x
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ANNUAL
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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¨
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TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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South Carolina
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57-1021355
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(State
or other jurisdiction of
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(IRS Employer
|
|
incorporation
or organization)
|
Identification
Number)
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256 Meeting Street, Charleston,
SC
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29401
|
|
(Address
of principal executive offices)
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(Zip
Code)
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1.
|
Include
a statement identifying the framework used by management to evaluate the
effectiveness of the Company’s internal control over financial reporting
in Item 9A(T) of Regulation S-K;
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2.
|
Include
Option Award information required by Item 402(f)(1) and Item 402(f)(2) of
Regulation S-K;
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3.
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Include
the equity compensation plan table as required by Item 201(d) of
Regulation S-K;
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|
4.
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Include
as exhibits a copy of the Company’s Incentive Stock Option Plan and the
Company’s Employee Stock Ownership Plan as required by Item
601(b)(10)(iii)(A) of Regulation
S-K.
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SUMMARY COMPENSATION TABLE
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|||||||||||||||||||||||||
Name
and
Principal
Position
|
Year
|
Salary
(1)
|
Bonus
(2)
|
Stock
Awards
|
Option
Awards
|
Non-Equity
Incentive Plan
Compensation
|
Nonqualified
Deferred
Compensation
Earnings
|
All
Other
Compensation
(3)
|
Total
|
||||||||||||||||
Hugh
C. Lane, Jr.
President
and Chief Executive
Officer
|
2008
|
210,101.45 | 100.00 | 19,572.15 | 229,773.60 | ||||||||||||||||||||
2007
|
200,001.37 | 1,600.00 | 18,136.27 | 219,737.64 | |||||||||||||||||||||
2006
|
190,000.00 | 1,600.00 | 21,630.52 | 213,230.52 | |||||||||||||||||||||
William
L. Hiott, Jr.
Executive
Vice President and Treasurer
|
2008
|
180,101.45 | 100.00 | 16,777.48 | 196,978.93 | ||||||||||||||||||||
2007
|
175,001.53 | 1,600.00 | 15,887.26 | 192,488.79 | |||||||||||||||||||||
2006
|
167,000.00 | 1,600.00 | 19,033.98 | 187,633.98 | |||||||||||||||||||||
Fleetwood
S. Hassell
Executive
Vice President
|
2008
|
145,101.29 | 100.00 | 13,517.02 | 158,718.31 | ||||||||||||||||||||
2007
|
135,001.45 | 1,600.00 | 12,288.81 | 148,890.26 | |||||||||||||||||||||
2006
|
120,000.00 | 1,600.00 | 13,728.00 | 135,328.00 | |||||||||||||||||||||
Nathaniel
I. Ball, III
Retired
Executive Vice President and Secretary
|
2007
|
140,600.00 | (4) | 140,600.00 | |||||||||||||||||||||
2006
|
146,649.09 | (4) | 146.649.09 |
1)
|
The
Compensation Committee consisting of Graham M. Eubank, Jr. and Thomas C.
Stevenson, III., compared salaries of positions at similar
sized banks within South Carolina as well as the overall bank and
individual performance. Once the salary levels were established
by the Compensation Committee, the salaries were recommended to the Board
of Directors for approval.
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2)
|
The
bonus consists of a $100 bonus presented to all employees at Christmas in
2006, 2007 and 2008 and a $1,500 bonus presented in January 2006 and 2007,
respectively, to all employees employed before July 1, 2005 and July 1,
2006.
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3)
|
On
November 2, 1989, the Bank adopted an Employee Stock Ownership Plan and
Trust Agreement (the “Plan”) to provide retirement benefits to eligible
employees for long and faithful service. The other compensation represents
the amount contributed to the Bank’s
ESOP.
|
4)
|
Nathaniel
I. Ball, III, retired on July 31, 2005. The amount reported in
2007 and 2006 represent severance
pay.
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·
1 year of service
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0%
Vested
|
|
·
2 Years of Service
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25%
Vested
|
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·
3 Years of Service
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50%
Vested
|
|
·
4 Years of Service
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75%
Vested
|
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·
5 Years of Service
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100%
Vested
|
OPTION AWARDS
|
||||||||||||||||||||
Name
|
Number of
Securities
Underlying
Unexercised
Options
Exercisable
|
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
|
Option
Exercise
Price
|
Option
Expiration
Date
|
|||||||||||||||
Hugh
C. Lane, Jr.
|
- | - | - | - | - | |||||||||||||||
William
L. Hiott, Jr.
|
- | 8,319 | (1) | - | 8.92 |
May
14,
2011
|
||||||||||||||
Fleetwood
S. Hassell
|
- | 4,992 | (1) | - | 8.92 |
May
14,
2011
|
||||||||||||||
- | 5,000 | (2) | - | 16.62 |
May
17,
2016
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(1)
|
These
options vest in 20% increments beginning on the fifth anniversary of the
date of grant, May 14, 2001, with an additional 20% to be exercisable on
and for the year following each successive
anniversary.
|
(2)
|
These
options vest in 20% increments beginning on the fifth anniversary of the
date of grant, May 17, 2006, with an additional 20% to be exercisable on
and for the year following each successive
anniversary.
|
Number
of Securities
|
Value
of Unexercised
|
|||||||||||||||||||||||
Underlying
Unexercised
|
In-the-Money
|
|||||||||||||||||||||||
#
of Shares
|
Options/SARS
|
Options/SARS
|
||||||||||||||||||||||
Acquired
|
Value
|
at Year-End (#)
|
at Year-End (#)
|
|||||||||||||||||||||
On Exercise
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Realized ($)
|
Exercisable
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Unexercisable
|
Exercisable
|
Unexercisable
|
|||||||||||||||||||
Hugh
C. Lane, Jr.
|
24,956 | 245,068 | 0 | 0 | 0 | $ | 0 | |||||||||||||||||
Fleetwood
S. Hassell
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7,485 | 66,766 | 0 | 9,992 | 0 | $ | 127,629 | |||||||||||||||||
William
L. Hiott, Jr.
|
12,477 | 111,295 | 0 | 8,319 | 0 | $ | 74,205 |
DIRECTOR
COMPENSATION
|
||||||||
NAME
|
FEES EARNED OR PAID IN CASH
|
TOTAL
|
||||||
C.
Ronald Coward
|
$ | 7,150 | $ | 7,150 | ||||
Graham
M. Eubank, Jr.
|
$ | 4,950 | $ | 4,950 | ||||
T.
Dean Harton (Deceased)
|
$ | 900 | $ | 900 | ||||
Fleetwood
S. Hassell
|
- | - | ||||||
Glen
B. Haynes, DVM
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$ | 7,750 | $ | 7,750 | ||||
William
L. Hiott, Jr.
|
- | - | ||||||
Katherine
M. Huger
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$ | 5,400 | $ | 5,400 | ||||
Richard
W. Hutson, Jr.
|
$ | 4,950 | $ | 4,950 | ||||
Charles
G. Lane, Jr.
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$ | 5,550 | $ | 5,550 | ||||
Hugh
C. Lane, Jr.
|
- | - | ||||||
Louise
J. Maybank
|
$ | 6,300 | $ | 6,300 | ||||
Dr.
Linda J. Bradley McKee, CPA
|
$ | 4,650 | $ | 4,650 | ||||
Alan
I. Nussbaum, MD
|
$ | 6,850 | $ | 6,850 | ||||
Edmund
Rhett, Jr. MD
|
$ | 5,350 | $ | 5,350 | ||||
Malcolm
M. Rhodes, MD
|
$ | 5,050 | $ | 5,050 | ||||
Thomas
C. Stevenson, III
|
$ | 7,050 | $ | 7,050 |
Name and Address of
|
Amount and Nature of
|
Percent of
|
||||||
Beneficial Owner
|
Beneficial Ownership
|
Class
|
||||||
Hugh
C. Lane, Jr. (1)
|
492,014 | (2) | 12.37 | % | ||||
30
Church Street
|
||||||||
Charleston,
SC 29401
|
||||||||
The
Bank of South Carolina
|
226,533 | (3) | 5.70 | % | ||||
Employee
Stock Ownership
|
||||||||
Plan
and Trust ("ESOP")
|
||||||||
256
Meeting Street
|
||||||||
Charleston,
SC 29401
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(1)
|
To
the extent known to the Board of Directors, the Marital Trust for the
Benefit of Beverly G. Lane, Beverly G. Lane Trust, Beverly G. Jost,
Kathleen L. Schenck, Charles G. Lane and Hugh C. Lane Jr., collectively,
have beneficial ownership of 663,164 shares or 16.68% of the outstanding
shares. As more fully described in the following footnotes, Hugh C. Lane,
Jr is the only one of the above who has a beneficial ownership interest in
more than 5% percent of the Company's Common Stock. Hugh C.
Lane, Jr. disclaims any beneficial interest in those shares in which other
members of his family have a beneficial interest other than those shares
his wife owns directly and those for which he serves as trustee or she
serves as custodian (as more fully described in the following
footnote).
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(2)
|
To
the extent known to the Board of Directors, Hugh C. Lane, Jr., an
Executive Officer and Director of the Bank and the Company, directly owns
and has sole voting and investment power with respect to 262,469 shares;
as trustee for three trust accounts holding an aggregate of 115,533
shares, he has sole voting and investment power with respect to such
shares; as a co-trustee for two trust accounts holding 2,298 shares, he
has joint voting and investment power with respect to such shares; as a
trustee for the Mills Bee Lane Memorial Foundation, he has shared voting
and investment power with respect to 9,831 shares; as a trustee for the
ESOP he has joint voting and investment power with respect to 3,962
unallocated shares; he is indirectly beneficial owner of 12,764
shares owned by his wife and an aggregate of 48,965 shares held by his
wife as custodian for their son, and 36,192 shares owned by the ESOP in
which he has a vested interest. All of the shares beneficially
owned by Hugh C. Lane, Jr. are currently owned. Hugh C. Lane,
Jr. has had beneficial ownership of more than 5% of the Bank's Common
Stock since October 23, 1986, and more than 10% since November 16,
1988.
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(3)
|
The
Trustees of the ESOP, Thomas C. Stevenson, III, a Director of the Bank and
the Company, Sheryl G. Sharry, an officer of the Bank and Hugh C. Lane,
Jr., an Executive Officer and Director of the Bank and the Company,
disclaim beneficial ownership of the 226,533 shares owned by the ESOP with
222,571 shares allocated to members of the plan each of whom under the
terms of the plan has the right to direct the Trustees as to the manner in
which voting rights are to be exercised. The Trustees have
joint voting and investment power with respect to 3,962 unallocated shares
held in the ESOP.
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Name
and Address of
|
Amount
and Nature of
|
Percent
of
|
||||||
Beneficial Owner
|
Beneficial Ownership
|
Class
|
||||||
David
W. Bunch
|
450 | .011 | % | |||||
6605
Seewee Road
|
||||||||
Awendaw,
SC 29429
|
||||||||
C.
Ronald Coward
|
50,295 | (1) | 1.265 | % | ||||
537
Planters Loop
|
||||||||
Mt.
Pleasant, SC 29464
|
||||||||
Graham
M. Eubank, Jr.
|
550 | .014 | % | |||||
791
Navigators Run
|
||||||||
Mt.
Pleasant, SC 29464
|
||||||||
Fleetwood
S. Hassell
|
61,046 | (1) | 1.535 | % | ||||
30
New Street
|
||||||||
Charleston,
SC 29401
|
||||||||
Glen
B. Haynes, DVM
|
3,276 | .082 | % | |||||
101
Drayton Drive
|
||||||||
Summerville,
SC 29483
|
||||||||
William
L. Hiott, Jr.
|
147,227 | (1) | 3.702 | % | ||||
1831
Capri Drive
|
||||||||
Charleston,
SC 29407
|
||||||||
Katherine
M. Huger
|
8,051 | (1) | .202 | % | ||||
1
Bishop Gadsden Way, C-17
|
||||||||
Charleston,
SC 29412
|
||||||||
Richard
W. Hutson, Jr.
|
1,525 | .038 | % | |||||
124
Tradd Street
|
||||||||
Charleston,
SC 29401
|
Name
and Address of
|
Amount
and Nature of
|
Percent
of
|
||||||
Beneficial Owner
|
Beneficial Ownership
|
Class
|
||||||
Charles
G. Lane
|
173,976 | (1) | 4.375 | % | ||||
10
Gillon Street
|
||||||||
Charleston,
SC 29401
|
||||||||
Hugh
C. Lane, Jr.
|
492,014 | (1) | 12.373 | % | ||||
30
Church Street
|
||||||||
Charleston,
SC 29401
|
||||||||
Louise
J. Maybank
|
44,907 | (1) | 1.129 | % | ||||
8
Meeting Street
|
||||||||
Charleston,
SC 29401
|
||||||||
Linda
J. Bradley
|
||||||||
McKee,
PHD, CPA
|
861 | .022 | % | |||||
3401
Waterway Blvd.
|
||||||||
Isle
of Palms, SC 29451
|
||||||||
Alan
I. Nussbaum, M.D.
|
703 | .018 | % | |||||
37
Rebellion Road
|
||||||||
Charleston,
S. C. 29407
|
||||||||
Edmund
Rhett, Jr., M.D.
|
2,387 | (1) | .060 | % | ||||
17
Country Club Drive
|
||||||||
Charleston,
S.C. 29412
|
||||||||
Malcolm
M. Rhodes, MD
|
1,787 | .045 | % | |||||
7
Guerard Road
|
||||||||
Charleston,
SC 29407
|
||||||||
David
R. Schools
|
100 | .003 | % | |||||
317
Coinbow Drive
|
||||||||
Mount
Pleasant, SC 29464
|
||||||||
Thomas
C. Stevenson, III
|
25,171 | (1) | .633 | % | ||||
173
Tradd Street
|
||||||||
Charleston,
SC 29401
|
(1)
|
To
the extent known to the Board of Directors, each of the following
Directors and Nominees for election as Directors (each of whom directly
owns and has sole voting and investment power of all shares beneficially
owned by him or her except as set forth in this footnote) indirectly owns
the following number of shares: C. Ronald
Coward
- an
aggregate of 1,663 shares owned by a company of which he is chairman and
director; Fleetwood S.
Hassell
– an
aggregate of 10,520 shares owned by his wife, held by him as trustee for
the revocable trust of his father, held by him as a co-trustee with
Charles G. Lane for the children of Hugh C. Lane, Jr. and 24,069 shares
owned by the ESOP, in which he has a vested interest; William L.
Hiott
, Jr. - an
aggregate of 8,050 shares directly owned by his wife and 23,289 shares
owned by the ESOP, in which he has a vested interest; Katherine M.
Huger
- 731
shares owned by her husband; Charles G.
Lane
- an
aggregate of 68,273 shares owned by his wife, held by her as custodian for
two of their children, held by him as a co-trustee with Hugh C. Lane, Jr.
under one trust for a sisters children, held by him as a
co-trustee with Fleetwood S. Hassell for the children of Hugh
C. Lane, Jr., held by him as co-trustee under the Irrevocable Trust of
Hugh C. Lane and held by him as a trustee of Mills Bee Lane Memorial
Foundation; Hugh C.
Lane
, Jr. - an
aggregate of 193,353 shares owned by his wife, held by his wife as
custodian for their son, held by him as a co-trustee with Charles G. Lane
under one trust for a sisters children, held by him as trustee under the
Hugh C. Lane Trust for the benefit of three of the grandchildren of Hugh
C. Lane, held by him as trustee for the Beverly Glover Lane
Trust, held by him as a trustee for the Hugh C. Lane
Irrevocable Trust, held by him as trustee for the Marital Trust for the
benefit of Beverly Glover Lane, held by him as a trustee of Mills Bee Lane
Memorial Foundation, held by him as a trustee for the ESOP(unallocated
shares), and 36,192 shares owned by the ESOP in which he has a vested
interest; Louise J.
Maybank
–
15,506 shares held by her as a co-trustee for a Family Charitable Trust;
Edmund
Rhett
, Jr.MD -
756 shares owned by his wife; and Thomas C.
Stevenson,
III-
an aggregate of 24,440 shares held by him as co-trustee under a Marital
Trust and held by him as co-trustee of a QTip Trust, held by him as
trustee of the ESOP (unallocated shares). All such
indirectly owned shares are included in the totals of the number of shares
set forth in the above table and beneficially owned by the Directors and
Nominees.
|
Equity
Compensation Plan Information
|
||||||||||||
Plan
category
|
Number
of securities to be
issued
upon exercise of
outstanding
options,
warrants
and rights
(a)
|
Weighted-average
exercise
price
of outstanding options,
warrants
and rights
(b)
|
Number
of securities
remaining
available for
future
issuance under equity
compensation
plans
(excluding
securities
reflected
in column (a))
(c)
|
|||||||||
Equity
compensation plans approved by security holders (1)
|
105,398 | $ | 10.99 | - | ||||||||
Equity
compensation plans not approved by security holders
|
- | - | - | |||||||||
Total
|
105,398 | $ | 10.99 | - |
1.
|
The
Consolidated Financial Statements and Report of Independent Auditors are
included in this Form 10-K and listed on pages as
indicated.
|
Page
|
||
(1)
|
Report
of Independent Registered Public Accounting Firm
|
28
|
(2)
|
Consolidated
Balance Sheets
|
29
|
(3)
|
Consolidated
Statements of Operations
|
30
|
(5)
|
Consolidated
Statements of Shareholders' Equity and Comprehensive
Income
|
31
|
(5)
|
Consolidated
Statements of Cash Flows
|
32
|
(6)
|
Notes
to Consolidated Financial Statements
|
33
- 58
|
(7)
|
Managements
Report on Internal Control over Financial Reporting
|
59
|
2.0
|
Plan
of Reorganization (Filed with 1995
10-KSB)
|
3.0
|
Articles
of Incorporation of the Registrant (Filed with 1995
10-KSB)
|
3.1
|
By-laws
of the Registrant (Filed with 1995
10-KSB)
|
4.0
|
2008
Proxy Statement (Filed with 2008 Original Form
10-K)
|
10.0
|
Lease
Agreement for 256 Meeting Street (Filed with 1995
10-KSB)
|
10.1
|
Sublease
Agreement for Parking Facilities at 256 Meeting Street (Filed with 1995
10-KSB)
|
10.2
|
Lease
Agreement for 100 N. Main Street, Summerville, SC (Filed with 1995
10-KSB)
|
10.3
|
Lease
Agreement for 1337 Chuck Dawley Blvd., Mt. Pleasant, SC (Filed with 1995
10-KSB)
|
10.4
|
1998
Incentive Sock Option Plan (Incorporated
herein)
|
10.5
|
Employee
Stock Ownership Plan (Incorporated
herein)
|
13.0
|
2008
10-K (Incorporated herein)
|
14.0
|
Code
of Ethics (Filed with 2004 10-KSB)
|
21.0
|
List
of Subsidiaries of the Registrant (Filed with 1995
10-KSB)
|
31.1
|
Certification
of Principal Executive Officer pursuant to 15 U.S.C. 78 m(a) or 78 o(d)
(Section 302 of the Sarbanes-Oxley Act of
2002)
|
31.2
|
Certification
of Principal Financial Officer pursuant to 15 U.S.C. 78 m(a) or 78 o(d)
(Section 302 of the Sarbanes-Oxley Act of
2002)
|
32.1
|
Certification
of Principal Executive Officer pursuant to 18 U.S.C. 1350
(Section 906 of the Sarbanes-Oxley Act of
2002)
|
32.2
|
Certification
of the Principal Financial Officer pursuant to 18 U.S.C. 1350 (Section 906
of the Sarbanes-Oxley Act of
2002)
|
Date: February
3, 2010
|
BANK
OF SOUTH CAROLINA CORPORATION
|
|
By:
|
/s/William
L. Hiott, Jr.
|
|
William
L. Hiott, Jr.
|
||
Executive
Vice President and
Treasurer
|
1.01
|
Agreement
means
a written agreement (including any amendment or supplement thereto)
between BKSC and a Participant specifying the terms and conditions of an
award of an Option granted to such
Participant.
|
1.02
|
Code
means the
Internal Revenue Code of 1986, as
amended.
|
1.03
|
Board
means the
Board of Directors of BKSC.
|
1.04
|
Date of
Exercise
means the date that the Option price is received by
BKSC.
|
1.05
|
Fair Market
Value
means, on any given date, the closing price of BKSC common
stock as reported on the Nasdaq Small Capitalization Market. If
BKSC common stock was not traded on the Nasdaq Small Capitalization Market
on such date, then
Fair Market
Value
is determined with reference to the next preceding day that
BKSC common stock was so traded.
|
1.06
|
Legal
Disability
means that a Participant is permanently and totally
disabled within the meaning of Code section
22(e)(3).
|
1.07
|
Plan
means the
Bank of South Carolina Corporation 1998 Omnibus Stock Incentive
Plan.
|
1.08
|
Retirement
means that a Participant has separated from service on or after his
earliest early retirement date under The Bank of South Carolina Employee
Stock Ownership Plan and Trust or such tax-qualified pension or profit
sharing plan maintained by BKSC or a Subsidiary in which he
participates.
|
1.09
|
BKSC
means Bank
of South Carolina Corporation.
|
1.10
|
BKSC Common
Stock
means the common stock, no par value, of
BKSC.
|
1.11
|
Option
means a
stock option that entitles the holder to purchase from BKSC a stated
number of shares of BKSC common stock at the price set forth in an
Agreement.
|
1.12
|
Participant
means an employee of BKSC or of a Subsidiary, including an employee who is
a member of the Board, or a non-employee who satisfies the requirements of
Article IV and is selected by the Committee to receive an
Option.
|
4.01
|
General
. Any
employee of BKSC or of any Subsidiary (including any corporation that
becomes a Subsidiary after the adoption of this Plan) is eligible to
participate in this Plan if the Committee, in its sole discretion,
determines that such person has contributed or can be expected to
contribute to the profits or growth of BKSC or a
Subsidiary. Any such employee may be granted
Options. A Director of BKSC who is an employee of BKSC or a
Subsidiary may be granted Options under this Plan. A member of
the Committee may not participate in this Plan during the time that his
participation would prevent the Committee from being “disinterested” for
purposes of Securities and Exchange Commission Rule 16b-3 as in effect
from time to time.
|
4.02
|
Grants
. The
Committee will designate individuals to whom Options are to be granted and
will specify the number of shares of BKSC common stock subject to each
award or grant. All Options granted under this Plan shall be
evidenced by Agreements which shall be subject to the applicable
provisions of this Plan and to such other provisions as the Committee may
adopt. No Participant may be granted incentive stock options
(under all incentive stock option plans of BKSC and its Subsidiaries)
which are first exercisable in any calendar year for stock having an
aggregate Fair Market Value (determined as of the date an option is
granted) exceeding $100,000.
|
5.01
|
Source of
Shares
. Upon the exercise of an Option, BKSC may deliver
to the Participant authorized but unissued BKSC Common
Stock.
|
5.02
|
Maximum Number of
Shares
. The maximum aggregate number of shares of BKSC
common stock that may be issues pursuant to the exercise of Options is One
Hundred Thousand subject to increases and adjustments as provided in this
Article V and Article XI.
|
5.03
|
Incentive Stock
Options
. Section 5.02 to the contrary notwithstanding,
the maximum aggregate number of shares of BKSC common stock that may be
issued pursuant to the exercise of Options that are incentive stock
options granted under this Plan is One Hundred Eighty
Thousand.
|
5.04
|
Forfeitures,
etc
. If an Option is terminated, in whole or in part,
for any reason other than its exercise, the number of shares of BKSC
common stock allocated to the Option or portion thereof may be reallocated
to other Options to be granted under this
Plan.
|
7.01
|
Maximum Option
Period
. The maximum period in which an Option may be
exercised shall be determined by the Committee on the date of grant except
that no Option that is an incentive stock option shall be exercisable
after the expiration of ten years from the date the Option was
granted. The terms of any Option may provide that it is
exercisable for a period less than such maximum
period.
|
7.02
|
Nontransferability
. Any
Option granted under this Plan shall be nontransferable except
by will or by the laws of descent and distribution. In the
event of any such transfer, the Option must be transferred to the same
person or persons or entity or entities. During the lifetime of
a Participant to whom an Option is granted, the Option may be exercised
only by the Participant. No right or interest of a Participant
in any Option shall be liable for, or subject to, any lien, obligation or
liability of such Participant.
|
8.01
|
Exercise
. An
Option granted under this Plan shall be deemed to have been exercised on
the Date of Exercise. Subject to the provisions of Articles VII
and X, an Option may be exercised in whole at any time or in part from
time to time at such times and in compliance with such requirements as the
Committee shall determine. An Option granted under this Plan
may be exercised with respect to any number of whole shares less than the
full number of whole shares for which the Option could be
exercised. A partial exercise of an Option shall not affect the
right to exercise the Option from time to time in accordance with this
Plan and the applicable Agreement with respect to remaining shares subject
to the Option.
|
8.02
|
Payment
. Unless
otherwise provided by the Agreement, payment of the Option price shall be
made by Cashiers Check. If the Agreement provides, payment of
all or part of the Option price may be made by surrendering shares of BKSC
common stock to BKSC. If BKSC common stock is used to pay all
of part of the Option price, the shares surrendered must have a Fair
Market Value (determined as of the day preceding the Date of Exercise)
that is not less than such price or part
thereof.
|
8.03
|
Shareholder
Rights
. No Participant shall have any rights as a
stockholder with respect to shares subject to an Option until the Date of
Exercise of such Option.
|
13.01
|
Effect on
Employment
. Neither the adoption of this Plan, its
operation nor any documents describing or referring to this Plan (or any
part thereof) shall confer upon any employee any right to continue in the
employ of BKSC or a Subsidiary to terminate the employment of any employee
at any time with or without assigning a reason
therefor.
|
13.02
|
Rules of
Construction
. Headings are given to the articles and
sections of this Plan solely as a convenience to facilitate
reference. The reference to any statute, regulation or other
provision of law shall be construed to refer to any amendment to or
successor of such provision of law.
|
13.03
|
Employee
Status
. For purposes of determining the applicability of
Code section 422 (relating to incentive stock options) or in the event
that the terms of any Option provide that it may be exercised only during
employment or within a specified period of time after termination of
employment, the Committee may decide to what extent leaves of absence for
governmental or military service, illness, temporary disability or other
reasons shall not be deemed interruptions of continuous
employment.
|
Article
1
|
-
1 -
|
||
Definitions
|
-
1 -
|
||
1.1
|
Administrator
|
- 1
-
|
|
1.2
|
Adopting
Employer
|
- 1
-
|
|
1.3
|
Affiliated
Employer
|
- 1
-
|
|
1.4
|
Age
|
- 1
-
|
|
1.5
|
Allocation
Period
|
- 1
-
|
|
1.6
|
Anniversary
Date
|
- 1
-
|
|
1.7
|
Annuity
Starting Date
|
- 1
-
|
|
1.8
|
Beneficiary
|
- 1
-
|
|
1.9
|
Benefiting
Participant
|
- 2
-
|
|
1.10
|
Break
in Service
|
- 2
-
|
|
1.11
|
Code
|
- 2
-
|
|
1.12
|
Code
§3401 Compensation
|
- 2
-
|
|
1.13
|
Code
§415 Safe Harbor Compensation
|
- 2
-
|
|
1.14
|
Code
§415 Statutory Compensation
|
- 3
-
|
|
1.15
|
Compensation
|
- 4
-
|
|
1.16
|
Current
Obligations
|
- 5
-
|
|
1.17
|
Deemed
Code §125 Compensation
|
- 5
-
|
|
1.18
|
Deemed
IRA Contribution
|
- 5
-
|
|
1.19
|
Deemed
IRA Account
|
- 5
-
|
|
1.20
|
Disability
|
- 5
-
|
|
1.21
|
Early
Retirement Age
|
- 5
-
|
|
1.22
|
Eligible
Employee
|
- 6
-
|
|
1.23
|
Employee
|
- 6
-
|
|
1.24
|
Employer
|
- 6
-
|
|
1.25
|
Exempt
Loan
|
- 6
-
|
|
1.26
|
Fiscal
Year
|
- 6
-
|
|
1.27
|
Forfeiture
|
- 6
-
|
|
1.28
|
Form
W-2 Compensation
|
- 6
-
|
|
1.29
|
HCE
|
- 7
-
|
|
1.30
|
Highly
Compensated Employee
|
- 7
-
|
|
1.31
|
Hour
of Service
|
- 7
-
|
|
1.32
|
Key
Employee
|
- 8
-
|
|
1.33
|
Leased
Employee
|
- 8
-
|
|
1.34
|
Limitation
Year
|
- 8
-
|
|
1.35
|
Maternity
or Paternity Leave
|
- 8
-
|
|
1.36
|
Named
Fiduciary
|
- 8
-
|
|
1.37
|
NHCE
|
- 8
-
|
|
1.38
|
Non-Highly
Compensated Employee
|
- 8
-
|
|
1.39
|
Non-Key
Employee
|
- 8
-
|
|
1.40
|
Normal
Retirement Age
|
- 8
-
|
|
1.41
|
Normal
Retirement Date
|
- 9
-
|
|
1.42
|
Other
Investments Account
|
- 9
-
|
|
1.43
|
Otherwise
Excludible Participant
|
- 9
-
|
|
1.44
|
Participant
|
- 9
-
|
|
1.45
|
Participant's
Account
|
- 9
-
|
|
1.46
|
Period
of Service
|
- 9
-
|
|
1.47
|
Period
of Severance
|
- 9
-
|
|
1.48
|
Permissive
Aggregation Group
|
- 9
-
|
|
1.49
|
Plan
|
- 9
-
|
|
1.50
|
Plan
Year
|
- 9
-
|
|
1.51
|
Policy
|
- 9
-
|
|
1.52
|
Qualified
Domestic Relations Orders
|
- 9
-
|
|
1.53
|
Required
Aggregation Group
|
- 9
-
|
|
1.54
|
Required
Beginning Date
|
- 10
-
|
|
1.55
|
Regulation
|
-
10 -
|
|
1.56
|
Rollover
Account
|
-
10 -
|
|
1.57
|
Rollover
Contribution (or Rollover)
|
-
10 -
|
1.58
|
Sponsoring
Employer
|
-
10 -
|
|
1.59
|
Spouse
|
-
10 -
|
|
1.60
|
Terminated
Participant
|
-
10 -
|
|
1.61
|
Top
Heavy
|
-
10 -
|
|
1.62
|
Top
Heavy Minimum Allocation
|
-
10 -
|
|
1.63
|
Top
Heavy Ratio
|
-
10 -
|
|
1.64
|
Transfer
Contribution
|
-
11 -
|
|
1.65
|
Trustee
|
-
11 -
|
|
1.66
|
Trust
(or Trust Fund)
|
-
11 -
|
|
1.67
|
Unallocated
Company Stock Account
|
-
11 -
|
|
1.69
|
Valuation
Date
|
-
12 -
|
|
1.70
|
Vested
Aggregate Account
|
-
12 -
|
|
1.71
|
Vested,
Vested Interest or Vesting
|
-
12 -
|
|
1.72
|
Voluntary
Employee Contribution
|
-
12 -
|
|
1.73
|
Voluntary
Employee Contribution Account
|
-
12 -
|
|
1.74
|
Year
of Service
|
-
12 -
|
|
Article
2
|
-
16 -
|
||
Plan
Participation
|
-
16 -
|
||
2.1
|
Eligibility
Requirements
|
-
16 -
|
|
2.2
|
Entry
Date
|
-
16 -
|
|
2.3
|
Waiver
of Participation
|
-
16 -
|
|
2.4
|
Reemployment
|
-
17 -
|
|
2.5
|
Exclusion
of an Eligible Employee
|
-
17 -
|
|
2.6
|
Inclusion
of an Ineligible Employee
|
-
17 -
|
|
Article
3
|
-
18 -
|
||
Contributions
and Allocations
|
-
18 -
|
||
3.1
|
Employer
Contributions
|
-
18 -
|
|
3.2
|
Allocation
of Employer Contributions
|
-
19 -
|
|
3.3
|
Company
Stock Account
|
-
19 -
|
|
3.4
|
Allocation
of Earnings and Losses
|
-
22 -
|
|
3.5
|
Allocation
of Forfeitures
|
-
23 -
|
|
3.6
|
Top
Heavy Minimum Allocation
|
-
23 -
|
|
3.7
|
Failsafe
Allocation
|
-
24 -
|
|
3.8
|
Rollover
Contributions
|
-
24 -
|
|
3.9
|
Voluntary
Employee Contributions
|
-
24 -
|
|
3.10
|
Deemed
IRA Contributions
|
-
24 -
|
|
Article
4
|
-
25 -
|
||
Plan
Benefits
|
-
25 -
|
||
4.1
|
Benefit
Upon Normal (or Early) Retirement
|
-
25 -
|
|
4.2
|
Benefit
Upon Late Retirement
|
-
25 -
|
|
4.3
|
Benefit
Upon Death
|
-
25 -
|
|
4.4
|
Benefit
Upon Disability
|
-
25 -
|
|
4.5
|
Benefit
Upon Termination of Employment
|
-
25 -
|
|
4.6
|
Determination
of Vested Interest
|
-
25 -
|
|
Article
5
|
-
27 -
|
||
Distribution
of Benefits
|
-
27 -
|
||
5.1
|
Distribution
of Benefit Upon Retirement
|
-
27 -
|
|
5.2
|
Distribution
of Benefit Upon Death
|
-
27 -
|
|
5.3
|
Distribution
of Benefit Upon Disability
|
-
28 -
|
|
5.4
|
Distribution
of Benefit Upon Termination of Employment
|
-
28 -
|
|
5.5
|
Mandatory
Cash-Out of Benefits
|
-
28 -
|
|
5.6
|
Restrictions
on Immediate Distributions
|
-
29 -
|
|
5.7
|
Accounts
of Rehired Participants
|
-
29 -
|
|
5.8
|
Spousal
Consent Requirements
|
-
30 -
|
|
5.9
|
Application
of Code §401(a)(9)
|
-
30 -
|
|
5.10
|
Statutory
Commencement of Benefits
|
-
33 -
|
|
5.11
|
Earnings
Before Benefit Distribution
|
-
33 -
|
|
5.12
|
Distribution
in the Event of Legal Incapacity
|
-
34 -
|
|
5.13
|
Missing
Payees and Unclaimed Benefits
|
-
34 -
|
|
5.14
|
Direct
Rollovers
|
-
34 -
|
5.15
|
Form
of Distribution
|
-
35 -
|
|
5.16
|
Cash
Dividends on Company Stock
|
-
35 -
|
|
5.17
|
Right
of First Refusal
|
-
36 -
|
|
5.18
|
Put
Option
|
-
36 -
|
|
5.19
|
Non-Terminable
Rights and Protections
|
-
38 -
|
|
5.20
|
Mandatory
Put Options for S and Certain Other Corporations
|
-
38 -
|
|
5.21
|
Required
Cash Distribution for Certain Banks
|
-
38 -
|
|
5.22
|
Financial
Hardship Distributions
|
-
38 -
|
|
5.23
|
In-Service
Distributions
|
-
38 -
|
|
5.24
|
Distribution
of Rollover Contributions
|
-
38 -
|
|
5.25
|
Distribution
of Transfer Contributions
|
-
38 -
|
|
5.26
|
Distribution
of Voluntary Employee Contributions
|
-
38 -
|
|
Article
6
|
-
39 -
|
||
Code
§ 415 Limitations
|
-
39 -
|
||
6.1
|
Maximum
Annual Additions
|
-
39 -
|
|
6.2
|
Adjustments
to Maximum Annual Addition
|
-
39 -
|
|
6.3
|
Multiple
Plans and Multiple Employers
|
-
40 -
|
|
6.4
|
Adjustment
for Excessive Annual Additions
|
-
40 -
|
|
Article
7
|
-
41 -
|
||
Loans,
Insurance and Directed Investments
|
-
41 -
|
||
7.1
|
Loans
to Participants
|
-
41 -
|
|
7.2
|
Insurance
on Participants
|
-
41 -
|
|
7.3
|
Key
Man Insurance
|
-
41 -
|
|
7.4
|
Directed
Investment Accounts
|
-
41 -
|
|
Article
8
|
-
42 -
|
||
Duties
of the Administrator
|
-
42 -
|
||
8.1
|
Appointment,
Resignation, Removal and Succession
|
-
42 -
|
|
8.2
|
General
Powers and Duties
|
-
42 -
|
|
8.3
|
Appointment
of Administrative Committee
|
-
42 -
|
|
8.4
|
Multiple
Administrators
|
-
42 -
|
|
8.5
|
Correcting
Administrative Errors
|
-
42 -
|
|
8.6
|
Promulgating
Notices and Procedures
|
-
43 -
|
|
8.7
|
Employment
of Agents and Counsel
|
-
43 -
|
|
8.8
|
Compensation
and Expenses
|
-
43 -
|
|
8.9
|
Claims
Procedures
|
-
43 -
|
|
8.10
|
Qualified
Domestic Relations Orders
|
-
43 -
|
|
8.11
|
Appointment
of Investment Manager
|
-
43 -
|
|
Article
9
|
-
44 -
|
||
Trustee
Provisions
|
-
44 -
|
||
9.1
|
Appointment,
Resignation, Removal and Succession
|
-
44 -
|
|
9.2
|
Investment
Alternatives of the Trustee
|
-
44 -
|
|
9.3
|
Valuation
of the Trust
|
-
46 -
|
|
9.4
|
Compensation
and Expenses
|
-
46 -
|
|
9.5
|
Payments
From the Trust Fund
|
-
46 -
|
|
9.6
|
Payment
of Taxes
|
-
46 -
|
|
9.7
|
Accounts,
Records and Reports
|
-
46 -
|
|
9.8
|
Employment
of Agents and Counsel
|
-
46 -
|
|
9.9
|
Division
of Duties and Indemnification
|
-
47 -
|
|
9.10
|
Investment
Manager
|
-
47 -
|
|
9.11
|
Exclusive
Benefit Rule
|
-
47 -
|
|
9.12
|
Voting
Company Stock
|
-
48 -
|
|
9.13
|
Application
of Cash
|
-
48 -
|
|
9.14
|
Restrictions
on Company Stock Transactions
|
-
48 -
|
|
9.15
|
Exempt
Loans
|
-
48 -
|
|
9.16
|
Diversification
Rights of Qualified Participants
|
-
49 -
|
|
9.17
|
Superseding
Trust or Custodial Agreement
|
-
50 -
|
|
Article
10
|
-
51 -
|
||
Adopting
Employer Provisions
|
-
51 -
|
||
10.1
|
Plan
Contributions
|
-
51 -
|
10.2
|
Plan
Amendments
|
-
51 -
|
|
10.3
|
Plan
Expenses
|
-
51 -
|
|
10.4
|
Employee
Transfers
|
-
51 -
|
|
10.5
|
Multiple
Employer Provisions Under Code §413(c)
|
-
51 -
|
|
10.6
|
Termination
of Adoption
|
-
52 -
|
|
10.7
|
Payment
of Benefits Upon Termination of Participation
|
-
52 -
|
|
Article
11
|
-
53 -
|
||
Amendment,
Termination and Merger
|
-
53 -
|
||
11.1
|
Plan
Amendment
|
-
53 -
|
|
11.2
|
Termination
By Sponsoring Employer
|
-
53 -
|
|
11.3
|
Merger
or Consolidation
|
-
54 -
|
|
Article
12
|
-
55 -
|
||
Miscellaneous
Provisions
|
-
55 -
|
||
12.1
|
No
Contract of Employment
|
-
55 -
|
|
12.2
|
Title
to Assets
|
-
55 -
|
|
12.3
|
Qualified
Military Service
|
-
55 -
|
|
12.4
|
Fiduciaries
and Bonding
|
-
55 -
|
|
12.5
|
Severability
of Provisions
|
-
55 -
|
|
12.6
|
Gender
and Number
|
-
55 -
|
|
12.7
|
Headings
and Subheadings
|
-
55 -
|
|
12.8
|
Legal
Action
|
-
55 -
|
|
12.9
|
Qualified
Plan Status
|
-
55 -
|
|
12.10
|
Mailing
of Notices to Administrator, Employer or Trustee
|
-
55 -
|
|
12.11
|
Participant
Notices and Waivers of Notices
|
-
55 -
|
|
12.12
|
No
Duplication of Benefits
|
-
56 -
|
|
12.13
|
Evidence
Furnished Conclusive
|
-
56 -
|
|
12.14
|
Release
of Claims
|
-
56 -
|
|
12.15
|
Multiple
Copies of Plan And/or Trust
|
-
56 -
|
|
12.16
|
Limitation
of Liability and Indemnification
|
-
56 -
|
|
12.17
|
Written
Elections and Forms
|
-
56 -
|
|
12.18
|
Assignment
and Alienation of Benefits
|
-
56 -
|
|
12.19
|
Exclusive
Benefit Rule
|
-
56 -
|
|
12.20
|
Dual
and Multiple Trusts
|
-
56 -
|
1.1
|
Administrator
.
The term
"Administrator" means the Sponsoring Employer unless the Sponsoring
Employer appoints another Administrator. The term Administrator also means
a Qualified Termination Administrator ("QTA") charged with the task of
holding the assets of an orphan plan as permitted by the Department of
Labor. A QTA is an eligible custodian such as a bank, mutual fund, or
insurance company. Third party record-keepers cannot be QTAs. However, if
this Plan is a one participant-owner only plan, the Spouse of a deceased
owner can continue operating the Plan pursuant to Revenue Procedure
2006-27.
|
1.2
|
Adopting
Employer
.
The term "Adopting Employer" means any entity which adopts this
Plan with the consent of the Sponsoring Employer. In addition to all the
other terms and conditions set forth in the Plan, an Adopting Employers
will also be subject to the terms and conditions set forth in Article
11.
|
1.3
|
Affiliated
Employer
.
The term "Affiliated Employer" means any of the following: (1) a
controlled group of corporations as defined in Code §414(b); (2) a trade
or business (whether or not incorporated) under common control as
described in Code §414(c); (3) any organization (whether or not
incorporated) which is a member of an affiliated service group as
described in Code §414(m); and (4) any other entity required to be
aggregated as described in Code §414(o). An Affiliated Employer is not
considered an Adopting Employer unless such Affiliated Employer has
specifically adopted the Plan; and any Periods of Service or Years of
Service with an Affiliated Employer will only be taken into account as
otherwise provided under the
Plan.
|
1.4
|
Age
.
The term "Age" means a
Participant's actual attained unless other specified under the terms of
the Plan.
|
1.5
|
Allocation
Period
.
The
term "Allocation Period" means a period of 12 consecutive months or less
for which (a) an Employer contribution is made and allocated under the
terms of the Plan; (b) Forfeitures are allocated under the terms of the
Plan; or (c) earnings and losses are allocated under the terms of the
Plan.
|
1.6
|
Anniversary
Date
.
The
term "Anniversary Date" means December 31st of each Plan
Year.
|
1.7
|
Annuity
Starting Date
.
The term "Annuity Starting Date" means the first day of the first
period for which a benefit is paid as an annuity, or in the case of a
benefit not payable as an annuity, the first day all events have occurred
which entitle the Participant to the benefit. The first day of the first
period for which a benefit is payable because of Disability will be
treated as the Annuity Starting Date only if it is not an auxiliary
benefit.
|
1.8
|
Beneficiary
.
The term "Beneficiary"
means the recipient designated by a Participant to receive the benefit
payable upon the Participant's death, or the recipient designated by a
Beneficiary to receive any benefit payable in the event of the
Beneficiary's death prior to receiving the entire death benefit to which
the Beneficiary is entitled. All Beneficiary designations will be made
subject to the following
provisions:
|
|
(a)
|
Beneficiary
Designations By a Participant.
Subject to the provisions of Section
5.8 regarding the rights of a Participant's Spouse, each Participant may
designate a Beneficiary in writing with the Administrator. If a
Participant designates his or her Spouse and the Participant and his or
her Spouse are legally divorced subsequent to the date of the designation,
then the designation of such Spouse as a Beneficiary hereunder will be
deemed null and void unless the Participant, subsequent to the legal
divorce, reaffirms the designation in writing. In the absence of any other
designation, the Participant will be deemed to have designated the
following Beneficiaries in the following order, provided however, that
with respect to clauses (1) and (2) following, such Beneficiaries are then
living: (1) the Participant's Spouse, (2) the Participant's issue per
stirpes; and (3) the Participant's
estate.
|
|
(b)
|
Beneficiary
Designations By a Beneficiary.
In the absence of a Beneficiary
designation or other directive from a Participant to the contrary, any
Beneficiary may name his or her own Beneficiary in accordance with Section
5.2(d) to receive any benefits payable in the event of the Beneficiary's
death prior to the receipt of all the Participant's death benefits to
which the Beneficiary was entitled.
|
|
(c)
|
Beneficiaries
Considered Contingent Until the Death of the Participant.
Notwithstanding any provision in this Section to the contrary, any
Beneficiary named hereunder will be considered a contingent Beneficiary
until the death of the Participant (or Beneficiary, as the case may be),
and until such time will have no rights granted to Beneficiaries under the
Plan.
|
1.9
|
Benefiting
Participant
.
The term "Benefiting Participant" means a Participant who is
eligible to receive an allocation of Employer contributions or Forfeitures
as of the last day of an Allocation Period. The requirements to be a
Benefiting Participant are set forth in Section
3.2(d).
|
1.10
|
Break
in Service
.
The term "Break in Service" means a 12-month eligibility or Vesting
computation period as set forth in Section 1.74 in which an Employee does
not complete more than 500 Hours of Service. If any computation period is
less than 12 months, the Hours of Service requirement set forth in the
preceding sentence will be proportionately reduced if it is greater than
one.
|
1.11
|
Code
.
The term "Code" means
the Internal Revenue Code of 1986, as amended, and the Regulations and
rulings promulgated thereunder by the Internal Revenue Service. All
citations to sections of the Code and Regulations are to such sections as
they may from time to time be amended or
renumbered.
|
1.12
|
Code
§3401 Compensation
.
The term "Code §3401
Compensation" means wages within the meaning of Code §3401(a) that are
actually paid or made available in gross income for the purposes of income
tax withholding at the source but determined without regard to any rules
under Code §3401 that limit the remuneration included in wages based on
the nature or location of the employment or the services performed (such
as the exception for agricultural labor in Code
§3401(a)(2)).
|
1.13
|
Code
§415 Safe Harbor Compensation
.
The term "Code §415
Safe Harbor Compensation" means Earned Income, wages, salaries, fees for
professional services and other amounts received (without regard to
whether or not an amount is paid in cash) for personal services actually
rendered in the course of employment with the Employer maintaining the
Plan, including, but not limited to, commissions paid salespersons,
compensation for services based on a percentage of profits, commissions on
insurance premiums, tips, bonuses, fringe benefits, and reimbursements, or
other expense allowances under a non-accountable plan as described in
Regulation §1.62-2(c). For Limitation Years beginning after December 31,
1991, Code §415 Safe Harbor Compensation will include amounts paid or made
available. Notwithstanding the preceding sentence, Code §415 Safe Harbor
Compensation for a Participant in a defined contribution plan who is
permanently and totally disabled (as defined in Code §22(e)(3)) is the
Code §415 Safe Harbor Compensation such Participant would have received
for the Limitation Year if the Participant had been paid at the rate of
Code §415 Safe Harbor Compensation paid immediately before becoming
permanently and totally disabled; for Limitation Years beginning before
January 1, 1997, such imputed Code §415 Safe Harbor Compensation for the
disabled Participant may be counted only if the Participant is not a
Highly Compensated Employee and contributions made on behalf of such
Participant are nonforfeitable when made. A Participant's Code §415 Safe
Harbor Compensation will be determined subject to the following
provisions:
|
|
(a)
|
Excluded
Amounts.
Code §415 Safe Harbor Compensation does not include (1)
Employer contributions to a plan of deferred compensation not includible
in gross income for the taxable year in which contributed, or Employer
contributions to a simplified employee pension plan to the extent they are
deductible by the Employee, or any distributions from a plan of deferred
compensation; (2) amounts realized from 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; (3) amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock option; and (4)
other amounts which receive special tax benefits, or contributions made by
an Employer (whether or not under a salary deferral agreement) towards the
purchase of an annuity described in Code §403(b) (whether or not the
amounts are excludible from gross
income).
|
|
(b)
|
Treatment
of Elective Deferrals and Code §132(f)(4) Amounts.
For Limitation
Years beginning on or after January 1, 1998, Code §415 Safe Harbor
Compensation will include any elective deferrals as defined in Code
§402(g)(3) and amounts contributed or deferred at the election of the
Employee which were not includible in gross income under Code §125
(including Deemed Code §125 Compensation) or Code §457. Code §415 Safe
Harbor Compensation will also include elective amounts that are not
includible in gross income under Code §132(f)(4) for Limitation Years
beginning on or after January 1, 2001 (or if elected by the Administrator
on a non-discriminatory basis, any earlier Limitation Year beginning on or
after January 1, 1998).
|
|
(c)
|
Treatment
of Severance Pay.
Effective January 1, 2005, Compensation does not
include amounts paid after termination of employment unless the payment is
made within 2½ months after termination and the Compensation falls into
either of two categories: (1) payments the Employee would have received
had he or she continued employment with the Employer which are regular
compensation, bonuses, commissions, overtime, etc.; or (2) payments for
unused sick leave, vacation time, etc. which the Employee could have used
if employment with the Employer continued. However, any other
post-severance payments are not Compensation, even if the Employee
receives them within 2½ months after termination of employment. Severance
pay, nonqualified deferred compensation and parachute payments received
after termination of employment are never considered Compensation for Plan
purposes. However, if an Employer continues to pay an Employee after the
Employee enters active United States military duty, that pay is considered
Compensation, provided it doesn't exceed the pay the Employee would have
received if he or she had remained with the
Employer.
|
1.14
|
Code
§415 Statutory Compensation
.
The term "Code §415
Statutory Compensation" means an Employee's compensation as
determined under Regulation §1.415-2(d)(2) and (3), to wit: (a) wages,
salaries, fees for professional services and other amounts received
(without regard to whether or not an amount is paid in cash) for personal
services actually rendered in the course of employment with the Employer
maintaining the Plan, including, but not limited to, commissions paid
salespersons, compensation for services based on a percentage of profits,
commissions on insurance premiums, tips, bonuses, fringe benefits, and
reimbursements, or other expense allowances under a non-accountable plan
as described in regulation §1.62-2(c); (b) in the case of an
Owner-Employee of a Self-Employed Individual, Earned Income; (c) amounts
described in Code §104(a)(3), §105(a) and 105(h), but only to the extent
these amounts are includible in the gross income of the Employee; (d)
amounts paid or reimbursed by the Employer for moving expenses incurred by
the Employee, but only to the extent that at the time of the payment it is
reasonable to believe that these amounts are not deductible by the
Employee under Code §217; (e) the value of a non-qualified stock option
granted to an Employee by the Employer, but only to the extent that the
value of the option is includible in the gross income of the Employee for
the taxable year in which granted; and (f) the amount includible in the
gross income of an Employee upon making the election described in Code
§83(b). Clauses (a) and (b) above include foreign earned income
(as defined in Code §911(b)), whether or not excludible from gross income
under Code §911. Compensation determined under clause (a) above is to be
determined without regard to the exclusions from gross in Code §931 and
§933. Similar principles are to be applied with respect to income subject
to Code §931 and §933 in determining compensation described in clause (b)
above. For Limitation Years beginning after December 31, 1991, Code §415
Statutory Compensation will include amounts paid or made available.
Notwithstanding the preceding sentence, Code §415 Statutory Compensation
for a Participant in a defined contribution plan who is permanently and
totally disabled (as defined in Code §22(e)(3)) is the Code §415 Statutory
Compensation such Participant would have received for the Limitation Year
if the Participant had been paid at the rate of Code §415 Statutory
Compensation paid immediately before becoming permanently and totally
disabled; for Limitation Years beginning before January 1, 1997, such
imputed Code §415 Statutory Compnsation for the disabled Participant may
be counted only if the Participant is not a HCE and contributions made on
behalf of such Participant are nonforfeitable when made. A Participant's
Code §415 Statutory Compensation will also be determined in accordance
with the following:
|
|
(a)
|
Excluded
Amounts.
Code §415 Statutory Compensation does not include (1)
Employer contributions to a plan of deferred compensation not includible
in gross income for the taxable year in which contributed, or Employer
contributions to a simplified employee pension plan to the extent they are
deductible by the Employee, or any distributions from a plan of deferred
compensation; (2) amounts realized from 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; (3) amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock option; and (4)
other amounts which receive special tax benefits, or contributions made by
an Employer (whether or not under a salary deferral agreement) towards the
purchase of an annuity described in Code §403(b) (whether or not the
amounts are excludible from gross
income).
|
|
(b)
|
Treatment
of Elective Deferrals and Code §132(f)(4) Amounts.
For Limitation
Years beginning on or after January 1, 1998, Code §415 Statutory
Compensation will include any elective deferrals as defined in Code
§402(g)(3) and amounts contributed or deferred at the election of the
Employee which were not includible in gross income under Code §125
(including Deemed Code §125 Compensation) or Code §457. Code §415
Statutory Compensation will also include elective amounts that are not
includible in gross income under Code §132(f)(4) for Limitation Years
beginning on or after January 1, 2001 (or if elected by the Administrator
on a non-discriminatory basis, any earlier Limitation Year beginning on or
after January 1, 1998).
|
|
(c)
|
Treatment
of Severance Pay.
Effective January 1, 2005, Compensation does not
include amounts paid after termination of employment unless the payment is
made within 2½ months after termination of employment and the Compensation
falls into either of two categories: (1) payments the Employee would have
received had he or she continued employment with the Employer which are
regular compensation, bonuses, commissions, overtime, etc.; or (2)
payments for unused sick leave, vacation time, etc. which the Employee
could have used if employment with the Employer continued. However, any
other post-severance payments are not Compensation, even if the Employee
receives them within 2½ months after termination of employment. Severance
pay, nonqualified deferred compensation and parachute payments received
after termination of employment are never considered Compensation for Plan
purposes. However, if an Employer continues to pay an Employee after the
Employee enters active United States military duty, that pay is considered
Compensation, provided it doesn't exceed the pay the Employee would have
received if he or she had remained with the
Employer.
|
1.15
|
Compensation
.
The term Compensation
means amounts received by an Employee from the Employer during a
Compensation Determination Period, determined in accordance with the
following provisions:
|
|
(a)
|
Compensation
Used to Determine Employer Contributions.
In determining Employer
contributions, the term Compensation means a Participant's Form W-2
Compensation received during the Compensation Determination Period. For
purposes of this paragraph, (1) the Compensation Determination Period is
the Plan Year; and (2) Employer contributions made pursuant to a salary
reduction agreement that are not currently includible in the gross income
of an Employee by reason of Code §125, §402(e)(3), §402(h)(1)(B), or
§403(b) will be included in determining Compensation for Plan Years
beginning on or after January 1, 1998. In addition, if elected by the
Administrator on a non-discriminatory basis, Compensation will also
include elective amounts that are not includible in the gross income of
the Employee by reason of Code §132(f)(4), beginning with the Plan Year
elected by the Administrator but not earlier than the Plan Year beginning
on or after January 1, 1998.
|
|
(b)
|
Compensation
Used to Determine Voluntary Employee Contributions.
Such
contributions are not currently permitted under the terms of the
Plan.
|
|
(c)
|
Compensation
Used to Determine Code §415 Limitations.
In determining an
Employee's Annual Addition limitation under Section 6.1 of the Plan,
Compensation means the Code §415 Safe Harbor Compensation received by an
Employee during the Limitation
Year.
|
|
(d)
|
Compensation
Used to Determine Highly Compensated Employee Status.
In
determining for any Plan Year if an Employee is a Highly Compensated
Employee, Compensation means the Code §415 Safe Harbor Compensation
received by the Employee during the Plan
Year.
|
|
(e)
|
Compensation
Used to Determine Key Employee Status.
In determining for any Plan
Year if an Employee is a Key Employee, Compensation means the Code §415
Safe Harbor Compensation received by the Employee during the Plan
Year.
|
|
(f)
|
Compensation
Used to Determine Top Heavy Allocations.
In determining the
Employer's Top Heavy Minimum Allocation under Section 3.6, Compensation
means the Code §415 Safe Harbor Compensation received by an Employee
during the Plan Year, excluding amounts received while a member of an
ineligible class of Employees as described in Section
2.1.
|
|
(g)
|
Code
§401(a)(17) Limit.
Notwithstanding any provision of this Section to
the contrary, Compensation for any Compensation Determination Period (or
Plan Year) will not exceed the limitation set forth in Code §401(a)(17) as
in effect for that Compensation Determination Period (or Plan Year). If a
Compensation Determination Period (or Plan Year) is less than 12
consecutive months, the Code §401(a)(17) limitation 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. If Compensation
for any prior Compensation Determination Period (or Plan Year) is used in
determining a Participant's Plan benefits for the current Plan Year, the
Compensation for such prior Compensation Determination Period (or Plan
Year) is subject to the applicable Code §401(a)(17) limitation as in
effect for that prior period.
|
1.16
|
Current
Obligations
.
The term "Current Obligations" means obligations of the Trust Find
arising from the extension of credit to the Trust Fund and which are
payable in cash within one year from the date an Employer contribution is
made to the Plan.
|
1.17
|
Deemed
Code §125 Compensation
.
The term "Deemed §125
Compensation" means an excludable amount that is not available to an
Employee in cash in lieu of group health coverage under a Code §125
arrangement because that Employee is not able to certify that he or she
has other health coverage. An amount is permitted to be treated as Deemed
Code §125 Compensation only if the Employer does not request or collect
information about the Employee's other health coverage as part of the
enrollment process for the health
plan.
|
1.18
|
Deemed
IRA Contribution
.
The term "Deemed IRA Contribution" means an Individual Retirement
Account contribution made by a Participant to the
Plan.
|
1.19
|
Deemed
IRA Account
.
The term "Deemed IRA Account" means the account to which a
Participant's Deemed IRA Contributions are
credited.
|
1.20
|
Disability
.
The term "Disability"
means a physical or mental condition arising after an Employee has become
a Participant which totally and permanently prevents the Participant from
performing his or her customary duties for the Employer. The determination
as to whether a Participant has suffered a Disability will be made by a
physician acceptable to the Administrator. If a difference of opinion
arises between the Participant and the Administrator as to whether the
Participant has suffered a Disability, it will be settled by a majority
decision of three physicians, one to be appointed by the Administrator,
one to be appointed by the Participant, and the third to be appointed by
the two physicians first appointed
herein.
|
1.21
|
Early
Retirement Age
.
The term "Early Retirement Age" means any Anniversary Date
coinciding with or following the date a Participant reaches 55 and
completes at least 5 Years of
Service.
|
1.22
|
Eligible
Employee
.
The term "Eligible
Employee" means an Employee who is in an eligible class of Employees as
described in Section 2.1.
|
1.23
|
Employee
.
The term "Employee"
means (a) any person reported on the payroll records of the Employer as an
employee who is deemed by the Employer to be a common law employee; (b)
except in determining eligibility to participate in this Plan, any person
reported on the payroll records of an Affiliated Employer as an employee
who is deemed by the Affiliated Employer to be a common law employee (even
if the Affiliated Employer is not an Adopting Employer); and (c) any
person who is considered a Leased Employee but who (1) is not covered by a
plan described in Code §414(n)(5), or (2) is covered by a plan described
in Code §414(n)(5) but Leased Employees constitute more than 20% of the
Employer's non- highly compensated workforce. The determination of
Employee status will be made in accordance with the
following:
|
|
(a)
|
Independent
Contractors.
The term Employee will not include any individual who
is not reported on the payroll records of the Employer or an Affiliated
Employer as a common law employee. If such person is later determined by
the Sponsoring Employer or by a court or governmental agency to be an
Employee or to have been an Employee, he or she will only be eligible for
Plan participation prospectively and may participate in the Plan as of the
next entry date set forth in Section 2.2 following such determination and
after satisfaction of all other eligibility requirements. However, the
Sponsoring Employer may elect to amend the Plan at any time to reclassify
any individual described herein as a member of an eligible class of
Employees retroactively applied for one or more prior Plan Years because
the Plan failed to satisfy for such Plan Year one of the tests in Code
§410(b)(1)(A) or Code §§410(b)(1)(B) and (C), or for any other reason
required to maintain the tax exempt status of the
Plan.
|
|
(b)
|
Undocumented
Workers.
The term Employee will not include any individual who does
not possess the proper legal credentials necessary to legally work in the
United States. If an individual enters the Plan and is later determined to
lack the necessary credentials, he or she will no longer be deemed an
Employee and his or her Participant's Account, if any, will be deemed a
Forfeiture.
|
1.24
|
Employer
.
The term "Employer"
means the Sponsoring Employer and any Adopting
Employer.
|
1.25
|
Exempt
Loan
.
The
term "Exempt Loan" means a loan made to the Plan by a disqualified person
or that is guaranteed by a disqualified person and which satisfies the
requirements of Regulation §54.4975-7(b) and Department of Labor
regulation §2550.408b-3.
|
1.26
|
Fiscal
Year
.
The
term "Fiscal Year" means the Sponsoring Employer's 12 consecutive month
accounting year beginning January 1st and ending the following the
following December 31st. If the Fiscal Year is changed, a short Fiscal
Year is established beginning the day after the last day of the Fiscal
Year in effect before this change and ending on the last day of the new
Fiscal Year.
|
1.27
|
Forfeiture
.
The term "Forfeiture"
means the amount by which a Participant's Account balance exceeds his or
her Vested Interest upon the earlier to occur of (1) the date the
Participant receives a distribution of his or her Vested Interest under
Article 5; or (2) the date the Participant incurs five consecutive Breaks
in Service after termination of employment. No Forfeitures will occur
solely as a result of the withdrawal of a Participant's own contributions
to the Plan or a Participant's transfer to an Affiliated Employer or
Adopting Employer. All Forfeitures will be placed in the Forfeiture
Account pending allocation pursuant to Section 3.5. The term Forfeiture
will also mean any amounts removed from a Participant's Account for any
reason (including but not limited to forfeiture as a result of an
inadvertent violation of a Plan limit or the inclusion of an ineligible
Employee) that cannot be returned to the
Employer.
|
1.28
|
Form
W-2 Compensation
.
The term "Form W-2 Compensation" means wages within the meaning of
Code §3401(a) and all other payments of compensation actually paid or made
available in gross income to an Employee by the Employer in the course of
the Employer's trade or business for which the Employer is required to
furnish the Employee a Form W-2 under Code §6041(d), §6051(a)(3) and
§6052. Compensation must be determined without regard to rules limiting
remuneration included in wages based on the nature or location of
employment or services performed (like the exception for agricultural
labor in Code §3401(a)(2)).
|
1.29
|
HCE
.
The term "HCE" means a
Highly Compensated Employee.
|
1.30
|
Highly
Compensated Employee
.
The term "Highly
Compensated Employee" means any Employee who during the Plan Year or the
look-back year was a 5% owner as defined in Code §416(i)(1), or who for
the look-back year had Code §415 Compensation in excess of $80,000 as
adjusted in accordance with Code §415(d) (except that the base year will
be the calendar quarter ending September 30, 1996). In determining who is
a former Highly Compensated Employee, the rules for determining which
Employees are Highly Compensated Employees for the Plan Year or look-back
year for which the determination is being made (in accordance with
temporary Regulation §1.414(q)-1T, A-4, Notice 97-45, and any subsequent
guidance) will be applied. A former Highly Compensated Employee for the
determination year is any former Employee who, with respect to the
Employer, had a separation year (as defined in temporary Regulation
§1.414(q)-1T, A-5) prior to the determination year and was an active
Highly Compensated Employee for either such Employee's separation year or
any determination year ending on or after the Employee's 55th birthday.
For purposes of determining status as a former Highly Compensated
Employee, whether an employee was an active Highly Compensated Employee
for a determination year that ended on or after the Employee's 55th
birthday, or that was a separation year, is based on the rules applicable
to determining HCE status as in effect for that determination year. If the
Employer maintains more than one qualified retirement plan, the definition
of Highly Compensated Employee must be consistently applied to all such
plans. In determining if an Employee is a Highly Compensated Employee
based on his or her Compensation, the top paid group election in Code
§414(q)(3) will be applied by this
Plan.
|
1.31
|
Hour
of Service
.
The term "Hour of Service" means, with respect to any provision of
the Plan in which service is determined by the elapsed time method, each
hour for which an Employee is paid, or is entitled to payment, by the
Employer or an Affiliated Employer for the performance of duties. With
respect to any provision of the Plan in which service is determined by
counting an Employee's Hours of Service, the meaning of the term "Hour of
Service" will be determined in accordance with the following
provisions:
|
|
(a)
|
Determination
of Hours.
The term Hour of Service means (1) each hour an Employee
is paid, or entitled to payment, for the performance of duties for the
Employer or an Affiliated Employer, which will 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 or an Affiliated 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, except that no more than 501 Hours of Service will be credited
under this clause (2) for any single continuous period (whether or not
such period occurs in a single computation period); and (3) each hour for
which back pay, irrespective of mitigation of damages, is either awarded
or agreed to by the Employer or an Affiliated Employer, except that the
same hours will not be credited both under clause (1) or clause (2) and
under this clause (3), and these hours will be credited for the
computation period or periods to which the award or agreement pertains
rather than the computation period in which the award, agreement or
payment is made. Hours of Service will be calculated and credited pursuant
to DOL Regulation §2530.200b-2(b) and (c), which are incorporated in this
Plan by reference.
|
|
(b)
|
Maternity
or Paternity Leave.
In determining if a Break in Service for
participation and Vesting has occurred in a computation period, an
individual on Maternity or Paternity Leave will receive credit for up to
501 Hours of Service which would otherwise have been credited but for such
absence, or in any case in which such Hours of Service cannot be
determined, 8 hours per day of such absence. Hours of Service
credited for Maternity of Paternity Leave will be credited in the
computation period in which the absence begins if the crediting is
necessary to prevent a Break in Service in that period, or in all other
cases, in the following computation
period.
|
|
(c)
|
Use
of Equivalencies.
Notwithstanding paragraph (a), the Administrator
may elect for all Employees or for one or more different classifications
of Employees (provided such classifications are reasonable and are
consistently applied) to apply one or more of the following equivalency
methods in determining the Hours of Service of an Employee. Under such
equivalency methods, an Employee will be credited with (1) 190 Hours of
Service for each month he or she is paid or entitled to payment for at
least one Hour of Service; or (2) 95 Hours of Service for each
semi-monthly period in which he or she is paid or entitled to payment for
at least one Hour of Service; or (3) 45 Hours of Service for each week he
or she is paid or entitled to payment for at least one Hour of Service; or
(4) 10 Hours of Service for each day he or she is paid or entitled to
payment for at least one Hour of
Service.
|
1.32
|
Key
Employee
.
The term "Key Employee" means, for Plan Years beginning on or after
January 1, 2002, any Employee, former Employee or deceased Employee who at
any time during the Plan Year that includes the Determination Date was (a)
an officer of the Employer having annual Compensation greater than the
dollar amount set forth in Code §416(i)(1), as adjusted for Plan Years
beginning after December 31, 2002; (b) a 5% owner as defined in Code
§416(i)(1)(B)(I); or (c) a 1% owner as defined in Code §416(i)(1)(B)(ii)
whose annual Compensation is more than $150,000. The determination of who
is a Key Employee will be made in accordance with Code §416(i)(1) and the
Regulations and other guidance issued
thereunder.
|
1.33
|
Leased
Employee
.
The term "Leased Employee" means, for Plan Years beginning on or
after January 1, 1997, any person within the meaning of Code §414(n)(2)
and §414(o) who is not reported on the payroll records of the Employer as
a common law employee and who provides services to the Employer if (a) the
services are provided under an agreement between the Employer and a
leasing organization; (b) the person has performed services for the
Employer or for the Employer and related persons as determined under Code
§414(n)(6) on a substantially full time basis for a period of at least one
year; and (c) the services are performed under the primary direction or
control of the Employer. Contributions or benefits provided to a Leased
Employee by the leasing organization which are attributable to services
performed for the Employer will be treated as provided by the Employer. A
Leased Employee will not be considered an Employee of the recipient if he
or she is covered by a money purchase plan providing (a) a non-integrated
Employer contribution rate of at least 10% of Code §415 Compensation,
including amounts contributed by the Employer pursuant to a salary
deferral agreement which are excludible from the Leased Employee's gross
income under a cafeteria plan covered by Code §125 (including Deemed Code
§125 Compensation), a cash or deferred plan under Code §401(k), a SEP
under Code §408(k) or a tax-deferred annuity under Code §403(b), and also
including, for Plan Years beginning on or after January 1, 2001, any
elective amounts that are not includible in the gross income of the Leased
Employee because of Code §132(f)(4); (b) immediate participation; and (c)
full and immediate vesting. This exclusion is only available if Leased
Employees do not constitute more than 20% of the recipient's non-highly
compensated work force.
|
1.34
|
Limitation
Year
.
The
term "Limitation Year" means the Plan
Year.
|
1.35
|
Maternity
or Paternity Leave
.
The term "Maternity or
Paternity Leave" means that an Employee is absent from work because of the
Employee's pregnancy; the birth of the Employee's child; the placement of
a child with the Employee in connection with the adoption of such child by
the Employee; or the need to care for such child for a period beginning
immediately following the child's birth or placement as set forth
above.
|
1.36
|
Named
Fiduciary
.
The term "Named Fiduciary" means the Plan Administrator or other fiduciary
named by the Plan Administrator to control and manage the operation and
administration of the Plan. To the extent authorized by the Plan
Administrator, a Named Fiduciary may delegate its responsibilities to a
third party or parties. The Employer will also be a Named
Fiduciary.
|
1.37
|
NHCE
.
The term "NHCE" means
a Non-Highly Compensated Employee.
|
1.38
|
Non-Highly
Compensated Employee
.
The term "Non-Highly
Compensated Employee" means any Employee who is not a Highly Compensated
Employee.
|
1.39
|
Non-Key
Employee
.
The term "Non-Key Employee" means any Employee who is not a Key
Employee, including former Key Employees. In making the allocation in
Section 3.6, Non-Key Employee means a Non-Key Employee who either is a
Participant or would be a Participant but for the reasons in Section
3.6(a).
|
1.40
|
Normal
Retirement Age
.
The term "Normal Retirement Age" means the date a Participant
reaches Age 65. There is no mandatory retirement
Age.
|
1.41
|
Normal
Retirement Date
.
The term "Normal Retirement Date" means the Anniversary Date
coinciding with or next following the date a Participant reaches Normal
Retirement Age.
|
1.42
|
Other
Investments Account
.
The term "Other
Investments Account" means the aggregate value of all of a Participant's
accounts (other than the Company Stock Account) to which are credited a
Participant's share of Employer contributions, Forfeitures which are not
used to pay administrative expenses or to reduce Employer contributions,
earnings and losses, and the proceeds of any Policies, if any, purchased
on the Participant's life under Section 7.2. Any purchase of Company Stock
will be debited from one or more of these accounts which together
constitute a Participant's Other Investments
Account.
|
1.43
|
Otherwise
Excludible Participant
.
The term "Otherwise
Excludible Participant" means a Participant who has not satisfied the
statutory age and service requirements set forth in Code
§410(b).
|
1.44
|
Participant
.
The term "Participant"
means any Employee who has met the eligibility and participation
requirements of the Plan. However, an individual who is no longer an
Employee will cease to be a Participant if his or her entire Plan benefit
(1) is fully guaranteed by an insurance company and legally enforceable at
the sole choice of such individual against such insurance company,
provided that a contract, Policy, or certificate describing the
individual's Plan benefits has been issued to such individual; (2) is paid
in a lump sum distribution which represents such individual's entire
interest in the Plan; or (3) is paid in some other form of distribution
and the final payment thereunder has been
made.
|
1.45
|
Participant's
Account
.
The term "Participant's Account" means the aggregate balance in a
Participant's Company Stock Account and Other Investments Account and any
other accounts that the Administrator may determine necessary from
time.
|
1.46
|
Period of
Service
.
Not
applicable
|
1.47
|
Period of
Severance
.
Not
applicable.
|
1.48
|
Permissive
Aggregation Group
.
The term "Permissive Aggregation Group" means a Required
Aggregation Group plus any Employer plan or plans which when considered as
a group with the Required Aggregation Group would continue to satisfy the
requirements of Code §401(a)(4) and
§410.
|
1.49
|
Plan
.
The term "Plan" means
the The Bank of South Carolina Employee Stock Ownership Plan, established
by the Sponsoring Employer as amended from time to
time.
|
1.50
|
Plan
Year
.
The
term Plan Year means the Plan's twelve month accounting year beginning
January 1st and ending the following the following December 31st. If the
Plan Year is changed, a short Plan Year will be established beginning the
day after the last day of the Plan Year in effect before the change and
ending on the last day of the new Plan
Year.
|
1.51
|
Policy
.
The term "Policy"
means an insurance policy or annuity contract purchased pursuant to
Section 7.2.
|
1.52
|
Qualified
Domestic Relations Orders
.
The term "Qualified
Domestic Relations Order" is a signed domestic relations order issued by a
State Court which creates, recognizes or assigns to an alternate payee(s)
right to receive all or part of a Participant's Plan benefit. An alternate
payee is a Spouse, former Spouse, child, or other dependent of a
Participant who is treated as a Beneficiary under the Plan as a result of
the QDRO.
|
1.53
|
Required
Aggregation Group
.
The term "Required Aggregation Group" means (1) each Employer
qualified deferred compensation plan in which at least one Key Employee
participates or participated at any time during the Plan Year containing
the Determination Date (as defined in Section 1.63(d)) or any of the four
preceding Plan Years (regardless of whether the plan has terminated); and
(2) any other Employer qualified deferred compensation plan that enables a
plan described in (1) to satisfy Code §401(a)(4) or
§410.
|
1.54
|
Required
Beginning Date
.
The term "Required Beginning Date" means the later of Age 70½ or
actual retirement. However, for a Participant who is a 5% owner, the term
Required Beginning Date means April 1st of the calendar year following the
later of the calendar year in which the Participant reaches Age 70½.
Notwithstanding the foregoing to the contrary, if a Participant made a
distribution election prior to January 1, 1984 pursuant to §242(b) of the
Tax Equity and Fiscal Responsibility Act (TEFRA), such Participant's
benefit will be distributed at the time and in the manner set forth in the
election provided it has not been revoked, and further provided that the
election provides a method of distribution of benefits which satisfies the
provisions of Code §401(a)(9) as in effect prior to the enactment of
TEFRA.
|
1.55
|
Regulation
.
The term "Regulation"
means regulations as promulgated by the Secretary of the Treasury, the
Secretary of the Department of Labor, or their delegates, as amended
and/or renumbered from time to
time.
|
1.56
|
Rollover
Account
.
The term "Rollover Account" means account to which a Participant's
Rollover Contributions, if any, are
credited.
|
1.57
|
Rollover
Contribution (or Rollover)
.
The terms "Rollover
Contribution" and "Rollover" mean an amount eligible for tax free rollover
treatment which is transferred to this
Plan
|
1.58
|
Sponsoring
Employer
.
The term "Sponsoring Employer" means The Bank of South Carolina
(and any successor thereto that elects to assume sponsorship of this
Plan).
|
1.59
|
Spouse
.
The term "Spouse"
means the person to whom a Participant is legally
married.
|
1.60
|
Terminated
Participant
.
The term "Terminated Participant" means a Participant who has
ceased to be an Employee for reasons other than retirement, death or
Disability.
|
1.61
|
Top
Heavy
.
The
term "Top Heavy" means for any Plan Year beginning after December 31, 1983
that (1) the Top Heavy Ratio exceeds 60% and the Plan is not part of a
Required Aggregation Group or Permissive Aggregation Group; or (2) the
Plan is a part of a Required Aggregation Group but not a Permissive
Aggregation Group and the Top Heavy Ratio for the group exceeds 60%; or
(3) the Plan is a part of a Required Aggregation Group and a Permissive
Aggregation Group and the Top Heavy Ratio for the Permissive Aggregation
Group exceeds 60%.
|
1.62
|
Top
Heavy Minimum Allocation
.
The term "Top Heavy
Minimum Allocation" means an amount of Employer contributions and
Forfeitures equal to 3% of an Employee's Compensation (or such higher or
lesser percentage of Compensation as may otherwise be indicated in Section
3.6). Elective Deferrals (and, for Plan Years beginning before 2002,
Matching Contributions) cannot be used to satisfy the Top-Heavy Minimum
Allocation. SIMPLE 401(k) plans and certain Safe Harbor 401(k) Plans are
not subject to Top
Heavy rules.
|
1.63
|
Top
Heavy Ratio
.
For Plan Years beginning on or after January 1, 2002, in
determining if this Plan is Top Heavy, the "Top Heavy Ratio" will be
determined in accordance with the following
provisions:
|
|
(a)
|
Rule
1.
If the employer maintains one or more defined contribution plans
(including any Simplified Employee Pension Plan) and has not maintained
any defined benefit plan which during the 5-year period ending on the
Determination Date(s) has or has had accrued benefits, the top-heavy ratio
for this Plan alone or for the Required Aggregation Group or the
Permissive Aggregation Group as appropriate is a fraction, the numerator
of which is the sum of the account balances of all Key Employees as of the
Determination Date(s) (including any part of any account balance
distributed in the 1-year period ending on the determination date(s))
(5-year period ending on the Determination Date in the case of a
distribution made for a reason other than severance from employment, death
or Disability and in determining whether the Plan is Top Heavy for Plan
Years beginning before January 1, 2002), and the denominator of which is
the sum of all account balances (including any part of any account balance
distributed in the 1-year period ending on the Determination date(s))
(5-year period ending on the Determination Date in the case of a
distribution made for a reason other than severance from employment, death
or disability and in determining whether the Plan is Top Heavy for Plan
Years beginning before January 1, 2002), both computed in accordance with
Code §416 and the Regulations promulgated thereunder. Both the
numerator and denominator of the Top Heavy Ratio are increased to reflect
any contribution not actually made as of the Determination Date, but which
is required to be taken into account on that date under Code §416 the
regulations promulgated
thereunder.
|
|
(b)
|
Rule
2.
If the Employer maintains one or more defined contribution plans
(including any Simplified Employee Pension Plan) and the Employer
maintains or has maintained one or more defined benefit plans which during
the 5-year period ending on the determination date(s) has or has had any
accrued benefits, the Top Heavy Ratio for any Required Aggregation Group
or Permissive Aggregation Group as appropriate is a fraction, the
numerator of which is the sum of account balances under the aggregated
defined contribution plan or plans for all Key Employees, determined in
accordance with paragraph (a) above, and the present value of accrued
benefits under the aggregated defined benefit plan or plans for all Key
Employees as of the Determination Date(s), and the denominator of which is
the sum of the account balances under the aggregated defined contribution
plan or plans for all Participants, determined in accordance with
paragraph (a) above, and the present value of accrued benefits under the
defined benefit plan or plans for all Participants as of the Determination
Date(s), all determined in accordance with Code §416 and the Regulations
promulgated thereunder. The accrued benefits under a defined benefit plan
in both the numerator and denominator of the Top Heavy Ratio are increased
for any distribution of an accrued benefit made in the 1-year period
ending on the Determination Date (5-year period ending on the
Determination Date in the case of a distribution made for a reason other
than severance from employment, death or disability and in determining
whether the Plan is Top Heavy for Plan Years beginning before January 1,
2002).
|
|
(c)
|
Rule
3.
For purposes of paragraphs (a) and (b), the value of account
balances and the present value of accrued benefits will be determined as
of the most recent valuation date that falls within or ends with the
12-month period ending on the Determination Date, except as provided in
Code §416 and the regulations thereunder for the first and second Plan
Years of a defined benefit plan. The account balances and accrued benefits
of a participant (1) who is not a Key Employee but who was a Key Employee
in a prior year, or (2) who has not been credited with at least one Hour
of Service with any Employer maintaining the Plan at any time during the
1-year period (5-year period in determining if the Plan is Top Heavy for
Plan Years beginning before January 1, 2002) ending on the Determination
Date will be disregarded. The calculation of the Top Heavy Ratio and the
extent to which distributions, Rollovers and Transfers are taken into
account will be made in accordance with Code §416 and the Regulations
thereunder. Deductible employee contributions will not be taken into
account for purposes of computing the Top Heavy Ratio. When aggregating
plans the value of account balances and accrued benefits will be
calculated with reference to the Determination Dates that fall within the
same calendar year. The accrued benefit of a Participant other than a Key
Employee will be determined under (1) the method, if any, that uniformly
applies for accrual purposes under all defined benefit plans maintained by
the Employer, 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 rule of Code
§411(b)(1)(C).
|
|
(d)
|
Definition
of Determination Date.
In determining the Top Heavy Ratio, the term
Determination Date means the last day of the preceding Plan Year except
for the first Plan Year when the Determination Date means the last day of
such first Plan Year.
|
1.64
|
Transfer
Contribution
.
The term "Transfer Contribution" means a non-taxable transfer of a
Participant's benefit directly from another qualified plan to this Plan
(for example, as a result of a plan merger). For accounting and record
keeping purposes, Transfer Contributions will be identical to Rollover
Contributions.
|
1.65
|
Trustee
.
The term "Trustee"
means the persons or entity named as trustee or trustees of the Trust. The
term Trustee will also mean custodian if a custodian is appointed by the
Sponsoring Employer.
|
1.66
|
Trust
(or Trust Fund)
.
The term "Trust" or "Trust Fund" means the assets of the Plan. The
term Trust or Trust Fund will also mean any custodial agreement entered
into by the Sponsoring Employer.
|
1.67
|
Unallocated
Company Stock Account
.
The term "Unallocated
Company Stock Account" means an account containing Company Stock acquired
with the proceeds of an Exempt Loan and which has not been allocated to
the Participants' Company Stock
Accounts.
|
1.69
|
Valuation
Date
.
The
term "Valuation Date" means the date on which the Trustee determines the
value of the Trust Fund. The Trust Fund must be valued at least annually
as of the last day of the Plan Year, but the Administrator can elect to
have all or any portion of the assets of the Trust Fund valued more
frequently, including, but not limited to, semi-annually, quarterly,
monthly, or daily. The Administrator may implement additional Valuation
Dates in order avoid prejudice with respect to any
Participant.
|
1.70
|
Vested
Aggregate Account
.
The term Vested Aggregate Account means a Participant's Vested
Interest in the aggregate value of his or her Participant's Account and
any accounts attributable to the Participant's own Plan contributions
(including rollovers).
|
1.71
|
Vested,
Vested Interest or Vesting
.
The term "Vested,"
"Vested Interest" or "Vesting" means a Participant's nonforfeitable
percentage in an account maintained on his or her behalf under the Plan. A
Participant's Vested Interest in his or her Participant's Account will be
determined in accordance with Section
4.6.
|
1.72
|
Voluntary
Employee Contribution
.
The term Voluntary
Employee Contribution means a non-deductible contribution made to the Plan
by a Participant.
|
1.73
|
Voluntary
Employee Contribution Account
.
The term Voluntary
Employee Contribution Account means the sub-account to which a
Participant's Voluntary Employee Contributions, if any, are
allocated.
|
1.74
|
Year
of Service
.
With respect to any provision of the Plan in which service is
determined by counting an Employee's Hours of Service, the term "Year of
Service" means a 12-consecutive month computation period during which an
Employee (or Participant) is credited with a specified number of Hours of
Service for the Employer, determined in accordance with the following
provisions:
|
|
(a)
|
Employment
Commencement Date.
The Employment Commencement Date is the first
day an Employee performs an Hour of Service for an Employer, Affiliated
Employer or Adopting Employer. The Reemployment Commencement Date is the
first day following a Period of Severance on which an Employee performs an
Hour of Service for an Employer, Adopting Employer or Affiliated
Employer.
|
|
(b)
|
Year
of Service for Eligibility.
For any Plan Year in which the
eligibility requirements under Section 2.1 are based on an Employee's
Years of Service, a Year of Service is a 12-consecutive month computation
period in which an Employee is credited with at least 1,000 Hours of
Service. An Employee's initial eligibility computation period will begin
on his or her Employment Commencement Date. The second eligibility
computation period will begin on the first day of the Plan Year which
begins prior to the first anniversary of the Employee's Employment
Commencement Date regardless of whether the Employee is credited with
1,000 Hours of Service during the initial computation period. If the
Employee is credited with 1,000 Hours of Service in both the initial
eligibility computation period and in the second eligibility computation
period, the Employee will be credited with two Years of Service for
eligibility purposes. If a Plan Year is less than 12 months, the Hours of
Service requirement set forth herein will be proportionately reduced. In
determining eligibility under Section 2.1 and the applicable entry date
under Section 2.2 (or in determining a Safe Harbor 401(k) Contribution
Addendum, if any), an Employee will be deemed to have completed a Year of
Service on the same date the Employee completes the applicable Hours of
Service requirement, even if such date occurs before the last day of the
computation period.
|
|
(c)
|
Year
of Service for Vesting.
For any Plan Year in which a Participant's
Vested Interest under Section 4.6 is based on Years of Service, a Year of
Service is a 12-consecutive month computation period in which an Employee
is credited with at least 1,000 Hours of Service. The Vesting computation
period is the Plan Year, and if any Plan Year is less than 12 consecutive
months and the Hours of Service requirement in this paragraph is greater
than one, such requirement will be proportionately
reduced.
|
|
(d)
|
Prior
Service Credit.
An Employee will receive credit for all Years of
Service with the
Employer.
|
|
(e)
|
Re-employment
of an Employee Before a Break In Service and Before Eligibility
Requirements Are Satisfied.
If
an Employee terminates employment with the Employer prior to satisfying
the eligibility requirements set forth in Section 2.1 and the Employee is
subsequently re-employed by the Employer before incurring a Break in
Service, then the Employee's pre-termination Years of Service (and Hours
of Service during the eligibility computation period) will be counted in
determining the satisfaction of such eligibility requirements, and for all
other purposes, as applicable, and the eligibility computation period and
the vesting computation period, as applicable, will remain
unchanged.
|
|
(f)
|
Re-employment
of an Employee Before a Break In Service and After Eligibility
Requirements Are Satisfied.
If an Employee terminates employment
with the Employer prior to the Employee's entry date under Section 2.2,
the Employee had satisfied the eligibility requirements under Section 2.1
as of the date of such termination, and the Employee is subsequently
re-employed by the Employer before incurring a Break in Service, then (1)
the Employee will become a Participant in the Plan as of the later of (A)
the date the Employee would have entered the Plan had the Employee not
terminated employment with the Employer, or (B) the Employee's
Re-employment Commencement Date; (2) the Employee's pre-termination Years
of Service (and Hours of Service during a computation period) will be
counted for all purposes; and (3) the Vesting computation period will
remain unchanged.
|
|
(g)
|
Re-employment
of a Participant Before a Break In Service.
If an
Employee terminates employment with the Employer after becoming
a Participant in the Plan and is subsequently re-employed by the Employer
before incurring a Break in Service, then (1) the Employee's Years of
Service and employment will be deemed not to have been interrupted; (2)
the Employee will recommence Plan participation immediately upon
re-employment; (3) the Employee's pre-termination Years of Service (and
Hours of Service during a computation period) will be counted for all
purposes; and (4) the vesting computation period will remain
unchanged.
|
|
(h)
|
Re-employment
of an Employee After a Break In Service and Before Eligibility
Requirements Are Satisfied.
If
an Employee terminates employment with the Employer prior to satisfying
the eligibility requirements under Section 2.1 and the Employee is
subsequently re-employed by the Employer after incurring a Break in
Service, then the Employee's Year(s) of Service that were completed prior
to the Break in Service will be counted, subject to the following
provisions:
|
|
(1)
|
Determination
of Years of Service for Eligibility Using the Rule of Parity.
For
any Plan Year in which the eligibility requirements under Section 2.1 are
based on Years of Service, Years of Service completed prior to an
Employee's Break(s) in Service will not be counted if the total number of
consecutive Breaks in Service incurred by the Employee equals or exceeds
the greater of five or the aggregate number of Year of Service credited to
the Employee prior to incurring the Breaks in Service; this rule hereafter
is referred to as the "rule of parity." For purposes of the preceding
sentence, the aggregate number of Years of Service will not include Years
of Service previously disregarded under prior applications of the rule of
parity. If such former Employee's Years of Service are disregarded under
the rule of parity, then (A) the rehired Employee will be treated as a new
Employee for purposes of Section 2.1 and (B) the Employee's eligibility
computation period will commence on the Employee's Re-employment
Commencement Date. If such former Employee's Years of Service are not
disregarded under the rule of parity, then the eligibility computation
periods will remain unchanged. However, if this Plan provides that an
Employee must complete more than one Year of Service for eligibility
purposes under Section 2.1, and provides that an Employee will have a 100%
Vested Interest in his or her Participant's Account upon becoming a
Participant in the Plan, then (A) the Year of Service (and Hours of
Service) of an Employee who incurs a Break in Service before satisfying
such eligibility requirement will not be counted for eligibility purposes
and (B) the Employee's eligibility computation period will commence on the
Employee's Re-employment Commencement
Date.
|
|
(2)
|
Determination
of
Years
of
Service for Vesting.
For any Plan Year in which a Vested Interest
under Section 4.6 is based on Years of Service, then in determining an
Employee's Vested Interest in his or her Participant's Account, any Years
of Service that were completed prior to an Employee's Break(s) in Service
will not be counted (A) if the Employee is not Vested in any portion of
his or her Participant's Account and (B) if the total number of
consecutive Breaks in Service incurred by the Employee equals or exceeds
the greater of five or the aggregate number of Years of Service credited
to the Employee prior to incurring the Break(s) in Service. For purposes
of the preceding sentence, the aggregate number of Years of Service will
not include any Years of Service previously disregarded under prior
applications of the rule of parity.
|
|
(i)
|
Re-employment
of an Employee After a Break In Service, After Eligibility Requirements
Are Satisfied, But Before the Employee's Entry Date.
If an Employee
terminates employment with the Employer after satisfying the eligibility
requirements under Section 2.1 (but before the Employee's entry date under
Section 2.2) and the Employee is subsequently re-employed by the Employer
after incurring a Break in Service, then the Employee's Years of Service
completed prior to the Break in Service will be counted , subject to the
following:
|
|
(1)
|
Determination
of Years of Service for Eligibility Using the Rule of Parity.
For
any Plan Year in which the eligibility requirements under Section 2.1 are
based on Years of Service, Years of Service completed prior to an
Employee's Break(s) in Service will not be counted if the total number of
consecutive Breaks in Service incurred by the Employee equals or exceeds
the greater of five or the aggregate number of Years of Service credited
to the Employee prior to incurring the Break(s) in Service; this rule
hereafter is referred to as the "rule of parity." For purposes of the
preceding sentence, the aggregate number of Years of Service will not
include Years of Service previously disregarded under prior applications
of the rule of parity. If such former Employee's Years of Service are
disregarded under the rule of parity, then (A) the rehired Employee will
be treated as a new Employee for purposes of Section 2.1 and (B) the
Employee's eligibility computation period will commence on the Employee's
Re-employment Commencement Date. If such former Employee's Years of
Service are not disregarded under the rule of parity, then the rehired
Employee will enter the Plan under Section 2.2 on the Employee's
Re-employment Commencement Date.
|
|
(2)
|
Determination
of
Years
of
Service for Vesting.
For any Plan Year in which a Vested Interest
under Section 4.6 is based on Years of Service, then in determining an
Employee's Vested Interest in his or her Participant's Account, any Years
of Service that were completed prior to an Employee's Break(s) in Service
will not be counted (A) if the Employee is not Vested in any portion of
his or her Participant's Account and (B) if the total number of
consecutive Breaks in Service incurred by the Employee equals or exceeds
the greater of five or the aggregate number of Years of Service credited
to the Employee prior to incurring the Break(s) in Service. For purposes
of the preceding sentence, the aggregate number of Years of Service will
not include any Years of Service previously disregarded under prior
applications of the rule of parity.
|
|
(j)
|
Re-employment
of a Participant After a Break In Service.
If
an Employee (1) was a Participant in the Plan, (2) terminates employment
with the Employer, and (3) is subsequently re-employed by the Employer
after incurring a Break in Service, then the Employee's Years of Service
that were completed prior to the Break in Service will be counted, subject
to the following:
|
|
(1)
|
Determination
of Years of Service for Eligibility Using the Rule of Parity.
For
any Plan Year in which the eligibility requirements under Section 2.1 are
based on Years of Service, Years of Service completed prior to an
Employee's Break(s) in Service will not be counted if the total number of
consecutive Breaks in Service incurred by the Employee equals or exceeds
the greater of five or the aggregate number of Years of Service credited
to the Employee prior to incurring the Break(s) in Service; this rule
hereafter is referred to as the "rule of parity." For purposes of the
preceding sentence, the aggregate number of Years of Service will not
include Years of Service previously disregarded under prior applications
of the rule of parity. If such former Employee's Years of Service are
disregarded under the rule of parity, then (A) the rehired Employee will
be treated as a new Employee for purposes of Section 2.1 and (B) the
Employee's eligibility computation period will commence on the Employee's
Re-employment Commencement Date. If such former Employee's Years of
Service are not disregarded under the rule of parity, then the rehired
Employee will reenter the Plan as of the Employee's Re-employment
Commencement Date.
|
|
(2)
|
Determination
of Years of Service for Vesting.
For
any Plan Year in which a Vested Interest under Section 4.6 is based on
Years of Service, then in determining an Employee's Vesting Interest in
his or her Participant's Account, any Years of Service that were completed
prior to an Employee's Break(s) in Service will not be counted (A) if the
Employee is not Vested in any portion of his or her Participant's Account
and (B) if the total number of consecutive Break(s) in Service incurred by
the Employee equals or exceeds the greater of five or the aggregate number
of Years of Service credited to the Employee prior to incurring the
Break(s) in Service. For purposes of the preceding sentence, the aggregate
number of Years of Service will not include any Years of Service
previously disregarded under prior applications of the rule of
parity.
|
|
(k)
|
Ignoring
Service for Eligibility If Service Requirement for Eligibility Is More
Than 1 Year of Service.
Notwithstanding anything in the Plan to the
contrary, if this Plan provides that an Employee must complete more than
one Year of Service for eligibility purposes under Section 2.1, and
provides that an Employee will have a 100% Vested Interest in his or her
Participant's Account upon becoming a Participant in the Plan, then (A)
the Years of Service (and Hours of Service) of an Employee who incurs a
Break in Service before satisfying such eligibility requirement will not
be counted for eligibility purposes and (B) the Employee's eligibility
computation period will commence on the Employee's Re-employment
Commencement Date.
|
2.1
|
Eligibility
Requirements
.
Any Employee who was a
Participant on December 31, 2006 will be eligible to continue as a
Participant without regard to the requirements described below. Any other
Employee who was not already a Participant on December 31, 2006 and who is
in an eligible class of Employees as described below (and who for purposes
of this Article 2 is referred to as an Eligible Employee) will become
eligible to enter the Plan as a Participant on the applicable entry date
in Section 2.2 in accordance with the
following:
|
|
(a)
|
Eligibility
Requirements for Employer Contributions.
The eligibility
requirements for the purpose of entering the Plan as a Participant to
receive an allocation of Employer contributions are as
follows:
|
|
(1)
|
General
Eligibility.
An Eligible Employee described in Section 2.1(a)(2)
will enter the Plan as a Participant on the applicable entry date
described in Section 2.2 upon reaching Age 21 and being credited with 1
Year of Service.
|
|
(2)
|
Eligible
Employees.
All Employees are Eligible Employees and are eligible to
participate in the Plan upon satisfying the eligibility requirements in
subparagraph (1) above except for the following ineligible classes of
Employees: (1) Employees whose employment is governed by a collective
bargaining agreement between Employee representatives and the Employer in
which retirement benefits were the subject of good faith bargaining unless
such collective bargaining agreement ; (2) Employees who are non-resident
aliens who do not receive earned income from the Employer which
constitutes income from sources within the United States; (3) Any person
who becomes an Employee as the result of a "Code §410(b)(6)(C)
transaction". Any such Employee will be excluded during the
period beginning on the date of the transaction and ending on the last day
of the first Plan Year beginnin; (4) Any person who is considered a Leased
Employee but who (A) is not covered by a plan described in Code
§414(n)(5), or (B) is covered by a plan described in Code §414(n)(5) but
Leased Employees constitute more than 20% of the Employer's non-hi; (5)
Employees who are employed by an Affiliated Employer which is not an
Adopting Employer; and (6) any person who is deemed by the Employer to be
an independent contractor on his or her employment commencement date and
on the first day of each subsequent Plan Year, even if such person is
later determined by a court or a governmental agency to be or to have been
an Employee.
|
|
(b)
|
Participation
By Employees Whose Status Changes.
If an Employee who is not an
Eligible Employee becomes an Eligible Employee, the Employee will
participate in the Plan immediately if he or she has satisfied the minimum
age and service requirements and would have previously become a
Participant had he or she been an Eligible Employee. The participation of
a Participant who ceases to be an Eligible Employee will be suspended and
such Participant will be entitled to an allocation of Employer
contributions (and any applicable Forfeitures) for the Allocation Period
only to the extent of any applicable Hours of Service completed while an
Eligible Employee. Upon once again becoming an Eligible Employee, a
suspended Participant will resume eligibility. The Vested Interest of a
Participant who ceases to be an Eligible Employee will continue to
increase in accordance with Section
4.6.
|
|
(c)
|
Participation
By Former Participants.
A Participant who terminates employment
with the Employer for any reason but is subsequently reemployed as an
Eligible Employee will again become a Participant in the Plan as provided
in the definition of Year of
Service.
|
2.2
|
Entry
Date
.
An
Eligible EmployeeAn Eligible Employee described in Section 2.1(a)(2) who
satisfies the eligibility requirements set forth in Section 2.1(a)(1) will
enter the Plan as a Participant on the January 1st that occurs nearest the
date on which the Employee first satisfies such
requirements.
|
2.3
|
Waiver
of Participation
.
Employees who have satisfied any of the eligibility requirements
set forth in Section 2.1 are not permitted to waive participation in the
Plan.
|
2.4
|
Reemployment
.
If an Employer
terminates employment and is subsequently reemployed by the Employer or an
Affiliated Employer, such Employee's Years of Service for purposes of
eligibility (as well as the time such Employee enters or reenters the Plan
as a Participant) will be determined in accordance with the rules
described in the definition of Year of
Service.
|
2.5
|
Exclusion
of an Eligible Employee
.
If any Employee who
should have been included as a Participant is erroneously excluded from
the Plan in any Allocation Period and discovery of such omission is not
made until after a contribution for that Allocation Period has been
allocated, the Employer will correct the omission by one or more of the
following methods: (1) by making an additional contribution to the Plan on
behalf of the omitted Employee; (2) by allocating any available
Forfeitures on behalf of the omitted Employee; or (3) by any other method
of correction permitted under Revenue Procedure 2003-44 or any subsequent
Revenue Procedure or guidance issued by the Internal Revenue
Service.
|
2.6
|
Inclusion
of an Ineligible Employee
.
If a person who should
not have been included as a Participant is erroneously included in any
Allocation Period and (a) the discovery of the inclusion is not made until
after a contribution has been allocated for that Allocation Period, (b)
such ineligible Employee has not received a distribution of the amount
erroneously allocated (other than Elective Deferrals, which will be
distributed to the ineligible Employee), and (c) such amount is not
eligible to be refunded to the Employer under Section 3.1(e), such amount
will be applied as a Forfeiture for the Plan Year in which the error is
discovered.
|
3.1
|
Employer
Contributions
.
The Employer intends
to make contributions to the Plan. The Employer does not guarantee either
the making of the contributions or the payment of the benefits under the
Plan. The Employer reserves the right to reduce, suspend or discontinue
contributions for any reason at any time, but if the Plan is deemed to be
terminated as a result of such reduction, suspension or discontinuance,
the provisions of Article 9 will become effective. All contributions will
be determined in accordance with the following
provisions:
|
|
(a)
|
Amount
of Contribution.
The Employer in its sole discretion may make a
contribution to the Plan. The amount will be determined by the Employer,
and the Employer's determination will be binding on the Trustee, the
Administrator and all Participants, and cannot be reviewed in any
manner.
|
|
(b)
|
Limitations
on Contributions.
Notwithstanding any provision herein to the
contrary, (1) no contribution will exceed the maximum amount deductible
under Code §404 except as otherwise provided below; (2) no contribution
will exceed the limitations set forth in Code §415; (3) no contribution
will be made for any Participant who is not a Benefiting Participant for
an Allocation Period unless otherwise required by the Top Heavy provisions
in Section 3.6; and (4) if an Employee should have been included as a
Participant but is mistakenly excluded for any reason, the omission will
be corrected as specified in Section 2.5, even if such amount is never
deductible by the Employer.
|
|
(c)
|
Allocation
Period.
Any contribution made under the terms of the Plan may, at
the election of the Employer, be contributed (1) each payroll period; (2)
each month; (3) each Plan quarter; (4) on an annual basis; or (5) on any
other less than annual Allocation Period basis as determined by the
Employer, provided such Allocation Period does not discriminate in favor
of HCEs. The Employer may elect a different Allocation Period for each
type of contribution. Contributions will be allocated to Benefiting
Participants as of the last day of an applicable contribution
period.
|
|
(d)
|
Form
of Contribution.
Employer contributions may consist of (1) cash;
(2) Company Stock; or (3) any other property that is permitted under Code
§4975 and is acceptable to the
Trustee.
|
|
(e)
|
Refund
of Contributions for All Plans.
Contributions made to the Plan by
the Employer can only be returned to the Employer in accordance with the
following provisions:
|
|
(1)
|
Failure
of Plan to Initially Qualify.
If the Plan fails to initially
satisfy the requirements of Code §401(a) and the Employer declines to
amend the Plan to satisfy such requirements, contributions made prior to
the date such qualification is denied must be returned to the Employer
within 1 year of the date of such denial, but only if the application for
the 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,
or by such later date as the Secretary of the Treasury may
prescribe.
|
|
(2)
|
Contributions
Made Under a Mistake of Fact.
If a contribution is attributable in
whole or in part to a good faith mistake of fact, including a good faith
mistake in determining the deductibility of the contribution under Code
§404, an amount may be returned to the Employer equal to the excess of the
amount contributed over the amount that would have been contributed had
the mistake not occurred. Earnings attributable to an excess contribution
will not be returned, but losses attributable to the excess contribution
will reduce the amount so returned. Such amount will be returned within
one year of the date the contribution was made or the deduction
disallowed, as the case may be.
|
|
(3)
|
Nondeductible
Contributions.
Except to the extent an Employer may intentionally
make a nondeductible contribution, for example in order to correct an
administrative error or restore a Forfeiture, any contribution by the
Employer is conditioned on its deductibility and will otherwise be
returned to the Employer.
|
3.2
|
Allocation
of Employer Contributions
.
Each Benefiting
Participant's share of Employer contributions made to the Plan
will be allocated to his or her Participant's Account in accordance with
the following provisions:
|
|
(a)
|
Allocation
of Company Stock.
Subject to the requirements of Section 3.3,
Company Stock contributed to the Plan will be allocated to each Benefiting
Participant's Company Stock Account in the ratio that each Benefiting
Participant's Compensation bears to the total Compensation of all
Benefiting Participants. However, Company Stock acquired by the Plan with
the proceeds of an Exempt Loan will only be allocated to each
Participant's Company Stock Account upon release from the Unallocated
Company Stock Suspense Account as provided in Section 3.3(b). Company
Stock acquired with the proceeds of an Exempt Loan will be an asset of the
Trust Fund and maintained in the Unallocated Company Stock Suspense
Account. Company Stock which has been released from the Unallocated
Company Stock Account during the Plan Year will be allocated on the annual
Valuation Date to each Benefiting Participant's Company Stock Account in
the same ratio as described above.
|
|
(b)
|
Allocation
of Other Contributions.
Each Benefiting Participant's share of cash
or property, other than Company Stock and dividends attributable thereto,
will be allocated to his or her Other Investments Account in the ratio
that the Compensation of each Benefiting Participant for the Allocation
Period bears to the total Compensation of all Benefiting Participants for
the Allocation Period.
|
|
(c)
|
Allocation
of Cash Dividends.
Cash dividends
received by the Plan that are attributable to Company Stock allocated to a
Participant's Company Stock Account and that are not currently distributed
in accordance with Section 5.15 will be allocated to the Participant's
Other Investments Account.
|
|
(d)
|
Benefiting
Participants.
A Participant will be a Benefiting Participant for
any Allocation Period in accordance with the following
provisions:
|
|
(1)
|
Allocations
to Participants Employed on the Last Day of the Allocation Period.
Any Participant who is an Employee on the last day of the Allocation
Period and who at any time during the Allocation Period was in an eligible
class of Employees as set forth in Section 2.1(a)(2) will be a Benefiting
Participant for that Allocation Period only if he or she is credited with
at least 1,000 Hours of Service during the Allocation Period (or is
credited with the proportionate equivalent if the Allocation Period is
less than 12 consecutive months).
|
|
(2)
|
Allocations
to Participants Who Terminate Before the Last Day of the Allocation
Period.
Any Participant who terminates employment with the Employer
before the last day of the Allocation Period: (A) a Participant who
terminates because of his or her retirement on or after Normal or Early
Retirement Age will be a Benefiting Participant regardless of the number
of Hours of Service with which he or she is credited during the Allocation
Period; (B) a Participant who terminates because of his or her death will
be a Benefiting Participant regardless of the number of Hours of Service
with which he or she is credited during the Allocation Period; (C) a
Participant who terminates because of his or her Disability will be a
Benefiting Participant regardless of the number of Hours of Service with
which he or she is credited during the Allocation Period; and (D) a
Participant who terminates for reasons other than retirement on or after
Normal or Early Retirement Age, death or Disability will not be a
Benefiting Participant.
|
3.3
|
Company
Stock Account
.
Company Stock allocable to a Benefiting Participant's Company Stock
Account, or Company Stock released from the Unallocated Company Stock
Account during an Allocation Period, will be allocated to a Benefiting
Participant's Company Stock Account in accordance with the
following:
|
|
(a)
|
Company
Stock.
A Benefiting Participant's Company Stock Account will be
credited with his or her allocable share of Company Stock (including
fractional shares) purchased and paid for by the Plan or contributed in
kind by the Employer, except that Company Stock acquired with the proceeds
of an Exempt Loan must be added to and maintained in the Unallocated
Company Stock Suspense Account. Such Company Stock will be released and
withdrawn from that account as if all Company Stock in that account were
encumbered. In the case of an Employer that is an electing small business
corporation, the Plan may not use dividends on any allocated Company Stock
to pay an Exempt Loan that was used to purchase Company Stock. Cash
dividends paid on Company Stock in a Participant's Company Stock Account
will, in the sole discretion of the Administrator, either be credited to
the Participant's Account or will be used to repay an Exempt Loan.
However, (1) when cash dividends are used to repay an Exempt Loan, Company
Stock will be released from the Unallocated Company Stock Suspense Account
and will be allocated to each Benefiting Participant's Company Stock
Account in the ratio that each Benefiting Participant's Compensation for
the Allocation Period bears to the total Compensation of all Benefiting
Participants for the Allocation Period; and (2) Company Stock allocated to
a Participant's Company Stock Account will have a fair market value not
less than the amount of cash dividends which would have been allocated to
such Participant's Account for the Allocation
Period.
|
|
(b)
|
Unallocated
Company Stock Account.
Any Company Stock which is acquired with an
Exempt Loan and is in the Unallocated Company Stock Account will only be
withdrawn and allocated to Participants' Accounts in accordance with the
following provisions:
|
|
(1)
|
Method
of Withdrawing Stock.
For each Allocation Period during the
duration of an Exempt Loan, the number of shares of Company Stock released
from the Unallocated Company Stock Account will equal the number of shares
held therein immediately before release for the current Allocation Period
multiplied by a fraction, the numerator of which is the amount of
principal and interest paid for the Allocation Period and the denominator
of which is the sum of the numerator plus the principal and interest to be
paid for all future Allocation Periods. The number of future Allocation
Periods must be definitely ascertainable and must be determined without
taking into account any possible extensions or renewal periods. If the
interest rate under the Exempt Loan is variable, the interest to be paid
in future Allocation Periods must be computed by using the interest rate
applicable as of the end of the Allocation
Period.
|
|
(2)
|
Alternative
Method of Withdrawing Stock.
Notwithstanding subparagraph (1), the
number of shares of Company Stock released from the Unallocated Company
Stock Account may be determined in the same manner described in
subparagraph (1) except that the number will be based solely on the amount
of principal paid for the Allocation Period in relation to the sum of such
amount plus the principal to be paid for all future Allocation Periods,
provided that (1) the Exempt Loan must provide for annual payments of
principal and interest at a cumulative rate that is not less rapid at any
time than level annual payments of such amounts for 10 years; (2) interest
in any payment is disregarded only to the extent it would be determined to
be interest under standard loan amortization tables; and (3) the
alternative described in this subparagraph is not applicable from the time
that, by reason of a renewal, extension or refinancing, the sum of the
expired duration of the Exempt Loan, the renewal period, the extension
period, and the duration of a new Exempt Loan exceeds 10
years.
|
|
(3)
|
Method
of Allocating Withdrawn Stock to Participants.
T
he Plan must
consistently allocate to each Participant's Account, in the same manner as
Employer contributions under Section 3.1 are allocated, non-monetary units
(shares and fractional shares of Company Stock) representing each
Participant's interest in Company Stock withdrawn from the Unallocated
Company Stock Suspense Account. However, Company Stock released from the
Unallocated Company Stock Account with cash dividends under paragraph (a)
will be allocated to each Benefiting Participant's Company Stock Account
in the same proportion that each such Participant's number of shares of
Company Stock sharing in such cash dividends bears to the total number of
shares of all Benefiting Participants' Company Stock sharing in such cash
dividends.
|
|
(4)
|
Allocation
of Income.
Income earned on Company Stock in the Unallocated
Company Stock Account will be used, at the discretion of the
Administrator, to repay the Exempt Loan used to purchase such Company
Stock. Company Stock released from the Unallocated Company Stock Account
with such income, and any income which is not so used, will be allocated
on the annual Valuation Date in the same proportion that each Benefiting
Participant's Compensation for the Plan Year bears to the total
Compensation of all Benefiting Participants for the Plan
Year.
|
|
(c)
|
Code
§1042 Stock.
Notwithstanding the foregoing to the contrary, any
portion of the Plan's assets that are attributable to (or allocable in
lieu of) Company Stock acquired by the Plan in a sale to which Code §1042
or §2057 applies will be allocated in accordance with the following
provisions:
|
|
(1)
|
No
Allocation Permitted to Certain Participants.
No portion of any
such assets may be allocated directly or indirectly under this Plan or any
other qualified plan of the Employer (A) during the Non-Allocation Period
for the benefit of any taxpayer who makes an election under Code §1042(a)
with respect to Company Stock or any decedent if the executor of the
estate of such decedent makes a qualified sale to which Code §2057 applies
or for the benefit of any individual who is related to the taxpayer or the
decedent within the meaning of Code §267(b); or (B) for the benefit of any
other person who owns, after applying Code §318(a), more than 25% of any
class of outstanding stock of the Employer or of any corporation which is
a member of the same controlled group of corporations within the meaning
of Code §409(l)(4) as the Employer; or the total value of any class of
outstanding stock of the Employer. For purposes hereof, Code §318(a) will
be applied without regard to the employee trust exception in Code
§318(a)(2)(B)(i); and a person will be treated as failing to meet the
stock ownership limitation set forth herein if such person fails such
limitation at any time during the 1-year period ending on the date of sale
of qualified securities to the Plan, or on the date as of which such
qualified securities are allocated to Participants in the
Plan.
|
|
(2)
|
Exception
for Certain Lineal Descendants.
The restrictions set forth in
subparagraph (1) will not apply to any individual who is a lineal
descendant of the taxpayer if the aggregate amount allocated to the
benefit of all lineal descendants during the Non-Allocation Period does
not exceed more than 5% of the Company Stock (or amounts allocated in lieu
thereof) held by the Plan which are attributable to a sale to the Plan by
any person related to such descendants within the meaning of Code
§267(c)(4) in a transaction to which Code §1042
applied.
|
|
(3)
|
Non-Allocation
Period.
As used in this paragraph, the term Non-Allocation Period
means the 10-year period beginning on the later of (1) the date of the
sale of the qualified securities, or (2) the date of the Plan allocation
attributable to the final payment of acquisition indebtedness incurred in
connection with such sale.
|
|
(d)
|
Prohibited
Allocation of Company Stock of an S Corporation.
Notwithstanding
any provision of this Plan to the contrary, no portion of the assets of
the Plan attributable to (or allocable in lieu of) Company Stock issued by
an S Corporation may, during a nonallocation year, be allocated directly
or indirectly for the benefit of any disqualified person under
this Plan or under any other qualified plan of the Employer, subject to
the following provisions:
|
|
(1)
|
Nonallocation
Year.
The term "nonallocation year" means any Plan Year in which
(A) the Plan holds Company Stock of an S Corporation, and (B)
"disqualified persons" own at least 50% of such Company Stock. In
determining ownership under clause (B), the rules of Code §318(a) will
apply, except that in applying Code §318(a)(1), the members of an
individual's family will include members of the family described in
subparagraph (4) below, and Code §318(a)(4) will not apply. In addition,
notwithstanding the employee trust exception in Code §318(a)(2)(B)(i), an
individual will be treated as owning deemed-owned shares of the
individual, and solely for purposes of applying subparagraph (5) below,
this subparagraph will be applied after the attribution rules of
subparagraph (5) have been applied.
|
|
(2)
|
Disqualified
Person.
The term "disqualified person" means any person whose
number of deemed-owned shares in the S Corporation is at least 10% of the
deemed-owned shares in such corporation, or whose number of shares of
deemed-owned shares in the S Corporation, when aggregated with the
deemed-owned shares of his or her family members, is at least 20% of the
number of deemed-owned shares of stock in the S Corporation. Any member of
a disqualified person's family with deemed-owned shares will be treated as
a disqualified person if not otherwise treated as a disqualified person
under this subparagraph.
|
|
(3)
|
Deemed-Owned
Shares.
The term "deemed-owned shares" means, with respect to any
person, (A) Company Stock of the S corporation which is allocated to such
person under the Plan, and (B) the person's share of such Company Stock
which is held by the Plan but is not allocated to Participants. A person's
share of unallocated S Corporation Company Stock held by the Plan is the
amount of such unallocated Company Stock which would be allocated to him
or her if such unallocated Company Stock were allocated to all
Participants in the same proportion as the most recent Company Stock
allocation under the Plan.
|
|
(4)
|
Member
of the Family.
The term "member of the family" means, with respect
to any individual, (A) the spouse of the individual; (B) an ancestor or
lineal descendant of the individual or the individual's spouse; (C) a
brother or sister of the individual or his or her spouse and any lineal
descendant of the brother or sister; and (D) the spouse of any individual
described in clause (B) or (C). However, a spouse who is legally separated
from such individual under a decree of divorce or separate maintenance
will not be treated as such individual's
spouse.
|
|
(5)
|
Treatment
of Synthetic Equity.
For purposes of subparagraphs (1) and (2), in
the case of a person who owns synthetic equity in the S corporation,
except to the extent provided in regulations, the shares of stock in the
corporation on which the synthetic equity is based will be treated as
outstanding stock in the corporation and deemed-owned shares of such
person if the treatment of synthetic equity of one or more such persons
results in (A) the treatment of any person as a disqualified person, or
(B) the treatment of any year as a nonallocation year. For purposes
hereof, synthetic equity is treated as owned by a person in the same
manner as stock is treated as owned by a person under Code §318(a)(2) and
(3). If, without regard to this subparagraph, a person is treated as a
disqualified person or a year is treated as a nonallocation year, this
subparagraph will not be construed to result in the person or year not
being so treated.
|
|
(6)
|
Synthetic
Equity.
The term "synthetic equity" means any stock option,
warrant, restricted stock, deferred issuance stock right, or
similar interest or right that gives the holder the right to acquire or
receive stock of the S corporation in the future. Except to the extent
provided in regulations, synthetic equity also includes a stock
appreciation right, phantom stock unit, or similar right to a future cash
payment based on the value of such stock or appreciation in such
value.
|
3.4
|
Allocation
of Earnings and Losses
.
As of each Valuation
Date, accounts which have not been distributed since the prior Valuation
Date will have the net income of the Trust Fund earned since the prior
Valuation Date allocated in accordance with any rules and procedures
established by the Administrator, and applied in a uniform and
nondiscriminatory manner; or accounts will be valued and adjusted as set
forth below.
|
|
(a)
|
Definition
of Net Income.
The term "net income" means the net of any interest,
dividends, unrealized appreciation and depreciation (other than the
unrealized appreciation or depreciation of the Company Stock allocated to
the Participants' Company Stock Accounts), capital gains and losses, and
investment expenses of the Trust Fund as determined on each Valuation
Date. Net income does not include (1) the interest paid under any
installment contract for the purchase of Company Stock by the Plan or the
interest paid on any loan used by the Plan to purchase Company Stock; or
(2) income received by the Trust Fund with respect to Company Stock
acquired with an Exempt Loan to the extent such income is used to repay
the loan. All income received by the Trust Fund from Company Stock
acquired with the proceeds of an Exempt Loan may, at the discretion of the
Administrator, be used to repay such
loan.
|
|
(b)
|
Allocations
to Non-Segregated Other Investment Accounts.
Other Investment
Accounts which have not been segregated from the general Trust for
investment will have net income allocated thereto in the ratio that the
value of each non-segregated account bears to the total value of all
non-segregated accounts on the Valuation Date. For purposes of this
paragraph, the value of each such account on the Valuation Date will be
determined before taking into account the allocation of any contributions
that have occurred (or are deemed to have occurred) since the prior
Valuation Date, and after taking into account 100% of any distributions
and withdrawals that have occurred since the prior Valuation
Date.
|
|
(c)
|
Segregated
Accounts and Policy Dividends.
Any accounts (other than Company
Stock Accounts) which have been segregated from the general Trust Fund for
investment, including any Directed Investment Accounts established under
Section 7.4 and any other accounts (including Directed Investment
Accounts) that are valued on a daily basis, will only have the net income
earned thereon allocated thereto. Any insurance Policy dividends or
credits will be allocated to the Participant's Account for whose benefit
the Policy is held.
|
3.5
|
Allocation
of Forfeitures
.
The Administrator may elect at any time to use all or any portion
of the Forfeiture Account to pay administrative expenses incurred by the
Plan. The portion of the Forfeiture Account which is not used to pay
administrative expenses will be used first to restore Participants'
Accounts pursuant to Section 5.7 and/or Section 5.13 and/or to satisfy any
contributions that may be required pursuant to Section 2.5. Any portion of
the Forfeiture Account which then remains will, subject to any rules and
procedures established by the Administrator, be allocated to the
Participant's Account of each Benefiting Participant in the ratio that
each such Benefiting Participant's Compensation bears to the total
Compensation of all such Benefiting
Participants.
|
3.6
|
Top
Heavy Minimum Allocation
.
In any Top Heavy Plan
Year in which a Key Employee receives an allocation of Employer
contributions or Forfeitures, each Employee who is described in paragraph
(a) below will receive the Top Heavy Minimum Allocation, determined in
accordance with the following
provisions:
|
|
(a)
|
Participants
Who Must Receive the Top Heavy Minimum Allocation.
The Top Heavy
Minimum Allocation, or such lesser amount as may be permitted under
paragraph (b), will be made for each Participant who is a Non-Key Employee
and who is employed by an Employer on the last day of the Plan Year, even
if such Participant (1) fails to complete any minimum Hours of
Service/Period of Service required to receive an allocation of Employer
contributions or Forfeitures for the Plan Year; (2) fails to make Elective
Deferrals to the Plan in the case of a 401(k) plan; (3) receives
Compensation that is less than a stated amount; or (4) declines to make a
mandatory employee contribution to the Plan. The Top Heavy Minimum
Allocation is not required for a Participant whose participation is
limited to a Rollover Contribution.
|
|
(b)
|
Lesser
Allocation Permitted.
If the amount of Employer contributions and
Forfeitures allocated to the Participant's Account of each Key Employee
for the Plan Year is less than 3% of his or her Compensation, and if this
Plan is not required to be included in an Aggregation Group to enable a
defined benefit plan to meet the requirements of Code §401(a)(4) or §410,
then the allocation made under this Section for each Participant who is
described in paragraph (a) above must be equal to the largest percentage
of Employer contributions and Forfeitures allocated to the Participant's
Account of a Key Employee for that Plan Year (determined after taking into
account elective contributions made by a Key Employee to a cash or
deferred arrangement maintained by the
Employer).
|
|
(c)
|
Participation
in Multiple Defined Contribution Plans.
If a Participant described
in paragraph (a) who participates in this Plan and in one or more defined
contribution plans that are included with this Plan in a Required
Aggregation Group, and if the allocation of Employer contributions and
Forfeitures in this Plan or any other such defined contribution plan is
insufficient to satisfy the Top Heavy requirement with respect to such
Participant, such requirement will nevertheless be deemed to be satisfied
if the aggregate allocation of Employer contributions and Forfeitures made
under this Plan and all other such plans on behalf of such Participant is
sufficient to satisfy the Top Heavy requirement. If not, the Employer will
make an additional contribution to this Plan and/or to one or more such
plans on behalf of the Participant in order that the aggregate allocation
of Employer contributions and Forfeitures to this Plan and all such plans
satisfies the Top Heavy
requirements.
|
|
(d)
|
Participation
in Defined Benefit Plan and Defined Contribution Plan.
Any
Participant described in paragraph (a) who participates in this Plan and
in a defined benefit plan included with this Plan in a Required
Aggregation Group will, in lieu of the allocation under paragraph (a),
receive an allocation under this Plan (or any other defined contribution
plan sponsored by the Employer) which is equal to 5% of Compensation.
Notwithstanding the foregoing, the Administrator may determine, in a
uniform non-discriminatory manner which is intended to satisfy the
requirements of Code §416(f) regarding the preclusion of required
duplication and inappropriate omission of Top Heavy minimum benefits or
contributions, that each such Participant will receive the minimum Top
Heavy benefit required under Code §416 under the defined benefit plan in
lieu of any such benefit under the terms of this
Plan.
|
|
(e)
|
Contributions
That Can Be Used to Satisfy Top Heavy Minimum.
All Employer
contributions to the Plan (other than Elective Deferrals made to a cash or
deferred arrangement) will be taken into account in determining if the
Employer has contributed an amount necessary to satisfy the requirements
of this Section. In addition, the following Employer contributions made on
a Participant's behalf to a cash or deferred arrangement may be taken into
account in determining if the Top Heavy requirements are satisfied:
Non-Safe Harbor Matching Contributions; Non-Safe Harbor Non-Elective
Contributions; QNECs; ADP Safe Harbor Non-Elective Contributions; ADP Safe
Harbor Matching Contributions; ACP Safe Harbor Matching Contributions; and
any other contributions as may be permitted by
law.
|
3.7
|
Failsafe
Allocation
.
For any Plan Year in which the Plan fails to satisfy the average
benefit percentage test under Code §410(b)(2) or the average benefits test
under Regulation §1.401(a)(4) (or if the Administrator is unable to or
elects not to perform such tests), no automatic "failsafe" is provided
under the Plan. Rather, the Sponsoring Employer must timely execute an
amendment to the Plan pursuant to Section 11.1(c) to insure that the Plan
satisfies one of the tests under either Code §410(b)(1)(A) (in which the
Plan initially fails to benefit at least 70% of NHCEs), or in Code
§410(b)(1)(B) (in which the Plan initially fails to benefit a percentage
of NHCEs that is at least 70% of the percentage of HCEs who benefit under
the Plan).
|
3.8
|
Rollover
Contributions
.
Such contributions
are not permitted.
|
3.9
|
Voluntary
Employee Contributions
.
Such
contributions are not permitted
|
3.10
|
Deemed
IRA Contributions
.
Such contributions are not
permitted.
|
4.1
|
Benefit
Upon Normal (or Early) Retirement
.
Every Participant who
has reached Normal (or Early) Retirement Age will be entitled upon
subsequent termination of employment to receive his or her Vested
Aggregate Account balance determined as of the most recent Valuation Date
coinciding with or immediately preceding the date of distribution.
Distribution will be made in accordance with Section
5.1.
|
4.2
|
Benefit
Upon Late Retirement
.
A Participant who has
reached Normal Retirement Age may elect to remain employed and retire at a
later date. Such Participant will continue to participate in the Plan and
his or her Participant's Account will continue to receive allocations
under Article 3. Upon actual retirement, the Participant will be entitled
to his or her Vested Aggregate Account balance determined as of the most
recent Valuation Date coinciding with or immediately preceding the date of
distribution. Distribution will be made in accordance with Section
5.1.
|
4.3
|
Benefit
Upon Death
.
Upon the death of a Participant prior to termination of employment, or
upon the death of a Terminated Participant prior to distribution of his or
her Vested Aggregate Account, his or her Beneficiary will be entitled to
the Participant's Vested Aggregate Account balance determined as of the
most recent Valuation Date coinciding with or immediately preceding the
date of distribution. If any Beneficiary who is living on the date of the
Participant's death dies prior to receiving his or her entire death
benefit, the portion of such death benefit will be paid in a lump sum to
the estate of such deceased Beneficiary. The Administrator's determination
that a Participant has died and that a particular person has a right to
receive a death benefit will be final. Distribution will be made in
accordance with Section 5.2.
|
4.4
|
Benefit
Upon Disability
.
If a Participant
suffers a Disability prior to termination of employment, or if a
Terminated Participant suffers a Disability prior to distribution of his
or her Vested Aggregate Account balance, he or she will be entitled to his
or her Vested Aggregate Account balance determined as of the most recent
Valuation Date coinciding with or immediately preceding the date of
distribution. Distribution will be made in accordance with
Section 5.3.
|
4.5
|
Benefit
Upon Termination of Employment
.
A Terminated
Participant will be entitled to his or her Vested Aggregate Account
balance as of the most recent Valuation Date coinciding with or
immediately preceding the date of distribution. Distribution to a
Terminated Participant who does not die prior to distribution or who does
not suffer a Disability prior to distribution will be made under Section
5.4.
|
4.6
|
Determination
of Vested Interest
.
A Participant's Vested
Interest in his or her Participant's Account will be determined in
accordance with the following
provisions:
|
|
(a)
|
Vesting
Upon Retirement, Death or Disability.
A Participant will have a
100% Vested Interest in his or her Participant's Account upon reaching
Normal Retirement Age prior to termination of employment. A Participant
will also have a 100% Vested Interest therein upon his or her retirement
at Early Retirement; upon his or her Disability prior to termination of
employment; and upon his or her death prior to termination of
employment.
|
|
(b)
|
Vesting
of Employer Contributions.
A Participant's Vested Interest in his
or her Participant's Account will be determined by the vesting schedule
following this paragraph. A Participant's Vested Interest under this
paragraph will be based on the Participant's completed Years of Service
with the Employer. All such Years of Service will be counted in
determining a Participant's Vested Interest under this paragraph except
for those that are credited prior to the date a Participant reaches Age
18.
|
|
(c)
|
Amendments
to the Vesting Schedule.
No amendment to the Plan may directly or
indirectly reduce a Participant's Vested Interest in his or her
Participant's Account. If the Plan is amended in any way that directly or
indirectly affects the computation of a Participant's Vested Interest in
his or her Participant's Account, or the Plan is deemed amended by an
automatic change to or from a Top Heavy Vesting schedule, then the
following provisions will apply:
|
|
(1)
|
Participant
Election.
Any Participant with at least three Years of Service may,
by filing a written request with the Administrator, elect to have the
Vested Interest in his or her Participant's Account computed by the
Vesting schedule in effect prior to the amendment. A Participant who fails
to make an election will have the Vested Interest computed under the new
schedule. The period in which the election may be made will begin on the
date the amendment is adopted or is deemed to be made and will end on the
latest of (1) 60 days after the amendment is adopted; (2) 60 days after
the amendment becomes effective; or (3) 60 days after the Participant is
issued written notice of the amendment by the Employer or
Administrator.
|
|
(2)
|
Preservation
of Vested Interest.
Notwithstanding the foregoing to the contrary,
if the vesting schedule is amended, then 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 Vested Interest in his or her Participant's
Account determined as of such date will not be less than his or her Vested
Interest computed under the Plan without regard to such
amendment.
|
5.1
|
Distribution
of Benefit Upon Retirement
.
Unless a cash-out
occurs under Section 5.5, the retirement benefit a Participant is entitled
to receive under Section 4.1 or 4.2 will be distributed in the following
manner:
|
|
(a)
|
Form
of Distribution.
A Participant's benefit will be distributed in one
lump sum payment.
|
|
(b)
|
Time
of Distribution.
Distribution will be made under this Section
within a reasonable time after the Participant's actual retirement at
Normal (or Early) Retirement Date, but distribution must begin no later
than the Required Beginning Date.
|
5.2
|
Distribution
of Benefit Upon Death
.
Unless a cash-out
occurs under Section 5.5, the benefit a deceased Participant's Beneficiary
is entitled to receive under Section 4.3 will be distributed in the
following manner:
|
|
(a)
|
Surviving
Spouse.
If a Participant is married on the date of his or her
death, the Participant's surviving Spouse will be entitled to receive a
death benefit determined in accordance with the
following:
|
|
(1)
|
Form
of Distribution.
Notwithstanding
any other Beneficiary designation by a Participant, if a Participant is
married on the date of death, the surviving Spouse will be entitled to
receive 100% of the Participant's death benefit unless the surviving
Spouse has waived that right under Section 5.8. The benefit will be
distributed in one lump sum payment
|
|
(2)
|
Time
of Distribution.
The surviving Spouse may elect to (1) have any
death benefit to which he or she is entitled distributed within a
reasonable time after the death of the Participant; or (2) defer
distribution of the death benefit, but distribution may not be deferred
beyond December 31st of the calendar year in which the deceased
Participant would have attained Age 70½. If the surviving Spouse dies
before distribution begins, then distribution will be made as if the
surviving Spouse were the Participant. Distribution will be considered as
having commenced when the deceased Participant would have reached Age 70½
even if payments have been made to the surviving Spouse before that
date.
|
|
(b)
|
Non-Spouse
Beneficiary.
Any death benefit a non-Spouse Beneficiary is entitled
to receive will be distributed in one lump sum payment. Distribution to a
non-Spouse Beneficiary will be made within a reasonable time after the
death of the Participant, but distribution must be made by December 31st
of the calendar year which contains the 5th anniversary of the date of the
Participant's death.
|
|
(c)
|
Distribution
If the Participant or Other Payee Is In Pay Status.
If a
Participant or Beneficiary who has begun receiving distribution of a
benefit dies before the entire benefit is distributed, the balance will be
distributed to the Participant's Beneficiary (or Beneficiary's
beneficiary) at least as rapidly as under the method of distribution being
used on the date of the Participant's or Beneficiary's
death.
|
|
(d)
|
Payments
to a Beneficiary.
In the absence of a Beneficiary designation or
other directive from the deceased Participant to the contrary, any
Beneficiary may name his or her own Beneficiary to receive any benefits
payable in the event of the Beneficiary's death prior to receiving the
entire death benefit to which the Beneficiary is entitled; and if a
Beneficiary has not named his or her own Beneficiary, the Beneficiary's
estate will be the Beneficiary. If any benefit is payable under this
paragraph to a Beneficiary of the deceased Participant's Beneficiary or to
the estate of the deceased Participant's Beneficiary, or to any other
Beneficiary or the estate thereof, subject to the limitations regarding
the latest dates for benefit payment in paragraphs (a) and (c) above, the
Administrator may (1) continue to pay the remaining value of such benefits
in the amount and form already commenced, or pay such benefits in any
other manner permitted under the Plan for a Participant or Beneficiary,
and (2) if payments have not already commenced, pay such benefits in any
other manner permitted under the Plan. Distribution to the Beneficiary of
a Beneficiary must begin no later than the date distribution would have
been made to the Participant's Beneficiary. The Administrator's
determination under this paragraph will be final and will be applied in a
non-discriminatory manner that does not discriminate in favor of Highly
Compensated Employees.
|
5.3
|
Distribution
of Benefit Upon Disability
.
Unless a cash-out
occurs under Section 5.5, the Disability benefit a Participant is entitled
to receive under Section 4.4 will be distributed in the following
manner:
|
|
(a)
|
Form
of Distribution.
A Participant's benefit will be distributed in one
lump sum payment.
|
|
(b)
|
Time
of Distribution.
Distribution will be made under this Section on
the date distribution is to be made to a Terminated Participant under
Section 5.4.
|
5.4
|
Distribution
of Benefit Upon Termination of Employment
.
Unless a cash-out
occurs under Section 5.5 or a prior distribution has been under Section
5.2 or 5.3, the benefit a Terminated Participant is entitled to receive
under Section 4.5 will be distributed in the following
manner:
|
|
(a)
|
Form
of Distribution.
A Participant's benefit will be distributed in one
lump sum payment.
|
|
(b)
|
Time
of Distribution.
Distribution will be made under this Section
within an administratively reasonable time after the last day of the Plan
Year in which termination of employment occurs, but in no event
later than the earlier to occur of (1) the date the Terminated Participant
reaches the Normal (or Early) Retirement Date, or (2) the Required
Beginning Date. Notwithstanding the foregoing, if a Terminated Participant
is not reemployed by the Employer at the end of the 5
th
Plan Year following the Plan Year of his or her termination of employment,
distribution of his or her Company Stock Account must begin not later than
1 year after the close of the 5
th
Plan Year following the Plan Year in which the Participant incurs such
termination of employment; but if a Terminated Participant is reemployed
by the Employer as of the last day of the 5
th
Plan Year following the Plan Year of such termination of employment,
distribution of his or her Company Stock Account will be postponed until
the Participant is otherwise entitled to a distribution under the
Plan.
|
5.5
|
Mandatory
Cash-Out of Benefits
.
Effective March 28,
2005, the Vested Aggregate Account of a terminated Participant who is
entitled to a distribution and who satisfies the requirements of this
Section will be distributed without the Participant's consent in
accordance with the following:
|
|
(a)
|
Cashout
Threshold.
The Administrator can only make a distribution under
this Section if a Participant's Vested Aggregate Account on the date of
distribution does not exceed $1,000 (including the Participant's Rollover
Account) (such amount hereafter referred to as the "Cashout Threshold").
If a Participant would have received a distribution under the preceding
sentence but for the fact that the Participant's Vested Aggregate Account
exceeded the Cashout Threshold when the Participant terminated employment,
and if at a later time the Participant's Vested Aggregate Account is
reduced to an amount not greater than the Cash-out Threshold in effect at
that later time, then the Administrator will distribute such amount or
remaining amount in a lump sum without the Participant’s consent. Any
portion of the Participant's Account which is not Vested will be treated
as a Forfeiture.
|
|
(b)
|
Time
and Form of Distribution.
Any distribution under this Section will
be made as soon as administratively feasible after the Participant
terminates employment (or, if applicable, as soon as administratively
feasible after a terminated Participant's Vested Aggregate Account no
longer exceeds the Cash-out Threshold). Distribution will, at the election
of the Participant, be made in the form of a lump sum cash payment or as a
direct rollover under Section 5.14. If the Participant fails to make a
timely election, distribution will made in the form of a lump sum cash
payment not less than 30 days and not more than 90 days (or such other
time as permitted by law) after the Code §402(f) notice is provided to the
Participant.
|
|
(c)
|
Deemed
Distributions.
If a Participant's Vested Interest in his or her
Participant's Account is zero on the date the Participant terminates
employment, the Participant will be deemed to have received a distribution
of such Vested Interest on the date of
termination.
|
5.6
|
Restrictions
on Immediate Distributions
.
If a Participant's
Vested Aggregate Account balance exceeds the amount set forth in paragraph
(a) of this Section and is immediately distributable, such account can
only be distributed in accordance with the following
provisions:
|
|
(a)
|
General
Rule.
If a Participant's Vested Aggregate Account balance
(determined before taking into account the Participant's Voluntary
Employee Contributions Account and Rollover Account) exceeds $5,000, or if
there are remaining payments to be made with respect to a particular
distribution option that previously commenced, and if such amount is
immediately distributable the Participant the Participant's Spouse (or
where either the Participant or Spouse has died, the survivor)), must
consent to any distribution of such amount. Any portion of the
Participant's Account which is not Vested will be treated as a Forfeiture.
If less than the entire Vested Aggregate Account is distributed, the part
of the non-Vested portion that will be treated as a Forfeiture is the
total non-Vested portion multiplied by a fraction, the numerator of which
is the amount of the distribution attributable to Employer contributions
and the denominator of which is the total value of the Participant's
Vested Account.
|
|
(b)
|
Definition
of Immediately Distributable.
A Participant's benefit is
immediately distributable if any part could be distributed to the
Participant (or the Participant's surviving Spouse) before the Participant
reaches (or would have reached if not deceased) the later of Normal
Retirement Age or Age 62.
|
|
(c)
|
Consent
Requirement.
The consent of the Participant to any benefit that is
immediately distributable must be obtained in writing within the 90-day
period ending on the Annuity Starting Date. The Participant is not
required to consent to a distribution that is required by Code §401(a)(9)
or §415.
|
|
(d)
|
Notification
Requirement.
The Administrator must notify the Participant of the
right to defer any distribution until it is no longer
immediately distributable. Notification will include a general explanation
of the material features and relative values of the optional forms of
benefit available in a manner that would satisfy the notice requirements
of Code §417(a)(3); and will be provided no less than 30 days or more than
90 days prior to the Annuity Starting Date. However, distribution of a
Participant's benefit may begin less than 30 days after the such notice is
given if (1) the Administrator clearly informs the Participant that the
Participant has a right to a period of at least 30 days after receiving
notice to consider the decision of whether or not to elect a distribution;
(2) the Participant, after receiving the notice, affirmatively elects a
distribution or a particular distribution
option.
|
|
(e)
|
Consent
Not Needed on Plan Termination.
If upon Plan termination neither
the Employer nor an Affiliated Employer maintains another defined
contribution plan other than an employee stock ownership plan (ESOP) as
defined in Code §4975(e)(7), the Participant's benefit will, without the
Participant's consent, be distributed to the Participant. If the Employer
or an Affiliated Employer maintains another defined contribution plan
other than an ESOP, the Participant's benefit will, without the
Participant's consent, be transferred to the other plan if the Participant
does not consent to an immediate distribution under this
Section.
|
5.7
|
Accounts
of Rehired Participants
.
If a Participant who
does not have a 100% Vested Interest in his or her Participant's Account
terminates employment with the Employer and receives (or is deemed to have
received) a distribution of such Vested Interest from the Plan, then upon
subsequent reemployment with the Employer, his or her Participant's
Account will be administered in accordance with the
following:
|
|
(a)
|
Reemployment
of a Participant After 5 Consecutive Breaks in Service.
If the
Participant is reemployed by the Employer after incurring five consecutive
Breaks in Service, that portion, if any, of his or her Participant's
Account which was (or was deemed to be) a Forfeiture will be permanently
forfeited under the terms of this
Plan.
|
|
(b)
|
Reemployment
of a Non-Vested Participant Before 5 Consecutive Breaks in Service.
If the Participant is reemployed by the Employer before incurring five
consecutive Breaks in Service, and if upon the prior termination of
employment the Participant's Vested Interest in his or her Participant's
Account was zero and such Participant was deemed to have received a
distribution of such Vested Interest before the date on which he or she
would have incurred five consecutive Breaks in Service, then such
Participant's Account balance attributable to Employer contributions will
upon such reemployment be restored to the amount on the date of the deemed
distribution.
|
|
(c)
|
Reemployment
of a Vested Participant Before 5 Consecutive Breaks in Service.
If
the Participant is reemployed by the Employer before incurring five
consecutive Breaks in Service, and if upon the prior termination of
employment the Participant had a Vested Interest in his or her
Participant's Account but such Vested Interest was less than a 100% Vested
Interest, then the following will
apply:
|
|
(1)
|
If
No Forfeiture Has Occurred.
If the portion of the Participant's
Account that was not Vested has not been forfeited, a separate account
will be established at the time of distribution, and at any relevant time
the Participant's Vested Interest in the separate account will be an
amount ("X") determined by the formula X = P (AB + (R x D)) - R x D). In
applying the formula, "P" is the Vested Interest at the relevant time,
"AB" is the respective account balance at the relevant time, "D" is the
amount of the distribution, and "R" is the ratio of the respective account
balance at the relevant time to the respective account balance
after the distribution.
|
|
(2)
|
If
Forfeiture Has Occurred.
If the portion of the Participant's
Account which was not Vested has been forfeited, such Participant's
Account balance will be restored to the amount on the date of
distribution, either (1) by the Participant repaying the full amount of
the distribution that was attributable to Employer contributions if
repayment is made before the earlier of five years after the first date on
which the Participant is subsequently reemployed by the Employer or the
date on which the Participant incurs five consecutive Breaks in Service
(or Periods of Severance) following the date of distribution; or (2) by
first using Forfeitures for such Plan Year to restore the Account and, if
Forfeitures are insufficient to restore the Account, by the Employer
making a special contribution to the Plan to the extent necessary to
restore such Account.
|
5.8
|
Spousal
Consent Requirements
.
A surviving Spouse's
election not to receive a death benefit under Section 5.2 will not be
effective unless (1) the election is in writing; (2) the election
designates a specific Beneficiary or form of benefit that cannot be
changed without spousal consent (or the Spouse's consent expressly permits
designations by the Participant without any requirement of further spousal
consent); and (3) the Spouse's consent acknowledges the effect of the
election and is witnessed by the Administrator or a notary
public.
|
5.9
|
Application
of Code §401(a)(9)
.
All distributions will
be determined and made in accordance with the final and temporary
Regulations issued by the Internal Revenue Service under Code §401(a)(9)
on April 17, 2002. Pursuant to those Regulations, all distributions will
be determined in accordance with the
following:
|
|
(a)
|
General
Rules.
All distributions under this section will be made in
accordance with these general rules: (1) the requirements of this section
will take precedence over any inconsistent Plan provisions and any prior
Plan amendments; (2) all distributions required under this section will be
determined and made in accordance with Regulations promulgated by the
Internal Revenue Service under Code §401(a)(9); and (3) notwithstanding
the other provisions of this section to the contrary, distributions may be
made under a designation made before January 1, 1984 in accordance with
§242(b)(2) of the Tax Equity and Fiscal Responsibility Act (TEFRA) and the
provisions of the Plan that relate
thereto.
|
|
(b)
|
Time
and Manner of Distribution.
The Participant's entire interest will
be distributed, or begin to be distributed, to the Participant no later
than the Participant's Required Beginning Date, subject to the following
provisions regarding the time and manner of
distribution:
|
|
(1)
|
Death
Before Distributions Begin.
If the Participant dies before
distribution begins, his or her entire interest will be distributed (or
begin to be distributed) not later than as
follows:
|
|
(A)
|
The
Surviving Spouse Is the Sole Designated Beneficiary.
If the
Participant's surviving Spouse is the sole designated Beneficiary, then
subject to subparagraph (D), distributions to the surviving Spouse will
begin by (1) December 31 of the calendar year immediately following the
calendar year in which the Participant died, or (2) December 31 of the
calendar year in which the Participant would have attained age 70½, if
later. If the surviving Spouse subsequently dies before distributions to
the surviving Spouse begin under this subparagraph, this entire paragraph
(b), other than the preceding clause of this subparagraph (A), will apply
as if the surviving Spouse were the
Participant.
|
|
(B)
|
The
Surviving Spouse Is Not the Sole Designated Beneficiary.
If the
Participant's surviving Spouse is not the sole designated Beneficiary,
then subject to subparagraph (D) below, distributions to the designated
Beneficiary will begin by December 31 of the calendar year immediately
following the calendar year in which the Participant
died.
|
|
(C)
|
There
Is No Designated Beneficiary.
If there is no designated Beneficiary
as of September 30 of the year following the year of the Participant's
death, the Participant's entire interest will be distributed by December
31 of the calendar year containing the fifth anniversary of the
Participant's death.
|
|
(D)
|
Alternative
Distribution Date.
If the Participant dies before distributions
begin and there is a designated Beneficiary, distribution to the
designated Beneficiary is not required to begin by the date specified in
subparagraphs (A) and (B) above provided the Participant's entire interest
in the Plan is distributed to the designated Beneficiary by December 31st
of the calendar year containing the fifth anniversary of the Participant's
death. In addition, a designated Beneficiary who is receiving payments
under this five year rule may make a new election to receive payments
under the Life Expectancy rule until December 31, 2003, provided that all
amounts that would have been required to be distributed under the Life
Expectancy rule for all Distribution Calendar Years before 2004 are
distributed by the earlier of December 31, 2003 or the end of the five
year period.
|
|
(2)
|
Date
Distributions Are Deemed To Begin.
For purposes of this paragraph
(b) and paragraph (d), unless subparagraph (1)(A)(ii) above applies,
distributions are considered to begin on the Participant's Required
Beginning Date. If subparagraph (1)(A)(ii) applies, distributions are
considered to begin on the date distributions are required to begin to the
surviving Spouse under subparagraph (1)(A)(I) above. If distributions
under an annuity purchased from an insurance company irrevocably commence
to the Participant before the Participant's Required Beginning Date (or to
the Participant's surviving Spouse before the date distributions are
required to begin to the surviving Spouse under subparagraph (1)(A)(I)),
the date distributions are considered to begin is the date distributions
actually commence.
|
|
(3)
|
Forms
of Distribution.
Unless the Participant's interest is distributed
in the form of an annuity purchased from an insurance company or in a
single sum on or before the Required Beginning Date, as of the first
Distribution Calendar Year distributions will be made in accordance with
this paragraph and paragraph (c). If a Participant's interest is
distributed as an annuity purchased from an insurance company,
distributions thereunder will be made in accordance with the requirements
of Code §401(a)(9) and the Internal Revenue Service
Regulations.
|
|
(c)
|
Required
Minimum Distributions During the Participant's Lifetime.
The amount
of a required minimum distribution during a Participant's lifetime will be
determined as follows:
|
|
(1)
|
Amount
of Required Distribution for Each Distribution Calendar Year.
During the Participant's lifetime, the minimum amount that will be
distributed each Distribution Calendar Year is the lesser of (1) the
quotient obtained by dividing the Participant's Account Balance by the
distribution period in the Uniform Lifetime Table in §1.401(a)(9)-9 of the
IRS Regulations, using the Participant's age as of his or her birthday in
the Distribution Calendar Year; or (2) if the Participant's sole
designated Beneficiary for the Distribution Calendar Year is the
Participant's Spouse, the quotient obtained by dividing the Participant's
account balance by the number in the Joint and Last Survivor Table in
§1.401(a)(9)-9 of the IRS Regulations, using the Participant's and
Spouse's attained ages as of the Participant's and Spouse's birthdays in
the Distribution Calendar Year.
|
|
(2)
|
Lifetime
Required Distributions Continue Through Year of Participant's
Death.
Required minimum distributions will be determined under this
paragraph (c) beginning with the first Distribution Calendar Year and up
to and including the Distribution Calendar Year that includes the
Participant's date of death.
|
|
(d)
|
Required
Minimum Distributions After the Participant's Death If Death Occurs On or
After the Date Distribution Begins.
The amount of a required
minimum distribution if a Participant dies on or after the date
distribution begins will be determined as
follows:
|
|
(1)
|
Participant
Survived by Designated Beneficiary.
If the Participant dies on or
after the date distributions begin and there is a designated Beneficiary,
the minimum amount that will be distributed each Distribution Calendar
Year after the year of the Participant's death is the quotient obtained by
dividing the Participant's Account Balance by the longer of the remaining
Life Expectancy of the Participant or the remaining Life Expectancy of the
designated Beneficiary, determined as follows: (1) the Participant's
remaining Life Expectancy is calculated using the age of the Participant
in the year of death, reduced by one for each subsequent year; (2) if the
Participant's surviving Spouse is the sole designated Beneficiary, the
remaining Life Expectancy of the Spouse is calculated for each
Distribution Calendar Year after the year of the Participant's death using
the surviving Spouse's age as of the Spouse's birthday in that year. For
Distribution Calendar Years after the year of the surviving Spouse's
death, the remaining Life Expectancy of the surviving Spouse is calculated
using the age of the surviving Spouse as of the Spouse's birthday in the
calendar year of the Spouse's death, reduced by one for each subsequent
calendar year; and (3) if the Participant's surviving Spouse is not the
Participant's sole designated Beneficiary, the designated Beneficiary's
remaining Life Expectancy is calculated using the age of the Beneficiary
in the year following the year of the Participant's death, reduced by one
for each subsequent year.
|
|
(2)
|
No
Designated Beneficiary.
If the Participant dies on or after the
date distributions begin and there is no designated Beneficiary as of
September 30 of the year after the year of the Participant's death, the
minimum amount that will be distributed for each Distribution Calendar
Year after the year of the Participant's death is the quotient obtained by
dividing the Participant's Account Balance by the Participant's remaining
Life Expectancy calculated using the age of the Participant in the year of
death, reduced by one each subsequent
year.
|
|
(e)
|
Required
Minimum Distributions After the Participant's Death If Death Occurs Before
the Date Distribution Begins.
The amount of a required minimum
distribution if a Participant dies before the date distribution begins
will be determined as follows:
|
|
(1)
|
Participant
Survived by Designated Beneficiary.
If the Participant dies before
the date distributions begin and there is a designated Beneficiary, the
minimum amount that will be distributed for each Distribution Calendar
Year after the year of the Participant's death is the quotient obtained by
dividing the Participant's Account Balance by the remaining Life
Expectancy of the Participant's designated Beneficiary, as determined
under paragraph (d).
|
|
(2)
|
No
Designated Beneficiary.
If the Participant dies before the date
distributions begin and there is no designated Beneficiary as of September
30 of the year following the year of the Participant's death, distribution
of the Participant's entire interest will be completed by December 31 of
the calendar year containing the fifth anniversary of the Participant's
death.
|
|
(3)
|
Death
of Surviving Spouse Before Distributions to Surviving Spouse Are Required
to Begin.
If the Participant dies before the date distributions
begin, the Participant's surviving Spouse is the Participant's sole
designated Beneficiary, and the surviving Spouse dies before distributions
are required to begin to the surviving Spouse under paragraph (b)(1)(A)(1)
above, then this paragraph (e) will apply as if the surviving Spouse were
the Participant.
|
|
(f)
|
Definitions.
In applying the terms of this section, the following definitions will
apply:
|
|
(1)
|
Designated
Beneficiary.
"Beneficiary" means the Beneficiary designated by the
Participant is the designated Beneficiary under Code §401(a)(9) and
§1.401(a)(9)-1, Q&A-4 of the Internal Revenue Service
Regulations.
|
|
(2)
|
Distribution
Calendar Year.
"Distribution Calendar Year" means 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 containing 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 under paragraph
(b). The required minimum distribution for the Participant's first
Distribution Calendar Year will be made on or before the Participant's
Required Beginning Date. The required minimum distribution for any other
Distribution Calendar Year, including the required minimum distribution
for the Distribution Calendar Year in which the Participant's Required
Beginning Date occurs, will be made on or before December 31 of that
Distribution Calendar Year.
|
|
(3)
|
Life
Expectancy.
"Life Expectancy" means life expectancy as computed by
use of the Single Life Table in IRS Regulation
§1.401(a)(9)-9.
|
|
(4)
|
Participant's
Account Balance.
"Participant's Account Balance" means 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 made and allocated 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. The Account
balance for the valuation calendar year includes any amounts rolled over
or transferred to the Plan either in the valuation calendar year or in the
Distribution Calendar Year if distributed or transferred in the valuation
calendar year.
|
5.10
|
Statutory
Commencement of Benefits
.
Unless the Participant
otherwise elects, distribution of a Participant's benefit must begin no
later than the 60th day after the latest of the close of the Plan Year in
which the Participant (1) reaches the earlier of Age 65 or Normal
Retirement Age; (2) reaches the 10th anniversary of the year he or she
began Plan participation; or (3) terminates service with the Employer.
However, the failure of a Participant to consent to a distribution while a
benefit is immediately distributable within the meaning of Section 5.6(b)
will be deemed to be an election to defer commencement of payment of any
benefit sufficient to satisfy this Section. In addition, if this Plan
provides for early retirement, a Participant who satisfied the service
requirement (if any) set forth in the definition of Early Retirement Age
in Section 1.21 prior to termination of employment will be entitled to
receive his or her Vested Aggregate Account balance (if any) upon
satisfaction of the age requirement (if any) set forth in the definition
of Early Retirement Age.
|
5.11
|
Earnings
Before Benefit Distribution
.
As of the Valuation
Date coinciding with or next following the date a Participant terminates
employment with the Employer for any reason, the Administrator will, until
a distribution is made to the Participant or the Participant's Beneficiary
in accordance with Sections 5.1, 5.2, 5.3, 5.4 or 5.5, direct the Trustee
in a uniform nondiscriminatory manner to either (1) invest the
Participant's Vested Aggregate Account balance determined as of such
Valuation Date in a separate interest bearing account; or (2) leave the
Participant's Vested Aggregate Account balance as part of the general
Trust Fund, in which case such account will either (A) share in the
allocation of net earnings and losses under Section 3.4, or (B) be granted
interest at a rate consistent with the interest bearing investments of the
Trust Fund.
|
5.12
|
Distribution
in the Event of Legal Incapacity
.
If any person entitled
to benefits (the "Payee") suffers from a Disability or is under any legal
incapacity, payments may be made in one or more of the following ways as
directed by the Administrator: (1) to the Payee directly; (2) to the
guardian or legal representative of the Payee's person or estate; (3) to a
relative of the Payee, to be expended for the Payee's benefit; or (4) to
the custodian of the Payee under any Uniform Transfers to Minors Act or
Uniform Gifts to Minors Act. The Administrator's determination of minority
or incapacity will be final.
|
5.13
|
Missing
Payees and Unclaimed Benefits
.
With respect to a
Participant or Beneficiary who has not claimed any benefit (the "missing
payee") to which such missing payee is entitled, and with respect to any
Participant or Beneficiary who has not satisfied the administrative
requirements for benefit payment, the Administrator may elect to either
(1) to segregate the benefit into an interest bearing account, in which
event an annual maintenance fee as may be set from time to time in a
written administrative policy established by the Sponsoring Employer may
be assessed against the segregated account; (2) subject to a written
administrative policy established by the Administrator, distribute the
benefit at any time in any manner which is sanctioned by the Internal
Revenue Service and/or the Department of Labor; or (3) treat the entire
benefit as a Forfeiture. If a missing payee whose benefit has been
forfeited is located, or if a payee whose benefit has been forfeited for
failure to satisfy the administrative requirements for benefit payment
subsequently satisfies such administrative requirements and claims his or
her benefit, and if the Plan has not terminated (or if the Plan has
terminated, all benefits have not yet been paid), then the benefit will be
restored. The Administrator, on a case by case basis, may elect to restore
the benefit by the use of earnings from non-segregated assets of the Fund,
by Employer contributions, or by any combination thereof. However, if any
such payee has not been located (or satisfied the administrative
requirements for benefit payment) by the time the Plan terminates and all
benefits have been distributed from the Plan, the Forfeiture of such
unpaid benefit will be irrevocable.
|
5.14
|
Direct
Rollovers
.
A distributee may elect to have all or any portion of an eligible rollover
distribution paid directly to an eligible retirement plan specified by the
distributee in a direct rollover, which is a payment by the Plan to the
eligible retirement plan specified by the
distributee.
|
|
(a)
|
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 (1) 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; (2) any
distribution to the extent such distribution is required under Code
§401(a)(9); (3) 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); (4) the
portion of any distribution which is attributable to a hardship
distribution; and (5) any other distribution that is reasonably expected
to total less than $200 during a
year.
|
|
(b)
|
Treatment
of Distributions That Include Voluntary Employee Contributions.
For
purposes of paragraph (a) (and for only for Plan Years beginning on or
after January 1, 2002), an eligible rollover distribution may include
Voluntary Employee Contributions that are not includible in gross income;
but the portion of an eligible rollover distribution that is attributable
to Voluntary Employee Contributions can be paid only to an individual
retirement account or annuity described in Code §408(a) or (b), or to a
qualified defined contribution plan described in Code §401(a) or §403(a)
that agrees to separately account for amounts so transferred, including
separately accounting for the portion of such distribution that is
includible in gross income and the portion of such distribution that is
not so includible. Furthermore, in accordance with the Job Creation and
Worker Assistance Act of 2002, when a distribution includes Voluntary
Employee Contributions that are not includible in gross income, the amount
that is rolled over will first be attributed to amounts includible in
gross income.
|
|
(c)
|
Treatment
of Distributions That Include Roth Elective Deferrals.
For purposes
of paragraph (a), an eligible rollover distribution may include Roth
Elective Deferrals that are not includible in gross income; but the
portion of an eligible rollover distribution that is attributable to Roth
Elective Deferrals can be paid only to an individual retirement account or
annuity described in Code §408(a) or (b), or to a qualified defined
contribution plan described in Code §401(a) or §403(a) that separately
accounts for Roth Elective Deferrals. The Plan will not provide for a
direct rollover (including an automatic rollover) for distributions from a
Participant's Roth Elective Deferral Account if the amount of the eligible
rollover distributions are reasonably expected to total less than $200
during a year (determined without taking into account distributions from a
Participant's Roth Elective Deferral
Account).
|
|
(d)
|
Eligible
Retirement Plan.
For Plan Years beginning on or after January 1,
2002, an eligible retirement plan is one of the following that accepts an
eligible rollover distribution: (1) an individual retirement account
described in Code §408(a); (2) an individual retirement annuity described
in Code §408(b); (3) an annuity plan described in Code §403(a); (4) an
annuity contract described in Code §403(b); (5) a qualified trust
described in Code §401(a); or (6) a plan under Code §457(b) which is
maintained by a state, political subdivision of a state, or any agency or
instrumentality of a state or political subdivision of a state and which
agrees to separately account for amounts transferred thereto from this
Plan.
|
|
(e)
|
Definition
of Distributee.
A distributee includes an Employee or former
Employee. In addition, an Employee's or former Employee's surviving Spouse
and an 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 §414(p), are distributees with regard to the interest of the Spouse
or former Spouse.
|
5.15
|
Form
of Distribution
.
All distributions made
under the other provisions of this Article 5 will be in the form of cash
or Company Stock, or both, subject to the following
provisions:
|
|
(a)
|
Participant
May Demand Company Stock.
Prior to making a distribution, the
Administrator will advise a Participant or Beneficiary in writing of his
or her right to demand that benefits be distributed solely in Company
Stock. If the Participant or Beneficiary fails to make such demand in
writing within 90 days after receipt of such written notice, the
Participant's Vested Aggregate Account will be distributed in the form of
Company Stock to the extent it is allocated to the Participant's Company
Stock Account, and the balance, if any, of the Vested Aggregate Account
will be distributed in cash.
|
|
(b)
|
Stock
Must Be Distributed In Whole Shares.
If a Participant or
Beneficiary demands that benefits be distributed solely in Company Stock,
distribution will be made entirely in whole shares of Company Stock. Any
balance in a Participant's Account not attributable to Company Stock will
be applied by the Trustee to acquire for distribution the maximum number
of whole shares of Company Stock at the then fair market value. Any
unexpended balance in the Participant's Account will be distributed in
cash. If the Trustee is unable to purchase the Company Stock required for
the distribution, the Trustee will make distribution in cash within one
year after the date the distribution was to have been made, except in the
case of a retirement distribution which must be made within 60 days after
the close of the Plan Year in which retirement
occurs.
|
|
(c)
|
Restrictions
on Distributed Stock.
Except as provided herein, distributed
Company Stock may be restricted as to sale or transfer by the by-laws or
articles of incorporation of the Employer if the restrictions are
applicable to all Company Stock of the same class. If a Participant is
required to offer the sale of his or her Company Stock to the Employer
before offering it to a third party, the Employer may not pay a price less
than that offered to the distributee by another potential buyer making a
bona fide offer, and the Trustee may not pay a price less than the fair
market value of the Company Stock.
|
|
(d)
|
Multiple
Classes of Company Stock Acquired With Exempt Loan.
If Company
Stock which was acquired with an Exempt Loan and which is available for
distribution consists of more than one class of stock, a Participant's or
Beneficiary's distribution must receive substantially the same proportion
of each such class of such stock.
|
5.16
|
Cash
Dividends on Company Stock
.
At the discretion of
the Administrator, cash dividends received on Company Stock allocated to
Participants' Company Stock Accounts may be distributed currently (or
within 90 days after the end of the Plan Year in which such dividends are
paid to the Plan) in cash to such Participants on a nondiscriminatory
basis. Any such distribution of cash dividends will be limited to
Participants who are still Employees, and will be further limited to
dividends on shares of Company Stock in which each such Participant has a
Vested Interest.
|
5.17
|
Right
of First Refusal
.
If Company Stock that is not readily tradeable on an established
securities market is distributed to a Participant, then except as
otherwise provided in this Section, if any Participant, Beneficiary, or
any other person to whom Company Stock is distributed (all such persons
hereafter called the Selling Participant) at any time desires to sell some
or all of such shares (such shares hereafter called the Offered Shares) to
a third party (such third party hereafter called the Third Party), then
the Selling Participant must give written notice of such desire to the
Employer and the Administrator, subject to the following
provisions:
|
|
(a)
|
Requirements
of Written Notice.
The written notice required to be given
hereunder must contain the number of shares offered for sale, the proposed
terms of the sale, and the names and addresses of both the Selling
Participant and the Third Party.
|
|
(b)
|
Trust
Fund and Employer.
Both the Plan and Employer will have the right
of first refusal for a period of 14 days from the date the Selling
Participant gives written notice to the Employer and Administrator (such
14 day period to run concurrently against the Plan and the Employer) to
acquire the Offered Shares. As between the Plan and Employer, the Plan has
priority to acquire the shares pursuant to the right of first refusal. The
selling price and terms will be the same as offered by the Third
Party.
|
|
(c)
|
Third
Parties.
If the Plan and the Employer do not exercise their
respective rights of first refusal within the required 14 day period
provided above, the Selling Participant will have the right, at any time
following the expiration of such 14 day period, to dispose of the Offered
Shares to the Third Party, provided, however, that no disposition will be
made to the Third Party on terms more favorable to the Third Party than
those set forth in the written notice delivered by the Selling
Participant. If a Third Party is offered terms more favorable than those
set forth in the written notice delivered to the Plan and the Employer,
then the Offered Shares will again be subject to the right of first
refusal.
|
|
(d)
|
Time
of Closing.
The closing pursuant to the exercise of the right of
first refusal will take place at such place as is agreed upon between the
Administrator and the Selling Participant, but not later than 10 days
after the Employer or the Plan has notified the Selling Participant of the
exercise of the right of first refusal. At closing, the Selling
Participant will deliver certificates representing the Offered Shares duly
endorsed in blank for transfer, or with stock powers attached duly
executed in blank with all required transfer tax stamps attached or
provided for, and the Employer or the Trustee will deliver the purchase
price, or an appropriate portion thereof, to the Selling
Participant.
|
|
(e)
|
Stock
Acquired With an Exempt Loan.
Notwithstanding the foregoing,
Company Stock acquired with an Exempt Loan will be subject to a right of
first refusal only for so long as such stock is not publicly traded on an
established securities market. The selling price and other terms under the
right of first refusal must not be less favorable to the seller than the
greater of (1) the value of the Company Stock as determined under
regulation §54.4975-11(d)(5), or (2) the purchase price of the Company
Stock and other terms offered by a buyer (other than the Employer or the
Plan) making a good faith offer to purchase such stock. The right of first
refusal must lapse no later than 14 days after the Selling Participant
gives written notice to the Administrator and Employer that an offer from
a Third Party has been received for the Offered Shares. The right of first
refusal will comply with paragraphs (a) through (c) above, except to the
extent they conflict with this
paragraph.
|
5.18
|
Put
Option
.
If
Company Stock that is not readily tradeable on an established securities
market is distributed to a Participant, he or she will have a right to
require the Employer to repurchase such Company Stock under a fair
valuation formula, subject to the following
provisions:
|
|
(a)
|
Stock
Acquired With an Exempt Loan.
Company Stock acquired with an Exempt
Loan will be subject to a put option if (1) such stock is not readily
tradeable as set forth above, or (2) if such stock is subject to a trading
limitation when distributed. For purposes of this Section, a trading
limitation is a restriction under any federal or state securities law, or
an agreement, not prohibited by this Section, which would make such stock
not as freely tradeable as stock not subject to such
restriction.
|
|
(b)
|
Conditions
of Exercise.
The put option may only be exercised by a Participant,
by the Participant's donees, or by a person (including an estate or its
distributee) to whom the Company Stock passes upon a Participant's death.
The put option must permit a Participant to put the Company Stock to the
Employer. Under no circumstances may the put option bind the Plan, but it
must grant the Plan an option to assume the rights and obligations of the
Employer at the time the put option is exercised. If it is known at the
time a loan is made that federal or state law will be violated by the
Employer's honoring such put option, the put option must permit the
Company Stock to be put, in a manner consistent with law, to a third party
(for example, an affiliate of the Employer or a shareholder other than the
Plan) that has substantial net worth at the time the Exempt Loan is made
and whose net worth is reasonably expected to remain
substantial.
|
|
(c)
|
Duration
of Put Option.
The put option will begin as of the day following
the date the Company Stock is distributed and end 60 days thereafter. If
not exercised within the 60-day period, an additional 60 day-period will
begin on the first day after the new determination of the value of the
Company Stock by the Trustee in the following Plan Year. With respect to
Company Stock that is publicly traded without restrictions when
distributed but ceases, after distribution, to be so traded within either
of the 60-day periods described above, the Employer must notify each
holder thereof in writing on or before the 10th day after the date the
stock ceases to be so traded that for the remainder of the applicable
60-day period the stock is subject to the put option. The notice must
inform distributees of the terms of the put option that they are to hold,
and the terms must satisfy the requirements of this
Section. The period during which a put option is exercisable
does not include any time when a distributee is unable to exercise it
because the party bound by the option is prohibited from honoring it by
federal or state law.
|
|
(d)
|
Manner
of Exercise.
The put option will be exercised by the holder
notifying the Employer in writing that the put option is being
exercised. The notice will state the name and address of the holder
and the number of shares to be
sold.
|
|
(e)
|
Terms
of Payment.
The price at which a put option must be exercised is
the value of the Company Stock determined by an independent appraiser as
of the Valuation Date coinciding with or immediately preceding the date of
distribution. Payment must be reasonable. The deferral of payment is
reasonable if adequate security and reasonable interest are provided for
any credit extended and if the cumulative payments at any time are not
less than the aggregate of reasonable periodic payments as of such
time. Periodic payments are reasonable if annual installments,
beginning 30 days after the date the put option is exercised, are
substantially equal. The payment period may generally not be more than 5
years after the date the put option is exercised, but it may be extended
to a date no later than the earlier of 10 years from the date the put
option is exercised or the date the proceeds of the loan used by the Plan
to acquire the Company Stock subject to the put option are entirely
repaid.
|
|
(f)
|
Payment
Restrictions.
Payment under a put option cannot be restricted by
the provisions of a loan or any other arrangement, including the terms of
the Employer's articles of incorporation or bylaws, unless so required
under applicable state law. An arrangement involving the Plan that creates
a put option cannot provide for the issuance of put options other than
provided for under this Section. The Plan cannot otherwise obligate itself
to acquire Company Stock from a particular holder thereof at an indefinite
time determined upon the happening of an event such as the death of the
holder.
|
|
(g)
|
Payment
Requirements for Total Distributions.
Notwithstanding the
foregoing, and with respect to Company Stock which is not readily
tradeable and which is acquired after December 31, 1986, if a distribution
of such stock constitutes a Total Distribution, payment of the fair market
value of a Participant's Company Stock Account will be made in 5
substantially equal annual payments. The first installment will be paid
not later than 30 days after the Participant exercises the put option. The
Plan will pay a reasonable rate of interest and provide adequate security
on amounts not paid after 30 days. For purposes of
this Section, the term Total Distribution means the
distribution with one taxable year to the recipient of the balance of his
Company Stock Account.
|
|
(h)
|
Payment
Requirements for Installment Distributions.
Notwithstanding
paragraph (g) above, if the distribution does not constitute a Total
Distribution, the Plan will pay the Participant an amount equal to the
fair market value of the Company Stock repurchased no later than 30 days
after the Participant exercises the put
option.
|
5.19
|
Non-Terminable
Rights and Protections
.
Except as otherwise
provided in Sections 5.17 and 5.18, no Company Stock acquired with an
Exempt Loan may be subject to a put, call, or other option, or buy-sell or
similar arrangement when held by and distributed from the Plan, whether or
not the Plan is then an Employee Stock Ownership Plan (ESOP). The rights
and protections granted in this Section and in Sections 5.17 and 5.18 are
non-terminable and will continue to exist under the terms of the Plan as
long as any Company Stock acquired with an Exempt Loan is held by the Plan
or by any Participant or any other person for whose benefit such
protections and rights have been created, and neither the repayment of
such loan nor the failure of the Plan to be an ESOP, nor any amendment of
the Plan, will cause a termination of the protections and
rights.
|
5.20
|
Mandatory
Put Options for S and Certain Other Corporations
.
If the
Employer is an S Corporation as defined in Code §1361, or if the charter
or by-laws of the Employer restrict the ownership of substantially all
outstanding Company Stock to Employees or the Trust, distribution of a
Participant's Vested Interest in his or her Company Stock Account will be
made in whole shares of Company Stock subject to the requirement that the
distributee must immediately exercise a put option as described in Section
5.18 of the Plan with respect to such shares of Company Stock. The value
of any fractional shares will be distributed in
cash.
|
5.21
|
Required
Cash Distribution for Certain Banks
.
If the Employer is a
bank as defined in Code §581 which is prohibited by law from redeeming or
purchasing its own securities, the Employer may distribute a Participant's
Plan benefit solely in the form of cash notwithstanding a Participant's
right as otherwise set forth in the Plan to receive a distribution of
Company Stock.
|
5.22
|
Financial
Hardship Distributions
.
Hardship distributions
are not permitted
|
5.23
|
In-Service
Distributions
.
Except as may otherwise be permitted under Section 4.2, no
distributions are permitted before a Participant terminates employment
with the Employer.
|
5.24
|
Distribution
of Rollover Contributions
.
Such contributions
are not permitted
|
5.25
|
Distribution
of Transfer Contributions
.
A Participant's
Transfer Contributions will be distributed at the same time and in the
same manner as the Participant's Account under Sections 5.1, 5.2, 5.3 or
5.4.
|
5.26
|
Distribution
of Voluntary Employee Contributions
.
Such
contributions are not
permitted
|
6.1
|
Maximum
Annual Additions
.
The maximum Annual
Addition (as defined in paragraph (c) below) made to a Participant's
various accounts maintained under the Plan for any Limitation Year will
not exceed the lesser of the Dollar Limitation in Section 6.1(a) or the
Compensation Limitation Section 6.1(b) below, as
follows:
|
|
(a)
|
Dollar
Limitation.
For Limitation Years beginning on or after January 1,
2002, the Dollar Limitation is $40,000 as adjusted in
accordance with Code §415(d).
|
|
(b)
|
Compensation
Limitation.
For Limitation Years beginning on or after January 1,
2002, the Compensation Limitation is an amount equal to 100% of the
Participant's Compensation for the Limitation Year. However, this
limitation will not apply to any contribution made for medical benefits
within the meaning of Code §401(h) or Code §419A(f)(2) after termination
of employment which is otherwise treated as an Annual Addition under Code
§415(l)(1) or Code §419A(d)(2).
|
|
(c)
|
Annual
Additions.
Annual Additions are the sum of the following amounts
credited to a Participant's Account for the Limitation Year: (1) Employer
contributions; (2) Employee contributions; (3) Forfeitures; (4) amounts
allocated, after March 31, 1984, to an individual medical account, as
defined in Code §415(l)(2), which is part of a pension or annuity plan
maintained by the Employer; and (5) amounts derived from contributions
paid or accrued after December 31, 1985, in taxable years ending after
such date, that are attributable to post-retirement medical benefits,
allocated to the separate account of a Key Employee, as defined in Code
§419A(d)(3), under a welfare fund, as defined in Code §419(e), maintained
by the Employer. However, a Participant's Annual Additions do not include
Rollover Contributions, Transfer Contributions, loan repayments, Catch-up
Contributions, repayments of prior Plan distributions or prior
distributions of mandatory contributions, deductible contributions to a
SEP, or voluntary deductible
contributions.
|
|
(d)
|
Special
ESOP Rules.
For purposes of this Section, (1) in determining the
amount of the Employer's contribution for purposes of paragraph (a) and
(b) above, the amount of Employer contributions will be determined based
upon the lesser of (A) the fair market value of the Company Stock
allocated to the Participant's Account from Employer contributions to the
Plan (determined at the time of the contribution by the most recent
valuation) plus any contributions which are not used to purchase Company
Stock or pay on an Exempt Loan; and (B) the amount of the Employer's cash
contribution to the Plan; and (2) in any Plan Year in which the Employer
is not an S Corporation as defined in Code §1361, if no more than
one-third of Employer contributions for that Plan Year that are deductible
under Code §404(a)(9) are allocated to HCEs, the limitations of this
Section will not apply to Forfeitures of Company Stock that was acquired
with an Exempt Loan or to Employer contributions that are deductible under
Code §404(a)(9)(B) and are charged against a Participant's
Account.
|
6.2
|
Adjustments
to Maximum Annual Addition
.
In applying the
limitation on Annual Additions set forth in Section 6.1 the following
adjustments must be made:
|
|
(a)
|
Short
Limitation Year.
In a Limitation Year of less than 12 months, the
Defined Contribution Dollar Limitation in Section 6.1(a) will be adjusted
by multiplying it by the ratio that the number of months in the short
Limitation Year bears to 12.
|
|
(b)
|
Multiple
Defined Contribution Plans.
If a Participant participates in
multiple defined contribution plans sponsored by the Employer and such
plans have different Anniversary Dates, the maximum Annual Addition in
this Plan for the Limitation Year will be reduced by the Annual Additions
credited to the Participant's accounts in the other defined contribution
plans during the Limitation Year. If a Participant participates in
multiple defined contribution plans sponsored by the Employer and such
plans have the same Anniversary Date, then (1) if only one of the plans is
subject to Code §412, Annual Additions will first be credited to the
Participant's account in the plan subject to Code §412; and (2) if more
than one of the plans is subject to Code §412, the maximum Annual Addition
in this Plan for a given Limitation Year will be equal to the product of
the maximum Annual Addition for such Limitation Year minus any other
Annual Additions previously credited to the Participant's account under
clause (1) above, multiplied by the ratio that the Annual Additions which
would be credited to a Participant's accounts hereunder without regard to
the limitations in Section 6.1 bears to the Annual Additions for all plans
described in this clause (2).
|
6.3
|
Multiple
Plans and Multiple Employers
.
All defined benefit
plans (whether terminated or not) sponsored by the Employer will be
treated as one defined benefit plan, and all defined contribution plans
(whether terminated or not) sponsored by the Employer will be treated as
one defined contribution plan. In addition, all Affiliated Employers will
be considered a single Employer.
|
6.4
|
Adjustment
for Excessive Annual Additions
.
If for any Limitation
Year the Annual Additions allocated to a Participant's Account exceeds the
maximum amount permitted under Section 6.1 because of an allocation of
Forfeitures, a reasonable error in estimating a Participant's
Compensation, a reasonable error in determining the amount of elective
contributions (within the meaning of Code §402(g)(3)), or because of other
limited facts and circumstances that the Commissioner finds justify the
availability of the rules set forth in this Section, then such
Participant's Account will be adjusted as follows to reduce the excess
Annual Additions:
|
|
(a)
|
Return
of Employee Contributions.
First, Voluntary Employee Contributions,
if any, to the extent that they would reduce the excess amount, will be
calculated, and such Voluntary Employee Contributions plus earnings
attributable thereto, will be returned to the
Participant.
|
|
(b)
|
Excess
Used To Reduce Employer Contributions If Participant Is Still Covered By
The Plan.
If, after applying paragraph (a), an excess amount still
exists and the Participant is covered by the Plan at the end of the
Limitation Year, the excess in the Participant's Account plus applicable
earnings thereon, if any, will be used to reduce Employer contributions
(including any allocation of Forfeitures) for such Participant in the next
Limitation Year, and in each succeeding Limitation Year if
necessary.
|
|
(c)
|
Excess
Used To Reduce Employer Contributions If Participant Is Not Covered By The
Plan.
If, after applying paragraph (a), an excess amount still
exists and the Participant is not covered by the Plan at the end of a
Limitation Year, the excess amount, plus applicable earnings thereon, if
any, will be held unallocated in a suspense account. The suspense account
will be applied to reduce future Employer contributions (including the
allocation of any Forfeitures) for all remaining Participants in the next
Limitation Year, and in each succeeding Limitation Year if
necessary.
|
|
(d)
|
Suspense
Account.
If a suspense account is in existence at any time during a
Limitation Year pursuant to this Section, such suspense account 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 or
any Employee contributions may be made to the Plan for that Limitation
Year. Excess amounts may not be distributed to Participants or former
Participants.
|
7.1
|
Loans
to Participants
.
The
making of loans to Participants is not
permitted.
|
7.2
|
Insurance
on Participants
.
The purchase of
Policies on the life of a Participant is not permitted except as otherwise
provided in Section 7.3 with regard to "key man"
insurance.
|
7.3
|
Key
Man Insurance
.
The Administrator may instruct the Trustee to purchase insurance
Policies on the life of any Participant whose employment is deemed to be
key to the Employer's financial success. Such "key man" Policies will be
deemed an investment of the Trust and will be payable to the Trust as the
beneficiary. The Trustee may exercise any and all rights under the
Policies. Neither the Trustee, Employer, Administrator, nor any fiduciary
will be responsible for the validity of any such Policy or the failure of
any insurer to make payments thereunder, or for the action of any person
that may delay payment or render a Policy void in whole or in part. No
insurer will be deemed a party to this Plan for any purpose or to be
responsible for its validity; nor will it be required to look into the
terms of the Plan nor to question any action of the Trustee. The
obligations of the insurer will be determined solely by the Policy's terms
and any other written agreements between it and the Trustee. The insurer
will act only at the written direction of the Trustee, and will be
discharged from all liability with respect to any amount paid to the
Trustee. The insurer will not be obligated to see that any money paid to
the Trustee or any other person is properly distributed or
applied.
|
7.4
|
Directed
Investment Accounts
.
Pursuant to procedures established by the Administrator and promulgated
under Section 8.6, Participants can direct the investment of one or more
of their accounts under the Plan. Investment directives will only be given
pursuant to an administrative policy regarding directed
investments.
|
8.1
|
Appointment,
Resignation, Removal and Succession
.
Each Administrator
appointed will continue until his death, resignation, or removal , and any
Administrator may resign by giving 30 days written notice to the
Sponsoring Employer. If an Administrator dies, resigns, or is removed ,
his successor will be appointed as promptly as possible, and such
appointment will become effective upon its acceptance in writing by such
successor. Pending the appointment and acceptance of any successor
Administrator, any then acting or remaining Administrator will have full
power to act.
|
8.2
|
General
Powers and Duties
.
The powers and duties
of the Administrator will include (a) appointing the Plan's attorney,
accountant, actuary, or any other party needed to administer the Plan; (b)
directing the Trustees with respect to payments from the Trust Fund; (c)
deciding if a Participant is entitled to a benefit; (d) communicating with
Employees regarding their Plan participation and benefits, including the
administration of all claims procedures; (e) filing any returns and
reports with the Internal Revenue Service, Department of Labor, or other
governmental agency; (f) reviewing and approving any financial reports,
investment reviews, or other reports prepared by any party under (e)
above; (g) establishing a funding policy and investment objectives
consistent with the purposes of the Plan and the ERISA; (h) construing and
resolving any question of Plan interpretation; and (i) making any findings
of fact the Administrator deems necessary to proper Plan administration.
Notwithstanding any contrary provision of this Plan, benefits under this
Plan will be paid only if the Administrator decides in its discretion that
the applicant is entitled to them. The Administrator's interpretation of
Plan provisions, and any findings of fact, including eligibility to
participate and eligibility for benefits, are final and will not be
subject to "de novo" review unless shown to be arbitrary and
capricious.
|
8.3
|
Appointment
of Administrative Committee
.
The Sponsoring
Employer may elect to appoint one or more members to an
Administrative/Advisory Committee to be known as the "Committee" (or such
other name as the Sponsoring Employer may select), to which the Sponsoring
Employer may delegate certain of its responsibilities as Administrator.
Members of the Committee need not be Participants or beneficiaries, and
officers and directors of the Employer will not be precluded from serving
as members. A member will serve until his or her resignation, death, or
disability, or until removed. In the event of a vacancy arising by reason
of the death, disability, removal, or resignation of a member, the
Sponsoring Employer may, but is not required to, appoint a successor to
serve in his or her place. The Committee will select a chairman and a
secretary from among its members. Committee members will serve in such
capacity without compensation. The Committee will act by majority vote.
The proper expenses of the Committee, and the compensation of its agents
appointed pursuant to Section 8.7 of the Plan, if any, will be paid
directly by the Employer.
|
8.4
|
Multiple
Administrators
.
If more than one
Administrator has been appointed by the Sponsoring Employer, the
Administrators may delegate specific responsibilities among themselves,
including the authority to execute documents unless the Sponsoring
Employer revokes such delegation. The Sponsoring Employer and Trustee will
be notified in writing of any such delegation of responsibilities, and the
Trustee thereafter may rely upon any documents executed by the appropriate
Administrator.
|
8.5
|
Correcting
Administrative Errors
.
The Administrator will
take such steps as it considers necessary and appropriate to remedy
administrative or operational errors, including, but will not be limited
to the following: (a) taking any action required under the employee plans
compliance resolution system of the Internal Revenue Service, any asset
management or fiduciary conduct error correction program available through
the Internal Revenue Service, United States Department of Labor or other
governmental administrative agency; (b) a reallocation of Plan assets; (c)
adjustments in amounts of future payments to Participants, Beneficiaries
or Alternate Payees; and (d) institution and prosecution of actions to
recover benefit payments made in error or on the basis of incorrect or
incomplete information.
|
8.6
|
Promulgating
Notices and Procedures
.
The
Sponsoring Employer and Administrator are given the power and
responsibility to promulgate certain written notices, policies and/or
procedures under the terms of the Plan and disseminate them to
Participants, and the Administrator may satisfy such responsibility by the
preparation of any such notice, policy and/or procedure in a written form
which can be published and communicated to a Participant in one or more of
the following ways: (a) by distribution in hard copy; (b) through
distribution of a summary plan description or summary of material
modifications thereto which sets forth the policy or procedure with
respect to a right, benefit or feature offered under the Plan; (c) by
e-mail, either to a Participant's personal e-mail address or his or her
Employer-maintained e-mail address; and (d) by publication on a web-site
accessible by the Participant, provided the Participant is notified of
said web-site publication. Any notice, policy and/or procedure provided
through an electronic medium will only be valid if the electronic medium
which is used is reasonably designed to provide the notice, policy and/or
procedure in a manner no less understandable to the Participant than a
written document, and under such medium, at the time the notice, policy
and/or procedure is provided, the Employee may request and receive the
notice, policy and/or procedure on a written paper document at no
charge.
|
8.7
|
Employment
of Agents and Counsel
.
The Administrator may
appoint actuaries, accountants, custodians, counsel, agents, consultants,
service companies and other persons deemed necessary or desirable in the
administration and operation of the Plan. Any person or company so
appointed will exercise no discretionary authority over investments or the
disposition of Trust assets, and their services and duties will be
ministerial only and will be to provide the Plan with those things
required by law or by the terms of the Plan without in any way exercising
any fiduciary authority or responsibility under the Plan. The duties of a
third party Administrator will be to safe-keep the records for all
Participants and to prepare all required actuarial services and disclosure
forms under the supervision of the Administrator and any Fiduciaries of
the Plan. It is expressly stated that the third party Administrator's
services are only ministerial in nature and that under no circumstances
will such third party Administrator (a) exercise any discretionary
authority whatsoever over Plan Participants, Plan investments, or Plan
benefits; or (b) be given any authority or discretion concerning the
management and operation of the Plan that would cause them to become
Fiduciaries of the Plan.
|
8.8
|
Compensation
and Expenses
.
The Administrator may
receive such compensation as agreed upon between the Sponsoring Employer
and the Administrator, but any person who already receives full-time pay
from the Employer may not receive any fees from the Plan for services to
the Plan as Administrator or in any other capacity, except for
reimbursement for expenses actually and properly incurred. The Sponsoring
Employer will pay all "settlor" expenses (as described in DOL Advisory
Opinion 2001-01-A) incurred by the Administrator, the Committee or any
party appointed under Section 8.7 in the performance of their duties. The
Sponsoring Employer may, but is not required to pay, all "non-settlor"
expenses incurred by the Administrator, the Committee, or any party
appointed under Section 8.7 in the performance of their duties. Any
"non-settlor" expenses incurred by the Administrator, the Committee or any
party appointed under Section 8.7 that the Sponsoring Employer elects not
to pay will be reimbursed from Trust Fund assets. Any expenses paid from
the Trust Fund will be charged to each Adopting Employer in the ratio that
each Adopting Employer's Participants' Accounts bears to the total of all
the Participants' Accounts maintained by this Plan, or in any other
reasonable method elected by the
Administrator.
|
8.9
|
Claims
Procedures
.
The claims procedure
required under §503 of ERISA and the regulations thereunder is set forth
in a written policy established by the Administrator. Such policy will be
the sole and exclusive remedy for an Employee, Participant or Beneficiary
("Claimant") to make a claim for benefits under the
Plan.
|
8.10
|
Qualified
Domestic Relations Orders
.
Whether a domestic
relations order is a Qualified Domestic Relations Order will be determined
in accordance with a written policy established by the
Administrator.
|
8.11
|
Appointment
of Investment Manager
.
The Administrator,
with the consent of the Employer, may appoint an Investment Manager to
manage and control the investment of all or any portion of the Trust. Each
Investment Manager will be a person (other than the Trustee) who (a) has
the power to manage, acquire, or dispose of Plan assets, (b) is an
investment adviser, a bank, or an insurance company as described in ERISA
§3(38)(B), and (c) acknowledges fiduciary responsibility to the Plan in
writing. The Administrator will enter into an agreement with the
Investment Manager specifying the duties and compensation of the
Investment Manager and specifying any other terms and conditions under
which the Investment will be retained. The Trustee is not liable for any
act or omission of an Investment Manager and is not liable for following
an Investment Manager's advice with respect to duties delegated by the
Administrator to the Investment Manager. The Administrator can determine
the portion of the Plan's assets to be invested by a designated Investment
Manager and can establish investment objectives and guidelines for the
Investment Manager to follow.
|
9.1
|
Appointment,
Resignation, Removal and Succession
.
This Plan will have
one or more individual Trustees, a corporate Trustee, or any combination
thereof, appointed as follows:
|
|
(a)
|
Appointment.
Each Trustee will be appointed and will serve until a successor has been
named or until such Trustee's resignation, death, incapacity, or removal,
in which event the Sponsoring Employer will name a successor Trustee. The
term Trustee will include the original and any successor
Trustees.
|
|
(b)
|
Resignation.
A Trustee may resign at any time by giving written notice to the
Sponsoring Employer, unless such notice is waived by the Sponsoring
Employer. The Sponsoring Employer may remove a Trustee at any time by
giving such Trustee written notice. Such removal may be with or without
cause. Unless waived in writing by the Sponsor, if any Trustee who is an
Employee or an elected or appointed official resigns or terminates
employment with the Sponsoring Employer or an Adopting Employer, such
termination will constitute an immediate resignation as a Trustee of the
Plan.
|
|
(c)
|
Successor
Trustee.
Each successor Trustee will succeed to the title to the
Trust by accepting the appointment in writing and by filing such
acceptance with the former Trustee and the Sponsoring Employer. The former
Trustee, upon receipt of such acceptance, will execute all documents and
perform all acts necessary to vest the Trust Fund's title of record in any
successor Trustee. No successor Trustee will be personally liable for any
act or failure to act of any predecessor
Trustee.
|
|
(d)
|
Merger.
If a corporate Trustee, before or after qualification, changes its name,
consolidates or merges with another corporation, or otherwise reorganizes,
any resulting corporation which succeeds to the fiduciary business of such
Trustee will become a Trustee hereunder in lieu of such corporate
Trustee.
|
9.2
|
Investment
Alternatives of the Trustee
.
The Trustees will
implement an investment program to accomplish the Employer's other
investment objectives. In addition to powers given by law, the Trustees
may:
|
|
(a)
|
Property.
Invest in any form of property, including common and preferred stocks,
exchange covered call options, bonds, money market instruments, mutual
funds, savings accounts, certificates of deposit, Treasury bills,
insurance policies and contracts, or in any other property, real or
personal, foreign or domestic, having a ready market including securities
issued by an institutional Trustee and/or affiliate of such Trustee. An
institutional Trustee may invest in its own deposits if they bear a
reasonable interest rate. The Trustee may retain, manage, operate, repair,
improve and mortgage or lease for any period on such terms as it deems
proper any real estate or personal property held by the Trustee, including
the power to demolish any building or other improvements in whole or part.
The Trustee may erect buildings or other improvements, make leases that
extend beyond the term of this Trust, and foreclose, extend, renew,
assign, release or partially release and discharge mortgages or other
liens.
|
|
(b)
|
Pooled
Funds.
The Trustee may transfer any assets of the Trust Fund to a
collective trust established to permit the pooling of funds of separate
pension and profit-sharing trusts or to any other common, collective, or
commingled trust fund which has been or may hereafter be established and
maintained by the Trustee and/or affiliates of an institutional Trustee.
Such commingling of assets of the Fund with assets of other qualified
trusts is specifically authorized, and to the extent of the investment of
the Trust Fund in such a group or collective trust, the terms of the
instrument establishing the group or collective trust will be a part
hereof as though set forth herein.
|
|
(c)
|
Cash
Reserves.
The Trustee may retain in cash as much of the Trust Fund
as the Trustee may deem advisable to satisfy the liquidity needs of the
Plan and to deposit any cash held in the Trust Fund in a bank account
without liability for the highest rate of interest available. If a bank is
acting as Trustee, such Trustee is specifically given authority to invest
in deposits of such Trustee. The Trustee may also hold cash un-invested at
any time and from time to time and in such amount or to such extent as the
Trustee deems prudent, and the Trustee will not be liable for any losses
which may be incurred as the result of the failure to invest same, except
to the extent that may otherwise be provided
herein.
|
|
(d)
|
Reorganizations.
The Trustee may join in or oppose the reorganization, recapitalization,
consolidation, sale or merger of corporations or properties, upon such
terms as the Trustee deems wise.
|
|
(e)
|
Registration
of Securities.
The Trustee may cause any securities or other
property to be registered in the Trustee's own name or in the name of the
Trustee's nominee or nominees, and may hold any investments in bearer
form, but the records of the Trustee will at all times show such
investments as part of the Trust.
|
|
(f)
|
Proxies.
The Trustee may vote proxies and if appropriate pass them on to any
investment manager which may have directed the investment in the equity
giving rise to the proxy.
|
|
(g)
|
Ownership.
The Trustee may exercise all ownership rights with respect to any assets
held in the Trust.
|
|
(h)
|
Other
Investments.
The Trustee may accept and retain for such time as the
Trustee deems advisable any securities or other property received or
acquired as Trustee, whether or not such securities or property would
normally be purchased as investments
hereunder.
|
|
(i)
|
Loans
to the Trust.
The Trustee may borrow or raise money for purposes of
the Plan in such amounts, and upon such terms and conditions, as the
Trustee deems advisable; and for any sum so borrowed, the Trustee may
issue a promissory note as Trustee, and secure repayment of the loan by
pledging all, or any part, of the Trust Fund as collateral. No person
lending money to the Trustee will be bound to see to the application of
the money lent or to inquire into the validity or propriety of any
borrowing.
|
|
(j)
|
Agreements
With Banks.
The Trustee may with the consent of the Sponsoring
Employer and upon such terms as they in their discretion deem necessary,
enter into an agreement with a bank or trust company providing for (a) the
deposit of all or part of the funds and property of the Trust with such
bank or trust company, (b) the appointment of such bank or trust company
as the agent or custodian of the Trustees for investment purposes, with
such discretion in investing and reinvesting the funds of the Trust as the
Trustees deem it necessary or desirable to
delegate.
|
|
(k)
|
Litigation.
The Trustee may begin, maintain, or defend any litigation necessary in
connection with the administration of the Plan, except that the Trustee
will not be obliged or required to do so unless indemnified to its
satisfaction.
|
|
(l)
|
Claims,
Debts and Damages.
The Trustee may settle, compromise, or submit to
arbitration any claims, debts, or damages due or owing to or from the
Plan.
|
|
(m)
|
Margin
Accounts, Options and Commodities.
The Trustee may borrow on
margin, buy options, write covered options, options spreads/straddles, and
engage in future/commodities
trading.
|
|
(n)
|
Miscellaneous.
The Trustee may do all such acts and exercise all such rights, although
not specifically mentioned herein, as the Trustee deems necessary to carry
out the purposes of the Plan. The Trustee will not be restricted to
securities or other property of the character expressly authorized by
applicable law for trust investments, subject to the requirement that the
Trustee discharge his duties with the care, skill, prudence, and
diligence, under the circumstances then prevailing, that a prudent man
acting in a like capacity and familiar with such matters would use in the
conduct of an enterprise of similar character and with similar aims by
diversifying the investments to minimize the risks of large losses unless
under the circumstances it is clearly prudent not to do
so.
|
9.3
|
Valuation
of the Trust
.
On each Valuation
Date, the Trustee will determine the net worth of the Trust Fund. The fair
market value of securities listed on a registered stock exchange will be
the prices at which they were last traded on such exchange preceding the
close of business on the Valuation Date. If the securities were not traded
on the Valuation Date, or if the exchange on which they are traded was not
open for business on the Valuation Date, the securities will be valued at
the prices at which they were last traded prior to the Valuation Date. An
unlisted security will be valued at its bid price next preceding the close
of business on the Valuation Date, which bid price will be obtained from a
registered broker or an investment banker. To determine the fair market
value of Company Stock for which trading or bid prices cannot be obtained,
the Trustee must use an independent appraiser who meets the requirements
of regulations prescribed under Code §170(a)(1). To determine the fair
market value of assets other than securities for which trading or bid
prices can be obtained, the Trustee may use any reasonable method to
determine the value of such assets, or may elect to employ one or more
appraisers for that purpose and rely on the values established by such
appraiser or appraisers.
|
9.4
|
Compensation
and Expenses
.
The Trustee will be
reimbursed for all of its expenses, either from the Trust Fund
or the Sponsoring Employer, and will be paid reasonable compensation as
agreed upon from time to time with the Sponsoring Employer; but no person
who receives full-time pay from the Employer will receive any fees for
services to the Plan as Trustee or in any other capacity, except for
reimbursement of expenses properly and actually incurred. Any expenses
paid from the Trust will be charged to each Adopting Employer in the ratio
that each Adopting Employer's Participants' Accounts bears to the total of
all the Participants' Accounts maintained by this Plan, or in any other
reasonable method elected by the
Administrator.
|
9.5
|
Payments
From the Trust Fund
.
The Trustee will pay
Plan benefits and other payments as the Administrator directs, and the
Trustee will not be responsible for the propriety of such payments. Any
payment made to a Participant, or a Participant's legal representative or
Beneficiary in accordance with the terms of the Plan will, to the extent
of such payment, be in full satisfaction of all claims arising against the
Trust, the Trustee, the Employer, and the Plan Administrator. Any payment
or distribution made from the Trust is contingent on the recipient
executing a receipt and release acceptable to the Trustee, Administrator,
or Employer.
|
9.6
|
Payment
of Taxes
.
The Trustee will pay all taxes of the Trust Fund, including property,
income, transfer and other taxes which may be levied or assessed upon or
in respect of the Trust Fund or any money, property or securities forming
a part of the Trust Fund. The Trustee may withhold from distributions to
any payee such sum as the Trustee may reasonably estimate as necessary to
cover federal and state taxes for which the Trustee may be liable, which
are, or may be, assessed with regard to the amount distributable to such
payee. Prior to making any payment, the Trustee may require such releases
or other documents from any lawful taxing authority and may require such
indemnity from a payee or distributee as the Trustee deems
necessary.
|
9.7
|
Accounts,
Records and Reports
.
The Trustee will keep
accurate records reflecting its administration of the Trust and will make
them available to the Administrator for review and audit. At the request
of the Administrator, the Trustee will, within 90 days of such request,
file with the Administrator an accounting of its administration during
such period or periods as the Administrator determines. The Administrator
will review the accounting and notify the Trustee within 90 days if the
report is disapproved, providing the Trustee with a written description of
the items in question. The Trustees will have 60 days to provide the
Administrator with a written explanation of the items in question. If the
Administrator again disapproves of the report, the Trustee will file its
accounting in a court of competent jurisdiction for audit and
adjudication.
|
9.8
|
Employment
of Agents and Counsel
.
The Trustee may employ
such agents, counsel, consultants, or service companies as it deems
necessary and may pay their reasonable expenses and compensation. The
Trustee will not be liable for any action taken or omitted by the Trustee
in good faith pursuant to the advice of such agents and counsel. Any
agent, counsel, consultant, service company and/or its successors will
exercise no discretionary authority over investments or the disposition of
Trust assets, and their services and duties will be ministerial only and
will be to provide the Plan with those things required by law or by the
terms of the Plan without in any way exercising any fiduciary authority or
responsibility under the Plan.
|
9.9
|
Division
of Duties and Indemnification
.
The division of duties
and the indemnification of the Trustees of this Plan will be governed by
the following provisions:
|
|
(a)
|
No
Guarantee Against Loss.
The Trustees will have the authority and
discretion to manage and control the Trust Fund to the extent provided in
this instrument, but they do not guarantee the Trust Fund in any manner
against investment loss or depreciation in asset value, or guarantee the
adequacy of the Fund to meet and discharge all or any liabilities of the
Plan. Furthermore, the Trustees will not be liable for the making,
retention or sale of any investment or reinvestment made by it, as herein
provided, or for any loss to or diminution of the Trust Fund, or for any
other loss or damage which may result from the discharge of its duties
hereunder, except to the extent it is judicially determined that the
Trustees have failed to exercise the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent person acting in a
like capacity and familiar with such matters would use in the conduct of
an enterprise of a like character and like
aims.
|
|
(b)
|
Representations
of the Sponsoring Employer.
The Sponsoring Employer warrants that
all directions issued to the Trustees by it or the Plan Administrator will
be in accordance with the terms of the
Plan.
|
|
(c)
|
Directions
by Others.
The Trustees are not answerable for an action taken
pursuant to any direction, consent, certificate, or other paper or
document on the belief that the same is genuine and signed by the proper
person. All directions by the Sponsoring Employer, a Participant or
Administrator must be in writing. The Administrator will deliver to the
Trustee (1) certificates evidencing the individual or individuals
authorized to act as the Administrator and (2) specimens of their
signatures.
|
|
(d)
|
Duties
and Obligations Limited by the Plan.
The duties and obligations of
the Trustee are limited to those expressly imposed upon it by the Plan or
subsequently agreed upon by the parties. Responsibility for administrative
duties required under the Plan or applicable law not expressly imposed
upon or agreed to by the Trustee, will rest solely with the Sponsoring
Employer and Administrator.
|
|
(e)
|
Indemnification
of the Trustees.
The Trustees will be indemnified and saved
harmless from and against any and all liability to which the Trustees may
be subjected, including all expenses reasonably incurred in its defense,
for any action or failure to act resulting from compliance with the
instructions of the Sponsoring Employer, the employees or agents of the
Sponsoring Employer, the Plan Administrator, or any other fiduciary to the
Plan, and for any liability arising from the actions or non-actions of any
predecessor Trustees or other fiduciary of the
Plan.
|
|
(f)
|
Trustees
Not Responsible for Application of Payments.
The Trustees will not
be responsible in any way for the application of any payments it is
directed to make or for the adequacy of the Fund to meet and discharge any
and all liabilities under the Plan.
|
|
(g)
|
Multiple
Trustees.
If more than one Trustee is appointed any single Trustee
may act independently in undertaking any act or transaction on behalf of
the Trust unless the Trustees have agreed by a majority vote of their
number that a particular action, including signing documents or checks,
must be approved by a majority vote before it can be
undertaken.
|
|
(h)
|
Trustees
as Participants or Beneficiaries.
Trustees will not be prevented
from receiving any benefits to which they may be entitled as Participants
or Beneficiaries as long as the benefits are computed and paid on a basis
consistent with the terms of the Plan as applied to other Participants and
Beneficiaries.
|
|
(i)
|
Limitation
of Liability.
No Trustee will be liable for the act of any other
Trustee or fiduciary unless the Trustee has knowledge of such
act.
|
|
(j)
|
No
Self-Dealing.
The Trustees will not (1) deal with the assets of the
Trust in their own interest or for their own account; (2) in their
individual or in any other capacity, act in any transaction involving the
Trust on behalf of a party (or represent a party) whose interests are
adverse to the interests of the Plan, or its Participants or
Beneficiaries; or (3) receive any consideration for their own personal
accounts from any party dealing with the Plan in connection with a
transaction involving assets of the
Trust.
|
9.10
|
Investment
Manager
.
The Trustee is not liable for acts or omissions of an Investment Manager
appointed by the Administrator under Section 8.11, and the Trustee is not
liable for following the advice of an Investment Manager with respect to
any duties delegated by the Administrator to the Investment
Manager.
|
9.11
|
Exclusive
Benefit Rule
.
All contributions made
by the Employer to the Trust Fund will be used for the exclusive benefit
of the Participants and their Beneficiaries and will not be used for nor
diverted to any other purpose except the payment of the costs of
maintaining the Plan.
|
9.12
|
Voting
Company Stock
.
The Trustee will vote all Company Stock held by it at such time and
in such manner as the Trustee decides, subject to the following
provisions:
|
|
(a)
|
Company
Stock Pledged As Security.
If any agreement entered into by the
Trustee provides for voting of any Company Stock pledged as security for
any obligation of the Plan, such Company Stock will be voted in accordance
with such agreement. If a Participant has the right to direct
the Trustee as to the manner in which Company Stock allocated to his
Company Stock Account is to be voted and such Participant fails or refuses
to give the Trustee timely instructions (or such instructions are
invalidated for any reason) as to how to vote any Company Stock as to
which the Trustee otherwise has the right to vote, the Trustee may not
exercise its power to vote such Company
Stock.
|
|
(b)
|
Registration-Type
Stock.
Notwithstanding paragraph (a), each Participant may direct
the Trustee as to the manner in which Company Stock allocated to his or
her Company Stock Account is to be voted provided such Company Stock is a
registration-type class of security (as defined in section 12 of the
Securities Exchange Act of 1934).
|
|
(c)
|
Non-Registration-Type
Stock.
With respect to Company Stock that is not a
registration-type class of security, each Participant may direct the
Trustee as to the manner in which Company Stock which is allocated to his
or her Company Stock Account is to be voted on any corporate matter which
involves the voting of such stock with respect to the approval or
disapproval of any corporate merger or consolidation, recapitalization,
reclassification, liquidation, dissolution, sale of substantially all
assets of a trade or business, or such similar transaction as may be
prescribed in Treasury regulations.
|
9.13
|
Application
of Cash
.
Employer contributions made to the Plan in cash and other cash
received by the Trustee will first be applied to pay Current
Obligations.
|
9.14
|
Restrictions
on Company Stock Transactions
.
The Plan may not
obligate itself to acquire Company Stock from a particular holder thereof
at an indefinite time determined upon the happening of an event such as
the death of the holder. Furthermore, the Plan may not obligate itself to
acquire Company Stock under a put option binding upon the
Plan. However, the Plan may be given an option to assume, at the time
a put option is exercised, the rights and obligations of the Employer
under a put option binding upon the Employer. In addition, all purchases
of Company Stock will be made at a price which, in the judgment of the
Administrator, does not exceed the fair market value thereof. All sales of
Company Stock will be made at a price which, in the judgment of the
Administrator, is not less than the fair market value
thereof.
|
9.15
|
Exempt
Loans
.
All
loans to the Plan made or guaranteed by a disqualified person must satisfy
all requirements applicable to Exempt Loans set forth in regulation
§54.4975-7(b)(4) to §54.4975-7(b)(7), regulation
§54.4975-7(b)(13), and Department of Labor regulation §2550.408b-3, and
all provisions of those regulations applicable to Company Stock purchased
with the proceeds of an Exempt Loan or which is used as collateral for an
Exempt Loan must be complied with, including, but not limited to, the
following provisions:
|
|
(a)
|
Definition
of "Disqualified Person."
For purposes of this Section, a
"disqualified person" is any person who is a disqualified person or party
in interest under ERISA.
|
|
(b)
|
Types
of Loans and Guarantees.
A loan for purposes of this Section
includes a direct loan of cash, a purchase-money transaction, or an
assumption of the obligation of the Trust. A guarantee for purposes of
this Section includes an unsecured guarantee and the use of assets of a
disqualified person as collateral for a loan, even though the use of
assets may not be a guarantee under applicable state
law.
|
|
(c)
|
Interest
Rate.
An Exempt Loan must provide for a reasonable rate of
interest. However, the interest rate and the price of the Company Stock
purchased with the proceeds of an Exempt Loan must not be such that Plan
assets can be drained off.
|
|
(d)
|
Loan
Must Primarily Benefit Participants and Beneficiaries.
An Exempt
Loan must primarily be for the benefit of Plan Participants and their
Beneficiaries.
|
|
(e)
|
Use
of Proceeds.
The proceeds of an Exempt Loan must be used within a
reasonable time to acquire Company Stock, to repay the Exempt Loan, or to
repay prior Exempt Loans. The proceeds of a new loan used to repay a prior
Exempt Loan must also satisfy the other requirements of this
Section.
|
|
(f)
|
Put
Option.
Except for the put option described in Section 5.18 of the
Plan, no Company Stock acquired with the proceeds of an Exempt Loan may be
subject to a put, call or other option, or a buy-sell or other arrangement
while held by, or when distributed, from the Plan, whether or not the Plan
has continued to operate as an employee stock ownership
plan.
|
|
(g)
|
Liability
of Plan to Loan Payee.
No person who is entitled to payment under
an Exempt Loan will have any right to (1) the assets of the Plan, other
than to the collateral given for the Exempt Loan; (2) any contributions,
other than contributions of Company Stock, made to the Plan to repay the
Exempt Loan; and (3) earnings attributable to such collateral and the
investment of such contributions.
|
|
(h)
|
Maximum
Annual Repayment.
Payments made during the Plan Year with respect
to an Exempt Loan cannot exceed an amount equal to the sum of the
contributions and earnings received during or prior to the Plan Year, less
such payments made in prior Plan Years. In addition, such contributions
and earnings must be accounted for separately until such time as the
Exempt Loan is repaid in full.
|
|
(i)
|
Default.
In the event of a default on an Exempt Loan, the value of Plan assets
transferred in satisfaction of the loan cannot exceed the amount of
default. If a lender is a "disqualified person," an Exempt Loan must
provide for a transfer of Plan assets upon default only upon and to the
extent of the failure of the Plan to meet the payment schedule of the
loan. For purposes hereof, the making of a guarantee does not make a
person a lender.
|
9.16
|
Diversification
Rights of Qualified Participants
.
Notwithstanding any
provision in the Plan to the contrary, a Qualified Participant will be
permitted to direct the Trustee as to the investment of amounts credited
to his or her Company Stock Account in accordance with the following
provisions:
|
|
(a)
|
Definitions.
For purposes of this Section, the term Qualified Election Period means the
six-Plan Year period beginning with the Plan Year in which the Participant
first becomes a Qualified Participant; and the term Qualified Participant
means a Participant who has attained Age 55 and who has been a Participant
in the Plan for at least ten years.
|
|
(b)
|
Method
of Direction.
The Participant's direction will be provided to the
Administrator in writing, and will be effective no later than 180 days
after the close of the Plan Year to which the direction
applies.
|
|
(c)
|
Determining
the Amount Subject to Diversification.
A Participant's rights under
this Section will be limited to 25% of the balance in his or her Company
Stock Account attributable to Company Stock acquired after December 31,
1986, within 90 days after the last day of each Plan Year, during the
Participant's Qualified Election Period. Within 90 days after the close of
the last Plan Year in a Participant's Qualified Election Period, a
Qualified Participant may direct the investment of 50% of the value of
such Company Stock Account. The portion of a Participant's Company Stock
Account attributable to Company Stock acquired by the Plan after December
31, 1986 will be determined by multiplying the number of shares of such
stock held in the Participant's Account by a fraction, the numerator of
which is the number of such shares acquired after December 31, 1986 and
allocated to Participants' Company Stock Accounts (not to exceed the
number of shares held by the Plan on the date of distribution) and the
denominator of which is the total number of such shares of Company Stock
held by the Plan on the date the individual becomes a Qualified
Participant. Company Stock not readily tradeable must be valued by an
independent appraiser before
diversification.
|
|
(d)
|
Exception
For Small Accounts.
Notwithstanding paragraph (b), if the fair
market value of a Qualified Participant's Company Stock Account is $500 or
less on the Valuation Date immediately preceding the first day the
Qualified Election Period, then such Company Stock Account will not be
subject to the diversification rights under this Section. In determining
if the fair market value exceeds $500, Company Stock held in all employee
stock ownership plans and tax credit employee stock ownership plans
maintained by the Employer or any Affiliated Employer will be considered
as held by the Plan.
|
|
(e)
|
Investment
Options.
Subject to a written policy adopted the Administrator, the
portion of a Qualified Participant's Company Stock Account covered by the
diversification election in this Section will either (1) be distributed to
the Qualified Participant within 90 days after the last day of the period
in which the election can be made, but any part of such distribution
consisting of Company Stock will be subject to the put option requirements
of the Plan, and the entire such distribution, if it is in excess of
$5,000, will be subject to the consent requirements under Section 5.8; (2)
be transferred no later than 90 days after the last day of the period in
which the election can be made to another qualified defined contribution
plan of the Employer that accepts such transfers, provided such plan
permits Employee-directed investments in at least three distinct
investment options and does not invest in Company Stock to a substantial
degree; or (3) be invested, at the election of the Qualified Participant,
in one or more alternative investments, provided that if the Administrator
elects to offer this option as part of the written policy adopted
hereunder, the Plan must provide at least three distinct investment
options.
|
9.17
|
Superseding
Trust or Custodial Agreement
.
If any Trust assets
are invested in a separate trust or custodial account maintained by a
Trustee or custodian, the provisions of the separate trust or custodial
agreement will supersede all provisions of this Article with respect such
assets except, in the absence of a specific provision in such separate
trust or custodial agreement regarding the valuation of securities held by
the Trust, Section 9.4. If such separate trust or custodial account should
for any reason fail, be found invalid or terminate prior to the
termination of this Plan and the distribution of all the assets hereof,
this Article 10 will be deemed to have again become effective immediately
prior to such failure, invalidity or
termination.
|
10.1
|
Plan
Contributions
.
Unless otherwise
agreed to by the parties, or unless otherwise required by law, no Employer
will have any obligation to make contributions to this Plan for or on
behalf of the Employees of any other Employer. If an Employee is employed
by more than one Employer, any contributions made on his or her behalf
will be prorated between those Employers on the basis of Compensation
received from each Employer. If any Employer is unable to make a
contribution for any Plan Year, any Employer which is an Affiliated
Employer of such Employer may make an additional contribution to the Plan
on behalf of any Employee of the non-contributing
Employer.
|
10.2
|
Plan
Amendments
.
Any amendment to this Plan that is adopted by the Sponsoring
Employer, at any time, will be deemed to be accepted by any Adopting
Employer.
|
10.3
|
Plan
Expenses
.
Any
expenses paid from the Trust will be charged to each Adopting Employer in
the ratio that each Adopting Employer's Participants' Accounts bears to
the total of all the Participants' Accounts maintained by this Plan, or in
any other reasonable method elected by the
Administrator.
|
10.4
|
Employee
Transfers
.
An Employee's transfer to or from an Employer or Adopting Employer will
not affect his or her Participant's Account balance and total Years of
Service or Periods of Service.
|
10.5
|
Multiple
Employer Provisions Under Code §413(c)
.
Notwithstanding any
other provision in the Plan, unless the Plan is a collectively bargained
plan under Regulation §1.413-1(a), the following provisions apply to any
Adopting Employer that is not also an Affiliated
Employer:
|
|
(a)
|
Instances
of Separate Employer Testing.
Employees of any such Adopting
Employer will be treated separately for testing under Code §401(a)(4),
§401(k), §401(m) and, if the Sponsoring Employer and the Adopting Employer
do not share Employees, Code §416. Furthermore, the terms of Code §410(b)
will be applied separately on an employer-by-employer basis by the
Sponsoring Employer(and the Adopting Employers which are part of the
Affiliated Group which includes the Sponsoring Employer) and each Adopting
Employer that is not an Affiliated Employer of the Sponsoring Employer,
taking into account the generally applicable rules described in Code
§401(a)(5), §414(b) and §414(c).
|
|
(b)
|
Instances
of Single Employer Testing.
Employees of the Adopting Employer will
be treated as part of a single Employer plan for purposes of eligibility
to participate under Article 2 and under the provisions of Code §410(a).
Furthermore, the terms of Code §411 relating to Vesting will be applied as
if all Employees of all such Adopting Employers and the Sponsoring
Employer were employed by a single Employer, except that the rules
regarding Breaks in Service will be applied under such Regulations as may
be prescribed by the Secretary of
Labor.
|
|
(c)
|
Common
Trust.
Contributions made by any such Adopting Employer will be
held in a common Trust Fund with contributions made by the Sponsoring
Employer, and all such contributions will be available to pay the benefits
of any Participant (or Beneficiary thereof) who is an Employee of the
Sponsoring Employer or any such Adopting
Employer.
|
|
(d)
|
Common
Disqualification Provision.
The failure of either the Sponsoring
Employer or any such Adopting Employer to satisfy the qualification
requirements under the provisions of Code §401(a), as modified by the
provisions of Code §413(c), will result in the disqualification of the
Plan for all such Employers maintaining the
Plan.
|
|
(e)
|
Plan
Becomes Individually Designed.
If the combination of the Sponsoring
Employer and/or any Adopting Employer creates a multiple employer plan as
that term is defined in Code §413(c), this Plan will be deemed to be an
individually designed plan.
|
10.6
|
Termination
of Adoption
.
An Adopting Employer
may terminate participation in the Plan by delivering written notice to
the Sponsoring Employer, to the Administrator and to the Trustee (but in
accordance with Article 11, only the Sponsoring Employer can terminate the
Plan). Upon any such termination of adoption by an Adopting Employer, the
Adopting Employer may request a transfer of Trust Fund assets attributable
to its Employees from this Plan to any successor qualified retirement plan
maintained by the Adopting Employer or its successor. If such request is
not made, or if the Administrator refuses to make the transfer because in
its considered opinion such transfer would operate to the detriment of any
Participant, jeopardize the continued qualification of the Plan, or not
comply with any requirements of the Internal Revenue Service, Participants
who are no longer Employees because an Adopting Employer terminates its
Plan participation will only be entitled to the commencement of their
benefits in accordance with Section 10.7
below.
|
10.7
|
Payment
of Benefits Upon Termination of Participation
.
If Plan assets
attributable to a terminated Adopting Employer are not transferred to
another qualified retirement plan for any of the reasons described in
Section 10.6, Participants who are no longer Employees because of such
termination of adoption will only be entitled to the commencement of their
benefits as follows: (1) in the case of Participants who are no longer
Employees and the terminated Adopting Employer is an Affiliated Employer
of the Sponsoring Employer, in accordance with Article 5 after their
retirement, death, Disability or other termination of employment from the
Adopting Employer or former Adopting Employer; and (2) in the case of
Participants who are no longer Employees and the terminated Adopting
Employer is not an Affiliated Employer of the Sponsoring Employer, within
a reasonable time thereafter as if the Plan had been terminated under
Section 11.2.
|
11.1
|
Plan
Amendment
.
The Plan can be amended at any time in accordance with the following
provisions:
|
|
(a)
|
Manner
of Amendment.
Any amendments can be made by either (1) substituting
pages with the new elections (or new addendum) and executing an "Amendment
By Page Substitution" and attaching it as part of the Plan; (2) by
executing an "Amendment By Section Replication" in which the section or
sections (or addendum or addendums) to be changed are reproduced with the
new elections indicated, and attaching it as part of the Plan; or (3) by
executing a properly worded corporate resolution and attaching it as part
of the Plan.
|
|
(b)
|
General
Requirements.
An amendment must be in writing. However, no
amendment or modification (1) can increase the responsibilities of the
Trustee or Administrator without their written consent; (2) can deprive
any Participant or Beneficiary of the benefits to which he is entitled
from the Plan; (3) can result in a decrease in the amount of any
Participant's Account except as may be permitted under the terms of Code
§412(c)(8) if applicable; or (4) can, except as otherwise provided, permit
any part of the Trust Fund (other than as required to pay taxes and
administration expenses) to be used for or diverted to purposes other than
the exclusive benefit of the Participants or their Beneficiaries, or cause
or permit any portion of the Trust Fund to revert to or become the
property of the Employer. In addition, unless the provisions of paragraph
(e) are satisfied, no amendment to the Plan will have the effect of
eliminating or restricting the ability of a Participant or other payee to
receive payment of his or her Account balance or benefit entitlement under
a particular optional form of benefit provided under the Plan. Any
amendment to the Plan by the Sponsoring Employer under this Section also
applies to any Affiliated Employer that participates under the Plan as an
Adopting Employer. The Sponsoring Employer's amendment of the Plan from
one type of defined contribution plan (e.g., a money purchase plan) into
another type of defined contribution plan (e.g., a profit sharing plan)
will not result in a partial termination or any other event that would
require full vesting of some or all Plan
Participants
|
|
(c)
|
Certain
Corrective Amendments.
In order to satisfy the minimum coverage
requirements of Code §410(b), the nondiscriminatory amount requirement of
Regulation §1.401(a)(4)-1(b)(2) or the nondiscriminatory plan amendment
requirement of Regulation §1.401(a)(4)-1(b)(4), a corrective amendment or
change of the choice of options in the Plan may retroactively increase
allocations for Employees who benefited under the Plan during the Plan
Year being corrected, or may grant allocations to Employees who did not
benefit under the Plan during the Plan Year being corrected. To satisfy
the nondiscriminatory current availability requirement of Regulation
§1.401(a)(4)-4(b) for benefits, rights or features, a corrective amendment
or change of the choice of options in Plan may make a benefit, right or
feature available to Employees to whom it was previously not available. A
corrective amendment or change of the choice of options in the Plan will
not be effective prior to the date of adoption unless it satisfies the
applicable requirements of Regulation §1.401(a)(4)-11(g)(3)(ii) through
(vii), including the requirement that, in order to be effective for the
preceding Plan Year, such amendment or change of the choice of options in
the Plan must be adopted by the 15th day of the 10th month after the close
of the preceding Plan Year.
|
11.2
|
Termination
By Sponsoring Employer
.
The Sponsoring
Employer at any time can terminate the Plan and Trust in whole or in part
in accordance with the following
provisions:
|
|
(a)
|
Termination
of Plan.
The Sponsoring Employer can terminate the Plan and Trust
by filing written notice thereof with the Administrator and Trustee and by
completely discontinuing contributions to the Plan. Upon any such
termination, the Trust Fund will continue to be administered until
distribution has been made to the Participants and other payees, which
distribution must occur as soon as administratively feasible after the
termination of the Plan, and must be made in accordance with the
provisions of Article 5 of the Plan. However, the Administrator may elect
not to distribute the Accounts of Participants and other payees upon
termination of the Plan but instead to transfer the entire Trust Fund
assets and liabilities attributable to this terminated Plan to another
qualified plan maintained by the Employer or its
successor.
|
|
(b)
|
Vesting
Requirement.
Upon complete termination of the Plan, or upon a
complete discontinuance of contributions to the Plan, any Participant who
is affected by such termination, any Participant who has not terminated
employment, and any Participant who has terminated employment but has not
incurred five consecutive Breaks in Service, will have a 100% Vested
Interest in his or her unpaid Participant's Account. Upon partial
termination of the Plan, only a Participant who has terminated employment
because of the event which caused the partial termination but who has not
incurred five consecutive Breaks in Service will automatically have a 100%
Vested Interest in his or her unpaid Participant's Account to the date of
partial termination.
|
|
(c)
|
Discontinuance
of Contributions.
The Sponsoring Employer may at any time
completely discontinue contributions to the Plan but continue the Plan in
operation in all other respects, in which event the Trust will continue to
be administered until eventual distribution of all benefits has been made
to the Participants and other payees in accordance with Article 5 after
their death, retirement, Disability or other termination of employment.
Any discontinuance of contributions without a notice of termination from
the Sponsoring Employer to the Administrator and Trustee will not
constitute a Plan termination.
|
11.3
|
Merger
or Consolidation
.
This Plan and Trust
may not be merged or consolidated with, nor may any of its assets or
liabilities be transferred to, any other plan, unless the benefits payable
to each Participant if the Plan was terminated immediately after such
action would be equal to or greater than the benefits to which such
Participant would have been entitled if this Plan had been terminated
immediately before such action. If the Employer acquires another company
in a "Section 410(b)(6)(c) transaction, employees of the acquired company
may be excluded from this Plan regardless of the provisions of Section 2.1
of the Plan during the period beginning on the date of the transaction and
ending on the last day of the Plan Year beginning after the date of the
Transaction. A Section 410(b)(6)(c) transaction is an asset or stock
acquisition, merger, or similar transaction involving a change in the
employer of the employees of a
business.
|
12.1
|
No
Contract of Employment
.
Except as otherwise
provided by law, neither the establishment of this Plan, any modification
hereto, the creation of any fund or account, nor the payment of any
benefits, will be construed as giving any Participant or other person any
legal or equitable rights against the Employer, any officer or Employee
thereof, or the Trustee, except as herein provided. Further, under no
circumstances will the terms of employment of any Participant be modified
or otherwise affected by this Plan.
|
12.2
|
Title
to Assets
.
No Participant or Beneficiary will have any right to, or any interest in,
any assets of the Trust upon separation from service with the Employer,
Affiliated Employer, or Adopting Employer, except as otherwise provided by
the terms of the Plan.
|
12.3
|
Qualified
Military Service
.
Notwithstanding any
other provision of the Plan, contributions, benefits and service credit
with respect to qualified military service will be provided in accordance
with Code §414(u).
|
12.4
|
Fiduciaries
and Bonding
.
Plan Fiduciaries will have only those powers and duties
specifically given to them under the terms of the Plan. Each fiduciary
other than a bank, an insurance company, or a fiduciary of an Employer
which has no common-law employees, will be bonded in an amount not less
than 10% of the amount of funds under such fiduciary's supervision, but
the bond will not be less than $1,000 or more than $500,000 (or any other
amount as required by law). The bond will provide protection to the Plan
against any loss for acts of fraud or dishonesty by a fiduciary acting
alone or in concert with others. The cost of such bond will be an expense
of either the Employer or the Trust, at the election of the Sponsoring
Employer.
|
12.5
|
Severability
of Provisions
.
If any Plan provision
is held invalid or unenforceable, such invalidity or unenforceability will
not affect any other provision of this Plan, and this Plan will be
construed and enforced as if such provision had not been
included.
|
12.6
|
Gender
and Number
.
Words used in the masculine gender will be construed as though they were
also used in the feminine or neuter gender where applicable, and words
used in the singular form will be construed as though they were also used
in the plural form where
applicable.
|
12.7
|
Headings
and Subheadings
.
Headings and
subheadings are inserted for convenience of reference. They constitute no
part of this Plan and are not to be considered in its
construction.
|
12.8
|
Legal
Action
.
In
any claim, suit or proceeding concerning the Plan and/or Trust which is
brought against the Trustee or Administrator, this Plan and Trust will be
construed and enforced according to the laws of the state where
the Sponsoring Employer maintains its principal place of business, to the
extent that is not preempted by ERISA. Furthermore, unless otherwise
prohibited by law, either the Sponsoring Employer or the Trust, in the
sole discretion of the Sponsoring Employer, will reimburse the Trustee
and/or the Administrator for all costs, attorneys fees and other expenses
associated with any such claim, suit or
proceeding.
|
12.9
|
Qualified
Plan Status
.
This Plan and the related Trust Agreement and the related are
intended to be a qualified retirement plan under the provisions of Code
§401(a) and §501(a).
|
12.10
|
Mailing
of Notices to Administrator, Employer or Trustee
.
Notices, documents or
forms required to be given to or filed with the Administrator, Employer or
Committee will be either hand delivered or mailed by first class mail,
postage prepaid, to the Committee or the Employer, at the Employer's
principal place of business. Any notices, documents or forms required to
be given to or filed with the Trustee will be either be hand delivered or
mailed by first class mail, postage prepaid, to the Trustee at its
principal place of business.
|
12.11
|
Participant
Notices and Waivers of Notices
.
Whenever written
notice is required to be given under the terms of this Plan, it will be
deemed to be given on the date such written notice is either hand
delivered to the recipient or deposited at a United States Postal Service
Station, first class mail, postage paid. Notice may be waived by any party
entitled to receive written notice concerning any matter under the terms
of this Plan.
|
12.12
|
No
Duplication of Benefits
.
There will be no
duplication of benefits under the Plan because of employment by more than
one participating Employer.
|
12.13
|
Evidence
Furnished Conclusive
.
Anyone required to
give evidence under the terms of the Plan may do so by certificate,
affidavit, document or other information that the person to act in
reliance may consider pertinent, reliable and genuine, and to have been
signed, made or presented by the proper party or parties. The Plan
Fiduciaries will be fully protected in acting and relying upon any
evidence described under this
Section.
|
12.14
|
Release
of Claims
.
A payment to a Participant or Beneficiary, his or her legal
representative, or to a guardian or committee appointed for such
Participant or Beneficiary, will, to the extent thereof, be in full
satisfaction of all claims hereunder against the Administrator and
Trustee, either of whom may require such Participant, legal
representative, Beneficiary, guardian or committee, as a condition
precedent to such payment, to execute a receipt and release thereof in
such form as determined by the Administrator or
Trustee.
|
12.15
|
Multiple
Copies of Plan And/or Trust
.
This Plan, the related
Trust Agreement and the related may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
will constitute one and the same Agreement or Trust Agreement, as the case
may be, and will be binding on the respective successors and assigns of
the Employer and all other parties.
|
12.16
|
Limitation
of Liability and Indemnification
.
In addition to and in
furtherance of any other limitations provided in the Plan, and to the
extent permitted by applicable law, the Employer will indemnify and hold
harmless its board of directors (collectively and individually), if any,
the Administrative/Advisory Committee (collectively and individually), if
any, and its officers, Employees, and agents against and with respect to
any and all expenses, losses, liabilities, costs, and claims, including
legal fees to defend against such liabilities and claims, arising out of
their good-faith discharge of responsibilities under or incident to the
Plan, excepting only expenses and liabilities resulting from willful
misconduct. This indemnity will not preclude such further indemnities as
may be available under insurance purchased by the Employer or as may be
provided by the Employer under any by-law, agreement, vote of shareholders
or disinterested directors, or otherwise, as such indemnities are
permitted under state law. Payments with respect to any indemnity and
payment of expenses or fees under this Section will be made only from
assets of the Employer, and will not be made directly or indirectly from
assets of the Trust.
|
12.17
|
Written
Elections and Forms
.
Whenever the word
"written" or the words "in writing" are used, such words will include any
method of communication permitted by the DOL with respect to such
documentation. In a similar manner, the word "form" will include any other
method of election permitted under current law. Such alternative methods
will include, but not be limited to, electronic modes to the extent
permitted by law.
|
12.18
|
Assignment
and Alienation of Benefits
.
Except as may
otherwise be permitted under Code §401(a)(13)(C), or as may otherwise be
permitted under a Qualified Domestic Relations Order as provided in
Section 8.10, or as may otherwise be permitted under Section 7.1 relating
to loans to Participants, no right or claim to, or interest in, any part
of the Trust Fund, or any payment therefrom, will be assignable,
transferable, or subject to sale, mortgage, pledge, hypothecation,
commutation, anticipation, garnishment, attachment, execution, or levy of
any kind, and the Trustees will not recognize any attempt to assign,
transfer, sell, mortgage, pledge, hypothecate, commute, or anticipate the
same, except to the extent required by
law.
|
12.19
|
Exclusive
Benefit Rule
.
All contributions made
by the Employer or an Affiliated Employer to the Trust Fund will be used
for the exclusive benefit of the Participants who are Employees of the
Employer or Affiliated Employer and for their Beneficiaries and will not
be used for nor diverted to any other purpose except the payment of the
costs of maintaining the Plan. All contributions made by an Adopting
Employer who is not an Affiliated Employer will be used for the exclusive
benefit of the Participants who are Employees of the Adopting Employer and
for their Beneficiaries and will not be used for nor diverted to any other
purpose except the payment of the Adopting Employers' proportionate costs
of maintaining the Plan.
|
12.20
|
Dual
and Multiple Trusts
.
Plan assets are may be
held in two or more separate trusts, or in trust and by an insurance
company or by a trust and under a custodial agreement. Assets may also be
held in a common trust.
|
The
Bank of South Carolina
|
|
By:
/s/Hugh C. Lane, Jr.
|
|
Hugh
C. Lane, Jr.
|
|
Trustees
|
|
/s/
Hugh C. Lane, Jr.
|
|
Hugh
C. Lane, Jr.
|
|
/s/T.
Dean Harton
|
|
T.
Dean Harton
|
|
/s/Sheryl
G. Sharry
|
|
Sheryl
G. Sharry
|
/s/Janice
B. Stanley
|
|
Janice
B. Stanley
|
|
Corporate
Secretary
|
1.
|
I
have reviewed this Annual Report on Form 10-K of the Bank of South
Carolina Corporation as amended by Amendment No. 1 on Form
10-K/A;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for the periods presented in this
report.
|
4.
|
The
registrant’s other certifying officer (s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal controls over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)), for the registrant and
have:
|
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiary, is made known to us by others within the entity,
particularly during the period in which this report is being
prepared;
|
|
b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
|
d)
|
Disclosed
in this report any changes in registrant’s internal control over financial
reporting that occurred during the registrant’s most recent fiscal quarter
(the registrant’s fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially
affect, the registrant’s internal control over financial reporting:
and
|
5.
|
The
registrant’s other certifying officer (s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
|
a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
|
b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
|
1.
|
I
have reviewed this Annual Report on Form 10-K of the Bank of South
Carolina Corporation as amended by Amendment No. 1 on Form
10-K/A;
|
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for the periods presented in this
report.
|
|
4.
|
The
registrant’s other certifying officer (s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal controls over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)), for the registrant and
have:
|
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiary, is made known to us by others within the entity,
particularly during the period in which this report is being
prepared;
|
|
b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
|
d)
|
Disclosed
in this report any changes in registrant’s internal control over financial
reporting that occurred during the registrant’s most recent fiscal quarter
(the registrant’s fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially
affect, the registrant’s internal control over financial reporting:
and
|
|
5.
|
The
registrant’s other certifying officer (s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
|
a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
|
b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
|
1.
|
the
report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934, as amended, (U.S.C. 78m or 78o(d));
and
|
2.
|
the
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
|
BY:
|
/s/Hugh
C. Lane, Jr.
|
Hugh C. Lane, Jr.
|
|
President
|
|
1.
|
the
report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934, as amended, (U.S.C. 78m or
78o(d)); and
|
|
2.
|
the
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
|
BY:
|
/s/William
L. Hiott, Jr.
|
William L. Hiott, Jr.
|
|
Executive Vice President &
Treasurer
|