<PAGE> 1
<TABLE>
<S><C>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 1, 1997 REGISTRATION NO.
-------------- ------------
_________________________________________________________________________________________________________
</TABLE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________
FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
___________________
CAPITOL BANCORP LTD.
(Exact name of Registrant as specified in its charter)
MICHIGAN 38-2761672
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ONE BUSINESS AND TRADE CENTER
200 WASHINGTON SQUARE NORTH
LANSING, MICHIGAN 48933
(Address of Principal executive offices) (Zip Code)
CAPITOL BANCORP, LTD.
EMPLOYEE SAVINGS AND STOCK OWNERSHIP PLAN
(Full title of the plan)
JOSEPH D. REID, CHAIRMAN AND CEO
ONE BUSINESS AND TRADE CENTER
200 WASHINGTON SQUARE NORTH
LANSING, MI 48933
(Name and address of agent for service)
517/487-6555
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Proposed Proposed
Amount Maximum Maximum Amount of
Title of Securities to be Offering Price Aggregate Registration
to be Registered Registered Per Share Offering Price Fee
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
Common Shares 100,000 Sh (1)(2) $17.625* $1,762,500* $534.09*
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) In addition, pursuant to Rule 416(c) under the Securities Act of 1933,
this Registration Statement also covers an indeterminate amount of interests
to be offered or sold pursuant to the employee benefit plan described herein.
(2) Subject to adjustment for stock splits and similar events.
*The registration fee has been calculated pursuant to Rule 457(h), based on the
average of the high and low prices of the shares on June 26, 1997 as reported
on the Nasdaq National Market.
<PAGE> 2
PART I
Information Required In the Section 10(a) Prospectus
Item 1. Plan Information.*
Item 2. Registrant Information and Employee Plan Annual Information.*
*The document(s) containing the information specified in Part I of
Form S-8 will be sent or given to participants as specified by Rule 428(b)(1)
promulgated by the Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "Securities Act"). Such document(s)
are not being filed with the SEC, but constitute (along with the documents
incorporated by reference into the Registration Statement pursuant to Item 3 of
Part II hereof) a prospectus that meets the requirements of Section 10(a) of
the Securities Act.
PART II
Information Required In the Registration Statement
Item 3. Incorporation of Documents by Reference.
The following documents filed by Capitol Bancorp Ltd. (the "Company")
and the Capitol Bancorp, Ltd. Employee Savings and Stock Ownership Plan (the
"Plan") with the SEC are incorporated in and made a part of this Registration
Statement by reference, except to the extent that any statement or information
therein is modified, superseded or replaced by a statement or information
contained in any other subsequently filed document incorporated herein by
reference:
(a) The Company's and the Plan's latest annual report filed
pursuant to Section 13(a) or 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and, in the case
of the Company, the latest prospectus filed pursuant to Rule
424(b) under the Securities Act, which contains audited
financial statements for the Company's latest fiscal year for
which such statements have been filed or the Company's
effective registration statement on Form 10 or 20F filed under
the Exchange Act containing audited financial statements for
the Company's last fiscal year.
(b) All other reports, by the Company or the Plan filed pursuant
to Section 13(a) or 15(d) of the Exchange Act since the end of
the fiscal year covered by the registration document referred
to in (a) above.
(c) If the class of securities to be offered is registered under
Section 12 of the Exchange Act, the description of that class
of securities which is contained in a registration statement
filed under the Exchange Act, including any amendment or
report filed for the purpose of updating that description.
<PAGE> 3
All reports and other documents subsequently filed by the Company or
the Plan pursuant to Sections 13(a) and (c), 14 and 15(d) of the Exchange Act,
prior to the filing of a post-effective amendment which indicates that all
securities offered hereby have been sold or which deregisters all securities
remaining unsold, shall be deemed to be incorporated by reference herein and to
be a part hereof from the date of the filing of such reports and documents.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
The bylaws of the Registrant provide that the Registrant shall
indemnify to the full extent permitted by law, any person who is made, or
threatened to be made, a party to any action, suit or proceeding, including
those brought by or in the right of the Registrant, (whether civil, criminal,
administrative or investigative) by reason of the fact that he is or was a
director, officer, employee or agent of the Registrant or serves or served any
other enterprise at the request of the Registrant.
The Registrant's articles of incorporation also provide that a
director of the Registrant shall not be personally liable to the Registrant or
its shareholders for monetary damages for breach of the director's fiduciary
duty. However, it does not eliminate or limit the liability of a director for
any of the following: (1) a breach of the director's duty of loyalty to the
Registrant or its shareholders, (2) acts or omissions not in good faith or that
involve intentional misconduct or a knowing violation of law, (3) a violation
of Section 551(l) of the Michigan Business Corporation Act, or (4) a
transaction from which the director derived an improper personal benefit.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
The Exhibits to this Registration Statement are listed in the Exhibit
Index of this Registration Statement, which Index is incorporated herein by
reference.
The Registrant will submit the Plan, attached as Exhibit 4, to the
Internal Revenue Service ("IRS") in a timely manner and will make all changes
required by the IRS in order to qualify the Plan.
<PAGE> 4
Item 9. Undertakings.
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
Registration Statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in the
registration statement or any material change to such information in the
registration statement.
provided, however, that paragraphs (A)(1)(i) and (A)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in the periodic reports filed by the Registrant
pursuant to Section 13 or 15(d) of the Exchange Act, as amended, that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective amendment shall be deemed
to be a new Registration Statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
B. The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Exchange Act, as amended, (and, where applicable, each filing of the Plan's
annual report pursuant to Section 15(d) of the Exchange Act, as amended) that
is incorporated by reference in the Registration Statement shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
C. The undersigned registrant hereby undertakes to deliver or
cause to be delivered with the prospectus, to each person to whom the
prospectus is sent or given, the latest annual report to security holders that
is incorporated by reference in the prospectus and furnished pursuant to and
meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities
<PAGE> 5
Exchange Act of 1934; and, where interim financial information required to be
presented by Article 3 of Regulation S-X are not set forth in the prospectus,
to deliver, or cause to be delivered to each person to whom the prospectus is
sent or given, the latest quarterly report that is specifically incorporated by
reference in the prospectus to provide such interim financial information.
D. Insofar as indemnification for liabilities arising under the
Securities Act, may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the SEC such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer, or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act of
1933, as amended, the Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-8 and has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Lansing, State of
Michigan, on May 6, 1997.
CAPITOL BANCORP LTD.
By: /s/ Joseph D. Reid
---------------------------
Joseph D. Reid
Chairman and CEO
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed by the following persons
in the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Joseph D. Reid Chairman of the Board, President and 5/6/97
----------------------------------- Chief Executive Officer, Chairman of
Joseph D. Reid the Board of the Corporation's
subsidiaries and Director (Principal
Executive Officer)
</TABLE>
<PAGE> 6
<TABLE>
<S> <C> <C>
/s/ Robert C. Carr Treasurer and Executive Vice President 5/6/97
---------------------------------- and Director
Robert C. Carr
/s/ David O'Leary Secretary and Director 5/6/97
-----------------------------------
David O'Leary
/s/ Louis G. Allen Director 5/6/97
----------------------------------
Louis G. Allen
/s/ Lee W. Hendrickson Vice President and Chief Financial 6/25/97
----------------------------- Officer (Principal Financial Officer)
Lee W. Hendrickson
/s/ Paul R. Ballard Executive Vice President 5/6/97
---------------------------------- and Director
Paul R. Ballard
/s/ David L. Becker Director 5/6/97
----------------------------------
David L. Becker
/s/ Douglas E. Crist Director 5/6/97
--------------------------
Douglas E. Crist
/s/ Richard G. Dorner Director 5/6/97
----------------------------------
Richard G. Dorner
/s/ Gary A. Falkenberg Director 5/6/97
-----------------------------
Gary A. Falkenberg
</TABLE>
<PAGE> 7
<TABLE>
<S> <C> <C>
Director
---------------------------------- __/__/97
Joel I. Ferguson
/s/ Kathleen A. Gaskin Director 5/6/97
------------------------------
Kathleen A. Gaskin
/s/ H. Nicholas Genova Director 5/6/97
----------------------------
H. Nicholas Genova
/s/ Lewis D. Johns Director 5/6/97
------------------------------
Lewis D. Johns
Director 5/6/97
/s/ Michael L. Kasten
-----------------------------
Michael L. Kasten
/s/ James R. Kaye Director 5/6/97
-----------------------------
James R. Kaye
/s/ Leonard Maas Director 5/6/97
-----------------------------
Leonard Maas
/s/ Lyle W. Miller Director 5/6/97
------------------------------
Lyle W. Miller
</TABLE>
<PAGE> 8
The Plan. Pursuant to the requirements of the Securities Act of 1933,
as amended the trustee and plan administrator of 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 Lansing, State of
Michigan, on May 6, 1997.
CAPITOL BANCORP LTD.
ESOP COMMITTEE
PLAN ADMINISTRATOR
By: /s/ Joseph D. Reid
-----------------------
for the Committee
PARAGON BANK & TRUST
PLAN TRUSTEE
By: /s/ Eric Hoogstra
--------------------------
Its: Vice President
and Trust Officer
<PAGE> 9
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Page
- -------- ------------
<S> <C> <C>
4 The Capitol Bancorp, Ltd. Employee 10
Savings and Stock Ownership Plan
5 Opinion of Foster, Swift, Collins & Smith, P.C. 114
regarding the legality of securities being registered
23.1 Consent of BDO Seidman, LLP 117
23.2 Consent of Foster, Swift, Collins & Smith, P.C.
(included in Exhibit 5)
</TABLE>
<PAGE> 1
EXHIBIT 4
CAPITOL BANCORP, LTD.
EMPLOYEE SAVINGS AND STOCK OWNERSHIP PLAN
<PAGE> 2
<TABLE>
<S> <C>
ARTICLE I - PURPOSE 1
ARTICLE II - DEFINITIONS 1
2.1 Definitions 1
ARTICLE III - PARTICIPATION AND SERVICE 17
3.1 Participation 17
3.2 Service 17
3.3 Inactive Status 18
3.4 Participation and Service Upon Reemployment 18
ARTICLE IV - CONTRIBUTIONS AND FORFEITURES 20
4.1 Employer Contributions 20
4.2 Participant Elective Deferrals 21
4.3 After-Tax Contributions by Participants 26
4.4 Limitations on Employee and Matching Contributions 26
4.5 Final Disposition of Forfeitures 30
4.6 Rollover or Transfer Amount from Other Plans 31
4.7 Independent Appraisal of Employer Stock 33
ARTICLE V - ALLOCATIONS TO PARTICIPANTS' ACCOUNTS 33
5.1 Maintenance of Accounts: 33
5.2 Account Adjustments 34
5.3 Limitation on Allocations 36
ARTICLE VI - BENEFITS 42
6.1 Benefit Distributions 42
6.2 Normal Retirement, Early Retirement or Disability 42
6.3 Death 42
6.4 Termination for Other Reasons 43
6.5 Payments of Benefits 46
6.6 Distribution Restrictions 53
6.7 Waiver of Distribution Restrictions 56
6.8 Investment Direction 57
6.9 Voting Employer Stock 57
6.10 Legends on Employer Stock 59
6.11 Securities and Exchange Commission Approval 59
6.12 Hardship Withdrawals of Elective Deferrals 59
6.13 Loans to Participants 60
ARTICLE VII - TRUST FUND 62
7.1 Trust Contributions 62
7.2 Investment of Trust Assets 63
ARTICLE VIII - ADMINISTRATION 64
8.1 Allocation of Responsibility Among Fiduciaries 64
8.2 Appointment of Committee 64
8.3 Claims Procedure 65
8.4 Records and Reports 66
8.5 Other Committee Powers and Duties 66
8.6 Rules and Decisions 67
8.7 Authorization of Benefit Payments 67
8.8 Application and Forms for Benefits 67
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
8.9 Facility of Payment 67
8.10 Indemnification of the Committee 67
ARTICLE IX - MISCELLANEOUS 68
9.1 Nonguarantee of Employment 68
9.2 Rights to Trust Assets 68
9.3 Nonalienation of Benefits 68
9.4 Discontinuance of Employer Contributions 68
9.5 Controlled Group of Corporations 68
9.6 Control of Trades or Businesses by Owner-Employee 68
9.7 Leased Employees 69
9.8 Unclaimed Pension Checks 70
9.9 Correction of Errors 70
9.10 Construction 70
ARTICLE X - AMENDMENTS AND ACTION BY EMPLOYER 70
10.1 Amendments 70
10.2 Action by Employer 71
10.3 Amendment or Change of Vesting Schedule 71
ARTICLE XI - SUCCESSOR EMPLOYER, MERGER OR CONSOLIDATION 72
11.1 Successor Employer 72
11.2 Plan Assets 72
ARTICLE XII - PLAN TERMINATION 72
12.1 Right to Terminate 72
12.2 Partial Termination 73
12.3 Liquidation of the Trust Fund 73
12.4 Manner of Distribution 73
ARTICLE XIII - TOP-HEAVY PLAN RESTRICTIONS 73
13.1 General Rule 73
13.2 Top-Heavy Test 73
13.3 Superseding Rules 76
13.4 Special Definitions 77
ARTICLE XIV - PROVISIONS RELATING TO MULTIPLE EMPLOYERS 78
14.1 Provisions Relating to Employer Contributions 78
14.2 Duties of Primary Employer 80
14.3 Portability of Service Credit 81
</TABLE>
<PAGE> 4
CAPITOL BANCORP, LTD.
EMPLOYEE SAVINGS AND STOCK OWNERSHIP PLAN
ARTICLE I - PURPOSE
Effective as of January 1, 1997 Capitol Bancorp, Ltd. has amended and
restated the Capitol Bancorp, Ltd. Profit Sharing and Thrift Plan and changed
the name of such plan to the Capitol Bancorp, Ltd. Employee Savings and Stock
Ownership Plan the purpose of which is to enable present and future employees
to acquire stock ownership interests in Capitol Bancorp, Ltd. The Plan is a
"cash or deferred arrangement" under Section 401(k) of the Code. If permitted
by the Employer's Board of Directors, employees may invest their elective
deferrals in Employer Stock.
In addition, the Employer may invest in or make contributions to the
Plan of Employer Stock. Therefore, funds accumulated pursuant to this Plan and
the Trust established hereunder may be invested primarily or totally in
employer securities, as defined in Section 407(d)(5) of ERISA, in the form of
shares of common stock or preferred stock of Capitol Bancorp, Ltd. or an
Affiliated Employer.
The provisions of this Plan shall apply only to an Employee who
terminates employment on or after the Effective Date. The rights and benefits,
if any, of an Employee who terminates employment prior to the Effective Date
shall be determined in accordance with the prior provisions of the Plan in
effect on the date of his employment termination.
ARTICLE II - DEFINITIONS
2.1 Definitions: The following words and phrases shall, when used
herein, have the following respective meanings unless their context clearly
indicates otherwise:
(a) Actual Deferral Percentage or ADP:
(1) For a specified group of Participants for a
Plan Year, the average of the ratios (calculated separately for each
Participant in such group) of:
[a] the amount of Employer Contributions
actually paid to the Trust on behalf of each such Eligible Participant for such
Plan Year, to
[b] the Eligible Participant's
Compensation for such Plan Year (whether or not the Employee was a Participant
for the entire Plan Year).
<PAGE> 5
(2) Employer contributions on behalf of any
Participant shall include:
[a] any Elective Deferrals made pursuant
to the Participant's deferral election, including Excess Elective Deferrals of
Highly Compensated Employees, but excluding:
[1] Excess Elective Deferrals of
Non-Highly Compensated Employees that arise solely from Elective Deferrals made
under the Plan or Plans of this Employer; and
[2] Elective Deferrals that are
taken into account in the Contribution Percentage test (provided the ADP test
is satisfied both with and without exclusion of these Elective Deferrals); and
[b] at the election of the Employer,
Qualified Nonelective Contributions and Qualified Matching Contributions.
For purposes of computing Actual Deferral
Percentages, an Employee who would be a Participant but for the failure to make
Elective Deferrals shall be treated as a Participant on whose behalf no
Elective Deferrals are made.
(3) The ADP for any Eligible Participant who is a
Highly Compensated Employee for the Plan Year and who is eligible to have
Elective Deferrals (and Qualified Nonelective Contributions or Qualified
Matching Contributions, or both, if treated as Elective Deferrals for purposes
of the ADP test) allocated to his or her accounts under two (2) or more plans
or arrangements described in Code Section 401(k) that are maintained by the
Employer shall be determined as if such Elective Deferrals (and, if applicable,
such Qualified Nonelective Contributions or Qualified Matching Contributions,
or both) were made under a single arrangement. If a Highly Compensated
Employee participates in two (2) or more cash or deferred arrangements that
have different Plan Years, all cash or deferred arrangements ending with or
within the same calendar year shall be treated as a single arrangement.
Notwithstanding the foregoing, certain plans shall be treated as separate if
mandatorily disaggregated under regulations under Code Section 401(k).
(4) In the event that this Plan satisfies the
requirements of Code Sections 401(k), 401(a)(4), or 410(b) only if aggregated
with one or more other plans, or if one or more other plans satisfy the
requirements of such Code Sections only if aggregated with this Plan, then this
section shall be applied by determining the ADP of employees as if all such
plans were a single plan. For Plan Years beginning after December 31, 1989
plans may be aggregated in order to satisfy Code Section 401(k) only if they
have the same Plan Year.
2
<PAGE> 6
(5) For purposes of determining the ADP of a
Participant who is a five percent owner or one of the ten most highly paid
Highly Compensated Employees, the Elective Deferrals (and Qualified Nonelective
Contributions or Qualified Matching Contributions, or both, if treated as
Elective Deferrals for purposes of the ADP test) and Compensation of such
Participant shall include the Elective Deferrals (and, if applicable, Qualified
Nonelective Contributions and Qualified Matching Contributions, or both) and
Compensation for the Plan Year of Family Members (as defined in Code Section
414(q)(6)). Family Members, with respect to such Highly Compensated Employees,
shall be disregarded as separate employees in determining the ADP both for
Participants who are Nonhighly Compensated Employees and for Participants who
are Highly Compensated Employees.
(c) Adjustment Factor: The cost of living adjustment
factor prescribed by the Secretary of the Treasury under Section 415(d) of the
Code for years beginning after December 31, 1987, as applied to such items and
in such manner as the Secretary shall provide.
(d) Affiliated Employer: The Employer and any
corporation which is a member of a controlled group of corporations (as defined
in Section 414(b) of the Code) which includes the Employer; any trade or
business (whether or not incorporated) which is under common control (as
defined in Section 414(c) of the Code) with the Employer; any organization
(whether or not incorporated) which is a member of an affiliated service group
(as defined in Section 414(m) of the Code) which includes the Employer; and any
other entity required to be aggregated with the Employer pursuant to
regulations under Section 414(o) of the Code.
(e) Annual Additions: With respect to each Plan Year,
the sum of the following amounts allocated to a Participant's account during
the Limitation Year:
(1) Employer contributions,
(2) Employee contributions,
(3) Forfeitures, and
(4) Amounts allocated after March 31, 1984 to an
individual medical account, as defined in Code Section 415(l)(2), which is part
of a pension or annuity plan maintained by the Employer are treated as Annual
Additions to a defined contribution plan. Also, amounts derived from
contributions paid or accrued after December 31, 1985, in taxable years ending
after such date, which are attributable to post-retirement medical benefits,
allocated to the separate account of a key employee, as defined in Code Section
419A(d)(3), under a welfare benefit fund,
3
<PAGE> 7
as defined in Code Section 419(e), maintained by the Employer are treated as
Annual Additions to a defined contribution plan.
For this purpose, any excess amount applied
under Sections 5.3(a)(1)-(4) or Section 5.3(b) in the Limitation Year to reduce
Employer contributions will be considered Annual Additions for such Limitation
Year.
Employee contributions shall not include Rollover or
Transfer Amounts for purposes of this definition of Annual Additions.
The Annual Addition for any Limitation Year beginning
before January 1, 1987 shall not be recomputed to treat all Employee
contributions as an Annual Addition.
(f) Authorized Leave of Absence: Any absence authorized
by the Employer Member under the Employer Member's standard personnel practices
provided that all persons under similar circumstances must be treated alike in
the granting of such Authorized Leaves of Absence and provided further that the
Participant returns within the period of authorized absence. An absence due to
service in the Armed Forces of the United States shall be considered an
Authorized Leave of Absence provided that the absence is caused by war or other
emergency, or provided that the Employee is required to serve under the laws of
conscription in time of peace, and further provided that the Employee returns
to employment with the Employer Member within the period provided by law.
(g) Beneficiary: A person or persons (natural or
otherwise) designated by a Participant in accordance with the provisions of
Section 6.5 to receive any death benefit which shall be payable under this
Plan.
(h) Board of Directors: The Employer's governing body
according to law and the Employer's governing documents.
(i) Break in Service: A twelve consecutive month period
during which an Employee completes 500 or fewer Hours of Service shall
constitute a one year Break in Service. Breaks in Service will be measured on
the same Eligibility Computation Period as are Years of Service.
(j) Committee: The Plan Committee appointed by the Board
of Directors in accordance with Article VIII.
(k) Compensation: Compensation shall mean the total of
all amounts paid to a Participant by the Employer for personal services
determined on the same basis as reported on the Participant's Federal Income
Tax Withholding Statement (Form W-2).
4
<PAGE> 8
The following rules shall apply for purposes of this
definition:
(1) Any Employee pre-tax salary reduction
contributions to a tax deferred annuity under Code Section 403(b) or to a
cafeteria plan under Code Section 125 or to a deferred compensation plan under
either of Code Sections 401(k) or 402(h)(1)(B) shall be included in
Compensation for purposes hereof.
(2) Any benefits paid under this and any other
deferred compensation plan and any qualified retirement plan shall be excluded
from Compensation for purposes hereof.
(3) For purposes of Employer contributions under
Section 4.1(b) and allocations thereof under Section 5.2, Compensation shall
include Compensation paid to the Participant for the entire Plan Year,
regardless of when his participation in the Plan commenced.
(4) For any Plan Year beginning on or after
January 1, 1989, the annual Compensation of each Participant taken into account
under the Plan for any year shall not exceed $200,000, as adjusted by the
Secretary at the same time and in the same manner as under Code Section 415(d).
In determining the Compensation of a Participant for purposes of this
limitation, the rules of Code Section 414(q)(6) shall apply, except in applying
such rules, the term "family" shall include only the spouse of the Participant
and any lineal descendants of the Participant who have not attained age 19
before the close of the year. If, as a result of the application of such
rules, the adjusted $200,000 limitation is exceeded, then (except for purposes
of determining the portion of Compensation up to the integration level if this
Plan provides for permitted disparity), the limitation shall be prorated among
the affected individuals in proportion to each such individual's Compensation
as determined under this section prior to the application of this limitation.
(5) In addition to other applicable limitations
set forth in the Plan, and notwithstanding any other provision of the Plan to
the contrary, for Plan years beginning on or after January 1, 1994, the annual
compensation of each employee taken into account under the Plan shall not
exceed the OBRA '93 annual compensation limit. The OBRA '93 annual
compensation limit is $150,000, as adjusted by the Commissioner for increases
in the cost of living in accordance with section 401(a)(17)(B) of the Internal
Revenue Code. The cost-of-living adjustment in effect for a calendar year
applies to any period, not exceeding 12 months, over which compensation is
determined (determination period) beginning in such calendar year. If a
determination period consists of few than 12 months, the OBRA '93 annual
5
<PAGE> 9
compensation limit will be multiplied by a fraction, the numerator of which is
the number of months in the determination period, and the denominator of which
is 12.
For Plan years beginning on or after January
1, 1994, any reference in this Plan to the limitation under section 401(a)(17)
of the Code shall mean the OBRA '93 annual compensation limit set forth in this
provision.
If compensation for any prior determination
period is taken into account in determining an employee's benefits accruing in
the current Plan year, the compensation for that prior determination period is
subject to the OBRA '93 annual compensation limit in effect for that prior
determination period. For this purpose, for determination periods beginning
before the first day of the first Plan year beginning on or after January 1,
1994, the OBRA '93 annual compensation limit is $150,000.
(l) Disability: Disability means a physical or mental
disorder resulting from a bodily injury or disease or mental disorder which
renders a Participant incapable of continuing in the employment of an Employer
Member within the meaning of the Social Security laws.
(m) Disqualified Person: Fiduciaries, a person providing
services to the Plan, an Employer any of whose Employees are covered by the
Plan, an employee organization any of whose members are covered by the Plan, an
owner, direct or indirect, of 50% or more of the total combined voting power of
all classes of voting stock or of the total value of all classes of the stock,
or an officer, director, 10% or more shareholder, or a highly compensated
employee as this term is defined in Code Section 4975(e)(2).
(n) Effective Date: January 1, 1997, the date on which
the provisions of this restated Plan become effective.
(o) Elective Deferral Account: The account maintained
for the purpose of recording a Participant's Elective Deferral Contributions
and adjustments relating thereto.
(p) Elective Deferral Contributions or Elective
Deferrals: The contributions made to the Plan during the Plan Year by the
Employer at the election of the Participant in lieu of cash compensation.
These contributions shall be made pursuant to an elective deferral agreement.
(q) Eligibility Computation Period: The 12 consecutive
month period used to determine whether an Employee has completed a Year of
Service or incurred a Break in Service for purposes of determining his or her
eligibility to participate under Article III. The initial Eligibility
Computation Period
6
<PAGE> 10
shall commence on the employment commencement date (the date on which the
Employee first performs an Hour of Service). The Eligibility Computation
Period thereafter shall be the same as a Plan Year, commencing with the Plan
Year which includes the first anniversary of the Employee's employment
commencement date and succeeding Plan Years.
In the event that a reemployed Employee does not
participate as of his reemployment date, said Employee's Eligibility
Computation Period shall commence on his reemployment commencement date (the
date on which the reemployed Employee first performs an Hour of Service during
his reemployment). The reemployment Eligibility Computation Period thereafter
shall be the same as the Plan Year commencing with the Plan Year which includes
the first anniversary of the Employee's reemployment commencement date, and
succeeding Plan Years.
(r) Employee: Any person other than an independent
contractor who, on or after the Effective Date, is receiving remuneration for
personal services rendered one or more Employer Members (or who would be
receiving such remuneration except for an Authorized Leave of Absence) or for
personal services rendered to any other employer required to be aggregated with
such Employer Member under Code Sections 414(b), (c), (m) or (o). Employee
shall also include any Leased Employee deemed to be an Employee of any Employer
described in the previous sentence as provided in Code Sections 414(n) or (o).
(s) Employee Contribution Account: The account
maintained for a Participant to record his contributions and adjustments
relating thereto.
(t) Employer: Capitol Bancorp, Ltd., a bank holding
company organized and existing under the laws of the State of Michigan, and the
entities listed below, or their respective successor or successors and any
other entity whose Board of Directors authorizes participation in this Plan
where Capitol Bancorp, Ltd. by its Board of Directors has approved said
participation. Capitol Bancorp, Ltd. may also be referred to as the Primary
Employer, as defined in Section 2.1(ss).
The Employers participating in the Plan in addition
to Capitol Bancorp, Ltd. are:
7
<PAGE> 11
<TABLE>
<CAPTION>
Name of Type of State of Date of
Employer Entity Organization Participation
-------- ------- ------------ -------------
<S> <C> <C> <C>
Portage Banking Michigan Participating as
Commerce Bank corp. of restatement
date
Capitol Banking Michigan Participating as
National Bank corp. of restatement
date
Ann Arbor Banking Michigan Participating as
Commerce Bank corp. of restatement
date
Oakland Banking Michigan Participating as
Commerce Bank corp. of restatement
date
Paragon Bank & Trust Banking Michigan Participating as
corp. of restatement
date
Grand Haven Bank Banking Michigan Participating as
corp. of restatement
date
Macomb County Banking Michigan Adopted as a
Bank corp. restatement
effective as of
July 1, 1997
Brighton Banking Michigan Adopted as a
Commerce Bank corp. restatement
effective as of
July 1, 1997
</TABLE>
Each of the individual Employers named in this
Section 2.1(t) may be referred to as an Employer Member. For purposes of
Section 5.3, Employer also includes all members of a controlled group of
corporations (as defined in Code Section 414(b) as modified by Code Section
415(h)), all commonly controlled trades or businesses (as defined in Code
Section 414(c) as modified by Code Section 415(h)) or affiliated service groups
(as defined in Code Section 414(m)) of which the Employer is a part, and any
other entity required to be aggregated with the Employer pursuant to
regulations under Code Section 414(o).
8
<PAGE> 12
(u) Employer Discretionary Contribution Account: The
account maintained for a Participant to record his share of the Employer Profit
Sharing Contributions made pursuant to Section 4.1(b)(1) and adjustments
related thereto.
(v) Employer Matching Contributions: Any contribution to
the Plan made by the Employer for the Plan Year and allocated to a
Participant's account by reason of the Participant's Employee Contributions or
Elective Deferrals.
(w) Employer Matching Contribution Account: The account
maintained for a Participant to record his share of the Employer Matching
Contributions made pursuant to Section 4.1(b)(2) and adjustments relating
thereto.
(x) Employer Member. Each of the individual Employers
named in Section 2.1(t).
(y) Employer Profit Sharing Contributions: Those
discretionary Nonelective Contributions made pursuant to Section 4.1(b)(1).
(z) Employer Stock: Common stock of the Primary Employer
or an affiliate (as that term is defined in Section 407(d)(7) of ERISA) which
is a qualifying employer security as defined in Section 407(d)(5) of ERISA and
which, except as otherwise herein provided, is not subject to a put, call, or
other option or buy-sell or similar agreement while held by and when
distributed from the Plan, regardless of whether the Plan is then a leveraged
employee savings and stock ownership plan.
(aa) Employer Stock Account: The sub-account maintained
for a Participant to record his shares of Employer Stock and adjustments
relating thereto.
(bb) ERISA: Public Law No. 93-406, the Employee
Retirement Income Security Act of 1974, as amended from time to time.
(cc) Family Member: An individual described in Section
414(q)(6)(B) of the Code.
(dd) Fiduciaries: The Employer Members, the Committee,
the Trustee and any designated Investment Manager, but only with respect to the
specific responsibilities of each for Plan and Trust administration, all as
described in Section 8.1.
(ee) Forfeitures: The non-vested portion of a
Participant's Nonelective Contribution Account which is forfeited in accordance
with Section 4.5.
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<PAGE> 13
(ff) Highly Compensated Employee: The term Highly
Compensated Employee includes Highly Compensated Active Employees and Highly
Compensated Former Employees.
(1) A Highly Compensated Active Employee includes
any Employee who performs service for the Employer during the determination
year and who, during the look-back year:
[a] received compensation from the
Employer in excess of $75,000 (as adjusted pursuant to Code Section 415(d));
[b] received compensation from the
Employer in excess of $50,000 (as adjusted pursuant to Code Section 415(d)) and
was a member of the top-paid group for such year; or
[c] was an officer of the Employer and
received compensation during such year that is greater than fifty percent (50%)
of the dollar limitation in effect under Code Section 415(b)(1)(A).
(2) The term Highly Compensated Employee also
includes:
[a] Employees who are both described in
the preceding sentence if the term "determination year" is substituted for the
term "look-back year" and the Employee is one of the one hundred (100)
Employees who received the most compensation from the Employer during the
determination year; and
[b] Employees who are five percent (5%)
owners at any time during the look-back year or determination year.
(3) If no officer has satisfied the compensation
requirement of (1)[b] above during either a determination year or look-back
year, the highest paid officer for such year shall be treated as a Highly
Compensated Employee.
(4) For purposes of this Section, the
determination year is the Plan Year. The look-back year is the twelve-month
period immediately preceding the determination year.
(5) A Highly Compensated Former Employee includes
any Employee who separated from service (or was deemed to have separated) prior
to the determination year, performs no service for the Employer during the
determination year, and was a Highly Compensated Active Employee for either the
separation year or any determination year ending on or after the Employee's
55th birthday.
10
<PAGE> 14
(6) If an Employee is, during a determination
year or look-back year, a family member of either a five percent (5%) owner who
is an active or former Employee or a Highly Compensated Employee who is one of
the ten (10) most highly compensated Employees ranked on the basis of
Compensation paid by the Employer during such year, then the family member and
the five percent (5%) owner or top-ten Highly Compensated Employee shall be
aggregated. In such case, the family member and five percent (5%) owner or
top-ten Highly Compensated Employee shall be treated as a single Employee
receiving Compensation and Plan contributions or benefits equal to the sum of
such Compensation and contributions or benefits of the family member and five
percent (5%) owner or top-ten Highly Compensated Employee. For purposes of
this section, family member includes the spouse, lineal ascendants and
descendants of the Employee or former Employee and the spouses of such lineal
ascendants and descendants.
(7) The determination of who is a Highly
Compensated Employee, including the determinations of the number and identity
of Employees in the top-paid group, the top one hundred (100) Employees, the
number of Employees treated as officers and the Compensation that is
considered, will be made in accordance with Code Section 414(q) and the
regulations thereunder.
(gg) Hour of Service:
(1) Each hour for which an Employee is paid, or
entitled to payment, for the performance of duties for the Employer. These
hours shall be credited to the Employee for the computation period in which the
duties are performed.
(2) Each hour for which an Employee is paid, or
entitled to payment, by the Employer on account of a period of time during
which no duties are performed (irrespective of whether the employment
relationship has terminated) due to vacation, holiday, illness, incapacity
(including disability), layoff, jury duty, military duty or leave of absence.
No more than 501 Hours of Service will be credited under this paragraph for any
single continuous period (whether or not such period occurs in a single
computation period). Hours under this paragraph will be calculated and
credited pursuant to Section 2530.200b-2 of the Department of Labor Regulations
which is incorporated herein by this reference.
(3) Each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to by the Employer. The
same Hours of Service will not be credited both under paragraph (1) or
paragraph (2), as the case may be, and under this paragraph (3). These hours
shall be credited to the Employee for the computation period or periods to
which the award
11
<PAGE> 15
or agreement pertains rather than the computation period in which the award,
agreement or payment is made.
(4) Hours of Service shall be determined on the
basis of actual hours for which an Employee is paid or entitled to payment.
(5) Where the Employer maintains the plan of a
predecessor employer, service for such predecessor employer shall be treated as
service for the Employer.
(6) Hours of Service will be credited for
employment with other members of an affiliated service group (under Code
Section 414(m)), a controlled group of corporations (under Code Section
414(b)), or a group of trades or businesses under common control (under Code
Section 414(c)), of which the Employer is a member and any other entity
required to be aggregated with the Employer pursuant to Code Section 414(o) and
the regulations thereunder.
(7) Hours of Service will also be credited for
any individual considered an Employee for purposes of this Plan under Code
Section 414(n) or Code Section 414(o) and the regulations thereunder.
(8) Solely for purposes of determining whether a
Break in Service (as defined in Section 2.1) has occurred in a computation
period under the Plan, an individual who is absent from work for maternity or
paternity reasons shall receive credit for the Hours of Service which would
otherwise have been credited to such individual but for such absence, or, in
any case in which such hours cannot be determined, for 8 Hours of Service per
day of such absence. For purposes of this paragraph, an absence from work for
maternity or paternity reasons means an absence:
[a] by reason of the pregnancy of the
individual;
[b] by reason of a birth of a child of
the individual;
[c] by reason of the placement of a
child with the individual in connection with the adoption of such child by such
individual; or
[d] for purposes of caring for such
child for a period beginning immediately following such birth or placement.
The Hours of Service credited under this
paragraph (8) shall be credited in the computation period in which the absence
begins if the crediting is necessary to prevent
12
<PAGE> 16
a Break in Service in that period. In all other cases, Hours of Service
credited under this paragraph shall be credited in the next following
computation period.
(9) For purposes of vesting, an individual shall
not receive credit for any Hours of Service completed with the Employer prior
to the time he or she attains age eighteen (18).
(hh) Income: The net gain or loss of the Trust Fund from
investments, as reflected by interest payments, dividends, realized and
unrealized gains and losses on securities, other investment transactions and
expenses paid from the Trust Fund. In determining the Income of the Trust Fund
for any period, assets shall be valued on the basis of their fair market value.
(ii) Internal Revenue Code or Code: The Internal Revenue
Code of 1986, as amended.
(jj) Joint and One-Half Survivor Annuity: Joint and
One-Half Survivor Annuity is an immediate annuity for the life of the
Participant with a survivor annuity payable to the Participant's Spouse or
Beneficiary in periodic payments equal to one-half of the amount payable during
the life of the Participant. The combined value of both annuities shall be an
amount equal to the Participant's account balance at the date of determination.
Notwithstanding the foregoing, a Joint and One-Half
Survivor Annuity for a Participant who is not married is an immediate annuity
for the life of the Participant.
(kk) Leased Employee: Any person (other than an employee
of the recipient) who, pursuant to an agreement between the recipient and any
other person ("leasing organization") has performed services for the recipient
(or for the recipient and related persons determined in accordance with Code
Section 414(n)(6)) on a substantially full time basis for a period of at least
one year, and such services are of a type historically performed by employees
in the business field of the recipient Employer. Contributions or benefits
provided to a Leased Employee by the leasing organization which are
attributable to services performed for the recipient Employer will be treated
as provided by the recipient Employer.
A Leased Employee will not be considered an Employee
of the recipient if the requirements of (1) and (2) below are met:
(1) Such employee is covered by a money purchase
pension plan providing:
13
<PAGE> 17
[a] a nonintegrated employer
contribution rate of at least ten percent (10%) of compensation (as defined in
Code Section 415(c)(3), but including amounts contributed by the employer
pursuant to a salary reduction agreement which are excludible from the
employee's gross income under any of Code Sections 125, 402(a)(8), 402(h) or
403(b));
[b] immediate participation; and
[c] full and immediate vesting.
(2) Leased Employees do not constitute more than
twenty percent (20%) of the recipient's nonhighly compensated workforce.
(ll) Nonhighly Compensated Participant: An Employee of
the Employer who is neither a Highly Compensated Employee nor a Family Member.
(mm) Normal Retirement Age: For all purposes under this
Plan, the Normal Retirement Age shall be 65.
(nn) Other Investments Account: The sub-account
maintained for a Participant to record his share of contributions of Trust
assets other than Employer Stock and adjustments relating thereto.
(oo) Participant: An Employee participating in the Plan
in accordance with the provisions of Section 3.1.
(pp) Plan: The Capitol Bancorp, Ltd. Employee Savings and
Stock Ownership Plan, the Plan set forth herein, as amended from time to time.
(qq) Plan Administrator: The person or entity appointed
under the provisions of Article VIII to administer the Plan.
(rr) Plan Year: The 12-month period commencing on January
1 and ending on December 31.
(ss) Primary Employer: The Primary Employer for purposes
of this Plan shall be Capitol Bancorp, Ltd.
(tt) Qualified Matching Contributions: Matching
contributions made by the Employer and allocated to a Participant's accounts
that the Participant may not elect to receive in cash until distributed from
the Plan; that are 100% vested and nonforfeitable when made; and that are not
distributable under the terms of the Plan to Participants or their
Beneficiaries earlier than the earliest of:
14
<PAGE> 18
(1) separation from service, death or disability
of the Participant;
(2) attainment of age 59 1/2 by the Participant;
(3) termination of the Plan without establishment
of a successor plan;
(4) the events specified in Section 12.3 hereof;
or
(5) for Plan Years beginning before January 1,
1989, upon hardship of the Participant.
In lieu of distributing Excess Contributions as
provided in Section 4.2 or Excess Aggregate Contributions as provided in
Section 4.4, the Employer may, as determined by the Board of Directors, make
Qualified Matching Contributions on behalf of Nonhighly Compensated Employees
that are sufficient to satisfy either the ADP test or the ACP test, or both,
pursuant to regulations under the Code.
In the event that the Employer Matching Contributions
provided for in Section 4.1(b) meet all of the requirements of this Section,
they shall be deemed to be Qualified Matching Contributions for purposes of the
ADP and ACP tests.
(uu) Qualified Nonelective Contributions: Contributions
(other than Matching Employer Contributions) made by the Employer and allocated
to a Participant's accounts that the Participant may not elect to receive in
cash until distributed from the Plan; that are 100% vested and nonforfeitable
when made; and that are not distributable under the terms of the Plan to
Participants or their Beneficiaries earlier than the earliest of:
(1) separation from service, death, or disability
of the Participant;
(2) attainment of age 59 1/2 by the Participant;
(3) termination of the Plan without establishment
of a successor plan;
(4) the events specified in Section 12.3 hereof;
or
(5) for Plan Years beginning before January 1,
1989, upon hardship of the Participant.
15
<PAGE> 19
In lieu of distributing Excess Contributions as
provided in Section 4.2 or Excess Aggregate Contributions as provided in
Section 4.4, the Employer may, as determined by the Board of Directors, make
Qualified Nonelective Contributions on behalf of Nonhighly Compensated
Employees that are sufficient to satisfy either the ADP test or the ACP test,
or both, pursuant to regulations under the Code.
In the event that the Employer Profit Sharing
Contributions provided for in Section 4.1(a) meet all of the requirements of
this Section, they shall be deemed to be Qualified Nonelective Contributions
for purposes of the ADP and ACP tests.
(vv) Service: A Participant's period of employment with
the Employer determined in accordance with Section 3.2.
(ww) Spouse or Surviving Spouse: The spouse or surviving
spouse of the Participant, provided that a former spouse will be treated as the
spouse or surviving spouse to the extent provided under a qualified domestic
relations order as described in Code Section 414(p).
(xx) Transfer Account: The account maintained for a
Participant to record amounts transferred to the Trust Fund pursuant to Section
4.6 and adjustments relating thereto.
(yy) Trust (or Trust Fund): The fund known as the Capitol
Bancorp, Ltd. Employee Stock Ownership Trust, maintained in accordance with the
terms of the trust agreement, as from time to time amended, which constitutes a
part of this Plan.
(zz) Trustee: The corporation or individual(s) appointed by
the Board of Directors of the Primary Employer to administer the Trust.
(aaa) Valuation Date: The last day of each Plan Year or the
date on which a special valuation is made in the sole discretion of the
Committee.
(bbb) Year of Service: A 12-consecutive month period during
which an Employee has not less than 1,000 Hours of Service. Employment at
either the beginning or the end of the applicable computation period shall not
be determinative of whether a Year of Service has been completed, a Year of
Service having been completed if the Employee has 1,000 or more Hours of
Service at any time during the applicable computation period; provided,
however, for purposes of allocating contributions, income and forfeitures, an
Employee who terminates employment on or after normal retirement age or who
dies or is Disabled during a given Plan Year shall always be deemed to have
completed 1,000 Hours during said Year. If the Plan's service requirement for
16
<PAGE> 20
purposes of eligibility to participate includes a fraction less than one (1),
said fraction will be deemed to be completed upon completion of one Hour of
Service in the relevant computation period.
If the Employer maintains the Plan of a predecessor
employer, Service with such employer shall be treated as service for the
Employer.
The method of crediting Years of Service for purposes
of vesting and eligibility for any entity not included as an Employer as of the
date this restated Plan is adopted shall be determined pursuant to Board
Resolutions of Capitol Bancorp, Ltd. when approving the participation of the
new entity as an Employer Member. Such method of crediting Years of Service
for purposes of eligibility and vesting shall be recorded in the Administrative
Procedures of the Plan.
(ccc) Vesting Computation Period: The 12 consecutive month
period used to determine whether an Employee has completed a Year of Service
for purposes of vesting. The initial Vesting Computation Period shall be
measured on the basis of the Plan Year commencing with the Plan Year during
which the Employee first performs an Hour of Service for the Employer and
continuing with each subsequent Plan Year thereafter.
ARTICLE III - PARTICIPATION AND SERVICE
3.1 Participation: Any Employee included under the prior
provisions of the Plan as of December 31, 1996 shall continue to participate in
accordance with the provisions of this amended and restated Plan. Effective
for the Plan Year beginning January 1, 1997, any other Employee shall become a
Participant as of the January 1 or July 1 thereafter coinciding with, or next
following, the date upon which the Employee satisfies the following:
(a) Completion of six (6) months of employment with the
Employer, and
(b) Attainment of 21 years of age, provided such Employee is
so employed on such January 1 or July 1.
3.2 Service: A Participant's eligibility for benefits under the
Plan shall be based on his period of Service, determined in accordance with the
following:
(a) Service Prior to the Effective Date for Continuing
Participants: For a Participant as of the Effective Date who had been covered
under the prior provisions of the Plan, the Participant's Service credit under
the Plan prior to the Effective Date shall be counted as Service.
17
<PAGE> 21
(b) Service for Employees Participating From and After
the Effective Date: Subject to the reemployment provisions of Section 3.4, an
Employee shall accrue a Year of Service for each Eligibility Computation Period
or Vesting Computation Period in which he has 1,000 or more Hours of Service.
The method of crediting Years of Service for purposes of
vesting and eligibility for any entity not included as an Employer as of the
date this restated Plan is adopted shall be determined pursuant to Board
Resolutions of Capitol Bancorp, Ltd. when approving the participation of the
new entity as an Employer Member. Such method of crediting Years of Service
for purposes of eligibility and vesting shall be recorded in the Administrative
Procedures of the Plan.
3.3 Inactive Status: In the event that any Participant shall
fail, in any Plan Year of his employment after the Effective Date, to
accumulate 1,000 Hours of Service, his accounts shall be placed on inactive
status. In such case, such Plan Year shall not be considered as a period of
Service for the purpose of determining the Participant's vested interest in
accordance with Section 6.3, and the Participant shall not share in the
Employer Profit Sharing Contribution under Section 4.1(b) or in the Forfeiture
allocations for any such Plan Year, but he shall continue to receive Income
allocations in accordance with Section 5.2. In the event such Participant
accumulates 1,000 Hours of Service in a subsequent Plan Year, his accounts
shall revert to active status with full rights and privileges under this Plan
restored.
3.4 Participation and Service Upon Reemployment: If an Employee
has a one-year Break in Service before satisfying the Plan's requirement for
eligibility, service before such Break will not be taken into account. Upon
the reemployment of any person after the Effective Date who had previously been
employed by the Employer prior to the Effective Date his rights upon
reemployment shall be determined in accordance with the Plan in effect on the
date of his employment termination. Upon the reemployment of any person after
the Effective Date who had previously been employed by the Employer on or after
the Effective Date, the following rules shall apply in determining his
Participation in the Plan and his Service under Section 3.2:
(a) Participation: A former Participant shall become a
Participant immediately upon his return to the employ of the Employer if such
former Participant had a nonforfeitable right to all or a portion of his
account balance derived from Employer contributions at the time of his
termination.
A former Employee who did not have a nonforfeitable
right to any portion of his account balance derived from Employer contributions
at the time of his
18
<PAGE> 22
termination shall be considered a new Employee, for eligibility purposes, if
the number of consecutive one-year Breaks in Service equals or exceeds the
greater of 5 or the aggregate number of Years of Service before such Break. If
such former Employee's Years of Service before his termination may not be
disregarded under other provisions of this Plan in circumstances described in
the preceding sentence, such Employee shall participate immediately upon his
reemployment.
In the event a Participant becomes ineligible to
participate because he is no longer a member of an eligible class of Employees,
but has not incurred a Break in Service, such Employee shall participate
immediately upon his return to an eligible class of Employees. If such
Participant incurs a Break in Service his eligibility to participate shall be
determined pursuant to the two preceding paragraphs.
In the event an Employee who is not a member of an
eligible class of Employees becomes a member of the eligible class, such
Employee shall participate immediately if such Employee has satisfied any
minimum age and service requirements and would previously have become a
Participant had he been in the eligible class.
(b) Service: In the case of a Participant who has 5 or
more consecutive one year Breaks in Service, all service after such Breaks in
Service will be disregarded for the purpose of vesting the Employer-derived
account balance that accrued before such Breaks in Service. Such Participant's
pre-Break Service will count in vesting the post-Break Employer-derived account
balance only if either:
(l) Such Participant had a nonforfeitable
interest in the account balance attributable to Employer contributions at the
time of separation from service; or
(2) Upon returning to service the number of
consecutive one year Breaks in Service is less than the number of Years of
Service.
Separate accounts will be maintained for the Participant's pre-Break and
post-Break Employer-derived account balance. Both accounts will share in the
earnings and losses of the fund.
In the case of a Participant who has fewer than five
consecutive one year Breaks in Service, service shall be credited pursuant to
Section 3.2 hereof.
Notwithstanding the foregoing, for purposes of computing
vested benefits under Section 6.3 in the case of any Employee who has any
one-year Break in Service, Years of Service before such Break shall not be
taken into account until the
19
<PAGE> 23
Employee has completed one Year of Service after his reemployment.
ARTICLE IV - CONTRIBUTIONS AND FORFEITURES
4.1 Employer Contributions: All of the following types of
Employer Contributions shall be made to the Plan without regard to current or
accumulated earnings and profits for the taxable year or years in question.
Notwithstanding the foregoing, the Plan shall continue to be designed to
qualify as a profit sharing plan for purposes of Code Sections 401(a), 402, 412
and 417. In no event will the total of all contributions made by the Employer
pursuant to this Section 4.1 exceed the maximum deductible amount permitted by
the Internal Revenue Code of 1986, as amended, nor shall it exceed the maximum
addition allowable for such year as provided in Section 5.3.
(a) Elective Deferral Contributions: Each of the
Employer Members shall, for each Plan Year, contribute to the Trust Fund an
amount equal to the total amount of contributions agreed to be made by it
pursuant to elective deferral agreements under Plan Section 4.2 entered into
between the Employer Member and Participants for said Plan Year. Contributions
made by the Employer Member for a given Plan Year pursuant to elective deferral
agreements under Section 4.2 shall be deposited in the Trust Fund no later than
the 15th business day of the month following the month with regard to which the
elective deferral occurs or such later date as is prescribed by applicable law.
Any such contributions, once deposited in the Trust, shall remain in the Trust
and will be administered according to the terms of this Plan, regardless of
whether the Participant for whom such contributions were made is placed on
inactive status during said Plan Year.
(b) Nonelective Contributions:
(1) Employer Profit Sharing Contributions: Each
of the Employer Members shall, for each Plan Year, contribute to the Trust Fund
the amount determined by resolution of the Board of Directors adopted on or
before the last day of each Plan Year, to be held and administered in Trust by
the Trustee according to the terms of this Plan. In no case, however, shall
the Employer's contribution exceed the maximum deductible amount permitted by
the Internal Revenue Code of 1986, as amended. A contribution may be made in
either cash or shares of Employer Stock as determined by the Board of
Directors.
(2) Employer Matching Contributions: Subject to
the limitations of Section 4.4, each of the Employer Members shall for each
Plan Year contribute to the Trust Fund an amount equal to such amount for every
one dollar ($1.00) of Elective
20
<PAGE> 24
Deferral Contributions made by each Participant as is determined by resolution
of the Board of Directors adopted on or before the last day of each Plan Year.
Employer Matching Contributions may be made in the form of cash or Employer
Stock as determined by the Board of Directors.
If a Participant does not make Elective Deferral
Contributions to the Plan during the entire Plan Year, he or she shall be
entitled to Employer Matching Contributions based on Compensation paid during
the time period during which he or she made Elective Deferrals. All such
Employer Matching Contributions shall be deposited in the Trust Fund not later
than the date prescribed by law for filing the Employer's federal income tax
return, including extensions which have been granted for the filing of such
return.
4.2 Participant Elective Deferrals: A Participant may, with the
Employer's consent, elect to enter into a written elective deferral agreement
with the Employer as of the dates set forth in Administrative Procedures
adopted by the Employer which will be applicable to all subsequent payroll
periods within such Plan Year. The terms of any such elective deferral
agreement shall provide that the Participant agrees to accept a reduction in
salary from the Employer equal to any amount consistent with rules adopted and
uniformly administered by the Plan Administrator not to exceed such percent of
said Compensation as the Plan Administrator deems appropriate in view of the
anti-discrimination provisions of Code Section 401(k) and regulations
thereunder (but in no event greater than 15% of said Compensation). No
Employee shall be permitted to have Elective Deferrals made under this Plan or
any other qualified plan maintained by the Employer during any calendar year in
excess of the dollar limitation contained in Code Section 402(g) in effect at
the beginning of such taxable year. In the event any Participant's Elective
Deferrals exceed this limit, the Excess Deferral Amount shall be distributed to
said Participant in the manner set forth in Section 4.2(i) below. Said Elective
Deferrals may be made from the Participant's periodic payroll checks issued to
the Participant as elected by the Participant in the elective deferral
agreement. All such Elective Deferrals are subject to the approval of the Plan
Administrator pursuant to rules adopted by and uniformly administered by the
Plan Administrator. In consideration of such agreement, the Employer Member
will make an Elective Deferral contribution to the Participant's Elective
Deferral Account on behalf of the Participant for such year in an amount equal
to the total amount by which the Participant's Compensation from the Employer
Member was reduced during the Plan Year pursuant to the elective deferral
agreement.
Amounts credited to a Participant's Elective Deferral Account
shall be 100% vested and nonforfeitable at all times. If a Participant enters
into an elective deferral agreement with the
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<PAGE> 25
Employer for a given Plan Year, his Compensation for such Plan Year for all
other purposes of this Plan, unless otherwise noted, shall be equal to his
Compensation before application of the elective deferral agreement.
The following additional rules shall apply to the elective
deferral agreement:
(a) A Participant's elective deferral agreement may be
amended by the Participant as of the dates set forth in Administrative
Procedures adopted by the Primary Employer. A Participant may cease deferrals
at any time.
(b) Elective deferral agreements and amendments to
elective deferral agreements shall be effective as of, and shall not apply to
any payroll period preceding, the payroll period next following the day the
elective deferral agreement or amendment to the elective deferral agreement is
executed by the Participant and the Employer Member.
(c) The Employer Member may amend or revoke its elective
deferral agreement with any Participant at any time if the Employer Member
determines that such revocation or amendment is necessary to ensure that a
Participant's Annual Additions for any Plan Year will not exceed the
limitations of Plan Section 5.3 for such Plan Year.
(d) Except as provided in this Section 4.2, an elective
deferral agreement applicable to any given Plan Year, once made, may not be
revoked or amended by the Participant or the Employer Member.
(e) If, for any Plan Year, the Average Actual Deferral
Percentage for Eligible Participants who are Highly Compensated Employees for
the Plan Year is larger than the greater of:
(1) the ADP for Eligible Participants who are
Nonhighly Compensated Employees for the Plan Year multiplied by 1.25, or
(2) the ADP for Eligible Participants who are
Nonhighly Compensated Employees for the Plan Year multiplied by 2, provided
that the ADP for Eligible Participants who are Highly Compensated Employees
does not exceed the ADP for Eligible Participants who are Nonhighly Compensated
Employees by more than two (2) percentage points,
the deferral amount specified in the elective deferral agreements of the Highly
Compensated Employee Participants shall be reduced to the extent necessary so
that the ADP for the group of Highly Compensated Employees is not more than the
greater of (1) or (2)
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<PAGE> 26
above. Such reduction shall be accomplished as set forth in Section 4.2(f)
below.
For purposes of determining the ADP test, Elective
Deferrals, Qualified Nonelective Contributions and Qualified Matching
Contributions must be made before the last day of the twelve (12) month period
immediately following the Plan Year to which contributions relate.
The Primary Employer shall maintain records
sufficient to demonstrate satisfaction of the ADP test and the amount of
Qualified Nonelective Contributions or Qualified Matching Contributions, or
both, used in such test.
(f) Any adjustment to Elective Deferral amounts
determined under paragraph (e) above shall be made by one or both of the
following means:
(1) First, the elective deferral agreement of
such Participant shall be amended to reduce the contribution set forth therein
so that the total amount of Elective Deferral Contributions for such
Participant for the Plan Year does not exceed the maximum amount determined
under paragraph (e) above.
(2) Next, any Excess Contributions plus any
income and minus any loss allocable thereto shall be distributed not later than
the last day of each Plan Year to Participants on whose behalf such Excess
Contributions were made for the preceding Plan Year. If such excess amounts
are distributed more than two and one-half (2 1/2) months after the last day of
the Plan Year in which such excess amounts arose, a ten percent (10%) excise
tax will be imposed on the Employer maintaining the Plan with respect to such
amounts. Such distributions shall be made to Highly Compensated Employees on
the basis of the respective portions of the Excess Contributions attributable
to each of such Employees. Excess Contributions of Participants who are
subject to the family member aggregation rules shall be allocated among the
family members in proportion to the Elective Deferrals (and amounts treated as
Elective Deferrals) of each family member that is combined to determine the
combined ADP.
Excess Contributions shall be treated as Annual Additions
under the Plan.
Excess Contributions shall be adjusted for any income or loss
up to the date of distribution. The income or loss allocable to Excess
Contributions is the sum of:
(1) income or loss allocable to the Participant's
Elective Deferral Account (and, if applicable, the Qualified Nonelective
Contributions or the Qualified Matching Contributions, or both) for the Plan
Year multiplied by a
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<PAGE> 27
fraction, the numerator of which is such Participant's Excess Contributions for
the year and the denominator is the Participant's account balance attributable
to Elective Deferrals (and Qualified Nonelective Contributions or Qualified
Matching Contributions, or both, if any such contributions are included in the
ADP test) without regard to any income or loss occurring during such Plan Year;
and
(2) ten percent (10%) of the amount determined
under (1) above multiplied by the number of whole calendar months between the
end of the Plan Year and the date of distribution, counting the month of
distribution if distribution occurs after the 15th of such month.
Notwithstanding the foregoing, the Plan Administrator may,
pursuant to a uniform and nondiscriminatory written policy, adopt a different
reasonable method of allocating income or loss to Excess Contributions.
Excess Contributions shall be distributed from the
Participant's Elective Deferral Account and Qualified Matching Contributions
(if applicable) in proportion to the Participant's Elective Deferrals and
Qualified Matching Contributions (to the extent used in the ADP test) for the
Plan Year. Excess Contributions shall be distributed from the Participant's
Qualified Nonelective Contributions only to the extent that such Excess
Contributions exceed the balance in the Participant's Elective Deferral Account
and the amount of Qualified Matching Contributions.
Excess Contributions shall mean, with respect to any Plan
Year, the excess of:
(1) The aggregate amount of Employer
contributions actually taken into account in computing the ADP of Highly
Compensated Employees for such Plan Year, over
(2) The maximum amount of such contributions
permitted by the ADP test (determined by reducing contributions made on behalf
of Highly Compensated Employees in order of the ADPs, beginning with the
highest of such percentages).
(g) For purposes of this Section 4.2 and for purposes of
Section 2.1(a), the following definitions shall apply:
(1) Actual Deferral Percentage shall be as
defined in Section 2.1.
(2) Eligible Participant shall mean any Employee
of the Employer who has met any age and service requirements of Section 3.1.
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<PAGE> 28
(h) The determination and treatment of the Elective
Deferrals, Qualified Nonelective Contributions and Actual Deferral Percentage
of any Participant shall satisfy such other requirements as may be prescribed
by the Secretary of the Treasury.
(i) If the amount of Elective Deferrals made by a
Participant during any calendar year, when added to amounts deferred under
other plans or arrangements described in Code Sections 401(k), 408(k), 403(b),
457 or 501(c)(18) exceed the limit imposed on the Participant by Code Section
402(g) for the year in which the deferral occurred, the Excess Deferral Amount
and income allocable thereto shall be distributed not later than the April 15
following the calendar year in which the Excess Deferral Amount was contributed
to the Plan, provided any such Participant files a claim for said Excess
Deferral Amount in accordance with (2) below.
(1) For purposes of this Section 4.2(i), Excess
Deferral Amount shall mean those elective deferrals allocated to a Participant
under this Plan which are includible in the Participant's gross income under
Code Section 402(g) to the extent such Participant's Elective Deferrals for a
taxable year exceed the dollar limitation under such Code Section. Excess
Elective Deferrals shall be treated as Annual Additions under the Plan, unless
such amounts are distributed no later than the first April 15 following the
close of the Participant's taxable year.
(2) A Participant is deemed to notify the Plan
Administrator of any Excess Elective Deferrals that arise by taking into
account only those Elective Deferrals made to this Plan and any other plans of
the Employer. Otherwise, any Participant's claim for Excess Deferral Amounts
shall:
[a] be in writing;
[b] be submitted to the Plan
Administrator not later than March 1 following the calendar year in which the
Excess Deferral Amount was contributed to the Plan;
[c] specify the Participant's Excess
Deferral Amount for the preceding calendar year; and
[d] be accompanied by the Participant's
written statement that if such amounts are not distributed, such Excess
Deferral Amount will exceed the limit imposed on the Participant by Code
Section 402(g) for the year in which the deferral occurred.
(3) The Excess Deferral Amount distributed to a
Participant with respect to a calendar year shall be adjusted for
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<PAGE> 29
income or loss up to the date of distribution. The income or loss allocable to
Excess Deferral Amounts is the sum of:
[a] income or loss allocable to the
Participant's Elective Deferral Account for the taxable year multiplied by a
fraction, the numerator of which is such Participant's Excess Deferral Amount
for the year and the denominator of which is the Participant's account balance
attributable to Elective Deferrals without regard to any income or loss
occurring during such taxable year; and
[b] ten percent (10%) of the amount
determined under [a] multiplied by the number of whole calendar months between
the end of the Participant's taxable year and the date of distribution,
counting the month of distribution if distribution occurs after the 15th of
such month.
4.3 After-Tax Contributions by Participants: No Employee
After-Tax Contributions are allowed under this Plan.
4.4 Limitations on Employee and Matching Contributions:
(a) If, for any Plan Year, the Average Contribution
Percentage (the "ACP") for Eligible Participants who are Highly Compensated
Employees is larger than the greater of:
(1) the ACP for Eligible Participants who are
Nonhighly Compensated Employees for the Plan Year multiplied by 1.25, or,
(2) the ACP for Eligible Participants who are
Nonhighly Compensated Employees for the Plan Year multiplied by 2, provided
that the ACP for Eligible Participants who are Highly Compensated Employees
does not exceed the ACP for Eligible Participants who are Nonhighly Compensated
Employees by more than two (2) percentage points,
the amount of Employee Contributions and Matching Employer Contributions of the
Highly Compensated Participants shall be reduced to the extent necessary so
that the ACP for the group of Highly Compensated Employees is not more than the
greater of (1) or (2). Such reduction shall be accomplished as set forth in
Section 4.4(d) below.
(b) For purposes of this Section 4.4, the following
definitions shall apply:
(1) Aggregate Limit shall mean the sum of:
[a] One hundred twenty-five percent
(125%) of the greater of the ADP of the Nonhighly Compensated Employees for the
Plan Year or the ACP of Nonhighly Compensated Employees
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<PAGE> 30
under the Plan subject to Code Section 401(m) for the Plan Year beginning with
or within the Plan Year of the CODA; and
[b] The lesser of two hundred percent
(200%) or two (2) plus the lesser of such ADP or ACP.
(2) Average Contribution Percentage means the
average of the Contribution Percentages of the Eligible Participants in a
group.
(3) Contribution Percentage shall mean the ratio
(expressed as a percentage) of a Participant's Contribution Percentage Amounts
to the Participant's Compensation for the Plan Year (whether or not the
Employee was a Participant for the entire Plan Year).
(4) Contribution Percentage Amounts shall mean
the sum of the Employee Contributions, Matching Contributions and Qualified
Matching Contributions (to the extent not taken into account for purposes of
the ADP test) made under the Plan on behalf of the Participant for the Plan
Year. Such Contribution Percentage Amounts shall not include Matching
Contributions that are forfeited either to correct Excess Aggregate
Contributions or because the contributions to which they relate are Excess
Deferrals, Excess Contributions or Excess Aggregate Contributions. The
Employer may include Qualified Nonelective Contributions in the Contribution
Percentage Amounts. The Employer may also elect to use Elective Deferrals in
the Contribution Percentage Amounts so long as the ADP test is met before the
Elective Deferrals are used in the ACP test and continues to be met following
the exclusion of those Elective Deferrals that are used to meet the ACP test.
(5) Eligible Participant shall mean any Employee
who is eligible to make an Employee Contribution, or an Elective Deferral (if
the Employer takes such contributions into account in the calculation of the
Contribution Percentage), or to receive a Matching Contribution or a Qualified
Matching Contribution. If an Employee Contribution is required as a condition
of participation in the Plan, any Employee who would be a Participant in the
Plan if such Employee made such a contribution shall be treated as an eligible
Participant on behalf of whom no Employee Contributions are made.
(6) Employee Contribution shall mean any
contribution made to the Plan by or on behalf of a Participant that is included
in the Participant's gross income in the year in which made and that is
maintained under a separate account to which earnings and losses are allocated.
(7) Matching Contribution shall mean an Employer
contribution made to this or any other defined contribution Plan
27
<PAGE> 31
on behalf of a Participant on account of an Employee Contribution made by such
Participant, or on account of a Participant's Elective Deferral, under a plan
maintained by the Employer.
(8) Excess Aggregate Contributions shall mean,
with respect to any Plan Year, the excess of:
[a] the aggregate Contribution
Percentage Amounts taken into account in computing the numerator of the
Contribution Percentage actually made on behalf of Highly Compensated Employees
for such Plan Year, over
[b] the maximum Contribution Percentage
Amounts permitted by the ACP test (determined by reducing contributions made on
behalf of Highly Compensated Employees in order of their Contribution
Percentages beginning with the highest of such percentages).
(c) For purposes of this Section 4.4, the following
special rules shall apply:
(1) If one or more Highly Compensated Employees
participate in both a CODA and a plan subject to the ACP test maintained by the
Employer, and the sum of the ADP and ACP of those Highly Compensated Employees
subject to either or both tests exceeds the Aggregate Limit, then the ACP of
those Highly Compensated Employees who also participate in a CODA will be
reduced (beginning with such Highly Compensated Employee whose ACP is the
highest) so that the limit is not exceeded. The amount by which each Highly
Compensated Employee's Contribution Percentage Amounts is reduced shall be
treated as an Excess Aggregate Contribution. The ADP and ACP of the Highly
Compensated Employees are determined after any corrections required to meet the
ADP and ACP tests. Multiple use does not occur if both the ADP and ACP of the
Highly Compensated Employees does not exceed 1.25 multiplied by the ADP and ACP
of the Nonhighly Compensated Employees.
(2) The Contribution Percentage for any Eligible
Participant who is a Highly Compensated Employee for the Plan Year and who is
eligible to have Contribution Percentage Amounts allocated to his or her
account under two (2) or more plans described in Code Section 401(a) or
arrangements described in Code Section 401(k) that are maintained by the
Employer shall be determined as if the total of such Contribution Percentage
Amounts was made under each plan. If a Highly Compensated Employee
participates in two (2) or more cash or deferred arrangements that have
different Plan Years, all cash or deferred arrangements ending with or within
the same calendar year shall be treated as a single arrangement.
Notwithstanding the foregoing, certain plans shall be treated as separate if
28
<PAGE> 32
mandatorily disaggregated under regulations under Code Section 401(m).
(3) In the event that this Plan satisfies the
requirements of Code Sections 401(m), 401(a)(4) or 410(b) only if aggregated
with one or more other plans, or if one or more other plans satisfy the
requirements of such Code Sections only if aggregated with this Plan, then this
Section 4.4 shall be applied by determining the Contribution Percentage of
Eligible Participants as if all such plans were a single plan. For Plan Years
beginning after December 31, 1989, plans may be aggregated in order to satisfy
Code Section 401(m) only if they have the same Plan Year.
(4) For purposes of determining the Contribution
Percentage of an Eligible Participant who is a five percent owner or one of the
ten (10) most highly-paid Highly Compensated Employees, the Contribution
Percentage Amounts and Compensation of such Participant shall include the
Contribution Percentage Amounts and Compensation of Family Members (as defined
in Code Section 414(q)(6)). Family Members with respect to Highly Compensated
Employees shall be disregarded as separate Employees in determining the
Contribution Percentage both for Eligible Participants who are Nonhighly
Compensated Employees and for Eligible Participants who are Highly Compensated
Employees.
(5) For purposes of determining the Contribution
Percentage test, Employee Contributions are considered to have been made in the
Plan Year in which contributed to the Trust. Matching Contributions and
Qualified Nonelective Contributions will be considered made for a Plan Year if
made no later than the end of the twelve-month period beginning on the day
after the close of the Plan Year.
(6) The Primary Employer shall maintain records
sufficient to demonstrate satisfaction of the ACP test and the amount of
Qualified Nonelective Contributions or Qualified Matching Contributions, or
both, used in such test.
(7) The determination and treatment of the
Contribution Percentage of any Participant shall satisfy such other
requirements as may be prescribed by the Secretary of the Treasury.
(d) Any Excess Aggregate Contributions, as determined
pursuant to Section 4.4(a) above and Code Section 401(m)(6)(B), plus any income
and minus any loss allocable thereto shall be forfeited or distributed not
later than the last day of each Plan Year to Participants to whose accounts
such Excess Aggregate Contributions were allocated for the preceding Plan Year.
Excess Aggregate Contributions of Participants who are subject to the family
member aggregation rules shall be allocated among the
29
<PAGE> 33
family members in proportion to the Employee and Matching Contributions (or
amounts treated as Matching Contributions) of each family member that is
combined to determine the combined ACP. If such Excess Aggregate Contributions
are distributed more than two and one-half (2 1/2) months after the last day of
the Plan Year in which such excess amounts arose, a ten percent (10%) excise
tax will be imposed on the Employer maintaining the Plan with respect to those
amounts. Excess Aggregate Contributions shall be treated as Annual Additions
under the Plan.
Excess Aggregate Contributions shall be adjusted for
any income or loss up to the date of distribution. The income or loss
allocable to Excess Aggregate Contributions is the sum of:
(1) income or loss allocable to the Participant's
Employee Contribution Account, Employer Matching Contribution amount (if any,
and if all such amounts are not used in the ADP test) and, if applicable,
Qualified Nonelective Contribution amounts and Elective Deferral Account for
the Plan Year multiplied by a fraction, the numerator of which is such
Participant's Excess Aggregate Contributions for the year and the denominator
is the Participant's account balance(s) attributable to Contribution Percentage
Amounts without regard to any income or loss occurring during such Plan Year;
and
(2) ten percent (10%) of the amount determined
under (1) above multiplied by the number of whole calendar months between the
end of the Plan Year and the date of distribution, counting the month of
distribution if distribution occurs after the 15th of such month.
Notwithstanding the foregoing, the Plan Administrator
may, pursuant to a uniform and nondiscriminatory written policy, adopt a
different reasonable method of allocating income or loss to Excess Aggregate
Contributions.
Excess Aggregate Contributions shall be distributed
in accordance with the foregoing from the Participant's Employee Contribution
Account, and forfeited from the Participant's Employer Matching Contributions
in proportion to the Participant's Employee Contributions and Employer Matching
Contributions for the Plan Year. Amounts forfeited by Highly Compensated
Employees under this Section 4.4 will be allocated, after all other forfeitures
under the Plan, to the same Participants, excluding Highly Compensated
Employees, in the same manner as set forth in Section 4.5.
4.5 Final Disposition of Forfeitures: All nonvested amounts will
be forfeited as of the last day of the Plan Year in which the terminated
Participant's termination of employment occurs. All forfeited, nonvested
amounts shall be allocated
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<PAGE> 34
among the accounts of other Participants as of the earlier of the last day of
the Plan Year in which:
(a) distributions commence to the terminated Participant,
or
(b) such Participant incurs his fifth consecutive one
year Break in Service.
If a Participant receives a distribution pursuant to Section
6.3, and the Participant resumes employment covered under the Plan, the
Participant's Employer-derived account balance will be restored to the amount
reflected therein on the date of distribution if the Participant repays to the
Plan the full amount of the distribution attributable to Employer contributions
before the earlier of 5 years after the first date on which the Participant is
subsequently reemployed by the Employer, or the date the Participant incurs 5
consecutive one year Breaks in Service following the date of the distribution.
If a Participant is deemed to receive a distribution pursuant to Section 6.3,
and the Participant resumes employment covered under this Plan before the date
the Participant incurs 5 consecutive one year Breaks in Service, then the
Employer-derived account balance of the Participant will be restored to the
amount of such deemed distribution as of the Participant's reemployment date.
If the Participant repays a distribution pursuant to this
Section 4.5 with after-tax dollars, any such repayment will be subject to the
limitations contained in Section 4.4.
4.6 Rollover or Transfer Amount from Other Plans:
(a) If an Employee who is eligible to participate in the
Plan (regardless of whether he has satisfied any age and/or service
requirements of Section 3.1), has received or is entitled to receive a
distribution from a plan which meets the requirements of Code Section 401(a)
(the "Other Plan"), such Participant may, in accordance with procedures
approved by the Plan Administrator, rollover or transfer the distribution from
the Other Plan to the Trustee provided the following conditions are met:
(1) the rollover or transfer occurs on or before
the 60th day following his receipt of the distribution from the Other Plan, or
if such distribution had previously been deposited in an Individual Retirement
Account (as defined in Code Section 408), the rollover or transfer occurs on or
before the 60th day following his receipt of such distribution plus earnings
thereon from the Individual Retirement Account;
(2) the distribution from the Other Plan is
eligible for rollover treatment or transfer pursuant to the
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<PAGE> 35
requirements of the Code and applicable regulations, including the requirements
of Code Section 402(c) applicable to eligible rollover distributions.
The Plan Administrator shall develop such procedures,
and may require such information from an Employee on whose behalf such a
rollover or transfer is to be made, as it deems necessary or desirable to
determine that the proposed rollover or transfer will meet the requirements of
this Section. Upon approval of the Plan Administrator, the amount rolled over
or transferred shall be deposited in the Trust Fund and shall be credited to a
Transfer Account. Such account shall be 100% vested in the Employee, shall
share in income allocations in accordance with Section 5.2(a), but shall not
share in Employer contribution allocations. Upon termination of employment,
the total amount of the Employee's Transfer Account shall be distributed in
accordance with Article VI.
Upon such a rollover or transfer by an Employee who is
otherwise eligible to participate in the Plan but who has not yet completed any
age and/or service requirements of Section 3.1, his Transfer Account shall
represent his sole interest in the Plan until he becomes a Participant.
(b) The Trustee may accept a direct transfer of an
account balance from any Other Plan on behalf of any Employee eligible to
participate in the Plan (regardless of whether he has satisfied any age and/or
service requirements of Section 3.1) according to such procedures and
requirements as are imposed by the Plan Administrator in its sole discretion.
The Plan Administrator shall develop such procedures,
and may require such information from an Employee on whose behalf such a
transfer is to be made, as it deems necessary or desirable to determine that
the proposed transfer will meet the requirements of this Section. Upon
approval of the Plan Administrator, the amount transferred shall be deposited
in the Trust Fund and shall be credited to a Transfer Account. Such account
shall share in income allocations in accordance with Section 5.2(a), but shall
not share in Employer contribution allocations. Upon termination of
employment, the total amount of the Employee's Transfer Account shall be
distributed in accordance with Article VI.
Upon such a transfer by an Employee who is otherwise
eligible to participate in the Plan but who has not yet completed any age
and/or service requirements of Section 3.1, his Transfer Account shall
represent his sole interest in the Plan until he becomes a Participant.
(c) In the case of any rollover or transfer of assets to
this Plan from a Keogh plan, the Plan Administrator shall
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<PAGE> 36
maintain records which enable the Plan Administrator to identify which portion
of the Transfer Account is comprised of the Keogh plan amounts (and earnings
thereon).
4.7 Independent Appraisal of Employer Stock: When applicable, all
valuations of shares of Employer Stock that are not readily tradeable on an
established securities market will be made by an independent appraiser as
defined by Code Section 401(a)(28). These valuations may be used for purposes
of determining Employer contributions, account adjustments under Article V, and
other purposes for which valuations of Employer Stock may be required under the
Plan.
ARTICLE V - ALLOCATIONS TO PARTICIPANTS' ACCOUNTS
5.1 Maintenance of Accounts:
(a) Individual Accounts: The Plan Administrator shall
create and maintain adequate records to disclose the interest in the Trust of
each Participant, former Participant and Beneficiary. Such records shall be in
the form of individual accounts and credits and charges shall be made to such
accounts in the manner herein described. When appropriate, a Participant shall
have certain separate accounts: an Elective Deferral Account, an Employer
Discretionary Contribution Account, an Employer Matching Contribution Account,
an Employee Contribution Account and a Transfer Account, as well as
sub-accounts therein (if applicable): an Employer Stock Account and an Other
Investments Account. The maintenance of individual accounts is only for
accounting purposes, and a segregation of the assets of the Trust Fund to each
account shall not be required, except where a Participant directs the
investment of accounts if authorized in Article VI below. Distributions and
withdrawals made from any account shall be charged to the account as of the
date paid. In no event will the amount allocated to any Participant's accounts
hereunder exceed the maximum addition allowable for such year as provided in
Section 5.3. Each sub-account (if applicable) shall be maintained as described
below.
(1) The Employer Stock Account maintained for
each Participant will be credited annually with the Participant's allocable
share of Employer Stock (including fractional shares) purchased and paid for or
contributed in kind, together with any Forfeitures of Employer Stock and with
any stock dividends on Employer Stock allocated to his Employer Stock Account.
(2) The Other Investments Account maintained for
each Participant will be credited annually with the Participant's allocable
share of [a] Employer contributions in cash, [b] any Forfeitures from a
Participant's Other Investments Account, and [c] net income (or loss) of the
Trust attributable to Trust
33
<PAGE> 37
Assets, together with any cash dividends on Employer Stock allocated to the
Participant's Employer Stock Account (other than dividends distributed pursuant
to Section 6.9).
In addition, the Committee shall maintain adequate
records of the aggregate cost basis of each class of Employer Stock allocated
to each Participant's Accounts. From time to time, the Committee, in its
discretion, may modify the accounting procedures for the purpose of achieving
equitable and nondiscriminatory allocations among the Accounts of Participants
in accordance with the general concepts of the Plan and applicable law,
including the ability to implement within the Trust a Participant's investment
direction regarding the purchase or sale of Employer Stock.
5.2 Account Adjustments: The accounts of Participants, former
Participants and Beneficiaries shall be adjusted in accordance with the
following:
(a) Income: The Income or loss of the Trust Fund (other
than dividends on Employer Stock) for each relevant accounting period selected
by the Committee shall be allocated in a uniform and nondiscriminatory manner
to the Other Investments Accounts of Participants, former Participants and
Beneficiaries in a uniform and nondiscriminatory manner based on the total
earnings from the underlying investment contracts as may be authorized from
time to time by the Plan Administrator. Each valuation shall be based on the
fair market value of assets in the Trust Fund on the Valuation Date.
(b) Dividends on Employer Stock: Any cash dividend
received on shares of Employer Stock allocated to Participants' Employer Stock
Accounts as of the record date relating to the cash dividend will be allocated
to the Other Investments Account sub-account within the Employer Discretionary
Contribution Account of such Participants. Any cash dividend received on
unallocated shares of Employer Stock, including any Financed Shares credited to
the Loan Suspense Account, shall be allocated in accordance with Section
5.2(a). Any stock dividend received on Employer Stock shall be credited to the
Accounts to which such Employer Stock was allocated as of the record date
relating to the stock dividend. Notwithstanding the foregoing, any cash
dividends which are currently distributed to Participants pursuant to Section
6.9 shall not be credited to their respective Other Investments Accounts.
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(c) Employer Contributions:
(1) The Employer Contribution for a Plan Year
which is made pursuant to elective deferral agreements entered into with
Participants pursuant to Section 4.2 for such Plan Year shall be allocated to
the respective Participants' Elective Deferral Account and to his or her
Employer Stock Account and/or Other Investments Account as of the last day of
the calendar quarter which includes the last day of the payroll period with
regard to which the Elective Deferral occurs.
(2) As of the end of each Plan Year, the
Employer's Profit Sharing Contribution for the Plan Year shall be allocated to
the respective Participant's Employer Discretionary Contribution Account and to
his or her Employer Stock Account and/or Other Investments Account of
Participants who were not placed on inactive status during the Plan Year and
who were employed by the Employer on the last day of the Plan Year.
Notwithstanding the foregoing, if a Participant fails to complete a Year of
Service during the Plan Year or is not employed by the Employer on the last day
of the Plan Year as a result of death, disability or retirement, said
Participant shall receive an allocation of Employer contributions to this
section. The amount allocated to each Participant's Employer Discretionary
Contribution Account shall be in the same proportion as such Participant's
Compensation for the Plan Year bears to the total Compensation of all
Participants for such Plan Year.
(3) Notwithstanding the foregoing, the following
special rules apply:
[a] In no event will the amount
allocated to each Participant's accounts hereunder exceed the maximum addition
allowable for such year as provided in Section 5.3.
[b] If this Plan is a Top-Heavy plan
under Article XIII hereof, no allocations shall be made hereunder until the
minimum contribution allocations set forth in Section 13.3 have been made.
(4) As of the end of each Plan Year, any Employer
Matching Contributions for a Plan Year which are made pursuant to Section
4.1(b) shall be allocated to the respective Employer Matching Contribution
Accounts, Employer Stock Accounts and/or Other Investments Accounts of those
Participants for whom the Employer Matching Contributions were made.
(d) Forfeitures: As of the end of each Plan Year, any
Forfeitures which have become available for allocation during such Plan Year
pursuant to Section 4.3, shall be credited to the Employer Stock Accounts or
Other Investments Accounts of the same Participants who are entitled to an
Employer Contribution for the
35
<PAGE> 39
Plan Year under Section 4.1(b). Such amounts shall be allocated according to
the ratio that each such Participant's Compensation for the Plan Year bears to
the total Compensation of all such Participants for the Plan Year.
5.3 Limitation on Allocations: This Section 5.3 applies
notwithstanding any other provision in this Plan to the contrary.
(a) If the Participant does not participate in, and has
never participated in another qualified plan or a welfare benefit fund, as
defined in Section 419(e) of the Code, maintained by the Employer, or an
individual medical account, as defined in Code Section 415(l)(2), maintained by
the Employer, which provides an Annual Addition as defined in Section 2.1, the
amount of Annual Additions which may be credited to the Participant's account
for any Limitation Year will not exceed the lesser of the maximum permissible
amount or any other limitation contained in this Plan. If the Employer
contribution that would otherwise be contributed or allocated to the
Participant's account would cause the Annual Additions for the Limitation Year
to exceed the maximum permissible amount, the amount contributed or allocated
will be reduced so that the Annual Additions for the Limitation Year will equal
the maximum permissible amount.
Prior to determining the Participant's actual compensation for
the Limitation Year, the Employer may determine the maximum permissible amount
for a Participant on the basis of a reasonable estimation of the Participant's
compensation for the Limitation Year, uniformly determined for all Participants
similarly situated.
As soon as is administratively feasible after the end of the
Limitation Year, the maximum permissible amount for the Limitation Year will be
determined on the basis of the Participant's actual compensation for the
Limitation Year.
If pursuant to the preceding paragraph or as a result of the
allocation of forfeitures, or as a result of a reasonable error in determining
the amount of elective deferrals (within the meaning of Code Section 402(g)(3))
that may be made with respect to any individual under the limits of Code
Section 415, there is an excess amount, the excess will be disposed of as
follows:
(1) Any elective deferral contributions or
nondeductible voluntary Employee Contributions, to the extent they would reduce
the excess amount, will be returned to the Participant.
(2) If after the application of paragraph (1) an
excess amount still exists, and the Participant is covered by the Plan at the
end of a Limitation Year, the excess amount in the
36
<PAGE> 40
Participant's account will be used to reduce Employer contributions (including
any allocation of forfeitures) for such Participant in the next Limitation
Year, and each succeeding Limitation Year if necessary.
(3) If after the application of paragraph (1) an
excess amount still exists, and the Participant is not covered by the Plan at
the end of a Limitation Year, the excess amount will be held unallocated in a
suspense account. The suspense account will be applied to reduce future
Employer contributions (including any allocation of forfeitures) for all
remaining Participants in the next Limitation Year, and each succeeding
Limitation Year if necessary.
(4) If a suspense account is in existence at any
time during the Limitation Year pursuant to this section, it will not
participate in the allocation of the trust's investment gains and losses. If a
suspense account is in existence at any time during a particular Limitation
Year, all amounts in the suspense account must be allocated and reallocated to
Participants' accounts before any Employer contributions may be made to the
Plan for that Limitation Year. Excess amounts may not be distributed to
Participants or former Participants.
(b) This section applies if, in addition to this Plan,
the Participant is covered under another qualified defined contribution plan or
welfare benefit fund, as defined in Section 419(e) of the Code, maintained by
the Employer or an individual medical account, as defined in Code Section
415(l)(2) maintained by the Employer which provides an Annual Addition as
defined in Section 2.1, during any Limitation Year. The Annual Additions which
may be credited to a Participant's account under this Plan for any such
Limitation Year will not exceed the maximum permissible amount reduced by the
Annual Additions credited to a Participant's account under the other plans and
welfare benefit funds for the same Limitation Year. If the Annual Additions
with respect to the Participant under other defined contribution plans and
welfare benefit funds maintained by the Employer are less than the maximum
permissible amount and the Employer contribution that would otherwise be
contributed or allocated to the Participant's account under this Plan would
cause the Annual Additions for the Limitation Year to exceed this limitation,
the amount contributed or allocated will be reduced so that the Annual
Additions under all such plans and funds for the Limitation Year will equal the
maximum permissible amount. If the Annual Additions with respect to the
Participant under such other defined contribution plans and welfare benefit
funds in the aggregate are equal to or greater than the maximum permissible
amount, no amount will be contributed or allocated to the Participant's account
under this Plan for the Limitation Year.
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<PAGE> 41
Prior to determining the Participant's actual compensation for
the Limitation Year, the Employer may determine the maximum permissible amount
for a Participant in the manner described in Section 5.3(a).
As soon as is administratively feasible after the end of the
Limitation Year, the maximum permissible amount for the Limitation Year will be
determined on the basis of the Participant's actual compensation for the
Limitation Year.
If, pursuant to the preceding paragraph, or as a result of the
allocation of forfeitures, or as a result of a reasonable error in determining
the amount of elective deferrals (within the meaning of Code Section 402(g)(3))
that may be made with respect to any individual under the limits of Code
Section 415, a Participant's Annual Additions under this Plan and such other
plans would result in an excess amount for a Limitation Year, the excess amount
will be deemed to consist of the Annual Additions last allocated, except that
Annual Additions attributable to a welfare benefit fund or individual medical
account will be deemed to have been allocated first regardless of the actual
allocation date.
If an excess amount was allocated to a Participant on an
allocation date of this Plan which coincides with an allocation date of another
plan, the excess amount attributed to this Plan will be the product of,
(1) the total excess amount allocated as of such
date, times
(2) the ratio of (i) the Annual Additions
allocated to the Participant for the Limitation Year as of such date under this
Plan to (ii) the total Annual Additions allocated to the Participant for the
Limitation Year as of such date under this and all the other qualified defined
contribution plans.
(c) If the Employer maintains, or at any time maintained,
a qualified defined benefit plan covering any Participant in this Plan, the sum
of the Participant's defined benefit plan fraction and defined contribution
plan fraction will not exceed 1.0 in any Limitation Year.
(d) For purposes of this Section 5.3 the following
definitions shall apply:
(1) Compensation: A Participant's earned income,
wages, salaries, and fees for professional services and other amounts received
for personal services actually rendered in the course of employment with the
Employer (including, but not limited to, commissions paid salesmen,
compensation for services
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<PAGE> 42
on the basis of a percentage of profits, commissions on insurance premiums,
tips and bonuses), and excluding the following:
[a] Employer contributions to a plan of
deferred compensation which are not includible in the Employee's gross income
for the taxable year in which contributed, or Employer contributions under a
simplified employee pension plan to the extent such contributions are
deductible by the Employee, or any distributions from a plan of deferred
compensation.
[b] Amounts realized from the exercise
of a non-qualified stock option, or when restricted stock (or property) held by
the Employee either becomes freely transferable or is no longer subject to a
substantial risk of forfeiture;
[c] Amounts realized from the sale,
exchange or other disposition of stock acquired under a qualified stock option;
and
[d] Other amounts which received special
tax benefits, or contributions made by the Employer (whether or not under a
salary reduction agreement) towards the purchase of an annuity described in
Section 403(b) of the Internal Revenue Code (whether or not the amounts are
actually excludible from the gross income of the Employee).
For purposes of applying the limitations of
this Section 5.3(d)(1), compensation for a Limitation Year is compensation
actually paid or includible in gross income during such Limitation Year.
(2) Defined benefit fraction: A fraction, the
numerator of which is the sum of the Participant's projected annual benefits
under all the defined benefit plans (whether or not terminated) maintained by
the Employer, and the denominator of which is the lesser of 125 percent of the
dollar limitation determined for the Limitation Year under Code Sections 415(b)
and (d) or 140 percent of the highest average compensation, including any
adjustments under Code Section 415(b).
Notwithstanding the above, if the Participant was a
Participant as of the first day of the first Limitation Year beginning after
December 31, 1986 in one or more defined benefit plans maintained by the
Employer which were in existence on May 6, 1986, the denominator of this
fraction will not be less than 125 percent of the sum of the annual benefits
under such plans which the Participant had accrued as of the close of the last
Limitation Year beginning before January 1, 1987, disregarding any changes in
the terms and conditions of the Plan after May 5, 1986. The preceding sentence
applies only if the defined benefit plans individually and in the aggregate
satisfied
39
<PAGE> 43
the requirements of Code Section 415 for all Limitation Years beginning before
January 1, 1987.
(3) Defined contribution dollar limitation:
$30,000 or if greater, one-fourth of the defined benefit dollar limitation set
forth in Code Section 415(b)(1) as in effect for the Limitation Year.
(4) Defined contribution fraction: A fraction,
the numerator of which is the sum of the Annual Additions to the Participant's
account under all the defined contribution plans (whether or not terminated)
maintained by the Employer for the current and all prior Limitation Years
(including the Annual Additions attributable to the Participant's nondeductible
Employee contributions to all defined benefit plans, whether or not terminated,
maintained by the Employer, and the Annual Additions attributable to all
welfare benefit funds, as defined in Code Section 419(e), and individual
medical accounts, as defined in Code Section 415(l)(2), maintained by the
Employer), and the denominator of which is the sum of the maximum aggregate
amounts for the current and all prior Limitation Years of Service with the
Employer (regardless of whether a defined contribution plan was maintained by
the Employer). The maximum aggregate amount in any Limitation Year is the
lesser of 125 percent of the dollar limitation determined under Code Sections
415(b) and (d) or 35 percent of the Participant's compensation for such year.
If the Employee was a Participant as of the end of the first
day of the first Limitation Year beginning after December 31, 1986 in one or
more defined contribution plans maintained by the Employer which were in
existence on May 6, 1986, the numerator of this fraction will be adjusted if
the sum of this fraction and the defined benefit fraction would otherwise
exceed 1.0 under the terms of this Plan. Under the adjustment, an amount equal
to the product of (i) the excess of the sum of the fractions over 1.0 times
(ii) the denominator of this fraction, will be permanently subtracted from the
numerator of this fraction. The adjustment is calculated using the fractions
as they would be computed as of the end of the last Limitation Year beginning
before January 1, 1987, and disregarding any changes in the terms and
conditions of the Plan made after May 5, 1986, but using the Section 415
limitation applicable to the first Limitation Year beginning on or after
January 1, 1987.
The Annual Addition for any Limitation Year beginning before
January 1, 1987 shall not be recomputed to treat all Employee contributions as
Annual Additions.
(5) Excess amount: The excess of the
Participant's Annual Additions for the Limitation Year over the maximum
permissible amount.
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<PAGE> 44
(6) Highest average compensation: The average
compensation for the three consecutive years of service with the Employer that
produces the highest average. A Year of Service with the Employer is the 12
consecutive month period defined in Section 2.1 of this Plan.
(7) Limitation Year: A calendar year, or the 12-
consecutive month period elected by the Primary Employer. All qualified plans
maintained by the Employer must use the same Limitation Year. If the
Limitation Year is amended to a different 12- consecutive month period, the new
Limitation Year must begin on a date within the Limitation Year in which the
amendment is made. The Limitation Year for purposes of this Plan shall be the
same as the Plan Year.
(8) Maximum permissible amount: The Maximum
Annual Addition that may be contributed or allocated to a Participant's account
under the Plan for any Limitation Year shall not exceed the lesser of:
[a] the defined contribution dollar
limitation; or
[b] 25 percent of the Participant's
compensation for the Limitation Year.
The compensation limitation referred to in [b] shall not apply
to any contribution for medical benefits (within the meaning of Code Section
401(h) or Code Section 419A(f)(2)) which is otherwise treated as an Annual
Addition under Code Section 415(l)(1) or Code Section 419A(d)(2).
If a short Limitation Year is created because of an amendment
changing the Limitation Year to a different 12-consecutive month period, the
maximum permissible amount will not exceed the defined contribution dollar
limitation multiplied by the following fraction:
Number of months in the short limitation year
---------------------------------------------
12
(9) Projected annual benefit: The annual
retirement benefit (adjusted to an actuarially equivalent straight life annuity
if such benefit is expressed in a form other than a straight life annuity or
qualified joint and survivor annuity) to which the Participant would be
entitled under the terms of the plan assuming:
[a] the Participant will continue
employment until normal retirement age under the plan (or current age, if
later), and
41
<PAGE> 45
[b] the Participant's compensation for
the current Limitation Year and all other relevant factors used to determine
benefits under the plan will remain constant for all future Limitation Years.
ARTICLE VI - BENEFITS
6.1 Benefit Distributions: The Trustee will make distributions
from the Trust only as directed by the Committee. Distribution of a
Participant's benefit will be made in whole shares of Employer Stock, cash or a
combination of both.
6.2 Normal Retirement, Early Retirement or Disability: If a
Participant's employment with the Employer is terminated at or after he reaches
his Normal Retirement Age or his Early Retirement Age, or if his employment is
terminated at an earlier age because of Disability, he shall be entitled to
receive the entire amount then in each of his accounts in accordance with
Section 6.5 within a reasonable time after he retires or becomes disabled.
A Participant's Early Retirement Age shall be the date upon
which he attains age 55 and 5 years of service. If a Participant separates
from service before satisfying the age requirement for Early Retirement, but
has satisfied any service requirement, the Participant will be entitled to
elect an Early Retirement benefit upon satisfaction of such age requirement.
6.3 Death:
(a) This Section 6.3(a) applies when a Participant dies
before distribution of benefits under the Plan has commenced. Within a
reasonable time after receipt by the Plan Administrator of acceptable proof of
death, the entire amount then in all of his accounts shall be paid to his
Spouse or Beneficiary as determined in accordance with Section 6.5 in one of
the forms set forth below if the Spouse or Beneficiary properly consents to
said commencement. If the Spouse or Beneficiary does not so consent,
commencement of benefits shall be postponed until the later date (not later
than the latest date permitted by Section 6.5(a)) consented to by the Spouse or
Beneficiary.
(1) If the requirements of Section 6.5(b)(1) are
met with regard to a Participant, the death benefit provided for above shall be
paid in one of the optional forms set forth in Section 6.5(b)(3). If this
Section 6.3(a)(1) applies and the Participant had not elected a form of payment
prior to his death, the Beneficiary, in its sole discretion, shall determine
the form of payment.
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<PAGE> 46
(2) If the requirements of Section 6.5(b)(1) are
not met with regard to a Participant, the death benefit provided for above
shall be applied toward the purchase of an annuity for the life of the
Surviving Spouse or Beneficiary; provided, however, that if a Participant who
filed a Qualified Election in accordance with Section 6.5, any benefit payable
under Section 6.3(a)(2) shall be paid in accordance with said election.
The "entire amount" in a Participant's account at
termination of employment shall include any Elective Deferral Contributions,
Employer Matching Contributions or Employee after-tax Contributions made
pursuant to any of Plan Sections 4.1, 4.2 or 4.3, respectively, for the Plan
Year in which employment termination occurs where such contributions are not
yet allocated to an account.
(b) If a Participant dies after distribution of his or
her interest has commenced, the remaining portion of such interest will
continue to be distributed at least as rapidly as under the method of
distribution being used prior to the Participant's death.
6.4 Termination for Other Reasons:
(a) At any given time, a Participant's vesting in his
accounts will be determined in accordance with paragraphs (1) and (2) below.
If a Participant's employment with the Employer is terminated before the Normal
Retirement Age for any reason other than Early Retirement, Disability or Death,
the Participant shall be entitled to the sum of:
(1) The entire amount credited to his Elective
Deferral Account, if any, his Employee Contribution Account, if any, (including
any Employer or Employee contributions made or to be made to such accounts for
the Plan Year in which employment termination occurs but not yet allocated on
the employment termination date), his Transfer Account, if any and his Employer
Matching Contribution Account plus
(2) An amount equal to the "vested percentage" of
his Employer Profit Sharing Contribution Account determined in accordance with
the following schedule:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
No. of Years of Service Credit Vested Forfeited
for Purposes of Vesting Percentage Percentage
- -------------------------------------------------------------------------------
<S> <C> <C>
0-1 0% 100%
2 20% 80%
3 40% 60%
4 60% 40%
</TABLE>
43
<PAGE> 47
<TABLE>
<S> <C> <C>
5 80% 20%
6 100% 0%
</TABLE>
(b) Notwithstanding the foregoing, the vested percentage,
if any, of the Employer Profit Sharing Contribution Account and the Employer
Matching Contribution Account of a Participant who had been covered under the
prior provisions of the Plan shall not be less than the vested percentage the
Participant would have had if the provisions of the Plan as in effect
immediately prior to the Effective Date had continued without change.
Furthermore, the interest of a Participant shall be 100% vested and
nonforfeitable upon the first to occur of attainment of: (1) age 62; (2) the
Normal Retirement Age; and (3) the Early Retirement Age irrespective of the
foregoing vesting schedule.
Notwithstanding the vesting schedules in Section
6.4(a), if a Participant is discharged for "just cause" before he has five (5)
Years of Service Credit for purposes of vesting, the entire amount in the
Participant's Other Investments Account and Employer Stock Account shall be
forfeited. No such Forfeiture may occur, however, following a Participant's
Normal Retirement Age. For this purpose, "just cause" shall mean theft, fraud,
embezzlement or willful misconduct causing significant property damage to an
Employer or personal injury to any other Employee or other acts that the
Employer deems to be "just cause."
(c) If the value of a Participant's vested interest in
the Trust exceeds (or at the time of any prior distribution exceeded) $3,500,
payment of benefits due under this Section 6.4 shall commence within a
reasonable time following the Participant's employment termination in
accordance with Section 6.5 if the Participant (and, if applicable, the
Participant's Spouse) properly consents to said commencement in accordance with
Section 6.4(d) below. If the Participant does not so consent, commencement of
benefits shall be postponed until the later date (not later than the latest
date permitted by Section 6.5(a)) consented to by the Participant. In the
event that such an early distribution has been made in the case of a terminated
Participant who is less than 100% vested in his Employer Profit Sharing
Contribution Account and/or his Employer Matching Contribution Account, the
nonvested portion of his or her account will be disposed of in accordance with
Section 4.5.
If the value of a Participant's vested interest in the Trust
at the time of distribution (or at the time of any prior distribution) does not
exceed $3,500, any benefit payable hereunder will be paid within one year after
termination of employment in the form of a lump sum distribution ("Involuntary
Cash Out"). For purposes of this paragraph, if the value of a Participant's
vested account balance is zero, the Participant
44
<PAGE> 48
shall be deemed to have received a distribution of such vested account balance.
Any portion of his Employer-derived account balance which is not vested on the
date of Involuntary Cash Out shall be forfeited in accordance with Section 4.5.
If the amount of a Participant's Employer Stock
Account balance cannot be determined by the Committee by the date on which a
distribution is to commence, or if the Participant cannot be located,
distribution of his benefit shall commence within sixty (60) days after the
date on which his Employer Stock Account balance can be determined or after the
date on which the Committee locates the Participant, whichever applies.
(d) The consent of the Participant and the Participant's
spouse shall be obtained in writing within the 90-day period ending on the
annuity starting date. The annuity starting date is the first day of the first
period for which an amount is paid as an annuity or any other form. Prior to
making any distributions under this Plan, the Committee shall notify the
Participant and the Participant's spouse of the right to defer any distribution
until the latest payment date set forth in Section 6.5(a). Such notification
shall include a general description of the material features, and an
explanation of the relative values of the optional forms of benefit available
under the Plan in a manner that would satisfy the notice requirements of Code
Section 417(a)(3), and shall be provided not less than 30 days and no more than
90 days prior to the annuity starting date.
Notwithstanding the foregoing, only the Participant need
consent to the commencement of a distribution in the form of a Joint and
One-Half Survivor Annuity while the account balance is immediately
distributable. Furthermore, if payment in the form of a Joint and One-Half
Survivor Annuity is not required with respect to the Participant pursuant to
Section 6.5(b), only the Participant need consent to the distribution of an
account balance that is immediately distributable. Neither the consent of the
Participant nor the Participant's spouse shall be required to the extent that a
distribution is required to satisfy either of Code Sections 401(a)(9) or 415.
In addition, upon termination of this Plan, if the Plan does not offer an
annuity option (purchased from a commercial provider), the Participant's
account balance may, without the Participant's consent, be distributed to the
Participant or transferred to another defined contribution plan (other than an
employee savings and stock ownership plan as defined in Code Section
4975(e)(7)) within the same controlled group.
For purposes of this Section, an account balance is
immediately distributable if any part of the account balance could be
distributed to the Participant (or surviving spouse) before the Participant
attains (or would have attained if not deceased) the later of Normal Retirement
Age or age 62.
45
<PAGE> 49
(e) Payment of benefits due under this Section shall be
made in accordance with Section 6.5.
6.5 Payments of Benefits: When an amount credited to a
Participant's account vests or is forfeited under any of the foregoing
provisions of this Plan, the valuation of such amount of the Participant's
account shall be made as of such date as the Plan Administrator deems
appropriate.
(a) Time of Payment:
(1) In general, the time of payment will be as
determined in Section 6.2, 6.3 and 6.4. In any event, payment of the retired,
disabled, deceased or terminated Participant's vested benefits must, unless the
Participant elects otherwise in writing, commence not later than the 60th day
after the close of the Plan Year in which the latest of the following events
occurs:
[a] the Participant attains the earlier
of the Plan's Normal Retirement Age or 65;
[b] the 10th anniversary of the Plan
Year in which the Participant commenced participation in the Plan; or
[c] the Participant terminates his
service with the Employer.
(2) Notwithstanding the foregoing, the failure of
a Participant and spouse to consent to a distribution while a benefit is
immediately distributable, within the meaning of Section 6.4(d), shall be
deemed to be an election to defer commencement of payment of any benefit
sufficient to satisfy this Section.
(3) No written election may defer distribution of
a Participant's account balance to a date later than the required beginning
date. The required beginning date of a Participant is the first day of April
of the calendar year following the calendar year in which the Participant
attains age 70 1/2. However, the required beginning date of a Participant who
attains age 70 1/2 before January 1, 1988 shall be determined in accordance
with [a] or [b] below:
[a] Non-5-percent owners. The required
beginning date of a Participant who is not a 5-percent owner is the first day
of April of the calendar year following the calendar year in which the later of
retirement or attainment of age 70 1/2 occurs.
[b] 5-percent owners. The required
beginning date of a Participant who is a 5-percent owner during
46
<PAGE> 50
any year beginning after December 31, 1979 is the first day of April following
the later of:
[1] the calendar year in which the
Participant attains age 70 1/2, or
[2] the earlier of the calendar
year with or within which ends the Plan Year in which the Participant becomes a
5-percent owner, or the calendar year in which the Participant retires.
The required beginning date of a Participant
who is not a 5-percent owner who attains age 70 1/2 during 1988 and who has not
retired as of January 1, 1989 is April 1, 1990.
A Participant is treated as a 5-percent owner
for purposes of this section if such Participant is a 5-percent owner as
defined in Code Section 416(i) (without regard to whether the Plan is
top-heavy) at any time during the Plan Year ending with or within the calendar
year in which such owner attains age 66 1/2 or any subsequent Plan Year.
After distributions have begun to a 5-percent
owner under this section, they must continue to be distributed, even if the
Participant ceases to be a 5-percent owner in a subsequent year.
(4) Elective Deferrals, Qualified Nonelective
Contributions and Qualified Matching Contributions, and income allocable to
each, are not distributable to a Participant or his or her beneficiary, in
accordance with such Participant's or beneficiary's election, earlier than the
earliest to occur of the following events:
[a] Separation from service, death or
disability.
[b] Termination of the Plan without the
establishment of another defined contribution plan, other than an employee
savings and stock ownership plan (as defined in Code Section 4975(e) or Code
Section 409) or a simplified employee pension plan as defined in Code Section
408(k).
[c] The disposition by a corporation to
an unrelated corporation of substantially all of the assets (within the meaning
of Code Section 409(d)(2)) used in a trade or business of such corporation if
such corporation continues to maintain this Plan after the disposition, but
only with respect to Employees who continue employment with the corporation
acquiring such assets.
47
<PAGE> 51
[d] The disposition by a corporation to
an unrelated entity of such corporation's interest in a subsidiary (within the
meaning of Code Section 409(d)(3)) if such corporation continues to maintain
this Plan, but only with respect to Employees who continue employment with such
subsidiary.
[e] The attainment of age 59 1/2.
Distributions after March 31, 1988 that are
triggered by any of [b], [c] or [d] above must be made in a lump sum.
(b) Form of Benefit: Except as otherwise noted in Plan
Section 6.3, the distribution of a Participant's benefit shall be made in one
of the following methods:
(1) If:
[a] the Participant does not elect
payments in the form of a life annuity; and
[b] on the death of the Participant the
Participant's vested account balance will be paid to his Surviving Spouse, if
any, or, in the absence of a Surviving Spouse, to his designated Beneficiary;
and
[c] this Plan is not a direct or
indirect transferee of a defined benefit plan, money purchase pension plan
(including a target benefit plan), stock bonus, or profit sharing plan which is
subject to the survivor annuity requirements of Code Sections 401(a)(11) and
417,
then any benefit payable under the Plan shall be paid in any of the optional
forms set forth in Section 6.5(b)(3) as elected by the Participant. In that
event, the other provisions of Sections 6.5(b) and (c) shall not apply.
(2) If the requirements set forth in Section
6.5(b)(1) above are not met with regard to said Participant, a Participant's
vested account balance will be paid in the form of a Joint and One-Half
Survivor Annuity unless he has elected an optional form of benefit pursuant to
a Qualified Election within the Election Period. The amount of the Joint and
One-Half Survivor Annuity is the amount of benefit which can be purchased with
the Participant's vested account balance.
(3) If he has elected an optional form of benefit
pursuant to a Qualified Election within the Election Period, a Participant's
vested account balance may be paid in one of the following forms as elected by
the Participant:
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[a] A lump sum payment equal to the
vested portion of the amount standing to the Participant's account as of his
benefit commencement date including the surrender values of any policies and/or
contracts that had been in force under this Plan on the Participant's life.
[b] A direct transfer of the
Participant's vested account balance to another plan that satisfies the
requirements of Code Section 401(a). Effective January 1, 1993, a distributee
may elect, at the time and in the manner prescribed by the Plan Administrator,
to have any portion of an eligible rollover distribution paid directly to an
eligible retirement plan specified by the distributee in a direct rollover.
For purposes of this Section 6.4(b)(3)[b], the following definitions shall
apply:
[1] Eligible rollover distribution:
An eligible rollover distribution is any distribution of all or any portion of
the balance to the credit of the distributee, except that an eligible rollover
distribution does not include: any distribution that is one of a series of
substantially equal periodic payments (not less frequently than annually) made
for the life (or life expectancy) of the distributee or the joint lives (or
joint life expectancies) of the distributee and the distributee's designated
beneficiary, or for a specified period of ten years or more; any distribution
to the extent such distribution is required under Code Section 401(a)(9); and
the portion of any distribution that is not includible in gross income
(determined without regard to the exclusion for net unrealized appreciation
with respect to Employer securities).
[2] Eligible retirement plan: An
eligible retirement plan is an individual retirement account described in Code
Section 408(a), an individual retirement annuity described in Code Section
408(b), an annuity plan described in Code Section 403(a), or a qualified trust
described in Code Section 401(a), that accepts the distributee's eligible
rollover distribution. However, in the case of an eligible rollover
distribution to the surviving spouse, an eligible retirement plan is an
individual retirement account or individual retirement annuity.
[3] Distributee: A distributee
includes an Employee or former Employee. In addition, the Employee's or former
Employee's surviving spouse and the Employee's or former Employee's spouse or
former spouse who is the alternate payee under a qualified domestic relations
order, as defined in Code Section 414(p), are distributees with regard to the
interest of the spouse or former spouse.
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[4] Direct rollover: A direct
rollover is a payment by the Plan to the eligible retirement plan specified by
the distributee.
[c] In the case of benefits payable
pursuant to Section 6.3, the Participant may elect to allow his Surviving
Spouse or Beneficiary to select the form in which any such benefits will be
paid. When selecting such form, the Surviving Spouse or Beneficiary may choose
among the optional forms listed in this Section 6.5(b)(3).
[d] In the event that an optional form
of distribution has been eliminated as a result of the amendment or restatement
of this Plan or as a result of the merger of another qualified plan into this
Plan, benefits which had already accrued as of the date of the amendment,
restatement or merger may be paid in such optional form at the election of the
Participant.
Any benefit which is required to be
distributed in the form of an annuity pursuant to the terms of this Plan may be
made by the purchase of an annuity contract from a commercial insurance
company, and distribution of that contract to the Participant or Beneficiary.
Any annuity contract distributed herefrom must be nontransferable. The terms
of any annuity contract purchased and distributable by the Plan to a
Participant or Beneficiary shall comply with the requirements of this Plan.
For purposes of this Section 6.5, a Participant's vested
account balance shall mean the aggregate value of the Participant's vested
account balances derived from Employer and Employee contributions (including
rollovers), whether vested before or upon death, including the proceeds of
insurance contracts, if any, on the Participant's life. The provisions of this
Section shall apply to a Participant who is vested in amounts attributable to
Employer contributions, Employee Contributions, or both, at the time of death
or distribution.
For purposes of benefits payable pursuant to Section 6.2 or
6.4, the Election Period shall be the 90-day period ending on the annuity
starting date. For purposes of this Section 6.5, annuity starting date means
the first day of the first period for which an amount is payable as an annuity
or any other form. For purposes of benefits payable pursuant to Section 6.3,
the Election Period shall begin on the first day of the Plan Year in which the
Participant attains age 35 and ends on the date of the Participant's death. If
a Participant separates from service prior to the first day of the Plan Year in
which age 35 is attained, the Election Period shall begin on the date of
separation solely with respect to the account balance as of the date of
separation.
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A Qualified Election is a waiver of the preretirement survivor
annuity or the Joint and One-Half Survivor Annuity payable to a Participant
pursuant to Section 6.3 or 6.5. The waiver must be in writing and must be
consented to by the Participant's Spouse. Pursuant to the waiver, the
Participant may designate any person or persons (who may be designated
contingently or successively and who may be an entity other than a natural
person) as his Beneficiary or Beneficiaries to whom his Plan benefits are paid
if he dies before receipt of all such benefits and the form in which those
benefits will be paid. However, the Participant's Spouse must also consent in
writing to any Beneficiary named and the form of benefit selected pursuant to
the waiver. The Spouse's consent to a waiver must be witnessed by a Plan
representative or notary public. Notwithstanding this consent requirement, if
the Participant establishes to the satisfaction of the Committee that such
written consent may not be obtained because there is no Spouse or the Spouse
cannot be located, a waiver will be deemed a Qualified Election. Any consent
necessary under this provision will be valid only with respect to the Spouse
who signs the consent or in the event of a deemed Qualified Election, the
designated Spouse. In addition, a revocation of a prior waiver may be made by
a Participant without the consent of the Spouse at any time before the
commencement of benefits. The number of revocations shall not be limited. Any
consent obtained under this provision shall not be valid unless the Participant
has received the notice provided in Section 6.5(c)(1).
Each waiver and Beneficiary designation shall be in the form
prescribed by the Committee and will be effective only when filed with the
Committee during the Participant's lifetime. In the absence of a legally
enforceable written Beneficiary designation pursuant to the foregoing, a
Participant's Surviving Spouse, if any, shall be considered to be the
designated Beneficiary. If there is no Surviving Spouse, then a Participant's
estate shall be considered to be the designated Beneficiary.
(c) Notice Requirements.
(1) In the case of the Joint and One-Half
Survivor Annuity payable under this Section 6.5, the Committee shall no less
than thirty (30) days and no more than ninety (90) days prior to the annuity
starting date provide each Participant a written explanation of:
[a] the terms and conditions of the
Joint and One-Half Survivor Annuity;
[b] the Participant's right to make, and
the effect of an election to waive the qualified Joint and One-Half Survivor
Annuity form of benefit;
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[c] the rights of a Participant's
Spouse; and
[d] the right to make, and the effect
of, a revocation of a previous election to waive the Joint and One-Half
Survivor Annuity.
(2) In the case of a qualified preretirement
survivor annuity as discussed in Section 6.3, the Plan Administrator shall
provide each Participant within the notice period set forth below, a written
explanation of the qualified preretirement survivor annuity in such terms and
in such manner as would be comparable to the explanation provided for meeting
the requirements of the preceding paragraph. The notice period means, with
respect to a Participant, whichever of the following periods ends last:
[a] The period beginning with the first
day of the Plan Year in which the Participant attains age 32 and ending with
the close of the Plan Year preceding the Plan Year in which the Participant
attains age 35.
[b] A reasonable period ending after the
individual becomes a Participant.
[c] A reasonable period ending after
Section 6.4(b)(2) applies to the Participant.
[d] A reasonable period ending after
separation from service in the case of the Participant who separates before
attaining age 35.
For purposes of applying this Section 6.5(c)(2), a
reasonable period ending after the enumerated events described in [b] and [c]
is the end of the two-year period beginning one year prior to the date the
applicable event occurs, and ending one year after that date. In the case of a
Participant who separates from service before the Plan Year in which age 35 is
attained, notice shall be provided within the two-year period beginning one
year prior to separation and ending one year after separation. If such a
Participant thereafter returns to employment with the Employer, the applicable
period for such Participant shall be redetermined.
(3) If a distribution is one to which Code
Sections 401(a)(11) and 417 do not apply, such distribution may commence less
than 30 days after the notice required under Regulation Section 1.411(a)-11(c)
is given, provided that:
[a] the Plan Administrator clearly
informs the Participant that the Participant has a right to a period of at
least 30 days after receiving the notice to consider the
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decision of whether or not to elect a distribution (and, if applicable, a
particularly distribution option), and
[b] the Participant, after receiving the
notice, affirmatively elects a distribution.
6.6 Distribution Restrictions: The restrictions contained in this
section will apply to all of the optional forms of benefit listed in Section
6.5. Nothing contained in this Section 6.6 will have the effect of offering
optional forms of benefit not contained in Section 6.5. All distributions
required under this Section will be determined and made in accordance with the
Proposed Income Tax Regulations under Section 401(a)(9), including the minimum
distribution incidental benefit requirement of Proposed Regulation Section
1.401(a)(9)-2.
(a) As of the first distribution calendar year,
distributions, if not made in a single sum, may only be made over one of the
following periods (or a combination thereof):
(1) the life of the Participant,
(2) the life of the Participant and a designated
beneficiary,
(3) a period certain not extending beyond the
life expectancy of the Participant, or
(4) a period certain not extending beyond the
joint and last survivor expectancy of the Participant and a designated
Beneficiary.
(b) If a Participant's interest is to be distributed in
other than a single sum, the following minimum distribution rules shall apply
on or after the required beginning date (as defined in Section 6.5(a)):
(1) If a Participant's benefit is to be
distributed over:
[a] a period not extending beyond the
life expectancy of the Participant or the joint life and last survivor
expectancy of the Participant and the Participant's designated Beneficiary, or
[b] a period not extending beyond the
life expectancy of the designated beneficiary,
the amount required to be distributed for each calendar year, beginning with
distributions for the first distribution calendar year, must at least equal the
quotient obtained by dividing the Participant's benefit by the applicable life
expectancy.
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(2) For calendar years beginning before January
1, 1989, if the Participant's spouse is not the designated Beneficiary, the
method of distribution selected must assure that at least 50% of the present
value of the amount available for distribution is paid within the life
expectancy of the Participant.
(3) For calendar years beginning after December
31, 1988, the amount to be distributed each year, beginning with distributions
for the first distribution calendar year shall not be less than the quotient
obtained by dividing the Participant's benefit by the lesser of:
[a] the applicable life expectancy, or
[b] if the Participant's spouse is not
the designated Beneficiary, the applicable divisor determined from the table
set forth in Q&A-4 of Section 1.401(a)(9)-2 of the Proposed Income Tax
Regulations.
Distributions after the death of the Participant shall be distributed using the
applicable life expectancy in Section 6.5(b)(1) above as the relevant divisor
without regard to Proposed Regulations Section 1.401(a)(9)-2.
(4) The minimum distribution required for the
Participant's first distribution calendar year must be made on or before the
Participant's required beginning date. The minimum distribution for other
calendar years, including the minimum distribution for the distribution
calendar year in which the Participant's required beginning date occurs, must
be made on or before December 31 of that distribution calendar year.
(c) If the Participant's benefit is distributed in the
form of an annuity purchased from an insurance company, distributions
thereunder shall be made in accordance with the requirements of Code Section
401(a)(9) and the proposed regulations thereunder.
(d) If the Participant dies before distribution of his or
her interest begins, distribution of the Participant's entire interest shall be
completed by December 31 of the calendar year containing the fifth anniversary
of the Participant's death except to the extent that an election is made to
receive distributions in accordance with (1) or (2) below:
(1) If any portion of the Participant's interest
is payable to a designated beneficiary, distributions may be made over the life
or over a period certain not greater than the life expectancy of the designated
beneficiary commencing on or before December 31 of the calendar year
immediately following the calendar year in which the Participant died.
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(2) If the designated Beneficiary is the
Participant's surviving spouse, the date distributions are required to begin in
accordance with (1) above shall not be earlier than the later of:
[a] December 31 of the calendar year
immediately following the calendar year in which the Participant died; or
[b] December 31 of the calendar year in
which the Participant would have attained age 70 1/2.
(e) If the Participant has not made an election pursuant
to Section 6.6(d) by the time of his or her death, the Participant's designated
Beneficiary must elect the method of distribution not later than the earlier
of:
(1) December 31 of the calendar year in which
distributions would be required to begin under this section, or
(2) December 31 of the calendar year which
contains the fifth anniversary of the date of death of the Participant.
If the Participant has no designated beneficiary, or if the designated
beneficiary does not elect a method of distribution, distribution of the
Participant's entire interest must be completed by December 31 of the calendar
year containing the fifth anniversary of the Participant's death.
(f) For purposes of Section 6.6(d) above, if the
surviving spouse dies after the Participant, but before payments to such spouse
begin, the provisions of Section 6.6(d), with the exception of Section
6.6(d)(2), shall be applied as if the surviving spouse were the Participant.
(g) For purposes of this Section 6.6, any amount paid to
a child of the Participant will be treated as if it had been paid to the
surviving spouse if the amount becomes payable to the surviving spouse when the
child reaches the age of majority.
(h) If distribution in the form of an annuity irrevocably
commences to the Participant before the required beginning date, the date
distribution is considered to begin is the date distribution actually
commences.
(i) For purposes of this Section 6.6, the following
definitions shall apply:
(1) Applicable life expectancy. The life
expectancy (or joint and last survivor expectancy) calculated using the
attained age of the Participant (or designated
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Beneficiary) as of the Participant's (or designated Beneficiary's) birthday in
the applicable calendar year reduced by one for each calendar year which has
elapsed since the date life expectancy was first calculated. If life
expectancy is being recalculated, the applicable life expectancy shall be the
life expectancy as so recalculated. The applicable calendar year shall be the
first distribution calendar year, and if life expectancy is being recalculated
such succeeding calendar year.
(2) Designated Beneficiary. The individual who
is designated as the Beneficiary under the Plan in accordance with Section
401(a)(9) and the regulations thereunder.
(3) Distribution calendar year. A calendar year
for which a minimum distribution is required. For distributions beginning
before the Participant's death, the first distribution calendar year is the
calendar year immediately preceding the calendar year which contains the
Participant's required beginning date. For distributions beginning after the
Participant's death, the first distribution calendar year is the calendar year
in which distributions are required to begin pursuant to Sections 6.6(d)-(h)
above.
(4) Life expectancy. Life expectancy and joint
and last survivor expectancy are computed by use of the expected return
multiplies in Tables V and VI of Section 1.72-9 of the Income Tax Regulations.
For purposes of this Section 6.6, life
expectancies shall be recalculated.
(5) Participant's benefit.
[a] The account balance as of the last
valuation date in the calendar year immediately preceding the distribution
calendar year (valuation calendar year) increased by the amount of any
contributions or forfeitures allocated to the account balance as of dates in
the valuation calendar year after the valuation date and decreased by
distributions made in the valuation calendar year after the valuation date.
[b] For purposes of paragraph [a] above,
if any portion of the minimum distribution for the first distribution calendar
year is made in the second distribution calendar year on or before the required
beginning date, the amount of the minimum distribution made in the second
distribution calendar year shall be treated as if it had been made in the
immediately preceding distribution calendar year.
6.7 Waiver of Distribution Restrictions: Notwithstanding any
other provisions of this Article VI restricting distributions from the Plan,
the Plan Administrator may pay benefits to an
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alternate payee pursuant to the terms of a qualified domestic relations order
(as defined in Code Section 414(p)) regardless of whether the Participant has
attained the earliest retirement age (as defined in Code Section 414(p)(4)(B))
under the Plan. In addition, the Plan Administrator may segregate to separate
accounts within the Trust those amounts which are the subject of a qualified
domestic relations order in accordance with Code Section 414(p).
6.8 Investment Direction: A Participant may, with the Employer's
consent, direct the Committee to invest his Elective Deferral Account balance
and Transfer Account balance in one or more investment options (including
Employer Stock) determined from time to time by the Trustee and the Committee.
If no election is made by a Participant, the Trustee, in its sole discretion,
shall direct the investment of said Participant's entire interest in the Trust.
(a) Allocation of Contributions to Investment Options. A
Participant may elect the manner in which the balances in his or her directed
Accounts shall be allocated among the investment Funds at such time, in such
manner and on such form as the Committee shall prescribe in a uniform and
nondiscriminatory manner.
(b) Transfers of Investments. A Participant, or a former
Participant or Beneficiary receiving installment distributions under the Plan,
may elect to transfer amounts among any of the optional investment funds at
such time, in such manner and in such form as the Committee shall prescribe in
a uniform and nondiscriminatory manner.
(c) Changes in Investments. The Committee reserves the
right to change the investment options under the Plan.
(d) Loans. Participants may receive loans from the Plan
pursuant to the provisions of Section 6.15. A loan to a Participant shall be
made from those accounts, the investment of which is being directed by the
Participant, and shall reduce the amounts invested in the optional Funds.
Repayments of a loan shall reduce the amount of the loan investment and shall
be invested in such optional Funds in accordance with the Participant's then
current investment direction. Loans and loan repayments shall not be treated
as elections of allocations or transfers under paragraphs (a) and (b) above.
6.9 Voting Employer Stock:
(a) Effective for the Plan Year beginning January 1,
1997, each Participant (or, in the event of his death, his Beneficiary) shall
have the right to direct the Committee as to the manner in which whole and
partial shares of Employer Stock
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allocated to his Employer Stock Account as of the record date are to be voted
on each matter brought before an annual or special shareholders' meeting.
Before each such meeting of shareholders, the Committee shall furnish to each
Participant (or Beneficiary) a copy of the proxy solicitation material,
together with a form requesting directions on how such shares of Employer Stock
allocated to such Participant's account shall be voted on each such matter.
Upon timely receipt of such directions from each Participant, the Committee
shall instruct the Trustee to vote the number of shares (including fractional
shares) of Employer Stock allocated to such Participant's Stock Account as
directed by each Participant or Beneficiary, and the Committee shall have no
discretion in such matter.
The Committee shall direct the Trustee to vote allocated
shares of Employer Stock for which it has not received direction in the same
proportion as directed shares are voted and the Committee shall have no
discretion in such matter.
If the Committee fails or refuses to give the Trustee timely
directions as to how to vote any Employer Stock as to which the Trustee
otherwise has the right to vote, the Trustee shall not exercise its power to
vote such Employer Stock and shall consider the Committee's failure or refusal
to give timely instructions as an exercise of the Committee's rights and a
directive to the Trustee not to vote said Employer Stock.
Notwithstanding the foregoing, if any agreement entered into
by the Trust provides for voting of any shares of Employer Stock pledged as
security for any obligation of the Trust, such shares of Employer Stock shall
be voted in accordance with such agreement to the extent such agreement
complies with relevant provisions of ERISA and the Code.
(b) If a tender or exchange offer is commenced for
Employer Stock:
(i) The Committee shall distribute in a timely
manner to each Participant (or Beneficiary) such information as is
distributed to holders of Employer Stock in connection with the tender
or exchange offer.
(ii) All Employer Stock held by the Trustee in
Employer Stock Accounts shall be tendered or not tendered by the
Trustee in accordance with the directions it receives from the
Committee. Each Participant (or Beneficiary) (subject to subparagraph
(b)(iii) below) shall be entitled to direct the Committee with respect
to the tender of such Employer Stock allocated to his account. The
instructions received by the Committee shall be held by the Committee
in confidence.
(iii) With respect to Employer Stock allocated to an
Employer Stock Account with respect to which directions by
Participants (or Beneficiaries) are not received and Employer Stock
held by the Trustee that is not allocated to
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Employer Stock Accounts, the Committee shall instruct the Trustee to
tender or not tender such Employer Stock in the same proportion as
directed shares are voted in 6.10(b)(ii) above.
(c) The Committee and Trustee shall make no
recommendations regarding the manner of exercising any rights under this
Paragraph, including whether or not such rights should be exercised.
(d) The Committee (or its designee) shall establish and
carry out a procedure to maintain the confidentiality with respect to
instructions received by Participants in voting Employer Stock. The Primary
Employer shall, if necessary, appoint an independent fiduciary to carry out the
confidentiality procedures in any situation determined by the Committee to
involve a potential for undue Employer influence on Participants. In addition,
the Committee shall, when necessary, provide Participants with a description of
the Plan procedures established to maintain the confidentiality of information
relating to Participants' interests in Employer securities and the exercise of
pass-through shareholder rights. The Committee shall also provide Participants
with the name, address and telephone number of the independent fiduciaries,
when applicable, who are responsible for monitoring the confidentiality
procedures.
6.10 Legends on Employer Stock: Shares of Employer Stock held or
distributed by the Trustee may include such legend restrictions on
transferability as the Primary Employer may reasonably require in order to
assure compliance with applicable federal and state securities laws.
6.11 Securities and Exchange Commission Approval: The Primary
Employer may request an interpretive letter from the Securities and Exchange
Commission stating that the transfers of Employer Stock contemplated hereunder
do not involve transactions requiring a registration of such Employer Stock
under the Securities Act of 1933. In the event that a favorable interpretive
letter is not obtained, the Primary Employer reserves the right to amend the
Plan and Trust retroactively to their Effective Dates in order to obtain a
favorable interpretive letter or to terminate the Plan.
6.12 Hardship Withdrawals of Elective Deferrals:
(a) At any time, but not more frequently than once in
each Plan Year, a Participant may elect, with the written consent of his or her
Spouse, to withdraw up to an amount equal to the balance then credited to his
or her Elective Deferral Account, not including earnings credited to the
Account after December 31, 1988. Such withdrawals may be made only if the
purpose of the withdrawal is to meet immediate and significant financial needs
of the Participant where the amount of the withdrawal is not reasonably
available from the resources of the Participant.
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(b) The only financial needs considered to be immediate
and significant are:
(1) Deductible medical expenses incurred or
necessary (within the meaning of Code Section 213(d)) of the Participant, the
Participant's spouse, children or dependents.
(2) The purchase (excluding mortgage payments) of
a principal residence for the Participant.
(3) Payment of tuition for the next twelve (12)
months of post-secondary education for the Participant, the Participant's
spouse, children or dependents.
(4) The need to prevent the eviction of the
Participant from, or a foreclosure on the mortgage of, the Participant's
principal residence.
(c) A distribution will be considered as necessary to
satisfy an immediate and significant financial need of the Participant only if:
(1) The Participant has obtained all
distributions, other than hardship distributions, and all nontaxable loans
under all plans maintained by the Employer.
(2) All plans maintained by the Employer provide
that the Participant's Elective Deferrals (and Employee Contributions) will be
suspended for twelve months after the receipt of the hardship distribution.
(3) The distribution is not in excess of the
amount of an immediate and significant financial need (including amounts
necessary to pay any federal, state or local income taxes or penalties
reasonably anticipated to result from the distribution).
(4) All plans maintained by the Employer provide
that the Participant may not make Elective Deferrals for the Participant's
taxable year immediately following the taxable year of the hardship
distribution in excess of the applicable limit under Code Section 402(g) for
such taxable year less the amount of such Participant's Elective Deferrals for
the taxable year of the hardship distribution.
(d) All withdrawal elections shall be made by a
Participant on written forms supplied by the Plan Administrator for that
purpose. Upon employment termination, a Participant's remaining Elective
Deferral Account shall be distributed in a manner consistent with Article VI
hereof.
6.13 Loans to Participants: The Trustee may lend a Participant or
Beneficiary an amount not in excess of 50% of the vested portion of his or her
entire interest in the Trust as of the date on which the loan is approved
subject to those special
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limits described in Section 6.13(g) hereof. The Plan Administrator may approve
loans to a Participant or Beneficiary only to meet a Participant's immediate
and heavy financial need as defined in Code section 414(g). Loans shall be
available to all Participants and Beneficiaries on a reasonably equivalent
basis, and they shall not be made available to Highly Compensated Employees as
defined in Code Section 414(q) or shareholders in an amount greater than the
amount made available to other Employees.
In addition to such rules and regulations as the Plan
Administrator may adopt, all loans shall comply with the following terms and
conditions:
(a) An application for a loan by a Participant or
Beneficiary shall be made in writing to the Plan Administrator, whose action
thereon shall be final.
(b) The period of repayment for any loan shall be arrived
at by mutual agreement between the Plan Administrator and the borrower. Loans
shall provide for level amortization with payments to be made not less
frequently than quarter annually over a period not to exceed five years.
However, if the loan is used to acquire a dwelling unit that is to be used
within a reasonable time as determined at the time the loan is made as the
principal residence of the Participant, the repayment period shall not exceed
such period as may be determined by the Plan Administrator and the Trustee.
(c) Each loan shall be made against such collateral as
the Trustee and the Plan Administrator may require, supported by the borrower's
collateral promissory note for the amount of the loan including interest,
payable to the order of the Trustee. In the event of default, where the sole
security for the loan is the Participant's interest in the Trust, foreclosure
on the note and attachment of security will not occur until a distributable
event occurs under the Plan.
Notwithstanding the foregoing, any portion of a loan
made on or after August 19, 1985 which is secured by a married Participant's
interest in the Trust must be consented to by the Participant's Spouse not more
than 90 day prior to the date the loan proceeds are distributed. The consent
must be in writing, must acknowledge the effect of the loan, and must be
witnessed by a notary public. Such consent shall thereafter be binding with
respect to the consenting spouse or any subsequent spouse with respect to that
loan. A new consent shall be required if the account balance is used for
renegotiation, extension, renewal, or other revision of the loan.
(d) Each loan shall bear interest at a rate to be fixed
by the Plan Administrator determining the interest rate; the Plan Administrator
shall take into consideration the interest rates currently being charged. The
Plan Administrator shall not discriminate among Participants or Beneficiaries
in the matter of interest rates; but loans granted at different times may bear
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different interest rates if, in the opinion of the Plan Administrator, the
difference in rates is justified by a change in general economic conditions.
Each loan shall bear interest at an effective annual percentage rate which is
commercially reasonable. Whether an interest rate is commercially reasonable
shall be determined with reference to the interest rate charged by banks in the
surrounding area in a similar transaction.
(e) No distribution shall be made to any Participant or
former Participant or to the Beneficiary of any such Participant or former
Participant unless and until all unpaid loans, including accrued interest
thereon, have been liquidated.
(f) No loans will be made to Shareholder-Employees or
Owner-Employees. For purposes of this requirement, a Shareholder-Employee
means an Employee or officer of an electing small business corporation
(Subchapter S corporation) who owns, or is considered as owning within the
meaning of the Code Section 318(a)(1), on any day during the taxable year of
such corporation, more than 5% of the outstanding stock of the corporation.
(g) Notwithstanding the foregoing, no Participant or
Beneficiary may borrow an amount which (when added to the outstanding balances
of all other loans from the Plan) exceeds the lesser of:
(i) $50,000 reduced by the amount by which [the
highest outstanding loan balance owing by the Participant to the Plan during
the one year period ending on the day before the new loan proceeds are to be
disbursed] exceeds [the participant's loan balance immediately before the
promissory note relating to the new loan proceeds is executed]; or
(ii) One-half of the sum of his vested Employer-
derived account balance.
This maximum loan limit as contained in this Section
6.13(g) shall be applied to all qualified plans of the Employer (as well as all
qualified plans treated as sponsored by a single Employer under any of Sections
414(b), (c), and (m) of the Code) in the aggregate. In no event will the
limitation imposed by this Section 6.15(g) operate to limit the dollar amount
of loans permitted under other provisions of this Section 6.13 to less than
$10,000 (from all qualified plans of the Employer or related Employers in the
aggregate).
ARTICLE VII - TRUST FUND
7.1 Trust Contributions: All contributions under this Plan shall
be paid to the Trustee and deposited in the Trust Fund. All contributions made
by the Employer are expressly conditioned upon the initial qualification of the
Plan under the Internal Revenue Code and upon the deductibility under Section
404 of the
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Internal Revenue Code of contributions made to provide Plan benefits.
Contributions being expressly conditioned upon the initial qualification of the
Plan must be returned to the Employer within one year after the date the
initial qualification is denied, provided that the application for
qualification is made by the time prescribed by law for filing the Employer's
tax return for the taxable year in which the Plan is adopted. All assets of
the Trust Fund, including investment income, shall be retained for the
exclusive benefit of Participants, former Participants, and Beneficiaries and
shall be used to pay benefits to such persons or to pay administrative expenses
of the Plan and Trust Fund to the extent not paid by the Employer and shall not
revert to or inure to the benefit of the Employer.
Notwithstanding anything herein to the contrary, the Employer may
request that a contribution which was made due to a mistake of fact, or which
was not deductible under Section 404 of the Internal Revenue Code of 1986,
shall be returned to the Employer within one year after the payment of the
contribution or the disallowance of the deduction (to the extent disallowed).
7.2 Investment of Trust Assets:
(a) Purchase of Employer Stock. Trust Assets (including
Employer Profit Sharing Contributions and Employer Matching Contributions
pursuant to Section 4.1(b)) may be invested by the Trustee primarily in
Employer Stock in accordance with directions from the Committee. Contributions
(and other Trust Assets) may be used to acquire shares of Employer Stock from
any shareholder of the Primary Employer or an Affiliated Employer, from the
Primary Employer or an Affiliated Employer, from an estate, or from any other
person or entity deemed appropriate by the Committee. The Trustee may also
invest Trust Assets in such other prudent investments as the Committee deems to
be desirable for the Trust, or Trust Assets may be held in cash. Subject to
Participant investment direction in Section 6.8, the Committee may direct the
Trustee to invest and hold up to 100% of the Trust Assets in Employer Stock.
All purchases or sales of Employer Stock by the Trustee shall be made only as
directed by the Committee and only at prices which do not exceed the fair
market value of Employer Stock as determined in good faith by the Committee
pursuant to applicable law. The Plan or Trust may not obligate itself to
acquire Employer Stock from a particular holder thereof at an indefinite time
determined upon the happening of an event such as the death of the holder.
(b) Sales of Employer Stock. Subject to the approval of
the Board of Directors and at the direction of the Committee, the Trustee may
sell shares of Employer Stock to any person (including the Employer), provided
that any such sale must be made at a price which satisfies applicable law as of
the date of the sale. Any sale of Employer Stock under this Section 7.2(b)
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must comply with the fiduciary duties applicable to the Trustee under Section
404(a)(1) of ERISA.
ARTICLE VIII - ADMINISTRATION
8.1 Allocation of Responsibility Among Fiduciaries: The
Fiduciaries shall have only those specific powers, duties, responsibilities and
obligations as are specifically given them under this Plan or the Trust. In
general, the Employer shall have the sole responsibility for making the
contributions provided for under Section 4.1. The Primary Employer shall have
the sole authority to appoint and remove the Trustee, Committee, any Committee
Member and any Investment Manager which may be provided for under the Trust,
and to amend or terminate, in whole or in part, this Plan or the Trust. The
Committee shall be the Plan Administrator and shall have the sole
responsibility for the administration of this Plan, which responsibility is
specifically described in this Plan and the Trust. The Trustee shall have the
sole responsibility for the administration of the Trust and the management of
the assets held under the Trust, all as specifically provided in the Trust.
Each Fiduciary warrants that any directions given, information furnished, or
action taken by it shall be in accordance with the provisions of the Plan or
the Trust, as the case may be, authorizing or providing for such direction,
information or action. Furthermore, each Fiduciary may rely upon any such
direction, information or action of another Fiduciary as being proper under
this Plan or the Trust, and is not required under this Plan or the Trust to
inquire into the propriety of any such direction, information or action. It is
intended under this Plan and the Trust that each Fiduciary shall be responsible
for the proper exercise of its own powers, duties, responsibilities and
obligations under this Plan and the Trust and shall not be responsible for any
act or failure to act of another Fiduciary. No Fiduciary guarantees the Trust
Fund in any manner against investment loss or depreciation in asset value.
8.2 Appointment of Committee: The Plan shall be administered by
the Plan Committee which is composed of individuals appointed by the Board of
Directors of the Primary Employer to serve at its pleasure and without
compensation. The Committee members shall be the named fiduciaries with
authority to control and manage the operation and administration of the Plan.
The Trustee shall be notified in writing by the Primary Employer of the names
of the Committee members. The Trustee may conclusively assume that the members
of the Committee will continue to act in that capacity until the Trustee has
been notified by the Primary Employer to the contrary in writing.
Committee action will be by vote of a majority of the members
at a meeting or in writing without a meeting. Minutes of each meeting of the
Committee shall be kept. The Committee will
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direct the Trustee on all matters which require instructions or directions, as
provided in this Plan and the Trust Agreement. The Committee may allocate its
fiduciary responsibilities among its members and may designate other persons
(including the Trustee) to carry out its fiduciary responsibilities (other than
investment responsibilities) under the Plan. The Committee may designate any
one or more of its members to have authority to sign any documents on its
behalf. The Trustee shall be fully protected in complying with any
instructions received from the Committee member(s) so designated.
The Committee shall be responsible for directing the Trustee
as to the investment of the Trust Assets. The Committee may delegate to the
Trustee the responsibility for investing Trust Assets other than Employer
Stock. The Committee shall establish a funding policy and method for directing
the Trustee to acquire Employer Stock (and for otherwise investing the Trust
Assets) in a manner that is consistent with the objectives of the Plan and the
requirements of ERISA.
The Committee is empowered, on behalf of the Plan, to employ
investment advisers, accountants, legal counsel and other agents to assist it
in the performance of its duties under the Plan. All usual and reasonable
expenses of the Committee may be paid in whole or in part by the Employer and
any expenses not paid by the Employer shall, upon the written consent of the
Committee, be paid by the Trustee out of the principal or income of the Trust
fund. The Primary Employer shall secure fidelity bonding for the fiduciaries
of the Plan, as required by Section 412 of ERISA.
The Primary Employer or the Trustee (as directed by the
Committee) may purchase insurance for the Committee (and other fiduciaries of
the Plan) to cover liability or loss occurring by reason of the act or omission
of a fiduciary. If such insurance is purchased with Trust Assets, the
insurance must permit recourse by the insurer against the fiduciary in the case
of breach of a fiduciary obligation by such fiduciary. The Employer Members
shall indemnify each member of the Committee (to the extent permitted by law)
against any personal liability or expense, except such liability or expense as
may result from his own willful misconduct.
The Committee shall be the Committee under Section 414(g) of
the Code and under Section 3(16)(A) of ERISA. The Committee shall be the
designated agent of the Plan for the service of legal process.
8.3 Claims Procedure: The Committee shall have discretionary
authority regarding claims for benefits and shall make all determinations as to
the right of any person to a benefit. Any denial by the Committee of the claim
for benefits under the Plan by a Participant or Beneficiary shall be stated in
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writing by the Committee and delivered or mailed to the Participant or
Beneficiary; and such notice shall set forth the specific reasons for the
denial, written to the best of the Committee's ability in a manner that may be
understood without legal or actuarial counsel. Approval or denial of a claim
is to be delivered or mailed to the claimant within 60 days of the time such
claim is made. In addition, the Committee shall afford a reasonable
opportunity to any Participant or Beneficiary whose claim for benefits has been
denied in whole or in part for a review of the decision denying the claim.
Review must be applied for by written request to the Committee within 60 days
after denial of the claim. The Committee will advise the claimant of its
decision within 60 days after such request is made.
8.4 Records and Reports: The Committee shall exercise such
authority and responsibility as it deems appropriate in order to comply with
ERISA and governmental regulations issued thereunder relating to records of
Participant's Service, account balances and the percentage of such account
balances which are nonforfeitable under the Plan; notification to Participants;
annual registration with the Internal Revenue Service; and annual reports to
the Department of Labor.
8.5 Other Committee Powers and Duties: The Committee shall have
such duties and powers as may be necessary to discharge its duties hereunder,
including, but not by way of limitation, the following:
(a) discretionary authority to construe and interpret the
Plan, decide all questions of eligibility and determine the amount, manner and
time of payment of any benefits hereunder;
(b) to prescribe procedures to be followed by
Participants or Beneficiaries filing applications for benefits;
(c) to prepare and distribute, in such manner as the
Committee determines to be appropriate, information explaining the Plan;
(d) to receive from the Employer Members and from
Participants such information as shall be necessary for the proper
administration of the Plan;
(e) to furnish the Employer Members, upon request such
annual reports with respect to the administration of the Plan as are reasonable
and appropriate;
(f) to receive, review and keep on file (as it deems
convenient and proper) reports of the financial condition and of the receipts
and disbursements of the Trust Fund from the Trustee;
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(g) to appoint or employ individuals to assist in the
administration of the Plan and any other agents it deems advisable, including
legal and actuarial counsel.
The Committee shall have no power to add to, subtract from or
modify any of the terms of the Plan, or to change or add to any benefits
provided by the Plan, or to waive or fail to apply any requirements of
eligibility for a benefit under the Plan.
8.6 Rules and Decisions: The Committee may adopt such rules as it
deems necessary, desirable or appropriate. All rules and decisions of the
Committee shall be uniformly and consistently applied to all Participants in
similar circumstances. When making a determination or calculation, the
Committee shall be entitled to rely upon information furnished by a Participant
or Beneficiary, an Employer Member, the legal counsel of an Employer Member, or
the Trustee.
8.7 Authorization of Benefit Payments: The Committee shall issue
directions to the Trustee concerning all benefits which are to be paid from the
Trust Fund pursuant to the provisions of the Plan, and warrants that all such
directions are in accordance with this Plan.
8.8 Application and Forms for Benefits: Claims for benefits under
the Plan are to be made on forms supplied by the Primary Employer. Such forms
are available at the Personnel Office of the Primary Employer. Claims are to
be submitted to the Committee, in care of the Primary Employer. The Committee
may rely upon all such information so furnished it, including the claimant's
current mailing address.
8.9 Facility of Payment: Whenever, in the Committee's opinion, a
person entitled to receive any payment of a benefit or installment thereof
hereunder is under a legal disability or is incapacitated in any way so as to
be unable to manage his financial affairs, the Committee may direct the Trustee
to make payments to such person or to his legal representative or to a relative
or friend of such person for his benefit, or the Committee may direct the
Trustee to apply the payment for the benefit of such person in such manner as
the Committee considers advisable. Any payment of a benefit or installment
thereof in accordance with the provisions of this Section shall be a complete
discharge of any liability for the making of such payment under the provisions
of the Plan.
8.10 Indemnification of the Committee: The Committee shall be
indemnified by the Employer against any and all liabilities arising by reason
of any act or failure to act made in good faith pursuant to the provisions of
the Plan, including expenses reasonably incurred in the defense of any claim
relating thereto.
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ARTICLE IX - MISCELLANEOUS
9.1 Nonguarantee of Employment: Nothing contained in this Plan
shall be construed as a contract of employment between an Employer Member and
any Employee, or as a right of any Employee to be continued in the employment
of the Employer Member, or as a limitation of the right of the Employer Member
to discharge any of its Employees, with or without cause.
9.2 Rights to Trust Assets: No Employee or Beneficiary shall have
any right to, or interest in, any assets of the Trust Fund, upon termination of
his employment or otherwise, except as provided from time to time under this
Plan, and then only to the extent of the benefits payable under the Plan to
such Employee or Beneficiary out of the assets of the Trust Fund. All payments
of benefits as provided for in this Plan shall be made solely out of the assets
of the Trust Fund and none of the Fiduciaries shall be liable therefor in any
manner.
9.3 Nonalienation of Benefits: Except as provided in Article VI,
no benefit, right or interest payable under this Plan shall be subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, charge, garnishment, execution, seizure, attachment or levy of any
kind, either voluntary or involuntary, or any other legal, equitable or other
process. The preceding sentence shall also apply to the creation, assignment
or recognition of a right to any benefit payable with respect to a Participant
pursuant to a domestic relations order, unless such order is determined to be a
qualified domestic relations order, as defined in Code Section 414(p), or any
domestic relations order entered before January 1, 1985. The Trust Fund shall
not in any manner be liable for, or subject to, the debts, contracts,
liabilities, engagements, or torts of any person entitled to benefits
hereunder.
9.4 Discontinuance of Employer Contributions: In the event of a
permanent discontinuance of contributions to the Plan by the Employer, the
accounts of each affected Participant shall, as of the date of such
discontinuance, become nonforfeitable.
9.5 Controlled Group of Corporations: Except as provided in
regulations issued under IRC Section 414(a), all employees of all Affiliated
Employers shall be treated as employed by a single Employer.
Further, all Years of Service with other Affiliated Employers
shall be credited for purposes of determining an Employee's eligibility to
participate or his nonforfeitable percentage of his Accrued Benefit under the
Plan.
9.6 Control of Trades or Businesses by Owner-Employee: If this
Plan provides contributions or benefits for one or more Owner-Employees who
control both the business for which this Plan
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is established and one or more other trades or businesses, this Plan and the
plan established for other trades or businesses must, when looked at as a
single plan, satisfy Code Sections 40l(a) and (d) for the Employees of this and
all other trades or businesses.
If the Plan provides contributions or benefits for one or more
Owner-Employees who control one or more other trades or businesses, the
Employees of the other trades or businesses must be included in a plan which
satisfies Code Sections 40l(a) and (d) and which provides contributions and
benefits not less favorable than provided for Owner-Employees under this Plan.
If an individual is covered as an Owner-Employee under the
plans of two or more trades or businesses which are not controlled and the
individual controls a trade or business, then the contributions or benefits of
the Employees under the plan of the trades or businesses which are controlled
must be as favorable as those provided for him under the most favorable plan of
the trade or business which is not controlled.
For purposes of the preceding paragraphs, an Owner-Employee,
or two or more Owner-Employees, will be considered to control a trade or
business if the Owner-Employee, or two or more Owner-Employees together:
(1) own the entire interest in an unincorporated
trade or business, or
(2) in the case of a partnership, own more than
50 percent of either the capital interest or the profits interest in the
partnership.
For purposes of the preceding sentence, an Owner-Employee, or
two or more Owner-Employees shall be treated as owning an interest in a
partnership which is owned, directly or indirectly, by a partnership which such
Owner-Employee, or such two or more Owner-Employees, are considered to control
within the meaning of the preceding sentence.
9.7 Leased Employees: Any leased employee shall be treated as an
Employee of the Employer. However, contributions or benefits provided by the
leasing organization which are attributable to services performed for the
Employer shall be treated as provided by the Employer. The preceding sentence
shall not apply to any leased Employee if such Employee is covered by a money
purchase pension plan providing: (1) a nonintegrated employer contribution
rate of at least 10 percent of compensation, (2) immediate participation, and
(3) full and immediate vesting. For purposes of this paragraph, the term
"leased Employee" means any person (other than an Employee of the Employer)
who, pursuant to an agreement between the Employer and any other person
("leasing organization") has performed services
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for the Employer (or for the Employer and related persons determined in
accordance with Code Section 414(n)(6)) on a substantially full time basis for
a period of at least one year where such services are a type historically
performed by Employees in the business field of the Employer.
9.8 Unclaimed Pension Checks: If a check in payment of a benefit
payable under this Plan has been mailed by regular United States mail to the
last address of the payee furnished to the Trustee and the check is returned
unclaimed, payments to such payee shall be discontinued and shall be held in
his respective Accounts until his correct address shall become known to the
Trustee. Any such amounts will be credited with fund earnings in accordance
with Section 5.2. If the Trustee does not receive written notice from the
payee of a new address within the time provided by Michigan law for escheat of
unclaimed property of this kind, all right to receive such benefits shall cease
and the property shall escheat to the State of Michigan.
9.9 Correction of Errors: Notwithstanding any other provision of
this Plan to the contrary, the Primary Employer and the Plan Administrator
reserve the right to correct (retroactively, if necessary) any error in the
Plan language or in the administration of the Plan which was inadvertently made
in the good faith creation and/or administration of this retirement program.
9.10 Construction: The masculine gender, where appearing in the
Plan, shall be deemed to include the feminine gender, unless the context
clearly indicates to the contrary. The words "hereof", "herein", "hereunder"
and other similar compounds of the word "here" shall mean and refer to the
entire Plan and not to any particular provision or section.
ARTICLE X - AMENDMENTS AND ACTION BY EMPLOYER
10.1 Amendments: The Primary Employer reserves the right to make
from time to time any amendment or amendments to this Plan which do not cause
any part of the Trust Fund to be used for, or diverted to, any purpose other
than the exclusive benefit of Participants, former Participants or their
Beneficiaries, provided, however, that the Primary Employer may make any
amendment it determines necessary or desirable, with or without retroactive
effect, to comply with ERISA.
No amendment to the Plan shall be effective to the extent that
it has the effect of decreasing a Participant's accrued benefit, including any
optional forms of benefits contained in the Plan prior to this restatement.
Notwithstanding the preceding sentence, a Participant's account balance may be
reduced to the extent permitted under Code Section 412(c)(8). For purposes of
this paragraph, a Plan amendment which has the
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effect of decreasing a Participant's account balance or eliminating an optional
form of benefit, with respect to benefits attributable to service before the
amendment shall be treated as reducing an accrued benefit. Furthermore, if the
vesting schedule of the Plan is amended, in the case of an Employee who is a
Participant as of the later of the date such amendment is adopted or the date
it becomes effective, the nonforfeitable percentage (determined as of such
date) of such Employee's Employer-derived account balance will not be less than
the percentage computed under the Plan without regard to such amendment.
The Primary Employer may amend the Plan by adding overriding
plan language where such language is necessary to satisfy Code Sections 415 or
416 because of the required aggregation of multiple plans under these Sections.
10.2 Action by Employer: Any action by any Employer Member under
this Plan may be by resolution of its Board of Directors, or by any person or
persons duly authorized by resolution of said Board to take such action.
10.3 Amendment or Change of Vesting Schedule: No amendment to the
vesting schedule set forth at Section 6.4 above, nor any change thereof due to
change in the top-heavy status of the Plan, shall deprive a Participant of his
nonforfeitable rights to benefits accrued to the date of the amendment.
Further, if the then operative vesting schedule of this Plan is amended or
deemed amended due to a change in the top-heavy status of the Plan, each
Participant with at least three Years of Service with the Employer at the date
of amendment may elect, within a reasonable period after the adoption of the
amendment or the change, to have his nonforfeitable percentage computed under
this Plan without regard to such amendment or change. For Participants who do
not have at least one Hour of Service in any Plan Year beginning after December
31, 1988, the preceding sentence shall be applied by substituting five Years of
Service for three Years of Service where such language appears. The period
within which the election may be made shall commence with the date the
amendment is adopted or deemed to be made and shall end on the later of:
(1) 60 days after the amendment is adopted; or
(2) 60 days after the amendment becomes effective; or
(3) 60 days after the Participant is issued written
notice of the amendment by the Primary Employer or Plan Administrator.
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ARTICLE XI - SUCCESSOR EMPLOYER, MERGER OR CONSOLIDATION
11.1 Successor Employer: In the event of the dissolution, merger,
consolidation or reorganization of any of the Employer Members, provision may
be made by which the Plan and Trust will be continued by the successor; and, in
that event, such successor shall be substituted for the Employer Member under
the Plan. The substitution of the successor shall constitute an assumption of
Plan liabilities by the successor and the successor shall have all of the
powers, duties and responsibilities of the Employer Member under the Plan.
11.2 Plan Assets: In the event of any merger or consolidation of
the Plan with, or transfer in whole or in part of the assets and liabilities of
the Trust Fund to another trust fund held under, any other plan of deferred
compensation maintained or to be established for the benefit of all or some of
the Participants of this Plan, the assets of the Trust Fund applicable to such
Participants shall be merged or consolidated with, or transferred to, the other
trust fund only if:
(a) each Participant would (if either this Plan or the
other plan then terminated) receive a benefit immediately after the merger,
consolidation or transfer which is equal to or greater than the benefit he
would have been entitled to receive immediately before the merger,
consolidation or transfer (if this Plan had then terminated);
(b) resolutions of the Boards of Directors of the
Employer Member under this Plan, or of any new or successor Employer Member of
the affected Participants, shall authorize such transfer of assets; and, in the
case of the new or successor Employer Member of the affected Participants, its
resolutions shall include an assumption of liabilities with respect to such
Participants' inclusion in the new Employer Member's plan; and
(c) such other plan and trust are qualified under
Sections 401(a) and 501(a) of the Internal Revenue Code.
ARTICLE XII - PLAN TERMINATION
12.1 Right to Terminate: In accordance with the procedures set
forth in this Article, the Primary Employer may terminate the Plan at any time.
In the event of the dissolution, merger, consolidation or reorganization of the
Primary Employer, the Plan shall terminate and the Trust Fund shall be
liquidated unless the Plan is continued by a successor to the Primary Employer
in accordance with Section 11.1.
In the event of the termination or partial termination of the
Plan, or in the event of a discontinuance of contributions thereunder, the
accrued benefit of each affected Participant
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shall become fully vested as of the date of such termination or discontinuance,
and no forfeiture shall then or thereafter occur.
12.2 Partial Termination: Upon termination of the Plan with
respect to a group of Participants which constitutes a partial termination of
the Plan, the Trustee shall, in accordance with the directions of the Plan
Administrator, allocate and segregate for the benefit of the Employees then or
theretofore employed by the Employer with respect to which the Plan is being
terminated the proportionate interest of such Participants in the Trust Fund.
The funds so allocated and segregated shall be used by the Trustee to pay
benefits to or on behalf of Participants in accordance with Section 12.3.
12.3 Liquidation of the Trust Fund: Upon complete or partial
termination of the Plan, or upon complete discontinuance of contributions to
the Plan, the accounts of all Participants affected thereby shall become fully
vested and nonforfeitable, and the Plan Administrator shall direct the Trustee
to distribute the assets remaining in the Trust Fund, after payment of any
expenses properly chargeable thereto, to Participants, former Participants and
Beneficiaries in proportion to their respective account balances; provided,
however, that neither the Employer nor an Affiliated Employer maintains a
successor plan. All distributions on plan termination will be made in
accordance with Section 6.5.
12.4 Manner of Distribution: To the extent that no discrimination
in value results, any distribution after termination of the Plan may be made,
in whole or in part, in cash, in securities or other assets in kind, or in
nontransferable annuity contracts, as the Plan Administrator (in its
discretion) may determine. All non-cash distributions shall be valued at fair
market value at date of distribution.
ARTICLE XIII - TOP-HEAVY PLAN RESTRICTIONS
13.1 General Rule. If, for any Plan Year beginning after December
31, 1983, the Plan is a top-heavy plan as determined under Section 13.2, then
the requirements in Section 13.3 shall apply to the extent indicated by that
paragraph; provided, however, that the Employer-derived account balances which
are subject to a vesting schedule pursuant to Section 6.5 of any employee who
does not complete an Hour of Service after the Plan becomes top-heavy is not
subject to any top-heavy vesting schedule set forth in Section 6.4.
13.2 Top-Heavy Test. The Plan's status as a top-heavy plan for any
Plan Year shall be determined in accordance with the following five step
procedure.
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(a) Required Plan Aggregation. First, there shall be
aggregated with this Plan (1) each qualified plan, whether or not terminated,
of the Employer in which a key employee is or was a Participant at any time
during the determination period and (2) each other plan of the Employer which
enables a plan described in Section 13.2(a)(1) to meet the requirements of Code
Section 401(a)(4) or 410.
(b) Key Employee Sum. Second, there shall be computed,
as of the determination date, the sum of the account balances of all key
employees under all defined contribution plans, including this Plan, required
to be aggregated under Section 13.2(a) hereof and the present values of the
cumulative accrued benefits of all key employees under all defined benefit
plans required to be aggregated under Section 13.2(a) hereof. For purposes of
this computation:
(1) there shall be included in the said sum any
distributions made to an employee from this Plan, or from another plan required
to be aggregated under Section 13.2(a), within the five year period ending on
the determination date;
(2) in calculating any employee's accrued benefit
for purposes of Section 13.2, rollovers shall be treated in the following
manner:
[a] Unrelated rollovers:
[1] the plan providing the
distribution always counts the distribution as a distribution under Code
Section 416(g)(3)(B); and
[2] the plan accepting the rollover
does not consider the rollover part of the accrued benefit if said rollover was
accepted after December 31, 1983. If the rollover was accepted before December
31, 1983, it is considered part of the accrued benefit.
[b] Related rollovers (whether or not
occurring before December 31, 1983):
[1] the plan providing the rollover
does not count the rollover as a distribution under Code Section 416(g)(3)(B);
and
[2] the plan accepting the rollover
counts the rollover as part of the accrued benefit.
(3) there shall be excluded from said sum the
account balance and present value of the accrued benefit of any employee who:
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[a] formerly was a key employee but who
is not a key employee for the year ending on the determination date; or
[b] has not performed any service for
any Employer maintaining the Plan at any time during the 5 year period ending
on the determination date.
(c) All Employee Sum. Third, under the same procedures
as set forth in Section 13.2(b) above (including the special rules in Section
13.2(b)(1), (2), and (3)) the sum of account balances and present values of
accrued benefits for all employees shall be computed.
Solely for the purpose of determining if the plan, or
any other plan included in a required aggregation group of which this plan is a
part, is top-heavy (within the meaning of Section 416(g) of the Code) the
accrued benefit of an Employee other than a key employee (within the meaning of
Section 416(i)(1) of the Code) shall be determined under:
(1) the method, if any, that uniformly applies
for accrual purposes under all defined benefit plans maintained by all
Affiliated Employers, or
(2) if there is no such method, as if such
benefit accrued not more rapidly than the slowest accrual rate permitted under
the fractional accrual rate of Section 411(b)(1)(C) of the Code.
(d) Top-Heavy Test Fraction. Fourth, the sum computed in
Section 13.2(b) shall be divided by the sum computed in Section 13.2(c). If
the resulting fraction is 0.60 or less, the Plan is not a top-heavy plan for
the Plan Year with regard to which the determination was made. If the fraction
is greater than 0.60, the Plan is a top-heavy plan for the Plan Year in
question, unless after the permissive plan aggregation described in Section
13.2(e) below, the recomputed fraction is 0.60 or less.
(e) Permissive Plan Aggregation. At the election of the
Plan Administrator, plans of the Employer other than those required to be
aggregated under Section 13.2(a) may be aggregated with the required
aggregation group (for purposes of the topheaviness determination) so long as
such aggregate group would meet the requirements of Code Sections 401(a)(4) and
410. Those steps described in Section 13.2(b), (c), and (d) may then be
repeated, based on this permissively aggregated group. If the top-heavy test
fraction computed in Section 13.2(d) is 0.60 or less for this permissive group,
then the Plan is not a top-heavy plan for the Plan Year in question. However,
if the top-heavy test fraction computed in 13.2(d) is greater than 0.60 for
this permissive group, only this Plan (and any plans of the Employer
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<PAGE> 79
that are required to be aggregated under Section 13.2(a)) is top-heavy for the
Plan Year in question. Any plans which may be aggregated with this Plan under
this Section 13.2(e) are not, as the result of permissive aggregation with this
Plan, top-heavy.
13.3 Superseding Rules. For each Plan Year with regard to which
the Plan is a top-heavy plan, the requirements in this Section 13.3 shall
supersede any other provisions of the Plan which otherwise would apply for that
Plan Year.
(a) Adjusted Code Section 415 Limitations. In order to
reduce the overall limitations on combined plan contributions and benefits
under Code Section 415, the number 1.00 shall be substituted for 1.25 in the
definitions of defined contribution fraction and defined benefit fraction in
Section 5.3 of the Plan, and "$41,500" shall be substituted for "$51,875" in
the numerator of the Transition Fraction in Section 5.3 of the Plan; provided,
however, that if the Plan is not super top-heavy and if (1) the Plan provides
in a given Plan Year a minimum nonintegrated contribution for non-key employees
which is 7 1/2% of Compensation, or (2) the Participant does not participate in
the Employer's defined benefit plan but receives a minimum nonintegrated
contribution to this Plan equal to 4% of his or her Compensation, then this
Section 13.3(a) shall not supersede Plan Section 5.3.
(b) Minimum Contributions for Non-Key Employee
Participants. Nonintegrated Employer contributions and forfeitures allocated
for the Plan Year on behalf of each non-key employee Participant shall equal at
least (1) 3% of Compensation or, if less, (2) the maximum percentage of
Employer contributions including Elective Deferrals (as a percentage of
Compensation not in excess of $200,000) allocated on behalf of any key employee
Participant for the Plan Year multiplied by the non-key employee Participant's
Compensation for the Plan Year. This minimum allocation shall be made even
though, under the other plan provisions, the Participant would not otherwise be
entitled to receive an allocation, or would have received a lesser allocation
for the Year because of (1) the Participant's failure to complete 1,000 Hours
of Service, or (2) the Participant's failure to make any mandatory employee
contributions to the Plan, or (3) compensation less than a stated amount. For
purposes of this rule, Employer contributions made under any other defined
contribution plan of the Employer in which any key employee participates or
which enables another defined contribution plan of the Employer to meet the
requirements of Code Section 401(a)(4) or 410 shall be considered contributions
made under this Plan. These minimum contribution rules shall apply to each
Participant in a top-heavy plan regardless of whether the Participant is
classified for purposes of the Plan as active or inactive. These minimum
contribution rules shall not apply to any Participant who was not employed by
the Employer on the last day of the Plan Year. The minimum allocation required
(to the
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<PAGE> 80
extent required to be nonforfeitable under Code Section 416(b)) may not be
forfeited under Code Section 411(a)(3)(B) or 411(a)(3)(D).
If any non-key employee Participant is also a Participant in any one
or more defined benefit plans maintained by the Employer, the percentage
Employer contribution allocable to any non-key employee Participant pursuant to
the foregoing paragraph shall be at least 5% of Compensation.
13.4 Special Definitions. For purposes of this Article XIII, the
following terms shall have the meanings indicated:
(a) "determination date" means, with respect to any Plan
Year, the last day of the preceding Plan Year, except that in the case of the
first Plan Year, the determination date shall be the last day of that Plan
Year.
(b) "employee" means a common-law employee of the
Employer who is or once was a Participant, including any Beneficiary, but
excluding any employee who is a member of a unit of employees covered by a
collective bargaining agreement under which retirement benefits were the
subject of good faith bargaining with the Employer.
(c) "key employee" means each employee (or former
employee) who, at any time during the Plan Year or any of the four preceding
Plan Years:
(1) is an officer of the Employer whose annual
compensation for the Plan Year exceeds 50% of the dollar limitation under Code
Section 415(b)(1)(A);
(2) is one of the ten employees owning or
considered owning (under Code Section 318) the largest interests in the
Employer (except that an employee will not be considered a top ten owner for a
Plan Year if the employee earns less than 100% of the dollar limitation under
Code Section 415(c)(1)(A) as in effect for the calendar year in which the
determination date falls);
(3) owns more than 5% of the outstanding stock or
voting power of all stock of an incorporated Employer or more than 5% of the
capital or profit interest of an unincorporated Employer;
(4) owns more than 1% of the outstanding stock or
voting power of all stock of an incorporated Employer or more than 1% of the
capital or profit interest of an unincorporated Employer and has annual
Compensation from the Employer of more than $150,000; or
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<PAGE> 81
(5) a beneficiary of any person included in
(c)(1)-(c)(4) above.
The determination of who is a key employee will be
made in accordance with Section 416(i)(l) of the Code and the regulations
thereunder.
For purposes of Section 13.4(c)(2), (3), and (4), the
constructive ownership rules of Code Section 318 shall apply with the
modification that 5 percent shall be substituted for 50 percent in Section
318(a)(2).
(d) "related rollover" means a rollover either (1) not
initiated by the employee or (2) made to a qualified retirement plan maintained
by another employer required to be aggregated under any of Code Sections
414(b), (c) or (m) with the employer sponsor of the Plan from which the
rollover distribution was made.
(e) "unrelated rollover" means a rollover initiated by
the employee and made from a plan maintained by one employer to a plan
maintained by another employer not required to be aggregated with the first
employer under any of Code Sections 414(b), (c), or (m).
(f) "super top-heavy" means a top-heavy plan in which the
fraction computed under Section 13.2(d) hereof exceeds 0.90.
(g) "Valuation Date". The date as of which account
balances or accrued benefits are valued for purposes of calculating the
top-heavy ratio shall be the last day of each Plan Year.
(h) "Compensation" or "annual compensation" means
compensation as defined in Code Section 415(c)(3) but including amounts
contributed by the Employer pursuant to an elective deferral agreement which
are excludible from the employee's gross income under Code Sections 125,
402(a)(8), 402(h) or 403(b).
ARTICLE XIV - PROVISIONS RELATING TO MULTIPLE EMPLOYERS
14.1 Provisions Relating to Employer Contributions: In addition to
those rules set forth in Article IV, the following provisions are effective
with regard to the multiple employers:
(a) Apportionment of Aggregate Contribution Among Members
of Employer: The aggregate amount of Employer contributions to be made under
this Plan by the Employer for a particular fiscal year may be referred to
herein as the "Aggregate Contribution". The Employer contribution under this
Plan (other than Employer elective deferral contributions) for a particular
fiscal year for the benefit of Participants who are
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<PAGE> 82
Employees of a particular Employer Member (herein referred to as the
"Individual Contribution" of such Employer Member) shall be that portion of the
Aggregate Contribution for such year which bears the same ratio to total
Aggregate Contributions as the total of the Compensation attributable to
Participants with such Employer Member during such year bears to the total
Compensation of all Participants for such year. The Employer elective deferral
contributions under this Plan for a particular fiscal year for the benefit of
Participants who are Employees of a particular Employer Member shall be such
contributions as are actually made by that Employer Member. Each Employer
Member shall pay, at the time and in the manner hereinafter provided, the
amount of its individual Contribution determined as aforesaid.
Notwithstanding the foregoing, if any Employer Member
is prevented from paying any portion of its Individual Contribution for a
particular fiscal year, such portion of such Individual Contribution may be
paid by the other Employer Members, who are members of the same controlled
group of corporations. Any such payments made by any other Employer Member
shall, for purposes of all provisions of this Agreement other than the
provisions of this Section, be considered to be a payment made by the Employer
Member for the benefit of whose Employees the Individual Contribution is made.
With respect to any fiscal year for which the Employer Members of the
controlled group do not file a consolidated federal income tax return, the
contributions to be made on behalf of one of the Employer Members by other
Employer Members under the provisions of this section will be in proportion to
the respective amounts of said contributing Employer Member's current and
accumulated earnings and profits remaining after adjustment for their
respective Individual Contributions.
(b) Payment of Contributions: Each Employer Member shall
pay to the Trustee, within the period of time prescribed by Section 4.1, its
Individual Contribution for such fiscal year.
(c) Proration of Compensation Among Employer Members: If
a Participant shall have been employed by only one of the Employer Members
during the course of a particular fiscal year, the entire amount of such
Participant's Compensation for such fiscal year shall be considered to be
attributable to service with such Employer Member. If, however, a Participant
shall have been employed by more than one of the Employer Members during a
particular fiscal year, the amount of such Participant's Compensation which
shall be considered attributable to his service during such fiscal year with
each of said Employer Members shall be the amount actually paid or accrued by
each Employer Member, as reported on the participant's Form W-2 for the year.
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<PAGE> 83
(d) Allocation of Contribution: The allocable share of a
Participant in the trust contribution payable hereunder for a particular fiscal
year by an Employer Member by which he was employed during such fiscal year
shall be that amount of Employer contributions and Employer elective deferral
contributions required by other provisions of Article IV, based on that
Participant's Compensation paid by the Employer Member in question. At the
time when an Employer Member's payment is made to the Trustee, said Employer
Member shall certify to the Trustee a list of the Participants entitled to
share in such contribution, together with adequate information to permit
determination of the allocable share therein of such Participants. The Trustee
shall thereupon credit to the account of each such Participant the amount of
his allocable share of such contribution.
(e) Duties of Trustee Regarding Employer Contributions:
All contributions made under the Plan by the Employer shall be delivered to the
Trustee. The Trustee shall be accountable for all Employer contributions
received by it but shall have no duty to require any contributions to be
delivered to it or to determine if the contributions received comply with the
Plan or with any resolution of the Board of Directors of any Employer Member
providing therefor.
14.2 Duties of Primary Employer: The Employer Members hereby
expressly acknowledge and agree that the Employer is vested with certain rights
and obligations with regard to amending, terminating, merging and consolidating
this Plan under the other provisions of this Plan, and that those rights and
obligations will be vested in the Primary Employer. However, any Employer
Member will have the right to terminate its participation in the Plan at any
time. Whether such termination of participation shall constitute a partial
termination of the Plan in accordance with Article XII, shall be determined in
accordance with applicable laws in effect at the time of the termination of
participation. In addition, it shall be the duty of the Primary Employer to
appoint and remove the Plan Administrator, the Trustee, any Investment Manager,
and any other agents, counsel or fiduciaries permitted or required under the
Plan.
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<PAGE> 84
14.3 Portability of Service Credit: Subject to the reemployment
provisions of Section 3.4, an Employee shall receive credit for all years of
employment with any of the Employer Members, for purposes of determining his
Years of Service with any Employer Member.
DATED this 6th day of May , 1997.
--------- --------------------------
CAPITOL BANCORP, LTD.
By: /s/
--------------------------------
Joseph D. Reid, Chairman and CEO
PORTAGE COMMERCE BANK
By: /s/ Paul R. Ballard
--------------------------------
Its: President
--------------------------------
CAPITOL NATIONAL BANK
By: /s/ Robert C. Carr
---------------------------------
Its: President
---------------------------------
ANN ARBOR COMMERCE BANK
By: /s/ Richard G. Dorner
---------------------------------
Its: President and CEO
--------------------------------
OAKLAND COMMERCE BANK
By: /s/ James R. Kaye
---------------------------------
Its: President and CEO
--------------------------------
81
<PAGE> 85
PARAGON BANK & TRUST
By: /s/ Scott G. Kling
---------------------------------
Its: President and CEO
---------------------------------
GRAND HAVEN BANK
By: /s/ John D. Groothuis
---------------------------------
Its: President
--------------------------------
MACOMB COMMUNITY BANK
By: /s/ Stephen C. Tarczy
---------------------------------
Its: President and CEO
--------------------------------
BRIGHTON COMMERCE BANK
By: /s/ Gary T. Nickerson
---------------------------------
Its: President
---------------------------------
BANK OF TUCSON
By: /s/ Michael F. Hannley
---------------------------------
Its: President
--------------------------------
VALLEY 1ST COMMUNITY BANK
By: /s/ Gary Hickel
----------------------------------
Its: President
-------------------------------
82
<PAGE> 86
CAPITOL BANCORP, LTD.
EMPLOYEE SAVINGS AND STOCK OWNERSHIP
TRUST AGREEMENT
<PAGE> 87
CAPITOL BANCORP, LTD.
EMPLOYEE SAVINGS AND STOCK OWNERSHIP
TRUST AGREEMENT
This Agreement, made this _____ day of __________, 1997, by
and between the Employer named in Article I of this Agreement (hereinafter
referred to as the "Employer") and the Trustee named in Article I of this
Agreement (hereinafter referred to as the "Trustee").
WITNESSETH:
WHEREAS, Capitol Bancorp, Ltd. adopted the Capitol Bancorp,
Ltd. Employee Savings and Stock Ownership Plan and Trust Agreement for its
eligible employees effective January 1, 1997 (hereinafter referred to as the
"Plan"); and
WHEREAS, a Plan Committee has been appointed to administer the
Plan; and
WHEREAS, under the Plan (the terms of which are incorporated
herein for purposes hereof), funds will from time to time be contributed to the
Trustee, which funds will constitute a trust fund to be held for the exclusive
benefit of the participants in the Plan or their beneficiaries, including
payment of certain expenses; and
WHEREAS, the Primary Employer wants the Trustee to hold,
invest, reinvest and otherwise to administer the funds, and the Trustee has
indicated its willingness to do so, all pursuant to the terms of this
Agreement;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants herein contained, the Employer and the Trustee do hereby
covenant and agree as follows:
ARTICLE I - DEFINITIONS AND CONSTRUCTION
1.01 Definitions: The following words and phrases shall, when used
herein, have the following respective meanings unless their context clearly
indicates otherwise:
(a) Committee: The person or entity appointed under the
provisions of the Plan to administer the Plan.
(b) Employer: Capitol Bancorp, Ltd., a bank holding
company organized and existing under the laws of the State of Michigan, and the
entities listed below, or their respective successor or successors and any
other entity whose Board of Directors authorizes participation in this Plan
where Capitol Bancorp, Ltd. by its Board of Directors has approved said
participation. Capitol Bancorp, Ltd. may also be referred to as the Primary
Employer, as defined in Section 1.01(e).
The Employers participating in the Plan in addition to Capitol
Bancorp, Ltd. are:
<PAGE> 88
<TABLE>
<CAPTION>
Name of Type of State of Date of
Employer Entity Organization Participation
-------- ------- ------------ -------------
<S> <C> <C> <C>
Portage Commerce Bank Banking corp. Michigan Participating as of
restatement date
Capitol National Bank Banking corp. Michigan Participating as of
restatement date
Ann Arbor Commerce Bank Banking corp. Michigan Participating as of
restatement date
Oakland Commerce Bank Banking corp. Michigan Participating as of
restatement date
Paragon Bank & Trust Banking corp. Michigan Participating as of
restatement date
Grand Haven Bank Banking corp. Michigan Participating as of
restatement date
Macomb County Bank Banking corp. Michigan Adopted as a restatement
effective as of July 1, 1997
Brighton Commerce Bank Banking corp. Michigan Adopted as a restatement
effective as of July 1, 1997
</TABLE>
Each of the individual Employers named in this
Section 1.01(b) may be referred to as an Employer Member. Employer also
includes all members of a controlled group of corporations (as defined in Code
Section 414(b) as modified by Code Section 415(h)), all commonly controlled
trades or businesses (as defined in Code Section 414(c) as modified by Code
Section 415(h)) or affiliated service groups (as defined in Code Section
414(m)) of which the Employer is a part, and any other entity required to be
aggregated with the Employer pursuant to regulations under Code Section 414(o).
(c) Employer Member: Each of the individual Employers
named in Section 1.01(b).
(d) Plan: The Capitol Bancorp, Ltd. Employee Savings and
Stock Ownership Plan, as amended from time to time.
(e) Primary Employer: The Primary Employer for purposes
of this Trust shall be Capitol Bancorp, Ltd.
(f) Trust (or Trust Fund): The fund known as the Capitol
Bancorp, Ltd. Employee Savings and Stock Ownership Trust,
2
<PAGE> 89
as set forth in this Agreement, as from time to time amended.
(g) Trustee: Paragon Bank & Trust.
1.02 Construction: The masculine gender, where appearing in this
Agreement, shall be deemed to include the feminine gender, unless the context
clearly indicates to the contrary. The words "hereof", "herein", "hereunder"
and other similar compounds of the word "here" shall mean and refer to the
entire Trust and not to any particular provision or section.
ARTICLE II - RECEIPT OF CONTRIBUTIONS
AND PAYMENTS FROM TRUST FUND
2.01 The Trustee shall receive any contributions paid to it in cash
or in the form of such other property including Employer Stock as it may from
time to time deem acceptable and which shall have been delivered to it.
Subject to Article III, the Trust assets shall be invested by the Trustee
pursuant to written instructions from the Committee appointed by the Primary
Employer to administer the Plan. All contributions so received, together with
the income therefrom and any other increment thereon, (hereinafter collectively
referred to as the "Trust Fund") shall be held, invested, reinvested and
administered by the Trustee pursuant to the terms of this Agreement without
distinction between principal and income and without liability for the payment
of interest thereon. The Employer may make contributions in cash or Employer
Stock in such manner and at such times as shall be appropriate. Employer
contributions and other Trust assets may be used to acquire shares of Employer
Stock. The Trustee shall not be responsible for the calculation or collection
of any contribution under or required by the Plan, but shall be responsible
only for property received by it pursuant to this Agreement.
2.02 The Plan, this Agreement and the Trust Fund thereunder are
intended to meet all the requirements of Sections 401(a) and 501(a) of the
Internal Revenue Code of 1986, and the Employee Retirement Income Security Act
of 1974, as the same may be amended from time to time.
2.03 Subject to the limitations imposed by Section 2.04 of this
Article, the Trustee shall from time to time on the written directions of the
Committee make payments out of the Trust Fund to such persons, including the
Committee, in such amounts and for such purposes as may be specified in the
written directions of the Committee, including the purchase of annuity
contracts. To the extent permitted by law, the Trustee shall be under no
liability for any payment made pursuant to the direction of the Committee. Any
written direction of the Committee shall constitute a certification that the
distribution or payment so directed is one which the Committee is authorized to
direct. If distribution is directed in Employer Stock, the Trustee or the
Committee shall cause the Primary Employer to issue an appropriate stock
certificate to the person entitled thereto to
3
<PAGE> 90
be delivered to such person by the Committee. Any cash distribution shall be
made by the Trustee furnishing its check to the Committee for delivery to the
Participant or Beneficiary.
2.04 Anything contained in this Agreement to the contrary
notwithstanding, it shall be impossible at any time prior to the satisfaction
of all liabilities with respect to participants and their beneficiaries, for
any part of the Trust Fund to be used for or diverted to purposes other than
for the exclusive benefit of the participants under the Plan and their
beneficiaries, except that payment of taxes and administration expenses may be
made from the Trust Fund as provided in Article VI hereof.
ARTICLE III - INVESTMENTS
3.01 As directed by the Committee and subject to the provisions of
Section 3.04 hereof, the Trustee shall invest and reinvest the principal and
income of the Trust Fund and keep the Trust Fund invested, without distinction
between principal and income, in such securities or in such property, real or
personal, tangible or intangible, or part interest therein, wherever situated,
whether or not productive of income, or consisting of wasting assets, as the
Trustee shall deem advisable, including but not limited to stocks, common or
preferred, including Employer Stock, trust and participation certificates,
interests in investment companies whether so-called "open-end mutual funds" or
"closed-end mutual funds", common investment funds, leaseholds, fee titles,
bonds or notes and mortgages, and other evidences of indebtedness or ownership,
irrespective of whether such securities or such property shall be of the
character authorized by any state law from time to time for trust investments.
The primary purpose of this Trust is to invest primarily or totally in Employer
Stock. Therefore, the Trustee shall be exempt from otherwise applicable rules
relating to diversification of investments with respect to investments made in
Employer Stock. The Trustee may dispose of Employer Stock for reasons other
than those described in Article II only if specifically directed in writing by
the Committee with the approval of the Board of Directors of the Primary
Employer or in accordance with Section 3.04 hereof. The Committee shall assume
the responsibility and liability for the prudence of investments directed by it
under Section 3.01. The Committee may delegate in writing to the Trustee the
responsibility for investing Trust Assets other than Employer Stock.
3.02 The term "investment company" as used in Section 3.01 above
shall include shares of open-end investment companies, including, without
limiting the generality of the foregoing, such investment companies as are
commonly known as "money-market funds". The Trustee shall use the price
established and provided from time to time by any such open-end investment
company for any valuation required under the terms of this Agreement.
3.03 The term "Employer Stock" as used herein shall mean shares of
stock as defined in Section 2.1 of the Plan. If the
4
<PAGE> 91
Trustee is directed to dispose of any Employer Stock held as Trust Assets under
circumstances which require registration and/or qualification of the securities
under applicable federal or state securities laws, then the Primary Employer
(at its own expense) will take, or cause to be taken, any and all such actions
as may be necessary or appropriate to effect such registration and/or
qualification.
3.04 This Section 3.04 shall control where inconsistent with other
Trust provisions. The Plan allows any Participant to direct the investment of
a portion of his interest in the Trust. Consistent therewith, each
Participant's directed interest in the Trust shall be placed in a segregated
account within the Trust. This segregated account shall be invested in any
security including Employer Stock or other property or other form that the
Trustee has the power to invest in hereunder, as directed by the Participant
and consistent with the terms of the Plan. Such investment shall not be
restricted by any law governing investments by fiduciaries. Each Participant
so directing may, subject to the terms of the Plan, subsequently notify the
Trustee that he desires any investment made from the fund so segregated sold,
converted to any other investment or otherwise disposed of. The Trustee shall
then purchase such investment or dispose of such investment as stated in the
notice received from the Participant. The Trustee shall incur no liability
whatsoever for carrying out the Participant's written instructions.
Investments so acquired shall be held by the Trustee for the Participant and
all income and/or losses thereon shall be credited to the Participant's account
from which the investment was made. Investments so acquired shall be held by
the Trustee until distributed in accordance with the Plan or until the Trustee
is directed to dispose of the assets by the Participant on the basis indicated
below. Such segregated accounts shall not share any Trust valuation gains or
losses as otherwise provided herein. Any Trust assets not the subject of a
valid written election shall be invested by the Trustee in accordance with the
Plan. In any event, this directed investment provision shall be administered
in a manner consistent with ERISA Section 404 or any successor thereto.
ARTICLE IV - FUNDING POLICY
4.01 The discretion of the Trustee in investing and reinvesting the
principal and income of the Trust Fund other than investments in Employer Stock
shall be subject to such funding policy, and any changes thereof from time to
time, as the Committee may, pursuant to the Plan, adopt from time to time and
communicate to the Trustee in writing. It shall be the duty of the Trustee to
act strictly in accordance with such funding policy, and any changes therein,
as so communicated to the Trustee from time to time in writing.
4.02 The Plan Administrator shall establish and carry out a funding
policy consistent with the purposes of the Plan and the requirements of
applicable law, as may be appropriate from time
5
<PAGE> 92
to time. As part of such funding policy, the named fiduciary shall from time
to time direct the Trustee or the Investment Manager (if an Investment Manager
has been appointed), to exercise its investment discretion so as to provide
sufficient cash assets in an amount determined by the named fiduciary, under
the funding policy then in effect, to be necessary to meet the liquidity
requirements for the administration of the Plan.
ARTICLE V - TRUSTEE'S POWERS
5.01 As directed by the Committee when administering the Trust
Fund, the Trustee is authorized and empowered, subject to the provisions of
Articles III and IV hereof:
(a) To purchase and subscribe (including transactions
with the Primary Employer, or any Affiliated Employer, or any shareholder of
the Primary Employer or Affiliated Employer) for any securities including
Employer Stock or other property and to retain such securities or other
property in trust;
(b) To sell at public or private sale, for cash, or upon
credit, or otherwise dispose of any property, real or personal; and no person
dealing with the Trustee shall be bound to see to the application or to inquire
into the validity, expediency or propriety of any such sale or other
disposition;
(c) To adjust, settle, contest, compromise and arbitrate
any claims, debts, or damages due or owing to or from the Trust Fund, and to
sue, commence or defend any legal proceedings in reference thereto;
(d) To exercise any conversion privilege subscription
rights or other options pertaining to or in connection with securities or other
property held by it; to consent to or otherwise participate in any
reorganization, consolidation, merger or adjustment pertaining to any corporate
reorganization or other changes affecting corporate securities, to deposit any
property with any committee or depositary, and to pay any assessments or other
charges in connection therewith;
(e) To exercise itself, or by general or limited power of
attorney, any right, including the right to vote, incident to any securities or
other property held by it;
(f) To borrow money from any lender including any of the
Employer Members upon such terms and conditions as may be deemed advisable to
carry out the purposes of the trust, to finance the acquisition of Employer
Stock and to pledge securities in repayment of any such loan; provided,
however, that loans or advances may be made by the Trustee hereunder by way of
overdrafts or otherwise on a temporary basis on which no interest is payable;
(g) To manage, administer, operate, repair, improve and
mortgage or lease for any number of years, regardless of any
6
<PAGE> 93
restrictions on leases made by trustees or to otherwise deal with any real
property or interest therein; to renew or extend or to participate in the
renewal or extension of any mortgage, and to agree to the reduction in the
interest on any mortgage or other modification or change in the terms of any
mortgage or guarantee thereof in any manner and upon such terms as may be
deemed advisable; to waive any defaults whether in the performance of any
covenant or condition of any mortgage or in the performance of any guarantee or
to enforce any such default in such manner as may be deemed advisable,
including the exercise and enforcement of any and all rights of foreclosure;
(h) To invest all or part of the Trust Fund in
interest-bearing deposits with the Trustee (if the Trustee is a bank), or with
a bank or similar financial institution related to the Trustee if such bank or
other institution is a fiduciary with respect to the Plan as defined in the
Employee Retirement Income Security Act of 1974, including but not limited to
investments in time deposits, savings deposits, certificates of deposit or time
accounts which bear a reasonable interest rate;
(i) To register any investment held in the Trust Fund,
including Employer Stock, in its own name or in the name of a nominee or to
hold any investment in bearer form;
(j) To employ suitable agents, accountants and counsel
and to pay their reasonable expenses and compensation or to reimburse the
Employer for such expenses and compensation paid by the Employer, all as
permitted by law;
(k) To hold any part or all of the Trust Fund uninvested;
(l) To form corporations and to create trusts to hold
title to any securities or other property, all upon such terms and conditions
as it may deem advisable;
(m) To make, execute and deliver as Trustee any and all
deeds, leases, mortgages, advances, contracts, waivers, releases or other
instruments in writing necessary or proper in the employment of any of the
foregoing powers;
(n) To exercise, generally, any of the powers which an
individual owner might exercise in connection with property either real,
personal or mixed held by the Trust Fund, and to do all other acts that the
Trustee may deem necessary or proper to carry out any of the powers set forth
in this Article V or otherwise in the best interests of the Trust Fund;
(o) To transfer, at any time and from time to time, such
part or all of the Trust Fund as it shall deem advisable to a state or national
banking institution as trustee of any trust maintained by it as a medium for
the collective investment of trust funds of which it may from time to time be
acting as Trustee, and to withdraw any part or all of the Trust Fund so
transferred; in which event the provisions of any such trust
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shall be deemed a part of this Agreement to the extent that they shall not be
inconsistent with the provisions hereof.
(p) To vote any stocks (including Employer Stock as
provided in Article VI of the Plan), bonds or other securities held in the
Trust, or otherwise consent to or request any action on the part of the issuer
in person or by proxy;
(q) To participate in reorganizations, recapitalizations,
consolidations, mergers and similar transactions with respect to Employer Stock
or any other securities;
The Committee may authorize the Trustee to act on any matter
(or class of matters) with respect to which directions or instructions from the
Committee are called for hereunder without specific directions or instructions
from the Committee.
5.02 Notwithstanding anything to the contrary herein contained, in
the event that an Investment Manager is appointed by the Primary Employer to
direct the investment and reinvestment of all or a portion of the Trust Fund
pursuant to Article III hereof, the Plan Administrator may direct the Trustee,
by written notice, to segregate said portion of the Trust Fund into a separate
investment account or investment accounts.
5.03 Any such Investment Manager shall either (i) be registered as
an investment adviser under the Investment Advisers Act of 1940; (ii) be a
bank, as defined in that Act; or (iii) be an insurance company qualified to
perform investment management services under the laws of more than one state.
If investment of the Trust Fund is to be directed in whole or in part by an
Investment Manager, the Primary Employer shall deliver to the Trustee a copy of
the instruments appointing the Investment Manager and evidencing the Investment
Manager's acceptance of such appointment, an acknowledgment by the Investment
Manager that it is a fiduciary of the Plan, and a certificate evidencing the
Investment Manager's current registration under said Act. The Trustee shall be
fully protected in relying upon such instruments and certificate until
otherwise notified in writing by the Primary Employer.
5.04 The Trustee shall follow the directions of the Investment
Manager regarding the investment and reinvestment of the Trust Fund, or such
portion thereof as shall be under management by the Investment Manager and
shall exercise the powers set forth in Section 5.01(a), (b), (c), (d), (e),
(f), (g), and (h) as directed by the Investment Manager. The Trustee shall be
under no duty or obligation to review any investment to be acquired, held or
disposed of pursuant to such directions nor to make any recommendations with
respect to the disposition or continued retention of any such investment or the
exercise or non-exercise of the powers in Section 5.01 of this Article V. The
Trustee shall have no liability or responsibility for acting or not acting
pursuant to the direction of, or failing to act in the absence of any direction
from, the Investment Manager, unless the
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Trustee knows that by such action or failure to act it would be itself
committing or participating in a breach of fiduciary duty by the Investment
Manager. The Primary Employer hereby agrees to indemnify the Trustee and hold
it harmless from and against any claim or liability which may be asserted
against the Trustee by reason of its acting or not acting pursuant to any
direction from the Investment Manager or failing to act in the absence of any
such direction.
5.05 The Investment Manager at any time and from time to time may
issue orders for the purchase or sale of securities directly to a broker; and
in order to facilitate such transaction, the Trustee upon request shall execute
and deliver appropriate trading authorizations. Written notification of the
issuance of each such order shall be given promptly to the Trustee by the
Investment Manager, and the execution of each such order shall be confirmed by
written advice to the Trustee by the broker. Such notification shall be
authority for the Trustee to pay for securities purchased against receipt
thereof and to deliver securities sold against payment therefor, as the case
may be.
5.06 In the event that an Investment Manager should resign or be
removed by the Primary Employer, or if no Investment Manager is appointed, the
Trustee shall manage the investment of the Trust Fund pursuant to Articles III,
IV and V unless and until it shall be notified of the appointment of another
Investment Manager with respect thereto as provided in this Article V.
5.07 The accounts, books and records of the Trustee shall reflect
the segregation, pursuant to the provisions of Article V hereof, of any portion
or portions of the Trust Fund in a separate investment account or accounts.
ARTICLE VI - FEES AND EXPENSES
6.01 The expenses incurred by the Trustee in the performance of its
duties, including fees for legal services, and such compensation to the Trustee
as may be agreed upon in writing from time to time between the Primary Employer
and the Trustee, and all other proper charges and disbursements of the Trustee,
including any and all taxes assessed against the Trustee or the Trust Fund,
shall be paid from the Trust Fund unless paid by the Employer.
ARTICLE VII - TRUSTEE'S DUTIES AND OBLIGATIONS
7.01 The Trustee shall discharge its duties under this Agreement
solely in the interest of the participants in the Plan and their beneficiaries
and for the exclusive purpose of providing benefits to such participants and
their beneficiaries and defraying reasonable expenses of administering the
Plans, with the care, skill, prudence and diligence under the
9
<PAGE> 96
circumstances then prevailing that a prudent man acting in a like capacity and
familiar with such matters would use in the conduct of an enterprise of a like
character and with like aims, and, subject to Participants' rights to direct
the investment of their accounts (if permitted by the Plan) and insofar as
investments are made in Employer Stock, by diversifying the investments of the
Plan so as to minimize the risk of large losses, unless under the circumstances
it is clearly prudent not to do so, all in accordance with the provisions of
this Agreement insofar as they are consistent with the provisions of the
Employee Retirement Income Security Act of 1974, as this Agreement and the said
Act may be from time to time amended; but the duties and obligations of the
Trustee as such shall be limited to those expressly imposed upon it by this
Agreement notwithstanding any reference herein to the Plan, or to the
provisions thereof, it being hereby expressly agreed that the Trustee is not a
party to the Plan.
7.02 The Trustee may consult with counsel (who may be counsel for
any Employer Member or for the Trustee in its individual capacity), and the
Trustee shall not be deemed imprudent by reason of its taking or refraining
from taking any action in accordance with the opinion of counsel. The Primary
Employer agrees, to the extent permitted by law, to indemnify and hold the
Trustee harmless from and against any liability that the Trustee may incur in
the administration of the Trust Fund, unless arising from the Trustee's own
negligent or willful breach of the provisions of this Agreement. The Trustee
shall not be required to give any bond or any other security for the faithful
performance of its duties under this Agreement, except such as may be required
by a law which prohibits the waiver thereof.
7.03 The Trustee shall be entitled, as it may deem appropriate from
time to time, to require of the Primary Employer, the named fiduciary or any
other person involved in the administration of the Plan or investment of the
Trust Fund, or having any interest under the Plan or in, to, or under this
Agreement or to the Trust Fund held hereunder, such certifications and proofs
of facts as shall permit the Trustee to perform its duties under the Employee
Retirement Income Security Act of 1974 (or any regulation thereunder) as may be
in effect from time to time, or to exercise the powers granted the Trustee
under this Agreement.
ARTICLE VIII - ACCOUNTS AND RECORDS
8.01 The Trustee shall keep accurate and detailed accounts of all
investments, receipts, disbursements and other transactions hereunder and all
such accounts and other records relating thereto shall be open to inspection
and audit at all reasonable times by any person designated by the Primary
Employer or the Committee. Within ninety (90) days following the close of the
fiscal year of the Trust Fund and within ninety (90) days after the removal or
resignation of the Trustee as provided under Article IX hereof, the Trustee
shall file with the Primary Employer a written account setting forth all
investments,
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<PAGE> 97
receipts, disbursements and other transactions effected by it during such
fiscal year or during the period from the close of the last fiscal year to the
date of such removal or resignation. Upon the expiration of sixty (60) days
from the filing of such account, the Trustee shall be forever released, remised
and discharged from all liability and accountability to anyone with respect to
the propriety of its accounts and transactions shown in such accounts except
with respect to any such account or transactions as to which the Primary
Employer shall within such sixty (60) day period file written exceptions and
objections. To the extent permitted by law, but subject to any express
provision of applicable law as may be in effect from time to time to the
contrary, no person other than the Primary Employer may require an accounting
or bring any action against the Trustee with respect to the Trust Funds or its
actions as Trustee.
8.02 Notwithstanding any other provision of this Article VIII, the
Trustee shall have the right to have a judicial settlement of the Trustee's
accounts, or for instructions in connection with the Trust Fund, the only
necessary parties thereto in addition to the Trustee shall be the Employer
Members and the Plan Administrator. If the Trustee so elects, it may bring in
any other person or persons as a party or parties defendant.
ARTICLE IX - TRUSTEE'S REMOVAL OR RESIGNATION
9.01 Any Trustee may be removed by the Primary Employer at any time
upon sixty (60) days' notice in writing to the Trustee and the Committee. Any
Trustee may resign at any time upon sixty (60) days' notice in writing to the
Primary Employer. Upon such resignation or removal, the Primary Employer shall
appoint a successor trustee and such successor trustee shall have the same
powers and duties as those conferred upon each Trustee named in this Agreement.
The removal of a Trustee and the appointment of a successor trustee shall be by
written instrument delivered to the Trustee.
ARTICLE X - LIMITATION ON TRUSTEE'S LIABILITY
10.01 The Committee shall administer the Plan as provided therein, and
the Trustee shall not be responsible in any respect for administering the Plan
nor shall the Trustee be responsible for the adequacy of the Trust Fund to meet
or discharge any payments or liabilities under the Plan. The Trustee shall not
be liable for any loss to or diminution in value of Employer Stock held as
Trust Assets. The Trustee shall be
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fully protected in relying upon any written notice, instruction, direction or
other communication of the Committee when signed by the Committee. The Primary
Employer from time to time shall furnish the Trustee with the names and
specimen signatures of the Committee and officers of the Primary Employer, and
shall promptly notify the Trustee of the termination of office of the Committee
or officer of the Primary Employer and the appointment of such person's
successor. Until notified to the contrary in writing, the Trustee shall be
fully protected in relying upon the most recent certification of the Committee
and officers of the Primary Employer furnished to it by the Primary Employer.
10.02 Any action required by any provision of this Agreement to be
taken by the Board of Directors of any Employer Member shall be evidenced by a
resolution of the Board of Directors certified to the Trustee by the Secretary
or an Assistant Secretary of the Employer Member, and the Trustee shall be
fully protected in relying upon any resolution so certified to it. Unless
other evidence with respect thereto has been expressly prescribed in this
Agreement, any other action of an Employer Member under any provision of this
Agreement, including any approval of or exceptions to the Trustee's accounts,
shall be evidenced by a certificate signed by an officer of the Employer
Member, and the Trustee shall be fully protected in relying upon such
certificate. The Trustee may accept a certificate signed by an officer of the
Employer Member as proof of any fact or matter that the Trustee deems necessary
or desirable to have established in the administration of the Trust Fund
(unless other evidence of such fact or matter is expressly prescribed herein),
and the Trustee shall be fully protected in relying upon the statements in the
certificate.
10.03 The Trustee shall be entitled conclusively to rely upon any
written notice, instruction, direction, certificate or other communication
believed by it to be genuine and to be signed by the proper person or persons,
and the Trustee shall be under no duty to make investigation or inquiry as to
the truth, accuracy, or completeness of any statement contained therein.
ARTICLE XI - AMENDMENT OF AGREEMENT
11.01 The Primary Employer reserves the right at any time and from
time to time by action of its Board of Directors to amend in whole or in part
any or all of the provisions of this Agreement, with the exception of Section
2.04 of Article II hereof, by an instrument in writing duly acknowledged and
delivered to the Committee and the Trustee, provided that no such amendment
which affects the rights, duties, responsibilities or immunities of the Trustee
may be made without its consent.
ARTICLE XII - TERMINATION OF PLAN OR TRUST
12.01 This Agreement and the Trust, which is part of the Plan, may be
terminated at any time by the Primary Employer, and upon such termination, or
upon the dissolution or liquidation of the Primary Employer, the Trust Fund
shall be paid out by the Trustee as and when directed by the Committee or the
Primary Employer, in accordance with the provisions of Article II hereof.
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<PAGE> 99
ARTICLE XIII - APPLICATION OF STATE LAW
13.01 Subject to the provisions of the Employee Retirement Income
Security Act of 1974, as the same may be amended from time to time, which may
be applicable and provides to the contrary, this Agreement, as amended from
time to time, shall be administered, construed and enforced according to the
laws of the State of Michigan and in courts situated in that State.
ARTICLE XIV - PROVISIONS RELATING TO MULTIPLE EMPLOYERS
14.01 Each Employer Member will pay to the Trustee its Individual
Contribution (as determined under the terms of the Plan) in accordance with the
provisions of Section 2.01 hereof.
14.02 The Employer Members hereby expressly acknowledge and agree that
the Employer is vested with certain rights and obligations with regard to
amending, terminating, merging and consolidating the Trust under the provisions
of the Plan and the other provisions of this Trust, and that those rights and
obligations will be vested in the Primary Employer. However, any Employer
Member will have the right to terminate its participation in the Plan at any
time. Whether such termination of participation shall constitute a partial
termination of the Plan shall be determined in accordance with applicable laws
in effect at the time of the termination of participation.
14.03 Each of the Employer Members agrees, to the extent permitted by
law, to indemnify and hold the Trustee harmless from and against any liability
that the Trustee may incur in the administration of the Trust Fund, unless
arising from the Trustee's own negligent or willful breach of the provisions of
this Agreement.
14.04 Each of the Employer Members shall certify to the Trustee, at
such times and in such form as the Trustee may require, the names and specimen
signatures of its officers, any named fiduciary, or any other person involved
in the administration of the Plan or investment of the Trust Fund, or any other
certifications and proofs of facts as may be required in accordance with
Section 7.03 hereof.
14.05 Any action required by any provision of this Agreement to be
taken by the Board of Directors of any Employer Member shall be evidenced by a
resolution of the Board of Directors certified to the Trustee by the Secretary
or an Assistant Secretary of the Employer Member, and the Trustee will be fully
protected in relying upon any resolution so certified to it. Unless other
evidence with respect thereto has been expressly prescribed in this Agreement,
any other action of any Employer Member under any provision of this Agreement,
including any approval of or exceptions to the Trustee's accounts, shall be
evidenced by a certificate signed by an officer of the Employer Member, and the
Trustee shall be fully protected in relying upon such certificate. The Trustee
may accept a certificate signed by
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<PAGE> 100
an officer of an Employer Member as proof of any fact or matter pertaining to
that specific Employer Member that the Trustee deems necessary or desirable to
have established in the administration of the Trust Fund (unless other evidence
of such fact or matter is expressly prescribed herein), and the Trustee shall
be fully protected in relying upon the statements in the certificate.
IN WITNESS WHEREOF, the parties hereto have hereunto set their
hands and seals as of the day and year first above written.
CAPITOL BANCORP, LTD.
BY: /s/
----
Joseph D. Reid, Chairman and CEO
PORTAGE COMMERCE BANK
By: /s/ Paul R. Ballard
-----------------------
Its: President
-----------------------
CAPITOL NATIONAL BANK
By: /s/ Robert C. Carr
-----------------------
Its: President
-----------------------
ANN ARBOR COMMERCE BANK
By: /s/ Richard G. Dorner
-----------------------
Its: President and CEO
-----------------------
OAKLAND COMMERCE BANK
By: /s/ James R. Kaye
-----------------------
Its: President and CEO
-----------------------
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<PAGE> 101
PARAGON BANK & TRUST
By: /s/ Scott G. Kling
-----------------------
Its: President and CEO
-----------------------
GRAND HAVEN BANK
By: /s/ John D. Groothuis
-----------------------
Its: President
-----------------------
MACOMB COMMUNITY BANK
By: /s/ Stephen C. Tarczy
-----------------------
Its: President & CEO
-----------------------
BRIGHTON COMMERCE BANK
By: /s/ Gary T. Nickerson
-----------------------
Its: President
-----------------------
BANK OF TUCSON
By: /s/ Michael F. Hannley
-----------------------
Its: President
-----------------------
VALLEY 1ST COMMUNITY BANK
By: /s/ Gary Hickel
-----------------------
Its: President
-----------------------
PARAGON BANK & TRUST
BY: /s/ Scott G. Kling
-----------------------
Its: President and CEO
-----------------------
15
<PAGE> 1
EXHIBIT 5
(517) 371-8272
June 24, 1997
Capitol Bancorp, Ltd.
One Business & Trade Center
200 Washington Square North
Lansing, MI 48933
Gentlemen:
Re: Registration Statement on Form S-8
In connection with the proposed registration of 100,000 shares
of common stock of Capitol Bancorp, Ltd. (the "Corporation") covered by the
above-captioned Registration Statement, we have examined the Corporation's
Certificate of Incorporation, Bylaws, Corporate Minute Book and the
Registration Statement to be filed with the Securities and Exchange Commission
pursuant to the Securities Act of 1933 on or about June 30, 1997.
Based upon such examination and upon examination of such other
instruments and records as we deem necessary, we are of the opinion that:
1. The Corporation has been fully incorporated under the
laws of the State of Michigan, and is validly existing and in good standing
under the laws of that state.
2. The 100,000 shares of common stock covered by this
Registration Statement have been legally authorized and when such shares have
been duly delivered against payment therefore as contemplated by the
Capitol Bancorp, Ltd. Employee Savings and Stock Ownership Plan, such shares
will be legally issued, fully paid and nonassessable.
<PAGE> 2
Capitol Bancorp, Ltd.
June 24, 1997
Page 2
We hereby consent to the filing of this opinion as an exhibit.
Very truly yours,
FOSTER, SWIFT, COLLINS & SMITH, P.C.
/s/ Stephen J. Lowney
Stephen J. Lowney
SJL:tlb
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement (Form S-8) of our report
dated January 31, 1997, relating to the consolidated financial statements of
Capitol Bancorp Limited appearing in the Corporation's Annual Report on Form
10-K for the year ended December 31, 1996, incorporated herein by reference.
/s/ BDO Seidman, LLP
Grand Rapids, Michigan
June 27, 1997
