|
Exhibit
10.1
FORM OF
FIRST SAVINGS BANK,
F.S.B.
EMPLOYEE STOCK OWNERSHIP
PLAN
Effective as of
January 1, 2008
FIRST SAVINGS BANK,
F.S.B.
EMPLOYEE STOCK OWNERSHIP
PLAN
CERTIFICATION
I, Larry W. Myers, President
and Chief Executive Officer of First Savings Bank, F.S.B., hereby
certify that the attached First Savings Bank, F.S.B. Employee Stock
Ownership Plan, effective January 1, 2008, was adopted at a
duly held meeting of the Board of Directors of the Bank.
|
|
|
| FIRST SAVINGS BANK, F.S.B. |
|
|
| By: |
|
|
|
|
Larry W.
Myers |
|
|
President
and Chief Executive Officer |
First Savings Bank,
F.S.B.
Employee Stock Ownership
Plan
Table of
Contents
|
|
|
| Section 1 -
Introduction |
|
1 |
|
|
| Section 2 -
Definitions |
|
1 |
|
|
| Section 3 -
Eligibility and Participation |
|
8 |
|
|
| Section 4 -
Contributions |
|
10 |
|
|
| Section 5 -
Plan Accounting |
|
12 |
|
|
| Section 6 -
Vesting and Forfeitures |
|
18 |
|
|
| Section 7 -
Distributions |
|
20 |
|
|
| Section 8 -
Voting of Company Stock and Tender Offers |
|
25 |
|
|
| Section 9 -
The Committee and Plan Administration |
|
26 |
|
|
| Section 10 -
Rules Governing Benefit Claims |
|
29 |
|
|
| Section 11 -
The Trust |
|
30 |
|
|
| Section 12 -
Adoption, Amendment and Termination |
|
31 |
|
|
| Section 13 -
General Provisions |
|
33 |
|
|
| Section 14 -
Top-Heavy Provisions |
|
38 |
SECTION 1
Introduction
Section 1.01 Nature of the
Plan .
Effective as of January 1, 2008
(the “Effective Date”), First Savings Bank, F.S.B. (the
“Bank”) hereby establishes the First Savings Bank,
F.S.B. Employee Stock Ownership Plan (the “Plan”) to
enable Eligible Employees (as defined in Section 2.01(o) of
the Plan) to acquire stock ownership interests in First Savings
Financial Group, Inc. (the “Company”), the holding
company of the Bank. The Bank intends this Plan to be a
tax-qualified stock bonus plan under Section 401(a) of the
Internal Revenue Code of 1986, as amended (the “Code”),
and an employee stock ownership plan within the meaning of
Section 407(d)(6) of the Employee Retirement Income Security
Act of 1974, as amended (“ERISA”), and Sections 409 and
4975(e)(7) of the Code. The Plan is designed to invest primarily in
the common stock of the Company, which stock constitutes
“qualifying employer securities” within the meaning of
Section 407(d)(5) of ERISA and Sections 409(l) and 4975(e)(8)
of the Code. Accordingly, the Plan and Trust Agreement (as defined
in Section 2.01(mm) of the Plan) shall be interpreted and
applied in a manner consistent with the Bank’s intent for it
to be a tax-qualified plan designed to invest primarily in
qualifying employer securities.
The Plan reflects certain provisions of
the Economic Growth and Tax Relief Reconciliation Act of 2001
(“EGTRRA”). The provisions related to EGTRRA are
intended as good faith compliance with EGTRRA and the guidance
issued thereunder. To the extent any provision of the Plan was
operated according to an effective date earlier than as required by
law, then such date shall be the effective date with respect to
that provision of the Plan.
Section 1.02 Employers and
Affiliates .
The Bank and each of its Affiliates (as
defined in Section 2.01(c) of the Plan) that, with the consent
of the Bank, adopt the Plan pursuant to the provisions of
Section 12.01 of the Plan are collectively referred to as the
“Employers” and individually as an
“Employer.” The Plan shall be treated as a single plan
with respect to all participating Employers.
SECTION 2
Definitions
Section 2.01 Definitions
.
In this Plan, whenever the context so
indicates, the singular or the plural number and the masculine or
feminine gender shall be deemed to include the other, the terms
“he,” “his,” and “him,” shall
refer to a Participant or Beneficiary, as the case may be, and,
except as otherwise provided, or unless the context otherwise
requires, the capitalized terms shall have the following
meanings:
| (a) |
“Account” or “Accounts”
mean a Participant’s or Beneficiary’s Company Stock
Account and/or his Other Investments Account, as the context so
requires. |
1
| (b) |
“Acquisition Loan” means a loan or other
extension of credit, including an installment obligation to a
“party in interest” (as defined in Section 3(14)
of ERISA) incurred by the Trustee in connection with the purchase
of Company Stock. |
| (c) |
“Affiliate” means any corporation, trade or
business, which, at the time of reference, is together with the
Bank, a member of a controlled group of corporations, a group of
trades or businesses (whether or not incorporated) under common
control, or an affiliated service group, as described in Sections
414(b), 414(c), and 414(m) of the Code, respectively, or any other
organization treated as a single employer with the Bank under
Section 414(o) of the Code; provided, however, that, where the
context so requires, the term “Affiliate” shall be
construed to give full effect to the provisions of Sections
409(l)(4) and 415(h) of the Code. |
| (d) |
“Bank” means First Savings Bank, F.S.B., and
any entity that succeeds to the business of the First Savings Bank,
F.S.B. and adopts this Plan in accordance with the provisions of
Section 12.02 of the Plan, or by written agreement assumes the
obligations of the Plan. |
| (e) |
“Beneficiary” means the person(s) entitled
to receive benefits under the Plan following a Participant’s
death, pursuant to Section 7.03 of the Plan. |
| (f) |
“Change in Control” means any one of the
following events occurs: |
| |
(i) |
Merger : The Company or the Bank merges into or
consolidates with another corporation, or merges another
corporation into the Company or the Bank, and as a result less than
a majority of the combined voting power of the resulting
corporation immediately after the merger or consolidation is held
by persons who were stockholders of the Company or the Bank
immediately before the merger or consolidation; |
| |
(ii) |
Acquisition of Significant Share Ownership : The Company
files, or is required to file, a report on Schedule 13D or another
form or schedule (other than Schedule 13G) required under Sections
13(d) or 14(d) of the Exchange Act, if the schedule discloses that
the filing person or persons acting in concert has or have become
the beneficial owner of twenty-five percent (25%) or more of a
class of the Company’s voting securities, but this clause
(b) shall not apply to beneficial ownership of Company voting
shares held in a fiduciary capacity by an entity of which the
Company directly or indirectly beneficially owns fifty
(50%) or more of its outstanding voting
securities; |
| |
(iii) |
Change in
Board Composition : During any period of two consecutive years,
individuals who constitute the Company’s or the Bank’s
Board of Directors at the beginning of the two-year period cease
for any reason to constitute at least a majority of the
Bank’s or the Company’s Board of Directors; provided,
however, that for purposes of this clause (iii), each director who
is first elected by the board (or first nominated by the board for
election by the stockholders) by a vote of at
|
2
| |
least two-thirds
(2/3) of the directors who were directors at the beginning of
the two-year period shall be deemed to have also been a director at
the beginning of such period; or
|
| |
(iv) |
Sale of Assets : The Company or the Bank sells to a
third party all or substantially all of its assets. |
| (g) |
“Code” means the Internal Revenue Code of
1986, as amended. |
| (h) |
“Committee” means the individual(s)
responsible for the administration of the Plan in accordance with
Section 9 of the Plan. |
| (i) |
“Company” means First Savings Financial
Group, Inc. and any entity which succeeds to the business of First
Savings Financial Group, Inc. |
| (j) |
“Company Stock” means shares of the voting
common stock or preferred stock, meeting the requirements of
Section 409 of the Code and Section 407(d)(5) of ERISA,
issued by the Company or its Affiliates. |
| (k) |
“Company Stock Account” means the account
established and maintained in the name of each Participant or
Beneficiary to reflect his share of the Trust Fund invested in
Company Stock. |
| (l) |
“Compensation” means a Participant’s
wages as defined in Code Section 3401(a) and all other
payments of Compensation and all other payments of compensation by
the Employer (in the course of the Employer’s trade or
business) for a Plan Year for which Employer is required to furnish
the Participant a written statement under Code Sections 6041(d),
6051(a)(3) and 6052. Compensation must be determined without regard
to any rules under 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)). Compensation shall also
include amounts not currently includible in gross income by reason
of the application of Code Sections 125 (cafeteria plan), 132(f)(4)
(qualified transportation fringe), 402(e)(3) (401(k) plan),
402(h)(1)(B)(simplified employee pension plan), 414(h) (employer
pickup contributions under a governmental plan), 403(b) (tax
sheltered annuity) or 457(b) (eligible deferred compensation
plan). |
A Participant’s
Compensation shall not exceed the limit set forth in
Section 401(a)(17) of the Code ($230,000 for Plan Years
beginning January 1, 2008). If the Plan Year for which a
Participant’s Compensation is measured is less than twelve
(12) calendar months, then the amount of Compensation taken
into account for such Plan Year shall be the adjusted amount for
such Plan Year, as prescribed by the Secretary of the Treasury
under Section 401(a)(17) of the Code, multiplied by a
fraction, the numerator of which is the number of months taken into
account for such Plan Year and the denominator of which is twelve
(12). In determining the dollar limitation hereunder, Compensation
received from an Affiliate shall be recognized as
Compensation.
3
| (m) |
“Disability” means a physical or mental
condition of a Participant resulting from bodily injury, disease,
or mental disorder which renders the Participant incapable of
continuing any gainful occupation and which condition constitutes
total disability under the federal Social Security Act. The
Disability of a Participant shall be determined by the Plan
Administrator, in its sole discretion. |
| (n) |
“Effective Date” means January 1,
2008. |
| (o) |
“Eligible Employee” means any Employee who
is not precluded from participating in the Plan by reason of the
provisions of Section 3.02 of the Plan. |
| (p) |
“ Eligibility Computation Period ” shall
mean the twelve (12) consecutive month period beginning on the
date an Employee first performed an Hour of Service for the
Employer (employment commencement date). Subsequent Eligibility
Computation Periods shall be the Plan Year, commencing with the
first Plan Year that includes the first anniversary date of the
Employee’s employment commencement date. To determine an
Eligibility Computation Period after a One Year Break in Service,
the Plan shall use the twelve (12) consecutive month period
beginning on the date the Employee again performs an Hour of
Service for the Employer. |
| (q) |
“ Employee” means any person who is actually
performing services for the Employer or an Affiliate in a
common-law, employer-employee relationship as determined under
Sections 31.3121(d)-1, 31.3306(i)-1, or 31.3401(c)-1 of the
Treasury Regulations. |
| (r) |
“Employer” or “Employers”
means the Bank and any of its Affiliates that adopt the Plan in
accordance with the provisions of Section 12.01 of the Plan,
and any entity which succeeds to the business of the Bank or its
Affiliates and which adopts the Plan in accordance with the
provisions of Section 12.02 of the Plan, or by written
agreement assumes the obligations under the Plan. |
|
(s)
|
“Entry
Date” means the January 1 st or July 1 st coincident with or next following the
date the Employee satisfies the requirements for participation
under Section 3.01 of the Plan.
|
| (t) |
“ERISA” means the Employee Retirement Income
Security Act of 1974, as amended. |
| (u) |
“Exchange Act” means the Securities Exchange
Act of 1934, as amended. |
| (v) |
“Financed Shares” means shares of Company
Stock acquired by the Trustee with the proceeds of an Acquisition
Loan, which shall constitute “qualifying employer
securities” under Section 409(l) of the Code and any
shares of Company Stock received upon conversion or exchange of
such shares. |
| (w) |
“Highly Compensated Employee” means an
Employee who, for a particular Plan Year, satisfies one of the
following conditions: |
| |
(i) |
was a “5-percent owner” (as defined in
Section 414(q)(2) of the Code) during the year or the
preceding year, or |
4
| |
(ii) |
for the preceding year, had “compensation” (as
defined in Section 414(q)(4) of the Code) from the Bank and
its Affiliates exceeding the limit in Section 414(q)(1) of the
Code ($105,000 for Plan Years beginning January 1,
2008). |
| (x) |
“Hours of Service” means: |
| |
(i) |
Each hour for which an Employee is paid, or entitled to
payment, for performing duties for the Employer during the
applicable computation period. |
| |
(ii) |
Each hour for which an Employee is paid, or entitled to
payment, for a period during which no duties are performed
(irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity
(including disability), layoff, jury duty, military duty or leave
of absence. Notwithstanding the preceding sentence, no credit shall
be given to the Employee for: |
| |
(A) |
more than 501 hours under this clause (ii) because of any
single continuous period in which the Employee performs no duties
(whether or not such period occurs in a single computation
period); |
| |
(B) |
an hour 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, unemployment, or disability
insurance laws; or |
| |
(C) |
an hour or a payment which solely reimburses the Employee for
medical or medically-related expenses incurred by the
Employee. |
| |
(iii) |
Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer; provided,
however, that hours credited under either clause (i) or
(ii) above shall not also be credited under this clause (iii).
Crediting of hours for back pay awarded or agreed to with respect
to periods described in clause (ii) above will be subject to
the limitations set forth in that clause. |
The crediting of Hours of Service shall
be determined by the Committee in accordance with the rules set
forth in Section 2530.200b-2 of the regulations prescribed by
the Department of Labor, which rules shall be consistently applied
with respect to all Employees within the same job classification.
If an Employer finds it impracticable to count actual Hours of
Service for any class or group of non-hourly Employees, each
Employee in that class or group shall be credited with 45 Hours of
Service for each weekly period in which he has at least one Hour of
Service. However, an Employee shall be credited with Hours of
Service only for his normal working hours during a paid absence.
Hours of Service shall be credited for employment with an
Affiliate.
5
For purposes of determining whether an
Employee has incurred a One Year Break in Service and for vesting
and participation purposes, if an Employee begins a
maternity/paternity leave of absence described in
Section 411(a)(6)(E)(i) of the Code, his Hours of Service
shall include the Hours of Service that would have been credited to
him if he had not been so absent (or 45 Hours of Service for each
week of such absence if the actual Hours of Service cannot be
determined). An Employee shall be credited for such Hours of
Service (up to a maximum of 501 Hours of Service) in the Plan Year
in which his absence begins (if such crediting will prevent him
from incurring a One Year Break in Service in such Plan Year) or,
in all other cases, in the following Plan Year. An absence from
employment for maternity or paternity reasons means an
absence:
| |
(i) |
by reason of pregnancy of the Employee, |
| |
(ii) |
by reason of the birth of a child of the Employee, |
| |
(iii) |
by reason of the placement of a child with the Employee in
connection with the adoption of such child by such Employee,
or |
| |
(iv) |
for purposes of caring for such child for a period beginning
immediately following such birth or placement. |
| (y) |
“Later Retirement Date” means the first day
of the month coincident with or next following a
Participant’s date of actual retirement which occurs after
his Normal Retirement Date. |
| (z) |
“Loan Suspense Account” means that portion
of the Trust Fund consisting of Company Stock acquired with an
Acquisition Loan which has not yet been allocated to the
Participants’ Accounts. |
| (aa) |
“Named Fiduciary” means the Board of
Directors of the Bank. |
| (bb) |
“Normal Retirement Age” means attainment of
age 65. |
| (cc) |
“Normal Retirement Date” means the first day
of the month coincident with or next following the
Participant’s attainment of Normal Retirement
Age. |
| (dd) |
“One Year Break in Service” means a twelve
(12) consecutive month period during which the Participant
does not complete more than 500 Hours of Service. |
| (ee) |
“Other Investments Account” means the
account established and maintained in the name of each Participant
or Beneficiary to reflect his share of the Trust Fund, other than
Company Stock. |
6
| (ff) |
“Participant” means any Eligible Employee
who has become a Participant in accordance with Section 3.01
of the Plan or any other person with an Account balance under the
Plan. |
| (gg) |
“Plan” means this First Savings Bank, F.S.B.
Employee Stock Ownership Plan, as amended from time to
time. |
| (hh) |
“ Plan Year” means the calendar
year. |
| (ii) |
“Recognized Absence” means a period for
which: |
| |
(i) |
an Employer grants an Employee a leave of absence for a limited
period of time, but only if an Employer grants such leaves of
absence on a nondiscriminatory basis to all Eligible Employees;
or |
| |
(ii) |
an Employee is temporarily laid off by an Employer because of a
change in the business conditions of the Employer; or |
| |
(iii) |
an Employee is on active military duty, but only to the extent
that his employment rights are protected by the Military Selective
Service Act of 1967 and the Uniformed Services Employment and
Reemployment Rights Act of 1994. |
| (jj) |
“Retirement Date” means a
Participant’s Normal or Later Retirement Date, whichever is
applicable. |
| (kk) |
“Service” means employment with the Bank or
an Affiliate. |
| (ll) |
“Termination of Service” means the earlier
of (a) the date on which an Employee’s Service is
terminated by reason of his resignation, retirement, discharge,
death or Disability or (b) the first anniversary of the date
on which such Employee’s service is terminated for disability
of a short-term nature or any other reason. Service in the Armed
Forces of the United States shall not constitute a Termination of
Service but shall be considered to be a period of employment by the
Employer provided (i) such military service is caused by war
or other emergency or the Employee is required to serve under the
laws of conscription in time of peace, (ii) the Employee
returns to employment with the Employer within six (6) months
following discharge from such military service and (iii) such
Employee is reemployed by the Employer at a time when the Employee
had a right to reemployment at his former position or substantially
similar position upon separation from such military duty in
accordance with seniority rights as protected under the laws of the
United States. A leave of absence granted to an Employee by the
Employer shall not constitute a Termination of Service provided
that the Participant returns to the active service of the Employer
at the expiration of any such period for which leave has been
granted. Notwithstanding the foregoing, an Employee who is absent
from service with the Employer beyond the first anniversary of the
first date of absence for maternity or paternity reasons set forth
in Section 2.01 of the Plan shall incur a Termination of
Service for purposes of the Plan on the second anniversary of the
date of such absence. |
7
| (mm) |
“Treasury Regulations” mean the regulations
promulgated by the Department of the Treasury under the
Code. |
| (nn) |
“Trust” means the First Savings Bank, F.S.B.
Employee Stock Ownership Plan Trust created in connection with the
establishment of the Plan. |
| (oo) |
“Trust Agreement” means the trust agreement
establishing the Trust. |
| (pp) |
“Trust Fund” means the assets held in the
Trust for the benefit of Participants and their
Beneficiaries. |
| (qq) |
“Trustee” means the trustee or trustees from
time to time in office under the Trust Agreement. |
| (rr) |
“Valuation Date” means the last day of the
Plan Year and each other date as of which the Committee shall
determine the investment experience of the Trust Fund and adjust
Participants’ Accounts accordingly. |
| (ss) |
“Valuation Period” means the period
following a Valuation Date and ending with the next Valuation
Date. |
SECTION 3
Eligibility and
Participation
Section 3.01
Participation .
| (a) |
All Eligible Employees who are over 21 years of age on the
closing date of the Bank’s mutual to stock conversion shall
enter the Plan and become Participants as of the later of:
(i) the Effective Date; or (ii) the Eligible
Employee’s date of hire. |
| (b) |
An Eligible Employee who is first employed by an Employer after
the closing date of the Bank’s mutual to stock conversion
shall become a Participant in the Plan upon satisfying the
following requirements: |
| |
(i) |
The Eligible Employee is at least 21 years of age;
and |
| |
(ii) |
The Eligible Employee has completed at least 1,000 Hours of
Service during an Eligibility Computation Period. |
| (c) |
An Eligible Employee who has satisfied the eligibility
requirements of Section 3.01(b) shall enter the Plan and
become a Participant on the Entry Date coincident with or next
following the date he satisfies such requirements. |
8
Section 3.02 Certain
Employees Ineligible .
The following Employees are ineligible
to participate in the Plan:
| (a) |
Employees covered by a collective bargaining agreement between
the Employer and the Employee’s collective bargaining
representative if: |
| |
(i) |
retirement benefits have been the subject of good faith
bargaining between the Employer and the representative,
and |
| |
(ii) |
the collective bargaining agreement does not expressly provide
that Employees of such unit be covered under the Plan; |
| (b) |
Employees who are nonresident aliens and who receive no earned
income from an Employer which constitutes income from sources
within the United States; and |
| (c) |
Employees of an Affiliate of the Bank that has not adopted the
Plan pursuant to Sections 12.01 or 12.02 of the Plan. |
Section 3.03 Transfer to and
from Eligible Employment .
| (a) |
If an Employee ineligible to participate in the Plan by reason
of Section 3.02 of the Plan transfers to employment as an
Eligible Employee, he shall enter the Plan as of the later
of: |
| |
(i) |
the first Entry Date after the date of transfer, or |
| |
(ii) |
the first Entry Date on which he could have become a
Participant pursuant to Section 3.01 of the Plan. |
| (b) |
If a Participant transfers to an employment position that makes
him ineligible to participate in the Plan as of the date of such
transfer, he shall cease active participation in the Plan as of
such date and his transfer shall be treated for all purposes under
the Plan in the same manner as any other termination of
Service. |
Section 3.04 Participation
after Reemployment .
| (a) |
If an Employee incurs a One Year Break in Service prior to
satisfying the eligibility requirements of Section 3.01 of the
Plan, Service prior to such One Year Break in Service shall be
disregarded and the Employee must satisfy the eligibility
requirements of Section 3.01 as a new Employee. |
| (b) |
If an Employee incurs a One Year Break in Service after
satisfying the eligibility requirements of Section 3.01 of the
Plan and again performs an Hour of Service, the Employee shall
receive credit for Service prior to his One Year Break in Service
and shall be eligible to participate in the Plan immediately upon
reemployment, provided the Employee is not excluded from
participation under the provisions of Section 3.02 of the
Plan. |
9
Section 3.05 Participation
Not Guarantee of Employment .
Participation in the Plan does not
constitute a guarantee or contract of employment and will not give
any Employee the right to be retained in the employ of the Bank or
any of its Affiliates nor any right or claim to any benefit under
the terms of the Plan unless such right or claim has specifically
accrued under the Plan.
SECTION 4
Contributions
Section 4.01 Employer
Contributions .
| (a) |
Discretionary Contributions. Each Plan Year, each
Employer, in its discretion, may make a contribution to the Trust.
Each Employer making a contribution for any Plan Year under this
Section 4.01(a) will contribute to the Trustee cash equal to,
or Company Stock or other property having an aggregate fair market
value equal to, such amount as the Board of Directors of the
Employer shall determine by resolution. Notwithstanding the
Employer’s discretion with respect to the medium of
contribution, an Employer shall not make a contribution in any
medium which would make such contribution a prohibited transaction
(for which no exemption is provided) under Section 406 of
ERISA or Section 4975 of the Code. |
| (b) |
Employer Contributions for Acquisition Loans.
Each Plan Year, the Employers shall, subject to any regulatory
prohibitions, contribute an amount of cash sufficient to enable the
Trustee to discharge any indebtedness incurred with respect to an
Acquisition Loan pursuant to the terms of the Acquisition Loan. The
Employers’ obligation to make contributions under this
Section 4.01(b) shall be reduced to the extent of any
investment earnings attributable to such contributions and any cash
dividends paid with respect to Company Stock held by the Trustee in
the Loan Suspense Account. If there is more than one Acquisition
Loan, the Employers shall designate the one to which any
contribution pursuant to this Section 4.01(b) is to be
applied. |
Section 4.02 Limitations on
Contributions .
In no event shall an Employer’s
contribution(s) made under Section 4.01 of the Plan for any
Plan Year exceed the lesser of:
| (a) |
The maximum amount deductible under Section 404 of the
Code by that Employer as an expense for Federal income tax
purposes; and |
| (b) |
The maximum amount which can be credited for that Plan Year in
accordance with the allocation limitation provisions of
Section 5.05 of the Plan. |
10
Section 4.03 Acquisition
Loans .
The Trustee may incur Acquisition Loans
from time to time to finance the acquisition of Company Stock for
the Trust or to repay a prior Acquisition Loan. An Acquisition Loan
shall be for a specific term, shall bear a reasonable rate of
interest, shall not be payable on demand, except in the event of
default, and shall be primarily for the benefit of Participants and
Beneficiaries of the Plan. An Acquisition Loan may be secured by a
collateral pledge of the Financed Shares so acquired and any other
Plan assets which are permissible securities within the provisions
of Section 54.4975-7(b) of the Treasury Regulations. No other
assets of the Plan or Trust may be pledged as collateral for an
Acquisition Loan, and no lender shall have recourse against any
other Trust assets. Any pledge of Financed Shares must provide for
the release of shares so pledged on a basis equal to the principal
and interest (or if the requirements of
Section 54.4975-7(b)(8)(ii) of the Treasury Regulations are
met and the Employer so elects, principal payments only), paid by
the Trustee on the Acquisition Loan. The released Financed Shares
shall be allocated to Participants’ Accounts in accordance
with the provisions of Sections 5.04 or 5.08 of the Plan, whichever
is applicable. Payment of principal and interest on any Acquisition
Loan shall be made by the Trustee only from the Employer
contributions paid in cash to enable the Trustee to repay such loan
in accordance with Section 4.01(b) of the Plan, from earnings
attributable to such contributions, and any cash dividends received
by the Trustee on Financed Shares acquired with the proceeds of the
Acquisition Loan (including contributions, earnings and dividends
received during or prior to the year of repayment less such
payments in prior years), whether or not allocated. Financed Shares
shall initially be credited to the Loan Suspense Account and shall
be transferred for allocation to the Company Stock Accounts of
Participants only as payments of principal and interest (or, if the
requirements of Section 54.4975-7(b)(8)(ii) of the Treasury
Regulations are met and the Employer so elects, principal payments
only), on the Acquisition Loan are made by the Trustee. The number
of Financed Shares to be released from the Loan Suspense Account
for allocation to Participants’ Company Stock Account for
each Plan Year shall be based on the ratio that the payments of
principal and interest (or, if the requirements of
Section 54.4975-7(b)(8)(ii) of the Treasury Regulations are
met and the Employer so elects, principal payments only), on the
Acquisition Loan for that Plan Year bears to the sum of the
payments of principal and interest on the Acquisition Loan for that
Plan Year plus the total remaining payment of principal and
interest projected (or, if the requirements of
Section 54.4975-7(b)(8)(ii) of the Treasury Regulations are
met and the Employer so elects, principal payments only), on the
Acquisition Loan over the duration of the Acquisition Loan
repayment period, subject to the provisions of Section 5.05 of
the Plan.
Section 4.04 Conditions as to
Contributions .
In addition to the provisions of
Section 12.03 of the Plan for the return of an
Employer’s contributions in connection with a failure of the
Plan to qualify initially under the Code, any amount contributed by
an Employer due to a good faith mistake of fact, or based upon a
good faith but erroneous determination of its deductibility under
Section 404 of the Code, shall be returned to the Employer
within one year after the date on which the Employer originally
made such contribution, or within one year after its
nondeductibility has been finally determined. However, the amount
to be returned shall be reduced to take account of any adverse
investment experience within the Trust in order that the balance
credited to each Participant Account is not less than it would have
been if the contribution had never been made by the
Employer.
11
Section 4.05 Employee
Contributions .
Employee contributions are neither
required nor permitted under the Plan.
Section 4.06 Rollover
Contributions .
Rollover contributions to the Plan of
assets from other tax-qualified retirement plans are not permitted
under the Plan.
Section 4.07
Trustee-to-Trustee Transfers .
Trustee-to-trustee transfers of assets
from other tax-qualified retirement plans are not permitted under
the Plan.
SECTION 5
Plan
Accounting
Section 5.01 Accounting for
Allocations .
The Committee shall establish the
Accounts (and sub-accounts, if deemed necessary) for each
Participant, and the accounting procedures for the purpose of
making allocations to Participants’ Accounts as provided for
in this Section 5. The Committee shall maintain adequate
records of the cost basis of shares of Company Stock allocated to
each Participant’s Company Stock Account. The Committee also
shall keep separate records of Financed Shares attributable to each
Acquisition Loan and of contributions made by the Employers (and
any earnings thereon) made for the purpose of enabling the Trustee
to repay any Acquisition Loan. From time to time, the Committee may
modify its accounting procedures for the purpose of achieving
equitable and nondiscriminatory allocations among the Accounts of
Participants, in accordance with the provisions of this
Section 5 and the applicable requirements of the Code and
ERISA. In accordance with Section 9 of the Plan, the Committee
may delegate the responsibility for maintaining Accounts and
records.
Section 5.02 Maintenance of
Participants’ Company Stock Accounts .
As of each Valuation Date, the Committee
shall adjust the Company Stock Account of each Participant to
reflect activity during the Valuation Period as follows:
| (a) |
First, charge to each Participant’s Company Stock Account
all distributions and payments made to the Participant that have
not been previously charged; |
| (b) |
Next, credit to each Participant’s Company Stock Account
the shares of Company Stock, if any, that have been purchased with
amounts from the Participant’s Other Investments Account, and
adjust such Other Investments Account in accordance with the
provisions of Section 5.03 of the Plan; |
12
| (c) |
Next, credit to each Participant’s Company Stock Account
the shares of Company Stock representing contributions made by the
Employers in the form of Company Stock and the number of Financed
Shares released from the Loan Suspense Account under
Section 4.03 of the Plan that are to be allocated and credited
as of that date in accordance with the provisions of
Section 5.04 of the Plan; and |
| (d) |
Finally, credit to each Participant’s Company Stock
Account the shares of Company Stock released from the Loan Suspense
Account that are to be allocated in accordance with the provisions
of Section 5.09 of the Plan. |
Section 5.03 Maintenance of
Participants’ Other Investments Accounts .
Except as otherwise provided for under
Section 5.08 of the Plan, as of each Valuation Date, the
Committee shall adjust the Other Investments Account of each
Participant to reflect activity during the Valuation Period as
follows:
| (a) |
First, charge to each Participant’s Other Investments
Account all distributions and payments made to the Participant that
have not previously been charged; |
| (b) |
Next, if Company Stock is purchased with assets from a
Participant’s Other Investments Account, charge the
Participant’s Other Investments Account
accordingly; |
| (c) |
Next, subject to the dividend provisions of Section 5.09
of the Plan, credit to the Other Investments Account of each
Participant any cash dividends paid to the Trustee on shares of
Company Stock held in that Participant’s Company Stock
Account (as of the record date for such cash dividends) and
dividends paid on shares of Company Stock held in the Loan Suspense
Account that have not been used to repay any Acquisition Loan.
Subject to the provisions of Section 5.09 of the Plan, cash
dividends that have not been used to repay any Acquisition Loan and
have been credited to a Participant’s Other Investments
Account shall be applied by the Trustee to purchase shares of
Company Stock, which shares shall then be credited to the Company
Stock Account of such Participant. The Participant’s Other
Investments Account shall then be charged by the amount of cash
used to purchase such Company Stock. In addition, any earnings
on: |
| |
(i) |
Participants’ Other Investments Accounts will be
allocated to Accounts, pro rata, based on Participants’ Other
Investments Account balances as of the first day of the Valuation
Period, and |
| |
(ii) |
the Loan Suspense Account, other than dividends used to repay
the Acquisition Loan, will be allocated to Participants’
Other Investments Accounts, pro rata, based on their Other
Investments Account balances as of the first day of the Valuation
Period; |
13
| (d) |
Next, allocate and credit the Employer contributions made
pursuant to Section 4.01(b) of the Plan for the purpose of
repaying any Acquisition Loan, in accordance with Section 5.04
of the Plan. Such amount shall then be used to repay any
Acquisition Loan and such Participant’s Other Investments
Account shall be charged accordingly; and |
| (e) |
Finally, allocate and credit the Employer contributions (other
than amounts contributed to repay an Acquisition Loan) that are
made in cash (or property other than Company Stock) for the Plan
Year to the Other Investments Account of each Participant in
accordance with Section 5.04 of the Plan. |
Section 5.04 Allocation and
Crediting of Employer Contributions .
| (a) |
Except as otherwise provided for in Sections 5.08 and 5.09 of
the Plan, as of the Valuation Date for each Plan Year: |
| |
(i) |
Company Stock released from the Loan Suspense Account for that
year and shares of Company Stock contributed directly to the Plan
shall be allocated and credited to each Active Participant’s
(as defined in paragraph (b) of this Section 5.04)
Company Stock Account based on the ratio that each Active
Participant’s Compensation bears to the aggregate
Compensation of all Active Participants for the Plan Year, and
then |
| |
(ii) |
The cash contributions not used to repay an Acquisition Loan
and any other property contributed for that year shall be allocated
and credited to each Active Participant’s Other Investments
Account based on the ratio determined by comparing each Active
Participant’s Compensation to the aggregate Compensation of
all Active Participants for the Plan Year. |
| (b) |
For purposes of this Section 5.04, the term “Active
Participant” means those Eligible Employees who: |
| |
(i) |
are employed on the last day of the Plan Year; or |
| |
(ii) |
terminated employment during the Plan Year by reason of death,
Disability, or attainment of their Normal or Later Retirement
Date. |
Section 5.05 Limitations on
Allocations .
| (a) |
In General. Subject to the provisions of this
Section 5.05, Section 415 of the Code shall be
incorporated by reference into the terms of the Plan. No allocation
shall be made under Section 5.04 of the Plan that would result
in a violation of Section 415 of the Code. |
| (b) |
Code Section 415 Compensation. For purposes
of this Section 5.05, Compensation shall be adjusted to
reflect the general rule of Section 1.415-2(d) of the Treasury
Regulations. |
14
| (c) |
Limitation Year. The “limitation
year” (within the meaning of Section 415 of the Code)
shall be the calendar year. |
| (d) |
Multiple Defined Contribution Plans. In any case
where a Participant also participates in another defined
contribution plan of the Bank or its Affiliates, the appropriate
committee of such other plan shall first reduce the after-tax
contributions under any such plan, shall then reduce any elective
deferrals under any such plan subject to Section 401(k) of the
Code, shall then reduce all other contributions under any other
such plan and, if necessary, shall then reduce contributions under
this Plan. |
| (e) |
Excess Allocations. If, after applying the
allocation provisions under Section 5.04 of the Plan,
allocations under Section 5.04 of the Plan would otherwise
result in a violation of Section 415 of the Code, the
Committee shall allocate and reallocate employer contributions to
other Participants in the Plan for the limitation year or, if such
allocation and reallocation causes the limitations of
Section 415 of the Code to be exceeded, shall hold excess
amounts in an unallocated suspense account for allocation in a
subsequent Plan Year in accordance with
Section 1.415-6(b)(6)(i) of the Treasury Regulations. Such
suspense account, if permitted, will be credited before any
allocation of contributions for subsequent limitation
years. |
| (f) |
Allocations Pursuant to Section 5.08. For
purposes of this Section 5.05, no amount credited to any
Participant’s Account pursuant to Section 5.08 of the
Plan shall be counted as an “annual addition” for
purposes of Section 415 of the Code. In the event any amount
cannot be allocated to Affected Participants (as defined in
Section 5.08 of the Plan) under the Plan pursuant to
Section 5.08 of the Plan in the year of a Change in Control,
the amount which may not be so allocated in the year of the Change
in Control shall be treated in accordance with paragraph
(e) of this Section 5.05. |
Section 5.06 Other
Limitations .
Aside from the limitations set forth in
Section 5.05 of the Plan, in no event shall more than
one-third of the Employer contributions to the Plan be allocated to
the Accounts of Highly Compensated Employees. In order to ensure
that such allocations are not made, the Committee shall, beginning
with the Participants whose Compensation exceeds the limit then in
effect under Section 401(a)(17) of the Code, reduce the amount
of Compensation of such Highly Compensated Employees on a pro-rata
basis per individual that would otherwise be taken into account for
purposes of allocating benefits under Section 5.04 of the
Plan. If, in order to satisfy this Section 5.06, any such
Participant’s Compensation must be reduced to an amount that
is lower than the Compensation amount of the next highest paid
(based on such Participant’s Compensation) Highly Compensated
Employee (the “breakpoint amount”), then, for purposes
of allocating benefits under Section 5.04 of the Plan, the
Compensation of all concerned Participants shall be reduced to an
amount not to exceed such breakpoint amount.
15
Section 5.07 Limitations as
to Certain Section 1042 Transactions .
To the extent that a shareholder of
Company Stock sells qualifying Company Stock to the Plan and elects
(with the consent of the Bank) nonrecognition of gain under
Section 1042 of the Code, no portion of the Company Stock
purchased in such nonrecognition transaction (or other dividends or
other income attributable thereto) may accrue or be allocated
during the nonallocation period (the ten (10) year period
beginning on the later of the date of the sale of the qualified
Company Stock, or the date of the Plan allocation attributable to
the final payment of an Acquisition Loan incurred in connection
with such sale) for the benefit of:
| (a) |
the selling shareholder; |
| (b) |
the spouse, brothers or sisters (whether by the whole or half
blood), ancestors or lineal descendants of the selling shareholder
or descendant referred to in (a) above; or |
| (c) |
any other person who owns, after application of
Section 318(a) of the Code, more than twenty-five percent
(25%) of: |
| |
(i) |
any class of outstanding stock of the Company or any Affiliate,
or |
|
