Exhibit No. 10(xxi) Northwestern Savings and Loan Association Employee Stock
Ownership Plan, as amended.
THIRD AMENDMENT TO THE
NORTHWESTERN SAVINGS AND LOAN ASSOCIATION
EMPLOYEE STOCK OWNERSHIP PLAN
WHEREAS, Mid America Federal Savings Bank (successor by merger to
Northwestern Savings Bank, formerly known as Northwestern Savings and Loan
Association) (the "Company") maintains the Northwestern Savings and Loan
Association Employee Stock Ownership Plan (the "Plan") for the benefit of
certain of its employees; and
WHEREAS, as provided in Section 13.4 of the Plan, the Company has reserved
the right to amend the Plan; and
WHEREAS, the Company is desirous in amending the Plan to set forth the
effects that the recent merger between N.S. Bancorp, Inc. and MAF Bancorp, Inc.
has on Plan participants.
NOW, THEREFORE, the Plan is hereby amended in the following particulars:
1. Effective May 30, 1996, the Plan is hereby amended by adding the
following new Section 16 thereto immediately after Section 15:
16.1 Purpose. The purpose of this Section 16 is to amend the Plan (and to
-------
the extent inconsistent herewith, the Trust) in furtherance of the orderly
operation of the Plan and application of the Merger Consideration received by
the Trust Fund upon the Merger (as defined below) to Participant Accounts and
toward repayment of the Stock Obligation, and for the allocation of amounts
remaining after such repayment, for the termination of the Plan, and for
liquidation of the Trust Fund, all as contemplated by the Merger Agreement. To
the extent any inconsistencies between the provisions of this Section 16 or the
implementation thereof by the Committee and the other provisions of the Plan or
Trust arise, the provisions of this Section 16 or implementation thereof shall
be controlling, except as may be necessary to retain the Plan's or Trust's
qualified status.
16.2 Definitions. For purposes of this Section 16:
-----------
(a) "Merger" means the merger of N.S. Bancorp, Inc. with and into MAF
Bancorp, Inc. as set forth in the Merger Agreement.
(b) "Merger Agreement" means that certain Amended and Restated Agreement
and Plan of Reorganization entered into as of November 29, 1995, by and between
N.S. Bancorp, Inc., a Delaware corporation ("N.S. Bancorp") and MAF Bancorp,
Inc., a Delaware corporation ("MAF Bancorp").
(c) "Merger Consideration" means the amount of cash and common stock of MAF
Bancorp into which each share of Stock was converted on the Merger Effective
Date as a result of the Merger. As a result of the Merger, each share of Stock
was converted into $20.1799 in cash and .8529 of a share of MAF Bancorp common
stock.
(d) "Merger Effective Date" means May 30, 1996.
(e) "Stock" means (I) common stock of N.S. Bancorp, Inc. prior to the
Merger Effective Date, and (ii) common stock of MAF Bancorp, Inc. thereafter.
16.3 Allocation of Dividends Received and Other Income
-------------------------------------------------
(a) Cash dividends on Stock (whether such Stock is held in Participant
Accounts or the Unallocated Stock Fund) received by the Trustee on or after the
Merger Effective Date shall be allocated to Participants' Accounts in accordance
with Section 8.3 and invested as part of the Investment Fund; provided, however,
that the Committee may direct that such dividends be distributed to the
Participants immediately following such allocation, or be distributed to the
Participants within 90 days of the close of the Plan Year in which paid.
(b) Investment Income earned from the investment of any assets of the Trust
Fund in a cash account received by the Trustee on or after the Merger Effective
Date shall be allocated to Participants' Accounts as of the Valuation Date
coinciding with or next following the date on which such investment income was
received. The investment income shall be allocated as of any Valuation Date in
proportion with that portion of the Participants' Account balance as of the
beginning of the valuation period that is represented by cash, and invested as
part of the Investment Fund.
16.4 Termination of Plan. The Plan shall terminate as of the Merger
-------------------
Effective Date and the Trust Fund shall be liquidated in accordance with this
Section 16.
16.5 Full Vesting Upon Merger Effective Date. Each Participant shall be
---------------------------------------
fully vested in his interest in his Account as of the Merger Effective Date. In
addition, Participants shall include those individuals whose Service terminated
during 1995 prior to such Participants becoming partially vested in their
Accounts, provided they completed at least 501 Hours of Service during 1995.
16.6 Effect of Merger Agreement and Merger on Employer Contributions,
----------------------------------------------------------------
Stock Obligations and the Unallocated Stock Fund.
- ------------------------------------------------
(a) Effective January 1, 1996, no Employer contributions shall be made to
the Plan or Trust Fund pursuant to Section 4 or otherwise, other than to the
extent contemplated by the
Merger Agreement or as agreed upon by N.S. Bancorp and MAF Bancorp subsequent to
the execution of the Merger Agreement.
(b) On or as soon as practicable (as determined by the Committee) after the
Merger Effective Date, the cash portion of the Merger Consideration attributable
to the Stock credited to the Unallocated Stock Fund shall be applied by the
Trustee in repayment of the Stock Obligation. In furtherance of Section 8.1, the
excess amount of the cash portion of the Merger Consideration, after repayment
of the Stock Obligation, along with the Stock portion of the Merger
Consideration shall be allocated as earnings of the Trust Fund (together with
any earnings thereon resulting from the investment of such amounts) as of a
special Valuation Date established for such purpose by the Committee among the
Participants' Accounts in proportion to the balance of such Accounts as of
January 1, 1996, which special Valuation Date shall be on or before December 31,
1996, and shall not be considered an annual addition under Section 5.1.
(c) Notwithstanding any provision to the contrary, the Stock released by
reason of the contribution made by N.S. Bancorp prior to the Merger Effective
Date shall be allocated as of the Valuation Date prescribed pursuant to
paragraph (b) above among the Accounts of Active Participants in proportion to
their amounts of Cash Compensation for the period beginning January 1, 1996 and
ending May 29, 1996.
16.7 Effect on Participation. Participation in the Plan shall be frozen
-----------------------
as of the Merger Effective Date.
16.8 Investment of Trust Fund After the Merger Effective Date. After the
--------------------------------------------------------
Merger Effective Date, all assets of the Trust Fund remaining after repayment of
the Stock Obligation shall be maintained by the Trustee as an Investment Fund,
consisting of MAF Bancorp common stock and cash. The cash portion of the
Investment Fund shall be invested as the Committee shall from time to time
direct in short-term interest bearing securities or deposit accounts, pending
distribution in connection with the final liquidation of the Trust Fund. The
last day of each calendar year occurring after the Merger Effective Date and
prior to the final distribution of all assets of the Trust Fund, and any other
date declared by the Committee, shall be a Valuation Date for purposes of
allocating any net earnings or loss on the Investment Fund during the Valuation
Period ending on such Valuation Date.
16.9 Determination Letter. Notwithstanding any other provisions of the
--------------------
Plan to the contrary, the provisions of this Section 16 and the allocations and
distributions contemplated hereby (other than the allocations described in
Section 16.3 and 16.8 and the provisions of Section 16.6(a)) shall be subject to
the issuance of a determination letter by the Internal Revenue Service that the
Plan, as amended by or pursuant to this Section 16 meets the qualifications of
Sections 401(a) and 4975(e)(7) of the Code. This Plan may be further amended,
as contemplated by Section 5.19(e) of the Merger Agreement, provided in no event
shall any Employer or any of its affiliates cause any portion of the Trust Fund
to revert, nor shall any portion of the Trust Fund revert, directly or
indirectly, to any Employer or any affiliate thereof.
16.10 Payment of Plan Expenses. Nothing in this Article 16 will be
------------------------
construed to preclude the payment of reasonable expenses associated with the
administration of the Plan and Trust from assets in the Trust.
IN WITNESS WHEREOF, the Company has caused this Third Amendment to the
Northwestern Savings and Loan Association Employee Stock Ownership Plan to be
executed this 27th day of August, 1996 by the undersigned duly authorized
officers.
MID AMERICA FEDERAL SAVINGS BANK
(As successor to Northwestern Savings Bank)
By: /s/ Allen Koranda
-----------------
Its: Chief Executive Officer
ATTEST:
/s/ Carolyn Pihera
Secretary
RESOLUTION OF THE BOARD OF DIRECTORS OF
NORTHWESTERN SAVINGS BANK
REGARDING AMENDMENTS TO
NORTHWESTERN SAVINGS BANK
EMPLOYEE STOCK OWNERSHIP PLAN
March 19, 1996
WHEREAS, The Board of Directors of Northwestern Savings Bank, (the "Bank")
approved and adopted the Northwestern Savings and Loan Association Employee
Stock Ownership Plan ("ESOP"), effective October 8, 1990; and
WHEREAS, Section 13.4 of the ESOP permits the Employer to amend the ESOP
from time to time; and
WHEREAS, the Board has previously approved the Agreement and Plan of
Reorganization Among MAF Bancorp, Inc. ("MAF") and N.S. Bancorp, Inc., dated as
of November 29, 1995 (the "Merger"); and
WHEREAS, the Bank desires to amend the ESOP so that the ESOP will treat as
Active Participants those employees of the Bank who otherwise are eligible for
participation in the ESOP and who will have completed at least 400 Hours of
Service with the Bank as of the effective date of the Merger; and
WHEREAS, the Bank desires to amend the ESOP to provide for its termination
in accordance with the terms of the Merger.
THEREFORE BE IT RESOLVED, that the ESOP be amended as follows:
First Amendment
The definition of "Active Participant" set forth in Section 4.3 shall be
amended by adding the following words at the end thereof:
"Notwithstanding clause (i), above, for Plan Year 1996 a Participant who
has satisfied the eligibility requirements under Section 3 shall qualify as an
Active Participant if the Participant has completed at least 400 Hours of
Service as of the last day of the Plan Year.
Second Amendment
Section 13.1 of the ESOP shall be amended by adding the following sentence
at the end thereof:
"The ESOP shall be terminated as of the Effective Time as defined in the
Agreement and Plan of Reorganization Among MAF Bancorp, Inc. ("MAF") and N.S.
Bancorp, Inc., dated as of November 29, 1995. Participants' Accounts shall be
distributed as soon as is practicable thereafter."
NORTHWESTERN SAVINGS AND LOAN ASSOCIATION
EMPLOYEE STOCK OWNERSHIP PLAN
(adopted effective October 8, 1990)
NORTHWESTERN SAVINGS AND LOAN ASSOCIATION
EMPLOYEE STOCK OWNERSHIP PLAN
This Employee Stock Ownership Plan, executed on 12/14/90 by
Northwestern Savings and Loan Association, a federally chartered savings and
loan association (the "Company"),
W I T N E S S E T H T H A T :
WHEREAS, the board of directors of the Company has resolved to adopt
an employee stock ownership plan for eligible employees in accordance with the
terms and conditions presented to the directors;
NOW, THEREFORE, the Company hereby adopts the following Plan setting
forth the terms and conditions pertaining to contributions by Employers and the
payment of benefits to Participants and Beneficiaries, effective October 8,
1990.
IN WITNESS WHEREOF, the Company has adopted this Plan and caused this
instrument to be executed by its duly authorized officers as of the above date.
ATTEST:
/s/ Gary M. Smogolski By: /s/ Henry Smogolski
- ------------------------------------- ---------------------------------
Gary M. Smogolski Henry Smogolski
Secretary President
C O N T E N T S
Section 1. Plan Identity.............................................. 6
-------------
1.1 Name.................................................. 6
----
1.2 Purpose............................................... 6
-------
1.3 Effective Date........................................ 6
--------------
1.4 Fiscal Period......................................... 6
-------------
1.5 Single Plan for All Employers......................... 6
-----------------------------
1.6 Interpretation of Provisions.......................... 6
----------------------------
Section 2. Definitions................................................ 7
-----------
Section 3. Eligibility for Participation.............................. 17
-----------------------------
3.1 Initial Eligibility................................... 17
-------------------
3.2 Definition of Eligibility Year........................ 17
------------------------------
3.3 Terminated or Part-time Employees..................... 18
---------------------------------
3.4 Certain Employees Ineligible.......................... 18
----------------------------
3.5 Participation and Reparticipation..................... 18
---------------------------------
Section 4. Employer Contributions and Credits......................... 18
----------------------------------
4.1 Discretionary Contributions........................... 18
---------------------------
4.2 Contributions for Stock Obligation.................... 19
----------------------------------
4.3 Definitions Related to Contributions.................. 20
----------------------------------
4.4 Conditions as to Contributions........................ 21
------------------------------
Section 5. Limitations on Contributions and Allocations............... 22
--------------------------------------------
5.1 Limitation on Annual Additions........................ 22
------------------------------
5.2 Coordinated Limitation With Other Plans............... 23
---------------------------------------
5.3 Effect of Limitations................................. 24
---------------------
5.4 Limitations as to Certain Participants................ 24
--------------------------------------
5.5 Limitation on Contributions to Highly Paid Employees.. 26
----------------------------------------------------
Section 6. Trust Fund and Its Investment.............................. 26
-----------------------------
6.1 Creation of Trust Fund................................ 26
----------------------
6.2 Stock Fund and Investment Fund........................ 26
------------------------------
6.3 Acquisition of Stock.................................. 27
--------------------
6.4 Participants' Option to Diversify..................... 28
---------------------------------
Section 7. Voting Rights and Dividends on Stock....................... 29
------------------------------------
7.1 Voting and Tendering of Stock........................ 29
------------------------------
7.2 Dividends on Stock.................................... 30
------------------
Section 8. Adjustments to Accounts.................................... 31
-----------------------
8.1 Adjustments for Transactions.......................... 31
----------------------------
8.2 Valuation of Investment Fund.......................... 31
----------------------------
8.3 Adjustments for Investment Experience................. 32
-------------------------------------
Section 9. Vesting of Participants' Interests......................... 32
----------------------------------
9.1 Deferred Vesting in Accounts.......................... 32
----------------------------
9.2 Computation of Vesting Years.......................... 33
----------------------------
9.3 Full Vesting Upon Certain Events...................... 33
--------------------------------
9.4 Full Vesting Upon Plan Termination.................... 34
----------------------------------
9.5 Forfeiture, Repayment, and Restoral................... 34
-----------------------------------
9.6 Accounting for Forfeitures............................ 35
--------------------------
9.7 Vesting and Nonforfeitability......................... 35
-----------------------------
Section 10. Payment of Benefits........................................ 35
-------------------
10.1 Benefits for Participants............................. 35
-------------------------
10.2 Benefits on a Participant's Death..................... 36
---------------------------------
10.3 Marital Status........................................ 36
--------------
10.4 Delay in Benefit Determination........................ 37
------------------------------
10.5 Accounting for Benefit Payments....................... 37
-------------------------------
10.6 Options to Receive and Sell Stock..................... 37
---------------------------------
10.7 Restrictions on Disposition of Stock.................. 39
------------------------------------
10.8 Direct Transfer of Eligible Plan Distributions........ 39
----------------------------------------------
10.9 Definitions........................................... 40
-----------
Section 11. Rules Governing Benefit Claims and Review of Appeals....... 41
----------------------------------------------------
11.1 Claim for Benefits.................................... 41
------------------
11.2 Notification by Committee............................. 41
-------------------------
11.3 Claims Review Procedure............................... 42
-----------------------
Section 12. The Committee and Its Functions............................ 42
-------------------------------
12.1 Authority of Committee................................ 42
----------------------
12.2 Identity of Committee................................. 43
---------------------
12.3 Duties of Committee................................... 43
-------------------
12.4 Valuation of Stock.................................... 44
------------------
12.5 Compliance with ERISA................................. 45
---------------------
12.6 Action by Committee................................... 45
-------------------
12.7 Execution of Documents................................ 45
----------------------
12.8 Adoption of Rules..................................... 45
-----------------
12.9 Responsibilities to Participants.................... 45
--------------------------------
12.10 Alternative Payees in Event of Incapacity........... 46
-----------------------------------------
12.11 Indemnification by Employers........................ 46
----------------------------
12.12 Nonparticipation by Interested Member............... 47
-------------------------------------
Section 13. Adoption Amendment, or Termination of the Plan............. 47
----------------------------------------------
13.1 Adoption of Plan by Other Employers................. 47
-----------------------------------
13.2 Adoption of Plan by Successor....................... 47
-----------------------------
13.3 Plan Adoption Subject to Qualification.............. 48
--------------------------------------
13.4 Right to Amend or Terminate......................... 49
---------------------------
Section 14. Miscellaneous Provisions................................... 50
------------------------
14.1 Plan Creates No Employment Rights................... 50
---------------------------------
14.2 Nonassignability of Benefits........................ 50
----------------------------
14.3 Limit of Employer Liability......................... 50
---------------------------
14.4 Treatment of Expenses............................... 51
---------------------
14.5 Number and Gender................................... 51
-----------------
14.6 Nondiversion of Assets.............................. 51
----------------------
14.7 Separability of Provisions.......................... 51
--------------------------
14.8 Service of Process.................................. 51
------------------
14.9 Governing State Law................................. 51
-------------------
Section 15. Top-Heavy Provisions....................................... 51
--------------------
15.1 Determination of Top-Heavy Status................... 52
---------------------------------
15.2 Minimum Contributions............................... 54
---------------------
15.3 Minimum Vesting..................................... 55
---------------
15.4 Maximum Compensation................................ 56
--------------------
NORTHWESTERN SAVINGS AND LOAN ASSOCIATION
EMPLOYEE STOCK OWNERSHIP PLAN
Section 1. Plan Identity.
-------------
1.1 Name. The name of this Plan is "Northwestern Savings and Loan
----
Association Employee Stock Ownership Plan."
1.2 Purpose. The purpose of this Plan is to describe the terms and
--------
conditions under which contributions made pursuant to the Plan will be credited
and paid to the Participants and their Beneficiaries.
1.3 Effective Date. The Effective Date of this Plan is
---------------
October 8, 1990.
1.4 Fiscal Period. This Plan shall be operated on the basis of a
--------------
January 1 - December 31 fiscal year for the purpose of keeping the Plan's books
and records and distributing or filing any reports or returns required by the
law.
1.5 Single Plan for All Employers. This Plan shall be treated as a
------------------------------
single plan with respect to all participating Employers for the purpose of
crediting contributions and forfeitures and distributing benefits, determining
whether there has been any termination of Service, and applying the limitations
set forth in Section 5.
1.6 Interpretation of Provisions. The Employers intend this Plan and
-----------------------------
the Trust to be qualified stock bonus plan under Section 401(a) of the Code and
an employee stock ownership plan within the meaning of Section 407(d)(6) of
ERISA and Section 4975(e)(7) of the Code. The Plan is intended to have its
assets invested primarily in qualifying employer securities of one or more
Employers within the meaning of Section 407(d)(5) of ERISA, and to satisfy any
4
requirement under ERISA or the Code applicable to such a plan. Accordingly, the
Plan and Trust Agreement shall be interpreted and applied in a manner consistent
with this intent and shall be administered at all times and in all respects in a
nondiscriminatory manner.
Section 2. Definitions. The following capitalized words and phrases shall have
------------
the meanings specified when used in this Plan and in the Trust Agreement, unless
the context clearly indicates otherwise:
"Account" means a Participant's interest in the assets accumulated
under this Plan as expressed in terms of a separate account balance which is
periodically adjusted to reflect his Employer's contributions, the Plan's
investment experience, and distributions and forfeitures.
"Active Participant" means any Employee who has satisfied the
eligibility requirements of Section 3 and who qualifies as an Active Participant
for a particular Plan Year under Section 4.3.
"Beneficiary" means the person or persons who are designated by a
Participant to receive benefits payable under the Plan on the Participant's
death. In the absence of any designation or if all the designated BeneficiarieS
shall die before the Participant dies or shall die before all benefits have been
paid, the Participant's Beneficiary shall be his surviving spouse, if any, or
his estate if he is not survived by a spouse. The Committee may rely upon the
advice of the Participant's executor or administrator as to the identity of the
Participant's spouse.
"Break in Service" means any five or more consecutive 12-month periods
beginning January 1 in which an Employee has 500 or fewer Hours of Service per
period. Solely for this purpose, an Employee shall be considered employed for
his normal hours of paid
5
employment during a Recognized Absence, unless he does not resume his Service at
the end of the Recognized Absence. Further, if an Employee is absent for any
period beginning on or after January 1, 1985, (i) by reason of the Employee's
pregnancy, (ii) by reason of the birth of the Employee's child, (iii) by reason
of the placement of a child with the Employee in connection with the Employee's
adoption of the child, or (iv) for purposes of caring for such child for a
period beginning immediately after such birth or placement, the Employee shall
be credited with the Hours of Service which would normally have been credited
but for such absence, up to a maximum of 501 Hours of Service, in the first 12-
month period which would otherwise be counted toward a Break in Service.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the committee responsible for the administration of
this Plan in accordance with Section 12.
"Company" means Northwestern Savings and Loan Association, and any
entity which succeeds to the business of the Company and adopts this Plan as its
own pursuant to Section 14.2.
"Disability" means only a disability which renders the Participant
totally unable, as a result of bodily or mental disease or injury, to perform
any duties for an Employer for which he is reasonably fitted, which disability
is expected to be permanent or of long and indefinite duration. However, this
term shall not include any disability directly or indirectly resulting from or
related to habitual drunkenness or addiction to narcotics, a criminal act or
attempt, service in the armed forces of any country, an act of war, declared or
undeclared, any injury or disease
6
occurring while compensation to the Participant is suspended, or any injury
which is intentionally self-inflicted. Further, this term shall apply only if
(i) the Participant is sufficiently disabled to qualify for the payment of
disability benefits under the federal Social Security Act or Veterans Disability
Act, or (ii) the Participant's disability is certified by a physician selected
by the Committee. Unless the Participant is sufficiently disabled to qualify for
disability benefits under the federal Social Security Act or Veterans Disability
Act, the Committee may require the Participant to be appropriately examined from
time to time by one or more physicians chosen by the Committee, and no
Participant who refuses to be examined shall be treated as having a Disability.
In any event, the Committee's good faith decision as to whether a Participant's
Service has been terminated by Disability shall be final and conclusive.
"Early Retirement" means retirement on or after a Participant's
attainment of age 55 and the completion of ten years of service for an Employer.
"Effective Date" means October 8, 1990.
"Employee" means any individual who is or has been employed or self-
employed by an Employer. "Employee" also means an individual employed by a
leasing organization who, pursuant to an agreement between an Employer and the
leasing organization, has performed services for the Employer and any related
persons (within the meaning of Section 414(n)(6) of the Code) on a substantially
full-time basis for more than one year, if such services are of a type
historically performed by employees in the Employer's business field. However,
such a "leased employee" shall not be considered an Employee if (i) he
participates in a money purchase pension plan sponsored by the leasing
organization which provides for immediate participation,
7
immediate full vesting, and an annual contribution of at least 10 percent of the
Employee's Total Compensation, and (ii) leased employees do not constitute more
than 20 percent of the Employer's total work force (including leased employees,
but excluding Highly Paid Employees and any other employees who have not
performed services for the Employer on a substantially full-time basis for at
least one year).
"Employer" means the Company or any affiliate within the purview of
section 414(b), (c) or (m) and 415(h) of the Code, any other corporation,
partnership, or proprietorship which adopts this Plan with the Company's consent
pursuant to Section 13.1, and any entity which succeeds to the business of any
Employer and adopts the Plan pursuant to Section 13.2.
"Entry Date" means the Effective Date of the Plan and each January 1
and July 1 of each Plan Year thereafter.
"ERISA" means the Employee Retirement Income Security Act of 1974
(P.L. 93-406, as amended).
"Highly Paid Employee" for any Plan Year means an Employee who, during
either of that or the immediately preceding Plan Year, (i) owned more than five
percent of the outstanding equity interest or the outstanding voting interest in
any Employer, (ii) had Total Compensation exceeding $75,000 (as adjusted
pursuant to section 415(d) of the Code), (iii) had Total Compensation exceeding
$50,000 (as adjusted pursuant to section 415(d) of the Code) and was among the
most highly compensated one-fifth of all Employees, or (iv) was at any time an
officer of an Employer and had Total Compensation exceeding $45,000 (or 50
percent of the currently applicable dollar limit under Section 415(b)(1)(A) of
the Code). For this purpose:
8
(a) "Total Compensation" shall include any amount which is excludable
from the Employee's gross income for tax purposes pursuant to Sections 125,
402(e)(3), 402(h)(1)(B), or 403(b) of the Code.
(b) The number of Employees in "the most highly compensated one-fifth
of all Employees" shall be determined by taking into account all
individuals working for all related employer entities described in the
definition of "Service", but excluding any individual who has not completed
six months of Service, who normally works fewer than 17-1/2 hours per week
or in fewer than six months per year, who has not reached age 21, whose
employment is covered by a collective bargaining agreement, or who is a
nonresident alien who receives no earned income from United States sources.
(c) The number of individuals counted as "officers" shall not be more
than the lesser of (i) 50 individuals and (ii) the greater of 3 individuals
or 10 percent of the total number of Employees. If no officer earns more
than $45,000 (or the adjusted limit), then the highest paid officer shall
be a Highly Paid Employee.
(d) A former employee shall be treated as a highly compensated
employee if such employee was a highly paid employee when such employee
separated from service, or if such employee was a highly paid employee at
any time after attaining age 55.
"Hours of Service" means hours to be credited to an Employee under the
following rules:
(a) Each hour for which an Employee is paid or is entitled to be paid
for services to an Employer is an Hour of Service.
9
(b) Each hour for which an Employee is directly or indirectly paid or
is entitled to be paid for a period of vacation, holidays, illness,
disability, lay-off, jury duty, temporary military duty, or leave of
absence is an Hour of Service. However, except as otherwise specifically
provided, no more than 501 Hours of Service shall be credited for any
single continuous period which an Employee performs no duties. Further, no
Hours of Service shall be credited on account of payments made solely under
a plan maintained to comply with worker's compensation, unemployment
compensation, or disability insurance laws, or to reimburse an Employee for
medical expenses.
(c) Each hour for which back pay (ignoring any mitigation of damages)
is either awarded or agreed to by an Employer is an Hour of Service.
However, no more than 501 Hours of Service shall be credited for any single
continuous period during which an Employee would not have performed any
duties.
(d) Hours of Service shall be credited in any one period only under
one of the foregoing paragraphs (a), (b) and (c); an Employee may not get
double credit for the same period.
(e) If an Employer finds it impractical to count the actual Hours of
Service for any class or group of non-hourly Employees, each Employee in
that class or group shall be credited with 45 Hours of Service for each
weekly pay period in which he has at least one Hour of Service. However, an
Employee shall be credited only for his normal working hours during a paid
absence.
10
(f) Hours of Service to be credited on account of a payment to an
Employee (including back pay) shall be recorded in the period of Service
for which the payment was made. If the period overlaps two or more Plan
Years, the Hours of Service credit shall be allocated in proportion to the
respective portions of the period included in the several Plan Years.
However, in the case of periods of 31 days or less, the Administrator may
apply a uniform policy of crediting the Hours of Service to either the
first Plan Year or the second.
(g) In all respects an Employee's Hours of Service shall be counted as
required by Section 2530.200b-2(b) and (c) of the Department of Labor's
regulations under Title I of ERISA.
"Investment Fund" means that portion of the Trust Fund consisting of
assets other than Stock.
"Normal Retirement Date" means a Participant's 65th birthday.
"Participant" means any Employee who is participating in the Plan, or
who has previously participated in the Plan and still has a balance credited to
his Account.
"Plan Year" means the short plan year commencing Ocotber 8, 1990 and
ending December 31, 1990 and each period of 12 consecutive months beginning on
January 1 of each succeeding year.
"Recognized Absence" means a period for which --
(a) an Employer grants an Employee a leave of absence for a limited
period, but only if an Employer grants such leaves on a nondiscriminatory
basis; or
11
(b) an Employee is temporarily laid off by an Employer because of a
change in business conditions; or
(c) an Employee is on active military duty, but only to the extent
that his employment rights are protected by the Military Selective Service
Act of 1967 (38 U.S.C. sec. 2021).
"Service" means an Employee's period(s) of employment or self-
employment with an Employer, excluding for initial eligibility purposes any
period in which the individual was a nonresident alien and did not receive from
an Employer any earned income which constituted income from sources within the
United States. An Employee's Service shall include any service which constitutes
service with a predecessor employer within the meaning of Section 414(a) of the
Code. An Employee's Service shall also include any service with an entity which
is not an Employer, but only either (i) for a period after 1975 in which the
other entity is a member of a controlled group of corporations or is under
common control with other trades and businesses within the meaning of Section
414(b) or 414(c) of the Code, and a member of the controlled group or one of the
trades and businesses is an Employer, or (ii) for a period after 1979 in which
the other entity is a member of an affiliated service group within the meaning
of Section 414(m) of the Code, and a member of the affiliated service group is
an Employer.
"Spouse" means the individual, if any, to whom a Participant is
lawfully married on the date benefit payments to the Participant are to begin,
or on the date of the Participant's death, if earlier.
12
"Stock" means shares of the Company's voting common stock or preferred
stock meeting the requirements of Section 409(e)(3) of the Code issued by an
Employer or an affiliated corporation.
"Stock Fund" means that portion of the Trust Fund consisting of Stock.
"Stock Obligation" means an indebtedness arising from any extension of
credit to the Plan or the Trust which was obtained for the purpose of buying
Stock and which satisfies the requirements set forth in Section 6.3.
"Total Compensation" means a Participant's wages, base wages, salary,
overtime, bonuses, and any other amounts received for personal services
rendered while in Service from any Employer or an affiliate (within the purview
of Section 414(b), (c), and (m) of the Code), plus his earned income from any
such entity as defined in Section 401(c)(2) of the Code if he is self-employed.
"Total Compensation" shall include (i) severance payments and amounts paid as a
result of termination, (ii) amounts excludable from gross income under Section
911 of the Code, (iii) amounts described in Sections 104(a)(3), 105(a), and
105(h) of the Code to the extent includable in gross income, (v) amounts
received from an Employer for moving expenses which are deductible under
Section 217 of the Code, (vi) amounts includable in gross income in the year of,
and on account of, the grant of a nonqualified stock option, (vii) amounts
includable in gross income pursuant to Section 83(b) of the Code, and
(viii) amounts includable in gross income under an unfunded nonqualified plan of
deferred compensation, but shall exclude (ix) Employer contributions or amounts
received from a funded or qualified plan of deferred compensation, (x) Employer
contributions to a simplified employee pension account to the extent
13
deductible under Section 219 of the Code, (xi) Employer contributions to Section
403(b) annuity contract, and (xii) amounts includable in gross income pursuant
to Section 83(a) of the Code, (xiii) amounts includable in gross income upon the
exercise of nonqualified stock option or upon the disposition of stock acquired
under any stock option, and (xiv) any other amounts expended by the Employer on
the Participant's behalf which are excludable from his income or which receive
special tax benefits, and (xv) any commissions received by the Employee from the
Employer. A Participant's Total Compensation shall exclude any compensation in
any limitation year beginning after 1988 in excess of $200,000 (or the limit
currently in effect under Section 401(a)(17) of the Code).
"Trust" or "Trust Fund" means the trust fund created under this Plan.
"Trust Agreement" means the agreement between the Company and the
Trustee concerning the Trust Fund. If any assets of the Trust Fund are held in a
co-mingled trust fund with assets of other qualified retirement plans, "Trust
Agreement" shall be deemed to include the trust agreement governing that co-
mingled trust fund. With respect to the allocation of investment responsibility
for the assets of the Trust Fund, the provisions of Section 2.2 of the Trust
Agreement are incorporated herein by reference.
"Trustee" means one or more corporate persons and individuals selected
from time to time by the Company to serve as trustee or co-trustees of the Trust
Fund.
"Unallocated Stock Fund" means that portion of the Stock Fund
consisting of the Plan's holding of stock which have been acquired in exchange
for one or more Stock obligations
14
and which have not yet been allocated to the Participant's Accounts in
accordance with Section 4.2.
"Valuation Date" means the last day of the Plan Year and each other
date as of which the committee shall determine the investment experience of the
Investment Fund and adjust the Participants' accounts accordingly.
"Valuation Period" means the period following a Valuation Date and
ending with the next Valuation Date.
"Vesting Year" means a unit of Service credited to a Participant
pursuant to Section 9.2 for purposes of determining his vested interest in his
Account.
Section 3. Eligibility for Participation.
------------------------------
3.1 Initial Eligibility. An Employee shall enter the Plan as of the
--------------------
Entry Date coinciding with or next following the later of the following dates:
(a) the last day of an Employee's first Eligibility Year, and
(b) the Employee's 21st birthday.
However, if an Employee is not in active Service with an Employer on
the date he would otherwise first enter the Plan, his entry shall be deferred
until the next day he is in Service.
3.2 Definition of Eligibility Year. An "Eligibility Year" means an
------------------------------
applicable eligibility period (as defined below) in which the Employee has at
least 1,000 Hours of Service for the Employer. For this purpose:
(a) an Employee's first "eligibility period" is the 12-consecutive
month period beginning on the first day on which he has an Hour
of Service, and
15
(b) his subsequent eligibility periods will be 12-consecutive month
periods beginning on each January 1 after that first day of
Service.
3.3 Terminated or Part-time Employees. No Employee shall have any
----------------------------------
interest or rights under this Plan if (i) he is never in active Service with an
Employer on or after the Effective Date, or (ii) he had 500 or fewer Hours of
Service in any eligibility period beginning before the Effective Date and he
never has an Eligibility Year after such period.
3.4 Certain Employees Ineligible. No Employee shall participate in the
-----------------------------
Plan while his Service is covered by a collective bargaining agreement between
an Employer and the Employee's collective bargaining representative if (i)
retirement benefits have been the subject of good faith bargaining between the
Employer and the representative and (ii) the collective bargaining agreement
does not provide for the Employee's participation in the Plan. No Employee shall
participate in the Plan while he is actually employed by a leasing organization
rather than an Employer.
3.5 Participation and Reparticipation. Subject to the satisfaction of
----------------------------------
the foregoing requirements, an Employee shall participate in the Plan during
each period of his Service from the date on which he first becomes eligible
until his termination. For this purpose, an Employee returning within five years
of his or her termination who previously satisfied the initial eligibility
requirements shall re-enter the Plan as of the date of his return to Service
with an Employer.
Section 4. Employer Contributions and Credits.
-----------------------------------
4.1 Discretionary Contributions. Each Employer shall from time to time
----------------------------
contribute, with respect to a Plan Year, such amounts as it may determine from
time to time. An Employer
16
shall have no obligation to contribute any amount under this Plan except as so
determined in its sole discretion. The Employers' contributions and available
forfeitures for a Plan Year shall be credited as of the last day of the year to
the Accounts of the Active Participants in proportion to their amounts of Cash
Compensation.
4.2 Contributions for Stock Obligations. If the Trustee, upon
------------------------------------
instructions from the Committee, incurs any Stock Obligation upon the purchase
of Stock, the Employer shall, subject to the provisions of the Company's Plan of
Conversion and any regulatory prohibitions, contribute for each Plan Year an
amount sufficient to cover all payments of principal and interest as they come
due under the terms of the Stock Obligation. If there is more than one Stock
Obligation, the Employers shall designate the one to which any contribution is
to be applied. The Employer's obligation to make contributions under this
Section 4.2 shall be reduced to the extent of any investment earnings realized
on such contributions and any dividends paid by the Employers on Stock held in
the Unallocated Stock Account, which earnings and dividends shall be applied to
the Stock Obligation related to that Stock.
In each Plan Year in which the Employer contributions, earnings on
contributions, or dividends on unallocated Stock are used as payments under a
Stock Obligation, a certain number of shares of the Stock acquired with that
Stock Obligation which is then held in the Unallocated Stock Fund shall be
released for allocation among the Participants. The number of shares released
shall bear the same ratio to the total number of those shares then held in the
Unallocated Stock Fund (prior to the release) as (i) the principal and interest
payments made on the Stock Obligation in the current Plan Year bears to (ii) the
sum of (i) above, and the remaining principal
17
and interest payments required (or projected to be required on the basis of the
interest rate in effect at the end of the Plan Year) to satisfy the Stock
Obligation.
At the direction of the Committee, the current and projected payments of
interest under a Stock Obligation may be ignored in calculating the number of
shares to be released in each year if (i) the Stock Obligation provides for
annual payments of principal and interest at a cumulative rate that is not less
rapid at any time than level annual payments of such amounts for 10 years, (ii)
the interest included in any payment is ignored only to the extent that it would
be determined to be interest under standard loan amortization tables, and (iii)
the term of the Stock Obligation, by reason of renewal, extension, or
refinancing, has not exceeded 10 years from the original acquisition of the
Stock.
For these purposes, each Stock Obligation, the Stock purchased with it,
and any dividends on such Stock, shall be considered separately. The Stock
released from the Unallocated Stock Fund in any Plan Year shall be credited as
of the last day of the year to the Accounts of the Active Participants in
proportion to their amounts of Cash Compensation.
4.3 Definitions Related to Contributions. For the purposes of this Plan,
-------------------------------------
the following terms have the meanings specified:
"Active Participant" means a Participant who has satisfied the
eligibility requirements under Section 3. However, a Participant shall not
qualify as an Active Participant unless (i) the Participant completes at least
1,000 Hours of Service as of the last day of the Plan Year, or (ii) he is on a
Recognized Absence as of that date, or (iii) his Service terminated during the
Plan Year by reason of disability or death.
18
"Cash Compensation" means a Participant's compensation from his Employer
with respect to that portion of a Plan Year in which he is an Active
Participant. A Participant's compensation shall be based upon the cash method of
accounting; bonuses, taxable sick pay, any compensation deferred under a
qualified cash or deferred arrangement, and similar items shall be included, but
any compensation income realized under a stock option, amounts paid by or
received from an Employer to cover travel, entertainment, moving or similar
expenses, the value of any fringe benefits not received in cash and any
commissions received from the Employer shall be excluded. A Participant's Cash
Compensation shall exclude any compensation in any Plan Year beginning after
1988 in excess of $200,000 (or the limit currently in effect under Section
401(a)(17) of the Code). For Plan Years on or after January 1, 1994, a
Participant's Cash Compensation taken into account under the Plan, shall not
exceed the limit of $150,000, (as adjusted for increases in the cost of living
in accordance with Section 401(a)(17)(B) of the Code).
4.4 Conditions as to Contributions. Employers' contributions shall in
-------------------------------
any event be subject to the limitation set forth in Section 5. Contributions may
be made in the form of cash, or securities and other property to the extent
permissible under ERISA, including Stock, and shall be held by the Trustee in
accordance with the Trust Agreement. In addition to the provisions of Section
13.3 for the return of an Employer's contributions in connection with a failure
of the Plan to qualify initially under the Code, any amount contributed by an
Employer due to a good faith mistake of fact, or based upon a good faith but
erroneous determination of its deductibility under Section 404 of the Code,
shall be returned to the Employer within one year after the date on
19
which the contribution was originally made, or within one year after its
nondeductibility has been finally determined. However, the amount to be returned
shall be reduced to take account of any adverse investment experience within the
Trust Fund in order that the balance credited to each Participant's Account is
not less that it would have been if the contribution had never been made.
Section 5. Limitations on Contributions and Allocations.
---------------------------------------------
5.1 Limitation on Annual Additions. Notwithstanding the provisions of
-------------------------------
Section 4, the annual addition to a Participant's accounts under this and any
other defined contribution plans maintained by the Employers or an affiliate
(within the purview of Section 414(b), (c), and (m) and Section 415(h) of the
Code, which affiliate shall be deemed an Employer for this purpose) shall not
exceed for any limitation year an amount equal to the lesser of --
5.1-1 $30,000, or the dollar limitation currently in effect; or
5.1-2 25 percent of the Participant's Total Compensation for such
limitation year.
For purposes of this Section 5.1 and the following Section 5.2, the "annual
addition" to a Participant's accounts means the sum of (i) the Employer
contributions and Employee forfeitures credited to a Participant's accounts with
respect to a limitation year, plus (ii) the Participant's total voluntary
contributions for that year. The $30,000 and $90,000 limitations referred to
shall, for each limitation year ending after 1988, be automatically adjusted to
the new dollar limitations determined by the Commissioner of Internal Revenue
for the calendar year beginning in that limitation year. Notwithstanding the
foregoing, if the special limitations on annual additions
20
described in section 415(c)(6) of the Code applies, the limitations described in
this section shall be adjusted accordingly. A "limitation year" means each 12
consecutive month period beginning January 1.
5.2 Coordinated Limitation With Other Plans. Aside from the limitation
----------------------------------------
prescribed by Section 5.1 with respect to the annual addition to a Participant's
accounts for any single limitation year, if a Participant has ever participated
in one or more defined benefit plans maintained by an Employer or an affiliate,
then the annual additions to his accounts shall be limited on a cumulative basis
so that the sum of his defined contribution plan fraction and his defined
benefit plan fraction does not exceed one. For this purpose:
5.2-1 A Participant's defined contribution plan fraction with
respect to a Plan Year shall be a fraction, (i) the numerator of which is
the sum of the annual additions to his accounts through the current year,
and (ii) the denominator of which is the sum of the lesser of the following
amounts -A- and -B- determined for the current limitation year and each
prior limitation year of Service with an Employer: -A- is 1.25 times
$30,000, or 1.0 times such dollar limitation if the Plan is top-heavy, and
-B- is 35 percent of the Participant's Total Compensation for such year.
Further, if the Participant participated in any related defined
contribution plan in any years beginning before 1976, any excess of the sum
of the actual annual additions to the Participant's accounts for those
years over the maximum annual additions which could have been made in
accordance with Section 5.1 shall be ignored, and voluntary contributions
by the Participant during those years shall be taken into account as to
each such year only to the extent that his average annual
21
voluntary contribution in those years exceeded 10 percent of his average
annual Total Compensation in those years.
5.2-2 A Participant's defined benefit plan fraction with respect
to a limitation year shall be a fraction, (i) the numerator of which is his
projected annual benefit payable at normal retirement under the Employers'
defined benefit plans, and (ii) the denominator of which is the lesser of
(a) 1.25 times $90,000, or 1.0 times such dollar limitation if the Plan is
top-heavy, and (b) 1.4 times the Participant's average Total Compensation
during his highest-paid three consecutive limitation years.
5.3 Effect of Limitations. The Committee shall take whatever action
----------------------
may be necessary from time to time to assure compliance with the limitations set
forth in Section 5.1 and 5.2. Specifically, the Committee shall see that each
Employer restrict its contributions for any Plan Year to an amount which, taking
into account the amount of available forfeitures, may be completely allocated to
the Participants consistent with those limitations. Where the limitations would
otherwise be exceeded by any Participant, further allocations to the Participant
shall be curtailed to the extent necessary to satisfy the limitations. Where an
excessive amount is contributed on account of a mistake as to one or more
Participants' compensation, or there is an amount of forfeitures which may not
be credited in the Plan Year in which it becomes available, the amount shall be
held in a suspense account to be allocated in lieu of any Employer contributions
in future years until it is eliminated, and to be returned to the Employer if it
cannot be credited consistent with these limitations before the termination of
the Plan.
22
5.4 Limitations as to Certain Participants. Aside from the limitations
---------------------------------------
set forth in Section 5.1 and 5.2, if the Plan acquires any Stock in a
transaction as to which a selling shareholder or the estate of a deceased
shareholder is claiming the benefit of Section 1042 of the Code, the Committee
shall see that none of such Stock, and no other assets in lieu of such Stock,
are allocated to the Accounts of certain Participants in order to comply with
Section 409(n) of the Code.
This restriction shall apply at all times to a Participant who owns
(taking into account the attribution rules under Section 318(a) of the Code,
without regard to the exception for employee plan trusts in Section
318(a)(2)(B)(i) more than 25 percent of any class of stock of a corporation
which issued the Stock acquired by the Plan, or another corporation within the
same controlled group, as defined in Section 409(1)(4) of the Code (any such
class of stock hereafter called a "Related Class"). For this purpose, a
Participant who owns more than 25 percent of any Related Class at any time
within the one year preceding the Plan's purchase of the Stock shall be subject
to the restriction as to all allocations of the Stock, but any other Participant
shall be subject to the restriction only as to allocations which occur at a time
when he owns more than 25 percent of any Related Class.
Further, this restriction shall apply to the selling shareholder claiming
the benefit of Section 1042 and any other Participant who is related to such a
shareholder within the meaning of Section 267(b) of the Code, during the period
beginning on the date on which the Plan purchases the Stock and ending 10 years
after the later of (i) the date of such purchase, and (ii)
23
the date of the allocation under Section 4.2 attributable to the final payment
on whatever Stock Obligations were incurred with the purchase.
This restriction shall not apply to any Participant who is a lineal
descendant of a selling shareholder if the aggregate amounts allocated under the
Plan for the benefit of all such descendants do not exceed five percent of the
Stock acquired from the shareholder.
24
5.5 Limitation on Contributions to Highly Paid Employees.
----------------------------------------------------
Aside from the limitations set forth in Section 5.1, 5.2 and 5.4, the
allocation to Highly Paid Employees under the Plan shall not exceed one third
(1/3) of the total Employer Contributions to all Employees under the Plan.
Where the above limitation would otherwise be exceeded, the allocation of
Employer Contributions to each Highly Paid Employee shall be reduced pro rata
among all Highly Paid Employees to such amount to satisfy the above limitation.
Such excess Employer Contributions shall be held in a suspense account until
such time as said amount may be reallocated among the Highly Compensated
Employees without exceeding the limitation set forth in this Section.
Section 6. Trust Fund and Its Investment.
------------------------------
6.1 Creation of Trust Fund. All amounts received under the Plan from
-----------------------
Employers and investments shall be held as the Trust Fund pursuant to the terms
of this Plan and of the Trust Agreement between the Company and the Trustee. The
benefits described in this Plan shall be payable only from the assets of the
Trust Fund, and none of the Company, any other Employer, its board of directors
or trustees, its stockholders, its officers, its employees, the Committee, and
the Trustee shall be liable for payment of any benefit under this Plan except
from the Trust Fund.
6.2 Stock Fund and Investment Fund. The Trust Fund consisting entirely of
-------------------------------
Stock, and the Investment Fund, consisting of all assets of the Trust other than
Stock. The Trustee shall have no investment responsibility for the Stock Fund,
but shall accept any Employer contributions made in the form of Stock, and shall
acquire, sell, exchange, distribute, and
25
otherwise deal with and dispose of Stock in accordance with the instructions of
the Committee. The Trustee shall have full responsibility for the investment of
the Investment Fund, held by the Trustee shall be divided into the Stock Fund,
except to the extent such responsibility may be delegated from time to time to
one or more investment managers pursuant to Section 2.2 of the Trust Agreement.
6.3 Acquisition of Stock. From time to time the Committee may, in its sole
---------------------
discretion, direct the Trustee to acquire Stock from the issuing Employer or
from shareholders, including shareholders who are or have been Employees,
Participants, or fiduciaries with respect to the Plan. The Trustee shall pay for
such Stock no more than its fair market value, which shall be determined
conclusively by the Committee pursuant to Section 12.4. The Committee may direct
the Trustee to finance the acquisition of Stock by incurring or assuming
indebtedness to the seller or another party which indebtedness shall be called a
"Stock Obligation". Any Stock Obligation shall be subject to the following
conditions and limitations:
6.3-1 A Stock Obligation shall be for a specific term, shall not be
payable on demand except in the event of default, and shall bear a
reasonable rate of interest.
6.3-2 A Stock Obligation may, but need not, be secured by a
collateral pledge of either the Stock acquired in exchange for the Stock
Obligation, or the Stock previously pledged in connection with a prior
Stock Obligation which is being repaid with the proceeds of the current
Stock Obligation. No other assets of the Plan and Trust may be used as
collateral for a Stock Obligation, and no creditor under a Stock Obligation
shall
26
have any right or recourse to any Plan and Trust assets other than Stock
remaining subject to a collateral pledge.
6.3-3 Any pledge of Stock to secure a Stock Obligation must provide
for the release of pledged Stock in connection with payments on the Stock
Obligations in the ratio prescribed in Section 4.2.
6.3-4 Repayments of principal and interest on any Stock Obligation
shall be made by the Trustee only from Employer cash contributions
designated for such payments, from earnings on such contributions, and from
cash dividends received on Stock held in the Unallocated Stock Fund.
6.4 Participants' Option to Diversify. The Committee shall provide for a
----------------------------------
procedure under which each Participant may, during the first five years of a
certain six-year period, elect to have up to 25 percent of the value of his
Account committed to alternative investment options within the Investment Fund.
For the sixth year in this period, the Participant may elect to have up to 50
percent of the value of his Account committed to other investments. The six-year
period shall begin with the Plan Year following the first Plan Year in which the
Participant has both reached aged 55 and completed 10 years of participation in
the Plan; a Participant's election to diversify his Account must be made within
the 90-day period immediately following the last day of each of the six Plan
Years. The Committee shall see that the Investment fund includes a sufficient
number of investment options to comply with Section 401(a)(28)(B) of the Code.
The Trustee shall comply with any investment directions received from
Participants in accordance with the procedures adopted from time to time by the
Committee under this Section 6.4.
27
Section 7. Voting Rights and Dividends on Stock.
-------------------------------------
7.1 Voting and Tendering of Stock. The Trustee generally shall vote all
------------------------------
shares of Stock held under the Plan. However, if any Employer has registration-
type class of securities within the meaning of Section 409(e)(4) of the Code, or
if a matter submitted to the holders of the Stock involves a merger,
consolidation, recapitalization, reclassification, liquidation, dissolution, or
sale of substantially all assets of an entity, then (i) the shares of Stock
which have been allocated to Participants' Accounts shall be voted by the
Trustee in accordance with the Participants' written instructions, and (ii) the
Trustee shall vote any shares of Stock which have been allocated to
Participants' Accounts but for which no written instructions have been received
and any unallocated Stock in a manner calculated to most accurately reflect the
instructions it has received from Participants regarding the allocated Stock. In
the event no shares of Stock have been allocated to Participants' Accounts at
the time Stock is to be voted, each Participant shall be deemed to have one
share of Stock allocated to his or her account for the sole purpose of providing
the Trustee with voting instructions. Notwithstanding any provision hereunder to
the contrary, all shares of Stock which have been allocated to Participants'
Accounts and for which the Trustee has received no written instructions and all
unallocated shares of Stock must be voted by the Trustee in a manner determined
by the Trustee to be solely in the interest of the Participants and
Beneficiaries. Whenever such voting rights are to be exercised, the Employers,
the Committee, and the Trustee shall see that all Participants and Beneficiaries
are provided with the same notices and other materials as are provided to other
holders of the Stock, and are provided with adequate opportunity to deliver
their instructions to the Trustee regarding the
28
voting of Stock allocated to their Accounts. The instructions of the
Participants' with respect to the voting of allocated shares hereunder shall be
confidential.
7.1-1 In the event of a tender offer, Stock shall be tendered by the
Trustee in the same manner as set forth above with respect to the voting of
Stock. Notwithstanding any provision hereunder to the contrary, Stock must be
tendered by the Trustee in a manner determined by the Trustee to be solely in
the interest of the Participants and Beneficiaries.
7.2 Dividends on Stock. Dividends on Stock which are received by the
-------------------
Trustee in the form of additional Stock shall be retained in the Stock Fund, and
shall be allocated among the Participant's Accounts and the Unallocated Stock
Fund in accordance with their holdings of the Stock on which the dividends have
been paid. Dividends on Stock credited to Participants' Accounts which are
received by the Trustee in the form of cash shall, at the direction of the
Company paying the dividends, either (i) be credited to the Accounts in
accordance with Section 8.3 and invested as part of the Investment Fund, (ii) be
distributed immediately to the Participants in proportion with the Participants'
Account balance; (iii) be distributed to the Participants within 90 days of the
close of the Plan Year in which paid in proportion with the Participants'
Account balance; or (iv) be used to repay principal and interest on the Stock
Obligation used to acquire Stock on which the dividends were paid. Dividends on
Stock held in the Unallocated Stock Fund which are received by the Trustee in
the form of cash shall be applied as soon as practicable to payments of
principal and interest under the Stock Obligation incurred with the purchase of
the Stock.
29
Section 8. Adjustments to Accounts.
------------------------
8.1 Adjustments for Transactions. An Employer contribution pursuant to
-----------------------------
Section 4.1 shall be credited to the Participants' Accounts as of the last day
of the Plan Year for which it is contributed. Stock released from the
Unallocated Stock Fund upon the Trust's repayment of a Stock Obligation pursuant
to Section 4.2 shall be credited to the Participants' Accounts as of the last
day of the Plan Year in which the repayment occurred. Any excess amounts
remaining from the use of proceeds of a sale of Stock from the Unallocated Stock
Fund to repay a Stock Obligation shall be allocated as of the last day of the
Plan Year in which the repayment occurred among the Participants' Accounts in
proportion to the opening balance in each Account. Any benefit which is paid to
a Participant or Beneficiary pursuant to Section 10 shall be charged to the
Participant's Account as of the first day of the Valuation Period in which it is
paid. Any forfeiture or restoral shall be charged or credited to the
Participant's Account as of the first day of the Valuation Period in which the
forfeiture or restoral occurs pursuant to Section 9.6.
8.2 Valuation of Investment Fund. As of each Valuation Date, the Trustee
-----------------------------
shall prepare a balance sheet of the Investment Fund, recording each asset
(including any contribution receivable from an Employer) and liability at its
fair market value. Any liability with respect to short positions or options and
any item of accrued income or expense and unrealized appreciation or
depreciation shall be included; provided, however, that such an item may be
estimated or excluded if it is not readily ascertainable unless estimating or
excluding it would result in a material distortion. The Committee shall then
determine the net gain or loss of the Investment Fund since the preceding
Valuation Date, which shall mean the entire income of the Investment
30
Fund, including realized and unrealized capital gains and losses, net of any
expenses to be charged to the general Investment Fund and excluding any
contributions by the Employer. The determination of gain or loss shall be
consistent with the balance sheets of the Investment Fund for the current and
preceding Valuation Dates.
8.3 Adjustments for Investment Experience. Any net gain or loss of the
--------------------------------------
Investment Fund during a Valuation Period, as determined pursuant to Section
8.2, shall be allocated as of the last day of the Valuation Period among the
Participants' Accounts in proportion to the opening balance in each Account, as
adjusted for benefit payments and forfeitures during the Valuation Period,
without regard to whatever Stock may be credited to an Account.
Section 9. Vesting of Participants' Interests.
-----------------------------------
9.1 Deferred Vesting in Accounts. A Participant's vested interest in his
-----------------------------
Account shall be based on his Vesting Years in accordance with the following
Table, subject to the balance of this Section 9:
Vesting Percentage of
Years Interest Vested
----- ---------------
fewer than 3 0%
3 20%
4 40%
5 60%
6 80%
7 or more 100%
31
Provided, however, that any Plan Participant who has completed at least three
years of service with the employer prior to February 19, 1991, shall be given
the opportunity to elect to have the vesting schedule in effect prior to this
amendment used to determine his or her vested benefit.
9.2 Computation of Vesting Years. For purposes of this Plan, a "Vesting
-----------------------------
Year" means each 12-month period in which an Employee has at least 1,000 Hours
of Service, beginning with the Effective Date of the Plan in which the Active
Participant completes 1,000 Hours of Service. However, a Participant's Vesting
Years shall be computed subject to the following conditions and qualifications:
(a) A Participant's vested interest in his Account accumulated before
a Break in Service shall be determined without regard to any Service after
the Break. Further, if a Participant has a Break in Service before his
interest in his Account has become vested to some extent, he shall lose
credit for any Vesting Year before the Break.
(b) Unless otherwise specifically excluded, a Participant's Vesting
Years shall include any period of active military duty to the extent
required by the Military Selective Service Act of 1967 (38 U.S.C. Section
2021).
9.3 Full Vesting Upon Certain Events. Notwithstanding Section 9.1, a
---------------------------------
Participant's interest in his Account shall fully vest on the Participant's
Normal Retirement Date, provided the Participant is in Service on or after that
date. The Participant's interest shall also fully vest in the event that his
Service is terminated by Early Retirement, Disability or by death.
9.4 Full Vesting Upon Plan Termination. Notwithstanding Section 9.1, a
-----------------------------------
Participant's interest in his Account shall fully vest if he is in active
Service upon termination of this Plan or
32
upon the permanent and complete discontinuance of contributions by his Employer.
In the event of a partial termination, the interest of each Participant who is
in Service shall fully vest with respect to that part of the Plan which is
terminated.
9.5 Forfeiture, Repayment, and Restoral. If a Participant's Service
------------------------------------
terminates before his interest in his Account is fully vested, that portion
which has not vested shall be forfeited if he either (i) receives a distribution
of his entire vested interest pursuant to Section 10.1, or (ii) has a Break in
Service.
If a Participant who has received his entire vested interest returns to
Service before he has a Break in Service, he may repay to the Trustee an amount
equal to the distribution. The Participant may repay such amount at any time
within five years after he has returned to Service. The amount shall be
credited to his account as of the last day of the Plan Year in which it is
repaid; and additional amount equal to that portion of his Account which was
previously forfeited shall be restored to his Account at the same time from
other Employees' forfeitures and, is such forfeitures are insufficient, from a
special contribution by his Employer for that year.
In the case of a terminated Participant who does not receive a distribution
of his entire vested interest and whose Service resumes before a Break in
Service occurs, any undistributed vested balance from his prior participation
shall be maintained as a fully vested subaccount within his Account.
9.6 Accounting for Forfeitures. A forfeiture shall be charged to the
---------------------------
Participant's Account as of the first day of the first Valuation Period in which
the forfeiture becomes certain pursuant to Section 9.5. Except as otherwise
provided in that Section, a forfeiture shall be added
33
to the contributions of the terminated Participant's Employer which are to be
credited to other Participants pursuant to Section 4.1 as of the last day of the
Plan Year in which the forfeiture becomes certain.
9.7 Vesting and Nonforfeitability. A Participant's interest in his
-----------------------------
Account which has become vested shall be nonforfeitable for any reason.
Section 10. Payment of Benefits.
--------------------
10.1 Benefits for Participants. A Participant whose Service ends for any
--------------------------
reason shall receive the vested portion of his Account in a single payment on a
date selected by the Committee. That date shall be on or before the 60th day
after the end of the Plan Year in which his Service ends. Notwithstanding the
foregoing, if the balance credited to his Account exceeds $3,500, his benefits
shall not be paid before the latest of his 65th birthday or the tenth
anniversary of the year in which he commenced participation in the Plan unless
he elects an early payment date in a written election filed with the Committee.
A Participant may modify such an election at any time, provided any new benefit
payment date is at least 30 days after a modified election is delivered to the
Committee. In all events, a Participant's benefits shall be paid by April 1st of
the calendar year following the year in which he reaches age 70-1/2. A
Participant's benefits from that portion of his Account committed to the
Investment Fund shall be calculated on the basis of the most recent Valuation
Date before the day of payment.
10.2 Benefits on a Participant's Death. If a Participant dies before his
----------------------------------
benefits are paid pursuant to Section 10.1, the balance credited to his Account
shall be paid to his Beneficiary in a single distribution on or before the 60th
day after the end of the Plan Year in which he died. The
34
benefits from that portion of the Account committed to the Investment Fund shall
be calculated on the basis of the most recent Valuation Date before the date of
payment.
If a married Participant dies before his benefit payments begin, than
unless he has specifically elected otherwise the Committee shall cause the
balance in his Account to be paid to his Spouse. No election by a married
Participant of a different Beneficiary shall be valid unless the election is
accompanied by the Spouse's written consent, which (i) must acknowledge the
effect of the election, (ii) must explicitly provide either that the designated
Beneficiary may not subsequently be changed by the Participant without the
Spouse's further consent, or that it may be changed without such consent, and
(iii) must be witnessed by the Committee, its representative, or a notary
public. This requirement shall not apply if the Participant establishes to the
Committee's satisfaction that the Spouse may not be located.
10.3 Marital Status. The Committee shall from time to time take whatever
---------------
steps it deems appropriate to keep informed of each Participant's marital
status. Each Employer shall provide the Committee with the most reliable
information in the Employer's possession regarding its Participants' marital
status. The Committee, the Plan, the Trustee, and the Employers shall be fully
protected and discharged from any liability to the extent of any benefit
payments made as a result of the Committee's good faith and reasonable reliance
upon information obtained from a Participant and his Employer as to his marital
status.
10.4 Delay in Benefit Determination. If the Committee is unable to
-------------------------------
determine the benefits payable to a Participant or Beneficiary on or before the
latest date prescribed for payment pursuant to Section 10.1 or 10.2, the
benefits shall in any event be paid within 60 days
35
after they can first be determined, with whatever makeup payments may be
appropriate in view of the delay.
10.5 Accounting for Benefit Payments. Any benefit payment shall be charged
--------------------------------
to the Participant's Account as of the first day of the Valuation Period in
which the payment is made.
10.6 Options to Receive and Sell Stock. Unless ownership of virtually all
----------------------------------
Stock is restricted to active Employees and qualified retirement plans for the
benefit of Employees pursuant to the certificates of incorporation or by-laws of
the Employers issuing Stock, a terminated Participant or the Beneficiary of a
deceased Participant may instruct the Committee to distribute the Participant's
entire vested interest in his Account in the form of Stock. In that event, the
Committee shall apply the Participant's vested interest in the Investment Fund
to purchase sufficient Stock from the Stock Fund or from any owner of stock to
make the required distribution. In all other cases, the Participant's vested
interest in the Stock Fund shall be distributed in shares of Stock, and his
vested interest in the Investment Fund shall be distributed in cash.
Any Participant who receives Stock pursuant to Section 10.1, and any person
who has received Stock from the Plan or from such a Participant by reason of the
Participant's death or incompetency, by reason of divorce or separation from the
Participant, or by reason of a rollover contribution described in Section
402(a)(5) of the Code, shall have the right to require the Employer which issued
the Stock to purchase the Stock for its current fair market value (hereinafter
referred to as the "put right"). The put right shall be exercisable by written
notice to the Committee during the first 60 days after the Stock is distributed
by the Plan, and, if not
36
exercised in that period, during the first 60 days in the following Plan Year
after the Committee has communicated to the Participant its determination as to
the Stock's current fair market value. However, the put right shall not apply to
the extent that the Stock, at the time the put right would otherwise be
exercisable, may be sold on an established market in accordance with federal and
state securities laws and regulations. If the put right is exercised, the
Trustee may, if so directed by the Committee in its sole discretion, assume the
Employer's rights and obligations with respect to purchasing the Stock.
The Employer or the Trustee, as the case may be, may elect to pay for the
Stock in equal periodic installments, not less frequently than annually, over a
period not longer than five years from the 30th day after the put right is
exercised, with adequate security and interest at a reasonable rate on the
unpaid balance, all such terms to be set forth in a promissory note delivered to
the seller with normal terms as to acceleration upon any uncured default.
Nothing contained herein shall be deemed to obligate any Employer to
register any Stock under any federal or state securities law or to create or
maintain a public market to facilitate the transfer or disposition of any Stock.
The put right described herein may only be exercised by a person described in
the second preceding paragraph, and may not be transferred with any Stock to any
other person. As to all Stock purchased by the Plan in exchange for any Stock
Obligation, the put right be nonterminable. The put right for Stock acquired
through a Stock Obligation shall continue with respect to such Stock after the
Stock Obligation is repaid or the Plan ceases to be an employee stock ownership
plan.
37
10.7 Restrictions on Disposition of Stock. Except in the case of Stock
-------------------------------------
which is traded on an established market, a Participant who receives Stock
pursuant to Section 10.1, and any person who has received Stock from the Plan or
from such a Participant by reason of the Participant's death or incompetency, by
reason of divorce or separation from the Participant, or by reason of a rollover
contribution described in Section 402(a)(5) of the Code, shall, prior to any
sale or other transfer of the Stock to any other person, first offer the Stock
to the issuing Employer and to the Plan at its current fair market value. This
restriction shall apply to any transfer, whether voluntary, involuntary, or by
operation of law, and whether for consideration or gratuitous. Either the
Employer or the Trustee may accept the offer within 14 days after it is
delivered. Any Stock distributed by the Plan shall bear a conspicuous legend
describing the right of first refusal under this Section 10.7, as well as any
other restrictions upon the transfer of the Stock imposed by federal and state
securities laws and regulations.
10.8 Direct Transfer of Eligible Plan Distributions. This Article applies
-----------------------------------------------
to distributions made on or after January 1, 1993. Notwithstanding any
provision to the plan to the contrary that would otherwise limit a distributee's
election under this Article, a distributee may elect, at the time and in the
manner precribed 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.
38
10.9 Definitions
-----------
10.9-1 Eligible rollover distribution: An eligible rollover
distribution is any distribution of all or any portion of the balance to the
credit of a 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 distributees and the distributee's designated beneficiary, or for a
specific 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 includable in gross income (determined without
regard to the exclusion for net unrealized appreciation with respect to employer
securities).
10.9-2 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 anuity
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.
10.9-3 Distributee: A distributee includes an employee or former
employee. In addition, the employee's or former employee's surviving spouse and
the employee's or former employee's spouse of former spouse who is the alternate
payee under a qualified domestic
39
relations order, as defined in section 414(p) of the Code, are distributees with
regard to the interest of the spouse or former spouse.
10.9-4 Direct Rollover: A direct rollover is a payment by the
plan to the eligible retirement plan specified by the distributee.
Section 11. Rules Governing Benefit Claims and Review of Appeals.
---------------------------
11.1 Claim for Benefits. Any Participant or Beneficiary who qualifies
------------------
for the payment of benefits shall file a claim for his benefits with the
Committee on a form provided by the Committee. The claim, including any election
of an alternative benefit form, shall be filed at least 30 days before the date
on which the benefits are to begin. If a Participant or Beneficiary fails to
file a claim by the 30th day before the date on which benefits become payable,
he shall be presumed to have filed a claim for payment for the Participant's
benefits in the standard form prescribed by Sections 10.1 or 10.2
11.2 Notification by Committee. Within 90 days after receiving a claim
-------------------------
for benefits (or within 180 days, if special circumstances require an extension
of time and written notice of the extension is given to the Participant or
Beneficiary within 90 days after receiving the claim for benefits), the
Committee shall notify the Participant or Beneficiary whether the claim has been
approved or denied. If the Committee denies a claim in any respect, the
Committee shall set forth in a written notice to the Participant or Beneficiary:
(i) each specific reason for the denial;
(ii) specific references to the pertinent Plan provisions on which
the denial is based;
40
(iii) a description of any additional material or information which
could be submitted by the Participant or Beneficiary to support his
claim, with an explanation of the relevance of such information;
and
(iv) an explanation of the claims review procedures set forth in
Section 11.3.
11.3 Claims Review Procedure. Within 60 days after a Participant or
------------------------
Beneficiary receives notice from the Committee that his claim for benefits has
been denied in any respect, he may file with the Committee a written notice of
appeal setting forth his reasons for disputing the Committee's determination. In
connection with his appeal the Participant or Beneficiary or his representative
may inspect or purchase copies of pertinent documents and records to the extent
not inconsistent with other Participants' and Beneficiaries' rights of privacy.
Within 60 days after receiving a notice of appeal from a prior determination (or
within 120 days, if special circumstances require an extension of time and
written notice of the extension is given to the Participant or Beneficiary and
his representative within 60 days after receiving the notice of appeal), the
Committee shall furnish to the Participant or Beneficiary and his
representative, if any, a written statement of the Committee's final decision
with respect to his claim, including the reasons for such decision and the
particular Plan provisions upon which it is based.
Section 12. The Committee and Its Functions.
--------------------------------
12.1 Authority of Committee. The Committee shall be the "plan
-----------------------
administrator" within the meaning of ERISA and shall have exclusive
responsibility and authority to control and manage the operation and
administration of the Plan, including the interpretation and application of its
provisions, except to the extent such responsibility and authority are otherwise
specifically
41
(i) allocated to the Company, the Employers, or the Trustee under the Plan and
Trust Agreement, (ii) delegated in writing to other persons by the Company, the
Employers, the Committee, or the Trustee, or (iii) allocated to other parties by
operation of law. The Committee shall have exclusive responsibility regarding
decisions concerning the payment of benefits under the Plan. The Committee shall
have no investment responsibility with respect to the Investment Fund except to
the extent, if any, specifically provided in the Trust Agreement. In the
discharge of its duties, the Committee may employ accountants, actuaries, legal
counsel, and other agents (who also may be employed by an Employer or the
Trustee in the same or some other capacity) and may pay their reasonable
expenses and compensation.
12.2 Identity of Committee. The Committee shall consist of three or more
----------------------
individuals selected by the Company. Any individual, including a director,
trustee, shareholder, officer, or employee of an Employer, shall be eligible to
service as a member of the Committee. The Company shall have the power to remove
any individual serving on the Committee at any time without cause upon 10 days
written notice, and any individual may resign from the Committee at any time
upon 10 days written notice to the Company. The Company shall notify the Trustee
of any change in membership of the Committee.
12.3 Duties of Committee. The Committee shall keep whatever records may be
--------------------
necessary to implement the Plan and shall furnish whatever reports may be
required from time to time by the Company. The Committee shall furnish to the
Trustee whatever information may be necessary to properly administer the Trust.
The Committee shall see to the filing with the
42
appropriate government agencies of all reports and returns required of the plan
Committee under ERISA and other laws.
Further, the Committee shall have exclusive responsibility and authority
with respect to the Plan's holdings of Stock and shall direct the Trustee in all
respects regarding the purchase, retention, sale, exchange, and pledge of Stock
and the creation and satisfaction of Stock Obligations. The Committee shall at
all times act consistently with the Company's long-term intention that the Plan,
as an employee stock ownership plan, be invested primarily in Stock. Subject to
the direction of the Board as to the application of Employer contributions to
Stock Obligations, and subject to the provisions of Sections 6.4 and 10.6 as to
Participants' rights under certain circumstances to have their Accounts invested
in Stock or in assets other than Stock, the Committee shall determine in its
sole discretion the extent to which assets of the Trust shall be used to repay
Stock Obligations, to purchase Stock, or to invest in other assets to be
selected by the Trustee or an investment manager. No provision of the Plan
relating to the allocation or vesting of any interests in the Stock Fund or the
Investment Fund shall restrict the Committee from changing any holdings of the
Trust, whether the changes involve an increase or a decrease in the Stock or
other assets credited to Participants' Accounts. In determining the proper
extent of the Trust's investment in Stock, the Committee shall be authorized to
employ investment counsel, legal counsel, appraisers, and other agents to pay
their reasonable expenses and compensation.
12.4 Valuation of Stock. If the valuation of any Stock is not established
-------------------
by reported trading on a generally recognized public market, the Committee shall
have the exclusive
43
authority and responsibility to determine its value for all purposes under the
Plan. Such value shall be determined as of each Valuation Date, and on any other
date as of which the Plan purchases or sells such Stock. The Committee shall use
generally accepted methods of valuing stock of similar corporations for purposes
of arm's length business and investment transactions, and in this connection the
Committee shall obtain, and shall be protected in relying upon, the valuation of
such Stock as determined by an independent appraiser experienced in preparing
valuations of similar businesses.
12.5 Compliance with ERISA. The Committee shall perform all acts necessary
----------------------
to comply with ERISA. Each individual member or employee of the Committee shall
discharge his duties in good faith and in accordance with the applicable
requirements of ERISA.
12.6 Action by Committee. All actions of the Committee shall be governed by
--------------------
the affirmative vote of a number of members which is a majority of the total
number of members currently appointed, including vacancies. The members of the
Committee may meet informally and may take any action without meeting as a
group.
12.7 Execution of Documents. Any instrument executed by the Committee shall
-----------------------
be signed by any member or employee of the Committee.
12.8 Adoption of Rules. The Committee shall adopt such rules and
------------------
regulations of uniform applicability as it deems necessary or appropriate for
the proper administration and interpretation of the Plan.
12.9 Responsibilities to Participants. The Committee shall determine which
---------------------------------
Employees qualify to enter the Plan. The Committee shall furnish to each
eligible Employee whatever
44
summary plan descriptions, summary annual reports, and other notices and
information may be required under ERISA. The Committee also shall determine when
a Participant or his Beneficiary qualifies for the payment of benefits under the
Plan. The Committee shall furnish to each such Participant or Beneficiary
whatever information is required under ERISA (or is otherwise appropriate) to
enable the Participant or Beneficiary to make whatever elections may be
available pursuant to Sections 6 and 10, and the Committee shall provide for the
payment of benefits in the proper form and amount from the assets of the Trust
Fund. The Committee may decide in its sole discretion to permit modifications of
elections and to defer or accelerate benefits to the extent consistent with
applicable law and the best interests of the individuals concerned.
12.10 Alternative Payees in Event of Incapacity. If the Committee finds at
------------------------------------------
any time that an individual qualifying for benefits under this Plan is a minor
or is incompetent, the committee may direct the benefits to be paid, in the case
of a minor, to his parents, his legal guardian, a custodian for him under the
Uniform Transfers to Minors Act, or the person having actual custody of him, or,
in the case of an incompetent, to his spouse, his legal guardian, or the person
having actual custody of him, the payments to be used for the individual's
benefit. The Committee and the Trustee shall not be obligated to inquire as to
the actual use of the funds by the person receiving them under this Section
12.10, and any such payment shall completely discharge the obligations of the
Plan, the Trustee, the Committee, and the Employers to the extent of the
payment.
45
12.11 Indemnification by Employers. Except as separately agreed in
-----------------------------
writing, the Committee, and any member or employee of the Committee, shall be
indemnified and held harmless by the Employers, jointly and severally, to the
fullest extent permitted by law against any and all costs, damages, expenses,
and liabilities reasonably incurred by or imposed upon it or him in connection
with any claim made against it or him or in which it or he may be involved by
reason of its or his being, or having been, the Committee, or a member or
employee of the Committee, to the extent such amounts are not paid by insurance.
12.12 Nonparticipation by Interested Member. Any member of the Committee
--------------------------------------
who also is a Participant in the Plan shall take no part in any determination
specifically relating to his own participation or benefits, unless his
abstention would leave the Committee incapable of acting on the matter.
Section 13. Adoption Amendment, or Termination of the Plan.
-----------------------------------------------
13.1 Adoption of Plan by Other Employers. With the consent of the Company,
------------------------------------
any entity may become a participating Employer under the Plan by (i) taking such
action as shall be necessary to adopt the Plan, (ii) becoming a party to the
Trust Agreement establishing the Trust Fund, and (iii) executing and delivering
such instruments and taking such other action as may be necessary or desirable
to put the Plan into effect with respect to the entity's Employees.
13.2 Adoption of Plan by Successor. In the event that any Employer shall be
------------------------------
reorganized by way of merger, consolidation, transfer of assets or otherwise, so
that an entity other than an Employer shall succeed to all or substantially all
of the Employer's business, the successor entity may be substituted for the
Employer under the Plan by adopting the Plan and
46
becoming a party to the Trust Agreement. Contributions by the Employer shall be
automatically suspended from the effective date of any such reorganization until
the date upon which the substitution of the successor entity for the Employer
under the Plan becomes effective. If, within 90 days following the effective
date of any such reorganization, the successor entity shall not have elected to
become a party to the Plan, or if the Employer shall adopt a plan of complete
liquidation other than in connection with a reorganization, the Plan shall be
automatically terminated with respect to Employees of the Employer as of the
close of business on the 90th day following the effective date of the
reorganization, or as of the close of business on the date of adoption of a plan
of complete liquidation, as the case may be.
13.3 Plan Adoption Subject to Qualification. Notwithstanding any other
---------------------------------------
provision of the Plan, the adoption of the Plan and the execution of the Trust
Agreement are conditioned upon their being determined initially by the Internal
Revenue Service to meet the qualification requirements of Section 401(a) of the
Code, so that the Employers may deduct currently for federal income tax purposes
their contributions to the Trust and so that the Participants may exclude the
contributions from their gross income and recognize income only when they
receive benefits. In the event that this Plan is held by the Internal Revenue
Service not to qualify initially under Section 401(a), the Plan, may be amended
retroactively to the earliest date permitted by U.S. Treasury Regulations in
order to secure qualification under Section 401(a). If this Plan is held by the
Internal Revenue Service not to qualify initially under Section 401(a) either as
originally adopted or as amended, each Employer's contributions to the Trust
under this Plan (including any earnings thereon) shall be returned to it and
this Plan shall be terminated. In the
47
event that this Plan is amended after its initial qualification and the Plan as
amended is held by the Internal Revenue Service not to qualify under Section
401(a), the amendment may be modified retroactively to the earliest date
permitted by U.S. Treasury Regulations in order to secure approval of the
amendment under Section 401(a).
13.4 Right to Amend or Terminate. The Company intends to continue this Plan
----------------------------
as a permanent program. However, each participating Employer separately reserves
the right to suspend, supersede, or terminate the Plan at any time and for any
reason, as it applies to that Employer's Employees, and the Company reserves the
right to amend, suspend, supersede, merge, consolidate, or terminate the Plan at
any time and for any reason, as it applies to the Employees of all Employers. No
amendment, suspension, supersession, merger, consolidation, or termination of
the Plan shall reduce any Participant's or Beneficiary's proportionate interest
in the Trust Fund, or shall divert any portion of the Trust Fund to purposes
other than the exclusive benefit of the Participants and their Beneficiaries
prior to the satisfaction of all liabilities under the Plan. Except as is
required for purposes of compliance with the Code or ERISA, each as amended from
time to time, neither the provisions of Section 4.1 and 4.2 relating to the
crediting of contributions, forfeitures and shares of Stock released from the
Unallocated Stock Fund, nor any other provision of the Plan relating to the
allocation of benefits to Participants' may be amended more frequently than once
every six months. Moreover, there shall not be any transfer of assets to a
successor plan or merger or consolidation with another plan unless, in the event
of the termination of the successor plan or the surviving plan immediately
following such transfer, merger, or consolidation, each participant or
beneficiary would be entitled to a benefit equal to or
48
greater than the benefit he would have been entitled to if the plan in which he
was previously a participant or beneficiary had terminated immediately prior to
such transfer, merger, or consolidation. Following a termination of this Plan by
the Company, the Trustee shall continue to administer the Trust and pay benefits
in accordance with the Plan as amended from time to time and the Committee's
instructions.
Section 14. Miscellaneous Provisions.
-------------------------
14.1 Plan Creates No Employment Rights. Nothing in this Plan shall be
----------------------------------
interpreted as giving any Employee the right to be retained as an Employee by an
Employer, or as limiting or affecting the rights of an Employer to control its
Employees or to terminate the Service of any Employee at any time and for any
reason, subject to any applicable employment or collective bargaining
agreements.
14.2 Nonassignability of Benefits. No assignment, pledge, or other
-----------------------------
anticipation of benefits from the Plan will be permitted or recognized by the
Employers, the Committee, or the Trustee. Moreover, benefits from the Plan shall
not be subject to attachment, garnishment, or other legal process for debts or
liabilities of any Participant or Beneficiary, to the extent permitted by law.
This prohibition on assignment or alienation shall apply to any judgment,
decree, or order (including approval of a property settlement agreement) which
relates to the provision of child support, alimony, or property rights to a
present or former spouse, child or other dependent of a Participant pursuant to
a State domestic relations or community property law, unless the judgment,
decree, or order is determined by the Committee to be a qualified domestic
relations order within the meaning of Section 414(p) of the Code.
49
14.3 Limit of Employer Liability. The liability of the Employers with
----------------------------
respect to Participants under this Plan shall be limited to making contributions
to the Trust from time to time, in accordance with Section 4.
14.4 Treatment of Expenses. All expenses incurred by the Committee and the
----------------------
Trustee in connection with administering this Plan and Trust Fund shall be paid
by the Trustee from the Trust Fund to the extent the expenses have not been paid
or assumed by the Employers or by the Trustee.
14.5 Number and Gender. Any use of the singular shall be interpreted to
------------------
include the plural, and the plural the singular. Any use of the masculine,
feminine, or neuter shall be interpreted to include the masculine, feminine, or
neuter, as the context shall require.
14.6 Nondiversion of Assets. Except as provided in Sections 5.3 and 13.3,
-----------------------
under no circumstances shall any portion of the Trust Fund be diverted to or
used for any purpose other than the exclusive benefit of the Participants and
their Beneficiaries prior to the satisfaction of all liabilities under the Plan.
14.7 Separability of Provisions. If any provision of this Plan is held to
---------------------------
be invalid or unenforceable, the other provisions of the Plan shall not be
affected but shall be applied as if the invalid or unenforceable provision had
not been included in the Plan.
14.8 Service of Process. The agent for the service of process upon the Plan
-------------------
shall be the president of the Company, or such other person as may be designated
from time to time by the Company.
50
14.9 Governing State Law. This Plan shall be interpreted in accordance
-------------------
with the laws of the State of Illinois to the extent those laws are applicable
under the provisions of ERISA.
Section 15. Top-Heavy Provisions.
---------------------
15.1 Determination of Top-Heavy Status. The Committee shall determine on
---------------------------------
a regular basis whether each Plan Year is or is not a "Top-Heavy Year" for
purposes of implementing the provisions of Sections 15.2, 15.3, 15.4, and 5.2
which apply only to the extent the Plan is top-heavy or super top-heavy within
the meaning of Section 416 and the Treasury Regulations promulgated thereunder.
In making this determination, the Committee shall use the following definitions
and principles:
15.1-1 The "Employer" includes all business entities which are
considered commonly controlled or affiliated within the meaning of
Sections 414(b), 414(c), and 414(m) of the Code.
15.1-2 The "plan aggregation group" includes each qualified
retirement plan maintained by the Employer (i) in which a Key Employee
is a Participant during the Plan Year, or (ii) which enables any plan
described in clause (i) to satisfy the requirements of Section 401(a)(4)
or 410 of the Code, or (iii) which provides contributions or benefits
comparable to those of the plans described in clauses (i) and (ii) and
which is designated by the Committee as part of the plan aggregation
group.
15.1-3 The "determination date", with respect to the first Plan
Year of any plan, means the last day of that Plan Year, and with respect
to each subsequent Plan Year, means the last day of the preceding Plan
Year. If any other plan has a determination date
51
which differs from this Plan's determination date, the top-heaviness of
this Plan shall be determined on the basis of the other plan's
determination date falling within the same calendar years as this Plan's
determination date.
15.1-4 A "Key Employee", with respect to a Plan Year, means an
Employee who at any time during the five years ending on the top-heavy
determination date for the Plan Year has received compensation from an
Employer and has been (i) an officer of the Employer having Total
Compensation greater than 50 percent of the limit then in effect under
Section 415(b)(1)(A) of the Code, (ii) one of the 10 Employees owning
the largest interests in the Employer having Total Compensation greater
than the limit then in effect under Section 415(c)(1)(A), (iii) an owner
of more than five percent of the outstanding equity interest or the
outstanding voting interest in any Employer, or (iv) an owner of more
than one percent of the outstanding equity interest or the outstanding
voting interest in an Employer whose Total Compensation exceeds
$150,000. In determining which individuals are Key Employees, the rules
of Section 415(i) of the Code and Treasury Regulations promulgated
thereunder shall apply. The Beneficiary of a Key Employee shall also be
considered a Key Employee.
15.1-5 A "Non-key Employee" means an Employee who at any time
during the five years ending on the top-heavy determination date for the
Plan Year has received compensation from an Employer and who has never
been a Key Employee, and the Beneficiary of any such Employee.
52
15.1-6 The "aggregated benefits" for any Plan Year means (i) the
adjusted account balances in defined contribution plans on the
determination date, plus (ii) the adjusted value of accrued benefits in
defined benefit plans, calculated as of the annual valuation date
coinciding with or next preceding the determination date, with respect
to Key Employees and Nonkey Employees under all plans within the plan
aggregation group which includes this Plan. For this purpose, the
"adjusted account balance" for and the "adjusted value of accrued
benefit" for any Employee shall be increased by all plan distributions
made with respect to the Employee during the five years ending on the
determination date. Further, the adjusted account balance under a plan
shall not include any amount attributable to a rollover contribution or
similar transfer to the plan initiated by an Employee and made after
1983, unless both plans involved are maintained by the Employer, in
which event the transferred amount shall be counted in the transferee
plan and ignored for all purposes in the transferor plan. Finally, the
adjusted value of accrued benefits under any defined benefit plan shall
be determined by assuming whichever actuarial assumptions were applied
by the Pension Benefit Guaranty Corporation to determine the sufficiency
of plan assets for plans terminating on the valuation date.
15.1-7 This Plan shall be "top-heavy" for any Plan Year in which
the aggregated benefits of the Key Employees exceed 60 percent of the
total aggregated benefits for both Key Employees and Nonkey Employees.
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15.1-8 This Plan shall be "super top-heavy" for any Plan Year in
which the aggregated benefits of the Key Employees exceed 90 percent of
the total aggregated benefits for both Key Employees and Nonkey
Employees.
15.1-9 A "Top-Heavy Year" means a Plan Year in which the Plan is
top-heavy.
15.2 Minimum Contributions. For any Top-Heavy Year, each Employer shall
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make a special contribution on behalf of each Participant to the extent that the
total allocations to his Account pursuant to Section 4 is less than the lesser
of:
(i) four percent of his Total Compensation for that year, or (ii) the
highest ratio of such allocation to Total Compensation received by any
Key Employee for that year. For purposes of the special contribution of
this Section 15.2, a Key Employee's Total Compensation shall include
amounts the Key Employee elected to defer under a qualified 401(k)
arrangement. Such a special contribution shall be made on behalf of each
Participant who is employed by an Employer on the last day of the Plan
Year, regardless of the number of his Hours of Service, and shall be
allocated to his Account.
For any Plan Year when (1) the Plan is top-heavy and (2) a Nonkey
Employee is a Participant in both this Plan and a defined benefit plan included
in the plan aggregation group which is top heavy, the sum of the Employer
contributions and forfeitures allocated to the Account of each such Nonkey
Employee shall be equal to at least five percent (5%) of such Nonkey Employee's
Total Compensation for that year.
15.3 Minimum Vesting. If a Participant's vested interest in his Account is
---------------
to be determined in a Top-Heavy Year, it shall be based on the following "top-
heavy table":
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Vesting Percentage of
Years Interest Vested
----- ---------------
fewer than 2 0%
2 20%
3 40%
4 60%
5 80%
6 or more 100%
Provided, however, that any Plan Participant who has completed at least three
years of service with the employer prior to February 19, 1991, shall be given
the opportunity to elect to have the vesting schedule in effect prior to this
amendment used to determine his or her vested benefit.
15.4 Maximum Compensation. For any Top-Heavy Year, a Participant's "Cash
--------------------
Compensation" as defined in Section 4.3, and his "Total Compensation" for
purposes of Section 15.2, shall not exceed $200,000 (or the limit currently in
effect under Section 401(a)(17) of the Code).
55