BARACK FERRAZZANO KIRSCHBAUM PERLMAN & NAGELBERG
333 WEST WACKER DRIVE, SUITE 2700
CHICAGO, ILLINOIS 60606
Telephone (312) 984-3100
Facsimile (312) 984-3150
Exhibit 5.1
October 20, 2000
Lakeland Financial Corporation
202 East Center Street
P.O. Box 1387
Warsaw, Indiana 46581
Ladies and Gentlemen:
We have acted as special counsel to Lakeland Financial Corporation ,
an Indiana corporation (the "Company"), in connection with the proposed
offering of 1,000,000 shares of its common stock, no par value ("Common
Shares"), pursuant to the Lakeland Financial Corporation 401(K) Plan (the
"Plan") as described in the Form S-8 Registration Statement to be filed with
the Securities and Exchange Commission (the "SEC") on October 23, 2000 (the
"Registration Statement"). In so acting, we have examined and relied upon the
originals, or copies certified or otherwise identified to our satisfaction, of
such records, documents and other instruments as in our judgment are necessary
or appropriate to enable us to render the opinion expressed below. Capitalized
terms used, but not defined, herein shall have the meanings given such terms
in the Registration Statement.
Based on the foregoing, we are of the opinion that the Shares have
been duly authorized and, when the Registration Statement becomes effective
and the Shares have been issued in accordance with the Plan, the Shares will
be validly issued, fully paid and nonassessable. With respect to the opinions
expressed above, we are qualified to practice law in the State of Illinois and
express no opinion concerning any law other than the laws of the State of
Illinois, the General Corporation Law of the State of Delaware and the laws of
the United States of America.
This opinion is being furnished to you solely for your benefit in
connection with the transactions set forth above. It may not be relied upon
by, nor a copy of it delivered to any other party, without our prior written
consent. This opinion is based upon our knowledge of the law and facts as of
the date hereof, and we assume no duty to communicate with you with respect to
any matter that comes to our attention hereafter.
BARACK FERRAZZANO KIRSCHBAUM PERLMAN & NAGELBERG
Lakeland Financial Corporation
October 20, 2000
Page 2
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement. In giving the
foregoing consents, we do not thereby admit that we come within the category
of persons whose consent is required under Section 7 of the Act, or the rules
and regulations of the Commission promulgated thereunder.
Sincerely,
/s/ Barack Ferrazzano Kirschbaum
Perlman & Nagelberg
BARACK FERRAZZANO KIRSCHBAUM
PERLMAN & NAGELBERG
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration Statement on
Form S-8 of our report dated January 14, 2000 on the consolidated financial
statements of Lakeland Financial Corporation included in the Annual Report on
Form 10-K of Lakeland Financial Corporation for the year ended December
31,1999.
/s/ Crowe, Chizek and Company LLP
Crowe, Chizek and Company LLP
South Bend, Indiana
October 19, 2000
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LAKELAND FINANCIAL CORPRATION 401(K) PLAN
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LAKELAND FINANCIAL CORPRATION 401(K) PLAN
I N D E X
PART I
ARTICLE DESCRIPTION PAGE
I INTRODUCTION 1
1.1.1 Adoption and Title 1
1.1.2 Effective Date 1
1.1.3 Purpose 1
II DEFINITIONS 2
PART II
I PARTICIPATION 11
2.1.1 Eligibility Requirements 11
2.1.2 Commencement of Participation 11
2.1.3 Participation Upon Re-Employment 11
2.1.4 Termination of Participation 12
2.1.5 Determination of Eligibility 12
2.1.6 Omission of Eligible Employee 12
2.1.7 Inclusion of Ineligible Participant 12
2.1.8 Election Not to Participate 12
2.1.9 Change in Status 12
2.1.10 Existing Participants 12
II CONTRIBUTIONS 14
2.2.1 Employer Contributions 14
2.2.2 Elective Contributions by the Employer
on Behalf of Electing Employees 15
2.2.3 Employee Contributions 15
2.2.4 Return of Contributions 16
III ALLOCATIONS 17
2.3.1 Non-Elective Contribution 17
2.3.2 Minimum Allocation 17
2.3.3 Fail-Safe Allocation 17
2.3.4 Matching Contributions 18
2.3.5 Elective Contributions 18
2.3.6 Qualified Non-Elective Contributions 18
2.3.7 Limitations 18
IV BENEFITS 19
2.4.1 Distributable benefit 19
2.4.2 Vesting 19
2.4.3 Leave of Absence 20
2.4.4 Re-Employment 20
2.4.5 Distribution Determination Date 20
2.4.6 Forfeitures 21
V DISTRIBUTIONS 23
2.5.1 Commencement of Distribution 23
2.5.2 Method of Distribution 27
2.5.3 Nature of Distributions 29
2.5.4 Advance Distributions 30
2.5.5 In Service Distributions 30
2.5.6 Hardship Distributions 30
VI CONTINGENT TOP HEAVY PROVISIONS 32
2.6.1 Top Heavy Requirements 32
2.6.2 Top Heavy Definitions 33
VII SPECIAL CODA LIMITATIONS 36
2.7.1 Limitation on Deferral Percentage
for Highly Compensated Employees 36
2.7.2 Multiple Plan Limitations 36
2.7.3 Limitation on Matching Contributions 37
2.7.4 Special Rules 38
2.7.5 Distribution of Excess Elective
Deferrals 39
2.7.6 Distribution of Excess Contribution 39
2.7.7 Distribution of Excess Aggregate
Contributions 39
2.7.8 Limitation on Distributions 40
2.7.9 Limitation on Elective Deferrals 41
PART III
I ACCOUNTING 42
3.1.1 Accounts 42
3.1.2 Adjustments 42
II LIMITATIONS 44
3.2.1 Limitations on Annual Additions 44
3.2.2 Controlled Businesses 48
III FIDUCIARIES 50
3.3.1 Standard of Conduct 50
3.3.2 Individual Fiduciaries 50
3.3.3 Disqualification from Service 50
3.3.4 Bonding 50
3.3.5 Prior Acts 50
3.3.6 Insurance and Indemnity 50
3.3.7 Expenses 50
3.3.8 Agents, Accountants and Legal Counsel 51
3.3.9 Investment Manager 51
3.3.10 Finality of Decisions or Acts 51
3.3.11 Certain Custodial Accounts and
Contracts 51
IV PLAN ADMINISTRATOR 52
3.4.1 Administration of Plan 52
3.4.2 Disclosure Requirements 53
3.4.3 Information Generally Available 53
3.4.4 Statement of Accrued Benefit 53
3.4.5 Explanation of Rollover Treatment 53
V TRUSTEE 54
3.5.1 Acceptance of Trust 54
3.5.2 Trustee Capacity - Co-Trustee 54
3.5.3 Resignation, Removal and Successors 54
3.5.4 Consultations 54
3.5.5 Right, Powers and Duties 54
3.5.6 Trustee Indemnification 56
3.5.7 Changes in Trustee Authority 56
VI TRUST ASSETS 57
3.6.1 Trustee Exclusive Owner 57
3.6.2 Investments 57
3.6.3 Administration of Trust Assets 58
3.6.4 Segregated Funds 59
3.6.5 Investment Control Option 59
VII LOANS 60
3.7.1 Authorization 60
VIII BENEFICIARIES 61
3.8.1 Designation of Beneficiaries 61
3.8.2 Absence or Death of Beneficiaries 61
IX CLAIMS 62
3.9.1 Claim Procedure 62
3.9.2 Appeal 62
X AMENDMENT AND TERMINATION 63
3.10.1 Right to Amend 63
3.10.2 Manner of Amending 63
3.10.3 Limitations on Amendments 63
3.10.4 Voluntary Termination 63
3.10.5 Involuntary Termination 64
3.10.6 Withdrawal By Employer 64
3.10.7 Powers Pending Final Distribution 64
3.10.8 Delegation 64
XI PORTABILITY 65
3.11.1 Continuance by Successor 65
3.11.2 Merger With Other Plan 65
3.11.3 Transfer From Other Plans 65
3.11.4 Transfer to Other Plans 66
XII MISCELLANEOUS 67
3.12.1 No Reversion to Employer 67
3.12.2 Employer Actions 67
3.12.3 Execution of Receipts and Releases 67
3.12.4 Rights of Participants Limited 67
3.12.5 Persons Dealing With Trustee Protected 67
3.12.6 Protection of Insurer 67
3.12.7 No Responsibility for Act of Insurer 67
3.12.8 Inalienability 68
3.12.9 Domestic Relations Orders 68
3.12.10 Authorization to Withhold Taxes 69
3.12.11 Missing Persons 69
3.12.12 Notices 70
3.12.13 Governing Law 70
3.12.14 Severability of Provisions 70
3.12.15 Gender and Number 70
3.12.16 Binding Effect 70
3.12.17 Qualification Under Internal
Revenue Laws 70
XIII EXECUTION OF AGREEMENT 71
3.13.1 Counterparts 71
3.13.2 Acceptance by Trustee 71
3.13.3 Execution 71
LAKELAND FINANCIAL CORPRATION 401(K) PLAN
THIS AGREEMENT is made this 1st day of October, 2000, by and between Lakeland
Financial Corporation ("the Employer") and Lake City Bank Trust Department
(collectively "the Trustee").
PART I
ARTICLE I
INTRODUCTION
1.1.1 Adoption and Title. The Employer and Trustee hereby adopt
and restate the Plan and Trust to be known as Lakeland Financial Corporation
401(k) Plan.
1.1.2 Effective Date. The provisions of this amended and
restated Plan and Trust which was originally effective January 1, 1984 shall
be effective as of October 1, 2000, hereinafter the Effective Date.
1.1.3 Purpose. This Plan and Trust is established for the
purpose of providing retirement benefits to eligible employees in accordance
with the Plan and Trust. If the Plan is a cash or deferred profit sharing
plan, the Plan is also intended to enable eligible Employees to supplement
their retirement by electing to have the Employer contribute amounts to the
Plan and Trust in lieu of payments to such Employees in cash. Under such
circumstances, the Plan and Trust are intended to satisfy the provisions of
Section 401(k) of the Internal Revenue Code of 1986, as amended.
1
ARTICLE II
DEFINITIONS
As used in this Plan and the Trust, the following terms shall
have the following meanings:
1.2.1 "Account": The Employer Account, Controlled Account,
Elective Contribution Account, Matching Account, Qualified Non-Elective
Contribution Account, Voluntary Account or Segregated Account of a
Participant, as the context requires, established and maintained for
accounting purposes.
1.2.2 "ACP": The average contribution percentage determined in
accordance with the provisions of Part II, Article VII.
1.2.3 "Act": The Employee Retirement Income Security Act of
1974, as amended from time to time.
1.2.4 "ADP": The actual deferral percentage determined in
accordance with the provisions of Part II, Article VII.
1.2.5 "Anniversary Date": The last day of each Plan Year.
1.2.6 "Beneficiary": The person or persons entitled to receive
the benefits which may be payable upon or after a Participant's death.
1.2.7 "Board of Directors": The board of directors of an
incorporated Employer.
1.2.8 "Break in Service": The failure of a Participant to
complete more than 500 Hours of Service during any twelve (12) consecutive
month Plan Year beginning with a Participant's first computation period after
becoming a Participant.
A Year of Service and a Break in Service for vesting purposes shall be
measured on the same computation period. The Eligibility Computation Period
and a Break in Service for eligibility purposes shall be measured on the same
computation period.
1.2.9 "Code": The Internal Revenue Code of 1986, as amended
from time to time.
1.2.10 "Compensation": All of a Participant's W-2 compensation
(or Earned Income in the case of a self-employed individual) which is actually
paid to the Participant by the Employer during the Plan Year; provided that
compensation shall also include any amount which is contributed by the
Employer pursuant to a salary reduction agreement and which is not includable
in the gross income of the Employee under Sections 125 and 402(a)(8) (401(k)
deferrals) of the Code; however, Compensation shall not include amounts
received for commissions, bonuses or taxable employee benefits; provided
further that the annual gross compensation taken into account for purposes of
the Plan shall not exceed $200,000, as such amount may be adjusted by the
Secretary of the Treasury at the same time and in the same manner as under
Section 415(d) of the Code, except that the dollar increase in effect on
January 1 of any calendar year is effective for years beginning in such
calendar year and the first adjustment to the $200,000 limitation is effected
on January 1, 1990. If the plan determines compensation for a period of time
that contains less than twelve (12) calendar months, then the annual
2
compensation limit is an amount equal to the annual compensation limit for the
calendar year in which the compensation period begins multiplied by the ratio
obtained by dividing the number of full months in the period by 12. For
purposes of this dollar limitation, the rules of Section 414(q)(6) of the Code
requiring the aggregation of the compensation of family members shall apply,
except that in applying such rules, the term "family" shall include only the
spouse of the Participant and any lineal descendants of the Participant who
have not attained age nineteen (19) before the close of the year. If, as a
result of the application of such rules the adjusted $200,000 limitation is
exceeded, then (except for purposes of determining the portion of compensation
up to the Social Security Integration Level if this Plan provides for
permitted disparity), the limitation shall be prorated among the affected
individuals in proportion to each such individual's compensation as determined
under this Section prior to the application of this limitation. If
compensation for any prior plan year is taken into account in determining an
employee's contributions or benefits for the current year, the compensation
for such prior year is subject to the applicable annual compensation limit in
effect for that prior year. For this purpose, for years beginning before
January 1, 1990, the applicable annual compensation limit is $200,000.
For the initial year of participation, Compensation from the Participant's
Entry Date shall be considered.
1.2.11 "Controlled Account": An account established and
maintained for a Participant to account for his interest in a Segregated Fund
over which he exercises investment control.
1.2.12 "Distributable Benefit": The benefit to which a
Participant is entitled following termination of his employment.
1.2.13 "Distribution Determination Date": The date as of which
the Distributable Benefit of a Participant is determined.
1.2.14 "Early Retirement Age": The date the Participant attains
age 55 and completes 5 Years of Service while a Participant.
1.2.15 "Early Retirement Date": The actual date the Participant
attains the Early Retirement Age.
1.2.16 "Earned Income": The net earnings from self-employment in the trade or
business with respect to which the Plan is established for which personal
services of the Participant are a material income-producing factor. Net
earnings shall be determined without regard to items not included in gross
income and the deductions allocable to such items but, in the case of taxable
years beginning after 1989, with regard to the deduction allowed by Section
164(f) of the Code. Net earnings shall be reduced by contributions to a
qualified plan to the extent deductible under Section 404 of the Code.
1.2.17 "Elective Contribution Account": An Account established
and maintained for a Participant to account for the Elective Contributions
made on his behalf.
1.2.18 "Elective Contribution": A contribution to the Plan by
the Employer on behalf of an electing Employee.
1.2.19 "Elective Deferrals": Any Employer contributions made to
the Plan at the election of the Participant, in lieu of cash compensation,
including contributions made pursuant to a salary reduction agreement or other
deferral mechanism. With respect to any taxable year, a Participant's Elective
Deferral is the sum of all Employer contributions made on behalf of the
3
Participant pursuant to an election to defer under any qualified CODA as
described in Section 401(k) of the Code, any simplified employee pension cash
or deferred arrangement as described in Section 402(h)(1)(B), any eligible
deferred compensation plan under Section 457, any plan as described under
Section 501(c)(18), and any employer contributions made on the behalf of a
participant for the purchase of an annuity contract under Section 403(b)
pursuant to a salary reduction agreement. Elective Deferrals shall not include
any deferrals properly distributed as excess annual additions.
1.2.20 "Eligibility Computation Period": For purposes of
determining Years of Service and Breaks in Service for purposes of
eligibility, the initial eligibility computation period is the twelve (12)
consecutive month period beginning with the employment commencement date on
which the Employee first renders an Hour of Service for the Employer and the
subsequent eligibility computation periods are each Plan Year commencing with
the first Plan Year which commences prior to the first anniversary of the
Employee's employment commencement date regardless of whether the Employee is
entitled to be credited with 1,000 Hours of Service during the initial
eligibility computation period. If the subsequent periods commence with the
first Plan Year which commences prior to the first anniversary of the
Employee's employment commencement date, an Employee who is credited with
1,000 Hours of Service in both the initial eligibility computation period and
the first Plan Year which commences prior to the first anniversary of the
Employee's initial eligibility computation period shall be credited with two
(2) Years of Service for purposes of eligibility to participate.
1.2.21 "Employee": A person who is currently or hereafter
employed by the Employer, or by any other employer aggregated under Section
414(b), (c), (m) or (o) of the Code and the regulations thereunder, including
- employees who are included in the unit of employees covered by a
collective bargaining agreement, provided that retirement benefits were
the subject of good faith negotiations;
- self-employed individuals;
- employees paid on a commissioned basis;
- employees paid on an hourly basis;
- employees paid on a salaried basis.
but excluding:
- an employee who is a non-resident alien deriving no earned income from
the Employer which constitutes income from sources within the United
States;
- independent contractors;
- leased employees subject to Section 414(n) of the Code.
1.2.22 "Employer": The Employer and, except where the context
expressly indicates to the contrary, each Affiliate Employer that is a party
to this Agreement, or any of their respective successors or assigns which
adopt the Plan; provided, however, that no mere change in the identity, form
or organization of the Employer shall affect its status under the Plan in any
manner, and, if the name of the Employer is hereinafter changed, references
herein to the Employer shall be deemed to refer to the Employer as it is then
known.
1.2.23 "Employer Account": An Account established and
maintained for a Participant for accounting purposes to which his share of
Employer contributions and forfeitures are added.
1.2.24 "Entry Date": January 1, April 1, July 1 and October 1
of every Plan Year
4
1.2.25 "Excess Aggregate Contributions": With respect to any
Plan Year, the excess of:
(a) The aggregate contribution percentage amounts taken into
account in computing the numerator of the contribution percentage
actually made on behalf of Highly Compensated Employees for such Plan
Year, over
(b) The maximum contribution percentage amounts permitted by the
ACP test (determined by reducing contributions made on behalf of Highly
Compensated Employees in order of their contribution percentages
beginning with the highest of such percentages).
Such determination shall be made after first determining Excess
Elective Deferrals and then determining Excess Contributions.
1.2.26 "Excess Contributions": With respect to any Plan Year,
the excess of:
(a) The aggregate amount of Employer Contributions actually
taken into account in computing the ADP of Highly Compensated Employees
for such Plan Year, over
(b) The maximum amount of such contributions permitted by the
ADP test (determined by reducing contributions made on behalf of Highly
Compensated Employees in order of the ADPs, beginning with the highest
of such percentages.
1.2.27 "Excessive Annual Addition": The portion of the
allocation of contributions and forfeitures that cannot be added to a
Participant's Accounts due to the limitations on annual additions contained in
the Plan.
1.2.28 "Excess Elective Deferrals": Those Elective Deferrals
that are includable in a Participant's gross income under Section 402(g) of
the Code to the extent such participant's Elective Deferrals for a taxable
year exceed the dollar limitation under such Code section. Excess Elective
Deferrals shall be treated as annual additions under the Plan.
1.2.29 "Family": The spouse and lineal ascendants or
descendants of an Employee and the spouses of such lineal ascendants and
descendants.
1.2.30 "Fiduciary": The Plan Administrator, the Trustee and any
other person who has discretionary authority or control in the management of
the Plan or the disposition of Trust assets.
1.2.31 "Highly Compensated Employee": A highly compensated
active employee and a highly compensated former employee. A highly compensated
active employee includes: any Employee who performs service for the Employer
during the determination year and who, during the look-back year: (i) received
compensation from the Employer in excess of $75,000 (as adjusted pursuant to
Section 415(d) of the Code); (ii) received compensation from the Employer in
excess of $50,000 (as adjusted pursuant to Section 415(d) of the Code) and was
a member of the top-paid group for such year; or (iii) was an officer of the
Employer and received compensation during such year that is greater than 50
percent of the dollar limitation as in effect under Section 415(b)(1)(A) of
the Code. The term highly compensated employee also includes: (i) employees
who are both described in the preceding sentence if the term "determination
year" is substituted for the term "look-back year" and the employee is one of
the 100 employees who received the most compensation from the Employer during
the determination year; and (ii) employees who are 5 percent owners at any
time during the look-back year or determination year.
5
If no officer has satisfied the compensation requirement of (iii) above during
either a determination year or look-back year, the highest paid officer for
such year shall be treated as a highly compensated employee. For this purpose,
the determination year shall be the Plan Year. The look-back year shall be the
twelve-month period immediately preceding the determination year and
compensation is as defined in Section 415(c)(3) of the Code including amounts
contributed by the Employer pursuant to a salary reduction agreement and which
is not includable in gross income under Sections 125, 402(a)(8), 402(h) or
403(b) of the Code.
A highly compensated former employee includes any employee who separated from
service (or was deemed to have separated) prior to the determination year,
performs no service for the employer during the determination year, and was a
highly compensated active employee for either the separation year or any
determination year ending on or after the employee's 55th birthday.
If an Employee is, during a Plan Year or the preceding Plan Year, a family
member of either a 5 percent owner who is an active or former employee or a
Highly Compensated Employee who is one of the 10 most highly compensated
employees ranked on the basis of compensation paid by the Employer during such
year, then the family member and the 5 percent owner or top-ten highly
compensated employee shall be aggregated. In such case, the family member and
5 percent owner or top-ten highly compensated employee shall be treated as a
single employee receiving compensation and plan contributions or benefits
equal to the sum of such compensation and contributions or benefits of the
family member and 5 percent owner or top-ten highly compensated employee. For
purposes of this section, family member includes the spouse, lineal ascendants
and descendants of the employee or former employee and the spouses of such
lineal ascendants and descendants.
An Employee is in the top-paid group of employees for any year if the Employee
is in the group consisting of the top twenty (20%) percent of the employees
when ranked on the basis of compensation paid during such year.
For purposes of determining whether an Employee is a Highly Compensated
Employee, Sections 414(b), (c), (m), (n) and (o) of the Code shall be applied.
The determination of who is a highly compensated employee, including the
determination of the number and identity of employees in the top-paid group,
the top 100 employees, the number of employees treated as officers and the
compensation that is considered, will be made in accordance with Section
414(q) of the Code and the regulations thereunder.
1.2.32 "Hour of Service": An hour for which (a) the Employee is
paid, or entitled to payment by the Employer for the performance of duties,
(b) the Employee is paid or entitled to payment by the Employer 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, or (c) back
pay, irrespective of mitigation of damages, has been either awarded or agreed
to by the Employer. Hours of Service shall be credited to the Employee under
(a), above, for the period in which the duties are performed, under (b),
above, in the period in which the period during which no duties are performed
occurs, beginning with the first Hour of Service to which the payment relates,
and under (c), above, for the period to which the award or agreement pertains
6
rather than the period in which the award, agreement or payment is made;
provided, however, that Hours of Service shall not be credited under both (a)
and (b), above, as the case may be, and under (c) above. Notwithstanding the
preceding sentences, (i) no more than five hundred one (501) Hours of Service
shall be credited under (b), above, on account of any single continuous period
during which the Employee performs no duties whether or not such period occurs
in a single computation period, (ii) no Hours of Service shall be credited to
the Employee by reason of a payment made or due under a plan maintained solely
for the purpose of complying with applicable worker's compensation, or
unemployment compensation or disability insurance laws, and (iii) no Hours of
Service shall be credited by reason of a payment which solely reimburses an
Employee for medical or medically related expenses incurred by the Employee.
The determination of Hours of Service for reasons other than the performance
of duties and the crediting of Hours of Service to computation periods shall
be made in accord with the provisions of Labor Regulation Sections
2530.200b-2(b) and (c) which are incorporated herein by reference.
Solely for purposes of determining whether an Employee has incurred a Break in
Service, an Employee shall be credited with number of Hours of Service which
would otherwise have been credited to such individual but for the absence or
in any case in which such Hours cannot be determined with eight (8) Hours of
Service for any day that the Employee is absent from work by reason of the
Employee's pregnancy, the birth of a child of the Employee, the placement of a
child with the Employee in connection with the adoption of such child by the
Employee or for purposes of caring for such child for a period beginning
immediately following such birth or placement. Such Hours of Service shall be
credited only in the computation period in which the absence from work begins
if the Employee would be prevented from incurring a Break in Service in such
computation period solely because credit is given for such period of absence
and, in any other case, in the immediately following computation period.
Notwithstanding the foregoing, no credit shall be given for such service
unless the Employee furnishes to the Plan Administrator information to
establish that the absence from work is for the reasons indicated and the
number of days for which there was such an absence.
Service with another business entity that is, along with the Employer, a
member of a controlled group of corporations, an affiliated service group or
trades or businesses under common control, as defined in the applicable
sections of the Code, or which is otherwise required to be aggregated with the
Employer pursuant to Section 414(o) of the Code and the regulations issued
thereunder shall be treated as service for the Employer. Hours of Service
shall be credited for any individual considered an employee for purposes of
this Plan under Section 414(n) or Section 414(o) of the Code and the
regulations issued thereunder.
Except to the extent inconsistent with regulations issued by the Secretary of
the Treasury, service for a predecessor to the Employer, whether as an
employee or self-employed person, shall be treated as service for the
Employer. If the Employer maintains the plan of a predecessor employer,
service with such predecessor shall be treated as service for the Employer.
Service with the following entities shall be considered as service under this
plan:
All employees who worked at the following banks: State Exchange Bank, North
Central Bank, Standard Federal Bank, NBD, Key Bank and National City Bank.
Service with the above entities has been determined under the terms of the
following documents:
Lakeland Financial Corporation per purchasing agreements: State Exchange Bank
purchased August 1984, North Central Bank purchased December 1991, Standard
Federal Bank purchased December 1990, NBD purchased November 1997, Key Bank
purchased December 1997 and National City Bank purchased February 1998.
7
1.2.33 "Insurer": Any insurance company which has issued a
Life Insurance Policy.
1.2.34 "Joint and Survivor Annuity": An immediate annuity for
the life of the Participant with a survivor annuity for the life of the spouse
which is not less than fifty (50%) percent and not more than one hundred
(100%) percent of the amount of the annuity which is payable during the joint
lives of the Participant and the spouse and which is the amount of benefit
which can be purchased with the Participant's vested Account balances.
1.2.35 "Leased Employee": Any person (other than an employee of
the recipient) who pursuant to an agreement between the recipient and any
other person has performed services for the recipient (or for the recipient
and related persons determined in accordance with Section 414(n)(6) of the
Code) on a substantially full time basis for a period of at least one (1) year
and such services are of a type historically performed by employees in the
business field of the recipient employer; provided that any such person shall
not be taken into account if (a) such person is covered by a money purchase
pension plan providing (i) a nonintegrated employer contribution rate of at
least ten (10%) percent of compensation, as defined in Section 415(c)(3) of
the Code, but including amounts contributed by the employer pursuant to a
salary reduction agreement which are excludable from the person's gross income
under Sections 125, 402(a)(8), 402(h) or 403(b) of the Code; (ii) immediate
participation; and (iii) full and immediate vesting; and (b) leased employees
do not constitute more than twenty (20%) percent of the work force of the
recipient who are not Highly Compensated Employees. Contributions or benefits
provided a leased employee by the leasing organization which are attributable
to services performed for the recipient employer shall be treated as provided
by the recipient employer.
1.2.36 "Life Insurance Policy": A life insurance, annuity or
endowment policy or contract which is owned by the Trust and is on the life of
a Participant.
1.2.37 "Limitation Year": The Plan Year; provided that all
qualified plans maintained by the Employer must use the same Limitation Year.
1.2.38 "Matching Account": An Account established and
maintained for a Participant for accounting purposes to which his share of
Matching Contributions are added.
1.2.39 "Matching Contribution": A contribution to the Plan by
the Employer which matches in whole or in part an Elective Contribution on
behalf of an electing Employee.
1.2.40 "Non-Elective Contribution": A contribution to the Plan
or any other Related Plan by the Employer which is neither a Qualified
Non-Elective Contribution, a Matching Contribution nor an Elective
Contribution.
1.2.41 "Normal Retirement Age": The date the Employee attains
age 65.
1.2.42 "Normal Retirement Date": The date the Participant
attains his Normal Retirement Age.
1.2.43 "Owner-Employee": An individual who is a sole proprietor
or who is a partner owning more than ten percent (10%) of either the capital
or profits interest of the partnership.
8
1.2.44 "Participant": Any eligible Employee who becomes
entitled to participate in the Plan.
1.2.45 "Plan": The profit sharing plan for Employees as set
forth in this Agreement, together with any amendments or supplements thereto.
1.2.46 "Plan Administrator": The person, persons or entity
appointed by the Employer to administer the Plan or, if the Employer fails to
make such appointment, the Employer.
1.2.47 "Plan Year" or "Year": The calendar year.
1.2.48 "Preretirement Survivor Annuity": A survivor annuity for
the life of the surviving spouse of the Participant under which
(a) the payments to the surviving spouse are not less than the
amounts which would be payable under a Joint and Survivor Annuity (or
the actuarial equivalent thereof) if -
(i) in the case of a Participant who dies after the date
on which the Participant attained the earliest retirement age
under the Plan on which he could elect to receive retirement
benefits, such Participant had retired with an immediate Joint
and Survivor Annuity on the day before the Participant's date of
death; or
(ii) in the case of a Participant who dies on or before
such date, such Participant had separated from service on the
date of death (except that a Participant who had actually
separated from service prior to death shall be treated as
separating on the actual date of separation), survived to the
earliest retirement age, retired with an immediate Joint and
Survivor Annuity at the earliest retirement age and died on the
day after the day on which such Participant would have attained
the earliest retirement age, and
(b) The earliest period for which the surviving spouse may
receive a payment under such annuity is not later than the month in
which the Participant would have attained the earliest retirement age
under the Plan; and
(c) Any security interest held by the Plan by reason of a loan
outstanding to the Participant for which a valid spousal consent has
been obtained, if necessary, shall be taken into account.
1.2.49 "Qualified Non-Elective Contribution": A contribution to
the Plan by the Employer which is neither a Matching Contribution nor an
Elective Contribution, is one hundred percent (100%) vested and nonforfeitable
when made, which a Participant may not elect to have paid in cash instead of
being contributed to the Plan and which may not be distributed from the Plan
(except in the case of a hardship distribution) prior to the termination of
employment or death of the Participant, attainment of age 59-1/2 by the
Participant or termination of the Plan without establishment of a successor
plan.
1.2.50 "Qualified Non-Elective Contribution Account": An
Account established and maintained for a Participant to account for the
Qualified Non-Elective Contributions made on his behalf.
1.2.51 "Qualifying Employer Securities or Real Property":
Securities or real property of the Employer which the Trustee may acquire and
hold pursuant to the applicable provisions of the Code and the Act.
9
1.2.52 "Segregated Account": An Account established and
maintained for a Participant to account for his interest in a Segregated Fund.
1.2.53 "Segregated Fund": Assets held in the name of the
Trustee which have been segregated from the Trust Fund in accordance with any
of the provisions of the Plan.
1.2.54 "Self-Employed Individual": An individual who has Earned
Income for the taxable year from the trade or business for which the Plan is
established or who would have had Earned Income but for the fact that the
trade or business had no net profit for the taxable year.
1.2.55 "Social Security Integration Level": Not applicable.
This Plan does not provide for integration with Social Security.
1.2.56 "Trust Fund": All money and property of every kind and
character held by the Trustee pursuant to the Plan, excluding assets held in
Segregated Funds.
1.2.57 "Trustee": The persons, corporations, associations or
combination of them who shall at the time be acting as such from time to time
hereunder.
1.2.58 "Valuation Date": Every day of the Plan Year in which
the New York Stock Exchange transacts business
1.2.59 "Voluntary Account": An Account established and
maintained for a Participant for accounting purposes to which his voluntary
Employee contributions have been added.
1.2.60 "Year of Service": Each 12-consecutive month Plan Year
during which the Employee completes at least 1,000 Hours of Service, including
years prior to the Effective Date, but excluding Years of Service completed
prior to the date the Employee attains age eighteen (18).
10
PART II
ARTICLE I
PARTICIPATION
2.1.1A Eligibility Requirements - Non-Elective. Each Employee
shall be eligible to receive an allocation of Non-Elective Contributions upon
the later of the following dates, provided that he is an Employee on such
date:
(a) the last day of the Eligibility Computation Period during
which he has completed 1,000 Hours of Service; or
(b) the date he attains age 21.
2.1.1B Eligibility Requirements - Elective. Each Employee shall
be eligible to have Elective Contributions made on his behalf upon the later
of the following dates, provided that he is an Employee on such date:
(a) the last day of the Eligibility Computation Period during
which he has completed 1,000 Hours of Service; or
(b) the date he attains age 21.
2.1.1C Eligibility Requirements - Matching. Each Employee shall
be eligible to receive an allocation of Matching Contributions upon the later
of the following dates, provided that he is an Employee on such date:
(a) the last day of the Eligibility Computation Period during
which he has completed 1,000 Hours of Service; or
(b) the date he attains age 21.
2.1.2 Commencement of Participation. An eligible Employee
shall become a Participant in the Plan on the applicable Entry Date.
2.1.3 Participation Upon Re-Employment. A Participant whose
employment terminates and who is subsequently re-employed shall re-enter the
Plan as a Participant immediately on the date of his re-employment. In the
event that an Employee completes the eligibility requirements set forth in
Section 2.1.1 above, his employment terminates prior to becoming a Participant
and he is subsequently re-employed, such Employee shall be deemed to have met
the eligibility requirements as of the date of his re-employment and shall
become a Participant on the date of his re-employment; provided, however, that
if he is re-employed prior to the date he would have become a Participant if
his employment had not terminated, he shall become a Participant as of the
date he would have become a Participant if his employment had not terminated.
Any other Employee whose employment terminates and who is subsequently
re-employed shall become a Participant in accordance with the provisions of
Sections 2.1.1 and 2.1.2.
11
2.1.4 Termination of Participation. An Employee who has become a
Participant shall remain a Participant until the entire amount of his
Distributable Benefit is distributed to him or his Beneficiary in the event of
his death.
2.1.5 Determination of Eligibility. In the event any question
shall arise as to the eligibility of any person to become a Participant or the
commencement of participation, the Plan Administrator shall determine such
question from information provided by the Employer and the Plan
Administrator's decision shall be conclusive and binding, except to the extent
of a claimant's right to appeal the denial of a claim.
2.1.6 Omission of Eligible Employee. If an Employee who should
be included as a Participant in the Plan is erroneously omitted and discovery
of the omission is made after the contribution by the Employer is made and
allocated, the Employer shall make an additional contribution on behalf of the
omitted Employee in the amount which the Employer would have contributed on
his behalf had he not been omitted.
2.1.7 Inclusion of Ineligible Participant. If any person is
erroneously included as a Participant in the Plan and discovery of the
erroneous inclusion is made after the contribution by the Employer is made and
allocated, the Employer may elect to treat the amount contributed on behalf of
the ineligible person plus any earnings thereon as a forfeiture for the Plan
Year in which the discovery is made and apply such amount in the manner
specified in Section 2.4.6.
2.1.8 Election Not to Participate. Notwithstanding anything
contained in the Plan to the contrary, an Employee may elect with the approval
of the Employer not to participate in the Plan if the tax-exempt status of the
Plan is not jeopardized by the election. The Employee shall sign such
documents as may be reasonably required by the Employer to evidence the
election. If it is subsequently determined that the tax-exempt status of the
Plan has been jeopardized, the Employer may elect to treat such Employee as
having been erroneously omitted. An Employee may revoke the election only with
respect to any subsequent Plan Year by written notice of revocation to the
Employer prior to the end of the Plan Year for which the revocation is
effective.
2.1.9 Change in Status. If any Participant continues in the
employ of the Employer or an affiliate for which service is required to be
taken into account but ceases to be an Employee by becoming a member of any
ineligible class for any reason (such as becoming covered by a collective
bargaining agreement unless the collective bargaining agreement otherwise
provides) the Participant shall continue to be a Participant until the entire
amount of his benefit is distributed but the individual shall not be entitled
to receive an allocation of contributions or forfeitures during the period
that the Participant is not an Employee for such reason. Such Participant
shall continue to receive credit for Years of Service completed during the
period for purposes of determining his vested and nonforfeitable interest in
his Accounts. In the event that the individual subsequently again becomes a
member of an eligible class of employees, the individual shall participate
immediately upon the date of such change in status. If such Participant incurs
a Break in Service and is subsequently reemployed, eligibility to participate
shall be determined in accordance with Section 2.1.3. In the event that an
individual who is not a member of an eligible class of employees becomes a
member of an eligible class, the individual shall participate immediately if
such individual has satisfied the eligibility requirements and would have
otherwise previously become a participant.
2.1.10 Existing Participants. An Employee who, on the Effective
12
Date, was a Participant under the provisions of the Plan as in effect
immediately prior to the Effective Date shall be a Participant on the
Effective Date and the provisions of Sections 2.1.1 and 2.1.2, pertaining to
participation, shall not be applicable to such Employee. The rights of a
Participant whose employment terminated prior to the Effective Date shall be
determined under the provisions of the Plan as in effect at the time of such
termination.
13
ARTICLE II
CONTRIBUTIONS
2.2.1 Employer Contributions.
(a) Amount of Non-Elective Contribution. The Employer shall
contribute to the Trust Fund each Plan Year such amounts not limited to
profits as it may determine as a Non-Elective Contribution.
(b) Amount of Matching Contribution. The Employer shall
contribute to the Trust Fund each Plan Year with respect to the amount
of Elective Contributions on behalf of each electing Employee a
Matching Contribution in such amount as the Employer may determine. The
formula used will be based on flat percentage.
However, the Employer shall not make Matching Contributions on behalf
of a Participant for any Plan Year with respect to Elective
Contributions in excess of 6% of a Participant's Compensation.
(c) Amount of Qualified Non-Elective Contribution. The Employer
shall contribute to the Trust Fund each Plan Year such amount as a
Qualified Non-Elective Contribution as the Employer may determine. In
addition, in lieu of distributing Excess Contributions or Excess
Aggregate Contributions as provided in Article VII, below, the Employer
may make Qualified Non-Elective Contributions on behalf of Employees
who are not Highly Compensated Employees that are sufficient to satisfy
either the ADP test or the ACP test, or both, pursuant to regulations
under the Code.
(d) Limitation. The contribution for any Plan Year by the
Employer shall not exceed the maximum amount deductible from the
Employer's income for such Year for federal income tax purposes under
the applicable sections of the Code.
(e) Time of Contribution. All contributions by the Employer
shall be delivered to the Trustee not later than the date fixed by law
for the filing of the Employer's federal income tax return for the Year
for which such contribution is made (including any extensions of time
granted by the Internal Revenue Service for filing such return).
(f) Determination of Amount to be Final. The determination by
the Employer as to the amount to be contributed by the Employer
hereunder shall be in all respects final, binding, and conclusive on
all persons or parties having or claiming any rights under this
agreement or under the Plan and Trust created hereby. Under no
circumstances and in no event shall any Participant, Beneficiary, or
other person or party have any right to examine the books or records of
the
Employer.
(g) Rights of Trustee as to Contributions. The Trustee shall
have no duty to report any contribution to be made or to determine
whether contributions delivered to the Trustee by the Employer comply
with the provisions of this Agreement. The Trustee shall be accountable
only for funds actually received by the Trustee.
14
2.2.2 Elective Contributions by the Employer on Behalf of
Electing Employees.
(a) Amount of Contribution. Each Employee may elect to have the
Employer contribute to the Trust on his behalf for any Plan Year during
which he is a Participant such amounts expressed either in dollars or
in whole percentages of his Compensation as he may elect which would
otherwise be payable by the Employer as Compensation (but not to exceed
the dollar limitation provided by Section 402(g) of the Code as in
effect at the beginning of the taxable year); provided that the
Employer may impose reasonable limitations in a uniform,
nondiscriminatory manner on the amounts which may be so contributed in
order to satisfy applicable legal requirements and to assure the
deductibility of amounts contributed by the Employer to the Plan and
any other qualified plan of deferred compensation.
(b) Election. The Plan Administrator shall determine the manner
in which a Participant may elect to have Elective Contributions made to
the Plan on his behalf. The Plan Administrator shall establish
reasonable periods during which the election may be made, modified or
revoked. Unless the Plan Administrator establishes another period
during which the election may be made, modified or revoked, any such
election may be made, modified or revoked during the first and last
months of the Plan Year. An election by an Employee may not be made
retroactively and once made shall remain in effect until modified or
terminated.
(c) Payment of Contribution. Elective Contributions shall be
remitted by the Employer within two and one-half months after such
amount would have otherwise been payable to the Participant. The
Employer shall designate, in accordance with the Participant's
election, the Plan Year to which any such contributions which are made
after the end of the Plan Year pertain.
(d) Segregated Fund. Unless an Elective Contribution on behalf
of a Participant is received by the Trustee within the time prescribed
by the Plan Administrator prior to a Valuation Date, the Plan
Administrator shall direct the Trustee to establish a Segregated Fund
with respect to such contribution. The funds contained in such
Segregated Fund shall be transferred to the Trust Fund in accordance
with the instructions of the Plan Administrator and such transfer shall
be deemed to have been made as of such next succeeding Valuation Date.
If an Elective Contribution on behalf of a Participant is received by
the Trustee within the period prescribed by the Plan Administrator,
such contribution shall be added to the Trust Fund. Notwithstanding the
foregoing, if the Trust Fund is invested in such a manner that the Plan
Administrator can determine, with a reasonable degree of certainty,
that portion of the adjustment to fair market value which is
attributable to Elective Contributions received by the Trustee other
than within such period, then the Plan Administrator shall direct the
Trustee to add any such Elective Contributions to the Trust Fund at the
time the Trustee receives such Elective Contributions.
(e) Hardship Distributions. An Employee may not have Elective
Contributions made on his or her behalf for the taxable year following
the taxable year of a hardship distribution in excess of the applicable
limit under Section 402(g) of the Code for such taxable year less the
amount of the Employee's Elective Deferrals for the taxable year of the
hardship distribution.
2.2.3 Employee Contributions.
(a) Amount of Contribution. An Employee is neither required nor
permitted to contribute to the Plan for any Plan Year beginning after
1986. The Plan Administrator shall not accept deductible employee
contributions attributable to any Plan Year.
15
2.2.4 Return of Contributions. Qualified Non-Elective,
Non-Elective and Matching Contributions shall be returned to the Employer in
the following instances:
(a) If a Qualified Non-Elective, Non-Elective or Matching
Contribution is made by the Employer by mistake of fact, then the
contribution shall be returned within one year after its payment upon
the Employer's written request.
(b) If a Qualified Non-Elective, Non-Elective or Matching
Contribution is conditioned on initial qualification of the Plan under
the applicable sections of the Code, and the Commissioner of Internal
Revenue determines that the Plan does not qualify, then the
contribution made incident to the initial qualification by the Employer
shall be returned within one year after the date of denial of initial
qualification of the Plan; provided that the application for initial
qualification is made by the time prescribed by law for filing the
Employer's tax return for the taxable year in which the Plan is
adopted, or such later date as the Secretary of the Treasury may
prescribe.
(c) Each Qualified Non-Elective, Non-Elective and Matching
Contribution is conditioned upon the deductibility of the contribution
under the applicable sections of the Code and to the extent of a
disallowance of the deduction for part or all of the contribution, the
contribution shall be returned within one year after such disallowance
upon the Employer's written request.
16
ARTICLE III
ALLOCATIONS
2.3.1 Non-Elective Contribution. As of each Anniversary Date,
the Non-Elective Contribution made by the Employer including any forfeitures
with respect to the preceding Plan year shall be allocated among the Employer
Accounts of Participants who have completed at least 1,000 Hours of Service
during the Plan Year, in the following manner:
(a) Non-Elective Contributions and forfeitures for the Plan Year
shall be allocated to each Participant's Employer Account in the ratio
that each Participant's Compensation for the Plan Year bears to all
Participants' Compensation for that year.
(b) Notwithstanding anything contained in this Section to the
contrary, if the employment of a Participant is terminated during a
Plan year by reason of retirement, disability or death, as provided in
Section 2.4.2, an allocation of contributions and forfeitures shall be
made to the Employer Account of such Participant for the Plan Year
during which his employment was so terminated, regardless of whether he
has completed 1,000 Hours of Service during said Plan Year;
(c) Notwithstanding anything contained in this Section to the
contrary, if the employment of a Participant is terminated during a
Plan Year by reason of resignation or discharge as provided in Section
2.4.2(f), no allocation of contributions or forfeitures shall be made
to the Employer Account of such Participant for the Plan Year during
which his employment is terminated.
2.3.2 Minimum Allocation. In the event the Plan becomes a
Top-Heavy Plan during any Plan Year, the provisions of Section 2.6.1(a) shall
apply.
2.3.3 Fail-Safe Allocation. Notwithstanding any provision of the
Plan to the contrary, for Plan Years beginning after December 31, 1989, if the
Plan would otherwise fail to satisfy the requirements of Section 401(a)(26),
410(b)(1) or 410(b)(2)(A)(i) of the Code and the regulations thereunder
because Employer contributions have not been allocated to a sufficient number
or percentage of Participants for the Plan Year, an additional contribution
shall be made by the Employer and shall be allocated to the Employer Accounts
of affected Participants subject to the following provisions:
(a) The Participants eligible to share in the allocation of the
Employer's contribution shall be expanded to include the minimum number
of Participants who are not otherwise eligible to the extent necessary
to satisfy the applicable test under the relevant Section of the Code.
The specific Participants who shall become eligible are those
Participants who are actively employed on the last day of the Plan Year
who have completed the greatest number of Hours of Service during the
Plan Year.
(b) If the applicable test is still not satisfied, the
Participants eligible to share in the allocation shall be further
expanded to include the minimum number of Participants who are not
employed on the last day of the Plan Year as are necessary to satisfy
the applicable test. The specific Participants who shall become
eligible are those Participants who have completed the greatest number
of Hours of Service during the Plan Year.
17
(c) A Participant's accrued benefit shall not be reduced by any
reallocation of amounts that have previously been allocated. To the
extent necessary, the Employer shall make an additional contribution
equal to the amount such affected Participants would have received if
they had originally shared in the allocations without regard to the
deductibility of the contribution. Any adjustment to the allocations
pursuant to this paragraph shall be considered a retroactive amendment
adopted by the last day of the Plan Year.
2.3.4 Matching Contributions. As of the next Valuation Date, the
Matching Contribution made by the Employer with respect to the preceding Plan
Year, and forfeitures, shall be allocated in the following manner:
(a) The Matching Contribution, including any forfeitures shall
be allocated among the Matching Accounts of Participants who have
completed at least 1,000 Hours of Service during the Plan Year and for
whom Elective Contributions were made in such amount as the Employer
may determine, based on flat percentage.
(b) Notwithstanding anything contained in this Section to the
contrary, if the employment of a Participant is terminated during a
Plan year by reason of retirement, disability, or death, as provided in
Section 2.4.2, an allocation of Matching Contributions and forfeitures
shall be made to the Matching Account of such Participant for the Plan
Year during which his employment was so terminated, regardless of
whether he has completed 1,000 Hours of Service during said Plan Year;
(c) Notwithstanding anything contained in this Section to the
contrary, if the employment of a Participant is terminated during a
Plan Year by reason of resignation or discharge as provided in Section
2.4.2(f), no allocation of Matching Contributions or forfeitures shall
be made to the Matching Account of such Participant for the Plan Year
during which his employment is terminated.
However, the Employer shall not make Matching Contributions on
behalf of a Participant for any Plan Year with respect to Elective
Contributions in excess of 6% of a Participant's Compensation.
2.3.5 Elective Contributions. The Elective Contributions by the
Employer on behalf of an electing Employee shall be allocated to the Elective
Contribution Account of such electing Employee as of the Anniversary Date of
the Plan Year to which the Elective Contribution pertains.
2.3.6 Qualified Non-Elective Contributions. The Qualified
Non-Elective Contributions made by the Employer with respect to the preceding
Plan Year shall be allocated to the Qualified Non-Elective Contribution
Account solely on behalf of Participants who are not Highly Compensated
Employees. The Qualified Non-Elective Contributions shall be allocated among
affected Participant's as needed to satisfy the ADP/ACP test.
2.3.7 Limitation. The allocation of Employer contributions must
satisfy the requirements of Section 416 of the Code. Neither Elective
Contributions nor Matching Contributions may be taken into account for the
purpose of satisfying the minimum top-heavy contribution requirement imposed
by Section 416.
18
ARTICLE IV
BENEFITS
2.4.1 Distributable Benefit. At such time that the employment of
a Participant terminates for any reason, he or his Beneficiary shall be
entitled to a benefit equal to the vested and nonforfeitable interest in his
Accounts as of the Distribution Determination Date. The Accounts shall include
the allocable share of contributions and forfeitures, if any, which may be
allocated to the Accounts as of such Distribution Determination Date, and
shall be determined after making the adjustments for which provision is made
in the Plan.
2.4.2 Vesting. A Participant shall at all times be one hundred
percent (100%) vested and have a nonforfeitable interest in his Elective
Contribution Account, Qualified Non-Elective Contribution Account, Voluntary
Account and Segregated Account. The vested and nonforfeitable interest of the
Participant in his Controlled Account shall be determined by reference to the
Account from which the funds were originally transferred. The vested and
nonforfeitable interest in a Participant's Employer Account and Matching
Account shall be determined as hereinafter provided.
(a) Normal Retirement. If a Participant terminates employment at
his Normal Retirement Age, he shall be one hundred percent (100%)
vested and have a nonforfeitable interest in his Employer Account and
Matching Account.
(b) Deferred Retirement. If a Participant continues in active
employment following his Normal Retirement Age, he shall continue to
participate under the Plan. From and after his Normal Retirement Age,
he shall be one hundred percent (100%) vested and have a nonforfeitable
interest in his Employer Account and Matching Account.
(c) Disability. If the employment of a Participant is terminated
prior to his Normal Retirement Age 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, he shall be one hundred percent (100%) vested and have a
nonforfeitable interest in his Employer Account and Matching Account.
All determinations in connection with the permanence and degree of such
disability shall be made by the Plan Administrator in a uniform,
nondiscriminatory manner on the basis of medical evidence.
(d) Death. In the event of the death of a Participant, he shall
be one hundred percent (100%) vested and have a nonforfeitable interest
in his Employer Account and Matching Account.
(e) Termination of Plan. In the event of termination of the
Plan (including termination resulting from a complete discontinuance of
contributions by the Employer), each Participant shall be one hundred
percent (100%) vested and have a nonforfeitable interest in his
Employer Account and Matching Account. In the event of a partial
termination of the Plan, each Participant with respect to whom such
partial termination has occurred shall be one hundred percent (100%)
vested and have a nonforfeitable interest in his Employer Account and
Matching Account.
19
(f) Early Retirement, Resignation or Discharge. If the
employment of a Participant terminates by reason of early retirement,
resignation or Discharge prior to his Normal Retirement Age, he shall
be vested and have a nonforfeitable interest in a percentage of his
Employer Account and Matching Account determined, except as provided
below, by taking into account all of his Years of Service as of such
termination date in accordance with the following schedule:
Years of Service Percent Vested
Less than 1 0%
1 but less than 2 0%
2 but less than 3 0%
3 but less than 4 20%
4 but less than 5 40%
5 but less than 6 60%
6 but less than 7 80%
7 or more 100%
2.4.3 Leave of Absence. A temporary cessation from active
employment with the Employer pursuant to an authorized leave of absence in
accordance with the nondiscriminatory policy of the Employer, whether
occasioned by illness, military service or any other reason shall not be
treated as either a termination of employment or a Break in Service provided
that the Employee returns to employment prior to the end of the authorized
leave of absence.
2.4.4 Re-Employment. In the event that the Participant is
re-employed during a Plan Year subsequent to the Plan Year encompassing the
Distribution Determination Date, he shall be given credit for Years of Service
preceding the Break in Service for the purpose of determining his vested and
nonforfeitable interest in his share of Employer contributions and forfeitures
allocated to his Employer Account after such re-employment.
Years of Service completed by the Participant after such re-employment shall
not increase his vested and nonforfeitable interest in his Employer Account on
the Distribution Determination Date as of which his Distributable Benefit is
determined preceding such re-employment unless the Participant is re-employed
before he incurs five (5) consecutive Breaks in Service.
In the case of a Participant who does not have any vested and nonforfeitable
right under the Plan to an accrued benefit derived from Employer
contributions, Years of Service before any period of consecutive Breaks in
Service shall not be taken into account in the event of re-employment if the
number of consecutive Breaks in Service within the period equals or exceeds
the greater of five (5) or the aggregate number of Years of Service before
such period. Any Years of Service which are not taken into account by reason
of such period of Breaks in Service shall not be taken into account in
applying the foregoing to a subsequent period of Breaks in Service.
2.4.5 Distribution Determination Date. The Distribution
Determination Date shall be determined as hereinafter provided.
(a) Less Than 100% Vested. If the employment of a Participant
terminates and the Participant has less than a one hundred percent
(100%) vested and nonforfeitable interest in his Employer Account as of
the date of such termination, the Distribution Determination Date shall
be the Valuation Date coinciding with or following the date of
termination, provided that he is not re-employed on the last day of
such Plan Year.
20
(b) Fully Vested. For a Participant who is fully vested but who
terminates employment prior to death, total and permanent disability or
retirement at his retirement date, the Distribution Determination Date
shall be the Valuation Date coinciding with or following the date of
termination.
For a Participant who terminates employment as a result of death, total
and permanent disability or retirement at his retirement date, the
Distribution Determination Date shall be the Valuation Date coinciding
with or following the date of termination.
In the case of a Participant's interest in a Voluntary Account or a
Segregated Account attributable to a rollover contribution from another
plan, the Distribution Determination Date is the Valuation Date
coinciding with or following the date of termination.
(c) Termination of Plan. In the event of termination of the Plan
(including termination resulting from a complete discontinuance of
contributions by the Employer), the Distribution Determination Date
shall be the date of such termination. In the event of a partial
termination of the Plan, as to each Participant with respect to whom
such partial termination has occurred, the Distribution Determination
Date shall be the Anniversary Date coinciding with or immediately
following the date of such partial termination.
(d) Other. Except as provided above, the Distribution
Determination Date shall be the Anniversary Date coinciding with or
next following the termination of employment of the Participant.
(e) Distributions Following Distribution Determination Date.
Subject to the necessity, if any, of obtaining the consent of a
Participant and spouse, distribution of a Participant's Distributable
Benefit shall commence within a reasonable period after the
Distribution Determination Date, unless otherwise elected by the
Participant in accordance with the provisions of the Plan or as
required by the provisions of the Plan.
2.4.6 Forfeitures. If an Employee terminates service, and the
value of the Employee's vested account balance derived from employer and
employee contributions is not greater than $3,500 and the Employee receives a
distribution of the value of the entire vested portion of such account
balance, the nonvested portion shall be treated as a forfeiture as of the last
day of the Plan Year in which the Participant's entire nonforfeitable interest
in such Account is distributed from the Plan. If the value of an Employee's
vested account balance is zero, the Employee shall be deemed to have received
a distribution of such vested account balance. A participant's vested account
balance shall not include accumulated deductible employee contributions within
the meaning of Section 72(o)(5)(B) of the Code for plan years beginning prior
to January 1, 1989.
If an Employee terminates service, and elects, in accordance with the
provisions of the Plan, to receive the value of the employee's vested account
balance, the nonvested portion shall be treated as a forfeiture. If the
Employee elects to have distributed less than the entire vested portion of the
account balance derived from employer contributions, the part of the nonvested
portion that will be treated as a forfeiture is the total nonvested portion
multiplied by a fraction, the numerator of which is the amount of the
distribution attributable to employer contributions and the denominator of
which is the total value of the vested employer derived account balance.
If an Employee receives a distribution and the Employee resumes employment
covered under the Plan, the Employee's employer-derived account balance shall
be restored to the amount on the date of distribution if the Employee repays
to the plan the full amount of the distribution attributable to Employer
21
contributions before the earlier of five (5) years after the first date on
which the Participant is subsequently re-employed by the Employer, or the date
the Participant incurs five (5) consecutive Breaks in Service following the
date of the distribution. If an Employee is deemed to receive a distribution
pursuant to this section, and the Employee resumes employment covered under
the Plan before the date the Participant incurs five (5) consecutive Breaks in
Service, upon the reemployment of such Employee, the employer-derived account
balance of the Employee will be restored to the amount on the date of such
deemed distribution.
Any portion of a Participant's Employer or Matching Account with respect to
which he is not vested shall be deemed a forfeiture as of the last day of the
Plan Year in which the Participant's entire nonforfeitable interest in such
Account is distributed from the Plan.
Forfeitures from the Employer Account shall be allocated to the Employer
Account of Participants who are entitled by reason of re-employment to
restoration of a prior forfeiture and any remaining forfeitures shall reduce
the Qualified Non-Elective Contribution for the Plan Year in which the
forfeiture is deemed to occur.
Forfeitures from the Matching Account shall be allocated to the Matching
Account of Participants who are entitled by reason of re-employment to
restoration of a prior forfeiture and any remaining forfeitures shall reduce
the Matching Contribution for the Plan Year in which the forfeiture is deemed
to occur.
Notwithstanding any provision herein to the contrary, forfeitures resulting
from contributions by an Employer shall not be reallocated for the benefit of
another adopting Employer. If a Participant is entitled to a restoration of a
forfeiture which has not otherwise been provided for, the amount to be
restored shall be restored by allocating forfeitures arising in the Plan Year
of restoration to the Participant's Account to the extent thereof and an
additional contribution by the Employer allocated to the Participant's Account
to the extent that allocable forfeitures are insufficient.
22
ARTICLE V
DISTRIBUTIONS
2.5.1 Commencement of Distribution.
(a) Immediate Distribution. If the employment of a Participant
is terminated for any reason other than resignation or discharge prior
to either his Early Retirement Date or his Normal Retirement Date,
distribution of his Distributable Benefit shall begin in accordance
with the Participant's election at any time after the earlier of the
date determined under subsection (b) below or within a reasonable
period after the Distribution Determination Date as of which his
Distributable Benefit is determined; provided that, if he has not
incurred a Break in Service, he is not reemployed prior to the date of
the commencement of distributions.
(b) Deferred Distribution. Unless the Participant elects either
earlier commencement in accordance with the provisions of the Plan or
to further defer distribution, if the employment of a Participant is
terminated by reason of resignation or discharge prior to either his
Early Retirement Date or his Normal Retirement Date, distribution of
his Distributable Benefit shall be deferred and commenced on the
sixtieth (60th) day after the close of the later of the following Plan
Years:
(i) The Plan Year during which the Participant attains
the earlier of age sixty-five (65) or the Normal Retirement Age;
(ii) The Plan Year during which the tenth (10th)
anniversary of the commencement of the Participant's
participation in the Plan occurs; or
(iii) The Plan Year during which the Participant
terminates service with the Employer.
A Participant who terminates employment before satisfying the age
requirement for early retirement but has satisfied any service
requirement shall be entitled to a distribution of his Distributable
Benefit in accordance with subsection (a) above upon attaining such
age.
If distribution is so deferred, unless otherwise determined by the Plan
Administrator, the Trustee at the Plan Administrator's direction shall
transfer the Distributable Benefit to a Segregated Fund from which
distribution shall thereafter be made. Such transfer shall be made as
of the Distribution Determination Date. Notwithstanding the foregoing,
the failure of a Participant and spouse to consent to a distribution
while a benefit is immediately distributable, within the meaning of
Section 2.5.2, shall be deemed to be an election to defer commencement
of payment of any benefit sufficient to satisfy this section.
(c) Required Distribution. Notwithstanding anything herein to
the contrary, unless the Participant has made an appropriate election
by December 31, 1983 to defer distribution which has not been revoked
or modified, the Participant's benefit shall be distributed to the
Participant not later than April 1 of the calendar year following the
calendar year in which he attains age 70-1/2 (the required beginning
date) or shall be distributed, commencing not later than April 1 of
such calendar year in accordance with regulations prescribed by the
Secretary of the Treasury over a period not extending beyond the life
23
expectancy of the Participant or the life expectancy of the Participant
and a beneficiary designated by the Participant. The amount required to
be distributed for each calendar year, beginning with distributions for
the first distribution calendar year, must at least equal the quotient
obtained by dividing the Participant's benefit by the applicable life
expectancy. Unless otherwise elected by the Participant (or spouse, if
distributions begin after death and the spouse is the designated
beneficiary), by the time distributions are required to begin, the life
expectancy of the Participant and the Participant's spouse shall be
recalculated annually. Other than for a life annuity, such election
shall be irrevocable as to the Participant or spouse and shall apply to
all subsequent years. The life expectancy of a non-spouse beneficiary
may not be recalculated. Life expectancy and joint and last survivor
expectancy shall be computed by use of the expected return multiples in
Tables V and VI of Section 1.72-9 of the Treasury Regulations. For
calendar years beginning after December 31, 1988, the amount to be
distributed each year, beginning with distributions for the first
distribution calendar year shall not be less than the quotient obtained
by dividing the Participant's benefit by the lesser of (1) the
applicable life expectancy or (2) if the Participant's spouse is not
the designated beneficiary, the applicable divisor then determined from
the table set forth in Q&A-4 of Section 1.401(a)(9)-2 of the proposed
regulations. Distributions after the death of the Participant shall be
distributed using the applicable life expectancy as the relevant
divisor without regard to Proposed Regulations Section 1.401(a)(9)-2.
The minimum distribution for subsequent calendar years, including the
minimum distribution for the distribution calendar year in which the
Participant's required beginning date occurs, must be made on or before
December 31 of that distribution calendar year.
(d) Distribution After Death. Unless the Participant has made an
appropriate election by December 31, 1983 to extend the period of
distribution after his death and the election has not been revoked or
modified, the following provisions shall apply.
If distribution of the Participant's benefit has begun and the
Participant dies before his entire benefit has been distributed to him,
the remaining portion of such benefit shall be distributed at least as
rapidly as under the method of distribution being used as of the date
of the Participant's death.
If the Participant dies before the distribution of his benefit has
begun, the entire interest of the Participant shall be distributed by
December 31 of the calendar year containing the fifth (5th) anniversary
of the death of such Participant, provided that if any portion of the
Participant's benefit is payable to or for the benefit of a designated
beneficiary and such portion is to be distributed in accordance with
regulations issued by the Secretary of the Treasury over the life of,
or over a period not extending beyond the life expectancy of such
designated beneficiary, such distributions shall begin not later than
December 31 of the calendar year immediately following the calendar
year of the Participant's death or such later date as may be provided
by regulations issued by the Secretary of the Treasury. If the
designated beneficiary is the surviving spouse of the Participant the
date on which the distributions are required to begin shall not be
earlier than the later of December 31 of the calendar year immediately
following the calendar year in which the Participant died and December
31 of the calendar year in which the Participant would have attained
age 70-1/2. If the surviving spouse thereafter dies before the
distributions to such spouse begin and any benefit is payable to a
contingent beneficiary, the date on which distributions are required to
begin shall be determined as if the surviving spouse were the
Participant.
If the Participant has not specified the manner in which benefits are
payable by the time of his or her death, the Participant's designated
beneficiary must elect the method of distribution no later than the
earlier of (1) December 31 of the calendar year in which distributions
would be required to begin under this section, or (2) December 31 of
24
the calendar year which contains the fifth anniversary of the date of
death of the Participant. If the Participant has no designated
beneficiary, or if the designated beneficiary does not elect a method
of distribution, distribution of the Participant's entire interest must
be completed by December 31 of the calendar year containing the fifth
anniversary of the Participant's death.
(e) Payments to Children. In accordance with regulations issued
by the Secretary of the Treasury, any amount paid to a child shall be
treated as if it had been paid to the surviving spouse if such amount
shall become payable to the surviving spouse upon such child reaching
majority (or other designated event permitted under such regulations).
(f) Incidental Death Benefit Distributions. Any distribution
required by the rules applicable to incidental death benefits shall be
treated as a distribution required by this Section. All distributions
required under this Section shall be determined and made in accordance
with the proposed regulations under Section 401(a)(9) of the Code,
including the minimum distribution incidental benefit requirement of
Section 1.401(a)(9)-2 of the proposed regulations.
(g) Distributions. For the purposes of this section,
distribution of a Participant's interest is considered to begin on the
Participant's required beginning date or the date distribution is
required to begin to the surviving spouse. If distribution in the form
of an annuity irrevocably commences to the Participant before the
required beginning date, the date distribution is considered to begin
is the date distribution actually commences.
(h) Definitions.
(1) Applicable life expectancy. The life expectancy (or
joint and last survivor expectancy) calculated using the
attained age of the Participant (or designated beneficiary) as
of the Participant's (or designated beneficiary's) birthday in
the applicable calendar year reduced by one for each calendar
year which has elapsed since the date life expectancy was first
calculated. If life expectancy is being recalculated, the
applicable life expectancy shall be the life expectancy as so
recalculated. The applicable calendar year shall be the first
distribution calendar year, and if life expectancy is being
recalculated such succeeding calendar year.
(2) Designated beneficiary. The individual who is
designated as the beneficiary under the Plan in accordance with
Section 401(a)(9) and the proposed regulations thereunder.
(3) Distribution calendar year. A calendar year for which
a minimum distribution is required. For distributions beginning
before the Participant's death, the first distribution calendar
year is the calendar year immediately preceding the calendar
year which contains the Participant's required beginning date.
For distributions beginning after the Participant's death, the
first distribution calendar year is the calendar year in which
distributions are required to begin.
(4) Participant's benefit.
(i) The account balance as of the last valuation
date in the calendar year immediately preceding the
distribution calendar year (valuation calendar year)
increased by the amount of any contributions or
forfeitures allocated to the account balance as of dates
in the valuation calendar year after the valuation date
and decreased by distributions made in the valuation
calendar year after the valuation date.
25
(ii) Exception for second distribution calendar
year. For purposes of paragraph (i) above, if any portion
of the minimum distribution for the first distribution
calendar year is made in the second distribution calendar
year on or before the required beginning date, the amount
of the minimum distribution made in the second
distribution calendar year shall be treated as if it had
been made in the immediately preceding distribution
calendar year.
(5) Required beginning date.
(i) General rule. The required beginning date of
a Participant is the first day of April of the calendar
year following the calendar year in which the Participant
attains age 70 1/2
(ii) Transitional rules. The required beginning
date of a Participant who attains age 70 1/2 before
January 1, 1988, shall be determined in accordance with
(I) or (II) below:
(I) Non-5-percent owners. The required
beginning date of a Participant who is not a
5-percent owner is the first day of April of the
calendar year following the calendar year in which
the later of retirement or attainment of age 70
1/2 occurs.
(II) 5-percent owners. The required
beginning date of a Participant who is a 5-percent
owner during any year beginning after December 31,
1979, is the first day of April following the
later of:
(A) the calendar year in which the
Participant attains age 70 1/2 or
(B) the earlier of the calendar year
with or within which ends the Plan Year in
which the Participant becomes a 5-percent
owner, or the calendar year in which the
Participant retires.
The required beginning date of a Participant who is not a
5-percent owner who attains age 70 1/2 during 1988 and
who has not retired as of January 1, 1989, is April 1,
1990.
(iii) 5-percent owner. A Participant is treated as
a 5-percent owner for purposes of this section if such
Participant is a 5-percent owner as defined in Section
416(i) of the Code (determined in accordance with Section
416 but without regard to whether the Plan is top-heavy)
at any time during the Plan Year ending with or within
the calendar year in which such owner attains age 66 1/2
or any subsequent Plan Year.
(iv) Once distributions have begun to a 5-percent
owner under this section, they must continue to be
distributed, even if the Participant ceases to be a
5-percent owner in a subsequent year.
(i) Transitional rule.
26
(1) Notwithstanding the other requirements of this
Section and subject to the requirements of Section 2.5.2,
distribution on behalf of any employee, including a 5-percent
owner, may be made in accordance with all of the following
requirements
(regardless of when such distribution commences):
(a) The distribution by the trust is one which
would not have disqualified such trust under Section
401(a)(9) of the Internal Revenue Code as in effect prior
to amendment by the Deficit Reduction Act of 1984.
(b) The distribution is in accordance with a
method of distribution designated by the employee whose
interest in the trust is being distributed or, if the
employee is deceased, by a beneficiary of such employee.
(c) Such designation was in writing, was signed by
the employee or the beneficiary, and was made before
January 1, 1984.
2.5.2 Method of Distribution. Subject to the provisions of
Section 2.5.1 above and any security interest in a loan from the Plan for
which any necessary spousal consent has been obtained (to the extent such
security interest is used as repayment of the loan), distribution shall be
made by one of the following methods, as determined in accordance with the
election of the Participant (or in the case of death, his Beneficiary) with
such spousal consents as may be required by law in any of the following
methods:
(a) Any alternative method of equivalent value contained in the
Plan at any time on or after the first day of the first Plan Year
beginning after 1988 to which the Participant consents.
(b) Incidental Death Benefits. For calendar years beginning
before January 1, 1989, if the Participant's spouse is not the
designated Beneficiary, the method of distribution selected must assure
that at least fifty (50%) percent of the present value of the amount
available for distribution is paid within the life expectancy of the
Participant.
(c) Consents. If the value of a Participant's vested account
balance derived from Employer and Employee contributions does not
exceed (and at the time of any prior distribution did not exceed)
$3,500, the consent of the Participant and his or her spouse shall not
be required; provided that if such value exceeds $3,500, the
Participant and spouse (or where either has died, the survivor) must
consent to any distribution of such account balance. The consent shall
be obtained in writing within the 90 day period ending on the annuity
starting date. Neither the consent of the Participant nor the
Participant's spouse shall be required to the extent that a
distribution is required to satisfy Section 401(a)(9) or Section 415 of
the Code. In addition, upon termination of the Plan if the Plan does
not offer an annuity option (purchased from a commercial provider), the
Participant's account balance in the Plan may, without the
Participant's consent, be distributed to the Participant or transferred
to another defined contribution plan (other than an employee stock
ownership plan as defined in Section 4975(e)(7) of the Code) within the
same controlled group.
(d) Zero Benefits. If the value of the Participant's vested and
nonforfeitable interest in the Plan at the time of his termination of
employment is zero, the Participant shall be deemed to have received a
distribution of such interest.
(e) Restrictions on Immediate Distributions. The Plan
27
Administrator shall notify the Participant and the Participant's spouse
of the right to defer any distribution until the Participant's account
balance in the Plan is no longer immediately distributable. Such
notification shall include a general description of the material
features and an explanation of the relative values of the optional
forms of benefit available under the Plan in a manner that would
satisfy the notice requirements of Section 417(a)(3) of the Code and
shall be provided no less than 30 days and no more than 90 days prior
to the annuity starting date. Notwithstanding the foregoing, only the
Participant need consent to the commencement of a distribution in the
form of a qualified joint and survivor annuity while the Participant's
account balance in the Plan is immediately distributable. Furthermore,
if payment in the form of a qualified joint and survivor annuity is not
required with respect to the Participant pursuant to the Plan, only the
Participant need consent to the distribution of an account balance that
is immediately distributable. The Participant's account balance is
immediately distributable if any part of the Participant's account
balance could be distributed to the Participant (or surviving spouse)
before the Participant attains (or would have attained if not deceased)
the later of age 62 or the Normal Retirement Age.
(f) Transitional Rules.
(1) Any living Participant not receiving benefits on
August 23, 1984, who would otherwise not receive the benefits
prescribed by the previous sections of the article must be given
the opportunity to elect to have the prior sections of this
article apply if such Participant is credited with at least one
hour of service under this Plan or a predecessor plan in a Plan
Year beginning on or after January 1, 1976, and such Participant
has at least 10 years of vesting service when he or she
separated from service.
(2) Any living Participant not receiving benefits on
August 23, 1984, who was credited with at least one hour of
service under this Plan or a predecessor plan on or after
September 2, 1974, and who is not otherwise credited with any
service in a Plan Year beginning on or after January 1, 1976,
must be given the opportunity to have his or her benefits paid
in accordance with Section (4) below.
(3) The respective opportunities to elect (as described
above) must be afforded to the appropriate Participants during
the period commencing on August 23, 1984, and ending on the date
benefits would otherwise commence to said Participants.
(4) Any Participant who has elected pursuant to Section
(2) above and any Participant who does not elect under Section
(1) or who meets the requirements of Section (1) except that
such Participant does not have at least 10 years of vesting
service when he or she separates from service, shall have his or
her benefits distributed in accordance with all of the following
requirements if benefits would have been payable in the form of
a life annuity:
(i) Automatic joint and survivor annuity. If
benefits in the form a life annuity become payable to a
married Participant who:
(1) begins to receive payments under the
Plan on or after normal retirement age; or
(2) dies on or after normal retirement age
while still working for the Employer; or
28
(3) begins to receive payments on or after
the qualified early retirement age; or
(4) separates from service on or after
attaining normal retirement age (or the qualified
early retirement age) and after satisfying the
eligibility requirements for the payment of
benefits under the plan and thereafter dies before
beginning to receive such benefits; then such
benefits will be received under this Plan in the
form of a qualified joint and survivor annuity,
unless the Participant has elected otherwise
during the election period. The election period
must begin at least 6 months before the
Participant attains qualified early retirement age
and end not more than 90 days before the
commencement of benefits. Any election hereunder
will be in writing and may be changed by the
Participant at any time.
(ii) Election of early survivor annuity. A
Participant who is employed after attaining the qualified
early retirement age will be given the opportunity to
elect, during the election period, to have a survivor
annuity payable on death. If the Participant elects the
survivor annuity, payments under such annuity must not be
less than the payments which would have been made to the
spouse under the qualified joint and survivor annuity if
the Participant had retired on the day before his or her
death. Any election under this provision will be in
writing and may be changed by the Participant at any
time. The election period begins on the later of (1) the
90th day before the Participant attains the qualified
early retirement age, or (2) the date on which
participation begins, and ends on the date the
Participant terminates employment.
(iii) For purposes of this Section (4):
(1) Qualified early retirement age is the
later of:
(i) the earliest date, under the
Plan, on which the Participant may elect to
receive retirement benefits,
(ii) the first day of the 120th month
beginning before the Participant reaches
normal retirement age, or
(iii) the date the Participant begins
participation.
(2) Qualified joint and survivor annuity is
an annuity for the life of the Participant with a
survivor annuity for the life of the spouse as
otherwise described in the Plan.
2.5.3 Nature of Distributions. The nature of the distribution
of a Participant's Distributable Benefit shall be as hereinafter provided.
(a) Trust Fund and Segregated Funds. Subject to the Joint and
Survivor Annuity requirements, except as provided in subsection (b)
with regard to Life Insurance Policies, distribution of a Participant's
Distributable Benefit shall consist of cash or property, or an annuity
contract as provided in Section 5.2 above.
29
(b) Insurance Policies. In the event that the Trustee has
purchased Life Insurance Policies on the life of the Participant, the
values and benefits available with respect to each such Policy shall be
distributed as follows:
(i) If the Participant's employment terminates for any
reason other than death, then the Trustee shall either surrender
the Life Insurance Policy for its available cash value and
distribute the proceeds as provided in subsection (a) above or,
at the election of the Participant, distribute the Life
Insurance Policy to the Participant, provided the Participant
has a vested and nonforfeitable interest in his Accounts in an
amount at least equal to the cash value thereof.
(ii) If the Participant's employment terminates by reason
of death, the beneficiary designated by the Participant in
accordance with the terms of the Plan shall be entitled to
receive from the Trustee the full amount of the proceeds
thereof.
The Trustee shall apply for and be the owner of any Policies purchased
under the terms of the Plan. The Policies must provide that the
proceeds are payable to the Trustee subject to the Trustee's obligation
to pay over the proceeds to the designated Beneficiary. Under no
circumstances shall the trust retain any part of the proceeds. In the
event of any conflict between the terms of the Plan and the terms of
any Policies purchased hereunder, the Plan provisions shall control.
2.5.4 Advance Distributions. Distributions will be made in a
lump sum as soon as administratively feasible following the Participant's
termination date.
2.5.5 In Service Distributions. A Participant may request an
in-service distribution from the Plan once each Plan Year upon the attainment
of age 59.5 provided the account which is subject to withdrawal is 100%
vested.
2.5.6 Hardship Distributions. A Participant may request a
distribution from the Plan as a result of immediate and heavy financial needs
of the Participant to the extent that the distribution is necessary to satisfy
such financial needs. Hardship distributions are subject to the spousal
consent requirements contained in Sections 401(a)(11) and 417 of the Code. The
determination of whether a Participant has an immediate and heavy financial
need shall be made by the Plan Administrator on the basis of all relevant
facts and circumstances. A distribution shall be deemed to be made on account
of an immediate and heavy financial need if the distribution is on account of:
(a) Deductible medical expenses described in Section 213(d) of
the Code incurred or necessary for medical care of the Participant, his
spouse or dependents;
(b) Purchase (excluding mortgage payments) of a principal
residence for the Participant;
(c) Payment of tuition and related educational fees for the next
12 months of post-secondary education for the Participant, his spouse,
children or dependents; or
(d) The need to prevent the eviction of the Participant from his
principal residence or foreclosure on the mortgage of the Participant's
principal residence.
A distribution shall be considered as necessary to satisfy an immediate and
heavy financial need of the Participant only if:
30
(a) The Participant has obtained all distributions, other than
hardship distributions, and all nontaxable loans under all plans
maintained by the Employer;
(b) All plans maintained by the Employer provide that the
Participant's elective Deferrals and employee contributions shall be
suspended for twelve (12) months after the receipt of the hardship
distribution;
(c) The distribution is not in excess of the amount of an
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); and
(d) All plans maintained by the Employer provide that the
Participant may not make Elective Deferrals for the Participant's
taxable year immediately following the taxable year of the hardship
distribution in excess of the applicable limit under Section 402(g) of
the Code for such taxable year less the amount of such Participant's
Elective Deferrals for the taxable year of the hardship distribution.
In the event of such distribution, when a Participant is less than one hundred
percent (100%) vested in his Employer Account or Matching Account, the vested
interest in the Employer Account or Matching Account shall thereafter be
determined in accordance with Section 2.5.4 of the Plan.
31
ARTICLE VI
CONTINGENT TOP HEAVY PROVISIONS
2.6.1 Top Heavy Requirements. If the Plan becomes a Top Heavy
Plan during any Plan Year, the following provisions shall supersede any
conflicting provisions in the Plan or Trust and apply for such Plan Year:
(a) Except as otherwise provided below, the Employer
contributions and forfeitures allocated on behalf of any Participant
who is not a Key Employee shall not be less than the lesser of 3
percent of such Participant's Compensation or in the case where the
Employer has no defined benefit plan which designates this plan to
satisfy Section 401 of the Code, the largest percentage of Employer
contributions and forfeitures, as a percentage of the first $200,000 of
the Key Employee's compensation, allocated on behalf of any Key
Employee for that year. The minimum allocation is determined without
regard to any Social Security contribution. This minimum allocation
shall be made even though, under other plan provisions, the Participant
would not otherwise be entitled to receive an allocation, or would have
received a lesser allocation for the year because of (i) the
Participant's failure to complete 1,000 Hours of Service (or any
equivalent provided in the plan), or (ii) the Participant's failure to
make mandatory employee contributions to the plan, or (iii)
compensation less than a stated amount. Neither Elective Deferrals nor
Matching Contributions may be taken into account for the purpose of
satisfying the minimum allocations.
For purposes of computing the minimum allocation, Compensation shall
mean a Participant's W-2 compensation.
The minimum allocation provided above shall not apply to any
Participant who was not employed by the Employer on the last day of the
Plan Year.
The minimum allocation provided above shall not apply to any
Participant to the extent the Participant is covered under any other
plan or plans of the Employer and the Employer has provided that the
minimum allocation or benefit requirement applicable to top-heavy plans
will be met in the other plan or plans.
(b) References in Section 3.2.1(d), pertaining to combined plan
limitations, to "1.25" shall be applied by substituting "1.0" for
"1.25" therein. Reference in Section 3.2.1(e), pertaining to a special
transition rule, to $51,875" shall be applied by substituting "$41,500"
for "$51,875" therein.
(c) The vested and nonforfeitable interest of each Participant
shall be equal to the percentage determined under the following
schedule if greater than the percentage determined under Section
2.4.2:
Years of Service Percent Vested
Less than 1 0%
1 but less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 but less than 6 80%
6 or more 100%
32
The top-heavy minimum vesting schedule applies to all benefits within
the meaning of Section 411(a)(7) of the Code, except those attributable
to employee contributions, including benefits accrued before the
effective date of Section 416 of the Code and benefits accrued before
the Plan becomes top-heavy.
If the Plan ceases to be a Top Heavy Plan, the vesting which occurs
while the Plan is a Top Heavy Plan shall not be cutback. Any minimum
allocation required (to the extent required to be nonforfeitable under
Section 416(b)) may not be forfeited under Section 411(a)(3)(B) or (D)
of the Code.
2.6.2 Top Heavy Definitions. The following terms, as used in
this Plan, shall have the following meaning:
(a) "Key Employee": An Employee or former employee who, at any
time during the Determination Period is either:
(i) an officer of the Employer having an Annual
Compensation greater than fifty (50%) percent of the amount in
effect under Section 415(b)(l)(A) of the Code;
(ii) an owner (or a person considered an owner under
Section 318 of the Code) of one of the ten largest interests in
the Employer if such individual's Annual Compensation from the
Employer is more than the limitation in effect under Section
415(c)(l)(A) of the Code;
(iii) any person who owns directly or indirectly more
than five (5%) percent of the outstanding stock of the
Employer or stock possessing more than five (5%) percent
of the
total combined voting power of all stock of the Employer or, in
the case of an unincorporated Employer, the capital or profits
interest in the Employer;
(iv) any person who owns directly or indirectly more than
one (1%) percent of the outstanding stock of the Employer or
stock possessing more than one (1%) percent of the total
combined voting power of all stock of the Employer or, in the
case of an unincorporated Employer, the capital or profits
interest in the Employer and having an Annual Compensation from
the Employer of more than $150,000; or
(v) any beneficiary of a Key Employee.
The determination of who is a Key Employee shall be made in accordance
with Section 416(i)(1) of the Code and the regulations thereunder.
(b) "Aggregation Group": Each qualified retirement plan of the
Employer in which a Key Employee is a participant and each other
qualified retirement plan of the Employer which enables any plan in
which a Key Employee is a participant to meet the requirements of
Section 401(a)(4) or Section 410 of the Code.
(c) "Annual Compensation": Compensation as defined in Section
415(c)(3) of the Code, but including amounts contributed by the
Employer pursuant to a salary reduction agreement which are excludible
from the Employee's gross income under Section 125, Section 402(a)(8),
Section 402(h) or Section 403(b) of the Code.
33
(d) "Top-Heavy Plan": For any Plan Year beginning after December
31, 1983, the plan is top-heavy if any of the following conditions
exists:
(i) If the top-heavy ratio for the plan exceeds 60
percent and the plan is not part of any required aggregation
group or permissive aggregation group of plans.
(ii) If the plan is a part of a required aggregation
group of plans but not part of a permissive aggregation group
and the top-heavy ratio for the group of plans exceeds 60
percent.
(iii) If the plan is a part of a required aggregation
group and part of a permissive aggregation group of plans and
the top-heavy ratio for the permissive aggregation group exceeds
60 percent.
(e) "Top-Heavy Ratio":
(i) 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 5-year period ending on the Determination
Date(s) has or has had accrued benefits, the top-heavy ratio for
this plan alone or for the required 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 5-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 5-year period ending on the Determination Date(s)), both
computed in accordance with Section 416 of the Code 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 Section 416 of the Code and the
regulations thereunder.
(ii) If the Employer maintains one or more defined
contribution plans (including any simplified employee pension
plan) and the Employer maintains or has maintained one or more
defined benefit plans which during the 5-year period ending on
the Determination Date(s) has or has had any accrued benefits,
the top-heavy ratio for any required or permissive aggregation
group as appropriate is a fraction, the numerator of which is
the sum of account balances under the aggregated defined
contribution plan or plans for all Key Employees, determined in
accordance with (i) 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 (i) 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 Section 416 of the Code 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.
34
(iii) For purposes of (i) and (ii) 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 Section 416 of the
Code and the regulations thereunder for the first and second
plan years of a defined benefit plan. The account balances and
accrued benefits of a Participant (1) who is not a Key Employee
but was a Key Employee in a prior year, or (2) who has not been
credited with at least one hour of service with any Employer
maintaining the plan at any time during the 5-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 Section 416 of the Code and the regulations
thereunder. Deductible employee contributions will not be taken
into account for purposes of computing the top-heavy ratio. When
aggregating plans, the value of account balances and accrued
benefits will be calculated with reference to the Determination
Dates that fall within the same calendar year.
The accrued benefit of a Participant other than a Key Employee
shall be determined under (a) the method, if any, that uniformly
applies for accrual purposes under all defined benefit plans
maintained by the Employer, or (b) 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 Section
411(b)(1)(C) of the Code.
(f) "Permissive Aggregation Group": The required aggregation
group of plans plus any other plan or plans of the Employer which, when
considered as a group with the required aggregation group, would
continue to satisfy the requirements of Sections 401(a)(4) and 410 of
the Code.
(g) "Required Aggregation Group":
(i) Each qualified plan of the Employer in which at least
one Key Employee participates or participated at any time during
the Determination Period (regardless of whether the plan has
terminated).
(ii) Any other qualified plan of the Employer which
enables a plan described in (i) to meet the requirements of
Sections 401(a)(4) or 410 of the Code.
(h) "Determination Date": 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.
(i) "Valuation Date": The date elected by the Employer as of
which account balances or accrued benefits are valued for purposes of
calculating the top-heavy ratio. The top-heavy valuation date shall be
the last day of the Plan Year.
(j) "Present Value": Present value shall be based only on the
interest and mortality rates.
(k) "Determination Period": The Plan Year containing the
Determination Date and the four (4) preceding Plan Years.
(l) "Non-Key Employee": An Employee who is not a Key Employee.
35
ARTICLE VII
SPECIAL CODA LIMITATIONS
2.7.1 Limitation on Deferral Percentage for Highly Compensated
Employees. Notwithstanding any provision herein to the contrary, the actual
deferral percentage for all Highly Compensated Employees for each Plan Year
must not exceed the actual deferral percentage for all other Employees
eligible to participate by more than the greater of:
(a) the actual deferral percentage of such other Employees
multiplied by 1.25; or
(b) the actual deferral percentage of such other Employees
multiplied by 2.0, but in no event more than two (2) percentage points
greater than the actual deferral percentage of such other Employees.
For purposes hereof, the actual deferral percentages for a Plan Year
for all Highly Compensated Employees and for all other Employees
respectively are the averages of the ratios, calculated separately for
each Employee in the respective group, of the amount of Elective
Contributions and Qualified Non-Elective Contributions paid under the
Plan on behalf of each such Employee for such Plan Year including
Excess Elective Deferrals to the Employee's Compensation for such Plan
Year whether or not the Employee was a Participant for the entire Plan
Year, but excluding Elective Deferrals that are taken into account in
the Contribution Percentage test (provided the ADP test is satisfied
both with and without exclusion of those Elective Deferrals). An
Employee who would be a Participant but for the failure to have
Elective Contributions made on his behalf shall be treated as a
Participant on whose behalf no Elective Contributions are made. For
purposes of calculating the actual deferral percentages of Highly
Compensated Employees who are 5 percent owners or among the ten most
highly paid Employees, Elective Contributions and Qualified
Non-Elective Contributions on behalf of a member of the Family of such
Highly Compensated Employees shall be taken into account and
Compensation of such Employees shall include the Elective Deferrals and
Qualified Non-Elective Contributions and Compensation for the Plan Year
of members of his Family (as determined in Section 414(q)(6) of the
Code). A member of the Family of such Highly Compensated Employees
shall be disregarded as a separate Employee in determining the actual
deferral percentage both for Participants who are Highly Compensated
Employees and for all other Employees.
For purposes of determining the actual deferral percentage test,
Elective Contributions and Qualified Non-Elective Contributions must be
made before the last day of the twelve month period immediately
following the Plan Year to which the contributions relate.
The Employer shall maintain records sufficient to demonstrate
satisfaction of the actual deferral percentage test and the amount of
Qualified Non-Elective Contributions used in such test.
The determination and treatment of the actual deferral percentage
amounts of any Participant shall satisfy such other requirements as may
be prescribed by the Secretary of the Treasury.
2.7.2 Multiple Plan Limitations.
36
(a) The actual deferral percentage for any Participant who is a
Highly Compensated Employee for the Plan Year and who is eligible to
have Elective Contributions (and Qualified Non-Elective Contributions
if treated as Elective Deferrals for purposes of the actual deferral
percentage test) allocated to his or her Accounts under two or more
arrangements described in Section 401(k) of the Code, that are
maintained by the Employer, shall be determined as if such Elective
Deferrals (and, if applicable, such Qualified Non-Elective
Contributions) were made under a single arrangement. If a Highly
Compensated Employee participates in two or more cash or deferred
arrangements that have different Plan Years, all cash or deferred
arrangements ending with or within the same calendar year shall be
treated as a single arrangement.
(b) In the event that this Plan satisfies the requirements of
Section 401(k), 401(a)(4) or 410(b) of the Code only if aggregated with
one or more other plans, or if one or more other plans satisfy the
requirements of such sections of the Code only if aggregated with this
Plan, then this section shall be applied by determining the actual
deferral percentage of Employees as if all such plans were a single
plan. For Plan Years beginning after December 31, 1989, plans may be
aggregated in order to satisfy Section 401(k) of the Code only if they
have the same Plan Year.
2.7.3 Limitation on Matching Contributions. Notwithstanding any
provision herein to the contrary, the average contribution percentage for all
Highly Compensated Employees for each Plan Year must not exceed the average
contribution percentage for all other Employees eligible to participate by
more than the greater of:
(a) the average contribution percentage of such other Employees
multiplied by 1.25; or
(b) the average contribution percentage of such other Employees
multiplied by 2.0, but in no event more than two (2) percentage points
greater than the average contribution percentage of such other
Employees.
For purposes hereof, the average contribution percentages for a Plan
Year for all Highly Compensated Employees and for all other Employees
respectively are the averages of the ratios, calculated separately for
each Employee in the respective group, of the amount of Matching
Contributions paid under the Plan on behalf of each such Employee for
such Plan Year, to the Employee's Compensation for such Plan Year
whether or not the Employee was a Participant for the entire 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. Such contribution percentage amounts shall include
forfeitures of Excess Aggregate Contributions or Matching Contributions
allocated to the Participant's Accounts which shall be taken into
account in the Plan Year in which such forfeiture is allocated. The
Employer shall include all Qualified Non-Elective Contributions in the
contribution percentage amounts.
The Employer may also use Elective Deferrals in the contribution
percentage amounts so long as the ADP test is met before the Elective
Deferrals are used in the ACP test and continues to be met following
the exclusion of those Elective Deferrals that are used to meet the ACP
test. If an Elective Contribution or other contribution by an Employee
is required as a condition of participation in the Plan, any Employee
who would be a Participant if such Employee made such a contribution
shall be treated as an eligible Participant on behalf of whom no such
contributions are made.
37
The Employer shall maintain records sufficient to demonstrate
satisfaction of the average contribution percentage test and the amount
of Qualified Non-Elective Contributions used in such test.
The determination and treatment of the contribution percentage of any
Participant shall satisfy such other requirements as may be prescribed
by the Secretary of the Treasury.
2.7.4 Special Rules.
(a) Multiple Use: If one or more Highly Compensated Employees
participate in both a CODA and a plan subject to the ACP test
maintained by the Employer and the sum of the ADP and ACP of those
Highly Compensated Employees subject to either or both tests exceeds
the Aggregate Limit, then the ACP of those Highly Compensated Employees
who also participate in a CODA shall be reduced (beginning with such
Highly Compensated Employee whose ACP is the highest) so that the limit
is not exceeded. The amount by which each Highly Compensated Employee's
contribution percentage amounts is reduced shall be treated as an
Excess Aggregate Contribution. The ADP and ACP of the Highly
Compensated Employees are determined after any corrections required to
meet the ADP and ACP tests. Multiple use does not occur if either the
ADP or ACP of the Highly Compensated Employees does not exceed 1.25
multiplied by the ADP and ACP of the Employees who are not Highly
Compensated Employees.
(b) The contribution percentage for any Participant who is a
Highly Compensated Employee and who is eligible to have contribution
percentage amounts allocated to his or her Accounts under two or more
plans described in Section 401(a) of the Code, or arrangements
described in Section 401(k) of the Code that are maintained by the
Employer, shall be determined as if the total of such contribution
percentage amounts was made under each plan. If a Highly Compensated
Employee participates in two 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.
(c) In the event that this Plan satisfies the requirements of
Sections 401(m), 401(a)(4) or 410(b) of the Code only if aggregated
with one or more other plans, or if one or more other plans satisfy the
requirements of such Sections of the Code only if aggregated with this
plan, then this section shall be applied by determining the
contribution percentages of Employees as if all such plans were a
single plan. For Plan Years beginning after December 31, 1989, plans
may be aggregated in order to satisfy Section 401(m) of the Code only
if they have the same Plan Year.
(d) For purposes of determining the contribution percentage of a
Participant who is a five-percent owner or one of the ten most
highly-paid Highly Compensated Employees, the contribution percentage
amounts and Compensation of such participant shall include the
contribution percentage amounts and Compensation for the Plan Year of
members of the Family of such Highly Compensated Employees. Family
members, with respect to Highly Compensated Employees, shall be
disregarded as separate employees in determining the contribution
percentage both for Participants who are Highly Compensated Employees
and for all other Employees.
(e) For purposes of determining the contribution percentage
test, Employee Contributions are considered to have been made in the
Plan Year in which contributed to the trust. Matching Contributions and
Qualified Non-Elective Contributions shall be considered made for a
Plan Year if made no later than the end of the twelve month period
beginning of the day after the close of the Plan Year.
38
2.7.5 Distribution of Excess Elective Deferrals. A Participant
may assign to the Plan any Excess Elective Deferrals made during a taxable
year of the Participant by notifying the Plan Administrator on or before March
15 of each calendar year 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 Deferrals made to this Plan and any other plans of the Employer.
Notwithstanding any other provision of the Plan, Excess Elective Deferrals,
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.
Excess Elective Deferrals distributed under this section shall be adjusted for
any income or loss based on a reasonable method of computing the allocable
income or loss. The method selected must be applied consistently to all
Participants and used for all corrective distributions under the Plan for the
Plan Year, and must be the same method that is used by the Plan for allocating
income or loss to Participants' Accounts. Income or loss allocable to the
period between the end of the taxable year and the date of distribution may be
disregarded in determining income or loss.
2.7.6 Distribution of Excess Contributions. Notwithstanding any
other provision of this Plan, Excess Contributions, plus any income and minus
any loss allocable thereto, shall be distributed no later than the last day of
each Plan Year to Participants to whose Accounts such Excess Contributions
were allocated for the preceding Plan Year. If such excess amounts are
distributed more than 2-1/2 months after the last day of the Plan Year in
which such excess amounts arose, a ten (10) percent excise tax will be imposed
on the Employer maintaining the Plan with respect to such amounts. Such
distributions shall be made to Highly Compensated Employees on the basis of
the respective portions of the Excess Contributions attributable to each of
such Employees. Excess Contributions of Participants who are subject to the
family member aggregation rules shall be allocated among the family members in
proportion to the Elective deferrals (and any amounts treated as Elective
Deferrals) of each family member that is combined to determine the combined
ADP.
Excess Contributions distributed under this section shall be adjusted for any
income or loss based on a reasonable method of computing the allocable income
or loss. The method selected must be applied consistently to all Participants
and used for all corrective distributions under the Plan for the Plan Year,
and must be the same method that is used by the Plan for allocating income or
loss to Participants' Accounts. Income or loss allocable to the period between
the end of the taxable year and the date of distribution may be disregarded in
determining income or loss.
Excess Contributions shall be distributed from the Participant's Elective
Contribution Account in proportion to the Participant's Elective Deferrals for
the Plan Year. Excess Contributions attributable to Qualified Non-Elective
Contributions shall be distributed from the Participant's Qualified
Non-Elective Contribution Account only to the extent that such Excess
Contributions exceed the balance in the Participant's Elective Contribution
Account.
2.7.7 Distribution of Excess Aggregate Contributions.
Notwithstanding any other provision of this Plan, Excess Aggregate
39
Contributions (including both Elective Contributions and the Employer's
Matching Contributions as well as any Voluntary Contributions), plus any
income and minus any loss allocable thereto, shall be forfeited, if
forfeitable, or if not forfeitable, distributed no later than the last day of
each Plan Year to Participants to whose accounts such Excess Aggregate
Contributions were allocated for the preceding Plan Year. Excess Aggregate
Contributions of Participants who are subject to the family member aggregation
rules shall be allocated among the family members in proportion to the
Employee and Matching Contributions (or amounts treated as Matching
Contributions) of each family member that is combined to determine the
combined ACP. Such distributions shall be made to Highly Compensated Employees
on the basis of the respective portions of the Excess Aggregate Contributions
attributable to each of such Employees. If such Excess Aggregate Contributions
are distributed more than 2-1/2 months after the last day of the Plan Year in
which such excess amounts arose, a ten (10) percent excise tax will be imposed
on the Employer maintaining the Plan with respect to those amounts.
Excess Aggregate Contributions distributed under this section shall be
adjusted for any income or loss based on a reasonable method of computing the
allocable income or loss. The method selected must be applied consistently to
all Participants and used for all corrective distributions under the Plan for
the Plan Year, and must be the same method that is used by the Plan for
allocating income or loss to Participants' Accounts. Income or loss allocable
to the period between the end of the taxable year and the date of distribution
may be disregarded in determining income or loss.
Forfeitures of Excess Aggregate Contributions shall be applied to reduce
Employer Contributions.
Excess Aggregate Contributions shall be forfeited, if forfeitable or
distributed on a pro-rata basis from the Participant's Matching Account and
Voluntary Account (and, if applicable, the Participant's Elective Contribution
Account).
2.7.8 Limitation on Distributions. Except as otherwise provided
in this Article, Elective Deferrals and Qualified Non-Elective Contributions
and income allocable thereto are not distributable to a Participant or his or
her Beneficiary in accordance with such Participant's or Beneficiary's
election prior to separation from service, death or disability. Such amounts
may, however, be distributed upon:
(a) Termination of the Plan without the establishment of another
defined contribution plan.
(b) The disposition by a corporation to an unrelated corporation
of substantially all of the assets (within the meaning of Section
409(d)(2) of the Code) used in a trade or business of such corporation
if such corporation continues to maintain this Plan after the
disposition, but only with respect to employees who continue employment
with the corporation acquiring such assets.
(c) The disposition by a corporation to an unrelated entity of
such corporation's interest in a subsidiary (within the meaning of
Section 409(d)(3) of the Code) if such corporation continues to
maintain this Plan, but only with respect to employees who continue
employment with such subsidiary.
(d) The attainment of age 59 1/2.
(e) The Hardship of a Participant in accordance with Section
2.5.6.
All such distributions are subject to the spousal and Participant
consent requirements, if applicable, contained in Sections 401(a)(11)
and 417 of the Code.
40
2.7.9 Limitation on Elective Deferrals. No Participant shall be
permitted to have Elective Deferrals 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 Section 402(g) of the Code in effect at
the beginning of such taxable year.
41
PART III
ARTICLE I
ACCOUNTING
3.1.1 Accounts. All income, profits, recoveries, contributions
and any and all monies, securities and properties of any kind at any time
received or held by the Trustee shall be held as a commingled Trust Fund,
except to the extent such assets are transferred to a Segregated Fund or
Controlled Fund. For accounting purposes, the Plan Administrator shall
establish and maintain certain Accounts for each Participant. An Employer
Account shall be established and maintained for each Participant to which
shall be added the Participant's share of Non-Elective Contributions and
forfeitures. A Matching Account shall be established and maintained for each
Participant to which shall be added the Participant's share of Matching
Contributions and forfeitures. A Qualified Non-Elective Contribution Account
shall be established and maintained for each Participant to which shall be
added the Participant's share of Qualified Non-Elective Contributions. If a
Participant has previously made voluntary nondeductible employee
contributions, the Plan Administrator shall establish and maintain a Voluntary
Account for the Participant. If, in accordance with any of the provisions of
the Plan, assets are either deposited initially or transferred to a Segregated
Fund for the benefit of a Participant, the Plan Administrator shall establish
and maintain a Segregated Account for the Participant. If a Participant elects
to exercise investment control over all or a portion of his Accounts, the Plan
Administrator shall establish and maintain a Controlled Account for the
Participant.
3.1.2 Adjustments. As of each Valuation Date each Participant's
Accounts shall be adjusted in the following order and manner.
(a) Distributions. Any distribution made to or on behalf of a
Participant since the last preceding Valuation Date shall be deducted
from the Participant's Account from which the distribution was made.
(b) Insurance Premiums. Payments made since the last preceding
Valuation Date for Life Insurance Policies on the life of a Participant
(including without limitation payments of premiums and interest on
policy loans) shall be deducted from the Account of the Participant
from which the payment was made.
(c) Adjustment to Fair Market Value. The value of all monies,
securities and other property in the Trust Fund, excluding Life
Insurance Policies, shall be appraised by the Trustee at the then fair
market value. In determining such value, all income and contributions,
if any, received by the Trustee from the Employer or Participants on
account of such year calculated under the method of accounting of the
Trust shall be included and there shall be deducted all expenses
determined in accordance with the method of accounting adopted by the
Plan Administrator.
If the total net value of the Trust Fund so determined exceeds (or is
less than) the total amount in the affected Accounts of all
Participants, the excess (or deficiency) shall be added to (or deducted
from) the respective Accounts of all Participants in the ratio that
each such Participant's Account bears to the total amount in all such
Accounts.
(d) Adjustment of Segregated and Controlled Accounts. The value
42
of all monies, securities and other property in each Participant's
Segregated Account or Controlled Account, if any, but exclusive of Life
Insurance Policies, shall be appraised by the Trustee at the then fair
market value. In determining such value, all income calculated under
the method of accounting of the Trust shall be included and all
expenses shall be deducted.
If the total net value of a Participant's Segregated Account or
Controlled Account, as the case may be, so determined exceeds (or is
less than) the previous balance in such Account, the excess (or
deficiency) shall be added to (or deducted from) the Participant's
respective Account.
(e) Insurance Dividends. Dividends or credits received since the
last preceding Valuation Date on any Life Insurance Policy on the life
of a Participant shall be added to the Account of the Participant from
which the premiums for such Life Insurance Policy have been paid.
(f) Contributions and Forfeitures. Each Participant's Account
shall be increased by that portion of the contribution and forfeitures
which is allocated to him.
(g) Transfers from Trust Fund. To the extent that funds in the
Trust Fund attributable to a Participant's Account were transferred
since the last preceding Valuation Date or are to be transferred to a
Segregated Fund pursuant to any of the provisions of the Plan, the
Account from which the funds were transferred shall be decreased and
the Account to which the funds were transferred shall be increased.
(h) Transfers to Trust Fund. To the extent that funds are
transferred from a Segregated Fund of a Participant to the Trust Fund
pursuant to any of the provisions of the Plan, the Account from which
the funds were transferred shall be decreased and the Account of the
Participant to which the funds were transferred shall be increased.
(i) Time of Adjustments. Every adjustment to be made pursuant to
this Section shall be considered as having been made as of the
applicable Valuation Date regardless of the actual dates of entries,
receipt by the Trustee of contributions by the Participant or the
Employer for such Year, or the transfers of funds to or from Segregated
Funds. The Trustee's determination as to valuation of trust assets and
charges or credits to the individual Accounts of the respective
Participants shall be conclusive and binding on all persons. If funds
are transferred to a Segregated Fund as of any date other than a
Valuation Date pursuant to the terms of the Plan, the adjustments to be
made pursuant to this Section shall be made as of the date as of which
the transfer is made, as if such date is a Valuation Date. If any
Participant receives a distribution pursuant to the terms of the Plan
as of any date other than a Valuation Date, then earnings will be
credited solely as of the immediately preceding Valuation Date.
43
ARTICLE II
LIMITATIONS
3.2.1 Limitations on Annual Additions. If the Participant does
not participate in, and has never participated in another qualified plan
maintained by the Employer, or an individual medical account, as defined in
Section 415(l)(2) of the Code, maintained by the Employer, which provides an
annual addition, subject to the adjustments hereinafter set forth, the amount
of annual additions which may be credited to a Participant's Accounts during
any Limitation Year shall in no event exceed the lesser of (a) thirty thousand
dollars ($30,000.00) or, if greater, one-fourth of the dollar limitation in
effect under Section 415(b)(1)(A) of the Code as in effect for the Limitation
Year or (b) twenty-five percent (25%) of the Participant's Compensation for
the Plan Year. The compensation limitation referred to in (b) shall not apply
to any contribution for medical benefits (within the meaning of Section 401(h)
or Section 419A(f)(2) of the Code) which is otherwise treated as an annual
addition under Section 415(l)(1) or 419A(d)(2) of the Code. 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 shall
equal the maximum permissible amount. For these purposes, the maximum
permissible amount is the maximum annual additions permitted on behalf of a
Participant.
(a) Annual Additions. The term "annual additions" shall mean,
the sum of the following amounts credited to a Participant's Accounts
for the Limitation Year:
(i) Employer contributions;
(ii) Employee contributions;
(iii) Forfeitures; and
(iv) Amounts allocated after March 31, 1984, to an
individual medical account, as defined in Section 415(l)(2) of
the Code, which is part of a pension or annuity plan maintained
by the Employer and 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 Section 419A(d)(3) of the Code, under a welfare
benefit fund as defined in Section 419(e) of the Code,
maintained by the Employer.
Any excess amounts applied under subsections (b) and (c) below
to reduce Employer contributions are considered annual additions
for such Limitation Year.
(b) Excessive Annual Additions. Prior to determining a
Participant's actual Compensation for a Limitation Year, the
Employer may determine the maximum permissible Annual Addition
for the Participant on the basis of a reasonable estimation of
the Participant's Compensation for the Limitation Year,
uniformly determined for all Participants similarly situated. As
soon as is administratively feasible after the end of the
Limitation Year, the maximum permissible amount for the
Limitation Year shall be determined on the basis of the
Participant's actual Compensation for the Limitation Year. Any
Excessive Annual Addition attributable to nondeductible
44
voluntary employee contributions made by a Participant to the
extent they reduce the excess amount shall be returned to the
Participant before any other adjustments are made.
If 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 shall be used to reduce Employer
contributions (including any allocation of forfeitures) for such
Participant in the next Limitation Year, and each succeeding
Limitation Year, if necessary. If an excess amount still exists,
and the Participant is not covered by the Plan at the end of a
Limitation Year, the excess amount shall be held unallocated in
a suspense account. The suspense account shall be applied to
reduce future Employer contributions for all remaining
Participants in the next Limitation Year, and each succeeding
Limitation Year, if necessary.
If a suspense account is in existence at any time during a
particular Limitation Year, all amounts in the suspense account
must be allocated and reallocated to Participants' Accounts
before any Employer or any Employee contributions may be made to
the Plan for that Limitation Year. Excess amounts may not be
distributed to Participants or former Participants. If a
suspense account is in existence at any time during a Limitation
Year, it shall not participate in the allocation of the Trust's
investment gains and losses.
(c) Participation in Certain Other Plans. If in addition to this
Plan, the Participant is covered under another qualified defined
contribution plan maintained by the Employer, a welfare benefit fund,
as defined in Section 419(e) of the code maintained by the Employer, or
an individual medical account, as defined in Section 415(l)(2) of the
Code, maintained by the Employer, which provides an Annual Addition
during any Limitation Year, the annual additions which may be credited
to a Participant's account under this Plan for any such Limitation Year
shall not exceed the maximum permissible amount reduced by the Annual
Additions credited to a Participant's Account under the other plans and
welfare benefit funds for the same Limitation Year. If the Annual
Additions with respect to the Participant under other defined
contribution plans and welfare benefit funds maintained by the Employer
are less than the maximum permissible amount and the Employer
contribution that would otherwise be contributed or allocated to the
Participant's Account under this Plan would cause the Annual Additions
for the Limitation Year to exceed this limitation, the amount
contributed or allocated shall be reduced so that the Annual Additions
under all such plans and funds for the Limitation Year shall equal the
maximum permissible amount. If the Annual Additions with respect to the
Participant under such other defined contribution plans and welfare
benefit funds in the aggregate are equal to or greater than the maximum
permissible amount, no amount will be contributed or allocated to the
Participant's Account under this Plan for the Limitation Year.
Prior to determining the Participant's actual Compensation for the
Limitation Year, the Employer may determine the maximum permissible
amount for a Participant in the manner described in subsection (b)
above. As soon as is administratively feasible after the end of the
Limitation Year, the maximum permissible amount for the Limitation Year
shall be determined on the basis of the Participant's actual
Compensation for the Limitation Year.
If a Participant's Annual Additions under this Plan and such other
plans would result in an excess amount for a Limitation Year, the
excess amount shall be deemed to consist of the Annual Additions last
allocated, except that Annual Additions attributable to a welfare
benefit fund or individual medical account will be deemed to have been
allocated first regardless of the actual allocation date.
45
If the excess amount was allocated to a Participant on an allocation
date of this Plan which coincides with an allocation date of another
plan, the excess amount attributed to this Plan will be the product of:
(i) the total excess amount allocated as of such date,
times
(ii) the ratio of (I) the Annual Additions allocated to
the Participant for the Limitation Year as of such date under
this Plan to (II) the total Annual Additions allocated to the
Participant for the Limitation Year as of such date under this
and all the other qualified defined contribution plans. Any
excess amount attributed to this Plan will be disposed in the
manner described in subsection (b), above.
For purposes hereof, the excess amount is the excess of the
Participant's annual additions for the Limitation Year over the
maximum permissible amount.
If the Employer maintains, or at any time maintained, a
qualified defined benefit plan covering any Participant in this
Plan, the sum of the Participant's defined benefit plan fraction
and defined contribution plan fraction will not exceed 1.0 in
any Limitation Year.
(d) Combined Plan Limitation. In the event that a Participant in
this Plan participates in a defined benefit plan (as defined in the
applicable sections of the Code) maintained by the Employer, the sum of
the "defined benefit plan fraction" plus the "defined contribution plan
fraction" shall at no time exceed 1.0. Except to the extent that
applicable law permits greater amounts to be provided on behalf of a
Participant, in which event such law is hereby incorporated by
reference, the foregoing fractions are defined as follows. The "defined
benefit plan fraction" for any year is a fraction (i) the numerator of
which is the projected annual benefit of the Participant under all the
defined benefit plans (whether or not terminated) maintained by the
Employer (determined as of the close of the year), and (ii) the
denominator of which is the lesser of (A) the product of 1.25
multiplied by the dollar limitation determined for the Limitation Year
under Sections 415(b) and (d) of the Code, or (B) the product of 1.4
multiplied by one hundred (100%) percent of the Participant's average
compensation for the three (3) consecutive Years of Service with the
Employer that produces the highest average, including any adjustments
under Section 415(b) of the Code. 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 shall 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 Section
415 for all Limitation Years beginning before January 1, 1987. The
"defined contribution fraction" for any year is a fraction (i) the
numerator of which is the sum of the annual additions to the
Participant's accounts under all 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 and
individual medical accounts (as defined in Sections 419(e) and
415(l)(2) of the Code) maintained by the Employer, and (ii) the
denominator of which is the sum of the lesser of the following amounts
46
determined for the current year and for all prior limitation years of
service with the Employer, regardless of whether a defined contribution
plan was maintained by the Employer: (A) the product of 1.25 multiplied
by the dollar limitation determined under Sections 415(b) and (d) of
the Code in effect under Section 415(c)(1)(A) of the Code, or (B)
thirty-five (35%) percent of the Participant's compensation from the
Employer for such plan 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 (1)
the excess of the sum of the fractions over 1.0 times (2) the
denominator of this fraction, shall be permanently subtracted from the
numerator of this fraction. The adjustment is calculated using the
fractions as they would be computed as of the end of the last
Limitation Year beginning before January 1, 1987, and disregarding any
changes in the terms and conditions of the Plan made after May 5, 1986,
but using the Section 415 limitation applicable to the first Limitation
Year beginning on or after January 1, 1987.
The annual addition for any Limitation Year beginning before January 1,
1987, shall not be recomputed to treat all employee contributions as
annual additions.
The projected annual benefits under a defined benefit plan is 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 the Participant continues employment until normal retirement
age under the plan (or current age, if later), and the Participant's
compensation for the current Limitation Year and all other relevant
factors used to determine benefits under the Plan remain constant for
all future Limitation Years.
(e) Special Transition Rule for Defined Contribution Fraction.
At the election of the Plan Administrator, in applying the provisions
of subsection (d) above with respect to the defined contribution plan
fraction for any year ending after December 31, 1982, the amount taken
into account for the denominator for each Participant for all years
ending before January 1, 1983 shall be an amount equal to the product
of the amount of the denominator determined under subsection (d) above
for the year ending in 1982, multiplied by the "transition fraction".
The "transition fraction" is a fraction (i) the numerator of which is
the lesser of (A) $51,875 or (B) 1.4 multiplied by twenty-five (25%)
percent of the Participant's compensation for the year ending in 1981,
and (ii) the denominator of which is the lesser of (A) $41,500 or (B)
twenty-five (25%) percent of the Participant's compensation for the
year ending in 1981.
(f) Special Transition Rule for Excess Benefits. Provided that
the Plan satisfied the requirements of Section 415 of the Code for the
last Plan Year beginning before January 1, 1983, an amount shall be
subtracted from the numerator of the defined contribution plan fraction
(not exceeding such numerator) so that the sum of the defined benefit
plan fraction and the defined contribution fraction computed in
accordance with Section 415(e)(l) of the Code (as amended by the Tax
Equity and Fiscal Responsibility Act of 1982) does not exceed 1.0 for
such year, in accordance with regulations issued by the Secretary of
the Treasury pursuant to the applicable provisions of the Code.
(g) Employer. For purposes of this Section, employer shall mean
the Employer that adopts this Plan and all members of a group of
47
employers which constitutes a controlled group of corporations or
trades or businesses under common control (as defined in Sections
414(b) and (c) of the Code, as modified by Section 415(h) of the Code),
or an affiliated service group (as defined in Section 414(m) of the
Code) of which the adopting employer is part and any other entity
required to be aggregated with the Employer under Section 414(o) of the
Code and the
regulations issued thereunder.
(h) Compensation. For purposes of this Section, Compensation
shall mean all of a Participant's: Section 415 Safe-harbor
Compensation. Wages, salaries and fees for professional services and
other amounts received for personal services actually rendered in the
course of employment for the Employer (including but not limited to
commissions paid salesmen, compensation for services on the basis of a
percentage of profits, commissions on insurance premiums, tips,
bonuses, fringe benefit, reimbursements and expense allowances), but
excluding:
(I) Employer contributions to a plan of deferred
compensation which are not includable in the Employee's gross
income for the taxable year in which contributed, or employer
contributions under a simplified employee pension plan to the
extent such contributions are deductible by the Employee or any
distributions from a plan of deferred compensation;
(II) Amounts realized from the exercise of a
non-qualified stock option or when restricted stock or property
held by the Employee is no longer subject to a substantial risk
of forfeiture or becomes freely transferable.
(III) Amounts realized from the sale, exchange or other
disposition of stock acquired under an incentive stock option;
and
(IV) Other amounts which received special tax benefits or
contributions made by the Employer (whether or not under a
salary reduction agreement) towards the purchase of an annuity
described in Section 403(b) of the Code (whether or not the
amounts are actually excludable from the gross income of the
Employee).
For any self-employed individual, compensation shall mean earned
income. For limitation years beginning after December 31, 1991, for
purposes of applying the limitations of this Article, Compensation for
a Limitation Year is the Compensation actually paid or includable in
gross income during such Limitation Year.
(i) Short Limitation Year. If the Limitation Year is amended to
a different twelve (12) consecutive month period, the new Limitation
Year must begin within the Limitation Year in which the amendment is
made. If a short Limitation Year is created because of an amendment
changing the Limitation Year to a different twelve (12) consecutive
month period, the maximum annual addition shall not exceed the defined
contribution dollar limitation determined in accordance with Section
415(c)(1)(A) of the Code then in effect multiplied by a fraction, the
numerator of which is the number of months in the short Limitation Year
and the denominator of which is twelve (12).
3.2.2 Controlled Businesses. If this plan provides contributions
or benefits for one or more owner-employees who control both the business for
which this plan is established and one or more other trades or businesses,
this plan and the plan established for other trades or businesses must, when
looked at as a single plan, satisfy sections 401(a) and (d) for the employees
of this and all other trades or businesses.
48
If the plan provides contributions or benefits for one or more owner-employees
who control one or more other trades or businesses, the employees of the other
trades or businesses must be included in a plan which satisfies sections
401(a) and (d) and which provides contributions and benefits not less
favorable than provided for owner-employees under this plan.
If an individual is covered as an owner-employee under the plans of two or
more trades or businesses which are not controlled and the individual controls
a trade or business, then the contributions or benefits of the employees under
the plan of the trades or businesses which are controlled must be as favorable
as those provided for him under the most favorable plan of the trade or
business which is not controlled.
For purposes of the preceding paragraphs, an owner-employee, or two or more
owner-employees, will be considered to control a trade or business if the
owner-employee, or two or more owner-employees together:
(a) own the entire interest in an unincorporated trade or
business, or
(b) in the case of a partnership, own more than 50 percent of
either the capital interest or the profits interest in the partnership.
For purposes of the preceding sentence, an owner-employee, or two or
more owner-employees shall be treated as owning any interest in a
partnership which is owned, directly or indirectly, by a partnership
which such owner-employee, or such two or more owner-employees, are
considered to control within the meaning of the preceding sentence.
49
ARTICLE III
FIDUCIARIES
3.3.1 Standard of Conduct. The duties and responsibilities of
the Plan Administrator and the Trustee with respect to the Plan shall be
discharged (a) in a non-discriminatory manner; (b) for the exclusive benefit
of Participants and their Beneficiaries; (c) by defraying the reasonable
expenses of administering the Plan; (d) with the care, skill, prudence, and
diligence under the circumstances then prevailing that a prudent man acting in
a like capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims; (e) by diversifying the
investments of the Plan so as to minimize the risk of large losses, unless
under the circumstances it is clearly prudent not to do so; and (f) in
accordance with the documents and instruments governing the Plan insofar as
such documents and instruments are consistent with the provisions of the Act.
3.3.2 Individual Fiduciaries. At any time that a group of
individuals is acting as Plan Administrator or Trustee, the number of such
persons who shall act in such capacity from time to time shall be determined
by the Employer. Such persons shall be appointed by the Employer and may or
may not be Participants or Employees of the Employer. Any action taken by a
group of individuals acting as either Plan Administrator or Trustee shall be
taken at the direction of a majority of such persons, or, if the number of
such persons is two (2), by unanimous consent.
3.3.3 Disqualification from Service. No person shall be
permitted to serve as a Fiduciary, custodian, counsel, agent or employee of
the Plan or as a consultant to the Plan who has been convicted of any of the
criminal offenses specified in the Act.
3.3.4 Bonding. Except as otherwise permitted by law, each
Fiduciary or person who handles funds or other property or assets of the Plan
shall be bonded in accordance with the requirements of the Act.
3.3.5 Prior Acts. No Fiduciary shall be liable for any acts
occurring prior to the period of time during which the Fiduciary was actually
serving in such capacity with respect to the Plan.
3.3.6 Insurance and Indemnity. The Employer may purchase or
cause the Trustee to purchase and keep current as an authorized expense
liability insurance for the Plan, its Fiduciaries, and any other person to
whom any financial or other administrative responsibility with respect to the
Plan and Trust is allocated or delegated, from and against any and all
liabilities, costs and expenses incurred by such persons as a result of any
act or omission to act in connection with the performance of the duties,
responsibilities and obligations under the Plan and under the Act; provided
that any such insurance policy purchased with Plan assets permits subrogation
by the Insurer against the Fiduciary in the case of breach by such Fiduciary.
Unless otherwise determined and communicated to affected parties by the
Employer, the Employer shall indemnify and hold harmless each such person,
other than a corporate trustee, for and from any such liabilities, costs and
expenses which are not covered by any such insurance, except to the extent
that any such liabilities, costs or expenses are judicially determined to be
due to the gross negligence or willful misconduct of such person. No Plan
assets may be used for any such indemnification.
3.3.7 Expenses. Expenses incurred by the Plan Administrator or
50
the Trustee in the administration of the Plan and the Trust, including fees
for legal services rendered, such compensation to the Trustee as may be agreed
upon in writing from time to time between the Employer and the Trustee, and
all other proper charges and expenses of the Plan Administrator or the Trustee
and of their agents and counsel shall be paid by the Employer, or at its
election at any time or from time to time, may be charged against the assets
of the Trust, but until so paid shall constitute a charge upon the assets of
the Trust. The Trustee shall have the authority to charge the Trust Fund for
its compensation and reasonable expenses unless paid or contested by written
notice by the Employer within sixty (60) days after mailing of the written
billing by the Trustee. All taxes of any and all kinds whatsoever which may be
levied or assessed under existing or future laws upon the assets of the Trust
or the income thereof shall be paid from such assets. Notwithstanding the
foregoing, no compensation shall be paid to any Employee for services rendered
under the Plan and Trust as a Trustee.
3.3.8 Agents, Accountants and Legal Counsel. The Plan
Administrator shall have authority to employ suitable agents, custodians,
investment counsel, accountants and legal counsel who may, but need not be,
legal counsel for the Employer. The Plan Administrator and the Trustee shall
be fully protected in acting upon the advice of such persons. The Trustee
shall at no time be obliged to institute any legal action or to become a party
to any legal action unless the Trustee has been indemnified to the Trustee's
satisfaction for any fees, costs and expenses to be incurred in connection
therewith.
3.3.9 Investment Manager. The Employer may employ as an
investment manager or managers to manage all or any part of the Trust Fund any
(i) investment advisor registered under the Investment Advisors Act of 1940;
(ii) bank as defined in said Act; or (iii) insurance company qualified to
perform investment management services in more than one state.
Any investment manager shall have all powers of the Trustee in the management
of such part of the Trust Fund, including the power to acquire or dispose of
assets. In the event an investment manager is so appointed, the Trustee shall
not be liable for the acts or omissions of such investment manager or be under
any obligation to invest or otherwise manage that part of the Trust Fund which
is subject to the management of the investment manager. The Employer shall
notify the Trustee in writing of any appointment of an investment manager, and
shall provide the Trustee with the investment manager's written acknowledgment
that it is a fiduciary with respect to the Plan.
3.3.10 Finality of Decisions or Acts. Except for the right of a
Participant or Beneficiary to appeal the denial of a claim, any decision or
action of the Plan Administrator or the Trustee made or done in good faith
upon any matter within the scope of authority and discretion of the Plan
Administrator or the Trustee shall be final and binding upon all persons. In
the event of judicial review of actions taken by any Fiduciary within the
scope of his duties in accordance with the terms of the Plan and Trust, such
actions shall be upheld unless determined to have been arbitrary and
capricious.
3.3.11 Certain Custodial Accounts and Contracts. The term
"Trustee" as used herein will also include a person holding the assets of a
custodial account, an annuity contract or other contract which is treated as a
qualified trust pursuant to Section 401(f) of the Code and references to the
Trust Fund shall be construed to apply to such custodial account, annuity
contract or other contract.
51
ARTICLE IV
PLAN ADMINISTRATOR
3.4.1 Administration of Plan. The Plan Administrator shall be
designated by the Employer from time to time. The primary responsibility of
the Plan Administrator is to administer the Plan for the exclusive benefit of
the Participants and their Beneficiaries, subject to the specific terms of the
Plan. The Plan Administrator shall administer the Plan and shall construe and
determine all questions of interpretation or policy in a manner consistent
with the Plan. The Plan Administrator may correct any defect, supply any
omission, or reconcile any inconsistency in such manner and to such extent as
he shall deem necessary or advisable to carry out the purpose of the Plan;
provided, however, that any interpretation or construction shall be done in a
nondiscriminatory manner and shall be consistent with the intent that the Plan
shall continue to be a qualified Plan pursuant to the Code, and shall comply
with the terms of the Act. The Plan Administrator shall have all powers
necessary or appropriate to accomplish his duties under the Plan.
(a) The Plan Administrator shall be charged with the duties of
the general administration of the Plan, including but not limited to
the following:
(1) To determine all questions relating to the
eligibility of an Employee to participate in the Plan or to
remain a Participant hereunder.
(2) To compute, certify and direct the Trustee with
respect to the amount and kind of benefits to which any
Participant shall be entitled hereunder.
(3) To authorize and direct the Trustee with respect to
all disbursements from the Trust Fund.
(4) To maintain all the necessary records for the
administration of the Plan.
(5) To interpret the provisions of the Plan and to make
and publish rules and regulations for the Plan as the Plan
Administrator may deem reasonably necessary for the proper and
efficient administration of the Plan and consistent with its
terms.
(6) To select the Insurer to provide any Life Insurance
Policy to be purchased for any Participant hereunder.
(7) To advise the Fiduciary with investment authority
regarding the short and long-term liquidity needs of the Plan in
order that the Fiduciary might direct its investment
accordingly.
(8) To advise, counsel and assist any Participant
regarding any rights, benefits or elections available under the
Plan.
(9) To instruct the Trustee as to the management,
investment and reinvestment of the Trust Fund unless the
investment authority has been delegated to the Trustee or an
Investment Manager.
52
(b) The Plan Administrator shall also be responsible for
preparing and filing such annual disclosure reports and tax forms as
may be required from time to time by the Secretary of Labor, the
Secretary of the Treasury or other governmental authorities.
(c) Whenever it is determined by the Plan Administrator to be in
the best interest of the Plan and its Participants or Beneficiaries,
the Plan Administrator may request such variances, deferrals,
extensions, or exemptions or make such elections for the Plan as may be
available under the law.
(d) The Plan Administrator shall be responsible for procuring
bonding for all persons dealing with the Plan or its assets as may be
required by law.
(e) In the event this Plan is required to file reports or pay
premiums to the Pension Benefit Guaranty Corporation, the Plan
Administrator shall have the duty to prepare and make such filings, to
pay any premiums required, whether for basic or contingent liability
coverage, and shall be charged with the responsibility of notifying all
necessary parties of such events and under such circumstances as may be
required by law.
3.4.2 Disclosure Requirements. Every Participant covered under
the Plan and every Beneficiary receiving benefits under the Plan shall receive
from the Plan Administrator a summary plan description, and such other
information as may be required by law or by the terms of the Plan.
3.4.3 Information Generally Available. The Plan Administrator
shall make copies of this Plan and Trust, the summary plan description, latest
annual report, Life Insurance Policies, or other instruments under which the
Plan was established or is operated available for examination by any
Participant or Beneficiary in the principal office of the Plan Administrator
and such other locations as may be necessary to make such information
reasonably accessible to all interested parties. Subject to a reasonable
charge to defray the cost of furnishing such copies, the Plan Administrator
shall, upon written request of any Participant or Beneficiary, furnish a copy
of any of the above documents to the respective party.
3.4.4 Statement of Accrued Benefit. Upon written request to the
Plan Administrator once during any twelve (12) month period, a Participant or
Beneficiary shall be furnished with a written statement, based on the latest
available information, of his then vested accrued benefit and the earliest
date upon which the same will become fully vested and nonforfeitable. The
statement shall also include a notice to the Participant of any benefits which
are forfeitable if the Participant dies before a certain date.
3.4.5 Explanation of Rollover Treatment. The Plan Administrator
shall, when making a distribution eligible for rollover treatment, provide a
written explanation to the recipient of the provisions under which such
distribution will not be subject to tax if transferred to an eligible
retirement plan within sixty (60) days after the date on which the recipient
received the distribution and, if applicable, the provisions of law pertaining
to the tax treatment of lump sum distributions.
53
ARTICLE V
TRUSTEE
3.5.1 Acceptance of Trust. The Trustee, by joining in the
execution of the Plan, agrees to act in accordance with the express terms and
conditions hereof.
3.5.2 Trustee Capacity - Co-Trustees. The Trustee may be a bank,
trust company or other corporation possessing trust powers under applicable
state or federal law or one or more individuals or any combination thereof.
When there are two or more Trustees, they may allocate specific
responsibilities, obligations or duties among themselves by their written
agreement. An executed copy of such written agreement shall be delivered to
and retained by the Plan Administrator.
3.5.3 Resignation, Removal, and Successors. Any Trustee may
resign at any time by delivering to the Employer a written notice of
resignation to take effect at a date specified therein, which shall not be
less than thirty (30) days after the delivery thereof; the Employer may waive
such notice. The Trustee may be removed by the Employer with or without cause,
by tendering to the Trustee a written notice of removal to take effect at a
date specified therein. Upon such removal or resignation of a Trustee, the
Employer shall either appoint a successor Trustee who shall have the same
powers and duties as those conferred upon the resigning or discharged Trustee,
or, if a group of individuals is acting as Trustee, determine that a successor
shall not be appointed and the number of Trustees shall be reduced by one (1).
3.5.4 Consultations. The Trustee shall be entitled to advice of
counsel, which may be counsel for the Plan or the Employer, in any case in
which the Trustee shall deem such advice necessary. The Trustee shall not be
liable for any action taken or omitted in good faith reliance upon the advice
of such counsel. With the exception of those powers and duties specifically
allocated to the Trustee by the express terms of the Plan, it shall not be the
responsibility of the Trustee to interpret the terms of the Plan and the
Trustee may request, and is entitled to receive, guidance and written
direction from the Plan Administrator on any point requiring construction or
interpretation of the Plan documents.
3.5.5 Rights, Powers and Duties. The rights, powers and duties
of the Trustee shall be as follows:
(a) The Trustee shall be responsible for the safekeeping of the
assets of the Trust Fund in accordance with the provisions of the Plan
and any amendments hereto. The duties of the Trustee under the Plan
shall be determined solely by the express provisions hereof and no
other further duties or responsibilities shall be implied. Subject to
the terms of this Plan, the Trustee shall be fully protected and shall
incur no liability in acting in reliance upon the written instructions
or directions of the Employer, the Plan Administrator, a duly
designated investment manager, or any other named Fiduciary.
(b) The Trustee shall have all powers necessary or convenient
for the orderly and efficient performance of its duties hereunder,
including but not limited to those specified in this Section. The
Trustee shall have the power generally to do all acts, whether or not
expressly authorized, which the Trustee in the exercise of its
fiduciary responsibility may deem necessary or desirable for the
protection of the Trust Fund and the assets thereof.
54
(c) The Trustee shall have the power to collect and receive any
and all monies and other property due hereunder and to give full
discharge and release therefore; to settle, compromise or submit to
arbitration any claims, debts or damages due to or owing to or from the
Trust Fund; to commence or defend suits or legal proceedings wherever,
in the Trustee's judgment, any interest of the Trust Fund requires it;
and to represent the Trust Fund in all suits or legal proceedings in
any court of law or equity or before any other body or tribunal.
(d) The Trustee shall cause any Life Insurance Policies or
assets of the Trust Fund to be registered in its name as Trustee and
shall be authorized to exercise any and all ownership rights regarding
these assets, subject to the terms of the Plan.
(e) The Trustee may temporarily hold cash balances and shall be
entitled to deposit any funds received in a bank account in the name of
the Trust Fund in any bank selected by the Trustee, including the
banking department of a corporate Trustee, if any, pending disposition
of such funds in accordance with the Plan. Any such deposit may be made
with or without interest.
(f) The Trustee shall pay the premiums and other charges due and
payable at any time on any Life Insurance Policies as it may be
directed by the Plan Administrator, provided funds for such payments
are then available in the Trust. The Trustee shall be responsible only
for such funds and Life Insurance Policies as shall actually be
received by it as Trustee hereunder, and shall have no obligation to
make payments other than from such funds and cash values of Life
Insurance Policies.
(g) If the whole or any part of the Trust Fund shall become
liable for the payment of any estate, inheritance, income or other tax
which the Trustee shall be required to pay, the Trustee shall have full
power and authority to pay such tax out of any monies or other property
in its hands for the account of the person whose interest hereunder is
so liable. Prior to making any payment, the Trustee may require such
releases or other documents from any lawful taxing authority as it
shall deem necessary. The Trustee shall not be liable for any
nonpayment of tax when it distributes an interest hereunder on
instructions from the Plan Administrator.
(h) The Trustee shall keep a full, accurate and detailed record
of all transactions of the Trust which the Employer and the Plan
Administrator shall have the right to examine at any time during the
Trustee's regular business hours.
As of the close of each Plan Year, the Trustee shall furnish the Plan
Administrator with a statement of account setting forth all receipts,
disbursements and other transactions effected by the Trustee during the
year. The Plan Administrator shall promptly notify the Trustee in
writing of his approval or disapproval of the account. The Plan
Administrator's failure to disapprove the account within sixty (60)
days after receipt shall be considered an approval. Except as otherwise
required by law, the approval by the Plan Administrator shall be
binding as to all matters embraced in any statement to the same extent
as if the account of the Trustee had been settled by judgment or decree
of a court of competent jurisdiction under which the Trustee, Employer
and all persons having or claiming any interest in the Trust Fund were
parties; provided, however, that the Trustee may have its account
judicially settled if it so desires.
(i) The Trustee is hereby authorized to execute all necessary
receipts and releases to any parties concerned; and shall be under a
55
duty, upon being advised by the Plan Administrator that the proceeds of
any Life Insurance Policies are payable, to give reasonable assistance
to the Beneficiary designated therein in collecting such sums as may
appear to be due.
(j) If, at any time, as the result of the death of the
Participant there shall be a dispute as to the person to whom payment
or delivery of monies or property should be made by the Trustee, or
regarding any action to be taken by the Trustee, the Trustee may
postpone such payment, delivery or action, retaining the funds or
property involved, until such dispute shall have been resolved in a
court of competent jurisdiction or the Trustee shall have been
indemnified to its satisfaction or until it has received written
direction from the Plan Administrator.
(k) Anything in this instrument to the contrary notwithstanding,
the Trustee shall have no duty or responsibility with respect to the
determination of matters pertaining to the eligibility of any Employee
to become or remain a Participant hereunder, the amount of benefit to
which any Participant or Beneficiary shall be entitled hereunder, or
the size and type of any Life Insurance Policy to be purchased from any
Insurer for any Participant hereunder; all such responsibilities being
vested in the Plan Administrator.
3.5.6 Trustee Indemnification. The Employer shall indemnify and
hold harmless the Trustee for and from the assertion or occurrence of any
liability to a Participant or Beneficiary for any action taken or omitted by
the Trustee pursuant to any written direction to the Trustee from the Employer
or the Plan Administrator. Such indemnification obligation of the Employer
shall not be applicable to the extent that any such liability is covered by
insurance.
3.5.7 Changes in Trustee Authority. If a successor Trustee is
appointed, neither an Insurer nor any other person who has previously had
dealings with the Trustee shall be chargeable with knowledge of such
appointment or such change until furnished with notice thereof. Until such
notice, the Insurer and any other such party shall be fully protected in
relying on any action taken or signature presented which would have been
proper in accordance with that information previously received.
56
ARTICLE VI
TRUST ASSETS
3.6.1 Trustee Exclusive Owner. All assets held by the Trustee,
whether in the Trust Fund or Segregated Funds, shall be owned exclusively by
the Trustee and no Participant or Beneficiary shall have any individual
ownership thereof. Participants and their Beneficiaries shall share in the
assets of the Trust, its net earnings, profits and losses, only as provided in
this Plan.
3.6.2 Investments. The Trustee shall invest and reinvest the
Trust Fund without distinction between income or principal in one or more of
the following ways as the Trustee shall from time to time determine:
(a) The Trustee may invest the Trust Fund or any portion thereof
in obligations issued or guaranteed by the United States of America or
of any instrumentality's thereof, or in other bonds, notes, debentures,
mortgages, preferred or common stocks, options to buy or sell stocks or
other securities, mutual fund shares, limited partnership interests,
commodities, or in such other property, real or personal, as the
Trustee shall determine.
(b) The Trustee may cause the Trust Fund or any portion thereof
to be invested in a common trust fund established and maintained by a
national bank or other for the collective investment of fiduciary funds
even though the bank is acting as the Trustee or Investment Manager,
providing such common trust fund is a qualified trust under the
applicable section of the Code, or corresponding provisions of future
federal internal revenue laws and is exempt from income tax under the
applicable section of the Code. In the event any assets of the Trust
Fund are invested in such a common trust fund, the Declaration of Trust
creating such common trust fund, as it may be amended from time to
time, shall be incorporated into this Plan by reference and made a part
hereof.
(c) The Trustee may deposit any portion of the Trust Fund in
savings accounts in federally insured banks or savings and loan
associations or invest in certificates of deposit issued by any such
bank or savings and loan association. The Trustee may, without
liability for interest, retain any portion of the Trust Fund in cash
balances pending investment thereof or payment of expenses.
(d) The Trustee may buy and sell put and call options, covered
or uncovered, engage in spreads, straddles, ratio writing and other
forms of options trading, including sales of options against
convertible bonds, and sales of Standard & Poor futures contracts, and
trade in and maintain a brokerage account on a cash or margin basis.
(e) The Trustee may invest any portion or all of the assets of
the Trust Fund which are attributable to the vested and nonforfeitable
interest in the Accounts of a Participant in the purchase of group or
individual Life Insurance Policies issued on the life of and for the
benefit of the Participant with the consent of the Participant, subject
to the following conditions:
(i) The aggregate premiums paid for ordinary whole Life
Insurance Policies with both nondecreasing death benefits and
nonincreasing premiums on the life of any Participant shall not
at any time exceed forty-nine percent (49%) of the aggregate
amount of Employer contributions which have been allocated to
the Accounts of such Participant.
57
(ii) The aggregate Premiums paid for Life Insurance
Policies on the life of any Participant which are either term,
universal or any other contracts which are not ordinary whole
life policies shall not at any time exceed twenty-five percent
(25%) of the aggregate amount of Employer contributions which
have been allocated to the Accounts of such Participant.
(iii) The sum of one-half of the aggregate premiums for
ordinary whole Life Insurance Policies and all premiums for
other Life Insurance Policies shall not at any time exceed
twenty-five percent (25%) of the aggregate amount of Employer
contributions which have been allocated to the Accounts of such
Participant.
(iv) If the Plan permits distributions to a Participant
prior to his termination of employment in accordance with
Section 2.5.5 and the Plan does not take into account
contributions to provide Social Security Benefits in the
allocation of Employer contributions, the amount which may be
distributed to the Participant may be applied to the purchase of
Life Insurance Policies.
(f) The Trustee may invest the Trust Fund or any portion thereof
to acquire or hold Qualifying Employer Securities or Real Property,
provided that the portion so invested shall not exceed the amount
allowed as an investment under the Act.
3.6.3 Administration of Trust Assets. Subject to the limitations
herein expressly set forth, the Trustee shall have the following powers and
authority in connection with the administration of the assets of the Trust:
(a) To hold and administer all contributions made by the
Employer to the Trust Fund and all income or other property derived
therefrom as a single Trust Fund, except as otherwise provided in the
Plan.
(b) To manage, control, sell, convey, exchange, petition,
divide, subdivide, improve, repair, grant options, sell upon deferred
payments, lease without limit as determined for any purpose,
compromise, arbitrate or otherwise settle claims in favor of or against
the Trust Fund, institute, compromise and defend actions and
proceedings, and to take any other action necessary or desirable in
connection with the administration of the Trust Fund.
(c) To vote any stock, bonds, or other securities of any
corporation or other issuer; otherwise consent to or request any action
on the part of any such corporation or other issuer; to give general or
special proxies or powers of attorney, with or without power of
substitution; to participate in any reorganization, recapitalization,
consolidation, merger or similar transaction with respect to such
securities; to deposit such stocks or other securities in any voting
trusts, or with any protective or like committee, or with the trustee,
or with the depositories designated thereby; to exercise any
subscription rights and conversion privileges or other options and to
make any payments incidental thereto; and generally to do all such
acts, execute all such instruments, take all such proceedings and
exercise all such rights, powers and privileges with respect to the
stock or other securities or property constituting the Trust Fund as if
the Trustee were the absolute owner thereof.
(d) To apply for and procure, at the election of any
Participant, Life Insurance Policies on the life of the Participant; to
exercise whatever rights and privileges may be granted to the Trustee
58
under such Policies, and to cash in, receive and collect such Policies
or the proceeds therefrom as and when entitled to do so under the
provisions thereof;
(e) To make, execute, acknowledge and deliver any and all
documents of transfer and conveyance and any and all other instruments
that may be necessary or appropriate to carry out the powers herein
granted;
(f) To register any investment held in the Trust in the
Trustee's own name or in the name of a nominee and to hold any
investment in bearer form, but the books and records of the Trustee
shall at all times show that all such investments are part of the
Trust;
(g) To borrow money for the purposes of the Plan in such amounts
and upon such terms and conditions as the Trustee deems appropriate;
(h) To commingle the assets of the Trust Fund with the assets of
other similar trusts which are exempt from income tax, whether
sponsored by the Employer, an affiliate of the Employer or an unrelated
employer, provided that the books and records of the Trustee shall at
all times show the portion of the commingled assets which are part of
the Trust; and
(i) To do all acts whether or not expressly authorized which the
Trustee may deem necessary or proper for the protection of the property
held hereunder.
3.6.4 Segregated Funds. Unless otherwise determined by the
Trustee to be prudent, the Trustee shall invest and reinvest each Segregated
Fund without distinction between income or principal in one or more
appropriately identified interest-bearing accounts or certificates of deposit
in the name of the Trustee and subject solely to the dominion of the Trustee
in a banking institution (which may or may not be the Trustee, if the Trustee
is a banking institution) or savings and loan association.
Any such account or certificate shall bear interest at a rate not less than
the rate of interest currently being paid upon regular savings accounts by
that banking corporation principally situated in the community in which the
Employer has its principal business location, which has capital, surplus and
undivided profits exceeding those of any other bank so situated. Such accounts
shall be held for the benefit of the Participant for whom such Segregated Fund
is established in accordance with the terms of the Plan and the Segregated
Account of the Participant shall be credited with any interest earned in
connection with such accounts. If the Trustee determines that an alternative
investment is appropriate, the Trustee may invest the Segregated Fund in any
manner permitted with respect to the Trust Fund and such Segregated Fund shall
be credited with the net income or loss or net appreciation or depreciation in
value of such investments. No Segregated Fund shall share in any Employer
contributions or forfeitures, any net income or loss from, or net appreciation
or depreciation in value of, any investments of the Trust Fund, or any
allocation for which provision is made in this Plan which is not specifically
attributable to the Segregated Fund.
3.6.5 Investment Control Option. A Participant is permitted to
direct All Accounts under the Plan. The Participant may trade daily all
accounts under the plan except the Lakeland Financial Corporation stock. An
employee may make an irrevocable election to buy or sell the stock at any
time. All requests on or before the tenth day of any month will be filled
using "best effort" on or after the fifteenth of the month.
59
ARTICLE VII
LOANS
3.7.1 Authorization. Loans to Participants or Beneficiaries
are not permitted under this plan.
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ARTICLE VIII
BENEFICIARIES
3.8.1 Designation of Beneficiaries. Each Participant shall have
the right to designate a Beneficiary or Beneficiaries and contingent or
successive Beneficiaries to receive any benefits provided by this Plan which
become payable upon the Participant's death. The Beneficiaries may be changed
at any time or times by the filing of a new designation with the Plan
Administrator, and the most recent designation shall govern. Notwithstanding
the foregoing and subject to the provisions of Section 2.5.2, the designated
Beneficiary shall be the surviving spouse of the Participant, unless such
surviving spouse consents in writing to an alternate designation and the terms
of such consent acknowledge the effect of such alternate designation and the
consent is witnessed by a representative of the Plan or by a notary public. A
spouse may not revoke the consent without the approval of the Participant. The
designation of a Beneficiary other than the spouse of the Participant or a
form of benefits with the consent of such spouse may not be changed without
the consent of such spouse and any consent must acknowledge the specific
non-spouse Beneficiary, including any class of Beneficiaries or any contingent
Beneficiaries.
3.8.2 Absence or Death of Beneficiaries. Except with respect to
the process of life insurance payable upon the death of the Participant, if a
Participant dies without having a beneficiary designation then in force, or if
all of the Beneficiaries designated by a Participant predecease him, his
Beneficiary shall be his surviving spouse, or if none, his surviving children,
equally, or if none, such other heirs, or the executor or administrator of his
estate, as the Plan Administrator shall select.
If a Participant dies survived by Beneficiaries designated by him and if all
such surviving Beneficiaries thereafter dies before complete distribution of
such deceased Participant's interest, the estate of the last of such
designated Beneficiaries to survive shall be deemed to be the Beneficiary of
the undistributed portion of such interest.
61
ARTICLE IX
CLAIMS
3.9.1 Claim Procedure. Any Participant or Beneficiary who is
entitled to a payment of a benefit for which provision is made in this Plan
shall file a written claim with the Plan Administrator on such forms as shall
be furnished to him by the Plan Administrator and shall furnish such evidence
of entitlement to benefits as the Plan Administrator may reasonably require.
The Plan Administrator shall notify the Participant or Beneficiary in writing
as to the amount of benefit to which he is entitled, the duration of such
benefit, the time the benefit is to commence and other pertinent information
concerning his benefit. If a claim for benefit is denied by the Plan
Administrator, in whole or in part, the Plan Administrator shall provide
adequate notice in writing to the Participant or Beneficiary whose claim for
benefit has been denied within ninety (90) days after receipt of the claim
unless special circumstances require an extension of time for processing the
claim. If such an extension of time for processing is required, written notice
indicating the special circumstances and the date by which a final decision is
expected to be rendered shall be furnished to the Participant or Beneficiary.
In no event shall the period of extension exceed one hundred eighty (180) days
after receipt of the claim. The notice of denial of the claim shall set forth
(a) the specific reason or reasons for the denial; (b) specific reference to
pertinent Plan provisions on which the denial is based; (c) a description of
any additional material or information necessary for the claimant to perfect
the claim and an explanation of why such material or information is necessary;
and (d) a statement that any appeal of the denial must be made by giving to
the Plan Administrator, within sixty (60) days after receipt of the notice of
the denial, written notice of such appeal, such notice to include a full
description of the pertinent issues and basis of the claim. The Participant or
Beneficiary (or his duly authorized representative) may review pertinent
documents and submit issues and comments in writing to the Plan Administrator.
If the Participant or Beneficiary fails to appeal such action to the Plan
Administrator in writing within the prescribed period of time, the Plan
Administrator's adverse determination shall be final, binding and conclusive.
3.9.2 Appeal. If the Plan Administrator receives from a
Participant or a Beneficiary, within the prescribed period of time, a notice
of an appeal of the denial of a claim for benefit, such notice and all
relevant materials shall immediately be submitted to the Employer. The
Employer may hold a hearing or otherwise ascertain such facts as it deems
necessary and shall render a decision which shall be binding upon both
parties. The decision of the Employer shall be made within sixty (60) days
after the receipt by the Plan Administrator of the notice of appeal, unless
special circumstances require an extension of time for processing, in which
case a decision of the Employer shall be rendered as soon as possible but not
later than one hundred twenty (120) days after receipt of the request for
review. If such an extension of time is required, written notice of the
extension shall be furnished to the claimant prior to the commencement of the
extension. The decision of the Employer shall be in writing, shall include
specific reasons for the decision, written in a manner calculated to be
understood by the claimant, as well as specific references to the pertinent
Plan provisions on which the decision is based and shall be promptly furnished
to the claimant.
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ARTICLE X
AMENDMENT AND TERMINATION
3.10.1 Right to Amend. The Employer may at any time or times
amend the Plan and Trust, in whole or in part. The Employer specifically
reserves the right to amend the Plan retroactively.
3.10.2 Manner of Amending. Each amendment of this Plan shall be
made by delivery to the Trustee of a copy of the resolution of the Employer
which sets forth such amendment.
3.10.3 Limitations On Amendments. No amendment shall be made
to this Plan which shall:
(a) Directly or indirectly operate to give the Employer any
interest whatsoever in the assets of the Trust or to deprive any
Participant or Beneficiary of his vested and nonforfeitable interest in
the assets of the Trust as then constituted, or cause any part of the
income or corpus of the Trust to be used for, or diverted to purposes
other than the exclusive benefit of Employees or their beneficiaries;
(b) Increase the duties or liabilities of the Trustee without
the Trustee's prior written consent;
(c) Change the vesting schedule under the Plan if the
nonforfeitable percentage of the accrued benefit derived from Employer
contributions (determined as of the later of the date such amendment is
adopted or the date such amendment becomes effective) of any
Participant is less than such nonforfeitable percentage computed
without regard to such amendment; or
(d) Reduce the accrued benefit of a Participant within the
meaning of Section 411(d)(6) of the Code, except to the extent
permitted under Section 412(c)(8) of the Code. An amendment which has
the effect of decreasing a Participant's account balance or eliminating
an optional form of benefit with respect to benefits attributable to
service before the amendment shall be treated as reducing an accrued
benefit.
If a Plan amendment changes the vesting schedule or the Plan is amended
in any way that directly or indirectly affects the computation of the
Participant's nonforfeitable percentage, each Participant who has
completed three (3) or, in the case of Participants who do not have at
least one (1) Hour of Service in any Plan Year beginning after 1988,
five (5) or more Years of Service may elect within a reasonable period
after the adoption of such amendment to have his nonforfeitable
percentage computed without regard to such amendment or change. The
period during which the election may be made shall commence with the
date the amendment is adopted or deemed to be made and shall end on the
latest of sixty (60) days after:
(i) the amendment is adopted;
(ii) the amendment becomes effective; or
(iii) the Participant is issued written notice of the
amendment by the Employer or Plan Administrator.
3.10.4 Voluntary Termination. The Employer may terminate the
63
Plan at any time by delivering to the Trustee an instrument in writing which
designates such termination. Following termination of the Plan, the Trust will
continue until the Distributable Benefit of each Participant has been
distributed.
3.10.5 Involuntary Termination. The Plan shall terminate if (a)
the Employer is dissolved or adjudicated bankrupt or insolvent in appropriate
proceedings, or if a general assignment is made by the Employer for the
benefit of creditors, or (b) the Employer loses its identity by consolidation
or merger into one or more corporations or organizations, unless within ninety
(90) days after such consolidation or merger, such corporations or
organizations elect to continue the Plan.
3.10.6 Withdrawal By Employer. The Employer may withdraw from
participation under the Plan without terminating the Trust upon making a
transfer of the Trust assets to another Plan which shall be deemed to
constitute an amendment in its entirety of the Trust.
3.10.7 Powers Pending Final Distribution. Until final
distribution of the assets of the Trust, the Plan Administrator and Trustee
shall continue to have all the powers provided under this Plan as are
necessary for the orderly administration, liquidation and distribution of the
assets of the Trust.
3.10.8 Delegation. Each Affiliate Employer expressly delegates
authority to the Employer the right to amend any part of the Plan on its
behalf. The Employer shall submit a copy of the amendment to each Affiliate
Employer who has adopted the Plan. An Affiliate Employer may revoke the
authority of the Employer to amend the Plan on its behalf by written notice to
the Employer of such revocation.
64
ARTICLE XI
PORTABILITY
3.11.1 Continuance by Successor. In the event of the
dissolution, consolidation or merger of the Employer, or the sale by the
Employer of its assets, the resulting successor person or persons, firm or
corporations may continue this Plan by (a) adopting the Plan by appropriate
resolution; (b) appointing a new Trustee as though the Trustee (including all
members of a group of individuals acting as Trustee) had resigned; and (c)
executing a proper agreement with the new Trustee. In such event, each
Participant in this Plan shall have an interest in the Plan after the
dissolution, consolidation, merger, or sale of assets, at least equal to the
interest which he had in the Plan immediately before the dissolution,
consolidation, merger or sale of assets. Any Participants who do not accept a
position with such successor within a reasonable time shall be deemed to be
terminated. If, within ninety (90) days from the effective date of such
dissolution, consolidation, merger, or sale of assets, such successor does not
adopt this Plan, as provided herein, the Plan shall automatically be
terminated and deemed to be an involuntary termination.
3.11.2 Merger With Other Plan. In the event of the merger or
consolidation with, or transfer of assets or liabilities to, any other
deferred compensation plan and trust, each Participant shall have an interest
in such other plan which is equal to or greater than the interest which he had
in this Plan immediately before such merger, consolidation or transfer, and if
such other plan thereafter terminates, each Participant shall be entitled to a
Distributable Benefit which is equal to or greater than the Distributable
Benefit to which he would have been entitled immediately before such merger,
consolidation or transfer if this Plan had then been terminated.
3.11.3 Transfer From Other Plans. The Employer may cause all or
any of the assets held in connection with any other plan or trust which is
maintained by the Employer for the benefit of its employees and satisfies the
applicable requirements of the Code relating to qualified plans and trusts to
be transferred to the Trustee, whether such transfer is made pursuant to a
merger or consolidation of this Plan with such other plan or trust or for any
other allowable purpose.
In addition, the Employer, may permit rollover to the Trustee of assets held
for the benefit of an Employee in a conduit Individual Retirement Account, a
terminated plan of the Employer, or any other plan or trust which is
maintained by some other employer for the benefit of its employees and
satisfies the applicable requirements of the Code relating to qualified plans
and trusts even if the employee has not satisfied the conditions for
participation in the Plan. Any such assets so transferred to the Trustee shall
be accompanied by written instructions from the employer, or the trustee,
custodian or individual holding such assets, setting forth the name of each
Employee for whose benefit such assets have been transferred and showing
separately the respective contributions by the employer and by the Employee
and the current value of the assets attributable thereto. Upon receipt by the
Trustee of such assets, the Trustee shall place such assets in a Segregated
Fund for the Participant and the Employee shall be deemed to be one hundred
percent (100%) vested and have a nonforfeitable interest in any such assets.
Notwithstanding any provisions herein to the contrary, unless the Plan
provides a life annuity distribution option or the Participant and his spouse
have signed a written waiver of their rights to the annuity options in a form
which satisfies the waiver requirements of Section 417 of the Code, the Plan
shall not be a direct or indirect transferee of a defined benefit pension
plan, money purchase pension plan, target benefit pension plan, stock bonus or
profit sharing plan which is subject to the survivor annuity requirements of
Section 401(a)(11) and Section 417 of the Code.
65
3.11.4 Transfer to Other Plans. The Trustee, upon written
direction by the Employer, shall transfer some or all of the assets held under
the Trust to another plan or trust of the Employer meeting the requirements of
the Code relating to qualified plans and trusts, whether such transfer is made
pursuant to a merger or consolidation of this Plan with such other plan or
trust or for any other allowable purpose. In addition, upon the termination of
employment of any Participant and receipt by the Plan Administrator of a
request in writing, the Participant may request that any distribution from the
Trust to which he is entitled shall be transferred to an Individual Retirement
Account, an Individual Retirement Annuity, or any other plan or trust which is
maintained by some other employer for the benefit of its employees and
satisfies the applicable requirements of the Code relating to qualified plans
and trusts. Upon receipt of any such written request, the Plan Administrator
shall cause the Trustee to transfer the assets so directed and, as
appropriate, shall direct the Insurer to transfer to the new trustee any
applicable insurance policies issued by it.
66
ARTICLE XII
MISCELLANEOUS
3.12.1 No Reversion to Employer. Except as specifically provided
in the Plan, no part of the corpus or income of the Trust shall revert to the
Employer or be used for, or diverted to purposes other than for the exclusive
benefit of Participants and their Beneficiaries.
3.12.2 Employer Actions. Any action by the Employer pursuant to
the provisions of the Plan shall be evidenced by appropriate resolution or by
written instrument executed by any person authorized by the Employer to take
such action.
3.12.3 Execution of Receipts and Releases. Any payment to any
person eligible to receive benefits under this Plan, in accordance with the
provisions of the Plan, shall, to the extent thereof, be in full satisfaction
of all claims hereunder. The Plan Administrator may require such person, as a
condition precedent to such payment, to execute a receipt and release
therefore in such form as he shall determine.
3.12.4 Rights of Participants Limited. Neither the creation of
this Plan and Trust nor anything contained in this Plan shall be construed as
giving any Participant, Beneficiary or Employee any equity or other interest
in the assets, business or affairs of the Employer, or the right to complain
about any action taken by or about any policy adopted or pursued by, the
Employer, or as giving any Employee the right to be retained in the service of
the Employer; and all Employees shall remain subject to discharge to the same
extent as if the Plan had never been executed. Prior to the time that
distributions are made in conformity with the provisions of the Plan, neither
the Participants, nor their spouses, Beneficiaries, heirs-at-law, or legal
representatives shall receive or be entitled to receive cash or any other
thing of current exchangeable value, from either the Employer or the Trustee
as a result of the Plan or the Trust.
3.12.5 Persons Dealing With Trustee Protected. No person dealing
with the Trustee shall be required or entitled to see to the application of
any money paid or property delivered to the Trustee, or determine whether or
not the Trustee is acting pursuant to the authorities granted to the Trustee
hereunder or to authorizations or directions herein required. The certificate
of the Trustee that the Trustee is acting in accordance with the Plan shall
protect any person relying thereon.
3.12.6 Protection of the Insurer. An Insurer shall not be
responsible for the validity of the Plan or Trust and shall have no
responsibility for action taken or not taken by the Trustee, for determining
the propriety of accepting premium payments or other contributions, for making
payments in accordance with the direction of the Trustee, or for the
application of such payments. The Insurer shall be fully protected in dealing
with any representative of the Employer or any one of a group of individuals
acting as Trustee. Until written notice of a change of Trustee has been
received by an Insurer at its home office, the Insurer shall be fully
protected in dealing with any party acting as Trustee according to the latest
information received by the Insurer at its home office.
3.12.7 No Responsibility for Act of Insurer. Neither the
Employer, the Plan Administrator nor the Trustee shall be responsible for any
of the following, nor shall they be liable for instituting action in
connection with:
67
(a) The validity of policies or policy provisions;
(b) Failure or refusal by the Insurer to provide benefits under
a policy;
(c) An act by a person which may render a policy invalid or
unenforceable; or
(d) Inability to perform or delay in performing an act, which
inability or delay is occasioned by a provision of a policy or a
restriction imposed by the Insurer.
3.12.8 Inalienability. The right of any Participant or his
Beneficiary in any distribution hereunder or to any separate Account shall not
be subject to alienation, assignment or transfer, voluntarily or
involuntarily, by operation of law or otherwise, except as may be expressly
permitted herein. No Participant shall assign, transfer, or dispose of such
right nor shall any such right be subjected to attachment, execution,
garnishment, sequestration, or other legal, equitable, or other process. The
preceding shall also apply to the creation, assignment, or recognition of a
right to any benefit payable with respect to a Participant pursuant to a
domestic relations order, unless such order is determined to be a qualified
domestic relations order, as defined in Section 414(p) of the Code, or any
domestic relations order entered before January 1, 1985.
In the event a Participant's benefits are attached by order of any court, the
Plan Administrator may bring an action for a declaratory judgment in a court
of competent jurisdiction to determine the proper recipient of the benefits to
be paid by the Plan. During the pendency of the action, the Plan Administrator
shall cause any benefits payable to be paid to the court for distribution by
the court as it considers appropriate.
3.12.9 Domestic Relations Orders. The Plan Administrator shall
adhere to the terms of any judgment, decree or order (including approval of a
property settlement agreement) which relates to the provision of child
support, alimony payments, or marital property rights to a spouse, former
spouse, child or other dependent of a Participant and is made pursuant to a
state domestic relations law (including a community property law) and which
creates or recognizes the existence of an alternate payee's right to, or
assigns to an alternate payee the right to, receive all or a portion of the
benefits payable with respect to a Participant.
Any such domestic relations order must clearly specify the name and last known
mailing address of the Participant and the name and mailing address of each
alternate payee covered by the order, the amount or percentage of the
Participant's benefit to be paid by the Plan to each such alternate payee, or
the manner in which such amount or percentage is to be determined, the number
of payments or period to which such order applies, and each plan to which such
order applies.
Any such domestic relations order shall not require the Plan to provide any
type or form of benefit, or any option not otherwise provided under the Plan,
to provide increased benefits (determined on the basis of actuarial value) or
the payment of benefits to an alternate payee which are required to be paid to
another alternate payee under another order previously determined to be a
qualified domestic relations order. Notwithstanding the foregoing sentence, a
domestic relations order may require the payment of benefits to an alternate
payee before the Participant has separated from service on or after the date
on which the Participant attains or would have attained the earliest
retirement age under the Plan as if the Participant had retired on the date on
which such payment is to begin under such order (but taking into account only
the present value of the benefits actually accrued and not taking into account
the present value of any Employer subsidy for early retirement) and in any
form in which such benefits may be paid under the Plan to the Participant
68
(other than the form of a joint and survivor annuity with respect to the
alternate payee and his or her subsequent spouse). The interest rate
assumption used in determining the present value shall be five (5%) percent.
For these purposes, the earliest retirement age under the Plan means the
earlier of: (a) the date on which the Participant is entitled to a
distribution under the Plan, or (b) the later of the date the Participant
attains age 50, or the earliest date on which the Participant could begin
receiving benefits under the Plan if the Participant separated from service.
Distributions may be made to an alternate payee even though the Participant
may not receive a distribution because he continues to be employed by the
Employer.
To the extent provided in the qualified domestic relations order, the former
spouse of a Participant shall be treated as a surviving spouse of such
Participant for purposes of Sections 401(a)(11) and 417 of the Code (and any
spouse of the Participant shall not be treated as a spouse of the Participant
for such purposes) and if married for at least one (1) year, the surviving
former spouse shall be treated as meeting the requirements of Section 417(d)
of the Code.
The Plan Administrator shall promptly notify the Participant and each
alternate payee of the receipt of a domestic relations order by the Plan and
the Plan's procedures for determining the qualified status of domestic
relations orders. Within a reasonable period after receipt of a domestic
relations order, the Plan Administrator shall determine whether such order is
a qualified domestic relations order and shall notify the Participant and each
alternate payee of such determination. If the Participant or any affected
alternate payee disagrees with the determinations of the Plan Administrator,
the disagreeing party shall be treated as a claimant and the claims procedure
of the Plan shall be followed. The Plan Administrator may bring an action for
a declaratory judgment in a court of competent jurisdiction to determine the
proper recipient of the benefits to be paid by the Plan.
During any period in which the issue of whether a domestic relations order is
a qualified domestic relations order is being determined (by the Plan
Administrator, by a court of competent jurisdiction or otherwise), the Plan
Administrator shall separately account for the amounts which would have been
payable to the alternate payee during such period if the order had been
determined to be a qualified domestic relations order. If, within the eighteen
(18) month period beginning on the date on which the first payment would be
required to be made under the domestic relations order, the order (or
modification thereof) is determined to be a qualified domestic relations
order, the Plan Administrator shall pay the segregated amounts, including any
interest thereon, to the person or persons entitled thereto. If within such
eighteen (18) month period it is determined that the order is not a qualified
domestic relations order or the issue as to whether such order is a qualified
domestic relations order is not resolved, then the Plan Administrator shall
pay the segregated amounts, including any interest thereon, to the person or
persons who would have been entitled to such amounts if there had been no
order. Any determination that an order is a qualified domestic relations order
which is made after the close of the eighteen (18) month period shall be
applied prospectively only.
3.12.10 Authorization to Withhold Taxes. The Trustee is
authorized in accordance with applicable law to withhold from distribution to
any payee such sums as may be necessary to cover federal and state taxes which
may be due with respect to such distributions.
3.12.11 Missing Persons. If the Trustee mails by registered or
certified mail, postage prepaid, to the last known address of a Participant or
Beneficiary, a notification that the Participant or Beneficiary is entitled to
a distribution and if (a) the notification is returned by the post office
because the addressee cannot be located at such address and if neither the
Employer, the Plan Administrator nor the Trustee shall have any knowledge of
69
the whereabouts of such Participant or Beneficiary within three (3) years from
the date such notification was mailed, or (b) within three (3) years after
such notification was mailed to such Participant or Beneficiary, he does not
respond thereto by informing the Trustee of his whereabouts, the ultimate
disposition of the then undistributed balance of the Distributable Benefit of
such Participant or Beneficiary shall be determined in accordance with the
then applicable Federal laws, rules and regulations. If any portion of the
Distributable Benefit is forfeited because the Participant or Beneficiary
cannot be found, such portion shall be reinstated if a claim is made by the
Participant or Beneficiary.
3.12.12 Notices. Any notice or direction to be given in
accordance with the Plan shall be deemed to have been effectively given if
hand delivered to the recipient or sent by certified mail, return receipt
requested, to the recipient at the recipient's last known address. At any time
that a group of individuals is acting as Trustee, notice to the Trustee may be
given by giving notice to any one or more of such individuals.
3.12.13 Governing Law. The provisions of this Plan shall be
construed, administered and enforced in accordance with the provisions of the
Act and, to the extent applicable, the laws of the state in which the Employer
has its principal place of business. All contributions to the Trust shall be
deemed to take place in such state.
3.12.14 Severability of Provisions. In the event that any
provision of this Plan shall be held to be illegal, invalid or unenforceable
for any reason, said illegality, invalidity or unenforceability shall not
affect the remaining provisions, but shall be fully severable and the Plan
shall be construed and enforced as if said illegal, invalid or unenforceable
provisions had never been inserted herein.
3.12.15 Gender and Number. Whenever appropriate, words used in
the singular shall include the plural, and the masculine gender shall include
the feminine gender.
3.12.16 Binding Effect. The Plan, and all actions and decisions
hereunder, shall be binding upon the heirs, executors, administrators,
successors and assigns of any and all parties hereto and Participants, present
and future.
3.12.17 Qualification Under Internal Revenue Laws. The Employer
intends that the Trust qualify under the applicable provisions of the Code.
Until advised to the contrary, the Trustee may assume that the Trust is so
qualified and is entitled to tax exemption under the Code.
70
ARTICLE XIII
EXECUTION OF AGREEMENT
3.13.1 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be considered an original, and no
other counterparts need be produced.
3.13.2 Acceptance by Trustee. The Trustee, by joining in the
execution of this Agreement, hereby signifies the Trustee's acceptance
thereof.
3.13.3 Execution. To record the adoption of this Plan the
Employer and each Affiliate Employer, if any, has caused this Agreement to be
executed by its duly qualified officers and the Trustee has executed this
Agreement, as of the day and year first above written.
Lakeland Financial Corporation
Employer: /s/ Michael L. Kubacki
Trustee: /s/ Patricia Culp, Trustee
Lake City Bank Trust Department
Patricia Culp, Vice President and Trust Officer
71
MODEL SECTION 401(a)(31) AMENDMENT TO
LAKELAND FINANCIAL CORPRATION 401(K) PLAN
WHEREAS, Lakeland Financial Corporation (the "Employer")
currently maintains Lakeland Financial
Corporation 401(k) Plan , (the "Plan"); and,
WHEREAS, the Unemployment Compensation Amendments of 1992 added
section 401(a)(31) to the Internal Revenue Code to require a plan to permit
the direct rollover of eligible rollover distributions made after December 31,
1992; and,
WHEREAS, the Internal Revenue Service issued Revenue Procedure
93-12 providing a simplified method to amend plans using a Model Section
401(a)(31) Amendment, as set forth below.
THEREFORE, the Plan is hereby amended effective January 1, 1993
to incorporate the Model Section 401(a)(31) Amendment as follows:
Section 1. This Article applies to distributions made on
or after January 1, 1993. Notwithstanding any provision of the
plan to the contrary that would otherwise limit a distributee's
election under this Article, a distribute may elect, at the time
and in the manner prescribed by the plan administrator, to have
any portion of an eligible rollover distribution paid directly
to an eligible retirement plan specified by the distributee in a
direct rollover.
Section 2. Definitions.
Section 2.1. Eligible rollover distribution: An eligible
rollover distribution is any distribution of all or any portion
of the balance to the credit of the distributee, except that an
eligible rollover distribution does not include: any
distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for
the life (or life expectancy) of the distributee or the joint
lives (or joint life expectancies) of the distributee and the
distributee's designated beneficiary, or for a specified period
of ten years or more; any distribution to the extent such
distribution is required under section 401(a)(9) of the Code;
and the portion of any distribution that is not ineludible in
gross income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities).
Section 2.2. Eligible retirement plan: An eligible
retirement plan is an individual retirement account described in
section 408(a) of the Code, an individual retirement annuity
described in section 408(b) of the Code, an annuity plan
described in section 403(a) of the Code, or a qualified trust
described in section 401(a) of the Code, 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.
Section 2.3. Distributee: A distributee includes an
employee or former employee. In addition, the employee's or
former employee's surviving spouse and the employee's or the
former employee's spouse or former spouse who is the alternate
payee under a qualified domestic relations order, as defined in
section 414(p) of the Code, are distributees with regard to the
interest of the spouse or former spouse.
Section 2.4. Direct rollover: A direct rollover is a
payment by the plan to the eligible retirement plan specified by
the distributee.
72
IN WITNESS WHEREOF, the undersigned has executed this Model
Section 401(a)(31) Amendment to the Plan on this 13th day of October, 2000.
For the Employer:
By:/s/ Michael L. Kubacki
WITNESS: /s/ Jill A. DeBatty
73
MODEL SECTION 401(a)(17) AMENDMENT TO
LAKELAND FINANCIAL CORPRATION 401(K) PLAN
WHEREAS, Lakeland Financial Corporation (the "Employer")
currently maintains Lakeland Financial
Corporation 401(k) Plan , (the "Plan"); and,
WHEREAS, the Omnibus Budget Reconciliation Act of 1993 amended
section 401(a)(17) of the Internal Revenue Code to limit compensation taken
into account under a plan in any year to $150,000, as adjusted for increases
in the cost of living; and,
WHEREAS, the Internal Revenue Service issued Revenue Procedure
94-13 providing a simplified method to amend plans using a Model Section
401(a)(17) Amendment, as set forth below.
THEREFORE, the Plan is hereby amended effective as of the first
day of the Plan Year beginning on or after January 1, 1994, to incorporate the
Model Section 401(a)(17) Amendment as follows:
SECTION 401(a)(17) LIMITATION
In addition to other applicable limitations set forth
in the plan, and notwithstanding any other provision of the
plan to contrary, for plan years beginning on or after
January 1, 1994, the annual compensation of each employee
taken into account under the plan shall not exceed the OBRA
'93 annual compensation limit. The OBRA '93 annual
compensation limit is $150,000, as adjusted by the
Commissioner for increases in the cost of living in
accordance with section 401(a)(17)(B) of the Internal
Revenue Code. The cost-of-living adjustment in effect for a
calendar year applies to any period, not exceeding 12
months, over which compensation is determined
(determination period) beginning in such calendar year. If
a determination period consist of fewer than 12 months, the
OBRA '93 annual compensation limit will be multiplied by a
fraction, the numerator of which is the number of months in
the determination period, and the denominator of which is
12.
For plan years beginning on or after January 1, 1994,
any reference in this plan to the limitation under section
401(a)(17) of the Code shall mean the OBRA '93 annual
compensation limit set forth in the provision.
If compensation for any prior determination period is
taken into account in determining an employee's benefits
accruing in the current plan year, the compensation for
that prior determination period is subject to the OBRA '93
annual compensation limit in effect for that prior
determination period. For this purpose, for determination
periods beginning before the first day of the first plan
year beginning on or after January 1, 1994, the OBRA '93
annual compensation limit is $150,000.
IN WITNESS WHEREOF, the undersigned has executed this Model
Section 401(a)(17) Amendment to the Plan on this 13th day of October, 2000.
For the Employer:
By:/s/ Michael L. Kubacki
WITNESS:/s/ Jill A. DeBatty
74
REVENUE PROCEDURE 93-47 AMENDMENT TO
LAKELAND FINANCIAL CORPRATION 401(K) PLAN
WHEREAS, Lakeland Financial Corporation (the "Employer")
currently maintains Lakeland Financial
Corporation 401(k) Plan , (the "Plan"); and,
WHEREAS, the Unemployment Compensation Amendments of 1992 added
section 401(a)(31) to the Internal Revenue Code to require a plan to permit
the direct rollover of eligible rollover distributions made after December 31,
1992; and,
WHEREAS, the Internal Revenue Service subsequently issued Notice
93-26 modifying the 30-day notice requirement under section 1.411(a)-11(c);
and,
WHEREAS, the Internal Revenue Service issued Revenue Procedure
93-47 providing a simplified method to amend plans using a Model Amendment, as
set forth below.
THEREFORE, the Plan is hereby amended effective January 1, 1993
to incorporate the Revenue Procedure 93-47 Model Amendment as follows:
The following language, applicable to distributions made on or after January
1, 1993, is hereby inserted following the final sentence of section 2.5.2(e)
of LAKELAND FINANCIAL CORPRATION 401(K) PLAN , Plan and Trust.
"If a distribution is one to which sections 401(a)(11) and 417
of the Internal Revenue Code do not apply, such distribution may
commence less than 30 days after the notice required under section
1.411(a)-11(c) of the Income Tax Regulations is given, provided
that:
(1) the plan administrator clearly informs the participant that
the participant has a right to a period of at least 30 days after
receiving the notice to consider the decision of whether or not to
elect a distribution (and if applicable, a particular distribution
option), and
(2) the participant, after receiving the notice, affirmatively
elects a distribution."
IN WITNESS WHEREOF, the undersigned has executed this Model
Amendment to the Plan on this 13th day of October, 2000.
For the Employer:
By:/s/ Michael L. Kubacki
WITNESS: /s/ Jill A. DeBatty
75
As filed with the Securities and Exchange Commission on October 23, 2000
Registration No. 33-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
------------------
LAKELAND FINANCIAL CORPORATION
(Exact name of Registrant as specified in its charter)
Indiana 35-1559596
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
------------------
202 East Center Street, P.O. Box 1387
Warsaw, Indiana 46581-1387
(Address of principal executive offices)
------------------
Lakeland Financial Corporation 401(k) Plan]
(Full title of the plan)
------------------
Michael L. Kubacki
President and Chief Executive Officer
Lakeland Financial Corporation
202 East Center Street, P.O. Box 1387
Warsaw, Indiana 46581-1387
(Name and address of agent for service)
(219) 267-6144
(Telephone number, including area code, of agent for service)
With copies to:
John E. Freechack, Esq.
Robert M. Fleetwood, Esq.
Barack Ferrazzano Kirschbaum Perlman & Nagelberg
333 West Wacker Drive, Suite 2700
Chicago, Illinois 60606
(312) 984-3100
CALCULATION OF REGISTRATION FEE
Proposed Maximum Proposed Maximum
Title of Securities Amount to be Offering Price Aggregate Amount of
to be Registered Registered(1)(2) per Share(3) Offering Price(2)(3) Registration Fee(3)
- -------------------------- ---------------- ----------------- -------------------- -------------------
Common Stock, No Par Value 1,000,000 shares $ 12.875 $ 12,875,000 $ 3,399
(1) Pursuant to Rule 416(c) under the Securities Act of 1933, as amended (the
"Securities Act"), this Registration Statement also covers an
indeterminate amount of interests to be offered or sold pursuant to the
[Name of Plan].
(2) Pursuant to Rule 416(a) under the Securities Act, this Registration
Statement also registers such indeterminate number of additional shares
as may be issuable under the Plan in connection with share splits, share
dividends or similar transactions.
(3) Estimated pursuant to Rule 457(h) under the Securities Act, solely for
the purpose of calculating the registration fee, based on the average of
the high and low prices for the Registrant's common stock as reported on
the Nasdaq National Market on October 19, 2000
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
The document(s) containing the information specified in Part I of
Form S-8 will be sent or given to participants in the [Name of Plan] (the
"Plan") as specified by Rule 428(b)(1) promulgated by the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Securities Act").
Such document(s) are not being filed with the Commission, but
constitute (along with the documents incorporated by reference into the
Registration Statement pursuant to Item 3 of Part II hereof) a prospectus that
meets the requirements of Section 10(a) of the Securities Act.
I-1
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 3. Incorporation of Certain Documents by Reference.
-----------------------------------------------
The following documents previously or concurrently filed by Lakeland
Financial Corporation (the "Company") with the Commission are hereby
incorporated by reference into this Registration Statement:
(a) The Company's Annual Report on Form 10-K for the year ended
December 31, 1999;
(b) All other reports filed pursuant to Section 13(a) or 15(d)
of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), since the end of the last fiscal year; and
(c) The description of the Company's common stock, no par value,
contained in the Company's Registration Statement on Form
S-14 and all amendments or reports filed for the purpose of
updating such description.
All documents subsequently filed by the Company or the Plan with the
Commission pursuant to Sections 13(a), 13(c), 14, or 15(d) of the Exchange
Act, prior to the filing of a post-effective amendment which indicates that
all securities offered hereby have been sold or which deregisters all
securities then remaining unsold, shall be deemed incorporated by reference
into this Registration Statement and to be a part thereof from the date of the
filing of such documents. Any statement contained in the documents
incorporated, or deemed to be incorporated, by reference herein or therein
shall be deemed to be modified or superseded for purposes of this Registration
Statement and the prospectus which is a part hereof (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.
Item 4. Description of Securities.
Not Applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
In accordance with the Indiana Business Corporation Law (Indiana Code
23-1-37-1 et seq.), Section 9 of the Company's Restated Articles of
Incorporation provide as follows:
SECTION 9. INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES.
Every person who is or was a director, officer or employee of this Corporation
or of any other corporation for which he is or was serving in any capacity at
the request of this Corporation shall be indemnified by this Corporation
against any and all liability and expense that may be incurred by him in
connection with or resulting from or arising out of any claim, action, suit or
proceeding, provided that such person is wholly successful with respect
thereto or acted in good faith in what he reasonably believed to be in or not
opposed to the best interests of this Corporation or such other corporation,
as the case may be, and, in addition, in any criminal action or proceeding in
which he had no reasonable cause to believe that his conduct was unlawful. As
used herein, "claim, action, suit or proceeding" shall include any claim,
action, suit or proceeding (whether brought by or in the right of this
Corporation or such other corporation or otherwise), civil, criminal,
administrative or investigative, whether actual or threatened or in connection
with an appeal relating thereto, in which a director, officer or employee of
II-1
this Corporation may become involved, as a party or otherwise, (i) by reason
of his being or having been a director, officer or employee of this
Corporation or such other corporation or arising out of his status as such or
(ii) by reason of any past or future action taken or not taken by him in any
such capacity, whether or not he continues to be such at the time such
liability or expense is incurred.
The terms "liability" and "expense" shall include, but shall not be
limited to, attorneys' fees and disbursements, amounts of judgments, fines or
penalties, and amounts paid in settlement by or on behalf of a director,
officer or employee, but shall not in any event include any liability or
expenses on account of profits realized by him in the purchase or sale of
securities of the Corporation in violation of the law. The termination of any
claim, action, suit or proceeding, by judgment, settlement (whether with or
without court approval) or conviction or upon a plea of guilty or of nolo
contendere, or its equivalent, shall not create a presumption that a director,
officer or employee did not meet the standards of conduct as forth in this
paragraph.
Any such director, officer or employee who has been wholly successful
with respect to any such claim, action, suit or proceeding shall be entitled
to indemnification as a matter of right. Except as provided in the preceding
sentence, any indemnification hereunder shall be made only if (i) the Board of
Directors acting by a quorum consisting of Directors who are not parties to or
who have been wholly successful with respect to such claim, action, suit or
proceeding shall find that the director, officer or employee has met the
standards of conduct set forth in the preceding paragraph; or (ii) independent
legal counsel shall deliver to the Corporation their written opinion that such
director, officer or employee has met such standards of conduct.
If several claims, issues or matters of action are involved, any such
person may be entitled to indemnification as to some matters even though he is
not entitled as to other matters.
The Corporation may advance expenses to or, where appropriate, may at
its expense undertake the defense of any such director, officer or employee
upon receipt of an undertaking, in form and substance satisfactory to the
Board of Directors, by or on behalf of such person to repay such expenses if
it should ultimately be determined that he is not entitled to indemnification
hereunder.
The provisions of this Section shall be applicable to claims,
actions, suits or proceedings made or commenced after the adoption hereof,
whether arising from acts or omissions to act during, before or after the
adoption hereof.
The rights of indemnification provided hereunder shall be in addition
to any rights to which any person concerned may otherwise be entitled by
contract or as a matter of law and shall inure to the benefit of the heirs,
executors and administrators of any such person.
The Corporation may 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 against any liability asserted
against him and incurred by him in any capacity or arising out of his status
as such, whether or not the Corporation would have the power to indemnify him
against such liability under the provisions of this Section or otherwise.
Further, Article VII of the Company's Restated Bylaws states the
following:
INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES. Every person
who is or was a director, officer or employee of this Corporation or of any
other corporation for which he is or was serving in any capacity at the
request of this Corporation shall be indemnified by this Corporation against
any and all liability and expense that may be incurred by him in connection
with or resulting from or arising out of any claim, action, suit or
proceeding, provided that such person is wholly successful with respect
thereto or acted in good faith in what he reasonably believed to be in or not
opposed to the best interests of this Corporation or such other corporation,
as the case may be, and, in addition, in any criminal action or proceeding in
which he had no reasonable cause to believe that his conduct was unlawful. As
used herein, "claim, action, suit or proceeding" shall include any claim,
action, suit or proceeding (whether brought by or in the right of this
II-2
Corporation or such other corporation or otherwise), civil, criminal,
administrative or investigative, whether actual or threatened or in connection
with an appeal relating thereto, in which a director, officer or employee of
this Corporation may become involved, as a party or otherwise, (i) by reason
of his being or having been a director, officer or employee of this
Corporation or such other corporation or arising out of his status as such or
(ii) by reason of any past or future action taken or not taken by him in any
such capacity, whether or not he continues to be such at the time such
liability or expense is incurred.
The terms "liability" and "expense" shall include, but shall not be
limited to, attorneys' fees and disbursements, amounts of judgments, fines or
penalties, and amounts paid in settlement by or on behalf of a director,
officer or employee, but shall not in any event include any liability or
expenses on account of profits realized by him in the purchase or sale of
securities of the Corporation in violation of the law. The termination of any
claim, action, suit or proceeding, by judgment, settlement (whether with or
without court approval) or conviction or upon a plea of guilty or of nolo
contendere, or its equivalent, shall not create a presumption that a director,
officer or employee did not meet the standards of conduct set forth in this
paragraph.
Any such director, officer or employee who has been wholly successful
with respect to any such claim, action, suit or proceeding shall be entitled
to indemnification as a matter of right. Except as provided in the preceding
sentence, any indemnification hereunder shall be made only if (i) the Board of
Directors acting by a quorum consisting of Directors who are not parties to or
who have been wholly successful with respect to such claim, action, suit or
proceeding shall find that the director, officer or employee has met the
standards of conduct set forth in the preceding paragraph; or (ii) independent
legal counsel shall deliver to the Corporation their written opinion that such
director, officer or employee has met such standards of conduct.
If several claims, issues or matters of action are involved, any such
person may be entitled to indemnification as to some matters even though he is
not entitled as to other matters.
The Corporation may advance expenses to or, where appropriate, may at
its expense undertake the defense of any such director, officer or employee
upon receipt of an undertaking by or on behalf of such person to repay such
expenses if it should ultimately be determined that he is not entitled to
indemnification hereunder.
The provisions of this Section shall be applicable to claims,
actions, suits or proceedings made or commenced after the adoption hereof,
whether arising from acts or omissions to act during, before or after the
adoption hereof.
The rights of indemnification provided hereunder shall be in addition
to any rights to which any person concerned may otherwise be entitled by
contract or as a matter of law and shall inure to the benefit of the heirs,
executors and administrators of any such person.
The Corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the Corporation
as a director, officer, employee or agent of another corporation against any
liability asserted against him and incurred by him in any capacity or arising
out of his status as such, whether or not the Corporation would have the power
to indemnify him against such liability under the provisions of this Section
or otherwise.
Item 7. Exemption from Registration Claimed.
Not Applicable.
Item 8. Exhibits.
See the Exhibit Index following the signature page in this
Registration Statement, which Exhibit Index is incorporated herein by
reference.
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The Company has received a determination letter from the Internal
Revenue Service that the Plan is qualified pursuant to Section 401 of the
Internal Revenue Code of 1986, as amended.
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to the Registration Statement
to include: (i) any prospectus required by Section 10(a)(3) of the
Securities Act; (ii) to reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement which,
individually or in the aggregate, represent a fundamental change in
the information set forth in the Registration Statement; and (iii)
any material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material
change to such information in the Registration Statement, provided
however, that provisions (i) and (ii) of this undertaking are
inapplicable if the information to be filed thereunder is contained
in periodic reports filed by the Company pursuant to Sections 13 or
15(d) of the Exchange Act and incorporated by reference into the
Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be
a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provision, 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
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant of expenses incurred or paid by a director, officer
or controlling person in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
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SIGNATURES
In accordance with the requirements of the Securities Act of 1933,
the Registrants certify that they have reasonable grounds to believe that they
meet all of the requirements of filing on Form S-8 and have duly caused this
Registration Statement to be signed on their behalf by the undersigned,
thereunder duly authorized, in the City of Warsaw, State of Indiana, on
October 10, 2000.
LAKELAND FINANCIAL CORPORATION
By: /s/ Michael L. Kubacki
Michael L. Kubacki
President and Principal Executive Officer
By: /s/ David M. Findlay
David M. Findlay
Executive Vice President and Chief
Financial Officer
LAKELAND FINANCIAL CORPORATION 401(K)
PLAN
By: LAKELAND FINANCIAL CORPORATION,
AS TRUSTEE OF THE PLAN
By: /s/ Patricia Culp
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POWER OF ATTORNEY
Know all men by these presents, that each person whose signature
appears below constitutes and appoints Michael L. Kubacki and David M.
Findlay, and each of them, his or her true and lawful attorney-in-fact and
agent, each with full power of substitution and re-substitution, for him or
her and in his or her name, place and stead, in any and all capacities to sign
any or all amendments (including post-effective amendments) to this
Registration Statement, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or any of them, or his
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
In accordance with the requirements of the Securities Act of 1933,
this Registration Statement was signed by the following persons in the
capacities indicated on October 10, 2000.
Signature Title
--------- -----
/s/ R. Douglas Grant Chairman of the Board of Directors
- ----------------------------------
R. Douglas Grant
/s/ Michael L. Kubacki President, Principal Executive Officer and
- ---------------------------------- Director
Michael L. Kubacki
/s/ Eddie Creighton Director
- ----------------------------------
Eddie Creighton
/s/ Steven D. Ross Director
- ----------------------------------
Steven D. Ross
/s/ M. Scott Welch Director
- ----------------------------------
M. Scott Welch Director
- ----------------------------------
George L. White Director
- ----------------------------------
Anna K. Duffin
/s/ L. Craig Fulmer Director
- ----------------------------------
L. Craig Fulmer Director
- ----------------------------------
Jerry L. Helvey Director
- ----------------------------------
Allan J. Ludwig
/s/ Charles E. Niemier Director
- ----------------------------------
Charles E. Niemier
/s/ Richard L. Pletcher Director
- ----------------------------------
Richard L. Pletcher
/s/ Terry L. Tucker Director
- ----------------------------------
Terry L. Tucker
II-6
LAKELAND FINANCIAL CORPORATION
EXHIBIT INDEX
TO
FORM S-8 REGISTRATION STATEMENT
Incorporated
Herein by Filed
Exhibit No. Description Reference to Herewith
- --------------- ---------------------------------------- --------------------------------- ---------------------
4.1 Amended and Restated Articles Exhibit 4.1 to the
of Incorporation of Lakeland Company's Form S-8 filed
Financial Corporation with the Commission on
April 15, 1998
4.2 Bylaws of Lakeland Financial Exhibit 3(ii) to the
Corporation Company's Form 10-Q
for the quarter ended June
30, 1996
5.1 Opinion of Barack Ferrazzano X
Kirschbaum Perlman & Nagelberg
10.1 Lakeland Financial X
Corporation 401(k) Plan
23.1 Consent of Crowe, Chizek and X
Company LLP
23.2 Consent of Barack Ferrazzano Included in
Kirschbaum Perlman & Nagelberg Exhibit 5.1
24.1 Power of Attorney Included on the
Signature Page to
this Registration
Statement
II-7