<PAGE> 1
As filed with the Securities and Exchange Commission on April 16, 1998
Registration No. 333-______
Registration No. 333-______
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
D&N FINANCIAL CORPORATION D&N CAPITAL CORPORATION
(Exact name of Registrant as specified (Exact name of Registrant as
in its charter) specified in its charter)
DELAWARE DELAWARE
(State or other jurisdiction of (State or other jurisdiction of
incorporation or organization) incorporation or organization)
--------------- ---------------
34-2790646 31-1517665
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
---------------------------
400 Quincy Street
Hancock, Michigan 49930
(906) 482-2700
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
D&N BANK 401(k) PLAN & TRUST
(Full title of the plan)
James S. Fleischer, P.C.
John S. Pettibone III, Esq.
Silver, Freedman & Taff, L.L.P.
(a limited liability partnership including professional corporations)
1100 New York Ave., N.W.
Washington, D.C. 20005
(Name and address of agent for service)
(202) 414-6100
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
REGISTERED REGISTERED PER SHARE OFFERING PRICE REGISTRATION FEE
- ------------------------------------ --------------------- ------------------- ------------------- ---------------------
<S> <C> <C> <C> <C>
D&N Financial Corporation
Common Stock, $.01 par value 160,000 shares(1) $27.375(2) $4,380,000(2) $1,293(2)
D&N Capital Corporation
Preferred Stock, $25 par value 20,000 shares(1) $26.25(3) $525,000(3) $ 155(3)
Interests in Plan(4) N/A(4) N/A N/A N/A(4)
==================================== ===================== =================== =================== =====================
(1) Estimated maximum aggregate number of shares of D&N Financial Corporation
("D&N") common stock and D&N Capital Corporation ("Capital") preferred
stock purchasable with employee and employer contributions under the Plan
during the next 60 months.
(2) Estimated in accordance with Rule 457(h), solely for the purpose of
calculating the registration fee at $27.375 per share, which was the
average of the high and low prices of the D&N common stock on April 13,
1998, as reported on the Nasdaq National Market.
(3) Estimated in accordance with Rule 457(h), solely for the purpose of
calculating the registration fee at $26.25 per share, which was the average
of the high and low prices of the Capital preferred stock on April 13,
1998, as reported on the Nasdaq National Market.
(4) In addition, pursuant to Rule 416(c) under the Securities Act of 1933, as
amended, this Registration Statement also covers an indeterminate amount of
interests to be offered or sold pursuant to the employee benefit plan
described herein. In accordance with Rule 457(h)(2) no separate fee
calculation is made for plan interests.
</TABLE>
<PAGE> 2
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
The document(s) containing the information specified in Part I of Form
S-8 will be sent or given to participants in the D&N Bank 401(k) Plan and Trust
(the "Plan") as specified by Rule 428(b)(1) promulgated by the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Securities Act").
Such document(s) are not being filed with the Commission, 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.
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<PAGE> 3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 3. Incorporation of Certain Documents by Reference.
The following documents previously or concurrently filed by D&N
Financial Corporation (the "Company") with the Commission to the Registration
Statement are hereby incorporated by reference in this Registration Statement:
(a) the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997 (File No. 0-17137) filed pursuant to Rule 13a-1 of the
Securities and Exchange Act of 1934, as amended (the "Exchange Act");
(b) all other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year covered by the Annual
Report referred to above;
(c) the Company's definitive Proxy Statement for its Annual Meeting of
Stockholders held on April 30, 1998;
(d) the description of the common stock, par value $.01 per share, of the
Registrant contained in the Registrant's Registration Statement on Form
S-2 (File No. 33-69300) filed with the Commission on September 23, 1993
and all amendments thereto or reports filed for the purpose of updating
such description; and
(e) the Plan's Annual Report on Form 11-K for the plan year ended December
31, 1996.
The following documents previously or concurrently filed by D&N Capital
Corporation ("Capital") with the Commission to the Registration Statement and
hereby incorporated by reference in this Registration Statement:
(a) Capital's Registration Statement on Form S-11, filed with the
Commission on April 29, 1997 (SEC NO. 333-26039);
(b) Capital's Annual Report on Form 10-K for the fiscal year ended December
31, 1997 (File No. 0-22767) filed pursuant to Rule 13a-1 of the Exchange
Act; and
(c) all other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since the filing of the registration statement referred to
above (File No. 0-22767).
All documents subsequently filed by the Company and Capital
(collectively, the "Registrant") with the Commission pursuant to Sections 13(a),
13(c), 14, or 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 then remaining unsold, shall be deemed
incorporated by reference into this Registration Statement and to be a part
thereof from the date of the filing of such documents. Any statement contained
in the documents incorporated, or deemed to be incorporated, by reference herein
or therein shall be deemed to be modified or superseded for purposes of this
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<PAGE> 4
Registration Statement and the Prospectus to the extent that a statement
contained herein or therein or in any other subsequently filed document which
also is, or is deemed to be, incorporated by reference herein or therein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Registration Statement and the Prospectus.
The Registrant shall furnish without charge to each person to whom the
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the documents incorporated by reference, other than exhibits to
such documents (unless such exhibits are specifically incorporated by reference
to the information that is incorporated). Requests should be directed to the
Corporate Secretary, D&N Financial Corporation, 400 Quincy Street, Hancock,
Michigan 49930, telephone number (906) 482-2700.
All information appearing in this Registration Statement and the
Prospectus is qualified in its entirety by the detailed information, including
financial statements, appearing in the documents incorporated herein or therein
by reference.
Item 4. Description of Securities.
Not Applicable.
Item 5. Interests of Named Experts and Counsel.
Not Applicable.
Item 6. Indemnification of Directors and Officers.
Section Ten of the Company's Certificate of Incorporation provides for
indemnification of directors and officers of the Registrant against any and all
liabilities, judgments, fines and reasonable settlements, costs, expenses and
attorneys' fees incurred in any actual, threatened or potential proceeding,
except to the extent that such indemnification is limited by Delaware law and
such law cannot be varied by contract or bylaw. Section Ten also provides for
the authority to purchase insurance with respect thereto.
Section 145 of the General Corporation Law of the State of Delaware
authorizes a corporation's board of directors to grant indemnity under certain
circumstances to directors and officers, when made, or threatened to be made,
parties to certain proceedings by reason of such status with the corporation,
against judgments, fines, settlements and expenses, including attorneys' fees.
In addition, under certain circumstances such persons may be indemnified against
expenses actually and reasonably incurred in defense of a proceeding by or on
behalf of the corporation. Similarly, the corporation, under certain
circumstances, is authorized to indemnify directors and officers of other
corporations or enterprises who are serving as such at the request of the
corporation, when such persons are made, or threatened to be made, parties to
certain proceedings by reason of such status, against judgments, fines,
settlements and expenses, including attorneys' fees; and under certain
circumstances, such persons may be indemnified against expenses actually and
reasonably incurred in connection with the defense or settlement of a proceeding
by or in the right of such other corporation or enterprise. Indemnification is
permitted where such person (i) was acting in good
II-2
<PAGE> 5
faith; (ii) was acting in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation or other corporation or
enterprise, as appropriate; (iii) with respect to a criminal proceeding, had no
reasonable cause to believe his conduct was unlawful; and (iv) was not adjudged
to be liable to the corporation or other corporation or enterprise (unless the
court where the proceeding was brought determines that such person is fairly and
reasonably entitled to indemnity).
Unless ordered by a court, indemnification may be made only following a
determination that such indemnification is permissible because the person being
indemnified has met the requisite standard of conduct. Such determination may be
made (i) by the corporation's board of directors by a majority vote of a quorum
consisting of directors not at the time parties to such proceeding; or (ii) if
such a quorum cannot be obtained or the quorum so directs, then by independent
legal counsel in a written opinion; or (iii) by the stockholders.
Section 145 also permits expenses incurred by directors and officers in
defending a proceeding to be paid by the corporation in advance of the final
disposition of such proceedings upon the receipt of an undertaking by the
director or officer to repay such amount if it is ultimately determined that he
is not entitled to be indemnified by the corporation against such expenses.
Under a directors' and officers' liability insurance policy, directors
and officers of the Company and Capital are insured against certain liabilities,
including certain liabilities under the Securities Act.
Section 6.2 of Capital's Certificate of Incorporation provides for
indemnification of any director, officer, employee or agent of Capital or any
other person who is serving at the request of Capital in any such capacity with
another corporation, partnership, joint venture, trust or other enterprise
(including, without limitation, any employee benefit plan) to the fullest extent
permitted by the General Corporation Law of the State of Delaware or as it may
hereafter be amended, and any such indemnification may continue as to any person
who has ceased to be a director, officer, employee or agent and may inure to the
benefit of the heirs, executors and administrators of such a person.
Item 7. Exemption from Registration Claimed.
Not Applicable.
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<PAGE> 6
<TABLE>
<CAPTION>
Item 8. Exhibits.
Regulation S-K Reference to Prior Filing or
Exhibit Exhibit Number Attached
Number Document Hereto
- ------------------ -------- ----------------------------
<S> <C> <C>
4 Instruments Defining the Rights of Security
Holders, Including Indentures:
4.1 Certificate of Incorporation of D&N *
Financial Corporation
4.2 Certificate of Incorporation of D&N **
Capital Corporation
4.3 Bylaws of D&N Financial Corporation *
4.4 Bylaws of D&N Capital Corporation **
4.5 D&N Bank 401(k) Plan and Trust Attached as Exhibit 4.5
5 Opinion of Silver, Freedman & Taff, L.L.P. Attached as Exhibit 5
23 Consents of Experts and Counsel:
Consent of Silver, Freedman & Taff, L.L.P. (Included in Exhibit 5)
Consent of Coopers and Lybrand L.L.P. Attached as Exhibit 23.2
24 Power of Attorney Contained on Signature Page
</TABLE>
- ------------------------
* Filed as exhibits to the Company's Registration Statement on Form S-2 (File
No. 33-69300) filed with the Commission on September 23, 1993 and all
amendments thereto or reports filed for the purpose of updating such
description. All of such previously filed documents are hereby incorporated
herein by reference in accordance with Item 601 of Regulation S-K.
** Filed as exhibits to Capital's Registration Statement on Form S-11 (File No.
333-26039) filed with the Commission on April 29, 1997 and all amendments
thereto or reports filed for the purpose of updating such description. All
of such previously filed documents are hereby incorporated herein by
reference in accordance with Item 601 of Regulation S-K.
The Company hereby undertakes that it will submit or has submitted the
Plan and any amendment thereto to the Internal Revenue Service (the "IRS") in a
timely manner and has made or will make all changes required by the IRS in order
to qualify the Plan under Section 401 of the Internal Revenue Code of 1986, as
amended.
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 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.
II-4
<PAGE> 7
(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 that is incorporated by reference in the
registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act 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 Commission such
indemnification is against public policy as expressed in the Securities
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 Securities Act and will
be governed by the final adjudication of such issue.
II-5
<PAGE> 8
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act of
1933, the Registrant certifies that it has reasonable grounds to believe that it
meets all 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 Hancock, State of Michigan, on April 15, 1998.
D&N FINANCIAL CORPORATION
By: /s/ George J. Butvilas
--------------------------------
George J. Butvilas, Director, President and
Chief Executive Officer (Duly Authorized
Representative)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints George J. Butvilas and Peter L. Lemmer,
or either of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and re-substitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the same,
with all exhibits thereto, and all other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming said
attorneys-in-fact and agents or their substitutes or substitute may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date as indicated.
By: /s/ George J. Butvilas Date: April 15, 1998
------------------------------------ --------------
George J. Butvilas
Chief Executive Officer,
President And Director
(Principal Executive and Operating Officer)
II-6
<PAGE> 9
By:/s/ Kenneth D. Seaton Date: April 15, 1998
------------------------------------------ --------------
Kenneth D. Seaton
Chairman of The Board
By:/s/ Joseph C. Bromley Date: April 15, 1998
------------------------------------------ --------------
Joseph C. Bromley
Director
By:/s/ B. Thomas M. Smith, Jr. Date: April 15, 1998
------------------------------------------ --------------
B. Thomas M. Smith, Jr.
Director
By:/s/ Stanley A. Jacobson Date: April 15, 1998
------------------------------------------ --------------
Stanley A. Jacobson
Director
By:/s/ Peter Van Pelt Date: April 15, 1998
------------------------------------------ --------------
Peter Van Pelt
Director
By:/s/ Randolph P. Piper Date: April 15, 1998
------------------------------------------ --------------
Randolph P. Piper
Director
By:/s/ Steven E. Zack Date: April 15, 1998
------------------------------------------ --------------
Steven E. Zack
Director
By:/s/ Mary P. Cauley Date: April 15, 1998
------------------------------------------ --------------
Mary P. Cauley
Director
By:/s/ Steven Coleman Date: April 15, 1998
------------------------------------------ --------------
Steven Coleman
Director
By:/s/ Kenneth R. Janson Date: April 15, 1998
------------------------------------------ --------------
Kenneth R. Janson
Executive Vice President and
Chief Financial Officer
(Chief Financial and Accounting Officer)
II-7
<PAGE> 10
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act of
1933, the Registrant certifies that it has reasonable grounds to believe that it
meets all 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 Hancock, State of Michigan, on April 15, 1998.
D&N CAPITAL CORPORATION
By: /s/ Kenneth R. Janson
-----------------------------------------
Kenneth R. Janson, Director, President and
Chief Executive Officer (Duly Authorized
Representative)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth R. Janson and Peter L. Lemmer, or
either of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and re-substitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the same,
with all exhibits thereto, and all other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming said
attorneys-in-fact and agents or their substitutes or substitute may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date as indicated.
By:/s/ Kenneth R. Janson Date: April 15, 1998
------------------------------------ --------------
Kenneth R. Janson
Chief Executive Officer,
President And Director
(Principal Executive and Operating Officer)
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<PAGE> 11
By:/s/ George J. Butvilas Date: April 15, 1998
------------------------------------------ --------------
George J. Butvilas
Chairman of the Board
And Director
By:/s/ Richard E. West Date: April 15, 1998
------------------------------------------ --------------
Richard E. West
Vice President and Director
By:/s/ Gail A. Mroz Date: April 15, 1998
------------------------------------------ --------------
Gail A. Mroz
Director
By:/s/ James Bogan Date: April 15, 1998
------------------------------------------ --------------
James Bogan
Director
By:/s/ William J. McGarry Date: April 15, 1998
------------------------------------------ --------------
William J. McGarry
Director
By:/s/ Daniel D. Greenlee Date: April 15, 1998
------------------------------------------ --------------
Daniel D. Greenlee
Chief Financial Officer and Treasurer
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<PAGE> 12
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Act of 1933,
the trustees or other persons who administer the employee benefit plan, have
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Hancock, State of
Michigan on April 15, 1998.
401(k) PLAN ADMINISTRATIVE COMMITTEE
By: /s/ George J. Butvilas By: /s/ John R. Clemmer
------------------------------ ---------------------------
George J. Butvilas John R. Clemmer
By: By: /s/ Peter W. Smith
------------------------------ ----------------------------
Mary Jo Kristapovich Peter W. Smith
By: /s/ Donald W. Schulze
-----------------------
Donald W. Schulze
BANKERS TRUST COMPANY OF DES MOINES,
IOWA, TRUSTEE
By: /s/ Patty Ashbaugh
------------------------
Name: Patty Ashbaugh
Title: Assistant Vice President
and Trust Officer
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<PAGE> 13
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
EXHIBITS
TO
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------
D&N FINANCIAL CORPORATION
D&N CAPITAL CORPORATION
<PAGE> 14
EXHIBIT INDEX
Exhibit
Number
-------
4.5 D&N Bank 401(k) Plan & Trust
5 Opinion of Silver, Freedman & Taff, L.L.P.
23.1 Consent of Silver, Freedman & Taff, L.L.P. (included in Exhibit
5)
23.2 Consent of Coopers & Lybrand L.L.P.
<PAGE> 1
EXHIBIT 4.5
D & N SAVINGS BANK
401(K) PLAN & TRUST
<PAGE> 2
TABLE OF CONTENTS
INTRODUCTION
<TABLE>
<CAPTION>
<S> <C>
ARTICLE I FORMAT AND DEFINITIONS..................................................................................2
SECTION 1.01 FORMAT......................................................................................2
SECTION 1.02 DEFINITIONS.................................................................................2
ARTICLE II PARTICIPATION........................................................................................16
SECTION 2.01 ACTIVE PARTICIPANT.........................................................................16
SECTION 2.02 INACTIVE PARTICIPANT.......................................................................17
SECTION 2.03 CESSATION OF PARTICIPATION.................................................................17
ARTICLE III CONTRIBUTIONS.......................................................................................18
SECTION 3.01 EMPLOYER CONTRIBUTIONS.....................................................................18
SECTION 3.01A ROLLOVER CONTRIBUTIONS....................................................................19
SECTION 3.02 FORFEITURES................................................................................20
SECTION 3.03 ALLOCATION.................................................................................21
SECTION 3.04 CONTRIBUTION LIMITATION....................................................................22
SECTION 3.05 EXCESS AMOUNTS.............................................................................27
ARTICLE IV INVESTMENT OF CONTRIBUTIONS..........................................................................35
SECTION 4.01 INVESTMENT OF CONTRIBUTIONS................................................................35
SECTION 4.02 SPECIAL TRANSFER RULES FOR CERTAIN PARTICIPANTS............................................36
SECTION 4.03 VOTING OF QUALIFYING EMPLOYER SECURITIES...................................................36
SECTION 4.04 TENDERING SHARES OF QUALIFYING EMPLOYER SECURITIES.........................................37
SECTION 4.05 RIGHT TO DEMAND QUALIFYING EMPLOYER SECURITIES.............................................37
SECTION 4.06 PUT OPTION.................................................................................37
SECTION 4.07 DIVERSIFICATION REQUIREMENTS...............................................................38
SECTION 4.08 INDEPENDENT APPRAISER......................................................................38
ARTICLE V BENEFITS..............................................................................................38
SECTION 5.01 RETIREMENT BENEFITS........................................................................38
SECTION 5.02 DEATH BENEFITS.............................................................................39
SECTION 5.03 VESTED BENEFITS............................................................................39
SECTION 5.04 WHEN BENEFITS START........................................................................39
SECTION 5.05 WITHDRAWAL PRIVILEGES......................................................................40
SECTION 5.06 LOANS TO PARTICIPANTS......................................................................41
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
ARTICLE VI DISTRIBUTION OF BENEFITS.............................................................................44
SECTION 6.01 FORM OF DISTRIBUTION.......................................................................44
SECTION 6.02 ELECTION PROCEDURES........................................................................45
SECTION 6.03 NOTICE REQUIREMENTS........................................................................46
SECTION 6.04 ESOP DISTRIBUTION RULES....................................................................46
ARTICLE VII TERMINATION OF PLAN.................................................................................46
ARTICLE VIII ADMINISTRATION OF PLAN.............................................................................47
SECTION 8.01 ADMINISTRATION.............................................................................47
SECTION 8.02 RECORDS....................................................................................47
SECTION 8.03 INFORMATION AVAILABLE......................................................................48
SECTION 8.04 CLAIM AND APPEAL PROCEDURES................................................................48
SECTION 8.05 UNCLAIMED VESTED ACCOUNT PROCEDURE.........................................................48
SECTION 8.06 DELEGATION OF AUTHORITY....................................................................49
ARTICLE IX GENERAL PROVISIONS...................................................................................49
SECTION 9.01 AMENDMENTS.................................................................................49
SECTION 9.02 DIRECT ROLLOVERS...........................................................................50
SECTION 9.03 MERGERS AND DIRECT TRANSFERS...............................................................50
SECTION 9.04 PROVISIONS RELATING TO THE INSURER AND OTHER PARTIES.......................................51
SECTION 9.05 EMPLOYMENT STATUS..........................................................................51
SECTION 9.06 RIGHTS TO PLAN ASSETS......................................................................51
SECTION 9.07 BENEFICIARY................................................................................52
SECTION 9.08 NONALIENATION OF BENEFITS..................................................................52
SECTION 9.09 CONSTRUCTION...............................................................................52
SECTION 9.10 LEGAL ACTIONS..............................................................................53
SECTION 9.11 SMALL AMOUNTS..............................................................................53
SECTION 9.12 WORD USAGE.................................................................................53
SECTION 9.13 TRANSFERS BETWEEN PLANS....................................................................53
SECTION 9.14 QUALIFICATION OF PLAN......................................................................54
SECTION 9.15 WAIVER OF 30-DAY NOTICE....................................................................54
ARTICLE X TOP-HEAVY PLAN REQUIREMENTS...........................................................................55
SECTION 10.01 APPLICATION...............................................................................55
SECTION 10.02 DEFINITIONS...............................................................................55
SECTION 10.03 MODIFICATION OF VESTING REQUIREMENTS......................................................59
SECTION 10.04 MODIFICATION OF CONTRIBUTIONS.............................................................59
SECTION 10.05 MODIFICATION OF CONTRIBUTION LIMITATION...................................................61
</TABLE>
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<PAGE> 4
INTRODUCTION
The Primary Employer previously adopted a 401(k) and employee stock
ownership plan, effective as of July 1. 1987, entitled the "D&N Savings Bank,
fsb Employee Stock Ownership Plan" (the "Predecessor Plan"). It was subsequently
amended and restated as of January 1, 1989.
The Primary Employer is of the opinion that the Plan should be changed.
It believes that the best means to accomplish these changes is to completely
restate the Plan's terms, provisions and conditions. The restatement effective
June 1, 1993, is set forth in this document and is substituted in lieu of the
prior document
The provisions of this Plan apply as of the date specified above or such
other date as may be specified in this Plan with the following exceptions:
The provisions included to comply with the technical corrections to the
Deficit Reduction Act of 1984 (DEFRA) and the Retirement Equity Act of
1984 (REA) contained in the Tax Reform Act of 1986 (TRA) are effective
as if included in the respective laws to which the corrections apply.
The provisions included to comply with the provisions of the Tax Reform
Act of 1986 other than the technical corrections to DEFRA and REA are
effective as of the dates specified in the law.
The provisions included to comply with the provisions of the Omnibus
Budget Reconciliation Act of 1986 (OBRA 86) are effective as of the
dates specified in the law.
The provisions included to comply with the provisions of the Omnibus
Budget Reconciliation Act of 1987 (OBRA 87) are effective as of the
dates specified in the law.
The provisions included to comply with the final regulations on optional
forms of benefit issued July 11, 1988, are effective as of the effective
date prescribed by such regulations.
The provisions included to comply with the final REA regulations issued
August 22, 1988, are effective as of the effective date prescribed by
such regulations.
The provisions included to comply with the provisions of the Technical
and Miscellaneous Revenue Act of 1988 are effective as of the dates
specified in the law.
The provisions included to comply with the final regulations on loans
issued July 20, 1989, are effective as of the effective date prescribed
by such regulations.
The provisions included to comply with the provisions of the Omnibus
Budget Reconciliation Act of 1989 (OBRA 89) are effective as of the
dates specified in the law.
1
<PAGE> 5
The restated plan continues to be for the exclusive benefit of employees
of the Employer. All persons covered under the plan on May 31, 1993, shall
continue to be covered under the restated plan with no loss of benefits.
It is intended that the plan, as restated, shall qualify as a profit
sharing plan under the Internal Revenue Code of 1986, including any later
amendments to the Code.
The Plan is also a stock bonus plan designed to meet the requirements of
an employee stock ownership plan as described at Section 4975(e)(7) of the Code
Section 407(d)(6)of ERISA. The primary purpose of the employee stock ownership
portion of the plan is to invest in Qualifying Employer Securities.
ARTICLE I
FORMAT AND DEFINITIONS
SECTION 1.01 FORMAT.
Words and phrases defined in the DEFINITIONS SECTION of Article I shall
have that defined meaning when used in this Plan, unless the context clearly
indicates otherwise.
These words and phrases have an initial capital letter to aid in
identifying them as defined terms.
SECTION 1.02 DEFINITIONS.
ACCOUNT means, for a Participant, his share of the Investment Fund.
Separate accounting records are kept for those parts of his Account that result
from:
(a) Elective Deferral Contributions
(b) Matching Contributions
(c) Other Employer Contributions
If the Employer elects to include any of these Contributions in
computing the percentages in the EXCESS AMOUNTS SECTION of Article III, a
separate accounting record shall be kept for any part of his Account resulting
from such Employer Contributions.
(d) Rollover Contributions
If the Participant's Vesting Percentage is less than 100% as to any of
the Employer Contributions, a separate accounting record will be kept for any
part of his Account resulting from such Employer Contributions and, if there has
been a prior Forfeiture Date, from such Contributions made before a prior
Forfeiture Date.
A Participant's Account shall be reduced by any distribution of his
Vested Account and by any Forfeitures. A Participant's Account will participate
in the earnings credited, expenses charged and any
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appreciation or depreciation of the Investment Fund. His Account is subject to
any minimum guarantees applicable under the Group Contract or other investment
arrangement.
ACTIVE PARTICIPANT means an Eligible Employee who is actively
participating in the Plan according to the provisions in the ACTIVE PARTICIPANT
SECTION of Article II.
AFFILIATED SERVICE GROUP means any group of corporations, partnerships
or other organizations of which the Employer is a part and which is affiliated
within the meaning of Code Section 414(m) and regulations thereunder. Such a
group includes at least two organizations one of which is either a service
organization (that is, an organization the principal business of which is
performing services), or an organization the principal business of which is
performing management functions on a regular and continuing basis. Such service
is of a type historically performed by employees. In the case of a management
organization, the Affiliated Service Group shall include organizations related,
within the meaning of Code Section 144(a)(3), to either the management
organization or the organization for which it performs management functions. The
term Controlled Group, as it is used in this Plan, shall include the term
Affiliated Service Group.
ANNUAL COMPENSATION means, on any given date, the Employee's
Compensation for the latest Compensation Year ending on or before the given
date.
ANNUITY STARTING DATE means, for a Participant, the first day of the
first period for which an amount is paid in a single sum.
BENEFICIARY means the person or persons named by a Participant to
receive any benefits under this Plan upon the Participant's death. Unless a
qualified election has been made, for the purpose of distributing any death
benefits before Annuity Starting Date, the Beneficiary of a married Participant
shall be the Participant's spouse. See the BENEFICIARY SECTION of Article IX.
CLAIMANT means any person who has made a claim for benefits under this
Plan. See the CLAIM AND APPEAL PROCEDURES SECTION of Article VIII.
CODE means the Internal Revenue Code of 1986, as amended.
COMPENSATION means, except as modified in this definition, the total
earnings paid or made available to an Employee by the Employer during any
specified period.
"Earnings" in this definition means Compensation as defined in the
CONTRIBUTION LIMITATION SECTION of Article Ill.
Compensation shall also include elective contributions. Elective
contributions are amounts excludable from the Employee's gross income under Code
Sections 125, 402(a)(8), 402(h) or 403(b), and contributed by the Employer, at
the Employee's election, to a Code Section 401 (k) arrangement, a simplified
employee pension, cafeteria plan or tax-sheltered annuity. Elective
contributions also include Compensation deferred under a Code Section 457 plan
maintained by the Employer and Employee contributions "picked up" by a
governmental entity and, pursuant to Code Section 414(h)(2), treated as
Employer contributions.
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For purposes of the EXCESS AMOUNTS SECTION of Article III, the Employer
may elect to use an alternative nondiscriminatory definition of Compensation in
accordance with the regulations under Code Section 414(s).
For purposes of determining the amount of Elective Deferral
Contributions, Compensation shall exclude reimbursements or other expense
allowances, fringe benefits (cash and noncash), moving expenses, deferred
compensation and welfare benefits.
For years beginning after December 31, 1988, the annual Compensation of
each Participant taken into account for determining all benefits provided under
the Plan for any year shall not exceed $200,000. This limitation shall be
adjusted by the Secretary at the same time and in the same manner as under Code
Section 415(d), except that the dollar increase in effect on January 1 of any
calendar year is effective for years beginning in such calendar year and the
first adjustment to the $200,000 limitation is effected on January 1, 1990. If
the Plan determines Compensation on a period of time that contains fewer than 12
months, then the annual compensation limit is an amount equal to the annual
compensation limit for the calendar year in which the period begins multiplied
by the ratio obtained by dividing the number of full months in the period by 12.
In determining the Compensation of a Participant for purposes of this
limitation, the rules of Code Section 414(q)(6) shall apply, except that 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 definition prior to the application of this limitation.
If Compensation for any prior period is taken into account in
determining a Participant's allocations or benefits for the current period, the
Compensation for such prior year is subject to the applicable annual
compensation limit in effect for that prior year. For this purpose, for years
beginning before January 1, 1990, the applicable compensation limit is $200,000.
Compensation means, for an Employee who is a Leased Employee, the
Employee's Compensation for the services he performs for the Employer,
determined in the same manner as the Compensation of Employees who are not
Leased Employees, regardless of whether such Compensation would be received
directly from the Employer or from the leasing organization.
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)(6) 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 fewer
than 12 months, the OBRA '93 annual compensation limit will be multiplied by a
fraction, the numerator of which is the number of months in the determination
period, and the denominator of which is 12.
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<PAGE> 8
For Plan Years beginning on or after January 1, 1994, any reference in
this Plan to the limitation under section 401 (a)(1 7) 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 08 RA '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 06 RA '93 annual
compensation limit is $150,000.
COMPENSATION YEAR means each one-year period ending on the last day of
the Plan Year, including corresponding periods before July 1, 1987.
CONTRIBUTIONS means
Elective Deferral Contributions
Matching Contributions
Discretionary Contributions
Rollover Contributions
as set out in Article III, unless the context clearly indicates
otherwise.
CONTROLLED GROUP means any group of corporations, trades or businesses
of which the Employer is a part that are under common control. A Controlled
Group includes any group of corporations, trades or businesses, whether or not
incorporated, which is either a parent-subsidiary group, a brother-sister group,
or a combined group within the meaning of Code Section 414(b), Code Section
414(c) and regulations thereunder and, for purposes of determining contribution
Imitations under the CONTRIBUTION LIMITATION SECTION of Article III, as modified
by Code Section 415(h) and, for the purpose of identifying Leased Employees, as
modified by Code Section 144(a)(3). The term Controlled Group, as it is used in
this Plan, shall include the term Affiliated Service Group and any other
employer required to be aggregated with the Employer under Code Section 414(o)
and the regulations thereunder.
DIRECT ROLLOVER means a payment by the Plan to the Eligible Retirement
Plan specified by the Distributee.
DISCRETIONARY CONTRIBUTIONS means discretionary contributions made by
the Employer to fund this Plan. See the EMPLOYER CONTRIBUTIONS SECTION of
Article III. Such term shall include stock bonus contributions or contributions
in the nature of stock bonus contributions, in that any such Employer cash
contributions are to be used within a reasonable period of time primarily to
purchase Qualifying Employer Securities.
DISTRIBUTEE means an Employee or former Employee. In addition, the
Employee's or former Employee's surviving spouse and the Employee's or former
Employee's spouse or former spouse who is the alternate payee under a qualified
domestic relations order, as defined in Code Section 414(p), are Distributees
with regard to the interest of the spouse or former spouse.
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<PAGE> 9
ELECTIVE DEFERRAL CONTRIBUTIONS means Contributions made by the Employer
to fund this Plan in accordance with a qualified cash or deferred arrangement as
described in Code Section 401(k). See the EMPLOYER CONTRIBUTIONS SECTION of
Article III.
ELIGIBILITY BREAK IN SERVICE means an Eligibility Computation Period in
which an Employee is credited with 500 or fewer Hours-of-Service. An Employee
incurs an Eligibility Break in Service on the last day of an Eligibility
Computation Period in which he has an Eligibility Break in Service.
ELIGIBILITY COMPUTATION PERIOD means a 12-consecutive month period. The
first Eligibility Computation Period begins on an Employee's Employment
Commencement Date. Later Eligibility Computation Periods shall be
112-consecutive month periods ending on the last day of each Plan Year that
begins after his Employment Commencement Date.
ELIGIBILITY SERVICE means one year of service for each Eligibility
Computation Period that has ended and in which an Employee is credited with at
least 1,000 Hours-of-Service. The year of service shall be credited as of the
date the Hour-of-Service requirement is met.
However, Eligibility Service is modified as follows:
Predecessor Employer service included:
An Employee's service with a Predecessor Employer shall be included as
service with the Employer. If this Plan is not a continuation of a plan of that
Predecessor Employer, an Employee's service with that Predecessor Employer shall
be counted only if service continued with the Employer without interruption.
This service includes service performed while a proprietor or partner.
Period of Military Duty included:
A Period of Military Duty shall be included as service with the Employer
to the extent R has not already been credited. For purposes of crediting
Hours-of-Service during the Period of Military Duty, an Hour-of-Service shall be
credited (without regard to the 501 Hour-of-Service limitation) for each hour an
Employee would normally have been scheduled to work for the Employer during such
period.
Controlled Group service included:
An Employee's service with a member firm of a Controlled Group while
both that firm and the Employer were members of the Controlled Group shall be
included as service with the Employer.
ELIGIBLE EMPLOYEE means any Employee of the Employer who meets the
following requirement. His employment classification with the Employer is the
following:
Nonbargaining class (not represented for collective bargaining purposes
by a bargaining unit which has bargained in good faith with the Employer on the
subject of retirement benefits).
However, he is excluded from this plan if he is a director of the bank
but is not a bank employee.
ELIGIBLE RETIREMENT PLAN means an individual retirement account
described in Code Section
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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.
ELIGIBLE ROLLOVER DISTRIBUTION means any distribution of all or any
portion of the balance to the credit of the Distributee, except that an Eligible
Rollover Distribution does not include:
(a) 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.
(b) Any distribution to the extent such distribution is required under
Code Section 401(a)(9).
(c) 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).
EMPLOYEE means an individual who is employed by the Employer or any
other employer required to be aggregated with the Employer under Code Sections
414(b), (c), (m) or (o). A Controlled Group member is required to be aggregated
with the Employer.
The term Employee shall also include any Leased Employee deemed to be an
employee of any employer described in the preceding paragraph as provided in
Code Sections 414(n) or 414(o).
EMPLOYER means the Primary Employer. This will also include any
successor corporation or firm of the Employer which shall, by written agreement,
assume the obligations of this Plan or any predecessor corporation or firm of
the Employer (absorbed by the Employer, or of which the Employer was once a
part) which became a predecessor because of a change of name, merger, purchase
of stock or purchase of assets and which maintained this Plan.
EMPLOYER CONTRIBUTIONS means
Elective Deferral Contributions
Matching Contributions
Discretionary Contributions
as set out in Article III, unless the context clearly indicates otherwise.
EMPLOYMENT COMMENCEMENT DATE means the date an Employee first performs
an Hour-of-Service.
ENTRY DATE means the date an Employee first enters the Plan as an Active
Participant. See the ACTIVE PARTICIPANT SECTION of Article II.
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FAMILY MEMBER means an individual described in Code Section
414(q)(6)(B).
FISCAL YEAR means the Primary Employers taxable year. The last day of
the Fiscal Year is December 31.
FORFEITURE means the part if any, of a Participant's Account that is
forfeited. See the FORFEITURES SECTION of Article III.
FORFEITURE DATE means, as to a Participant, the date the Participant
incurs five consecutive Vesting Breaks in Service. A Participant incurs a
Vesting Break in Service on the last day of the period used to determine the
Vesting Break in Service.
This is the date on which the Participant's Nonvested Account will be
forfeited unless an earlier forfeiture occurs as provided in the FORFEITURES
SECTION of Article III.
GROUP CONTRACT means the group annuity contract or contracts into which
the Primary Employer enters with the Insurer for the investment of Contributions
and the payment of benefits under this Plan. The term Group Contract as it is
used in this Plan is deemed to include the plural unless the context clearly
indicates otherwise.
HIGHLY COMPENSATED EMPLOYEE means a highly compensated active Employee
or a highly compensated former Employee.
A highly compensated active Employee means 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 50 percent of the dollar limitation in effect under
Code Section 415(b)(1)(A).
The term Highly Compensated Employee also means:
(d) 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 100 Employees who received the most compensation from the
Employer during the determination year, and
(e) Employees who are 5 percent owners at any time during the look-back
year or determination year.
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If no officer has satisfied the compensation requirement of (c) 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.
For this purpose, the determination year shall be the Plan Year. The
look-back year shall be the twelve-month period immediately preceding the
determination year.
A highly compensated former Employee means 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.
If an Employee is, during a determination year or look-back year, a
family member of either a 5 percent owner who is an active or former Employee or
a Highly Compensated Employee who is one of the 10 most highly compensated
Employees ranked on the basis of compensation paid by the Employer during such
year, then the family member and the 5 percent owner or top-ten highly
compensated Employee shall be aggregated. In such case, the family member and 5
percent 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 5 percent owner or top-ten highly compensated Employee. For purposes
of this definition, family member includes the spouse, lineal ascendants and
descendants of the Employee or former Employee and the spouses of such lineal
ascendants and descendants.
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 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.
HOUR-OF-SERVICE means the following:
(a) Each hour for which an Employee is paid, or entitled to payment, for
performing duties for the Employer during the applicable computation period.
(b) Each hour for which an Employee is paid, or entitled to payment, by
the Employer because of a period of time in 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. Notwithstanding the preceding
provisions of this subparagraph (b), no credit will be given to the Employee
(1) for more than 501 Hours-of-Service under this
subparagraph (b) because of any single continuous period in which the
Employee performs no duties (whether or not such period occurs in a single
computation period); or
(2) for an Hour-of-Service for which the Employee is
directly or indirectly paid, or entitled to payment because of a period in
which no duties are performed if such payment is made or due under a plan
maintained solely for the purpose of complying with applicable worker's or
workmen's compensation, or unemployment compensation or disability insurance
laws; or
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<PAGE> 13
(3) for an Hour-of-Service for a payment which solely
reimburses the Employee for medical or medically related expenses incurred by
him.
For purposes of this subparagraph (b), a payment shall be
deemed to be made by, or due from the Employer, regardless of whether such
payment is made by, or due from the Employer, directly or indirectly through,
among others, a trust fund or insurer, to which the Employer contributes or
pays premiums and regardless of whether contributions made or due to the trust
under, insurer or other entity are for the benefit of particular employees or
are on behalf of a group of employees in the aggregate.
(c) Each hour for which back pay, irrespective of mitigation of damages,
is either awarded or agreed to by the Employer. The same Hours-of-Service shall
not be credited both under subparagraph (a) or subparagraph (b) above (as the
case may be) and under this subparagraph (c). Crediting of Hours-of-Service for
back pay awarded or agreed to with respect to periods described in subparagraph
(b) above will be subject to the limitations set forth in that subparagraph.
The crediting of Hours-of-Service above shall be applied under the rules
of paragraphs (b) and (c) of the Department of Labor Regulation 2530.200b-2
(including any interpretations or opinions implementing said rules); which
rules, by this reference, are specifically incorporated in full within this
Plan. The reference to paragraph (b) applies to the special rule for determining
hours of service for reasons other than the performance of duties such as
payments calculated (or not calculated) on the basis of units of time and the
rule against double credit. The reference to paragraph (c) applies to the
crediting of hours of service to computation periods.
Hours-of-Service shall be credited for employment with any other
employer required to be aggregated with the Employer under Code Sections 414(b),
(c), (m) or (o) and the regulations thereunder for purposes of eligibility and
vesting. Hours-of-Service shall also be credited for any individual who is
considered an employee for purposes of this Plan pursuant to Code Section 414
(n) or Code Section 414(o) and the regulations thereunder.
Solely for purposes of determining whether a one-year break in service
has occurred for eligibility or vesting purposes, during a Parental Absence an
Employee shall be credited with the Hours-of-Service which otherwise would
normally have been credited to the Employee but for such absence, or in any case
in which such hours cannot be determined, eight Hours-of-Service per day of such
absence. The Hours-of-Service credited under this paragraph 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; or in all other cases, in the
following computation period.
INACTIVE PARTICIPANT means a former Active Participant who has an
Account. See the INACTIVE PARTICIPANT SECTION of Article II.
INSURER means Principal Mutual Life Insurance Company and any other
insurance company or companies named by the Trustee or Primary Employer.
INVESTMENT FUND means the total assets held for the purpose of providing
benefits for Participants. These funds result from Contributions made under the
Plan.
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INVESTMENT MANAGER means any fiduciary (other than a trustee or Named
Fiduciary)
(a) who has the power to manage, acquire, or dispose of any assets of
the Plan; and
(b) who (1) is registered as an investment adviser under the Investment
Advisers Act of 1940, or (2) is a bank, as defined in the Investment Advisers
Act of 1940, or (3) is an insurance company qualified to perform services
described in subparagraph (a) above under the laws of more than one state; and
(c) who has acknowledged in writing being a fiduciary with respect to
the Plan.
LATE RETIREMENT DATE means the first day of any month which is after a
Participant's Normal Retirement Date and on which retirement benefits begin. If
a Participant continues to work for the Employer after his Normal Retirement
Date, his Late Retirement Date shall be the earliest first day of the month on
or after he ceases to be an Employee. An earlier or a later Retirement Date may
apply if the Participant so elects. An earlier Retirement Date may apply if the
Participant is age 70 1/2. See the WHEN BENEFITS START SECTION of Article V.
LEASED EMPLOYEE means any person (other than an employee of the
recipient) who pursuant to an agreement between the recipient and any other
person ("leasing organization") has performed services for the recipient (or for
the recipient and related persons determined in accordance with Code Section
414(n)(6)) on a substantially full time basis for a period of at least one year,
and such services are of a type historically performed by employees in the
business field of the recipient employer. Contributions or benefits provided a
Leased Employee by the leasing organization which are attributable to service
performed for the recipient employer shall be treated as provided by the
recipient employer.
A Leased Employee shall not be considered an employee of the recipient
if:
(a) such employee is covered by a money purchase pension plan providing
(1) a nonintegrated employer contribution rate of at least 10 percent of
compensation, as defined in Code Section 415(c)(3), but including amounts
contributed pursuant to a salary reduction agreement which are excludable from
the employee's gross income under Code Sections 125, 402(a)(8), 402(h) or
403(b), (2) immediate participation, and (3) full and immediate vesting and
(b) Leased Employees do not constitute more than 20 percent of the
recipient's nonhighly compensated workforce.
LOAN ADMINISTRATOR means the person or positions authorized to
administer the- Participant loan program. The Loan Administrator is the Plan
Administrator.
MATCHING CONTRIBUTIONS means matching contributions made by the Employer
to fund this Plan. See the EMPLOYER CONTRIBUTIONS SECTION of Article III.
MONTHLY DATE means each Yearly Date and the same day of each following
month during the Plan Year beginning on such Yearly Date.
NAMED FIDUCIARY means the person or persons who have authority to
control and manage the operation and administration of the Plan.
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The Named Fiduciary is the Employer.
NONHIGHLY COMPENSATED EMPLOYEE means an Employee of the Employer who is
neither a Highly Compensated Employee nor a Family Member.
NONVESTED ACCOUNT means the part if any, of a Participant's Account that
is in excess of his Vested Account.
NORMAL RETIREMENT AGE means the age at which the Participant's normal
retirement benefit becomes nonforfeitable. A Participant's Normal Retirement Age
is 59 1/2.
NORMAL RETIREMENT DATE means the earliest first day of the month on or
after the date the Participant reaches his Normal Retirement Age. Unless
otherwise provided in this Plan, a Participant's retirement benefits shall begin
on a Participant's Normal Retirement Date if he has ceased to be an Employee on
such date and has a Vested Account. However, retirement benefits shall not begin
before the later of age 62 or Normal Retirement Age unless the qualified
election procedures of the ELECTION PROCEDURES SECTION of Article VI are met.
Even if the Participant is an Employee on his Normal Retirement Date, he may
choose to have his retirement benefit begin on such date. See the WHEN BENEFITS
START SECTION of Article V.
PARENTAL ABSENCE means an Employee's absence from work which begins on
or after the first Yearly Date after December 31, 1984,
(a) by reason of pregnancy of the Employee,
(b) by reason of birth of a child of the Employee,
(c) by reason of the placement of a child with the Employee in
connection with adoption of such child by such Employee, or
(d) for purposes of caring for such child for a period beginning
immediately following such birth or placement.
PARTICIPANT means either an Active Participant or an Inactive
Participant.
PERIOD OF MILITARY DUTY means, for an Employee
(a) who served as a member of the armed forces of
the United States, and
(b) who was reemployed by the Employer at a time when the Employee had
a right to reemployment in accordance with seniority rights as protected
under Section 2021 through 2026 of Title 38 of the U. S. Code,
The period of time from the date the Employee was first absent from
active work for the Employer because of such military duty to the date the
Employee was reemployed.
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PLAN means the 401(k) savings plan of the Employer set forth in this
document, including any later amendments to ft.
PLAN ADMINISTRATOR means the person or persons who administer the Plan.
The Plan Administrator is the Employer.
PLAN YEAR means a period beginning on a Yearly Date and ending on the
day before the next Yearly Date.
PREDECESSOR EMPLOYER means First Federal Savings & Loan Association of
Livingston County.
PREDECESSOR PLAN means the D&N Savings Bank, fsb Employee Stock
Ownership Plan, as in effect prior to the effective date of the amendment and
restatement June 1, 1993.
PRIMARY EMPLOYER means D&N Bank, a Federal Savings Bank.
QUALIFYING EMPLOYER SECURITIES means any instrument issued by the
Employer and meeting the requirements of Section 4975(e) (8) of the Code.
QUALIFYING EMPLOYER SECURITIES ACCOUNT means for a Participant, his
share of Qualifying Employer Securities.
QUARTERLY DATE means each Yearly Date and the third, sixth, and ninth
Monthly Date after each Yearly Date which is within the same Plan Year.
REEMPLOYMENT COMMENCEMENT DATE means the date an Employee first performs
an Hours-of-Service following an Eligibility Break in Service.
REENTRY DATE means the date a former Active Participant reenters the
Plan. See the ACTIVE PARTICIPANT SECTION of Article II.
RETIREMENT DATE means the date a retirement benefit will begin and is a
Participant's Normal or Late Retirement Date, as the case may be.
ROLLOVER CONTRIBUTIONS means the Rollover Contributions which are made
by or for a Participant according to the provisions of the ROLLOVER
CONTRIBUTIONS SECTION of Article III.
SEMI-YEARLY DATE means each Yearly Date and the sixth Monthly Date after
each Yearly Date which is within the same Plan Year.
TEFRA means the Tax Equity and Fiscal Responsibility Act of 1982.
TEFRA COMPLIANCE DATE means the date a plan is to comply with the
provisions of TEFRA. The TEFRA Compliance Date as used in this Plan is,
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(a) for purposes of contribution limitations, Code Section 415,
(1) if the plan was in effect on, July 1, 1982, the first day of
the first limitation year which begins after December 31, 1982, or
(2) if the plan was not in effect on July 1, 1982, the first day of
the first limitation year which ends after July 1, 1982.
(b) for all other purposes, the first Yearly Date after December 31,
1983.
TOTALLY AND PERMANENTLY DISABLED means that a Participant is disabled,
as a result of sickness or injury, to the extent that he is prevented from
engaging in any substantial gainful
activity, and is eligible for and receives a disability benefit under Title 11
of the Federal Social Security Act.
TRUST means an agreement of trust between the Primary Employer and
Trustee established for the purpose of holding and distributing the Trust Fund
under the provisions of the Plan. The Trust may provide for the investment of
all or any portion of the Trust Fund in the Group Contract.
TRUST FUND means the total funds held under the Trust for the purpose of
providing benefits for Participants. Assets of the Trust Fund held in Qualifying
Employer Securities Accounts shall be invested primarily in Qualifying Employer
Securities pursuant to the terms of the Plan and Trust. These funds result from
Contributions made under the Plan which are forwarded to the Trustee to be
deposited in the Trust Fund.
TRUSTEE means the trustee or trustees under the Trust. The term Trustee
as it is used in this Plan is deemed to include the plural unless the context
clearly indicates otherwise.
VALUATION DATE means the last day of each Plan Year. The Trustee may
make additional valuations, at the instruction of the Primary Employer. Whenever
such date fags on a Saturday, Sunday or holiday, the preceding business day
shall be the Valuation Date.
VESTED ACCOUNT means the vested part of a Participant's Account The
Participant's Vested Account is determined as follows.
If the Participant's Vesting Percentage is 100%, his Vested Account
equals his Account
If the Participant's Vesting Percentage is less than 100%, his Vested
Account equals the sum of (a) and (b) below:
(a) The part of the Participant's Account that results from Employer
Contributions made before a prior Forfeiture Date and all other Contributions
which were 100% vested when made.
(b) The balance of the Participant's Account in excess of the amount in
(a) above multiplied by his Vesting Percentage.
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If the Participant has withdrawn any part of his Account resulting from
Employer Contributions, other than the vested Employer Contributions included in
(a) above, the amount determined under this subparagraph (b) shall be equal to
P(AB + D) - D as defined below:
P The Participant's Vesting Percentage.
AB The balance of the Participant's Account in excess
of the amount in (a) above.
D The amount of withdrawal resulting from Employer Contributions, other
than the vested Employer Contributions included in (a) above.
The Participant's Vested Account is nonforfeitable.
VESTING BREAK IN SERVICE means a Vesting Computation Period in which an
Employee is credited with 500 or fewer Hours-of-Service. An Employee incurs a
Vesting Break in Service on the last day of a Vesting Computation Period in
which he has a Vesting Break in Service.
VESTING COMPUTATION PERIOD means a 12-consecutive month period ending on
the last day of each Plan Year, including corresponding 12-consecutive month
periods before July 1, 1987.
VESTING PERCENTAGE means the percentage used to determine the
nonforfeitable portion of a Participant's Account attributable to Employer
Contributions which were not 100% vested when made.
A Participant's Vesting Percentage is shown in the following schedule
opposite the number of whole years of his Vesting Service:
VESTING SERVICE VESTING
(whole years) PERCENTAGE
--------------- ----------
Less than 3 0.0
3 33.3
4 66.6
5 100.0
However, the Vesting Percentage for a Participant who is an Employee on
or after the earliest of (i) the date he reaches his Normal Retirement Age, (ii)
the date of his death, or (iii) the date he becomes Totally and Permanently
Disabled, shall be 100% on such date.
If the schedule used to determine a Participant's Vesting Percentage is
changed, the new schedule shall not apply to a Participant unless he is credited
with an Hour-of-Service on or after the date of the change and the Participant's
nonforfeitable percentage on the day before the date of the change is not
reduced under this Plan. The amendment provisions of the AMENDMENT SECTION of
Article IX regarding changes in the computation of the Vesting Percentage shall
apply.
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VESTING SERVICE means the sum of (a) and (b) below:
(a) The total of an Employee's service with the Employer before June 1,
1993, shall be determined according to the provisions of the Plan in effect on
May 31, 1993. Service prior to the date the Plan became subject to the Employee
Retirement Income Security Act of 1974 may be disregarded if such service would
have been disregarded in accordance with the break in service rules of the Plan
as in effect on the day before such date.
(b) One year of service for each Vesting Computation Period ending on or
after June 1, 1993, in which an Employee is credited with at least 1,000
Hours-of-Service.
However, Vesting Service is modified as follows:
Predecessor Employer service included:
An Employee's service with a Predecessor Employer shall be included as
service with the Employer. If this Plan is not a continuation of a plan of that
Predecessor Employer, an Employee's service with that Predecessor Employer shall
be counted only if service continued with the Employer without interruption.
This service includes service performed while a proprietor or partner.
Period of Military Duty included:
A Period of Military Duty shall be included as service with the Employer
to the extent it has not already been credited. For purposes of crediting
Hours-of-Service during the Period of Military Duty, an Hour-of-Service shall be
credited (without regard to the 501 Hour-of-Service limitation) for each hour an
Employee would normally have been scheduled to work for the Employer during such
period.
Controlled Group service included:
An Employee's service with a member firm of a Controlled Group while
both that firm and the Employer were members of the Controlled Group shall be
included as service with the Employer.
YEARLY DATE means June 1, 1993, and each following January 1. Yearly
Dates before June 1, 1993, shall be determined under the provisions of the prior
document.
YEARS OF SERVICE means an Employee's Vesting Service disregarding any
modifications which exclude service.
ARTICLE II
PARTICIPATION
SECTION 2.01 ACTIVE PARTICIPANT.
(a) An Employee shall first become an Active Participant (begin active
participation in the Plan) on the earliest Quarterly Date on or after June 1,
1993, on which he is an Eligible Employee and has met the eligibility
requirement set forth below.
This date is his Entry Date.
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(1) He has completed 1000 hours of Eligibility Service before
his Entry Date.
Each Employee who was an Active Participant under the Plan on May 31,
1993, shall continue to be an Active Participant if he is still an Eligible
Employee on June 1, 1993, and his Entry Date shall not change.
If a person has been an Eligible Employee who has met all the
eligibility requirements above, but is not an Eligible Employee on the date
which would have been his Entry Date, he shall become an Active Participant on
the date he again becomes an Eligible Employee. This date is his Entry Date.
(b) An Inactive Participant shall again become an Active Participant
(resume active participation in the Plan) on the date he again performs an
Hour-of-Service as an Eligible Employee. This date is his Reentry Date.
Upon again becoming an Active Participant, he shall cease to be an
Inactive Participant.
(c) A former Participant shall again become an Active Participant
(resume active participation in the Plan) on the date he again performs an
Hour-of-Service as an Eligible Employee. This date is his Reentry Date.
There shall be no duplication of benefits for a Participant under this
Plan because of more than one period as an Active Participant.
SECTION 2.02 INACTIVE PARTICIPANT.
An Active Participant shall become an Inactive Participant (stop
accruing benefits under the Plan) on the earlier of the following:
(a) The date on which he ceases to be an Eligible Employee (on his
Retirement Date if the date he ceases to be an Eligible Employee occurs within
one month of his Retirement Date).
(b) The effective date of complete termination of the Plan.
An Employee or former Employee who was an Inactive Participant under the
Plan on January 1, 1989, shall continue to be an Inactive Participant on June 1,
1993. Eligibility for any benefits payable to him or on his behalf and the
amount of the benefits shall be determined according to the provisions of the
prior document unless otherwise stated in this document.
SECTION 2.03 CESSATION OF PARTICIPATION.
A Participant shall cease to be a Participant on the date he is no
longer an Eligible Employee and his Account is zero.
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<PAGE> 21
ARTICLE III
CONTRIBUTIONS
SECTION 3.01 EMPLOYER CONTRIBUTIONS.
Employer Contributions for Plan Years which end on or after June 1,
1993, may be made without regard to current or accumulated net income, earnings,
or profits of the Employer. Notwithstanding the foregoing, the Plan shall
continue to be designed to qualify as a profit sharing plan for purposes of Code
Sections 401 (a), 402, 412, and 417. Such Contributions will be equal to the
Employer Contributions as described below:
(a) The amount of each Elective Deferral Contribution for a Participant
shall be equal to any percentage (not less than 1% nor more than 15%) of his
Compensation for the pay period as elected in his elective deferral agreement.
An Employee who is eligible to participate in the Plan may file an elective
deferral agreement with the Employer. The elective deferral agreement to start
Elective Deferral Contributions may be effective on a Participant's Entry Date
(Reentry Date, if applicable) or any following Yearly Date. The Participant
shall make any change or terminate the elective deferral agreement by filing a
new elective deferral agreement. A Participant's elective deferral agreement
making a change may be effective on any date an elective deferral agreement to
start Elective Deferral Contributions could be effective. A Participant's
elective deferral agreement to stop Elective Deferral Contributions may be
effective on any date. The elective deferral agreement must be in writing and
effective before the beginning of the pay period in which Elective Deferral
Contributions are to start, change or stop.
A Participant may elect to have his entire bonus,or any portion
thereof, withheld by the Employer in any Plan Year. Participants shall only be
eligible to defer bonuses which the Plan Administrator earmarks as being
eligible for deferrals. A Participant may elect to defer bonuses by filling out
a separate bonus deferral agreement.
Elective Deferral Contributions and bonuses are fully (100%) vested
and nonforfeitable.
(b) The amount of each Matching Contribution for a Participant eligible
for an allocation for the Plan Year shall be equal to 100% of the Elective
Deferral Contributions made for him for Plan Year, disregarding any Elective
Deferral Contributions in excess of 6% of his Compensation for the Plan Year.
Matching Contributions are subject to the Vesting Percentage.
(d) The amount of each Discretionary Contribution shall be determined
by the Employer.
Discretionary Contributions are subject to the Vesting Percentage.
No Participant shall be permitted to have Elective Deferral
Contributions, as defined in the EXCESS AMOUNTS SECTION of Article III, made
under this Plan, or any other qualified plan maintained by the Employer, during
any taxable year, in excess of the dollar limitation contained in Code Section
402(g) in effect at the beginning of such taxable year.
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The Employer shall pay to the Insurer its Contributions used to
determine the Actual Deferral Percentage, as defined in the EXCESS AMOUNTS
SECTION of Article III, to the Plan for each Plan Year not later than the end of
the twelve-month period immediately following the Plan Year for which they are
deemed to be paid. Any such Contributions accumulated through payroll deductions
shall be paid within 90 days of the date withheld or the date it is first
reasonably practical for the Employer to do so, if earlier.
A portion of the Plan assets resulting from Employer Contributions (but
not more than the original amount of those Contributions) may be returned if the
Employer Contributions are made because of a mistake of fact or are more than
the amount deductible under Code Section 404 (excluding any amount which is not
deductible because the Plan is disqualified). The amount involved must be
returned to the Employer within one year after the date the Employer
Contributions are made by mistake of fact or the date the deduction is
disallowed, whichever applies. Except as provided under this paragraph and
Article VII, the assets of the Plan shall never be used for the benefit of the
Employer and are held for the exclusive purpose of providing benefits to
Participants and their Beneficiaries and for defraying reasonable expenses of
administering the Plan.
SECTION 3.01A ROLLOVER CONTRIBUTIONS.
A Rollover Contribution may be made by or for an Eligible Employee if
the following conditions are met:
(a) The Contribution is a rollover contribution which the Code permits
to be transferred to a plan that meets the requirements of Code Section 401 (a).
(b) If the Contribution is made by the Eligible Employee, it is made
within sixty days after he receives the distribution.
(c) The Eligible Employee furnishes evidence satisfactory to the Plan
Administrator that the proposed transfer is in fact a rollover contribution that
meets conditions (a) and (b) above.
The Rollover Contribution may be made by the Eligible Employee or the
Eligible Employee may direct the trustee or named fiduciary of another plan to
transfer the funds which would otherwise be a Rollover Contribution directly to
this Plan. Such transferred funds shall be called a Rollover Contribution. The
Contribution shall be made according to procedures set up by the Plan
Administrator.
If the Eligible Employee is not an Active Participant at the time the
Rollover Contribution is made, he shall be deemed to be a Participant only for
the purposes of investment and distribution of the Rollover Contribution. He
shall not share in the allocation of Employer Contributions until the time he
meets all the requirements to become an Active Participant.
Rollover Contributions made by or for an Eligible Employee shall be
credited to his Account. The part of the Participant's Account resulting from
Rollover Contributions is fully (100%) vested and nonforfeitable at all times. A
separate accounting record shall be maintained for that part of his Rollover
Contribution which consists of voluntary contributions that were deducted from
the Participant's gross income for Federal income tax purposes.
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<PAGE> 23
SECTION 3.02 FORFEITURES.
The Nonvested Account of a Participant shall be forfeited as of the
earlier of the following: the date of the Participant's death, if prior to such
date he had ceased to be an Employee; or his Forfeiture Date. All or a part of a
Participant's Nonvested Account will be forfeited if, after he ceases to be an
Employee, he receives a distribution of his entire Vested Account or a
distribution of his Vested Account derived from Employer Contributions which
were not 100% vested when made according to the provisions of the VESTED
BENEFITS SECTION of Article V or the SMALL AMOUNTS SECTION of Article IX If a
Participant's Vested Account is zero on the date he ceases to be an Employee, he
shall be deemed to have received a distribution of his entire Vested Account on
such date. The forfeiture will occur as of the date he receives the distribution
or on the date such provision became effective, if later. If he receives a
distribution of his entire Vested Account, his entire Nonvested Account will be
forfeited. If he receives a distribution of his Vested Account from Employer
Contributions which were not 100% vested when made, but less than his entire
Vested Account the amount to be forfeited will be determined by multiplying his
Nonvested Account by a fraction. The numerator of the fraction is the amount of
the distribution derived from Employer Contributions which were not 100% vested
when made and the denominator of the fraction is his entire Vested Account
derived from such Employer Contributions on the date of distribution.
A Forfeiture shall also occur as described in the EXCESS AMOUNTS SECTION
of Article III.
Forfeitures may first be applied to pay expenses under the Plan which
would otherwise be paid by the Employer.
Forfeitures not used to pay expenses shall be applied to reduce the
earliest Employer Contributions made after the Forfeitures are determined.
Forfeitures shall be determined at least once during each taxable year of the
Employer. Upon their application, such Forfeitures shall be deemed to be
Employer Contributions.
Forfeitures of Matching Contributions which relate to excess amounts
shall be applied as provided in the EXCESS AMOUNTS SECTION of Article Ill.
If a Participant again becomes an Eligible Employee after receiving a
distribution which caused his Nonvested Account to be forfeited, he shall have
the right to repay to the Plan the entire amount of the distribution he
received (excluding any amount of such distribution resulting from
Contributions which were 100% vested when made). The repayment must be made
before the earlier of the date five years after the date he again becomes an
Eligible Employee or the end of the first period of five consecutive Vesting
Breaks in Service which begin after the date of the distribution.
If the Participant makes the repayment provided above, the Plan
Administrator shall restore to his Account an amount equal to his Nonvested
Account which was forfeited on the date of distribution, unadjusted for any
investment gains or losses. If the Participant was deemed to have received a
distribution because his Vested Account was zero or the plan did not have
repayment provisions in effect on the date the distribution was made and he
again performs an Hour-of-Service as an Eligible Employee within the repayment
period, the Plan Administrator shall restore the Participant's Account as if he
had made a required repayment on the date he performed such Hour-of-Service.
Restoration of the Participant's Account shall include restoration of all Code
Section 411 (d)(6) protected benefits with respect to that restored Account,
according to applicable Treasury regulations. Provided, however, the Plan
Administrator shall not restore the Nonvested Account if
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<PAGE> 24
a Forfeiture Date has occurred after the date of the distribution and on or
before the date of repayment and that Forfeiture Date would result in a complete
forfeiture of the amount the Plan Administrator would otherwise restore.
The Plan Administrator shall restore the Participant's Account by the
close of the Plan Year following the Plan Year in which repayment is made.
Permissible sources for restoration are Forfeitures or Employer Contributions.
The Employer shall contribute, without regard to any requirement or condition of
the EMPLOYER CONTRIBUTIONS SECTION of Article III, such additional amount needed
to make the required restoration. The repaid and restored amounts are not
included in the Participant's Annual Addition, as defined in the CONTRIBUTION
LIMITATION SECTION of Article iii.
If a portion of a Participant's Account is forfeited, Qualifying
Employer Securities shall be forfeited only after other assets.
SECTION 3.03 ALLOCATION.
The following Contributions for the Plan Year shall be allocated among
all eligible persons:
Matching Contributions made at the end of the Plan Year
Discretionary Contributions
The eligible persons are all Participants and former Participants who (i) are
Active Participants on the last day of the Plan Year or (ii) were Active
Participants at any time in the Plan Year and have died, retired or become
Totally and Permanently Disabled. The amount allocated to such a person shall be
determined below and under Article X.
The following Contributions for each Plan Year shall be allocated to
each Participant for whom such Contributions were made under the EMPLOYER
CONTRIBUTIONS SECTION of Article Ill:
Elective Deferral Contributions
These Contributions shall be allocated when made and credited to the
Participant's Account.
The following Contributions are allocated as of the last day of the Plan
Year to each eligible person for whom they are made and credited to his Account:
Matching Contributions made at the end of the Plan Year
Discretionary Contributions are allocated as of the last day of each
Plan Year. The amount allocated to each eligible person for the Plan Year shall
be equal to the Discretionary Contributions for the Plan Year, multiplied by the
ratio of (a) his Annual Compensation as of the last day of the Plan Year to (b)
the total of such compensation for all eligible persons. This amount is credited
to his Account.
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In determining the amount of Employer Contributions to be allocated to a
Participant who is a Leased Employee, contributions and benefits provided by the
leasing organization which are attributable to services such Leased Employee
performs for the Employer shall be treated as provided by the Employer and there
shall be no duplication of those contributions or benefits under this Plan.
SECTION 3.04 CONTRIBUTION LIMITATION.
(a) For the purpose of determining the contribution limitation set forth
in this section, the following terms are defined:
Aggregate Annual Addition means, for a Participant with respect to any
Limitation Year, the sum of his Annual Additions under all defined contribution
plans of the Employer, as defined in this section, for such Limitation Year. The
nondeductible participant contributions which the Participant makes to a defined
benefit plan shall be treated as Annual Additions to a defined contribution
plan. The Contributions the Employer, as defined in this section, made for the
Participant for a Plan Year beginning on or after March 31, 1984, to an
individual medical benefit account, as defined in Code Section 415(1)(2), under
a pension or annuity plan of the Employer, as defined in this section, shall be
treated as Annual Additions to a defined contribution plan. Also, amounts
derived from contributions paid or accrued after December 31, 1985, in Fiscal
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, as defined in this section, are treated as
Annual Additions to a defined contribution plan. The 25% of Compensation limit
under Maximum Permissible Amount does not apply to Annual Additions resulting
from contributions made to an individual medical account, as defined in Code
Section 415(l)(2), or to Annual Additions resulting from contributions for
medical benefits, within the meaning of Code Section 419A, after separation from
service.
Annual Addition means the amount added to a Participant's Account for
any Limitation Year which may not exceed the Maximum Permissible Amount The
Annual Addition under any plan for a Participant with respect to any Limitation
Year, shall be equal to the sum of (1) and (2) below,
(1) Employer contributions and forfeitures credited to his
account for the Limitation Year.
(2) Participant contributions made by him for the Limitation
Year.
Before the first Limitation Year beginning after December 31, 1986, the
amount under (2) above is the lesser of (i) 1/2 of his nondeductible participant
contributions made for the Limitation Year, or (ii) the amount, if any, of his
nondeductible participant contributions made for the Limitation Year which is in
excess of six percent of his Compensation, as defined in this section, for such
Limitation Year.
Limitation Year means the 12-consecutive month period within which it is
determined whether or not the limitations of Code Section 415 are exceeded.
Limitation Year means each 12-consecutive month period ending on the last day of
each Plan Year, including corresponding 12-consecutive month periods before July
1, 1987. If the Limitation Year is other than the calendar year, execution of
this Plan (or any amendment to this Plan changing the Limitation Year)
constitutes the Employees adoption of a written resolution electing the
Limitation Year. If the Limitation Year is changed, the new Limitation Year
shall begin within the current Limitation Year, creating a short Limitation
Year.
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Maximum Permissible Amount means, for a Participant With respect to any
Limitation Year, the lesser of (1) or (2) below:
(1) The greater of $30,000 or one-fourth of the maximum
dollar limitation which applies to defined benefit plans set forth in Code
Section 415 (b)(1) as in effect for the Limitation Year. (Before the TEFRA
Compliance Date, $25,000 multiplied by the cost of living adjustment factor
permitted by Federal regulations.)
(2) 25% of his Compensation, as defined in this section, for
such Limitation Year.
The compensation limitation referred to in (2) 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 there is a short Limitation Year because of a change in Limitation
Year, the Maximum Permissible Amount will not exceed the maximum dollar
limitation which would otherwise apply multiplied by the following fraction:
Number of months in the short Limitation Year
12
Projected Annual Benefit means a Participant's expected annual benefit
under all defined benefit plan(s) ever maintained by the Employer, as defined in
this section. The Projected Annual Benefit shall be determined assuming that the
Participant will continue employment until the later of current age or normal
retirement age under such plan(s), and that the Participant's compensation for
the current Limitation Year and all other relevant factors used to determine
benefits under such plan(s) will remain constant for all future Limitation
Years. Such expected annual benefit shall be adjusted to the actuarial
equivalent of a straight life annuity if expressed in a form other than a
straight life or qualified joint and survivor annuity.
(b) The Annual Addition under this Plan for a Participant during a
Limitation Year shall not be more than the Maximum Permissible Amount.
(c) Contributions which would otherwise be credited to the Participant's
Account shall be limited or reallocated to the extent necessary to meet the
restrictions of subparagraph (b) above for any Limitation Year in the following
order. Discretionary Contributions shall be reallocated in the same manner as
described in the ALLOCATION SECTION of Article III to the remaining Participants
to whom the limitations do not apply for the Limitation Year. The Discretionary
Contributions shall be limited if there are no such remaining Participants.
Elective Deferral Contributions that are not the basis for Matching
Contributions shall be limited. Matching Contributions shall be limited to the
extent necessary to limit the Participant's Annual Addition under this Plan to
his maximum amount. If Matching Contributions are limited because of this limit,
Elective Deferral Contributions that are the basis for Matching Contributions
shall be reduced in proportion.
If, due to (i) an error in estimating a Participant's Compensation as
defined in this section, (ii) because the amount of the Forfeitures to be used
to offset Employer Contributions is more than the amount of Employer
Contributions due for the remaining Participants, (iii) 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
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to any individual under the limits of Code Section 415, or (iv)other limited
facts and circumstances, a Participant's Annual Addition is greater than the
amount permitted in (b) above, such excess amount shall be applied as follows.
Elective Deferral Contributions will be returned to the Participant. If after
the return of Elective Deferral Contributions, an excess amount still exists,
and the Participant is a Active Participant as of the end of the Limitation
Year, the excess amount shall be used to offset Employer Contributions for him
in the next Limitation Year. If after the return of Elective Deferral
Contributions, an excess amount still exists, and the Participant is not an
Active Participant as of the end of the Limitation Year, the excess amount will
be held in a suspense account which will be used to offset Employer
Contributions for all Participants in the next Limitation Year. No Employer
Contributions that would be included in the next Limitation Year's Annual
Addition may be made before the total suspense account has been used.
(d) A Participant's Aggregate Annual Addition for a Limitation Year
shall not exceed the Maximum Permissible Amount.
If, for the Limitation Year, the Participant has an Annual Addition
under more than one defined contribution plan or a welfare benefit fund, as
defined in Code Section 419(e), or an individual medical account, as defined in
Code Section 415(l)(2), maintained by the Employer, as defined in this
section, and such plans and welfare benefit funds and individual medical
accounts do not otherwise limit the Aggregate Annual Addition to the Maximum
Permissible Amount, any reduction necessary shall be made first to the profit
sharing plans, then to all other such plans and welfare benefit funds and
individual medical accounts and, if necessary, by reducing first those that were
most recently allocated. Welfare benefit funds and individual medical accounts
shall be deemed to be allocated first. However, elective deferral contributions
shall be the last contributions reduced before the welfare benefit fund or
individual medical account is reduced.
If some of the Employer's defined contribution plans were not in
existence on July 1, 1982, and some were in existence on that date, the Maximum
Permissible Amount which is based on a dollar amount may differ for a Limitation
Year. The Aggregate Annual Addition for the Limitation Year in which the dollar
limit differs shall not exceed the lesser of (1) 25% of Compensation as defined
in this section, (2) $45,475, or (3) the greater of $30,000 or the sum of the
Annual Additions for such Limitation Year under all the plan(s) to which the
$45,475 amount applies.
(e) If a Participant is or has been a participant in both defined
benefit and defined contribution plans (including a welfare benefit fund or
individual medical account) ever maintained by the Employer, as defined in this
section, the sum of the Defined Benefit Plan Fraction and the Defined
Contribution Plan Fraction for any Limitation Year shall not exceed 1.0 (1.4
before the TEFRA Compliance Date).
After all other limitations set out in the plans and funds have been
applied, the following limitations shall apply so that the sum of the
Participant's Defined Benefit Plan Fraction and Defined Contribution Plan
Fraction shall not exceed 1.0 (1.4 before the TEFRA Compliance Date). The
Projected Annual Benefit shall be limited first. If the Participant's annual
benefit(s) equal his Projected Annual Benefit, as limited, then Annual Additions
to the defined contribution plan(s) shall be limited to the extent needed to
reduce the sum to 1.0 (1.4). First, the voluntary contributions the Participant
may make for the Limitation Year shall be limited. Next, in the case of a profit
sharing plan, any forfeitures allocated to the Participant shall be reallocated
to remaining participants to the extent necessary to reduce the decimal to 1.0
(1.4). Last, to the extent necessary, employer contributions for the Limitation
Year shall be reallocated or limited, and any required and optional employee
contributions to which such employer contributions were geared shall be reduced
in proportion.
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Limitation Year means the 12-consecutive month period within which it is
determined whether or not the limitations of Code Section 415 are exceeded.
Limitation Year means each 12-consecutive month period ending on the last day of
each Plan Year, including corresponding 12-consecutive month periods before July
1, 1987. If the Limitation Year is other than the calendar year, execution of
this Plan (or any amendment to this Plan changing the Limitation Year)
constitutes the Employees adoption of a written resolution electing the
Limitation Year. If the Limitation Year is changed, the new Limitation Year
shall begin within the current Limitation Year, creating a short Limitation
Year.
Maximum Permissible Amount means, for a Participant with respect to any
Limitation Year, the lesser of (1) or (2) below:
(1) The greater of $30,000 or one-fourth of the maximum
dollar limitation which applies to defined benefit plans set forth in Code
Section 415(b)(1)
as in effect for the Limitation Year. (Before the TEFRA Compliance Date, $25,000
multiplied by the cost of living adjustment factor permitted by Federal
regulations.)
(2) 25% of his Compensation, as defined in this section, for
such Limitation Year.
The compensation limitation referred to in (2) 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 there is a short Limitation Year because of a change in Limitation
Year, the Maximum Permissible Amount will not exceed the maximum dollar
limitation which would otherwise apply multiplied by the following fraction:
Number of months in the short Limitation Year
12
Projected Annual Benefit means a Participant's expected annual benefit
under all defined benefit plan(s) ever maintained by the Employer, as defined in
this section. The Projected Annual Benefit shall be determined assuming that the
Participant will continue employment until the later of current age or normal
retirement age under such plan(s), and that the Participant's compensation for
the current Limitation Year and all other relevant factors used to determine
benefits under such plan(s) will remain constant for all future Limitation
Years. Such expected annual benefit shall be adjusted to the actuarial
equivalent of a straight life annuity if expressed in a form other than a
straight life or qualified joint and survivor annuity.
(b) The Annual Addition under this Plan for a Participant during a
Limitation Year shall not be more than the Maximum Permissible Amount.
(c) Contributions and Forfeitures which would otherwise be credited to
the Participant's Account shall be limited or reallocated to the extent
necessary to meet the restrictions of subparagraph (b) above for any Limitation
Year in the following order. Forfeitures shall be reallocated in the same manner
as described in the ALLOCATION SECTION of Article III to the remaining
Participants to whom the limitations do not
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apply for the Limitation Year. Discretionary Contributions shall be reallocated
in the same manner as described in the ALLOCATION SECTION of Article III to the
remaining Participants to whom the limitations do not apply for the Limitation
Year. The Discretionary Contributions shall be limited if there are no such
remaining Participants. Elective Deferral Contributions that are not the basis
for Matching Contributions shall be limited. Matching Contributions shall be
limited to the extent necessary to limit the Participant's Annual Addition under
this Plan to his maximum amount. If Matching Contributions are limited because
of this limit, Elective Deferral Contributions that are the basis for Matching
Contributions shall be reduced in proportion.
If, due to (i) an error in estimating a Participant's Compensation as
defined in this section, (ii) because Forfeitures cannot be reallocated to
remaining Participants due to the limits of this section, (iii) 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, or (iv) other limited facts and
circumstances, a Participant's Annual Addition is greater than the amount
permitted in (b) above, such excess amount shall be applied as follows. Elective
Deferral Contributions will be returned to the Participant. If after the return
of Elective Deferral Contributions, an excess amount still exists, and the
Participant is an Active Participant as of the end of the Limitation Year, the
excess amount shall be used to offset Employer Contributions for him in the next
Limitation Year. If after the return of Elective Deferral Contributions, an
excess amount still exists, and the Participant is not an Active Participant as
of the end of the Limitation Year, the excess amount will be held in a suspense
account which will be used to offset Employer Contributions for all Participants
in the next Limitation Year. No Employer Contributions that would be included in
the next Limitation Year's Annual Addition may be made before the total suspense
account has been used.
(d) A Participant's Aggregate Annual Addition for a Limitation Year
shall not exceed the Maximum Permissible Amount.
If, for the Limitation Year, the Participant has an Annual Addition
under more than one defined contribution plan or a welfare benefit fund, as
defined in Code Section 419(e), or an individual medical account, as defined in
Code Section 415(l)(2), maintained by the Employer, as defined in this section,
and such plans and welfare benefit funds and individual medical accounts do not
otherwise limit the Aggregate Annual Addition to the Maximum Permissible Amount,
any reduction necessary shall be made first to the profit sharing plans, then to
all other such plans and welfare benefit funds and individual medical accounts
and, if necessary, by reducing first those that were most recently allocated.
Welfare benefit funds and individual medical accounts shall be deemed to be
allocated first. However, elective deferral contributions shall be the last
contributions reduced before the welfare benefit fund or individual medical
account is reduced.
If some of the Employers defined contribution plans were not in
existence on July 1, 1982, and some were in existence on that date, the Maximum
Permissible Amount which is based on a dollar amount may differ for a Limitation
Year. The Aggregate Annual Addition for the Limitation Year in which the dollar
limit differs shall not exceed the lesser of (1) 25% of Compensation as defined
in this section, (2) $45,475, or (3) the greater of $30,000 or the sum of the
Annual Additions for such Limitation Year under all the plan(s) to which the
$45,475 amount applies.
(e) If a Participant is or has been a participant in both defined
benefit and defined contribution plans (including a welfare benefit fund or
individual medical account) ever maintained by the Employer, as defined in this
section, the sum of the Defined Benefit Plan Fraction and the Defined
Contribution Plan Fraction for any Limitation Year shall not exceed 1.0 (1.4
before the TEFRA Compliance Date).
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<PAGE> 30
After all other limitations set out in the plans and funds have been
applied, the following limitations shall apply so that the sum of the
Participant's Defined Benefit Plan Fraction and Defined Contribution Plan
Fraction shall not exceed 1.0 (1.4 before the TEFRA Compliance Date). The
Projected Annual Benefit shall be limited first. If the Participant's annual
benefit(s) equal his Projected Annual Benefit, as limited, then Annual Additions
to the defined contribution plan(s) shall be limited to the extent needed to
reduce the sum to 1.0 (1.4). First, the voluntary contributions the Participant
may make for the Limitation Year shall be limited. Next, in the case of a profit
sharing plan, any forfeitures allocated to the Participant shall be reallocated
to remaining participants to the extent necessary to reduce the decimal to 1.0
(1.4). Last, to the extent necessary, employer contributions for the Limitation
Year shall be reallocated or limited, and any required and optional employee
contributions to which such employer contributions were geared shall be reduced
in proportion.
If, for the Limitation Year, the Participant has an Annual Addition
under more than one defined contribution plan or welfare benefit fund or
individual medical account maintained by the Employer, as defined in this
section, any reduction above shall be made first to the profit sharing plans,
then to all other such plans and welfare benefit plans and individual medical
accounts and, if necessary, by reducing first those that were most recently
allocated. However, elective deferral contributions shall be the last
contributions reduced before the welfare benefit fund or individual medical
account is reduced. The annual addition to the welfare benefit fund and
individual medical account shall be limited last.
SECTION 3.05 EXCESS AMOUNTS.
(a) For the purposes of this section, the following terms are defined:
Actual Deferral Percentage means the ratio (expressed as a percentage)
of Elective Deferral Contributions under this Plan on behalf of the Eligible
Participant for the Plan Year to the Eligible Participant's Compensation for the
Plan Year. In modification of the foregoing, Compensation shall be limited to
the Compensation received while an Active Participant. The Elective Deferral
Contributions used to determine the Actual Deferral Percentage shall include
Excess Elective Deferrals (other than Excess Elective Deferrals of Nonhighly
Compensated Employees that arise solely from Elective Deferral Contributions
made under this Plan or any other plans of the Employer or a Controlled Group
member), but shall exclude Elective Deferral Contributions that are used in
computing the Contribution Percentage (provided the Average Actual Deferral
Percentage test is satisfied both with and without exclusion of these Elective
Deferral Contributions). Under such rules as the Secretary of the Treasury shall
prescribe, the Employer may elect to include Qualified Nonelective Contributions
and Qualified Matching Contributions under this Plan in computing the Actual
Deferral Percentage. For an Eligible Participant for whom such Contributions on
his behalf for the Plan Year are zero, the percentage is zero.
Aggregate Limit means the greater of (1) or (2) below:
(1) The sum of
(i) 125 percent of the greater of the Average Actual Deferral
Percentage of the Nonhighly Compensated Employees for the Plan Year or the
Average Contribution Percentage 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 cash or deferred arrangement and
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<PAGE> 31
(ii) the lesser of 200% or two plus the lesser of such Average
Actual Deferral Percentage or Average Contribution Percentage.
(2) The sum of
(i) 125 percent of the lesser of the Average Actual Deferral
Percentage of the Nonhighly Compensated Employees for the Plan Year or the
Average Contribution Percentage 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 cash or deferred arrangement and
(ii) the lesser of 200% or two plus the greater of such Average
Actual Deferral Percentage or Average Contribution Percentage.
Average Actual Deferral Percentage means the average (expressed as a
percentage) of the Actual Deferral Percentages of the Eligible Participants in a
group.
Average Contribution Percentage means the average (expressed as a
percentage) of the Contribution Percentages of the Eligible Participants in a
group.
Contribution Percentage means the ratio (expressed as a percentage) of
the Eligible Participant's Contribution Percentage Amounts to the Eligible
Participant's Compensation for the Plan Year. In modification of the foregoing,
Compensation shall be limited to the Compensation received while an Active
Participant. For an Eligible Participant for whom such Contribution Percentage
Amounts for the Plan Year are zero, the percentage is zero.
Contribution Percentage Amounts means the sum of the Participant
Contributions and Matching Contributions (that are not Qualified Matching
Contributions) under this Plan on behalf of the Eligible 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
Elective Deferrals, Excess Contributions or Excess Aggregate Contributions.
Under such rules as the Secretary of the Treasury shall prescribe, the Employer
may elect to include Qualified Nonelective Contributions and Qualified Matching
Contributions under this Plan which were not used in computing the Actual
Deferral Percentage in computing the Contribution Percentage. The Employer may
also elect to use Elective Deferral Contributions in computing the Contribution
Percentage so long as the Average Actual Deferral Percentage test is met before
the Elective Deferral Contributions are used in the Average Contribution
Percentage test and continues to be met following the exclusion of those
Elective Deferral Contributions that are used to meet the Average Contribution
Percentage test.
Elective Deferral Contributions means employer contributions made on
behalf of a participant pursuant to an election to defer under any qualified
cash or deferred arrangement as described in Code Section 401(k), any simplified
employee pension cash or deferred arrangement as described in Code Section
402(h)(1)(B), any eligible deferred compensation plan under Code Section 457,
any plan as described under Code Section 501(c)(18), and any employer
contributions made on behalf of a participant for the purchase of an annuity
contract under Code Section 403(b) pursuant to a salary reduction agreement.
Elective Deferral Contributions shall not include any deferrals properly
distributed as excess Annual Additions.
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<PAGE> 32
Eligible Participant means, for purposes of determining the Actual
Deferral Percentage, any Employee who is otherwise authorized under the terms of
the Plan to have Elective Deferral Contributions made on his behalf for the Plan
Year. Eligible Participant means, for purposes of determining the Average
Contribution Percentage, any Employee who is otherwise authorized under the
terms of the Plan to have Participant Contributions or Matching Contributions
made on his behalf for the Plan Year.
Excess Aggregate Contributions means, with respect to any Plan Year, the
excess of:
(1) The aggregate Contributions taken into account in computing the
numerator of the Contribution Percentage actually made on behalf of Highly
Compensated Employees for such Plan Year, over
(2) The maximum amount of such Contributions permitted by the Average
Contribution Percentage 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).
Such determination shall be made after first determining Excess Elective
Deferrals and then determining Excess Contributions.
Excess Contributions means, with respect to any Plan Year, the excess
of:
(1) The aggregate amount of Contributions actually taken into account in
computing the Actual Deferral Percentage of Highly Compensated Employees for
such Plan Year, over
(2) The maximum amount of such Contributions permitted by the Actual
Deferral Percentage test (determined by reducing Contributions made on behalf of
Highly Compensated Employees in order of the Actual Deferral Percentages,
beginning with the highest of such percentages).
A Participant's Excess Contributions for a Plan Year will be reduced by
the amount of Excess Elective Deferrals, if any, previously distributed to the
Participant for the taxable year ending in that Plan Year.
Excess Elective Deferrals means those Elective Deferral Contributions
that are includible in a Participant's gross income under Code Section 402(g) to
the extent such Participant's Elective Deferral Contributions for a taxable year
exceed the dollar limitation under such Code section. Excess Elective Deferrals
shall be treated as Annual Additions, as defined in the CONTRIBUTION LIMITATION
SECTION of Article III, under the Plan, unless such amounts are distributed no
later than the first April 15 following the close of the Participant's taxable
year.
Participant Contributions means contributions made to any plan by or on
behalf of a participant that are included in the participant's gross income in
the year in which made and that are maintained under a separate account to
which earnings and losses are allocated.
Matching Contributions means employer contributions made to this or any
other defined contribution plan, or to a contract described in Code Section
403(b), on behalf of a participant on account of a Participant Contribution made
by such participant, or on account of a participant's Elective Deferral
Contributions, under a plan maintained by the employer.
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Qualified Matching Contributions means Matching Contributions which are
subject to the distribution and nonforfeitability requirements under Code
Section 401(k) when made.
Qualified Nonelective Contributions means any employer contributions
(other than Matching Contributions) which an employee may not elect to have paid
to him in cash instead of being contributed to the plan and which are subject to
the distribution and nonforfeitability requirements under Code Section 401(k).
(b) A Participant may assign to this Plan any Excess Elective Deferrals
made during a taxable year by notifying the Plan Administrator in writing on or
before the first following March 1 of the amount of the Excess Elective
Deferrals to be assigned to the Plan. A Participant is deemed to notify the Plan
Administrator of any Excess Elective Deferrals that arise by taking into account
only those Elective Deferral Contributions made to this Plan and any other plans
of the Employer or a Controlled Group member and reducing such Excess Elective
Deferrals by the amount of Excess Contributions, if any, previously distributed
for the Plan Year beginning in that taxable year. The Participant's claim for
Excess Elective Deferrals shall be accompanied by the Participant's written
statement that if such amounts are not distributed, such Excess Elective
Deferrals, when added to amounts deferred under other plans or arrangements
described in Code Sections 401 (k), 408(k) or 403(b), will exceed the limit
imposed on the Participant by Code Section 402(g) for the year in which the
deferral occurred. The Excess Elective Deferrals assigned to this Plan can not
exceed the Elective Deferral Contributions allocated under this Plan for such
taxable year.
Notwithstanding any other provisions of the Plan, Elective Deferral
Contributions in an amount equal to the Excess Elective Deferrals assigned to
this Plan, plus any income and minus any loss allocable thereto, shall be
distributed no later than April 15 to any Participant to whose Account Excess
Elective
Deferrals were assigned for the preceding year and who claims Excess
Elective Deferrals for such taxable year.
The income or loss allocable to such Excess Elective Deferrals shall be
equal to the income or loss allocable to the Participant's Elective Deferral
Contributions for the taxable year in which the excess occurred multiplied by a
fraction. The numerator of the fraction is the Excess Elective Deferrals. The
denominator of the fraction is the closing balance without regard to any income
or loss occurring during such taxable year (as of the end of such taxable year)
of the Participant's Account resulting from Elective Deferral Contributions.
The income or loss allocable to such Excess Elective Deferrals shall be
equal to the sum of:
(1) the income or loss allocable to the Participant's Elective Deferral
Contributions for the taxable year in which the excess occurred multiplied by a
fraction and
(2) the income or loss allocable to the Participant's Elective Deferral
Contributions for the gap period between the end of such taxable year and the
date of distribution multiplied by a fraction.
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The numerator of the fractions is the Excess Elective Deferrals. The
denominator of the fraction in (1) above is the closing balance without regard
to any income or loss occurring during such taxable year (as of the end of such
taxable year) of the Participant's Account resulting from Elective Deferral
Contributions. The denominator of the fraction in (2) above is the closing
balance without regard to any income or loss occurring during such gap period
(as of the end of such gap period) of the Participant's Account resulting from
Elective Deferral Contributions. The amount determined in (2) above shall not be
included for taxable years beginning after December 31, 1991.
Any Matching Contributions which were based on the Elective Deferral
Contributions, which are distributed as Excess Elective Deferrals, plus any
income and minus any loss allocable thereto, shall be forfeited, if forfeitable.
These Forfeitures shall be allocated to the eligible persons in the ALLOCATION
SECTION of Article III who do not have an excess amount and shall be deemed to
be Matching Contributions. The amount allocated to each eligible person for the
Plan Year shall be equal to such Forfeitures for the Plan Year, multiplied by
the ratio of (i) his Annual Compensation as of the last day of the Plan Year to
(ii) the total of such compensation for all eligible persons.
(c) As of the end of each Plan Year after Excess Elective Deferrals have
been determined, one of the following tests must be met:
(1) The Average Actual Deferral Percentage for Eligible
Participants who are Highly Compensated Employees for the Plan Year is not more
than the Average Actual Deferral Percentage for Eligible Participants who are
Nonhighly Compensated Employees for the Plan Year multiplied by 1.25.
(2) The Average Actual Deferral Percentage for Eligible
Participants who are Highly Compensated Employees for the Plan Year is
not more than the Average Actual Deferral Percentage for Eligible Participants
who are Nonhighly Compensated Employees for the Plan Year multiplied by 2 and
the difference between the Average Actual Deferral Percentages is not more than
2.
The Actual Deferral Percentage for any Eligible Participant who
is a Highly Compensated Employee for the Plan Year and who is eligible to have
Elective Deferral Contributions (and Qualified Nonelective Contributions or
Qualified Matching Contributions, or both, if used in computing the Actual
Deferral Percentage) allocated to his account under two or more plans
or arrangements described in Code Section 401(k) that are maintained by the
Employer or a Controlled Group member shall be determined as if all such
Elective Deferral Contributions (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 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 the regulations under
Code Section 401(k).
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 Actual Deferral Percentage of employees as if all such plans were a single
plan. Plans may be aggregated in order to satisfy Code Section 401(k) only if
they have the same Plan Year.
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<PAGE> 35
For purposes of determining the Actual Deferral Percentage of an
Eligible Participant who is a five-percent owner or one of the ten most
highly-paid Highly Compensated Employees, the Elective Deferral Contributions
(and Qualified Nonelective Contributions or Qualified Matching Contributions, or
both, if used in computing the Actual Deferral Percentage) and Compensation of
such Eligible Participant include the Elective Deferral Contributions (and, if
applicable, Qualified Nonelective Contributions or Qualified Matching
Contributions, or both) and Compensation for the Plan Year of Family Members.
Family Members, with respect to such Highly Compensated Employees, shall be
disregarded as separate employees in determining the Actual Deferral Percentage
both for Participants who are Nonhighly Compensated Employees and for
Participants who are Highly Compensated Employees.
For purposes of determining the Actual Deferral Percentage, Elective
Deferral Contributions, Qualified Nonelective Contributions and Qualified
Matching Contributions must be made before the last day of the 12-month period
immediately following the Plan Year to which contributions relate.
The Employer shall maintain records sufficient to demonstrate
satisfaction of the Average Actual Deferral Percentage test and the amount of
Qualified Nonelective Contributions or Qualified Matching Contributions, or
both, used in such test.
The determination and treatment of the Contributions used in computing
the Actual Deferral Percentage shall satisfy such other requirements as may be
prescribed by the Secretary of the Treasury.
If the Plan Administrator should determine during the Plan Year that
neither of the above tests is being met, the Plan Administrator may adjust the
amount of future Elective Deferral Contributions of the Highly Compensated
Employees.
Notwithstanding any other provisions of this Plan, Excess Contributions,
plus any income and minus any loss allocable thereto, shall be distributed no
later than the last day of each Plan Year to Participants to whose Accounts such
Excess Contributions were allocated for the preceding Plan Year. If such excess
amounts are distributed more than 2 1/2 months after the last day of the Plan
Year in which such excess amounts arose, a ten (10) percent 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 Deferral Contributions (and amounts treated as
Elective Deferral Contributions) of each Family Member that is combined to
determine the combined Actual Deferral Percentage.
Excess Contributions shall be treated as Annual Additions, as defined in
the CONTRIBUTION LIMITATION SECTION of Article III, under the Plan.
The Excess Contributions shall be adjusted for income or loss. The
income or loss allocable to such Excess Contributions shall be equal to the
income or loss allocable to the Participant's Elective Deferral Contributions
(and, if applicable, Qualified Nonelective Contributions or Qualified Matching
Contributions, or both) for the Plan Year in which the excess occurred
multiplied by a fraction. The numerator of the fraction is the Excess
Contributions. The denominator of the fraction is the closing balance without
regard to any income or loss occurring during such Plan Year (as of the end of
such Plan Year) of the Participant's Account
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<PAGE> 36
resulting from Elective Deferral Contributions (and Qualified Nonelective
Contributions or Qualified Matching Contributions, or both, if used in computing
the Actual Deferral Percentage).
Excess Contributions shall be distributed from the Participant's Account
resulting from Elective Deferral Contributions. If such Excess Contributions
exceed the balance in the Participant's Account resulting from Elective Deferral
Contributions, the balance shall be distributed from the Participant's Account
resulting from Qualified Matching Contributions (if applicable) and Qualified
Nonelective Contributions, respectively.
Any Matching Contributions which were based on the Elective Deferral
Contributions which are distributed as Excess Contributions, plus any income and
minus any loss allocable thereto, shall be forfeited, if forfeitable. These
Forfeitures shall be used to offset the earliest Employer Contribution due after
the Forfeiture arises.
(d) As of the end of each Plan Year, one of the following tests must be
met:
(1) The Average Contribution Percentage for Eligible
Participants who are Highly Compensated Employees for the Plan Year is not more
than the Average Contribution Percentage for Eligible Participants who are
Nonhighly Compensated Employees for the Plan Year multiplied by 1.25.
(2) The Average Contribution Percentage for Eligible
Participants who are Highly Compensated Employees for the Plan Year is not more
than the Average Contribution Percentage for Eligible Participants who are
Nonhighly Compensated Employees for the Plan Year multiplied by 2 and the
difference between the Average Contribution Percentages is not more than 2.
If one or more Highly Compensated Employees participate in both a cash
or deferred arrangement and a plan subject to the Average Contribution
Percentage test maintained by the Employer or a Controlled Group member and the
sum of the Average Actual Deferral Percentage and Average Contribution
Percentage of those Highly Compensated Employees subject to either or both tests
exceeds the Aggregate Limit, then the Contribution Percentage of those Highly
Compensated Employees who also participate in a cash or deferred arrangement
will be reduced (beginning with such Highly Compensated Employees whose
Contribution Percentage is the highest) so that the limit is not exceeded. The
amount by which each Highly Compensated Employee's Contribution Percentage is
reduced shall be treated as an Excess Aggregate Contribution. The Average Actual
Deferral Percentage and Average Contribution Percentage of the Highly
Compensated Employees are determined after any corrections required to meet the
Average Actual Deferral Percentage and Average Contribution Percentage tests.
Multiple use does not occur if both the Average Actual Deferral Percentage and
Average Contribution Percentage of the Highly Compensated Employees does not
exceed 1.25 multiplied by the Average Actual Deferral Percentage and Average
Contribution Percentage of the Nonhighly Compensated Employees.
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 account under two or more plans described in
Code Section 401 (a) or arrangements described in Code Section 401(k) that are
maintained by the Employer or a Controlled Group member 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 or more cash or deferred
arrangements that have different
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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 the regulations under Code Section 401(m).
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 Code sections only if
aggregated with this Plan, then this section shall be applied by determining the
Contribution Percentages of Eligible Participants as if all such plans were a
single plan. Plans may be aggregated in order to satisfy Code Section 401(m)
only if they have the same Plan Year.
For purposes of determining the Contribution Percentage of an Eligible
Participant who is a five-percent owner or one of the ten most highly-paid
Highly Compensated Employees, the Contribution Percentage Amounts and
Compensation of such Participant shall include Contribution Percentage Amounts
and Compensation for the Plan Year of Family Members. Family Members, with
respect to Highly Compensated Employees, shall be disregarded as separate
employees in determining the Contribution Percentage both for employees who are
Nonhighly Compensated Employees and for employees who are Highly Compensated
Employees.
For purposes of determining the Contribution Percentage, Participant
Contributions are considered to have been made in the Plan Year in which
contributed to the Plan. Matching Contributions and Qualified Nonelective
Contributions will be considered made for a Plan Year if made no later than the
end of the 12-month period beginning on the day after the close of the Plan
Year.
The Employer shall maintain records sufficient to demonstrate
satisfaction of the Average Contribution Percentage test and the amount of
Qualified Nonelective Contributions or Qualified Matching Contributions, or
both, used in such test.
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.
Notwithstanding any other provisions of this Plan, Excess Aggregate
Contributions, plus any income and minus any loss allocable thereto, shall be
forfeited, if not vested, or distributed, if vested, no 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 Contribution
Percentage. If such Excess Aggregate Contributions are distributed more than 2
1/2 months after the last day of the Plan Year in which such excess amounts
arose, a ten (10) percent 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, as defined in the CONTRIBUTION LIMITATION SECTION
of Article III, under the Plan.
The Excess Aggregate Contributions shall be adjusted for income or loss.
The income or loss allocable to such Excess Aggregate Contributions shall be
equal to the income or loss allocable to the Participant's Contribution
Percentage Amounts for the Plan Year in which the excess occurred multiplied by
a fraction. The numerator of the fraction is the Excess Aggregate Contributions.
The denominator of the fraction is the closing
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balance without regard to any income or loss occurring during such Plan Year (as
of the end of such Plan Year) of the Participant's Account resulting from
Contribution Percentage Amounts.
Excess Aggregate Contributions shall be distributed from the
Participant's Account resulting from Participant Contributions that are not
required as a condition of employment or participation or for obtaining
additional benefits from Employer Contributions. If such Excess Aggregate
Contributions exceed the balance in the Participant's Account resulting from
such Participant Contributions, the balance shall be forfeited, if not vested,
or distributed, if vested, on a pro-rata basis from the Participant's Account
resulting from Contribution Percentage Amounts. These Forfeitures shall be used
to offset the earliest Employer Contribution due after the Forfeiture arises.
ARTICLE IV
INVESTMENT OF CONTRIBUTIONS
SECTION 4.01 INVESTMENT OF CONTRIBUTIONS.
All Contributions are forwarded by the Employer to the Insurer to be
deposited under the Group Contract or forwarded to the Trustee to be deposited
in the Trust Fund.
Investment of Contributions is governed by the provisions of the Trust,
the Group Contract and any other funding arrangement in which the Trust Fund is
or may be invested. To the extent permitted by the Trust, Group Contract or
other funding arrangement, the parties named below shall direct the
Contributions to any of the accounts available under the Trust or Group Contract
and may request the transfer of assets resulting from those Contributions
between such accounts. A Participant may not direct the Trustee to invest the
Participant's Account in collectibles. Collectibles means any work of art, rug
or antique, metal or gem, stamp or coin, alcoholic beverage or other tangible
personal prop" specified by the Secretary of Treasury. To the extent that a
Participant does not direct the investment of his Account, such Account shall be
invested ratably in the accounts available under the Trust or Group Contract in
the same manner as the undirected Accounts of all other Participants. The Vested
Accounts of all Inactive Participants may be segregated and invested separately
from the Accounts of all other Participants.
The Trust Fund shall be valued at current fair market value as of the
last day of the last calendar month ending in the Plan Year and, at the
discretion of the Trustee, may be valued more frequently. The valuation shall
take into consideration investment earnings credited, expenses charged, payments
made and changes in the value of the assets held in the Trust Fund. The Account
of a Participant shall be credited with its share of the gains and losses of the
Trust Fund. That part of a Participant's Account invested in a funding
arrangement which establishes an account or accounts for such Participant
thereunder shall be credited with the gain or loss from such account or
accounts. That part of a Participant's Account which is invested in other
funding arrangements shall be credited with a proportionate share of the gain or
loss of such investments. The share shall be determined by multiplying the gain
or loss of the investment by the ratio of the part of the Participant's Account
invested in such funding arrangement to the total of the Trust Fund invested in
such funding arrangement.
At least annually, the Named Fiduciary shall review all pertinent
Employee information and Plan data in order to establish the funding policy of
the Plan and to determine appropriate methods of carrying out the
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Plan's objectives. The Named Fiduciary shall inform the Trustee and any
Investment Manager of the Plan's short-term and long-term financial needs so the
investment policy can be coordinated with the Plan's financial requirements.
(a) Employer Contributions other than Elective Deferral Contributions:
The Participant shall direct the investment of such Employer Contributions and
transfer of assets resulting from those Contributions.
(b) Elective Deferral Contributions: The Participant shall direct the
investment of Elective Deferral Contributions and transfer of assets resulting
from those Contributions.
(c) Rollover Contributions: The Participant shall direct the investment
of Rollover Contributions and transfer of assets resulting from those
Contributions.
However, the Named Fiduciary may delegate to the Investment Manager
investment discretion for Contributions and Plan assets which are not subject to
Participant direction. The Primary Employer shall establish rules and
regulations with respect to each Participant's individual investment direction
of his Elective Deferral Contributions and Rollover Contributions, which rules
and regulations shall apply in a uniform and nondiscriminatory manner, except to
the extent that an individual subject to Section 16 of the Securities Exchange
Act of 1934, as amended (the "1934 Act"), may have special limitations imposed
on him in order to assure that a transaction or transactions qualify for
exemption from Section 16(b) of the 1934 Act.
SECTION 4.02 SPECIAL TRANSFER RULES FOR CERTAIN PARTICIPANTS.
With respect to persons subject to Section 16 of the Securities Exchange
Act of 1934 (the "1934 Act'), transactions under this Plan are intended to
comply with all applicable conditions of Rule 16b-3 or its successors under the
1934 Act. To the extent that any provision of the Plan or action by the Plan
Administrator fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Plan Administrator.
SECTION 4.03 VOTING OF QUALIFYING EMPLOYER SECURITIES.
All voting rights on shares of Qualifying Employer Securities held in
the Trust Fund shall be exercised by the Trustee only as directed by the
Participants acting in their capacity as named fiduciaries (within the meaning
of Section 402 of the Employee Retirement Income Security Act of 1974, as
amended) in accordance with the following provisions of this Section. Voting
rights with respect to Qualifying Employer Securities held by the Trustee for
Participants as to which the Trustee receives written instructions from such
Participants shall be voted by the Trustee as directed by the Participants. At
the time of the mailing to shareholders of the notice of any shareholders'
meeting, the Trustee shall use its reasonable best efforts to cause to be
delivered to each such Participant such notices and informational statements as
are furnished to shareholders in respect of the exercise of voting rights,
together with forms by which the Participant may confidentially instruct the
Trustee, or revoke such instruction, with respect to the voting of shares of
Qualifying Employer Securities allocated to his Account. Upon timely receipt of
directions, the Trustee shall vote the Qualifying Employer Securities allocated
to a Participant's Account on each matter as directed by the Participant. The
Trustee shall vote all Qualifying Employer Securities allocated to a
Participant's Account which is not voted by the Participant, because the
Participant has not directed (or not timely directed) the Trustee as to the
manner in which such Qualifying Employer
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Securities are to be voted, in the same proportion as those shares of Qualifying
Employer Securities for which the Trustee has received proper direction on such
matter. All such voting rights instructions and the directions received by the
Trustee from a Participant shall be held in confidence by the Trustee and shall
not be divulged or released to any person, including directors, officers and
employees of the Employer.
SECTION 4.04 TENDERING SHARES OF QUALIFYING EMPLOYER SECURITIES.
Notwithstanding any provisions of the Plan, if there is a tender or
exchange offer for, or a request or invitation for tenders or exchange of,
shares of Qualifying Employer Securities held by the Trustee for Participants,
the Primary Employer shall furnish to the Trustee, who shall then furnish to
each Participant, prompt notice of any such tender or exchange offer for, or
request or invitation for tenders or exchange of, such shares of Qualifying
Employer Securities and the Trustee shall request from each Participant
instructions as to the tendering or exchange of such shares of Qualifying
Employer Securities allocated to the Participant's Account. All tender or
exchange decisions with respect to Qualifying Employer Securities held by the
Trust shall be made only by the Participants acting in their capacity as named
fiduciaries (within the meaning of Section 402 of the Employee Retirement Income
Security Act of 1974, as amended) in accordance with the following provisions of
this Section. The Trustee shall tender or exchange only such shares of
Qualifying Employer Securities for which the Trustee has received (within the
time specified in the notification) tender instructions. The Trustee shall not
tender or exchange all other shares of Qualifying Employer Securities. All other
tender instructions received by the Trustee from a Participant shall be held in
confidence by the Trustee and shall not be divulged or released to any person,
including directors, officers and employees of Employer or any person making the
offer.
SECTION 4.05 RIGHT TO DEMAND QUALIFYING EMPLOYER SECURITIES.
A Participant entitled to a distribution from his Qualifying Employer
Securities Account shall be entitled to demand that his interest in the
Qualifying Employer Securities Account be distributed to him in the form of
Qualifying Employer Securities, all subject to Section 6.04. In the event that
the Qualifying Employer Securities are not readily tradable on an established
market, the Participant shall be entitled to require that Employer repurchase
the Qualifying Employer Securities under a fair valuation formula, as provided
by governmental regulations. The Participant or Beneficiary shall be entitled to
exercise the put option described in the preceding sentence for a period of not
more than 60 days following the date of distribution of Qualifying Employer
Securities to him. If the put option is not exercised within such 60-day period,
the Participant or Beneficiary may exercise the put option during an additional
period of not more than 60 days after the beginning of the first day of the
first Plan Year following the Plan Year in which the first put option period
occurred, all as provided in regulations promulgated by the Secretary of the
Treasury.
SECTION 4.06 PUT OPTION.
If a Participant exercises a put option (as set forth in Section 4.05)
with respect to Qualifying Employer Securities that were distributed as part of
a total distribution pursuant to which a Participant's Account is distributed to
him in a single taxable year, the Employer or the Plan may elect to pay the
purchase price of the Qualifying Employer Securities over a period not to exceed
five years. Such payments shall be made in substantially equal installments not
less frequently than annually over a period beginning not later than 30 days
after the exercise of the put option. Reasonable interest shall be paid to the
Participant with respect to the unpaid balance of the purchase price and
adequate security shall be provided with respect thereto. In the event
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that a Participant exercises a put option with respect to Qualifying Employer
Securities that are distributed as part of an installment distribution, the
amount to be paid for such securities shall be paid not later than 30 days after
the exercise of the put option.
SECTION 4.07 DIVERSIFICATION REQUIREMENTS.
Each Participant who has completed at least 10 years of participation in
the Plan and has attained age 55 may elect within 90 days after the close of
each Plan Year during his "qualified election period" to direct the Plan as to
the investment of at least 25 percent of his Account which had been invested in
Qualifying Employer Securities (to the extent such percentage exceeds the amount
to which a prior election under this Section 4.07 had been made). For purposes
of this Section 4.07, the term "qualified election period" shall mean the 5-Plan
Year period beginning with the Plan Year after the Plan Year in which the
Participant attains age 55 (or, if later, beginning with the Plan Year after the
first Plan Year in which the Employee first completes at least 10 years of
participation in the Plan). In the case of the Employee who has attained age 60
and completed 10 years of participation in the prior Plan Year and in the case
of the election year in which any other Participant who has met the minimum age
and service requirements for diversification can make his last election
hereunder, he shall be entitled to direct the Plan as to the investment of at
least 50 percent of his Account which has been invested in Qualifying Employer
Securities (to the extent such percentage exceeds the amount to which a prior
election under this Section 4.07 had been made). The Plan shall make available
at least 3 investment options (not inconsistent with regulations prescribed by
the Department of Treasury) to each Participant making an election hereunder.
The Plan shall be deemed to have met the requirements of this Section if the
portion of the Participant's Account covered by the election hereunder is
distributed to the Participant or his designated Beneficiary within 90 days
after the period during which the election may be made. In the absence of such a
distribution, the Trustee shall implement the Participant's election within 90
days following the expiration of the qualified election period.
SECTION 4.08 INDEPENDENT APPRAISER.
An independent appraiser meeting the requirements of Code Section 1
70(a)(1) shall value the Qualifying Employer Securities in those Plan Years when
such securities are not readily tradable on an established securities market.
ARTICLE V
BENEFITS
SECTION 5.01 RETIREMENT BENEFITS.
On a Participant's Retirement Date, his Vested Account shall be
distributed to him according to the distribution of benefits,, provisions of
Article VI and the provisions of the SMALL AMOUNTS SECTION of Article IX.
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SECTION 5.02 DEATH BENEFITS.
If a Participant dies before his Annuity Starting Date, his Vested
Account shall be distributed according to the distribution of benefits
provisions of Article VI and the provisions of the SMALL AMOUNTS SECTION of
Article IX
SECTION 5.03 VESTED BENEFITS.
A Participant may receive a distribution of his Vested Account at any
time after he ceases to be an Employee, provided he has not again become an
Employee. If such amount is not payable under the provisions of the SMALL
AMOUNTS SECTION of Article IX, it will be distributed only if the Participant so
elects.
If a Participant does not receive an earlier distribution according to
the provisions of this section or the SMALL AMOUNTS SECTION of Article IX, upon
his Retirement Date or death, his Vested Account shall be applied according to
the provisions of the RETIREMENT BENEFITS SECTION or the DEATH BENEFITS SECTION
of Article V.
The Nonvested Account of a Participant who has ceased to be an Employee
shall remain a part of his Account until it becomes a Forfeiture; provided,
however, if the Participant again becomes an Employee so that his Vesting
Percentage can increase, the Nonvested Account may become a part of his Vested
Account.
SECTION 5.04 WHEN BENEFITS START.
Benefits under the Plan begin when a Participant retires, dies or ceases
to be an Employee, whichever applies, as provided in the preceding sections of
this article. Benefits which begin before Normal Retirement Date for a
Participant who became Totally and Permanently Disabled when he was an Employee
shall be deemed to begin because he is Totally and Permanently Disabled. The
start of benefits is subject to the qualified election procedures of Article VI.
Unless otherwise elected, benefits shall begin before the sixtieth day
following the close of the Plan Year in which the latest date below occurs:
(a) The date the Participant attains age 65 (Normal Retirement Age,
if earlier).
(b) The tenth anniversary of the Participant's Entry Date.
(c) The date the Participant ceases to be an Employee.
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 the ELECTION PROCEDURES SECTION of Article VI, shall be
deemed to be an election to defer commencement of payment of any benefit
sufficient to satisfy this section.
The Participant may elect to have his benefits begin after the latest
date for beginning benefits described above, subject to the provisions of this
section. The Participant shall make the election in writing and deliver the
signed statement of election to the Plan Administrator before Normal Retirement
Date or the date he ceases
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to be an Employee, if later. The election must describe the form of distribution
and the date the benefits will begin. The Participant shall not elect a date for
beginning benefits or a form of distribution that would result in a benefit
payable when he dies which would be more than incidental within the meaning of
governmental regulations.
Benefits shall begin by the Participant's required beginning date, as
defined in the FORM OF DISTRIBUTION SECTION of Article VI.
Contributions which are used to compute the Actual Deferral Percentage,
as defined in the EXCESS AMOUNTS SECTION of Article III, may be distributed upon
disposition by the Employer of substantially all of the assets (within the
meaning of Code Section 409(d)(2)) used by the Employer in a trade or business
or disposition by the Employer of the Employer's interest in a subsidiary
(within the meaning of Code Section 409(d)(3)) if the transferee corporation is
not a Controlled Group member, the Employee continues employment with the
transferee corporation and the transferor corporation continues to maintain the
Plan. Such distributions made after March 31, 1988, must be made in a single
sum.
SECTION 5.05 WITHDRAWAL PRIVILEGES.
A Participant who has attained age 59 1/2 may withdraw all or any
portion of his Vested Account which results from the following Contributions:
Elective Deferral Contributions
Rollover Contributions
A Participant may make only two such withdrawals in any 12-month period.
A Participant may withdraw all or any portion of his Vested Account
which results from the following Contributions
Elective Deferral Contributions
Rollover Contributions
in the event of hardship due to an immediate and heavy financial need.
Withdrawals from the Participant's Account resulting from Elective Deferral
Contributions shall be limited to the amount of the Participant's Elective
Deferral Contributions plus income allocable thereto credited to his Account as
of December 31, 1988. Immediate and heavy financial need shall be limited to:
(I) expenses incurred or necessary for medical care, described in Code Section
213(d), of the Participant, the Participant's spouse, or any dependents of the
Participant (as defined in Code Section 152); (ii) purchase (excluding mortgage
payments) of a principal residence for the Participant (iii) payment of tuition
and related educational fees for the next 12 months of post-secondary education
for the Participant, his spouse, children or dependents; (iv) the need to
prevent the eviction of the Participant from his principal residence or
foreclosure on the mortgage of the Participant's principal residence; or (v) any
other distribution which is deemed by the Commissioner of Internal Revenue to be
made on account of immediate and heavy financial need as provided in Treasury
regulations. The Participant's request for a withdrawal shall include his
written statement that an immediate and heavy financial need exists and explain
its nature.
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No withdrawal shall be allowed which is not necessary to satisfy such
immediate and heavy financial need. Such withdrawal shall be deemed necessary
only if all of the following requirements are met: (i) the distribution is not
in excess of the amount of the immediate and heavy financial need of the
Participant (including amounts necessary to pay any Federal, state or local
income taxes or penalties reasonably anticipated to result from the
distribution); (ii) the Participant has obtained all distributions, other than
hardship distributions, and all nontaxable loans currently available under all
plans maintained by the Employer, (iii) the Plan, and all other plans maintained
by the Employer, provide that the Participant's elective contributions and
employee contributions will be suspended for at least 12 months after receipt of
the hardship distribution; and (iv) the Plan, and all other plans maintained by
the Employer, provide that the Participant may not make elective contributions
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 next taxable year less the amount of such Participant's elective
contributions for the taxable year of the hardship distribution. The Plan will
suspend elective contributions and employee contributions for 12 months and
limit elective deferrals as provided in the preceding sentence. A Participant
shall not cease to be an Eligible Participant, as defined in the EXCESS AMOUNTS
SECTION of Article III, merely because his elective contributions or employee
contributions are suspended.
A request for withdrawal shall be in writing on a form furnished for
that purpose and delivered to the Plan Administrator before the withdrawal is to
occur.
A forfeiture shall not occur solely as a result of a withdrawal.
SECTION 5.06 LOANS TO PARTICIPANTS.
Loans shall be made available to all Participants on a reasonably
equivalent basis. For purposes of this section, Participant means any
Participant or Beneficiary who is an Employee. Loans shall not be made to highly
compensated employees, as defined in Code Section 414(q), in an amount greater
than the amount made available to other Participants.
No loans will be made to any shareholder-employee or owner-employee. For
purposes of this requirement, a shareholder-employee means an employee or
officer of an electing small business (Subchapter S) corporation who owns (or is
considered as owning within the meaning of 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.
A loan to a Participant shall be a Participant-directed investment of
his Account. No Account other than the borrowing Participant's Account shall
share in the interest paid on the loan or bear any expense or loss incurred
because of the loan.
The number of outstanding loans shall be limited to one. No more than
one loan will be approved for any Participant in any 12-month period. The
minimum amount of any loan shall be $1,000.00.
Loans must be adequately secured and bear a reasonable rate of interest
The amount of the loan shall not exceed the maximum amount that may be
treated as a loan under Code Section 72(p) (rather than a distribution) to the
Participant and shall be equal to the lesser of (a) or (b) below:
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(a) $50,000 reduced by the highest outstanding loan balance of loans
during the one-year period ending on the day before the new loan is made.
(b) The greater of (1) or (2), reduced by (3) below.
(1) One-half of the Participant's Vested Account
(2) $10,000.
(3) Any outstanding loan balance on the date the new loan is made.
For purposes of this maximum, a Participant's Vested Account does not include
any accumulated deductible employee contributions, as defined in Code Section
72(o)(5)(B), and all qualified employer plans, as defined in Code Section
72(p)(4), of the Employer and any Controlled Group member shall be treated as
one plan.
The foregoing notwithstanding, the amount of such loan shall not exceed
60% of the amount of the Participant's Vested Account. No collateral other than
a portion of the Participant's Vested Account (as limited above) shall be
accepted. The Loan Administrator shall determine if the collateral is adequate
for the amount of the loan requested.
Notwithstanding any other provision of this Plan, the portion of the
Participant's Vested Account used as a security interest held by the Plan by
reason of a loan outstanding to the Participant shall be taken into account for
purposes of determining the amount of the Vested Account payable at the time of
death or distribution, but only if the reduction is used as repayment of the
loan.
Each loan shall bear a reasonable fixed rate of interest to be
determined by the Loan Administrator. In determining the interest rate, the Loan
Administrator shall take into consideration fixed interest rates currently being
charged by commercial lenders for loans of comparable risk on similar terms and
for similar durations, so that the interest will provide for a return
commensurate with rates currently charged by commercial lenders for loans made
under similar circumstances. The Loan Administrator shall not discriminate among
Participants in the matter of interest rates; but loans granted at different
times may bear different interest rates in accordance with the current
appropriate standards.
The loan shall by its terms require that repayment (principal and
interest) be amortized in level payments, not less frequently than quarterly,
over a period not extending beyond five years from the date of the loan. A loan
is not subject to this five-year repayment requirement if it is used to buy any
dwelling unit, which within a reasonable time, is to be used as the principal
residence of the Participant. A maximum of ten years is permitted for the buying
of a dwelling. The "reasonable time" will be determined at the time the loan is
made. The period of repayment for any loan shall be arrived at by mutual
agreement between the Loan Administrator and the Participant.
The Participant shall make a written application for a loan from the
Plan on forms provided by the Loan Administrator. The application must specify
the amount and duration requested. No loan will be approved unless the
Participant is creditworthy. The Participant must grant authority to the Loan
Administrator to investigate the Participant's creditworthiness so that the loan
application may be properly considered.
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Information contained in the application for the loan concerning the
income, liabilities, and assets of the Participant will be evaluated to
determine whether there is a reasonable expectation that the Participant will be
able to satisfy payments on the loan as due. Additionally, the Loan
Administrator will pursue any appropriate further investigations concerning the
creditworthiness and/or credit history of the Participant to determine whether a
loan should be approved.
Each loan shall be fully documented in the form of a promissory note
signed by the Participant for the face amount of the loan, together with
interest determined as specified above.
There will be an assignment of collateral to the Plan executed at the
time the loan is made.
In those cases where repayment through payroll deduction by the Employer
is available, installments are so payable, and a payroll deduction agreement
will be executed by the Participant at the time of making the loan.
Where payroll deduction is not available, payments are to be timely
made.
Any payment that is not by payroll deduction shall be made payable to
the Employer or Trustee, as specified in the promissory note, and delivered to
the Loan Administrator, including prepayments, service fees and penalties, if
any, and other amounts due under the note.
The promissory note may provide for reasonable late payment penalties
and/or service fees. Any penalties or service fees shall be applied to all
Participants in a nondiscriminatory manner. If the promissory note so provides,
such amounts may be assessed and collected from the Account of the Participant
as part of the loan balance.
Each loan may be paid prior to maturity, in part or in full, without
penalty or service fee, except as may be set out in the promissory note.
If any amount remains unpaid for more than 31 days after due, a default
is deemed to occur.
Upon default, the Plan has the right to pursue any remedy available by
law to satisfy the amount due, along with accrued interest, including the right
to enforce its claim against the security pledged and execute upon the
collateral as allowed by law.
If any payment of principal or interest or any other amount due under
the promissory note, or any portion thereof, is not made for a period of 90
days after due, the entire principal balance whether or not otherwise then due,
shall become immediately due and payable without demand or notice, and subject
to collection or satisfaction by any lawful means, including specifically but
not limited to the right to enforce the claim against the security pledged and
to execute upon the collateral as allowed by law.
In the event of default, foreclosure on the note and attachment of
security or use of amounts pledged to satisfy the amount then due, will not
occur until a distributable event occurs in accordance with the Plan, and will
not occur to an extent greater than the amount then available upon any
distributable event which has occurred under the Plan.
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All reasonable costs and expenses, including but not limited to
attorney's fees, incurred by the Plan in connection with any default or in any
proceeding to enforce any provision of a promissory note or instrument by which
a promissory note for a Participant loan is secured, shall be assessed and
collected from the Account of the Participant as part of the loan balance.
If payroll deduction is being utilized, in the event that a
Participant's available payroll deduction amounts in any given month are
insufficient to satisfy the total amount due, there will be an increase in the
amount taken subsequently, sufficient to make up the amount that is then due. If
the subsequent deduction is also insufficient to satisfy the amount due within
31 days, a default is deemed to occur as above. If any amount remains past due
more than 90 days, the entire principal amount, whether or not otherwise then
due, along with interest then accrued and any other amount then due under the
promissory note, shall become due and payable, as above.
If the Participant ceases to be an Employee, the balance of the
outstanding loan becomes due and payable, and the Participant's Vested Account
will be used as available for distribution(s) to pay the outstanding loan. The
Participant's Vested Account will not be used to pay any amount due under the
outstanding loan before the date which is 31 days after the date he ceased to be
an Employee, and the Participant may elect to repay the outstanding loan with
interest on the day of repayment. If no distributable event has occurred under
the Plan at the time that the Participant's Vested Account would otherwise be
used under this provision to pay any amount due under the outstanding loan, this
will not occur until the time, or in excess of the extent to which, a
distributable event occurs under the Plan.
ARTICLE VI
DISTRIBUTION OF BENEFITS
SECTION 6.01 FORM OF DISTRIBUTION.
The form of benefit payable to or on behalf of a Participant is a single
sum payment. The entire interest of a Participant must be distributed no later
than the Participant's required beginning date. The Participants required
beginning date is the first day of April of the calendar year following the
calendar year in which the Participant attains age 70 1/2, unless otherwise
provided in (a), (b) or (c) below:
(a) The required beginning date for a Participant who attains age 70 1/2
before January 1, 1988, and 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) The required beginning date for a Participant who attains age 70 112
before January 1, 1988, and who is a 5-percent owner is the first day of April
of the calendar year 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.
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(c) The required beginning date of a Participant who is not a 5-percent
owner and 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)
(determined in accordance with Code Section 416 but without regard to whether
the Plan is top-heavy) at any time during the Plan Year ending with or within
the calendar year in which such owner attains age 66 1/2 or any subsequent Plan
Year.
SECTION 6.02 ELECTION PROCEDURES.
The Participant shall make any election under this section in writing.
The Plan Administrator may require such individual to complete and sign any
necessary documents as to the provisions to be made. Any election permitted
under (a) below shall be subject to the qualified election provisions of (b)
below.
(a) Death Benefits. A Participant may elect his Beneficiary.
(b) Qualified Election. The Participant may make an election at any time
during the election period. The Participant may revoke the election made (or
make a new election) at any time and any number of times during the election
period. An election is effective only if it meets the consent requirements
below.
A Participant may make an election as to death benefits at any time
before he dies.
If the Participant's Vested Account has at any time exceeded $3,500, any
benefit which is immediately distributable requires the consent of the
Participant. The consent of the Participant to a benefit which is immediately
distributable must not be made before the date the Participant is provided with
the notice of the ability to defer the distribution. Such consent shall be made
in writing. The consent shall not be made more than 90 days before the Annuity
Starting Date. The consent of the Participant shall not be required to the
extent that a distribution is required to satisfy Code Section 401(a)(9) or Code
Section 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 stock ownership plan as defined in Code Section
4975(e)(7)) within the same Controlled Group. A benefit is immediately
distributable if any part of the benefit could be distributed to the Participant
before the Participant attains the older of Normal Retirement Age or age 62.
Spousal consent is needed to name a Beneficiary other than the spouse. If the
Participant names a Beneficiary other than his spouse, the spouse has the right
to limit consent only to a specific Beneficiary. The spouse can relinquish such
right. Such consent shall be made in writing. The spouse's consent shall be
witnessed by a plan representative or notary public. The spouse's consent must
acknowledge the effect of the election, including that the spouse had the right
to limit consent only to a specific Beneficiary and that the relinquishment of
such right was voluntary. Unless the consent of the spouse expressly permits
designations by the Participant without a requirement of further consent by the
spouse, the spouse's consent must be limited to the Beneficiary, class of
Beneficiaries, or contingent Beneficiary named in the election. Spousal consent
is not required, however, if the Participant establishes to the satisfaction of
the plan representative that the consent of the spouse cannot be obtained
because there is no spouse or the spouse cannot be located. A spouse's consent
under this paragraph shall not be valid with respect to any other spouse. A
Participant may revoke a prior election without the consent of the spouse. Any
new election will require a new spousal consent, unless the consent of the
spouse expressly permits such election by the Participant
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without further consent by the spouse. A spouse's consent may be revoked at any
time within the Participant's election period.
SECTION 6.03 NOTICE REQUIREMENTS.
The Plan Administrator shall furnish to the Participant a written
explanation of the right of the Participant to defer distribution until the
benefit is no longer immediately distributable. The Plan Administrator shall
furnish the written explanation by a method reasonably calculated to reach the
attention of the Participant no less than 30 days and no more than 90 days
before the Annuity Starting Date.
SECTION 6.04 ESOP DISTRIBUTION RULES.
Notwithstanding any provision of this Article VI or of Article IV to the
contrary, the distribution of a Participant's Qualifying Employer Securities
Account (unless the Participant elects otherwise in writing) shall commence as
soon as administratively feasible as of the first Valuation Date coincident with
or next following his death, disability or termination of Service, but not later
than one year after the close of the Plan Year in which the Participant
separates from Service by reason of the attainment of his Normal Retirement
Date, disability, death or separation from Service. In addition, all
distributions hereunder shall, to the extent that the Participant's Account is
invested in Qualifying Employer Securities, be made in the form of Qualifying
Employer Securities. Fractional shares, however, may be distributed in the form
of cash.
ARTICLE VII
TERMINATION OF PLAN
The Employer expects to continue the Plan indefinitely but reserves the
right to terminate the Plan in whole or in part at any time upon giving written
notice to all parties concerned. Complete discontinuance of Contributions under
the Plan constitutes complete termination of Plan.
The Account of each Participant shall be fully (100%) vested and
nonforfeitable as of the effective date of complete termination of Plan. The
Account of each Participant who is included in the group of Participants deemed
to be affected by the partial termination of the Plan shall be fully (100%)
vested and nonforfeitable as of the effective date of the partial Plan
termination. The Participant's Account shall continue to participate in the
earnings credited, expenses charged and any appreciation or depreciation of the
Investment Fund until the Vested Account is distributed. A distribution under
this article will be a retirement benefit and shall be distributed to the
Participant according to the provisions of Article VI.
A Participant's Account which does not result from Contributions which
are used to compute the Actual Deferral Percentage, as defined in the EXCESS
AMOUNTS SECTION of Article III, may be distributed to the Participant after the
effective date of the complete or partial Plan termination. A Participant's
Account resulting from Contributions which are used to compute such percentage
may be distributed upon termination of the Plan without the establishment or
maintenance of another defined contribution plan, other than an employee 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)). Such a
distribution made after March 31, 1988, must be in a single sum.
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Upon complete termination of Plan, no more Employees shall become
Participants and no more Contributions shall be made.
The assets of this Plan shall not be paid to the Employer at any time,
except that, after the satisfaction of all liabilities under the Plan, any
assets remaining may be paid to the Employer. The payment may not be made if it
would contravene any provision of law.
ARTICLE VIII
ADMINISTRATION OF PLAN
SECTION 8.01 ADMINISTRATION.
Subject to the provisions of this article, the Plan Administrator has
complete control of the administration of the Plan. The Plan Administrator has
all the powers necessary for it to properly carry out its administrative duties.
Not in limitation, but in amplification of the foregoing, the Plan Administrator
has the power to construe the Plan and to determine all questions that may arise
under the Plan, including all questions relating to the eligibility of Employees
to participate in the Plan and the amount of benefit to which any Participant or
Beneficiary may become entitled. The Plan Administrator's decisions upon all
matters within the scope of its authority shall be final.
Unless otherwise set out in the Plan or Group Contract, the Plan
Administrator may delegate recordkeeping and other duties which are necessary
for the administration of the Plan to any person or firm which agrees to accept
such duties. The Plan Administrator shall be entitled to rely upon all tables,
valuations, certificates and reports furnished by the consultant or actuary
appointed by the Plan Administrator and upon all opinions given by any counsel
selected or approved by the Plan Administrator.
The Plan Administrator shall receive all claims for benefits by
Participants, former Participants and Beneficiaries. The Plan Administrator
shall determine all facts necessary to establish the right of any Claimant to
benefits and the amount of those benefits under the provisions of the Plan. The
Plan Administrator may establish rules and procedures to be followed by
Claimants in filing claims for benefits, in furnishing and verifying proofs
necessary to determine age, and in any other matters required to administer the
Plan.
SECTION 8.02 RECORDS.
All acts and determinations of the Plan Administrator shall be duly
recorded. All these records, together with other documents necessary for the
administration of the Plan, shall be preserved in the Plan Administrator's
custody.
Writing (handwriting, typing, printing), photostating, photographing,
microfilming, magnetic impulse, mechanical or electrical recording or other
forms of data compilation shall be acceptable means of keeping records.
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SECTION 8.03 INFORMATION AVAILABLE.
Any Participant in the Plan or any Beneficiary may examine copies of the
Plan description, latest annual report, any bargaining agreement, this Plan, the
Group Contract or any other instrument under which the Plan was established or
is operated. The Plan Administrator shall maintain all of the items listed in
this section in its office, or in such other place or places as it may designate
in order to comply with governmental regulations. These items may be examined
during reasonable business hours. Upon the written request of a Participant or
Beneficiary receiving benefits under the Plan, the Plan Administrator will
furnish him with a copy of any of these items. The Plan Administrator may make a
reasonable charge to the requesting person for the copy.
SECTION 8.04 CLAIM AND APPEAL PROCEDURES.
A Claimant must submit any required forms and pertinent information when
making a claim for benefits under the Plan.
If a claim for benefits under the Plan is denied, the Plan Administrator
shall provide adequate written notice to the Claimant whose claim for benefits
under the Plan has been denied. The notice must be furnished within 90 days of
the date that the claim is received by the Plan Administrator. The Claimant
shall be notified in writing within this initial 90-day period if special
circumstances require an extension of time needed to process the claim and the
date by which the Plan Administrator's decision is expected to be rendered. The
written notice shall be furnished no later than 180 days after the date the
claim was received by the Plan Administrator.
The Plan Administrator's notice to the Claimant shall specify the reason
for the denial; specify references to pertinent Plan provisions on which denial
is based; describe any additional material and information needed for the
Claimant to perfect his claim for benefits; explain why the material and
information is needed; inform the Claimant that any appeal he wishes to make
must be in writing to the Plan Administrator within 60 days after receipt of the
Plan Administrator's notice of denial of benefits and that failure to make the
written appeal within such 60-day period shall render the Plan Administrators
determination of such denial final, binding and conclusive.
If the Claimant appeals to the Plan Administrator, the Claimant, or his
authorized representative, may submit in writing whatever issues and comments
the Claimant, or his representative, feels are pertinent. The Claimant, or his
authorized representative may review pertinent Plan documents. The Plan
Administrator shall reexamine all facts related to the appeal and make a final
determination as to whether the denial of benefits is justified under the
circumstances. The Plan Administrator shall advise the Claimant of its decision
within 60 days of his written request for review, unless special circumstances
(such as a hearing) would make rendering a decision within the 60-day limit
unfeasible. The Claimant must be notified within the 60-day limit if an
extension is necessary. The Plan Administrator shall render a decision on a
claim for benefits no later than 120 days after the request for review is
received.
SECTION 8.05 UNCLAIMED VESTED ACCOUNT PROCEDURE.
At the time the Participant's Vested Account is distributable to the
Participant, spouse or Beneficiary without his consent according to the
provisions of Article VI or Article IX, the Plan Administrator, by certified
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or registered mail addressed to his last known address and in accordance with
the notice requirements of Article VI, will notify him of his entitlement to a
benefit. If the Participant, spouse or Beneficiary fails to claim the Vested
Account or make his whereabouts known in writing within six months from the date
of mailing the notice, the Plan Administrator may treat such unclaimed Vested
Account as a forfeiture and apply it according to the forfeiture provisions of
Article III. If Article III contains no forfeiture provisions, such amount will
be applied to reduce the earliest Employer Contributions due after the
forfeiture arises.
If a Participant's Vested Account is forfeited according to the
provisions of the above paragraph and the Participant, his spouse or his
Beneficiary at any time make a claim for benefits, the forfeited Vested Account
shall be reinstated, unadjusted for any gains or losses occurring after the date
it was forfeited. The reinstated Vested Account shall then be distributed to the
Participant, spouse or Beneficiary according to the preceding provisions of the
Plan.
SECTION 8.06 DELEGATION OF AUTHORITY.
All or any part of the administrative duties and responsibilities under
this article may be delegated by the Plan Administrator to a retirement
committee. The duties and responsibilities of the retirement committee shall be
set out in a separate written agreement.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01 AMENDMENTS.
The Employer may amend this Plan at any time, including any remedial
retroactive changes (within the specified period of time as may be determined by
Internal Revenue Service regulations) to comply with the requirements of any law
or regulation issued by any governmental agency to which the Employer is
subject. An amendment may not diminish or adversely affect any accrued interest
or benefit of Participants or their Beneficiaries or eliminate an optional form
of distribution with respect to benefits attributable to service before the
amendment nor allow reversion or diversion of Plan assets to the Employer at any
time, except as may be necessary to comply with the requirements of any law or
regulation issued by any governmental agency to which the Employer is subject.
No amendment to this Plan shall be effective to the extent that R has the effect
of decreasing a Participant's accrued benefit. However, a Participant's Account
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 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 accrued benefit will not be less than his percentage computed
under the Plan without regard to such amendment.
An amendment shall not decrease a Participant's vested interest in the
Plan. If an amendment to the Plan, or a deemed amendment in the case of a change
in top-heavy status of the Plan as provided in the MODIFICATION OF VESTING
REQUIREMENTS SECTION of Article X, changes the computation of the percentage
used to determine that portion of a Participant's Account attributable to
Employer Contributions which is nonforfeitable (whether directly or indirectly),
each Participant or former Participant
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(a) who has completed at least three Years of Service on the date the
election period described below ends (five Years of Service if the Participant
does not have at least one Hour-of-Service in a Plan Year beginning after
December 31, 1988) and
(b) whose nonforfeitable percentage will be determined on any date after
the date of the change
may elect, during the election period, to have the nonforfeitable percentage of
his Account that results from Employer Contributions determined without regard
to the amendment This election may not be revoked. An election does not need to
be provided for any Participant or former Participant whose nonforfeitable
percentage, determined according to the Plan provisions as changed, cannot at
any time be less than the percentage determined without regard to such change.
The election period shall begin no later than the date the Plan amendment is
adopted, or deemed adopted in the case of a change in the top-heavy status of
the Plan, and end no earlier than the sixtieth day after the latest of the date
the amendment is adopted (deemed adopted) or becomes effective, or the date the
Participant is issued written notice of the amendment (deemed amendment) by the
Employer or the Plan Administrator.
SECTION 9.02 DIRECT ROLLOVERS.
This section applies to distributions made on or after January 1, 1993.
Notwithstanding any provision of the Plan to the contrary that would otherwise
limit a Distributee's election under this section, a Distributee may elect, at
the time and in the manner prescribed by the Plan Administrator, to have any
portion of an Eligible Rollover Distribution paid directly to an Eligible
Retirement Plan, specified by the Distributee, in a Direct Rollover.
SECTION 9.03 MERGERS AND DIRECT TRANSFERS.
The Plan may not be merged or consolidated with, nor have its assets or
liabilities transferred to, any other retirement plan, unless each Participant
in the plan would (if the plan then terminated) receive a benefit immediately
after the merger, consolidation or transfer which is equal to or greater than
the benefit the Participant would have been entitled to receive immediately
before the merger, consolidation or transfer (if this Plan had then terminated).
The Employer may enter into merger agreements or direct transfer of assets
agreements with the employers under other retirement plans which are qualifiable
under Code Section 401 (a), including an elective transfer, and may accept the
direct transfer of plan assets, or may transfer plan assets, as a party to any
such agreement. The Employer shall not consent to, or be a party to a merger,
consolidation or transfer of assets with a defined benefit plan if such action
would result in a defined benefit feature being maintained under this Plan. The
Employer shall not consent to, or be a party to a merger, consolidation or
transfer of assets with a plan which is subject to the survivor annuity
requirements of Code Section 401 (a)(11) if such action would result in a
survivor annuity feature being maintained under the Plan.
The Plan may accept a direct transfer of plan assets on behalf of an
Eligible Employee. If the Eligible Employee is not an Active Participant when
the transfer is made, the Eligible Employee shall be deemed to be an Active
Participant only for the purpose of investment and distribution of the
transferred assets. Employer Contributions shall not be made for or allocated to
the Eligible Employee, until the time he meets all of the requirements to become
an Active Participant.
The Plan shall hold, administer and distribute the transferred assets as
a part of the Plan. The Plan shall maintain a separate account for the benefit
of the Employee on whose behalf the Plan accepted the transfer in
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order to reflect the value of the transferred assets. Unless a transfer of
assets to the Plan is an elective transfer, the Plan shall apply the optional
forms of benefit protections described in the AMENDMENTS SECTION of Article IX
to all transferred assets. A transfer is elective if (1) the transfer is.
voluntary, under a fully informed election by the Participant; (2) the
Participant has an alternative that retains his Code Section 411 (d)(6)
protected benefits (including an option to leave his benefit in the transferor
plan, if that plan is not terminating); (3) if the transferor plan is subject to
Code Sections 401 (a)(11) and 417, the transfer satisfies the applicable spousal
consent requirements of the Code; (4) the notice requirements under Code Section
417, requiring a written explanation with respect to an election not to receive
benefits in the form of a qualified joint and survivor annuity, are met with
respect to the Participant and spousal transfer election; (6) the Participant
has a right to immediate distribution from the transferor plan under provisions
in the plan not inconsistent with Code Section 401 (a); (6) the transferred
benefit is equal to the Participant's entire nonforfeitable accrued benefit
under the transferor plan, calculated to be at least the greater of the single
sum distribution provided by the transferor plan (if any) or the present value
of the Participant's accrued benefit under the transferor plan payable at the
plan's normal retirement age and calculated using an interest rate subject to
the restrictions of Code Section 417(e) and subject to the overall limitations
of Code Section 415; (7) the Participant has a 100% nonforfeitable interest in
the transferred benefit and (8) the transfer otherwise satisfies applicable
Treasury regulations.
SECTION 9.04 PROVISIONS RELATING TO THE INSURER AND OTHER PARTIES.
The obligations of an Insurer shall be governed solely by the provisions
of the Group Contract. The Insurer shall not be required to perform any act not
provided in or contrary to the provisions of the Group Contract. See the
CONSTRUCTION SECTION of this article.
Any issuer or distributor of investment contracts or securities is
governed solely by the terms of its policies, written investment contract,
prospectuses, security instruments, and any other written agreements entered
into with the Trustee.
Such Insurer, issuer or distributor is not a party to the Plan, nor
bound in any way by the Plan provisions. Such parties shall not be required to
look to the terms of this Plan, nor to determine whether the Employer, the Plan
Administrator, the Trustee, or the Named Fiduciary have the authority to act in
any particular manner or to make any contract or agreement.
Until notice of any amendment or termination of this Plan or a change in
Trustee has been received by the Insurer at its home office or an issuer or
distributor at their principal address, they are and shall be fully protected in
assuming that the Plan has not been amended or terminated and in dealing with
any party acting as Trustee according to the latest information which they have
received at their home office or principal address.
SECTION 9.05 EMPLOYMENT STATUS.
Nothing contained in this Plan gives an Employee the right to be
retained in the Employers employ or to interfere with the Employees right to
discharge any Employee.
SECTION 9.06 RIGHTS TO PLAN ASSETS.
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No Employee shall have any right to or interest in any assets of the
Plan upon termination of his employment or otherwise except as specifically
provided under this Plan, and then only to the extent of the benefits payable to
such Employee in accordance with Plan provisions.
Any final payment or distribution to a Participant or his legal
representative or to any Beneficiaries of such Participant under the Plan
provisions shall be in full satisfaction of all claims against the Plan, the
Named Fiduciary, the Plan Administrator, the Trustee, the Insurer, and the-
Employer arising under or by virtue of the Plan.
SECTION 9.07 BENEFICIARY.
Each Participant may name a Beneficiary to receive any death benefit
that may arise out of his participation in the Plan. The Participant may change
his Beneficiary from time to time. Unless a qualified election has been made,
for purposes of distributing any death benefits before Retirement Date, the
Beneficiary of a Participant shall be the Participant's spouse. The
Participant's Beneficiary designation and any change of Beneficiary shall be
subject to the provisions of the ELECTION PROCEDURES SECTION of Article VI. It
is the responsibility of the Participant to give written notice to the Insurer
of the name of the Beneficiary on a form furnished for that purpose.
With the Employees consent, the Plan Administrator may maintain records
of Beneficiary designations for Participants before their Retirement Dates. In
that event, the written designations made by Participants shall be filed with
the Plan Administrator. If a Participant dies before his Retirement Date, the
Plan Administrator shall certify to the Insurer the Beneficiary designation on
its records for the Participant.
If, at the death of a Participant, there is no Beneficiary named or
surviving, any death benefit under the Group Contract shall be paid under the
applicable provisions of the Group Contract.
SECTION 9.08 NONALIENATION OF BENEFITS.
Benefits payable under the Plan are not subject to the claims of any
creditor of any Participant, Beneficiary or spouse. A Participant, Beneficiary
or spouse does not have any rights to alienate, anticipate, commute, pledge,
encumber or assign any of such benefits, except in the case of a loan as
provided in the LOANS TO PARTICIPANTS' SECTION of Article V. The preceding
sentences shall also apply to the creation, assignment, or recognition of a
right to any benefit payable with respect to a Participant according to a
domestic relations order, unless such order is determined by the Plan
Administrator to be a qualified domestic relations order, as defined in Code
Section 414(p), or any domestic relations order entered before January 1, 1985.
SECTION 9.09 CONSTRUCTION.
The validity of the Plan or any of its provisions is determined under
and construed according to Federal law and, to the extent permissible, according
to the laws of the state in which the Employer has its principal office. In case
any provision of this Plan is held illegal or invalid for any reason, such
determination shall not affect the remaining provisions of this Plan, and the
Plan shall be construed and enforced as if the illegal or invalid provision had
never been included.
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In the event of any conflict between the provisions of the Plan and the
terms of any contract or policy issued hereunder, the provisions of the Plan
control the operation and administration of the Plan.
SECTION 9.10 LEGAL ACTIONS.
The Plan, the Plan Administrator, the Trustee and the Named Fiduciary
are the necessary parties to any action or proceeding involving the assets held
with respect to the Plan or administration of the Plan or Trust. No person
employed by the Employer, no Participant, former Participant or their
Beneficiaries or any other person having or claiming to have an interest in the
Plan is entitled to any notice of process. A final judgment entered in any such
action or proceeding shall be binding and conclusive on all persons having or
claiming to have an interest in the Plan.
SECTION 9.11 SMALL AMOUNTS.
If the Vested Account of a Participant has never exceeded $3,500, the
entire Vested Account shall be payable in a single sum as of the earliest of his
Retirement Date, the date he dies, or the date he ceases to be an Employee for
any other reason. This is a small amounts payment. If a small amount is payable
as of the date the Participant dies, the small amounts payment shall be made to
the Participant's Beneficiary. If a small amount is payable while the
Participant is living, the small amounts payment shall be made to the
Participant. The small amounts payment is in full settlement of all benefits
otherwise payable.
No other small amounts payments shall be made.
SECTION 9.12 WORD USAGE.
The masculine gender, where used in this Plan, shall include the
feminine gender and the singular words as used in this Plan may include the
plural, unless the context indicates otherwise.
SECTION 9.13 TRANSFERS BETWEEN PLANS.
If an Employee previously participated in another plan of the Employer
which credited service under the elapsed time method for any purpose which under
this Plan is determined using the hours method, then the Employee's service
shall be equal to the sum of (a), (b) and (c) below:
(a) The number of whole years of service credited to him under the other
plan as of the date he became an Eligible Employee under this Plan.
(b) One year or a part of a year of service for the applicable service
period in which he became an Eligible Employee if he is credited with the
required number of Hours-of-Service. If the Employer does not have sufficient
records to determine the Employee's actual Hours-of-Service in that part of the
service period before the date he became an Eligible Employee, the
Hours-of-Service shall be determined using an equivalency. For any month in
which he would be required to be credited with one Hour-of-Service, the Employee
shall be deemed for purposes of this section to be credited with 190
Hours-of-Service.
(c) The Employee's service determined under this Plan using the hours
method after the end of the applicable service period in which he became an
Eligible Employee.
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If an Employee previously participated in another plan of the Employer
which credited service under the hours method for any purpose which under this
Plan is determined using the elapsed time method, then the Employee's service
shall be equal to the sum of (d), (e) and (f) below:
(d) The number of whole years of service credited to him under the other
plan as of the beginning of the applicable service period under that plan in
which he became an Eligible Employee under this Plan.
(e) The greater of (1) the service that would be credited to him for
that entire service period using the elapsed time method or (2) the service
credited to him under the other plan as of the date he became an Eligible
Employee under this Plan.
(f) The Employee's service determined under this Plan using the elapsed
time method after the end of the applicable service period under the other plan
in which he became an Eligible Employee.
Any modification of service contained in this Plan shall be applicable
to the service determined pursuant to this section.
If the Employee previously participated in the plan of a Controlled
Group member which credited service under a different method than is used in
this Plan, for purposes of determining eligibility and vesting the provisions
above shall apply as though the plan of the Controlled Group member were a plan
of the Employer,
SECTION 9.14 QUALIFICATION OF PLAN.
The Employer intends to apply for an advance determination letter from
the Internal Revenue Service for the initial qualification of the Plan, and the
determination of the exempt status of the Trust.
If this Plan is denied initial qualification, it will terminate. The
Employer shall give written notice to the Trustee and Insurer of the denial in
sufficient time so the assets resulting from Contributions which were
conditioned on initial qualification of the Plan may be returned within one year
after the date of denial, but only if the application for the qualification is
made by the time prescribed by law for filing the Employees return for the
taxable year in which the Plan is adopted, or such later date as the Secretary
of the Treasury may prescribe. The Employer shall notify the Insurer that the
Group Contract is to be terminated. The Plan assets which result from Employer
Contributions shall be returned to the Employer. The Trustee, the Plan
Administrator and the Named Fiduciary shall then be discharged from all
obligations under the Plan and the Insurer shall be discharged from all
obligations under the Group Contract. A Participant or Beneficiary shall not
have any right or claim to the assets or to any benefit under this Plan before
the Internal Revenue Service determines that the Plan and Trust qualify under
the provisions of Code Section 401 (a).
SECTION 9.15 WAIVER OF 30-DAY NOTICE.
If a distribution is one to which Sections 401 (a)(11) and 417 of the
Code do not apply, such distribution may commence less than 30 days after the
notice required under section 1.411(a)-11(c) of the Income Tax Regulations is
given, provided that: (1) 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 particular distribution option), and (2) the Participant,
after receiving the notice, affirmatively elects a distribution.
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ARTICLE X
TOP-HEAVY PLAN REQUIREMENTS
SECTION 10.01 APPLICATION.
The provisions of this article shall supersede all other provisions in
the Plan to the contrary.
For the purpose of applying the Top-heavy Plan requirements of this
article, all members of the Controlled Group shall be treated as one Employer.
The term Employer as used in this article shall be deemed to include all members
of the Controlled Group unless the term as used clearly indicates only the
Employer is meant.
The accrued benefit or account of a participant which results from
deductible voluntary contributions shall not be included for any purpose under
this article.
The minimum vesting and contribution provisions of the MODIFICATION OF
VESTING REQUIREMENTS and MODIFICATION OF CONTRIBUTIONS SECTIONS of Article X
shall not apply to any Employee who is included in a group of Employees covered
by a collective bargaining agreement which the Secretary of Labor finds to be a
collective bargaining agreement between employee representatives and one or more
employers, including the Employer, if there is evidence that retirement benefits
were the subject of good faith bargaining between such representatives. For this
purpose, the term "employee representatives" does not include any organization
more than half of whose members are employees who are owners, officers, or
executives.
SECTION 10.02 DEFINITIONS.
The following terms are defined for purposes of this article.
Aggregation Group means
(a) each of the Employers retirement plans in which a Key Employee is a
participant during the Year containing the Determination Date or one of the four
preceding Years,
(b) each of the Employer's other retirement plans which allows the
plan(s) described in (a) above to meet the nondiscrimination requirement of Code
Section 401(a)(4) or the minimum coverage requirement of Code Section 410, and
(c) any of the Employer's other retirement plans not included in (a) or
(b) above which the Employer desires to include as part of the Aggregation
Group. Such a retirement plan shall be included only if the Aggregation Group
would continue to satisfy the requirements of Code Section 401 (a)(4) and Code
Section 410.
The plans in (a) and (b) above constitute the "required" Aggregation
Group. The plans in (a), (b) and (c) above constitute the "permissive
Aggregation Group.
Compensation means, as to an Employee for any period, compensation as
defined in the
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CONTRIBUTION LIMITATION SECTION of Article Ill. For purposes of determining who
is a Key Employee, Compensation shall include, in addition to compensation as
defined in the CONTRIBUTION LIMITATION SECTION of Article III, elective
contributions. Elective contributions are amounts excludable from the Employee's
gross income under Code Sections 125, 402(a)(8), 402(h) or 403(b), and
contributed by the Employer, at the Employee's election, to a Code Section
401(k) arrangement, a simplified employee pension, cafeteria plan or
tax-sheltered annuity.
Determination Date means as to this Plan for any Year, the last day of
the preceding Year. However, if there is no preceding Year, the Determination
Date is the last day of such Year.
Key Employee means any Employee or former Employee (including
Beneficiaries of deceased Employees) who at any time during the determination
period was
(a) One of the Employer's officers (subject to the maximum below) whose
Compensation (as defined in this section) for the Year exceeds 50 percent of the
dollar limitation under Code Section 415(b)(1)(A),
(b) one of the ten Employees who owns (or is considered to own, under
Code Section 318) more than a half percent ownership interest and one of the
largest interests in the Employer during any Year of the determination period if
such person's Compensation (as defined in this section) for the Year exceeds the
dollar limitation under Code Section 415(c)(1)(A),
(c) a five-percent owner of the Employer, or
(d) a one-percent owner of the Employer whose Compensation (as defined
in this section) for the Year is more than $150,000.
Each member of the Controlled Group shall be treated as a separate
employer for purposes of determining ownership in the Employer.
The determination period is the Year containing the Determination Date
and the four preceding Years. If the Employer has fewer than 30 Employees, no
more than three Employees shall be treated as Key Employees because they are
officers. If the Employer has between 30 and 500 Employees, no more than ten
percent of the Employees. Employees (if not an integer, increased to the next
integer) shall be treated as Key Employees because they are officers. In no
event will more than 50 Employees be treated as Key Employees because they are
officers if the Employer has 500 or more Employees. The number of Employees for
any Plan Year is the greatest number of Employees during the determination
period. Officers who are employees described in Code Section 414(q)(8) shall be
excluded. If the Employer has more than the maximum number of officers to be
treated as Key Employees, the officers shall be ranked by amount of annual
Compensation (as defined in this section), and those with the greater amount of
annual Compensation during the determination period shall be treated as Key
Employees. To determine the ten Employees owning the largest interests in the
Employer, if more than one -Employee has the same ownership interest, the
Employee(s) having the greater annual Compensation shall be treated as owning
the larger interest(s). The determination of who is a Key Employee shall be made
according to Code Section 416(i)(1) and the regulations thereunder.
Non-key Employee means a person who is a non-key employee within the
meaning of Code Section 416 and regulations thereunder.
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Present Value means the present value of a participant's accrued benefit
under a defined benefit plan as of his normal retirement age (attained age if
later) or, if the plan provides non-proportional subsidies, the age at which the
benefit is most valuable. The accrued benefit of any Employee (other than a Key
Employee) shall be determined under the method which is used for accrual
purposes for all plans of the Employer or if there is no one method which is
used for accrual purposes for all plans of the Employer, as if such benefit
accrued not more rapidly than the slowest accrual rate permitted under Code
Section 411(b)(1)(C). For purposes of establishing Present Value, any benefit
shall be discounted only for 7.5% interest and mortality according to the 1971
Group Annuity Table (Male) without the 7% margin but with projection by Scale E
from 1971 to the later of (a) 1974, or (b) the year determined by adding the age
to 1920, and wherein for females the male age six years younger is used. If the
Present Value of accrued benefits is determined for a participant under more
than one defined benefit plan included in the Aggregation Group, all such plans
shall use the same actuarial assumptions to determine the Present Value.
Top-heavy Plan means a plan which is a top-heavy plan for any plan year
beginning after December 31, 1983. This Plan shall be a Top-heavy Plan if
(a) the Top-heavy Ratio for this Plan alone exceeds 60 percent and this
Plan is not part of any required Aggregation Group or permissive Aggregation
Group.
(b) this Plan is a part of a required Aggregation Group, but not part of
a permissive Aggregation Group, and the Top-heavy Ratio for the required
Aggregation Group exceeds 60 percent.
(c) this Plan is a part of a required Aggregation Group and part of a
permissive Aggregation Group and the Top-heavy Ratio for the permissive
Aggregation Group exceeds 60 percent.
Top-heavy Ratio means the ratio calculated below for this Plan or for
the Aggregation Group.
(a) If the Employer maintains one or more defined contribution plans
(including any simplified employee pension plan) and the Employer has not
maintained any defined benefit plan which during the five-year period ending on
the determination date has or has had accrued benefits, the Top-heavy Ratio for
this Plan alone or for the required or permissive Aggregation Group as
appropriate is a fraction, the numerator of which is the sum of the account
balances of all Key Employees as of the determination date and the denominator
of which is the sum of all account balances of all employees as of the
determination date. Both the numerator and denominator of the Top-heavy Ratio
are adjusted for any distribution of an account balance (including those made
from terminated plan(s) of the Employer which would have been part of the
required Aggregation Group had such plan(s) not been terminated) made in the
five-year period ending on the determination date. Both the numerator and
denominator of the Top-heavy Ratio are increased to reflect any contribution not
actually made as of the Determination Date, but which is required to be taken
into account on that date under Code Section 416 and the regulations thereunder.
(b) If the Employer maintains one or more defined contribution plans
(including any simplified employee pension plan) and the Employer maintains or
has maintained one or more defined benefit plans which during the five-year
period ending on the determination date has or has had accrued benefits, the
Top-heavy Ratio for any required or permissive Aggregation Group as appropriate
is a fraction, the numerator of which is the sum of the account balances under
the defined contribution plan(s) of all Key Employees and the
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Present Value of accrued benefits under the defined benefit plan(s) for all Key
Employees, and the denominator of which is the sum of the account balances under
the defined contribution plan(s) for all employees and the Present Value of
accrued benefits under the defined benefit plans for all employees. Both the
numerator and denominator of the Top-heavy Ratio are adjusted for any
distribution of an account balance or an accrued benefit (including those made
from terminated plan(s) of the Employer which would have been part of the
required Aggregation Group had such plan(s) not been terminated) made in the
five-year period ending on the determination date.
(c) For purposes of (a) and (b) above, the value of account balances and
the Present Value of accrued benefits will be determined as of the most recent
valuation date that falls within or ends with the 12-month period ending on the
determination date, except as provided in Code Section 416 and the regulations
thereunder for the first and second plan years of a defined benefit plan. The
account balances and accrued benefits of an employee who is not a Key Employee
but who was a Key Employee in a prior year will be disregarded. The calculation
of the Top-heavy Ratio and the extent to which distributions, rollovers and
transfers during the five-year period ending on the determination date are to be
taken into account, shall be determined according to the provisions of Code
Section 416 and regulations thereunder. The account balances and accrued
benefits of an individual who has performed no service for the Employer during
the five-year period ending on the determination date shall be excluded from the
Top-heavy Ratio until the time the individual again performs service for the
Employer. Deductible employee contributions will not be taken into account for
purposes of computing the Top-heavy Ratio. When aggregating plans, the value of
account balances and accrued benefits will be calculated with reference to the
determination dates that fall within the same calendar year.
Account, as used in this definition, means the value of an employee's
account under one of the Employers retirement plans on the latest valuation
date. In the case of a money purchase plan or target benefit plan, such value
shall be adjusted to include any contributions made for or by the employee after
the valuation date and on or before such determination date or due to be made as
of such determination date but not yet forwarded to the insurer or trustee. In
the case of a profit sharing plan, such value shall be adjusted to include any
contributions made for or by the employee after the valuation date and on or
before such determination date. During the first Year of any profit sharing plan
such adjustment in value shall include contributions made after such
determination date that are allocated as of a date in such Year. The
nondeductible employee contributions which an employee makes under a defined
benefit plan of the Employer shall be treated as if they were contributions
under a separate defined contribution plan.
Valuation Date means, as to this Plan, the last day of the last calendar
month ending in a Year.
Year means the Plan Year unless another year is specified by the
Employer in a separate written resolution in accordance with regulations issued
by the Secretary of the Treasury or his delegate.
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SECTION 10.03 MODIFICATION OF VESTING REQUIREMENTS.
If a Participant's Vesting Percentage determined under Article I is not
at least as great as his Vesting Percentage would be if it were determined under
a schedule permitted in Code Section 416, the following shall apply. During any
Year in which the Plan is a Top-heavy Plan, the Participant's Vesting Percentage
shall be the greater of the Vesting Percentage determined under Article I or the
schedule below.
VESTING
PERCENTAGE NONFORFEITABLE
(whole years) PERCENTAGE
------------- --------------
Less than 2 0
2 20
3 40
4 60
5 80
6 or more 100
The schedule above shall not apply to Participants who are not credited
with an Hour-of-Service after the Plan first becomes a Top-heavy Plan. The
Vesting Percentage determined above applies to all of the Participant's Account
resulting from Employer Contributions, including Contributions the Employer
makes before the TEFRA Compliance Date or when the Plan is not a Top-heavy Plan.
If, in a later Year, this Plan is not a Top-heavy Plan, a Participant's
Vesting Percentage shall be determined under Article I. A Participant's Vesting
Percentage determined under either Article I or the schedule above shall never
be reduced and the election procedures of the AMENDMENTS SECTION of Article IX
shall apply when changing to or from the schedule as though the automatic change
were the result of an amendment.
The part of the Participant's Vested Account resulting from the minimum
contributions required pursuant to the MODIFICATION OF CONTRIBUTIONS SECTION of
Article X shall not be forfeited because of a period of reemployment after
benefit payments have begun.
SECTION 10.04 MODIFICATION OF CONTRIBUTIONS.
For any Plan Year in which the Plan is top-heavy, only the first
$200,000 of a Participant's annual compensation shall be taken into account for
purposes of determining Employer Contributions under the Plan. This limitation
shall be adjusted by the Secretary at the same time and in the same manner as
under Code Section 415(d), except that the dollar increase in effect on January
1 of any calendar year is effective for years beginning in such calendar year
and the first adjustment to the $200,000 limitation is effected on January 1,
1990. If the Plan determines Compensation, as defined in this article, on a
period of time that contains fewer than 12 months, then the annual compensation
limit is an amount equal to the annual compensation limit for the calendar year
in which the period begins multiplied by the ratio obtained by dividing the
number of full months in the period by 12. In determining the Compensation, as
defined in this article, of a Participant for purposes of this limitation, the
rules of Code Section 414(q)(6) shall apply, except that in applying such rules,
the term "family" shall include only the spouse of,the Participant and any
lineal descendants of the Participant
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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
the limitation shall be prorated among the affected individuals in proportion to
each such individual's Compensation as determined under the definition in this
article prior to the application of this limitation.
During any Year in which this Plan is a Top-heavy Plan, the Employer
shall make a minimum contribution or allocation on the last day of the Year for
each person who is a Non-key Employee on that day and who either was or could
have been an Active Participant during the Year. A Non-key Employee is not
required to have a minimum number of hours-of-service or minimum amount of
Compensation, or to have to this minimum. The minimum contribution or allocation
for such person shall be equal to the lesser of (a) or (b) below:
(a) Three percent of such person's Compensation (as defined in this
article).
(b) The "highest percentage" of Compensation (as defined in this
article) for such Year at which the Employer's contributions are made for or
allocated to any Key Employee. The highest percentage shall be determined by
dividing the Employer Contributions made for or allocated to each Key Employee
during such Year by the amount of his Compensation (as defined in this article),
which is not more than the maximum set out above, and selecting the greatest
quotient (expressed as a percentage). To determine the highest percentage, all
of the Employees defined contribution plans within the Aggregation Group shall
be treated as one plan. The provisions of this paragraph shall not apply if this
Plan and a defined benefit plan of the Employer are required to be included in
the Aggregation Group and this Plan enables the defined benefit plan to meet the
requirements of Code Section 401(a)(4) or Code Section 410.
If the Employer's contributions and allocations otherwise required under
the defined contribution plan(s) are at least equal to the minimum above, no
additional contribution or reallocation shall be required. If the Employees
contributions and allocations are less than the minimum above and Employer
Contributions under this Plan are allocated to Participants, any Employer
Contributions (other than those which are allocated on the basis of the amount
made for such person) shall be reallocated to provide the minimum. The remaining
Contributions shall be allocated as provided in the preceding articles of this
Plan taking into account any amount which was reallocated to provide the
minimum. If the Employer's total contributions and allocations are less than the
minimum above after any reallocation provided above, the Employer shall
contribute the difference for the Year.
The minimum contribution or allocation applies to all of the Employees
defined contribution plans in the aggregate which are Top-heavy Plans. If an
additional contribution or allocation is required to meet the minimum above, it
shall be provided in this Plan.
A minimum allocation under a profit sharing plan shall be made without
regard to whether or not the Employer has profits.
If a person who is otherwise entitled to a minimum contribution or
allocation above is also covered under a defined benefit plan of the Employees
which is a Top-heavy Plan during that same Year, the minimum benefits for him
shall not be duplicated. The defined benefit plan shall provide an annual
benefit for him on, or adjusted to, a straight life basis of the lesser of (c)
two percent of his average pay multiplied by his years of service or (d) twenty
percent of his average pay. Average pay and years of service shall have the
meaning set forth in such defined benefit plan for this purpose.
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For purposes of this section, any employer contribution made according
to a salary reduction or similar arrangement shall not apply before the first
Yearly Date in 1985. On and after the first Yearly Date in 1989, any such
employer contributions and employer contributions which are matching
contributions, as defined in Code Section 401 (m), shall not apply in
determining if the minimum contribution requirement has been met, but shall
apply in determining the minimum contribution required. Forfeitures credited to
a Participant's Account are treated as employer contributions.
The requirements of this section shall be met without regard to
contributions under Chapter 2 of the Code (relating to tax on self-employment),
Chapter 21 of the Code (relating to Federal Insurance Contributions Act), Title
11 of the Social Security Act or any other Federal or state law.
SECTION 10.05 MODIFICATION OF CONTRIBUTION LIMITATION.
If the provisions of subsection (e) of the CONTRIBUTION LIMITATION
SECTION of Article III are applicable for any Limitation Year during which this
Plan is a Top-heavy Plan, the benefit limitations shall be modified. The
definitions of Defined Benefit Plan Fraction and Defined Contribution Plan
Fraction in the CONTRIBUTION LIMITATION SECTION of Article III shall be modified
by substituting "1.0" in lieu of "1.25." The optional denominator for
determining the Defined Contribution Plan Fraction shall be modified by
substituting '341,500" in lieu of "$51,875." In addition, an adjustment shall be
made to the numerator of the Defined Contribution Plan Fraction. The adjustment
is a reduction of that numerator similar to the modification of the Defined
Contribution Plan Fraction described in the CONTRIBUTION LIMITATION SECTION of
Article III, and shall be made with respect to the last Plan Year beginning
before January 1, 1984.
The modifications in the paragraph above shall not apply with respect to
a Participant so long as employer contributions, forfeitures or nondeductible
employee contributions are not credited to his account under this or any of the
Employees other defined contribution plans and benefits do not accrue for such
Participant under the Employees defined benefit plan(s), until the sum of his
Defined Contribution and Defined Benefit Plan Fractions is less than 1.0.
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By executing this Plan. the Primary Employer acknowledges
having counseled to the extent necessary with selected legal and tax advisors
regarding the Plan's legal and tax implications.
D & N BANK, A FEDERAL SAVINGS BANK
By:
----------------------------------
----------------------------------
Title
62
<PAGE> 1
EXHIBIT 5
April 15, 1998
Board of Directors
D&N Financial Corporation
D&N Capital Corporation
400 Quincy Street
Hancock, Michigan 49930
Members of the Board:
We have acted as counsel to D&N Financial Corporation (the "Company")
and D&N Capital Corporation ("Capital") in connection with the preparation and
filing with the Securities and Exchange Commission of a registration statement
on Form S-8 under the Securities Act of 1933 (the "Registration Statement")
relating to 160,000 shares of the Company's Common Stock, par value $.01 per
share (the "Common Stock"), and 20,000 shares of Capital's Preferred Stock, par
value $25 per share ("Capital Preferred Stock"), to be offered pursuant to the
D&N Bank 401(k) Plan & Trust (the "Plan"), and related interests in the Plan.
In this connection, we have reviewed originals or copies, certified or
otherwise identified to our satisfaction, of the Company's and Capital's
Certificates of Incorporation, Bylaws, resolutions of Board of Directors and
such other documents and corporate records as we deem appropriate for the
purpose of rendering this opinion.
Based upon the foregoing, it is our opinion that the shares of Common
Stock and Capital Preferred Stock to be offered by the Company and Capital will
be, when and if issued, sold and paid for as contemplated by the Plan, legally
issued, fully paid and non-assessable shares of Common Stock of the Company and
Preferred Stock of Capital, respectively.
We hereby consent to the inclusion of our opinion as Exhibit 5 of this
Registration Statement. In giving this consent, we do not admit that we are
within the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
/s/ Silver, Freedman & Taff, L.L.P.
SILVER, FREEDMAN & TAFF, L.L.P.
<PAGE> 1
EXHIBIT 23.2
[FORM OF INDEPENDENT AUDITORS' CONSENT]
We consent to the incorporation by reference in this Registration
Statement of D&N Financial Corporation and D&N Capital Corporation on Form S-8
of our report dated January 22, 1998 on our audits of the financial statements
of D&N Financial Corporation and Subsidiary as of December 31, 1997 and 1996 and
for each of the three years in the period ended December 31, 1997 and our
report dated January 22, 1998 on our audit of the financial statements of D&N
Capital Corporation as of December 31, 1997 and for the year then ended.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Detroit, Michigan
April 15, 1998
