As filed with the Securities and Exchange Commission on November 10, 2004

 

Registration No. 333-             


 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM S-8

 

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 


 

Provident Bancorp, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

Delaware   80-0091851

(State or Other Jurisdiction of

Incorporation or Organization)

  (I.R.S. Employer Identification No.)

 

400 Rella Boulevard

Montebello, New York 10901

(Address of Principal Executive Offices)

 

George Strayton

400 Rella Boulevard

Montebello, New York 10901

(Name and Address of Agent for Service)

 


 

The Warwick Community Bancorp 401(k) Savings Plan

(Full Title of the Plan)

 

Copies to:

 

George Strayton

President and Chief Executive Officer

Provident Bancorp, Inc.

400 Rella Boulevard

Montebello, New York 10901

(845) 369-8040

 

Ned Quint, Esquire

Luse Gorman Pomerenk & Schick, P.C.

5335 Wisconsin Ave., N.W., Suite 400

Washington, D.C. 20015

(202) 274-2000

(Name, Address and Telephone

Number of Agent for Service)

   

 


 

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. : x


CALCULATION OF REGISTRATION FEE



Title of

Securities

to be

Registered

  

Amount

to be

Registered (1)

    

Proposed

Maximum

Offering Price

Per Share

  

Proposed

Maximum

Aggregate

Offering Price

  

Amount of

Registration

Fee

 

401(k) Participation

Interests

   (1 )    —      —      (2 )



(1) Represents an indeterminate number of interests in The Warwick Community Bancorp 401(k) Savings Plan.

 

(2) Pursuant to Rule 457(h)(3) no registration fee is required to be paid.

 


 

This Registration Statement shall become effective upon filing in accordance with Section 8(a) of the Securities Act of 1933 and 17 C.F.R. § 230.462.


 


PART I.

 

Items 1 and 2. Plan Information and Registrant Information and Employee Plan Annual Information

 

This Registration Statement relates to the registration of an indeterminate number of participation interests in The Warwick Community Bancorp 401(k) Savings Plan (the “Plan”). Documents containing the information required by Part I of the Registration Statement have been or will be sent or given to participants in the Plan, as specified by Securities Act Rule 428(b)(1). Such documents are not filed with the Securities and Exchange Commission (the “Commission”) either as part of this Registration Statement or as prospectuses or prospectus supplements pursuant to Rule 424, in reliance on Rule 428.

 

PART II.

 

Item 3. Incorporation of Documents by Reference

 

The following documents previously or concurrently filed with the Commission are hereby incorporated by reference in this Registration Statement:

 

a) The Annual Report on Form 10-K of Provident Bancorp, Inc., a federal corporation, for the fiscal year ended September 30, 2003 (Commission File No. 000-25233), filed with the Commission on December 29, 2003 pursuant to Section 13(a) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”);

 

b) Amendment No. 1 to the Annual Report on Form 10-K of Provident Bancorp, Inc., a Delaware corporation (the “Company”) for the fiscal year ended September 30, 2003 (Commission File No. 000-25233), filed with the Commission on January 28, 2004;

 

c) All other reports filed by the Company pursuant to Section 13(a) or 15(d) of the Exchange Act since the end of the year covered by the Annual Report on Form 10-K referred to in (a) above; and

 

d) The description of the Company’s common stock contained in the Registration Statement on Form 8-A filed with the Commission on January 13, 2004 (Commission File No. 000-25233).

 

All documents subsequently filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act, after the date hereof, and prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold or which deregisters all securities then remaining unsold, shall be deemed incorporated by reference into this Registration Statement and to be a part thereof from the date of the filing of such documents. Any statement contained in the documents incorporated, or deemed to be incorporated, by reference herein or therein shall be deemed to be modified or superseded for purposes of this Registration Statement and the prospectus to the extent that a statement contained herein or therein or in any other subsequently filed document which also is, or is deemed to be, incorporated by reference herein or therein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Registration Statement and the prospectus.

 

The Company shall furnish without charge to each person to whom the prospectus is delivered, on the written or oral request of such person, a copy of any or all of the documents incorporated by reference, other than exhibits to such documents (unless such exhibits are specifically incorporated by reference to the information that is incorporated). Requests should be directed to Maureen Solero, Director of Human Resources, Provident Bancorp, Inc., 400 Rella Boulevard, Montebello, New York 10901, telephone number (845) 369-8040.

 

All information appearing in this Registration Statement and the prospectus is qualified in its entirety by the detailed information, including financial statements, appearing in the documents incorporated herein or therein by reference.

 

Item 4. Description of Securities

 

Not applicable.

 

3


Item 5. Interests of Named Experts and Counsel

 

None.

 

Item 6. Indemnification of Directors and Officers

 

Section 145 of the Delaware General Corporation Law (“DGCL”), among other things, empowers a Delaware corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interest of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. Similar indemnity is authorized for such person against expenses (including attorneys’ fees) actually and reasonably incurred in connection with the defense or settlement of any such threatened, pending or completed action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and provided further that (unless a court of competent jurisdiction otherwise provides) he shall not have been adjudged liable to the corporation. Any such indemnification (unless ordered by a court) may be made by the corporation only as authorized in each specific case by the corporation upon a determination that indemnification of the present or former director, officer, employee or agent is proper because such person has met the applicable standard of conduct, which indemnification shall be made in the case of a director or officer at the time of the determination by the shareholders, a majority vote of disinterested directors, a committee of disinterested directors or by independent legal counsel in a written opinion, if no such directors.

 

Section 145 further authorizes a corporation to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise, against any liability asserted against him, and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would otherwise have the power to indemnify him against such liability under Section 145.

 

Articles TENTH and ELEVENTH of the Certificate of Incorporation of the Company set forth circumstances under which directors, officers, employees and agents of the Company may be insured or indemnified against liability which they incur in their capacities as such:

 

TENTH:

 

A. Each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “proceeding”), by reason of the fact that he or she is or was a Director or an Officer of the Corporation or is or was serving at the request of the Corporation as a Director, Officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan (hereinafter an “indemnitee”), whether the basis of such proceeding is alleged action in an official capacity as a Director, Officer, employee or agent or in any other capacity while serving as a Director, Officer, employee or agent, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than such law permitted the Corporation to provide prior to such amendment), against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such indemnitee in connection therewith; provided, however, that, except as provided in Section C hereof with respect to proceedings to enforce rights to indemnification, the Corporation shall indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Board of Directors of the Corporation.

 

4


B. The right to indemnification conferred in Section A of this Article TENTH shall include the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition (hereinafter an “advancement of expenses”); provided, however, that, if the Delaware General Corporation Law requires, an advancement of expenses incurred by an indemnitee in his or her capacity as a Director or Officer (and not in any other capacity in which service was or is rendered by such indemnitee, including, without limitation, services to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking (hereinafter an “undertaking”), by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal (hereinafter a “final adjudication”) that such indemnitee is not entitled to be indemnified for such expenses under this Section or otherwise. The rights to indemnification and to the advancement of expenses conferred in Sections A and B of this Article TENTH shall be contract rights and such rights shall continue as to an indemnitee who has ceased to be a Director, Officer, employee or agent and shall inure to the benefit of the indemnitee’s heirs, executors and administrators.

 

C. If a claim under Section A or B of this Article TENTH is not paid in full by the Corporation within sixty days after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be twenty days, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the indemnitee shall be entitled to be paid also the expense of prosecuting or defending such suit. In (i) any suit brought by the indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to an advancement of expenses) it shall be a defense that, and (ii) in any suit by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking the Corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has not met any applicable standard for indemnification set forth in the Delaware General Corporation Law. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the indemnitee is proper in the circumstances because the indemnitee has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) that the indemnitee has not met such applicable standard of conduct, shall create a presumption that the indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the indemnitee, be a defense to such suit. In any suit brought by the indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Article TENTH or otherwise shall be on the Corporation.

 

D. The rights to indemnification and to the advancement of expenses conferred in this Article TENTH shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, the Corporation’s Certificate of Incorporation, Bylaws, agreement, vote of stockholders or disinterested directors or otherwise.

 

E. The Corporation may maintain insurance, at its expense, to protect itself and any Director, Officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law.

 

F. The Corporation may, to the extent authorized from time to time by the Board of Directors, grant rights to indemnification and to the advancement of expenses to any employee or agent of the Corporation to the fullest extent of the provisions of this Article TENTH with respect to the indemnification and advancement of expenses of directors and officers of the Corporation.

 

ELEVENTH:

 

A Director of this Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a Director, except for liability (i) for any breach of the Director’s

 

5


duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the Director derived an improper personal benefit. If the Delaware General Corporation Law is amended to authorize corporate action further eliminating or limiting the personal liability of Directors, then the liability of a Director of the Corporation shall be eliminated or limited to the fullest extent permitted by the Delaware General Corporation Law, as so amended.

 

Any repeal or modification of the foregoing paragraph by the stockholders of the Corporation shall not adversely affect any right or protection of a Director of the Corporation existing at the time of such repeal or modification.

 

In addition, the Company has entered into Employment Agreements with Stephen G. Dormer, John F. Fitzpatrick, Paul A. Maisch, Daniel G. Rothstein, Robert J. Sansky and George Strayton pursuant to which the Company has undertaken contractually to provide indemnification in the manner described above.

 

Item 7. Exemption From Registration Claimed.

 

Not applicable.

 

Item 8. List of Exhibits.

 

Regulation S-K
Exhibit Number


  

Document


  

Reference to Prior Filing or

Exhibit No. Attached Hereto


4        Form of Common Stock Certificate   

                *

5        Opinion of Luse Gorman Pomerenk & Schick, P.C.    Attached as Exhibit 5
10      The Warwick Community Bancorp 401(k) Savings Plan    Attached as Exhibit 10
23.1    Consent of Luse Gorman Pomerenk & Schick, P.C.    Contained in Exhibit 5
23.2    Consent of KPMG LLP    Attached as Exhibit 23.2
24       Power of Attorney    Contained on Signature Page

* Incorporated by reference to Exhibit 4 to the Registration Statement on Form S-1 (Commission File No. 333-108795), originally filed by the Company under the Securities Act of 1933 with the Commission on September 15, 2003, and all amendments or reports filed for the purpose of updating such description.

 

Item 9. Undertakings

 

The undersigned Registrant hereby undertakes:

 

1. To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement to include any material information with respect to the plan distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement;

 

2. That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof;

 

3. To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the Plan;

 

6


4. That, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant’s annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the Registration Statement shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; and

 

5. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

 

7


 

SIGNATURES

 

The Registrant. Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement on Form S-8 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Montebello, State of New York, on this 8th day of November, 2004.

 

PROVIDENT BANCORP, INC.

By:

 

\s\ George Strayton


   

George Strayton, President and

Chief Executive Officer

   

(Duly Authorized Representative)

 

POWER OF ATTORNEY

 

We, the undersigned directors and officers of Provident Bancorp, Inc. (the “Company”) hereby severally constitute and appoint George Strayton, as our true and lawful attorney and agent, to do any and all things in our names in the capacities indicated below which said George Strayton may deem necessary or advisable to enable the Company to comply with the Securities Act of 1933, and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with the registration of participation interests in The Warwick Community Bancorp 401(k) Savings Plan, including specifically, but not limited to, power and authority to sign for us in our names in the capacities indicated below the registration statement and any and all amendments (including post-effective amendments) thereto; and we hereby approve, ratify and confirm all that said George Strayton shall do or cause to be done by virtue thereof.

 

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-8 has been signed by the following persons in the capacities and on the date indicated.

 

Signatures


  

Title


 

Date


\s\ George Strayton


George Strayton

  

President, Chief Executive Officer

and Director (Principal Executive

Officer)

 

November 8, 2004

\s\ Paul A. Maisch


Paul A. Maisch

  

Senior Vice President and

Chief Financial Officer (Principal

Financial and Accounting Officer)

 

November 8, 2004

\s\ William F. Helmer


William F. Helmer

  

Chairman of the Board

 

November 8, 2004

\s\ Dennis L. Coyle


Dennis L. Coyle

  

Vice Chairman

 

November 8, 2004

 


\s\ Judith Hershaft


Judith Hershaft

  

Director

  November 8, 2004

\s\ Thomas F. Jauntig, Jr.


Thomas F. Jauntig, Jr.

  

Director

  November 8, 2004

\s\ Victoria Kossover


Victoria Kossover

  

Director

  November 8, 2004

\s\ Donald T. McNelis


Donald T. McNelis

  

Director

  November 8, 2004

\s\ Richard A. Nozell


Richard A. Nozell

  

Director

  November 8, 2004

\s\ Carl J. Rosenstock


Carl J. Rosenstock

  

Director

  November 8, 2004

\s\ William R. Sichol, Jr.


William R. Sichol, Jr.

  

Director

  November 8, 2004

\s\ Burt Steinberg


Burt Steinberg

  

Director

  November 8, 2004

\s\ F. Gary Zeh


F. Gary Zeh

  

Director

  November 8, 2004

 


THE PLAN . Pursuant to requirements of the Securities Act of 1933, the trustees (or other persons who administer the employee benefit plan) have duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Montebello, State of New York, on November 8, 2004.

 

    THE WARWICK COMMUNITY BANCORP 401(k) SAVINGS PLAN

By:

 

\s\ George Strayton

   

George Strayton, Trustee

   

(Duly authorized representative)

 


 

EXHIBIT INDEX

 

Exhibit Number

  

Description


4          Form of Common Stock Certificate (incorporated by reference to Exhibit 4 to the Registration Statement on Form S-1 (Commission File No. 333-108795), originally filed by the Company under the Securities Act of 1933 with the Commission on September 15, 2003, and all amendments or reports filed for the purpose of updating such description).
5          Opinion of Luse Gorman Pomerenk & Schick, P.C.
10        The Warwick Community Bancorp 401(k) Savings Plan
23.1    Consent of Luse Gorman Pomerenk & Schick, P.C. (contained in the opinion included as Exhibit 5).
23.2    Consent of KPMG LLP
24        Power of Attorney (contained in the signature page to this Registration Statement).

 

Exhibit 5

 


 

(202) 274-2000

 

November 8, 2004

 

Board of Directors

Provident Bancorp, Inc.

400 Rella Boulevard

Montebello, New York 10901

 

  Re: The Warwick Community Bancorp 401(k) Savings Plan Registration Statement on Form S-8

 

Gentlemen:

 

You have requested the opinion of this firm as to certain matters in connection with the registration of participation interests in The Warwick Community Bancorp 401(k) Savings Plan (the “Plan”). We have reviewed the Certificate of Incorporation of Provident Bancorp, Inc. (the “Company”), the Plan, the Company’s Registration Statement on Form S-8 (the “Form S-8”), as well as applicable statutes and regulations governing the Company.

 

Based on the foregoing, we are of the following opinion:

 

Upon the effectiveness of the Form S-8, the participation interests in the Plan will be legally issued, fully paid and non-assessable and the shares of common stock, par value $0.01 per share, of the Company that may be purchased by the Plan will, upon purchase, be legally issued, fully paid and non-assessable.

 

This opinion has been prepared solely for the use of the Company in connection with the preparation and filing of the Form S-8, and should not be used for any other purpose or relied upon by any other person without the prior written consent of this firm. We hereby consent to the use of this opinion in the Form S-8.

 

Very truly yours,

\s\ Luse Gorman Pomerenk & Schick

Luse Gorman Pomerenk & Schick,

A Professional Corporation

 

Exhibit 10

 


THE WARWICK SAVINGS BANK

401(k) SAVINGS PLAN

 

Defined Contribution Plan 8.0

 

Restated January 1, 1997

 


TABLE OF CONTENTS

 

INTRODUCTION

  6

ARTICLE I

      

FORMAT AND DEFINITIONS

  7

Section 1.01

    

Format

  7

Section 1.02

    

Definitions

  7

ARTICLE II

      

PARTICIPATION

  22

Section 2.01

    

Active Participant

  22

Section 2.02

    

Inactive Participant

  23

Section 2.03

    

Cessation of Participation

  23

Section 2.04

    

Adopting Employers - Single Plan

  23

Section 2.05

    

Veterans Reemployment Rights

  24

ARTICLE III

      

CONTRIBUTIONS

  25

Section 3.01

    

Employer Contributions

  25

Section 3.01 A

    

Rollover Contributions

  26

Section 3.02

    

Forfeitures

  27

Section 3.03

    

Allocation

  28

Section 3.04

    

Contribution Limitation

  29

Section 3.05

    

Excess Amounts

  34

ARTICLE IV

      

INVESTMENT OF CONTRIBUTIONS

  44

Section 4.01

    

Investment and Timing of Contributions

  44

Section 4.01 A

    

Investment Direction, Changes and Transfers

  45

Section 4.01 B

    

Investment in Qualifying Employer Securities

  48

ARTICLE V

      

BENEFITS

  50

Section 5.01

    

Retirement Benefits

  50

Section 5.02

    

Death Benefits

  50

Section 5.03

    

Vested Benefits

  50

Section 5.04

    

When Benefits Start

  50

Section 5.05

    

Withdrawal Benefits

  52

Section 5.06

    

Loans to Participants

  53

Section 5.07

    

Distributions Under Qualified Domestic Relations Orders

  56

 

3


ARTICLE VI

      

DISTRIBUTION OF BENEFITS

  58

Section 6.01

    

Form of Distribution

  58

Section 6.02

    

Election Procedures

  58

Section 6.03

    

Notice Requirements

  58

ARTICLE VII

      

DISTRIBUTION REQUIREMENTS

  61

Section 7.01

    

Application

  61

Section 7.02

    

Definitions

  61

Section 7.03

    

Distribution Requirements

  62

ARTICLE VIII

      

TERMINATION OF THE PLAN

  63

ARTICLE IX

      

ADMINISTRATION OF THE PLAN

  64

Section 9.01

    

Administration

  64

Section 9.02

    

Expenses

  64

Section 9.03

    

Records

  64

Section 9.04

    

Information Available

  65

Section 9.05

    

Claim and Appeal Procedures

  65

Section 9.06

    

Delegation of Authority

  65

Section 9.07

    

Exercise of Discretionary Authority

  66

Section 9.08

    

Voting and Tender of Qualifying Employer Securities

  66

ARTICLE X

      

GENERAL PROVISIONS

  70

Section 10.01

    

Amendments

  70

Section 10.02

    

Direct Rollovers

  71

Section 10.03

    

Mergers and Direct Transfers

  72

Section 10.04

    

Provisions Relating to the Insurer and Other Parties

  73

Section 10.05

    

Employment Status

  73

Section 10.06

    

Rights to Plan Assets

  73

Section 10.07

    

Beneficiary

  73

Section 10.08

    

Nonalienation of Benefits

  74

Section 10.09

    

Construction

  74

Section 10.10

    

Legal Actions

  74

Section 10.11

    

Small Amounts

  74

Section 10.12

    

Word Usage

  75

Section 10.13

    

Change in Service Method

  75

Section 10.14

    

Military Service

  77

 

4


ARTICLE XI

      

TOP-HEAVY PLAN REQUIREMENTS

  78

Section 11.01

    

Application

  78

Section 11.02

    

Definitions

  78

Section 11.03

    

Modification of Vesting Requirements

  81

Section 11.04

    

Modification of Contributions

  81

Section 11.05

    

Modification of Contribution Limitation

  83

PLAN EXECUTION

   

 

5


INTRODUCTION

 

The Primary Employer previously established a 401 (k) savings plan on March 1, 1987.

 

The Primary Employer is of the opinion that the plan should be changed. It believes that the best means to accomplish these changes is to completely restate the plan’s terms, provisions and conditions. The restatement, effective January 1, 1997, is set forth in this document and is substituted in lieu of the prior document.

 

This restatement is made retroactively to reflect the law changes made through the Internal Revenue Service Restructuring and Reform Act of 1998. The provisions of this Plan apply as of the effective date of the restatement except as provided in the attached addendums which reflect the operation of the Plan between the effective date of the restatement and the date this restatement is adopted and identify those provisions which are not amended retroactively.

 

The restated plan continues to be for the exclusive benefit of employees of the Employer. All persons covered under the plan on December 31, 1996, shall continue to be covered under the restated plan with no loss of benefits.

 

It is intended that the plan, as restated, shall qualify as a profit sharing plan under the Internal Revenue Code of 1986, including any later amendments to the Code.

 

6


ARTICLE I

 

FORMAT AND DEFINITIONS

 

SECTION 1.01—FORMAT.

 

Words and phrases defined in the DEFINITIONS SECTION of Article I shall have that defined meaning when used in this Plan, unless the context clearly indicates otherwise.

 

These words and phrases have an initial capital letter to aid in identifying them as defined terms.

 

SECTION 1.02—DEFINITIONS.

 

Account means, for a Participant, his share of the Plan Fund. Separate accounting records are kept for those parts of his Account that result from:

 

  (a) Elective Deferral Contributions

 

  (b) Matching Contributions

 

  (c) Qualified Nonelective Contributions

 

  (d) Rollover Contributions

 

If the Participant’s Vesting Percentage is less than 100% as to any of the Employer Contributions, a separate accounting record will be kept for any part of his Account resulting from such Employer Contributions and, if there has been a prior Forfeiture Date, from such Contributions made before a prior Forfeiture Date.

 

A Participant’s Account shall be reduced by any distribution of his Vested Account and by any Forfeitures. A Participant’s Account shall participate in the earnings credited, expenses charged, and any appreciation or depreciation of the Investment Fund. His Account is subject to any minimum guarantees applicable under the Annuity Contract or other investment arrangement and to any expenses associated therewith.

 

ACP Test means the nondiscrimination test described in Code Section 401(m)(2) as provided for in subparagraph (d) of the EXCESS AMOUNTS SECTION of Article III.

 

Active Participant means an Eligible Employee who is actively participating in the Plan according to the provisions in the ACTIVE PARTICIPANT SECTION of Article II.

 

Adopting Employer means an employer which is a Controlled Group member and which is listed in the attached participation agreement.

 

ADP Test means the nondiscrimination test described in Code Section 401(k)(3) as provided for in subparagraph (c) of the EXCESS AMOUNTS SECTION of Article III.

 

7


Affiliated Service Group means any group of corporations, partnerships or other organizations of which the Employer is a part and which is affiliated within the meaning of Code Section 414(m) and regulations thereunder. Such a group includes at least two organizations one of which is either a service organization (that is, an organization the principal business of which is performing services), or an organization the principal business of which is performing management functions on a regular and continuing basis. Such service is of a type historically performed by employees. In the case of a management organization, the Affiliated Service Group shall include organizations related, within the meaning of Code Section 144(a)(3), to either the management organization or the organization for which it performs management functions. The term Controlled Group, as it is used in this Plan, shall include the term Affiliated Service Group.

 

Alternate Payee means any spouse, former spouse, child, or other dependent of a Participant who is recognized by a qualified domestic relations order as having a right to receive all, or a portion of, the benefits payable under the Plan with respect to such Participant.

 

Annual Compensation means, for a Plan Year, the Employee’s Compensation for the Compensation Year ending with or within the consecutive 12-month period ending on the last day of the Plan Year.

 

Annual Compensation shall only include Compensation received while an Active Participant.

 

Annuity Contract means the annuity contract or contracts into which the Trustee enters with the Insurer for guaranteed benefits, for the investment of Contributions in separate accounts, and for the payment of benefits under this Plan. The term Annuity Contract as it is used in this Plan shall include the plural unless the context clearly indicates the singular is meant.

 

Annuity Starting Date means, for a Participant, the first day of the first period for which an amount is payable as an annuity or any other form.

 

Beneficiary means the person or persons named by a Participant to receive any benefits under the Plan when the Participant dies. See the BENEFICIARY SECTION of Article X.

 

Claimant means any person who makes a claim for benefits under this Plan. See the CLAIM AND APPEAL PROCEDURES SECTION of Article IX.

 

Code means the Internal Revenue Code of 1986, as amended.

 

Compensation means, except for purposes of the CONTRIBUTION LIMITATION SECTION of Article III and Article XI, the total earnings, except as modified in this definition, paid or made available to an Employee by the Employer during any specified period.

 

“Earnings” in this definition means wages within the meaning of Code Section 3401(a) and all other payments of compensation 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 written statement under Code Sections 6041(d), 6051(a)(3), and 6052. Earnings must be determined without regard to any rules under Code Section 3401(a) that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in Code Section 3401(a)(2)). The amount reported in the “Wages, Tips and Other Compensation” box on Form W-2 satisfies this definition; provided that, effective as of January 1, 1999, Compensation shall

 

8


not include any amounts attributable to the vesting of awards of stock under the Recognition and Retention Plan of Warwick Community Bancorp, Inc. or to the exercise of stock options under the Stock Option Plan of Warwick Community Bancorp, Inc., or, effective as of August 1, 2000, any payments of severance benefits or amounts paid under any employment agreement, change of control agreement, retention agreement or other special payments.

 

For any Self-employed Individual, Compensation means Earned Income.

 

Compensation shall also include elective contributions. For this purpose, elective contributions are amounts contributed by the Employer pursuant to a salary reduction agreement and which are not includible in the gross income of the Employee under Code Section 125, 402(e)(3), 402(h)(1)(B), or 403(b). Elective contributions also include compensation deferred under a Code Section 457 plan maintained by the Employer and employee contributions “picked up” by a governmental entity and, pursuant to Code Section 414(h)(2), treated as Employer contributions. For years beginning after December 31, 1997, elective contributions shall also include amounts contributed by the Employer pursuant to a salary reduction agreement and which are not includible in the gross income of the Employee under Code Section 132(f)(4).

 

For purposes of the EXCESS AMOUNTS SECTION of Article III, the Employer may elect to use an alternative nondiscriminatory definition of Compensation in accordance with the regulations under Code Section 414(s).

 

For Plan Years beginning on or after January 1, 1994, the annual Compensation of each Participant taken into account for determining all benefits provided under the Plan for any determination period shall not exceed $150,000, as adjusted for increases in the cost-of-living in accordance with Code Section 401(a)(17)(B). The cost-of-living adjustment in effect for a calendar year applies to any determination period beginning in such calendar year.

 

If a determination period consists of fewer than 12 months, the annual limit is an amount equal to the otherwise applicable annual limit multiplied by a fraction. The numerator of the fraction is the number of months in the short determination period, and the denominator of the fraction is 12.

 

If Compensation for any prior determination period is taken into account in determining a Participant’s contributions or benefits for the current Plan Year, the Compensation for such prior determination period is subject to the applicable annual compensation limit in effect for that determination period. For this purpose, in determining contributions or benefits in Plan Years beginning on or after January 1, 1994, the annual compensation limit in effect for determination periods beginning before that date is $150,000.

 

Compensation means, for a Leased Employee, Compensation for the services the Leased Employee performs for the Employer, determined in the same manner as the Compensation of Employees who are not Leased Employees, regardless of whether such Compensation is received directly from the Employer or from the leasing organization.

 

Compensation Year means the consecutive 12-month period ending on the last day of each Plan Year, including corresponding periods before March 1, 1987.

 

9


Contributions means

 

Elective Deferral Contributions

Matching Contributions

Qualified Nonelective Contributions

Rollover Contributions

 

as set out in Article III, unless the context clearly indicates only specific contributions are meant.

 

Controlled Group means any group of corporations, trades, or businesses of which the Employer is a part that are under common control. A Controlled Group includes any group of corporations, trades, or businesses, whether or not incorporated, which is either a parent-subsidiary group, a brother-sister group, or a combined group within the meaning of Code Section 414(b), Code Section 414(c) and regulations thereunder and, for purposes of determining contribution limitations under the CONTRIBUTION LIMITATION SECTION of Article III, as modified by Code Section 415(h) and, for the purpose of identifying Leased Employees, as modified by Code Section 144(a)(3). The term Controlled Group, as it is used in this Plan, shall include the term Affiliated Service Group and any other employer required to be aggregated with the Employer under Code Section 414(o) and the regulations thereunder.

 

Direct Rollover means a payment by the Plan to the Eligible Retirement Plan specified by the Distributee.

 

Distributee means an Employee or former Employee. In addition, the Employee’s (or former Employee’s) surviving spouse and the Employee’s (or former Employee’s) spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Code Section 414(p), are Distributees with regard to the interest of the spouse or former spouse.

 

Early Retirement Age means a Participant’s age on the date he meets the following requirement(s):

 

  (a) He has attained age 60.

 

  () He has completed 5 years of Vesting Service.

 

Early Retirement Date means the first day of any month before a Participant’s Normal Retirement Date which the Participant selects for the start of his retirement benefits. This day may be on or after the date on which he ceases to be an Employee and reaches Early Retirement Age. If a Participant ceases to be an Employee before satisfying any age requirement for Early Retirement Age, but after satisfying any other requirements, the Participant shall be entitled to elect an early retirement benefit upon satisfying such age requirement.

 

Earned Income means, for a Self-employed Individual, net earnings from self-employment in the trade or business for which this Plan is established if such Self-employed Individual’s personal services are a material income producing factor for that trade or business. Net earnings shall be determined without regard to items not included in gross income and the deductions properly allocable to or chargeable against such items. Net earnings shall be reduced for the employer contributions to the Employer’s qualified retirement plan(s) to the extent deductible under Code Section 404.

 

Net earnings shall be determined with regard to the deduction allowed to the Employer by Code Section 164(f) for taxable years beginning after December 31, 1989.

 

10


Elective Deferral Contributions means contributions made by the Employer to fund this Plan in accordance with elective deferral agreements between Eligible Employees and the Employer.

 

Elective deferral agreements shall be made, changed, or terminated according to the provisions of the EMPLOYER CONTRIBUTIONS SECTION of Article III.

 

Elective Deferral Contributions shall be 100% vested and subject to the distribution restrictions of Code Section 401 (k) when made. See the WHEN BENEFITS START SECTION of Article V.

 

Eligibility Break in Service means an Eligibility Computation Period in which an Employee is credited with 500 or fewer Hours-of-Service. An Employee incurs an Eligibility Break in Service on the last day of an Eligibility Computation Period in which he has an Eligibility Break in Service.

 

Eligibility Computation Period means a consecutive 12-month period. The first Eligibility Computation Period begins on an Employee’s Employment Commencement Date. Later Eligibility Computation Periods shall be consecutive 12-month periods ending on the last day of each Plan Year that begins after his Employment Commencement Date.

 

To determine an Eligibility Computation Period after an Eligibility Break in Service, the Plan shall use the consecutive 12-month period beginning on an Employee’s Reemployment Commencement Date as if his Reemployment Commencement Date were his Employment Commencement Date.

 

Eligibility Service means one year of service for each Eligibility Computation Period that has ended and in which an Employee is credited with at least 1,000 Hours-of-Service.

 

However, Eligibility Service is modified as follows:

 

Service with a Predecessor Employer which did not maintain this Plan included:

 

An Employee’s service with a Predecessor Employer which did not maintain this Plan shall be included as service with the Employer. This service includes service performed while a proprietor or partner.

 

Period of Military Duty included:

 

A Period of Military Duty shall be included as service with the Employer to the extent it has not already been credited. For purposes of crediting Hours-of-Service during the Period of Military Duty, an Hour-of-Service shall be credited (without regard to the 501 Hour-of-Service limitation) for each hour an Employee would normally have been scheduled to work for the Employer during such period.

 

Controlled Group service included:

 

An Employee’s service with a member firm of a Controlled Group while both that firm and the Employer were members of the Controlled Group shall be included as service with the Employer.

 

11


Eligible Employee means any Employee of the Employer excluding the following:

 

Bargaining class (represented by a bargaining unit for collective bargaining purposes).

 

Non-resident aliens

 

Self-employed persons

 

Independent contractors

 

Eligible Retirement Plan means an individual retirement account described in Code Section 408(a), an individual retirement annuity described in Code Section 408(b), an annuity plan described in Code Section 403(a) or a qualified trust described in Code Section 401(a), that accepts the Distributee’s Eligible Rollover Distribution. However, in the case of an Eligible Rollover Distribution to the surviving spouse, an Eligible Retirement Plan is an individual retirement account or individual retirement annuity.

 

Eligible Rollover Distribution means any distribution of all or any portion of the balance to the credit of the Distributee, except that an Eligible Rollover Distribution does not include: (i) 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; (ii) any distribution to the extent such distribution is required under Code Section 401(a)(9); (iii) any hardship distribution described in Code Section 401(k)(2)(B)(i)(lV) received after December 31, 1998; (iv) the portion of any other distribution(s) that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities); and (v) any other distribution(s) that is reasonably expected to total less than $200 during a year.

 

Employee means an individual who is employed by the Employer or any other employer required to be aggregated with the Employer under Code Sections 414(b), (c), (m), or (o). A Controlled Group member is required to be aggregated with the Employer.

 

The term Employee shall include any Self-employed Individual treated as an employee of any employer described in the preceding paragraph as provided in Code Section 401(c)(1). The term Employee shall also include any Leased Employee deemed to be an employee of any employer described in the preceding paragraph as provided in Code Section 414(n) or (o).

 

Employer means, except for purposes of the CONTRIBUTION LIMITATION SECTION of Article III, the Primary Employer. This will also include any successor corporation or firm of the Employer which shall, by written agreement, assume the obligations of this Plan or any Predecessor Employer which maintained this Plan.

 

Employer Contributions means

 

Elective Deferral Contributions

 

Matching Contributions

 

Qualified Nonelective Contributions

 

12


as set out in Article III and contributions made by the Employer to fund this Plan in accordance with the provisions of the MODIFICATION OF CONTRIBUTIONS SECTION of Article XI, unless the context clearly indicates only specific contributions are meant.

 

Employment Commencement Date means the date an Employee first performs an Hour-of-Service.

 

Entry Date means the date an Employee first enters the Plan as an Active Participant. See the ACTIVE PARTICIPANT SECTION of Article II.

 

ERISA means the Employee Retirement Income Security Act of 1974, as amended.

 

Fiscal Year means the Primary Employer’s taxable year. The last day of the Fiscal Year is December 31.

 

Forfeiture means the part, if any, of a Participant’s Account that is forfeited. See the FORFEITURES SECTION of Article III.

 

Forfeiture Date means, as to a Participant, the date the Participant incurs five consecutive Vesting Breaks in Service.

 

Highly Compensated Employee means any Employee who:

 

  (a) was a 5-percent owner at any time during the year or the preceding year, or

 

  (b) for the preceding year had compensation from the Employer in excess of $80,000 and, if the Employer so elects, was in the top-paid group for the preceding year. The $80,000 amount is adjusted at the same time and in the same manner as under Code Section 415(d), except that the base period is the calendar quarter ending September 30, 1996.

 

For this purpose the applicable year of the plan for which a determination is being made is called a determination year and the preceding 12-month period is called a look-back year. If the Employer makes a calendar year data election, the look-back year shall be the calendar year beginning with or within the look-back year. The Plan may not use such election to determine whether Employees are Highly Compensated Employees on account of being a 5-percent owner.

 

In determining who is a Highly Compensated Employee the Employer does not make a top-paid group election. In determining who is a Highly Compensated Employee the Employer does not make a calendar year data election.

 

Calendar year data elections and top-paid group elections, once made, apply for all subsequent years unless changed by the Employer. If the Employer makes one election, the Employer is not required to make the other. If both elections are made, the look-back year in determining the top-paid group must be the calendar year beginning with or within the look-back year. These elections must apply consistently to the determination years of all plans maintained by the Employer which reference the highly compensated employee definition in Code Section 414(q), except as provided in Internal Revenue Service Notice 97-45 (or superseding guidance). The consistency requirement will not apply to determination years beginning with or within the 1997 calendar year, and for determination years beginning on or after January 1, 1998 and before January 1, 2000, satisfaction of the consistency requirement is determined without regard to any nonretirement plans of the Employer.

 

13


The determination of who is a highly compensated former Employee is based on the rules applicable to determining Highly Compensated Employee status as in effect for that determination year, in accordance with section 1.414(q)-1T, A-4 of the temporary Income Tax Regulations and Internal Revenue Service Notice 97-45.

 

In determining whether an Employee is a Highly Compensated Employee for years beginning in 1997, the amendments to Code Section 414(q) stated above are treated as having been in effect for years beginning in 1996.

 

The determination of who is a Highly Compensated Employee, including the determinations of the number and identity of Employees in the top-paid group, the compensation that is considered, and the identity of the 5-percent owners, shall be made in accordance with Code Section 414(q) and the regulations thereunder.

 

Hour-of-Service means the following:

 

  (a) Each hour for which an Employee is paid, or entitled to payment, for performing duties for the Employer during the applicable computation period.

 

  (b) Each hour for which an Employee is paid, or entitled to payment, by the Employer because of a period of time in which no duties are performed (irrespective of whether the employment relationship has terminated) due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or leave of absence. Notwithstanding the preceding provisions of this subparagraph (b), no credit will be given to the Employee:

 

  (1) for more than 501 Hours-of-Service under this subparagraph (b) because of any single continuous period in which the Employee performs no duties (whether or not such period occurs in a single computation period); or

 

  (2) for an Hour-of-Service for which the Employee is directly or indirectly paid, or entitled to payment, because of a period in which no duties are performed if such payment is made or due under a plan maintained solely for the purpose of complying with applicable worker’s or workmen’s compensation, or unemployment compensation, or disability insurance laws; or

 

  (3) for an Hour-of-Service for a payment which solely reimburses the Employee for medical or medically related expenses incurred by him.

 

For purposes of this subparagraph (b), a payment shall be deemed to be made by, or due from the Employer, regardless of whether such payment is made by, or due from the Employer, directly or indirectly through, among others, a trust fund or insurer, to which the Employer contributes or pays premiums and regardless of whether contributions made or due to the trust fund, insurer or other entity are for the benefit of particular employees or are on behalf of a group of employees in the aggregate.

 

  (c)

Each hour for which back pay, irrespective of mitigation of damages, is either awarded or agreed to by the Employer. The same Hours-of-Service shall not be credited both under subparagraph (a) or subparagraph (b) above (as the case may be) and under this subparagraph (c). Crediting of

 

14


 

Hours-of-Service for back pay awarded or agreed to with respect to periods described in subparagraph (b) above will be subject to the limitations set forth in that subparagraph.

 

The crediting of Hours-of-Service above shall be applied under the rules of paragraphs (b) and (c) of the Department of Labor Regulation 2530.200b-2 (including any interpretations or opinions implementing such rules); which rules, by this reference, are specifically incorporated in full within this Plan. The reference to paragraph (b) applies to the special rule for determining hours of service for reasons other than the performance of duties such as payments calculated (or not calculated) on the basis of units of time and the rule against double credit. The reference to paragraph (c) applies to the crediting of hours of service to computation periods.

 

Hours-of-Service shall be credited for employment with any other employer required to be aggregated with the Employer under Code Sections 414(b), (c), (m), or (o) and the regulations thereunder for purposes of eligibility and vesting. Hours-of-Service shall also be credited for any individual who is considered an employee for purposes of this Plan pursuant to Code Section 414(n) or (o) and the regulations thereunder.

 

Solely for purposes of determining whether a one-year break in service has occurred for eligibility or vesting purposes, during a Parental Absence an Employee shall be credited with the Hours-of-Service which otherwise would normally have been credited to the Employee but for such absence, or in any case in which such hours cannot be determined, eight Hours-of-Service per day of such absence. The Hours-of-Service credited under this paragraph shall be credited in the computation period in which the absence begins if the crediting is necessary to prevent a break in service in that period; or in all other cases, in the following computation period.

 

Inactive Participant means a former Active Participant who has an Account. See the INACTIVE PARTICIPANT SECTION of Article II.

 

Insurer means Principal Life Insurance Company and any other insurance company or companies named by the Trustee or Primary Employer.

 

Investment Fund means the investment funds designated by the Trustee for the investment of Plan assets pursuant to Article IV, which, together with promissory notes evidencing loans made under section 5.06, constitute the Trust Fund. The Qualifying Employer Securities Fund shall be an Investment Fund.

 

The Investment Fund shall be valued at current fair market value as of the Valuation Date. The valuation shall take into consideration investment earnings credited, expenses charged, payments made, and changes in the values of the assets held in the Investment Fund.

 

The Investment Fund shall be allocated at all times to Participants, except as otherwise expressly provided in the Plan. The Account of a Participant shall be credited with its share of the gains and losses of the Investment Fund. That part of a Participant’s Account invested in a funding arrangement which establishes one or more accounts or investment vehicles for such Participant thereunder shall be credited with the gain or loss from such accounts or investment vehicles. The part of a Participant’s Account which is invested in other funding arrangements shall be credited with a proportionate share of the gain or loss of such investments. The share shall be determined by multiplying the gain or loss of the investment by the ratio of the part of the Participant’s Account

 

15


invested in such funding arrangement to the total of the Investment Fund invested in such funding arrangement.

 

Investment Manager means any fiduciary (other than a trustee or Named Fiduciary)

 

  (a) who has the power to manage, acquire, or dispose of any assets of the Plan;

 

  (b) who (i) is registered as an investment adviser under the Investment Advisers Act of 1940; (ii) is not registered as an investment adviser under such Act by reason of paragraph (1) of section 203A(a) of such Act, is registered as an investment adviser under the laws of the state (referred to in such paragraph (1)) in which it maintains its principal office and place of business, and, at the time it last filed the registration form most recently filed by it with such state in order to maintain its registration under the laws of such state, also filed a copy of such form with the Secretary of Labor, (iii) is a bank, as defined in that Act; or (iv) is an insurance company qualified to perform services described in subparagraph (a) above under the laws of more than one state; and

 

  (c) who has acknowledged in writing being a fiduciary with respect to the Plan.

 

Late Retirement Date means the first day of any month which is after the date a Participant’s Normal Retirement Date and on which retirement benefits begin. If a Participant continues to work for the Employer after his Normal Retirement Date, his Late Retirement Date shall be the earliest first day of the month on or after the date he ceases to be an Employee. An earlier or a later Retirement Date may apply if the Participant so elects. An earlier Retirement Date may apply if the Participant is age 70 1/2. See the WHEN BENEFITS START SECTION of Article V.

 

Leased Employee means any person (other than an employee of the recipient) who, pursuant to an agreement between the recipient and any other person (“leasing organization”), has performed services for the recipient (or for the recipient and related persons determined in accordance with Code Section 414(n)(6)) on a substantially full time basis for a period of at least one year, and such services are performed under primary direction or control by the recipient. Contributions or benefits provided by the leasing organization to a Leased Employee, which are attributable to service performed for the recipient employer, shall be treated as provided by the recipient employer.

 

A Leased Employee shall not be considered an employee of the recipient if:

 

  (a) such employee is covered by a money purchase pension plan providing (i) a nonintegrated employer contribution rate of at least 10 percent of compensation, as defined in Code Section 415(c)(3), but including amounts contributed pursuant to a salary reduction agreement which are excludible from the employee’s gross income under Code Sections 125, 402(e)(3), 402(h)(1)(B), or 403(b), (ii) immediate participation, and (iii) full and immediate vesting, and

 

  (b) Leased Employees do not constitute more than 20 percent of the recipient’s nonhighly compensated work force.

 

Loan Administrator means the person(s) or position(s) authorized to administer the Participant loan program.

 

16


The Loan Administrator is the Plan Administrator.

 

Matching Contributions means contributions made by the Employer to fund this Plan which are contingent on a Participant’s Elective Deferral Contributions. See the EMPLOYER CONTRIBUTIONS SECTION of Article III.

 

Monthly Date means each Yearly Date and the same day of each following month during the Plan Year beginning on such Yearly Date.

 

Named Fiduciary means the person or persons who have authority to control and manage the operation and administration of the Plan.

 

The Named Fiduciary is the Employer.

 

Nonhighly Compensated Employee means an Employee of the Employer who is not a Highly Compensated Employee.

 

Nonvested Account means the excess, if any, of a Participant’s Account over his Vested Account.

 

Normal Retirement Age means the age at which the Participant’s normal retirement benefit becomes nonforfeitable if he is an Employee. A Participant’s Normal Retirement Age is the older of age 65 or his age on the date 5 years after the first day of the Plan Year in which his Entry Date occurred.

 

Normal Retirement Date means the earliest first day of the month on or after the date the Participant reaches his Normal Retirement Age. Unless otherwise provided in this Plan, a Participant’s retirement benefits shall begin on a Participant’s Normal Retirement Date if he has ceased to be an Employee on such date and has a Vested Account. Even if the Participant is an Employee on his Normal Retirement Date, he may choose to have his retirement benefit begin on such date. An earlier Retirement Date may apply if the Participant is age 70 1/2. See the WHEN BENEFITS START SECTION of Article V.

 

Owner-employee means a Self-employed Individual who, in the case of a sole proprietorship, owns the entire interest in the unincorporated trade or business for which this Plan is established. If this Plan is established for a partnership, an Owner-employee means a Self-employed Individual who owns more than 10 percent of either the capital interest or profits interest in such partnership.

 

Parental Absence means an Employee’s absence from work:

 

  (a) by reason of pregnancy of the Employee,

 

  (b) by reason of birth of a child of the Employee,

 

  (c) by reason of the placement of a child with the Employee in connection with adoption of such child by such Employee, or

 

  (d) for purposes of caring for such child for a period beginning immediately following such birth or placement.

 

Participant means either an Active Participant or an Inactive Participant.

 

17


Period of Military Duty means, for an Employee

 

  (a) who served as a member of the armed forces of the United States, and

 

  (b) who was reemployed by the Employer at a time when the Employee had a right to reemployment in accordance with seniority rights as protected under Chapter 43 of Title 38 of the U. S. Code,

 

the period of time from the date the Employee was first absent from active work for the Employer because of such military duty to the date the Employee was reemployed.

 

Plan means the 401 (k) savings plan of the Employer set forth in this document, including any later amendments to it.

 

Plan Administrator means the person or persons who administer the Plan.

 

The Plan Administrator is the senior officer for Human Resources of the Employer unless a different person is appointed by the Employer.

 

Plan Fund means the total of the Investment Fund and the guaranteed benefit policy portion of any Annuity Contract. The Investment Fund shall be valued as stated in its definition. The guaranteed benefit policy portion of any Annuity Contract shall be determined in accordance with the terms of the Annuity Contract and, to the extent that such Annuity Contract allocates contract values to Participants, allocated to Participants in accordance with its terms. The total value of all amounts held under the Plan Fund shall equal the value of the aggregate Participants’ Accounts under the Plan.

 

Plan Year means a period beginning on a Yearly Date and ending on the day before the next Yearly Date.

 

Predecessor Employer means a firm of which the Employer was once a part (e.g., due to a spinoff or change of corporate status) or a firm absorbed by the Employer because of a merger or acquisition (stock or asset, including a division or an operation of such company).

 

Primary Employer means The Warwick Savings Bank.

 

Qualified Nonelective Contributions means contributions made by the Employer to fund this Plan (other than Elective Deferral Contributions) which are 100% vested and subject to the distribution restrictions of Code Section 401 (k) when made. See the EMPLOYER CONTRIBUTIONS SECTION of Article III and the WHEN BENEFITS START SECTION of Article V.

 

Qualifying Employer Securities means any security which is issued by the Employer or any Controlled Group member and which meets the requirements of Code Section 409(1) and ERISA Section 407(d)(5). This shall also include any securities that satisfied the requirements of .the definition when these securities were assigned to the Plan.

 

Qualifying Employer Securities Fund means that part of the assets of the Trust Fund that are designated to be held primarily or exclusively in Qualifying Employer Securities for the purpose of providing benefits for Participants.

 

18


Reemployment Commencement Date means the date an Employee first performs an Hour-of-Service following an Eligibility Break in Service.

 

Reentry Date means the date a former Active Participant reenters the Plan. See the ACTIVE PARTICIPANT SECTION of Article II.

 

Retirement Date means the date a retirement benefit will begin and is a Participant’s Early, Normal, or Late Retirement Date, as the case may be.

 

Rollover Contributions means the Rollover Contributions which are made by an Eligible Employee or an Inactive Participant according to the provisions of the ROLLOVER CONTRIBUTIONS SECTION of Article III.

 

Self-employed Individual means, with respect to any Fiscal Year, an individual who has Earned Income for the Fiscal Year (or who would have Earned Income but for the fact the trade or business for which this Plan is established did not have net profits for such Fiscal Year).

 

Semi-yearly Date means each Yearly Date and the sixth Monthly Date after each Yearly Date which is within the same Plan Year.

 

Starting Date means, for a Participant, the first day of the first period for which an amount is payable in a single sum, whether or not paid.

 

Totally and Permanently Disabled means that a Participant is disabled, as a result of a medically determinable physical or mental impairment which may be expected to result in death or to last for a continuous period of not less than twelve (12) months and which renders him incapable of performing his duties. All determinations in connection with the performance and degree of such disability shall be made by the Plan Administrator in a uniform, nondiscriminatory manner on the basis of medical evidence.

 

Trust Agreement means an agreement of trust between the Primary Employer and Trustee established for the purpose of holding and distributing the Trust Fund under the provisions of the Plan. The Trust Agreement may provide for the investment of all or any portion of the Trust Fund in the Annuity Contract.

 

Trust Fund means the total funds held under the Trust Agreement.

 

Trustee means the party or parties named in the Trust Agreement. The term Trustee as it is used in this Plan is deemed to include the plural unless the context clearly indicates the singular is meant.

 

Valuation Date means the date on which the value of the assets of the Investment Fund is determined. The value of each Account which is maintained under this Plan shall be determined on the Valuation Date. In each Plan Year, the Valuation Date shall be the last day of the Plan Year. At the discretion of the Plan Administrator, Trustee, or Insurer (whichever applies), assets of the Investment Fund may be valued more frequently. These dates shall also be Valuation Dates.

 

Vested Account means the vested part of a Participant’s Account. The Participant’s Vested Account is determined as follows.

 

19


If the Participant’s Vesting Percentage is 100%, his Vested Account equals his Account.

 

If the Participant’s Vesting Percentage is less than 100%, his Vested Account equals the sum of (a) and (b) below:

 

  (a) The part of the Participant’s Account that results from Employer Contributions made before a prior Forfeiture Date and all other Contributions which were 100% vested when made.

 

  (b) The balance of the Participant’s Account in excess of the amount in (a) above multiplied by his Vesting Percentage.

 

If the Participant has withdrawn any part of his Account resulting from Employer Contributions, other than the vested Employer Contributions included in (a) above, the amount determined under this subparagraph (b) shall be equal to P(AB + D) - D as defined below:

 

  P The Participant’s Vesting Percentage.

 

  AB The balance of the Participant’s Account in excess of the amount in (a) above.

 

  D The amount of the withdrawal resulting from Employer Contributions, other than the vested Employer Contributions included in (a) above.

 

The Participant’s Vested Account is nonforfeitable.

 

Vesting Break in Service means a Vesting Computation Period in which an Employee is credited with 500 or fewer Hours-of-Service. An Employee incurs a Vesting Break in Service on the last day of a Vesting Computation Period in which he has a Vesting Break in Service.

 

Vesting Computation Period means a consecutive 12-month period ending on the last day of each Plan Year, including corresponding consecutive 12-month periods before March 1, 1987.

 

Vesting Percentage means the percentage used to determine the nonforfeitable portion of a Participant’s Account attributable to Employer Contributions which were not 100% vested when made.

 

A Participant’s Vesting Percentage is shown in the following schedule opposite the number of whole years of his Vesting Service.

 

VESTING SERVICE

(whole years)


  

VESTING

PERCENTAGE


Less than 1

   0

1

   20

2

   40

3

   60

4

   80

5 or more

   100

 

20


The Vesting Percentage for a Participant who is an Employee on or after the date he reaches Normal Retirement Age or Early Retirement Age shall be 100%. The Vesting Percentage for a Participant who is an Employee on the date he becomes Totally and Permanently Disabled or dies shall be 100%.

 

If the schedule used to determine a Participant’s Vesting Percentage is changed, the new schedule shall not apply to a Participant unless he is credited with an Hour-of-Service on or after the date of the change and the Participant’s nonforfeitable percentage on the day before the date of the change is not reduced under this Plan. The amendment provisions of the AMENDMENTS SECTION of Article X regarding changes in the computation of the Vesting Percentage shall apply.

 

Vesting Service means one year of service for each Vesting Computation Period in which an Employee is credited with at least 1,000 Hours-of-Service.

 

However, Vesting Service is modified as follows:

 

Service with a Predecessor Employer which did not maintain this Plan included:

 

An Employee’s service with a Predecessor Employer which did not maintain this Plan shall be included as service with the Employer. This service includes service performed while a proprietor or partner.

 

Period of Military Duty included:

 

A Period of Military Duty shall be included as service with the Employer to the extent it has not already been credited. For purposes of crediting Hours-of-Service during the Period of Military Duty, an Hour-of-Service shall be credited (without regard to the 501 Hour-of-Service limitation) for each hour an Employee would normally have been scheduled to work for the Employer during such period.

 

Controlled Group service included:

 

An Employee’s service with a member firm of a Controlled Group while both that firm and the Employer were members of the Controlled Group shall be included as service with the Employer.

 

Yearly Date means March 1, 1987 and each following January 1.

 

Years of Service means an Employee’s Vesting Service disregarding any modifications which exclude service.

 

21


ARTICLE II

 

PARTICIPATION

 

SECTION 2.01—ACTIVE PARTICIPANT.

 

  (a) An Employee shall first become an Active Participant (begin active participation in the Plan) on the earliest Semi-yearly Date on which he is an Eligible Employee and has met both of the eligibility requirements set forth below. This date is his Entry Date.

 

  (1) He has completed one year of Eligibility Service before his Entry Date.

 

  (2) He is age 21 or older.

 

Each Employee who was an Active Participant under the Plan on December 31, 1996, shall continue to be an Active Participant if he is still an Eligible Employee on January 1, 1997, and his Entry Date shall not change.

 

If service with a Predecessor Employer is counted for purposes of Eligibility Service, an Employee shall be credited with such service on the date he becomes an Employee and shall become an Active Participant on the earliest Semi-yearly Date on which he is an Eligible Employee and has met all of the eligibility requirements above. This date is his Entry Date.

 

If a person has been an Eligible Employee who has met all of the eligibility requirements above, but is not an Eligible Employee on the date which would have been his Entry Date, he shall become an Active Participant on the date he again becomes an Eligible Employee. This date is his Entry Date.

 

In the event an Employee who is not an Eligible Employee becomes an Eligible Employee, such Eligible Employee shall become an Active Participant immediately if such Eligible Employee has satisfied the eligibility requirements above and would have otherwise previously become an Active Participant had he met the definition of Eligible Employee. This date is his Entry Date.

 

  (b) An Inactive Participant shall again become an Active Participant (resume active participation in the Plan) on the date he again performs an Hour-of-Service as an Eligible Employee. This date is his Reentry Date.

 

  Upon again becoming an Active Participant, he shall cease to be an Inactive Participant.

 

  (c) A former Participant shall again become an Active Participant (resume active participation in the Plan) on the date he again performs an Hour-of-Service as an Eligible Employee. This date is his Reentry Date.

 

An Active Participant or an Eligible Employee may elect not to be an Active Participant. The election may be for a specified or an indefinite period of time. The election shall be made by filing a written request with the Plan Administrator not to be an Active Participant. Employer Contributions shall not be made for the Eligible Employee, allocated to the Eligible Employee, and he may not make those participant Contributions

 

22


which can only be made by Active participants for any period during which he is not an Active Participant. The Eligible Employee may at any time revoke such election and,

 

  (a) if he has met all of the other eligibility requirements under this section and his Entry Date has occurred, he shall become an Active Participant as of the date of such revocation, or

 

  (b) if he has met all of the other eligibility requirements under this section and his Entry Date has not occurred, he shall become an Active Participant as provided in this section, or

 

  (c) if he has not met all of the other eligibility requirements under this section, he shall become an Active Participant as provided in this section.

 

There shall be no duplication of benefits for a Participant under this Plan because of more than one period as an Active Participant.

 

SECTION 2.02—INACTIVE PARTICIPANT.

 

An Active Participant shall become an Inactive Participant (stop accruing benefits under the Plan) on the earlier of the following:

 

  (a) the date the Participant ceases to be an Eligible Employee, or

 

  (b) the effective date of complete termination of the Plan under Article VIII. ‘

 

An Employee or former Employee who was an Inactive Participant under the Plan on December 31, 1996, shall continue to be an Inactive Participant on January 1, 1997. Eligibility for any benefits payable to the Participant or on his behalf and the amount of the benefits shall be determined according to the provisions of the prior document, unless otherwise stated in this document.

 

SECTION 2.03—CESSATlON OF PARTICIPATION.

 

A Participant shall cease to be a Participant on the date he is no longer an Eligible Employee and his Account is zero.

 

SECTION 2.04—ADOPTING EMPLOYERS - SINGLE PLAN.

 

Each of the Controlled Group members listed in the attached participation agreement is an Adopting Employer. Each Adopting Employer listed in the attached participation agreement participates with the Employer in this Plan. An Adopting Employer’s agreement to participate in this Plan shall be in writing.

 

The Employer has the right to amend the Plan. An Adopting Employer does not have the right to amend the Plan.

 

If the Adopting Employer did not maintain its plan before its date of adoption specified in the attached participation agreement, its date of adoption shall be the Entry Date for any of its Employees who have met the requirements in the ACTIVE PARTICIPANT SECTION of Article II as of that date. Service with and Compensation from an Adopting Employer shall be included as service with and Compensation from the

 

23


Employer. Transfer of employment, without interruption, between an Adopting Employer and another Adopting Employer or the Employer shall not be considered an interruption of service. The Employer’s Fiscal Year defined in the DEFINITIONS SECTION of Article I shall be the Fiscal Year used in interpreting this Plan for Adopting Employers.

 

Contributions made by an Adopting Employer shall be treated as Contributions made by the Employer. Forfeitures arising from those Contributions shall be used for the benefit of all Participants.

 

An employer shall not be an Adopting Employer if it ceases to be a Controlled Group member. Such an employer may continue a retirement plan for its Employees in the form of a separate document. This Plan shall be amended to delete a former Adopting Employer from the attached participation agreement.

 

If (i) an employer ceases to be an Adopting Employer or the Plan is amended to delete an Adopting Employer and (ii) the Adopting Employer does not continue a retirement plan for the benefit of its Employees, partial termination may result and the provisions of Article VIII shall apply.

 

SECTION 2.05—VETERANS REEMPLOYMENT RIGHTS.

 

The Plan shall meet the requirements of Section 414(u) of the Code with respect to veterans’ reemployment rights.

 

24


ARTICLE III

 

CONTRIBUTIONS

 

SECTION 3.01—EMPLOYER CONTRIBUTIONS.

 

Employer Contributions shall be made without regard to current or accumulated net income, earnings or profits of the Employer. Notwithstanding the foregoing, the Plan shall continue to be designed to qualify as a profit sharing plan for purposes of Code Sections 401(a), 402, 412, and 417. Such Contributions shall be equal to the Employer Contributions as described below:

 

  (a) The amount of each Elective Deferral Contribution for a Participant shall be equal to a portion of Compensation as specified in the elective deferral agreement. An Employee who is eligible to participate in the Plan may file an elective deferral agreement with the Employer. The Participant shall modify or terminate the elective deferral agreement by filing a new elective deferral agreement. The elective deferral agreement may not be made retroactively and shall remain in effect until modified or terminated.

 

The elective deferral agreement to start or modify Elective Deferral Contributions shall be effective on the first day of the first pay period following the pay period in which the Participant’s Entry Date (Reentry Date, if applicable) or any following Semi-yearly Date occurs. The elective deferral agreement must be entered into on or before the date it is effective.

 

The elective deferral agreement to stop Elective Deferral Contributions may be entered into on any date. Such elective deferral agreement shall be effective on the first day of the pay period following the pay period in which the elective deferral agreement is entered into.

 

Elective Deferral Contributions must be a whole percentage of Compensation and cannot be more than 15% of Compensation for the pay period.

 

Elective Deferral Contributions are fully (100%) vested and nonforfeitable.

 

  (b) The Employer may make discretionary Matching Contributions. The percentage of Elective Deferral Contributions matched, if any, shall be a percentage as determined by the Employer. Elective Deferral Contributions which are over 3% of Compensation won’t be matched.

 

Matching Contributions are calculated based on Elective Deferral Contributions and Compensation for the pay period. Matching Contributions are made for all persons who were Active Participants at any time during that pay period.

 

Any percentage determined by the Employer shall apply to all eligible persons for the entire Plan Year.

 

Matching Contributions are subject to the Vesting Percentage.

 

  (c)

Qualified Nonelective Contributions may be made for each Plan Year in an amount determined by the Employer to be used to reduce Excess Aggregate Contributions and Excess

 

25


 

Contributions, as defined in the EXCESS AMOUNTS SECTION of this article. If the Plan is treated as separate plans because it is mandatorily disaggregated under the regulations of Code Section 401(k), a separate Qualified Nonelective Contribution may be determined for each separate plan.

 

Qualified Nonelective Contributions are 100% vested and subject to the distribution restrictions of Code Section 401(k) when made.

 

No Participant shall be permitted to have Elective Deferral Contributions, as defined in the EXCESS AMOUNTS SECTION of this article, made under this Plan, or any other qualified plan maintained by the Employer, during any taxable year, in excess of the dollar limitation contained in Code Section 402(g) in effect at the beginning of such taxable year.

 

An elective deferral agreement (or change thereto) must be made in such manner and in accordance with such rules as the Employer may prescribe (including by means of voice response or other electronic system under circumstances the Employer permits) and may not be made retroactively.

 

Employer Contributions are allocated according to the provisions of the ALLOCATION SECTION of this article.

 

The Employer may make all or any portion of the Matching Contributions, which are to be invested in Qualifying Employer Securities, to the Trustee in the form of Qualifying Employer Securities.

 

A portion of the Plan assets resulting from Employer Contributions (but not more than the original amount of those Contributions) may be returned if the Employer Contributions are made because of a mistake of fact or are more than the amount deductible under Code Section 404 (excluding any amount which is not deductible because the Plan is disqualified). The amount involved must be returned to the Employer within one year after the date the Employer Contributions are made by mistake of fact or the date the deduction is disallowed, whichever applies. Except as provided under this paragraph and Article VIII, the assets of the Ran shall never be used for the benefit of the Employer and are held for the exclusive purpose of providing benefits to Participants and their Beneficiaries and for defraying reasonable expenses of administering the Plan.

 

SECTION 3.01A—ROLLOVER CONTRIBUTIONS.

 

A Rollover Contribution may be made by an Eligible Employee or an Inactive Participant if the following conditions are met:

 

  (a) The Contribution is of amounts distributed from a plan that satisfies the requirements of Code Section 401(a) or from a “conduit” individual retirement account described in Code Section 408(d)(3)(A). In the case of an Inactive Participant, the Contribution must be of an amount distributed from another plan of the Employer, or a plan of a Controlled Group member, that satisfies the requirements of Code Section 401(a).

 

  (b) The Contribution is of amounts that the Code permits to be transferred to a plan that meets the requirements of Code Section 401(a).

 

26


  (c) The Contribution is made in the form of a direct rollover under Code Section 401(a)(31) or is a rollover made under 402(c) or 408(d)(3)(A) within 60 days after the Eligible Employee or Inactive Participant receives the distribution.

 

  (d) The Eligible Employee or Inactive Participant furnishes evidence satisfactory to the Plan Administrator that the proposed rollover meets conditions (a), (b), and (c) above.

 

A Rollover Contribution shall be allowed in cash only and must be made according to procedures set up by the Plan Administrator.

 

Rollover Contributions made by an Eligible Employee or an Inactive Participant shall be credited to his Account. The part of the Participant’s Account resulting from Rollover Contributions is fully (100%) vested and nonforfeitable at all times. A separate accounting record shall be maintained for that part of his Rollover Contributions consisting of voluntary contributions which were deducted from the Participant’s gross income for Federal income tax purposes.

 

SECTION 3.02—FORFEITURES.

 

The Nonvested Account of a Participant shall be forfeited as of the earlier of the following:

 

  (a) the date the Participant dies (if prior to such date he had ceased to be an Employee), or

 

  (b) the Participant’s Forfeiture Date.

 

All or a portion of a Participant’s Nonvested Account shall be forfeited before such earlier date if, after he ceases to be an Employee, he receives, or is deemed to receive, a distribution of his entire Vested Account or a distribution of his Vested Account derived from Employer Contributions which were not 100% vested when made, under the RETIREMENT BENEFITS SECTION of Article V, the VESTED BENEFITS SECTION of Article V, or the SMALL AMOUNTS SECTION of Article X. The forfeiture shall occur as of the date the Participant receives, or is deemed to receive, the distribution. If a Participant receives, or is deemed to receive, his entire Vested Account, his entire Nonvested Account shall be forfeited. If a Participant receives a distribution of his Vested Account from Employer Contributions which were not 100% vested when made, but less than his entire Vested Account from such Contributions, the amount to be forfeited shall be determined by multiplying his Nonvested Account from such Contributions by a fraction. The numerator of the fraction is the amount of the distribution derived from Employer Contributions which were not 100% vested when made and the denominator of the fraction is his entire Vested Account derived from such Contributions on the date of distribution.

 

A Forfeiture shall also occur as provided in the EXCESS AMOUNTS SECTION of this article.

 

Forfeitures shall be determined at least once during each Plan Year. Forfeitures may first be used to pay administrative expenses. Forfeitures of Matching Contributions which relate to excess amounts as provided in the EXCESS AMOUNTS SECTION of this article, which have not been used to pay administrative expenses, shall be applied to reduce the earliest Employer Contributions made after the Forfeitures are determined. Any other Forfeitures which have not been used to pay administrative expenses shall be applied to reduce the earliest Employer Contributions made after the Forfeitures are determined. Upon their application to reduce Employer Contributions, Forfeitures shall be deemed to be Employer Contributions.

 

27


If a Participant again becomes an Eligible Employee after receiving a distribution which caused all or a portion of his Vested Account to be forfeited, he shall have the right to repay to the Plan the entire amount of the distribution he received (excluding any amount of such distribution resulting from Contributions which were 100% vested when made). The repayment must be made in a single sum (repayment in installments is not permitted) before the earlier of the date five years after the date he again becomes an Eligible Employee or the end of the first period of five consecutive Vesting Breaks in Service which begin after the date of the distribution.

 

If the Participant makes the repayment above, the Plan Administrator shall restore to his Account an amount equal to his Nonvested Account which was forfeited on the date of distribution, unadjusted for any investment gains or losses. If no amount is to be repaid because the Participant was deemed to have received a distribution, or only received a distribution of Contributions which were 100% vested when made, and he again performs an Hour-of-Service as an Eligible Employee within the repayment period, the Plan Administrator shall restore the Participant’s Account as if he had made a required repayment on the date he performed such Hour-of-Service. Restoration of the Participant’s Account shall include restoration of all Code Section 411(d)(6) protected benefits with respect to that restored Account, according to applicable Treasury regulations. Provided, however, the Plan Administrator shall not restore the Nonvested Account if (i) a Forfeiture Date has occurred after the date of the distribution and on or before the date of repayment and (ii) that Forfeiture Date would result in a complete forfeiture of the amount the Plan Administrator would otherwise restore.

 

The Plan Administrator shall restore the Participant’s Account by the close of the Plan Year following the Plan Year in which repayment is made. Permissible sources for the restoration of the Participant’s Account are Forfeitures or special Employer Contributions. Such special Employer Contributions shall be made without regard to profits. The repaid and restored amounts are not included in the Participant’s Annual Additions, as defined in the CONTRIBUTION LIMITATION SECTION of this article.

 

SECTION 3.03—ALLOCATION.

 

Elective Deferral Contributions shall be allocated to Participants for whom such Contributions are made under the EMPLOYER CONTRIBUTIONS SECTION of this article. Such Contributions shall be allocated when made and credited to the Participant’s Account.

 

Matching Contributions shall be allocated to the persons for whom such Contributions are made under the EMPLOYER CONTRIBUTIONS SECTION of this article. Such Contributions shall be allocated when made and credited to the person’s Account.

 

The discretionary Qualified Nonelective Contributions to be used to reduce excess amounts, as described in the EMPLOYER CONTRIBUTIONS SECTION of this article, shall be allocated as of the last day of the Plan Year only to Nonhighly Compensated Employees who were Active Participants at any time during the Plan Year. Such Contributions (or separate Contributions) shall be allocated first to the eligible person under the Plan (or separate plan) with the lowest Annual Compensation for the Plan Year, then to the eligible person under the Plan (or separate plan) with the next lowest Annual Compensation, and so forth, in each case subject to the applicable limits of the CONTRIBUTION LIMITATION SECTION of this article. This amount shall be credited to the person’s Account.

 

If Leased Employees are Eligible Employees, in determining the amount of Employer Contributions allocated to a person who is a Leased Employee, contributions provided by the leasing organization which are

 

28


attributable to services such Leased Employee performs for the Employer shall be treated as provided by the Employer. Those contributions shall not be duplicated under this Plan.

 

SECTION 3.04—CONTRIBUTION LIMITATION.

 

  (a) Definitions . For the purpose of determining the contribution limitation set forth in this section, the following terms are defined.

 

Annual Additions means the sum of the following amounts credited to a Participant’s account for the Limitation Year:

 

  (1) employer contributions; (including Elective Deferral Contributions)

 

  (2) employee contributions; and

 

  (3) forfeitures.

 

Annual Additions to a defined contribution plan shall also include the following:

 

  (4) amounts allocated, after March 31, 1984, to an individual medical account, as defined in Code Section 415(l)(2), which are part of a pension or annuity plan maintained by the Employer,

 

  (5) amounts derived from contributions paid or accrued after December 31, 1985, in taxable years ending after such date, which are attributable to post-retirement medical benefits, allocated to the separate account of a key employee, as defined in Code Section 419A(d)(3), under a welfare benefit fund, as defined in Code Section 419(e), maintained by the Employer; and

 

  (6) allocations under a simplified employee pension.

 

For this purpose, any Excess Amount applied under (e) below in the Limitation Year to reduce Employer Contributions shall be considered Annual Additions for such Limitation Year.

 

Compensation means wages within the meaning of Code Section 3401(a) and all other payments of compensation 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 written statement under Code Sections 6041(d), 6051(a)(3), and 6052. Compensation must be determined without regard to any rules under Code Section 3401(a) that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in Code Section 3401(a)(2)). The amount reported in the “Wages, Tips and Other Compensation” box on Form W-2 satisfies this definition.

 

For any Self-employed Individual, Compensation shall mean Earned Income.

 

For purposes of applying the limitations of this section, Compensation for a Limitation Year is the Compensation actually paid or made available in gross income during such Limitation Year.

 

29


For Limitation Years beginning after December 31, 1997, for purposes of applying the limitations of this section, Compensation paid or made available during such Limitation Year shall include any elective deferral (as defined in Code Section 402(g)(3)), and any amount which is contributed or deferred by the Employer at the election of the Employee and which is not includible in the gross income of the Employee by reason of Code Section 125, 132(f)(4), or 457.

 

Defined Benefit Plan Fraction means a fraction, the numerator of which is the sum of the Participant’s Projected Annual Benefits under all the defined benefit plans (whether or not terminated) maintained by the Employer, and the denominator of which is the lesser of (i) 125 percent of the dollar limitation determined for the Limitation Year under Code Sections 415(b)(1)(A) and (d) or (ii) 140 percent of the Highest Average Compensation, including any adjustments under Code Section 415(b)(5).

 

Notwithstanding the above, if the Participant was a participant as of the first day of the first Limitation Year beginning after December 31, 1986, in one or more defined benefit plans maintained by the Employer which were in existence on May 6, 1986, the denominator of this fraction will not be less than 125 percent of the sum of the annual benefits under such plans which the Participant had accrued as of the close of the last Limitation Year beginning before January 1, 1987, disregarding any changes in the terms and conditions of the plan after May 5, 1986. The preceding sentence applies only if the defined benefit plans individually and in the aggregate satisfied the requirements of Code Section 415 for all Limitation Years beginning before January 1, 1987.

 

Defined Contribution Dollar Limitation means, for Limitation Years beginning after December 31, 1994, $30,000, as adjusted under Code Section 415(d).

 

Defined Contribution Plan Fraction means a fraction, the numerator of which is the sum of the Annual Additions to the Participant’s account under all the defined contribution plans (whether or not terminated) maintained by the Employer for the current and all prior Limitation Years (including the Annual Additions attributable to the Participant’s nondeductible employee contributions to all defined benefit plans, whether or not terminated, maintained by the Employer, and the Annual Additions attributable to all welfare benefit funds, individual medical accounts, and simplified employee pensions, maintained by the Employer), and the denominator of which is the sum of the maximum aggregated amounts for the current and all prior Limitation Years of service with the Employer (regardless of whether a defined contribution plan was maintained by the Employer). The maximum aggregate amount in any Limitation Year is the lesser of (i) 125 percent of the dollar limitation under Code Section 415(c)(1)(A) after adjustment under Code Section 415(d) or (ii) 35 percent of the Participant’s Compensation for such year.

 

If the Employee was a participant as of the end of the first day of the first Limitation Year beginning after December 31, 1986, in one or more defined contribution plans maintained by the Employer which were in existence on May 6, 1986, the numerator of this fraction will be adjusted if the sum of this fraction and the Defined Benefit Fraction would otherwise exceed 1.0 under the terms of this Plan. Under the adjustment, an amount equal to the product of (i) the excess of the sum of the fractions over 1.0 times (ii) the denominator of this fraction, will be permanently subtracted from the numerator of this fraction. The adjustment is calculated using the fractions as they would be computed as of the end of the last Limitation Year beginning before January 1, 1987, and disregarding any changes in the terms and conditions of the plan made after May 5,

 

30


1986, but using the Code Section 415 limitation applicable to the first Limitation Year beginning on or after January 1, 1987.

 

The Annual Addition for any Limitation Year beginning before January 1, 1987, shall not be recomputed to treat all employee contributions as Annual Additions.

 

Employer means the employer that adopts this Plan, and all members of a controlled group of corporations (as defined in Code Section 414(b) as modified by Code Section 415(h)), all commonly controlled trades or businesses (as defined in Code Section 415(c) as modified by Code Section 415(h)) or affiliated service groups (as defined in Code Section 414(m)) of which the adopting employer is a part, and any other entity required to be aggregated with the employer pursuant to regulations under Code Section 414(o).

 

Excess Amount means the excess of the Participant’s Annual Additions for the Limitation Year over the Maximum Permissible Amount.

 

Highest Average Compensation means the average Compensation for the three consecutive Limitation Years while he was an Employee (actual consecutive Limitation Years while he was an Employee, if employed less than three years) that produces the highest average.

 

Limitation Year means the consecutive 12-month period ending on the last day of each Plan Year, including corresponding consecutive 12-month periods before March 1, 1987. If the Limitation Year is other than the calendar year, execution of this Plan (or any amendment to this Plan changing the Limitation Year) constitutes the Employer’s adoption of a written resolution electing the Limitation Year. If the Limitation Year is amended to a different consecutive 12-month period, the new Limitation Year must begin on a date within the Limitation Year in which the amendment is made.

 

Maximum Permissible Amount means the maximum Annual Addition that may be contributed or allocated to a Participant’s Account under the Plan for any Limitation Year. This amount shall not exceed the lesser of:

 

  (1) The Defined Contribution Dollar Limitation, or

 

  (2) 25 percent of the Participant’s Compensation for the Limitation Year.

 

The compensation limitation referred to in (2) shall not apply to any contribution for medical benefits (within the meaning of Code Section 401 (h) or 419A(f)(2)) which is otherwise treated as an Annual Addition under Code Section 415(l)(1) or 419A(d)(2).

 

If a short Limitation Year is created because of an amendment changing the Limitation Year to a different consecutive 12-month period, the Maximum Permissible Amount will not exceed the Defined Contribution Dollar Limitation multiplied by the following fraction:

 

Number of months in the short Limitation Year
12

 

31


Projected Annual Benefit means the annual retirement benefit (adjusted to an actuarially equivalent straight life annuity if such benefit is expressed in a form other than a straight life annuity or qualified joint and survivor annuity) to which the Participant would be entitled under the terms of the plan assuming:

 

  (1) the Participant will continue employment until normal retirement age under the plan (or current age, if later), and

 

  (2) the Participant’s Compensation for the current Limitation Year and all other relevant factors used to determine benefits under the Plan will remain constant for all future Limitation Years.

 

  (b) If the Participant does not participate in, and has never participated in, another qualified plan maintained by the Employer or a welfare benefit fund, as defined in Code Section 419(e), maintained by the Employer, or an individual medical account, as defined in Code Section 415(l)(2), maintained by the Employer, or a simplified employee pension, as defined in Code Section 408(k), maintained by the Employer, which provides an Annual Addition, the amount of Annual Additions which may be credited to the Participant’s Account for any Limitation Year shall not exceed the lesser of the Maximum Permissible Amount or any other limitation contained in this Plan. If the Employer Contribution that would otherwise be contributed or allocated to the Participant’s Account would cause the Annual Additions for the Limitation Year to exceed the Maximum Permissible Amount, the amount contributed or allocated shall be reduced so that the Annual Additions for the Limitation Year will equal the Maximum Permissible Amount.

 

  (c) Prior to determining the Participant’s actual Compensation for the Limitation Year, the Employer may determine the Maximum Permissible Amount for a Participant on the basis of a reasonable estimation of the Participant’s Compensation for the Limitation Year, uniformly determined for all Participants similarly situated.

 

  (d) As soon as is administratively feasible after the end of the Limitation Year, the Maximum Permissible Amount for the Limitation Year will be determined on the basis of the Participant’s actual Compensation for the Limitation Year.

 

  (e) If a reasonable error in estimating a Participant’s Compensation for the Limitation Year, a reasonable error in determining the amount of elective deferrals (within the meaning of Code Section 402(g)(3)) that may be made with respect to any individual under the limits of Code Section 415, or under other facts and circumstances allowed by the Internal Revenue Service, there is an Excess Amount, the excess will be disposed of as follows:

 

  (1) Any Elective Deferral Contributions that are not the basis for Matching Contributions (plus attributable earnings), to the extent they would reduce the Excess Amount, will be distributed to the Participant.

 

  (2)

If after the application of (1) above an Excess Amount still exists, any Elective Deferral Contributions that are the basis for Matching Contributions (plus attributable earnings), to the extent they would reduce the Excess Amount, will be distributed to the Participant. Concurrently with the distribution of such Elective Deferral Contributions, any Matching Contributions which relate to any Elective Deferral Contributions distributed in the

 

32


 

preceding sentence, to the extent such application would reduce the Excess Amount, will be applied as provided in (3) or (4) below:

 

  (3) If after the application of (2) above an Excess Amount still exists, and the Participant is covered by the Plan at the end of the Limitation Year, the Excess Amount in the Participant’s Account will be used to reduce Employer Contributions for such Participant in the next Limitation Year, and each succeeding Limitation Year if necessary.

 

  (4) If after the application of (2) above an Excess Amount still exists, and the Participant is not covered by the Plan at the end of the Limitation Year, the Excess Amount will be held unallocated in a suspense account. The suspense account will be applied to reduce future Employer Contributions for all remaining Participants in the next Limitation Year, and each succeeding Limitation Year if necessary.

 

  (5) If a suspense account is in existence at any time during a Limitation Year pursuant to this (e), it will participate in the allocation of investment gains or losses. If a suspense account is in existence at any time during a particular Limitation Year, all amounts in the suspense account must be allocated and reallocated to Participant’s Accounts before any Employer Contributions may be made to the Plan for that Limitation Year. Excess Amounts held in a suspense account may not be distributed to Participants or former Participants.

 

  (f) This (f) applies if, in addition to this Plan, the Participant is covered under another qualified defined contribution plan maintained by the Employer, a welfare benefit fund maintained by the Employer, an individual medical account maintained by the Employer, or a simplified employee pension maintained by the Employer which provides an Annual Addition during any Limitation Year. The aggregate Annual Additions under all such qualified defined contribution plans, welfare benefit funds, individual medical accounts, and simplified employee pensions for the Limitation Year will not exceed the Maximum Permissible Amount. Any reduction necessary shall be made first to the profit sharing plans, then to all other such qualified defined contribution plans and welfare benefit funds, individual medical accounts, and simplified employee pensions and, if necessary, by reducing first those that were most recently allocated. Welfare benefit funds and individual medical accounts shall be deemed to be allocated first. However, Elective Deferral Contributions shall be the last contributions reduced before the welfare benefit fund or individual medical account is reduced.

 

  (g) If the Employer maintains, or at any time maintained, a qualified defined benefit plan covering any Participant in this Plan, the sum of the Participant’s Defined Benefit Plan Fraction and Defined Contribution Plan Fraction will not exceed 1.0 in any Limitation Year. The Projected Annual Benefit shall be limited first. If the Participant’s annual benefit(s) equal his Projected Annual Benefit, as limited, then Annual Additions to the defined contribution plan(s) shall be limited to the extent needed to reduce the sum to 1.0 in the same manner in which the Annual Additions are limited to meet the Maximum Permissible Amount. This subparagraph shall cease to apply effective as of the first Limitation Year beginning on or after January 1, 2000.

 

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SECTION 3.05—EXCESS AMOUNTS.

 

  (a) Definitions . For the purposes of this section, the following terms are defined:

 

ACP means the average (expressed as a percentage) of the Contribution Percentages of the Eligible Participants in a group.

 

ADP means the average (expressed as a percentage) of the Deferral Percentages of the Eligible Participants in a group.

 

Aggregate Limit means the greater of:

 

  (1) The sum of:

 

  (i) 125 percent of the greater of the ADP of the Nonhighly Compensated Employees for the prior Plan Year or the ACP of the Nonhighly Compensated Employees under the plan subject to Code Section 401(m) for the Plan Year beginning with or within the prior Plan Year of the cash or deferred arrangement, and

 

  (ii) the lesser of 200 percent or 2 percent plus the lesser of such ADP or ACP.

 

  (2) The sum of:

 

  (i) 125 percent of the lesser of the ADP of the Nonhighly Compensated Employees for the prior Plan Year or the ACP of the Nonhighly Compensated Employees under the plan subject to Code Section 401(m) for the Plan Year beginning with or within the prior Plan Year of the cash or deferred arrangement, and

 

  (ii) the lesser of 200 percent or 2 percent plus the greater of such ADP or ACP.

 

If the Employer has elected to use the current testing method, then, in calculating the Aggregate Limit for a particular Plan Year, the Nonhighly Compensated Employees’ ADP and ACP for that Plan Year, instead of the prior Plan Year, is used.

 

Contribution Percentage means the ratio (expressed as a percentage) of the Eligible Participant’s Contribution Percentage Amounts to the Eligible Participant’s Compensation for the Plan Year (whether or not the Eligible Participant was an Eligible Participant for the entire Plan Year). In modification of the foregoing, Compensation shall be limited to the Compensation received while an Eligible Participant. For an Eligible Participant for whom such Contribution Percentage Amounts for the Plan Year are zero, the percentage is zero.

 

Contribution Percentage Amounts means the sum of the Participant Contributions and Matching Contributions (that are not Qualified Matching Contributions taken into account for purposes of the ADP Test) made under the Plan on behalf of the Eligible Participant for the Plan Year. Such Contribution Percentage Amounts shall not include Matching Contributions that are forfeited either to correct Excess Aggregate Contributions or because the Contributions to which they relate are Excess Elective Deferrals, Excess Contributions, or Excess Aggregate Contributions. Under such rules as the Secretary of the Treasury shall prescribe, in determining the

 

34


Contribution Percentage the Employer may elect to include Qualified Nonelective Contributions under this Plan which were not used in computing the Deferral Percentage. The Employer may also elect to use Elective Deferral Contributions in computing the Contribution Percentage so long as the ADP Test is met before the Elective Deferral Contributions are used in the ACP Test and continues to be met following the exclusion of those Elective Deferral Contributions that are used to meet the ACP Test.

 

Deferral Percentage means the ratio (expressed as a percentage) of Elective Deferral Contributions under this Plan on behalf of the Eligible Participant for the Plan Year to the Eligible Participant’s Compensation for the Plan Year (whether or not the Eligible Participant was an Eligible Participant for the entire Plan Year). In modification of the foregoing, Compensation shall be limited to the Compensation received while an Eligible Participant. The Elective Deferral Contributions used to determine the Deferral Percentage shall include Excess Elective Deferrals (other than Excess Elective Deferrals of Nonhighly Compensated Employees that arise solely from Elective Deferral Contributions made under this Plan or any other plans of the Employer or a Controlled Group member), but shall exclude Elective Deferral Contributions that are used in computing the Contribution Percentage (provided the ADP Test is satisfied both with and without exclusion of these Elective Deferral Contributions). Under such rules as the Secretary of the Treasury shall prescribe, the Employer may elect to include Qualified Nonelective Contributions and Qualified Matching Contributions under this Plan in computing the Deferral Percentage. For an Eligible Participant for whom such contributions on his behalf for the Plan Year are zero, the percentage is zero.

 

Elective Deferral Contributions means any employer contributions made to a plan at the election of a participant, in lieu of cash compensation, and shall include contributions made pursuant to a salary reduction agreement or other deferral mechanism. With respect to any taxable year, a participant’s Elective Deferral Contributions are the sum of all employer contributions made on behalf of such participant pursuant to an election to defer under any qualified cash or deferred arrangement described in Code Section 401(k), any salary reduction simplified employee pension plan described in Code Section 408(k)(6), any SIMPLE IRA plan described in Code Section 408(p), any eligible deferred compensation plan under Code Section 457, any plan described under Code Section 501(c)(18), and any employer contributions made on behalf of a participant for the purchase of an annuity contract under Code Section 403(b) pursuant to a salary reduction agreement. Elective Deferral Contributions shall not include any deferrals properly distributed as excess annual additions.

 

Eligible Participant means, for purposes of determining the Deferral Percentage, any Employee who is otherwise entitled to make Elective Deferral Contributions under the terms of the Plan for the Plan Year. Eligible Participant means, for purposes of determining the Contribution Percentage, any Employee who is eligible (i) to make a Participant Contribution or an Elective Deferral Contribution (if the Employer takes such contributions into account in the calculation of the Contribution Percentage), or (ii) to receive a Matching Contribution (including forfeitures) or a Qualified Matching Contribution. If a Participant Contribution is required as a condition of participation in the Plan, any Employee who would be a Participant in the Plan if such Employee made such a contribution shall be treated as an Eligible Participant on behalf of whom no Participant Contributions are made.

 

35


Excess Aggregate Contributions means, with respect to any Plan Year, the excess of:

 

  (1) The aggregate Contribution Percentage Amounts taken into account in computing the numerator of the Contribution Percentage actually made on behalf of Highly Compensated Employees for such Plan Year, over

 

  (2) The maximum Contribution Percentage Amounts permitted by the ACP Test (determined by hypothetically reducing contributions made on behalf of Highly Compensated Employees in order of their Contribution Percentages beginning with the highest of such percentages).

 

Such determination shall be made after first determining Excess Elective Deferrals and then determining Excess Contributions.

 

Excess Contributions means, with respect to any Plan Year, the excess of:

 

  (1) The aggregate amount of employer contributions actually taken into account in computing the Deferral Percentage of Highly Compensated Employees for such Plan Year, over

 

  (2) The maximum amount of such contributions permitted by the ADP Test (determined by hypothetically reducing contributions made on behalf of Highly Compensated Employees in the order of the Deferral Percentages, beginning with the highest of such percentages).

 

Such determination shall be made after first determining Excess Elective Deferrals.

 

Excess Elective Deferrals means those Elective Deferral Contributions that are includible in a Participant’s gross income under Code Section 402(g) to the extent such Participant’s Elective Deferral Contributions for a taxable year exceed the dollar limitation under such Code section. Excess Elective Deferrals shall be treated as Annual Additions, as defined in the CONTRIBUTION LIMITATION SECTION of this article, under the Plan, unless such amounts are distributed no later than the first April 15 following the close of the Participant’s taxable year.

 

Matching Contributions means employer contributions made to this or any other defined contribution plan, or to a contract described in Code Section 403(b), on behalf of a participant on account of a Participant Contribution made by such participant, or on account of a participant’s Elective Deferral Contributions, under a plan maintained by the Employer or a Controlled Group member.

 

Participant Contributions means contributions made to the plan by or on behalf of a participant that are included in the participant’s gross income in the year in which made and that are maintained under a separate account to which the earnings and losses are allocated.

 

Qualified Matching Contributions means Matching Contributions which are subject to the distribution and nonforfeitability requirements under Code Section 401(k) when made.

 

Qualified Nonelective Contributions means any employer contributions (other than Matching Contributions) which an employee may not elect to have paid to him in cash instead of being contributed to the plan and which are subject to the distribution and nonforfeitability requirements under Code Section 401(k) when made.

 

36


  (b) Excess Elective Deferrals . A Participant may assign to this Plan any Excess Elective Deferrals made during a taxable year of the Participant by notifying the Plan Administrator in writing on or before the first following March 1 of the amount of the Excess Elective Deferrals to be assigned to the Plan. A Participant is deemed to notify the Plan Administrator of any Excess Elective Deferrals that arise by taking into account only those Elective Deferral Contributions made to this Plan and any other plan of the Employer or a Controlled Group member. The Participant’s claim for Excess Elective Deferrals shall be accompanied by the Participant’s written statement that if such amounts are not distributed, such Excess Elective Deferrals will exceed the limit imposed on the Participant by Code Section 402(g) for the year in which the deferral occurred. The Excess Elective Deferrals assigned to this Plan cannot exceed the Elective Deferral Contributions allocated under this Plan for such taxable year.

 

Notwithstanding any other provisions of the Plan, Elective Deferral Contributions in an amount equal to the Excess Elective Deferrals assigned to this Plan, plus any income and minus any loss allocable thereto, shall be distributed no later than April 15 to any Participant to whose Account Excess Elective Deferrals were assigned for the preceding year and who claims Excess Elective Deferrals for such taxable year.

 

The Excess Elective Deferrals shall be adjusted for income or loss. The income or loss allocable to such Excess Elective Deferrals shall be equal to the income or loss allocable to the Participant’s Elective Deferral Contributions for the taxable year in which the excess occurred multiplied by a fraction. The numerator of the fraction is the Excess Elective Deferrals. The denominator of the fraction is the closing balance without regard to any income or loss occurring during such taxable year (as of the end of such taxable year) of the Participant’s Account resulting from Elective Deferral Contributions.

 

Any Matching Contributions which were based on the Elective Deferral Contributions which are distributed as Excess Elective Deferrals, plus any income and minus any loss allocable thereto, shall be forfeited.

 

  (c) ADP Test . As of the end of each Plan Year after Excess Elective Deferrals have been determined, the Plan must satisfy the ADP Test. The ADP Test shall be satisfied using the prior year testing method, unless the Employer has elected to use the current year testing method.

 

  (1) Prior Year Testing Method . The ADP for a Plan Year for Eligible Participants who are Highly Compensated Employees for each Plan Year and the prior year’s ADP for Eligible Participants who were Nonhighly Compensated Employees for the prior Plan Year must satisfy one of the following tests:

 

  (i) The ADP for a Plan Year for Eligible Participants who are Highly Compensated Employees for the Plan Year shall not exceed the prior year’s ADP for Eligible Participants who were Nonhighly Compensated Employees for the prior Plan Year multiplied by 1.25; or

 

37


  (ii) The ADP for a Plan Year for Eligible Participants who are Highly Compensated Employees for the Plan Year:

 

  A. shall not exceed the prior year’s ADP for Eligible Participants who were Nonhighly Compensated Employees for the prior Plan Year multiplied by 2, and

 

  B. the difference between such ADPs is not more than 2.

 

If this is not a successor plan, for the first Plan Year the Plan permits any Participant to make Elective Deferral Contributions, for purposes of the foregoing tests, the prior year’s Nonhighly Compensated Employees’ ADP shall be 3 percent, unless the Employer has elected to use the Plan Year’s ADP for these Eligible Participants.

 

  (2) Current Year Testing Method . The ADP for a Plan Year for Eligible Participants who are Highly Compensated Employees for each Plan Year and the ADP for Eligible Participants who are Nonhighly Compensated Employees for the Plan Year must satisfy one of the following tests:

 

  (i) The ADP for a Plan Year for Eligible Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ADP for Eligible Participants who are Nonhighly Compensated Employees for the Plan Year multiplied by 1.25; or

 

  (ii) The ADP for a Plan Year for Eligible Participants who are Highly Compensated Employees for the Plan Year:

 

  A. shall not exceed the ADP for Eligible Participants who are Nonhighly Compensated Employees for the Plan Year multiplied by 2, and

 

  B. the difference between such ADP’s is not more than 2.

 

If the Employer has elected to use the current year testing method, that election cannot be changed unless (i) the Plan has been using the current year testing method for the preceding five Plan Years, or if less, the number of Plan Years the Plan has been in existence; or (ii) the Plan otherwise meets one of the conditions specified in Internal Revenue Service Notice 98-1 (or superseding guidance) for changing from the current year testing method.

 

A Participant is a Highly Compensated Employee for a particular Plan Year if he meets the definition of a Highly Compensated Employee in effect for that Plan Year. Similarly, a Participant is a Nonhighly Compensated Employee for a particular Plan Year if he does not meet the definition of a Highly Compensated Employee in effect for that Plan Year.

 

The Deferral Percentage for any Eligible Participant who is a Highly Compensated Employee for the Plan Year and who is eligible to have Elective Deferral Contributions (and Qualified Nonelective Contributions or Qualified Matching Contributions, or both, if treated as Elective Deferral Contributions for purposes of the ADP Test) allocated to his account under two or more arrangements described in Code Section 401(k) that are maintained by the Employer or a Controlled Group member shall be determined as if such Elective Deferral Contributions (and, if applicable, such Qualified Nonelective Contributions or Qualified Matching Contributions, or both) were made under a single arrangement. If a Highly Compensated Employee participates in two or

 

38


more cash or deferred arrangements that have different plan years, all cash or deferred arrangements ending with or within the same calendar year shall be treated as a single arrangement. The foregoing notwithstanding, certain plans shall be treated as separate if mandatorily disaggregated under the regulations of Code Section 401 (k). If the Employer elects to apply Code Section 410(b)(4)(B) to satisfy the requirements of Code Section 410(b), the Employer may elect to do a single ADP Test for the mandatorily disaggregated plans for Plan Years beginning after December 31, 1998 in accordance with Code Section 401 (k) and the regulations thereunder.

 

In the event this Plan satisfies the requirements of Code Section 401(k), 401(a)(4), or 410(b) only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such Code sections only if aggregated with this Plan, then this section shall be applied by determining the Deferral Percentage of Employees as if all such plans were a single plan. Any adjustments to the Nonhighly Compensated Employee ADP for the prior year shall be made in accordance with Internal Revenue Service Notice 98-1 (or superseding guidance), unless the Employer has elected to use the current year testing method. Plans may be aggregated in order to satisfy Code Section 401(k) only if they have the same plan year and use the same testing method for the ADP Test.

 

For purposes of the ADP Test, Elective Deferral Contributions, Qualified Nonelective Contributions, and Qualified Matching Contributions must be made before the end of the 12-month period immediately following the Plan Year to which the contributions relate.

 

The Employer shall maintain records sufficient to demonstrate satisfaction of the ADP Test and the amount of Qualified Nonelective Contributions or Qualified Matching Contributions, or both, used in such test.

 

If the Plan Administrator should determine during the Plan Year that the ADP Test is not being met, the Plan Administrator may limit the amount of future Elective Deferral Contributions of the Highly Compensated Employees.

 

Notwithstanding any other provisions of this Plan, Excess Contributions, plus any income and minus any loss allocable thereto, shall be distributed no later than the last day of each Plan Year to Participants to whose Accounts such Excess Contributions were allocated for the preceding Plan Year. Excess Contributions are allocated to the Highly Compensated Employees with the largest amounts of employer contributions taken into account in calculating the ADP Test for the year in which the excess arose, beginning with the Highly Compensated Employee with the largest amount of such employer contributions and continuing in descending order until all of the Excess Contributions have been allocated. For purposes of the preceding sentence, the “largest amount” is determined after distribution of any Excess Contributions. If such excess amounts are distributed more than 2 1/2 months after the last day of the Plan Year in which such excess amounts arose, a 10 percent excise tax shall be imposed on the employer maintaining the plan with respect to such amounts.

 

Excess Contributions shall be treated as Annual Additions, as defined in the CONTRIBUTION LIMITATION SECTION of this article.

 

39


The Excess Contributions shall be adjusted for income or loss. The income or loss allocable to such Excess Contributions allocated to each Participant shall be equal to the income or loss allocable to the Participant’s Elective Deferral Contributions (and, if applicable, Qualified Nonelective Contributions or Qualified Matching Contributions, or both) for the Plan Year in which the excess occurred multiplied by a fraction. The numerator of the fraction is the Excess Contributions. The denominator of the fraction is the closing balance without regard to any income or loss occurring during such Plan Year (as of the end of such Plan Year) of the Participant’s Account resulting from Elective Deferral Contributions (and Qualified Nonelective Contributions or Qualified Matching Contributions, or both, if such contributions are included in the ADP test).

 

Excess Contributions allocated to a Participant shall be distributed from the Participant’s Account resulting from Elective Deferral Contributions. If such Excess Contributions exceed the balance in the Participant’s Account resulting from Elective Deferral Contributions, the balance shall be distributed from the Participant’s Account resulting from Qualified Matching Contributions (if applicable) and Qualified Nonelective Contributions, respectively.

 

Any Matching Contributions which were based on the Elective Deferral Contributions which are distributed as Excess Contributions, plus any income and minus any loss allocable thereto, shall be forfeited.

 

  (d) ACP Test . As of the end of each Plan Year, the Plan must satisfy the ACP Test. The ACP Test shall be satisfied using the prior year testing method, unless the Employer has elected to use the current year testing method.

 

  (1) Prior Year Testing Method . The ACP for a Plan Year for Eligible Participants who are Highly Compensated Employees for each Plan Year and the prior year’s ACP for Eligible Participants who were Nonhighly Compensated Employees for the prior Plan Year must satisfy one of the following tests:

 

  (i) The ACP for the Plan Year for Eligible Participants who are Highly Compensated Employees for the Plan Year shall not exceed the prior year’s ACP for Eligible Participants who were Nonhighly Compensated Employees for the prior Plan Year multiplied by 1.25; or

 

  (ii) The ACP for a Plan Year for Eligible Participants who are Highly Compensated Employees for the Plan Year:

 

  A. shall not exceed the prior year’s ACP for Eligible Participants who were Nonhighly Compensated Employees for the prior Plan Year multiplied by 2, and

 

  B. the difference between such ACPs is not more than 2.

 

If this is not a successor plan, for the first Plan Year the Plan permits any Participant to make Participant Contributions, provides for Matching Contributions, or both, for purposes of the foregoing tests, the prior year’s Nonhighly Compensated Employees’ ACP shall be 3 percent, unless the Employer has elected to use the Plan Year’s ACP for these Eligible Participants.

 

40


  (2) Current Year Testing Method . The ACP for a Plan Year for Eligible Participants who are Highly Compensated Employees for each Plan Year and the ACP for Eligible Participants who are Nonhighly Compensated Employees for the Plan Year must satisfy one of the following tests:

 

  (i) The ACP for a Plan Year for Eligible Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ACP for Eligible Participants who are Nonhighly Compensated Employees for the Plan Year multiplied by 1.25; or

 

  (ii) The ACP for a Plan Year for Eligible Participants who are Highly Compensated Employees for the Plan Year:

 

  A. shall not exceed the ACP for Eligible Participants who are Nonhighly Compensated Employees for the Plan Year multiplied by 2, and

 

  B. the difference between such ACPs is not more than 2.

 

If the Employer has elected to use the current year testing method, that election cannot be changed unless (i) the Plan has been using the current year testing method for the preceding five Plan Years, or if less, the number of Plan Years the Plan has been in existence; or (ii) the Plan otherwise meets one of the conditions specified in Internal Revenue Service Notice 98-1 (or superseding guidance) for changing from the current year testing method.

 

A Participant is a Highly Compensated Employee for a particular Plan Year if he meets the definition of a Highly Compensated Employee in effect for that Plan Year. Similarly, a Participant is a Nonhighly Compensated Employee for a particular Plan Year if he does not meet the definition of a Highly Compensated Employee in effect for that Plan Year.

 

Multiple Use . If one or more Highly Compensated Employees participate in both a cash or deferred arrangement and a plan subject to the ACP Test maintained by the Employer or a Controlled Group member, and the sum of the ADP and ACP of those Highly Compensated Employees subject to either or both tests exceeds the Aggregate Limit, then the Contribution Percentage of those Highly Compensated Employees who also participate in a cash or deferred arrangement will be reduced in the manner described below for allocating Excess Aggregate Contributions so that the limit is not exceeded. The amount by which each Highly Compensated Employee’s Contribution Percentage is reduced shall be treated as an Excess Aggregate Contribution. The ADP and ACP of the Highly Compensated Employees are determined after any corrections required to meet the ADP Test and ACP Test and are deemed to be the maximum permitted under such tests for the Plan Year. Multiple use does not occur if either the ADP or ACP of the Highly Compensated Employees does not exceed 1.25 multiplied by the ADP and ACP, respectively, of the Nonhighly Compensated Employees.

 

The Contribution Percentage for any Eligible Participant who is a Highly Compensated Employee for the Plan Year and who is eligible to have Contribution Percentage Amounts allocated to his account under two or more plans described in Code Section 401(a) or arrangements described in Code Section 401(k) that are maintained by the Employer or a Controlled Group member shall be determined as if the total of such Contribution Percentage Amounts was made under each plan.

 

41


If a Highly Compensated Employee participates in two or more cash or deferred arrangements that have different plan years, all cash or deferred arrangements ending with or within the same calendar year shall be treated as a single arrangement. The foregoing notwithstanding, certain plans shall be treated as separate if mandatorily disaggregated under the regulations of Code Section 401(m). If the Employer elects to apply Code Section 410(b)(4)(B) to satisfy the requirements of Code Section 410(b), the Employer may elect to do a single ACP Test for the mandatorily disaggregated plans for Plan Years beginning after December 31, 1998 in accordance with Code Section 401(m) and the regulations thereunder.

 

In the event this Plan satisfies the requirements of Code Section 401(m), 401(a)(4), or 410(b) only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such Code sections only if aggregated with this Plan, then this section shall be applied by determining the Contribution Percentage of Employees as if all such plans were a single plan. Any adjustments to the Nonhighly Compensated Employee ACP for the prior year shall be made in accordance with Internal Revenue Service Notice 98-1 (or superseding guidance), unless the Employer has elected to use the current year testing method. Plans may be aggregated in order to satisfy Code Section 401(m) only if they have the same plan year and use the same testing method for the ACP Test.

 

For purposes of the ACP Test, Participant Contributions are considered to have been made in the Plan Year in which contributed to the Plan. Matching Contributions and Qualified Nonelective Contributions will be considered to have been made for a Plan Year if made no later than the end of the 12-month period beginning on the day after the close of the Plan Year.

 

The Employer shall maintain records sufficient to demonstrate satisfaction of the ACP Test and the amount of Qualified Nonelective Contributions or Qualified Matching Contributions, or both, used in such test.

 

Notwithstanding any other provisions of this Plan, Excess Aggregate Contributions, plus any income and minus any loss allocable thereto, shall be forfeited, if not vested, or distributed, if vested, no later than the last day of each Plan Year to Participants to whose Accounts such Excess Aggregate Contributions were allocated for the. preceding Plan Year. Excess Aggregate Contributions are allocated to the Highly Compensated Employees with the largest Contribution Percentage Amounts taken into account in calculating the ACP Test for the year in which the excess arose, beginning with the Highly Compensated Employee with the largest amount of such Contribution Percentage Amounts and continuing in descending order until all of the Excess Aggregate Contributions have been allocated. For purposes of the preceding sentence, the “largest amount” is determined after distribution of any Excess Aggregate Contributions. If such Excess Aggregate Contributions are distributed more than 2 1/2 months after the last day of the Plan Year in which such excess amounts arose, a 10 percent excise tax shall be imposed on the employer maintaining the plan with respect to such amounts.

 

Excess Aggregate Contributions shall be treated as Annual Additions, as defined in the CONTRIBUTION LIMITATION SECTION of this article.

 

The Excess Aggregate Contributions shall be adjusted for income or loss. The income or loss allocable to such Excess Aggregate Contributions allocated to each Participant shall be equal to the income or loss allocable to the Participant’s Contribution Percentage Amounts for the Plan

 

42


Year in which the excess occurred multiplied by a fraction. The numerator of the fraction is the Excess Aggregate Contributions. The denominator of the fraction is the closing balance without regard to any income or loss occurring during such Plan Year (as of the end of such Plan Year) of the Participant’s Account resulting from Contribution Percentage Amounts.

 

Excess Aggregate Contributions allocated to a Participant shall be distributed from the Participant’s Account resulting from Participant Contributions that are not required as a condition of employment or participation or for obtaining additional benefits from Employer Contributions. If such Excess Aggregate Contributions exceed the balance in the Participant’s Account resulting from such Participant’s Contributions, the balance shall be forfeited, if not vested, or distributed, if vested, on a pro-rata basis from the Participant’s Account resulting from Contribution Percentage Amounts.

 

  (e) Employer Elections . The Employer has made an election to use the current year testing method.

 

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ARTICLE IV

 

INVESTMENT OF CONTRIBUTIONS

 

SECTION 4.01 —INVESTMENT AND TIMING OF CONTRIBUTIONS.

 

The handling of Contributions is governed by the provisions of the Trust Agreement, the Annuity Contract, and any other funding arrangement in which the Plan Fund is or may be held or invested. To the extent permitted by the Trust Agreement, Annuity Contract, or other funding arrangement, the parties named below shall direct the Contributions to the guaranteed benefit policy portion of the Annuity Contract, any of the investment options available under the Annuity Contract, or any of the investment vehicles available under the Trust Agreement and may request the transfer of amounts resulting from those Contributions between such investment options and investment vehicles or the transfer of amounts between the guaranteed benefit policy portion of the Annuity Contract and such investment options and investment vehicles. A Participant may not direct the Trustee or Insurer to invest the Participant’s Account in collectibles. Collectibles mean any work of art, rug or antique, metal or gem, stamp or coin, alcoholic beverage, or other tangible personal property specified by the Secretary of the Treasury. However, for tax years beginning after December 31, 1997, certain coins and bullion as provided in Code Section 408(m)(3) shall not be considered collectibles. To the extent that a Participant who has investment direction fails to give timely direction, the Primary Employer shall direct the investment of his Account. If the Primary Employer has investment direction, such Account shall be invested ratably in the guaranteed benefit policy portion of the Annuity Contract, the investment options available under the Annuity Contract, or the investment vehicles available under the Trust Agreement in the same manner as the Accounts of all other Participants who do not direct their investments. The Primary Employer shall have investment direction for amounts which have not been allocated to Participants. To the extent an investment is no longer available, the Primary Employer may require that amounts currently held in such investment be reinvested in other investments.

 

At least annually, the Named Fiduciary shall review all pertinent Employee information and Plan data in order to establish the funding policy of the Plan and to determine appropriate methods of carrying out the Plan’s objectives. The Named Fiduciary shall inform the Trustee and any Investment Manager of the Plan’s short-term and long-term financial needs so the investment policy can be coordinated with the Plan’s financial requirements. The Trustee shall be directed as to investment of the Trust Fund by the Employer pursuant to the following provisions:

 

  (a) Employer Contributions other than Elective Deferral Contributions: Employer Contributions shall be invested in the Qualifying Employer Securities Fund.

 

  (b) Elective Deferral Contributions: The Participant shall direct the investment of Elective Deferral Contributions and transfer of amounts resulting from those Contributions.

 

  (c) Rollover Contributions: The Participant shall direct the investment of Rollover Contributions and transfer of amounts resulting from those Contributions.

 

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The Trust Fund shall consist of promissory notes evidencing indebtedness for loans obtained pursuant to section 5.06, and such other Investment Funds as the Trustee may, from time to time, establish and maintain, subject to the following:

 

  (a) The Trustee shall establish and at all times maintain and the Plan Administrator shall identify to Participants, former Participants and Beneficiaries of deceased former Participants a minimum of three Investment Funds, each of which shall, to the extent practicable: (i) consist of a diversified portfolio of assets, (ii) have risk and return characteristics that are materially different from at least two of the other Investment Funds, other than the Qualifying Employer Securities Fund; (iii) when combined with the investment opportunities offered by the other Investment Funds, enable any person to achieve within his Account a portfolio having aggregate risk and return characteristics at any point within a range normally appropriate for him; and (iv) when combined with the investment opportunities offered by the other Investment Funds, provide a reasonable means of minimizing through diversification the overall risk of the portfolio held in any person’s Account.

 

  (b) Each Investment Fund shall permit each Participant, former Participant and Beneficiary of a deceased former Participant to give investment instructions with respect thereto with a frequency that is appropriate in light of the market volatility to which the Investment Fund may reasonably be expected to be subject, and at least three of the Investment Funds shall permit each Participant, former Participant and Beneficiary to give investment instructions no less frequently than once within any three-month period.

 

  (c) At least one of the Investment Funds shall be an income-producing, low-risk, liquid fund into which funds may be transferred on any date on which funds may be transferred out of any other Investment Fund.

 

The Investment Funds may include or consist of, without limitation: units of interest in an investment company registered under the Investment Company Act of 1940, as amended, participation interests in a commingled, collective or common trust fund, provided that participation in such trust fund is restricted to trusts which are exempt from federal income taxation under Code Section 501(a); participation interests in a pooled separate account maintained by an insurance company authorized to do business in more than one state; or a portfolio of investments selected by the Trustee or by a professional investment manager selected by the Employer; provided, however, that in no event shall the Plan Administrator establish any Investment Fund, other than the Qualifying Employer Securities Fund, which would require the Employer, the Plan or the Plan Administrator to file a registration statement with the United States Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended.

 

SECTION 4.01 A - INVESTMENT DIRECTIONS, CHANGES AND TRANSFERS.

 

(a) Upon first becoming a Participant, such Participant shall direct, in the form and manner prescribed by the Plan Administrator, that any of his Elective Deferral Contributions, Employer Contributions (other than Matching Contributions) and Rollover Contributions be invested, in such proportions as he may designate, for him in any one or more of the Investment Funds. To the extent that a Participant shall fail to make an investment direction, or shall make an investment direction that is ineffective, his Elective Deferral Contributions, Employer Contributions (other than Matching Contributions) and Rollover Contributions shall be invested in an Investment Fund consisting primarily of interest-bearing obligations with a term to maturity of less than one year. The investment election made by a Participant with respect to his Elective Deferral Contributions shall also apply to his Employer Contributions (other than Matching Contributions). A Participant’s Matching Contributions shall be allocated in the Qualifying Employer Securities Fund.

 

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(b) The Plan Administrator shall provide, cause to be provided, or establish and communicate to Participants a procedure by which they may request, written confirmation of the execution of investment directions given under section 4.01 A(a) and (b).

 

(c) Subject to the limitations described in this section 4.01, a Participant may, by notice given in such form and manner as the Plan Administrator may prescribe, change his investment directions. In such event, the new investment direction shall become effective, as soon as reasonably practicable after such notice is given. Such election shall apply to all of his Elective Deferral Contributions, Employer Contributions (other than Matching Contributions) and Rollover Contributions invested on or after the date on which such election becomes effective. The Plan Administrator shall provide, cause to be provided, or establish and communicate to Participants a procedure by which they may request, written confirmation of the execution of changes of investment directions given under this section 4.01 A(c).

 

(d) Subject to the limitations of described in this section 4.01, by giving notice in such form and manner as the Plan Administrator may prescribe, a Participant or former Participant, or the Beneficiary of a deceased former Participant, may direct that all or part of his Account in any one or more of the Investment Funds be redeemed and the proceeds invested for him in any one or more of the other Investment Funds as of any date permitted under the terms of such Investment Funds. Such transfer shall be effected, as soon as reasonably practicable after such notice is given. The Plan Administrator shall provide, cause to be provided, or establish and communicate to Participants, former Participants and Beneficiaries a procedure by which they may request, written confirmation of the execution of instructions for transfers among Investment Funds given under this section 4.01 A(d).

 

(e) With respect to each Investment Fund, the Plan Administrator shall furnish or cause to be furnished to each Participant, former Participant and Beneficiary of a deceased former Participant, upon request, sufficient information to make informed decisions with regard to the Investment Funds and the incidents of ownership with respect to the Investment Funds, including, without limitation:

 

  (i) an explanation that the Plan is intended to constitute a participant-directed individual account plan described in section 404(c) of ERISA, and that the fiduciaries of the Plan may be relieved of liability for any losses which are the direct and necessary result of investment directions given by a Participant, former Participant or Beneficiary;

 

  (ii) a description of the Investment Funds, a general description of the investment objectives and risk and return characteristics of each and information relating to the type and diversification of assets comprising the portfolio of each;

 

  (iii) identification of any designated investment managers;

 

  (iv) an explanation of the circumstances under which investment instructions may be given with respect to each Investment Fund and an explanation of any specified limitations on such instructions under the Plan, including any restrictions on transfers to or from an Investment Fund and any restrictions on the exercise of voting, tender and similar rights appurtenant to an investment in each Investment Fund;

 

  (v) a description of any transaction fees and expenses which affect a Participant’s, former Participant’s or Beneficiary’s Account in connection with purchases or sales of interests in each Investment Fund;

 

46


  (vi) the name, address and telephone number of the person designated by the Plan Administrator to be responsible, upon request made, for providing the information described in section 4.01A(f) and a description of such information;

 

  (vii) in the case of an Investment Fund that is registered under the Securities Act of 1933, as amended, a copy of the most recent prospectus relating thereto, such prospectus to be provided to a Participant, former Participant or Beneficiary either immediately before or immediately after such person’s first investment in such Investment Fund; and

 

  (viii) subsequent to an investment in an Investment Fund, any materials provided to the Plan relating to the exercise of voting, tender or similar rights which are incidental to the holding of an interest in such Investment Fund, to the extent that the exercise of such rights is passed through to Participants, former Participants and Beneficiaries with an interest in the Investment Fund.

 

(f) In addition to the information furnished in accordance with section 4.01A(e), the Plan Administrator shall furnish, or cause to be furnished, either automatically or upon request by a Participant, former Participant or Beneficiary of a deceased former Participant the following information:

 

  (i) a description of the annual operating expenses of each Investment Fund which reduce the rate of return to Participants, former Participants or Beneficiaries, and the aggregate amount of such expenses for a specified period of time expressed as a percentage of the average net assets of such Investment Period over the same period;

 

  (ii) copies of any prospectuses, financial statements and reports, and of any other materials relating to any Investment Fund, provided to the Plan;

 

  (iii) a list of the assets comprising the portfolio of each Investment Fund which constitute plan assets within the meaning of 29 C.F.R. §2510.3-101, the value of each such assets (or the portion of the Investment Fund which it comprises) and, with respect to each such asset which is a fixed rate investment contract issued by a bank, savings and loan association or insurance company, the name of the issuer of the contract, the term of the contract and the rate of return on the contract;

 

  (iv) information concerning the value of the shares or units of each Investment Fund, as well as the past and current investment performance of each Investment Fund, determined on a reasonable and consistent basis; and

 

  (v) information concerning the value of shares or units in each Investment Fund held in the Account of the Participant, former Participant or Beneficiary;

 

all on the basis of the most current information available to the Plan Administrator or its designee.

 

(g) The Plan Administrator shall also furnish or cause to be furnished, upon request or otherwise to any Participant, former Participant or Beneficiary such other information and take or cause to be taken such other actions as shall be necessary or appropriate to permit the Plan to qualify as a participant-directed individual account plan within the meaning of section 404(c) of ERISA.

 

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SECTION 4.01B—INVESTMENT IN QUALIFYING EMPLOYER SECURITIES.

 

All or some portion of the Participant’s Account may be invested in the Qualifying Employer Securities Fund. Matching Contributions shall be invested in the Qualifying Employer Securities Fund. If the Participant has investment control, once an investment in the Qualifying Employer Securities Fund is made available to Participants, it shall continue to be available unless the Employer determines that it is no longer available. In the absence of an election to invest in Qualifying Employer Securities, Participants shall be deemed to have elected to have their Accounts invested wholly in other investment options of the Investment Fund. Once an election is made, it shall be considered to continue until a new election is’ made and becomes effective.

 

For purposes of determining the annual valuation of the Plan, and for reporting to Participants and regulatory authorities, the assets of the Plan shall be valued at least annually on the Valuation Date which corresponds to the last day of the Plan Year. The fair market value of Qualifying Employer Securities shall be determined on such Valuation Date. The prices of Qualifying Employer Securities as of the date of the transaction shall apply for purposes of valuing distributions and other transactions of the Plan to the extent such value is representative of the fair market value of such securities in the opinion of the Plan Administrator. The value of a Participant’s Account held in the Qualifying Employer Securities Fund may be expressed in units.

 

If the Qualifying Employer Securities are not publicly traded, or if an extremely thin market exists for such securities so that reasonable valuation may not be obtained from the market place, then such securities must be valued at least annually by an independent appraiser who is not associated with the Employer, the Plan Administrator, the Trustee, or any person related to any fiduciary under the Plan. The independent appraiser may be associated with a person who is merely a contract administrator with respect to the Plan, but who exercises no discretionary authority and is not a plan fiduciary.

 

If there is a public market for Qualifying Employer Securities of the type held by the Plan, then the Plan Administrator may use as the value of the securities the price at which such securities trade in such market. If the Qualifying Employer Securities do not trade on the relevant date, or if the market is very thin on such date, then the Plan Administrator may use for the valuation the next preceding trading day on which the trading prices are representative of the fair market value of such securities in the opinion of the Plan Administrator.

 

Cash dividends payable on the Qualifying Employer Securities shall be reinvested in additional shares of such securities. In the event of any cash or stock dividend or any stock split, such dividend or split shall be credited to the Accounts based on the number of shares of Qualifying Employer Securities credited to each Account as of the payable date of such dividend or split.

 

All purchases of Qualifying Employer Securities shall be made at a price, or prices, which, in the judgement of the Plan Administrator, do not exceed the fair market value of such securities.

 

In the event that the Trustee acquires Qualifying Employer Securities by purchase from a “disqualified person” as defined in Code Section 4975(e)(2) or from a “party-in-interest” as defined in ERISA Section 3(14), the terms of such purchase shall contain the provision that in the event there is a final determination by the Internal Revenue Service, the Department of Labor, or court of competent jurisdiction that the fair market value of such securities as of the date of purchase was less than the purchase price paid by the Trustee, then the seller shall pay or transfer, as the case may be, to the Trustee an amount of cash or shares of Qualifying Employer Securities equal in value to the difference between the purchase price and such fair market value for all such shares. In the event that cash or shares of Qualifying Employer Securities are paid or transferred to the Trustee under this provision, such securities shall be valued at their fair market value as of the date of such

 

48


purchase, and interest at a reasonable rate from the date of purchase to the date of payment or transfer shall be paid by the seller on the amount of cash paid.

 

The Plan Administrator may direct the Trustee to sell, resell, or otherwise dispose of Qualifying Employer Securities to any person, including the Employer, provided that any such sales to any disqualified person or party-in-interest, including the Employer, will be made at not less than the fair market value and no commission will be charged. Any such sale shall be made in conformance with ERISA Section 408(e).

 

The Employer is responsible for compliance with any applicable Federal or state securities law with respect to all aspects of the Plan. If the Qualifying Employer Securities or interest in this Plan are required to be registered in order to permit investment in the Qualifying Employer Securities Fund as provided in this section, then such investment will not be effective until the later of the effective date of the Plan or the date such registration or qualification is effective. The Employer, at its own expense, will take or cause to be taken any and all such actions as may be necessary or appropriate to effect such registration or qualification. Further, if the Trustee is directed to dispose of any Qualifying Employer Securities held under the Plan under circumstances which require registration or qualification of the securities under applicable Federal or state securities laws, then the Employer will, at its own expense, take or cause to be taken any and all such action as may be necessary or appropriate to effect such registration or qualification. The Employer is responsible for all compliance requirements under Section 16 of the Securities Act.

 

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ARTICLE V

 

BENEFITS

 

SECTION 5.01—RETIREMENT BENEFITS.

 

On a Participant’s Retirement Date, his Vested Account shall be distributed to him according to the distribution of benefits provisions of Article VI and the provisions of the SMALL AMOUNTS SECTION of Article X.

 

SECTION 5.02—DEATH BENEFITS.

 

On a Participant’s death, his Vested Account shall be distributed according to the distribution of benefits provisions of Article VI and the provisions of the SMALL AMOUNTS SECTION of Article X.

 

SECTION 5.03—VESTED BENEFITS.

 

If an Inactive Participant’s Vested Account is not payable under the SMALL AMOUNTS SECTION of Article X, he may elect, but is not required, to receive a distribution of his Vested Account after he ceases to be an Employee. A distribution under this paragraph shall be a retirement benefit and shall be distributed to the Participant according to the distribution of benefits provisions of Article VI.

 

A Participant may not elect to receive a distribution under the provisions of this section after he again becomes an Employee until he subsequently ceases to be an Employee and meets the requirements of this section.

 

If an Inactive Participant does not receive an earlier distribution, upon his Retirement Date or death, his Vested Account shall be distributed according to the provisions of the RETIREMENT BENEFITS SECTION or the DEATH BENEFITS SECTION of Article V.

 

The Nonvested Account of an Inactive Participant who has ceased to be an Employee shall remain a part of his Account until it becomes a Forfeiture. However, if he again becomes an Employee so that his Vesting Percentage can increase, the Nonvested Account may become a part of his Vested Account.

 

SECTION 5.04—WHEN BENEFITS START.

 

  (a) Unless otherwise elected, benefits shall begin before the 60th day following the close of the Plan Year in which the latest date below occurs:

 

  (1) The date the Participant attains age 65 (or Normal Retirement Age, if earlier).

 

  (2) The 10th anniversary of the Participant’s Entry Date.

 

  (3) The date the Participant ceases to be an Employee.

 

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Notwithstanding the foregoing, the failure of a Participant to consent to a distribution while a benefit is immediately distributable, within the meaning of the ELECTION PROCEDURES SECTION of Article VI, shall be deemed to be an election to defer the start of benefits sufficient to satisfy this section.

 

The Participant may elect to have his benefits begin after the latest date for beginning benefits described above, subject to the following provisions of this section. The Participant shall make the election in writing. Such election must be made before his Normal Retirement Date or the date he ceases to be an Employee, if later. The election must describe the form of distribution and the date benefits will begin. The Participant shall not elect a date for beginning benefits or a form of distribution that would result in a benefit payable when he dies which would be more than incidental within the meaning of governmental regulations.

 

Benefits shall begin on an earlier date if otherwise provided in the Plan. For example, the Participant’s Retirement Date or Required Beginning Date, as defined in the DEFINITIONS SECTION of Article VII.

 

  (b) The Participant’s Vested Account which results from Elective Deferral Contributions and Qualified Nonelective Contributions may not be distributed to a Participant or to his Beneficiary (or Beneficiaries) in accordance with the Participant’s or Beneficiary’s (or Beneficiaries’) election, earlier than separation from service, death, or disability. Such amount may also be distributed upon:

 

  (1) Termination of the Plan, as permitted in Article VIII.

 

  (2) The disposition by the Employer, if the Employer is a corporation, to an unrelated corporation of substantially all of the assets, within the meaning of Code Section 409(d)(2), used in a trade or business of the Employer if the Employer continues to maintain the Plan after the disposition, but only with respect to Employees who continue employment with the corporation acquiring such assets.

 

  (3) The disposition by the Employer, if the Employer is a corporation, to an unrelated entity of the Employer’s interest in a subsidiary, within the meaning of Code Section 409(d)(3), if the Employer continues to maintain the Plan, but only with respect to Employees who continue employment with such subsidiary.

 

  (4) The attainment of age 59 1/2 as permitted in the WITHDRAWAL BENEFITS SECTION of this article.

 

  (5) The hardship of the Participant as permitted in the WITHDRAWAL BENEFITS SECTION of this article.

 

All distributions that may be made pursuant to one or more of the foregoing distributable events will be a retirement benefit and shall be distributed to the Participant according to the distribution of benefit provisions of Article VI. In addition, distributions that are triggered by (1), (2) and (3) above must be made in a lump sum. A lump sum shall include a distribution of an annuity contract.

 

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SECTION 5.05—WITHDRAWAL BENEFITS.

 

A fully vested Participant who has attained age 59 1/2 may withdraw all or any portion of his Vested Account which results from the following Contributions if the amounts to be withdrawn have been allocated to the Participant for two (2) or more years or the Participant has been a Participant for at least five (5) years:

 

Elective Deferral Contributions

Matching Contributions

Qualified Nonelective Contributions

Rollover Contributions

 

A Participant may make such a withdrawal at any time.

 

A Participant may withdraw any part of his Vested Account which results from the following Contributions:

 

Elective Deferral Contributions

Matching Contributions

Rollover Contributions

 

in the event of hardship due to an immediate and heavy financial need. Withdrawals from the Participant’s Account resulting from Elective Deferral Contributions shall be limited to the amount of the Participant’s Elective Deferral Contributions plus income allocable thereto credited to his Account as of December 31, 1988. Immediate and heavy financial need shall be limited to: (i) expenses incurred or necessary for medical care, described in Code Section 213(d), of the Participant, the Participant’s spouse, or any dependents of the Participant (as defined in Code Section 152); (ii) purchase (excluding mortgage payments) of a principal residence for the Participant; (iii) payment of tuition, related educational fees, and room and board expenses, for the next 12 months of post-secondary education for the Participant, his spouse, children, or dependents; (iv) the need to prevent the eviction of the Participant from his principal residence or foreclosure on the mortgage of the Participant’s principal residence; or (v) any other distribution which is deemed by the Commissioner of Internal Revenue to be made on account of immediate and heavy financial need as provided in Treasury regulations.

 

No withdrawal shall be allowed which is not necessary to satisfy such immediate and heavy financial need. Such withdrawal shall be deemed necessary only if all of the following requirements are met: (i) the distribution is not in excess of the amount of the immediate and heavy financial need (including amounts necessary to pay any Federal, state, or local income taxes or penalties reasonably anticipated to result from the distribution); (ii) the Participant has obtained all distributions, other than hardship distributions, and all nontaxable loans currently available under all plans maintained by the Employer; (iii) the Plan, and all other plans maintained by the Employer, provide that the Participant’s elective contributions and participant contributions will be suspended for at least 12 months after receipt of the hardship distribution; and (iv) the Plan, and all other plans maintained by the Employer, provide that the Participant may not make elective contributions for the Participant’s taxable year immediately following the taxable year of the hardship distribution in excess of the applicable limit under Code Section 402(g) for such next taxable year less the amount of such Participant’s elective contributions for the taxable year of the hardship distribution. The Plan will suspend elective contributions and participant contributions for 12 months and limit elective deferrals as provided in the preceding sentence. A Participant shall not cease to be an Eligible Participant, as defined in the

 

52


EXCESS AMOUNTS SECTION of Article III, merely because his elective contributions or participant contributions are suspended.

 

A request for withdrawal shall be made in such manner and in accordance with such rules as the Employer will prescribe for this purpose (including by means of voice response or other electronic means under circumstances the Employer permits). Withdrawals shall be a retirement benefit and shall be distributed to the Participant according to the distribution of benefits provisions of Article VI. A forfeiture shall not occur solely as a result of a withdrawal.

 

SECTION 5.06—LOANS TO PARTICIPANTS.

 

Loans shall be made available to all Participants on a reasonably equivalent basis. For purposes of this section, and unless otherwise specified, Participant means any Participant or Beneficiary who is a party-in-interest as defined in ERISA. Loans shall not be made to Highly Compensated Employees in an amount greater than the amount made available to other Participants.

 

No loans will be made to any shareholder-employee or Owner-employee. For purposes of this requirement, a shareholder-employee means an employee or officer of an electing small business (Subchapter S) corporation who owns (or is considered as owning within the meaning of Code Section 318(a)(1)), on any day during the taxable year of such corporation, more than 5 percent of the outstanding stock of the corporation.

 

A loan to a Participant shall be a Participant-directed investment of his Account. The portion of the Participant’s Account held in the Qualifying Employer Securities Fund may be redeemed for purposes of a loan only after the amount held in other investment options has been depleted. The loan is a Trust Fund investment but no Account other than the borrowing Participant’s Account shall share in the interest paid on the loan or bear any expense or loss incurred because of the loan.

 

The number of outstanding loans shall be limited to 3. not be limited. No more than 3 loans shall be approved for any Participant in any 12-month period. The minimum amount of any loan shall be $500.

 

Loans must be adequately secured and bear a reasonable rate of interest.

 

The amount of the loan shall not exceed the maximum amount that may be treated as a loan under Code Section 72(p) (rather than a distribution) to the Participant and shall be equal to the lesser of (a) or (b) below:

 

  (a) $50,000, reduced by the highest outstanding loan balance of loans during the one-year period ending on the day before the new loan is made.

 

  (b) The greater of (1) or (2), reduced by (3) below:

 

  (1) One-half of the Participant’s Vested Account.

 

  (2) $10,000.

 

  (3) Any outstanding loan balance on the date the new loan is made.

 

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For purposes of this maximum, a Participant’s Vested Account does not include any accumulated deductible employee contributions, as defined in Code Section 72(o)(5)(B), and all qualified employer plans, as defined in Code Section 72(p)(4), of the Employer and any Controlled Group member shall be treated as one plan.

 

The foregoing notwithstanding, the amount of such loan shall not exceed 50 percent of the amount of the Participant’s Vested Account, reduced by any outstanding loan balance on the date the new loan is made. For purposes of this maximum, a Participant’s Vested Account does not include any accumulated deductible employee contributions, as defined in Code Section 72(o)(5)(B). No collateral other than a portion of the Participant’s Vested Account (as limited above) shall be accepted. The Loan Administrator shall determine if the collateral is adequate for the amount of the loan requested.

 

A Participant must obtain the consent of his spouse, if any, to the use of the Vested Account as security for the loan. Spousal consent shall be obtained no earlier than the beginning of the 90-day period that ends on the date on which the loan to be so secured is made. The consent must be in writing, must acknowledge the effect of the loan, and must be witnessed by a plan representative or a notary public. Such consent shall thereafter be binding with respect to the consenting spouse or any subsequent spouse with respect to that loan. A new consent shall be required if the Vested Account is used for collateral upon renegotiation, extension, renewal, or other revision of the loan. No consent shall be required if subparagraph (d) of the ELECTION PROCEDURES SECTION of Article VI applies.

 

If a valid spousal consent has been obtained in accordance with the above, or spousal consent is not required, then, notwithstanding any other provision of this Plan, the portion of the Participant’s Vested Account used as a security interest held by the Plan by reason of a loan outstanding to the Participant shall be taken into account for purposes of determining the amount of the Vested Account payable at the time of the death or distribution, but only if the reduction is used as repayment of the loan. If spousal consent is required and less than 100 percent of the Participant’s Vested Account (determined without regard to the preceding sentence) is payable to the surviving spouse, then the Vested Account shall be adjusted by first reducing the Vested Account by the amount of the security used as repayment of the loan, and then determining the benefit payable to the surviving spouse.

 

Each loan shall bear a reasonable fixed rate of interest to be determined by the Loan Administrator. In determining the interest rate, the Loan Administrator shall take irito consideration fixed interest rates currently being charged by commercial lenders for loans of comparable risk on similar terms and for similar durations, so that the interest will provide for a return commensurate with rates currently charged by commercial lenders for loans made under similar circumstances. The Loan Administrator shall not discriminate among Participants in the matter of interest rates; but loans granted at different times may bear different interest rates in accordance with the current appropriate standards.

 

The loan shall by its terms require that repayment (principal and interest) be amortized in level payments, not less frequently than quarterly, over a period not extending beyond five years from the date of the loan. If the loan is used to acquire a dwelling unit, which within a reasonable time (determined at the time the loan is made) will be used as the principal residence of the Participant, the repayment period may extend beyond five years from the date of the loan. If the loan is used to purchase a primary residence, the repayment period will not extend beyond fifteen (15) years form the date of the loan. The period of repayment for any loan shall be arrived at by mutual agreement between the Loan Administrator and the Participant and if the loan is for a principal residence, shall not be made for a period longer than the repayment period consistent with commercial practices.

 

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The Participant shall make an application for a loan in such manner and in accordance with such rules as the Employer shall prescribe for this purpose (including by means of voice response or other electronic means under circumstances the Employer permits). The application must specify the amount and duration requested.

 

Information contained in the application for the loan concerning the income, liabilities, and assets of the Participant will be evaluated to determine whether there is a reasonable expectation that the Participant will be able to satisfy payments on the loan as due. Additionally, the Loan Administrator will pursue any appropriate further investigations concerning the creditworthiness and credit history of the Participant to determine whether a loan should be approved.

 

Each loan shall be fully documented in the form of a promissory note signed by the Participant for the face amount of the loan, together with interest determined as specified above.

 

There will be an assignment of collateral to the Plan executed at the time the loan is made.

 

In those cases where repayment through payroll deduction is available, installments are so payable, and a payroll deduction agreement shall be executed by the Participant at the time the loan is made. Loan repayments that are accumulated through payroll deduction shall be paid to the Trustee by the earlier of (i) the date the loan repayments can reasonably be segregated from the Employer’s assets, or (ii) the 15th business day of the month following the month in which such amounts would otherwise have been paid in cash to the Participant.

 

Where payroll deduction is not available, payments in cash are to be timely made. Any payment that is not by payroll deduction shall be made payable to the Employer or the Trustee, as specified in the promissory note, and delivered to the Loan Administrator, including prepayments, service fees and penalties, if any, and other amounts due under the note. The Loan Administrator shall deposit such amounts into the Plan as soon as administratively practicable after they are received, but in no event later than the 15th business day of the month after they are received.

 

The promissory note may provide for reasonable late payment penalties and service fees. Any penalties or service fees shall be applied to all Participants in a nondiscriminatory manner. If the promissory note so provides, such amounts may be assessed and collected from the Account of the Participant as part of the loan balance.

 

Each loan may be paid prior to maturity, in part or in full, without penalty or service fee, except as may be set out in the promissory note.

 

The Plan shall suspend loan payments for a period not exceeding one year during which an approved unpaid leave of absence occurs other than a military leave of absence. The Loan Administrator shall provide the Participant a written explanation of the effect of the suspension of payments upon his loan.

 

If a Participant separates from service (or takes a leave of absence) from the Employer because of service in the military and does not receive a distribution of his Vested Account, the Plan shall suspend loan payments until the Participant’s completion of military service or until the Participant’s fifth anniversary of commencement of military service, if earlier, as permitted under Code Section 414(u). The Loan Administrator shall provide the Participant a written explanation of the effect of his military service upon his loan.

 

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If any payment of principal and interest, or any portion thereof, remains unpaid for more than 90 days after due, the loan shall be in default. For purposes of Code Section 72(p), the Participant shall then be treated as having received a deemed distribution regardless of whether or not a distributable event has occurred.

 

Upon default, the Plan has the right to pursue any remedy available by law to satisfy the amount due, along with accrued interest, including the right to enforce its claim against the security pledged and execute upon the collateral as allowed by law. The entire principal balance whether or not otherwise then due, along with accrued interest, shall become immediately due and payable without demand or notice, and subject to collection or satisfaction by any lawful means, including specifically, but not limited to, the right to enforce the claim against the security pledged and to execute upon the collateral as allowed by law.

 

In the event of default, foreclosure on the note and attachment of security or use of amounts pledged to satisfy the amount then due shall not occur until a distributable event occurs in accordance with the Plan, and shall not occur to an extent greater than the amount then available upon any distributable event which has occurred under the Plan.

 

All reasonable costs and expenses, including but not limited to attorney’s fees, incurred by the Plan in connection with any default or in any proceeding to enforce any provision of a promissory note or instrument by which a promissory note for a Participant loan is secured, shall be assessed and collected from the Account of the Participant as part of the loan balance.

 

If payroll deduction is being utilized, in the event that a Participant’s available payroll deduction amounts in any given month are insufficient to satisfy the total amount due, there will be an increase in the amount taken subsequently, sufficient to make up the amount that is then due. It any amount remains past due more than 90 days, the entire principal amount, whether or not otherwise then due, along with interest then accrued, shall become due and payable, as above.

 

If no distributable event has occurred under the Plan at the time that the Participant’s Vested Account would otherwise be used under this provision to pay any amount due under the outstanding loan, this will not occur until the time, or in excess of the extent to which, a distributable event occurs under the Plan. An outstanding loan will become due and payable in full 60 days after a Participant ceases to be an Employee and a party-in-interest as defined in ERISA or after complete termination of the Plan.

 

SECTION 5.07—DISTRIBUTIONS UNDER QUALIFIED DOMESTIC RELATIONS ORDERS.

 

The Plan specifically permits distributions to an Alternate Payee under a qualified domestic relations order as defined in Code Section 414(p), at any time, irrespective of whether the Participant has attained his earliest retirement age, as defined in Code Section 414(p), under the Plan. A distribution to an Alternate Payee before the Participant has attained his earliest retirement age is available only if the order specifies that distribution shall be made prior to the earliest retirement age or allows the Alternate Payee to elect a distribution prior to the earliest retirement age.

 

Nothing in this section shall permit a Participant to receive a distribution at a time otherwise not permitted under the Plan nor shall it permit the Alternate Payee to receive a form of payment not permitted under the Plan.

 

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The benefit payable to an Alternate Payee shall be subject to the provisions of the SMALL AMOUNTS SECTION of Article X if the value of the benefit does not exceed $5,000 ($3,500 for Plan Years beginning before August 6, 1997).

 

The Plan Administrator shall establish reasonable procedures to determine the qualified status of a domestic relations order. Upon receiving a domestic relations order, the Plan Administrator shall promptly notify the Participant and the Alternate Payee named in the order, in writing, of the receipt of the order and the Plan’s procedures for determining the qualified status of the order. Within a reasonable period of time after receiving the domestic relations order, the Plan Administrator shall determine the qualified status of the order and shall notify the Participant and each Alternate Payee, in writing, of its determination. The Plan Administrator shall provide notice under this paragraph by mailing to the individual’s address specified in the domestic relations order, or in a manner consistent with Department of Labor regulations. The Plan Administrator may treat as qualified any domestic relations order entered into before January 1, 1985, irrespective of whether it satisfies all the requirements described in Code Section 414(p).

 

If any portion of the Participant’s Vested Account is payable during the period the Plan Administrator is making its determination of the qualified status of the domestic relations order, a separate accounting shall be made of the amount payable. If the Plan Administrator determines the order is a qualified domestic relations order within 18 months of the date amounts are first payable following receipt of the order, the payable amounts shall be distributed in accordance with the order. If the Plan Administrator does not make its determination of the qualified status of the order within the 18-month determination period, the payable amounts shall be distributed in the manner the Plan would distribute if the order did not exist and the order shall apply prospectively if the Plan Administrator later determines the order is a qualified domestic relations order.

 

The Plan shall make payments or distributions required under this section by separate benefit checks or other separate distribution to the Alternate Payee(s).

 

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ARTICLE VI

 

DISTRIBUTION OF BENEFITS

 

SECTION 6.01—AUTOMATIC FORMS OF DISTRIBUTION.

 

Unless an optional form of benefit is selected pursuant to a qualified election within the election period (see the ELECTION PROCEDURES SECTION of this article), the automatic form of benefit payable to or on behalf of a Participant is determined as follows:

 

  (a) Retirement Benefits . The automatic form of retirement benefit for a Participant who does not die before his Annuity Starting Date shall be a single sum payment.

 

  (b) Death Benefits . The automatic form of death benefit for a Participant who dies before his Annuity Starting Date shall be a single-sum payment to the Participant’s Beneficiary.

 

SECTION 6.02—OPTIONAL FORMS OF DISTRIBUTION.

 

  (a) Retirement Benefits . The only form of retirement benefit for that portion of a Participant’s Account which is not held in the Qualifying Employer Securities Fund is a single sum payment. The optional forms of retirement benefit for that portion of a Participant’s Account which is held in the Qualifying Employer Securities Fund are a single sum payment and a distribution in kind.

 

Election of an optional form is subject to the qualified election provisions of the ELECTION PROCEDURES SECTION of this article and the distribution requirements of Article VII.

 

  (b) Death Benefits . The only form of death benefit is a single-sum payment.

 

SECTION 6.03—ELECTION PROCEDURES.

 

The Participant or spouse shall make any election under this section in writing. The Plan Administrator may require such individual to complete and sign any necessary documents as to the provisions to be made. Any election permitted under (a) and (b) below shall be subject to the qualified election provisions of (c) below.

 

  (a) Retirement Benefits . A Participant may elect to have retirement benefits from that portion of his Account which is held in the Qualifying Employer Securities Fund distributed under any of the optional forms of retirement benefit available in the OPTIONAL FORMS OF DISTRIBUTION SECTION of this article.

 

  (b) Death Benefits . A Participant may elect his Beneficiary.

 

  (c) Election . The Participant may make an election at any time during the election period. The Participant may revoke the election made (or make a new election) at any time and any number of times during the election period. An election is effective only if it meets the consent requirements below.

 

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  (1) Election Period for Retirement Benefits . The Participant may make an election as to retirement benefits at any time before the Annuity Starting Date.

 

  (2) Election Period for Death Benefits . A Participant may make an election as to death benefits at any time before he dies.

 

  (3) Consent to Election . If the Participant’s Vested Account exceeds $5,000 ($3,500 for Plan Years beginning before August 6, 1997), any benefit which is immediately distributable requires the consent of the Participant. Such consent shall also be required if the Participant’s Vested Account at the time of any prior distribution exceeded $5,000 ($3,500 for Plan Years beginning before August 6, 1997). However, for distributions made after March 21, 1999, such consent shall only be required if the Participant’s Vested Account exceeds $5,000.

 

The consent of the Participant to a benefit which is immediately distributable must not be made before the date the Participant is provided with the notice of the ability to defer the distribution. Such consent shall be made in writing.

 

The consent shall not be made more than 90 days before the Annuity Starting Date. The consent of the Participant shall not be required to the extent that a distribution is required to satisfy Code Section 401(a)(9) or Code Section 415.

 

In addition, upon termination of this Plan, if the Plan does not offer an annuity option (purchased from a commercial provider), and if the Employer (or any entity within the same Controlled Group) does not maintain another defined contribution plan (other than an employee stock ownership plan as defined in Code Section 4975(e)(7)), the Participant’s Account balance will, without the Participant’s consent, be distributed to the Participant. However, if any entity within the same Controlled Group maintains another defined contribution plan (other than an employee stock ownership plan as defined in Code Section 4975(e)(7)) then the Participant’s Account will be transferred, without the Participant’s consent, to the other plan if the Participant does not consent to an immediate distribution.

 

A benefit is immediately distributable if any part of the benefit could be distributed to the Participant before the Participant attains the older of Normal Retirement Age or age 62.

 

Spousal consent is needed to name a Beneficiary other than the Participant’s spouse. If a Participant names a Beneficiary other than his spouse, the spouse has the right to limit consent only to a specific Beneficiary. The spouse can relinquish such right. Such consent shall be in writing. The spouse’s consent shall be witnessed by a plan representative or notary public. The spouse’s consent must acknowledge the effect of the election, including that the spouse had the right to limit consent only to a specific Beneficiary and that the relinquishment of such right was voluntary. Unless the consent of the spouse expressly permits designations by the Participant without a requirement of further consent by the spouse, the spouse’s consent must be limited to the Beneficiary, class of Beneficiaries, or contingent Beneficiary named in the election.

 

Spousal consent is not required, however, if the Participant establishes to the satisfaction of the plan representative that the consent of the spouse cannot be obtained because there

 

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is no spouse or the spouse cannot be located. A spouse’s consent under this paragraph shall not be valid with respect to any other spouse. A Participant may revoke a prior election without the consent of the spouse. Any new election will require a new spousal consent, unless the consent of the spouse expressly permits such election by the Participant without further consent by the spouse. A spouse’s consent may be revoked at any time within the Participant’s election period.

 

SECTION 6.04—NOTICE REQUIREMENTS.

 

Optional Forms of Retirement Benefit and Right to Defer . The Plan Administrator shall furnish to the Participant a written explanation of the optional forms of retirement benefit in the OPTIONAL FORMS OF DISTRIBUTION SECTION of this article, including the material features and relative values of these options, in a manner that would satisfy the notice requirements of Code Section 417(a)(3) and the right of the Participant to defer distribution until the benefit is no longer immediately distributable.

 

The Plan Administrator shall furnish the written explanation by a method reasonably calculated to reach the attention of the Participant no less than 30 days, and no more than 90 days, before the Annuity Starting Date.

 

However, distribution may begin less than 30 days after the notice described in this subparagraph is given, provided the Plan Administrator clearly informs the Participant that he has a right to a period of at least 30 days after receiving the notice to consider the decision of whether or not to elect a distribution (and if applicable, a particular distribution option), and the Participant, after receiving the notice, affirmatively elects a distribution.

 

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ARTICLE VII

 

DISTRIBUTION REQUIREMENTS

 

SECTION 7.01—APPLICATION.

 

The timing of any distribution must meet the requirements of this article.

 

SECTION 7.02—DEFINITIONS.

 

For purposes of this article, the following terms are defined:

 

5-percent Owner means a 5-percent owner as defined in Code Section 416. A Participant is treated as a 5-percent Owner for purposes of this article if such Participant is a 5-percent Owner at any time during the Plan Year ending with or within the calendar year in which such owner attains age 70 1/2.

 

In addition, a Participant is treated as a 5-percent Owner for purposes of this article if such Participant becomes a 5-percent Owner in a later Plan Year. Such Participant’s Required Beginning Date shall not be later than the April 1 of the calendar year following the calendar year in which such later Plan Year ends.

 

Once distributions have begun to a 5-percent Owner under this article, they must continue to be distributed, even if the Participant ceases to be a 5-percent Owner in a subsequent year.

 

Required Beginning Date means, for a Participant who is a 5-percent Owner, the April 1 of the calendar year following the calendar year in which he attains age 70 1/2.

 

Required Beginning Date means, for any Participant who is not a 5-percent Owner, the April 1 of the calendar year following the later of the calendar year in which he attains age 70 1/2 or the calendar year in which he retires.

 

The preretirement age 70 1/2 distribution option is only eliminated with respect to Participants who reach age 70 1/2 in or after a calendar year that begins after the later of December 31, 1998, or the adoption date of the amendment which eliminated such option. The preretirement age 70 1/2 distribution is an optional form of benefit under which benefits payable in a particular distribution form (including any modifications that may be elected after benefits begin) begin at a time during the period that begins on or after January 1 of the calendar year in which the Participant attains age 70 1/2 and ends April 1 of the immediately following calendar year.

 

The options available for Participants who are not 5-percent Owners and attained age 70 1/2 in calendar years before the calendar year that begins after the later of December 31, 1998, or the adoption date of the amendment which eliminated the preretirement age 70 1/2 distribution shall be the following. Any such Participant attaining age 70 1/2 in years after 1995 may elect by April 1 of the calendar year following the calendar year in which he attained age 70 1/2 (or by December 31, 1997 in the case of a Participant attaining age 70 1/2 in 1996) to defer distributions until the calendar year following the calendar year in which he retires.

 

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SECTION 7.03—DISTRIBUTION REQUIREMENTS.

 

  (a) General Rules .

 

  (1) The requirements of this article shall apply to any distribution of a Participant’s interest and shall take precedence over any inconsistent provisions of this Plan. Unless otherwise specified, the provisions of this article apply to calendar years beginning after December 31, 1984.

 

  (2) All distributions required under this article shall be determined and made in accordance with the proposed regulations under Code Section 401(a)(9).

 

  (3) With respect to distributions under the Plan made for calendar years beginning on or after January 1, 2001, the Plan will apply the minimum distribution requirements of Code Section 401(a)(9) in accordance with the regulations under Code Section 401(a)(9) that were proposed on January 17, 2001, notwithstanding any provision of the Plan to the contrary. These provisions shall continue in effect until the end of the last calendar year beginning before the effective date of final regulations under Code Section 401(a)(9) or such other date as may be specified in guidance published by the Internal Revenue Service.

 

  (b) Required Beginning Date . The entire interest of a Participant must be distributed or begin to be distributed no later than the Participant’s Required Beginning Date.

 

  (c) Death Distribution Provisions . If the Participant dies before distribution of his interest begins, distribution of the Participant’s entire interest shall be completed by December 31 of the calendar year containing the fifth anniversary of the Participant’s death.

 

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ARTICLE VIII

 

TERMINATION OF THE PLAN

 

The Employer expects to continue the Plan indefinitely but reserves the right to terminate the Plan in whole or in part at any time upon giving written notice to all parties concerned. Complete discontinuance of Contributions constitutes complete termination of the Plan.

 

The Account of each Participant shall be fully (100%) vested and nonforfeitable as of the effective date of complete termination of the Plan. The Account of each Participant who is included in the group of Participants deemed to be affected by the partial termination of the Plan shall be fully (100%) vested and nonforfeitable as of the effective date of the partial termination of the Plan. The Participant’s Account shall continue to participate in the earnings credited, expenses charged, and any appreciation or depreciation of the Investment Fund until his Vested Account is distributed.

 

A Participant’s Account which does not result from the Contributions listed below may be distributed to the Participant after the effective date of the complete termination of the Plan:

 

Elective Deferral Contributions

Qualified Nonelective Contributions

 

A Participant’s Account resulting from such Contributions may be distributed upon complete termination of the Plan, but only if neither the Employer nor any Controlled Group member maintain or establish a successor defined contribution plan (other than an employer stock ownership plan as defined in Code Section 4975(e)(7), a simplified employee pension plan as defined in Code Section 408(k) or a SIMPLE IRA plan as defined in Code Section 408(p)) and such distribution is made in a lump sum. A distribution under this article shall be a retirement benefit and shall be distributed to the Participant according to the provisions of Article VI.

 

The Participant’s entire Vested Account shall be paid in a single sum to the Participant as of the effective date of complete termination of the Plan if (i) the requirements for distribution of Elective Deferral Contributions in the above paragraph are met and (ii) consent of the Participant is not required in the ELECTION PROCEDURES SECTION of Article VI to distribute a benefit which is immediately distributable. This is a small amounts payment. The small amounts payment is in full settlement of all benefits otherwise payable.

 

Upon complete termination of the Plan, no more Employees shall become Participants and no more Contributions shall be made.

 

The assets of this Plan shall not be paid to the Employer at any time, except that, after the satisfaction of all liabilities under the Plan, any assets remaining may be paid to the Employer. The payment may not be made if it would contravene any provision of law.

 

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ARTICLE IX

 

ADMINISTRATION OF THE PLAN

 

SECTION 9.01—ADMINISTRATION.

 

Subject to the provisions of this article, the Plan Administrator has complete control of the administration of the Plan. The Plan Administrator has all the powers necessary for it to properly carry out its administrative duties. Not in limitation, but in amplification of the foregoing, the Plan Administrator has complete discretion to construe or interpret the provisions of the Plan, including ambiguous provisions, if any, and to determine all questions that may arise under the Plan, including all questions relating to the eligibility of Employees to participate in the Plan and the amount of benefit to which any Participant or Beneficiary may become entitled. The Plan Administrator’s decisions upon all matters within the scope of its authority shall be final.

 

Unless otherwise set out in the Plan or Annuity Contract, the Plan Administrator may delegate recordkeeping and other duties which are necessary for the administration of the Plan to any person or firm which agrees to accept such duties. The Plan Administrator shall be entitled to rely upon all tables, valuations, certificates and reports furnished by the consultant appointed by the Plan Administrator and upon all opinions given by any counsel selected or approved by the Plan Administrator.

 

The Plan Administrator shall receive all claims for benefits by Participants, former Participants and Beneficiaries. The Plan Administrator shall determine all facts necessary to establish the right of any Claimant to benefits and the amount of those benefits under the provisions of the Plan. The Plan Administrator may establish rules and procedures to be followed by Claimants in filing claims for benefits, in furnishing and verifying proofs necessary to determine age, and in any other matters required to administer the Plan.

 

SECTION 9.02—EXPENSES.

 

Expenses of the Plan, to the extent that the Employer does not pay such expenses, may be paid out of the assets of the Plan provided that such payment is consistent with ERISA. Such expenses include, but are not limited to, expenses for bonding required by ERISA; expenses for recordkeeping and other administrative services; fees and expenses of the Trustee or Annuity Contract; expenses for investment education service; and direct costs that the Employer incurs with respect to the Plan.

 

SECTION 9.03—RECORDS.

 

All acts and determinations of the Plan Administrator shall be duly recorded. All these records, together with other documents necessary for the administration of the Plan, shall be preserved in the Plan Administrator’s custody.

 

Writing (handwriting, typing, printing), photostating, photographing, microfilming, magnetic impulse, mechanical or electrical recording, or other forms of data compilation shall be acceptable means of keeping records.

 

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SECTION 9.04—INFORMATION AVAILABLE.

 

Any Participant in the Plan or any Beneficiary may examine copies of the Plan description, latest annual report, this Plan, the Annuity Contract or any other instrument under which the Plan was established or is operated. The Plan Administrator shall maintain all of the items listed in this section in its office, or in such other place or places as it may designate in order to comply with governmental regulations. These items may be examined during reasonable business hours. Upon the written request of a Participant or Beneficiary receiving benefits under the Plan, the Plan Administrator shall furnish him with a copy of any of these items. The Plan Administrator may make a reasonable charge to the requesting person for the copy.

 

SECTION 9.05—CLAIM AND APPEAL PROCEDURES.

 

A Claimant must submit any required forms and pertinent information when making a claim for benefits under the Plan.

 

If a claim for benefits under the Plan is denied, the Plan Administrator shall provide adequate written notice to the Claimant whose claim for benefits under the Plan has been denied. The notice must be furnished within 90 days of the date that the claim is received by the Plan Administrator. The Claimant shall be notified in writing within this initial 90-day period if special circumstances require an extension of time needed to process the claim and the date by which the Plan Administrator’s decision is expected to be rendered. The written notice shall be furnished no later than 180 days after the date the claim was received by the Plan Administrator.

 

The Plan Administrator’s notice to the Claimant shall specify the reason for the denial; specify references to pertinent Plan provisions on which denial is based; describe any additional material and information needed for the Claimant to perfect his claim for benefits; explain why the material and information is needed; inform the Claimant that any appeal he wishes to make must be in writing to the Plan Administrator within 60 days after receipt of the Plan Administrator’s notice of denial of benefits and that failure to make the written appeal within such 60-day period renders the Plan Administrator’s determination of such denial final, binding and conclusive.

 

If the Claimant appeals to the Employer, the Claimant (or his authorized representative) may submit in writing whatever issues and comments the Claimant (or his authorized representative) feels are pertinent. The Claimant (or his authorized representative) may review pertinent Plan documents. The Employer shall reexamine all facts related to the appeal and make a final determination as to whether the denial of benefits is justified under the circumstances. The Employer shall advise the Claimant of its decision within 60 days of his written request for review, unless special circumstances (such as a hearing) would make rendering a decision within the 60-day limit unfeasible. The Claimant must be notified within the 60-day limit if an extension is necessary. The Employer shall render a decision on a claim for benefits no later than 120 days after the request for review is received.

 

SECTION 9.06—DELEGATION OF AUTHORITY.

 

All or any part of the administrative duties and responsibilities under this article may be delegated by the Plan Administrator to a retirement committee. The duties and responsibilities of the retirement committee shall be set out in a separate written agreement.

 

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SECTION 9.07—EXERCISE OF DISCRETIONARY AUTHORITY.

 

The Employer, Plan Administrator, and any other person or entity who has authority with respect to the management, administration, or investment of the Plan may exercise that authority in its/his full discretion, subject only to the duties imposed under ERISA. This discretionary authority includes, but is not limited to, the authority to make any and all factual determinations and interpret all terms and provisions of the Plan documents relevant to the issue under consideration. The exercise of authority will be binding upon all persons; will be given deference in all courts of law; and will not be overturned or set aside by any court of law unless found to be arbitrary and capricious or made in bad faith.

 

SECTION 9.08—VOTING AND TENDER OF QUALIFYING EMPLOYER SECURITIES.

 

(a) Each person with amounts invested in the Qualifying Employer Securities Fund shall have the right to confidentially direct the exercise of voting rights appurtenant to Qualifying. Employer Securities attributable to the portion of such person’s account invested in the Qualifying Employer Securities Fund; provided, however, that such person had investments in the Qualifying Employer Securities Fund as of the most recent valuation date coincident with or immediately preceding the applicable record date for exercising such voting rights. Such person shall, for this purpose, be deemed a “named fiduciary” within the meaning of section 402(a)(2) of ERISA. Such direction shall be made by completing and filing with the inspector of elections, Trustee, or such other person who shall be independent of the issuer of Qualifying Employer Securities as the Plan Administrator shall designate, at- least 10 days prior to the date of the meeting of holders of Qualifying Employer Securities at which such voting rights will be exercised, a written direction in the form and manner prescribed by the Plan Administrator. The inspector of elections, Trustee or such other person designated by the Plan Administrator shall tabulate the directions given on a strictly confidential basis and shall provide the Plan Administrator with only the final results of such tabulation. The final results of the tabulation shall be followed by the Plan Administrator in directing the Trustee as to the manner in which such voting rights shall be exercised. The Plan Administrator shall furnish, or cause to be furnished, to each person whose account is invested in the Qualifying Employer Securities Fund all annual reports, proxy materials and other information known by the Plan Administrator to have been furnished by the issuer of the Qualifying Employer Securities or by any proxy solicitor to the holders of Qualifying Employer Securities.

 

(b) To the extent that any person with amounts invested in the Qualifying Employer Securities Fund fails to give instructions with respect to the exercise of voting rights appurtenant to Qualifying Employer Securities attributable to the portion of such person’s account invested in the Qualifying Employer Securities Fund with respect to each matter to be voted upon:

 

  (i) the Plan Administrator shall direct the Trustee to: (A) cast a number of affirmative votes equal to the product of (I) the number of Qualifying Employer Securities for which no written instructions have been given, multiplied by (II) a fraction, the numerator of which is the number of Qualifying Employer Securities for which affirmative votes will be cast in accordance with written instructions given as provided in section 8.07(a) and the denominator of which is the aggregate number of affirmative and negative votes which will be cast in accordance with written instructions given as aforesaid, and (B) cast a number of negative votes equal to the excess (if any) of (1) the number of Qualifying Employer Securities for which no written instructions have been given over (II) the number of affirmative votes being cast with respect to such Qualifying Employer Securities pursuant to section 8.07(b)(i)(A); or

 

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  (ii) if the Plan Administrator shall determine that it may not, consistent with its fiduciary duties, direct the Trustee to vote the Qualifying Employer Securities for which no written instructions have been given in the manner described in section 8.07(b)(i), it shall direct the Trustee to vote such Qualifying Employer Securities in such manner as the Plan Administrator, in its discretion, may determine to be in the best interests of the persons to whom such Qualifying Employer Securities are attributable.

 

(c) To the extent permitted by applicable law, the Trustee shall act in accordance with the directions that it receives from the Plan Administrator for each matter as to which voting rights are to be exercised. If the Plan Administrator does not provide the Trustee with directions, then to the extent permitted by applicable law, the Trustee shall exercise the voting rights appurtenant to Qualifying Employer Securities held in the Qualifying Employer Securities Fund in its discretion. The Trustee shall have no discretion over or responsibility or liability for its actions taken in accordance with the Plan Administrator’s directions. The Employer hereby agrees to indemnify the Trustee and hold it harmless from and defend it against any claim asserted against or liability imposed on the Trustee by reason of its having acted on any direction given by the Plan Administrator in accordance with section 8.07(a), (b) or (c) or failing to act in the absence of such direction.

 

(d) Each person with amounts invested in the Qualifying Employer Securities Fund shall have the right to confidentially direct the response to a tender offer, or to any other offer, made to the holders of Qualifying Employer Securities generally, to purchase, exchange, redeem or otherwise transfer Qualifying Employer Securities, with respect to the Qualifying Employer Securities attributable to the portion of such person’s account invested in the Qualifying Employer Securities Fund; provided, however, that such person had amounts invested in the Qualifying Employer Securities Fund as of the most recent valuation date coincident with or immediately preceding the first day for delivering Qualifying Employer Securities or otherwise responding to such tender or other offer. Such person shall, for such purpose, be deemed a “named fiduciary” within the meaning of section 402(a)(2) of ERISA. Such direction shall be made by completing and filing with the Trustee, or such other person who shall be independent of the issuer of Qualifying Employer Securities as the Plan Administrator shall designate, at least 10 days prior to the last day for delivering Qualifying Employer Securities or otherwise responding to such tender or other offer, a written direction in the form and manner prescribed by the Plan Administrator. The Trustee or such other person designated by the Plan Administrator shall tabulate the directions given on a strictly confidential basis and shall provide the Plan Administrator with only the final results of such tabulation. The final results of the tabulation shall be followed by the Plan Administrator in directing the Trustee as to the number of Qualifying Employer Securities to be delivered in response to such tender or other offer. The Plan Administrator shall furnish or cause to be furnished, to each person whose account is invested in whole or in part in the Qualifying Employer Securities Fund, all information concerning such tender or other offer known by the Plan Administrator to have been furnished by the issuer of Qualifying Employer Securities or furnished by or on behalf of the person making such tender or other offer.

 

(e) To the extent that any person with amounts invested in the Qualifying Employer Securities Fund fails to give instructions with respect to Qualifying Employer Securities attributable to the portion of his account invested in the Qualifying Employer Securities Fund:

 

  (i)

the Plan Administrator shall direct the Trustee to: (A) tender or otherwise offer for purchase, exchange or redemption a number of such Qualifying Employer Securities equal to the product of (I) the number of Qualifying Employer Securities for which no written instructions have been

 

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given, multiplied by (II) a fraction, the numerator of which is the number of Qualifying Employer Securities tendered or otherwise offered for purchase, exchange or redemption in accordance with written instructions given as provided in section 8.07(d) and the denominator of which is the aggregate number of Qualifying Employer Securities for which written instructions have been given as aforesaid, and (B) withhold a number of Qualifying Employer Securities equal to the excess (if any) of (I) the number of Qualifying Employer Securities for which no written instructions have been given over (II) the number of Qualifying Employer Securities being tendered or otherwise offered pursuant to section 8.07(e)(i)(A); or

 

  (ii) if the Plan Administrator shall determine that it may not, consistent with its fiduciary duties, direct the Trustee to tender or otherwise offer for purchase, exchange or redemption Qualifying Employer Securities for which no written instructions have been given in the manner described in section 8.07(e)(i), it shall tender, or otherwise offer, or withhold such Qualifying Employer Securities in such manner as it, in its discretion, may determine to be in the best interests of the • persons to whom such Qualifying Employer Securities are attributable.

 

(f) If the Plan Administrator does not provide the Trustee with directions with respect to a tender offer or other offer described in section 8.07(d), then to the extent permitted by applicable law, the Trustee shall take any action in response to such an offer in its discretion. The Trustee shall have no discretion over or responsibility or liability for its actions taken in accordance with the Plan Administrators directions. The Employer hereby agrees to indemnify the Trustee and hold it harmless from and defend it against any claim asserted against or liability imposed on the Trustee by reason of its having acted on any direction given by the Plan Administrator in accordance with section 8.07(d), (e) or (f) or failing to act in the absence of any such direction.

 

(g) Each person with amounts invested in the Qualifying Employer Securities Fund shall have the right to confidentially direct the manner in which all dissent and appraisal rights appurtenant to Qualifying Employer Securities attributable to the portion of such person’s account invested in the Qualifying Employer Securities Fund will be exercised; provided, however, that such person had amounts invested in the Qualifying Employer Securities Fund as of the most recent valuation date coincident with or immediately preceding the applicable date for exercising such dissent or appraisal rights. Such individual shall, for such purpose, be deemed a “named fiduciary” within the meaning of section 402(a)(2) of ERISA. Such a direction shall be given by completing and filing with the Trustee or such other person designated by the Plan Administrator who shall be independent of the issuer of Qualifying Employer Securities at least 10 days prior to the latest date for exercising such dissent and appraisal rights a written direction in the form and manner prescribed by the Plan Administrator. The Trustee or other person designated by the Plan Administrator shall tabulate the directions given on a strictly confidently basis and shall provide the Plan Administrator with only the final results of such tabulation. The final results of the tabulation shall be followed by the Plan Administrator in directing the Trustee as to the manner in which such dissent and appraisal rights shall be exercised. The Plan Administrator shall furnish, or cause to be furnished, to each person whose account is invested in the Qualifying Employer Securities Fund all information known by the Plan Administrator to have been furnished by the issuer of the Qualifying Employer Securities, or by or on behalf of any person, to the holders of Qualifying Employer Securities in connection with such dissent and appraisal rights.

 

(h)

To the extent that any person with amounts invested in the Qualifying Employer Securities Fund shall fails to give instructions with respect to dissent and appraisal rights appurtenant to Qualifying Employer Securities attributable to his interest, the Plan Administrator shall direct the Trustee to exercise dissent

 

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and appraisal rights as to those Qualifying Employer Securities in such manner as the Plan Administrator shall determine to be in the best interest of the person to whom such Qualifying Employer Securities are attributable.

 

(i) If the Plan Administrator does not provide the Trustee with directions with respect to dissent and appraisal rights, then to the extent permitted by applicable law, the Trustee shall take any action in response to such rights in its discretion. The Trustee shall have no discretion over or responsibility or liability for its actions taken in accordance with the Plan Administrator’s directions. The Employer hereby agrees to indemnify the Trustee and hold it harmless from and defend it against any claim asserted against or liability imposed on the Trustee by reason of its having acted on any direction given by the Plan Administrator in accordance with section 8.07(g), (h) or (i) or failing to act in the absence of any such direction.

 

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ARTICLE X

 

GENERAL PROVISIONS

 

SECTION 10.01—AMENDMENTS.

 

The Employer may amend this Plan at any time, including any remedial retroactive changes (within the time specified by Internal Revenue Service regulations), to comply with any law or regulation issued by any governmental agency to which the Plan is subject.

 

An amendment may not diminish or adversely affect any accrued interest or benefit of Participants or their Beneficiaries nor allow reversion or diversion of Plan assets to the Employer at any time, except as may be required to comply with any law or regulation issued by any governmental agency to which the Plan is subject.

 

No amendment to this Plan shall be effective to the extent that it has the effect of decreasing a Participant’s accrued benefit. However, a Participant’s Account may be reduced to the extent permitted under Code Section 412(c)(8). For purposes of this paragraph, a Plan amendment which has the effect of decreasing a Participant’s Account with respect to benefits attributable to service before the amendment shall be treated as reducing an accrued benefit. Furthermore, if the vesting schedule of the Plan is amended, in the case of an Employee who is a Participant as of the later of the date such amendment is adopted or the date it becomes effective, the nonforfeitable percentage (determined as of such date) of such Employee’s right to his employer-derived accrued benefit shall not be less than his percentage computed under the Plan without regard to such amendment.

 

No amendment to the Plan shall be effective to eliminate or restrict an optional form of benefit with respect to benefits attributable to service before the amendment except as provided in the MERGERS AND DIRECT TRANSFERS SECTION of this article and below:

 

  (a) The Plan is amended to eliminate or restrict the ability of a Participant to receive payment of his Account balance under a particular optional form of benefit and the amendment satisfies the conditions in (1) and (2) below:

 

  (1) The amendment provides a single sum distribution form that is otherwise identical to the optional form of benefit eliminated or restricted. For purposes of this condition (1), a single sum distribution form is otherwise identical only if it is identical in all respects to the eliminated or restricted optional form of benefit (or would be identical except that it provides greater rights to the Participant) except with respect to the timing of payments after commencement.

 

  (2) The amendment provides that the amendment shall not apply to any distribution with an Annuity Starting Date earlier than the earlier of:

 

  (i) the 90th day after the date the Participant receiving the distribution has been furnished a summary that reflects the amendment and that satisfies the ERISA requirements at 29 CFR 2520.104b-3 relating to a summary of material modifications, or

 

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  (ii) the first day of the second Plan Year following the Plan Year in which the amendment is adopted.

 

  (b) The Plan is amended to eliminate or restrict in-kind distributions and the conditions in Q&A 2(b)(2)(iii) in section 1.411(d)-4 of the regulations are met.

 

If, as a result of an amendment, an Employer Contribution is removed that is not 100% immediately vested when made, the applicable vesting schedule shall remain in effect after the date of such amendment. The Participant shall not become immediately 100% vested in such Contributions as a result of the elimination of such Contribution except as otherwise specifically provided in the Plan.

 

An amendment shall not decrease a Participant’s vested interest in the Plan. If an amendment to the Plan, or a deemed amendment in the case of a change in top-heavy status of the Plan as provided in the MODIFICATION OF VESTING REQUIREMENTS SECTION of Article XI, changes the computation of the percentage used to determine that portion of a Participant’s Account attributable to Employer Contributions which is nonforfeitable (whether directly or indirectly), each Participant or former Participant

 

  (c) who has completed at least three Years of Service on the date the election period described below ends (five Years of Service if the Participant does not have at least one Hour-of-Service in a Plan Year beginning after December 31, 1988) and

 

  (d) whose nonforfeitable percentage will be determined on any date after the date of the change

 

may elect, during the election period, to have the nonforfeitable percentage of his Account that results from Employer Contributions determined without regard to the amendment. This election may not be revoked. If after the Plan is changed, the Participant’s nonforfeitable percentage will at all times be as great as it would have been if the change had not been made, no election needs to be provided. The election period shall begin no later than the date the Plan amendment is adopted, or deemed adopted in the case of a change in the top-heavy status of the Plan, and end no earlier than the 60th day after the latest of the date the amendment is adopted (deemed adopted) or becomes effective, or the date the Participant is issued written notice of the amendment (deemed amendment) by the Employer or the Plan Administrator.

 

SECTION 10.02—DIRECT ROLLOVERS.

 

Notwithstanding any provision of the Plan to the contrary that would otherwise limit a Distributee’s election under this section, a Distributee may elect, at the time and in the manner prescribed by the Plan Administrator, to have any portion of an Eligible Rollover Distribution paid directly to an Eligible Retirement Plan specified by the Distributee in a Direct Rollover.

 

Any distributions made under the SMALL AMOUNTS SECTION of this article (or which are small amounts payments made under Article VIII at complete termination of the Plan) which are Eligible Rollover Distributions and for which the Distributee has not elected to either have such distribution paid to him or to an Eligible Retirement Plan shall be paid to the Distributee.

 

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SECTION 10.03—MERGERS AND DIRECT TRANSFERS.

 

The Plan may not be merged or consolidated with, nor have its assets or liabilities transferred to, any other retirement plan, unless each Participant in the plan would (if the plan then terminated) receive a benefit immediately after the merger, consolidation, or transfer which is equal to or greater than the benefit the Participant would have been entitled to receive immediately before the merger, consolidation, or transfer (if this Plan had then terminated). The Employer may enter into merger agreements or direct transfer of assets agreements with the employers under other retirement plans which are qualifiable under Code Section 401(a), including an elective transfer, and may accept the direct transfer of plan assets, or may transfer plan assets, as a party to any such agreement. The Employer shall not consent to, or be a party to a merger, consolidation, or transfer of assets with a plan which is subject to the survivor annuity requirements of Code Section 401(a)(11) if such action would result in a survivor annuity feature being maintained under this Plan.

 

Notwithstanding any provision of the Plan to the contrary, to the extent any optional form of benefit under the Plan permits a distribution prior to the Employee’s retirement, death, disability, or severance from employment, and prior to plan termination, the optional form of benefit is not available with respect to benefits attributable to assets (including the post-transfer earnings thereon) and liabilities that are transferred, within the meaning of Code Section 414(1), to this Plan from a money purchase pension plan qualified under Code Section 401(a) (other than any portion of those assets and liabilities attributable to voluntary employee contributions).

 

The Plan may accept a direct transfer of plan assets on behalf of an Eligible Employee. If the Eligible Employee is not an Active Participant when the transfer is made, the Eligible Employee shall be deemed to be an Active Participant only for the purpose of investment and distribution of the transferred assets. Employer Contributions shall not be made for or allocated to the Eligible Employee, until the time he meets all of the requirements to become an Active Participant.

 

The Plan shall hold, administer, and distribute the transferred assets as a part of the Plan. The Plan shall maintain a separate account for the benefit of the Employee on whose behalf the Plan accepted the transfer in order to reflect the value of the transferred assets.

 

Unless a transfer of assets to the Plan is an elective transfer as described below, the Plan shall apply the optional forms of benefit protections described in the AMENDMENTS SECTION of this article to all transferred assets.

 

A Participant’s protected benefits may be eliminated upon transfer between qualified defined contribution plans if the conditions in Q&A 3(b)(1) in section 1.411(d)-4 of the regulations are met. The transfer must meet all of the other applicable qualification requirements.

 

A Participant’s protected benefits may be eliminated upon transfer between qualified plans (both defined benefit and defined contribution) if the conditions in Q&A 3(c)(1) in section 1.411(d)-4 of the regulations are met. Beginning January 1, 2002, if the Participant is eligible to receive an immediate distribution of his entire nonforfeitable accrued benefit in a single sum distribution that would consist entirely of an eligible rollover distribution under Code Section 401(a)(31), such transfer will be accomplished as a direct rollover under Code Section 401(a)(31). The rules applicable to distributions under the plan would apply to the transfer, but the transfer would not be treated as a distribution for purposes of the minimum distribution requirements of Code Section 401(a)(9).

 

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SECTION 10.04—PROVISIONS RELATING TO THE INSURER AND OTHER PARTIES.

 

The obligations of an Insurer shall be governed solely by the provisions of the Annuity Contract. The Insurer shall not be required to perform any act not provided in or contrary to the provisions of the Annuity Contract. Each Annuity Contract when purchased shall comply with the Plan. See the CONSTRUCTION SECTION of this article.

 

Any issuer or distributor of investment contracts or securities is governed solely by the terms of its policies, written investment contract, prospectuses, security instruments, and any other written agreements entered into with the Trustee with regard to such investment contracts or securities.

 

Such Insurer, issuer or distributor is not a party to the Plan, nor bound in any way by the Plan provisions. Such parties shall not be required to look to the terms of this Plan, nor to determine whether the Employer, the Plan Administrator, the Trustee, or the Named Fiduciary have the authority to act in any particular manner or to make any contract or agreement.

 

Until notice of any amendment or termination of this Plan or a change in Trustee has been received by the Insurer at its home office or an issuer or distributor at their principal address, they are and shall be fully protected in assuming that the Plan, has not been amended or terminated and in dealing with any party acting as Trustee according to the latest information which they have received at their home office or principal address.

 

SECTION 10.05—EMPLOYMENT STATUS.

 

Nothing contained in this Plan gives an Employee the right to be retained in the Employer’s employ or to interfere with the Employer’s right to discharge any Employee.

 

SECTION 10.06—RIGHTS TO PLAN ASSETS.

 

An Employee shall not have any right to or interest in any assets of the Plan upon termination of employment or otherwise except as specifically provided under this Plan, and then only to the extent of the benefits payable to such Employee according to the Plan provisions.

 

Any final payment or distribution to a Participant or his legal representative or to any Beneficiaries of such Participant under the Plan provisions shall be in full satisfaction of all claims against the Plan, the Named Fiduciary, the Plan Administrator, the Insurer, the Trustee, and the Employer arising under or by virtue of the Plan.

 

SECTION 10.07—BENEFICIARY.

 

Each Participant may name a Beneficiary to receive any death benefit that may arise out of his participation in the Plan. The Participant may change his Beneficiary from time to time. Unless a qualified election has been made under Section 6.02, for purposes of distributing any death benefits before the Participant’s Retirement Date, the Beneficiary of a Participant who has a spouse shall be the Participant’s spouse. The Participant’s Beneficiary designation and any change of Beneficiary shall be subject to the provisions of the ELECTION PROCEDURES SECTION of Article VI. It is the responsibility of the Participant to give written notice to the Insurer of the name of the Beneficiary on a form furnished for that purpose.

 

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The Plan Administrator shall maintain records of Beneficiary designations for Participants. If a Participant dies before his Retirement Date, the Plan Administrator shall produce a copy the Beneficiary designation on its records for the Participant to the Insurer.

 

If there is no Beneficiary named or surviving when a Participant dies, the Participant’s Beneficiary shall be the Participant’s surviving spouse, or where there is no surviving spouse, the executor or administrator of the Participant’s estate.

 

SECTION 10.08—NONALIENATION OF BENEFITS.

 

Benefits payable under the Plan are not subject to the claims of any creditor of. any Participant, Beneficiary or spouse. A Participant, Beneficiary or spouse does not have any rights to alienate, anticipate, commute, pledge, encumber, or assign any of such benefits, except in the case of a loan as provided in the LOANS TO PARTICIPANTS SECTION of Article V. The preceding sentences shall also apply to the creation, assignment, or recognition of a right to any benefit payable with respect to a Participant according to a domestic relations order, unless such order is determined by the Plan Administrator to be a qualified domestic relations order, as defined in Code Section 414(p), or any domestic relations order entered before January 1, 1985. The preceding sentences shall not apply to any offset of a Participant’s benefits provided under the Plan against an amount the Participant is required to pay the Plan with respect to a judgement, order, or decree issued, or a settlement entered into, on or after August 5, 1997, which meets the requirements of Code Sections 401(a)(13)(C) or (D).

 

SECTION 10.09—CONSTRUCTION.

 

The validity of the Plan or any of its provisions is determined under and construed according to Federal law and, to the extent permissible, according to the laws of the state in which the Employer has its principal office. In case any provision of this Plan is held illegal or invalid for any reason, such determination shall not affect the remaining provisions of this Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had never been included.

 

In the event of any conflict between the provisions of the Plan and the terms of any Annuity Contract issued hereunder, the provisions of the Plan control.

 

SECTION 10.10—LEGAL ACTIONS.

 

No person employed by the Employer, no Participant, former Participant, or their Beneficiaries, or any other person having or claiming to have an interest in the Plan is entitled to any notice of process. A final judgment entered in any such action or proceeding shall be binding and conclusive on all persons having or claiming to have an interest in the Plan.

 

SECTION 10.11—SMALL AMOUNTS.

 

If consent of the Participant is not required for a benefit which is immediately distributable in the ELECTION PROCEDURES SECTION of Article VI, a Participant’s entire Vested Account shall be paid in a single sum as of the earliest of his Retirement Date, the date he dies, or the date he ceases to be an Employee for any other reason. For purposes of this section, if the Participant’s Vested Account is zero, the Participant shall be deemed to have received a distribution of such Vested Account. If a Participant would have

 

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received a distribution under the first sentence of this paragraph but for the fact that the Participant’s consent was needed to distribute a benefit which is immediately distributable, and if at a later time consent would not be needed to distribute a benefit which is immediately distributable and such Participant has not again become an Employee, such Vested Account shall be paid in a single sum. This is a small amounts payment.

 

If a small amounts payment is made as of the date the Participant dies, the small amounts payment shall be made to the Participant’s Beneficiary. If a small amounts payment is made while the Participant is living, the small amounts payment shall be made to the Participant. The small amounts payment is in full settlement of benefits otherwise payable.

 

No other small amounts payments shall be made.

 

SECTION 10.12—WORD USAGE.

 

The masculine gender, where used in this Plan, shall include the feminine gender and the singular words, as used in this Plan, may include the plural, unless the context indicates otherwise.

 

The words in writing and written, where used in this Plan, shall include any other forms, such as voice response or other electronic system, as permitted by any governmental agency to which the Plan is subject.

 

SECTION 10.13—CHANGE IN SERVICE METHOD.

 

  (a) Change of Service Method Under This Plan . If this Plan is amended to change the method of crediting service from the elapsed time method to the hours method for any purpose under this Plan, the Employee’s service shall be equal to the sum of (1), (2), and (3) below:

 

  (1) The number of whole years of service credited to the Employee under the Plan as of the date the change is effective.

 

  (2) One year of service for the applicable computation period in which the change is effective if he is credited with the required number of Hours-of-Service. If the Employer does not have sufficient records to determine the Employee’s actual Hours-of-Service in that part of the service period before the effective date of the change, the Hours-of-Service shall be determined using an equivalency. For any month in which he would be required to be credited with one Hour-of-Service, the Employee shall be deemed for purposes of this section to be credited with 190 Hours-of-Service.

 

  (3) The Employee’s service determined under this Plan using the hours method after the end of the computation period in which the change in service method was effective.

 

If this Plan is amended to change the method of crediting service from the hours method to the elapsed time method for any purpose under this Plan, the Employee’s service shall be equal to the sum of (4), (5), and (6) below:

 

  (4) The number of whole years of service credited to the Employee under the Plan as of the beginning of the computation period in which the change in service method is effective.

 

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  (5) the greater of (i) the service that would be credited to the Employee for that entire computation period using the elapsed time method or (ii) the service credited to him under the Plan as of the date the change is effective.

 

  (6) The Employee’s service determined under this Plan using the elapsed time method after the end of the applicable computation period in which the change in service method was effective.

 

  (b) Transfers Between Plans with Different Service Methods . If an Employee has been a participant in another plan of the Employer which credited service under the elapsed time method for any purpose which under this Plan is determined using the hours method;then the Employee’s service shall be equal to the sum of (1), (2), and (3) below:

 

  (1) The number of whole years of service credited to the Employee under the plan as of the date he became an Eligible Employee under this Plan.

 

  (2) One year of service for the applicable computation period in which he became an Eligible Employee if he is credited with the required number of Hours-of-Service. If the Employer does not have sufficient records to determine the Employee’s actual Hours-of-Service in that part of the service period before the date he became an Eligible Employee, the Hours-of-Service shall be determined using an equivalency. For any month in which he would be required to be credited with one Hour-of-Service, the Employee shall be deemed for purposes of this section to be credited with 190 Hours-of-Service.

 

  (3) The Employee’s service determined under this Plan using the hours method after the end of the computation period in which he became an Eligible Employee.

 

If an Employee has been a participant in another plan of the Employer which credited service under the hours method for any purpose which under this Plan is determined using the elapsed time method, then the Employee’s service shall be equal to the sum of (4), (5), and (6) below:

 

  (4) The number of whole years of service credited to the Employee under the other plan as of the beginning of the computation period under that plan in which he became an Eligible Employee under this Plan.

 

  (5) The greater of (i) the service that would be credited to the Employee for that entire computation period using the elapsed time method or (ii) the service credited to him under the other plan as of the date he became an Eligible Employee under this Plan.

 

  (6) The Employee’s service determined under this Plan using the elapsed time method after the end of the applicable computation period under the other plan in which he became an Eligible Employee.

 

If an Employee has been a participant in a Controlled Group member’s plan which credited service under a different method than is used in this Plan, in order to determine entry and vesting, the provisions in (b) above shall apply as though the Controlled Group member’s plan were a plan of the Employer.

 

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Any modification of service contained in this Plan shall be applicable to the service determined pursuant to this section.

 

SECTION 10.14—MILITARY SERVICE.

 

Notwithstanding any provision of this Plan to the contrary, the Plan shall provide contributions, benefits, and service credit with respect to qualified military service in accordance with Code Section 414(u). Loan repayments shall be suspended under this Plan as permitted under Code Section 414(u).

 

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ARTICLE XI

 

TOP-HEAVY PLAN REQUIREMENTS

 

SECTION 11.01—APPLICATION.

 

The provisions of this article shall supersede all other provisions in the Plan to the contrary.

 

For the purpose of applying the Top-heavy Plan requirements of this article, all members of the Controlled Group shall be treated as one Employer. The term Employer, as used in this article, shall be deemed to include all members of the Controlled Group, unless the term as used clearly indicates only the Employer is meant.

 

The accrued benefit or account of a participant which results from deductible employee contributions shall not be included for any purpose under this article.

 

The minimum vesting and contribution provisions of the MODIFICATION OF VESTING REQUIREMENTS and MODIFICATION OF CONTRIBUTIONS SECTIONS of this article shall not apply to any Employee who is included in a group of Employees covered by a collective bargaining agreement which the Secretary of Labor finds to be a collective bargaining agreement between employee representatives and one or more employers, including the Employer, if there is evidence that retirement benefits were the subject of good faith bargaining between such representatives. For this purpose, the term “employee representatives” does not include any organization more than half of whose members are employees who are owners, officers, or executives.

 

SECTION 11.02—DEFINITIONS.

 

For purposes of this article the following terms are defined:

 

Aggregation Group means:

 

  (a) each of the Employer’s qualified plans in which a Key Employee is a participant during the Plan Year containing the Determination Date (regardless of whether the plan was terminated) or one of the four preceding Plan Years,

 

  (b) each of the Employer’s other qualified plans which allows the plan(s) described in (a) above to meet the nondiscrimination requirement of Code Section 401(a)(4) or the minimum coverage requirement of Code Section 410, and

 

  (c) any of the Employer’s other qualified plans not included in (a) or (b) above which the Employer desires to include as part of the Aggregation Group. Such a qualified plan shall be included only if the Aggregation Group would continue to satisfy the requirements of Code Section 401(a)(4) and Code Section 410.

 

The plans in (a) and (b) above constitute the “required” Aggregation Group. The plans in (a), (b), and (c) above constitute the “permissive” Aggregation Group.

 

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Compensation means compensation as defined in the CONTRIBUTION LIMITATION SECTION of Article III. For purposes of determining who is a Key Employee in years beginning before January 1, 1998, Compensation shall include, in addition to compensation as defined in the CONTRIBUTION LIMITATION SECTION of Article III, elective contributions. Elective contributions are amounts excludible from the gross income of the Employee under Code Sections 125, 402(e)(3), 402(h)(1)(B), or 403(b), and contributed by the Employer, at the Employee’s election, to a Code Section 401(k) arrangement, a simplified employee pension, cafeteria plan, or tax-sheltered annuity. Elective contributions also include amounts deferred under a Code Section 457 plan maintained by the Employer.

 

Determination Date means as to any plan, for any plan year subsequent to the first plan year, the last day of the preceding plan year. For the first plan year of the plan, the last day of that year.

 

Key Employee means any Employee or former Employee (and the Beneficiaries of such Employee) who at any time during the determination period was:

 

  (a) an officer of the Employer if such individual’s annual Compensation exceeds 50 percent of the dollar limitation under Code Section 415(b)(1)(A).

 

  (b) an owner (or considered an owner under Code Section 318) of one of the ten largest interests in the Employer if such individual’s annual Compensation exceeds 100 percent of the dollar limitation, under Code Section 415(c)(1)(A).

 

  (c) a 5-percent owner of the Employer, or

 

  (d) a 1-percent owner of the Employer who has annual Compensation of more than $150,000.

 

The determination period is the Plan Year containing the Determination Date and the four preceding Plan Years.

 

The determination of who is a Key Employee shall be made according to Code Section 416(i)(1) and the regulations thereunder.

 

Non-key Employee means any Employee who is not a Key Employee.

 

Present Value means the present value of a participant’s accrued benefit under a defined benefit plan. For purposes of establishing Present Value to compute the Top-heavy Ratio, any benefit shall be discounted only for 7.5% interest and mortality according to the 1971 Group Annuity Table (Male) without the 7% margin but with projection by Scale E from 1971 to the later of (a) 1974, or (b) the year determined by adding the age to 1920, and wherein for females the male age six years younger is used.

 

Top-heavy Plan means a plan which is top-heavy for any plan year beginning after December 31, 1983. This Plan shall be top-heavy if any of the following conditions exist:

 

  (a) The Top-heavy Ratio for this Plan exceeds 60 percent and this Plan is not part of any required Aggregation Group or permissive Aggregation Group.

 

  (b) This Plan is a part of a required Aggregation Group, but not part of a permissive Aggregation Group, and the Top-heavy Ratio for the required Aggregation Group exceeds 60 percent.

 

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  (c) This Plan is a part of a required Aggregation Group and part of a permissive Aggregation Group and the Top-heavy Ratio for the permissive Aggregation Group exceeds 60 percent.

 

Top-heavy Ratio means:

 

  (a) If the Employer maintains one or more defined contribution plans (including any simplified employee pension plan) and the Employer has not maintained any defined benefit plan which during the five-year period ending on the Determination Date(s) has or has had accrued benefits, the Top-heavy Ratio for this Plan alone or for the required or permissive Aggregation Group, as appropriate, is a fraction, the numerator of which is the sum of the account balances of all Key Employees as of the Determination Date(s) (including any part of any account balance distributed in the five-year period ending on the Determination Date(s)), and the denominator of which is the sum of all account balances (including any part of any account balance distributed in the five-year period ending on the Distribution Date(s)), both computed in accordance with Code Section 416 and the regulations 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 Section 416 and the regulations thereunder.

 

  (b) If the Employer maintains one or more defined contribution plans (including any simplified employee pension plan) and the Employer maintains or has maintained one or more defined benefit plans which during the five-year period ending on the Determination Date(s) has or has had accrued benefits, the Top-heavy Ratio for any required or permissive Aggregation Group, as appropriate, is a fraction, the numerator of which is the sum of the account balances under the aggregated defined contribution plan or plans of all Key Employees determined in accordance with (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 (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 Section 416 and the regulations 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 five-year period ending on the Determination Date.

 

  (c) For purposes of (a) and (b) above, the value of account balances and the Present Value of accrued benefits will be determined as of the most recent Valuation Date that falls within or ends with the 12-month period ending on the Determination Date, except as provided in Code Section 416 and the regulations thereunder for the first and second plan years of a defined benefit plan. The account balances and accrued benefits of a participant (i) who is not a Key Employee but who was a Key Employee in a prior year or (ii) who has not been credited with at least an hour of service with any employer maintaining the plan at any time during the five-year period 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 Section 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.

 

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The accrued benefit of a participant other than a Key Employee shall be determined under (i) the method, if any, that uniformly applies for accrual purposes under all defined benefit plans maintained by the Employer, or (ii) 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 Section 411(b)(1)(C).

 

SECTION 11.03—MODIFICATION OF VESTING REQUIREMENTS.

 

If a Participant’s Vesting Percentage determined under Article I is not at least as great as his Vesting Percentage would be if it were determined under a schedule permitted in Code Section 416, the following shall apply. During any Plan Year in which the Plan is a Top-heavy Plan, the Participant’s Vesting Percentage shall be the greater of the Vesting Percentage determined under Article I or the schedule below.

 

VESTING SERVICE

(whole years)


  

NONFORFEITABLE

PERCENTAGE


  

Less than 2

       0

2

     20

3

     40

4

     60

5

     80

6 or more

   100

 

The schedule above shall not apply to Participants who are not credited with an Hour-of-Service after the Plan first becomes a Top-heavy Plan. The Vesting Percentage determined above applies to the portion of the Participant’s Account which is multiplied by a Vesting Percentage to determine his Vested Account, including benefits accrued before the effective date of Code Section 416 and benefits accrued before this Plan became a Top-heavy Plan.

 

If, in a later Plan Year, this Plan is not a Top-heavy Plan, a Participant’s Vesting Percentage shall be determined under Article I. A Participant’s Vesting Percentage determined under either Article I or the schedule above shall never be reduced and the election procedures of the AMENDMENTS SECTION of Article X shall apply when changing to or from the schedule as though the automatic change were the result of an amendment.

 

The part of the Participant’s Vested Account resulting from the minimum contributions required pursuant to the MODIFICATION OF CONTRIBUTIONS SECTION of this article (to the extent required to be nonforfeitable under Code Section 416(b)) may not be forfeited under Code Section 411(a)(3)(B) or (D).

 

SECTION 11.04—MODIFICATION OF CONTRIBUTIONS.

 

During any Plan Year in which this Plan is a Top-heavy Plan, the Employer shall make a minimum contribution as of the last day of the Plan Year for each Non-key Employee who is an Employee on the last day of the Plan Year and who was an Active Participant at any time during the Plan Year. A Non-key Employee is not required to have a minimum number of Hours-of-Service or minimum amount of Compensation in order to be entitled to this minimum. A Non-key Employee who fails to be an Active Participant merely because his Compensation is less than a stated amount or merely because of a failure to make mandatory participant

 

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contributions or, in the case of a cash or deferred arrangement, elective contributions shall be treated as if he were an Active Participant. The minimum is the lesser of (a) or (b) below:

 

  (a) 3 percent of such person’s Compensation for such Plan Year.

 

  (b) The “highest percentage” of Compensation for such Plan Year at which the Employer’s contributions are made for or allocated to any Key Employee. The highest percentage shall be determined by dividing the Employer Contributions made for or allocated to each Key Employee during the Plan Year by the amount of his Compensation for such Plan Year, and selecting the greatest quotient (expressed as a percentage). To determine the highest percentage, all of the Employer’s defined contribution plans within the Aggregation Group shall be treated as one plan. The minimum shall be the amount in (a) above if this Plan and a defined benefit plan of the Employer are required to be included in the Aggregation Group and this Plan enables the defined benefit plan to meet the requirements of Code Section 401(a)(4) or 410.

 

For purposes of (a) and (b) above, Compensation shall be limited by Code Section 401(a)(17).

 

If the Employer’s contributions and allocations otherwise required under the defined contribution plan(s) are at least equal to the minimum above, no additional contribution shall be required. If the Employer’s total contributions and allocations are less than the minimum above, the Employer shall contribute the difference for the Plan Year.

 

The minimum contribution applies to all of the Employer’s defined contribution plans in the aggregate which are Top-heavy Plans. A minimum contribution under a profit sharing plan shall be made without regard to whether or not the Employer has profits.

 

If a person who is otherwise entitled to a minimum contribution above is also covered under another defined contribution plan of the Employer’s which is a Top-heavy Plan during that same Plan Year, any additional contribution required to meet the minimum above shall be provided in this Plan.

 

If a person who is otherwise entitled to a minimum contribution above is also covered under a defined benefit plan of the Employer’s which is a Top-heavy Plan during that same Plan Year, the minimum benefits for him shall not be duplicated. The defined benefit plan shall provide an annual benefit for him on, or adjusted to, a straight life basis equal to the lesser of:

 

  (c) 2 percent of his average compensation multiplied by his years of service, or

 

  (d) 20 percent of his average compensation.

 

Average compensation and years of service shall have the meaning set forth in such defined benefit plan for this purpose.

 

For purposes of this section, any employer contribution made according to a salary reduction or similar arrangement and employer contributions which are matching contributions, as defined in Code Section 401(m), shall not apply in determining if the minimum contribution requirement has been met, but shall apply in determining the minimum contribution required.

 

The requirements of this section shall be met without regard to any Social Security contribution.

 

82


SECTION 11.05—MODIFICATION OF CONTRIBUTION LIMITATION.

 

If the provisions of subparagraph (g) of the CONTRIBUTION LIMITATION SECTION of Article III are applicable for any Limitation Year during which this Plan is a Top-heavy Plan, the contribution limitations shall be modified. The definitions of Defined Benefit Plan Fraction and Defined Contribution Plan Fraction in the CONTRIBUTION LIMITATION SECTION of Article III shall be modified by substituting “100 percent” in lieu of “125 percent.” In addition, an adjustment shall be made to the numerator of the Defined Contribution Plan Fraction. The adjustment is a reduction of that numerator similar to the modification of the Defined Contribution Plan Fraction described in the CONTRIBUTION LIMITATION SECTION of Article III, and shall be made with respect to the last Plan Year beginning before January 1, 1984.

 

The modifications in the paragraph above shall not apply with respect to a Participant so long as employer contributions, forfeitures, or nondeductible employee contributions are not credited to his account under this or any of the Employer’s other defined contribution plans and benefits do not accrue for such Participant under the Employer’s defined benefit plants), until the sum of his Defined Contribution and Defined Benefit Plan Fractions is less than 1.0.

 

The modification of the contribution limitation shall not apply if both of the following requirements are met:

 

  (a) This Plan would not be a Top-heavy Plan if “90 percent” were substituted for “60 percent” in the definition of Top-heavy Plan.

 

  (b) A Non-key Employee who is covered only under a defined benefit plan of the Employer, accrues a minimum benefit on, or adjusted to, a straight life basis equal to the lesser of (i) 3 percent of his average compensation multiplied by his years of service or (ii) 30 percent of his average compensation. Average compensation and years of service shall have the meaning set forth in such defined benefit plan for this purpose.

 

The account of a Non-key Employee who is covered only under one or more defined contribution plans of the Employer, is credited with a minimum employer contribution under such plan(s) equal to 4 percent of the person’s Compensation for each plan year in which the plan is a Top-heavy Plan.

 

If a Non-key Employee is covered under both defined contribution and defined benefit plans of the Employer, (i) a minimum accrued benefit for such person equal to the amount determined above for a person who is covered only under a defined benefit plan is accrued in the defined benefit plan(s) or (ii) a minimum contribution equal to 7.5 percent of the person’s Compensation for a plan year in which the plans are Top-heavy Plans will be credited to his account under the defined contribution plans.

 

This section shall cease to apply effective as of the first Limitation Year beginning on or after January 1, 2000.

 

83


By executing this Plan, the Primary Employer acknowledges having counseled to the extent necessary with selected legal and tax advisors regarding the Plan’s legal and tax implications.

 

Executed this 30th day of December, 2001.

 

THE WARWlCK SAVINGS BANK

By:  

/s/ Nancy L. Sobotor - Littel

   

Director of Human Resources

    Title
    Defined Contribution Plan 8.0

 

84


AMENDMENT NO. 1

 

THE WARWICK SAVINGS BANK

401(k) SAVINGS PLAN

 

The Plan named above gives the Employer the right to amend it at any time. According to that right, the Plan is amended as of January 1, 2001:

 

By striking Section 7.03(a)(3) and substituting the following Section 7.03(a)(3):

 

With respect to distributions under the Plan made on or after June 14, 2001, for calendar years beginning on or after January 1, 2001, the Plan will apply the minimum distribution requirements of Code Section 401 (a)(9) in accordance with the regulations under Code Section 401(a)(9) that were proposed on January 17, 2001 (the 2001 Proposed Regulations), notwithstanding any provision of the Plan to the contrary. If the total amount of required minimum distributions made to a Participant for 2001 prior to June 14, 2001, are equal to or greater than the amount of required minimum distributions determined under the 2001 Proposed Regulations, then no additional distributions are required for such Participant for 2001 on or after such date. If the total amount of required minimum distributions made to a Participant for 2001 prior to June 14, 2001, are less than the amount determined under the 2001 Proposed Regulations, then the amount of required minimum distributions for 2001 on or after such date will be determined so that the total amount of required minimum distributions for 2001 is the amount determined under the 2001 Proposed Regulations. These provisions shall continue in effect until the last calendar year beginning before the effective date of final regulations under Code Section 401(a)(9) or such other date as may be published by the Internal Revenue Service.

 

By inserting the following as new sections after the ADP/ACP Testing Section of the Operational History Addendum attached to the Plan:

 

Distribution Requirements (Minimum Distributions)

 

  a) The plan will apply the minimum distribution requirements of Code Section 401 (a)(9) in accordance with the 2001 Proposed Regulations for distributions made on or after June 14, 2001, for calendar years beginning on or after January 1, 2001, unless otherwise specified below.

 

  i) ¨ These provisions will be applied for distributions made on or after                      ,          for calendar years beginning on or after January 1, 2001. Such date shall be substituted for June 14, 2001, in the applicable provisions of the Plan.

 

  ii) ¨ These provisions will be applied for all distributions made for calendar years beginning on or after January 1, 2001.

 

  iii) ¨ These provisions will be applied for all distributions made for calendar years beginning on or after January 1, 2002. These provisions will not be applied for distributions made for the 2001 calendar year.

 

Compensation Definition (Qualified Transportation Fringe Benefits)

 

  a)

Amounts excludable from the gross income of the Employee by reason of Code Section 132(f)(4) shall not be included in any definition of

 

1


 

Compensation for years beginning before January 1, 2001, unless otherwise specified below.

 

  i) ¨ Such amounts shall be included for years beginning January 1,          . (Must be 1998, 1999, or 2000 )

 

This amendment is made an integral part of the aforesaid Plan and is controlling over the terms of said Plan with respect to the particular items addressed expressly herein. All other provisions of the Plan remain unchanged and controlling.

 

Unless otherwise stated on any page of this amendment, eligibility for benefits and the amount of any benefits payable to or on behalf of an individual who is an Inactive Participant on the effective date(s) stated above, shall be determined according to the provisions of the aforesaid Plan as in effect on the day before he became an Inactive Participant.

 

Signing this amendment, the Employer, as plan sponsor, has made the decision to adopt this plan amendment. The Employer is acting in reliance on its own discretion and on the legal and tax advice of its own advisors, and not that of any member of the Principal Financial Group or any representative of a member company of the Principal Financial Group.

 

Signed this 30th day of December, 2001.

 

THE WARWlCK SAVINGS BANK

By  

/s/ Nancy L. Sobotor - Littel

   

Director of Human Resources

    Title

 

2


AMENDMENT NO. 2

THE WARWICK SAVINGS BANK 401(K) SAVINGS PLAN

 

The Plan named above gives the Employer the right to amend it at any time. According to that right, the Plan is amended effective October 1, 2002 as follows:

 

By striking subparagraph (a) from the ACTIVE PARTICIPANT SECTION of Article II and substituting the following:

 

  (a) For purposes of Elective Deferral Contributions, an Employee shall first become an Active Participant (begin active participation in the Plan) on the earliest Monthly Date on which he is an Eligible Employee. This date is his Entry Date. This Entry Date shall be used to determine if a Participant is an Active Participant for purposes of any minimum contribution or allocation under the MODIFICATION OF CONTRIBUTIONS SECTION of Article XI.

 

For purposes of Matching Contributions, an Employee shall first become an Active Participant (begin active participation in the Plan) on the earliest Semi-yearly Date on which he is an Eligible Employee and has met the eligibility requirements set forth below. This date is his Entry Date.

 

  (1) He has completed one year of Eligibility Service before his Entry Date.

 

  (2) He is age 21 or older.

 

If service with a Predecessor Employer is counted for purposes of Eligibility Service, an Employee shall be credited with such service on the date he becomes an Employee and shall become an Active Participant on the earliest Semi-yearly Date on which he is an Eligible Employee and has met all the eligibility requirements above. This date is his Entry Date.

 

If a person has been an Eligible Employee who has met all of the eligibility requirements above, but is not an Eligible Employee on the date which would have been his Entry Date, he shall become an Active Participant on the date he again becomes an Eligible Employee. This date is his Entry Date.

 

In the event an Employee who is not an Eligible Employee becomes an Eligible Employee, such Eligible Employee shall become an Active Participant immediately if such Eligible Employee has satisfied the eligibility requirements above and would have otherwise previously become an Active Participant had he met the definition of Eligible Employee. This date is his Entry Date.

 

This amendment is made an integral part of the aforesaid Plan and is controlling over the terms of said Plan with respect to the particular items addressed expressly herein. All other provision of the Plan remain unchanged and controlling.

 


Unless otherwise stated on any page of this amendment, eligibility for benefits and the amount of any benefits payable to or on behalf of an individual who is an Inactive Participant on the effective date(s) stated above, shall be determined according to the provisions of the aforesaid Plan as in effect on the day before he became an Inactive Participant.

 

Signing this amendment, the Employer, as plan sponsor, has made the decision to adopt this plan amendment. The Employer is acting in reliance on its own discretion and on the legal and tax advise of its own advisors, and not that of any member of the Principal Financial Group or any representative of a member company of the Principal Financial Group.

 

Signed this                                  day of                                      ,                 .

 

THE WARWICK SAVINGS BANK

By

   
 

TITLE

 


GOOD FAITH COMPLIANCE AMENDMENT FOR THE

ECONOMIC GROWTH AND TAX RELIEF RECONCILIATION ACT OF 2001 (EGTRRA)

 

This amendment of the Plan is adopted to reflect certain provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). This amendment is intended as good faith compliance with the requirements of EGTRRA and is to be construed in accordance with EGTRRA and guidance issued thereunder. Except as otherwise provided, this amendment shall be effective as of the first day of the first Plan Year beginning after December 31, 2001.

 

This amendment shall supersede the provisions of the Plan to the extent those provisions are inconsistent with the provisions of this amendment.

 

THE WARWICK SAVINGS BANK 401 (K) SAVINGS PLAN

 

The Plan named above gives the Employer the right to amend it at any time. According to that right, the Plan is amended as follows:

 

INCREASE IN COMPENSATION LIMIT

 

For Plan Years beginning on and after January 1, 2002, the annual Compensation of each Participant taken into account for determining all benefits provided under the Plan for any determination period shall not exceed $200,000, as adjusted for increases in the cost-of-living in accordance with Code Section 401(a)(17)(B). The cost-of-living adjustment in effect for a calendar year applies to any determination period beginning in such calendar year.

 

If Compensation for any prior determination period is taken into account in determining a Participant’s contributions or benefits for the current Plan Year, the Compensation for such prior determination period is subject to the applicable annual compensation limit in effect for that determination period. For this purpose, in determining contributions or benefits in Plan Years beginning on or after January 1, 2002, the annual Compensation limit in effect for determination periods beginning before that date is $200,000.

 

LIMITATIONS ON CONTRIBUTIONS

 

Effective date. This section shall be effective for Limitation Years beginning after December 31, 2001.

 

Maximum Annual Addition. Except to the extent permitted in the Catch-up Contributions section of this amendment that provides for catch-up contributions under EGTRRA section 631 and Code Section 414(v), if applicable, the Annual Addition that may be contributed or allocated to a Participant’s Account under the Plan for any Limitation Year shall not exceed the lesser of:

 

a) $40,000, as adjusted for increases in the cost-of-living under Code Section 415(d), or

 

b) 100 percent of the Participant’s Compensation, for the Limitation Year.

 

The compensation limitation referred to in (b) shall not apply to any contribution for medical benefits after separation from service (within the meaning of Code Section 401 (h) or 419A(f)(2)) which is otherwise treated as an Annual Addition.

 

1


Elective Deferral Limits. The cap (or the choice to not include a cap) on Elective Deferral Contributions will not change, unless otherwise specified below.

 

a) ¨ (Increase the cap.) Increase the cap on Elective Deferral Contributions to          % of Compensation.

 

b) ¨ (Remove the cap.) The cap on Elective Deferral Contributions shall no longer apply.

 

c) ¨ (Add a cap.) The Plan does not currently cap Elective Deferral Contributions. A Participant may not defer more than          % of his Compensation for (Select one.)

 

  i) ¨ for the Plan Year.

 

  ii) ¨ for the pay period.

 

  iii) ¨ for the month.

 

Voluntary After-tax Contributions. Voluntary Contributions will not be added to the Plan, unless otherwise specified below.

 

a) ¨ An Active Participant may make Voluntary Contributions in accordance with nondiscriminatory procedures set up by the Plan Administrator. (Select any that apply.)

 

  i) ¨                      % of Compensation is the minimum Voluntary Contribution.

 

  ii) ¨                      % of Compensation is the maximum Voluntary Contribution.

 

  iii) ¨                      Voluntary Contributions must be a whole percentage of Compensation.

 

  iv) ¨          Voluntary Contributions can only be made by Nonhighly Compensated Employees.

 

Limit on Elective Deferral Contributions Matched. The limit on Elective Deferral Contributions matched (or the choice to not limit the Elective Deferral Contributions matched) will not change, unless otherwise specified below.

 

a) ¨ (Add a stated limit.) Elective Deferral Contributions which are over                      % of Compensation won’t be matched.

 

b) ¨ (Add a stated limit to additional match.) Elective Deferral Contributions which are over                      % of Compensation won’t be matched.

 

ELECTIVE DEFERRALS – CONTRIBUTION LIMITATION

 

No Participant shall be permitted to have Elective Deferral Contributions, as defined in the EXCESS AMOUNTS Section, made under this Plan, or any other qualified plan maintained by us, during any taxable year in excess of the dollar limitation contained in Code Section 402(g) in effect for such taxable year, except to the extent permitted in the Catch-up Contributions section of this amendment that provides for catch-up contributions under EGTRRA section 631 and Code Section 414(v), if applicable.

 

2


CATCH-UP CONTRIBUTIONS

 

Effective Date. This section shall apply to Contributions received after December 31, 2001.

 

Catch-up Contributions. All employees who are eligible to make Elective Deferral Contributions under this Plan and who have attained age 50 before the close of the Plan Year shall be eligible to make catch-up contributions in accordance with, and subject to the limitations of, Code Section 414(v), unless otherwise specified below. Such catch-up contributions shall not be taken into account for purposes of the provisions of the Plan implementing the required limitations of Code Sections 402(g) and 415. The Plan shall not be treated as failing to satisfy the provisions of the Plan implementing the requirements of Code Section 401(k)(3), 401(k)(11), 401(k)(12), 410(b), or 416, as applicable, by reason of the making of such catch-up contributions.

 

a) ¨ Catch-up Contributions are not permitted.

 

DIRECT ROLLOVERS OF PLAN DISTRIBUTIONS

 

Effective date. This section shall apply to distributions made after December 31, 2001.

 

Modification of definition of Eligible Retirement Plan. For purposes of the DIRECT ROLLOVER Section, an Eligible Retirement Plan shall also mean an annuity contract described in Code Section 403(b) and an eligible plan under Code Section 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 into such plan from this Plan. The definition of Eligible Retirement Plan shall also apply in the case of a distribution to a surviving spouse, or to a spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Code Section 414(p).

 

Modification of definition of Eligible Rollover Distribution to exclude hardship distributions. For purposes of the DIRECT ROLLOVER Section, any amount that is distributed on account of hardship shall not be an Eligible Rollover Distribution and the Distributee may not elect to have any portion of such a distribution paid directly to an Eligible Retirement Plan.

 

Modification of definition of Eligible Rollover Distribution to include after-tax employee contributions. For purposes of the DIRECT ROLLOVER Section, a portion of a distribution shall not fail to be an Eligible Rollover Distribution merely because the portion consists of after-tax employee contributions which are not includible in gross income. However, such portion may be transferred only to an individual retirement account or individual retirement annuity described in Code Section 408(a) or (b), or to a qualified defined contribution plan described in Code Section 401(a) or 403(a) that agrees to separately account for amounts so transferred, including separately accounting for the portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible.

 

3


ROLLOVERS FROM OTHER PLANS

 

The Plan will accept Participant Rollover Contributions and/or direct rollovers of distributions made after December 31, 2001 from the types of plans specified below beginning January 1, 2002. The Plan will accept all of the following sources of rollovers, unless otherwise specified in (a) below.

 

Direct Rollovers

 

The Plan will accept a direct rollover of an Eligible Rollover Distribution from:

 

  i) a qualified plan described in Code Section 401(a) or 403(a), including after-tax employee contributions.

 

  ii) an annuity contract described in Code Section 4O3(b), excluding after-tax employee contributions.

 

  iii) an eligible plan under Code Section 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.

 

Participant Rollover Contributions from Other Plans

 

The Plan will accept a Participant contribution of an Eligible Rollover Distribution from:

 

  i) a qualified plan described in Code Section 401(a) or 403(a).

 

  ii) an annuity contract described in Code Section 403(b).

 

  iii) an eligible plan under Code Section 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.

 

Participant Rollover Contributions from IRAs

 

The Plan will accept a Participant Rollover Contribution of the portion of a distribution from an individual retirement account or individual retirement annuity described in Code Section 408(a) or (b) that is eligible to be rolled over and would otherwise be includible in gross income.

 

(Select (a) if you want to allow only certain sources of rollovers.)

 

a) ¨ The Plan will accept Participant Rollover Contributions and/or direct rollovers of distributions made after December 31, 2001 from the types of plans specified below beginning January 1, 2002. (Select any that apply.)

 

Direct Rollovers

 

The Plan will accept a direct rollover of an Eligible Rollover Distribution from:

 

i) ¨ a qualified plan described in Code Section 401(a) or 403(a), including after-tax employee contributions.

 

ii) ¨ a qualified plan described in Code Section 401(a) or 403(a), excluding after-tax employee contributions. (Cannot select if (i) is selected.)

 

iii) ¨ an annuity contract described in Code Section 403(b), excluding after-tax employee contributions.

 

iv) ¨ an eligible plan under Code Section 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.

 

4


Participant Rollover Contributions from Other Plans

 

The Plan will accept a Participant contribution of an Eligible Rollover Distribution from:

 

i) ¨ a qualified plan described in Code Section 401 (a) or 403(a)

 

(ii) ¨ an annuity contract described in Code Section 403(b).

 

iii) ¨ an eligible plan under Code Section 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.

 

Participant Rollover Contributions from IRAs

 

The Plan will accept a Participant Rollover Contribution of the portion of a distribution from an individual retirement account or individual retirement annuity described in Code Section 408(a) or (b) that is eligible to be rolled over and would otherwise be includible in gross income, unless otherwise specified below.

 

i) x Participant Rollover Contributions from IRAs are not permitted.

 

ROLLOVERS DISREGARDED IN INVOLUNTARY CASH-OUTS

 

Rollover Contributions will be included in determining the value of account balances for involuntary distributions, unless otherwise specified below. (NOTE: Can only select (a) if the Plan is not subject to the qualified joint and survivor annuity requirements of Code Sections 401(a)(11) and 417.)

 

a) ¨ Rollover Contributions are excluded in determining the value of the Participant’s nonforfeitable balance for purposes of the Plan’s involuntary cash-out rules for

 

distributions made after                                  ,                      (No earlier than December 31, 2001.) with respect to Participants who separated from service after

 

                                 ,                      . (The date may be earlier than December 31, 2001.)

 

REPEAL OF MULTIPLE USE TEST

 

The multiple use test described in Treasury Regulation section 1.401(m)-2 and the EXCESS AMOUNTS Section shall not apply for Plan Years beginning after December 31, 2001.

 

DISTRIBUTION UPON SEVERANCE FROM EMPLOYMENT

 

Effective date. This section shall apply for distributions due to severance from employment occurring after December 31, 2001 and distributions that are processed after December 31, 2001 regardless of when the severance from employment occurred.

 

New distributable event - Distribution Upon Severance From Employment. A Participant’s Elective Deferral Contributions, Qualified Nonelective Contributions, Qualified Matching Contributions, and earnings attributable to these Contributions shall be distributed on account of the Participant’s severance from employment. However, such a distribution shall be subject to the other provisions of the Plan regarding distributions, other than provisions that require a separation from service before such amounts may be distributed.

 

5


SUSPENSION PERIOD FOLLOWING HARDSHIP DISTRIBUTION

 

If the Plan allows hardship distributions and the deemed hardship provisions are used, the suspension period following a hardship distribution will be decreased, unless otherwise specified in (a) below. A Participant who receives a distribution of elective deferrals after December 31, 2001, on account of hardship shall be prohibited from making elective deferrals and participant contributions under this and all other plans of ours for six months after receipt of the distribution. A Participant who receives a distribution of elective deferrals in calendar year 2001 on account of hardship shall be prohibited from making elective deferrals and participant contributions under this and all other plans of ours for six months after receipt of the distribution or until January 1, 2002, if later.

 

a) x The suspension period will not change. (Not available for 401 (k) Safe Harbor plans.)

 

MODIFICATION OF TOP-HEAVY RULES

 

Effective date. This section shall apply for purposes of determining whether the Plan is a Top-heavy Plan for Plan Years beginning after December 31, 2001, and whether the Plan satisfies the minimum benefits requirements of Code Section 416(c) for such years. This section amends the TOP-HEAVY PLAN REQUIREMENTS Section of the Plan.

 

Determination of top-heavy status.

 

Key Employee means any Employee or former Employee (and the Beneficiaries of such Employee) who at any time during the determination period was:

 

a) an officer of ours if such individual’s annual Compensation is more than $130,000 (as adjusted under Code Section 416(i)(1) for Plan Years beginning after December 31, 2002),

 

b) a 5-percent owner of us, or

 

c) a 1-percent owner of us who has annual Compensation of more than $150,000.

 

The determination period is the Plan Year containing the Determination Date.

 

The determination of who is a Key Employee shall be made according to Code Section 416(i)(1) and the applicable regulations and other guidance of general applicability issued thereunder.

 

Determination o f present values and amounts. This section shall apply for purposes of determining the present values of accrued benefits and the amounts of account balances of Employees as of the Determination Date.

 

Distributions during year ending on the Determination Date. The present values of accrued benefits and the amounts of account balances of an Employee as of the Determination Date shall be increased by the distributions made with respect to the Employee under the Plan and any plan aggregated with the Plan under Code Section 416(g)(2) during the one-year period ending on the Determination Date. The preceding sentence shall also apply to distributions under a terminated plan which, had it not been terminated, would have been aggregated with the Plan under Code Section 416(g){2)(A)(i). In the case of a distribution made for a reason other than separation from service, death, or disability, this provision shall be applied by substituting “five-year period” for “one-year period.”

 

6


Employees not performing services during year ending on the Determination Date. The accrued benefits and accounts of any individual who has not performed services for us during the one-year period ending on the Determination Date shall not be taken into account.

 

Minimum benefits.

 

Matching contributions . Employer matching contributions shall be taken into account for purposes of satisfying the minimum contribution requirements of Code Section 416(c)(2) and the Plan. The preceding sentence shall apply with respect to Matching Contributions under the Plan or, if the Plan provides that the minimum contribution requirement shall be met in another plan, such other plan. Employer matching contributions that are used to satisfy the minimum contribution requirements shall be treated as matching contributions for purposes of the actual contribution percentage test and other requirements of Code Section 401(m).

 

Contributions under other plans. We may provide in the Plan that the minimum benefit requirement shall be met in another plan (including another plan that consists solely of a cash or deferred arrangement which meets the requirements of Code Section 401(k)(12) and matching contributions with respect to which the requirements of Code Section 401(m)(11) are met).

 

PLAN LOANS FOR OWNER-EMPLOYEES AND SHAREHOLDER EMPLOYEES

 

Effective for plan loans made after December 31, 2001, plan provisions prohibiting loans to any shareholder-employee or Owner-employee shall cease to apply.

 

Signed this 30th day of December, 2001.

 

By:  

/s/ Nancy L. Sobotor - Littel

   

Director of Human Resources

    Title

 

7

Exhibit 23.2

 


[LOGO APPEARS HERE]     
     KPMG LLP
    

345 Park Avenue

    

New York, NY 10154

 

 

Consent of Independent Registered Public Accounting Firm

 

The Board of Directors

Provident Bancorp, Inc.:

 

We consent to the incorporation by reference in the Registration Statement on Form S-8 of Provident Bancorp, Inc. relating to the Warwick Community Bancorp 401(k) Savings Plan of our report dated November 26, 2003, relating to the consolidated statements of financial condition of Provident Bancorp, Inc. and subsidiary as of September 30, 2003 and 2002, and the related consolidated statements of income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended September 30, 2003, which report appears in the September 30, 2003 Annual Report on Form 10-K, as amended, of Provident Bancorp, Inc.

 

/s/ KPMG LLP

 

November 4, 2004

New York, New York