the Trustee's accounts, shall be
evidenced by a certificate signed by an officer of the Employer, and the Trustee
shall be fully protected in relying upon such certificate. The Trustee may
accept a certificate signed by an officer of the Employer as
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proof of any fact or matter that the Trustee deems necessary or desirable to
have established in the administration of the Trust Fund (unless other evidence
of such fact or matter is expressly prescribed herein), and the Trustee shall be
fully protected in relying upon the statements in the certificate.
10.03 The Trustee shall be entitled conclusively to rely upon any
written notice, instruction, direction, certificate or other communication
believed by it to be genuine and to be signed by the proper person or persons,
and the Trustee shall be under no duty to make investigation or inquiry as to
the truth, accuracy, or completeness of any statement contained therein.
ARTICLE XI - AMENDMENT OF AGREEMENT
11.01 The Employer reserves the right at any time and from time to time
by action of its Board of Directors to amend in whole or in part any or all of
the provisions of this Agreement, with the exception of Section 2.04 of Article
II hereof, by an instrument in writing duly acknowledged and delivered to the
Committee and the Trustee, provided that no such amendment which affects the
rights, duties, responsibilities or immunities of the Trustee may be made
without its consent.
ARTICLE XII - TERMINATION OF PLAN OR TRUST
12.01 This Agreement and the Trust, which is part of the Plan, may be
terminated at any time by the Employer, and upon such termination, or upon the
dissolution or liquidation of the Employer, the Trust Fund shall be paid out by
the Trustee as and when directed by the Committee or the Employer, in accordance
with the provisions of Article II hereof.
ARTICLE XIII - APPLICATION OF STATE LAW
13.01 Subject to the provisions of the Employee Retirement Income
Security Act of 1974, as the same may be amended from time to time, which may be
applicable and provides to the contrary, this Agreement, as amended from time to
time, shall be administered, construed and enforced according to the laws of the
State of Michigan and in courts situated in that State.
IN WITNESS WHEREOF, the parties hereto have hereunto set their
hands and seals as of the day and year first above written.
COMMERCIAL BANK
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/s/ Dean E. Milligan
BY:
------------------------------------
Dean E. Milligan, President
CITIZENS BANK
/s/ Jerry A. Young
BY:
------------------------------------
Jerry A. Young
Its: Vice President & Trust Officer
--------------------------------
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Exhibit 5
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EXHIBIT 5
December 3, 1998
Commercial National Financial Corporation
101 N. Pine River
P.O. Box 280
Ithaca, MI 48847
Gentlemen:
Re: Registration Statement on Form S-8
In connection with the proposed registration of 50,000 shares
of common stock of Commercial National Financial Corporation (the "Corporation")
covered by the above-captioned Registration Statement, we have examined the
Corporation's Articles of Incorporation, Bylaws, Corporate Minute Book and the
Registration Statement to be filed with the Securities and Exchange Commission
pursuant to the Securities Act of 1933 on or about December 3, 1998.
Based upon such examination and upon examination of such other
instruments and records as we deem necessary, we are of the opinion that:
1. The Corporation has been fully incorporated under the laws
of the State of Michigan, and is validly existing and in good standing under the
laws of that state.
2. The 50,000 shares of common stock covered by this
Registration Statement have been legally authorized and when such shares have
been duly delivered against payment therefore as contemplated by the Commercial
Bank Employee Savings and Stock Ownership Plan, such shares will be legally
issued, fully paid and nonassessable.
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We hereby consent to the filing of this opinion as an exhibit.
Very truly yours,
FOSTER, SWIFT, COLLINS & SMITH, P.C.
/s/ Matt G. Hrebec
Matt G. Hrebec
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EXHIBIT 23.1
[CROWE CHIZEK LETTERHEAD]
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement of
Commercial National Financial Corporation on Form S-8, of our report dated
February 6, 1998 on the consolidated financial statements of Commercial
National Financial Corporation, which report is included in the 1997 Annual
Report on Form 10-K of Commercial National Financial Corporation.
/s/ Crowe, Chizek and Company LLP
Crowe, Chizek and Company LLP
South Bend, Indiana
December 4, 1998
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